MEMORABLE WINTER EXPERIENCES ANNUAL REPORT 2012/13

Transcription

1 MEMORABLE WINTER EXPERIENCES ANNUAL REPORT 2012/13

2 CONTENTS OPERATIONS THE PAST YEAR 4 OUR HISTORY 5 COMMENTS FROM MATS 7 OUR INDUSTRY 8 OPERATIONS 12 VISION, GOALS AND STRATEGIES 14 MARKETING AND SALES 16 EMPLOYEES 20 OUR RESPONSIBILITY 22 RISKS AND OPPORTUNITIES 24 SHARE PERFORMANCE 28 SHAREHOLDER BENEFITS 31 BUSINESS AREA DESTINATIONS 32 SWEDEN 34 NORWAY 35 SÄLEN 36 ÅRE 38 VEMDALEN 40 HEMSEDAL 42 TRYSIL 44 BUSINESS AREA PROPERTY DEVELOPMENT 46 ANNUAL REPORT ADMINISTRATION REPORT 52 DEFINITIONS 54 FIVE-YEAR OVERVIEW 55 CONSOLIDATED STATEMENT 56 OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION 57 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 58 CONSOLIDATED STATEMENT OF CASH FLOW 59 PARENT COMPANY INCOME STATEMENT 60 PARENT COMPANY BALANCE SHEET 61 PARENT COMPANY STATEMENT OF CHANGES IN EQUITY 62 PARENT COMPANY CASH FLOW STATEMENT 63 NOTES TO THE FINANCIAL STATEMENTS 64 SIGNATURES 82 AUDIT REPORT 83 CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT 84 BOARD OF DIRECTORS 88 FINANCIAL INFORMATION 89 MANAGEMENT 90 ARTICLES OF ASSOCIATION, ADDRESSES 91 2

3 SKISTAR S VISION IS TO CREATE MEMORABLE WINTER EXPERIENCES AS THE LEADING OPERATOR OF EUROPEAN ALPINE DESTINATIONS 3

4 THE PAST YEAR SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR After two years of decline, the past winter marked a trend reversal and a step towards achieving our profitability targets again. Higher volumes and higher revenues were generated during all holiday periods Christmas/New Year, the winter sports school holidays and the Easter holidays. The periods between New Year and the winter sports holidays, and between the winter sports holidays and Easter were somewhat weaker than the year before. Limited opportunities to obtain leave from school are one reason behind the change in behaviour. Net sales increased to MSEK 1,665 (1,552), the income before tax increased to MSEK 160 (139) and the income after tax decreased to MSEK 137 (157). Earnings per share were SEK 3.49 (3.99). Items affecting comparability comprise an additional charge of MSEK 12 relating to Radisson Blu in Trysil and MSEK 13 in repayments of social security contributions following a favourable outcome of a tax case. Excluding these items, the increase in income before tax was MSEK 46 (37%). The tax expense for the year is significantly higher than last year due to the fact that SkiStar s tax loss carry-forwards were fully recognised in the previous year s accounts. Through consolidation, the Company s financial position has strengthened, as reflected in an equity/assets ratio of 38% (36). Following a favourable ruling by the Land and Environmental Court, plans for the construction of an airport between Sälen and Trysil have moved forward, and work on exploring opportunities to obtain publicsector funding is currently underway. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR Booking volumes for the 2013/2014 winter season are 1% higher compared with the same period the year before. Continued favourable calendar conditions with a maximum number of free days over the Christmas and New Year period and a late Easter, which means a long high season but at the same time only one big Easter week. More activities aimed at new customer segments, such as groups and conferences, are expected to increase the number of guests during weaker periods. THE YEAR IN FIGURES As a result of increased activity in Property Development, some 90 apartments and 80 building plots will be sold. Starting with the first interim report, a clearer distinction will be made between Destinations and Property Development, with separate income statements, balance sheets and key performance indicators. It is proposed that the dividend remain unchanged at SEK 2.50 per share. In its budget proposition, the Swedish Government has proposed to remove the tax exemption rules applying to specially assessed properties. This means that from fiscal year 2014/15 onwards the full income in SkiStar s Swedish business will be taxed. 2012/ /12 +/- +/-, % Net sales, MSEK 1,665 1, % Income before tax, MSEK % Income after tax, MSEK % Cash flow from operating activities, MSEK % Earnings per share, SEK 3:49 3: % Dividend, SEK (proposed) 2:50, 2:50, % Share price, 31 August, SEK 81:00, 81:25, % Return, % % Price-to-earnings ratio, times % Equity, MSEK 1,482 1, % Equity/assets ratio, % % Return on capital employed, % % Return on equity, % % Gross margin, % % Operating margin, % % Net margin, % % Average no. of employees 1,085 1, % Definitions are found on page 54 4 THE PAST YEAR

5 OUR HISTORY 1999 Åre-Vemdalen AB is acquired Hemsedal, Norway s second largest ski resort, is acquired Tandådalen and Hundfjället AB is acquired The Group adopts the name SkiStar AB Lindvallen i Sälen AB is listed on the Stockholm Stock Exchange Trysil, Norway s largest ski resort, is acquired, making SkiStar the operator of the fi ve largest ski resorts in Scandinavia. 1975/78 The brothers Erik and Mats Paulsson purchase the ski resort Lindvallen in Sälen. OUR HISTORY 5

6 COMMENTS FROM MATS THE PAST YEAR We are pleased this year to have taken a major step towards once again achieving our profitability targets. Visitor numbers and sales have increased, primarily during the main holiday periods Christmas/New Year and the winter sports and Easter school holidays. A combination of high occupancy rates in commercial beds and good use of private beds testifies to a strong interest in alpine holidays at SkiStar s destinations. To further improve profitability, we need to attract more guests between the holiday periods, when spare capacity is high. Limited opportunities to obtain leave from school between holidays are one reason why holiday travel is concentrated to the holiday periods. Sales and earnings Our Destinations business area increased net sales by MSEK 108 (7%) to MSEK 1,659 and operating profit by MSEK 24 to MSEK 201. Booking volumes increased by 2% during the winter season compared with the previous year. The occupancy rate at Company-owned and SkiStar-arranged accommodation increased by 4 percentage points to 74%. The number of skier days, defined as one day s skiing with a SkiPass, increased to 4.3 million (4.1). SkiPass revenues increased by MSEK 70 (8%) to MSEK 927. Our Property Development business area increased its operating profit by MSEK 6 to MSEK 18. Increased interest in buying private building plots resulted in an increase in sales profits by MSEK 17 to MSEK 38 while a SkiStar associated company, Radisson Blu Trysil, reported a larger deficit than previously, of which MSEK 12 was of a non-recurring nature. On a consolidated basis, external net sales increased by MSEK 113 to MSEK 1,665 while the income before tax grew by MSEK 21 to MSEK 160. The tax expense increased due to the fact that our tax loss carry-forward were fully recognised in the preceding financial year and because deferred tax assets were restated to take account of the Swedish Parliament s decision to lower the corporate tax rate in Sweden to 22%. The consolidated income after tax decreased to MSEK 137 (157) as a result of the increased tax charge. Earnings per share decreased to SEK 3.49 (3.99), and the Board of Directors proposes that the Annual General Meeting resolve to approve a dividend payment of SEK 2.50 per share (2.50). We are pleased that the Company has been strengthened financially, with an equity/assets ratio of 38% (36) and a cash flow after investments of MSEK 255 (-11). Two of our financial targets have been achieved: organic growth at 7% (target: 3% above inflation) and the equity /assets ratio, as mentioned above (target: at least 35%). The operating margin increased to 6 COMMENTS FROM MATS

7 13% (PY 12% and target 22%), the return on capital employed increased to 6% (PY 5% and target 11%) and return on equity decreased to 9% (PY 11% and target 16%). FOCUS AREAS GOING FORWARD Developing our destinations Developing our destinations is a continuous process aimed at ensuring the best possible experience for our guests. Prior to the season, we expect to invest MSEK 142 in our ski resorts, most of which relates to replacement investments, including a warming hut in Vemdalen, improvements to snow making systems, a new surface lift in Sälen and a capital injection in a company that is building three new chairlifts in Åre. The chairlifts and pistes that are being built and prepared in Åre will have a significant impact on capacity as well as the skiing experience, especially the two chairlifts that connect to each other, linking central Åre with the Björnen area via Fjällgården. Investments in Property Development are expected to reach MSEK 38, comprising investments in replacements, the acquisition of shares in Hemsedal and renovation of apartments held for sale in Sälen, Vemdalen and Åre. The business area also has 80 unsold building plots. MySkiStar health and skiing Skiing and health go hand in hand! Some 117,000 guests have discovered our popular free service, MySkiStar. During the past season, we registered nearly 6.5 million lift rides and more than 1.5 billion vertical metres. This year, we will also be welcoming our youngest guests to enter the MySkiStar world, which means that the whole family can enjoy challenges and tasks, and locate other family members. That spending time in the mountains is a healthy and invigorating experience is no longer just a cliché. In a survey carried out by HUI Research, 8 out of 10 Swedish skiers say they associate a skiing holiday with physical activity, health and pleasure. Skiing helps improve body strength, fitness, coordination, agility and balance. You also gain wonderful memories that will stay with you long after your muscles have stopped aching, a fact that as many as 90% of Swedes travelling with children agree on. Broader communication to reach more customer groups In addition to maintaining a strong market presence, we are now broadening our communication activities with the aim of reaching additional customer groups. Communications aimed at the family target group are being expanded through additional targeted messages for families with older children, 12+, SkiStar Snow Camps. For groups of friends and couples, we are offering party packages with SkiPasses linked to tickets to various forms of entertainment; beginners are offered SkiRookie, and for the 55+ pleasure-seeker target group, we are tailoring packages with experienced ski guides. Younger children will be able to sample 26 new experiences and attractions in Valles Värld ( Valle s World ) at all our destinations. A unique event, Valles Vinterveckor ( Valle s Winter Weeks ), will be launched. Our Valle ski package includes specially designed Valle skis, which participating children will be able to take with them when they go. Children will also be able to experience Valle s winter games during Valle s Winter Week, where all children are winners. Future growth Expanding in a market with limited growth is a challenge that we are strongly committed to meet. In the short term, this means that we need to regain the volumes that we have lost. Longer-term, as growth opportunities have been exhausted in our neighbouring markets, we will be expanding in our international markets. Spending time together and ideally on an active holiday with a healthy outdoors focus are examples of clear social trends that benefit SkiStar s business. Our ski resorts are the best possible arenas for offering these experiences, and there are good reasons to believe that these trends will endure. We have strong hopes that Åre, in competition with Cortina (ITA), will be awarded the honour of hosting the 2019 Alpine World Ski Championships, in connection with the Congress of the International Ski Federation (FIS) in Barcelona on 5 June As has been reported, the 2007 World Championships provided a big push for investments and growth not only in Åre, but also at several other destinations. At the time of writing, discussions are also being held on the possibility of arranging the Winter Olympic Games in Sweden in 2022, where most events would take place in Stockholm and all alpine disciplines except slalom in Åre. Although it is still a long way to go before a decision on a candidacy is taken, arranging the Winter Olympics in Stockholm/Åre would of course have a major impact on Swedish sports and on the country as a whole. In March, the Land and Environmental Court issued a favourable ruling on the planned expansion of the airport in Sälen. Work on arranging funding is currently underway, with the aim of having the airport up and running in time for winter 2015/16. The Company s management agreement with Andermatt expired in September. Discussions on a new agreement, which would have a stronger focus on marketing, sales and IT support, are ongoing. CURRENT BOOKINGS Interest in booking winter holidays remains strong. The combination of stronger economic activity and favourable weather conditions in the summer works in favour of SkiStar, as does the nice winter season that we experienced. The warm and sunny summer has had a negative impact on new bookings, however, although bookings have picked up again since September. In early October, booking volumes were 1% higher than the year before, and we are confident about the coming winter season. See you on the slopes this winter! Mats Årjes CEO COMMENTS FROM MATS 7

8 OUR INDUSTRY Alpine skiing is practiced on every continent. THE GLOBAL TOURISM INDUSTRY Tourism is one of the world s largest industries. According to the UN World Tourism Organization (UNWTO), which publishes statistics on global tourism, the sector accounts for around 6% of total global exports of goods and services. In the service sector, tourism accounts for around 30% of exports. According to UNWTO, global tourism has increased by approximately 96% since 1995, in terms of the number of visits (tourist arrivals). In 2012, tourist arrivals increased by 4% globally, to 1,035 million, while turnover in the tourism industry (tourism receipts) increased by 4% (in fixed prices) to USD 1,075 billion. Europe is the most visited region, accounting for over half of the world s foreign visits. The most visited country is France, which attracts around 80 million tourist visits annually. In 2012, the number of visitors in Europe increased by 3%. Asia saw the strongest growth in the number of visitors, with an increase of 7%, followed by Africa with 6% and America with 5%. The number of visitors in the Middle East fell by 5% and, despite gains in some countries, we have yet to see a reversal of the negative trend in this region. In line with longer-term trends, emerging markets saw a stronger growth rate, 4.1%, than the more mature markets, at 3.6%. Despite the challenges faced by the global economy, the volume of visits in 2013 is predicted to increase at a similar pace as in 2012, i.e. by 3-4%. UNWTO s long-term forecast envisages an annual growth rate in visits of 4.1% up to THE SWEDISH TOURISM INDUSTRY The tourism industry is an important industry also in Sweden. Accounting for about 3% of GDP and employing more than 168,000, tourism makes a significant contribution to the Swedish economy. According to the Swedish Agency for Economic and Regional Growth, total tourist consumption in Sweden has increased by nearly 83.5% in current prices since In 2012, total tourist consumption increased by 4.8% to SEK billion. Of this, SEK 169 billion (61%) refers to tourist consumption by Swedes in Sweden. Swedes tourist consumption, broken down by private and business travel, grew by 2.8% to SEK billion for private travel and by 4.1% to SEK 47.6 billion for business travel. Of the total tourist consumption, SEK billion refers to foreign visitors consumption in Sweden. The figure, which includes both private and business travellers, represents an increase of 7.5% compared with THE GLOBAL ALPINE MARKET People practice alpine skiing on every continent. Around 2,100 ski resorts have been identified around the world. The annual number of skier days has remained relatively stable, at around 400 million. Europe has the largest alpine market, with some 200 million skier days a year (one day s downhill skiing with a SkiPass is defined as one skier day). North America is the second largest market, with just under 80 million skier days a year. The largest individual markets are the United States, France and Austria, with about million skier days a year. The Nordic region Sweden, Norway and Finland accounts for around 17 million skier days a year. Historically, the market has grown by around 2% a year, but with significant variations among regions. Perhaps the fastest growing ski market today is in Eastern Europe, both in terms of skier numbers and the construction of new ski resorts. A country which is currently experiencing a strong surge in interest in skiing is Russia. One reason behind the increase in the number of skier days is thought to be that the Russian resort of Sochi is set to host the Winter Olympics in Apart from an increased interest in skiing, this will of course also contribute to a sharp increase in investments in the run-up to the Games. In most countries, ski resorts mainly attract skiers from the same country. The largest share of foreign visitors is in Andorra (95%), Austria (66%) and Switzerland (50%). In the United States and Canada, foreign skiers account for around 6% and 14%, respectively. In Sweden and Norway, the figure is 8%, and in Finland 17%. In countries like Japan, South Africa, India and Australia the proportion of foreign visitors is very low. The leading players in the industry mainly 8 OUR INDUSTRY

9 operate locally, but the last few years have seen a number of cross-border partnerships and acquisitions. In Sweden, SkiStar has made acquisitions in Norway, and in France, Compagnie des Alpes (CDA), a listed corporate group, has acquired ski resorts in both Switzerland and Italy. Ownership of ski resorts is highly fragmented. Many are family-owned and many of the companies involved are small. In Austria, ownership is entirely dominated by small, privately owned companies. In Italy, there is a strong element of ownership by credit institutions while Switzerland and France have a few, larger limited companies with broad ownership, of which a couple are listed public companies. In Japan, ski resorts and lift systems normally form part of large, privately owned conglomerates, often with associated hotel operations. In Norway, the Hafjell and Kvittfjell ski resorts have merged their operations to form a joint-owned company called Alpinco. In addition to SkiStar, Sweden is also home to Visionalis AB, for instance, which owns and manages Riksgränsen and Björkliden Fjällby AB (with operations in the Lapland destinations of Björkliden and Tärnaby). The North American market does not distinguish itself from the other markets, but is also heavily fragmented, although in recent years a restructuring process has been under way leading to fewer and ever larger companies. Behind this trend is the possibility of achieving economies of scale and the need to achieve a critical mass. Economies of scale can be achieved by coordinating purchasing activities, in operations and maintenance, and in marketing and sales. Critical mass is achieved primarily through the acquisition of competitors. This is partly about building volume and partly about generating cash flows that are adequate to offset investments in lifts, slopes and snowmaking systems, which can be very significant. Another driving force behind the restructuring of the industry is the desire of companies to establish a presence in additional geographical locations and thus reduce their weather dependency. CDA, for example, has gone one step further by investing in warm weather services such as golf resorts and amusement and theme parks. Various attempts are also being made to broaden the product range to include ski rental and ski schools, for example, with the aim of increasing the company s share of its guests total expenditure. THE 2012/13 SEASON Nordic region SkiPass sales increased in the Swedish market during the season. This is due to a combination of factors, of which favourable weather conditions in the winter, an improved economic climate and a slightly weaker Swedish krona (SEK) compared with the Danish krone (DKK) and euro (EUR) are seen as strong contributors. Another contributing factor was the calendar effect, with a small number of public holidays resulting in long holidays during the Christmas and New Year period. According to the Swedish Ski Lift Organisation (SLAO), SkiPass sales in Sweden grew by 12% to MSEK 1,267 million, excluding VAT, in winter 2012/13, compared with the previous season. The average price increase was 3.3%. The number of skier days increased by around 8%, from 7.8 million to 8.5 million. In Norway, total SkiPass sales increased by almost 14% to NOK 980 million. The average price increase in Norway was 2.2%. The total number of skier days increased from 5.2 million to 5.8 million. In Finland, SkiPass sales were EUR 58.5 million (51.2) and the number of skier days increased from 2.8 million to 2.9 million. North America The number of skier days in the United States increased by 11% to 56.6 million (51.0), which is the largest year-on-year increase in 30 years. Despite a slow early season, many ski resorts experienced a strong Christmas holiday, with the trend remaining strong all through March, which means that the number of skier days per year is back to more normal visitor levels. At the national level, visitor numbers increased in all periods of the season, with the most significant increases occurring towards the end of the season. In North America, weekends account for more than half of the total number of skier days, which is in line with previous years. Snowboarders account for around a third of the total. There are significant local variations, however. Compared with Europe, the share of snowboarders in North America is high. The Alps In the Alps, the total number of skiers increased somewhat over the past season. In France, however, the number of skier days in France remained unchanged at around 55 million. In Austria, the number of skier days increased by an impressive 8% to 54.2 million. In Switzerland, the number of skier days shrank marginally from 24.8 million to 24.7 million. In Germany, where guests, rather than skier days, are counted, the number of guests increased from 4.8 million to 5.0 million. As in North America and the Nordic countries, the largest ski resorts in the Alps account for a majority of sales. The 25 largest resorts are estimated to account for more than 60% of total revenues in the industry. COMPETITION SkiStar competes for people s disposable income. This means that, in a broader sense, SkiStar is competing with the consumer discretionary, home decoration and other industries. In the travel industry, SkiStar competes mainly with sun and beach holidays and weekend city breaks. The availability of these kinds of holidays has increased over the last 15 years. One reason for this could be that, in contrast to the alpine skiing industry, the travel industry has low barriers to entry, resulting in a glut of competing companies, which puts pressure on prices and margins. In the alpine skiing industry, the competitors are other alpine ski resorts in Scandinavia and the Alps. Statistics indicate, however, that over the years the proportion of people who choose to go abroad to ski has remained largely unchanged. Moreover, SkiStar has strong and well-known brands as well as a strong distribution channel in the form of skistar.com, which is becoming ever more important in an increasingly cluttered media landscape. Thanks to its consistently robust financial position and strong cash flows, SkiStar is also able to invest continually in everything from marketing and sales systems and training programmes for employees to new, modern forms of accommodation, lifts and snow-making facilities. This ensures that SkiStar s alpine destinations always maintain a high quality compared with its competitors. SkiStar s resorts also have good access to more densely populated areas due to their geographic proximity and the existence of reasonably priced rail, air and coach connections. INTERNATIONAL COMPARISON OF SKIPASS PRICES The UK company Snow24 produces an annual global comparison of SkiPass prices around the world. The figures show that SkiStar s SkiPass prices are competitive in the international market. Generally speaking, it can be said that comparing ski resorts with similar facilities in terms of lift capacity and total length of slopes in kilometres, SkiPass prices in Switzerland, Canada and the US are considerably higher than elsewhere. In Italy, France, Austria and Germany, prices are roughly the same or somewhat higher than SkiStar s. TRENDS Consolidation In recent years, the travel industry has undergone major consolidation. As many travel companies have narrow margins, a high turnover is crucial to ensuring that the company has sufficient resources for advertising and marketing. Competition for customers attention is intense. The Internet is the only medium showing a rapid increase with regard to both marketing and sales. Packaging and availability Many travellers are looking for a simple solution and want an easy overview of content and costs, which requires that travel providers find good ways packaging their offering and making it available to customers. Increasingly, add-on products are pre-booked along with accommodation and travel. An example of this is all-inclusive offers, which are aimed at budget-conscious travellers who want to avoid thinking about unexpected expenses and just relax. More activities A clear trend in the travel industry is that guests want to fit in more and have a wider variety of experiences during their holidays. At SkiStar s destinations, this has translated into OUR INDUSTRY 9

10 an increased range of activities, shopping and restaurants as well as significant investment in swimming pools, experience centres and other facilities. Active holidays General interest in health and well-being has increased at the same time that the trend towards staying active while on holiday has grown. Sporting experiences and activities SKIPASS SALES AT ALPINE DESTINATIONS, SEK MILLIONS TOURIST CONSUMPTION IN SWEDEN, current prices, SEK BILLIONS SEK billions /03 Sälen 03/04 Åre Source: NUTEK/SCB 04/05 05/06 06/07 Trysil Hemsedal Vemdalen Swedish leisure travellers Foreign visitors feature ever more prominently in Swedes holiday plans. Travel agencies advertising campaigns and the mass media are focusing on health and wellness, training and outdoor activities. MySkiStar is an example of a service launched by SkiStar that aims to capitalise on and strengthen consumers interest in downhill skiing as a form of exercise and socialising. Read more about MySkiStar on page /08 TOURIST VISITS globally, MILLIONS Millions /09 Idre/Grövelfjäll/Fjätervålen NOK/SEK is calculated at the exchange rate of 1:1 for 03/04 and 04/05, 1:13 for 06/07, 1:15 for 10/11, 1:18 for 05/06 and 07/08, 1:19 for 02/03 and 08/09, 1:22 for 09/10, 1:17 for 11/12 and 1:14 for 12/13. EURO/SEK is calculated at the exchange rate of 9:20 for 02/03 and 10/11, 9:10 for 03/04, 9:45 for 04/05, 9:25 for 05/06, 9:21 for 06/07, 9:40 for 07/08, 10:54 for 08/09, 9:30 for 09/10, 8:84 for 11/12 and 8:65 for 12/ / / /12 Levi /13 Ruka 2012 Source: UNWTO (United Nations World Travel Organisation) The family Doing things together and convenience are key factors in a family holiday. More and more ski resorts have the family as their most important target group and are adjusting their offering accordingly. This takes the form of wider and flatter slopes, accommodation facilities located closer to the slopes, child-minding services, ski schools, swimming facilities, cross-country ski tracks, more comfortable accommodation and a choice between self-catering and restaurants. Another change is that surface lifts are being replaced with modern chairlifts that are reliable, comfortable and have a higher capacity. Segmentation by need and desire The process of social segmentation continues, and this is having an impact on product and service development as well as marketing. In the context of increasingly fierce competition for people s time and money, niche marketing, themed holidays and specialisation are becoming increasingly important. This requires that service providers have an insight into and understand what it is that people long for. Making snow More money is being invested in snowmaking facilities, with the aim of reducing weather dependency. With a similar goal in mind, ski resorts in the Alps are investing in lifts and slopes at high altitudes, but investments in snowmaking facilities are increasing also in the Alps. Product range The leading players in the ski tourism industry are broadening their range of services to include ski schools, ski rental and sales of profile products, ski wear and equipment. Social structural factors Factors such as more leisure time and higher disposable incomes are generally favourable for the tourism industry. A parallel trend is a growing interest in fitness, outdoor activities and recreation, which is particularly favourable for the skiing industry. More and older skiers As the first major ski generation in Sweden learned to ski in the 1970s, skiers in the 55+ age group are likely to grow in number. Many people in this group still ski and plan to do so for many years to come. On the assumption that the number of children and young people that take up skiing will remain the same as in previous years, the total Nordic ski market will continue to grow. COMPARISON OF TOUR OPERATORS SkiStar 2012/13 Ticket Privatresor 2012 Resia 2012 Sales, SEKm Net sales, MSEK Income after tax, MSEK Operating margin, % Employees OUR INDUSTRY

11 4,284,000 SKIER DAYS ON THE NORDIC REGION S MOST POPULAR SLOPES OUR INDUSTRY 11

12 OPERATIONS Operations have been divided into two business areas Destinations and Property Development SIGNIFICANT EVENTS DURING THE YEAR After two years of decline, the past winter marked a trend reversal and a step towards achieving our profitability targets again. Visitor numbers increased and higher volumes were generated during all holiday periods Christmas/New Year, the winter sports holidays and the Easter holidays. The periods between New Year and the winter sports holidays, and between the winter sports holidays and Easter were somewhat weaker than in the year before. Limited opportunities to obtain leave from school are one reason behind the change in behaviour. Net sales increased to MSEK 1,665 (1,552), income before tax increased to MSEK 160 (139) and income after tax decreased to MSEK 137 (157). Earnings per share were SEK 3.49 (3.99). Non-recurring items comprise an additional charge of MSEK 12 relating to Radisson Blu in Trysil and MSEK 13 in repayments of social security contributions following a favourable outcome of a tax case. Excluding these items, the increase in income before tax was MSEK 46 (37%). The tax expense for the year is significantly higher than last year due to the fact that SkiStar s tax loss carry-forwards were fully recognised in the previous year s accounts. Through consolidation the Company s financial position has strengthened, as reflected in an equity/assets ratio of 38% (36). Following a favourable ruling by the Land and Environmental Court, plans for the construction of an airport between Sälen and Trysil have moved forward, and work on exploring opportunities to obtain publicsector funding is currently underway. SIGNIFICANT EVENTS AFTER THE END OF THE YEAR Bookings at 1 October were up 1% compared with the same date the year before. In its budget proposition, the Swedish Government has proposed to remove the tax exemption rules applying to specially assessed properties. This means that from fiscal 2014/15 onwards the full income in SkiStar s Swedish business will be taxed. It is proposed that the dividend remain unchanged at SEK 2.50 per share. LEGAL ORGANISATION Most of our Destinations business area s operations in Sweden are run by the Parent Company, SkiStar AB (publ). The operations of our Property Development business area are run through Fjällinvest AB (which is 100% owned by SkiStar AB) with the wholly-owned subsidiary Fjellinvest Norge AS. SkiStar s operations in Trysil and Hemsedal are run by SkiStar Norge AS. All subsidiaries in the Group are wholly-owned with the exception of Hammarbybacken AB, which is 91% owned by SkiStar AB. OPERATIONAL ORGANISATION During the financial year, SkiStar s operations have been divided into two business areas and a number of corporate functions. The Destinations business area consists of two areas of operation: Sweden and Norway. The other business area is Property Development. During the financial year the management team consisted of the CEO, CFO, Marketing and Sales Director and three Destination Managers, one for Åre/Vemdalen, one for Norway and one for Sälen. After 25 years with the Company, SkiStar s CFO and Executive Vice President, Magnus Sjöholm has decided to step down. Magnus will remain in his post until a successor has been recruited and installed. As of 1 September, the operational organisation has changed somewhat. Property Development will be organised under each Destination Manager, who will hold local LEGAL ORGANISATION SKISTAR AB (PUBL) 91% FJÄLLINVEST AB HAMMARBYBACKEN AB SKISTAR NORGE AS FJÄLLFÖRSÄKRINGAR AB FJÄLLINVEST NORGE AS 12 OPERATIONS

13 responsibility. Starting with the first interim report for 2013/14, all properties will be reported separately from the destinations for Sweden and Norway, respectively, and for SkiStar as a whole. CORPORATE FUNCTIONS To make the best use of SkiStar s combined resources and maximise the impact, a number of functions have been centralised (see the organisational chart below): Accounting/Finance/IR/Operational Control/Accounting/CM/Human Resources Marketing/PR/Sales/Environment/CSR IT Purchasing PROPERTY DEVELOPMENT SkiStar s Property Development business area is responsible for generating growth in accommodation at SkiStar s destinations, increasing the value of assets through development, preparing long-term development plans for future investments together with the destinations, building and developing our SkiStar Vacation Club together with Marketing/Sales, and creating business opportunities by acquiring existing accommodation facilities and developable land. More information about SkiStar s Property Development business area is found on pages DESTINATIONS Our Destinations business area is responsible for the operation of SkiStar s alpine destinations and comprises the strategic product areas Alpine Skiing/Lifts/SkiPass, Accommodation, Ski Rental and Ski Schools, which lie at the heart of SkiStar s concept. The business area is presented on pages DISTRIBUTION OF OPERATING INCOME AND EXPENSES, MSEK Operating income 2012/ /12 +/- +/- % SkiPass % Accommodation % Ski rental % Ski school % Sporting goods outlets % Property services % Other % Total operating income 1,665 1, % Operating expenses Goods for resale % Other external expenses % Staff costs % Total operating expenses -1,243-1, % GROUP OPERATING SEGMENTS, MSEK Destinations Sweden Destinations Norway All Destinations Property Development Intra-segment eliminations 2012/ / / / / / / / / / / /12 Income from external customers Income from other segments Operating expenses Operating expenses from other segments Income from associated companies Depreciation/amortisation Income for the segment Operating margin for the segment, % Group total Revenues and earnings by operating segment 1 September August Central Group expenses have been allocated based on estimated benefits. As of 1 September 2011, the Group has applied a new structure for operational monitoring. The operating segments in the Destinations business area are defined as the countries in which SkiStar operates, i.e. Sweden and Norway. The Property Development business area constitutes a separate operating segment. OPERATIVE ORGANISATION CEO / GROUP CEO ECONOMY / FINANCE / IR / OPERATIONAL MANAGEMENT / ACCOUNTING / CM / PERSONNEL MARKETING / PR / SALES / ENVIRONMENT / CSR IT PURCHASING PROPERTY DESTINATIONS / TECHNICAL DEVELOPMENT LAND DEVELOPMENT SKISTAR VACATION CLUB DESTINATIONS SWEDEN DESTINATIONS NORWAY OPERATIONS 13

14 VISION, GOALS AND STRATEGIES FOR SUCCESS SkiStar aims to be the leading player in terms of concepts, an integrated approach and development. 14 VISION, GOALS AND STRATEGIES FOR SUCCESS

15 VISION SkiStar s vision is to create memorable winter experiences as the leading operator of European alpine destinations. BUSINESS CONCEPT By providing memorable winter experiences, SkiStar creates value for its guests, employees and other stakeholders, which in turn creates value for shareholders. GOALS Financial targets To enable a proactive strategy while balancing its operational risk, SkiStar aims to maintain a strong financial base. The target is an equity/ assets ratio in excess of 35%. Based on current interest rates, the target return on equity is 16% and the target return on capital employed 11%. These targets have been defined in relation to the yield on three-month treasury bills, which averaged 1.81% in the financial year 2012/13. The operating margin should exceed 22% over the long term. Operational targets SkiStar s growth target is an annual organic growth rate that exceeds inflation by at least 3%, on top of any growth through acquisitions. Inflation in Sweden during the financial year was 0.1%. Target achievement The overall goal is to increase the value of our shareholders capital. During the 2012/13 financial year, SkiStar s share price declined by 0.3%. The Stockholm Stock Exchange all-share index (OMXS) gained 19% over the same period. A dividend payment of SEK 2.50 (2.50) per share has been proposed. The targets for growth and equity/assets ratio have been achieved, but not the targets for return on capital employed, return on equity and operating margin. To also achieve these targets, we will need to attract more guests between holiday periods. Limited opportunities to obtain leave from school between holiday periods have led to fewer guests. For the upcoming season, we will be increasing our focus on guest categories that are not affected by school holiday periods. Target achievement figures are shown in the table below. Information on the Group s earnings performance during the financial year can be found on pages STRATEGIES Concept and business model SkiStar s core business is alpine skiing, with a focus on the guests skiing experience. Our long-term goal is to run profitable and strategic operations in alpine skiing, ski schools, ski rental and accommodation in SkiStar s own organisation at our various destinations. Another aim is to develop activities which supplement our existing portfolio of services and add value for our guests as well as SkiStar. Examples of such activities include the sale of shares through SkiStar Vacation Club, the sale of merchandise through SkiStar s own UA brand and insurance solutions through SkiStar s own insurance company, Fjällförsäkringar AB. SkiStar works to ensure that all agents at our alpine destinations maintain high levels of quality and service in order to strengthen the destinations brands and give our guests a better experience. Our Property Development business area shall, through active property development at SkiStar s destinations, create new, more modern and attractive residential units while also generating profits through sales. Operational strategies Well-managed products and services result in a higher percentage of returning guests. These, in turn, are our best marketers. By providing a well-developed infrastructure, our guests should be able to find everything they need within walking distance. Accommodation and skiing areas should be linked to provide a wide range of accommodation near the lifts. A Ski in Ski out concept enables our guests to become independent of their cars as a means of transport during their stay. Developing the Group s snowmaking systems is a high priority objective. These are modernised and expanded continually to ensure that we offer good skiing conditions regardless of the amount of natural snow. Our destinations have different profiles, and should therefore jointly attract large customer groups. SkiStar works to ensure that there is a wide range of reasonably priced transport options for each destination, primarily by concluding agreements with external players and secondarily by offering our own transport solutions. Leadership and service strategies SkiStar aims to ensure that it has a corporate culture centred on learning, high standards of performance, concern for others, an emphasis on the guest and pride in what we do. Our leadership should also encourage an attitude of openness to change to improve on previous improvements. The service we provide to our guests should be continually improved. Our strategy for achieving these objectives is based on professional selection processes in recruitment activities coupled with training and continuous follow-up. Our alpine destinations should be improved continually in dialogue with our guests and in response to their wishes, resulting in an TARGET ACHIEVEMENT, FINANCIAL TARGETS even higher number of satisfied and returning guests. Efforts to improve access and make things easier and more convenient for our guests should always be in focus. Marketing and sales strategies The primary purpose of the Company s marketing and sales strategies is to increase the number and maximise the percentage of alpine skiers at SkiStar s destinations. The SkiStar brand and SkiStar s destinations should be clearly profiled and their image strengthened through marketing and adaptation to various target groups. Coordination of sales through a single website and a single telephone number will enable increased cross-sales and better service as well as improved efficiency and optimisation of the range of accommodation options at each of our destinations. Increased advance sales will enable us to secure a higher portion of revenues at an early stage, even before the start of the season, thus reducing the risk and ensuring a more even cash flow. Increasing the share of online sales will cut sales costs and expand our customer register, providing additional scope for marketing activities. Increasing the number of visitors to our website represents an opportunity to generate add-on sales. Customers who purchase a ski trip to a SkiStar destination are customers of SkiStar and guests at their chosen destination. Environmental and CSR strategies Through active environmental work, SkiStar seeks to minimise the environmental impact of its operations. SkiStar aims to offer its guests active holidays that improve their health and well-being, with positive knock-on effects on society. Our environmental and CSR strategies should be incorporated into the Company s other strategies. Cross-learning and benchmarking SkiStar s employees have extensive experience and knowledge in operating alpine ski resorts. Meetings with industry colleagues at our various destinations ensure a continual process of cross-learning. Comparing activities and operating models at our various resorts enables us to improve the efficiency of our operations and strengthen the relationship with our guests, thus establishing a foundation for increased growth and profitability. Outcome 2012/13 Goal Outcome 2011/12 Outcome 2010/11 Equity/assets ratio, % 38 > Return on capital employed, % Return on equity, % Operating margin, % Organic growth above inflation, % 7 > VISION, GOALS AND STRATEGIES FOR SUCCESS 15

