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Eniro Annual Report 2006
Contents
Eniro 2006
1
CEO´s comments
2
Strategic focus
4
Market overview
10
Market Sweden
12
Market Norway
15
Market Finland
18
Market Denmark
20
Market Poland
21
Market Germany
22
Eniro´s revenue models
23
Employees
24
Environment
26
Risk management
28
The share
30
Corporate Governance Report 2006
32
Board of Directors and Auditors
41
Group Management
43
Board of Directors´ report
44
Consolidated income statement
48
Consolidated balance sheet
49
Changes in consolidated equity 50
Consolidated cash flow statement
50
Parent Company income statement
51
Parent Company balance sheet
52
Changes in equity, Parent Company 53
This annual report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish and the translation, the
former shall have precedence.
Parent Company cash flow statement
53
Accounting principles 54
Notes 61
Certification by the Board of Directors and the President 71
Audit report 71
Multi-year Summary and Definitions 72
The formal financial report that was prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU is presented on pages
44 to 75. Only the formal financial report was reviewed by the Company’s auditors. Quarterly Summary 74
Annual General Meeting and addresses
76
Dates for financial information 77
Markets
Share of Group
operating revenues EBITDA
Sweden
41%
Directories
Internet
services
Directory
assistance
Mobile services
mobil.eniro.se
Eniro Gula Sidorna
eniro.se
Eniro 118 118
Gula Sidorna – på väg
emfas.com
Eniro 118 119
Din Del
dindel.se
Eniro 118 118 sms
Emfas
passagen.se
bilweb.se
48%
118118office.com
dittpris.se
leta.se
bubblare.se
Norway
32%
9%
kvasir.no
wap.gulesider.no
Ditt Distrikt
sol.no
wap.telefonkatalogen.no
Proff
proff.no
wap.tlf.no
dinpris.no
GuleSider 1880 sms
Eniro Telephone Directories
eniro.fi
Eniro 0100100
wap.eniro.fi
Kaupunki-Info
yritystele.fi
118
16123 search service
Yritystele
suomi24.fi
Mostrup Vejviser
eniro.dk
Eniro sms 1928
Eniro local directories
sol.dk
wap.eniro.dk
Panorama Firm
pf.pl
2%
Poland
Panorama Lokalna
Panorama Do
4%
Germany
Samochodu
wlw.com
wlw.de
5%
3%
Panorama Firm
118 118
Panorama Budownictwa
6%
wap.sol.no
4%
Denmark
7%
gulesidor.no
Telefonkatalogen
39%
Finland
Gule Sider 1880
Gule Sider
Operating revenues by market,
SEK M
Operating revenues by channel,
SEK M
� Print (offline)
� Internet and mobil services (online)
� 118 services/directory assistance (voice)
� 2006
� 2005
2006
2,621
2005
642
637
1,422
784
2004
325
Key data
SEK M
2006
Operating revenues
EBITDA excluding cost related to aquisition
Cost related to aquisition
Operating income before depreciation (EBITDA)
Earnings before tax
Net income per share, SEK
Cash earnings per share, SEK
Dividend per share, SEK
Return on equity, %
Interest-bearing net debt
Interest-bearing net debt/EBITDA, times
Average number of full-time employees
6,697
2,290
2)
Eniro pro forma including Findexa 2005.
Board of Director’s proposal.
1,250
1,422
2,704
2,621
2004
2005
1,938
3,852
1,250
Germany 347
1)
784
34
907
791
395
375
Poland
Tryckta kataloger (offline)
791
2,704
442
396
Denmark
Internet och28
mibniltjänster (online
26
907
293
� Voice
EBITDA margin
118-tjänster/nummerupplysning (voice)
1,938
2,121
Finland
� Offline
� Online
3,852
2,772
2,779
Sweden
Norway
Operating revenues, SEK M and
EBITDA margin, %
2,290
1,336
5.82
8.13
4.402)
22
8,872
3.9
4,801
proforma1)
2005
6,628
2,093
–113
1,980
5.0
2005
2004
4,827
1,234
4,745
1,324
1,234
1,017
5.84
6.88
2.20
42
10,564
8.6
4,754
1,324
1,131
4.62
5.20
2.20
35
2,832
2.1
4,752
2006
Eniro 2006 – the leading Nordic search company
During 2006, the foundation was established for accelerated online
growth. Eniro became the Nordic market leader in search through integration of Findexa in Norway. Operational EBITDA margins improved in
all markets. The Board of Directors’ proposal to the Annual General Meeting is a dividend of SEK 4.40 per share. The proposed dividend corresponds to a total of SEK 797 M or 76 percent of net income for the year.
CEO’S COMMENTS
Focus on revenue growth
During 2006, Eniro’s strong
growth in Internet continued,
with increases in both Internet
revenues and usage figures in all
markets. Although the revenues
for printed directories remains
under pressure, we made considerable progress towards
stabilization of the revenues in
most markets. The Norwegian
directory market remains a
challenge. For 118 services,
we succeeded in maintaining
and strengthening our positions.
Through continued tight cost
controls and leveraging of synergies, margins were strengthened
during the year. Strong market
positions and favorable cash
flows also mean that we will be
able to continue to provide high
returns for our shareholders.
2 ENIRO
02_Strategy_Summary_cmyk.indd 2
Eniro’s business developed well during 2006.
Despite tough competition in all markets,
Internet revenues continued to show strong
growth. All Nordic markets reported doubledigit growth figures, and the share of Internet
revenues, as a proportion of total revenues
were 29 percent. Traffic to Eniro sites in the
various countries also continued to increase,
in total by more than 20 percent.
At the same time as the revenue shares
from Internet advertising and 118 services
are increasing, the revenue share for Eniro’s
printed directories is declining. In five years,
our dependency on print revenues has
declined from 80 percent to 57 percent.
However, we believe that printed directories
will continue to fill a great need for both users
and advertisers for a long time. Our challenge lies in increasing usability as far as
possible while enhancing the offer to advertisers and stimulating demand for printed
directories.
With the increased use of mobile phones
and demand for a higher level of service,
we anticipate stable development of 118 services. The introduction of new concepts and
services contribute to increasing revenues
from this type of services.
Eniro’s position as the leading search
company in the Nordic region was strengthened. In 2006, 1.4 billion searches were performed in Eniro’s Internet networks. During
the year, we worked with integrating the during 2005 acquired company Findexa with our
previous Norwegian operations. The two
units Findexa AS and Eniro AS are now completely integrated, and employees have
moved to joint offices. Findexa’s name has
been changed to Eniro AS. The promised
cost synergies of SEK 50 M during 2006 were
realized, and we intend to achieve an additional SEK 50 M in 2007.
The work to increase cost awareness
within the Group has continued to produce
results. Operating income before depreciation (EBITDA) for the year increased by 9 percent to SEK 2,290 M (2,093), including a capital gain of SEK 43 M. Our market outlook
was an improvement by 5–7 percent. Exclud-
ing the capital gain the outcome was in the
higher end of the range and the EBITDA-margin was 34 percent. Net income per share
amounted to SEK 5.82, and the dividend
proposal to the Annual General Meeting
means that 76 percent of net income will be
returned to the shareholders.
Our ambition
Eniro’s ambition is to achieve revenue growth
of 3–5 percent per year with a sustained
EBITDA margin exceeding 30 percent over
the medium-long term. The balance sheet
will be continuously optimized with consideration taken to financial flexibility and stability.
The goal is a an efficient capital structure with
a net debt in relation to EBITDA of up to 5
times. Eniro’s business generates high cash
flows, while investment requirements are limited, thus permitting a high return to shareholders. Eniro’s dividend policy is a dividend
corresponding to 75 percent of net income.
Our challenge going forward is primarily
growth. During 2006, revenues increased
organically by 1 percent. To achieve the goal
of 3–5 percent growth, we must accelerate
the growth rate in Internet revenues, increase
revenues from 118 services and reduce revenue losses for printed directories. We must
retain cost controls, but also become better
at realizing Group synergies. Above all, we
must better leverage the benefits of our Nordic Internet position.
Accelerated Internet revenue growth
Norway, Finland, Denmark and Poland are
experiencing high growth in Internet revenues. The challenge lies in increasing growth
in Germany and Sweden. To meet user
requirements and to increase Internet traffic,
new versions of eniro.se, eniro.fi, eniro.dk,
gulesider.no and kvasir.no were launched
with a new design and improved functionality. In addition to development of new functions and improved functionality for our Internet services, significant effort is being devoted to new customer offerings based on
transaction-based payment. These solutions
enable Eniro to be an active participant in the
ANNUAL REPORT 2006
07-03-08 16.30.22
CEO’S COMMENTS
fastest growing market segment, which is the market
for sponsored links. As of 2006, Eniro also has specialized Internet sales representatives in all markets.
Stable or somewhat higher revenues from 118
services
The ambition is that revenues from 118 services will
be retained or increase somewhat in Sweden and
Norway and grow in Finland. Eniro will continue to
develop its service concept and offer a broader service than previously that includes driving directions
and web searches.
Reduced revenue decline from directories
Revenues from printed directories declined by 5
percent during 2006. The ambition is to reduce and
preferably stabilize the revenue decline. Denmark
and Poland already report stable print revenues.
Sweden and Finland are making satisfactory progress, while Norway is the market in which Eniro currently faces the greatest challenge. The keys to
success are continuous product development that
stimulates usage while increasing the effect of
advertising, our ability to lead and develop the sales
force based on Eniro’s sales concept, and our ability to demonstrate the value of advertising for our
advertisers.
Realizing Group synergies
Synergies within the Eniro Group are currently created primarily within purchasing, product development and IT through common platforms that can be
used by several of the Nordic countries. We believe
that there are opportunities for realizing further synergies in these areas.
Stockholm, February 2007
Tomas Franzén
Tomas Franzén
President and CEO
VD och koncernchef
ANNUAL REPORT 2006
Future
Over the past two years, we have succeeded in
accelerating Internet revenue growth, decreasing
the decline in print revenues and stabilize revenues
from 118 services in most markets while improving
our profitability. This gives us strength and a strong
belief in our ability to succeed in achieving even
higher improvements. We have an organization of
skilled and loyal employees to whom I wish to
extend my warmest thanks. I am convinced that we
can continue to increase shareholder value over the
coming years through continued focus on organic
growth with high profitability.
ENIRO 3
07-03-08 16.30.23
S T R AT E G I C F O C U S
The leading Nordic search company – today and tomorrow
Via printed directories, 118 services, the Internet and mobile
phones, Eniro offers the best
search opportunities for buyers
and sellers who want to find
each other easily. Strong brands
and high usage of Eniro’s products and services make it valuable for advertisers to be present
in Eniro’s search channels.
Cornerstones in Eniro’s business
Eniro offers search facilities via printed
directories, Internet services, 118 services
and mobile services.
Through these channels, Eniro makes
information available to users wherever and
whenever they want it while advertisers are
exposed to users in one or more search
channels based on their particular needs.
High usage of the services creates value for
advertisers, and relevant information from
many advertisers increases value for the
users.
Eniro’s channels are distinguished by
buyers who take the initiative to look for sellers and suppliers. Through active users
close to a transaction, Eniro’s search services become effective marketing channels for
advertisers.
Eniro’s services are to a large extent
advertising-financed and free for users.
However, 118 services are user-financed.
Mission
“With a commitment to innovative search
services, Eniro is the helper that makes
everyone a finder.”
This is the fundamental idea behind Eniro
as a company and the mission that ultimately
drives Eniro’s employees forward.
Financial targets
The Eniro Group has as its overall objective
to achieve a number of financial targets that
when balanced, create both favorable
returns for shareholders as well as financial
stability for the business.
The financial targets that have been
established by the Eniro Board of Directors
for the medium-long term, meaning 3–5
years, are presented and commented in the
table on the following page.
Vision
“Eniro is the leading search company in the
Nordic media market.”
Eniro as the leading search company
shall act as the leading search company
and be perceived as the leading search
company.
1.4 billion Internet searches in the Eniro
network
Approximately 60 million inquiries to the 118
services in Sweden
4 ENIRO
oo
se
ds
ENIRO’S CHANNELS
an
d
ch
s
el based on
n ee
hann
Internet
directories
n
tio
ua
758 titles of printed directories published
USER
hc
arc
se
sit
DURING 2006
Business concept
“For users searching for a business, person,
place, product or service, Eniro provides relevant, local, high-quality information – easy
to find and evaluate, accessible wherever
the need arises.
For advertisers aiming at customers close
to the transaction, Eniro provides effective
sales-generating advertising solutions – easy
to manage and measure, customized to
advertiser needs in multiple channels.”
Through this focus in its offering to users
and advertisers, Eniro will continue to be
successful and retain and enhance its position as the industry leader.
ADVERTISER
reaches out via all
search channels
118
services
mobil
services
The advertiser gains exposure via a number of search
channels – and meets the user on the user’s terms.
ANNUAL REPORT 2006
07-03-08 16.30.24
S T R AT E G I S K I N R I K T N I N G
High usage of Eniro’s services creates value for advertisers, and relevant information from many advertisers increases value for the users.
Outcome
2006 (2005)
Targets
Background
Annual revenue growth of 3–5
percent in the mid-term.
Corresponds to a growth level on
par with industry leaders.
Sustained EBITDA margin of
above 30 percent and a strong
cash flow.
Target set against weighted assessment of Eniro’s respective market
positions, changes in the markets,
growth rate and cost development.
An efficient capital structure
with a net debt in relation to
EBITDA of up to 5 times.
Dividend to shareholders
corresponding to 75 percent
of net income.
1)
1.0%1) (1.7%)
34% (26%)
Through cost savings in the Group, Eniro has improved the margin
during 2006. To be able to achieve the target in future, Eniro must
increase revenue growth, maintain cost controls and exploit Group
synergies. Eniro’s need for capital expenditures is limited to
approximately 2 percent of total revenues. Therefore the cash
conversion rate from EBITDA is high.
The level was set based on
effective use of Eniro’s capital
while maintaining a sound level
of operational risk.
3.9 (5.0 Pro
forma incl.
Findexa 2005)
The acquisition of Findexa on December 5, 2005 increased Eniro’s
debt. At January 1, 2006, net debt was a multiple of 8.6 times
EBITDA, which based on pro forma accounts for the new Eniro
Group including Findexa and excluding non-recurring costs
corresponds to a multiple of 5.0 times EBITDA. The level at
December 31, 2006 was 3.9.
The goal is based on Eniro’s
estimated capital expenditure
requirements and the target for
net debt in relation to EBITDA.
76% (43%)
Due to the acquisition of Findexa, the dividend for 2005 was below
the target. The proposed dividend in 2007 for the 2006 fiscal year
meets the target. The outcome for 2006 of 76 percent of net
income is based on the board of director’s proposal of a dividend
of SEK 4.40 per share, which is to be decided by the AGM on
March 30, 2007.
Compared with pro forma incl. Findexa 2005.
Revenue growth, SEK M
EBITDA margin,%
1,436
500
10
8.6
34
6000
5000
Net debt in relation to
EBITDA, times
Cash flow from current
operations, SEK M
6,697
7000
Comments
Through strong Internet growth, despite some pressure on print
revenues, Eniro has improved revenue levels slightly in 2006. The
goal of 3-5 percent growth will be reached through accelerated
growth in online revenues, improved revenues from voice and
reduced revenue decline in offline.
200
4,745
4,827
1,016
28
4000
8
1,007
900
6
600
4
300
2
26
3000
3.9
2.1
2000
1000
2004
0
2004
2005
The strong improvement in revenues 2006 is
mainly due to the acquisition of Findexa
December 5, 2005. Revenues increased organically by 1 percent in 2006.
ANNUAL REPORT 2006
2005
2006
2006
The acquisition of Findexa positively affected
the 2006 EBITDA margin. During 2006, the
operational EBITDA margin improved in all our
business units.
0
0
2004
2005
2006
The need for capital expenditures is limited to
approximately 2 percent of total revenues.
Therefore the cash conversion rate from
EBITDA is high.
2004
2005
2006
January 1, 2006, net debt in relation to EBITDA
was 5 times EBITDA (pro forma including Findexa and excluding costs related to the aquisition). At the end of 2006, net debt in relation to
EBITDA was 3.9 times.
ENIRO 5
07-03-08 16.30.25
Strategic success factors
Information and content in the
search services, a strong brand
and sales force are some of the
factors that are prerequisites for
Eniro’s ability to meet financial
targets and to succeed in meeting the business challenges
ahead.
Product development
The development of new products and services – through own product development
and in alliances with various business partners – is a central component in Eniro’s
strategy to strengthen and enhance its position as the leading Nordic search company.
High usage is the primary factor that drives
the value of the search channel for advertisers and thus advertising revenues.
To be able to remain leading, Eniro works
constantly to deepen its knowledge of user
patterns, user needs and usability, in part
through surveys, test panels and beta testing. Directories, Internet and mobile services are constantly being enhanced to make
them easier to use. Based on an understanding of how new technology can be leveraged and how different search channels
can be combined to meet changes in user
patterns, Eniro evaluates its service offering
and adapts the product portfolio.
Product development is focused on services for users who are looking for commercial information, meaning services that are
close to the actual transaction between
buyer and seller, as well as services in which
the value of the customer’s advertising
becomes clear and measurable.
The common platform for Internet services comprising eniro.se, eniro.fi and eniro.dk,
which were launched in January 2007, will
result in faster and more efficient product
development. The platform is an example of
how synergies can be exploited within the
Group.
The offering for advertisers is also being
enhanced. Previously, Eniro primarily
charged for advertisements based on insertions in directories or on the Internet. Today,
Eniro also offers customers paid search
advertising in which the advertiser pays per
click and also has access to a network of
media partners through which Eniro’s advertisers can advertise with sponsored links in
editorial environments.
Sales force and value-based sales
Leading the sales force in an effective man-
6 ENIRO
ner is of critical importance for Eniro’s success. To increase efficiency and to offer
customers more specialized expertise, part
of the sales force in several of Eniro’s markets focus on a single brand and/or a
search service. There are specialized Internet sales forces in all of Eniro’s markets.
The sales force is managed and developed based on Eniro’s sales concept, which
provides structure and focus for sales
efforts. The concept, which includes planning, conducting meetings, joint visits, sales
training and key data for follow-ups, is oriented towards result-promoting behavior
and focused on developing both the individual and the team.
A focus area for Eniro and the sales force
is value-based sales in which the value of
advertising with Eniro is clarified and the gap
between perceived and actual value is narrowed. Tools to support the sales force in
this work include call measurements, web
statistics and surveys.
The sales force also performs an important function in collecting and quality-assuring information for the search channels.
Local and high-quality content
Information and content in the search channels that is perceived as relevant, local and
of high quality is an important competitive
factor for Eniro being able to offer the best
search assistance in every individual geographic market. A very important part of
achieving this is that the established sales
force with customer contacts ensures the
quality and depth of information.
To an increasing extent, users are also
contributing content, not only to Eniro’s portal services, but also through updating personal information, submitting opinions of
various suppliers and creating classified
ads, for example.
Strong brand
Eniro wants to be the self-evident choice
when users seek companies, persons,
places, products or services. In addition to
quality offerings, this demands a strong
ANNUAL REPORT 2006
07-03-08 16.30.26
S T R AT E G I S K I N R I K T N I N G
A focus area for Eniro and the sales force is value-based sales in which the value of advertising with
Eniro is clarified and the gap between perceived and actual value is narrowed.
brand. Particularly for Internet search services where the step from need to action is
short, it is important to be the user’s first
choice.
The Eniro brand, which was established
in 2000, started to expand during 2003 to
become an umbrella brand under which the
various products and services were gathered. Eniro has developed into a strong
brand in the Nordic region. In addition to
Eniro, there are strong local product brands,
such as Gule Sider® in Norway and Panorama Firm® in Poland.
During 2006, branding work was focused
on emphasizing the different channels and
loading the brand with emotional values,
such that Eniro is helpful and always knows
where information is available.
Multi-channel strategy
How people want to seek and find information varies over time, between individuals
and with the same person, depending on the
situation. Eniro has therefore chosen a strat-
ANNUAL REPORT 2006
egy that entails offering all relevant and local
content in several ways via different channels and search services. There is thus
always a product or service that meets user
needs and provides excellent opportunities
for advertisers to customize their exposure.
Geographic focus
The search industry and directories in particular are characterized by a strong correlation between market position and profitability. Accordingly, Eniro focuses on the Nordic
countries and Poland, which are markets in
which Eniro is the leading player or among
the leaders. Eniro’s German operations in
“Wer liefert Was?” are to be considered a
financial investment that Eniro will retain and
develop as long as they are deemed to create added value for shareholders. Between
2003 and 2006, Eniro divested operations
with weaker market positions in Ukraine,
Estonia, Latvia, Lithuania, Russia and Belarus. During 2005, Eniro acquired Findexa, the
leading search company in Norway.
BRAND RECOGNITION
Eniro1)
December December
2005
2006
Sweden
93
94
Norway
47
46
Norway – Gule Sider
952)
97
Finland
69
82
Denmark
463)
403)
Brand recognition includes both spontaneous and
aided recognition Source: Research International (Sifo).
2) Measurement conducted in January 2006.
3) Measurement conducted in November.
1)
ENIRO 7
07-03-08 16.30.27
Challenges and results 2006
Based on market and competitive conditions, financial targets
and strategic choices, Eniro’s
management every autumn
identifies the most important
challenges for the coming year.
During 2006, the focus was on
five core challenges for Eniro’s
management and its employees.
These challenges and the results
are described in this section.
1. Revenue development for printed
directories in Sweden and
Norway
Challenge
In both Sweden and Norway, organic revenues from printed directories have declined
in recent years. After new initiatives were
taken, the revenue decline in Sweden was
limited to –2 percent during 2005. At the
beginning of 2006, the target was organically
unchanged print revenues, compared with
2005, which later was revised to a decline of
2 percent, organically. For Norway, the 2006
target was a print revenue decline of about
10 percent, organically.
Results
Revenues from printed directories in Sweden declined organically by 2 percent, which
was in line with the revised outlook for 2006,
but not in line with the initial target.
In Norway, revenues from printed directories declined organically by 7 percent during 2006, which was a somewhat better
result than expected. However, the challenge remains during 2007 since the Norwegian revenue decline has not been halted.
Actual offline revenues and organic
revenue decline, SEK M
1,598
1500
1,443
1,522
–2%
1,344
–7%
1000
Actions
In Sweden, directory renewal has been in
progress since 2004. The 2007 edition of
Gula Sidorna featured a new layout, improved
index and search pages and a new Health &
Medical Care guide to make it even easier for
users to find information. During 2006, a
pocket version, Gula Sidorna – på väg, was
distributed for the first time in the Stockholm
region. The sales force was divided into one
unit for printed directories and one for Internet in order to increase sales focus on respective offering. More flexible payment forms
were introduced for customers, and measures were implemented to be able to better
demonstrate the value of the advertising.
In Norway, the 2007 editions of Gule
Sider will include four themed guides for
Restaurants, Weddings, Health & Beauty
and 24-hour Service. Mobile telephone
numbers are also included in the white
pages. The local directory Ditt Distrikt has
been improved with respect to both contents and usability. Demonstrating the value
of advertising remained a priority for the
sales force during 2006. More customized
presentation materials for each sales channel have increased efficiency, as did a centralization of previously fragmented function
within telephone sales. Pricing and the offering were simplified.
8 ENIRO
500
0
2005
2006
Sweden
Norway
2. Address the changed market
conditions in Finland
Challenge
Due to changes in the market situation in
which both Eniro and Fonecta published
directly competing regional directories, the
revenues from printed directories in Helsinki
and Tampere declined by 27 percent for
Eniro in 2005. Lower revenues plus increased
costs for establishing Eniro’s own sales
organization and a national directory offering meant that the EBITDA margin for the
Finnish operations was 8 percent in 2005.
The challenge for 2006 was to regain lost
revenues, increase efficiency in the organization and accelerate the Internet and 118
services to achieve an EBITDA margin greater
than 10 percent.
Actions
The focus during the year was on increasing
the organization’s efficiency and reducing
costs. During 2006, Eniro Finland changed
ANNUAL REPORT 2006
07-03-08 16.30.28
the organization at the management level
and in sales and back-office functions. The
sales force’s efficiency increased in part
through improved campaign planning, as
well as clearer management by objectives
and follow-ups. At the same time, preparations were made for future product development and increased brand awareness.
Results
The competition in printed directories
remains intense in Helsinki and Tampere,
but revenues in the rest of Finland are
increasing. Internet revenues showed a
strong increase, and directory assistance
services captured market share. Eniro
increased revenues in Finland somewhat to
SEK 642 (637). The EBITDA margin for 2006
was 13 percent (5), an improvement from the
target.
support sales personnel in a dialogue on the
value of advertising in Eniro’s networks. For
sponsored links, new pricing models were
introduced and developed.
Results
Eniro’s product development was positively
received by customers and users. The
Group’s online revenues increased organically by 14 percent during the year, and the
number of searches in Eniro’s networks
increased to 1.4 billion (1.1).
Unique browsers in the entire
Eniro Internet network
8,000,000
6,000,000
4,000,000
2,000,000
0
2004
3. Enchance the Internet offering
Challenge
Usage and advertising revenues on the
Internet are growing at the same time as
competition is increasing. Eniro’s challenge
for 2006 was to increase traffic and to
enhance its offering and packaging of services for advertisers. One goal was also to
move users to a greater extend closer to the
actual transaction.
Actions
During the first quarter of 2006, Eniro decided to invest an additional SEK 50 M each
year in Internet product development. The
single largest result was the new eniro.se,
eniro.fi and eniro.dk sites that were launched
in January 2007. Previously during the year,
a number of functions were developed to
move users closer to a purchase, such as
more advanced search functions for products and services, click-to-call functions,
user reviews and a price-comparison service. Statistical tools were developed to
ANNUAL REPORT 2006
2005
2006
Number of unique browsers,
weekly average by month.
4. Cost levels
Challenge
The cost level was too high.
Actions
During 2004, a cost-savings program was
implemented to reduce Eniro’s total cost
levels calculated in fixed prices and specified as net savings compared with the 2003
cost level. After adjustment of the program
for the increased investment pace for Internet-related product development, the intention was that SEK 300 M would be saved,
with SEK 100 M realized in 2005, an additional SEK 100 M in 2006 and yet another
SEK 100 M in 2007.
The cost-savings during 2006 were
among other things realized within purchasing and IT.
Results
For 2006, the cost savings were in line with
the target of SEK 200 M accumulated savings. The cost-saving target for 2007 is
retained.
5. Integration of Findexa
Challenge
To integrate Findexa into the Eniro Group.
The goal was that the merger would generate cost synergies of SEK 50 M during 2006
and SEK 100 M during 2007, through the
integration of the two Norwegian operations.
In addition, work with group synergy issues
in such areas as product development, marketing and IT was to be initiated.
Actions
The work with the practical integration of the
Norwegian operations was conducted, as
was work to realize the cost synergies arising from the merger. The employees have
relocated to joint premises, and Findexa’s
name was changed to Eniro as of October 1,
2006. The number of brands was reduced,
and Eniro elected to focus on the marketleading brands Gule Sider® and Kvasir®.
A project aiming at identifying and planning the realization of group synergies was
completed.
Results
The two Norwegian operations are now fully
integrated. The target for cost synergies of
SEK 50 M for 2006 was achieved and the
target of a total of SEK 100 M for 2007 is
retained.
During 2007, realization of the identified
group synergies within purchasing, IT and
product development will be in focus.
ENIRO 9
07-03-08 16.30.28
MARKET OVERVIEW
Search market in transition
The Nordic search market comprises printed directories, Internet services, mobile services and
directory assistance (118) services. Changes in user patterns
and technical solutions that create more sophisticated advertising opportunities place demands
on continuous development of
products, services and business
models at the same time as the
industry has undergone a distinct consolidation in recent
years.
Market data used in the annual report has
been compiled using the following sources:
IRM, WARC, IAB, TNS Adex, Dansk
Oplagskontrol, ZAW, BVDW, CR Media
Consulting and Eniro estimates. The figures
The advertising market for Internet and mobile services is growing rapidly. Entry barriers for starting a service in the newer channels are lower than in the directory market,
but the importance of functionality, strong
brands, high-quality content and a large
sales force nonetheless pose a challenge for
new players in successfully launching and
capitalizing on new products and services.
The Nordic directory market is mature,
and the usage of printed directories remains
at a high level. The market is dominated by a
few players, and entry barriers are high.
Market trends
Europe accounts for approximately 30 percent of the global search market, according
to estimates by The Kelsey Group (US). The
Nordic countries, combined with the US, still
have the highest proportion of search-related advertising in relation to total advertising
and the highest proportion of investments
per capita in search-related media. Historically, the Nordic markets were characterized
by a single company with a strong position,
often spin-offs from telecom operators. Following European Directories’ (EDSA) acquisition of TDC Förlag and Fonecta, the Nordic market has been transformed and is divided between two leading companies:
Eniro and EDSA.
The Nordic search market is estimated
by The Kelsey Group to show average annual growth of 4.5 percent between 2005 and
2010, with growth primarily in Internet and
mobile services.
Most traditional search companies in Europe, meaning Eniro’s industry colleagues,
have expanded their portfolios from primarily distributing printed Yellow Page directories to Internet solutions, directory assistance and mobile services.
for 2005 were adjusted in consideration of
changed market data from the various
institutes and changes in sources.
Advertising in traditional media includes daily
press, magazines, tv, radio, cinema and
outdoor adevertising.
10 ENIRO
03_Market_cmyk.indd 10
Strong growth in Internet advertising
Internet usage is increasing, and the Internet
is becoming an increasingly self-evident tool
among both professional and private users
and for business, as well as for pleasure. In
Sweden and Norway, for example, approxi-
mately half of all households are estimated
to have access to broadband in their homes.
This enables scope for increasingly sophisticated and bandwidth-demanding services.
Much of the development of Internet services in recent years has been driven by technology, and the Web 2.0 concept has become established. Web 2.0 services allow
users to communicate and interact more via
the Internet and to share information in new
ways.
Given these conditions, search companies are developing new advertising concepts to persuade advertisers to advertise
and encourage users to click on the advertisements. One example of market growth is
that IRM, Institutet för Reklam och Mediastatistik (Institute for Advertising and Media
Statistics) estimates that the Swedish market for Internet advertising amounted to SEK
2.6 billion in 2006 and is expected to grow
by 30 percent in 2007.
If Web 2.0 is the most prominent technology trend, then paid search marketing is the
fastest growing advertising trend in many
markets. In Sweden, IRM estimated that
paid search marketing increased by about
260 percent in 2006 and will grow by 70 percent in 2007. Paid search advertising means
that advertisers buy advertising space linked
to a given keyword on a search engine or Internet directory.
Directories retain their strong position
Printed directories have a strong position in
Europe, with high revenues and high usage.
To meet changes in user patterns and increasing Internet usage, Nordic search companies have increased their investments in
product development for both printed directories and Internet and mobile services.
New competitive situation
Many search companies have high profit
margins and stable cash flows, making them
attractive take-over targets. In recent years,
the industry has been consolidated to a
great extent. Above all, venture capital companies have been active in this consolida-
ANNUAL REPORT 2006
07-03-08 16.34.48
MARKNADSÖVERSIKT
The Nordic countries, combined with the US, have the highest proportion of search-related advertising in relation to total advertising.
tion, but there have also been industrial acquisitions by media companies, for example, that wish to expand their offering by
combining news, maps and company
searches. Some of the most recent transactions were Yell in the UK, which acquired
TPI, and the venture capital company KKR,
which acquired a majority shareholding in
France’s Pages Jaunes.
In recent years, the traditional search
companies have faced competition from
new players in that the Internet has become
a general tool for searching for information.
In the various local markets, traditional
search companies face competition from
global search engines, as well as smaller,
local Internet-based search companies. The
global Internet search companies have continued to establish operations in smaller
local markets and have launched search
services customized for the local market.
Classified ad, price comparison and auction
sites have become increasingly popular for
finding and evaluating products. Facing this
challenge, the traditional search companies
have supplemented their original business
models and matched their competitors with
attractive services and advertising solutions
for Internet and mobile services.
The search market faces major challenges in terms of users and products, as well as
structurally. The changes in the form of industry consolidation, product development
of both existing and new products and new
strategic alliances that have occurred in recent years will most probably also continue
over the coming years.
Eniro’s industry colleagues
Unlisted companies
Primary markets
Owner
Primary market positions
Revenues 2005 (approx.)
