annual report 2009 - apoteksgruppen · 6 apoteket omstrukturering ab • annual report 2009...

ANNUAL REPORT 2009

Contents

Highlights 2

Statement by the President 3

Background, mission and objectives 4

Mission implementation 8

The new pharmacy market 16

Public information campaign 20

Subsidiaries 22

Administration Report 26

Financial statements 31

Notes to the fi nancial statements 36

Proposed distribution of earnings 55

Auditors’ report and Review report 56

Corporate Governance Report 56

Report on internal control of fi nancial reporting 57

Board of Directors and auditors 62

The annual report is in all respects a translation of the

Swedish annual report prepared in accordance with

Swedish laws and regulations. In the event of any

differences between this translation and the Swedish

original, the Swedish annual report shall have

precedence.

MISSION

The mission of Apoteket

Omstrukturering AB (OAB) is to

lead and monitor the restructur-

ing of Apoteket in connection

with the reregulation of the

Swedish market. The primary

tasks are to manage the

process of selling pharmacies

owned by Apoteket and ensure

that certain infrastructure

and certain service functions

are transferred to Apotekens

Service.

READ MORE ON PAGE 5

OBJECTIVES

The overall objective for the

company’s operations is to

create the conditions for well-

functioning competition and

diversity on a reregulated

pharmacy market.

The aims for the reregulation

are to achieve better availability

for consumers, better service

and a better range of services,

low pharmaceutical costs, a

continued safe and effi cient

drug supply and sound drug

use.

READ MORE ON PAGE 6

NOTE

OAB = Apoteket Omstrukturering AB

Apoteket = Apoteket AB

Apotekens Service = Apotekens Service AB

Apoteksgruppen = Apoteksgruppen i Sverige AB

Apoteket Omstrukturering AB • Annual Report 20092

Highlights

Highlights

2009

• On 29 April, the Swedish Parliament (Riksdag) passed bill 2008/09:145

Reregulation of the Pharmacy Market.

• On 5 May 2009, OAB announced the pharmacies that were to be sold to

private players and the clusters (portfolios) they were to be divided into.

• On 1 July 2009, the new legislation regarding a reregulation of the pharmacy

market entered into effect and the pharmacy market was thereby formally

opened to competition. At the same time, OAB opened a toll-free phone

number for questions from the public.

• In October, an information campaign regarding the reregulation was launched.

• On 7 October 2009, a new Board of Directors was appointed for Apoteket.

• On 1 November 2009, it became possible to buy certain non prescription

drugs from general retailers.

• On 9 November 2009, OAB announced the names of the buyers of the

clusters that had been on sale.

2010

• On 15 January 2010, the fi rst buyer of a pharmacy cluster took possession.

• On 2 February 2010, the fi rst new pharmacy player outside the sales process

began to dispense prescription medicine.

• On March 12, 2010, OAB assumed direct ownership of Apoteksgruppen from

Apoteket. The President took offi ce at Apoteksgruppen.

• On 26 March 2010, all shares in Apotekens Service were spun off to the state.

• On 26 March 2010, OAB’s Board decided to propose to the Annual General

Meeting that all shares in Apoteket be spun off to the state.

Apoteket Omstrukturering AB • Annual Report 2009 3

Statement by the President

Exciting, challenging and eventful

Th is past year was very exciting, challenging and eventful. Th e bill concerning the reregulation of the pharmacy market was passed by the Riksdag on 29 April, representing the starting shot for a number of events.

OAB’s mission entailed comprehensive work in order to enable the reregulation of the 40-year-old monopoly. Together with Apoteket and Apotekens Service, preparations were made and steps taken to make it possible for other pharmacy players to establish business in the market. Th e infrastructure, including national databases, was transferred to Apotekens Service so that it would be made available to all players on equal terms. Apoteket made its internal computer system available to new players for a transitional period and also off ered a transitional solution concerning the delivery of goods.

Th e task of selling pharmacies also entailed major preparation work, including the compilation and analysis of information for potential buyers, as well as the incorporation and preparations prior to the transfer of clusters (portfolios).

OAB was in charge of the organisation and implementa-tion of the sale of pharmacies. Th e point of departure was to create well-functioning competition and diversity in the market and better service and availability for the customers while retaining effi cient drug supply. A part of achieving these goals comprised decisions regarding which pharmacies, and in which groups, the pharmacies would be sold. Nine diff erent clusters were formed and the rules for their sale were determined by OAB’s Board of Directors.

Th e results of the sale meet the objectives of competition and diversity established in connection with reregulation by four major players initially being active in the new market – Apoteket, Apotek Hjärtat, Kronans Droghandel and Apoteksgruppen – and two medium-sized players – Medstop and Vårdapoteket i Norden. In January and February 2010, more players were granted permits to conduct pharmacy operations.

A great deal will happen in the new market. Th e new players recognise the opportunities represented by increasing service by off ering broader ranges of goods and services to customers without this negatively aff ecting drug supply and safety, as stipulated in the set of objectives that defi ned the reform.

A huge amount of work went into this process in many places – Government ministries, authorities, new pharmacy players, wholesalers, suppliers, Apotekens Service, OAB and, in particular, Apoteket. Without a great deal of commitment from the personnel at all of these units, this conversion of the pharmacy market would not have been possible. I would therefore like to take this opportunity to thank everyone involved and wish them good luck for the future.

Stockholm, April 2010

Eva-Britt GustafssonPresident


Background, mission and objectives

A complex mission

BackgroundOn 21 December 2006, the Government decided to call in a special investigator, Lars Reje, (Pharmacy Market Commission), with the task of submitting proposals on making it possible for players other than Apoteket to conduct retail trade in prescription and non prescription drugs. Moreover, proposals were to be made on how competition could be increased, availability improved and prices lowered. Th is was to be combined with a safe and appropriate supply of drugs.

As a part of this assignment, proposals were also to be made as to players other than Apoteket being permitted to supply drugs to inpatient care and to operate hospital pharmacies. Th is part of the inquiry was presented in an interim report in 2007 and, after the submission of a bill to the Riksdag in April 2008, the law entered into eff ect on 1 September 2008, whereby Apoteket’s monopoly on providing services for inpatient care ended.

In other matters, the Pharmacy Market Commission submitted its fi nal report to the Government on 8 January 2008. Th e report included a proposal concerning what other conditions should apply for players to be permitted to own pharmacies and conduct retail trade in pharmaceuticals. Th e IT infrastructure, including online prescriptions and high-cost protection, was proposed to be separated from Apoteket in order to make it available to all pharmacies regardless of owner.

On 13 March 2008, the Government submitted a bill to the Riksdag concerning the formation of a Parent Company for Apoteket and certain restructuring measures.

The Pharmacy Market

Commission was appointed

in 2006.



Th is gave the Government the authority to:• Restructure the ownership of Apoteket by establishing a Parent Company, Apoteket

Omstrukturering (OAB), which would hold all shares in Apoteket during the period of time needed to ensure implementation of the reregulation.

• Establish a service company owned by the state, Apotekens Service, with responsibility for public utility infrastructure and information databases.

• Undertake the measures necessary to enable Apoteket to sell pharmacies owned by the company to outsiders.

OAB was initially a subsidiary of Apoteket. Th e name change from Sveriges Apotek to Apoteket Omstrukturering took place in May 2008. At Apoteket’s Annual General Meeting in June 2008, it was resolved to spin-off all shares in OAB to the owner, meaning the state, as an initial step in the formation of a new Parent Company for Apoteket. All shares in Apoteket were transferred to OAB on 8 July 2008, which has since been the Parent Company of the Group. In the summer of 2008, a Board of Directors was also appointed, consisting of Birgitta Böhlin (Chair), Gunvor Engström, Jan Forsberg, Ann-Christin Nykvist and Sofi a Wallström.

Th e Board’s fi rst task was to recruit a Chief Executive Offi cer. Eva-Britt Gustafsson was appointed at the end of August 2008, charged with the task of preparing for and later also implementing the project of restructuring Apoteket.

In early 2009, the Government submitted a bill to the Riksdag concerning the reregulation of the pharmacy market, the content of which was that:• Th e pharmacy market would be reregulated and Apoteket’s sole right to sell pharma-

ceuticals would end.• A permit shall be required to conduct retail trade in pharmaceuticals.• Apotekens Service would assume the responsibility for IT infrastructure.• Th e Dental and Pharmaceutical Benefi ts Agency (TLV) would determine the out-

patient pharmacies’ purchase and sales price for subsidised pharmaceuticals.• Th e Medical Products Agency would be the licensing and supervisory authority.• Th e Government’s assessment was that the majority of the pharmacies that Apoteket

owned at the time would remain in state ownership and that space would be allowed within this framework for a state-owned company for small businesses that could have private entrepreneurs as part-owners. Th is company would have no ownership connection to Apoteket. Within the scope of its owner directive, OAB is responsible for the implementation of this issue.

Th e bill was passed by the Riksdag on 29 April and the new legislation entered into eff ect on 1 July 2009.

MissionOAB’s mission is to lead and monitor the restructuring of Apoteket. Th e primary tasks under the state’s owner directive of 23 April 2008 are to manage the process of selling pharmacies owned by Apoteket and ensure that certain infrastructure and service functions are transferred to Apotekens Service.

During the reregulation period, until the legislation for the reregulated pharmacy market has entered into eff ect and conditions for competition have been achieved, OAB will be the Parent Company of Apoteket. In accordance with the Government’s assessment in bill 2007/08:87, the intention is to close OAB when reregulation is complete.

The bill regarding the reregula-

tion of the pharmacy market was

passed in April 2009.



Th e company’s tasks are to be responsible for the planning, preparation and implemen-tation of the process of selling pharmacies. Th e pharmacies in Apoteket were to be compiled into suitable portfolios prior to sale. Transfers would take place on market terms and the possibilities of small players to participate in the market were prioritised.

OAB was to ensure that all pharmacies on the reregulated market would have access to the public utility infrastructure, the service functions and information databases that Apoteket owned by these being transferred to Apotekens Service.

ObjectivesTh e overall objective for OAB’s operations pursuant to its owner directive is to create the conditions for well-functioning competition and diversity on a reregulated pharmacy market.

Th e objectives for the reregulation are to achieve better availability for consumers, better service and a better range of services, as well as low pharmaceutical costs for the benefi t of consumers and the public sector. Th e reregulation should also take advantage of the pharmacies’ contribution to improved drug utilisation. One fundamental prerequisite is that the same level of expertise and safety in drug supply would be retained as a minimum requirement.

OAB initially conducted a number of impact analyses concerning the planned reregulation. Th e most comprehensive of these is the work on conceivable scenarios for competition on a future reregulated market. Th e company also analysed the pricing model based on its possibility of meeting society’s demands for cost control, while also focusing on the opportunities of new players to establish business.

Based on these analyses, it was deemed that at least three new players would initially be needed besides Apoteket and the intended small-business company, meaning a total of at least fi ve pharmacy players in order to prevent an oligopoly situation from arising. Th e bidding process was designed based on this objective. In addition, it was estimated that a number of new players would gradually establish business in the market.

One of the objectives for the

reregulation is better availability

for the consumers.

State

Apoteket Omstrukturering

Apoteket330 pharmacies

Apoteket Farmaci

Cluster 1198

pharmacies

Cluster 2171

pharmacies

Cluster 321

pharmacies

Cluster 420

pharmacies

Cluster 521

pharmacies

Cluster 612

pharmacies

Cluster 712

pharmacies

Cluster 810

pharmacies

Apoteks-gruppen

150pharmacies

Apotekens Service

Apoteket Produktion & Laboratorier

Apoteket International



GROUP OVERVIEW

At year-end, the Group comprised the Parent Company Apoteket Omstrukturering AB (OAB) with subsidiaries, Apotekens Service and Apoteket Group with the cluster companies 1–8, Apoteksgruppen and the subsidiaries Apoteket Farmaci, Apoteket Produktion & Laboratorier and Apoteket International.

On 12 March 2010, Apoteksgruppen was spun off by Apoteket and became a directly owned subsidiary of OAB. On 26 March 2010, Apotekens Service was spun off to the state and a proposal to resolve to spin-off Apoteket to the state was approved by OAB’s Board on 26 March 2010.


Operations

Mission implementation

Analysis phaseIn autumn and winter 2008 – 2009, OAB analysed the pharmacy market based on the proposals from the Pharmacy Market Commission, the owner directive issued in June 2008 and the report for comment submitted by the Government to the Council on Legislation in December 2008.

Mapping

OAB began the work of mapping the profi tability levels and structures of the pharmacy market in both Sweden and the rest of Europe. Th e objective of this mapping was to obtain a view of profi tability levels on corresponding markets and to determine a reasonable level of profi tability in order for there to be interest in establishing business on the Swedish market.

Competition analysis

OAB also conducted a number of impact analyses concerning the planned reregulation. Th e most comprehensive of these is the work on conceivable scenarios for competition on a future reregulated market. Th is included assessments of the proportion of the total number of pharmacies and other branches of operations, assets and systems that would have to be separated from Apoteket, or made available to new players, in order to establish a market with functioning competition.

At the same time, all 930 existing pharmacies were screened and appraised. Since all costs were not historically distributed to a pharmacy level, comprehensive screening was required of the pharmacies’ results for both 2008 and 2009. Th is meant that pro forma earnings were calculated for each pharmacy for these periods. Th e operations

930 pharmacies were

screened and appraised.


Operations

that could not be allocated and/or divested were analysed based on safeguarding availability to pharmacy customers and achieving competition neutrality on the market. A separate analysis of pharmacies in rural areas was conducted, resulting in some pharmacies being protected from undertakings regarding continued operation for a three-year period. Th e company also analysed the pricing model based on its possibility of meeting society’s demands for cost control, while also focusing on the opportunities of new players to establish business. Th e eff ects of an anticipated possibility of selling non-prescription drugs in supermarkets were also weighed into the profi tability estimates.

Based on these analyses, it was deemed that Apoteket’s market share should end up between 25 and 50 percent to make it possible for new players to establish themselves and work on equal terms. It was initially assumed that at least three new players besides Apoteket and the small-business initiative would be needed, meaning a total of fi ve pharmacy players, in order to prevent an oligopoly situation from arising. After the Riksdag decided that the majority of the pharmacies should remain in state ownership, of which 200 would be allocated to a special small-business venture, OAB decided that eight clusters (portfolios) containing 49.9 percent of the pharmacies would be established for sale to large and medium-sized players. Moreover, a ninth cluster encompassing 150 pharmacies was created for the small-business concept, Apoteksgruppen. Th is way, it was deemed that sound competition would be achieved on the new market and an oligopoly situation could be avoided. Choice of transaction structureTh e selection of the transaction structure was primarily eff ected on the basis of the following objectives, combined with the mission of achieving the best possible value given these objectives.

Competition: Desired competition on a national level was judged to be possible through a sales structure that guaranteed a minimum number of players. To also achieve competition on a regional and local level, each individual pharmacy and its location was evaluated so that nearby pharmacies would be placed in diff erent cluster companies to the furthest possible extent. Th e European average for pharmacy density is approximately 5,000 residents per pharmacy, while in Sweden there are nearly 10,000 residents per pharmacy. Th is fact meant that the conditions for establishing new pharmacies were also considered favourable.

Diversity: In order to create the conditions for a diversity of players, it was necessary for the pharmacies to be sold in units of varying sizes and orientations. Eight clusters were created, of which two were large and nationwide. Th e objective of this division was to attract larger prospective buyers that could become competitors to Apoteket on a national level, as well as medium-sized prospective buyers with a niche concept in terms of geography or business orientation. In addition to this, the small-business concept of Apoteksgruppen was created to make it easier for private individuals to operate individual pharmacies. A decision was made that the transfer agreements would include clauses that prevent the cluster buyers from selling one or more pharmacies to other cluster buyers or individual pharmacies to other pharmacy players during a three-year period. Apoteks-gruppen’s pharmacies are also subject to limits concerning transfers requiring that the pharmacies shall be transferred to private entrepreneurs and not to large pharmacy players.

A special rural area undertaking was also incorporated in all transfer agreements to ensure pharmacy access to selected locations.

The rural area undertaking

ensures the presence of

pharmacies in selected

locations.


Operations

Rational operation: Consideration was taken to rational operation when grouping the pharmacies. For example, it was judged that a small cluster should not include pharma-cies spread throughout the entire country. Consideration was also taken to some pharmacies organisationally being dependent on other pharmacies to, for example, be able to borrow personnel in case of illness or holidays.

Highest possible market value: To achieve the highest possible market value, the structure needed to attract prospective buyers of various characteristics and sizes, and the rules in the reregulated market needed to be as clear and transparent as possible to eliminate uncertainty. Uncertainty could otherwise result in lower bids and erode interest from bidders. Th e objective was to create as broad an interest as possible and minimise the risk of price collaboration.

When all factors were weighed together, a structure was chosen with two larger clusters with nationwide coverage and six smaller clusters (three regional metropolitan clusters, two clusters with dispensing pharmacies located in hospitals and one cluster with larger pharmacies in large cities). Together with the bidding rules, the specifi c composition of the eight clusters was chosen to ensure competition at all levels.

Apoteksgruppen was allocated 150 pharmacies for small business operators. Th is cluster was given a national spread to enable competition with the other larger clusters, but also to off er entrepreneurs throughout the country the opportunity to acquire a pharmacy.

IDENTIFICATION OF PROSPECTIVE BUYERS

In autumn 2008, OAB also worked to identify potential buyers of various types. At meetings early in the process, it became apparent that prospective buyers had diff erent expectations of the sale with regard to such factors as the number of pharmacies that a private party could acquire, and the geographic spread and size and orientation of these pharmacies. However, one common factor was the importance of a transparent process, making clear how the future market would look and what rules would apply, both for the new players and for Apoteket.

In connection with these meetings, the prospective buyers received a brief memo-randum with information concerning the reregulation, market conditions, the price negotiation model, pharmacy operation with systems and processes and fi nancial information about Apoteket.

Sales processOnce the Riksdag had approved the bill concerning the reregulation of the pharmacy market, OAB’s Board was able to approve and announce which pharmacies were to be sold and which clusters they had been divided into. Th is took place at a press conference on 5 May 2009. At the same time, Apoteket’s personnel were informed of which pharmacies would be sold and which clusters they were to be grouped into.

Th e potential buyers then received an invitation to the formal sales process together with an information memorandum (IM). Th is material included more comprehensive and detailed information about the reregulation, other regulatory conditions, the pricing model, possible profi tability and competition on a reregulated market and a description of pharmacy operations with regard to operations, systems, processes, product fl ows and personnel. Th e IM also contained detailed information on all of Apoteket’s pharmacies, including information about those that would not be sold. Th e objective of this information was to create competition-neutral conditions between Apoteket and the buyers of pharmacies.

Also attached to this IM was a so-called process letter that described how the transaction process would be shaped, the conditions for this and the formulation of the future sales agreements. Th is was particularly important to communicate early on since the seller did not want to issue any guarantees and the buyers were also expected to demonstrate that they had fi nancing ready upon submission of binding off ers.

A transparent process with

clear rules.


Operations

Th e players that were interested in moving on with the process after receipt of the IM were encouraged to submit indicative off ers on the clusters they wanted to acquire in accordance with the following bidding rules:• Cluster 1 could be acquired in combination with one smaller cluster.• Cluster 2 could be acquired in combination with two smaller clusters.• A maximum of three small clusters could be acquired together.• However, bids could be placed for all clusters.

Th e players that OAB deemed to have submitted competitive bids were invited to a second bidding round where they received more detailed fi nancial, legal and economic information in a so-called data room. Th e data room contained slightly more than 7,000 documents of varying scope. Also tied to the data room was an inquiry function, where supplemental questions could be asked. Approximately 1,300 questions were asked by the prospective buyers and were answered by Apoteket and OAB over a few weeks. A vendor due diligence report was also at the buyers’ disposal. Th is report contained a review and verifi cation of Apoteket’s accounts down to the pharmacy level conducted by an external auditing fi rm. In connection with this, the buyers were also given the opportunity to ask questions directly of Apoteket’s personnel and the various consultants at 130 meetings. All potential buyers were also given the opportunity to conduct several pharmacy visits where they could ask the pharmacy managers questions directly.

After these meetings, the participants were asked to submit fi nal, binding bids which also included demonstrating access to fi nancing.

Considerable interest was shown in the pharmacies. Initially, more than 100 players were contacted and more than 60 received the information memorandum. In the fi nal round of bidding, multiple bids were received for all clusters from both industrial and fi nancial players.

After the bids were submitted, they were evaluated against the bidding rules conveyed in advance in the process letter. Th e Board of OAB then decided which bids would be accepted based on the bidding rules, the size of the bids, confi rmed fi nancing and an assessment of whether the bidders would be able to obtain the permission of the Medical Products Agency and the competition authorities.

THE OUTCOME OF THE SALES WAS AS FOLLOWS

• Apotek Hjärtat acquired one of the national clusters (cluster 1) and the cluster with the larger pharmacies (cluster 8).

• Kronans Droghandel acquired the other national cluster (cluster 2).• Medstop acquired the three regional clusters (clusters 3, 4 and 5).• Vårdapoteket i Norden acquired clusters of pharmacies close to healthcare facilities

(clusters 6 and 7).

Th e sales process was unusual in several ways. Th e pharmacy clusters were sold without management functions and head offi ces, which a buyer must consequently establish itself. Moreover, authority and political decisions continuously aff ected the process as they were announced. Th is was true of TLV’s setting of the trading margin as well as the proposal concerning non prescription drugs, called the over-the-counter reform.