16 MARKETING AND SALES More than fifty percent of all sales take place on an advance booking basis and skistar.com is the largest sales channel. MISSION AND TARGETS The overall goal of the marketing and sales departments at the resorts 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 rental, ski schools and accommodation. Cost effectiveness shall be achieved through the prioritisation of distribution via skistar.com. Furthermore, the sales department should work to 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 brand portfolio consists of the destinations trademarks, the trademarks associated with the various destinations and the common trademarks skistar.com and SkiStar. Resort trademarks and skistar.com are the main market channels. Guests seek out these destinations for a memorable winter experience, while skistar.com is the name of the Company s website and is, primarily, for the travel agent selling package holidays to the respective destinations. This way, the various trademarks work together to increase recognition of the brand, while in turn ensuring that consumers are viewed both as guests at the destinations and customers of SkiStar. MARKETS SkiStar s customers primarily come from the Nordic countries, where Sweden, Norway and Denmark are considered home markets. During the 2012/13 season, the volume of SkiStar s largest home market Sweden increased by 2%. Norway, Denmark and other foreign markets remained unchanged. TARGET GROUPS SkiStar s target groups can be classified according to many different criteria, such as geographical location, age, interests, family situation or based on the destinations various profiles. The most important target group is families with children. In order to provide broad market cultivation, SkiStar works with different target-group-focused concepts. MARKETING AND SALES STRATEGIES Tailor-made winter holidays SkiStar s strategy is to offer each individual guest a tailor-made winter holiday, in line with their own specific wishes. Guests can choose between five different means of transport: car, bus, train, plane or boat, or a combination of these, depending primarily on the chosen destination. Transportation can, in turn, be combined with thousands of accommodation alternatives in different price ranges, everything from self-catering cabins to hotels with all amenities under one roof. Furthermore, guests can choose from an extensive selection of 16 MARKETING AND SALES

17 ski schools, ski rental options and SkiPasses. Guests also have the option of choosing the length of their holiday, whether it happens to be a weekend, a short break, an entire week or, in some cases, an even longer visit. High accessibility through skistar.com The most important sales channel is skistar.com where guests can book their entire winter holiday, including travel arrangements, accommodation, ski school, ski rental and SkiPass, all at one place. Large parts of the investments made in SkiStar s business systems relate to making it easier for customers to book on skistar.com. The aim is that all products should always be marketable through the website. The website skistar.com has more than 8.6 million visits a year. The greatest amount of traffic is during January when the number of visits per week is close to 500,000. High and stable occupancy rate A stable and high occupancy rate in our accommodation over the entire winter season forms the basis of high profitability. In order to achieve this, the sales departments work actively with differentiated pricing based on the underlying demand. In order to optimise demand during the low season, different offers and events are marketed aimed at the various target groups, such as theme weeks and events. Available beds SkiStar actively works to provide as many beds as possible. When apartments/cabins are sold through the Business Area Property Development, a contract is signed entitling SkiStar the right to let 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 letting. Reasonably priced transportation In order to secure a high occupancy rate in the accommodation, it must be easy for guests to travel to the destinations. Consequently, SkiStar actively works to secure reasonably priced transportation to the resorts via external partners. SkiStar cooperates, for example, with ferry lines in Denmark and Germany, charter companies in Russia, the UK and the Netherlands, as well as with travel agencies in all foreign markets. In addition, SkiStar cooperates domestically with a list of transporters including air, rail and bus transport. Returning guests - loyalty 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 cost of a newly recruited guest. Guests who visited any of SkiStar s destinations are continuously cultivated. For example, the guest may receive an offer to return to the same destination, or visit another destination in the same season. During December/January, large parts of the following winter season s accommodation programme are also released for booking. Returning guests have priority in terms of this release through communication via , etc. On-site sales In spring 2013, a major project designed to facilitate on-site sales at the destinations was initiated. The goal here is to ultimately be able to bring together the customer s entire buying process from advance sales and on-site sales to sales after the guest s stay. SALES CHANNELS Sales are carried out via four channels, including the Internet, telephone (call centre), over the counter at the destinations and via retailers (agents). Sales through the three first channels, so-called own sales, comprise 95%. The portion of bookings via skistar.com during the 2012/13 season was 45% (46%). As regards accommodation only, a considerable 68% (65%) of the total amount of sales took place via online bookings. A total of 5% of SkiStar s sales takes place via retailers, travel agents and transportation companies. Such intermediaries are primarily important for markets outside of Sweden and Norway. SkiStar considers its high-priority foreign markets to be Denmark, Finland, the UK, the Netherlands, Russia, the Baltic States and Northern Germany. MYSKISTAR MySkiStar is a project undertaken by the Company with the aim of inspiring more enjoyable alpine skiing, by linking skiing with SALES CHANNELS, % Advance Sales Destination Telephone Web Travel Agent Cashier sales SkiPass Accommodation Transport Ski rental Ski school Total Total PROPORTION OF GUESTS BY NATIONALITY, % digital channels. The registration of a SkiPass allows opportunities to add a further dimension to the ski experience. The user can receive rewards, can integrate and compete with other users, view ski statistics and share everything on social media. MySkiStar is accessible via the Internet, mobile websites and apps; however, it is based on the user s personal SkiPass. As of August 2013, a total of 117,000 skiers are registered on MySkiStar. Communication SkiStar s marketing aims at emphasizing the unique characteristics of each individual destination in order to provide our guests with a broad selection. Our distribution channel, skistar.com, incorporates a common graphical framework and demonstrates the fact that the destinations belong to the SkiStar family. SkiStar continuously communicates with guests who have previously visited SkiStar s destinations. Our distributed s inform these guests of, for example, various offers, discounts and discounted periods. Anyone who books an upcoming trip to one of the destinations will also receive information and offers by aimed towards simplifying the guests preparations prior to their winter vacation. As a result, guests have more leisure time, as well as more time to devote to activities at the destination. SkiStar s communication is integrated in various media channels; both current and potential guests are, thus, reached by SkiStar s marketing via television advertisements, newspaper advertising, on websites, in social media and local advertising to name a few (see examples on pages 18-19). Åre Vemdalen Sälen Hemsedal Trysil SkiStar total Sweden Norway Denmark Finland The UK The Netherlands Germany Russia Baltic States Other MARKETING AND SALES 17

18 Communication, digital media, examples The skistar.com portal, a marketing and sales channel sent to existing guests in Sweden, Norway, Denmark and other countries facebook 18 MARKETING AND SALES

19 Instagram Press Releases Communication, printed media, examples SKIAKTIVITETER UTEN MYSKISTAR SKIAKTIVITETER MED MYSKISTAR En herlig dag i bakken, akkurat som vanlig. Eller vil du teste noe nytt, spennende og utviklende? Da burde du registrere deg i MySkiStar. Det kan du gjøre når som helst på: Det eneste du trenger er skipasset ditt. Registrer WTP-nummeret på baksiden av skipasset på: skistar.com/myskistar Du kan gjøre det med en gang eller etter første dagen i bakken. Utforsk mulighetene og ha det morsomt!... eller med MySkiStar-appen. Vi lär barnen åka skidor gratis*! Snöglädje och lyckan att själv susa nerför skidbacken är något vi vill att så många barn som möjligt får uppleva. Under Kidz Prize-veckorna är därför skidskola, skidhyra och SkiPass gratis för alla barn*. skistar.com/myskistar Härliga dagar i backen och stugmys om kvällarna. Det bästa sportlovet firas i fjällen med familjen.veckorna 7-10 har vi fyllt med aktiviteter och event som passar alla åldrar. Pris från 4995 kr per boende, fyra bäddar. Läs mer och boka på skistar.com Begränsat antal platser - Först till kvarn! Läs mer och boka på skistar.com SAMLE PINS Den finnes flere hundre forskjellig pins du kan samle på. KONKURRER SJEKK KALORIFORBRENNINGEN Delta i konkurranser og ha muligheten til å vinne fine premier. Se hvor mange kalorier du har kvittet deg med i løpet av skidagen. SE STATISTIKK FINN ANDRE Se hvor aktiv du har vært og sammenlign med andre. Se hvor i skianlegget familie og venner befinner seg. UTFORDRE Få med deg familie og venner på egne eller andres utfordringer. rsommere Så mye mo d blir det me DEL Knytt kontoen til Facebook og Twitter og del skidagen med andre VINN 5 Bare ved å delta får du gode tilbud du straks kan benytte deg av. FÅ TRENINGSTIPS Få tilgang til gratis treningstips som styrker kroppen og gjør skiaktivitetene enda bedre. % FÅ TILBUD SEK/NOK BLI MED NÅ! Få tilsendt tilbud direkte til profilen din, for eksempel gratis kaffe eller rabatt på neste skiferie. GRATIS GRUPPSKIDSKOLA GRATIS SKIDHYRA GRATIS SKIPASS Oppdag MySkiStar ved å registrere skipasset ditt MySkiStar er gratis. Det eneste du trenger er skipasset ditt. Følg med på dine egne og andres skiaktiviteter på *Vistelser vecka (5/1-7/2) för barn t o m 7 år i Sälen, Åre, Vemdalen samt t o m 6 år i Trysil och Hemsedal. Rabatten gäller vid bokning av minst ett 5 dagar vuxen-skipass. Begränsat antal platser. Erbjudandet gäller t o m 31/ skistar.com/myskistar *Gäller ej säsongspass. Prisexemplet avser 4 bäddars stuga/lgh sön-sön vecka med reservation för slutförsäljning. Boka på skistar.com Advertisements in magazines and daily newspapers Vi lærer børnene at stå på ski for 0 kroner*! God Jul önskar SkiStar B Boka in lång-ledigt redan idag! Sverige Porto betalt Avs: 21 Grams, Box 43, Stockholm Jullovet är långt och härligt även i år. I fjällen du ett riktigt bra sådant får. Julfirande i fjällen är något minnesvärt för hela familjen. Snötyngda granar, frisk fjälluft, smittande skratt i sittliften och dagar fyllda med skidåkning. När mörkret faller på infinner sig stugmyset och tid för avkoppling och god mat. Ta ut fem semesterdagar under jul och nyår, så blir du ledig upp till två veckor. Ta med nära och kära - boka idag så bjuder vi på tomte på julafton! Begränsat antal tomtar först till kvarn! Boka nu på skistar.com DKK 0 God Jul Boka boende under julen så bjuder vi på tomte För dig som bokar minst 7 dygns boende med ankomst 20-22/ Gäller endast nya boendebokningar gjorda 17 juni tom 18 aug. Ansök med ditt bokningsnummer på skistar.com Postcards GRATIS GRUPPESKISKOLE GRATIS SKIUDLEJNING GRATIS SKIPASS *Ophold i uge (5/1-7/2) for børn t.o.m. 7 år i Sälen, Åre, Vemdalen samt t.o.m. 6 år i Trysil og Hemsedal. Rabatten gælder ved booking af mindst ét 5-dages voksen-skipass. Begrænset antal pladser. Tilbuddet gælder t.o.m. 31/ Television advertisements Outdoor advertising M A RKE TI NG A ND SALE S 19

20 EMPLOYEES 20 EMPLOYEES

21 SKISTAR S HR-VISION SkiStar will create a business culture characterised by learning, high performance standards, care, focus on guests and pride in one s work. Employees are to have an attitude characterised by a willingness to adapt. SATISFIED EMPLOYEES AND GOOD SERVICE PROVIDE RESULTS Motivated and satisfied employees provide better service. Good service is one of the most important reasons why guests return to one of SkiStar s destinations, since a large part of the guest s experience is in how welcome they are made to feel by the personnel. Satisfied returning customers are the foundation of SkiStar s profitability. SkiStar works with various programmes in order to continually improve the service provided to our guests. MEASURING VALUES MAPPING OUR TARGETS Feedback regarding the guests experiences plays a crucial role in our efforts to improve service. Consequently, SkiStar has created a tool with which we can measure how the guests experience the employees fulfilment of SkiStar s basic values. The results are reported digitally in the form of a target map. The target map is created over the entire duration of the winter season and the results are monitored on an ongoing basis. EMPLOYEE SURVEY During 2012, a survey among our employees was made to ensure an enjoyable and pleasant working environment and, also, to obtain their views on how the business can be improved. The results were very positive and show that 98% of our employees enjoy their work, and have fun at work. During 2013, the employee survey was followed up and three focus areas were selected in each department, destination, and overall, to further improve and to utilise employee suggestions. Information has been one of the areas of work and one of the measures to improve information within SkiStar is a new intranet. increases the quality of the selection process. For the 2012/13 season, more than 8,000 people applied for work at SkiStar s destinations. OUR WORKING ENVIRONMENT HOW GUESTS EXPERIENCE THEIR ENVIRONMENT A safe and sound working environment for SkiStar s employees is a prerequisite for being able to offer guests memorable winter experiences in a safe and secure mountain environment. SkiStar has a structured work environment organisation at each and every destination, working with preventative measures to continuously improve working conditions, by way of, for example, safety checks and inspections, as well as via the drafting of policies for the work environment. Each destination also has a well-developed emergency organisation with specially trained crisis managers. Last year, several emergency drills 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 are able to administer the provision of professional and considerate care, in order to reduce any unnecessary suffering for those affected. This applies equally to our guests, our employees and any other stakeholders. In the event of an emergency, the organisation is always, primarily, to address those who are injured and any individuals accompanying them and, secondly, to maintain confidence in SkiStar. DISTRIBUTION BY AGE, permanent employees > EQUALITY SkiStar works actively with issues of equality, together with trade unions and employers organisations. A gender equality group manages development issues. EMPLOYEE STATISTICS The average number of employees during the 2012/13 financial year increased by 34 (3%) to 1,085 (1,051). The distribution of employees over the different destinations is shown in the pie chart below. The average age of full-time employees was 42 (42), whilst the average period of employment of full-time employees was 10 (9) years. A total of 38% (38%) of the total number of employees were women. Net sales per employee increased by 3.9% to TSEK 1,535 (1,477). The number of full-time employees as per 31 August was 428 (418) and the employee turnover among full-time employees shows that 41 (28) have entered employment and 31 (38) have terminated their employment during the financial year. The number recalculated to fulltime was (403.8). During the peak season, SkiStar had a total of 2,330 (2,289) employees. The portion of full-time employees with higher education qualifications was 17% (18%), as per 31 August 2013, and SkiStar s investment in competence development totalled MSEK 3 (3) during the financial year. The majority of the training carried out to improve both skills and confidence was undertaken in-house. PERMANENT EMPLOYEES, per destination Hemsedal 12% Vemdalen 7% Trysil 16% Åre 20% Stab inkl fastighet 17% Sälen 28% RECRUITMENT A SEARCH FOR VALUES A positive corporate culture is highly valued by people seeking employment, as confirmed by internal interviews within SkiStar. A jobseeker s personal values should be matched to the values of SkiStar in order to provide a positive experience for guests, employees and the organisation. Prior to each season, close to 2,500 employment interviews are conducted and up to 1,700 individuals are recruited, including returning seasonal workers. A wellstructured recruitment programme is, therefore, one of the strategic tools available to help build a strong business culture. SkiStar has developed an online recruitment tool based on the Company s values. This tool makes the recruitment process more cost-efficient and AVERAGE NUMBER OF EMPLOYEES Persons /09 09/10 10/11 11/12 12/13 NET SALES per employee, TSEK TSEK /09 09/10 10/11 11/12 12/13 EMPLOYEES 21

22 OUR RESPONSIBILITY CODE OF CONDUCT SkiStar follows a Code of Conduct, adopted by the Company s Board. This Code contains all policies regarding the manner in which the Company is to act in relation to its stakeholders, and contains guidelines for environment and social responsibility. STAKEHOLDERS In SkiStar s business environment, there are a large number of important stakeholders. These are addressed in the Code of Conduct, based on their relationship to SkiStar. The adjacent table lists a number of examples of stakeholders, the key issues that are important to each stakeholder, as well as the measures taken by SkiStar to best protect and accommodate the stakeholders and satisfy the requirements placed upon SkiStar by the authorities, as well as the legislation and other regulations with which SkiStar is to comply. ENVIRONMENT Environmental policy SkiStar shall take the environment into consideration in all of its operations in its efforts to create a memorable winter experience. Systematic improvements will ensure that SkiStar s guests come to view SkiStar as the environmentally sound choice. SkiStar s destinations shall: Maintain the natural beauty of the mountain environment. Design and select products and services in such a manner as to limit their environmental impact during purchase, production, utilisation and disposal. Make every effort to continually minimise each significant negative environmental impact by reducing, in relative terms, the use of natural resources (materials, fuels and energy) and by reducing the amount of waste products (materials, emissions to land, air and water). Continually improve employees environmental knowledge and awareness. Energy policy It is SkiStar s goal to conduct operations adapted to the environment with as low energy consumption as possible. This implies that SkiStar strives to make its energy consumption efficient and to maintain energy utilisation at the lowest level possible in relation to its operations. Snow making, property management and ski lifts are all processes requiring a great deal of energy. In order to achieve energy efficiency, SkiStar should systematically identify and analyse energy use, as well as operate with as low energy consumption as financially plausible. Moreover, SkiStar should focus on the energy efficiency of new investments, visualise energy usage for individual employees, and, together with them, find solutions as to how energy consumption can be reduced without compromising product quality. SkiStar shall also use renewable energy, wherever possible, whilst CLIMATE TREND, TONNES CO 2 /MSEK /09 09/10 10/11 11/12 12/13 REPORTED CO2 EMISSIONS, TONNES 12/13 11/12 Fuel* 5,219 4,985 Transportation** Heating*** Electricity**** Total 5,568 5,206 * Increased slope areas and ever higher quality standards contribute to the increase. The clearest increase is in Hemsedal and Trysil, weather-related. ** The increase is mostly due to increased air travel by the staff. *** Concerns district heating. **** As of 2007/08, all destinations use renewable energy, Good Environmental Choices and EPD Water or equivalent eco-labelling. As of 1 January 2013, however, Åre no longer trades Good Environmental Choice electricity. 22 OUR RESPONSIBILITY

23 abiding by the rules and regulations applicable to the operations regarding energy utilisation. Examples of environmental and energy efficiency measures implemented Follow-up on carbon dioxide (CO 2 ) emissions caused by the operations. See the table on the previous page. The operations of SkiStar are geographically dispersed and, therefore, physical meetings are replaced by telephone, web or video conferences whenever possible. SkiStar buys, to the greatest extent possible, its electricity and heating from renewable sources. Continuous upgrading of the snow systems to more modern, efficient and low-energy systems. SkiStar is a part owner of Dala Vindkraft Ekonomisk Förening, as well as Dala Vind AB, as part of the Company s focus on renewable energy and climate-neutral power production, and also in order to make it possible for the municipalities, the County of Dalarna, Sweden and the EU to meet their climate targets. SkiStar, together with other investors, operates three heating plants, two heating plants in Sälen, in Lindvallen and in Tandådalen, as well as one in Hemsedal. Planning work for recycling and reinserting excess heat from compressors used for snow-creation back to the district heating network. Accommodation is, to the greatest extent possible, built by local construction companies, using locally sourced recycled materials. Existing vegetation on the land is preserved and replanted, and trees in the vicinity are protected during the construction period. Continuous work to prevent erosion of the slopes through the building of dams and planting of vegetation. The vast majority of newly constructed accommodation is adjacent to the lift systems so-called Ski In Ski Out which means less car travel at the destinations. SOCIAL RESPONSIBILITY The guidelines adopted by SkiStar state that SkiStar supports the basic values expressed in the UN Global Compact and its ten principles on corporate social responsibility. These principles encompass regulations regarding respect for basic human rights, labour laws including regulations against child labour and forced labour corruption measures and environmental regulations. SkiStar shall contribute, as much as possible, to the improvement of financial, environmental and social conditions through an open dialogue with the relevant interest groups in the community. Consequently, SkiStar supports the UN Millennium Development Goals. SkiStar supports and respects the preservation of international resolutions on human rights. SkiStar shall ensure that it does not, in any manner, contribute to, benefit from or facilitate the violation of human rights. HEALTH AND ACTIVE LIFESTYLE As SkiStar believes that an active lifestyle with friends and family contributes significantly to a healthy and fulfilling life, the Company is constantly looking for new opportunities to create the conditions for such a lifestyle. The general interest in health and well-being has increased and the trend to stay active while away on holiday is also growing. The ski community MySkiStar and the SkiStar Experience concept are examples of services that SkiStar has introduced to seize upon and reinforce the guests interest in alpine skiing as a means of exercising and socialising. National efforts and local involvement SkiStar collaborates with several different organisations and projects in the areas of environment, social responsibility and health and active lifestyle. This concerns both projects at the national level and support of local initiatives and activities. Below are some examples: ENVIRONMENT Panta Mera (Swedish can and bottle recycling drive). Cans and PET bottles are collected in containers and igloos labelled Panta Mera at the destinations. The return on the cans is donated by SkiStar to the project Alla på snö (Snow for Everybody). Participating in the climate manifestation Earth Hour to inspire guests and employees to conserve energy for a brighter future. SOCIAL RESPONSIBILITY Min Stora Dag (My Big Day) works with granting the wishes of critically ill children. Together with volunteers and SkiStar personnel, several Min Stora Dag events have been held at SkiStar destinations. Stefans Stuga, next to Snötorget in Lindvallen, is a specially designed building, adjacent to the lift systems, intended to be a place where families affected by cancer can relax, socialize, experience, and be together. Stefans Stuga is part of the foundation the Stefan Paulsson Cancer Fund. HEALTH AND ACTIVE LIFESTYLE Alla på snö, a collaboration between the Swedish Ski Association and the Swedish Ski Council, aimed at inspiring children to an active and healthy lifestyle through opportunities to try skiing. Team sponsor to the Ski Team Sweden Alpine, in order to increase interest in skiing and create the resources for training and competing. STAKEHOLDERS Examples of key issues Examples of management within SkiStar GUESTS Service Guest surveys as a basis to improve satisfaction. Safety Thorough safety routines. Crisis management policy, with an established plan of action for emergencies and thorough routines. EMLOYEES PARTNERS AND OTHER STAKEHOLDERS SHAREHOLDERS Safe working environment Diversity and equality Freedom of competition Company security Financial reporting and information affecting share value Insider information and insider Trading Work environment policy. Continuous improvement of the work environment, through safety inspections and health and safety plans. Equality plan that protects the equal rights of all employees and promotes increased diversity. Policy about bribes to ensure that employees do not participate in activities that hamper competition. IT and security policy makes sure that all usage of IT and phone systems is in the interest of the Company. SkiStar AB is listed on the Nasdaq OMX Mid Cap Stockholm and has explicit guidelines as to how, when, and by whom, reports and information affecting share value is communicated. Employees with access to insider information are covered by the Insider Trading Act. OUR RESPONSIBILITY 23

24 RISKS AND OPPORTUNITIES SkiStar s operations are well adapted to seasonal variations. 24 RISKS AND OPPORTUNITIES

25 OPERATIONAL RISKS Seasonal dependency The majority of SkiStar s revenues are generated during the period December-April. SkiStar s operations are well adapted to seasonal variations, not least in terms of the workforce. The majority of the winter bookings are made prior to the commencement of the season. With an increased portion of sales paid in advance, business transactions are concluded at an earlier point in time, which, in turn, decreases operational risk. Dependency on climate and weather The number of guests at SkiStar s destinations is affected by weather and snow conditions. A late winter, with poor access to cold weather and natural snow leading up to the week of Christmas, results in lower demand. A lower demand can also arise in winters with long periods of cold weather and good snow conditions in the more densely populated parts of southern Scandinavia, as snow, cold weather and skiing are available closer to home. SkiStar meets these risks by continuously developing its snow systems, in order to guarantee skiing, and by executing strategic sales to ensure that a considerable portion of the available accommodation capacity is booked prior to the Christmas week, which marks the start of the high season. The impact of the greenhouse effect has been vigorously debated for some time. Most scientists are in agreement that global warming is taking place; however, it is very difficult to predict the resulting regional and local effects, which means that certain regions may experience unchanged, or even declining, temperatures. A milder climate may, in the long run, give rise to shorter winter seasons, with later winters and an earlier spring. For instance, should SkiStar s destinations start the season one week later than usual and end one week earlier, the Company s income would be only marginally affected, as the majority of guests visit the destinations between Christmas week and the middle of April. The Group s weather risks are also limited, due to the fact that the destinations are geographically situated in a variety of locations and, thereby, enjoy varying weather conditions and climates. SkiStar s destinations are rapidly developing their snow-making facilities in order to ensure, in both the short and long term, good skiing for guests during the entire winter season. Business cycle Fluctuations in disposable income impact private consumption, which, in turn, affects people s ability to take winter holidays. SkiStar s historical sales development and earnings trends show that the Company has been quite capable of handling swings in the business cycle. A large portion of SkiStar s guests are families who, to a large extent, return year after year, and for whom the winter holiday is a high priority. The dependency on the Swedish economic climate is reduced by the fact that there are also operations in Norway. Competition Sun and sea holidays and weekend city trips are considered to comprise SkiStar s main competitors; however, other industries also compete for customer s disposable income, such as luxury items and investments in the home. Other competitors are comprised of other alpine ski resorts in Scandinavia and the Alps. The alpine ski industry has high start-up costs, which limits competition. Extensive investments in service-minded staff, management, modern lifts and snow systems, IT, restaurants, etc., ensure that SkiStar s destinations maintain a high level of quality in which the guests winter experiences and comfort are also enhanced year after year. SkiStar s destinations are highly accessible from urban areas due to their geographical proximity and reasonably priced transport solutions in the form of railway, air and bus connections. SkiStar s product and service offerings are highly accessible to SkiStar s guests via its online marketing and sales system, which facilitates the booking process for guests. Other important competitive factors include a strong financial position, the well-known and attractive brand, and a strong cash flow. Expansion SkiStar s strategy for growth primarily consists of improved utilisation of the existing destinations and the development of product and service offerings. Secondarily, growth is stimulated by the acquisition or leasing of other ski resorts. All of the acquisitions which SkiStar has undertaken have developed well and have contributed significantly to SkiStar s success. During 1997, Tandådalen & Hundfjället AB was acquired, followed by Åre Vemdalen AB in 1999, Hemsedal Skisenter AS in 2000 and Trysilfjellet Alpin AS in The management agreement with Andermatt expired in September. Renegotiation of a new agreement, which is more focused on marketing, sales and IT, is under way. SkiStar s well-established and well-developed concept for the operation of alpine destinations is a good basis for further successful expansion. Bed capacity and occupancy rate The profitability of alpine destinations is dependent on the number of available beds and the occupancy rates. It is important that SkiStar retains control over a high bed capacity, in order to optimize occupancy by adapting to changes in demand and by setting the right rates for accommodation throughout the season. SkiStar actively works to increase the number of beds at its destinations and to increase the proportion of beds mediated by SkiStar. It is also important that older cabins and apartments are modernised in order to maintain demand. In addition to SkiStar, new investments in cabins and apartments have primarily been undertaken by external stakeholders or jointly-owned companies. Skiers strong interest in SkiStar s destinations increases the attractiveness of the Company to investment capitalists, which leads to long-term growth in tourist beds and the development of various accommodation alternatives. Employees Salary costs are the Company s single largest expense item. SkiStar s continued success is dependent on motivated and committed employees. In order to retain key personnel, SkiStar works with leadership training and incentive programmes in which, amongst other things, personnel have been offered the opportunity to purchase convertible debentures during both 2003 and 2007, for a total of MSEK 55. SkiStar s management consists of the CEO, the deputy CEO, also CFO, the Marketing and Sales Manager, the Technical Director, also Resort Manager for the Norwegian resorts Hemsedal and Trysil, as well as two Resort Managers in Sweden; one from Åre-Vemdalen and one from Sälen. As per 31 August 2013, the management group held a total of 579,568 Class B shares in the Company. In order to increase efficiency, awareness and commitment amongst personnel, SkiStar works extensively on leadership issues. The personnel s service level in relation to the guests is an important part of the guests total experience. Consequently, a deterioration in the possibility of recruiting qualified seasonal personnel during a strong economic cycle, when unemployment is low, constitutes a risk. Safety issues SkiStar actively works with safety issues by identifying and rectifying the risk of accident and also by proactively working with issues connected to the working environment. Risk analyses are continually executed at all destinations in order to ensure sufficient insurance protection and to minimise the various types of risk. A comprehensive crisis plan for SkiStar has also been produced to prepare the Company for any possible accidents or unforeseen incidents. FINANCIAL RISKS AND OPPORTUNITIES Currency risks The fluctuation of local currencies against foreign currencies impacts travel habits and, thus, can affect the number of guests at SkiStar s alpine destinations. The Group is also impacted by the relationship between the Swedish and Norwegian currencies. SkiStar does not hedge its Norwegian operations. Hedging is done for larger investments, mostly purchases of lifts, snow systems and snow grooming equipment, which are often made in EUR. Starting in the summer of 2013, Danish customers have the option to make their reservation in DKK. SkiStar has hedged 60% of estimated cash flows in DKK. Investments and interest rates The Alpine ski industry demands major capital investments in order to maintain and increase RISKS AND OPPORTUNITIES 25

26 competitiveness. SkiStar has a strong cash flow, which enables a high level of internallyfinanced investments. Should interest rates increase, the cash flow can be used to more quickly amortise loans and, thereby, decrease the financial burden on the Company. At present, external borrowing only takes place in the local currencies, SEK and NOK. Parts of the loan portfolio have been hedged through interest derivatives with longer durations. OTHER RISKS AND OPPORTUNITIES Electricity costs SkiStar s operations consume a great deal of electricity. Consequently, variations in electricity rates impact the Group s total expenses and income. According to established policy, the major portion of the Group s e lectricity consumption is obtained on the basis of fixed or local prices. Approximately 52% of the electricity prices for the 2012/13 season were fixed and local energy producers supplied approximately 36% of the Group s electricity consumption at local prices or fund management, which are normally lower than market prices on the electricity market, Nord Pool. These local prices fluctuate significantly less than market prices, and the fund price is set at a fixed price the quarter before the start of consumption. Approximately 12% of the expected electricity consumption for the 2013/14 season will be directly impacted by fluctuations in market prices. During the coming financial year, SkiStar anticipates that approximately 1.5% of its total energy needs will come from wind power plants in Dalarna, of which SkiStar is a part-owner. Together with other investors, SkiStar has built three thermal power stations, two in Sälen, located in Lindvallen and in Tandådalen, and one in Hemsedal. The heating plant in Lindvallen provides power to larger properties in the southern area of Lindvallen. The Tandådalen heating plant provides power to the central parts of Tandådalen, as well as the cabin area of Solbacken. In Hemsedal, the heating plant provides power to the entire Alpine Lodge, and is adapted for future needs in the Fjelland area. The heating plants are run using locally produced, renewable forest fuel. Fuel prices Many of SkiStar s guests use private cars to travel to their destinations. This mode of travel is impacted by fuel prices and taxation on company cars. The close proximity of alpine destinations to population centres and other alternative forms of travel, such as railway, reduce the negative consequences of increased petrol prices. Newer cars with significantly more energy efficient engines are also a positive development which will result in lower travel costs. Changes in laws and regulations Changes in laws and regulations concerning SkiStar s operations can, of course, impact operations and income. At present, the Company knows of no upcoming changes in laws and regulations which would have a significant impact on the Company. CURRENT DISPUTES SkiStar has received a summons to appear in court together with two former Board members of Spray AB, related to the sale of a company which took place before SkiStar acquired Spray AB in The claimant, CA Fastigheter, has called for the transaction to be reversed in an amount equivalent to the purchase consideration of MSEK 17, plus interest. SkiStar has not reserved any expenses in relation to the summons, as it is not considered likely that CA Fastigheter s claim will be upheld. SENSITIVITY ANALYSIS The sensitivity analysis below describes the manner in which the Group s income is impacted by changes in a number of the Group s most important variables. Assumptions regarding the impact of the occupancy rate on income are based on all accommodation mediated via SkiStar and refer only to the impact on the sale of SkiPasses. Changes in other types of revenue are deemed, in the sensitivity analysis, to be neutralised by the increase or decrease of expenses. In calculating the sensitivity of electricity consumption, only the portion of electricity consumption directly impacted by changes in market price has been taken into consideration. In calculating the sensitivity of a change in interest rate levels, the loans affected by a change in the interest rate levels have been taken into consideration. FORECASTS SkiStar has previously decided not to provide an earnings forecast. Instead, the interim reports provide information regarding the current status of bookings. SENSITIVITY ANALYSIS Change Impact on results Occupancy +/-10% +/-51 MSEK SkiPass Prices +/-10% +/-93 MSEK Interest +/-1% -/+12 MSEK Salary costs +/-10% -/+49 MSEK Market price of electricity +/-10 öre -/+ 0 MSEK Exchange rate NOK/SEK +/-10% +/-1 MSEK 26 RISKS AND OPPORTUNITIES

27 RISKS AND OPPORTUNITIES 27

28 THE SKISTAR SHARE The SkiStar share has been listed on the Stockholm Stock Exchange since HISTORY The Class B share is listed on the Nasdaq OMX Mid Cap Stockholm. The share was listed on 8 July 1994 on the Stockholm Stock Exchange OTC list. At the time of listing, the share price was SEK 9 adjusted for share splits. SHARE STRUCTURE On 31 August 2012, share capital amounted to SEK 19,594,014 distributed among 39,188,028 shares, of which 1,824,000 are Class A shares entitling the holder to 10 votes per share and 37,364,028 are Class B shares entitling the holder to one vote per share. All shares have equal rights to distribution. SHARE PRICE DEVELOPMENT AND SALES During the financial year 2012/13, the share price decreased by SEK 0.25 (0.3%) to SEK The Stockholm Stock Exchange s total index (OMXS) increased by 19% during the same period. Since the Company was listed in 1994, the market price has increased from SEK 9 to SEK During the same period, dividends have been provided at SEK per share, including a dividend of SEK 2.50 proposed by the Board for the 2012/13 financial year. During the period 1 September 2012 to 31 August 2013, a total of 6,700,402 (6,114,565) shares in SkiStar were traded on the Stockholm Stock Exchange at a value of MSEK 535 (503). The turnover of SkiStar shares has increased after Investment AB Öresund distributed 2,381,852 SkiStar shares to their shareholders, resulting in the number of shareholders almost having been doubled. The turnover rate for shares amounted to 18% (16), compared to 68% (85) for the Stockholm Stock Exchange as a whole. The lowest price of SEK was noted on 24 June 2013, and the highest price paid was SEK 89.00, noted on 20 February On 31 August 2013, SkiStar s market value amounted to MSEK 3,174 (3,184). BETA VALUE The beta value of SkiStar s Class B share was 0.29 on 31 August The beta value is based on the Company s share price over the past 24 months and indicates the degree to which the share price has fluctuated compared to the stock exchange index. If a share has the same price fluctuation as the stock exchange index, the share s beta value is equal to 1.0. The SkiStar share s beta value of 0.29, thus, implies that the share displays less share price volatility than the Stock Exchange, on average. SHAREHOLDERS According to the shareholders register kept by Euroclear Sweden AB, there were 31,162 (16,648) shareholders on 31 August The large increase in the number of shareholders is due to Investment AB Öresund having distributed 2,381,852 SkiStar shares to its shareholders. At the end of the financial year, the ten largest shareholders accounted for 60% (64) of the capital and 72% (75) of the votes. Foreign shareholders accounted for 9% (9) and Swedish institutional owners for 21% (28) of the capital. Significant changes in holdings amongst major owners during the financial year included Investment AB Öresund decreasing its holdings significantly by distributing SkiStar shares to its shareholders, and Lannebo Småbolag Fonder and Handelsbanken Fonder also decreasing their holdings. JPM Chase NA, Mats Qviberg and family, the Fourth Swedish National Pension Fund and Banque Öhman S.A. have increased their holdings. Among new major owners are AMF Aktiefond, which owns 300,000 Class B shares, and Catella Sverige Select, which owns 200,000 Class B shares. DIVIDEND POLICY SkiStar s dividend policy is to annually distribute a minimum of 50% of its income after tax. The policy is based upon SkiStar s strong financial base, combined with a strong cash flow which allows a generous dividend policy, at the same time as allowing investments to be financed by the Company s own funds. The proposed dividend of SEK 2.50 (2.50) per share corresponds to 72% (63) of income after tax, implying a direct return of 3.1% (3.1), based on the market value on 31 August. In total, the proposed dividend amounts to MSEK 98 (98). The record date for payments to the Swedish shareholders is proposed to be 18 December Payment will be disbursed through Euroclear Sweden AB on 23 December THE SKISTAR SHARE