European Directories
Denmark, Austria, Finland,
Sweden and Netherlands
Macquarie Capital Alliance
Group, Caisse de Depot
et Placement du Qubéc and
Nikko Principal Investment Ltd
No. 1 in Denmark and Austria
SEK 5.6 billion
World Directories Group
Netherlands, Belgium, Ireland
and Portugal
Apax Partners Worldwide LLP
and Cinven Limited
No. 1 in Belgium, Ireland and
Portugal
SEK 4.5 billion
Sweden, Norway, Finland,
Denmark and Poland
Listed in Stockholm
No. 1 in Sweden, Norway and
Poland
SEK 6.6 billion pro forma
incl. Findexa
Pages Jaunes
France and Spain
Listed in Paris
No. 1 in France
SEK 9.8 billion
SEAT
Italy, Germany and UK
Listed in Milan
No. 1 in Italy
SEK 13.2 billion
Yell
UK, USA and Spain
Listed in London
No. 1 in UK and Spain
SEK 22.0 billion
Listed companies
Eniro
Some of Eniro’s industry colleagues with operations in Europe. Out of these, Eniro competes directly only with European Directories in the Finnish, Danish and Swedish markets.
ANNUAL REPORT 2006
ENIRO 11
07-03-08 16.34.49
MARKET
Sweden
THE YEAR IN BRIEF
• Eniro.se: Aerial photos, price comparison
service and a click-to-call solution are
some of the functions added during the
year. A new version of eniro.se with a new
design and improved functionality was
launched.
• The Eniro Gula Sidorna® directory was
enhanced with an improved layout and
headings. As well as guides to restaurants,
weddings and body & soul, as well as
improved public service information.
• The Stockholm edition of Gula Sidorna
was published in a pocket format with a
selection of 280 headings. The pocket
directory was distributed in 250,000
copies.
• In December, Din Del launched local
Internet portals for Sweden’s municipalities.
• Telenor selected Eniro 118 118 as the
supplier of its Swedish directory assistance
service for a two-year period.
• Eniro 118 118 received awards as
“Europe’s best personal search service”
and “Best search site for mobile users”
from 118tracker.
• mobil.eniro.se was appointed the best
mobile service in Sweden by Internetworld.
Key data , SEK M
2006
Revenues
2,772 2,779 2,786
2005
2004
Of which Offline
1,522 1,598 1,645
Of which Online
653
581
522
Of which Voice
597
600
619
EBITDA
1,143 1,116 1,097
EBITDA-margin
total, %
41
40
39
EBITDA-margin
Sweden exkl.
Voice, %
46
46
44
EBITDA-marginal
Sverige Voice, %
23
20
22
No. of full-time
employees
12 ENIRO
1,459 1,522 1,507
During 2006, online revenues in
Sweden increased organically by
13 percent, while revenues from
118 services declined by 1 percent and offline revenues decreased organically by 2 percent.
Operating income before depreciation (EBITDA) increased as a
result of good cost control.
Market
Sweden is Eniro’s largest market. In Sweden, Eniro has a strong position in all market
segments: The market share in printed directories amounted to about 78 percent (82),
and in the strongly growing market for Internet advertising, Eniro’s market share was 26
percent (33). Eniro is the market leader in directory assistance services in Sweden and
retained its market share during 2006.
Offering
Eniro is the only company in the Swedish
market with a complete market offering
comprising printed directories, Internet services, 118 and mobile services. Eniro is the
market leader in all of these areas.
With a combined basic insertion in Gula
Sidorna®, the advertiser’s information is included not only in the printed directory, but
also in Eniro’s Internet and mobile services
and 118 services.
Both in the printed directory as well as on
the Internet, advertisers are offered a complete range of advertisment.
Competitors
Competitors are found in the individual market segments. Eniro has a leading position in
regional and local directories. Eniro’s largest
competitor is EDSA Förlag, which published
the local directory Lokaldelen and the business directory Stortele.
Competition in Internet services comes
from a number of players. These include
global and local search engines, such as
Google and Sesam, and web sites for infor-
mation about private persons and businesses, such as Hitta, as well as shopping sites,
such as Kelkoo, and classified ad sites, such
as Blocket.
Within directory assistance services,
Eniro’s main competitors are Ahhaaa and
Tele2. There are also a number of smaller
players within personal number assistance
and SMS-based number assistance.
Customers
Eniro estimates that there are some 300,000
potential business customers in Sweden.
Eniro’s customer base is comprised of small
and medium-size companies, as well as larger companies and organizations. During
2006, the number of invoiced business customers increased to 171,000, compared with
166,000 in the preceding year. The increase
is primarily attributable to Din Del, but the
number of customers for other products also
increased. Of total customers, approximatelty 37,000 purchased advertisements in addition to the basic insertion on the Internet,
and approximately 82,000 customers purchased advertisements in addition to the
basic insertion in the printed directory. During 2006, development of tools to more
clearly demonstrate the value of advertising
for customers continued.
During 2006, about 56 percent of Sweden’s population used one of Eniro’s 118
services one or more times during the year.
A total of nearly 60 million inquiries are handled each year.
Directories
The Gula Sidorna® (Yellow Pages) directory
is Eniro’s single largest product, with revenues corresponding to 29 percent of total
revenues for printed products in the Group. It
contains advertisements from companies,
organizations, county councils and municipalities and is produced for all households
and businesses in 28 regions, with Stockholm, Gothenburg and Malmö as the largest
editions. The total circulation during 2006
amounted to about 5.9 million copies.
ANNUAL REPORT 2006
07-03-08 16.34.50
MARKET SWEDEN MARKET SWEDEN
During the year, Gula Sidorna had about
151,000 invoiced customers. The retention
rate for Gula Sidorna during the year was 89
percent (89). A study by Research International (Sifo) showed that 95 percent of all
Swedes between the ages of 15 and 79 use
the printed edition of Gula Sidorna.
During the spring of 2006, a pocket version of Gula Sidorna was produced in Stockholm called Gula Sidorna – På Väg (Yellow
Pages – On the Move) with a selection of
slightly more than 280 headings. It was distributed at gas stations and in shopping centers. The 2007 edition of Gula Sidorna – På
Väg will be published in Stockholm, Gothenburg and Malmö, and the number of headings will be increased to 350.
Din Del® is Sweden’s most frequently
used local directory with information about
local companies in a town or city district, according to Research International (Sifo). In
2006, it was published for 181 local retail
areas with a total circulation of about 4.5
million copies. The number of invoiced Din
Del customers was just under 70,000. Of
Sweden’s population between the ages of
15 and 79, 75 percent use Din Del at least
once a year, according to Research International (Sifo).
As of December 2006, Din Del is also
available on the Internet with local portals in
all municipalities.
Emfas® is one of the leading business directories with detailed information about
some 200,000 companies and their products. Emfas is published in a printed edition
of 130,000 copies and is also available on
the Internet. In addition to basic information,
the Internet service contains annual reports,
information about credit worthiness, financial key data and information regarding public procurements.
Sweden’s advertising market
in 2006, SEK 22.1 billion (20.1)
Internet 12%
Directories 9%
Traditional
media 79%
Eniro’s share of the Swedish
directory advertising market in 2006
78%
Eniro’s share of the Swedish Internet
advertising market in 2006
26%
Number of unique web browsers
weekly average by month
3,000,000
2,500,000
2,000,000
Internet services
With some 2.5 million unique web browsers
on average per week in December 2006
(2.5), Eniro’s Internet network is one of Sweden’s largest in terms of usage. Eniro’s network comprises eniro.se, passagen.se, bil-
ANNUAL REPORT 2006
1,500,000
1,000,000
500,000
0
2004
2005
eniro.se
2006
Eniro’s Internet services, total
ENIRO 13
07-03-08 16.34.51
MARKET SWEDEN
web.se, dindel.se and emfas.com. At the
beginning of 2007, leta.se and bubblare.se
were aquired.
Eniro.se is one of Sweden’s most frequently used web sites. On eniro.se, users
can search in Gula Sidorna, find private persons, obtain maps and driving directions
and access the Internet’s most extensive
search service. The site also contains a large
number of other useful services, such as
Buy & Sell, price comparison, news searches, job searches and a popular link guide.
EFFECTIVE ADVERTISEMENTS
Eniro offers customers call measuring. A
unique telephone number is placed in the
customer’s directory advertisement, making it
easy to measure the number of calls that the
advertisement generates. Here are the
industry averages for advertisements under
the heading Lawyers in Gula Sidorna:
During 2006, eniro.se was expanded with
aerial photos and functions for making it easier for users to find products and services. A
new version of eniro.se with enhanced functionality and design was launched. Advertisers on eniro.se are also offered an opportunity to advertise via sponsored links and banner ads.
Dindel.se is an Internet service that aggregates 290 local portals with company information plus local information that includes
sports, events, news and weather. The contents are derived from the DinDel directory,
as well as from several business partners.
Dindel.se was launched in November 2006.
Passagen.se is one of Sweden’s largest
portals with content that is created based on
user interests. Bilweb.se is a service for
selling new and used cars on the Internet.
Eniro’s advertisers are offered an opportunity via passagen.se and bilweb.se for exposure for large and attractive user groups.
Number of measured calls per month: 27.5
Proportion of calls resulting in purchase: 62%1)
Average order value: SEK 8,5001)
Revenue per month from the advertisement:
approximately SEK 145,000
Ad investment per month: SEK 4,900
Net revenue per month from advertisement:
SEK 140,100
kThe customer gains about SEK 30 in sales
revenue for each SEK 1 invested with Eniro.
1)
Source: Research International (SIFO)
14 ENIRO
118 services
118 118® is Sweden’s most frequently used
directory assistance service. In addition to
telephone numbers and addresses, operators can assist users with e-mail addresses,
opening hours, web searches on eniro.se,
for example, and driving directions. Operators can guide users to the nearest ATM or
florist, for example, and can send maps and
driving directions to their mobile phones.
The customer can also be connected at no
extra charge and receive the requested information in a sms message.
118 118 is the only service in Sweden that
can assist users with names and addresses
outside Sweden. The service is directly connected to 20 different databases with more
than 500 million numbers and can provide
information from nearly the entire world. The
service can also be reached directly via 118
119® or from outside Sweden via +46 649
118 118.
With 118 118 SMS, users can obtain assistance with telephone numbers, addresses and names via SMS. Users can also find
the nearest pizzeria or pharmacy, for example. The result can be presented with a map,
driving directions and opening hours. The
service is accessed by sending an SMS to
118 118.
Mobile services
Eniro’s search services are aggregated on
mobil.eniro.se. Via their mobile phones,
users can search for information on companies in Gula Sidorna, find information about
private persons and obtain maps and driving directions. Usage of mobil.eniro.se has
increased strongly in recent years, and in
July 2006 the start page was visited more
than 300,000 times.
Priorities for 2007
Through continuous product development,
investments in value-based sales and becoming more skilled in showing the customer value of exposure in Eniro’s search channels, Eniro’s ambition is that the offline revenues should decline in line with 2006, while
accelerating revenues from Internet and mobile services.
ANNUAL REPORT 2006
07-03-08 16.34.52
MARKET
Norway
Norway is Eniro’s second largest market and following the acquisition of Findexa, Eniro has a very strong position in Norway.
The integration of Findexa and
Eniro is now complete, and the
cost synergies are being realized
according to plan. In 2006, Norway showed strong online growth
with an organic increase in revenues of 23 percent1). Offline revenues declined organically by 7
percent, while revenues from directory assistance services declined organically by 3 percent.
Market
Norway is Eniro’s second largest market. Following the acquisition of Findexa in December 2005, Eniro has a very strong position in
Norway. In the Internet advertising market, in
which Eniro has been active since the acquisition of Scandinavia Online in 2001, Eniro
has the most frequently used search services
with gulesider.no and kvasir.no and a market
share of 31 percent (34). The Norwegian Internet advertising market is the second largest in the Nordic region in terms of revenues.
The Norwegian directory assistance market
was deregulated in 2002, and in the same
year, Findexa took over the company that
provided the manual directory assistance
service Telefonkatalogen 1880. With this service, which is now called Gule Sider 1880,
Eniro is now number two in the market for directory assistance.
THE YEAR IN BRIEF
• Findexa and Eniro were integrated and the
personnel moved to joint premises.
Offering
Following the acquisition of Findexa, Eniro
has a complete multi-channel offering in the
Norwegian market with printed directories,
Internet services, directory assistance and
mobile services. Eniro is the only company
in the Norwegian market that offers users
information in all search channels.
With a combined basic insertion, the advertiser’s information is presented both in
the Gule Sider® directory and on the Internet service gulesider.no. In addition to the
combined basic insertion, Eniro offers a variety of advertising opportunities in directories and on the Internet. On the Internet services gulesider.no, kvasir.no and sol.no, advertisers are offered exposure not only via
information pages, but also via sponsored
links and banner ads.
Competitors
Within regional and local directories and in
business directories, Eniro has a marketleading position.
• Four new guides were introduced in the
printed directory Gule Sider for weddings,
restaurants and health, plus a special
guide for 24-hour service.
• New versions of the Internet services
gulesider.no and kvasir.no were launched.
• The portal SOL was augmented with
increased media expertise through a
partnership with Aller. The jointly owned
company is consolidated in Eniro Norway
as of January 1, 2007.
Key data, SEK M
Revenues
Of which Offline
Of which Online
Of which Voice
EBITDA
EBITDA margin, %
No. of full-time
employees
2006
2,121
1,344
675
102
925
44
2005
293
13
274
6
–39
–13
2004
179
n/a
179
n/a
–15
–8
1,069 1,156
218
1) Compared with pro forma 2005 incl. Findexa.
ANNUAL REPORT 2006
ENIRO 15
07-03-08 16.34.53
M A R K E T N O R WAY
The Norwegian Internet advertising market
is very competitive. Competitors in Internet
services include several global and local
search engines, including Google and
Sesam.
Within directory assistance services, the
largest competitor is Opplysningen 1881.
Customers
Eniro estimates that there are some 220,000
potential business customers in Norway. The
customer base consists of small and medium-size companies, as well as large companies and organizations. During 2006, the
total number of invoiced business customers amounted to about 143,000.
Norway’s advertising market in 2006,
SEK 19.1 billion (15.8)
Internet 11%
Directories 7%
Traditional
media 82%
Eniro’s share of the Norwegian
97%
Eniro’s share of the Norwegian
Internet advertising market in 2006
31%
2,000,000
1,600,000
1,200,000
800,000
400,000
0
2004
2005
2006
kvasir.no
gulesider.no
16 ENIRO
Directories
Telefonkatalogen® with an overview of all
telephone subscribers is distributed to Norwegian households, companies and organizations together with Gule Sider.
Gule Sider®, which is the leading regional directory in Norway, contains information
and advertisements from companies. It is
published in 13 editions, of which the Oslo
edition is the largest. During 2006, it was
published in a total number of 2.7 million
copies. Gule Sider accounts for the major
share of Eniro’s revenues from printed directories in Norway and has a market share of
about 73 percent.
During 2006, Gule Sider had about
134,000 invoiced customers. The retention
rate for Gule Sider during the year was 83
percent.
For the Oslo region, Eniro also publishes
a pocket version of Gule Sider. The pocket
directory is distributed via Statoil stations in
the Oslo region and has a total circulation of
80,000 copies.
Ditt Distrikt® is a local directory published in 73 editions with a total circulation
of 1.9 million copies. Ditt Distrikt contains
local information about companies and private persons, municipal information, cultural information and other useful information.
The directory is distributed to all households, companies and organizations, as well
as to summer homes in each region. During
2006, the number of invoiced customers for
Ditt Distrikt was about 34,000. For 2007, Ditt
Distrikt has a new layout.
Proff® is a business-oriented B2B directory with information about 220,000 companies published in a total number of
70,000 copies. Proff, which was previously
called BizKit, is also available via the Internet and on CD. Proff contains business-related information targeted to professional
users with additional content, such as financial information and presentation of
board members.
Internet services
Eniro has one of the largest Internet networks in Norway with more than 1.8 million
unique web browsers on average per week
in December 2006. Eniro’s network of Norwegian Internet services primarily includes the
search services gulesider.no and kvasir.no
and the portal sol.no.
Gulesider.no® is one of Norway’s most
frequently used Internet services. On gulesider.no, users can search in Gule Sider, find
private persons and classified ads, obtain
maps, aerial photos and driving directions
and perform web searches. There is also a
wide range of other useful functions, such
as a price comparison service.
During 2006, a new version of gulesider.no
was launched with a new design and an improved map function that included the introduction of aerial photos. A tab for classified
ads was launched, and on the information
pages, functionality was added to enable
advertisers to be exposed via video.
Kvasir® is one of the most visited Internet services in Norway. In addition to general web searches, Kvasir has an extensive
link guide. Via Kvasir Firmasök, users can
search for companies, products and services. There are also maps and driving directions. Kvasir recently received a new look in
October 2006. At the same time, functionality was introduced to support advertising via
sponsored links.
ANNUAL REPORT 2006
07-03-08 16.34.53
In 2006, Norway showed strong online growth with an organic increase in revenues of 23 percent.
SOL® is one of Norway’s leading Internet
portals with a broad offering that includes
news, entertainment, chat and community
services, as well as the Kvasir search service. The independent web site bilguiden.no,
a marketplace for new and used cars, is
linked to the portal. In December, Eniro and
Norsk Aller AS reached an agreement to operate sol.no as of January 1, 2007 via a jointly owned company in which Eniro owns 50.1
percent.
Proff® , the business-oriented B2B directory, is also available via the Internet.
tion via SMS without charge. Gule Sider
1880 is distinguished as Norway’s most
economical directory assistance service.
The service is also available via SMS.
Mobile services
Eniro has several mobile services in Norway. On wap.gulesider.no, wap.telefonkatalogen.no and wap.tlf.no, users
can search for companies and private persons and obtain maps with their mobile
phones. The mobile service wap.sol.no includes news summaries.
advertisement on Eniro Norway’s Internet
Directory assistance
Gule Sider 1880® is a directory assistance
service that provides telephone numbers
and contact information for Norwegian telephone subscribers. Users are offered to be
connected and can also receive the informa-
Priorities for 2007
During 2007, Eniro Norway will focus on reducing the negative revenue trend within
printed products, maintaining the strong
growth in Internet with respect to both usage
and revenues and realize synergies.
50 calls via the Free Call function in the
ANNUAL REPORT 2006
GULESIDER.NO DELIVERS
CUSTOMERS
Ekenberg Restaurant in Oslo has an
service Gule Sider. These are the statistics for
what their advertisement under the heading
Restaurants generated during August 2006:
1,250 clicks on the information page, the
map page or through to the restaurants own
web site.
608 direct phone calls (via call metering)
advertisement.
25 e-mail messages sent via the Send
function in the advertisement.
ENIRO 17
07-03-08 16.34.55
MARKET
Finland
THE YEAR IN BRIEF
• A new version of eniro.fi with a new design
and improved functionality was launched.
• Organizational changes at the management level and in sales and back office
functions.
Key data, SEK M
Revenues
Of which Offline
Of which Online
Of which Voice
EBITDA
EBITDA margin, %
No. of full-time
employees
2006
642
311
123
208
84
13
2005
637
363
96
178
34
5
2004
703
442
89
172
167
24
530
549
589
During the year, both EBITDA and
the EBITDA margin improved
strongly, compared with 2005.
This was a result of increased
revenues and implemented costsaving measures. Organically,
revenues increased by 29 percent
for online products and 13 percent
for directory assistance services,
while offline revenues declined by
12 percent.
Market
Prior to 2004, sales of the regional directories in Helsinki and Tampere were handled
jointly by Eniro and another player. This was
changed during 2004, and sales of the 2005
and 2006 directories took place under full
competition and intense price pressures. All
Finnish households received directories
from two suppliers. Eniro’s market share for
printed directories amounted to about
26 percent in 2006.
The Finnish market for Internet services
is more fragmented and less developed than
in the other Nordic countries. The Finnish Internet advertising market comprises a smaller share of the total media market than in
Sweden, Norway and Denmark.
Characteristic for the Finnish market is
that directory assistance and mobile services are used to a greater extent than in
the other Nordic countries. In Finland, the
user’s choice of directory assistance services is determined by the telephone operator used.
Offering
Eniro currently has a nationwide presence
in Finland and a multi-channel offering
comprising all relevant search channels,
meaning printed directories, Internet and
mobile services and directory assistance.
Eniro offers a wide range of advertising
solutions both in the printed directories and
18 ENIRO
on Internet. On Eniro’s Internet services, advertisers are offered exposure via information pages, sponsored links and banner
ads.
Competitors
Eniro is the second largest player in the Finnish market. The largest competitor is Fonecta, which is owned by European Directories
and which together with Eniro is the other
large player in the market for regional and
local directories, B2B directories and directory assistance services. In the market for
Internet and mobile services, Eniro faces
competition from several national and international players.
Customers
Eniro Finland’s customers range from small
to large companies. The company estimates
that there are about 240,000 active companies that are potential customers. During
2006, Eniro invoiced some 60,000 customers, an increase of 10 percent, compared
with 2005.
Directories
Eniro’s telephone directories are distributed throughout Finland and are published
in 32 retail areas including the Helsinki and
Tampere regions. The directories contain
information on companies and private persons, maps and information from cities and
municipalities. The total circulation for 2006
amounted to some 3.0 million copies.
Kaupunki-Info® is Eniro’s local directory
containing information about local companies and municipal service, as well as private persons. Kaupunki-Info is published in
six areas.
Yritystele® is Finland’s leading B2B directory with information about companies,
government agencies and public service.
Internet services
Eniro’s network of Finnish web sites, which
includes the search services eniro.fi, yritystele.fi and the portal suomi24.fi, had an av-
ANNUAL REPORT 2006
07-03-08 16.34.56
MARKET FINLAND
Eniro’s network of Finnish web sites had an
average of 1.1 million unique web browsers
per week in December 2006, an increase of
26 percent, compared with 2005.
erage of 1.1 million unique web browsers
per week in December 2006, an increase of
26 percent, compared with 2005.
Eniro.fi aggregates a number of services
in a single location. Here users can find companies and private persons, obtain maps
and driving directions and use the Internet’s
most extensive image and web search engine. A new version with new functionality
and design was launched. In addition to the
traditional information pages, advertisers
are offered advertisements via sponsored
links and banner ads. During 2006, eniro.fi
strengthened its market position as the leading local search service and became the
most frequently used, well-known and appreciated local search service.
Yritystele.fi is a B2B service with national, regional and industry-specific information about companies and public service.
Suomi24.fi is a portal that in addition to
links and search services contains a popular
dating service, discussion forums and chat
and offers Internet connections without
monthly charges and free e-mail.
Directory assistance
Eniro:0100100® is an operator-independent
directory assistance service with information on both Finnish and Swedish telephone
numbers, names and addresses for compa-
nies and private persons and a function for
sending maps and driving directions to mobile phones. In addition, Eniro provides the
nationwide 118 directory assistance service
that the country’s telephone operators offer
their customers. Eniro produces this service
for fixed subscribers from Elisa in Helsinki,
Tampere, Rihimäki, Jyväskylä and Joensuu,
for Elisa’s mobile subscribers and for fixed
subscribers from certain other companies
within the Finnet group.
Mobile services
The eniro.fi search service is also available
on mobile phones via wap.eniro.fi. The services offers contact information for companies and private persons throughout Finland
plus maps and links to other mobile services. The SMS search service 16123 enables
users to obtain information about telephone
numbers, companies and names.
Priorities for 2007
Continued development of directory products in parallel with growth and increased
capitalization of Internet services are the top
priorities. This will be accomplished through
among other things product development
and continued focus on the efficiency of the
sales force.
Finland’s advertising market in 2006,
SEK 12.8 billion SEK (12.5)
Internet 6%
Directories 9%
Traditional
media 85%
Eniro’s share of the Finnish
26%
Eniro’s share of the Finnish
Internet advertising market in 2006
15%
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2004
2005
eniro.fi
ANNUAL REPORT 2006
2006
ENIRO 19
07-03-08 16.34.56
MARKET
Denmark
THE YEAR IN BRIEF
• A new version of eniro.dk with a new
design and enhanced functionality was
launched.
• Webdir with seven local directories was
acquired and consolidated in Eniro
Denmark from February 1, 2006.
• The sales force was expanded, primarily in
online.
Key data, SEK M
Revenues
Of which Offline
Of which Online
EBITDA
EBITDA margin, %
No. of full-time
employees
2006
442
346
96
58
13
2005
396
320
76
37
9
2004
376
309
67
22
6
401
331
299
Denmark’s advertising market in 2006,
Internet 8%
Directories 7%
Traditional
media 85%
Eniro’s share of the Danish directory advertising
market in 2006
32%
Eniro’s share of the Danish Internet advertising
market in 2006
8%
1,000,000
Expansion of the sales force for
online products showed results,
and online revenues increased
organically by 27 percent. Offline
revenues increased organically
by 2 percent during the year, and
the EBITDA margin increased to
13 percent.
Market
Eniro has been active in Denmark since
1996 when Den Røde Lokalbog and
Mostrup were acquired. Its offering is focused on local directories and Internet and
mobile services. The market share in printed directories amounted to about 32 percent (27), while the share of the Internet advertising market was 8 percent (8).
Offering
Eniro has separate offerings for exposure
in directories and on the Internet.
Competitors
In the Danish market for printed directories,
Eniro’s competitors are De Gule Sider A/S
and several local publishers. Within commercial Internet searches, De Gule Sider
and Krak are the largest competitors. Eniro
also faces competition from global search
engines.
Customers
Eniro estimates that there are some
200,000 potential business customers in
Denmark. Eniro’s customer base consists
of small and medium-size companies and
large companies and organizations. During
2006, the number of invoiced business customers amounted to 54,000.
800,000
600,000
400,000
200,000
0
2004
2005
eniro.dk
20 ENIRO
2006
Directories
Under the brand name Mostrup ®, Eniro
publishes three directories: Den Grønne
Vejviser, which is published in 274 local
areas and contains municipal information,
business listing and telephone number for
private persons; Kommunalhåndbogen,
which is a directory containing municipal
and public information, and Mostrup Kortbog, which is a book of maps with advertisements. Grønne Vejviser is used at least
once a year by about 88 percent of those
living in areas where it is distributed.
Eniro publishes local directories in 72
areas. Following the acquisition of Webdir’s
local directories at the beginning of 2006,
some of them are marketed under own
brands, such as Viborg:Bogen. However,
most are marketed under the brand Den
Røde Lokalbogen ®, which has been established in the market since 1927.
In total, Eniro’s distribution of directories in Denmark amounts to some 4.6 million copies.
Internet services
The eniro.dk search service enables users
to find companies and private persons, obtain maps and driving directions and use the
Internet’s most extensive image and web
search engine. Since July 2005, the portal
sol.dk and the car service bilguiden.dk have
been integrated in eniro.dk. A new version
of eniro.dk with a new design and enhanced
functionality was launched. In December
2006, the number of unique web browser
per week averaged 0.7 million.
Mobile services
Eniro.dk is also available as a mobile service
at wap.eniro.dk. Eniro Denmark offers the
sms 1928 service where users can obtain
information on companies, private persons,
telephone numbers and names.
Priorities for 2007
Strengthened coverage for local directories
and increased growth for the Internet services, in part through product development targeted to both users and advertisers, are prioritized areas for Eniro Denmark.
ANNUAL REPORT 2006
07-03-08 16.34.57
MARKET
Poland
Online revenues increased organically by 32 percent. Offline
revenues declined organically by
2 percent, while EBITDA increased.
Market
Eniro holds the number one position in the
Polish directory market, and Eniro’s share of
the Polish directory advertising market
amounted to 50 percent (55). In the Internet
advertising market, Eniro’s share amounted
to 10 percent (11). Of Poland’s population of
38 million, 33 percent currently use the Internet, compared with 25 percent in 2004
(source: The Kelsey Group).
Offering
In Poland, Eniro publishes directories and
provides Internet and mobile services. Eniro
also recently introduced a 118 directory assistance service. Exposure in directories and
Internet are sold separately.
Customers
The number of invoiced customers remained
on the same level in 2006 as in 2005,
108,000. Eniro estimates that there are 1.2
million companies in Poland that are potential business customers. Each year, Eniro
contacts over 650,000 companies in Poland.
Competitors
In printed directories, Eniro has two competitors in the Polish market, PKT and DiTel S.A.
with market shares of 25 and 20 percent, respectively. In Internet services, Eniro’s largest competitor is the portal Onet, managed
by ITI Holdings.
ic location and above-average income levels. In the Warsaw region, three local directories are distributed under the brand Panorama Lokalna®. In addition, Eniro publishes a special directory for motorists and a
B2B directory for the construction industry.
In total, Eniro’s distribution of directories in
Poland amounts to about 2,9 million copies.
THE YEAR IN BRIEF
• Panorama Firm brand awareness
(spontaneous) increased to 42 percent
• Recognized as best telephone directory in
Poland (Panorama Firm) by Media Partner
Group
Internet services
Pf.pl is one of Poland’s most popular web
sites and enables users to search for companies and obtain maps and driving directions. In December 2006, pf.pl registered an
average of some 415,000 unique browsers
per week, which was an increase of about
237 percent compared with the preceding
year (123,000). Pf.pl won a “Now Internet
2006” (Teraz Internet) prize for best search
engine with the best database.
Key data, SEK M
Revenues
Of which Offline
Of which Online
EBITDA
EBITDA margin, %
No. of full-time
employees
Priorities for 2007
Strengthening unique selling propositions
for advertisers, improvement of sales structure and processes together with continuous increase of the brand awareness are the
major focus areas for 2007.
2005
375
327
48
83
22
2004
325
295
30
70
22
1,108 1,112 1,026
Poland’s advertising market in 2006,
Internet 4%
Directories 4%
Traditional media
92%
Mobile services
Panorama Firm is also available as a mobile
service via Nokia plug in and in Era Omnix.
118 service
At the end of 2006, a 118 service was
launched, initially on a limited scale in one of
the telecom networks. The 118 service answers inquiries regarding businesses, but
not on private individuals.
2006
395
329
66
91
23
Eniro’s share of the Polish directory advertising
market in 2006
50%
Eniro’s share of the Polish Internet advertising
market in 2006
10%
Number of unique web browsers on Eniro’s
Internet services, weekly average by month
600,000
Directories
Eniro’s regional directory Panorama Firm®
is Poland’s leading directory for businessclassified information. It is published in 33
editions that cover the entire country. Distribution to households is based on geograph-
500,000
400,000
300,000
200,000
100,000
0
ANNUAL REPORT 2006
2004
2005
2006
ENIRO 21
07-03-08 16.34.57
MARKET
Germany
THE YEAR IN BRIEF
• Changed customer offering and sales
process model completed.
• Reorganization of company structure to
optimize core workflows.
Key data, SEK M
Revenues
EBITDA
EBITDA margin, %
No. of full-time
employees
2006
325
70
22
2005
347
72
21
2004
376
86
23
254
253
267
Germany’s advertising market in 2006,
Internet 7%
Directories 5%
Traditional
media 88%
Eniro’s share of the German Internet advertising
market in 2006
2%
Number of unique web browsers on wlw.de,
350,000
280,000
210,000
140,000
70,000
0
2004
22 ENIRO
2005
2006
“Wer liefert Was?” now works
with a purely online-based business model. Revenues declined
by 6 percent during the year. The
effect on earnings was partly
compensated by lower production and sales costs.
370,000 companies. During 2006, “Wer liefert Was?” invoiced approximately 21,500
customers (19,500) in Germany alone.
Priorities for 2007
Development of value-based pricing, segmentation and increasing brand awareness
are focused activities for the management of
“Wer liefert Was?” in 2007.
Market
Eniro is active in the German market through
the wholly owned subsidiary “Wer liefert
Was?” with its head office in Hamburg, Germany. Sales offices are located in Austria,
Croatia, the Czech Republic and Switzerland. Through “Wer liefert Was?”, Eniro’s
share of the German Internet advertising
market amounted to approximately 2 percent in 2006 (4).
Offering
“Wer liefert Was?” offers a supplier search
service with the same name as the company
(Who supplies what?). This search service is
the market leader in Internet-based B2B
search services for the targeted group professional purchasers. The database contains information on a total of more than
370,000 companies (350,000), including
data on product range, contact persons,
type of company, etc.
The service and the information are available via the Internet in German and English.
Use of the search service increased during
2006 and more than 43 million (38) product
and company searches were registered on
wlw.de.
Competitors
“Wer liefert Was?” primarily competes with
Google, Gelbe Seiten and GoYellow.
Customers
Customers are primarily small and mid-size
companies active in most industries and
services. By broadening the offering and
focus of “Wer liefert Was?” during 2005 and
2006 the target market has increased to
ANNUAL REPORT 2006
07-03-08 16.34.57
N YA P R O D U K T E R O C H T J Ä N S T E R
Kapitelrubrik
Eniro’s revenue
models
Advertisements in local, regional or special directories are sold per insertion. The directories are
normally published once a year, and the advertisement price is determined by such factors as
circulation, directory area, the advertisement’s
size, information content and design.
