ANNUAL REPORT 2007
använd omslaget
Table of Content
4-5 ITAB 2007 in brief 6-7 Important events 2007 8-11 CEO’s comments
12-13 Business concept, goals and strategies
ITAB’s ACTIvITIEs
14-15 Complete concepts and products for chain stores 16-17 From concept to turnkey shop
18-19 shop fittings – inspiring shop fitting concept
20-21 shop fittings – market leader in checkouts and entrance systems 22-23 shopping in the future
ITAB’s mARkETs 24-25 Broad base in Europe
26-27 market leading in the Nordic countries, the Uk and the Baltic countries 28-29 Healthy expansion in the Benelux countries, Germany and Central Europe
ITAB’s ORGANIsATION
30-31 The environment – long-term perspective and accountability 32 streamlined units and flexible production
32-33 sweden, Norway, and Denmark
34-35 Benelux countries, the Uk, Germany and the Czech Republic 36-37 Finland, the Baltic countries, Russia and the Ukraine
FINANCIAL INFORmATION 40-45 Directors’ report
THE GROUP 46 Income statements 47-48 Balance sheets
49 Changes in equity 50 Cash flow statement
THE PARENT COmPANy 51 Income statements 52-53 Balance sheets
54 Changes in equity 55 Cash flow statement
56-75 Notes 76 Auditors’ report
77 Financial review – five years 78 Comments on financial performance 79-80 share data, dividend policy and definitions
81 share capital trends and ownership structure 82-83 Board of directors, auditors and group management 84-87 Contact details
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ITAB sells, develops and manufactures complete shop fittings, checkouts and entrance systems.”
2007 summary
Profit after tax rose by 33%
to sEk 94.7 million (71.1)
Earnings per share amounted to sEk 6.77 (5.16) Profit after
financial items rose by 35% to sEk 130.1 million (96.6)
Net sales increased by 34%
to sEk 2,429.8 million (1,817.7)
FINANCIAL INFORmATION
ITAB plans to publish the following financial information for the 2008 financial year:
Interim report, January - march 29 April 2008
Annual General meeting 3 June 2008
Interim report, January - June 11 July 2008 Interim report, January - september 22 October 2008
year-end report 2008 February 2009
Annual report 2008 march/April 2009
Annual General meeting may 2009
Complete shop fitting concepts and equipment for the European market
ITAB sells, develops and manufactures products and entire concepts of fittings and equipment for chain stores. ITAB’s customers are retailers in the Nordic, Baltic and Benelux countries, the Uk, Germany, Central Europe, Russia and the Ukraine. The Group manufactures shop fittings, checkouts and entrance systems. ITAB also acts as a contractor for building new stores or refitting existing ones.
ITAB’s 2007 sales reached SEK 2,429.8 million and the company had 1,320 employees on 31 December 2007. The Parent Company is based in Jönköping, Sweden, and the Group's Class B shares are traded on First North on the OMX Nordic Exchange Stockholm.
Shop fittings, checkouts and entrance systems
Shop fittings, checkouts and entrance systems are developed and manufactured at the com- pany’s own production and logistics units and then shipped to much of Europe. Pro- duction, sales, project management, installation and service is conducted at units in Swe- den, Norway, Finland, Denmark, Lithuania, the UK, Holland, Belgium, Germany and the Czech Republic. The units in Estonia, Latvia, Russia and the Ukraine have functions involving project management and purchasing. In addition to ITAB’s own units, the com- pany’s activities are supplemented by partners in several European countries.
Most of Europe
ITAB’s target group consists of large-sized shops and major chain stores in the food and non-food sector. Following the acquisitions carried out in January 2008, ITAB is now the largest player in the Nordic and Baltic countries as well as the UK. In Germany, Central Europe and the Benelux countries ITAB is also a leading supplier. ITAB ranks as Europe’s largest checkout supplier and second largest in entrance and queue management systems.
ITAB’s business activities are based on long-term business relations and excellent delivery reliability coupled with streamlined production resources.
key figures for the Group
2007 2006
Net sales, SEK m 2,429.8 1,817.7
Operating profit, SEK m 156.5 115.8
Profit after financial items, SEK m 130.1 96.6
Profit after tax, SEK m 94.7 71.1
Earnings per share, SEK 6.77 5.16
Equity per share, SEK 27.93 21.59
Return on equity, % 28.7 28.9
Equity/assets ratio, % 25.2 23.1
Portion of interest-bearing capital, % 27.7 26.0
Average number of employees 1,294 1,189
30 25 20 15 10 5
0 2003 2004 2005 2006 2007
Return on equity, %
2600 2400 2200 2000 1800 1600 1400 1200 1000 800 600 400 200
0 2003 2004 2005 2006 2007
Net sales, sEk m
Important events 2007
An agreement for the acquisition of Hansa kontor shopfitting Group with activities in Germany, Belgium and the Uk was signed at the end of 2007. Agreements were also signed for the acquisition of the Finnish checkout manufacturer, Pan-Oston, and the swedish company L-Form which manufactures entrance and queue manage- ment systems. ITAB also acquired sintek, a swedish supplier of shop fittings for pharmacies. The task of building a new factory in the Czech Republic took the first three quarters of 2007 and was completed in september when the factory was fully equipped and became operational. In 2007, partnerships and agreements were initi- ated with several strategically important customers in the Nordic countries and the rest of Europe.
Acquisition of Sintek
Sintek, a Swedish leading supplier of special fittings for pharmacies, was acquired in July 2007. The company has long-standing, sound experience of product and concept develop- ment which strengthens ITAB’s market position in fittings for pharmacies in Europe.
