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NORWAYCorporate headquarters:HÅG asaFridtjof Nansens vei 12P.Box 5055 MajorstuaNO-0301 Oslo Tel.: +47 22 59 59 00Fax: +47 22 59 59 59E-mail: [email protected]: http:/www.hag.no
Production:HÅG asaSundveienNO-7366 Røros Tel.: +47 72 40 72 00Fax: +47 72 40 72 72
SWEDENHÅG abBlekingegatan 22Box 20083S-10 460 Stockholm Tel.: +46 8 442 78 00Fax: +46 8 642 59 04E-mail: [email protected]
DENMARKHÅG asStrandgade 4CDK-1401 København K Tel.: +45 32 64 09 10Fax: +45 32 96 96 08E-mail: [email protected]
GERMANYHÅG GmbHCentral EuropeKoppelskamp 7D-40489 Düsseldorf Tel.: +49 203 74200-0Fax: +49 203 74200-30E-mail: [email protected]
THE NETHERLANDS HÅG B.V. Benelux (former Safimex)Amnesty Internationalweg 25P.O. Box 278NL-3300 AG DordrechtTel.: +31 (0)78-653 5353Fax: +31 (0)78-653 5355E-mail: [email protected]
FRANCEHÅG sa18, Rue Saint MarcF-75002 ParisTel.: + 33 1 44 88 5800Fax: + 33 1 44 88 9788E-mail: [email protected]
US.HAG Inc.108 Landmark DriveGreensboroNC 27409Tel.: +1 336 668 9544Fax: +1 336 668 7331E-mail: [email protected]
AUSTRALIADavter Manufacturing Pty. Ltd4 / 60 Stubbs St.Kensington,VIC 3031Tel.: +61 3 9372 1954Fax: +61 3 9372 2466E-mail: [email protected]
AUSTRIAHÅG GmbHCentral EuropeKoppelskamp 7D-40489 Düsseldorf Tel.: +49 203 74200-0Fax: +49 203 74200-30E-mail: [email protected]
FINLANDKombi Kaluste OYSibeliuksenkatu 4SF-00260 Helsinki Tel.: +358 9498130Fax: +358 9498260
GREAT BRITAINSven Christiansen plcRiverway Estate, Portsmouth Road,Peasmarsh, GuildfordGU3 1LZ SurreyTel.: +44 14 83302728Fax: +44 14 83569903E-mail: [email protected]
ICELANDE G Skrifstofubúna∂ur ehf.Armuli 20P.O. Box 8221IS-128 Reykjavik Tel.: +354 533 5900Fax: +354 533 5901E-mail: [email protected]
JAPANKokushin Co. Ltd.35-1, Komagome 1-chomeToshima-ku,Tokyo 170-0003Tel.: +81 3 5978 6801Fax: +81 2 5978 2761E-mail: [email protected]
HUNGARYMani Kft.Konkoly Thege U 18/B1121 Budapest XII Tel.: +361 363 3058Fax: +361 363 3058E-mail: [email protected]
PORTUGALKrsitiania Scandinavian Design Lda.Rua Maria Luísa Holstein, 15-1AlcântaraP-1300-388 LisboaTel.: + 351 21 362 4891Fax: + 351 21 362 4892E-mail: [email protected]
SAUDI ARABIAAl-Eqtessad Est.P.O.Box. 32Riyadh 11411Tel.: +966 1 463 3331Fax: +966 1 463 3718E-mail: [email protected]
SOUTH AFRICAPossum Enterprises CCP.O.Box 407Port Elizabeth 6000Tel.: +27 41 5821152Fax: +27 41 5862808E-mail: [email protected]
SWITZERLANDMO Moll GmbHBahnhofstr. 3CH-5600 LenzburgTel.: +41 621 89 20633Fax: +41 621 89 20686E-mail: [email protected]
THE CZECH REPUBLICPRAGONOR spol. sronám. Na Luzinách 15715500 Praha 5 – StodulkyTel.: +420 2 651 3636Fax: +420 2 561 7724E-mail: [email protected]
UNITED ARAB EMIRATESMoosa Habib & SonsAl Saroq BuildingZabeel RoadP.O.Box. 2030 DubaiTel.: +971 4 33 46101Fax: +971 4 33 64912E-mail: [email protected]
> A D D R E S S E SHÅG companies:
A N N U A L R E P14 June 2000
> I M P O R T E R S / A G E N T S
> D
esig
n:U
nion
Des
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> P
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,Bo
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of D
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and
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Hen
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> P
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> CONTENTS
Facts on HÅG
Headlines 1999
Directors´ report
1:
2 :
4 :
8 :
9 :
10 :
11 :
19 :
24 :
28 :
30 :
31 :
38 :
Profit & loss statement
Balance sheet
Cash flow statement
Notes
Auditor´s report
Management report
Shareholders relations
Key figures
Environmental report
Addresses
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> FOCUS IN 2000In order to achieve profitable growth, HÅG willin 2000 focus on
¶A successful launch of the new chair line -HÅG H05
¶Securing market entry
¶Reduction of product cost
The human body was not
created for sitting still
F A C T Son HÅG
> HISTORYHÅG was established in 1943. Since1973 the company has concentrated itsactivities on chairs to the working environ-ment.
In the early 90s, the product range wasexpanded to include visitor chairs andconference chairs.
In April 1992, HÅG was, as the first com-pany, listed on the SMB list (small andmedium sized businesses) of the OsloStock Exchange.
Today, HÅG is the leading supplier of office chairs in the Nordic countries.
> PHILOSOPHYHÅG’s philosophy is based on the princi-ple that one has a need for variation andmovement, also while seated.The compa-ny therefore makes chairs that adjust toone’s movements.
> HÅG’S ACTIVITIESHÅG develops, produces and sells chairsto the actively working person.
HÅG has chosen a differentiation strategywith the objective of being different fromand better than its competitors.
HÅG has ambitions to be the world’s lea-ding supplier of ergonomic seating solutions.
> STRATEGIC SUCCESSFACTORS
Further internationalisationToday approx. 80% of the sales goes tomarkets outside Norway. In order to achi-eve further growth, it is important forHÅG to continue its internationalisationstrategy.
Product developmentThe ability to supply the market with newand better products will be essential toHÅG’s further development. Great impor-tance is attached to good design and tothe products being environmentally friendlywith high quality.
Corporate cultureA strong corporate culture is a competiti-ve advantage. HÅG therefore works syste-matically to enhance the corporate culturein the entire organisation.
1999>1989>1990>1991>1992>1993>1994>1995>1996>1997>1998
> Development of HÅG H05 completedHÅG has completed several years ofdevelopment work on a new, innovativeoffice chair, which is expected to be animportant catalyst for the company’sfurther growth.The chair builds onHÅG’s well-known principle for foot-operated movement and is unique inthat only one lever and one hand wheelare required to adjust the chair to the user.
> Launch of HÅG CapiscoAt the beginning of the year, HÅG launc-hed an upgraded HÅG Capisco chairline (the saddle chair).With a new de-sign and more models, the chair line isthe only one that gives the right sittingheight in relation to height-adjustableworktables. Sales of the chair line nearlydoubled compared with the previous year.
> Conveyor lines increase efficiencyIn order to achieve speedier and moreefficient assembly of the chairs, largeparts of production were reorganised inthe course of the summer.The compo-nents of the chairs are now picked cen-trally by a computer-operated procedureand are transported to the fitters bymeans of conveyor lines, which aremounted in the roof.This forms part ofthe work to reduce product costs.
> Establishment in FranceIn the autumn, HÅG started up a newsales company in France, which isEurope’s third largest market for officefittings and furniture. From sales to im-porters, the chairs are now sold directlyto dealers throughout France. Sales inFrance are gradually expected to beco-me an important part of the company’sfurther development.
> Poor development in salesThe total operating income for 1999amounted to MNOK 595, which is atthe same level as last year.The reasonfor the poor development in sales is aconsiderable decline in the total marketin Denmark and, in particular, in Norway.We also saw a poorer development insales in the USA than expected. Sales inGermany have continued to developvery well.
> Profit developmentHÅG had an income before taxes ofMNOK 27, which is MNOK 30 downon last year.The lower profit shows thatHÅG needs growth in sales to be ableto maintain operating margins higherthan 10%.
> Decrease in value The price of the HÅG share started theyear at NOK 85 and fell down to NOK50 during the year.Towards the end ofthe year, the price increased and endedat NOK 68, which is 20% lower than atthe beginning of the year. HÅG has acapitalised value of MNOK 650 at theend of the year.
France
H I G H L I G H T S
20
40
60
80
100
1994
1995
1996
1997
1998
1999
120
140
Other Export MarketsU.S.The NetherlandsGermanyDenmarkSwedeneNorway
SALES MAIN MARKETS Million NOK
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9
K E Y F I G U R E S1999 1998 1997 1996 1995 1994
OPERATING REVENUES MNOK 595.4 596.4 484.5 416.9 377.8 325.5
OPERATING INCOME MNOK 33.3 63.1 51.3 49.0 47.3 32.0
INCOME BEFORE TAXES MNOK 26.8 56.8 51.5 46.0 44.1 27.2
NET INCOME MNOK 13.0 34.8 35.0 32.4 30.2 18.6
RETURN ON ASSETS % 5.4 13.5 16.3 17.6 19.4 15.4
EQUITY SHARE % 43.2 50.6 53.8 53.7 47.6 40.3
EARNINGS PER SHARE NOK 1.38 3.64 3.66 3.39 3.16 1.95
DIVIDEND PER SHARE NOK 1.40 1.90 1.40 0.92 0.55 0.44
INVESTMENTS MNOK 51.3 28.0 29.8 43.9 18.9 13.2
STOCK VALUE MNOK 650.3 812.8 640.7 627.9 344.3 173.2
MAN-LABOUR YEAR PER 31.12 474 465 364 362 333 316
For more key figures and definitions, see page 30
> Employees as shareholdersIn the spring, HÅG implemented its first employee share programme. 134 employees (27%) made use of the offer to purchase 150 shares at price NOK 57.Towards the end of the year, a number of insiders and a few other employeestraded a significant number of shares. More employeesas shareholders will make it possible to create betterunderstanding of and focus on increasing the value ofthe company.
> New agreements / contracts¶Aftenposten / Schibsted¶SAS Radison Hotels¶Renewal of state framework agreements in Norway,Sweden and Denmark¶IBM (Norway og Denmark)¶Deutsche Börse AG¶Mannesmann Mobilfunk D2 AG¶Deutsche Bahn AG¶Citizen Financial Group¶RF Micro Devices¶Nextlink
T H E B O A R D O F D I R E C T O R S ’
Front from left: Jostein Ødynn, Anne Breiby, Ingar O. Skaug,Torgeir Mjør Grimsrud
Back from left: Svein Ribe Anderssen, Hans Lødrup, Kjell Sundt, Gunnar Hegre
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A N N U A L R E P O R T – H Å G G R O U P
HÅG is an industrial enterprise focusing on the
business area of development, production and
marketing of work chairs and conference chairs
for the actively working person. Sales of work
chairs represent approx. 90% of the turnover
of chairs, whereas the remaining part comprises
visitor’s chairs and conference chairs.The com-
pany has chosen a differentiation strategy under
which the objective is to stand out from the
competitors as a different and better company.
Over time, HÅG is to achieve good profitability
and growth by providing different and better
products to meet the actively working person’s
requirement for seating solutions.The company’s
headquarter is located in Oslo, whereas its pro-
duction takes place in the company’s own
factory at Røros.At HÅG’s subsidiary in
Greensboro, NC in USA, there is an assembly
factory for the US market. Moreover, HÅG has
sales companies in most of the company’s
principal European markets (see page 38 for details).
> PREREQUISITES FOR CONTINUEDOPERATIONSHÅG has, for many years,had good development in sales,good operating margins and sound equity capital.Thefinancial position of the company is good, and it has allthe prerequisites for being able to continue its positivedevelopment.The annual accounts have therefore beenbased on an assumption of continued operations.
> CHANGED ANNUAL ACCOUNTS FOR 1999As already informed, the Board of Directors withdrewthe previous annual accounts for 1999 before consideredby the General Meeting.This was due to informationreceived by the Board of Directors regarding thesituation in the subsidiary HAG Inc. in the US. It has the-reafter been conducted a review of discrepancies inHAG Inc. which has resulted in significant changes of the financial statement for 1999 in the subsidiary.Overstatements of the books in 1998 and 1997 havebeen directed to the company’s equity. Income andbalance sheet statements for 1998 and 1997 have beenadjusted in order to have comparable figures. Based onthe changed equity situation of HAG Inc. the Board ofDirectors have decided to make a write-down of thebooked value of the shares in HAG Inc. with NOK 21.2million.
> THE ANNUAL ACCOUNTS1999 has been characterised by poor total market development on several of HÅG’s central markets.Together with the situation in HAG Inc, considerablecosts in connection with the development of and pro-duction preparations for HÅG’s new product line,HÅGH05, have contributed to a profit for 1999 being consi-derably lower than expected.The profit is not satisfac-tory. Nevertheless, HÅG has maintained its marketshares on the Scandinavian market. An important contributing factor in this connection has been a new,expanded product range for the HÅG Capisco officechair (the saddle chair).For the other European markets,sales have developed particularly well in Germany withan increase in sales, which far exceeds the total marketgrowth. Germany is now HÅG’s second largest marketafter Norway. Sales in the principal markets of theNetherlands and the UK have also had a positive deve-lopment. In the second half of the year, HÅG set up a new sales company in France,which is the third largestmarket for office fittings and furniture in Europe. In theUSA, HÅG has had a slight decrease in sales. Severalchanges have been made to the organisation of theAmerican company, and this reorganisation is expectedto have a positive effect on sales and earnings in thefuture. Sales have developed very positively on otherexport markets, which are important contributors tothe further growth of the company.
