ANNUAL REPORT - EuroMaint › PageFiles › 23 › Annual Report 2005.pdfIMPORTANT EVENTS IN 2005 5...
Transcript of ANNUAL REPORT - EuroMaint › PageFiles › 23 › Annual Report 2005.pdfIMPORTANT EVENTS IN 2005 5...
0505ANNUAL REPORT
0505
Annual Report
3
THE OPERATION EuroMaint in brief 2005 4
Important events in 2005 5
The President’s comments 6
Benefit in a changing world 8
EuroMaint – a Group in motion 10
Goals and goal achievement 12
Acquisitions and investments 13
Article on EuroMaint’s historical background Bengt Möller 14
EuroMaint Rail 16
EuroMaint Industry 22
Article on EuroMaint Industry’s technical development Jan-Olof Lundgren 28
Research and technical development 30
Article on EuroMaint Rail’s technical development Thomas Robertsson 32
Personnel in focus 34
Article on EuroMaint’s HR work Janette Sved and Ulf Sandén 36
Quality and environment 38
Article on EuroMaint’s environmental work Annkristin Castagna and Urban Ekmark 40
Sustainable development 42
Risk management 43
Article on a member of the Board’s view of EuroMaint Elisabeth Nilsson 44
Four-year summary 46
THE BUSINESS IN FIGURES Report of the Directors 48
Income Statement 51
Balance Sheet 52
Change in equity 54
Cash flow analysis 55
Notes 56
Auditors’ Report 72
CORPORATE GOVERNANCE Corporate Governance 73
The Chairman’s comments 76
The EuroMaint Board of Directors 77
The EuroMaint Group management 79
EuroMaint Rail management 80
EuroMaint Industry management 81
OTHER INFORMATION Addresses 82
CONTENTS
55
EUROMAINT IN BRIEF 2005
2005 was an eventful year for the EuroMaint Group.There was a great deal of movement, both internallyand on the market. The Group achieved its goals ofgenerating even better profits, winning important newcontracts, gaining environmental certification for theGroup and strengthening its customer relations. One major and important event half-way through the year was the acquisition of Euromation from VolvoTechnology Transfer AB, Volvo Powertrain AB and VolvoCars. The acquisition extends the EuroMaint Group’sestablished position within the rail transport industry witha closely related operation in the engineering sector.
NEW GROUP STRUCTURE
As of 2006, EuroMaint has a new Group structure with two
subsidiary companies targeting the rail transport industry and
the engineering industry respectively. The subsidiaries focus on
customers and their needs, while the parent company conducts
strategic development issues in networks with the two subsidiaries.
EUROMAINT RAIL AB AND EUROMAINT INDUSTRY AB
The names of the subsidiary companies are EuroMaint Rail AB
and EuroMaint Industry AB. Euromation is disappearing as a name
and a brand, and in this annual report has been renamed EuroMaint
Industry except in historical contexts. The operation known as
EuroMaint up until the beginning of the year is now called
EuroMaint Rail. The name EuroMaint is used when referring to
the EuroMaint Group.
MANY COMMON FACTORS
Both EuroMaint Rail and EuroMaint Industry have a history that
extends back to the 19th century. Both companies were founded
from the realisation that maintenance and technical development
for increased availability, efficiency and quality are important core
operations. Both are specialist companies that combine long
experience with fresh thinking and innovative solutions. Both are
profitable and strengthen their customers’ competitiveness by
putting expertise, customisation and delivery quality first.
EUROMAINT RAIL
EuroMaint – without the Rail add-on – was established at the begin-
ning of 2001 when the Swedish State Railways (SJ) were converted
into companies and SJ Engineering became EuroMaint AB. The pri-
mary operation encompasses the maintenance and refurbishment
of rail rolling stock. EuroMaint Rail’s head office is in Solna outside
Stockholm, and it has operations in 14 locations: Blackvreten, Borlänge,
Gävle, Gothenburg, Hallsberg, Linköping, Luleå, Malmö, Nässjö,
Stockholm/Hagalund, Sundsvall, Vännäs, Åmål and Örebro. In 2005
it had around 1,370 employees and a turnover of SEK 1,710 million.
EUROMAINT INDUSTRY
EuroMaint Industry – formerly Euromation – was established in
2000 when the business unit Maskinteknik within the Volvo Group
was converted into a company. This operation focuses on the
engineering industry and encompasses maintenance services,
component servicing and production engineering, as well as the
development and manufacture of production equipment. The head
office is in Skövde, southern central Sweden. There is also an
operation in Hallsberg, central Sweden. In 2005 EuroMaint Industry
had around 285 employees and a turnover of SEK 307 million.
FACTS IN BRIEF
The EuroMaint Group strengthens its customers’ competitiveness
through tailored maintenance and technical solutions. The Group’s
headquarters are in Solna. Turnover in 2005 totalled SEK 1,872 million,
with a profit of SEK 113 million. The Group had approximately 1,650
employees in 2005. EuroMaint is owned by AB Swedcarrier, a state-
owned holding company.
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KEY RATIOS 2005 1 2004 2
Turnover, SEK mn 1,872 1,493
Operating profit, SEK mn 113 47
Cash flow after investment activities, SEK mn 52 14
Operating margin, % 6 3.2
Equity/assets ratio, % 17.8 11
Average number of employees 1,669 1,534
1 Includes EuroMaint Industry as of 1 July 2005.
2 The present EuroMaint Rail.
IMPORTANT EVENTS IN 2005
5
2.
3.
4.
6.
1.
2,000
1,500
1,000
500
02003
1,49
4
2004
1,87
2
2005
1,6
53
2002
1,87
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The world’s first biogas train in regular service
A unique event occurred when EuroMaint Rail
delivered a Y1 engine coach converted from diesel
to biogas – the first in the world to go into regular
service. The customer was Svensk Biogas AB,
a wholly-owned subsidiary of Tekniska Verken
i Linköping AB. This investment in reducing environ-
mental load from non-electrified rail transport
attracted international attention.
Acquisition of Euromation
The opportunity to acquire Euromation arose very
suddenly. When it happened, the EuroMaint Group
was already mentally prepared to extend and deepen
its dealings with the engineering industry. With stable
profitability the Group was also ready to take this
step financially. The Board was able to make a rapid
decision.
10-year maintenance agreement with
Arlanda Express
In January EuroMaint Rail signed a 10-year agreement
with Arlanda Express to maintain the X3 trains on
the Arlanda Line. EuroMaint Rail won the tender in
the face of stiff international competition, thereby
gaining its first major contract with an operator
outside the circle of companies that traditionally
derive from the Swedish State Railways – and also
an operator with a foreign owner.
Whole of EuroMaint eco-certified
Many of EuroMaint’s production units had already
been awarded environmental certification by the start
of 2005. During the year, a great deal of commitment
and work has been invested in gaining ISO 14001
environmental certification for all units. This goal
was achieved at the end of the year. As a result, the
whole of EuroMaint is now quality and environ-
mentally certified.
Stockholm Train Alliance won SL procurement
At the end of the year, the Stockholm Train Alliance
– owned by Tågkompaniet and SJ AB, with ISS
TraffiCare and EuroMaint Rail as suppliers – won
the procurement of commuter rail services within
Stockholm Transport (SL), in the face of stiff competi-
tion from international players. The quality level of
our maintenance was an important reason behind
winning the contract. The agreement runs to June
2011 with an option for a further five years.
New Group structure
The decision to revise the Group structure as of
2006, with separate companies for the rail transport
industry and the engineering industry, enables the
EuroMaint Group to invest more generally in the
development of maintenance and technical solutions.
The companies EuroMaint Rail and EuroMaint
Industry are devoted to customer benefit, while the
parent company drives strategic development issues.
1. SJ AB, 42 %
2. Green Cargo, 15 %
3. AB Volvo, 10 %
4. Volvo Cars, 3 %
5. Other customers, rail transport, 28 %
6. Other customers, engineering industry, 2 %
TURNOVER BY GROUP COMPANY TURNOVER BY CUSTOMER IN THE GROUP VOLUME DEVELOPMENT *SEK mn
2.
1. EuroMaint Rail, 85 %
2. EuroMaint Industry, 15 %
1.
5.
* The relevant figures for 2002–2004 relate to
EuroMaint Rail. EuroMaint Industry is included
from 1 July 2005.
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THE PRESIDENT’S COMMENTS
During 2005, operations within EuroMaint havebeen further reinforced from the positive positionwe managed to achieve the year before. We havereceived several major orders, kept our promises to the customers regarding good quality at theright time – and achieved our planned profit levelby a clear margin. The operation has expandedthrough the acquisition of Euromation. The futureis looking bright, with a good workload and strongpotential for further contracts.
Reinforced engineering and planning function
In March we carried out a restructuring operation, which primarily
involved strengthening the engineering and planning function
within EuroMaint Rail. The aim was to become more proactive in
relation to our customers and to highlight the importance we place
on being at the leading edge of technical developments. One direct
consequence of this was our partnership with AEA Technology Rail,
a specialist company in condition-based maintenance. Our
customers have shown great interest and I have already received
numerous positive reactions.
The EuroMaint Group will also be increasingly active in its
contacts with universities and colleges. Euromation brought with
it an established network of R&D contacts. We will now expand
this into areas such as rolling stock engineering, maintenance
engineering and systems engineering.
A strong contract portfolio
In January we entered into a ten-year maintenance contract with
Arlanda Express. Since the contract came into force in April,
Arlanda Express has reported that they have never had such a
high level of availability for their trains, while passenger numbers
are rising steadily.
The biogas train in Linköping was another important project.
We developed, designed and converted a Y1 engine coach from
diesel to biogas. It will go into service shortly, when our workshop
in Linköping has been adapted for maintenance of biogas trains.
Through this investment we are clarifying our commitment to
reducing environmental impact.
The agreement with Stockholm Transport (SL) regarding
commuter train services in Stockholm is also worthy of mention.
As a supplier in the Stockholm Train Alliance, EuroMaint Rail
plays an important role in supplying light maintenance, component
maintenance and material sourcing.
SL is striving to achieve clean, working, punctual trains as well
as a secure environment for its passengers. The Stockholm Train
Alliance won the contract in the face of stiff competition from seve-
ral international companies, thanks to top marks for quality as well
as the actual takeover process, which is clearly just as important.
The contract will run from 18 June 2006 for five plus five years.
The total order value amounts to around SEK 1 billion a year.
EuroMaint Rail’s share is approximately 17 per cent.
Stable market share
In order to illustrate the stability of our position in the rail transport
industry, one only has to look back to 2002. It was then that we
realised that if we were to lose all the tenders we competed for, our
market share would fall from 50 to 6 per cent in four years. Today we
still have a market share of 50 per cent. After winning many extremely
competitive contracts, we now have so many long-term contracts
that we have secured a capacity of 80 per cent up until 2008.
Environmental certification
An important factor, in particular for our competitiveness, is that
the entire Group has been environmentally certified since last
December. As a result, the whole of EuroMaint is now both quality
and environmentally certified.
Improved profits – to say the least
During 2005 we have achieved our goal of improving our profits
– to say the least. Profits grew from SEK 47 million to SEK 113 million,
an increase of more than 100 per cent. This success, delivering a
profit amounting to 6 per cent of turnover, means that the Board
of Directors is continuing to entrust us to develop the company.
We have also succeeded in turning around the cash flow during 2005,
finishing the year with a surplus.
Acquisition of Euromation
Back in the spring, the Board of Directors considered that the time
was right to plan for new business areas, specifically the engineering
and process industries. On 1 July 2005 we acquired Euromation,
now called EuroMaint Industry, with almost 285 employees, head-
quarters in Skövde, a turnover of approximately SEK 300 million
and a profit level of 8 per cent in 2005. The majority of this turnover
comes from the previous owner, Volvo. The aim is to increase the
number of additional customers through active cultivation of the
market, thereby reducing dependency on Volvo.
A logical consequence of the acquisition was the decision,
from the beginning of 2006, to introduce a new Group structure
with separate subsidiaries for rail transport and engineering. At the
same time we have opened the door to the potential of expanding
internationally – an important step in strengthening our brand.
7
ships with local players. A clear structural shift is under way in the
Swedish engineering industry, with maintenance and production
streamlining increasingly being outsourced. This is where EuroMaint
Industry will be an important supplier! The market is so large in
certain areas that a five per cent market share would double the
Group’s turnover. Our ambition is to approach this share within
a few years. We are focusing on a segment with relatively advanced
services, which demand the level of authorisation and security at
which EuroMaint excels.
I would like to conclude by saying a big thank you to all the
tremendous employees within EuroMaint. When I travel around
and speak with you, I can see that the climate and level of confidence
are constantly changing for the better. I hope and trust that you feel
satisfied – particularly bearing in mind our excellent profit figures.
PETHER WALLIN
President & CEO
”We are now ready to grow””We are now ready to grow”Pether Wallin –President & CEO
Visions for the future
From half-way through 2006, when the SL contract begins, we
anticipate achieving a rolling 12-month turnover of SEK 2 billion.
With 1,650 employees, this means a turnover of SEK 1,21 million
per employee, which is excellent for a service-producing company.
In the rail transport industry, maintenance procurement for the
Pågatågen trains is currently under way. During the year, the basic
material for the procurement of Öresund rail services is anticipated.
On the refurbishment side, two major procurements are in progress:
the upgrading of Green Cargo’s T44 and RC2 engines respectively.
The two contracts have a combined value of between SEK 1 and
1,5 billion, depending on the scope.
With the large market share we have in train maintenance and
refurbishment, we need to expand internationally in order to continue
evolving the company. As the Swedish market is not expanding over
time, it is also important to stabilise the economy with streamlined
services on a broader market.
At the same time we realise that the rules of the game and
business cultures differ considerably from one country to the next.
We will bridge these differences through co-operation or partner-
8
BENEFIT IN A CHANGING WORLD
EuroMaint strengthens its customers’ competitivenessthrough tailored maintenance and technical solutions.The Group’s companies focus on customer benefit anddelivery quality. They have a strong position on themarket and good relations with their customers.
THE MARKET & BUSINESS ENVIRONMENT
A general structural change in maintenance and productivity
development is taking place on the Swedish market. In addition to
the current good economic situation, there are various general trends
that are leading to increased demand for the Group’s services.
General structural changes on the maintenance market
The market for maintenance services is rapidly changing and being
restructured. It is becoming increasingly common in most sectors
to establish a long-term collaboration with external partners,
partners whose core business is maintenance and who can offer
complete turnkey solutions. Collaboration takes place through a
complete outsourcing agreement or by placing parts of the main-
tenance with external suppliers. EuroMaint’s companies are
specialist businesses that offer advanced maintenance services.
They supply their customers with expertise, development resources,
proactive planning and innovative maintenance solutions.
The EuroMaint Group is also investing in strategic development
and connecting research with practical experience.
Increased demand for availability-based services
Looking at the rail transport industry in particular, more and more
operators and vehicle owners are investing in modernising or
renewing their rolling stock. There is a growing need for refurbish-
ment services, both in Sweden and abroad. The market for train
maintenance, on the other hand, is not displaying any general growth.
There is however greatly increased demand for more advanced,
availability-based services.
Increased need for production refinement within industry
Demand for efficiency and productivity-raising services and tech-
nical solutions in Swedish industry is growing. Above all there is an
emerging realisation that it is worth investing in the development of
production engineering, automation and systematic maintenance.
Many companies have also experienced the fact that it can cost
money to move production to low-cost countries. When it comes
to knowledge-intensive production in particular, it is important to
have maintenance suppliers close by who offer quality, flexibility
and experience of advanced technology.
Prospects on the export market
EuroMaint Rail has strengthened its capacity on the marketing side,
with the focus on train maintenance and refurbishment work in
Denmark, Norway and Germany, as well as the new EU states of
Estonia, Latvia and Lithuania. Clear wishes have been expressed in
these countries to bring in new incentives and to increase domestic
competition. Many contacts have been made and positive discus-
sions are being conducted.
The export venture relates primarily to services and structural
capital: to export EuroMaint Rail’s quality and environmentally
certified business management system, specialist knowledge within
technical maintenance and project management expertise. The
required resources are built up on site with the aid of key individuals
and partners.
The Swedish market is EuroMaint Industry’s main market.
The company follows its customers out into the world, but does not
currently focus on exports.
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BENEFIT IN SOCIETY
In our day-to-day lives, we can all see that careful maintenance
of our home or car preserves its value, usability and traffic safety
– and reduces the need for expensive emergency measures. It’s
that simple. On a larger scale, it is vital to achieve an optimum
balance between cost and benefit. EuroMaint is strengthening
the rail transport and engineering industries’ profitability
through tailored maintenance and technical solutions:
• EuroMaint Rail is contributing to a safer, more efficient and
more environmentally friendly rail transport system, and is
helping to make the system more attractive and convenient
for passengers and more competitive for freight transporters.
• EuroMaint Industry is contributing to a higher level of
availability, better utilisation of facilities and an improved
quality exchange in industry, thereby supporting profitability
and competitiveness.
The EuroMaint Group as a whole aims to contribute to increased
exports of knowledge and structural capital. There is also a
clear desire to promote training and research within those
areas where the Group possesses leading-edge expertise.
EuroMaint Rail
EuroMaint Rail is contributing towards
a safer, more efficient and more
environmentally friendly transport
system, and is helping to make the
system more attractive and convenient.
EuroMaint Industry
EuroMaint Industry is contributing
to a higher level of availability,
better utilisation of facilities and
an improved quality exchange
in industry.
10
EUROMAINT – A GROUP IN MOTION
The opportunity for EuroMaint to acquire Euromationarose very suddenly. When it happened, the Group wasalready mentally prepared to extend and deepen itsdealings with the engineering industry. With stable profitability the Group was also ready to take this stepfinancially. The Board was able to make a rapid decision.
THE NEW GROUP STRUCTURE
The two companies in the EuroMaint Group have many factors in
common. In particular, they both have experience of developing
from being an internal resource within their former owner
organisations – the Swedish State Railways and Volvo respectively
– to becoming commercial companies on a competitive market.
They are both still heavily dependent on their former owners.
This dependency will decrease without reducing the assignment
volumes: EuroMaint Rail and EuroMaint Industry intend to grow.
The decision to form a Group in which the different companies
focus on different markets was important. The Group is now broader,
both from a market and a skills perspective. The Group has a clear
structure – the companies can concentrate on customer benefit
and delivery quality, while strategic development issues and the
development of co-operation with strategic partners are dealt with
at Group level. The Group management operates with the lowest
possible overhead in networks with the companies.
VISION
EuroMaint’s vision is to be a leading innovative partner for more
efficient maintenance and increased productivity.
This means that the companies in the Group must be driving
forces that promote development, as well as being the largest main-
tenance suppliers in the selected industry – and that the Group as a
whole must stand out as a leader in ‘all categories’. Innovative means
that the Group’s companies must lead the development of concepts
for new maintenance and technical solutions, based on their know-
ledge of their customers. The Group must work on the continual
development of organisational forms, processes and working
methods in order to achieve improved efficiency and productivity.
The term ‘partner’ means that the Group’s companies must
develop long-term collaborations with their customers and offer
them tailored total solutions, rather than simply supplying one-off
services from time to time. This means focusing on areas of business
where the Group’s strategic strengths can best be put to use.
More efficient maintenance and increased productivity mean
strengthening our customers’ competitiveness by improving
availability and the degree of utilisation of their production plants
and rolling stock.
BUSINESS CONCEPT
EuroMaint strengthens its customers’ competitiveness through
tailored maintenance and technical solutions, primarily within
the rail transport industry and the engineering industry.
An important success factor is EuroMaint’s ability to develop
and supply total solutions – and to unify customisation with
cost-effectiveness. Customisation naturally requires diversity.
Cost-effectiveness often demands uniformity. These requirements
may appear contradictory, but they can be united.
Diversity is achieved through receptiveness, knowledge about
customers and by creating service concepts that can be flexibly
combined to form customised total solutions. Uniformity is secured
in that the business management system’s standardised processes
support the work at every stage, from early business phases to
final delivery.
11
STRATEGIC GOALS
EuroMaint’s strategic goals are for the companies to be market
leaders and profitable in maintenance for the rail transport industry
and the engineering industry, as well as to further develop and expand
the Group towards new sectors through corporate acquisitions.
The strategic goals are to:
• Increase turnover significantly during the period 2006–2008
by expanding within current business units and in new sectors.
• Satisfy the owners’ demands for profitability, in part by
developing new technical maintenance and production
solutions, as well as through standardised, efficient, uniform,
clear processes.
• Be an attractive employer that ensures success through a skilled
and dedicated workforce with a high level of satisfaction and
shared action.
• Develop long-term relationships with customers, suppliers
and partners. The goal is based in part on sustaining a high level
of delivery quality and on developing the EuroMaint brand so
that it represents the Group’s core values: customer orientation,
environmental consideration and being a safe, attractive
workplace.
The idea behind the EuroMaint Group’s structure is
that the companies can concentrate on customer
benefit and delivery quality, while strategic develop-
ment issues are conducted at Group level. The Group
management co-operates with the lowest possible
overhead in networks with the companies.
EuroMaint AB
EuroMaint Rail AB EuroMaint Industry AB
12
GOALS AND GOAL ACHIEVEMENT
PROFITABILITY
Turnover for 2005 amounted to SEK 1,872 million, operating profit
was SEK 113 million and the operating margin was 6 per cent.
These results satisfy the goals laid down for 2005 by a clear margin.
EuroMaint Rail has won new contracts, such as Arlanda Express
and the maintenance of Stockholm’s commuter rail traffic. We have
also commenced deliveries of refurbished X2 trains. Turnover is
above forecast and expectation. Planned cost-cutting has been
successfully implemented. Day-to-day efficiency at all levels has
increased. All control and support systems have been further
developed in order to function in a changing world.
Important factors that have influenced the results include:
• Problems with the net cash flow during the first half of the year,
primarily due to initially delayed deliveries of the X2 refurbishment.
• Tough cost control at all levels – contract, workshop, division,
company and Group – has entailed high cost consciousness
and a strong focus on the optimum utilisation of resources.
• A decrease in purchasing costs by about 10 per cent wherever
possible. Intensive efforts to ensure improved and more cost-
effective suppliers will also produce results in the longer term.
• Reassessment of the obsolescence model means that inventories
have been revalued by SEK 23 million, which has had a positive
impact on profit.
• The lease agreement in Tillberga was dissolved at a one-off cost
of SEK 23 million, of which SEK 19 million relates to the period
after the end of 2005.
• The acquisition of Euromation, now EuroMaint Industry,
whose profits and net cash flow exceeded the forecast at the
time of the takeover.
CAPITAL STRUCTURE
The total assets amounted to SEK 973 million. Equity amounted to
SEK 174 million, an increase of SEK 93 million during the year. The
equity/assets ratio is 17.8 per cent and no dividend will be paid until
the minimum ratio target of 25 per cent is achieved. Goodwill of
SEK 44 million derives from the acquisition of Euromation AB,
which took place on 1 July 2005.
DIVIDEND
No dividend has been paid to shareholders. A dividend will be paid
when the target equity/assets ratio of 25 per cent has been achieved.
