new summary of fagerhult annual report...

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Annual Report 2005

(English summary)

3fagerhult annual report 2005

Contents4-5 Fagerhult in brief

6-7 Business concept

8-9 Comments from the Group CEO

10-11 Fagerhult and energy

12-15 Professional lighting

16-17 Retail lighting

18-19 Exterior lighting

20-21 Home lighting

22-23 The work behind it all – operations

24-25 Environment and quality

26-28 Staff

29 Acquisitions and disposals

30 Fagerhult stock and ownership structure

31 Five-year review

32-36 Administration report

37 Income statement

38-39 Balance sheet

40 Changes in equity

41 Cash flow statements

42-43 Board of Directors and Auditors

44 Group management and business area managers

45 Heads of subsidiaries and local managers

46 Kalendarium

46 Definition

47 Calendar

4 fagerhult annual report 2005

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Fagerhult in brief

This business area includes the sales of indoor lighting for public environments such as offi ces, schools, hospitals, and industrial structures.

Professional lighting

This business area comprises the sales of lighting systems, light sources and services to retail stores.

Retail lighting

This business area comprises the sales of outdoor products for the lighting of buildings, parks, recreational areas, paths, etc.

Exterior lighting

This business area comprises the sales of lighting for hotels, conference centres, public premises and the home.

Home lighting

4 fagerhult annual report 2005, summary

The Fagerhult Group, with approximately 1 500 employees, is the largest lighting group in the Nordic region and a leading force in Europe. We develop, manufacture and market professional lighting systems for public environments as well as offering a range of decorative lighting.

The companies in the Fagerhult Group have many years of experience in lighting. They inspire each other to be conducive to make positive contributions to lighting in all of its forms.

The Group has sales companies in Sweden, Norway, Denmark, Finland, the United Kingdom, the Netherlands, Germany, Estonia, Russia and China.

fagerhult group’s sales over 10 years


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Trademarks of the Fagerhult Group

5fagerhult annual report 2005, summary

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Our vision, business concept and aimsOur vision is to create energy-effi cient lighting solutions which contribute to an ergonomically correct environ-ment for the international arena.

Our business concept is to develop, manufacture and market lighting systems for public environments, as well as for the home.

Our aim is to be a leading global player within the ligh-ting industry. We shall remain number one in the Nordic countries and become one of the three foremost lighting companies in Europe. Through profi table growth, we shall generate increased customer benefi t and increased value for our shareholders, as well as contribute positi-vely to the quality of life where our products or solutions are offered and within our own operations.

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the stock’s trend in market prices

Fagerhult’s share capital amounts to MSEK 65.5 allocated into 12 850 000 shares at a nominal value of SEK 5.10. All of the shares are unrestricted

shares and entitle the same voting rights and equal share in the fi rm’s

assets and profi ts.


Our vision is to create energy-efficient lighting solutions which contribute to an ergonomically correct environment for the interna-tional arena.

Our business concept is to develop, manufacture and market ligh-ting systems for public environments, as well as for the home.

Our aim is to be a leading global player within the lighting industry. We shall remain number one in the Nordic countries and become one of the three foremost lighting companies in Europe. Through profitable growth, we shall generate increased customer benefit and increased value for our shareholders, as well as contribute positively to the quality of life where our products or solutions are offered and within our own operations.

Business concept Our overall aims are:

• Average growth of 15% per year, of which at least 5% is organic• Operating profit shall be 10% of sales across a business cycle• Return on capital employed shall amount to at least 20% across a business cycle

• Equity/assets ratio for the Group shall not fall below 30% Our strategy is built on four cornerstones: focus, growth, differen-tiation and world class manufacturing.

Our focus is on the business and on creating, maintaining and ta-king advantage of new business opportunities. We want to increase sales to our existing customers and at the same time acquire new customers.


We create growth by establishing ourselves in new markets and within new segments. By acting internationally, we also acquire customers operating in a number of countries. We develop exciting products and offerings using the latest in technology for the markets and segments we have chosen to enter. As forerunners in the development of energy-efficient products with a high level of innovation, we have a solid basis for continued growth.

We distinguish ourselves from others by working with lighting in the broadest sense of the word, with the objective of supplying the perfect light. Our two primary driving forces are the development of energy-efficient products contributing to an environmentally-friendly society and, at the same time, developing high-performing, top-quality products with inspirational designs, in order to achieve the highest possible level of comfort.

We shall manufacture world-class products and strengthen our competitiveness with continued growth and investment in the areas in which we know we are, or can be, the best. Our operations shall be imbued with continuous improvements. We shall stream-line production through automation, and we shall strive after high capacity utilization in our factories. Increased standardisation and modularisation drives progress in efficiency. We shall utilize the eco-nomies of scale that our growth creates for purchasing as well as production, and by establishing ourselves in China, we are creating increased global competitiveness for the Group.


Net sales for 2005 amounted to MSEK 1 759, which is an increase of 27 percent compared with the previous year. The underlying organic growth was a solid 10 percent. Sales outside of Sweden are continuing to grow and are currently close to SEK 1 billion, which corresponds to 55 percent of the total turnover. Income after finan-cial items has increased by 97 percent to MSEK 108. The increase in income is primarily due to the increase in sales and to favourable growth in the market. Demand during the year has continued to strengthen in the European lighting market. Investments in construction have shown growth in most of the markets in which the Group is active in the wake of an increasingly stronger general economic climate. Ho-wever, the traditionally important market of commercial premises construction continues to show however weak results in many European cities, and the vacancy rate in office space continues to be high.

Comments from the Group CEO The growth and internalisation strategy that was implemented during the second term of 2004 has consistently and successfully been accomplished throughout the year. Three strategic acquisi-tions have taken place: LampGustaf in Sweden, Rinaldo Marketing in Estonia and Whitecroft Lighting in England. Two companies have also been sold, Aneta Belysning and Tryckta i Markaryd (both in Sweden), in order to concentrate our offering within certain business segments. We have also established operations in China in order to establish a presence in the strong and expanding Chinese market, streamline our purchasing and create a production platform to secure competitiveness for our products. business area

In order to increase our business focus within the defined areas, the number of segments within the Group has been increased from two to four during the year. The segment Home Lighting segment


remains. The Lighting for Public Areas has been divided into Profes-sional Lighting, Exterior Lighting and Retail Lighting. Each of the four business areas has a different strategy for reach-ing their respective target groups. The subdivision of the business areas is based on marketing and sales, and not on the division of products or technology.

professional lighting

This business area comprises the sales of indoor lighting for public environments such as offices, schools, hospitals, and industrial structures. Entry into this market is characterised by classic project marketing and sales activities in the building sector, through prescribed stages and together with architects, and thereafter in cooperation with installation engineers and construction entrepre-neurs. During the year, both the growth in sales and margins have continued to develop well for the business area and through the acquisition of Whitecroft Lighting during the fall, we currently hold a strong position on the European market.

retail lighiting

This business area comprises the sales of lighting systems, light sources and service to retail stores. Chains stores are the target group and especially large chain stores with a national or internatio-nal presence and strong trademarks. Exposure of products in shops is, to a great extent, dependent on the lighting. The development of lighting concepts for shops in close cooperation with customers and interior designers is an internationally growing market. After having completed the acquisition of LampGustaf during the year, we have started to create a platform for the execution of our stra-tegy to grow in the European market within this business area.

exterior lighting

This business area comprises the sales of outdoor products for the lighting of buildings, parks, recreational areas, paths etc. The decoration of parking lots, paths, and buildings and cities, where lighting has become an integrated part of the architecture, as well as a safety aspect to be considered when lighting green areas, and drives international demand within this business area. We have not yet achieved critical mass and we do not currently have a suffi-ciently strong offering for the European market within this business segment. However, we will work hard during the coming years in order to be able to follow through with our growth strategy in this business segment, as well.

