Swedish Match - Annual Report 2007

Notes for the Parent Company Financial Statements

All amounts referred in the notes to the Parent Company financial statements are in millions of Swedish kronor (MSEK) unless stated otherwise.

For renumeration and other benefits to Parent Company President and other members of Group management, see Note 6. Personnel, page 62.

1. Revenue
The Parent Company’s revenue consist exclusively of sales of nasal snuff in Europe, 6 MSEK (13).

2. Fees and compensation for incurred costs to auditors
Administrative expenses include costs for audit fees in accordance with the table below:

	2007	2006
KPMG
Audit assignments	6	7
Other assignments	5	1
Total	11	8

Audit assignments refer to the examination of the annual report and accounts, the Board of Director’s and the President’s management, other work assignments which are incumbent on the Company’s auditor to conduct, and advising or other support justified by observations in the course of examination or performance of other such work assignments. All else is other assignments.

3. Sick leave within the Parent Company

Percent	2007	2006
Total sick leave	0.97	0.84
of which long-term sick leave	–	–
Sick leave for men	1.20	0.37
Sick leave for women	0.68	1.36
Sick leave for employees under 29	*	*
Sick leave for employees age 30–49	0.88	0.83
Sick leave for employees age 50+	1.23	0.94
* No data provided if the group comprises less than 10 persons.

Long-term sick leave relate to absence due to illness of 60 continious days and is calculated in relation to the total sick leave in hours. Other sick leave is calculated in relation to regular working time.

4. Other income
Other income mainly pertains to the portion of joint administration costs charged to Group companies 36 MSEK (34).

5. Financial items

Income from participations in Group companies	2007	2006
Dividends received	23,166	6,042
Liquidation Group companies	–91	–
Impairment losses	–6,552	–1
Group contribution	1,191	1,329
Total	17,714	7,370

	Income from other
	investments and receivables carried		Interest income and
	as fixed assets		comparable items
	2007	2006	2007	2006
Interest income, Group
companies	6	171	211	113
Interest income, non-Group
companies	–	0	91	53
Net foreign exchange gains/
losses	–5	–395	9	400
Total	1	–224	311	566

	Interest expense and
	comparable items
	2007	2006
Interest expense, Group companies	–631	–227
Interest expense, non-Group companies	–381	–211
Fees, banks and credit institutions	–4	–3
Loss from sale of current investments	–4	–6
Total	–1,020	–447

6. Appropriations

	2007	2006
Difference between reported amortization and
amortization according to plan:
Trademarks	11	11
Total	11	11

7. Taxes

Reported in Income Statement	2007	2006
Tax expense for the period	–18	–281
Adjustment of taxes attributable to prior years	48	–
Deferred tax due to temporary differences	1	–4
Total taxes	30	–285

Reconciliation of effective tax rate	2007		2006
	(%)		(%)
Income before tax		17,009		6,904
Swedish tax rate	28.0	–4,763	28.0	–1,933
Non-deductible expenses	10.8	–1,840	0.7	–50
Non-taxable revenue	–38.7	6,583	–24.6	1,696
Tax attributable to prior
years	–0.3	48	–	–
Other	–0.0	2	–0.0	2
Reported effective tax	–0.2	30	4.1	–285

Tax items reported directly against equity	2007	2006
Current tax in paid Group contributions	10	7
Hedge reserve	–10	–
Total	–1	7

Tax receivable amounts to 67 MSEK (45). In 2007 67 MSEK (53) represents amount to be recovered on income for the year.

The deferred tax asset reported in the balance sheet of 3 MSEK is attributable to a provision. Previous year 2 MSEK was attributable to a restructuring reserve recognized in other liabilities. The change from the previous year is reported as a deferred tax income.

8. Intangible assets

	Trademarks			Licenses & Software		Total
	2007	2006		2007	2006	2007	2006
Cost at beginning of year	114		114	6	5	120	119
Purchase	–		–	1	–	1	1
Cost at end of year	114		114	6	6	120	120
Accumulated amortization at beginning of year	–88		–77	–3	–2	–91	–79
Amortization for the year	–11		–11	–1	–1	–12	–12
Accumulated amortization at end of year	–100		–88	–4	–3	–104	–91
Net book value at end of year	14		25	3	3	17	28

Amortization is included in the following lines of the Income Statement:

	2007	2006
Administrative expenses	–1	–1
Selling expenses	–11	–11
Total	–12	–12

All intangible assets are acquired.

Trademarks are amortized according to plan over ten years. Licenses and software are amortized over three to five years. The acquisition value of assets does not include any interest expenses.

9. Property, plant and equipment

Equipment, tools and fixtures
	2007	2006
Cost at beginning of year	6	7
Purchase	2	1
Sales/disposals	–1	–2
Cost at end of year	7	6
Accumulated depreciation at beginning of year	–5	–4
Depreciation for the year	–1	–2
Sales/disposals	1	1
Accumulated depreciation at end of year	–5	–5
Net book value at end of year	2	1

Depreciation of property, plant and equipment is included in administrative expenses in the income statement in the amount of 1 MSEK (2). The acquisition value of assets does not include any interest expenses.

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