12345
Satisfy owner demandson profitability
Continue to developpositively on the domestic market andexpand internationally
Develop partnershipswith customers and suppliers
Be an attractiveemployer
Environmental goals
Operating margin
Cash flow
Equity/assets ratio
Market share
Employee Satisfaction Index,
ESI
Overall key ratios for the
environment are currently
being developed
6 %
SEK 52 mn
17.8 %
EuroMaint Rail 49 % *
EuroMaint Rail 2.4 (2004) *
Under
development
Goal achieved for 2005. There is still
some way to go before the long-term
profitability goals are met: 8 % operating
margin and 25 % equity/assets ratio.
Goal achieved for the domestic
market. No export business was
conducted during the year.
Goal achieved.
Next CSI measurement in 2006.
Next ESI measurement in 2006.
Planned for completion in 2006.
Operating margin
5 %
Market share in
Sweden
> 50 %
CSI 24.5
ESI 2.9
Under
development
Goal Key ratio Target for 2005 Outcome Comments
Customer Satisfaction Index,
CSI
EuroMaint Rail 24.5 (2004) *
* Only EuroMaint Rail’s goals are presented for 2005, in relation to goals 2, 3 and 4. Group-wide key ratios are to be produced.
OVERALL KEY RATIOS, RESULTS AND GOALS FOR 2005
13
ACQUISITIONS AND INVESTMENTS
ACQUISITIONS
The EuroMaint Group acquired Euromation AB from Volvo
Technology Transfer, Volvo Powertrain and Volvo Cars on 1 July 2005.
Euromation had approximately 285 employees and a turnover of
SEK 307 million in 2005. As of 2006 the company’s name has been
changed to EuroMaint Industry AB.
INVESTMENTS
All investments in 2005 have been characterised by moderation,
in order to safeguard the goal of achieving a positive cash flow. Any
investments that were made were important and forward-looking.
The Group’s control and support systems have been further
developed to facilitate flexible adaptation to a changing world. For
example, a great deal of work has been devoted to ensuring that
future corporate acquisitions blend into the IT system environment
as easily as possible. EuroMaint Rail’s conversion of the Y1 engine
coach from diesel to biogas meant that the Group had to invest
in specialist resources for the maintenance of biogas vehicles.
In conjunction with the acquisition of Euromation, now EuroMaint
Industry, certain investments were made ahead of the new Group
structure. Work aimed at developing the Group brand was also
initiated during the year.
Considerable investments were made in developing expertise
within EuroMaint Industry. EuroMaint Rail invested in leadership
development for production managers. The content for a project
academy for project managers was also produced in 2005. The
Effective Workshop training programme, which many of EuroMaint
Rail’s employees underwent in 2004, has provided an understanding
of the importance of cost-awareness and has also resulted in
tangible proposals for cost rationalisations.
However, the planned investment in developing a joint
corporate culture had to be postponed, to be resumed in 2006
when it will also encompass EuroMaint Industry. EuroMaint Rail’s
focus on delivery quality meant that the greatest forces and
resources were devoted to fulfilling existing contracts.
14
Bengt Möller – historical perspective
”We built a good foundation for deregulation”
”We built a good foundation for deregulation”
Article on EuroMaint’s historical background
15
throughout this year. One of the high points
will be the King’s participation in the cele-
brations in Nora in June. Commemorative
stamps bearing train motifs are also being
issued. Here at EuroMaint Rail we are con-
tributing by holding open house events in
a number of our workshops. We have also
been involved in refurbishing a Rapidlok
high-speed engine dating from the 1960s.”
A quick look back
Up until 1988, the Swedish State Railways
had a virtual monopoly on rail transport in
Sweden. It was then that Stig Larsson was
appointed Director-General and came to
personify ‘the new SJ’.
“This was a clear watershed in the
Swedish State Railways’ development,”
explains Bengt, “and even back then we held
many discussions regarding how customer-
orientation could be increased. A number
of organisational changes were also made
during the first few years. For example,
Banverket became a separate unit, the heavy
freight wagon workshops were sold to
ABB and the other heavy workshops were
converted into independent companies
and transferred to TGOJ.
“At that time, maintenance was carried out
by us in the Machine Division within the
Swedish State Railways. It seems remarkable
now that we were able to decide for ourselves
on the regulations regarding how the main-
tenance should be carried out. We also drew
up the rules and instructions for how the
commercialised workshops would work.”
Another distinct change at the time
related to the form of state control. During
the 1980s, the Machine Division had to
respond to all kinds of questions from
politicians.
Train maintenance has tradi-tionally been part of the SwedishState Railways. The 1990s sawthe progressive development of a more customer-oriented and deregulated operation,which bore fruit in 2001 with the formation of EuroMaint AB.Bengt Möller has been involvedthroughout this journey. He canexplain the historical perspective,and also consider how the futurewill be affected.
Bengt Möller has been involved in the
maintenance of rail rolling stock almost his
entire adult life. He began working for the
Swedish State Railways in the early 1960s,
and has since grown and developed with
and within the company – apart from a few
years when he worked in shipping.
With his many years of experience in the
sector, he is the obvious guide for anyone who
wants to know more about the company’s
history and obtain a good foundation for
looking to the future. He was also the perfect
representative for EuroMaint Rail when
planning the 150th anniversary of the railway.
150 years of railways, 2006
The Swedish State Railways have naturally
been responsible for organising previous
railway anniversaries.
This time it was Banverket (Sweden’s
National Rail Administration) that took on
the 150th anniversary celebrations.
“They have invited various players in
the industry to a joint celebration of the fact
that it is 150 years since the first commercial
railway went into service in Sweden,”
explains Bengt, who is EuroMaint Rail’s
representative on the anniversary board.
In addition to Banverket and EuroMaint Rail,
the principal sponsors for the arrangements
are Green Cargo, Jernhusen, Railway Forum,
SJ AB and TGOJ Trafik. Other organisations
will also participate in the actual celebrations.
“A wide variety of arrangements and
activities will take place across Sweden
150 years have shaped EuroMaint Rail
“The questions could be about anything
right down to component level, even
technical matters,” remembers Bengt.
“During the 1990s we were governed
more according to principles, however, and
the politicians left the questions of detail to
the civil servants.”
Progressive deregulation
Bengt feels that the Swedish State Railways
did not have a particularly businesslike
approach prior to 1989, but that since then it
has consciously built up a strong foundation
for operating on a deregulated market.
“Even in the 1990s the Machine Division
had a number of small external customers,
which allowed us to ‘practise’ getting paid.
We gradually built up knowledge about
where the costs lay and about pricing, and
were able to learn a good deal about the
relationship between customer and supplier.
“Up until then we were closer to the end
customer in a way – the passenger or trans-
port client – but being an internal supplier
seldom encourages development and cost-
effectiveness.
“The roles are far more clearly defined
now. The operator is our customer and the
one responsible for setting regulations. The
operator in turn is responsible for satisfying
the end customer’s needs. There is an
entirely different vitality in the operation
when you work on a fully competitive market
and have to focus on delivering quality.”
Further development
Maintenance of rolling stock is increasingly
being streamlined, which means that the
entire operation is gradually changing.
“It is very important for us to identify
areas where we can develop, in particular
by entering new markets here in Sweden.
However, it is also essential for us to retain
a focused railway company within the Group,
which our customers think of as experts
in the field of modern railway engineering.
This is a position we have to nurture,”
believes Bengt.
.
”The 150th anni-versary celebrations
are taking placethroughout the year”
16
EUROMAINT RAIL
EuroMaint Rail is Sweden’s leading company in mainte-nance and refurbishment of rolling stock, with a marketshare of around 50 per cent. The company’s businessproposition strengthens its customers’ competitivenessand the profitability of the rail transport industry bycontributing to improved transport safety, lower main-tenance costs, increased availability, better performance,more efficient transport and more comfortable journeys.
2005 IN SUMMARY
2005 was a positive year, with good results and many new opportu-
nities. EuroMaint Rail has entered into new contracts, been involved
in winning the most important procurement of the year on the
Swedish market, worked hard to bring in new orders and has resolved
a couple of difficult problems to the satisfaction of customers.
Ten-year contract with Arlanda Express
The year began with EuroMaint Rail signing a ten-year availability
contract with Arlanda Express in January, to maintain the X3 trains
on the Arlanda Line. This was EuroMaint Rail’s first major main-
tenance contract outside the circle of companies that traditionally
derive from the Swedish State Railways, and also an operator with
a foreign owner.
Thanks to the length of the contract, the maintenance system can
be developed within the framework of the agreement. Through
innovative maintenance engineering, skilled employees and more
efficient control, the extremely high availability requirements can
be fulfilled at progressively reduced cost. During 2005, Arlanda
Express achieved its highest vehicle availability ever: an average of
99.8 per cent.
Problems resolved
One problem during the early part of the year was the delayed
delivery of refurbished X2 trains for SJ AB. The primary reason was
a lack of preparation on the part of EuroMaint Rail. The refurbishment
process has been improved and work has subsequently proceeded
to plan. Another problem was the key figures in the contract with SJ
AB regarding maintenance of passenger carriages. The first stage of
this contract has now been completed to the customer’s satisfaction.
Engineering & Planning – separate division
A new organisational structure was introduced in the spring,
with Engineering & Planning becoming a separate division. This
represented a clear signal, both internally and to the outside world,
that cutting-edge technical expertise and proactive planning are
strategic factors for success. The new division also illustrates the
importance of effective planning and preparation at every stage of
a contract, to ensure that the solutions are adapted to customers’
needs and that delivery quality meets their demands and expectations.
Tools for condition-based maintenance
One direct consequence of Engineering & Planning being included
at management level was that EuroMaint Rail entered into a colla-
boration with the British specialist company AEA Technology Rail.
The aim is to increase flexibility and speed in technical development.
The goal is to offer world-class train maintenance within the frame-
work of a partnership. AEA’s tool for checking the condition of
wheels and brake linings by means of laser measurement has been
installed on a trial basis at the workshop in Hagalund.
The world’s first biogas train
A unique event occurred when EuroMaint Rail delivered a Y1 engine
coach converted from diesel to biogas – the first in the world to go
into regular service. The customer was Svensk Biogas AB.
This investment in reducing the environmental load from
non-electrified rail transport attracted international attention.
EuroMaint Rail has also invested in specialist resources for the
maintenance of biogas trains. The company aims to be at the
forefront when it comes to development and leading-edge expertise
for sustainable transport development.
>>>
17
The world’s first biogas train in regular service
The delivery of a Y1 engine coach converted from
diesel to biogas was a unique event – it was the first
in the world to go into regular service. The customer
was Svensk Biogas AB. This investment in reducing
environmental load from non-electrified rail transport
attracted international attention. EuroMaint Rail has
also invested in resources for the maintenance of
biogas trains.
Refurbishment of X2 trains for SJ AB
X2 trains revolutionised rail travel in Sweden. They
made it possible to ‘fly at ground level’ – quickly and
conveniently. After 15 years SJ AB decided it was time
to renew the trains, and the task of refurbishing
them is EuroMaint Rail’s largest and most prestigious
refurbishment order to date. Work began in 2005
and a total of 30 refurbished trains will have rolled
out by mid-2007.
Highest availability for Arlanda Express
In January, EuroMaint Rail signed a ten-year availability
agreement with Arlanda Express to maintain the
X3 trains on the Arlanda Line. This was the company’s
first major maintenance contract with a foreign-owned
operator. During 2005, Arlanda Express achieved
its highest vehicle availability ever: an average of
99.8 per cent.
18
EUROMAINT RAIL CONTD.
MARKET CONDITIONS
The market conditions for train maintenance and refurbishment are
entirely different. In maintenance, the volumes vary fairly predictably,
while requirements for refurbishment fluctuate considerably from
year to year. The reason is that maintenance is conducted continu-
ally throughout the service life of a train, while major refurbishments
are only performed occasionally.
Market conditions for train maintenance
The market for train maintenance is primarily influenced by the
volume of traffic and the age of the rolling stock. Increased travel and
growing freight transport volumes are increasing vehicle mileage
and therefore leading to more maintenance being required. Older
vehicles generally require more maintenance than new or refur-
bished ones. Another factor that plays in is rationalisation, such
as the transition from balanced to condition-based maintenance,
which reduces volumes.
All of these factors contribute to a market with relatively slow
and predictable fluctuations. However, more abrupt fluctuations
can become commonplace when the volume of traffic is adapted
more and more flexibly to the needs of passengers and freight
transporters. A recent example during 2005 was when demand for
timber transport by rail increased dramatically following Hurricane
Gudrun (known as Erwin outside the Nordic countries). All the
players in the rail transport industry worked alongside the forestry
industry in order to come up with creative transport solutions as
quickly as possible.
Market conditions for refurbishment
As major refurbishments only occur occasionally during the service
life of a rail vehicle, this market fluctuates dramatically. The refur-
bishment work is intensive during a highly compressed time period
– the refurbished trains have to be back in service as quickly as
possible. The largest Swedish refurbishment contract to date is
for the X2 trains for SJ AB. This assignment serves as an excellent
reference for EuroMaint Rail as it seeks new refurbishment
contracts, both in Sweden and abroad.
The Swedish market
Conditions for EuroMaint Rail on its domestic market remain good.
The overall market share is approximately 50 per cent. The current
backlog of orders – mainly contracts that the company has won
through competitive tender – entails guaranteed capacity utilisation
of 80 per cent up until 2008. Our customers are showing faith in
EuroMaint Rail, and the company is living up to that confidence.
Elmia Nordic Rail
In October, EuroMaint Rail showed off its skills and resources at
Elmia Nordic Rail 2005. Many rail transport industry stakeholders
from Sweden and abroad visited the company’s stand and took part
in the seminars that had been arranged.
Maintenance of SL commuter trains
The year was crowned by the Stockholm Train Alliance
– Tågkompaniet and SJ AB, with ISS TraffiCare and EuroMaint Rail
as suppliers – winning the contract for Stockholm Transport (SL)
commuter rail traffic. There was extremely stiff competition with a
number of international players. The level of quality of the mainte-
nance was one of the factors that led to the contract being won. The
contract runs until June 2011 with an option for a further five years.
19
Even when there have been problems, the dialogue has been con-
structive. EuroMaint Rail has dealt with the problems directly and
produced action plans, both for emergency measures and for those
that require preparation. Careful preparation and flexible adaptation
of capacity and costs are of the utmost importance, as the Swedish
market for train maintenance and refurbishment is one of the most
competitive in Europe.
The export market
The market conditions overseas – primarily in Denmark, Norway
and Germany, as well as the new EU states of Estonia, Latvia and
Lithuania – are positively affected as deregulation and European
harmonisation increasingly open the door to service exports.
Submitting a tender and being able to live up to it is a tremendous
undertaking. Everything has to be prepared: structures, business
partners, workshops, personnel, skills provision, material sourcing,
etc. It is important to understand the regulations in different countries,
so that tenders are not only assessed on the basis of price. It is to the
benefit both of EuroMaint Rail and its customers if procurements
include clear quality requirements that allow proactive solutions.
TRAIN MAINTENANCE
EuroMaint Rail supports operators and vehicle owners with opti-
mised maintenance for increased traffic safety, increased vehicle
availability, improved punctuality and lower costs. Optimised
maintenance requires a high level of delivery quality, meticulous
cost control and total responsibility for the entire package.
Train maintenance is divided into three levels: light maintenance,
corrective and preventive maintenance at workshops around
Sweden, as well as the maintenance of heavy components at
specialist workshops.
In some cases the contracts are based on maintenance at tradi-
tional intervals, which means that the customer governs what is to
be done. The most common situation is where the contracts are
availability based, which means that EuroMaint Rail assumes
complete responsibility for the trains’ availability and is paid per
vehicle kilometre.
The customers are to be found in long-distance, regional and
local rail services. They have varying needs. In some cases EuroMaint
Rail’s nationwide workshop resources are an advantage, while in
others it is important for the company to have a presence in the city
regions. With broad experience and in-depth expertise, EuroMaint
Rail is able to adapt its services to each individual customer.
>>>
20
Through continuous development, for example with regard to
methods and equipment for condition-based maintenance,
EuroMaint Rail can offer an increasingly high level of availability
at lower and lower costs. Checks on condition mean that the
maintenance can be directly adapted to actual requirements, as
compared to balanced maintenance, where the trains are taken
out of service after a set number of vehicle kilometres.
Major savings can be achieved for the customer, particularly
when it comes to wheels and brakes, both of which require con-
siderable maintenance and are critical to traffic safety.
REFURBISHMENT
EuroMaint Rail supports operators and vehicle owners with refur-
bishment for increased traffic safety, better travel comfort, improved
performance, extended service life and higher vehicle value.
Refurbishment work can encompass technical reconditioning and
modernisation of the vehicle’s various subsystems. It can also
cover new exterior design and new interior furnishings and fittings,
including an Internet connection at each seat so that the journey
time can be better utilised.
EUROMAINT RAIL CONTD.
Thanks to extensive experience in maintaining vehicles of virtually
every type in the Swedish rail transport industry, EuroMaint Rail
can also propose solutions that improve rolling stock from a
maintenance and functional safety perspective – thus rationalising
future maintenance.
The refurbishment operation is based on close co-operation with
the customer. Alliances with strategic partners and collaboration
with local suppliers contribute to the overall content of EuroMaint
Rail’s propositions. These may be strategic partners who supplement
the company’s core technical expertise, or the company may even
engage independent contractors for work that does not require
specific rail expertise. The business management system contributes
to flexible customisation, both in minor refurbishment contracts
and in major contracts that include several partners and suppliers.
CUSTOMER FOCUS AND DELIVERY QUALITY
It is becoming increasingly important to be able to offer tailored
total solutions based on the needs of each individual customer.
By not standardising its solutions, but instead standardising the
processes, EuroMaint Rail combines customisation and cost-
effectiveness. The cross-functional organisation places various
skills and resources at the customer’s disposal in a flexible manner.
For each contract – from initial sale through to delivery
– EuroMaint Rail creates a customised organisation with distinct
processes and a clear division of responsibility. Careful preparation,
meticulous follow-up and a constant focus on satisfying the
customer’s needs for delivery quality combine to produce a
relationship that ensures the customer’s peace of mind.
FUTURE 2006
The important procurement of Öresund rail services is due to begin
in 2006 – a contract for which EuroMaint Rail will be competing.
The procurement of the Pågatågen trains in Skåne is under way, and
the winner of the maintenance contract will be announced during
the year.
EuroMaint Rail is also currently working to win the refurbishment
contract for Green Cargo’s engines – a total of around 80 RC engines
and almost 100 diesel engines. The refurbishment will result in
a longer service life, lower maintenance costs and improved per-
formance. For the diesel engines, the environmental performance
will also be improved.
In Norway, deregulation is progressing slightly slower than
anticipated. EuroMaint Rail is monitoring the maintenance market
in Germany with interest, as well as a large fleet of diesel engines
that require refurbishment.
EuroMaint Rail reinforced its marketing organisation for exports
in 2005, in the conviction of being able to offer high-quality, cost-
effective, competitive services for train maintenance and refurbish-
ment in neighbouring geographical regions.
What has been thebest thing about thejob in 2005 and whatcould be better?
Staffan Åström, maintenance engineer, Gävle
The celebrations in Gothenburg last spring were
a real highlight, and it was good to meet so many
other employees. Internal projects shouldn’t be
over and done with quite so quickly.
Michael Kohr, engineer, Blackvreten
The best thing is when something unexpected
happens, like a problem we have to go out and solve
on the line. I would like to see more events for the staff.
Charlotte Andersson, controller, Solna
It’s been rewarding for me to start working as a
workshop controller as well, and to learn more
about the core of our operation. Co-operation
between the divisions should be developed.
21
“I was previously EuroMaint’s marketing
director and am now looking forward to
leading EuroMaint Rail towards a future
that feels very positive. We have positive
profitability and an upward trend. With skilled
and experienced employees – and by creating
a corporate culture that makes even better
use of their abilities – we will become increa-
singly successful.”
1. Train maintenance 78 %
2. Refurbishment 13 %
3. Other 9 %
TURNOVER BY PRODUCT AREA VOLUME DEVELOPMENTSEK mn
Jonas Samuelson –President of EuroMaint Rail
2,000
1,500
1,000
500
02003
1,49
4
2004
1,71
0
2005
1,6
53
2002
1,87
92.
3.
1.
22
EUROMAINT INDUSTRY
EuroMaint Industry was established in 2000 when theMaskinteknik business unit within Volvo was convertedinto a company. The company increases Swedishindustry’s competitiveness through production stream-lining. We design and refine production processes, develop and manufacture customer-specific productionequipment, and are a complete supplier in the field of maintenance. Our customers are primarily to befound in the engineering industry.
BRIEF HISTORY
Even though EuroMaint Industry has only been in existence as an
independent company for a relatively short time, we actually have
a very long history, dating back to the 1860s when the company
Sköfde Gjuteri och Mekaniska was established. From the 1930s up
until 2000, the company formed part of Volvo’s engine factories
in Skövde. In the tough automotive sector, there has been a high
demand for efficient and operationally reliable production pro-
cesses. Against this background, experience and skills have been
built up with the aim of supporting and optimising production.
From the late 1980s the company also operated outside the confines
of Volvo, but it was only when the operation was converted into
an independent company in 2000 that the focus on the ‘external’
market truly gathered momentum. On 1 July 2005 EuroMaint
acquired the company, which now operates under a new brand and
company name: EuroMaint Industry.
2005 IN SUMMARY
2005 was a record year for EuroMaint Industry, both with regard to
turnover and profit margin. The new strategy and corporate culture
launched in 2003/2004 began to have a full impact.
Successful strategy work
The strategy is that the company’s knowledge about its customers’
production processes and the way it works in close co-operation
with customers should be unique distinguishing factors. Business
should be characterised by long-term customer relations and
customised total solutions with a high knowledge content. Working
models and working methods aimed at achieving continuous im-
provements have therefore been evolved throughout the operation.
New ways of measuring results have been introduced. Similarly,
risk assessments in ongoing projects have been honed.
Full-service concept for electric engines
At the beginning of 2005, EuroMaint Industry took over the motor
rewinding operation from ABB in Skövde. This acquisition supple-
mented the company’s existing service operation for servo and
electric motors, and enables it to offer a full-service concept of fast,
quality-assured repairs. During the year, the acquired operation has
been relocated and integrated with the existing service workshop in
order to achieve an optimum process.
Production engineering assignment resulted in
major order for new customer
Two areas on which EuroMaint Industry has decided to focus in
2005 are Maintenance Development and Production Engineering.
Resources have been doubled and initiatives for further skills
development have been taken. One such production engineering
project for a brand new customer initially resulted in investigation
assignments, followed by a historic major order for two assembly
systems. This is evidence that the company’s expertise as well as its
business and turnkey concepts are valued by the market.
>>>
23
In certain cases the use of standard machinery does
not produce optimum results, and customised
equipment is preferable. EuroMaint Industry
develops and manufactures special machines as well
as various accessories and peripheral equipment.
Several AGV systems have been installed for various
customers in 2005.
EuroMaint Industry focuses primarily on the
engineering industry, although its customer base
has been extended as a consequence of the new
Group structure. This has resulted in more
customers in the processing industry, such as
the steel, paper and power sectors.
