ContentsDirectors’ reportResearch and developmentPersonnelCapital investmentFinancingManufacturing unitsOther information and proposed appropriation of profitsStatement of fundsProfit and loss accountsBalance sheetsNotes on the AccountsBoard of directors and auditorsThe Trelleborg Group 1970–1 979

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Annual General MeetingThe Annual General Meeting will be held on Tuesday 27May 1980 at 10.00 hours in the ‘Forum’ building, JohanKocksgatan 7, Trelleborg, Sweden.

Notification of attendanceThose intending to be present at the meeting must notifythe Company not later than 15.00 hours on Thursday 22May 1980 either by telephone to (Sweden) 0410/51419,51103 or through exchange 51000, or by letter to:Trelleborg ABJuridiska avdelningenFackS-231 01 TrelleborgSweden.

The Company will apply the law governing simplified sharehandling. In order to be eligible to vote, shareholders mustbe entered on the register kept by VärdepapperscentralenVPC AB not later than 16 May 1980. Shareholders withshares registered on their behalf by the trust department ofa bank or by individual stockbrokers must ensure that suchshares are registered provisionally with VPC in their ownname by the above date.

Changes of addressAll changes of address must be notified to VPC, Box 7444,S-10391 Stockholm, Sweden; a special form is providedfor this purpose, available from all Swedish bankbranches.

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Annual Report of Trelleborg ABThe Board of Directors and Managing Director submitherewith the Annual Report and Accounts of the Companyand the Group Annual Report and Consolidated Accountsfor the financial year 1979.

Summarized results (in Kr million)

Trelleborg Group Parent Company1979 1978 1977 1979 1978 1977

Invoiced sales 1,039 970 985 659 601 562of which sales abroad as a percentage 51 54 46 44 45 45

Operating result before depreciation 83.5 21.7 62.6 31.1 –9.5 36.5operating result as a percentage

of invoiced sales 8.0 2.2 6.3 4.7 Neg 6,5

Result after financial income andexpenditure 17.7 –56.3 –13.3 2.7 –51.5 –1.8

Result before allocations and taxes 14.2 9.8 –23.1 –3.3 11.8 –12.9

Capital expenditure on plant (net) 45 –23*) 60 25 – l 0 * ) 46capital expenditure on plant as apercentage of invoiced sales 4.3 Neg 6.1 3.8 Neg 8.3

Equity ratio as a percentage 30.7 31.6 26.4 40.9 41.5 34.7

Average number of employees 5,061 5,296 6,072 3,129 3,203 3,335

Invoiced sales per employee(kr thousand) 205 183 162 211 188 169

*) Gross capital expenditure Kr 27 million (Parent Company) and Kr 44 million (Trelleborg Group), lessdisposals of Kr 37 million and Kr 67 million respectively.

Trelleborg’s Management Group: from left Sören Kelmeling(Finance, Administration), Bo Persson (Marketing), Sven IngvarOlsson (Engineering) and Managing Director Arne Lundqvist.

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Directors’ reportGroup summaryTrelleborg Group sales for 1979 amounted to Kr 1,039million (1978: Kr 970 million), which represents an increaseof 7%. Orders received during the year also increased byabout 10%. These increases is attributable to priceincreases, although tonnages delivered were slightlybelow forecast.

The operating result of the Trelleborg Group for 1979before extraordinary items, allocations and tax was a Kr17.7 million profit (1978: a Kr 56.3 million loss). Whereas in1978 extraoridnary income exeeded extraordinary expen-diture, contributing a net Kr 66.1 million to earnings, mainlyas a result of the sale of property to SPP (the Swedish StaffPension Society), in 1979 there was a negative balance onextraordinary items of Kr 3.5 million. The result beforeallocations on profit and loss account and tax was a Kr14.2 million profit (1978: a Kr 9.8 million profit). After alloca-tions the profit and loss account and provision for tax, thenet result becomes a Kr 6.7 million profit (1978: a Kr 25.2million profit).

Increased demandDemand for Trelleborg Group products showed a progres-sive increase throughout the year in line with the improvedeconomic climate. This increase was distributed more orless evenly across all product areas and markets.

During 1979, overseas sales accounted for 51% of totalsales. A mainly positive development trend was observedin our five main customer countries: the UK, France, USA,Denmark and Norway.

Substantial raw material price increasesThe majority of raw materials used by the Trelleborg Groupare oil-based. In addition to rubber, of which just over 80%is synthetic, almost identical quantities of textile productsare used, mainly as reinforcement materials. These textilesare now made mainly from synthetic fibres. Also used inthe production processes are large quantities of oil-basedchemicals in the form of carbon black, accelerators, anti-oxidant, adhesives and solvents.

The major proportion of these price increases in raw ma-terials could be compensated for by corresponding priceincreases on finished goods.

Restructuring programme takes effektThe improvement in operating results between 1978 and1979 is due mainly to the restructuring programme cur-rently under way. The aims of this programme are to main-tain a restrained growth rate and at the same time eliminatethe least profitable parts of the business, to concentrateand coordinate production resources and to achieve sig-nificant cost reductions.

Rationalization of industrial hose productionAs indicated in last year’s Directors’ Report, the greatestnegative variances in the 1978 operating results were inindustrial hose, moulded rubber products and conveyorbelts. Industrial hose alone accounted for 65% of the totaloperating loss. As a result, the industrial hose productgroup has undergone one of the most comprehensive-remedial programmed during 1979.

Invoiced Sales (The Trelleborg Group)

1000 Total900 invoiced

Sales800700600500 Foreign

Sales400300 Export200 from100 Sweden

70 71 72 73 74 75 76 77 78 79

The manufacture of standard hose has been run down,both at Trelleborg and at our Netherlands plant. It did notprove possible fully to coordinate production at the plan-ned level in 1979; this will have to continue during 1980.The manufacture of plastics hose to high specification willstart at Trelleborg during 1980. Further contraction of themarket has taken place. Unprofitable products and mar-kets have been phased out.

Just before the end of 1979, agreement was reached withthe East German authorities for Trelleborg to construct aturnkey factory for the manufacture of high-presssure hosein the German Democratic Republic. This project, whichalso includes the sale of technical know-how, is worthabout Kr 100 million and was won in competition with otherWestern European rubber manufacturers. The factory is tobe completed during the second half of 1981.

Manufacture of standard industrial hose in the Netherlandswill cease in 1980, to be replaced by the production ofhydraulic hose, ie high-pressure hose for hydraulicallyoperated machines and equipment. The aim is to developthe Netherlands factory to become the Trelleborg Group’sspecialist centre for the manufacture and marketing ofhydraulic hose – a technically advanced product with con-siderable marketing potential.

The structural changes in the field of industrial hose haveled to improved results, with 1978’s very heavy loss con-siderably reduced. The remedial programme will now con-tinue with the objective of bringing the industrial hoseproduct group into profit in 1980.

Moulded rubber productsThe moulded rubber products activity has been affectedby several restructuring programmes during 1979.

In autumn 1978, three new divisions were formed from theGRG (General Rubber Goods) Division: Novibra; SafetyProducts; and Roll Covering and Lining Divisions. Whatremained of the GRG Division has been restructured prin-cipally for the large-scale manufacture of moulded prod-ucts, The range has been rationalized and is now concen-trated in those areas in which the division has many yearsof technical experience and has available the necessaryspecialized plant and equipment. These measures coin-cided with increased demand and have greatly improvedthis division’s results for 1979.

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Known as compensator, this huge flexible pipe joint is a GRGDiivision speciality. Compensators absorb vibration and noise,preventing their transmission most effectively.

Small-scale output and the manufacture of specializedproducts will now be concentrated mainly in the subsidiarycompanies Ulvex AB and Tekniska GummifabrikenJakobsberg AB, both in the Stockholm area. The restruc-turing of both these companies has progressed at a slowerrate than projected. This has had a negative effect on theoperating results of Ulvex in particular.

The Jakobsberg company has two subsidiary companies:one located on Gotland (in Hemse and Havdhem), theother in Härjedalen (in Ytterhogdal). It was decided in 1979to merge both subsidiaries with the parent company inJakobsberg.

Moulded rubber products are also manufactured at theHamburg factory, where output has been restricted tomeet the needs of the West German market. These pro-ducts were also manufactured in the Netherlands factoryat one time, but this activity had already been phased outby 1978.

The restructuring of moulded rubber product output istherefore for the most part complete. Future measures willbe aimed at achieving further improvements in the market-ing and product mix.

Conveyor belts return to profitabilityThe conveyor belt side of the business was hit in 1976 and1977 by the mining industry recession. This trend wasreversed, however, in 1978 in line with the improvementin the economic climate; conveyor belts again showed aprofit in 1979. Several new types of belt have beendeveloped and introduced onto the market with excellentresults.

Conveyor belts form part of the Mining Division (rubberproducts for mining applications), and enjoyed a healthylevel of demand throughout 1979. Order input increasedmarkedly both from the domestic Swedish market and fromoverseas.

