Annual Report 2006 - Munters

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NOTE 12 PATENTS, LICENSES, BRANDS AND SIMILAR RIGHTSAcquisition valueGroupParent CompanyAmount on opening date 38 1Acquisition of subsidiary (Note 3) 28 –Capital expenditure for the year 6 3Translation differences for the year –2 –Amount on closing date 70 4Accumulated amortizationAmount on opening date 20 0Acquisition of subsidiary (Note 3) 2 –Amortization for the year 5 1Translation differences for the year 0 –Amount on closing date 27 1Reported value 43 3Patent, licenses and similar rights include SEK 8 M relating to capitalizedexpenses for business and Group accounting systems, as well as SEK 5 Mrelating to a lease in China and brands in the amount of SEK 25 M.NOTE 13 GOODWILLReported value before impairmentsAmount on opening date 367Acquisition of subsidiary (Note 3) 200Translation differences for the year –21Amount on closing date 546Accumulated impairmentsAmount on opening date 3Impairments for the year –Amount on closing date 3Reported value 543Reported goodwill value per cash-generating unit 2006 2005HumiCool, Italy 332 137MCS, Germany 92 96MCS, Norway and Denmark 68 73HumiCool Aerotech, US 45 51MCS, Australia 4 4Other 2 3543 364ImpairmentDuring 2005, an impairment of the entire goodwill value of SEK 3 M wasrecognized attributable to M’Renov, a company that was acquired in 2001 andis part of the MCS Division in France.Impairment testing of goodwill valuesOn 30 September 2006, reported values of goodwill were subjected to routineimpairment testing. The investigations have been carried out for each individualcash-generating unit. The valuation has been based on the discounted futurecash flow. This encompasses forecasts, approved by Group management, forthe next three years. The growth rate after the three years has been cautiouslyestimated at 2 percent. In the calculations, a discount rate that is a nominal ratefor the Group (average weighted capital cost before tax) was used. It wasestablished to be 11.6 percent (10.0). For each acquisition the discount rate hasbeen adapted to a long-term capital structure in the acquired company,whereby the discount interest rate has varied within the interval of 8.1 to 11.6percent. The most significant assumptions pertain to sales growth, thedevelopment of the operating margin, utilization of operating capital employedand the discount rate.The recoverable value was found to exceed the reported values. Consequently,no impairment was necessary. Up to 31 December 2006, there was noindication of any decline in value.Acquisition of operationsThe cash-flow statement shows the impact on cash and cash equivalents withrespect to acquired operations. During 2005, the cash-flow impact pertained tothe payment of additional purchase prices that were previously booked asliabilities in conjunction with the acquisition.NOTE 14 PARTICIPATIONS IN SUBSIDIARIESDirect shareholdingsCountryShare ofvotes andcapital, %ReportedvalueAB Carl Munters (corp. reg. no.556035-1198) Sweden 100 169Munters Betelligungs GmbH Germany 100 4Munters BV Netherlands 100 0Munters Corporation USA 100 2Munters France SAS France 100 26Munters Group Ltd UK 100 0Munters Italy SpA Italy 100 50Munters Korea Co Ltd South Korea 100 0Munters Ltd UK 100 157Munters (Thailand) Co Ltd Thailand 100 1Polygon AS Norway 100 249Polygon A/S Denmark 19 1Indirect shareholdings in Group companieswith significant business operationsCountry659Share ofvotes andcapital, %Munters AG Switzerland 100Munters Air Treatment Equipment (Beijing) Co Ltd China 100Munters A/S Denmark 100Munters Austria GmbH Austria 100Munters Brasil Industria e Comercio Ltda Brazil 100Munters de Mexico S de RL de CV Mexico 100Munters Euroform GmbH Germany 100Munters Europe AB (corp. reg. no. 556380-3039) Sweden 100Munters GmbH Germany 100Munters Inc Canada 100Munters KK Japan 100Munters Mist Eliminator (Beijing) Co Ltd China 100Munters NV Belgium 100Munters Oy Finland 100Munters Poland Sp zoo Poland 100Munters Pte Ltd Singapore 100Munters (Pty) Ltd South Africa 100Munters Pty Ltd Australia 100Munters Service GmbH Germany 100Munters Services France SAS France 100Munters Spain SAU Spain 100Munters Torkteknik AB (corp. reg. no. 556034-6164) Sweden 100Polygon A/S Denmark 56SIAL S.p.A Italy 10056 M U N T E R S A N N U A L R E P O R T 2 0 0 6
NOTE 15 PARTIciPATIONS IN ASSOCIATED COMPANIESAerotechAsia Inc CoCountryShare ofvotes andcapital, %AcquisitionvalueReportedvalue inGroupShares inearnings2006British VirginIslands 50 4 4 –Impairment occurred in the amount of SEK 2 M (0). No business wasconducted in the company. Impairment was calculated at the estimatedrecoverable amount at a possible future liquidation of the company.NOTE 16 PREPAID EXPENSES AND ACCRUED INCOMEGroupParent Company2006 2005 2006 2005Prepaid rent and leases 6 6 1 1Prepaid insurance premiums 9 12 – –Other items 41 32 2 156 50 3 2NOTE 18 EQUITYShare capitalThe share capital SEK 125,000,000 comprises 25,000,000 shares with a parvalue of SEK 5.00. Each share entitles the holder to one vote. All shares carrythe same right to a share in the Company’s assets and profits.ReservesReserve forunrealized gainsReserve fortranslationdifferencesTotalreserves1 January 2005 2 –56 –54Cash flow