A large portion of Eniro’s products and services
are financed by advertising and therefore free of
charge for users. Services for directory assistance on the other hand, are user-financed. The
most common model is that Eniro charges a
Eniro’s customers can purchase advertising space from
Eniro and reach their customers via several advertising
channels. Some of the different revenue models that Eniro is
using for various products and services are described here.
start-up fee plus a fixed charge per minute for
personal services. For inquiries via sms, a fixed
fee is most common.
On Eniro’s Internet search services, various types
Banners are the most common form of Internet
Paid search advertising is possible on many of
of information pages are sold that function as a
advertising. Banner ads are sold for a given period
the Eniro network’s web sites, but also on external
display window for companies and provide more
and priced in part based on the type of web site, its
partner sites. With a sponsored link which is linked
information than a simple basic listing with name.
traffic, the ad’s size and placement. Advertisement
to search results or shown in other relevant con-
address and telephone number. Information pages
can also often be linked to special keywords or to
texts, customers receive more traffic to their infor-
are sold per insertion and for a limited period of
individual headings in company searcher. The
mation page or company web site. Eniro charges
time. The price depends on the amount of content
price then various for different categories and pos-
per click on the link or advertisement, and the price
and how it is displayed (text, images, slide show,
sibly geographic area. Banner ads are also sold for
is set via an Internet-based auction procedure.
film) and the number of key words linked to the
mobile services, such as mobil.eniro.se. The ban-
company. The price varies between different geo-
ner may be linked to the customer’s own web site
graphic markets.
or a special campaign site that Eniro creates for
the customer. Eniro charges a fixed price for each
period the ad is shown.
ANNUAL REPORT 2006
04_Employees_cmyk.indd 23
ENIRO 23
07-03-08 16.42.19
EMPLOYEES
Attractive employer
Eniro’s ambition is to be an
attractive employer for skilled
and motivated employees. Skills
development, leadership training, compensation forms and
human capital follow ups are
therefore prioritized areas for
Eniro. By always ensuring that
the right skills are available in the
right place, Human Resource
work helps Eniro to achieve its
short- and long-term business
goals.
H U M A N C A P I TA L
DEVELOPMENT
Index by
country
Sweden
Norway1)
Finland
Denmark
Poland
Group (excl.
Germany)
1)
2004
66
72
66
71
71
2005
72
69
57
75
74
68
70
2006 Trend
j
73
j
71
j
59
j
80
k
74
72
j
The results for 2004 and 2005 derive from the former
Eniro Norway, while the result for 2006 comprises
Eniro Norway including Findexa, which was acquired
in December 2005.
A Human Capital Index above 68 is very good for this
type of business (Source: Synovate). The response rate
was a full 91 percent in the 2006 survey (88 percent in
2005).
24 ENIRO
The sales organization is the core of a salesoriented company such as Eniro and also an
important success factor. In Eniro’s core
markets – Sweden, Norway, Finland, Denmark and Poland – the sales force constituted the major share of Eniro’s employees. In
Sweden, 55 percent of all employees worked
within sales, including Din Del but excluding
directory assistance. The sales organization’s share of the total number of employees, excluding 118 services, was 54 percent
in Norway, 58 percent in Finland, 62 percent
in Denmark, 64 percent in Poland and 54
percent in “Wer lifert Was?”.
Eniro’s business is conducted in local
search markets. Consequently, Eniro’s organization is based on independent subsidiaries with local management in the various
geographic markets. The sales organization
is also configured according to the conditions in each country, based on a model with
separate Internet and print sales, as well as
a special group that handles existing and
potential key accounts. Smaller customers
are normally handled by telephone and with
a combined offering.
Other large groups of emplyees handle
order processing and advertising production, product and IT development, customer
service and staffing of 118 services.
Satisfied employees
A Group-wide human capital survey is conducted annually, providing a valuable tool
for evaluating and enhancing Eniro’s operations, leadership and employees. The overriding objectives of this survey are to improve conditions for employees and to facilitate more rapid product development, simplified business processes and increased
customer orientation.
The 2006 survey showed that the structured efforts based on the 2005 survey to
improve employee satisfaction produced
positive results in the prioritized areas of
customer orientation, leadership and organization. The Group’s overall human capital
index has increased over recent years, and
the scores showed a better result than the
average for similar companies.
Leadership development and skills
provisioning
Eniro’s ambition is to, as far as possible, recruit leaders from within the organization
and to provide them with competence development. During 2005 and 2006, leadership development programs were conducted in Sweden, Norway and Denmark.
As a sales company, Eniro continuously
invests in sales training. A program was conducted in Sweden and Norway during 2006
to develop primarily sales managers in their
roles as trainers and coaches. The program
instills systematic work methods for sales
and develops skills at the individual and
team levels. The program also functioned as
part of the integration work between the acquired Norwegian company Findexa and
Eniro Norway.
In addition to leadership programs, Eniro
works with annual development programs
for key personnel and potential leaders. The
program is conducted at the Group level and
is intended to communicate a holistic view
of Eniro to the participants. The ambition is
also to develop individuals and their personal networks, while ensuring that the team
will contribute to Eniro’s business and strategic development. In addition to competence development, the program is intended
to attract and retain qualified employees.
Compensation forms, including
share-savings programs
Eniro strives to offer competitive compensation that enables the company to recruit and
retain employees.
As a sales-oriented company, Eniro has
a tradition of variable salary. All employees
in sales have a salary that consists of both a
fixed and a variable portion. This variable
salary model is intended to ensure the company’s profitability over both the short and
long term. In the Swedish sales companies,
about 70 percent of the compensation is
fixed, while 30 percent is variable. In Norway
about 80 percent of the compensation is
fixed. In Finland and Poland the proportions
are about 60 percent fixed and 40 percent
variable, while the distribution in Denmark is
ANNUAL REPORT 2006
07-03-08 16.42.21
The Group’s overall human capital index has increased over recent years, and the scores showed a
better result than the average for similar companies.
approximately half fixed and half variable
compensation.
Some 150 executives and key personnel
in the Eniro Group have a variable salary
component of 10 to 60 percent of the fixed
salary. The variable portion is mainly linked
to the company’s sales and profits trend, but
it is also affected by marketing, human capital and strategic initiatives.
In addition, a portion of the variable salary
is paid in the form of a share-related incentive program amounting to up to 20 percent
of the fixed salary for the President, executive management and some key personnel.
The program allocates what are called synthetic shares that are converted to cash after
two years, if the person is still employed by
Eniro.
The 2005 Annual General Meeting decided to introduce the Share-Savings Program,
which is offered to all Eniro employees in
Sweden, Norway (including the former Findexa) and Finland, as well as senior executives in Denmark and Poland. The objective
of the program is to illustrate the correlation
between employees’ efforts, Eniro’s earnings and the value of the Eniro share. By
thinking, acting and being rewarded as a
ANNUAL REPORT 2006
shareholder, employees are encouraged to
contribute to the development of the business and to make the company more profitable. Some 300 persons, corresponding to
about 10 percent of all eligible employees,
were participants in the Share-Savings Program at June 1, 2006.
Diversity at Eniro
The right competence in the right place at all
times is a goal for Eniro’s HR work. Promoting equality and diversity is one of many
steps in achieving this goal, in which competence is the decisive factor in recruitment.
Eniro measures and monitors equality, in
part by documenting gender distribution in
executive management and among managers and through skills investments and salary comparisons.
Eniro’s Group management consisted of
one third women (5 women, 10 men) at the
end of 2006. Among managers in the Group,
some 43 percent are women.
AV E R AG E N U M B E R O F
FULL-TIME EMPLOYEES
Country
Sweden
Norway
Finland
Denmark
Poland
Germany
Other
Total
2006
2005
Of
whom
women,
Total
%
1,455
68
1,094
47
530
74
372
51
1,098
60
173
26
79
39
4,801
59
Of
whom
women,
Total
%
1,430
68
283
44
549
72
308
49
1,059
61
180
27
945
78
4,754
64
For 2005, Other include employees in Russia, Belarus
and the Baltic countries. These operations have been
divested. The number of full-time employees at December 31, 2006 was 4,821.
Proportion of sales personnel1)
Sweden
Norway
Finland
Denmark
Poland
“Wer liefert was?”
1)
55%
54%
58%
62%
64%
54%
Proportion of salesmen and sales managers (excluding
directory assistance in each country).
ENIRO 25
07-03-08 16.42.22
ENVIRONMENT
Eniro works actively to minimize its environmental impact
Since Eniro’s operations include
production and distribution of
printed directories, a certain
impact on the environment is
inevitable. Eniro therefore works
actively to minimize the environmental effects of its operations,
and Eniro AB was environmentally certified on January 31,
2007.
E N V I R O N M E N TA L G O A L S
– ENIRO SWEDEN
Environmental goals,
Eniro Sweden 2006
Fuel purchases (liters) to
be reduced by 10
percent
Result
Reduced by
26.5%
Waste volume (kg) at
Frösunda office to be
reduced by 5 percent
Reduced
by 7.6%
Energy consumption to
be reduced by 5 percent
Reduced
by 7.5%
Paper consumption (not
including directory
paper) to be reduced by
10 percent
Reduced by
29.8%
25 percent of company
cars replaced each
year to be replaced by
green cars
39% of the
replaced cars
were replaced
by green cars
The same goals apply during 2007 but in relation to
2006 levels.
26 ENIRO
A policy for the environmental work was developed based on an environmental vision that
provides a general summary of the attitudes
that Eniro wishes to pervade the Group.
Environmental policy
“Eniro must comply with and apply laws,
agreements and government requirements
in the environmental area. Our products
must have as little impact as possible on
health and the environment without compromising quality. Eniro strives for continuous
improvement in the environmental area.
Eniro offers channels for buyers and sellers who want to find each other easily. Current channels include directories, directory
assistance, Internet and mobile services.
Communication of environmental issues
must be characterized by openness and
clarity in accordance with the company’s
long-term environmental work.
Eniro must:
• Prioritize environmentally labeled and ecocycle-adapted products in purchasing.
Inform and make demands on supplier
regarding the importance of living up to
Eniro’s environmental requirements.
• Work proactively and actively monitor
trends in the environmental area.
• Evaluate new technology and products
with respect to the environment.
• Promote personal responsibility in employees through training, information and
active participation in environment work.
• Take action to provide relevant environmental labeling of our products.
• Market environmental arguments based
on facts and a holistic approach.”
Environmental certification
During 2006, work was performed to certify
Eniro AB in accordance with the ISO
140001:2004 standard. The external audit
was conducted at the end of December,
and on January 31, 2007, formal certification was granted.
Certifying the Parent Company facilitates
the certification process for additional Eniro
companies in that proven routines and processes have been developed. The goal is to
also certify Eniro Gula Sidorna AB and Eniro
Gula Sidorna Försäljning AB during 2007.
In preparation for certification, all employees have undergone special environmental training designed for each personnel
group. Since 2005, Eniro has also worked
actively in Sweden with interactive environmental training on the intranet.
Significant environmental factors
Through an environmental study, Eniro’s operations were documented and activities
with environmental impact were studied in
preparation for environmental certification.
The most important of the significant environmental factors defined for Eniro are wood
products, paper manufacturing, paper consumption, directories and transports. Further down on the list are such factors as energy consumption and waste products.
Organization of environmental work
A natural consequence of the fact that the
significant environmental factors can be
linked to materials and services that Eniro
purchases, Eniro has consolidated responsibility for purchasing and environment at
the Group level in a joint staff function. The
Purchasing and Environment department is
responsible for ensuring that routines, follow-ups and legislative compliance are handled in such a manner that Eniro lives up to
the requirements of legislation and certification. For every purchasing category, environmental routines have been developed
that must be followed for all purchases and
procurements.
In other respects, environmental work is
performed in the organization and included
as one of the dimensions in the Group’s normal business planning processes. Line managers, project managers and department
heads are charged with taking environmen-
ANNUAL REPORT 2006
07-03-08 16.42.23
Eniro’s products and services contribute to reduce environmental impact by making purchasing and travel more efficient.
tal aspects into consideration within their
areas of responsibility and deciding on measures.
The local companies’ environmental
work is in certain cases strongly linked to
Group activities. All paper for printed directories, for example, is purchased centrally from
environmentally certified suppliers.
A review of environmental work is performed twice a year, and results are reported
to management, which takes decision on
focus areas and possible corrective measures.
S T R I N G E N T E N V I R O N M E N TA L R E Q U I R E M E N T S F O R D I R E C T O R I E S
– ENIRO SWEDEN
• Eniro’s printed directories consist entirely of chlorine-free paper, and the printing process employs
only inks, varnishes and glues that are approved by SIS Environmental Labeling.
• Suppliers of paper and printing services are of world class and certified in accordance with
ISO 14001.
• Eniro Sweden places the highest possible environmental requirements on all distributors employed,
both centrally and locally. This means, for example, that their vehicles use environmentally classed
engines and tires, have exhaust emission control devices and use environmentally classed fuels.
• Some 80 percent of all directories are reclaimed and collected for paper recycling. Eniro Sweden
also handles retrieval of directories that were damaged and would cause littering.
Eniro’s services reduce environmental
impact
Eniro’s products and services also contribute to reduce environmental impact by making purchasing and travel more efficient.
Directories, directory assistance, mobile
and Internet services all make it easier to
find the closest supplier and reduce long
ANNUAL REPORT 2006
• By using 30 percent recycled paper in its directories, Eniro saves approximately 77,000 trees.
transports. By contacting potential supplier
in advance, unnecessary travel can be
avoided, if a product is temporarily out of
stock, for example. With maps and driving
directions, routes can be planned more effectively, and links to traffic cameras (eniro.
se) enable traffic jams to be avoided.
ENIRO 27
07-03-08 16.42.24
Risk management
Eniro’s definition of risk
Risks are a natural part of all business operations and which 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 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.
Purpose of risk management at Eniro
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 and regularly.
2. To support operative management by
providing relevant risk information and
decision-making data to obtain effective
risk management and effective operational control and monitoring to achieve established business objectives.
3. To facilitate for management and the
Board of Directors to systematically identify, handle and monitor risks on various
organizational levels in order to minimize
damage to the business.
Risk categories
Eniro endeavors to efficiently identify, assess
and manage a wide range of risks. The company has categorized the risks it faces as industry- and market-related risks, commercial risks, operative risks, financial risks,
compliance risks relating to laws and regulations, and financial reporting risks.
The risk analysis and risk management
process
Eniro evaluates the above risks through an
annual risk analysis. The risk categories are
28 ENIRO
assessed annually by Group management
and other functions with knowledge of the
various risk category areas.
The risk analysis enables the company to
identity risks in a systematic manner. All
identified risks are evaluated in terms of the
likelihood of their materializing and the consequences this would have for Eniro’s ability
to achieve established business objectives
for the coming three-year period. For each
identified risk, this results in a risk assessment with respect to other operative risks in
relation to its impact on the company’s ability to achieve its business objectives.
For every risk thus evaluated, an assessment is also made as to how the risk should
be monitored, eliminated, reduced or increased. The risk analysis then becomes
input for the annual business plan, in which
risk management activities are developed as
a part of the strategic or operational initiatives adopted.
The company’s risk analysis, including
risk management measures, is reported to
the company’s audit committee and to the
Board of Directors for evaluation and approval. The status of the company’s risk
management activities is continuously monitored by company management and the
Board of Directors.
In 2007, Eniro intends to invest further in
the development and improvement of its risk
management processes.
Industry and market-related risks
In conjunction with the annual risk analysis,
Eniro conducts a systematic analysis of industry and market-related risks, which involves the following areas:
• Industry structure
• Market trends
• Technology trends
• Business-cycle phase
• Customer behavior
• Competitor behavior
Examples of significant industry and marketrelated risks in Eniro’s operations include the
risk of new types of competitor constella-
tions and competitor cooperation, the risk of
changes in customer behavior and user behavior, the risk of rapid technological development or technology shifts, as well as the
risk that competitors will develop new and
improved products and services.
Commercial risks
To identify relevant commercial risks, Eniro
assesses the following:
• Products and services
• Pricing models
• Payment models
• Distribution channels
• Business partners and alliances
• Business models
Examples of significant commercial risks in
Eniro’s operations include risks in the selection of strategic business partners and distribution channels, the speed of the development and launch of new products and services. Examples of other significant risks include the risk of price changes for Internet
traffic, price changes from business partners, and the risk that the company’s products, services and pricing models are not
perceived as competitive.
Operative risks
Eniro carries out a systematic analysis of the
company’s operative risks:
• Organizational structures
• Management models
• Operative systems
• Processes
Examples of significant operative risks in
Eniro’s operations include the risk that business-critical processes, such as marketing,
sales, product development and IT systems,
are not sufficiently effective. Moreover, as in
all other operations, there is a risk that in certain situations the organizational structure
and management model is not optimal with
respect to the company’s business objectives and other factors relating to the business environment.
ANNUAL REPORT 2006
07-03-08 16.42.25
Financial risks
Eniro carries out a systematic analysis of its
financial risks, which involves assessment of
the following:
• Financing
• Currencies
• Interest rates
• Liquidity
The Group’s finance policy as established by
the Board of Directors is the foundation for
the financial operations, delegation of responsibility and financial risk management.
The focus for Eniro’s risk management is to
eliminate financial risks with consideration
taken to costs, liquidity and financial position. In addition to the annual risk analysis, financial risks are continuously assessed and
monitored.
For a detailed description of financial risk
management, see to the special section on
page 58.
ANNUAL REPORT 2006
Compliance risks
Eniro carries out a systematic analysis of the
company’s compliance risks:
• Laws
• Regulations
• Internal policies
Changed laws and 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 – for example, through the activities of the internal audit, which includes
monitoring of compliance risks.
Financial reporting risks
Correct and objective 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 of its financial reporting, in
accordance with the intentions of the Swedish Code of Corporate Governance.
The risk of essential errors in the company’s financial reporting is analyzed from the
point of view of the consolidated earnings
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, please refer to the section
on internal control relating to financial reporting in the Corporate Governance Report.
ENIRO 29
07-03-08 16.42.26
THE SHARE
High liquidity in the Eniro share
Trading
The Eniro share (ENRO) was listed on the
Stockholm Stock Exchange in 2000. During
2006, total turnover of the Eniro share
amounted to 474 million shares (349), corresponding to a value of about SEK 41.1 billion (29.2). Average daily trading corresponded to a value of SEK 163.7 M (117.4).
The turnover rate, meaning the share’s liquidity, was 2.60 (2.22), compared with a
rate of 1.48 (1.23) for the exchange as a
whole. A round lot is 100 shares.
16.5 billion at year-end. The share price was
SEK 100.00 at the beginning of 2006 and
SEK 90.50 at the end of 2006. The OMXS30
index increased by 19.1 percent during the
year, while the OMXSPI index increased by
23.4 percent. The highest price paid during
2006 was SEK 103.50 on January 9 and the
lowest was SEK 71.25 on July 18.
Index
At year-end, the Eniro share was included
with a weighting of 0.39 percent in the
Stockholm Stock Exchange’s OMXSPI
index. On the OMX Nordic List, Eniro belongs to the segment Large Cap, Consumer
Discretionary.
Share price trend
Eniro’s market capitalization was SEK 18.2
billion at the beginning of 2006 and SEK
Per-share data
SEK unless otherwise specified
Share price on December 31
Highest price during the year
Lowest price during the year
Net income for the year
Cash Earnings
Equity
Dividend
Dividend as percentage of net income
Direct return, %
P/E ratio on Dec. 31
Number of shareholders on Dec. 31
2006
90.50
103.50
71.25
5.82
8.13
28.27
4.402)
76
4.86
15.5
5,257
2005
100
100
67.50
5.84
6.88
25.59
2.20
43
2.20
17.1
4,961
2004
68
76.50
55
4.62
5.20
12.00
2.20
45
3.24
14.7
4,954
20031)
69
73
47.30
1.14
5.30
14.14
1.80
152
2.61
60.5
5,843
20021)
55
89
40
–4.34
2.86
21.07
1.40
n/a
2.54
n/a
6,237
According to previous Swedish accounting principles, i.e. not IFRS
Board of Directors’ proposal
See page 73 for definitions
1)
2)
Price trend for the Eniro share, Oct. 2000–Dec. 2006
130
120
110
100
90
Ownership
On December 31, 2006, the number of
shareholders was 5,257 (4,961). According
to the information known to the company,
the holdings of the ten largest owners are
equal to 41.7 percent (29.6) of the share
capital, while foreign owners hold 78 percent (80). Swedish ownership was divided,
with 35.7 percent (40.7), held by institutions,
46.9 (44.7) by mutual funds and with 17.4
percent (14.6) by private individuals.
Transfers to shareholders and changes
in share capital
On January 1, 2006, the number of Eniro
shares was 182,102,392, of which Eniro held
a total of 1,000,000 treasury shares. The
treasury shares are intended for use in the
Share-Savings Program encompassing all
employees in the Eniro Group. During the
year, 140 shares were used. At year-end, the
share capital was unchanged, while the
number of treasury shares was 999,860. The
average holding of treasury shares during
the year was 999,943.
As a result of the acquisition of Findexa
in December 2005, a departure was made
with respect to the dividend from 2005 earnings from Eniro’s dividend policy of 75 percent of net income for the year. The Eniro
Annual General Meeting on April 5, 2006 approved a dividend of SEK 2.20 per share
(2.20), corresponding to 43 percent of net
income in 2005 based on the number of
shares at year-end after buy-backs. The
total amount paid to shareholders amounted to SEK 398 M.
80
120,000
70
60
90,000
50
60,000
40
30,000
30
00 01
02
Eniro share
03
04
OMX Stockholm_PI
05
06
(c) FINDATA
Dividend proposal
After adjustments in the lending agreement
during 2006, Eniro gained the flexibility to
return to the previously established dividend
policy. For 2006, the Board of Directors proposes a dividend of SEK 4.40 (2.20) per
share, corresponding to 76 percent of net income for the year. The total amount of the
proposed dividend is SEK 797 M (398).
OMX 30 Stockholm
Shares traded (000s), including after market
30 ENIRO
ANNUAL REPORT 2006
07-03-08 16.42.27
THE SHARE
Analysts covering Eniro
Company
ABG Sundal Collier
ABN AMRO
Carnegie
Cheuvreux
Citigroup Smith Barney
Den Danske Bank
Analyst
Patrick Clase
Paul Gooden
Daniel Ek
Niklas Kristoffersson
Thomas Singlehurst
Henrik Schultz
Company
Deutsche Bank
Exane BNP Paribas
Goldman Sachs
Handelsbanken Securities
JP Morgan
Kaupthing Bank
Analyst
Stefan Lycke
Sami Kassab
Veronika Pechlaner
Rasmus Engberg
Craig Watson
Henrik Fröjd
Company
Lehman Brothers
Morgan Stanley
SEB Enskilda
Swedbank
UBS Warburg
Öhman
Analyst
Colin Tennant
Edward Hill-Wood
Nicklas Fhärm
Patrik Nygård
Albin Sandberg
Patrik Egnell
Contact information for analysts is available on eniro.com
Trend of the share capital
Transfer of capital to shareholders
Year
March 2000
September 2000
September 2000
February 2001
June 2001
November 2001
August 2003
October 2004
November 2005
Transaction
Eniro established
100:1 split
New issue1)
New issue2)
New issue3)
New issue4)
Redemption5)
Redemption6)
New issue7)
Number
of shares
1,000
1,000,000
150,000,000
155,725,287
163,922,687
176,180,952
167,397,557
158,151,875
182,102,392
Par value Share capital SEK
100
100,000
1
100,000
1
150,000,000
1
155,725,287
1
163,922,687
1
176,180,952
1
167,397,557
1
158,151,875
1
182,102,392
Directed placement to Tello Cable Holding BV. Subscription price SEK 1.21 per share.
Directed placement to SBC Ameritech. Subscription price SEK 93.42 per share.
Directed placement to Telia AB. Subscription price SEK 116.40 per share.
4) Directed placement to Elisa Communications OY. Subscription price SEK 76.15 per share.
5) Redemption of every 20th share at SEK 80 per share.
6) Redemption of every 18th share at SEK 86 per share.
7) Targeted new issue to shareholders in Findexa Limited as partial payment for acquisition of Findexa Limited.
SEK M
Dividend
Share
redemptions
2006
398
2005
345
2004
301
2003
247
2002
123
n/a
n/a
795
703
n/a
n/a
398
193
100
538 1 196
n/a
950
n/a
123
Share buybacks
Total
The Board of Directors’ proposed dividend for 2006 totals
SEK 797 M to be paid in 2007.
1)
2)
3)
Distribution of ownership by country at
December 31, 2006
Sweden 22%
France 3%
Others 8%
Shareholder structure at December 31, 2006
Shareholding
1–1,000
1,001–10,000
10,001–50,000
50,001–500,000
500,001–1,000,000
1,000,001–5,000,000
5,000,001–10,000,000
10,000,001–50,000,000
Total
No. of
shareholders
3,870
910
239
168
32
32
3
3
5,257
%
73.6
17.3
4.5
3.2
0.6
0.6
<0.1
<0.1
100.0
No. of shares
1,244,980
2,955,655
5,790,148
25,275,269
22,221,888
69,303,938
22,991,700
32,318,814
182,102,392
%
0.7
1.6
3.2
13.9
12.2
38.1
12.6
17.7
100.0
UK 18%
Luxemburg 4%
Italy 7%
USA 38%
Source: SIS Ägarservice
Largest shareholders at December 31, 2006
Shareholder
Fidelity funds
Hermes Focus Asset Management
Kairos Investment Management
Parvus Asset Management
Richmond Capital
SHB/SPP funds
SEB funds
Swedbank Robur funds
Others
Total
No. of shares
14,968,634
13,659,991
12,346,823
8,521,642
8,149,000
5,707,786
3,385,897
3,336,258
112,026,361
182,102,392
No. of shares and
voting rights %
8.2
7.5
6.8
4.7
4.5
3.1
1.9
1.8
61.5
100.0
ANNUAL REPORT 2006
ENIRO 31
07-03-09 14.42.24
Corporate Governance Report 2006
This Corporate Governance Report for 2006 has
not been audited by the Company´s external
auditors. The report is not a part of the formal
financial statements.
As described below, the ownership structure of Eniro is characterised by its large
amount of foreign investors. These investors
frequently have questions regarding the
Swedish corporate governance structure. To
facilitate this majority of shareholders, and in
order to describe and explain the underlying
regulation, as well as to describe its effects
on Eniro’s daily operations, Eniro has this
year chosen to expand this report in relation
to what otherwise would have been deemed
necessary.
Eniro AB (publ) (the Company) is a Swedish
public limited liability company. The Eniro
group of companies (Eniro or the Group) is
governed on the basis of the Articles of
Association of Eniro AB, the Swedish Companies Act, the listing agreement with Stockholm Stock Exchange, the Swedish Code of
Corporate Governance (including the directions to the Code issued by the Swedish
Corporate Governance Board) and other
relevant Swedish and foreign laws and regulations.
The Swedish Code of Corporate Governance (the Code) is included in the listing requirements of the Stockholm Stock Exchange
as of July 1, 2005, and has been applied by
Eniro as from that date. Eniro had also before that date in practise applied rules corresponding to most of the provisions of the
Code, and has since July 1, 2005 implemented the remainder of the provisions.
Since the listing of Eniro at the Stockholm Stock Exchange in the autumn of
2000, Eniro has for its internal governance
developed and applied the Eniro Code of
Corporate Governance (ECCG). In connection with the full coming into force of the
Code in July 2005, the ECCG was reviewed
in its entirety in order to secure the conformity with the provisions in the Code. Despite the fact that the ECCG was created
already in the year 2000, there were only
minor adjustments needed.
Ownership
Shareholder structure
According to the share register held by VPC
AB (the Swedish Central Securities Depository & Clearing Organization), at year-end
2006, Eniro had a total of 5,257 shareholders. The shares held by the ten largest
owners corresponded to approximately 41.7
Corporate governance structure
percent of the total share capital and voting
rights.
Approximately 22 percent of the share
capital was owned by Swedish institutions,
funds and private individuals, and approximately 78 percent by corresponding foreign
investors.
Major shareholders1)
Share capital and
voting rights %
8.2
Fidelity Funds
Hermes Focus Asset
Management
7.5
Kairos Investment
Management
Parvus Asset Management
Richmond Capital
SHB/SPP Funds
SEB Funds
Swedbank Robur Funds
Total
6.8
4.7
4.5
3.1
1.9
1.8
38.5
Shares held by Eniro
Board of Directors and Group
management collectively
1)
0.55
0.09
Source: SIS Ägarservice as of December 31, 2006.
Major external regulations affecting
the governance of Eniro
• Swedish Companies Act
External Audit
Shareholders meeting
Nomination procedure
• Listing Agreement with Stockholm Stock
Audit Committe
• Swedish Code of Corporate Governance
Exchange
Internal Audit
Board of Directors
Compensation Committe
CEO and Group
Management
Business Unit
and Subsidiaries
(incl. directions)
Internal code and policies
• Rules of Procedure for the Board of Directors,
including instructions for the President and CEO
• Eniro Code of Corporate Governance
• Eniro Code of Ethics
• Process for internal control and management
32 ENIRO
05_Corp_Governance__cmyk.indd Avs1:32
ANNUAL REPORT 2006
07-03-08 16.48.07
C O R P O R AT E G O V E R N A N C E R E P O R T 2 0 0 6
General meetings of shareholders
The decision making rights of shareholders
in Eniro are exercised at General Meetings
of Shareholders.
The Annual General Meeting (AGM) must
be held within six months of the end of the
accounting year. The notice convening the
meeting must be announced at least 4
weeks, and not earlier than 6 weeks, before
the meeting. The meeting decides on dividends, adoption of the annual report, election of members of the Board and auditors
(if applicable), remuneration of the members
of the Board and auditors, the policy and
other terms of employment for senior management and on other important matters.
An Extraordinary General Meeting (EGM)
can be held at the discretion of the Board of
Directors or, if requested, by the auditors or
by shareholders owning at least 10 percent
of the shares.
Participation in a General Meeting (AGM
or EGM), in Eniro requires the shareholder’s
personal attendance or him being represented by an agent. Shareholders represented
by an agent must issue a power of attorney
for the agent. The power of attorney should
be sent to Eniro in due time before the General Meeting, and if the power of attorney is
issued by a legal entity, a certified copy of the
registration certificate must be enclosed.
The shareholder must be registered in
the share register as of a prescribed record
date prior to the meeting and must provide
notice of participation in due course. The
shareholder can send his notice to participate in the meeting to Eniro either by ordinary mail, fax or by e-mail. Shareholders whose
shares are registered in the name of a nominee must arrange for those shares to be
temporarily registered in their own names on
the record date in order to participate at the
meeting
Decisions at the meeting are normally
made by simple majority. However, for some
matters the Swedish Companies Act and
the Articles of Association stipulate that a
proposal must be approved by a higher pro-
ANNUAL REPORT 2006
portion of the shares and votes represented
at the meeting.
Individual shareholders who wish to have
a specific issue included in the agenda for a
shareholders meeting can request the Board
to do so in writing in good time before the
meeting. The address of the Board is posted
on the Company web site, www.eniro.com.
The AGM in April 2006 was attended by
shareholders representing approximately
23 percent of the share capital and voting
rights in Eniro. The minutes, in Swedish as
well as translated into English, of the AGM
are available on the Company web site,
www.eniro.com.
In order to facilitate for Eniro’s foreign
shareholders to participate in the General
Meeting, simultaneous interpretation is available at the meeting. Eniro contiuously also
evaluates if a technique for distant participation should be introduced, based on the
ownership structure from time to time, as
well as the technical development, both from
a financial and safety point of view.
Nomination procedure for election of the
Board of Directors and auditors
The AGM in April 2006 decided that the
establishment of a committee for the nomination of the Board of Directors and, when
applicable, the auditors, should take place
according to the procedure described
below. The decision in 2006 was to a large
extent based on the same base as laid down
by the AGM in 2005.
The Chairman of the Board of Directors
shall contact the four largest shareholders in
terms of voting rights, who may each
appoint one representative to serve as a
member of the Nomination Committee along
with the Chairman of the Board of Directors
up until the end of the next General Meeting
or, if necessary, up until the time a new
Nomination Committee has been appointed.