Th e fi nal sales amount totalled approximately SEK 6 billion.

Transfer of pharmaciesOnce the purchase agreements were signed, the various buyers applied to the Medical Products Agency for permits to take over the pharmacies. In addition, some buyers required a competition review of the acquisitions by relevant competition authorities.

Access to the pharmacies could not take place until both of these reviews were complete. Th ese permits were received in December 2009 and January 2010. Th e cluster companies were taken into possession in January and February.

The sales total was

approximately SEK 6 billion.


Operations

Agreement review – incorporationAt the same time as the transaction process, a mapping and negotiation concerning 2,000 diff erent supplier agreements at a central and pharmacy level was initiated together with Apoteket in order to prepare for the incorporation of the pharmacies that were to be sold. Renegotiations of 630 leases were conducted so they could be transferred to the new companies, whereby 50 disputes had to be pursued in various rent tribunals. Being able to transfer the individual pharmacies’ leases was necessary to complete the sale. For leases younger than three years, there is no legal right to transfer them in connection with a sale of assets and leases older than three years are subject to limitations. Accordingly, success in these negotiations with landlords was a prerequisite for completing the transaction. Only a few leases could not be transferred, which marginally impacted the transaction.

After these negotiations, nine cluster companies were formed with which Apoteket entered into transfer agreements with regard to the assets at each pharmacy. So-called player agreements were also entered into between the cluster companies and Apotekens Service in respect of access to online prescriptions and the high-cost database. One condition for entering into this agreement was that the companies would be provided with access to Apoteket’s dispensing system, called the ATS system, for a period of two years. OAB therefore decided that all buyers, as well as new pharmacy players, would be given access to this system at cost for a limited period of time. To make this possible, a comprehensive separation of Apoteket’s ATS system was implemented so that it could be used by various players in a competition-neutral and integrity-safe manner.

An agreement was also reached with Apoteket and most suppliers under which the buyers would have access to a transitional system for six months with regard to product deliveries in order to ensure drug supply in an initial phase. It was considered necessary that the buyers should be permitted to negotiate new delivery agreements during this period. Similar transitional solutions were negotiated with suppliers of business-critical goods and services such as electricity, telecommunications, transports, etc.

In connection with the incorporation, union negotiations were conducted with regard to a “transition of operations” comprising approximately 5,000 employees at individual pharmacies. Only a few of these employees opted not to agree to allow their employment to be transferred to the nine new cluster companies.

All activities were then gathered in a transfer project in order to ensure the commissioning of technical transition solutions and to transfer the information about processes, systems and so forth that were included in the acquisitions. Within the transfer project, more than 200 meetings were held with the pharmacy buyers.

Analyses concerning conditions under European law in respect of competition, small businesses, state support, etc. were conducted to ensure the quality of the solutions developed. In connection with the sales transaction, a number of diff erent agreements were prepared, including asset transfer agreements, player agreements with Apotekens Service, transfers of leases, supplier agreements, process letters, confi dentiality agree-ments, sales agreements and liquidity settlements. Th ese agreements were quality assured by legal experts.

Establishment of ApoteksgruppenAs a part of the reregulation of the pharmacy market, the Government’s assessment was that the opportunities for small companies to be active in the market were favourable. However, the Government also concluded that to enable a component of small businesses in the pharmacy market from the beginning, a special support structure for private players needed to be achieved. Accordingly, the Government decided that a maximum of 200 of the pharmacies remaining in Apoteket after the sale should be transferred to a newly established company and be able to have private entrepreneurs as part-owners. Within the scope of its owner directive, OAB was given responsibility for this. After a decision by OAB, Apoteket transferred 150 pharmacies to a separate company, Apoteksgruppen, to be sold to private small business operators. On 12 March 2010,

A transitional solution was

established for business-critical

goods and services, featuring

an IT solution.

Nine cluster companies were

formed with which Apoteket

entered into transfer

agreements concerning the

assets of each pharmacy.


Operations

this company was transferred from Apoteket to OAB. Apoteksgruppen will become a nationwide chain with 150 pharmacies that are operated by entrepreneurs.

In 2010, the build-up of the central organisation for the small business concept will be completed. At the same time, two projects will be under way, one to sell the individual pharmacies to new owners and the other to incorporate and transfer the pharmacies with functioning systems and operations in connection with the sales.

MISSION

Th e main objective of Apoteksgruppen is to make it possible for small business operators to participate in the reregulated Swedish pharmacy market. Apoteksgruppen will constitute a service organisation, a negotiating party and a long-term business partner for the pharmacies with the overall objective of creating the necessary conditions for operating as vital small-business pharmacies.

Th is will be achieved by combining the economies of scale of the large chains with the knowledge, service and customer focus of the local entrepreneur. Th e group will off er joint services to the individual pharmacies with the aim of generating economies of scale for the small business operators in, for example, IT, purchasing, logistics, quality, accounting and customer loyalty programmes.

OBJECTIVES

In 2009, Apoteksgruppen had a market share of 13% with approximately 950 employees. Th e service organisation is estimated to have about 35 employees.

Th e customers will be off ered safe and reliable dispensing of prescriptions together with an attractive range of competitively priced over-the-counter (OTC), self-care and retail items with a particular focus on good advice and service.

Apoteksgruppen has the objective of combining the fi nancial advantages of large-scale operations in such areas as purchasing and the build-up of IT infrastructure with the private entrepreneur’s drive and local base. Th is also makes it possible for the individual small business operators to participate in the future pharmacy market without having to assume unreasonably high start-up costs, which would otherwise have arisen for IT, costs of premises, etc. Th e operating support will be taken care of by Apoteksgruppen.

VISION

Apoteksgruppen shall be perceived as a personal, safe alternative founded on pharma-ceutical knowledge. All goods provided shall be of a high quality and be perceived as safe. Advice shall be characterised by concern for the customer and also include preventive measures.

SALES PROCESS

Th e sale of the 150 pharmacies in Apoteksgruppen began in spring 2009 in connection with a questionnaire that OAB used to investigate interest in buying and operating small business pharmacies. Th e sales process formally commenced in June 2009 and will continue during 2010 until the pharmacies have been sold. It can be divided into

The sale of individual

pharmacies to small

business operators will be

carried out in 2010.

Apoteksgruppen’s trademark symbolises the diversity in the company.


Operations

six stages, in which the prospective buyers gradually work out a business plan and secure fi nancing, ending in a selection process and the taking of possession of the pharmacies. During the course of the process, the buyers also have access to support and help in the form of materials, seminars and contact with business coaches and banks. Interested entrepreneurs have had access to a website developed especially for the sales process, have received three information brochures and have had access to a phone service at Apoteksgruppen, through which they have received support in the development of business plans and budgeting.

Reference prices have been prepared to facilitate the sale of the individual pharmacies. Th e prices are based on historical earnings and sales fi gures, but have also been adjusted with forecasts pertaining to the development of the competitive situation, sales and results.

Financially, Apoteksgruppen, through its subsidiary Apoteksgruppen Förvaltning, supports small business operators by fi nancing up to 40% of the acquisition cost for buying pharmacies, which together with bank fi nancing means that the initial investment for private buyers could be kept down.

Average sales for an out-patient pharmacy amounted to SEK 33 m in 2008, which with an average distribution between the product categories, means about SEK 26 m in prescription drug sales, SEK 4 m in OTC sales and approximately SEK 3 m for other sales. However, OAB’s estimates show that it costs a minimum of SEK 7 m to set up a medium-sized pharmacy from scratch.

Based on detailed information presented in a data room, the entrepreneurs submitted bids on the pharmacies they were interested in acquiring. Th e fi nal date to register for acquisitions was 12 February 2010. Th ere has been great interest in buying a pharmacy in the small business operator process. Th ese entrepreneurs possess experience from both pharmacy operations and retailing.

Th e individual entrepreneurs will buy existing businesses in the scope of Apoteks-gruppen’s off ering with the advantages that this entails. Th e pharmacies already have competent personnel and well-developed business locations that the local customers are aware of. Th e fi rst entrepreneurs are expected to take over their pharmacies beginning in June 2010.

Parent Company’s earningsTh e costs for carrying out the mission totalled SEK 175 m in 2009. Of the total, project, transaction and personnel costs related to preparations for the sale of small business pharmacies in Apoteksgruppen and the creation of a central organisation accounted for SEK 72 m.

Th e remaining SEK 103 m pertains to the Parent Company OAB’s other operations and comprises personnel costs, other overhead expenses, information measures in respect of websites, toll-free phone numbers to customer service, brochures in multiple languages, information meetings and an information campaign directed at the public. Costs for project management are also included with regard to initial analyses of the market, profi tability, pricing models, processes, incorporation and the cluster distribution. Costs for the sales process included preparation of the IM, data rooms, the vendor due diligence report, pro forma preparation of historic income statements, the valuation of pharmacies and the drafting of agreements and negotiations. Apoteket was invoiced SEK 100 m and Apoteksgruppen SEK 45 m for services rendered in 2009.

In addition to a technically complicated transfer, the transfer together with Apoteket of the clusters to the new buyers included costs for a major educational eff ort directed at the buyers to ensure quality, continuous operations and safe drug supply.

Target fulfi lmentIn summary, OAB judges that the outcome of the sales process and the creation of the new pharmacy market achieve the mission and objectives the company was given and thereby the objectives set forth in the bill because:


The Apoteksgruppen sign being set up next to the national pharmacy symbol.

Operations

• Five new pharmacy players have been established, of which three have national coverage, resulting in necessary conditions for sound competition on the new market.

• IT systems and national databases have been placed at the disposal of all players on competition-neutral terms.

• A transitional solution concerning product deliveries was negotiated and placed at the disposal of the new players.

• Good drug supply has been able to be maintained during the reregulation period.• Access to pharmacies in rural areas has been secured through a special undertaking

with regard to pharmacy coverage.• During the transaction process, Apoteket was subject to a standstill that was continu-

ously clarifi ed, thus strengthening the competition opportunities for new players.• Market prices were received for the pharmacies sold.• Apoteksgruppen was formed for the sale of 150 pharmacies to private entrepreneurs.• Assets at the pharmacies that were valuable in terms of cultural history remain in

state ownership.• Apotekens Service was formed.• Th e generic name “apotek” (pharmacy) may be used by all pharmacy players.• Comprehensive information eff orts were directed to the public and the new players.

Remaining tasks for the Parent CompanyCAPITALISATION OF APOTEKET, ETC.

Under its owner directive, OAB is responsible for submitting proposals on the capitalisation structure of Apoteket, Apoteket Produktion & Laboratorier and Apoteks-gruppen. Th is work is under way, based on the premise that these companies shall be subject to profi tability targets and be given a capitalisation structure in line with comparable operations in both the public and the private sector.

On 26 March 2010, OAB spun off the subsidiary, Apotekens Service, to the state. Ownership is managed by the Ministry of Health and Social Aff airs.

OAB’s Board of Directors decided in March that Apoteket was to transfer the electronic prescription interface (e-recept dos) and responsibility for the electronic prescription database for veterinary medicine to Apotekens Service. Funding needed to do so will be transferred from Apoteket in connection with the move. OAB has also decided that certain changes of the systems for ordering ApoDos shall be implemented to facilitate competition in this area and in the procurement of pharmacy services for the supply of medicines to in-patient care.


The new pharmacy market

Announcement of the buyersAt a press conference on 9 November 2009, OAB announced which companies

had entered into share-transfer agreements concerning the eight cluster companies.

465 pharmacies to large buyersTh e pharmacies that were to be sold to large and medium-sized buyers had been divided into eight groups, called clusters, with 10–200 pharmacies in each.

At a press conference on 9 November 2009, OAB announced which companies had entered into share-transfer agreements concerning the acquisition of these clusters. Th e buyers included companies in the pharmacy industry, private equity companies and other players:• Apotek Hjärtat, owned by Apo Pharm AB, acquired clusters 1 and 8, which comprise

208 pharmacies.• Kronans Droghandel Retail, owned by Oriola-KD and KF, acquired cluster 2 that

comprises 171 pharmacies.• Medstop Holding, owned by Segulah, acquired clusters 3, 4 and 5, which comprise

62 pharmacies.• Vårdapotek i Norden, owned by Investor and Priveq Investment, acquired clusters 6

and 7, which comprise 24 pharmacies.

Th e total sales price for all clusters amounted to SEK 5,970 m. Th e sales process proceeded as planned and one of the key steps in the Swedish pharmacy market’s reregulation was thereby complete.

“With this, a market is taking shape consisting of four buyers, Apoteket and the small business group as well as newly started players. We feel that it creates a good market structure with multiple players of various orientation and geographic coverage,” said Eva-Britt Gustafsson, President of OAB.

A new national pharmacy symbol For the consumers, the new reform means that they will encounter many new symbols and logotypes when visiting the pharmacies. In order to reduce the uncertainty about the status of the various pharmacies and to create competition-neutral conditions, the state felt that a common, national pharmacy symbol was needed. Th is task was assigned to the Medical Products Agency.

“It is important that everyone feels safe when they buy medicine and know that they are turning to a pharmacy that the state has approved and also checks,” said Christina Åkerman, Director-General of the Medical Products Agency.

All pharmacies that are approved by the Medical Products Agency shall use the new national pharmacy symbol, a green cross.

Eva-Britt Gustafsson, President of OAB and Birgitta Böhlin, Chair of the Board of OAB led the press conference at which the buyers were presented.

Four parties have entered into share-transfer agreements concerning the acquisition of the eight clusters that were up for sale. In the picture (from left): Cecilia Marlow, Kronans Droghandel; Eero Hautaniemi, Oriola-KD; Lars Idermark, KF; Peter Weiderman, Vårdapoteket; Fredrik Strömholm, Apotek Hjärtat; Anders Nyberg, Apotek Hjärtat; Peter Elving, Medstop and Fredrik Söderberg, Medstop.

Market share, 23%

Market share, 36%



Number of

pharmacies 315

Cluster 9

Sales1) approx. SEK 11.3 billion

Number of

employees 1) approx. 2,400

Founded 2) 1970

President Stefan Carlsson

Website apoteket.se

Owner OAB until 29 April 2010,

then the Swedish state

1) Pertains to the remaining pharmacies.

The Group has sales of SEK 22.8 billion

and approximately 5,400 employees.2) Apoteksbolaget

Number of

pharmacies 208

Clusters 1 and 8

Sales approx. SEK 7.3 billion

Number of

employees approx. 1,500

Founded 2009

President Anders Nyberg

Website apotekhjartat.se

Owner Apo Pharm AB

Apotek Hjärtat

Apoteket

Operations/business concept Apotek Hjärtat will be Sweden’s fi rst independent pharmacy chain with 208 pharmacies spread throughout the country. At least 100 new pharmacies will be opened in the next few years. Th e base of Apotek Hjärtat’s customer off ering is continued safe and secure drug handling, performed by knowl-edgeable pharmacy specialists. In the next step, Apotek Hjärtat will develop the pharmacy of the future together with its employees and with the focus on customer needs.

Operations/business conceptApoteket is the market leader on the reregulated pharmacy market with 315 pharmacies and agreements with all county councils. In 2010, there are plans for more new shops and a broadened product range. Th e business concept is to off er a broad range of products and services in the fi eld of drugs and health to private individuals, companies and healthcare providers.

Apoteket strives for sound drug handling and utilisation, and develops new services that make it easier to feel good.

Market share, 12%

Market share, 15%



Number of

pharmacies 150

Cluster 10


Number of

employees approx. 950

Founded 2009

President Jens Sandström

Website apoteksgruppen.se

Owner OAB until 29 April 2010,

then Apoteksgruppen

Holding AB, which is

owned by the Swedish

state

Number of

pharmacies 171

Cluster 2


Number of


Founded 1907

President Cecilia Marlow

Website kronansdroghandel.se

Owners Oriola-KD and KF

Apoteksgruppen

Kronans Droghandel

Operations/business conceptTh e main objective of Apoteksgruppen is to make it possible for small business operators to participate in the reregulated Swedish pharmacy market. Th is is to be achieved by selling 150 pharmacies to entrepreneurs. Apoteks-gruppen shall be attractive to entrepre-neurs and exhibit sustainably good profi tability both centrally and locally.

By combining the economies of scale of the large chain with the knowledge, service and customer focus of the entrepreneur, Apoteksgruppen seeks to create profi table, personal and inspiring pharmacies.

Operations/business conceptIn connection with the acquisition of cluster 2, Finnish Oriola-KD and KF formed a joint venture company, Kronans Droghandel Retail. Th rough the owners, Kronans Droghandel Retail is given the opportunity of establishing new pharmacies, primarily in connection with Coop’s superstores and convenience stores. Oriola-KD is responsible for the pharmacy chain’s development and management. Th e jointly owned company will conduct business under the brand name Kronans Droghandel.

Market share, 10%

Market share, 4%



Number of

pharmacies 62

Clusters 3, 4 and 5


Number of


Founded 2009

President Fredrik Söderberg

Website medstop.se

Owner Segulah

Number of

pharmacies 24

Clusters 6 and 7


Number of


Founded 2009

President Tony Rydberg

Website vardapoteket.se

Owners Investor and Priveq

Investment

Medstop

Vårdapoteket i Norden

Operations/business conceptMedstop’s ambition is to build up a strong and reliable position in the Swedish pharmacy market. Medstop will meet and develop the pharmacy market by means of modern and eff ective pharmacies that are readily accessible in both their off ering and in their way of meeting many people. Medstop shall off er an eff ective prescription service and well-developed self-care.

Operations/business conceptVårdapoteket i Norden’s business concept is to conduct pharmacy operations in Sweden and the Nordic region with healthcare-oriented out-patient pharmacies. Th e core business consists of providing a complete range of goods and services to patients, relatives and healthcare personnel. Th e company will also account for drug supply and pharmaceutical-related knowledge and manufacturing services.

Snart får vi fl er apotek i Sverige

Det blir fler apotek. Inga apotek läggs ned samtidigt som nya öppnas. Apoteks-ombuden blir kvar.

Fler apotek och bättre öppettiderNu omregleras apoteksmarknaden. Nya apotek kommer att startas. En del av dagens apotek kommer att drivas av andra aktörer.

Syftet är att vi ska få fler apotek och bättre öppettider. Kraven på personalens kompetens kommer vara lika höga som i dag.

Läs mer på www.apoteksnyheter.se eller ring 020-248 248.

Apoteket Omstrukturering AB har ansvar för försäljningen av apotek. Läkemedelsverket är tillsyns-myndighet för alla apotek. De apotek som vill sälja receptbelagda läkemedel söker tillstånd hos Läkemedelsverket. Godkända apotek kommer att ha den nya nationella apotekssymbolen.

Blir det fler eller färre apotek?

Nu får vissa receptfria läkemedel säljas också i vanliga butiker. Alla läkemedel måste vara godkända av Läkemedelsverket.


Syftet är att vi ska få fler apotek och bättre öppettider. Kraven på personalens kompetens kommervara lika höga som i dag.


Vad händer med de receptfria läkemedlen?

Apoteket Omstrukturering AB har ansvar för försäljningen av apotek. Läkemedelsverket är tillsynsmyndighet för alla apotek. Deapotek som vill sälja receptbelagda läkemedel söker tillstånd hos Läkemedelsverket. Godkända apotek kommer att ha den nya nationella apotekssymbolen.

Ja, du kan hämta ut dina mediciner på alla apotek som har den nationella apotekssymbolen.


Syftet är att vi ska få fler apotek och bättre öppettider. Kraven på personalens kompetens kommer vara lika höga som i dag.


Apoteket Omstrukturering AB har ansvar för försäljningen av apotek. Läkemedelsverket är tillsyns-myndighet för alla apotek. De apotek som vill sälja receptbelagda läkemedel söker tillstånd hos Läkemedelsverket. Godkända apotek kommer att ha den nya nationella apotekssymbolen.

Kan jag hämta ut recept på vilket apotek som helst?

Blir detBlir det fle fler eller färre

En eller fl era farmaceuter fi nns alltid på apoteket

för att kunna ge dig råd.

55


Public information campaign

Important messages were that the requirements in terms of the personnel’s expertise would be just as high as before, that the high-cost protection, the electronic prescription system and the possibility of paying for medicine in instalments would remain the same, that the prices for prescription drugs would be the same at all pharmacies and that the availability of medicine and advice would increase. Th e new national pharmacy symbol, which all pharmacies approved by the Medical Products Agency will use, was presented.

Th e information campaign included advertisements in the daily press nationwide and in magazines such as Icakuriren, Kommunalarbetare and Land. Outdoor advertisements were also used. Brochures were distributed to waiting rooms at hospitals and health-care centres, as well as all pharmacies. Fact sheets were prepared in multiple languages. More in-depth information could be obtained on the website, www.apoteksnyheter.se, which was adapted for people with hearing impairments, and a phone service that was open all weekdays.

Furthermore, a theme supplement was distributed in the newspaper Metro on 2 November with the Medical Products Agency, the Dental and Pharmaceutical Benefi ts Agency (TLV), Apotekens Service and OAB as joint senders. Th e campaign also included an information fi lm that was shown in waiting rooms at healthcare centres throughout the country. In the fi lm, the Director-General of the Medical Products Agency answered questions about the pharmacy reform. Th e public service television programme, Anslagstavlan, was another information channel.