Aggressive approachSince completion of the rationalization programmes, plan-ning of future activities has been based on an aggressiveapproach within those areas in which Trelleborg is bestable to exploit its strengths.

Excellent results have been achieved through the MiningDivision’s increased activity in Eastern Europe, LatinAmerica and Asia, which has helped the division’s exportlevel grow to 68%. Trelleborg mill linings made from rubberand other materials have been manufactured underIicence in the USA, Australia and Japan for many years.1979 has seen the start of a similar licensing arrangementin Brazil, where Trelleborg has been represented through awholly-owned sales company since 1974. A new salescompany has been formed in Mexico, and local manu-facture of rubber products for mining applications isscheduled to get underway in the first half of 1980.

The three new industrial rubber divisions – Novibra, SafetyProducts, and Roll Covering and Lining Divisions – areincreasing their impact through joint efforts principally inproduct development and marketing. High priority hasbeen given to automating production processes in theNovibra Division (bonded rubber/metal anti-vibrationproducts). A new market for vibration isolators is beingopened up in Canada. The Safety Products Division (pro-tective clothing, diving suits, oil booms) has sold Troilboomoil booms into several markets including Greece, Australiaand New Zealand. A complete system for dealing with oilpollution at sea (Springsweep), including floating contain-ers for the collection of oil out at sea, is now ready to belaunched on the market. There will be more sophisticatedprocesses within the Roll Covering and Lining Division (thelining of rollers used in the paper, cellulose and machinetool industries). Boring, bossing and balancing of rollerswill be carried out in addition to lining all types of roller withrubber or plastics. High technological standards areassured by our long cooperation with the world’s leadingmanufacturers, Stowe-Woodward Inc of the USA.

Development work on special tyres for agricultural, forestry andindustrial vehicles benefits from the close cooperation we enjoywith our customers.

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Negotiations for the acquisition of companiesNegotiations commenced in the spring of 1980 for theacquisition from Persöner AB of all the shares in AB Vär-namo Gummifabrik and in Sigma AB, Örebro. Both Vär-namo and Sigma manufacture principally industrial rubberproducts. Värnamo has a turnover of approximately Kr 120million and employs about 580 persons (550 in Värnamoand 30 in Kramfors), whereas Sigma, with its turnover ofapproximately Kr 30 million, employs about 130 in Örebro.The combined profit of Värnamo/Sigma in 1979 beforeextraordinary items, allocations and tax was Kr 7.7 million.

It is felt that an acquisition of this kind will enable significantstructural rationalization to take place. Thus a merger be-tween Trelleborg, Värnamo and Sigma would produceconsiderable advantages for the companies concerned inthe form of the exchange of products, the coordination ofproduction and the combination of their product develop-ment and production engineering resources.

Promotion of special tyresAfter incurring losses for several years – with the exceptionof 1977, when a small profit was made – the Tyre Divisionreturned once more to profitability in 1979. At the sametime, the remainder of Europe’s tyre industry continued tostruggle with severe profit problems.

Spearheading the Tyre Division is the wide range of spe-cial tyres for agricultural, forestry and industrial applica-tions. We manufacture the majority of these tyres our-selves, although the largest earthmover tyres are pur-chased from Japan’s Yokohama company for resale on theSwedish market. In 1980 our own range of tractor tyres is tobe complemented by marketing of a range of bought-inradial tyres. Earlier activities in selected product and mar-ket segments are now beginning to bear fruit. This is alsotrue to a great extent in exports, where the marketingorganization is still being built up.

Important recycling projectIn October 1979, the first spadeful of earth was removedfor a recycling plant – the first of its kind in the world –which will produce rubber crumb and powder reclaim fromwaste rubber, mainly used car tyres. This rubber reclaimmay then be processed directly into new products orblended with new rubber for use in conventional rubberproducts.

The project is backed by Gummiåtervinnings AB CGÅ,57% -owned by Trelleborg AB. Alfax AB of Malmö has a25% holding, and will supply liquid nitrogen to be used asa refrigerant in the new plant, which operates on the prin-ciple of extremely low-temperature grinding. A numberof scrap salvage firms also have holdings in CGA.

The plant is under construction at Surahammar. This loca-tion was chosen partly because of its proximity to Stock-holm, where by far the greatest numbers of used car tyresare to be found, and to the Alfax liquid air plant, the sourceof its nitrogen supplies. The plant is expected to be com-missioned at the end of 1980, providing employment for aworkforce of 15.

Used car tyres area raw material source with a highenergy content. It has been calculated that rubber crumbwith an energy value equivalent to 30 Iitres of oil may bereclaimed from four used tyres. Grants have beenauthorized by Statens Industriverk (the National Industrial

Board) under the Act relating to State grants for energyconservation measures in industry. Överstyrelsen förekonomiskt försvar (the National Board of EconomicDefence) is concerned with the nation’s state of prepared-ness for the defence of its economy.

Marketing policyIn 1979, export sales accounted for 51% of total turnover(1978: 540/0). Overseas sales were worth Kr 527 million(1978: Kr 520 million) and home sales in Sweden Kr 512million (1978: Kr 450 million). Exports from Sweden wereworth Kr 300 million (1978: Kr 275 million).

Export sales may be broken down as follows: to the neigh-boring Nordic countries 20% (1978: 20%) to the rest ofEurope 63% (1 978: 58%); to the USA and Canada 9%(1978: 11%); and to the rest of the world 8% (1978: 11%).

One of Trelleborg’s long-established strengths has beenits well-developed marketing organization. Trelleborg isrepresented in overseas markets partly by an extensiveagency network (a total of about 70), and partly by wholly-owned sales companies (at present 16).

Whereas previous policy was to cover the majority ofcountries throughout the world with most of the productrange, export sales are now limited to certain selectedmarkets and a concentrated range of products. The mainemphasis is on a number of basic markets, of which themost important are West Germany, France, the UK, theUSA, Norway and Denmark. A great deal of trade is alsodone with Eastern Bloc states.

Trelleborg’s export sales are dominated by rubber prod-ucts for mining applications, industrial hose and tyres.

A new, independent profit centre was created in Sweden in1979, equal in status to the other marketing companies,divisions and service units within the Trelleborg Group.This new profit centre –trading under the title TrelleborgIndustriservice Sverige – mainly sells industrial suppliesacross the entire Swedish market. It is structured aroundthe nine regional sales offices already existing in Sweden,which have been merged with the Parent Company(Malmö, Jönköping, Göteborg, Karlstad, Örebro, Stock-holm, Falun, Sundsvall and Skellefteå) together withEskilstuna Gummi AB.

Decentralization continuesThe organization’s extensive decentralization, begun inautumn 1978 is now beginning to show results and ishelping to renew the Company’s vitality.

It was decided at the beginning of 1980 to split the existingIHT Division (Industrial Hose and Transmission) into twonew divisions: Hose and Transmission. These plans haveexisted for some time, but could not be implemented untilthe restructuring program me for transmission V-belts hadachieved the desired effect, as is now the case. Afterhaving sustained losses for a number of years, transmis-sion belts are once again showing a profit and have everychance of ‘standing on their own feet’ in the future.

New administrative system1979 has seen the introduction of new administrative sys-tems in the Parent Company. One of these is a comprehen-sive new order processing, invoicing and stock monitoringsystem, tailored to suit the new decentralized organizationThe introduction of this system has meant equipping the

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operating divisions with display screens, writers and mini-computers linked to a central computer, in which up-to-date information is available on customers, products andorders. A completely new computer-based reporting sys-tem has also been installed during the course of the year toprovide considerably more rapid and reliable economicreporting.

Time-sharing between Trelleborg and PLMAgreement was reached in spring 1980 between Trelle-borg and PLM AB in Malmö for the formation of a separatedata processing company. This company, which will beowned jointly by the two parties, will first and foremostmeet its owners’ needs but will also be in a position to sellits services to others once established. Cooperation of thisnature brings economies of scale which will reduce dataprocessing costs to both Trelleborg and PLM.

Research and developmentMost research and development work within the TrelleborgGroup is currently carried out inside the respective operat-ing divisions, with the central R & D function concernedprincipally with longer-term development projects. Therehas been an increase in the level of cooperation with theinstitutes of Technology and other independent develop-ment organizations.

R & D’s shareResearch and development within the Trelleborg Group

Originally developed by Trelleborg for the swedish ArmedForces is this inflatable medical tent – which is easy to disman-tle, move and erect – satisfies the most stringent hygienerequirements.

was funded at the rate of approximately 3% of total turn-over in 1979. Some 80% went to development projectswithin the operating divisions themselves, with 10% goingto central projects and the remaining 10% to long-termdevelopment of materials. Areas of priority within the cen-tral

a.

b.

c.

R & D function include:

the development of materials and products for futureenergy systems;the development of materials which will satisfy increas-ingly demanding environmental requirements;the development of recycling processes and products.

