Lindab Annual Report 2006

Transcription

1 lindab annual report Lindab Annual Report 2006

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3 Contents Financial key figures Amounts in SEK M unless otherwise specified Change % Net sales 7,609 6, Of which: Organic, % 10 8 Acquired growth, % 13 3 Exchange rate effects, % 1 2 Operating profit ( EBITDA ) 1, Operating profit ( EBITA ) ) ) + 70 Operating profit ( EBIT ) Profit after financial items ( EBT ) Profit for the year Cash flow from operating activities Operating margin ( EBITA ), % Return on capital employed, % Return on shareholders equity, % Net debt 2,602 1,846 Net debt/equity ratio ( times ) Average number of employees 4,689 4,135 Data per share SEK/share unless otherwise specified Change % Undiluted earnings per share Diluted earnings per share ( EPS ) Earnings per share 3 ) Cash flow from operating activities Shareholders equity per basic share Shareholders equity per diluted share Proposed dividends Number of diluted shares, 1000s 4 ) 78, ,940 1 ) SEK 41 M adjustment for restructuring expenses, SEK 25 M in expenses related to the flotation of the Company and a capital gain of SEK 27 M from the sale of real estate. 2 ) SEK 40 M adjustment for restructuring expenses and a capital gain of SEK 47 M from the sale of real estate. 3 ) Based on the current number of shares 4 ) Payment was made in May 2006 for the redemption of 44,832,150 shares. The year in figures This is Lindab The CEO s comments The Lindab share Lindab s strategies for future growth Innovative system solutions Close customer relations Optimised production system Strong corporate culture Dedicated environmental work Responsible personnel policy Profile business area Ventilation business area Corporate Governance Report Board and Group Management Directors Report The Group Key fi gures Consolidated Income Statement Consolidated Balance Sheet Changes in Consolidated Equity Capital Consolidated Cash Flow Statement The Parent Company Notes to the Consolidated Financial Statements Auditors Report Information to Shareholders Glossary Lindab Group addresses Key figures The Group Financial key figures/data per share Net sales Operating profi t Cash fl ow Profile business area Ventilation business area The Group s key figures Important notes Note 1General information Note 2Summary of accounting principles Note 3Financial and operational risk management Note 4Key estimates and assessments for accounting purposes Note 5 Acquisitions Note 7Segment reporting Note 27 Consolidated borrowing Contents 3

4 lindab annual report The year in figures Sales The Lindab Group s net sales amounted to SEK 7,609 M in 2006, compared with SEK 6,214 M in 2005, which represents an increase of 22 percent. When net sales are adjusted for acquisitions and divestments, the increase was 9 percent. When adjusted also for currency effects, net sales increased by 10 percent. Operating profit Operating profit ( EBITA ), excluding one-off items, amounted to SEK 942 M ( 553 ) for the full year, which is an increase of 70 percent. The one-off items relate to a SEK 41 M reserve for restructuring expenses ( acquisition of CCL Veloduct Ltd. ), SEK 25 M for flotation expenses and a capital gain of SEK 27 M from the sale of real estate. The unadjusted operating profit was SEK 903 M, which is a 61 percent increase over the previous year s SEK 560 M. Cash flow Cash flow from operating activities amounted to SEK 778 M ( 730 ). This slightly stronger cash flow is due to a higher operating profit but is offset by increased working capital. Investment Gross investments, excluding acquisitions, amounted to SEK 146 M ( 218 ). Including acquisitions, investments totalled SEK 530 M ( 891 ). Of these the biggest single investments during the year were the acquisitions of CCL Veloduct Ltd. and Airbat S.A.S., totalling SEK 311 M. Initial Public Offering Lindab s shares were floated on the Stockholm Stock Exchange on 1December The offer consisted of 35,418,519 shares and the issue was subscribed seven times at the highest level. The price was set at SEK 110 per share, corresponding to a total market capitalisation of SEK 8,658 M. The price of steel Steel prices continued to rise during the year. Lindab has adjusted prices during the year to compensate for this. Efforts are also being made to lower the overall cost of raw materials, these include increasing the number of purchasing channels. Construction industry trend The construction industry market has remained strong during the year, and this has been noticeable across Lindab s business areas. In the Nordic, Central European and Eastern European markets, this healthy development has continued, while Western Europe has started to make a recovery. Acquisitions During the year, the Group acquired three companies the British company CCL Veloduct Ltd., the French company Airbat S.A.S. and Gowco Texas in the USA. All three companies operate in the ventilation sector. On 6 November, Lindab acquired CCL Veloduct Ltd. which was consolidated into the Group on 1 November. The preliminary acquisition price was SEK 291 M. The company s net sales are approximately SEK 545 M. In December, Lindab acquired Airbat S.A.S. The preliminary acquisition price was SEK 20 M and the company s net sales are approximately SEK 50 M. Some of the operations of Gowco Texas, USA, were acquired during the year. The acquisition price was approximately SEK 4 M. Gowco s net sales are approximately SEK 30 M. These three companies specialise in circularventilation ducts and will be integrated with Lindab s current operations to create a strong supplier in each market. Final settlement of the acquisition of Astron Buildings S.A. was also made during the year. This resulted in a negative cash flow of SEK 69 M. Lindab signed a strategic partnership agreement with Berliner Luft GmbH in Germany last November. This agreement came into effect on 1 January and covers the supply of circular duct systems to Berliner Luft by Lindab. At the same time, Lindab outsources its rectangular duct system production to Berliner Luft. This production streamlining means that the number of employees in Lindab s German organisation will be reduced by 44. Prefabricated building structures. Ventilation duct systems. Volume growth Sales have continued to increase in the Nordic markets, as well as the Central and Eastern European markets. The sales trend in Western Europe has also shown satisfactory growth. 4 The year in figures

