winter-
experiences
memorable
annual report 2008/09
2
operations
summary of the year 4
our history 5
comments from mats 6
our industry 8
operations 12
Visions, goals and strategies 14
sales and marketing 16
leadership and employees 20
corporate social responsibility 22
opportunities and risks 24
the skistar share 28
shareholder benefits 32
business area destinations 34
• sälen 36
• Åre 38
• Vemdalen 40
• hemsedal 42
• trysil 44
business area properties 46
annual report
administration report 50
definitions 52
fiVe year oVerView 53
consolidated income statement 54
consolidated balance sheet 55
change in equity for the group 56 cash flow statement for the group 57 parent company income statement 58 parent company balance sheet 59 change in equity for the parent company 60 cash flow statement for
the parent company 61
notes 62
signatures 78
audit report 79
corporate goVernance
corporate goVernance report 80 board of director´s report
on internal control 83
board of director´s 84
financial information 85
group management 86
articles of assocation, addresses 87
3
skistar creates
memorable winter experiences
as the leading operator
of european alpine destinations
4 summary of the year
2008/09 2007/08 +/- +/-, %
net sales, msek 1,635 1,483 152 10%
income before tax, msek 302 206 95 46%
income after tax, msek 273 193 80 41%
cash flow, msek 502 356 152 43%
earnings per share, sek 6:96 4:94 2:02 41%
dividend, sek 5:00 4:50 0:50 11%
market value, 31 august, sek 111:00 87:00 24:00 28%
direct yield, % 4.5 5.2 -0.7 -13%
p/e ratio 16 18 -2 -11%
equity, msek 1,372 1,278 93 7%
equity ratio, % 37 36 1 3%
return on capital employed, % 11 10 1 10%
return on equity, % 21 15 6 40%
gross profit margin, % 36 33 3 9%
operating margin, % 22 20 2 10%
net margin, % 18 13 5 38%
average number of employees 1,120 1,100 20 2%
definitions can be found on page 52.
the year in figures
summary of the year
significant eVents during the financial year
Net sales amounted to MSEK 1,635 (1,483), income before tax amounted to MSEK 302 (206) and income after tax amounted to MSEK 273 (193).
Earnings per share amounted to SEK 6.96 (4.94).
Operating income for the Business Area Destinations increased by MSEK 102 to MSEK 363, corresponding to a 39 % increase.
The operating income from Business Area Property declined during the fiscal year to MSEK 7, due to a gene- ral downturn in business within the housing market.
Net interest income improved during the financial year to MSEK -68 (-96) due to lower interest rates.
significant eVents after the end of the financial year
Booking volumes for the winter sea- son 2009/10 are up 8% in volume (up to and including week 39), compared with the corresponding period for the previous year.
Dividends are proposed at SEK 5.00 (4.50) per share.
SkiStar has decided to initiate the sale of apartment shared ownership within the Business Area Property, where the use of the apartment is divided amongst the owners on a weekly basis and membership in an inter- national organisation for the exchange of vacation accommodations will be included in the shared ownership.
4
5
1975/78
Brothers Mats and Erik
Paulsson purchase the Lindvallen ski resort in Sälen.
1994
Lindvallen is listed on the Stockholm Stock Exchange O-list.
1997
Tandådalen &
Hundfjället AB is acquired.
1999
Åre - Vemdalen AB is acquired.
2000
Hemsedal, Norway’s second largest ski resort is acquired.
2001
The Group adopts the new name, SkiStar AB.
2005
Trysil, Norway’s largest ski resort is acquired.
our history
our history 5
6
• A new record year
• All financial goals have been achieved
• An exciting future
6 comments from mats
comments from mats
6
the year in reView
We have now completed the best year of our operation ever. All five of our desti- nations; Sälen, Åre and Vemdalen in Sweden, as well as Hemsedal and Trysil in Norway, show increased sales and higher profits as compared to the pre- vious year. Our organic growth has been 10% and our most important source of revenue, SkiPass, has increased by 12%
to MSEK 933. Our destinations’ ope- rating income increased by MSEK 102 to MSEK 363, corresponding to a 39%
increase. The operating income reported by our destinations is the result of several different factors, such as a high level of interest in which alpine vaca- tions are a particularly notable priority for families in the Nordic region, good winter conditions during the entire season, an increased number of guests from our home markets, Sweden (+8%), Norway (+3%) and Denmark (+10%), but perhaps, above all, an increase in the number of guests from our foreign markets (+13%) and where the Russian market shows the largest degree of growth (+49%). The weak Swedish krona and a relatively weak Norwegian krona has implied that more people
living in the Nordic region stay at home and vacation in their own region, which has benefited the Scandinavian alpine businesses.
Operating income from the Business Area Property decreased to MSEK 7 (41) due to the general downturn in transactions on the property market.
Our property operations are more sensitive to the state of the economy than our alpine operations. The level of our net financial income/expenses has been strengthened by MSEK 28 to MSEK -68 due to lower interest rates.
Our net sales increased to MSEK 1,635 (1,483), income before taxes increased by MSEK 96 to MSEK 302 (206) and net income after taxes was MSEK 273 (193). Earnings per share amounted to SEK 6.96 (4.94). The Board has pro- posed that the annual general meeting increase dividends to SEK 5.00 per share (4.50). We are both proud and pleased with the development which SkiStar has demonstrated during the year.
achieVement of financial goals
All of our financial targets have been achieved during the year. Organic
growth was 10%. This is well above our goal, which is that organic growth should be at least 3% above inflation.
The equity/assets ratio was strengthe- ned during the year to 37% (36) and, thereby, the goal that the equity/assets ratio would not be less than 35%, was achieved. Return on equity amounted to 21%, which is 6 percentage points above the target level of 15%. Return on capital employed amounted to 11%, to be compared with a target of 10%.
The operating margin amounted to 22%, which is equivalent to the target level.
The financial targets have, thereby, been achieved during a year in which the Company’s property operations are showing a low level of return. The continuing work to improve guest expe- riences, combined with the development of new, profitable business opportunities and a continuing focus on costs, implies that SkiStar will be able to continue to report a favourable level of profitability.