New production unit in the Czech Republic
Construction of a new facility for production and logistics was completed in the Czech Republic in 2007. The factory measures about 20,000 square metres and is intended pri- marily for production of standard fittings and checkouts. When the factory is operating at full capacity it will significantly increase ITAB’s previous Czech production capacity and serve as a hub for the Group’s production of standard fittings and checkouts.
Agreements in many European countries
ITAB signed a three-year agreement with the swedish retail company Clas Ohlson. The company is on the brink of extensive establishment activities in England, ITAB will de- velop and deliver complete shop fittings and equipment to the British shops. ITAB also signed an agreement with Statoil for their new shop concept. Two three-year agreements were signed with the Danish companies, XL-BYGG and Super Gros, and cover shop fit- tings, checkouts and entrance systems. An agreement was also signed with Tesco Central Europe for delivery of shelving for Tesco shops in the Czech Republic, Slovakia, Poland and Hungary. ITAB has signed a two-year agreement with one of the largest supermarket chains in the UK. ITAB was chosen as preferred supplier for their national recycling pro- gramme, which involves refurbishment and recycling of shop fittings. Not only does the order reinforce ITAB’s position as an concept supplier to the major food chain stores in the UK but also points the way to a more enviromentally-aware use of shop fittings. Another two agreements for shop fittings were signed with the largest British food chain stores, Sainsbury and Tesco.
Strategic acquisition at the end of the year
The autumn also saw negotiations that resulted in the signing of agreements for the acquisi- tion of the European Group, Hansa Kontor Shopfitting Group, Finnish Pan-Oston and Swedish L-Form at the close of 2007. These acquisitions were incorporated as of January 2008. Hansa Kontor Shopfitting is made up of four companies. Hansa Harr, market leader in checkouts in Europe. Hansa Kontor, an established concept supplier of complete shops to German food chain stores in particular. Hans Mertens, one of the most prominent suppliers in shop fitting to the Belgian market and supplier to subsidiaries in the UK and
The acquisition of Hansa Kontor Shopfitting Group reinforces ITAB’s position as one of the leading players on the European market.
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ITAB is the larg- est provider of check- outs on the European market”
Germany, and Hansa GWS, one of the UK’s largest shop fittings and checkout suppliers.
The companies have changed their names to ITAB Kontor, ITAB Harr, ITAB Mertens and ITAB GWS. Pan-Oston is one of Finland’s two checkout and entrance system suppliers. In addition to sales to the Finnish food chain stores, the company also has considerable export to Denmark and Russia. The acquisition enhances ITAB’s position as a complete concept supplier in Finland and Russia. L-Form is a smaller company active in the field of entrance and queue management systems. The company’s product range is an excellent complement to the rest of ITAB’s portfolio in this niche. The acquisition will also provide a share of new markets for ITAB. L-Form will be fully integrated in ITAB’s newly formed product company, ITAB Shop Products, which was formed to more directly focus on product sales.
After these acquisitions, ITAB will be the single largest provider of checkouts as well as the second largest shop fittings and entrance systems supplier on the European market.
ITAB’s new production unit in Boskovice, Czech Republic, began operating in the autumn 2007.
This was a year of consolidation of our business activities and, in particular, of the acquisitions made in 2006. Increased sales and streamlining activities helped boost both earnings and profits in 2007. The customer agreements signed at the close of 2006 and beginning of 2007 substantially contributed to the Group’s positive growth.
2007 was another good year for ITAB. It was a year of consolidation during which the number of acquisitions was limited to the Stockholm-based company Sintek, a supplier of special fittings for pharmacies. Acquisition agreements were signed with the German group Hansa Kontor Shopfitting, Finnish Pan-Oston and Swedish L-Form. The new production unit in the Czech Republic was taken into operation last autumn and the merger of busi- ness operations in Jönköping and Hjo plus Nässjö and Örebro was completed.
A strong contributing factor to the Group’s good turnover and earnings trend is the market position we have secured over the past years. Customer agreements signed at the turn of 2006/2007 with the larger chain stores substantially contributed to the Group’s positive growth.
Our company’s success depends on several factors. Our proximity to the market, our smoothly operating production units, our streamlined organisation and our talented and dedicated employees.
Higher turnover and better profits
The Group’s net sales rose by 34% to SEK 2,429.8 million (1,817.7) in 2007. Favourable developments in terms of long-term customer agreements and market advances generated through acquisitions made in 2006 contributed to this strong growth. When we look at individual markets, we see that the UK reports the single largest growth, followed by Hol- land and Norway. Denmark and Finland also report higher, though more modest turno- vers, while figures for Sweden, the Baltic countries and the Czech Republic are on par with last year.
In terms of earnings, the trend throughout the year was favourable. Profit after financial items amounted to SEK 130.1 million (96.6). The improvement in profits are primarily one to higher sales volumes, alongside the streamlining effects that were achieved and cost reductions that were implemented to improve resource utilisation in our production fa- cilities. Streamlining and cost-cutting schemes were also carried out in regard to salaried employees. A scheme to cutback working capital is being prepared and is expected to have an impact in the next few years.
Impressive increase in profit
CEO’s comments
Strategic acquisitions and consolidation
As in previous years, 2007 was an extremely intense and active year. The companies ac- quired in 2006 were integrated to the Group’s business operations, thereby reinforcing our position as one of the leading and most successful players in our market sector in Europe.