home lighting

This business area comprises the sales of lighting for hotels, confe-rence centres, public premises and for the home environment. By strengthening our offering outside the traditional home lightning

Per Borgvall, CEO

segment and focusing on perceived values, profitability has conti-nued to grow during the year within the business area.

industrial platform

Because of the great change in the industrial playing field that is taking place around us, including substantial growth in China and India, and the transfer of production to so-called low cost countries in Eastern Europe and Asia, it is essential to have a clear and precise strategic outlook. We are convinced that it is possible to develop productivity and efficiency in our production units in Sweden through rationalisation and investments. This requires harder, smarter and more work. At the same time, we must participate in the international/global arena in order to be close to the rapidly growing regions and in order to take advantage of the business opportunities found in those regions. During the year, we created a platform in China for sales, purcha-sing and production. We are currently established in Shanghai (sales and head office), Suzhou (purchases and production) and in Shenzhen (purchases and logistics). At all of our production units, work is in progress on the im-plementation of a concept based on “Lean Production”. We have reinforced the logistics competence at Group level during the year and have made decisions regarding relatively large investments with reference to the automation of assembly.

future prospects

The acquisition of Whitecroft Lighting in England has resulted in both continued internationalisation and strong increases in the sa-les for the Group. The platform in China will further strengthen the Group’s competitiveness. The state of the market in the construc-tion industry is relatively favourable in most local markets and our momentum is high within all business areas. Our long-term goal of reaching sales of SEK 3 billion in 2008, with good profitability, remains firm and feels realistic. It is with significant confidence in our strategy and strong faith in the future that we continue our journey into 2006.


During the last 10 to 15 years, lighting technology has developed dramatically and Fagerhult has been a leading player. By the late eighties, we had already developed lighting systems for electro-nic operating gear. In the mid-nineties, we took the next step by developing luminaires for the energy efficient T5 flourescent light. The T5 investment has provided us with the possibilities to develop more efficient reflectors and anti-glare devices. The technology of integrated components such as light sources, operating equipment and reflector material has advanced, as has the knowledge of how to distribute light effectively. Through de-veloping luminaires for energy-efficient light sources, and through innovations such as our patent-pending reflector technology r5, we can contribute to reduced energy consumption. Why then is this important to Fagerhult? The legacy we leave behind is a common responsibility, which also includes us, as a company. Ninety percent of the environmental impact of a lighting installation constitutes the energy it consumes.

Fagerhult and energy


The production and distribution of energy is a burden on the environment; the development of more effi cient luminaires is our contribution to improve this situation. A sensible use of energy today will, therefore, produce environmental benefi ts tomorrow. As market leaders, we choose to assume our responsibility. A new installation from Fagerhult can more than halve energy consumption compared to an older lighting installation. Today, lighting accounts for 30 to 45% of the energy consumption of an offi ce facility. With a deliberate effort towards developing fi nished system solutions with different types of lighting control, Fagerhult can further reduce the energy requirements of our future lighting systems. The fi rst step has now been taken and we will continue in this direction. Reduced energy consumption for lighting can yield additional resource savings if one includes reduced refrigerating requirements and indoor climate in this line of reasoning. Modern lighting provides many environmental advantages apart from pure energy consumption.

According to estimates from lighting industry, 10 percent of Sweden’s total energy consumption is used for lighting.

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energy consumption


This business area offers lighting for public environments. Offi ces, schools, hospitals, hotels and industries are a few examples of the public environments in which this business area offers complete lightning solutions. The business model is based on sales to construction projects, via architects and direct channels, in which installation engineers and contractors are our customers. Fagerhult is a powerful player in the European market with an expansive development of business outside of Sweden. Sales com-panies can already be found in Sweden, Norway, Denmark, Fin-land, Estonia, Russia, Germany, Holland, Great Britain and China. Thanks to partners in additional countries, we are also active in a great many other areas of the world. Growth and internationalization through dividing our business operations helps us to focus on what we do best and to do it tho-roughly. We are trained in the art of prioritizing, which generates results. Increased proximity to the customer through increased focus gives us a clearer picture of what the customers want and of their needs.

positive market development

2005 was a year characterised by positive developments for the business area. Net sales amounted to MSEK 1 118, an increase of

13 percent compared to the previous year. Operating profi t was MSEK 93 and operating margin was 8.3%. Clear goals and the execution of our strategy is part of the explanation. Focused activities in order to reach out to Europe have been initiated and the acquisition of Whitecroft Lighting (see page 29), a sales company in Estonia, and the launching of sales in Spain, are examples of activities which rapidly provide us with the opportunity to reach new markets and new customers.

Professional Lighting Business Area

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During the fall, activity within the construction industry in large parts of Europe has continued to increase. Consumption and investment is driving growth, and in conjunction with expansive economic policies, these provide good conditions for the construc-tion market to continue growing for at least the coming year. The construction of commercial premises, which had decreased considerably in recent years, is also starting to increase. Above all, an increase in reconstruction investments has been observed and demand is expected to continue growing in the coming year. In addition, the need to invest in the public sector is large in many countries and increasing investments in hospitals and schools is already underway.

knowledge offer

Selling lighting systems is not simply a matter of selling a product. Fagerhult aims to become an expert in energy effi ciency, light planning and light technology – detailed knowledge, which is crucial in creating lighting systems which can be successfully inte-grated into the buildings for which they are designated. We are at the leading edge in providing innovative solutions, and, furthermore, exciting and interesting design solutions are being created with the help of the Nordic design idiom, both through competent internal designers and in collaboration with external designers. The Fagerhult Lighting Academy ensures that all employees share our goals and visions. Employees from all over the world are trained in basic lighting skills. During 2005, the Fagerhult Lighting Academy also developed into a source of knowledge for our custo-mers, an effort with which we are very satisfi ed. The basic idea is to create a situation in which cooperation can take place between Fagerhult’s employees and its customers, who should feel that they can cooperate with Fagerhult under all circumstances. The Fagerhult Lighting Academy is based in Copenhagen, a location accessible to both our customers and our employees around Europe.

future trends

We observe a clear trend of increased interest in lighting control, a trend which we fi nd interesting both from a human perspective and in terms of energy saving. Our customers seek increased design content, reliable and intel-ligent technology and, not the least, a strong collaborator that can offer competence, delivery capacity and precision.

professional lighting 2004 2005

Invoiced sales, MSEK 988 1 118

Operating profi t, MSEK 46.0 92.9

Share of Group sales 72% 64%

Share of Group operating profi t 84% 86%


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retail lighting 2004 2005

Invoiced sales, MSEK 133 306




This business area comprises the sales of lighting systems, light sources and services to retail stores. Chains stores are the target group and especially large chain stores with a national or interna-tional presence and strong brands. Exposure of products in stores is to a great extent dependant on the lighting. The development of lighting concepts for stores, in close cooperation with customers and interior designers, is an internationally growing market.

market development

Investments in new stores and shopping centres are increasing con-tinuously throughout the world. Trademark profi ling and increased insight into the manner in which light infl uences our purchasing patterns and behaviour have generated substantial growth in the retail lighting market. Furthermore, the renewal pace for retail ligh-ting is very high, between three and fi ve years, compared to approx-imately 20 years in traditional applications. An interesting side note is that, in addition to the increasingly sophisticated installations, an aftermarket for service and maintenance has arisen. On the basis of the acquisition of LampGustaf during the year, we have created the conditions and obtained the critical mass for conti-nued development of our offering in Sweden and internationally. As a result, this business area’s sales have increased a substan-tial 130% to MSEK 306. Due to restructuring and preparations to proceed internationally, the operating profi t of MSEK 10.9 and an operating margin of 3.6 percent, have not completely kept pace

with the increased sales during the year, but the outlook for the coming years look good.

knowledge offer

The manner in which one applies our knowledge is evident when you enter an environment equipped with our lighting products. Above all, you feel the difference. Pleasant, cosy, fresh, inspirational and uplifting. The next thing you notice is how the light leads you around and how certain objects and areas in the stores are more visible than others. When we succeed is when you feel at home. If you feel comfortable, then you are likely to stay for a long time. What is “right” in one environment is obviously not right in another environment. With the right lighting, you can alter shopping beha-viour and increase sales. That is the knowledge we have to offer.