Sales via skistar.com have continued to increase. Of the total amount of accom- modations sales, 54% (46) of these sales took place via skistar.com. As regards our most important source of income,
7
SkiPass, we sold 27% (17) as advance sales, equivalent to an amount of MSEK 239 (135) and, of the total amount of advance sales, online sales comprised 84% (68). Using skistar.com as a distri- bution and sales channel has proven to be a successful development for SkiStar.
focus areas – present and future
satisfied and returning guests
The development of our destinations will continue so that our guests can receive the best possible experience.
Satisfied and regular guests are the foundation of our activities. The largest investment for the coming season is being carried out in Lindvallen, Sälen with the construction of Experium, an 11,000 square-meter entertainment centre for both adults and children.
Among other things, Experium contains an adventure water park, a playground, a 3D movie theatre, games, bowling, spa, restaurants and bars. Experium will open their doors for guests in the middle of December 2009. Experium will be a complement to ski activities and the holders of SkiPass shall receive a rebate on Experium’s activities. Our other destinations are also showing annual improvements as regards the products and services we offer to our guests. This refers, not the least, to the fact that the manner in which guests are greeted by our personnel comprises an important factor in ensuring that they have a posi- tive experience.
new guests
In order to create growth, we are dedi- cated to a variety of means to attract new visitors to our destinations. New guests can be divided into two customer groups; guests from areas we refer to as new markets, primarily countries outside of Scandinavia, as well as new guests from our home markets, Sweden, Norway and Denmark. Guests from new markets have not previously been addressed to any major degree. Through active processing, primarily via increased communication, transportation solutions and cooperation, we believe that we will be able to increase growth in this cate- gory of guests at a higher rate. By refi- ning our communication with current guests, primarily through CRM, we free up resources which can be put towards broader media channels, such as TV and online advertising.
increased sales
We are working specifically to increase the sales of our most important source of income, SkiPass. By offering a dis- count on pre-paid SkiPasses via skistar.
com, the volume of pre-paid SkiPasses has increased by 27% (17). We have also, to a limited degree, begun to load the SkiPasses with other benefits in order to increase their attractiveness.
Income from SkiPass sales has increased 12% during the financial year, in com- parison to our 10% increase of total net sales. We will continue working to further increase the sales of SkiPass.
focus on costs
The focus on costs which we have undertaken during the previous finan- cial year has shown positive effects and we will continue to maintain the same degree of cost focus. We are continuously seeking to become more efficient and to monitor our operational processes. The increased level of online sales provides for a more efficient sales process. An efficient CRM system and a larger customer database allow for direct contact with guests and, thereby, more efficient market processing. There are also additional areas in which we can become more efficient.
new areas of growth
Large transaction volumes, together with high visit rates to skistar.com and the destinations, provides new business opportunities for SkiStar. Starting in the fall of 2009, SkiStar entered into the market for time-shares, so-called shared ownership. In Lindvallen in Sälen we are in the process of renovating 12 apart- ments for sale via the shared ownership concept. The buyers will be linked to an international company within the area of exchange and administration of vacation accommodations. The weekly awarded points can be used in exchange for vacation accommodations in another location. In addition, the holders of the shared ownership become members of the SkiStar Vacation Club, which entails a few additional attractive benefits. Shared ownership is a simple and flexible form of owning a residence where the owner does not need to take responsibility, to the same extent, as an individual owning a house or an apart- ment. Shared ownership and SkiStar Vacation Club will also eventually develop in other SkiStar destinations.
During the past year, SkiStar has also started operations in customer insurance
and merchandise.
continued high demand
The level of demand for winter vacatio- ning at a SkiStar destination conti- nues to be favourable. At the end of September the level of bookings was 8%
higher in volume than by the equivalent point in time during the previous year.
Already at the end of September, 48%
of the total volume of accommodation bookings which were expected to be booked during the entire winter season, had been booked. Sales through skistar.
com continue to increase and thus far, 59% (50) of bookings have been made through skistar.com. We will also have a greater accommodation capacity for the forthcoming winter season, as approximately 2,000 new beds will be available. Just like you, we are looking forward to the forthcoming winter season.
Mats Årjes CEO
comments from mats 7
8
SEK billions
20 40 60 80 100 120
2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Source: NUTEK/SCB
Swedish leisure travellers Foreign visitors
in all five corners of the world, people are interested in alpine downhill skiing.
Millions
400 600 800 1,000
2008 2007 2006 2005 2004 2003 2002 2000 1995
Source: UNWTO (United Nations World Travel Organisations)
tourist Visit globally, millions tourist consumption in sweden, going prices, sek billions
our industry
our industry
the global tourism industry
Tourism is one of the world’s largest industries. According to the World Tourism Organisation (UNWTO), a United Nations body producing statistics regarding global tourism, the tourism sector accounts for 6% of the total global export industry of goods and services. In the service sector, tourism constitutes around 30% of all exports. According to UNWTO, global tourism has increased by approximately 73% since 1995 in terms of the volume of visits.
During 2008, the tourism industry experienced turnover of USD 944 billion (tourism receipts) which is equi- valent to an increase of 1.9% compared to 2007. The global volume of tourist visits increased during the first half of 2008 by 5%, but showed a decrease of 1% during the second half of the year.
The result for the entire year was an increase of 3%, to 924 million tourist visits, globally.
Europe is the most visited region, receiving more than half of the world’s foreign visits. The most highly visited
country is France, with nearly 80 mil- lion tourists annually. During 2008, the number of foreign visitors to Europe increased by 0.1%, which makes Europe the region demonstrating the lowest level of growth during the year. The Middle East increased by 18.2% and, thereby, comprised the largest increase on a global basis. The region that had the next largest increase was Africa which showed a growth in tourism of 4.1% during 2008.
During the first four months of 2009, the volume of global tourism decreased by 8% compared with the same period in 2008. Consequently, the negative trend which had begun during the second half of 2008 has continued.
UNWTO’s long-term forecast is expec- ted to show an annual growth in the volume of tourism of 4.1% up until the year 2020.
the swedish tourism industry
In Sweden, the tourist industry is an important sector, with approximately 2.9% of Sweden’s combined GNP, and according to The Swedish Agency
for Economic and Regional Growth, employment corresponding to 160,000 person-years.
