ANNUAL REPORT
05
Annual Report
05
CONTENTS THE OPERATION
Article on EuroMaint’s historical background
Article on EuroMaint Industry’s technical development Article on EuroMaint Rail’s technical development Article on EuroMaint’s HR work Article on EuroMaint’s environmental work
Article on a member of the Board’s view of EuroMaint
THE BUSINESS IN FIGURES
CORPORATE GOVERNANCE
OTHER INFORMATION
EuroMaint in brief 2005
4
Important events in 2005
5
The President’s comments
6
Benefit in a changing world
8
EuroMaint – a Group in motion
10
Goals and goal achievement
12
Acquisitions and investments
13
Bengt Möller
14
EuroMaint Rail
16
EuroMaint Industry
22
Jan-Olof Lundgren
28
Research and technical development
30
Thomas Robertsson
32
Personnel in focus
34
Janette Sved and Ulf Sandén
36
Quality and environment
38
Annkristin Castagna and Urban Ekmark
40
Sustainable development
42
Risk management
43
Elisabeth Nilsson
44
Four-year summary
46
Report of the Directors
48
Income Statement
51
Balance Sheet
52
Change in equity
54
Cash flow analysis
55
Notes
56
Auditors’ Report
72
Corporate Governance
73
The Chairman’s comments
76
The EuroMaint Board of Directors
77
The EuroMaint Group management
79
EuroMaint Rail management
80
EuroMaint Industry management
81
Addresses
82
3
EUROMAINT IN BRIEF 2005 2005 was an eventful year for the EuroMaint Group. There was a great deal of movement, both internally and on the market. The Group achieved its goals of generating even better profits, winning important new contracts, gaining environmental certification for the Group and strengthening its customer relations. One major and important event half-way through the year was the acquisition of Euromation from Volvo Technology Transfer AB, Volvo Powertrain AB and Volvo Cars. The acquisition extends the EuroMaint Group’s established position within the rail transport industry with a closely related operation in the engineering sector.
operations. Both are specialist companies that combine long experience with fresh thinking and innovative solutions. Both are profitable and strengthen their customers’ competitiveness by putting expertise, customisation and delivery quality first. EUROMAINT RAIL EuroMaint – without the Rail add-on – was established at the beginning of 2001 when the Swedish State Railways (SJ) were converted into companies and SJ Engineering became EuroMaint AB. The primary operation encompasses the maintenance and refurbishment of rail rolling stock. EuroMaint Rail’s head office is in Solna outside Stockholm, and it has operations in 14 locations: Blackvreten, Borlänge, Gävle, Gothenburg, Hallsberg, Linköping, Luleå, Malmö, Nässjö,
NEW GROUP STRUCTURE
Stockholm/Hagalund, Sundsvall, Vännäs, Åmål and Örebro. In 2005
As of 2006, EuroMaint has a new Group structure with two
it had around 1,370 employees and a turnover of SEK 1,710 million.
subsidiary companies targeting the rail transport industry and the engineering industry respectively. The subsidiaries focus on
EUROMAINT INDUSTRY
customers and their needs, while the parent company conducts
EuroMaint Industry – formerly Euromation – was established in
strategic development issues in networks with the two subsidiaries.
2000 when the business unit Maskinteknik within the Volvo Group was converted into a company. This operation focuses on the
EUROMAINT RAIL AB AND EUROMAINT INDUSTRY AB
engineering industry and encompasses maintenance services,
The names of the subsidiary companies are EuroMaint Rail AB
component servicing and production engineering, as well as the
and EuroMaint Industry AB. Euromation is disappearing as a name
development and manufacture of production equipment. The head
and a brand, and in this annual report has been renamed EuroMaint
office is in Skövde, southern central Sweden. There is also an
Industry except in historical contexts. The operation known as
operation in Hallsberg, central Sweden. In 2005 EuroMaint Industry
EuroMaint up until the beginning of the year is now called
had around 285 employees and a turnover of SEK 307 million.
EuroMaint Rail. The name EuroMaint is used when referring to the EuroMaint Group.
FACTS IN BRIEF The EuroMaint Group strengthens its customers’ competitiveness
MANY COMMON FACTORS
through tailored maintenance and technical solutions. The Group’s
Both EuroMaint Rail and EuroMaint Industry have a history that
headquarters are in Solna. Turnover in 2005 totalled SEK 1,872 million,
extends back to the 19th century. Both companies were founded
with a profit of SEK 113 million. The Group had approximately 1,650
from the realisation that maintenance and technical development
employees in 2005. EuroMaint is owned by AB Swedcarrier, a state-
for increased availability, efficiency and quality are important core
owned holding company.
KEY RATIOS Turnover, SEK mn Operating profit, SEK mn Cash flow after investment activities, SEK mn Operating margin, % Equity/assets ratio, % Average number of employees
1
Includes EuroMaint Industry as of 1 July 2005.
2
The present EuroMaint Rail.
4
2005 1
2004 2
1,872
1,493
113
47
52
14
6
3.2
17.8
11
1,669
1,534
IMPORTANT EVENTS IN 2005
10-year maintenance agreement with Arlanda Express In January EuroMaint Rail signed a 10-year agreement with Arlanda Express to maintain the X3 trains on the Arlanda Line. EuroMaint Rail won the tender in the face of stiff international competition, thereby gaining its first major contract with an operator outside the circle of companies that traditionally derive from the Swedish State Railways – and also an operator with a foreign owner.
The world’s first biogas train in regular service A unique event occurred when EuroMaint Rail delivered a Y1 engine coach converted from diesel to biogas – the first in the world to go into regular service. The customer was Svensk Biogas AB, a wholly-owned subsidiary of Tekniska Verken i Linköping AB. This investment in reducing environmental load from non-electrified rail transport attracted international attention.
Acquisition of Euromation The opportunity to acquire Euromation arose very suddenly. When it happened, the EuroMaint Group was already mentally prepared to extend and deepen its dealings with the engineering industry. With stable profitability the Group was also ready to take this step financially. The Board was able to make a rapid decision.
Whole of EuroMaint eco-certified Many of EuroMaint’s production units had already been awarded environmental certification by the start of 2005. During the year, a great deal of commitment and work has been invested in gaining ISO 14001 environmental certification for all units. This goal was achieved at the end of the year. As a result, the whole of EuroMaint is now quality and environmentally certified.
Stockholm Train Alliance won SL procurement At the end of the year, the Stockholm Train Alliance – owned by Tågkompaniet and SJ AB, with ISS TraffiCare and EuroMaint Rail as suppliers – won the procurement of commuter rail services within Stockholm Transport (SL), in the face of stiff competition from international players. The quality level of our maintenance was an important reason behind winning the contract. The agreement runs to June 2011 with an option for a further five years.
New Group structure The decision to revise the Group structure as of 2006, with separate companies for the rail transport industry and the engineering industry, enables the EuroMaint Group to invest more generally in the development of maintenance and technical solutions. The companies EuroMaint Rail and EuroMaint Industry are devoted to customer benefit, while the parent company drives strategic development issues.
TURNOVER BY GROUP COMPANY
TURNOVER BY CUSTOMER IN THE GROUP
VOLUME DEVELOPMENT * SEK mn
6.
1,000 1.
1,872 1,494
1,500 1.
1,653
5.
1,879
2,000
2.
4. 3.
500 2. 0
1. EuroMaint Rail, 85 %
1. SJ AB, 42 %
2. EuroMaint Industry, 15 %
2. Green Cargo, 15 %
2002
2003
2004
2005
3. AB Volvo, 10 % 4. Volvo Cars, 3 %
* The relevant figures for 2002–2004 relate to
5. Other customers, rail transport, 28 %
EuroMaint Rail. EuroMaint Industry is included
6. Other customers, engineering industry, 2 %
from 1 July 2005.
5
THE PRESIDENT’S COMMENTS During 2005, operations within EuroMaint have been further reinforced from the positive position we managed to achieve the year before. We have received several major orders, kept our promises to the customers regarding good quality at the right time – and achieved our planned profit level by a clear margin. The operation has expanded through the acquisition of Euromation. The future is looking bright, with a good workload and strong potential for further contracts.
Alliance won the contract in the face of stiff competition from several international companies, thanks to top marks for quality as well as the actual takeover process, which is clearly just as important. The contract will run from 18 June 2006 for five plus five years. The total order value amounts to around SEK 1 billion a year. EuroMaint Rail’s share is approximately 17 per cent. Stable market share In order to illustrate the stability of our position in the rail transport industry, one only has to look back to 2002. It was then that we realised that if we were to lose all the tenders we competed for, our
Reinforced engineering and planning function
market share would fall from 50 to 6 per cent in four years. Today we
In March we carried out a restructuring operation, which primarily
still have a market share of 50 per cent. After winning many extremely
involved strengthening the engineering and planning function
competitive contracts, we now have so many long-term contracts
within EuroMaint Rail. The aim was to become more proactive in
that we have secured a capacity of 80 per cent up until 2008.
relation to our customers and to highlight the importance we place on being at the leading edge of technical developments. One direct
Environmental certification
consequence of this was our partnership with AEA Technology Rail,
An important factor, in particular for our competitiveness, is that
a specialist company in condition-based maintenance. Our
the entire Group has been environmentally certified since last
customers have shown great interest and I have already received
December. As a result, the whole of EuroMaint is now both quality
numerous positive reactions.
and environmentally certified.
The EuroMaint Group will also be increasingly active in its contacts with universities and colleges. Euromation brought with
Improved profits – to say the least
it an established network of R&D contacts. We will now expand
During 2005 we have achieved our goal of improving our profits
this into areas such as rolling stock engineering, maintenance
– to say the least. Profits grew from SEK 47 million to SEK 113 million,
engineering and systems engineering.
an increase of more than 100 per cent. This success, delivering a profit amounting to 6 per cent of turnover, means that the Board
A strong contract portfolio
of Directors is continuing to entrust us to develop the company.
In January we entered into a ten-year maintenance contract with
We have also succeeded in turning around the cash flow during 2005,
Arlanda Express. Since the contract came into force in April,
finishing the year with a surplus.
Arlanda Express has reported that they have never had such a high level of availability for their trains, while passenger numbers
Acquisition of Euromation
are rising steadily.
Back in the spring, the Board of Directors considered that the time
The biogas train in Linköping was another important project.
was right to plan for new business areas, specifically the engineering
We developed, designed and converted a Y1 engine coach from
and process industries. On 1 July 2005 we acquired Euromation,
diesel to biogas. It will go into service shortly, when our workshop
now called EuroMaint Industry, with almost 285 employees, head-
in Linköping has been adapted for maintenance of biogas trains.
quarters in Skövde, a turnover of approximately SEK 300 million
Through this investment we are clarifying our commitment to
and a profit level of 8 per cent in 2005. The majority of this turnover
reducing environmental impact.
comes from the previous owner, Volvo. The aim is to increase the
The agreement with Stockholm Transport (SL) regarding commuter train services in Stockholm is also worthy of mention. As a supplier in the Stockholm Train Alliance, EuroMaint Rail
number of additional customers through active cultivation of the market, thereby reducing dependency on Volvo. A logical consequence of the acquisition was the decision,
plays an important role in supplying light maintenance, component
from the beginning of 2006, to introduce a new Group structure
maintenance and material sourcing.
with separate subsidiaries for rail transport and engineering. At the
SL is striving to achieve clean, working, punctual trains as well as a secure environment for its passengers. The Stockholm Train
6
same time we have opened the door to the potential of expanding internationally – an important step in strengthening our brand.
”We are now ready to grow” Pether Wallin –President & CEO Visions for the future From half-way through 2006, when the SL contract begins, we
ships with local players. A clear structural shift is under way in the
anticipate achieving a rolling 12-month turnover of SEK 2 billion.
Swedish engineering industry, with maintenance and production
With 1,650 employees, this means a turnover of SEK 1,21 million
streamlining increasingly being outsourced. This is where EuroMaint
per employee, which is excellent for a service-producing company.
Industry will be an important supplier! The market is so large in
In the rail transport industry, maintenance procurement for the
certain areas that a five per cent market share would double the
Pågatågen trains is currently under way. During the year, the basic
Group’s turnover. Our ambition is to approach this share within
material for the procurement of Öresund rail services is anticipated.
a few years. We are focusing on a segment with relatively advanced
On the refurbishment side, two major procurements are in progress:
services, which demand the level of authorisation and security at
the upgrading of Green Cargo’s T44 and RC2 engines respectively.
which EuroMaint excels.
The two contracts have a combined value of between SEK 1 and 1,5 billion, depending on the scope. With the large market share we have in train maintenance and
I would like to conclude by saying a big thank you to all the tremendous employees within EuroMaint. When I travel around and speak with you, I can see that the climate and level of confidence
refurbishment, we need to expand internationally in order to continue
are constantly changing for the better. I hope and trust that you feel
evolving the company. As the Swedish market is not expanding over
satisfied – particularly bearing in mind our excellent profit figures.
time, it is also important to stabilise the economy with streamlined services on a broader market. At the same time we realise that the rules of the game and business cultures differ considerably from one country to the next. We will bridge these differences through co-operation or partner-
PETHER WALLIN President & CEO
7
BENEFIT IN A CHANGING WORLD They supply their customers with expertise, development resources, proactive planning and innovative maintenance solutions. The EuroMaint Group is also investing in strategic development and connecting research with practical experience. Increased demand for availability-based services Looking at the rail transport industry in particular, more and more operators and vehicle owners are investing in modernising or renewing their rolling stock. There is a growing need for refurbishment services, both in Sweden and abroad. The market for train maintenance, on the other hand, is not displaying any general growth. There is however greatly increased demand for more advanced, availability-based services. Increased need for production refinement within industry Demand for efficiency and productivity-raising services and technical solutions in Swedish industry is growing. Above all there is an emerging realisation that it is worth investing in the development of production engineering, automation and systematic maintenance. Many companies have also experienced the fact that it can cost money to move production to low-cost countries. When it comes to knowledge-intensive production in particular, it is important to have maintenance suppliers close by who offer quality, flexibility and experience of advanced technology.
EuroMaint strengthens its customers’ competitiveness through tailored maintenance and technical solutions. The Group’s companies focus on customer benefit and delivery quality. They have a strong position on the market and good relations with their customers.
Prospects on the export market EuroMaint Rail has strengthened its capacity on the marketing side, with the focus on train maintenance and refurbishment work in Denmark, Norway and Germany, as well as the new EU states of Estonia, Latvia and Lithuania. Clear wishes have been expressed in these countries to bring in new incentives and to increase domestic
THE MARKET & BUSINESS ENVIRONMENT
competition. Many contacts have been made and positive discus-
A general structural change in maintenance and productivity
sions are being conducted.
development is taking place on the Swedish market. In addition to
The export venture relates primarily to services and structural
the current good economic situation, there are various general trends
capital: to export EuroMaint Rail’s quality and environmentally
that are leading to increased demand for the Group’s services.
certified business management system, specialist knowledge within technical maintenance and project management expertise. The
General structural changes on the maintenance market
required resources are built up on site with the aid of key individuals
The market for maintenance services is rapidly changing and being
and partners.
restructured. It is becoming increasingly common in most sectors
The Swedish market is EuroMaint Industry’s main market.
to establish a long-term collaboration with external partners,
The company follows its customers out into the world, but does not
partners whose core business is maintenance and who can offer
currently focus on exports.
complete turnkey solutions. Collaboration takes place through a complete outsourcing agreement or by placing parts of the maintenance with external suppliers. EuroMaint’s companies are specialist businesses that offer advanced maintenance services.
8
BENEFIT IN SOCIETY In our day-to-day lives, we can all see that careful maintenance of our home or car preserves its value, usability and traffic safety – and reduces the need for expensive emergency measures. It’s that simple. On a larger scale, it is vital to achieve an optimum balance between cost and benefit. EuroMaint is strengthening the rail transport and engineering industries’ profitability through tailored maintenance and technical solutions: • EuroMaint Rail is contributing to a safer, more efficient and more environmentally friendly rail transport system, and is EuroMaint Rail
EuroMaint Industry
EuroMaint Rail is contributing towards
EuroMaint Industry is contributing
a safer, more efficient and more
to a higher level of availability,
environmentally friendly transport
better utilisation of facilities and
availability, better utilisation of facilities and an improved
system, and is helping to make the
an improved quality exchange
quality exchange in industry, thereby supporting profitability
system more attractive and convenient.
in industry.
helping to make the system more attractive and convenient for passengers and more competitive for freight transporters. • EuroMaint Industry is contributing to a higher level of
and competitiveness. The EuroMaint Group as a whole aims to contribute to increased exports of knowledge and structural capital. There is also a clear desire to promote training and research within those areas where the Group possesses leading-edge expertise.
9
EUROMAINT – A GROUP IN MOTION The decision to form a Group in which the different companies focus on different markets was important. The Group is now broader, both from a market and a skills perspective. The Group has a clear structure – the companies can concentrate on customer benefit and delivery quality, while strategic development issues and the development of co-operation with strategic partners are dealt with at Group level. The Group management operates with the lowest possible overhead in networks with the companies. VISION EuroMaint’s vision is to be a leading innovative partner for more efficient maintenance and increased productivity. This means that the companies in the Group must be driving forces that promote development, as well as being the largest maintenance suppliers in the selected industry – and that the Group as a whole must stand out as a leader in ‘all categories’. Innovative means that the Group’s companies must lead the development of concepts for new maintenance and technical solutions, based on their knowledge of their customers. The Group must work on the continual development of organisational forms, processes and working methods in order to achieve improved efficiency and productivity. The term ‘partner’ means that the Group’s companies must develop long-term collaborations with their customers and offer them tailored total solutions, rather than simply supplying one-off services from time to time. This means focusing on areas of business
The opportunity for EuroMaint to acquire Euromation arose very suddenly. When it happened, the Group was already mentally prepared to extend and deepen its dealings with the engineering industry. With stable profitability the Group was also ready to take this step financially. The Board was able to make a rapid decision.
where the Group’s strategic strengths can best be put to use. More efficient maintenance and increased productivity mean strengthening our customers’ competitiveness by improving availability and the degree of utilisation of their production plants and rolling stock. BUSINESS CONCEPT
THE NEW GROUP STRUCTURE
EuroMaint strengthens its customers’ competitiveness through
The two companies in the EuroMaint Group have many factors in
tailored maintenance and technical solutions, primarily within
common. In particular, they both have experience of developing
the rail transport industry and the engineering industry.
from being an internal resource within their former owner
An important success factor is EuroMaint’s ability to develop
organisations – the Swedish State Railways and Volvo respectively
and supply total solutions – and to unify customisation with
– to becoming commercial companies on a competitive market.
cost-effectiveness. Customisation naturally requires diversity.
They are both still heavily dependent on their former owners.
Cost-effectiveness often demands uniformity. These requirements
This dependency will decrease without reducing the assignment
may appear contradictory, but they can be united.
volumes: EuroMaint Rail and EuroMaint Industry intend to grow.
Diversity is achieved through receptiveness, knowledge about customers and by creating service concepts that can be flexibly combined to form customised total solutions. Uniformity is secured in that the business management system’s standardised processes support the work at every stage, from early business phases to final delivery.
10
STRATEGIC GOALS EuroMaint’s strategic goals are for the companies to be market
EuroMaint AB
leaders and profitable in maintenance for the rail transport industry and the engineering industry, as well as to further develop and expand the Group towards new sectors through corporate acquisitions. The strategic goals are to: • Increase turnover significantly during the period 2006–2008
EuroMaint Rail AB
EuroMaint Industry AB
by expanding within current business units and in new sectors. • Satisfy the owners’ demands for profitability, in part by
The idea behind the EuroMaint Group’s structure is that the companies can concentrate on customer
developing new technical maintenance and production
benefit and delivery quality, while strategic develop-
solutions, as well as through standardised, efficient, uniform,
ment issues are conducted at Group level. The Group
clear processes.
management co-operates with the lowest possible
• Be an attractive employer that ensures success through a skilled
overhead in networks with the companies.
and dedicated workforce with a high level of satisfaction and shared action. • Develop long-term relationships with customers, suppliers and partners. The goal is based in part on sustaining a high level of delivery quality and on developing the EuroMaint brand so that it represents the Group’s core values: customer orientation, environmental consideration and being a safe, attractive workplace.
11
GOALS AND GOAL ACHIEVEMENT PROFITABILITY Turnover for 2005 amounted to SEK 1,872 million, operating profit
• Reassessment of the obsolescence model means that inventories
was SEK 113 million and the operating margin was 6 per cent.
have been revalued by SEK 23 million, which has had a positive
These results satisfy the goals laid down for 2005 by a clear margin. EuroMaint Rail has won new contracts, such as Arlanda Express
impact on profit. • The lease agreement in Tillberga was dissolved at a one-off cost
and the maintenance of Stockholm’s commuter rail traffic. We have
of SEK 23 million, of which SEK 19 million relates to the period
also commenced deliveries of refurbished X2 trains. Turnover is
after the end of 2005.
above forecast and expectation. Planned cost-cutting has been
• The acquisition of Euromation, now EuroMaint Industry,
successfully implemented. Day-to-day efficiency at all levels has
whose profits and net cash flow exceeded the forecast at the
increased. All control and support systems have been further
time of the takeover.
developed in order to function in a changing world. CAPITAL STRUCTURE Important factors that have influenced the results include:
The total assets amounted to SEK 973 million. Equity amounted to
• Problems with the net cash flow during the first half of the year,
SEK 174 million, an increase of SEK 93 million during the year. The
primarily due to initially delayed deliveries of the X2 refurbishment. • Tough cost control at all levels – contract, workshop, division,
equity/assets ratio is 17.8 per cent and no dividend will be paid until the minimum ratio target of 25 per cent is achieved. Goodwill of
company and Group – has entailed high cost consciousness
SEK 44 million derives from the acquisition of Euromation AB,
and a strong focus on the optimum utilisation of resources.
which took place on 1 July 2005.
• A decrease in purchasing costs by about 10 per cent wherever possible. Intensive efforts to ensure improved and more cost-
DIVIDEND
effective suppliers will also produce results in the longer term.
No dividend has been paid to shareholders. A dividend will be paid when the target equity/assets ratio of 25 per cent has been achieved.
OVERALL KEY RATIOS, RESULTS AND GOALS FOR 2005
Goal
1 2 3 4 5
Key ratio Operating margin
Satisfy owner demands on profitability
Cash flow
Target for 2005 Outcome Operating margin 5%
Continue to develop positively on the domestic market and expand internationally
Market share
Develop partnerships with customers and suppliers
Customer Satisfaction Index,
some way to go before the long-term
SEK 52 mn
Market share in
17.8 %
margin and 25 % equity/assets ratio.
