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3. Directors’ Annual Report: Activities and fıgures 2009 FRETEX NORGE AS’S OBJECTS ARE: 8. Profit and Loss Account for the Fretex Group, 2009 • to be engaged, via the Fretex companies, in active rehabilitation and qualification of occupationally disabled persons in 9. Balance Sheet for the Fretex Group, as at 31.12.2009 accordance with guidelines prepared by the principals and the authorities empowered to make grants, 10. Fretex Norge AS - Group • to be the owner company of the Fretex companies in that are engaged in recycling and reuse, including 11. Vision, Mission and Values operation of second hand stores as well as other activities that naturally belong under the Salvation Army’s activity area, • to be the owner/partner in other companies with the same objects.

The company must carry on its activities in accordance with the basic values of the Salvation Army. The company is owned by the Norwegian Salvation Army and is part of the Salvation Army’s Social Service.

The company’s head office is located in . The Fretex Group consists of the holding company and the wholly- owned subsidiaries Fretex Øst-Norge AS, Fretex Vest-Norge AS, Fretex Midt-Norge AS and Fretex Nord-Norge AS. Fretex Midt-Norge AS acquired Malvik Produkter AS as at 01.11.2008, Malvik Produkter AS became part of Fretex Midt-Norge AS through a merger as at 01.01.2009.

In addition to the group companies, the Fretex Group consists of the jointly controlled export company Fretex International AS. The Fretex Group has an export partnership with the Swedish Salvation Army, which is a co-owner of Fretex International AS with a shareholding of 49%.

The Group carried on activities in all the counties of Norway, with the exception of Sogn og Fjordane and Hedmark, in 2009. Fretex has been approved as a labour market enterprise in , , Rogaland, Hordaland, Sør-Trøndelag and Finnmark. The activities have comprised:

• 2 paper processing plants. • 4 paper shredding plants. • 12 facilities for sorting and handling of second hand clothes. • 42 stores and 2 warehouse outlets. • 6 Sally Annshop in shop-departments • 2 cafes • Collection of clothes in all the counties of Norway with the exception of Hedmark. • A shoddy factory in and an emergency blanket factory in Forsand. • Bakery, joiner’s shop and packing department in Malvik. • 2 Jobbfrukt departments. • 1 laundry. • Department for Job Training in Sheltered Workshop in Oslo, Jessheim, , Moss, Gol, , , Sandnes, , , Ålesund, , Malvik, Bodø, , Tromsø and Kirkenes. • Organiser of the Supported Employment scheme in Oslo, Drammen, Lillehammer, Bergen, Trondheim, Malvik and Kirkenes. • Organiser of the Permanent Sheltered Employment scheme in Malvik and Trondheim. • Running of art gallery and studio in Bergen. • Training of apprentices in Sandnes, Bergen, Trondheim and Malvik. • Operation of 70 lorries/vans, 5 wheel loaders and 22 trucks. • Operation of canteen in Oslo, Drammen, Sandnes, Trondheim and Malvik.

Directors’ Annual Report 3 In 2009 some shops and departments have moved to new locations. Export market for used clothing has been stable all year, and this seems to continue. Stable and high prices are major factors leading to increased competition also in this market, and it will be necessary to enhance Fretex as the first choice for Fretex Norge AS had 9 employees as at the year-end. The Group had 1,503 employees as at the year-end. 431 of these donors. All major sorting facilities for textiles are now renewed, and sorting capacity has increased substantially. Landfill employees were employed on ordinary terms, 237 were employed in vocational qualification and adapted work under the ban for textiles was launched by law in July 2009, but it did not cause major changes for the group’s practices or strategies. Labour Market Enterprise scheme, 28 were employed under the Permanent Sheltered Employment scheme, whereas 807 It has been invested in the development of new collection containers throughout the year, and after a period of reduction in were employed under other labour market schemes. the number of deployed containers, Fretex has made plans for an increased collection of textiles.