29 SKISTAR, CLASS B SHARE EARNINGS AND DIVIDENDS PER SHARE, SEK 160 B-Share OMX Stockholm_PI Share trading volume (1000s) SEK /09 09/10 10/11 11/12 12/13 Profit/share Dividend/share OWNERSHIP STRUCTURE, 31 AUGUST 2013 Number of Number of Holdings Number of owners % A-shares B-shares Capital, % Votes, % , % 434, , % 1,214, ,000 5, % 2,695, ,001-5,000 1, % 2,831, ,001-10, % 811, ,001-20, % 943, ,001-50, % 1,394, , , % 1,916, , % 1,824,000 25,120, Totalt 31, % 1,824,000 37,364, SHARE CAPITAL DEVELOPMENT Year and transaction Increase in number of shares Nominal amount per share Total number of shares Change in share capital, SEK Total share capital, SEK 1992 Established ,000 5,000, New share issue 150, ,000 1,500,000 6,500, Conversion 160, ,405 1,604,050 8,104, Split 5:1 3,241, ,052,025 8,104, New share issue 2,337, ,389,750 4,675,450 12,779, New share issue 200, ,589, ,000 13,179, Conversion 250, ,839, ,000 13,679, Conversion 250, ,089, ,000 14,179, New share issue 2,450, ,539,750 4,900,000 19,079, New share issue 100, ,639, ,146 19,279, Split 2:1 9,639, ,279,646 19,279, Conversion 183, ,463, ,566 19,463, Conversion 64, ,528,034 64,822 19,528, Split 2:1 19,528, ,056,068 19,528, Conversion 24, ,080,078 12,005 19,540, Conversion 87, ,167,991 43,956:50 19,583, Conversion 20, ,188,028 10,018:50 19,594,014 THE SKISTAR SHARE 29

30 SHARE STRUCTURE, 31 AUGUST 2013 Number Number Class of shares of shares of votes Capital, % Votes, % A 10 Votes 1,824,000 18,240, B 1 Vote 37,364,028 37,364, Total 39,188,028 55,604, OWNERSHIP CATEGORIES, 31 AUGUST 2013 Category Number of shares Participations, % Swedish private individuals 27,290, Swedish institutional ownership 8,224, Foreign private individuals 77, Foreign institutional ownership 3,596, Total 39,188, LARGEST SHAREHOLDERS 31 AUGUST 2013 Shareholder A-Shares B-Shares Capital, % Votes, % Mats Paulsson including company and family 1,824,000 6,583, % 44.64% Erik Paulsson including company and family 7,543, % 13.56% Lima Jordägande Sockenmän 1,836, % 3.30% Per-Uno Sandberg 1,525, % 2.74% Investment AB Öresund 916, % 1.65% Mats Qviberg including family 909, % 1.63% JPM Chase NA 824, % 1.48% Lannebo Småbolag Fonder 632, % 1.14% The Fourth Swedish National Pension Fund 434, % 0.78% SEB Sverigefond 400, % 0.72% Nordea Bank Norge Nominee 334, % 0.60% Banque Öhman S.A. 332, % 0.59% Mats Årjes including company 320, % 0.58% Handelsbanken Fonder 300, % 0.54% AMF Aktiefond 300, % 0.54% Swedbank Robur Småbolagsfond Sverige 265, % 0.48% Swedbank Robur Småbolagsfond Norden 248, % 0.47% Skialp AS 204, % 0.37% Catella Sverige Select 200, % 0.36% Other 13,252, % 23.83% Total 1,824,000 37,364, % % DATA PER SHARE 2012/ / / / /09 Share price, SEK 81:00 81:25 97:50 123:75 111:00 Average number of shares 39,188,028 39,188,028 39,188,028 39,188,028 39,188,028 Number of shares after full conversion 39,188,028 39,438,028 39,438,028 39,438,028 39,438,028 Income, SEK 3:49 3:99 4:61 8:52 6:96 Income after full conversion, SEK 3:49 3:99 4:58 8:46 6:92 Cash flow before changes in working capital, SEK 9:26 8:46 9:44 13:62 12:81 Cash flow from operating activities, SEK 10:18 7:94 9:32 12:51 12:57 Share price/cash flow P/E ratio Dividend, SEK 2:50 2:50 3:50 5:50 5:00 Direct return, % Equity, SEK Share price/equity, % THE SKISTAR SHARE

31 SHAREHOLDER BENEFITS Shareholders in SkiStar can take advantage of a wide range of benefi ts Many of SkiStar s shareholders are also guests at SkiStar resorts. As guests, shareholders gain firsthand experience of the Company s operations. SkiStars Shareholders owning more than 200 SkiStar shares are entitled to discounts on all of SkiStars destinations. These discounts amount to 15% on SkiPass, ski rentals and ski schools arranged by SkiStar, and also apply to the families of shareholders (wife/husband/partner and children under 18). The easiest way to take advantage of these discounts is by advance booking at skistar.com. For further details regarding how to register in the shareholders register and about shareholder benefits, please visit skistar.com. EXAMPLE On 1 September 2012, Kristina purchased 200 SkiStar shares for SEK 16,250. During the winter school holidays, she and her husband, together with their two children, aged 10 and 12, visited Sälen for a ski holiday. One year later, on 31 August 2013, Kristina had received the following returns on her SkiStar shares. Dividend SEK 2.50/share x 200 shares + SEK % discount on family SkiPasses 15% discount on family ski hire day adult SkiPasses at SEK 1,715 each plus day children s SkiPasses at SEK 1,370 each day complete sets of adult ski equipment, medium at SEK 805 each plus day complete sets of children s ski equipment, medium, at SEK 370 each SEK SEK 15% discount on family ski school 4 group ski school courses at SEK SEK 558 Total return, SEK 2,336 Total return, % 14.4% SHAREHOLDER BENEFITS 31

32 BUSINESS AREA DESTINATIONS SkiStar operates the five largest ski resorts in the nordic region, where do you want to go? 32 BUSINESS AREA DESTINATIONS

33 LOCATION OF THE DESTINATIONS SkiStar owns and operates ski resorts in alpine destinations in Sälen, Åre and Vemdalen in Sweden and in Hemsedal and Trysil in Norway. Sälen is situated in the north-western part of the province of Dalarna, 420 km from Stockholm. Vemdalen is situated on the border between the provinces of Jämtland and Härjedalen, 480 km northwest of Stockholm. Åre is situated in Jämtland, 650 km northwest of Stockholm. Hemsedal is situated 230 km northwest of Oslo and Trysil 210 km northeast of Oslo. STRATEGIC PRODUCT AREAS Alpine Skiing/Ski Lift/SkiPass Alpine skiing is the Group s core business. The majority of SkiStar s profits are generated by the sale of SkiPasses. The marginal revenue for each additional SkiPass that is sold is high. Sales of SkiPasses during the 2012/13 financial year totalled MSEK 927 (857). The average price change was 3.3%. The Group s market share of SkiPass sales during the financial year in Sweden was 49% (50%) and in Norway it was 28% (29%). In Scandinavia, it decreased to 39% (41%). The number of skier days within the Group, whereby one skier day is a day s skiing with a SkiPass, amounted to 4,283,000 (4,084,000). Mediated accommodation In order to ensure its operations, SkiStar needs to oversee the leasing of a large number of beds at all of its destinations. In this manner, the occupancy rate can be optimized and possible weak sales can be corrected at an early stage via proactive marketing efforts. The occupancy rate in cabins and apartments owned and mediated by the Group, amounted during the 2012/13 season (Christmas week 30 April) to 74% (70%). Income from accommodations amounted to MSEK 205 (202). Ski Rental In order to ensure that sufficient amounts of ski equipment are available for rental and that the equipment is of the required quality, ski rental operations have been identified as a strategically important area for SkiStar. During the financial year, SkiStar operated a total of 24 ski rental outlets, nine in Sälen, eight in Åre, two in Vemdalen, two in Hemsedal and three in Trysil. Net sales from ski rentals remained unchanged at MSEK 134 (134). Ski School SkiStar operates its own ski schools in all of its destinations, except in Trysil, where SkiStar s participating interest in the ski school is 35%. Ski school operations are strategically important for SkiStar, as a life-long interest in skiing is established and long-term contacts are forged between the destination, the skiing instructors and the guests. Children and youngsters who learn to ski early in life often develop a lasting interest in the sport, which they, in turn, pass on to their children. Net sales for the ski schools amounted to MSEK 46 (45) during the financial year. The number of learners at SkiStar s wholly-owned ski schools amounted to 73,000. This figure excludes the ski school in Trysil, in which SkiStar only has a participating interest. OTHER PRODUCT AREAS Sporting goods outlets The Company operates one sporting goods outlet in each of Sälen, Åre and Hemsedal and two in Vemdalen. In all of the Group s rental locations, sports equipment associated with alpine skiing is sold. During the financial year 2012/13, the Group s sporting goods outlet operations reported net sales of MSEK 70, which is the same as in the previous year. Property Services Caretakers, carpenters, electricians, cleaners and other service personnel are employed in the product area, Property Services. Revenues within Property Services are comprised of rental income for SkiStar s premises, compensation for cabin service and cleaning. Income amounted to MSEK 124 (110) during the financial year. Other Other income includes income from events, advertising sales, kiosks, and sales of the Ski*Direct card (electronic SkiPass). Other income amounted to MSEK 159 (134) during the financial year; MSEK 21 of the increase SKI PASS SALES,per skier day, SEK SEK SKI RENTAL SALES, per skier day, SEK SEK /09 08/09 09/10 Hemsedal Sälen 09/10 Hemsedal Sälen 10/11 10/11 11/12 Trysil Vemdalen 11/12 Trysil Vemdalen 12/13 Åre 12/13 Åre compared to the previous year is attributable to the takeover of operations at Experium in Sälen. INVESTMENTS Net total investments were MSEK 106 and were comprised primarily of investments in replacements, as well as investments initiated prior to the winter season 2013/14. OCCUPANCY RATE, accommodation, % % SKI SCHOOL SALES, per skier day, SEK SEK /09 Occupancy rate 08/09 09/10 09/10 Hemsedal Sälen OSLO KÖPENHAMN 10/11 STOCKHOLM 10/11 11/12 Åre Vemdalen HELSINGFORS Number of beds / /12 12/13 Mediated beds BUSINESS AREA DESTINATIONS 33

34 DESTINATIONS SWEDEN NET SALES AND INCOME External net sales in the Destinations Swedish operations increased by MSEK 81 to MSEK 1,145 and operating profit increased by MSEK 8 to MSEK 146. Last year s income benefited from a tax dispute settled in favour of SkiStar, which meant that personnel expenses were reduced by MSEK 13. The Swedish destinations Sälen and Vemdalen report increased sales and income, while Åre report a slightly lower income compared with the previous year. Sales of SkiPasses in the Swedish operations increased by MSEK 50 (9%), to MSEK 619. EARNINGS TREND, Sweden % MSEK /10 10/11 11/12 12/ Operating margin Income from external customers OPERATING SEGMENT, MSEK Destinations Sweden 2012/ /12 Income from external customers 1,145 1,064 Income from other segments Operating expenses Operating expenses from other segments Income from associated companies - - Depreciation/amortisation Net income for the segment Operating margin for the segment, % Revenues and income per operating segment 1 September August Common Group expenses have been allocated according to assessed benefits. 34 DESTINATIONS SWEDEN

35 DESTINATIONS NORWAY NET SALES AND INCOME External net sales in the Destinations Norwegian operations increased by MSEK 27 to MSEK 514 and the operating profit increased by MSEK 16 to MSEK 55. Trysil and Hemsedal report increases of sales and operating profit for the financial year. The sales of SkiPasses decreased in local currency by MNOK 24 (10%) to MNOK 271, and in SEK by MSEK 20 (7%) to MSEK 308. EARNINGS TREND, Norway % MSEK OPERATING SEGMENT, MSEK Destinations Norway 2012/ /12 Income from external customers Income from other segments 6 9 Operating expenses Operating expenses from other segments Income from associated companies 1 1 Depreciation/amortisation Net income for the segment Operating margin for the segment, % /10 10/11 11/12 12/13 Revenues and income per operating segment 1 September August Operating margin Income from external customers Common Group expenses have been allocated according to assessed benefits. DESTINATIONS NORWAY 35

36 RESORTS AND FOCUS Sälen consists of four resorts Lindvallen, Högfjället, Tandådalen and Hundfjället. Sälen is situated in the northwest of the province of Dalarna, approximately 420 km from Stockholm and 460 km from Gothenburg. The four resorts are interconnected into two large skiing areas Lindvallen/Högfjället and Tandådalen/Hundfjället. Lindvallen is the destination of choice for many families with children. Lindvallen is home to the Nordic countries largest children s and beginners slopes, as well as Sweden s most frequented ski-slope, Gustavbacken, with its Snowman standing at the top of the slope. It s also home to the Pink Park, designed by one of Sweden s best fun park skiers, offering fun park-skiing for everyone. Högfjället offers all the classic winter holiday ingredients, with an easy to navigate ski area and the Högfjällshotell acting as a natural meeting point. The pace is a little slower and the atmosphere cosier. Tandådalen is a favourite destination for families with teenagers who enjoy skiing and snowboarding. Tandådalen offers, among other things, one of Sweden s greatest fun parks, Tandådalen Super Park, some of Sälen s most challenging slopes, but also the less demanding slopes of Tandådalen Östra. Hundfjället, with its genuine winter atmosphere, offers a variety of skiing for the entire family. Hundfjället s adventure forest Trollskogen ( Troll Forest ) is home to 450 unique trolls spread out along a 36 SÄLEN

37 1.3 km winding and undulating forest slope. Sälen is also the home of Experium, an experience centre covering 11,500 square metres, which includes restaurants, a bowling alley, an adventure pool, a spa/sauna section, a cinema (3D), and much more. OPERATIONS SkiStar s operations in Sälen comprise the skiing area, nine ski rental outlets, four ski schools and a sporting goods outlet. Operations in the skiing area are conducted almost exclusively on land owned by SkiStar. SkiStar annually books approximately 14,500 beds in the area, 2,000 of which are owned by SkiStar. In addition, a hotel, Sälen s Högfjällshotell, two sporting goods outlets and all of the restaurants at the slopes are leased to external operators. SkiStar also manages Hammarbybacken in Stockholm within its Sälen operations. MARKET The number of skier days increased by 4.5% to 1,392,000. The occupancy rate for objects owned and mediated by SkiStar was 83% (81%). The majority of guests at Sälen come from Sweden (mainly from southern and central Sweden). A significant portion of Sälen s guests also come from Denmark (9%). The majority of guests take their own car to Sälen, but it is also possible to take direct buses from Stockholm, Gothenburg, Malmö and Copenhagen. There are also flights from Ängelholm to Mora, with shuttle buses to Sälen. The Swedish and Danish markets are expected to remain the most important markets for Sälen. INVESTMENTS Investments during the 2012/13 season amounted to MSEK 58. Among other things, they included the expansion of the experience area Valletorget in Lindvallen, and a 1960 s inspired heated cabin in Tandådalen, the latter as part of Tandådalens 50th anniversary. The project concerning the water supply from Västerdalälven continued during the year, and will continue to do so during the 2013/14 season. NEW FEATURES Going in to the 2013/14 season, the Company is continuing to develop activities offered in the ski area to provide an even better skiing experience for the guests. With the introduction of the child concept Valles World, Valle will move into Tandådalen and Hundfjälllet. Sälen will further develop its existing Valle concept with for instance more opportunities to meet Valle on Valle s show or in meet and greets, three new Valle s ski countries, located in Lindvallen, Eastern Tandådalen and Hundfjälllet and Valle s children s ski school - Valle becomes the mascot for the ski school for children age 3-9, which means that Valle will appear on the diploma, giveaways, vests and turning aids. Hundfjälllet extended Trollskogen from Trollens Fäbod down to Trolliften. The area is lighted with LED lighting that moves and changes colour so the skiing will be extra exciting for our youngest guests. New wooden figures will line the new route. In connection to this, Trolliften will also be lit with LED lighting. To meet the guest s demand for flexible transportation on the mountain, the timetable has been extended for the popular Ski and Bath bus. The bus route premiered during the 2012/13 season and is aimed at creating easy transportation between the skiing area and the swimming pool at Experium where many guests have free entrance through the Sälen- Passet + pool offer. As part of the process to inspire and stimulate interest in alpine skiing in the Malung-Sälen municipality, all children and adolescents up to 15 years will travel for free in the SkiStar Sälen ski area during the winter season 2013/14. DEVELOPMENT OPPORTUNITIES Due to its geographical location, accessibility and well-established brand, a continued high demand for winter vacations in Sälen is expected. Experium in Lindvallen opened in December 2009 and brought along new opportunities to increase the number of guests, not only during the winter season, but also in the off-season. Continued development, including new skiing areas, is planned for Lindvallen s southern skiing area, the area between Lindvallen and Högfjället, and also in the Trollbäck area in Hundfjället and in Tandådalen. Approximately 10,000 additional beds are planned to be added in Sälen over the next few years. There is potential for an additional 5,000 beds in the Lindvallen/Högfjället area. There are plans for approximately 4,700 new beds in the future. All accommodation is situated close to the ski lifts. Regarding guest development, there are good possibilities for increasing the number of guests from Denmark, as well as the number of guests during the off-season. A possible development of Airport centre in the area will also imply large growth opportunities, above all in the foreign markets. OCCUPANCY RATE % Number of beds /09 SKIER DAYS st /10 08/09 09/10 PROPORTION OF GUESTS per nationality SÄLEN IN FIGURES 10/11 Occupancy rate 11/12 10/11 12/13 Mediated beds 11/12 Sweden, 89% Norway, 1% Denmark, 9% Other, 1% / /13 Rented beds 14,455 Occupancy rate, % 83 Ski school students, nr 37,388 Rental ski equipment, nr 13,752 Ski days nr 1,392,000 Number of lifts 86 Lift capacity, skiers per hour 82,500 Number of slopes 117 Number of children s areas 12 Longest slope, km 2.5 Total length of groomed slopes, km 82 Maximum vertical drop, m 303 Highest groomed ski area, metres above sea level (MASL) 860 Total area of groomed slopes, square metres 2,877,000 Area covered by snow-making systems, square metres 1,850,000 Lit up slopes, nr 31 Fun parks, nr 11 SÄLEN 37

38 RESORTS AND FOCUS Åre, which is situated 650 km northwest of Stockholm, consists of three resorts: Åre Björnen, Åre By and Duved. Each resort has its own profile and target group. Åre Björnen, the resort located farthest to the East, is a favourite with children and is also called Barnens Björnen ( The Children s Bear ). Just one lift away, the more challenging skiing offered at Åreskutan can be found, with its extensive choice of ski slopes and varied terrain. Åre By is the most well-known destination. Fantastic skiing can be found here, in the direct vicinity of a small town with a great atmosphere and a long tradition. Åre By has a wide selection of restaurants, entertainment and activities. Duved is situated west of Åre By, and, like Åre By, is a resort with a longstanding tradition. Duved has a slightly calmer pace and, consequently, suits all types of skiers. OPERATIONS SkiStar s operations in Åre include the ski area, accommodation booking, eight ski rental outlets, a sporting goods outlet and a ski school. Approximately 35% of the land on which operations in the ski area are conducted is owned by SkiStar and the remaining 65% is held through leases of between years. At the end of the leasing periods, SkiStar has the right to renew the agreements on the same 38 ÅRE

39 terms. SkiStar rents out approximately 6,200 beds annually in Åre, of which the Group owns around 800. In addition, the slope restaurants Linbanecaféet, Stormköket, VM Grillen and Timmerstugan, the food shop in Åre Björnen, the restaurant in the Hotel Renen and the restaurant, night club and conference centre in Åre Fjällby are also leased to external operators. MARKET The number of skier days increased by 2% to 986,000. The weather in Åre during the last winter was generally good, but the destination suffered an intense low pressure in week 9 with strong winds and rain that turned into intense snowfalls which affected revenue negatively. The occupancy rate of objects owned and mediated by SkiStar was 70% (67%). Swedish guests in Åre represent approximately 72% of visitors, most of whom are from the Mälardalen region around Stockholm. The largest foreign market is Norway, followed by Russia and Finland. Åre is continuing its long-term commitment to foreign markets and by further development of the prioritised markets and work with annual international events the proportion of foreign guests should continue to increase. The goal is also to arrange another Alpine Ski Championship. The candidature is in progress and the vote on who will host the Alpine World Ski Champion ships 2019 takes place in June INVESTMENTS Investments for the 2012/13 season amounted to MSEK 17, and mainly consisted of the strengthening of the snow-making system, reinvestments in grooming machines and a continuation of improving the floodlit slope I Jättars Spår ( In the Trail of Giants ), which is Sweden s, and one of the world s, longest electrically lit slopes. NEWS In preparation for the season 2013/14, the biggest lift investment since the cable car was built was made in Åre. Three new modern chairlifts built in strategic locations to further improve and strengthen the Åre ski area. The expansion of the ski area can be compared with 26 full sized football fields. A fourchair lift built in Tegefjäll replaces the old Tegefjällsliften. Extensive ground work has also been performed in the area, making the slopes clearly improved through widening and realignment. Tegefjäll which is known for its fantastic forest skiing will be even better by a large part of the forest adjacent to the new lift has been thinned out to make way for a safe and fun off-piste skiing. From Fjällgården up to Totts mountain station, a new linkable six-chair lift is under construction, the slopes here have also been improved. Additional snowmaking capacity has also been installed to ensure an early start to the season and good snow conditions. From Högåsliften s Valley Station to Sadelliftens mountain station, a new six-chair lift with hoods and heated seats, is under construction. These two six-chair lifts even more clearly connect central Åre with Björnen. Two great ski areas that fit the modern demands of skiing on wide and long slopes are also being created. For the second consecutive year, Åre hosted World Cup competitions in Alpine skiing and Skicross. Plans are also in place for hosting World Cup competitions in Freestyle. This clearly shows Åre s breadth and strength as an international ski destination. In March, week 10, the alpine circus arrives in the village, with the arrangement of the FIS World Cup for women, an annually recurring event on the Åre alpine scene. The following week, Åre will host the World Cup competitions in Skicross. This means that Åre, as one of very few organisers in the world has been entrusted this year to arrange at least two major events within the International Ski Federation. DEVELOPMENT OPPORTUNITIES Thanks to Åre s good infrastructure conditions, with a direct train to the village of Åre, the European route E14 running through the village, as well as two nearby international airports, Åre-Östersund Airport and Vaernes Airport in Trondheim, the potential for development is very good. Continued investment in reasonably priced transportation, in conjunction with the previous years significant increase in bed capacity, provides Åre with additional and improved possibilities to receive a larger number of skiing guests. Because of extensive investments made a couple of years ago and the investment which began in Åre Björnen for the 2010/11 winter season, Åre is well prepared for an increased stream of guests to the slopes. By being entrusted to host three Alpine World Cup competitions in one season, Åre has clearly shown its diversity and strength as an internationally competitive ski destination. OCCUPANCY RATE % /09 SKIER DAYS st /10 Occupancy rate 08/09 10/11 09/10 11/12 10/11 Number of beds /13 Mediated beds 11/12 12/13 PROPORTION OF GUESTS per nationality ÅRE IN FIGURES Sweden, 72% Norway, 11% Denmark, 3% Finland, 4% UK, 1% The Netherlands, 1% Russia, 5% Baltic states, 3% Other, 1% 2012/13 Rented beds 6,200 Occupancy rate, % 70 Ski school students, nr 14,129 Rental ski equipment, nr 5,678 Ski days, nr 986,000 Number of lifts 41 Lift capacity, skiers per hour 51,555 Number of slopes 111 Number of children s areas 4 Longest slope, km 6.5 Total length of groomed slopes, km 101 Maximum vertical drop, m 890 Highest groomed ski area, metres above sea level (MASL) 1,274 Total area of groomed slopes, square metres 3,204,478 Area covered by snow-making systems, square metres 2,352,760 Floodlit slopes 7 Fun parks, nr 3 ÅRE 39

40 40 VEMDALEN

41 RESORT AND FOCUS The destination Vemdalen lies approximately 480 kilometres northwest of Stockholm, on the border between the Counties of Härjedalen and Jämtland, and consists of three resorts: Vemdalsskalet, Björnrike and Klövsjö/ Storhogna. Vemdalsskalet is the largest resort. In addition to varied skiing, Vemdalsskalet also offers a broad range of entertainment and activities. Björnrike is the choice of families with children. Good ski slopes, combined with accommodation close to the ski lifts and good service facilities make the mountain holiday easy. Klövsjö is a traditional mountain retreat with a long tradition, also offering challenging skiing for the experienced skier. Storhogna offers the option of combining skiing with other activities. For example, Sweden s first mountain spa can be found here. OPERATIONS SkiStar s operations in Vemdalen include the ski area, ski schools, two ski rentals and two sporting goods outlets. Approximately 5,800 beds in the area are mediated through SkiStar. Approximately 58% of the land on which operations in the ski area are conducted is owned by the Group. The remaining land is leased on a long-term basis, with the right to renew the lease upon expiration. Two slope restaurants in Vemdalsskalet are sublet to external operators. MARKET The number of skier days increased by 9%. The occupancy rate of objects owned and mediated by SkiStar was 69% (65%). Nearly all of Vemdalen s visitors come from Sweden, with the Mälardalen region and the industrial coast from Gävle to Härnösand comprising the most important catchment areas. The primary target group is families with children. The vast majority of guests travel to Vemdalen in their own cars. During the 18 weeks of the winter season there is daily train traffic from Stockholm via Mora to Röjan/Vemdalen. During the same period, you can go by overnight train from Malmö via Gothenburg and Mora to Röjan/Vemdalen. From Röjan/Vemdalen the distance by shuttle bus to Klövsjö is 11 km, Vemdalsskalet 22 km and Björnrike 35 km. On location in Vemdalen, a major upgrade of the local bus service is under way to adapt to the rail links, and to improve the ability to visit the area without a car. The bus line Härjedalingen frequently traffics Stockholm- Vemdalen via Uppsala/Gävle/Bollnäs. Air travel to Vemdalen is available via Östersund or Sveg. INVESTMENTS Investments for the 2012/13 season amounted to MSEK 9, and mainly comprised a new T-bar lift, a new groomer and the expansion of the snow system. NEWS For the 2013/14, a large number of plots are completed for sales in Klövsjö and Storhogna. For example, Grubbvallen in Klövsjö with 40 plots in total and a superior location next to the newly built lift Katrina. At Vemdalsskalet, the construction of the new centre, Skalets Torg, continues. Eventually comprising eight planned, large building complexes, the new centre is half way to completion with four completed building complexes. Construction of the fifth building complex began in August All building complexes have commercial premises at ground floor, and accommodation for rent on floors 1-3. One of the building complexes, Hovde Hotell, contains hotel accommodation. In Björnrike, the five-year project for the renovation of the entire road network, which began in 2012, continues, involving surfacing work, separate sidewalks, lighting, signposts etc. News in Björnrike for the winter 2013/14 is twelve new apartments for rent in Lingonkullen. Furthermore, a new restaurant at Björnidet and a new large heated cabin that is in place at Björnvallen. DEVELOPMENT OPPORTUNITIES Vemdalen, with its three ski areas Björnrike, Vemdalsskalet and Klövsjö/Storhogna, has had very strong growth in relation to its size in the past 8 years. A growth that can be attributed to very good physical conditions for skiing in all its forms, proximity to the Swedish market, and strong improvements in the product, value for money and strong sales channels via SkiStar. Expansion continues for the winter 2013/14. The area s total investment level for summer and fall of 2013 is about MSEK 140. OCCUPANCY RATE % Number of beds SKIER DAYS st /09 Occupancy rate 08/09 09/10 09/10 10/11 10/11 11/12 11/12 12/13 Mediated beds 12/13 PROPORTION OF GUESTS per nationality VEMDALEN IN FIGURES Sweden, 97% Norway, 0% Denmark, 1% Finland, 1% Baltic states, 1% /13 Rented beds, nr 5,800 Occupancy rate, % 69 Ski school students, nr 10,674 Rental ski equipment, nr 4,376 Ski days 545,000 Number of lifts 34 Lift capacity, skiers per hour 35,632 Number of slopes 55 Number of children s areas 4 Longest slope, km 2.3 Total length of groomed slopes, km 49.9 Maximum vertical drop, m 470 Highest groomed ski area, metres above sea level (MASL) 946 Total area of groomed slopes, square metres 1,606,414 Area covered by snow-making systems, square metres 1,283,082 Floodlit slopes 15 Fun parks, nr 3 0 VEMDALEN 41

42 42 HEMSEDAL

43 RESORT AND FOCUS Hemsedal is situated 230 kilometres northwest of Oslo and 280 kilometres west of Bergen. The destination, referred to as Scandinavia s Alps, is a complete ski resort, offering a wide selection of activities for skiers of all ages. In Hemsedal, Norway s largest nursery slope area can be found, alongside extremely challenging slopes for the most advanced skiers. OPERATIONS SkiStar s activities in Hemsedal include the skiing area, a ski school, two ski rentals and two sporting goods outlets. A total of approximately 4,700 beds are mediated through SkiStar in the area. Business operations in the ski area are conducted on leased land. The leases are long term and SkiStar has the right of renewal upon termination of the leases. Four slope restaurants are sublet to external operators. MARKET The number of skier days increased by 9.5% to 534,000. The occupancy rate for accommodation owned and mediated by SkiStar amounted to 66%. Hemsedal has a large proportion of foreign guests; over half of the visitors come from abroad. The majority of the foreign guests come from Denmark and Sweden, but Hemsedal is also a popular ski destination among countries such as Germany, the UK and the Netherlands. An effort, of which the results are beginning to become substantial, is the marketing activities undertaken within the Russian market. The combination of foreign markets with the Norwegian contributes to a high occupancy level throughout the entire winter season. The Norwegian guests come primarily from the area around Oslo and Bergen and most of them travel with their own cars. The foreign guests travel either by ferry, in their own cars, with chartered flights or by bus. INVESTMENTS Investments for the 2012/13 season amounted to MSEK 14 and consisted mainly of expanded Ski in Ski out opportunities for easier access to the skiing area, upgrade of the snowmaking system and an increase in the number of venues and attractions in the ski area. NEWS For the 2012/13 season, Hemsedal is developing and improving its park and Skicross offering. Hemsedalparken moved to offer a better, safer and more flexible park offering. On the park s old location, a new Skicross course was built. The existing Skicross course was also extended with 350 meters. The snow system was upgraded to optimise production at higher temperatures, which in turn results in a more efficient snow production and that more slopes may open earlier. In the Skarsnuten area, availability is increasing as 450 beds will become Ski in Ski out. Skistua is renovating its premises in order to provide better service and offer a stronger à la carte concept to ski guests. Also, the heated cabin in Fjellkafeen is being refurbished and undergoing an expansion and a significant upgrade of the toilet facilities. DEVELOPMENT OPPORTUNITIES There are opportunities to continue the develop ment of additional accommodation options in Hemsedal. The municipality has approved a zoning plan for the area around the resort. Hotels, apartments and cabins can all be developed here. In addition to the approximately 6,300 commercial beds already available in Hemsedal, the municipality has approved zoning plans for an additional 5,500 beds. Hemsedal has significant opportunities to continue to attract more families through major investments in the beginners ski area and in the children s area. There are also good reasons to assume that the number of foreign guests will continue to grow, thanks to foreign investments and well-established partnerships with several tour operators. OCCUPANCY RATE % Number of beds SKIER DAYS st /09 Occupancy rate 08/09 09/10 09/10 10/11 10/11 11/12 11/12 12/13 Mediated beds 12/13 PROPORTION OF GUESTS per nationality HEMSEDAL IN FIGURES Sweden, 23% Norway, 40% Denmark, 27% UK, 1% The Netherlands, 2% Germany, 4% Russia, 2% Other, 1% 2012/13 Rented beds, nr 4,700 Occupancy rate, % 66 Ski school students, nr 7,184 Rental ski equipment, nr 3,397 Ski days, nr 534,300 Number of lifts 18 Lift capacity, skiers per hour 26,000 Number of slopes 47 Number of children s areas 1 Longest slope, km 6 Total length of groomed slopes, km 44 Maximum vertical drop, m 810 Highest groomed ski area, metres above sea level (MASL) 1450 Total area of groomed slopes, square metres 1,470,000 Area covered by snow-making systems, square metres 602,000 Floodlit slopes 10 Fun parks, nr 5 HEMSEDAL 43

44 44 TRYSIL

45 RESORT AND FOCUS Trysil is situated 210 kilometres northeast of Oslo. The mountain, Trysilfjället, offers 71 kilometres of skiing on three sides of the mountain, and is thus able to provide skiing suitable for both families with children and for more experienced skiers. Trysil is Norway s largest ski resort and is highly accessible thanks to its geographic location. OPERATIONS SkiStar s operations in Trysil comprise the ski area, three ski rentals, the ski school, in which SkiStar has a minority interest amounting to 35%, and a sales department, which arranges the rental of 5,800 beds (excluding the hotel) in the area. Operations in the ski area are conducted on leased land. The leasing agreement has a tenure of 50 years, with the possibility for SkiStar to renew upon expiration. SkiStar also sublets 13 slope restaurants in Trysil to external operators. MARKET The number of skier days increased by 3.6% to 827,000. The occupancy rate for accommodation owned and mediated by SkiStar increased to 65% (60%). Trysil s largest markets are Denmark and Sweden, with 31% of the guests each, and Norway, with 25% of the guests. The Danish guests mainly arrive in their own cars. The majority of Norwegian guests come from Oslo and, therefore, they also prefer to travel in their own cars. The important markets in the future will be northern Germany and Russia. The main target group in all markets is families with children. INVESTMENTS For the 2012/13 season, MNOK 13.9 was invested in product improvements. Among other things, ski venues for Speedski, Self Timer, parallel slalom and cross trails. In addition, improvements were made in all the parks, two green, one blue and one with both red and black slopes. The slopes adjacent to the Park Inn Trysil Mountain Resort got lighting wherein the area around the hotel has become a part of the offered night skiing opportunities. NEWS In Trysil, it is all about skiing and, for the 2013/14 season, three new areas are being built, two slopes for snow waves and one for forest skiing. To slope No 75, pipes for snowmaking have been laid so that Eksperten can be opened earlier and with better snow conditions. The restaurant Knettsetra has undergone extensive expansion and upgrading. A new, nearly 300 square-metres large restaurant wing will add 100 new seats. An additional 100 seats will be added outdoors thanks to a newly built terrace. The redevelopment also includes the expansion of the restaurant kitchen. DEVELOPMENT OPPORTUNITIES There are approximately 23,500 beds in Trysil at present, of which 11,300 are commercial. The municipal plan approves 38,400 beds in total in the area, so the development possibilities are significant. With the previous year s investments in the ski area, the lift capacity amounts to more than 35,000 skiers per hour. A possible development of the Airport Centre in the immediate area will also represent significant growth opportunities, primarily on foreign markets. OCCUPANCY RATE % Number of beds /09 09/10 10/11 11/12 12/13 0 Occupancy rate Mediated beds SKIER DAYS st /09 09/10 10/11 11/12 12/13 PROPORTION OF GUESTS per nationality Sweden, 31% Norway, 25% Denmark, 31% Finland, 1% UK, 1% The Netherlands, 2% Germany, 5% Russia, 3% Baltic states, 1% TRYSIL IN FIGURES 2012/13 Rented beds, nr 5,800 Occupancy rate, % 65 Rental ski equipment, nr 6,291 Ski days, nr 827,000 Number of lifts 31 Lift capacity, skiers per hour 35,200 Number of slopes 66 Number of children s areas 3 Longest slope, km 5 Total length of groomed slopes, km 71 Maximum vertical drop, m 685 Highest groomed ski area, metres above sea level (MASL) 1,100 Total area of groomed slopes, square metres 2,380,000 Area covered by snow-making systems, square metres 950,000 Floodlit slopes 6 Fun parks, nr 3 TRYSIL 45