EuroMaint Rail 49 % *
Goal achieved for the domestic
Sweden
market. No export business was
> 50 %
conducted during the year.
CSI 24.5
EuroMaint Rail 24.5 (2004) *
CSI
Employee Satisfaction Index,
Environmental goals
Goal achieved. Next CSI measurement in 2006.
ESI 2.9
EuroMaint Rail 2.4 (2004) *
Next ESI measurement in 2006.
Overall key ratios for the
Under
Under
Planned for completion in 2006.
environment are currently
development
development
ESI
being developed
* Only EuroMaint Rail’s goals are presented for 2005, in relation to goals 2, 3 and 4. Group-wide key ratios are to be produced.
12
Goal achieved for 2005. There is still
profitability goals are met: 8 % operating
Equity/assets ratio
Be an attractive employer
6%
Comments
ACQUISITIONS AND INVESTMENTS
ACQUISITIONS The EuroMaint Group acquired Euromation AB from Volvo
In conjunction with the acquisition of Euromation, now EuroMaint
Technology Transfer, Volvo Powertrain and Volvo Cars on 1 July 2005.
Industry, certain investments were made ahead of the new Group
Euromation had approximately 285 employees and a turnover of
structure. Work aimed at developing the Group brand was also
SEK 307 million in 2005. As of 2006 the company’s name has been
initiated during the year.
changed to EuroMaint Industry AB.
Considerable investments were made in developing expertise within EuroMaint Industry. EuroMaint Rail invested in leadership
INVESTMENTS
development for production managers. The content for a project
All investments in 2005 have been characterised by moderation,
academy for project managers was also produced in 2005. The
in order to safeguard the goal of achieving a positive cash flow. Any
Effective Workshop training programme, which many of EuroMaint
investments that were made were important and forward-looking.
Rail’s employees underwent in 2004, has provided an understanding
The Group’s control and support systems have been further developed to facilitate flexible adaptation to a changing world. For example, a great deal of work has been devoted to ensuring that
of the importance of cost-awareness and has also resulted in tangible proposals for cost rationalisations. However, the planned investment in developing a joint
future corporate acquisitions blend into the IT system environment
corporate culture had to be postponed, to be resumed in 2006
as easily as possible. EuroMaint Rail’s conversion of the Y1 engine
when it will also encompass EuroMaint Industry. EuroMaint Rail’s
coach from diesel to biogas meant that the Group had to invest
focus on delivery quality meant that the greatest forces and
in specialist resources for the maintenance of biogas vehicles.
resources were devoted to fulfilling existing contracts.
13
”We built a good foundation for deregulation” Bengt Möller – historical perspective
14
Article on EuroMaint’s historical background
150 years have shaped EuroMaint Rail Train maintenance has traditionally been part of the Swedish State Railways. The 1990s saw the progressive development of a more customer-oriented and deregulated operation, which bore fruit in 2001 with the formation of EuroMaint AB. Bengt Möller has been involved throughout this journey. He can explain the historical perspective, and also consider how the future will be affected.
throughout this year. One of the high points
“The questions could be about anything
will be the King’s participation in the cele-
right down to component level, even
brations in Nora in June. Commemorative
technical matters,” remembers Bengt.
stamps bearing train motifs are also being
more according to principles, however, and
tributing by holding open house events in
the politicians left the questions of detail to
a number of our workshops. We have also
the civil servants.”
been involved in refurbishing a Rapidlok high-speed engine dating from the 1960s.”
Progressive deregulation Bengt feels that the Swedish State Railways
A quick look back
did not have a particularly businesslike
Up until 1988, the Swedish State Railways
approach prior to 1989, but that since then it
had a virtual monopoly on rail transport in
has consciously built up a strong foundation
Sweden. It was then that Stig Larsson was
for operating on a deregulated market.
Bengt Möller has been involved in the
appointed Director-General and came to
maintenance of rail rolling stock almost his
personify ‘the new SJ’.
entire adult life. He began working for the
“During the 1990s we were governed
issued. Here at EuroMaint Rail we are con-
“This was a clear watershed in the
“Even in the 1990s the Machine Division had a number of small external customers, which allowed us to ‘practise’ getting paid.
Swedish State Railways in the early 1960s,
Swedish State Railways’ development,”
We gradually built up knowledge about
and has since grown and developed with
explains Bengt, “and even back then we held
where the costs lay and about pricing, and
and within the company – apart from a few
many discussions regarding how customer-
were able to learn a good deal about the
years when he worked in shipping.
orientation could be increased. A number
relationship between customer and supplier.
With his many years of experience in the
of organisational changes were also made
“Up until then we were closer to the end
sector, he is the obvious guide for anyone who
during the first few years. For example,
customer in a way – the passenger or trans-
wants to know more about the company’s
Banverket became a separate unit, the heavy
port client – but being an internal supplier
history and obtain a good foundation for
freight wagon workshops were sold to
seldom encourages development and cost-
looking to the future. He was also the perfect
ABB and the other heavy workshops were
effectiveness.
representative for EuroMaint Rail when
converted into independent companies
planning the 150th anniversary of the railway.
and transferred to TGOJ.
“The roles are far more clearly defined now. The operator is our customer and the one responsible for setting regulations. The
150 years of railways, 2006 The Swedish State Railways have naturally been responsible for organising previous railway anniversaries. This time it was Banverket (Sweden’s National Rail Administration) that took on
”The 150th anniversary celebrations are taking place throughout the year”
operator in turn is responsible for satisfying the end customer’s needs. There is an entirely different vitality in the operation when you work on a fully competitive market and have to focus on delivering quality.” Further development
the 150th anniversary celebrations. “At that time, maintenance was carried out
Maintenance of rolling stock is increasingly
the industry to a joint celebration of the fact
by us in the Machine Division within the
being streamlined, which means that the
that it is 150 years since the first commercial
Swedish State Railways. It seems remarkable
entire operation is gradually changing.
railway went into service in Sweden,”
now that we were able to decide for ourselves
“It is very important for us to identify
explains Bengt, who is EuroMaint Rail’s
on the regulations regarding how the main-
areas where we can develop, in particular
representative on the anniversary board.
tenance should be carried out. We also drew
by entering new markets here in Sweden.
In addition to Banverket and EuroMaint Rail,
up the rules and instructions for how the
However, it is also essential for us to retain
the principal sponsors for the arrangements
commercialised workshops would work.”
a focused railway company within the Group,
“They have invited various players in
are Green Cargo, Jernhusen, Railway Forum,
Another distinct change at the time
SJ AB and TGOJ Trafik. Other organisations
related to the form of state control. During
in the field of modern railway engineering.
will also participate in the actual celebrations.
the 1980s, the Machine Division had to
This is a position we have to nurture,”
“A wide variety of arrangements and
respond to all kinds of questions from
believes Bengt.
activities will take place across Sweden
politicians.
which our customers think of as experts
.
15
EUROMAINT RAIL Thanks to the length of the contract, the maintenance system can be developed within the framework of the agreement. Through innovative maintenance engineering, skilled employees and more efficient control, the extremely high availability requirements can be fulfilled at progressively reduced cost. During 2005, Arlanda Express achieved its highest vehicle availability ever: an average of 99.8 per cent. Problems resolved One problem during the early part of the year was the delayed delivery of refurbished X2 trains for SJ AB. The primary reason was a lack of preparation on the part of EuroMaint Rail. The refurbishment process has been improved and work has subsequently proceeded to plan. Another problem was the key figures in the contract with SJ AB regarding maintenance of passenger carriages. The first stage of this contract has now been completed to the customer’s satisfaction. Engineering & Planning – separate division A new organisational structure was introduced in the spring, with Engineering & Planning becoming a separate division. This represented a clear signal, both internally and to the outside world, that cutting-edge technical expertise and proactive planning are strategic factors for success. The new division also illustrates the importance of effective planning and preparation at every stage of a contract, to ensure that the solutions are adapted to customers’
EuroMaint Rail is Sweden’s leading company in maintenance and refurbishment of rolling stock, with a market share of around 50 per cent. The company’s business proposition strengthens its customers’ competitiveness and the profitability of the rail transport industry by contributing to improved transport safety, lower maintenance costs, increased availability, better performance, more efficient transport and more comfortable journeys.
needs and that delivery quality meets their demands and expectations. Tools for condition-based maintenance One direct consequence of Engineering & Planning being included at management level was that EuroMaint Rail entered into a collaboration with the British specialist company AEA Technology Rail. The aim is to increase flexibility and speed in technical development. The goal is to offer world-class train maintenance within the framework of a partnership. AEA’s tool for checking the condition of
2005 IN SUMMARY
wheels and brake linings by means of laser measurement has been
2005 was a positive year, with good results and many new opportu-
installed on a trial basis at the workshop in Hagalund.
nities. EuroMaint Rail has entered into new contracts, been involved in winning the most important procurement of the year on the
The world’s first biogas train
Swedish market, worked hard to bring in new orders and has resolved
A unique event occurred when EuroMaint Rail delivered a Y1 engine
a couple of difficult problems to the satisfaction of customers.
coach converted from diesel to biogas – the first in the world to go into regular service. The customer was Svensk Biogas AB.
Ten-year contract with Arlanda Express
This investment in reducing the environmental load from
The year began with EuroMaint Rail signing a ten-year availability
non-electrified rail transport attracted international attention.
contract with Arlanda Express in January, to maintain the X3 trains
EuroMaint Rail has also invested in specialist resources for the
on the Arlanda Line. This was EuroMaint Rail’s first major main-
maintenance of biogas trains. The company aims to be at the
tenance contract outside the circle of companies that traditionally
forefront when it comes to development and leading-edge expertise
derive from the Swedish State Railways, and also an operator with
for sustainable transport development.
a foreign owner.
16
>>>
The world’s first biogas train in regular service
Refurbishment of X2 trains for SJ AB
Highest availability for Arlanda Express
The delivery of a Y1 engine coach converted from
X2 trains revolutionised rail travel in Sweden. They
In January, EuroMaint Rail signed a ten-year availability
diesel to biogas was a unique event – it was the first
made it possible to ‘fly at ground level’ – quickly and
agreement with Arlanda Express to maintain the
in the world to go into regular service. The customer
conveniently. After 15 years SJ AB decided it was time
X3 trains on the Arlanda Line. This was the company’s
was Svensk Biogas AB. This investment in reducing
to renew the trains, and the task of refurbishing
first major maintenance contract with a foreign-owned
environmental load from non-electrified rail transport
them is EuroMaint Rail’s largest and most prestigious
operator. During 2005, Arlanda Express achieved
attracted international attention. EuroMaint Rail has
refurbishment order to date. Work began in 2005
its highest vehicle availability ever: an average of
also invested in resources for the maintenance of
and a total of 30 refurbished trains will have rolled
99.8 per cent.
biogas trains.
out by mid-2007.
17
EUROMAINT RAIL CONTD.
MARKET CONDITIONS The market conditions for train maintenance and refurbishment are entirely different. In maintenance, the volumes vary fairly predictably, while requirements for refurbishment fluctuate considerably from year to year. The reason is that maintenance is conducted continually throughout the service life of a train, while major refurbishments are only performed occasionally. Market conditions for train maintenance The market for train maintenance is primarily influenced by the volume of traffic and the age of the rolling stock. Increased travel and growing freight transport volumes are increasing vehicle mileage and therefore leading to more maintenance being required. Older vehicles generally require more maintenance than new or refurbished ones. Another factor that plays in is rationalisation, such as the transition from balanced to condition-based maintenance, which reduces volumes. All of these factors contribute to a market with relatively slow and predictable fluctuations. However, more abrupt fluctuations can become commonplace when the volume of traffic is adapted more and more flexibly to the needs of passengers and freight transporters. A recent example during 2005 was when demand for timber transport by rail increased dramatically following Hurricane Gudrun (known as Erwin outside the Nordic countries). All the players in the rail transport industry worked alongside the forestry Elmia Nordic Rail
industry in order to come up with creative transport solutions as
In October, EuroMaint Rail showed off its skills and resources at
quickly as possible.
Elmia Nordic Rail 2005. Many rail transport industry stakeholders from Sweden and abroad visited the company’s stand and took part
Market conditions for refurbishment
in the seminars that had been arranged.
As major refurbishments only occur occasionally during the service life of a rail vehicle, this market fluctuates dramatically. The refur-
Maintenance of SL commuter trains
bishment work is intensive during a highly compressed time period
The year was crowned by the Stockholm Train Alliance
– the refurbished trains have to be back in service as quickly as
– Tågkompaniet and SJ AB, with ISS TraffiCare and EuroMaint Rail
possible. The largest Swedish refurbishment contract to date is
as suppliers – winning the contract for Stockholm Transport (SL)
for the X2 trains for SJ AB. This assignment serves as an excellent
commuter rail traffic. There was extremely stiff competition with a
reference for EuroMaint Rail as it seeks new refurbishment
number of international players. The level of quality of the mainte-
contracts, both in Sweden and abroad.
nance was one of the factors that led to the contract being won. The contract runs until June 2011 with an option for a further five years.
The Swedish market Conditions for EuroMaint Rail on its domestic market remain good. The overall market share is approximately 50 per cent. The current backlog of orders – mainly contracts that the company has won through competitive tender – entails guaranteed capacity utilisation of 80 per cent up until 2008. Our customers are showing faith in EuroMaint Rail, and the company is living up to that confidence.
18
Even when there have been problems, the dialogue has been con-
TRAIN MAINTENANCE
structive. EuroMaint Rail has dealt with the problems directly and
EuroMaint Rail supports operators and vehicle owners with opti-
produced action plans, both for emergency measures and for those
mised maintenance for increased traffic safety, increased vehicle
that require preparation. Careful preparation and flexible adaptation
availability, improved punctuality and lower costs. Optimised
of capacity and costs are of the utmost importance, as the Swedish
maintenance requires a high level of delivery quality, meticulous
market for train maintenance and refurbishment is one of the most
cost control and total responsibility for the entire package.
competitive in Europe.
Train maintenance is divided into three levels: light maintenance, corrective and preventive maintenance at workshops around
The export market
Sweden, as well as the maintenance of heavy components at
The market conditions overseas – primarily in Denmark, Norway
specialist workshops.
and Germany, as well as the new EU states of Estonia, Latvia and
In some cases the contracts are based on maintenance at tradi-
Lithuania – are positively affected as deregulation and European
tional intervals, which means that the customer governs what is to
harmonisation increasingly open the door to service exports.
be done. The most common situation is where the contracts are
Submitting a tender and being able to live up to it is a tremendous
availability based, which means that EuroMaint Rail assumes
undertaking. Everything has to be prepared: structures, business
complete responsibility for the trains’ availability and is paid per
partners, workshops, personnel, skills provision, material sourcing,
vehicle kilometre.
etc. It is important to understand the regulations in different countries,
The customers are to be found in long-distance, regional and
so that tenders are not only assessed on the basis of price. It is to the
local rail services. They have varying needs. In some cases EuroMaint
benefit both of EuroMaint Rail and its customers if procurements
Rail’s nationwide workshop resources are an advantage, while in
include clear quality requirements that allow proactive solutions.
others it is important for the company to have a presence in the city regions. With broad experience and in-depth expertise, EuroMaint Rail is able to adapt its services to each individual customer. >>>
19
EUROMAINT RAIL CONTD.
Thanks to extensive experience in maintaining vehicles of virtually every type in the Swedish rail transport industry, EuroMaint Rail can also propose solutions that improve rolling stock from a maintenance and functional safety perspective – thus rationalising future maintenance. The refurbishment operation is based on close co-operation with the customer. Alliances with strategic partners and collaboration with local suppliers contribute to the overall content of EuroMaint Rail’s propositions. These may be strategic partners who supplement the company’s core technical expertise, or the company may even engage independent contractors for work that does not require specific rail expertise. The business management system contributes to flexible customisation, both in minor refurbishment contracts and in major contracts that include several partners and suppliers. CUSTOMER FOCUS AND DELIVERY QUALITY It is becoming increasingly important to be able to offer tailored total solutions based on the needs of each individual customer. By not standardising its solutions, but instead standardising the processes, EuroMaint Rail combines customisation and costeffectiveness. The cross-functional organisation places various skills and resources at the customer’s disposal in a flexible manner. For each contract – from initial sale through to delivery – EuroMaint Rail creates a customised organisation with distinct processes and a clear division of responsibility. Careful preparation, Through continuous development, for example with regard to
meticulous follow-up and a constant focus on satisfying the
methods and equipment for condition-based maintenance,
customer’s needs for delivery quality combine to produce a
EuroMaint Rail can offer an increasingly high level of availability
relationship that ensures the customer’s peace of mind.
at lower and lower costs. Checks on condition mean that the maintenance can be directly adapted to actual requirements, as
FUTURE 2006
compared to balanced maintenance, where the trains are taken
The important procurement of Öresund rail services is due to begin
out of service after a set number of vehicle kilometres.
in 2006 – a contract for which EuroMaint Rail will be competing.
Major savings can be achieved for the customer, particularly
The procurement of the Pågatågen trains in Skåne is under way, and
when it comes to wheels and brakes, both of which require con-
the winner of the maintenance contract will be announced during
siderable maintenance and are critical to traffic safety.
the year.
REFURBISHMENT
contract for Green Cargo’s engines – a total of around 80 RC engines
EuroMaint Rail supports operators and vehicle owners with refur-
and almost 100 diesel engines. The refurbishment will result in
bishment for increased traffic safety, better travel comfort, improved
a longer service life, lower maintenance costs and improved per-
performance, extended service life and higher vehicle value.
formance. For the diesel engines, the environmental performance
Refurbishment work can encompass technical reconditioning and
will also be improved.
EuroMaint Rail is also currently working to win the refurbishment
modernisation of the vehicle’s various subsystems. It can also
In Norway, deregulation is progressing slightly slower than
cover new exterior design and new interior furnishings and fittings,
anticipated. EuroMaint Rail is monitoring the maintenance market
including an Internet connection at each seat so that the journey
in Germany with interest, as well as a large fleet of diesel engines
time can be better utilised.
that require refurbishment. EuroMaint Rail reinforced its marketing organisation for exports in 2005, in the conviction of being able to offer high-quality, costeffective, competitive services for train maintenance and refurbishment in neighbouring geographical regions.
20
What has been the best thing about the job in 2005 and what could be better?
Michael Kohr, engineer, Blackvreten The best thing is when something unexpected happens, like a problem we have to go out and solve on the line. I would like to see more events for the staff.
Jonas Samuelson –President of EuroMaint Rail “I was previously EuroMaint’s marketing director and am now looking forward to leading EuroMaint Rail towards a future that feels very positive. We have positive profitability and an upward trend. With skilled and experienced employees – and by creating
Charlotte Andersson, controller, Solna
a corporate culture that makes even better
It’s been rewarding for me to start working as a
use of their abilities – we will become increa-
workshop controller as well, and to learn more about the core of our operation. Co-operation
singly successful.”
TURNOVER BY PRODUCT AREA
between the divisions should be developed.
VOLUME DEVELOPMENT SEK mn
1,000
1,710
1,494
1,500
1,653
2.
1,879
2,000
3.
1. 500
Staffan Åström, maintenance engineer, Gävle The celebrations in Gothenburg last spring were
0
1. Train maintenance 78 %
2002
2003
2004
2005
a real highlight, and it was good to meet so many
2. Refurbishment 13 %
other employees. Internal projects shouldn’t be
3. Other 9 %
over and done with quite so quickly.
21
EUROMAINT INDUSTRY built up with the aim of supporting and optimising production. From the late 1980s the company also operated outside the confines of Volvo, but it was only when the operation was converted into an independent company in 2000 that the focus on the ‘external’ market truly gathered momentum. On 1 July 2005 EuroMaint acquired the company, which now operates under a new brand and company name: EuroMaint Industry. 2005 IN SUMMARY 2005 was a record year for EuroMaint Industry, both with regard to turnover and profit margin. The new strategy and corporate culture launched in 2003/2004 began to have a full impact. Successful strategy work The strategy is that the company’s knowledge about its customers’ production processes and the way it works in close co-operation with customers should be unique distinguishing factors. Business should be characterised by long-term customer relations and customised total solutions with a high knowledge content. Working models and working methods aimed at achieving continuous improvements have therefore been evolved throughout the operation. New ways of measuring results have been introduced. Similarly, risk assessments in ongoing projects have been honed. Full-service concept for electric engines
EuroMaint Industry was established in 2000 when the Maskinteknik business unit within Volvo was converted into a company. The company increases Swedish industry’s competitiveness through production streamlining. We design and refine production processes, develop and manufacture customer-specific production equipment, and are a complete supplier in the field of maintenance. Our customers are primarily to be found in the engineering industry.
At the beginning of 2005, EuroMaint Industry took over the motor rewinding operation from ABB in Skövde. This acquisition supplemented the company’s existing service operation for servo and electric motors, and enables it to offer a full-service concept of fast, quality-assured repairs. During the year, the acquired operation has been relocated and integrated with the existing service workshop in order to achieve an optimum process. Production engineering assignment resulted in major order for new customer
BRIEF HISTORY
Two areas on which EuroMaint Industry has decided to focus in
Even though EuroMaint Industry has only been in existence as an
2005 are Maintenance Development and Production Engineering.
independent company for a relatively short time, we actually have
Resources have been doubled and initiatives for further skills
a very long history, dating back to the 1860s when the company
development have been taken. One such production engineering
Sköfde Gjuteri och Mekaniska was established. From the 1930s up
project for a brand new customer initially resulted in investigation
until 2000, the company formed part of Volvo’s engine factories
assignments, followed by a historic major order for two assembly
in Skövde. In the tough automotive sector, there has been a high
systems. This is evidence that the company’s expertise as well as its
demand for efficient and operationally reliable production pro-
business and turnkey concepts are valued by the market.
cesses. Against this background, experience and skills have been
22
>>>
In certain cases the use of standard machinery does
EuroMaint Industry focuses primarily on the
When the Group was restructured, business
not produce optimum results, and customised
engineering industry, although its customer base
responsibility and sales resources for the Industrial
equipment is preferable. EuroMaint Industry
has been extended as a consequence of the new
Maintenance product area were transferred from
develops and manufactures special machines as well
Group structure. This has resulted in more
EuroMaint Rail to EuroMaint Industry. As a result,
as various accessories and peripheral equipment.
customers in the processing industry, such as
the company is expanding its product range with
Several AGV systems have been installed for various
the steel, paper and power sectors.
service on rotating electrical machinery such as large
customers in 2005.
electric engines, generators, transformers, etc.