A milestone for our continued expansion and success involves the construction of the new production factory in the Czech Republic. This project began during the summer 2006 and was opened in September 2007. Operations in Blansko and Letovice moved the twenty kilometres to the new factory in Boskovice during the summer 2007. Our new Czech facil- ity means that we have not only more than doubled our production capacity for standard fittings and checkouts, we have also significantly rationalised the process. A new automatic line for shelf production and another powder coating unit will be installed in 2008, ena- bling us to boost our capacity, our efficiency and our competitiveness. One acquisition was made during the financial year 2007, namely the Stockholm-based company Sintek Hold- ing AB, with an annual turnover of about SEK 50 million and good profitability. Sintek was integrated with ITAB’s other business operations in the autumn. The autumn also saw negotiations that resulted in the signing of agreements for the acquisition of the German Group Hansa Kontor Shopfitting Group, Finnish Pan-Oston and Swedish L-Form at the close of 2007.
UK, Holland and the Baltic countries are also strong
The companies acquired in the UK in 2006 were major contributors to our expansion.
ITAB evolved in 2007 into a frontline supplier of both shop fittings and complete shops to several of the largest British chain stores. The collaboration between our UK company and the Czech production unit has advanced and is extremely important to the market position we have created for ourselves. Our UK-based companies have also developed a successful inter-company partnership which has been conducive to our strong position in the UK market. The integration in Holland that started in 2006 has progressed favourably as has the collaboration in the Baltic countries between our units in Latvia and Lithuania.
Our Lithuanian production is an asset for our Danish business activities the collaboration has been smooth.
Continued expansion in Europe
The acquisitions carried out in 2006 laid a solid foundation for our position as one of the largest in the industry within our chosen European markets. Acquisitions completed at the close of the year and the beginning of 2008 further reinforce our position, particularly in Germany, Central Europe, UK and the Benelux countries. We are now the second-largest supplier in Europe within our market sector. ITAB is now Europe’s largest checkout sup- plier, ranking second in shop fittings as well as entrance and queue management systems.
Mergers, secure and production investments carried out in 2007 a substantially better pro- duction capacity which will help to make us more competitive. Through our organisation and structure as a concept supplier, with the capacity to offer major European chains eve- rything from product deliveries to complete stores, we envisage significant opportunities for further expansion.
More collaboration – greater synergy
Group-wide collaboration will intensify in 2008, particularly between our Czech and Lithuanian production units. The co-relocation of business operations in UK, Milton Key- nes and Hemel Hempstead, is scheduled for the first quarter of 2008. The companies will continue to be run as separate legal entities but will have a common executive manage- ment team and will be structured from a customer perspective. These activities will give us more intense customer focus, better use of our skills and expertise as well as better cost
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The improvement in profits can primarily be as- cribed to higher sales volumes, but also to the imple- mented streamlining effects and cost reductions”
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Our proximity to the market, our smoothlyoperating production units, our streamlined organi- sation and our talented and dedicated employees in particular are crucial factors.
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…VD har ordet
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Germany is a brand- new market for us, one where we have great expectations. This market is very large and is home to several of the largest European chain stores.”
Top priority will be given to the integration of the newly acquired ITAB GWS in the UK with its existing companies.
Germany is a brand new market for us, one where we have great expectations. This market is very large and home to several of the largest European chains. Up until the acquisition of Hansa Kontor Shopfitting, our Czech organisation supplied to the major German chains, although these deliveries went primarily to their foreign operations. We see opportunities in the German market through our new companies in Germany. A highly critical factor in this context will be the collaboration between our existing Czech organisation and our re- cently acquired German company. ITAB’s production of standardised fittings and entrance systems is a feature that Hansa Kontor has lacked and access to this alone will open new opportunities. Customer contacts and relationships gained through the Germany organisa- tion will be vital to our expansion in these countries.
Our Dutch company reports limited success in the Belgium market to date. We do howev- er foresee opportunities for progress through the collaboration between Belgium and Hol- land. Sintek, the leading supplier of special fittings for pharmacies in the Nordic countries, was acquired in 2007. One year earlier, we bought PharmaService, the leading supplier of fittings for pharmacies in Norway. The background behind these acquisitions is that we expected a deregulation of the government monopoly for the retail of pharmaceuticals in Sweden. Since the completion of these acquisitions, we have tried to prepare ourselves so that we are ready when the Swedish market opens during the latter half of 2008.
New company: ITAB Shop Products
We took a decision to start a new company, ITAB Shop Products, at the close of 2007. The purpose is to focus on product sales, primarily entrance and queue management systems.
ITAB presently has a good second-place ranking in terms of revenue in this product market from our experience in the UK and Swedish markets which are similar in size. During the autumn, we have attempted to coordinate and select a range of products and accessories that will make up an ITAB system. The Swedish company L-Form, which marketed a comparable collection but a different design, was acquired in January 2008 and its product collection has been integrated with ITAB’s. As at the turn of 2007/2008, the company has a complete system that will be unveiled on the market in conjunction with Euroshop, scheduled for February 2008.
Jönköping, February 2008
Jan-Ola Wiréhn Greater competition stimulates market growth
Our customers are facing more competition which often causes shops to cut their prices.
At the same time, more shops are being re-profiled with the ambition of attracting new customers. These re-profiling activities generate a higher demand for fittings and concept solutions which benefits our type of business. We can also observe how the larger chains outsource more of their project management, installation and concept development ac- tivities, which is also positive for our business. However, we have for some time noticed distinct tendencies to exert pressure on product prices making it imperative that we can offer the market better service on top of satisfactory product costs. Bearing this in mind, we strive for ultimate efficiency in our own production process, to improve our purchasing process and, last but not least, to improve and expand our project management concept.
ITAB has extremely good know-how and competence as a complete concept and product supplier. We have a broad market presence and an ambition to become even better and stronger in Northern and Central Europe as well as the UK. Most importantly, ITAB has won the confidence of many of the largest and most successful chains. This confidence is our greatest strength as we face the future!