Retail Lighting Business Area


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This business area comprises the sales of exterior products for the lighting of buildings, parks, leisure time areas, footpaths etc.

market development

The decoration of parking lots, paths, and buildings and cities, where lighting has become an integrated part of the architecture, as well as a safety aspect to be considered when lighting green areas, and drives international demands within this segment.The business area’s sales increased by 37 percent to MSEK 107. Operating profi t amounted to MSEK 3.3 and operating margin was 3.1 percent. The main reason for the increase in sales was due to the fact that Elenco AB, was included in the LampGustaf acquisition in the beginning of the year.

knowledge offer

We have yet to achieve a critical mass in this area and a suffi ciently strong offering for the European market, but we will work hard during the coming years in order to follow through with our growth strategy also within this business segment.

Exterior Lighting Business Area

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exterior lighting 2004 2005






Home Lighting Business AreaThis business area comprises the sales of products for both home lighting and lighting for hotels, conference establishments and public premises. The brands available within this business area are Belid and LampGustaf.

market development

The market is dominated by products from low-cost countries. Belid, as Scandinavia’s leading manufacturer of decorative ligh-ting, deals with this competitive situation in a successful manner by offering products of high quality. The market is particularly sensitive to trends and infl uences and Belid’s ability to quickly develop and manufacture entirely new collections makes the company a powerful competitor and an effective supplier. LampGustaf AB was acquired at the beginning of 2005. Ope-rations concerning home lighting were a part of the company. During the year, these operations were transferred to a new company, LampGustaf Inredning. The company purchases the majority of its selection from China with the help of its own personnel in Hong Kong. Aneta Belysning was sold in January 2005. The business area’s net sales amounted to MSEK 229, an increase of 25 percent compared to the previous year. Operating profi t was MSEK 7.6 (2.5) and operating margin 3.3 (1.4) percent. A signifi cant portion of the sales goes to markets outside Swe-den, primarily to Scandinavia and Great Britain.

knowledge offer

Differing activities in home and hotel environments create

differing needs for lighting. Light needs to coalesce into a harmonic unit in order to create a comfortable and pleasant lighting effect. Reading lights by the bookshelf, comfort lights at the dinner table or mood spotlights on the walls are but a few examples of what we can offer. Our products are characterised by new, modern lines in combination with traditional forms. Domestic and external designers contribute signifi cantly in introducing an exciting design language and interesting functions.

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home lighting 2004 2005






The term Operations is used to describe that portion of the Group’s organisation that is responsible for the functioning of manufactur-ing, logistics and quality. Operations provide all our business areas with goods and services. We have a goal for 2008 to increase efficiency and reduce costs by MSEK 75. This implies that we must manage to improve ef-ficiency and business ratios as well as quality and delivery safety. Thus far, more than 150 activities have been initiated.

key activities 2005

Our factory in the industrial city of Suzhou, located outside Shanghai, was opened on April 12. With our location in China, we have become a part of the growing lighting market in that country. Purchasing activities are more easily managed and enhanced with a local presence, and we will also be manufacturing for the European market. Production capacity has gradually been expanded during the year and we have already begun the assembly of products for retail app-lications. So far, we have followed both time and cost frames and the establishment of the local organisation has gone well. During 2006, we are counting on full speed production and currently already have 50 employees.

logistics organisation

Since we are in an expansive phase, with acquisitions, geographic growth and an increasingly complex situation as regards our sales chain, we have established a brand new logistics function to deal with new and demanding tasks during the year.

central purchase organisation

In order to better meet our new needs for efficiency and demands for increased quality, the purchase department has undergone an organisational change. The goal is to lower costs for purchased material by MSEK 50 in three years and to dramatically improve the precision of incoming deliveries. The purpose of this is to provide the Fagerhult Group with an improved competitive position. In order to implement this, we have sought new suppliers, started various rationalisation projects, reduced the number of suppliers and have undertaken many logistics projects together with the suppliers. Special logistic projects will be carried out in order to improve delivery precision.

less is more

We will work smarter – not harder, though hard work may also help. During the later part of the year, we began implementing a com-mon production system for Fagerhult based on LEAN, but adapted to our operations and local needs. This will be our overall and most important theme in coming years.

world class production

Our wide range of products is one of our strengths. Our customers often expect short delivery times, preferably delivery direct from the warehouse. In order to manage this, an unreasonably large warehouse would be required, which is not plausible in the long run. Instead, our solution is to directly manufacture products on the basis of the customer’s order but with a very short lead-time. We were able to cut our lead-times in half during the year.

automation

During the month of December, the Board of Directors approved an investment project for the purpose of automating the wiring functions in our electric fittings with the help of robots. Start-up is planned to take place at the end of 2006 and the savings effects will, by and large, be apparent in 2007.

The work behind it all – operations


Environment and quality

We engage in active and long-term quality and environmen-tal operations. Three of Fagerhults Belysnings manufacturing units are quality and environmentally certified in accordance with ISO 9001 and 14001. In our environmental work, we strive to fulfil or surpass the demands of current legislation, to economise resources, using both energy and raw materials, and to increase recycling in the entire process. Our workers are to engage their education in environmental and energy issues in their daily work. In order to create environmentally friendly lighting, compe-tence regarding lighting is required. Knowledge of lighting has always been a characteristic of the Fagerhult Group and is a prerequisite for our developmental work. This makes it possible for us to combine dynamic technology with function, energy efficiency and design.

authorised by certification institute

One of Northern Europe’s best-equipped lighting laboratories is located in the Technical Centre in Fagerhult. The laboratory is authorised by the test and certification institute Intertek-Sem-ko, which implies that our own testing results form the basis of the certification of our products. A luminaire’s performance is measured using one of the Nordic region’s few mirror photogenmeters. This equipment is of great help, not only with documentation but also in the development of new reflectors and dazzling protection.

life cycle analysis

In order to assess a product’s environmental influence, the entire life cycle must be considered. In a life cycle analysis, the extent to which the environment is affected during manufac-ture, usage and scrapping is investigated. For lighting products, the usage phase entails the largest environmental burden, while manufacturing and scrapping do not have such a large impact on the environment. A number of investigations show that 90 percent of environmental impact takes place during usage and that is due to consumption of energy. All production and distribution of electrical energy result in an environmen-tal impact, and if this can be reduced, then environmental benefit will follow. Modern lighting is less of an environmental burden, espe-cially with regards to environmentally dangerous substances. New light sources, especially the T5 fluorescent lamp, contain significantly less mercury than older light sources, and the fact that they last longer means fewer changes and, therefore, even less environmentally dangerous waste. As is common in the lighting business, we are responsible for recycling old luminaires and light sources, as dictated by the so-called producer responsibility. This spares the environment and promotes change to newer and more environmentally friendly lighting.


our environmental goals

Reduction of the products’ environmental impact during use and recycling. Reduction of our manufacturing units’ energy

consumption. Reduction of our manufacturing units’ impact on the

local environment. Reduction of the environmental impact of transport to

and from our factories. Reduction of the consumption of raw materials and

minimising the amount of inferior waste.

gunnar eliasson, quality and environmental manager


StaffWe are a company in transition. New enterprises, organisational changes and the sale of subsidiaries are just a few of the things affecting us right now. Since the beginning of 2004, we have had a new vision and new goals for the future. Our roles and methods of collaborating are in the process of change. There are many new things to learn and we need to provide our employees with the right circumstances and in-service training. In order to meet our goals, we must create a climate characterised by commitment and a will to improve. Our vision, mission and core values are important tools for creating a company in which we are united by our common goals. Our core values assist our employees in working towards meeting our goals.

