Annual Report 2006 - Munters

NotesAmounts shown in million Swedish kronor (SEK M) unless otherwise indicated.Amounts in parentheses indicate values for the preceding year.CONTENT NOTESNotePage1 48 Company information2 48 Accounting principles3 52 Business Combinations4 52 Segment reporting5 53 Other operating income and operating expenses6 53 Depreciation and impairments7 54 Leasing8 54 Financial income and expenses9 54 Income taxes10 55 Earnings per share11 55 Tangible assets12 56 Patents, licenses, brands and similar rights13 56 Goodwill14 56 Participation in subsidiaries15 57 Participation in associated companies16 57 Prepaid expenses and accrued income17 57 Financial instruments18 57 Equity19 59 Interest-bearing liabilities20 59 Provisions for pensions and similar commitments21 61 Other provisions22 61 Accrued expenses and deferred income23 61 Pledged assets and contingent liabilities24 61 Transactions with related parties25 61 Average number of employees, absence due to illnessand gender distribution26 62 Wages, salaries and other remuneration and socialsecurity expenses27 63 Remuneration to Board members and senior executives28 63 Outstanding incentive programs29 64 Fees to auditorsNOTE 1 COMPANY INFORMATIONMunters AB (publ) is a Swedish public limited company registered with theSwedish Companies Registration Office. Its Corporate Registration Number is556041-0606. The registered office of the Board Directors of Munters is inSollentuna Municipality in Sweden.The principal operations of the Group are described in Note 4. TheCompany’s shares are listed on the OMX – Nordic Mid Cap list.The consolidated accounts for the fiscal year ended 31 December 2006were approved by the Board and the President on 7 March 2007 and will bepresented to the Annual General Meeting on 24 April 2007 for adoption.NOTE 2 ACCOUNTING PRINCIPLES2.1 Regulations appliedThe consolidated accounts have been prepared in accordance with theInternational Financial Reporting Standards (IFRS). Since the Parent Company isan EU company, the IFRS, approved by the EU, is the only regulations applied.Moreover, the consolidated accounts have been prepared in accordancewith Swedish law through the application of the Swedish Financial AccountingStandards Council’s RR 30:05 recommendation (supplementary accountingrules for groups).The Parent Company’s annual report has been prepared in accordance withSwedish law and through application of the Swedish Financial AccountingStandards Council’s RR 32:05 recommendation (Accounting for legal entities).This implies that the IFRS valuation and disclosure rules are applied, with theexception of the deviations indicated in the section entitled “Parent Company’saccounting principles.”2.2 Basis on which the accounts have been preparedThe consolidated accounts are based on historical acquisition values, with theexception of derivatives, financial assets available for sale and financial assetsvalued at their fair value via the income statement.2.3 Basis on which the consolidated accounts have been preparedThe consolidated accounts encompass the Parent Company and its subsidiaries.The financial statements for the Parent Company and its subsidiaries thatare included in the consolidated accounts refer to the same period and havebeen prepared in accordance with the accounting principles that apply to theGroup.All intra-Group transactions, revenues, costs, profits or losses that arise intransactions between companies included in the consolidated accounts havebeen entirely eliminated.SubsidiariesSubsidiaries refers to a company in which the Parent Company directly orindirectly holds more than half of the voting rights or otherwise has a controllinginfluence.A subsidiary is included in the consolidated accounts as of the time of itsacquisition, which is the day when the Parent Company acquires a controllinginfluence, and is included in the consolidated accounts until the day on whichthe controlling influence ceases.All acquisitions are included in the consolidated accounts in accordancewith the purchase method. This implies that the acquisition value is distributedamong acquired assets, commitments and liabilities assumed at the time ofacquisition on the basis of the fair values of these commitments and liabilities.Minority interestThe minority interest is the portion of earnings and of net assets of not whollyowned subsidiaries that accrues to other owners. The minority share in thecompany’s net earnings is included in the earnings reported in the consolidatedaccounts and the share in its net assets is included in the equity reported on theconsolidated balance sheet.Associated companiesAssociated companies refers to companies in which the Parent Companydirectly or indirectly has a long-term holding corresponding to not less than 20percent and not more than 50 percent of the voting rights or otherwise holds acontrolling influence.Associated companies are reported in accordance with the equity method.This means that the consolidated balance sheet includes the acquisitioncost of the shares, plus the Group’s share in the earnings of associatedcompanies after acquisition and after deduction of dividends received. Theconsolidated income statement includes the participation in the earnings of theassociated companies after tax, with deduction, where applicable, ofimpairments of goodwill and amortization of surplus values.Translation of the accounts of foreign subsidiariesThe subsidiaries’ items on the balance sheet are valued in the relevant functionalcurrency, which would normally be identical to the local currency in the particularcountry. The consolidated financial statements are presented in Swedish kronor,which is the Parent Company’s functional currency. The income statement andbalance sheets for the foreign subsidiaries are translated into Swedish kronor inaccordance with the current method. This method implies that the balancesheets are translated at year-end rates. The income statements are translated atthe average exchange-rate during the period. Exchange-rate translationdifferences do not affect earnings, but are reported directly under equity. Thefollowing currency rates have been used in currency translations.48 M U N T E R S A N N U A L R E P O R T 2 0 0 6