annual report 2014 eng

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the Gunnebo Security Group is a global supplier of security products, services and solutions with an offering covering cash handling, safes and vaults, entrance security and electronic security for banks, retail, CIt, mass transit, public & commercial buildings, and industrial & high-risk sites.

the Group has an annual turnover of €610 million and 5,700 employees in 33 countries across europe, the Middle east & Africa, Asia-pacific and the Americas as well as a network of Channel partners on 100 additional markets.

For a safer world.

ANNUAL REPORT 2014

TAKINGSECURITYINTO THE FUTURE

Order intake amounted to MSEK 5,433 (5,514), organically a decrease of 5%.

Net sales increased to MSEK 5,557 (5,271), organically they increased by 2%.

Operating profit increased to MSEK 352 (222) and the operating margin to 6.3% (4.2%).

Operating profit excluding items of a non-recurring nature of MSEK –14 (–84) increased to MSEK 366 (306) and the operating margin to 6.6% (5.8%).

Profit after tax for the period increased to MSEK 227 (102). Earnings per share were SEK 2.98 (1.29).

Free cash flow increased to MSEK 223 (144).

In June 2014, the French subsidiary Fichet-Bauche Télésurveillance was divested with a capital gain of MSEK 73, which is entered under operating profit as an item of a non-recurring nature.

On August 28, 2014 Gunnebo acquired the Mexican company Diseños Inteligentes de Seguridad S.A. de C.V. (Dissamex). On October 10, 2014 Gunnebo acquired the British company Clear Image, which operates in electronic security.

The Board proposes a dividend of SEK 1.00 (SEK 1.00) per share.

2014 2013

Net sales, MSEK 5,557 5,271

Operating profit/loss exc. items of a non-recurring nature, MSEK 366 306

Operating margin exc. items of a non-recurring nature, % 6.6 5.8

Operating profit, MSEK 352 222

Operating margin, % 6.3 4.2

Earnings per share after dilution, SEK 2.98 1.29

Net debt excluding pension commitments, MSEK 613 728

Equity ratio, % 35 34

Key Ratios

Highlights for 2014

Gunnebo is a global supplier with a broad offering covering cash handling, safes and vaults, entrance security and electronic security, as well as security-related services.

66%

16%18%

Share of Group sales:

EMEA Asia-Pacific Americas

30%

32%38%

Share of Group EBIT excluding items of a non-recurring nature:


50%

12%38%

No. of employees by Region:


The Gunnebo Group Customers and Markets 2Brands 3Comments by the CEO 4Highlights 2014 6Strategy 8The Security Market 10

The Business Offering 12Regions 14Region Europe, Middle East & Africa 16Region Asia-Pacific 20Region Americas 23

Sustainable Business Operations 26Corporate Responsibility 30 People and Leadership 31Environmental Management 32

Corporate GovernanceCorporate Governance Report 34Auditor’s Statement 41Board of Directors 42Group Executive Team 43

Risk and Sensitivity AnalysisRisk and Sensitivity Analysis 44

Financial ReportingBoard of Directors’ Report 48Definitions 52Group Income Statements 53Group Statement of Comprehensive Income 53Group Balance Sheets 54Change in Group Equity 56Group Cash Flow Statements 57Parent Company Income Statements 58Parent Company Statement of Comprehensive Income 58Parent Company Balance Sheets 59Change in Parent Company’s Equity 61Parent Company Cash Flow Statements 62Notes 63Proposed Distribution of Earnings 87Auditor’s Report 88

Capital MarketInformation for the Capital Market 89The Gunnebo Share 92Five-Year Review 94

Contact Details 96Gunnebo Glossary 97

ContentsA vision to be the leading global

provider of a safer future

Increased profitability through

higher production efficiency

Continued growth andgeographical expansion

14–15

8–9

26–27 This document is essentially a translation of the Swedish language version. In the event of any discrepancies between this translation and the original Swedish document, the latter shall be deemed correct.

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Customers MarketsEMEA (Europe, Middle East & Africa)Sales companies (21): Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Middle East (UAE), Netherlands, Norway, Poland, Portugal, South Africa, Spain, Sweden, Switzerland, UK.

The economic instability in Europe in recent years has resulted in lower demand in Region EMEA, and the Group has had to adapt its cost structure accordingly. There has been a greater focus within the region on growth markets outside of Europe.

Read more on pages 16–19

Asia-PacificSales companies (8): Australia, China, India, Indonesia, Malaysia, New Zealand, Singapore, South Korea.

The fastest growing region for Gunnebo where it has expanded its presence considerably in recent years. Gunnebo will continue to develop its strong market position here and invest in new growth opportunities.


AmericasSales companies (4): Brazil, Canada, Mexico, USA.

Gunnebo continues to grow in North and Latin America, where it has made key acquisitions in the USA and Brazil and established companies in Mexico in recent years.


HeritageThe Gunnebo brand has an industrial heritage going back 250 years to south-east Sweden. Today Gunnebo has sales companies in 33 countries and channel partners in a further 100 markets around the globe.

1991HIDEF Kapital AB is formed by the Swedish government as one of eight venture capital companies charged with investing in Swedish companies suffering from the national financial crisis.

1994–1995Gunnebo Industries is acquired by HIDEF, which changes its name to Gunnebo AB and is listed on the Swedish stock exchange in 1994. The new company will focus on deliver-ing security products.

RootsIn 1764, a forge is opened in the Swedish village of Gunnebo. The business grows steadily until the formation of Gunnebo Bruks Nya AB in 1889 which has several factories supplying chains to the shipping industry. This company later becomes known as Gunnebo Industries.

BankCore offering: solutions for secure and efficient cash handling, the storage of valuables and entrance secu-rity. Customers include Bank of China, Citibank, HSBC, ING Bank, Nordea and Standard Bank.

RetailCore offering: solutions for secure and efficient cash handling, loss prevention, the storage of valuables and entrance security. Customers include Aldi, Auchan, Carrefour, Coop, Decathlon and Walmart.

CIT (Cash in Transit)Core offering: solutions for the secure collection and storage of cash. Customers include Brinks, G4S, Loomis and Prosegur.

Mass TransitCore offering: solutions for the control of passenger flows and fare collection on public transport systems. For airports, Gunnebo provides security solutions for boarding, immigration control and anti-return control. Customers include the public transport networks of Beijing, Bogotá, Melbourne and New Delhi, and air-ports in Bahrain, Boston, London, Madrid and Sydney.

Public & Commercial BuildingsCore offering: solutions for access control and solu-tions for the storage of valuables. Customers include the European Commission, Honeywell, Hyundai Information Technology and Siemens.

Industrial & High-Risk SitesCore offering: solutions for access control and solu-tions for the storage of valuables. Customers include factories, logistics companies, power plants, arenas, ports, prisons and casinos.

2 Gunnebo Annual Report 2014

All sales companies within the Gunnebo Security Group carry the Gunnebo name and the majority of security products, services and solutions are sold under the Gunnebo brand, which also acts as an umbrella brand.

Brands

2011–2014Focus: Growth and profi tabilityGunnebo continues to move the point of gravity to markets with high growth potential within its core business segment. The Group expands its presence in South Korea, Thailand, Malaysia, USA, Mexico and Brazil.

1995–2005Focus: AcquisitionsGunnebo acquires around 40 com-panies specialising in security. Thin includes Fichet-Bauche, a listed company on the French stock ex-change with a history in safes dating back to 1825.

2006–2008Focus: IntegrationThe acquisitions made over the past 12 years are inte-grated into the Group and adopt the name Gunnebo.

2009–2010Focus: Strategy and profi tabilityGunnebo redefi nes its vision to become the leading global pro-vider of a safer future and divests non-core business, Perimeter Protection. The Group also starts to focus on investing more in growth markets outside of Europe.

Gunnebo Annual Report 2014 3

Safes & Vaults Global UK. Founded 1835. Marketed and sold by Gunnebo since 2000.

Outdoor perimeter security Global Germany. Founded 1951.Acquired by Gunnebo in 2004.

Safes & Vaults Global France. Founded 1825.Acquired by Gunnebo in 1999.

Electronic article surveillance for retail Global Sweden. Founded 1984. Acquired by Gunnebo in 2004.

Safes & Vaults North America USA. Founded 1967. Acquired by Gunnebo in 2012.

Fire protection India India. Founded 1903. Marketed and sold by Gunnebo since 2000.

Safes & Vaults Global Sweden. Founded 1886. Acquired by Gunnebo in 1994

Closed cash handling Global Sweden. Acquired by Gunnebo in 2001.

Safes India India. Founded 1932. Acquired by Gunnebo in 2000.

Brand Product Segment Market origin


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Focus on Costs Produces ResultsDEAR SHAREHoLDER,Central to the development of Gunnebo’s business is shifting the point of gravity in terms of geographic focus, allocation of resources, and increased customer value.

During 2014, we have continued to grow our business outside of Europe. The propor-tion of sales on markets in the Middle East and Africa, Asia-Pacific and Americas now totals 41% (40%) of our sales. Our presence in Latin American has been strengthened through the acquisition of the Mexican ser-vice company Dissamex. We have also con-tinued to establish ourselves on new markets by opening representative offices in Oman, Saudi Arabia, Nigeria, Turkey and Myanmar.

In terms of resource allocation, in 2014 we have invested in greater production capacity in India, and have continued efforts to reduce our fixed cost base in Europe. We have sold a part of our French operation, Fichet-Bauche Télésurveillance, which we no longer consid-ered to be part of our core business.

To strengthen customer value we launched a number of new offerings during the year in all of our product segments: Cash Handling, Safes & Vaults, Entrance Security and Electronic Security. The new generation of SpeedStile entrance security gates which were launched at the end of 2013 has been well received by the market. To strengthen our customer offering on the British market, we acquired electronic security company Clear Image during the year.

FINANCIAL RESULTSThe good sales growth in Region Asia-Pacific continued during the year, albeit at a lower level than previously. This slowdown is partly due to elections in several of the Group’s main markets in the region, which has an impact on the business climate.

Although we noted weak sales develop-ment in Region EMEA, the market situation did improve during the year. We are positive about the future in EMEA, as developments in 2014 are a sign of stabilisation.

For Gunnebo, Region Americas is a growth market. Sales in the region during the year developed in line with last year, above all due to a sluggish market in Brazil and restructur-ing in public administration in the USA.

During the year we have continued to work on reducing our fixed costs in Europe. Our efforts have produced results, and the operating margin in Region EMEA more than doubled during the year to 3.0% (1.4%). This improvement is a result of a wide range of large and small-scale measures linked to both the sales organisation and our production platform in Europe. Along with continued good cost control in other regions, these measures are a strong contributor to the im-proved operating margin. 6.6% is the strong-est operating margin Gunnebo has reported for many years.

We have also continued to strengthen our cash flow, and the equity ratio was 35% at the end of the year. This means that Gunnebo is now financially strong and has scope to con-tinue investing in growth where opportuni-ties present themselves.

BUSINESS STRATEGy 2016 – CASH HANDLING IN FoCUSDuring the year we drew up a strategic plan which extends up to 2016. It entails a distinct change in the way we view our future core business.

Traditionally, Gunnebo’s core business has been in safes and vaults, primarily for banks and public administration. This is an important foundation for our business in the future too, especially on markets outside of Europe. This business has enabled us to develop partnerships with the majority of the world’s major banks – relationships that go back decades.

However, in recent years we have noticed lower sales of certified safes and vaults, and 2014 was no exception. In Europe and North America we are facing only modest market growth moving forward, while we see the slowdown in Asia as more temporary. Sales

of safes and vaults made up one quarter of the Group’s total sales.

Therefore, in 2014 we shifted focus. Safes and vaults will remain an important part of our business in future, but we see the main growth in cash handling, both in terms of sales and profitability. The foundation of our business is to provide solutions that increase efficiency and security in the cash handling process for all players involved.

We began working with cash handling in Europe and Australia several decades ago, and at the time the primary customer seg-ment was banks. Today cash handling is part of our global business, and the majority of orders come from CIT companies and retail. Business in this area developed very well during the year and now comprises one fifth of the Group’s total sales, with satisfactory profitability above Gunnebo’s target of a 7% operating margin.

Read more about our business strategy on pages 8–9

EMPLoyEESGunnebo continuously invests in the develop-ment of its employees on all levels. In 2014, we have worked together to develop and implement new core values, clearly linked to performance and results. We call the plat-form Gunnebo’s Performance Cornerstones, and it forms the basis for our employees’ per-sonal development. With Gunnebo’s history of growth primarily through acquisitions, these common core values are a vital building block in creating sustainable global customer offerings and collaborations that create value.

I am personally convinced that ‘soft’ in-vestments also lead to good returns, if not in the next quarter then in the longer term.

The Gunnebo Group currently has some 5,700 knowledgeable, dedicated employees around the world. Without them we could never have created value for our customers or produced the results we have delivered to our owners during the year. I would therefore like

CoMMEnTS By THE CEo

to take this opportunity to thank them all for their fine efforts in 2014!

I would also like to thank our customers and partners for their faith in allowing us to help evolve their business.

THE FUTUREIn 2015 Gunnebo will continue to strengthen its offering and its market positions primar-ily in cash handling, but as is clear from our business strategy we will also continue to cultivate and grow our business in safes and vaults where possible, build on our strong entrance security operation, and consolidate our market position in electronic security wherever in the world this represents major business for us. We will also carry on focusing on reducing our fixed cost base, primarily in Europe, and streamlining our capital utilisa-tion. And like most businesses, we will do our best to increase sales and continue along our set path with better profitability.

As communicated in early January, I will be stepping down as President and CEO of Gunnebo in summer 2015. I would therefore particularly like to thank all our sharehold-ers for your firm support whilst I have led Gunnebo these past six years. I would also like to wish my successor, Henrik Lange, the very best of success in his new post.

Per Borgvall President and CEo

The beneficial effects of cost adaptations combined with a stabilised market have strengthened the results for our business in Europe. Along with continued good profitability in other regions, we finished the year with an operating margin of 6.6%, the strongest result for many years.6.6

operating margin

%



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First Quarter

Quarterly Financial Summary

Net sales (MSEK) 1,250

Operating profit (MSEK)* 38

Operating margin (%)* 3.1





Second Quarter

Highlights 2014

IMS Research recognises Gunnebo as the global number one supplier of entrance gates in its “World Market for Entrance Control Equipment” report. This is the fourth consecutive oc-casion Gunnebo has ranked as the world leader in this field.

www.gunnebo.com is re-launched as a responsive website, optimised for viewing on all devices, including tablets and smartphones.

Fichet-Bauche Télésurveillance (FBT) is divested from Gunnebo France to Butler Group.

Gunnebo holds its Annual General Meeting for 2014.

Region EMEACOOP in Sweden, Denmark and Norway signs a framework agreement with Gunnebo for the delivery of the closed cash handling system, SafePay™.

British pharmaceuticals company UDG Ltd. orders a large strongroom for its plant in the UK.

Read more on page 19

A branch office is opened in Oman to improve customer service in the region.

Region Asia-PacificThe first order for a vault and the automated safe deposit locker system, SafeStore Auto, is received in Singapore.

Busan International Finance Center in South Korea signs an order for entrance security.

A nuclear power plant in China places an order for entrance security.

Region AmericasSunTrust Bank unveils the latest in banking technology at the SunTrust Plaza Garden in Atlanta, USA. Among the new features is Gunnebo’s SafeStore Auto.


Gunnebo signs a three-year service and maintenance con-tract for security equipment with a major Canadian bank.

Gunnebo holds its Capital Market Day in Stockholm, Sweden, for analysts, fund managers, investors and journal-ists. Cash handling, entrance security and electronic secu-rity solutions are demonstrated live.

The Group decides to invest a further MSEK 33 in 2014–15 to increase capacity and improve quality at its Indian pro-duction plant in Halol.


To support growth in Asia-Pacific, Gunnebo announces the closure of its entrance security production facility in Uckfield, UK and the transfer of production to Kunshan in China.

Region EMEAThe French postal service, La Poste, strengthens its partnership with Gunnebo through a general agreement for electronic security.

Region Asia-PacificGunnebo receives an order worth over €2 million to deliver over 16,500 safe deposit lockers and 15 vault doors to Guanfu Museum in Shanghai, China.

The first cash handling order in Indonesia is received from taxi operator, Express Group.


Region AmericasBrazilian cash in transit company, Fidely’s, invests in a front-office cash handling solution from Gunnebo. The solution reduces the time spent on cash management, minimises the risk of robbery and prevents counterfeit notes being accepted.

San Diego Stadium in the USA installs Gunnebo entrance security solutions to control the flow of visitors to and from the arena.

Gunnebo’s service centre in the US is expanded to serve Canadian customers as well.

* Excluding items of a non-recurring nature *Excluding items of a non-recurring nature










Third Quarter Fourth QuarterGunnebo acquires all shares in Mexican security services com-pany, Dissamex, giving the Group a market-leading position within electronic security services to banks in Mexico.


Gunnebo receives the Delivery and Supply Chain Reliability Award from one of its major customers, NCR, for exhibiting outstanding on-time delivery performance.


Region EMEABanque de France signs a major order for vaults and entrance security.

Newgate International places an order for vaults and SDLs with Gunnebo UK.

Region Asia-PacificGunnebo China receives an order from Huatai Securities for entrance security for its offices.

Jilin Bank in China chooses Gunnebo’s automated safe deposit locker system, SafeStore Auto.

Tianwan Nuclear Power Station in China places order for entrance security, strengthening Gunnebo’s position as a supplier of security solutions to high-risk sites.

Sejong City Government in South Korea once again chooses Gunnebo to supply entrance security solutions.

Region AmericasGunnebo receives a large order from a national bank in the USA related to the increased automation of the customer reception areas at 370 of its branches.

A major Canadian airport places an entrance security order.

Gunnebo acquires Clear Image, a provider of electronic security solutions and security services in the UK.

Gunnebo launches a range of thermally-insulated security doors designed to improve a building’s energy perfor-mance in line with the European Union’s Energy Efficiency Directive (2012/27/EU).

Gunnebo’s plant in Halol, India wins a Gold Award at a Lean Six Sigma Convention in recognition of the journey it has made to improve production efficiency.

Region EMEALa Poste and La Poste Immobilier in France renews a long-term agreement for the delivery of safes, locks and high-security doors.

Gunnebo receives an order for SafePay closed cash handling systems from a major German retail chain with roll-out planned for 2015.

Dubai’s largest CIT company, Transguard, places an order for cash handling solutions with Gunnebo in the Middle East.

Region Asia-PacificG7 Safety Lockers in Malaysia continues to invest in Gunnebo’s automated safe deposit locker system, SafeStore Auto.

In connection with an upgrade to Beijing’s metro system, Gunnebo receives a major entrance security order in China.

Sacha de La Noë is appointed the new SVP Region Asia-Pacific and becomes a member of the Group Executive Team.

Region AmericasThe first delivery of Gunnebo’s cash handling systems to a global CIT company in Brazil is completed.

Gunnebo receives an order for smart surveillance systems from a grocery chain in Brazil.

*Excluding items of a non-recurring nature *Excluding items of a non-recurring nature


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VISIoNGunnebo’s vision is to be the leading global provider of a safer future.

Being a leading global provider means mak-ing a competitive offering available through a global market presence on those markets where customers want the Group’s products, services and solutions.

Providing a safer future means taking a long-term approach, investing in innova-tive research and product development, and building lasting business relationships which generate mutual value.

BUSINESS CoNCEPTGunnebo’s business concept is to offer security products, services and solutions that create value for shareholders, customers, partners, employees and society on a global scale.

STRATEGyGunnebo’s strategy is executed in the Group’s regions and sales companies to ensure that the needs of local customers in each individual market are addressed and met.

Read more about the Group’s business, market trends and development in the different regions on pages 14–25

Gunnebo’s overriding strategy is focused on its core customer offering supported by a backbone strategy to move the Group’s point of gravity.

Customer FocusCash HandlingGunnebo’s intelligent cash handling solutions are designed to reduce the time spent on cash management, improve efficiencies in the cash cycle and make cash handling more secure.

The Group has a keen understanding of the cash handling processes performed by retailers, CIT companies and banks as well as other customers managing cash, such as restaurants, casinos and taxi operators. Gunnebo creates value for these partners in the cash cycle by reducing the total cost of cash handling and improving security for their customers and staff.

Safes and VaultsUnder leading brands, such as Chubbsafes and Fichet-Bauche, the Group produces high-quality safes and vaults, certified to resist burglary, fire and explosives.

Gunnebo can leverage its strong local brands in this segment (see page 3, Brands). Sales through its own companies are com-plemented by a strong global network of Channel Partners.

Entrance SecurityGunnebo’s turnstiles and speed gates regu-late and control the flow of people into and out of public and commercial buildings, as well as industrial and high-risk sites. Security doors, partitions and windows also protect high-risk sites from physical attacks.

In addition Gunnebo targets airports and mass transit systems with a strong range of solutions designed to simplify the flow of passengers whilst maintaining the requisite levels of security.

Electronic SecurityGunnebo’s innovative solutions for electronic security consist of access control, intrusion detection, CCTV, electronic locks and remote surveillance systems.

Key customer segments include public buildings, high-risk sites and banks which require integrated and automated security systems often operated from a central soft-ware platform.

Moving the point of gravityThe backbone strategy is to move the Group’s point of gravity in terms of geog-raphy, resource allocation and value chain development. By moving its point of gravity geographically the Group will successively generate a larger proportion of its sales from growth markets rather than mature and declining markets. Hand in hand with this comes the movement of resources to ensure that a larger proportion of the company’s staff and expertise is located in these growth markets. Finally, the Group is developing its position in the value chain by becoming more and more of a solutions provider which deliv-ers not only security, but also added-value im-provements to its clients’ business processes.

FINANCIAL GoALSGunnebo’s financial goals shall contribute to a good return for the Group’s sharehold-ers. They focus on profitable growth and the operating margin.

Into the Future with a Strong Core Offering

Long- term

goals

out-come2014

Out-come2013

Return on capital employed*, % 15 12.6 10.7

Operating margin*, % 7 6.6 5.8

Equity ratio, % >30 35 34

Organic growth invoiced sales, %

5 2 1

* Excluding items of a non-recurring nature

Goals and Outcomes

The Gunnebo Security Group is a global supplier of security products, services and solutions with an offering covering cash handling, safes and vaults, entrance security and electronic security for banks, retail, CIT, mass transit, public & commercial buildings, and industrial & high-risk sites.

STRATEgy

Vision What Gunnebo wants to be

gunnebo will become the leading global provider of a safer future

Financial GoalsWhat the Group wants to achieve

5%Organic growth

of at least 5%An equity ratio ofno less than 30%

30%An operating margin

of at least 7%

7% Return on capital em-ployed of at least 15%

15%

Customer Focus

The sales regions and sales companies formulate and execute strategic business plans for Gunnebo’s core offering:

Cash Handling

Safes & Vaults

Entrance Security

Electronic Security

StrategyHow the Group will achieve it

Moving the Point of Gravity

Moving the point of gravity within three aspects of the business:

Geographic focus

Resource allocation

Value chain

Read more on pages 4–5 and 12–25



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The total value of the global security equip-ment market is estimated to be around SEK 700 billion. The market has shown growth of around 4.5% over the past five years and is expected to maintain a good rate of growth in the years to come.

The underlying drivers behind the develop-ment of the security market are economic growth, a higher standard of living, and ur-banisation. A large part of the security market comprises areas where Gunnebo does not operate, such as security patrols and cash in transit (CIT). The proportion of the market where Gunnebo does operate is estimated to be worth around SEK 480 billion and is divided into the following product groups:

CASH HANDLING The cash handling market segment encom-passes players within bank, CIT, retail, res-taurants, casinos and mass-transit compa-nies. Gunnebo provides products, software and services that improve efficiency and security in the whole cash cycle for these customers.

The global cash handling equipment mar-ket is estimated to be worth approximately SEK 50 billion, divided primarily between retail cash handling (40%), central cash handling for banks and CIT companies (20%) and self-service operations e.g. for depositing and withdrawing cash (40%).

Trends show that the volume of cash in cir-culation will continue to grow on a global ba-sis, despite the influence of online payment, card payment and near-field communication (NFC). Key market drivers for those who work with cash are enhanced security, lower costs, less shrinkage and improved productivity and control, especially within the retail sector.

The installed base for intelligent retail cash handling solutions is estimated at around 250,000 systems globally, with Americas currently having the largest base. Gunnebo is estimated to have a 5% global market share in retail cash handling with strong positions in Europe, Australia and Brazil. With the excep-tion of Western Europe, Australia and the USA, the market for cash handling is regarded as less mature. The volume of cash in circula-tion is increasing and the demand from both retailers and CIT companies for more efficient cash handling solutions is rising.

Gunnebo’s competitors in retail cash handling include Wincor, Glory and Tidel.

Another important part of the global market for cash handling is ATM machines, defined here as self-service cash deposit and withdrawal. The global ATM market has grown rapidly since the late 1980s and is expected to continue to grow in the years to come. Even though the banks in Europe have decreased their investment in this part of the market in recent years, there is strong growth

in Americas and Asia-Pacific. Annual growth in the number of installed ATMs between the years 2012 and 2018 is estimated at 6% globally. The annual install volume of ATMs is approximately 450,000 units, and there are currently more than 3.5 million installed.

Gunnebo is a supplier of ATM safes and has a considerable share of the market thanks to a global production base. Players on this market are NCR, Diebold and Wincor.

SAFES AND VAULTS The safes and vaults market segment en-compasses safes, vaults, vault doors and safe deposit locker (SDL) systems. Gunnebo has been operating within the safes and vaults business for more than 150 years through strong global brands such as Chubbsafes and Fichet-Bauche.

The global market for safes and vaults was estimated at around SEK 22 billion in 2014, with a forecasted annual growth of just over 5% up to 2020. Graded, or certified, safes are an important part of Gunnebo’s business, accounting for around one third of the total world market for safes and vaults. The Group is estimated to have a global market share of 12% in certified safes, and a quarter of the European market.

The market for graded or certified safes is predicted to have a lower growth pace than safes without a grade or certification. Development is driven by higher demand from smaller organisations and private indi-viduals, as well as the fact that some growth markets have no certification requirements.

Key market drivers within the safes and vaults segment are economic growth and increased wealth, as well as a developing financial infrastructure – especially on many markets in Asia and Africa. This develop-ment leads to increased awareness about the importance of protecting valuables against fire and theft, both among businesses and private individuals.

Another trend is that end customers are demanding that a safe has some kind of inte-grated intelligence, such as connection to the Internet. Moreover there is greater demand for certified safes outside of the bank sector,

Growth, a Higher Standard of Living and Urbanisation Drive the MarketThe global security industry is extensive in its scope, covering a wide range of products and services associated with the safety and protection of businesses, people and assets. The market is fragmented and characterised by a few sizeable global corporations operating alongside a large number of smaller local suppliers.

Market estimations in this section were taken from different sources, including “Safes & Vaults. A Global Strategic Business Report of May 2014 from Global Industry Analysts, Inc.”; “The World Market for Pedestrian Entrance Control Equipment of September 2013 from IHS”; “Planet Retail”; “World Security Equipment of March 2013 from the Freedonia Group”. Estimated mar-ket sizes taken from the sources have been converted into SEK using an average exchange rate from USD in 2014.

THE SECURITy MARKET


for example in pharmaceuticals and retail. Gunnebo’s competitors in this segment

include Godrej and Diebold.

ENTRANCE SECURITy The entrance security market segment in-cludes speed gates, turnstiles and security doors, as well as ticket gates for mass transit systems and security gates for airports.

The global market for pedestrian entrance security, which includes the product seg-ments mentioned above, is estimated at around SEK 4 billion, with Europe, Middle East and Africa accounting for around 50% of the total. Global growth over the next few years is estimated at just under 5%.

Key market drivers for entrance security are urbanisation, the expansion of inner-city infrastructures such as metros and BRT (Bus Rapid Transit), facilitation of mobility, and increased cross-border movement of people. Also a greater need for centralised security and personnel checks, reduction of overheads for receptionists and guards, as well as grow-ing threats from terrorism and crime.

The top ten leading suppliers of pedestrian entrance control equipment accounted for more than half of the global market in 2012, and Gunnebo was judged to be the lead-ing supplier globally with a market share of close to 12%. Gunnebo’s competitors in this segment are Royal Boon Edam, Kaba and Automatic Systems.

ELECTRoNIC SECURITy The electronic security market segment relates to products for monitoring physical environments, access control and fire alarms. The segment also covers the installation, monitoring and maintenance of these sys-tems.

Access control and video surveillance systems make up 45% of the market, alarms 40%, and other electronic security products the remaining 15%.

The global market for electronic security systems is valued at over SEK 410 billion. EMEA represents around 40%, the largest markets being the UK, Germany, France, Spain and Italy. On these markets, Gunnebo has a

position as an integrator of electronic secu-rity solutions within the banking and public administration sectors. In Europe the market is expected to develop well, with anticipated growth of 5% over the next three years. Global growth is estimated at just over 7%.

Growth in electronic security is very much driven by technological developments such as IP innovation in CCTV systems. Customer demand for integrated solutions, i.e. plat-forms that integrate several systems into one solution, is also expected to be a strong driver moving forward.

Gunnebo’s competitors in electronic secu-rity systems include Nedap, Lenel, Pacom and Honeywell.

Electronic Security

Access control and CCTV systems, 45% Alarms, 40%Other electronic security products 15%

Entrance SecuritySpeed gates, 40%Turnstiles, 35%Security doors, 20%Security gates for airports, 5%

40% 35% 5%20%

Safes & VaultsCertified and higher graded fireproof safes, 33% Other safes, 67%

33% 67%

45% 40% 15%

Cash Handling

The Market by Segment

Retail, 40%Central cash handling for banksand CIT, 20%Self-service for deposit andwithdrawal of cash, 40%

40% 20% 40%


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12

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Global Security Solutions for Greater Customer ValueGunnebo provides security products, services and solutions with a focus on cash handling, safes & vaults, entrance security and electronic security.

Cash HandlingGunnebo’s intelligent cash handling solutions are designed to reduce the time spent on cash management, improve efficiencies in the cash cycle and make the whole cash handling process more secure. From entry-level cash deposit systems to self-service cash recycling units

and closed cash handling solutions, the range addresses the needs of both front and back office environments. Gunnebo also provides integrated cash management software as well as related services, such as retail cash monitoring and central hosting.

Gunnebo’s turnstiles, speed gates and revolving doors regulate and control the flow of people into and out of buildings. Intelligent detection and inte-gration with other security systems ensure freedom of movement for authorised individuals and denial of passage for people without permission to enter a given area. Entrance Security also includes ticket control solutions for mass transit systems and airport gates for fast boarding, immigration control and security checks.

Entrance Security

19%

19%

of Group sales

of Group sales

OFFERING


Safes & VaultsProtecting valuables is one of Gunnebo’s core businesses. Under lead-ing brands, such as Chubbsafes and Fichet-Bauche, the Group produc-es high-quality safes and vaults, certifi ed to resist burglary, fi re and explosives. The range includes deposit safes, fi reproof fi ling cabinets,

and safes for the protection of digital media as well as bank vaults and modular vault rooms. The off ering also covers safe deposit lockers and the automated safe deposit locker system, SafeStore Auto.

Electronic Security

New for 2014

Gunnebo’s solutions for in-tegrated security consist of several modules for managing an array of electronic security functions: access control, intrusion detection, CCTV systems, electronic locks and remote surveillance.

In each product area Gunnebo off ers a range of security services encompassing the whole product lifecycle. These include corrective, preventive and perfor-mance maintenance services, as well as upgrades and retrofi tting. Gunnebo also off ers services for the remote monitoring of customers’ cash handling processes, alarm systems and surveillance networks.

Service

25%

14%

23%

of Group sales

of Group sales

of Group sales

SafeCash RecyclerA self-service cash handling solution for the deposit and withdrawal of large volumes of notes and coins.

Thermally insulated security doors Certifi ed to resist manual and ballistic attacks and designed to improve a build-ing’s energy performance in line with the 2012/27/EU European Directive.

Fichet-Bauche InviKtusPremium range of safes off ering triple-certifi ed protection against burglary, fi re and explosives.

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Gunnebo’s 33 sales companies are organised into three regions: EMEA (21 sales companies), Asia-Pacific (8) and Americas (4). Gunnebo also works with an extensive Channel Partner network, giving it coverage in markets where it does not currently have its own sales companies.

Regions

Group Sales Sales by Sub-Region Employees Key Ratios Customers



Frankrike, 30%Centraleuropa, 26%Norden, 13%Sydeuropa, 12%Storbritannien/Irland, 9%Afrika, 4%Mellanöstern, 4%Östeuropa, 2%

France, 30%Central Europe, 26%Nordic region, 13%South Europe, 12%UK/Ireland, 9%Africa, 4%Middle East, 4%Eastern Europe, 2%

Indien, 41%Sydostasien, 29%Australien, 15%Kina, 15%

India, 41%South-East Asia, 29%Australia, 15%China, 15%

Nordamerika, 77%Latinamerika, 23%

North America, 77%Latin America, 23%

66% 50%

Sub-Regions and Sales Companies North America: Canada, USA

Latin America: Brazil, Mexico

Sub-Regions and Sales Companies

Nordic region: Denmark, Finland, Norway, SwedenCentral Europe: Austria, Belgium, Germany, Luxembourg, Netherlands, Switzerland South Europe: Italy, Portugal, SpainEastern Europe: Czech Republic, Hungary, PolandFranceUK/IrelandMiddle East: UAEAfrica: South Africa

Sub-Regions and Sales Companies India

China

Australia and New Zealand

South-East Asia: Indonesia, Malaysia, Singapore, South Korea

Region EMEAEurope, Middle East & Africa

Region Asia-Pacific

Region Americas

18% 38%

16% 12%





Bank Banco Actinver (Mexico), Banorte (Mexico), BBVA Bancomer (Canada, Mexico, USA), Banc Sabadell (USA), CIBC (USA and Canada), Citibank (Latin America), Fifth Third Bank (USA), HSBC (Brazil, Canada, Mexico, USA), ITAU (Brazil), RBC (Canada and USA), Santander (Mexico, USA), Wells Fargo (USA and Latin America)Retail Autozone (Brazil and Mexico), C&A (Brazil), Carrefour (Brazil), Cencosud (Brazil), FNAC (Brazil), McDonald’s (Mexico), Raia Drogasil (Brazil), Riachuelo (Brazil), Súper City (Mexico), Telus (Canada), TIM (Brazil), Wow Mobile (Canada), Target (Canada), The Body Shop (Canada), Walmart (Brazil)Other NCR (Canada), Shell Oil (Canada), Weatherford Global (Canada)

Bank Bank of China (China), American Express, Axis Bank, Deutsche Bank, Canara Bank, Fidelity Investments, HDFC Bank, ICICI Bank, IDBI bank (India), Bank Rakyat Indonesia (Indonesia)Mass Transit Hangzhous Metro (China)Public & Commercial Buildings E2 Power Sdn Bhd, G7 Safety Lockers, Measat Network Broadcasting Systems, Taylor’s University (Malaysia), PT Pos Indonesia ( Indonesia), Guardtec, HDS Security, Honeywell, Hyundai Information Technology, KBIT, KT Telecop, S1, Shinhwa System, Shinsegae Inc., SK InfoSec, TobeAce, CAPS (South Korea), Global Pvt Ltd, Raghuleela Builders Pvt Ltd, RMZ Eco world, Trafigura & Barclays (India)Retail Phoenix Mills, Reliance Retail, Tata Croma (India)

Bank Barclays, BNP, Danske Bank, Euronet, Forex, ING, NordeaRetail Aldi, Auchan, BP, Carrefour, COOP, Decathlon, LIDL, Metro Group, Shell Oil, Spar, Tokheim, TotalCIT (Cash in Transit) Brinks, G4S, Loomis, Nokas, ProsegurPublic & Commercial Buildings European Commission, Hermès, Honeywell, SiemensIndustrial & High-Risk Sites Besix, Bouygues, Nestlé

MSEK 2014 2013

Order intake 3,620 3,558Organic growth, % –3 –2Net sales 3,644 3,474Organic growth, % 0 –5Operating profit/loss* 109 47

MSEK 2014 2013

Order intake 987 1,043Organic growth, % –5 27Net sales 1,029 954Organic growth, % 8 20Operating profit/loss* 140 134

MSEK 2014 2013

Order intake 826 913Organic growth, % –14 9Net sales 884 843Organic growth, % 0 7Operating profit/loss* 117 125

*Excluding items of a non-recurring nature




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THE REGION IN BRIEFEurope, Middle East & Africa (EMEA) is the Group’s largest region, accounting for 66% (66%) of Group sales in 2014. The region is made up of 21 sales companies off ering solu-tions and services in the product segments cash handling, safes & vaults, entrance secu-rity and electronic security. The most impor-tant customer segments are bank, retail, CIT companies, mass transit, public & commercial buildings, and industrial & high-risk sites.