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We would like to be perceived as a leader in creating added value for our customers, shareholders and employees. We are going to be number one in the Nordic region and one of the three leading ligh-ting companies in Europe. We will strive to create increased added value, achieve even better results and make a positive contribution to the quality of life everywhere our products or solutions are of-fered. We conduct our operations according to the highest possible financial and ecological standards. We think and act in a professio-nal manner. We are proud to work at Fagerhult and are deemed the best in the business by our customers and by our competitors. We are very good at creating, developing and maintaining relationships with our customers. And working at Fagerhult is fun.

core values

Responsibility, respect and knowledge. Our core values are rooted in the company’s history. They define the way we work and the way we behave. These core values inspire and challenge the employees at Fagerhult in their efforts to create a successful company – finan-cially, socially and ecologically. Responsibility. We strive to provide every individual with the opportunity for self-improvement within the company – and self-improvement requires responsibility. To take responsibility is to be reliable, but also to be creative, to be self-confident and to be ready

to assume challenges. We always perform our daily tasks with care and attention to detail, keeping our customers’ and the company’s best in mind. Respect. To show respect is to be open and honest and to behave with integrity. In order to show respect we must consider how our actions affect our surroundings, within and outside the company, now and in the future. Respect fosters cooperation and makes it easier for us to achieve our common goals. Knowledge. In our efforts to achieve world-class results, we raise our professionalism to a higher level. To reach world class, we must challenge ourselves to exceed the expectations of our customers, our shareholders and our employees, continually striving to improve our results and meet our targets with good measure.

focus on the employee

Employee efforts within the Fagerhult Group, both individually and collectively, are of utmost importance in determining the manner in which efficiency, quality and service goals can be reached. The company’s success is dependent on the employees’ skills, motiva-tion and involvement. The company’s policy for its managers and team-leaders ensures that they are responsible for both the operations and the personnel, and reflects a positive and optimistic view of mankind. Our managers shall put into practice a situationally-adapted form


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of leadership, and management by objectives are the fundamental method of management. Our managers are responsible for their employees’ development on the job.

cooperation for development

We encourage close cooperation with colleges and universities in countries in which we have our own companies. In Sweden, we have a close collaboration with Jönköping University. This cooperation is comprised primarily of systematic, practical training within the scope of so-called company sponsored operations. A total of thirty university students have been involved in different work-study as-signments at the company.

keep-fit activities as a business idea

We prioritize preventive measures against diseases and illness. This means that we implement training in work ergonomics, follow-up on causes of absences due to illness and actively manage the working environment. The company health service works primarily with identifying and reducing risks for disease, illness and injuries, and secondarily with providing medical treatment. In order to

reduce the risks for illness and disease, exercise during free time is encouraged by, for example, offering different types of discounts to athletic and training facilities.

we believe in equal opportunity

Our work in equal opportunity aims to create an effective work organisation within the company. Experience shows that groups, in which both men and women are represented, function well. This applies to both productivity and comfort level. Other factors having a positive infl uence on effi ciency are age, personal characteristics and different occupational experiences.

dare to be human

We focus on several different measures that contribute to keeping our work place alcohol and drug free to reduce the risk of illness and accidents. In the long-term, we also want to positively infl uence prejudices and negative attitudes so that efforts for improvement are not impeded. Creating a good physical and psychosocial envi-ronment where one dares to deal with problems and diffi culties in an open and humane manner is one of our goals.


Company Acquisitions

WHITECROFT LIGHTING LTD

In order to continue strengthening our position in the European lighting market and to create a strong platform in the important British market, we have acquired Whitecroft Lighting Holdings Ltd, the parent company of Whitecroft Lighting Ltd. Whitecroft, which has its base and only production unit in Ashton-under-Lyne, just outside of Manchester, has a turnover of approximately MSEK 400 and has 280 employees. The company has good profitability, good growth and is well positioned in the British market, which accounts for 95 percent of sales. The operations place an emphasis on the development and sales of lighting solutions in professional lighting, foremost in the areas of health, schools, offices and stores and on strengthening Fagerhult’s offers within these segments.

Company SalesIn the first quarter, Aneta Belysning, with its primary area of operations in the Home Lighting segment, was sold. Net sales amounted to MSEK 72 in 2004. During the third quarter Tryckta in Markaryd was sold. The company’s net sales amounted to MSEK 45.

LAMPGUSTAF

LampGustaf is the leading player in the Nordic region within the retail lighting sector, which is also its primary area of operation. In addition to this, the LampGustaf Group offers a wide variety of light sources and a well-established assortment of interior lighting. The LampGustaf Group includes a subsidiary company in Hong Kong, which is primarily engaged in purchasing operations for the Group, and a smaller company in Russia. Another subsidiary of the Lamp-Gustaf Group, Elenco Lighting AB, situated in Borås, manufactures and sells exterior lighting for public areas. Elenco is, hence, well suited in terms of the Fagerhult Group’s ambition to expand within this segment. During 2005 an extension to the LampGustaf exhibition premises was built in Bollebyggd, offering major possibilities to present vari-ous lighting concepts in a variety of different retail environments. Net sales for 2005 amounted to MSEK 269 and the number of employees is currently 100.

RINALDO MARKETING

In order to strengthen our presence in the Baltic region and there-by increase the home market for the complete Baltic Sea area, we have acquired the Estonian company Rinaldo Marketing Oü. The company has seven employees and a yearly turnover of MSEK 7.


share capitalFagerhult’s share capital amounts to MSEK 65.5 distributed among 12 850 000 shares with a quota value of SEK 5.10 per share. All shares are unrestricted and confer equal voting rights and equal participa-tion in the company’s assets and profi t.

stock-exchange listingAB Fagerhult was listed in 1997 on the Stockholm Stock Exchange. A trading unit consists of 100 shares. The last price paid at year-end was SEK 154 corresponds to a market value of MSEK 1 979.

options programIn 2004, Fagerhult implemented an options programme for approxi-mately 40 members of management which had been approved by the 2004 annual general meeting. A market-adjusted premium of SEK 10.25 per option was paid for a total of the 224 000 options. The options convey the right to acquire shares in AB Fagerhult for SEK 100 per share until 2008. In order to cover its commitment arising from the options programme, the company has retained 200 000 own shares acquired previously. The company will acquire the remaining shares as needed.

dividends and dividend policyIn the long term, AB Fagerhult intends to distribute dividends corresponding to approximately 30-40 percent of the Group’s net income. At this dividend level, the Board of Directors considers itself to have a satisfactory cash fl ow for the fi nancing of expected future investments. The Board of Directors has proposed a dividend of SEK 3.50 (3.00) per share to the annual general meeting, corresponding to a return of 2.3 percent on the stock-exchange price on 31 December 2005.

proposal to grant the right to acquire sharesThe annual general annual meeting held 25 April 2005 authorised the company to acquire its own shares. No own shares were purchased in 2005. During 2002, 200 000 shares were acquired by the company at a price of SEK 110 per share. The nominal value of these shares amounts to MSEK 1.0. The number of outstanding shares amounted to 12 650 000 at year-end. The company owns 1.6% of its own shares. The Board of Directors proposes that the annual general meeting grant the Board continued authorisation to acquire own shares until the next annual general meeting.