23
EUROMAINT INDUSTRY CONTD.
Important assignment for small company One assignment that began in 2005 involved helping CC Pack, a company with around 25 employees, to bring out ‘hidden capacity’ through more efficient maintenance. This partnership has gradually grown into something very good. MARKET CONDITIONS The primary target group for EuroMaint Industry is the Swedish market. The company only really works on overseas markets when existing customers move into these markets. Two trends that produce positive market conditions are: increased interest in production streamlining, as well as greater interest in total solutions and partnerships in the field of maintenance. Production streamlining for increased competitiveness Swedish industry has long had to battle hard in the face of international competition. Many companies have therefore elected to locate their production in ‘low-cost’ countries. During 2005, however, this previously one-sided debate experienced a turnaround. In certain cases there is good reason to relocate, but the risks and costs are often misjudged, as many companies have experienced. Instead there has been greater emphasis on the potential of focusing first on the domestic market and picking out the unused production resources – the hidden factory. Productivity can be significantly improved by focusing on production engineering, Major AGV orders
automation and systematic maintenance. The potential can often
The most important business events include a couple of major
be 50 per cent or more.
orders for AGVs. AGV stands for Automated Guided Vehicle, systems of self-propelled, loop-controlled trucks for complex
Total solutions and partnerships
assembly applications.
There is a clear trend of focusing on core operations. Outsourcing
EuroMaint Industry has developed AGVs in collaboration with a
basic support functions such as cleaning and office services is
large group of Swedish and international R&D partners, as well as in
nothing new. Another clear trend is for companies to seek long-term
close co-operation with customers. The systems consist of mobile
partnerships with their suppliers. In production engineering and
units that flexibly move about between different workplaces in the
maintenance, broad experience and in-depth specialist expertise are
production flow. The have built-in quality assurance systems and
key. Both of these can be difficult for an individual industrial company
are easy to reset if the production process is altered. They are also
to maintain and develop to a sufficiently high, cost-effective level.
easy to adapt individually to different operators.
24
THE PRODUCT RANGE
Maintenance
The total solution – and the parts – that EuroMaint Industry offers
More and more companies are realising the benefits of well-planned,
have been developed within and in close co-operation with the
well-executed maintenance. Sure signs of this include disruption-
automotive industry. This was the first sector to feel the full force
free production, a workplace with a high level of safety and a good
of global competition, and consequently it adopted cutting-edge
environment, as well as excellent delivery precision and satisfied
know-how at a very early stage.
customers. Overall Equipment Efficiency (OEE) is a good way of
The company’s expertise displays range and depth, and has been built up through many years of experience, training and
measuring productivity improvements based on APQ. Availability (A) indicates the degree of disruption and losses
recruitment. As an independent service partner, the company offers
from down time. Performance (P) shows how well the equipment
everything from small, individual projects to long-term total solu-
‘is being utilised, and the Quality parameter (Q) reveals quality
tions. The operation now encompasses maintenance, component
shortcomings in the items produced by the equipment.
servicing, production engineering and production equipment – all equally important for increased efficiency.
Many companies have considerable potential for improvement and invisible capacity to utilise. EuroMaint Industry can help its customers to measure, analyse and structure their maintenance work. The foundation is a maintenance platform, and there are several tools in EuroMaint’s ‘toolbox’. However, the starting point is the customer’s requirements and conditions when planning the job of improving operational reliability. The aspect that makes EuroMaint Industry unique in the field of maintenance is that the company can also implement the proposed measures. This includes technical maintenance services and procedures for preventive maintenance, preparation of spare parts etc., as well as carrying out maintenance on machinery, from day-to-day activities to major machine overhauls. >>>
25
EUROMAINT INDUSTRY CONTD.
Production equipment In certain cases the use of standard machinery does not produce optimum results, and customised equipment is preferable. This is true for example in the transition between different parts of a customer’s production process. EuroMaint Industry develops and manufactures special machines for assembly, handling, machining and testing, as well as various accessories and peripheral equipment, such as fixtures, lifting devices and protection. CUSTOMER FOCUS EuroMaint Industry has made the strategic decision to focus on proximity to the customer. This working method entails being close to the customer’s production and genuinely understanding the conditions and challenges the customer faces. As a result, the company’s personnel are able to provide the right service and suggest improvements – either as a total supplier or in individual projects. Quite simply, one partner is all that’s needed. FUTURE 2006 Over the next few years the aim is to expand the customer base, as the company is currently heavily dependent on a few large customers. The first customer category in line to be cultivated comprises medium-sized industrial companies. Here the hidden factory will be developed with the aid of strategic Component servicing
and operative services. Many large Swedish corporations are already
Many machine components can be repaired or reconditioned to
world leaders in OEE, but there is still considerable potential for
improve function – all with the aim of increasing their service life.
improvement in many companies.
Preventive maintenance is of course preferable even at component
Further strengthening and deepening relations with existing
level, but sudden stoppages occur nevertheless. In situations like
customers is another focus area for 2006, as is a concentration on
these, EuroMaint Industry can provide a service organisation for
clarifying our customer proposition by turning our skills into pro-
rapid fault-tracing and repairs on a large number of machine com-
duct offerings – ‘productising’ them.
ponents, irrespective of make. Examples of specialist areas include
One area that may be problematic in the short term is produc-
spindles, electric motors, servo motors, servo actuators, electronics,
tion equipment, where volumes fluctuate dramatically from year to
tools and dies, mechanical components and measuring equipment.
year. There are no orders currently in the pipeline of the same scale as those in 2005. On the other hand demand for maintenance
Production engineering
services is increasing noticeably, and more personnel are required
The integration of maintenance and production is a natural founda-
on that side of the business.
tion for EuroMaint Industry’s expertise and business propositions
One of EuroMaint Industry’s policies is to develop its co-workers
in the field of production engineering. This can start off with a pilot
so that they can grow into new duties and flexibly shift between
study and continue through preparation, participation in new
different working areas. In addition to increased job satisfaction
procurement as well as various kinds of technical design service.
from job variety and skills development, this approach also helps to reveal undreamt-of capabilities. Skills development is a very high priority. Considerable energy has been devoted to this area during 2005, and this will continue in 2006. As a service-producing company, the employees’ expertise and service spirit are absolutely crucial to success.
26
What has been the best thing about the job in 2005 and what could be better?
Mikael Pajunen, co-ordinator at the prototype department, Skövde I have a varied job that entails numerous contacts with customers and employees. We have old machines and need some more modern machinery.
Per-Olof Rengstedt –President of EuroMaint Industry “I joined Euromation as President just over two years ago. We now have an owner whose core operation we are a part of. Our market is also being broadened as a result of this new owner. We aim to strengthen the competitiveness and profitability of Swedish industry by
Katarina Andersson, production engineer, Skövde
contributing to a better overall perspective,
Introducing operator maintenance into the customer’s
increased utilisation of resources, structured
operation has been exciting. Their production level has increased and things look better. We need to be more
maintenance work and smart automation
flexible.
solutions.”
TURNOVER BY PRODUCT AREA
TURNOVER DEVELOPMENT SEK mn 350
200 2.
259
307
250 4.
303
300 288
1.
150 100
3.
Urban Gustavsson, service engineer, Skövde
50
The constant challenges are the best thing.
0
1. Maintenance 25 % 2. Component servicing 21 %
2002
2003
2004
2005
I’m always learning a lot and the work is never monotonous. I need training in the new systems.
3. Production engineering 9 % 4. Production equipment 45 %
27
Article on EuroMaint Industry’s technical development
Right resources in right place thanks to research EuroMaint Industry focuses on keeping up to date with technical developments in the sector. And what better way than to take part in the research work? This provides a good foundation when making decisions regarding the development of new products and services. Jan-Olof Lundgren is Research and Development Manager as well as IT Manager at EuroMaint Industry. When it comes to making decisions about which services are to be productised, he is assisted by a product council, which includes parts of the management group. “The council defines the strategic areas where the product range needs to be developed and decides on fund allocation. In some cases we participate in research collaboration alongside universities and other companies, thereby acquiring useful material for further decisions. “Our heaviest involvement usually lies in the actual productisation process. Our own employees are responsible for developing the products and services we offer our customers,” explains Jan-Olof, and observes that these skilled employees are EuroMaint Industry’s greatest strength. The majority of Jan-Olof’s working day is taken up with his job as IT Manager, and he feels that it is important to have an IT environment that is flexible and supports the customer. He is also in the middle of his doctoral studies. “The lifecycle process for one-off production companies” is the working title of his thesis, and the processes within EuroMaint Industry are naturally the subject of his research. Marketing channel “I am convinced that we will become better known by participating in various research projects,” says Jan-Olof. “We have achieved a relatively strong position in the research world, and regularly receive enquiries regarding doctoral students looking for industrial projects. A while ago I was contacted by both a Greek and a Russian professor, who
28
wanted to apply for research grants and needed an industrial partner for their projects – and they thought of us. “It is clear that research contributes to our brand-building and is a way of helping us to win market shares. “It is important for us to have a common thread through our development work. The research projects we chose to participate in were initially related to technical design, although we have increasingly moved towards maintenance-related areas.”
”Common thread in development work” Concluded research projects Integrated Design, Simulation and Distributed Control of Agile Modular Manufacturing Machinery, popularly known as Vir-Eng, was one of the first major research projects that what was then Euromation became involved in. The project related to the virtual building and testing of products in a simulated environment. During the course of the project, an in-house research lab was constructed. Project Copernicus has been extremely important for the company. Several different European companies and universities were involved in the project, which focused on Automated Guided Vehicles (AGVs). The project looked at navigation principles, sensor-driven simulation and architectures for hardware and software. “The results have to a large extent influenced our production of AGV systems, as they broadened the view of what was possible and stimulated us to find new methods and ways of working,” explains Jan-Olof. Current projects One project that plays more of a supporting role and in which less money is involved is MASSIVE, Machine Service Support based on Innovative Virtual Engineering. Here too there are universities and several companies involved. “New simulation models were developed during the design stage, and the MASSIVE
project is about using these when operating the equipment as well. The focus is on maintenance and fault-tracing, above all remotely,” explains Jan-Olof. “It is possible to build with simulation support, and we also intend to draw benefit from these models during fault-tracing.” With the aid of these simulations, conclusions can be drawn about what is wrong and requires maintenance. This should entail a reduced travel requirement for service personnel. During the course of the project, it has become increasingly clear that, when conducting remote diagnostics with intelligent simulation support, the large amount of data that needs to be transferred via the Internet constitutes a limitation. It is therefore pleasing to note that the University of Skövde has recently initiated a research profile for information fusion, i.e. integrating data from various sources, as well as looking at how the systems should be designed in order to support decisions with large volumes of information. “The university profile has just started, and we’re currently in the process of defining various projects. The hope is that we will be able to develop products in parallel with the research, particularly in the field of maintenance,” explains Jan-Olof. “Our investment for the university profile is not enormous, but we are contributing time and our research lab, and we were one of the companies that helped ensure the venture got started in the first place. “With intelligent ways of gathering information and MASSIVE’s simulation, we hope to be able to rationalise the maintenance process to ensure that the right resources are in the right place, without always having to perform fault-tracing on site. “The role of research is to indicate possibilities, and I obviously hope that a technical platform will be created that can subsequently be built upon. We will then have the very latest capability in our sector, enabling us to provide our customers with added value when they engage EuroMaint Industry,” hopes Jan-Olof in conclusion.
”Research contributes to our brand-building” Jan-Olof Lundgren – development perspective 29
RESEARCH AND TECHNICAL DEVELOPMENT Three events in 2005 increased and clarified the importance that EuroMaint places on research and technical development: the formation of the Engineering & Planning division within EuroMaint Rail, the collaboration with UK company AEA Technology Rail and the acquisition of Euromation. FORMATION OF ENGINEERING & PLANNING DIVISION The Engineering & Planning division is an expression of the strategic importance that the EuroMaint Group places on leading-edge technical expertise and proactive planning. In order to identify internal recipients for new technology – and to make the most of new ideas that originate internally – a production engineering network has been created. Many development proposals contribute to increased customer benefit, such as patents for a mobile lathe and new brake testing equipment. COLLABORATION WITH AEA TECHNOLOGY RAIL AEA Technology Rail is a specialist company in rail engineering, which develops world-leading products for checking the condition of components. By means of a transition from balanced maintenance to condition-based maintenance, the service content in availability-based transactions can be refined. ACQUISITION OF EUROMATION Euromation has a long and strong tradition of viewing research and
FUTURE
development as a natural part of its operation. Co-operation with
Strategy for co-operation
universities and colleges is well established. Knowledge from various
Strategic work is currently in progress aimed at identifying which
R&D projects is implemented directly in the day-to-day work. The
universities are of most interest when it comes to co-operation in
acquisition provides a better outlook for the entire EuroMaint
the fields of automotive engineering, systems engineering, mainte-
Group with regard to bringing in new impulses from outside.
nance engineering, production engineering and technical/aesthetic design. Work is also under way to bring about a greater exchange
IMPORTANT R&D PROJECTS
of experiences with industry organisations such as UTEK/Swedish
EuroMaint Industry has conducted three different development
Maintenance Society and the Swedish Centre for Maintenance
projects alongside a number of European universities. The projects
Management.
have contributed greatly to the company’s AGV systems. Smart trains, machines and production equipment 1. Vir-Eng – simulation for virtual product development Smart trains and production equipment that can independently 2. ARMMS – modular machines and mobility communicate their maintenance needs provide greater opportu3. Copernicus – mobile robots nities for proactive planning. As materials, documentation and The next stage of one current project – MASSIVE – will enable more
personnel are in the right place at the right time, turnaround times
advanced remote diagnostics of machines than at present, i.e.
are short and the maintenance is highly effective, thus increasing
transferring and processing data for fault detection and fault-tracing.
availability and productivity alike.
The problem here is not a lack of data but rather an overabundance, which has to be filtered if the information is to be reliable and usable.
Reliable information to support decisions Information fusion is an R&D project at the University of Skövde for the integration of data from various sources regarding the behaviour of technical systems. Many companies are involved in the project, including EuroMaint.
30
Where would you most like to see EuroMaint focusing in the future?
Mattias Wernersson, maintenance engineer, Skövde It’s good that we have efficient maintenance as our core activity. We should continue to develop our concepts and maintenance solutions with our customers.
1. Vir-Eng – simulation for virtual product development A simulation system for virtual product development. The project was launched in 1998. The customers’ requirement was to be able,
Tommy Andersson, maintenance engineer
early in the design phase, to speed up and quality-assure the
and instructor, Svartön, Luleå
development processes surrounding new or modified products or
We should develop a forum where maintenance engineers
production flows. The result was a time reduction from 5 weeks
and fault-tracers can discuss vehicle problems and
to 15 minutes.
share experiences, technology and expertise.
2. ARMMS – modular machines and mobility A European network for modular machines and mobility. The network encompasses some 30 companies, half of which are highly research-intensive. The project is both a consequence of and a supplement to Vir-Eng.
3. Copernicus – mobile robots A research project into mobile robots. R&D partners are De Montfort in the UK, the University of Skövde, Kaunas University in Lithuania
Lars Kallio, concept designer, Skövde
and MSTU in Moscow. The results included a prototype for an
We have to satisfy our customers’ need for innovation
Automated Guided Vehicle (AGV). Since 2002, EuroMaint Industry’s
value when it comes to production equipment.
AGV systems have been successfully sold to companies that require
We can broaden our clientele by developing our specialist machines.
flexible production flows that can swiftly be changed over.
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“Tremendous technical expertise and long experience” Thomas Robertsson – development perspective
32
Article on EuroMaint Rail’s technical development
Focusing more on development The Group management has clearly highlighted the need for technical development and innovation in the field of maintenance, and has decided on investments for the years to come. As the company works with large volumes, it is not difficult to access improvements and new ideas. This is one of the aspects that the newly appointed head of technology and development at EuroMaint Rail particularly appreciates. Thomas Robertsson has only been with EuroMaint Rail since October 2005. However, he has almost 20 years’ experience of rail transport as a vehicle supplier. “The Technology department has been created during the past year, and we are also responsible for technical development. This is an indication from the management that these are important issues. “The best thing about EuroMaint Rail is that we work with large volumes, so it shouldn’t be difficult to identify profitable rationalisations,” hopes Thomas. “I believe it is particularly important to make the most of the experience that exists within the organisation, especially among the vehicle engineers. “As the manager of a fairly large number of employees, it is my job to know what everyone is doing, to help out where I can and, in particular, to get everyone to work together as a team,” says Thomas, adding that this is both a difficult and a challenging task. Thomas highlights three areas that he feels are particularly important to focus on in the immediate future: streamlining, refurbishment and skills development. Streamlining maintenance “As train maintenance accounts for the vast majority of EuroMaint Rail’s turnover, streamlining and optimisation of this operation are essential to our profitability,” Thomas explains. “Condition-based maintenance is of great interest, and we have carried out a pilot installation for condition monitoring in Hagalund. We’re currently working to install identification units on the relevant
vehicles, so that we can subsequently obtain measurement values for a decision support system, initiate an evaluation and gather the information in our maintenance system. Our hope is to be able to implement a number of additional installations for monitoring within the next few years.” The system will initially measure wheel profiles and brake linings. Together with the current collectors, these are the most significant factors influencing the frequency of maintenance intervals. “That’s why I hope that condition monitoring of the current collectors will be our next project,” says Thomas. Collaboration and partnership are crucial to achieve good results. In this case EuroMaint Rail is working with a UK company which supplies both hardware and software. Thomas also wants to increase the co-operation with institutes of technology and bring in more students working on graduation projects. “I would like to take this opportunity to praise some of our alert employees who, on their own initiative, have devised mobile tools that will solve some of the problems they have faced in their service work.” Thomas also explains that the company is investigating the potential to conduct non-destructive ultrasound testing on hollow axles automatically to achieve digital measurement values, rather than a manual system with results on paper.
“Added value that is profitable for the customer” Refurbishment of rolling stock Modernisation and refurbishment of rolling stock have traditionally always been carried out according to the customer’s detailed specification. “Developments are moving towards a situation where we, in our role as supplier, produce proposals for technical solutions. We should be able to offer our customers
added value which generates better economy in the long term. “Examples include the calculation of lifecycle costs and maintenance costs, as well as providing operational reliability guarantees. We are also working to develop computerised documentation systems.” Skills development “EuroMaint Rail possesses a tremendous amount of technical expertise and long experience. “This will be supplemented with the more general use of modern technical design aids, such as 3D CAD, as well as with various specialist skills, in particular so we can offer the added values I mentioned,” explains Thomas. Integrated Logistics Support (ILS), functional reliability analysis, maintenance analysis and maintenance optimisation are some of the areas where skills development will take place, with the aid both of external courses and learning in the workplace. “We are often consulted and have already established that we need more technical designers,” says Thomas. “This, in combination with a high average age, makes it very important to pass on these skills to younger generations. In order to make this easier, we will group ourselves according to technical systems expertise, such as brakes, doors, propulsion and diesel engines.” Thoughts on the future Thomas is a firm believer in condition-based maintenance. A major reason for this is that research indicates that a very large proportion of the maintenance carried out at present is not actually required. “There are so many areas that can be monitored to provide even more refined information. The first step should be to gain access to the information that can already be supplied wirelessly from the train’s onboard computer, but that is mostly only used during commissioning when the vehicle has just been delivered. The vehicles’ control data and error codes, along with condition monitoring that we carry out ourselves, can ensure even more relevant maintenance.”
33
EMPLOYEES From an employee perspective, the EuroMaint Group has not yet become a single entity. Even though both EuroMaint Rail and EuroMaint Industry are focusing on expertise, proximity to the customer and delivery quality, the companies have different cultures and experiences. For this reason they will initially be described separately. EUROMAINT RAIL 2005 was characterised by the completion of the major restructuring operation and by several large contracts that generate faith in the future. The focus has been on delivery quality. As a result, the work of creating a shared corporate culture, which had previously been established as a strategic theme for 2005, was postponed until 2006. Even though the venture has not been completed, activities aimed at increased participation and team spirit have been conducted. This included the two employee meetings in Gothenburg, where employees from around Sweden had the opportunity to meet and socialise for the first time. Many people refer to ‘before and after Gothenburg’ as a paradigm shift in the company’s history. Another much appreciated element was the Presidents’ annual tour visiting all the plants, under the heading of ‘Dialogue for Change’. The major investment in leadership development for production managers has also continued during 2005. Similarly, a project has been carried out to develop skills profiles for administrative personnel. There is already a well-developed authorisation system for production personnel. Moreover, a considerable amount of work
SKILLS DEVELOPMENT
has been devoted to developing a standardised salary model.
Skills development has a high priority within the EuroMaint Group.
The restructuring carried out in previous years has restricted
Both companies work with knowledge-intensive services and
external recruitment and minimised profiling in relation to univer-
advanced technology in industries that are characterised by renewal
sities. A working group has now been appointed to intensify
and increased specialisation. Skills development takes place both
co-operation with the academic world.
through external courses and internal training. For work that requires special authorisation, such as safety-
EUROMAINT INDUSTRY
related work on rolling stock, production equipment and compo-
During 2005, EuroMaint Industry experienced a significant increase
nents, there is a comprehensive administration system for training.
in demand for maintenance services and other parts of its offering.
As a rule, theoretical training and practical training with tutors both
The provision of skills is achieved in part through new recruitment,
take place on home ground.
although primarily through internal recruitment, training and
Skilled project managers are an important key to success.
mentorship. The policy is that anyone who wants to develop must
The content of a project academy has therefore been produced,
be given the opportunity – and this includes full-time or part-time
with training to commence in 2006.
external training. Many employees’ everyday workplace is out at the customer’s
AN ATTRACTIVE WORKPLACE
premises. As a result, professional competence is not the only area
The Employee Satisfaction Index (ESI) and Customer Satisfaction
of great importance, but also the ability to create good relations and
Index (CSI) are both measured regularly. Satisfied employees and
to be receptive to new customer requirements. It is also important
satisfied customers form a virtuous circle. Another way of measuring
to have a high level of expertise in safety issues, and thorough safety
attractiveness as an employer will be available in 2006, when
training is therefore provided. Close co-operation with various
EuroMaint will be included for the first time in the Företags-
research environments has contributed to the company’s skills
barometern – essentially a ‘corporate barometer’ where young
development over the years.
academics are asked who their preferred employer would be. The barometer takes many different factors into consideration.