When the Group was restructured, business
responsibility and sales resources for the Industrial
Maintenance product area were transferred from
EuroMaint Rail to EuroMaint Industry. As a result,
the company is expanding its product range with
service on rotating electrical machinery such as large
electric engines, generators, transformers, etc.
24
EUROMAINT INDUSTRYCONTD.
Important assignment for small company
One assignment that began in 2005 involved helping CC Pack, a
company with around 25 employees, to bring out ‘hidden capacity’
through more efficient maintenance. This partnership has
gradually grown into something very good.
MARKET CONDITIONS
The primary target group for EuroMaint Industry is the Swedish
market. The company only really works on overseas markets when
existing customers move into these markets. Two trends that
produce positive market conditions are: increased interest in
production streamlining, as well as greater interest in total solutions
and partnerships in the field of maintenance.
Production streamlining for increased competitiveness
Swedish industry has long had to battle hard in the face of interna-
tional competition. Many companies have therefore elected to locate
their production in ‘low-cost’ countries. During 2005, however, this
previously one-sided debate experienced a turnaround. In certain
cases there is good reason to relocate, but the risks and costs are
often misjudged, as many companies have experienced.
Instead there has been greater emphasis on the potential of
focusing first on the domestic market and picking out the unused
production resources – the hidden factory. Productivity can be
significantly improved by focusing on production engineering,
automation and systematic maintenance. The potential can often
be 50 per cent or more.
Total solutions and partnerships
There is a clear trend of focusing on core operations. Outsourcing
basic support functions such as cleaning and office services is
nothing new. Another clear trend is for companies to seek long-term
partnerships with their suppliers. In production engineering and
maintenance, broad experience and in-depth specialist expertise are
key. Both of these can be difficult for an individual industrial company
to maintain and develop to a sufficiently high, cost-effective level.
Major AGV orders
The most important business events include a couple of major
orders for AGVs. AGV stands for Automated Guided Vehicle,
systems of self-propelled, loop-controlled trucks for complex
assembly applications.
EuroMaint Industry has developed AGVs in collaboration with a
large group of Swedish and international R&D partners, as well as in
close co-operation with customers. The systems consist of mobile
units that flexibly move about between different workplaces in the
production flow. The have built-in quality assurance systems and
are easy to reset if the production process is altered. They are also
easy to adapt individually to different operators.
25
THE PRODUCT RANGE
The total solution – and the parts – that EuroMaint Industry offers
have been developed within and in close co-operation with the
automotive industry. This was the first sector to feel the full force
of global competition, and consequently it adopted cutting-edge
know-how at a very early stage.
The company’s expertise displays range and depth, and has
been built up through many years of experience, training and
recruitment. As an independent service partner, the company offers
everything from small, individual projects to long-term total solu-
tions. The operation now encompasses maintenance, component
servicing, production engineering and production equipment
– all equally important for increased efficiency.
Maintenance
More and more companies are realising the benefits of well-planned,
well-executed maintenance. Sure signs of this include disruption-
free production, a workplace with a high level of safety and a good
environment, as well as excellent delivery precision and satisfied
customers. Overall Equipment Efficiency (OEE) is a good way of
measuring productivity improvements based on APQ.
Availability (A) indicates the degree of disruption and losses
from down time. Performance (P) shows how well the equipment
‘is being utilised, and the Quality parameter (Q) reveals quality
shortcomings in the items produced by the equipment.
Many companies have considerable potential for improvement
and invisible capacity to utilise. EuroMaint Industry can help its
customers to measure, analyse and structure their maintenance work.
The foundation is a maintenance platform, and there are several
tools in EuroMaint’s ‘toolbox’. However, the starting point is the
customer’s requirements and conditions when planning the job of
improving operational reliability. The aspect that makes EuroMaint
Industry unique in the field of maintenance is that the company can
also implement the proposed measures. This includes technical
maintenance services and procedures for preventive maintenance,
preparation of spare parts etc., as well as carrying out maintenance
on machinery, from day-to-day activities to major machine overhauls.
>>>
26
Component servicing
Many machine components can be repaired or reconditioned to
improve function – all with the aim of increasing their service life.
Preventive maintenance is of course preferable even at component
level, but sudden stoppages occur nevertheless. In situations like
these, EuroMaint Industry can provide a service organisation for
rapid fault-tracing and repairs on a large number of machine com-
ponents, irrespective of make. Examples of specialist areas include
spindles, electric motors, servo motors, servo actuators, electronics,
tools and dies, mechanical components and measuring equipment.
Production engineering
The integration of maintenance and production is a natural founda-
tion for EuroMaint Industry’s expertise and business propositions
in the field of production engineering. This can start off with a pilot
study and continue through preparation, participation in new
procurement as well as various kinds of technical design service.
Production equipment
In certain cases the use of standard machinery does not produce
optimum results, and customised equipment is preferable. This
is true for example in the transition between different parts of a
customer’s production process.
EuroMaint Industry develops and manufactures special
machines for assembly, handling, machining and testing, as well
as various accessories and peripheral equipment, such as fixtures,
lifting devices and protection.
CUSTOMER FOCUS
EuroMaint Industry has made the strategic decision to focus on
proximity to the customer. This working method entails being close
to the customer’s production and genuinely understanding the
conditions and challenges the customer faces. As a result, the com-
pany’s personnel are able to provide the right service and suggest
improvements – either as a total supplier or in individual projects.
Quite simply, one partner is all that’s needed.
FUTURE 2006
Over the next few years the aim is to expand the customer base, as
the company is currently heavily dependent on a few large customers.
The first customer category in line to be cultivated comprises
medium-sized industrial companies.
Here the hidden factory will be developed with the aid of strategic
and operative services. Many large Swedish corporations are already
world leaders in OEE, but there is still considerable potential for
improvement in many companies.
Further strengthening and deepening relations with existing
customers is another focus area for 2006, as is a concentration on
clarifying our customer proposition by turning our skills into pro-
duct offerings – ‘productising’ them.
One area that may be problematic in the short term is produc-
tion equipment, where volumes fluctuate dramatically from year to
year. There are no orders currently in the pipeline of the same scale
as those in 2005. On the other hand demand for maintenance
services is increasing noticeably, and more personnel are required
on that side of the business.
One of EuroMaint Industry’s policies is to develop its co-workers
so that they can grow into new duties and flexibly shift between
different working areas. In addition to increased job satisfaction
from job variety and skills development, this approach also helps
to reveal undreamt-of capabilities.
Skills development is a very high priority. Considerable energy
has been devoted to this area during 2005, and this will continue in
2006. As a service-producing company, the employees’ expertise
and service spirit are absolutely crucial to success.
EUROMAINT INDUSTRY CONTD.
What has been thebest thing about the job in 2005 andwhat could be better?
Urban Gustavsson, service engineer, Skövde
The constant challenges are the best thing.
I’m always learning a lot and the work is never
monotonous. I need training in the new systems.
Mikael Pajunen, co-ordinator at the prototype
department, Skövde
I have a varied job that entails numerous contacts
with customers and employees. We have old machines
and need some more modern machinery.
Katarina Andersson, production engineer, Skövde
Introducing operator maintenance into the customer’s
operation has been exciting. Their production level has
increased and things look better. We need to be more
flexible.
27
“I joined Euromation as President just over
two years ago. We now have an owner whose
core operation we are a part of. Our market is
also being broadened as a result of this new
owner. We aim to strengthen the competitive-
ness and profitability of Swedish industry by
contributing to a better overall perspective,
increased utilisation of resources, structured
maintenance work and smart automation
solutions.”
1. Maintenance 25 %
2. Component servicing 21 %
3. Production engineering 9 %
4. Production equipment 45 %
350
300
250
200
150
100
50
02003
303
2004
307
2005
288
2002
259
TURNOVER DEVELOPMENTSEK mn
Per-Olof Rengstedt –President of EuroMaint Industry
TURNOVER BY PRODUCT AREA
2.
1.
3.
4.
28
wanted to apply for research grants and
needed an industrial partner for their
projects – and they thought of us.
“It is clear that research contributes to
our brand-building and is a way of helping
us to win market shares.
“It is important for us to have a common
thread through our development work.
The research projects we chose to participate
in were initially related to technical design,
although we have increasingly moved
towards maintenance-related areas.”
Concluded research projects
Integrated Design, Simulation and Distributed
Control of Agile Modular Manufacturing
Machinery, popularly known as Vir-Eng, was
one of the first major research projects that
what was then Euromation became involved
in. The project related to the virtual building
and testing of products in a simulated envir-
onment. During the course of the project,
an in-house research lab was constructed.
Project Copernicus has been extremely
important for the company. Several different
European companies and universities were
involved in the project, which focused on
Automated Guided Vehicles (AGVs).
The project looked at navigation
principles, sensor-driven simulation and
architectures for hardware and software.
“The results have to a large extent influ-
enced our production of AGV systems,
as they broadened the view of what was pos-
sible and stimulated us to find new methods
and ways of working,” explains Jan-Olof.
Current projects
One project that plays more of a supporting
role and in which less money is involved is
MASSIVE, Machine Service Support based
on Innovative Virtual Engineering. Here
too there are universities and several
companies involved.
“New simulation models were developed
during the design stage, and the MASSIVE
EuroMaint Industry focuses onkeeping up to date with technicaldevelopments in the sector. Andwhat better way than to takepart in the research work? Thisprovides a good foundation whenmaking decisions regarding thedevelopment of new productsand services.
Jan-Olof Lundgren is Research and
Development Manager as well as IT Manager
at EuroMaint Industry. When it comes to
making decisions about which services
are to be productised, he is assisted by a
product council, which includes parts of
the management group.
“The council defines the strategic areas
where the product range needs to be
developed and decides on fund allocation.
In some cases we participate in research
collaboration alongside universities and
other companies, thereby acquiring useful
material for further decisions.
“Our heaviest involvement usually lies
in the actual productisation process. Our own
employees are responsible for developing
the products and services we offer our
customers,” explains Jan-Olof, and observes
that these skilled employees are EuroMaint
Industry’s greatest strength.
The majority of Jan-Olof’s working day
is taken up with his job as IT Manager, and
he feels that it is important to have an IT
environment that is flexible and supports
the customer. He is also in the middle of his
doctoral studies.
“The lifecycle process for one-off
production companies” is the working title
of his thesis, and the processes within
EuroMaint Industry are naturally the
subject of his research.
Marketing channel
“I am convinced that we will become better
known by participating in various research
projects,” says Jan-Olof. “We have achieved
a relatively strong position in the research
world, and regularly receive enquiries regar-
ding doctoral students looking for industrial
projects. A while ago I was contacted by
both a Greek and a Russian professor, who
project is about using these when operating
the equipment as well. The focus is on
maintenance and fault-tracing, above all
remotely,” explains Jan-Olof. “It is possible
to build with simulation support, and we
also intend to draw benefit from these
models during fault-tracing.”
With the aid of these simulations,
conclusions can be drawn about what is
wrong and requires maintenance. This
should entail a reduced travel requirement
for service personnel.
During the course of the project, it has
become increasingly clear that, when con-
ducting remote diagnostics with intelligent
simulation support, the large amount of
data that needs to be transferred via the
Internet constitutes a limitation. It is there-
fore pleasing to note that the University of
Skövde has recently initiated a research pro-
file for information fusion, i.e. integrating
data from various sources, as well as looking
at how the systems should be designed in
order to support decisions with large volumes
of information.
“The university profile has just started,
and we’re currently in the process of defining
various projects.
The hope is that we will be able to develop
products in parallel with the research,
particularly in the field of maintenance,”
explains Jan-Olof. “Our investment for the
university profile is not enormous, but we
are contributing time and our research lab,
and we were one of the companies that
helped ensure the venture got started in
the first place.
“With intelligent ways of gathering
information and MASSIVE’s simulation, we
hope to be able to rationalise the mainte-
nance process to ensure that the right
resources are in the right place, without
always having to perform fault-tracing on site.
“The role of research is to indicate
possibilities, and I obviously hope that a
technical platform will be created that can
subsequently be built upon. We will then
have the very latest capability in our sector,
enabling us to provide our customers with
added value when they engage EuroMaint
Industry,” hopes Jan-Olof in conclusion.
”Common thread indevelopment work”
Article on EuroMaint Industry’s technical development
Right resources in right place thanks to research
Jan-Olof Lundgren – development perspective
”Research contributes to ourbrand-building”
”Research contributes to ourbrand-building”
29
30
RESEARCH AND TECHNICAL DEVELOPMENT
FUTURE
Strategy for co-operation
Strategic work is currently in progress aimed at identifying which
universities are of most interest when it comes to co-operation in
the fields of automotive engineering, systems engineering, mainte-
nance engineering, production engineering and technical/aesthetic
design. Work is also under way to bring about a greater exchange
of experiences with industry organisations such as UTEK/Swedish
Maintenance Society and the Swedish Centre for Maintenance
Management.
Smart trains, machines and production equipment
Smart trains and production equipment that can independently
communicate their maintenance needs provide greater opportu-
nities for proactive planning. As materials, documentation and
personnel are in the right place at the right time, turnaround times
are short and the maintenance is highly effective, thus increasing
availability and productivity alike.
Reliable information to support decisions
Information fusion is an R&D project at the University of Skövde for
the integration of data from various sources regarding the behaviour
of technical systems. Many companies are involved in the project,
including EuroMaint.
Three events in 2005 increased and clarified the importance that EuroMaint places on research andtechnical development: the formation of the Engineering& Planning division within EuroMaint Rail, the collaboration with UK company AEA Technology Railand the acquisition of Euromation.
FORMATION OF ENGINEERING & PLANNING DIVISION
The Engineering & Planning division is an expression of the strategic
importance that the EuroMaint Group places on leading-edge
technical expertise and proactive planning. In order to identify
internal recipients for new technology – and to make the most of
new ideas that originate internally – a production engineering
network has been created. Many development proposals contribute
to increased customer benefit, such as patents for a mobile lathe
and new brake testing equipment.
COLLABORATION WITH AEA TECHNOLOGY RAIL
AEA Technology Rail is a specialist company in rail engineering,
which develops world-leading products for checking the condition
of components. By means of a transition from balanced mainte-
nance to condition-based maintenance, the service content in
availability-based transactions can be refined.
ACQUISITION OF EUROMATION
Euromation has a long and strong tradition of viewing research and
development as a natural part of its operation. Co-operation with
universities and colleges is well established. Knowledge from various
R&D projects is implemented directly in the day-to-day work. The
acquisition provides a better outlook for the entire EuroMaint
Group with regard to bringing in new impulses from outside.
IMPORTANT R&D PROJECTS
EuroMaint Industry has conducted three different development
projects alongside a number of European universities. The projects
have contributed greatly to the company’s AGV systems.
1. Vir-Eng – simulation for virtual product development
2. ARMMS – modular machines and mobility
3. Copernicus – mobile robots
The next stage of one current project – MASSIVE – will enable more
advanced remote diagnostics of machines than at present, i.e.
transferring and processing data for fault detection and fault-tracing.
The problem here is not a lack of data but rather an overabundance,
which has to be filtered if the information is to be reliable and usable.
31
Where would youmost like to seeEuroMaint focusingin the future?
Lars Kallio, concept designer, Skövde
We have to satisfy our customers’ need for innovation
value when it comes to production equipment.
We can broaden our clientele by developing our
specialist machines.
Mattias Wernersson, maintenance engineer,
Skövde
It’s good that we have efficient maintenance as our core
activity. We should continue to develop our concepts
and maintenance solutions with our customers.
Tommy Andersson, maintenance engineer
and instructor, Svartön, Luleå
We should develop a forum where maintenance engineers
and fault-tracers can discuss vehicle problems and
share experiences, technology and expertise.
1. Vir-Eng – simulation for virtual product development
A simulation system for virtual product development. The project
was launched in 1998. The customers’ requirement was to be able,
early in the design phase, to speed up and quality-assure the
development processes surrounding new or modified products or
production flows. The result was a time reduction from 5 weeks
to 15 minutes.
2. ARMMS – modular machines and mobility
A European network for modular machines and mobility.
The network encompasses some 30 companies, half of which
are highly research-intensive. The project is both a consequence
of and a supplement to Vir-Eng.
3. Copernicus – mobile robots
A research project into mobile robots. R&D partners are De Montfort
in the UK, the University of Skövde, Kaunas University in Lithuania
and MSTU in Moscow. The results included a prototype for an
Automated Guided Vehicle (AGV). Since 2002, EuroMaint Industry’s
AGV systems have been successfully sold to companies that require
flexible production flows that can swiftly be changed over.
Thomas Robertsson – development perspective
“Tremendous technical expertise and long experience”
“Tremendous technical expertise and long experience”
32
Article on EuroMaint Rail’s technical development
Focusing more on development
vehicles, so that we can subsequently
obtain measurement values for a decision
support system, initiate an evaluation and
gather the information in our maintenance
system. Our hope is to be able to implement
a number of additional installations for
monitoring within the next few years.”
The system will initially measure wheel
profiles and brake linings. Together with the
current collectors, these are the most signi-
ficant factors influencing the frequency of
maintenance intervals.
“That’s why I hope that condition
monitoring of the current collectors will be
our next project,” says Thomas.
Collaboration and partnership are
crucial to achieve good results. In this case
EuroMaint Rail is working with a UK com-
pany which supplies both hardware and
software. Thomas also wants to increase
the co-operation with institutes of tech-
nology and bring in more students working
on graduation projects.
“I would like to take this opportunity to
praise some of our alert employees who, on
their own initiative, have devised mobile
tools that will solve some of the problems
they have faced in their service work.”
Thomas also explains that the company
is investigating the potential to conduct
non-destructive ultrasound testing on hol-
low axles automatically to achieve digital
measurement values, rather than a manual
system with results on paper.
Refurbishment of rolling stock
Modernisation and refurbishment of rolling
stock have traditionally always been carried
out according to the customer’s detailed
specification.
“Developments are moving towards a
situation where we, in our role as supplier,
produce proposals for technical solutions.
We should be able to offer our customers
The Group management hasclearly highlighted the need fortechnical development and inno-vation in the field of maintenance,and has decided on investmentsfor the years to come.
As the company works with large volumes, it
is not difficult to access improvements and
new ideas. This is one of the aspects that
the newly appointed head of technology and
development at EuroMaint Rail particularly
appreciates.
Thomas Robertsson has only been with
EuroMaint Rail since October 2005.
However, he has almost 20 years’ experience
of rail transport as a vehicle supplier.
“The Technology department has been
created during the past year, and we are also
responsible for technical development. This
is an indication from the management that
these are important issues.
“The best thing about EuroMaint Rail is
that we work with large volumes, so it shouldn’t
be difficult to identify profitable rationalisa-
tions,” hopes Thomas. “I believe it is parti-
cularly important to make the most of the
experience that exists within the organisation,
especially among the vehicle engineers.
“As the manager of a fairly large number
of employees, it is my job to know what every-
one is doing, to help out where I can and, in
particular, to get everyone to work together
as a team,” says Thomas, adding that this is
both a difficult and a challenging task.
Thomas highlights three areas that he
feels are particularly important to focus on
in the immediate future: streamlining,
refurbishment and skills development.
Streamlining maintenance
“As train maintenance accounts for the
vast majority of EuroMaint Rail’s turnover,
streamlining and optimisation of this
operation are essential to our profitability,”
Thomas explains.
“Condition-based maintenance is of
great interest, and we have carried out a
pilot installation for condition monitoring
in Hagalund. We’re currently working to
install identification units on the relevant
added value which generates better economy
in the long term.
“Examples include the calculation of
lifecycle costs and maintenance costs, as
well as providing operational reliability
guarantees. We are also working to develop
computerised documentation systems.”
Skills development
“EuroMaint Rail possesses a tremendous
amount of technical expertise and long
experience.
“This will be supplemented with the
more general use of modern technical
design aids, such as 3D CAD, as well as with
various specialist skills, in particular so we
can offer the added values I mentioned,”
explains Thomas.
Integrated Logistics Support (ILS),
functional reliability analysis, maintenance
analysis and maintenance optimisation are
some of the areas where skills development
will take place, with the aid both of external
courses and learning in the workplace.
“We are often consulted and have already
established that we need more technical
designers,” says Thomas. “This, in combi-
nation with a high average age, makes it
very important to pass on these skills to
younger generations. In order to make this
easier, we will group ourselves according to
technical systems expertise, such as brakes,
doors, propulsion and diesel engines.”
Thoughts on the future
Thomas is a firm believer in condition-based
maintenance. A major reason for this is that
research indicates that a very large proportion
of the maintenance carried out at present is
not actually required.
“There are so many areas that can be
monitored to provide even more refined
information. The first step should be to gain
access to the information that can already
be supplied wirelessly from the train’s on-
board computer, but that is mostly only used
during commissioning when the vehicle has
just been delivered. The vehicles’ control
data and error codes, along with condition
monitoring that we carry out ourselves, can
ensure even more relevant maintenance.”
33
“Added value that is profitable for the customer”
34
EMPLOYEES
SKILLS DEVELOPMENT
Skills development has a high priority within the EuroMaint Group.
Both companies work with knowledge-intensive services and
advanced technology in industries that are characterised by renewal
and increased specialisation. Skills development takes place both
through external courses and internal training.
For work that requires special authorisation, such as safety-
related work on rolling stock, production equipment and compo-
nents, there is a comprehensive administration system for training.
As a rule, theoretical training and practical training with tutors both
take place on home ground.
Skilled project managers are an important key to success.
The content of a project academy has therefore been produced,
with training to commence in 2006.
AN ATTRACTIVE WORKPLACE
The Employee Satisfaction Index (ESI) and Customer Satisfaction
Index (CSI) are both measured regularly. Satisfied employees and
satisfied customers form a virtuous circle. Another way of measuring
attractiveness as an employer will be available in 2006, when
EuroMaint will be included for the first time in the Företags-
barometern – essentially a ‘corporate barometer’ where young
academics are asked who their preferred employer would be.
The barometer takes many different factors into consideration.
From an employee perspective, the EuroMaint Grouphas not yet become a single entity. Even though bothEuroMaint Rail and EuroMaint Industry are focusing onexpertise, proximity to the customer and delivery quality,the companies have different cultures and experiences.For this reason they will initially be described separately.
EUROMAINT RAIL
2005 was characterised by the completion of the major restructuring
operation and by several large contracts that generate faith in the
future. The focus has been on delivery quality. As a result, the work
of creating a shared corporate culture, which had previously been
established as a strategic theme for 2005, was postponed until 2006.
Even though the venture has not been completed, activities
aimed at increased participation and team spirit have been con-
ducted. This included the two employee meetings in Gothenburg,
where employees from around Sweden had the opportunity to meet
and socialise for the first time. Many people refer to ‘before and after
Gothenburg’ as a paradigm shift in the company’s history. Another
much appreciated element was the Presidents’ annual tour visiting
all the plants, under the heading of ‘Dialogue for Change’.
The major investment in leadership development for production
managers has also continued during 2005. Similarly, a project has
been carried out to develop skills profiles for administrative per-
sonnel. There is already a well-developed authorisation system for
production personnel. Moreover, a considerable amount of work
has been devoted to developing a standardised salary model.