In May 2009, half of the population was aware of the upcoming pharmacy reform. When the information campaign was concluded in December, awareness of the pharmacy reform was very high. Nine out of ten respondents were well aware of the change, according to surveys conducted by Novus Opinion. Among those 60 years of age or older, 95% were aware of the pharmacy reform. Th ree out of four Swedes were also positive or neutral to the change. Th ey expected improvements in opening hours and in the availability of both non prescription and prescription drugs.

An advertising evaluation showed that 55% believed that the information in the advertising campaign would be useful, 54% that it contained new information and 50% that it was addressed to them. Th ese results were signifi cantly higher than the average for equivalent campaigns.

Noteworthy campaignIn a campaign conducted jointly with the Medical Products

Agency, OAB disseminated information about the pharmacy

reform to the population of Sweden. The objective was to

increase public awareness of the fact that several pharmacies

would soon be operated by private companies, that new

pharmacies could be formed and that general retailers

would be permitted to sell many non prescription drugs.


Subsidiaries

Apoteket ABApoteket offers consumers throughout the country pharmaceuticals and

attractive health products, as well as advice and other services that

should inspire a healthy life and make it easier to feel well. Among the

operations in healthcare, Apoteket offers cost-effective drug supply and

expert pharmacy services. Since 2010, Apoteket is one of many players

active in a competitive pharmacy market.

MissionApoteket was formed in 1970 and, since 1971, has had a sole right to conduct retail trade in drugs and a clear social mission: to be responsible for safe and secure drug supply throughout the country. Apoteket has also provided producer-independent drug information. Th ese social missions, which applied throughout 2009, expire in connection with the reregulation.

In the new pharmacy market, Apoteket will be a central and competitive player in accordance with the new business agreement that applies as of 1 June 2009. Apoteket will continue to off er the customers safe and secure drug supply and work for sound drug use.

VisionApoteket’s vision is a Life of Health. Apoteket views health from a broad perspective, in which knowledge of pharmaceuticals and their use, along with prevention eff orts and lifestyle changes, contribute to a healthier life.

Business conceptBased on customer needs, Apoteket off ers individuals, companies and healthcare providers a wide range of products and services in the areas of pharmaceuticals and health.

OperationsApoteket off ers non prescription and prescription drugs, an attractive range of other health products and information and advice to consumers throughout the country through retail sales via pharmacies and pharmacy representatives, as well as by phone and the Internet at apoteket.se. At many pharmacies, Apoteket also off ers service and a broad range of products for animal owners and veterinarians.

Apoteket Farmaci is responsible for the drug supply and the operation of hospital pharmacies, as well as pharmaceutical services to the healthcare market. Apoteket Farmaci contributes to greater patient safety and better health through effi cient processes for drug handling and drug utilisation throughout the health-care chain. Th e principal customer groups are county councils, municipalities and private companies active in healthcare.

Apoteket International is responsible for Apoteket’s foreign programmes, primarily for the sale of drug-related services such as ApoDos, dose packaged drugs for healthcare. During 2009, a subsidiary was established in Norway. Apoteket Produktion & Laboratorier (APL) is responsible for the production of drugs that are not provided by the pharmaceutical industry. In 2010, APL will become directly owned by the state.

Income Statement (SEK m) 2009 2008

Net sales 43,073 41,710

Other income 6 11

Costs –42,275 –40,771

Operating earnings 804 950

Share of earnings in associated companies –1 0

Financial income 13 39

Financial expenses –10 –20

Pre-tax earnings 806 969

Tax –274 –258

Net earnings 532 711

Attributable to:

Parent Company’s shareholders 532 711

Balance sheet, SEK m 2009 2008

ASSETS

Non-interest-bearing fixed assets 2,184 2,748

Non-interest-bearing current assets 5,100 7,942

Interest-bearing current assets 766 1,010

Assets held for resale 3,636 –

Total assets 11,686 11,700

EQUITY, PROVISIONS AND LIABILITIES

Equity attributable to Parent Company’s shareholders

4,026 3,838

Total equity 4,026 3,838

Long-term liabilities 749 680

Interest-bearing current liabilities 1,750 2,300

Non-interest-bearing current liabilities 3,136 4,882

Liabilities attributable to assets held for resale

2,025 –

Total equity and liabilities 11,686 11,700

Cash flow, SEK m 2009 2008

Cash flow from operating activities 890 1,068

Cash flow from investing activities –282 –253

Cash flow from financing activities –852 –264

Key figures 2009 2008

Return on equity (average), % 13.5 19.9

Return on total capital (average), % 7.0 8.9

Return on capital employed (average), % 14.6 18.2

Equity/assets ratio, % 34.5 32.8

Other, SEK m 2009 2008

Dividend, cash 372 237

Gross investments 357 253

Depreciation, amortisation and impairment 508 303

Average number of employees 10,319 10,666

Sickness absence, % 3.9 4.7

100%

Women 89 %

Men 11%

Women 60 %

Men 40 %

Women 40 %

Men 60 %

Employees Executivemanagement1)

Board of Directors

1)From February 2010


Stefan Carlsson

President Apoteket AB

Subsidiaries

Number of employeesTh e average number of employees was 10,319 (10,666). Of these, approximately 4,000 worked in pharmacies that were sold and went over to the new owners during the fi rst quarter of 2010.

Adjustment to the new pharmacy marketApoteket has played a key role in the reregulation of the Swedish pharmacy market. During the year, Apoteket prepared the sale of 615 of a total 930 pharmacies to new players. To make it easier for the new players, Apoteket provides transitional solutions for checkout systems, accounting and personnel administration. Socially critical systems and databases, such as the online prescription repository, the National Pharmacy Register and the high-cost protection database, were transferred to Apotekens Service, which will provide access to the infrastructure shared by all players. Since 1 July 2009, Apotekens Service has been a subsidiary of OAB.

A number of Apoteket’s earlier social mandates, such as the Poisons Information Centre, Läkemedelsboken (a book of treatment alternatives and advice for prescribers) and the national drug information centre, were transferred to the Medical Products Agency.

Apoteket will be the market leader in the new market with a market share of approximately 35%. An important mission has been to adjust the business to match their new scope and competition. Despite signifi cant adjustment work, the employee survey shows that the values for motivation, health and leadership have improved. To meet future challenges and be an attractive employer in the new market, Apoteket has identifi ed a number of focus areas, including terms and conditions of employment, skills development and health.

Net salesDuring the year, Apoteket’s net sales increased by 3.3% (5.6) to SEK 43,073 m (41,710). Th is increase derived primarily from higher sales of non prescription drugs and other health products in the Apoteket Consumer business segment, but also from more agreement-based sales in the Apoteket Farmaci business segment.

EarningsOperating earnings for the year amounted to SEK 804 m, down SEK 146 m compared with 2008. Adjusted for costs totalling SEK 733 m for the development of necessary infrastructure for the new pharmacy market, reregulation and adjusting to a lower operating volume, operating earnings totalled SEK 1,537 m.

Gross profi t increased 5.4% (6.4) to SEK 8,901 m and the gross profi t margin was 20.7% (20.3).

Apoteket’s sustainability report Apoteket has a long tradition of sustainability work with the aim of being a responsible and successful company long term: economically, socially and environmentally. Apoteket publishes a separate sustainability report that complies with the international guidelines of the Global Reporting Initiative (GRI). Th e entire Group is environmentally certifi ed in accordance with ISO 14001.

BOARD OF DIRECTORSChristian W Jansson

Chairman

Lars-Johan Jarnheimer

Gert Karnberger

Kristina Schauman

Elisabet Wenzlaff

Carina Jansson

Carin Sällström-Nilsson

Sustainability

Ethics policy Yes

Equal opportunities policy Yes

Environment policy Yes

Environmental management system ISO 14001 (parts of the operations)

Yes

Accounting in accordance with IFRS Yes

Reporting in accordance with the GRI guidelines for 2009

Yes

Gender distribution

Read more at www.apoteket.se

OAB’s participating interest


Subsidiaries

Income Statement, SEK m 2009 2008

Net sales 89 0

Other income 0 0

Costs –213 –82

Operating loss –124 –82

Financial income 0 0

Financial expenses 0 0

Earnings after financial items –124 –82

Appropriations –7 0

Pre-tax loss –131 –82

Tax 34 23

Net loss –97 –59

Attributable to:

Parent Company’s shareholders –97 –59

Balance sheet, SEK m 2009 2008

ASSETS

Non-interest-bearing fixed assets 66 0

Non-interest-bearing current assets 29 20

Interest-bearing current assets 174 4

Total assets 269 24

EQUITY, PROVISIONS AND LIABILITIES

Equity attributable to Parent Company’s shareholders

95 5

Total equity 95 5

Non-interest-bearing provisions 7 0

Interest-bearing current liabilities 0 0

Non-interest-bearing current liabilities 167 19

Total equity and liabilities 269 24

Cash flow, SEK m 2009 2008

Cash flow from operating activities 16 –83

Cash flow from investing activities –22 0

Cash flow from financing activities 176 87

Key figures 2009 2008

Equity/assets ratio, % 67.7 20.9

Other, SEK m 2009 2008

Dividend 0 0

Gross investments 22 0

Depreciation, amortisation and impairment –4 0

Average number of employees 19 1

Sickness absence, % 1.7 0

Apotekens Service AB

MissionApotekens Service’s main task is to provide national infrastructure services for all pharmacy players. Th e company must provide services in a competition-neutral manner that ensures patient safety. Th is involves the availability of online prescriptions, which currently comprise the majority of all prescriptions in Sweden, support for handling drug benefi ts and national systems for pharmaceutical statistics.

A newly formed companyIn the Government bill 2008/2009:145 “Reregulation of the pharmacy market”, it was proposed that a number of databases, registers and other IT infrastructure to which all out-patient pharmacies must have access in order to conduct their operations would be separated from Apoteket and be placed in a company independent of the pharmacy players, Apotekens Service. Th e registers and computer systems concerned are the National Pharmacy Register, the prescription repository and the high-cost protection database. It was also proposed that Apotekens Service would assume responsibility for national pharmaceutical statistics from Apoteket.

Th e legislative proposals in the bill became eff ective on 1 July 2009. On the same date, Apotekens Service assumed responsibility for the national infrastruc-ture needed by all players on the new competition-exposed pharmacy market.

Apotekens Service also plays a role in the approval of new pharmacy players and systems suppliers. Th e requirements imposed by the company are that the prescription dispensing systems can properly handle laws, ordinances and regulations and that all pharmacy players must submit certifi cation from Apotekens Service to the Medical Products Agency before being granted a permit to conduct pharmacy operations.

Business conceptApotekens Service shall be an eff ective link between all healthcare players by off ering, on behalf of society, cost-eff ective infrastructure solutions that are safe for patients.

OperationsApotekens Service was formed in June 2008. Until 31 December 2009, the company was owned by OAB with the Ministry of Health and Social Aff airs as the principal. Since 1 July 2009, the company constitutes a link between health-care services and all players on the reregulated pharmacy market. Apotekens Service is not subject to any profi t requirements.

Apotekens Service shall operate as a competition-neutral hub on the pharmacy market by providing national infrastructure services to all players. Th e information included is primarily the prescription repository, the National Pharmacy Register and the high-cost protection database, which are used when dispensing prescriptions.

Apotekens Service is a company that following the reregulation of the

pharmacy market acts as a link between the healthcare services and

all pharmacy players.

ÅRSREDOVISNING 2009

Women 74 %

Men 26 %

Women 62 %

Men 38 %

Women 67 %

Men 33 %

Employees Executivemanagement

Board of Directors

100%


Ylva Hambraeus Björling

President Apotekens Service AB

Subsidiaries

Apotekens Service must approve both newly developed and upgraded prescription-dispensing systems and the pharmacy players’ introduction of the systems. Apotekens Service tests correct compliance with the process for dispensing prescriptions, as well as compliance with related integrity and patient-safety requirements.

As of 1 July 2009, Apotekens Service is also responsible for collecting, maintaining and supplying statistics on drug sales in Sweden. Recipients include authorities and county councils. On 1 November 2009, general retailers were permitted to sell certain non prescription drugs, which entails that Apotekens Service will gather statistics from a number of sales points.

To prevent reregulation from entailing greater administration for county councils and to avoid a heavy administrative burden for the pharmacy players, Apotekens Service is charged with the task of ensuring eff ective distribution of drug benefi ts between county councils and pharmacy players. All pharmacy players report their prescription amounts in the benefi t system to Apotekens Service daily. Subsequently, Apotekens Service compiles benefi t documentation for the county councils based on the information that the pharmacy players have reported and creates benefi t documentation from the pharmacy players.

Number of employeesTh e company began the year with one employee, the President, and its major task has been to achieve a full-fl edged management organisation. Th e build-up of the management organisation included eff orts ranging from the recruitment of employees to the formulation of values, policies, a business plan and introduction of processes. At year-end, the company had 52 employees.

SalesSales will primarily derive from two areas of operations: the fees for the infrastructure

services provided to pharmacy players, which amounted to SEK 83 m in 2009, and statistics sales, which amounted to SEK 6 m.

All revenues originate from the latter half of the year, meaning from the time after assumption of the operation from Apoteket.

Revenues attributable to the infrastructure services are based on a price model entailing that the pharmacy players pay a certain price per prescription order line. Th e model and price are decided by the Dental and Pharmaceutical Benefi t Agency and shall be set so that Apotekens Service’s costs related to pharmacy services are covered over time, including some margin for development. Th e price for 2009 was SEK 2.21 per prescription order line, which applies until further notice.

Operating resultIn 2009, the operating result was a loss of SEK 124 m (loss:82), including the cost for the assumption of the infrastructure services from Apoteket and the build-up of Apotekens Service.

BOARD OF DIRECTORSOlof Englund,

Chairman

Anitha Bondestam

Eva Andersson

Christina Wahrolin

Mats Larson

Olivia Wigzell

Sustainability

Ethics policy No

Equal-opportunities policy Yes

Environment policy Yes

Environmental management system ISO 14001 (parts of the operations)

No

Accounting in accordance with IFRS No

Reporting in accordance with the GRI guidelines for 2008

No

Gender distribution

Read more at www.apotekensservice.se

OAB’s participating interest


Administration Report


Group structure and operationsApoteket Omstrukturering AB (OAB) is wholly owned by the Swedish state. OAB’s mission is to lead and monitor the restructuring of Apoteket AB. Th e objective is to ensure well-functioning competition in a reregulated pharmacy market. Th e primary tasks are to manage the process of selling pharmacies owned by Apoteket AB and ensure that certain infrastructure and certain service functions are transferred to Apotekens Service AB. Operations are conducted in the wholly owned subsidiaries Apoteket AB and Apotekens Service AB.

Apoteket off ers individuals, companies and healthcare providers a wide range of products and services in the areas of pharmaceuticals and health.

Apotekens Service off ers national infrastructure services to all pharmacy players on the competitive pharmacy market.

OAB complies with applicable sections of state guidelines for external reporting for state-owned companies. Insofar as the guidelines are not complied with, this is due to the company’s specifi c, time-limited assignment and the fact that Apoteket AB, which con-stitutes a substantial part of the Group, reports in full compliance with the guidelines.

Signifi cant events 2009• On 29 April, the Swedish Parliament (Riksdag) passed bill 2008/09:145 Reregula-

tion of the Pharmacy Market.• On 5 May 2009, OAB announced which pharmacies would be sold to private players

and which clusters (portfolios) they had been divided into.• On 1 July 2009, the new legislation regarding a reregulation of the pharmacy market

entered into eff ect and the pharmacy market was thereby formally opened to competition. At the same time, OAB opened a toll-free phone number for questions from the public.

• In October, an information campaign regarding reregulation was launched.• On 7 October 2009, a new Board of Directors was appointed for Apoteket AB.• On 1 November 2009, it became possible to buy certain non prescription drugs from

general retailers.• On 9 November 2009, OAB announced the names of the buyers of the clusters that

had been on sale. Th e total sales price amounted to SEK 5,970 m and the new players were to take possession in the fi rst quarter of 2010.

Financial disclosures • Net sales increased by 3.3% (5.6) or SEK 1,366 m to SEK 43,076 m (41,710).• Operating earnings totalled SEK 765 m (922).• Earnings after tax amounted to SEK 503 m (683).• Th e return on equity was 12.7% (19.2).• Cash fl ow amounted to a negative SEK 75 m (pos: 556).

NET SALES

Consolidated net sales derive primarily from three sub-areas: sales of prescription drugs, contract-based sales to county councils, municipalities and companies and sales of self-care products and other health products. During 2009, net sales increased 3.3% (5.6) to SEK 43,076 m (41,710).

The Board of Directors and the President of Apoteket Omstrukturering AB, corp.

reg. no. 556481-5966, hereby submit the annual accounts and consolidated

fi nancial statements for the fi nancial year 1 January – 31 December 2009.



Prescription drug sales accounted for 64% (65) of the Group’s net sales and amounted to SEK 27,582 m (27,315), an increase of 1.0% (3.6).

Contract-based sales increased 6.2% (9.6) to SEK 7,810 m, corresponding to 18% (18) of consolidated net sales. Contract-based sales comprise sales of pharmaceuticals and services to healthcare services in county councils, municipalities and companies. Th e rise in pharmaceutical sales to hospitals was primarily due to a continued high sales volume, mainly of preparations, and a relatively high average price trend in some areas of therapy.

Sales of self-care drugs and other health products increased 10.3% (10.4) to SEK 7,150 m, corresponding to 17% (16) of consolidated net sales. Th e sales increase derived primarily from a rise in customer visits as a result of increased availability, but also to each customer purchasing for higher average amounts on each purchase occasion.

OPERATING EARNINGS

Operating earnings for 2009 amounted to SEK 765 m (922), down SEK 157 m. Gross profi t increased 5.4% (6.4) to SEK 8,904 m. Th e gross profi t margin was 20.7% (20.3). Operating earnings include costs of SEK 733 m that are attributable to:• Effi ciency enhancements in the Group’s organisation, primarily in the form of

overhead costs of SEK 100 m.• SEK 249 m for the build-up of national dispensing support with the aim of improving

drug utilisation and patient safety.• SEK 278 m for the build-up of new IT infrastructure for the new pharmacy market,

establishment of the subsidiary Apotekens Service AB and the development of transitional solutions off ered to buyers of pharmacies.

• SEK 58 m in provisions for loss-making operations in the Group.• Costs of SEK 48 m for the build-up of the subsidiary Apoteksgruppen i Sverige AB

and the sale of individual pharmacies.

Personnel costs increased 1.2% (1.3) to SEK 5,019 m. Adjusted for pension and restructuring costs, personnel costs were 1.3% lower. Th e average number of employees was 10,343. Other external costs increased 14.9% to SEK 2,615 m.

Depreciation, amortisation and impairment losses increased 68.6% to SEK 511 m. SEK 240 m was recognised in impairment losses on intangible assets due to the reregulation of the pharmacy market. Impairment losses were also recognised in connection with the restructuring required due to a lower operational volume.

CASH FLOW

Consolidated cash fl ow amounted to a negative SEK 75 m (pos: 556).Cash fl ow from operating activities was SEK 1,038 m (1,053) and was primarily

attributable to earnings for the year. Cash fl ow from investing activities was a negative SEK 306 m (neg: 253). Investments in tangible fi xed assets amounted to SEK 140 m (158). Investments in intangible assets amounted to SEK 163 m (86) and mainly comprised investments in subsidiaries treated as an acquisition of intangible assets in the consolidated fi nancial statements. Th e cash fl ow from fi nancing activities was a negative SEK 807 m (neg: 244) and was attributable to dividends paid to the owner and a decreased need for short-term borrowing.

Cash and cash equivalents amounted to SEK 940 m at 31 December 2009.

FINANCIAL POSITION

At 31 December 2009, shareholders’ equity amounted to SEK 4,095 m, SEK 265 m higher than the preceding year-end. Th is change corresponds to earnings for the year less dividends paid to the owner.

Th e equity/assets ratio was 34.4% (32.7). Th e return on equity was 12.7% (19.2). Net fi nancial income/expense amounted to income of SEK 3 m (19). Interest-

bearing net debt amounted to SEK 810 m, SEK 475 m lower than at the preceding year-end.



Corporate social responsibilitySUPPLY CHAIN

A key element of sustainable development eff orts involves ensuring good relationships with various partners. Within the Group, a code of conduct has been adopted that must be included in all new agreements signed with suppliers. By signing the code of conduct, the supplier pledges to work for good conditions in the production of the products supplied to the Group. During the year, extensive work was initiated on mapping and assessing the risks of suppliers with regard to social and environmental conditions. Follow-up is performed to varying extents depending on risk category.

EMPLOYEES

For the employees of the Group, 2009 was a diff erent and ground-breaking year. It was characterised by uncertainty with regard to which pharmacies would be sold and the other consequences that the change would have for employees and customers. Examples of activities resulting from the reregulation include the training and coaching of the managers to enable them to lead the change and the drafting of a new industry agreement. Assistance in fi nding new employment with a diff erent employer was provided for employees made redundant.

In order to ensure as good a transition as possible to the new pharmacy owners, the Group worked on an undertaking during the year to provide the industry with adminis-trative human resource systems for salary management, etc.

Measurements of healthy attendance, meaning the proportion of employees with a maximum of seven sick days in the past 12 months, exhibit a positive trend. Healthy attendance was 69% (67) in 2009.

ENVIRONMENT

Th e Apoteket Group has successfully conducted work on environmental issues for many years. Th e elements of the operations with the greatest environmental impact are emissions of environmentally burdensome substances from the production and consumption of drugs, and emissions of greenhouse gases from transports and travel.