During 2008, the total tourist con- sumption in Sweden increased by 6.3%
to SEK 244 billion. Of the total level of consumption, 153 billion referred to tourism consumption by Swedes in Sweden during 2008. Swedish tourist consumption, specified into private contra business travel, shows an increase of 4.1% to SEK 104.8 billion for private travel and an increase of 7.5% to SEK 48.2 billion for business travel. Of the total amount of tourist consumption, SEK 90.0 billion was comprised of con- sumption by foreign tourists in Sweden.
This figure includes both private and business travel, corresponding to an increase of 8.4% compared with 2007.
the alpine world market
People on all five continents engage in alpine skiing. Europe is the largest market and each year approximately 210 million ski days are consumed (one days’ downhill skiing with a SkiPass is considered one ski day). North America is the second largest market, with
our industri 9
approximately 80 million ski days per year. The largest, individual markets are the US and France, with approximately 60 million ski days per year. The Nordic region, consisting of Sweden, Norway and Finland, accounts for approximately 18 million ski days per year.
The growth in the global market has historically been a couple of percentage points per annum. However, market fluctuations are large. Perhaps the fas- test growing ski market today is found in Eastern Europe, both as regards the number of skiers and as regards the development of new ski resorts.
Relatively unknown skiing destinations, such as Bulgaria and Poland, appeared in a number of Swedish travel agency offerings some years ago. One of the countries in which interest in skiing is currently growing very rapidly is Russia, where participation in winter sports is increasing by 20% annually.
The Russian resort of Sochi will host the 2014 Winter Olympics, which will probably contribute to increased interest and investments over the next few years.
Ski resorts in all countries are primarily visited by domestic skiers.
In the US and Canada, foreign skiers account for slightly less than 5% of visits. In countries such as Japan, South Africa, Chile and Argentina, the propor- tion of foreign guests is very low. The largest percentage of foreign visitors is found in the Alps, where approximately one-third of all downhill skiers come from other countries. The industry- leading companies primarily work local- ly but, during recent years, there have been some cross-border collaborations and acquisitions. SkiStar has completed an acquisition in Norway. In France, the listed group Compagnie des Alpes (CDA) has acquired ski resorts in both Switzerland and Italy. The ownership of ski resorts is very fragmented; many are family owned and many companies are small. In Austria, ownership is domina- ted entirely by privately owned, smaller companies. In Italy, the ownership pro- file includes a strong element of credit institutions; in Switzerland and France, there are a few larger limited companies with broad ownership, of which a couple are publicly-owned and listed on the stock exchange. In Japan, ski resorts and lift systems are often included in larger, privately-owned conglomerates, often with associated hotel operations.
In addition to SkiStar, Sweden is also home to the Strömma Group, which has resorts in Hemavan-Tärnaby and Riksgränsen. The North American
market does not differ from the other markets and is also heavily fragmented.
However, restructuring has taken place during recent years, with a shift taking place towards fewer, increasingly larger companies. Lying behind this trend is the possibility of achieving economies of scale and the need to create a critical business volume. Economies of scale are found in the coordination of purchasing, operations and maintenance, as well as within marketing and sales. The critical business volume is built up primarily via the acquisition of competitors. This has to do both with building volume and with creating a cash flow sufficient to balance the often extensive investments in such areas as lifts, slopes and snow systems. Another driving force behind the industry’s restructuring trend is the companies’ desire to work in a greater number of different geographical locations in an effort to decrease depen- dency on weather conditions in one or a limited number of locations. CDA, for example, has taken further steps by investing in “warm weather services,”
such as golfing resorts and amusement and theme parks. Attempts are also being made, to varying degrees, to broaden the product offering to include, for example, ski rentals and ski schools, in order to attract a larger portion of the guests’ total consumption.
season 2008/2009 nordic region
Sales of ski passes increased in all Nordic countries during the season, due mostly to the good skiing conditions and a favourable calendar year effect.
According to SLAO (the Swedish Ski Lift Organisation), sales of SkiPasses in Sweden during 2008/09 increased by 18% to MSEK 1,183, excluding VAT, as compared with the previous season. The average price increase was 4.0%. The number of ski days increased from 6.7 million to 8.3 million. In Norway, total sales of SkiPasses increased by a total of 11.0% to MNOK 966. Price increases in Norway were, on average, 4%. The total number of ski days increased from 6.0 million to 7.0 million. In Finland, sales of SkiPasses amounted to EUR 44.1 million (44.2) and the number of ski days increased from 2.6 million to 3.0 million.
north america
The number of ski days in the USA decreased by 7 % to 57 million (61).
Due to the financial situation, many chose to spend their ski vacations at nearby destinations in order to avoid
overnight stays, at the same time as ski destinations with more long-term guests reported shorter visits with fewer over- night stays. However, it should be noted that several ski destinations indicate that the snow and weather conditions have proven to have a greater impact on visitor statistics than financial factors.
In Canada, the total number of ski days decreased slightly from 19 million to 18.7 million. In North America, more than half of the total number of ski days took place on the weekend, which is in line with previous years. Snowboarders accounted for approximately one-third of visitors to ski resorts, although these numbers vary significantly from location to location. Compared to Europe, the proportion of snowboarders in North America is very high.
the alps
The number of skiers increased during the previous season. Due to several heavy snowfalls and an extremely favourable climate, the Alps had a great season. For example, France experienced some heavy snowfalls during Easter and wrapped up the season with excellent ski conditions. During the 2008/09 season, the total number of ski days in France increased by 6% to 58.5 mil- lion. In Austria, the number of skier days increased by 4% to 57 million.
In Switzerland the number of ski days increased by slightly more than 10 % to 32 million. Germany, where it is the number of guests which is measured, recovered from last season’s drop and the number of total guests increased by 14% to 4.9 million. Similar to North America and the Nordic countries, the largest ski resorts in the Alps account for a majority of turnover. The 25 lar- gest ski resorts are estimated to account for more than 60% of the industry’s total revenue.
competition
SkiStar competes for people’s disposable income. This means that, in the broader perspective, SkiStar is competing with such industries as infrequently purcha- sed goods and home interiors.