ownership structure 31 December 2005

Shareholders Number of shares

%

Investment AB Latour 4 104 500 32.4

Gustaf Douglas, family and companies 3 480 000 27.5

SÄKI AB 1 302 500 10.3

Bertil Svensson, family, foundation and companies 943 025 7.5

Lannebo Fonder 549 925 4.3

Tolag Holding AB 250 000 2.0

Stiftelsen för kunskaps- ochkompetensutveckling 175 000 1.4

Fredrik Palmstierna 170 205 1.4

IF Insurance company 59 500 0.5

16 shareholders with holdings of 10 000–100 000 shares 292 248 2.3

233 shareholders with holdings of 1 000–10 000 shares 611 481 4.8

3619 shareholders with holdings of up to 1 000 shares 711 616 5.6

12 650 000 100.0

share

The Fagerhult share and ownership structure

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facts per share

SEK/Share 2005 2004

Profi t after tax 6.03 2.95

Dividends 3.501) 3.00

Stock market price 154.00 104.00

Yield % 2.3 2.9

Equity 43.10 38.001) Proposed dividend


Five-year overviewProfi t/loss items (MSEK) 2001 2002 2003 2004 2005

Net sales 1 410 1 475 1 403 1 382 1 759(of which outside Sweden) (697) (739) (740) (726) (969)Cost of goods sold – 991 – 1 039 – 995 –984 – 1 185Gross profi t 419 436 408 398 574Selling expenses – 225 – 240 – 244 – 262 – 347Administrative expenses – 68 – 72 – 72 – 83 – 125Other operating incomes 9 8 9 7 6Other operating expenses – 5Operating profi t 135 132 101 55 108Financial income 6 6 4 3 10Financial expense – 3 – 5 – 3 – 3 – 10Financial net 138 133 102 55 108

Balance sheet items (MSEK)

Intangible assets 3 2 1 4 347Tangible fi xed assets 227 240 233 217 267Financial assets 3 3 4 5 11Inventories 233 243 236 222 336Receivables from customers 223 209 184 218 338Other short-term receivables 13 17 19 23 40Cash in hand and at the bank 145 119 164 116 125Total assets 847 833 841 805 1 464

Equity 478 514 546 471 545Pension liabilities 65 34 35 34 36Deferred tax 57 61 64 61 75Other long term interest-bearing liabilities 335Other long term interest-free liabilities 1 1 58Short-term interest-bearing liabilities 51Short-term interest-free liabilities 246 223 196 239 364Total Equity and liabilities 847 833 841 805 1 464

Key ratios and data per share

Net sales growth, % 14.4 4.6 – 4.9 – 1.5 27.3Growth in operating profi t, % 3.1 – 2.6 – 23.3 – 45.8 96.7Growth in profi t after fi nancial items, % 5.0 – 3.6 – 23.1 – 46.3 97.3Operating margin, % 9.6 8.9 7.2 4.0 6.1Profi t margin, % 9.8 9.0 7.3 4.0 6.1Quick ratio, % 59 53 83 49 30Debt / equity ratio 0.1 0.1 0.1 0.1 0.8Equity / assets ratio, % 56 62 65 59 37Capital employed, MSEK 543 549 580 505 968Return on capital employed, % 27.8 25.3 18.5 10.6 16.0Return on equity, % 22.0 19.1 13.4 7.2 14.9Net indebtedness, MSEK – 81 – 85 – 129 – 82 – 298Net investments in fi xed assets, MSEK 59 52 33 33 78Depreciation of fi xed assets, MSEK 36 38 40 46 43No. of employees 1 175 1 203 1 183 1 130 1 288Equity per share, SEK 37.95 41.48 44.00 37.99 43.10Equity per share, SEK 7.71 7.58 5.73 2.95 6.03Dividend per share, SEK 2.75 3.00 9.00 3.00 3.501)

Cash fl ow per share, SEK 9.41 8.83 9.52 7.73 6.842)

No. of outstanding shares, thousands 12 600 12 400 12 400 12 400 12 650Average number of outstanding shares, thousands 12 600 12 533 12 400 12 400 12 5461) Proposed dividend 2) Cash fl ow from continuing operations.

Only 2004 and 2005 have been made up according to IFRS


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The board of directors and the CEO for AB Fagerhult (publ), Corpora-te Identity Number 556110-6203, hereby present the annual report for the Group and the Parent Company for the year 2005.

operationsWith approximately 1 500 employees, the Fagerhult Group is one of Europe’s leading lighting groups and the largest in the Nordic region. We develop, manufacture and market professional lighting systems for public environments and offer a range of products for home lighting. The Group has sales companies in Sweden, Norway, Denmark, Finland, England, Holland, Germany, Estonia, Russia and China. Manufacturing units are located in Habo, Örnsköldsvik, Var-berg, Falkenberg, Borås and Åhus in Sweden, Manchester in Eng-land, and Suzhou in China. The Group includes Fagerhults Belysning, Ateljé Lyktan, Belid, LampGustaf, LampGustaf Inredning, Elenco and Whitecroft Lighting. The Fagerhult share is listed on Stockholm Stock Exchange.

changes in the groupAt the beginning of the year the Group acquired LampGustaf AB. LampGustaf is the leading player in the Nordic region within its pri-mary area of operations, retail lighting. The company also includes a subsidiary in Hong Kong, which is primarily engaged in purchasing operations, and Elenco Lighting AB, which manufactures and sells exterior lighting for public areas. Net sales for 2005 amounted to MSEK 262. In order to strengthen the Group’s presence in the Baltic region, and thereby expand the home market throughout the entire Baltic Sea region, the Group acquired the Estonian company Rinaldo Marketing Oü, whose name has been changed to Fagerhult Oü. The company is a trading company with seven employees and annual net sales of MSEK 7. To continue strengthening the Groups position in the European lighting market and create a strong platform in the important Bri-tish market, the Group acquired Whitecroft Lighting Holdings Ltd, the parent company of Whitecroft Lighting Ltd, during the fourth quarter of 2005. Whitecroft Lighting Holdings Ltd has annual net sales of approximately MSEK 400 and 288 employees. Aneta Belysning and Tryckta in Markaryd were sold in the first and third quarters of the year, respectively. Production in the factory in China has begun and most machi-nery is in place, with the exception of a painting facility which will be completed during the first quarter of 2006. During the first half-year, net sales will increase substantially. Activities will include manufacturing, purchasing and sales in the Chinese market.

net sales and income Demand has continued to increase during the year. Construction

investments have shown growth in most of the markets in which the company is active. The market for office construction, however, remains weak. In order to strengthen and streamline the Group, three strategic acquisitions and two sales of companies were executed. The growth and internationalisation strategy initiated by the Group in the second half of 2004 has been consistently imple-mented. The Group’s net sales amounted to MSEK 1,759 (1,382), an increase of 27% compared with the previous year. Net sales for comparable units increased by 10%. Sales outside of Sweden conti-nue to grow, amounting to MSEK 969 (726), which corresponds to 55% (52) of total net sales. Companies acquired during the year had a positive effect of MSEK 339 on net sales. Orders received during the period were higher than the net sales and amounted to MSEK 1,784 (1,394).Profit after financial items increased by 97% to MSEK 108.1 (54.8). Net profit for the year includes a capital gain of MSEK 3.4 referring

Board of directors’ report

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to sales of shares in Tryckta. Operating income for comparable units amounted to MSEK 97 (50). Improvements in profit can primarily be ascribed to increases in volume.

business areasIn order to increase business focus within defined areas, during the year the Group expanded from two segments to four. The Home Lighting business area remains. The Lighting for Public Areas seg-ment has been divided into Professional Lighting, Exterior Lighting and Retail Lighting. Comparative figures have been recalculated to reflect the new organisation.

Professional lightingThe business area includes sales of indoor lighting for public environments such as offices, schools, hospitals, and industrial structures. Net sales amounted to MSEK 1 118, compared with MSEK 999 in the previous year. The months of November and December include net sales from Whitecroft in the amount of MSEK 76. Operating income was MSEK 92.0 (46.0) and the operating margin was 8.3 percent (4.7).