5 Net sales SEK 7,609 M ( 6,214 ) Operating profit ( EBITA ) SEK 942 M ( 553 ) excluding one-off items Cash flow SEK 778 M ( 730 ) Net sales SEK M Operating profit (EBITA ) SEK M Cash flow from operating activities SEK M 7, ,214 5,235 5,302 5, The key figures for the years have not been restated onto an IFRS basis. The operating profit for has been adjusted for non-recurring items

6 lindab annual report This is Lindab The business Lindab is an international group of companies that develops, produces, distributes and markets products and system solutions in sheet metal for simplified construction and improved indoor climate. The Company is divided into two business areas, Ventilation and Profile. The Group had net sales of SEK 7,609 M in 2006, is established in 29 countries and has about 4,900 employees. The Ventilation business area focuses on the ventilation sector with components and system solutions. It conducts operations within two divisions, Air Duct Systems and Comfort. The Profile business area operates in the construction sector with building systems and building components. It conducts operations within two divisions, Building Systems and Building Components. Lindab shares are traded on the Stockholm Stock Exchange. The principal shareholders are Ratos, Sjätte AP-fonden and Skandia Liv. Net sales per market SEK M The Nordic region 3,222 Central and Eastern Europe 2,139 Markets The main market is Europe. Lindab has had a strong presence in the Nordic region for many years. Central and Eastern Europe continue to offer extremely strong emerging markets. There has been a recovery in demand throughout Western Europe during the past year. During the year new system solutions for simplified construction have been launched. Western Europe 1,854 Other markets 394 Steel working Sheet metal and steel are the materials that are the common denominator for both the business areas. Many synergy and efficiency gains are created throughout the entire value chain by means of meticulous and consistent co-ordination from purchasing, plate-working and production, to distribution, support and supply. Lindab is one of Sweden s major purchasers of steel and sheet metal. 6 This is Lindab

7 Pre-engineered building systems. Building components. Ventilation duct systems. Products that enhance the indoor climate. Products Building systems The Building Systems division specialises in pre-engineered systems for the construction of steel buildings. These are marketed and sold by authorised building contractors. Building components The Building Components division comprises a highlyadvanced system of components for roof drainage, roof and wall cladding, and wall c onstruction components. Duct systems The Air Duct Systems division focuses on complete duct systems for ventilation. These provide optimum flow and good energy efficiency. Indoor climate products The Comfort division comprises components that help to distribute and treat ventilating air to create improved indoor climates. Organisation Group Lindab Business areas Profile Ventilation Divisions Building Systems Building Components Air Duct Systems Comfort Customers The majority of the Group s customers are distributors, installation companies and building contractors in the construction industry. Sales are also increasing through smaller construction companies delivering turnkey steel buildings. Lindab Distributors/ Retailers Installation companies/contractors Clients This is Lindab 7