In 1999, the HÅG Group had a consolidated operatingincome of NOK 33.3 million. Income before taxes ofNOK 26.8 million is NOK 29.9 million down on the profitfor 1998.Net income was NOK 13 million, a decrease ofNOK 21.8 million. Besides of very slow earnings in theUS., the lower margins are due to several factors.Thereorganisation of the assembly area in the production atRøros in the second half of the year resulted in somewhatlower productivity during a period. Furthermore, theturnover of commercial goods in the Netherlands with alow contribution margin has increased.As stated, largeproduct development resources have also been spent onmaking HÅG’s new,major chair line,HÅG H05, ready forlaunching.The start-up of a new sales company in Franceand further targeting of the German market have alsoaffected the level of costs in 1999.A joint feature of mostof the factors, which have had a negative effect onoperating margins, is that they have had a negative effectin 1999,but that they are expected to be important con-tributors to the company’s further growth and earnings.During the year, HÅG has also booked as expenditureNOK 28 million for production development attached toproducts,which are to be launched in the next few years.
1999 has been a demanding year for HÅG in terms ofliquidity. In connection with the development of HÅGH05, approx. NOK 24 million has been invested inmachines, tools and moulds as well as in a new assemblyline in 1999. HÅG’s total investments in 1999 have beenNOK 51.3 million.Own shares have also been repurcha-sed for approx. NOK 13 million, which must be seen in connection with internal incentive programmes.Necessary commissioned credit lines have been establis-hed to ensure that the company will have good liquidity inthe future.At the end of the year,HÅG has credit lines ofjust over NOK 100 million.Disposable funds in the formof unused credit facilities and bank deposits amounted toabout NOK 45 million at the year-end.With an equityratio of 43% and net interest-bearing debt of NOK 53million seen in relation to a balance sheet total of NOK311 million, HÅG has a good financing structure and a sound financial position at the end of the year.
With a relatively modest debt ratio, a large part of thecompany’s financial risk is attached to changes in exchangerates.Nearly 80% of the sales revenue is invoiced in othercurrencies than NOK. In order to reduce parts of theeffect,which follows from fluctuating exchange rates, thecompany uses forward exchange transactions. See note18 for more details.As a Norwegian listed company, theannual accounts have been based on Norwegian accoun-ting standards.
> WORKING ENVIRONMENTIn the internal climate survey in 1999, the working envi-ronment at HÅG Røros received a high score (4.9 of 7possible points). A new production concept for HÅGCredo and HÅG H05 based on ergonomic principles hasbeen introduced in co-operation with the employees.A new humidifier system improves the air quality.Theturnover in the permanent staff was 5.9%. For the HÅGGroup, the total absence due to illness was 5.7%. For thehead office in Oslo, the figure was 3.7%,whereas at HÅGRøros, the absence due to illness was 8.6%.The latter gives an H value (the number of injuries with absence per million working hours) of 11.07 and an F value (thenumber of days of absence due to injuries per million
working hours) of 57.56. The target is to reduce theabsence due to illness to 6% at HÅG Røros in 2000,among other measures through a trial scheme withincreased own reporting.With its programme for cultureand values,HÅG attaches great importance to employeedevelopment and corporate culture.
> EXTERNAL ENVIRONMENTIn accordance with the company’s environmental philosophy,"HÅG’s objective is to be a sustainable company, and to makethis visible through product solutions and priorities which helpto reduce the total consumption of resources based upon ecolo-gical understanding".
HÅG asa is ISO 14001 certified, and, as the first Scandi-navian furniture producer,HÅG Røros was EMAS registe-red in 1996. HÅG consequently has an obligation toensure continuous improvement and to account for thispublicly. Since 1995, HÅG has had environmentalreporting as part of its annual report. HÅG’s Environ-mental Programme 2000-2002 is a programme forfollow-up and further development of environmentalmanagement and areas of focus.This is made concrete inannual plans of action and is followed up in quarterly envi-ronmental committee meetings. HÅG’s areas of focus for thisperiod have been described in the Environmental Report on page 33.
HÅG’s production at Røros affects the external envi-ronment to a limited extent.HÅG does not carry on anyactivities,which are subject to a licence,and is not subjectto control from the State Pollution Control Authority.HÅG’s industrial area does not have contaminated soil.HÅG is aware of the responsibility which location in a unique and preservation-worthy location such as Rørosentails.The main processes are processing of steel andfinishing of metal components as well as drawing,assembly and packing. HÅG has its own epoxy coatingplant for finishing. Epoxy is solvent-free. Processes with a potential impact on the environment are degreasing ofmetal and removal of hardened epoxy from equipment.This takes place in a phosphate bath and by pyrolysis.Theenergy consumption is mainly for heating of premises andfor the epoxy coating plant. Improvements in the air-conditioning system in the autumn of 1999 will result inconsiderably reduced energy consumption in the future.For many years,HÅG Røros has attached importance towaste handling and sorting at source and has halved thequantity of waste for waste dumps since 1995. Duringthe past year, improvements in routines and wastehandling have resulted in a further reduction in waste forwaste dumps of approx. 35% from the year before.
There are no discharges or emissions to the air, sea orground. 25% of HÅG’s suppliers have so far introducedsystems such as EMAS or ISO 14001. Together withLinjegods/BTL, HÅG is involved in a project to map,evaluate and weight environmental factors attached tothe company’s transport of goods.
The principal activities at HAG Inc. in the USA are cuttingand sewing of covers and assembly and packing of chairs.Most components arrive in containers from Røros, therest are purchased locally. All transport services arepurchased. All employees are given environmentaltraining. In 1999,HAG Inc. has reduced its consumptionof energy and the quantities of waste produced.Theoffice premises have been converted into a "Lifestyle
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Design Center", a combined office and showroom,withgreat improvements in the working environment, in par-ticular light and air. HÅG’s environmental profile and, inparticular, HÅG Scio «Bottle Cap», has been in focus invarious contexts in 1999, among other things in con-nection with the "National Recycling Day" last autumn.HAG Inc.will continue to focus on the environment andsustainability in 2000.
There is no direct health risk or environmental riskconnected with normal disposal of HÅG’s products byrecycling or at waste dumps.Toxic gases occur in con-nection with incineration.There are no known negativehealth effects or environmental impacts from usingHÅG’s products. In line with green efficiency, more hasbeen produced using less material in connection withthe development of the new HÅG H05 chair line, andfuture simple recycling has been ensured. In relation tocomparable products such as HÅG Credo, the chairconsists of 40% fewer components and is approx. 10%lighter.The constructions are simple with easily replace-able components of a high technical quality. Simplifiedfunctions provide high user-friendliness and few wearpoints, which, together with a timeless design, extendsthe life of the product.This reduces the need for newchairs and consequently the total impact on resources.
> PROSPECTSHÅG is facing a very challenging year in which thelaunches of the company’s new office chair line, HÅGH05, will be the main event.After several years’ deve-lopment work, investments of more than NOK 34million and product development costs of approx.NOK26 million, a successful launch is of great importance tothe company’s development in the years to come.Thenew chair line will be an important contribution tostrengthening HÅG’s position as a leading supplier ofergonomic chairs for the working environment.Withlaunch costs in the order of NOK 14 million, the profitfor the first half of the year will be affected by this launch.
The running in of the chair line in production will taketime and affect productivity in particular during the firsthalf-year of 2000. The signals from the first externallaunches of HÅG H05 are unambiguously positive, andHÅG is of the opinion that the chair line will be regardedas a pioneering new product. In connection with suchmajor launches, there will always be a risk that sales ofcomparable products can be affected pending the launchof the new product.
The company has many products in development,whichare to support the company’s objective to be a marketleader of seating solutions for the actively workingperson. In this context, the product range in visitor’schairs and conference chairs will be extended so thatHÅG can appear as a total supplier also in this chairsegment.
1999 has shown that HÅG needs growth in order to beable to maintain sound profitability and high operatingmargins. In 2000, the focus will therefore be on achievinggrowth in sales.With a good product range and HÅGH05 in ordinary production, the operating margins areexpected to show improvement in the second half of theyear.With further growth in sales, the company has clearambitions to achieve steadily increasing operatingmargins over the next few years.The prerequisites forfurther growth in sales are connected with a positiveeconomic development on HÅG’s principal markets andwith the company continuing to succeed in its differen-tiation strategy – HÅG is to stand out from its compe-titors as being a different and better chair supplier in itssegments.
> ALLOCATION OF PROFITFor the parent company, HÅG asa, the Board of Direc- tors recommends that the net income for the year,NOK12 398 761 be allocated as follows:
DIVIDEND NOK 13 123 138
TRANSFERRED FROM RETAINED EARNINGS NOK 724 377
The Board of Directors recommends the distribution ofa dividend of NOK 1.40 per share.The dividend for 1998was NOK 1.90.
TORGEIR MJØR GRIMSRUDChairman of the Board
SVEIN RIBE ANDERSSEN Deputy chairman of the Board
INGAR O. SKAUG
HANS LØDRUP
ANNE BREIBY
> OSLO, 14 JUNE 2000
KARI SYNNØVE BORGOS
STÅLE VANGSKÅSEN
KJELL SUNDT
New as per 3 May
New as per 3 May
P R O F I T & L O S S S T A T E M E N T FOR THE PERIOD 01.01 - 31.12
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 Notes 1999 1998 1997
593 579 593 971 482 549 Sales revenues 2 406 539 428 738 367 6201 843 2 443 1 981 Other operating revenues 15 285 13 402 12 366
595 422 596 414 484 530 TOTAL OPERATING REVENUES 421 824 442 140 379 986
227 142 217 466 177 870 Cost of goods sold 3 190 265 191 212 170 654(1 007) 25 6 Inventory movements, in-house production (1 011)
161 012 147 894 119 379 Cost of labour 4 103 272 102 325 88 54626 636 20 378 18 110 Depreciation 5 18 262 15 347 14 384
148 337 147 547 117 895 Other operating costs 66 900 67 837 59 431562 120 533 310 433 260 TOTAL OPERATING COSTS 377 688 376 721 333 015
33 302 63 104 51 270 OPERATING INCOME 44 136 65 419 46 971
(6 457) (6 353) 261 Net financial income/(expense) 6 (20 008) 804 5 19126 845 56 751 51 531 INCOME BEFORE TAXES 24 128 66 223 52 162
13 801 21 903 16 556 Taxes 7 11 729 17 848 12 76113 044 34 848 34 975 NET INCOME 12 399 48 375 39 401
INFORMATION CONCERNING:
Dividend 13 123 18 169 13 387
2.5
5.0
7.5
10.0
12.5
100
200
300
400
500
1999
1998
1997
1996
1995
1994
1999
1998
1997
1996
1995
1994
1999
1998
1997
1996
1995
1994
OPERATING MARGINS%
Capital employedEquityTotal assets
15
30
45
60
75
RETURNS%
REVENUES & EARNINGS MNOK
Income before taxesOperating revenues
10
20
30
40
TORGEIR MJØR GRIMSRUDChairman of the Board
SVEIN RIBE ANDERSSEN Deputy chairman of the Board
INGAR O. SKAUG
HANS LØDRUP
ANNE BREIBY
KJELL SUNDT
> OSLO, 14 JUNE 2000
KARI SYNNØVE BORGOS
STÅLE VANGSKÅSEN
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Group Group Group Assets HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 Notes 1999 1998 1997
FIXED ASSETS2 774 202 191 Deferred tax benefit 7 428 202 1916 980 7 800 Goodwill 59 754 8 002 191 TOTAL INTANGIBLE ASSETS 428 202 191
43 363 44 236 44 007 Buildings and other fixed property 5 43 363 44 236 44 00716 980 7 013 7 788 Machinery and equipment 5 16 980 7 013 7 78874 560 58 181 49 924 Furniture and fittings 5 54 983 41 156 36 821
134 903 109 430 101 719 TOTAL DEPRECIABLE FIXED ASSETS 115 326 92 405 88 616
4 788 4 562 4 279 Non-depreciable fixed assets 3 864 3 639 3 553139 691 113 992 105 998 TOTAL TANGIBLE FIXED ASSETS 119 190 96 044 92 169