The restructuring carried out in previous years has restricted
external recruitment and minimised profiling in relation to univer-
sities. A working group has now been appointed to intensify
co-operation with the academic world.
EUROMAINT INDUSTRY
During 2005, EuroMaint Industry experienced a significant increase
in demand for maintenance services and other parts of its offering.
The provision of skills is achieved in part through new recruitment,
although primarily through internal recruitment, training and
mentorship. The policy is that anyone who wants to develop must
be given the opportunity – and this includes full-time or part-time
external training.
Many employees’ everyday workplace is out at the customer’s
premises. As a result, professional competence is not the only area
of great importance, but also the ability to create good relations and
to be receptive to new customer requirements. It is also important
to have a high level of expertise in safety issues, and thorough safety
training is therefore provided. Close co-operation with various
research environments has contributed to the company’s skills
development over the years.
35
Örjan Jalava, maintenance engineer and
health & safety officer, Vännäs
For me it’s important to acquaint myself with the
company’s development and to be involved in it.
I would like more interchange with employees from
other workshops.
Rolf Forsell, maintenance engineer, Notviken, Luleå
Flexibility and variation in work are important – working
in different departments, trying out new professional
roles. I get good support in my work, and everyone
helps out.
Susanne Johansson, HR administrator, Skövde
I feel it’s important to have knowledge in order to do
my job properly. This knowledge can be developed
in various ways.
HEALTH REPORT
The health report illustrates and describes the health of the personnel in keyratios that are quantifiable from a corporate finance perspective. Weighted keyratio EuroMaint Rail 13.1, EuroMaint Industry 9.8. The combined key ratio is a summation where key ratio 1 weighs 0.6, key ratio 2 weighs 0.6, key ratio 3weighs 2.5, key ratio 4 weighs 2.5 and key ratio 5 weighs 5.
HEALTH REPORT TABLE FOR 2005
All employees/EuroMaint Rail Number Key ratio
Hours worked 2,206,859 0
Sickness number – hours 1) 113,780 3.1
Sickness cases – quantity 2) 2,341 6.4
Rehabilitation cases 3) 58 0.66
Returns 4) 50 0.57
Staff turnover 5) 108 2.45
All employees/EuroMaint Industry Number Key ratio
Hours worked 461,416 0
Sickness number – hours 1) 15,633 3.4
Sickness cases – quantity 2) 339 7.3
Rehabilitation cases 3) 13 0.28
Returns 4) 10 0.77
Staff turnover 6) 21 0.45
1) Both: Sick leave hours/worked hours * 100.2) Both: Commenced sickness cases/worked hours * 10,000.3) Both: Sick leave periods that commence day 29/hours worked * 10,000.4) Both: Full returns after commencing sick leave day 29/sick leave periods that commence day 29.5) EuroMaint Rail: Personnel departures/worked hours * 10,000.6) EuroMaint Industry: Number of personnel departures minus reduced number of employees on
“SKO”/hours worked * 10,000.
What is most important in your personal development at work, and what support would you like?
36
Day-to-day improvement programmes
Within the production division, Janette has
worked on various programmes related to
developing day-to-day operations and
supporting the actions of the management.
One of these involves promoting commun-
icative leadership.
“The emphasis is on a fresh start for
activities that involve and motivate the
employees, such as results boards, staff
appraisals, a suggestion scheme and
workplace meetings. These meetings are
facilitated as the production managers
receive presentation material every month
reporting aspects such as costs, hours,
deviations and sick leave.
“The other programme focuses on early
rehabilitation,” Janette explains. “The
managers have a considerable responsibility
in this area, and we have developed clear
structures to provide them with support.
Information about absence has been
systemised, and the managers can act more
rapidly in the event of any signs of ill health,
often with the assistance of occupational
health care resources. At one of the units,
short-term sick leave has been reduced
from 11 to 3 per cent in one year!”
Focus on customer proximity
“At EuroMaint Industry we have come to the
conclusion that one of our most important
success factors is customer proximity,”
explains Ulf Sandén, who is both Financial
and Human Resources Manager. “A far-
reaching venture is under way on the topic
of customer proximity. It is based on offering
our customers the opportunity to receive
the products and services they need, deli-
vered to wherever they are.” The past year
Within EuroMaint Rail, employeeswith different backgrounds andcultures have worked together tobecome a single company – inboth physical and psychologicalterms. EuroMaint Industry hasnow joined the Group, and theHR units are continuing to workto co-ordinate operations so thatthe newcomers will also feel welcome under the EuroMaintumbrella.
“I think it’s very important for us to work
actively to ensure that everyone who belongs
to the EuroMaint Group feels part of one
company,” says Janette Sved, who works at
the central HR function at EuroMaint Rail
with specific responsibility for the produc-
tion division. Janette is based in Örebro,
central Sweden.
“We talk a great deal about the fact that
we have to be an innovative engineering
Group, and I feel we can act even more
clearly to demonstrate this. One example
could be to focus on promoting and
developing the operation by having more
production engineers.
“Another example is a greater focus on
the process for making use of the employees’
own proposals for improvement.”
Joint pay model
Much of Janette’s work over the past year has
been on a project aimed at developing a joint
pay model for the whole of EuroMaint Rail.
“We come from separate operations,
and there are certain differences in the con-
ditions of existing employment contracts.
To become a single company with a shared
culture, we have to find ways of bridging
these differences. This will require a lot of
talking and will take time. It feels good to
have made a start, and I’m sure that every-
thing will turn out fine in the end,” says
Janette.
has seen an intensification of efforts to
productise and package the various skills
that customers are demanding.
“This is where we are now,” explains Ulf.
“In our charting process, we are dividing up
our business skills into basic skills that
everyone should have and the specialist
skills that our employees possess, such as
electrical maintenance, mechanical design,
electronics and so on. The needs of our
customers change, and we have to meet
these needs. That’s why we’re working
intensively on skills development, recruit-
ment and network building.
“Demands from the market also mean
that we have to increase our flexibility. This
relates to the potential to work during
holiday periods when our customers have
a great need for service and maintenance,
as well as working to develop flexible, wide-
ranging skills, as needs can vary greatly over
time,” Ulf explains. The skills that are in
demand today could be completely different
tomorrow. He observes that the entire
project entails a concerted effort that has
to succeed if EuroMaint Industry is to serve
its customers in the best way.
Different worlds become one
Ulf does not see belonging to the
EuroMaint Group as a problem.
“Up until about a year ago we were
part of the Volvo Group, so this is not a
new situation for us. EuroMaint Rail and
ourselves also have similar backgrounds
– both have been internal suppliers that,
after being converted into independent
companies, have developed rapidly into
competitive units – even though our former
parent companies operated in completely
different worlds.
“So far we have mostly received
information about the EuroMaint Group,
and there has not been that much practical
collaboration between the companies.
But obviously I hope that together we will
become stronger at what we do, and I see
this as an exciting challenge,” Ulf Sandén
concludes.
“Develop
day-to-day
operations”
Article on EuroMaint’s HR work
From many different corporate cultures – to collaboration in a single Group
Janette Sved and Ulf Sandén – employee perspective
“Together we willbecome strongerat what we do”
“Together we willbecome strongerat what we do”
37
38
QUALITY AND ENVIRONMENT
EuroMaint generally works to streamline its customers’ energy
usage and utilisation of resources. One example of environmental
commitment and environmental expertise is the Y1 engine coach,
which has been converted from diesel to biogas. It is the first biogas
train in the world to go into regular service. EuroMaint Rail developed,
technically designed and carried out the refurbishment. In addition
to modernising the exterior and interior of the coach, the project
entailed developing new products and new technology for converting
from diesel to biogas. EuroMaint Rail has also invested in specialist
resources for the maintenance of biogas trains. This gives a clear
signal of our ambition to be at the forefront of developments for
reduced environmental impact.
Shared significant environmental aspects
The list opposite specifies EuroMaint’s shared significant environ-
mental aspects. EuroMaint’s environmental impact requires a
licence and official notification.
As of the 2006 financial year, the entire EuroMaint Grouphas been awarded quality and environmental certification.However, the two companies in the Group have achievedthis status by different routes. As EuroMaint Industry hasits roots in the automotive industry, quality and environ-mental certification have been natural elements for manyyears. The company was certified to ISO 9001 in 1994and ISO 14001 in 1998. EuroMaint Rail, which was certified in 2004 and 2005 respectively, has its roots in a sector where these phenomena are still largely unique.
QUALITY
EuroMaint is a specialist company offering advanced services.
In addition to the specialist expertise required to carry out safety-
related work, it is important to maintain a generally high level of
expertise when it comes to safety. There are various risks in our
customers’ working environments, and considerable sums can be
at stake.
The delivery quality that EuroMaint provides plays a crucial
role in ensuring safe rail transport, operationally reliable industrial
plants, customers’ profitability in the short and long term – and
their confidence in the Group. The business management system
provides support for continuous improvements at all levels and in
all business phases. Delivery quality has been an important focus
area in 2005. The companies have devoted considerable energy to
refining processes and procedures in the practical quality work.
Within the EU, work is currently under way on special EU certif-
ication for suppliers of maintenance on rolling stock. The require-
ments will be completed in 2007. As a result of EuroMaint Rail’s
experience in quality certification and practical quality work, the
Swedish Rail Agency has obtained good arguments for influencing
the European Railway Agency (ERA).
THE ENVIRONMENT
Several of the units within EuroMaint already have environmental
certification in accordance with ISO 14001. During 2005, intensive
work has been conducted in order to achieve environmental certif-
ication for the entire Group. The formal documentation indicating
that the whole of EuroMaint had been awarded quality and environ-
mental certification was received in December.
The greatest focus was initially placed on those units that had
not previously been environmentally certified, followed by the
phasing-in of those units that had been certified before. The next
stage of development will be to decide on common key ratios for
environmental management.
39
How can you affect theenvironmental workon a day-to-day basis?
Leif Tornebjer, electrician and health & safety
officer, Malmö
By following the regulations and policies we’ve
drawn up. I also help to train personnel so we can
raise our environmental awareness.
Significant environmental aspects
for EuroMaint:
• Energy consumption
• Waste
• Exhaust fumes from
company cars/transport
• Diesel tank installations
• Volatile organic compounds
• Waste/process water
Jörgen Forsman, maintenance engineer, Gävle
There are many examples, such as using the
containers for separating waste and dealing with
any oil spillages. When washing off graffiti, we treat
all the wastewater.
Lennart Grundel, Quality and Environmental
Manager, Skövde
I have to do the right thing myself and set a good
example, as I work with these issues. One example
is reducing car travel and taking the train instead.
40
Annkristin Castagna and Urban Ekmark – environmental perspective
“Important to retain our focus on environmentalaspects”
“Important to retain our focus on environmentalaspects”
40
Article on EuroMaint’s environmental work
High environmental awareness among all employees
41
Common key ratios
The next goal for Annkristin is for the entire
company to have common key ratios for
environmental impact.
“The areas we will begin working with
during the year are waste management,
energy consumption and volatile organic
compounds. My vision is for us to be able
to agree on further key ratios, such as the
environmental impact of transport, business
travel and process water discharge. After that,
of course, each unit must focus on the areas
that are relevant to their particular operation.
There are a number of significant environ-
mental aspects within EuroMaint Rail. These
can be influenced, although not eliminated
entirely. Each workshop has its own environ-
mental aspect catalogue, where all aspects
are classified according to the same model.
“It’s incredibly important for us to focus on
these at all times, and to develop our pro-
cesses as far as possible, also with conside-
ration for the environment,” she says. “Our
overall goals are to raise the degree of recyc-
ling and waste separation, heighten environ-
mental awareness and increase the number
of environmentally certified suppliers.”
EuroMaint Industry
– a long environmental tradition
Urban Ekmark, who is in charge of technical
issues and quality at EuroMaint Industry,
explains that the company’s quality and
environmental certification dates back to
the 1990s.
“Because we started out as part of
Volvo, safety and environmental thinking
have always been important. We’re also
located in a large factory area that employs
4,000 people close to Skövde town centre.
This makes it even more important to
monitor any environmental impact, but it
also means that there is a high level of
awareness and environmental spirit.”
EuroMaint Rail has focused heavily on environmental certif-ication over the past year. AtEuroMaint Industry, safety andenvironmental thinking havebeen part of the scenery since the company’s time as part ofVolvo, and the company hasbeen environmentally certifiedfor several years. Everyone is nowpulling in the same direction,making EuroMaint a Group witha high level of environmentalcommitment.
Annkristin Castagna, environmental co-
ordinator at EuroMaint Rail, explains that
many people have been involved in the work
of obtaining environmental certification for
the entire company during 2005, particularly
within those parts of the operation that
did not previously hold an environmental
certificate.
“It has been an extremely stimulating
process,” she says, before going on to
explain how the work was structured:
“Many employees have taken part in a
training course comprising three separate
sections. We began with information about
the global environmental problems. There
was a lot of ground to cover – everyone has
heard descriptions of these problems, but
taking in and understanding how they affect
your own job is a different matter. The next
step was to define how work within
EuroMaint Rail is affected and how this is
described in goals, policies and business
management systems. What is released
and how is the environment affected?
Finally we conducted group work, where
everyone had the opportunity to submit
proposals for how their own operation
could be changed in practical terms in order
to reduce environmental impact.
“The fact that many people were involved
so early meant that there was a high level of
commitment throughout the certification
process,” explains Annkristin. “We can now
see that everyone is more aware and con-
siders environmental impact in advance,
performs risk analyses and so on.”
The company is endeavouring to further
reduce its already low environmental impact
in its own operation. There are well-estab-
lished systems for separation at source both
in offices and workshops, for forwarding to
incineration or recycling. Filter installations
are installed wherever welding is performed.
“Over the past year, for example, we
have reviewed energy consumption in the
workshop and made investments aimed at
making better use of our heating. We have
also improved the storage stations for oil
and cutting fluids,” explains Urban.
Impact on customers
“Our primary initiative for reducing environ-
mental impact is being conducted in co-
operation with our customers, by increasing
efficiency and reducing resource wastage in
their installations.”
Urban explains: “We often work on our
customers’ premises to rationalise their
production facilities. Through preventive
maintenance it is possible to achieve many
benefits – particularly environmental ones.
When operations gradually become
continuous, there is a higher utilisation of
resources and as a result the environmental
impact is less per produced unit. A well-
tuned plant produces fewer items that have
to be scrapped, requires fewer product
adjustments, ensures lower energy con-
sumption and fewer residual products.”
The same thought processes apply when
developing new production equipment.
“Environmental thinking is naturally
essential, such as selecting environmentally
certified subcontractors and ensuring that
the machines are energy efficient as they
often operate in three shifts.”
Future together
“Railways are often associated with the
environment, while industry is symbolised
by smoking chimneys,” says Urban. “It is
my hope that we will be able to preserve the
long tradition of safety and environmental
thinking, and ensure that the new EuroMaint
is known as a company with strong environ-
mental commitment and high levels of
expertise.”
“Common key ratios are the next goal”
42
SUSTAINABLE DEVELOPMENT
as possible, employees are offered workplaces with individual
ergonomic solutions. Stress in conjunction with a high workload
can occasionally be unavoidable in an event-led business. It is
therefore important to detect early signs of stress and to take
measures quickly. Even ‘positive stress’ in highly dedicated
employees can constitute a risk.
The opportunities for skills development are good. This is both
because it is possible to work in different areas within different
parts of the Group’s companies, and because further development
of the employees’ skills is high on the agenda when it comes to
bringing strong financial results to the operation.
EuroMaint supports those employees who want to continue
studying, and is also involved in research and education in society.
For example, plans are in place to establish a maintenance
engineering centre in Malmö.
EuroMaint is a constantly changing Group, on a constantly changing market, in a constantly changingsociety. Sustainable development means contributing to social development with a sound economy and consideration for people’s health and safety, and for the environment.
EuroMaint contributes to sustainable development in many ways.
The Group enjoys long-term, stable profitability – and contributes
to its customers’ profitability.
The Swedish rail transport industry as a whole is now profitable
for the first time in its history. This is highly significant: the most
environmentally friendly and safe transport system is profitable for
the first time ever.
EuroMaint also contributes to the development of the ‘hidden
factory’ in manufacturing companies – raising their OEE (Overall
Equipment Efficiency) and adding to their competitiveness. This
process reinforces economic growth with more job opportunities,
where efficient, operationally reliable industrial processes work
alongside environmental consideration.
As an employer, EuroMaint aims to set a good example: core
values for the Group include being an attractive employer and a
safe workplace. The companies work in a targeted fashion in order
to offer a safe and enjoyable working environment that helps
develop skills and offers good ergonomics. Many of our employees
work in risky workplaces with assignments that affect traffic safety
and operational reliability. Safety work is therefore meticulous.
It is almost impossible to contribute to human and socially
sustainable development in society without starting at home and
looking after your own workforce’s health and enjoyment. As far
EUROMAINT’S IMPACT ON THE LOCAL, REGIONAL AND GLOBAL ENVIRONMENT
Environmental aspect Energy Waste Exhaust fumes Diesel tank Volatile Waste/process consumption from company installation organic water
cars/transport compounds
ImpactGround • • •Groundwater • •Greenhouse effect • • •Acidification • • • •Eutrophication • • •Ozone depletion • •Ground-level ozone • • •Organic environmental toxins •Discharge of metals • •Consumption of resources • • • • • •
Sustainable development means contributing
to social development with a sound economy
and consideration for people’s health and
safety, and for the environment.
The environment
People
Economy
43
RISK MANAGEMENT
Phase 1, Identification
Identifying risks calls for active participation by the people whose
operation is to be analysed. The process can be based on situational
questions, interviews with key people or personnel at different
levels in the operation, or through workshops focusing specifically
on risk identification.
Phase 2, Analysis/classification
In the event of changes in the operation, a qualitative analysis
should be conducted prior to risk classification in order to identify
trends or patterns that may affect the assessment of damage or
the probability ratio. The risk classification is carried out with the
aid of a matrix, in which damage/probabilities are graded: low
(0–20 per cent), medium (20–40 per cent) and high (>40 per cent).
Phase 3, Preventive measures
Preventive measures are taken to reduce the probability of identified
risks occurring. Activities include establishing the preventive
measures, appointing someone to ensure the measures are
implemented, scheduling the measures and documenting them
in an action plan.
Phase 4, Follow-up
The preventive measures are continually followed up to ensure they
are having the intended effect. This can take place by analysing
completed improvement measures on the basis of the action plan.
It can also be achieved by summarising the risks and results,
which are checked against the final report. In some cases, a new
identification and analysis phase and a new action plan may be
required.
HIGH LEVEL OF READINESS
Risk and sensitivity analyses are not only about changes instigated
by EuroMaint: they also involve changes that the outside world
imposes on the Group. In an increasingly complex world, risk and
sensitivity analyses entail a high level of response readiness in the
face of different scenarios.
FINANCIAL RISK MANAGEMENT
See Note 26 for information about financial risk management
(exchange rate, interest rate, credit, liquidity and refinancing risks,
pensions and interest rates).
What safety, quality and environmental factors aresusceptible ahead of a planned change? How can they beaffected? What are the risks and how can they be elimi-nated? These are questions that EuroMaint regularlyhas to ask itself before implementing any change. In an operational field exposed to competition, continuousimprovement is a must to be commercially successful.It is equally important to analyse planned changes froma risk and sensitivity perspective.
PROCEDURES FOR RISK AND SENSITIVITY ANALYSIS
What risks could arise for the company, customers or in the sur-
rounding environment? How can the risks be eliminated or prevented?
Safety is regularly included in EuroMaint’s risk and sensitivity
analyses. The Group’s procedures for risk and sensitivity analysis
regarding safety, quality, the environment and working environment
encompass four phases, which are outlined below.
Elisabeth Nilsson – Board of Directors’ perspective
“We can influence developments by workingalongside others”
44
“We can influence developments by workingalongside others”
Article on a member of the Board’s view of EuroMaint
Skilled management of the company provides security
45
kinds of talk about quality these days, and
that maintenance and quality are the same
thing for EuroMaint.
“For me it is important as a member
of the Board to be able to feel proud that
I am working for a good company, and that
we are offering services of a high quality.
It is necessary for each individual employee
to think quality in his or her day-to-day work
– when making decisions, installing a
component or examining a drawing.”
Great breadth of operations
Elisabeth is fascinated by the tremendous
breadth within EuroMaint Rail’s various parts.
Rewinding engines is an amazing skill,
and taking trains out of service for main-
tenance work and then returning them with-
out disrupting the traffic flow is something
entirely different. Collaborating with per-
sonnel on technical and ergonomic solutions
when working on refurbishment projects,
as well as producing attractive coaches that
entice passengers, requires still other
qualifications.
“I was also very impressed when I visited
EuroMaint Industry in Skövde and saw what
they had done for Volvo,” explains Elisabeth.
“With so many different parts of the
operation, it is incredibly important to con-
stantly develop efficiency. To ask yourself if
you are doing the right things, whether any-
thing should be phased out or anything new
added. Constant changes of this kind can
be stressful for the employees, who ideally
want stability. However, I believe competent
work towards change produces long-term
security. The world is changing, and we need
to constantly evaluate how customers and
clients are acting and how political develop-
ments change the conditions and rules of
the game – and to act accordingly.”
As the rail transport industry is moving
Elisabeth Nilsson has been amember of EuroMaint’s Board of Directors for two years. She isimpressed by the breadth thatexists within the operation: the craftsmanship in rewindingengines, the logistics when trainsare taken out of and returned toservice for maintenance, and inparticular the extremely long-termwork of influencing developmentswithin the European rail sector.
Elisabeth Nilsson is President of the
Swedish Steel Producers’ Association. She
is now a member of EuroMaint’s Board of
Directors for the second year, and has there-
fore immersed herself in the situation for
railways both within and outside of Sweden.
“Since the various parts of the Swedish
State Railways were first converted into
independent companies there have been a
number of interesting developments. The
revolution has not been easy for anyone,”
she says.
“EuroMaint has been very adept at
developing the company from being part of
a state operation to working as an efficient
company on a market exposed to competi-
tion. It has successfully identified new
concepts, developed quality awareness
and developed the relationship between
customer and supplier.”
Tough competition demands quality
One interesting example is the Stockholm
Train Alliance, in which EuroMaint is a
supplier, which in competition with other
companies and consortiums has been
commissioned to run the commuter train
services in Stockholm.
“When you work with the public sector,
it’s important that transport is punctual.
EuroMaint’s capabilities will be put to the
test, and it is important to realise that
anyone who does not do their part in
Stockholm will be ‘blacklisted’, and not be
given a chance anywhere else either.”
Elisabeth mentions that there is all
“We are on the right track,and I believe the future
looks bright”
towards fewer and fewer maintenance
assignments, it is vital to review how the
company should deal with this situation.
EuroMaint already has a high market share
in Sweden and now sees two opportunities:
to grow within neighbouring sectors in the
field of maintenance in Sweden, and to
establish itself on the international market.
“It’s important to act wisely,” says
Elisabeth. “You have to have the ability
to handle growth while at the same time
adapting the organisation.”
Looking to Europe
“There is a great deal to be done to make
the railway an attractive means of transport
in Europe,” says Elisabeth. “Quite simply,
trains have to travel more quickly and be
extremely reliable in areas such as safety,
maintenance and punctuality.