REPORT ON THE ANNUAL FINANCIAL STATEMENTS There are still many opportunities for increased collaboration between companies within the Fretex group, in addition to development areas in relation to the rest of the owner organization. Fretex Norge AS generated a total turnover of NOK 17,582,579 in 2009, and the financial statements show a profit for the year of NOK 63,598. As at 31.12.2009, the company has total assets of NOK 19,079,519 of which the equity capital constitutes In the spring of 2009 the staff in the holding company was expanded with a new Operational Director og Quality Director, NOK 5,377,965 (28.2 %). and this has increased resources in a number of key areas. There is reason to believe that the holding company model provides a good foundation for success in the future. The Group generated a total consolidated turnover of NOK 398,084,253 in 2009, and the consolidated financial statements for the Group show a profit for the year of NOK 4,571,896. As at 31.12.2009, the Group has total assets of NOK 127,745,702, FINANCIAL RISK of which the equity capital constitutes NOK 60,018,654 (47.0 %). The company’s financial risk is attached to the level of interest rates on the financial markets. The company may draw on The Board of Directors is not aware of any circumstances that are of importance to an assessment of the position of the the Fretex Group’s excess liquid funds within the Group account system. company and the Group that are not disclosed in the profit and loss account and in the balance sheet with accompanying notes. The Group’s financial risk is first and foremost attached to exchange rate fluctuations, but this risk is minimal, as the foreign currency exposure is very low. The Group does not use currency hedging, as this is assumed to be the most profitable REPORT ON THE PROSPECTS FOR THE COMPANY AND THE GROUP choice in the long term. The Group’s liquidity is good.

2009 was a year with a lot of emphasises on the Equass certification. The European Quality in Social Services is a European GOING CONCERN Quality System aiming at gaining and sustaining a certain level of quality in service delivery. Fretex is one of the first service providers to accomplish this certification in Norway. The new Labour and Welfare Administration (NAV) who is the most Based on the company’s situation, the Board of Directors finds that the company meets the conditions for a going concern, significant and important stakeholder and customer for Fretex, has stated that a quality certification will be mandatory and the annual financial statements have consequently been prepared based on a going concern assumption. for social service businesses in the near future. It is therefore a strength to already have this certification. After two years of membership in the European Platform for Rehabilitation (EPR), it is still an asset to be one of the three Norwegian PROFIT FOR THE YEAR AND ALLOCATIONS members in this network of leading providers of vocational rehabilitation services in Europe. The Board of Directors recommends that the profit for the year be allocated as follows: There is reason to believe that, in the years to come, there will continue to be a need for the competence, quality and Carried forward to other reserves: NOK 63,598 experience that the Fretex Group has in assessment, qualification and provision. Throughout 2009 some of the traditionally services has been reduced in some of geographic areas, but it has been replaced by new services. Fretex has won several WORKING ENVIRONMENT tenders, both as a sole provider and in co-operation with other service providers. Some of the tenders have been of a short time span, and in these situations it has been a challenge to have the most suited staff at all time. The company attaches importance to ensuring a good working environment for its employees. In pursuance of the current Acts and Regulations, the company keeps records of the total absence from work due to illness among its employees. The Fretex has in 2009 emphasised consolidation, in addition to development in some areas. Even if the sales in the stores rate of absence from work due to illness was 0.5 % in 2009. were a little less than expected in the last few months of the year, the overall development in sales figures has been positive. There has been an upgrading of many stores into a joint concept. The new Sally Ann shop in shop-departments In the Group, the rate of absence from work due to illness was 10.5 % for employees who are employed on ordinary terms have been a vital contribution to the stores, and are attracting new customer groups. and 14.6 % for employees who are employed on special labour market terms.

There is still great interest in environmental issues, second hand and redesign. This is a positive trend for Fretex. At the same time there has been a significant increase in competition in this field in 2009. This makes it necessary to reconsider the current growth strategy, which will have priority in the coming year.