New productsOur research and development work produces a continu-ous flow of improved, or entirely new, products and appli-cations. The following examples are worthy of mentionfrom the Safety Products Division: inflatable seals for dockgates (Tretight), a new range of waders (Akvarex) and aninflatable hospital tent. The Mining Division can now offer anew generation of conveyor belts which may be com-plemented by a system for the transport of materials bytube. Screen cloths in new materials has been introduced.The Hose Division has launched an extra-lightweight venti-lation hose and a safety coupling for heavy hoses (Trell-safe). The General Rubber Goods Division (GRG) is cur-rently developing a new type of expansion joints, as well asrubber shock-absorbers incorporating chains for use inmooring boats.

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Personnel Average numbers of employees1979 1978

Continued reduction in number of salaried employeesThe number of salaried employees continues to fall. At theend of the year, the Trelleborg Group had a total of 1625salaried employees as against 1755 at the start of the year– a reduction of 130, of whom 66 were in the ParentCompany.

An average of 75 salaried employees received trainingduring the year. The training programme, described ingreater detail in last year’s Directors’ Report and sup-ported by the public employment authorities and Tjän-stemännens Trygghetsråd (Council for the Security ofSalaried Employees), will be continued in 1980, but itsscope will be reduced progressively. Grants totalling Kr7.2 million were received during the year in the form ofemployment and training subsidies from AMS (NationalLabour Market Board) and Trygghetsrådet (SwedishEmployment Security Council).

Recruitment of new workersThe reverse has been the case with production workers.Recruitment of new workers recommenced cautiously inthe spring and increased after the holiday period. 203workers were recruited by the Parent Company in Trel-leborg in 1979. Nevertheless, this increase in personnelwas unable to compensate fully for the total of workers wholeft the Company during the same period and, by the closeof the year, there was a net reduction of 38 in the workforceat Trelleborg.

Stabilization of absenteeismAbsenteeism has stabilized at the 1977 and 1978 levels.The overall level for 1979 was 19% for blue-collar workers,9.4% for salaried employees. Within the overall absentee-ism rate there has been a slight reduction in absence dueto sickness. }Early retirement continued to be approved in 1979, but at alower level than in 1980. Subsidies of Kr 4.5 million werereceived from Trygghetsrådet (Swedish Employment Se-curity Council) to make good deficiencies in the companypension payable to those who elected for early retirement.

Parent Company 2,894 (3,129) 3,203

Other Swedish companies 8 2 4 ( 8 6 9 ) 853

Foreign manufacturingcompanies 705 816Foreign sales companies 358 424

Total for Trelleborg Group 4,781 (5,061) 5,296

of which blue-collar workers 3,129 (3,417) 3,487salaried employees 1,652 (1,644) 1,809

With effect from 1979, the average number of employees inSweden has been calculated as the number of permanentemployees as recommended by Bokföringsnämnden (theAccountancy Board). The figures which appear in brack-ets show the average number of employees arrived at bythe previous calculation method and are directly compar-able with the 1978 figures.

Wages and other forms of pay (in Kr million)Trelleborg Group Parent Company

1979 1978 1979 1978

Wages, etc, paidBoards of Directors andManaging Directors 1.5 2.5 0.7 1.4

Blue-collar workers 160.8 155.5 96.3 94.0

Salaried employees andforemen 131.2 134.8 83.9 85.7

Social costs, etcHoliday and public holidaypay (included in wagesabove)Pension costsPersonal insuranceTraining costsGeneral employer’s contri-bution

293.5 292.8 180.9 181.1

19.7 21.2147.5 143.7 56.6 51.3

2 7 . 5 2 4 . 61.2 1.2

— 3.1 - 2.7

147.5 146.8 105.0 101.0

The number of employees and the wages paid at eachplace of work with more than 20 employees or in thedifferent countries are presented in a separate table on

page 21, notes 23 and 24.

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Capital investmentGross fixed investment in 1979 amounted to Kr 47 million(1978: Kr 44 million). Most of this was expenditure on therationalization programme.

The transition to highly automated of moulded productshas been accelerated and introduced into important pro-duction areas in the Trelleborg and Jakobsberg plants.Continuous injection equipment has been installed both inTrelleborg and Hamburg to meet the heavy increase indemand for sealing strip.

Advanced boring equipment has been commissioned inthe roller lining department; this has improved manufactur-ing quality considerably.

A new method of vulcanizing industrial hose in longlengths, known as the open curing process, is nowincreasingly replacing the previous, so-called lead curingprocess. This method is more efficient and can eliminatethe environmental problems associated with handlinglead. The changeover began in 1978, and about half ourtotal production of long hose is manufactured currently bythe open curing process.

Capital expenditure has continued as planned throughout1979 on sealed handling systems for chemicals, etc., inthe blending department, aimed at increasing efficiencyand improving the environment.

An improved, more environmentally acceptable rubber-to-metal bonding process will begin to be used during thefirst half of 1980 in the Mining Division (for rubber productsfor mining applications).

Safety is of paramount importance in coalmines. This conveyorbelt had to be manufactured to the most exacting standards,including beeing self-quenching, before beeing accepted forservice,

Financing, liquidity and equity ratioThe interest-bearing liabilities of the Trelleborg Group, lesscash in hand and at bank, increased by Kr 25 millionduring 1979.

The following trend may be observed for working capital asa percentage of invoiced sales:

1975 1976 1977 1978 1979

Inventories % 32.5 30.2 33.2 28.2 30.0Accounts receivablefrom customers % 17.3 18.7 21.9 20.9 20,8Accounts payableto suppliers andbills payable % 6.6 7.9 9.7 8.1 9.3

Total % 43.2 41.0 45.4 41.0 41.5

In terms of value, 1979 has seen an increase of Kr 32million in the working capital of the Group.

The total increase for the year in the interest-bearing liabili-ties, less cash in hand and at bank, has been financed bya reduction in liquidity, which was abnormally high at thestart of the year as a result of the then recent sale ofproperty to SPP (Swedish Staff Pension Society). At theend of the year, the liquidity position was still extremelysound. The liquid resources of the Trelleborg Group,including unutilized credits, amounted to Kr 199.1 millionon 31 December 1979 as against Kr 241.6 million at thestart of the year.

The equity ratio*) of the Trelleborg Group has changed asfollows:

year 1975 1976 1977 1978 1979

% 34.3 33.8 26.4 31.6 30.7

*) The equity ratio is defined as shareholders’ equity, plusaccumulated extra depreciation, plus 50% of stock reser-ves and untaxed reserves, as a percentage of total assetsless cash in hand at bank and short-term investments.

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Manufacturing units within the Trelleborg GroupTyre Division Tekniska GummifabrikenTrelleborg Jakobsberg AB

StockholmSales: Kr 142.2 million (144.7)Return on capital *):8.5% (0.4) Sales: Kr 24.3 million(16.8)Average number of employees:416 (410) Return on capital: 7.4% (4.5)Activities: Sale of tyres for forestry, agricultural and Average number of employees: 239 (165)industrial vehicles and motorcycles and cycles, Activities: Manufacture and sale of moulded rubbermanufactured within the division; in addition, tyresfor cars, lorries and earthmovers are purchased

products and special products in silicone, thermo-

from other manufacturers for resale.plastics and other materials.

Comments: Here too, delays have been experi-Comments: The clear improvement in the operating enced in the restructuring programrne.result may be attributed in part to the economicsituation, but principally to the fact that previousefforts in selected product and market segmentsare now starting to show results: The manufactureof cycle tyres is being continued with the support ofState loans to ensure production in times of emer-gency.*) For the definition of return on capital, see page21, note 25.

IHT Division(Industrial Hose & Transmission), Trelleborg

GRG (General Rubber Goods)DivisionTrelleborg

Sales: Kr 83.7 million (70.0)Return on capital: 14.3%Average number of employees: 430Activities: Manufacture and sale of moulded andextruded rubber products, sealing strips, expan-sion elements, etc.

Comments: Greatly improved results thanks to ahigh order input and improved utilization of avail-able capacity.

Ulvex ABBromma/Stockholm

Sales: Kr 41.0 million (39.3)Return on capital: 1.2% (negative)Average number of employees: 269 (255)Activities: Manufacture and sale of industrial rubberproducts, medical rubber products, cellular plas-tics products, etc.

Comments: The restructuring programme is takinglonger to complete than originally estimated. Thecellular plastics division in Dyvik has encounteredproblems in the form of intermittent price freezes onbuilding materials.

Sales: Kr 154.8 million (143.7)Return on capital: negative (negative)Average number of employees: 435(420)Activities: Manufacture and sale of hose for industri-al applications (compressed air, welding, bottledgas, hydraulics, petrol, oil, ventilation, cement,chemicals and steam, etc), as well as V-belts andother transmission belts and pulleys.

Comments: An improved marketing/product mix,the concentration of production, increased use ofavailable capacity and a switch to more highly spe-cialized products has reduced considerably theprevious very high losses, although operating re-sults are still unsatisfactory.

