Annual Report 2006 - Munters

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NOTe 28 cont.StartingyearExerciseperiodNumberof issuedoptionsNumber of outstandingoptionson closing dateOptionpremium, SEKExerciseprice,SEK2003 1 Sep 2006–30 March 2007 63,600 10,600 15.80 226.002004 1 Sep 2007–30 March 2008 42,500 42,500 19.80 260.002006 1 Sep 2009–31 March 2010 75,000 75,000 32.80/19.10 341.00181,100 128,100During the year, the option program started in 2002 fell due for payment. Noneof the 114,000 options, with an exercise price of SEK 315, were utilized byoption holders, since the exercise price exceeded the current share price.During the year, the exercise period for the option program started in2003 commenced. The average share price during the exercise period wasSEK 293.51.The fair value of options issued during the year, which was determined usingan appropriate version of the Black-Scholes valuation model, was SEK 32.80per option. Significant input in the model was the average highest and lowestprices paid during the period 28 April – 5 May 2006 of SEK 283.85, the abovementionedexercise price, the options’ exercise period according to the above,volatility of 22 percent, an annual risk-free interest with the same duration as theoptions of 3.46 percent and the estimated dividend for the 2006 to 2008 fiscalyears. The volatility assumption was based on future assessments and thehistoric volatility of the Munters share. Furthermore, consideration was taken tothe fact that the options have restricted liquidity. The exercise price correspondsto 120 percent of the average share price during the period 28 April – 5 May2006. The incoming President acquired options at an exercise price of SEK19.10. The control period for the exercise price was 24 – 31 May 2006, whenthe average price paid for the share was SEK 251.90. The input in the valuationmodel and the exercise price are the same as for other options.Munters also subsidizes the acquisition of shares in Munters made by GroupManagement in October 2005. The subsidy means that during the period up to31 December 2009 or at most to the termination of employment, Munterssubsidizes the interest costs for loan financing of current acquisitions for seniorexecutives. In October 2005, within the framework for the offering, other seniorexecutives jointly acquired 35,000 shares at a cost of SEK 6,825,000. Theincoming President is also included in this subsidy. During 2006, the incomingPresident acquired 12,000 shares at a cost of SEK 2,931,000.NOTE 29 FEES TO AUDITORSGroupParent CompanyAmounts in SEK 000s 2006 2005 2006 2005Ernst & YoungAudit 6,564 5,931 429 429Other assignments 1,311 1,222 – 112OtherAudit 892 646 – –Other assignments 1,100 483 – –9,867 8,282 429 541An audit entails an examination of the annual report and accounts, as well asthe management by the Board of Directors and the President, other tasks forwhich the Company’s auditors are responsible for performing and providingadvice and other council occasioned by this examination or the performance ofother tasks. Other assignments relate mainly to consultation on taxation matters.64 M U N T E R S A N N U A L R E P O R T 2 0 0 6
Proposed distribution of earningsFuture outlookMunters commands a strong market position in its areas ofoperation and employs reorganization and efficiency-enhancementmeasures on an ongoing basis. Consequently, theoutlook for a long-term favorable development is good.Proposed distribution of earningsThe following earnings (SEK) are at the disposal of theAnnual General Meeting:Share premium reserve 2,117,500Retained earnings 129,340,207Net earnings for the year 936,590,747Total 1,068,048,454The Board of Directors proposed thatearnings be distributed as follows:Distributed to shareholders SEK 6.75 per share 166,014,563Retained 902,033,891Total 1,068,048,454The Board of Directors has also proposed that the AnnualGeneral Meeting on 24 April 2007 shall decide on anautomatic redemption of shares including the 4:1 sharesplit whereby one share will be redeemed for SEK 20.Consequently, a total of approximately SEK 492 M will bedistributed to shareholders in addition to the proposed cashdividend. The proposal includes a bonus issue aimed at restoringthe share capital, whereby funds from unrestricted equitywill be utilized.Statement on proposed dividend and redemption process, inaccordance with the Companies Act, Chapter 18, Section 4and Chapter 20, Section 8The Board of Directors has also proposed that the AnnualGeneral Meeting on 24 April 2007 shall decide on anautomatic redemption of shares including the 4:1 share split,whereby one share will be redeemed for SEK 20, a reductionin share capital with repayment to shareholders and a bonusissue aimed at restoring the share capital, whereby funds fromunrestricted equity shall be utilized. The proposed distributionand the proposed automatic redemption will reduce theCompany’s equity/assets ratio from 75 percent to 36 percentand the consolidated equity/assets ratio from 48 to 27 percent.The equity/assets level is satisfactory, given that the assessmentthat the operations of the Company and the Group operationscan continue to be carried out while maintaining profitability.It is believed that the liquidity in the Company and theGroup can also be maintained at a similarly satisfactory level.The Company’s equity includes no unrealized profit orloss due to financial instruments having been reported atmarket value.It is the Board’s opinion that the proposed dividend andthe proposed redemption process would not prevent the Companyor other companies in the Group from fulfilling theirobligations in the short and the long term, nor from carryingout necessary investments. Consequently, the proposed dividendand the proposed redemption process can be justifiedwith reference to the provisions of the Companies Act, Chapter17, Section 3, Articles 2–3 (rule of prudence).Regarding the consolidated earnings and position and theParent Company’s earnings and position otherwise, referenceis made to the income statements and the balance sheets.AssuranceThe Annual Reports have, to the best of our knowledge, beenprepared in accordance with generally accepted accountingprinciples for listed companies. The information presentedaccurately reflects actual circumstances and nothing of materialsignificance has been omitted that could influence theview of the Company that is created by the Annual Report.Sollentuna, 7 March 2007Berthold Lindqvist Anders Ilstam Bengt KjellChairmanEva-Lotta Kraft Pia Nordqvist Sören MellstigSven Ohlsson Mats Persson Jan SvenssonLars EngströmPresidentOur Auditor’s report was submitted on 7 March 2007Ernst & Young ABBjörn FernströmAuthorized Public AccountantM U N T E R S A N N U A L R E P O R T 2 0 0 6 65
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Annual Report 2006
Page 3 and 4:
The year in briefOrder intake incre
Page 5 and 6:
From everyday life to highsustainab
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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
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PRODUCTS AND SERVICES CONTRIBUTING
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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 and 60: NOTE 9 Cont.GroupDeferred tax asset
Page 61 and 62: NOTE 15 PARTIciPATIONS IN ASSOCIATE
Page 63 and 64: NOTe 18 cont.Parent CompanySharecap
Page 65 and 66: NOTe 20 cont.Reported pension costs
Page 67: NOTE 27 REMUNERATION TO THE BOARD A
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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