Content

4.1 segment reporting by business units
4.2 sales to customers and tangible assets by countries and regions
4.3 sales revenue with key accounts
4.4 total income
4.5 other operating income
4.6 personnel expenditure
4.7 other operating expenses
4.8 financial result
4.9 income tax expenses
4.10 earnings per share

4.1 segment reporting by business units

As mentioned in paragraph 2.1 business activities of Orell Füssli Group are designated into three segments that provide the basis for the internal segment reporting by business units. Segment reporting provides information on tangible assets and the income statement to the level of earnings before interest and taxes. It follows the accounting principles in accordance with IFRS.

Industrial Systems

Disclosures in connection with the production and marketing of machineries and systems for encoding and personalisation of any printable products.

Security Printing

Disclosures in connection with the production and marketing of banknotes, security documents, passports and further documents with high and highest security requirements.

Book Retailing

Disclosures in connection with the sale of books and similar products in numerous bookstores of the German-speaking part of Switzerland and on the Internet (www.books.ch and www.storyworld.ch).

Business activities disclosed as “Other” include the publishing units as well as infrastructure services. Their size is not sufficiently material to be disclosed separately in the segment reporting.

Financial results, results from associates and income taxes remain unallocated, as these positions are governed on a Group level rather than by business units. Inter-segment sales and expenses are eliminated based on normal commercial terms and conditions that would be provided to third parties. The consolidation effects are also disclosed as unallocated.

segment results 2010
in CHF '000
Industrial
Systems		 Security
Printing		 Book
Retailing
Other		 Total
segments
Unallocated		 Total
Group
Total gross segment sales
 78,842 100,556 119,858 14,676 313,932 – 313,932
Inter-segment sales
 309 – 3 27 339 –339 –
Sales to customers
 79,151 100,556 119,861 14,703 314,271 –339 313,932
Depreciation and impairment
 –3,855 –9,019 –4,285 –215 –17,374 –100 –17,474
Earnings before interest and taxes (EBIT)
 –903 13,993 2,153 –374 14,869 –773 14,096
Financial result
 –75 –75
Share of profit from associates (Note 4.23)
 – –
Income tax expenses
 –1,916 –1,916
Net income for the period
 12,105
Total tangible assets at 31 December 2010
 13,933 75,790 9,826 60 99,609 116 99,725

segment results 2009
in CHF '000
Industrial
Systems		 Security
Printing		 Book
Retailing
Other		 Total
segments
Unallocated		 Total
Group
Total gross segment sales
 72,355 85,322 123,606 21,094 302,377 – 302,377
Inter-segment sales
 181 1 23 32 237 –237 –
Sales to customers
 72,536 85,323 123,629 21,126 302,614 –237 302,377
Depreciation and impairment
 –2,880 –4,061 –2,938 –331 –10,210 –87 –10,297
Earnings before interest and taxes (EBIT)
 –4,427 16,704 6,308 –217 18,368 4,760 23,128
Financial result
 –2,003 –2,003
Share of profit from associates (Note 4.23)
 – –
Income tax expenses
 –2,993 –2,993
Net income for the period
 18,132
Total tangible assets at 31 December 2009
 16,633 81,080 12,614 335 110,662 173 110,835

4.2 sales to customers and tangible assets by countries and regions

Industrial Systems and Security Printing are the two business units whose customer relations exist worldwide without any geographic market specifications. The business segment Book Retailing and other activities find their customers mainly in Switzerland and the neighbouring countries. In the 2010 and 2009 financial years, no recorded sales revenue of a single country was material in an extent that would require separate disclosure, apart from Switzerland.

Therefore, the Group allocates its sales revenue in the following geographic segments as hitherto:

sales to customers by region
in CHF '000
 2010 2009
Switzerland
 186,741 180,105
Germany
 13,175 14,326
The rest of Europe and Africa
 48,413 69,061
North and South America
 21,476 11,235
Asia and Oceania
 44,127 27,650
Total sales by region
 313,932 302,377

Total sales are allocated based on the country in which the customer is located.