“EuroMaint Rail has everything in place
to influence this development. By setting
good examples, we can spread our way of
working to business partners and custo-
mers in other countries. We have to be the
engine, pulling a heavy load in this initial
phase. If we succeed, we can then sit in first
class once the journey is under way,” says
Elisabeth with a smile.
She adds that European countries have
reached different stages in the deregulation
process, and that Sweden is very advanced.
There are a great many factors influencing
such decisions, not least the fact that train
operations are often closely linked to the
nation – indeed they frequently bear the
name of the nation.
“It’s a little odd: nobody wants to put up
barriers to road haulage and shipping com-
panies when it comes to operating across
national borders, but the railways have to be
protected. This will take time to change, but
we can influence developments by working
alongside others.
“The name EuroMaint is an indication of
what we expect of the future,” feels Elisabeth.
“Our goal is to grow across national borders.
We are on the right track, and I believe that the
future looks bright!”
FOUR-YEAR SUMMARY
PRO FORMA PRO FORMA
Income statement, SEK mn 2005 2004 2003 2002
Turnover 1,872 1,493 1,653 1,879
Operating profit/loss 113 47 -103 -188
Net financial items -11 -10 -11 -26
Profit/loss after tax 92 52 -106 -164
Cash flow, SEK mn 2005 2004 2003 2002
Cash flow from:
Ongoing activities 62 48 -40 -56
Investment activities -100 -34 10 -21
Financing activities 90 0 30 76
Change in cash and cash equivalents 52 14 0 0
Balance sheet, SEK mn 31 Dec 2005 31 Dec 2004 31 Dec 2003 31 Dec 2002
Fixed assets 215 160 113 140
Receivables and stock 693 563 690 722
Cash and cash equivalents 66 14 0 0
Total assets 974 737 803 862
Equity 174 81 18 110
Deferred tax 12 0 0 13
Other provisions 45 46 54 75
Long-term liabilities 340 250 250 240
Operating liabilities 403 359 481 424
Total equity and liabilities 974 737 803 862
46
The relevant figures for 2002–2004 relate to EuroMaint Rail. EuroMaint Industry is included from 1 July 2005.
2,000
, 750
1,500
1,250
1,000
750
500
250
02003 2004 20052002
TURNOVERSEK mn
150
100
50
0
-50
-100
-150
-2002003 2004 20052002
OPERATING PROFIT/LOSSSEK mn
200
150
100
50
02003 2004 20052002
EQUITYSEK mn
81
174
18
110
47
113
-10
3
-188
1,49
4
1,87
2
1,6
531,87
9
The business in figures
0505
48
REPORT OF THE DIRECTORS
The Board of Directors and President of EuroMaint AB hereby submit the Annual Report and consolidated financial
statements for the 2005 financial year. EuroMaint AB is a wholly-owned subsidiary of AB Swedcarrier, with registered number
553036-3409 domiciled in Stockholm, Sweden, and is wholly-owned by the Swedish state.
GROUP RESTRUCTURING
In order to better handle future challenges and expansion plans while retaining customer focus, the decision was made in late 2005
to restructure the EuroMaint Group. In December AB Swedcarrier acquired EuroMaint AB (formerly Jernhusen Exploatering AB)
from Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB (formerly EuroMaint AB) from the parent company AB
Swedcarrier. The acquisition was financed through a shareholders’ contribution. The technically new Group, which thus comprises
EuroMaint AB and the EuroMaint Rail Group, equates in financial terms to the former EuroMaint Group.
In January 2006, the shares in Euromation AB were transferred from EuroMaint Rail AB to the new parent company, and
Euromation AB changed name to EuroMaint Industry AB and continued to focus on the engineering industry.
OPERATIONS
EuroMaint strengthens its customers’ competitiveness through tailored maintenance and technical solutions. EuroMaint’s
business proposition targets the rail industry and engineering industry.
The proposition for the rail industry encompasses train maintenance and refurbishment of rolling stock, including spare
parts sourcing.
EuroMaint Rail is currently the market leader in Sweden and has begun offering its services to an international market,
primarily Denmark, Norway and Germany.
The largest customers in the rail industry are SJ AB and Green Cargo.
The company’s competitors are mainly various international maintenance providers, train operators’ own maintenance
organisations and vehicle manufacturers.
The proposition for the engineering industry encompasses maintenance, component service, production engineering
consultancy services and the development of production equipment. EuroMaint Industry currently focuses its offering on the
Swedish engineering industry. The largest customers in the engineering industry are from the Volvo group of companies, which
account for 90 per cent of turnover. Most maintenance service in the industry is carried out internally, so the challenge for
EuroMaint Industry is to present prospective customers with a sufficiently attractive offering that maintenance services are
outsourced with EuroMaint Industry.
THE ENVIRONMENT
The Group carries out operations with permit and notification obligations in accordance with the Swedish Environmental Code,
through its companies EuroMaint Rail and EuroMaint Industry. These two companies account for the Group’s main impact on the
external environment.
The Group’s overall operation has a certain impact on the external environment, primarily via emissions to land, water and air.
The Group’s permit and notification decisions are absolutely crucial to conducting the present operating activities.
Impact on the environment
EuroMaint Rail conducts three operations requiring permits and 12 requiring notification. At all workshops, the main effect on the
environment is to the air and water. Eleven of the notification decisions pertain to workshops for train maintenance, and one relates
to the refurbishment workshop in Malmö. The notification decisions mainly relate to vehicle washing units, painting and deicing
and refuelling facilities.
Increased activity in Malmö may require a new notification decision due to the increased discharge of solvent.
This is currently being looked into. Malmö also has a permit for inflammable goods which expires in February 2006 and needs
to be renewed. The workshops in Åmål and Gävle also need to renew their permits for inflammable goods in 2006.
The operations in Åmål and Örebro require permits. This is primarily due to the large amount of chemicals used, partly in
connection with vehicle washing and handling diesel systems.
EuroMaint Industry does not conduct any activities that require a permit. It has one operation which requires notification. It
relates to the motor rewinding operation and the use of paints. The environmental impact of all EuroMaint Industry operations is low.
THE BUSINESS IN FIGURES
49
SIGNIFICANT DEVELOPMENTS
In January EuroMaint Rail signed a 10-year maintenance contract with Arlanda Express worth in the region of SEK 250 million.
In March EuroMaint Rail established a new division, Engineering & Planning, to further focus on and secure solid expertise in
engineering and development of maintenance systems.
In May a sales function with a focus on international sales was established.
In June EuroMaint Rail delivered a Y1 engine coach converted from diesel to run on biogas – the world’s first biogas engine
coach. The customer, Svensk Biogas AB, is a wholly-owned subsidiary of Tekniska Verken i Linköping AB.
Euromation AB was acquired from Volvo Technology Transfer, Volvo Powertrain and Volvo Cars on 1 June. Euromation has
around 285 employees and a turnover of approximately SEK 300 million.
The ‘Stockholm Train Alliance’, in which EuroMaint Rail is a maintenance provider, won the contract for Stockholm’s Pendeltåg
commuter rail traffic. The agreement runs until 2011 with an option for a further five years, and the order is worth in the region of
SEK 850 million, excluding the option period. There was an appeal against the decision but the legal process led to the Alliance finally
receiving the order in any case. In December, EuroMaint Rail’s operational management system was granted environmental certi-
fication. During the year, EuroMaint Rail began a collaboration with AEA Technology Rail to enable the introduction of maintenance
technology that decreases maintenance costs and increases the availability of customers’ rolling stock.
FUTURE DEVELOPMENT
Clear trends in trade and industry towards an increased focus on the core business have resulted in various types of service increa-
singly being outsourced to specialist companies. Over the longer term this trend has related to services under the umbrella term of
‘facility management’.
The development has continued with the division of industrial corporations and public services into different companies or
specialist operations, thereby enabling each part to evolve into a robust unit under professional, proactive management. EuroMaint
Rail is a good example of this trend, whereby SJ Engineering with its maintenance and refurbishment operation within the former
Swedish State Railways (SJ) was converted into companies in 2001. In a similar way, the Volvo companies set up the Maskinteknik
unit as a company in 2000, which became part of the EuroMaint Group on 1 July 2005 and changed name to EuroMaint Industry
in 2006.
By highlighting the development of the engineering operation in the rail industry, automotive industry and proprietary core
business on a competitive market, it has been possible to achieve major benefits for customers and owners alike. The results have
been measurable in increased accessibility to costly production equipment and plants, while it has also been possible to reduce
maintenance costs and improve production efficiency. The EuroMaint Group will further develop efficient methods and processes
for maintenance and production, thereby helping increase customers’ competitiveness.
EuroMaint also intends to be part of the continued restructuring and development of the maintenance industry, both in Sweden
and in other EU countries. This could take place through organic growth and corporate acquisitions. It primarily refers to the rail
industry and the engineering industry, but could also extend to other industrial segments where EuroMaint’s processes can be
successfully applied.
THE BUSINESS IN FIGURES
50
TURNOVER AND PROFIT
Turnover
Turnover amounted to SEK 1,872 (1,493) million. Of the SEK 379 million increase in turnover, SEK 161 million can be attributed
to the acquisition of Euromation on 1 July. The remaining increase in turnover is due to expansion in refurbishment business (X2)
and a general increase in volume.
Operating profit
Operating profit amounted to SEK 113 (47) million, which gives an operating margin of 6 per cent and an increase in absolute terms
of SEK 66 million.
The improvement can be explained by
• The acquisition of Euromation with a positive contribution of SEK 13 million.
• A decrease in purchasing costs by about 10 per cent wherever possible.
• An update of the obsolescence model for materials, which means that inventories have been revalued by SEK 23 million,
which has had a positive impact on profit for the year.
Financial items
Net financial income/expense amounted to SEK -11 (-10) million. The figure has been positively affected by lower interest rates,
and negatively influenced by increased borrowing due to the acquisition of Euromation.
Cash flow
Cash flow for the year amounted to SEK 52 (14) million. The increase is mainly attributable to improved profit and moderation in
investments in tangible assets. During the first three quarters of the year there was a backlog in the planned cash flow, mainly due
to initial delays in deliveries for the X2 refurbishment. Cash flow from business in the fourth quarter was, however, strong. Cash
flow has also been influenced by transactions linked to the acquisition of Euromation.
Goal achievement
Turnover for 2005 amounted to SEK 1,872 million. Operating profit was SEK 113 million and the operating margin equalled 6 per cent.
The long-term goal is an operating margin of 8 per cent. EuroMaint has won and started working on new contracts. Planned cost-
cutting has been successfully implemented, as has effective cost control.
The equity/assets ratio is 17.8 (11) per cent, which is in line with the business plan. The goal is an equity/assets ratio of at least
25 per cent.
Proposed treatment of unappropriated earnings
Profit for the year in the parent company amounted to SEK 117,570 ( ). The Board of Directors proposes that the funds at the
AGM’s disposal, in accordance with the parent company’s balance sheet, be carried forward.
Earnings carried forward (SEK) 156,761,000
Net profit for the year 117,570
TOTAL 156,878,570
The income statement and balance sheet will be presented to the AGM on 30 March 2006 for approval.
THE BUSINESS IN FIGURES
51
INCOME STATEMENT1 January–31 December 2005
Group Parent company
SEK thousands Note 2005 2004 2005 2004
OPERATING INCOME
Net turnover 1,865,011 1,482,906 0 0
Other operating income 4 7,202 10,374 0 0
TOTAL OPERATING INCOME 1,872,213 1,493,280 0 0
OPERATING EXPENSES
Net operating expenses -631,100 -462,882 0 0
Other external expenses 5, 24 -381,036 -315,855 0 0
Costs of personnel 6 -721,183 -661,554 0 0
Depreciation of tangible assets 7 -24,164 -18,636 0 0
Amortisation of intangible assets 8 -938 0 0 0
Other operating expenses -69 917 0 0
Items affecting comparability 9 0 12,364 0 0
TOTAL OPERATING EXPENSES -1,758,489 -1,445,646 0 0
Operating profit 113,723 47,634 0 0
FINANCIAL ITEMS
Financial income 10 916 570 163 0
Financial expenses 10 -11,800 -10,585 0 0
NET FINANCIAL INCOME/EXPENSES -10,884 -10,015 163 0
Pre-tax profit 102,840 37,619 163 0
Tax 11 -10,375 13,970 -46 0
NET PROFIT FOR THE PERIOD 92,464 51,589 118 0
Parent company shareholders’ share of profit for the period 92,464 51,589 118 0
Earnings per share, SEK thousands 92.5 51.6 0.12 0
52
BALANCE SHEETOn 31 December 2005
Group Parent company
SEK thousands Note 2005 2004 2005 2004
ASSETS
FIXED ASSETS
Tangible assets 7 125,567 118,703 66 0
Intangible assets 8 44,258 0 0 0
Participations in Group companies 12 0 0 156,761 0
Long-term receivables 13, 14 12,929 12,929 129 129
Pension receivables 14 10,383 12,456 0 0
Deferred tax assets 15 21,547 20,000 0 0
TOTAL FIXED ASSETS 214,684 164,088 156,956 129
CURRENT ASSETS
Inventories 16 259,343 237,925 0 0
Accounts receivable 283,644 174,970 164 0
Receivables from Group companies 511 470 0 0
Other receivables 41,275 13,196 0 0
Completed, not invoiced 79,997 85,912 0 0
Tax assets 0 20,000 0 0
Prepaid expenses and accrued income 17 28,450 26,330 0 0
Cash and cash equivalents 65,850 13,820 0 0
TOTAL CURRENT ASSETS 759,070 572,623 164 0
TOTAL ASSETS 973,753 736,711 157,120 129
EQUITY
Share capital 100 100 100 100
Other contributed capital/statutory reserve 394,863 394,863 29 29
Accumulated deficit/non-restricted equity -221,372 -313,532 156,879 0
SHARE CAPITAL PERTAINING TO
PARENT COMPANY SHAREHOLDERS 173,591 81,431 157,008 129
TOTAL EQUITY 173,591 81,431 157,008 129
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
53
BALANCE SHEETCONTD.
Group Parent company
SEK thousands Note 2005 2004 2005 2004
LIABILITIES
LONG-TERM LIABILITIES
Long-term interest-bearing liabilities 18 340,000 250,000 0 0
Provision for pensions and similar commitments 14 38,448 41,219 0 0
Other provisions 19 6,363 4,975 0 0
Deferred tax liability 20 12,418 0 0 0
TOTAL LONG-TERM LIABILITIES 397,229 296,194 0 0
CURRENT LIABILITIES
Advance payment from customers 21 9,938 21,454 0 0
Accounts payable 21 116,954 109,514 0 0
Income tax liability 21 6,690 8,747 46 0
Liabilities to Group companies 21 7,482 10,705 0 0
Other current liabilities 21 19,120 3,323 66 0
Accrued expenses and prepaid income 22 242,750 205,343 0 0
TOTAL CURRENT LIABILITIES 402,933 359,086 112 0
TOTAL LIABILITIES 800,162 655,280 112 0
TOTAL EQUITY AND LIABILITIES 973,753 736,711 157,120 129
PLEDGED ASSETS AND CONTINGENT LIABILITIES
Pledged assets, floating charges 23 20,000 20,000 None None
Contingent liabilities 23 11,809 9,463 None None
54
CHANGES IN CONSOLIDATED EQUITY1 January – 31 December 2005
Share capital pertaining to parent company shareholders Share capital Other contri- Accumulated Total equitySEK thousands buted capital deficit
Opening equity 1 Jan 2004 100 394,863 -365,121 29,842
Net profit for the year 0 0 51,589 51,589
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 51,589 51,589
CLOSING EQUITY 31 DEC 2004 100 394,863 -313,532 81,431
Opening equity 1 Jan 2005 100 394,863 -313,532 81,431
Reclassification 0 0 -304 -304
Net profit for the year 0 0 92,464 92,464
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 92,160 92,160
CLOSING EQUITY 31 DEC 2005 100 394,863 -221,372 173,591
CHANGES IN PARENT COMPANY EQUITY1 January – 31 December 2005
Share capital pertaining to Share capital Statutory Earnings Net profit Total equityparent company shareholders, SEK thousands reserve vinstmedel for the year
Opening equity 1 Jan 2004 100 29 0 0 129
Net profit for the year 0 0 0 0 0
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 0 0 0
CLOSING EQUITY 31 DEC 2004 100 29 0 0 129
Opening equity 1 Jan 2005 100 29 0 0 129
Net profit for the year 0 0 0 118 118
TOTAL CHANGE IN WEALTH EXC. TRANSACTIONS WITH THE COMPANY’S OWNERS 0 0 0 118 118
Shareholders’ contribution 0 0 156,761 0 0
CLOSING EQUITY 31 DEC 2005 100 29 156,761 118 157,008
The number of shares in the parent company amounts to 1,000
The quota value in the parent company amounts to 100
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
55
Group Parent company
SEK thousands Note 2005 2004 2005 2004
ONGOING ACTIVITIES
Profit after financial items 102,840 37,619 163 0
Depreciation and write-downs 25,102 18,636 0 0
Other items not affecting liquidity 25 -33,929 -82,962 -46 0
CASH FLOW FROM ONGOING ACTIVITIES 94,013 -26,707 118 0BEFORE CHANGES IN WORKING CAPITAL
CHANGES IN WORKING CAPITAL
Increase (–)/decrease (+) in inventories -18,501 42,284 0 0
Increase (–)/decrease (+) in accounts receivable -47,675 66,568 0 0
Increase (–)/decrease (+) in other current receivables 22,910 -801 -163 0
Increase (+)/decrease (–) in accounts payable -15,467 -14,182 0 0
Increase (+)/decrease (–) in other current liabilities 26,694 -19,513 112 0
CASH FLOW FROM ONGOING ACTIVITIES 61,974 47,649 66 0
INVESTMENT ACTIVITIES
Acquisition of tangible fixed assets 7 -21,049 -49,589 -66 0
Divestment of tangible fixed assets 1,115 16,990 0 0
Acquisition of subsidiary/business segment, net liquidity effect 27 -80,534 0 0 0
Acquisition of financial assets 524 -1,230 0 0
CASH FLOW FROM INVESTMENT ACTIVITIES -99,944 -33,829 -66 0
Cash flow from operating activities -37,970 13,820 0 0
FINANCING ACTIVITIES
Borrowings 100,000 0 0 0
Repayment of debt -10,000 0 0 0
CASH FLOW FROM FINANCING ACTIVITIES 90,000 0 0 0
Change in cash and cash equivalents for the year 52,030 13,820 0 0
Cash and cash equivalents at beginning of year 13,820 0 0 0
Exchange rate differences in cash and cash equivalents 0 0 0 0
CASH AND CASH EQUIVALENTS AT END OF YEAR 65,850 13,820 0 0
CASH FLOW ANALYSIS1 January – 31 December 2005
56
IAS 1 Presentation of Financial StatementsIAS 2 InventoriesIAS 7 Cash Flow StatementsIAS 8 Accounting Policies, Changes in Accounting Estimates
and ErrorsIAS 10 Events after the Balance Sheet DateIAS 11 Construction ContractsIAS 12 Income TaxesIAS 14 Segment ReportingIAS 16 Property, Plant and EquipmentIAS 17 LeasesIAS 18 RevenueIAS 19 Employee BenefitsIAS 23 Borrowing CostsIAS 24 Related Party DisclosuresIAS 27 Consolidated and Separate Financial StatementsIAS 32 Financial Instruments: Disclosure and Presentation IAS 33 Earnings per ShareIAS 37 Provisions, Contingent Liabilities and Contingent AssetsIAS 38 Intangible AssetsIAS 39 Financial Instruments: Recognition and MeasurementIFRS 1 First-time Adoption of IFRSIFRS 3 Business Combinations
Important estimates and assumptions for accounting purposesThe Group makes estimates and assumptions about the future. The estimates for accounting purposes which result from these, by definition, will rarely equate to the actual result.
The estimates and assumptions which entail a significant riskfor considerable adjustments in carrying amounts for assets andliabilities over the coming financial year are discussed below.
Critical accounting issuesDuring the preparation of EuroMaint’s consolidated financial statements, the Board and President have, in addition to estimates,made a number of assessments of critical accounting issues whichare highly significant to carrying amounts. This applies for the following areas:
Fair value of acquired subsidiaryEuroMaint Industry’s predominant customers operate in the auto-motive industry. This industry is undergoing heavy restructuring bothnationally and internationally, which is henceforth likely to force players possibly to relocate their production facilities to regions withcomparative advantages. Needless to say, this scenario means thatvaluations of customer relations and goodwill contain a degree ofuncertainty.
Uncertainty in estimatesCertain assumptions about the future and certain estimates andassessments on the balance sheet date are of particular importanceto the valuation of assets and liabilities in the balance sheet. Theareas where the risk of changes in value during the subsequent yearare greatest because the assumptions or estimates may need to bealtered are discussed below.
NOTES
NOTE 1 Accounting principles
General informationEuroMaint Rail develops and produces technical system services andmaintenance of rolling stock. EuroMaint’s proposition to customersencompasses most forms of technical maintenance. EuroMaintIndustry offers customers maintenance, installation and developmentof various types of production equipment. The accounting principlesbelow apply for both the parent company and the Group.
The consolidated financial statements and the Annual Report for EuroMaint AB (the parent company) for the 2005 financial yearhave been approved by the Board of Directors and the President forpresentation to the AGM on 30 March 2006 for adoption.
The parent company is a registered limited company domiciledin Stockholm, Sweden.
The address of the head office is Svetsarvägen 10, SE-171 29 SOLNA. The Swedish state is the ultimate owner.
The parent company of the largest Group in which EuroMaint AB,556084-8458, is a subsidiary and in which consolidated financial sta-tements are prepared, is AB Swedcarrier, 556036-3409, in Stockholm.
Summary of important accounting principlesThe most important accounting principles applied in the preparationof these consolidated financial statements have been set out.
Statement on compliance with the applied rulesThe consolidated financial statements for the EuroMaint Group havebeen prepared in accordance with International Financial ReportingStandards (IFRS).
As the parent company is a company in the EU, only the IFRS asendorsed by the EU are applied. Moreover, the consolidated financialstatements are prepared in accordance with Swedish legislationthrough the application of Swedish Financial Accounting StandardsCouncil recommendation RR 30 (Supplementary financial reportingrules for Groups).
The parent company Annual Report is prepared in accordancewith Swedish law through the application of Swedish FinancialAccounting Standards Council recommendation RR 32 (Financialreporting for legal entities). This means that IFRS valuation and disclosure principles are applied with the deviations specified in thesection on parent company accounting principles.
EuroMaint also follows the Stockholm Stock Exchange’s listingagreement with appendices and regulations from the SwedishIndustry and Commerce Stock Exchange Committee (NBK).
Foundation for preparing reportsThe consolidated financial statements for the EuroMaint Group havebeen prepared in accordance with International Financial ReportingStandards (IFRS).
The accounts are primarily based on historical costs with theexception of certain financial instruments which are reported at fairvalue. The Group has applied the following IFRS for 2005.
Comparison figures for 2004 have been adjusted as required in accordance with prevailing rules.