Within the travel industry, SkiStar competes primarily with sun and sea holidays and weekend trips to major cities. The range of holidays of this type has increased over the last decade.
One explanation for this could be that, in contrast to the alpine skiing indu- stry, the travel industry retains lower start-up costs, which implies an over- establishment and this, accordingly, puts pressure on prices and margins. During
10
skistar ticket resia
sales, msek - 4,240 3,128
net sales, msek 1,635 419 505
income after tax, msek 273 -52 23
operating margin, % 22 neg 10
employees 1,120 470 416
comparison of tour operators
our industry 10
last season, the weak Swedish krona, combined with the financial turbulence, in general, has had a negative effect on the tourism industry.
Within the alpine skiing industry, competitors consist of other alpine ski resorts in Scandinavia and the Alps.
However, throughout the years, statistics indicate that the proportion of custo- mers choosing to travel abroad to ski has remained principally unchanged. In addition, SkiStar has a strong and well- known brand and a strong distribution channel in the form of skistar.com, which is increasingly important due to the ever-growing presence and impact of this type of media is increasingly important. Thanks to its strong finan- cial position and significant cash flow level, SkiStar retains the possibility of continually investing in everything from service training for employees to new, modern lifts and snow-making facilities, thereby ensuring that SkiStar’s alpine resorts always maintain their high qua- lity compared with their competitors.
Furthermore, SkiStar’s ski resorts pro- vide good access to densely populated areas due to their close proximity and reasonably priced transport solutions in the form of rail, air and bus connec- tions, as well as rental cars.
international comparison of skipass prices
The British company Snowhunter Ltd.
annually performs global comparisons of ski pass prices. These comparisons indicate that SkiStar’s SkiPass prices are competitive on the international mar- kets. Generally speaking, in comparison with resorts with similar alternatives as regards lift capacity and total number of kilometres of slopes, ski pass prices in Switzerland, Canada and the USA are considerably higher. In Italy, France, Austria and Germany, they are approx- imately the same or somewhat higher.
trends consolidation
In recent years, the travel industry has undergone a substantial degree of con-
solidation. Considering that margins for many travel companies are small, high turnover is important in order to retain sufficient resources for advertising and marketing. Competition for exposure to potential customers is considerable. The Internet is the only medium showing a rapid increase in regards to both marke- ting and sales.
increase in advance sales
Many tourists seek simplicity and an overview of the offerings at a loca- tion, as well as of costs. To be able to plan and book a trip ahead of time is important in order to be able to get what one wants. It is becoming more and more common to also pre-book supplementary products in addition to accommodations and travel. One example of this is all-inclusive packages which are geared towards the price- aware traveler wanting to avoid having to think about unexpected expenses and looking forward to being able to just relax.
more activities
One distinct trend for the travel industry is that guests wish to fit in an increased number of activities and a greater varie- ty of experience during their holidays.
At SkiStar’s resorts, this is evident from an increase in the choice of activities, shopping, restaurants and greater invest- ment in such facilities as swimming facilities and experience centres.
the family
More and more ski resorts are aiming at families as their target group. This is evident from the advent of broader and shallower slopes, greater access to accommodation situated closer to the slopes, child-minding facilities, ski schools, youth activities during the evenings, cross-country tracks, more comfortable accommodation and the possibility of self-catered accommo- dation. At the same time, ski-tows are being replaced with modern chairlifts that are reliable, comfortable and can handle a greater capacity.
a larger number of target groups
Particularly in the USA, the skiing industry is working to expand its target groups in order to reach more Afro- Americans, Hispanics, ethnic minorities, etc.
snow-making facilities
Investments in snow-making facilities are increasing with the aim of minimi- sing dependency on the weather. With a similar goal in mind, Alpine ski resorts are investing in lifts and slopes at high altitudes, although investments in snow- making facilities are also increasing in the Alps.
product development
The leading companies within the skiing industry are broadening their operations to include ski schools, ski hire and sales of profile products, ski wear and equipment.
population trends
Factors, such as more leisure time and an increase in disposable income, are generally favourable to the tourism industry. In addition, a general interest in keep-fit activities and outdoor activi- ties and recreation is on the rise, which is particularly favourable for the skiing industry.
more and older skiers
In Sweden’s case, skiers in the age group 55+ will probably grow in number as the first large “ski-generation” that learned to ski during the 1970’s. There are still many individuals in this group who continue to ski and plan to do so for many years to come. Assuming that an equal number of children and youths begin skiing as has been the case in previous years, the total ski market will continue to grow in the Nordic countries.
11 0
50 100 150 200 250 300
Levi Ruka
Idre/Grövelsjön/Fjätervålen Trysil
Hemsedal Vemdalen Åre Sälen
08/09 07/08 06/07 05/06 04/05 03/04 02/03 01/02 00/01 99/00 98/99 97/98 96/97
NOK/SEK is calculated at the exchange rate of 1.05 for the years up to and including 99/00, 1.10 for the years 00/01, 03/04 and 04/05, 1.19 for the years 01/02, 02/03 and 08/09, 1.18 for 05/06, 1.13 for 06/07 and 1.18 for 07/08. FIM/SEK is calculated at a rate of 1.48 for the years up to and including 99/00 and 1.50 for 00/01. EUR/SEK for 01/02 and 02/03 is translated at a rate of 9.20, 03/04 to 9.10, 04/05 to 9.45, 05/06 to 9.25, 06/07 to 9.21, 07/08 to 9.40 and 08/09 to 10.54.
MSEK
ski pass sales for alpine destinations, msek
our industry
4,737,000 ski days
on the nordic region´s most popular slopes
11
12
maJor points during the year
Net sales amounted to MSEK 1,635 (1,483), income before tax to MSEK 302 (206) and income after tax to MSEK 273 (193). Profit per share amounted to SEK 6.96 (4.94).
Operating income for the Business Area Destinations increased by MSEK 102 to MSEK 363. The increase in income is the result of the weak domestic curr- ency, a high level of attraction and good conditions, in general, during the winter season.