8 lindab annual report The CEO s comments: A year that paves the way for continued success Kjell Åkesson CEO and Group President. A robust year 2006 has been a fantastic year for Lindab. Profits have soared to SEK 942 M, excluding one-off items, from SEK 553 M last year. Consistent efforts over several years have yielded results, thanks to strong resolve and perseverance by the entire organisation in all countries. We have made successful strategic acquisitions and experienced favourable market conditions in the construction industry during the past 15 months. In addition, we have successfully streamlined our ventilation operations, grown even stronger in the area of building components and created more integrated building system packages. Back on the stock exchange The biggest single event of the year was our return as a listed company, with the much talked-about and successful flotation of our Company on the Stockholm Stock Exchange on 1 December What are Lindab s strengths? We are a market leading company in most of our markets and have achieved significant growth and good profitability. Wehave reached this position through our many innovative products that bring numerous benefits to customers by simplifying the construction process. We also have excellent market coverage across the whole of Europe. This is particularly the case in the Nordic countries and in the expansive markets of Central and Eastern Europe, and to a growing extent in Western Europe too. Today, the Nordic countries account for 42 percent, Central and Eastern Europe for 28 percent and Western Europe for 24 percent of sales volumes. The company also has a good geographic spread of its production resources, a high level of automation and some of its manufacturing in expanding low-cost countries. Last, but not least, we have consistently invested in our employees, which has created avery productive corporate culture that promotes and encourages the growth of our Group. Strong products Today, we have a portfolio of very strong products that are the result of innovative development. Furthermore, production units for these product groups have gradually expanded through determined and consistent efforts to produce optimal conditions for the manufacturing processes. LindabRainline roof drainage system is one outstanding example. This smart, highquality system is now being successfully marketed in large areas of Europe, where itis gaining market share over its rivals, especially from plastic and zinc products. Another is Construline steel battens for interior walls which is beginning to conquer the market for partition wall construction. As the construction process becomes industrialised, steel battens beat wood as amaterial. The result is not only a faster, more cost-effective construction process, it also reduces the weight of partition walls. We are now broadening our efforts to include steel battens for exterior walls. Steel buildings constitute a market of SEK 40 billion in Europe, excluding Russia and Ukraine. 10 percent of these are prefabricated structures. Today, Lindab has 35 percent of this market via Building Systems. In other words, the potential is huge. In the ventilation sector, development of circular duct systems is good, since these systems offer far greater energy efficiency and are 20 to 25 percent more economical than the rectangular systems in terms of materials and installation. Lindab s Round Solution campaign is producing obvious results since sales of circular duct systems are increasing noticeably. Strong distribution network Over the years, Lindab has built up astrong network of almost 1,700 distributors. This network enables us to offer our many customers a high degree of service and proxim- 8 The CEO s comments

9 ity. We have a broad risk spread, since the largest customer only accounts for about 1 percent of Lindab s sales and the ten biggest customers no more than about 5 percent. We work hard to achieve close relationships with our distributors, by introducing our own IT support service, traded goods activity and by launching new technological solutions. High steel prices Steel is our most important raw material. Our company possesses in-depth knowledge of purchasing, working and processing this material and manufacturing and marketing sheet metal products. Steel is a strong, lightweight, versatile and, above all, cost-effective material. Steel is also an environmentallyfriendly material that can be recycled. Lindab is a major buyer of steel from suppliers throughout the global steel market. Every year, we buy about SEK 2 billion worth of steel, which means that our company is one of Sweden s top steel purchasers. The share of purchasing from outside Europe is gradually increasing. Lindab s accumulated expertise together with central purchases of large volumes, have helped us to improve our profitability despite the high steel prices during the last few years. Strong results management Fill the Gap is our method of helping the organisation to focus on the right things and to ensure that all our activities, large and small, contribute to the bottom line in a positive way. The principal goal is to improve profitability and to create an effective activity culture. More acquisitions Astron Buildings, with its pre-engineered steel building operations, was acquired in Its integration with the Group s other operations has continued very successfully throughout the year and it is now contributing strongly to this year s results. In 2006, a further three companies were acquired. CCL Veloduct Ltd. is a strategic acquisition that will make Lindab s UK operations the single largest ventilation market. Airbat S.A.S. provides reinforcement in the already successful operations in France. With the acquisition of Gowco Texas, Lindab steps into the expanding Texas market in the USA. Integration of Astron The integration of Astron s business is a fine example of how strong Lindab s corporate culture is and how it facilitates business combinations. Astron s company management has quickly adopted Lindab s culture, helping to achieve rapid harmonisation within Building Systems. Consequently, Building Systems has very robust operations and is now growing swiftly, particularly in Central and Eastern Europe. Intensive marketing Lindab is a strong brand name in Europe. We will continue to intensify brand building initiatives and implement sales promotion campaigns. In recent years, we have achieved excellent results, with centrally initiated and co-ordinated campaigns launched in several countries simultaneously, including campaigns for the LindabRainline and LindabSafe product groups. These campaigns have generated very good sales growth in mature markets in Northern Europe as well as in rapidly expanding markets in Central and Eastern Europe. Future prospects looking good Euroconstruct (Europe s leading survey institute for the construction industry ) predicts that Lindab s growth potential is 4.5 percent in 2007, slightly exceeding the rate for Growth is expected to be greatest in Central and Eastern Europe, including Russia. One of the most important projects during 2007 is our investment in the new Yaroslavl production unit in Russia, estimated at SEK 150 M. It will be operational during the second quarter of The production unit in St. Petersburg is now ready for Air Duct Systems to be launched on the rapidly growing Russian market. Demand in Western Europe is increasing and the Nordic countries are maintaining good levels of demand. We are therefore anticipating that the construction market will see continued good growth during 2007 in most of Europe, not just in the eastern region. For the long term, we particularly expect good results from our investment initiatives in Russia. We also expect to gain further market share from traditional products in mature markets. All in all, 2007 looks to be a promising year. Grevie, February 2007 Kjell Åkesson CEO and Group President The CEO s comments 9