4 Directors’ Annual Report Directors’ Annual Report 5 In the autumn of 2008, the Fretex Group performed an employee satisfaction survey among its ordinary employees and Sandnes, 25.05.2010 among employees under the Adapted Work scheme and the Permanent Sheltered Employment scheme. The survey shows that the employees feel that they are engaged in very meaningful work tasks. The survey also shows that there is a high On the Board of Directors for Fretex Norge AS level of well-being and job satisfaction among the employees.

EQUALITY OF STATUS AND EQUAL OPPORTUNITIES

The company has 5 male and 4 female employees. The company’s Board of Directors consists of 6 women and 5 men. The company’s staff policy is regarded as gender neutral in all areas. In our opinion, matters concerning equality of status and equal opportunities have been handled satisfactorily, and no specific measures have been implemented or planned in this Elisabeth Henne Clive Adams Jan Peder Fosen area. Chairwoman of the Board Deputy Chairman of the Board

273 out of 431 employees employed on ordinary terms in the Group are women (63.3 %). The share of women in executive positions is 56.1 %. As at the end of 2009, the Group’s management team consisted of 7 men and 4 women.

The average salary for women (translated into full-time positions) is NOK 51,517 lower than for men in the executive positions. The reason for this difference is that there is a higher share of men than women in senior executive positions. Knut-Johan Onarheim Svein Andersen Lise O. Luther For ordinary positions, the average salary for women is equal to men’s. Based on the answers provided by the respondents in the employee satisfaction survey, 87.7 % of the ordinary employees find that the Group provides equal opportunities for its employees.

NON-DISCRIMINATION AND ACCESSABILITY Sissel Skogly Hege Jeanette Lillebø Kristin Kleve Hoff The board can’t find that there is made any discrimination of employees, neither in recruitment, due to ethnicity, national origin, ancestry, color, language, religion or belief. Accessibility to persons with special needs is attempted to be solved in the shops and other facilities.

EXTERNAL ENVIRONMENT Wenche Karin Grønnevik Thor Fjellvang The company does not have any discharges or emissions that require a licence, and the Board of Directors is not aware of Managing Director the company causing any pollution of the external environment in any other way.

The Group does not currently have any discharges or emissions that require a licence. Following a demand from the County Governor in Rogaland, the company has submitted an application for a licence for discharges and emissions for the activities in Gausel.

Apart from the above, the Board of Directors is not aware of the Group causing any pollution of the external environment in any other way.

6 Directors’ Annual Report Directors’ Annual Report 7 Proƒit and Loss Account for the Fretex Group, 2009 Balance Sheet for the Fretex Group, as at 31.12.2009

Fretex Fretex Fretex Fretex Fretex Elimina- Fretex Fretex Fretex Fretex Fretex Fretex Elimina- Fretex Norge Øst-Norge Midt-Norge Vest-Norge Nord-Norge tions Group International Total Norge Øst-Norge Midt-Norge Vest-Norge Nord-Norge tions Group International Total