Mining DivisionTrelleborg

Sales: Kr 154.3 million (133.9)Return on capital: 13.6% (8.8)Average number of employees: 244 (219)Activities: Manufacture and sale of wear-resistantrubber components, conveyor belts, rubber sheet-ing, etc, for the mining, cement, quarrying and ce-ramics industries, and for other mineral processingindustries.

Comments: The clear improvement in operating re-sults is attributable principally to a significant in-crease in volume and improved price levels.

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Novibra DivisionSjöbo (Skåne)

Safety Products DivisionYstad

Sales: Kr 37.9 million (36.0)Return on capital: 12.6%Average number of employees: 137Activities: Manufacture and sale of specialized rub-ber/metal products for damping, suspension, insu-lation, sealing and wear-resistant applications. Thedivision markets a complete range of vibration iso-lators under the Novibra brand name.

Comments: The operating results are satisfactory.The financial year has also been marked by therestructuring process initiated when the new profitcentre was formed.

Roll Coveting and Lining DivisionTrelleborg

Sales: Kr 23.6 million (23.0)Return on capital: 19.7%Average number of employees: 75Activities: Cladding of rollers for paper and cellulo -se industries, etc, as well as corrosion-resistant andwear-resistant coatings for applications withing thechemicals, mining and power generation indus-tries.

Comments: The upturn in the paper and celluloseindustries has had a positive effect on both turnoverand operating results.

Netherlands DivisionHoogezand

Sales: Kr 90.8 million (80.6)Return on capital: 7.3% (2.0)Average number of employees: 285 (314)Activities: Manufacture and sale of battery cases,industrial hose, etc., and resale of products fromthe Trelleborg range.

Comments: Higher sales and lower costs, due part-Iy to a 10% reduction in personnel, have improvedprofitability considerably. The running-down of thehose manufacturing activity has been compensat-ed for by an increase in the sale of rubber com-pounds.

Sales: Kr 30.8 million (29.0)Return on capital: 9.5%Average number of employees: 121Activities: Manufacture and sale of products forpersonal and environmental protection, protectiveclothing against fire, chlorine and other chemicals,and oil booms.

Comments: The operating results are satisfactory,but have been affected adversely by the fact thatthe division was loaded with project costs while itwas still being built up (cleaning ships’ hulls).

Mechanical Engineering Division(Lango AB in Järfälla/Stockholm, together withIng Torsten Ullman AB in Moheda)

Sales: Kr 51.2 million (49.9)Return on capital: 11.8% (8.0)Average number of employees: 280 (299)Activities: Manufacture and sale of precision engin-eering products, electro-medical equipment andplastics products, etc.

Comments: Positive development has continued inboth the Lango and the shareholding in the Norwe-gian subsidiary of the Unman company was dis-posed of during the year, producing a capital gainof Kr 541 thousand.

West Germany DivisionHamburg

Sales: Kr 103.0 million (103.2)Return on capital: 6.9% (2.3)Average number of employees: 420(457)Activities: Manufacture of industrial rubber prod-ucts to meet the needs of the German domesticmarket; resale of the remaining range of products ofthe Trelleborg Group.

Comments: Thanks to the economic upswing in theWest German market, a positive operating resultwas achieved despite the restructuring program-me´s not having been implemented fully.

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Other informationSales by the Trading Division in 1979 amounted to Kr 2.1million (2.7), with an average of 6 (9) employees. TheTrading Division cooperates closely with the other operat-ing divisions and concentrates on the sale of Iicences andon barter trading; it is also responsible for running its ownoperation within certain specialist areas, e.g. automaticsediment monitoring. The 1979 operating results werenegative because a couple of major licensing deals werepostponed until after the turn of the year.

The two remaining Vulko companies, Vulko i Malmö ABand Vulko i Norrland AB, which are engaged in the sale oftyres and retreading activities, produced combined salesof Kr 20.2 million on 1979.

During 1979, purchases by the Parent Company from sub-sidiaries amounted to Kr 21.2 million (26.2) or 8% (8) of thetotal purchase during the year.

Of the Parent Company’s invoiced sales of Kr 658.6 million(600.8), sales to subsidiaries represent Kr 154.4 million(139.0), or 23% (23%).

The principles observed in drawing up the consolidatedaccounts are described on page 16.

Proposed appropriation of profitsThe Group’s unappropriated profits, including the profit forthe year 1979, amount to Kr 56,811 thousand.

The unappropriated profits of the Parent Company consistof the profit of Kr 60,190 thousand brought forward fromthe previous year, minus the loss for the year of Kr 5,193thousand, making Kr 54,997 thousand in all.

The board of Directors and Managing Director recommendthat no dividend be paid to the shareholders and that theunappropriated profits of Kr 54,997 thousand be carriedforward to the new account. Four of these Novibra vibration isolators can replace a whole

concrete bed. The isolators reduce noise and vibration and,furthermore, enable the machinery to be moved more easily.

11

Statement of funds (Kr million)

Trelleborg Group

1979 1978Funds provided internallyProfit before allocations and tax +14.2 + 9.8Depreciation according to plan +39.9 + 42.5Tax - 6.2 - 2.8Dividends — —

Other - 0.6 - 1.3Deposits/withdrawals from frozenaccounts at the National Bank of Sweden + 1.9 + 0.6

Parent Company

1975-79 1979 1978 1975-79

-15.7 -3.3 +11.8 -14.3+201.8 +22.7 +24.1 +117.6- 24.9 - 1.9 - 0.6 - 7.8- 21.9 — — -21.9- 21.6 — — -1.2

-0.1 + 1.8 —

Total funds provided internally +49.2 + 48.8 +117.6 +19.3 +35.3 + 72.4

Funds utilized internallyWorking capital:Change in inventories +37.8 - 50.3 + 42.6 +24.1 -10.0 + 43.9Change in non-interest-bearingshort-term accounts receivable +16.3 - 43.1 + 46.7 -25.3 -15.4 - 0.1Change in non-interest-bearingshort-term liabilities - 2.9 + 11.8 - 30.2 + 2.6 -17.9 - 36.5

Capital expenditure:Capital expenditure on plant +43.0 - 20.2 +172.3 +30.5 -12.1 + 96.1Capital expenditure on shares — — -0.1 -12.0 - 5.6 + 10.4

Total funds utilized internally +94.2 -101.8 +231 .3 +19.9 -61 .0 +113.8

Funds generated internally -45.0 +150.6 -113.7 - 0.6 +96.3 - 41.4

Funds provided or utilized externallyNew issuse — + 3.1 + 36.8 — + 3.1 + 36.8Change in long-term liabilities +35.8 - 70.0 +146.0 + 3.8 -27.7 + 60.2Change in interest-bearing short-termliabilities - 7.0 - 16.0 + 14.7 - 9.0 -11.8 + 7.1Change in long-term accounts receivable + 0.2 - 2.2 - 8.1 - 8.3 +11.9 + 10.2Change in interest-bearing short-termaccounts receivable — — — — — —

Change in minority Interests andGroup reserves + 0.9 - 0.2 - 0.8 — — —

Total funds provided or utilized externally +29.9 - 85.3 +188.6 -13.5 -24.5 +114.3Change in liquid funds -15.1 + 65.3 + 74.9 -14.1 +71.8 + 72.9

12

Profit and Loss Accounts (Kr million)

Trelleborg

1979Operating income and expenditureInvoiced sales (Note 1 ) 1,038.7Production, selling and administrativeexpenditure - 955.2

Group Parent Company

1978 1979 1978

969.6 658.6 600.8

- 947.9 - 627.5 - 610.3

Operating result before depreciation + 83.5 + 21.7 + 31.1 - 9.5Depreciation according to plan (Note 2) - 39.9 - 42.5 - 22.7 - 24.1

Operating result after depreciation (Note 3) + 43.6 - 20.8 + 8.4 - 33.6

Financial income and expenditureDividends on shares in subsidiaries — — + 0.3 + 0.2Dividends on other shares + 0.0 + 2.6 + 0.0 + 0.0Interest receivable + 12.5 + 7.4 + 14.8 + 9.1Interest payable - 38.9 - 45.5 - 21.3 - 27.2Variation in rates of exchange + 0.5 — + 0.5 —

Result after financial income andexpenditure + 17.7 - 56.3 + 2.7 - 51.5

Extraordinary income and expenditure (Note 4)Income + 5.4 + 96.7 + 9.1 +101.5Expenditure - 8.9 - 30.6 - 21.1 - 38.2Group contribution — — + 6.0 —

Result before allocations and tax + 14.2 + 9.8 - 3.3 + 11.8

Allocations on profit and loss accountChange in inventory reserve - 1.6 + 0.4 —

Difference between depreciation according to plan

—

and book depreciation - 0.9 + 18.5 - 1.8 + 18.4Change in special investment fund + 0.6 — + 0.6 —Change in working environment fund + 1.2 + 0.6 + 1.2 —Other allocations (Note 5) - 0.6 - 1.3 — —