In 2009, the Group collected a total of 1,128 tonnes of pharmaceutical waste, including packaging. Furthermore, work to prevent the scrapping of pharmaceuticals is conducted together with healthcare personnel through various services. In 2009, the Group’s total CO2 emissions decreased 0.4%.

In the past few years, parts of the Group apply an environmental management system certifi ed in accordance with ISO 14001. Th is entails an undertaking to constantly improve environmental work.

OPERATIONS REQUIRING PERMITS

Th e manufacture of pharmaceuticals in the Group company Apoteket Produktion & Laboratorier AB accounts for 1.2% (1.2) of consolidated sales and requires a permit under the Environmental Code. No limits stipulated in the permit were exceeded during the year and the company has not been charged any environmental fi nes or issued other injunctions under the Environmental Code.

SUSTAINABILITY ACCOUNTING

A separate sustainability report for 2009 is available at www.apoteket.se.

Substantial risks and uncertaintiesBUSINESS RISKS

Apoteket Omstrukturering AB is the company charged with the task of managing the sale of pharmacies resulting from the reregulation of the pharmacy market.

In the fourth quarter of 2009, Apoteket AB concluded an agreement regarding the sale of eight subsidiaries containing 465 pharmacies with takeover scheduled for the fi rst quarter of 2010.



On 12 March, Apoteket AB spun off Apoteksgruppen i Sverige AB, with 150 pharmacies, to its Parent Company, Apoteket Omstrukturering AB. Subsequently, Apoteksgruppen is to sell these 150 pharmacies to private entrepreneurs, requiring that all of these pharmacies be incorporated before the sale. Th is is a comprehensive and complicated process since drug supply must not be negatively aff ected at the same time.

As of November 2009, sales of a large range of non prescription drugs have been permissible in supermarkets. Th is entails a decrease in the sales volume of these products in the pharmacy supply chain. At the same time, the number of pharmacies will increase, thus increasing competition.

Th e events above have a material impact on sales and earnings. New business opportunities must be developed and the effi ciency of existing pharmacies must increase to off set the decrease in volume.

Today, the Group has agreements concerning the drug supply of hospitals with all county councils through the Group company Apoteket Farmaci AB. A loss of any of the major supply agreements involving healthcare would entail a profi tability risk for the business. Th e current supply agreements expire during the period 2010–2013.

OPERATING RISKS

In a reregulated pharmacy market, with new players establishing a position, there is a signifi cant risk that employees with a high level of expertise will be lost to competitors, not just pharmacists and pharmacy technicians, but also centrally placed key employees.

Th e Group has a mandate to provide systems solutions and administrative solutions to both buyers of pharmacies and newly started players during a transitional period. Th e availability of resources in areas of expertise vital for the implementation of the mandate is essential.

FINANCIAL RISKS

Th e Group’s operations are subject to limited currency and interest rate risks. In connection with sales of pharmacies, Apoteksgruppen will off er loans to private entrepreneurs. Th is will entail a credit risk in the future.

Board composition, work and remunerationAt the Annual General Meeting (AGM) on 30 April 2009, Birgitta Böhlin (Chairperson), Gunvor Engström, Jan Forsberg, Ann-Christin Nykvist and Sofi a Wallström (owner representative) were re-elected as Board members.

Th e employee representative for the Association of Technical Pharmacy Employees is Christer Ottoson, appointed in September 2008, and the deputy representative for the association is Ann-Katrin Westermark as of January 2009. Th e employee representative for the Swedish Pharmaceutical Association is Cecilia Bernsten, appointed in December 2008, and the deputy is Claes Wallén, appointed in 2009.

In accordance with a resolution by the 2009 AGM, a fi xed fee of SEK 250,000 is payable to the Chair of the Board. A fi xed fee of SEK 130,000 per year is payable to other AGM-elected Board members, except for the owner representative who receives a fi xed fee of SEK 4,000 per meeting attended. A fi xed fee of SEK 4,000 per meeting attended is payable to regular employee representatives. A fee of SEK 2,000 is payable to deputy employee representatives when they replace a regular employee representative.

In 2009, the Board held 24 meetings where the issues discussed included the following: • Th e rules of procedure for the Board and the instructions for the President, including

instructions for fi nancial reporting, and the adoption of policies for OAB.• Th e stand-still for Apoteket AB for a transitional period.• Th e pharmacies to be sold and the cluster distribution.• Th e transaction process.• Decisions regarding buyers of clusters.• Transfer agreements concerning clusters.• Appointment of a new Board in Apoteket AB.• Apoteksgruppen’s structure, transaction structure and reference prices.



Guidelines regarding remuneration of senior executivesTh e company complies with the rules for remuneration of senior executives and employees established by the Government. Th e Board decides on the employment and terms and conditions of employment of the President. Remuneration and benefi ts payable to other senior executives are determined by the President and announced in the Board. At the AGM, the Board will submit motions on the principles of remuneration and other terms of employment for senior executives, for approval by the AGM.

Th ere are no outstanding share-related or share price-related incentive programmes for the Board or senior executives.

For salaries and benefi ts for the President and other senior executives, refer to Note 9.

PROPOSED GUIDELINES TO APPLY AS OF THE NEXT AGM

Th e Board proposes that the company apply the guidelines, as decided by the Government, concerning the terms of employment for senior executives in public companies. Th ese guidelines constitute a part of the state’s ownership policy. For further information on the state’s ownership policy, refer to the Government’s website.

Financial disclosures for the Parent Company• Th e operating result was a loss of SEK 30 m (loss: 27).• Earnings for the year amounted to SEK 929 m (loss: 27), of which dividends received

accounted for SEK 952 m (-).• Cash fl ow was a negative SEK 5 m (pos: 5).

Revenues amounted to SEK 145 m (-) and pertained to services rendered that were invoiced to Apoteket AB and Apoteksgruppen i Sverige AB. Operating costs amounted to SEK 175 m (27), of which SEK 103 m comprised costs for legal consultation in respect of contractual negotiations and incorporation, analyses of the market, profi tability and pricing models, costs associated with the pharmacy sales process and costs for informa-tion campaigns to the public regarding the pharmacy reform. Th e remaining SEK 72 m comprised costs associated with preparations for the sale of small-business pharmacies and the build-up of a central organisation for the small-business operator concept.

Planned activities in 2010It is anticipated that the sale and delivery of individual pharmacies in Apoteks gruppen will commence in the second quarter of 2010.

OAB will submit proposals to the owner, the Ministry of Health and Social Aff airs, concerning the capitalisation structure for Apoteket AB, Apoteket Produktion & Laboratorier AB and Apoteksgruppen i Sverige AB.

Signifi cant events after the reporting period• On 15 January 2010, the fi rst buyer took possession of a pharmacy cluster.

Th e remainder took possession in February.• On 2 February 2010, the fi rst new pharmacy player outside the sales process began

to dispense prescription medicine.• On 12 March, OAB assumed direct ownership of Apoteksgruppen i Sverige AB by

means of a spin-off from Apoteket AB. Accordingly, the organisation built up within OAB assumed responsibility for this company.

• On 12 March, Jens Sandström took offi ce as the President of Apoteksgruppen.• On 26 March 2010, all shares in Apotekens Service AB were spun off to the state.• On 26 March 2010, OAB’s Board decided to propose to the AGM that all shares in

Apoteket AB be spun off to the state.

Distribution of earningsFor the proposed distribution of earnings, refer to page 55.


Financial statements

AMOUNTS IN SEK M NOTE 2009 2008

Net sales 5, 6 43,076 41,710

Other income 6 6 11

Total revenues 43,082 41,721

Goods for resale 1) –34,172 –33,263

Other ex ternal costs 7, 8 –2,615 –2,275

Personnel costs 9, 17, 24 –5,019 –4,958

Depreciat ion/amor t isat ion and impairment 14, 15 –511 –303

Operating earnings 765 922

Share of earnings of associated companies 16 –1 0

Financial revenues 23 13 39

Financial costs 23 –10 –20

Pre-tax earnings 767 941

Income tax 10 –264 –258

Net earnings for the year 503 683

Other comprehensive incomeRemeasurement of f inancial f ixed asset –1 –1

Total comprehensive income during the year 502 682

Net earnings for the year at tr ibutable to:Parent Company’s shareholders 503 683

Comprehensive income during the year at tr ibutable to:Parent Company’s shareholders 502 682

1) The term “Goods for resale” comprises Apoteket ’s cost of mater ials for the sale of drugs and other products.

Consolidated statement of comprehensive income



Operating activit iesPre-tax earnings 767 941

Adjustment for non-cash items

Depreciat ion/amor t isat ion and impairment 511 303

Net capital gains 34 12

Change in pension claim –14 –380

Other 5 2

Paid taxes –263 –7

Cash f low from operating activit ies before changes in working capital 1,040 871

Cash flow from changes in working capital

Changes in inventor ies –14 –127

Changes in receivables –361 –265

Changes in liabil i t ies 373 574

Cash f low from operating activit ies 1,038 1,053

Investing activit ies 14, 15, 16Investments in intangible assets –163 –86

Investments in tangible f ixed assets –140 –158

Investments in associated companies – –9

Investments in other f inancial f ixed assets –3 –

Cash f low from investing activit ies –306 –253

Financing activit iesDecrease in current f inancial l iabili t ies –570 –99

Dividends paid 28 –237 –145

Cash f low from financing activit ies –807 –244

Cash f low for the year –75 556Cash and cash equivalents at the beginning of the year 1,015 459

Cash and cash equivalents at the end of the year 940 1,015

Cash f low from receipt of interest income amounted to SEK 13 m (39).

Cash f low from payment of interest expense amounted to SEK 10 m (20).


Consolidated cash-fl ow statement

Changes in consolidated equityShareholder’s equity is, in its entirety, attributable to the Parent Company’s shareholder

AMOUNTS IN SEK M AS OF 31 DECEMBER NOTE SHARE CAPITAL

OTHER

CAPITAL CON-

TRIBUTIONS

OTHER

RESERVES

RETAINED

EARNINGS TOTAL EQUITY

Opening balance as of 1 January 2008 0.1 174.9 4 3,114 3,293

Total comprehensive income during the year – – –1 683 682

Dividend – – – –145 –145

Closing balance as of 31 December 2008 0.1 174.9 3 3,652 3,830

Opening balance as of 1 January 2009 0.1 174.9 3 3,652 3,830

Total comprehensive income during the year – – –1 503 502

Dividend 28 – – – –237 –237

Closing balance as of 31 December 2009 0.1 174.9 2 3,918 4,095



Consolidated balance sheetAMOUNTS IN SEK M AS OF 31 DECEMBER NOTE 2009 2008

ASSETSFixed assetsIntangible assets 14 105 155

Tangible fixed assets 15

Buildings, land and land improvements 216 228

Equipment 487 925

Construct ion in progress 0 0

Total tangible f ixed assets 703 1,153

Financial fixed assets

Holdings in associated companies 16 27 37

Financial assets available for sale 23 3 5

Pension claim 17 1,412 1,398

Other receivables 0 0

Total f inancial f ixed assets 1,442 1,440Total f ixed assets 2,250 2,748

Current assetsInventor ies 18 1,073 1,999

Accounts receivable 23 3,122 5,005

Current tax assets 74 41

Other receivables 19 557 688

Prepaid expenses and accrued income 20 266 209

Cash and cash equivalents 23 940 1,015

Total current assets 6,032 8,957Assets held for sale 13 3,636 –

TOTAL ASSETS 11,918 11,705

EQUIT YShare capital 0.1 0.1

Other capital contr ibutions 174.9 174.9

Other reserves 2 3

Retained earnings 3,918 3,652

Total equity 4,095 3,830

LIABIL IT IESLong-term liabili t iesDeferred tax 11 611 608

Other provisions 22 51 72

Other long-term liabil i t ies 81 –

Total long-term liabili t ies 743 680

Current liabili t iesLiabili t ies to credit inst i tut ions, interest-bearing 23 1,750 2,300

Accounts payable 23 2,469 3,985

Other l iabil i t ies 354 355

Accrued expenses and deferred income 21 373 470

Other provisions 22 109 85

Total current liabili t ies 5,055 7,194Total liabili t ies 5,798 7,874Liabili t ies at tr ibutable to assets held for sale 13 2,025 –

TOTAL EQUIT Y AND L IABIL IT IES 11,918 11,705

Contingent liabili t iesGuarantee commitments, others 22 132 0

Pledged assets none none



Parent Company statement of earningsAMOUNTS IN SEK M NOTE 2009 2008

Revenues 1) 6, 25 145.5 –

Other operating income 7, 8 –164.1 –25.0

Personnel costs 9, 24 –11.8 –2.5

Operating loss –30.4 –27.5

Share of earnings in Group companies 26 951.8 –

Other interest income and similar i tems 23, 25 0.1 0.3

Other interest costs and similar i tems 23, 25 – 0.1 –

Pre-tax earnings 921.4 –27.2

Income tax 10 8.0 –

NET E ARNINGS FOR THE YE AR 929.4 –27.2

1) The term “Revenues” comprises ser vices invoiced to Apoteket AB and Apoteksgruppen i Sver ige AB.

Parent Company balance sheetAMOUNTS IN SEK M AS OF 31 DECEMBER NOTE 2009 2008

ASSETSFixed assetsPar t icipat ions in Group companies 27 1,971.0 1,883.5

Deferred tax assets 11 8.0 –

Total f inancial f ixed assets 1,979.0 1,883.5

Current assetsReceivables from Group companies 608.9 –

Other receivables 19 4.9 –

Prepaid expenses and accrued income 20 0.2 0.1

Cash and cash equivalents 0.1 5.3

Total current assets 614.1 5.4TOTAL ASSETS 2,593.1 1,888.9

EQUIT YRestricted equityShare capital (100 shares with quota value SEK 1,000 per share) 0.1 0.1

Total restr icted equity 0.1 0.1

Non-restricted equityRetained earnings 1,639.3 1,903.5

Net earnings for the year 929.4 –27.2

Total non-restr icted equity 2,568.7 1,876.3Total equity 2,568.8 1,876.4

L IABIL IT IESCurrent liabili t iesAccounts payable 14.3 11.9

Liabili t ies to Group companies – 0

Other l iabil i t ies 0.9 0.3

Accrued expenses and deferred income 21 9.1 0.3

Total current liabili t ies 24.3 12.5TOTAL EQUIT Y AND L IABIL IT IES 2,593.1 1,888.9

Contingent liabili t ies none nonePledged assets none none



Parent Company cash-fl ow statement

Changes in Parent Company’s equity


Operating activit iesEarnings before appropriat ions and tax 921.4 –27.2

Adjustment for non-cash items

Anticipated dividend from subsidiaries – 627.3 – Received distribution in kind from subsidiaries –87.5 –Cash f low from operating activit ies before changes in working capital 206.6 –27.2

Cash flow from changes in working capital

Changes in receivables 13.3 0

Changes in liabil i t ies 11.9 12.5

Cash f low from operating activit ies 231.8 –14.7

Investing activit iesCash f low from investing activit ies – –

Financing activit iesShareholders’ contr ibution – 20.0

Dividends paid –237.0 –

Cash f low from financing activit ies –237.0 20.0

Cash f low for the year –5.2 5.3Cash and cash equivalents at the beginning of the year 5.3 –

Cash and cash equivalents at the end of the year 0.1 5.3

AMOUNTS IN SEK M AS OF 31 DECEMBER NOTE SHARE CAPITAL

RETAINED

EARNINGS

NET EARNINGS

FOR THE YEAR TOTAL EQUITY

Opening balance as of 1 January 2008 0.1 – – 0.1Shareholders’ contr ibution received 1) – 1,903.5 – 1,903.5

Net earnings for the year – – –27.2 –27.2

Closing balance as of 31 December 2008 0.1 1,903.5 –27.2 1,876.4

Opening balance as of 1 January 2009 0.1 1,903.5 –27.2 1,876.4Distr ibut ion of earnings – –27.2 27.2 –

Dividends – –237.0 – –237.0

Net earnings for the year – – 929.4 929.4

Closing balance as of 31 December 2009 0.1 1,639.3 929.4 2,568.8

1) The shareholder’s contr ibut ion in 2008 comprised shares in Apoteket AB valued at the carr y ing amount of shareholders’ equit y of Apoteket AB on 30 June 2008, SEK 1,883.5 m, and

cash equivalents total l ing SEK 20.0 m.


Notes

Notes to the fi nancial statementsNOTE 1 GENERAL INFORMATIONApoteket Omstrukturering AB (the Parent Company) and its subsidiaries (which jointly form

the Group) distribute and sell pharmaceutical and self-care products, as well as services

related to pharmaceuticals and healthcare, mainly through a network of pharmacies and

to the health services. The Group has four production facilities for the manufacture of

special drugs. The Parent Company, which is wholly owned by the Swedish government,

is a registered limited liability company with its head offi ce in Stockholm. The Parent

Company’s mission is, and has been, to manage and monitor the restructuring of the

subsidiary Apoteket AB during the deregulation of the pharmacy market as decided by

the Swedish Government.

The consolidated fi nancial statements and the Annual Report for 2009 were approved

for publication by the Board of Directors on 9 April 2010, and will be presented to the

Annual General Meeting on 29 April 2010.

NOTE 2 SUMMARY OF IMPORTANT ACCOUNTING POLICIES

The consolidated fi nancial statements have been prepared in accordance with the Inter-

national Financial Reporting Standards (IFRS) and the interpretative recommendations of

the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the

European Commission. Recommendation RFR 1.2 “Supplementary accounting rules for

groups” of the Swedish Financial Reporting Board has also been adopted. The preparation

of fi nancial statements in conformity with the IFRS standards requires the use of a number

of signifi cant assumptions and accounting estimates. The management is also required

to make certain assessments when applying the company’s accounting policies. Areas

involving signifi cant assessments that are complex, or areas where assumptions and

estimates are of material importance to the consolidated fi nancial statements, are

presented in Note 3.

Basis of preparation of the consolidated fi nancial statementsThe working currency of the Parent Company and the subsidiaries is the Swedish krona

(SEK), which is also the reporting currency for both the Parent Company and the Group.

Unless otherwise stated, all recognised amounts have been rounded to the nearest million.

The consolidated fi nancial statements have been prepared according to the cost method,

except insofar as certain fi nancial assets measured at fair value are concerned. Such assets

consist of condominiums, which are classifi ed as fi nancial assets available for sale.

The principal accounting policies adopted when these consolidated fi nancial statements

were prepared are formulated below. Unless otherwise stated, these policies have been

applied consistently for all of the years presented. The Parent Company’s accounting

policies are presented in Note 4.

Changed accounting policiesThe Group applies the same accounting policies as those applied in the 2008 Annual

Report, with the following exceptions due to new or revised standards, interpretations and

improvements as adopted by the EU and applied as of 1 January 2009. The presentation

below includes only those changes that have had an impact on the Group.

IAS 1 Presentation of Financial Statements

This standard came into force on 1 January 2009 and applies to the accounting year

starting after that date. The standard entails, for example, that equity transactions with

the owner must be presented in a separate statement. Other transactions recognised

directly in equity must be presented either as a continuation of the statement of earnings

or in a separate statement. For other transactions recognised directly in equity, income

tax accruing on each component must be recognised separately. If a restatement of a

comparative period has occurred, a restated opening balance sheet for the comparative

period must be presented.

IFRS 7 Financial instruments

The amendment of IFRS 7 has entailed that additional disclosures be provided concerning

fi nancial instruments measured at fair value in the balance sheet.

IFRS 8 Operating Segments

This standard came into force on 1 January 2009 and applies to accounting years starting

after that date. It deals with the division of the company’s business into different segments.

According to the standard, companies are to take, as their starting point, the structure of

their internal reporting and defi ne recognisable segments according to this structure.

Information concerning forthcoming standards, amendments and interpretationsIFRS 3 Business Combinations

The amendments to IFRS 3 will entail a change in the manner in which future acquisitions

of business will be reported. To be applied as of 1 January 2010.

IAS 27 Consolidated and Separate Financial Statements

The amendments to IAS 27 will entail a change in the recognition of losses arising in

subsidiaries and in when the controlling infl uence over subsidiaries ceases. To be applied

as of 1 January 2010.

IFRS 9 Financial Instruments Recognition and Measurement (not approved by the EU)

Pending completion of all aspects of the standard, the Group has not evaluated the

effects of the new standard.

IAS 24 Related Party DisclosuresThe defi nition of related parties has been amended; in addition, certain relief is permitted

concerning disclosures required of state-owned companies. To be applied as of 1 January

2010.

The forthcoming standards, amendments and interpretations of IFRS standards

presented above are not expected to impact the Group’s statement of earnings or fi nancial

position. However, they could require changes in the presentation of fi nancial instruments,

in addition to additional disclosures in notes, including, in certain cases, updates of

accounting policies.

Consolidated fi nancial statementsSubsidiaries are all companies in which the Group is entitled to formulate fi nancial and

operational strategies in a manner that normally accompanies a shareholding exceeding half

of the voting rights. They are included in the consolidated fi nancial statements from the

date on which the controlling infl uence is transferred to the Group. They are excluded from

the consolidated fi nancial statements from the date on which this infl uence ceases. The

consolidated fi nancial statements have been prepared according to the purchase method,

whereby the shareholder’s equity of the subsidiaries at the time of acquisition, determined

as the difference between the fair values of their assets and liabilities, is eliminated in full.