In all fi ve Western European sub-regions – Nordic, UK & Ireland, Central Europe, France and Southern Europe – the markets are mature. Here Gunnebo is focusing on developing from being a product supplier to a solutions provider, by actively working with national and international key customers.

The markets in the three sub-regions Eastern Europe, Middle East and Africa are growth markets. Here the focus is to extend Gunnebo’s footprint into markets where there is growth potential, and to launch new segments of the Group’s product portfolio. Sales go primarily through a network of

carefully selected Channel Partners, but also through project sales in association with international systems integrators.

CUSTOMERS ANd MARKETGunnebo has a long history in the region where the Group has been building relation-ships with key customers for over 100 years through the strong brands of Fichet-Bauche and Chubbsafes.

The basis of the Group’s business is still in the bank sector. There is a trend towards less and less business with this sector, but this customer segment is developing well in France, the Middle East as well as in Sub-Saharan Africa with central banks. Historically speaking, Gunnebo’s business with bank cus-tomers has related to the sale of safes, vaults, vault doors and electronic security solutions. The Group’s cash handling off ering emerged from working with major bank customers in the region.

In recent years the trend has shifted, whereby fl ows of cash in society are increas-ingly being managed outside the bank sector,

primarily by CIT companies and the retail sector. Gunnebo has therefore refi ned its off ering to enable it to streamline and assure security in the whole cash handling process, with a particular focus on retail. This is a growing business in the region. For example, the Group’s closed system for cash handling, SafePay, reported its best result ever in 2014. Sales were generated predominantly in the Nordics and Italy.

Other important customer segments in the region are mass transit, public & commercial building, and industrial & high-risk sites. The proportion of sales to these customer seg-ments is relatively stable. Development is closely linked to public investments in infra-structure. Here, the main off ering is within electronic and entrance security. During the year, sales to these customer segments were boosted with the market introduction of the new series of entrance control gates. The strongest development in these customer segments during the year was noted on the UK and Middle East markets.

Region Europe, Middle East & Africa

EMEA Own sales companies

and Channel Partners Channel Partners only

Stabilised Sales and Improved Profi tability

In 2014, Gunnebo’s sales on its Western European markets stabilised after several years of negative development. In tandem with this, the region has continued to focus on reducing fi xed costs, primarily in Europe. The business in Middle East and Eastern Europe showed healthy growth, whereas the development in Africa was fl at. For the full year, the organic growth in sales was unchanged and the operating margin was 3.0% (1.4%).


DEVELOPMENT OF THE BUSINESSFor Gunnebo, business development is closely connected to the strategy of shifting the Group’s point of gravity with relation to geographic focus, allocation of resources and increased customer value. Geographically, the Group is moving its point of gravity to markets with continued growth in its core business. In 2014, Gunnebo opened representative offices in Oman, Saudi Arabia, Nigeria and Turkey.

When it comes to resource allocation, Gunnebo has continued to reduce its fixed cost base in the region, which has contributed to the year’s results.

In June, Gunnebo divested Fichet-Bauche Télésurveillance to Butler Group. The divest-ment was in line with the strategy to phase out those areas which are not part of the Group’s defined core business or where the Group does not see the opportunity to attain a significant market position.

To increase customer value, the Group also expanded its business offering on the UK/Ireland market through the acquisition of electronic security solutions provider Clear Image. The acquisition brings new opportuni-ties and a broader service offering for existing customers in the bank, CIT and retail sectors.

During the year, the Group also launched a number of new products in the region. For instance the introduction of a new range of speed gates within entrance security, the SpeedStile series, was very well received by the market. In addition, a new range

of thermally insulated security doors was launched which meet standards set by the new European Directive on a building’s energy performance.

Within cash handling, a new cash deposit solution, SafeCash Counter Deposit Smart, and SafeCash Recycler, a solution for the deposit and withdrawal of large volumes of notes and coins in the back office, were also well received. Furthermore, the Group launched a new solu-tion for the integration of SafePay into the cus-tomer’s POS system, SafePay QuickPOS, which has been developed in close cooperation with a number of key customers.

RESULTS FOR 2014Order intake in Region EMEA amounted to MSEK 3,620 (3,558). Organically, i.e. exclud-ing acquisitions, divestments and currency effects, order intake fell by 3%. The decline was primarily attributable to the Nordics and Central Europe, with tentative demand in bank and retail. In the Middle East, France and

Eastern Europe, order intake rose organically compared to 2013.

Net sales increased to MSEK 3,644 (3,474), but organically they remained unchanged on 2013. Sales increased in the UK/Ireland, Central Europe and the Middle East, while other mar-kets developed less strongly than in 2013.

Operating profit excluding non-recurring items amounted to MSEK 109 (47) and the operating margin to 3.0% (1.4%). Efforts to reduce the cost base in Europe made a posi-tive contribution to the improved operating margin.

Items of a non-recurring nature totalled MSEK –1 (–74), partly including the positive effect on results of MSEK 73 from the divest-ment of French subsidiary Fichet-Bauche Télésurveillance, and partly one-off costs of MSEK –74 (–74) primarily attributable to staff cuts and other structural measures.

Region Europe, Middle East & Africa

Q1 Q2 Q3 Q4Full

yearFull

yearMSEK 2014 2014 2014 2014 2014 2013

Order intake 1,070 908 838 804 3,620 3,558Organic growth, % 1 −3 5 −15 −3

Net sales 842 925 864 1,013 3,644 3,474Organic growth, % 7 0 0 −4 0

Operating profit/loss excl. non-recurring items −1 30 23 57 109 47Operating margin excl. non-recurring items, % −0.1 3.2 2.7 5.6 3.0 1.4Non-recurring items −19 51 −4 −29 −1 –74

Operating profit −20 81 19 28 108 –27

During the year we continued to trim our fixed cost base. Meanwhile sales have stabilised, and we can report an operating margin of 3.0%, a clear improvement on 2013 and a major step in the right direction.

SVP, Morten Andreasen

+62Improved operating profit

MSEK

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MARKET TRENdSThe factors driving the development of the secu-rity market in Western Europe are typical of those for other industrialised markets around the world, namely economic growth, a higher standard of living, and urbanisation. The annual growth forecast for the section of the market where Gunnebo has a presence is 2–3%.

In Eastern Europe, demand in the security market has been bolstered by greater spending on construc-tion in much of the region.

Major changes in the economic systems of Eastern Europe, and the accompanying increase in wealth, is widening the base of both businesses and individuals who require and have the means to invest in security solutions. The annual growth forecast for the section of the market where Gunnebo has a presence is 3–5%.

The sale of security equipment in Africa is mainly supported by increased urbanisation, economic growth and greater personal affluence. In conjunction with this growth in wealth, there are more assets to protect. The annual growth forecast for the section of the market where Gunnebo has a presence is 10–15%.

In the Middle East too, market development is driven by economic growth and greater affluence. There is also a clear trend towards higher demand for better protection of commercial and public build-ings through the installation of entrance and access control systems. The annual growth forecast for the section of the market where Gunnebo has a presence is 4–7%.

region emea | kundcase region emea | customer case

Orange MakesSecurity SimplerWhen telecom operator, Orange, decided to upgrade its access control system – starting with its new French headquarters – it was looking for a partner to help integrate the new Desfire encryption technology into its employee smart card. Staff use a single card for multiple functions – as a means of identifica-tion when accessing different parts of the building, for logging safely onto the IT system, and in time as a method of payment for use at on-site areas such as the staff canteen. Gunnebo, a long-time provider of access control solutions to Orange, equipped the new headquarters with the latest generation of cards and card readers with encryption technology securing the transfer of data from card to reader, from reader to local processing unit (LPU) and from LPU to the servers.

Delivers intelligent access controlSince the smart card is compatible with any existing access control reader, it can be used by Orange employees at any building within the Group. The integrated system set up by Gunnebo has now become a standard for Orange which the telecoms corporation plans to deploy not only in its other offices in France, but also at its many sites around the globe.

“This vision and solution, driven by Orange Security Direc-tion with the help of Gunnebo, serves both to raise the level of building security and make the lives of Orange’s employees much simpler,” explains Denis Mangin, from Orange Security Direction.

About OrangeOrange is one of the world’s lead-ing telecom operators. The Orange Group serves 240 million customers in 30 countries and has a turnover of more than €40 billion (2013).


Gunnebo Årsredovisning 2014 19

Since the storage of pharmaceuticals is heavily regulated, UDG must ensure that its facilities conform to the British Home Office’s Medicine Licensing Laws and MRHA Regulations. In recent years the British Government has been increasing the number of medicines on their high-security list. This has led to more demand from the pharmaceu-tical sector for storage space which meets the national regulatory requirements.

UDG found itself in a situation where it had outgrown its existing strongroom storage facility and needed to expand quickly to respond to the growing market demand by creating 1,500 additional pallet spaces at their new purpose built warehouse.

Solution that meets business-specific needsUDG turned to Gunnebo as a supplier approved by the British Government for the delivery and installation of strongrooms in the UK.

Using modular vault panelling, Gunnebo manufactured and con-structed it’s biggest ever strongroom. All Gunnebo vault panels are independently certified for resistance against manual attack, to con-form to levels of security required.

Now complete, the strongroom measures 11 metres high, 16.7 metres wide and 46 metres long. Installation was carried out within eight weeks – one week ahead of schedule.

UDG’s latest strong room has been designed and constructed to achieve 1500 extra pallet storage spaces to conform to British Government regulations for storage of pharmaceuticals The new strongroom was completed without any disruption to UDG’s business.

“We are absolutely delighted. This project was built on budget, ran like clockwork and was even completed ahead of time,” says Mark Langton, Director of Operations at UDG. “We have built up an excellent relationship with Gunnebo which has strengthened with every project completed. It was a natural conclusion to award this latest contract to a supplier in whom we place such great trust” That trust is also shared by the British Government who recognise the quality of Gunnebo products.

Building Britain’s Largest Strongroom

When the Central Bank of Oman was building its new disaster recovery centre, it wanted a vault that would make it the most secure premises in the Middle East. The build-ing needed to be secure not only because it would host all the data belonging to the central bank, but also because it would serve as a safe haven for the bank’s senior manage-ment in the event of a disaster.

Found complete business partner“We first got to know Gunnebo through its reputation as the best supplier of vaults in the world,” says Jamal Al-Raisi, Senior Manager Information Security and Corporate Security at the Central Bank of Oman. “Following the intro-ductory discussions, we realised this was the partner we were looking for to make sure that our disaster recovery centre would meet the highest security standards in the region. This was our aim, and this is also what we, together with Gunnebo, achieved.”

Gunnebo gave the customer expert advice on security, and was also responsible for project management for construction and installation in the centre. As a result, the Central Bank of Oman has now appointed Gunnebo as its security advisor to consult on all matters related to security.

Security Advisorfor Central Bank

region emea | kundcase region emea | customer case

Orange MakesSecurity Simpler

About OmanOman is on the south-east coast of the Arabian Peninsula. Its capital is Muscat, where a large proportion of the sultanate’s four million inhabitants reside. As with many other countries in the region, oil is by far the main com-modity, constituting over 95% of the nation’s exports.

About UDGUDG (UniDrug Distribution Group) provides supply chain solutions to the healthcare industry, offering specialist storage, fulfilment and distribution services to pharmaceutical, healthcare, veterinary and consumer product manufacturing companies in the UK.



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In Asia-Pacific, the Group’s good growth in recent years has continued in 2014, if at a lower rate. However, the rate of growth decreased on many markets in the region, partly due to national elections which affected the business climate.For the full year, the organic growth in sales was 8% and the operating margin was 13.6% (14.0%).

THE REGION IN BRIEF Asia-Pacific is the Group’s second largest and fastest-growing region, accounting for 18% (18%) of Group sales.

The region has eight sales companies, as well as representative offices and a presence through strategic partnerships on many other markets.

The offering in the region comprises products and services within the safes and vaults, entrance security, electronic security, fire safety, and cash handling segments. The most important customer segments are bank, retail, mass transit, public & commercial buildings, and industrial & high-risk sites.

Most markets in the region are growth mar-kets where the focus is to extend Gunnebo’s footprint by expanding in those countries where the company already has a presence and by launching the Group’s offering through business partners in those territories where it is not currently represented. Sales via Channel Partners and other strategic business partners is an important element in securing national coverage on each market. On certain large markets like India and Indonesia, there is also a well-developed business for project sales and major installations.

CUSTOMERS ANd MARKETOn many markets in the region, the Group has been building relationships with key customers, primarily in the banking sector, for

over 80 years through the strong Chubbsafes brand. In India the brands Steelage (safes) and Minimax (fire safety) are also very important, while in Australia the cash handling system, IntelliSafe, has a strong market position in the retail and casino segments.

The bank sector forms the foundation for the Group’s business in Asia-Pacific. The core business centres on safes and vaults, with a growing interest in entrance security and electronic security solutions. The strongest development in order intake during the year has been from the Chinese market.

One part of the business that has excellent growth potential in the region is cash han-dling. The Australian market is mature – cash handling has been part of Gunnebo’s core busi-ness for many years, with a large proportion of installations and a well-developed service organisation in place.

On most of the other markets in the region, cash handling is generally considered to equate to the physical transportation of money from one place to another.

Gunnebo is therefore focusing on increasing awareness of costs and potential risks con-nected with cash handling.

At the same time the Group is launching solutions that make cash handling safer and more efficient, an offering which targets all players in the process such as retail, casinos and the mass transit network. Great progress was made launching this concept in Indonesia and Malaysia during 2014, exemplified by the

order received from Indonesian taxi operator, Express Group.

Read more about customer cases from the region on page 22

Another important customer segment in the region is mass transit, where Gunnebo has a strong position as a supplier of entrance security. Business in this segment is closely linked to investment in infrastructure, which is a high priority on several markets in the region, including China for instance. In 2014, China showed the highest growth rate in the segment.

In recent years the region has seen a rise in security awareness from the public & com-mercial buildings and industrial & high-risk sites segments where Gunnebo’s main of-fering is in entrance security, and safes and vaults. Order intake in the region improved in 2014 with the launch of the new SpeedStiles range, which was particularly well received in South Korea and Australia. On the Indian and Indonesian markets, fire safety products are also an important feature of Gunnebo’s offering.

dEVELOPMENT OF THE BUSINESSFor Gunnebo, business development in the region is closely connected to the long-term strategy of shifting the Group’s point of gravity regarding geographic focus, allocation of resources, and increased customer value. Geographically, Gunnebo has continued to

Region Asia-Pacific

Asia-Pacific Own sales companies


Continued Growth and Geographical Expansion


strengthen its presence in South-East Asia in 2014 and has opened up a new representa-tive office in Myanmar.

The Group is investing in Asia-Pacific more heavily than any other region. In 2014 Gunnebo continued to invest in its produc-tion plants in India, Indonesia and China, and has also worked on strengthening the region’s sales companies.

To increase customer value, the market introduction of new offerings in secure, ef-ficient cash handling has continued success-fully. In close collaboration with a number of key customers, the Group has also invested in the establishment of a centre for monitoring customer facilities in India.

Various entrance security products have also been launched such as the new Speed-Stiles series, as well as a new range of lower-classification safes primarily intended for private customers, and a fire safety offering for the hotel, restaurant and catering sector.

RESULTS FOR 2014Order intake in Region Asia-Pacific amounted to MSEK 987 (1,043). Organically, i.e. exclud-ing acquisitions, divestments and currency effects, order intake fell by 5%. The decline was attributable to weaker demand in India, Australia and South-East Asia. China reported strong order intake during the year, a rise of 16% on 2013.

Net sales increased to MSEK 1,029 (954). Organically this equates to a rise of 8%, pri-marily attributable to strong sales in China and India. The majority of other countries in the region made a positive contribution to the higher sales.

Operating profit excluding non-recurring

items amounted to MSEK 140 (134), which equates to an operating margin of 13.6% (14.0%).

Non-recurring items totalled MSEK –9 (–8).

MARKET TRENDSGrowth on the security market in Region Asia-Pacific has increased more quickly than the global average over the past two decades.

China is one of the world’s largest security markets and also one of the fastest growing. The Chinese government is investing large sums in infrastructure projects and public security programmes, and urbanisation is also increasing, making airports and mass transit networks the focus for large-scale installations of security equipment, such as electronic security and entrance security.

In India the market is also expanding, driven by economic growth, increased con-struction and rising personal affluence, cou-pled with a growing population. The Indian

state’s aim to increase accessibility to banks and ATMs for the country’s rural population is driving demand for vaults and ATM safes. The market remains less developed than that in Western Europe, and offers considerable opportunities for security providers, particu-larly in the energy and transportation sectors where considerable investment is being made to improve infrastructure.

South Korea is currently the continent’s fourth largest security market. Whilst the market is not growing at the rate of China and India, it is expected to increase over the coming years, supported by rising investment in commercial building construction and a soaring urban population.

The annual growth forecast for the section of the market where Gunnebo has a presence is 6–8%.

Region Asia-Pacific

Q1 Q2 Q3 Q4Full

yearFull

yearMSEK 2014 2014 2014 2014 2014 2013

Order intake 258 232 272 225 987 1,043Organic growth, % 12 −8 1 −25 −5

Net sales 221 281 228 299 1,029 954Organic growth, % 15 24 −11 5 8

Operating profit/loss excl. non-recurring items 24 42 27 47 140 134Operating margin excl. non-recurring items, % 10.9 14.9 11.8 15.7 13.6 14.0Non-recurring items −1 −5 0 −3 −9 –8

Operating profit 23 37 27 44 131 126

Thanks to good cost control, the region has delivered a strong operating profit, even though the business climate on many markets in the region has been weaker than expected. We have continued to invest in growth opportunities and now have a very stable platform for continued growth and expansion. SVP, Sacha de La Noë

Took up position on January 1, 2015

13.6Operating margin

%

The

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Gunnebo received its first cash handling order in Indonesia in 2014, when taxi operator Express Group decided to install 50 IntelliSafe units at 25 of its taxi pools in Jakarta, Bogor, Tangerang and Bekasi.

“At Express Group we always implement the latest technology in order to improve our performance and efficiency,” says Daniel Podiman, President Director of Express Group. “One of our goals is to improve security and accuracy, and to simplify the management of our drivers’ daily fares, so we are proud to be the first users of IntelliSafe in Indonesia.”

Streamlines business processesSince IntelliSafe was installed, cash handling at Express Group has

become much more efficient. Cash collection via the company’s CIT partner has also been streamlined as collections are now only made when IntelliSafe indicates there is a need, rather than at regular planned intervals as before.

Gunnebo began launching products from its cash management range on the Indonesian market in 2013, and the area is continuing to expand.

Driving the Cash Handling Revolution

About Express GroupExpress Group is one of the largest taxi companies in Indonesia, with more than 10,000 licensed vehicles and over 24,000 qualified drivers.

Minimising Fare EvasionKorean company Airport Express (AREX) was experiencing problems with passengers passing onto their trains without a ticket and needed a solution which would ensure that all passengers had paid their fare before boarding the train. With 170,000 passengers during rush hour every day, the company required a ticket gate which would not only prevent fare evasion but also allow the smooth flow of passengers, and increase safety and security for its customers.

Chooses the industry pioneer“We turned to Gunnebo Korea since they have a good track re-cord of providing high-quality and durable solutions,” explains Seo Jung-hoon, Head of Security at AREX. “Gunnebo suggested we install speed gates, and we now have almost 200 Gunnebo SpeedStiles in place at all 11 stations on the line. This solution has more or less eliminated fare dodgers, and our story has become a good example for the industry.”

AREX followed Gunnebo’s recommendation and has in-stalled the full-panel model of SpeedStile with a 1,400mm glass wing.

About AREXAREX operates the express train line between Incheon International Airport and central Seoul. It is an important part of the city’s infrastructure as it offers rapid connections for air passengers and commuters alike.

Access Control Crucial for High-Risk Site in ChinaTianwan Nuclear Power Plant required a solution for com-prehensive control and monitoring of the movement of individuals in and around its site. Each employee needed to be assigned specific access rights to give them authorisa-tion to the relevant areas of the plant and the entrance gates themselves would have to withstand years of wear and tear, not just from staff use but also from the humid, salty sea air.

Optimised entrance security secures flowA combination of exterior full-height turnstiles and interior tripod turnstiles requiring personal identification for entry was installed by Gunnebo. The solution controls the flow of people and provides full security for the high-risk site by preventing unauthorised access.

The entrance security solution from Gunnebo has improved security management at the Tianwan Nuclear Power Plant. In addition, the units have a long operating life and the surface material can withstand the harmful effects of the salty air, providing a high degree of reliability.

About TianwanTianwan Nuclear Power Plant is the largest joint engi-neering project undertaken by China and Russia. Located on the east coast of China, it has been operational since 2006 and is part of the Chinese government’s nuclear power development programme.

region asia-pacific | customer case



Region Americas

Americas Own sales companies


The region showed a decrease in order intake during the year, due to weaker demand in the retail sector in Brazil and restructuring in public administration in the USA. Thanks to good cost control, the region was able to keep its operating margin well above the Group average. Gunnebo also continued to increase its footprint in Latin America with the acquisition of Dissamex, a Mexican provider of electronic security services. For the full year, sales developed on a par with last year and the operating margin was 13.2% (14.8%).

THE REGION IN BRIEFIn Region Americas, Gunnebo is organised into four sales companies: Canada, USA, Mexico and Brazil. The region accounts for 16% of the Group’s sales, and despite sluggish development in 2014 many of the region’s markets are growth markets in the security sector.

The most important customers in the re-gion are in the bank, retail, mass transit, and public and commercial properties segments. North America is considered a mature market. The Group can see potential in launching cash handling offerings from its global portfolio which are not yet represented in this part of the region, and this is a platform for future growth. To secure national coverage in the USA, the majority of sales take place through an extensive network of Channel Partners. In addition there is a well-established concept for key customers with a number of major national customers in the bank sector. In Canada, business is primarily conducted through Gunnebo’s own regional sales and service organisation.

The markets in Latin America are growth markets, and the focus here is on extend-ing Gunnebo’s geographical footprint and introducing parts of the Group’s offering that are not currently an established part of the

business. Cash handling is an important foun-dation for future growth opportunities here. Sales take place directly to end customers in Brazil and Mexico, but through a well-estab-lished network of Channel Partners on other markets in the region.

CUSTOMERS ANd MARKETGunnebo has a long history in the region where the company has been doing business in Canada for over 60 years with the strong Chubbsafes brand and in the USA for more than 40 years under the Hamilton Safe brand in the bank and public administration sec-tor. In Brazil the Gateway brand has been established since the mid-1990s, and is today associated with high quality and customised solutions in theft protection (primarily elec-tronic article surveillance systems and CCTV) for the retail sector.

For historical reasons, there is still some variation in the Group’s presence in each country in the region. In Canada, the bank sector forms the basis of the Group’s busi-ness. Gunnebo’s offering includes a very well-developed service portfolio which accounts for the majority of sales, but there are also products and solutions in safes, vaults, and lock systems for bank and retail customers. Other important segments in Canada are

public & commercial buildings, and airports, where the core offering is in entrance security and related services.

The core business in the USA is in the bank sector. Business consists primarily of customised solutions in safes and vaults, but also solutions for the efficient transfer and deposit of bank-related services such as daily takings, documents and cheques, as well as high-security windows and entrance security solutions.

The core business for Gunnebo Brazil is to offer products and services in theft protec-tion, monitoring and article surveillance for the retail sector. In 2013 Gunnebo began introducing cash handling on the Brazilian market, and in 2014 several orders were received from retail and CIT companies.

In Latin America, the Group established a sales company in Mexico in 2013, which focuses on providing security-related ser-vices for international banks represented in the country. In 2014 the Group acquired Dissamex, a provider of electronic security services, and doubled Gunnebo Mexico’s sales. The Group now has a solid platform for providing security-related services across the nation.

Through partnerships, Gunnebo also conducts sales on several other markets in

Retained Position on a Recovering Market

region asia-pacific | customer case


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Latin America. In Colombia the Group’s core business lies in entrance solutions for the mass transit sector, and in both Argentina and the Caribbean, the Group received sev-eral important orders for safes and vaults, as well as its first order in the region for the automated safety deposit locker solution, SafeStore Auto.

DEVELOPMENT OF THE BUSINESSFor Gunnebo, business development in the region is closely connected to the strategy of shifting the Group’s point of gravity with regard to geographic focus, allocation of resources and increased customer value.

During 2014 Gunnebo has continued to strengthen its presence in Latin America with the acquisition of Mexican company Dissamex, and this is also in line with the Group’s ambi-tion to move up the value chain.

In North America, Gunnebo has been suc-cessfully focusing on broadening its customer base during the year, and this has compen-sated for weaker demand from governmental customers.

A number of strategic partnerships were entered into during 2014, to reinforce the company’s offering and achieve greater mar-ket coverage. Gunnebo has also continued to invest in developing its cash handling offering in the region. The investments focus mainly on the market adaptations required to enable global solutions to be customised to local needs. Gunnebo has also successfully launched its automated safety deposit locker solution, SafeStore Auto, in the region. More-over, investments have been made to improve production efficiency at the Hamilton produc-tion plant in the USA.

RESULTS FOR 2014Order intake in Region Americas amounted to MSEK 826 (913). Organically, i.e. excluding acquisitions, divestments and currency ef-fects, order intake fell by 14%.

The decline was mainly attributable to weaker demand in the Brazilian retail sec-tor, budget cuts in US public administra-tion and a strong comparison year, a major order from BBVA Bancomer having been

received in Mexico during the second quar-ter of 2013.

Net sales increased to MSEK 884 (843), but organically they were unchanged com-pared to the previous year. The acquisition of Dissamex in Mexico contributed to the region’s sales during the fourth quarter.

Operating profit excluding non-recurring items amounted to MSEK 117 (125), which equates to an operating margin of 13.2% (14.8%). Costs for market initiatives aimed at broadening the Group’s customer offering in the region burdened the profit and margin during the year. Expenses of a non-recurring nature amounted to MSEK –4 (–2), primarily relating to acquisition costs.

MARKET TRENDSDemand for security systems in North America is expected to rise as the major banks start to recover from the economic slowdown and the resulting consolidation of the bank market. One trend is that the nation-al banks are overhauling and reducing their branch network by merging branches. This in turn is driving higher investment as new local and regional branches are established. The new branches are often designed with com-prehensive technological solutions and less hardware. The annual growth forecast for the market available to Gunnebo is 4–6%.

In Latin America, development on the secu-rity market is primarily driven by a heightened security consciousness and continued invest-ments by multinational and regional com-panies setting up in the region. The annual growth forecast for the market available to Gunnebo is 5–7%.

Region Americas

Q1 Q2 Q3 Q4Full

yearFull

yearMSEK 2014 2014 2014 2014 2014 2013

Order intake 178 190 221 237 826 913Organic growth, % −16 −31 −12 18 −14

Net sales 187 213 222 262 884 843Organic growth, % 7 9 −14 2 0

Operating profit/loss excl. non-recurring items 15 26 32 44 117 125Operating margin excl. non-recurring items, % 8.0 12.2 14.4 16.8 13.2 14.8Non-recurring items 0 −3 −1 0 −4 –2

Operating profit 15 23 31 44 113 123

During the year we have had good control of pricing and costs in a very competitive market climate. This has contributed to continued good profit-ability. Moreover, the introduction of new products has helped us advance our market positions.

SVP, Tomas Wängberg

13.2Operating margin

%

SVP, Tomas Wängberg

In 2014, American bank, SunTrust, unveiled the latest in banking technology at its flagship Plaza Garden branch in downtown Atlanta.

One of the new features was Gunnebo’s SafeStore Auto – a fully automated safe deposit locker system that allows clients to access their valuables using their debit card, pin number and hand scan. The system was delivered by Hamilton Safe and became the first of its kind to be installed in the USA.

SunTrust has modelled the branch to become a testing ground for new concepts that could make their way into other locations.

In August 2014, Gunnebo acquired Mexican electronic secu-rity service provider Dissamex. The company has a solid cus-tomer base including leading Mexican and international banks as well as other financial institutions. One of them is Banco Santander – ranked as the tenth safest bank in the world*.

“We have had a partnership with Dissamex encompassing security main-tenance of our buildings, provision of security equipment and their infrastruc-ture and installation, for the past seven years,” says Carlos Jaime, B.A., Director of Local Security, Mexico for the Financial Group Santander.

“The aim for perfection within the services offered and those required by us have made Dissamex a strategic supplier for the Santander Group. Furthermore, Dissamex have helped us achieve economies of scale, and are a reliable supplier with a high adaptability to the changing needs of the Group.”

With Gunnebo acquiring Dissamex, Carlos Jaime and Banco Santander see opportunities for increased added value.

“We expect this not only to strengthen our existing re-lationship and to support us in generating value in order to be more competitive, but also to transfer this benefit to our customers and shareholders.”

Pioneering Bank Innovation in the US

Acquisition Adds Value

region americas | customer case

About SunTrust Banks Inc.SunTrust Banks, Inc., headquartered in Atlanta, is one of the USA’s largest banking organisations, serving a broad range of consumer, commercial, corporate and institutional clients. Through its flagship subsidiary, SunTrust Bank, the company operates an extensive branch and ATM network throughout the high-growth South-East and Mid-Atlantic states.

About Santander MexicoSantander is the largest financial group in Spain and Latin America with over 100 million customers. It is today Mexico’s third largest bank with 1,268 branches and over 5,500 ATMs.

*Banco Santander was ranked tenth in Global Finance Magazine’s listing of the world’s 50 safest banks. The list reflects the global stability of banks.

In 2013, Brazilian pharmaceuticals retailer, Brasil Pharma, concluded a deal to equip over 450 of its shops with surveillance equipment.

Installation was carried out by Gunnebo’s service technicians in Brazil over an eight-month period. By the end Brasil Pharma stores in a total of 119 cities had been fitted with Gateway electronic article surveillance systems and CCTV cameras.

The project demanded expert coordination and alignment with the retailer to ensure that every element was installed on

time and with minimal disruption to Brasil Pharma’s business’s operations.

Orchestrating a Large-Scale Installation

About Brasil PharmaBrasil Brasil Pharma owns the largest network of drugstores in Brazil which it operates under the brands Big Ben, Drogaria Rosário, Sant’Ana, Mais Econômica and Farmais.



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At the end of 2014, the Gunnebo Group had 12 manufacturing units ( ) in 10 countries worldwide.

In recent years the point of gravity of the Group’s manufacturing footprint has gradu-ally shifted towards growth markets. These include China, where the Kunshan factory was opened in 2011, and India, where the Halol plant has expanded significantly to accommodate larger production volumes. The shift means a larger proportion of the Group’s production is increasing in areas where its customer base is growing, allowing Gunnebo to more effectively serve market demand.

Global Manufacturing Close to the Customer

1

Global StandardsGunnebo’s manufacturing units undergo regular independent audits to meet the requirements set by global standards. 90% of the manu-facturing units have ISO 9001 certification, 90% have ISO 14001 cer-tification and 40% have OHSAS 18001 certification. Gunnebo’s goal is to introduce ISO 9001, 14001 and OHSAS 18001 at all manufacturing units by the end of 2016.

ISO 9001 An international standard for quality management systems. It provides assurance that products can be consistently produced to the required standard of quality.

ISO 14001 An international standard for environmental management systems. It provides assurance that environmental impact is being meas-ured and improved.

OHSAS 18001 A series of standards that can form the basis of a health and safety management system. These standards provide assurances that an organisation is managing occupational health and safety risks.

AmericasProportion of employees: 7%

1. CinCinnatiNumber of employees: 155Manufactures: Safes & vaults, entrance security, airtube systems.

OPERatiOnS


1

3

2

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37 5

4

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8

Global Manufacturing Close to the Customer EMEAProportion of employees: 34%

1. BaldEnhEimNumber of employees: 76Manufactures: Entrance security, electronic securityISO 14001, ISO 9001, OHSAS 18001 (planned 2015)

2. BazanCOuRtNumber of employees: 145Manufactures: Safes & vaultsISO 14001, ISO 9001, OHSAS 18001

3. dOEtinChEmNumber of employees: 208Manufactures: ATM safes ISO 14001, ISO 9001, OHSAS 18001

4. laviS Number of employees: 49Manufactures: Entrance securityISO 14001, ISO 9001

5. maRkERSdORf Number of employees: 46Manufactures: Safes & vaultsISO 14001, ISO 9001, OHSAS 18001

6. tRiERNumber of employees: 37Manufactures: Cash handlingISO 14001, ISO 9001, OHSAS 18001

7. uCkfiEldNumber of employees: 32Manufactures: Entrance security ISO 14001, ISO 9001 During 2014, Gunnebo reported the closure of the Uckfield plant and the transfer of production to Kunshan in China.

8. WadEvillENumber of employees: 111Manufactures: Safes & vaults, entrance securityISO 14001 (planned 2015), ISO 9001, OHSAS 18001 (planned 2015)

Asia-PacificProportion of employees: 59%

1. halOlNumber of employees: 843Manufactures: Safes & vaults, ATM safesISO 14001, ISO 9001

2. JakaRtaNumber of employees: 352Manufactures: SafesISO 14001, ISO 9001, OHSAS 18001

3. kunShanNumber of employees: 44Manufactures: Cash handling, entrance securityISO 14001, ISO 9001


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Operations is responsible for Gunnebo’s manufacturing units, pur-chasing, logistics, technical support for the Group’s sales companies, and research and development (R&D).

OPerAtIONAl excelleNceGunnebo’s focus on results and performance is the foundation on which the Group builds its business. Within Operations this means driving continuous improvements within manufacturing and logistics to make all related processes more efficient and more effective.

In 2013, the Gunnebo Operations System (GOS) was introduced to provide a standard-ised production system to ensure the im-provement to production efficiency organised around quality, delivery, use of resources, health & safety and securing employee com-mitment. During 2014, all plants completed an audit to assess their status with regard to these areas. In addition, implementation of GOS continued apace, with dedicated teams in place in many factories charged with integrating the GOS methodology into the manufacturing culture. A plan has also been established for the continued roll-out of GOS in 2015 and beyond.

Thanks to focused work with GOS, the quality and punctuality of deliveries have improved during the year. Compared to 2013 the number of complaints about quality has decreased by 36% and punctual deliveries have increased from 90% to 91%.

StrAteGyOperations supports Gunnebo’s long-term strategy which is based on shifting the point of gravity of the Group’s business to markets with good conditions for growth.

The Halol plant in India, for example, has been expanded in recent years. Productivity has surged and the plant has achieved greater efficiency through work with GOS. The value of products manufactured at the plant has increased by 115% since 2011. To meet the local demand for ATM safes, capacity at Halol was increased in 2013. As a result the plant now produces around 30% of all of the Group’s ATM Safes. In 2014 investment plans for further expansion were approved to sup-port growth in the region.

QuAlItyOver 90% of Gunnebo’s plants are certified to ISO 9001, and the goal is to introduce the standard at all units by the end of 2016. Continuous quality improvement is a corner-stone of GOS and the aim is to bring devia-tions from quality down to almost zero at all plants, and to drive value for the customer by delivering the right products first time and on time.

To define the minimum level of quality required for safes, both manufactured and sourced, Gunnebo introduced a common quality platform during 2014. The platform has also established a common inspection procedure which all finished products must undergo before they can be approved to en-sure consistency of quality across all plants.

QuAlIty rePOrtING SySteMGunnebo’s NCN system measures the quality performance of all units. All customer com-plaints are logged in the system to provide an overall picture of quality from production, installation and after-sales service. During 2014, the NCN system was upgraded to make it more transparent and efficient. The data in the NCN system has been aligned with GOS and meas-ures whether Gunnebo is achieving a satisfac-tory enough level of quality across the Group.

PrOduct develOPMeNtTogether with the Group’s global product managers, Operations introduced an inte-grated Product Lifecycle Management (PLM) process during 2014, a substantial part of which focuses on research and the develop-ment of new products.

The Group launched new products onto multiple markets and into several different segments during the year.

Read more under Offering on pages 12–13.