Result before tax

Tax (Note 6)

+ 12.9 + 28.0 - 3.3 + 30.2

- 6.2 - 2.8 - 1.9 - 0.6

Net result for the year + 6.7 + 25.2 - 5.2 + 29.6

13

Balance sheets as at 31 December (Kr million)

Trelleborg Group

1978

Parent Company

1 9 7 9 1979 1978

AssetsCurrent assetsBank balances and cash 39.6

Short-term investments (Note 7 ) 70.1

Bills receivable 2.7

Accounts receivable from customers (Note 8) 213.2

Accounts receivable from subsidiaries —

Prepaid costs and accrued income 14.7

Advance payments to suppliers 0.3Other accounts receivable (Note 9) 12.9Inventories (Note 10) 311.5

31.570.1

99.416.3

108.516.3

1.4201.5

— —

29.9 25.391.4 127.812.6 3.1

— —

5.6 8.6181.7 157.6

—4.20.1

20.3273.7

Total current assets 665.0 626.0 422.8 438.1

Frozen accounts at the National Bank of SwedenInvestment account 0.1

Special investment account —

Working environment account —

— —0.20.6 —1.2 —

0.61.2

1.80.1 2.0 —Total frozen accounts at the National Bank of Sweden

Fixed assets, investments, etc. (Note 11)Shares and participation certificates relating toexternal companies (Note 12) 0.3

Shares in subsidiaries (Note 12) —

Accounts receivable from subsidiaries — —

Other long-term receivables 8.1 8.3

Goodwill 5,8 6.7

Machinery and equipment 221.4 221.9

Buildings 104.1 104.8

Land and land improvements 21.2 21.1

New projects in progress 5.5 0.4

Total fixed assets 366.4

0.149.0

0.3 0.161.020.4

7.6

148.542.8

7.5—

287.9

29.46.9— —

147.9.50.6

9.0—

292.9363.5

1,031.5 991.5 715.7 727.8Total assets

14

Trelleborg Group Parent Company

1979 1978 1979 1978

Liabilities and Shareholders’ EquityCurrent liabilities (Note 13)Bills payable 4.2 4.4 3.8 2.7

Accounts payable to subsidiaries — — 17.6 30.5

Accounts payable to suppliers 92.6 73.8 63.2 48.1

Accrued expenses and income received in advance 61.7 51.2 41.9 37.9

Accrued taxes 1.8 3.1 — 1.9

Advance payments from customers 4.6 5.6 4.5 5.5

Other current liabilities (Note 14) 73.9 104.8 46.4 62.4

Total current liabilities 238.8 242.9 177.4 189.0

Long-term liabilities (Note 13)Accounts payable to subsidiaries — — 0.2 —Overdraft on cheque accounts 141.1 95.9 8.8 —Debenture loans (Note 15) 44.9 49.6 44.9 49.6

Provision for pensions (Note 16) 114.7 96.5 98.4 82.3

Other long-term liabilities (Note 17) 203.5 226.4 131.6 148.2

Total long-term liabilities 504.2 468.4 283,9 280.1

Untaxed reserves (Note 18)Inventory reserve 10.5 8.9 6.1 6.1

Accumulated extra depreciation 45.3 44.4 35.8 33.1

Investment fund 0.3 0.3 — —

Special investment fund — 0.6 — 0.6

Working environment fund — 1.2 — 1.2

Total untaxed reserves 56.1 55.4 41.9 41.0

Minority interest in shareholders’ equity 0.9 — — —

Shareholders’ equityNon-distributable shareholders’ equityShare capital (Note 19) 125.6 125.6 125,6 125.6

330,400 A-shares, each of Kr 100 nominal valueand carrying 10 votes925,712 B-shares, each of Kr 100 nominal valueand carrying 1 vote

.Statutory reserve (Note 20) 49.1 54.2 31.9 31.9

Total 174.7 179.8 157.5 157.5

Distributable shareholders’ equity (Note 21)Unappropriated profit 50.1 19.8 60.2 30.6

Net result for the year 6.7 25.2 – 5.2 29.6

Total 56.8 45.0 55.0 60.2

Total shareholders’ equity 231.5 224.8 212.5 217.7

Total liabilities and shareholders’ equity 1,031.5 991.5 715.7 727.8

Contingent liabilities (Note 22) 47.0 51.9 219.0 191.6

Assets pledged (Note 22) 443.8 472.6 237.2 281.8

15

Notes on the AccountsPrinciples of consolidationThe accounts of the Trelleborg Group include the ParentCompany and all companies in which Trelleborg ABdirectly or indirectly owns at least 50% of the shares, andare drawn up by the “past equity” method. Goodwillcovers acquired goodwill in both tangible and Intangibleassets.

The minority interest refers to Gummiåtervinningsak-tiebolaget CGÅ, in which Trelleborg owns 57% of theshares. The sales company Trelleborg Iran J.S. Co., inwhich the Parent Company owns 50% of the shares, hasnot been included in the 1979 accounts. Both the sharesand the accounts receivable from the latter company bythe Parent Company have been written down by 100%.

Current assets and liabilities in foreign Group companieshave been converted at the exchange rates prevailing atthe end of the year. Other assets and shareholders’ equityhave been converted at the rates prevailing on the date ofacquisition. The exchange rates applied in the profit andloss accounts are mainly the average rates for the year,except for depreciation, which has been based upon thevalue in Swedish kronor of the item concerned on the dateof acquisition.

The unrealized exchange profits which arise on the appli-cation of the above conversion principles have beenappropriated to the Group reserves. Correspondingunrealized exchange losses are charged against theoperating result and appear in the accounts under “Otherallocations”.

Valuation of debts and liabilities inforeign currenciesThe accounts receivable in foreign currencies by the Trel-Ieborg Group amount to Kr 94.5 million and the accountspayable to Kr 248.8 million.

The Swedish Group companies’ accounts receivable andpayable in foreign currencies have been converted at theexchange rates prevailing on the date of the balance-sheet. Exchange profits or losses have been added to, ordeducted from, the operating results of the different com-panies. The accounts receivable in foreign currencies con-sist mainly of debts due from Group companies; the cor-responding accounts payable have been converted at theexchange rate prevailing on the date of the balance-sheet.The exchange profits for the Trelleborg Group amounted toKr 0.5 million (0.2).

Exports from Sweden amounted to Kr 299.5 million (274.6)

Of the Parent Company’s invoiced sales of Kr 658.6 million(600.8), sales to other companies within the TrelleborgGroup represent Kr 154.4 million (139.0).

Invoiced sales, by area of responsibility (Kr million) 1979 1978

Tyre DivisionGRG DivisionUlvex ABTekniska Gummifabriken Jakobsberg ABIHT DivisionMining DivisionNovibra DivisionSafety Products DivisionRoll Covering and Lining DivisionMechanical Engineering DivisionNetherlands DivisionWest Germany DivisionEskilstuna Gummi ABOverseas sales companiesOther salesLess intercompany sales

142.283.741.024.3

154.8154.337.930.823.651.290.8

103.09.0

216.439.2

-163.5

144.770.039.316.8

143.7133.936.029.023.049.980.6

103.27.0

224.435.0

-166.9

Total 1,038.7 969.6

Note. 2 DepreciationOperating profit IS charged with depreciation according toplan, on the basis of historical cost and depreciation ratesapplied internationally by the rubber industry.

These rates are:

Machinery and equipmentMoulds

6–18%18% } (weighted average 8.3%)

Buildings 2–6%Total (weighted average) 7.1%

Goodwill is written off over ten years.

During the years 1978/1979, depreciation according toplan for the Parent Company and for the Trelleborg Groupas a whole has been charged at the amounts shown be-low. The cost-accounting depreciation is also shown, forcomparison. This has been calculated in the conventionalway at historical cost, adjusted on the basis of the fireinsurance index.

Depreciation (Kr million) Trelleborg Group Parent Company

1979 1978 1979 1978

Machinery and equipment 33.4 32.8 19.8 19.9Buildings 5.1 6.3 2.5 4.0Land improvements 0.2 0.2 0.2 0.2Depreciation on write-upof buildings 0.2 0.3 0.2 —Depreciation on goodwill 1.0 2.9 —

Total depreciation accordingto plan 39.9 42.5 22.7 24.1

Book depreciation 40.8 24.0 24.5 5.7

Cost-accounting depreciation 50.0 49.2

Profit and Loss AccountsNote 1. Invoiced salesInvoiced sales by the Trelleborg Group maybe brokendown as follows:

For fixed assets in foreign subsidiaries, fiscal depreciationis usually calculated at the highest permissible rate. InSwedish companies, substantial fiscal depreciationoptions remain unutilized.