34
What is most important in your personal development at work, and what support would you like?
Rolf Forsell, maintenance engineer, Notviken, Luleå Flexibility and variation in work are important – working in different departments, trying out new professional roles. I get good support in my work, and everyone helps out.
HEALTH REPORT The health report illustrates and describes the health of the personnel in key ratios that are quantifiable from a corporate finance perspective. Weighted key ratio EuroMaint Rail 13.1, EuroMaint Industry 9.8. The combined key ratio is a summation where key ratio 1 weighs 0.6, key ratio 2 weighs 0.6, key ratio 3 weighs 2.5, key ratio 4 weighs 2.5 and key ratio 5 weighs 5.
Susanne Johansson, HR administrator, Skövde
HEALTH REPORT TABLE FOR 2005
in various ways.
All employees/EuroMaint Rail Hours worked
Number
0
Sickness number – hours 1)
113,780
3.1
Sickness cases – quantity 2)
2,341
6.4
58
0.66
Returns 4)
50
0.57
108
2.45
All employees/EuroMaint Industry
Number
Key ratio
Hours worked
461,416
0
Sickness number – hours 1)
15,633
3.4
Sickness cases – quantity 2)
Staff turnover 5)
my job properly. This knowledge can be developed
Key ratio
2,206,859
Rehabilitation cases 3)
I feel it’s important to have knowledge in order to do
339
7.3
Rehabilitation cases 3)
13
0.28
Returns 4)
10
0.77
health & safety officer, Vännäs
Staff turnover 6)
21
0.45
For me it’s important to acquaint myself with the
1)
Both: Sick leave hours/worked hours * 100. 2) Both: Commenced sickness cases/worked hours * 10,000. 3) Both: Sick leave periods that commence day 29/hours worked * 10,000. 4) Both: Full returns after commencing sick leave day 29/sick leave periods that commence day 29. 5) EuroMaint Rail: Personnel departures/worked hours * 10,000. 6) EuroMaint Industry: Number of personnel departures minus reduced number of employees on “SKO”/hours worked * 10,000.
Örjan Jalava, maintenance engineer and
company’s development and to be involved in it. I would like more interchange with employees from other workshops.
35
Article on EuroMaint’s HR work
From many different corporate cultures – to collaboration in a single Group Within EuroMaint Rail, employees with different backgrounds and cultures have worked together to become a single company – in both physical and psychological terms. EuroMaint Industry has now joined the Group, and the HR units are continuing to work to co-ordinate operations so that the newcomers will also feel welcome under the EuroMaint umbrella. “I think it’s very important for us to work actively to ensure that everyone who belongs to the EuroMaint Group feels part of one company,” says Janette Sved, who works at the central HR function at EuroMaint Rail with specific responsibility for the production division. Janette is based in Örebro, central Sweden. “We talk a great deal about the fact that we have to be an innovative engineering Group, and I feel we can act even more clearly to demonstrate this. One example could be to focus on promoting and developing the operation by having more production engineers. “Another example is a greater focus on the process for making use of the employees’ own proposals for improvement.” Joint pay model Much of Janette’s work over the past year has been on a project aimed at developing a joint pay model for the whole of EuroMaint Rail. “We come from separate operations, and there are certain differences in the conditions of existing employment contracts. To become a single company with a shared culture, we have to find ways of bridging these differences. This will require a lot of talking and will take time. It feels good to have made a start, and I’m sure that everything will turn out fine in the end,” says Janette.
36
Day-to-day improvement programmes Within the production division, Janette has worked on various programmes related to developing day-to-day operations and supporting the actions of the management. One of these involves promoting communicative leadership. “The emphasis is on a fresh start for activities that involve and motivate the employees, such as results boards, staff appraisals, a suggestion scheme and workplace meetings. These meetings are facilitated as the production managers receive presentation material every month reporting aspects such as costs, hours, deviations and sick leave. “The other programme focuses on early rehabilitation,” Janette explains. “The managers have a considerable responsibility in this area, and we have developed clear
“Develop day-to-day operations” structures to provide them with support. Information about absence has been systemised, and the managers can act more rapidly in the event of any signs of ill health, often with the assistance of occupational health care resources. At one of the units, short-term sick leave has been reduced from 11 to 3 per cent in one year!” Focus on customer proximity “At EuroMaint Industry we have come to the conclusion that one of our most important success factors is customer proximity,” explains Ulf Sandén, who is both Financial and Human Resources Manager. “A farreaching venture is under way on the topic of customer proximity. It is based on offering our customers the opportunity to receive the products and services they need, delivered to wherever they are.” The past year
has seen an intensification of efforts to productise and package the various skills that customers are demanding. “This is where we are now,” explains Ulf. “In our charting process, we are dividing up our business skills into basic skills that everyone should have and the specialist skills that our employees possess, such as electrical maintenance, mechanical design, electronics and so on. The needs of our customers change, and we have to meet these needs. That’s why we’re working intensively on skills development, recruitment and network building. “Demands from the market also mean that we have to increase our flexibility. This relates to the potential to work during holiday periods when our customers have a great need for service and maintenance, as well as working to develop flexible, wideranging skills, as needs can vary greatly over time,” Ulf explains. The skills that are in demand today could be completely different tomorrow. He observes that the entire project entails a concerted effort that has to succeed if EuroMaint Industry is to serve its customers in the best way. Different worlds become one Ulf does not see belonging to the EuroMaint Group as a problem. “Up until about a year ago we were part of the Volvo Group, so this is not a new situation for us. EuroMaint Rail and ourselves also have similar backgrounds – both have been internal suppliers that, after being converted into independent companies, have developed rapidly into competitive units – even though our former parent companies operated in completely different worlds. “So far we have mostly received information about the EuroMaint Group, and there has not been that much practical collaboration between the companies. But obviously I hope that together we will become stronger at what we do, and I see this as an exciting challenge,” Ulf Sandén concludes.
Janette Sved and Ulf Sandén – employee perspective
“Together we will become stronger at what we do”
37
QUALITY AND ENVIRONMENT As of the 2006 financial year, the entire EuroMaint Group has been awarded quality and environmental certification. However, the two companies in the Group have achieved this status by different routes. As EuroMaint Industry has its roots in the automotive industry, quality and environmental certification have been natural elements for many years. The company was certified to ISO 9001 in 1994 and ISO 14001 in 1998. EuroMaint Rail, which was certified in 2004 and 2005 respectively, has its roots in a sector where these phenomena are still largely unique. QUALITY EuroMaint is a specialist company offering advanced services. In addition to the specialist expertise required to carry out safetyrelated work, it is important to maintain a generally high level of expertise when it comes to safety. There are various risks in our customers’ working environments, and considerable sums can be at stake. The delivery quality that EuroMaint provides plays a crucial role in ensuring safe rail transport, operationally reliable industrial plants, customers’ profitability in the short and long term – and their confidence in the Group. The business management system provides support for continuous improvements at all levels and in all business phases. Delivery quality has been an important focus area in 2005. The companies have devoted considerable energy to refining processes and procedures in the practical quality work. Within the EU, work is currently under way on special EU certif-
EuroMaint generally works to streamline its customers’ energy usage and utilisation of resources. One example of environmental
ication for suppliers of maintenance on rolling stock. The require-
commitment and environmental expertise is the Y1 engine coach,
ments will be completed in 2007. As a result of EuroMaint Rail’s
which has been converted from diesel to biogas. It is the first biogas
experience in quality certification and practical quality work, the
train in the world to go into regular service. EuroMaint Rail developed,
Swedish Rail Agency has obtained good arguments for influencing
technically designed and carried out the refurbishment. In addition
the European Railway Agency (ERA).
to modernising the exterior and interior of the coach, the project entailed developing new products and new technology for converting
THE ENVIRONMENT
from diesel to biogas. EuroMaint Rail has also invested in specialist
Several of the units within EuroMaint already have environmental
resources for the maintenance of biogas trains. This gives a clear
certification in accordance with ISO 14001. During 2005, intensive
signal of our ambition to be at the forefront of developments for
work has been conducted in order to achieve environmental certif-
reduced environmental impact.
ication for the entire Group. The formal documentation indicating that the whole of EuroMaint had been awarded quality and environ-
Shared significant environmental aspects
mental certification was received in December.
The list opposite specifies EuroMaint’s shared significant environ-
The greatest focus was initially placed on those units that had not previously been environmentally certified, followed by the phasing-in of those units that had been certified before. The next stage of development will be to decide on common key ratios for environmental management.
38
mental aspects. EuroMaint’s environmental impact requires a licence and official notification.
How can you affect the environmental work on a day-to-day basis?
Jörgen Forsman, maintenance engineer, Gävle There are many examples, such as using the containers for separating waste and dealing with any oil spillages. When washing off graffiti, we treat all the wastewater.
Significant environmental aspects for EuroMaint: • Energy consumption • Waste
Lennart Grundel, Quality and Environmental
• Exhaust fumes from
Manager, Skövde
company cars/transport
I have to do the right thing myself and set a good
• Diesel tank installations
example, as I work with these issues. One example
• Volatile organic compounds
is reducing car travel and taking the train instead.
• Waste/process water
Leif Tornebjer, electrician and health & safety officer, Malmö By following the regulations and policies we’ve drawn up. I also help to train personnel so we can raise our environmental awareness.
39
“Important to retain our focus on environmental aspects”
Annkristin Castagna and Urban Ekmark – environmental perspective 40
40
Article on EuroMaint’s environmental work
High environmental awareness among all employees EuroMaint Rail has focused heavily on environmental certification over the past year. At EuroMaint Industry, safety and environmental thinking have been part of the scenery since the company’s time as part of Volvo, and the company has been environmentally certified for several years. Everyone is now pulling in the same direction, making EuroMaint a Group with a high level of environmental commitment. Annkristin Castagna, environmental coordinator at EuroMaint Rail, explains that many people have been involved in the work of obtaining environmental certification for the entire company during 2005, particularly within those parts of the operation that did not previously hold an environmental certificate. “It has been an extremely stimulating process,” she says, before going on to explain how the work was structured: “Many employees have taken part in a training course comprising three separate sections. We began with information about the global environmental problems. There was a lot of ground to cover – everyone has heard descriptions of these problems, but taking in and understanding how they affect your own job is a different matter. The next step was to define how work within EuroMaint Rail is affected and how this is described in goals, policies and business management systems. What is released and how is the environment affected? Finally we conducted group work, where everyone had the opportunity to submit proposals for how their own operation could be changed in practical terms in order to reduce environmental impact. “The fact that many people were involved so early meant that there was a high level of commitment throughout the certification process,” explains Annkristin. “We can now see that everyone is more aware and considers environmental impact in advance, performs risk analyses and so on.”
Common key ratios The next goal for Annkristin is for the entire company to have common key ratios for environmental impact. “The areas we will begin working with during the year are waste management, energy consumption and volatile organic compounds. My vision is for us to be able to agree on further key ratios, such as the environmental impact of transport, business travel and process water discharge. After that, of course, each unit must focus on the areas that are relevant to their particular operation. There are a number of significant environmental aspects within EuroMaint Rail. These can be influenced, although not eliminated entirely. Each workshop has its own environmental aspect catalogue, where all aspects are classified according to the same model.
“Common key ratios are the next goal” “It’s incredibly important for us to focus on these at all times, and to develop our processes as far as possible, also with consideration for the environment,” she says. “Our overall goals are to raise the degree of recycling and waste separation, heighten environmental awareness and increase the number of environmentally certified suppliers.” EuroMaint Industry – a long environmental tradition Urban Ekmark, who is in charge of technical issues and quality at EuroMaint Industry, explains that the company’s quality and environmental certification dates back to the 1990s. “Because we started out as part of Volvo, safety and environmental thinking have always been important. We’re also located in a large factory area that employs 4,000 people close to Skövde town centre. This makes it even more important to monitor any environmental impact, but it also means that there is a high level of awareness and environmental spirit.”
The company is endeavouring to further reduce its already low environmental impact in its own operation. There are well-established systems for separation at source both in offices and workshops, for forwarding to incineration or recycling. Filter installations are installed wherever welding is performed. “Over the past year, for example, we have reviewed energy consumption in the workshop and made investments aimed at making better use of our heating. We have also improved the storage stations for oil and cutting fluids,” explains Urban. Impact on customers “Our primary initiative for reducing environmental impact is being conducted in cooperation with our customers, by increasing efficiency and reducing resource wastage in their installations.” Urban explains: “We often work on our customers’ premises to rationalise their production facilities. Through preventive maintenance it is possible to achieve many benefits – particularly environmental ones. When operations gradually become continuous, there is a higher utilisation of resources and as a result the environmental impact is less per produced unit. A welltuned plant produces fewer items that have to be scrapped, requires fewer product adjustments, ensures lower energy consumption and fewer residual products.” The same thought processes apply when developing new production equipment. “Environmental thinking is naturally essential, such as selecting environmentally certified subcontractors and ensuring that the machines are energy efficient as they often operate in three shifts.” Future together “Railways are often associated with the environment, while industry is symbolised by smoking chimneys,” says Urban. “It is my hope that we will be able to preserve the long tradition of safety and environmental thinking, and ensure that the new EuroMaint is known as a company with strong environmental commitment and high levels of expertise.”
41
SUSTAINABLE DEVELOPMENT EuroMaint is a constantly changing Group, on a constantly changing market, in a constantly changing society. Sustainable development means contributing to social development with a sound economy and consideration for people’s health and safety, and for the environment.
as possible, employees are offered workplaces with individual
EuroMaint contributes to sustainable development in many ways.
because it is possible to work in different areas within different
The Group enjoys long-term, stable profitability – and contributes
parts of the Group’s companies, and because further development
to its customers’ profitability.
of the employees’ skills is high on the agenda when it comes to
ergonomic solutions. Stress in conjunction with a high workload can occasionally be unavoidable in an event-led business. It is therefore important to detect early signs of stress and to take measures quickly. Even ‘positive stress’ in highly dedicated employees can constitute a risk. The opportunities for skills development are good. This is both
The Swedish rail transport industry as a whole is now profitable
bringing strong financial results to the operation. EuroMaint supports those employees who want to continue
for the first time in its history. This is highly significant: the most environmentally friendly and safe transport system is profitable for
studying, and is also involved in research and education in society.
the first time ever.
For example, plans are in place to establish a maintenance
EuroMaint also contributes to the development of the ‘hidden
engineering centre in Malmö.
factory’ in manufacturing companies – raising their OEE (Overall Equipment Efficiency) and adding to their competitiveness. This process reinforces economic growth with more job opportunities, People
where efficient, operationally reliable industrial processes work alongside environmental consideration. As an employer, EuroMaint aims to set a good example: core values for the Group include being an attractive employer and a The environment
safe workplace. The companies work in a targeted fashion in order to offer a safe and enjoyable working environment that helps develop skills and offers good ergonomics. Many of our employees
Economy
work in risky workplaces with assignments that affect traffic safety and operational reliability. Safety work is therefore meticulous. Sustainable development means contributing
It is almost impossible to contribute to human and socially
to social development with a sound economy
sustainable development in society without starting at home and
and consideration for people’s health and
looking after your own workforce’s health and enjoyment. As far
safety, and for the environment.
EUROMAINT’S IMPACT ON THE LOCAL, REGIONAL AND GLOBAL ENVIRONMENT
Environmental aspect
Energy consumption
Impact Ground Groundwater Greenhouse effect Acidification Eutrophication
• • •
Ozone depletion Ground-level ozone Organic environmental toxins Discharge of metals Consumption of resources
42
•
Waste
Exhaust fumes from company cars/transport
Diesel tank installation
• • • • • • • • • •
• • • • •
• •
•
•
Volatile organic compounds
Waste/process water
• • • •
• •
RISK MANAGEMENT Phase 1, Identification Identifying risks calls for active participation by the people whose operation is to be analysed. The process can be based on situational questions, interviews with key people or personnel at different levels in the operation, or through workshops focusing specifically on risk identification. Phase 2, Analysis/classification In the event of changes in the operation, a qualitative analysis should be conducted prior to risk classification in order to identify trends or patterns that may affect the assessment of damage or the probability ratio. The risk classification is carried out with the aid of a matrix, in which damage/probabilities are graded: low (0–20 per cent), medium (20–40 per cent) and high (>40 per cent). Phase 3, Preventive measures Preventive measures are taken to reduce the probability of identified risks occurring. Activities include establishing the preventive measures, appointing someone to ensure the measures are implemented, scheduling the measures and documenting them in an action plan. Phase 4, Follow-up The preventive measures are continually followed up to ensure they are having the intended effect. This can take place by analysing
What safety, quality and environmental factors are susceptible ahead of a planned change? How can they be affected? What are the risks and how can they be eliminated? These are questions that EuroMaint regularly has to ask itself before implementing any change. In an operational field exposed to competition, continuous improvement is a must to be commercially successful. It is equally important to analyse planned changes from a risk and sensitivity perspective.
completed improvement measures on the basis of the action plan. It can also be achieved by summarising the risks and results, which are checked against the final report. In some cases, a new identification and analysis phase and a new action plan may be required. HIGH LEVEL OF READINESS Risk and sensitivity analyses are not only about changes instigated by EuroMaint: they also involve changes that the outside world imposes on the Group. In an increasingly complex world, risk and
PROCEDURES FOR RISK AND SENSITIVITY ANALYSIS
sensitivity analyses entail a high level of response readiness in the
What risks could arise for the company, customers or in the sur-
face of different scenarios.
rounding environment? How can the risks be eliminated or prevented? Safety is regularly included in EuroMaint’s risk and sensitivity
FINANCIAL RISK MANAGEMENT
analyses. The Group’s procedures for risk and sensitivity analysis
See Note 26 for information about financial risk management
regarding safety, quality, the environment and working environment
(exchange rate, interest rate, credit, liquidity and refinancing risks,
encompass four phases, which are outlined below.
pensions and interest rates).
43
“We can influence developments by working alongside others” Elisabeth Nilsson – Board of Directors’ perspective
44
Article on a member of the Board’s view of EuroMaint
Skilled management of the company provides security Elisabeth Nilsson has been a member of EuroMaint’s Board of Directors for two years. She is impressed by the breadth that exists within the operation: the craftsmanship in rewinding engines, the logistics when trains are taken out of and returned to service for maintenance, and in particular the extremely long-term work of influencing developments within the European rail sector.
kinds of talk about quality these days, and
towards fewer and fewer maintenance
that maintenance and quality are the same
assignments, it is vital to review how the
thing for EuroMaint.
company should deal with this situation.
“For me it is important as a member
EuroMaint already has a high market share
of the Board to be able to feel proud that
in Sweden and now sees two opportunities:
I am working for a good company, and that
to grow within neighbouring sectors in the
we are offering services of a high quality.
field of maintenance in Sweden, and to
It is necessary for each individual employee
establish itself on the international market.
to think quality in his or her day-to-day work
“It’s important to act wisely,” says
– when making decisions, installing a
Elisabeth. “You have to have the ability
component or examining a drawing.”
to handle growth while at the same time adapting the organisation.”
Great breadth of operations Elisabeth Nilsson is President of the
Elisabeth is fascinated by the tremendous
Looking to Europe
Swedish Steel Producers’ Association. She
breadth within EuroMaint Rail’s various parts.
“There is a great deal to be done to make
is now a member of EuroMaint’s Board of
Rewinding engines is an amazing skill,
the railway an attractive means of transport
Directors for the second year, and has there-
and taking trains out of service for main-
in Europe,” says Elisabeth. “Quite simply,
fore immersed herself in the situation for
tenance work and then returning them with-
trains have to travel more quickly and be
railways both within and outside of Sweden.
out disrupting the traffic flow is something
extremely reliable in areas such as safety,
entirely different. Collaborating with per-
maintenance and punctuality.
“Since the various parts of the Swedish
“EuroMaint Rail has everything in place
State Railways were first converted into
sonnel on technical and ergonomic solutions
independent companies there have been a
when working on refurbishment projects,
to influence this development. By setting
number of interesting developments. The
as well as producing attractive coaches that
good examples, we can spread our way of
revolution has not been easy for anyone,”
entice passengers, requires still other
working to business partners and custo-
she says.
qualifications.
mers in other countries. We have to be the engine, pulling a heavy load in this initial
“EuroMaint has been very adept at developing the company from being part of a state operation to working as an efficient company on a market exposed to competition. It has successfully identified new
“We are on the right track, and I believe the future looks bright”
phase. If we succeed, we can then sit in first class once the journey is under way,” says Elisabeth with a smile. She adds that European countries have reached different stages in the deregulation
concepts, developed quality awareness and developed the relationship between
“I was also very impressed when I visited
process, and that Sweden is very advanced.
customer and supplier.”
EuroMaint Industry in Skövde and saw what
There are a great many factors influencing
they had done for Volvo,” explains Elisabeth.
such decisions, not least the fact that train
“With so many different parts of the
operations are often closely linked to the
One interesting example is the Stockholm
operation, it is incredibly important to con-
nation – indeed they frequently bear the
Train Alliance, in which EuroMaint is a
stantly develop efficiency. To ask yourself if
name of the nation.
supplier, which in competition with other
you are doing the right things, whether any-
companies and consortiums has been
thing should be phased out or anything new
barriers to road haulage and shipping com-
commissioned to run the commuter train
added. Constant changes of this kind can
panies when it comes to operating across
services in Stockholm.
be stressful for the employees, who ideally
national borders, but the railways have to be
Tough competition demands quality
“It’s a little odd: nobody wants to put up
want stability. However, I believe competent
protected. This will take time to change, but
it’s important that transport is punctual.
work towards change produces long-term
we can influence developments by working
EuroMaint’s capabilities will be put to the
security. The world is changing, and we need
alongside others.
test, and it is important to realise that
to constantly evaluate how customers and
anyone who does not do their part in
clients are acting and how political develop-
what we expect of the future,” feels Elisabeth.
Stockholm will be ‘blacklisted’, and not be
ments change the conditions and rules of
“Our goal is to grow across national borders.
given a chance anywhere else either.”
the game – and to act accordingly.”
We are on the right track, and I believe that the
As the rail transport industry is moving
future looks bright!”