Shares in subsidiaries 8 31 961 51 223 39 943Loans to companies in the same group 6 084 4 779
5 194 279 129 Investments in shares 9 5 194 279 1293 337 3 256 2 589 Pension fund assets 10 3 337 3 257 2 5898 531 3 536 2 718 TOTAL FINANCIAL FIXED ASSETS 46 576 59 538 42 661
157 976 125 530 108 907 TOTAL FIXED ASSETS 166 194 155 784 135 021
CURRENT ASSETS50 245 50 734 41 772 INVENTORIES 11 30 807 30 337 27 395
76 925 81 347 61 169 Accounts receivable 12 81 244 72 932 50 71421 512 13 528 14 552 Other short-term receivables 15 052 8 144 6 19398 438 94 875 75 721 TOTAL RECEIVABLES 96 296 81 076 56 907
4 122 22 694 18 677 Liquid funds 13 4 496 5 320 4 307152 805 168 303 136 169 TOTAL CURRENT ASSETS 131 599 116 733 88 609 310 781 293 833 245 077 TOTAL ASSETS 297 793 272 517 223 630
Group Group Group Equity and liabilities HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
EQUITY95 625 95 625 95 625 Share capital (9 562 500 à NOK 10)14 95 625 95 625 95 625(1 888) Own shares (188 830 à NOK 10) 15 (1 888)
5 350 Share premium fund 15 5 35099 087 95 625 95 625 TOTAL PAID-UP EQUITY 99 087 95 625 95 625
35 187 52 955 36 312 Retained earnings 15 40 088 57 211 27 004134 274 148 580 131 937 TOTAL EQUITY 139 175 152 836 122 629
LIABILITIES2 055 721 682 Pension obligations 10 1 526 721 6806 093 5 324 5 184 Deferred taxes 7 5 325 4 497 4 2592 789 1 000 1 000 Guarantees provision 1 500 1 000 1 000
10 937 7 045 6 866 TOTAL PROVISION FOR COMMITMENTS 8 351 6 218 5 939
52 625 14 555 19 965 Mortgage loans 16 52 625 14 555 19 965900 1 500 2 100 Other long-term debt 900 1 500 2 100
53 525 16 055 22 065 TOTAL OTHER LONG-TERM LIABILITIES 53 525 16 055 22 065
4 832 Bank overdraft 16 16 915 5 156 (1 355)45 614 38 531 30 095 Accounts payable 35 509 30 674 26 34214 528 19 507 13 942 Taxes payable 7 11 110 17 153 12 62217 471 22 871 15 041 Accrued liabilities (taxes,VAT, social security etc.) 6 824 7 412 5 85813 123 18 169 13 388 Dividends 13 123 18 169 13 388
Liabilities to companies in the same group 3 078 3 078 3 07816 478 23 075 11 743 Other short-term debt 10 183 15 766 13 064
112 046 122 153 84 209 TOTAL CURRENT LIABILITIES 96 742 97 408 72 997176 507 145 253 113 140 TOTAL LIABILITIES 158 618 119 681 101 001310 781 293 833 245 077 TOTAL EQUITY AND LIABILITIES 297 793 272 517 223 630
B A L A N C E S H E E T PER 31.12
C A S H F L O W S T A T E M E N T
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
26 845 56 751 51 531 Income before taxes 24 128 66 223 52 162(21 865) (16 248) (10 492) Taxes paid (17 114) (13 090) (10 642)
26 636 20 378 18 110 Ordinary depreciation 18 262 15 347 14 384Write-down shares 21 234
489 (8 962) (5 856) Changes in inventories (470) (2 942) (4 849)4 422 (19 572) (10 037) Changes in receivables (15 220) (24 139) (1 085)7 083 8 438 474 Changes in current liabilities 4 835 4 333 128
(18 408) 18 982 8 743 Changes in other provisions (5 934) 3 678 6 666
25 202 59 767 52 473 A NET CASH FROM OPERATIONS 29 721 49 410 56 764(51 122) (27 959) (29 793) Purchase paid of fixed assets (41 544) (19 222) (24 024)(4 915) (8 214) Purchase paid of shares (6 887) (11 280) (19 135)
131 145 Payments received from sales of other investments 131 4 226(81) (779) Purchase paid of other investments (1 385) (5 607)
(12 520) Purchase paid of own shares (12 520)
(68 507) (36 952) (29 648) B NET CASH FROM INVESTING ACTIVITY (62 205) (36 109) (38 933)40 000 Payments received of new long-term debt 40 000(1 930) (5 410) (410) Down payment of long-term debt (1 930) (5 410) (410)
4 832 Net change in bank overdraf 11 759 6 510 (8 119)(18 169) (13 388) (8 766) Dividend paid (18 169) (13 388) (8 766)
24 733 (18 798) (9 176) C NET CASH FROM FINANCING ACTIVITIES 31 660 (12 288) (17 295)
(18 572) 4 017 13 649 A+B+C Net changes in cash and cash equivalents (824) 1 013 53622 694 18 677 5 028 Cash and equivalents as of 01.01 5 320 4 307 3 7714 122 22 694 18 677 CASH AND EQUIVALENTS AS OF 31.12. 4 496 5 320 4 307
1999
1998
1997
1996
1995
1994
1999
1998
1997
1996
1995
1994
WORKING CAPITAL CASH FLOWMNOK MNOK
10
20
30
40
50
10
20
30
40
50
NOTE 1 ACCOUNTING PRINCIPLESThe annual accounts have been presented in accordancewith the Norwegian Accounting Act of 1998. Theaccounts have been drawn up in accordance withgenerally accepted accounting principles as applied inNorway.A change in accounting principles has had littleeffect on the accounting figures for 1999. The minorchanges have affected historical figures as well. Due tothis, the effects have not been specified.
Consolidated accounts – consolidation principleThe consolidated accounts show the financial position ofthe Group as a whole.The Group accounts comprise theparent company and all of the totally owned subsidiaries.Internal transactions have been eliminated.Share holdingsin subsidiaries have been eliminated by means of the PastEquity Method. Conversion differences are charged orcredited to equity. By the elimination of the subsidiary inthe Netherlands the excess value of booked value at thetime of the acquisition is defined as goodwill, and will beamortized over the next 10 years.The subsidiary in theNetherlands, Safimex BV, is from 1st of July 1998 consoli-dated.As Safimex BV only represents a minor part of theGroup, no pro forma figures for 1997, which includesSafimex BV,have been prepared. In 1999 the company esta-blished a new 100% owned subsidiary,HÅG sa, in France.The subsidiary is from 1st September consolidated.
Foreign exchangeMoney items, receivables and debt denominated in for-eign currency are translated at the exchange rate as atthe balance sheet date. Items in the profit and loss ac-count have been translated at monthly average exchangerates for the year.
Fixed assetsAll group companies follow the principle that straight-linedepreciation is charged to the operating income distribu-ted over the estimated useful life of the assets.The Group’scompanies use approximate equal rates of depreciation.
Goods Raw materials have been valued at cost price.Work inprogress has been valued at variable manufacturing cost.Finished goods have been valued at full manufacturing cost.Consideration has been made for unmerchantable stocks.
Product development costsThe Group has product development costs in bothNorway and the U.S.These are charged to expense whenincurred.
SharesInvestments in subsidiaries have been valued in accor-dance with the cost method in HÅG asa. HÅG asa hasother shares,which are classified as long-term sharehol-dings.These are shares in companies in which HÅG asadoes not have a significant interest.These items have beenvalued at acquisition cost.
WarrantiesUnearned income which is attached to warranty andservice work for closed sales is valued at the estimatedcost for such work.The estimate is calculated on the basisof historical figures for service work and warranty repairs.
Pension costs and pension commitmentsThe Company (HÅG asa) is financing its pension com-mitments through an insured pension plan. Based onactuarial principles the present value of future pensioncommitments is calculated.The commitments calculatedare compared to the value of the Company’s pensionfunds.The difference will, if negative be booked as a long-term debt, and if positive, as a fixed asset.Employer’s con-tributions have been included in the calculation. Inaddition, the Company has an uninsured pension com-mitment to the present and former President & CEO.The present value of this commitment has been bookedas a long-term debt. This pension plan is presentedaccording to the general accepted Norwegian accoun-ting standard. In 1999, the company implemented com-mitments attached to AFP (contractual pension). Inaddition, the company has taken out supplementaryinsurance for executives.The effect of the implementa-tion of these commitments has been entered against freereserve and amounts to NOK 416,879.
LeasingThe company has a lease agreement for company cars.There are no other lease agreements.
Investment grantThe investment grant is booked on a gross basis, i.e. thegrant is booked in the profit and loss statement accordingto the depreciation of the investments.The investmentgrant booked in the balance sheet amounts to NOK 0.95million by the year-end and this item is included in otherlong-term debt.The company has not received any invest-ment grants in 1999.
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NOTE 2 BUSINESS AREASHÅG operates within one business area that is sales of chairs to the working environment.The sales to the various main markets and product lines are as follows:
SALES REVENUES HÅG GROUP:
MNOK 1999 1998 1997 1996 1995Norway 123.3 146.9 125.9 103.6 88.9 Sweden 62.2 60.5 55.0 50.8 56.9Denmark 64.9 71.4 58.0 52.5 44.1Germany 114.6 98.6 81.2 62.9 56.4 The Netherlands 105.7 98.8 52.7 48.3 41.3 U.S. 71.5 74.0 74.8 67.9 58.7Other export markets 51.4 43.8 34.9 28.7 29.0TOTAL SALES REVENUES 593.6 594.0 482.5 414.7 375.3
SALES SPLIT BETWEEN PRODUCT LINES:
In percent 1999 1998 1997 1996 1995HÅG Scio 9.7 11.2 11.7 12,6 9.7 HÅG Credo 54.3 57.2 58.4 58.6 59.6 HÅG Signét 7.9 8.0 8.7 7.6 8.7 HÅG Capisco 8.6 4.8 5.0 4.6 4.4 Other office chairs 3.5 3.4 4.7 5.3 7.1TOTAL OFFICE CHAIRS 84.0 84.6 88.5 88.7 89.5
HÅG Conventio 4.8 3.9 3.0 Other visitor and conference chairs 4.7 5.3 6.0 7.5 6.8 TOTAL VISITOR AND CONFERENCE CHAIRS 9.5 9.2 9.0 7.5 6.8
Parts 2.2 2.4 2.5 3.8 3.7 Other products 4.3 3.8 TOTAL SALES REVENUES 100.0 100.0 100.0 100.0 100.0
NOTE 3 COST OF GOODS SOLD - THE GROUPNOK 1 000 1999 1998 1997Purchase of raw materials incl. inventory movements 229 418 223 999 181 199 Inventory movements work in progress (1 402) (1 631) (114) Inventory movements finished goods (1 881) (4 877) (3 209) TOTAL COST OF GOODS SOLD 226 135 217 491 177 876
NOTE 4 COST OF LABOUR, NO. OF EMPLOYEES, COMPENSATIONS, LOANS TO EMPLOYEES ETC.
HÅG asaCost of labour NOK 1 000 1999 1998 1997Salaries 83 344 83 234 73 191Social security contributions 10 580 10 075 8 578Pension costs 2 453 1 697 1 298Other payments 6 895 7 319 5 479TOTAL 103 272 102 325 88 546
Average number of employees: 355 336 299
President Chairman of ThePayments to key personell & ECO the Board BoardBoard of Directors fee 150 445Salaries 1 271 911Pension costs 141
N O T E 2 , 3 , 4
N O T E 4 , 5
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AuditorAudit fee 445Consultancy assistance fee 207
Where the company gives notice of cessation of employment, the Chairman of the Board has an agreement which gives 18 months with salarypaid and thereafter 60% salary until retirement age. Retirement at the age of 65 gives the President & ECO the right to 60% salary for twoyears.All the employees in the HÅG Group had through a share issue program the opportunity to buy150 shares to the price of NOK 57.Compared to the market price this represented a discount of NOK 10 per share. 134 employees (27%) made use of this program.
In 1999 a group of leaders were assigned 150 000 stock options in HÅG.The options, which extend over three years, have abinding time of 18 months from 1st of July 1999.The price for each share (strike) is NOK 67 and an addition of 0.5% per monthfrom1st July 1999 to the date the option is used. No loans are made to any of the employees in the company.
NOTE 5 DEPRECIABLE ASSETS AND FIXED PROPERTY
Buildings and Machinery and FurnitureGroup NOK 1 000 Goodwill facilities equipment and fittings TotalCost 8 214 56 257 13 730 126 798 204 999 Additions 1 472 12 730 36 920 51 122Sales 131 131 Accumulated depr/adjustments per 31.12. 1 234 14 366 9 480 89 027 114 107BOOK VALUE AT 31.12. 6 980 43 363 16 980 74 560 141 883Ordinary depreciation 1999 819 2 346 13 153 8 194 24 512Write-down 2 124 2 124Depreciation and write-down 1999 26 636Depreciation rates 10% 4-6% 20% 10-33%
Buildings and Machinery and FurnitureHÅG asa NOK 1 000 facilities equipment and fittings TotalCost 56 257 13 730 82 068 152 055 Additions 1 472 12 730 27 117 41 319Sales 131 131 Accumulated depreciations per 31.12. 14 366 9 480 54 071 77 917 BOOK VALUE AT 31.12. 43 363 16 980 54 983 115 326Ordinary depreciation 1999 2 346 13 153 2 763 18 262 Depreciation rates 4-6% 20% 10-33%
ADDITIONS AND SALES OF FIXED ASSETS OVER THE PAST FIVE YEARS
Group NOK 1 000 1999 1998 1997 1996 1995Machinery and other equipment Additions 49 650 21 340 20 307 24 259 18 278
Sales 131 253Buildings and facilities Additions 1 472 6 419 8 653 19 500 656
SalesNon depreciable assets Additions 225 200 833 134 11
SalesTOTAL Additions 51 347 27 959 29 793 43 893 18 945TOTAL Sales 131 253
HÅG asa NOK 1 000 1999 1998 1997 1996 1995Machinery and other equipment Additions 39 847 12 717 14 921 18 040 15 084
Sales 131 256Buildings and facilities Additions 1 472 6 419 8 653 19 500 656
SalesNon depreciable assets Additions 225 86 450 394 152
SalesTOTAL Additions 41 544 19 222 24 024 37 934 15 892TOTAL Sales 131 256The company has real estate totalling 12 000 m2 at Røros.