46 BUSINESS AREA PROPERTY DEVELOPMENT Increased demand for plots of land has increased the sales profits for the financial year by MSEK 17. BUSINESS AREA PROPERTY DEVELOPMENT The Business Area Property Development is operated by the wholly-owned subsidiaries, Fjällinvest AB in Sweden and Fjellinvest Norge AS in Norway. The companies own accommodation properties for hire and land for development, and have participating interests in various real estate companies operating at SkiStar s destinations. THE BUSINESS AREA S MISSION The Business Area Property Development s mission is to: Create growth in the construction of accommodation at SkiStar s destinations, with the largest possible return on the smallest possible capital investment. Create growth in the value of the assets through their development, both independently and in conjunction with collaborative partners. Establish, together with the destinations, long-term development plans for future investments at SkiStar s destinations. Manage and develop the SkiStar Vacation Club. Create business opportunities through the acquisition of existing residential property and development land. SALES AND INCOME The Business Area Property Development increased external net sales by MSEK 25 to MSEK 47, of which MSEK 27 (10) refers to profits from the sales of plots and apartments, MSEK 11 (11) refers to profits from the sales of shares in SkiStar Vacation Club, and MSEK 9 (1) refers to other income. The costs within the Business Area have increased due to the associated company Radisson Blu Trysil reporting an increased loss, of which MSEK 12 is deemed as non-recurring cost. Operating profit for the Business Area increased to MSEK 18 (12). INVESTMENTS AND DISPOSALS Investments within the Business Area Property Development totalled MSEK 38 (139), net, during the year. The investments primarily consisted of replacement investments and acquisitions of participations in associated companies. During the financial year, 17 plots of land were sold for a sum of MSEK 42 (16), with a profit of MSEK 27 (10). Shares in SkiStar Vacation Club have been sold at an amount of MSEK 14 (14), with a profit of MSEK 11 (11). The average profit per plot of land during the financial year was approximately MSEK 1.6, this included two larger plots. The estimated long-term average sales profit per plot is approximately MSEK 1.1. PROPERTY PORTFOLIO AND VALUATION The Business Area s assets consist of hotel properties, cabins and apartments, development land, as well as shares and participations in jointly-owned real estate companies. In total, the book value of residential assets, development land and shares and participations in jointly owned companies and associations was MSEK 925 (898). An external market valuation in September 2010 indicated a surplus value in Fjällinvest AB amounting to MSEK 230. Development land assets amount to 5.4 million square metres (5.5) for which the book value is MSEK 39 (45). The majority of land assets were acquired many years ago, for which reason the book value of these is low. The decrease during the year is a result of the sale of plots. No market evaluation has been made for these assets, as it is difficult to make a reasonable assessment as to the possible development rate of land assets. Based on our assumptions and experience, it can be estimated that 50% of the land can be developed, which equates to 2,700,000 square metres. If the land were to be sold as plots, this would entail 2,700 plots at 1,000 square metres per plot. SKISTAR VACATION CLUB SkiStar Vacation Club is a future-oriented form of housing based on the demands and requirements of the guests. The apartments are divided into weekly units and buyers receive, in addition to the weeks purchased, membership in the international exchange and placement organisation, RCI, as well as membership in SkiStar Vacation Club. This form of accommodation is cost effective, simple and flexible for the shared-ownership holder. Cost effectiveness is achieved either through the utilisation of a purchased week, compared with the cost of renting for an equivalent week, or by exchanging the week with travel abroad through RCI. In addition, the shared-ownership holder can purchase inexpensive journeys abroad through the RCI system. With SkiStar Vacation Club, a shared-ownership holder also receives a large number of advantages and benefits during 46 BUSINESS AREA PROPERTY DEVELOPMENT

47 their stay. Simplicity is achieved because the shared-ownership holder is not responsible for maintenance of their ownership share. Instead, the tenant-owner association, of which the shared-ownership holder is a part, assumes this responsibility. The apartment is always clean, warm, and ready ahead of arrivals. Flexibility is achieved as the shared-ownership holders can enjoy RCI s entire range of over 5,000 destinations worldwide. SkiStar Vacation Club is currently offered in Sälen; however, the intention is that the concept will eventually be available at more destinations. PLOTS OF LAND AND APARTMENTS FOR SALE During the past financial year, 15 private plots of land were sold in Sälen and Vemdalen as well as two larger plots of land for commercial construction, one in Åre and one in Sälen. There are 80 private plots still for sale in Vemdalen and Sälen. Before Christmas, the sale of 92 newly renovated private apartments in Vemdalen and Sälen will commence. In Sälen, there are 32 apartments in Trollbäcken in Hundfjällen and 24 apartments in Timmerbyn in Lindvallen being put up for sale. In Vemdalen, there are 14 apartments in Solhyllan at Vemdalsskalet and in Åre there are 22 apartments in Åre Fjällby being put up for sale. DEVELOPMENT PROJECTS At all destinations, the work of producing new future development projects within the real estate sector is ongoing. These projects are capital-intensive and will, therefore, to the greatest possible extent, be carried out in cooperation with other investors. Sälen In Sälen, SkiStar owns large land development areas. The projects that have progressed the furthest, planning-wise, are Ski Apartment Hundfjället, an apartment complex with approx. 700 beds, the remaining phase for apartments in Solbacken in Tandådalen, with approx. 500 beds, an additional phase of SkiLodge Village in Lindvallen, with approx. 300 beds, as well as another apartment complex next to Experium in Lindvallen, with an additional 500 beds. Åre In Åre, an area in Åre Björnen is zoning planned, right next to the new ski area with chairlifts, including 1,500 beds. The project is co-owned 50/50 with Peab. In Rödkullen, SkiStar is the minority owner in a larger development project together with two Norwegian partners. The area is not yet zoning planned, but is expected to generate up to 7,000 beds in the long run. In central Åre, in direct connection to the cabin lift, SkiStar owns land for development of resident and commercial areas. The area is not yet zoning planned, but is expected to generate up to 1,300 new beds. Vemdalen In Vemdalen, there is great activity among external investors in regard to construction of commercial beds. In all of the three areas, Vemdalsskalet, Björnrike and Klövsjö, new accommodation property is being built for commercial use, of which the largest development is located in Skalet city centre. SkiStar owns development land both in Vemdalsskalet and in Björnrike. Hemsedal In Hemsedal, plans are being made for the development of an apartment complex in a partly-owned company including approx. 850 beds. SkiStar also owns a great deal of development land in Hemsedal for future development. Trysil In Trysil, the demand to build new commercial accommodations is small on account of the available capacity in the two large hotels Mountain Resort Trysil and Radisson Blu Trysil, where SkiStar is half-owner sq. km worth of development land belong to the half-owned companies. OPERATING PROFIT Business Area Property Development MSEK HOTELS, CABINS AND APARTMENTS as well as development land MSEK 35 Sälen Åre Vemdalen Hemsedal Trysil Totalt Hotels 1 1 2* 4 Existing cabins and apartments Existing shared-ownership cabins and apartments Land holdings (number of apartments that can be built) Completed zoning plans Ongoing zoning plans Scheduled zoning plans Scheduled comprehensive plans , /09 09/10 10/11 11/12 12/13 *)The two holtels in Trysil are owned 50% via associated companies THE BUSINESS AREA S ASSIGNMENTS BUSINESS AREA PROPERTY DEVELOMENT GROWTH CONSTRUCTION ACQUISITIONS /DISPOSALS GROWTH ASSETS DEVELOPMENT DESTINATIONS DEVELOPMENT SKISTAR VACATION CLUB BUSINESS AREA PROPERTY DEVELOPMENT 47

48 LIST OF PROPERTIES FOR THE BUSINESS AREA PROPERTY SWEDEN Property name Municipality Area Name Year of construction Living area, square km Stores, square km Total area, square km Land, square km Taxable value, TSEK Västra Sälen 3:101 Malung-Sälen Lindvallen Timmerbyn ,333 9,584 Västra Sälen 3:102 Malung-Sälen Lindvallen Timmerbyn ,752 1,752 8,868 19,032 Västra Sälen 5:524 Malung-Sälen Lindvallen Timmerbyn ,118 10,835 Västra Sälen 5:508 Malung-Sälen Lindvallen Timmerbyn ,022 1,022 8,997 12,957 Västra Sälen 4:11 Malung-Sälen Lindvallen Bruna byn ,585 2,585 38,796 33,710 Västra Sälen 4:27 Malung-Sälen Lindvallen Röda byn ,752 3,752 25,199 34,942 Västra Sälen 3:51 Malung-Sälen Lindvallen Development land 133,042 1,000 Västra Sälen 3:93 Malung-Sälen Lindvallen Leased mark 29,273 11,875 Västra Sälen 3:114 Malung-Sälen Lindvallen Development land 4,838 1,031 Västra Sälen 3:115 Malung-Sälen Lindvallen Development land 5,781 1,031 Västra Sälen 5:3 Malung-Sälen Lindvallen Development land 1,583, Västra Sälen 5:10 Malung-Sälen Högfjället Development land ,297 1,188 Västra Sälen 5:17 Malung-Sälen Högfjället Development land 26,880 0 Västra Sälen 5:18 Malung-Sälen Högfjället Development land 852,500 0 Lima Besparingsskog 1:4 Malung-Sälen Tandådalen Solbacken 2006/2007 4,075 4,075 21,600 37,291 Lima Besparingsskog 1:4 Malung-Sälen Tandådalen Caravan camping , Lima besparingsskog 1:7 Malung-Sälen Tandådalen Development land 2, Lima besparingsskog 1:18 Malung-Sälen Tandådalen Development land 2,567,666 0 Lima Besparingsskog 2:7 Malung-Sälen Tandådalen ICA/Snöloftet ,648 5,350 Lima Besparingsskog 2:13 Malung-Sälen Tandådalen Poolarium/Sport area ,888 3,879 8,800 Rörbäcksnäs 20:88 Malung-Sälen Hundfjället A+B och Annexet 1980/1996 1,100 1,100 3,521 Rörbäcksnäs 20:331 Malung-Sälen Hundfjället Trollbäcken ,142 Rörbäcksnäs 20:332 Malung-Sälen Hundfjället Trollbäcken ,049 2,142 Rörbäcksnäs 20:333 Malung-Sälen Hundfjället Trollbäcken ,142 Rörbäcksnäs 20:334 Malung-Sälen Hundfjället Trollbäcken ,068 2,142 Rörbäcksnäs 20:338 Malung-Sälen Hundfjället Trollbäcken ,120 1,120 4,244 8,400 Västra Sälen 1:64 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:65 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:67 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:69 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:70 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:73 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:76 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:77 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:78 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:80 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:81 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 1:82 Malung-Sälen Lindvallen F Non-developed plot of land Västra Sälen 5:557 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:558 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:559 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:562 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:563 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:564 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:565 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:566 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:567 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:568 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:569 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:570 Malung-Sälen Lindvallen V1 Non-developed plot of land 2, Västra Sälen 5:571 Malung-Sälen Lindvallen V1 Non-developed plot of land 1, Västra Sälen 5:572 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:573 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:574 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:575 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:576 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:577 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:578 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:579 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:580 Malung-Sälen Lindvallen V2 Non-developed plot of land Västra Sälen 5:581 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:582 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:583 Malung-Sälen Lindvallen V2 Non-developed plot of land Västra Sälen 5:584 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:585 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:586 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:587 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:588 Malung-Sälen Lindvallen V2 Non-developed plot of land 1, Västra Sälen 5:589 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:590 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:591 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:592 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:593 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:594 Malung-Sälen Högfjället Non-developed plot of land BUSINESS AREA PROPERTY DEVELOPMENT

49 CONT. LIST OF PROPERTIES FOR THE BUSINESS AREA PROPERTY SWEDEN Property name Municipality Area Name Year of construction Living area, square km Stores, square km Total area, square km Land, square km Taxable value, TSEK Västra Sälen 5:595 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:596 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:597 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:598 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:599 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:600 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:601 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:602 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:603 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:604 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:605 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:606 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:607 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:608 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:609 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:610 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:611 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:612 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:613 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:614 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:615 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:616 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:617 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:618 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:619 Malung-Sälen Högfjället Non-developed plot of land Västra Sälen 5:620 Malung-Sälen Högfjället Non-developed plot of land Lien 1:10 Åre Åre Development land 1910/ Lien 2:33 Åre Åre Development land 21,428 0 Lien 2:37 Åre Åre Fjällbyn centrumhus ,818 2,818 3,630 23,533 Lien 2:38 Åre Åre Fjällbyn skidåkarhuset ,797 Lien 2:41 Åre Åre Fjällbyn 300-längan ,459 10,989 Hamre 1:101 Åre Duved Hotell Renen ,540 2,540 2,891 5,390 Åre-Svedje 1:96 Åre Åre Björnen Uttern ,997 6,371 Åre-Svedje 1:143 Åre Åre Björnen Björnen centrumhus ,014 1,014 7,723 8,090 Vemdalens Kyrkby 56:56 Härjedalen Vemdalen Sörgårdarna ,036 5,036 30,588 21,372 Vemdalens Kyrkby 57:112 Härjedalen Vemdalen Solhyllan ,180 4,079 Vemdalens Kyrkby 57:113 Härjedalen Vemdalen Solhyllan ,538 4,025 Vemdalens Kyrkby 43:310 Härjedalen Björnrike Development land 45,460 0 Vemdalens Kyrkby 43:310 Härjedalen Björnrike Development land 6, Vemdalens Kyrkby 43:420 Härjedalen Björnrike Non-developed plot of land 1,336 1,040 Vemdalens Kyrkby 43:421 Härjedalen Björnrike Non-developed plot of land 1,061 1,560 Vemdalens Kyrkby 43:529 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:531 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:534 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:537 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:538 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:539 Härjedalen Björnrike Non-developed plot of land 1, Vemdalens Kyrkby 43:540 Härjedalen Björnrike Non-developed plot of land 1, ,404 6,863 36,267 5,644, ,441 Development land Malung-Sälen Lindvallen 2,686,795 4,622 Malung-Sälen Tandådalen 2,569, Åre Åre 22, Härjedalen Björnrike 52, ,331,479 6,240 Non-developed plot of land Malung-Sälen Lindvallen 46,965 24,132 Högfjället 15,490 22,026 Härjedalen Björnrike 12,459 5,739 74,914 51,897 LIST OF PROPERTIES FOR THE BUSINESS AREA PROPERTY NORWAY Year of construction Living area, square km Store, square km Total area, square km Land, square km Municipality Area Name Total area, square square km km Land, square km ,200 1,294 0 Trysil Skihytta Idrettshytta Trysil Fageråsen Aaasgard fjelltun ,240 1,240 1,640 Trysil Fageråsen Aaasgard fjelltun 0 5,600 Hemsedal Veslestölen Veslestölen ,000 Hemsedal Skisenter Alpinlodgen ,400 3,600 11,000 30,000 9,674 4,800 14,474 39,240 Development land Trysil Fageråsen Aaasgard fjelltun 5,600 Hemsedal Skisenter Alpinlodgen 20,000 25,600 BUSINESS AREA PROPERTY DEVELOPMENT 49

50 ANNUAL REPORT SKISTAR AB (PUBL) 1 SEPTEMBER AUGUST ANNUAL REPORT

51 ANNUAL REPORT 51

52 ADMINISTRATION REPORT ADMINISTRATION REPORT The Board of Directors and CEO of SkiStar AB (publ), Corporate Identity Number , hereby present the annual report and consolidated accounts for the financial year 1 September August BUSINESS NAME AND REGISTERED OFFICE The Company s business name is SkiStar AB (publ). The Company has its registered offices in the Municipality of Malung-Sälen, in the County of Dalarna, with its head offices in Sälen. The postal address is Sälen, Sweden. FOCUS OF THE OPERATIONS SkiStar operates alpine ski operations in Sälen, Åre and Vemdalen in Sweden and Trysil and Hemsedal in Norway. The core business is alpine skiing, with a focus on the guests overall skiing experience. Operations are divided into two Business Areas, Destinations and Property Development. The Business Area Destinations is divided into Sweden and Norway, and operations primarily include skiing, accommodation services, ski schools and ski rentals. The Business Area Property Development includes construction and development. SkiStar s vision is to create memorable winter experiences as the leading operator of European alpine skiing destinations. OWNERSHIP STRUCTURE SkiStar s Class B shares have been listed on the Nasdaq OMX Mid Cap Stockholm since As per 31 August 2012, there were 31,162 (16,648) shareholders, according to Euroclear Sweden AB. The large increase is due to the fact that Investment AB Öresund has distributed 2,381,852 SkiStar shares to their shareholders. Major shareholders include Mats Paulsson, including company and family, who hold 21.46% of the capital and 44.64% of the votes; Erik Paulsson, including company and family, who hold 19.25% of the capital and 13.56% of the votes and Lima Jordägande Socknemän, which holds 4.69% of the capital and 3.30% of the votes. Significant changes in holdings among major shareholders during the financial year are the significantly decreased holding of Investment AB Öresund who distributed SkiStar shares to their shareholders, as well as Lannebo Småbolag Fonder and Handelsbanken Fonder who also have decreased their holdings. JPM Chase NA, Mats Qviberg with family, The Fourth Swedish National Pension Fund and Banque Öhman S.A. have increased their holdings. New major shareholders include AMF Aktiefond, which owns 300,000 Class B shares, and Catella Sverige Select, which owns 200,000 Class B shares. THE SKISTAR SHARE There are a total of 39,188,028 shares, of which 1,824,000 are Class A shares with ten votes per share and 37,364,028 are Class B shares with one vote per share. The highest noted share price during the financial year was SEK 89, noted on 20 February 2013, and the lowest noted share price was SEK 72.50, noted on 24 June The share price at year-end, as at closing date, was SEK 81. At the Annual General Meeting on 8 December 2012, the Board of Directors was authorised to undertake decisions regarding the acquisition and transfer of SkiStar s own shares. This authorisation applies until the next Annual General Meeting. The Board of Directors had not carried out any repurchases by the date of preparation of this annual report. MARKET DEVELOPMENT During the 2012/13 season, SkiPass sales in Sweden increased by 12% to MSEK 1,267 (1,132), according to the Swedish Ski Lift Organisation (SLAO). The average price increase for SkiPasses in Sweden was 3.3%. In Norway, sales of SkiPasses increased by 14% to MNOK 980 (860) during the 2012/13 winter season, according to the Norwegian Ski Lift Association. The average price increase of SkiPasses in Norway was 2.2%. OPERATIONS The Group s net sales increased during the financial year to MSEK 1,665 (1,552), income before tax increased to MSEK 160 (139) and income after tax decreased, due to a higher tax burden, to MSEK 137 (157). Earnings per share amounted to SEK 3.49 (3.99). After two years of decline, the last winter comprised a turning point and saw a step towards, once again, achieving the profitability goals. All holidays, Christmas/New Year, the winter sports break and Easter holiday showed an increased number of visitors and increased income. The periods between New Year and the winter sports break, and between the winter sports holiday and Easter holiday, have been weaker than in the previous year. One reason for this change in behaviour is the limited possibility to take leave from school. LIQUIDITY, PROFITABILITY AND FINANCIAL POSITION The Group s available cash and cash equivalents amounted to MSEK 219 (211), including unutilised credits of MSEK 193 (170). The average net interestbearing liabilities decreased by MSEK 4 to MSEK 2,072, and the equity/assets ratio increased to 38% (36). Average interest expenses (net interest income/ expenses/average net interest-bearing liabilities) amounted to 3.1% (2.9) during the financial year. Return on capital employed increased to 6% (5), return on equity decreased to 9% (11) and the operating margin increased to 13% (12). CASH FLOW Cash flow from operating activities before changes in working capital totalled MSEK 363 (332) and cash flow after changes in working capital amounted to MSEK 399 (311). Cash flow for the period after investing activities was MSEK 255 (-11). INVESTMENTS, DISPOSALS AND OTHER ACQUISITIONS Investments during the period amounted to MSEK 183 gross and MSEK 144 net. Investments are divided between investments in the Business Area Destinations, which consist of investments in the Group s skiing facilities (lifts, slopes, snow systems, etc.) and investments in the Business Area Property Development, which consist of investments in real estate companies, buildings and land for possible future development and sale. Net investments within the Business Area Destinations amounted to MSEK 106, and referred primarily to replacement investments, expansion of the Group s snowmaking systems and the commencement of investments prior to the 2013/14 winter season. Net investments in the Busi- OPERATING MARGIN, % RETURN on capital employed, % 40 % 20 % /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/13 52 ADMINISTRATION REPORT

53 ness Area Property Development amounted to MSEK 38 and related to the replacement investments as well as the acquisition of shares in associated companies. FINANCIAL RISKS AND OPPORTUNITIES Foreign exchange risk The fluctuation of local currencies against foreign currencies impacts travel habits and may, therefore, impact the number of guests at SkiStar s alpine destinations. The Group is also affected by the relationship between the Swedish and Norwegian currencies. SkiStar does not hedge its Norwegian operations. For example, purchases of lifts and snow grooming equipment are made from abroad and the prices for these are affected by changes in exchange rates. SkiStar offers Danish guests the option of paying in their domestic currency (DKK) and the net flow of DKK is partially hedged. For further information, see Note 32. Investments and interest rates The Alpine ski industry demands major capital investments in order to maintain and increase competitiveness. SkiStar has a strong cash flow, enabling a high level of internally financed investments. Should interest rates increase, the cash flow can be used to more quickly amortise loans and thereby decrease the financial burden on the Company. At present, external borrowing only takes place in local currencies, SEK and NOK. As of 31 August 2013, net interest-bearing liabilities amounted to MSEK 1,986, of which MSEK 800 has been hedged by interest derivatives with durations of 5 and 10 years. For further information, see Note 32. PERSONNEL The average number of employees decreased by 34 to 1,085. Each destination has an organisational structure for addressing work environment and gender equality issues. These groups are coordinated centrally and have common governance documents, such as a gender equality plan and working environment policy. Costs for skills development during the financial year amounted to MSEK 3 (3) and refer primarily to internal training. Personnel turnover among permanent employees shows that 41 individuals commenced, and 31 terminated, their employment with SkiStar (22 and 38, respectively). The proposed guidelines of the Board of Directors regarding remuneration to senior management, subject to the resolution of the Annual General Meeting in December 2013, will correspond to the guidelines described in Note 8 and which remain applicable. ENVIRONMENTAL IMPACT SkiStar s operations have a certain environmental impact. The Company works actively to minimise this impact. A joint environmental management system and a basic policy form the foundation of the environ mental work. The environmental policy entails that, in striving to offer its guests a memorable winter experience, SkiStar takes the environment into consideration in all of its operations. Through systematic improvement activities, guests will experience SkiStar as the environmentally sound choice. SkiStar monitors carbon dioxide (CO 2 ) emissions produced by its operations and annually measures the amount of CO 2 emitted by its operations in relation to sales. In financial year 2012/13, SkiStar emitted 5.6 tonnes of CO 2 / MSEK (5.2), of which the increase is primarily due to an increased geographical area used for skiing. On 22 August 2006, the energy management system for snowmaking at SkiStar s Swedish destinations, which SkiStar introduced during 2005/06, was approved by Lloyd s Register Quality Assurance, in accordance with the standard for energy management systems, SS RISK AND FACTORS OF UNCERTAINTY The risks and factors of uncertainty described below affect both the Parent Company and the Group. The number of guests at SkiStar s destinations is impacted by weather and snow conditions. A late winter, with poor access to cold weather and natural snow leading up to the Christmas week, can result in lower demand. A lower demand can also arise in winters with long periods of cold weather and good snow conditions in the more densely populated parts of southern Scandinavia, as snow, cold weather and skiing are available closer to home. SkiStar meets these risks by continuously developing its snowmaking systems, in order to guarantee skiing, and through strategic sales, ensure that a considerable portion of the available accommodation capacity is booked up prior to the Christmas week, which marks the start of the high season. Fluctuations in the values of domestic currencies in relation to other currencies influence people s travel patterns and can, thereby, affect the number of guests at SkiStar s destinations. The Group is also affected by the relationship between the Swedish krona and Norwegian krone. Furthermore, SkiStar s income is impacted by changes in interest rates in the Nordic countries, as the general interest rate level affects disposable income and consumption patterns. The Government s budget proposal states that the regulations concerning tax exemption on income from properties incurring a special tax assessment are to be revoked. SkiStar has applied these regulations in its Swedish operations. This change implies that, starting in financial year 2014/15, the entire profit from SkiStar s Swedish operations will be subject to tax. Meanwhile, SkiStar AB has approximately MSEK 800 in unutilised losses carried forward, implying that the Company will not have to pay any tax for a number of years. SkiStar has received a joint summons to appear in court together with two former Board members of Spray AB, related to the sale of a company which took place before SkiStar acquired Spray AB in The claimant, CA Fastigheter, has called for the transaction to be reversed in an amount equivalent to the purchase consideration of MSEK 17, plus interest. SkiStar has not reported a provision for any expenses in relation to this summons, as it is not considered likely that CA Fastigheter s claim will be upheld. PARENT COMPANY The Parent Company s net sales amounted to MSEK 1,148 (1,076), and income before tax to MSEK 147 (440). Income was positively impacted during the fourth quarter by the reversal of accelerated depreciation, amounting to MSEK 301. The majority of the Swedish operations are conducted in the Parent Company. However, as per the financial year 2008/09, property operations have been conducted in the whollyowned subsidiary, Fjällinvest AB. CORPORATE GOVERNANCE The corporate governance information is presented in a separate Corporate Governance Report. ANDERMATT/SEDRUN The management agreement with Andermatt expired in September Renegotiation of a new agree- EQUITY/ASSETS RATIO, % RETURN on equity, % 50 % 30 % /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/13 ADMINISTRATION REPORT 53

54 ment, with increased focus on support within marketing, sales and IT, is ongoing. PRIOR TO 2013/14 The unusually beautiful weather during the summer has led to a lower, short-term bookings entrance during the summer, but since mid-september, bookings have increased again. Several external factors are positive for the coming season; good conditions at all destinations during the previous winter, the pleasant summer weather which results in increased priority for ski trips, a more positive economic climate and slightly weaker exchange rates (NOK and SEK against DKK and Euro). The books are 1% better compared with the same period last year. The calendar for Christmas and New Year is advantageous as there is a maximum number of days off from work. Easter arrives late in April, implying a good potential as there is a long top-season, but a late Easter also means that there will only be one week of Easter, since almost all schools have Easter break during the first week of Easter. Investments in ski resorts, which are estimated at MSEK 142, consist primarily of replacement investments including a warming hut in Vemdalen, a reinforced snowmaking system and a new surface lift in Sälen and capital investments in a company building three new chairlifts in Åre. Investment in Property Development is estimated at MSEK 38 and includes replacement investments, the acquisition of shares in associated companies, land acquisition in Hemsedal and the renovation of apartments for sale. From this autumn, there are just over 90 apartments for sale in Sälen, Vemdalen and Åre. In addition to this, there are another 80 unsold lots. The Government s budget proposal states that the regulations concerning tax exemption on property income from properties incurring special tax assessment are to be revoked. SkiStar has applied these regulations in its Swedish operations. This change implies that, starting with the financial year 2014/15, the entire profit from SkiStar s Swedish operations will be subject to tax. Meanwhile, SkiStar AB has approximately MSEK 800 in unutilised losses brought forward, implying that the Company will not have to pay any tax for a number of years. INCOME BEFORE TAXES, by period, TSEK 2012/ /12 September-November -268, ,598 December-February 415, ,983 March-May 185, ,033, June-August -172, ,795 APPROPRIATION OF PROFITS Proposed allocation of the Company s profits. The Board of Directors proposes that the profits available, SEK 1,019,448,277, be appropriated as follows: Dividend: 39,188,028 shares 2.50 SEK 97,970,070 To be carried forward 921,478,207 (of which is share premium 4,242,533) Total 1,019,448,277 TURNOVER BREAKDOWN, % Other 10% Building Services 7% Sporting Goods Outlets 4% Ski School/Activities 3% Ski Rental 8% Accomodations 12% SkiPass 56% DEFINITIONS EARNINGS PER SHARE Net income for the year attributable to the shareholders in the Parent Company divided by the average number of shares. EARNINGS PER SHARE AFTER FULL CONVERSION Net income for the year attributable to the shareholders in the Parent Company, adjusted for interest expenses after taxes accrued on convertible debentures, divided by the number of shares after full conversion of subscribed convertible debentures. CASH FLOW Cash flow before changes in working capital. CASH FLOW PER SHARE Cash flow divided by the average number of shares. P/E RATIO Share price as per the balance sheet date divided by earnings per share after tax. SHARE PRICE/CASH FLOW Share price at year-end divided by cash flow per share. SHARE PRICE/EQUITY Share price at year-end divided by equity per share. YIELD Dividends divided by share price. EQUITY/ASSETS RATIO Equity as a percentage of balance sheet total. DEBT/EQUITY RATIO Interest-bearing liabilities as a percentage of equity. INTEREST COVERAGE RATIO Income after net financial income plus financial expenses as a percentage of financial expenses. RETURN ON CAPITAL EMPLOYED Income after net financial income plus financial expenses as a percentage of average capital employed. Capital employed is defined as the value of assets deducted by non-interest bearing liabilities. RETURN ON EQUITY Income after tax as a percentage of average equity. RETURN ON TOTAL ASSETS Income after net financial income plus financial expenses as a percentage of average balance sheet total. GROSS MARGIN Operating profit/loss before depreciation/amortisation as a percentage of net sales. OPERATING MARGIN Operating profit/loss after depreciation/ amortisation as a percentage of net sales. NET MARGIN Income before tax as a percentage of net sales. CURRENT RATIO Current assets including granted but unutilised bank overdraft facilities as a percentage of current liabilities. LIQUID RATIO Current assets including granted but unutilised bank overdraft facilities, with deduction of inventories, as a percentage of current liabilities. SLAO Svenska Liftanläggningars Organisation. (The Swedish liftorganisation). ALF Alpinanleggenes Landsforening. (The Norwegian liftorganisation). SKIPASS SkiPass for access to the slopes. SKI DAY One day of skiing with a SkiPass. OBJECT DAY One booked day in a cabin, apartment or hotel. 54 ADMINISTRATION REPORT

55 REVIEW OF THE PAST FIVE YEARS REVIEW OF THE PAST FIVE YEARS 2012/ / / / /09 Net sales and profit/loss Net sales, MSEK 1,665 1,552 1,574 1,688 1,635 Operating income, MSEK 1,706 1,573 1,598 1,728 1,642 Income before depreciation, MSEK Result before taxes, MSEK Profit after taxes, MSEK Cash flow Cash flow before change in working capital, MSEK Cash flow after change in working capital, MSEK Cash flow after investing activities, MSEK Profitability Return on capital employed, % Return on equity, % Return on total assets, % Gross margin, % Operating margin, % Net margin, % Investments Gross investments, MSEK Net investments, MSEK Financial position Balance sheet total, MSEK 3,894 4,002 3,892 3,726 3,669 Equity, MSEK 1,482 1,457 1,466 1,497 1,372 Equity/assets ratio, % Debt/equity ratio Interest coverage ratio Liquidity Current ratio, % Liquid ratio, % Personnel Average number of employees 1,085 1,051 1,099 1,118 1,120 Net sales per employee, TSEK 1,535 1,477 1,402 1,510 1,460 REVIEW OF THE PAST FIVE YEARS 55

56 STATEMENT OF COMPREHENSIVE INCOME FOR THE GROUP TSEK NOTE Net sales 2 1,665,285 1,551,861 Other operating income 4 40,955 21,397 Total operating income 3 1,706,240 1,573,258 Operating expenses Goods for resale -137, ,023 Other external expenses 6, 7-601, ,496 Personnel costs 5, 8-504, ,672 Shares in associated companies income 16-25,274-8,211 Depreciation of tangible and amortisation of intangible fixed assets 9-218, ,485 Operating profit/loss 219, ,371 Income from financial items Profit/loss from securities accounted for as fixed assets ,933 Interest income and similar profit/loss items 34 10,444 16,369 Interest expenses and similar profit/loss items 35-69,806-70,050 Income before tax 159, ,623 Tax 11-23,380 17,925 Net income for the year 136, ,548 OTHER COMPREHENSIVE INCOME Change in fair value of cash flow hedges for the year 13,830-22,557 Deferred tax on cash flow hedges -3,647 6,086 Exchange rate differences for the year upon translation of foreign operations -24,859-12,863 Other comprehensive income for the year -14,676-29,334 Total comprehensive income for the year 121, ,214 Net income for the year attributable to: Shareholders in the Parent Company 136, ,548 Non-controlling interest -295 Net income for the year 136, ,548 Total comprehensive income for the year attributable to: Shareholders in the Parent Company 122, ,214 Non-controlling interest Total comprehensive income for the year 121, ,214 Earnings per share Earnings per share before dilution, SEK 12 3:49 3:99 Earnings per share after dilution, SEK 12 3:49 3:99 Average number of shares before dilution 12 39,188,028 39,188,028 Number of shares after dilution 12 39,188,028 39,438,028 QUARTERLY VALUES 2012/13 Q1 Q2 Q3 Q4 Full year Operating revenues, TSEK 60, , ,139 61,538 1,706,240 Operating profit/loss, TSEK -252, , , , ,122 Operating margin, % neg neg 13 DEPRECIATION of tangible and amortisation of intangible fixed assets MSEK /12 Q1 Q2 Q3 Q4 Full year Operating revenues, TSEK 44, , ,280 44,951 1,573,258 Operating profit/loss, TSEK -247, , , , ,371 Operating margin, % neg neg /09 09/10 10/11 11/12 12/13 56 STATEMENT OF COMPREHENSIVE INCOME FOR THE GROUP

57 STATEMENT OF FINANCIAL POSITION FOR THE GROUP ASSETS, TSEK NOTE Fixed assets Intangible fixed assets , ,650 Tangible fixed assets 14 2,931,034 3,016,794 Deferred tax assets 11 22,015 33,793 Participations in associated companies , ,780 Other participations and long-term holdings 17 84,636 90,839 Other non-current receivables ,870 97,555 Total fixed assets 3,623,041 3,726,411 Current assets -Inventories Goods for resale 61,550 66,238 61,550 66,238 -Current receivables Accounts receivable - trade 19 30,682 34,822 Tax assets 29,810 33,369 Other current receivables 20 79,246 70,133 Prepaid expenses and accrued income 21 43,336 29, , ,075 Cash and cash equivalents Cash and bank balances 26,277 41,131 Total current assets 270, ,444 TOTAL ASSETS 3,893,942 4,001,855 EQUITY AND LIABILITIES Equity Share capital 22 19,594 19,594 Other contributed capital 397, ,573 Reserves -33,711-19,101 Profit brought forward, including net profit/loss for the year 1,097,394 1,058,462 Equity attributable to shareholders in the Parent Company 1,480,850 1,456,528 Non-controlling interests 1,291 - Total equity 1,482,141 1,456,528 Non-current liabilities -Non-current, interest-bearing liabilities Liabilities with credit institutions 25 1,435,635 1,571,611 Pension provisions 26 5,607 2,932 -Non-current, non-interest-bearing liabilities Other provisions Other financial liabilities 32 9,843 22,557 Other non-interest-bearing liabilities 5,053 - Deferred tax liabilities 11 26,039 27,616 Total non-current liabilities 1,482,885 1,625,270 -Current liabilities Liabilities with credit institutions , ,685 Subordinated debenture 24, 25-29,997 Accounts payable - trade 36 64,974 43,315 Tax liabilities 18,908 13,076 Other current liabilities 79,335 71,503 Accrued expenses and deferred income 29 99,528 88,481 Total current liabilities 928, ,057 Total liabilities 2,411,801 2,545,327 TOTAL EQUITY AND LIABILITIES 3,893,942 4,001,855 PLEDGED ASSETS AND CONTINGENT LIABILITIES Pledged assets 30 1,521,331 1,653,549 Contingent liabilities , ,747 STATEMENT OF FINANCIAL POSITION FOR THE GROUP 57