Retail lightingThis business area is comprised of sales of lighting systems, light sources and service to retail locations. Net sales amounted to MSEK 306, as compared with MSEK 133 in the previous year. Of this increase, MSEK 145 was attributable to LampGustaf AB, which was acquired during the year. Operating income amounted to MSEK 10.9 (5.7) and the operating margin was 3.6% (4.3).

Exterior lightingThis business area is comprised of the sales of outdoor products for the lighting of buildings, parks, recreational areas, paths etc. Net sales amounted to MSEK 107, as compared with MSEK 78 in the previous year. Of the net sales, MSEK 23 was attributable to Elenco Lighting AB, which was a part of LampGustaf AB. Operating income amounted to MSEK 3.3 (0.5) and the operating margin was 3.1% (0.6)

Home lightingThis business area is comprised of the sales of lighting for hotels, conference centres, public premises and the home. Net sales amounted to MSEK 229, as compared with MSEK 183 in the previous year. Of this increase, MSEK 31 was attributable to units that were acquired or sold. Operating income amounted to MSEK 7.6 (2.5) and the operating margin was 3.3% (1.4).

financial positionThe Group has a strong financial position. At the close of the year,

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investmentsThe Groups net investments in tangible fixed assets amounted to MSEK 73 (33) and investments in intangible fixed assets to MSEK 344 (6), of which MSEK 339 (0) refers to acquired companies. Depreciation for the year amounted to MSEK 43 (45).

product developmentThe Fagerhult Group conducts continuous product development in order to improve current products and to develop new ones. A fundamental principle is that all product development shall occur in close relation with the market and in cooperation with customers and end users. Fagerhult is a leader within the lighting segment, even from an international perspective, and cooperation with leading producers of light sources and components is essential.Fagerhult’s engineering centre contains one of Northern Europe’s best-equipped laboratories, where we can both inspect and approve our products.

the Group’s debt/equity ratio was 0.8 (0.1). As a result of the year’s acquisitions, the equity/assets ratio since the end of the year has decreased by 22% to 37%. Cash and bank balances at the end of the period amounted to MSEK 124 (116) and the Group’s equity was MSEK 545 (471). Cash flow from operating activities amounted to MSEK 86 (96). A directed issue of 250,000 new shares was executed in the second quarter and comprised a portion of the purchase price for shares in LampGustaf AB. The new share issue resulted in a dilution of 2%.

tangible fixed assets MSEK

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Assets and liabilities in companies that were sold or acquired have changed the company’s financial position. The largest items were increases of MSEK 77 in Inventories, MSEK 108 in Accounts recei-vable – Trade, and MSEK 17 in Other non interest-bearing current assets. Interest-bearing liabilities increased by MSEK 73, while the Group’s equity decreased by MSEK 18. Bank loans attributable to acquisitions increased by MSEK 309. Pledged assets and contingent liabilities amount to MSEK 84.2 (0.0) and MSEK 17.0 (3.1), respectively. The increase in pledged as-sets is mainly attributable to acquired companies, and the majority refers to property mortgages.

personnelDuring 2005 the average number of employees increased by 14 percent to 1,288 (1,130). Acquired and sold companies contributed 96 employees to the change. The Group has 37 employees in China. The number of employees in the Group’s foreign sales compa-nies continues to grow and presently amounts to 239 employees (146). Women accounted for 32% (31) of the personnel. In order to strengthen the Group’s knowledge base, the establishment of goals for the development of both individuals and the organisation has continued to be a priority. In order to decrease poor health and ab-sence due to illness, company health care has focused on preventive measures and health care.


The amount of MSEK 4 was capitalised in the year’s balance sheet. Other expenses are expensed as they arise.

environmental effectsThe Fagerhult Group conducts operations that require reporting in the three Swedish companies Fagerhults Belysning AB, Belid AB and Elenco Lighting AB. The Group’s operations affect the exte-rior environment mainly via vaporisation of organic solvents and noise. For many years a targeted effort has been made to minimise environmental impact by the erection of new coating/painting facilities utilising an alkaline washing process and closed systems. The majority of the business, approximately 80 percent, is environ-mentally certifi ed according to ISO 14001. There are no restrictions that would limit reasonable quantity increases for the Swedish companies.

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control of the groupShareownersAB Fagerhult had approximately 3,900 shareholders at the end of the year. The nine largest shareholders’ account for 87.2% (89.6) of the company. For additional information, see Ownership structure on page 30 and note 31.

Annual general meeting The annual general meeting shall be held within six months of the end of the fi nancial year. All shareholders that are listed in the shareholder’s register and that have registered their participation on time have the right to vote their holdings of shares. One share entitles one vote. The annual general meeting elects board members for a period of one year. Remuneration for the board members is decided upon at the annual general meeting.

Nomination committeeAt the annual general meeting, a Nomination Committee was elected consisting of Gustaf Douglas (chairman), Anders Frick and Björn Karlsson. The Nomination Committee was later expanded to include Göran Espelund of Lannebo Fonder.

Board of DirectorsThe Board consists of seven directors elected by the annual general

meeting, two deputies, and two employee representatives. For a detailed presentation of the board of directors, see pages 62-63. The CEO is also a director. The Board of Directors is responsible for the Parent company’s and the Group’s organisation and administration, and continuously assesses the Parent Company’s and the Group’s fi nancial position. The board has adopted a formal work plan which, among other things, stipulates the number of board meetings, business to be referred to the board, fi nancial reports and instructions for the CEO. During the year, the board had fi ve working meetings in addition to the meeting following election. Relevant business is discus-sed at the board meetings, such as strategy, the business climate, investments and organisational issues. Among other things discus-sed at the board meetings was the sale of the subsidiary Trycka i Markaryd and the acquisition of LampGustaf AB, RinaldoOü and Whitecroft Lighting Holdings Ltd. The companys auditor participa-ted in the board meeting at which the annual fi nancial statements were discussed and submitted his observations at that time. The complete board constitutes the Audit Committee.

Remuneration to the CEO and to Group managementAfter consultation with the Compensation Committee, the Board of Directors determines the amount of remuneration to the CEO and presents guidelines as to the manner in which Group management is to be remunerated. The Compensation Committee consists of Anders Frick (Chairman of the Board) and Eric Douglas (Vice-Chair-man of the Board)

AuditorsÖhrlings PricewaterhouseCoopers AB was appointed in 2004 to serve until the annual general meeting in 2008.

acquisition of own sharesThe annual general annual meeting held 25 April 2005 authori-sed the company to acquire its own shares. No own shares were purchased in 2005. During 2002, 200 000 shares were acquired by the company at a price of SEK 110 per share. The nominal value of these shares amounts to MSEK 1.0. The number of outstanding shares amounted to 12 650 000 at year-end. The company owns 1.6% of its own shares. The Board of Directors proposes that the annual general meeting grant the Board continued authorisation to acquire own shares until the next annual general meeting. As the acquired shares do not entitle any dividend, they are excluded from the total number of shares in the proposed appropriation of profi ts provided below.

the parent companyOperations in AB Fagerhult consist of management of the Group, fi nancing, and the coordination of market, production and business


development. The company reports other income amounting to MSEK 11.5 (0.0). Profi t after fi nancial items amounted to MSEK 53.2 (48.6). The company’s investments amounted to MSEK 409.2 and refer to shares in subsidiary companies. Cash on hand and bank balances amounted to MSEK 27.6 at the end of the period, which is a de-crease of MSEK 24 compared with the beginning of the year. There were eight employees (0) during the period.