If any of the above-mentioned shareholders
choose not to exercise its right to appoint a
representative, that right passes to the shareholder who, after the above-mentioned
shareholders, owns the next largest number
of shares. If a member of the Nomination
Committee resigns from the position prior to
the conclusion of its work, the same shareholder who appointed the resigning member
shall, if considered to be required, appoint a
successor, or if that shareholder no longer,
in terms of voting rights, is one of the four
largest shareholders, by the new shareholder in that group. The Nomination Committee will amongst themselves appoint a
Chairman. The Chairman of the Board of
Directors cannot be elected Chairman of the
Nomination Committee.
The composition of the Committee shall
be made public through a separate press
release as soon as it has been appointed and
at the latest six months prior to the AGM.
This information shall be made available on
the Company website where there shall also
be information as to how shareholders can
submit proposals to the Committee.
In case the ownership structure should
change substantially thereafter, the composition of the Committee shall change accordingly.
The task of the Nomination Committee
shall be to present proposals prior to the
General Meeting, as regards to the number
of members of the Board of Directors to be
elected by the General Meeting, the fees for
the Board of Directors, possible fees for
work in the committees of the Board of
Directors, the composition of the Board of
Directors, the Chairman of the Board of
Directors, chairman of the General Meeting
and, when applicable, for the election of
auditors and the fees for the auditors.
The Nomination Committee’s proposal
shall be included in the notice for the General Meeting and published on the Company
website.
The Nomination Committee
for the AGM 2007
According to the described procedure, the
Nomination Committee for the AGM 2007
represents the four largest shareholders in
ENIRO 33
07-03-08 16.48.07
terms of voting rights. Together they represent approximately 23 percent of the voting
rights. The names of the committee members and the shareholders they represented
were published in a press release and on the
Eniro website, on September 22, 2006.
Eniro´s Nomination Committee for the 2007
AGM consists of Wouter Rosingh, Hermes
Focus Asset Management, Luca Bechis,
Richmond Capital, Niklas Antman, Kairos
Investment Management, Mads Eg Gensmann, Parvus Asset Management, and Lars
Berg, Chairman of the Eniro Board. At the
same time it was also possible for the shareholders to submit proposals to the Nomination Committee on the website. As per December 31, 2006, no proposals have been made.
As a part of what has been laid down by
the AGM as the task for the Nomination
Committee according to above, the Committee has during 2006 primarily dealt with the
following matters. Since the Committee to a
great extent is new in relation to last year, the
Committee has interviewed each member of
the Board individually in order to lay a ground
for an evaluation of appropriate competence
and necessary experience in the Board as
well as the appropriate number of Board
members. Further, the remuneration of the
members of the Board has been discussed,
particularly from the perspective of the inter-
national composition of the Board, and possible adjustments to international market
practice.
The Nomination Committee’s proposals
and a report on how the Committee has conducted its work will be announced in connection with the notice to the AGM on March
30, 2007.
The Board of Directors
Independence
Besides the President and CEO, the Board
as a whole was by the Nomination Committee considered as being in compliance with
the requirements for independence stipulated by the Stockholm Stock Exchange and
the Code. A more detailed presentation of
each of the members of the Board of Directors is found on page 41 in the Annual Report,
and on the Eniro website.
The Nomination Committee’s assessment of whether each of the Board members
proposed to be elected at the AGM 2007 are
in compliance with these independence
requirements will be published together with
the Nomination Committee’s proposal to the
AGM.
The principal task and responsibility
The principal task of the Board is to manage
Eniro’s affairs in such a way as to satisfy the
owners that their interests in a good longterm return on capital are being met in the
best possible way. According to the Swedish
Companies Act the Board is overall liable for
the organisation of the company and the
management of the affairs of the company.
The Board is further responsible for continuous assessment of the company’s and the
group’s financial position. Besides the rules
in the Swedish Companies Act, the Board’s
work in Eniro is governed by the Articles of
Association, the Code, the Rules and Procedure for the Board and the ECCG.
Working procedure and meetings
The Rules of Procedure for the Board shall
be reviewed and adopted again annually,
normally at the constituent meeting.
In addition to the constituent meeting, the
Board should normally hold five ordinary
meetings per calendar year. Four Board
meetings are coordinated with the dates of
the presentation of the external financial
reports, while one is held in December and
involves a review of the business plan and
budget. In addition, each year the Board
attends a two-day meeting on strategic
issues. Audit-related matters are addressed
as a special item during a Board meeting
once a year and in conjunction therewith the
Board meet with the company auditor wit-
Composition of the Board and remuneration (as per AGM April 5, 2006)
Remuneration
(KSEK)2)
Holding of
shares in Eniro3)
x
825
50,000
x
330+50
2,500
x
330+50
12,834
330
0
x
330+100
10,000
The Board of Directors1)
Born
Nationality
Member since
Audit Com.
Comp. Com.
Lars Berg (Chairman)
1947
Swedish
2000
x
Per Bystedt
1965
Swedish
2000
Barbara Donoghue
1951
British
2003
Gunilla Fransson
1960
Swedish
2006
Urban Jansson
1945
Swedish
2003
Luca Majocchi
1959
Italian
2006
330
0
Tom Vidar Rygh
1958
Norwegian
2006
330
2,142
Tomas Franzén
1962
Swedish
2005
–
36,095
Bengt Sandin4)
1952
Swedish
2001
11
293
Daniel Hultenius4)
1974
Swedish
2005
12
0
Ola Leander4)
1967
Swedish
2006
9
269
With the exception of the President and CEO, none of the members of the Board are Group executives.
The Board of Directors are not participating in any share or share-price related incentive scheme aimed at company management, and no such programme is intended for the Board alone.
Own holding of shares and other financial instruments in the company or those of related physical persons or legal entities, as of December 31, 2006.
4) Employee representatives.
1)
2)
3)
34 ENIRO
ANNUAL REPORT 2006
07-03-08 16.48.07
hout the President or any other member of
management being present.
During 2006 the Board has been working
in accordance with the above-described
working procedures. The Group’s auditors
participated in the Board meeting on February 13, 2006, where the Year-end Report for
2005 was approved, and in the meeting on
October 25, 2006, in connection with the
Board’s review of the third-quarter report,
2006.
Extraordinary meetings may be held in
order to deal with matters that cannot suitably be dealt with at ordinary meetings. Such
meetings can be held by telephone, by
videoconference or per capsulam.
During 2006 the Board held in total eleven
meetings, of which two were per capsulam,
and two held by telephone. Besides the
long-term strategic questions described
above, the work in the Board during 2006
was to a large extent devoted to questions
concerning important issues related to
financing, capital structure, investments,
acquisitions and divestments. Further, the
Board was monitoring and dealing with follow-up and control of Eniro’s operations,
including a structured process for the evaluation of the operative management. As overall responsible for these questions, the
Board also devoted a substantial amount of
time to the establishment of an effective system of internal control and risk management, as well as general audit related matters, including the Company’s compliance
with laws and ethical conduct. The Board
also performed an annual evaluation of the
President and CEO. At such occasion no
person from senior management was present.
The Board shall be assisted by a Secretary of the Board, who is not a member of
the Board. The Chief Legal Officer of the
Group, Mikael Engqvist, was the Secretary
at all Board meetings during 2006.
The Board’s work in 2006
During the years 2004 and 2005, the work in
the Board was to a great extent focused on
matters related to organisational structure,
including management, cost cutting activities, as well as the appropriate capital structure for the Group. During 2006, a substantial part of the work in the Board has been
concentrated to long-term strategies, the
development of the printed directory and a
growth of the on-line related services. For
that purpose, the Board has held different
strategic seminaries.
Committees
Within its area of responsibility, the Board
may among its members appoint committees or members with special tasks. The
committees shall prepare the matters and
present proposals, reports etc. for the
Board’s decision or handling. The Board
may also in separate cases delegate to the
committees the power of decision in accordance with directives and guidelines decided by the Board.
The Board has established a Compensation Committee and an Audit Committee.
Compensation Committee
The Board is responsible for over seeing that
the Company has a formal process, which is
transparent for all Board members, for establishing the Company’s policy for remuneration and other terms of employment for senior management and for deciding the
President’s remuneration and other terms of
employment.
The Compensation Committee shall be
responsible for the preparation of the
Board’s proposal to the AGM for Company
policy on remuneration and other terms of
employment for senior management. The
proposal of the Committee shall be submitted
to the Board in its entirety and shall be for
the Board to decide upon. The proposal pre-
Attendance at Board and Committee meetings during 2006
The Board of Directors
Board
Audit Com.
Lars Berg
11
6
Per Bystedt
11
Barbara Donoghue
11
Gunilla Fransson1)
8
Urban Jansson
10
Luca Majocchi1)
7
Tom Vidar Rygh1)
11
Erik Engström2)
3
Bengt Sandin
4
2
6
6
8
Tomas Franzén
Birgitta Klasén2)
Comp. Com.
3
2
11
Daniel Hultenius
9
Ola Leander1)
8
As per April 5, 2006.
2) Up to April 5, 2006.
1)
ANNUAL REPORT 2006
ENIRO 35
07-03-08 16.48.07
pared by the Committee shall be in line with
good market practice for listed companies.
The Board has delegated to the Compensation Committee, on behalf of the
Board, to decide upon individual salary and
other compensation and pension benefits of
senior group managers, excluding the President and CEO.
The Compensation Committee consists
of two members of the Board, appointed by
the Board. The constituent Board meeting in
April 2006 appointed Lars Berg (Chairman)
and Per Bystedt as members of the Compensation Committee.
During 2006 the Compensation Committee worked according to what is described
above and held four meetings. The work in
the Committee during 2006 was further to a
large extent devoted to questions concerning variable compensation, the relationship
between fixed and variable salary, criteria for
assessment of variable salary, long-term
incentive, pension terms and other benefits.
Audit Committee
The Board is responsible, inter alia, for the
internal control of the Company and the
Group, the overriding purpose of which is to
protect the investment of the owners and
the assets of the Company and the Group.
The overall task for the Audit Committee
is to assist the Board in overseeing the
accounting and financial reporting processes, including the effectiveness of disclosure controls and the adequacy and effectiveness of internal controls of financial
reporting. When conducting its overall task,
the Committee shall, according to what has
been laid down in the Rules of Procedure for
the Board, inter alia, be responsible for the
preparation of the Board’s work with ensuring the quality of the financial reporting of
the Company and the Group, on a current
basis meet with the auditors of the Company and inform itself about the focus and
scope of the audit and discuss the view on
the risks in the Company, establish guidelines for which services other than audit services that the Company and the Group may
purchase from the auditors of the Company,
evaluate the audit work and inform the
Nomination Committee of the Company of
the result of the evaluation and assist the
Nomination Committee in its preparation of
proposal of auditors and remuneration of the
audit work.
The Audit Committee consists of three
members of the Board, the majority of which
shall be independent in relation to the Company and its management, and at least one
of which shall be independent in relation to
the larger owners of the Company. A Board
member who is also a member of the management of the Company may not be part of
the Audit Committee. The constituent Board
meeting in April 2006 appointed Urban
Jansson (Chairman), Lars Berg and Barbara
Donoghue as members of the Audit Committee. All the members appointed 2006 fulfilled the criteria above.
In order to support the Audit Committee
in its work, there is an Internal Audit Function, with the role and responsibilities outlined in a separate job-description decided
by the Board, which reports directly to the
Audit Committee.
The Audit Committee meets at least three
times per year. Special meetings may be
convened as required.
During 2006 the Audit Committee held
six meetings. The work in the Committee
during 2006 was to a large extent devoted to
questions concerning internal control over
financial reporting and risk assessment,
including risk handling.
The Audit Committee shall be assisted
by a secretary, who ought to be the Secre-
CEO
Tomas Franzén1)
Denmark
Henrik Dyring
Norway
Wenche Holen
Finland
Ilkka Wäck
Poland
Roger Asplund
118 118
Barbro Sjölander
Sweden
Tomas Franzén
Din Del
Peter Kusendal
WLW
Andrew Pylyp
Peter Schulze
HR/Purchase
Ingrid Engström
Finance
Joachim Jaginder
IR & Communication
Boel Sundvall
IT
Mattias Wedar
Legal
Mikael Engqvist
Strategy and M&A
Mats Eklund
Product & Marketing
Cecilia Geijer
1)
Special projects
Martin Carlesund
Further information concerning the President and CEO is found on page 43 in the Annual Report.
36 ENIRO
ANNUAL REPORT 2006
07-03-08 16.48.07
tary of the Board. The Chief Legal Officer of
the Group, Mikael Engqvist, was the Secretary at all Audit Committee meetings during
2006.
Evaluation of the Board’s activities
The Board annually evaluates its work, including the work in the Committees, with regard
to working procedures and the working climate, as well as the alignment of the Board’s
work.
Group management
Organisation
The Group’s operations are organized in
eight business units and eight Group staff
units.
The President and CEO is responsible for
the ongoing management of the Group in
accordance with the Board’s guidelines and
instructions.
Group management has biweekly meetings in order to review the previous periods
result, business activities, market development, the progress in strategic projects,
coordination of common Group activities
and strategic issues.
Remuneration of the CEO and Group
management
The remuneration of the President and CEO
and the Group management comprises
fixed salary, variable salary based on annual
performance targets, long-term incentives,
and benefits such as pension and insurance.
Variable salary is paid according to performance. Revenue and EBITDA are the
most important financial indicators. For
2006, the non-financial targets focused on
the integration of Findexa in Norway, the
development of the Finnish business, the
stabilizing of the revenue related to the printed services, the monetizing of the on-line
related services and general cost cutting
activities.
As per July 1, 2006, most of the regulations in the Code regarding the company’s
policy on remuneration and other terms of
employment for senior management was
ANNUAL REPORT 2006
substituted by corresponding regulations in
the Swedish Companies Act. The regulation
in the Code regarding what should be included in the Corporate Governance Report,
and the Board’s work with the development
of policies for remuneration of senior management, is however still applicable.
The Board’s preparation in 2006 of matters of remuneration for senior management
is described above (see primarily Compensation Committee). The policy on remuneration and other terms of employment for senior management, adopted by the AGM in
April 2006, is further described in the Annual
Report, page 62-63.
The policy on remuneration and other
terms of employment for senior management, which will be proposed for the AGM
2007 will be presented in connection with
the notice for the AGM.
The AGM in April 2006 also approved an
incentive program aimed for the CEO, the
Group management and some key personnel, a total of approximately 20 persons.
Further details, including Eniro’s costs for
the incentive program, are presented on
page 63 in the Annual Report.
External auditors
By law, the mandate period for auditors is
four years. At the 2004 AGM, PriceWaterhouseCoopers AB (PWC), with the Authorized Public Accountant Peter Bladh as auditor in charge was appointed for a four year
period.
The cost of audit, audit related services
and consulting services during 2004–2006
are shown in the table below.
(SEK M)
Year
Audit
Audit related
services
Consulting
services
2004
4.1
0
1.9
2005
5.2
3.6
2.2
2006
6.0
0
2.3
Most of PWC’s consulting services in 2006
were related to continuing work for Eniro AB
(publ) regarding acquisitions and IFRS.
During 2005, most of the consulting servi-
ces provided by PWC were for Eniro AB
(publ) and included the Group’s capital
structure and work in conjunction with the
acquisition of Findexa.
In addition to auditing Eniro, Peter Bladh
is the auditor of Gambro, Paynova, Phadia
and Biovitrum. Peter Bladh also conducts
assessments on behalf of the Stockholm
Stock Exchange’s Company Committee in
relation to the market maturity of candidates
seeking public listing.
The Board’s Report on Internal Control
over Financial Reporting for the financial
year 2006
Introduction
This report has been prepared in accordance with the Code and is limited to a description of how the internal control over financial
reporting is organized.
The report is not part of the formal 2006
financial statements and has not been reviewed by the Company’s auditors.
Framework for internal control
In 2006 Eniro implemented the COSO
framework which defines internal control
over financial reporting divided in five different components: Control Environment, Risk
Assessment, Control Activities, Information
and Communication and Monitoring.
Eniro uses a Top-Down Risk Based
Approach with a starting point in the consolidated Financial Statements and related
Footnotes.
Control Environment
The Board of Directors defines Eniro’s Control Environment through a number of policies, guidelines and frameworks related to
financial reporting. These include for instance a Financial Manual with instructions for
accounting and reporting, financial policy,
directives regarding decision levels in various types of issues, and instructions regarding general decision levels and regarding
authorization, directives regarding insider
issues, and information and ethics policies.
The purpose of these policies is to form the
ENIRO 37
07-03-08 16.48.07
basis for effective internal control. These
policies are followed-up on and updated
continuously and communicated to all
employees involved in financial reporting.
The Board has furthermore ensured that
the organization structure is logical and
transparent with clear roles, responsibilities
and processes to facilitate an efficient management of key business risks including
financial reporting risks.
The procedures of the Audit Committee
include evaluation and discussions regarding significant accounting matters and
financial reporting issues. The Company’s
management has the operational responsibility for the internal controls. Management
has stipulated clear roles and responsibilities for personnel involved in financial
reporting both on group level as well as on
subsidiary level.
Risk Assessment
During 2006 the Company has performed
an in-depth risk assessment on group level
of the risk for material errors in various
Balance Sheets and Income Statement
accounts and related footnotes with considerations of both quantitative and qualitative risk parameters. In the Company’s business these risks are mainly related to revenue recognition, accounting of production
and sales costs, valuation of goodwill and
other immaterial assets, valuation of work in
progress, valuation of accounts receivables,
provisions and taxes. This risk assessment
will be an annually recurring process which
the Board will evaluate and approve.
This risk assessment has thereafter been
performed at subsidiary level. The risk for
material errors based on materiality in various Balance Sheet and Income Statement
accounts have been assessed as well as the
risk for errors due to the complexity in the
accounting and related GAAP for various
accounts. Also the risk based on the complexity in the processes that significantly
impacts various accounts has been assessed. Furthermore, the risk for errors in vari-
38 ENIRO
ous items due to inherent risks for fraud and
manipulation of financial information have
been assessed.
The Company has furthermore previously established a number of risk management
processes that have a substantial impact on
the Company’s ability to ensure correct
financial reporting. These procedures comprise mainly the following areas:
• Risk assessments with the purpose to
identify events on the market or within the
business that can impact the financial
reporting in a timely manner.
• Processes to identify changes in accounting rules and recommendations with the
purpose to ensure that these changes are
properly assessed and implemented as
appropriate in compliance with GAAP in
the Company’s financial reporting.
Control Activities
Control structures are designed to manage
the risks that the Board evaluates as significant for internal control over financial
reporting.
Based on the initial risk assessment, a
number of significant accounts were identified where inventory, documentation and
assessment of the Company’s controls to
mitigate the risk for material errors is currently in progress. Initially the focus has
been placed on documentation and analysis
of Company Level Controls within the group
in accordance with the COSO framework
with special emphasis on the Control Environment. Furthermore documentation and
analysis of controls at the process, transaction
and application level has been performed
for the Swedish entities during 2006. For
other significant foreign subsidiaries within
the group and of IT, General Controls for
systems supporting significant processes
that impacts financial reporting the work
started in 2006 and will be finalized during
2007.
Examples of control activities are clear
decision-making processes for significant
decisions (e.g. investments, agreements,
approval of accounting transactions, etc),
performance analysis and other analytical
follow-up of financial reporting information,
reconciliations and application controls of
financial reporting information in our for the
financial reporting significant IT-systems.
One of the results of the ongoing internal
control project will be appropriately designed and clearly documented control activities. Furthermore all controls will be linked to
financial statement assertions in a clear and
structured way for significant accounts.
Information and Communication
The Company’s Policies & Procedures,
Directives and Guidelines and are regularly
updated with regard to financial reporting,
and are communicated through relevant
communication channels, such as intranet
and internal meetings. Furthermore there
are written instructions, internal information
meetings and workshops where the internal
controls framework and methodology for
internal control work are clarified. Internal
reporting regarding the operating effectiveness of internal controls will be implemented
throughout the group and be performed
continuously from 2007.
An Information Policy states the guidelines for how the communication with external parties should be executed. The purpose of the policy is to ensure that all information obligations are fulfilled.
The Audit Committee has thus during
2006 supervised the systems for risk management and internal control, and has continuously received reports from company
management on the progression of the initiated internal control project.
The Board approves all interim and annual reports at regular meetings before publication.
Monitoring
The Company has established an Internal
Audit function with the main responsibility to
monitor the effectiveness of the Company’s
risk management and internal control pro-
ANNUAL REPORT 2006
07-03-08 16.48.08
cesses. One of the significant tasks for the
Internal Audit function consists of separate
reviews of how well certain policies and guidelines are complied with, and evaluation of
the effectiveness of significant control activities linked to risks for material errors in the
financial reporting. Internal Audit plans the
work in co-operation with the Audit Committee who approves the internal audit plan,
and the Internal Audit function reports continuously the result of its work directly to the
Audit Committee and to Management.
The monitoring activities, which will be
performed with various depth and scope for
different entities within the group, will prima-
ANNUAL REPORT 2006
rily be focused on the design and operating
effectiveness of controls within areas with
higher risk for material errors in the financial
reporting. This follow-up is planned to be
executed during 2007 through a combination of Self-Assessments and testing by the
Internal Audit function. The result from this
follow-up will be reported from each subsidiary to the Corporate CFO, who is responsible for forwarding the result and any
necessary actions taken to the Company’s
Audit Committee. The assessments will constitute a base for the Board’s evaluation of
the efficiency of internal controls over financial reporting. The Board has defined the
guidelines for the above work comprising
roles, responsibilities and processes significant in order to maintain a well functioning
internal control system.
The Audit Committee has taken part of
and evaluated the procedures for accounting and financial reporting, and followed-up
on and evaluated the work of the external
auditors, qualifications and independence.
The Audit Committee also evaluates the risk
reporting made to the Board from management and takes appropriate actions based
on this in consultation with the Company’s
management.
ENIRO 39
07-03-08 16.48.08
1
6
SIDRUBRIK
Kapitelrubrik
11
9
7
5
4
8
4
2
10
3
40 ENIRO
ANNUAL REPORT 2006
07-03-08 16.48.09
Board of Directors and Auditors
1 LARS BERG
4 GUNILLA FRANSSON
7 TOM VIDAR RYGH
11 O L A L E A N D E R
Chairman of the Board since 2003.
Member of the Board since 2000. Born
in 1947.
M.Sc. Econ., Gothenburg School of
Economics.
Former positions: Member of
Mannesmann’s executive management with responsibility for the Telecom Division. President and CEO,
Telia. Formerly held various executive
positions within the Ericsson Group.
Other significant Board assignments:
Viamare, Ratos och Net Insight.
Shareholding in Eniro1): 50,000.
in 1960.
PhD in Nuclear Science, at Royal Institute of Technology in Stockholm.
Main employment: VP Ericsson Enterprise, Head of Portfolio and Development.
Former positions: Various executive
positions within the Ericsson Group,
most recent position: Area Manager of
Mobile Internet Applications.
Shareholding in Eniro1): 300.
in 1958.
M.Sc. Economics, Norwegian School of
Economics.
Former positions: CEO Enskilda
Securities AB. Vice President of the
Orkla Executive Group. Head of Asset
Management, Orkla Borregaard.
Chairman of the Board of Aktiv Kapital
ASA.
Employee representative on the Board
since 2006. Born in 1967.
Main employment: Supervisor and
principal safety representative, Eniro
118 118 AB.
2 PER BYSTEDT
in 1965.
M.Sc. Econ., Stockholm School of
Economics.
Main employment: President of
Spray AB.
Former positions: Executive Vice President, MTG. President, TV3 Broadcasting Group Ltd. President, ZTV.
Axel Johnson AB, Servera, Neonode
Inc. and AIK Fotboll AB.
5 URBAN JANSSON
8 TOMAS FRANZÉN
in 1945.
Diploma in Economics (Skandinaviska
Banken).
Former positions: Leading positions
within SEB and the Incentive Group.
President, Ratos.
Addtech, Ahlström Corp., W Becker,
CapMan, Clas Ohlson, Ferd A/S, HMS,
Jetpak Group, Rezidor Hotel Group,
SEB, Siemens AB, Stockholm Stock
Exchange Listing Committee and Tylö.
in 1962.
M.Sc. education in Industrial Economics and Management, Linköping
Technical University.
Main employment: CEO and President
Eniro AB.
Former positions: President and CEO
of Song Networks Holding AB. President AU-System. Director of Sales
Nokia Data/ICL Data AB.
BTS Group AB, OEM International AB
and Securitas Systems AB.
6 LUCA MAJOCCHI
3 BARBARA DONOGHUE
in 1951.
MBA, McGill University. Bachelor of
Commerce, McGill University.
Former positions: Managing Director,
NatWest Markets and Hawkpoint Partners. Member, Independent Television
Commission. Teaching Fellow, London
Business School. Director, Noventus
Partners.
Panel Member of the UK Competition
Commission.
1)
in 1959.
M.Sc. Engineering Management, the
Polytechnic Institute in Milano. Visiting
scholar, National Research Council in
Milan.
Main employment: President and CEO
Seat Pagine Gialle.
Former positions: President and CEO
Unicredit Banca SpA; Deputy of Unicredit Group. Leading positions within
the UniCredit Banca SpA Group. Senior Engagement Manager McKinsey &
Company.
Thomson Directories Limited,
Telegate AG.
9 BENGT SANDIN
Main employment: Manager of Environmental issues, Eniro.
10 DA NIE L HULT E NIUS
Main employment: Sales manager,
Eniro Sverige, Internet Media Sales.
Own holdings of shares and other financial instruments in the company or those of related physical persons or legal entities,
according to the information available to the company.
Auditors
PETER BLADH
STEN HÅKANSSON
Born in 1949.
Authorized Public Accountant, Auditor in charge.
PricewaterhouseCoopers AB.
With Eniro since 2004.
Other significant audit assignments: Gambro, Paynova, Phadia and Biovitrum
Born in 1960.
Authorized Public Accountant.
PricewaterhouseCoopers AB.
With Eniro since 2004.
Other significant audit assignments: Lundin
Mining, Coor, Biacore and Vattenfall Eldistribution.
ANNUAL REPORT 2006
ENIRO 41
07-03-08 16.48.10
14
7
1
12
4
8
5
10
3
11
15
4
4
2
13
6
9
42 ENIRO
ANNUAL REPORT 2006
07-03-08 16.48.10
Group Management
1 TOMAS FRANZÉN
5 M AT S EK LUND
10 JOAC HIM JAGINDER
14 M AT T I A S WEDA R
CEO and President.
Eniro since 2004. Born in 1962.
M.Sc. education in Industrial Economics and Management, Linköping
Technical University.
Previous position: President and
CEO, Song Networks Holding AB.
Board assignments: BTS Group AB,
OEM International AB and Securitas
Systems AB.
Head of Business Development and
M&A.
M.Sc. Econ. Gothenburg School of
Economics.
Previous position: Founder and partner, Accel Consult AB.
CFO.
M.Sc. Econ. Stockholm University.
Previous position: CFO, Song Networks Holding AB.
Chief Information Officer.
M.Sc. Informatics and Systems
Analysis, Lund University.
Previous position: Project manager
and key account manager, Accenture.
2 ROGER ASPLUND
President Eniro Poland.
Market Economics, IHM Business
School.
Previous position: Sales Director,
Eniro Sverige Försäljning AB.
3 MARTIN CARLESUND
Head of Business projects.
M.Sc. Econ. University College of
Borås and University of Gothenburg.
CEO, 3L System AB.
4 HENRIK DYRING
President Eniro Denmark.
M.Sc. Sales and Marketing,
Copenhagen Business School.
Previous position: President, People
Group A/S.
1)
6 MIKAEL ENGQVIST
CLO (Chief Legal Officer).
LL.B. University of Uppsala.
Previous position: Chief Legal Officer,
Telia Group.
7 INGRID ENGSTRÖM
Head of Purchasing, Human Resources and Operations Sweden.
Eniro 2003-2007. Born in 1958.
M.Sc. Applied Psychology, Uppsala
University.
CEO, KnowIT.
8 CECILIA GEIJER
Head of Product and Market.
M.Sc. Econ. Stockholm School of
Economics.
Previous position: President, Telia
InfoMedia Interactive.
9 WENCHE HOLEN
President Eniro Norway.
Eniro/Findexa since 1994. Born in
1964.
Gjøvik Ingeniørhøgskole and NHH
Kursvirksomhet.
Previous position: Chief Operating
Officer, Findexa Group AS.
11 P E T E R K U S E N D A H L
President Din Del AB and coordination
printed directories.
Eniro (DinDel/Telia) since 1987. Born in
1958.
IFL Management training, Advanced
Management Program, Stockholm
School of Economics.
Previous position: President, Eniro
International AB.
15 ILK K A WÄC K
President Eniro Finland.
M.Sc. Education, Turku University.
Executive MBA from Helsinki School
of Economics.
Previous position: President of Inoa.
Finland.
12 B A R BR O S JÖL A NDE R
President Eniro 118 118.
Eniro 118 118 since 1998.
Born in 1950.
Economics Frans Schartau, Stockholm.
Previous position: Manager of Customer Service Developement, Telia Nära
AB.
13 BOEL SUNDVA LL
Head of Communications & IR.
M.Sc. Economics, Stockholm School
of Economics.
Previous position: Vice President
Investor Relations, Swedish Match AB.
Own holdings of shares and other financial instruments in the company or those of related physical persons or legal entities,
according to the information available to the company.
ANNUAL REPORT 2006
ENIRO 43
07-03-08 16.48.11
Board of Directors’ report
Group operations and structure
The Eniro Group was formed on July 1, 2000
by the combination of several companies
with similar operations within the Telia Group
under a single parent company, Eniro AB
(publ). On October 10, 2000, Eniro AB (publ)
was listed on the O-List of the Stockholm
Stock Exchange.
Via telephone directories, 118 services,
the Internet and mobile phones, Eniro offers
the best search facilities for buyers and sellers who want to find each other easily. For
users seeking companies, persons, places,
products or services, Eniro provides relevant, local and high-quality information, and
for advertisers seeking customers ready to
make a purchase, Eniro provides effective
advertising solutions.
Eniro’s operations are organized in seven
geographic market units: Sweden excluding
Voice, Sweden Voice, Norway, Finland, Denmark, Poland and Germany. External financial information is reported by geographical
market segment and by product: offline,
online and voice.
Acquisitions and divestments
Eniro acquired the Norwegian company Din
Pris AS at the end of January 2006 and
thereby entered the market for price comparisons and shopping. The purchase price
for Din Pris AS was approximately SEK 31 M.
In addition, there is a variable amount that
cannot exceed SEK 31 M and which will be
based on earnings over a three-year period.
Din Pris AS was consolidated in Eniro Norway as of February 1, 2006.
Webdir, a company within local directories in Denmark, was acquired in February
2006. Webdir was consolidated in Eniro
Denmark as of February 1, 2006. In 2005,
the company reported sales of slightly more
than SEK 20 M. The purchase price was initially SEK 32 M.
Katologer i Norr, which publishes eight
local directories in Northern Sweden, was
acquired and consolidated in Din Del as of
June 1, 2006. The purchase price was SEK
8.5 M plus a variable amount that cannot
exceed SEK 8.5 M.
In May 2006 Eniro divested its shares in
the Norwegian direct advertising company
DM Huset AS, which Eniro gained through
the acquisition of Findexa. The total sale
price was SEK 44 M and the capital gain
amounted to SEK 34 M.
During the second quarter Eniro also sold
its ownership in Tradera Nordic AB for
44 ENIRO
06_Adm_report_cmyk.indd 44
approximately SEK 9 M, with a capital gain
of SEK 9 M.
In October 2005, Eniro signed an
agreement to sell its Russian operations for
EUR 5 M, or about SEK 47 M. The sale was
subject to approval by the Russian anti-trust
authority, which was granted in January 2006.
On December 14, 2005, Eniro also agreed to
sell operations in Belarus for EUR 850,000, or
about SEK 8 M. The sale was subject to
approval by the Belarus anti-trust authority,
which was granted in March 2006. See also
the section Discontinued operations.
Revenues and income
Operating revenues amounted to SEK 6,697
M (4,827). Compared to 2005 pro forma figures including Findexa, operating revenues
increased by 1 percent to SEK 6,697 M
(6,628). Strong growth in online and voice
offset the weaker trend in offline revenues.
Organic growth (adjusted for exchangerate effects, changed publication dates,
divestments and excluding the effects of
changed advertising tax) was also 1 percent.
Online revenues increased by 14 percent
to SEK 1,938 M (1,693), and organic growth
was also 14 percent. Norway was the primary growth engine, with organic online growth
of 23 percent.
Voice revenues increased by 3 percent to
SEK 907 M (884). Organic growth was 2 percent.
Offline revenues declined by 5 percent to
SEK 3,852 M (4,051). The organic decline in
offline revenues was 5 percent, due to lower
offline revenues primarily in Norway, Finland
and Sweden.