N O T E 6 , 7
NOTE 6 AGGREGATED FINANCIAL INCOME / FINANCIAL EXPENSE
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
639 423 470 Interest income 416 169 225Interest income from subsidiaries 228 264 208
615 670 109 Cash discount on purchases 492 637 508114 93 461 Other financial income 18 9 (14)
1 368 1 186 1 040 NET FINANCIAL INCOME 1 154 1 079 927
(4 452) (2 087) (1 971) Interest expense (4 577) (2 059) (1 971)Interest expense subsidiaries (149) (84) (108)
(3 306) (2 436) (1 855) Cash discount on sales (376) (413) (418)(1 262) (992) (922) Other financial expenses (699) (768) (695)
Write-down shares in subsidiary (21 234)(9 020) (5 515) (4 748) NET FINANCIAL EXPENSE (27 035) (3 324) (3 192)
1 195 (2 024) 3 969 Net foreign exchange gain/(loss) 1 278 (2 006) 3 166Dividends from subsidiaries 4 595 5 055 4 290
(6 457) (6 353) 261 NET FINANCIAL INCOME/(EXPENSE) (20 008) 804 5 191
NOTE 7 TAXESTaxes in the profit and loss statement:
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
12 096 21 294 16 607 Taxes payable 11 110 17 153 12 623Deferred taxes due to change in equity 56
1 744 141 (51) Changes in deferred taxes 602 227 138(39) 468 Changes previous years (39) 468
13 801 21 903 16 556 TAXES IN THE PROFIT AND LOSS STATEMENT 11 729 17 848 12 761
Taxes payable: Income before taxes 24 128 66 223 52 162Permanent differences 1 263 876 (589)Changes in temporary differences 18 883 (812) (537)Dividend from foreign subsidiaries (4 595) (5 025) (5 958)TAXES BASIS FOR THE YEAR 39 679 61 262 45 078Taxes 28% 11 110 17 153 12 622
Taxes payable in the balance sheet:Taxes payable 11 110 17 153 12 622TOTAL TAXES PAYABLE 11 110 17 153 12 622
Dividends received from foreign subsidiaries are taxable to Norway, but a tax refund of maximum 28% will be given if the subsidiary has paid dividend and income tax on its operations.
N O T E 7 , 8
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Specification of the basis of deferred taxes:
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
Temporary differences included in the provision for deferred taxes:13 519 10 889 11 481 Fixed Assets 13 055 10 783 11 0053 681 2 997 2 284 Current Assets 4 127 3 020 2 6163 337 3 256 2 589 Pension funds 3 337 3 256 2 589
(1 500) (1 000) (1 000) Guarantee allowance (1 500) (1 000) (1 000)2 195 1 888 1 700 Accruals foreign subsidiary
490 980 1 455 Tax equalization reserve foreign subsidiary Carry forward losses
21 722 19 010 18 509 TOTAL 19 019 16 059 15 2106 093 5 324 5 184 DEFERRED TAXES 5 325 4 497 4 259
Temporary differences not included in the provision for deferred taxes:4 945 Carry forward losses 1 527 721 681 Pension obligations not covered 1 527 721 6816 472 721 681 TOTAL 1 527 721 6812 774 202 191 DEFERRED TAX BENEFIT 428 202 191
The Group has losses to be carried forward in the subsidiary HAG Inc. in US. amounting to NOK 42.1 million.The losses can becarried forward for 20 years. Deferred tax benefit accounts for NOK 17.2 million.This deferred tax benefit has not been capitalizedat December 31, 1999.
NOTE 8 SHARES IN SUBSIDIARIES
NOK 1 000 Time of Share Company's Book valueCompany acquisition Currency capital Ownership % share (cost value)Mobilitet as 1967 NOK 1 600 100% 100% 1 563HÅG ab 1979 SEK 4 000 100% 100% 4 753HAG Inc. 1979 USD 4 250 100% 100% 10 000HÅG as 1990 DKK 500 100% 100% 301HÅG GmbH 1991 DEM 500 100% 100% 2 092Safimex BV 1998 NLG 100 100% 100% 11 280HÅG sa 1999 FRF 1 500 100% 100% 1 972TOTAL 31 961
N O T E 9 , 1 0 , 1 1 , 1 2
NOTE 9 SHARES AND INTEREST IN OTHER COMPANIES
Acquisition BookFixed assets Interest cost valueMøbel Invest AS 15% 4 830 000 4 830 000TOTAL 4 830 000 4 830 000
NOTE 10 PENSION COSTS, -ASSETS AND -OBLIGATIONSHÅG asa has a pension plan for all employees.The pension plan was established in 1992.The company has not entered an arrangement where the pension are automatically changed according to changes in the State funded pension.The pension plan is organised by the insurance company.Additionally the company has pension commitments for former and present President &CEO booked as a yearly unfunded pension cost.
NOK 1 000 Not COMPONENTS OF PENSION COSTS Covered coveredBenefits earned during the year 1 284 58Interests costs 595 83Return on pension plan assets (850)Effect of changes in actuarial assumption 16 4Employer's contribution 145 NET PENSION COSTS 1 190 145
PENSION ASSETS AND OBLIGATIONS
Estimated obligations (10 247) (1 477)Assets of the plan at fair value 12 235 Effect of changes in actuarial assumption 1 349 (49)NET PENSION PLAN ASSETS/(-OBLIGATIONS) 3 337 (1 526)
ACTUARY CALCULATION IS MADE ANNUALLY USING THE FOLLOWING ASSUMPTION (P.A.)
Discount rate 7%Expected increase in salaries and G-increase 3%Adjustment of pension benefits 3%Expected return on pension plan assets 8%Actuarial assumptions based on demographic factors and the basis for retirement, are normal conditions used within the insurance industry.
NOTE 11 INVENTORIESInventories consist of the following items:Group Group Group HÅG asa HÅG asa HÅG asa
1999 1998 1997 NOK 1 000 1999 1998 199724 027 27 799 25 345 Raw materials 20 728 18 505 18 35813 241 11 839 10 208 Work in progress 8 989 11 142 6 49912 977 11 096 6 219 Finished goods 1 090 690 2 53850 245 50 734 41 772 TOTAL INVENTORIES 30 807 30 337 27 395
NOTE 12 ACCOUNTS RECEIVABLES
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 19972 214 3 008 2 419 Allowance for doubtful accounts 586 1 086 1 436
976 137 645 Realized losses (34) 477 296Receivables subsidiaries 55 779 51 305 25 313
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NOTE 13 BANK DEPOSIT
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 19974 122 5 148 3 979 Bank deposit taxes payable 4 122 5 148 3 979
NOTE 14 SHARE CAPITAL AND RELATED PARTIESHÅG asa has a total number of 9,562,500 shares.
SPECIFICATION OF SHARES ACCORDING TO THE COMPANY ACT § 11-12:
Torgeir Mjør Grimsrud (Chairman of the Board) w/family and company 3 294 180 sharesSvein Ribe Anderssen 40 150 sharesAnne Breiby 1 150 sharesHans Lødrup 1 150 sharesIngar O. Skaug 150 sharesJostein Ødynn 270 sharesFredrik Evjen w/family 14 100 shares
% of total THE PRIMARY SHAREHOLDERS OF THE COMPANY AT 31 DECEMBER 1999: No.of shares sharesTorgeir Mjør Grimsrud w/family and company 3 294 180 34.40%Orkla ASA 1 896 550 19.80%Storebrand Livsforsikring 568 100 5.90%Norsk Hydro pensjonskasse 534 000 5.60%Nordstjernen Holding AS 377 950 4.00%Industriforsikring A.S 240 000 2.50%VÅR Livsforsikring A/S 214 200 2.20%Fokus SMB 211 700 2.20%Morten Mjør Grimsruds stiftelse 191 250 2.00%Storebrand AMS 175 000 1.80%Cincoto AS 175 000 1.80%Tine Pensjonskasse 150 000 1.60%K-Kapital 141 540 1.50%Terra Aksjefond Norge 121 800 1.30%Terra Vekst 100 000 1.00%
The company has no other relations defined as related parties. Through its ordinary general meeting the company received a proxyto buy shares in its own company, limited to 5% of issued shares. HÅG has partly used this proxy and holds at the end of the year188,830 shares which were bought at an average price of NOK 65,57. Most of the share holding is linked to a stock optionprogram for leaders, as described above in note 4.
NOTE 15 EQUITYShare Own Share Retained
Group NOK 1 000 capital shares premium fund earnings TotalChanges in equity due to new Accounting Act Equity at 31.12.98 95 625 5 350 68 307 169 282Pension obligations booked in the balance sheet (417) (417)EQUITY AT 01.01.99 95 625 5 350 67 890 168 865This year's changes in equityPurchase of own shares (1 888) (10 632) (12 520)Adjustments prior years wrong figures (20 702) (20 702)Exchange rate adjustments (1 290) (1 290)Net income after dividends (79) (79)EQUITY AT 31.12.99 95 625 (1 888) 5 350 35 187 134 274
N O T E 1 5 , 1 6 , 1 7 , 1 8 , 1 9
NOTE 15 EQUITYShare Own Share Retained
HÅG asa NOK 1 000 capital shares premium fund earnings TotalChanges in equity due to new Accounting Act Equity at 31.12.98 95 625 5 350 51 861 152 836Pension obligations booked in the balance sheet (417) (417)EQUITY AT 01.01.99 95 625 5 350 51 444 152 419Purchase of own shares (1 888) (10 632) (12 520)Net income after dividends (724) (724)EQUITY AT 31.12.99 95 625 (1 888) 5 350 40 088 139 175
NOTE 16 MORTGAGES AND GUARANTEES
Group Group Group HÅG asa HÅG asa HÅG asa1999 1998 1997 NOK 1 000 1999 1998 1997
Loans secured by mortgage as at 31.12.Line of credit (limit MNOK 50) 16 914 5 156 (1 355)
52 625 14 555 19 965 Mortgage loans 52 625 14 555 19 96552 625 14 555 19 965 TOTAL INTEREST-BEARING DEBT 69 539 19 711 18 610
Book value of assets mortgaged:Group Group Group HÅG asa HÅG asa HÅG asa
1999 1998 1997 NOK 1 000 1999 1998 199781 047 104 041 79 846 Accounts receivables and other short-term receivables 82 172 73 096 56 37450 245 50 734 41 772 Inventories 30 807 30 337 27 395
139 690 113 993 105 998 Fixed assets, houses, land 119 189 96 044 92 169272 981 270 766 229 613 TOTAL BOOK VALUE 234 167 201 475 177 935 Mortgage loans are in NOK and have an average interest at the turn of the year of 6.75% and have a flexible down payment
N OT E 1 7 P R O D U C T D E V E L O P M E N T C O S T S
Group Group Group1999 1998 1997 MNOK 28.0 26.0 23.6 Product development costs
The costs are related to research and development of new seating solutions as well as further development of existing seating solutions.The main part of the company's R&D costs is incurred in Norway.
NOTE 18 FINANCIAL RISK - SECURITYWith a considerable part of the sales to markets outside Norway, HÅG is exposed to exchange rate fluctuations as a major part ofthe company’s sales is in local currency. However, the company has through its subsidiaries substantial costs in local currency.A largeportion of the raw materials are purchased in NOK from Norwegian suppliers.To reduce the net exposure in the respective curren-cies, the company avail itself of the forward market.
HÅG asa has the following outstanding forward contracts in foreign currencies as at 31st December 1999:Total amount sold (all due in 2000): Average exchange rateEUR/NOK 4.8 mill. EUR 8.50USD/NOK 1.2 mill. USD 7.91GBP/NOK 0.6 mill. GBP 12.84All forward sales of foreign currencies are related to the company's export revenues, and are a part of reducing currency risk.
NOTE 19 ADJUSTMENTS OF FORMER YEARS FINANCIAL STATEMENTSIn accordance with the temporary general accepted Norwegian accounting standards, regarding adjustment of financial errors connectedto former years, this adjustment is made against equity.The adjusments relates to 1998 and 1997. Income and balance sheetstatements for 1998 and 1997 have been adjusted in order to have comparable figures for the past three years.
A U D I T O R ’ S R E P O R T FOR 1999
To the Annual General Meeting of HÅG asaThis report replaces the previous report presented on14th February 2000.Altered information from the sub-sidiary in the US. has resulted in a change in the annualfinancial statements for 1999 for the parent company andfor the Group.
We have audited the annual financial statements of theHÅG asa as of 31st December 1999, showing a netincome of NOK 12 398 761 for the parent company anda net income of NOK 13 043 920 for the Group.We have also audited the information in the Board ofDirector’s report concerning the financial statements,the going concern assumption and the proposal for theallocation of the profit.The financial statements comprisethe balance sheet, the income and cash flow statements,the accompanying notes and the Group accounts.These financial statements are the responsibility of theCompany’s Board of Directors and the ManagingDirector. Our responsibility is to express an opinion onthe financial statements and on other information asrequired by the Norwegian Act on Auditing and Auditors.