During the year, operating income from the Business Area Property decreased to MSEK 7 (41), due to the general decrease in transactions on the property market.
Net financial income/expenses impro- ved during the financial year to MSEK -68 (-96) due to lower interest rates. All of SkiStar’s loans have variable interest rates.
legal organisation
The majority of the operations of the Business Area Destinations in Sweden are undertaken by the Parent Company, SkiStar AB (publ). The Business Area Property’s operations are run by Fjällinvest AB, which is 100% by SkiStar AB. The operations with the Business Area Destinations in Norway are run by the wholly-owned subsidiary, SkiStar Norge AS. Operations in Trysil are run by
operations are divided into two
business areas- destinations and property
operations
Trysilfjellet Alpin AS and in Hemsedal by the company, Hemsedal Skisenter AS.
All of the subsidiaries within the Group are wholly-owned, with the exception of Hammarbybacken AB, which is 91%
owned by SkiStar AB.
operatiVe organisation
SkiStar’s operations are divided into two Business Areas and five staff areas. The Business Area Destinations is comprised of five operative areas: Sälen, Åre, Vemdalen, Hemsedal and Trysil. The second Business Area is Properties. The operative management group is com- prised of: the CEO, the Accounting and Finance Director, the Technical Director, the Marketing and Sales manager and the six destination managers, one each from Åre, Vemdalen, Hemsedal and Trysil and two from Sälen (Lindvallen/
Högfjället and Tandådalen/Hundfjället).
staff functions
In order to best take advantage of SkiStar’s combined resources and obtain the optimum possible effect, a number of functions have been gathered under five staff areas. These staff functions are:
Economy/ Finance/IR/Purchasing/
CSR/Environment, IT,
Human Resources/Guest Services, Marketing/Sales,
Technical Development.
skistar ab (publ)
legal organisation
skistar norge as trysilfJellet alpin as
trysilfJellet golf as
hemsedal alpin
hotell as hemsedal fJellandsby as hemsedal booking as
hemsedal skisenter as fJällinVest ab
fJällinVest norge as
hammarbybacken ab sälens
högfJällshotell ab fJällförsäkringar ab 91%
operations 12
SkiStar’s work within Human Resources is outlined on pages 20-21, for
Marketing and Sales see pages 16-19, and for Environmental and CSR areas, see pages 22-23.
business area property
The Business Area Property has been operational since January 2005. This Business Area is responsible for, amongst other things, creating growth in accom- modations at SkiStar’s destinations, creating growth in the value of assets through their further development, establishing long-term development plans, together with the destinations, for future investments, as regards Market/
Sales, build up and development of SkiStar Vacation Club and shared ownership and create business opportu- nities through the acquisition of current accommodations and development land.
The Business Area Property is organised by the CFO. More information regar- ding Business Area Property is found on pages 46-47.
business area destinations
Business Area Destinations is responsible for the management of SkiStar’s alpine destinations and comprises the strategic product areas Alpine Skiing/Lifts/
SkiPass, Accommodation, Ski Rental and Ski Schools, which are the founda- tion of SkiStar’s concept. This Business Area is presented on pages 34-35.
13
legal organisation
Sälen Åre Vemdalen Hemsedal Trysil Total, destinations Property
2008/09 2007/08 2008/09 2007/08 2008/09 2007/08 2008/09 2007/08 2008/09 2007/08 2008/09 2007/08 2008/09 2007/08
net sales 586 523 345 330 162 145 248 220 292 262 1,633 1,480 2 3
other
income -1 4 -2 - - - - -2 1 - -2 2 11 46
operating
revenue 585 527 343 330 162 145 248 218 293 262 1,631 1,482 13 49
operating
expenses -345 -337 -240 -238 -110 -104 -170 -160 -184 -172 -1,049 -1,011 -6 -8
depreciation -75 -72 -37 -38 -18 -17 -39 -31 -50 -52 -219 -210 - -
operating
income 165 118 66 54 34 24 39 27 59 38 363 261 7 41
operating
margin, % 28 22 19 16 21 17 16 12 20 15 22 18 54 84
operating reVenue and operating income per business area, msek distribution of operating income and eXpenses, msek
Operating income 2008/09 2007/08 +/- +/-, %
skipasses 933 836 97 12%
accommodation 229 210 20 10%
ski rental 157 147 9 6%
ski school 52 47 5 11%
sporting goods outlets 69 55 13 24%
property services 94 89 5 6%
capital gains 7 46 -39 -85%
other 103 101 3 3%
Total operating income 1,644 1,531 113 7%
Operating expenses
goods -95 -83 -12 14%
personnel -461 -447 -14 3%
other -499 -489 -10 2%
Total Operating expenses -1,055 -1,019 -36 4%
ceo / group ceo
operative organisation
hr / guest serVice
property
marketing / sales economy / finance / ir / csr / enVironment
it
technical deVelopment
operations 13
14
Vision
SkiStar is to create memorable winter experiences as the leading operator of European alpine destinations.
business concept
By providing memorable winter expe- riences, value is created for guests, personnel and other interested parties which, in turn, creates value for the shareholders.
goals financial goals
In order to make possible a proactive strategy and, at the same time, balance operating risks, SkiStar shall have a strong financial foundation. The goal is an equity ratio above 35%. At the current interest rate level, the return on equity shall amount to 15% and the return on capital employed to 10%.
These targets are established on the basis of three-month treasury bills for which the average interest rate during the financial year 2008/09 was 1.42%.
The operating margin shall, in the long term, exceed 22%.
operational goals
SkiStar’s growth target is that organic growth shall exceed inflation by at least 3% per year, in addition to any growth via acquisitions. Inflation in Sweden during the financial year was 1% and organic growth for comparable units was 10%.
goal fulfilment
The overall goal is to increase the value of shareholders’ capital. During the financial year 2008/09, the share price increased by 28%. Stockholmsbörsen’s
total index (OMXS) remains unchanged during the same period. It is proposed that dividends be paid at SEK 5.00 (4.50) per share. All financial targets have been achieved, which is also demonstrated by the table on the adjoin- ing page. Information on the Group’s earnings trend during the financial year can be found on pages 12-13.
strategies
concept and business model
The core business is alpine skiing with a focus on the guests’ ski experiences.