ASSETS OPERATING INCOME AND OPERATING COSTS FIXED ASSETS OPERATING INCOME Tangible fixed assets 2 930 000 13 458 200 3 233 400 14 641 636 2 230 000 -50 600 36 442 636 0 36 442 636 Sales income 17 376 383 99 446 178 26 364 491 98 404 195 11 872 908 -18 333 249 235 130 906 51 277 615 286 408 521 Fixed asset investments 12 710 000 200 000 1 000 13 000 0 -5 780 000 7 144 000 0 7 144 000 Sales of services to the public sector 0 67 007 021 17 876 682 61 218 651 12 755 709 0 158 858 063 0 158 858 063 Total fixed assets 15 640 000 13 658 200 3 234 400 14 654 636 2 230 000 -5 830 600 43 586 636 0 43 586 636 Investment grants 0 210 000 0 0 254 564 0 464 564 0 464 564 Other operating income 206 196 2 478 018 399 328 1 175 767 8 700 -637 290 3 630 719 0 3 630 719 CURRENT ASSETS Total operating income 17 582 579 169 141 217 44 640 501 160 798 613 24 891 881 -18 970 539 398 084 252 51 277 615 449 361 867 Property for sale 0 0 Stocks 0 1 265 807 920 655 2 616 863 357 901 -22 547 5 138 679 0 5 138 679 OPERATING COSTS Trade debtors 2 197 750 4 423 829 2 647 229 5 444 775 464 415 -2 993 147 12 184 851 1 228 478 13 413 329 Cost of sales 0 19 955 414 5 098 804 14 080 147 2 154 890 -318 832 40 970 423 46 138 865 87 109 288 Other accounts receivable 809 138 4 516 245 1 181 447 7 518 455 1 247 446 0 15 272 731 1 812 468 17 085 200 Change in stocks of own-manufactured goods 0 0 -63 627 298 036 0 2 146 236 555 0 236 555 Cash in bank 432 631 24 217 446 7 428 628 24 131 166 5 730 868 0 61 940 739 6 974 496 68 915 235 Payroll costs 7 211 673 96 904 776 25 461 929 89 343 342 11 991 614 -513 998 230 399 336 2 124 560 232 523 896 Total current assets 3 439 519 34 423 327 12 177 959 39 711 259 7 800 630 -3 015 694 94 537 000 10 015 442 104 552 442 Depreciation of tangible fixed assets 950 483 4 423 481 1 061 425 3 826 375 667 417 -26 400 10 902 781 0 10 902 781 Writedown of tangible fixed assets 0 210 000 0 0 221 838 0 431 838 0 431 838 TOTAL ASSETS 19 079 519 48 081 527 15 412 359 54 365 895 10 030 630 -8 846 294 138 123 636 10 015 442 148 139 078 Other operating costs 9 430 332 46 971 603 13 177 027 50 420 188 9 410 348 -18 137 709 111 271 789 2 122 034 113 393 823 Total operating costs 17 592 488 168 465 274 44 735 558 157 968 088 24 446 107 -18 994 793 394 212 722 50 385 459 444 598 181 LIABILITIES AND EQUITY CAPITAL Operating profit/loss -9 908 675 943 -95 057 2 830 525 445 774 24 254 3 871 531 892 156 4 763 687 EQUITY CAPITAL Called-up and fully paid equity capital 5 250 000 5 000 000 450 000 7 742 975 506 696 -10 650 000 8 299 671 1 338 582 9 638 253 FINANCIAL INCOME AND FINANCIAL COSTS Retained earnings 127 965 17 127 761 4 253 035 19 828 772 5 584 596 4 796 853 51 718 982 2 297 396 54 016 378 Income from investments in associated companies 8 048 0 0 0 0 0 8 048 0 8 048 Total equity capital 5 377 965 22 127 761 4 703 035 27 571 747 6 091 292 -5 853 147 60 018 653 3 635 978 63 654 631 Income from interest 126 147 341 597 225 416 304 965 78 152 0 1 076 277 80 221 1 156 498 Other financial income 389 32 618 0 6 583 0 0 39 590 420 023 459 613 Pension commitments 266 394 0 0 0 876 371 0 1 142 765 46 670 1 189 435 Interest charges paid 60 995 26 986 274 164 37 420 2 963 0 402 528 0 402 528 Long-term debt 10 377 935 0 3 219 678 189 809 0 0 13 787 422 0 13 787 422 Other financial costs 83 15 036 0 5 902 0 0 21 021 878 717 899 738 Trade creditors 1 806 930 7 265 820 3 056 502 7 808 680 1 212 989 -2 993 147 18 157 774 5 508 664 23 666 438 Net financial income 73 506 332 193 -48 748 268 226 75 189 0 700 366 -378 473 321 893 Unpaid government charges and special taxes 257 594 7 172 639 1 673 202 4 976 972 475 554 0 14 555 961 89 742 14 645 703 Profit/loss on ordinary activities 63 598 1 008 136 -143 805 3 098 751 520 963 24 254 4 571 897 513 683 5 085 580 Other short-term debt 992 700 11 515 308 2 759 943 13 818 688 1 374 423 0 30 461 062 734 389 31 195 451 Total debt 13 701 554 25 953 767 10 709 325 26 794 149 3 939 337 -2 993 147 78 104 985 6 379 464 84 484 449