We conducted our audit in accordance with theNorwegian Act on Auditing and Auditors and generallyaccepted auditing principles.These principles require thatwe plan and perform the audit to obtain reasonableassurance about whether the financial statements arefree of material misstatement. An audit also includesassessing the accounting principles used and the signifi-cant estimates made by Management,as well as evaluatingthe overall financial statement presentation.To the extentrequired by law and generally accepted auditing princi-ples, an audit also comprises a review of the managementof the Company’s financial affairs and its accounting andinternal control systems. We believe that our auditprovides a reasonable basis for our opinion.
In our opinion¶the financial statements are prepared in accordancewith Norwegian law and regulations and present fairly,in all material respects, the financial position of theCompany and of the Group as of 31st December 1999,and the results of its operation and cash flows for theyear then ended, in accordance with generally acceptedaccounting principles.¶the company’s management fulfilled its duty to properlyregister and document the accounting information inaccordance with Norwegian law and generally acceptedaccounting principles.¶the information in the Board of Directors’ report con-cerning the financial statements, the going concernassumption and the proposal for the allocation of theprofit are consistent with the financial statements andcomply with Norwegian law and regulations.
Oslo, 14 June 2000ERNST & YOUNG AS
Thorbjørn SneveState Authorised Public Accountant (Norway)
Note:This translation from Norwegian has been
prepared for information purposes only.
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From left: Rune Stenhammer:Vice President Controller, Lars B. Nielsen: President HÅG GmbH, Steen Schneider:Vice President Organization & Culture,
Fredrik Evjen: President & CEO, Lars I. Røiri: Executive Vice President Sales & Marketing, André Jaeger:Vice President Finance, Carl Peter Aaser:Vice President Product Development.
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1999 was a year without growth and with lower
margins than previously.This is primarily due to
a decrease in the total markets.The company
has not lost its market position in relation to its
principal competitors.Despite stagnant sales,
the year has been used for the development of
new competence and new concepts. Investments
have been made in the future. At the start of
a new Millennium,HÅG is financially strong and
well equipped to capture new markets and
customer groups.
On 3 May the financial statement for 1999 was with-drawn due to discrepancies in the financial accounts ofthe American subsidiary HAG Inc. An external investi-gation of the financial discrepancies has been concludedand the effects are included in the present annual reportfor 1999. HÅG’s subsidiary in the US. has not beenobliged to implement full audits as the other EuropeanHÅG companies. The company’s internal controllingroutines have not been sufficient to discover the financialoverstatement that has taken place.To avoid similar situ-ations in the future, full audits have been implementedin HAG Inc.As we have seen lower gross margins in theUS., action is taken to regain profitability both in theshort and long term.We have high expectations for ournew management in HAG Inc. In terms of sales, we seea substantial potential in the US. market, not the leastafter winning the Gold Award for HÅG H05 at thelargest US exhibition for office furniture, Neocon.
The investments in product development have beenlarger than ever. Some products were launched in 1999,but we are now facing the biggest product launch in thecompany’s history. Once again, it is to be proved thatHÅG is an innovative design company, and the companyis once more to make its mark as a trendsetter withinnew sitting solutions. Our total product range shouldhave all the prerequisites for creating enthusiasm amongdealers, opinion makers and end users.
The work to improve production and logistics has beenimpeccable with the focus on enhanced efficiency andimproved productivity. Work is being carried out toreduce product costs and increase margins throughimprovement measures throughout the value chain.In parallel with the product development, a new pro-duction line has been created to achieve optimallyautomated production.At the same time, importancehas been attached to making the workplaces ergonomi-cally correct. In parallel with this development, conside-rable investments have been made in new computertechnology.All in all, this gives increased capacity andhigher quality with lower resource requirements – weare prepared for further growth!
The Sales and Marketing Department has workedactively to hold on to market shares and serve existingcustomers.At the same time,new markets and segmentsare being developed on a continuous basis so that wehave more strings to our bow in our internationalisa-tion. Our business activities continue to move south-wards. Our sitting solutions have been well received onthe Central European market. We are targeting thepopulous regions with great purchasing power in Europeand North America.We are consistent and persistent inour brand building and distribution.We hold on to jointstrategies but appear as local as possible on the individualmarkets.This contributes to continuous growth and riskdiversification for the future.
The employees and the organisation are developed inparallel with requirements from the market and otherinterested parties.Great importance is attached to com-petence development and enthusiasm. Our corporateculture is characterised by optimism ahead of the largeevents in 2000.An organisation acting in concert is onceagain to make HÅG’s presence felt on the company’sprincipal markets. We are to show that we can bedifferent and better.
> PRODUCT DEVELOPMENTHÅG’s objective is to be the market’s leading producerof innovative sitting solutions.Therefore, HÅG tries tocomplete two new products every year. In 1999, HÅGCapisco and HÅG StepUp were launched. Both theseproducts will contribute to strengthening the company’sposition as a supplier of trend-setting sitting solutionsfor the actively working person.
The new HÅG Capisco is a further development andupgrade of the original model, which was launched in1988.The collection consists of three basic models,whichare each available in a number of versions.HÅG Capiscois unique in that it remains virtually the only chair in theworld,which offers sitting solutions in the area betweena conventional sitting working position and a standingworking position. The requirement for this type of sittingsolution has increased considerably in recent years inline with the introduction of height-adjustable tables.Thenew chairs were introduced gradually in the course ofthe first half of the year, and the market response hasbeen very positive. In 1999,HÅG has sold nearly twice asmany of this chair line as in the previous year, and thereis no reason why we should stop there. The futurebelongs to this type of solution,and in this segment HÅGCapisco is currently almost totally unrivalled on themarket.Peter Opsvik is the designer, and the product hasbeen both design protected and patented.
The year’s other new product was HÅG StepUp.This is anaccessory which can be mounted on all our chairs andwhich gives the user foot support in two new higherpositions.HÅG StepUp increases the possibility of varyingthe position in all sitting heights,but only really comes intoits own in environments in which the new height-adjusta-ble tables are used.The product is easy to mount, also onexisting chairs.Peter Opsvik is the designer,and the producthas been patented.
In the course of 1999, the Product DevelopmentDepartment has completed the work on the sales supporttool “Ergonomic Binder”.Together with the “Environ-mental Binder”, this will be a useful work of reference foremployees and partners. HÅG has also spent manyresources on representing Norway in the preparation ofthe new European furniture standard EN1335,which hasnow been approved as the new European standard.
During the new year, two important new products are tobe launched:a new work chair and a new chair for confe-rences and conference rooms.The HÅG H05 work chair,which has been in development for several years,has beenextremely labour intensive. The chair will bring newmeaning to the concepts of dynamic sitting and user fri-endliness.The chair line has also been developed in accor-dance with the company’s rigorous internal environmen-tal requirements and has been through an extensivetesting period before it will be introduced on the marketin early 2000.A new,wider version of the HÅG Conventioconference chair will also be launched during this year.
HÅG has always been highly committed to product deve-lopment. In recent years, the total costs have constitutedaround five per cent of the turnover.To increase pro-ductivity and reduce the development time,3D DAK wastaken into use internally in 1999. We now have tendesigners who carry out all their assignments on 3D. Inaddition to the gain in the company’s own department,it has been possible further to reduce the lead time fromidea to market when the company’s sub-suppliers andtool makers can make use of the same data basis.Together with further research into the environmentalimpact of the products and into the working environ-ment of tomorrow, this will be one of the areas of focusfor HÅG in the year to come.
H Å G H 0 5 :
The development of HÅG H05 commenced several years ago.The objective was to develop a new work chair in the mid-price
segment. HÅG H05 was to be just as big a new product for the market as HÅG Credo was when it was launched in 1984.
Peter Opsvik was chosen as the designer.
The Project Group was composed of participants from sales, marketing, production, logistics and product development.All availa-
ble know-how and knowledge of chairs and the customers’ requirements have been gathered in this product.
HÅG H05 sets new standards in sitting comfort and user friendliness. In line with the requirements for “green efficiency”, all
undesired materials have been avoided, and the chair is composed of 40% fewer components than HÅG Credo.A total of five
new designs and patents have been submitted to secure the investment and ensure the distance to the competitors.
> PRODUCTION AND LOGISTICS.The factory at Røros represents the centre of HÅG’sproduction of work, visitor and conference chairs.Theproduction of all steel components and assembly of allchairs,which are primarily sold on the European markets,are based at this factory.At the company’s factory inGreensboro, North Carolina, in the USA, chairs areassembled for the North American market based onparts delivered from Røros and textiles,plastic foam andwoodwork purchased locally. In 1999, the total produc-tion reached 259,000 chairs, 30,500 of which wereassembled at the factory in Greensboro.
HÅG’s production is flow-oriented and customer ordercontrolled.The normal time of delivery is 4-8 days.The“just-in-time” principle is used extensively to keep downstocks and ensure that the right goods are beingproduced at any given time.
The HÅG Credo models constitute nearly 60% of thetotal production volume. In order to enhance the effici-ency of this production and improve the end quality, anew production system for this chair line was installedand commissioned in the summer of 1999.The line isalso designed for production of HÅG H05,which will bein production in the course of the first quarter of 2000.
The “just-in-time” principle is used
extensively to keep down stocks and
ensure that the right goods are being
produced at any given time.
Customers increasingly expect more freedom of choiceregarding versions and customisations. In order to meetthese expectations, new textile collections, HÅGPartners, have been created in close co-operation withselected suppliers. Such a development creates greatlogistical challenges. Particularly rigorous requirementsare made for communication and flow of informationboth internally and with customers and suppliers. Inorder to enhance efficiency and improve the service tocustomers, a Logistics Centre has been set up in whichreceipt of orders, purchasing, transport and productionplanning are gathered in one group. This is part of aprocess of continuous adjustment and development ofthe organisation in accordance with customer require-ments and the tasks and assignments, which are to beperformed.
In order to be able to offer customers the best deliveriesin the future, the company must constantly be active infurther development of know-how, interaction and co-ordination at all levels in the value chain.HÅG intends todevelop its core competence further and run its ownproduction in areas, which strengthen the company’scompetitiveness. Such competence is an important andnecessary basis for being able to develop future innova-tive product solutions. In areas in which own productionis not expedient,a partnership is developed with the bestsuppliers in each area. HÅG’s total production andlogistics system is consequently developed into anetwork of players who all handle and develop theirrespective core competence. In this way, the companywill meet the global competition and ensure itscustomers of the best products.
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The development of the new HÅG H05 chair line has affected the company in most areas throughout the year. It has been neces-
sary to break technical barriers in terms of materials and production both internally and at suppliers. Large investments have been
made in equipment and tools for the new seat mechanism.These initiatives represent a considerable increase in competence in
advanced steel processing.
It is essential that quality, reliability and production considerations are built into the product already at the design stage.Therefore, the fac-
tory has been involved with its competence from an early stage of the development project. Many resources have been spent on building
and testing models and prototypes.The chair line meets the most rigorous requirements for function, strength and reliability.
In parallel with the product itself, this time a new production process has also been developed which is adjusted to the new chair
line. Several operations in part assembly and final assembly have been partly robotised and partly prepared for automated assem-
bly. In the order-controlled area, investment has been made in an automatic transport system and new IT solutions. Emphasise has
been placed in creating interesting and varied tasks for the employees.
> SALES AND MARKETING1999 has been a year without the desired growth forHÅG. This is primarily due to a general decrease indemand on several of the company’s principal markets.Total sales revenues of NOK 594 million were at thesame level as last year.The sales revenue has, in particu-lar, been affected by the negative trend on the totalmarkets in Norway (16-18%) and Denmark (8-10%).TheSwedish and Dutch total markets have both been cha-racterised by stagnation in 1999. Germany shows aslightly positive development in the total market.
Despite the heavy decline on the Norwegian and Danishtotal markets, market shares of about 40% and 20%respectively have been maintained. Good sales growthon the German market with increased market shareshas been an important contributing factor to HÅG’sdevelopment in 1999. Sales on the American market in1999 have been somewhat below the level in 1998. Inthe second half of the year, the American operations havebeen reorganised with, among other things, a newManaging Director and a considerable increase in thecompany’s sales resources. For the company’s otherexport markets,HÅG has experienced a good develop-ment in sales with a sales growth rate of 17%.
HÅG’s principal markets in Europe are characterised bymany small producers and a large number of indepen-dent dealers. In the course of 1999,HÅG has seen a con-siderable change in the distribution structure on some ofthe markets.This trend is making itself felt in mergersand amalgamations on the production side. Increasingvertical integration between the production stage andthe distribution stage, in particular on the Scandinavianand Dutch markets, has been marked. Further changesare expected in the distribution and productionstructure on HÅG’s principal markets with both verticaland horizontal integration of the distribution stage.Thistrend will increasingly take place across national borders.HÅG is represented on many of the most important
European markets and consequently has a good basis foradjusting itself to an industry, which is going through aprocess of structural change.
In 1999, HÅG has set up a new subsidiary in France,HÅG sa. Clear objectives and targets have been set forthe development in France, and it is expected that theFrench market will gradually become an important sup-plement to the company’s growth on the Europeanmarket.
A new “Corporate Identity Manual” has been preparedin 1999.This manual is based on the company’s corevalues and describes HÅG’s logo and graphic profile.