Accordingly, consolidated equity contains only that portion of the subsidiaries’ equity

arising after the acquisition. Intra-group transactions and balance sheet items, as well as

unrealised gains on transactions between Group companies, are eliminated.

Accounting for associated companiesAssociated companies are all companies in which the Group has a signifi cant, but not a

controlling, infl uence, which generally applies to shareholdings comprising between 20

and 50% of the votes. Holdings in associated companies are recognised according to the

equity method and are initially measured at cost.

The Group’s share of earnings in associated companies, after their acquisition, is

recognised in the statement of earnings. Accumulated changes after the acquisition are

stated as a change in the carrying amount of the holding. When the Group’s share of the


Notes

losses of an associated company amounts to or exceeds its holding in the associated

company, including any unsecured receivables, the Group does not recognise further

losses unless it has taken on commitments or made payments on behalf of the associated

company. There are no unrealised gains and losses on transactions between the Group

and its associated companies.

Assets held for saleAssets held for sale are defi ned as assets whose value is intended to be recovered by

means of sale rather than by being used in a business operation. Assets that are classifi ed

as holdings of assets held for sale must be reported separately in the balance sheet.

Assets held for sale must be recognised at the carrying amount or the fair value less

selling costs, whichever is lower.

Depreciation/amortisation of assets classifi ed as holdings of assets held for sale is not

permissible.

Reporting by segmentsAn operating segment is defi ned as a component of a business entity.

Characteristics of a segment include the following:

– it engages in business operations from which it can accrue revenues and incur costs

(including revenues and costs involving transactions with other parts of the same

company),

– its operating earnings is examined regularly by the company’s chief operating decision

maker as a basis for decisions concerning the allocation of resources to segments and

evaluation of their results,

– there is separate fi nancial information available about the segment.

Translation of receivables and liabilities in a foreign currencyForeign currency transactions are translated to the working currency at the rate of exchange

applying on the date of the transaction. Currency gains and losses arising from the

payment of such transactions, and from the translation of assets and liabilities in foreign

currencies at the year-end exchange rate, are recognised in the statement of earnings.

Intangible assetsCapitalised development expenses

Development expenses are capitalised insofar as they are adjudged to generate future

economic benefi ts. The recognised amount includes direct expenditure for acquired

services and materials, as well as indirect expenses that can be attributed to the asset in

a reasonable and consistent manner. Other development costs are expensed in the state-

ment of earnings as they arise.

In the balance sheet, recognised capitalised development expenses are entered at

acquisition value less accumulated amortisation and impairment. The principal criteria for

capitalisation are that future earnings and cash fl ow can be demonstrated to derive from

the end product resulting from the development work and that the technical and fi nancial

capabilities for completing the development work existed when the work started. Software

licences have a limited useful life and are recognised at acquisition value less accumulated

amortisation. Costs that are closely associated with software production include personnel

costs for program development and a reasonable portion of assignable indirect costs.

Other intangible assets

Other intangible assets mainly comprise expenditure for the acquisition of rental contracts.

Additional expenditure

Additional expenditure for capitalised intangible assets is recognised as an asset in the

balance sheet only if the expenditure increases the future economic benefi ts of the

specifi c asset to which the expenditure pertains. All other expenditure is expensed when

it arises.

Amortisation principle

Amortisation using the straight-line method is recognised in the statement of earnings

over the estimated useful life of the assets. Licences and capitalised development costs

recognised as assets are amortised over their estimated useful life, which is estimated

as fi ve years. The amortisation period for other intangible assets corresponds to the

contractual period.

Tangible fi xed assetsOwned assets

Buildings and land mainly comprise production facilities and other buildings. Buildings are

recognised at their acquisition value less subsequent straight-line depreciation. Land is

recognised at acquisition value. Other tangible fi xed assets are stated at acquisition value

less depreciation. The acquisition value includes expenditure that can be directly attributed

to the acquisition of the asset.

Additional expenditure

Additional expenditure is added to the carrying amount of the asset only if it is probable

that the future economic benefi ts associated with the asset will accrue to the Group and

the acquisition value of the asset can be reliably determined. Continuous repair and

maintenance are recognised as costs in the statement of earnings during the period in

which they arise.

Depreciation principles

Land is not depreciated. Depreciation of other assets is allocated to their acquisition

value down to their estimated residual value. Straight-line depreciation is applied over the

estimated useful life, as follows:

– Buildings 20 – 40 years – Fittings 20 years

– Machinery 5 – 10 years – Equipment and installations 3 – 5 years

– Vehicles 5 years

Impairment lossesWhenever there is an indication of a decrease in the value of a tangible or intangible asset,

a recoverable amount is estimated for the asset. The recoverable amount is compared

with the carrying amount. The amount by which the carrying amount of the asset exceeds

its recoverable amount is then recognised as an impairment loss. The recoverable amount

is the higher of the fair value of an asset less selling expenses and its value in use. In

assessing the need for impairment losses, assets are grouped at the lowest levels at

which there are separate identifi able cash fl ows (cash-generating units).

LeasesLeasing of fi xed assets, whereby the Group essentially bears the fi nancial risks and

enjoys the benefi ts associated with ownership, is classifi ed as fi nancial leases. These are

recognised at the start of the leasing period at the lower of the fair value of the leased

item and the present value of the minimum leasing fees. Each lease payment comprises

amortisation of the liability and fi nancial expenses in order to achieve a fi xed rate of

interest for the recognised liability. Corresponding payment obligations, after a deduction

for fi nancial expenses, are included in other long-term liabilities and current liabilities.

The interest portion of the fi nancial expenses is recognised in the statement of earnings

distributed over the leasing period, so that each accounting period is charged with an

amount corresponding to a fi xed rate of interest for the liability recognised during each

period. Fixed assets held under fi nancial leases are depreciated over their useful life or

the leasing period, whichever is the shorter.

Charges for operating leasing are expensed using the straight-line method over the

leasing period. The Group’s operating leasing charges relate mainly to the rental of premises

for pharmacies.


Notes

Financial instrumentsFinancial instruments are any type of agreement that gives rise to a fi nancial asset, fi nancial

liability or an equity instrument in another company. Financial instruments recognised in

the balance sheet include, on the asset side, cash and cash equivalents, accounts

receivable, shares and loan receivables. Liabilities and equity include accounts payable,

issued instruments of debt and loan liabilities. Cash and cash equivalents comprise cash

and bank deposits and short-term investments with a maturity of less than 90 days.

Recognition of fi nancial assets and liabilities

Financial instruments are initially recognised at acquisition value corresponding to the

instrument’s fair value plus transaction costs for all fi nancial instruments apart from

those pertaining to the fi nancial assets category, which are recognised at fair value via

the statement of earnings.

The way they are subsequently recognised depends on how they have been classifi ed.

A fi nancial asset or liability is recognised in the balance sheet when the company

becomes a party to the contractual terms of the instrument. Accounts receivable are

recognised in the balance sheet when an invoice has been sent. Liabilities are recognised

when the counterparty has performed and has a contractual obligation to pay, even if an

invoice has not been received.

A fi nancial asset is derecognised from the balance sheet when the contractual rights

expire or the company’s control over the asset ceases. The same applies to a part of a

fi nancial asset. A fi nancial liability is derecognised from the balance sheet when the

contractual obligation is fulfi lled or is extinguished in another manner. The same applies

to a part of a liability.

The fair value of unlisted fi nancial assets is determined using established valuation

techniques.

On every reporting occasion, the company assesses whether there are objective reasons

to impair a fi nancial asset.

Classifi cation of fi nancial instruments

Financial instruments are classifi ed in categories. The classifi cation depends on the

reason for which the fi nancial instruments were acquired. Management determines the

classifi cation of the instruments the fi rst time they are recognised and reassesses this

decision on every reporting occasion. The categories are as follows:

1) Financial assets and fi nancial liabilities measured at the fair value via the

statement of earnings

This category comprises two subgroups:

a) Financial assets and liabilities held for sale.

b) Financial assets and liabilities that, from the very beginning, were designated as

belonging to this category.

Apoteket has no fi nancial instruments in this category.

2) Loan receivables and accounts receivable

These assets are subject to fi xed payment periods or payment periods with the

potential to be fi xed. Cash and cash equivalents, accounts receivable and loan

receivables belong to this category.

3) Investments intended to be held to maturity

This category comprises fi nancial assets subject to fi xed payment periods or

payment periods with the potential to be fi xed that the Group intends, and has the

ability, to retain until maturity.

4) Available-for-sale fi nancial assets

This category comprises fi nancial assets that cannot be classifi ed in any other

category, such as shares and participating rights in either listed or unlisted compa-

nies. Condominiums belong to this category.

5) Financial liabilities measured at a crude acquisition value

This category comprises fi nancial liabilities that are not held for sale. Accounts

payable and liabilities to credit institutions as belonging to this category.

Recognition of fi nancial instruments

Cash and cash equivalents

Cash and cash equivalents include cash assets, bank deposits and other short-term

investments with a maturity of less than 90 days from the date of acquisition.

Available-for-sale fi nancial assets

Available-for-sale fi nancial assets comprise condominiums recognised at fair value.

Changes in fair value are recognised in equity.

Loan receivables and accounts receivable

Loan receivables and accounts receivable are fi nancial assets with fi xed payment periods

or payment periods with the potential to be fi xed and that are not listed on an active

market. A characteristic feature of such assets is that they arise when the Group provides

cash, goods or services directly to a customer without the intention to trade in the

receivable that arises. They are included in current assets, with the exception of items

with a due date later than 12 months after the reporting period, which are classifi ed as

fi xed assets.

Accounts receivable are initially recognised at fair value and thereafter at their accrued

acquisition value less any reserve for a decrease in value. Such a reserve is created when

objective evidence exists that the Group will not be able to receive all the amounts that

have fallen due according to the original terms of the receivables. For private customers,

the size of the reserve is calculated from a rating template, subject to a rising percentage

linked to an increased number of past due days after the date of payment. For contract

customers, the size of the reserve is calculated as 30% of receivables older than 90 days,

plus all cases submitted for debt collection. The amount reserved is recognised in the

statement of earnings.

Financial liabilities

Financial liabilities are initially recognised at the amount received less transaction costs.

After the date of acquisition, the liabilities are measured at accrued acquisition value in

accordance with the effective interest rate method.

InventoriesInventories are measured at the lower of acquisition value and net realisable value.

Acquisition value is determined using the fi rst-in, fi rst-out (FIFO) method.

Revenue recognitionIncome comprises the fair value of sold goods and services, excluding value added tax

(VAT) and discounts and after the elimination of intra-group sales.

Sales of goods are recognised as income when a Group company sells a product to a

customer. Retail sales are usually paid in cash or with a credit card. The gross sales

amount, excluding VAT and including any credit card charges to be paid for the transaction,

is recognised as income.

Services performed on current account are recognised as revenue at the rate at which

the work is performed. For services performed at a fi xed price, revenues are recognised

insofar as they correspond to the assignment fees that have arisen and that are to be

compensated for by the client.

Accrued revenue is recognised as an amount corresponding to the minimum costs

incurred during the assignment. The total revenue that can be recognised is limited by the

contractual amount. This may result in the recognised revenue exceeding/being less than

the amount invoiced. Where applicable, revenues are adjusted when the assignment has

been completed.

Notifi cation charges, reminders and statutory charges attributable to Apoteket’s part-

payment system are recognised as income after they have been paid. The same principle

applies to recovered bad debts attributable to the part-payment system.

Current taxRecognised current tax comprises tax that is payable or receivable for the current year

and adjustments to the current tax for previous years. The valuation of all tax liabilities/

receivables takes place at nominal amounts and according to the tax rules and tax

rates that have been adopted or that have been announced and will, in all likelihood, be

enacted.

In the case of items recognised in the statement of earnings, tax effects associated

with these items are also recognised there.


Notes

Deferred taxDeferred tax is recognised in its entirety according to the balance sheet method on all

temporary differences that arise between the fi scal and carrying amounts of assets and

liabilities in the consolidated fi nancial statements.

However, if the deferred tax arises from a transaction that comprises the fi rst report

made of an asset or liability that is not a company acquisition and that, at the time of the

transaction, infl uences recognised or taxable earnings, it is not recognised. Deferred tax

is calculated by applying tax rates and tax laws that have been adopted or announced as

per the balance sheet day and that are expected to apply when the deferred tax asset in

question is realised or the deferred tax liability is settled.

Deferred tax liabilities are recognised insofar as it is likely that future fi scal surpluses

will be available against which the temporary differences can be utilised. Deferred tax

assets can be offset against deferred tax liabilities when there is a legal right to offset

such amounts and when the deferred tax applies to the same tax authority.

Deferred tax is calculated on temporary differences that arise in participations in sub-

sidiaries and associated companies, except where the time of reversal of the temporary

difference can be controlled by the Group and it is likely that the temporary difference will

not be reversed within the foreseeable future.

Cash fl owsThe statements of cash fl ows are recognised according to the indirect method. The

recognised cash fl ow comprises only transactions involving receipts and disbursements.

Employee benefi ts, pensionsThe companies in the Group have different pension plans which are fi nanced via the

Pension Foundation and through payments to an insurance company or an insurance

association. The Group has both defi ned-contribution and defi ned-benefi t pension plans.

A defi ned-benefi t plan is one that specifi es the amount of pension benefi t to be received

by the employee on retirement – normally based on one or more factors, such as age,

length of service and pensionable salary.

In a defi ned-contribution plan, the company pays fi xed contributions to a separate legal

entity. It has no legal or informal obligation to pay additional contributions if the legal

entity does not have assets suffi cient to pay all of the benefi ts to the employees, which

are linked to the employee’s length of service during the current or previous periods.

The liability/receivable recognised in the balance sheet for defi ned-benefi t pension

plans is the present value of the defi ned-benefi t obligation on the balance sheet day less

the fair value of the plan assets, with adjustments for non-recognised actuarial gains/

losses for service in prior periods. The defi ned-benefi t pension obligation is calculated,

annually, by independent actuaries using the projected unit credit method. The present

value of the defi ned-benefi t obligation is determined by discounting estimated future cash

fl ows based on the interest rate for ten-year treasury bonds issued in the same currency

in which the benefi ts are to be paid and with a term corresponding to the pension liability

in question. For actuarial gains and losses, the so-called corridor rule is applied. The

corridor rule entails that actuarial gains and losses arising from experience-based adjust-

ments and changes in actuarial assumptions exceeding 10% of the value of the plan

assets or 10% of the defi ned-benefi t obligation, whichever is greater, are expensed or

recognised as income over the estimated average remaining period of service of the

employees. Otherwise, actuarial gains and losses are not recognised.

In the case of those pension payments recognised as defi ned-contribution plans, the Group

pays contributions to an insurance company/insurance association. Once these contributions

have been paid, the Group has no further payment obligations. The contributions are recog-

nised as personnel costs when they become due for payment. With regard to defi ned-benefi t

pensions insured with Alecta, the company has not had access to information enabling it to

recognise them as defi ned-benefi t plans. Accordingly, the supplementary pension for salaried

employees (the ITP plan) is insured with Alecta and is recognised as a defi ned-contribution

plan. In the event of notice being served, benefi ts are payable when an employee is made

redundant before the date of the normal pension or when an employee accepts voluntary

retirement from employment in exchange for such benefi ts. The Group recognises severance

payments when it is demonstrably obliged either to give notice to an employee according to a

detailed formal plan for which no possibility of cancellation exists or to provide benefi ts when

giving notice as a result of an offer made to encourage voluntary retirement from employment.

ProvisionsProvisions are recognised when the Group has an existing or informal commitment

resulting from previous events, it is more likely than not that an outfl ow of resources to

regulate the commitment will be required and the amount has been estimated reliably.

Contingent liabilities and contingent assetsContingent liabilities are recognised when there is a possible commitment originating

from occurred events whose existence will be confi rmed by one or more uncertain future

events. Contingent liabilities could also comprise existing events that are not recognised

as a liability or provision because it is not probable that an outfl ow of resources will be

required or when it is not possible to calculate the amount with suffi cient accuracy. When

they arise, contingent liabilities are recognised at their discounted value.

NOTE 3 SIGNIFICANT ESTIMATES AND ASSESSMENTS FOR ACCOUNTING PURPOSES

Estimates and assessments are evaluated continuously and based on historical experience

and other factors, including expectations of future events that are considered to be reasonable

under prevailing circumstances. The Group makes estimates and assumptions about the

future.

The estimates for accounting purposes that result from these will, by defi nition, seldom

correspond with the actual outcome.

A re-examination of actuarial assumptions for pension calculations, according to IAS 19,

is performed annually. For further information about pension calculations according to

IAS 19, see Note 17, Pension assets in the Group.

NOTE 4 PARENT COMPANY ACCOUNTING POLICIESThe Parent Company complies with the Group’s accounting policies, apart from the

exceptions and supplements stipulated by the Swedish Financial Reporting Council in

Recommendation RFR 2.2 Accounting for Legal Entities.

NOTE 5 SEGMENT REPORTINGSegment disclosures – business segmentsThe Group is divided into segments on the basis of business segments: Apoteket Consumer,

which includes all outpatient pharmacies, Apoteket Farmaci which includes all hospital

pharmacies, and Apoteket Distribution which includes e-trading distribution and dose

dispensing pharmacies as well as Other operations which includes Apoteket Omstruktu-

rering AB, Apotekens Service AB, Apoteket International AB, Apoteket Produktion &

Laboratorier AB and Group-wide functions. Costs of operations conducted within Group-

wide functions that are directly attributable to the various businesses have been transferred

to the business segments. Transfers or transactions between business segments have

been eliminated.

The assets of the business segments primarily comprise tangible fi xed assets, intangible

assets, inventories, receivables and cash and cash equivalents. Investments consist of

purchases of tangible fi xed assets and intangible assets. Of the assets in the Apoteket

Consumer business segment, SEK 3,636 m is classifi ed as assets held for sale.

Reporting to the chief operating decision maker contains an in-depth analysis of the

operating results of each business segment, including operating revenue, gross profi t and

overhead expenses. The analysis can differ depending on the business segment concerned.

The accounting policies applied for the Group apply in full for all of the business segments.

Since no form of debt measurement is reported to the chief operating decision maker,

liabilities are not reported in the above summary for the various business segments.


Notes

NOTE 6 BREAKDOWN OF REVENUES

RESULTS OF THE BUSINESS SEGMENTS FOR 2008

Apoteket

Consumer

Apoteket

Farmaci

Apoteket

Distribution

Other

operations Eliminations Group

Sales revenues 30,834 7,505 4,601 1,171 –2,401 41,710

of which, transactions between business segments 135 70 1,177 1,027 – –

Operat ing earnings/ loss 1,242 140 96 –556 – 922

Net f inancial i tems –14 0 0 33 – 19

Share of earnings of associated companies – – – – – 0

Pre-tax earnings – – – – – 941Income tax – – – – – –258

Net earnings for the year 683

RESULTS OF THE BUSINESS SEGMENTS FOR 2009

Apoteket

Consumer

Apoteket

Farmaci

Apoteket

Distribution

Other

operations Eliminations Group

Sales revenues 31,578 8,020 4,767 1,918 – 3,207 43,076

of which, transactions between business segments 157 63 1,196 1,537 – –

Operat ing earnings/ loss 1,444 172 91 –942 – 765

Net f inancial i tems –10 0 0 13 – 3

Par ticipations in the results of associated companies – – – – – –1

Pre-tax earnings – – – – – 767Income tax – – – – – –264

Net earnings for the year 503

OTHER EARNINGS/LOSS ITEMS PERTAINING TO

BUSINESS SEGMENT

Apoteket

Consumer

Apoteket

Farmaci

Apoteket

Distribution

Other

operations Group

2008Depreciat ion/amor t isat ion 109 9 130 40 288

Impairment losses – – – 15 15

2009Depreciat ion/amor t isat ion 108 8 124 8 248

Impairment losses – – 24 239 263

ASSETS OF BUSINESS SEGMENTS AS PER

31 DECEMBER 2008 AND INVESTMENTS IN 2008

Apoteket

Consumer

Apoteket

Farmaci

Apoteket

Distribution

Other

operations Unallocated Group

Assets 6,077 1,601 1,649 2,300 41 11,668

Associated companies – – – – 37 37

Total assets 6,077 1,601 1,649 2,300 78 11,705Investments 77 14 45 108 9 253

ASSETS OF BUSINESS SEGMENTS AS PER

31 DECEMBER 2009 AND INVESTMENTS IN 2009

Apoteket

Consumer

Apoteket

Farmaci

Apoteket

Distribution

Other

operations Unallocated Group

Assets 6,569 1,762 1,121 2,363 76 11,891

Associated companies – – – – 27 27

Total assets 6,569 1,762 1,121 2,363 103 11,918Investments 100 6 45 260 – 411

Group Parent CompanyNET SALES INCLUDE INCOME FROM 2009 2008 2009 2008

Sales of goods 42,267 40,878 – –

Sales of services 708 713 145.5 –

Invoiced costs 38 33 – –

Notif icat ion charges, statutory charges 58 58 – –

Rental income 1 4 – –

Other income 4 24 – –

Total 43,076 41,710 145.5 –

Group Parent CompanyOTHER OPERATING INCOME INCLUDES INCOME FROM 2009 2008 2009 2008

Recovered bad debts 5 5 – –

State grants received 1) 1 5 – –

Other income 0 1 – –

Total 6 11 – –

1) Includes special compensation for operating the National Pharmacy Register, as well as fulfilling the national responsibility for vaccine and antidote supply, which is stated in the business agreement.