“When you work with the public sector,
Elisabeth mentions that there is all
“The name EuroMaint is an indication of
45
FOUR-YEAR SUMMARY PRO FORMA
PRO FORMA
Income statement, SEK mn
2005
2004
2003
2002
Turnover
1,872
1,493
1,653
1,879
Operating profit/loss
113
47
-103
-188
Net financial items
-11
-10
-11
-26
Profit/loss after tax
92
52
-106
-164
Cash flow, SEK mn
2005
2004
2003
2002
62
48
-40
-56
-100
-34
10
-21
Financing activities
90
0
30
76
Change in cash and cash equivalents
52
14
0
0
31 Dec 2005
31 Dec 2004
31 Dec 2003
31 Dec 2002
Fixed assets
215
160
113
140
Receivables and stock
693
563
690
722
66
14
0
0
Total assets
974
737
803
862
Equity
174
81
18
110
Deferred tax
12
0
0
13
Other provisions
45
46
54
75
Long-term liabilities
340
250
250
240
Operating liabilities
403
359
481
424
Total equity and liabilities
974
737
803
862
Cash flow from: Ongoing activities Investment activities
Balance sheet, SEK mn
Cash and cash equivalents
The relevant figures for 2002–2004 relate to EuroMaint Rail. EuroMaint Industry is included from 1 July 2005.
OPERATING PROFIT/LOSS SEK mn
100 -100
50
-200
0 2004
2005
18
-150
250
-188
500
46
81
-103
-50
2003
150
0
750
2002
174
50
110
1,000
200
47
1,250
1,494
1,500
1,872
100
1,653
150
, 750
1,879
2,000
EQUITY SEK mn
113
TURNOVER SEK mn
0 2002
2003
2004
2005
2002
2003
2004
2005
The business in figures
05
THE BUSINESS IN FIGURES
REPORT OF THE DIRECTORS The Board of Directors and President of EuroMaint AB hereby submit the Annual Report and consolidated financial statements for the 2005 financial year. EuroMaint AB is a wholly-owned subsidiary of AB Swedcarrier, with registered number 553036-3409 domiciled in Stockholm, Sweden, and is wholly-owned by the Swedish state. GROUP RESTRUCTURING In order to better handle future challenges and expansion plans while retaining customer focus, the decision was made in late 2005 to restructure the EuroMaint Group. In December AB Swedcarrier acquired EuroMaint AB (formerly Jernhusen Exploatering AB) from Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB (formerly EuroMaint AB) from the parent company AB Swedcarrier. The acquisition was financed through a shareholders’ contribution. The technically new Group, which thus comprises EuroMaint AB and the EuroMaint Rail Group, equates in financial terms to the former EuroMaint Group. In January 2006, the shares in Euromation AB were transferred from EuroMaint Rail AB to the new parent company, and Euromation AB changed name to EuroMaint Industry AB and continued to focus on the engineering industry. OPERATIONS EuroMaint strengthens its customers’ competitiveness through tailored maintenance and technical solutions. EuroMaint’s business proposition targets the rail industry and engineering industry. The proposition for the rail industry encompasses train maintenance and refurbishment of rolling stock, including spare parts sourcing. EuroMaint Rail is currently the market leader in Sweden and has begun offering its services to an international market, primarily Denmark, Norway and Germany. The largest customers in the rail industry are SJ AB and Green Cargo. The company’s competitors are mainly various international maintenance providers, train operators’ own maintenance organisations and vehicle manufacturers. The proposition for the engineering industry encompasses maintenance, component service, production engineering consultancy services and the development of production equipment. EuroMaint Industry currently focuses its offering on the Swedish engineering industry. The largest customers in the engineering industry are from the Volvo group of companies, which account for 90 per cent of turnover. Most maintenance service in the industry is carried out internally, so the challenge for EuroMaint Industry is to present prospective customers with a sufficiently attractive offering that maintenance services are outsourced with EuroMaint Industry. THE ENVIRONMENT The Group carries out operations with permit and notification obligations in accordance with the Swedish Environmental Code, through its companies EuroMaint Rail and EuroMaint Industry. These two companies account for the Group’s main impact on the external environment. The Group’s overall operation has a certain impact on the external environment, primarily via emissions to land, water and air. The Group’s permit and notification decisions are absolutely crucial to conducting the present operating activities. Impact on the environment EuroMaint Rail conducts three operations requiring permits and 12 requiring notification. At all workshops, the main effect on the environment is to the air and water. Eleven of the notification decisions pertain to workshops for train maintenance, and one relates to the refurbishment workshop in Malmö. The notification decisions mainly relate to vehicle washing units, painting and deicing and refuelling facilities. Increased activity in Malmö may require a new notification decision due to the increased discharge of solvent. This is currently being looked into. Malmö also has a permit for inflammable goods which expires in February 2006 and needs to be renewed. The workshops in Åmål and Gävle also need to renew their permits for inflammable goods in 2006. The operations in Åmål and Örebro require permits. This is primarily due to the large amount of chemicals used, partly in connection with vehicle washing and handling diesel systems. EuroMaint Industry does not conduct any activities that require a permit. It has one operation which requires notification. It relates to the motor rewinding operation and the use of paints. The environmental impact of all EuroMaint Industry operations is low.
48
SIGNIFICANT DEVELOPMENTS In January EuroMaint Rail signed a 10-year maintenance contract with Arlanda Express worth in the region of SEK 250 million. In March EuroMaint Rail established a new division, Engineering & Planning, to further focus on and secure solid expertise in engineering and development of maintenance systems. In May a sales function with a focus on international sales was established. In June EuroMaint Rail delivered a Y1 engine coach converted from diesel to run on biogas – the world’s first biogas engine coach. The customer, Svensk Biogas AB, is a wholly-owned subsidiary of Tekniska Verken i Linköping AB. Euromation AB was acquired from Volvo Technology Transfer, Volvo Powertrain and Volvo Cars on 1 June. Euromation has around 285 employees and a turnover of approximately SEK 300 million. The ‘Stockholm Train Alliance’, in which EuroMaint Rail is a maintenance provider, won the contract for Stockholm’s Pendeltåg commuter rail traffic. The agreement runs until 2011 with an option for a further five years, and the order is worth in the region of SEK 850 million, excluding the option period. There was an appeal against the decision but the legal process led to the Alliance finally receiving the order in any case. In December, EuroMaint Rail’s operational management system was granted environmental certification. During the year, EuroMaint Rail began a collaboration with AEA Technology Rail to enable the introduction of maintenance technology that decreases maintenance costs and increases the availability of customers’ rolling stock. FUTURE DEVELOPMENT Clear trends in trade and industry towards an increased focus on the core business have resulted in various types of service increasingly being outsourced to specialist companies. Over the longer term this trend has related to services under the umbrella term of ‘facility management’. The development has continued with the division of industrial corporations and public services into different companies or specialist operations, thereby enabling each part to evolve into a robust unit under professional, proactive management. EuroMaint Rail is a good example of this trend, whereby SJ Engineering with its maintenance and refurbishment operation within the former Swedish State Railways (SJ) was converted into companies in 2001. In a similar way, the Volvo companies set up the Maskinteknik unit as a company in 2000, which became part of the EuroMaint Group on 1 July 2005 and changed name to EuroMaint Industry in 2006. By highlighting the development of the engineering operation in the rail industry, automotive industry and proprietary core business on a competitive market, it has been possible to achieve major benefits for customers and owners alike. The results have been measurable in increased accessibility to costly production equipment and plants, while it has also been possible to reduce maintenance costs and improve production efficiency. The EuroMaint Group will further develop efficient methods and processes for maintenance and production, thereby helping increase customers’ competitiveness. EuroMaint also intends to be part of the continued restructuring and development of the maintenance industry, both in Sweden and in other EU countries. This could take place through organic growth and corporate acquisitions. It primarily refers to the rail industry and the engineering industry, but could also extend to other industrial segments where EuroMaint’s processes can be successfully applied.
49
THE BUSINESS IN FIGURES
TURNOVER AND PROFIT Turnover Turnover amounted to SEK 1,872 (1,493) million. Of the SEK 379 million increase in turnover, SEK 161 million can be attributed to the acquisition of Euromation on 1 July. The remaining increase in turnover is due to expansion in refurbishment business (X2) and a general increase in volume. Operating profit Operating profit amounted to SEK 113 (47) million, which gives an operating margin of 6 per cent and an increase in absolute terms of SEK 66 million. The improvement can be explained by • The acquisition of Euromation with a positive contribution of SEK 13 million. • A decrease in purchasing costs by about 10 per cent wherever possible. • An update of the obsolescence model for materials, which means that inventories have been revalued by SEK 23 million, which has had a positive impact on profit for the year. Financial items Net financial income/expense amounted to SEK -11 (-10) million. The figure has been positively affected by lower interest rates, and negatively influenced by increased borrowing due to the acquisition of Euromation. Cash flow Cash flow for the year amounted to SEK 52 (14) million. The increase is mainly attributable to improved profit and moderation in investments in tangible assets. During the first three quarters of the year there was a backlog in the planned cash flow, mainly due to initial delays in deliveries for the X2 refurbishment. Cash flow from business in the fourth quarter was, however, strong. Cash flow has also been influenced by transactions linked to the acquisition of Euromation. Goal achievement Turnover for 2005 amounted to SEK 1,872 million. Operating profit was SEK 113 million and the operating margin equalled 6 per cent. The long-term goal is an operating margin of 8 per cent. EuroMaint has won and started working on new contracts. Planned costcutting has been successfully implemented, as has effective cost control. The equity/assets ratio is 17.8 (11) per cent, which is in line with the business plan. The goal is an equity/assets ratio of at least 25 per cent. Proposed treatment of unappropriated earnings Profit for the year in the parent company amounted to SEK 117,570 ( ). The Board of Directors proposes that the funds at the AGM’s disposal, in accordance with the parent company’s balance sheet, be carried forward.
Earnings carried forward (SEK)
156,761,000
Net profit for the year TOTAL
117,570 156,878,570
The income statement and balance sheet will be presented to the AGM on 30 March 2006 for approval.
50
THE BUSINESS IN FIGURES
INCOME STATEMENT 1 January–31 December 2005
Group SEK thousands
Note
Parent company 2005
2004
2005
2004
1,865,011
1,482,906
0
0
7,202
10,374
0
0
1,872,213
1,493,280
0
0
-631,100
-462,882
0
0
5, 24
-381,036
-315,855
0
0
Costs of personnel
6
-721,183
-661,554
0
0
Depreciation of tangible assets
7
-24,164
-18,636
0
0
Amortisation of intangible assets
8
-938
0
0
0
-69
917
0
0
0
12,364
0
0
-1,758,489
-1,445,646
0
0
113,723
47,634
0
0
OPERATING INCOME Net turnover Other operating income
4
TOTAL OPERATING INCOME
OPERATING EXPENSES Net operating expenses Other external expenses
Other operating expenses Items affecting comparability
9
TOTAL OPERATING EXPENSES
Operating profit
FINANCIAL ITEMS Financial income
10
916
570
163
0
Financial expenses
10
-11,800
-10,585
0
0
NET FINANCIAL INCOME/EXPENSES
-10,884
-10,015
163
0
Pre-tax profit
102,840
37,619
163
0
-10,375
13,970
-46
0
NET PROFIT FOR THE PERIOD
92,464
51,589
118
0
Parent company shareholders’ share of profit for the period
92,464
51,589
118
0
92.5
51.6
0.12
0
Tax
Earnings per share, SEK thousands
11
51
THE BUSINESS IN FIGURES
BALANCE SHEET On 31 December 2005
Group SEK thousands
Parent company
Note
2005
2004
2005
2004
Tangible assets
7
125,567
118,703
66
0
Intangible assets
8
44,258
0
0
0
12
0
0
156,761
0
13, 14
12,929
12,929
129
129
Pension receivables
14
10,383
12,456
0
0
Deferred tax assets
15
21,547
20,000
0
0
214,684
164,088
156,956
129
259,343
237,925
0
0
283,644
174,970
164
0
511
470
0
0
Other receivables
41,275
13,196
0
0
Completed, not invoiced
79,997
85,912
0
0
0
20,000
0
0
28,450
26,330
0
0
65,850
13,820
0
0
TOTAL CURRENT ASSETS
759,070
572,623
164
0
TOTAL ASSETS
973,753
736,711
157,120
129
100
100
100
100
Other contributed capital/statutory reserve
394,863
394,863
29
29
Accumulated deficit/non-restricted equity
-221,372
-313,532
156,879
0
PARENT COMPANY SHAREHOLDERS
173,591
81,431
157,008
129
TOTAL EQUITY
173,591
81,431
157,008
129
ASSETS
FIXED ASSETS
Participations in Group companies Long-term receivables
TOTAL FIXED ASSETS
CURRENT ASSETS Inventories
16
Accounts receivable Receivables from Group companies
Tax assets Prepaid expenses and accrued income Cash and cash equivalents
17
EQUITY Share capital
SHARE CAPITAL PERTAINING TO
52
THE BUSINESS IN FIGURES
BALANCE SHEET CONTD.
Group SEK thousands
Parent company
Note
2005
2004
2005
2004
Long-term interest-bearing liabilities
18
340,000
250,000
0
0
Provision for pensions and similar commitments
14
38,448
41,219
0
0
Other provisions
19
6,363
4,975
0
0
Deferred tax liability
20
12,418
0
0
0
397,229
296,194
0
0
LIABILITIES
LONG-TERM LIABILITIES
TOTAL LONG-TERM LIABILITIES
CURRENT LIABILITIES Advance payment from customers
21
9,938
21,454
0
0
Accounts payable
21
116,954
109,514
0
0
Income tax liability
21
6,690
8,747
46
0
Liabilities to Group companies
21
7,482
10,705
0
0
Other current liabilities
21
19,120
3,323
66
0
Accrued expenses and prepaid income
22
242,750
205,343
0
0
TOTAL CURRENT LIABILITIES
402,933
359,086
112
0
TOTAL LIABILITIES
800,162
655,280
112
0
973,753
736,711
157,120
129
TOTAL EQUITY AND LIABILITIES
PLEDGED ASSETS AND CONTINGENT LIABILITIES Pledged assets, floating charges
23
20,000
20,000
None
None
Contingent liabilities
23
11,809
9,463
None
None
53
THE BUSINESS IN FIGURES
CHANGES IN CONSOLIDATED EQUITY 1 January – 31 December 2005
Share capital pertaining to parent company shareholders SEK thousands
Share capital
Opening equity 1 Jan 2004
Other contributed capital
Accumulated deficit
Total equity
100
394,863
-365,121
29,842
Net profit for the year
0
0
51,589
51,589
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS
0
0
51,589
51,589
CLOSING EQUITY 31 DEC 2004
100
394,863
-313,532
81,431
Opening equity 1 Jan 2005
100
394,863
-313,532
81,431
Reclassification
0
0
-304
-304
Net profit for the year
0
0
92,464
92,464
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS
0
0
92,160
92,160
100
394,863
-221,372
173,591
CLOSING EQUITY 31 DEC 2005
CHANGES IN PARENT COMPANY EQUITY 1 January – 31 December 2005
Share capital pertaining to parent company shareholders, SEK thousands
Share capital Statutory reserve
Opening equity 1 Jan 2004
Earnings vinstmedel
Net profit for the year
Total equity
100
29
0
0
129
Net profit for the year
0
0
0
0
0
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS
0
0
0
0
0
CLOSING EQUITY 31 DEC 2004
100
29
0
0
129
Opening equity 1 Jan 2005
100
29
0
0
129
Net profit for the year
0
0
0
118
118
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS
0
0
0
118
118
Shareholders’ contribution
0
0
156,761
0
0
100
29
156,761
118
157,008
CLOSING EQUITY 31 DEC 2005 The number of shares in the parent company amounts to 1,000 The quota value in the parent company amounts to 100
54
THE BUSINESS IN FIGURES
CASH FLOW ANALYSIS 1 January – 31 December 2005
Group SEK thousands
Note
Parent company 2005
2004
2005
2004
102,840
37,619
163
0
25,102
18,636
0
0
-33,929
-82,962
-46
0
94,013
-26,707
118
0
Increase (–)/decrease (+) in inventories
-18,501
42,284
0
0
Increase (–)/decrease (+) in accounts receivable
-47,675
66,568
0
0
Increase (–)/decrease (+) in other current receivables
22,910
-801
-163
0
Increase (+)/decrease (–) in accounts payable
-15,467
-14,182
0
0
Increase (+)/decrease (–) in other current liabilities
26,694
-19,513
112
0
CASH FLOW FROM ONGOING ACTIVITIES
61,974
47,649
66
0
-21,049
-49,589
-66
0
1,115
16,990
0
0
-80,534
0
0
0
524
-1,230
0
0
-99,944
-33,829
-66
0
-37,970
13,820
0
0
Borrowings
100,000
0
0
0
Repayment of debt
-10,000
0
0
0
CASH FLOW FROM FINANCING ACTIVITIES
90,000
0
0
0
Change in cash and cash equivalents for the year
52,030
13,820
0
0
Cash and cash equivalents at beginning of year
13,820
0
0
0
Exchange rate differences in cash and cash equivalents
0
0
0
0
CASH AND CASH EQUIVALENTS AT END OF YEAR
65,850
13,820
0
0
ONGOING ACTIVITIES Profit after financial items Depreciation and write-downs Other items not affecting liquidity
25
CASH FLOW FROM ONGOING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL
CHANGES IN WORKING CAPITAL
INVESTMENT ACTIVITIES Acquisition of tangible fixed assets
7
Divestment of tangible fixed assets Acquisition of subsidiary/business segment, net liquidity effect
27
Acquisition of financial assets CASH FLOW FROM INVESTMENT ACTIVITIES
Cash flow from operating activities
FINANCING ACTIVITIES
55
THE BUSINESS IN FIGURES
NOTES
NOTE
1
Accounting principles
General information EuroMaint Rail develops and produces technical system services and maintenance of rolling stock. EuroMaint’s proposition to customers encompasses most forms of technical maintenance. EuroMaint Industry offers customers maintenance, installation and development of various types of production equipment. The accounting principles below apply for both the parent company and the Group. The consolidated financial statements and the Annual Report for EuroMaint AB (the parent company) for the 2005 financial year have been approved by the Board of Directors and the President for presentation to the AGM on 30 March 2006 for adoption. The parent company is a registered limited company domiciled in Stockholm, Sweden. The address of the head office is Svetsarvägen 10, SE-171 29 SOLNA. The Swedish state is the ultimate owner. The parent company of the largest Group in which EuroMaint AB, 556084-8458, is a subsidiary and in which consolidated financial statements are prepared, is AB Swedcarrier, 556036-3409, in Stockholm. Summary of important accounting principles The most important accounting principles applied in the preparation of these consolidated financial statements have been set out. Statement on compliance with the applied rules The consolidated financial statements for the EuroMaint Group have been prepared in accordance with International Financial Reporting Standards (IFRS). As the parent company is a company in the EU, only the IFRS as endorsed by the EU are applied. Moreover, the consolidated financial statements are prepared in accordance with Swedish legislation through the application of Swedish Financial Accounting Standards Council recommendation RR 30 (Supplementary financial reporting rules for Groups). The parent company Annual Report is prepared in accordance with Swedish law through the application of Swedish Financial Accounting Standards Council recommendation RR 32 (Financial reporting for legal entities). This means that IFRS valuation and disclosure principles are applied with the deviations specified in the section on parent company accounting principles. EuroMaint also follows the Stockholm Stock Exchange’s listing agreement with appendices and regulations from the Swedish Industry and Commerce Stock Exchange Committee (NBK). Foundation for preparing reports The consolidated financial statements for the EuroMaint Group have been prepared in accordance with International Financial Reporting Standards (IFRS). The accounts are primarily based on historical costs with the exception of certain financial instruments which are reported at fair value. The Group has applied the following IFRS for 2005. Comparison figures for 2004 have been adjusted as required in accordance with prevailing rules.
56
IAS 1 IAS 2 IAS 7 IAS 8 IAS 10 IAS 11 IAS 12 IAS 14 IAS 16 IAS 17 IAS 18 IAS 19 IAS 23 IAS 24 IAS 27 IAS 32 IAS 33 IAS 37 IAS 38 IAS 39 IFRS 1 IFRS 3
Presentation of Financial Statements Inventories Cash Flow Statements Accounting Policies, Changes in Accounting Estimates and Errors Events after the Balance Sheet Date Construction Contracts Income Taxes Segment Reporting Property, Plant and Equipment Leases Revenue Employee Benefits Borrowing Costs Related Party Disclosures Consolidated and Separate Financial Statements Financial Instruments: Disclosure and Presentation Earnings per Share Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Financial Instruments: Recognition and Measurement First-time Adoption of IFRS Business Combinations
Important estimates and assumptions for accounting purposes The Group makes estimates and assumptions about the future. The estimates for accounting purposes which result from these, by definition, will rarely equate to the actual result. The estimates and assumptions which entail a significant risk for considerable adjustments in carrying amounts for assets and liabilities over the coming financial year are discussed below. Critical accounting issues During the preparation of EuroMaint’s consolidated financial statements, the Board and President have, in addition to estimates, made a number of assessments of critical accounting issues which are highly significant to carrying amounts. This applies for the following areas: Fair value of acquired subsidiary EuroMaint Industry’s predominant customers operate in the automotive industry. This industry is undergoing heavy restructuring both nationally and internationally, which is henceforth likely to force players possibly to relocate their production facilities to regions with comparative advantages. Needless to say, this scenario means that valuations of customer relations and goodwill contain a degree of uncertainty. Uncertainty in estimates Certain assumptions about the future and certain estimates and assessments on the balance sheet date are of particular importance to the valuation of assets and liabilities in the balance sheet. The areas where the risk of changes in value during the subsequent year are greatest because the assumptions or estimates may need to be altered are discussed below.