In 1999,HÅG has strengthened its product range aimedat the office chair market with the launch of the newHÅG Capisco in three versions. HÅG Capisco, which isespecially adapted to height-adjustable desks, hasbecome the company’s third best-selling chair model inthe course of 1999.The investment in the conferencechair market with HÅG Conventio has produced goodresults in 1999.The sales of this chair line have increasedby 21%.During the year, several large framework agree-ments have been entered into with international hotelchains. Early in the year, for example,we entered into anagreement with the SAS Radisson hotels.The targeting ofthis segment will be intensified in terms of both productsand sales.
During the first half of 2000, HÅG will launch a new,innovative office chair concept – HÅG H05.This chairline is expected to become one of HÅG’s best-sellingproducts as early as in 2000. A successful launch willtherefore be given high priority in the new year. Focuswill also be placed on securing and developing the accessto new and existing markets through our dealer and dis-tribution network.
H Å G H 0 5 :
HÅG’s new office chair line, HÅG H05, will be launched on all markets during the first half of 2000.Through this launch, the com-
pany will show that HÅG has products, which stand out from those of its competitors.The unique feature of HÅG H05 is that it is
simpler to achieve movement and variation of sitting positions in this chair than in any other chair on the market.The only thing
the user has to do is to adjust one hand wheel and one lever. In parallel with the product development, significant improvements
have been made in sales and marketing in order to be optimally equipped to introduce HÅG H05 successfully.
The chair is brilliantly simple!
Norway 20,8%Sweden 10,5%Denmark 10,9%Germany 19,3% The Netherlands 17,8%UK 4,6%U.S. 12%Other export markets 4,1%
HÅG Scio 9,7%HÅG Credo 54,3%HÅG Signét 7,9%HÅG Capisco 8,6%Other office chairs 3,5%Visitor/conference charis 9,5%Other products/parts 6,5%
SALES 1999 SALES SPLIT BETWEEN PRODUCTS 1999
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> MARKET DEVELOPMENTHÅG has confirmed its position as market leader inNorway by maintaining its market share in a heavilydeclining total market. Several sessions with physiothe-rapists and architects and close co-operation with andtraining of new dealers have produced results. Largeproject customers are being increasingly targeted, andthis has resulted in important deliveries to, amongothers, Gjensidige NOR/Sparebanken NOR, Kredit-kassen, NTNU, Statoil and several public departments.The Norwegian market has been characterised by tur-bulence on the distribution side,one result of which wasthat HÅG acquired 15% of Møbel Invest AS,which owns75% of the office furniture producer HOV+DOKKA.
In Sweden, HÅG has had a slight increase in turnover in1999.The total market is estimated to be on a level with1998.The market has been characterised by turbulenceon the distribution side as well as increasing price com-petition, in particular on large projects.This means thatHÅG’s ability to present differentiated product solutionsbecomes important. HÅG Capisco has therefore been aconsiderable success for HÅG on the Swedish market andis the main reason why the company’s growth somewhatexceeds the growth on the total market. HÅG’s regionalpresence in Sweden increased in 1999 through the esta-blishment of a new showroom in Malmö.
In Denmark,HÅG has experienced a negative developmentin sales of 9%.This is primarily due to a decrease in the totalmarket for the private sector and a considerable reductionin procurement by the public sector, which representsapprox. 20% of HÅG’s turnover. Changes on the distribu-tion side have also had a negative impact on the develop-ment in sales. In the course of 1999, the targeting of largeend users and important partner dealers has beenincreased.This targeting will be increased further in 2000.
Germany has had an extremely positive development in1999.The sales growth has been 18% with a generatedturnover of approx. NOK 115 million. In the course ofthe year, HÅG has strengthened its position as a trend-setter within both ergonomics and environment.Themarket share on the German market is 1.7%, placingHÅG among the ten largest chair suppliers to thecorporate market in Germany.The company has increa-singly succeeded in establishing relations with the mostsuccessful dealers on the German market.A continuedpositive trend on the German market is expected.
In the Netherlands, HÅG has had a positive developmentin sales of 8%. This is primarily due to sales of thefollowing dealer products: the INABA table line andlighting products from LUXO.HÅG products have taken76% of the sales in this market. Large changes areoccurring in the distribution structure in the Netherlands.In the course of the year, a considerable part of thecompany’s dealer distribution has disappeared becauseof acquisitions by producers or closures. In the course of1999,HÅG has worked actively to counteract this trendthrough its own dealer,Unicon,and through plans for thedevelopment of new distribution in the Netherlands.Thenew HÅG H05 chair line is expected to contribute to amore positive development in 2000.
In the USA, HÅG has had a decrease in sales of 3%.TheAmerican market is characterised by strong integrationbetween the producer stage and the distribution.This hashad the effect that the five largest players on the marketcontrol more than 70% of the retail stage.Therefore,HÅG has strengthened and reorganised its sales force in1999 with increased focus on large customers and prio-ritised customer segments.These measures, combinedwith the launch of the new HÅG H05 chair line, areexpected to have a positive effect in 2000.
In the UK,HÅG has achieved a good rate of growth of 9%in 1999. Sales are made through HÅG’s importer in theUK,Sven Christiansen plc.Goal-oriented,good sales workwith the focus on large projects and end customers isexpected to generate further good growth on this market.The total UK market has decreased by approx.5% in 1999.This means that HÅG has captured market shares.
The company has had a very positive development in salesto other export markets in 1999. HÅG’s sales growth onthese markets has been 29%.The development in sales hasbeen particularly positive in Belgium, Italy, Portugal, Spain,Finland, Switzerland and Eastern Europe.The responsibi-lity for the individual markets has been reorganised in 1999.The subsidiary in Germany will now have the responsibi-lity for the development of Austria, Switzerland, Hungary,the Czech Republic and Poland,whereas the subsidiary inthe Netherlands has the responsibility for the Beneluxcountries.The other export markets in which HÅG doesnot have subsidiaries have now been organised in a Depart-ment for Business Development.
See note 2 for the sales figures.
> ORGANISATION & CULTUREThe company’s five core values – Security & Care,Responsibility & Loyalty, Innovation,Customer Orientationand Initiative & Commitment – are not merely a set ofjoint standards in HÅG.Together, our core values repre-sent everything we are and do and how we are jointly tomeet our objectives and targets and fulfil our vision.
At the same time, each value has its own separatemeaning.The work on the individual value generates sug-gestions and ideas for what is to be given priority andfor the concrete measures, which are to be implemen-ted. It is natural that each of the five core values isgenerally interpreted differently by the individual em-ployee and by the individual units in HÅG.
Therefore,a joint template for the company’s work on itscorporate culture has not been followed in 1999. Instead,the individual units have, to a great extent, been giventhe opportunity to work with the value or values,whichis,or are of most importance to them. In addition to theinitiatives taken by the units themselves, all units havebeen given suggestions by two joint activities imple-mented in HÅG in 1999, a Climate Analysis and a coursein Personal Quality.
The Climate Analysis, which HÅG has itself developed,was implemented for the second time in 1999. Theanalysis contributes considerably to making the indivi-dual employees and units aware of the importance ofworking with the company’s core values and is also agood tool in management appraisals.The overall resultfor HÅG is a clear improvement on the previous year.The most important aspect of the Climate Analysis isnot to compare figures but to process and understandthe results and to initiate measures,which will make ourclimate even better. In order to simplify this work, weintroduced a method for processing and understandingthe results in 1999.Through group work, concrete prio-ritised measures are arrived at. This work will becontinued in 2000.
In 1999, the HÅG Academy has held courses in PersonalQuality throughout the organisation. If the company isto succeed in producing even better quality at all levels,a new ISO certificate is not enough. It is completelyessential that each and everyone in the company is awareof his or her responsibility for the organisation as awhole and of the consequences which the individualemployee’s own work results and methods have for hisor her colleagues. Personal responsibility and loyalty tocolleagues and the company are key words.Throughexercises and group work, many proposals have beenmade regarding what each individual employee can andwill contribute to make HÅG a better workplace for all.Several of the proposals will serve as guides in the workon Culture & Values in 2000.
In May 1999, the company received concrete proof that HÅGhas a strong and sound corporate culture when the EU’s“Workplace Health Promotion” selected HÅG as Norway’s lea-ding company in terms of working environment.
A strong and sound corporate culture is an importantprerequisite for attracting,developing and holding on toemployees with high competence. In addition to goal-oriented work on the corporate culture for the wholeorganisation,we must know more about each individualemployee’s competence and agree on the competence,which is necessary for each individual position. In 1999,a mapping of the competence in HÅG was commenced.The company defines competence, both for the indivi-dual employee and for the company, as the sum total ofknowledge, skills and attitudes. The first step in theprocess is to map skills – this work will be carried outthroughout 2000.
HÅG’s thoughts on management and the requirementsfor managers in the company are formulated in thepamphlet “Holistic Management”. Management is aprocess of development.HÅG’s managers must be at theforefront in terms of acquiring new knowledge andlearning new skills, and they must be positive and willing
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to change their attitudes.Therefore, in 2000, time will beinvested in a review and evaluation, together with eachindividual manager,of the company’s management idealsand the ways in which management is practised in HÅG.The findings of this work will be included in the start-upof a new management development programme in thecompany in the autumn of 2000.
In 2000, HÅG will focus strongly on increased compe-tence development based on the company’s core values.A different and better corporate culture is one of HÅG’sstrongest competitive advantages.
> FINANCIAL MANAGEMENT AND ITHÅG has wholly-owned subsidiaries in six countriesoutside Norway. Each company has an independentFinance and Accounts Department with completeresponsibility for local financial management. Most ofHÅG’s units are connected on-line to the Group’sAS/400 computer at Røros. Movex is used as softwarethroughout the value chain from receipt of orders andorder processing,via production management to financialmanagement and debt collection. Such a uniform, stan-dardised IT platform gives HÅG unique advantagesregarding financial control combined with uniform,efficient reporting at all levels. In the same way as theAS/400/Movex platform, the HÅG Group’s officesupport tools have also been standardised. Productsfrom suppliers such as Microsoft, Lotus and IBM areprimarily used as the PC platform.
The HÅG Group has uniform financial reporting,which,in an efficient manner, makes companies and depart-ments within the Group more comparable. Speedy,uniform reporting gives the management a good toolwhen decisions are to be made. Balanced scorecardreporting,which also includes non-financial parameters,is being further developed on a continuous basis.Thebalanced scorecard reporting is also uniform and stan-dardised in its form in line with the financial reporting.
As described in the Annual Report for the previous year,HÅG commenced the work on the preparation for theyear 2000 as early as in 1998. It is now positive to beable to ascertain that there were no Millennium Bugproblems in any areas in connection with the start andfirst part of the year 2000.
For the IT area, 1999 was also a hectic year with anumber of activities and projects. Besides the integra-tion of HÅG’s standardised IT platform for HÅG’s sub-sidiary in the Netherlands, there has been much focuson the use of the Internet.The objective has been tomake doing business with HÅG as accessible as possible.The first step has been to create a web-based solutionfor order registration via the Internet.This opens up newe-commerce possibilities, and we will continue the workon this next year.The development of an intranet forHÅG has been commenced. It is expected that HÅGwith subsidiaries will be included in the course of thenext two years.New barcode technology has been taken
into use among the operators in our production atRøros. This is expected to result in better internalreporting, enhancement of efficiency and more precisedeliveries to our customers. In order to improve internalcommunication and limit travelling activities, video con-ference equipment linking Røros,Oslo and Greensborohas been installed.The Group’s other subsidiaries will beincluded in the spring of 2000.
> THE FINANCIAL AREA HÅG has had higher ordinary financial costs in 1999 thanin the previous year. In addition to increased cashdiscounts, this increase is primarily the result of anincrease in loans obtained.At the year-end, long-termdebt amounted to NOK 53 million against NOK 15million in the previous year.The increased capital requi-rement is connected with large investments in produc-tion equipment for a new major chair line,which will beput into production at the beginning of the new year, aswell as repurchase of own shares. In 1999, there was arun on the liquidity of nearly NOK 40 million more thanwhat is expected during a normal operating year.However, the liquidity of the company has been satisfac-tory throughout the year. For more detailed informationabout the company’s financial costs, see note 6.
With 80% of sales being made outside Norway, HÅG isexposed to exchange rate fluctuations.Most of the salesto the export markets are invoiced in local currency.Therefore, the company has considerable accounts recei-vable, which are denominated in foreign currency.Witha Norwegian crone, which has risen by approx. 9%against the Euro from the beginning of the year to theend of the year, this has resulted in a loss on exchange asa result of a writedown on the claims volume in terms ofNOK.This has, to a great extent,been offset by a streng-thened USD and advantageous forward transactionsmade with due dates during 1999. For outstandingforward transactions at the year-end made for 2000, seenote 18.The switch to the Euro has not resulted in anysignificant changes for HÅG.There has been a certainslowness in the establishment of the Euro as a tradecurrency instead of the individual currencies in the EUMember States that participate in the Euro.A changedattitude to this is expected during the new year.
The development in the price of and turnover of theHÅG share has varied during the year.The highest levelof activity was seen towards the end of the year when acouple of large shareholders sold off their shareholdingsand a number of HÅG employees purchased a relativelylarge number of shares in the same period in which otherunit trusts acquired shares. Moreover, 27% of allemployees chose to purchase 150 shares in connectionwith the company’s first organised sale of shares toemployees.