10 lindab annual report The Lindab share Lindab on the stock exchange On 1 December 2006, Lindab International AB ( Lindab ) shares were floated on Stockholm s Stock Exchange under the trading symbol LIAB. The share offer generated great interest prior to flotation. The offer consisted of 35,418,519 shares and the issue was subscribed seven times at the highest level. Because of the huge interest, the advisors exercised an over-allotment option of 3,935,391 shares, meaning that a total of 39,353,910 shares were sold, corresponding to 50 percent of the number of shares. The price was set at SEK 110 per share, corresponding to a total market capitalisation of SEK 8,658 M. Flotation on the Stockholm Stock Exchange Lindab was previously listed on the Stockholm and Copenhagen Stock Exchanges. In 2001, the Company s present m ajority owners bought Lindab out of the stock exchanges. Prior to the flotation on 1 December 2006, Ratos held 46 percent of the shares in the Company, Skandia Liv 23 percent and Sjätte AP-fonden 23 percent. The remaining 8 percent were held by the Company s board and management and former management. Handelsbanken Capital Markets and Morgan Stanley were the Company s and owners Joint Global Coordinators and Joint Book Runners for the flotation. SEB Enskilda acted as co-lead manager. Preparations Since leaving the stock exchange in 2001, we have implemented many key organisational changes, achieved essential cost savings by streamlining production and made a number of acquisitions that have been successfully integrated. In addition, the rate of growth has accelerated, particularly in Central and Eastern Europe. We are now ready to return to the stock market as a bigger and more profitable company, explained Kjell Åkesson, Lindab s CEO, prior to flotation. Lindab s largest shareholders Shares Capital % Votes % Ratos AB 17,699, Skandia Liv 8,798, Sjätte AP-fonden 8,798, Other shareholders 43,410, Total number 78,707, Svend Holst-Nielsen, Chairman and Kjell Åkesson, CEO and Group President, at the trading start of the Lindab share. Trading and turnover The shares are quoted on the Mid Cap list of the Nordic Exchange. During December, the total turnover of shares was 19.8 million, giving an average turnover rate of more than 1 million shares a day. Excluding the first day of trading, the average rate of turnover was half a million shares daily. Ownership structure The number of shareholders was approximately 8,500 at year-end. The three largest shareholders represented percent of the share capital and the voting rights. The three main shareholders have undertaken not to sell further shares for a period of 270 days after the first day of trading. Share price development in 2006 The closing price in 2006 for Lindab International AB s shares was SEK , which is equivalent to a market capitalisation of SEK 10,252 M. The share rose by 18 percent in December. During the same period, the OMXS index rose by 8 percent. The highest closing rate for the share, SEK 132, was recorded on 29 December and the lowest rate was SEK 111 on 1 December in the same period. 10 The Lindab share