THE BUSINESS IN FIGURES
NOTES Impairment test for goodwill The value of recognised goodwill is tested at least once a year to determine any write-down requirement. The test requires an assessment of the value in use of the cash generating unit, or groups of cash generating units, to which the goodwill value is attributable. In turn, this requires an estimation of the expected future cash flow from the cash generating unit and a relevant discount rate must be established to calculate the present value of the cash flow. The assessments carried out on 31 December 2005 are stated in Note 8, Intangible Assets. Obsolescence of inventories In terms of value, inventories mainly comprise items which have been acquired in accordance with an assessed maintenance plan for various train models. As these cycles are long-term in nature (5 to 12 years), there is an element of uncertainty in this assessment. The company has a far-reaching obligation to stock items (spare parts) for a long time for various train models which have a very long financial and technical life. Consolidated accounts Subsidiaries are all companies in which the Group is entitled to formulate financial and operational strategies in a way that usually accompanies a shareholding amounting to over half the voting rights. Subsidiaries are included in the consolidated financial statements from the day on which controlling influence passes to the Group. They are excluded from the consolidated financial statements from the day on which this controlling influence ceases. The purchase method is used in accounting for the Group’s business combinations. The cost of an acquisition comprises the fair value of assets provided as remuneration, arisen or assumed liabilities on the transfer day, plus costs directly attributable to the acquisition. Identifiable acquired assets and assumed liabilities and contingent liabilities in a corporate acquisition are initially measured at fair value on the acquisition date regardless of the extent of any minority interest. The surplus comprising the difference between the cost and fair value of the Group’s proportion of identifiable acquired net assets is recognised as goodwill. If the cost is less than the fair value of the acquired subsidiary’s net assets, the difference is recognised directly in the income statement. Intra-Group transactions and balance sheet items, as well as profits on transactions between Group companies, are eliminated. Losses are also eliminated, unless the transaction is proof of a writedown requirement for the transferred asset. The accounting principles for subsidiaries have been changed where appropriate to guarantee consistent application of the Group’s principles. Euromation AB which was acquired on 1 July 2005 has been included in the consolidated financial statements in accordance with the purchase method. This entails, for example, distributing the cost of acquired assets, assumed commitments and liabilities at the time of the acquisition on the basis of their fair values. Consequently, Euromation’s profit and cash flow for the six-month period July – December 2005 are included in the consolidated financial statements. In order to better handle future challenges and expansion plans while retaining customer focus, the decision was made in late 2005 to restructure the EuroMaint Group. In December AB Swedcarrier acquired EuroMaint AB (formerly Jernhusen Exploatering AB) from
Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB (formerly EuroMaint AB) from the parent company AB Swedcarrier. The acquisition was financed through a shareholders’ contribution. The technically new Group, which thus comprises EuroMaint AB and the EuroMaint Rail Group, equates in financial terms to the former EuroMaint Group. EuroMaint AB’s acquisition of EuroMaint Rail AB was a transaction between companies under the same controlling influence. IFRS 3 which deals with accounting of business combinations does not, therefore, apply. The consolidated financial statements have been prepared using the pooling of interests method, which entails preparing the consolidated financial statements for the newly formed Group as though both units (EuroMaint AB and the EuroMaint Rail Group) merged at the beginning of the comparison year and without revaluation of assets and liabilities in both the merged units. Business combinations IFRS 3 has been applied for business combinations carried out since 1 January 2004, which is in accordance with IFRS 1 and therefore an exception from the main rule on retroactive application of IFRS. IFRS 3 entails establishing the fair value of identifiable assets and liabilities in the acquired operation at the time of acquisition. Identifiable assets and liabilities also include assets, liabilities and provisions including obligations and demands from external parties not reported in the acquired operation’s balance sheet. No provisions are made for costs relating to planned restructuring measures resulting from the acquisition. The difference between the cost of the acquisition and the acquired proportion of net assets in the acquired operation is classified as goodwill and is recognised as an intangible asset in the balance sheet. The useful life of each individual intangible asset is established and the asset’s fair value is amortised over its useful life. If the useful life is deemed indefinite, no amortisation takes place. If the useful life of an intangible asset is deemed indefinite, all relevant conditions are taken into account and based on there being no foreseeable upper time limit for the net cash flow generated by the asset. The useful life for goodwill is generally assumed to be indefinite. Segment reporting As the subsidiaries conduct separate operations with separate products and services, their operations have been chosen as the primary segment. Sales between subsidiaries are based on market conditions. All assets and liabilities have been included for each subsidiary. Segment information per subsidiary is given in Note 3. Translation of foreign currencies Transactions in foreign currencies are translated at the rate used on the transaction date. Receivables and liabilities in foreign currencies are translated at the exchange rates in force on the balance sheet date. Exchange rate differences on loans and investments in foreign currencies are reported as financial income or financial expense. Other exchange differences are included in operating income.
57
THE BUSINESS IN FIGURES
NOTES Tangible fixed assets Tangible fixed assets are recognised at cost less accumulated depreciation according to plan and accumulated write-downs. Depreciation takes place in accordance with a systematic plan over the useful life of the asset to an estimated residual value. Additional costs are added to the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is likely that future economic benefits associated with the asset will accrue to the Group and the asset’s cost can be measured in a reliable way. All other forms of repair and maintenance are recognised as expenses in the income statement for the period in which they arise. In order to distribute the cost of tangible fixed assets down to the estimated residual value, depreciation takes place linearly over the estimated useful life, in accordance with the following percentages. Category Machinery and equipment Computers and terminals Buildings
Depreciation, % 5–10 33 5
The residual values and useful lives of assets are tested on each balance sheet date and adjusted as necessary. An asset’s carrying amount is depreciated immediately to its recoverable amount (the higher of the net selling price and value in use) if the asset’s carrying amount exceeds its estimated recoverable amount. Profits and losses from sales are established by means of a comparison between the sales proceeds and carrying amount and the result is recognised in the income statement. Intangible assets Goodwill Goodwill is the amount by which the cost exceeds the fair value of the Group’s proportion of the subsidiary’s identifiable net assets upon acquisition. Goodwill upon acquisition of the subsidiary is recognised under intangible assets. Profit or loss from the sale of a unit includes the remaining carrying amount of the goodwill pertaining to the sold unit. Goodwill is distributed between cash generating units upon testing to determine any write-down requirement. The write-down requirement for goodwill is tested as follows: the goodwill value established at the time of acquisition is distributed among cash generating units or groups of cash generating units, which are expected to bring benefits through the acquisition in the form of synergy effects. Assets and liabilities already within the Group at the time of acquisition may also be attributed to these cash generating units. Each cash flow of this kind to which goodwill is distributed, corresponds to the lowest level in the Group at which goodwill is monitored in the company’s Board and is not a larger part of the Group than a segment, i.e. a business segment or geographical area in accordance with the Group’s segment reporting. A write-down requirement exists when the recoverable amount for a cash generating unit, or group of cash generating units, is lower than the carrying amount. In such cases a write-down is entered in the income statement.
58
Other intangible assets/Customer relations In connection with corporate acquisitions, the Group has identified intangible assets which fulfil the criteria set out in IAS 38. Linear amortisation is applied over the useful life of the asset, which is 8 years. The carrying amounts of intangible assets are tested to determine any write-down requirement when events or changes in circumstances indicate that the value may not be recoverable. Write-downs Assets with an indefinite useful life are not depreciated/amortised but tested annually to determine any write-down requirement. The assets which are depreciated/amortised are assessed in terms of decrease in value whenever an event or a change indicates that the carrying amount may not be recoverable. A write-down is carried out for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less selling expenses, or its value in use. On determining the write-down requirement, the assets are grouped at the lowest levels at which there are separate, identifiable cash flows (cash generating units). Goodwill is tested annually to identify any write-down requirement and is recognised at cost less accumulated write-downs. Financial instruments Financial instruments recognised as assets in the balance sheet include cash equivalents, accounts receivable, derivatives and other receivables. Those recognised as liabilities include accounts payable, borrowings, derivatives and other liabilities. A financial asset or financial liability is recognised in the balance sheet when the company becomes party to the instrument’s contractual terms. Accounts receivable are recognised in the balance sheet once an invoice has been sent. Liabilities are recognised once the counterparty has completed its task and there is a contractual obligation to pay, even though an invoice may not yet have been received. Accounts payable are recognised once the invoice has been received. A financial asset is excluded from the balance sheet once the contractual rights have been realised, have expired or the company has lost control over it. The same applies for part of a financial asset. A financial liability is removed from the balance sheet once the obligation in the contract has been fulfilled or has in some other way been extinguished. The same applies for part of a financial liability. EuroMaint has taken the voluntary exception to apply IAS 32 and IAS 39 from 1 January 2005. Financial assets Acquisitions and sales of financial assets are reported on the business day, i.e. the day on which the company commits to acquiring or selling the asset.
THE BUSINESS IN FIGURES
NOTES Borrowing Loans are initially recognised at the loan amount and are subsequently entered at the loan amount less reductions. Borrowing is classified as current liabilities unless the Group has an unconditional right to postpone payment of the liability for at least 12 months after the balance sheet date. Derivative instruments The Group uses derivative instruments to secure parts of its exposure to currency risks in ongoing payment flows. Management is in accordance with the financial rules established by the Board. Hedge accounting is not applied, instead all derivatives are categorised as financial assets and liabilities valued at fair value through the income statement. This means that the change in value of the derivatives is recognised in the income statement under financial items. Derivatives with positive values are entered as assets and derivatives with negative values are entered as liabilities. Fair value is established by obtaining the costs or revenue which would have arisen if the contract had expired on the balance sheet date. Inventories Material stores and finished goods inventories are valued at the lower of cost or net selling price. The Group applies the first-in, first-out method (FIFO). The net selling price is the estimated selling price in the ongoing operation less applicable variable selling expenses. Accounts receivable Accounts receivable are reported at the invoiced amount less any reserve for decrease in value. A reserve for decrease in value of accounts receivable is set up when there is objective proof that the Group will not be able to receive all amounts due in accordance with the original terms of the receivables. The size of the reserve is the difference between the asset’s carrying amount and the value of assessed future cash flows. The decrease in value is reported in the income statement. Cash and cash equivalents Cash and cash equivalents include cash and bank balances. In the balance sheet, the bank overdraft facility utilised is entered as borrowing under current liabilities. Income tax The tax burden is affected by appropriations and other tax adjustments made in each company. The tax rate used is 28 per cent. Deferred tax is recognised in its entirety on all temporary differences comprising the difference between the tax base for assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is calculated through the application of tax rates and laws which have been decided or notified on the balance sheet date and which are expected to apply when the deferred tax assets in question are realised or the deferred tax liability is cleared. Deferred tax assets are recognised for tax-deductible temporary differences and unused loss carry-forwards to the extent it is likely that future taxable profit will be available against which the temporary differences or unused loss carry-forwards may be used.
Remuneration to employees Pension obligations The Group companies have different pension plans. The pension plans are primarily financed through payment of insurance premiums or through a provision in the balance sheet. The Group has both defined benefit and defined contribution pension plans. For employees in the Group previously employed by the public enterprise the Swedish State Railways, the Swedish state is responsible for earned and not paid pension commitments for the time prior to conversion into companies at the end of 2000/beginning of 2001. A defined contribution pension plan is a plan whereby the Group has no further payment obligation once the contributions are paid. Defined contribution pension plans in the Group are PA-03, Alternativ ITP-S (supplementary pensions for higher earners), and ITP supplementary pensions for salaried employees, Alecta. ITP pensions in Alecta are recognised as defined contribution plans due to a deficiency in the information required to classify the plan as a defined benefit pension. According to a statement from the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force, URA 42, these are defined benefit plans encompassing several employers. EuroMaint has not had access to such information for the 2005 financial year that would make it possible to enter this plan as a defined benefit plan. The ITP pension, which is secured through an insurance policy with Alecta, is therefore entered as a defined contribution plan. Fees for the year for pension plans issued by Alecta amount to SEK 19 (14) million. Some employees are entitled to exchange part of their ITP plan for a premium-based pension solution where the company’s sole obligation is to pay the set premiums. The fees are reported as costs of personnel when they fall due for payment. Prepaid fees are recognised as an asset to the extent that cash repayment or a reduction in future payments may accrue to the company. A defined benefit pension plan guarantees the employee a pension equivalent to a certain percentage of his or her final salary. The liability recognised in the balance sheet regarding defined benefit pension plans is the present value of the defined benefit obligation on the balance sheet date net the fair value of the plan assets, with adjustments for unrecognised actuarial losses/past service losses. The defined benefit pension obligation is calculated annually by independent actuaries. The present value of the defined benefit obligation is established by discounting the estimated future cash flow at an interest rate for government bonds issued in the same currency in which the remuneration will be paid out, and with durations comparable to the pension provision in question. Actuarial gains and losses arising from experience-based adjustments and changes in actuarial assumptions exceeding the higher of 10 per cent of the value of the plan assets and 10 per cent of the defined benefit obligation, are taken up as expense or income over the estimated average remaining period of service of the employees. Past service cost is recognised directly in the income statement, unless the changes in the pension plan are conditional on the employee remaining in service for a set period (entitlement period). In such cases, the past service cost is recognised on a straight-line basis over the entitlement period. The results for defined benefit pension obligations were calculated in accordance with IAS 19 (Projected Unit Credit Method) on 31 December 2005.
59
THE BUSINESS IN FIGURES
NOTES Remuneration on termination of employment Remuneration on termination of employment is paid when an employee’s position is terminated prior to standard retirement or when an employee accepts voluntary redundancy from the position in exchange for such remuneration. The Group recognises severance pay when it is demonstrably obliged either to make the employee redundant in accordance with a detailed formal plan with no opportunity for recall, or to provide remuneration upon redundancy due to an offer made to encourage voluntary redundancy among personnel. Benefits due after 12 months of the balance sheet date or longer are discounted at the present value.
Related parties Related companies to the EuroMaint Group are defined as state companies with market requirements where the state has a controlling influence. Persons closely associated with the Group are defined as Board members, senior personnel and close family members of these people. Disclosures are provided about transactions with related parties which entail the transfer of resources, services or obligations between related parties, whether or not remuneration is paid. The information contains details of the nature of the relationship and information about the effect of the relationship on the financial reports.
Provisions Provisions are recognised when the Group has an existing legal or constructive obligation as a result of a past event, and it is more probable than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. If there are a number of similar obligations, the probability that an outflow of resources will be required to settle is assessed generally for this entire group of obligations. A provision is also reported if the probability of an outflow regarding a specific item in this group of commitments is only slight.
Parent company The parent company applies the same accounting principles as the Group, along with RR 32.
Revenue recognition Net turnover encompasses sales of services within maintenance, refurbishment of rolling stock, as well as maintenance and implementation of production facilities for the engineering industry. For maintenance contracts guaranteeing availability (known as ‘availability contracts’) and refurbishment contracts, income and costs pertaining to the assignment are recognised relative to the degree of completion of the assignment. This accounting principle is based on the view that the task is fulfilled in line with the work being carried out, and means that profit is recognised progressively based on the degree of completion of each assignment when the assignment’s final outcome can be measured in a reliable way. For availability contracts, the degree of completion is determined on the basis of work carried out in relation to the maintenance plan. For refurbishment contracts, the degree of completion is determined in relation to accrued assignment costs. If an assignment’s final outcome cannot be measured in a reliable way but no loss is feared, revenue corresponding to accrued costs is recognised. A feared loss for an assignment is immediately charged in its entirety to the period’s results. Leases Leases where a considerable part of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made during the lease term are taken up as expenses in the income statement on a straight-line basis over the lease term. Cash flow analysis The indirect method is applied in recognising cash flow from ongoing activities.
60
Transition to International Financial Reporting Standards (IFRS) As of 1 January 2005, the Group prepares its consolidated financial statements in accordance with International Financial Reporting Standards, IFRS. The Group has applied the Swedish Financial Accounting Standards Council’s recommendations up until 2004, which largely correspond to IFRS. Accounting and reporting in accordance with IFRS have affected the Group’s reported results and position. The area that has had an impact on the Balance Sheet, Equity and Reported Result upon transition to IFRS is: • Pensions IAS 19 Balance Sheet, SEK mn Equity as per former accounting principles
1 Jan 2004 18,2
Effect of IAS 19
11,6
Equity as per new accounting principles
29,8
Balance Sheet, SEK mn Equity as per former accounting principles
31 Dec 2004 68,6
Effect of IAS 19
12,8
Equity as per new accounting principles
81,4
Income Statement, SEK mn Profit as per former accounting principles Effect of IAS 19 Profit as per new accounting principles
2004 50,4 1,2 51,6
THE BUSINESS IN FIGURES
NOTES
Note
2
Transactions with related parties
Group, SEK thousands Sale of goods and services State companies/departments Banverket Green Cargo
1 Jan 2005 31 Dec 2005
1 Jan 2004 31 Dec 2004
50,313
61,848
299,802
297,448
SJ AB
835,565
689,644
ASJ
12,829
1,732
SweMaint AB
55,453
41,465
Vattenfall
543
651
Jernhusen
19
246
Purchase of goods and services State companies/departments Banverket
7,688
Green Cargo
2,014
5,283
SJ AB
9,821
7,367
37
36
30,937
31,644
6
4
233
444
128,482
115,555
ASJ SweMaint AB Lantmäteriverket Vattenfall Jernhusen
8,372
Receivables from related parties State companies/departments Banverket
8,019
21,701
Green Cargo
31,505
32,392
102,278
73,360
14,087
414
209
415
SJ AB ASJ SweMaint AB Vattenfall
3
4
Jernhusen
0
470
2,049
2,710
Liabilities to related parties State companies/departments Banverket Green Cargo
283
567
SJ AB
1,187
627
SweMaint AB
3,821
5,543
Vattenfall Jernhusen
27
10
3,645
4,648
The table below presents information about the prime nature of the transactions with related parties. Operating revenues
Expenses
Banverket
Sale of materials Rolling stock maintenance Recovery services
Premises rental Telephone costs
Green Cargo
Sale of materials Rolling stock maintenance Recovery services
Premises rental Transport costs
Lantmäteriverket –
Purchase of maps
SJ AB
Sale of materials Rolling stock maintenance Recovery services
Train journeys
SweMaint AB
Sale of materials Rolling stock maintenance
Material costs Component maintenance costs
ASJ
Refurbishment of rolling stock
Damages costs
Jernhusen
–
Workshop rental
Vattenfall AB
Industrial maintenance
Energy costs
61
THE BUSINESS IN FIGURES
NOTES
Note
3
Segment reporting
The EuroMaint Group operates in the maintenance industry. The Group has two segments: rolling stock maintenance and industrial maintenance. EuroMaint Rail provides maintenance for rolling stock, while EuroMaint Industry provides industrial maintenance. EuroMaint Industry (at the time Euromation AB) was acquired on 1 July 2005, which is why segment reporting for industrial maintenance is barely applicable for the 2005 financial year. 1 januari–31 december 2005, SEK thousands Net turnover External net turnover Internal net turnover Total net turnover Profit/loss Operating profit/loss Financial income
EuroMaint Rail
EuroMaint Industry
Group adjustments
Group
1,709,608
161,429
0
1,871,037
4,933
27
-3,784
1,176
1,714,541
161,456
-3,784
1,872,213
105,516
6,850
1,357
113,723
642
111
163
916
Financial expenses
-11,793
-7
0
-11,800
Pre-tax profit
94,365
6,954
1,520
102,840
Income tax
-6,200
-1,971
-2,204
-10,375
Net profit/loss for the year
88,165
4,983
-684
92,464
924,600
123,699
-74,546
973,753
735,284
74,968
-10,090
800,162
6,185
970
66
7,221
23,230
935
938
25,102
Other disclosures Assets Liabilities Investments Depreciation/amortisation
The Group generally enters sales and transfers between the segments as though the sales and transfers had been to a third party at prevailing market prices.
Note
4
Other operating income
Group, SEK thousands Profit from sale of fixed assets Exchange gain from receivables/ liabilities relating to operations
Note
5
Remuneration to auditors
31 Dec 2005
31 Dec 2004
869
5,363
Deloitte Audit engagement
22
370
1,480
1,050
Other engagements
630
402
Ernst & Young Audit engagement
910
0
Other engagements
150
0
1,712
772
Rental income
1,226
385
Other
3,627
3,576
Total
7,202
10,374
Group, SEK thousands
Total
1 Jan 2005 31 Dec 2005
1 Jan 2004 31 Dec 2004
Audit engagement refers to the examination of the annual report and accounts as well as the Board’s administration, other tasks incumbent on the company’s auditors as well as advice or other assistance resulting from observations during the examination or implementation of other such work tasks. All other work is classified as other engagements.
62
THE BUSINESS IN FIGURES
NOTES
Note
6
Average number of employees and costs of personnel Group 1 Jan 2005 31 Dec 2005
Average number of employees by gender Sweden Women
1 Jan 2004 31 Dec 2004
Parent company 1 Jan 2005 31 Dec 2005
1 Jan 2004 31 Dec 2004
108
102
0
0
Men
1,561
1,432
0
0
Total
1,669
1,534
Board members and senior personnel Board members Women Men
4
3
2
0
24
22
7
3
President and other senior personnel Women
2
1
0
0
Men
17
15
4
0
Total
47
41
13
3
Sick leave, % Total sick leave
EuroMaint Rail 2005 2004 5.2 4.9
EuroMaint Industry 2005 2004 2.8 3.8
Long-term sick leave
5.2
4.9
0.7
2.0
Sick leave for men
5.2
4.9
2.6
3.0
Sick leave for women
4.2
4.3
4.7
13.2
Employees – 29 years
5.1
7.1
1.9
2.8
Employees 30 – 49 years
4.2
3.7
3.2
3.3
Employees 50+ years
6.3
6.0
2.5
4.9
Sick leave is calculated based on the actual absence in relation to the normal working hours for each group.
Group, SEK thousands Costs of personnel Salaries and other remuneration in Sweden Board and President of which bonus and thereby equalised remuneration
1 Jan 2005 31 Dec 2005
1 Jan 2004 31 Dec 2004
6,230
5,848
2,558
890
Other employees
463,564
449,630
Total salaries and other remuneration
472,352
455,478
Social security expenses
232,592
222,548
of which pension costs
61,877
53,496
63
THE BUSINESS IN FIGURES
NOTES
Note
6
Average number of employees and costs of personnel, contd.
As of 2004, no bonus is paid to the management or other personnel within EuroMaint Rail. The chairman of EuroMaint Rail receives a fee of SEK 120,000 and other Board members SEK 80,000 provided they are not members of the Swedcarrier Board. If they are, a fee of SEK 0 (zero) is paid to members of the EuroMaint Rail Board. The President of EuroMaint Rail received salary and benefits totalling SEK 2,09 (2,124) million (excluding social security costs) during the financial year and had the use of a company car with a total benefit value of SEK 73,000 (61,000). The President receives an old-age pension at 65 years. The President has a non-revokable premium-based pension promise of 30 per cent of monthly income. The term of notice is 12 months from both the company’s and the President’s side, and during this time salary is payable with full adjustment. If notice is given by the company, 12 months’ non-pensionable severance pay is also awarded with full adjustment against other income.