New CEO: Ulf Rostedt
Following my decision to reduce my involvement in the company and step down as CEO after more than ten years of leadership, the Board has appointed Ulf Rostedt as the new Chief Executive Officer of ITAB Shop Concept AB. Ulf has held various executive posi- tions within the ITAB Group since 1997 and served as Deputy CEO since the Group’s listing in 2004. I am extremely pleased with the Board’s decision to appoint Ulf as my successor since he has long been a prominent figure both within the Group and externally.
I wish Ulf all success in his new role. I will continue to work within the Group on various business development projects.
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ITAB will realise a market leading position on selected markets through its expertise and long- term strategies.”
Business concept, goals and strategies
Tailor-made for European chain stores
Business concept
ITAB’s business concept is to offer shop fitting concepts for chain stores in retail. ITAB will realise a market leading position on selected markets through its expertise and long-term strategies.
Business goals
- ITAB will experience growth of at least 15 per cent per year over an extended period.
- ITAB will maintain its position as market leader in the Nordic and Baltic markets as well as in the UK.
- ITAB will become the market leader in the Benelux countries and Central Europe.
- ITAB will develop and gain market shares in new markets.
Financial goals
- Over a prolonged period, ITAB will have a minimum 20 per cent return on equity.
- ITAB will have at least 25 per cent risk-bearing capital.
- ITAB’s share dividends will, over an extended period, follow the company’s profits and correspond to 20–30 per cent of the company’s profit after tax. The dividend will, how- ever, be adjusted to the company’s investment needs and share repurchase schemes when relevant.
Strategy
ITAB will develop and nurture long-term business relations with chain stores within the food and non-food segments by working closely with its customers and their markets. The competence, dedication and business acumen that characterises the Group must generate trust and confidence in each and every customer. Turnkey solutions will be offered through responsibility for the entire flow – from concept, design, project management and con- struction to production, logistics and installation.
ITAB will develop new concepts, products and solutions by utilising its extensive mar- ket expertise and innovativeness while also working closely with its customers. ITAB will use its highly efficient and flexible production resources, thorough logistics process and selected partners to offer the market competitive terms coupled with precise delivery reli- ability and quality.
ITAB will use its leading position on the European market to create the conditions for further growth and expansion in selected markets.
ITAB’s activities
Complete concepts and products for chain stores
ITAB sells, manufactures and supplies complete concepts and products for chain stores. These concepts include shop fittings and equipment adapted to display each shop’s profile. Thanks to the company’s own broad and competent organisation and its extensive network of partners, ITAB can act as a supplier in much of Europe.
Developing and designing concepts and products
ITAB has the competence and capacity to develop, manufacture and install entire concepts for chain stores. A complete concept includes most things that make up a store: shop fittings, such as shelving and various types of product displays, and equipment, such as checkouts and entrance systems. ITAB has the ability and the expertise to take responsibil- ity for the entire shop concept. In certain cases, ITAB works as an all-inclusive contractor responsible for building new business premises or refurbishing existing ones. An effective production organisation centred on the new Czech facility enables ITAB to be a competi- tive supplier of standard fittings and customised checkout solutions.
Extensive network
A broad organisation and advanced work structure is required in order to be able to supply complete shop fitting concepts for chain stores. ITAB has production units in ten countries and project management offices in another four countries. In other European countries there are partner networks within sales, project management, installation and service. ITAB also gains major advantages through its combination of central volume production and local, flexible production units.
Effective project management
In order to run large, high-quality projects, ITAB follows a well-established work process.
The hub of this process is the project management function, which is involved in each stage of the work. By working according to this given framework, quality and delivery reliability are assured even though every agreement and individual project is unique. A description of the work process, from concept to turnkey shop, can be found on the next pages.
From concept to turnkey shop
ITAB’s activities work methods
CONCEPT
ITAB uses the customer’s needs and specifications as the starting point. This phase entails close collabora- tion between the customer’s representatives and various experts from ITAB. Proposals can include designs and/
or construction elements depending on the nature of the assignment.
TURNkEy sHOPs
ITAB manages projects through to the very end. When the last screw is in place the customer has a finished product, a new concept or a complete shop that can be used for new sales successes and greater profitability.
DEsIGN
ITAB’s development engineers and designers keep each customer’s brand and image in mind at all times as they work. Proposals are illustrated using 3D layouts, which are also used for making prototypes, then tested for function and appearance.
FURTHER DEvELOPmENT
New ideas and needs often crop up while working on a shop concept. Thanks to a coordinated project management function and a well-functioning work process, new stages can be slipped smoothly into the appropriate phase of the flow. The work of creating the optimum store continues.
Project management is the coordinating link in ITAB’s work method “From concept to turn- key shop”. The fact that project management is involved at every stage in the flow guaran- tees that everything runs efficiently and that cooperation and dialogue between ITAB and the customer functions effectively. Competent project management ensures that the project is completed smoothly and reassures the customer.
From concept to turnkey shop
DEsIGN
Design documentation is produced using three-dimen- sional CAD systems that minimise development times and support the decision-making and production proc- esses. Important elements in terms of the physical design include finalising the stability criteria, selecting the right materials and enabling cost-effective production.
PRODUCTION
modern facilities provide the Group with efficient production of high-quality standard fittings and enable flexible, customised production. High avail- ability is guaranteed by ITAB’s broad geographic spread and network of sub-suppliers.
LOGIsTICs
Friction-free flow for large-scale installations requires competent management of goods and information.
Production planners and purchasing networks work to reduce purchasing costs, and optimise the size and transport of goods. The project manager has the overall responsibility for the installation, as well as communication internally and with the customer.
INsTALLATION
ITAB’s own technicians and certified installation teams are experts in the company’s products and systems. Installations can be performed while a store carries on its usual activities, or alternatively, a completely empty space can be converted into a ready-to-use shop.