For more information on share-related matters, see,moreover,pages 28 and 29.
> SHAREHOLDER POLICYOne objective of HÅG is to create values for its share-holders by focusing on long-term profitability andgrowth. HÅG strives to give its shareholders a returnon their invested capital, which over time exceeds thereturn on alternative investments with a similar risk.The return on investment in the form of a combinationof share price development and dividend should reflectthe financial development in the company.
> DIVIDEND AND VALUE DEVELOPMENTThe dividend policy shall reflect HÅG’s result develop-ment and capital requirements.The target of the compa-ny is to have a dividend, which, over time, is in the rangeof 25-50% of the net income. For 1999, the Board ofDirectors is recommending the distribution of a dividendof NOK 1.40 per share. This is a decrease comparedwith the dividend of the previous year which amountedto NOK 1.90 per share. Dividend is distributed to theshareholders who are registered as owners on the dateof the General Meeting (22 June 2000).
The price of the HÅG share decreased from NOK 85at the beginning of the year to NOK 68 at the end ofthe year, a reduction of 20%. The lowest price of theHÅG share was NOK 50.The total share index and in-dustrial share index of the Oslo Stock Exchange saw anincrease of 45.5 and 48.9% respectively in the same pe-riod. HÅG was capitalised to NOK 650 million at theend of 1999.The weak development of the share pricemust be seen in connection with the sales and ear-nings, which have been considerably, lower than 1998.During the year there has been limited trade in theHÅG-share.Towards the end of the year, the activity in-creased in connection with certain changes in the ow-nership structure. In 1999, 1.3 million HÅG shareswere traded, which is equivalent to 13% of the totalnumber of shares. The limited liquidity in the share isamong other things due to the special focus that theshare market has had on technology-shares and thelargest companies on the Oslo Stock Exchange.
S H A R E H O L D E R S R E L A T I O N S
120
110
100
90
80
70
60
50
SHARE PRICE DEVELOPMENT ON OSLO STOCK EXCHANGE 1999 NOK
HÅG Relative industry index Relative total index
FINANCIAL CALENDAR:
FOR 2000
Results 1999:
15 February
Ordinary General Meeting:
03 May and 22 June
Results, 1st quarter:
04 May
Results, 2nd quarter:
22 August
Results, 3rd quarter:
25 October
YEARLY RISK REGULATION PER SHARE IN NOKRisk per share Nominal value No. of shares
1.1.1993 5.60 NOK 15 1 012 500
1.1.1994 0 NOK 15 1 012 500
1.1.1995 7.11 NOK 15 1 062 500
1.1.1996 7.71 NOK 10 3 187 500 (split 1:3 5.4.1995)
1.1.1997 8.25 NOK 10 3 187 500
1.1.1998 2.57 NOK 10 9 562 500 (split1:3 28.4.1997)
1.1.1999 3.23 NOK 10 9 562 500
1.1.2000 1.80 (est) NOK 10 9 562 500
DISTRIBUTION OF SHARES ON SHAREHOLDERS PER 31.12.99No. of shares
From – To No. of shareholders Holdings %
1 – 100 35 1 740 0.02
101 – 1000 228 72 540 0.76
1001 – 10 000 51 193 200 2.02
10 001 – 100 000 22 826 620 8.64
100 001 – 1 000 000 16 4 222 870 44.16
1 000 001 – and more 2 4 245 530 44.40
Total 354 9 562 500 100.00
29
SH
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1999
1998
1997
1996
1995
1994
EARNINGS PER SHARENOK
0.5
1.0
1.5
1999
1998
1997
1996
1995
1994
DIVIDEND PER SHARENOK
1999
1998
1997
1996
1995
1994
EQUITY PER SHARENOK
15
30
45
60
75
1999
1998
1997
1996
1995
1994
1993
1992
HÅG SHARE PRICENOK
High/lowPrice year-end
1
2
3
4
1999
1998
1997
1996
1995
1994
5
10
15
> OWNERSHIP STRUCTUREHÅG’s ownership structure has not changed considerablyduring the year and is dominated by a limited number ofshareholders and institutional investors. Torgeir MjørGrimsrud (HÅG’s Chairman of the Board of Directors)with his company and family holds a third of the shares,whereas Orkla holds just under 20%.The most importantchanges during the year are the increase of ownership byTerra Forvaltning, Fokus Forvaltning and Cincoto (PetterOlsen Finans), whereas Vesta Forvaltning and Statoil havereduced their ownership.The shareholding share in foreignhands has been low during the year and was approx. 1% atthe year-end.
> EMPLOYEES AS OWNERSHÅG regards it as a positive factor that employees ownshares in their own company.This contributes to a higherdegree of employee identification with the company andwith the value creation, which is created through the workand commitment of all employees. In second quarter, HÅGimplemented a program for shares to its employees and tothe board of directors. 134 employees of a total of 500 inboth Norway and abroad took the opportunity to buy 150shares at the price of NOK 57 per share, which represen-ted a discount of NOK 10 per share.Towards the end ofthe year 18 key managers and employees decided to buyapprox.170 000 shares to the price of NOK 50.This hap-pened in parallel with some prominent shareholders chang-ing their ownership. At the year-end, HÅG has 138 em-ployee shareholders. Together, these shareholders own2.4% of the company - a 100% increase compared to theend of 1998.
The group management has the following holdings of HÅG-shares:
Fredrik Evjen, President and CEO 14 100 shares
Carl Peter Aaser,Vice President Product Development 40 150 shares
André Jaeger,Vice President Finance (CFO) 34 600 shares
Rune Stenhammer,Vice President Controller 30 150 shares
Lars B. Nielsen, President HÅG GmbH 18 000 shares
Lars I. Røiri, Executive Vice President Sales & Marketing 5 650 shares
Steen Schneider,Vice President Organization & Culture 1 150 shares
> INVESTOR RELATIONSAn objective for HÅG is to improve the liquidity of theshare. Among other things, this is to be achieved to alager extent than before by providing the financial mar-ket with timely and relevant information about impor-tant events for the company. Importance is attached toproviding both new and old shareholders with a highdegree of service, which makes it possible for them tokeep up to date on HÅG’s development. In the first halfof 2000, information from relevant players in theNorwegian finance market has been collected in orderto improve the service for these players.The trade ofthe HÅG-share is not widespread among the brokera-ge houses. In 2000, time will be spent on giving morebrokerage houses the necessary insight into HÅG inorder for the financial market to have more points ofcontacts for advice and realistic analyses.
KEY FIGURES HÅG GROUP 3) 3)
NOK 1 000 1999 1998 1997 1996 1995 1994INCOME/SALES
1. Total operating revenues 595 422 596 414 484 530 416 926 377 840 325 5062. Sales outside Norway in % 79 75 74 75 77 763. Operating income 33 302 63 104 51 270 48 981 47 329 32 0344. Income before taxes 26 845 56 751 51 531 46 038 44 054 27 2415. Net income 13 044 34 848 34 975 32 428 30 188 18 639PROFITABILITY (%)
6. Operating margin 5.59 10.58 10.58 11.75 12.53 9.84 7. Gross profit margin 4.51 9.52 10.64 11.04 11.66 8.378. Net profit margin 2.19 5.84 7.22 7.78 8.00 5.73 9. Return on assets 5.38 13.49 16.29 17.60 19.36 15.38 10. Return on capital employed 9.28 23.08 25.93 28.66 31.21 21.89 11. Return on equity 9.22 24.85 29.10 33.43 41.27 35.53CAPITAL/LIQUIDITY
12. Working capital 40 760 46 150 51 960 37 405 42 492 45 95513. Bankers ratio 1.36 1.38 1.62 1. 56 1.62 2.0214. Cash flow 39 680 55 226 53 085 47 462 43 064 31 87015. Total equity 134 274 148 580 131 937 108 410 85 611 60 67116. Equity share (%) 43.2 50.6 53.8 53.7 47.6 40.317. Investments 51 347 27 959 29 793 43 893 18 945 13 172STOCK RELATED KEY FIGURES 2)
18. Value on Oslo Stock Exchange 650 250 812 813 640 688 627 938 344 250 173 18819. EPS (NOK)1) 1.38 3.64 3.66 3.39 3.16 1.9520. Total equity per share (NOK)1) 14.19 15.54 13.80 11.34 8.95 6.6621. Net interest-bearing debt per share (NOK)1) 5.13 (0.85) 0.14 1.60 (0.29) 2.2422. Dividend per share (NOK)1) 1.40 1.90 1.40 0.92 0.55 0.44
1) Adjusted for a share split 1:3 in April 1995 and April 1997.2) Due to purchase of shares in own company, median number of outstanding shares in 1999 has been
9 460 814 vs. 9 562 500 previous years.3) The financial statements for 1998 and 1997 have been adjusted due to overstatements at HÅG's subsidiary
in the US. (see the Board of Directors' annual report and note 19).
K E Y F I G U R E S
RATIOS - WHAT THEY MEAN
6. Operating income as % of operating revenues.7. Income before taxes as % of operating revenues.8. Net income as % of operating revenues.9. Net income after taxes plus interest expenses adjusted for tax as % of average total assets.10. Net income after taxes plus interest expenses adjusted for tax as % of average total equity
plus gross interest-bearing debt.11. Net income after taxes as % of average total equity.12. Total current assets reduced by short-term debt.13. Total current assets divided by short-term debt.14. Income after net finance plus depreciation minus taxes payable.19. Net income divided by number of shares by year end.21. Interest-bearing debt reduced by liquid funds divided by number of shares at year end.
E N V I R O N M E N T A L R E P O R T 1 9 9 9
> ENVIRONMENT AND SOCIETY
HÅG wants to care for both the global and the local community. Our contribution as
company and employer must be evaluated on the basis of our economical, ecological
and social performance, which are the main elements of a sustainable development.
Fredrik Evjen President & CEO
In line with our environmental
philosophy, HÅG also feels committed
to the community where we are
located all over the world.We want to
create meaningful work for people,
taking social responsibility and genera-
ting local welfare.
E N V I R O N M E N T 9 9
> SOCIETY COMMITMENTAs the major employer HÅG has a special relationshipwith the local community of Røros and the surroundingregion. Our philosophy is to develop a sustainableindustry within the region, also being aware of the risksand responsibilities as cornerstone company. HÅG willkeep close relation with local authorities and decisionmakers, supporting a number of local projects and acti-vities.HÅG will care for the local community and culture.Considering our size and importance for the region ofRøros, including the difficulties in getting skilled workers,expansion after the year 2000 possibly will be doneabroad.We encourage our employees to do voluntarywork in their local communities.We seek to be a goodneighbour and supportive resident in the places wherewe are established.
HÅG as a good neighbour and employerHÅG supports various activities in the areas of art,culture and sports, which amount to approx. NOK500,000 per annum. In 1999,HÅG’s Ergonomics Scholar-ship in the Nordic countries and a scholarship for furtherdevelopment for HÅG employees were granted. AtRøros HÅG supports the local sport-clubs, the theatre,the Music Winter Festival as well as the Røros AdultTraining Centre for the mentally disabled, from whichtwo people have had their daily work in HÅG’s produc-tion for many years.
Røros is on UNESCO’s “World heritage list”, whichentails extra responsibility for looking after a unique localenvironment.HÅG as a workplace has been created withfocus on ergonomics,design and environment and is sti-mulating to body and soul.Many employees have flexible,individual solutions with an ever-increasing numberworking from home and part-time.
> ENVIRONMENTAL PHILOSOPHYHÅG’s objective is to be a sustainable company, and to makethis visible through product solutions and priorities, which helpto reduce the total consumption of resources, based upon eco-logical understanding.
HÅG believes that business has a moral responsibility tobe open and honest about what it does, and face up tothings that need to be improved. HÅG has a globalresponsibility of reducing environmental impact.We mustachieve higher ecological efficiency in products andprocesses, which means making more with less andavoiding hazardous material, though with the samedemands on quality, function and good design. Asconsumer of non-renewable resources we have thespecial responsibility of closing the material loops byusing recycled material and by optimising the possibilitiesfor reuse and recycling of our products.HÅG’s productsshall meet real needs and improve the quality of workinglife for people.HÅG is to represent added value – morethan just a chair, serving the market in a more eco-efficient way than our competitors.Our seating solutionsmust benefit both the customers and the environment.HÅG shall be ahead of governmental regulations.
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HÅG H05 has been made to give people a long-term relationship with it.
H Å G H 0 5 :
In line with ecological efficiency, we have produced more using less materials and ensured future simple recycling. In relation
to comparable products such as HÅG Credo, HÅG H05 consists of 40% fewer components and is approx. 10% lighter.
It is mounted using only two screws.All plastic and metal components are material type-marked in accordance with ISO.
It does not contain chromium, PVC, composites or joints, which have been cast together.The star base has a high share of
secondary aluminium.The suppliers are relatively few and geographically near.The constructions are simple with easily
replaceable components of a high technical quality.The covers are easy to remove and put on. Simplified functions give high
user-friendliness and few wear points, which together with a timeless design, extends the service life of the product.This
reduces the need for new chairs and consequently the total impact on resources. User-friendliness is an important element
in ecological efficiency.