EBITDA increased by 9 percent to SEK
2,290 M (2,093). A capital gain of SEK 43 M
from the sale of shares in DM-huset and
Tradera was included. Excluding the capital
gain, the improvement in EBITDA was 7 percent.
Market unit Sweden excluding Voice
Operating revenues decreased marginally to
SEK 2,175 M (2,179). Organically, operating
revenues increased by 2 percent.
Offline revenues declined organically by
2 percent. Changed advertising tax, publication shifts and the discontinuation of Gula
Tidning resulted in lost revenues of SEK 45
M in 2006.
Offline revenues for Din Del and Emfas
were SEK 318 M (289), an increase of 10
percent, compared with 2005.
Online revenues increased organically by 13
percent.
EBITDA increased to SEK 1,003 M (994).
Comparison figures for 2005 were also
affected by compensation that Eniro
received from the settlement with TDC. The
strong improvement in EBITDA was a result
of effective cost controls.
Market unit Sweden Voice
Operating revenues declined marginally to
SEK 597 M (600). Organically, operating revenues declined by 1 percent.
EBITDA amounted to SEK 140 M (122).
The increase was mainly due to strict cost
controls. 2005 included a restructuring
charge of SEK 15 M.
In October 2006 Eniro 118 118 was chosen by Telenor as their service provider for
directory assistance services in Sweden for
two years. The order value corresponds to
SEK 10–15 M in additional revenue per year.
Market unit Norway
The two entities Findexa AS and Eniro AS
are now fully integrated.
Operating revenues increased to SEK
2,121 M (293). Organically, operating revenues increased by 1 percent, compared with
pro forma figures including Findexa for
2005.
Offline revenues declined organically by
7 percent while online revenues increased
organically by 23 percent and voice
decreased by 3 percent, organically.
EBITDA includes a capital gain of SEK 37 M,
which was received in the second quarter.
Cost synergies were implemented according to plan.
Market unit Finland
Operating revenues amounted to SEK 642 M
(637). Organically, operating revenues increased by 1 percent.
Organically, offline revenues declined by
12 percent, while online revenues increased
by 29 percent and voice increased by 13
percent.
The Helsinki and the Tampere directories
were those most affected by competition.
Total revenues for these two directories
declined to about SEK 170 M (210) including
a lost publication fee of SEK 8 M from Elisa.
The other Eniro directories (ETD) developed
favorably.
The online and the voice businesses both
showed strong growth. The 118 services
ANNUAL REPORT 2006
07-03-08 16.56.49
BOARD OF DIRECTORS’ REPORT
acquired during the year had an annual
impact on revenues of about SEK 6 M.
EBITDA showed a strong increase to
SEK 84 M (34), due to cost control and higher
revenues. The EBITDA margin improved to
13 percent (5).
Market unit Denmark
Operating revenues increased to SEK 442 M
(396). The organic increase was 6 percent.
Offline revenues increased organically by
2 percent. In order to ensure continued
growth of online revenues, new sales personnel were recruited earlier in the year. The
organic increase in online revenues was 27
percent.
EBITDA increased to SEK 58 M (37). The
EBITDA margin improved to 13 percent (9).
Market unit Poland
Operating revenues increased to SEK 395 M
(375). The organic increase was 2 percent.
Offline revenues decreased organically
by 2 percent and online revenues increased
by 32 percent organically.
Market unit Germany
Operating revenues decreased to SEK 325 M
(347). Organically, operating revenues
declined by 6 percent. However, since the
second quarter 2006 revenues improved
quarter by quarter.
Lower operational and marketing costs partly
offset the decline in revenues. EBITDA last
year was positively affected by reversals of
reserves of SEK 20 M.
Other
This category includes costs for corporate
headquarters and Group-wide projects.
EBITDA amounted to a loss of SEK 81 M
(loss: 69).
Discontinued operations
At the end of 2005, negotiations on the sale
of operations in Russia and Belarus had
been completed, but final approval by the
competition authorities was not received
until the first quarter of 2006 when the capital gain from the sales was reported. The
capital gain from discontinued operations
amounted to SEK 43 M (81), of which SEK 52
M was attributable to the sale of operations
in Russia and Belarus.
ANNUAL REPORT 2006
Research and development
Eniro conducts continuous work on improving and developing services and technical
platforms. To meet user needs and to
increase Internet traffic, a new version of
eniro.se, eniro.fi, eniro.dk, gulesider.no and
kvasir.no with new design and improved
functionality was launched during 2006. The
new version uses more advanced search
technology to ensure a positive user experience. Total development costs of approximately SEK 62 M (12) were capitalized in the
balance sheet.
Consolidated cash flow
Cash flow from operational activities
amounted to SEK 1,436 M (1,007) and was
positively affected by improved operating
income, while increased interest payments
had a negative effect. Cash flow from investing activities was a negative SEK 225 M (neg:
5,141). Investment activities in 2005 included a negative cash flow of SEK 5,055 M for
the acquisition of Findexa. Cash flow from
financing activities was negative in an
amount of SEK 1,486 M (4,468) and included
amortization of loans in an amount of SEK
1,088 M and a dividend of SEK 398 M.
Financing activities during the preceding
year included borrowing in conjunction with
the acquisition of Findexa.
Financial position
The Group’s interest-bearing net debt totaled
SEK 8,872 M (10,564) at December 31. The
equity/assets ratio was 28 percent (24). The
debt/equity ratio was a multiple of 1.73,
compared with 2.28 at December 31, 2005.
Interest-bearing net debt in relation to EBITDA
was a multiple of 3.9 at December 31, 2006.
Excluding costs in conjunction with the
acquisition of Findexa, interest-bearing net
debt in relation to EBITDA was 5.0 times at
December 31, 2005. The return on shareholders’ equity was 22 percent for 2006.
Unrealized exchange-rate effects on external borrowing and changes in the value of
derivatives totaling SEK 862 M had a positive effect on net debt.
Net financial items amounted to an
expense of SEK 536 M (expense: 56), which
included an exchange-rate loss of SEK 13 M
(gain: 68). The increase in financial expenses
was due to higher debt in conjunction with
the acquisition of Findexa when Eniro
entered a borrowing agreement totaling SEK
12,000 M. The objectives were to finance the
cash portion of the Findexa acquisition, to
refinance Eniro’s and Findexa’s previous
debt and to provide operating capital for
ongoing operations. The credit facility is for
five years. During the year, the debt was
amortized in an amount of SEK 1,088 M. Further amortization will take place in an amount
of about SEK 850 M in 2007 and 2008 and
about SEK 600 M in the remaining two year.
At December 31, 2006, the credit facility
had been utilized in the amounts of NOK
6,877, EUR 100 M and SEK 927 M. The
major share of the amounts in NOK and EUR
were hedged at fixed interest rates.
Financial risks
The Group-wide finance policy that is adopted by the Board of Directors forms the foundation for the management of financial operations, the division of responsibilities and
financial risks. The focus of Eniro’s risk management activities is to limit or eliminate
financial risks in terms of costs, liquidity and
financial position. Eniro Treasury has centralized responsibility for financing and risk
management. For a description of risk management, see the section on Financial risk
management in the Accounting principles
and the references to the relevant notes.
Shareholders’ equity
At December 31, 2005, the share capital
amounted to SEK 182,102,392 corresponding to the same number of shares. There
were no changes in the share capital during
the year.
At the start of the year, Eniro held
1,000,000 of its own shares. During the year,
140 shares were used for the share-savings
program. At December 31, 2006, Eniro held
999,860 treasury shares. These shares will
be retained for use in the share-savings program. The average holding during 2006 was
999,943.
The Group’s shareholders’ equity
amounted to SEK 5,120 M (4,634) at the end
of 2006.
Taxes
The tax expense for 2006 amounted to
SEK 325 M (181), which resulted in an average tax rate of 24 percent (18). Tax for the
preceding year included positive non-recurring effects from the acquisition of Findexa,
which reduced the tax expense for 2005 by
about SEK 100 M.
ENIRO 45
07-03-08 16.56.50
Earnings per share
Net income per share amounted to SEK 5.82
(5.84). In 2005, net income per share included non-recurring effects from the acquisition
of Findexa, which reduced tax expenses.
Earnings per share before tax amounted to
SEK 7.38 (6.47).
The average number of shares is based
on the average number of shares after buybacks and new issues on a daily basis.
Legal issues
In the ongoing legal proceedings between
Eniro Windhager Medien GmbH and DeTeMedien GmbH in Germany, the Supreme
Court has now passed their ruling on the
issue of whether to admit the DeTeMedien
appeal to the Supreme Court or not. The
Supreme Court decided to remit the case
back to the Court of Appeal in Frankfurt for a
new hearing. The ground for the remittal was
procedural. A new hearing at the Court of
Appeal in Frankfurt is expected to be held
late in 2007. Eniro has not recognized any
asset in the balance sheet regarding the
legal proceedings, with DeTeMedien, nor
has it during 2006 been any change in the
accounting of the financial assessment of
the case.
Employees
On December 31, 2006, the number of fulltime employees totaled 4,821 (5,429). The
figures for 2005 included 556 employees in
Russia and Belarus reported under discontinued operations. The increase in the number of employees in Denmark was attributable to additional sales personnel and the
acquisition of Webdir.
Environmental impact
Because Eniro’s operations include production and distribution of printed directories, a
certain impact on the environment is inevitable. Based on an environmental vision that
provides a general summary of the attitudes
that Eniro wishes to pervade the Group,
Eniro has developed a policy for environmental work. “Eniro must comply with and
apply laws, agreements and government
requirements in the environmental area. Our
products must have as little impact as possible on health and the environment without
compromising quality. Eniro strives for continuous improvement in the environmental
area.”
46 ENIRO
Accordingly, Eniro works actively to minimize the environmental impact of its operations. During 2006, work was conducted for
environmental certification of Eniro AB, and
on January 31, 2007, the company was certified in accordance with ISO 14001:2004.
The goal during 2007 is to also certify Eniro
Svergie AB and Eniro Sverige Försäljning
AB. A more detailed description of Eniro’s
environmental work is provided in a separate section of the annual report.
Parent Company
The Parent Company Eniro AB (publ) had 31
(23) employees at year-end.
Operating revenues in 2006 totaled SEK
28 M (30). All operating revenues pertain to
intra-Group sales. In 2006, earnings before
tax amounted to SEK 362 M (32) and included impairment losses on shares in subsidiaries in an amount of SEK 52 M (322) and
appropriations of SEK 131 M (224). Investments amounted to SEK 921 M (8,054) and
consisted of capital contributions to subsidiaries. The Parent Company’s external interest-bearing net debt at year-end amounted
to SEK 6 M (–1). All external financing was
transferred to the Group company Eniro
Treasury AB as of December 2005.
The Parent Company’s shareholders’
equity at year-end amounted to SEK 5,110
M (4,354), of which unrestricted shareholders’ equity accounted for SEK 2,779 M
(2,023).
Company management and work conducted by the Board of Directors
The Board of Directors of Eniro AB (publ)
consisted of eight members elected by the
Annual General Meeting, of which one is the
President and Chief Executive Officer Tomas
Franzén. The employees appointed three
members. In addition to the constituent
meeting, the Board should normally hold
five ordinary meetings per calendar year.
During 2006 the Board held in total eleven
meetings, of which one was per capsulam,
and one held by telephone. The work in the
Board during 2006 was to a large extent
devoted to questions related to the strategic
orientation of the Group as well as important
issues related to financing, capital structure,
investments, acquisitions and divestments.
The Board also devoted a substantial time
to the establishing of an effective system of
internal control and risk management, as
well as general audit related matters. The
Board is also performing an annual evaluation of the President and CEO.
The Board has a Compensation Committee and an Audit Committee. During 2006,
the Compensation Committee consisted of
Lars Berg (chairman) and Per Bystedt. The
Audit Committee comprised Urban Jansson
(chairman), Barbara Donoghue and Lars
Berg. For a more detailed report on the work
conducted by the Board of Directors, see
separate Corporate Governance Report on
page 32.
Eniro’s Group management consists of
the Presidents of the subsidiaries in Sweden, Norway, Finland, Denmark and Poland,
together with the responsible persons for
the staff organizations. In total Eniro’s Group
management consists of 15 persons. Group
management has bi-weekly meetings to
review the previous periods result, business
activities, market development, the progress in strategic project, coordination of
common Group activities and strategic
issues.
Capital structure and dividend
For the 2006 fiscal year, the Board proposes
a dividend of SEK 4.40 (2.20) per share,
which corresponds to 76 percent (43) of net
income for the year (based on the number of
shares at year-end excluding holding of own
shares). The amount proposed for distribution totals SEK 797 M (398). The proposed
dividend is in line with the dividend policy of
75 percent of net income. Adjustments in
the loan agreement made it possible to
return to this dividend policy during 2006.
Significant events after year-end
Eniro Finland has sold its 35 percent holding
in Finnet Media Oy, for a contribution of SEK
17 M. At the same time 15 percent of the
shares in SNOY were acquired for SEK 5 M.
SNOY gathers, administers and distributes
all basic contact information in Finland.
In order to increase traffic and revenues
for sol.no, Eniro´s Internet portal in Norway,
an agreement was reached with Norsk Aller
AS to form a jointly owned company as of
January 1, 2007. Eniro will retain 50.1 percent of the company while Aller will acquire
a total of 49.9 percent in the newly created
company Scandinavia Online AS (SOL).
2006 pro forma revenue for the SOL operation
is approximately NOK 42 M, with EBITDA of
ANNUAL REPORT 2006
07-03-08 16.56.50
approximately NOK 6 M. The capital gain for
Eniro Norway is estimated at approximately
NOK 100 M to be recognized in 2007.
In January 2007, Eniro acquired 100 percent of the shares in Leta AB in Sweden for a
cash consideration of SEK 48 M. The operation is consolidated from February 1, 2007.
The company reported revenues in 2006 of
about SEK 7 M and an EBITDA of about SEK
6 M. Leta.se is an established start page in
Sweden with more than 1.1 million visits per
week.
On February 13, 2007 a new organizational structure for the Swedish operations
was approved by the Board. The operations
in Sweden will be organized in four independent units. In addition to the currently existing independently operating units Eniro 118
118 and Din Del there will be a Print and an
Online unit. Peter Kusendahl who besides
being the President of Din Del will be the
President for the Print unit, while Tomas
Franzén will be responsible for the Online
unit.
Market outlook
Total revenues for the Group in 2007 are
expected to increase organically supported
by strong online growth and despite the
continued pressure on offline.
EBITDA for the Group is expected to be
in line with 2006, including cost savings
related to the previously announced costsavings program as of 2004 as well as cost
synergies from the integration of the Norwegian operations. EBITDA cash conversion
will remain high.
Total revenues for Sweden are expected
to increase organically in 2007. Offline is
expected to decline in line with 2006, online
growth rate is expected to be higher than in
2006, and voice to show a slight increase.
Total revenues in Norway, 2007, are
expected to be organically in line with 2006.
Offline is expected to decline organically by
approximately 10 percent and online to
increase organically by approximately 20
percent. In addition, publishing fees of NOK
52 M expire as of January 1, 2007.
The Board of Directors’ proposed distribution of earnings
Proposed distribution of earnings
The following earnings are at the disposal of the Annual General Meeting:
499,681,738
Earnings brought forward
2,279,782,461
Total
2,779,464,199
The Board of Directors proposes that:
A dividend of SEK 4.40 per share be paid to external
shareholders
To be brought forward
1,982,613,058
Total
2,779,464,199
796,851,141
The proposed record date for receiving the dividend is April 4, 2007. Payment via VPC is
expected to occur on April 11, 2007.
Board of Directors’ statement regarding
the proposed dividend, in accordance with
Chapter 18, Section 4 of the Swedish
Companies Act
The proposed dividend to shareholders will
reduce the Parent Company’s equity/assets
ratio from 34 percent to 31 percent and the
Group’s equity/assets ratio from 28 to 25 percent. The equity/assets level is regarded as
satisfactory in view of the fact that the Group’s
ANNUAL REPORT 2006
operations are continuing to generate profitability and considerable cash flows.
According tothe Board of Directors, the
proposed dividend is compatible with the
requirements on the Group for amortization
and interest payments according to the loan
agreements with Eniro Treasury AB.
The Company’s shareholders’ equity was
not affected by unrealized gains as a result of
the fair valuation of financial instruments.
According to the Board of Directors, the proposed dividend will not prevent the Company and other Group companies from fulfilling
their obligations in the short or long term; nor
will it prevent the Company from completing
necessary investments. Accordingly, the
proposed dividend can be defended in the
light of what is stated in Chapter 17, Section
3, Paragraphs 2–3 of the Swedish Companies Act.
ENIRO 47
07-03-08 16.56.50
Consolidated income statement
SEK M
Note
2006
2005
6,771
–74
4,910
–83
1
6,697
4,827
2, 5
2, 5
2, 5
2, 5, 6, 7
2, 5
–1,899
–1,646
–701
–531
–121
79
–6
–1,569
–1,294
–404
–427
–118
76
–18
1,872
1,073
61
–597
140
–196
1,336
1,017
–325
–181
1,011
836
Continuing operations
Gross operating revenues
Advertising tax
Operating revenues
Production costs
Sales costs
Marketing costs
Administration costs
Product development costs
Other revenues
Other costs
Operating income
Financial revenues
Financial costs
8
8
Earnings before tax
Income tax
9
Net income for the year from remaining operations
Net income from discontinued operations
3
43
81
1,054
917
Net income per share from continuing operations, SEK
– before dilution
– after dilution
5,58
5,58
5,32
5,32
Income per share from discontinued operations, SEK
– before dilution
– after dilution
0,24
0,24
0,52
0,52
Net income per share, SEK
– before dilution
– after dilution
5,82
5,81
5,84
5,83
181,102
181,309
157,079
157,231
Average number of shares before dilution (000s)
Average number of shares after dilution (000s)
48 ENIRO
25
25
ANNUAL REPORT 2006
07-03-08 16.56.50
Consolidated balance sheet
SEK M
Note
Dec. 31, 2006
Dec. 31, 2005
10
12
9
17
23
259
15,459
138
172
–
121
292
16,497
172
1
7
151
16,149
17,120
157
1,042
203
108
68
8
478
–
145
1,208
185
78
42
,6
742
16
ASSETS
Non-current assets
Tangible assets
Intangible assets
Deferred tax assets
Derivative financial instruments
Participation in associated companies
Other receivables
Total non-current assets
Current assets
Work in progress
Accounts receivable
Prepaid costs and accrued revenues
Income tax receivables
Other non-interest bearing current assets
Other financial assets
Cash and cash equivalents
Assets classified as held for sale
13
14
15
3
Total current assets
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Equity
Share capital
Additional paid-in capital
Reserves
Retained earnings
2,064
2,422
18,213
19,542
182
4,254
–296
980
182
4,249
–121
324
Total equity
25
5,120
4,634
Non-current liabilities
Borrowings
Derivative financial instruments
Retirement benefit obligations
Deferred income tax liabilities
Other provisions
16
17
18
9
19
8,545
334
1,227
40
10,123
67
365
1,020
43
10,146
11,618
143
326
26
1,192
476
21
763
–
126
355
27
1,294
564
24
876
24
Total long-term liabilities
Current liabilities
Advances from customers
Accounts payable
Income tax liabilities
Accrued costs and prepaid revenues
Other non-interest bearing liabilities
Other provisions
Interest-bearing borrowings
Liabilities directly associated with assets classified as held for sale
Total current liabilities
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
ANNUAL REPORT 2006
20
19
16
3
2,947
3,290
18,213
19,542
ENIRO 49
07-03-08 16.56.50
Changes in consolidated equity
SEK M
Note
Share capital
Other capital
contributions
Opening balance as per January 1, 2005
Reserves
Earnings
brought
forward
Total
equity
158
2,072
–103
–248
1,879
Hedging of cash flow after tax
Hedging of net investments after tax
Exchange rate differences
–
–
–
–
–
–
–48
26
4
–
–
–
–48
26
4
Total transactions recognized directly in equity
–
–
–18
Total revenues and costs
Share-savings program – value of employees’ service
Buy-back of shares
Non-cash issues in conjunction with company acquisitions
Dividend
Closing balance as per December 31, 2005
25
Hedging of cash flow after tax
Hedging of net investments after tax
Exchange rate differences
Total transactions recognized directly in equity
–
–18
917
917
–18
917
899
–
–
24
–
2
–193
2,368
–
–
–
–
–
–
–
–345
2
–193
2,392
–345
182
4,249
–121
324
4,634
182
–
–
–
4,249
–
–
–
–121
172
528
–875
324
–
–
–
4,634
172
528
–875
–
–
–175
–
–175
1,054
1,054
–
–
–175
1,054
879
Share-savings prgram – value of employees’ service
Dividend
–
–
5
–
–
–
–398
5
–398
182
4,254
–296
980
5,120
25
Consolidated cash flow statement
SEK M
Note
2006
2005
1,872
1,073
418
–38
–
–46
11
61
–552
–255
161
–53
6
0
–
21
–136
–179
1,471
893
–14
76
–97
49
58
7
1,436
1,007
–138
–78
–68
49
10
–5,060
–36
–45
–
0
–225
–5,141
Financing activities
New borrowing
Amortization of loans
Buy-back of shares
Dividend
–
–1,088
–
–398
11,201
–6,195
–193
–345
Cash flow from financing activities
–1,486
4,468
–11
56
–3
81
45
78
–230
742
–34
412
317
13
478
742
Current operations
Operating income
Adjustment for items excluded in cash flow
Depreciation, amortization and impairment of non-current assets
Provisions
Dividend from associated companies
Profit from divestment of fixed assets
Other items not affecting liquidity
Interest received
Interest paid
Income taxes paid
2
23
Cash flow from current operations before changes in working capital
Cash flow from changes in working capital
Decrease/Increase in work in progress
Decrease/Increase in current receivables
Decrease/Increase in current liabilities
Cash flow from current operations
Investing activities
Acquisition of subsidiaries and associated companies
Acquisition of intangible assets
Acquisition of tangible assets
Divestment of subsidiaries and associated companies
Divestment of tangible assets
24
12
10
22, 23
10
Cash flow from investing activities
Current operations
Investing operations
3
Cash flow from discontinued operations
Cash flow for the year
Cash and cash equivalents at the beginning of the year
Exchange rate differences in cash and cash equivalents
Cash and cash equivalents at the end of the year
50 ENIRO
15
ANNUAL REPORT 2006
07-03-08 16.56.50
Parent Company income statement
SEK M
Note
2006
2005
1
28
30
2, 5
2, 5
2, 5
2, 5, 6, 7
–5
–
–29
–88
16
–1
–3
–
–44
–75
24
0
–79
–68
358
4
594
–2
–52
35
–365
–
–
756
–15
–322
111
–206
493
256
–131
138
–224
103
500
135
Proposed dividend per share for the financial year
4.40
2.20
Operating revenues
Production costs
Sales costs
Marketing costs
Other revenues
Other costs
Operating income
Profit from sale of shares in Group companies
Profit from sale of other shares
Dividends from Group companies
Impairment of receivables from Group companies
Impairment of shares in Group companies
Financial revenues
Financial costs
22
8
8
Income after financial items
Appropriations
Income tax
ANNUAL REPORT 2006
9
ENIRO 51
07-03-08 16.56.51
Parent Company balance sheet
SEK M
Note
Dec. 31, 2006
Dec. 31, 2005
10
22
0
13,030
3
199
5
0
12,324
2
916
4
13,237
13,246
0
1,549
1
94
1
–
1
0
0
1,087
4
17
3
211
0
7
ASSETS
Non-current assets
Tangible assets
Shares in subsidiaries
Deferred income tax assets
Interest-bearing receivables from Group companies
Other interest-bearing receivables
Current assets
Accounts receivable
Receivables from Group companies
Prepaid costs and accrued revenues
Income tax receivables
Other non-interest bearing current assets
Interest-bearing receivables from Group companies
Other interest-bearing receivables
14
15
1,646
1,329
14,883
14,575
182
2,149
–
182
2,149
–
–
2,779
892
1,131
5,110
4,354
1,053
921
12
–
10
0
12
10
Non-current liabilities
Liabilities to Group companies
8,366
9,009
Total non-current liabilities
8,366
9,009
11
190
27
4
110
65
23
25
49
119
TOTAL ASSETS
SHAREHOLDERS’ EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital
Statutory reserve
Share premium reserve
Non-restricted equity
Funds available for distribution according to decisions by the Annual General Meeting
Retained earnings
Total shareholders’ equity
Untaxed reserves
Tax allocation reserve
Provisions
Provision for pensions
Other provisions
25
18
19
Total provisions
Current liabilities
Accounts payable
Liabilities to Group companies
Accrued costs and prepaid revenues
Borrowing from Group companies
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
52 ENIRO
20
342
281
14,883
14,575
ANNUAL REPORT 2006
07-03-08 16.56.51
Changes in equity, Parent Company
SEK M
Note
Share
capital
Statutory
reserve
Premium
reserve
Earnings
brought
forward
Other
unrestricted
reserves
Total
shareholders’
equity
1,612
158
–
36
588
830
–
–
–
135
–
135
–
–
–
135
–
135
–
–
24
–
–
–
–
–
2,113
753
–
–
–
–193
–
753
–193
2,137
Group contributions received, net after tax
Buy-back of shares
Non-cash issues in connection with company acquisitions
Divestment in connection with company acquisitions of previously
repurchased shares
–
–
–
–
255
255
Transfer to statutory reserve
Dividend
–
–
2,149
–
–2,149
–
–
–345
–
–
–
–345
182
2,149
–
1,131
892
4,354
182
–
2,149
–
–
–
1,131
500
892
–
4,354
500
–
–
–
500
–
500
Group contributions received, net after tax
Retained earnings
Dividend
–
–
–
–
–
–
–
–
–
654
892
–398
–
–892
–
654
–
–398
182
2,149
–
2,779
–
5,110
25
25
Parent Company cash flow statement
SEK M
Note
2006
2005
Operating income
Adjustment for items excluded in cash flow
Interest received from Group companies
Interest paid to Group companies
Interest received
Interest paid
Income taxes paid
–79
3
32
–352
1
–1
–195
–68
–5
50
–45
1
–70
–119
Cash flow from current operations before changes in working capital
–591
–256
Cash flow from changes in working capital
Decrease in current receivables
Decrease in current liabilities
16
–104
2
2
–679
–252
Investing activities
Acquisition of subsidiaries
Divestment of subsidiaries
Acquisition of other shareholdings
Divestment of other shareholdings
Acquisition of tangible non-current assets
–
521
0
4
0
–5,406
–
–
–
0
Cash flow from investment activities
525
–5,406
–
–
–327
872
–
–398
200
–2,844
558
8,289
–193
–345
147
5,665
–7
7
7
0
0
7
Current operations
Financing activities
New borrowing
Amortization of loans
Net of intra-Group dividends, Group contributions and paid-in capital
Net change in financial receivables and liabilities with Group companies
Buy-back of shares
Dividend paid
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
ANNUAL REPORT 2006
15
ENIRO 53
07-03-08 16.56.51
Accounting principles
The current Annual Report for Eniro AB
(publ) with corporate registration number
556588-0936 and registered office in Stockholm and adress SE-169 87 Stockholm was
approved by the Board of Directors on
March 5, 2007 and will be approved by the
Annual General Meeting on March 30,
2007.
General accounting principles for 2006
The Annual Report was prepared in accordance with the International Financial
Reporting Standards (IFRS), as well as the
applicable statutes of the Swedish Annual
Accounts Act and Recommendation RR 30
Supplementary reporting rules for corporate
groups issued by the Swedish Financial
Accounting Standards Council.
The application of general principles in
many cases requires estimates for accounting purposes and financial assessments
having a significant impact on balancesheet and income-statement items. In
Eniro’s case, this applies particularly to the
valuation of goodwill and other intangible
assets. In other cases, a qualified interpretation and assessment must be made of how
the principles should be applied in the
reporting of complex business transactions.
One such area is reporting of revenues. A
more detailed account of the assessments
and interpretations with major impact on the
consolidated accounts is provided below
under the heading Significant estimates and
assessments.
The most important principles applied in
preparing the consolidated accounts are
discussed under the heading Summary of
important accounting principles.
The Parent Company’s accounts were
prepared largely according to the same principles as applied in the consolidated
accounts. The exceptions are primarily due
to the Annual Accounts Act and the relation
between accounting and taxation. A more
detailed description of these differences is
provided on the section Parent Company
accounting principles.
Changes in published standards
effective in 2006
As of January 1, 2006, it is permissible
according to IAS 19 Employee benefits to
54 ENIRO
07_Notes_cmyk.indd 54
recognize compensation to employees in
pension plans as deficits and surpluses (socalled actuarial losses and gains) directly
against shareholders’ equity. Eniro has not
utilized this option but instead continues to
report deviations from previous assumptions in the income statement.
Other standards and interpretations
approved by the EU Commission and applicable as of January 1, 2006 include amendments/modifications of IAS 39 Financial
instruments: recognition and measurement
and IFRIC 4 Determining whether an
arrangement contains a lease. Eniro chose
to apply standards and interpretations from
January 1, 2006 starting on the date they
took effect. These standards and interpretations did not have any tangible effect on the
Group’s earnings or shareholders’ equity.
Summary of important
accounting principles
Basis for preparing reports
Assets and liabilities are reported in the consolidated accounts at acquisition value
reduced by depreciation, amortization and
impairment loss as appropriate. Exceptions
from this principle are financial assets available for sale and financial assets and liabilities reported at fair value in the income
statement, as well as derivative instruments
for which hedge accounting is applied.
Consolidated accounts
The consolidated accounts include the Parent Company and its subsidiaries. Subsidiaries are considered companies in which
the Parent Company directly or indirectly
has the right to determine financial and
operative strategies in a manner that normally results from a shareholding greater
than or equal to 50 percent of the voting
rights. Subsidiaries are included in the consolidated accounts from the date on which
the controlling influence was transferred to
the Group. They are eliminated from the
consolidated accounts on the date from
which this controlling influence ceases.
Eniro’s consolidated accounts have been
prepared in accordance with the purchase
method. The purchase price for an acquisition consists of the fair value of the assets
provided as payment, issued equity instru-
ments and accrued or assumed liabilities on
the date of transfer of ownership increased
by costs directly attributable to the acquisition. Identifiable assets and liabilities in subsidiaries on the date of acquisition are
reported at fair value in the consolidated balance sheet according to an acquisition analysis. If the acquisition price exceeds the fair
value of the company’s net assets on the
acquisition date, the difference is reported
as consolidated goodwill. If the acquisition
price is less than fair value of the acquired
company’s net assets, the difference is
reported directly in the income statement.
Group-internal transactions and balance
sheet items, as well as unrealized gains on
transactions between Group companies are
eliminated. Unrealized losses are also eliminated, unless the loss corresponds to a
need to recognize an impairment.
Untaxed reserves, which occur in the
accounts of companies in certain countries,
are reported in the consolidated accounts in
part as a deferred tax liability and in part as
retained earnings. The deferred income tax
liability is calculated according to the prevailing tax rate in each country.
Associated companies
Associated companies are those companies
in which the Group has a share of the voting
rights between 20 and 50 percent and thus a
significant influence. Holdings in associated
companies are reported in accordance with
the equity method.
The Group’s share of the income in associated companies after acquisition is reported
in the income statement. Accumulated
changes after the acquisition are reported as
a change in the book value of the holding.
Unrealized gains and losses on transactions between the Group and its associated
companies are eliminated against the Group’s
holdings in the associated company.
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 accounts,
SEK is used, which is the Parent Company’s
functional and reporting currency.
ANNUAL REPORT 2006
07-03-08 16.58.19
ACCOUNTING PRINCIPLES
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 closing-date rate are
reported in the income statement. Exceptions are transactions that constitute hedges
and which satisfy the conditions for hedge
accounting of cash flows or net investments.
Such gains or losses are booked directly
against shareholders’ equity.
Income statements and balance sheets
for subsidiaries with another functional currency than SEK are translated as follows:
• Assets and liabilities are translated at the
closing-date rate.
• Revenues and costs are translated at the
average rate or, if this does not provide a
reasonable approximation, at the weighted
average rate.
• Exchange rate differences are reported as
a translation difference under shareholders’
equity.
In the consolidated accounts, exchangerate differences attributable to net investments in foreign operations, or borrowing
and other currency instruments identified as
hedges for such investments, are charged
to equity. When foreign operations are
divested, such exchange-rate differences
are reported in the income statement as part
of the capital gain or loss.
Goodwill and other adjustments of fair
value arising in the acquisition of foreign
operations are treated as assets and liabilities in that operation and translated at the
closing-date rate.