Continued, Note 5


Notes

NOTE 7 OPERATIONAL LEASING FEES

NOTE 8 FEES FOR AUDITORS AND AUDIT COMPANIES

Leasing costs relating to operational leases during the year amounted to SEK 566 m

(530) in the Group and SEK 1.1 m (0) in the Parent Company. Apoteket’s leasing fees

relate mainly to the rental of premises for pharmacies and its head offi ce. Most of the

The audit pertains to the examination of Apoteket Omstrukturering’s annual report,

consolidated fi nancial statements and accounting records, the administration of the

company by the Board of Directors and President, other assignments that the auditors

are obligated to conduct and consultancy or other assistance resulting from the audit

rental agreements expire within fi ve years, although there is nothing to indicate that they

will not be renegotiated.

assignment. Other assignments pertain mainly to analysis and inquiry assignments due

to the planned reregulation of the Swedish pharmacy market. These assignments are

considered not to affect the impartiality and independence of the auditors.

FUTURE MINIMUM LEASING FEES RELATING TO OPERATIONAL LEASES THAT

CANNOT BE TERMINATED WERE DISTRIBUTED AS FOLLOWS:

Group Parent Company

2009 2008 2009 2008

Within 1 year 494 556 1.0 1.0

Between 1 and 5 years 1,099 2,184 – –

Af ter more than 5 years 358 907 – –

Group Parent Company 2009 2008 2007 2009 2008 2007

Audit

Lay auditor 1) 0 0 0 0 0 –

National Audit Of f ice 2) 0 0 0 0 0 –

Ernst & Young AB 5 3 3 0.4 0 –

Other assignments

Ernst & Young AB 8 7 13 – – –

Öhrlings PricewaterhouseCoopers – – 1 – – –

Total 13 10 17 0.4 0 –

1) The lay auditor received a fee of SEK 20,000 (20,000).

2) The auditor appointed by the National Audit Office received a fee of SEK 410,000 (326,000).

NOTE 9 SALARIES, OTHER REMUNERATION AND SOCIAL COSTS

Incentive programme of Apoteket ABAn earnings-based incentive programme has been established for managers and employees

of units included in the evaluation of a franchise-like operating format. If Apoteket’s

earnings exceed the budgeted fi gure, a portion of the excess earnings will become available

as scope for bonus payment. This scope for bonus payment will primarily be at the disposal

of the manager. Should the earnings signifi cantly exceed the budgeted fi gure, the manager

will be empowered to also pay a bonus to the employees. The maximum outcome of the

programme for an individual employee corresponds to two monthly salaries.

Another earnings-based programme for employees and managers of pharmacies could

result in payment of SEK 3,000 per employee/manager if all three bonus targets are

achieved. One of the bonus targets is mandatory for all units and is designed as a fi nan-

cial improvement target on the basis of the unit’s earnings target. The other two targets

are established by the business area/profi t centre concerned.

Apoteket AB has also introduced a stay-employed bonus for a few individuals, some of

whom are senior executives. The agreements were entered into in accordance with

previously applicable guidelines and have not been renegotiated since new guidelines were

adopted in April 2009. This entails a deviation from the currently applicable guide lines for

senior executives. These bonus agreements, which were entered into in 2008, were

based on an ambition of safeguarding the mission of maintaining secure and satisfactory

drug supply and contributing to the reregulation of the pharmacy market. The maximum

payment amounted to four monthly salaries. The agreements were terminated as of

31 December 2009.

Apoteket Omstrukturering AB and Apotekens Service AB have no incentive programmes.


2009 2008 2009 2008

Salar ies and remunerat ion 3,421 3,462 6.9 1.6

Social costs 1,487 1,373 4.3 0.9

(of which, pension costs) 1) 2) (343) (144) (1.8) (0.3)

Total 4,908 4,835 11.2 2.5

1) The Groups’ pension costs, calculated according to IAS 19, SEK 0.8 m (6.2), pertain to the President.2) The Parent Company’s pension costs are defi ned-contribution.


Notes

SALARIES AND OTHER REMUNERATION DISTRIBUTED AMONG

SENIOR EXECUTIVES AND OTHER EMPLOYEES


2009 2008 2009 2008

Members of the Board and President and other senior executives 1) 3 1 3.0 1.0

(of which are bonuses, etc.) (–) (–) (–) (–)

Other employees 3,418 3,461 3.9 0.6

Total 3,421 3,462 6.9 1.6

1) In the Group, the Board of Directors, President and other senior executive category comprises 8 (8) persons. Information regarding the senior executives of the subsidiaries and the subsidiary groups is pre-

sented in the annual report for each specific subsidiary.

REMUNERATION AND BENEFITS 2009 FOR

SENIOR EXECUTIVES (SEK 000S) Appointed Salary

Other

benefits

Pension

cost

Eva-Brit t Gustafsson, President 2008 2,430 – 750

Other senior executives (0 persons) – – – –

Total 2,430 – 750

Remuneration and benefi ts for the President consist of a salary, paid in cash, and pension

commitments. All amounts are stated excluding social security contributions and special

employer’s contributions.

The President has a six-month mutual period of notice. In the event of termination of

employment by the employer, 12-months severance pay will also be paid, which is

deducted from any other salary received. The President’s assignment is limited in time

and expires on 31 December 2010.

Basis for decisionsRemuneration and benefi ts payable to the President have been decided by the Board of

Directors.

Pension terms and conditions for senior executives of the Parent Company The President’s pension is a defi ned-contribution pension and the amount of the premium

is 30% of the monthly salary. Information regarding pension conditions for senior executives

of the subsidiaries and the subsidiary groups is presented in the annual report for each

specifi c subsidiary.

BOARD MEMBERS WHO RECEIVE FIXED FEES (SEK 000s) Annual fees

Number of

meetings attended Fees paid

Birgit ta Böhlin (Chairman) 250 24 250

Gunvor Engström 130 19 130

Jan Forsberg 130 21 130

Ann-Christ in Nykvist 130 23 130

BOARD MEMBERS WHO RECEIVE A FEE PER MEETING ATTENDED (SEK 000s) Fee per meeting

Number of

meetings attended Fees paid

Sofia Wallström 4 24 96

Cecilia Bernsten 4 21 84

Christer Ot tosson 4 23 92

Ann-Katr in Westermark (Deputy for Christer Ot tosson) 2 18 2

Claes Wallén (Deputy for Cecilia Bernsten) 2 12 0

Deputies only receive fees if they serve in the place of the ordinary Board member.

Continued, Note 9


Notes

NOTE 10 INCOME TAX


2009 2008 2009 2008

Current tax for the year –221 –160 – –

Deferred tax –43 –98 8.0 –

Share of the tax of associated companies 0 0 – –

Total –264 –258 8.0 –

The tax on the Group’s and Parent Company’s pre-tax earnings differs from the theoretical amount that would have resulted from a weighted average tax rate applicable to the earnings of

the Group and the Parent Company, as follows:

Group Parent Company2009 2008 2009 2008

Pre-tax earnings 767 969 921.4 –

Tax at the exist ing tax rate –202 –270 –242.3 –

Tax ef fect changed corporate tax rate 1) –5 31 – –

Adjustment of tax at tr ibutable to earlier period – –12 – –

Tax ef fect of revenues not liable for tax – 1 250.3 –

Tax ef fect of non-deductible costs 1) –57 –8 – –

Tax expense –264 –258 8.0 –

The current rate of income tax is 26.3% (28).

1) As a result of a change to the corporate tax rate in Sweden, from 2009, the deferred tax liabilities have been revalued, which reduced the tax costs in the Group by SEK 31 m for 2008. The effective tax rate

for the period was 34%, which was mainly attributable to non-tax-deductible impairment losses pertaining to investments in subsidiaries, which in the consolidated financial statements are treated as an

acquisition of an intangible asset. Those companies that have been up for sale are taxed at the preceding year’s tax rate, as the companies’ first accounting year has been extended.

Group Parent Company2009 2008 2009 2008

The year’s deferred tax expense

Deferred tax relat ing to carr y forwards 8 – 8.0 –

Adjustment of tax at tr ibutable to earlier period 2 –12 – –

Deferred tax relat ing to untaxed reserves –50 –4 – –

Deferred tax pension claim –3 –82 – –

Deferred tax in the statement of earnings –43 –98 8.0 –

Deferred tax assets

Deferred tax relat ing to carr y forwards –8 – –8.0 _

Total deferred tax assets –8 – –8.0 _

Deferred tax l iabil ities

Deferred tax – pension claim 371 368 – –

Deferred tax – real estate 5 5 – –

Deferred tax – condominiums 0 2 – –

Deferred tax – untaxed reserves 243 233 – –

Total deferred tax liabili t ies 619 608 – –Net liabili t y/asset 611 608 –8.0 –

At the star t of the year 608 510 – –

Recognised in the statement of earnings 43 98 –8.0 –

Of which, deferred tax – assets held for sale –40 – – –

At year-end 611 608 –8.0 –

NOTE 11 DEFERRED TAX

NOTE 12 EARNINGS PER SHARE

Group

2009 2008

Net earnings for the year (SEK m) 503 683

Number of shares 100 100

Earnings per share (SEK ) 5,032,000 6,835,000

There is no dilution effect.


Notes

On 29 April 2009, the Swedish Parliament enacted a bill on the reregulation of the

pharmacy market, which entails that Apoteket AB’s sole right to the retailing of pharma-

ceuticals was replaced on 1 July 2009 by a market that is exposed to competition.

To create the best possible conditions for a well-functioning pharmacy market subject to

competition, it was decided that Apoteket AB would have to divest 615 pharmacies.

To facilitate and optimise the process of selling the pharmacies covered by the decision

to sell, Apoteket AB formed nine wholly owned subsidiaries. By means of agreements

concerning the transfer of net assets, which were concluded between Apoteket AB and

the various subsidiaries, the pharmacy operations were subsequently transferred.

Apoteket Omstrukturering AB selected the pharmacies that were put up for sale, based

on the aim of creating conditions for effi cient competition throughout Sweden. The selection

criteria included geographic spread, size, type of pharmacy, profi tability and rational

operating units.

On 9 November 2009, it was announced that Apoteket AB had concluded share-transfer

with four parties pertaining to the sale of eight of the subsidiaries, corresponding to a total

of 465 pharmacies that had been up for sale. The total sales price was SEK 5.9 billion.

The acquisitions have been approved by the competition authorities and all of the buyers

have obtained permits from the Medical Products Agency.

An additional 150 pharmacies were transferred to a newly formed subsidiary, Apoteks-

gruppen i Sverige AB, which is building up a chain of pharmacies for small businesses.

During the fi rst quarter of 2010, the subsidiary was spun off to the Parent Company,

Apoteket Omstrukturering AB.

At 31 December, the total asset value of the assets held for sale and that have been

allocated to the subsidiaries was SEK 3,636 m, as shown in the table above. At 31 December,

the liabilities attributable to assets held for sale amounted to SEK 2,025 m, as shown in

the table above.

NOTE 13 ASSETS HELD FOR SALE

2009

Intangible assets 132

Tangible f ixed assets 231

Financial f ixed assets 6

Inventor ies 940

Accounts receivable 2,008

Tax assets 9

Other receivables 237

Prepaid expenses and accrued income 73

Assets held for sale 3,636

Deferred tax 40

Accounts payable 1,680

Other current l iabil i t ies 137

Accrued expenses and prepaid income 168

Liabili t ies at tr ibutable to assets held for sale 2,025

Net amount for assets held for sale 1,611


Notes

NOTE 14 INTANGIBLE ASSETSIntangible assets are categorised in three groups: development work, rental contracts

and other intangible assets. In the development work category, capitalised development

expenses are recognised. As of 31 December 2009, the category includes capitalised

expenditures for a platform for e-commerce operations, an IT system at Apoteket’s

Customer Centre and order and stock systems at the distance pharmacy. Investments

in development work during the year amounted to SEK 268 m and mainly comprised

investments in the subsidiary ProDur AB, which in the consolidated fi nancial statements

is treated as an acquisition of an intangible asset.

In the rental contracts category, capitalised expenditure is recognised for the acquisition

of rental contracts, and these relate to premises located in strategic areas.

The category of other intangible assets includes interior fi ttings in property belonging to

third parties, which were reclassifi ed from tangible assets in connection with the net-asset

transfer to subsidiaries that are for sale.

Determination of any impairment requirements for intangible assets was performed

according to IAS 36, whereby the estimated recoverable value was compared with the

carrying amount for each intangible asset. Regarding the valuation of intangible assets, it

has been assessed that an impairment requirement of SEK 263 m is needed. The impairment

loss mainly comprises an impairment of investments in subsidiaries, which in the consoli-

dated fi nancial statements is treated as an impairment of an intangible asset and related

development expenditure.

Development

work

Rental

contracts

Other intangible

assets Total

GROUP 2009 2008 2009 2008 2009 2008 2009 2008

Accumulated acquisit ion value at the beginning of the year 331 224 24 21 – – 355 245

Investments 268 83 3 3 – – 271 86

Disposals/Retirements –165 – 0 – – – –165 –

Transfer from tangible f ixed assets – 24 – – 339 – 339 24

Reclassif icat ion of assets held for sale – – –4 – –339 – –343 –

Accumulated acquisit ion value at the end of the year 434 331 23 24 – – 457 355

Accumulated amor t isat ion at the beginning of the year –160 –125 –10 –5 – – –170 –130

Amor t isat ion for the year according to plan –17 –22 –5 –5 –5 – –27 –27

Disposals/Retirements 131 – – – – – 131 –

Transfer from tangible f ixed assets – –13 – – –204 – –204 –13

Reclassif icat ion of assets held for sale – – 2 – 209 – 211 –

Accumulated amor tisation at the end of the year –46 –160 –13 –10 – – –59 –170

Accumulated impairment losses at the beginning of the year –30 –15 – – – – –30 –15

Impairment for the year –263 –15 – – – – –263 –15

Accumulated impairment losses at the end of the year –293 –30 – – – – –293 –30

Residual value at the end of year according to plan 95 141 10 14 – – 105 155

NOTE 15 TANGIBLE FIXED ASSETS

Buildings, land and

land improvements Equipment

Construction

in progress Total

GROUP 2009 2008 2009 2008 2009 2008 2009 2008

Accumulated acquisit ion values at the beginning of the year 488 479 2,868 2,838 0 9 3,356 3,326

New acquisit ions 2 0 138 158 0 0 140 158

Disposals/Ret irements 0 – –84 –104 – – –84 –104

Transfers – 9 – – 0 –9 – –

Transfer to intangible assets – – –339 –24 – – –339 –24

Reclassif icat ion of assets held for sale – – –810 – – – –810 –

Accumulated acquisit ion values at the end of the year 490 488 1,773 2,868 0 0 2,263 3,356

Accumulated depreciat ion at the beginning of the year –260 –246 –1,943 –1,801 – – –2,203 –2,047

Disposals/Retirements 0 – 81 92 – – 81 92

Depreciat ion for the year according to plan –14 –14 –207 –243 – – –221 –257

Impairment for the year – – – –4 – – – –4

Transfer to intangible assets – – 204 13 – – 204 13

Reclassif icat ion of assets held for sale – – 579 – – – 579 –

Accumulated depreciation at the end of the year –274 –260 –1,286 –1,943 – – –1,560 –2,203

Residual value according to plan at the end of the year 216 228 487 925 0 0 703 1 153Carrying amount, buildings 204 216 – – – – 204 216

Carrying amount, land and land improvements 12 12 – – – – 12 12

Taxable value, buildings 117 117 – – – – 117 117

Taxable value, land 31 31 – – – – 31 31


Notes

NOTE 16 HOLDINGS IN ASSOCIATED COMPANIES

Group

2009 2008

At the star t of the year 37 28

New acquisit ions during the year – 9

Transfers to shares in subsidiar ies –9 –

Share in earnings/ loss 1) –1 0

At year-end 27 37

1) Share in earnings/loss is specified after taxes.

PENSION BENEFITS

THE AMOUNTS RECOGNISED IN THE BALANCE SHEET HAVE BEEN CALCULATED AS FOLLOWS: 2009 2008

Present value of pension obligat ions –7,322 – 6,978

Fair value of plan assets 9,268 6,641

Pension obligations less plan assets 1,946 –337Unrecognised actuarial losses (+)/gains (–) –810 1,462

Recognised receivable excluding special employers’ contribution 1,136 1,125Special employer’s contr ibut ion 276 273

Receivable recognised in the balance sheet 1,412 1,398

GROUP HOLDINGS IN ASSOCIATED COMPANIES 2008 Assets Liabilities Income Earning/loss

Kårhuset Pharmen AB 556043-3277, Uppsala 7 2 0 0

Fastighets AB Högberga 556449-1677, Stockholm 26 5 9 0

ProDur AB 556734-6407, Stockholm 12 0 0 0

Total 45 7 9 0

GROUP HOLDINGS IN ASSOCIATED COMPANIES 2009 Assets Liabilities Income Earning/loss

Kårhuset Pharmen AB 556043-3277, Uppsala 7 2 1 0

Fastighets AB Högberga 556449-1677, Stockholm 25 7 8 –1

Total 32 9 9 –1

SPECIFICATION OF GROUP HOLDINGS IN ASSOCIATED COMPANIES Holding Holding in % Carrying amount

Kårhuset Pharmen AB 556043-3277, Uppsala 27,000 45.0 9

Fastighets AB Högberga 556449-1677, Stockholm 18,750 37.5 18

NOTE 17 PENSION ASSETS IN THE GROUPMost employees of the Group are covered by the ITP plan, excluding certain transferred

groups for which pensions continue to be vested according to Apoteket’s pension plan.

For employees born before 1979, pensions are vested in defi ned-benefi t pension plans in

accordance with ITP2 and employees born after 1979 are covered by ITP1 – the defi ned-

contribution part of the ITP plan. The subsidiaries formed by Apoteket AB on assignment

from the Parent Company, Apoteket Omstrukturering AB, as a feature of the process of

selling pharmacies, were affi liated to the ITP1 plan as of 1 July 2009. The earnings from

the defi ned-benefi t retirement pension, for employees within the Apoteket Group, are

secured through Apoteket AB and its subsidiaries’ pension foundation. Retirement pensions

for ITP2, for the employees in Apoteket Produktion & Laboratorier AB and Institutet för

Hälso- och sjukvårdsekonomi AB (The Swedish Institute for Health Economics), are

insured with Alecta. With regard to the insurance-secured ITP, Alecta has stated that it

lacks suffi cient information for defi ned-benefi t accounting. For this reason, the ITP plan

is being recognised as a defi ned-contribution plan. In 2008, Apoteket concluded a new

pension agreement with the trade union associations, entailing, among other consequences,

that the so-called Apoteket Plan was to be replaced by ITP and that Apoteket would

annually make decisions concerning the indexing of accrued pensions and pension pay-

ments for those not covered by ITP.

In this connection, Apoteket appointed a new external actuary. During the actuarial

calculation for 2009, it was concluded that the present value of funded obligations at 31

December 2008 was too high. Accordingly, in the comparative fi gures in the note below,

the present value of the obligation and of unrecognised actuarial losses has been

adjusted by SEK 1,165 m. Since Apoteket applies the corridor method, this adjustment

had no impact on the Group’s reported fi nancial position and only an immaterial impact

on reported earnings.


Notes

PENSION BENEFITS

THE AMOUNTS RECOGNISED IN THE BALANCE SHEET HAVE BEEN CALCULATED AS FOLLOWS: 2009 2008

Costs relat ing to employment in the current year –169 –211

Cost early ret irement pensions –35 –14

Benefits earned in previous periods – 44

Actuarial gain, redemption of sickness pension – 13

Interest expense –273 –301

Reduction of pension obligat ion 52 –

Actuarial gain/ loss during the year – 60 –

Expected return on plan assets 372 475

Total cost of defined-benefit plans –113 6Cost of def ined-contr ibut ion plans –163 –122

Special employer’s contr ibut ion – 67 –28

Total pension cost –343 –144

The actual return on the plan assets amounted to SEK 2,147 m (neg: 1,865).

PENSION BENEFITS

THE PRINCIPAL ACTUARIAL ASSUMPTIONS USED WERE AS FOLLOWS: 2009 2008

Discount rate 3.95% 3.95%

Expected return on plan assets 5.60% 5.60%

Future salary increases 3.30% 3.30%

Increased basic amount 2.00% 2.00%

Staf f turnover 3.50% 3.50%

Average remaining length of service 16 years 16 years

The discount rate is linked to the estimated term of obligations and has been determined

taking into account the market return on fi rst-class Government bonds.

• The increased basic amount is a measure of the infl ation assumption. It refl ects the

trend in the consumer price index (CPI) and is used for indexation of the pension base.

• The expected salary increase refl ects future expected percentage salary increases,

taking into account expected future infl ation (see the increased basic amount).

• Staff turnover is based on historical facts and on expected future staff turnover.

Accounting principle for actuarial gains and losses Changes due to changed assumptions for calculating the present value of pension

obligations for each specifi c fi scal year are recognised in the corridor, which is defi ned

as 10% of the highest value of the pension obligation, or alternatively, of the plan assets

for actuarial gains and losses, and which, accordingly, may not affect the statement of

earnings. As of 31 December 2009, the actuarial gain amounted to SEK 810 m.