ITAB’s activities – shop fittings
Inspiring shop fitting concepts
ITAB develops and designs tailor-made shop fittings for chain stores in Europe. shop fittings cover everything from complete designed shop fitting concepts in metal, wood and wire to shelves, consoles, counters and product stands. Customers include chain stores in both the food and non-food segments throughout most parts of Europe.
shop fittings, with project management, installation and service, account for around 75 % of ITAB’s turnover.
Customer-oriented production
ITAB develops and produces shop fittings for major chain stores within the food and non- food sector. There are both standard systems and concept fittings, specially designed for a particular customer, in the food sector. Fittings for the non-food sector are usually unique to each chain. ITAB manufactures shop fittings at its own facilities in Sweden, Norway, Finland, Denmark, Lithuania, the Netherlands, Belgium, Germany, the Czech Repub- lic and the UK. Volume production of standard fittings takes place mainly in the Czech Republic, while other manufacturing units have been constructed for high flexibility and customised solutions.
Selling designs
Large chain stores are very protective of their brand and their image. Shop fittings are a crucial element. The store’s profile includes everything - not just fittings - from staff cloth- ing and the way the staff greet customers, to advertising and range. The shape, colour and choice of material for shelves and product stands, as well as colour schemes and lighting, emphasise the store’s identity. To create optimal sales, ITAB works with its own designers and architects but developing close partnership with the customer.
ITAB’s activities – shop equipment
Market leader in checkouts and entrance systems
shop equipment includes customer-unique as well as standard checkouts and en- trance systems. Customers are located throughout most of Europe and include chain stores mainly in the food sector. shop equipment sales correspond to about 25 % of ITAB’s total turnover. The company’s shop equipment is marketed directly by ITAB and through distibutors.
New product company
To intensify focus on product sales, a new company was formed, ITAB Shop Products. The decision is strategically important and aimed at improving product sales, mainly to new markets, using the company’s own organisation. The first product group established by the company is for entrance and queue management systems. There is potential for growth in this area; the number of players in the market is limited and ITAB’s portfolio is considered competitive. ITAB is presently Europe’s second largest supplier and the new focus is expect- ed to bolster this position. ITAB already has significant exports outside Europe although there is room for growth. The product company may grow even more in the future with the addition of new strategic product sectors.
All types of entrance systems
ITAB develops and manufactures entrance gates and markets a number of styles with vari- ous accessories. The entrance systems are designed for flexibility with a range of features such as radar or photocell-controlled operation, and open or closed systems. They are also available in a variety of designs, colours and materials – all intended to provide the cus- tomer with the optimum solution and flexibility.
Manned or unmanned checkouts
ITAB develops, constructs, manufactures and sells checkout systems. These are supplied largely to the food sector, but also to chain stores like IKEA, Clas Ohlson, Gamma, Karwei, Systembolaget and Plantagen. The common denominator for all of ITAB’s checkout sys- tems is that they have efficient flows, are high quality with well-designed ergonomics, and can be adapted to various register and payment systems. They are also very reliable, serv- iced by our experienced staff via an extensive service network. Checkouts are produced at ITAB’s units in Sweden, Denmark, Finland, Holland Germany and the Czech Republic.
In all stores, the interaction with the customer is important. A well-functioning checkout system enables good customer contact and a good final impression of the store before the customer leaves. This is why checkout systems are designed based on the needs and condi- tions of each chain. For shops stocking a lot of products and where speed is a decisive factor, ITAB manufactures highly effective, ergonomic checkout systems with patented conveyor belt scales and “third-customer” features*. Other customers have limited space in their stores. In these places, ITAB supplies compact checkout systems, optimised for the flow of customers and goods, efficiency and ergonomics.
ITAB runs a number of development projects in the checkout product sector. One of the newer products is a self-scanning counter that was launched in 2007. The consumer per- sonally scans the goods at the checkout and pays at the same checkout. The system is safe, frees up staff, saves on shop space, reduces losses and improves customer service through fewer queues.
*ITAB developed the patented
“third-customer” feature to increase the flow of customers in checkout aisles where customers have a large number of purchases. The feature allows a third customer to start the purchasing process even though the first two customers have not yet packed their goods.
ITAB’s activities – the future
Shopping in the future
ITAB is conducting various development projects in terms of new ways of shopping and paying. The company maintains a constant dialogue with its customers about how shops can be fitted and equipped in response to new needs and trends. The past year has resulted in recycling and a self-scanning development projects.
Recycling
ITAB has long strived to manufacture and transport its products in an environment- friendly manner as possible. Also ITAB’s customers are acutely aware of the increasingly relevant environmental aspects so they organise various projects such as better sorting at source and more effective energy recycling.
One way to reduce our environmental impact is to reuse worn shop fittings. In collabora- tion with a UK food chain, ITAB has developed a recycling service. This means that older shop fittings are renovated for reuse. ITAB’s commitment to this entails disassembling the fittings, assessing whether recycling is an option, removing old paint, recoating and reinstalling the fittings in the shop. The service is a huge success for the UK market and the combination of profitability coupled with environmental savings means it has growth potential in the rest of Europe.
Self-scanning development project
The concept of hand-scanning has become more widely accepted recently especially when shopping in larger food shops. With the system, each consumer scans their items them- selves using a small hand scanner. This means that the items do not have to be scanned in the checkout, which saves time for the shop staff and the consumer. Hand scanners are however a relatively costly investment for the shop. The advantage for the consumer is that the items are already packed when payment is made. On the other hand, the consumer must choose one of the hand-scanning checkouts, even if the queue is long. It is also easy to miss an item and counter-checks can create some irritation.