Tangible assets
Tangible assets are reported at acquisition
cost and depreciated linearly over their estimated useful life. This varies between ten
and 25 years for buildings and between
three and five years for equipment. Equipment consists primarily of computer equipment, office fittings and vehicles.
Intangible assets
Goodwill arising from the acquisition of
operations in foreign subsidiaries is reported
as a separate item under intangible assets.
Goodwill arising from the acquisition of
associated companies is included in the
ANNUAL REPORT 2006
value of the associated company. Goodwill
is assumed to have an indefinite useful life.
Other intangible assets with indefinite useful
life consist of trademarks that were added
through the acquisition of Findexa. Goodwill
and other intangible assets with indefinite
useful life are assessed annually to identify
possible impairment losses and are reported at acquisition value reduced by accumulated impairment losses. Gains or losses
arising from the divestment of a unit include
the remaining book value of goodwill and
other intangible assets attributable to the
divested unit.
Goodwill is distributed among cash-generating units at acquisition. These cash-generating units correspond to operations within a geographic area.
Customer relations and other intangible
assets are reduced by amortizations over
their useful life. The useful life for customer
relations is based on retention rate and varies between three and ten years. Other
brands have a finite 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
longer than one year and which exceed the
costs of their acquisition and development.
The activated expenses are amortized linearly over the estimated useful life. This varies
between three and ten years. Capitalized
expenses include personnel costs and a reasonable share of attributable indirect costs.
Impairment
Assets with an indefinite useful life are not
amortized, but rather tested each year for
possible impairment. Assets considered for
impairment are assessed whenever events
or changed circumstances indicate that the
reported value may not be recoverable. An
impairment loss is recognized in the amount
that the asset’s book value exceeds its
recoverable value. Recoverable value is the
higher of an asset’s fair value reduced by
sales costs and its value in use. In impairment testing, assets are grouped at the lowest level at which separate cash-flow generating units can be identified.
Leasing agreements
Leasing agreements are reported in accordance with recommendation IAS 17 Leases.
Leasing in which a significant portion of the
risks and benefits incident to ownership are
retained by the leaser are classified as operational leasing. Currently the Group only has
operational leasing agreements.
Work in progress
The value of work in progress consists of
direct production costs and attributable indirect production costs. Direct production
costs primarily relate to paper purchases,
printing and binding of directories, as well as
costs for obtaining and processing information for publication in printed directories.
Interest expense is not included. An individual assessment is made for expensed
amounts for each individual directory.
Accounts receivable
Accounts receivable are valued at the amount
that is expected to be received. Credit risks
are handled through active credit checks and
routines for follow-up and debt collection. In
addition, credit risk reserves are assessed
regularly based primarily on ageing of debts.
Amounts that are not expected to be received
are offset by reserves and reported as a sales
cost in the income statement.
Cash and cash equivalents consist of cash
and disposable funds in bank accounts, as
well as current investments with a shorter
period than three months from the acquisition date.
Shareholders’ equity
Holdings of treasury shares purchased within the framework approved by the Annual
General Meeting are reported in the consolidated accounts as a reduction of other capital contributions. In the Parent Company,
these are booked as a reduction of retained
earnings or, where applicable, against a fund
to be used in accordance with decisions by
the Annual General Meeting. Costs in addition to the purchase price arising in conjunction with the acquisition of own shares are
charged against retained earnings. This
holding is not included in outstanding shares
when calculating key data per share.
ENIRO 55
07-03-08 16.58.20
Borrowings
Borrowings are initially reported at fair value
as a net amount after transaction costs.
Thereafter, borrowings are reported at
accrued acquisition cost, and any difference
between the amount received after transaction costs and the amount repaid is reported
in the income statement and distributed
over the maturity period by applying the
effective-interest method. Borrowings are
classified as current liabilities if Eniro does
not have an unconditional right to defer payment until at least 12 months after the closing date. Liabilities with maturity periods
that originally exceeded 12 months are also
reported as current liabilities according to
this principle.
Financial assets
Financial instruments are classed in the following categories:
• Financial assets valued at fair value in the
income statement
• Loans and accounts payable
• Financial assets held until maturity
Financial assets valued at fair value over the
income statement consist primarily of assets
intended to be sold shortly. Such assets that
are not included in the Group’s central chart
of accounts occur to a limited extent in foreign units. This category also includes a
receivable from TeliaSonera for pension obligations that is calculated in the amount that
TeliaSonera is expected to pay. Loan receivables and accounts receivable are nonderivative financial assets with fixed or predictable payments and which are not listed
on an active market. There are no significant
loan receivables.
Financial assets held to maturity are nonderivative financial assets with fixed or predictable payments and fixed periods that
Eniro intends to hold until maturity.
Purchases and sales of financial assets
are reported on the date at which Eniro
pledges to purchase or sell the asset. Financial assets are initially valued at fair value
plus transaction costs. Financial assets valued at fair value in the income statement are
valued without transaction costs. Financial
assets are eliminated from the balance sheet
when the right to receive cash flows from the
asset has expired or virtually all risks and
56 ENIRO
benefits associated with the asset have
been transferred to another party.
Accounts receivable are reported at
acquisition value without discounting, since
the average credit period is short and interest thus insignificant. Loan receivables and
financial assets held to maturity are reported
at accrued acquisition value by applying the
effective interest method.
Recognition of derivative instruments
and hedging measures
Derivative instruments are recognized in the
balance sheet on the contract date and valued at fair value both initially and on subsequent revaluations. Derivative instruments
within Eniro consist either of hedges of fair
value and cash flows or hedges of net
investments in foreign currency.
When a hedging contract is entered, the
relationship between the hedging instrument
and the hedged item is documented, as well
as the effectiveness of the derivative instrument employed in balancing fair value or
cash flow for the hedged items. Fair value of
derivative instruments is presented in Note
17. Changes in hedging reserves in shareholders’ equity are presented in Note 25.
Hedging of fair value
Changes in value of derivatives employed to
hedge fair value that satisfy the conditions
for hedge accounting are reported in the
income statement together with changes in
value of the hedged asset or liability.
Hedging of cash flow
The effective portion of changes in value of
derivatives employed to hedge cash flows
that satisfy the conditions for hedge
accounting are reported under shareholders’ equity. The gain or loss attributable to
the ineffective portion is immediately reported in the income statement.
Accumulated amounts in shareholders’
equity are reversed in the income statement
in the periods in which the hedged item
affects income. If the hedged transaction
results in the reporting of a non-financial
asset or liability, gains or losses previously
reported under shareholders’ equity are
transferred from shareholders’ equity and
included in the value of the asset or liability.
Even when a hedging instrument expires or
is sold or when the hedge no longer satisfies
the conditions for hedge accounting and
accumulated gains or losses are included in
shareholders’ equity, the accumulated
amount is reversed, since the hedged item
affects income. If the hedged transaction is
no longer expected to occur, the accumulated amount is immediately booked against
shareholders’ equity.
Hedging of net investments
Hedging of net investments in foreign operations is reported in a similar manner as
hedging of cash flows. The effective portion
of the hedge is reported under shareholders’
equity, while the ineffective portion is immediately booked against income.
Accumulated gains and losses under
shareholders’ equity are reported as a portion of the capital gain or loss 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
reported in accordance with IAS 37 Provisions, contingent liabilities and contingent
assets. Provisions are reported when the
Group has a legal or informal obligation
resulting from previous events and 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
commitments, deferred income tax liabilities, costs in conjunction with changes in
personnel, legal proceedings and disputed
selective tax. Amounts expected to be settled within 12 months after the closing date
are reported under the heading current liabilities, while others are reported as noncurrent liabilities. The provisions comprise
the best estimate of what would be paid out
on the closing date to settle the obligation or
to transfer it to a third party
Revenues
Revenues from directory operations (offline)
are booked when the directory is published.
Production costs are capitalized up until the
ANNUAL REPORT 2006
07-03-08 16.58.20
publication date, whereupon they are
expensed. Directories are normally published once a year. Online revenues are distributed over the contract period, which is
normally 12 months.
For sales of bundled offline and online
products, revenues are distributed according to a distribution ratio that reflects the
market value of each product. The distribution ratio is based on measurements of commercial use of each product, which is measured continuously through customer surveys. The distribution ratio is adjusted annually. As of 2007, this distribution ratio is based
on the value for the advertisers. The value for
the advertiser is measured continuously
through customer surveys where the customers estimate the value of commercial use.
Operating units and geographic areas
According to IAS 14 Segment reporting,
income and certain balance-sheet items
must be reported by primary segment, while
revenues are reported by secondary segment. The primary segments consist of the
regions Sweden, Nordic and Central Europe.
The secondary segments are the product
groups offline, online and voice.
Operations that were cash-generating units
during the time that they were owned or
group of such units that were either divested
or are held for sale are reported in accordance with IFRS 5 Non-current assets held
for sale and discontinued operations. In
cases where the unit remains within the
Group on the closing date, all assets are
reported as current assets and liabilities
directly attributable to operations as current
liabilities.
Income after tax from such operations
under the period of ownership and capital
gains or losses in conjunction with the completion of a sale are reported as an item in
the income statement following tax expenses
for the period.
Fixed assets held for sale are reported at
the lower of book value and fair value reduced
by sales costs, assuming that their book
value is recovered primarily through a sales
transaction and not through constant use.
ANNUAL REPORT 2006
Compensation to employees
Pensions
There are different pension plans within the
Eniro Group. Swedish units are primarily
covered by defined-benefit plans, while the
Norwegian units are partly covered by
defined-benefit plans. Other countries in
most respects apply defined-contribution
plans.
For defined-contribution plans, the company pays fixed fees to a separate legal entity and has no obligation to pay further fees.
Costs are charged against consolidated
earnings in pace with benefits being
earned.
In defined-benefits plans, compensation
is paid to employees and former employees
based on salary at the time of retirement and
number of years of employment. The Group
assumes the obligation for paying the promised compensation.
Defined-benefit pension plans are funded in one case and otherwise unfunded. For
the funded plan, the assets are allocated to
a separate pension fund.
The net of the estimated current value of
the commitments and the fair value of the
managed assets is reported in the balance
sheet either as a provision or as a long-term
financial receivable. In cases where a surplus in a pension plan cannot be fully utilized,
only that portion of the surplus is reported
that the company is able to recover through
reduction of future fees or bonuses.
For defined-benefit plans, the pension
cost and the pension commitment are calculated according to what is called the Projected Unit Credit method. This method distributes the costs for pensions 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 valued at the current value of anticipated payments after application of a discount factor
corresponding to the rate for grade A commercial bonds with a maturity corresponding to the commitment in question. The most
important actuarial assumptions are
described in Note 18.
In establishing the current value of the
commitment and the fair value of managed
assets, actuarial gains and losses may arise.
These occur either because the actual outcome differs from previous assumptions or
because the assumptions have changed.
That portion of the accumulated actuarial
gains and losses at the end of the preceding
year that exceeds 10 percent of the current
value of the largest commitment and the fair
value of the managed assets are reported in
the income statement over the employee’s
average remaining period of employment.
Interest expenses reduced by anticipated
return on managed assets are classified as a
financial expense. Other expense items in
pension costs are charged against operating income.
If the pension costs and the pension provisions determined for the Swedish plans in
accordance with IAS 19 differ from the corresponding amount according to FAR 4, a
cost is reported for special employer´s contribution on the difference in accordance
with URA 43.
The accounting principles described
above for defined-benefit pension plans are
only applied in the consolidated accounts.
Share-related benefits
The Eniro Group offers a share-savings program to all permanent employees in Sweden, Norway and Finland, as well as to
senior executives in Poland and Denmark.
Through the program, employees are invited
to purchase Eniro shares on the Stockholm
Stock Exchange through monthly savings.
Purchase of savings shares takes place
once each quarter for the amount allocated.
After a qualifying period of three years following the purchase of savings shares, participants are allocated additional shares,
called matching shares, without charge. In
addition, senior executives may receive performance-based matching shares for each
savings share based on their position and
the Group’s earnings (cash earnings per
share).
The costs for the share savings program
are reported in accordance with IFRS 2
Share-based payments and the statement
“URA 46, IFRS 2 and social fees” issued by
the Urgent Issues Committee of the Swedish Financial Accounting Standards Council.
ENIRO 57
07-03-08 16.58.20
This means that the calculated value of the
matching shares and the calculated costs for
social security contributions are capitalized
over the qualifying period. In estimating the
fair value of the matching shares, the share
price for purchase of the savings shares is
used after deduction of the estimated dividend during the qualifying period. In estimating the fair value of social security contributions, the most recent share price is used to
calculate social security contributions for the
matching shares earned until every closing
date.
The 2006 Annual General Meeting
approved a share price-related incentives
program directed towards the President,
Group management and certain key persons. The incentives program means that a
maximum of 20 percent of fixed salary is
reserved for allotment of what are called synthetic shares. The number of synthetic
shares, which corresponds to the amount
calculated for each participant, is based on
the average paid price of the Eniro share on
the five trading days after the record date.
After two 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. Accordingly,
this 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 the cash compensation. Funds
are reserved regularly in a manner similar to
other variable compensation. The reserve is
based on the current Eniro share price plus
social security contributions.
Taxes
In the consolidated accounts, both current and
deferred income taxes are reported. In reporting income taxes, the balance sheet method is
applied in accordance with IAS 12 Income
taxes. According to this method, deferred
income tax liabilities and receivables are
reported for all temporary differences between
book values and values for tax purposes of
assets and liabilities. Additional deferred
income tax liabilities are reported when it is
considered probable that there will be loss carryforwards that can be used in the future.
Deferred income tax liabilities and receivables
are estimated on the basis of the anticipated
58 ENIRO
tax rate on the expected date for reversal of
the loss carryforward. The effects of changes
in prevailing tax rates are booked during the
period in which the change is adopted. No
deferred taxes are reported on temporary differences relating to shares in subsidiaries.
The Parent Company’s accounting
principles
The annual report for a legal entity must be
prepared according to the Swedish Annual
Accounts Act and recommendation RR
32:05 Reporting of legal entities issued by
the Swedish Accounting Standards Council.
In recommendation RR 32:05, the Council
has stated that legal entities whose securities are exchange-listed should apply the
same IFRS/IAS rules as applied in the consolidated accounts. The recommendation
contains certain exceptions and amendments to this general rule.
For the Parent Company Eniro AB, the
following deviations from IFRS/IAS are
applied with the support of RR 32:05.
• IAS 1 Presentation of financial statements
is not applied in the preparation of the balance sheet and income statement, which
are instead prepared in accordance with
the Annual Accounts Act.
• IAS 12 Income taxes is not applied to
untaxed reserves, which are reported as
gross amounts in the balance sheet.
Changes in untaxed reserves are reported
in the income statement.
• IAS 17 Leases is not applied for financial
leasing. Currently the parent company has
not any financial leasing.
• IAS 19 Employee benefits is not applied in
the reporting of pension commitments
and pension costs, which are instead
reported in accordance with FAR’s recommendation 4 Reporting of pension liabilities and pension costs. The Parent Company has defined-benefit pension commitments to employees. The Parent Company’s future obligation to pay pensions
thus has a current value determined for
each employee in part by pension level,
age and to the degree a full pension has
been earned. This current value is calculated on actuarial principles and is based
on the salary and pension levels applying
on the closing date. Pension commitments are reported as a provision in the
balance sheet. The interest portion of the
year’s pension costs are reported as a
financial expense. Other pension costs
are charged against operating income.
• Earlier application of item 70 in RR 32:06,
regarding exception to apply IAS 39 concerning provided financial guarantees to
subsidiaries and associated companies.
Financial risk management
Financial risks
The Group’s common finance policy as
established by the Board of Directors is the
foundation for financial operations, delegation of responsibility and managing financial
risks. The focus for Eniro’s risk management
is to eliminate financial risks with consideration taken to costs, liquidity and financial
position. Responsibility for financing and risk
management is centralized in Eniro Treasury.
Eniro is exposed to a number of financial
risks, mainly related to financing, business
operations, transactions in foreign currency
and interest rate changes. To a certain
extent, Eniro is also exposed to credit risks
pertaining to counterparties in derivative
transactions, the investment of surplus
liquidity and credit risks associated with customer relations.
Financing risk
The financing risk pertains to the risk that external financing will not be available when needed
and that the refinancing of maturing loans will
be impeded or become costly. Eniro’s goal is
that 60 percent of available loan facilities will
mature later than one year. Eniro also has a
stated objective of developing relations with
several credit institutions with a high rating.
In conjunction with the acquisition of Findexa, Eniro signed a loan agreement that initially corresponded to SEK 12,000 M with four
Nordic banks as co-arrangers. Of the total
facility, SEK 842 M, or 7 percent, had been
amortized and reduced the facility matured at
December 31, 2006. During 2007 and 2008,
SEK 1,700 M, or 14 percent, will fall due, while
SEK 600 M, or 5 percent will fall due in 2009.
The remaining credit matures on September
25, 2010. For details about this facility, see
Note 16.
ANNUAL REPORT 2006
07-03-08 16.58.20
Currency risk
The currency risk may be divided into the
translation risk and the transaction risk. The
translation risk is the risk that the value of the
SEK, in terms of net investments in foreign
currency, will fluctuate due to exchange-rate
changes. The transaction risk pertains to the
impact on net profit and cash flow resulting
from changes in the value of operating flows
in foreign currency due to exchange-rate
changes.
According to Eniro’s finance policy, decisions pertaining to the hedging of translation
risks are made by the Board. In connection
with net investments in foreign currency,
translation risks must be considered. Eniro
mainly has investments in NOK, EUR, PLN
and DKK. In conjunction with the acquisition
of Findexa, exposure to NOK increased. As
part of efforts to reduce exposure, a part of
the external financing of the acquisition and
the refinancing of loans in Findexa were
raised in NOK. Eniro also has external financing in EUR to reduce its net exposure to German and Finnish operations. In total, external loans in foreign currency amount to NOK
6,877 M and EUR 100 M. For more details
about borrowing, see Note 16 and exposure
to shareholders’ equity, Note 25.
Transaction risks in each geographic
region are limited, because relatively few
contracts are denominated in a currency
other than that of the particular country’s
reporting currency. Major purchasing contracts in foreign currency are interest ratehedged on a case-by-case basis. Of EBITDA
in 2006, 54 percent was derived from operations with currencies other than SEK (NOK
40%, EUR 7%, PLN 4% and DKK 3%). If
current foreign exchanges rates had been 10
percent lower on average in relation to SEK,
EBITDA for 2006 would have been negatively affected by SEK 123 M. The Group’s exposure in EBITDA for changes in foreign currency against SEK are monitored and analyzed regularly.
Interest-rate risk
Interest-rate risks pertain to the risk that net
profit will be affected by changes in general
interest rates. According to Eniro’s finance
policy, the Company’s financial position
must be taken into account when selecting
ANNUAL REPORT 2006
interest-rate maturities. The interest rate
duration must never exceed four years.
The higher indebtedness that arose in
connection with the acquisition of Findexa
increased exposure to interest-rate risk and
the need to hedge future interest payments.
Of the total interest-bearing net indebtedness, NOK 6,077 M (6,815) and EUR 100 M
(100) are interest hedged until maturity, taking scheduled repayments into account. Of
the total loan facility, this means that 80 percent (75) is interest hedged until the various
maturities.
Interest-rate risk is primarily handled by
using interest-rate swaps that convert variable interest to fixed interest. Interest-rate
swaps mean that Eniro enters agreements
with other parties (credit institutes), usually
on a quarterly basis, to exchange the difference between the interest amount according
to a fixed interest contract and the variable
interest amount. For handling of derivatives,
see Note 17. At year-end, the interest rate
duration was 2.5 years (3.2).
The Group continuously analyzes its
exposure to interest-rate risk. Simulations of
interest-rate changes are performed regularly. An increase of market interest rates of 100
points (1 percentage point) would have an
effect of SEK 18 M on the Group’s interest
expenses based on current debt at December 31, 2006.
Credit risk
The credit risk pertains to the risk that the
counterparty will be unable to fulfill his commitments and thus incur a loss. Eniro’s counterparties in derivative transactions are
exclusively credit institutions with a high official credit rating. Surplus liquidity may only
be invested in Swedish government securities, certificates with a rating of (AAA/P1) and
with banks with a high official credit rating.
At year-end, all surplus liquidity was invested
in such banks.
Eniro is exposed to the risk of not being
paid by its customers. However, the risk of
extensive bad debts is limited because
Eniro’s customer base is extremely large and
well differentiated.
Calculation of fair value
Fair value of financial instruments traded on
an active market is based on quoted market
prices on the closing date or, if this is not a
banking day, the immediately prior date for
which market prices were available. The current bid price is used for assets and the current asking price for liabilities.
Fair value of financial instruments that are
not traded on an active market is established
based on market conditions on the closing
date. For the valuation of non-current liabilities, the current market rate for the corresponding maturity period and risk is used.
Interest swaps are valued at the current value
of anticipated future cash flows.
Since the discount effect is insignificant,
accounts receivable and accounts payable
are valued at nominal value reduced by
anticipated credits. An assessment of credit
risk is also performed for accounts receivable.
Significant estimates and assessments
for accounting purposes
Estimates and assessments are continuously evaluated and based on historical information and future assessments that are deemed
reasonable under the prevailing circumstances.
Sensitivity analysis for certain assumptions in valuation of significant items
In valuing balance-sheet items, assumptions
are made that may deviate from the final outcome. Such assumptions that may entail significant risk for the revaluation of important
items are discussed below.
Assessment of goodwill
The reported value of goodwill at December
31, 2006 amounted to SEK 12,267 M. In the
impairment testing of goodwill described
above, certain assumptions must be made.
The recovery value for cash-generating units
is determined by calculating the value in
use.
If the WACC used for discounting cash
flows was 10 percent higher than management’s assessment, an impairment loss
relating to the cash-generating unit Norway
would need to be recognized in an amount
of SEK 780 M (1,220). For other units, the
value in use would still be higher than the
reported value.
ENIRO 59
07-03-08 16.58.20
If the annual future cash flow had been 10
percent lower than management’s assessment, an impairment loss relating to the
cash-generating unit Norway would need to
be recognized in an amount of SEK 528 M
(1,000). For other units, the value in use
would still be higher than the reported value.
Assessment of brands
The reported value of brands amounted to
SEK 1,008 M at December 31, 2006 and corresponded to the value of brands added
through the acquisition of Findexa. The
brands in question are Gule Sider, Telefonkatalogen and Ditt Distrikt. The recovery
value for brands is determined by calculating
the useful value. Essential information for
assessing the value of brands are the cash
flow that they generate and their measured
recognition. The brands in question are used
for both offline and online products.
Deferred income tax assets
Loss carryforwards and deferred income tax
assets attributable to temporary differences
deductible for tax purposes are capitalized
to the extent that it is expected to be possible to offset them against future surpluses.
The reported value of loss carry forwards
amounted to SEK 243 M (291) at December
31, 2006 and is primarily attributable to Norway, Finland and Germany. The reported
value of temporary differences attributable
to non-current assets amounted to SEK 99
M (89). The valuation was based on the most
recent known tax rate. Reductions of tax
rates or new limitations on the right to utilize
loss carryforwards may mean that reported
tax assets must be expensed.
Lower future surpluses primarily mean
that the ability to utilize capitalized loss carryforwards is delayed in time. Such a shift in
time does not affect the valuation, since
deferred income tax assets and liabilities are
valued without discounting.
60 ENIRO
Significant assessments in application of
accounting principles
Revenues
Revenues from directories are booked on
publication. Management considers that this
is in agreement with a correct interpretation
of IAS 18 Revenue. All European competitors apply this principle or close equivalents.
Another alternative is to report revenues from
printed directories incrementally from the
date of publication until publication of the
next directory. If the European standard
should change in favor of this alternative,
either through changes in IAS 18 or an
authoritative statement, the change in
accounting would result in a significant
reduction in consolidated shareholders’
equity.
Revenues from the sale of bundled products are distributed between offline and
online revenues according to a distribution
ratio that reflects the market value of each
product. Up to and including 2006, the distribution ratio was based on measurements of
commercial use of each product, which is
measured continuously through customer
surveys. The distribution ratio is adjusted
annually. As of 2007, this distribution ratio is
based on value for the advertisers. The value
for the advertiser is measured continuously
through customer surveys where the customers estimate the value of commercial
use.
Sales of bundled products in Swedish
operations amounted to SEK 420-450 M. As
of January 1, 2007, 40 percent of revenues
are reported as online revenues, while 60
percent are reported as offline revenues. The
same distribution ratio between online and
offline was used in 2006.
Sales of bundled products in Norway
amounted to approximately NOK 150 M. The
same distribution method will be introduced
in Norway as in Sweden, thus indicating a
distribution of 70 percent to online and 30
percent to offline of all sales as of January 1,
2007. The change in distribution method will
have a negative impact on offline revenues
of NOK 75 M, while online revenues will
increase by NOK 51 M for 2007. EBITDA for
2007 will be negatively affected in an amount
of approximately NOK 24 M. The net difference of NOK 24 M in revenues will be shifted
to 2008.
Standards and interpretations effective
from 2007 and later
At the time for issuance of the annual report
as of December 31, 2006, a number of standards and interpretations have been published which are not yet effective. The following standards and interpretations have peen
adopted by the EU with effective date during
2007:
• IAS 1 Amendments – Presentation of
Financial Statements: Disclosures of equity. The amendments are currently expected to affect disclosures in definition of
equity and capital structure.
• IFRS 7 Financial instruments: Disclosures.
The standard is expected to lead to more
extensive disclosures.
• IFRIC 11 IFRS 2 Group and Treasury Share
Transactions. The interpretation is deemed
not to have any impact on the financial
statements of the Group.
The above standards and interpretations will
be applied as of January 1, 2007.
IFRS 8 Operating Segments (not yet
adopted by the EU) will be effective by January 1, 2009 to be applied for annual periods
beginning on or after that date. The standard
specifies how an entity should report information about its operating segments. The
standard is currently expected to not materially affect the disclosure of segments.
ANNUAL REPORT 2006
07-03-08 16.58.20
Notes
N OT E 1
| SE GME NT INF ORMATION
Sweden
2006
2005
Nordic region
excl. Sweden
2006
2005
Offline
Online
Voice
1,522
653
597
1,598
581
600
2,001
894
310
696
446
184
329
391
–
327
395
–
Total external operating revenues
2,772
2,779
3,205
1,326
720
722
SEK M
Central Europe
2006
2005
Eastern Europe1)
2006
2005
Other2)
2006
2005
Total
2006
2005
–
–
–
3,852
1,938
907
2,621
1,422
784
4,827
Operating revenues
Internal operating revenues
–
–
–
–
–
–
–
–
–
–
–
–
–
6,697
–
–
28
30
–
–
Total operating revenues
2,772
2,779
3,205
1,326
720
722
–
–
28
30
6,697
4,827
Operating income
1,100
1,053
711
–47
142
137
–
–
–81
–70
1,872
1,073
12,879
Assets and liabilities
Goodwill
1,866
1,866
8,608
9,151
1,793
1,862
–
–
–
–
12,267
Other assets
1,046
1,187
4,674
4,791
485
730
–
19
–259
–64
5,946
6,663
Total assets
2,912
3,053
13,282
13,942
2,278
2,592
–
19
–259
–64
18,213
19,542
Distributed liabilities
Undistributed liabilities
1,204
1,249
2,458
1,733
463
493
–
24
0
14,088
0
11,409
4,125
14,088
3,499
11,409
Total liabilities
1,204
1,249
2,458
1,733
463
493
–
24
14,088
11,409
18,213
14,908
50
43
37
63
79
356
33
79
21
19
13
18
–
–
1
–
0
0
1
1
150
418
85
161
Other information
Investments
Depreciation and amortization
It was not possible to distribute the Parent Company’s assets and liabilities to the secondary segments offline, online and voice in a meaningful manner.
1) Defined according to IFRS 5 as operations being discontinued. For further information, see Note 3.
2) The Parent Company’s operating revenues (Other) are attributable in their entirety to intra-Group services valued at market value.
N OT E 2
| BRE AK- DOWN OF OPE RATIONAL C OS TS
Parent
Company
2006
2005
SEK M
Group
2006
2005
Compensation to employees
Paper, printing, binding and distribution
Agents, consultants and other non-employed personnel
Advertising
Depreciation, amortization and impairment losses
Other
2,146
554
356
172
418
1,252
1,526
446
309
159
161
1,211
65
–
22
–
0
35
58
–
48
–
1
15
Total operational costs
4,898
3,812
122
122
SEK M
Group
2006
2005
Parent
Company
2006
2005
Relating to tangible assets
Production costs
Sales costs
Marketing costs
33
24
2
23
1
25
15
2
19
11
–
–
–
0
–
–
–
–
1
–
Total tangible assets
83
72
0
1
Relating to intangible assets
Production costs
Sales costs
Marketing costs
39
11
271
13
1
35
17
37
0
0
–
–
–
–
–
–
–
–
0
–
Total intangible assets
335
89
–
0
Total
418
161
0
1
Impairment losses relating to tangible assets are included in production costs for 2006 in an
amount of SEK 0 M (9).
Impairment losses relating to intangible assets are included in marketing costs for 2006
in an amount of SEK 0 M (22) and in production costs in an amount of SEK 3 M (0).
ANNUAL REPORT 2006
| DIS CO NTINUED O PER ATIO NS
In November 2004, the Board of Directors decided to divest operations in the Eastern
Europe market area. The market area, which included the Baltic countries, Russia and
Belarus, is reported in accordance with IFRS 5 as disposal group (non-current assets held
for sale). Disposal groups are reported at the lower of book value and fair value reduced by
sales costs. At December 31, 2005, negotiations on the sale of operations in Russia and
Belarus had been completed, but final approval from the competition authorities was not
received until the first quarter of 2006, at which time the capital gain was reported.
Income from discontinued operations
2006
2005
3
128
–1
–1
0
–1
0
–9
–39
–63
–9
–19
–1
–8
Income before tax and capital gain/loss
–9
–11
Capital gain from divestment of operations
Tax on income for the year
52
0
92
0
Income from operations being divested
43
81
Operating revenues
Operating costs
Operational costs refer to production cost, sales costs, marketing costs, administration
costs and product-development costs.
Depreciation, amortization and impairment by
function
N OTE 3
Production costs
Sales costs
Marketing costs
Other income and expenses
Assets and liabilities in operations being divested
2006
2005
Tangible assets
–
2
–
2
Non-interest bearing current assets
–
11
Interest-bearing current assets
–
1
–
14
Total assets
–
16
Advances from customers
Accounts payable
Prepaid expenses and accrued income
–
–
–
–
15
3
4
2
–
24
Total liabilities
–
24
ENIRO 61
07-03-09 14.44.17
NOTES
C O N T. N OT E 3
|
DISC ONTINUE D OPE RATIONS
2006
2005
–11
–3
Cash flow from investing activities
56
–
81
–
Total cash flow from discontinued operations
45
78
Cash flow from operations
1)
1)
Refers to the cash payment received from divestment of operations in Russia and Belarus in
2006 and reduced by cash and cash equivalents in the divested companies.
N OT E 4
| E M PL OYE E S
2006
2005
of whom
Total women, %
of whom
Total women, %
Sweden
Norway
Finland
Denmark
Poland
Germany
Russia
Belarus
Other countries
1,455
1,094
530
372
1,098
173
–
–
79
68
47
74
51
60
26
–
–
39
1,430
283
549
308
1,059
180
383
167
395
65
44
72
49
61
27
83
83
70
Total
4,801
59
4,754
64
The number of full-time employees at year-end amounted to 4,821 (5,479).
The average number of full-time employees in the Parent Company was 28 (22) of whom
women 13 (10).
The proportion of women on the Board of Directors was 20 percent (25) and among
other senior executives 36 percent (25).
Absence due to illness as a percentage of total ordinary working time1)
Swedish Group
companies
2006
2005
Total absence due to illness
Percentage of total absence longer than 60 days
Absence, women
Absence, men
29 years and under, (total men and women)
30-49 years, (total men and women)
50 years and older, (total men and women)
1)
2)
6.4%
53%
7.7%
3.5%
4.7%
6.1%
9.9%
6.9%
54%
8.3%
3.7%
4.2%
7.3%
10.1%
Parent
Company
2006
2005
3.7%
87%
7.5%
0.3%
– 2)
4.8%
– 2)
5.8%
67%
9.3%
2.8%
– 2)
7.1%
– 2)
Ordinary working time does not include leave of absence or parental leave. Part-time absence
due to illness is included in the figures.
Figure omitted because the group is comprised of less than 10 individuals.