Continued, Note 17

SPECIFICATION OF CHANGES IN DEFINED-BENEFIT PENSION PLANS AND PLAN ASSETS: 2009 2008

Specification of changes in defined-benefit pension obligations

Present value of obligation at the beginning of the year 6,978 7,218Cost of newly earned pension r ights 169 211

Cost early ret irement pensions 35 14

Interest expense 273 301

Benefits earned in previous periods – –44

Actuarial gain, redemption of sickness pension – –13

Reduction of pension plan –52 –

Benefits paid out –275 –285

Actuarial loss (+)/gain (–) on obligat ion 194 –424

Present value of obligation at the end of the year 7,322 6,978

Specification of change of plan assets

Plan assets at the beginning of the year 6,641 8,492Expected return on plan assets 372 475

Funds provided by the employer – 14

Reimbursement from Apoteket ’s Pension Foundation –150 –

Actuarial loss (+)/gain (–) on plan assets 2,405 –2,340

Plan assets at the end of the year 9,268 6,641


Notes

Continued, Note 17

The Group anticipates a net cash fl ow in 2010 relating to defi ned-benefi t plans amounting

to SEK 300 m. The expected return on plan assets is based on the existing composition

of the investment portfolio.

The commitments for retirement and family pensions for salaried employees in Sweden

are secured through an insurance policy with Alecta. According to a statement from the

Swedish Financial Reporting Council, recommendation UFR 3, this is a defi ned-benefi t

plan that covers several employers. For fi nancial years for which the company has not had

access to information enabling this plan to be recognised as a defi ned-benefi t plan, a

pension plan according to ITP, which is secured through insurance with Alecta, has to be

recognised as a defi ned-contribution plan. The year’s contributions for pension insurance

taken out with Alecta amounted to SEK 146 m (99). The considerable increase in pension

contributions taken out with Alecta is due to parts of the Group’s pension obligations being

transferred from defi ned-contribution pensions to defi ned-benefi t pensions. At year-end

2009, Alecta’s surplus, in the form of the collective consolidation rate, was 141% (112).

The collective consolidation rate comprises the market value of Alecta’s assets expressed

as a percentage of the insurance commitments, calculated according to Alecta’s actuarial

computation assumptions, which do not comply with IAS 19.

Pension Foundation’s management of assetsSince the size of the pension liability results from such factors as the interest-rate situation,

infl ation and real wage developments in Sweden, investment activities in the Pension

Foundation will be exposed to assets that refl ect the characteristics of the pension liability.

In view of the above, the Pension Foundation’s Board of Directors has adopted an

investment orientation, whereby a portion of the capital is to be invested in interest-

bearing assets issued by the Swedish state or other lenders with a high credit rating. In

addition, investments are to be made in shares with a main focus on the Swedish market.

The overall objective is to diversify the managed capital in terms of both nominal and

real assets and thus reduce the risk, while achieving a favourable long-term return.

THE PLAN ASSETS CONSIST MAINLY OF SHARES AND INTEREST-BEARING

SECURITIES WITH THE FOLLOWING MARKET VALUES AT THE END OF THE

REPORTING PERIOD 2009 2008

Type of asset

Shares and similar f inancial instruments 5,520 3,396

Interest-bearing securit ies etc 3,902 3,262

Other current l iabil i t ies –154 –17

Total 9,268 6,641

SURPLUS AND EXPERIENCE-BASED ADJUSTMENTS TO LIABILITY/ASSET 2009 2008 2007 2006

Present value defined-benefit obligations –7,322 – 6,978 –7,218 –7,438

Plan assets 9,268 6,641 8,492 8,393

Deficit /surplus 1,946 –337 1,274 955Experience-based adjustments to the obligat ion 194 –424 23 –86

Experience-based adjustments to the plan assets 2,405 –2,340 –285 402

NOTE 18 INVENTORIES

Group

2009 2008

Raw materials and supplies 39 35

Work in progress 6 10

Finished goods at acquisit ion value 20 10

Goods for resale at acquisit ion value 1,008 1,944

Total 1,073 1,999

The expenditure for expensed inventories is included in goods for resale and amounted to SEK 34,172 m (33,263) in the Group.

NOTE 19 OTHER RECEIVABLES


2009 2008 2009 2008

VAT receivable 354 617 4.9 –

Receivable from Apoteket ’s Pension Foundation 150 – – –

Other receivables 53 71 – –

Total 557 688 4.9 –


Notes

NOTE 20 PREPAID EXPENSES AND ACCRUED INCOME

NOTE 21 ACCRUED EXPENSES AND PREPAID INCOME


2009 2008 2009 2008

Rents announced 84 152 – –

Accrued income 5 5 – –

Accrued expenses 151 – – –

Accrued suppliers’ bonus 6 18 – –

Other items 20 34 0.2 0.1

Total 266 209 0.2 0.1


2009 2008 2009 2008

Vacation pay reserves 197 351 0.1 0.2

Bonus to employees 16 20 – –

Backdated salar ies 10 31 – –

Prepaid income 55 23 – –

Accrued suppliers’ invoices 78 32 9.0 0.1

Other items 17 13 – –

Total 373 470 9.1 0.3

Group

2009 2008


Expensed in statement of earnings

Addit ional provisions 118 141

Reversed unutil ised amounts –10 0

Utilised during the year –105 –5

At year-end 160 157

Of which, long-term provision 1) 51 72

Of which, shor t-term provision 109 85

1) Of the long-term provision, SEK 0 m (16) expires more than fi ve years after the close of the reporting period.

NOTE 22 OTHER PROVISIONS

Rents

Severance

pay

Loss-making

contracts Total

At the star t of the year 55 102 – 157

Addit ional provisions 17 43 58 118

Utilised during the year –31 –74 – –105

Reversed unutil ised amounts –10 – – –10

At year-end 31 71 58 160


Notes

As of 1 January 2009, reserved non-utilised rents amounted to SEK 55 m. These com-

prised reserved rental costs deriving from the decision, made in 2006, to close the

dispensing pharmacy in Boden and rental costs for the previous decision to close down

dose dispensing operations.

Additional provisions for rental costs during 2009 amounted to SEK 17 m and com-

prised rental costs pertaining to an adaptation of premises at Apoteket’s Head Offi ce in

Stockholm.

Unutilised provisions pertaining to previously reserved rental costs amounted to SEK

31 m and related to costs for the closure of the distance pharmacies in Boden and Sollefteå.

The distance pharmacy in Sollefteå was closed on 31 December 2008 and the distance

pharmacy in Boden was closed on 1 July 2009.

As of 1 January 2009, reserved non-utilised severance pay amounted to SEK 102 m.

This item pertains to personnel costs for the closure of the distance pharmacies in Sollefteå

and Boden, costs for the closure of the Customer Centre in Uppsala, and personnel costs

within Apoteket Produktion & Laboratorier AB.

Additional provisions for severance pay during 2009 amounted to SEK 43 m and com-

prised reserved personnel costs connected to downsizing of the workforce at Apoteket’s

Head Offi ce in Stockholm.

During the year, unutilised prior provisions amounted to SEK 74 m and pertained to

personnel costs for the distance pharmacies closed down in Sollefteå and Boden, as well

as the Customer Centre in Uppsala.

Additional provisions during the year for loss-making contracts amounted to SEK 58 m

and pertain to fees required to be paid in accordance with the business agreement, whereby

the expenses for satisfying the obligations exceed the anticipated economic benefi ts. This

primarily pertains to Apoteket’s pharmacy representatives business.

Contingent liabilitiesApoteket Omstrukturering AB’s subsidiary Apoteket AB signed guarantee commitments

in connection with the transfer of rental agreements to the cluster of companies that were

sold during the fi rst quarter of 2010. The number of guarantee commitments is 66 and

they pertain to an amount of approximately SEK 132 m. The maturities of these guarantee

commitments vary. The purchasers of the subsidiaries undertake to relieve Apoteket AB

of its guarantee commitments. If this does not occur during the contractual period,

Apoteket AB will receive compensation for the issue of guarantee commitments.

Continued, Note 22

NOTE 23 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Apoteket Group’s fi nancial risk management is governed by a fi nance policy, which

encompasses guidelines for liquidity management, capital supply and fi nancial risk

management. The Group’s overall risk management policy aims at minimising potential

unfavourable effects on consolidated fi nancial earnings. Financial management is

centralised to a Group-wide function within Apoteket, whose task is to capitalise on

coordination gains, reduce earnings and cash-fl ow fl uctuations and ensure favourable risk

management. The subsidiaries and the Parent Company’s operational units are responsible

for identifying, reporting and following up the fi nancial risks that arise in the operations.

Policy and principles for the management of fi nancial risksObjectives and principles applied for fi nancial risk management

The objectives for fi nancial risk management are to maintain good access to funds and an

effi cient use of capital, while securing capital supply. The principles applied for fi nancial

risk control are that:

• The fi nancial risks that arise in the Group’s operations will be maintained within

established parameters in terms of credit risk, market risk and refi nancing risk. A rule

for all risk management is that speculative trading is not permissible.

• All credit granting must be based on commercial considerations that take into account

both fi nancing costs and risk. Credit will not be granted until a credit assessment of the

borrower has been conducted.

• The Group’s fi nancial management and credit granting must be characterised by such

organisation, including internal controls and reporting, so that the administrative risks

are minimised.

Liquidity risk

Financing of temporary liquidity strains at the end of each month is to be managed by

ensuring the existence of suffi cient committed lines of credit.

Caution, in terms of the management of liquidity risk, involves having suffi cient cash

and cash equivalents and available fi nancing through suffi cient committed lines of credit.

Due to the dynamic nature of the underlying operations, Apoteket aims to maintain fl exi-

bility in its fi nancing by maintaining agreements concerning lines of credit.

Interest rate risk

The Group’s exposure to interest rate risk is essentially associated with its pension assets.

The Pension Foundation strives for an investment of plan assets that offsets the risk

associated with the value trend for the pension liability. Otherwise, short-term fi nancial

borrowing and investment is subject to a limited exposure to interest rate risk.

Currency risk

Since purchasing and sales essentially occur in SEK, currency exposure is limited.

Credit risk

The Group has no signifi cant concentration of credit risks. There is an established policy

for credit risk management.

Sales in the consumer market are paid for in cash or via the most commonly used

credit cards. A part-payment system for private customers has been in use since 1997

and was previously subject to major credit losses. Since 28 November 2005, Apoteket

has introduced a system of credit assessment for all newly added customers who apply

for credit. This credit assessment is based on whether the customer has a record of non-

payment of debt or a debt balance with the Enforcement Service. Checks are made in

cases where the person is under 18 years of age, has a guardian, lacks an address, is

resident abroad or has a protected identity. Customers who fail to pay their debts are

blocked and denied continued credit after approximately two months from the date of

payment default.

The county councils contribute to a considerable share of the Group’s outstanding

accounts receivable. The risk has been assessed as very low. The receivables are normally

paid within the specifi ed credit period.


Notes

DUE DATES FOR ACCOUNTS RECEIVABLE 2009 2008 2007 2006

Past due date, but not impaired

< 30 days 6 5 27 8

30 –90 days 13 4 3 2

Past due date and impaired

91–180 days 0 1 2 1

> 180 days 0 1 0 0

Total 19 11 32 11

The receivables may be regarded as doubtful when payment is more than 90 days overdue or when the information available leads to depreciation of the receivable.

Continued, Note 23

THE PROVISION FOR DOUBTFUL RECEIVABLES HAS CHANGED AS FOLLOWS: 2009 2008 2007 2006

At the star t of the year 3 4 3 4

Provision for anticipated losses 0 –1 1 –1

At year-end 3 3 4 3

Confirmed losses 7 6 6 9

Recovered bad debts 5 5 4 5

The provision for doubtful receivables amounted to SEK 3 m (3).

The year’s cost for doubtful receivables amounted to SEK 7 m (6). The percentage of

doubtful receivables is calculated on the basis of an established model that has been

tried and tested by the Group. Accordingly, the recognised amount provides a fair

approximation of the fair value.

Fair value of fi nancial instruments The nominal amount less any assessed credit entries for accounts receivable and

accounts payable is assumed to match the fair value. For the disclosures provided in the

notes, the fair value of fi nancial liabilities is calculated by discounting the future contracted

cash fl ow to the current market interest rate that is available to the Group for similar

fi nancial instruments.

The table below shows the recognised and fair value per type of instrument:2009 2008

GROUP Carrying amount Fair value Carrying amount Fair value

Financial assets

Condominiums 1) 3 3 5 5

Accounts receivable 2) 3,122 3,122 5,005 5,005

Cash and cash equivalents 940 940 1,015 1,015

Total 4,065 4,065 6,025 6,025

Financial l iabil ities

Accounts payable 3) 2,469 2,469 3,985 3,985

Loan liabil i t ies 4) 1,750 1,750 2,300 2,300

Total 4,219 4,219 6,285 6,285

1) Available-for-sale fi nancial assets.2) When calculating the carrying amount of accounts receivable, the portion of the receivables that is regarded as uncertain is taken into account.3) The fair value of accounts payable is the same as the carrying amount. 4) Liabilities to credit institutions, interest-bearing.

Group AVAILABLE-FOR-SALE FINANCIAL ASSETS 2009 2008


Purchases and sales, net –3 –

Revaluation, transferred to equit y 1 –1

At year-end 3 5

Available-for-sale fi nancial assets consist of condominiums. Fair value has been determined by means of comparison with equivalent sold objects.


Notes

Group FINANCIAL LIABILITIES TO CREDIT INSTITUTIONS 2009 2008 Granted

Nordea 750 1,300 2,500

Cer t i f icates 1,000 1,000 1,500

Total ut ilised credit 1,750 2,300 4,000

The granted, unutilised overdraft facility amounts to SEK 100 m. Loan liabilities comprise

overnight loans of SEK 750 m (1,300) carrying an interest rate of 1.30% (3.04) and a

certifi cate of SEK 1,000 m (1,000) carrying an interest rate of 0.42% (1.80).

The maturity of the certifi cate is seven days. The carrying amount of loan liabilities provides

a fair approximation of the fair value.

Continued, Note 23

The table below shows the interest income and interest expense pertaining

to all fi nancial assets and fi nancial liabilities:Group Parent Company

INTEREST INCOME AND INTEREST EXPENSE ON FINANCIAL INSTRUMENTS 2009 2008 2009 2008

Interest income on f inancial assets 13 39 0.1 0.3

Interest expense on f inancial l iabili t ies –10 –20 – 0.1 –

Totalt 3 19 0 0.3

NOTE 24 AVERAGE NUMBER OF EMPLOYEES

2009 2008

Average number

of employees of whom, men %

Average number

of employees of whom, men %

Parent Company

Sweden 5 40.0 1 30.0

Subsidiaries

Sweden 10,338 10.7 10,666 10.8

Group total 10,343 10.8 10,667 10.8

2009 2008MEMBERS OF THE BOARD AND SENIOR EXECUTIVES number of whom, men % number of whom, men %

Group

Members of the Board 58 46.6 55 43.6

President and other senior executives 36 38.9 31 41.9

Parent Company

Members of the Board 7 28.6 7 28.6

President and other senior executives 1 0.0 1 0.0

Group SICKNESS ABSENCE 2009 2008

Total sickness absence as a percentage of total normal work ing hours 3.9 4.7

Sickness absence for women 1) 4.1 5.0

Sickness absence for men 1) 2.1 2.7

Sickness absence for those aged 29 and below 1) 1.7 2.4

Sickness absence for those aged 30 –49 1) 4.1 4.8

Sickness absence for those aged 50 and above 1) 4.7 5.7

1) As a percentage of total normal working hours for each group.

Group 2009 2008

Propor t ion of total sickness absence last ing for 60 days or more, % 1.4 2.1


Notes

NOTE 25 RELATED-PARTY TRANSACTIONSGroup companies During the year, the Parent Company purchased services from Group at an amount of

SEK 302,000 (94,000). The Parent Company’s revenues are attributable in their entirety

to the sale of Group companies. With regard to purchases and sales between Group

companies, the same principles apply to pricing as to transactions with external parties.

The Swedish Government Apoteket Omstrukturering is wholly owned by the Swedish Government. Purchases and

sales of products and services to and from Government authorities and companies take

place on a commercial basis.

NOTE 26 SHARE OF EARNINGS OF GROUP COMPANIES

Other interest income and interest expense Interest income and expense for the Parent Company does not include any interest

payments relating to Group companies.

Remuneration of senior executivesRemuneration of senior executives is presented in Note 9.

Parent Company 2009 2008

Dividends from Apoteket AB per taining to 2008 237.0 –

Anticipated dividends from Apoteket AB 627.3 –

Distr ibut ion in k ind from Apoteket AB comprising all shares of Apotekens Service AB

and ProDur AB 87.5–

Total 951.8 –


Notes

NOTE 27 PARTICIPATIONS IN GROUP COMPANIES

Parent Company 2009 2008

Accumulated acquisit ion value at the beginning of the year 1,883.5 –

Shareholders’ contr ibut ion received comprising all shares in Apoteket AB – 1,883.5

Dividend from Apoteket AB comprising all shares in Apotekens Service AB 39.8 –

Shareholders’ contr ibut ion paid to Apotekens Service AB 47.7 –

Accumulated acquisit ion value at year-end 1,971.0 1,883.5

SPECIFICATION OF THE PARENT COMPANY’S HOLDINGS OF SHARES AND

PARTICIPATIONS IN GROUP COMPANIES:

GROUP COMPANIES/REG. NO./REGISTERED OFFICE Number %

Carrying amount

2009 2008

Apoteket AB (publ.) 556138-6532, Stockholm 175,000 100 1883.5 1883.5

Apoteket Farmaci AB 556758-1789, Stockholm 25,000 100 – –

Apoteket Produktion & Laborator ier AB 556758-1805, Stockholm 10,000 100 – –

IHE, Inst i tutet för Hälso- och Sjukvårdsekonomi AB 556186-3498, Lund 5,000 100 – –

Förvaltnings AB Tanken 556500-6953, Stockholm 1,000 100 – –

Adara AB 556615-7367, Stockholm 1,000 100 – –

Apoteket International AB 556606-4266, Stockholm 1) 1,000 100 – –

Apoteket International Norway AS 993289396, Oslo 1) 100 100 – –

Nordiska Apoteksservice AB 556629-4616, Stockholm 34,000 100 – –

Pharmacy Company Sweden 1 AB 556773-8249, Stockholm 100,000 100 – –









Apoteksgruppen i Sverige AB 556773-4156, Stockholm 100,000 100 – –

Dormant companies

Apoteksinformation AB 556043-0984, Stockholm 50,000 100 – –

Sveriges Apotek AB 556197-7355, Stockholm 1,000 100 – –

BD Bankdata AB 556309-7343, Stockholm 1,000 100 – –

Apoteksbolaget AB 556459-6723, Stockholm 500 100 – –

Apotekens Service AB 556763-4778, Stockholm 100 100 87.5 –

Produr AB 556734-6407, Stockholm 2,000 100 – –

Total 1 971.0 1 883.5

1) Apoteket International AB owns all shares in Apoteket International Norway AS.

NOTE 28 DIVIDEND PER SHAREAt the Annual General Meeting on 19 April 2010, a cash dividend pertaining to 2009 of

SEK 1,770,000 (2,370,000) per share, totalling SEK 177 m (237) will be recommended.

In addition, a distribution in kind of all shares in Apoteket AB corresponding to SEK

18,835,000 per share, totalling SEK 1,883.5 m will be proposed. The dividend will be

recognised as a distribution of earnings. In 2009, cash dividends of SEK 237 m were

paid to the owner.


Proposed distribution of earnings

Proposed distribution of earningsTHE FOLLOWING EARNINGS AND UNRESTRICTED FUNDS

ARE AT THE DISPOSAL OF THE ANNUAL GENERAL MEETING

Retained earnings SEK 1,639,311,574

Earnings for the year SEK 929,379,202

Total SEK 2,568,690,776

THE BOARD OF DIRECTORS PROPOSES THAT THE

AVAILABLE EARNINGS BE DISTRIBUTED AS FOLLOWS:

Dividend to the shareholder of

– SEK 1,770,000 per share, total SEK 177,000,000

– all shares in Apoteket AB (publ.) of SEK 18,835,000

per share, total SEK 1,883,500,000

To be carr ied forward SEK 508,190,776

Total SEK 2,568,690,776

Th e dividend approved by the Annual General Meeting will be paid by 19 May 2010.

Th e undersigned declare that the consolidated and annual fi nancial statements have been prepared in accordance with IFRS, as adopted by the EU, and generally accepted accounting principles, and provide a true and fair view of the Group’s and Parent Company’s position and performance, and that the Administration Report provides an accurate overview of the development of the Group’s and the Parent Company’s operations, position and performance and describes signifi cant risks and uncertainties faced by the companies included in the Group.

Th e statement of earnings and balance sheets will be adopted at the Annual General Meeting on 29 April 2010.

Stockholm, 9 April 2010

Birgitta Böhlin CHAIRMAN OF THE BOARD

Gunvor Engström Jan Forsberg Ann-Christin Nykvist MEMBER OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD

Sofi a Wallström MEMBER OF THE BOARD

Cecilia Bernsten Christer Ottosson EMPLOYEE REPRESENTATIVE EMPLOYEE REPRESENTATIVE

Eva-Britt Gustafsson PRESIDENT

Our auditors’ report was submitted on 9 April 2010.