Extraordinary income 0 0 TOTAL LIABILITIES AND EQUITY CAPITAL 19 079 519 48 081 528 15 412 360 54 365 896 10 030 629 -8 846 294 138 123 638 10 015 442 148 139 080

PROFIT/LOSS FOR THE YEAR 63 598 1 008 136 -143 805 3 098 751 520 963 24 254 4 571 897 513 683 5 085 580

Additional disclosures: Brought forward to other reserves 63 598 1 008 136 -143 805 3 098 751 520 963 24 254 4 571 897 513 683 5 085 580

8 Financial statements Financial statements 9 Fretex Norge AS - Group Vision Profit and loss account 2009 2008 2007 2006 2005 2004 2003

OPERATING INCOME AND OPERATING COSTS We give people reasons to believe in the future! OPERATING INCOME Sales income 235 130 907 233 090 644 208 254 900 188 475 289 193 651 559 186 055 565 179 584 696 Sales of services to the public sector 158 858 063 144 744 903 131 656 111 121 084 209 120 039 986 101 476 925 88 350 380 Investment grants 464 564 2 389 068 923 233 395 114 1 356 323 5 071 860 3 139 561 Other operating income 3 630 719 4 601 436 4 012 247 4 148 016 3 080 928 3 344 974 3 753 540 Mission Total operating income 398 084 253 384 826 052 344 846 491 314 102 629 318 128 796 295 949 323 274 828 177

OPERATING COSTS Our mission is to carry on activities aimed at rehabilitation and qualification Cost of sales 40 970 423 44 818 117 41 433 356 38 012 480 35 984 821 36 010 934 34 115 763 of occupationally disabled persons, recycling of resources and operation of Change in stocks of own-manufactured goods 236 555 -12 980 461 058 -2 050 024 964 003 674 846 -1 310 322 second hand stores. Payroll costs 230 399 336 223 798 398 197 393 246 184 711 972 181 510 904 169 452 625 161 481 936 Depreciation of tangible fixed assets 10 902 781 8 855 507 7 778 045 7 732 123 6 953 110 6 155 062 7 470 763 Writedown of tangible fixed assets 431 838 1 950 935 399 000 171 931 1 029 372 4 595 587 2 809 173 Other operating costs 111 271 790 102 581 911 89 447 943 82 439 510 85 571 186 79 706 513 77 100 317 Total operating costs 394 212 724 381 991 889 336 912 648 311 017 993 312 013 396 296 595 566 281 667 630 Values

Operating profit/loss 3 871 529 2 834 163 7 933 843 3 084 636 6 115 400 -646 243 -6 839 453 Openness, engagement, charity/love, profitability.

INANCIAL INCOME AND FINANCIAL COSTS

Income from investments in associated companies 8 048 0 0 0 0 128 750 3 750 Other income from interest 1 048 689 2 619 847 1 904 584 1 144 477 781 516 645 850 1 640 364 Other financial income 67 179 12 477 31 023 25 619 75 183 79 417 363 032 Other interest charges paid 401 946 390 774 125 354 50 466 33 675 36 654 460 282 Other financial costs 21 603 120 146 63 928 68 416 246 932 312 624 178 391 Result of financial items 700 367 2 121 405 1 746 325 1 051 214 576 092 504 740 1 368 473

Profit/loss on ordinary activities 4 571 896 4 955 567 9 680 168 4 135 850 6 691 492 -141 503 -5 470 980

PROFIT/LOSS FOR THE YEAR 4 571 896 4 955 567 9 680 168 4 135 850 6 691 492 -141 503 -5 470 980

10 Financial statements Vision, Mission and Values 11 Layout and production: Markedsavdelingen AS.