N OT E 5
| S A LARIE S AND OTHE R C OMPE NSATION
2006
SEK M
Parent Company
Salaries and
other compensation
41
of which pension costs
Subsidiaries
62 ENIRO
Social
costs
Social
costs
24
34
21
1,319
368
11
1,646
Group total
2005
Salaries and
other compensation
436
460
126
Board of
Directors
and
President
SEK M
Parent Company
Sweden, excluding
Parent Company
Norway
Finland
Denmark
Germany
Poland
Other countries
Group total
N OTE 6
Of which
variable
compenOther
sation
emto the
ployees President
Board of
Directors
and
President
Of which
variable
compenOther
sation
emto the
ployees President
11
30
2
8
13
2
7
496
3
8
519
5
7
3
3
6
3
526
175
193
84
117
3
1
0
3
1
9
3
2
5
3
145
191
159
96
104
0
0
0
2
0
3
23
1
7
81
2
43
1,644
14
46
1,340
12
| CO MPENS ATIO N A ND OTHER B ENEFITS , BOA R D O F
DIR ECTO R S A ND S ENIO R EXECUTIVES
Principles
Those members of the Board of Directors elected by the Annual General Meeting receive
compensation in an amount determined by the Annual General Meeting. Compensation to
employee representatives is decided by the Board of Directors. Compensation to the President and other senior executives consists of basic salary, variable compensation, other benefits and pension allocations.
The outcome of variable compensation for 2006 is based on preliminary calculations. Final settlement and any payments will take place during 2007. For both the President and
other senior executives in the Parent Company, variable compensation for 2006 is based on
a balanced scorecard where revenues and EBITDA determine 70 percent of the outcome,
while the remaining 30 percent is determined by the development of market capital, human
capital and strategic change projects, which represent individual targets. For 2006, variable
compensation could amount to at most 50 percent of basic salary for the President and 35
to 60 percent for other senior executives. Of the variable compensation 15 to 40 percentage
points is paid cash. The remaining variable salary portion (at most 20 percent) is converted
to synthetic shares. Variable compensation does not carry entitlement to a pension.
Costs for compensation and other benefits relating to 2006 (excluding statutory
social security costs)
Board of Directors
Board fee
Compensation,
committee work
Lars Berg (Chairman)
825
–
825
Per Bystedt
Barbara Donoghue
Gunilla Fransson
Urban Jansson
Luca Majocchi
Tom Vidar Rygh
Bengt Sandin1)
Daniel Hultenius1)
Ola Leander1)
330
330
330
330
330
330
11
12
9
50
50
–
100
–
–
–
–
–
380
380
330
430
330
330
11
12
9
2,837
200
3,037
SEK 000s
Total
1)
Total
Employee representative
9
115
1,687
Salaries and other compensation by country and between President and Board of
Directors and other employees
2006
2005
106
1,353
389
115
ANNUAL REPORT 2006
07-03-08 16.58.21
NOTES
C O N T. N OT E 6
|
C OMPE NSATION AND OTHE R B ENEFITS , B OA R D O F DIR ECTO R S A ND S ENIO R EXECUTIVES
President and other senior executives
Basic salary
incl. vacation
benefits
Variable
compensation
Other
benefits3)
Pension
costs
Other
compensations4)
President and CEO Tomas Franzén1)
5,211
Other senior executives, Parent Company2)
9,900
1,685
84
1,750
778
9,508
6,093
15,780
3,102
378
2,901
265
16,546
6,336
Total Parent Company
14,420
15,111
4,787
462
4,651
1,043
26,054
12,429
30,200
Other senior executives, Subsidiaries2)
16,281
7,493
718
3,608
657
28,757
13,510
17,517
Total other senior executives, Parent Company and subsidiaries 2)
26,181
10,595
1,096
6,509
922
45,303
19,846
31,937
Total
31,392
12,280
1,180
8,259
1,700
54,811
25,939
47,717
SEK 000s
No. of saving
Total
shares
No. of
synthetic
shares
The President Tomas Franzén has a fixed annual basic salary of SEK 5,000,000 in 2006, also included in the table above is vacation benefits.
2) Other senior executives comprise Group management (14 persons in total, of whom 6 in the Parent Company).
3) Relates to the tax value of company cars.
4) Relates to the company’s cost for the share-savings program.
1)
Variable compensation
Variable compensation to the President and CEO Tomas Franzén amounted to SEK
1,685,000 (1,800 000), corresponding to 34 percent (50) of basic salary. Of variable
compensation for the year, SEK 1,213,000 was in cash, while SEK 472,000 was in the form
of 5,587 synthetic shares. For 2005, Tomas Franzén was previously allocated 10,193
synthetic shares, and his total holding of synthetic shares is after allocation concerning 2006
15,780. The variable compensation for senior executives amounted to SEK 10,595 000
(4,976,000), corresponding to 40 percent of basic salary. Of variable compensation for the
year, SEK 7,898,000 was paid in cash and SEK 2,697,000 in the form of 31,937 synthetic
shares.
Share-Savings Program
In 2005, Eniro Group employees in Sweden, Norway and Finland, as well as executive
management in Poland and Denmark, were invited to participate in a share-savings program
through which they may save up to 7.5 percent of gross salary during 2005-2008 to
purchase Eniro shares on the Stockholm Stock Exchange. Subject to the conditions that the
share savings are held for a period of three years from the purchase date and that the
employee remains employed by Eniro, each savings share entitles the holder to 0.5 shares
(matching shares). In addition, senior executives are entitled to 2 to 8 performance-based
matching shares for each savings share, depending on their position and the development
of consolidated result (cash earnings) over the three-year period. During 2006, a total of
47,126 savings shares were purchased, of which 3,184 by the President and 9,990 by other
senior executives. Since the program started in 2005, 89,014 savings shares were
purchased, of which 6,093 by the President and 19,845 of other senior executives. The
year’s costs for the share-savings program excluding social security amounted to SEK
4,944,000 of which SEK 778,000 for the President and SEK 922,000 for other senior
exectives.
The year’s share saving is estimated to result in a total of 42,596 matching shares, of
which 7,450 to the President and 16,483 to other senior executives. Saving in the program
N OT E 7
Pensions
Pension costs for the President Tomas Franzén amounted to SEK 1,750,000 (1,260,000).
Pension costs for other senior executives amounted to SEK 6,509,000 (5,477,000),
corresponding to 25 percent of basic salary. The President and CEO Tomas Franzén has a
premium-based pension for which the fee amounts to 35 percent of basic salary. Other
members of executive management have defined-contribution pensions with fees
amounting to at most 35 percent of basic salary or are subject to the normal ITP plan. All
pension benefits are vested, meaning that they are not dependent on future employment.
The Parent Company and the Swedish subsidiaries follow the ITP plan. Swedish pension
commitments are calculated by PRI, and credit insurance is obtained through FPG, an
insurance company that underwrites pension commitments. The Group’s employees in other
countries are normally covered by country-specific pension plans. Fees for these plans are
usually a part of the employee’s salary.
Termination and severance pay
The President and CEO Tomas Franzén has a termination period of 12 months plus an
additional 12 months’ severance pay if employment is terminated by the company. There is a
mutual notice period of a maximum of 12 months between the company and other senior
executives. At termination of employment by the company, a maximum of an additional 12
months’ severance pay is paid.
Related-party transactions
Compensation to senior executives is presented above. In other respects, no transactions
with related parties occurred during the year.
N OTE 8
| AUD ITING F E E S
SEK M
since the start in 2005 is estimated to result in 206,229 matching shares, of which 32,178 to
the President and 60,833 to other senior executives.
Group
2006
2005
Parent
Company
2006
2005
| FINA NCIA L INCO M E A ND CO S T
SEK M
Group
2006
2005
Parent
Company
2006
2005
PricewaterhouseCoopers, audit assignments
6
5
2
1
Income
PricewaterhouseCoopers, other assignments
2
6
0
3
Exchange-rate gains on borrowing
0
81
–
–
Other auditors, audit assignments
0
1
–
–
Exchange-rate gains on intra-Group receivables
and liabilities
30
38
4
65
Other financial income
External financial interest income
Internal financial interest income
3
28
–
5
16
–
–
1
30
–
1
45
Total
61
140
35
111
0
7
–
32
Cost
Exchange-rate losses on borrowing
Exchange-rate losses on intra-Group receivables
and liabilities
43
44
21
62
Other financial cost
Interest expense for pension liabilities
External financial interest cost
Internal financial interest cost
1
13
540
–
2
11
132
–
–
–
1
343
–
–
67
45
Total
597
196
365
206
–536
–56
–330
–95
Total net financial items
The Parent Company income statement includes exchange-rate differences that are
intended as hedges of equity in subsidiaries. Such differences are booked directly against
equity in the consolidated accounts. This amounted to expenses of SEK 8 M (income: 3).
ANNUAL REPORT 2006
ENIRO 63
07-03-08 16.58.21
NOTES
N OT E 9
| TA X
Group
2006 2005
SEK M
Deferred tax liabilities
The following components are included in tax cost:
SEK M
Current tax cost on income for the year
Additional tax cost corresponding to interest on tax
equalization reserve
Group
2006
2005
Parent
Company
2006 2005
126
164
–152
–109
6
5
6
6
Adjustments of current tax for prior periods
Deferred tax cost due to change in tax rates
Deferred tax cost relating to utilized loss carry-forward
Deferred tax cost relating to temporary differences
Deferred tax income relating to change in tax rates
Deferred tax income relating to temporary differences
Deferred tax income relating to loss carry-forward
Adjustments of deferred tax for prior periods
31
–
146
142
–
–60
–63
–3
2
5
16
211
–10
–64
–148
–
7
–
–
1
–
–
–
–
–
–
–
1
–
–
–
–1
Tax cost recognized
325
181
–138
–103
–
0
255
292
325
181
117
189
Current tax recognized directly in equity
Total tax for the year
The effective tax rate calculated as total tax in relation to income before tax amounted to
24% (18). The preceding year included positive tax effects in conjunction with the
acquisition of Findexa that reduced tax cost for 2005 by about SEK 100 M. During 2006
Eniro AB paid 7 MSEK in taxes related to a dispute with the Swedish Tax Authority
regarding deductible expenses from 2001, which the company lost. Also, Oy Eniro Ds paid
24 MSEK in taxes related to a dispute between 2001-2004. In above specification of tax in
the income statement the payment is reported as a correction of current tax for prior
periods. During the year Eniro Norway has utilized tax loss carryforwards. The effect of
Group contribution received by the Parent company is recognized directly in equity of 255
MSEK (292).
Relationship between tax cost for the year and tax cost in accordance with
prevailing Swedish tax rate
Group
SEK M
2006 2005
Reported earnings before tax
1,336
1,017
374
285
Taxable temporary differences
goodwill and other intangible assets
tangible non-current assets
work in progress
provisions for pensions
untaxed reserves
financial instruments
Netting of assets and liabilities
Total deferred tax liabilities
Reserve for disputed tax assets
Total provisions for taxes
Tax effect of:
– operating costs that are not deductible for tax
purposes
– revenues that are not taxable
Losses for which loss carry-forwards were not taken
into consideration
Losses from prior periods now recognized
15
170
–72
–246
–
3
–30
–1
Previously unutilized loss carry-forwards now deemed
possible to utilize
10
–28
Adjustment of tax for prior periods
28
–11
0
9
325
181
Differences between Swedish and foreign tax rates
Tax cost recognized in income statement
Total deferred tax assets
55
34
–
36
10
31
58
13
44
–400
138
172
1,530
1,573
Loss carry-forwards which are deemed to not meet the criteria for reporting as receivables
amounted to SEK 1,530 M and corresponded to a potential future tax reduction of
SEK 612 M (630).
N OTE 10
| TA NG IB LE A S S ETS
Buildings
Parent
Company
2006
2005
62
71
–
–
Investments during the year
Sales and disposals
Translation differences for the year
3
–
–3
1
–12
2
–
–
–
–
–
–
Acquisition value on closing date
62
62
–
–
Accumulated depreciation on opening date
Depreciation for the year
Sales and disposals
–13
–2
–
1
–16
–3
5
1
–
–
–
–
–
–
–
–
Accumulated depreciation on closing date
–14
–13
–
–
Residual value of buildings on closing date
48
49
–
–
Land
Residual value of land on closing date
Group
2006
2005
Parent
Company
2006
2005
12
12
–
0
0
–
–
–
12
12
–
–
No taxation values are reported since all property is located outside Sweden
Equipment
Group
2006
2005
Parent
Company
2006
2005
Acquisition value on opening date
655
503
2
2
Acquisitions through company purchases
Sales and disposals
65
1
–92
–29
42
138
–48
20
0
–
–1
–
0
–
–
–
600
655
1
2
–374
–336
–2
–1
–81
75
18
–60
39
–17
–
1
–
–1
–
–
–362
–374
–1
–2
Depreciation for the year
Sales and disposals
Accumulated depreciation on closing date
Group
2006
2005
Accumulated depreciation on opening date
64 ENIRO
12
1,020
Total future deductions
37
32
30
4
18
27
5
17
–
–275
–
1,227
–
–
–
–
1,573
Deferred tax assets
291
1,008
–
–
–
–
1,530
243
1,227
Due dates
During 2007
During 2008
During 2009
During 2010
Without limitation
The following components are included in deferred tax assets and deferred tax
liabilities.
Group
SEK M
2006 2005
Loss carry-forwards
Temporary differences deductible for tax purposes
goodwill and other intangible assets
tangible assets
financial assets
work in progress
provisions for pensions
other provisions and accrued costs
accrued revenues
accounts receivable
financial instruments
Netting of assets and liabilities
1,000
18
5
12
361
12
–400
Loss carry-forwards and other future tax deductions without corresponding
deferred tax assets
Group
SEK M
2006 2005
SEK M
Tax at the domestic rate of 28%
919
0
6
19
400
158
-275
ANNUAL REPORT 2006
07-03-09 14.49.16
NOTES
C O N T. N OT E 1 0
| TANGIBL E ASSE TS
Group
2006
2005
Accumulated impairment losses on
opening date
Parent
Company
2006
2005
–50
–40
–
–
–
10
1
–9
–
–1
–
–
–
–
–
–
Accumulated impairment losses on closing date
–39
–50
–
–
Residual value of equipment on closing date
199
231
0
0
Residual value of tangible assets on closing date
259
292
0
0
7
0
0
0
Impairment losses for the year
Sales and disposals
Compensation received from divestment of
tangible assets
Assets in discontinued operations consist of tangible assets in
the following amounts
SEK M
Group
2006
2005
Equipment
–
2
Total tangible assets
–
2
N OT E 1 1
| L E ASING C ONTRAC TS
Contracted leasing fees for operational leasing contacts that cannot be terminated
SEK M
– due within one year
– due between one and five years
– due later than five years
Group
2006
2005
142
286
24
133
367
72
The year’s operating expenses include fees for operational leasing contracts in an amount of
SEK 167 M (124). Leasing contracts for premises include customary index clauses. In
February 2006 an agreement was signed between Eniro Sverige AB and HP Sverige
concerning operation of servers, networks, databases and IT-applications. Included in the
contract is support and maintenance of office IT including service desk. The contract period
is 2006 to 2008 with possibility for both parties to extend the the agreement for another
three years. At the end of 2006, the yearly cost is 55 SEK M. No binding agreement to
repurchase the assets exist. The contract is an operational leasing contract and payments
according to the agreement are included in the specification above.
N OT E 1 2 | I NTANGIBL E ASSE TS
SEK M
Goodwill
Adjustments of previous years’ acquisitions against tax claims
Residual value of goodwill on closing date
Group
2006
2005
12,879
4,822
58
–
–670
8,042
–18
33
12,267 12,879
Brands with indefinite useful life
2006
1,167
0
–
1,191
–79
–24
Residual value of brands with indefinite useful life on
closing date
1,088
1,167
Other brands
2006
2005
2005
Customer relations
2006
2005
Accumulated amortization on opening date
Amortization for the year
–18
–221
11
–
–18
–
Accumulated amortization on closing date
–228
–18
Residual value of customer relations on closing date
1,878
2,207
Other intangible assets
2006
2005
395
9
78
–13
260
95
42
–2
469
395
–144
–109
7
–94
–49
–1
–246
–144
–7
–3
0
–3
–4
0
Accumulated impairment losses on opening date
Impairment losses for the year
Accumulated impairment losses on closing date
–10
–7
Residual value of other intangible assets on closing date
213
244
Total residual value of intangible assets on closing date
Unit
WACC
before
tax
Annual cash
flow growth Margin over
yrs. 0–3 book value
6%
2%
741%
5%
637%
–8%
657%
–5%
Finland
Poland
Denmark
Germany
8.3%
8.8%
8.9%
8.5%
28%
5%
21%
18%
74%
34%
245%
32%
53%
16%
202%
17%
56%
20%
210%
19%
With margin, the difference between value in use and book value, is ment.Differences in the
discount rate before tax are due to differences in country-specific interest levels and tax
rates. The risk-free interest used for estimating the discount rate amounted to 4.3 percent in
all units except Poland, where it amounted to 4.8 percent.
Goodwill and other intangible assets with indefinite useful life are reported for the following
cash-generating units. At December 31, the residual value consisted of the following items.
–
–
Residual value 31 December
–
–
SEK M
15
–
–
–
–2
0
–
–
–2
–
Residual value of other brands on closing date
13
–
Customer relations
2006
2005
2,225
36
–155
–
2,268
–43
2,106
2,225
ANNUAL REPORT 2006
Margin at
10% lower
cash flow
9.0%
8.9%
16
–1
Margin at
10% higher
interest
Sweden
Norway
15,459 16,497
Goodwill and other intangible assets with indefinite useful life are reported at value in use.
Brands are considered to have indefinite economic life, since they are market-leading and
have high recognition. Brands are long established and used both offline and online. There
are currently no known legal, contractual or competitive factors limiting their useful life. The
brands comprise Gule Sider, Telefonkatalogen and Ditt Distrikt, which were added with the
acquisition of Findexa 2005.
Other brands, customer relations and other intangible assets are amortized over their
useful life. The useful life of other brands is 5–10 years. Average remaining useful life for other
brands is about 5 years. The useful life of customer relations is based on repurchasing frequency and amounts to 5–10 years. The average remaining useful life of customer relations
amounts to 9 years (10).
In valuing goodwill, future cash flows after tax were estimated over the coming three
years. Forecasts are based on assessments of each unit’s development with consideration
taken to local market prerequisites. From year 4 onward, growth is assumed to correspond
to inflation (2.0–2.5 percent). In valuing brands the “relief from royalty” method has been
used, implying the current value of a hypotethical royalty payment of 4–5 percent and the
other assumtions below regarding Norway.
When valuing customer relations, in addition to the assumtions below, also the retention
rate has been used. The valuation was based on the following assumptions and resulted in
the following amounts for the most significant units.
Goodwill
Sweden
Denmark
Finland
Norway
Poland
Germany
Total
Brands
Norway
Total intangible assets with indefinite useful life
Group
2006
2005
1,866 1,866
269
246
972 1,013
7,367 7,892
826
855
967 1,007
12,267 12,879
1,088
1,167
13,355 14,046
ENIRO 65
07-03-09 14.44.53
NOTES
C O N T. N OT E 1 2
| INTANGIBL E ASSE TS
Goodwill included in reported residual value for which
amortization is deductible for tax purposes.
Group
2006
2005
SEK M
Goodwill
SEK M
Group
2006
2005
Granted, unutilized credit facilities
due within one year
due during following five years
–
1,097
due later than five years
Denmark
Finland
Total
153
951
126
991
1,104
1,117
Parent
Company
2006
2005
–
833
–
–
–
–
–
–
–
–
Total granted credit facilities
1,097
833
–
–
Fair value of long-term borrowing
8,545 10,123
–
–
The fair value of short-term borrowing is equal to book value, since the loans have variable
interest rates that are hedged through interest swaps.
N OT E 1 3
| ACC OUNTS RE C E IVABL E
SEK M
Group
2006
2005
Gross accounts receivable
1,186
Provisions for customer losses
Net accounts receivable
1,382
Parent
Company
2006
2005
12
–
–144
–174
–
–
1,042
1,208
12
–
Provisions for customer losses
Group
2006
2005
SEK M
Provisions at the beginning of the year
New provisions
Provisions utilized during the year
Reversed provisions not utilized
Reclassification to discontinued operations
Effects of exchange-rate changes
Provisions at the end of the year
N OT E 1 4
Parent
Company
2006
2005
174
204
–
6
120
–115
–30
–
–5
131
–124
–10
–27
0
–
–
–
–
–
–6
–
–
–
–
144
174
–
–
| P R E PAID E XPE NSE S AND AC C RUE D INCO M E
Group
2006
2005
SEK M
Parent
Company
2006
2005
1
2
–
–
Other prepaid expenses
Accrued income
Accrued interest income
105
97
0
95
88
0
1
–
–
3
–
1
Total
203
185
1
4
N OT E 1 5
Cash and cash equivalents consist primarily of bank balances and smaller current
investments in foreign units that are not included in the Group’s central cash pool. Current
investments are classed as financial assets valued at fair value in the income statement.
Group
2006
2005
Current investments
Parent
Company
2006
2005
19
19
1
–
Cash and bank
459
723
0
7
Total cash and cash equivalents
478
742
1
7
N OT E 1 6
| B O RROWING
SEK M
Group
2006
2005
Long-term bank loans
8,545 10,123
Short-term bank loans
–
–
876
–
–
–
–
Interest-bearing loans have the following maturity structure
during the coming year
763
876
during the following five years
8,545 10,123
–
–
–
–
Total
9,308 10,999
–
–
Reported amounts by currency for loans
EUR
NOK
SEK
905
7,575
828
943
9,020
1,036
–
–
–
–
–
–
Total
9,308 10,999
–
–
66 ENIRO
763
Parent
Company
2006
2005
9,308 10,999
Total bank loans
EUR
NOK
SEK
4.47% 4.70%
5.59% 5.35%
4.60% 3.51%
–
–
–
–
–
–
The portion of borrowing that was not interest-hedged (SEK 1,803 M at year-end 2006) is
affected by interest-rate fluctuations. An interest-rate change of 1 percent affects interest
expenses by SEK +/– 18 M per year.
Financing
In conjunction with the acquisition of Findexa, Eniro entered a five-year multi-currency
borrowing agreement (with an option to borrow in different currencies) totaling SEK 12,000 M
with a bank consortium led by Svenska Handelsbanken AB as the facility and security agent
plus Swedbank AB, Nordea Bank AB and Skandinaviska Enskilda Banken AB as other
leading issuers. The loan has a fixed amortization plan but may be paid prematurely, if the
Company so wishes. The transaction costs in conjunction with the borrowing agreement for
SEK 12,000 M amounted to SEK 96 M. The borrowing costs are reported in the income
statement as an interest expense from the date at which the agreement was entered on
September 25, 2005 until the due date on September 25, 2010. During 2006, certain terms
in the agreement were renegotiated. The transaction costs thus arising amounted to SEK 36
M and were booked in the income statement as an interest expense from July 1, 2006 and
due on September 25, 2010. At December 31, 2006, the capitalized borrowing costs
amounted to SEK 99 M (91) for the loan.
Interest levels
The loans carry a surcharge of 1.0 percent (1.35) over IBOR and will in future follow an
interest ladder based on the company’s debt level (defined as consolidated net debt in
relation to EBITDA) as shown below:
At most 4.50 but above 3.50
1.00%
Up to and including 3.50 but above or equal to 3.00
0.75%
Less than 3.00
0.65%
Interest hedging
The loan is subject to the condition that Eniro AB will hedge 90% of the interest payments
due on the acquisition credit of NOK 4,515 M, as well as refinancing credits of NOK 2,300
M, EUR 100 M and SEK 900 M. The hedging requirement ceases and other restrictions in
the borrowing agreement are eased when the Company’s net debt falls below 3.5 in relation
to EBITDA.
| C A SH AND C ASH E QU IVAL E NTS
SEK M
Effective interest rates on the closing date were as
follows:
Guarantees and collateral
The borrowing agreement is guaranteed by Eniro AB, Eniro Sverige AB, Din Del AB,
Respons Group AB, Eniro Treasury AB, Eniro Norway AB, Eniro Holding AB, Oy Eniro
Finland Ab, Eniro Deutschland GmbH, Eniro Polska Sp. Z o.o., Eniro Holding AS, Eniro
Denmark A/S, Findexa Luxemburg Sarl and Eniro Norge AS. The above subsidiaries are parties to the borrowing agreement in the capacity of obligors. As collateral for the loan, the
Company has pledged shares in most operating subsidiaries according to the above, as well
as securities consisting in part of intra-Group loans.
Covenants
The borrowing agreement contains the normal restrictions and conditions on financial
covenants, such as
– Consolidated net debt in relation to consolidated EBITDA
– Consolidated EBITDA in relation to interest payments
– Consolidated cash flow to consolidated interest and amortization
plus restrictions and limitations regarding further borrowing, guarantee commitments and
pledges, significant changes in operations and acquisitions and divestments.
Termination/grounds for termination
The Company is free to terminate the borrowing agreement. In other respects, the
agreement contains the normal grounds for termination falling under events of default.
ANNUAL REPORT 2006
07-03-08 16.58.22
NOTES
N OT E 1 7
| D E RIVATIV E F INANC IAL INSTRU ME NTS
Changes during the year, defined-benefit pension plans
2006
SEK M
Assets
Interest swaps
cash-flow hedges
Liabilities
172
Currency swaps
cash-flow hedges
Assets
–
0
Total
2005
1
–
172
Liabilities
67
–
–
–
1
67
Less long-term portion
172
–
1
67
Total long-term derivative
instruments
172
–
1
67
–
–
–
–
Short-term portion
The swap contracts entered entail a swap of variable interest rates for fixed rates. The
nominal loan amount for swaps at December 31, 2006 was NOK 6,077 M and EUR 100 M.
The fixed interest rates varied from 3.12% to 4.59%, while the variable rates were based on
three-month IBOR rates.
The Group’s exposure with respect to borrowing for changes in interest rates and
contracted dates for rate negotiations is shown below.
At December 31, 2005
6 months
of less
6–12
months
12–36
months
36 months
or more
Total
2,474
435
1,977
6,113
10,999
Total borrowing
Effect of interest swaps
4
4
13
45
66
SEK M
Group
2006
2005
Parent
Company
2006
2005
Net debt at the beginning of the year
365
323
10
13
Net costs reported in income statement
–2
20
2
3
Obligations assumed through company acquisitions
14
41
–
–
–41
–19
–
–6
Pension payments
–2
–
–
–
Net debt at the end of the year1)
334
365
12
10
The Parent Companys retirement benefit obligations concerns the capital value of pension
obligations in accordance with Swedish standards, FARS´s Recommendation 4.
Specification of costs for defined-benefit pension plans
SEK M
Group
2006
2005
Parent
Company
2006
2005
Costs relating to employment during current year
43
15
1
2
Interest expense
28
17
0
0
Return on managed assets
–22
–9
–
–
Actuarial net gains/losses reported during the year
–42
0
–
–
Costs relating to employment during previous years
14
–3
–
–
Total costs for retirement benefit obligations
21
20
1
2
1
3
0
0
22
23
1
2
Management costs
Total costs for defined-benefit pension plans
Pension provisions include provisions in Eniro 118 118 for early retirement pensions in accordance with collective agreements for negotiated pension entitlements (ERB Plan) from the ages
of 55, 60 and 63 for certain personnel categories. The ERB Plan is a pension plan that includes
certain Eniro employees who were employed by Televerket (now TeliaSonera) prior to incorporation in 1991. According to the agreement, compensation will be partially paid by the former owner Telia Sonera. On December 31, 2006, the corresponding claim amounted to SEK 106 M (115)
and is reported as an interest-bearing non-current asset that is not included in managed assets.
The credit risk for this receivable is considered negligible. Pension liabilities primarily relate to
employees in Sweden of whom nearly all are covered by defined-benefit pension plans. Eniro
118 118 has made provisions to a pension fund, while other commitments are guaranteed
through insurance with FPG. Retirement benefit obligations are calculated annually on the opening date applying actuarial principles according to the Projected Unit Credit Method.
1)
6 months
of less
6–12
months
12-36
months
36 months
or more
Total
2,133
382
1,300
5,493
9,308
–11
–12
–41
–108
–172
Total borrowing
Effect of interest swaps
N OT E 1 8
| RE TIRE ME NT- BE NE F IT OBL IGATIONS
The amounts reported in the consolidated balance sheet were calculated as
follows
Parent
Group
Company
SEK M
2006
2005
2006
2005
Current value of funded commitments
Fair value of managed assets
Current value of unfunded obligations
Special employer´s contributions included in reported
net debt
Unrecognised actuarial losses
Net debt in balance sheet reported as pension
provisions1)
636
297
–
–
–389
–199
–
–
247
98
–
–
204
301
11
9
1
1
1
1
–118
–35
–
–
334
365
12
10
The following assumptions were made concerning Sweden: discount factor 4.0%, (4.8),
salary increases 2.8% (2.8), inflation 2% (2.0,) increase in income base amount 2.8% (2.8),
return from pension fund 5.1% (5.3). Internal data were used for attrition rates, while
remaining employment time was calculated individually by the PRI pension service and
mortality according to swedish financial supervisory authority. A 40-year male is expected to
live until the age of 80 and a 40 year old woman until the age of 86. Actual return on
managed assets amounted to SEK 16 M (23), equivalent to 7.8% (14.4). Return on other
pension-related receivables was 5.1% (5.2).
The following assumptions were made concerning Norway: discount factor 4.35% (4.50),
salary increases 4.5% (3.0), inflation 2.25 increase in income base amount 4.25% (3.0), return on managed assets 5.4% (5.5). Internal data were used for attrition rates.
Expected return on the pension fund’s assets is based on 3.6% return on interest-bearing securities and 7.5% for share investments. The distribution between interest-bearing securities and shares is assumed to be 60/40 over the long term, corresponding to a weighted
return of 5.1%. At December 31, 2006, the portfolio contained 51% Swedish interest-bearing securities, 17% interest hedge funds, 22% Swedish shares and 10% global shares. For
the interest portfolio, the average period was 1.58 years and the average coupon rate was
3.91%.
The year’s unrecognised actuarial losses were distributed as follows:
2006
Total pension costs
Effects of experience-based adjustments
ITP plan
Managed assets
ERB plan
–15
3
–1
Total effect of experience-based adjustments
–13
Effect of changes assumptions
ITP plan
Managed assets
ERB plan
–62
0
–8
Total effect of changes assumptions
–70
Total unrecognised actuarial losses
–83
ANNUAL REPORT 2006
SEK M
Group
2006
2005
Parent
Company
2006
2005
Costs for defined-benefit plans
22
23
1
2
Costs for defined-contribution plans
Costs for special employer´s contributions and tax on
returns
Cost reported as interest expense
99
92
6
6
18
11
2
3
–13
–11
–
–
Cost reported in operating income
126
115
9
11
The pension cost reported in the income statement is distributed by function as follows:
production SEK 40 M (41), sales SEK 71 M (46), marketing SEK 12 M (2), administration
SEK –10 M (18) and other SEK 13 M (8).
ENIRO 67
07-03-08 16.58.22
NOTES
N OT E 1 9
| OT HE R PROV ISIONS
N OTE 20
| ACCR UED EXPENS ES A ND PR EPA ID R EV EN U ES
Long-term provisions
Group
2006
2005
SEK M
Parent
Company
2006
2005
Provisions on opening date
43
74
–
–
New provisions
Reversal of unutilized provisions
Effects of changed exchange rates
Reclassifications
3
–1
–
–
–5
0
0
–5
5
–31
–
–
–
–
–
–
–
–
–
–
Provisions on closing date
40
43
–
–
Group
2006
2005
SEK M
Accrued personnel-related costs
217
223
21
18
Accrued interest expenses
Other accrued expenses
Prepaid online revenues
4
188
783
2
255
814
2
4
–
0
7
–
1,192
1,294
27
25
Total
N OTE 21
| CO MMITM ENTS A ND CO NTING ENT LIA B I LIT IES
Group
2006
2005
SEK M
Short-term provisions
Group
2006
2005
SEK M
Parent
Company
2006
2005
Provisions on opening date
24
66
0
6
New provisions
Reversal of unutilized provisions
Effects of changed exchange rates
Reclassifications
11
–7
–7
0
0
0
–60
–9
0
27
–
–
–
–
–
–
–6
–
–
–
Provisions on closing date
21
24
0
0
Parent
Company
2006
2005
Guarantees
Parent
Company
2006
2005
–
4
Sureties and contingent liabilities relating to subsidiaries
Sureties
Pledged shares in subsidiaries
Guarantee provisions FPG/PRI
Tax disputes
–
–
8,131
8
42
–
–
7,856
7
49
68
68
9,359 10,999
–
–
0
0
21
28
–
–
Total
8,181
7,916
9,448 11,095
Internal receivables and shares in subsidiaries have been pledged as collateral for Eniro
Treasury’s external loans. Alternatively, subsidiaries have also provided sureties for the
Parent Company’s liabilities. See also Note 16 Borrowing.