In large parts of Europe, another type of consumer scanning is gaining ground, namely self-scanning at special exit checkouts. ITAB has partnered with a software supplier to develop two types of self-scanning checkouts – a larger one with a conveyor belt intended for customers with shopping trolleys, and a smaller unit adapted to customer baskets.
The shopping procedure is the same as usual, meaning that the consumer puts the items into the trolley or the basket. At the self-scanning checkout, the customer takes out the items, scans them at a reader, and places them on the conveyor belt which transports the items to end of the checkout. The customer then pays at a card reader integrated with the checkout, a receipt is printed and the customer can pack the items and leave. The shop staff stands by at a service counter to help in the event of a problem or to accept payment.
The system offers many benefits for the shop. Since the consumers scan the items, one per- son can manage up to eight checkouts. Self scanning is a secure system since all items are scanned at the exit. Although ITAB’s self-scanning checkouts allow room for two custom- ers at the same time, they require less room than traditional checkouts, which saves shop space and makes room for more items or more exit checkouts, resulting in fewer queues.
The system also has an alarm function that minimises the risk of theft and loss of stock.
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Self-scanning frees staff and shop space”
ITAB’s markets
Broad base in Europe
ITAB supplies shop fittings and equipment for major chain stores within the food and non-food sectors throughout most parts of Europe. The company’s aim is to operate close to its customers, which means a steady expansion of the geographic markets as customers set up new organisations.
ITAB’s primary target groups are major European chain stores in the food and non-food sector. The food sector consists of national and international grocery chains such as Ahold with ICA, Rimi, Albert Hein and COOP, Axfood, Dansk Supermarket with Netto, Kesko, S-Gruppen, Real, Kaufland, Lidl, Metro Group, Tesco, Sainsbury, Morrison, Waitrose Wilkinsons and ASDA. In the non-food sector, ITAB has a broad customer network of chain stores within ready-to-wear clothing, petrol, sports and home furnishing. Customers include H&M, KappAhl, Cubus, Stadium, Statoil, Jysk, Stockman, Etos, Hema, Dunnes, Homebase, Oasis and Delhaize.
Major part of the European market
ITAB is currently the largest supplier of checkouts and second largest in entrance systems and shop fittings in Europe. Its primary geographic markets are the Nordic and Baltic countries, the UK, the Benelux countries, Germany and Central Europe. The Hansa Kon- tor acquisition means a significant establishment on the German and Central European markets.
ITAB’s geographical presence is distinguished by its strategy to operate close to its cus- tomers. When these customers expand into new countries, ITAB can continue to act as
supplier, either through its own operations or through authorised partners. ITAB’s broad geographic spread in Europe and its willingness to follow customers to new areas creates excellent conditions for increased cooperation. Through long-term customer relationships, ITAB is able to continually develop its markets.
Competitors
ITAB has a number of competitors in the Nordic and Baltic countries, for example Ex- pedit, New Store Europe, Pikwal, Hestra, and Rol. In the UK competitors include Eden, HMY/Radford and others, while in the Benelux countries and central Europe there are players such as Hermes Metal, van Keulen, Mago, Tego Metal, Wanzl, Store Best and Um- bach alongside many local companies.
Suppliers near and far
ITAB’s products, concept fittings and turnkey solutions require a broad network of sup- pliers for such materials as steel, wood, plastics and glass. Substantial purchasing expertise ensures the Group a strong position in terms of its suppliers, while simultaneously foster- ing a close and long-term collaboration. This collaboration is distinguished by ongoing efforts to ensure maximum delivery reliability, both from ITAB’s suppliers and to ITAB’s customers. The UK acquisition in 2006 included a larger number of partners and suppliers in Asia, a situation that is increasing in scope. To reduce purchasing expenses, the Group’s purchasing activities have for several years been coordinated through a central purchasing and logistics function.
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ITAB’s market grows throughlong-term relations
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Agreements with international cus- tomers in the Baltic countries have been critical in maintain- ing collaborations in several countries.”
ITAB’s market - 2007
Market leading in the Nordic
countries, the UK and the Baltic countries
ITAB has long been the leading shop fitting and equipment supplier on the Nordic and Baltic markets. Through the Hansa Group acquisition, ITAB has strengthened its market-leading position in the Uk as well.
Nordic countries
ITAB is the market leader for shop fittings and shop equipment in the Nordic markets, both in the food and non-food sectors. This position was further cemented in the non-food sector in 2007, while the food sector retains its strong position. The company will continue its ventures in the non-food sector and uphold its focus on major customers in the food sector in 2008.
For ITAB, the Norwegian market demonstrated the greatest growth again in 2007. Shop equipment sales and customers in the non-food sector are the major contributors to the company's higher sales figures.
The non-food sector accounted for the largest increase in volume in Sweden and Finland, too. Above all, figures indicate a positive trend among the largest customers. The acquisition of Sintek had a favourable impact on the Swedish market and intensified efforts in Finland in the non-food sector have paid off.
Denmark reports an increase in sales in the food sector where aggressive marketing activities are now yielding results. A number of larger agreements at the end of the year will secure a higher market share in the non-food sector in the future.
UK
ITAB is today the largest player in the UK, with sales to national and international chains that oper- ate largely in the food sector. ITAB in the UK is the market leader in entrance and queue manage- ment systems. The company also offers trolley products like Radlok, a product that reduces the risk of trolley thefts.
The UK companies reported an excellent year for 2007. The collaboration between the different units and new, large-sized customers were the reason for the good results. “Recycling” of shop fittings is an interesting new niche. This concept means that older shop fittings are renovated for reuse. The service is available in the UK today, but since recycling is not only an eco-friendly alternative but also economical for the shop, we predict that this trend will spread to more markets over the next few years.