Profitable and strategic operations within alpine skiing, ski schools, ski rental and the provision of accom- modation shall, in the long term, be conducted within SkiStar´s own organisation at the respective destina- tions.
Operations outside the core business shall preferably be undertaken by external professionals.
SkiStar shall work to ensure that all companies providing services at the alpine destinations maintain a high level of quality and service in order to strengthen the destination’s brand and to provide the guests with a better skiing experience.
The Business Area Property is to free up financial resources and create profits by renovating and selling older accommodation and by using the resulting resources to construct new, modern tourist accommodation at SkiStar’s destinations.
operative strategies
Well-maintained products and ser-
vices result in a high percentage of returning guests. These are, in turn, the best marketing resources available.
A well constructed infrastructure should allow guests to find every- thing within walking distance.
Accommodation and skiing areas should be geographically linked to each other to allow a wide range of accommodation near the lifts.
The socalled Ski In-Ski Out concept provides independence from cars as a means of transport during visits.
Development of the Group’s snow systems has a high priority. These have been modernised and are being continually expanded to offer good skiing conditions, regardless of the degree of natural snowfall.
The destinations have varying profiles and, together, should be able to attract large customer groups.
SkiStar must ensure that there is a large selection of reasonably priced transport options for the respective destinations, primarily via agreements with external entities and, secondarily, via internal transport solutions.
leadership and service strategies
SkiStar shall create a business culture characterised by learning, high perfor- mance standards, care, focus on guests and pride. Leadership shall also show a willingness to change in order to make further improvements.
The service offered to our guests shall be continuously improved. The stra- tegy is to utilise professional selection
skistar shall be a leader within concepts, a comprehensive approach and business development
Vision, goals and strategies for success
vision, goals
and strategies
for success
15
processes for recruitment and to train and perform continual follow-ups of training requirements.
The alpine destinations will be conti - nuously improved in consultation with the guests and in consideration of their wishes, which will result in more satisfied guests who will return to SkiStar destinations year after year.
The improvement of accessibility, simplicity and comfort for our guests will always be a focus area.
marketing and sales strategies
The primary purpose of the market- ing and sales strategies is to increase the number and maximise the percentage of alpine skiers at SkiStar’s destinations.
SkiStar’s destinations shall be clearly profiled and their image strengthened by marketing and adaptation to vari- ous target groups.
The coordination of sales via one telephone number and one website will enable increased cross-sales, higher levels of service and greater effectiveness.
Increases in advance sales lead to a larger portion of earnings being secured at an early stage, before the start of the season, resulting in a lower risk and a more even cash flow.
Increased online sales entail lower sales costs and an increased customer register for processing.
An increased number of visitors to the website implies a possibility for additio- nal sales.
Those who purchase a ski trip to SkiStar’s destinations are considered to be a customer of SkiStar and a guest of the relevant destination.
cross-training and benchmarking
SkiStar’s employees have extensive
experience and knowledge in operating alpine ski resorts. Through meetings with colleagues with similar positions at the various destinations, a continual process of cross-learning can steadily be achieved. By comparing business activities and working models of the various resorts, the circumstances for more effective operations and reinforced guest relations will be created, thereby increasing growth and profitability.
Outcome 2008/09 Outcome 2007/08 Outcome 2006/07 Goal
equity ratio, % 37 36 39 >35
return on capital employed, % 11 10 8 10
return on equity, % 21 15 14 15
operating margin, % 22 20 17 22
organic growth above inflation, % 9 11 -5 >3
goal fulfilment, financial goals
Vision, goals and strategies for success
16
a high level of accessibility is a key activity within skistar, which is why guests can book their
entire winter vacation at skistar.com.
sales and marketing
sales and marketing
Advance bookings Destination
Telephone Online Travel Agent Cashier
skipass 4% 23% - 73%
accommodation 31% 54% 11% 4%
transport 46% 47% 6% 1%
ski rental 3% 21% 1% 75%
ski school 21% 45% 1% 31%
Totalt 14% 34% 4% 48%
52% 48%
mission and targets
The overall goal of the marketing and sales departments is to maximise the occupancy rate of available beds, as well as to maximise the sales of the Group’s own services and products, such as SkiPasses, ski rentals, places in ski schools and accommodation. Cost effi- ciency is prioritised through distribution via skistar.com. Furthermore, the sales department should ensure effective and reasonably priced transport solutions for all destinations, via collaboration with external organisers, such as charter operators and carriers.
trademark positioning
SkiStar’s trademark portfolio consists of the destinations’ trademarks, the trademarks associated with the various locations at the destinations and the common trademarks skistar.com and SkiStar. The destination trademarks and skistar.com have the primary contact with the market. Guests travel to the destinations to have memorable winter experiences. Skistar.com is the name of the Company’s website and is, primarily, for the person planning the trip, which sells and provides packages for trips to the respective destinations. In this way, the different trademarks complement and reinforce one another, and consu- mers are viewed both as guests at the destinations and as SkiStar’s clients.
markets
SkiStar’s guests come mainly from the Nordic countries, where Sweden, Norway and Denmark are conside- red home markets. During the last
winter season, these markets grew by a total of 8%. Other guests come primarily from Finland, Russia, the Baltic States, Northern Germany, the United Kingdom and the Netherlands (see table on page 17). The percentage of foreign guests at the destinations has increased steadily during recent years. In total, guests from countries outside of SkiStar’s home markets show a growth of 13% during the 2008/09 season. The markets which have increased the most are Russia and the Netherlands.
target groups
SkiStar’s target groups can be classified according to many different criteria, for example, by geography, age or a number or other parameters. Target group clas- sification differs in terms of the various destinations, as they all have different profiles. Further information on each destination’s specific target groups can be found on pages 36-45. However, all of SkiStar’s destinations have one main target group, families with children, which is the single largest target group for all destinations.