Invoiced sales, by market (Kr million) 1979 1978

Sweden 511.6 449.5Other Nordic countries 104.9 104.6Rest of Europe 334.1 302.1USA and Canada 46.3 59.3Other markets 41.8 54.1

Total 1,038.7 969.6

16

Note 3. Operating result after depreciationThe result after depreciation includes the following majoritems which are of significance for appraisal of the result:

a.

b.

c.

d.

costs of personnel surplus to requirements: Kr 10million;employment subsidies, training grants, etc: Kr 7.2million;grant from Överstyrelsen for Ekonomiskt Försvar, ÖEF(National Board of Economic Defence): Kr 1.8 million;price-rise profit on stock additions: approximately Kr 12million.

Note 4. Extraordinary income and expenditure(Kr million)

Trelleborg ParentGroup Company

Extraordinary incomeProfit from sale of fixed assets 4.5 3,2Profit from mergers — 4.8Other 0.9 1,1

Total extraordinary income 5.4 9.1

Extraordinary expenditureWriting down of shares in subsidiaries — 1.4Writing down of accounts receivablefrom subsidiaries — 3.0Losses on sale of fixed assets 0.8 0.8Pension costs incurred in conjunctionwith early retirements 3.4 3.2Extraordinary depreciation 2,1 2.1Restructuring costs 1979 1.0 9.2Other 1.6 1.4

Total extraordinary expenditure 8.9 21.1

The Parent Company made a group contribution to Vulko iNorrland AB, as well as receiving group contributions fromEskilstuna Gummi AB, Lango AB, Ing Torsten Ullman ABand Tekniska Gummifabriken Jakobsberg AB. Thereported extraordinary pension costs represent one half ofthe cost for the early retirement of personnel from theParent Company in 1979. The net cost has been creditedwith the payment received from Trygghetsrådet (SwedishEmployment Security Council). See Note 16.

Note 5. Other allocations on profit and loss account(Kr million)

Trelleborg Group 1979 1978

Non-statutory allocation to pensions inforeign subsidiaries –1.1 –0.6Unrealized exchange differences +0.5 –0.7

Total –0.6 –1.3

The unrealized exchange differences arose from the con-version of the balance sheets of foreign subsidiaries. Theexchange rate ruling on the date of the balance sheet wasapplied for conversion of current assets and liabilities, andthe rate on the date of acquisition for conversion of fixedassets and shareholders’ equity. With this procedure,when the Swedish krona is devalued the liabilities increasemore than the assets. Since the foreign companies arefinanced in local currency and are therefore unaffected by

the change in the exchange rate for the Swedish krona, thecalculated loss will probably never be realized, and cantherefore be regarded as virtually a reserve of the sameamount.

Note 6. TaxTax amounting to Kr 6.2 million has been charged againstthe Trelleborg Group result, Kr 4.0 million of it in respect offoreign subsidiaries.

Balance SheetsNote 7. Short-term investmentsShort-term investments consist partly of funds which havebeen blocked in favour of SPP.

The amount also includes the companies’ own bonds witha redemption value of Kr 1.4 million (1 .3).

Note 8. Accounts receivable from customersDuring the period 1975–1 979, accounts receivable fromcustomers and bills receivable for the Trelleborg Groupamounted to the following percentages of invoiced sales:

1975 1976 1977 1978 1979

17.3% 18.7% 21 .9% 20.9% 20.8%

Receivables were entered at the amounts at which theywere expected to be realized.

Note 9. Other accounts receivableThis item includes tax accounts receivable amounting to Kr0.4 million. Of the outstanding amounts, Kr 2.0 million (4.0)bears interest.

Note 10. InventoriesStocks have been valued according to the same principlesas in previous years, i.e. they are shown in the accounts atthe purchase price or the current price, whichever is thelower, on a first-in first-out (FIFO) basis. Unsaleable stockshave been adequately written down.

The composition of the Trelleborg Group’s stocks, ex-pressed as percentages of invoiced sales, is shown in thefollowing table:

1975 1976 1977 1978 1979

Raw materials 5.0 4.5 4.8 4.2 5.8Semi-finished products 4.8 5.0 5.7 5.2 6.0Finished products 22.7 20.7 22.7 18.8 18.2

Total 32.5 30.2 33.2 28.2 30.0

Inventory value according tobalance sheet (Kr million) 308.5 287.6 327.1 273.7 311.5Less: Inventory reserve

(Kr million) 93.0 54.6 12,4 8.9 10.5

Total inventory value, net(Kr million) 215.5 233.0 314.7 264.8 301.0

Fiscally non-utilized stock depreciation in the Swedish sec-tor of the Trelleborg Group amounted to Kr 114.1 million(98.2).

17

Note 11. Fixed assetsThe fixed assets of the Trelleborg Group stand at thefollowing values (Kr million):

Machinery Build- Land and Projects Totaland ings land in

equipment improve- progressments

Purchase cost 510.2 173.5 19.1 5.5 708.3

Accumulated depreci-ation according to plan –288.8 – 73.0 – 0.7 — –362.5Amount of accumulatedwrite-ups not writtendown — + 3.6 + 2.8 — + 6.4

Balance carried for-ward, gross 221.4 104.1 21.2 5.5 352.2Accumulated extradepreciation 43.9 1.4 — — 45.3

Book values 177.5 102.7 21.2 5.5 306.9

In the course of the year, the fixed assets of the TrelleborgGroup have changed as follows (Kr million):

Machinery Build- Land and Projects Totaland ings land in

equipment improve- progressments

Balance brought for-ward, 1.1 1979, gross 221.9 104.8 21.1 0 . 4 3 4 8 . 2

New capital investmentfor the year, gross + 39.6 + 2.0 + 0.3 +5.5 + 47.4

Assets disposed ofduring the year - 4.6 + 2.4 — - 0.4 - 2.6

Deprecation accord-ing to plan - 33.4 - 5.1 - 0.2 — - 38.7

Extraordinarydepredation - 2.1 — — — - 2.1

Balance carried for-ward, 31.121979,gross 221.4 104.1 21.2 5 . 5 3 5 2 . 2

The fixed assets of the Parent Company areas follows(Kr million):

Machinery Build- Land and Totaland ings land

equipment improve-ments

Purchase cost 348.4 97.9 9.4 455.7Accumulated depreciationaccording to plan -200.5 -48.8 -0.9 -250.2Amount of accumulated write-ups

not written down — + 1.5 +0.5 + 2.0

Total fixed assets, gross value on31.12.1979 147.9 50.6 9.0 207.5

Accumulated extra depreciation 35.0 0.8 — -35.8

Total fixed assets, net value on31.12.1979 112.9 49.8 9.0 171.7

Assessed value for tax — 53.2 7.2 60.4

Brandförsäkringsvärde 764.0 276.7 — 1,040.7

In the course of the year, the fixed assets of the ParentCompany have changed as follows (Kr million):

Machinery Build- Land and Totaland ings land

equipment improve-ments

Balance brought forward,1.1. 1979, gross 148.5 42.8 7.5 198.8New capital investment for theyear, gross + 22.2 + 0.4 +0.3 + 22.9Fixed assets taken over at merger — + 7.2 +1.4 + 8.6Assets disposed of during theyear - 0.9 + 2.9 — + 2.0Depreciation according to plan - 19.8 - 2.7 -0.2 - 22.7Extraordinary nedskrivning - 2.1 — — - 2.1

Balance carried forward,31.12 .1979, gross 147.9 50.6 9.0 207.5

The item "Assets disposed of during the year” includes acorrection in respect of the residual value of buildingsincluded in the property sold to the SPP in 1978.

The book value of the Trelleborg Group’s fixed assets,including land and buildings, corresponds to about sixyears’ expenditure.

Note 12. Shares and stockholdingsThe book values of the shares in subsidiaries held by theParent Company have changed as follows during the year(Kr million):

Balance at 1.11979 61.0Plus. shares purchased + 2.3Less: share sold - 3.2Less: shares written down - 1.9Less: book values of shares incompanies which were mergedwith Trelleborg AB during 1979 - 9.2

Balance at 31.12 1979 49.0

The item “shares sold” indicates shares which were trans-ferred during the course of the year from Trelleborg AB toits subsidiary companies.

Shares purchased during the year includes Kr 1.0 millionfor shares transferred from subsidiaries to Trelleborg AB.The remainder represents a new subscription in Gum-miåtervinningsaktiebolaget CGÅ.

The shares in Lango AB have been written up by Kr 0.5million against a writing down of shares in Vulko i MalmöAB.

The sales companies in Stockholm, Göteborg, Jönköping,Örebro, Karlstad, Falun, Sundsvall and Skellefteå, as wellas Fastighets AB Trio, were merged with Trelleborg ABduring the course of the year.