The Orell Füssli Group owns tangible assets in the following regions:

tangible assets by region
in CHF '000 at 31 December
 2010 2009
Switzerland
 85,792 94,202
Germany
 12,175 14,563
The rest of Europe and Africa
 567 679
North and South America
 1,127 1,391
Asia and Oceania
 64 –
Total tangible assets by region
 99,725 110,835

4.3 sales revenue with key accounts

Each business unit of the Orell Füssli Group serves a large number of different customers. In the 2010 and 2009 financial years, none of them has generated sales revenue for the Group in an extent that would require separate disclosure. The business segment Security Printing generates the most significant sales revenue with key accounts; among them are national bank institutions and public authorities. The Group does not provide names or details about these customers. However, Swiss National Bank Ltd is a major shareholder of the Orell Füssli Group and, therefore, further information on related-party transactions has to be disclosed in note 4.39.

4.4 total income
in CHF '000
 2010 2009
Sales of goods and products
 317,117 305,758
Revenues from license fees
 593 528
Total income
 317,710 306,286

4.5 other operating income
in CHF '000
 2010 2009
Rental income from operating leases
 570 764
Other income
 3,208 3,145
Total other operating income
 3,778 3,909

4.6 personnel expenditure
in CHF '000
 2010 2009
Wages and salaries
 73,790 74,440
Social security costs
 5,535 5,447
Pension costs by contribution plans
 1,743 2,135
Pension costs by defined benefit plans (refer to note 4.28)
 2,530 1,559
Other personnel expenditure
 3,534 5,088
Total personnel expenditure
 87,132 88,669

4.7 other operating expenses
in CHF '000
 2010 2009
Marketing and distribution expenses
 13,545 14,750
Operating lease expenses
 12,753 11,870
Repairs and maintenance
 4,621 4,491
Administration expenses
 6,672 6,650
Other operating expenses
 9,713 6,925
Total other operating expenses
 47,304 44,686

4.8 financial result
in CHF '000
 Expense Income Balance 2010 Expense Income Balance 2009
Interest income and expenses
Bank borrowings
 –702 1,012 310 –602 500 –102
Finance lease liabilities
 –171 – –171 –227 15 –212
Total interest income and expenses
 –873 1,012 139 –829 515 –314
Other finance income and expense
Net gains (losses) from securities held for trade
 – 1,127 1,127 –297 –313 –610
Dividend income
 – 214 214 – 145 145
Share of profit/(loss) of associates
 –60 – –60 – 88 88
Net gains (losses) from foreign exchange differences
 –1,513 476 –1,037 –2,212 1,251 –961
Bank charges and other finance cost
 –458 – –458 –351 – –351
Total other finance income and expense
 –2,031 1,817 –214 –2,860 1,171 –1,689
Total financial result
 –2,904 2,829 –75 –3,689 1,686 –2,003

4.9 income tax expenses
in CHF '000
 2010 2009
Current income tax
 4,432 3,293
Deferred income tax (refer to note 4.29)
 –2,516 –300
Total income tax expenses
 1,916 2,993

The income taxes on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the profits of the consolidated companies as follows:

reconciliation of the income taxes
in CHF '000
 2010 2009
Profit before income tax
 14,021 21,125
Weighted average applicable tax rate of the Group
 14.3% 14.2%
Income tax calculated
 2,011 2,993
Different income tax rates
 314 –23
Upcoming income tax rate changes
 – –2
Expenses not deductible for income tax purposes
 154 145
Revenue not subject to income tax
 –367 –361
Additions / reversals of tax loss carry-forwards
 17 –2
Adjustments to deferred tax assets
 –52 459
Tax effects related to other periods
 –35 –213
Other
 –126 –3
Income tax recognised in the income statement
 1,916 2,993

Certain foreign entities based in countries with higher income tax rates than in Switzerland did not generate any taxable profits in 2010 and 2009. As in the previous year, Orell Füssli Holding Ltd could claim the participation exemption on the gain of the disposal of investments. Also in the 2009 financial year, such additional profit could be recorded on the disposal of that investment. Consequently, in 2010 and 2009 financial years the Group’s weighted average applicable tax rate was lower on a long-term consideration.

4.10 earnings per share
At 31 December
 2010 2009
Net income for the period in CHF '000
 10,593 14,699
Weighted average numbers of shares in issue (in thousands)
 1,960 1,960
Earnings per share (in CHF)
 5.40 7.50

In terms of IAS 33 no dilution effects per share occurred either in 2010 or 2009.