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Annual Report 2015 Report by the Board of Directors Notes Proposed distribution of earnings Auditor’s report Eleven-year review Quarterly information

Note 4 Net sales and operating income

All amounts in SEKm unless otherwise stated 

Revenue recognition and additional information on net sales

Sales are recorded net of value-added tax, specific sales taxes, returns, and trade discounts. Revenues arise from sales of finished products and services. Sales are recognized when the significant risks and rewards connected with ownership of the goods have been transferred to the buyer and the Group retains neither a continuing right to dispose of the goods, nor effective control of those goods and when the amount of revenue can be measured reliably. Revenues from services are recorded when the service, such as installation or repair of products, has been performed. Revenues from sale of extended warranty are recognized on a linear basis over the contract period unless there is evidence that some other method better represents the matching of revenue and expense for warranties.

The vast majority of the Group’s revenues consisted of product sales. Revenue from service activities amounted to SEK 1,607m (1,482). The Group’s net sales in Sweden amounted to SEK 4,426m (4,236). Exports from Sweden during the year amounted to SEK 31,156m (27,853), of which SEK 27,518m (24,844) were to Group subsidiaries. The major part of the Swedish export comes from one of the Swedish entities acting as a buying/selling hub for the European business meaning that most of the European product flows are routed via this entity.

Cost of goods sold and additional information on costs by nature

Cost of goods sold includes expenses for the following items:

  • Finished goods (see Note 15 Inventories), i.e., cost for production
  • Warranty
  • Environmental fees
  • Warehousing and transportation
  • Exchange-rate changes on payables and receivables and the effects from currency hedging

Cost of goods sold includes direct material and components amounting to SEK 51,982m (46,901) and sourced products amounting to SEK 17,289m (16,543). The depreciation and amortization charge for the year amounted to SEK 3,936m (3,671). Costs for research and development amounted to SEK 2,851m (2,517).

Government grants relating to expenses have been deducted in the related expenses by SEK 105m (140). Government grants related to assets have been recognized as deferred income in the balance sheet and will be recognized as income over the useful life of the assets. The remaining value of these grants, at the end of 2015, amounted to SEK 1,039m (1,148).

The Group’s operating income includes net exchange-rate differences in the amount of SEK –708m (–675). The Group’s Swedish factories accounted for 1.7% (1.7) of the total value of production.

Selling and administration expenses

Selling expenses include expenses for brand communication, sales driving communication and costs for sales and marketing staff. Selling expenses also include the cost for impairment of trade receivables.

Administration expenses include expenses for general management, controlling, human resources, shared service and IT expenses related to the named functions. Administration costs related to manufacturing are included in cost of goods sold.