> ENVIRONMENTAL MANAGEMENTHÅG asa is ISO 14001 certified and, in 1996,HÅG Røroswas the first furniture manufacturer in Scandinavia to beEMAS registered.As an EMAS company, HÅG has com-mitted itself to adopting and implementing an environ-mental policy, regularly reviewing its environmental per-formance and reporting on this publicly. Since 1995 HÅGhas published an environmental report as a part of theannual report. Environmental management is an integralpart of HÅG’s total management system. It applies for thewhole company and is an element in internal audits.HÅG’sGroup management is its Environmental Council, whichmeets quarterly,and the President & CEO is the manage-ment’s representative in environmental issues. HÅG hasan Environmental Manager with specialist and co-ordina-ting responsibility. HÅG Røros has its own responsibilityfor health,safety and environment (HSE).Each departmenthas a local environmental co-ordinator.They also partici-pate in HÅG’s Environmental Forum.
HÅG’s Environmental Programme 2000-2002 is a pro-gramme for follow-up and further development of areas offocus.This is made concrete in annual local plans of actionand is followed up in environmental committee meetings.The areas of focus for the period are:
¶”Green Group”: Local management of office operations,water and energy.¶Knowledge and communication: Internal and externalenvironmental training. Relevant good information and commu-nication about products and the company’s environmentalwork to the customer.¶Research and product development: Future-orientedsustainable products, materials and processes in interactionwith good design and quality.¶Chairs in a cycle: The creation of a closed cycle of materi-als by assuming producer responsibility for scrapped productsfor reuse and recycling.¶Waste handling and supplier development:Minimisation and recycling of waste and further developmentof suppliers in line with HÅG’s Environmental Philosophy.
Meeting of objectives in 1999¶Agreement with Fretex on recycling of textile waste¶Reduction of waste for waste dumps at Røros by 39%¶77% reuse of packaging for purchased goods ¶25% of the suppliers have been EMAS or ISO 14001 approved.¶HÅG H05 ready for launching
Important objectives 2000-2002¶«Chair Care» programme: continuous focus on reuse and recycling of chairs¶Environmental knowledge «The Natural Way - Naturally» for all employees ¶Further reduction of waste¶Elimination of waste for waste dumps from HÅG Røros¶Active participation in external research and pilot projects ¶Commencement of the development of an ecologically compatible chair¶Introduction of at least one recycled component per annum¶Discussion of environmentally-friendly service and spareparts policy¶Supplier development in the USA
> ENVIRONMENTAL COSTSHÅG has no accounting obligations or provisions for envi-ronmental activities.Environmental costs in 1999 amountto NOK 200,000 and are entered as expenditure as theyare incurred.
> PRODUCTSHÅG’s product development always incorporates envi-ronmental criteria, as construction, choice and consump-tion of materials entail the greatest future environmentalimpact.We must create more using less materials anddesign products so that they either form part of closedindustrial cycles or are returned to the organic cycle ofnature.The question is not only whether we are ecologi-cally effective in what we do,but the impact which this hason the environment. It is easy to create a double-edgedsituation of technological progress which,on the one hand,results in materials with technically higher quality and alonger service life, but which, on the other hand, mayconstitute potential health or environmental hazards.
LEAVES OF ABSENCE SAFETY
5%
6%
7%
8%
6
12
18
24
1999
1998
1997
1996
1995
1999
1998
1997
1996
1995
40
80
120
160
H valueF value
H F
ENERGY AND WATER
5
10
15
20
25
Water (1000 m3)Oil (1000 l)Electricity (kWh mill.)
1999
1998
1997
1996
1995
50
100
150
1999
1998
1997
1996
1995
1994
1993
WASTE FOR WASTE DUMPS
MixedWoodHazardous wastePlastic filmProduced units
«Design for reincarnation» - a challenge for the wholevalue chain. HÅG has entered into co-operation withRohner Textil in Switzerland on design and production of anew fabric collection for HÅG based on “Climatex LifeCycle”.This is a 100% degradable textile. HÅG Scio withrecycled bottle caps as the raw material is a good examplethat it is possible for waste to be recycled into a more refinedproduct.We are continuously working with new compo-nents, but it is difficult to find recoverable waste materials,which meet requirements for processing,strength and appe-arance.There is a challenge for the supplier industry to findwaste fractions, which can become new raw materials.Systems are required for returning and waste sorting ofmore types of material, a task for the public authorities,companies and consumers.“It is not only about doing things right,but about doing the right things”.
Industrial EcologyHÅG participates as a core company in the P2005 “IndustrialEcology” research programme at the Norwegian Universityof Science and Technology, NTNU, Trondheim. We areactively involved in the following projects with expected pre-sentation of results in 2000:
¶“Factor X”: How do we create more with less? How do we meetthe future requirements for seating solutions by getting between 4 to10 times more out of the same resources compared with the currentconsumption?¶Closed cycles: How do we achieve as many closed cycles ofmaterials as possible throughout the total life of a product?¶Ecologically responsible companies:How does increased focuson the environment affect strategic planning and corporate culture inindustrial companies?
Chairs in a CycleSecond-hand chairs are often sold or passed on. HÅG’sobjective is that no HÅG chairs are to end up in wastedumps.We have return systems in Scandinavia and Germany,and we believe that active producer responsibility is right.Therefore, each market must optimise its systems and itsmarket communication. In 1999,we only had 500 chairsreturned to us.
“There is a long way to go before the
consumers demand producer responsi-
bility in practice”.
Under the auspices of the National Association of Furnitureand Fixtures and Fittings Manufacturers (MIL),a pilot projectis being conducted on the handling of second-hand officefurniture and equipment. HÅG has been actively involvedin making this a cross-sectoral measure,which will make iteasier to offer user-friendly,ecological and financially soundsystems.The results will be evaluated in 2000.The biggestfuture task will be to make consumers conscious and createenvironmental awareness by communicating knowledge andspreading environmental commitment.
Communication and KnowledgeIn HÅG, activities have been implemented both internallyand for customers and dealers.Local environmental co-ordi-nators with instructor training from the educational concept“The Natural Way - Naturally” implement and quality assurethis training. Environmental knowledge is part of HÅGAcademy’s Basic Training for new employees.
Customers’ demand and requirements for environmentaldocumentation have decreased in 1999! It looks as if exe-cutives and buyers actually neither can nor want to be envi-ronmentally aware in their purchasing,not even those whohave a marketed environmental policy. HÅG is still con-cerned with making environmental information more easilyaccessible. Our Environmental Binder with environmentalinformation about products and materials is updated on acontinuous basis. HÅG participates in a Nordic cross-sectoral project on the development of green labels (GL)based on life cycle analyses (LCA) in order to give usersfacts in a comprehensible, clear and comparable manner.Official GL registers are set up in the individual country.HÅG Conventio has the first GL for the furniture industry in theNordic countries!
H Å G R Ø R O S :
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> GREEN ACCOUNTS HÅG RØROSHÅG’s factory area is of 50,000 m2,25% of which is pro-duction premises, approx. 10% parking spaces and therest natural vegetation.At the end of 1999, there were276 employees at the factory in addition to 73 man-yearsin the local community. HÅG Røros produced 228,500chairs as well as mechanical components for 30,500chairs for HAG Inc. HÅG’s production has a limitedimpact on the external environment. HÅG does notcarry on any activities,which are subject to a licence noris HÅG subject to control from the Norwegian StatePollution Control Authority.HÅG’s industrial area doesnot have contaminated soil.The main processes are pro-cessing of steel and finishing of metal components as wellas drawing, assembly and packing. HÅG has an epoxycoating plant for finishing. Processes with a potentialimpact on the environment are degreasing of metal andremoval of hardened epoxy from equipment.These takeplace in a phosphate bath and by pyrolysis respectively.
Working Environment In the internal climate survey in 1999, the working envi-ronment received a high score (4.9 out of a possible 7points).A new production concept for HÅG Credo andHÅG H05 based on ergonomic principles has been intro-duced in co-operation with the employees.A new humi-difier system improves the air quality.The turnover inthe permanent staff was 5.9%.
Absence due to Illness and Safety In 1999, the absence due to illness has been 8.6% onaverage for all employees at Røros. The target is toreduce this figure to 6% in 2000, one measure being atrial scheme with own reporting.
Energy and Water In the autumn of 1999, improvements were made to theventilation system,resulting in reductions in energy con-sumption.
Waste HandlingThere has been a reduction in waste-to-waste dumps,primarily because of recycling of textile waste, no moreuse of disposable tableware in the canteen and bettersorting of waste at source.There has been an increase ina few waste categories as a result of the purchase of alarge defective consignment of carton packaging andbetter waste sorting routines.
Waste Categories Unit Treatment 1999
STEEL 207.6 ton Recycling ¶Nails
CARDBOARD/PAPER 56.4 ton Recycling ¶Cardboard
PLASTIC FILM 5.2 ton Recycling ¶Plastic film
WOOD 36.2 m3 Recycling ¶Energy
COOLING FLUID/OIL 1 200 litre Recycling ¶Energy
LEATHER 9.8 ton Waste for waste dumps
MIXED 228 m3 Waste for waste dumps
WASHING WATER 14 000 litre Waste for waste dumps
Emissions and DischargesTo the air, water, ground: None
SuppliersApprox. 2/3 of a HÅG chair is made outside HÅG Røros.HÅG has 78 contract suppliers.They must document theirenvironmental impact and are classified in HÅG’s evalua-tion system. 25% of the suppliers have introduced systemssuch as EMAS or ISO 14001, and a further 30% of thesuppliers are working on the introduction of such systems.
TransportHÅG purchases and manages all transport services itself.The degree of utilisation has been 83.1% in 1999.Together with Linjegods/BTL, HÅG has a project aimedat mapping, evaluating and weighting environmentalfactors attached to the company’s transport of goods.In 1999, we have laid the foundation for a future envi-ronment-friendly logistics system. Focus and measure-ment parameters have been set up towards 2003.
1999199819971996
1999199819971996
WASTERAW MATERIALS
1
2
3
4
5
6
7
Palle
ts
Card
boar
d
Plas
tic fi
lm
Leat
her
Fabr
ics (m
ostly
woo
l)
Woo
d
PUR
foam
Ther
mop
last
ics
Recy
cled
PP
Alum
iniu
m
Stee
l
10
20
30
40
50
Cool
ing
fluid
/oil
(100
0 l)
Was
hing
wat
er (1
000
l)
Mixe
d (m
3)
Woo
d (to
n)
Leat
her
(ton)
Plas
tic fi
lm (t
on)
Pape
r (to
n)
Stee
l (hu
ndre
d to
n)
10
20
30
40
50
60
70
Plas
tic fi
lmCa
rdbo
ard
Leat
her
Fabr
icsG
lue
Woo
dPU
R fo
am
0.5
1.0
1.5
2.0
Mixe
dFa
brics
Plas
tic fi
lm
Pape
r
19991998
1998 1997
1999
WASTE PER UNIT
Kg
ENERGY AND WATERRAW MATERIALS
Ton
3000
6000
9000
12000
Wat
er (m
3)G
as (C
CF)
Elec
trici
ty (k
Wh
1000
)
Total 1999Total 1998Per unit 1999Per unit 1998
H A G I N C . :
> GREEN ACCOUNTS HAG INC. USA Since 1981, HAG Inc. has had sales and production inGreensboro, North Carolina.At the end of 1999, therewere 40 employees.The principal activities of HAG Inc.are cutting and sewing of covers and assembly andpacking of chairs.Most components arrive in containersfrom Røros, the rest are purchased locally. In 1999,HAGInc. delivered 30,500 chairs for the North Americanmarket. All transport services are purchased andcomprise forwarding, furniture and package transportby approx.1/3 each.The chairs are forwarded in cartonsor ready mounted wrapped in blankets.
Environmental ManagementAll employees received environmental training in 1999.HAG Inc. has as an objective to become ISO 14001certified in 2001.
MarketIn 1999, HAG Inc. participated at EnvironDesign3 as asponsor and exhibitor.HÅG’s environmental profile andHÅG Scio «Bottle Cap» have been in focus in variouscontexts in 1999. In connection with the ”NationalRecycling Day”, a competition on HÅG Scio was heldfor school children at 100 schools in the Greensboroarea, and a workshop on sustainable production forarchitects and contractors was held at NC StateUniversity.A brochure has been prepared which com-municates HÅG’s environmental philosophy and sustai-nable production.The company has had positive feedbackon this brochure from the market.HAG Inc.will continueits focus on the environment and sustainability in itsmarketing in 2000.
Working EnvironmentIn 1999, the office premises were converted into a“Lifestyle Design Center”, which is a combined officeand showroom with great improvements in the workingenvironment, in particular light and air.
Absence due to illness: 0.5%
Waste HAG Inc. has entered into an agreement with the cityadministration in Greensboro on collection and sortingof recyclable waste.
Waste Categories Unit Treatment 1999
PALLETS Reuse
WOOD Recycling
METAL Recycling
LEATHER Recycling
CARDBOARD/PAPER 51.62 ton Recycling
PLASTIC FILM 0.06 ton Recycling
FABRICS 2.86 ton Waste for waste dumps
MIXED 57.56 ton Waste for waste dumps
Suppliers Documentation has been obtained on materials for a local version of HÅG’s Environmental Binder.
Transport No activities aimed at purchased transport services wereimplemented in 1999.
For further details,please contact President & CEO FredrikEvjen or Environmental Manager Kjersti Kviseth, e-mail:[email protected]