In addition to these, several new ATM safes were developed at Gunnebo’s plant in Doet-inchem and underwent successful testing against explosives.

lOGIStIcSA restructuring of the supply chain in Europe was carried out during 2014 and a new sup-ply chain model is being implemented. This means for example that the management of the European central warehouse has been outsourced to a logistics supplier and Gunnebo can focus on central order manage-ment, operational purchasing and improving supply chain efficiency. The new warehousing solution gives Gunnebo greater storage and distribution flexibility, putting the Group in a position to more effectively meet the de-mands of European customers.

SOurcING ANd PrOcureMeNtGunnebo has a central function which co-ordinates purchasing for a number of global categories: steel, sheet steel, indirect materi-als, transport, electronics, locks, circuit boards

Supplier AwardDuring the year, Gunnebo’s delivery precision was acknowledged by one of its major customers, NCR, through a supplier award for Delivery and Supply Chain Reliability. NCR is the leading global manufacturer of ATMs and Gunnebo supplies it with ATM safes from its plants in Doetinchem and Halol.

“The winners of our supplier awards continue to demonstrate leadership and innovation in areas that are crucial to keeping our business moving forward,” says Bob Ciminera, SVP of Integrated Supply Chain at NCR. “They bring unique ideas that raise the bar and redefine the value of the partnership.”

OPERatiOnS

Increased Profitability through Continuous Improvements


and safes. The central purchasing function allows the Group to negotiate better overall terms in these categories and serves to keep the total number of suppliers down.

Purchasing costs are also being reduced through increasing purchases from low-cost countries (LCCs). LCC sourcing is being strengthened within Europe in particular. In addition, a common supplier platform has been created for low-cost European countries to supply all of Gunnebo’s European units and reduce the total number of suppliers. There is also a dedicated sourcing function in China which supports the sourcing of products from the local Chinese market and Asia as a whole to all plants across the Group.

VALUE ENGINEERINGAs well as bringing down costs by sourcing from low-cost countries and cooperating closely with suppliers, Gunnebo also works

internally to reduce the cost of products through value engineering.

Value engineering is a method which sys-tematically increases the value of a product either by improving its function or removing cost. By making a constant cycle of product reviews, part by part, a plant identifies cases for re-development. By redesigning a spe-cific product part, for example, Gunnebo’s Hamilton plant in the USA reduced the num-ber of pieces in the component from 19 to just two, generating considerable savings. Gunnebo’s plant in Doetinchem, the main producer of ATM safes in the Group, has also worked with value engineering during the year, focusing on cost reductions from better material usage and more efficient design.

OCCUPATIONAL HEALTHMaintaining and improving health and safety standards at Gunnebo’s plants is of the utmost

importance. As an integral part of GOS, health and safety has a defined wanted position and is measured using key performance indicators (KPIs) in the same way as other areas such as on-time delivery and production quality.

During 2014, an audit was conducted at four plants – Jakarta in Indonesia, Halol in India, Markersdorf in Germany and Bazancourt in France – to gauge the current standards being met and establish a two-year roadmap for attaining the wanted position.

Five of Gunnebo’s plants have already been awarded the OHSAS 18001 certification for health and safety management systems. The plants in Baldenheim (France) and Wadeville (South Africa) are planned for assessment during 2015. The goal is to introduce the standard at all units by the end of 2016.

Uwe Sträter is Operations’ Director of Industrial Development and oversees the continued imple-mentation of GOS (the Gunnebo Operations System) in the Group’s manufacturing plants.

GOS was launched in 2013. What impact has it made on Gunnebo’s manufacturing processes?“The introduction of GOS means we now have a common approach to our way of manufacturing in all factories. One of the key tenets of the platform is continuous improvement so we have also become more attuned to learning from one another and sharing best practices. This has meant that our general performance in terms of qual-ity, on-time delivery and cost efficiency has significantly improved.”

What has been the main focus for GOS in 2014?“To enable us to measure the progress we are making towards our goals, we devel-oped and introduced a self-assessment system during 2014. In parallel with the

implementation of GOS, this was carried out in all of the Group’s factories during the first half of the year. The results then al-lowed us to create individual improvement plans for each plant by mapping the route towards achieving our wanted position.”

Can you give any examples of where GOS has made an impact?“Halol in India is a positive example. The plant has fully embraced the Gunnebo Operations System and has begun working with many tools, such as Visual Manage-ment and Value Stream Analysis, to ensure that continuous improvements are being made. This philosophy permeates the day-to-day activities throughout the factory and has resulted in many savings due to more efficient manufacturing processes.”

Looking forward, what will be the main focus for GOS in 2015?“During 2015 we will be focused on the

implementation plans and making de-fined improvements to our KPIs in each of our factories. We have also set a target to increase the proportion of Operations employees actively involved in continu-ous improvement projects. In addition, we will be putting an emphasis on health and safety standards – an area which was inte-grated into the GOS audit during 2014.”

Increased Customer Value through Production Efficiency

…our general performance in terms of quality, on-time delivery and cost efficiency has significantly improved.

Uwe Sträter, Director of Industrial Development


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Taking Responsibility for the FutureGunnebo’s aim is to create a sustainable and profi table business with satisfi ed customers and committed employees, to reduce impact on the environment, and maintain a strong bond of trust with all of our stakeholders.

SocialSocial

Business EnvironmentalStrong, clear leadership

focusing on building a profitable and ethical business

A business that minimises its impact on the environment

A safer society and an employer that cares

about employee health and safety

BuSINeSS reSPONSIBIlItyGunnebo’s contribution to sustainable devel-opment is founded on the Group’s responsi-bility for its own business, the environment and society.

SOcIAl reSPONSIBIlItyIn keeping with its mission to create a safer world, Gunnebo provides greater security for the individual and contributes to making everyday life safer for everyone. Gunnebo is an employer that cares about the health and safety of its employees and guarantees fair pay in all the markets where it is present.

eNvIrONMeNtAl reSPONSIBIlItyGunnebo sets clear, long-term environmental goals and works continuously to minimise its impact on the environment through improve-ments to product design, production, pur-chasing, logistics, energy consumption and waste management.

Read more on pages 32–33.

cOde Of cONductAs a global organisation, it is Gunnebo’s ambition to comply with human rights princi-ples in all controllable aspects of its business. Through Gunnebo’s Code of Conduct, em-ployees are given clear guidelines describing how they should act in an ethical manner in every aspect of their jobs.

The Group’s Code of Conduct is based on the UN Declaration of Human Rights, the UN Global Compact initiative, the International Labour Organization’s principles on rights in working life and OECD guidelines for multina-tional enterprises.

The Code of Conduct provides employees with clear guidelines on how to act profes-sionally in their interactions with customers, partners, suppliers, society and colleagues. To ensure that this information is correctly understood, all employees have access to a course to educate them about the Code of Conduct and its contents.

Gunnebo also encourages its suppliers to adhere to the Code of Conduct and uses the principles therein among the criteria for selecting new business partners.

CORPORatE RESPOnSiBilitY


A Corporate Culture Focused on Performance and Personal DevelopmentAt the end of 2014, Gunnebo had 5,670 (5,612) employees in 33 (33) countries.

leAderSHIP vAlueSDuring 2014, Gunnebo developed and introduced the Performance Cornerstones to establish a stronger performance culture within the Group and link leadership behaviour to business goals.

As the Performance Cornerstones are implemented, they will establish a clear frame-work for leaders – and employees as a whole – ensuring that everyone across the Group has the same basic understanding of the type of behaviour required to make Gunnebo a successful, target-oriented organisation.

Gunnebo’s Performance Cornerstones have been made an integral part of the Group’s performance development reviews for all employees, and for the recruitment of white-collar workers. The strength of each candi-date is assessed with relation to every aspect of the Performance Cornerstones.

PerSONAl develOPMeNtStructured performance development reviews (PDRs) are conducted annually with employees to facilitate the setting of goals and formalise the assessment of the progress each individual is making within the company.

Regular reviews like this are an essen-tial part of helping employees to grow. In conjunction with the introduction of the

Performance Cornerstones, Gunnebo revi-talised its PDR process during 2014, so that individual development is now related directly to those behaviours described by the Performance Cornerstones.

cAreerSGunnebo offers many stimulating career opportunities in a wide range of disciplines and locations. Gunnebo carries out an annual review of employees’ expertise and develop-ment opportunities within the company. This allows individual employees to optimise their potential and also means that departing employees can be effectively replaced in a timely manner.

educAtIONTo facilitate the dissemination of know-ledge and to make education accessible to as many of the Group’s employees as pos-sible, Gunnebo has an online training centre which offers e-courses. The Gunnebo Training Centre covers a range of topics from strategy and product functionality to maintenance procedures and certification methodology. In 2014, 1,947 employees underwent 6,851 hours of education. Taking courses online also contributes to reducing the costs and impact on the environment associated with travelling.

dIverSItyWith sales companies, production plants and customers around the world, Gunnebo is by its nature a diverse organisation. Having a presence on 33 markets, as well as branch offices in several other countries, ensures the Group’s cultural diversity and allows Gunnebo to establish close, long-lasting customer relationships.

Cultural exchange is a significant benefit of having a global organisation and Gunnebo encourages the sharing of knowledge across the Group to raise its employees’ general understanding of other cultures.

71%

Gender distribution

Employees by country Employees by organisation

Managers

Employees

29%

85% 15%

Region EMEA, 36%Region Asia-Pacific, 19%Region Americas, 9%Corporate functions, 1%Operations, 35%

India, 20%France, 17%Indonesia, 15%Netherlands, 5%UK, 5%Germany, 4%Spain, 4%USA, 4%South Africa, 3%Sweden, 3%Others, 20%

PEOPlE and lEadERShiP


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Reducing the Group’s Impact on the EnvironmentGunnebo is raising its requirements for health & safety and has launched a new set of environmental targets that cover the supply chain. eNvIrONMeNtAl tArGetSGunnebo’s new environmental targets for the period 2014–2018 are described in the table below.

The previous environmental targets for 2009–2013 were achieved during that period. Since Gunnebo is now entering into a new period, it is taking the opportunity to extend its sustainability targets to more areas and to include all the Group’s companies. To increase transparency, transport is being accounted for separately from the CO2 target. The Group is taking an inventory of the company’s trans-port flows and aims to return with figures for emissions from the transport of goods and people in 2015.

To see comparison figures for previous periods, go to www.gunnebogroup.com.

HeAltH & SAfety OHSAS 18001 sets out requirements for health and safety management systems. These stand-ards provide assurances that an organisation is managing occupational health and safety risks. Gunnebo’s plants in Trier, Bazancourt, Markersdorf, Doetinchem and Jakarta are all OHSAS 18001 certified and during 2014, the Gunnebo Executive Team took the decision to

make OHSAS 18001 certification compulsory for all production facilities by 2016. Read more about the health and safety audits carried out by Operations during 2014 on page 29.

During 2014 Gunnebo also took the deci-sion to set higher minimum standards for its working environments than is required by the legislation in several countries. In specific areas, European standards will apply to all plants regardless of geographical location. These relate to the quality of waste water from industrial processes, indoor air quality, requirements for personal protection equip-ment, scope of medical examinations for staff, and the chemical substances that may be used in production. These changes are to come into effect over the next few years.

vAlue cHAINThe Group has a large international supplier base which makes maintaining high standards in the supply chain challenging. One-fifth of the Group’s suppliers account for 75% of the total external spend, while within Europe and the Middle East the same proportion accounts for 90.5%. These “significant suppliers” are impartially evaluated on parameters such as price, quality and reliability. In 2014, Gunnebo also started assessing its suppliers from an environmental, social and ethical perspec-tive. The main tool for an ethical evaluation of business partners is a checklist based on the UN Global Compact (incorporated 2014) to-gether with a site visit. All significant suppliers

outside of Europe are visited annually. In 2014 there were 15 significant suppliers. From 2015 onwards, the European “top-spend suppliers” will also be audited annually. The purchasing agreement with significant suppliers already includes a clause where suppliers are request-ed to meet the standards laid out in Gunnebo’s Code of Conduct. Read more about Sourcing and Procurement on pages 28–29.

With almost 6,000 employees, Gunnebo is a large consumer of computer equipment. It is therefore also natural that the Group’s PC suppliers are evaluated according to the same sustainable parameters. Gunnebo’s chosen supplier is active within the domain of cor-porate responsibility regarding the origin of components.

cONflIct MINerAlSDuring 2014, the Group started to examine the origin of the minerals in its electronic products. The purpose is to avoid conflict minerals, i.e. to ensure the minerals the Group uses do not originate from areas of conflict in the Democratic Republic of Congo or adjoining countries. The goal is that all direct suppliers will be self-certified during 2015.

lOGIStIcSIntelligent Distribution to MarketTo continuously find the best solutions to bring products to market, it is in the Group’s interest to find the most efficient route, both

Suppliers Power consumption at own sites

Goals 100% of leading direct suppliers and subcontractors to production and sales companies to be CSR audited by the end of 2016.100% of all suppliers affected to be self-certified and free of conflict minerals by the end of 2016.

Reduction in total annual consumption of electricity, related to sales, by 2% a year to 2018, starting from the 2014 value.

Comment Work began in 2014 and is continuing in 2015. Refers to raw materials and components.

Four of Gunnebo’s factories in Germany, the Netherlands, China and Italy run on renewable electricity. Total electricity consump-tion amounted to 20GWh.Refers to production and offices.

EnviROnmEntal manaGEmEnt


from an environmental and cost perspective. During 2014 the transport routes to UK and Sweden were improved. In the UK this resulted in a reduction in the transportation of goods from a central warehouse in Germany by 50%, corresponding to an anticipated saving of EUR 40,000.

Better utilisation of storage space through outsourcing the central warehouse has resulted in lower CO2 emissions. Read more about this under Logistics on page 28.

Actively working to reduce emissions is a requirement Gunnebo sets when procuring transport solutions.

TravelGunnebo has signed a Group-wide agreement with a global travel supplier and is expected to be able to deliver reliable data for travel-related emissions for 2015.

MINIMISING eNvIrONMeNtAl IMPActA new car fleet policy with stricter targets was adopted by the Gunnebo Executive Team. All new vehicles used across the Group must adhere to conditions that will significantly lower average CO2 emissions.

Operations trier: Natural gas consumption was re-duced by smarter heating of water. Old refrigeration systems were replaced which has led to a significant drop in electricity consumption.

Kunshan: The plant, which was opened in 2011, achieved its ISO 14001 certification in 2014.

doetinchem: The waste management process was improved by installing a sys-tem to separate oil. Continuous improve-ments, driven by the Gunnebo Operations System (GOS), resulted in better lead times and more efficient processes which had a positive effect on energy consumption. Also, awareness training on environmental risks and behaviour was carried out during 2014.

Halol: 40 trees were planted as part of a green belt development programme.

Baldenheim: The heating system was modernised to increase energy efficiency.

Jakarta: Replacement of the compressor system is expected to reduce electricity consumption by 6%, the equivalent of 174 tonnes of CO2 per year.

ProductsDuring 2014, Gunnebo launched a range of thermally insulated security doors, windows and partitions that lower the rate of heat loss by 72%. The range is not only compliant with the European Union Directive 2012/27/EU for the energy performance of buildings, but is also bullet-resistant and burglary-resistant. Furthermore 99.9% of the material used in the new security doors can be recycled. Read more about the new products introduced by Gunnebo during 2014 on pages 12–13.

Elsewhere continuous improvements are being made towards ever more eco-friendly entrance and speed gates. Increased remote connectivity provides quicker service and fewer on-site visits from technicians which leads to a reduction in fuel consumption and, therefore, lower emissions. Fewer hours on the road also means a significantly reduced risk for service staff. The goal is, by 2017, to have all products controlled by an electronics platform which can be accessed remotely. In addition, reducing the complexity of each range by sharing more core components will have a positive impact on training, storage, servicing and usability.

RecyclingSafes, which are constructed predominantly of steel and different concretes, typically have a long lifecycle. Premium quality safes, for example, last for decades. In many coun-tries Gunnebo arranges the removal of safes that are no longer in use. A small percentage of these are then updated for sale on the second-hand market and in other cases the product is recycled by a third party. The steel is melted down and the concrete is repro-cessed, ensuring that almost all of the original material can be reused. All electronics are sent for recycling.

Carbon dioxide emissions from own sites Waste recycling Transport and distribution

Reduction in emissions of carbon dioxide relating to sales by 5% from 2014 to 2018.

Increase in amount of recycled waste of 5% from 2015 to 2018.

Continuous improvement in the transport chain paves the way for cost efficiency, productivity and lower environmental cost.

Emissions for production and electricity amounted to 14,000 tonnes of CO2.Refers to production and offices.

The amount of recycled waste totals 84%. Steel and electronic waste from the factories is virtu-ally completely recycled. A lot of the purchased steel raw material comes from recycled materials.Refers to own plants and offices.

Approximately 51% of emissions are generated by road transport, 30% by shipping and 19% by aviation.Refers to purchased goods transport.


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Gunnebo AB (publ) is listed on the NASDAQ Stockholm and, in addi-tion to Swedish law, the Group’s corporate governance is based on the Swedish Corporate Governance Code (referred to below as “the Code”), NASDAQ OMX Stockholm AB’s Rule Book for Issuers and the Swedish Securities Council’s statements. This Report summarises the structure of corporate governance and how corporate governance has been per-formed and developed within the Group during the 2014 financial year. Gunnebo complies with the regulations of the Code in all respects.

Governance and division of responsibilitiesCorporate governance structured around the Group’s operations is essential to commercial success and increased profitability. Effective corporate governance involves a well-defined division of duties and responsibilities, transparency vis-a-vis the shareholders and the market

and efficient governance and effective control over the Group’s opera-tions to ensure that it meets established targets, applicable legislation and other regulations.

In 2014, the following groups were primarily in charge of the gov-ernance, management, control and divisions of responsibilities at Gunnebo: Shareholders Board of Directors President Group Executive Team Operational management groups in regions, sales companies,

Entrance Control as well as Operations Group corporate functions

Corporate Governance ReportGunnebo is a Swedish public limited company listed on NASDAQ OMX Stockholm, Mid Cap. The company applies the Swedish Corporate Governance Code and hereby submits its 2014 Corporate Governance Report.

Overview of Gunnebo’s Corporate Governance

ShareholdersAnnual General Meeting Nominations Committee

External Auditors Board of Directors Remuneration CommitteeAudit Committee

President and Group Executive Team

Operational Boards

Corporate Functions

Management teams in Regions, Sales Companies, Entrance Control and Operations

ImpOrtant external reGulatIOns

Swedish Companies Act and Annual Accounts Act NASDAQ OMX Stockholm AB’s Rule Book for Issuers

Swedish Corporate Governance Code

ImpOrtant Internal GOvernInG dOCuments

Articles of Association Instructions and rules of procedure (Board, President and Board committees)

Policies and guidelines The Group’s Code of Conduct


shareholders and the shareFor information about shareholders and the Gunnebo share, refer to pages 92–93 and www.gunnebogroup.com.

General MeetinGsShareholders exercise their influence at the Annual General Meeting or, if held, at Extraordinary General Meetings, which are Gunnebo’s highest decision-making bodies. All shareholders registered in the transcript or other statement of the shareholders’ register a certain amount of time before the Meeting and who have registered their attendance at the Meeting before the stipulated deadline in the notice to attend are entitled to participate in the Meeting and exercise full voting rights. Shareholders who are unable to attend the Meeting in person may appoint a proxy. Shareholders wishing to have an issue ad-dressed by a General Meeting should submit their request to the Board by e-mail to [email protected] or by post to Gunnebo AB at the ad-dress printed on page 96 of this Annual Report. Such a request should be submitted far enough in advance to be included in the convening notice to the General Meeting.

2014 annual General MeetinGThe 2014 Annual General Meeting (AGM) was held on 10 April at the Chalmers Student Union building in Gothenburg. A total of 110 share-holders took part in the Meeting, representing 60% of the number of shares and votes in the company. Chairman of the Board Martin Svalstedt was elected Chairman of the Meeting. All Board members elected by the Meeting were in attendance.

Minutes from the AGM have been published on Gunnebo’s website: www.gunnebogroup.com. The Meeting adopted resolutions including: A dividend according to the Board and President’s proposal of SEK 1.00 per share for the 2013 financial year.

Re-election of all Board members Re-election of Martin Svalstedt as Chairman of the Board Determination of remuneration to the Board of Directors and auditor Guidelines for remuneration of senior executives Process for appointments to the Nomination Committee Election of Deloitte AB as the company’s auditor until the end of the 2015 Annual General Meeting

2015 annual General MeetinGThe next Annual General Meeting of shareholders in Gunnebo will be held in the Chalmers Student Union building, Chalmersplatsen 1, in Gothenburg on Wednesday, 15 April 2015. More information about the Annual General Meeting is available on page 89 of this Annual Report and will be published on www.gunnebogroup.com.

noMination coMMitteeThe task of the Nomination Committee is to present proposals to the Annual General Meeting for decisions in such matters as the election of the Chairman of the Meeting, Board members (number, name and Chairman), fees to the Board of Directors, remuneration for Committee work, auditor’s fees, procedures for the appointment of the Nomination Committee and, where applicable, the election of auditors. It was decided at the 2014 Annual General Meeting that, for the period until the 2015 Annual General Meeting, Gunnebo’s Nomi-nation Committee would consist of one representative from each of the three largest shareholders as of 30 September 2014 as well as the Chairman of the Board. This means that the following shareholder representatives constituted the Nomination Committee for the pe-riod until the 2015 Annual General Meeting: Dan Sten Olsson (Stena Adactum), Nils-Olov Jönsson (Vätterledens Invest), Ricard Wennerklint (If Skadeförsäkring) and Martin Svalstedt, Chairman of the Board and convener. The Chairman of the Nomination Committee is Dan Sten Olsson. In the Nomination Committee’s opinion, all of the Committee members are independent of the company and its executive manage-ment. Furthermore, Nils-Olov Jönsson and Ricard Wennerklint are deemed to be independent of the company’s largest shareholder in terms of votes. No remuneration is paid by the company to the mem-bers for their work on the Nomination Committee. The Nomination Committee held one meeting prior to the date of this Annual Report.

Contact the Nomination Committee by post to Gunnebo AB at the address printed on page 96 or by e-mail to [email protected].

boardThe overall task of the Board of Directors is to manage the interests of the company and all of its shareholders. It is also the Board’s duty and responsibility to ensure that this Corporate Governance Report is prepared. The Articles of Association stipulate that the Board shall comprise no fewer than five and no more than seven members, with no more than two deputies.

The 2014 Annual General Meeting resolved that, for the period until the 2015 Annual General Meeting, Gunnebo’s Board would comprise six ordinary members and no deputies. In addition, Gunnebo’s Swedish trade unions are entitled to appoint two ordinary Board members and two deputies.

The Chairman of the Board is appointed by the Annual General Meeting. None of Gunnebo’s senior executives are members of the Board. The President and the CFO participate at Board meetings, the latter also serving as secretary. Furthermore, other senior executives participate at meetings whenever required.


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independence of board MeMbersPursuant to the Code, the majority of Board members elected at the Annual General Meeting must be independent of the company and its executive management. At least two members who are independent of the company and its executive management must also be inde-pendent of the company’s major shareholders. The shareholdings of the individual Board members and their independence of the compa-ny, its executive management and the major shareholders, and other assignments in other companies are presented in the table on page 38 and the presentation of Board members on page 42.

the board’s rules of procedureThe Board’s work is primarily governed by the Swedish Companies Act, the Code and the Board’s rules of procedure. The rules of procedure are adopted every year at the statutory meeting of the Board. The current rules of procedure state that the Board shall hold at least six scheduled meetings between Annual General Meetings and describe the matters to be addressed at each meeting. The rules of procedure also out-line the division of work and responsibilities between the Board, the Chairman, the Board Committees and the President.

The Board’s tasks include adopting strategies, business plans, opera-tional targets, interim reports and year-end reports. Furthermore, it is the Board’s duty to decide on significant changes to the organisation of Gunnebo and its business activities and continuously evaluate the work of the President.

MeetinGs’ reportIn 2014, the Board held seven scheduled meetings (in addition to the statutory meeting) and two extra meetings. During these meetings, reports from the President, the accounts at the close of interim peri-ods, the budget for 2015, interim and annual reports, financial state-ments, reports from the Board’s Committees and the Nomination Committee, and items pertaining to the Annual General Meeting were addressed. The following topics were also discussed: Strategic issues Investment issues Acquisition of Clear Image MMS Ltd, UK Divestment of Fichet-Bauche Télésurveillance, France Acquisition of Diseños Inteligentes de Seguridad S.A de C.V, Mexico New establishments AGM items Board evaluations Evaluation of President

No Board members registered reservations against any decisions dur-ing the year.

evaluation of the board’s workThe work of the Board is evaluated every year by a survey, the results of which form the basis for continuous improvements to the Board’s work. The evaluation, for which the Chairman of the Board is responsi-ble, includes issues regarding the composition of the Board, meetings, material, Committees and the manner in which the Chairman of the Board and the Board perform their main duties in accordance with the Code. The evaluation also serves as a basis for the Nomination Committee’s proposals concerning Board members and remuneration levels.

chairManMartin Svalstedt was re-elected the Chairman of the Board of Directors at the Annual General Meeting held on 10 April 2014. It is the Chairman of the Board’s responsibility to ensure that the Board’s work is conducted efficiently. This includes ensuring that the Board completes its duties, and monitoring the progress of the company and ensuring that the other members continuously receive the information required for the Board to perform its work to the necessary standard and in accordance with the relevant regulations. The Chairman does not participate in the operational management of the company.

coMMitteesDuring 2014, the Board of Directors of Gunnebo had two Committees: the Remuneration Committee and the Audit Committee. The repre-sentatives sitting on these Committees are appointed by the Board from among its own ranks.

reMuneration coMMitteeThe Remuneration Committee’s task includes preparing issues per-taining to the conditions of employment for the Group Executive Team, succession planning and other personnel development issues prepared by the Group Executive Team and the Group’s SVP HR. The Remuneration Committee also evaluates the application of the guide-lines for remuneration to senior executives adopted by the Annual General Meeting. The Remuneration Committee follows written rules of procedure.

Following the Annual General Meeting held on 10 April 2014, the Committee comprised Martin Svalstedt (Chairman), Mikael Jönsson and Göran Bille. All of the members of the Remuneration Committee are independent of the company and company management and one member is also independent of the company’s major shareholders. The Committee held five meetings during the year, at which items such as bonus models, bonus outcomes and guidelines for remuneration to senior executives were discussed. The attendance of the Committee members at meetings is presented in the table on page 38.


audit coMMitteeThe Audit Committee is a preparatory body for contact between the Board and the auditors. The Audit Committee follows written rules of procedure. The Committee’s duties also include examining and monitoring the Group’s financial reporting, external reporting, internal control and ensuring the management and reporting of financial risks.

Following the Annual General Meeting held on 10 April 2014, the Committee comprised Bo Dankis (Chairman), Mikael Jönsson and Tore Bertilsson. All of the members of the Audit Committee are indepen-dent of the company and company management and, with the excep-tion of Mikael Jönsson, the company’s major shareholders.

The Committee held eight meetings during the year and the Group’s auditors participated in five of these. The Group’s auditors also par-ticipated at one Board meeting to present an account of their audit. Issues including the annual and interim accounts, the auditors’ audit, risk management, internal control and the election of an auditor were discussed during the year. The attendance of the Committee members at meetings is presented in the table on page 38.

external auditGunnebo’s auditors are elected at the Annual General Meeting. At the 2014 Annual General Meeting, the registered public accounting firm Deloitte AB was elected as the auditor with Jan Nilsson as the Auditor in Charge. The current mandate period expires at the 2015 Annual General Meeting. The auditor’s report on their audit to the Audit Committee and the Board of Directors. In addition to their standard audit assignments, Deloitte provides assistance in the form of advisory and investigative assignments. The assignments performed are not deemed to give rise to a disqualification situation. Information regard-ing fees to auditors is provided in Note 33.

president & ceo and Group executive teaMPer Borgvall is Gunnebo’s President and CEO and leads Gunnebo’s business activities. The President is also responsible for ensuring that the Board receives the information and material necessary for making decisions. Furthermore, he presents reports at Board meetings and continuously keeps the Board and Chairman informed of the Group’s and company’s financial position and performance.

It is the President’s responsibility to implement and ensure the execution of the strategies, business plans and operational targets adopted by the Board.

The President is assisted by a Group Executive Team comprising managers for regions, Entrance Control, Operations and corporate functions. At year-end 2014, the Group Executive Team consisted of eight individuals. These individuals are presented on page 43 of this Annual Report. In 2014, the Group Executive Team held 12 meetings.

The meetings mainly focused on the Group’s strategic and operational development as well as performance monitoring.

corporate functionsGunnebo’s head office houses the corporate functions for the coordi-nation of Operations (production, quality, logistics and purchasing), CFO (finance, financial control, business control, legal affairs, IT, inves-tor relations and acquisitions), Human Resources, and Marketing and Service. These functions are responsible for preparing relevant Group-wide strategies and activity plans for their respective areas of respon-sibility and for driving, supporting and controlling the development of the organisation based on their respective areas of expertise.

operational ManaGeMentGunnebo’s operating activities consist of the regions EMEA, Asia-Pacific and the Americas with sales companies, and the business unit Entrance Control as well as Operations. Each unit has an opera-tional Board, which is responsible for the unit’s business operations. The operational Boards are the bodies under the Group Executive Team that are responsible for ensuring and following up on the imple-mentation of the decisions made. Other members of the operational boards include representatives from the Group Executive Team and representatives from the management groups of each of the units. These management groups are responsible for leading the day-to-day operations in each unit and usually comprise the head of each unit and the most important heads of corporate functions.

financial reportinGEach region and sales company, Entrance Control as well as Operations, reports its financial outcomes every month. The major sales companies also report certain key figures on a weekly basis.


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These reports are compiled by the central finance, financial control and business control corporate functions, and form the basis of further analyses and interim reporting to shareholders and the stock market.

incentive proGraMMeThe 2010 Annual General Meeting resolved to adopt an initial compo-nent of a “rolling” incentive programme comprising warrants (Incen-tive Programme 2010/2014). A total of 550,000 warrants were offered to 46 senior executives and other key individuals in the Group. The warrants were valued at market value externally in accordance with the Black & Scholes valuation model and the price per warrant was set at SEK 3.30. A warrant entitles the holder to subscribe for a share in Gunnebo AB for SEK 32.00 during certain fixed periods between 2013 and 2014. During 2014, a total of 259,403 new shares were registered through the exercise of warrants issued within the framework of the Incentive Programme 2010–2014.

In conjunction with the 2011 Annual General Meeting, a second component of the rolling incentive programme (Incentive Programme 2011/2015) was adopted. A total of 575,000 warrants were offered to 49 senior executives and other key individuals in the Group. The

warrants were valued at market value externally in accordance with Black & Scholes valuation model and the price per warrant was set at SEK 6.30. A warrant entitles the holder to subscribe for a share in Gunnebo AB for SEK 44.20 during certain fixed periods between 2014 and 2015.

In conjunction with the 2012 Annual General Meeting, a third component of the rolling incentive programme (Incentive Programme 2012/2016) was adopted. A total of 585,000 warrants were offered to 50 senior executives and other key individuals in the Group. The war-rants were valued at market value externally in accordance with the Black & Scholes valuation model and the price per warrant was set at SEK 4.00. A warrant entitles the holder to subscribe for a share in Gunnebo AB for SEK 31.40 during certain fixed periods between 2015 and 2016.

Since the participants, within the scope of the above incentive programme, have been offered acquisition of warrants at market price, the programme is not deemed to entail any accounting salary costs or similar costs in accordance with IFRS 2.

However, costs in the form of social security charges may be pay-able in certain countries.

Statistics on Attendance and Independence of Board Members 2014Independent in relation to:

NameElected at Annual General Meeting Elected Board meetings

Remuneration Committee

AuditCommittee

The company and executive management

The company’s largest

shareholders

Total remuneration,

SEK

Martin Svalstedt 2003 10 (C) 5 (C) Yes No 475,000

Tore Bertilsson 2012 10 (M) 8 (M) Yes Yes 267,500

Göran Bille 2008 10 (M) 4 (M) Yes Yes 267,500

Charlotte Brogren 2012 10 (M) Yes Yes 237,500

Bo Dankis 2006 9 (M) 8 (C) Yes Yes 287,500

Mikael Jönsson 2000 10 (M) 5 (M) 8 (M) Yes No 297,500

Employee representatives

Crister Carlsson 2010 10 (M) 38,700

Irene Thorin 2012 10 (M) 38,700Number of meetings: 10 5 8 Total: 1,909,900

C=Chairman M=Member


The responsibility of the Board of Directors for internal control is regulated in the Swedish Companies Act and in the Swedish Corporate Governance Code. Gunnebo AB applies and adheres to the require-ments for internal governance and control stipulated by Swedish law (Companies Act and Annual Accounts Act) and the Swedish Corporate Governance Code (“the Code”). Accordingly, the Report is limited to a description of how internal control is organised with regard to finan-cial reporting.

internal control of financial reportinGThe internal governance and control process involves the Board, Audit Committee, President, Group Executive Team, corporate staffs, operational boards and other personnel. The purpose of the process is to ensure fulfilment of the Group’s goals in terms of relevant and efficient processes, to obtain reasonable assurance with respect to the reliability of external financial reporting in the form of interim reports, annual reports and year-end reports and to ensure that this report-ing is prepared in accordance with law, applicable financial reporting standards and other requirements on listed companies.

control environMentGunnebo’s Board of Directors has overall responsibility for establishing an efficient system for the internal control of financial reporting and operations in general. The Board has established rules of procedure that clarify the responsibilities of the Board and regulate the division of duties between the Board and the Board Committees. The Board of Directors’ Audit Committee monitors the financial reporting, internal control and risk management within Gunnebo. The Audit Committee also represents the Board of Directors in connection with external audits and stays informed about audits of the Annual Report and the consolidated financial statements, and also stays informed about day-to-day finance activities. The Board of Directors has prepared instruc-tions for the President and instructions for financial reporting to the Board of Directors. The operational responsibility for maintaining an efficient control environment is delegated to the President and this responsibility is exercised by the President together with the Group Executive Team, operational boards and management, as well as Group staff. Gunnebo’s Code of Conduct is fundamental to the control environment and highlights the basic principles that govern opera-tions. The structure of the internal governance and control is described on page 34 and the various functions that are included interact based on approved divisions of responsibility and relevant governing docu-ments, in addition to the above-named documents, including the Authorisation Policy and Finance Policy.

risk assessMentRisk assessment is an integrated part of the Group’s business, from the strategy process to budget, financial forecasts, implementation and follow-up. Furthermore, it is combined with other information that may influence risks, such as major changes with regard to the organisation, senior executives, systems or new operations and acqui-sitions. The risks identified are managed through the Group’s control structures and continuously monitored with the aim of implementing measures, identifying and evaluating processes and ensuring good quality in financial reporting. More information about the Group’s risks is available in the section “Risk and Sensitivity Analysis”, pages 44–47, and in Note 3, “Financial Risk Management and Financial Instruments”.

control activitiesControl activities are performed at various levels within Gunnebo. The Group Executive Team is ultimately responsible for implementing and ensuring that controls are performed at both a general and detailed operational level. This is achieved by ongoing governance and control of the accounts and financial reporting carried out by the finance func-tions of the local companies, regions and the corporate finance func-tions in conjunction with reporting and consolidation. The controller network in the various organisational units performs detailed financial analyses of earnings, key ratios, tied-up capital, trends and the follow-up of budgets and forecasts. In addition, more detailed analyses are performed as required.

The Group’s risks with regard to financial reporting are related to the risk that material misstatements may arise in the reporting of the company’s financial position and performance. The company’s report-ing instructions and established monitoring procedures aim to mini-mise these risks.

inforMation and coMMunicationGunnebo’s external and internal information and communication in the form of reporting to various authorities, financial reporting and information to the Board and employees takes place in accordance with the requirements of the business environment, the Group’s inter-nal governing documents and the Communication Policy. Accordingly, all external and internal information and communication are to be appropriate, up-to-date and correct, and should be available to the target groups as and when required.

Board of Directors’ Report on Internal Control


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internal inforMationInternal governing documents and guidelines pertaining to finan-cial reporting are available to the relevant personnel on Gunnebo’s intranet and are also communicated at meetings and through other channels. The intranet contains policies, guidelines and specific in-structions for financial reporting, internal control, closing of accounts, budget and forecasts. The Gunnebo Training Centre (GTC) is a tool used for training and facilitating communication of, for example, the Group’s vision, targets, strategies and ethical dilemmas linked to the Group’s Code of Conduct.