58 CHANGE IN EQUITY FOR THE GROUP Equity attributable to shareholders in the Parent Company GROUP, TSEK Share capital Other contributed capital Reserves Hedging reserves Profit brought forward and net income for the year Total Non-controlling interest Total equity Opening equity, 1 Sept , ,573 10,233 1,039,072 1,466,472-1,466,472 Net profit/loss for the year 156, , ,548 Other comprehensive income for the year * -12,863-16,471-29,334-29,334 Comprehensive income for the year ,863-16, , , ,214 Dividend -137, , ,158 Closing equity 31 Aug , ,573-2,630-16,471 1,058,462 1,456,528-1,456,528 Opening equity 1 Sept , ,573-2,630-16,471 1,058,462 1,456,528-1,456,528 Net profit/loss for the year 136, , ,607 Other comprehensive income for the yea r* -24,793 10,183-14, ,676 Comprehensive income for the year ,793 10, , , ,931 Takeovers without controlling influence ,652 Dividend -97,970-97,970-97,970 Closing equity , ,573-27,423-6,288 1,097,394 1,480,850 1,291 1,482,141 * Items which can be reallocated to the profit and loss 58 CHANGE IN EQUITY FOR THE GROUP

59 CASH FLOW STATEMENT FOR THE GROUP TSEK NOTE Operating activities Income after financial items 159, ,623 Adjustments for non-cash items, etc , , , ,182 Tax paid -3,884-29,548 Cash flow from operating activities before changes in working capital 362, ,634 Cash flow from changes in working capital Increase (-) / Decrease (+) in inventories 7, Increase (-) / Decrease (+) in operating receivables -22,886-3,297 Increase (+) / Decrease (-) in operating liabilities 51,230-16,961 Cash flow from operating activities 399, ,278 Investing activities Acquisition of subsidiaries, net of cash Sale of subsidiaries, net of cash Acquisition of intangible fixed assets -9,090-18,507 Acquisition of tangible fixed assets -128, ,572 Acquisition of financial assets -45, ,339 Sale of tangible fixed assets 38,843 13,589 Sale / decrease of financial assets - 22,634 Cash flow from investing activities -143, ,195 Financing activities Loans raised - 150,477 Repayment of debt -169,588 - Dividends paid -97, ,158 Cash flow from financing activities -267,558 13,319 Cash flow for the year -12,251 2,402 Cash and cash equivalents at the beginning of the year 41,131 39,819 Exchange rate differences in cash and cash equivalents -2,603-1,090 Cash and cash equivalents at year-end 31 26,277 41,131 CASH FLOW from operating activities before changes in working capital, MSEK CASH FLOW after investing activities, MSEK 600 MSEK MSEK /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/13 CASH FLOW STATEMENT FOR THE GROUP 59

60 PARENT COMPANY INCOME STATEMENT TSEK NOTE Net sales 2 1,148,299 1,076,038 Other operating income 4 24,504 5,990 Total operating income 2,3 1,172,803 1,082,028 Operating expenses Goods for resale -83,256-77,134 Other external expenses 6, 7-479, ,735 Personnel costs 5, 8-347, ,628 Depreciation of tangible and amortisation of intangible fixed assets 9-124, ,818 Operating profit/loss 137, ,713 Income from financial items Income from securities accounted for as fixed assets Income from participations in Group companies 10 37,215 36,365 Interest income and similar profit/loss items, external 34 5,349 10,602 Interest income, Group companies 34 2,502 11,241 Interest expenses and similar profit/loss items, external 35-35,410-40,278 Interest expenses, Group companies Income after financial items 147, ,719 Appropriations ,776 Income before tax 147, ,495 Tax 11 12,171-45,089 Net income for the year 159, ,406 OTHER COMPREHENSIVE INCOME Change in fair value of cash flow hedges for the year 11,948-10,944 Deferred tax on cash flow hedges -3,097 2,878 Other comprehensive income for the year 8,851-8,066 Total comprehensive income for the year 168, , PARENT COMPANY INCOME STATEMENT

61 PARENT COMPANY BALANCE SHEET ASSETS, TSEK NOTE Fixed assets Intangible fixed assets 13 34,501 32,735 Tangible fixed assets 14 1,558,932 1,604,780 Financial fixed assets Participations in Group companies , ,635 Participations in associated companies 16 8,668 7,826 Other participations and investments held as fixed assets 17 12,971 10,513 Other non-current receivables 18 88,059 98,595 Receivables from Group companies , ,520 TOTAL FIXED ASSETS 2,283,991 2,485,604 Current assets -Inventories Goods for resale 46,872 50,517 46,872 50,517 - Current receivables Accounts receivable trade 19 29,638 19,691 Tax assets 22,167 22,143 Other current receivables 20 40,586 43,377 Prepaid expenses and accrued income 21 40,555 18, , ,178 - Cash and cash equivalents Cash and bank balances 2,859 3,409 TOTAL CURRENT ASSETS 182, ,104 TOTAL ASSETS 2,466,668 2,643,708 EQUITY AND LIABILITIES Equity 22 - Restricted equity Share capital 19,594 19,594 Statutory reserve 25,750 25,750 45,344 45,344 - Non-restricted equity Share premium reserve 4,242 4,242 Profit brought forward 855, ,426 Net income for the year 159, ,406 1,019, ,074 Total equity 1,064, ,418 Untaxed reserves Non-current liabilities - Non-current, interest-bearing liabilities Liabilities to Group companies 27 43,734 24,176 Liabilities to credit institutions ,502 1,125,597 -Provisions Provisions for pensions 26 3, Other provisions Non-current, non-interest-bearing liabilities Other non-interest-bearing liabilities ,944 Deferred tax liabilities , ,334 Total non-current liabilities 904,305 1,308,003 - Current liabilities Liabilities to credit institutions 24, , ,997 Accounts payable trade 36 44,646 28,832 Other current liabilities 54, ,755 Accrued expenses and deferred income 29 58,293 52,703 Total current liabilities 497, ,287 Total liabilities 1,401,876 1,649,290 TOTAL EQUITY AND LIABILITIES 2,466,668 2,643,708 PLEDGED ASSETS AND CONTINGENT LIABILITIES Pledged assets , ,167 Contingent liabilities , ,089 PARENT COMPANY BALANCE SHEET 61

62 CHANGE IN EQUITY FOR THE PARENT COMPANY Restricted equity Non-restricted equity Statutory Share premium Hedging Profit brought Net income PARENT COMPANY, TSEK Share capital Reserve Reserve reserves forward for the year Total equity Opening equity, 1 Sept ,594 25,750 4, , ,236 Net income for the year 395, ,406 Other comprehensive income for the year -8,066-8,066 Comprehensive income for the year , , ,340 Dividends -137, ,158 Closing equity, 31 Aug ,594 25,750 4,242-8, , , ,418 Opening equity, 1 Sept ,594 25,750 4,242-8, , ,418 Net income for the year 159, ,493 Other comprehensive income for the year 8,851 8,851 Comprehensive income for the year , , ,344 Dividends -97,970-97,970 Closing equity, 31 Aug ,594 25,750 4, , ,493 1,064, CHANGE IN EQUITY FOR THE PARENT COMPANY

63 CASH FLOW STATEMENT FOR THE PARENT COMPANY TSEK NOTE Operating activities Income after financial items 147, ,719 Adjustments for non-cash items, etc , , , ,324 Tax paid Cash flow from operating activities before changes in working capital 253, ,059 Cash flow from changes in working capital Increase (-) / Decrease (+) in inventories 3,646-2,447 Increase (-) / Decrease (+) in operating receivables 106,585-4,147 Increase (+) / Decrease (-) in operating liabilities -42,061 61,983 Cash flow from operating activities 321, ,448 Investing activities Acquisition of intangible fixed assets -13,212-18,518 Acquisition of tangible fixed assets -76, ,086 Sale of tangible fixed assets 31,941 - Investments in financial assets -8,786-62,366 Sale / decrease of financial assets Cash flow from investing activities -66, ,670 Financing activities Loans raised - 115,000 Repayment of debt -157, ,520 Dividends paid -97, ,158 Cash flow from financing activities -254, ,678 Cash flow for the year Cash and cash equivalents at the beginning of the year 3,409 3,309 Cash and cash equivalents at year-end 31 2,859 3,409 CASH FLOW STATEMENT FOR THE PARENT COMPANY 63

64 NOTES TO THE FINANCIAL STATEMENTS NOTE 1 ACCOUNTING PRINCIPLES COMPLIANCE WITH STANDARDS AND STATUTORY REQUIREMENTS The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as well as in accordance with the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the EU. The Swedish Financial Reporting Board s standard RFR 1 has also been applied. The Parent Company has applied the same accounting principles as the Group, except for the cases specified below in the section Parent Company Accounting Principles. CONDITIONS FOR THE PREPARATION OF THE PARENT COMPANY S AND THE GROUP S FINANCIAL STATEMENTS The Parent Company s functional currency, as well as the reporting currency for the Parent Company and the Group, is the Swedish krona (SEK). This implies that the financial statements are presented in SEK. All amounts, unless stated otherwise, are rounded off to the nearest thousand. Assets and liabilities are reported at amortised acquisition cost and, where appropriate, with a deduction for depreciation/amortisation, unless otherwise indicated. Preparing the financial statements in accordance with IFRS requires that the Group s management undertakes assessments and estimations, and makes assumptions influences the application of the accounting principles and the carrying amounts of assets, liabilities, income and expenses. The estimations and assumptions are based on historical experience and a number of other factors which, under the prevailing circumstances, are deemed reasonable. The results of these estimations and assumptions are subsequently used to assess the carrying amounts of assets and liabilities, which are otherwise not clearly apparent from other sources. The actual outcome can deviate from these estimations and assessments. Estimations and assumptions are reviewed regularly. Changes in estimations are reported in the period in which the change is made, if the change only affects that specific period, or they are reported in the period in which the change is made and in future periods if the change affects both the current and future periods. The accounting principles described for the Group have been applied consistently for all periods presented in the Group s financial statements, unless stated otherwise below. The Group s accounting principles have been applied consistently in the reporting and consolidation of the Parent Company, subsidiaries and associated companies. CHANGES IN ACCOUNTING PRINCIPLES Changes in accounting principles resulting from new, or amended, IFRS The changes in accounting principles applied by the Group from 1 September 2012 are described below. Other amended and new IFRS effective from 1 September 2012 have had no significant effect on the Group s accounting. Amendment to IAS 1, Presentation of Financial Statements (Presentation of other comprehensive income). This amendment applies to the manner in which items within Other comprehensive income are to be presented. The items are to be divided into two groups; items which will be reclassified to net income and items which will not be reclassified. Items which will be reclassified are translation differences. Items which will not be reclassified are actuarial gains and losses. The amendment is to be applied for financial years beginning 1 July 2012 or later, and shall be applied retroactively. Amendment to IAS 24, Related Party Disclosures, primarily regarding disclosures for government related companies, but also with regard to the definition of related party. Amendments to IFRIC 14 IAS 19 The Limit on a Defined Benefit Assets, Minimum Funding Requirements and their Interaction with regard to advance payments to cover minimum funding requirements. Other forthcoming amended and new IFRS are not expected to have any impact on the Company s accounts. New IFRS and interpretations to be applied during upcoming periods IFRS 9, Financial Instruments, is intended to replace IAS 39, Financial Instruments: Recognition and Measurement, with a proposed effective date from 2015 at latest. The IASB has published the first two of, at least, three parts which, together, will comprise IFRS 9. The first part concerns the classification and measurement of financial assets. The categories of financial assets in IAS 39 are replaced by two categories, in which measurement is made at fair value or amortised acquisition cost. Amortised acquisition cost is used for instruments held in a business model having the objective of receiving the contractual cash flows, which will form payments of principal and interest on the principal, on specified dates. Other financial assets are reported at fair value, and the possibility to apply the fair value option, as in IAS 39, remains. Changes in fair value are to be reported in income, with the exception of changes in the value of equity instruments not held for trading and for which the initial designation is made to report changes in value in Other comprehensive income. Changes in the value of derivatives in hedge accounting are not affected by this aspect of IFRS 9, but are to be reported in accordance with IAS 39 until further notice. In October 2010, IASB also published those sections of IFRS 9 concerning the recognition and measurement of financial liabilities. The majority of sections are similar to the previous requirements of IAS 39, with the exception of financial liabilities voluntarily designated as measured at fair value, in accordance with the so-called Fair value option. Changes in the value of these liabilities are to be divided between changes which are attributable to the holder s credit rating and changes attributable to changes in the reference interest rate. The application of IFRS 9 is currently estimated to have no material impact on the accounts. The effects of the following future changes in accounting principles will affect the Group s statement of financial position and equity ratio. An analysis of the classification of the associated companies is ongoing, which is why an amount cannot be estimated with reasonable accuracy at this date: IFRS 10 Consolidated Financial Statements. New standard for consolidated financial statements. The standard will become effective in IFRS 11 Joint Arrangements. New standard for the accounting of joint ventures and joint operations. The standard will become effective in It is not currently possible to assess, with a reasonable degree of accuracy, the effects of the following future changes in accounting principles: IFRS 12 Disclosure of Interests in Other Entities. New standard for the disclosure of all types of investments in other companies. The standard will become effective in Amended IAS 27 Separate Financial Statements. The amended standard includes requirements for legal entities only. In principle, there are no changes regarding the accounting and disclosures for separate financial statements. Accounting for associated companies and joint ventures has been included in IAS 27. The amendments are likely to become effective in Amendment to IAS 28 Investments in Associates and Joint Ventures. The amended standard corresponds, in principle, to the previous IAS 28. The amendment concerns the manner in which accounting is to be prepared when there are changes in investments in associates in which significant or joint controlling influence ceases, or not. The amendment is to be applied for financial years beginning on 1 January 2013 or later. IFRS 13 Fair Value Measurement. A new, uniform standard for the measurement of fair value and improved disclosure. The standard is to be applied for financial years beginning on 1 January 2013 or later. Amendment to IAS 19 Employee Benefits. The amendment implies that the use of the so-called corridor method is eliminated. Actuarial gains and losses are to be reported in Other comprehensive income. Returns which are calculated on plan assets shall be based on the discount rate applied in the calculation of pension commitments. The difference between the actual and calculated return on plan assets is to be reported in Other comprehensive income. The amendment is to be applied for financial years beginning 1 January 2013 or later, and is to be applied retroactively. Other forthcoming, amended and new IFRS are not expected to have any impact on the Company s accounts. SEGMENT REPORTING An operating segment is a part of the Group that conducts business from which it can generate income and incur expenses for which independent financial information is available. The operating segments results are followed up by the Company s chief operating decision-makers in order to evaluate financial performance and to be able to allocate resources to operating segments. The performance measure that is monitored is the operating segment s operating profit. See Note 3 for a further description of the division and presentation of operating segments. Segment information is provided, in accordance with IFRS 8, for the Group only. CLASSIFICATIONS, ETC. Non-current assets and non-current liabilities in the Parent Company and the Group are comprised, in all material respects, of only the amounts expected to be recovered, or paid, later than twelve months from balance sheet date. Current assets and current liabilities in the Parent Company and the Group comprise, in all material respects, only those amounts expected to be recovered, or paid, within twelve months from balance sheet date. 64 NOTES

65 CONT. NOTE 1 ACCOUNTING PRINCIPLES CONSOLIDATION PRINCIPLES Subsidiaries Subsidiaries are companies that are controlled by SkiStar AB. Control implies having the right, directly or indirectly, to form a company s financial and operating strategies with the purpose of gaining economic benefit. In the assessment to determine any control, potential shares with voting rights which can be utilised, or converted, immediately, are taken into consideration. Acquisitions 1 September 2009 or later Subsidiaries are reported according to the acquisition method in which the acquisition of a subsidiary is considered to comprise a transaction through which the Group indirectly acquires the subsidiary s assets and assumes its liabilities. The fair value of acquired identifiable assets and assumed liabilities on acquisition date, as well as any non-controlling interest, is established in the acquisition analysis. Transaction costs, with the exception of transaction costs attributable to the issue of equity or debt instruments, are reported directly in net income. For business combinations in which transferred consideration, any non-controlling interest and fair value of previously owned shares (for stepwise acquisitions) exceed the fair value of the acquired assets and assumed liabilities which are reported separately, the difference is reported as goodwill. When the difference is negative, so called acquisition at low consideration, it is reported directly in net income. Transferred compensation in connection with the acquisition does not include payments relating to the settlement of previous business relationships. This type of settlement is reported in net income. Conditional considerations are reported at fair value on acquisition date. In cases in which the conditional consideration is classified as an equity instrument, no revaluation is made and settlement is carried out within equity. Other conditional considerations are revalued at each reporting date and changes are reported in net income. In the event that the acquisition does not refer to 100% of the subsidiary, non-controlling interest arises. There are two alternatives for reporting noncontrolling interests. These two alternatives are to report the proportional share of net assets of the noncontrolling interest, or, alternatively, that the non-controlling interest is reported at fair value, which implies that the non-controlling interest incurs a portion of the goodwill. The choice between the different alternatives for accounting non-controlling interest can be made on an acquisition-by-acquisition basis. For acquisitions which are carried out step-wise, goodwill is established on the date on which control is acquired. Earlier holdings are measured at fair value and any change is reported in net income. Disposals leading to the loss of control, but in which the holding is retained, are measured at fair value and the change in value is reported in net income. Acquisitions undertaken between 1 September 2004 and 31 August 2009 Acquisitions made between 1 September 2004 and 31 August 2009, in which the acquisition cost exceeds the fair value of acquired assets and assumed liabilities together with contingent liabilities which are reported separately, are reported as goodwill. When the difference is negative, this is reported directly in net income. Transaction costs, excluding transaction costs attributable to the issuance of equity or debt instruments are included in the cost. Acquisitions made prior to 1 September 2004 (date of transition to IFRS) For acquisitions made before 1 September 2004, goodwill is reported, after impairment tests, at acquisition cost, which corresponds to the carrying amount according to previous accounting principles. The classification and accounting treatment of business combinations taking place before 1 September 2004 have not been reassessed in accordance with IFRS 3 in establishing the Group s opening balance as of 1 September 2004 according to IFRS. Financial statements of subsidiaries are included in the consolidated financial statements from the date of acquisition to the date on which control ceases to exist. In cases in which the subsidiary s accounting principles are not consistent with the Group s accounting principles, adjustments have been made to the Group s accounting principles. Losses attributable to non-controlling interests are allocated to the non-controlling interests, although the non-controlling interests are recorded as a debit item in equity. Acquisition of non-controlling interests Acquisition of non-controlling interest is reported as a transaction within equity, i.e. between the Parent Company (in retained profits) and the non-controlling interest. Consequently, goodwill does not arise in those transactions. A change in non-controlling interest is based on the proportional share of net assets. Sales to non-controlling interests Sales to non-controlling interests, but where a controlling interest remains, are reported as a transaction within equity, i.e. between the owners of the Parent Company and the non-controlling interest. The difference between payment received and the proportional share of the acquired net assets referring to the noncontrolling interest, is reported in retained profits. Associated companies Associated companies are the companies in which the Group exercises a significant influence, but not control, regarding financial and operating policies, usually through shareholdings of between 20% and 50% of the voting rights. From the point in time at which the significant influence is obtained, shares in the associated company are reported in the consolidated accounts according to the equity method. According to the equity method, the value of shares in the associated company reported in the Group is equivalent to the Group s participation in the associated company s equity, as well as consolidated goodwill and any other remaining values on consolidated surplus and deficit value. The Group s share of the associated company s net income, adjusted for any depreciation/amortisation, impairment or dissolution of acquired surplus and deficit values is reported as Shares in the income of associated companies in the net income for the Group. The main change in the carrying amount of shares in associated companies consists of these shares in profit, less dividends received from associated companies. The Group s share of other comprehensive income in the associated companies is reported in a separate item in the Group s other comprehensive income. Transaction costs, with the exception of issue expenses attributable to issuing of equity or debt instruments, are included in the acquisition cost. Any difference at acquisition between the acquisition cost for the holding and the owner Company s participation in the fair value net of the associated company s identifiable assets, liabilities and contingent liabilities, is reported according to the same principles as in acquisitions of subsidiaries. When the Group s share of the reported losses in the associated company exceeds the carrying amount of the participations in the Group, the value of the shares is reduced to zero. Losses are also settled against long-term financial transactions without collateral, which, in their economic substance, comprise a part of the owner Company s net investment in the associated company. Continued losses are not reported unless the Group has provided guarantees to cover losses accrued in the associated company. The equity method is applied up to the point in time at which the significant influence ceases. Transactions to be eliminated upon consolidation Intra-Group receivables and liabilities, income or expenses and unrealised gains or losses arising from intra-group transactions are eliminated in their entirety upon the preparation of the consolidated accounts. Unrealised gains arising from transactions with associated companies and companies under joint control are eliminated in an amount equivalent to the Group s participating interest in the Company. Unrealised losses are eliminated in the same manner as unrealised gains, but only to the extent to which there is no indication of impairment. FOREIGN CURRENCY Transactions in foreign currency Transactions in foreign currency are translated to the functional currency at the exchange rate of the transaction date. The functional currency is the currency in the primary economic environment in which the Company conducts its operations. Monetary assets and liabilities in foreign currency are translated to the functional currency at the exchange rate applicable on the balance sheet date. Exchange rate differences arising on translation are reported in net income. Nonmonetary assets and liabilities reported at historical acquisition cost are translated at the exchange rate at the time of the transaction. Non-monetary assets and liabilities reported at fair value are translated to the functional currency at the exchange rate applicable at the date of measurement at fair value, following which the exchange rate difference is reported in the same manner as other changes in value concerning the asset or liability. Foreign operations financial statements Assets and liabilities in foreign operations, including goodwill and other consolidated surplus and deficit values are translated from the foreign operations functional currencies to the Group s reporting currency, SEK, at the exchange rate of the balance sheet date. Income and expenses in foreign operations are translated to SEK at the average rate for the period, which comprises an approximation of the rates at the respective transaction dates. Exchange rate differences arising from the translation of foreign operations are reported in other comprehensive income as a translation reserve. Upon the sale of foreign operations, the accumulated exchange rate differences referring to the operations are realised in net income of the Group. NOTES 65

66 CONT. NOTE 1 ACCOUNTING PRINCIPLES Net investment in foreign operations Exchange rate differences arising in connection with the translation of a foreign net investment and the related effects of the hedging of the net investments are reported in other comprehensive income and are accumulated in a separate component in equity. Upon the sale of foreign operations, the accumulated exchange rate differences, less any currency hedging attributable to the operations, are realised in the net income of the Group. INCOME Sale of goods and services Income from the sale of goods is reported in net income when the significant risks and rewards associated with the ownership of the goods have been transferred to the buyer. Income from services is reported when the service has been completed. A partially completed service is reported in net income based on the stage of completion as at balance sheet date. Income is not reported if it is likely that the economic benefits will not accrue to the Group. If there is significant uncertainty regarding payment, related costs or the risk of the goods being returned, and if the seller retains a continuing involvement usually associated with ownership, then no income is recognised. Income from property sales Income from property sales is normally recognised on the date of taking possession unless the risks and rewards have been transferred to the buyer at an earlier date. The control of the asset may have been transferred earlier than the possession date and, if so, the income is recognised at the earlier date. In assessing the date for income recognition, agreements between the parties concerning risks and rewards and continuing involvement are taken into consideration. In addition, circumstances that can influence the outcome of the transaction and that are beyond the control of the seller and/or buyer are also taken into consideration. Rental income Rental income from the rental of property used in business operations is recognised in net income using the straight-line method, based on the terms of the rental agreement. Government grants Government grants related to assets are reported in the statement of financial position as a reduction of the asset s carrying amount. OPERATING EXPENSES AND FINANCIAL INCOME AND EXPENSES Operating leases Expenses regarding operating leases are reported in net income using the straight-line method over the lease term and in some cases according to the straight-line method during the period of December to April, when the assets are used. Benefits received in conjunction with the signing of such a lease agreement are reported in net income, reducing the lease expense. Variable charges are recognised as an expense in the periods in which they arise. All leases are operating leases. Financial income and expenses Financial income and expenses comprise interest income on bank deposits and receivables and interestbearing securities, interest expenses on loans, coupons on interest swaps, dividend income and exchange rate differences. Interest income on receivables and interest expenses on liabilities are calculated with the application of the effective interest method. The effective interest is the interest which renders the present values of all the estimated future deposits and payments during the expected fixed interest term of the financial instrument equal to the net carrying amount of the receivables or liabilities. Interest income includes allocated amounts of transaction costs and any discounts, premiums and other differences between the original value of the receivable and the amount received upon maturity. Dividend income is reported when the right to receive payments is established. FINANCIAL INSTRUMENTS Financial instruments reported in the statement of financial position for the Group include, on the asset side, cash and cash equivalents, accounts receivable, shares and other equity instruments and loans receivable. Accounts payable, issued debt and equity instruments, interest swaps, forward agreements and loans are included in liabilities and equity. Financial instruments are initially reported at acquisition cost equivalent to the instrument s fair value, with the addition of transaction costs for all financial instruments other than those belonging to the category Financial assets at fair value through P/L, which are reported excluding transaction costs. Subsequent reporting depends on the manner in which the instruments have been classified, in accordance with the following: A financial asset or a financial liability is recognised in the statement of financial position for the Group when the Company becomes a party to the instrument s contractual agreement. A receivable is recognised when the Company has performed and there is a contractual obligation for the other party to pay, even if the invoice has not yet been sent. Accounts receivable are recognised in the statement of financial position for the Group when an invoice has been sent. Liabilities are recognised when the counterparty has performed and there is a contractual obligation to pay, regardless of whether the invoice has been received. Accounts payable are recognised when the invoice has been received. A financial asset is derecognised in the statement of financial position for the Group when the rights in the agreement are realised, mature or when the Company loses control over them. The same applies for components of a financial asset. A financial liability is derecognised in the statement of financial position for the Group when the obligation in the agreement is fulfilled or is, in any other manner, terminated. The same applies for components of a financial liability. The acquisition or sale of financial assets is reported on transaction date, which is the date on which the Company commits itself to acquiring or selling the asset, except for cases in which the Company acquires or sells listed securities, when settlement day reporting is applied. The fair value of listed financial assets is equivalent to the asset s listed bid price at balance sheet date. The fair value of unlisted financial assets is established through the utilisation of valuation techniques, for example, recently performed transactions, prices of similar instruments and discounted cash flows. For further information, see Note 32. On each reporting date, the Company evaluates whether there are objective indications that a financial asset or a group of financial assets is impaired. For equity instruments classified as assets available-forsale, a material and long-term decline in the fair value to an amount lower than the instrument s acquisition cost is presumed before impairment is executed. If an asset classified as available-for-sale is impaired, any previously accumulated impairment reported directly against equity is recycled in net income. Impairment of equity instruments reported in the income statement may not be recycled in net income at a later occasion. Financial instruments are classified in conjunction with initial recognition based on the purpose for which the instrument was acquired, which influences the subsequent accounting of the instrument. Financial instruments are subsequently reported according to their classification as follows: Loans receivable and accounts receivable Loans receivable and accounts receivable are nonderivative financial assets with fixed or determinable payments that are not listed on an active market. Receivables arise when the Company provides funds, goods and services directly to the beneficiary with no intention of trading in the resulting claim. This category also includes acquired receivables. Assets in this category are measured at amortised acquisition cost. Amortised acquisition cost is determined on the basis of the effective interest calculated at the date of acquisition. Accounts receivable are classified to the category loans receivable and accounts receivable. Accounts receivable are reported at the amounts which are expected to inflow after deductions for individually assessed doubtful claims. The accounts receivables expected duration is short, for which reason they are usually reported at their nominal amount without discounting. Impairment of accounts receivable is reported in operating expenses. Non-current receivables and other current receivables are receivables arising when the Company provides funds with no intention of trading in the resulting claim. If the duration of the expected period of holding is longer than one year, they are deemed to comprise non-current receivables and if they are shorter than one year, they comprise other receivables. Available-for-sale financial assets The category available-for-sale financial assets includes financial assets that are not classified in another category or which the Company has initially designated to this category. Assets in this category are measured on an ongoing basis at fair value, with changes in value reported in Other comprehensive income and the accumulated value changes in a special component of equity, although not value changes dependent on impairment, nor interest on debt instruments, income from dividends or exchange rate differences on monetary items reported in net income. At the time an investment is derecognised in the statement of financial position for the Group, accumulated profit or loss which has previously been reported in other comprehensive income is recycled through net income. Financial investments Financial investments comprise either non-current financial assets or current investments depending on the intention of the holding. If the maturity or the expected duration of the holding is longer than one year, they are deemed to comprise non-current financial assets, and if they are shorter than one year, they comprise current investments. 66 NOTES

67 CONT. NOTE 1 ACCOUNTING PRINCIPLES Other financial liabilities Financial liabilities not held for trade are measured at amortised acquisition cost. Amortised acquisition cost is determined on the basis of the effective interest calculated at the time that the liability was recognised. This entails that overvaluation and undervaluation and costs directly related to share issues are allocated over the duration of the liability. Liabilities are classified as other financial liabilities, which implies that they are initially reported at the amount received after deduction of transaction costs. In the subsequent measurement, the loan is measured at amortised acquisition cost according to the effective interest method. Non-current liabilities have an expected duration longer than one year, while current liabilities have a duration less than one year. Accounts payable are classified in the category Other financial liabilities. Accounts payable have a short expected duration and are measured without discounting at their nominal amount. Interest rate risk The Group s interest rate risk arises primarily through short-term borrowing and is managed by the CFO. According to the Financial Policy, the objective of the long-term debt portfolio is that the average fixedinterest period should be short-term. As this is considered to be necessary due to the Company s market and interest rate conditions, derivative instruments, such as interest swap agreements, can be utilised to manage interest rate risk, which means that longer fixedinterest periods of 3-10 years may prevail. Cash and cash equivalents Cash and cash equivalents includes cash-on-hand and immediately accessible funds on deposit with banks or equivalent institutions, as well as current investments having a duration of less than three months from the acquisition date and which are subject to only an insignificant risk of value fluctuations. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recognised as assets in the balance sheet when it is likely that the future economic benefits associated with the assets will accrue to the Company, and when the asset s acquisition cost can be calculated reliably. Property, plant and equipment are recognised in the Group at acquisition cost, less accumulated depreciation and any impairment. The acquisition cost includes the price paid and any costs directly attributable to rendering the asset in a place and condition in which it can be utilised for the purpose intended by the acquisition. Examples of directly attributable costs included in acquisition cost are expenses for shipping and handling, installation, land registration certificates and consulting and legal services. Accounting principles for impairment are stated below. The acquisition cost for property, plant and equipment produced by the Company, itself, includes expenses for materials and employee costs, and, if applicable, other production costs considered to be directly attributable to the asset. Property, plant and equipment consisting of components with differing estimated useful lifetimes are treated as separate components of property, plant and equipment. The carrying amount for property, plant and equipment is removed from the statement of financial position for the Group when the asset is disposed of or sold or when no future economic benefits are expected from the use or disposal/sale of the asset. Gains or losses arising on the sale or disposal of an asset comprise the difference between the selling price and the carrying amount of the asset, less direct selling expenses. Gains or losses are recognised as other operating income/expenses. Subsequent expenditure Subsequent expenditure is added to the acquisition cost only when it is likely that the future economic benefits associated of the asset will accrue to the Company and when the acquisition cost can be calculated reliably. All other subsequent expenditure is recognised as an expense in the period in which it arises. The critical factor in determining when subsequent expenditure is to be added to the acquisition cost is whether the subsequent expenditure refers to the replacement of identified components or parts thereof, if so, the subsequent expenditure is capitalised. In cases in which a new component is identified, the expenditure is added to the acquisition cost. Any undepreciated carrying amount on replaced components, or parts of components, is eliminated and expensed in conjunction with the replacement. Repair costs are expensed on an ongoing basis. Depreciation principles Depreciation is reported on a straight-line basis over the asset s estimated useful life. Land and land improvements associated with ski slopes are not depreciated. The Group applies component depreciation, in which the estimated useful lives of the components form the basis for depreciation. Estimated useful lives: Buildings (owner-occupied properties) years Land improvements 20 years Machinery and equipment 3 33 years Owner-occupied properties consist of a number of components with differing estimated useful lives. The primary category is buildings and land. No depreciation is charged on the land component, the estimated useful life of which is unlimited. Buildings, however, consist of a number of components with varying estimated useful lives. The estimated useful lives of these components have been determined to vary between 15 and 50 years. The following primary groups of components have been identified and form the basis of depreciation on buildings: Structure and foundation 50 years Structural additions, inner walls 40 years Fixtures and fittings: heating, electricity, water and sanitation, ventilation, etc. 40 years External surfaces: facades, roof, windows etc. 40 years Fixed equipment, kitchen equipment, etc. 25 years Heating and ventilation 30 years Internal surfaces, machinery, etc. 15 years Machinery and equipment includes ski lifts and snowmaking facilities consisting of a number of components with varying estimated useful lives. The estimated useful lives for these components have been determined to vary between 10 and 33 years. The following primary groups of components have been identified and form the basis of depreciation on lifts: Foundations and masts 33 years Cabins, gondolas, chairs and carriers years Lines years Engines, gearboxes and electronics 15 years Other movable mechanisms 20 years The following primary groups of components have been identified and form the basis of depreciation on snowmaking facilities: Pipes and hydrants 20 years Compressors 15 years Pumps, snow cannons and electronics 10 years The assessment of the residual values and useful lives of assets is reviewed annually. INTANGIBLE ASSETS Goodwill Goodwill represents the difference between the acquisition cost of acquiring a business combination and the fair value of the acquired assets, assumed liabilities and any contingent liabilities. Goodwill is measured at acquisition cost less any accumulated impairment. Goodwill is divided among cash-generating units and is not amortised; but is rather, tested annually for impairment. Goodwill arising on the acquisition of associated companies is included in the carrying amount for the participations in associated companies. In acquisitions of business combinations in which the cost is less than the net value of acquired assets and of assumed and contingent liabilities, the difference is recognised directly in net income. Other intangible assets Other intangible assets acquired by the Group are recognised at acquisition cost less accumulated amortisation and impairment. Costs incurred for internally generated goodwill and internally generated trademarks are recognised in net income as they arise. Expenditures for development of the Group s booking and sales systems are capitalised when such expenditures are expected to produce future economic benefits. Capitalised expenditures comprise external invoiced costs and, if applicable, direct costs for the Company s own personnel. Subsequent expenditure Subsequent expenditure for capitalised intangible assets are recognised as an asset in the statement of financial position for the Group only when they increase the future economic benefits attributable to the asset to which the costs are related. All other expenditure is expensed as it arises. Amortisation principles Amortisation is reported in net income on a straightline basis over the estimated useful lives of the intangible assets, as long as the useful lives are not indefinite. Goodwill and intangible assets with indefinite useful lives are tested for impairment on an annual basis or as soon as any indication arises that the asset in question has declined in value. Intangible assets subject to amortisation are amortised from the date on which the asset became available for use. The estimated useful lives are: Lease agreements years Capitalised development expenditure, rental rights, etc. 5 years The useful lives are reviewed on an annual basis. NOTES 67