The planned relocation of the two ITAB companies, ITAB CG and ITAB MK, to the same address will make market communication and service to the company’s customers easier, which will subse- quently support a stronger market position and a more efficient organisation. The move is scheduled for the first half of 2008.
Baltic countries
ITAB is the market leader for shop fittings in the Baltic countries. Shop equipment on the other hand has a smaller market share. Emphasis is on the food sector and the large hypermarkets (super- stores with food, clothes, household appliances, home electronics, sporting goods, building materi- als, etc.) Sales were relatively stable throughout the year, with some indication of an increase in the non-food sector. Several major agreements with international customers have been decisive for ITAB’s collaboration with these chains even outside the Baltic countries.
Collaboration will continue between the Latvian and Lithuanian companies the next few years ena- bling more intense marketing activities and be an instrumental part of the company's future plans to expand in the east.
ITAB’s market - 2007
Healthy expansion in the
Benelux countries, Germany and Central Europe
ITAB is one of the larger players in Central Europe. The company further cemented its market position in 2007, and expects to expand here over the next few years. In Holland, the company's position has grown steadily stronger over the past years and the acquisition of Hansa mertens makes ITAB one of the largest suppliers in the Ben- elux region. The acquisition of Hansa kontor and Hansa Harr gives ITAB a foothold on the German market.
Benelux
In Holland, ITAB is the leading checkout supplier in the market and one of the largest players in the shop fitting sector. A great deal of effort was dedicated to developing a new concept together with prioritised customers in 2006. Activities carried out during the year produced good results with higher volumes in both the food and non-food sector. In con- junction with the acquisition of the Hansa Group, ITAB has assumed a strong position in Belgium through Hansa Mertens. A number of requests for quotes and prospectuses were received at the end of the year, creating much encouragement for the Benelux countries in 2008.
Germany
The Hansa Kontor Shopfitting Group was acquired in January 2008. With this acquisi- tion, Hansa Harr, Europe’s largest checkout manufacturer, was incorporated in to the ITAB Group. Renamed ITAB Harr, the company has a large share of the German market, as well as export to the major German chains in Europe. The combination with ITAB’s own checkout production makes ITAB the largest in Europe with an annual production volume of approximately 22,000 checkouts. There is enormous potential to further enhance the com- pany's market-leading position by adding ITAB's experience of extensive Nordic research and development in checkout ergonomics and efficiency and coordinating the Czech checkout
production activities. ITAB has not been active previously on the German market in the shop fitting and shop concept segment. To be successful in Germany requires a well-established German organisation and network. The acquisition of Hansa Kontor has presented ITAB with the conditions to take a substantial market share as concept and fitting supplier. Hansa Kontor’s work methods and offer to the market coincides with ITAB's business concept and profile. The companies complement each other perfectly. Hansa Kontor has lacked the type of standard fittings that ITAB makes in the Czech Republic. Entrance systems and queue management systems are other product groups previously lacking in Hansa Kontor’s range.
The organisation has a strong platform from which to work now that ITAB Kontor has access to a complete range of products including checkouts, entrance and queue management sys- tems, as well as standard fittings. Hansa Kontor has an advanced design centre and market- ing organisation in Cologne which, together with its old and new product range, reinforces its position as concept supplier to the largest German chain stores. Through collaboration between the Czech production unit and the expertise and customer base that the acquired German companies bring to the mix, ITAB predicts a strong 2008.
Central Europe
Central Europe, which includes the Czech Republic, Slovakia, Poland and Hungary is a significant market for ITAB. The Group is the leading supplier of checkouts and one of the largest suppliers of shop fittings in this market. Customers operate primarily in the food sector - hyper and supermarkets.
In just a short time, ITAB has built a strong platform and a confidence on the Central Eu- ropean market. 2007 was a stable year in terms of sales, well on par with 2006. New op- portunities for more production to customers based in Central Europe present themselves with the opening of ITAB’s new factory in the Czech Republic. Consequently, 2008 will be distinguished by intensive marketing activities that target new and existing chain stores.
Russia and Romania
Russia is characterised by a small number of large customers in the hypermarket sector.
There is a great deal of future potential, and a major campaign will be launched when ITAB’s capacity has been expanded.
Romania is a growing market and one that ITAB views with great interest. A number of major chains are active in this market and growth is good. ITAB has some sales of shop fittings and equipment here, and although the figures are modest at present, the market is being studied for the future.
ITAB’s organisation – the environment
Long-term perspective and accountability
The Group’s environmental goal is for its companies to continuously strive to reduce their environmental impact by making environmentally-sound choices when it comes to raw materials, production processes and transport. The companies are to be sensi- tive to the wishes of their customers and must comply with the market’s environmen- tal requirements.
For a number of years ITAB has been making “green” investments in offices and factories, resulting in extremely energy-efficient units. For example, systems that cut electricity and gas consumption have been implemented, and equipment that uses residual heat from coating units to heat other premises are in use. The Group also uses an advanced water- based surface treatment for wood products. In addition to recycling the company’s own materials such as metal, plastics, cardboard, glass and paper, ITAB also offers its customers recycled products. Environmental aspects come into play when selecting suppliers and pro- duction alternatives since transport is one of the largest factors in terms of environmental impact for ITAB.
The company now offers a complete "Recycling" service. This means that instead of scrap- ping older shop fittings, they are renovated, painted and polished for reuse. This is a more eco-friendly alternative since energy and raw material consumption is considerably lower than for new production. Other environmental activities were carried out in 2007 at the new factory built in the Czech Republic. All wastewater is purified and powder from the coating process is reused. In addition, the factory is heated using residual heat from the powder coating unit, a solution also used in ITAB's other production facilities.