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
57
Impairment test for goodwillThe value of recognised goodwill is tested at least once a year todetermine any write-down requirement. The test requires an assess-ment of the value in use of the cash generating unit, or groups ofcash generating units, to which the goodwill value is attributable. In turn, this requires an estimation of the expected future cash flowfrom the cash generating unit and a relevant discount rate must beestablished to calculate the present value of the cash flow. Theassessments carried out on 31 December 2005 are stated in Note 8,Intangible Assets.
Obsolescence of inventoriesIn terms of value, inventories mainly comprise items which havebeen acquired in accordance with an assessed maintenance plan for various train models. As these cycles are long-term in nature (5 to 12 years), there is an element of uncertainty in this assessment.The company has a far-reaching obligation to stock items (spareparts) for a long time for various train models which have a verylong financial and technical life.
Consolidated accountsSubsidiaries are all companies in which the Group is entitled toformulate financial and operational strategies in a way that usuallyaccompanies a shareholding amounting to over half the voting rights.
Subsidiaries are included in the consolidated financial statementsfrom the day on which controlling influence passes to the Group.They are excluded from the consolidated financial statements fromthe day on which this controlling influence ceases.
The purchase method is used in accounting for the Group’sbusiness combinations. The cost of an acquisition comprises the fairvalue of assets provided as remuneration, arisen or assumed liabilitieson the transfer day, plus costs directly attributable to the acquisition.Identifiable acquired assets and assumed liabilities and contingentliabilities in a corporate acquisition are initially measured at fairvalue on the acquisition date regardless of the extent of any minorityinterest. The surplus comprising the difference between the cost andfair value of the Group’s proportion of identifiable acquired net assetsis recognised as goodwill. If the cost is less than the fair value of theacquired subsidiary’s net assets, the difference is recognised directlyin the income statement.
Intra-Group transactions and balance sheet items, as well asprofits on transactions between Group companies, are eliminated.Losses are also eliminated, unless the transaction is proof of a write-down requirement for the transferred asset. The accounting principlesfor subsidiaries have been changed where appropriate to guaranteeconsistent application of the Group’s principles.
Euromation AB which was acquired on 1 July 2005 has beenincluded in the consolidated financial statements in accordance withthe purchase method. This entails, for example, distributing the costof acquired assets, assumed commitments and liabilities at the timeof the acquisition on the basis of their fair values. Consequently,Euromation’s profit and cash flow for the six-month period July – December 2005 are included in the consolidated financial statements.
In order to better handle future challenges and expansion planswhile retaining customer focus, the decision was made in late 2005to restructure the EuroMaint Group. In December AB Swedcarrieracquired EuroMaint AB (formerly Jernhusen Exploatering AB) from
Jernhusen. EuroMaint AB then acquired shares in EuroMaint Rail AB(formerly EuroMaint AB) from the parent company AB Swedcarrier.The acquisition was financed through a shareholders’ contribution.
The technically new Group, which thus comprises EuroMaint ABand the EuroMaint Rail Group, equates in financial terms to the formerEuroMaint Group. EuroMaint AB’s acquisition of EuroMaint Rail ABwas a transaction between companies under the same controllinginfluence. IFRS 3 which deals with accounting of business combina-tions does not, therefore, apply. The consolidated financial statementshave been prepared using the pooling of interests method, whichentails preparing the consolidated financial statements for the newlyformed Group as though both units (EuroMaint AB and theEuroMaint Rail Group) merged at the beginning of the comparisonyear and without revaluation of assets and liabilities in both the merged units.
Business combinationsIFRS 3 has been applied for business combinations carried out since1 January 2004, which is in accordance with IFRS 1 and therefore anexception from the main rule on retroactive application of IFRS.IFRS 3 entails establishing the fair value of identifiable assets and liabilities in the acquired operation at the time of acquisition.
Identifiable assets and liabilities also include assets, liabilitiesand provisions including obligations and demands from externalparties not reported in the acquired operation’s balance sheet. No provisions are made for costs relating to planned restructuringmeasures resulting from the acquisition.
The difference between the cost of the acquisition and the acquiredproportion of net assets in the acquired operation is classified asgoodwill and is recognised as an intangible asset in the balance sheet.
The useful life of each individual intangible asset is establishedand the asset’s fair value is amortised over its useful life. If the usefullife is deemed indefinite, no amortisation takes place. If the useful lifeof an intangible asset is deemed indefinite, all relevant conditionsare taken into account and based on there being no foreseeableupper time limit for the net cash flow generated by the asset. Theuseful life for goodwill is generally assumed to be indefinite.
Segment reportingAs the subsidiaries conduct separate operations with separate products and services, their operations have been chosen as the primary segment. Sales between subsidiaries are based on marketconditions.
All assets and liabilities have been included for each subsidiary.Segment information per subsidiary is given in Note 3.
Translation of foreign currenciesTransactions in foreign currencies are translated at the rate used onthe transaction date. Receivables and liabilities in foreign currenciesare translated at the exchange rates in force on the balance sheetdate. Exchange rate differences on loans and investments in foreigncurrencies are reported as financial income or financial expense.Other exchange differences are included in operating income.
NOTES
58
Tangible fixed assetsTangible fixed assets are recognised at cost less accumulated deprecia-tion according to plan and accumulated write-downs. Depreciationtakes place in accordance with a systematic plan over the useful lifeof the asset to an estimated residual value.
Additional costs are added to the asset’s carrying amount orrecognised as a separate asset, as appropriate, only when it is likelythat future economic benefits associated with the asset will accrue tothe Group and the asset’s cost can be measured in a reliable way.
All other forms of repair and maintenance are recognised asexpenses in the income statement for the period in which they arise.
In order to distribute the cost of tangible fixed assets down to theestimated residual value, depreciation takes place linearly over theestimated useful life, in accordance with the following percentages.
Category Depreciation, %Machinery and equipment 5–10
Computers and terminals 33
Buildings 5
Other intangible assets/Customer relationsIn connection with corporate acquisitions, the Group has identifiedintangible assets which fulfil the criteria set out in IAS 38. Linearamortisation is applied over the useful life of the asset, which is 8 years.
The carrying amounts of intangible assets are tested to determineany write-down requirement when events or changes in circumstancesindicate that the value may not be recoverable.
Write-downsAssets with an indefinite useful life are not depreciated/amortisedbut tested annually to determine any write-down requirement. Theassets which are depreciated/amortised are assessed in terms ofdecrease in value whenever an event or a change indicates that thecarrying amount may not be recoverable. A write-down is carried outfor the amount by which the asset’s carrying amount exceeds itsrecoverable amount.
The recoverable amount is the higher of an asset’s fair value lessselling expenses, or its value in use. On determining the write-downrequirement, the assets are grouped at the lowest levels at whichthere are separate, identifiable cash flows (cash generating units).Goodwill is tested annually to identify any write-down requirementand is recognised at cost less accumulated write-downs.
Financial instrumentsFinancial instruments recognised as assets in the balance sheetinclude cash equivalents, accounts receivable, derivatives and otherreceivables. Those recognised as liabilities include accounts payable,borrowings, derivatives and other liabilities.
A financial asset or financial liability is recognised in the balancesheet when the company becomes party to the instrument’s contractual terms.
Accounts receivable are recognised in the balance sheet once an invoice has been sent.
Liabilities are recognised once the counterparty has completedits task and there is a contractual obligation to pay, even though an invoice may not yet have been received.
Accounts payable are recognised once the invoice has beenreceived.
A financial asset is excluded from the balance sheet once thecontractual rights have been realised, have expired or the companyhas lost control over it. The same applies for part of a financial asset.A financial liability is removed from the balance sheet once theobligation in the contract has been fulfilled or has in some other waybeen extinguished. The same applies for part of a financial liability.
EuroMaint has taken the voluntary exception to apply IAS 32 andIAS 39 from 1 January 2005.
Financial assetsAcquisitions and sales of financial assets are reported on the businessday, i.e. the day on which the company commits to acquiring or sellingthe asset.
NOTES
The residual values and useful lives of assets are tested on eachbalance sheet date and adjusted as necessary. An asset’s carryingamount is depreciated immediately to its recoverable amount (thehigher of the net selling price and value in use) if the asset’s carryingamount exceeds its estimated recoverable amount.
Profits and losses from sales are established by means of acomparison between the sales proceeds and carrying amount andthe result is recognised in the income statement.
Intangible assets
GoodwillGoodwill is the amount by which the cost exceeds the fair value
of the Group’s proportion of the subsidiary’s identifiable net assetsupon acquisition. Goodwill upon acquisition of the subsidiary isrecognised under intangible assets.
Profit or loss from the sale of a unit includes the remaining carrying amount of the goodwill pertaining to the sold unit.
Goodwill is distributed between cash generating units upon testing to determine any write-down requirement. The write-downrequirement for goodwill is tested as follows: the goodwill valueestablished at the time of acquisition is distributed among cashgenerating units or groups of cash generating units, which areexpected to bring benefits through the acquisition in the form ofsynergy effects.
Assets and liabilities already within the Group at the time ofacquisition may also be attributed to these cash generating units.
Each cash flow of this kind to which goodwill is distributed,corresponds to the lowest level in the Group at which goodwill ismonitored in the company’s Board and is not a larger part of theGroup than a segment, i.e. a business segment or geographical areain accordance with the Group’s segment reporting. A write-downrequirement exists when the recoverable amount for a cash generatingunit, or group of cash generating units, is lower than the carryingamount. In such cases a write-down is entered in the income statement.
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
59
BorrowingLoans are initially recognised at the loan amount and are subsequentlyentered at the loan amount less reductions. Borrowing is classifiedas current liabilities unless the Group has an unconditional right topostpone payment of the liability for at least 12 months after thebalance sheet date.
Derivative instrumentsThe Group uses derivative instruments to secure parts of its exposureto currency risks in ongoing payment flows. Management is in accordance with the financial rules established by the Board. Hedgeaccounting is not applied, instead all derivatives are categorised asfinancial assets and liabilities valued at fair value through the incomestatement.
This means that the change in value of the derivatives is recog-nised in the income statement under financial items. Derivatives withpositive values are entered as assets and derivatives with negativevalues are entered as liabilities.
Fair value is established by obtaining the costs or revenue whichwould have arisen if the contract had expired on the balance sheet date.
InventoriesMaterial stores and finished goods inventories are valued at the lowerof cost or net selling price. The Group applies the first-in, first-outmethod (FIFO). The net selling price is the estimated selling price in the ongoing operation less applicable variable selling expenses.
Accounts receivableAccounts receivable are reported at the invoiced amount less anyreserve for decrease in value. A reserve for decrease in value ofaccounts receivable is set up when there is objective proof that theGroup will not be able to receive all amounts due in accordance withthe original terms of the receivables. The size of the reserve is thedifference between the asset’s carrying amount and the value ofassessed future cash flows. The decrease in value is reported in theincome statement.
Cash and cash equivalentsCash and cash equivalents include cash and bank balances. In the balance sheet, the bank overdraft facility utilised is entered asborrowing under current liabilities.
Income taxThe tax burden is affected by appropriations and other tax adjustmentsmade in each company. The tax rate used is 28 per cent. Deferred taxis recognised in its entirety on all temporary differences comprisingthe difference between the tax base for assets and liabilities and theircarrying amounts in the consolidated financial statements. Deferredtax is calculated through the application of tax rates and laws whichhave been decided or notified on the balance sheet date and whichare expected to apply when the deferred tax assets in question arerealised or the deferred tax liability is cleared.
Deferred tax assets are recognised for tax-deductible temporarydifferences and unused loss carry-forwards to the extent it is likely thatfuture taxable profit will be available against which the temporarydifferences or unused loss carry-forwards may be used.
Remuneration to employees
Pension obligationsThe Group companies have different pension plans. The pensionplans are primarily financed through payment of insurance premiumsor through a provision in the balance sheet. The Group has bothdefined benefit and defined contribution pension plans. For employeesin the Group previously employed by the public enterprise theSwedish State Railways, the Swedish state is responsible for earnedand not paid pension commitments for the time prior to conversioninto companies at the end of 2000/beginning of 2001.
A defined contribution pension plan is a plan whereby the Grouphas no further payment obligation once the contributions are paid.Defined contribution pension plans in the Group are PA-03, AlternativITP-S (supplementary pensions for higher earners), and ITP supple-mentary pensions for salaried employees, Alecta. ITP pensions in Alectaare recognised as defined contribution plans due to a deficiency in the information required to classify the plan as a defined benefitpension. According to a statement from the Swedish FinancialAccounting Standards Council’s Emerging Issues Task Force, URA42, these are defined benefit plans encompassing several employers.
EuroMaint has not had access to such information for the 2005financial year that would make it possible to enter this plan as a defined benefit plan. The ITP pension, which is secured through an insurance policy with Alecta, is therefore entered as a definedcontribution plan.
Fees for the year for pension plans issued by Alecta amount toSEK 19 (14) million. Some employees are entitled to exchange part of their ITP plan for a premium-based pension solution where thecompany’s sole obligation is to pay the set premiums. The fees arereported as costs of personnel when they fall due for payment.Prepaid fees are recognised as an asset to the extent that cash repay-ment or a reduction in future payments may accrue to the company.
A defined benefit pension plan guarantees the employee a pensionequivalent to a certain percentage of his or her final salary.
The liability recognised in the balance sheet regarding definedbenefit pension plans is the present value of the defined benefit obli-gation on the balance sheet date net the fair value of the plan assets,with adjustments for unrecognised actuarial losses/past service losses.The defined benefit pension obligation is calculated annually by inde-pendent actuaries. The present value of the defined benefit obligationis established by discounting the estimated future cash flow at aninterest rate for government bonds issued in the same currency in which the remuneration will be paid out, and with durationscomparable to the pension provision in question. Actuarial gains and losses arising from experience-based adjustments and changesin actuarial assumptions exceeding the higher of 10 per cent of the value of the plan assets and 10 per cent of the defined benefitobligation, are taken up as expense or income over the estimatedaverage remaining period of service of the employees.
Past service cost is recognised directly in the income statement,unless the changes in the pension plan are conditional on theemployee remaining in service for a set period (entitlement period).In such cases, the past service cost is recognised on a straight-linebasis over the entitlement period.
The results for defined benefit pension obligations were calcu-lated in accordance with IAS 19 (Projected Unit Credit Method) on 31 December 2005.
NOTES
60
Remuneration on termination of employmentRemuneration on termination of employment is paid when anemployee’s position is terminated prior to standard retirement orwhen an employee accepts voluntary redundancy from the positionin exchange for such remuneration. The Group recognises severancepay when it is demonstrably obliged either to make the employeeredundant in accordance with a detailed formal plan with no oppor-tunity for recall, or to provide remuneration upon redundancy due toan offer made to encourage voluntary redundancy among personnel.Benefits due after 12 months of the balance sheet date or longer arediscounted at the present value.
ProvisionsProvisions are recognised when the Group has an existing legal or constructive obligation as a result of a past event, and it is more probable than not that an outflow of resources will be required tosettle the obligation, and the amount has been reliably estimated. If there are a number of similar obligations, the probability that anoutflow of resources will be required to settle is assessed generallyfor this entire group of obligations. A provision is also reported if the probability of an outflow regarding a specific item in this groupof commitments is only slight.
Revenue recognitionNet turnover encompasses sales of services within maintenance,refurbishment of rolling stock, as well as maintenance and imple-mentation of production facilities for the engineering industry.
For maintenance contracts guaranteeing availability (known as‘availability contracts’) and refurbishment contracts, income and costspertaining to the assignment are recognised relative to the degree ofcompletion of the assignment. This accounting principle is based onthe view that the task is fulfilled in line with the work being carriedout, and means that profit is recognised progressively based on thedegree of completion of each assignment when the assignment’sfinal outcome can be measured in a reliable way. For availabilitycontracts, the degree of completion is determined on the basis ofwork carried out in relation to the maintenance plan.
For refurbishment contracts, the degree of completion is determined in relation to accrued assignment costs.
If an assignment’s final outcome cannot be measured in a reliableway but no loss is feared, revenue corresponding to accrued costs isrecognised.
A feared loss for an assignment is immediately charged in itsentirety to the period’s results.
LeasesLeases where a considerable part of the risks and rewards of owner-ship are retained by the lessor are classified as operating leases.Payments made during the lease term are taken up as expenses inthe income statement on a straight-line basis over the lease term.
Cash flow analysisThe indirect method is applied in recognising cash flow from ongoingactivities.
Related partiesRelated companies to the EuroMaint Group are defined as statecompanies with market requirements where the state has a controlling influence.
Persons closely associated with the Group are defined as Boardmembers, senior personnel and close family members of these people.
Disclosures are provided about transactions with related partieswhich entail the transfer of resources, services or obligations betweenrelated parties, whether or not remuneration is paid. The informationcontains details of the nature of the relationship and informationabout the effect of the relationship on the financial reports.
Parent companyThe parent company applies the same accounting principles as theGroup, along with RR 32.
Transition to International Financial Reporting Standards (IFRS)As of 1 January 2005, the Group prepares its consolidated financialstatements in accordance with International Financial ReportingStandards, IFRS. The Group has applied the Swedish FinancialAccounting Standards Council’s recommendations up until 2004,which largely correspond to IFRS. Accounting and reporting in accordance with IFRS have affected the Group’s reported results and position. The area that has had an impact on the Balance Sheet,Equity and Reported Result upon transition to IFRS is:• Pensions IAS 19
Balance Sheet, SEK mn 1 Jan 2004Equity as per former accounting principles 18,2
Effect of IAS 19 11,6
Equity as per new accounting principles 29,8
Balance Sheet, SEK mn 31 Dec 2004Equity as per former accounting principles 68,6
Effect of IAS 19 12,8
Equity as per new accounting principles 81,4
Income Statement, SEK mn 2004Profit as per former accounting principles 50,4
Effect of IAS 19 1,2
Profit as per new accounting principles 51,6
NOTES
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
61
The table below presents information about the prime nature of the transactions with related parties.
Operating revenues Expenses
Banverket Sale of materials Premises rentalRolling stock maintenance Telephone costsRecovery services
Green Cargo Sale of materials Premises rentalRolling stock maintenance Transport costsRecovery services
Lantmäteriverket – Purchase of maps
SJ AB Sale of materials Train journeysRolling stock maintenanceRecovery services
SweMaint AB Sale of materials Material costsRolling stock maintenance Component
maintenance costs
ASJ Refurbishment Damages costsof rolling stock
Jernhusen – Workshop rental
Vattenfall AB Industrial maintenance Energy costs
NOTES
Note 2 Transactions with related parties
Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004
Sale of goods and servicesState companies/departmentsBanverket 50,313 61,848
Green Cargo 299,802 297,448
SJ AB 835,565 689,644
ASJ 12,829 1,732
SweMaint AB 55,453 41,465
Vattenfall 543 651
Jernhusen 19 246
Purchase of goods and servicesState companies/departmentsBanverket 7,688 8,372
Green Cargo 2,014 5,283
SJ AB 9,821 7,367
ASJ 37 36
SweMaint AB 30,937 31,644
Lantmäteriverket 6 4
Vattenfall 233 444
Jernhusen 128,482 115,555
Receivables from related partiesState companies/departmentsBanverket 8,019 21,701
Green Cargo 31,505 32,392
SJ AB 102,278 73,360
ASJ 14,087 414
SweMaint AB 209 415
Vattenfall 3 4
Jernhusen 0 470
Liabilities to related partiesState companies/departmentsBanverket 2,049 2,710
Green Cargo 283 567
SJ AB 1,187 627
SweMaint AB 3,821 5,543
Vattenfall 27 10
Jernhusen 3,645 4,648
62
NOTES
Note 3 Segment reporting
The EuroMaint Group operates in the maintenance industry. The Group has two segments: rolling stock maintenance and industrial maintenance.EuroMaint Rail provides maintenance for rolling stock, while EuroMaint Industry provides industrial maintenance. EuroMaint Industry (at the timeEuromation AB) was acquired on 1 July 2005, which is why segment reporting for industrial maintenance is barely applicable for the 2005 financial year.
1 januari–31 december 2005, SEK thousands EuroMaint Rail EuroMaint Industry Group adjustments GroupNet turnoverExternal net turnover 1,709,608 161,429 0 1,871,037
Internal net turnover 4,933 27 -3,784 1,176
Total net turnover 1,714,541 161,456 -3,784 1,872,213
Profit/lossOperating profit/loss 105,516 6,850 1,357 113,723
Financial income 642 111 163 916
Financial expenses -11,793 -7 0 -11,800
Pre-tax profit 94,365 6,954 1,520 102,840
Income tax -6,200 -1,971 -2,204 -10,375
Net profit/loss for the year 88,165 4,983 -684 92,464
Other disclosuresAssets 924,600 123,699 -74,546 973,753
Liabilities 735,284 74,968 -10,090 800,162
Investments 6,185 970 66 7,221
Depreciation/amortisation 23,230 935 938 25,102
The Group generally enters sales and transfers between the segments as though the sales and transfers had been to a third party at prevailingmarket prices.
Note 4 Other operating income
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Profit from sale of fixed assets 869 5,363
Exchange gain from receivables/liabilities relating to operations 1,480 1,050
Rental income 1,226 385
Other 3,627 3,576
Total 7,202 10,374
Note 5 Remuneration to auditors
Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004
Deloitte Audit engagement 22 370
Other engagements 630 402
Ernst & YoungAudit engagement 910 0
Other engagements 150 0
Total 1,712 772
Audit engagement refers to the examination of the annual report andaccounts as well as the Board’s administration, other tasks incumbenton the company’s auditors as well as advice or other assistanceresulting from observations during the examination or implementationof other such work tasks. All other work is classified as other engage-ments.
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
63
NOTES
Note 6 Average number of employees and costs of personnel
Group Parent company1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004
31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Average number of employees by genderSwedenWomen 108 102 0 0
Men 1,561 1,432 0 0
Total 1,669 1,534
Board members and senior personnelBoard membersWomen 4 3 2 0
Men 24 22 7 3
President and other senior personnelWomen 2 1 0 0
Men 17 15 4 0
Total 47 41 13 3
EuroMaint EuroMaint Rail Industry
Sick leave, % 2005 2004 2005 2004Total sick leave 5.2 4.9 2.8 3.8
Long-term sick leave 5.2 4.9 0.7 2.0
Sick leave for men 5.2 4.9 2.6 3.0
Sick leave for women 4.2 4.3 4.7 13.2
Employees – 29 years 5.1 7.1 1.9 2.8
Employees 30 – 49 years 4.2 3.7 3.2 3.3
Employees 50+ years 6.3 6.0 2.5 4.9
Sick leave is calculated based on the actual absence in relation to thenormal working hours for each group.
