Electrolux 2006 Annual Report Download - page 60

board of directors report
The items in the concolidated balance sheet as per December
31, 2005 are in accordance with the historical fi nancial state-
ments including the distributed outdoor operations. In accord-
ance with International Financial Reporting Standards, IFRS,
previous periods have not been adjusted for discontinued
oper ations. In the table below, working capital and net assets for
the Group’s current operations are presented also exclusive of
the Outdoor Products operations.
In order to adapt the Group’s capital structure and thus con-
tribute to an increase in shareholder value, an Extraordinary
General Meeting in December 2006 decided on a mandatory
redemption of shares totaling approximately SEK 5,600m as a
distribution of capital to Electrolux shareholders. The redemption
procedure was implemented at the end of January 2007. The
payment of the redemption in the amount of SEK 5,579m is rec-
ognized as a current liability in the balance sheet as of December
31, 2006. The liability has not been included in the net assets or
the net borrowings below.
The comments below concerning working capital and net
assets refers to continuing operations and are exclusive of
Outdoor Products operations, Husqvarna.
Working capital and net assets
excl. Husqvarna
December 31, December 31, December 31,
SEKm 2006 2005 2005
Inventories 12,041 12,342 18,606
Trade receivables 20,905 20,944 24,269
Accounts payable –15,320 –14,576 –18,798
Provisions –12,476 –14,945 –15,609
Prepaid and accrued
income and expenses –6,020 –6,971 –7,762
Taxes and other assets
and liabilities –1,743 – 593 –737
Working capital –2,613 –3,799 –31
% of annualized net sales –2.4 –3.3 0.0
Property, plant and
equipment 14,209 14,776 18,622
Goodwill 1,981 2,144 3,872
Other non-current assets 3,552 3,540 4,169
Deferred tax assets and
liabilities 1,011 1,281 1,533
Net assets 18,140 17,942 28,165
Return on net assets, % 23.2 5.4 13.0
Return on net assets,
excluding items affecting
comparability, % 21.2 17.8 20.6
Value creation 2,202 1,305 2,913
Net assets and return on net assets
Net assets as of December 31, 2006, amounted to SEK 18,140m
(17,942). Average net assets for the year decreased to SEK 17,352m
(19,196), mainly as a result of lower inventory levels and higher
accounts payable. The reduction in extra inventory following the
closure of the American Greenville plant was an important factor.
Adjusted for items affecting comparability, net assets amounted
to SEK 21,527m (22,792) and average net assets amounted to
SEK 21,571m (22,658), corresponding to 20.8% (22.5) of net
sales. Items affecting comparability refers to restructuring provi-
sions and provision for post-employment benefi ts due to the IFRS
transition.
The return on net assets was 23.2% (5.4), and 21.2% (17.8),
excluding items affecting comparability.
Change in net assets
SEKm Net assets
January 1, 2006 17,942
Change in restructuring provisions 715
Write-down of assets –133
Other items affecting comparability 351
Changes in exchange rates –1,476
Capital expenditure 3,152
Depreciation –2,758
Changes in working capital, etc. 347
December 31, 2006 18,140
Net assets
0
5,000
10,000
20,000
15,000
25,000
SEKm
04
02 05 06
03 0
10
20
40
30
%
As % of
annualized
net sales
Net assets
Net assets as of December 31, 2006, amounted to SEK 18,140m, corresponding to 16,5% of
annualized net sales.
Working capital
Working capital at year-end amounted to SEK –2,613m (–3,799),
corresponding to –2.4% (–3.3) of annualized net sales. Inven-
tories amounted to SEK 12,041m (12,342) at year-end, and trade
receivables to SEK 20,905m (20,944), corresponding to 11.0%
(10.8) and 19.1% (18.3) of annualized net sales, respectively.
Accounts payable amounted to SEK 15,320m (14,576), corres-
ponding to 14.0% (12.7) of annualized net sales.
Financial position
• Equity/assets ratio was 22.7% (33.6)
• Return on equity was 18.7% (7.0)
• Average net assets for continuing
operations declined to SEK 17,352m
(19,196)
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