Remuneration and other benefits during the financial year Senior personnel receive an old-age pension at 65 years. Two members of senior personnel have individual defined contribution pensions equivalent to 20–35 per cent of pensionable salary. Other senior personnel are covered by the ITP supplementary pension for salaried employees with the option to choose alternative ITP with voluntary premiums relating to salary exceeding 7.5 income base amounts. Two of these members of senior personnel are, however, covered by a supplementary defined contribution pension within the framework of alternative ITP, with a premium equivalent to 20–40 per cent of the pensionable salary exceeding 7.5 income base amounts. Agreements have been reached with two senior personnel regarding severance pay should the company give notice. The severance pay is equivalent to the fixed salary for 12 months in addition to the period of notice, which is 12 months. Severance pay is not pensionable, is fully adjustable and is not paid on retirement. Other senior personnel receive salary during the period of notice, which is 12 months, and no severance pay. EuroMaint Rail’s Board received a fee of SEK 520,000 (440,000).
Remuneration to senior personnel of EuroMaint Rail Bonus 0
Other benefits 142
Pension cost 560
1,507
0
12
738
Executive Vice President, CFO
1,404
0
103
494
Vice President, Refurbishment & Component Overhaul
1,064
0
68
231
Vice President, Train Maintenance
825
0
32
238
Vice President, Engineering & Planning
604
0
0
136
Vice President, Sourcing & Supply
655
0
24
110
Vice President, Sales & Marketing
1,078
0
75
356
883
0
54
266
President
Basic salary 1,948
Executive Vice President, Strategy & Business Development
Vice President, Quality & Environment Vice President, Human Resources Total
721
0
0
287
10,689
0
511
3,415
The agreed retirement age for all senior personnel is 65 years. Upon termination of employment for the President there is a period of notice of 12 months from the employer’s side, or 6 months from the President’s side. The Vice Presidents have a term of notice of 3 months which applies for notice given by either side. No severance pay is payable upon termination of employment. Management members are free to choose how the premium is managed for salary exceeding 7.5 income base amounts. Irrespective of the pension solution chosen by the manager, it must be cost-neutral for the company in relation to the ITP plan. Management members have a bonus agreement for 2005 which stipulates a maximum bonus of 50 per cent of annual salary for the President and a maximum bonus of Remuneration to senior personnel of EuroMaint Industry Basic salary President 1,129
35 per cent of annual salary for the Vice Presidents. The President has received a bonus related to the sale of Euromation. The cost of this bonus has been carried by the sellers of Euromation. The EuroMaint Industry Board has received a fee amounting to SEK 75,000 for the period 1 July – 31 December 2005. The chairman has not received any fee and other members received SEK 25,000 each. Remuneration is paid to the Board Chairman and other members of the Group’s Boards in accordance with decisions by the general meeting of shareholders. Salary and remuneration to Presidents is decided by each company’s Board. Salary and remuneration to other senior personnel is decided by each company’s Board or President.
Bonus 2,558
Other benefits 61
Pension cost 336
Executive Vice President, Sales
699
245
48
135
Executive Vice President & CFO
666
233
50
145
2,493
3,036
159
616
Total
The management of EuroMaint Industry have received bonuses conditional on agreements entered into prior to the acquisition.
64
THE BUSINESS IN FIGURES
NOTES
Note
7
Tangible fixed assets
Group, SEK thousands
Opening cost
Equipment, tools, Construction Land and buildings Plant and machinery fixtures and fittings in progress Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 29,454 34,820 128,035 118,723 151,773 152,663 15,737 4,384 324,998
Acquisition of subsidiaries Purchases
18,768
0
2,677
0
0
0
21,445
2004 310,591 0
1,779
14,036
7,220
13,952
18,367
10,248
-6,317
11,353
21,049
35,553
-488
-19,402
-4,760
-4,641
-8,580
-11,139
0
0
-13,340
-35,182
Closing accumulated cost
30,745
29,454
149,262
128,035
164,237
151,773
9,420
15,737
353,664
324,998
Opening depreciation
-6,101
-11,643
-89,403
-86,339 -110,790
-210,854
Sales/scrappings
Acquisition of subsidiaries Depreciation for the year
-4,119
Sales/scrappings
-2,819
-112,873
0
0 -206,294
-8,299
0
-2,579
0
0
0
-10,878
0
-8,593
-6,879
-11,452
-8,938
0
0
-24,164
-18,636
8,120
11,020
0
0
13,239
23,196
-116,701 -110,790
0
0 -228,097 -206,294
358
8,361
4,760
3,815
Closing accumulated depreciation
-9,862
-6,101
-101,535
-89,403
CLOSING RESIDUAL VALUE ACCORDING TO PLAN
20,884
23,353
47,727
38,631
Parent company
Opening cost
47,536
40,982
9,420
15,737
125,567
118,703
Equipment, tools, Construction Land and buildings Plant and machinery fixtures and fittings in progress Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 0 0 0 0 0 0 0 0 0
2004 0
Purchases
0
0
0
0
0
0
66
0
66
0
Sales/scrappings
0
0
0
0
0
0
0
0
0
0
Closing accumulated cost
0
0
0
0
0
0
66
0
66
0
Opening depreciation
0
0
0
0
0
0
0
0
0
0
Depreciation for the year
0
0
0
0
0
0
0
0
0
0
Sales/scrappings
0
0
0
0
0
0
0
0
0
0
Closing accumulated depreciation
0
0
0
0
0
0
0
0
0
0
CLOSING RESIDUAL VALUE ACCORDING TO PLAN
0
0
0
0
0
0
66
0
66
0
Note
8
Intangible assets
Accumulated cost, SEK thousands Opening balance 1 Jan 2005 Business combinations Amortisation Closing balance 31 Dec 2005
Goodwill
Trademarks & licences
Customer relations
Total
0
0
0
0
30,195
0
15,000
45,195
0
0
-938
-938
30,195
0
14,063
44,258
Goodwill is attributable to the acquisition of Euromation. This goodwill was tested to determine any write-down requirement on 31 December 2005. In connection with this impairment test, EuroMaint Industry’s discount rate before tax was assessed at 11.9 per cent. Note
9
Items affecting comparability
Group, SEK thousands
31 Dec 2005
31 Dec 2004
Costs linked to restructuring
23,927
Result of arbitration
-11,563
Impact on profit
0
12,364
65
THE BUSINESS IN FIGURES
NOTES
Note
10
Net financial items
SEK thousands
Group 1 Jan 2005 31 Dec 2005 785
1 Jan 2004 31 Dec 2004 570
Net exchange rate fluctuations
131
0
0
0
Financial income
916
570
163
0
Interest expenses
-11,645
-10,585
0
0
-155
0
0
0
-11,800 -10,884
-10,585 -10,015
0 163
0 0
Group 1 Jan 2005 31 Dec 2005 -1,971
1 Jan 2004 31 Dec 2004 0
Deferred tax
-8,404
13,970
-46
0
Total
-10,375
13,970
-46
0
Interest income
Net exchange rate fluctuations Financial expenses Net financial items Note
11
Parent company 1 Jan 2005 31 Dec 2005 163
2004-01-01 2004-12-31 0
Tax
Total recorded tax, SEK thousands Current tax
Parent company 1 Jan 2005 31 Dec 2005 0
1 Jan 2004 31 Dec 2004 0
Differences between the recorded tax and calculated tax based on the prevailing tax rate comprise the following components: Group, SEK thousands Difference with calculated tax at prevailing tax rate Recorded pre-tax profit/loss Tax in accordance with prevailing tax rate, 28 %
1 Jan 2005 31 Dec 2005 102,839
1 Jan 2004 12 Dec 2004 37,619
-28,795
-10,533
13
Long-term receivables
Group, SEK thousands Pensions in accordance with IAS 19 Other
Effects of non-taxable income and non-deductible expenses Non-deductible expenses -13,132 Non-taxable income
Note
-1,830
9,478
3,332
Valuation of loss carry-forward and previously 22,074 non-recognised temporary differences
23,001
Total
13,970
-10,375
Total
31 Dec 2005 12,800
31 Dec 2004 12,800
129
129
12,929
12,929
See also Note 14, Pension obligations.
The weighted average tax rate was 10 per cent (+38 per cent). The reduction in the Group’s average tax for 2005 to 10 per cent was primarily conditional on the Group having a significant tax deficit. In 2004, the Group found it objectively justifiable to adjust deferred income taxes recoverable as the company can in all likelihood be assumed to have excellent earning capacity in the future. This is the reason why the tax rate is a positive +13,970 (+38 per cent).
Note
12
Participations in Group companies
Company name, SEK thousands EuroMaint Rail AB
No. of Percentage of participations equity and votes 190,000 100
Book value 31 Dec 05 156,761
Book value 31 Dec 04 0
100
0
0
100
0
0
Reg. no. 556032-2918
Domicile Stockholm
– EuroMaint Industry AB
556232-0134
Stockholm
100,000
– EuroMaint Bemanning AB
556670-3095
Stockholm
1,000
– Underhållsbolaget Pendeln AB
556673-4363
Stockholm
1,000
100
Total
66
0
0
156,761
0
THE BUSINESS IN FIGURES
NOTES
Note
14
Pension obligations
In accordance with IAS 19, Employee Benefits, an actuary working on behalf of EuroMaint has calculated the Group’s pension provision and the amounts to be allocated for pensions for Group employees on an ongoing basis. Pension plans in EuroMaint comprise both defined benefit and premium-based plans. Premium-based pension promises comprise what are known as Alternative ITP plans, individual pension promises for senior personnel, as well as PA-03. Defined benefit pension obligations General description of defined benefit obligations: ITP is a defined benefit pension plan containing retirement, family and disability/ sickness pension. On full entitlement the employee receives a final retirement pension of 65 per cent of salary. Salaried employees covered by ITP can be insured in Alecta or in Scandia, ITP-S. Employees previously covered by the state pension plan PA-91, former employees of the SJ Group, have the opportunity to choose early retirement in accordance with the transitional rules. Pension is paid from 60 years at the earliest and the pension level depends on the salary and length of service. Occupational injury annuities are paid on a continuous basis until the death of the employee. Furthermore, the EuroMaint Group made a one-off redemption payment in 1998 to free itself from obligations with the insurance company KPA regarding a defined benefit pension plan. Consequently the Group has a claim on KPA. In the terms linked to the redemption, the Group pledges henceforth to compensate KPA for any arising actuarial costs in accordance with an agreement. To date these costs have been settled via adjustments to the Group’s claim on KPA. According to a statement from the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force, a commitment secured through an insurance policy with Alecta, which relates to retirement pension and family pension for salaried employees in Sweden, is a defined benefit plan covering several employers. The EuroMaint Group has not had access to such information for the 2005 financial year that would make it possible to enter this plan as a defined benefit plan, which is why it has been entered as a defined contribution plan. The following defined benefit plans are recognised in the balance sheet: Plan Pension provision/receivable (-/+) in balance sheet, SEK thousands 31 Dec 2005 31 Dec 2004 ITP-S pension plan insured with Skandia
12,800
12,800
Early retirement in accordance with transition rules, non-funded
-23,191
-22,709
-1,730
-2,833
Occupational injury annuities, non-funded
-13,527
-15,677
Redeemed pension obligations in KPA
10,383
12,456
Total
-15,265
-15,963
ITP in FPG/PRI, non-funded
Amount recorded in income statement, SEK thousands Recorded net cost in income statement
Defined benefit plans
Group 2005 Premium-based plans
10,183
51,694
Group Pension provision, SEK thousands
31 Dec 2005
Present value of funded obligations
31 Dec 2004
245,313
216,149
248,024
241,405
2,711
25,256
Present value of non-funded obligations
39,590
41,219
Non-reported actuarial profit/loss (-/+)
21,614
0
Pension provision to report in balance sheet
15,265
15,963
31 Dec 2005
31 Dec 2004
Net provision at beginning of year
15,963
20,233
Net cost reported in income statement
10,183
10,658
Remuneration paid
13,735
14,451
Premiums
11,572
11,384
Reimbursement
14,426
10,907
Net provision at year-end
15,265
15,963
31 Dec 2005
31 Dec 2004
Fair value of plan assets Receivable
Group Net provision in balance sheet, SEK thousands
Group Calculation assumptions, % Discount rate
3,8
4,2
Return on plan assets
4,0
4,0
Expected pay increase
2,5
2,8
Calculation of maturing pensions
1,8
1,8
Personnel turnover
3,0
3,0
Calculation of income base amounts Demographic assumptions Expected remaining period of service for employees
2,8
2,8
P94
P94
14 years
14 years
Plan assets are invested in insurance schemes with Skandia or KPA. The insurances contain a mixture of shares and bonds. The return in 2005 amounted to 4.3 per cent (SEK 10,033) million.
Total
Defined benefit plans
Group 2004 Premium-based plans
Total
61,877
10,658
42,838
53,496
67
THE BUSINESS IN FIGURES
NOTES
Note
15
Accrued tax assets
Group, SEK thousands
Note 31 Dec 2005
31 Dec 2004
Deferred tax for tax deficit
9,823
20,000
Deferred tax on temporary differences
11,724
0
Total
21,547
20,000
Last year the Group had unused loss carry-forwards amounting to SEK 83,9 million. Following individual assessment of tax deficits, a deferred tax asset of SEK 20 million was recognised. Income is expected to develop positively in the future which is why this year the Group has recognised a deferred tax asset for the entire amount of unused loss carry-forward of SEK 35,1 million. Note
16
Inventories
Group, SEK thousands Gross stock
1 Jan 2005 31 Dec 2005 347,739
1 Jan 2004 31 Dec 2004 350,820
Obsolescence reserve
-88,396
-112,895
Net stock
259,343
237,925
Distributed as follows Replacement items
51,293
47,585
138,491
128,480
Other
69,559
61,861
Total
259,343
237,925
Spare parts
The Group has revised the obsolescence model for one of the companies, EuroMaint Rail. All companies use an obsolescence scale in line with their particular circumstances. The aim of the revision was to reduce the number of parameters in the model and thereby better reflect economic obsolescence based on current production. The revised model is based for example on articles being regarded as saleable for a longer period than in the former model. Implementation of the new obsolescence model increased profit by SEK 23 million during the final quarter of 2005. Note
17
Prepaid insurance costs Accrued income relating to maintenance work carried out Prepaid rent and lease fees Other items Total
Long-term interest-bearing liabilities
The recorded amounts and fair value for long-term borrowing are as follows: Group, SEK thousands Book value 1 Jan 2005 1 Jan 2004 31 Dec 2005 31 Dec 2004 Long-term Bank loans 340,000 250,000
340,000
250,000
250,000
340,000
250,000
Short-term Bank overdraft
0
0
0
0
Total
0
0
0
0
Bank overdraft facility granted
125,000
125,000
0
0
Total
125,000
125,000
0
0
Unused credit facilities refer to credit facilities of SEK 425 (325) million with FöreningsSparbanken and SEK 300 (300) million with the Swedish National Debt Office, of which SEK 85 (75) million remains in the credit facilities with FöreningsSparbanken and SEK 300 (300) million remains in the Swedish National Debt Office. The Group has chosen to classify unused credit within existing credit facilities as long-term, as these agreements run until further notice. The Group’s exposure, regarding borrowing, to changes in interest and contractual time for interest renegotiation are as follows: Group, SEK thousands 6 months or less
1 Jan 2005 31 Dec 2005 215,000
1 Jan 2004 31 Dec 2004 175,000
6-12 months
125,000
75,000
Total
340,000
250,000
4.26
3.7
2.71 %
3.22 %
Group Provision guarantees, SEK thousands 31 Dec 2005
31 Dec 2004
Average fixed interest term in months
19
31 Dec 2005
31 Dec 2004
1,427
1,261
18,968
22,443
1,558
1,505
Provision at beginning of year
4,975
4,975
6,497
1,121
Provisions for the year
1,900
0
-513
0
0
0
6,363
4,975
31 Dec 2005 6,363
31 Dec 2004 4,975
0
0
28,450
26,330
Note
Other provisions
Used during the year Unused amount cancelled Provision at year-end Provisions Long-term portion Current portion
68
Fair value 1 Jan 2005 1 Jan 2004 31 Dec 2005 31 Dec 2004
340,000
Total
Weighted average interest on balance sheet date
Prepaid expenses and accrued income
Group, SEK thousands
18
THE BUSINESS IN FIGURES
NOTES
Note
20
Deferred tax liability
Group, SEK thousands Provision at beginning of year
31 Dec 2005
31 Dec 2004
0
0
Deferred tax for cancelled depreciation/amortisation
7,854
0
Deferred tax for untaxed reserves
4,564
0
Provision at year-end
12,418
0
Note
21
Non interest-bearing current liabilities
SEK thousands Advance payment from customers Accounts payable
Group 1 Jan 2005 31 Dec 2005 9,938
1 Jan 2004 31 Dec 2004 21,454
Parent Company 1 Jan 2005 1 Jan 2004 31 Dec 2005 31 Dec 2004 0 0
116,954
109,514
0
0
Tax liability
6,690
8,747
46
0
Liabilities to Group companies
7,482
10,705
0
0
Other liabilities Total
Note
22
19,120
3,323
66
0
160,184
153,743
112
0
Accrued expenses and deferred income
Group, SEK thousands
Note
24
Operating leases
1 Jan 2005 31 Dec 2005 30,773
1 Jan 2004 31 Dec 2004 36,096
Future leasing fees 2006
Social security contributions
31,128
22,237
Future leasing fees 2007
3,541
Trade accounts payable
16,775
9,258
Future leasing fees 2008
1,097
Holiday pay liability
Special employer’s contribution
Group, SEK thousands
31 Dec 2005 8,463
37,989
27,136
Future leasing fees 2009
361
Overtime liability
6,850
4,465
Future leasing fees 2010
280
Accrued pensions
2,306
5,194
Future leasing fees 2011 and later
1,537
1,873
Total
Reserve for obsolete Y1 materials
5,600
5,600
Bonus
7,080
0
Accrued interest
Restructuring costs
6,433
31,583
Risk reserve
29,930
29,636
Other
66,349
32,265
Total
242,750
205,343
Note
23
295 14,037
Leasing fees taken up as costs
11,260
Total
11,260
The Group’s operating leases include fees for vehicles, computers and certain office equipment. Note
25
Cash flow analysis, other items not affecting liquidity
Contingent liabilities Group, SEK thousands
31 Dec 2005
31 Dec 2004
31 Dec 2005
31 Dec 2004
37
57
Bank guarantees issued
11,772
9,406
Change in pension provision
Total
11,809
9,463
Change in other provisions and reserves
3,852
4,873
Other items
-9,185
-1,201
-33,929
-82,962
Group, SEK thousands
Capital gain Pension obligations, FPG/PRI
Floating charges amount to SEK 20 million and are paid to FöreningsSparbanken in Skövde. Furthermore, EuroMaint Rail has floating charges of SEK 5,19 million in its own custody.
Utilisation of restructuring reserve
Total
-525
-5,003
-25,300
-74,856
-2,771
-6,775
69
THE BUSINESS IN FIGURES
NOTES
Note
26
Financial instruments and financial risk management
Through its business, EuroMaint is exposed to financial risks, including the effects of changes in prices on the credit and capital markets, and fluctuations in exchange rates and interest rates. The Group’s overall risk management focuses on the unpredictability of the financial markets, and strives to minimise potential unfavourable effects on the Group’s financial results. Financial operations in the Group are centralised in the parent company’s finance function. The finance function acts as an internal bank and is responsible for the sourcing of capital, cash management and financial risk management. The operation is regulated through the Group’s financial rules. The important areas of financial risk that are dealt with comprise: Exchange rate risks EuroMaint is exposed to some extent to exchange rate risks due to its relatively large purchase volumes in foreign currencies and low customer invoicing in corresponding currencies. Purchases in foreign currencies for large projects are hedged or agreed with variable foreign exchange clauses during the tendering/contract formulation stage. A hedging policy was introduced in 2005. The policy states that currency exposure shall be hedged at least to set levels during a rolling 12-month forecast period. This is usually achieved through forward agreements. Interest rate risks EuroMaint is affected by general changes in interest rates on its loan portfolio. To counter this the portfolio has been divided and tied to different fixed-interest terms. All borrowing agreements re-signed during the year have a fixed-interest period of 12 months. On 31 December, 26 per cent of the total loan amount was subject to variable interest rates. See also Note 18. The only interest-bearing assets are cash and bank balances which have been credited with variable interest linked to the bank’s VECI interest rate, a weekly interest rate on deposits, less 0.15 percentage points, which equated to 1.37 per cent on 31 December 2005.
70
Credit risk EuroMaint has procedures for minimising ongoing customer credit risks in the business. These procedures include credit checks, advance payment and guarantee management, and ongoing credit monitoring. Bad debt losses established in 2005 amounted to SEK 2 (453) million. On the balance sheet date, EuroMaint owned securities of approximately SEK 10 million in the form of advances from customers and bank guarantees. The Group does not consider there to be any significant concentration of credit risks regarding financial assets. Liquidity and refinancing risk EuroMaint’s policy is always to have cash and cash equivalents and secured refinancing available to the extent required for the operation. On 31 December 2005, the company had credit facilities of SEK 300 million with the Swedish National Debt Office and credit facilities of SEK 425 million with FöreningsSparbanken. EuroMaint also has a bank overdraft facility with FöreningsSparbanken amounting to SEK 125 million. The company’s total credit facility amounts to SEK 850 million. As of 2006, the credit facilities of SEK 300 million with the Swedish National Debt Office will be replaced with credit facilities of equal magnitude from FöreningsSparbanken.
Fair values of derivative instruments on the balance sheet date, SEK thousands 31 Dec 2005 31 Dec 2004 Contracts with positive fair values: Hedging 61 – Contracts with negative fair values: Hedging
154
–
The nominal amount of outstanding derivatives on 31 December was NOK 5,300,000 (Sell) and GBP 305,000 (Buy). The fair value of the derivative contracts has been calculated as the costs or revenue which would have arisen if the contract had expired on the balance sheet date. The banks’ official exchange rates have been used.