Group, SEK thousandsCosts of personnel 1 Jan 2005 1 Jan 2004Salaries and other remuneration 31 Dec 2005 31 Dec 2004in Sweden
Board and President 6,230 5,848
of which bonus and thereby equalised remuneration 2,558 890
Other employees 463,564 449,630
Total salaries and other remuneration 472,352 455,478
Social security expenses 232,592 222,548
of which pension costs 61,877 53,496
64
NOTES
Remuneration to senior personnel of EuroMaint RailBasic salary Bonus Other benefits Pension cost
President 1,948 0 142 560
Executive Vice President, Strategy & Business Development 1,507 0 12 738
Executive Vice President, CFO 1,404 0 103 494
Vice President, Refurbishment & Component Overhaul 1,064 0 68 231
Vice President, Train Maintenance 825 0 32 238
Vice President, Engineering & Planning 604 0 0 136
Vice President, Sourcing & Supply 655 0 24 110
Vice President, Sales & Marketing 1,078 0 75 356
Vice President, Quality & Environment 883 0 54 266
Vice President, Human Resources 721 0 0 287
Total 10,689 0 511 3,415
Remuneration to senior personnel of EuroMaint IndustryBasic salary Bonus Other benefits Pension cost
President 1,129 2,558 61 336
Executive Vice President, Sales 699 245 48 135
Executive Vice President & CFO 666 233 50 145
Total 2,493 3,036 159 616
The management of EuroMaint Industry have received bonuses conditional on agreements entered into prior to the acquisition.
Remuneration and other benefits during the financial yearSenior personnel receive an old-age pension at 65 years. Two membersof senior personnel have individual defined contribution pensionsequivalent to 20–35 per cent of pensionable salary. Other senior personnel are covered by the ITP supplementary pension for salariedemployees with the option to choose alternative ITP with voluntarypremiums relating to salary exceeding 7.5 income base amounts. Two of these members of senior personnel are, however, covered by asupplementary defined contribution pension within the framework ofalternative ITP, with a premium equivalent to 20–40 per cent of thepensionable salary exceeding 7.5 income base amounts. Agreementshave been reached with two senior personnel regarding severance payshould the company give notice. The severance pay is equivalent tothe fixed salary for 12 months in addition to the period of notice, whichis 12 months. Severance pay is not pensionable, is fully adjustableand is not paid on retirement. Other senior personnel receive salaryduring the period of notice, which is 12 months, and no severance pay.EuroMaint Rail’s Board received a fee of SEK 520,000 (440,000).
Note 6 Average number of employees and costs of personnel, contd.
The agreed retirement age for all senior personnel is 65 years. Upontermination of employment for the President there is a period ofnotice of 12 months from the employer’s side, or 6 months from the President’s side. The Vice Presidents have a term of notice of 3 months which applies for notice given by either side.
No severance pay is payable upon termination of employment.Management members are free to choose how the premium is mana-ged for salary exceeding 7.5 income base amounts. Irrespective of thepension solution chosen by the manager, it must be cost-neutral for the company in relation to the ITP plan. Management members havea bonus agreement for 2005 which stipulates a maximum bonus of 50 per cent of annual salary for the President and a maximum bonus of
35 per cent of annual salary for the Vice Presidents. The Presidenthas received a bonus related to the sale of Euromation. The cost of thisbonus has been carried by the sellers of Euromation.
The EuroMaint Industry Board has received a fee amounting toSEK 75,000 for the period 1 July – 31 December 2005. The chairmanhas not received any fee and other members received SEK 25,000 each.
Remuneration is paid to the Board Chairman and other membersof the Group’s Boards in accordance with decisions by the generalmeeting of shareholders. Salary and remuneration to Presidents isdecided by each company’s Board. Salary and remuneration to othersenior personnel is decided by each company’s Board or President.
THE BUSINESS IN FIGURES
As of 2004, no bonus is paid to the management or other personnelwithin EuroMaint Rail.
The chairman of EuroMaint Rail receives a fee of SEK 120,000 andother Board members SEK 80,000 provided they are not members of the Swedcarrier Board. If they are, a fee of SEK 0 (zero) is paid tomembers of the EuroMaint Rail Board. The President of EuroMaintRail received salary and benefits totalling SEK 2,09 (2,124) million(excluding social security costs) during the financial year and hadthe use of a company car with a total benefit value of SEK 73,000(61,000).
The President receives an old-age pension at 65 years. ThePresident has a non-revokable premium-based pension promise of 30 per cent of monthly income. The term of notice is 12 monthsfrom both the company’s and the President’s side, and during thistime salary is payable with full adjustment. If notice is given by thecompany, 12 months’ non-pensionable severance pay is also awardedwith full adjustment against other income.
THE BUSINESS IN FIGURES
65
NOTES
Note 7 Tangible fixed assets
Group, SEK thousands Equipment, tools, ConstructionLand and buildings Plant and machinery fixtures and fittings in progress Total
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004Opening cost 29,454 34,820 128,035 118,723 151,773 152,663 15,737 4,384 324,998 310,591
Acquisition of subsidiaries 18,768 0 2,677 0 0 0 21,445 0
Purchases 1,779 14,036 7,220 13,952 18,367 10,248 -6,317 11,353 21,049 35,553
Sales/scrappings -488 -19,402 -4,760 -4,641 -8,580 -11,139 0 0 -13,340 -35,182
Closing accumulated cost 30,745 29,454 149,262 128,035 164,237 151,773 9,420 15,737 353,664 324,998
Opening depreciation -6,101 -11,643 -89,403 -86,339 -110,790 -112,873 0 0 -206,294 -210,854
Acquisition of subsidiaries -8,299 0 -2,579 0 0 0 -10,878 0
Depreciation for the year -4,119 -2,819 -8,593 -6,879 -11,452 -8,938 0 0 -24,164 -18,636
Sales/scrappings 358 8,361 4,760 3,815 8,120 11,020 0 0 13,239 23,196
Closing accumulated depreciation -9,862 -6,101 -101,535 -89,403 -116,701 -110,790 0 0 -228,097 -206,294
CLOSING RESIDUAL VALUEACCORDING TO PLAN 20,884 23,353 47,727 38,631 47,536 40,982 9,420 15,737 125,567 118,703
Parent company Equipment, tools, ConstructionLand and buildings Plant and machinery fixtures and fittings in progress Total
2005 2004 2005 2004 2005 2004 2005 2004 2005 2004Opening cost 0 0 0 0 0 0 0 0 0 0
Purchases 0 0 0 0 0 0 66 0 66 0
Sales/scrappings 0 0 0 0 0 0 0 0 0 0
Closing accumulated cost 0 0 0 0 0 0 66 0 66 0
Opening depreciation 0 0 0 0 0 0 0 0 0 0
Depreciation for the year 0 0 0 0 0 0 0 0 0 0
Sales/scrappings 0 0 0 0 0 0 0 0 0 0
Closing accumulated depreciation 0 0 0 0 0 0 0 0 0 0
CLOSING RESIDUAL VALUEACCORDING TO PLAN 0 0 0 0 0 0 66 0 66 0
Note 8 Intangible assets
Accumulated cost, SEK thousands Goodwill Trademarks & licences Customer relations Total
Opening balance 1 Jan 2005 0 0 0 0
Business combinations 30,195 0 15,000 45,195
Amortisation 0 0 -938 -938
Closing balance 31 Dec 2005 30,195 0 14,063 44,258
Goodwill is attributable to the acquisition of Euromation. This goodwill was tested to determine any write-down requirement on 31 December 2005.In connection with this impairment test, EuroMaint Industry’s discount rate before tax was assessed at 11.9 per cent.
Note 9 Items affecting comparability
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Costs linked to restructuring 23,927
Result of arbitration -11,563
Impact on profit 0 12,364
66
NOTES
Note 12 Participations in Group companies
No. of Percentage of Book value Book valueCompany name, SEK thousands Reg. no. Domicile participations equity and votes 31 Dec 05 31 Dec 04EuroMaint Rail AB 556032-2918 Stockholm 190,000 100 156,761 0
– EuroMaint Industry AB 556232-0134 Stockholm 100,000 100 0 0
– EuroMaint Bemanning AB 556670-3095 Stockholm 1,000 100 0 0
– Underhållsbolaget Pendeln AB 556673-4363 Stockholm 1,000 100 0 0
Total 156,761 0
Note 10 Net financial items
SEK thousands Group Parent company1 Jan 2005 1 Jan 2004 1 Jan 2005 2004-01-01
31 Dec 2005 31 Dec 2004 31 Dec 2005 2004-12-31Interest income 785 570 163 0
Net exchange rate fluctuations 131 0 0 0
Financial income 916 570 163 0
Interest expenses -11,645 -10,585 0 0
Net exchange rate fluctuations -155 0 0 0
Financial expenses -11,800 -10,585 0 0Net financial items -10,884 -10,015 163 0
Note 11 Tax
Group Parent companyTotal recorded tax, SEK thousands 1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004
31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Current tax -1,971 0 0 0
Deferred tax -8,404 13,970 -46 0
Total -10,375 13,970 -46 0
Differences between the recorded tax and calculated tax based on the prevailing tax rate comprise the following components:
Group, SEK thousandsDifference with calculated tax 1 Jan 2005 1 Jan 2004at prevailing tax rate 31 Dec 2005 12 Dec 2004Recorded pre-tax profit/loss 102,839 37,619
Tax in accordance with prevailing tax rate, 28 % -28,795 -10,533
Effects of non-taxable income and non-deductible expensesNon-deductible expenses -13,132 -1,830
Non-taxable income 9,478 3,332
Valuation of loss carry-forward and previouslynon-recognised temporary differences 22,074 23,001
Total -10,375 13,970
The weighted average tax rate was 10 per cent (+38 per cent).The reduction in the Group’s average tax for 2005 to 10 per cent wasprimarily conditional on the Group having a significant tax deficit. In 2004, the Group found it objectively justifiable to adjust deferredincome taxes recoverable as the company can in all likelihood beassumed to have excellent earning capacity in the future. This is thereason why the tax rate is a positive +13,970 (+38 per cent).
Note 13 Long-term receivables
Group, SEK thousands 31 Dec 2005 31 Dec 2004Pensions in accordance with IAS 19 12,800 12,800
Other 129 129
Total 12,929 12,929
See also Note 14, Pension obligations.
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
67
NOTES
Note 14 Pension obligations
In accordance with IAS 19, Employee Benefits, an actuary working onbehalf of EuroMaint has calculated the Group’s pension provision andthe amounts to be allocated for pensions for Group employees on anongoing basis. Pension plans in EuroMaint comprise both definedbenefit and premium-based plans. Premium-based pension promisescomprise what are known as Alternative ITP plans, individual pensionpromises for senior personnel, as well as PA-03.
Defined benefit pension obligationsGeneral description of defined benefit obligations: ITP is a definedbenefit pension plan containing retirement, family and disability/sickness pension. On full entitlement the employee receives a finalretirement pension of 65 per cent of salary. Salaried employees covered by ITP can be insured in Alecta or in Scandia, ITP-S.
Employees previously covered by the state pension plan PA-91,former employees of the SJ Group, have the opportunity to chooseearly retirement in accordance with the transitional rules. Pension ispaid from 60 years at the earliest and the pension level depends onthe salary and length of service. Occupational injury annuities are paidon a continuous basis until the death of the employee.
Furthermore, the EuroMaint Group made a one-off redemptionpayment in 1998 to free itself from obligations with the insurancecompany KPA regarding a defined benefit pension plan. Consequentlythe Group has a claim on KPA. In the terms linked to the redemption,the Group pledges henceforth to compensate KPA for any arisingactuarial costs in accordance with an agreement. To date these costshave been settled via adjustments to the Group’s claim on KPA.
According to a statement from the Swedish Financial AccountingStandards Council’s Emerging Issues Task Force, a commitment secu-red through an insurance policy with Alecta, which relates to retirementpension and family pension for salaried employees in Sweden, is adefined benefit plan covering several employers. The EuroMaint Grouphas not had access to such information for the 2005 financial year thatwould make it possible to enter this plan as a defined benefit plan,which is why it has been entered as a defined contribution plan.
The following defined benefit plans are recognised in the balance sheet:Plan Pension provision/receivable (-/+)in balance sheet, SEK thousands 31 Dec 2005 31 Dec 2004
ITP-S pension plan insured with Skandia 12,800 12,800
Early retirement in accordance with transition rules, non-funded -23,191 -22,709
ITP in FPG/PRI, non-funded -1,730 -2,833
Occupational injury annuities, non-funded -13,527 -15,677
Redeemed pension obligations in KPA 10,383 12,456
Total -15,265 -15,963
GroupPension provision, SEK thousands 31 Dec 2005 31 Dec 2004
Present value of funded obligations 245,313 216,149
Fair value of plan assets 248,024 241,405
Receivable 2,711 25,256
Present value of non-funded obligations 39,590 41,219
Non-reported actuarial profit/loss (-/+) 21,614 0
Pension provision to report in balance sheet 15,265 15,963
GroupNet provision in balance sheet, 31 Dec 2005 31 Dec 2004SEK thousands
Net provision at beginning of year 15,963 20,233
Net cost reported in income statement 10,183 10,658
Remuneration paid 13,735 14,451
Premiums 11,572 11,384
Reimbursement 14,426 10,907
Net provision at year-end 15,265 15,963
GroupCalculation assumptions, % 31 Dec 2005 31 Dec 2004
Discount rate 3,8 4,2
Return on plan assets 4,0 4,0
Expected pay increase 2,5 2,8
Calculation of maturing pensions 1,8 1,8
Personnel turnover 3,0 3,0
Calculation of income base amounts 2,8 2,8
Demographic assumptions P94 P94
Expected remaining period of service for employees 14 years 14 years
Plan assets are invested in insurance schemes with Skandia or KPA.The insurances contain a mixture of shares and bonds.The return in 2005 amounted to 4.3 per cent (SEK 10,033) million.
Group 2005 Group 2004Amount recorded in income Defined benefit Premium-based Defined benefit Premium-basedstatement, SEK thousands plans plans Total plans plans Total
Recorded net cost in income statement 10,183 51,694 61,877 10,658 42,838 53,496
68
NOTES
Note 18 Long-term interest-bearing liabilities
The recorded amounts and fair value for long-term borrowing are as follows:
Group, SEK thousandsBook value Fair value
1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004
Long-termBank loans 340,000 250,000 340,000 250,000
Total 340,000 250,000 340,000 250,000
Short-termBank overdraft 0 0 0 0
Total 0 0 0 0
Bank overdraft facility granted 125,000 125,000 0 0
Total 125,000 125,000 0 0
Unused credit facilities refer to credit facilities of SEK 425 (325) millionwith FöreningsSparbanken and SEK 300 (300) million with theSwedish National Debt Office, of which SEK 85 (75) million remainsin the credit facilities with FöreningsSparbanken and SEK 300 (300)million remains in the Swedish National Debt Office.
The Group has chosen to classify unused credit within existingcredit facilities as long-term, as these agreements run until furthernotice. The Group’s exposure, regarding borrowing, to changes ininterest and contractual time for interest renegotiation are as follows:
Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004
6 months or less 215,000 175,000
6-12 months 125,000 75,000
Total 340,000 250,000
Average fixed interest term in months 4.26 3.7
Weighted average interest on balance sheet date 2.71 % 3.22 %
Note 19 Other provisions
Group Provision guarantees, SEK thousands 31 Dec 2005 31 Dec 2004
Provision at beginning of year 4,975 4,975
Provisions for the year 1,900 0
Used during the year -513 0
Unused amount cancelled 0 0
Provision at year-end 6,363 4,975
Provisions 31 Dec 2005 31 Dec 2004Long-term portion 6,363 4,975
Current portion 0 0
Note 15 Accrued tax assets
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Deferred tax for tax deficit 9,823 20,000
Deferred tax on temporary differences 11,724 0
Total 21,547 20,000
Last year the Group had unused loss carry-forwards amounting toSEK 83,9 million. Following individual assessment of tax deficits, a deferred tax asset of SEK 20 million was recognised. Income isexpected to develop positively in the future which is why this year the Group has recognised a deferred tax asset for the entire amountof unused loss carry-forward of SEK 35,1 million.
Note 16 Inventories
Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004
Gross stock 347,739 350,820
Obsolescence reserve -88,396 -112,895
Net stock 259,343 237,925
Distributed as followsReplacement items 51,293 47,585
Spare parts 138,491 128,480
Other 69,559 61,861
Total 259,343 237,925
The Group has revised the obsolescence model for one of the companies, EuroMaint Rail. All companies use an obsolescencescale in line with their particular circumstances.
The aim of the revision was to reduce the number of parametersin the model and thereby better reflect economic obsolescence basedon current production. The revised model is based for example on articles being regarded as saleable for a longer period than in the former model. Implementation of the new obsolescence modelincreased profit by SEK 23 million during the final quarter of 2005.
Note 17 Prepaid expenses and accrued income
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Prepaid insurance costs 1,427 1,261
Accrued income relating to maintenance work carried out 18,968 22,443
Prepaid rent and lease fees 1,558 1,505
Other items 6,497 1,121
Total 28,450 26,330
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
69
NOTES
Note 20 Deferred tax liability
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Provision at beginning of year 0 0
Deferred tax for cancelled depreciation/amortisation 7,854 0
Deferred tax for untaxed reserves 4,564 0
Provision at year-end 12,418 0
Note 21 Non interest-bearing current liabilities
Group Parent CompanySEK thousands 1 Jan 2005 1 Jan 2004 1 Jan 2005 1 Jan 2004
31 Dec 2005 31 Dec 2004 31 Dec 2005 31 Dec 2004Advance payment from customers 9,938 21,454 0 0
Accounts payable 116,954 109,514 0 0
Tax liability 6,690 8,747 46 0
Liabilities to Group companies 7,482 10,705 0 0
Other liabilities 19,120 3,323 66 0
Total 160,184 153,743 112 0
Note 22 Accrued expenses and deferred income
Group, SEK thousands 1 Jan 2005 1 Jan 200431 Dec 2005 31 Dec 2004
Special employer’s contribution 30,773 36,096
Social security contributions 31,128 22,237
Trade accounts payable 16,775 9,258
Holiday pay liability 37,989 27,136
Overtime liability 6,850 4,465
Accrued pensions 2,306 5,194
Accrued interest 1,537 1,873
Reserve for obsolete Y1 materials 5,600 5,600
Bonus 7,080 0
Restructuring costs 6,433 31,583
Risk reserve 29,930 29,636
Other 66,349 32,265
Total 242,750 205,343
Note 23 Contingent liabilities
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Pension obligations, FPG/PRI 37 57
Bank guarantees issued 11,772 9,406
Total 11,809 9,463
Floating charges amount to SEK 20 million and are paid toFöreningsSparbanken in Skövde. Furthermore, EuroMaint Rail hasfloating charges of SEK 5,19 million in its own custody.
Note 24 Operating leases
Group, SEK thousands 31 Dec 2005
Future leasing fees 2006 8,463
Future leasing fees 2007 3,541
Future leasing fees 2008 1,097
Future leasing fees 2009 361
Future leasing fees 2010 280
Future leasing fees 2011 and later 295
Total 14,037
Leasing fees taken up as costs 11,260
Total 11,260
The Group’s operating leases include fees for vehicles, computersand certain office equipment.
Note 25 Cash flow analysis, other items not affecting liquidity
Group, SEK thousands 31 Dec 2005 31 Dec 2004
Capital gain -525 -5,003
Utilisation of restructuring reserve -25,300 -74,856
Change in pension provision -2,771 -6,775
Change in other provisions and reserves 3,852 4,873
Other items -9,185 -1,201
Total -33,929 -82,962
70
NOTES
Note 26 Financial instruments and financial risk management
Through its business, EuroMaint is exposed to financial risks, includingthe effects of changes in prices on the credit and capital markets,and fluctuations in exchange rates and interest rates. The Group’soverall risk management focuses on the unpredictability of the finan-cial markets, and strives to minimise potential unfavourable effectson the Group’s financial results. Financial operations in the Groupare centralised in the parent company’s finance function. The financefunction acts as an internal bank and is responsible for the sourcingof capital, cash management and financial risk management. Theoperation is regulated through the Group’s financial rules.
The important areas of financial risk that are dealt with comprise:
Exchange rate risksEuroMaint is exposed to some extent to exchange rate risks due toits relatively large purchase volumes in foreign currencies and lowcustomer invoicing in corresponding currencies. Purchases in foreigncurrencies for large projects are hedged or agreed with variableforeign exchange clauses during the tendering/contract formulationstage. A hedging policy was introduced in 2005. The policy statesthat currency exposure shall be hedged at least to set levels during a rolling 12-month forecast period. This is usually achieved throughforward agreements.
Interest rate risksEuroMaint is affected by general changes in interest rates on its loanportfolio. To counter this the portfolio has been divided and tied todifferent fixed-interest terms. All borrowing agreements re-signedduring the year have a fixed-interest period of 12 months. On 31December, 26 per cent of the total loan amount was subject to vari-able interest rates. See also Note 18. The only interest-bearing assetsare cash and bank balances which have been credited with variableinterest linked to the bank’s VECI interest rate, a weekly interest rateon deposits, less 0.15 percentage points, which equated to 1.37 percent on 31 December 2005.
Credit riskEuroMaint has procedures for minimising ongoing customer creditrisks in the business. These procedures include credit checks, advancepayment and guarantee management, and ongoing credit monitoring.Bad debt losses established in 2005 amounted to SEK 2 (453) million.On the balance sheet date, EuroMaint owned securities of approxi-mately SEK 10 million in the form of advances from customers andbank guarantees. The Group does not consider there to be any signi-ficant concentration of credit risks regarding financial assets.
Liquidity and refinancing riskEuroMaint’s policy is always to have cash and cash equivalents andsecured refinancing available to the extent required for the operation.On 31 December 2005, the company had credit facilities of SEK 300million with the Swedish National Debt Office and credit facilities of SEK 425 million with FöreningsSparbanken. EuroMaint also has a bank overdraft facility with FöreningsSparbanken amounting toSEK 125 million. The company’s total credit facility amounts to SEK 850 million. As of 2006, the credit facilities of SEK 300 millionwith the Swedish National Debt Office will be replaced with creditfacilities of equal magnitude from FöreningsSparbanken.
Fair values of derivative instruments on the balance sheet date, SEK thousands
31 Dec 2005 31 Dec 2004Contracts with positive fair values:Hedging 61 –
Contracts with negative fair values:Hedging 154 –
The nominal amount of outstanding derivatives on 31 December wasNOK 5,300,000 (Sell) and GBP 305,000 (Buy).
The fair value of the derivative contracts has been calculated asthe costs or revenue which would have arisen if the contract hadexpired on the balance sheet date. The banks’ official exchange rateshave been used.
THE BUSINESS IN FIGURES
THE BUSINESS IN FIGURES
71
NOTES
Note 27 Corporate acquisitions
Effects of the acquisitionThe acquisition has had the following effect on the Group’s assets and liabilities.
The acquired company’s net assets at time of acquisition:SEK thousands Carrying amount in Fair value Fair value
EuroMaint Industry before acquisition adjustment recorded in the Group
Tangible fixed assets 10,567 0 10,567
Intangible assets 0 44,258 44,258
Inventories 27,859 0 27,859
Accounts receivable and other receivables 60,906 0 60,906
Cash and cash equivalents 15,663 0 15,663
Interest-bearing liabilities 0 0 0
Accounts payable, other liabilities -63,996 0 -63,996
Net identifiable assets and liabilities 50,999 44,258 95,257
Purchase price paid, cash* 0 0 -96,197
Cash (acquired) 0 0 15,663
Net cash flow 0 0 -80,534
* including transaction-related costs (SEK 933,000)
On 1 July 2005, the Group acquired 100 per cent of the shares in EuroMaint Industry AB for SEK 96,197 million and paid cash. The companyworks in maintenance, implementation and development of production equipment for industry. During the 6 months following the acquisition,the subsidiary contributed SEK 4,88 million to the Group’s profit after tax. If the acquisition had taken place on 1 January 2005, the Group’sincome would have been SEK 2,017,356,000 and profit for the year would have been SEK 100,777,000 after tax.