accounting principles As of the year 2005, the Fagerhult Group will report according to the International Financial Reporting Standards (IFRS). The Groups transition per 1 January 2004 to the IFRS approved by the EU has not necessitated any changes, which is the reason there are no “bridges” in this annual report. The transition as regards other standards has been reported in accordance with IFRS 1. Of the optional exemptions provided in IFRS 1, Fagerhult has chosen not to retroactively apply IFRS 3, implying that no adjustments have been made regarding company acquisi-tions completed prior to 1 January 2004. IAS 39 regarding the valuation of fi nancial instruments has been applied as from 1 January 2005. An adjustment regarding the ope-ning actual fair value of the company’s currency derivatives has resulted in an increase in the equity of MSEK 0.1, which is reported as a change in equity. Due to the modest size of the adjustment, no “bridge” is reported regarding this transition per 1 January 2005. In the third quarter of 2004, a factory for the production of panels for hospitals was moved from Denmark to Sweden. In con-junction with this move, goodwill relating to these operations was written-down in the amount of MSEK 1.3. This has resulted in the reported value of goodwill in the 2004 closing balance being the same as according to previously applied accounting principles. No per-quarter adjustments have been made to fi gures for 2004 due to the size of the amount. The Parent Company’s interim report has been prepared in accordance with the Swedish Annual Accounts Act and Swedish Financial Accounting Standards Council recommendation RR32. The application of RR32:05 which went into effect on 1 January 2005 has not resulted in any changes compared with the previous year. All other accounting principles remain unchanged compared with the previous year.

prospects for 2006The acquisition of Whitecroft Lighting in England has resulted in both continued internationalisation and strong increases in net sales for the Group. Whitecroft will also continue to make positive contributions to income in 2006. The production of a number of products in China will strengthen the Group’s competitiveness. Additional new markets will be cultivated and a new sales company established in Russia. Conditions for the construction industry are

relatively favourable in most markets. Taken together, this will result in continued increases in both net sales and profi t in comparison with the previous year.

proposed appropriation of profits The Groups non-restricted equity according to the consolidated balance sheet amounts to MSEK 266.1 (218.1).

Profi t funds at the disposal of the annual general meeting:

Balanced Profi t 32.1

Profi t for the year 44.7

MSEK 76.8

After deduction for repurchased shares, the number of shares entitled to a dividend amounted to 12,650,000 on 10 March 2006. The Board of Directors proposes that the profi ts be appropriated as follows:

Dividend to shareholders, SEK 3.50 44.3

To be carried forward 32.5

MSEK 76.8

statement of the board of directors regarding the proposed dividendIt is the opinion of the Board of Directors that the proposed dividend does not prevent the company from fulfi lling its short- or long-term obligations, nor does it prevent the company from making any necessary investments. The proposed dividend can therefore be justifi ed in accordance with the provisions of Chapter 17, Section 3, Paragraphs 2-3 of the Swedish Companies Act (ABL). Considering that the company continues to be operated profi ta-bility the equity/assets ratio is at satisfactory level. It is the Board’s assessment that liquidity in the company can be maintained at a similarly satisfactory level.


The Group Parent CompanyMSEK 2005 2004 2005 2004

Net sales 1 759.2 1 382.2Cost of goods sold – 1 185.5 – 984.3Gross profi t 573.7 397.9

Selling expenses – 347.1 – 261.8 – 2.4 – Administrative expenses – 124.7 – 83.4 – 13.5 – 2.1Other operating income 5.7 6.8 11.5 –Other operating expenses – – 4.8Operating profi t 107.6 54.7 – 4.4 – 2.1

Financial income and expensesIncome from shares in subsidiaries 3.4 – 60.0 50.0Interest income and similar profi t/loss items 6.8 2.7 3.0 1.3Interest expenses and similar profi t/loss items –9.7 – 2.6 –5.4 – 0.6

Total fi nancial income and expenses 0.5 0.1 57.6 50.7Profi t after fi nancial items 108.1 54.8 53.2 48.6

Changes in tax allocation reserve 9,7 8,1Tax on profi t for the period –32.5 – 18.2 –18.2 –15.9Net profi t/loss for the year, Parent Company shareholders 75.6 36.6 44.7 40.8

Earnings per share before dilution, SEK 6.03 2.95Earnings per share after dilution, SEK 5.88 2.90Average nr of outstanding shares before dilution, thousandsAverage nr of outstanding shares after dilution, thousands

12 546 12 40012 850 12 600

Nr of outstanding shares, thousands 12 650 12 400

Profi t and loss accounts



ASSETSNon-current assetsIntangible assetsCapitalized expenditure for development 4.6 4.0Goodwill 265.6 —Other intangible assets 76.6 0.2

346.8 4.2

Tangible fi xed assetsLand and buildings 126.0 100.0Plant and machinery 101.8 99.6Equipment, fi xtures and fi ttings 31.7 16.7Constructions in progress and advance payments 7.9 1.1

267.4 217.4

Financial fi xed assetsShares and participations in subsidiaries 601.5 192.3Receivables from subsidiaries 145.6 101.8Other investments held as fi xed assets 1.1 0.7Deferred tax assets 3.1 3.6Other long-term receivables 6.9 0.9

11.1 5.2 747.1 294.1

Total non-current assets 625.3 226.8 747.1 294.1

Current assets Inventories, etcRaw materials and consumables 110.0 90.0Work-in-progress 40.1 33.4Finished products and goods for resale 175.5 94.0Advance payments to suppliers 10.5 4.1

336.1 221.5Current receivables Accounts receivable - trade 337.6 217.9Income taxes recoverable, advised — 8.5Other receivables 12.9 4.1 0.1 —Prepaid expenses and accrued income 27.3 10.4 0.6 0.1

377.8 240.9 0.7 0.1

Liquid funds / Cash and bank balances 124.5 115.9 27.6 51.6

Total current assets 838.4 578.3 28.3 51.7

Total assets 1 463.7 805.1 775.4 345.8

Balance sheets



EQUITYCapital and reserves attributed to the Parent company’s shareholdersShare capital 65.5 64.3 65.5 64.3Other reserves 213.6 188.7Restricted reserves 161.7 133.2

279.1 253.0 227.2 197.5

Unappropriated profi t brought forward 190.5 181.5 32.1 28.5Net profi t/loss for the year 75.6 36.6 44.7 40.8

266.1 218.1 76.8 69.3

Total equity 545.2 471.1 304.0 266.8

Untaxed reservesTransfer to tax allocation reserve 67.3 77.0

LIABILITIESLong-term liabilities Borrowing 335.3 — 288.4 —Provisions for pensions and similar commitments 36.1 34.1Deferred income tax liabilities 75.1 61.0 —Other provisions 57.6 — 57.6 —

504.1 95.1 346.0Current liabilitiesAdvance payments from customers 1.9 2.8Accounts payable - trade 183.6 93.6Current income tax liabilities 2.4 — 3.2 1.1Borrowing 51.2 — 50.0 —Other liabilities 32.6 23.6Accrued expenses and deferred income 142.7 118.9 4.9 0.9

414.4 238.9 58.1 2.0

Total liabilities 918.5 334.0 404.1 2.0 Total equity and liabilities 1 463.7 805.1 775.4 345.8

Pledged assets 84.2 — — —Contingent liabilities 17.0 3.1 50.5 36.6

Balance sheets


The Group Sharecapital

Paid-up capital

Other reserves

Retained earnings

Total equity

Equity as at 1 January 2004 64.3 131.1 63.4 288.1 546.9Change in differences on translation – 0.4 – 0.4 –0.8Transfers between restricted and non-restricted reserves – 5.4 5.4 0.0Dividend paid – 111.6 – 111.6Net profi t for the year 36.6 36.6Equity as at 31 December 2004 64.3 131.1 57.6 218.1 471.1

Effect of change of accounting principles 0.1 0.1Adjusted balance as at 1 January 2005 64.3 131.1 57.6 218.2 471.2Change in differences on translation 0.5 5.4 5.9Issued call options 2.3 2.3Transfers between restricted and non-restricted reserves – 4.1 4.1 0.0New share issue 1.2 26.2 27.4Dividend paid 3.00 SEK per share – 37.2 – 37.2Net profi t for the period 75.6 75.6Equity as at 31 December 2005 65.5 159.6 54.0 266.1 545.2