hedges –3 – –3Translation differences – 140 14031 December 2005 –1 84 83Cash flow hedges 3 – 3Translation differences – –132 –13231 December 2006 2 –48 –46The reserve for unrealized gains consists of the portion of gains and lossesattributable to cash-flow hedges that are classified as effective.The reserve for translation differences consists of differences that arise whenthe income statements and balance sheets of foreign subsidiaries are translatedinto Swedish kronor.NOTE 17 FINANCIAL INSTRUMENTSA financial instrument is defined as a contract that results in a financial assetin a company and a financial liability or equity instrument in another company.Financial instruments include both primary instruments, such as accountsreceivable, accounts payable and shares, as well as derivatives, such asoptions, forward contracts and interest and currency swaps.For a description of financial risk management, refer to the section “Riskmanagement” on pages 30–31, which is part of the financial statements.Financial instruments in addition to those that arise in current operations arerelatively limited within the Munters Group. In addition to the stock optionspresented in Note 28, they consist primarily of currency hedges and interestbearingborrowing with banks (see Note 19).Holding of own sharesIn order to cover its commitments for outstanding option programs, theCompany has acquired its own shares held as treasury stock.NumberPar value, SEK1 January 2005 621,950 3,109,750Sales in 2005 –202,700 –1,013,50031 December 2005 419,250 2,096,250Sales in 2006 –14,000 –70,00031 December 2006 405,250 2,026,250Financial instruments reported at accrued acquisition valueFor accounts receivable, accounts payable and other assets and liabilities thatare reported at accrued acquisition value, reported value corresponds to fairvalue on account of the short maturity.Derivative instrumentsAt the end of the year, there were currency hedges within the Group accordingto the table below. They have been reported at fair value on the balance sheet.CurrencyNet sales amount inlocal currency, 000sReported value,SEK 000sEUR –1,858 130USD 472 925GBP 101 –12DKK 1,715 –4JPY –18,638 115PLN –700 21ZAR 6,000 –60Total 1,115Negative net selling amounts refer to purchasing and positive net selling amounts refer to selling.In total, treasury shares have been acquired for a purchase price of SEK68,870,966, corresponding to an average price including commission ofSEK 169.94 per share.Number of outstanding sharesExcluding treasury shares, the number of outstanding shares at year-endamounted to 24,594,750.Options programOutstanding options programs are described in Note 28.Dividend during the yearThe Annual General Meeting on 26 April 2006 approved the proposal of theBoard of Directors and the President of a dividend amounting to SEK 5.50 pershare, or SEK 135,194,125 in total.Proposed dividendThe Board of Directors proposes that the Annual General Meeting approve adividend of SEK 6.75 per share be paid to the shareholders, or SEK166,014,563 in total.All forward contracts fall due for payment during 2007. In accordance withthe Group’s policy, payments in most cases will be due during the first halfof the year.M U N T E R S A N N U A L R E P O R T 2 0 0 6 57
Page 1 and 2:
Annual Report 2006
Page 3 and 4:
The year in briefOrder intake incre
Page 5 and 6:
From everyday life to highsustainab
Page 7 and 8:
Focus on product development and gr
Page 9 and 10: Munters develops a strategic plan f
Page 11 and 12: Carl Munters’ first sketch of a r
Page 13 and 14: PRODUCTS AND SERVICES CONTRIBUTING
Page 15 and 16: and a bonus program aimed at upper
Page 17 and 18: Many production processes require p
Page 19 and 20: “In many instances, Munters has t
Page 21 and 22: Facts - Dehumidification Division
Page 23 and 24: For insurance companies and constru
Page 25 and 26: “The development of framework agr
Page 27 and 28: Facts - Moisture Control Services (
Page 29 and 30: In Mist Elimination, we develop eff
Page 31 and 32: “The increasingly stringent envir
Page 33 and 34: Facts - HumiCool Division“ Our en
Page 35 and 36: Transaction exposureTransaction exp
Page 37 and 38: DividendFor the 2006 fi scal year,
Page 39 and 40: Work of the Board of DirectorsGener
Page 41 and 42: for implementing the guidelines to
Page 43 and 44: Pro forma 2GEOGRAPHIC REGIONS 2006
Page 45 and 46: 2006 2005 2004GEOGRAPHIC REGIONS Q4
Page 47 and 48: Income statementGroupParent Company
Page 49 and 50: Balance sheetGroupParent CompanyAmo
Page 51 and 52: Statement of the Group’s recognis
Page 53 and 54: Average rateYear-end rateCurrency C
Page 55 and 56: Borrowing costsBorrowing costs are
Page 57 and 58: NOTE 4 CONT.Dehumidification MCS Hu
Page 59: NOTE 9 Cont.GroupDeferred tax asset
Page 63 and 64: NOTe 18 cont.Parent CompanySharecap
Page 65 and 66: NOTe 20 cont.Reported pension costs
Page 67 and 68: NOTE 27 REMUNERATION TO THE BOARD A
Page 69 and 70: Proposed distribution of earningsFu
Page 71 and 72: GLOSSARYAbsolute humidityThe volume
Page 73 and 74: Group ManagementLARS ENGSTRÖMBorn
Page 75: = Production facilities, sales and
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Annual Report 2006 - Munters

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