Goodwill arose in connection with the acquisition of EuroMaint Industry mainly because acquired know-how did not fulfil the criteria to berecognised as an intangible asset at the time of acquisition. This acquisition analysis is preliminary and may therefore be adjusted in 2006.
Note 28 Disclosure on fair values relating to financial instruments
The fair values of financial instruments correspond to the book values, with the exception of financial loans which are subject to fixed interestrates. The nominal and book value of fixed-interest loans on the balance sheet date amounted to SEK 250 million. Upon valuation at fair valuethe liability increases by SEK 398,000, taking into account any interest penalty that would be payable if the loans were to be settled in advanceon the balance sheet date. The variable interest used in the calculation is 2.52 per cent, which was the rate the company would have had on anew loan at a variable interest rate on 31 December.
Note 29 Definition of key ratios
Operating margin: Operating income as a percentage of operating revenuesEquity/assets ratio: Equity as a percentage of total assets
Stockholm, 15 March 2006
Stig Holm Lennart Käll Elisabeth NilssonChairman
Annika Nordin Richard Reinius Anders Ågren
Lennart Andrén Bertil Hallén Johnny StrömEmployee representative Employee representative Employee representative
Pether WallinPresident
72
To the Annual General Meeting of EuroMaint ABReg. no. 556084-8458
I have audited the annual accounts, the consolidated accounts, theaccounting records and the administration of the Board of Directorsand the President of EuroMaint AB for the year 2005. The Board ofDirectors and President are responsible for these accounts and theadministration of the company, and for ensuring the annual accountsare prepared in accordance with the Annual Accounts Act and that theconsolidated accounts are prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the EU and theAnnual Accounts Act.
My responsibility is to express an opinion on the annual accounts,the consolidated accounts and the administration based on my audit.
I conducted my audit in accordance with generally accepted auditingstandards in Sweden. Those standards require that I plan and performthe audit to obtain high but not complete assurance that the annualaccounts and the consolidated accounts are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts.
An audit also includes assessing the accounting principles used andtheir application by the Board of Directors and President and significantestimates made by the Board of Directors and the President when preparing the annual accounts and consolidated accounts as well as
evaluating the overall presentation of information in the annualaccounts and the consolidated accounts. As a basis for my opinionconcerning discharge from liability, I examined significant decisions,actions taken and circumstances of the company in order to be able todetermine the liability, if any, to the company of any Board member orthe President. I also examined whether any Board member or thePresident has, in any other way, acted in contravention of the CompaniesAct, the Annual Accounts Act or the Articles of Association. I believethat my audit provides a reasonable basis for my opinion set out below.
The annual accounts have been prepared in accordance with theAnnual Accounts Act and, thereby, give a true and fair view of the com-pany’s financial position and results of operations in accordance withgenerally accepted accounting principles in Sweden. The consolidatedaccounts have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as endorsed by the EU and theAnnual Accounts Act and give a true and fair view of the Group’s financialposition and results of operations. The Report of the Directors is consistent with the other parts of the annual accounts and consolidatedaccounts.
I recommend to the general meeting of shareholders that the incomestatement and balance sheet for the parent company and Group beadopted, that the profit be dealt with in accordance with the proposal inthe Report of the Directors and that the members of the Board of Directorsand the President be discharged from liability for the financial year.
AUDIT REPORT
THE BUSINESS IN FIGURES
Stockholm, 16 March 2006Ernst & Young
Magnus FredmerAuthorised Public Accountant
0505
Corporate Governance
74
EUROMAINT AB CORPORATE GOVERNANCE REPORT 2005
The company has commenced work in line with theSwedish Code of Corporate Governance and a corporategovernance report has been produced. The corporategovernance report has not been examined by the com-pany’s auditors. The company does deviate in somerespects, and this is attributable to the guidelines andinstructions issued by the ultimate owner – Sweden’sMinistry of Industry, Employment and Communications– which the company is bound to follow. A report oninternal controls has also been produced.
EuroMaint’s decision-making body comprises the general meeting
of shareholders, the Board of Directors, the President and the
auditors. The general meeting of shareholders elects the Board of
Directors and auditors.
The Board of Directors appoints the President and Vice
Presidents.
Parent company Swedcarrier proposes Board members in
accordance with the Swedish state’s ownership directive.
On behalf of the general meeting of shareholders, the auditors
examine the accounts and the administration of the Board of
Directors and President during the year.
ARTICLES OF ASSOCIATION
The Articles of Association state that EuroMaint’s business is to own,
manage and administrate shares and securities in subsidiaries
and associated companies in the transport sector and engineering
and processing industry, and to manage real and movable estate,
and to pursue business compatible therewith.
The Board of Directors shall comprise at least three and at
most eight members with a maximum of three deputies. The Board
members and deputies are selected each year at the Annual
General Meeting of shareholders for the period until the next
Annual General Meeting.
Notice to attend annual general meetings and extraordinary
general meetings, where the issue of changes to the articles of
association will be dealt with, shall be announced by letter by post no
earlier than six weeks and no later than two weeks before the meeting.
Other messages to shareholders must also be issued by letter
by post.
GENERAL MEETING OF SHAREHOLDERS
The general meeting of shareholders is EuroMaint’s highest decision-
making body.
The Annual General Meeting shall be held within six months of
the end of the financial year and shall be the forum for approving the
income statement and balance sheet, determining the dividend,
electing the Board of Directors and, where appropriate, the auditors
and deciding their fees, and for dealing with other statutory matters.
Notice to attend the extraordinary general meeting on 16 December
2005 was issued by letter in the post in accordance with the require-
ments set out in the articles of association.
The notice provides a detailed agenda including election of the
Board of Directors and auditors. Katja Elväng chaired the general
meeting of shareholders on 16 December 2005.
The Board of Directors was elected at the general meeting as
described below.
The extraordinary general meeting on 16 December 2005 decided:
• to elect Stig Holm, Elisabeth Nilsson, Annika Nordin, Lennart Käll,
Anders Ågren and Richard Reinius to the Board of Directors.
• to appoint Stig Holm Chairman of the Board.
• to appoint Ernst & Young AB as auditors and deputy auditors
until the 2009 Annual General Meeting. Magnus Fredmer is
the principal auditor.
• that fees with the following fixed amounts be paid to the Board
members elected at the general meeting of shareholders:
Chairman SEK 120,000. Board members who are not
Board members of AB Swedcarrier SEK 80,000. Board members
who are also Board members of AB Swedcarrier SEK 0.
BOARD OF DIRECTORS
The EuroMaint Board of Directors, which is appointed by the
general meeting of shareholders, currently comprises six members.
All members are independent in relation to EuroMaint.
When necessary, employees of the company present reports
to the Board meetings.
The Board is ultimately responsible for the company’s
organisation and administration, and shall also make decisions
in strategic issues.
In general terms the Board of Directors deals with issues
of considerable importance, such as:
• Establishing rules of procedure
• Strategy planning, and business and profitability goals
• Organisation and management structure
75
In addition to the inaugural Board meeting, which is held in connec-
tion with the general meeting of shareholders, the Board usually
convenes five times a year (ordinary meetings).
Extra meetings are called if necessary.
The inaugural meeting establishes the rules of procedure for
the Board and decisions on authorised signatories for the company,
verification of the minutes and allocation of the Board fee.
In connection with the Board meeting that deals with the annual
accounts, the report of the directors and proposed treatment of
unallocated earnings, the principal auditor reports on the auditors’
observations and assessments from their audit.
At the ordinary meetings held during the year, interim reports are
either finalised and published, or this task is commissioned from
the President.
The ordinary meetings encompass various standard reporting
points, such as the latest financial results of the operation.
Each year the Board evaluates the financial reporting it receives
from the company and sets out requirements for its content and
presentation.
DIRECTORS’ ATTENDANCE AT BOARD MEETINGS
This report pertains to the Boards of Directors of EuroMaint Rail AB
(formerly EuroMaint AB) and EuroMaint AB. The attendance applies
for the whole of 2005 and includes the parent company and the
Group. Eight ordinary Board meetings took place during the year
with the following attendance:
Stig Holm 8
Lennart Käll 8
Elisabeth Nilsson 7
Annika Nordin 6
Richard Reinius 7
Anders Ågren 8
Bertil Hallén 8
Johnny Ström 8
Lennart Andrén 8
IMPORTANT ISSUES DURING THE 2005 FINANCIAL YEAR
In 2005, the Board held one meeting for EuroMaint AB and eight
meetings for EuroMaint Rail AB in addition to the inaugural
Board meeting.
The acquisition of Euromation on 1 July was discussed during
the first half of the year.
Discussions regarding the future Group structure took place
continuously during the year, one result being that a new Group
structure was decided upon and introduced on 31 December 2005.
THE ROLE OF THE CHAIRMAN
In addition to leading the work of the Board of Directors, the
Chairman monitors the Group’s ongoing development through
continuous contacts with the President in strategic issues, and
represents the company in issues of interest to the owners.
PRESIDENT AND VICE PRESIDENTS
President Pether Wallin has been an employee of EuroMaint since
2002. The President is responsible for EuroMaint’s ongoing
administration. There are also rules for the President’s decision-
making authority regarding investments and financing issues.
These rules have been established by the Board. Executive Vice
President Åke Finn is responsible for economy, finance and IT.
Executive Vice President Björn Sundén is responsible for business
development.
AUDITORS
At the extraordinary general meeting on 16 December 2005,
Ernst & Young AB was appointed the company’s auditor until the
2009 Annual General Meeting. The principal auditor is Authorised
Public Accountant Magnus Fredmer.
Stockholm, 15 March 2006
Stig Holm Elisabeth Nilsson Annika Nordin
Chairman
Lennart Käll Richard Reinius Anders Ågren
Bertil Hallén Johnny Ström Lennart Andrén
Employee Employee Employee
representative representative representative
76
“Stable long-term development”
“Stable long-term development”
expertise and awareness within the Group is important for
EuroMaint and its customers alike.
During the year EuroMaint has also laid the foundation for a good
strategy. Here I would particularly like to mention the outstanding
efforts of the Group management in performing the groundwork.
In conclusion, I am very pleased with the increased attention
EuroMaint has enjoyed. Many parties have contacted us spont-
aneously or in connection with press information, and following
Elmia Nordic Rail 2005.
Myself and the other Board members have actively supported
the development that has strengthened EuroMaint’s market
position during the past year. The results for 2004 turned losses
into profits. The results for 2005 confirm the company’s ability to
be competitive and profitable. I can therefore express my and the
Board’s full confidence in the fine work and good results achieved
by EuroMaint and the company’s management.
STIG HOLM
Chairman of the Board
In 2005, EuroMaint has fulfilled its goals and met theBoard of Directors’ expectations. I can see with greatsatisfaction that customer confidence in the Group isbeing maintained and strengthened. This is particularlyclear from the volume of incoming orders, the importantcontract with SL crowning the year’s successes.One major development, which is of great importanceto the future, was the acquisition of Euromation.
Financial development in terms of profits and margins has been
satisfactory. Financial control has been improved and control over
the cash flow has increased. The goal of considerably reducing
purchasing costs wherever possible has been achieved.
The acquisition of Euromation facilitates cross-fertilisation
between various areas of experience and expertise in the industry,
producing benefits all round. The new Group structure, with two
companies focusing on the rail industry and engineering industry
respectively, strengthens EuroMaint’s overall position as a leading
maintenance partner and bodes well for continued solid development.
I would also like to comment on the ISO 14001 environmental
certification. The commendable job of establishing environmental
Stig Holm – Chairman of the Board
THE CHAIRMAN’S COMMENTS
77
STYRELSENTHE EUROMAINT BOARD OF DIRECTORS
LENNART ANDRÉNBERTIL HALLÉN JOHNNY STRÖM
ANNIKA NORDIN RICHARD REINIUS ANDERS ÅGREN
ELISABETH NILSSONLENNART KÄLLSTIG HOLM
78
LENNART ANDRÉN1941. BSc.
Employee representative.Board member since 2001.
Current employment: IT/IS training co-ordinator, EuroMaint AB
Other important assignments:Chairman of the SACO-association for Traffic and Railway at EuroMaint ABVice Chairman of the SACO-association for Traffic and Railway
Committee member: –Board meetings attended: 8(8)
BERTIL HALLÉN1954.
Employee representative.Board member since 2001.
Current employment:EuroMaint AB
Other important assignments:Board member of AB Swedcarrier, Chairman of SEKO EuroMaint AB andDepartment Chairman of SEKO EuroMaintGothenburg
Committee member: –Board meetings attended: 8(8)
JOHNNY STRÖM1945.
Employee representative.Board member since 2004.
Current employment: EuroMaint AB
Other important assignments:Club chairman of the SEKO CV clubEuroMaint Örebro, Commissions of trust in FONUS
Committee member: –Board meetings attended: 8(8)
ELISABETH NILSSON1953. Master of Science, Mining andMinerals Processing.
Board member since 2004.
Current employment:President of Jernkontoret Swedish SteelProducers’ Association
Other important assignments:Board member of the Swedish MaritimeAdministration Chairman of the Mefos Foundation for Metallurgical Research
Committee member: –Board meetings attended: 7(8)
ANNIKA NORDIN1954. BSc economics.
Board member since 2004.
Current employment:VP Category Product Development AFH, SCA Tissue Europe
Other important assignments: –
Committee member: –Board meetings attended: 6(8)
RICHARD REINIUS1967. MSc economics.
Board member since 2004.
Current employment:Ministry of Industry, Employment andCommunications
Other important assignments:Board member SweMaint AB, Jernhusen
Committee member: –Board meetings attended: 7(8)
LENNART KÄLL1958. MSc economics.
Board member since 2005.
Current employment: President & CEO Ticket Travel Group AB
Other important assignments:Advisor Segulah
Committee member: –Board meetings attended: 8(8)
ANDERS ÅGREN1947. Engineer.
Board member since 2005.
Current employment: Nerga AB
Other important assignments:Board member Swedesurvey AB, AxentiHolding AB, PJ Järnförädling AB
Committee member: –Board meetings attended: 8(8)
STIG HOLM1951. MSc engineering.
Chairman of the Board.Board member since 2004.
Current employment: Group Director Tekniska Verken i Linköping AB
Other important assignments:MD of Parkeringsaktiebolaget Dukaten, Linköping Chairman of Stadspartner AB, LinköpingKraftnät AB, Östkraft AB, Svensk Biogas i Linköping AB, Utsikt Linköping AB, Katrineholm Energi AB and SweMaint ABBoard member of Mjölby – SvartådalenEnergi AB,CityLink AB, ÖstkraftEnergihandel AB, AB Swedcarrier
Committee member: –Board meetings attended: 8(8)
THE EUROMAINT BOARD OF DIRECTORS CONTD.
79
NICKLAS FALK1973. BSc Engineering.
Vice President, Maintenance Development & Change Management.Employed since 2003.
Previous positions:Train Tech AB
Other important assignments: –
PER-OLOF RENGSTEDT1953. MSc engineering.
President of EuroMaintIndustry.Employed since 2003.
Previous positions:CEO of JK Group, MD of Fredrik Mogensen AB
Other important assignments: –
JONAS SAMUELSON1960. MSc engineering.
President of EuroMaint Rail.Employed since 2002.
Previous positions:ABB Process Industries
Other important assignments: –
ÅKE FINN1959.
Executive Vice President & CFO.Employed since 2002.
Previous positions:Head of Finance AlphaHelix AB and MD ofABB Switchgear Egypt
Other important assignments: –
THE EUROMAINT GROUP MANAGEMENT
BJÖRN SUNDÉN1944. BSc.
Executive Vice President,Strategy & BusinessDevelopment.Employed since 2001.
Previous positions:MD Saab NygeAero andFöretagsfinans, CFO Linjeflyg,Business ControllerNitroNobel
Other important assignments: –
PETHER WALLIN1956. MSc engineering.
President & CEO.Employed since 2002.
Previous positions: MD of OmniNova Vehicle ABand OmniNova CompositeAB, Vice President HydroAutomotive Structures andVolvo Car Corporation
Other important assignments: –
Standing
Sitting
80
EUROMAINT RAIL MANAGEMENT
HÅKAN BJÖRK1966. Electrical Engineer.
Vice President, Engineering & Planning.Employed since 2002.
Previous positions:Scania CV AB
Other important assignments: –
KRISTINA NYHOLM1943. BSc.
Vice President, Human Resources.Employed since 1962.
Previous positions:Swedish State Railways
Other important assignments: –
HANS-ÅKE ELFWING1962. Mechanical engineer.
Vice President, Train Maintenance.Employed since 1984.
Previous positions: Swedish State RailwaysMachine Division
Other important assignments: –
ANN-CHARLOTTE ÅGREN1960. BSc.
Executive Vice President & CFO.Employed since 2001.
Previous positions:ICL
Other important assignments: –
STEVEN DAVIDSSON1956. Mechanical engineer.
Vice President, Sourcing & Supply.Employed since 2003.
Previous positions:Ericsson AB
Other important assignments: –
THOMAS ANDERSSON1953. MSc engineering.
Vice President, Quality & Environment.Employed since 1991.
Previous positions:Swedish State Railways andPlockmatic International
Other important assignments: –
JONAS SAMUELSON1960. MSc engineering.
President.Employed since 2002.
Previous positions:ABB Process Industries
Other important assignments: –
NICLAS FLODIN1966. MSc engineering.
Acting Vice President, Maintenance CommuterTrains Stockholm.Employed since 2005.
Previous positions:President ABB Service
Other important assignments: –
TORSTEN NEDERMAN1964. MSc engineering.
Vice President,Refurbishment & ComponentOverhaul.Employed since 1991.
Previous positions:TGOJ and RPL
Other important assignments: –
Standing
Sitting
81
EUROMAINT INDUSTRY MANAGEMENT
PER-OLOF RENGSTEDT1953. MSc engineering.
President.Employed since 2003.
Previous positions:CEO of JK Group, MD ofFredrik Mogensen AB
Other important assignments: –
THOMAS GRÖNLUND1963. MSc in IndustrialEngineering and Management.
Marketing Manager.Employed since 2002.
Previous positions:Management consultant, MD Prido AB Head of Sales &Marketing, LVI Produkter ABHead of Marketing, RapidGranulator AB
Other important assignments: –
URBAN EKMARK1964. MSc engineering, Eng. Lic.
Technical Manager.Employed since 2000.
Previous positions:Department Head, University of Skövde
Other important assignments: –
PATRIK SAHLBERG1962. Mechanical engineer.
Executive Vice President,Sales.Employed since 1982.
Previous positions:Volvo
Other important assignments: –
BO LENNARTSSON1952. Electrical &TelecommunicationsEngineer.
Manager Maintenance.Employed since 1973.
Previous positions: Volvo
Other important assignments: –
ULF SANDÉN1959. Economist.
Executive Vice President & CFO.Employed since 1989.
Previous positions:Volvo Controller, Källbergs Industri AB, Bank clerk, Sparbanken
Other important assignments: –
Standing
Sitting
ADDRESSES
GROUP OFFICES:
EuroMaint ABBox 1555SE-171 29 Solna, Sweden
Visiting address:
Svetsarvägen 10
DESIGN AND PRODUCTION: Collaboration between EuroMaint AB and Care of Haus, Västerås. PHOTOGRAPHY: Lasse Fredriksson, Thomas Harrysson, Ulf B. Jonsson, Melker Larsson, Anders Roth, Håkan Röjder, Getty Images and archive photos from EuroMaint. REPRO: Turbin, Västerås. PRINTING: Edita, Västerås.
BORLÄNGE
EuroMaint Rail ABBangårdsgatan 8SE-781 71 BorlängeSweden
Visiting address:
Bangårdsgatan 8
GÄVLE
EuroMaint Industry ABLötängsgatanSE-801 31 GävleSweden
Visiting address:
Lötängsgatan
EuroMaint Rail ABLötängsgatanSE-801 31 GävleSweden
Visiting address:
Lötängsgatan
GOTHENBURG
EuroMaint Rail ABBox 36 136SE-400 13 GöteborgSweden
Visiting address:
Partihandelsgatan
HALLSBERG
EuroMaint Industry ABKraftvärmegatan 1SE-694 32 Hallsberg, Sweden
Visiting address:
Kraftvärmegatan 1
EuroMaint Rail ABLokvägen 2SE-694 35 HallsbergSweden
Visiting address: Lokvägen 2
LINKÖPING
EuroMaint Rail ABSödra Oscarsgatan 2SE-582 73 LinköpingSweden
Visiting address:Södra Oscarsgatan 2
LULEÅ
EuroMaint Rail ABKontorsgatan 37SE-993 42 LuleåSweden
Visiting address:
Kontorsgatan 37
EuroMaint Rail ABLokstallsvägen 2SE-972 45 LuleåSweden
Visiting address:
Lokstallsvägen 2
MALMÖ
EuroMaint Rail ABBox 124SE-201 21 MalmöSweden
Visiting address:
Carlsgatan, infart 6
EuroMaint Rail ABBox 3503SE-200 22 MalmöSweden
Visiting address:Södra Bulltoftavägen 51
NÄSSJÖ
EuroMaint Rail ABBox 37SE-571 21 NässjöSweden
Visiting address: Gölgatan
SKÖVDE
EuroMaint Industry ABSE-541 87 SkövdeSweden
Visiting address:
Kavelbrovägen 2
SOLNA
EuroMaint Rail ABVäxlarevägen 29SE-170 63 SolnaSweden
Visiting address:
Växlarevägen 29
EuroMaint Rail ABBox 1555SE-171 29 SolnaSweden
Visiting address:
Svetsarvägen 10
SUNDSVALL
EuroMaint Rail ABParkgatan 5SE-852 29 SundsvallSweden
Visiting address:
Parkgatan 5
VÄNNÄS
EuroMaint Rail ABVästra Järnvägsgatan 8SE-911 34 VännäsSweden
Visiting address: Västra Järnvägsgatan 8
ÅMÅL
EuroMaint Industry ABBox 302SE-662 27 ÅmålSweden
Visiting address:
Västra Bangatan 2
EuroMaint Rail ABBox 302SE-662 27 ÅmålSweden
Visiting address:
Västra Bangatan 2
ÖREBRO
EuroMaint Rail ABBox 1502SE-701 15 ÖrebroSweden
Visiting address:Södra Grev Rosengatan 1
EuroMaint Rail ABBox 1403SE-701 14 ÖrebroSweden
Visiting address: Södra Grev Rosengatan 1
OPERATIONS AND WORKSHOPS:
82
83
0505
www.euromaint.se
EuroMaint unites innovative thinking with a long past. Through creative technical system
services, customised total solutions and partnerships, we contribute to our customers’
competitiveness and success. The EuroMaint Group consists of EuroMaint Rail, which
helps strengthen profitability in the rail transport sector, and EuroMaint Industry, which
helps increase customers’ productivity.
www.euromaint.se