The Board receives regular reports on the financial statements and earnings trends, analyses and comments on outcomes, plans and forecasts. It also receives feedback from Audit Committee meetings, at which the auditors present the results of their audits. Additionally, there are various internal meeting forums, such as the International Management Conference (IMC), and internal boards that also include the monitoring of financial information and other important internal matters on their fixed agendas.

external inforMationInformation about the Group’s business is communicated to external stakeholders on www.gunnebogroup.com, which contains publica-tions, interim reports and other financial information, press releases

and information about Gunnebo’s organisation and market offering. This information is also supplemented by meetings with investors and analysts, which are logged in an internal database.

follow-upRegular monitoring of and reporting on operations is carried out at different levels by the Board, Audit Committee, President, Group Executive Team, corporate finance function and operational boards. Monitoring of Group companies includes monthly and quarterly reviews of outcomes compared with budget and forecasts, the results of audits, etc. In addition to this, special efforts are monitored such as activities linked with the implementation of the new strategy, acquisitions and divestments. The Group’s internal control function is an integrated part of the corporate finance function. The Board, which annually evaluates the need for such a function, has deemed that existing structures for monitoring, control and evaluation provide satisfactory documentation. External auditors are engaged for certain special audits.

See the Information for the Capital Market section on pages 89–91 for information about how communication and monitoring of the Group’s financial reporting are carried out externally.


Gothenburg, March 5, 2015

Deloitte AB

Jan NilssonAuthorised Public Accountant

Auditor’s Report on the Corporate Governance Report

To the Annual General Meeting of Gunnebo AB

Corp. Reg. No. 556438-2629

It is the Board of Directors who is responsible for the Corporate Govern-ance Report for the financial year January 1, 2014 to December 31, 2014 included in the printed version of this document on pages 34–40 and that it has been prepared in accordance with the Annual Accounts Act.

We have read the Corporate Governance Report, and based on this reading and our knowledge of the Group, we believe that we have sufficient grounds for our opinions. This means that our statutory

examination of the Corporate Governance Report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden.

In our opinion, the Corporate Governance Report has been prepared and its statutory content is consistent with the annual accounts and consolidated accounts.

This auditor s report on the corporate governance report is a translation of the Swedish language original. In the events of any differences between this translation and the Swedish original the latter shall prevail.

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Board of Directors

Charlotte Brogren

Board memberElected: 2012Born: 1963Nationality: SwedishMain position: Director General of VinnovaEducation: Engineering PhDProfessional background: Senior positions in ABBOther Board assignments: Chairperson of Industrifonden. Member of HMS Industrial Networks AB and QFree ASShareholding: 3,000

Bo Dankis

Board memberElected: 2006Born: 1954Nationality: SwedishMain position: Profes-sional Board member and industrial advisorEducation: Master of Science in Mechanical EngineeringProfessional background: President of Assa Abloy AB and Perstorp Group and senior positions at Forsheda AB and ABBOther Board assignments: Chairman of The Swedish Trade & Invest Council, IV Produkt, Cleanergy, Gadelius Group Tokyo and the Sweden-Japan Foundation.Shareholding: 8,666 (of which 2,000 via endowment insurance)

Mikael Jönsson

Board memberElected: 2000Born: 1963Nationality: SwedishMain position: President of Vätterledens Invest ABEducation: University studies in economicsProfessional background: Stockbroker, various senior positions at Vätterledens Invest ABOther Board assignments: Chairman of Lids Industri AB and member of AB Trätälja, Vätterledens Invest AB and its subsidiaries, Kopparbergs bryggeri AB, Wipcore AB and Nordic E-commerce Knowledge Shareholding: 153,333


Crister CarlssonEmployee representative for UnionenElected: 2010Born: 1965Nationality: SwedishEducation: Electric Power EngineeringShareholding: —

Irene ThorinEmployee representative for UnionenElected: 2011Born: 1959Nationality: SwedishEducation: Economist, upper secondary levelShareholding: —

Martin Svalstedt

ChairmanElected: 2003, Chairman since 2008Born: 1963Nationality: SwedishMain position: President of Stena Adactum AB and Stena Sessan ABEducation: Master of Science in Business AdministrationProfessional background: CFO Capio AB, senior financial posts at Stora and ABBOther Board assignments: Chairman of Meda AB, Ballingslöv International AB, Envac AB and Stena Renewable AB, and member of Stena Adactum AB and Stena Sessan ABShareholding: 180,000 (of which 60,000 via endowment insurance)

Tore Bertilsson

Board memberElected: 2012Born: 1951Nationality: SwedishMain position: Profes-sional board member and industrial advisorEducation: Master of Science in Business AdministrationProfessional background: Executive Vice Pres-ident and CFO of AB SKF, Bank Director SEBOther Board assignments: Chairman of PRI Pensionsgaranti and Ludvig Svensson, mem-ber of IKEA Group, Stampen, JCE Group, Gamla Livförsäkringsaktiebolaget SEB Trygg Liv and SalinityShareholding: 8,000

Göran Bille

Board memberElected: 2008Born: 1955Nationality: SwedishMain position: President and CEO of Gina TricotEducation: Master of Science in Business AdministrationProfessional background: President and CEO of AB Lindex, senior positions at H&M inclu ding President of H&M Rowells, Country Manager for H&M in Sweden, Division Manager for H&M WomanOther Board assignments: —Shareholding: —

Group Executive Team

Gunnebo Årsredovisning 2014 43

Morten Andreasen SVP Region EMEA (Europe, Middle East & Africa)Employed: 2012 Born: 1958Nationality: DanishEducation: Master of Science in Business Administration, PED from IMD (Lausanne)Professional background: President of Munters’ Moisture Control Services (MCS) divi-sion, Senior Vice President Lufthansa Service Gesellschaft and CEO Top Flight CateringBoard assignments: Kosan Crisplant A/SShareholding: 5,000Warrants and share options: 40,000

Sacha de La NoëSVP Region Asia-PacificEmployed: 2005, mem-ber of Group Executive Team since 1 January 2015Born: 1970Nationality: SwedishEducation: Master of Science in Business Administration, Warwick Business School, UKProfessional background: Regional Manager for Gunnebo in South-East Asia, Manager of Gunnebo Global ATM, senior financial posi-tions at Gunnebo, Wilson Logistics Group, Oriflame, Alfort & Cronholm GroupBoard assignments: —Shareholding: —Warrants and share options: —

Tomas Wängberg

SVP Region AmericasEmployed: 2009Born: 1958Nationality: SwedishEducation: Marine Engi-neering, Chalmers 1981Professional background: President and CEO of ABS Group, AB Pharmadule, ABB Carbon AB and senior positions in marketing, sales and production at the ABB GroupBoard assignments: HTC Group ABShareholding: 2,280Warrants and share options: 40,000

Per Borgvall

President and CEOEmployed: 2009Born: 1958Nationality: SwedishEducation: Master of Science in Mechanical Engineering, Chalmers 1982Professional background: President and CEO of AB Fagerhult; Divisional President of the Indoor Climate division at British IMI Plc, Presi-dent of Tour & Andersson AB and Uponor ABBoard assignments: Nederman Holding AB, Louis Poulsen LightingShareholding: 62,000 Warrants and share options: 70,000

Christian Johansson Chief Financial OfficerEmployed: 2013Born: 1963Nationality: SwedishEducation: Master of Science in Business Administration, Stockholm University and INSEAD (Fountainbleau, France) Professional background: Senior finan-cial positions at Volvo, ABB and Alfa Laval, Regional Manager for Central and Eastern Europe at ABB ServiceBoard assignments: —Shareholding: —Warrants and share options: —

Anna AlmlöfSVP Strategy, Marketing & ServiceEmployed: 2011Born: 1967Nationality: SwedishEducation: Economics degree from Stockholm School of Economics and Executive MBA from Instituto de Empresa, MadridProfessional background: Director of Product Management at Ericsson Global Services and other senior positions in sales and service at Ericsson AB and Unisys, in Sweden and inter-nationally.Board assignments: —Shareholding: —Warrants and share options: —

Robert Hermans SVP Entrance ControlEmployed: 1996Born: 1968Nationality: SwedishEducation: Master of Science in Business Administration from Uppsala University and MBA from Stockholm School of EconomicsProfessional background: Country Manager Gunnebo South Africa, President Gunnebo Lifting, Managing Director Cargo Control Systems (South Africa) and other senior posi-tions in marketing and sales in the Gunnebo Industrier GroupBoard assignments: Tsarmedia AB and Satpack Travel, South AfricaShareholding: —Warrants and share options: —

Magnus Lundbäck

SVP Human Resources & SustainabilityEmployed: 2013Born: 1969Nationality: SwedishEducation: Licentiate of Engineering and PhD in Strategy and Organisation from Luleå University of TechnologyProfessional background: Executive Vice President Human Resources and Sustainability at the Getinge Group, Vice President of Human Resources at Volvo Car CorporationBoard assignments: —Shareholding: —Warrants and share options: 50,000

Lars ThorénSVP OperationsEmployed: 2012Born: 1961Nationality: SwedishEducation: Master of Science in Engineering, Chalmers and Execu-tive MBA, University of Gothenburg School of Business, Economics and LawProfessional background: Senior positions at Volvo Buses, Sandvik Materials Technology, ESAB and SKFBoard assignments: —Shareholding: 800Warrants and share options: 50,000

Gunnebo Annual Report 2014


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Gunnebo is an international group with a broad geographical spread. The Group currently has operations in 33 countries and production units in 10 countries. The Group is therefore exposed to various kinds of strategic, operational and financial risk. Strategic and operational risks include business environment risks, raw material risks, pro-duction risks and legal risks. The financial risks are mainly linked to changes in interest and exchange rates, as well as refinancing and counterparty risks.

Risk management within the Group is an important part of the governance and control of the Group’s operation and aims to identify, evaluate and manage these types of risk and, thereby, mitigate their potential effects.

The management groups in Gunnebo’s regions and sales companies are responsible for developing strategies and identifying risks in their market or area of responsibility. These management groups are sup-ported by resources within central Group functions such as Finance, Legal Affairs, Operations, Marketing & Service, and Human Resources and by Group-wide principles, guidelines and instructions. The Group’s risk management is systematically monitored by the Group Executive Team, partly through a system of monthly reports whereby the man-agement groups describe developments in their respective units, along with identified risks. Further control is achieved through the inclusion of representatives of the Group Executive Team on internal boards of directors. The President reports continuously to the Board of Directors about the development of the Group’s risks, and Gunnebo’s Board has overall responsibility for the Group’s risk management and for deciding the Group’s strategic direction.

Strategic and operational riSkSMarket risks The Gunnebo Group’s operation and results are exposed to market risks such as the impact of the business cycle on demand for the Group’s products and services, and changes in customers’ investment plans and production levels. The Group’s relatively broad product range and customer structure, as well as its global market coverage with sales and production in a large number of countries, provide a good distribution of risk intended to restrict the effect of a change in demand limited to a particular industry, region or country.

The operation’s geographical distribution naturally entails exposure to business environment risks such as country-specific risks in the form of political decisions and changes to regulations.

Raw material risks The Gunnebo Group is exposed to risks related to supply and price variations of raw materials and components. Competition on the market may restrict the opportunity to fully offset cost increases through price rises, even though the Group endeavours to enter sales agreements which allow the price increases to be passed on to customers.

Steel is the single largest raw material component in the Group. Many different types and grades of steel are purchased on different markets, resulting in differentiated price development. With the aim of limiting the short-term effect of price fluctuations, a large part of the Group’s steel requirement is purchased via index-based contracts.

Risks related to the Group’s purchases of more important input goods are managed by co-ordinating and controlling procurement through a central purchasing function, which for instance appoints people responsible for certain categories of raw materials or components.

Production risks Gunnebo’s production operation takes place in twelve production units and comprises a chain of processes where stoppages or disruptions can have consequences on Gunnebo’s ability to fulfil its obligations to customers. Gunnebo deals with risks relating to the Group’s property and operational stoppages through a programme for identifying and assessing such risks. The programme is applied at all of Gunnebo’s production plants and aims to prevent these types of risks or, if an event is beyond Gunnebo’s control, to mitigate the consequences.

The majority of components used in the Group’s products are sourced from subcontractors. With the aim of minimising the risk of one of these subcontractors being unable to deliver the component, or to deliver on time, for any reason, Gunnebo actively strives to secure alternative suppliers for critical components.

There is, therefore, usually more than one subcontractor that can deliver a particular component. Furthermore, the Group’s purchasing

Risk and Sensitivity AnalysisExposure to risk and uncertainty with regard to future development are natural aspects of all businesses. Risk aware-ness and good risk management are prerequisites for creating long-term value and for securing good profitability.

Gunnebo therefore continuously evaluates the risks to which the business is exposed, and carefully monitors the development of factors that influence the main risks that have been identified.


function works actively and continuously to evaluate and analyse the Group’s suppliers from a risk perspective, for example.

Environmental impact primarily takes place in the production process through material and energy consumption, emissions to air and water, and the creation of noise and waste. To restrict the environmental impact of production, the Group has the objective to gain ISO 14001 certification for all production units. Risk analyses are carried out in connection with such certification and through chemical analyses during, for example, REACH work (Registration, Evaluation, Authorisation and restriction of Chemicals). These risk analyses pro-vide good information about the various risks at the production plants, and relevant programmes of measures can therefore be implemented.

Acquisition of new operationsOne of the Gunnebo Group’s goals is to grow. Growth should be organic but supplemented by acquisitions. The aim is to carry out more acquisitions on certain defined markets on an ongoing basis. Acquisitions can entail various difficulties integrating the acquired operation, which can lead to far higher costs for the acquisition than estimated and/or that the synergies take longer to realise than planned.

Acquisitions that do not develop as planned may also lead to high write-down costs for goodwill and other intangible assets, which can have a significant adverse effect on the Group’s results and financial position.

The acquisition process is conducted in accordance with set instruc-tions and guidelines. The Group’s function for Mergers & Acquisitions has overall responsibility for evaluating and implementing acquisi-tions, and for ensuring that the established integration plans are carried out.

Legal risks The legal department within the Group is responsible for monitor-ing and controlling the management of legal risks within Gunnebo. A Group-wide legal policy has been introduced which states, for ex-ample, that some matters of a legal nature must be escalated to the legal affairs department. This includes stock exchange related issues, competition law issues and issues relating to the Group’s intangible

assets. With the aim of eliminating unwanted risks in the Group’s customer and supplier agreements and to ensure the quality of these agreements, instructions and guidelines have been issued on the more important agreement terms, such as those relating to liability and limitations on liability. Furthermore, the Group’s business areas have access to agreement templates for the more common types of agree-ment. In addition to the above, there are also procedures for approving agreements.

As a result of standard business operations, Gunnebo is a party in various legal disputes. These disputes include, for example, commer-cial disputes and disputes regarding tax or labour law. Such outstand-ing and potential disputes are reported regularly to the Group’s legal affairs department. Disputes can last a long time and entail high costs. It can also be hard to predict the outcome of many disputes. A nega-tive outcome in one particular dispute could have an important nega-tive impact on the Group’s results and financial position. At the end of 2014, there were not deemed to be any disputes that could entail such an effect.

Insurable risksGunnebo has established a Group-wide insurance programme to pro-tect the Group’s insurable assets and interests. The programme covers property and loss of profit insurance, general liability and product liability, transport insurance, crime against property as well as claims for damages against the Board and senior executives, for example. Linked to the insurance programme is a programme for identifying and evalu-ating risks related to physical injury at the Group’s production plants and related financial consequences. The results of these reviews are summarised in a points system for risk exposure at each plant, enabling the management to control the risks and to assess the need for risk-reduction measures and establish priorities among these.

Financial riSkS The object of Gunnebo’s financial activities is to minimise the Group’s long-term financing costs and effectively manage and control its financial risks such as changes in interest and exchange rates, as well as refinancing and counterparty risks.


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Organisation and activities Gunnebo’s financial operations are managed through the subsidiary Gunnebo Treasury AB which acts as the Group’s internal bank, is respon-sible for the Group’s currency and interest rate risk management, and supports the subsidiary companies in currency transactions. Gunnebo Treasury AB is also responsible for the Group’s liquidity management and external borrowing, and assists the subsidiaries with loans and in-vestments. Through this centralisation the Group is able to benefit from economies of scale and synergies within the financial area.

The financial activities are carried out in accordance with the finance policy established by the Board, which regulates how financial risks are to be managed and the limits within which the internal bank and Gunnebo’s subsidiaries may operate. The following financial risks are covered, and regulated, by the finance policy:

Financing risk Financing risk refers to the risk that financing of the Group’s capital requirement and refinancing of its outstanding borrowing are rendered more difficult or more expensive. In order to limit the financing risk, the Group’s finance policy stipulates that the total outstanding volume of borrowing must be covered by long-term credit facilities of at least twelve months at any given time.

interest rate risk The interest rate risk refers to the negative effect on the Group’s income and cash flow of a lasting change in market interest rates. The sensitivity of the income may, however, be lim-ited through carefully selected interest maturity structures and by entering into fixed-interest agreements in the form of interest rate hedges. According to the finance policy, interest rate hedges may entail a maximum hedge rate of 60% and the term may not exceed 36 months.

liquidity risk Liquidity risk refers to the risk of not having access to liquid funds or undrawn lines of credit in order to fulfil payment ob-ligations. The Group’s finance policy stipulates that liquid funds and

undrawn lines of credit shall always amount to a minimum of MSEK 350. Surplus liquidity in the Group shall be invested with the internal bank or in local cash pools. Gunnebo has centralised its liquidity management in cash pools in the main European countries where it operates and in the USA.

currency risk The Group has operations in a large number of coun-tries and is therefore exposed to currency risks. This can be partly offset by hedging transactions in foreign currencies within the frame-work of the finance policy. For more detailed information about finan-cial risk management and reporting of financial instruments, see Note 3, “Financial risk management and financial instruments”.

counterparty risk Counterparty risk or credit risk refers to the risk of a loss if the counterparty fails to fulfil its obligations.

Financial credit risk Exposure to credit risk arises both when invest-ing surplus liquidity, and in receivables from banks which arise via derivative instruments. Gunnebo’s finance policy includes a special list of permitted counterparties and maximum credit exposure with each approved counterparty. Gunnebo has also entered into general agreements regarding netting (ISDAs) with all of its counterparties for transactions in derivative instruments. Financial credit risk is also reduced in that liquid funds shall primarily be used to reduce out-standing liabilities, which limits the volume of outstanding surplus liquidity.

customer credit risk Gunnebo has formulated a credit policy regu-lating the management of customer credit, which partly encompass-es decision-making levels for granting credit limits. Each subsidiary is responsible for checking and controlling credit risk with customers, within given limits. The rules applicable for issuing credit locally are documented in a local credit policy regulating credit limits, terms of payment and collection procedures. Lease agreements and customer financing packages shall be approved by Gunnebo Treasury AB. For further information, see Note 18, “Accounts receivable”.

Profit is affected by changes in certain factors of importance to the Group, as explained below. The calculation is made on the basis of the Group’s structure at the year-end and assuming all other factors remain unchanged.

Change Effect

Selling prices A 1% change in the selling price… … would affect income and operating profit by approximately MSEK 56.

labour cost A 1% change in labour costs, including social security charges…

… would affect operating profit by approximately MSEK 19.

Steel prices A general change in steel prices of 10%… … would affect profit by around MSEK 30 for the subsequent 12 months.

currencies A 10% change in the value of the SEK… … would affect operating profit by approximately MSEK 42 in total. Of this, MSEK 27 would be netted transaction exposure, without taking the Group’s forward cover into account. The remaining MSEK 15 is attributable to translation exposure.

interest expenses On the basis of the average fixed interest term of the Group’s total loans at the year-end, a simultaneous change of one percentage point in all of Gunnebo’s loan currencies…

… would affect profit by approximately MSEK 7 for the subsequent 12 months.

Sensitivity Analysis


Category of Risk Risks to Gunnebo Risk Management Comments 2014

Market risk Changes in the economy and demand, custo-mers’ investment plans and production levels.

Monthly reports, good distribution of risk in issues relating to products, customers and market coverage.

There has been stabilisation on the European market. The Group has continued to shift the business to markets with growth.

Raw materials risk Increased costs for input goods and compo-nents, shortage of input goods and compo-nents, price increases cannot be passed on to customers.

Steel is purchased through index-based contracts, purchasing activities are co-ordinated by a central purchasing function, people are assigned responsi-bility for categories in particularly important areas of purchasing.

The price of steel remained relatively stable in 2014 and even fell on some markets. Further information about the Group’s material purcha-ses is provided on page 32.

Production risk Disruptions and capacity shortages in the Group’s own units or with subcontractors, environmental impact.

Programme for identifying and evaluating risks in the Group’s own units and with subcontractors, environmental certification and environmental risk analyses.

No significant disruptions or incidents were reported in 2014.

Acquisition of new operations Integration problems, increased costs, write-down of goodwill.

Group-wide function for acquisitions, instructions and guidelines for the acquisition process (evalua-tion, implementation, integration).

The Group’s acquisitions in 2014 are reported in the Board of Directors’ report and in Note 30, “Acquisition of operations”.

Legal risks Financial risks in customer and supplier cont-racts resulting from unbalanced agreements, disputes.

Group-wide policies and guidelines, systems with standard agreements, reporting of disputes to the legal affairs department.

At the end of 2014, there were not deemed to be any disputes that could entail a negative impact on the Group’s results and financial position.

Insurable risks Physical damage to the Group’s insurable assets and interests.

Extensive Group-wide insurance programme, pro-gramme for identifying and evaluating the risk of physical damage at the production plants.

The Group’s insurance protection is deemed sufficient to run the operation.

Financial counterparty risk Gunnebo is exposed to its counterparties’ sol-vency through loans, lease agreements, sales agreements, bank balances and derivatives.

The Group’s exposure is regulated in the finance policy, risk and exposure are controlled and minimi-sed on an ongoing basis.

No counterparty losses in 2014.

Liquidity Gunnebo has some degree of a seasonal cycle, which affects cash flow.

The finance policy stipulates that a financial con-tingency of MSEK 350 must always be retained via a combination of cash and credit agreements.

An extension of the financing agreements was signed in February 2014, now maturing in February 2019, the financial contingency was maintained throughout the year.

Interest rate levels The Group is a net borrower, which results in exposure to changes in interest rates.

The Group’s finance policy stipulates that a maxi-mum of 60% of the outstanding volume of bor-rowing can be hedged with interest derivatives, the average term of which must not exceed 36% months.

The net interest expense has been kept down through continued low market interest rate levels and market terms for the new financing. Increased hedge rate to securely maintain

Exchange rates A considerable proportion of income/costs and assets/liabilities are in foreign currencies, which gives rise to exchange rate effects.

Active monitoring and, in some cases, hedging of exposure, proceeding both from transactions and equity.

The geographical spread of the business helps balance currency exposure.

Risk Management within the Gunnebo Group


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Gunnebo is an international security group with an annual turnover of approximately MSEK 5,600 and around 5,700 employees. The Group offers effective, innovative security solutions in bank security, cash handling, secure storage, entrance security and security-related services to customers around the globe.

Order intake and net salesThe Group’s order intake amounted to MSEK 5,433.1 (5,513.8). Organically, order intake decreased by 5%.

Net sales increased by MSEK 286.0 to MSEK 5,556.5 (5,270.5). Organically, sales increased by 2%.

FinanCial resUltsOperating profit increased to MSEK 351.8 (222.2) and the operating margin to 6.3% (4.2%). Currency effects had a marginal impact on the figures.

The divestment of Fichet-Bauche Télésurveillance in June 2014 re-sulted in a capital gain of MSEK 73.4, which is entered under operating profit. Restructuring costs, along with other expenses of a non-recur-ring nature, burdened the result by MSEK 87.9 (84.0). The majority of these costs can be attributed to staff cuts and other structural meas-ures in Region EMEA. Operating profit excluding income and expenses of a non-recurring nature of MSEK –14.5 (–84.0) amounted to MSEK 366.3 (306.2), which equates to an operating margin of 6.6% (5.8%).

Higher sales improved the result by approximately MSEK 18. Compared to last year, capacity adaptations and other savings have brought fixed costs down by approximately MSEK 48, and this helped to improve the operating margin. In addition, further initiatives to expand the operation have been carried out on growth markets.

Net financial items improved to MSEK –35.2 (–75.2). The high cost in the previous year was mainly due to the write-down of financial assets attributable to the discontinued Perimeter Protection. Group profit after financial items amounted to MSEK 316.6 (147.0). Net profit for the period totalled MSEK 227.3 (101.6), and earnings per share attributable to the parent company’s shareholders were SEK 2.98 (1.29) per share.

The tax expense amounted to MSEK –89.3 (–45.4) and the tax rate to 28.2% (30.9%). The tax rate was positively affected by non-taxable income attributable to the divestment of Fichet-Bauche Télésurveil-lance, and by a more favourable composition of Group profit, with profit improvements in countries where the Group is not yet in a tax position.

aCQUisitiOn in MeXiCOOn August 28, 2014, Gunnebo acquired Mexican company Diseños Inteligentes de Seguridad S.A de C.V. (Dissamex), which provides service and installation services in electronic security, primarily to banks. The acquired operation has annual sales of approximately MSEK 45. The purchase sum is expected to total MSEK 32.

aCQUisitiOn in the UkOn October 10, 2014 Gunnebo acquired British company Clear Image MMS Ltd, which operates in electronic security. The acquired opera-tion has annual sales of approximately MSEK 60. The purchase sum totalled MSEK 36.

Capital eXpenditUre and depreCiatiOn/aMOrtisatiOnInvestments made during the period in intangible assets and in prop-erty, plant and equipment totalled MSEK 77.7 (71.8). Depreciation/amortisation amounted to MSEK 87.7 (84.2).

prOdUCt develOpMentGroup expenditure on developing existing product programmes, and on developing brand new products in existing or new market seg-ments, totalled MSEK 69.2 (73.7). Of this, MSEK 12.2 (14.8) was capital-ised in the balance sheet during the year.

Cash FlOwCash flow from operating activities improved compared to the pre-vious year and amounted to MSEK 271.3 (210.8), primarily as a result of freeing up working capital, and also higher operating profit. Cash flow from investing activities amounted to MSEK –14.7 (–74.7), and this was compensated for by MSEK 76.9 during the year with the sale amount from divesting Fichet-Bauche Télésurveillance.

liQUidity and FinanCial pOsitiOnThe Group’s liquid funds at the end of the period amounted to MSEK 447.0 (392.0). Equity amounted to MSEK 1,694.3 (1,463.6) and the equity ratio to 35% (34%).

The increase in equity can primarily be attributed to net profit for the period of MSEK 227.3. Translation differences in foreign opera-tions, reported in other comprehensive income, had a positive effect on equity of MSEK 92.6. Dividend payments to shareholders burdened equity by MSEK 75.9.

Net debt fell by MSEK 49.9 during the year to MSEK 1,038.6 (1,088.5), primarily due to a strong free cash flow and the divestment of Fichet-Bauche Télésurveillance.

The Board and President of Gunnebo AB (publ), company registration number 556438-2629, hereby submit the Annual Report and consolidated accounts for the 2014 financial year.

Board of Directors’ Report


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The debt/equity ratio totalled 0.6 (0.7). Net debt excluding pension commitments amounted to MSEK 613.4 (727.9).

The Group’s long-term credit framework on December 31, 2014 amounted to MSEK 1,509.9 and ensures that financing is available on market terms until the end of February 2019.

eMplOyeesThe number of employees at the end of the period was 5,670 (5,612). The number of employees outside of Sweden at the end of the period was 5,498 (5,432).

reMUneratiOn tO seniOr eXeCUtives The Board proposes that the 2015 AGM re-approve the current principles for remuneration and other employment conditions for Gunnebo’s Group Executive Team for 2015. The principles relate to the President and other members of the Group Executive Team and apply to employment contracts entered into after the guidelines have been approved by the AGM and to changes in existing employment con-tracts made subsequently.

Gunnebo will offer the level of remuneration and terms of employ-ment necessary to recruit and retain qualified senior executives. The overall principles for salary and other remuneration to senior execu-tives at Gunnebo are, therefore, that compensation shall be competi-tive and in line with market standards. The Group Executive Team’s total remuneration shall consist of fixed salary, performance-related remuneration including long-term incentive programmes, pension and other benefits.

The fixed salary shall take into account the individual’s position, expertise, areas of responsibility, performance and experience, and shall normally be reviewed on an annual basis. The fixed salary shall also

sales by Market2014 2013

MSEK % MSEK %

France 1,030 19 1,023 19USA 486 9 447 8India 429 8 390 7UK 328 6 255 5Spain 238 4 232 4Germany 232 4 251 5Sweden 203 4 189 4Canada 189 3 198 4Denmark 170 3 158 3Belgium 169 3 174 3Indonesia 163 3 165 3China 162 3 131 2Italy 159 3 159 3Australia 158 3 161 3Other 1,441 25 1,338 27total 5,557 100 5,271 100


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comprise the basis for calculating performance-related remuneration. The performance-related element shall be dependent on the individual’s achievement of predetermined, quantitative financial targets and may not exceed 50% of the fixed salary.

The Board shall evaluate each year whether a share or share price-related incentive programme will be proposed at the AGM.

Pension premiums for members of the Group Executive Team living in Sweden are paid in accordance with a defined contribution plan. Premiums may amount to a maximum of 35% of the fixed salary, depending on age and salary level. Members of the Group Executive Team living outside of Sweden may be offered pension solutions that are competitive in the country where they live, preferably premium-based solutions. The retirement age shall be 65.

For members of the Group Executive Team living in Sweden, the notice period is 12 months for the company and six months for the individual. No severance pay is awarded. Members of the Group Execu-tive Team living outside of Sweden may be offered notice periods that are competitive in the country where they live, preferably equivalent to the notice periods applicable in Sweden. The Board is entitled to depart from these guidelines in individual cases if there are specific reasons to do so. Remuneration to the management that has already been decided but which has not fallen due for payment by the 2015 AGM comes under these guidelines, with the exception that the Presi-dent is entitled to 12 months’ severance pay in the event of the em-ployment being terminated by the company.

In conjunction with the company signing an employment contract with a new President in 2015, the Board of Directors has used the right decided by the AGM to deviate from the guidelines under certain circumstances. It has therefore been agreed that the President shall be entitled to severance pay corresponding to 12 months’ salary in the event of the employment being terminated by the company, that performance-related pay shall also be pensionable and that the Presi-dent shall be entitled to receive pension from the age of 63.5 years. The Board has deemed these deviations to be necessary to carry out the recruitment. Besides the above, no deviations have been made from the guidelines adopted by the 2014 AGM.

share CateGOryAt the end of the year, Gunnebo AB’s share capital amounted to MSEK 380.9, divided between 76,173,501 shares with a quota value of SEK 5. All shares have one vote each and are of the same category. Each share entitles the holder to an equal share of the company’s assets and prof-its. There are no restrictions on the transferability of shares.

share dataEarnings per share after dilution were SEK 2.98 (1.29). The number of shareholders totalled 12,000 (10,900).

prOpOsed dividendThe Board proposes that a dividend of SEK 1.00 (1.00) per share be paid for the 2014 financial year.

parent COMpanyThe Group’s parent company, Gunnebo AB, is a holding company which has the main task of owning and managing shares in other Group com-panies, as well as providing Group-wide functions and services within corporate management, business development, human resources, legal affairs, financial control/finance, IT, quality, logistics, the environ-ment and communication.

Net sales for the period January-December amounted to MSEK 260.1 (204.1), of which MSEK 0.0 (0.0) related to external customers. Net profit/loss for the period amounted to MSEK 120.5 (–50.1). Group contributions had a positive impact on net profit of MSEK 47.0 (nega-tive impact of MSEK 90.0).

Investments in and divestments of shares and participations in subsidiaries amounted to MSEK 0.0 (0.0) and MSEK 0.0 (0.0) respecti-vely. Investments made in intangible assets and in property, plant and equipment totalled MSEK 2.3 (1.4). Liquid funds at the end of the year amounted to MSEK 0.1 (2.8).

envirOnMental iMpaCtGunnebo strives to operate its business in a way that is not damaging to the environment, and it complies with the applicable environmental

net sales, OperatinG prOFit and OperatinG MarGin By reGiOn, Msek

Net sales Operating profit/loss Operating margin, %

2014 2013 2014 2013 2014 2013

Region Europe, Middle East & Africa 3,644 3,474 108 –27 3.0 –0.8Region Asia-Pacific 1,029 954 131 126 12.7 13.2Region Americas 884 843 113 123 12.8 14.6total 5,557 5,271 352 222 6.3 4.2


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legislation in its businesses and processes around the world. The Group does not operate any business that requires notification or a licence under Swedish environmental law. For more information, see “Environmental Management” on pages 32–33.

risks and UnCertaintiesGiven the international nature of its business, Gunnebo is exposed to financial, strategic and operational risks. The financial risks are linked to changes in interest rates, exchange rates, as well as refinancing and counterparty risks, and primarily comprise financing risk, interest rate risk, liquidity risk and currency risk. These risks are covered by and regulated in the Group’s finance policy.

Strategic and operational risks mainly comprise market risks, raw material risks, production risks and legal risks. In addition to the above risks, the Group also continuously monitors risks relating to the envi-ronment, changes in prices, competition, technical development, new legislation, competence supply and taxes. For more information on the risks to which Gunnebo is exposed, see Notes 3 and 35 and the “Risk and Sensitivity Analysis” section on pages 44–47.

COrpOrate GOvernanCe repOrtThe Corporate Governance Report (pages 34–40), constitutes a sepa-rate document from the Annual Report under the Annual Accounts Act, Chapter 7, §8.

FUtUre prOspeCtsGunnebo is making no comment on prospects for 2015.

events aFter the ClOsinG dayNo significant events have occurred since the closing day, except that Henrik Lange has been appointed President and CEO.

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DefinitionsCapital eMplOyed Total assets less interest-free provisions and liabilities.

Capital tUrnOver rateNet sales in relation to average capital employed.

deBt/eQUity ratiONet debt in relation to equity.

dividend yieldDividend in relation to listed price on December 31.

earninGs per shareProfit after tax attributable to the parent company’s shareholders divided by the average number of shares.

eQUity per share Equity attributable to the shareholders of the parent company divided by the number of shares at the end of the period.

eQUity ratiOEquity as a percentage of the balance sheet total.

Free Cash FlOwCash flow from operating activities and investing activities excluding acquisitions and divestments.

Free Cash FlOw per shareFree cash flow divided by average number of shares in issue after dilution.

GrOss MarGinGross profit as a percentage of net sales.

interest COveraGe ratiOProfit after financial items plus interest costs, divided by interest costs.

net deBtInterest-bearing provisions and liabilities less liquid funds and interest-bearing receivables.

OperatinG MarGinOperating profit as a percentage of net sales.

OrGaniC GrOwthGrowth in net sales, or order intake, adjusted for acqui-sitions, divestments and exchange rate effects.

p/e ratiOListed price on December 31 divided by earnings per share after dilution.

prOFit MarGinProfit after financial items as a percentage of net sales.

retUrn On Capital eMplOyed Operating profit plus financial income as a percentage of average capital employed.

retUrn On eQUityProfit for the year as a percentage of average equity.

