20% - Assa Abloy

ASSA ABLOY
Annual Report 2007
56
Financial position
• Capital employed amounted to SEK 28,621 M (27,205).
• Net debt fell to SEK 12,953 M (13,560).
• The net debt / equity ratio was 0.83 (0.99).
SEK M 2006 2007
Capital employed 27,205 28,621
– of which goodwill 16,683 17,270
Net debt 13,560 12,953
Minority interests 60 201
Equity 13,585 15,467
Capital employed
Capital employed – defined as total assets less interest-
bearing assets and non-interest-bearing liabilities including
deferred tax liabilities – amounted to SEK 28,621 M (27,205).
The return on capital employed was 18.4 percent (17.1).
Intangible assets amounted to SEK 18,708 M (17,825).
The increase is mainly due to the acquisitions made. During
the year, goodwill and other intangible assets with an
indefinite useful life of approximately SEK 1,200 M have
arisen. A valuation model based on discounted future cash
flows is used for impairment testing of goodwill and other
intangible assets with an indefinite useful life. No impairment
was recognized this year.
Tangible assets amounted to SEK 5,345 M (5,121). Capital
expenditure on tangible and intangible assets, less sales
of tangible and intangible assets, totaled SEK 751 M (739).
Depreciation according to plan amounted to SEK 909 M
(898).
Accounts receivable totaled SEK 5,537 M (5,081) and
inventories totaled SEK 4,399 M (4,026). The average collection
period for accounts receivable was 54 days (54).
Material throughput time was 104 days (109). The Group is
making systematic efforts to increase capital efficiency.
Net debt
Net debt amounted to SEK 12,953 M (13,560), of which
pension commitments accounted for SEK 1,156 M (1,297).
Net debt was increased by the dividend to shareholders
and acquisitions, and reduced by the strong operating
cash flow.
External financing
The Group’s long-term loan financing consists mainly of Private
Placement Programs in the USA totaling USD 630 M
(630), Incentive Programs of EUR 238 M (138) and a threeyear
bond totaling SEK 1,500 M (1,500).
The Group’s short-term loan financing consists mainly
of two Commercial Paper Programs for a maximum of USD
1,000 M (1,000) and SEK 5,000 M (5,000). At year-end, SEK
4,166 M (5,048) of the Commercial Paper Programs had
been utilized.
In addition, substantial credit facilities are available,
mainly in the form of a Multi-Currency Revolving Credit
(MCRF) agreement for a maximum of EUR 1,100 M (1,000),
which had not been utilized at all at year-end.
The interest coverage ratio, defined as income before
tax plus net interest, divided by net interest, was 7.4 (5.1).
Fixed interest terms were largely unchanged during the
year, with average terms of 25 months at year-end.
Cash and cash equivalents amounted to SEK 1,338 M
(1,154) and are invested in banks with high credit ratings.
Some of the Group’s main financing agreements contain
a customary Change of Control clause. The effect of
the clause is that lenders have the right in certain circumstances
to demand the renegotiation of conditions or to
terminate the agreement should control of the company
change.
Equity
The Group’s equity totaled SEK 15,668 M (13,645) at yearend.
The return on shareholders’ equity amounted to 21.0
percent (11.5). The equity ratio was 41.5 percent (38.4). The
net debt / equity ratio, defined as net debt divided by shareholders’
equity, was 0.83 (0.99).