Parent Company Share capital

Share premium

reserve

Statutory reserve

Retained earnings

Total equity

Equity as at 1 January 2004 64.3 131.1 2.1 140.1 337.6Dividends – 111.6 – 111.6Net profi t for the year 40.8 40.8Equity as at 31 December 2004 64.3 131.1 2.1 69.3 266.8Issued call options 2.3 2.3New share issue 1.2 26.2 27.4Dividend paid, 3.00 SEK per Shares – 37.2 –37.2Net profi t for the year 44.7 44.7Equity as at 31 December 2005 65.5 159.6 2.1 76.8 304.0

Specifi cation of changes in equity

The Group Translation Reserve

Opening balance, translation reserve, as at 1 January 2004 7.4Changes in differences on translation – 0.8Translation reserve as at 31 December 2004 6.6Changes in differences on translation 5.9Closing balance, translation reserve, as at 31 December 2005 12.5

Specifi cation of translation reserve, Group equity


The Group Parent CompanyMKr 2005 2004 2005 2004

Net profi t for the year 75.6 36.6 44.7 40.8Tax 32.5 18.2 18.2 15.9Income from shares in subsidiaries – 3.4 — – 60.0 – 50.0Interest income and similar profi t/loss items – 6.8 – 2.7 – 3.0 – 1.3Interest expenses and similar profi t/loss items 9.7 2.6 5.4 0.6Operating profi t 107.6 54.7 – 4.4 – 2.1

Adjustments for items not included in the cash fl ow:Depreciation 43.2 45.5Receipts from sales of tangible fi xed assets 0.2 0.4Exchange rate differences 5.6 – 0.1

156.6 100.5 – 4.4 – 2.1

Interest income and similar profi t/loss items 6.3 2.7 2.5 1.4Interest expenses and similar profi t/loss items – 8.2 – 2.6 – 5.4 – 0.6Income tax paid – 27.8 – 26.2 – 16.1 – 16.2

Cash fl ow generated by operations before changes in working capital 126.9 74.4 – 23.4 – 17.5

Changes in working capital:Changes in inventories – 31.0 11.6Changes in receivables – 16.6 – 32.6 – 0.1 —Change in current liabilities 6.5 42.4 4.0 —

Cash fl ow from operating activities 85.8 95.8 – 19.5 – 17.5

Investment activities Investments in subsidiaries – 339.2 — – 409.2 —Investments in intangible assets – 5.0 – 6.2Investments in tangible fi xed assets – 73.1 – 26.8Sales from subsidiaries 44.6 —Changes in construction in progress and advance payments – 5.7 – 0.2Changes in long-term receivables and securities – 5.5 0.1 – 43.8 45.2Group contribution received 60.0 50.0

Cash fl ow generated by investments – 383.9 – 33.1 –393.0 95.2

Financing activities Changes in long-term liabilities and provisions 315.8 1.3 396.0Issued call options 2.3 — 2.3New share issue 27.4 — 27.4Dividend paid – 37.2 – 111.6 – 37.2 – 111.6

Cash fl ow from fi nancing activities 308.3 – 110.3 388.5 – 111.6

Changes in liquid funds/cash and bank 10.2 – 47.6 – 24.0 – 33.9Balance as at beginning of the period 115.9 163.8 51.6 85.5Changes in differences on translation of liquid funds – 1.6 – 0.3Balance as at year-end 124.5 115.9 27.6 51.6

Cash fl ow analyses


ANNA BERNSTENBorn 1961. Chief Executive Officer of Carmeda AB. Member of the Fagerhult Board since 2003. Shares in Fagerhult: 0.

Options to purchase: 5 000, issued by Förvaltnings AB Wasatornet.

BJÖRN KARLSSONBorn 1961. Chief Execu-tive Officer of Lecrima AB. Board member in IUC Tibro AB, Skaraborgsmäklaren AB and Arkitekthuset i Jönköping AB. Member of the Fagerhult Board since 1997.

Shares in Fagerhult: 32 324.

PER BORGVALLChief Executive Officer Born 1958. Member of the Fagerhult Board since 2004.

Shares in Fagerhult: 0. Options to purchase:

60 000.

MIKAEL TJERNBERGBorn 1966. Ordinary employee representative.

Shares in Fagerhult: 200.

PER WIKSTRÖM (not pictured)Born 1969. Deputy employee representative.


ERIC DOUGLASVice chairmanBorn 1968. Partner in Pod Holding AB. Member of the Board in Almedahls AB, SWECO AB, Investment AB Latour and Linktech AB, among others. Member of the Fagerhult Board since 1993.

Shares in Fagerhult: 40 000 and through company: 3 440 000.

The Board of Directors and Accountants


EVA NYGRENBorn 1955. Chief Executive Officer of SWECO FFNS Arkitekter AB. Member of the Fagerhult Board since 2004.

Shares in Fagerhult: 0. Options to purchase: 5 000 issued by Förvaltnings AB Wasatornet.

FREDRIK PALMSTIERNABorn 1946. Chief Executive Officer of SÄKI AB. Board member in Investment AB Latour, Securitas AB, Bravida and Hultafors AB. Member of the Fagerhult Board since 1992.

Shares in Fagerhult: 179 705.

ANNIKA FRÖBERGBorn 1974. Deputy employee representative.


ANDERS SVENSONBorn 1942. Ordinary employee representative.


ANDERS FRICKChairmanBorn 1945. Chairman of ProstaLund AB, Vice chairman in SWECO AB. Member of the Fagerhult Board since 1997.

Shares in Fagerhult: 4 000.Options to purchase: 25 000 issued by Förvalt-nings AB Wasatornet.

Auditors Öhrlings PricewaterhouseCoopers ABAuditor in charge for Fagerhult since 2004,

Lennart Wiberg, Authorised Public Accountant.


PER BORGVALLChief Executive Officer

ANDERS ANDERSSONProduction director

ULF KARLSSONFinance Director

Koncernledning och affärsområdesansvariga

business area managersLennart Jonsson Retail lighting

Christer Kämpeskog Professional lighting Rolf Brandstedt Exterior lighting


Richard Wegele Ateljé Lyktan AB

Jan-Eskil Eskilsson Belid AB

Svante Samuelsson Elenco Lighting AB

Lennart Jonsson LampGustaf AB

Anders Karlsson LampGustaf Inredning AB

Jan Erik Engebretsen Fagerhult AS, Norway

Carsten Sörensen Fagerhult AS, Denmark

Patrik Malin Fagerhult Oy, Finland

Bert Nederlof Fagerhult BV, the Netherlands

Henning Dobler Fagerhult GmbH, Germany

Paul Spicer Fagerhult Lighting Ltd, Great Britain

Mats Johansson Fagerhult Lighting Systems (Suzhou) Co Ltd, China

Tonu Rahumeel Fagerhult Oü, Estonia

Paul Barton Whitecroft Lighting Ltd

Nils-Olof Dahlström Marketing Director, Sweden

Peter Gunnarsson Manager, Falkenberg factory

Hasse Nilsson Manager Ö-vik factory

Owe Törnroth Manager, Habo factory

Hans Hansson Manager, Åhus factory

Dan Mattsson Manager, Suzhou factory

Heads of Subsidiaries and local managers


number of employeesAverage number of yearly employed.

return on capital employedProfi t/loss after fi nancial income and expenses plus fi nancial expenses in relation to the average capital employed.

return on equityProfi t/loss according to the income statement as a percentage of the average (reported) equity.

equity per shareEquity divided by the number of outstanding shares.

cash flow per shareThe annual cash fl ow from continuing operations divided by the average number of outstanding shares.

liquidityLiquid funds in relation to current liabilities.

quick ratioCash in hand and

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