Contents

Group income statements 53Group statement of Comprehensive income 53Group Balance sheets 54Change in Group equity 56Group Cash Flow statements 57parent Company income statements 58parent Company statement of Comprehensive income 58parent Company Balance sheets 59Change in parent Company’s equity 61parent Company Cash Flow statements 62notes 63proposed distribution of earnings 87auditor’s report 88



MSEK Note 2014 2013

Net sales 5 5,556.5 5,270.5Cost of goods sold –3,911.0 –3,688.7Gross profit 1,645.5 1,581.8

Selling expenses –738.2 –739.6Administrative expenses 33 –646.1 –629.1Share of profit of associated companies 16 0.4 –0.1Other operating income 6 95.7 21.5Other operating expenses 7 –5.5 –12.3Operating profit/loss 5, 8, 9, 10, 22, 27, 32 351.8 222.2

Financial income and expensesInterest income 11.6 11.3Other financial income 11 2.1 1.2Interest expenses –37.0 –33.8Other financial expenses 11 –11.9 –53.9Total financial income and expenses –35.2 –75.2

Profit/loss after financial items 316.6 147.0

Taxes 12 –89.3 –45.4Profit/loss for the year 227.3 101.6

Of which attributable to:Parent company shareholders 226.2 98.1Holdings with a non-controlling interest 1.1 3.5

227.3 101.6

Earnings per share before dilution, SEK 13 2.98 1.29

Earnings per share after dilution, SEK 13 2.98 1.29

Group Statement of Comprehensive IncomeMSEK Note 2014 2013

Profit/loss for the year entered in the income statement 227.3 101.6

Other comprehensive income during the year

Items which will not be reversed to profitActuarial gains and losses –35.5 –21.0Tax relating to actuarial gains and losses 5.5 5.2Total items which will not be reversed to profit –30.0 –15.8

Items which may be reversed to profit Translation differences in foreign operations* 21 93.2 –80.9Hedging of net investments 21 5.1 –3.0Cash flow hedges 21 –7.1 2.1Total items which may be reversed to profit 91.2 –81.8

Total other comprehensive income 61.2 –97.6

Comprehensive income for the year 288.5 4.0

Of which attributable to:Parent company shareholders 286.8 2.7Holdings with a non-controlling interest 1.7 1.3Total 288.5 4.0

*Of which MSEK 0.6 (–2.2) refers to holdings with a non-controlling interest.

Group Income Statements


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aSSETS, MSEK Note 2014 2013

Non-current assets

Intangible assetsGoodwill 14 1,490.0 1,322.4Other intangible assets 14 184.6 172.1Total intangible assets 1,674.6 1,494.5

Property, plant and equipmentBuildings and land 15 119.6 129.6Machinery 15 99.5 86.6Equipment 15 69.6 80.1Construction in progress 15 15.7 7.4Total property, plant and equipment 304.4 303.7

Financial assetsHoldings in associated companies 16 9.6 10.1Other shares and participations 0.3 0.3Other long-term receivables 6.1 6.0Total financial assets 16.0 16.4

Deferred tax assets 12 339.2 306.9

Total non-current assets 2,334.2 2,121.5

Current assets

Inventories 17 694.2 609.2

Current receivablesAccounts receivable 18 1,125.0 1,038.5Current tax receivables 62.6 54.3Other receivables 76.3 65.2Prepaid expenses and accrued income 19 85.9 54.2Total current receivables 1,349.8 1,212.2

Liquid funds 20 447.0 392.0

Total current assets 2,491.0 2,213.4

TOTaL aSSETS 4,825.2 4,334.9

Group Balance Sheets


EQUITY aND LIaBILITIES, MSEK Note 2014 2013

EquityShare capital (76,173,501 shares with a quota value of SEK 5) 380.9 379.6Other contributed capital 987.6 980.6Reserves 21 –170.2 –260.8Retained earnings 472.0 347.7Total equity attributable to parent company shareholders 1,670.3 1,447.1

Holdings with a non-controlling interest 24.0 16.5Total equity 1,694.3 1,463.6

Long-term liabilitiesDeferred tax liabilities 12 66.0 64.1Pension commitments 22 425.2 360.6Borrowings 24 958.0 848.8Total long-term liabilities 1,449.2 1,273.5

Current liabilitiesAccounts payable 659.5 555.3Current tax liabilities 37.0 34.3Other liabilities 221.5 167.1Accrued expenses and deferred income 25 556.0 472.3Borrowings 24 108.5 277.1Other provisions 23 99.2 91.7Total current liabilities 1,681.7 1,597.8

TOTaL EQUITY aND LIaBILITIES 4,825.2 4,334.9

Pledged assets — —Contingent liabilities 26 184.1 146.5


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Change in Group EquityAttributable to parent company shareholders

MSEKShare

capital

Other contribu-

ted capital ReservesRetained earnings Total

Holdings with a non- controlling

interest Total

equity

Opening balance Jan 1, 2014 379.6 980.6 –260.8 347.7 1,447.1 16.5 1,463.6

Profit/loss for the year — — — 226.2 226.2 1.1 227.3Other comprehensive income during the year — — 90.6 –30.0 60.6 0.6 61.2Comprehensive income for the year — — 90.6 196.2 286.8 1.7 288.5

New share issue* 1.3 7.0 — — 8.3 — 8.3Acquisitions through non-cash issue** — — — 4.0 4.0 5.8 9.8Dividend — — — –75.9 –75.9 — –75.9Total transactions with owners 1.3 7.0 — –71.9 –63.6 5.8 –57.8

Closing balance Dec 31, 2014 380.9 987.6 –170.2 472.0 1,670.3 24.0 1,694.3

Attributable to parent company shareholders

MSEK

Sharecapital

Other contribu-

ted capital ReservesRetained earnings Total

Holdings with a non- controlling

interest Total

equity

Opening balance Jan 1, 2013 379.3 979.0 –181.2 341.3 1,518.4 15.2 1,533.6

Profit/loss for the year — — — 98.1 98.1 3.5 101.6Other comprehensive income during the year — — –79.6 –15.8 –95.4 –2.2 –97.6Comprehensive income for the year — — –79.6 82.3 2.7 1.3 4.0

New share issue* 0.3 1.6 — — 1.9 — 1.9Dividend — — — –75.9 –75.9 — –75.9Total transactions with owners 0.3 1.6 — –75.9 –74.0 — –74.0

Closing balance Dec 31, 2013 379.6 980.6 –260.8 347.7 1,447.1 16.5 1,463.6

*Refers to issue of shares and warrants to participants in incentive programmes.

**In the acquisition of Diseňos Inteligentes de Seguridad S.A de C.V, part of the purchase sum was paid in the form of newly issued shares in Gunnebo Mexíco S.A. de C.V. The transaction also resulted in an equity shift between the parent company’s shareholders and shareholders with a non-controlling interest.


MSEK Note 2014 2013

OPERaTING aCTIVITIESOperating profit/loss 351.8 222.2Adjustment for items not included in cash flow etc. 29 39.8 112.2Net financial items affecting cash flow 28 –32.6 –31.4Taxes paid –112.6 –85.3Cash flow from operating activities before changes in working capital 246.4 217.7

Cash flow from changes in working capitalChange in inventories –33.0 –26.2Change in operating receivables 9.5 –23.0Change in operating liabilities 48.4 42.3Total change in working capital 24.9 –6.9

Cash flow from operating activities 271.3 210.8

INVESTING aCTIVITIESCapital expenditure on intangible assets 14 –26.4 –23.7Capital expenditure on property, plant and equipment 15 –51.3 –48.1Sales of non-current assets 29.5 5.5Acquisition of operations 30 –43.8 –8.4Divestiture of operations 31 76.9 —Divestiture of participations in associated companies 0.4 —Cash flow from investing activities –14.7 –74.7

FINaNCING aCTIVITIESChange in interest-bearing receivables 0.0 –2.0Change in interest-bearing liabilities –180.5 14.5New share issue 8.3 1.9Dividend –75.9 –75.9Cash flow from financing activities –248.1 –61.5

Cash flow for the year 8.5 74.6

Liquid funds at the beginning of the year 392.0 349.6Translation differences in liquid funds 46.5 –32.2

Liquid funds at year-end 20 447.0 392.0

Group Cash Flow Statements


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MSEK Note 2014 2013

Net sales 52 260.1 204.1Administrative expenses 37, 47, 49, 50, 52 –203.9 –147.1Operating profit/loss 56.2 57.0

Financial income and expensesProfit/loss from participations in Group companies 38 49.0 –0.3Interest income 38 0.2 0.7Interest expenses 38 –18.1 –14.1Other financial expenses 38 — –0.1Total financial income and expenses 31.1 –13.8

Profit/loss after financial items 87.3 43.2

Appropriations 39 47.0 –90.0Taxes 40 –13.8 –3.3Profit/loss for the year 120.5 –50.1

Parent Company Statement of Comprehensive IncomeMSEK 2014 2013

Profit/loss for the year entered in the income statement 120.5 –50.1Other comprehensive income, net of tax — —Comprehensive income for the year 120.5 –50.1

Parent Company Income Statements


aSSETS, MSEK Note 2014 2013

Non-current assets

Intangible assetsOther intangible assets 41 6.1 5.7Total intangible assets 6.1 5.7

Property, plant and equipmentEquipment 42 2.1 2.4Total property, plant and equipment 2.1 2.4

Financial assetsShares in subsidiaries 43 1,595.3 1,595.3Deferred tax assets 40 120.3 130.7Total financial assets 1,715.6 1,726.0

Total non-current assets 1,723.8 1,734.1

Current assets

Current receivablesReceivables from Group companies 18.7 134.4Other receivables 5.2 2.0Prepaid expenses and accrued income 44 3.3 4.0Total current receivables 27.2 140.4

Liquid funds 0.1 2.8

Total current assets 27.3 143.2

TOTaL aSSETS 1,751.1 1,877.3

Parent Company Balance Sheets


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EQUITY aND LIaBILITIES, MSEK Note 2014 2013

Equity

Restricted equityShare capital (76,173,501 shares with a quota value of SEK 5) 380.9 379.6Statutory reserve 539.3 539.3Total restricted equity 920.2 918.9

Unrestricted equityShare premium reserve 448.3 441.3Retained earnings –4.4 121.6Profit/loss for the year 120.5 –50.1Total unrestricted equity 564.4 512.8

Total equity 1,484.6 1,431.7

Current liabilitiesAccounts payable 10.1 13.1Liabilities to Group companies 51 216.3 406.0Other liabilities 1.7 2.8Accrued expenses and deferred income 45 35.9 21.2Other provisions 2.5 2.5Total current liabilities 266.5 445.6

TOTaL EQUITY aND LIaBILITIES 1,751.1 1,877.3

Pledged assets — —Contingent liabilities 46 1,317.5 1,310.3

Parent Company Balance Sheets cont.


Change in Parent Company’s EquityRestricted equity Unrestricted equity

MSEK Share capitalStatutory

reserveShare premium

reserve

Retained earnings and

profit/loss for the year Total equity

Opening balance Jan 1, 2014 379.6 539.3 441.3 71.5 1,431.7

Profit/loss for the year — — — 120.5 120.5Other comprehensive income during the year — — — — —Comprehensive income for the year — — — 120.5 120.5

New share issue* 1.3 — 7.0 — 8.3Dividend — — — –75.9 –75.9Total transactions with owners 1.3 — 7.0 –75.9 –67.6

Closing balance Dec 31, 2014 380.9 539.3 448.3 116.1 1,484.6

Restricted equity Unrestricted equity

MSEK Share capitalStatutory

reserveShare premium

reserve

Retained earnings and

profit/loss for the year Total equity

Opening balance Jan 1, 2013 379.3 539.3 439.7 197.5 1,555.8

Profit/loss for the year — — — –50.1 –50.1Other comprehensive income during the year — — — — —Comprehensive income for the year — — — –50.1 –50.1

New share issue* 0.3 — 1.6 — 1.9Dividend — — — –75.9 –75.9Total transactions with owners 0.3 — 1.6 –75.9 –74.0

Closing balance Dec 31, 2013 379.6 539.3 441.3 71.5 1,431.7

*Refers to issue of shares and warrants to participants in incentive programmes.


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MSEK Note 2014 2013

OPERaTING aCTIVITIESOperating profit/loss 56.2 57.0Adjustment for items not included in cash flow etc. 2.2 7.2Net financial items affecting cash flow 48 31.2 –8.5Taxes paid –3.4 –3.3Cash flow from operating activities before changes in working capital 86.2 52.4

Cash flow from changes in working capitalChange in operating receivables 113.2 –73.5Change in operating liabilities 8.5 –1.5Total change in working capital 121.7 –75.0

Cash flow from operating activities 207.9 –22.6

INVESTING aCTIVITIESCapital expenditure on intangible assets 41 –2.2 –1.4Capital expenditure on property, plant and equipment 42 –0.1 —Cash flow from investing activities –2.3 –1.4

FINaNCING aCTIVITIESChange in interest-bearing liabilities –50.7 33.1Group contributions received — 67.0Group contributions paid –90.0 —New share issue 8.3 1.9Dividend –75.9 –75.9Cash flow from financing activities –208.3 26.1

Cash flow for the year –2.7 2.1

Liquid funds at the beginning of the year 2.8 0.7Liquid funds at year-end 0.1 2.8

Parent Company Cash Flow Statements


Notes Amounts in MSEK unless otherwise stated

Note 1 General information

Gunnebo AB (publ) is a Swedish public limited company registered with the Swedish Companies Registration Office under the company registration number 556438-2629. The Board has its registered office in Göteborg Municipality in Sweden. The Group’s main activities are described in the Board of Directors’ Report and in the notes to this Annual Report. The company’s shares are listed on the NASDAQ Stockholm’s Mid Cap list. The consolidated accounts for the financial year ending December 31, 2014 were approved by the Board on March 5, 2015 and will be submitted to the Annual General Meeting on April 15, 2015 for adoption.

Note 2 Summary of important accounting principles

Foundations for preparing the statementsThis Annual Report has been prepared in accordance with the Swedish Annual Accounts Act and the International Financial Reporting Standards (IFRS), as adopted by the EU. The Annual Report also contains additional information in accordance with the recommendation of the Swedish Financial Reporting Board, RFR 1 Supplementary Accounting Regulations for Groups, which specifies infor-mation required in addition to the IFRS information in accordance with the pro-visions of the Swedish Annual Accounts Act.

The consolidated accounts have been prepared in accordance with the cost method, with the exception of financial instruments measured at fair value.

Reports prepared in compliance with IFRS require the use of accounting esti-mates. Furthermore, the management is required to make certain assessments upon application of the company’s accounting principles. The areas which include estimates and assessments of significant importance to the consoli-dated accounts are given in Note 4.

New and amended accounting principlesAs of January 1, 2014, Gunnebo applies the following new standards and amendments:

Amendment to IAS 32 Financial Instruments: Presentation: The amendments regard offsetting financial assets and financial liabilities and clarify how the off-setting rules in IAS 32 are to be applied. The amendments have not had any material effect on the Group’s accounts.

IFRS 10 Consolidated Financial Statements replaces the parts of IAS 27 Con-solidated and Separate Financial Statements that regulate when and how con-solidated financial statements are to be prepared. Controlling interest plays a key role in the consolidation requirement of IFRS 10 irrespective of the character of the investment entity.

The definition of controlling interest is based on the following sub-compo-nents: influence over the investment entity, right to variable returns from the investment entity, and ability to use the influence over the investment entity to affect its return. Furthermore, IFRS 10 contains guidance on how a company should apply the principle of controlling interest in a number of different situa-tions.

IFRS 11 Joint Arrangements supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. Joint arrangements are categorised as shared operations or a joint venture in IFRS 11 and the parties’ rights and obligations as set out in agreements are cru-cial to the classification. IFRS 11 also states that the equity interest method shall be used when recognising participations in joint ventures. The propor-tional method is, therefore, no longer permitted for joint ventures.

IFRS 12 Disclosure of Interests in Other Entities contains requirements on disclosures regarding subsidiaries, joint arrangements, associates or struc-tured companies which are not consolidated. The aim of the new disclosure requirements is that companies should submit information to help users of its financial statements to assess the risks attributable to holdings in other entities, and the influence these holdings have on the company’s financial statements.

The above amendments to IFRS 10, IFRS 11 and IFRS 12 have not had any effect on Gunnebo’s financial position or results. This is because Gunnebo is not a part-owner of any company that is affected by the new rules on joint arrange-ments, and the new definition of controlling interest in IFRS 10 has not resulted in any changes regarding which companies are included in the consolidated accounts.

Other new and amended standards have not had any effect on the Group’s financial statements.

Standards, interpretations and amendments that have been issued but have not yet come into force or been adopted by the EUOn preparing the consolidated accounts as at December 31, 2014, several stand-ards, interpretations and amendments have been published which have not yet come into force or been adopted by the EU. The Group has still not begun to apply these new, amended standards and interpretations. The following is a preliminary assessment of the effect the introduction of these new, amended standards and interpretations may have on Gunnebo’s financial statements:

IFRS 15 Revenue from Contracts with Customers replaces IAS 18 Revenue and IAS 11 Construction Contracts and shall be applied from January 1, 2017.

IFRS 15 entails new rules for recognising revenue that comprises income aris-ing from contracts with customers, with the exception of lease agreements, financial instruments and insurance contracts. With IFRS 15, the fundamental principle for revenue recognition is that income is recognised when all risks and benefits associated with a good or service pass to the customer in exchange for remuneration for this good or service.

The new standard may have consequences for the recognition of, for exam-ple, service agreements, long-term contracts and sales transactions with ele-ments of goods and/or services. The corporate management is currently assess-ing how IFRS 15 will impact on the Group’s financial statements when it is applied for the first time.

IAS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recogni-tion and Measurement. The latest version of the standard was issued on July 24, 2014 and supersedes the previous versions, which were issued in phases. IFRS 9 contains new requirements for financial instruments regarding recognition and measurement, derecognition, impairment and hedge accounting. The standard, which has not yet been adopted by the EU, shall be applied from January 1, 2018.

IFRS 9 requires that all recognised financial assets covered by IAS 39 shall henceforth be measured at amortised cost, fair value via the income statement or fair value via other comprehensive income. Financial assets held with the aim of collecting the contracted cash flows, and instruments that only have con-tracted flows in the form of payments of principal and interest on the principal amount outstanding, shall be measured at amortised cost at the end of the reporting period. If such instruments are held with the aim of mainly collecting contractual cash flows, measurement at fair value via other comprehensive income may be possible. Other financial assets shall be valued at fair value at the end of the reporting period.

IFRS 9 also includes a new model for impairments that entail a transfer from an incurred loss model to an expected loss model. In principle the change means that all assets recognised at amortised cost are divided into three cate-gories. A 12-month expected credit loss shall be earmarked for the first category into which all instruments are placed the first time they are recorded. The provi-sion for assets assigned to the second category shall instead be based on life-long expected loss. The third category is for instruments where an actual event means that there is objective evidence of impairment.

The most significant effect of IFRS 9 in terms of recognition and measure-ment of financial liabilities (identified at fair value via the income statement) relates to changes in fair value due to changes in credit risk. According to IFRS 9 the change in fair value for such financial liabilities shall be recognised in other comprehensive income to the extent that the change relates to changes in credit risk. This applies provided that recognition of the effects of the change in the liability’s credit risk in other comprehensive income does not result in a mis-leading matching of the income statement. Furthermore, changes in fair value relating to credit risk shall not be reclassified to the income statement in a sub-sequent period. This is a change compared with IAS 39 which stipulates that changes in fair value relating to financial liabilities (identified at fair value via the income statement) shall be recognised in their entirety in the income state-ment.

IFRS 9 also includes new rules on hedge accounting. It is, however, possible to choose to continue to apply the rules on hedge accounting in the current IAS 39 instead of the new rules introduced in IFRS 9. (The IASB, however, intends to review this freedom of choice in connection with its work on macro hedging.)

The three hedging categories cash flow hedge, fair value hedge and hedge of a net investment in a foreign operation remain in IFRS 9. Significant changes have however been introduced regarding the application of hedge accounting, and in particular the scope of which types of risk it is possible to hedge has been


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extended to non-financial items. Furthermore, IFRS 9 introduces a more princi-ple-based approach to measuring the effectiveness of a hedge transaction com-pared with the current rules in IAS 39.

In summary, it is the corporate management’s assessment that the applica-tion of IFRS 9 may influence the Group’s financial statements. However, the cor-porate management has not carried out a detailed analysis of the effects of applying IFRS 9, which is why it is not currently possible to quantify the effects.

Consolidated accountsThe consolidated accounts relate to Gunnebo AB and those companies in which the company directly or indirectly owns shares controlling more than 50% of the votes, or over which the company exercises control in some other way.

The consolidated accounts have been drawn up in accordance with the acquisition method, whereby the Group equity includes the parent company’s equity, equity in holdings belonging to subsidiaries with a non-controlling inter-est at the time of acquisition, and subsidiary companies’ equity generated after acquisition.

In the case of corporate acquisitions where the total of the purchase sum, any holdings with a non-controlling interest and fair value at the time of the acquisition of former shareholdings exceeds the fair value at the time of acqui-sition of identifiable acquired net assets, the difference is recognised as good-will in the report on financial position. If the difference is negative, it is recog-nised as a gain on an acquisition at a low price directly as income after reviewing the difference. Intra-Group transactions and balance items as well as non-realised gains on transactions between Group companies are eliminated.

For every corporate acquisition, holdings with a non-controlling interest in the acquired company are measured either at fair value, or at the value of the percentage of the holding with a non-controlling interest of the acquired com-pany’s identifiable net assets.

With gradual acquisitions, the former equity percentages in the acquired company are re-measured at their fair value at the time of acquisition (ie when a controlling interest is obtained). Any gain or loss is reported as income.

Accounting treatment of associated companiesIn the accounts, associated companies are companies that are not subsidiaries but in which Gunnebo has a significant but not controlling interest, which gen-erally entails a shareholding or participation corresponding to between 20% and 50% of the number of votes. Shareholdings in associated companies are recog-nised using the equity interest method. This means that the cost of shares, adjusted to take into account the Group’s share of the associated companies’ result, is entered in the Group’s balance sheet, under financial assets, after deduction for dividend received. The Group’s share of the associated company’s result after tax is recognised in the income statement under Share of profit of associated companies. The Group’s carrying amount for holdings in associated companies includes goodwill as identified on acquisition, net of write-downs.

Translation of foreign currenciesa) Functional currency and presentation currencyItems in the financial statements for the various Group units are measured in the currency used in the economic environment in which each company primarily operates (functional currency). In the consolidated accounts the Swedish krona is used, which is the parent company’s functional and presentation currency.

b) Transactions and balance sheet itemsTransactions in foreign currencies are translated into the functional currency using the exchange rates in force on the transaction date. Exchange rate gains and losses arising upon payment of such transactions and upon translating monetary assets and liabilities in foreign currencies at the closing day exchange rate are recognised in the income statement. The exceptions are transactions comprising hedges which fulfil the conditions for hedge reporting of cash flows or net investments, whereby gains/losses are recognised in other comprehen-sive income. The equivalent also applies for monetary items which form part of a net investment in a foreign operation.

c) Group companiesThe income statement and balance sheet of all Group companies with a func-tional currency different to the presentation currency are retranslated into the Group’s presentation currency as follows: (i) assets and liabilities for each of the balance sheets are translated at the

closing day rate;

(ii) income and expenses for each of the income statements and statements of comprehensive income are translated at the average exchange rate (if this average exchange rate is not a reasonable approximation of the accu-mulated effect of the rates in effect on the transaction date, income and expenses are translated on the transaction date);

(iii) all currency differences which arise are recognised in other comprehensive income. Upon consolidation, currency differences which arise as a result of translating net investments in foreign operations and of borrowing and other currency instruments identified as hedges of such investments, are recognised in other comprehensive income. On divestment of a foreign operation, such currency differences are recognised in the income state-ment along with the gain/loss entailed by the transaction. Goodwill and adjustments of fair value arising upon acquisition of a foreign operation are treated as assets and liabilities in the operation in question, and are translated at the closing day rate.

Discontinued operationsA discontinued operation is a part of a company that has either been divested or is classified as being held for sale and constitutes a considerable, independent business line or an operation run within a geographical region. The profit for a discontinued operation is recognised separately from continuing operations in the income statement.

Derivative instrumentsThe Group applies accounting standard IAS 39, Financial Instruments: Recognition and Measurement.This means that all derivative instruments are recognised in the balance sheet at fair value. Changes in value relating to derivative instruments are recognised in the income statement except where the derivative instrument is a hedging instrument in a cash flow hedge or in a hedge of a net investment in a foreign company. In these cases the effective portion of the change in value regarding the derivative instrument is recognised via other comprehensive income and is accumulated under equity until the point where the hedged transaction has an effect on profit. With regard to the derivative instruments relating to hedging of fair value, the changes in value both from derivative instruments and the hedged item are recognised in the income statement, where they neutralise one another to the extent that the hedge is effective.

Other long-term receivablesAssets in this category mainly comprise long-term financial receivables and they are initially recognised at fair value including transaction costs. After that they are recognised at amortised cost with the application of the effective interest method.

InventoriesInventories are measured at the lower of cost and net selling price in accordance with the first-in first-out principle (FIFO). The value of inventories includes an attributable share of indirect costs.

Accounts receivableA reserve for doubtful receivables is made when it is likely that the Group will not receive the amounts due in accordance with the receivables’ original terms. The size of the reserve comprises the difference between the assets’ carrying amount and the present value of assessed future cash flows.

Liquid fundsLiquid funds include cash, bank deposits and other short-term investments which mature within three months of the date of acquisition..

Income taxThe stated income tax comprises tax that is to be paid or received for the finan-cial year in question, adjustments to previous years’ taxes and changes in deferred tax. All tax liabilities and assets are measured at nominal amounts in accordance with the tax rules and at the tax rates that have been decided or announced and will almost certainly be approved.

Tax effects relating to items in the income statement are also recognised in the income statement. The tax effects of items recognised under other compre-hensive income are also reported under other comprehensive income and accu-mulated under equity. Deferred tax is calculated based on the difference between the tax written-down value and the carrying amount of assets and lia-bilities (temporary differences), and on tax loss carry-forwards. Deferred tax is also calculated on the basis of the unrealised result of loans and forward con-

Note 2 cont.


tracts entered into to hedge the net assets of foreign subsidiaries. The change in the item is recognised under other comprehensive income and accumulated under equity. Deferred tax receivables attributable to loss allowances are only reported if it is probable that the deduction can be netted against a surplus in future taxation.

Pension commitmentsIAS 19 is applied in the reporting of pensions, healthcare benefits and other employee benefits after the period of employment. The recommendation makes a distinction between defined contribution and defined benefit pension plans. Defined contribution pension plans are defined as plans where the com-pany makes pre-determined payments to a third party and has no other com-mitment once the premiums have been paid. The payments made in exchange for the employee carrying out services for the company are expensed in the period in which those services are carried out.

Other plans are defined benefit plans in which the commitments remain within the Group. These commitments and plan-related costs regarding employment during the current period are based on actuarial calculations in accordance with the projected unit credit method. External actuaries are engaged for these calculations and the method allocates the cost for pensions as the employees carry out services which increase their right to future remu-neration. The actuarial assumptions used to calculate the commitments and costs vary with the economic factors that reflect conditions in the countries where the defined benefit plans are located. The discount rate equates to the interest on first-class corporate bonds or government bonds, the duration of which corresponds to the average term of the obligations.

The Group’s defined benefit plans are either non-funded or funded exter-nally. Provisions for non-funded plans in the balance sheet comprise the present value of the defined benefit commitments.

As regards the funded plans, the plan assets of the plans are separated from the Group’s assets in externally managed funds. Liabilities or assets recognised in the balance sheet relating to funded plans represent the amount by which the market value of the plan assets exceeds or falls short of the present value of the defined benefit commitments. However, a net asset is only recognised to the extent that it represents future financial benefits which the Group can uti-lise, for example in the form of reduced contributions in the future or repay-ment of funds paid into the plan. When it is not possible to utilise such sur-pluses, they are not recognised but presented in the notes.

Actuarial gains or losses arise in the event of changes in actuarial assump-tions and differences between actuarial assumptions and the outcome in real-ity. Changes to expected life span, pay and the discount rate are examples of amended assumptions which could give rise to actuarial gains and losses. Actu-arial gains and losses are recognised in their entirety under other comprehen-sive income in the period in which they arise, and they are not transferred to the income statement in a subsequent period.

Interest expenses for pension liabilities and interest income on plan assets are recognised net as financial income or expenses. Costs regarding employ-ment during the current and earlier periods, reductions and rules as well as other components in the pension cost for the year are recognised under operat-ing profit/loss.

Some of the plans for supplementary pensions for salaried employees in Sweden are financed through insurance premiums paid to Alecta/Collectum. This arrangement constitutes a defined benefit plan encompassing several employers. Alecta is currently unable to provide the information required to report the plan as a defined benefit plan. Consequently, supplementary pen-sions for salaried employees insured with Alecta are stated as defined contribu-tion plans.

ProvisionsLiabilities that are uncertain in terms of amount or when they will be settled are entered as provisions. It must also be considered likely that an outflow of resources will be required in order to service the commitment and that the amount can be reliably estimated. Provisions for restructuring expenses include costs for terminating lease agreements and severance pay and are recognised when the Group has a definite detailed restructuring plan which it has made known to interested parties. Provisions for legal requirements are estimates of the future cash flows required in order to settle the commitments. These esti-mates are based on the nature of the legal proceedings and take into account the assessments and opinions of legal advisers with regard to their outcome. Provisions to cover guarantee costs are estimates of warranty claims made and have been estimated using statistics for previous claims, the expected costs of

measures and the average time interval between the occurrence of a fault and a claim being made against the company.

Accounting treatment of revenueRevenue from the sale of goods and services is stated when an agreement has been reached with a customer and the products have been delivered or the ser-vices provided and when all significant risks have transferred to the customer. Rev-enue is stated net after value added tax (VAT), discounts and returns. Intra-Group sales are eliminated in the Group. Income for major ongoing projects of long dura-tion on behalf of outside parties is recognised on the basis of the degree of com-pletion, which is determined by comparing costs incurred on the closing day with the estimated total cost.

Other operating incomeOther operating income mainly comprises income in the form of royalties, rent, capital gains on sales of non-current assets, and currency gains on receivables and liabilities that are operational in character.

GoodwillIn the case of corporate acquisitions where the sum of the purchase sum, any holdings without a controlling influence and fair value at the time of the acquisi-tion of former shareholdings exceeds the fair value at the time of acquisition of identifiable acquired net assets, the difference is recognised as goodwill in the report on financial position. If the difference is negative, it is recognised as a gain on an acquisition at a low price directly as income after reviewing the difference. Goodwill has an indefinite useful life and is recognised at cost less accumulated write-downs. When a business is sold, goodwill related to this business is recog-nised in the capital gain/loss calculation.

Other intangible assetsOther intangible assets are primarily brands, customer relations, product devel-opment costs and the costs of purchasing and developing software. Internally developed intangible assets are only recognised as assets if an identifiable asset has been created, it is likely that the asset will generate future financial benefits and the cost of developing the asset can be calculated in a reliable way. If it is not possible to recognise an internally developed intangible asset, the develop-ment costs are recognised as a cost in the period in which they arise.

Customer relationsAcquired customer relations are recognised at cost less accumulated amortisa-tion and write-down. Customer relations have a finite useful life and amortisa-tion is carried out linearly over the asset’s expected useful life. The amortisation period is 5–10 years.

BrandsAcquired brands are recognised at cost less any accumulated amortisation and write-down. Brands with an indefinite useful life are not amortised but instead reviewed annually in terms of write-down requirement in the same way as for goodwill. The useful life is considered indefinite if there is no foreseeable limit to the period over which the brand is expected to be used and to generate net cash inflows.

Expenditure on product developmentExpenditure on development projects is capitalised under intangible assets to the extent it is expected to generate future financial benefits. Other develop-ment expenditure is expensed in the income statement as it is incurred and is included in cost of goods sold. Development expenditure previously stated as a cost in the income statement is not capitalised as an asset in later periods. Capi-talised development expenditure is written off linearly over the estimated use-ful life of 3–5 years.

Expenditure on softwareExpenditure on software is capitalised under intangible assets if it is likely to have economic benefits in excess of the cost after one year. Other software is recog-nised as a cost. Capitalised expenditure on purchasing and developing software is written off linearly over the estimated useful life of 3–5 years.

Property, plant and equipmentProperty, plant and equipment are recognised at cost less accumulated depreci-ation and any write-down. The cost includes expenses directly attributable to bringing the asset to the location and into the condition required for it to be


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used for its intended purpose. Costs for improvements to the asset’s perfor-mance increase the asset’s carrying amount if the investment is expected to generate economic benefits. Expenditure on repairs and maintenance is recog-nised as costs. Property, plant and equipment are depreciated linearly over the asset’s expected useful life down to the asset’s estimated residual value. In instances where property, plant and equipment comprise elements with different useful lives, each part is treated as a separate component with regard to depreciation. The following useful lives are used for calculating scheduled depreciation: Equipment• Vehicles 5 years• Computers 3–5 years• Other equipment 5–15 years

Machinery 5–15 years Buildings and land improvements 20–50 years

Write-downsOn the occasion of each report, an assessment is made as to whether there is any indication of a reduction in the value of the Group’s assets.

If this is the case, an estimate is made of the asset’s recoverable amount. Goodwill and other assets with an indefinite useful life have been allocated to the smallest cash-generating units and are subject to annual impairment reviews even if there is no indication of a reduction in value. The need for write-down is reviewed more often, however, if there are indications of a reduction in value. The recoverable amount is calculated as the higher of the value in use of the asset in the business and the net selling price. The value in use consists of the present value of all income and payments attributable to the asset during the period it is expected to be used in the business plus the present value of the net selling price at the end of its useful life. If the recoverable amount calcu-lated is less than the carrying amount, the asset is written down to its recovera-ble amount. A previous write-down is reversed if there has been a change in the assumptions that formed the basis for determining the asset’s recoverable amount when it was written down and which mean that the write-down is no longer considered necessary. The reversal of previous write-downs is reviewed on an individual basis and is recognised in the income statement. Write-downs of goodwill may not be reversed in any subsequent period.

BorrowingsBorrowing is initially recognised at fair value after transaction costs. Subse-quently, borrowing is recognised at amortised cost and any difference between the amount received and the repayment amount is recognised in the income statement, distributed across the loan period, with the application of the effec-tive interest method.

LeasingWhen a lease contract means that the financial benefits are, in all essentials, passed on to the Group, as the lessee, and the Group bears the economic risks attributable to the leased object (known as financial leasing), the object is rec-ognised as a non-current asset in the consolidated balance sheet. The corre-sponding undertaking to pay leasing charges in the future is recognised as a lia-bility.

Leasing where a significant portion of the risks and benefits of ownership are retained by the lessor is classified as operational leasing. Payments made during the lease term are expensed systematically over the term of the lease.

Reporting by segmentAn operating segment is a part of a company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are reviewed regularly by the company’s chief operating decision-maker and for which discrete financial information is available. Gunnebo’s reporting of operat-ing segments agrees with internal reporting to the chief operating decision-maker and the definition of operating segment is also based on the manage-ment’s decision to organise the Group based on geographical areas that differ as regards the risks they are subject to and the income they earn. The Group’s operating segments comprise three regions: Europe, Middle East & Africa; Asia-Pacific; and the Americas. The regions are consolidated according to the same principles that apply for the Group as a whole.

EquityTransaction costs that can be directly attributed to the issue of new shares or options are recognised, net of tax, in equity as a reduction in the issue amount.

Expenses for buying back treasury shares reduce retained earnings. If these shares are later divested, the sale amount is recognised as an increase in retained earnings.

PARENT COMPANY’S ACCOUNTING PRINCIPLESThe parent company has drawn up its Annual Report in accordance with the Annual Accounts Act and the recommendation of the Swedish Financial Report-ing Board, RFR 2 Accounting for Legal Entities, as well as the applicable state-ments of the Swedish Financial Reporting Board. RFR 2 means that in its annual report for the legal entity, the parent company applies all IFRS and statements approved by the EU as far as possible, within the framework of the Annual Accounts Act and the Act on Safeguarding Pension Obligations with regard to the relationship between accounting and taxation.

The parent company mainly applies the principles described above in relation to the Group. The differences between the accounting principles of the Group and the parent company are described below.

New and amended accounting principlesThe changes to RFR 2 which have come into force and apply to the 2014 finan-cial year relate to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IAS 40 Investment Property and IAS 37 Provisions, Contingent Liabilities and Contingent Assets. None of these amendments have had any effect on the parent company’s financial statements.

The new and amended standards and interpretations that have been issued but come into force for the financial year beginning January 1, 2015 or later are not expected to have a material impact on the parent company’s financial statements when they are applied for the first time.

Shares in subsidiariesShares in subsidiaries are measured at cost less any write-down. Acquisition costs are included in the cost.

Group contributionsAccording to RFR 2, Group contributions paid by the parent company to subsidi-aries are recognised as an increase in the carrying amount of the participations in the receiving subsidiaries. The Swedish Financial Reporting Board has also introduced an alternative rule which means Group contributions both received and paid may be recognised as an appropriation. Gunnebo has decided to apply the alternative rule which means that Group contributions received and paid are recognised as appropriations.

PensionsThe parent company’s pension commitments have been calculated and recog-nised on the basis of the Act on Safeguarding Pension Obligations. The application of the Act on Safeguarding Pension Obligations is a condition of tax relief law.

Note 2 cont.