marketing and sales strategies
tailor-made winter holidays
SkiStar’s strategy is to offer each indivi- dual guest a tailor-made winter holiday in line with their specific wishes. Guests can choose between six different means of transport: their own car, rental car, bus, train, plane and boat, or a combi- nation of these, depending primarily on the chosen destination. Transportation can, in turn, be combined with thou- sands of accommodation alternatives in
different price classes, everything from self catering cabins to hotels with all amenities under one roof. Furthermore, guests can choose from an exten- sive selection of ski schools, ski rental options and SkiPasses. Guests can also choose the duration of their holiday: a weekend, a short break, a week or, in some cases, a longer stay.
everything in one place
Accessibility is one of SkiStar’s key con- cepts, which is why our guests can book their entire winter holiday, including tra- vel arrangements, accommodation, ski school, ski rental and SkiPass, all at one place, either via our website at skistar.
com or via telephone. The percentage of online bookings is continually increasing year by year. During the financial year 2008/09, the portion of online sales amounted to 34% (25) of the total volume of sales. As regards accommoda- tions only, 54% (46) of the total amount of sales took place via online bookings.
high and stable occupancy rate
A stable and high occupancy rate in our accommodations over the entire winter season forms the basis for high profitability. In order to achieve this, the sales department actively works with differentiated pricing, depending upon the underlying demand. In addition, the marketing department intensifies its work with events applicable to the various target groups during low season weeks. These activities include such things as high school graduation week or New Year celebrations for Russian guests (the Russian New Year takes place during the second week of the year).
17 sales and marketing
Advance bookings Destination
Telephone Online Travel Agent Cashier
skipass 4% 23% - 73%
accommodation 31% 54% 11% 4%
transport 46% 47% 6% 1%
ski rental 3% 21% 1% 75%
ski school 21% 45% 1% 31%
Totalt 14% 34% 4% 48%
52% 48%
adVance sales, %
Åre Vemdalen Sälen Hemsedal Trysil SkiStar Total
sweden 73 95 88 18 25 70
norway 7 0 2 37 27 9
denmark 3 1 10 30 33 12
finland 5 1 0 1 1 2
england 2 2 0 3 1 1
great britain 1 0 0 2 2 1
germany 0 0 0 5 4 1
russia 4 0 0 2 3 2
baltic states 4 1 0 0 3 1
other 1 0 0 2 1 1
share of guests by nationality, %
available beds
SkiStar actively works to provide as many beds as possible. When renovated apartments/cabins are sold through Business Area Property, a contract is sig- ned giving SkiStar the right to lease the apartment/cabin for a certain number of weeks per year. SkiStar also works actively with current owners by offering a number of bonuses to those who make their cabins/apartments available for leasing.
reasonably priced transportation
In order to secure a high occupancy rate, it must be easy for the guests to travel to the destinations. SkiStar, therefore, actively works to secure reasonably pri- ced transportation to our destinations, primarily via external partners. SkiStar cooperates, for example, with boat ferry companies in Denmark and Germany, charter companies in Russia, the UK and the Netherlands, as well as with travel agencies in all foreign markets. In addi- tion, SkiStar cooperates domestically with a list of carriers within air, rail and bus transport, as well as with car rental companies.
advance sales
All SkiStar products can be booked and
paid for in advance. Advance sales vary from product to product. It is simpler and more convenient for guests to book and pay in advance. For example, if the guest has purchased a SkiPass in advance, the winter holiday can begin at the lifts in the morning. From SkiStar’s point of view, a high percentage of advance sales provide an improved cash flow, better possibilities for optimisa- tion, a competitive advantage within those segments in which local competi- tion exists at destinations, reduced vulnerability to weather conditions and reduced financial risk. During 2008/09 the portion of advance sales increased by 4% to 52% (48) and was, thereby, for the first time, greater than the por- tion of such sales taking place at the destinations themselves. This break in the trend can be attributed, primarily, to the implementation of SkiPass sales at differential prices, which implies that SkiPasses are always the least expensive when purchased in advance online.
add-on sales
During the last few years, SkiStar has actively committed to increase the add- on sales of peripheral products in addi- tion to accommodation. This includes such things as SkiPasses, ski rental, ski
school, cancellation insurance and travel insurance. Examples of measures taken to stimulate add-on sales are;
Attractive offers, such as discounts for advance bookings and cheaper SkiPasses with online bookings.
Continuous development of our web- site to make it easier for guests to book their entire winter holiday online.
Frequent e-mails to existing custo- mers via a so-called CRM system.
Intense on-site marketing at our destinations.
returning guests
Returning guests are an important factor for SkiStar’s high profitability, as the marketing cost for a returning guest is much lower compared with the costs of recruiting a new guest.
sales channels
Sales are primarily carried out via four channels; telephone, Internet, over the counter at the destinations and via travel agencies. Sales taking place via the three first channels, so-called own sales, comprise 96%. The portion of online
18 sales and marketing
bookings is steadily increasing and during 2008/09 this portion was 34%
(25), which corresponds to an increase of 9% compared with the previous season. Efforts to improve and simplify the flow of bookings at skistar.com continued during the season. Above all, the booking dialogues for SkiPass and ski rentals were developed. The website, skistar.com, has over 10 million visitors per year. The majority of the traffic on the website takes place during January when the number of visits per week approaches 500,000.
As a result of the increasing number of online bookings, the number of telephone bookings decreased by 10%
during 2008/09. Beginning in April 2009, SkiStar will outsource incoming telephone bookings to an external call centre partner which will sell all of SkiStar’s products and services. A total of 4% of SkiStar’s sales take place via retailers, travel agents and transporta- tion companies. Such agents are prima- rily important for markets outside of Sweden and Norway. SkiStar considers its priority markets to be Denmark,
Finland, the United Kingdom, the Netherlands, Russia, the Baltic States, and northern Germany.
communication
SkiStar’s marketing aims at bringing to the fore the unique characteristics of each individual destination, in order to show our guests our broad offering.
Our distribution channel, skistar.com, incorporates a joint, graphic framework and demonstrates the fact that the desti- nations belong to the SkiStar family.