Provisions at December 31, 2006 related primarily to remaining provisions in conjunction
with refocusing of German operations, provisions for disputed selective tax in Sweden,
provisions for stamp tax in Poland and provisions for ongoing legal proceedings.
N OT E 2 2
| S HARE S AND PARTIC IPATIONS IN GROUP CO MPA NIES
Shares and participations directly and indirectly owned by the Parent Company
Name
TIM Varumärke AB
TIMI Nederlands BV
Eniro Danmark A/S
Respons Group AB
Respons Holding AB
Eniro 118 118 AB
Gula Tidningen AB
Lila Tidningen i Skåne AB
Gula Tidningen Trader AB
Gula Interactive Trader AB
Eniro International AB
Budapest Projekt 92 KFT
Eniro Emfas AB
Magyar Herold Business Data KFT
TeleMedia International BV
Eniro Sverige AB
Eniro Sverige Försäljning AB
Din Del AB
Kataloger i Norr AB
Din Del Försäljning AB
Eniro Norge (merged during 2006)
Eniro Treasury AB
Eniro Holding AB
Findexa Luxembourg Sarl
Eniro Norway AB
Eniro Holding AS (prev. Findexa Norway AS)
Eniro Norge AS (prev. Findexa AS)
Index Publishing AS
Din Pris AS
1880 Nummeropplysning AS
Kartforlaget AS
Grenseguiden AS
Økonomisk Literatur Norge AS
Kvalex AS
Yelo AS
Rosa Index AS
Index Media AS
Telefonkatalog AS
1880 Telefonkatalogen AS
Capital share, %
Book value at
Dec. 31, 2006
SEK M
Book value at
Dec. 31, 2005
SEK M
100
0
0
100
407
407
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
752
752
–
52
23
23
1,494
1,494
6
6
1
–
8,377
0
163
7,856
Corporate.
registration no.
Registered office
No. of shares
556580-8515
Stockholm
1,000
33.25.87.44
Amsterdam
50
100
18 93 69 84
Copenhagen
24,000
556639-2196
556570-6115
556476-5294
556470-0101
556488-5191
556555-7153
556573-4018
556429-6670
01-09-362834
556445-6894
01-09-164362
33.25.94.60
556445-1846
556580-1965
556053-2409
556570-3707
556572-1502
974209314
556688-5637
556688-5645
B-100.546
556688-5652
986656022
963815751
976553225
870987242
976491351
984604513
988437549
987529547
980253341
988875740
983789579
986493492
988437565
988437506
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Budapest
Stockholm
Budapest
Amsterdam
Stockholm
Stockholm
Stockholm
Skellefteå
Stockholm
Oslo
Stockholm
Stockholm
Luxembourg
Stockholm
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Kristiansand
1,000
1,050,915
75,000
1,000
1,000
1,000
1,000
1,000
100
40
500,000
1,000
200,000
1,000
1,000
200,000
1,000
1,000
343,848
1,000
1,100,000
55,206
30,958
106
1,020
100
100
100
100
100
1,000
100
100
100
Telefonkatalogen 1880 AS
988437476
Oslo
100
100
Rosa Sider AS
Hvite Sider AS
Din Bydel AS
Findexa Forlag AS
988437581
988437417
888437452
988271608
Oslo
Oslo
Oslo
Oslo
100
100
100
100
100
100
100
100
68 ENIRO
ANNUAL REPORT 2006
07-03-08 16.58.23
NOTES
N OT E 2 2
| SHARE S AND PARTIC IPATIONS IN GR O UP CO MPA NIES
Name
Plan B förlag AS
Editorium AS
Bedriftkatalogen Bizkit AS
Gule Sider AS
Telefonkatalogens Gule Sider AS
Bedriftskatalogen AS
Lokalveiviseren Informasjonsforlaget AS
Gule Sider Internett AS
Proff AS
BizKit AS
Ditt Distrikt AS
Scandinavia Online AB
Netbonus Norge AS
Bilguiden Sverige HB
Oy Eniro Finland Ab
EDS Media Oy
Eniro Deutschland GmbH
Wer Liefert Was? GmbH
WLW Vermögensverwaltungs GmbH
Wer liefert was? GmbH Switzerland
Wer liefert was? GmbH Austria
Wer liefert was? Spol. S.r.o. Czech Republic
Wer liefert was? D.o.o Slovenia
Wer liefert was? D.o.o Croatia
Eniro Windhager GmbH
Esenza Werbeagentur, GmbH
Eniro Polska Sp.z.o.o
Corporate.
registration no.
Registered office
No. of shares
Capital share, %
989439448
985126887
985822883
968306782
968306405
979763379
979915314
980287432
982175968
982175968
883878752
556551-9989
981211391
969628-6955
0100130-4
1634986-4
HRB 77757
HRB 44606
HRB 5850
CH 170.4.001.503-4
108453
62584669
Srg 98/01016
80282955
HRB 22085
HRB 21868
RH B 31000
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Oslo
Stockholm
Oslo
Stockholm
Turku
Helsinki
Hamburg
Hamburg
Hamburg
Baar
Klosterneuburg
Prague
Celie
Zagreb
Stuttgart
Stuttgart
Warszaw
1,000
100
100
100
100
100
100
100
100
100
100
100,000
100,000
100
100
100
100
100
100
100
100
100
100
100
100
100
60,000
500,000
1
2
1
1
1
1
1
1
1
1
1,035,209
100
100
100
1001)
100
100
100
100
100
100
100
100
100
Total
Book value at
Dec. 31, 2006
SEK M
Book value at
Dec. 31, 2005
SEK M
0
0
331
42
430
85
320
85
1,124
1,124
13,030
12,324
1) Of which Eniro AB directly owns 5.1%
The following companies and operations were established or acquired during 2006
Company / operation
Din Pris AS
Kataloger i Norr AB
Plan B AS
Editorium AS
Thisted/Favrskov
Webdir
Proff AS
06–02–01
06–06–01
06–01–16
06–02–01
06–12–01
06–02–01
06–02–01
100
100
100
100
asset deal
asset deal
100
Corp. reg.
no.
Registered
office
OOO Eniro Rus-S
228896
St Petersburg
OOO Eniro Rus-M
Belfakta SP
100844
1047
Moscow
Minsk
The following companies were divested during 2006
Company / operation
The following companies were merged or liquidated during 2006
Corp. reg. no.
Registered
office
1726828-1
Helsinki
974209314
983689639
983689949
982775159
556397-6892
556556-0900
556549-0892
556588-1397
556546-3758
556575-7480
556546-3451
556546-3170
556544-2331
556606-0140
556445-0921
556474-9108
556465-2013
556598-3359
556423-9704
969629-3753
969630-7355
32046863
Oslo
Oslo
Oslo
Oslo
Halmstad
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Stockholm
Kiev
Date Capital share, %
Changes during the year
Parent Company
Shares in subsidiaries at Dec. 31, 2005
12,324
Impairment loss, Gula tidningen AB
Capital contributions to
– Oy Eniro Finland Ab / OY Eniro Ds Ab
– Eniro Deutschland GmbH
– Eniro Treasury AB
– Din Del Försäljning AB
Intra-Group sale of Eniro Norge AS
–52
289
110
522
0
–163
Shares in subsidiaries at Dec. 31, 2006
13,030
Company / operation
OY Eniro Ds Ab
Eniro Norge AS
Findexa IV AS
Findexa I AS
Findexa Holding AS
Nord Trans Handelshus AB
Scandinavia Online Passagen AB
Scandinavia Online Content AB
Bilguiden Sweden AB
Bilweb Sweden AB
Netbonus Holding AB
Netbonus Svenska AB
Inside Finans AB
Eniro Svar om Sverige AB
Eniro Eastern Europe Holding AB
Eniro Estland AB
Eniro Nederland AB
TeleMedia Svenska AB
Eniro Förlagslån AB
Lindgren & Co Data AB
Gula Sidorna HB
Emfas företagskatalogen HB
Eniro Ukraine Holding
N OTE 23
| SHARES AND PARTICIPATIONS IN ASSOCIATED COMPANIES
There were no shares or participations in associated companies at December 31, 2006.
The following companies and operationns were sold during 2006
Company / operation
Divestment date
DM Huset AS
06–05–11
Holdings in associated companies
SEK M
Acquisition value at the beginning of the year
Share of profit
Divestment
Acquisitions through company purcahses
Dividend
Reported value of holdings in associated
companies at the end of the year
Group
2006
2005
7
–
–
–7
–
–
0
13
–6
–
7
The capital gain on divestments for the year amounted to SEK 34 M.
ANNUAL REPORT 2006
ENIRO 69
07-03-08 16.58.23
NOTES
N OT E 2 4
| ACQUIRE D OPE RATIONS
N OTE 25
In January 2006 Eniro acquired 100% of the shares in Din Pris AS, active at the pricecomparison market and shopping. The purchase price assessed to SEK 31 M, of which
SEK 27 M was cash and SEK 4 M a variable amount. The variable amount is based on
earnings over a three-year period. Total purchase price will not exceed SEK 62 M.
In February Eniro acquired 100% of the activity in WebDir, a player within the local directory segment in Denmark. The purchase price assessed to SEK 45 M, of which SEK 33 M
was cash and SEK 12 M a variable amount. The variable amount is based on future earnings. The purchase price will not exceed SEK 45 M.
In June Eniro acquired 100% of the shares in Kataloger i Norr AB, which publishes local
directories for eight communities in Northern Sweden. The purchase price assessed to SEK
14 M, of which SEK 8,5 M was cash and SEK 5,5 M is variable amount. The variable
amount is based on earnings over a three-year period. The purchase price will not exceed
SEK 17 M.
In October Eniro acquired 100% of the activity in Thisted and Favrskov, active at the local
directory segment in Denmark. The purchase price assessed to SEK 11 M, of which SEK 9
M was cash and SEK 2 is variable amount. The variable amount is based on future earnings. The purchase price will not exceed SEK 11 M.
Above acquisitions is included from acquisition date with SEK 60 M in revenue and SEK
–3 M in EBITDA. If all acquisitions had taken place on January 1st , consolidated revenues
would have increased by SEK 10 M and EBITA by SEK 1 M.
The preliminary acquisition analysis for Findexa AS in Annual Report 2005 have been determined without changes.
The valuation of acquired net assets and goodwill is shown in the following
acquisition analysis.
SEK M
Purchase price including other acquisition costs for the
year’s acquisitions
– of which amount as yet unpaid
Less cash and cash equivalents on the acquisition date
Group
Parent
Company
105
–
–24
–
0
81
–
Payments relating to previous years’ acquisitions
57
57
138
57
Acquired
book value
Fair value
1
1
–
16
Assets and liabilities
Identifiable assets and liabilities
Tangible assets
Euro (EUR)
Danish kroner (DKK)
Norwegian kroner (NOK)
Polish zloty (PLN)
Other currencies in SEK M
Customer relations
–
36
–
9
1
62
Non-interest bearing current assets
3
3
Total assets in acquired operations
4
65
Non-current borrowings
4
4
Deferred tax liabilities
–
11
Total non-current liabilities
4
15
Current liabilities
3
3
Total liabilities attributable to acquired operations
7
18
Goodwill on acquisition date
Purchase price
47
58
105
14
254
2,032
1,440
432
–
469
7
No of shares
Opening balance
181,102,392
effect of premature matching share-saving program in February, 10 shares
effect of premature matching share-saving program in July, 130 shares
Average number of shares after buy-backs in 2006
7
52
181,102,451
During the year, employees purchased a total of 47,126 shares within the framework of the
share-savings program. Since the start of the program in 2005, employees have purchased
a total of 89,014 shares, which are expected to result in a dilution of 206 229 shares.
Share capital
At December 31, 2006, the quotient value of the Eniro share was 1/ 182 102 392.
The proposed dividend is SEK 4.40 per share or a total of SEK 797 M (398).
Parent Company
SEK M
Of which
Registered repurchased
Acquisition of own shares
New issue in conjunction
with company acquisitions
Of which
Registered repurchased
158,152
1,522
158
2
–
2,339
–
2
23,951
–2,861
24
–3
182,102
1,000
182
1
At January 1, 2006
182,102
1,000
182
1
Share-savings program
–
0
–
0
182,102
1,000
182
1
Valuation of
financial
instruments
at fair value
Accumulated
translation
differences
Total
–1
–102
–103
–67
–
–67
19
–
19
–
4
4
–
–
36
–10
36
–10
Closing balance at December 31, 2005
–49
–72
–121
Opening balance at January 1, 2006
–49
–72
–121
– valuation of interest swaps
at fair value (Note 17)
238
–
238
– tax on fair value of losses
–66
–
–66
–
–875
–875
– value of borrowing
–
624
624
– tax on value of borrowing
–
–96
–96
123
–419
–296
Reserves
Changes in other reserves consist of the following items.
Group
Opening balance at January 1, 2005
Acquired identifiable net assets
2005
26
318
On January 1, 2006, the number of shares was 182,102,392, of which 1,000,000 were held
by the Company, thus totaling 181,102,392 after reduction for repurchases. During the year,
premature termination of the share-savings program for employees whose employment
ended, resulted in a reduction of treasury shares by 140 shares, which were transferred to
the employee from the company’s deposit account. At December 31, 2006, the number of
shares was 182,102,392, of which 999,860 were treasury shares, thus totaling 181,102,532
after reduction for repurchases. The treasury shares are intended for use in the sharesavings program. See also Note 6.
At January 1, 2005
Other intangible assets
2006
Average number of shares
No. of shares (000s)
Intangible assets
Trade names
Millions in respective currency
Average number of shares after repurchases
Total net payments for the year’s acquisitions
Total net payments for acquisitions
| S HA R EHO LDER ’ EQUITY
Currency exposure
The total currency exposure related to investments in foreign subsidiaries, also considered
currency hedges, amounted to SEK 3,862 M (3,297) with the following distribution.
Cash-flow hedges
– valuation of interest swaps at fair value
(Note 16)
– tax on fair value of losses
Translation of foreign subsidiaries
– value of borrowing
– tax on value of borrowing
Cash-flow hedges
Translation of foreign subsidiaries
Closing balance at December 31, 2006
70 ENIRO
ANNUAL REPORT 2006
07-03-08 16.58.23
Certification by the Board of Directors and the President
The Board of Directors and the President hereby certify that, to the best of our knowledge,
the annual accounts are prepared in accor-
dance with good accounting practises for a
stock market company, that the information
presented is consistent with the actual condi-
tions and nothing of material value has been
omitted that would affect the picture of Eniro
AB (publ) as presented in the Annual Report.
Stockholm, March 5, 2007
Eniro AB (publ)
Lars Berg
Chairman of the Board of Directors
Tomas Franzén
President
Per Bystedt
Barbara Donoghue
Gunilla Fransson
Urban Jansson
Luca Majocchi
Tom Vidar Rygh
Bengt Sandin
Daniel Hultenius
Ola Leander
Audit report
To the annual meeting of the shareholders of Eniro AB (publ)
Corporate identity number 556588-0936
We have audited the annual accounts, the
consolidated accounts, the accounting
records and the administration of the board
of directors and the managing director of
Eniro AB for the year 2006. The company’s
annual accounts are included in the printed
version on pages 44-75. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the
Annual Accounts Act when preparing the
consolidated accounts. Our responsibility is
to express an opinion on the annual
accounts, the consolidated accounts and
the administration based on our audit.
We conducted our audit in accordance
with generally accepted auditing standards
in Sweden. Those standards require that we
plan and perform the audit to obtain reasonable assurance that the annual accounts and
the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the accounts. An
ANNUAL REPORT 2006
audit also includes assessing the accounting
principles used and their application by the
board of directors and the managing director
and significant estimates made by the board
of directors and the managing director when
preparing the annual accounts and consolidated accounts as well as evaluating the
overall presentation of information in the
annual accounts and the consolidated
accounts. As a basis for our opinion concerning discharge from liability, we examined
significant decisions, actions taken and circumstances of the company in order to be
able to determine the liability, if any, to the
company of any board member or the managing director. We also examined whether
any board member or the managing director
has, in any other way, acted in contravention
of the Companies Act, the Annual Accounts
Act or the Articles of Association. We believe
that our audit provides a reasonable basis
for our opinion set out below.
The annual accounts have been prepared
in accordance with the Annual Accounts Act
and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted
accounting principles in Sweden. The con-
solidated accounts have been prepared in
accordance with international financial
reporting standards IFRSs as adopted by the
EU and the Annual Accounts Act and give a
true and fair view of the group’s financial
position and results of operations. The statutory administration report is consistent with
the other parts of the annual accounts and
the consolidated accounts.
We recommend to the annual meeting of
shareholders that the income statements
and balance sheets of the parent company
and the group be adopted, that the profit of
the parent company be dealt with in accordance with the proposal in the administration report and that the members of the
board of directors and the managing director
be discharged from liability for the financial
year.
Stockholm, March 7, 2007
PricewaterhouseCoopers AB
Peter Bladh
Authorized
Public Accountant
Partner in charge
Sten Håkansson
Authorized
Public Accountant
ENIRO 71
07-03-08 16.58.24
Multi-year Summary
CONDENSED CONSOLIDATED INCOME STATEMENT (SEK M)
2006
2005
2004
2003
2002
2001
Operating revenues
6,697
4,827
4,745
4,808
4,737
4,519
20001)
3,004
Offline
Online
Voice
Operating income before depreciation and amortization (EBITDA)
Operating income after depreciation (EBIT)
Earnings before tax
3,852
1,938
907
2,290
1,872
1,336
1,054
2,621
1,422
784
1,234
1,073
1,017
917
2,704
1,250
791
1,324
1,232
1,131
764
3,061
1,160
587
1,292
569
483
198
3,415
1,189
133
940
–327
–409
–764
3,594
925
–
1,150
775
692
453
2,562
442
–
891
738
711
489
Goodwill
Other fixed assets
Current assets
Total assets
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
6,141
686
2,425
9,252
2,998
245
1,597
4,840
Equity and liabilities
Equity
Minority interest
Long-term liabilities
Current liabilities
Total equity and liabilities
5,120
–
10,146
2,947
18,213
4,634
–
11,618
3,290
19,542
1,879
–
2,424
3,053
7,356
2,367
–
2,491
2,297
7,155
3,713
–
2,377
1,230
7,320
4,977
–
2,739
1,536
9,252
2,397
5
1,494
944
4,840
1,436
–225
–1,486
45
–230
1,007
–5,141
4,468
78
412
1,016
–235
–769
4
16
1,355
–983
–366
–
6
490
–356
–436
–
–302
738
–1,416
886
–
208
KEY RATIOS
2006
2005
2004
2003
2002
2001
2000*
Operating margin – EBITDA, %
Operating margin – EBIT, %
Cash earnings continuing operations, SEK M
Cash earnings, SEK M
Average equity, SEK M
Return on equity, %
Interest-bearing net debt, SEK M
Debt/equity ratio, multiple
Equity/assets ratio, %
Interest-bearing net debt/EBITDA, multiple
34
28
1,429
1,472
4,804
22
8,872
1.73
28
3.9
26
22
997
1,081
2,195
42
10,564
2.28
24
8.6
28
26
855
860
2,154
35
2,832
1.51
26
2.1
27
12
921
921
2,839
7
2,462
1.04
33
1.9
20
–7
503
503
4,618
–17
1,828
0.49
51
1.9
25
17
828
828
3,464
13
1,960
0.39
54
1.7
30
25
642
642
1,492
33
969
0.40
50
1.1
5.82
7.89
8.13
28.27
181,103
181,102
5.84
6.35
6.88
25.59
181,102
157,079
4.62
5.17
5.20
12.00
156,630
165,327
1.14
5.30
5.30
14.14
167,398
173,651
–4.34
2.86
2.86
21.07
176,181
176,181
2.80
5.12
5.12
28.25
176,181
161,665
3.26
4.28
4.28
15.98
150,000
150,000
4,801
4,821
4,754
5,429
4,752
4,953
4,595
4,695
4,168
4,117
3,606
4,151
2,142
2,381
CONDENSED CONSOLIDATED BALANCE SHEET (SEK M)
Assets
CONDENSED CONSOLIDATED CASH FLOW ANALYSIS (SEK M)
Cash flow from investment operations
Cash flow from financing operations
KEY RATIOS PER SHARE BEFORE DILUTION
Net income, SEK
Cash earnings continuing operations, SEK
Cash Earnings, SEK
Equity, SEK
Number of shares on the closing date after buy backs, 000s
Average number of shares after buy backs, 000s
OTHER KEY DATA
Number of full-time employees on the closing date
1)
Proforma
Years 2004–2006 according to IFRS.
Years 2000–2003 according to previous Swedish accounting principles, not IFRS
Major changes in Group composition
2006
– Acquisition of Din pris AS, Norge, consolidation from
February 2006.
– Acquisition of WebDir, Danmark, consolidation from
February 2006.
– Acquisition of Kataloger i Norr AB, consolidation from
June 2006.
2005
– Acquisition of Findexa, Norge. 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.
72 ENIRO
08_Overview_Definit_cmyk.indd 72
2004
– Acquisition of Gula Tidningen. Consolidation from April
2004.
2003
– Acquisition of directory assistance service Respons (name
changed to Eniro 118 118). Consolidation from Maj 2003.
2002
– Acquisition of directory operations in Tampere, Finland.
consolidation from October 2002.
2001
– Acquisition of Scandinavia Online. Consolidation 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.
ANNUAL REPORT 2006
07-03-09 14.46.16
Definitions
Average number of shares for the period
The average number of shares is for period
calculated as an average of the number of
outstanding shares on a daily basis after
redemption, repurchase and share issue
Average equity
Average shareholders’ equity is based on an
average of the values on the opening and
closing dates for each quarter
Cash Earnings
Net income for the year + re-entered
depreciation and amortization + re-entered
impairment loss
Cash Earnings per share
Cash Earnings
Average number of shares during the period
Debt/equity ratio
Equity
Earnings before tax per share
Earnings before tax for the period
Interest-bearing liabilities + interest-bearing
provisions less interest-bearing assets
EBIT
Operating income after depreciation,
amortization and impairment loss
Interest-bearing net debt/EBITDA
EBITDA
EBITDA
Operating income before depreciation,
amortization and impairment loss
Net income per share
Net income for the period
EBITDA margin (%)
100 x EBITDA
Operating revenues
Operating revenues per share
Operating revenues
Equity per share
Equity
Number of shares at end of period after
redemption, repurchase and share issue
P/E ratio
Share price at end of period
Net income per share for the last 12 months
Equity/assets ratio (%)
100 x Equity
Balance sheet total
Return on equity (%)
100 x Net income for the last 12 months
Equity
Direct return (%)
100 x Dividend for the year
Share price at year-end
ANNUAL REPORT 2006
ENIRO 73
07-03-08 16.59.33
Quarterly Summary
2006
OPERATING REVENUES (SEK M)
2005
Full year
Q4
Q3
Q2
Q1
Full year
Q4
Q3
Q2
Q1
Total
Offline
Online
Voice
6,697
3,852
1,938
907
2,040
1,284
517
239
1,432
720
479
233
1,819
1,106
478
235
1,406
742
464
200
4,827
2,621
1,422
784
1,761
1,147
413
201
969
413
350
206
1,292
756
335
201
805
305
324
176
Sweden
Offline
Online
Voice
Sweden excl. Voice
Offline
Online
Sweden Voice
Voice
2,772
1522
653
597
2,175
1,522
653
597
597
1,004
659
187
158
846
659
187
158
158
543
230
160
153
390
230
160
153
153
723
417
154
152
571
417
154
152
152
502
216
152
134
368
216
152
134
134
2,779
1598
581
600
2,179
1598
581
600
600
1,017
708
161
148
869
708
161
148
148
547
245
146
156
391
245
146
156
156
749
448
143
158
591
448
143
158
158
466
197
131
138
328
197
131
138
138
Nordic region (excl. Sweden)
Offline
Online
Voice
3,205
2,001
894
310
715
404
230
81
728
426
222
80
967
656
228
83
795
515
214
66
1,326
696
446
184
409
206
150
53
262
108
104
50
422
283
96
43
233
99
96
38
Norway
Offline
Online
Voice
2,121
1,344
675
102
416
216
173
27
518
325
167
26
581
378
175
28
606
425
160
21
293
13
274
6
119
13
100
6
61
–
61
–
57
–
57
–
56
–
56
–
Finland
Offline
Online
Voice
642
311
123
208
161
77
30
54
110
25
31
54
257
172
30
55
114
37
32
45
637
363
96
178
168
92
29
47
103
29
24
50
258
194
21
43
108
48
22
38
Denmark
Offline
Online
442
346
96
138
111
27
100
76
24
129
106
23
75
53
22
396
320
76
122
101
21
98
79
19
107
89
18
69
51
18
720
329
391
321
221
100
161
64
97
129
33
96
109
11
98
722
327
395
335
233
102
160
60
100
121
25
96
106
9
97
Germany
Online
325
325
82
82
81
81
80
80
82
82
347
347
88
88
87
87
85
85
87
87
Poland
Offline
Online
395
329
66
239
221
18
80
64
16
49
33
16
27
11
16
375
327
48
247
233
14
73
60
13
36
25
11
19
9
10
Total
2,290
752
464
683
391
1,234
548
194
380
112
Sweden
Sweden excl. Voice
Sweden Voice
1,143
1,003
140
497
466
31
198
147
51
301
269
32
147
121
26
1,116
994
122
470
426
44
160
119
41
325
305
20
161
144
17
Norway
Finland
Denmark
1,067
925
84
58
169
108
26
35
244
236
3
5
392
301
62
29
262
280
–7
–11
32
–39
34
37
–21
–48
19
8
12
8
–12
16
78
5
50
23
–37
–4
–23
–10
Central Europe
Germany
Poland
161
70
91
116
5
111
41
16
25
4
20
–16
0
29
–29
155
72
83
133
9
124
32
20
12
–12
14
–26
2
29
–27
Other (head office and Group-wide projects))
–81
–30
–19
–14
–18
–69
–34
–10
–11
–14
Central Europe
Offline
Online
EBITDA (SEK M)
74 ENIRO
ANNUAL REPORT 2006
07-03-09 14.46.30
Q U A R T E R LY S U M M A R Y
2006
EBITDA MARGIN
2005
Full year
Q4
Q3
Q2
Q1
Full year
Q4
Q3
Q2
Q1
Total
Sweden
Sweden excl. Voice
Sweden Voice
34
41
46
23
37
50
55
20
32
36
38
33
38
42
47
21
28
29
33
19
26
40
46
20
31
46
49
30
20
29
30
26
29
43
52
13
14
35
44
12
Norway
Finland
Denmark
33
44
13
13
24
26
16
25
34
46
3
5
41
52
24
22
33
46
–6
–15
2
–13
5
9
–5
–40
11
7
5
13
–12
16
18
9
19
21
–16
–7
–21
–14
Central Europe
Germany
Poland
22
22
23
36
6
46
25
20
31
3
25
–33
0
35
–107
21
21
22
40
10
50
20
23
16
–10
16
–72
2
33
–142
CONDENSED CONSOLIDATE INCOME STATEMENT (SEK M)
Operating revenues
Operating costs
6,697
4,825
2,040
1,392
1,432
1,073
1,819
1,241
1,406
1,119
4,827
3,754
1,761
1,291
969
805
1,292
939
805
719
Operating income (EBIT)
Net financial items
1,872
–536
648
–145
359
–134
578
–130
287
–127
1,073
–56
470
–9
164
–22
353
–9
86
–16
Earnings before tax
1,336
503
225
448
160
1,017
461
142
344
70
Major acquisitions with consequenses for the consolidated income statement: As of Q 4 – 2005, acquisition Findexa, Nordic region (Norway)
ANNUAL REPORT 2006
ENIRO 75
07-03-08 16.59.34
Annual General Meeting
Time and place
The Annual General Meeting of Eniro AB
(publ) will be held on Friday March 30, 2007
at 10:00 a.m. (CET) in Industrisalen, Näringslivets Hus, Storgatan 19, Sweden.
Participation
Shareholders of Eniro AB (publ) who wish to
participate in the Annual General Meeting
must be registered in the shareholder register maintained by VPC AB (the Swedish
Securities Register Center) on March 23,
2007 and register their intention to participate no later than 4:00 p.m. (CET) on March 27,
2007 under the address specified below.
Shares held by nominee
In order to be entitled to participate in the
Meeting, shareholders whose shares are
registered in the name of a nominee, must
arrange via the nominee for the temporary
registration of the shares in their own name
in due time prior to March 23, 2007.
Registration
Shareholders may register by:
Tel: +46-8 553 310 38
Fax: +46-8 585 097 25
E-mail: bolagsstamma@eniro.com
Mail: Eniro AB (publ), Corporate Legal Affairs,
SE-169 87 Stockholm, Sweden
Payment of dividends
The proposed record date for dividends is
April 4, 2007. Dividends are expected to be
paid through VPC AB on April 11, 2007.
Registration must include the name, address, civic or corporate registration number
and telephone number of the shareholder
and the number of assistants (two at most)
who will participate.
Shareholders who are represented by
proxy must issue a power of attorney for the
proxy. The power of attorney must be sent to
Eniro well in advance of the Meeting at the
address above. If the power of attorney is
issued by a legal entity, a copy of the registration certificate for the legal entity must be
enclosed.
Addresses
Sweden
Eniro AB and Eniro Sverige AB
SE-169 87 Stockholm
Tel: +46 8 553 310 00
Fax: +46 8 585 098 27
info@eniro.com
www.eniro.com,
www.enirosverige.se
Din Del AB
Gustavslundsvägen 141
Box 869
SE-161 24 Bromma
Tel: +46 8 585 023 00
Fax: +46 8 704 18 30
www.enirosverige.se,
www.dindel.se
Eniro 118 118 AB
SE-169 87 Stockholm
Tel: +46 8 553 310 00
Fax: +46 8 553 317 60
info@eniro.com
www.enirosverige.se,
www.eniro118118.se
Norway
Eniro Norge AS
Olaf Helsets vei 5
P.O. Box 6705 Etterstad
N-0694 Oslo
Tel: +47 81 54 44 18
Fax: +47 22 77 10 01
firmapost@eniro.no
www.enironorge.no
Visiting address:
Gustav III:s boulevard 40
Solna, Stockholm
76 ENIRO
Finland
Eniro Finland Oy Ab
Säterinkatu 6
P.O. Box 290
FI-02601 Espoo
Tel: +358 201 110 510
Fax: +358 201 110 511
info@eniro.fi
www.enirofinland.fi
Denmark
Eniro Danmark A/S
Sydmarken 44 A
2860 Søborg
Tel: +45 88 38 38 00
Fax: +45 88 38 38 10
www.enirodanmark.dk
Poland
Eniro Polska Sp. z o.o.
ul. Domaniewska 41
PL-02-672 Warszawa
Tel: +48 22 314 2000
Fax: +48 22 314 2001
eniro@eniro.pl
www.eniropolska.pl
Germany
Wer liefert Was? GmbH
Normannenweg 16-20
DE-20537 Hamburg
P.O. Box 100549
D-20004 Hamburg
Tel: +49 40 2 54 40 0
Fax: +49 40 2 54 40 100
info@wlw.de
www.wlw.de
ANNUAL REPORT 2006
07-03-08 16.59.34
Dates for financial information
Annual General Meeting 2007
Interim report, January–March Interim report, January–June Interim report, January–September
Year-end report for 2007 Annual Report for 2007 March 30, 2007
April 25, 2007
July 19, 2007
October 24, 2007
February 2008
March 2008
The financial reports and the latest news from Eniro are available at www.eniro.com.
The reports may also be ordered from:
Eniro AB, Investor Relations, SE-169 87 Stockholm, Sweden
Tel: +46 8 553 315 11, Fax: +46 8 585 90 15, E-mail: info@eniro.com
Production: Eniro and n3prenör. Photo: Fredrik Eriksson, LeStudio and Knut Buer. Printing: Elanders Gummessons. Translation: The Bugli Company AB.
ANNUAL REPORT 2006
ENIRO 77
With a commitment to innovative search services, Eniro is the helper that makes everyone a finder.
Eniro AB
SE-169 87 Stockholm
Tel +46 8 553 310 00
Fax +46 8 585 090 37
info@eniro.com
eniro.com
Visiting address
Gustav III:s Boulevard 40
Solna, Stockholm, Sweden
78 ENIRO
ANNUAL REPORT 2006

200703142209en3 (4.33 MB PDF)

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