Notes – GroupNote 3 Financial risk management and financial instruments

Financial risk management The financial activities are carried out in accordance with the finance policy established by the Board, which regulates how financial risks are to be managed and the limits within which the internal bank and Gunnebo’s subsidiaries may operate.

Objective and policy for risk managementFinancing risk Financing risk refers to the risk that financing of the Group’s capital requirement and refinancing of its outstanding borrowing are rendered more difficult or more expensive. In order to limit the financing risk, the Group’s finance policy stipulates that the total outstanding volume of borrowing must be covered by long-term credit facilities of at least 12 months at any given time.

Interest rate risk The interest rate risk refers to the negative effect on the Group’s income and cash flow of a lasting change in market interest rates. The sensitivity of the income may, however, be limited in the short term through selected interest maturity structures and by entering into fixed-interest agreements in the form of interest rate hedges. The Group’s finance policy stipulates that a maximum of 60% of the outstanding volume of borrowing can be hedged with interest derivatives, the average term of which must not exceed 36 months.

Liquidity risk Liquidity risk refers to the risk of not having access to liquid funds or undrawn lines of credit in order to fulfil payment obligations. The finance policy stipu-lates that liquid funds and unused lines of credit shall always amount to a mini-mum of MSEK 350.

Liquidity in the Group shall be invested with the internal bank or in local cash pools. Gunnebo has centralised its liquidity management in cash pools in the main European countries where it operates and in the USA. The Group uses these cash pools to match the local subsidiaries’ surpluses and deficits in each country and currency. Because the Group is a net borrower, the surplus liquidity is used to reduce external liabilities.

Currency risk Gunnebo’s accounts are prepared in Swedish kronor, but the Group has opera-tions in a large number of countries worldwide. Consequently, the Group is exposed to currency risks. In order to manage these risks, the Group can hedge its currency risks within the framework of the finance policy.

Transaction exposure Gunnebo has export income and import costs in several currencies and is there-fore exposed to exchange rate fluctuations. This currency risk is called transac-tion exposure and has an impact on the Group’s operating result. In accordance with the finance policy, Gunnebo does not ordinarily hedge transaction expo-sure. Hedging may, however, be carried out for large projects and for major stable currency flows, provided the exposure is deemed considerable and the hedging can take place at a reasonable cost. Any hedging should not usually run for more than 12 months.

Translation exposure (net investments) On consolidation, the net assets of foreign subsidiaries are translated to Swed-ish kronor, which can result in translation differences. In order to limit the nega-tive effects of translation differences on Group equity, hedging may take place through borrowing and currency derivative contracts, provided the exposure is deemed considerable and the hedging can take place at a reasonable cost.

Translation exposure (income statement) Exchange rate fluctuations also affect Group results when income statements of foreign subsidiaries are translated into Swedish kronor. Expected future income in foreign subsidiaries is not hedged.

Credit risk Financial credit risk Credit risk refers to the risk of a loss if the counterparty fails to fulfil its obliga-tions. Exposure arises both when investing surplus liquidity and in receivables from banks which arise via derivative instruments. Gunnebo’s finance policy

includes a special list of permitted counterparties and maximum credit expo-sure with each approved counterparty. Gunnebo has also entered into general agreements (ISDAs) with all of its counterparties for transactions in derivative instruments.

Liquid funds shall primarily be used to reduce outstanding liabilities, in order to limit the volume of outstanding surplus liquidity.

Customer credit risk Gunnebo has formulated a credit policy regulating the management of cus-tomer credit, which partly encompasses decision-making levels for granting credit limits. Each subsidiary is responsible for checking and controlling credit risk with customers, within given frameworks. The rules applicable for issuing credit locally are documented in a local credit policy regulating credit limits, terms of payment and collection procedures.

The Group’s maximum exposure to credit risk is equivalent to the book val-ues of financial assets, as shown in the table below.

2014 2013

Other long-term receivables 6.1 6.0Accounts receivable 1,125.0 1,038.5Other receivables 76.3 65.2Liquid funds 447.0 392.0Maximum exposure to credit risk 1,654.4 1,501.7

Financial instruments – Risk management during the year Interest-bearing liabilities Gunnebo had credit facilities totalling MSEK 1,889 at the end of the year, of which MSEK 1,066 was drawn. The average duration of the agreed credit facili-ties was 3.8 years.

The long-term credit facilities chiefly comprise a syndicated loan agreement for MEUR 140 which falls due in February 2019. Furthermore, the Group has acquisition financing of MUSD 35 and approximately MSEK 324 in short-term credit facilities and external local financing in subsidiaries. The reason for indi-vidual subsidiaries having external financing is that taxes and other regulations in certain countries make it unfavourable to take up loans from foreign Group companies.

Loan maturity structure

Credit facilityOf which

drawn

2015 379 1082016 55 552017 55 552018 55 552019 and later 1,345 793Total 1,889 1,066

Interest rate riskAt the end of the year, Gunnebo’s loan portfolio had an average interest term of 12 (2) months, and the average rate of interest on the loan portfolio* was 1.9% (1.8%). Given the same borrowing liability and the same interest terms as at the end of the year, a one percentage point change in the market interest rate would change the Group’s interest cost by approximately MSEK 7 on an annual basis.

A one percentage point change in the market interest rate would also result in a change in the market value of outstanding interest derivatives of approxi-mately MSEK 20, which affects other comprehensive income.

*Including margins and interest derivatives related to the loan portfolio through hedge accounting.

Currency risksCurrency effects affected operating profit marginally.

Transaction exposureThe forecast commercial currency flow after net calculations of opposite flows in the same currencies amounts to MSEK 423 (430) on an annual basis. On the clos-ing day, the proportion of this flow hedged was 0% (0%). Forward contracts that matured during the year had an effect of MSEK 0.0 (0.0) on the result, when com-pared with the conversion of currency flows at the spot rates prevailing at the


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Liquidity risk The contracted maturity dates for the Group’s financial instruments are shown below. The amounts are nominal and include interest payments.

Finansiella tillgångar och skulderLess than 6 months

6–12 months 1–2 years 2–3 years 3–6 years

Total contracted

cash flow

Long-term financial receivables — 6 — — — 6Accounts receivable 1,125 — — — — 1,125Liquid funds 447 — — — — 447Bank loans and overdraft facilities* –1,077 –11 –22 –22 –66 –1,198Accounts payable –659 — — — — –659

Derivatives - Interest-rate swap agreements outflow –2 –3 –6 –4 –3 –18

inflow 0 0 0 0 0 0 - Currency forward contracts included in hedge accounting outflow — — — — — —

inflow — — — — — — - Currency forward contracts not included in hedge accounting outflow –648 — — — — –648

inflow 634 — — — — 634Total –180 –8 –28 –26 –69 –311

*Interest maturity on borrowing under the Group’s syndicated credit facilities falls within 6 months but the guaranteed credit facilities do not mature until 2019.

For financial liabilities with a long contracted term but a short/variable fixed interest, the variable interest has been adopted as the quoted interbank rate as at December 31, 2014. The base currency of the currency forward contract has been re-measured at the applicable closing rate as at December 31, 2014 while the future flows of the other type of currency are measured at the contracted rate.

time of conversion. Total outstanding forward cover at the year-end was nomi-nally MSEK 0.0 (0.0).

Translation exposureThe net assets of foreign subsidiaries amounted to MSEK 923 (718) on Decem-ber 31, 2014. The Group hedges a small proportion of these assets through loans and forward contracts in corresponding currencies. This hedging includes the tax effect.

Sensitivity analysisA 10% weakening in the value of the Swedish krona against all other currencies would increase profit by a total of approximately MSEK 42, of which approxi-mately MSEK 27 would be netted transaction exposure, without taking the Group’s forward cover into account. The remaining MSEK 15 is attributable to translation exposure (income statement).

A weakening of the Swedish krona by 10% against the Group’s most impor-tant currencies, the euro and US dollar, would have differing effects: with the euro it would increase profit by MSEK 22, while with the US dollar it would reduce profit by MSEK 20.

Such a weakening of the Swedish krona would also mean an increase in equity of MSEK 17 with the euro and an increase in equity of MSEK 11 with the dollar when translating foreign net assets into Swedish kronor.

Accounting treatment of derivative instruments and hedgesDerivative instruments are reported in the balance sheet on the contract date at fair value, both initially and upon subsequent revaluations. The method for reporting the gain or loss arising upon revaluation depends on whether the derivative is identified as a hedging instrument and, if that is the case, the nature of the item being hedged. The Group identifies derivatives as: (1) a hedge of fair value of an identified asset or liability or a firm commitment (fair value hedge); (2) a hedge of a highly probable forecast transaction (cash flow hedge); or (3) a hedge of a net investment in a foreign operation (net investment hedge). When the transaction is entered into, the relationship between the hedging instrument and the hedged item is documented, as is the aim of the risk management and the strategy for taking various hedging measures. The Group documents at the beginning of the hedge and continuously thereafter whether the derivative instruments used in the hedging transactions are effec-tive in evening out changes in the fair value or cash flow of hedged items.

Information about the fair value for derivative instruments used for hedging is provided in a summary on page 69.

Note 3 cont.

Hedge accountingFair value hedgeChanges in the fair value of derivatives which are identified as fair value hedges and which fulfil the terms of hedge accounting are reported in the income statement together with changes in fair value of the asset or liability which has given rise to the hedged risk.

Cash flow hedgingThe effective portion of changes in fair value of derivative instruments which have been identified as cash flow hedges and which fulfil the terms of hedge accounting are recognised via other comprehensive income and accumulated under equity. The gain or loss attributable to the ineffective portion is reported directly in the income statement.

Accumulated amounts in equity are reversed to the income statement in the periods during which the hedged item affects the result (for example when the forecast hedged sale takes place).

When a hedging instrument expires or is sold, or when the hedge no longer fulfils the terms of hedge accounting and there are accumulated gains or losses regarding the hedge in equity, these gains/losses remain in equity until the fore-cast transaction is finally reported in the income statement. When a forecast transaction is no longer expected to take place, the accumulated gain or loss rec-ognised in equity is immediately transferred to the income statement.

Hedging of net investments in foreign operationsNet investment hedges in foreign operations are reported in a similar way to cash flow hedges. Gains or losses regarding hedging instruments relating to the effective portion of hedging are recognised via other comprehensive income and accumu-lated under equity. Gains or losses attributable to the ineffective portion are recog-nised in the income statement. Accumulated gains and losses in equity are recog-nised in the income statement when the foreign operation is divested or discontinued.

Receivables and liabilities in foreign currenciesCurrency forward contracts are used to hedge receivables and liabilities in for-eign currencies. To protect against such currency risks, hedge accounting is not applied since a financial hedge is reflected in the accounts in that both the hedged item and the hedging instrument are recognised at the exchange rate on the closing day, and that exchange rate fluctuations are recognised in the income statement.

Interest-rate swapsThe nominal value of outstanding interest-rate swap agreements relating to cash flow hedges amounted to MSEK 952 (537) on December 31, 2014. There


were no interest-rate swap agreements relating to fair value hedges on the closing day

Derivative instruments

Nominal amounts 2014 2013

Interest-rate swap agreements

Term of less than 1 year — 179

Term 1–2 years — —

Term 2–5 years 952 358Interest-rate swap agreements total 952* 537

Currency forward contracts** 634 665

Total 1,586 1,202

*Of which MSEK 571 refers to interest-rate swap agreements starting after December 31, 2014.**Gross amount calculated at future forward rate.

Financial assets and liabilities covered by netting or similar agreementsThe table below shows the Group’s derivatives on the closing day taking into account the netting opportunities.

Derivatives GrossNetting

agreement Net

Assets 0.7 –0.7 0.0Liabilities –29.3 0.7 –28.6

The Group has entered into general agreements (ISDAs) with all of its counter-parties regarding transactions in derivative instruments. All receivables and lia-bilities related to such instruments may, therefore, be offset in their entirety against the respective counterparty. On December 31, 2014, the Group had not applied net accounting for derivative instruments or for any other important assets and liabilities.

The capital structure of the Group One of Gunnebo’s long-term financial goals is to have an equity ratio of no less than 30%. The equity ratio at the end of the year was 35% (34%).Another of Gunnebo’s aims is to achieve a return of 15% on capital employed. The return on capital employed for 2014 was 12.1% (7.9%).

Gunnebo’s borrowing is unsecured. Borrowing is limited, however, by finan-cial obligations in the loan agreements in the form of covenants. These mainly relate to the key ratios of interest coverage ratio and net debt/EBITDA. With regard to the prevailing terms in the loan agreements, available credit facilities amounted to MSEK 1,263 at the end of the year as all financial commitments in the form of covenants were fulfilled. The Group expects all covenants to be ful-filled also in 2015.

Measurement at fair valueThe carrying amounts and fair values of the Group’s financial instruments are shown in the table below.

Financial instruments measured at fair value For all assets and liabilities measured at fair value, which comprise derivative instruments, the fair value has been established based on measurement tech-niques which are, in all essentials, based on observable market data. According to the fair value hierarchy of IFRS 13, such measurement methods are referred to as Level 2*.

The table below presents the assets and liabilities measured at fair value.

Other financial instruments The carrying amount of interest-bearing assets and liabilities in the balance sheet can deviate from their fair value, as a result of changes to the market interest rates among other things. The fair value has been calculated by dis-counting future payment flows to current interest rates and exchange rates for equivalent instruments.

For financial instruments such as accounts receivable, accounts payable and other non-interest-bearing financial assets and liabilities, which are recognised at amortised cost less any write-down, the fair value is deemed to be the same as the carrying amount due to the short anticipated duration.

The Group’s long-term borrowing primarily relates to long-term credit facili-ties but with short fixed interest rate periods and a stable credit margin. The fair value is therefore deemed to be the same as the carrying amount.

According to the fair value hierarchy of IFRS 13, the methods for establishing fair value for other financial instruments are classified as Level 2*.

* In IFRS 13, financial instruments are classified in a hierarchy of three levels, based on the information used to establish their fair value. Level 1 refers to fair values based on quoted prices on an active market for similar financial assets and liabilities. Level 2 refers to fair values established based on directly observable market inputs other than Level 1 inputs. Level 3 refers to fair values based on valuation models with inputs based on non-observa-ble market data.

2014 2013

Financial assets Carrying amount Fair value Carrying amount Fair value

Financial assets measured at fair value* 0.7 0.7 3.9 3.9 - of which derivatives for which hedge accounting does not apply 0.7 0.7 3.9 3.9 - of which currency derivatives regarding commercial exposure

for which hedge accounting of cash flows applies — — — — - of which currency derivatives for hedging net investment abroad — — — —Loan receivable and accounts receivable** 1,578.1 1,578.1 1,436.5 1,436.5Total financial assets 1,578.8 1,578.8 1,440.4 1,440.4

Financial liabilitiesFinancial liabilities measured at fair value*** 29.3 29.3 6.2 6.2 - of which derivatives for which hedge accounting does not apply 15.0 15.0 1.4 1.4 - of which interest-rate swap agreements for which hedge accounting of cash flows

applies 14.3 14.3 4.8 4.8 - of which currency derivatives regarding commercial exposure

for which hedge accounting of cash flows applies — — — — - of which currency derivatives for hedging net investment abroad — — — —Other financial liabilities**** 1,726.0 1,726.0 1,681.2 1,681.2Total financial liabilities 1,755.3 1,755.3 1,687.4 1,687.4

* These assets are recognised as other current receivables in the Group balance sheets. ** Assets recognised as other long-term and current receivables, accounts receivable and

liquid funds in the consolidated balance sheet

*** Liabilities recognised as other current liabilities in the consolidated balance sheet. **** Liabilities recognised as accounts payable as well as short-term and long-term

borrowing.


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Note 4 Critical accounting estimates and assessments

When drawing up the annual report in accordance with IFRS and good account-ing practice, the Group has made estimates and assumptions about the future which affect the carrying amounts of assets and liabilities. These estimates and assessments are continuously evaluated and are based on historical experience and other factors considered reasonable under the prevailing conditions. Where it is not possible to establish the carrying amount of assets and liabilities using information from other sources, these estimates and assumptions are used as the basis for valuations. Different assumptions and estimates may give different results and the predicted outcome will rarely correspond exactly to the actual result. The assumptions and estimates deemed to have the greatest impact on Gunnebo’s financial position and results are described below.

Review of write-down requirement for goodwill and brandsThe Group conducts an impairment review every year to assess whether there is a write-down requirement for goodwill and brands with an indefinite useful life in accordance with the accounting principles described in Note 2 above. The review requires an estimate of the parameters affecting future cash flow as well as the specification of a discounting factor. The recoverable amounts for cash-generating units have then been established by calculating value in use. Note 14 contains details of the important assumptions made when reviewing the write-down requirement of goodwill and other assets with indefinite useful lives, as well as a description of the effect of possible changes to the assump-tions that form the basis of the calculations. As at December 31, 2014, the carry-ing amount of goodwill and brands with an indefinite useful life was MSEK 1,560.

Valuation of deferred tax assetsDeferred tax receivables relating to temporary differences of MSEK 114 have been entered in the Group based on the assessment that it is likely they will be able to be utilised and that they will entail lower tax payments in the future.

Furthermore, deferred tax assets reported in relation to loss carry-forward were MSEK 225 as at December 31, 2014. The carrying amount of these tax assets has been reviewed on the closing day and it has been considered likely that the deduc-tion can be used against a surplus in future taxation. The greater part of the tax assets relate to countries with an unlimited period in which the loss carry-forwards can be used. The Group’s business in these countries is either profitable or is expected to generate a surplus in the future. Gunnebo therefore believes that there are major factors to indicate that it will be possible to utilise the loss carry-forwards to which the tax assets can be attributed against future taxable surpluses.

Furthermore, on December 31, 2014, the Group had unused loss carry-forwards and other deductible temporary differences totalling just over MSEK 600, for which no deferred tax assets were recognised.

Changes to the above assumptions and assessments may result in significant dif-ferences in the valuation of deferred tax assets.

Guarantee commitmentsMany of the products sold by Gunnebo are covered by guarantees that apply for a period specified in advance. Provisions for these product guarantees are based on historical data and on the expected costs of quality issues that are known or can be predicted. Provisions are also made for guarantees of a goodwill nature and extended guarantees. Total provisions for guarantees were MSEK 40 on December 31, 2014. Even though changes to the assumptions may result in different valua-tions, it is considered unlikely that these will have a significant effect on the Group’s profits or financial position.

Capitalised product development costsExpenditure on development projects is capitalised to the extent it is expected to generate economic benefits. Capitalisation begins when the management considers that the product will be technically or economically sound. This means that specific criteria must be met before a development project can be capital-ised as an intangible asset. Capitalisation ends and depreciation of the capital-ised development expenditure begins when the product is ready for sale. Capitalised development costs are subject to an impairment review when there is any indication of a reduction in value. The management decides on the depre-ciation period as well as the write-down requirement review. On December 31, 2014, the Group’s capitalised development costs were MSEK 57.

DisputesProvisions for disputes are estimates of the future cash flows required in order to settle the commitments. Disputes mainly relate to contractual obligations attributable to contracts with customers and suppliers, but other kinds of dis-pute may arise in the normal course of business. The outcome of complex dis-putes can be difficult to predict and the disputes can be both time-consuming and costly. It cannot therefore be ruled out that an unfavourable outcome in a dispute may have a significant effect on the Group’s profits and financial posi-tion. The management considers it unlikely, however, that any disputes of which it is currently aware in which Gunnebo is involved will have a significant effect on the Group’s accounts. The Group’s provision for disputes was MSEK 31 on the closing day. In addition provisions for tax disputes total MSEK 3.

Remuneration after the end of employmentReporting of provisions for defined benefit pension plans and other pension benefits is based on actuarial calculations using assumptions relating to dis-count rates, future salary increases, personnel turnover and demographic condi-tions. The assessments made in relation to these assumptions affect the total value of the pension commitments and major changes in these assessments could have a significant impact on the Group’s profits and financial position. The same is true of any changed assessment in relation to whether or not pen-sion insurance with Alecta should be recognised as a defined contribution plan. On December 31, 2014, the Group’s provision for pensions was MSEK 425.

Obsolescence reserveInventory is measured at the lower of cost and net selling price in accordance with the first-in first-out principle (FIFO). The value of inventory is adjusted by an estimated reduction in value for physical damage, discontinued items, over-dimensioned stock and other forms of obsolescence. On December 31, 2014, the Group’s reserve for obsolescence amounted to MSEK 78.

Accounts receivableA reserve for doubtful receivables is made when it is likely that the Group will not receive the amounts due in accordance with the receivables’ original terms. The size of the reserve comprises the difference between the assets’ carrying amount and the present value of assessed future cash flows. The assessments made in relation to these future cash flows affect the value of the accounts receivable item and a major change in these assessments could have a signifi-cant impact on the Group’s profits and position.

The Group’s accounts receivable after reserve for doubtful receivables was MSEK 1,125 on the closing day.


Note 5 Reporting by segment

Operating segments

2014 2013

Region Europe, Middle East

& AfricaRegion

Asia-PacificRegion

Americas Total

Region Europe, Middle East

& AfricaRegion

Asia-PacificRegion

Americas Total

Net sales 3,644 1,029 884 5,557 3,474 954 843 5,271

Operating profit/loss* 108 131 113 352 –27 126 123 222Financial income 14 13Financial expenses –49 –88Tax –90 –45Profit/loss for the year 227 102

Operating capital**Operating assets 1,547 393 530 2,470 1,549 276 418 2,243

Operating liabilities –914 –235 –288 –1,437 –849 –146 –200 –1,195Total operating capital 633 158 242 1,033 700 130 218 1,048

Other informationCapital expenditure 42 15 21 78 55 13 4 72Depreciation/Amortisation 57 16 15 88 60 11 13 84

Geographical information Net sales*** Operating capital** Capital expenditure

2014 2013 2014 2013 2014 2013

France 1,030 1,023 161 171 13 25USA 486 447 206 156 3 1India 429 390 57 33 5 8UK 328 255 71 66 6 4Spain 238 232 33 39 0 4

Germany 232 251 44 93 4 6Sweden 203 189 –2 45 2 6Canada 189 198 29 29 0 0Denmark 170 158 8 13 0 0Other 2,252 2,128 426 403 45 18Total 5,557 5,271 1,033 1,048 78 72

* Income and expenses of a non-recurring nature had an effect on the Group’s results of MSEK –14 (–84). Region Europe, Middle East & Africa has been burdened by MSEK –1 (–74), Region Asia-Pacific by MSEK –9 (–8) and Region Americas by MSEK –4 (–2). ** Operating assets comprise other intangible assets, property, plant and equipment, stock, accounts receivable, other receivables as well as prepaid expenses and accrued income. Operating liabilities comprise accounts payable, other liabilities as well as accrued expenses and deferred income.*** In the geographical representation of sales, the customer’s location determines the geographical region to which the sale is allocated.


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Note 6 Other operating income

2014 2013

Capital gains 11.0 3.4Currency gains 7.1 11.0Gain from divestiture of operations* 73.4 —Other 4.2 7.1Total 95.7 21.5

*Refers to Fichet-Bauche Télésurveillance which was divested in June 2014. For further information, see Note 31, Divestiture of operations.

Note 7 Other operating expenses

2014 2013

Capital losses 0.4 7.4Currency losses 4.4 3.2Other 0.7 1.7Total 5.5 12.3

Note 8 Depreciation by function

Depreciation has been charged against the operating profit as follows:

2014 2013

Cost of goods sold 57.8 55.5Selling expenses 6.7 7.0Administrative expenses 23.2 21.7Total 87.7 84.2

Note 9 Income and expenses of a non-recurring nature by

function

Income of a non-recurring nature has been included in operating profit as follows:

2014 2013

Other operating income 73.4 —Total 73.4 —

Expenses of a non-recurring nature have been charged against the operating profit as follows:

2014 2013

Cost of goods sold 31.7 32.8Selling expenses 24.5 19.3Administrative expenses 31.6 30.1Other operating expenses 0.1 1.8Total 87.9 84.0

Income of a non-recurring nature refers to gain from divestiture of operations. For further information, see Note 31, Divestiture of operations.

Expenses of a non-recurring nature during the year can primarily be attributed to staff cuts and other structural measures in Region Europe, Middle East & Africa.

Note 10 Operating expenses allocated by type of cost

2014 2013

Direct material costs 1,924.5 1,767.4Change in stock –7.9 11.9Remuneration for employees 1,935.8 1,834.6Temporary personnel and subcontractors 310.8 293.1Transport costs 127.1 121.8Vehicle and travel costs 208.5 206.5Depreciation and write-down of non-current assets 88.0 86.2Other costs 708.5 735.9Total operating expenses* 5,295.3 5,057.4

*Relates to cost of goods sold, selling expenses and administrative expenses.

Note 11 Other financial income and expenses

2014 2013

Other financial incomeCurrency gains 1.4 0.5Other 0.7 0.7Total 2.1 1.2

Other financial expensesCurrency losses –1.5 –0.5Bank charges and bank guarantee costs –9.7 –8.5Write-down of financial assets* — –44.7Other –0.7 –0.2Total –11.9 –53.9

*Relates to the write-down of financial assets attributed to Perimeter Protection, which was divested in 2011.

Note 12 Taxes

2014 2013

Current tax –105.8 –86.7Deferred tax 16.5 41.3Total –89.3 –45.4

The Group’s tax expense amounted to MSEK –89.3 (–45.4) and the tax rate to 28.2% (30.9%). The tax rate for the year was positively affected by non-taxable income attributable to the divestment of Fichet-Bauche Télésurveillance, and by a more favourable composition of Group profit, with profit improvements in coun-tries where the Group is not yet in a tax position.

Tax calculated on Group profit before tax differs from the theoretical amount which would have been produced from a weighted average tax rate for profits in the consolidated companies as described below.

2014 2013

Tax calculated in accordance with national tax rates for each country –84.9 –39.1Tax attributable to previous years 1.0 –3.4Effects of tax deficits for which no deferred tax asset has been stated 7.1 –0.3Effects of non-deductible expenses and non- taxable income etc. –12.5 –2.6Tax cost –89.3 –45.4


Deferred tax assets and liabilities are attributable to the following items:

Deferred tax assets 2014 2013

Loss carry-forward 224.7 211.2Hedging transactions 1.9 1.3Inventories 2.2 2.9Pension commitments 73.3 60.7Provisions 24.3 19.7Other deductible temporary differences 12.8 11.1Total 339.2 306.9

Deferred tax liabilities 2014 2013

Non-current assets 60.0 56.1Other taxable temporary differences 6.0 8.0Total 66.0 64.1

Deferred tax assets and tax liabilities, net 273.2 242.8

The change pertaining to deferred taxes is as follows:

2014 2013

Opening value, net 242.8 197.6Translation differences 8.2 0.1Deferred tax in the income statement 16.5 41.3Deferred tax recognised in other comprehensive income 6.1 3.8Acquisition of operations –0.2 —Divestiture of operations –0.2 —Closing value, net 273.2 242.8

Deferred tax assets attributable to loss carry-forwards are only reported if it is probable that the deduction can be netted against a surplus in future taxation. At the end of 2014, loss carry-forwards totalled over MSEK 600 where no deferred tax assets have been observed. MSEK 0 of this is due within five years. There are both timing and other constraints which mean that these loss carry-forwards are not expected to be able to be utilised.

Note 13 Earnings per share

2014 2013

Net profit for the year attributable to parent company shareholders, MSEK 226.2 98.1Average no. of shares (in thousands) 75,979 75,863Earnings per share, SEK* 2.98 1.29

Earnings per share are calculated by dividing the profit attributable to the par-ent company shareholders by the average number of outstanding shares during the period.

A dividend of SEK 1.00 (1.00) per share is proposed.

*Earnings per share before and after dilution.

Note 14 Intangible assets

2014 financial year GoodwillOther intangible

assets

Opening cost Jan 1, 2014 1,322.4 437.7Capital expenditure — 26.4Acquisitions 51.7 –Divestiture of operations –5.2 –2.7Sales/disposals — –6.1Translation differences 121.1 34.7Closing accumulated cost Dec 31, 2014 1,490.0 490.0

Opening amortisation and write-downs Jan 1, 2014 — 265.6Divestiture of operations — –2.5Sales/disposals — –3.3Amortisation — 31.2Write-downs — 0.2Translation differences — 14.2Closing accumulated amortisation and write-downs Dec 31, 2014 — 305.4

Closing carrying amount Dec 31, 2014 1,490.0 184.6

2013 financial year GoodwillOther intangible

assets

Opening cost Jan 1, 2013 1,319.7 416.0Capital expenditure — 23.7Acquisitions 8.6 —Sales/disposals — –4.3Translation differences –5.9 2.3Closing accumulated cost Dec 31, 2013 1,322.4 437.7

Opening depreciation and write-downs Jan 1, 2013 — 234.0Sales/disposals — –2.4Amortisation — 30.1Translation differences — 3.9Closing accumulated amortisation and write-downs Dec 31, 2013 — 265.6

Closing carrying amount Dec 31, 2013 1,322.4 172.1

Other intangible assets in the Group consist primarily of acquisition-related assets in the form of brands and customer relations, as well as expenditure on software and capitalised expenditure on product development. The useful life is limited for all asset types included in this item, with the exception of brands. Amortisation is linear over the useful life.

Capitalised expenditure on product development amounts to MSEK 56.7 (59.2). During the course of the year, capital expenditure on product develop-ment projects totals MSEK 12.2 (14.8). The closing carrying amounts for cus-tomer relations and brands total MSEK 30.7 (31.4) and MSEK 69.9 (58.2) respec-tively. The carrying amount for brands refers entirely to brands with an indefinite useful life attributable to the Bank Security & Cash Handling business area. Other asset types included in the item mainly refer to software, and the closing carrying amount for these assets amounts to MSEK 27.3 (23.3).

Review of write-down requirement

Goodwill is distributed between the Group’s cash-generating units as follows:

Specification of goodwill 2014 2013

Bank Security & Cash Handling 747.1 638.8Secure Storage 197.2 185.9Global Services 305.0 270.2Entrance Control 211.4 198.2Gateway 29.3 29.3Carrying amount 1,490.0 1,322.4


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The write-down requirement for goodwill and brands with an indefinite useful life is reviewed annually, and when there are indications that a write-down is necessary.

The recoverable amount for cash-generating units has been established by calculating the value in use. In terms of the write-down test, this has been car-ried out at the lowest level where separable cash flows have been identified.*

The value in use of goodwill and brands with an indefinite useful life in rela-tion to Gunnebo’s cash-generating units has been calculated on the basis of dis-counted cash flows. Cash flows for the first year are based on a budget set by the Board of Directors, and for the two subsequent years cash flows have been calculated based on financial plans approved by the Board of Directors. For the cash-generating units that contain assets with an indefinite useful life, cash flows beyond this three-year period have been established with a growth rate equivalent to 2.0%. This growth rate is based on a cautious assumption and is expected to be in line with the security industry’s long-term growth rate in the countries where Gunnebo operates business.

The forecast cash flows have been computed at present value with a dis-

count rate of 10.0% (10.5%) before tax. The discount rate equates to the Group’s weighted average cost of capital, WACC, for the required return on equity and the cost of external borrowing. The calculation of required return on equity is based on a risk-free interest rate of 1.5% and a risk premium of 7.3%.

Using a discount rate of 10.0%, the value in use exceeds the carrying amount for all cash-generating units.

Adverse effects in the form of a one percentage point increase in the dis-count rate or a 20% decrease in operating margin would not individually have such a large impact that the recoverable amount would be reduced to a value equal to or less than the carrying amount for any cash-generating unit, with the exception of the Bank Security & Cash Handling business area. A 20% decrease in operating margin would mean that the recoverable amount would be MSEK 9 less than the carrying amount for this business area.

*According to IAS 36, the impairment review for goodwill is based on the smallest group of assets to which goodwill is allocated and which gives rise to payments. For Gunnebo these cash-generating units are the business areas.

Sensitivity analysis Bank Security & Cash Handling Secure Storage Global Services Entrance Control Gateway

Carrying amount 1,279 289 505 343 71

Discount rate before tax is increased to 11.0%

Value in use decreases but still exceeds the car-rying amount





Operating margin decreases by 20%

Value in use decreases and is MSEK 9 less than the carrying amount.





Note 15 Property, plant and equipment

2014 financial year

Buildings and land*

Machinery

Equip-ment

Construc-tion in

progress

Opening cost Jan 1, 2014 458.2 370.6 290.9 7.4Capital expenditure 1.6 28.0 10.7 11.0Acquisitions 0.2 — 9.8 —Divestiture of operations — –0.2 –9.7 —Sales/disposals –111.1 –8.6 –9.3 —Reclassifications 0.1 2.0 1.9 –4.0Translation differences 30.1 32.8 21.8 1.3Closing accumulated cost Dec 31, 2014 379.1 424.6 316.1 15.7

Depreciation and write-downs Jan 1, 2014 328.6 284.0 210.8 —Acquisitions 0.0 — 7.2 —Divestiture of operations — –0.2 –3.7 —Sales/disposals –98.7 –5.2 –8.6 —Depreciation 9.8 22.4 24.3 —Write-downs — — 0.1 —Translation differences 19.8 24.1 16.4 —Closing accumulated depreciation and write-downs Dec 31, 2014 259.5 325.1 246.5 —

Closing carrying amount Dec 31, 2014 119.6 99.5 69.6 15.7

2013 financial year

Buildings and land*

Machinery

Equip-ment

Construc-tion in

progress

Opening cost Jan 1, 2013 472.8 396.1 293.6 16.5Capital expenditure 3.9 8.1 21.3 14.8Acquisitions 1.7 — 1.0 —Sales/disposals –28.5 –39.5 –30.7 –1.3Reclassifications 2.2 10.6 10.0 –22.8Translation differences 6.1 –4.7 –4.3 0.2Closing accumulated cost Dec 31, 2013 458.2 370.6 290.9 7.4

Depreciation and write-downs Jan 1, 2013 332.6 302.3 216.8 —Acquisitions 0.2 — 0.8 —Sales/disposals –23.8 –38.8 –27.5 —Depreciation 10.1 19.7 24.3 —Write-downs 2.0 — — —Translation differences 7.5 0.8 –3.6 —Closing accumulated depreciation and write-downs Dec 31, 2013 328.6 284.0 210.8 —

Closing carrying amount Dec 31, 2013 129.6 86.6 80.1 7.4

Specification, buildings and land 2014 2013

Carrying amount, buildings* 92.3 102.9Carrying amount, land 27.3 26.7Total carrying amount 119.6 129.6

*Including land improvements

Note 14 cont.


Note 16 Holdings in associated companies

2014 2013

Opening book value 10.1 11.2Share of profit of associated companies 0.4 –0.1Dividends –1.3 –1.1Currency differences 0.4 0.1Closing book value 9.6 10.1

Book value

Group’s holdings in associated companies% share

of capital 2014 2013

FBH Fichet Ltd, UK 49 1.1 1.1Ritzenthaler Ltd, UK* 45 — 0.0Gateway Security Portugal Ltda, Portugal 55 0.0 1.6Prodimo AB, Sweden 48 6.9 6.1K/H Enterprises Inc., USA 31 1.6 1.3Total 9.6 10.1

Gunnebo’s share in the income and profit of the associated companies after tax amounts to MSEK 55.1 (49.0) and MSEK 0.4 (–0.1) respectively. The share of their total assets is MSEK 31.6 (31.5) and the share of their liabilities is MSEK 22.0 (21.4).

*During the year, the participation in Ritzenthaler Ltd was divested.

Note 17 Inventories

2014 2013

Raw materials 215.1 193.2Work in progress 19.9 22.9Finished goods 444.2 401.1Installation work in progress 106.4 74.0Less advance payments from customers –91.4 –82.0Total 694.2 609.2

Of the inventories, MSEK 649.4 is measured at cost and MSEK 44.8 at net selling price. At December 31, 2014, the Group’s reserve for obsolescence amounted to MSEK 78.0 (66.8). See also Note 4 Obsolescence reserve.