SkiStar is continually communicating with those gusts which have previously visited SkiStar’s destinations. Our mail distribution informs such guests of, for example, various offers, discounts and periods with good prices. Those who have booked an upcoming trip to one of the destinations also receive mail distribution. The purpose of such distribution is to simplify the guests’
preparations prior to their winter vaca- tion so that more time can be freed up for time together and activities at the destinations. After the visit, the guest is provided with an opportunity to express their reaction to their visit via a
response form.
Both current and potential guests can be reached by SkiStar’s markets via, for example, television commercials, advertising in newspapers, on Internet sites and local advertising. One channel which is gaining in importance, both in home and foreign markets is the so-called search word marketing on the Internet. When interested parties search on the subject and words related to SkiStar, SkiStar’s destinations, winter vacations, etc, they should find SkiStar online as quickly as possible.
Regardless of which marketing channel is used and the target group of the marketing, the message will always encourage the viewer to visit skistar.com for more information and bookings.
The portal, skistar.com, is a marketing and sales channel.
sales and marketing 19 26
Banner advertisements online.
Mailings to current clients.
Advertising leaflet distributed as a newspaper supplement in Sweden and Denmark.
Mailutskick till befintliga gäster.
20 leadership and employees
skistar’s hr Vision
SkiStar will create a business culture characterised by learning, high perfor- mance standards, care, focus on guests and pride. Employees are to have an attitude characterised by a willingness to change.
good serVice giVes results
Through the corporate culture, employees shall feel a high degree of freedom and a commitment to improve and innovate. In order to achieve this, leaders must serve as good examples as regards their values which, in turn, steer the employees towards the values of the organisation. SkiStar works with vari- ous programmes in order to continually improve guest service.
measuring Values – mapping our targets
Linking to the guests’ experience is a source for the improvement work.
Therefore, SkiStar has created a tool in order to measure guests’ experience of employees on the basis of SkiStar’s values. The results are reported digitally in the form of a target map. The target map is created over the entire winter season and follow-ups of the results take place on an ongoing basis.
satisfied employees means deVelopment
Motivated and satisfied employees provide better service than non-engaged and unsatisfied employees. Good service
is one of the main reasons that a visitor will return to a SkiStar destination because a large portion of the guest experience is comprised of the treatment which a guest experiences. Satisfied and returning guests are the base of SkiStar’s profitability.
conVertible debenture loan programme
Partnerships are also an important moti- vator, therefore, a number of convertible debenture programmes have been executed in order to increase the staff’s commitment to the development of the Company. The last convertible deben- ture loan programme was executed during the fall of 2007 after the end of the financial year and comprised MSEK 30 to be converted to, at most, 250,000 Class B shares. The convertibles expire in 2012 and have a conversion price of SEK 138. The convertible programme was significantly oversubscribed
recruitment- a search for Values
A positive business culture is highly valued by people looking for work, which has been confirmed by internal interviews within SkiStar’s organisation.
The personal values of an individual see- king work should match with SkiStar’s values in order for the experience to be a positive one for guests, employees and the organisation. Prior to each season, close to 2,500 employment interviews are conducted and up to 1,700 indivi-
duals are recruited, including returning seasonal workers. A well-planned recruitment plan is, hence, one of the strategic tools available for building a strong business culture. SkiStar has developed an Internet-based recruitment tool which is based on the Company’s values. This tool makes the recruitment process more cost-efficient and increases the quality of the recruitment process.
More than 12,000 individuals applied for work at one of SkiStar’s destinations for the 2009/10 season.
our working enVironment – our guests’ eXperience enVironment
A sound and secure working environ- ment for SkiStar’s staff is a prerequi- site in order to be able to offer guests memorable winter experiences in a safe and secure mountain environment.
SkiStar has a structured working envi- ronment organisation at every destina- tion, which works with preventative measures to continually improve the working environment by way of, for example, safety patrols and inspections, as well as via the drafting of policies for the working environment.
Each destination also has a well- developed crisis organisation with specially trained crisis managers. Last year, several crisis exercises were carried out in order to maintain a high degree of preparedness. In the event of a crisis or accident, SkiStar’s tested routines and trained staff allow SkiStar to provide
leadership and
employees
21
500 1,000 1,500 2,000
08/09 07/08 06/07 05/06 04/05 TSEK
400 600 800 1,000 1,200
08/09 07/08
06/07 05/06
04/05 Persons
Staff 11%
Trysil 17%
Hemsedal 13%
Vemdalen 6% Åre 22%
Sälen 32%
>60 50-59
40-49
30-39 20-29
>20 years
10-20 years
6-10 years 4-5 years 2-3 years
<2 years distribution by age,
permanent employees period of employment,
permanent employees permanent employees
per destination
net sales per employee, tsek aVerage number of employees
leadership and employees
professional and considerate care to those affected in order to reduce any unneces- sary suffering. This applies equally to our guests, our employees and any other concerned parties. During a crisis, an organisation is to always first address those who are injured and any individu- als with them and, secondly, ensure the maintenance of confidence in SkiStar.
equality
SkiStar works actively with issues of equality, together with trade unions and employers’ organisations. An equality group manages personnel development issues. SkiStar’s Equality Plan has been reviewed and approved by Jämo. No unjustified salary differences were iden- tified.
employee statistics
The average number of employees during the financial year 2008/09 increased by 20 (2%) to 1,120 (1,100). The distribu- tion of employees over the various areas of operation is shown in the pie chart
below. In the Parent Company, employee absence due to illness amounted to 2.8% (3.1). The average age of those employed on a permanent basis was 43 (43) years, while the average period of employment of permanent employees was 9 years (10). 38% (38) of the total number of employees were women. Net sales per employee increased by 8.3%
to TSEK 1,460 (1,348). The number of permanent employees as per 31 August was 422 (418) individuals and the turnover amongst permanent employ- ees shows that 36 (28) have begun employment and 32 (36) individuals have terminated their employment in SkiStar. During the peak season, SkiStar had a total of 2,370 (2,312) employees.
The share of permanent employees with qualifications from higher education was 16% (16) per 31 August 2009 and SkiStar’s investment in competence renewal totalled MSEK 4 (7) during the financial year. The greatest portion of this competence renewal consisted of internal training.