68 CONT. NOTE 1 ACCOUNTING PRINCIPLES INVENTORIES Inventories are measured at the lower of acquisition cost and net realisable value. Net realisable value is the estimated sales price in current operations less estimated selling costs. The acquisition cost for inventories is calculated applying the First-in/First-out principle (FIFO) and includes expenditure arising from the acquisition of the inventories and for the transportation of the assets to their current place and condition. IMPAIRMENT The carrying amounts of the Group s assets are tested on each balance sheet date for indications of impairment. IAS 36 is applied as regards the impairment of assets other than financial assets, which are reported according to IAS 39, assets for sale and disposal groups, which are reported according to IFRS 5, inventories, plan assets used to finance employee benefits and deferred tax assets. The carrying amounts of assets other than those above are tested in accordance with the standard covering the asset. For goodwill and other intangible assets with indefinite estimated useful lives and for intangible assets which are not yet ready for use, the recoverable amount is calculated annually or when an indication of impairment arises. If it is not possible to establish the materially independent cash flow for a particular asset, the asset shall be grouped during impairment testing at the lowest level at which it is possible to identify material, independent cash flows (the cash-generating unit). Impairment is reported when an asset s or cash generating unit s carrying amount exceeds its recoverable amount. Impairment is charged net income. The impairment of assets attributable to a cashgenerating unit (group of units) is initially allocated to goodwill, after which the assets included in the unit (group of units) are impaired proportionally. Goodwill was tested for impairment 31 May 2013, even though there was no indication of impairment. The recoverable amount of other assets is the higher of the fair value less selling costs and value in use. In calculating the value in use, the future cash flow is discounted by a discounting factor taking into consideration risk-free interest and the risk associated with the particular asset. For an asset that does not generate a cash flow significantly independent of other assets, the recoverable amount is calculated for a cash-generating unit to which the asset belongs. Impairment of financial assets In conjunction with each reporting, the Company carries out evaluations to determine whether there is objective evidence that the value of a financial asset or group of assets needs to be impaired. Objective evidence is comprised partly of observable circumstances which have taken place and which have a negative impact on the possibility of recovering the acquisition cost and also on the material or long-term reduction of the fair value of an investment in a financial investment classified as an available-for-sale financial asset. The Company classifies accounts receivable as doubtful when they have matured for payment in excess of 180 days. The impairment requirement of the receivables is determined on the basis of historical experience of doubtful debts on similar receivables. The accounts receivable with an impairment requirement are reported at the present value of expected future cash flows. The receivables with a short maturity which can be sold are not, however, discounted. Equity instruments classified as available-forsale financial assets are seen to incur an impairment requirement, and are impaired if the fair value is less than the acquisition cost by a material amount, or when the value decrease is long-term. The Company considers a value decrease greater than 20% to be material, and a period of at least nine months comprises a long-term decline in value. With the impairment of an equity instrument classified as an available-for-sale financial asset, previously reported accumulated gains or losses in equity are reclassified via other comprehensive income in net income. The amount of the accumulated losses which are recycled from equity via other comprehensive income in net income is comprised of the difference between the cost and fair value, after deduction for any possible impairment of the financial asset which has previously been reported in net income. Impairment of available-for-sale financial assets is reported in net income, included in net financial items. Reversal of impairment The impairment of assets included in the scope of IAS 36 is reversed if there is both an indication that an impairment requirement is no longer in place and if there has been a change in the assumption providing the basis for the calculation of the recoverable amount. The impairment of goodwill is, however, never reversed. A reversal is recorded only to the degree that the asset s value reported after reversal does not exceed the carrying amount which would have been reported, with deduction for impairment as applicable, if no impairment had been made. Impairment of loans receivable and accounts receivable reported at amortised acquisition cost is reversed if the previous reason for impairment no longer exists and if full payment from the client can be expected to be received. Impairment of equity instruments classified as available-for-sale, which have been previously reported in net income, is not reversed via net income, but via other comprehensive income. The impaired value is the value to which subsequent re-measurements are made, which is reported in other comprehensive income. The impairment of interest-bearing instruments, classified as available-for-sale financial assets, is reversed in net income if the fair value increases and such an increase can be seen to objectively refer to an event taking place after the impairment was executed. EMPLOYEE BENEFITS Defined contribution plans Defined contribution plans are classified as plans in which the Company s commitment is limited to the premium contributions the Company has committed to pay. In those cases, the size of the employee s pension depends on the premium contributions that the Company pays to the plan or to an insurance company and the return on capital in which these premium contributions result. Accordingly, the employee carries the actuarial risk (that the benefit becomes lower than expected) and the investment risk (that the invested assets will not suffice to give the expected benefits). The Company s obligations regarding premium contributions to defined contribution plans are accounted for as an expense in net income as they are earned by the performance of services for a period of time by the employees on behalf of the Company. Defined benefit plans The Group s net liability regarding defined benefit plans is calculated by an estimation of the future benefit earned by employees during their term of employment in both the current and previous periods. This benefit is discounted to a present value and the fair value of any plan assets is deducted. The discount rate is the interest rate, on the balance sheet date, of government bonds with a duration corresponding to the Company s pension commitment. The calculation is performed by a qualified actuary using the projected unit credit method. When the benefits in a plan are improved, the portion of the increased benefit attributable to the employees service in previous periods is recognised as an expense in net income on a straight-line basis over the average period until the benefit is fully vested. If the benefit is fully vested, this amount is immediately reported as an expense in net income. The so-called corridor method is applied, entailing that accumulated actuarial gains and losses exceeding 10% of the greater of either the commitments present value or the fair value of plan assets is recognised in net income over the expected average remaining period of service for the employees covered by the plan. In other respects, actuarial gains and losses are not taken into consideration. When calculations result in an asset for the Group, the carrying amount of the asset is limited to the net of unrecognised actuarial losses and unrecognised costs for service during previous periods and the present value of future refunds from the plan or decreased future contributions to the plan. Where there is a difference between the manner in which the pension obligations have been determined in a legal entity and the manner in which the Group reports those obligations, then a provision or receivable for special employer s contributions is calculated based on this difference. The provision or receivable is not calculated at present value. All components included in the period s expenses for a defined benefit plan are reported in operating profit/loss. Termination benefits The cost of compensation in connection with the termination of employment is only reported if the Company is apparently committed, without realistic possibility of withdrawal, by a formal detailed plan to terminate the employment before the usual period of employment is terminated. When compensation is offered to encourage voluntary redundancy, an expense is reported if it is likely that the offer will be accepted and that the number of employees who will accept the offer can be estimated reliably. Share-based payment During 2007, a convertible debenture was issued for a total of MSEK 30. Conversion could have taken place up and until 31 August The convertible debenture was issued on the basis of market conditions and there was no benefit existing at the time of allocation. The equity component of the loan does not comprise a material amount which is the reason the convertible debenture is reported, in its entirety, as a liability. For further details, refer to Note 8. PROVISIONS A provision is reported in the statement of financial position for the Group when the Group has an existing legal or constructive obligation to do so as a result of past events, and when it is probable that an outflow of resources will be required to settle the commitment and the amount can be estimated reliably. TAXES Income tax is comprised of current tax and deferred tax. Income tax is reported in net income, except when the underlying transaction is reported in Other comprehensive income or directly against equity, in which 68 NOTES

69 CONT. NOTE 1 ACCOUNTING PRINCIPLES case the related tax effects are reported in a corresponding manner. Current tax is tax that is to be paid or received regarding the current year, with the application of the tax rates that are determined or that are likely to be adopted per the balance sheet date, as well as current tax attributable to previous periods. Deferred tax is calculated according to the balance sheet method on temporary differences between the reported and tax values of assets and liabilities. The following temporary differences are not considered: temporary differences arising on initial recognition of goodwill, the first recognition of assets and liabilities which do not constitute business combinations and, at the date of the transaction, do not affect either the reported or taxable income. In addition, no consideration is given to temporary differences attributable to participations in subsidiaries and associated companies which are not expected to be reversed in the foreseeable future. The measurement of deferred tax is based on the manner in which the carrying amount of the asset or liability is expected to be realised or settled. Deferred tax is calculated with the application of the tax rates and tax regulations which are determined or which are likely to be adopted per the balance sheet date. Deferred tax liabilities regarding deductible temporary differences and loss-carry forwards are reported only to the extent it is likely that they can be utilised. The value of deferred tax liabilities is reduced when it is no longer deemed likely that they can be utilised. EARNINGS PER SHARE The calculation of earnings per share is based on the Group s net income attributable to the shareholders in the Parent Company and to the weighted average number of shares outstanding during the year. In conjunction with the calculation of earnings per share after dilution, the income and the average number of shares are adjusted to consider the effects of the dilution of potential ordinary shares arising from convertibles and options issued to employees during reporting periods. Dilution arising from options impacts the number of shares, and occurs only when the redemption price is lower than the stock exchange rate. The greater the difference between the redemption price and the stock market price, the more significant the dilution effect. The dilution arising from convertible debentures is calculated by increasing the number of shares by the total number of shares represented by the convertible debentures, and by increasing income by the reported interest expense, after tax. CONTINGENT LIABILITIES A contingent liability is reported when there is a possible commitment arising from past events whose existence can be verified only by one or more uncertain future events, or when there is a commitment which is not recognised as a liability or provision due to it being unlikely that an outflow of resources will be required. PARENT COMPANY ACCOUNTING PRINCIPLES The annual report for the Parent Company is prepared according to the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board s standard RFR 2. The Swedish Financial Reporting Board s statements for listed companies are also applied. The amendments to IFRS 1 First-time adoption of IFRS are applied. Classification and format For the Parent Company an income statement and a statement of comprehensive income are reported. Furthermore, in the Parent Company the terminology of balance sheet and cash flow statement is used for the statements called statement of financial position and statement of cash flow, respectively, in the consolidated accounts. The income statement and balance sheet for the Parent Company are prepared in accordance with the formats of the Annual Accounts Act, while the statement of comprehensive income, statement of change in equity and cash flow statement are based on IAS 1 Presentation of Financial Statements and IAS 7 Statement of Cash Flows. The differences in relation to the Group s reports, which are applicable to the Parent Company s income statement and balance sheet, consist primarily of the reporting of financial income and expenses, equity, and the existence of provisions as a separate item in the balance sheet. Differences between the Group s and the Parent Company s accounting principles Differences between the Group s and the Parent Company s accounting principles are specified below. The accounting principles stated below for the Parent Company have been consistently applied to all periods presented in the Parent Company s financial statements. Subsidiaries and associated companies Participations in subsidiaries and associated companies are reported in the Parent Company according to the acquisition cost method. This implies that transaction costs are included in the carrying amount of investments in subsidiaries and associated companies. In the consolidated accounts, transaction costs attributable to subsidiaries are reported directly in income when they arise. Contingent purchase consideration is measured according to the probability that the purchase consideration will be payable. Any changes to the provision/the receivable increase or reduce, respectively, the acquisition cost. In the consolidated accounts, contingent consideration is reported at fair value with any value changes affecting income. An acquisition at a low price, corresponding to expected future losses and expenses, is dissolved during the expected periods in which the losses or expenses are incurred. Acquisition at a low price arising from other causes is recognised as a provision to the extent that it exceeds the fair value of acquired identifiable non-monetary assets. The portion exceeding this value is recognised directly as income. The portion that does not exceed the fair value of acquired identifiable non-monetary assets is recognised as income on a systematic basis over a period which is calculated as the remaining weighted average useful life of the acquired identifiable depreciable assets. In the consolidated accounts, acquisitions at low prices are reported directly in income. FINANCIAL GUARANTEES The Parent Company s financial guarantee contract consists primarily of guarantor commitments for the benefit of subsidiary companies. Financial guarantees signify that the Company has a commitment to replace the owner of a liability item for losses suffered by this entity on account of a given debtor not fulfilling payments when due according to contract. In the accounting of financial guarantee contracts, the Parent Company applies one of the mitigation rules permitted by the Swedish Financial Reporting Board in comparison with the regulations of IAS 39. This mitigation rule refers to financial guarantee contracts issued for the benefit of subsidiary companies, associated companies and joint ventures. The Parent Company recognises financial guarantee contracts as provisions in the statement of financial position for the Group when the Company has a commitment for which payment will probably be required for regulation to take place. Financial instruments The Parent Company applies the rules of the Swedish Annual Accounts Act, Chapter 4, 14 a-e, allowing the measurement of certain financial instruments at fair value. Reversal of impairment Impairment of equity instruments classified as available-for-sale financial assets is not reversed via net income in the Group. In the Parent Company, however, equivalent reversals are reported via the income statement. Employee benefits The Parent Company applies other bases for the calculation of defined benefit plans than those stated in IAS 19. The Parent Company follows the provisions of the Swedish Pension Obligations Vesting Act and the Swedish Financial Supervisory Authority s regulations, as this is a condition for the right to fiscal deduction. The most significant differences compared with the regulations in IAS 19 are the manner in which the discount rate is determined, that the calculation of the defined benefit commitments is based on current salary levels without applying assumptions regarding future salary increases, and that all actuarial gains and losses are reported in the income statement as they arise. Taxes In the Parent Company, reported untaxed reserves include deferred tax liabilities. In the consolidated accounts, untaxed reserves are divided into deferred tax liabilities and equity. Group contributions and shareholders contributions for legal entities The Company reports Group contributions and shareholders contributions in accordance with the Swedish Financial Reporting Board s statement. Shareholders contributions are recognised directly in equity by the recipient and are capitalised in shares and participations by the contributing entity, to the extent that impairment is not required. Group contributions that a Parent Company receives from a subsidiary are reported in accordance with the same principles as regular dividends from subsidiaries. Group contributions paid from Parent Company to subsidiaries are recognised in income. NOTES 69

70 NOTE 2 DISTRIBUTION OF NET SALES NOTE 4 OTHER OPERATING INCOME GROUP, MSEK Alpine skiing/skipasses Accommodation Ski rental Ski school/activities Sporting goods outlets Property service Other ,665 1,552 PARENT COMPANY, MSEK Alpine skiing/skipasses Accommodation Ski rental Ski school/activities Sporting goods outlets Property service Other Net sales for the Parent Company originating in Sweden 1,148 1,076 NOTE 3 GROUP OPERATING SEGMENTS DESTINATIONS/PROPERTY DEVELOPMENT Destinations Sweden Destinations Norway Total Destinations MSEK 2012/ / / / / /12 External income 1,145 1, ,659 1,551 Income from other segments Total income 1,170 1, ,690 1,584 Operating expenses ,128 Operating expenses in other segments Income from associated companies Depreciation/amortisation Operating profit/loss Operating margin, % Fixed assets excluding participations in associated companies 1,564 1,591 1,126 1,196 2,690 2,787 Participations in associated companies Gross investments fixed assets Property development Inter-segment eliminations Total Group MSEK 2012/ / / / / /12 External income ,706 1,573 Income from other segments Total income ,706 1,573 Operating expenses ,243-1,153 Operating expenses in other segments Income from associated companies Depreciation/amortisation Operating profit/loss Operating margin, % Financial items, net Income for the Group before tax Fixed assets excluding participations in associated companies ,357 3,417 Participations in associated companies Total fixed assets ,601 3,693 Gross investments in fixed assets Sweden Norway Total Group MSEK 2012/ / / / / /12 External income 1,217 1, ,706 1,573 Fixed assets 2,127 2,191 1,474 1,502 3,601 3,693 Segment reporting has been prepared for the Group s Business Areas Destinations and Property Development, and has been determined based on the information handled by the Group s management, which is also used to follow up the return generated by the segment, as well as for the allocation of resources (investments) to the segment. The Group s internal reporting system is based on the follow up of the Group s operations within the different segments. External income refers exclusively to sales within the Group s segments and is raised in the country were the guest is located, as well as compensation gains on the assets in the respective country. Income and operating expenses from other segments refer to transactions between the Business Areas Destinations and Property Development. The segment s fixed assets and investments in fixed assets include all investments in intangible fixed assets, tangible fixed assets and financial non-current assets excluding financial instruments and deferred tax assets. All purchases and sales between Group companies have taken place under market conditions. Other operating income primarily includes capital gains from the sale of fixed assets. This amounts to MSEK 40 in the Group (21) and to MSEK 24 in the Parent Company (6). NOTE 5 OWN WORK CAPITALISED Own work capitalised includes capitalised expenses for the work performed by SkiStar s personnel as regards investments and expenses attributable to the Company s own construction equipment. Own work capitalised during the year amounts to TSEK 2,040 (3,292), which is included in personnel costs. Own work capitalised during the year for the Parent Company amounts to TSEK 719 (1,637) NOTE 6 FEES AND REMUNERATION TO AUDITORS GROUP KPMG Audit assignment 1,859 1,440 Other assignments ,328 1, PARENT COMPANY KPMG Audit assignment 1, Other assignments , Audit assignments include review of the annual and consolidated accounts and the bookkeeping, as well as of the administration by the Board of Directors and CEO, other tasks incumbent upon the auditor to perform and advice or other assistance resulting from observations made during the audit or implementation of such other tasks. NOTE 7 FEES FOR OPERATING LEASES GROUP Leasing expenses for the financial year 21,712 1,683 Contracted future leasing fees referring to contracts which are non-cancellable before maturity, fall due as follows: Within one year: 23,751 1,177 Between one and five years 90,483 2, ,234 4,097 PARENT COMPANY Leasing expenses for the financial year 19, Contracted future leasing fees referring to contracts which are non-cancellable before maturity, fall due as follows: Within one year: 22, Between one and five years 87,814 1, ,999 1,386 During the year, leasing fees increased primarily due to SkiStar AB s rental of the baths in Experium within the destination Sälen, furthermore new snow grooming machines have been leased. Of the above operating leases, there are no commitments with a duration exceeding five years. SkiStar has operating leases for grooming machinery, snow scooters and construction machinery. The leasing fees for a portion of the grooming machinery are paid during the period December April, which is done in order that these costs can be charged to the periods in which the machinery is actually used. The majority of leasing agreements are paid on a straight-line basis over the year. Leasing agreements contain no conditions stipulating that the object of the lease shall be acquired by SkiStar when the agreement expires. However, these agreements may be extended. Leasing fees are recorded as a rental expense in the consolidated income statement. SkiStar has a partnership with two local companies in Vemdalen and Klövsjö from whom SkiStar hires three ski lifts. The lease agreements have durations of 20 years and the annual leasing fee for these lifts is MSEK 7.1. Starting with the season 2013/14, there is also a partnership with a company in Åre from whom SkiStar rents lifts, and the annual rental fee is MSEK NOTES

71 NOTE 8 INFORMATION ON PERSONNEL AND REMUNERATION TO THE BOARD OF DIRECTORS AND THE CEO CONT. NOTE 8 INFORMATION ON PERSONNEL AND REMUNERATION TO THE BOARD OF DIRECTORS AND THE CEO AVERAGE NUMBER OF EMPLOYEES The average number of employees, classified by gender, has amounted to: Share, % Share, % GROUP Sweden Women Men Norway Women Men Total for the Group 1,085 1,051 PARENT COMPANY Sweden Women Men Total for the Parent Company MEMBERS OF THE BOARD OF DIRECTORS AND GROUP MANAGEMENT CLASSIFIED BY % women % womenr GROUP Board of Directors 22% 22% Other senior management 0% 0% PARENT COMPANY Board of Directors 22% 22% Other senior management 0% 0% Pensions Members of senior management have the right to pension solutions according to collective agreements and agreements with SkiStar. For the CEO, the Company pays pension contributions corresponding to 30% of the salary, and there is an obligation of MSEK 3.7 secured by an endowment insurance. For other members of senior management, pension payments are made according to the customary ITP plan. Terms of notice and severance pay The term of notice initiated by SkiStar is a maximum of 24 months and, for term of notice initiated by the senior manager, a maximum of 6 months. Decisions regarding remuneration The Board of Directors makes decisions regarding salary and other terms of employment for the CEO after consultation with the Board of Directors Compensation Committee. The Compensation Committee makes decisions regarding salary and other terms of employment for other members of senior management after consultation with the CEO. Any changes in the bonus system are to be determined by the Board of Directors. CONVERTIBLES PROGRAMME 2007/12 AND OPTIONS During the autumn of 2007, the employees of SkiStar were invited to subscribe to convertible debentures in a total amount of MSEK 30, which, during their duration, can be converted to a total of 250,000 Class B shares at a conversion rate of SEK 138. The convertible debentures were issued on market terms and with no benefit granted in their allotment, for which reason the issue is not covered by IFRS 2. The convertible debenture bore interest equivalent to the 12-month STIBOR percentage points. The contractual duration of the convertibles programme expired on 31 August 2012 (see Note 24). No conversion has taken place and the loans were repaid in September REMUNERATION AND SOCIAL SECURITY CONTRIBUTIONS Salaries and Social security Salaries and Social security remuneration contributions remuneration contributions PARENT COMPANY Senior management 14,019 7,265 11,557 7,066 Other personnel 239,327 76, ,427 58,361 (of which pension costs, senior management) 1) (2,861) (3,434) (of which pension costs, other personnel) (12,785) (8,719) SUBSIDIARIES Senior management 2, Other personnel 123,319 20, ,605 19,637 (of which pension costs, senior management) (271) (of which pension costs, other personnel) (5,295) (4,869) GROUP 376, , ,119 85,603 (of which pension costs) 2) (20,941) (17,293) 1) Of the Parent Company s pension costs, TSEK 815 (833) refers to the CEO. The Parent Company s total pension costs are comprised of defined contribution pensions. 2) Of the Group s pension costs, TSEK 815 (833) refers to the CEO and TSEK 2,046 (2,872) to other senior management. Subsidiaries consist primarily of the Norwegian operations. In the Norwegian operations, pension costs primarily comprise defined benefit plans. BENEFITS TO SENIOR MANAGEMENT Remuneration has been paid to members of the Board of Directors in the amount of TSEK 730 (730), of which TSEK 155 (155) was paid to the Chairman and TSEK 115 (115) to each of the other members elected by the Annual General Meeting. The CEO, who is also a Board member, receives no Board fees. In other respects, no Board Member has received remuneration other than the Board fees. The CEO has received salary, remuneration and benefits in a total value of TSEK 3,973 (2,951), of which the CEO s bonus totals TSEK 1,080 (0). The Deputy CEO has received salary, remuneration and benefits at a total value of TSEK 2,357 (1,737), of which the bonus amounts to TSEK 608 (0). Salaries, remunerations and benefits paid to the other 4 (8) members of Group management amounted to TSEK 7,689 (9,399), of which TSEK 956 (0) constituted bonuses. NOTE 9 DEPRECIATION OF TANGIBLE AND AMORTISATION OF INTANGIBLE FIXED ASSETS GROUP Capitalised expenditure for IT systems 9,864 8,535 Rental rights and similar rights 6,506 6,028 Buildings, land and land improvements 57,953 58,705 Plant, machinery and equipment 144, , , ,485 PARENT COMPANY Capitalised expenditure for IT systems 9,864 8,535 Rental rights and similar rights 1,582 1,017 Buildings, land and land improvements 27,019 27,677 Plant, machinery and equipment 86,225 89, , ,818 NOTE 10 INCOME FROM PARTICIPATIONS IN GROUP AND ASSOCIATED COMPANIES PARENT COMPANY Dividend 37,827 35,144 Group contribution ,221 37,215 36,365 Dividends for both years have been received from the subsidiary SkiStar Norge AS. GUIDELINES FOR REMUNERATION TO SKISTAR S GROUP MANAGEMENT The guidelines stated below include remuneration and other terms of employment for Group management in SkiStar. These individuals are referred to below as senior management. These guidelines were prepared by the Compensation Committee and were approved by the Annual General Meeting on 8 December 2012 for adoption. These guidelines shall be applied in new agreements, and in alterations to existing agreements. Fundamental principle Total remuneration and other terms of employment shall be sufficiently attractive to retain, or attract, new, competent senior managers. Fixed salary Members of senior management shall be offered a fixed salary in line with market levels in relation to their responsibilities, competence, performance and regional salary levels. The fixed salary shall be established annually on a contractual basis. Bonuses Members of Group management are entitled to bonuses based on the current bonus programme applying to SkiStar s Group management, according to a resolution by the Board of Directors. The maximum amount for bonuses is 40% of 12 times the current monthly salary, which gives a maximum of MSEK 3.8. This year s outcome totals MSEK 2.6. Bonuses are paid based on the Company s performance in terms of growth per share, return on equity, operating margin and organic growth. Non-monetary benefits Members of senior management are entitled to extra health insurance and to the benefits available to other employees within SkiStar. NOTES 71

72 NOTE 11 TAXES CONT. NOTE 11 TAXES REPORTED IN COMPREHENSIVE INCOME GROUP Current tax expense (-) /revenue(+) Tax for the period -14,159-12,725 Adjustment of previous year s tax ,167-12,725 Deferred tax expense (-) /revenue(+) Deferred tax referring to temporary differences -2,790-12,911 Deferred tax due to change in tax rates -5,693 - Deferred tax in tax value capitalised during the year in loss carryforward ,407 Deferred tax expenses due to utilisation of previously capitalised tax value in loss-carry forward ,213 30,650 Total reported tax revenue/expenses in the Group -23,380 17,925 REPORTED IN THE INCOME STATEMENT PARENT COMPANY Deferred tax expense (-) /revenue(+) Deferred tax referring to temporary differences -3,115-89,800 Deferred tax due to change in tax rates 15,320 - Deferred tax in tax value capitalised during the year in loss carryforward ,711 12,171-45,089 Total reported tax revenue/expenses in the Parent Company 12,171-45,089 RECONCILIATION OF EFFECTIVE TAX GROUP Percent Amount Percent Amount Income before taxes 159, ,623 Tax according to current tax rate for the Parent Company 22.0% -35, % -36,458 Difference in tax rate in foreign operations 2.6% -4, % -1,493 Non-deductible expenses 56.1% -89, % -109,887 Non-taxable income -69.7% 111, % 124,730 Tax attributable to previous years 0.1% % 0 Standard interest on tax allocation reserves 0.0% % -19 Effect of change in tax rates 3.4% -5, % 0 Revaluation of loss carry-forwards 0.0% % 40,422 Other 0.0% % 0 Reported effective tax 14.6% -23, % 17,295 RECONCILIATION OF EFFECTIVE TAX PARENT COMPANY Percent Amount Percent Amount Income before taxes 147, ,495 Tax according to current tax rate for the Parent Company 22.0% -32, % -115,850 Non-deductible expenses 60.9% -89, % -101,367 Non-taxable income -75.7% 111, % 172,128 Non-taxable dividends from Group companies -5.6% 8, Tax attributable to previous years 0.1% % - Effect of change in tax rates -10.5% 15, % - Other 0.5% % - Reported effective tax -8.3% 12, % -45,089 REPORTED IN THE STATEMENT OF FINANCIAL POSITION FOR THE GROUP GROUP 31 AUG 2013 Deferred tax assets Deferred tax liabilities Net Fixed assets , ,783 Unutilised loss carry-forwards 181, ,271 Cash flow hedges - 2,438 2,438 Other - -6,950-6, , ,295-4,024 Set-off -159, ,256 Net deferred tax liability 22,015-26,039-4,024 GROUP 31 AUG 2012 Deferred tax assets Deferred tax liabilities Net Fixed assets , ,318 Unutilised loss carry-forwards 217, ,384 Cash flow hedges - 6,086 6,086 Other - -4,975-4, , ,207 6,177 Set-off -184, ,015 - Net deferred tax liability 33,369-27,192 6,177 REPORTED IN THE PARENT COMPANY BALANCE SHEET PARENT COMPANY 31 AUG 2013 Deferred tax assets Deferred tax liabilities Net Fixed assets , ,757 Unutilised loss carry-forwards 43,684-43,684 Cash flow hedges , ,978-82,294 Set-off Net deferred tax liability 43, ,978-82,294 PARENT COMPANY 31 AUG 2012 Deferred tax assets Deferred tax liabilities Net Fixed assets , ,229 Unutilised loss carry-forwards 51,793-51,793 Cash flow hedges 2,890-2,890 54, ,334-91,546 Set-off Net deferred tax liability 54, ,334-91,546 CHANGE IN DEFERRED TAX ON TEMPORARY DIFFERENCES AND LOSS CARRY-FORWARDS Recognised in GROUP 31 Aug 2013 Opening balance the Statement of comprehensive income Recognised in Other comprehensive income Closing balance Fixed assets -212,318 29,068 2, ,783 Unutilised loss carry-forwards 217,384-36, ,271 Cash flow hedges 6, ,648 2,438 Other -4,975-1, ,950 6,177-9,020-1,181-4,024 Recognised Recognised in PARENT COMPANY 31 Aug in the Income Other comprehensive 2013 Opening balance statement income Closing balance Fixed assets -146,229 20, ,757 Unutilised loss carry-forwards 51,793-8,877 42,916 Cash flow hedges 2, , Other ,546 12,363-3,111-82,294 Recognised in GROUP 31 Aug 2012 Opening balance the Statement of comprehensive income Recognised in Other comprehensive income Closing balance Fixed assets -201,136-11, ,318 Unutilised loss carry-forwards 173,977 43, ,384 Cash flow hedges - - 6,086 6,086 Other -3,400-1, ,975-30,559 30,650 6,086 6,177 Recognised Recognised in PARENT COMPANY 31 Aug in the Income Other comprehensive 2012 Opening balance statement income Closing balance Fixed assets -56,431-89, ,229 Unutilised loss carry-forwards - 44,711-51,793 Cash flow hedges 6,938-2,890 2,890-49,493-45,089 2,890-91,546 The entirety of the deferred tax liability amounting to TSEK 26,039 (27,616) refers to the Norwegian operations. Deferred tax assets in the Swedish operations amounted to TSEK 22,015 (33,637). All unutilised deficits have been valued as of 31 August The deficits have, mainly, been added to the Group through the acquisition of a company holding MSEK 811 in unutilised loss carry-forwards. At the end of the financial year, there remain tax deficits amounting to MSEK 824 (826), of which MSEK 0 (3) refers to the Norwegian operations. The deficit is not limited in time, and, consequently, information on maturity dates is not provided. The Government has proposed that the Swedish corporate tax rate be reduced from 26.3% to 22.0% with effect from 1 January 2013, to apply to financial years commencing on or after that date. For SkiStar AB, this means that the new proposed tax rate will be applicable from the financial year 2013/2014. Deferred taxes in both the Group and the Parent Company have been revalued at tax rates of 22.0% in Sweden and 28.0% in Norway. In the Government s budget it states that the rules governing tax exemption for income from specially assessed properties is to be removed. SkiStar has applied these rules in its Swedish operations. The change will mean that from the financial year 2014/15, the entire income in SkiStar s Swedish operations is to be taxed. SkiStar AB also has more than MSEK 800 of unused tax losses, implying that the Company will not pay taxes for a number of years. 72 NOTES

73 NOTE 12 EARNINGS PER SHARE NOTE 13 INTANGIBLE FIXED ASSETS NUMBER OF SHARES BEFORE DILUTION Total number of shares, 1 September 39,188,028 39,188,028 Effect of new share issues - - Weighted average number of shares during the year, before dilution 39,188,028 39,188,028 EARNINGS PER SHARE BEFORE DILUTION Net income for the year 136, ,548 Average number of outstanding shares 39,188,028 39,188,028 Earnings per share before dilution 3:49 3:99 The calculation of earnings per share has been based on net income for the year attributable to the shareholders in the Parent Company, amounting to TSEK 136,902 (156,548) and on a weighted average number of outstanding shares totalling 39,188,028 shares (39,188,028). NUMBER OF SHARES AFTER DILUTION Weighted average number of shares during the year, before dilution 39,188,028 39,188,028 Effect of convertibles programme - 250,000 Weighted average number of shares during the year, after dilution 39,188,028 39,438,028 EARNINGS PER SHARE AFTER DILUTION Net income for the year 136, ,548 Effect of interest on convertible debt (after tax) Average number of outstanding shares 39,188,028 39,438,028 Earnings per share after dilution 3:49 3:99 The calculation of earnings per share has been based on net income for the year attributable to the shareholders in the Parent Company, amounting to TSEK 136,902 (156,548) and on a weighted average number of outstanding shares totalling 39,188,028 shares (39,188,028). The convertible debenture issued in 2007 has expired during August 2012 without conversion and the loan portion was repaid to the holders in September Capitalised expenditure for IT systems Rental rights and similar rights Goodwill Total GROUP Accumulated acquisition cost Opening balance, 1 Sept , ,396 93, ,501 Capitalised expenditure 11,283 3,288-14,571 Reclassifications 3, ,946 Exchange rate differences - -2,083-2,435-4,518 Closing balance, 31 Aug , ,663 90, ,500 Opening balance, 1 Sept , ,663 90, ,500 Capitalised expenditure 8, ,091 Reclassifications 3, ,121 Exchange rate differences - -3,878-4,529-8,407 Closing balance, 31 Aug , ,823 86, ,305 Accumulated amortisation and impairment Opening balance, 1 Sept ,753-41, ,216 Amortisation -8,535-6, ,563 Exchange rate differences Closing balance, 31 Aug ,288-46, ,850 Opening balance, 1 Sept ,288-46, ,850 Amortisation -9,864-6, ,370 Exchange rate differences - 2,018-2,018 Closing balance, 31 Aug ,152-51, ,202 Reported value, 31 Aug ,752 94,101 90, ,650 Reported value, 31 Aug ,062 86,773 86, ,103 Capitalised expenditure for IT systems Rental rights and similar rights Goodwill Total PARENT COMPANY Accumulated acquisition cost Opening balance, 1 Sept ,873 10,244 18, ,559 Capitalised expenditure 11,283 3,289-14,572 Reclassifications 3, ,946 Closing balance, 31 Aug ,040 13,595 18, ,077 Opening balance, 1 Sept ,040 13,595 18, ,077 Capitalised expenditure 8, ,091 Reclassifications 3, ,121 Closing balance, 31 Aug ,214 14,633 18, ,289 Accumulated amortisation and impairment Opening balance, 1 Sept ,753-6,595-18,442-87,790 Amortisation -8,535-1, ,552 Closing balance, 31 Aug ,288-7,612-18,442-97,342 Opening balance, 1 Sept ,288-7,612-18,442-97,342 Amortisation -9,864-1, ,446 Closing balance, 31 Aug ,152-9,194-18, ,788 Reported value, 31 Aug ,752 5, ,735 Reported value, 31 Aug ,062 5, ,501 Of the year s capitalised expenditure and reclassifications, a total of TSEK 4,178 (11,283) is comprised of internally-developed intangible assets in both the Parent Company and the Group. IMPAIRMENT TESTING OF CASH-GENERATING UNITS REPORTING GOODWILL THE FOLLOWING CASH-GENERATING UNITS REPORT GOODWILL VALUES Accommodation booking, Hemsedal 13,333 14,005 Accommodation booking, Åre 1,106 1,106 Ski rental, Åre Årevisionen Skidåkarna Åre 3,419 3,419 Hemsedal Group 2,804 2,902 Trysil Group 48,593 51,641 Tandådalens Fjällhotell Service AB 2,400 2,400 Hammarbybacken AB 1,510 1,510 Ski rental, Trysil 11,348 12,059 Fjällförsäkringar AB ,268 90,797 An analysis of any impairment requirements for intangible assets indicates that there are no such requirements. Impairment testing is based on a calculation of value in use. The most important assumptions in the five-year plan are growth in sales, net income and cash flow per cash-generating unit. This value is based on cash flow projections for 25 years (25), of which the first five years are based on the Company s Business Plan. The forecast period s total length (25 years) corresponds to the useful lifetime of the most important assets, ski lifts. The cash flow forecasted after the first five years has been based on an annual growth rate of 2% (2%). The present value of forecasted cash flows has been calculated on the basis of a discount rate of 6% (8%) before tax. A total of 84% (89%) of the Group s goodwill should be attributed to the Norwegian operations, of which the majority refers to Trysil. SkiStar s Norwegian operations have experienced a positive development during the financial years following these acquisitions, and following a few years of decline, the trend is positive again this year. NOTES 73

74 NOTE 14 TANGIBLE FIXED ASSETS Buildings, land and land improvements Machinery and Equipement Construction in progress GROUP Total Accumulated acquisition cost Opening balance, 1 Sept ,401,060 2,636, ,439 5,200,785 New acquisitions 34,429 91,678 77, ,125 Sales and disposals -6,104-44,305-1,120-51,529 Reclassifications, etc. 33,524 41,304-78,774-3,946 Exchange rate differences -14,723-31, ,113 Closing balance, 31 Aug ,448,186 2,693, ,902 5,301,322 Opening balance, 1 Sept ,448,186 2,693, ,902 5,301,322 New acquisitions 29,984 35,484 63, ,785 Business combinations 36, ,321 49,378 Sales and disposals -8,796-40,688-2,476-51,960 Reclassifications, etc. 42,537 24,759-71,418-4,122 Exchange rate differences -41,579-58, ,197 Closing balance, 31 Aug ,506,474 2,654, ,858 5,322,206 Accumulated depreciation and impairment Opening balance, 1 Sept ,852-1,587, ,143,769 Sales and disposals ,943-42,432 Reclassifications, etc Depreciation -58, , ,922 Exchange rate differences -2,803 27,534-24,731 Closing balance, 31 Aug ,871-1,667, ,284,528 Opening balance, 1 Sept ,871-1,667, ,284,528 Sales and disposals 0 38,179-38,179 Depreciation -57, , ,241 Exchange rate differences 9,648 47,770-57,418 Closing balance, 31 Aug ,176-1,725, ,391,172 Reported value, 31 Aug ,831,315 1,025, ,902 3,016,794 Reported value, 31 Aug ,841, , ,858 2,931,034 Buildings, land and land improvements Machinery and Equipement Construction in progress PARENT COMPANY Total Accumulated acquisition cost Opening balance, 1 Sept ,203,564 1,565, ,522 2,874,105 New acquisitions 11,373 62,563 42, ,776 Sales and disposals , ,740 Reclassifications, etc. 5,914 30,421-36,335 0 Closing balance, 31 Aug ,220,091 1,639, ,027 2,971,141 Opening balance, 1 Sept ,220,091 1,639, ,027 2,971,141 New acquisitions 11,885 21,331 47,645 80,861 Sales and disposals -5,352-28, ,038 Reclassifications, etc. 14,648 18,495-37,264-4,121 Closing balance, 31 Aug ,241,272 1,650, ,408 3,013,843 Accumulated depreciation and impairment Opening balance, 1 Sept , , ,265,267 Sales and disposals ,767-1,878 16,174 Depreciation -27,677-89, ,268 Closing balance, 31 Aug , ,469-1,878-1,366,361 Opening balance, 1 Sept , ,469-1,878-1,366,361 Sales and disposals 0 26,532-1,838 24,694 Depreciation -27,019-86, ,244 Closing balance, 31 Aug ,033-1,040,162-3,716-1,454,911 Reported value, 31 Aug , , ,149 1,604,780 Reported value, 31 Aug , , ,692 1,558, Reported value of land for properties in Sweden 167, ,498 Reported value of slopes 207, , Reported value of land for properties in Sweden 345, ,993 Reported value of slopes 254, ,776 NOTE 15 PARTICIPATIONS IN GROUP COMPANIES Opening balance 249, ,635 Closing balance 249, ,635 SPEC OF PARENT COMPANY S SHARES IN GROUP COMPANIES SUBSIDIARY/CORPORATE IDENTITY NUMBER/REGISTERED OFFICES Number of shares Participation, % Reported Value Reported Value Sälens Högfjällshotell AB / / Sälen 2,600, % 9,427 9,427 Tandådalens Fjällhotell Service AB / / Sälen 42, % 3,000 3,000 Åre Invest AB / / Åre 100, % Vintertorget i Sälen KB / / Sälen % SkiStar Norge AS / NO / Hemsedal 5, % 130, ,898 Hammarbybacken AB / / Stockholm % 1 1 Vemdalens Sportaffärer & Skiduthyrning AB / / Vemdalen 1, % 48,531 48,531 Fjällinvest AB / / Sälen 161, % 25,279 25,279 Fjällmedia AB / / Sälen 1, % Bostadsrätter i Åre AB / / Åre 1, % Fjällförsäkringar AB / / Sälen 30, % 30,484 30,484 Lindvallen Fastighet AB / / Sälen 2, % , , NOTES