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Equipment that uses residual heat from coating units to heat other premises are in use”
Factors that affect the environment
Factors in ITAB’s business that have an environmental impact include emissions to air and water, wastewater, noise, packaging, waste and transport. The nature of ITAB’s business – its manufacturing processes and products – is such that the environmental risks are deemed to be limited.
Activities requiring disclosure in Sweden
In accordance with the Swedish Environmental Code, business activities that are deemed to have an impact on the environment are subject to disclosure requirements. The ITAB Group conducts activities that require disclosure at its Swedish subsidiaries in Jönköping and Näss- jö. The disclosure obligation is primarily intended to inform the Environment and Health Administration of details concerning planned or existing activities that have an impact on the environment, the effects of these activities on the surroundings, and whether protective measures have been taken to the extent stipulated in the Swedish Environmental Code. The directives concerning Environmentally Hazardous Activities and The Protection of Public Health (SFS 1998:899) define which types of business activities or measures that may not be set up or conducted without prior consent. Also amendments to the disclosure obligation and in certain instances, activities requiring a permit, must be reported when they are significant from a disruption perspective.
ISO 14001 certification
One of the Group’s Swedish companies and a UK-based company has a certified environ- ment management system in accordance with ISO 14001:2004. Through the certifica- tion process, the companies contribute to long-term sustainable growth by monitoring its resource usage and environmental impact when developing and producing products and services. The organisation makes regular improvements, is economical with its re- sources, limits its environmental impact, takes preventive action against pollution and adopts a product lifecycle approach which, together with good margins, complies with current legislation. The certification process also includes environmental training for all employees. This means that employees have documented training in environmental as- pects of waste management, transport and the impact on the environment that stems from metals and power consumption. Several other Group companies are in line for the certification process.
ITAB’s organisation
Streamlined units and flexible production
ITAB has well-established units in northern and central Europe. In 2007, the or- ganisation was supplemented with the acquisition of sintek, a swedish shop fitting company that targets pharmacies. Construction of the Group’s new factory in the Czech Republic was completed. The factory will serve as ITAB’s production hub for standard fittings and has considerable checkout production. At the close of 2007 ITAB signed an agreement for the acquisition of the German group Hansa kontor shopfitting Group, Finnish Pan-Oston and swedish L-Form.
ITAB’s units
After the most recent acquisition in January 2008, the ITAB Group has some twenty units and about 1,750 employees. Strategic issues such as business development and investment needs are dealt with by the parent company in Jönköping alongside such Group-wide functions as financing, marketing, purchasing and accounting. Concept sales, production, development and project management is conducted at units in Sweden, Norway, Finland, Denmark, Lithuania, the UK, Holland, Belgium, Germany and the Czech Republic. Pur- chasing and project management functions are managed by units in Estonia, Latvia, the Ukraine and Russia. The Group has sales, service and installation partners throughout large parts of Europe.
Management and staff
ITAB’s management philosophy is based on distinct, accessible leadership coupled with delegated responsibility. During the year, ITAB started the second round of a trainee pro- gramme, in which a number of young university students will over the course of one year have the opportunity to participate in developmental assignments within the Group. Fol- lowing this trainee period, the participants are usually offered employment at an ITAB company.
The Group has an ITAB spirit, distinguished by solidarity, openness and accountability for the company and its growth. The working environment is customer oriented and the company’s method of working on projects permeates through the entire Group.
Sweden
Production of wooden shop fittings takes place in Nässjö, while metal products, checkouts and entrance systems are manufactured in Jönköping. Sales, project management organisa- tion, construction, R&D and logistics are to be found in both locations. Activities in Hjo were phased out in 2007 and production moved to Jönköping. The final changes will be completed during the first quarter, 2008.
Sintek, the shop fitting company that targeted pharmacies, was acquired in 2007. The company is based in Stockholm and collaborates with ITAB’s Norwegian company, Phar- maService. Increasingly more of the company’s fitting products are made at the units in Jönköping, Sweden and Stadsbygd, Norway. In January 2008, L-Form Logistics AB, a Swedish company based in Reftele, was acquired. L-Form manufactures and markets en- trance and queue management systems that have a modern design and advanced features.
This system will be an excellent complement to ITAB’s current product portfollio.
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The new Czech factory boostscapacity many times over and is a hub in the Group’s standard production
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ITAB Shop Products was formed in 2007. The company develops, manufactures and mar- kets parts of ITAB’s shop equipment. In the first phase, the entrance and queue manage- ment system will be moved from the Jönköping-based company, ITAB MK in UK, Finnish Pan-Oston and L-Form to ITAB Shop Products in Jönköping. There are 245 employees in Sweden.
Norway
Our Oslo office houses management, marketing and sales functions, project management, and architectural and design skills. There is a production unit for metal shop fittings and some wood production in Stadsbygd. Investments were made in production equipment in order to streamline production. The higher level of flexibility and efficiency achieved has resulted in higher production capacity, which is imperative for the coming years to remain competitive in a strong Norwegian market.
A smaller project management office is located in Sandefjord that targets the pharmacies market. In 2007, incorporation of PharmaService continued and a partnership with the Swedish pharmacies company, Sintek, was initiated. There are 144 employees in all at the Norwegian units.
Denmark
The company’s Danish centre for project management, logistics and checkout assembly is in Alleröd in Sjælland. There is a small unit for production of prototypes and customised shop equipment solutions at Hinnerup in Jylland.
A lot of effort has been made in previous years to increase the market share, work that paid off in 2007. To form a more effective organisation, additional plans to coordinate the Danish business are planned during the next few years. This will mean better utilisation of premises and employees, plus more streamlined logistics and production. The Danish company has 35 employees.