18

Number Par Bookvalue value

(Kr ‘000) (Kr ‘000)

Shares in subsidiary companiesSweden

Manufacturing companiesUlvex AB 150,000 7,500 3,200Lango AB 1,500 150 6,000

Other companiesVulko i Malmö ABVulko i Norrland ABEskilstuna Gummi ABRubber Trading ABStockholm Gummiindustri ABAB TegeaAB TrelleborgfinansTrelleborg Marin ABTrelleborgplast Nord AB.(in liquidation)AB AkvarexRubber Holding ABTrelleborg Däck ABTrelleborgs Gummifabriks ABGummiåtervinnings AB CGA

5,00050

1,25040,000

6,00012,000

1,000100

12,00010050

1,000500

11,202

5005

1254,000

6001,200

10010

1,20010

5100

501,120

5003,500

1001,200

100

105

10050

1,120

Other countries

Manufacturing companiesTrelleborg RubberfabriekenB. V., NetherlandsTrelleborg GummiwerkeGmbH, West Germany

12,000 NLG 12,000 12,000

— DEM 11,997 10,353

Sales companiesTrelleborg S. A.-N. V., BelgiumTrelleborg do Brasil, BrazilTrelleborg Gummi A/S, DenmarkTrelleborg Limited, CanadaOyTrelleborg AB, FinlandTrelleborg S.A. FranceTrelleborg Iran, J.S. Co., IranTrelleborg S.p.A., ItalyTrelleborg Gummi A/S, NorwayTrelleborg S.A. SpainTrelleborg Rubber Limited, UKTrelleborg Rubber Co., Inc., USATrelleborq Gummi GmbH, Austria

3,000 BEC2,145,589 BRC

300 DKK500 CAD100 FIM

40,000 FRF80 IRR

10,000 ITL25,000 NOK32,000 ESP

100,000 GBP100,000 USD

— ATS

3,0002,1461,500

515

4,0004,000

100,0002,500

32,000100

1,0003,000

200400

1,0351816

3,807

1,8002,185

855

400

Total value of shares in subsidiaries 48,954

Shares owned indirectlyIng. Torsten Unman AB 23,040 2,304Tekniska GummifabrikenJakobsberg AB 2,000 210Trelleborg Pty. Ltd., Australia 100,000 AUD 100

Other sharesSvensk IntercontinentalLufttrafik AB 1,800 180Miscellaneous shares

7590 29

Total other shares 104

Note 13. Indebtedness of the Trelleborg Group(Kr million)

Total Of whichinterest-bearing

1979 1978 1979 1978

Current liabilities 238.8 242.9 40.8 47.8Long-term liabilities,including overdrafts 504.2 468.4 378.0 360.8

743.0 711.3 418.8 408.6Less: bank balances and cash 109.7 124.8 109.7 124.8

Net indebtedness 633.3 586.5 309.1 283.8Net indebtedness as % of currentassets, excluding bank balances andcash 114% 117% 56% 57%Net indebtedness as % of sharehold-ers’ equity according to balancesheet, including untaxed reserves 220% 210% 107% 102%Bank balances and cash, bills andaccounts receivable from customersas % of current liabilities 136% 134% — —

Note 14. Other current liabilitiesOther current liabilities include amortization of long-termliabilities during 1980 at Kr 35.8 million. Other items areprovisions in respect of employees’ taxes, value-addedtax, etc. Of the liabilities under this heading, Kr 40.8 million(47.8) bears interest.

Note 15. Bond loans and debenture loansOriginal Remaining Rate Term Amortizationamount of for the

(Kr 31.12.19% interest year (1980)million) (Kr million) % (Kr million)

Bond loan of1967 25 12.7 7 1967-87 1.4Debentureloan of 1970 35 16.3 8 1970-85 2.6Bond loan of1973 20 15.9 7¼ 1973-93 0.7

Note 16. Provision for pensions, Parent CompanyThe Parent Company’s pension liabilities consist of PRl(Pensions Registration Institute) commitments amountingto Kr 85.2 million (1978: Kr 74.3 million) and other commit-ments amounting to Kr 13.2 million (1978: Kr 8.0 million).

The pension liabilities of the Trelleborg Group to its Swed-ish companies fall short of the actual commitments com-puted in accordance with actuarial principle by Kr 5.7million, of which Kr 5.4 million is in respect of TrelleborgAB. This amount corresponds to half the total increaserequired to meet the early retirement pensions payable tosalaried employees, mainly of the Parent Company. Thedifference between this amount, less grants received fromTrygghetsrådet, and the total increase is shown as a con-tingent liability and will be charged against the operatingresult for 1980.

19

Note 17. Other long-term liabilities of the TrelleborgGroup (Kr million)

Note 20. Non-distributable reserves (Kr million)Trelleborg Parent

Group Company

Balance at 1.1.1979 179.8 157,5Plus:Allocation to non-distributable reserves in 1979 + 0.2 —

1979 1978

Re-borrowing from the National SupplementaryPensions Scheme (ATP) 34.7 33.4Provision for salaried employees’ securityinsurance 1,6 11.3Loans from insurance companies 10,5 11.2Loans from Sveriges Investeringsbank 17,8 23,5Loans from other Swedish banks 36.3 44.4Loans from foreign banks 76.6 79.6Miscellaneous 26.0 23.0

Less:Non-distributable reserves in subsidiariesmerged – 5.3

Balance at 31.12,1979 174.7 157.5

Note 21. Distributable reserves (Kr million)An insignificant part of the Trelleborg Group’s distributablereserves is subject to dividend tax, which becomes due inthe event of a dividend being paid to the Parent Company.

Total 203.5 226,4

Note 18. Untaxed reserves (Kr million)The following changes have taken place during the year inthe untaxed reserves of the Trelleborg Group:

Trelleborg ParentGroup C o m p a n y

Balance at 1.1.1979 45.0 60.2Plus:Net profit for 1979 6.7 – 5.2Distributabel reserves arising from the merger ofsubsidiaries + 5.3 —

Less:Allocated to non-distributable reserves in 1979 – 0.2

Balance 31.12.1979 56.8 55.0

Inventory Accumulated Otherreserve extra reserves

depreciation

Balance brought forward,1.1.1979 8.9 44.4 2.1Amounts written back from oradded to reserves, as shown inprofit and loss account + 1.6 + 0.9 –1.8

Balance carried forward,31.12.1979 10.5 45.3 0.3

Note 22. Contingent liabilities and assets pledged(Kr million)

The total inventory reserves in the individual companiesamount to Kr 13.9 million, of which Kr 3.4 million is incompanies which have been acquired. Accumulated extradepreciation is the depreciation additional to planneddepreciation charged in the accounts over past years. Onthe sale of plant, the corresponding extra depreciation hasbeen written back. In all, the accumulated extra deprecia-tion amounts to Kr 55.8 million, of which Kr 10.5 million is incompanies which have been acquired.

Trelleborg Parent CompanyGroup

1979 1978 1979 1978

Contingent liabilities:discounted bills 10.1 13.7 — 2.0pension commitments 6.0 2.8 3.2 —guarantees and other contingentliabilities 30.9 35.4 215.8 189.6

219.0 191.6Totalof which relating to subsidiarycompanies

Assets pledged:real estate mortgagesleasehold mortgagesmortgages on the businessbank accountsother assets pledgedshares in subsidiariesmachines and equipmentaccounts receivable fromcustomers

47.0 51.9

190.8 161.3

81.4—

106.083.3

Note 19. Parent Company’s share capitalAt the end of 1979, the number of registered shareholderswas approximately 7,200. The distribution of sharehold-ings and voting rights is shown in the following table:

114.63.1

157.016.455.0

145.13.1

148.083.3

—

9.3

46.81.2

108.016.455.0

1.88.0

Percentage share ofShare number

capital of votes1.89.38.0

Tretorn AB 13.92 17,31AB Hevea 12.74 33.574:e AP-fonden (4th National PensionInsurance Fund) 11.00 8,69Kockska stiftelserna (the KockFoundations) 3.15 9.37Förvaltnings AB HGI 2.95 7.58Henry and Gerda DunkersDonationsfond No. 2 2,41 7.17Other shareholders, approximately7.200 53.83 16.31

83.889.7 —

Total 443.8 472.6 237.2 281.8

The item “other assets pledged” for the Trelleborg Groupalso contains Kr 40.5 million collateral security foraccounts receivable from customers. In addition to theabove-mentioned liabilities, the Parent Company has alsosigned a 15-year rental agreement with SPP.

100.00 100.00

20

Note 23. Average number of employees by communeand by country

Trelleborg ParentGroup Company

SwedenAlvestaEskilstunaGotlandGöteborgHärjedalenJärfallaMalmöSjöboStockholmTrelleborgUmeåYstadCommunes with an average numberof employees of less than 20

236 —20 —

120 —3036 —

118 —62

108246

2,57822 —80

62

30

40108

142,578

80

44

Total for Sweden 3,718 2,894

OverseasAustraliaBrazilDenmarkFranceNetherlandsNorwaySpainUKUSAWest GermanyOther countries in which theaverage number of employeeshas not exceeded 20

22 —20 —25 —69 —

285 —36 —28 —72 —60 —

420 —

26 —

Total overseas 1,063 —

Total 4,781 2,894

The average number of employees in Sweden is calcu-lated on the basis of permanent employees as recom-mended by Bokföringsnämnden (the Accountancy Board).