75 NOTE 16 PARTICIPATIONS IN ASSOCIATED COMPANIES GROUP Opening balance 275, ,882 Acquisitions 1, ,902 Disposals -5,875-9,000 Capital contribution 6,000 - Dividends Reclassifications Exchange rate differences -7, Share of income -25,274-8,211 Closing balance 244, ,780 PARENT COMPANY Opening balance 7,826 7,826 Acquisitions Reclassification 42 - Closing balance 8,668 7,826 SPECIFICATION OF THE GROUP S AND THE PARENT COMPANY S HOLDINGS OF PARTICIPATIONS IN ASSOCIATED COMPANIES ASSOCIATED COMPANY/ CORPORATE IDENTITY NUMBER / Participating Value of Group s Reported value in REGISTERED OFFICES Income Net income Assets Liabilities Equity interest % share of equity Parent Company Lima Transtrand Fastighets AB, , Sälen Åreföretagarna i Åre AB, , Åre Fjällvärme i Lindvallen AB, , Sälen Åre 2007 AB, , Åre World Cup Åre AB, , Åre Ski Invest Sälen AB, , Sälen Entréhuset i Sälen AB, , Sälen Staven Naeringseiendom AS, NO , Hemsedal Skitorget AS, NO , Trysil Mountain Resort Trysil AS, NO , Trysil * Knettsetra AS, NO , Trysil Trysilguidene AS, NO , Trysil HA aktiviteter AB, , Jämtlands län Fjällmacken i Lindvallen AB, , Sälen Skiab Invest AB, , Sälen Trysilsuiterna AS, NO / Trysil Hemsedal Eiendomselskap AS, NO / Hemsedal Tegefjäll Linbane AB, Trysil Hotellutvikling AS, NO / Trysil * No newer values have been published SPECIFICATION OF THE GROUP S AND THE PARENT COMPANY S HOLDINGS OF PARTICIPATIONS IN ASSOCIATED COMPANIES ASSOCIATED COMPANY/ CORPORATE IDENTITY NUMBER / Participating Value of Group s Reported value in REGISTERED OFFICES Income Net income Assets Liabilities Equity interest % share of equity Parent Company Lima Transtrand Fastighets AB, , Sälen Åreföretagarna i Åre AB, , Åre Fjällvärme i Lindvallen AB, , Sälen Åre 2007 AB, , Åre World Cup Åre AB, , Åre Ski Invest Sälen AB, , Sälen Entréhuset i Sälen AB, , Sälen Staven Naeringseiendom AS, NO , Hemsedal Fageråsen Invest AS, NO , Trysil Skitorget AS, NO , Trysil Mountain Resort Trysil AS, NO , Trysil Knettsetra AS, NO , Trysil Trysilguidene AS, NO , Trysil HA aktiviteter AB, , Jämtlands län Fjällmacken i Lindvallen AB, , Sälen Skiab Invest AB, , Sälen Trysilsuiterna, NO / Trysil Trysil Hotellutvikling AS, NO , Trysil The participating interest in capital is referred to, which corresponds to the share of votes for the total number of shares. Where the holdings are less than 20% but the participation is, nonetheless, classified as an associated company, this is motivated on the basis of a significant influence over the company, via seats on the associated company s Board. Hotel operations Radisson Blu in Trysil, included in the associated company Trysil Hotelutvikling, has for some years been characterised by losses, for which reason an impairment test has been prepared relating to the assets. The test is based on the five-year plan that the Company s new management has made, followed by weak growth during the subsequent 30 years. A discount rate of 5.6% after tax has been used. The recoverable amount of assets was thereby estimated to MSEK 175. Since the recoverable amount is close to the book value, a sensitivity analysis was prepared which states that revenue could be 3.5% lower and the discount rate 0.15% higher than forecasted. For changes larger than these, impairment could be relevant. NOTE 17 OTHER INVESTMENTS HELD AS FIXED ASSETS GROUP Available-for-sale financial assets Opening acquisition cost Acquisitions Disposals Reclassifications Exchange rate differences Closing balance PARENT COMPANY Available-for-sale financial assets Opening acquisition cost Acquisitions Reclassifications Closing balance GROUP Shares in tenant-owners associations Other long-term securities Shares and participations Closing balance PARENT COMPANY Shares in tenant-owners associations Shares and participations Closing balance Other investments held as fixed assets are essentially comprised of shares in tenant-owners associations and shares in smaller companies, as well as the acquisition cost of interest deposits in Fjällförsäkringar AB. The items are reported at acquisition cost, as a reliable fair value cannot be determined. NOTES 75

76 NOTE 18 OTHER NON-CURRENT RECEIVABLES NOTE 22 EQUITY GROUP Opening acquisition cost 97, ,325 Additional receivables 47,509 7,771 Settlement of receivables -2,921-11,845 Reclassifications to investments held as fixed assets ,973 Other reclassifications 0 18,261 Exchange rate differences -2, Closing balance 138,870 97,555 PARENT COMPANY Opening acquisition cost 98,595 53,590 Additional receivables 2,778 57,729 Settlement of receivables -13,314-12,724 Closing balance 88,059 98,595 GROUP Receivables from associated companies 82,017 43,079 Other long term interest-bearing 51,853 52,172 Other long term non-interest-bearing 5,000 2,304 Closing balance 138,870 97,555 PARENT COMPANY Deferred tax assets 43,684 51,898 Other long term interest-bearing 39,605 41,819 Other long term non-interest-bearing 4,770 4,878 Closing balance 88,059 98,595 NOTE 19 NOTE 20 OTHER CURRENT RECEIVABLES GROUP VAT recoverable 6,777 7,508 Current loans receivable 38,206 25,892 Other 34,263 36,733 Closing balance 79,246 70,133 PARENT COMPANY VAT recoverable 4,378 2,446 Current loans receivable 21,706 11,281 Other 14,502 29,650 Closing balance 40,586 43,377 No other current receivables are due for payment. Of Other shown above, TSEK 1,116 are comprised of receivables on derivatives NOTE 21 ACCOUNTS RECEIVABLE Accounts receivable are reported with consideration of established and expected bad debt losses during the year amounting to TSEK 648 (1,451) in the Group, of which established bad debt losses amounted to TSEK 607 (1,404). In the Parent Company, established and expected bad debt losses amounted to TSEK 265 (611), of which established bad debt losses amounted to TSEK 224 (1,061). During the year, the Group has recovered previously reported and expected bad debt losses of TSEK 314 (405). The Group s provisions for expected bad debt losses have decreased during the financial year from TSEK 5,068 by TSEK 4,174 to TSEK 912. Accounts receivable with related parties amounted to TSEK 3 (53,937) in the Group. For further information regarding related party transactions, see Note 36. AGE ANALYSIS OF OVERDUE BUT NOT IMPAIRED ACCOUNTS RECEIVABLE GROUP days 6,500 2, days 2,358 13,195 Closing balance 8,858 15,558 PARENT COMPANY days 5, days 1, Closing balance 6, PREPAID EXPENSES AND ACCRUED INCOME GROUP Prepaid rental charges and leasing fees 20,506 5,933 Prepaid insurance 2, Accrued interest income 1,644 1,142 Other items 18,691 21,712 Closing balance 43,336 29,751 PARENT COMPANY Prepaid rental charges and leasing fees 15,654 4,422 Prepaid insurance 1, Accrued interest income 1, Other items 22,774 13,093 Closing balance 40,555 18,967 GROUP Translation reserve Opening translation reserve -2,630 10,233 Exchange rate differences for the year -24,793-12,863 Closing translation reserve -27,423-2,630 GROUP Hedging reserve Opening hedging reserve -16,471 - Measurement of hedging reserve 13,830-22,557 Deferred tax -3,647 6,086 Closing hedging reserve -6,288-16,471 PARENT COMPANY Hedging reserve Opening hedging reserve -8,066 0 Measurement of hedging reserve 11,948-10,944 Deferred tax -3,097 2,878 Closing hedging reserve 785-8,066 GROUP Other contributed capital This item refers to equity contributed by shareholders. The item also includes share premium reserves transferred to statutory reserves per 31 August Future provisions to the share premium reserve from 1 September 2006 onward will also be reported as other contributed capital. Translation reserve The translation reserve includes all exchange rate differences arising upon the translation of foreign subsidiaries preparing their financial statements in a currency other than the Group s presentation currency. The Parent Company and Group present their financial statements in SEK. In accordance with IFRS 1, SkiStar has chosen to value the translation reserve at TSEK 0 as per 1 September Hedging reserve During the financial year, interest has been hedged through interest rate derivatives of MSEK 600 and MNOK 200, with maturities of 5 and 10 years. Changes in value of interest rate derivatives are reported in Comprehensive income. Since July 2013, DKK cash flows have been hedged against the forecasted net flow of DKK. Currency hedges are reported in SkiStar AB and SkiStar Norge AS. Profit brought forward and net income for the year Profit brought forward includes profit earned in the Parent Company, subsidiaries and associated companies after acquisitions. The provisions previously made to the statutory reserve, excluding the transferred share premium reserves, are included in profit brought forward. Dividends After balance sheet date, the Board proposed a dividend of SEK 2.50 per share, totalling SEK 97,970,070, to be distributed to the shareholders in the Parent Company. This dividend proposal will be presented for adoption to the Annual General Meeting on 14 December In 2012, the dividend was SEK 2.50 per share. PARENT COMPANY Restricted equity Restricted funds may not be reduced via the distribution of dividends. Statutory reserve The purpose of the statutory reserve is to retain a portion of the net profits which has not been utilised to cover accumulated losses. The requirement for transfer to the statutory reserve has been abolished in the Swedish Companies Act as from 1 January Non-restricted equity Share premium reserve When shares are issued at a premium, that is, when the amount paid for the shares exceeds their market price, the portion corresponding to the amount received in excess of the quotient value of the share is transferred to the share premium reserve. From 1 January 2006, the share premium reserve is classified as non-restricted equity. Hedging reserve During the financial year, interest has been hedged through interest rate derivatives of MSEK 500, with maturities of 5 and 10 years. Changes in value of interest rate derivatives are reported in Comprehensive income. Since July 2013, DKK cash flows have been hedged against the forecasted net flow of DKK. Profit brought forward Comprises the previous year s non-restricted equity, after distribution of dividends. Constitutes, together with net income for the year, total non-restricted equity that is, the amount available to the shareholders. NUMBER OF SHARES Number of outstanding Class A shares at the beginning of the period 1,824,000 1,824,000 Number of outstanding Class B shares at the beginning of the period 37,364,028 37,364,028 Number of outstanding shares at the end of the period 39,188,028 39,188,028 The overall goal is for the value of shareholders capital to grow. SkiStar shall have a strong financial foundation in order to enable an offensive strategy, at the same time balancing operating risk. The goal is an equity ratio above 35%. At the current interest rate level, the return on equity would 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 was 3.1% during the financial year 2012/13. The operating margin is to exceed 22% in the long term. SkiStar s dividend policy means that annual dividends are to be equivalent to a minimum of 50% of profit after tax. The policy is determined on the basis that SkiStar has a strong financial foundation, in combination with a strong cash flow, as well as that the investments are largely financeable through own resources. SkiStar has a large volume of short-term loans and covenants which means that the loan conditions may be renegotiated if the equity ratio is lower than 30%, and if the interest coverage ratio does not exceed 4.0 times. The quotient value per share as of 31 August was SEK 0.5 (0.5). 76 NOTES

77 NOTE 23 UNTAXED RESERVES NOTE 27 RECEIVABLES AND LIABILITIES GROUP COMPANIES The Parent Company s accelerated depreciation was fully dissolved in August 2012 and impacted the Parent Company s income positively in an amount of MSEK 301. NOTE 24 CONVERTIBLE DEBENTURE The 2007/12 debenture (employee convertibles) was issued in September 2007 in a total amount of MSEK 30 and was fully subscribed to by the Group s employees. The convertible period ended in August 2012, without any conversion. The loans were repaid in September NOTE 25 LIABILITIES TO CREDIT INSTITUTIONS GROUP Due for payment within one year from balance sheet date 666, ,682 Due for payment 1-5 years from balance sheet date 1,435,635 1,549,664 Due for payment more than five years from balance sheet date 0 21,947 Closing balance 2,101,806 2,275,293 Granted bank overdraft facilities amount to 646,150 1,231,991 Utilised portion of overdraft facilities 452,841 1,062,466 PARENT COMPANY Due for payment within one year from balance sheet date 340, ,997 Due for payment 1-5 years from balance sheet date 730,502 1,125,597 Due for payment more than five years from balance sheet date - - Closing balance 1,070,502 1,270,594 Granted bank overdraft facilities amount to 430, ,000 Utilised portion of overdraft facilities 330, ,347 For further information on loan structure, commitment periods, etc., refer to Note 32. RECEIVABLES FROM GROUP COMPANIES Sälens Högfjällshotell AB 70,116 68,481 Tandådalens Fjällhotell Service AB 84,772 84,743 SkiStar Norge AS 10,745 - Hammarbybacken AB 1,937 3,147 Vemdalen Logi AB 32,688 32,188 Trysilfjellet Alpin AS - 1 Timmerbyn Lindvallen AB - 3,622 Fjällinvest AB 130, ,338 Utgående värde 331, ,520 LIABILITIES TO GROUP COMPANIES Sälens Högfjällshotell AB - 3 Åre Invest AB 1,361 1,359 Vemdalens Sportaffärer & Skiduthyrning AB 14,718 5,093 Vintertorget i Sälen KB 2,208 2,208 Fjällförsäkringar AB 16,023 - Skistar Fastighets AB 2,627 3,284 Hundfjället Servicecenter AB 1,743 1,743 Hundfjället Sport AB - 5,432 Hundfjället Centrum AB 5,034 5,034 Vemdalen Logi AB Bostadsrätter i Åre AB ,734 24,176 Net receivables/liabilities 287, ,344 The majority of the receivables from and liabilities to Group companies relate to the Group account. NOTE 28 OTHER PROVISIONS GROUP Electricity certificates Closing value NOTE 26 PENSION PROVISIONS GROUP Defined benefit plans 1,632 1,930 Other pension commitments 3,975 1,002 Closing value 5,607 2,932 PARENT COMPANY Other pension commitments 3, Closing value 3, Only in the Norwegian operations, a small portion of the employees are covered by pension plans reported as defined benefit plans. Provisions for defined benefit pensions amount to MSEK 19.9 (23.3), while the fair value of plan assets totals MSEK 18.3 (21.2). The net value of these items is reported in the statement of financial position for the Group and amounts to MSEK 1.6 (2.1). The disclosure regarding defined benefit plans has been limited, as this item is deemed to be insignificant. Pension commitments for office workers in Sweden are safeguarded on the basis of pension insurance with Alecta and on the basis of individual pension solutions for employees whose salaries exceed 10 base income amounts. According to statement UFR 3 from the Swedish Financial Accounting Standards Council s Emerging Issues Task Force, this constitutes a multi-employer defined benefit plan. For the financial years 2010/11, 2011/12 and 2012/13, the Company has not had access to information that would enable reporting of this plan as a defined benefit plan. The ITP pension plan, safeguarded on the basis of insurance with Alecta is, therefore, reported as a defined contribution plan, entailing that obligations are recognised as costs in the statement of comprehensive income for the Group as they arise. The expenses for the year for pension insurance in Alecta amount to MSEK 6.2 (6.6). Total contributions for the year for pension insurance amounted to MSEK 20.9 (17.3). Alecta s surplus can be allocated to the policy holder and/or to the insured. Per 31 August, Alecta s surplus, in the form of the collective funding ratio, amounted to 145% (125). The collective funding ratio is the market value of Alecta s assets as a percentage of insurance commitments, calculated according to Alecta s actuarial calculation assumptions, which do not correspond to IAS 19. PARENT COMPANY Electricity certificates Closing value GROUP Opening value Purchases 1, Cancellations -1, Closing value PARENT COMPANY Opening value Purchases 1, Cancellations -1, Closing value SkiStar AB is registered with the Swedish Energy Agency as of January 2009 as a power-intensive industry. As a result of this, SkiStar AB is obliged to meet quota requirements and is required to present a quota obligation declaration. For each MWh of quota obliged electric power consumed during 2012, a total of electricity certificates are annulled. Thanks to the registration as a power-intensive industry, expenses for electricity decreased by MSEK 1 during NOTES 77

78 NOTE 29 ACCRUED EXPENSES AND DEFERRED INCOME NOTE 31 CASH FLOW STATEMENT GROUP Accrued salary expenses and social security contributions 54,508 38,578 Accrued financial expenses 15,824 18,765 Accrued property expenses 6,134 7,331 Other items 23,062 23,807 Closing value 99,528 88,481 PARENT COMPANY Accrued salary expenses and social security contributions 37,787 32,833 Accrued financial expenses 6,453 8,611 Accrued property expenses 3,548 3,533 Other items 10,505 7,726 Closing value 58,293 52,703 NOTE 30 PLEDGED ASSETS AND CONTINGENT LIABILITIES PLEDGED ASSETS GROUP Property mortgages 799, ,854 Assets, SkiStar Norwegian Group 722, ,695 Closing value 1,521,331 1,653,549 of which pledged for own liabilities 1,521,331 1,582,305 PARENT COMPANY Property mortgages 537, ,167 Closing value 537, ,167 Of which pledged for own liabilities 537, ,167 CONTINGENT LIABILITIES GROUP Contributions with conditional repayment liability 6,883 2,095 Guarantees 410, ,452 Other contingent liabilities 8,200 8,200 Closing value 425, ,747 PARENT COMPANY Contributions with conditional repayment liability 3,723 2,095 Guarantees for Group companies 396, ,469 Other guarantees 370, ,325 Other contingent liabilities 8,200 8,200 Closing value 779, ,089 KONCERNEN MODERBOLAGET Interest paid and dividends received Dividends received 36,365 Interest received 4,868 5,926 3,328 1,534 Interest paid -49,592-43,060-26,472-24,101 Adjustments for non-cash items Less share of income from associated companies 25,277 8, Dividends from subsidiaries Depreciation/amortisation and impairment 218, , , ,818 of assets Unrealised exchange rate differences Capital gains from the sale of fixed assets -39,543-7,001-22,597 - Pension provisions 2, , Other provisions , , , ,605 Acquisition of subsidiaries and other business units Acquired assets and liabilities: Tangible fixed assets 50, Operating receivables 4, Cash and cash equivalents Total assets 55, Purchase consideration Less cash and cash equivalents in acquired operations Effect on cash and cash equivalents Borrowings 43, Operating liabilities Total liabilities 44, Sale of subsidiaries and other business units Divested assets and liabilities Tangible fixed assets -5, Total capital gain, liabilities and provisions -5, Cash and cash equivalents Following components are included in cash and cash equivalents: Current investments Cash and bank balances 26,277 41,131 2,859 3,409 26,277 41,131 2,859 3,409 ACQUISITION OF ADDITIONAL SHARES IN FAGERÅSEN INVEST AS The acquired company's net assets at the acquisition date, TSEK Tangible fixed assets 50,923 Inventories 4,090 Accounts receivable and other receivables 63 Cash and cash equivalents 294 Interest-bearing liabilities 43,375 Accounts payable and other operating liabilities 982 Net identifiable assets and liabilities 11,013 Holdings without controlling influences 1,652 Fair value of previously owned shares 5,985 During the year, the Group acquired an additional 36% of Fageråsen Invest AS, amounting to a total of 85%. The Company has in the report contributed to sales and income with TSEK 1,890 and TSEK -833, respectively. If the Company had been owned the whole year it would have contributed to sales and income with TSEK 1,890 and TSEK -855, respectively. 78 NOTES

79 NOTE 32 FINANCIAL RISKS AND FINANCIAL POLICIES FINANCIAL RISKS Financial risk not only entails the risk of losses, but also the potential for gains. SkiStar s policy for the handling of financial risk is, amongst other things, that there shall be no surplus liquidity, rather, to maximise return, short-term credits are to be amortised when major liquidity flows arise. The Finance Policy is adopted by the Board. The CFO is responsible for ensuring compliance with this policy. Financing activities within the Company are centralised under the CFO. CURRENCY RISKS Currency risk refers to the risk that changes in currency exchange rates impact the income statement, balance sheet and/or cash flow statement of the Group. Currency risks include both translation and transaction risks. SkiStar conducts operations in Norway via the subsidiary, SkiStar Norge AS, and its subsidiaries and is exposed to translation risks through these operations. SkiStar s policy is to not hedge currency risks. Of SkiStar s total income after taxes, approximately 12% (8) is attributable to Norwegian operations. A weaker NOK compared with SEK results in the destinations Hemsedal and Trysil being consolidated in the SkiStar Group at a lower profit level compared to a situation in which the NOK is stronger in relation to the SEK. A sensitivity analysis shows that a change in the exchange rate NOK/SEK by +/- 10% influences income by MSEK +/- 2 and equity by MSEK +/- 2. An equalising factor is that it is less expensive for Swedish guests to visit Hemsedal and Trysil when the NOK is weaker. A total of 60% of the guests in Hemsedal come from outside Norway and 24% of these are Swedish. In Trysil, the proportion of foreign guests is 78%, of whom 28% are Swedish. The income statements and balance sheets of foreign subsidiaries are translated according to the current method whereby assets and liabilities are translated at the closing rate of exchange and all items in the income statement are translated at the average exchange rate for the period. Exchange rate differences are reported directly in other comprehensive income. To reduce currency risks, assets in foreign subsidiaries are financed only in local currency. Purchases of lifts, grooming machines and ski rental equipment, in particular, are partly financed in EUR and USD, and are hedged if it is deemed beneficial to the Company. In recent years, only a small number of minor purchases have been made, for which reason the Company resolved not to hedge the purchases. During the financial year 2012/13, goods and services were acquired by the Group for a total of MEUR 12.8 (5.6). CREDIT RISK The risk that SkiStar s customers will not fulfil their obligations constitutes a customer credit risk. In light of the fact that a large portion of sales is settled in cash or through advanced payments and that the vast majority of accounts receivable items refer to small amounts, the customer credit risk is assessed to be low. INTEREST AND LIQUIDITY RISK SkiStar s Financial Policy stipulates that, primarily, borrowing can only take place on the basis of short, fixedinterest terms of a maximum of three months. With a strong financial foundation, in which the equity ratio is 38% (36), and a strong cash flow, SkiStar is able to take advantage of the effect of the lower interest rates on shorter interest periods than on long interest periods. When, according to the Company, the market situation and interest rates are reasonable, borrowing at longer fixed-interest rates can be undertaken. Such decisions are made by the finance team and the Board of Directors. Net interest-bearing liabilities as per year-end amounted to MSEK 2,072 (2,076). Net interest income amounted to MSEK 59.1 (50.3) during the financial year and average interest expenses to 3.1% (2.9). As of balance date, interest-bearing liabilities amounted to MSEK 2,102 (2,275). If the interest rate level were to increase by one percentage point, SkiStar s interest expenses would increase by approximately MSEK 21 (14), the overall effect of which would largely influence the net financial income/expense in net income for the year and with that, equity. Just over half of SkiStar s loan volume is comprised of short-term loans, in order to offset the strong fluctuations in the cash flow over the year. SkiStar has covenants allowing loan terms and conditions to be renegotiated if the equity ratio falls below 30% and if the interest coverage ratio does not exceed 4.0 times. SkiStar s liquidity per balance sheet date amounted to MSEK 219 (211), of which MSEK 193 (170) comprised unutilised bank overdraft facilities. The Company has a strong financial position, which implies that, when necessary, the possibility of raising new loans on competitive terms is very positive. In accordance with the disclosure requirements in IFRS 7, the estimation of the financial instruments at fair value in the balance sheet is shown below. This is done by dividing the estimates into 3 levels: Level 1: Fair value is determined according to prices quoted on an active market for similar instruments. Level 2: Fair value is determined either directly (such as price) or indirectly (derived from prices) observable market inputs other than Level 1 inputs. Level 3: Fair value is determined based on inputs which are not observable on the market. INTEREST RATE SWAPS To hedge the risk of highly probable, forecasted interest payments on borrowings at variable interest rates, swaps are utilised whereby the Company receives a variable rate and pays a fixed rate. The interest swaps are valued at fair value in the statement of financial position. The interest coupon portion is reported in net income for the year as a part of interest expenses. Unrealised changes in the fair value of the interest swaps are reported in other comprehensive income and are included as part of the hedging reserve until the hedged item affects net income for the year and as long as the criteria for hedge accounting and effectiveness are met. The gain or loss relating to the ineffective portion of the unrealised changes in value of interest swaps is reported in net income for the year. As of 31 August 2013, no ineffective portion exists. As of 31 August 2013, the accumulated effect on these cash flow secured interest swaps is reported as MSEK 5 in equity. The Company has interest rate swaps amounting to MSEK 600 and MNOK 200 with durations of 3, 5 and 10 years. These are valued in the financial statements, based on observable market data, in accordance with Level 2 of the fair value hierarchy in IFRS 7. CURRENCY FORWARDS A currency derivative is employed to hedge the risk of highly probable, forecasted currency flows from the revenues pertaining to the DKK payments from Danish customers. These currency derivatives are matched with underlying liquidity forecasts for the net cash flow in the respective currencies. Under the condition that the effectiveness of these securities can be assured, the change in market value for each security transaction is reported in other comprehensive income until it is rereported to the income statement as a revenue/cost. The profit or loss attributable to the ineffective portion of unrealised changes in the value of the currency forward is reported in net income for the year. As of 31 August 2013, the accumulated currency effect on these cash flow secured currency derivatives is reported as MSEK 1 in equity. These are valued in the financial statements, based on observable market data, in accordance with level 2 of the fair value hierarchy in IFRS 7. FAIR VALUE Measurement of fair value is carried out when reliable and observable market data is available on the balance sheet date. For this reason, interest swaps and currency forward are valued at fair value. Other long-term holdings are essentially comprised of shares in tenant-owners associations and shares in smaller companies, as well as the acquisition cost of interest deposits in Fjällförsäkringar AB. The items are reported at acquisition cost, as a reliable fair value cannot be determined. Other reported results from financial assets and liabilities can be said to conform to fair value as all funding is bound to short-term interest rates, either at current interest or fixed for a maximum of three months. Some of the loans classified as short-term loans will be renegotiated during the coming year without being repaid and, thus, they are not included as a cash flow effect for subsequent years, other than as part of the interest calculation. LOAN STRUCTURE SWEDEN Nominal amount in original currency Reported value, TSEK Fair value of Maturity loan, TSEK Ongoing/ framework agreement 330,502 Overdraft facilities, variable interest 330, ,502 accrued interest 1,195 1,195 Bank loan, variable interest 250, , ,000 accrued interest Bank loan, variable interest 90,000 90, ,000 accrued interest Bank loan, variable interest 400, , ,000 accrued interest Bank loan, variable interest accrued interest 2 2 Bank loan, variable interest 280, , ,000 accrued interest 1,095 1,095 NORWAY Nominal amount in original currency Reported value, TSEK Fair value of Maturity loan, TSEK Ongoing/ framework agreement 122,339 Overdraft facilities, variable interest 113, ,339 accrued interest Bank loan, variable interest 363, , ,123 accrued interest 3,053 3,053 3,053 Bank loan, variable interest 150, , ,113 accrued interest 1,313 1,313 1,313 Bank loan, variable interest 27,143 29, ,335 accrued interest 0 Bank loan, variable interest 40,500 43, ,770 accrued interest Total loans 2,101,806 Total accrued interest on bank 8,683 loans Other financial liabilities are comprised of, other than the fair value of interest swaps, MSEK 7 (23) and currency futures of MSEK 2 (0), of liabilities with a maturity within one year. NOTES 79

80 CONT. NOTE 32 FINANCIAL RISKS AND FINANCIAL POLICIES NOTE 33 INCOME FROM SECURITIES ACCOUNTED FOR AS FIXED ASSETS APPRECIATED FAIR VALUE OF FINANCIAL INSTRUMENTS, MSEK Interest swaps 7 23 Forward exchange agreements 2 - The entries can be found as liabilities in the balance sheet. The nominal value of the interest swaps was, as of 31 August 2013, MSEK 838 (838) and the nominal value of the currency futures was MSEK 101 (0). FINANCIAL ASSETS BY VALUATION CATEGORY, MSEK 2013 Available-forsale financial assets Loans and accounts receivable Derivatives used for hedge reporting Total book value Fair value Financial investments 1) Receivables from associated companies Derivatives Accounts receivable - trade Other current receivables Liquid assets Total financial assets ) Of the financial investments, 85 (91) are primarily investments in tenant-owners associations and other minor stock holdings. These have been appreciated in accordance with Level 3 of the fair value hierarchy in IFRS 7. FINANCIAL ASSETS BY VALUATION CATEGORY, MSEK 2012 Available-forsale financial assets Loans and accounts receivable Derivatives used for hedge reporting Total book value Fair value Financial investments 1) Receivables from associated companies Derivatives Accounts receivable - trade Other current receivables Liquid assets Total financial assets FINANCIAL LIABILITIES BY VALUATION CATEGORY, MSEK Derivatives used hedge Other financial Total book 2013 Borrowings reporting liabilities value Fair value Borrowings 2, , Derivatives Accounts payable - trade Accrued interest Advance payments from customers Total financial liabilities 2, ,252 2,252 FINANCIAL LIABILITIES BY VALUATION CATEGORY, MSEK Derivatives used hedge Other financial Total book 2012 Borrowings reporting liabilities value Fair value Borrowings 2, , Derivatives Accounts payable - trade Accrued interest Advance payments from customers Total financial liabilities 2, ,414 2,414 GROUP Revaluation Impairment Dividend - 1,018 Capital gain 851 1,694 Capital loss ,933 PARENT COMPANY Impairment Dividend , The year s capital gains refer to unrealised losses on shares in Fjällförsäkringar AB and realised gains from sales of shares in Fjällinvest. An indirect subsidiary was liquidated during the year, which resulted in a write-down of TSEK 120. NOTE 34 INTEREST INCOME AND SIMILAR PROFIT/LOSS ITEMS GROUP Bank balances 1,998 2,602 Non-current receivables 4,330 4,174 Accounts receivables trade Clearing account for taxes and charges Exchange gains 3,097 9,301 10,444 16,369 PARENT COMPANY Bank balance 2, Non-current receivables 1,369 1,701 Accounts receivable trade Clearing account for taxes and charges Exchange gains 2,880 8,580 7,851 10,602 All items derive from financial items at acquisition cost, except items arising from interest swaps (MSEK 0). NOTE 35 INTEREST EXPENSES AND SIMILAR PROFIT/LOSS ITEMS GROUP Liabilities to credit institutions 65,411 60,633 Subordinated debenture Accounts payable- trade Clearing account for taxes and charges Currency exchange losses 3,359 8,225 69,806 70,050 PARENT COMPANY Liabilities to credit institutions 32,922 31,803 Subordinated debenture Accounts payable- trade Clearing account for taxes and charges - 1 Currency exchange losses 3,039 7,566 36,070 40,278 All items derive from financial items at acquisition cost, except items arising from interest swaps (MSEK 4.3). GROUP S MATURITY STRUCTURE AS REGARDS TO UNDISCOUNTED CASH FLOWS FOR FINANCIAL LIABILITIES AND DERIVATIVES MSEK within 1 year 1 5 years Accounts receivable - trade 31 - Borrowings 2) Derivatives -2 - Accounts payable - trade 65 - Advance payments from customers 59-2) Some of the loans will be renegotiated during forthcoming years without being repaid and, therefore, they are not included as a cash flow effect in the coming years. 80 NOTES