Ernst & Young AB Erik Åström Lars Nordstrand AUTHORISED PUBLIC ACCOUNTANT AUTHORISED PUBLIC ACCOUNTANT

APPOINTED BY THE NATIONAL AUDIT OFFICE

My review report was submitted on 9 April 2010.

Lars Elinderson MEMBER OF THE RIKSDAG


Auditors’ report and Review report

We have audited the annual accounts, the consolidated fi nancial statements and the accounting records and the administration of the Board of Directors and the President of Apoteket Omstrukturering AB (publ.) for the fi nancial year 2009. Th e company’s annual accounts and consolidated fi nancial statements are included in this document on pages 26–55. Th e Board and the President have responsibility for the fi nancial statements and the administration of the company, for the application of the Annual Accounts Act when preparing the annual accounts and for the application of IFRS international reporting standards (as adopted by the EU and the Annual Accounts Act) when preparing the consolidated fi nancial statements. Our responsibility is to express an opinion on the annual accounts, the consolidated fi nancial statements and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Th ese standards require that we plan and perform the audit with high but not absolute certainty so that the annual accounts and consolidated fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. It also includes assessing the accounting principles used and their application by the Board of Directors and the President and signifi cant estimates made by the Board of Directors and the President when preparing the annual accounts and the consolidated fi nancial statements, as well as evaluating the overall presentation of

I have reviewed the business of Apoteket Omstrukturering AB for the fi nancial year 2009. My review was conducted in accordance with the Swedish Companies Act and generally accepted auditing standards.

I reviewed signifi cant decisions, actions taken and circumstances of the company in order to be able to determine whether the business has been managed in an appropriate and fi nancially satisfactory manner and that the company’s internal control is adequate. I also reviewed whether the company, its management and Board of

information in the annual accounts and the consolidated fi nancial statements. As a basis for our opinion concerning discharge from liability, we examined signifi cant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any Member of the Board or the President. We also examined whether any Member of the Board or the President, 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.

Th e annual accounts have been prepared in accordance with the Annual Accounts Act and thus give a true and fair view of the results and fi nancial position of the company in accordance with generally accepted accounting standards in Sweden. Th e consolidated fi nancial statements have been prepared in accordance with the IFRS as adopted by the EU and the Annual Accounts Act and thus give a true and fair view of the results and fi nancial position of the Group. Th e Administration Report is consistent with the other parts of the annual accounts and the consolidated fi nancial statements.

We therefore recommend that the statements of earnings and balance sheets of the Parent Company and the Group be adopted by the Annual General Meeting, that the earnings of the Parent Company be dealt with in accordance with the proposal in the Administration Report, and that the Board of Directors and the President be discharged from liability for the fi nancial year.

Directors are observing the guidelines stipulated by the Government for Apoteket Omstrukturering AB in particular and for state-owned companies generally.

I consider that my review provides me with a reasonable basis for the following statement. I am of the opinion that the business of the company has been managed in an appropriate manner and that its internal control has been adequate.

All in all, my review has not indicated any circumstances which give rise for comment.

Stockholm, 9 april 2010 Ernst & Young AB

Erik Åström Lars Nordstrand AUTHORISED PUBLIC ACCOUNTANT AUTHORISED PUBLIC ACCOUNTANT

APPOINTED BY THE NATIONAL AUDIT OFFICE

Stockholm, 9 april 2010

Lars ElindersonMEMBER OF THE RIKSDAG

Auditors’ reportSubmitted to the annual meeting of Apoteket Omstrukturering AB (publ.), reg. no. 556481-5966.

Review reportSubmitted to the annual meeting of Apoteket Omstrukturering AB (publ.), reg. no. 556481-5966.


Corporate Governance Report


Apoteket Omstrukturering AB (referred to below as “OAB”) is a Swedish public limited liability company that is wholly owned by the Swedish state.

As a state-owned company, OAB complies with the Swedish state’s ownership policy, which contains guidelines concerning the effi ciency of the Board, the role of the auditors, an effi cient capital structure, transparency and accounting, remuneration and benefi ts and targets in key areas in order to contribute to sustainable development.

Th e owner has also stated that the Swedish Code of Corporate Governance (“the Code”) is to comprise part of the state’s framework for ownership management.

OAB applies the Code but deviates from it with respect to the Nomination Committee, the independence of Board members in relation to the owner, the appointment of commit-tees and certain specifi c areas since OAB has an assignment that is limited in time.

Th e basis of the Group’s governance also comprises owner directives, the Articles of Association, the Swedish Companies Act and other Swedish and international statutes.

Th e Corporate Governance Report has not been examined by the auditors.

Share capital and ownershipTh e company’s share capital amounts to SEK 100,000. All of the shares are owned by the Swedish state. Ownership is managed on behalf of the government by the Ministry of Health and Social Aff airs.

Th e Pharmacy Market Commission appointed in December 2006 was assigned with the task of presenting proposals on how the pharmacy market could be re-regulated to allow companies other than Apoteket AB to conduct pharmacy operations. In addition, the Commission was to submit proposals on increasing competition, enhancing availabi-lity and exerting pressure on prices, while retaining safe and appropriate drug utilisation. Requirements to be imposed on pharmacy operations were also studied. Th e results of the investigation were presented to the Ministry of Health and Social Aff airs in January 2008.

Th e guidelines for Apoteket Omstrukturering AB are stipulated in government bill 2007/08:87 on the establishment of a parent company for Apoteket AB, and certain restructuring activities. At its meeting on 13 March 2008, the government decided to submit this bill to the Riksdag (the Swedish Parliament). Th e Riksdag made a decision on 8 May 2008.

OAB was initially a subsidiary of Apoteket AB. Th e company changed its name from Sveriges Apotek AB to Apoteket Omstrukturering AB in May 2008. A resolution was passed at Apotekets AB’s Annual General Meeting in June 2008 to distribute all of the shares in OAB to the owner, meaning the Swedish state, as the fi rst step in forming a new Parent Company for Apoteket AB. All of the shares in Apoteket AB were transferred to OAB on 8 July 2008, which subsequently became the Parent Company of the Group.

Th e governance structure of the Group is based on resolutions taken at the Annual General Meetings of OAB, Apoteket AB and Apotekens Service AB. Resolutions are made at these Meetings regarding owner directives, Board composition, Articles of Association, guidelines for owners and in the case of Apoteket AB a business agreement with the state. Th ree external Boards of Directors were appointed at the Annual General Meetings of the three companies at the proposal of the Ministry of Health and Social Aff airs. No Board member sits on more than one of these Boards. Resolutions were also made at Extraordinary General Meetings regarding owner instructions that regulate decisions and the decision-making processes in the companies and the Group.

Swedish listed companies apply the Swedish Code of Corporate Governance.

Apoteket Omstrukturering AB is not listed but endeavours to maintain the same

level of quality and transparency in its fi nancial accounts as listed companies.



Annual General MeetingsIn accordance with the Articles of Association, the Annual General Meeting shall be held once at year, not later than in the month of April.

2009 ANNUAL GENERAL MEETING

Th e 2009 Annual General Meeting (AGM) was held on 30 April 2009 in Stockholm. Th e offi cial notice of the Meeting was published on the company’s website and in Post- och Inrikes tidningar. Members of parliament were also invited to participate after an announcement was made at the Riksdag’s Secretariat of the Chamber. Th e 2008 Annual Report was available prior to the Meeting being held. In her speech, the President presented the main points of the Group’s operations and the terms of employment for senior executives. Th e following resolutions were passed:• Th e accounts for the 2008 fi nancial year were adopted and the Board of Directors and the

President were discharged from liability for their administration of the company in 2008. • Th e dividend was set at SEK 237 m. • Birgitta Böhlin (Chairman), Gunvor Engström, Jan Forsberg, Ann-Christin Nykvist

and Sofi a Wallström were re-elected members of the Board. Th e Board also includes employee representatives appointed by the Swedish Pharmaceutical Association and the Swedish Association of Technical Pharmacy Employees.

• Fees to the members of the Board were determined. • Th e principles for the terms of employment for senior executives and remuneration

were approved.

Th e minutes taken at the AGM are available at www.omstruktureringsbolaget.se.

2010 AGM

OAB’s 2010 AGM will be held on 29 April 2010 in Stockholm. Th e notice to attend the Meeting is published on the company’s website, announced at the Riksdag’s Secretariat of the Chamber and published in Post- och Inrikes tidningar.

Nomination processTh e Nomination Committee is primarily an organ formed on behalf of shareholders to make decisions concerning matters of appointments. For companies wholly owned by the state, the following principles replace the Code’s rules pertaining to making decisions on the appointment of Board members and auditors.

Th e state’s ownership policy stipulates that nominations to the Board should be made public according to the guidelines of the Code. A deviation from the Code is that the independence of Board members in relation to the state as the owner is not reported. Th e Code is primarily directed to companies with a spread of ownership. Th e main reason that the Code requires that companies should have at least two Board members who are independent of major shareholders and that the independence of all Board members in relation to major owners should be reported according to the Code is to protect minority shareholders in companies with a spread of ownership. Accordingly, in state-owned companies, there is no reason for reporting on such independence.

Board of DirectorsTh e Board of Directors is responsible for ensuring that the management and control of OAB is divided between the Board and President in accordance with the external and internal regulations that form the basis of the governance of the Group.

In accordance with the Articles of Association, the Board shall comprise at least three and not more than fi ve regular Board members. Th ese members are to be elected by the AGM for a period of one year until the conclusion of the following AGM. In accordance with the Code, the Chairman is also elected by the AGM.

Furthermore, under Swedish law employee organisations are entitled to appoint members with deputy members.



FORMAL WORK PLAN FOR THE BOARD AND INSTRUCTIONS FOR THE PRESIDENT

Th e Board has adopted a formal work plan that stipulates how work is to be distributed between the Board and the President. Th is work plan is reviewed annually. Th e formal work plan and instructions for the President stipulate the following matters:• Th e Board is normally to hold at least fi ve meetings per calendar year, in addition to

the statutory Board meeting following election.• Th e following matters are to be addressed at every scheduled Board meeting:

- Th e President’s report on the current business situation of the company and fi nancial reports.- Th e other matters that according to law and the formal work plan are the Board’s responsibility to discuss.

• Th e annual report and auditors’ report are to be addressed during the fi rst four months of the year.

• Decisions on the budget and targets for the following year.• Discussions of reports on signifi cant events and any extraordinary measures to be taken.• Adoption of the instructions for the President.• Disqualifi cation rules.• Auditors should be asked to attend the meeting at which the annual report is discussed.• OAB’s Board follows the owner’s guidelines regarding remuneration of the President

and senior executives.• OAB does not have any incentive or bonus programmes. Th e subsidiaries report the

terms of employment that they apply in Note 9.

Th e following matters are to be presented to the Board for a decision under the formal work plan and instructions for the President:• Acquisitions and divestments of operations and parts of operations. Th e Board may

authorise the President in conjunction with acquisitions and divestments to implement transactions within expressed and defi ned limits.

• Formation of subsidiaries or increase in capital.• Purchase or sale of real estate.• Implementation of signifi cant changes involving the organisation and strategic direction.• Raise loans and provide collateral.• Other issues of key fi nancial or other signifi cance that do not fall under the provisions

of Chapter 8, Section 25 of the Swedish Companies Act.

Also during the year, the Board decided on policies for communications, ethics, quality, environment and equal opportunities and diversity.

RESPONSIBILITIES OF THE CHAIRMAN

Th e Chairman of the Board is responsible for such matters as coordinating the view of the Board with the views of the owner in issues of key importance to the company, ensuring that the division of duties between the Board and the President is maintained and monitoring the progress of the company through contact with the President.

COMPOSITION OF THE BOARD AND NUMBER OF MEETINGS

OAB’s Board of Directors comprises fi ve regular members elected by the AGM. In addition, the employee organisation appointed two members with deputies. Th e President and CEO of the company is not a member of the Board but attends Board meetings. None of the Board members are also members of company management. Four of the Board members are women. In 2009, 24 Board meetings were held, of which six were telephone meetings and three were held per capsulam.

REMUNERATION OF THE BOARD

Fees to the Board members elected at the AGM are determined by the Meeting for the period 1 July – 30 June.



In accordance with a resolution of the 2009 AGM, a fi xed fee of SEK 250,000 per year is paid to the Chairman of the Board. A fi xed fee of SEK 130,000 per year is paid to each of the other Board members elected by the Meeting, except for the owner representative who receives SEK 4,000 per meeting attended. Regular employee representatives receive a fee of SEK 4,000 per meeting attended and SEK 2,000 is paid when a regular representative is replaced.

President Th e President is responsible for the day-to-day management of the company. Th e President directs the business within the framework laid down by the Board and keeps the Chairman of the Board continually informed of signifi cant business events.

Th e President has the task of organising the management of the company so as to achieve appropriate direction and control of the business. Th e areas of responsibility of the President are regulated in greater detail in the “Instructions for the President” as adopted by the Board.

Remuneration and incentive programmesAt each AGM, the Board presents a motion concerning the principles underlying the remuneration and other terms and conditions of employment for OAB’s senior executives for approval by the AGM.

OAB applies the Government’s guidelines on the terms and conditions of employment of those in senior management positions. In accordance with the guidelines, the general principle is also applied that salaries and remuneration of senior executives at OAB will be competitive, but not pay-leading. Th e Board decides on employment and terms and conditions of employment for the President.

Th ere are no outstanding share- or share-price-based or other incentive or bonus programmes for the Board or the Group Executive Board.

External auditorsIn accordance with the Articles of Association, OAB must have at least one and not more than two authorised accountants or an authorised accounting fi rm plus a lay auditor, as well as a deputy lay auditor. An assignment as lay auditor shall apply until the close of the fi rst AGM held after the year when the lay auditor was elected.

Board members who receive fixed fees Annual feesNumber of meet-

ings attended Fees paid

Birgitta Böhlin (Chairman) SEK 250,000 24 SEK 250,000

Gunvor Engström SEK 130,000 19 SEK 130,000

Jan Forsberg SEK 130,000 21 SEK 130,000

Ann-Christin Nykvist SEK 130,000 23 SEK 130,000

Board members who receive a fee per meeting attended Fee per meetingNumber of meet-

ings attended Fees paid

Sofia Wallström SEK 4,000 24 SEK 96,000

Cecilia Bernsten SEK 4,000 21 SEK 84,000

Christer Ottosson SEK 4,000 23 SEK 92,000

Ann-Katrin Westermark (Deputy for Christer Ottosson) SEK 2,000 18 SEK 2,000

Claes Wallén (Deputy for Cecilia Bernsten) SEK 2,000 12 SEK 0

Deputies only receive fees if they serve in the place of the ordinary Board member.

BOARD COMPOSITION, NUMBER OF MEETINGS AND FEES



AUDITORS

Th e company’s auditors are Ernst & Young, with Erik Åström, Authorised Public Accountant, as Auditor in Charge. Lars Elinderson, Member of the Riksdag, was appointed lay auditor, with Anders Karlsson, Member of the Riksdag, as deputy.

Lars Nordstrand was appointed auditor in 2009 by the National Audit Offi ce.

AUDITORS’ FEES

Auditors’ fees for performing the audit and other examinations in accordance with applicable laws and for providing advisory services and assistance in conjunction with examinations performed are presented in Note 8 of the Annual Report.

Report on internal control of fi nancial reportingApoteket Omstrukturering AB (OAB) has an assignment that is limited in time and pertains to the sale of pharmacies in conjunction with the re-regulation of the pharmacy market. Th e compilation of annual reports and annual accounts and all payments are the responsibility of the subsidiary Apoteket AB and are regulated in a service agree-ment. Th e Board of Directors of OAB has decided on an authorised signatory and an attestation manual. Th e Board of Apoteket AB is responsible for ensuring that Apoteket’s organisation is designed to give adequate control of the accounts, management of assets and the company’s fi nancial conditions in general. Th is means that Apoteket must have a process which endeavours to achieve reliable fi nancial reporting, a well-adapted and eff ective business and the observance of applicable laws and regulations.

Apoteket has chosen to gather all of the Group’s governing documents in a Group handbook, which is available for all Apoteket employees. Th e values that steer the company are available in an overall policy, which describes Apoteket’s approach. In addition to these policies, guidelines and instructions provide further guidance to the company’s employees.

Current work processes include built-in mechanical and manual controls whose purpose is to prevent, discover and correct errors. Th ese controls are described in a process management system. Apoteket has a centralised accounting function entailing that many of the control activities that exist are conducted at a central level. Such controls include the reconciliation of accounts, valuation of statements of earnings, balance sheet items and fi nancial reviews. During the year, all pharmacy managers underwent training intended to strengthen knowledge of internal controls.

Th e President of Apoteket AB has a quarterly follow-up with Apoteket’s various business units, which constitutes part of the follow-up of operations. In addition, the Group Executive Board conducts regular reviews in order to follow up scorecard results and examines the integrated quality, environment and sustainable development of management systems so that they function satisfactorily.

Th e Audit Committee and the management of Apoteket AB receive regular information about the fi nancial reporting. Th e Board and the management scrutinise the interim reports and the annual report and engage in an active dialogue with the external auditors.

Th e Board of Apoteket AB has decided that the company shall not have a separate function for internal auditing, since the current organisation provides the Board with a satisfactory impression of internal controls. Th e Board also conducts an annual evaluation of the internal control of fi nancial reporting and whether there is a need for a separate internal audit function.


Board of Directors and auditors

Birgitta Böhlin, Chairman of the Board

Member of the Board and Chairman of the Board since 2008. Born 1948.

President of Samhall AB.

Previous positions: Director General of Swedish Defence Materiel Administration, Head of Karolinska University Hospital in Huddinge, CFO of Sveriges Television, the Swedish National Audit Office and the Ministry of Finance.

Education: Business Administration Graduate.

Other signifi cant assignments: Chairman of the Board of Mid Sweden University. Member of the Boards of AFA Försäkring, Almega and Confederation of Swedish Enterprise (deputy).

Gunvor Engström

Member of the Board since 2008. Born 1950.

County governor of Blekinge.

Previous positions: President of Bank2, President of Swedish Federation of Business Owners, business owner, President of Tjänsteförbundet, the Swedish Government Offices and Swedish Transport Administration.


Other significant assignments: Member of the Boards of Länsförsäkringar Liv, Semcon AB and Third Swedish National Pension Fund.

Sofia Wallström

Member of the Board and owner representative since 2008. Born 1969.

Assistant undersecretary of Ministry of Health and Social Affairs.

Previous positions: Head secretary Dental Service Review Committee, deputy director Ministry of Finance, political adviser Ministry of the Interior and principal administrative officer Armed Forces Headquarters.

Education: Bachelor of Arts in Legal Science.

Jan Forsberg


CEO of SJ.

Previous positions: Member of SAS Group Management.

Education: Master of Science in Engineering.

Other significant assignments: Chairman of the Boards of SJ Event, SJ Service Academy, Stockholmståg and SJ Norrlandståg. Member of the Boards of Samtrafiken AB and Almega.

Ann-Christine Nykvist


Director General, National Government Employee Pensions Board.

Previous positions: Minister and Head of Ministry of Agriculture, Director General of Swedish Competition Authority and the Swedish Government Offices.


Members of the Board elected by the Annual General Meeting


Board of Directors and auditors

Claes Wallén

Employee representative appointed by Swedish Pharmaceutical Association, deputy Board member for Cecilia Bernsten since 2008. Born 1944.

Shop steward responsible for pharmaceutical employees at Apoteket AB.

Education: Registered pharmacist.

Other signifi cant assignments: Deputy Board member of Apoteket AB’s Pension Fund and Optimalia, the Apotek Group’s insurance association. Central operations auditor at the Swedish Pharmaceutical Association and the Swedish Academy of Pharma-ceutical Sciences.

Cecilia Bernsten

Employee representative appointed by Swedish Pharmaceutical Association, member of the Board since 2008. Born 1950.

Researcher at Apoteket AB’s R&D staff unit.

Education: Prescriptionist, pharmacist and Doctor of Philosophy in Pharmaceutical Science.

Ann-Katrin Westermark

Employee representative appointed by Swedish Association of Technical Pharmacy Employees, deputy Board member for Christer Ottosson since 2008. Born 1948.

Employed at Apoteket AB since 1964.

Education: Prescriptionist.

Christer Ottosson

Employee representative appointed by Swedish Association of Technical Pharmacy Employees, member of the Board since 2008. Born 1979.

Head of Transport, Apoteket AB.

Education: Business and Economics Graduate.

Ernst & Young AB

Erik Åström, Authorised Public Accountant. Born in 1957.

Other signifi cant assignments: Apoteket, Hakon Invest, Hennes & Mauritz, Modern Times Group, Saab and Svenska Handels-banken.

Lars Nordstrand

Authorised Public Accountant, appointed by National Audit Offi ce. Born in 1954.

Other signifi cant assignments: Apoteket, the Swedish Tax Agency, the Swedish Customs Service, the National Property Board and the National Fortifi cations Administration.

Lars Elinderson

Lay Auditor, Member of the Riksdag. Born in 1949.

Members of the Board appointed by employee organisations

Auditors

Production: Apoteket Omstrukturering AB in cooperation with Grayling & Citigate Norden AB. Photography: Fredrik Hjerling, Bo Johansson, Mats Lundqvist and Peter Nerström. Reproduction: Blomquist & Co och mods. Print: Elanders. Translation: The Bugli Company. Paper: Maxi Offset, contents 120 g, cover 250 g.

Grev Turegatan 3–5, Entrance D, 6th Floor, SE - 114 46 Stockholm, + 46 8 442 74 50

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