Note 18 Accounts receivable2014 2013

Accounts receivable, not yet due 882.8 794.9Overdue, 1–30 days 164.1 163.6Overdue, 31–60 days 49.6 56.1Overdue, 61–90 days 28.2 26.8Overdue, over 90 days 51.7 50.8Total 1,176.4 1,092.2

Provision for doubtful receivables 2014 2013

Provision at the beginning of the year –53.7 –50.4Reserve for anticipated losses –10.5 –20.1Confirmed losses 7.1 8.9Discharged payment of reserved receivables 9.6 7.7Divestiture 0.7 —Acquisition of operations –0.3 –0.4Currency differences –4.3 0.6Provision at the end of the year –51.4 –53.7

Closing carrying amount 1,125.0 1,038.5

Note 19 Prepaid expenses and accrued income

2014 2013

Prepaid insurance premiums 10.4 7.3Prepaid rent 9.2 7.3Accrued interest 1.0 1.0Other items 65.3 38.6Total 85.9 54.2

Note 20 Liquid funds

2014 2013

Short-term investments 46.8 39.1Cash and bank 400.2 352.9Total 447.0 392.0

Note 21 Equity reserves

Hedging reserve

Translation reserve Total reserves

Opening balance Jan 1, 2014 –4.0 –256.8 –260.8Currency differences:- Subsidiaries — 92.2 92.2- Associated companies — 0.4 0.4Hedging of net investments — 5.1 5.1Cash flow hedges:- Changes in the fair value during

the year –9.1 — –9.1- Tax on changes in fair value 2.0 — 2.0- Transfers to income statement — — —- Tax on transfers

to income statement — — —Closing balance Dec 31, 2014 –11.1 –159.1 –170.2

Hedging reserve

Translation reserve Total reserves

Opening balance Jan 1, 2013 –6.1 –175.1 –181.2Currency differences:- Subsidiaries — –78.8 –78.8- Associated companies — 0.1 0.1Hedging of net investments — –3.0 –3.0Cash flow hedges:- Changes in the fair value during

the year 2.7 — 2.7- Tax on changes in fair value –0.6 — –0.6- Transfers to income statement — — —- Tax on transfers to income

statement — — —Closing balance Dec 31, 2013 –4.0 –256.8 –260.8

No. of shares 2014 2013

Opening balance 75,914,098 75,855,598

Issue via conversion of warrants 259,403 58,500Closing balance 76,173,501 75,914,098


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MSEK 4.9 (4.1) of the cost for defined contribution plans comprises premiums to Alecta/Collectum. This insurance policy encompasses several employers in Sweden, and insufficient information is available from Alecta/Collectum to be able to report the plan as a defined benefit plan.

Alecta’s collective funding ratio at the end of the year was 143% (148%). The collective funding level is the difference between the company’s assets and insurance commitments, based on Alecta’s calculation assumptions for insur-ance purposes, which do not comply with IAS 19.

Other countriesTotal defined benefit commitments in other countries amounted to MSEK 335.0 (264.6) and the associated plan assets amounted to MSEK 125.6 (101.0). The net provision recognised in the balance sheet amounted to MSEK 209.4 (163.6). The largest pension provisions related to France and Germany where they amounted to MSEK 91.3 (74.3) and MSEK 41.4 (43.1) respectively.

The weighted average term for the total commitment for other countries amounts to 13 years.

Important actuarial assumptions, % 2014 2013

Discount rateUK 3.7 4.5Sweden 2.8 3.7Other countries (weighted average) 3.8 4.3

Expected wage increase rateUK 3.1 3.9Sweden 3.0 3.0Other countries (weighted average) 2.8 3.4

Inflation UK 3.1 3.4Sweden 1.5 1.8Other countries (weighted average) 2.7 2.6

Reconciliation of pension commitments UK Sweden

Other countries

2014 Total

Present value of commitments 650.3 97.9 335.0 1,083.2Fair value of plan assets –532.4 — –125.6 –658.0Net provision in balance sheet 117.9 97.9 209.4 425.2

Reconciliation of pension commitments UK Sweden

Other countries

2013 Total

Present value of commitments 527.6 83.1 264.6 875.3Fair value of plan assets –413.7 — –101.0 –514.7Net provision in balance sheet 113.9 83.1 163.6 360.6

Of the present value of commitments, MSEK 868.2 (696.9) relates to funded pensions and other plans, and MSEK 215.0 (178.4) to non-funded pensions and other plans..

In 2015 the Group expects to make MSEK 43.7 (36.7) in payments relating to defined benefit plans.

Note 22 Pension commitments

Remuneration to employees after the end of employment, such as pensions, healthcare benefits and other remuneration, is predominantly funded through payments to insurance companies or authorities which thereby take over the obligations to the employees; these are known as defined contribution plans. The remainder is carried out through defined benefit plans whereby the com-mitments remain within the Group. The main defined benefit plans are in the UK and Sweden (FPG/PRI provision). There are other defined benefit plans in Canada, France, Germany, the Netherlands, Italy, Indonesia, India and South Africa.

With regard to defined benefit plans, the company’s costs and the value of out-standing commitments are estimated using actuarial calculations, which aim to establish the present value of commitments issued.

At December 31, 2014, the Group’s total defined benefit pension commitment amounted to MSEK 1,083.2 (875.3). Contributed funds to cover these commit-ments, known as plan assets, amounted to MSEK 658.0 (514.7). Plan assets mainly comprise shares and interest-bearing current receivables. No plan assets comprise financial instruments in Gunnebo AB or assets used within the Group.

The Group’s net provision for pensions, which is recognised in the balance sheet, amounted to MSEK 425.2 (360.6). The pension commitment has increased in the majority of countries compared with last year due primarily to a lower dis-count rate and exchange rate fluctuations.

The defined benefit pension cost recognised in the income statement amounted to MSEK 42.7 (31.4), of which MSEK 14.5 (12.5) related to financial expenses. Actuarial gains and losses recognised in other comprehensive income amounted to MSEK –35.5 (–21.0) net.

UKIn the UK, pension commitments are mainly secured through payments into a defined benefit pension plan. The plan is closed to new employees but is still open to the employees it covers. To meet legal requirements, the plan com-prises an independent foundation and is funded.

The foundation’s assets are managed by a board comprising representatives for Gunnebo and the employees who are members of the plan. The assets are managed in accordance with national legislation and in collaboration with pro-fessional advisors and fund managers. The benefits are based on the employ-ees’ final pay and the remaining average term for the commitments is 20 years.

The total defined benefit commitment increased to MSEK 650.3 (527.6). The increase can be attributed to altered assumptions regarding discount rate and to experience-based adjustments regarding demographic conditions. The value of the foundation’s plan assets amounted to MSEK 532.4 (413.7), which gave a net provision of MSEK 117.9 (113.9).

The defined benefit commitment has been calculated using a discount rate based on high-quality corporate bonds with a term corresponding to the aver-age remaining term of the commitment.

The costs for defined benefit pension plans in the UK recognised in the income statement amounted to MSEK 14.3 (8.8), of which MSEK 5.0 (2.8) related to financial expenses.

SwedenThe majority of the Group’s pension arrangements in Sweden comprise a defined benefit pension plan. The commitment relates to lifelong retirement pensions and the benefits are primarily based on the employees’ final pay. The average remaining term for the commitment is 27 years.

The pension commitment at the end of the year amounted to MSEK 97.9 (83.1). There are no plan assets. The commitment has increased compared with last year due to a lower discount rate.

The pension commitment has been calculated using a discount rate based on the return on the market interest rate for Swedish housing bonds. These bonds are considered to be high quality because they are secured with assets and the housing bond market in Sweden is judged to be deep and liquid. The term of the bonds equates to the average term of the commitment.

The costs for defined benefit pension plans in Sweden recognised in the income statement amounted to MSEK 4.1 (4.5), of which MSEK 3.0 (2.9) related to financial expenses. Costs for defined contribution plans amounted to MSEK 11.9 (10.7) and burdened operating profit.


Specification of changes in defined benefit obligations 2014 2013

Opening balance 875.3 835.9Costs pertaining to employment during the current year 15.7 17.2Interest expense on commitments 39.0 33.7Actuarial gains (–) and losses (+) relating to altered demographic assumptions –27.3 –1.0Actuarial gains (–) and losses (+) relating to altered financial assumptions 101.3 16.0Experience-based gains (–) and losses (+) –1.3 10.7Payroll tax on actuarial changes 2.6 –1.3Contributions made by pension plan members 2.2 2.0Payment of pension benefits –34.0 –38.0Past service costs/income 10.3 –0.3Curtailments and settlements — –5.0Companies acquired and divested –1.6 —Currency differences on foreign plans 101.0 5.4Closing balance 1,083.2 875.3

Specification of changes in plan assets 2014 2013

Opening balance 514.7 493.7Administrative expenses –2.2 –2.0Interest income on plan assets 24.5 21.2Return on plan assets excluding amounts included in interest income 39.8 3.4

Contributions made by pension plan members 2.2 2.0Contributions to the plan made by the company 31.7 25.7Payment of pension benefits –21.9 –28.3Assets used for settlement — –5.0Currency differences on foreign plans 69.2 4.0Closing balance 658.0 514.7

Specification of changes i provisions for pensions 2014 2013

Opening balance 360.6 342.2Net cost entered in the income statement 42.7 31.4Actuarial gains (–) and losses (+) 35.5 21.0Payment of benefits –12.1 –9.7Contributions into funded plans –31.7 –25.7Companies acquired and divested –1.6 —Currency differences on foreign plans 31.8 1.4Closing balance 425.2 360.6

Specification of pension costs in the income statement 2014 2013

Costs pertaining to defined benefit plans:Costs pertaining to employment during the current year 15.7 17.2Net interest 14.5 12.5Administrative expenses 2.2 2.0Past service costs/income 10.3 –0.3Costs pertaining to defined benefit plan 42.7 31.4

Costs pertaining to defined contribution plans 49.3 49.0Total pension costs in the income statement 92.0 80.4of which:Amount charged against operating profit 77.5 67.9Amount charged against financial expenses 14.5 12.5Total pension costs in the income statement 92.0 80.4

Specification of actuarial gains and losses recognised in other comprehensive income 2014 2013

Return on plan assets excluding interest income –39.8 –3.4Actuarial gains (–) and losses (+) relating to altered demographic assumptions –27.3 –1.0Actuarial gains (–) and losses (+) relating to altered financial assumptions 101.3 16.0Experience-based gains (–) and losses (+) –1.3 10.7Payroll tax on actuarial changes 2.6 –1.3Total actuarial gains (–) and losses (+) recognised in other comprehensive income 35.5 21.0

Specification of plan assets 2014 2013

Government bonds 91.7 70.3Commercial papers 208.9 155.4Shares 335.9 276.7Liquid funds 21.5 12.3Total plan assets 658.0 514.7

Interest expense on pension commitments and interest income on plan assets are classified as a financial cost. Other cost items are recognised under operating profit and are allocated between cost of goods sold, selling expenses or adminis-trative expenses depending on the employee’s function.

Sensitivity analysisThe table below shows how the defined benefit pension commitment is affected in MSEK if the actuarial assumptions regarding discount rate, expected wage increase rate and inflation each change by 1 percentage point.

Assumption +1 percentage point –1 percentage point

Discount rate –191 194Expected wage increase rate 38 –33Inflation 63 –59

Maturity analysisThe expected maturity dates for the Group’s defined benefit pension commit-ment are shown below in nominal amounts.

Maturity analysis < 1 year1–2

years2–5

years5–10 years

>10 years Total

Expected pension payments 36 35 132 274 2,346 2,823


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Note 23 Other provisions

2014 financial year

Restructur-ing pro-

grammesDis-

putesGuaran-

tees Taxes Other Total

Opening balance 16.4 23.4 40.2 2.1 9.6 91.7Divestiture of operations — — — — –0.6 –0.6Provisions during the year 18.6 11.3 25.2 0.6 1.4 57.1Utilised during the year –20.3 –5.3 –23.5 — –0.6 –49.7Reversed during the year –0.4 –0.7 –5.0 — 0.0 –6.1Currency differences 0.9 2.1 3.2 0.2 0.4 6.8Closing balance 15.2 30.8 40.1 2.9 10.2 99.2

2013 financial year

Restructur-ing pro-

grammeDis-

putesGuaran-

tees Taxes Other Total

Opening balance 17.1 19.0 40.0 3.2 7.1 86.4Acquisition of operations — — 0.0 1.5 — 1.5Provisions during the year 9.7 10.5 23.8 — 4.5 48.5Utilised during the year –10.9 –3.9 –21.8 –0.3 –1.4 –38.3Reversed during the year — –3.0 –2.3 –2.4 –0.6 –8.3Currency differences 0.5 0.8 0.5 0.1 0.0 1.9Closing balance 16.4 23.4 40.2 2.1 9.6 91.7

Provisions for restructuring measures have been made mainly for reorganisa-tion. The provisions are expected to be utilised during 2015.

For information relating to the assumptions and assessments made in reporting provisions, see Note 4.

Note 24 Borrowings

Long-term borrowing 2014 2013

Liabilities to credit institutions 958.0 848.8Total 958.0 848.8

Short term borrowing

Overdraft facilities 56.0 11.4Liabilities to credit institutions 52.5 265.7Total 108.5 277.1

Total borrowing* 1,066.5 1,125.9

*Loan maturity structure for the Group is reported in Note 3.

Note 25 Accrued expenses and deferred income

2014 2013

Holiday pay liability 116.0 108.0Accrued salaries 107.7 92.6Social security charges 70.9 64.1Deferred income 52.1 43.7Accrued interest 6.9 4.3Other items 202.4 159.6Total 556.0 472.3

Note 26 Contingent liabilities

2014 2013

Guarantees 184.1 146.5Total 184.1 146.5

Guarantees for the fulfilment of various contractual obligations are part of the Group’s normal business activities. At the time of publication of this annual report, there were no indications that guarantees provided will result in pay-ments.

As a result of standard business operations, Gunnebo is a party in various legal disputes. At the end of 2014, there were not deemed to be any disputes that could entail a negative impact on the Group’s results and financial position. See Note 4 and Note 35 for further information on disputes.

Note 27 Operating lease contracts

Leased assets

Future payment commitments for operating lease contracts have the follow-ing breakdown:

2015 89.92016 64.72017 34.52018 20.52019 11.22020 and later 20.2Total 241.0

The year’s cost for leased assets amounted to MSEK 113.5 (104.7).

Note 28 Net financial items affecting cash flow

2014 2013

Interest received 11.6 11.2Interest paid –34.4 –34.6Other items affecting cash flow –9.8 –8.0Total –32.6 –31.4

Note 29 Adjustment for items not included in cash flow etc.

2014 2013

Amortisation of intangible assets 31.2 30.1Depreciation of property, plant and equipment 56.5 54.1Write-down of intangible assets 0.2 —Write-down of property, plant and equipment 0.1 2.0Share in profit of associated companies, not distributed 0.9 1.2Adjustment for provisions 3.0 3.0Restructuring costs not affecting cash flow 54.5 27.2Restructuring costs paid, previously recognised as costs –22.6 –11.7Capital gain from divestiture of associated companies –0.4 —Capital gain from divestiture of operations –73.4 —Capital gain from sale/disposal of property, plant and equipment –10.2 6.3Adjustment for items not included in cash flow etc. 39.8 112.2


Note 30 Acquisition of operations

Assets and liabilities of acquired operations 2014 2013

Property, plant and equipment 2.8 1.7Financial assets 0.1 0.3Inventories 3.9 10.4Current receivables* 33.6 5.3Liquid funds 2.3 1.0Long-term liabilities –2.4 –4.8Current liabilities –23.7 –7.3Identifiable net assets 16.6 6.6

Goodwill 51.7 8.6

Total purchase sums 68.3 15.2

Less:Purchase sums not paid –12.4 –5.8Acquisitions of own shares –9.8 —Liquid funds in acquired operations –2.3 –1.0Effect on Group liquid funds 43.8 8.4

Acquisitions in 2014Acquisition of Diseños Inteligentes de Seguridad S.A. de C.V.On August 28, 2014, Gunnebo acquired 100% of Mexican company Diseños Inteligentes de Seguridad S.A. de C.V. (Dissamex), which provides service and installation services in electronic security, primarily to banks. The acquired oper-ation has annual sales of approximately MSEK 45 and 130 employees. The pur-chase sum is estimated at MSEK 32.0 and the Group goodwill arising from the acquisition has not been finally established as the acquisition analysis is as yet preliminary. Acquisition costs, which burdened profit, totalled MSEK 1.3. After the acquisition the company has had sales of MSEK 23.9 and an operating profit of MSEK 4.6.

Dissamex

Carrying amount in

Group

Property, plant and equipment 1.3

Financial assets 0.1Inventories 1.9Current receivables* 7.0

Liquid funds 0.2Long-term liabilities –2.2Current liabilities –5.1Identifiable net assets 3.2

Goodwill 28.8Total purchase sums 32.0Less:Purchase sums not paid –7.9Acquisitions of own shares –9.8Liquid funds in acquired operations –0.2Effect on Group liquid funds 14.1

Acquisition of Clear Image MMS LtdOn October 10, 2014 Gunnebo acquired 100% of British company Clear Image MMS Ltd, which operates in electronic security. The acquired operation has annual sales of approximately MSEK 60 and 60 employees. The purchase sum totalled MSEK 36.3. Group goodwill arising from the acquisition has not been finally established as the acquisition analysis is as yet preliminary. Acquisition costs, which burdened profit, totalled MSEK 4.1. After the acquisition the com-pany has had sales of MSEK 17.2 and an operating profit of MSEK 0.9.

Clear Image

Carrying amount in

Group


Financial assets —Inventories 2.0Current receivables* 26.6


Goodwill 22.9Total purchase sums 36.3Less:Purchase sums not paid –4.5Liquid funds in acquired operations –2.1Effect on Group liquid funds 29.7

Acquisitions in 2013Acquisition of ATG Entrance CorporationOn July 5, 2013, 100% of ATG Entrance Corporation, the Channel Partner for Gunnebo’s entrance security products in South Korea, was acquired. The pur-chase sum totalled MSEK 15.2. Goodwill arising from the acquisition amounted to MSEK 8.6 and can primarily be attributed to geographic coverage.

ATG Entrance Corporation

Carrying amount in

Group


Financial assets 0.3Inventories 10.4Current receivables* 5.3


Goodwill 8.6Total purchase sums 15.2Less:Purchase sums not paid –5.8Liquid funds in acquired operations –1.0Effect on Group liquid funds 8.4

*Current receivables primarily relate to accounts receivable.


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Note 31 Divestment of operations

Divestment in 2014Divestment of Fichet-Bauche TélésurveillanceIn June 2014, the subsidiary Fichet-Bauche Télésurveillance, which provides alarm monitoring and call-out services on the French market, was sold to ven-ture capital company Butler Group. The purchase sum after transaction costs amounted to MSEK 89.6 and the Group capital gain totalled MSEK 73.4.

Assets and liabilities in discontinued operations 2014 2013

Goodwill 5.2 —Other intangible assets 0.2 —Property, plant and equipment 6.0 —Deferred tax assets 0.2 —Current receivables 12.1 —Liquid funds 12.7 —Long-term liabilities –1.6 —Current liabilities –18.6 —Divested net assets 16.2 —

Capital gains/losses 73.4 —Purchase sum received after transaction costs and tax 89.6 —

Liquid funds in discontinued operations –12.7 —Effect on Group liquid funds 76.9 —

Note 32 Personnel

Average number of employees 2014 2013

Sweden 165 181Australia 73 75Austria 9 8Belgium 75 83Brazil 125 110Canada 145 147China/Hong Kong 80 69Czech Republic 15 16Denmark 71 76Finland 7 7France 968 1,045Germany 241 262Hungary 9 9India 1,131 1,108Indonesia 830 843Italy 143 154Kenya 1 —Luxembourg 6 7Malaysia 33 31Mexico 97 42Netherlands 345 305Norway 28 29Oman 4 —Poland 42 42Portugal 39 42Saudi Arabia — 1Singapore 20 19South Africa 196 187South Korea 18 5Spain 220 240Switzerland 38 39Turkey 2 1UAE 16 16UK 238 248USA 199 209Total 5,629 5,656

Of the average number of employees, 868 (859) were female. Women occupy 8% of the senior management positions in the Group. The average number of employees abroad was 5,464 (5,475).

Costs of personnel

Wages, salaries, other remuneration and social security charges 2014

Salaries and other

remunerationSocial security

chargesof which

pension costs

Group total 1,502.2 433.6 77.5

Wages, salaries, other remuneration and social security charges 2013

Salaries and other


chargesof which

pension costs

Group total 1,413.3 421.3 67.9


Of the above amount, a total of MSEK 57.8 (50.2) was paid in salaries and other remuneration to Presidents, of which MSEK 6.5 (4.6) consisted of performance-related pay. Of the Group’s pension costs, MSEK 5.2 (4.5) related to Presidents.

Remuneration to the BoardDuring the year remuneration paid to the Board of the parent company amounted to TSEK 1,910 (1,917), of which TSEK 170 (185) comprises remunera-tion for committee work. A Board fee of TSEK 475 was paid to Chairman of the Board Martin Svalstedt. Board fees of TSEK 297.5 and TSEK 287.5 were paid to Board members Mikael Jönsson and Bo Dankis respectively. A Board fee of TSEK 267.5 per person was paid to Board members Göran Bille and Tore Bertilsson. A Board fee of TSEK 237.5 was paid to Board member Charlotte Brogren.

Remuneration to senior executives

Remuneration and other benefits for senior executives during the year

SEK '000 SalaryPerformance-

related payOther

benefits Pension cost Total

Per Borgvall, President 4,137 1,843 215 1,435 7,630Other senior executives (7 people) 15,359 6,500 924 5,101 27,884Total 19,496 8,343 1,139 6,536 35,514

Other benefits relate mainly to housing allowances and company cars.

Pensions, severance pay and performance-related payThe retirement age for the President is 65. The pension solution is premium-based and the pension cost amounts to 35% of salary, excluding performance-related pay. If the President resigns the notice period is 6 months. The President is entitled to a notice period of 12 months, during which the normal salary and other benefits shall be paid, in the event of the contract being terminated by the company. At the end of the notice period, severance pay amounting to one year’s salary (excluding performance-related pay) shall be paid out in equal amounts over the course of 12 months.

For other senior executives (seven people who, together with the President, constitute the Group Executive Team), the notice period is a maximum of one year, during which full salary and other benefits are payable.

If the senior executive resigns the notice period is 6 months. No severance pay is awarded.

The retirement age is 65. A premium-based pension plan is in place for senior executives in Sweden (five people). The agreed premium provision may amount to a maximum of 35% of the basic salary, depending on age and salary level.

Performance-related pay for the President and other members of the Group Executive Team is dependent on the achievement of predetermined, quantitative financial targets and may not exceed 50% of the fixed salary.

Incentive programmesAt the 2010 AGM a share price-related incentive programme was adopted for senior executives and other key personnel within the Group, which ran up to 2014. The background was that the Board considered it important that these people have a long-term interest in the good value development of the com-pany share. The 2011 and 2012 AGMs decided to implement similar pro-grammes, and consequently three programmes were running in parallel in 2014.

Warrants

Changes to incentive programmesIncentive pro-gramme 2010

Incentive pro-gramme 2011


Opening balance 323,000 154,500 146,500Exercised –259,403 — —Matured –63,597 — —Closing balance — 154,500 146,500

Warrants

Specification of incentive programmesIncentive pro-gramme 2011


President and CEO 30,000 40,000Other senior executives 25,000 60,000Other 99,500 46,500Closing balance 154,500 146,500

Incentive programme 2010 At the 2010 AGM, an incentive programme was decided on for 46 senior execu-tives and other key personnel within the Group through an issue of warrants which entitle the holder to subscribe for new shares in Gunnebo AB. The acquisi-tion price of the warrants was determined using the Black–Scholes valuation model and amounted to SEK 3.30 per warrant. A warrant gave the holder the right to subscribe to a share in Gunnebo AB at a price of SEK 32.00 during certain periods in 2013–2014.

Incentive programme 2011In connection with the 2011 AGM, a new incentive programme was adopted for 49 senior executives, structured along the same principles as the programme adopted at the 2010 AGM. The market value of the warrants was determined by an external financial institute using the Black–Scholes valuation model and the price was set at SEK 6.30 per warrant. A warrant gives the holder the right to subscribe to a share in Gunnebo AB at a price of SEK 44.20 during certain peri-ods in 2014–2015.

Incentive programme 2012 In connection with the 2012 AGM, yet another new incentive programme was adopted for 50 senior executives. The market value of the warrants was deter-mined externally using the Black–Scholes valuation model and the price was set at SEK 4.00 per warrant. A warrant gives the holder the right to subscribe to a share in Gunnebo AB at a price of SEK 31.40 during certain periods in 2015–2016.

Since the participants in the above incentive programmes have been offered the opportunity to acquire warrants at market price, the programmes will not entail payroll costs for accounting purposes according to IFRS 2. Costs in the form of social security charges may, however, arise in certain countries.

Note 33 Auditors’ remuneration

2014 2013

Remuneration to DeloitteAuditing 7.0 7.0Auditing assignments in addition to auditing 0.3 0.1Tax advice 0.4 0.5Other services 0.4 0.2Total remuneration to Deloitte 8.1 7.8

Audit remuneration to other firms of accountants 0.9 0.8Total auditors’ remuneration 9.0 8.6

Auditing refers to the auditors’ remuneration for the statutory audit. Auditing assignments in addition to auditing constitute any examination of administration or financial information resulting from statutes, the Articles of Association, regu-lations or agreements which result in a report or some other document intended to form a basis for assessment also for a party other than the ordering client, as well as advice or other assistance prompted by observations in an auditing assign-ment. An example of an auditing assignment that is not part of the audit is the auditors’ general review of an interim report.

Tax advice is self-evident. Other services are advice not related to any of the previously specified services.


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Note 34 Transactions with related parties

Information on remuneration to Board members is provided in Note 32. Over and above these, there were no other transactions with related parties.

Not 35 Business risks

Exposure to risk and uncertainty with regard to future development are natural aspects of all businesses. Risk awareness and good risk management are prereq-uisites for long-term value creation and for securing good profitability. Gunnebo therefore continuously evaluates the risks to which the operation is exposed, and carefully monitors the development of factors that influence the main risks that have been identified.

Gunnebo is an international group with a broad geographical spread. The Group currently has operations in 33 countries and production units in 10 coun-tries. The Group is therefore exposed to various kinds of strategic, operational and financial risk. Strategic and operational risks include business environment risks, raw material risks, production risks and legal risks.

Risk management within the Group is an important part of the governance and control of the Group’s operation and aims to identify, evaluate and manage these types of risk and, thereby, mitigate their potential effects.

The management groups in Gunnebo’s regions and sales companies are responsible for developing strategies and identifying risks in their market or area of responsibility. These management groups are supported by resources within central Group functions such as finance, legal affairs, operations, market-ing & service, and human resources and by Group-wide principles, guidelines and instructions. The Group’s risk management is systematically monitored by the Group Executive Team, partly through a system of monthly reports whereby the management groups describe developments in their respective units, along with identified risks. Further control is achieved through the inclusion of repre-sentatives of the Group Executive Team on internal boards. The President reports continuously to the Board of Directors about the development of the Group’s risks, and Gunnebo’s Board has overall responsibility for the Group’s risk management and for deciding the Group’s strategic direction.

Market risksThe Gunnebo Group’s operation and results are exposed to market risks such as the impact of the business cycle on demand for the Group’s products and ser-vices, and changes in customers’ investment plans and production levels. The Group’s relatively broad product range and customer structure, as well as its global market coverage with sales and production in a large number of coun-tries, provide a good distribution of risk intended to restrict the effect of a change in demand limited to a particular industry, region or country.

The operation’s geographical distribution naturally entails exposure to busi-ness environment risks such as country-specific risks in the form of political decisions and changes to regulations.

Raw material risksThe Gunnebo Group is exposed to risks related to supply and price variations of raw materials and components. Competition on the market may restrict the opportunity to fully offset cost increases through price rises, even though the Group endeavours to enter sales agreements which allow the price increases to be passed on to customers.

Steel is the single largest raw material component in the Group. The Group purchases many different types and grades of steel on different markets, result-ing in differentiated price development. With the aim of limiting the short-term effect of price fluctuations, a large part of the Group’s steel requirement is pur-chased via index-based contracts.

Risks related to the Group’s purchases of more important input goods are managed by co-ordinating and controlling procurement through a central pur-chasing function, which for instance appoints people responsible for certain categories of raw materials or components.

Production risksGunnebo’s production operation takes place in 12 production units and com-prises a chain of processes where stoppages or disruptions can have conse-

quences on Gunnebo’s ability to fulfil its obligations to customers. Gunnebo deals with risks relating to the Group’s property and operational stoppages through a programme for identifying and assessing such risks. The programme is applied at all of Gunnebo’s production plants and aims to prevent these types of risks or, if an event is beyond Gunnebo’s control, to mitigate the conse-quences.

The majority of components used in the Group’s products are sourced from subcontractors. With the aim of minimising the risk of one of these subcontrac-tors being unable to deliver the component, or to deliver on time, for any reason, Gunnebo actively strives to secure alternative suppliers for critical components. There is, therefore, usually more than one subcontractor that can deliver a par-ticular component. Furthermore, the Group’s purchasing function works actively and continuously to evaluate and analyse the Group’s suppliers from a risk perspective, for example.

Environmental impact primarily takes place in the production process through material and energy consumption, emissions to air and water, and the creation of noise and waste. To restrict the environmental impact of produc-tion, the Group has the objective to gain ISO 14001 certification for all produc-tion units. Risk analyses are carried out in connection with such certification and through chemical analyses during, for example, REACH work (Registration, Evaluation, Authorisation and restriction of Chemicals). These risk analyses pro-vide good information about the various risks at the production plants, and rel-evant programmes of measures can therefore be implemented.

Acquisition of new operationsOne of the Gunnebo Group’s goals is to grow. Growth shall be organic but sup-plemented by acquisitions. The aim is to carry out more acquisitions on certain defined markets on an ongoing basis. Acquisitions can entail various difficulties integrating the acquired operation, which can lead to far higher costs for the acquisition than estimated and/or that the synergies take longer to realise than planned.

Acquisitions that do not develop as planned may also lead to high write-down costs for goodwill and other intangible assets, which can have a signifi-cant adverse effect on the Group’s results and financial position.

The acquisition process is conducted in accordance with set instructions and guidelines. The Group’s function for Mergers & Acquisitions has overall respon-sibility for evaluating and implementing acquisitions, and for ensuring that the established integration plans are carried out.

Legal risksThe legal affairs department within the Group is responsible for monitoring and controlling the management of legal risks within Gunnebo. A Group-wide legal policy has been introduced which states, for example, that some matters of a legal nature must be escalated to the legal affairs department. This includes stock exchange related issues, competition law issues and issues relating to the Group’s intangible assets. With the aim of eliminating unwanted risks in the Group’s customer and supplier agreements and to ensure the quality of these agreements, instructions and guidelines have been issued on the more impor-tant agreement terms, such as those relating to liability and limitations on lia-bility. Furthermore, the Group’s business areas have access to agreement tem-plates for the more common types of agreement. In addition to the above, there are also procedures for approving agreements.

As a result of standard business operations, Gunnebo is a party in various legal disputes. These disputes include, for example, commercial disputes and disputes regarding tax or labour law. Such outstanding and potential disputes are reported regularly to the Group’s legal affairs department. Disputes can last a long time and entail high costs. It can also be hard to predict the outcome of many disputes. A negative outcome in one particular dispute could have an important negative impact on the Group’s results and financial position. At the end of 2014, there were not deemed to be any disputes that could entail such an effect.

Insurable risksGunnebo has established a Group-wide insurance programme to protect the Group’s insurable assets and interests. The programme covers property and loss of profit insurance, general liability and product liability, transport insurance, crime against property as well as claims for damages against the Board and sen-ior executives, for example. Linked to the insurance programme is a programme for identifying and evaluating risks related to physical damage at the Group’s


production plants and related financial consequences. The results of these reviews are summarised in a points system for risk exposure at each plant, ena-bling the management to control the risks and to assess the need for risk-reduc-tion measures and establish priorities among these.

Sensitivity analysisProfit is affected by changes in certain factors of importance to the Group, as explained below. The calculation is made on the basis of the Group’s structure at the year-end and assuming all other factors remain unchanged.

Selling pricesA 1% change in selling prices affects income and operating profit by approxi-mately MSEK 56.

Labour costsA 1% change in labour costs, including social security charges, affects operating profit by approximately MSEK 19.

Steel pricesSteel is the single largest raw material component in the Group. Steel purchases span many different types and grades, resulting in differentiated price develop-ment. A general change in the steel price of 10% affects profits by around MSEK 30 for the subsequent 12 months.

Note 36 Events after the closing day

No significant events have occurred since the closing day, except that Henrik Lange has been appointed President and CEO.

Notes – Parent Company

Note 37 Operating expenses allocated by type of cost

2014 2013

Remuneration for employees 68.3 49.3Temporary personnel and subcontractors 57.6 68.0Vehicle and travel costs 8.6 9.3Depreciation and write-downs 2.3 4.7Other costs 67.1 15.8Total operating costs 203.9 147.1

Note 38 Financial income and expenses

2014 2013

Profit/loss from participations in Group companiesDividends 49.0 —Liquidation of subsidiaries — –0.3Total 49.0 –0.3

Interest incomeInterest income, external 0.2 0.7Total 0.2 0.7

Interest expensesInterest expenses, Group companies –18.1 –14.1Total –18.1 –14.1

Other financial expensesOther financial expenses — –0.1Total — –0.1

Note 39 Appropriations

2014 2013

Group contributions received 84.0 —Group contributions paid –37.0 –90.0Total 47.0 –90.0

Note 40 Taxes

2014 2013

Current tax –3.4 –3.3Deferred tax –10.4 —Total –13.8 –3.3 Deferred tax assets of MSEK 120.3 (130.7) relate entirely to loss carry-forwards.


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Note 41 Intangible assets

Other intangible assets 2014 2013

Opening cost 24.3 23.2Capital expenditure 2.2 1.4Sales/disposals — –0.3Closing accumulated cost 26.5 24.3

Opening amortisation 18.6 14.9Sales/disposals — –0.3Amortisation 1.8 4.0Closing accumulated amortisation 20.4 18.6

Closing carrying amount 6.1 5.7

Note 42 Property, plant and equipment

Equipment 2014 2013

Opening cost 6.4 6.4Capital expenditure 0.1 —Closing accumulated cost 6.5 6.4

Opening depreciation 4.0 3.3Depreciation 0.4 0.7Closing accumulated depreciation 4.4 4.0

Closing carrying amount 2.1 2.4

Note 43 Shares in subsidiaries

2014 2013

Opening book value 1,595.3 1,562.6Shareholder contributions paid — 40.0Liquidation of subsidiaries — –7.3*Closing book value 1,595.3 1,595.3 * Relates to liquidation of Gunnebo Treasury SA.