THE BUSINESS IN FIGURES
NOTES
Note
27
Corporate acquisitions
Effects of the acquisition The acquisition has had the following effect on the Group’s assets and liabilities. The acquired company’s net assets at time of acquisition: SEK thousands Carrying amount in EuroMaint Industry before acquisition Tangible fixed assets
Fair value adjustment
Fair value recorded in the Group
10,567
0
10,567
0
44,258
44,258
27,859
0
27,859
60,906
0
60,906
15,663
0
15,663
0
0
0
Accounts payable, other liabilities
-63,996
0
-63,996
Net identifiable assets and liabilities
50,999
44,258
95,257
0
0
-96,197
Intangible assets Inventories Accounts receivable and other receivables Cash and cash equivalents Interest-bearing liabilities
Purchase price paid, cash* Cash (acquired)
0
0
15,663
Net cash flow
0
0
-80,534
* including transaction-related costs (SEK 933,000) On 1 July 2005, the Group acquired 100 per cent of the shares in EuroMaint Industry AB for SEK 96,197 million and paid cash. The company works in maintenance, implementation and development of production equipment for industry. During the 6 months following the acquisition, the subsidiary contributed SEK 4,88 million to the Group’s profit after tax. If the acquisition had taken place on 1 January 2005, the Group’s income would have been SEK 2,017,356,000 and profit for the year would have been SEK 100,777,000 after tax. Goodwill arose in connection with the acquisition of EuroMaint Industry mainly because acquired know-how did not fulfil the criteria to be recognised as an intangible asset at the time of acquisition. This acquisition analysis is preliminary and may therefore be adjusted in 2006. Note
28
Disclosure on fair values relating to financial instruments
The fair values of financial instruments correspond to the book values, with the exception of financial loans which are subject to fixed interest rates. The nominal and book value of fixed-interest loans on the balance sheet date amounted to SEK 250 million. Upon valuation at fair value the liability increases by SEK 398,000, taking into account any interest penalty that would be payable if the loans were to be settled in advance on the balance sheet date. The variable interest used in the calculation is 2.52 per cent, which was the rate the company would have had on a new loan at a variable interest rate on 31 December. Note
29
Definition of key ratios
Operating margin: Equity/assets ratio:
Operating income as a percentage of operating revenues Equity as a percentage of total assets
71
THE BUSINESS IN FIGURES Stockholm, 15 March 2006
Stig Holm Chairman
Lennart Käll
Elisabeth Nilsson
Annika Nordin
Richard Reinius
Anders Ågren
Lennart Andrén Employee representative
Bertil Hallén Employee representative
Johnny Ström Employee representative
Pether Wallin President
AUDIT REPORT To the Annual General Meeting of EuroMaint AB Reg. no. 556084-8458 I have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of EuroMaint AB for the year 2005. The Board of Directors and President are responsible for these accounts and the administration of the company, and for ensuring the annual accounts are prepared in accordance with the Annual Accounts Act and that the consolidated accounts are prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and the Annual Accounts Act. My responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on my audit. I conducted my audit in accordance with generally accepted auditing standards in Sweden. Those standards require that I plan and perform the audit to obtain high but not complete assurance that the annual accounts and the consolidated accounts are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and consolidated accounts as well as
evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for my opinion concerning discharge from liability, I examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any Board member or the President. I also examined whether any Board member or the President has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. I believe that my audit provides a reasonable basis for my opinion set out below. The annual accounts have been prepared in accordance with the Annual Accounts Act and, thereby, give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU and the Annual Accounts Act and give a true and fair view of the Group’s financial position and results of operations. The Report of the Directors is consistent with the other parts of the annual accounts and consolidated accounts. I recommend to the general meeting of shareholders that the income statement and balance sheet for the parent company and Group be adopted, that the profit be dealt with in accordance with the proposal in the Report of the Directors and that the members of the Board of Directors and the President be discharged from liability for the financial year.
Stockholm, 16 March 2006 Ernst & Young
Magnus Fredmer Authorised Public Accountant
72
Corporate Governance
05
EUROMAINT AB CORPORATE GOVERNANCE REPORT 2005 The company has commenced work in line with the Swedish Code of Corporate Governance and a corporate governance report has been produced. The corporate governance report has not been examined by the company’s auditors. The company does deviate in some respects, and this is attributable to the guidelines and instructions issued by the ultimate owner – Sweden’s Ministry of Industry, Employment and Communications – which the company is bound to follow. A report on internal controls has also been produced.
GENERAL MEETING OF SHAREHOLDERS The general meeting of shareholders is EuroMaint’s highest decisionmaking body. The Annual General Meeting shall be held within six months of the end of the financial year and shall be the forum for approving the income statement and balance sheet, determining the dividend, electing the Board of Directors and, where appropriate, the auditors and deciding their fees, and for dealing with other statutory matters. Notice to attend the extraordinary general meeting on 16 December 2005 was issued by letter in the post in accordance with the requirements set out in the articles of association.
EuroMaint’s decision-making body comprises the general meeting
The notice provides a detailed agenda including election of the
of shareholders, the Board of Directors, the President and the
Board of Directors and auditors. Katja Elväng chaired the general
auditors. The general meeting of shareholders elects the Board of
meeting of shareholders on 16 December 2005.
Directors and auditors. The Board of Directors appoints the President and Vice Presidents.
The Board of Directors was elected at the general meeting as described below.
Parent company Swedcarrier proposes Board members in accordance with the Swedish state’s ownership directive. On behalf of the general meeting of shareholders, the auditors examine the accounts and the administration of the Board of Directors and President during the year.
The extraordinary general meeting on 16 December 2005 decided: • to elect Stig Holm, Elisabeth Nilsson, Annika Nordin, Lennart Käll, Anders Ågren and Richard Reinius to the Board of Directors. • to appoint Stig Holm Chairman of the Board. • to appoint Ernst & Young AB as auditors and deputy auditors
ARTICLES OF ASSOCIATION The Articles of Association state that EuroMaint’s business is to own, manage and administrate shares and securities in subsidiaries
until the 2009 Annual General Meeting. Magnus Fredmer is the principal auditor. • that fees with the following fixed amounts be paid to the Board
and associated companies in the transport sector and engineering
members elected at the general meeting of shareholders:
and processing industry, and to manage real and movable estate,
Chairman SEK 120,000. Board members who are not
and to pursue business compatible therewith.
Board members of AB Swedcarrier SEK 80,000. Board members
The Board of Directors shall comprise at least three and at
who are also Board members of AB Swedcarrier SEK 0.
most eight members with a maximum of three deputies. The Board members and deputies are selected each year at the Annual
BOARD OF DIRECTORS
General Meeting of shareholders for the period until the next
The EuroMaint Board of Directors, which is appointed by the
Annual General Meeting.
general meeting of shareholders, currently comprises six members.
Notice to attend annual general meetings and extraordinary general meetings, where the issue of changes to the articles of association will be dealt with, shall be announced by letter by post no earlier than six weeks and no later than two weeks before the meeting. Other messages to shareholders must also be issued by letter by post.
All members are independent in relation to EuroMaint. When necessary, employees of the company present reports to the Board meetings. The Board is ultimately responsible for the company’s organisation and administration, and shall also make decisions in strategic issues. In general terms the Board of Directors deals with issues of considerable importance, such as: • Establishing rules of procedure • Strategy planning, and business and profitability goals • Organisation and management structure
74
In addition to the inaugural Board meeting, which is held in connec-
THE ROLE OF THE CHAIRMAN
tion with the general meeting of shareholders, the Board usually
In addition to leading the work of the Board of Directors, the
convenes five times a year (ordinary meetings).
Chairman monitors the Group’s ongoing development through
Extra meetings are called if necessary.
continuous contacts with the President in strategic issues, and
The inaugural meeting establishes the rules of procedure for
represents the company in issues of interest to the owners.
the Board and decisions on authorised signatories for the company, verification of the minutes and allocation of the Board fee.
PRESIDENT AND VICE PRESIDENTS
In connection with the Board meeting that deals with the annual
President Pether Wallin has been an employee of EuroMaint since
accounts, the report of the directors and proposed treatment of
2002. The President is responsible for EuroMaint’s ongoing
unallocated earnings, the principal auditor reports on the auditors’
administration. There are also rules for the President’s decision-
observations and assessments from their audit.
making authority regarding investments and financing issues. These rules have been established by the Board. Executive Vice
At the ordinary meetings held during the year, interim reports are
President Åke Finn is responsible for economy, finance and IT.
either finalised and published, or this task is commissioned from
Executive Vice President Björn Sundén is responsible for business
the President.
development.
The ordinary meetings encompass various standard reporting points, such as the latest financial results of the operation. Each year the Board evaluates the financial reporting it receives
AUDITORS At the extraordinary general meeting on 16 December 2005,
from the company and sets out requirements for its content and
Ernst & Young AB was appointed the company’s auditor until the
presentation.
2009 Annual General Meeting. The principal auditor is Authorised Public Accountant Magnus Fredmer.
DIRECTORS’ ATTENDANCE AT BOARD MEETINGS This report pertains to the Boards of Directors of EuroMaint Rail AB
Stockholm, 15 March 2006
(formerly EuroMaint AB) and EuroMaint AB. The attendance applies for the whole of 2005 and includes the parent company and the Group. Eight ordinary Board meetings took place during the year with the following attendance: Stig Holm Stig Holm
8
Lennart Käll
8
Elisabeth Nilsson
7
Annika Nordin
6
Richard Reinius
7
Anders Ågren
8
Bertil Hallén
8
Johnny Ström
8
Lennart Andrén
8
Elisabeth Nilsson
Annika Nordin
Lennart Käll
Richard Reinius
Anders Ågren
Chairman
Bertil Hallén
Johnny Ström
Lennart Andrén
IMPORTANT ISSUES DURING THE 2005 FINANCIAL YEAR
Employee
Employee
Employee
In 2005, the Board held one meeting for EuroMaint AB and eight
representative
representative
representative
meetings for EuroMaint Rail AB in addition to the inaugural Board meeting. The acquisition of Euromation on 1 July was discussed during the first half of the year. Discussions regarding the future Group structure took place continuously during the year, one result being that a new Group structure was decided upon and introduced on 31 December 2005.
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THE CHAIRMAN’S COMMENTS
“Stable long-term development” Stig Holm – Chairman of the Board In 2005, EuroMaint has fulfilled its goals and met the Board of Directors’ expectations. I can see with great satisfaction that customer confidence in the Group is being maintained and strengthened. This is particularly clear from the volume of incoming orders, the important contract with SL crowning the year’s successes. One major development, which is of great importance to the future, was the acquisition of Euromation. Financial development in terms of profits and margins has been satisfactory. Financial control has been improved and control over the cash flow has increased. The goal of considerably reducing purchasing costs wherever possible has been achieved. The acquisition of Euromation facilitates cross-fertilisation between various areas of experience and expertise in the industry, producing benefits all round. The new Group structure, with two companies focusing on the rail industry and engineering industry respectively, strengthens EuroMaint’s overall position as a leading maintenance partner and bodes well for continued solid development. I would also like to comment on the ISO 14001 environmental certification. The commendable job of establishing environmental
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expertise and awareness within the Group is important for EuroMaint and its customers alike. During the year EuroMaint has also laid the foundation for a good strategy. Here I would particularly like to mention the outstanding efforts of the Group management in performing the groundwork. In conclusion, I am very pleased with the increased attention EuroMaint has enjoyed. Many parties have contacted us spontaneously or in connection with press information, and following Elmia Nordic Rail 2005. Myself and the other Board members have actively supported the development that has strengthened EuroMaint’s market position during the past year. The results for 2004 turned losses into profits. The results for 2005 confirm the company’s ability to be competitive and profitable. I can therefore express my and the Board’s full confidence in the fine work and good results achieved by EuroMaint and the company’s management.
STIG HOLM Chairman of the Board
STYRELSEN THE EUROMAINT BOARD OF DIRECTORS
STIG HOLM
LENNART KÄLL
ELISABETH NILSSON
ANNIKA NORDIN
RICHARD REINIUS
ANDERS ÅGREN
BERTIL HALLÉN
JOHNNY STRÖM
LENNART ANDRÉN
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THE EUROMAINT BOARD OF DIRECTORS CONTD.
STIG HOLM 1951. MSc engineering.
LENNART KÄLL 1958. MSc economics.
Chairman of the Board. Board member since 2004.
Board member since 2005.
Current employment: Group Director Tekniska Verken i Linköping AB Other important assignments: MD of Parkeringsaktiebolaget Dukaten, Linköping Chairman of Stadspartner AB, Linköping Kraftnät AB, Östkraft AB, Svensk Biogas i Linköping AB, Utsikt Linköping AB, Katrineholm Energi AB and SweMaint AB Board member of Mjölby – Svartådalen Energi AB,CityLink AB, Östkraft Energihandel AB, AB Swedcarrier
ELISABETH NILSSON 1953. Master of Science, Mining and Minerals Processing. Board member since 2004.
Current employment: President & CEO Ticket Travel Group AB Other important assignments: Advisor Segulah Committee member: – Board meetings attended: 8(8)
Current employment: President of Jernkontoret Swedish Steel Producers’ Association Other important assignments: Board member of the Swedish Maritime Administration Chairman of the Mefos Foundation for Metallurgical Research Committee member: – Board meetings attended: 7(8)
Committee member: – Board meetings attended: 8(8) ANNIKA NORDIN 1954. BSc economics.
RICHARD REINIUS 1967. MSc economics.
ANDERS ÅGREN 1947. Engineer.
Board member since 2004.
Board member since 2004.
Board member since 2005.
Current employment: VP Category Product Development AFH, SCA Tissue Europe
Current employment: Ministry of Industry, Employment and Communications
Current employment: Nerga AB
Other important assignments: –
Other important assignments: Board member SweMaint AB, Jernhusen
Other important assignments: Board member Swedesurvey AB, Axenti Holding AB, PJ Järnförädling AB
Committee member: – Board meetings attended: 7(8)
Committee member: – Board meetings attended: 8(8)
BERTIL HALLÉN 1954.
JOHNNY STRÖM 1945.
LENNART ANDRÉN 1941. BSc.
Employee representative. Board member since 2001.
Employee representative. Board member since 2004.
Employee representative. Board member since 2001.
Current employment: EuroMaint AB
Current employment: EuroMaint AB
Current employment: IT/IS training co-ordinator, EuroMaint AB
Other important assignments: Board member of AB Swedcarrier, Chairman of SEKO EuroMaint AB and Department Chairman of SEKO EuroMaint Gothenburg
Other important assignments: Club chairman of the SEKO CV club EuroMaint Örebro, Commissions of trust in FONUS
Other important assignments: Chairman of the SACO-association for Traffic and Railway at EuroMaint AB Vice Chairman of the SACO-association for Traffic and Railway
Committee member: – Board meetings attended: 6(8)
Committee member: – Board meetings attended: 8(8)
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Committee member: – Board meetings attended: 8(8)
Committee member: – Board meetings attended: 8(8)
THE EUROMAINT GROUP MANAGEMENT
Standing NICKLAS FALK 1973. BSc Engineering.
PER-OLOF RENGSTEDT 1953. MSc engineering.
JONAS SAMUELSON 1960. MSc engineering.
ÅKE FINN 1959.
Vice President, Maintenance Development & Change Management. Employed since 2003.
President of EuroMaint Industry. Employed since 2003.
President of EuroMaint Rail. Employed since 2002.
Executive Vice President & CFO. Employed since 2002.
Previous positions: Train Tech AB
Previous positions: CEO of JK Group, MD of Fredrik Mogensen AB
Other important assignments: –
Other important assignments: –
Previous positions: ABB Process Industries Other important assignments: –
Previous positions: Head of Finance AlphaHelix AB and MD of ABB Switchgear Egypt Other important assignments: –
Sitting BJÖRN SUNDÉN 1944. BSc.
PETHER WALLIN 1956. MSc engineering.
Executive Vice President, Strategy & Business Development. Employed since 2001.
President & CEO. Employed since 2002.
Previous positions: MD Saab NygeAero and Företagsfinans, CFO Linjeflyg, Business Controller NitroNobel Other important assignments: –
Previous positions: MD of OmniNova Vehicle AB and OmniNova Composite AB, Vice President Hydro Automotive Structures and Volvo Car Corporation Other important assignments: –
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EUROMAINT RAIL MANAGEMENT
Standing HÅKAN BJÖRK 1966. Electrical Engineer.
KRISTINA NYHOLM 1943. BSc.
HANS-ÅKE ELFWING 1962. Mechanical engineer.
ANN-CHARLOTTE ÅGREN 1960. BSc.
TORSTEN NEDERMAN 1964. MSc engineering.
Vice President, Engineering & Planning. Employed since 2002.
Vice President, Human Resources. Employed since 1962.
Vice President, Train Maintenance. Employed since 1984.
Executive Vice President & CFO. Employed since 2001.
Previous positions: Scania CV AB
Previous positions: Swedish State Railways
Previous positions: ICL
Other important assignments: –
Other important assignments: –
Previous positions: Swedish State Railways Machine Division
Vice President, Refurbishment & Component Overhaul. Employed since 1991.
Other important assignments: –
Other important assignments: –
Sitting STEVEN DAVIDSSON 1956. Mechanical engineer.
THOMAS ANDERSSON 1953. MSc engineering.
JONAS SAMUELSON 1960. MSc engineering.
NICLAS FLODIN 1966. MSc engineering.
Vice President, Sourcing & Supply. Employed since 2003.
Vice President, Quality & Environment. Employed since 1991.
President. Employed since 2002.
Previous positions: Ericsson AB
Previous positions: Swedish State Railways and Plockmatic International
Acting Vice President, Maintenance Commuter Trains Stockholm. Employed since 2005.
Other important assignments: –
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Other important assignments: –
Previous positions: ABB Process Industries Other important assignments: –
Previous positions: President ABB Service Other important assignments: –
Previous positions: TGOJ and RPL Other important assignments: –
EUROMAINT INDUSTRY MANAGEMENT
Standing PER-OLOF RENGSTEDT 1953. MSc engineering. President. Employed since 2003. Previous positions: CEO of JK Group, MD of Fredrik Mogensen AB Other important assignments: –
THOMAS GRÖNLUND BO LENNARTSSON 1963. MSc in Industrial 1952. Electrical & Engineering and Management. Telecommunications Engineer. Marketing Manager. Employed since 2002. Manager Maintenance. Employed since 1973. Previous positions: Management consultant, Previous positions: MD Prido AB Head of Sales & Volvo Marketing, LVI Produkter AB Other important Head of Marketing, Rapid assignments: – Granulator AB Other important assignments: –
ULF SANDÉN 1959. Economist. Executive Vice President & CFO. Employed since 1989. Previous positions: Volvo Controller, Källbergs Industri AB, Bank clerk, Sparbanken Other important assignments: –
Sitting URBAN EKMARK 1964. MSc engineering, Eng. Lic. Technical Manager. Employed since 2000. Previous positions: Department Head, University of Skövde Other important assignments: –
PATRIK SAHLBERG 1962. Mechanical engineer. Executive Vice President, Sales. Employed since 1982. Previous positions: Volvo Other important assignments: –
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ADDRESSES GROUP OFFICES:
OPERATIONS AND WORKSHOPS:
EuroMaint AB Box 1555 SE-171 29 Solna, Sweden Visiting address: Svetsarvägen 10
BORLÄNGE
LINKÖPING
NÄSSJÖ
VÄNNÄS
EuroMaint Rail AB Bangårdsgatan 8 SE-781 71 Borlänge Sweden Visiting address: Bangårdsgatan 8
EuroMaint Rail AB Södra Oscarsgatan 2 SE-582 73 Linköping Sweden Visiting address: Södra Oscarsgatan 2
EuroMaint Rail AB Box 37 SE-571 21 Nässjö Sweden Visiting address: Gölgatan
EuroMaint Rail AB Västra Järnvägsgatan 8 SE-911 34 Vännäs Sweden Visiting address: Västra Järnvägsgatan 8
GÄVLE
LULEÅ
EuroMaint Industry AB Lötängsgatan SE-801 31 Gävle Sweden Visiting address: Lötängsgatan
EuroMaint Rail AB Kontorsgatan 37 SE-993 42 Luleå Sweden Visiting address: Kontorsgatan 37
EuroMaint Rail AB Lötängsgatan SE-801 31 Gävle Sweden Visiting address: Lötängsgatan
EuroMaint Rail AB Lokstallsvägen 2 SE-972 45 Luleå Sweden Visiting address: Lokstallsvägen 2
GOTHENBURG
MALMÖ
EuroMaint Rail AB Box 36 136 SE-400 13 Göteborg Sweden Visiting address: Partihandelsgatan
EuroMaint Rail AB Box 124 SE-201 21 Malmö Sweden Visiting address: Carlsgatan, infart 6
SKÖVDE
HALLSBERG EuroMaint Industry AB Kraftvärmegatan 1 SE-694 32 Hallsberg, Sweden Visiting address: Kraftvärmegatan 1
EuroMaint Rail AB Box 3503 SE-200 22 Malmö Sweden Visiting address: Södra Bulltoftavägen 51
EuroMaint Industry AB SE-541 87 Skövde Sweden Visiting address: Kavelbrovägen 2 SOLNA EuroMaint Rail AB Växlarevägen 29 SE-170 63 Solna Sweden Visiting address: Växlarevägen 29 EuroMaint Rail AB Box 1555 SE-171 29 Solna Sweden Visiting address: Svetsarvägen 10
ÅMÅL EuroMaint Industry AB Box 302 SE-662 27 Åmål Sweden Visiting address: Västra Bangatan 2 EuroMaint Rail AB Box 302 SE-662 27 Åmål Sweden Visiting address: Västra Bangatan 2 ÖREBRO EuroMaint Rail AB Box 1502 SE-701 15 Örebro Sweden Visiting address: Södra Grev Rosengatan 1
SUNDSVALL EuroMaint Rail AB Parkgatan 5 SE-852 29 Sundsvall Sweden Visiting address: Parkgatan 5
EuroMaint Rail AB Box 1403 SE-701 14 Örebro Sweden Visiting address: Södra Grev Rosengatan 1
EuroMaint Rail AB Lokvägen 2 SE-694 35 Hallsberg Sweden Visiting address: Lokvägen 2
DESIGN AND PRODUCTION: Collaboration between EuroMaint AB and Care of Haus, Västerås. PHOTOGRAPHY: Lasse Fredriksson, Thomas Harrysson, Ulf B. Jonsson, Melker Larsson, Anders Roth, Håkan Röjder, Getty Images and archive photos from EuroMaint. REPRO: Turbin, Västerås. PRINTING: Edita, Västerås.
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www.euromaint.se
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EuroMaint unites innovative thinking with a long past. Through creative technical system services, customised total solutions and partnerships, we contribute to our customers’ competitiveness and success. The EuroMaint Group consists of EuroMaint Rail, which helps strengthen profitability in the rail transport sector, and EuroMaint Industry, which helps increase customers’ productivity.
www.euromaint.se