81 NOTE 36 RELATED PARTIES NOTE 37 EVENTS AFTER THE BALANCE SHEET DATE RELATED PARTIES The Group is under the controlling influence of the brothers Mats and Erik Paulsson, with their families and companies. Their combined participating interest per 31 August 2013 represented approximately 58% (57) of the votes in the Group s Parent Company. Peab The Peab Group is under the controlling influence of the brothers Mats and Erik Paulsson, with their families and companies. Mats Paulsson is the CEO of Peab. SkiStar procures construction contract work from the Peab Group in conjunction with investments in fixed assets. Clifton-Swerock The Company is part of the Peab Group and delivers concrete products for contractors. Fabege Erik Paulsson is Chairman of the Board of Fabege and has a significant influence. SkiStar rents office space from Fabege in central Stockholm. Hansan Erik Paulsson is Chairman of the Board of Hansan AB and has a significant influence. SkiStar rents office services, office equipment and IT networks to Hansan in the rented office space in central Stockholm. SUBSIDIARIES AND ASSOCIATED COMPANIES In addition to the related party relationships stated above, the Parent Company has related party relationships consisting of controlling influence in subsidiaries, see Note 15. Furthermore, the SkiStar Group has transactions with associated companies in which SkiStar does not have a controlling interest, see Note 16. Sales to subsidiaries largely refer to corporate services to the Norwegian subsidiaries and commission from Fjällförsäkringar AB for sold cancellation insurance and ski rental insurance. Purchases from subsidiaries largely refer to rental of accommodation from Fjällinvest AB. Purchases from associated companies largely refer to marketing services from Experium AB, World Cup Åre AB and Åreföretagarna AB, as well as rental of premises from Snöcenter Lindvallen AB. Sales to associated companies largely refer to commission from acting as accommodation agents and from accounting and property services to Lima Transtrand Fastighets AB and SkiLodge Village Lindvallen AB, Snöcenter Lindvallen AB and Skilodge Lindvallen AB, as well as staff accommodation to Experium AB. A Transfer Pricing agreement has been drawn up for trade with the Norwegian subsidiaries. SENIOR MANAGEMENT Refer to Note 8 for information regarding the salaries, other remuneration, pensions, etc. for the Board of Directors, the CEO and other members of senior management. TRANSACTION CONDITIONS Transactions with related parties have taken place on market-based terms. RELATED PARTY TRANSACTIONS, SUMMARY Sales to related parties Purchases from related parties Receivables from related parties Liabilities to related parties GROUP Associated companies 35,618 45, ,066 9,971 Peab , ,012 Cliffton - 1, Fabege - 1, Hansan Total 36,815 62, ,228 11,997 PARENT COMPANY Associated companies 22,992 41,397 42,355 9,875 Peab 267 6, Cliffton - 1, Fabege - 1, Hansan Total 24,186 51,951 42,517 10,526 Several external factors are positive for the coming season; good conditions at all destinations during the previous winter, the nice summer giving increased priority for ski trips, a more positive economic climate and slightly weaker exchange rates (NOK and SEK against DKK and Euro). The bookings are 1% better compared to the same period last year. The calendar for Christmas and New Year is advantageous with the maximum number of days off. Easter comes in late April, which means a good potential for a long high season, at the same time a late Easter means that there will only be one Easter week, as almost all schools have holidays in the first Easter week. Ski capital expenditures, which are estimated at MSEK 142, consist mainly of replacement investments comprising, among others, a warming hut in Vemdalen, an enhanced snowmaking system and a new surface lift in Sälen, as well as capital investments in companies that are building three new chairlifts in Åre. Investments in Property development are estimated at MSEK 38 and they include replacement investments, the purchase of shares in associated companies, land acquisition in Hemsedal and renovation of apartments for sale. From this autumn, there are over 90 apartments for sale in Sälen, Vemdalen and Åre. In addition there are 80 unsold lots. The management agreement with Andermatt expired in September. Re-negotiation of a new agreement, more focused on support in marketing, sales and IT, is ongoing. The Government s budget proposal states that the regulations concerning tax exemption on property income from properties with special tax assessment are to be removed. In its Swedish operations, SkiStar has applied these regulations. This change implies that, starting with the financial year 2014/15, the entire profit from SkiStar s Swedish operations will be subject to tax. Meanwhile, SkiStar AB has approximately MSEK 800 in unutilised deficit deductions, implying that the Company will not have to pay any tax for a number of years. The Board proposes that a dividend of SEK 2.50 per share, totalling MSEK 98, be paid to the shareholders. The Annual General Meeting will be held at Experium in Sälen on 14 December 2013 at 2:00 pm. NOTE 38 IMPORTANT ACCOUNTING ESTIMATIONS AND ASSUMPTIONS Company management undertakes estimations and assumptions regarding the future. The results of these estimations and assumptions are used to assess the reported values of assets and liabilities. The actual outcome may differ from these estimations and assumptions. Certain estimations and assumptions entailing a risk of adjustment of fair values for assets and liabilities are described below. REVENUE RECOGNITION FOR SOLD PROPERTY Our main principle in other contexts is that revenue recognition is performed per date of formal transfer of possession. Revenue recognition for property sold to tenant-owners associations takes place when the company owning the properties is sold to a tenant-owners association or other party, under the condition that the property will be let. In other cases, revenue recognition is distributed over a period of time at the same rate as the apartments are let. The Company has no obligation towards the tenant-owners association regarding the apartments that the tenant-owners association does not sell. The Company will not commence any new sales until the unsold apartments in existing tenant-owners associations are sold. If the rules regarding revenue recognition are changed, the Company will make changes in its accounting, which may have some effect on future revenue recognition regarding the sale of apartments. VALUATION OF GOODWILL In the calculation of the recoverable amount of cash generating units for the assessment of any impairment requirement of goodwill (so called impairment testing), it has been assumed that these units will also continue to generate a cash flow to the operations in the future, which implies that no impairment requirement exists at present. Should these assumptions change, an impairment requirement could arise in the future. For more information regarding goodwill, see Note 13. TAXES Changes in tax legislation and changes in established practice in the interpretation of tax rules may affect the amount of deferred tax assets. DISPUTES As of the date of preparation of this document, SkiStar is not involved in any legal dispute of substantial significance to the Group. Sales,to related,parties Purchases,from related,parties Receivables,from related,parties Liabilities,to related,parties GROUP Associated companies 22,190 17,715 53,772 4,680 Peab , Cliffton - 2, Fabege - 1, Hansan Total 23,759 45,832 53,937 5,681 NOTE 39 DISCLOSURE REGARDING THE PARENT COMPANY SkiStar AB (publ), Corporate Identity Number , is a limited liability company registered in Sweden, with its registered offices in the Municipality of Malung-Sälen, Dalarna County. The headquarters are located in Sälen, with the postal address SE Sälen. The Parent Company s shares are registered on the OMX Nordic Mid Cap Exchange in Stockholm. PARENT COMPANY Associated companies 20,587 16,182 34,678 4,562 Peab , Cliffton - 2, Fabege - 1, Hansan Total 22,156 39,353 34,843 5,563 NOTES 81

82 The Consolidated Accounts and the Annual Report have been prepared in accordance with the international accounting principles referred to in the Regulation (EC) 1606/2002 of the European Parliament and Council dated 19 July 2002, regarding the application of international accounting standards and generally accepted accounting principles, and give a true and fair view of the Group s and the Parent Company s financial position and income. The Group s and Company s respective administration reports give a true and fair view of the Group s and the Parent Company s operations, financial position and income, and describe substantial risks and factors of uncertainty facing the Parent Company and the other companies in the Group. It is the Board s assessment, in view of the financial position of the Group and the Company, that the dividend is justifiable, with reference to the requirements placed by the operations on equity, the need to strengthen the balance sheet, and with regard to the liquidity and financial position of the Company and of the Group. Sälen 14 november 2013 Erik Paulsson Chairman Mats Paulsson Board member Mats Årjes CEO Board member Mats Qviberg Board member Per-Uno Sandberg Board member Eivor Andersson Board member Pär Nuder Board member Katarina Hjalmarsson Employee representative Bengt Larsson Employee representative The Board of Directors approved the issuance of the Annual Report and Consolidated Accounts on 14 November The consolidated income statement and balance sheet and the Parent Company s income statement and balance sheet will be presented for adoption at the Annual General Meeting on 14 December NOTES

83 AUDIT REPORT TO THE ANNUAL GENERAL MEETING OF SKISTAR AB (PUBL), CORPORATE IDENTITY NUMBER REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS We have audited the annual accounts and consolidated accounts of SkiStar AB (publ) for the financial year 1 September August The annual accounts and consolidated accounts of the Company are included in the printed version of this document on pages Responsibilities of the Board of Directors and the CEO for the annual accounts and consolidated accounts The Board of Directors and the CEO are responsible for the preparation and fair presentation of annual accounts in accordance with the Annual Accounts Act and for the preparation and fair presentation of consolidated accounts in accordance with international accounting standards, IFRS, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the CEO determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the CEO, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Parent Company as of 31 August 2013 and of its financial performance and cash flows for the year then ended, in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the Group as of 31 August 2013 and of its financial performance and cash flows for the year then ended, in accordance with IFRS, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the Annual General Meeting adopt the income statement and the balance sheet for the Parent Company and the statement of comprehensive income and statement of financial position for the Group. REPORT ON OTHER LEGAL AND REGULA- TORY REQUIREMENTS In addition to our audit of the annual accounts and consolidated accounts, we have also examined the proposed appropriations of the Company s profit or loss and the administration of the Board of Directors and the CEO of SkiStar AB (publ) for the financial year 1 September August Responsibilities of the Board of Directors and the CEO The Board of Directors is responsible for the proposal for appropriations of the Company s profit or loss, and the Board of Directors and the CEO are responsible for administration under the Swedish Companies Act. Auditors responsibility Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the Company s profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As a basis for our opinion on the Board of Directors proposed appropriations of the Company s profit or loss, we examined the Board of Directors motivated statement and a selection of supporting documentation in order to assess whether the proposal is in accordance with the Swedish Companies Act. As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the Company in order to determine whether any member of the Board of Directors or the CEO is liable to the Company. We also examined whether any member of the Board of Directors or the CEO has, in any other way, acted in contravention of the Swedish Companies Act, the Annual Accounts Act or the Articles of Association. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion We recommend to the Annual General Meeting that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the CEO be discharged from liability for the financial year. Sälen, 14 November 2013 KPMG AB Owe Wallinder Authorised Public Accountant AUDIT REPORT 83

84 CORPORATE GOVERNANCE REPORT NOMINATING COMMITTEE ANNUAL GENERAL MEETING EXTERNAL AUDIT COMPENSATION COMMITTEE BOARD OF DIRECTORS GROUP MANAGEMENT AUDIT COMMITTEE TWO BUSINESS AREAS, PROPERTY DEVELOPMENT AND DESTINATIONS INTERNAL RULES AND REGULATIONS Articles of association, the formal work plan for the Board of Directors, division of duties between the Board of Directors/CEO, Rules of decision-making for the Group and business areas, policies, rules, guidelines and instructions EXTERNAL RULES AND REGULATIONS Companies Act, Listing Agreements CORPORATE GOVERNANCE SkiStar s corporate governance is based on the Articles of Association, the Swedish Companies Act, the listing agreement with the Nasdaq OMX Nordic Exchange Stockholm AB, including the Swedish Code of Corporate Governance, and other relevant Swedish and foreign laws and regulations. The guidelines regarding the Swedish Code of Corporate Governance are available on the homepage of the Swedish Corporate Governance Board (bolagsstyrning.se). Internal guidelines, such as the Articles of Association and this document, are available on SkiStar s homepage ( OWNERSHIP STRUCTURE As per 31 August 2013, SkiStar had 31,162 shareholders according to the shareholder s register administered by Euroclear Sweden AB. The three largest shareholders, in terms of voting rights, represent 61.50% of the votes and 45.40% of the share capital. The distribution is shown in the administration report on page 52. Holdings by Swedish private individuals, either directly or through companies, amounted to 69.64% and Swedish institutional ownership amounted to 20.98% of share capital. Foreign private individuals represent 0.20% and foreign institutional ownership represents 9.18% of the share capital. SHARE CAPITAL AND VOTING RIGHTS SkiStar s share capital per 31 August 2013 amounted to SEK 19,594,014, divided among 39,188,028 shares, of which 1,824,000 are Class A shares and 37,364,028 are Class B shares. Each Class A share entitles the holder to ten votes, and each Class B share entitles one vote. All shares convey equal participation in the Company s assets and profit, and entitle equal rights to dividends. SkiStar s Articles of Association include no limits as to how many votes every shareholder can deliver during General Meetings, other than the inherent limitation implied by the number of shares in the Company. ANNUAL GENERAL MEETING The Annual General Meeting is SkiStar s senior decision making body. The Annual General Meeting shall be held annually within six months of the close of the financial year. All shareholders who are listed in the share register and have registered to attend within the prescribed time have the right to participate and vote for their total holding of shares. Shareholders who cannot attend the meeting can be represented by a proxy. A shareholder or a proxy may have no more than two representatives. Notice of the Annual General Meeting will be issued in the Post- och Inrikes Tidningar and on the Company s website, The release of the notice will be made public in Dagens Nyheter. Shareholders who wish to participate in the Annual General Meeting shall be listed on a transcript of the entire share register showing circumstances five working days prior to the meeting, and register with the Company by 12 pm on the date stated in the notice of the meeting, at which time the number of representatives is to be stated. This day may not be a Sunday, any other public holiday, a Saturday, Midsummer Eve, Christmas Eve or New Year s Eve, and may not fall earlier than the fifth working day prior to the meeting. The Annual General Meeting will be held in Sälen, Åre or Stockholm. 84 CORPORATE GOVERNANCE REPORT

85 During the Annual General Meeting the following matters will be discussed: 1. Election of chairman of the meeting. 2. Preparation and approval of voting list. 3. Approval of the agenda. 4. Election of two persons to verify the minutes. 5. Consideration of whether the meeting has been properly convened. 6. Presentation of the annual accounts and audit report, and of the consolidated accounts and Group audit report. 7. Resolution concerning the adoption of the income statement and balance sheet and the consolidated income statement and consolidated balance sheet. 8. Resolution concerning the appropriation of the Company s profit or treatment of losses according to the adopted balance sheet. 9. Resolution concerning discharge from liability of the Board of Directors and the CEO. 10. Determination of remuneration to the members of the Board of Directors and the audit fees. 11. Election of Board of Directors and auditors and deputies, if any. 12. Other matters to be addressed by the General Meeting pursuant to the Swedish Annual Accounts Act or the Articles of Association. ANNUAL GENERAL MEETING 2011/12 A total of 240 shareholders, representing 71% of the votes in the Company, attended the Annual General Meeting held on 8 December 2012 at Experium in Sälen. During the Meeting, the Board of Directors was authorised to purchase and sell shares in the Company to the effect that the Board is authorised, until the next Annual General Meeting, on one or more occasions, to decide whether to acquire Class B shares in the Company. The Company s holding of own shares, however, shall not exceed ten percent of the Company s total number of shares at any time. Acquisition will take place on a regulated market and may only occur at a price within the prevailing registered price range, namely the range between the highest purchase consideration and the lowest selling price, or through a purchase offer addressed to all shareholders. The authorisation of the Board further implies that the Board is authorised, until the next Annual General Meeting, to decide to sell the Company s own shares on a regulated market, or in another way, in connection with the purchase of a company or business. The authorisation includes the right to decide on deviation from the shareholders privileges and whether payment will be made in cash, in kind, by offset or under other conditions. The authorisation may be exercised on one or more occasions and may include the maximum number of shares acquired by virtue of authorisation to purchase own shares. The authorisation is to give the Board of Directors increased flexibility in the work with the Company s capital structure and, if deemed suitable, to enable acquisition. Repurchase and sale of own shares can only apply to Class B shares. The authorisation of the Board to issue own shares was not subject to resolution. ANNUAL GENERAL MEETING 2011/12 The Annual General Meeting for 2013 will be held at Experium in Sälen 2 pm on 14 December. For further information, visit NOMINATING COMMITTEE The Company s Nominating Committee is appointed at the Annual General Meeting for a period of one year. The Nominating Committee s duties are to prepare suggestions for Board members, remuneration for Board members, the Chairman of the Board, the Chairman of the Annual General Meeting and the Nominating Committee for the following financial year, as well as, when applicable, to prepare the nomination of auditors and auditors remuneration, assisted by the Audit Committee. The Nominating Committee, prior to the 2012/13 Annual General Meeting, had the following members: Erik Paulsson, Chairman, for Company and family, Mats Qviberg, for Investment AB Öresund, Mats Paulsson, for Company and family, and Per Limberg, for Lima Jordägande Socknemän. All shareholders have had the possibility to address proposals to the Nominating Committee. THE BOARD OF DIRECTORS Composition of the Board The Board is appointed by the Annual General Meeting in accordance with the Swedish Companies Act and the Board Representation (Private Sector Employees) Act. The Articles of Association include, apart from regulations concerning the number of members and deputies, no regulations on appointment and dismissal of the Board s members. The Board of Directors shall, in addition to members who may be appointed by other parties by law, be composed of four to nine members, with a maximum of three deputies. Members of the Board are elected until the end of the first Annual General Meeting held following the year of their appointment. During 2012/13, the Annual General Meeting elected seven members: Erik Paulsson, Chairman, Mats Paulsson, Mats Qviberg, Per-Uno Sandberg, Eivor Andersson, Pär Nuder and Mats Årjes, CEO. Furthermore, two employee representatives were included: Katarina Hjalmarsson, Unionen and Bengt Larsson, HRF. Three of the Board members are considered to have dependent positions vis à vis the Company: Mats Årjes, in his role as CEO of SkiStar, and Mats Paulsson, in his role as deputy Chairman of the Board of construction firm Peab, with whom SkiStar has construction contracts and Erik Paulsson, on the basis of close fraternal relationship with Mats Paulsson. For information on the age, education, assignments, shareholding etc. of each Board member, refer to page 88. The work of the Board The work of the Board of Directors is governed by the formal work plan that the Board adopts at the Board meeting following election each year. The Chairman of the Board, Erik Paulsson, leads the work of the Board and has continuous contact with the CEO in order to follow up the Group s business and development. The work of the Board mainly comprises strategic matters, business plans, the year-end book-closing and larger investments and sales. During the financial year 2012/13, the Board held seven scheduled meetings; the attendance of the members is shown in the table on page 87. The work of the Board is evaluated continuously. SkiStar s CFO, Magnus Sjöholm, is the Board s secretary. Compensation Committee At the Board meeting following election on 8 December 2012, Erik Paulsson was elected Chairman of the Compensation Committee and Mats Qviberg and Mats Paulsson were elected as members. The Compensation Committee is responsible for issues concerning salaries, pension benefits, bonus programmes and other employment benefits for the CEO and management of SkiStar. The Compensation Committee has no decision-making authority; rather, it prepares information and reports matters to the Board as a whole. The Compensation Committee held two meetings during the financial year, at which all Committee members were present, refer to the table on page 87. Audit Committee At the Board meeting following election on 8 December 2012, Per-Uno Sandberg was elected Chairman of the Audit Committee, and Eivor Andersson and Pär Nuder were elected members. The Audit Committee is responsible for ensuring that the financial reporting maintains a high standard. They also maintain regular contact with the Company s auditors, draw up guidelines regarding negotiations for services from the Group s auditing firm and evaluate audit activities. They also assist the Nominating Committee in the work of nominating and establishing fees for the auditors. The Audit Committee has no decision-making authority; rather, it prepares information and reports matters to the Board as a whole. The Audit Committee has held three meetings during the financial year. For further information on each Board member s attendance, refer to the table on page 87. External auditors At the Annual General Meeting in 2011, KPMG was reappointed as the auditing firm for SkiStar until the Annual General Meeting in Owe Wallinder has during the year CORPORATE GOVERNANCE REPORT 85

86 assumed the role as the principal auditor. The results of the audit are reported regularly during the year to Group Management and the Audit Committee. At least once per year, the auditor meets the Company s Board of Directors. The external auditor s independence is governed by specific rules of procedure for the Audit Committee, adopted by the Board, which set out the areas in which the external auditor may be engaged in matters outside the ordinary audit assignment. Remuneration to the auditor is paid on an approved, on-account basis. For further information on fees, refer to Note 6. Remuneration to the Board The combined remuneration paid to Board members elected by the Board was fixed by the 2012 Annual General Meeting at TSEK 730 (730), of which the Chairman received TSEK 155 and the other Board members not employed by the Company each received TSEK 115. No other remuneration for work within the committees was paid. GROUP MANAGEMENT The policies in the chart below are presented as guidelines to the business. The Chief Executive Officer The Chief Executive Officer, who is also Group Chief Executive, is responsible for the day-today management of the Company in accordance with the Board of Directors guidelines and directives. As support during the financial year, he has a deputy CEO, who is also the CFO, the three resort managers and the Group staff. The CEO is responsible for communicating continuous information and necessary documentation for decision-making to the Board of Directors, in order to allow the Board to be able to assess the financial position of the Group and make appropriate decisions. For the CEO s age, education, assignments, shareholding, etc. see page 90. The Company s Management Group During the financial year 2012/13, the Company s management group consisted of six individuals, the CEO, the deputy CEO, also CFO, the Marketing and Sales Manager, the Technical Director, also Resort Manager for the Norwegian destinations Hemsedal and Trysil, two Resort Managers in Sweden; one for Åre-, Vemdalen and one for Sälen. FINANCIAL REPORTING External financial reporting SkiStar applies International Financial Reporting Standards (IFRS) in the preparation of the Group s reporting. Quality in the current financial reporting is ensured via a number of internal measures and routines. The auditors perform a limited review of the Company s nine-month report. In accordance with the Swedish Companies Act and the Swedish Code of Corporate Governance, the Board is responsible for internal control. DESCRIPTION OF THE INTERNAL CONTROL Control environment There is a clear division of roles and responsibilities contained in the formal work plan of the Board of Directors and the instructions to the CEO, as well as for Board committees, the purpose of which is to ensure the effective management of the operations risks. Company management regularly reports to the Board according to established routines. Company management is responsible for the internal controls required to manage significant risks in the day-to-day operations of the Company. A common business system both for external reporting and for internal follow-up, budgeting and forecasting is deemed to strengthen the control environment and security in the financial reporting. The Audit Committee prepares the Board of Directors continuous follow-up of the internal control, which includes evaluating and discussing substantial issues concerning auditing and reporting technicalities. During the financial year, the Audit Committee has received reports from senior management concerning the internal control projects that have been implemented. The Audit Committee held three meetings during the financial year. Risk assessment The Board ensures that risk assessments are carried out for all significant risks to which the Company is exposed in the context of the financial reporting. This includes identifying those items in the income statement and balance sheet for which the risk of material misstatement is increased, and designing a control system to prevent and identify any such errors. This is primarily carried out by quickly identifying events in operations or in the external environment that may affect the financial reporting and by monitoring those changes in auditing standards and recommendations that concern the financial reporting of the Company. Control activities The Company works continuously with eliminating and reducing significant risks which can affect the internal control with regard to financial reporting. Examples of control activities undertaken to manage risks are: The management group s follow-up and analysis Individual reviews of the Company s IT system, with an emphasis on the sales system. Continuous monitoring of compliance with authorisation manuals and authorisation structures. Annual review of the handling of means of payment at the Company s points of sale. Other regular reconciliations and physical checks. POLICIES CODE OF CONDUCT SAFETY POLICY IT, crisis management, etc. OTHER Operational, strategic and administrative policies SUSTAINABLE VALUE CREATION Environment, csr, energy PERSONNEL POLICIES HR, health and safety, etc. 86 CORPORATE GOVERNANCE REPORT

87 Information and communication In order to comply with the Company s policies, guidelines and recommendations, it is required that these be well-documented and that they be communicated within the Company. To ensure that information and communication function properly, the management group holds regular meetings with representatives from the Company s destinations and from staff functions. Policies, manuals and instructions are available on the Company s intranet. Follow-up The Board of Directors continuously evaluates the information provided by senior management and the Audit Committee and ensures that identified deficiencies in the internal controls are remedied. Of particular significance for follow-up is the work of the Audit Committee and the reports from the external auditors. Internal auditing The Board of Directors has made the assessment that the monitoring and follow-up described above are presently sufficient to ensure the efficiency of the internal control, without any special internal auditing function. ARTICLES OF ASSOCIATION The Company s current Articles of Association, adopted at the 2011 Annual General Meeting, were registered in January The Articles of Association do not include rules on the procedure for amending the Articles of Association. COMPLIANCE WITH THE SWEDISH CODE OF CORPORATE GOVERNANCE The adjacent table shows and explains the deviations from the Swedish Code of Corporate Governance. The auditors report with regard to this Corporate Governance Report can be found to the right. BOARD OF DIRECTORS Attendance Independent Attendance, Audit Committee Attendance, Compensation Committee Remuneration Members elected by the AGM Erik Paulsson 7/7 2/2 155,000 Mats Paulsson 6/7 2/2 115,000 Mats Qviberg 7/7 x 2/2 115,000 Per-Uno Sandberg 7/7 x 3/3 115,000 Eivor Andersson 7/7 x 2/3 115,000 Pär Nuder 7/7 x 1/3 115,000 Mats Årjes 7/7 Employee representatives Bengt Larsson 6/7 Katarina Hjalmarsson 6/7 DEVIATIONS FROM THE SWEDISH CODE OF CORPORATE GOVERNANCE 2012/13 Code Rule Description Deviation Explanation 2.4 Criteria for members of Nominating Committee SkiStar s Chairman of the Board of Directors is also the Chairman of the Nominating Committee. The majority of members on the Nominating Committee are also Board members and are dependent in relation to major shareholders. The principal owners are Board members and are also included in the Nominating Committee, in order to take an active ownership role and because they are well-suited to achieving the best results for the Company s shareholders. 4.1 Size and composition of the Board of Directors The Board of Directors does currently not have an equal gender distribution. 9.2 Criteria for composition of Compensation Directors is also Chairman of the The Chairman of the Board of Committee Compensation Committee, which implies that the other members must be independent. Only one of the two other members is independent. To the Annual General Meeting of SkiStar AB (publ), Corporate Identity Number An equal gender distribution shall be pursued. It is deemed that the Compensation Committee can act independently despite the fact that one member is considered dependent according to the Code. AUDITOR S STATEMENT ON THE CORPORATE GOVERNANCE REPORT The Board of Directors is responsible for the preparation of the Corporate Governance Report for the financial year 1 September August 2013 on pages in accordance with the Annual Accounts Act. We have reviewed the Corporate Governance Report, and we believe that this review, in conjunction with our knowledge of the Company and the Group, provides a reasonable basis for our opinion. This implies that our statutory review of the Corporate Governance Report has a different focus and is substantially smaller in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. Our opinion is that a Corporate Governance Report has been prepared, and the statutory information contained therein is consistent with the other parts of the annual accounts and consolidated accounts. Sälen, 14 November 2013 KPMG AB Owe Wallinder Authorised Public Accountant 87

88 BOARD OF DIRECTORS Erik Paulsson Born 1942 Chairman Elected 1977 Mats Paulsson Born 1944 Elected 1977 Mats Årjes Born 1967 CEO Elected 2003 Education: Public school Other functions: Chairman of the Board of Directors of Backahill AB, Brinova Fastigheter AB, Fabege AB and Wihlborgs Fastigheter AB. Board member of Nolato AB and Catena AB. Shares: Including family and Company 7,543,973 Class B shares. Dependent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to major shareholders. Education: Public school Other functions: Vice-Chairman of the Board of Directors of Peab AB. Board Member of Mentor Sverige AB, Mats Paulssons stiftelse and Medicon Village AB. Shares: Including family and Company 1,824,000 Class A shares and 6,583,807 Class B shares. Dependent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to major shareholders. Education: Master of Business Administration Other functions: Board Member of New Wave Group AB. Chairman of the Swedish Ski Association. Shares: Including Company 320,304 Class B shares. Dependent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company. Independence in relation to major shareholders. Mats Qviberg Born 1953 Elected 2000 Per-Uno Sandberg Born 1962 Elected 2002 Eivor Andersson Born 1961 Elected 2011 Education: Master of Business Administration Other functions: Chairman of the Board of Directors of Investment AB Öresund and Bilia AB. Vice-Chairman of the Board of Directors of Fabege. Shares: Including family 909,011 Class B shares. Independent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to major shareholders. Education: Master of Engineering Shares: 1,525,000 Class B shares. Independent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to larger shareholders. Education: Marketing diploma, management training IHM Business School. Other functions: Chairman of the Board of Directors of Senior Work AB/Intervallum and Board Member of SJ AB, European Travel Interactive AB, Ifs Global AB and F12 Gruppen AB. Shares: 4,500 Class B shares. Independent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to major larger shareholders. Pär Nuder Born 1963 Elected 2011 Katarina Hjalmarsson Born 1964 Employee representative Bengt Larsson Born 1951 Employee representative Education: Master of Laws Other functions: Senior Director Albright Stonebridge Group. Chairman of the Board of Directors of Sundbybergs Stadshus AB, the Third Swedish National Pension Fund and Hemsö AB. Board Member of Fabege AB, Swedegas AB and Cleanergy AB. Shares: Including Company 14,012 Class B shares. Independent according to the Swedish Code for Corporate Governance and the Stockholm stock exchange listing agreement in relation to the Company as well as to major shareholders. 88 BOARD OF DIRECTORS

89 FINANCIAL INFORMATION SkiStar endeavors to maintain a high level of quality regarding the Company s financial information. This will facilitate the understanding of SkiStar s operations and build long-term confidence in the Company. SkiStar has been awarded a number of prizes for its financial information, including an honourable mention on several occasions in the Best Accounting, organised by the Stockholm Stock Exchange. The Company was also voted Listed Company of the Year in 1999, 2003 and 2004, a financial information competition arranged by the Swedish financial publications, Dagens Industri and Aktiespararna. ANALYSTS The following analysts monitor SkiStar s progress and development on a regular basis: Danske Bank Mikael Holm mikho@danskebank.se +46 (0) JRS Securities Johan Broström johan.brostrom@jrssec.se +46 (0) REPORTING PERIODS Interim reports and the Year-end report during the 2013/14 financial year will be published as follows: Three-month report 1 September 30 November 2013, 18 December 2013 Half-year report 1 September February 2014, 20 March 2014 Nine-month report 1 September May 2014, 19 June 2014 Year-end report 1 September August 2014, 2 October 2014 ANNUAL GENERAL MEETING OF SHAREHOLDERS Shareholders are welcome to attend SkiStar s Annual General Meeting on Saturday 14 December 2013 at 2.00 pm at Experium in Lindvallen, Sälen. Shareholders who would like to participate in the Annual General Meeting must be registered in the register of shareholders kept by Euroclear Sweden AB (formerly VPC) by Monday 9 December 2013 and report their intention to participate in the Annual General Meeting latest on Monday 9 December 2013, at 12 pm. Shareholders who have registered their shares with an authorised nominee must, in good time prior to 9 December, temporarily reregister their shares in their own name in order to be able to participate in the Annual General Meeting. Registration to participate in the Annual General Meeting shall be made in writing to: SkiStar AB, Shareholder Services SE Sälen, On the Company s corporate site Telephone: +46 (0) ANNUAL REPORT With regards to our environment and the community, we have decided to print only a limited number of copies of the annual report. The report is available to read on and can also be ordered via info@skistar.com. FINANCIAL INFORMATION 89

90 MANAGEMENT Mats Årjes Born 1967 CEO Magnus Sjöholm Born 1960 CFO, deputy CEO Bo Halvardsson Born 1955 Technical director, Resort Manager, Norway Employed since 2002 Education: Master of Business Administration Previous positions: Director of Swedish Ski Association, Hotel Manager of Mora Hotel. CEO and partner in Santaworld AB. Shares: Including Company 320,304 Class B shares. Employed since 1988 Education: Master of Business Administration Previous positions: Auditor for LR Revision. Shares: Including family 143,368 Class B shares. Employed since 2005 Education: Constructional engineer Previous positions: Administrative Director of Trysilfjellet Alpin AS. Responsible for Purchasing/Project Development at SälenStjärnan AB/ SkiStar AB. CEO of Tandådalen & Hundfjället AB. Shares: Including family 54,000 Class B shares. Mathias Lindström Born 1972 Marketing and Sales Manager Jonas Bauer Born 1964 Resort Manager Sälen Niclas Sjögren Berg Född 1969 Resort Manager Åre-Vemdalen Employed since 2007 Education: Master of Business Administration Previous positions: Nordic Marketing Manager, Fritidsresor. Sales and Marketing Manager, Langley Travel. Shares: 43,000 Class B shares. Employed since 2012 Education: Master of Business Administration Previous positions: CEO Vasaloppet AB, CEO and partner of the advertising agency ANR. BBDO, Project leader advertising agency Paradiset, Product Manager Pharmacia & Upjohn/Nicorette, Sweden Manager Danone International Brands AB. Shares: Including family 328 Class B shares. Employed since 1989 Education: Marketing Diploma IHM Previous positions: Various management positions within the SkiStar Group. Business Area Manager Ski School Tandådalen & Hundfjället AB. Shares: 18,568 Class B shares. 90 MANAGEMENT

91 ARTICLES OF ASSOCIATION Adopted at the Annual General Meeting 10 December 2011 (registered in January 2012). 1 BUSINESS NAME The Company s business name is SkiStar Aktiebolag, Corporate Identity Number The Company is a public limited liability company (publ). 2 REGISTERED OFFICES The Board of Directors shall have its registered offices in Sälen, Municipality of Malung, County of Dalarna. 3 LOCATION OF ANNUAL GENERAL MEETING The Annual General Meeting shall be held in Sälen, Åre or Stockholm. 4 OPERATIONS The operations of the Company, whether undertaken by the Company itself or by another company, are comprised of the ownership and operation of recreational facilities, with a primary focus on alpine skiing, the conduct of travel agency, radio and TV operations, in addition to the ownership and administration of real estate and securities, as well as associated operations. 5 SHARE CAPITAL Share capital shall be a minimum of SEK 15,000,000 and a maximum of SEK 30,000,000. The number of shares shall be a minimum of 30,000,000 and a maximum of 60,000,000. Of the Company s shares, a maximum of 2,250,000 shares shall be Class A shares, with ten votes per share, and a maximum of 60,000,000 shares shall be Class B shares, with one vote per share. If the Company resolves to issue new Class A and Class B shares on the basis of a cash issue or an offset issue, the owners of Class A and Class B shares are entitled to the preferential right to subscribe for new shares of the same class in proportion to the number of shares the holder previously owned (preferential rights). Shares that are not subscribed for by holders of preferential rights shall be offered for subscription to all shareholders (subsidiary rights issue). If there are not enough shares offered for subscription via a subsidiary rights issue, the shares shall be divided amongst the subscribers in proportion to the number of shares that the subscriber previously owned. When this is not possible, the shares shall be allotted by the drawing of lots. If the Company issues only new Class A or only new Class B shares on the basis of a cash issue, all shareholders, regardless of whether they hold Class A or Class B shares, shall have the preferential right to subscribe for the new shares in proportion to the number of shares previously owned. If the Company issues, on the basis of a cash issue or an offset issue, share warrants or convertibles, the shareholders are entitled to the preferential right to subscribe to share warrants as if the issue regarded the shares that can be subject to subscription for new shares on the basis of the option right and the preferential right to subscribe for convertibles as if the issue regarded the shares that the convertibles can be replaced with, respectively. The provisions above shall not imply any restriction to the possibility of resolving upon a cash issue with deviations from the preferential rights of the shareholders. When share capital is increased on the basis of a bonus issue, new shares of each share type shall be issued in proportion to the previous number of shares of the same type. In this manner, old shares of a certain share type shall convey the right to new shares of the same share type. This provision shall not imply any restriction on the possibility of issuing new shares of a new type on the basis of a bonus issue, subsequent to the necessary changes to the Articles of Association. 6 BOARD OF DIRECTORS The Board of Directors shall, in addition to members who may be appointed by other parties by law, be composed of four to nine members, with a maximum of three deputies. Members of the Board are elected for a period of one year. 7 AUDITORS One or two auditors, with one or two deputies, or a registered public accounting firm, shall be appointed by the Annual General Meeting to audit the Company s annual accounts and accounting records and the administration of the Board of Directors and the CEO. 8 NOTICE Notice of the Annual General Meeting will be issued in the Swedish Official Gazette and on the Company s website, The release of the notice will be made public in Dagens Nyheter. Shareholders who wish to participate in the Annual General Meeting shall be listed on a transcript of the entire share register showing circumstances five working days prior to the meeting, and register with the Company by 12 pm on the date stated in the notice of the meeting, at which time the number of representatives is to be stated. This day may not be a Sunday, any other public holiday, a Saturday, Midsummer Eve, Christmas Eve or New Year s Eve, and may not fall earlier than the fifth working day prior to the meeting. 9 ANNUAL GENERAL MEETING An Annual General Meeting shall be held annually within six (6) months of the end of the financial year. The following matters shall be addressed at the Annual General Meeting: 1. Election of chairman of the meeting. 2. Preparation and approval of voting list. 3. Approval of the agenda. 4. Election of two persons to verify the minutes. 5. Consideration of whether the meeting has been properly convened. 6. Presentation of the annual accounts and audit report, and of the consolidated accounts and Group audit report. 7. Resolution concerning the adoption of the income statement and balance sheet and the consolidated income statement and consolidated balance sheet. 8. Resolution concerning the appropriation of the Company s profit or treatment of losses according to the adopted balance sheet. 9. Resolution concerning discharge from liability of the Board of Directors and the CEO. 10. Determination of remuneration to the members of the Board of Directors and the audit fees. 11. Election of Board of Directors and auditors and deputies, if any. 12. Other matters to be addressed by the General Meeting pursuant to the Swedish Annual Accounts Act or the Articles of Association. 10 ATTENDANCE AT ANNUAL GENERAL MEETING The Board of Directors may decide that an individual who is not a shareholder of the Company, shall, on the terms established by the Board, have the right to attend the Annual General Meeting. 11 FINANCIAL YEAR The Company s financial year shall be 1 September- 31 August. 12 RECORD DAY PROVISION The Company s shares shall be registered in a record day register according to the Financial Instruments Act (1998:1479). ADDRESSES SkiStar AB (publ) SE Sälen Box 7322 SE Stockholm Tel Fax skistar.com SkiStar, Sälen SE Sälen Tel Fax skistar.com SkiStar, Åre Box 36 SE Åre Tel Fax skistar.com SkiStar, Vemdalen Nya Landsvägen 58 SE Vemdalen Tel Fax skistar.com SkiStar, Hemsedal Boks 43 NO-3561 Hemsedal Tel Fax skistar.com SkiStar, Trysil NO-2420 Trysil Tel Fax skistar.com Photographs: Jonas Kullman, Ola Matsson, Jonas Hasselgren, Kristoffer Andersson, Per Eriksson, Kalle Hägglund. Portraits: Jonas Hasselgren, Bengt Alm. Design and project management: SkiStar Mediahuset. Print and repro: Elanders. We are not liable for any printing errors. ARTICLES OF ASSOCIATION 91

92 SkiStar AB (publ) Org nr SE Sälen Tel +46 (0) Fax +46 (0)