Note 24. Wages and other forms of pay(excluding fringe benefits), Kr million

1979 1978

Parent Company 180,8 181.1Subsidiaries in Sweden 46.6 40,9Overseas subsidiaries

Australia 1.4 1.5

Brazil 0.5 0.5Denmark 2.1 2.0France 5.2 4,8Netherlands 15.3 14.8Norway 2.8 5.7Spain 1.6 1.5UK 3.4 2.7USA 4.6 7.5West Germany 26.8 27.3

Other countries 2.4 2.5

Total 293.5 292.8

Note 25. Return on capitalThe figures for the return on capital have been calculatedon the following basis:

a) Return on shareholders’ equity:adjusted net profit

average shareholders’ equity

The average shareholders’ equity amounts to Kr 256.0million.

b) Return on total capital:adjusted net profit+0.5

(interest payable as per financial and cost accounts)

average total capital

The average total capital amounts to Kr 1011.5 million.

However, the return on capital shown for the individualdivisions is the profit before interest charges as a propor-tion of total capital.

Trelleborg, March 1980

Åke StåhlbrandtChairman of the Board

Ernst Herslow Karl- Magnus Herrlin

Arne Belfrage Otto P Olsson

Hans Cavall i-Björkman Berti l Berti lsson

Jan Odhnoff Ulf af Trolle

Kurt Olsson Oscar Harvidsson

Arne Lundqvist

Managing Director

The Auditors’ Report on this Annual Report and GroupReport was submitted on 1 April 1980.

Sten Berglund Reidar Peters

21

Board of Directors and AuditorsMembers of the Board appointed by theAnnual General MeetingÅke Ståhlbrandt, born 1914. Chairman. MalmöFormer Managing Director, Trelleborg ABShareholding: 1524

Ernst Herslow, born 1919. Deputy Chairman. MalmöManaging Director, AB CardoShareholding: 0

Karl-Magnus Herrlin, born 1921. LidingöRegistered PhysicianShareholding: 250

Arne Belfrage, born 1909. HelsingborgFormer Bank DirectorShareholding: 130

Otto P. Olsson, born 1923. HelsingborgManaging Director, AB P Olsson & Co.Shareholding: 50

Hans Cavalli-Björkman, born 1928. MalmöManaging Director, Skandinaviska Enskilda BankenShareholding: 2

Bertil Bertilsson, born 1926. HelsingborgManaging Director, AB HeveaShareholding: 0

Jan Odhnoff, born 1931. StockholmEditor, newspaper of the LO(Swedish Trade Union Confederation)Shareholding: 0

Ulf af Trolle, born 1919. Aix-en-ProvenceFormer ProfessorShareholding: 7500

Arne Lundqvist, born 1929. MalmöManaging Director, Trelleborg ABShareholding: 834

Members of the Board appointed by theTrade UnionsKurt Olsson, born 1931. TrelleborgRubber worker. Appointed by Works Department 49Shareholding: 0

Oscar Harvidsson, born 1934. TrelleborgProduct Manager. Appointed by SIF (Swedish IndustrialSalaried Employees’ Association) section 349/2Shareholding: 5

Deputy members appointed by theAnnual General MeetingEinar Mörck, born 1914. TrelleborgFormerly Deputy Managing Director, Trelleborg ABShareholding: 170

Jan Erik Leander, born 1914. FalsterboFormerly Deputy Managing Director, Trelleborg ABShareholding: 1000

Göran Olsson, born 1927. LidingöDirector, Handelns Arbetsgivarorganisation (CommercialEmployers’ Accociation)Shareholding: 14

22

Deputy members appointed by theTrade UnionsKarl-Axel Lindskog, born 1928. AnderslövFactory worker. Appointed by Works Department 49Shareholding: 100

Helge Pedersen, born 1927. HöllviksnäsForeman. Appointed by SALF (Swedish Foremen’s andSupervisors’ Association) section 37Shareholding: 0

AuditorsSten Berglund, Authorized Public Accountant. StockholmShareholding: 0

Reidar Peters, Authorized Public Accountant. MalmöShareholding: 0

Deputy AuditorsOla Clemedtson, Authorized Public Accountant.StockholmShareholding: 0

Gert Ottosson, Authorized Public Accountant. MalmöShareholding: 0

Details of the above shareholdings are based on informa-tion provided under Law No. 1971:827 concerning theregistration of shares.

Auditors’ ReportThe Annual Report and Accounts for 1979 comply with theSwedish Companies Act.

We confirm that the Annual General Meeting— approves the Profit and Loss Accounts and Balance

Sheets for the Parent Company and the Group— has allocated the profit as proposed in the Directors’

Report— discharges the Board and the Managing Director from

liability for the year 1979.

Trelleborg, 1 April 1980

Sten BerglundAuthorized Auditor

Reidar PetersAuthorized Auditor

The Trelleborg Group 1970–1979

(Kr million unless otherwise stated)1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Per Profit and loss accountInvoiced sales 517 522 555 629 920 951 952 985 970 1,039

of which foreign sales % 38 41 45 47 49 44 44 46 54 51Operating result before depreciation 48.9 52.4 50.2 63.5 124.5 100.0 38.6 62.6 21.7 83.5

as % of invoiced salesDepreciation according to planFinancial income and expenditureExtraordinary income expenditureResult before allocations and taxAdjusted net resultAdjusted net result per share

Per balance sheetCurrent assetsFixed assetsCurrent liabilitiesLong-term liabilitiesUntaxed reservesShareholders’ equityTotal assets

Per statements of fundsFunds provided internallyFunds utilized internallyFunds generated internallyFunds provided or utilized

externallyChange in liquid funds

RatiosReturn on shareholders’ equityReturn on total capitalLiquidityEquity ratio (“solvency”)Interest coverCash flow/interest-bearing

liabilitiesNet assets/long-term IiabilititesWorking capital as % of turnover

Other dataNet investments in plantsNumber of employees

Sales per employee (Kr ‘000)Fixed assets per employee(Kr ‘000)

Wages and salaries paidas % of sales

Costs associated with wagesand salariesas % of wages and salaries

% 9.5 10.0 9.0 10.1 13.5 10.5 4.1 6.3 2.2 8.019.9 21.6 25.1 27.5 31.3 35.6 39.9 43.8 42.5 39.9

5.0 8.7 10.4 14.2 25.7 27.7 26.8 32.1 35.5 25.9+0.3 +1.4 –3.0 –1.4 –1.0 –9.9 –15.3 –9.8 +66.1 –3.524.3 23.5 11.7 20.3 66.5 26.8 –43.4 –23.1 +9.8 +14.214.9 15.2 8.0 13.6 39.5 13.2 Neg Neg 16.1 7.4

16:26 16:55 8:72 14:85 42:96 14:39 Neg Neg 12:79 5:88

310 321 324 364 501 530 547 657 626 665208 248 269 315 388 417 409 433 366 367107 111 114 149 194 213 226 271 243 239149 182 204 245 358 371 395 538 469 505110 121 120 125 161 178 131 84 55 56152 154 155 160 176 185 204 197 225 232518 569 593 679 889 947 956 1090 992 1,032

32.6 34.8 26.4 36.2 78.0 42.0 -16.4 -5.8 +48.8 +49.282.0 80.0 51.8 93.2 192.6 68.9 12.1 +154.8 -101.8 +94.2

-49.4 -45,2 -25.4 -57.0 -114.6 -26.9 -28.5 -160.6 +150.6 -45.0

56.2 36.4 26.3 51.1 119.5 28.0 47.9 +164.5 -85.3 +29.96.8 -8.8 0.9 –5.9 4.9 1.1 19.4 +3.9 +65.3 -15.1

7.7 7.6 3.9 6.5 16.9 5.1 Neg Neg 6.5 2.94.6 4.4 2.9 3.9 7.4 3.7 Neg 1.0 4.3 3.32.9 2.9 2.8 2.4 2.6 2.5 2.4 2.4 2.6 2.8

49.2 45.6 43.9 39.0 34.1 34.3 33.8 26.4 31.6 30.73.5 2.6 1.8 2.0 3.0 1.8 Neg 0.2 Neg 1.3

0.3 0.3 0.2 0.2 0.3 0.2 Neg Neg 0.2 0.22.0 1.9 1.8 1.7 1.6 1.6 1.6 1.4 1.5 1.5

38.2 43.4 41.2 40.7 41.7 43.2 41.0 45.4 41.1 41.5

73.2 60.7 47.7 73.3 104.6 46.5 40.8 64.8 -20.2 43.06,551 6,481 6,133 6,130 6,971 6,881 6,491 6,072 5,296 5,061

tkr 79 81 90 103 132 138 146 162 183 205

tkr 31 38 44 51 55 59 61 68 66 70166 182 184 198 246 280 290 301 293 294

% 32 35 33 31 27 29 30 31 30 28

25 29 31 37 58 78 103 128 121 124

% 15.1 15.9 16.8 18.7 23.5 27.8 35.5 42.5 41.3 42.2

23