Specification of shares in subsidiaries No. of shares Holding, %Corporate iden-tity number (SE) Reg. office

Country code Book value

Gunnebo Holding GmbH 1 100 Garching DE 0.1Gunnebo Holding ApS 1,000 100 Skovlunde DK 91.4Gunnebo India Pvt. Ltd. 8,059,880 100 Mumbai IN 115.5Hidef Industri AB 1,000 100 556465-2757 Gothenburg SE 0.1Gunnebo Entrance Control AB 48,000 100 556086-5403 Gothenburg SE 8.5Gunnebo Holding AB 1,000 100 556573-7508 Gothenburg SE 90.0Gunnebo Nordic AB 251,000 100 556041-2362 Gothenburg SE 388.3Gunnebo Sverige AB 5,500 100 556095-6509 Gothenburg SE 1.3Gunnebo SafePay AB 1,000 100 556621-4721 Gothenburg SE 0.1Gunnebo Treasury AB 1,000 100 556465-2765 Gothenburg SE 900.0Total 1,595.3


Subsidiaries’ holdings in Group companies Holding, %Corporate iden-tity number (SE) Reg. office

Country code

Gunnebo Middle East FZE 100 Dubai AEGunnebo Australia Pty Ltd 100 Bella Vista AUGunnebo Österreich GmbH 100 Ansfelden ATGunnebo Belgium SA/NV 100 Brussels BEGunnebo Gateway Brasil S.A. 80 Cotia BRGunnebo Gateway Brasil Servicos Ltda 100 * Cotia BRGunnebo Canada Inc. 100 Barrie CAGunnebo (Suisse) SA 100 Geneva CHGunnebo Security (China) Co. Ltd. 100 Kunshan City CNGunnebo CZ s. r. o. 100 Prague CZGunnebo Cash Automation GmbH 100 Trier DEGunnebo Deutschland GmbH 100 Garching DEGunnebo Logistics GmbH 100 Hildesheim DEGunnebo Markersdorf GmbH 100 Markersdorf DERosengrens GmbH 100 Garching DEA/S Gunnebo Nordic 100 Skovlunde DKFichet Industria SL 100 Barcelona ESGunnebo España SA 100 Barcelona ESGunnebo Nordic Oy 100 Vantaa FIGunnebo Bazancourt SAS 100 Versailles FRGunnebo Electronic Sécurité SAS 100 Colmar FRGunnebo France SAS 100 Velizy FRSCI route de Schwobsheim 100 Colmar FRClear Image MMS Ltd 100 Batley GBClear Image Group LLP 100 Batley GBFBH Fichet Ltd 49 Hitchin GBGunnebo Entrance Control Ltd 100 Uckfield GBGunnebo UK Ltd 100 Wolverhampton GBGunnebo Magyarország Kft. 100 Budapest HUGunnebo Hong Kong Ltd. 100 WanChai HKPT Chubb Safes Indonesia 100 Jakarta IDGunnebo Services India Pvt. Ltd. 100 New Delhi INGunnebo Entrance Control S.p.A. 100 Trento ITGunnebo Italia S.p.A. 100 Milan ITGunnebo Korea Co. Ltd. 100 Seoul KRGunnebo Luxembourg SARL 100 Schifflange LUDiseños Inteligentes de Seguridad S.A. de C.V. 100 ** Monterrey MXGunnebo México S.A. de C.V 85 Mexico City MXGunnebo Malaysia Sendirian Berhad 100 Kuala Lumpur MYGunnebo Doetinchem BV 100 Arnhem NLGunnebo Holding Nederland BV 100 Doetinchem NLGunnebo Nederland BV 100 Amsterdam NLGunnebo Nederland Technical BV 100 Rotterdam NLGunnebo Nordic AS 100 Oslo NOGunnebo Polska Sp. z.o.o. 100 Kalisz PLGAT – Comercializacao de Sistemas de Proteccao Electronica LDA 55 Lisbon PTGunnebo Portugal SA 100 Lisbon PTGunnebo Cash Automation AB 100 556533-2078 Gothenburg SEGunnebo Gateway AB 100 556480-7641 Motala SEGunnebo Mora AB 100 556009-9458 Mora SEProdimo AB 48 556653-3153 Motala SEGunnebo Singapore Pte Ltd. 100 Singapore SGGateway Security Inc. 100 Florida USGunnebo Entrance Control Inc. 100 California USGunnebo Security Inc. 100 Florida USHamilton Products Group, Inc. 100 Ohio USHamilton Safe Co. 100 Ohio USSafe LLC 100 Delaware USKaaa/Hamilton Enterprises, Inc. 31 Ohio USAll Technologies Access and Parking (Pty) Ltd 100 Johannesburg ZAGunnebo South Africa (Pty) Ltd 100 Johannesburg ZA

*The company is a wholly-owned subsidiary of Gunnebo Gateway Brasil S.A. in which Gunnebo has a participating interest of 80%.**The company is a wholly-owned subsidiary of Gunnebo México S.A. de C.V in which Gunnebo has a participating interest of 85%.


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Note 49 Personnel

Average number of employeesIn the 2014 financial year, the average number of parent company employees was 33 (31), of whom 15 were female (15).

There is one woman on the Board of the parent company and one in the executive management team.

Costs of personnel

Salaries, other remuneration and social security charges 2014

Salaries and other


chargesof which

pension costs

Total 42.7 25.6 9.6

Salaries, other remuneration and social security charges 2013

Salaries and other


chargesof which

pension costs

Total 30.5 18.8 7.3

Information on remuneration to senior executives and the Board is provided in Note 32.

Note 50 Auditors’ remuneration

2014 2013

Remuneration to Deloitte

Auditing 1.0 1.2Auditing assignments in addition to auditing 0.1 0.0Tax advice 0.1 0.1Other services 0.3 0.1Total remuneration to Deloitte 1.5 1.4

Auditing assignments in addition to auditing constitute any examination of administration or financial information resulting from statutes, the Articles of Association, regulations or agreements which result in a report or some other document intended to form a basis for assessment also for a party other than the ordering client, as well as advice or other assistance prompted by observa-tions in an auditing assignment. An example of an auditing assignment that is not part of the audit is the auditors’ general review of an interim report.

Tax advice is self-evident. Other services are advice not related to any of the previously specified services.

Note 51 Current liabilities to Group companies

The company is part of Gunnebo Treasury AB’s Group account system whereby the company’s authorised credit amounts to MSEK 237.4. The liability at the end of the year totalled MSEK 28.8 and is net accounted in the item Current liabili-ties to Group companies.

Note 52 Transactions with related parties

Of the parent company’s net sales, 100% (100%) related to Group companies, while purchases from Group companies accounted for 20% (26%) of the total.

Information on remuneration to Board members is provided in Note 32. Over and above these, there were no other transactions with related parties.

Note 44 Prepaid expenses and accrued income

2014 2013

Prepaid rent 0.7 0.6Other items 2.6 3.4

Total 3.3 4.0

Note 45 Accrued expenses and deferred income

2014 2013

Holiday pay liability 5.9 5.0Social security charges 15.2 11.9Accrued salaries 10.3 2.3Other items 4.5 2.0Total 35.9 21.2

Note 46 Contingent liabilities

2014 2013

Guarantees* 1,317.5 1,310.3Total 1,317.5 1,310.3

*Refers to guarantees for subsidiaries and associated companies.

Note 47 Operating lease contracts

Leased assetsFuture payment commitments for operating lease contracts have the following breakdown:

2015 3.12016 2.52017 0.72018 0.02019 —2020 and later —Total 6.3

Leasing costs at the parent company amounted to MSEK 3.4 (2.8).

Note 48 Net financial items affecting cash flow

2014 2013

Interest received 0.2 0.7Interest paid –18.0 –16.1Dividends received 49.0 —Dividend in connection with liquidation of subsidiaries — 7.0Other items affecting cash flow — –0.1Total 31.2 –8.5


Proposed Distribution of EarningsUnrestricted equity in the parent company at the disposal of the Annual General Meeting:

Share premium reserve 448.3Retained earnings –4.4Profit/loss for the year 120.5Total 564.4

The Board of Directors proposes:

that a dividend of SEK 1.00 per share be paid to shareholders* 76.2and that the remaining sum be carried forward 488.2Total 564.4

*For Euroclear Sweden AB-registered owners, the proposed record date for dividend payment is April 17, 2015. The number of dividend-bearing shares on the record day is expected to total 76,173,501.

Board statement: The Board has proposed that a dividend of SEK 1.00 per share be paid, i.e. a total of approximately MSEK 76. As a result of the dividend, unrestricted equity will change as shown above. The company and the Group are in a good position. There is more than enough scope for the proposed dividend in unrestricted equity. The equity ratio and liquidity will continue to be satisfactory after the proposed dividend. Considering this, the information in the Board of Directors’ report and what is otherwise known by the Board, the

Board deems the proposed dividend justified with regard to the requirements placed by the operation’s nature, scope and risks on the size of the company’s and Group’s equity and on the company’s and Group’s consolidation requirements, liquidity and position in general. None of the parent company equity on the closing day depends on assets and liabilities being measured at fair value according to Chapter 4 §14 of the Annual Accounts Act.

Gothenburg, March 5, 2015

Martin Svalstedt Chairman

Tore Bertilsson Göran Bille Charlotte Brogren Bo Dankis Mikael Jönsson Board member Board member Board member Board member Board member

Irene Thorin Per Borgvall Crister Carlsson Board member President and CEO Board member

Our audit report was submitted on March 5, 2015 Deloitte AB

Jan Nilsson Authorised Public Accountant

The Board and the President hereby give their assurance that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and that they provide a true and fair view of the financial position and results of the Group. The annual accounts have been prepared in accordance with generally accepted accounting principles and thus provide a true and fair view of the financial position and results of the Parent Com-pany. The Board of Directors’ Report for the Group and the Parent Company provides a true and fair view of the Group’s and Parent Company’s operations, financial posi-tions and results and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.

This annual report is a translation of the original report in Swedish, which has been audited by the company’s auditors.


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Auditor’s ReportThis auditor s report is a translation of the Swedish language original.In the events of any differences between this translation and the Swedish original the latter shall prevail.

To the annual meeting of the shareholders of Gunnebo AB (publ)Corporate identity number 556438-2629

Report on the annual accounts and the consolidated accountsWe have audited the annual accounts and consolidated accounts of Gunnebo AB for the financial year January 1, 2014 to December 31, 2014. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 48–87.

The responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accountsThe Board of Directors and the Managing Director are responsible for the prepa-ration and fair presentation of these annual accounts in accordance with the Annual Accounts Act and of the consolidated accounts in accordance with Inter-national Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these annual accounts and consol-idated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstate-ment.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circum-stances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appro-priateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.

We believe that the audit evidence we have obtained is sufficient and appro-priate to provide a basis for our audit opinions.

OpinionsIn our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Parent Company as of December 31, 2014 and of its financial performance and its cash flows for the year then ended in accordance with the

Annual Accounts Act. The consolidated accounts have been prepared in accord-ance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as of December 31, 2014 and of its financial performance and cash flows for the year then ended in accordance with Inter-national Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the Parent Company and the Group.

Report on other legal and regulatory requirementsIn addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company’s profit or loss and the administration of the Board of Directors and the Managing Director of Gunnebo AB for the financial year January 1, 2014 – December 31, 2014.

Responsibilities of the Board of Directors and the Managing DirectorThe Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act.

Auditors’ responsibilityOur responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company’s profit or loss and on the administra-tion based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.

As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss, we examined the Board’s substantiating state-ment and a selection of the relevant documentation to ascertain whether the proposal is in accordance with the Companies Act.

As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined sig-nificant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

We believe that the audit evidence we have obtained is sufficient and appro-priate to provide a basis for our audit opinions.

OpinionsWe recommend to the annual meeting of shareholders that the profit be appro-priated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Gothenburg, March 5, 2015Deloitte AB

Jan NilssonAuthorised Public Accountant


Invitation to the 2015 Annual General MeetingGunnebo’s Annual General Meeting will be held at 4.00 pm CET on Wednesday April 15, 2015 at the Chalmers Student Union building, Chalmersplatsen 1, Gothenburg, Sweden.

RegistrationShareholders who wish to participate in the Annual General Meeting must have their names entered in the register of shareholders maintained by Euroclear Sweden by no later than Thursday April 9, 2015, and must notify the AGM of attendance by no later

than Thursday April 9, 2015, preferably before 4:00pm CET, either online at www.gunnebogroup.com, by post to Gunnebo AB, Box 5181, SE-402 26 Gothenburg, or by fax on +46 (0)10-209 50 10, or by phone on +46 (0)10-209 50 00.

Shareholders whose shares are registered in nominee names must, if they wish to exercise their right to vote at the AGM, have their shares re-registered in their own names by April 9, 2015.

Gunnebo’s objective is to provide the market with open, consistent and transparent financial information. All external and internal com-munication shall be fair and appropriate. Relevant information shall be made accessible to all stakeholders simultaneously and at the prom-ised time.

Communication in the form of reporting to various authorities, financial reporting and information for employees takes place in ac-cordance with external rules and requirements, the Group’s internal governing documents as well as Gunnebo’s IR and communication policy.

InfoRmatIon channelsGunnebo AB’s website www.gunnebogroup.com contains publica-tions, financial information, press releases, and information about Gunnebo’s organisation and offering.

OwnersShareholders are asked what information they would like to see from the company and therefore make an active choice in receiving the re-quired information. The information channels available to sharehold-ers are interim reports and annual reports, as well as the customer magazine Global and the website. Shareholders can also participate at Gunnebo’s Annual General Meeting.

Questions may be sent directly to [email protected] or submit-ted by telephone on +46 (0)10-209 50 00. It is also possible to order printed annual reports and interim reports from the Group head office on +46 (0)10-209 50 00, from the website or via the above e-mail address.

Stock marketGunnebo’s aim is always to be available to respond to questions from the stock market. Questions about the company’s operations are pri-marily answered by Gunnebo’s President and CEO, the Chief Financial Officer and the IR department. There is also detailed information about both the Group’s operations and its financial results on the Group web-site, www.gunnebogroup.com.

annual GeneRal meetInGGunnebo’s Annual General Meeting will be held at 4:00pm CET on Wednesday April 15, 2015 at the Chalmers Student Union building, Chalmersplatsen 1, Gothenburg, Sweden.

RegistrationShareholders who wish to participate in the Annual General Meeting must have their names entered in the register of shareholders main-tained by Euroclear Sweden by no later than Thursday April 9, 2015, and must notify the AGM of attendance by no later than Thursday April 9, 2015, preferably before 4:00pm CET, either online at the Group’s web-site, www.gunnebogroup.com, by post to Gunnebo AB, Box 5181, SE-402 26 Gothenburg, by fax on +46 (0)10-209 50 10, or by phone on +46 (0)10-209 50 00. Shareholders whose shares are registered in nomi-nee names must, if they wish to exercise their right to vote at the AGM, have their shares re-registered in their own names by April 9, 2015.

DividendThe Board and the President propose to the AGM a dividend of SEK 1.00 (SEK 1.00) per share for the 2014 financial year.

Information for the Capital Market Gunnebo strives to give all stakeholders as fair a view as possible of the Group’s business and financial results. The goal is to provide owners and the stock market with information that supports these parties in the process of evaluating Gunnebo’s business.


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IR polIcyThe goal of Gunnebo’s IR activities is, through communication activi-ties, to help give all stakeholders as fair a picture as possible of the Group’s business and financial results.

In addition to day-to-day communications, contact takes place with the finance market in connection with the interim reports and the AGM, and through meetings with analysts, investors and journalists at seminars or individual meetings. Trustful contact with the market’s various stakeholders presupposes a smoothly functioning internal reporting system that provides fast, accurate reporting from all the Group’s business.

Gunnebo keeps important financial information secret until it is disclosed – simultaneously and consistently – to the stock market and to NASDAQ Stockholm. All external financial information about Gunnebo is handled centrally. Financial interim reports are comment-ed on by the President and CEO, and the Chief Financial Officer. One of these people is always available in connection with the publication of interim reports.

Confidence in the Gunnebo share is based on compliance with NASDAQ Stockholm’s rules for listed companies and on Gunnebo’s abil-ity and willingness to provide clear, relevant information to the market.

actIvItIes 2014In 2014, Gunnebo held individual analyst meetings with, for example, the analysts that follow Gunnebo: Carnegie, SEB and Swedbank. Dur-ing the year telephone conferences and face-to-face meetings were also held with analysts. On March 5, Gunnebo held its Capital Market Day in Stockholm, Sweden for analysts, fund managers, investors and journalists.

The company also participated in seminars, breakfasts, lunch and dinner meetings, as well as several shareholder meetings. After each interim report Gunnebo arranges a telephone conference to present the financial results. The conference is recorded and the recording is made available via the website.

fInancIal GoalsGunnebo’s financial goals have remained unchanged since 2005. Gunnebo shall earn a long-term return on capital employed of at least 15% and an operating margin of at least 7%

The Group shall achieve organic growth of at least 5% The equity ratio shall not fall below 30%

the capItal stRuctuRe of the GRoupOne of Gunnebo’s long-term financial goals is to have an equity ratio of no less than 30%. The equity ratio at the end of the year was 35%. Another of Gunnebo’s aims is to achieve a return of at least 15% on capital employed. Gunnebo’s borrowing is mostly unsecured. Borrowing is limited, how-ever, by financial obligations in the loan agreements in the form of covenants. These mainly relate to the key ratios of interest coverage ratio and net debt/EBITDA. The Group’s long-term credit framework on December 31, 2014 amounted to MSEK 1,510 and ensures that financing is available on market terms until the end of February 2019.

DIvIDenD polIcy anD pRoposeD DIvIDenDThe Board’s dividend proposal shall take into account Gunnebo’s long-term development potential, its financial position and its investment needs. The Board has decided that the target for the dividend is that in the long term it shall amount to 30–40% of the profit after tax. The proposed dividend for 2014 is SEK 1.00 per share.

Analysts Following Gunnebo

caRneGIe Investment Bank aBFredrik Villard+46 8 676 88 [email protected]

seB equIty ReseaRchOlof Larshammar+46 8 522 295 00 [email protected]

sweDBank maRketsMats Liss+46 8 585 900 [email protected]

April 15, 2015Annual General Meeting 2015

April 28, 2015Interim Report January–March 2015

July 17, 2015Interim Report January–June 2015

October 21, 2015Interim Report January–September 2015

February 4, 20162015 Year-End Release

Financial Information and Reports 2015


Investor Relations WebsiteVisit www.gunnebogroup.com to access previous fi nancial reports, presentations, fi nancial statistics and share data, as well as information about corporate governance and the Group in general.

Share price and its development

Contact information

Press releases

Risk analysis

Latest annual report and archived reports

Financial results and related material

Financial calendar

Subscription to interim reports, annual reports and press releases


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At the end of 2014 Gunnebo had 12,000 shareholders. The percentage of foreign ownership amounted to 11%. 15% of the share capital was owned by Swedish natural persons, which means that 85% was owned by legal entities or foreign natural persons.

shaRe capItal anD votesOn December 31, 2014 Gunnebo had a share capital of MSEK 380.9 divided into 76,173,501 shares, each with a quota value of SEK 5. All shares have equal voting rights and share equally in the company’s assets and earnings.

shaRe pRIceAt the end of the year the Gunnebo share was trading at SEK 37.7, which is a decrease during the year of 6%. During the same period, Stockholm Stock Exchange’s OMX 30 index increased by 10%. The lowest share price paid during the year was SEK 33.3 (February 5 and 6) and the highest was SEK 43.7 (July 17).

tRaDInG anD maRket valueA total of 25,822,152 shares (26,165,851) were traded in 2014 at a value corresponding to MSEK 988 (806). The average volume traded each trading day was 103,703 shares (104,663), equating to TSEK 3,966 (3,222). The market value on December 30, 2014 was MSEK 2,872.

The Gunnebo ShareThe Gunnebo share has been listed on Stockholm Stock Exchange since 1993, and can be found on the NASDAQ Stockholm in the Mid Cap segment and the Industrials sector. The abbreviated name is GUNN and the ISIN code is SE0000195570.

The Gunnebo share 2014

DECJAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV©NASDAQ OMX

0200400600800

1,0001,2001,400

©NASDAQ OMX

0

1,000

2,000

3,000

4,000

5,000

6,000

20112010 2012 2013 2014

Share/SEK OMX Stockholm_PI Trading (no. of shares in thousands)

30

40

50

0

20

40

60

The Gunnebo share 2010–2014


No. of shares 2014 2013 2012 2011 2010

Closing no. of shares, x 1,000 76,174 75,914 75,856 75,856 75,856Average number of shares, x 1,000 75,979 75,863 75,856 75,856 75,856

Largest shareholders, grouped No. of shares Proportion, %

Stena Adactum 19,852,329 26.1Vätterledens Invest, with associates 14,977,913 19.7IF Skadeförsäkringar 8,849,114 11.6Didner & Gerge Funds 1,839,693 2.4NTC Various Fiduciary Capacit 1,743,592 2.3Avanza Pension 1,700,012 2.24th AP Fund 1,373,131 1.8DnB Carlson Funds 1,199,073 1.6Skandia Funds 829,086 1.1Muirfield Invest 750,000 1.0BP2S London/Henderson OEIC 617,290 0.8Swedbank Robur Funds 501,810 0.7NordNet pension insurance 404,554 0.5Örgryte Industri AB 402,000 0.5DFA International Small Cap 395,710 0.5State Street Bank 378,336 0.5Handelsbanken Funds 361,701 0.5Other 19,998,157 26.2Total 76,173,501 100.0

Changes in share capital, MSEK Change Share capital

Total no. of shares

1991 Formation 4 4,0001992 Split 100:1 4 400,0001992 New share issue +96 100 10,000,0001995 New share issue +50 150 15,000,9341995 Conversion +3 153 15,280,7831996 Conversion +10 163 16,275,8191997 New share issue +4 167 16,715,8191997 Conversion +27 194 19,351,1211998 Conversion +4 198 19,813,1501998 New share issue +2 200 19,973,1501999 Conversion 0 200 19,982,3101999 New share issue +6 206 20,625,8812000 Conversion +6 212 21,204,5282001 Conversion 0 212 21,211,1982003 Conversion +7 219 21,889,9742004 Split 2:1 0 219 43,779,9482005 New share issue 0 219 43,854,5482006 New share issue +4 223 44,578,5232007 New share issue +5 228 45,513,3592009 New share issue +151 379 75,855,5982013 New share issue +1 380 75,914,0982014 New share issue +1 381 76,173,501

shareholders by sizeNo. of

shareholders No. of sharesHolding and

votes, %

1–500 7,499 1,389,736 1.8501–1,000 2,066 1,716,080 2.31,001–5,000 1,938 4,532,461 5.95,001–10,000 242 1,819,853 2.410,001–20,000 98 1,421,714 1.920,001– 157 65,293,657 85.7total 12,000 76,173,501 100.0

2

1

3

4

SEK

10 11 12 1413

Earnings per share after dilution

0.5

1.0

1.5

SEK

10 11 12 13 14 *)

Divended per share

10

20

30

SEK

1410 11 12 13

Equity per share

–1.0

2.0

1.0

3.0

4.0

SEK

10 11 12 13 14

Cash flow per share

Share price related share data 2014 2013 2012 2011 2010

Share price at year-end (last price paid), SEK 37.70 40.00 24.50 24.00 53.00Highest price during the year (price paid), SEK 43.70 40.90 39.40 54.75 53.50Lowest price during the year (price paid), SEK 33.30 24.00 23.30 21.20 25.10Market value at year-end, MSEK 2,872 3,037 1,858 1,821 4,020P/E ratio, times 13 31 94 8 23Dividend yield, %2) 2.7 2.5 4.1 4.2 0.9

1) The figures have not been recalculated as a result of the revised standard IAS 19 Employee Benefits.

2) The Board proposes a dividend of SEK 1.00 per share for the year 2014.

Data per share 2014 2013 2012 20111) 20101)

Earnings per share after dilution, SEK 2.98 1.29 0.26 3.00 2.35Equity per share, SEK 21.93 19.06 20.02 23.24 21.17Free cash flow per share, SEK 2.94 1.90 0.28 –0.31 0.87Dividend, SEK2) 1.00 1.00 1.00 1.00 0.50

*) Board proposal


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2014 2013 2012 20111) 20101)

Income statement, msekNet sales 5,557 5,271 5,236 5,137 5,263Cost of goods sold –3,911 –3,689 –3,666 –3,572 –3,723Gross profit 1,646 1,582 1,570 1,565 1,540Other operating expenses, net –1,294 –1,360 –1,391 –1,241 –1,343operating profit2) 352 222 179 324 197Net financial items –35 –75 –66 –27 –75profit/loss after financial items 317 147 113 297 122Taxes –90 –45 –89 –52 –41profit/loss for the year 227 102 24 245 812) Of which items of a non-recurring nature –14 –84 –87 7 –127

margins, excl. items of a non-recurring natureGross margin, % 30.2 30.6 30.3 30.8 30.2Operating margin before depreciation, (EBITDA), % 8.2 7.4 6.9 7.7 7.7Operating margin (EBIT), % 6.6 5.8 5.1 6.2 6.1Profit margin (EBT), % 6.0 5.2 4.7 5.7 4.7

margins, incl. items of a non-recurring natureGross margin, % 29.6 30.0 30.0 30.5 29.3Operating margin before depreciation, (EBITDA), % 7.9 5.9 5.2 7.9 5.3Operating margin (EBIT), % 6.3 4.2 3.4 6.3 3.7Profit margin (EBT), % 5.7 2.8 2.2 5.8 2.3

other information Foreign sales ratio, % 97 97 97 96 96Order intake, MSEK 5,433 5,514 5,250 5,091 5,271Capital expenditure, MSEK 78 72 116 85 71Depreciation, MSEK 88 84 87 81 82Average number of employees 5,629 5,656 5,563 5,315 5,248

1) The figures have not been recalculated as a result of the revised standard IAS 19 Employee Benefits.

Five-Year Review


2014 2013 2012 20111) 20101)

Balance sheet, msek Intangible assets 1,675 1,494 1,502 1,215 1,048Property, plant and equipment 304 304 327 316 367Financial assets 16 17 60 139 94Deferred tax assets 339 307 263 253 241Inventories 694 609 580 564 543Current receivables 1,350 1,212 1,201 1,239 1,253Liquid funds 447 392 350 239 189total assets 4,825 4,335 4,283 3,965 3,735

Equity 1,694 1,463 1,533 1,776 1,606Long-term liabilities 1,449 1,274 1,428 800 639Current liabilities 1,682 1,598 1,322 1,389 1,490total equity and liabilities 4,825 4,335 4,283 3,965 3,735

cash flow statement, msek Cash flow from operating activities before changes in working capital 246 218 156 234 177Cash flow from changes in working capital 25 –7 –20 –169 –32cash flow from operating activities 271 211 136 65 145

free cash flow, msek Free cash flow 223 144 21 –23 66

Returns, excl. items of a non-recurring natureReturn on capital employed, % 12.6 10.7 10.2 13.2 13.5Return on equity, % 15.6 15.6 9.7 13.7 14.3

Returns,incl. items of a non-recurring nature Return on capital employed, % 12.1 7.9 7.0 13.5 12.3Return on equity, % 14.7 6.9 1.5 14.1 12.2

other key ratiosCapital turnover rate, times 1.8 1.8 1.9 2.3 2.5Equity ratio, % 35 34 36 45 43Interest coverage ratio, times 9.6 5.3 5.4 18.0 5.0Debt/equity ratio, times 0.6 0.7 0.7 0.3 0.3

share dataEarnings per share before dilution, SEK 2.98 1.29 0.26 3.00 2.35Earnings per share after dilution, SEK 2.98 1.29 0.26 3.00 2.35Equity per share, SEK 21.93 19.06 20.02 23.24 21.17Free cash flow per share, SEK 2.94 1.90 0.28 –0.31 0.87Dividend, SEK2) 1.00 1.00 1.00 1.00 0.50

other informationCapital employed, MSEK3) 3,186 2,950 2,958 2,617 2,289Net debt, MSEK3) 1,039 1,088 1,026 498 460

1) The figures have not been recalculated as a result of the revised standard IAS 19 Employee Benefits2) The Board proposes a dividend of SEK 1.00 per share for the year 2014.3) Closing balance.


Region EMEA

(Europe, Middle East and Africa)SVP: Morten Andreasen

NORDIC REGIONRegional Manager: Tom Christensen

DENMARKA/S Gunnebo Nordicwww.gunnebo.dkTel: +45 70 10 56 00E-mail: [email protected] Manager: Tom Christensen

FINLANDGunnebo Nordic Oy www.gunnebo.fiTel: +358 10 219 3480 E-mail: [email protected] General Manager: Päivi Laaksomies

NORWAYGunnebo Nordic A/Swww.gunnebo.noTel: +47 22 90 03 00E-mail: [email protected] Manager: Torgeir Abusdal

SWEDENGunnebo Nordic ABwww.gunnebo.seTel: +46 10 209 51 00E-mail: [email protected] Manager: Morten Henriksen

CENTRAL EUROPERegional Manager: Patrick van Aart

BELGIUM, LUXEMBOURGGunnebo Belgium SA/NVwww.gunnebo.beTel: +32 2 464 19 11 (Belgium)Tel: +35 2 49 05 06 (Luxembourg)E-mail: [email protected] Manager: Frederik De Broyer

NETHERLANDSGunnebo Nederland BVwww.gunnebo.nlTel: +31 203 988 988E-mail: [email protected] Manager: Patrick van Aart (acting)

SWITZERLANDGunnebo Suisse SAwww.gunnebo.chTel: +41 22 363 7777E-mail: [email protected] Manager: Patrick van Aart (acting)

GERMANY, AUSTRIAGunnebo Deutschland GmbHGunnebo Österreich GmbHwww.gunnebo.dewww.gunnebo.atTel: +49 89 2441 63500 (Germany)Tel: +43 7229 820 50 (Austria)E-mail: [email protected]: [email protected] Manager: Patrick van Aart

SOUTHERN EUROPERegional Manager: Darío Vicario

ITALY Gunnebo Italia S.p.A. www.gunnebo.it Tel: +39 02 267 101 E-mail: [email protected] Country Manager: Marco Depaoli

PORTUGAL Gunnebo Portugal S.A. www.gunnebo.pt Tel: +351 218 315 600 E-mail: [email protected] Country Manager: Carlos Valpradinhos

SPAIN Gunnebo España S.A. www.gunnebo.es Tel: +34 902 100 076 E-mail: [email protected] Country Manager: Darío Vicario

FRANCEGunnebo France S.A.S www.gunnebo.fr Tel: +33 1 34 65 65 34 E-mail: [email protected] Country Manager: Michael Gass

UK, IRELAND Gunnebo UK Ltd www.gunnebo.co.uk Tel: +44 1902 455 111 E-mail: [email protected] Country Manager: Paul Hutchinson

AFRICA, MIDDLE EAST ANDEASTERN EUROPERegional Manager: William Mouat

CZECH REPUBLICGunnebo CZ s.ro. www.gunnebo.cz Tel: +420 266 190 200 E-mail: [email protected] Country Manager: Viktor Bartušek

HUNGARY Gunnebo Magyarország Kft. www.gunnebo.hu Tel: +36 1 465 6080 E-mail: [email protected] Country Manager: István Roszmann

POLAND Gunnebo Polska Sp. z o.o. www.gunnebo.pl Tel: +48 62 76 85 570 E-mail: [email protected] Country Manager: Jurek Szkalej

UAEGunnebo Middle East FZE www.gunnebo.ae Tel: +971 4 701 7837 E-mail: [email protected] Country Manager: Jacob Touma

SOUTH AFRICA Gunnebo South Africa (Pty) Ltd www.gunnebo.co.za Tel: +27 11 878 23 00 E-mail: [email protected] Country Manager: Hannes Venter

Region AmericasSVP: Tomas Wängberg

LATIN AMERICA

BRAZILGunnebo Gateway S.A.www.gunnebo.com.brwww.gateway-security.com.brTel: +55 11 3732 6626E-mail: [email protected] Manager: Rubens Bulgarelli Filho

MEXICOGunnebo Mèxico, S.A. de C.V.www.gunnebo.comTel: +52 1 5531 4621 103Country Manager: Jordi Riart

NORTH AMERICARegional Manager: John Haining

CANADAGunnebo Canada Inc.www.gunnebo.caTel: +1 905 595 4140E-mail: [email protected] Manager: Troy McCleary

USAHamilton Safe Inc.www.hamiltonsafe.comwww.gunnebo.us Tel: +1 513 874 3733E-mail: [email protected] Manager: John Haining

Region Asia-PacificSVP: Sacha de La Noë

AUSTRALIA, NEW ZEALANDGunnebo Australia Pty Ltdwww.gunnebo.com.auTel: +61 2 9852 0700E-mail: [email protected]: [email protected] Manager: Dan Turner

INDIAGunnebo India Ltd.www.gunnebo.inTel: +91 22 67 80 35 00E-mail: [email protected] Manager: Sabyasachi Sengupta

CHINAGunnebo Security (China) Co., Ltd.www.gunnebo.cnTel: +86 21 54662978 (Sales and purchasing)Tel: +86 512 50338950 (Factory)E-mail: [email protected] Manager: Chris Dai

SOUTH-EAST ASIARegional Manager: Ravindran Gengadaran

INDONESIA Gunnebo Indonesiawww.gunnebo.com/idTel: +62 21 314 8383E-mail: [email protected] Manager: Hindra Kurniawan

MALAYSIAGunnebo Malaysia Sdn Bhdwww.gunnebo.com.myTel: +603 8024 3050E-mail: [email protected] Manager: Ravindran Gengadaran

SINGAPOREGunnebo Singapore Pte Ltdwww.gunnebo.sgTel: +65 6270 6698E-mail: [email protected] Manager: Ravindran Gengadaran

SOUTH KOREAGunnebo Korea Co. Ltdwww.gunnebo.comTel: +82 2 2081 1480E-mail: [email protected] Manager: Ryan Kim

Corporate FunctionsENTRANCE CONTROLTel: +44 1825 746 120SVP: Robert Hermans

OPERATIONSTel: +46 10 209 50 00SVP: Lars Thorén

FINANCE & INVESTOR RELATIONSTel +46 10 209 50 00CFO: Christian Johansson

MARKETING & SERVICETel: +46 10 209 50 00SVP: Anna Almlöf

HUMAN RESOURCES & SUSTAINABILITYTel: +46 10 209 50 00SVP: Magnus Lundbäck

GUNNEBO GATEWAYwww.gateway-security.comTel: +46 141 215 070General Manager: Björn Skoog

www.gunnebogroup.comTel: +46 10 209 50 00E-mail: [email protected] and CEO: Per Borgvall

Head OfficeGUNNEBO ABBox 5181402 26 GÖTEBORG


ORGANISATION

Region EMEA (Europe, Middle East & Africa)

The region for all business within the sales companies for Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, the Middle East, Netherlands, Norway, Poland, Portugal, South Africa, Spain, Sweden, Switzerland and the UK.

Region Asia-Pacific

The region for all business within the sales companies for Australia, China, India, Indonesia, Malaysia, New Zealand, Singapore and South Korea.

Region Americas

The region for all business within the sales companies for Brazil, Canada, Mexico and the USA.

Sales company

A Gunnebo subsidiary responsible for local sales and marketing. Gunnebo has its own sales companies in 33 countries.

Operations

Operations is responsible for Gunnebo’s manufacturing units, purchasing, logistics, technical support for the Group’s sales companies, and research and development.

NCN (Non-Conformance Note)

Gunnebo’s fault reporting system for quality complaints.

PRODUCTS AND SOLUTIONS

Cash Handling

Solutions designed to make cash handling safer and more efficient. Cash handling occurs throughout the cash cycle and involves central banks, bank branches, retailers, CIT companies and the general public.

Safes & Vaults

Safes and vaults that are certified to resist burglary, fire and explosives. Also includes deposit safes, fireproof filing cabinets, safes for the protection of digital media, bank vaults, modular vault rooms and safe deposit lockers.

Entrance Security

Solutions that allow authorised entry and prevent unauthorised access to sites and buildings. Includes speed gates, turnstiles, interlocking doors and security doors. Entrance Security also includes ticket gate solutions for mass transit systems and air-port gates for fast boarding, immigration control and security checks.

Electronic Security

Solutions for the integration of security systems. Includes access control, intrusion detection, electronic locks and remote sur-veillance systems.

CUSTOMER SEGMENTS

Bank

Central, national, regional and local banks, pawn shops and other financial institutions.

Retail

Shops, restaurants, casinos, mass transit, post offices, public services such as librar-ies and other organisations outside of the bank segment that handle cash in their day-to-day operations.

CIT (Cash in Transit)

A company that transports money between different units in the cash handling process, such as from a shop or a central bank to a counting centre.

Mass Transit

Public rail, bus and metro networks and airports, which transport large volumes of passengers.

Industrial & High-Risk Sites

Includes factories, logistics companies, power plants, stadia, ports, prisons and casinos.

Public & Commercial Buildings

Includes company and government offices, administrative centres and public buildings.

OTHER

Near Field Communication (NFC)

Used for contactless transactions and exchange of data, enabling devices such as smartphones to communicate with other devices when placed near each other.

Gunnebo Glossary

DisclaimerThis report contains future-oriented information. It reflects the management’s current perceptions of certain future events and the possible ensuing results. No guarantees can be given that these per-ceptions will prove to be correct. Actual future results may vary con-siderably from the information supplied in this report, partly due to changes in circumstances regarding the economy, market and com-petition, changed legal requirements and other political measures, variations in exchange rates, business risk assessments and other factors mentioned in this annual report.

Production: Gunnebo in cooperation with Newsroom Printing: INEKOPaper, cover: Tom&Otto Silk 300gPaper, insert: Tom&Otto Silk 150gThis product can be recycled as paper.

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l RepoRt 2014

the Gunnebo Security Group is a global supplier of security products, services and solutions with an offering covering cash handling, safes and vaults, entrance security and electronic security for banks, retail, CIt, mass transit, public & commercial buildings, and industrial & high-risk sites.

the Group has an annual turnover of €610 million and 5,700 employees in 33 countries across europe, the Middle east & Africa, Asia-pacific and the Americas as well as a network of Channel partners on 100 additional markets.

For a safer world.

ANNUAL REPORT 2014

TAKINGSECURITYINTO THE FUTURE

annual report 2014 eng

Investor Relations

gunnebo security group

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