11 Analysts who follow Lindab Company Name Telephone number Handelsbanken Kenneth Toll keto03@handelsbanken.se Morgan Stanley Gustaf Lindskog gustaf.lindskog@morganstanley.com SEB Anders Trapp anders.trapp@enskilda.se Swedbank Jon Hyltner jon.hyltner@swedbank.se ABG Sundal Collier Tobias Ottosson tobias.ottosson@abgsc.se Share capital Year Action No. of shares Class A Class B 1 ) Change in share capital ( SEK 000 s ) Total share capital ( SEK 000 s ) 2001 New formation 1, New shares issue 9, , Share split ( 100:1 ) 1,000, , Share split ( 8:1 ) 8,000, ,000 New shares issue - 2,988, ,374 Redemption of shares and reduction of share capital 2,988, ,000 Redemption of shares and reduction of share capital - 2,988, Bonus issue ,542 75,168 Share split ( 15:1 ) 75,167, ,168 Exercised options 3,539,970-3,540 78,708 Closing balance 78,707,820-78,708 1 ) All Class B shares were redeemed in May 2006 and this type of share has been removed by a change to the Articles of Association. Share capital and voting rights The share capital is SEK 78,707,820 split between 78,707,820 class A shares only. All shares have a face value of SEK 1.00 and are thus entitled to an equal share of the Company s assets and results. Each share also entitles the holder to one vote at Lindab s Annual General Meeting. Atrading lot comprises 100 shares. Under Lindab s Articles of Association, the issued share capital must not fall below SEK 60 M nor exceed SEK 240 M and the number of shares must not fall below 60,000,000 nor exceed 240,000,000. The Board of Directors and the CEO recommend that SEK 3.25 per share, SEK 256 M, should be paid in dividends to shareholders for the financial year of Lindab s policy on dividends is to pay out between percent of the net profit. However, Lindab s long-term financial needs shall always be taken into consideration. Data per share SEK/share unless otherwise specified ) ) Profit/loss after tax and dilution Earnings per share 2 ) Dividend ) Direct return, % 4 ) Dividends % 2 ) Quoted price at end of period Highest quoted price Lowest quoted price Shareholders equity, after dilution Diluted number of shares 78,707, ,940, ,736, ,736, ,736,000 1 ) Not restated on an IFRS basis. 2 ) Based upon the current number of shares 3 ) Proposed dividends. 4 ) Dividends as a percentage of the quoted price at end of period. The Lindab share 11

12 lindab annual report Lindab s strategies for future growth Business concept Lindab develops, manufactures, markets and distributes products and system solutions in sheet metal for simplified construction and improved indoor climate. The Company is divided into two business areas, Ventilation and Profile. Its products are distinguished by their high quality, ease of assembly, energy efficiency and environmentally-friendly design and are delivered with high levels of service. Altogether, this increases the value for customers. Method of increasing profitability Fill the Gap is the method that Lindab has been using since 2003 for structured management of business objectives, so that set profitability goals are actually achieved. It is one of several key tools that are being used to budget, plan, manage and evaluate major projects and smaller, local activities. This method allows Group activities to be prioritised and ensures profitability at central and local levels. The activities may range from the establishment of a new branch, support for a sales organisation to a new production line or a large-scale advertising campaign. This profitability strategy permeates the entire Group, involving personnel groups at all levels. Business strategies Profitability Lindab s profitability target (operating margin ) is 12 percent. This is to be achieved through organic and acquired growth, cost-effective measures, and a focus on Lindab s core products. Finance Lindab must possess the financial strength and resources needed to respond quickly and take advantage of any acquisition and business opportunities that may arise. Acquisitions Above all, Lindab shall grow organically, but there is also scope for strategic acquisitions. 12 Lindab s strategies for future growth

13 Vision We simplify construction Lindab s core values Simplified construction Down-to-earth Neatness and order Financial targets Organic sales growth/year, % 6 Operating margin ( EBITA),% 12 Net debt/equity ratio, ( times ) Dividend policy The dividend policy, approved by the Board of Directors, states that the dividend should represent percent of net profit. The proposed dividend shall take into consideration Lindab s financial targets, acquisition opportunities, future results, financial position, cash flow, credit terms and other factors. Products Lindab will focus on its core activities in the areas of circular duct systems, building systems and building components. Distribution Lindab s products will be distributed through market-tailored solutions that guarantee close proximity and accessibility within the defined market areas. Production Standard products will be manufactured at cost-effective production units. This will be supplemented by local production where transport costs and product customisation necessitate such measures. Expansion High priority is given to the continued expansion of existing and new markets. The goal is to achieve a strong position in the markets where Lindab decides to act. Brands Lindab currently focuses its marketing communications on the Lindab brand. This will be promoted in all activities aimed at all target groups in all markets. The brand communicates the three core values: Simplified construction, Down-to-earth and Neatness and order. Lindab s strategies for futuregrowth 13

14 lindab annual report Innovative system solutions High quality products It is Lindab s strategy to develop, produce and supply high-quality products. This en ables the Company to maintain its significant presence in the market as the leading supplier in terms of quality. It also provides scope for successfully offering steel alternatives to products and solutions in other materials, such as wood, concrete, aluminium and plastic. Systems approach All the different product groups within Lindab are permeated by a systems approach. The products are easy to assemble and they offer a long service life with invariably high and reliable functionality. LindabRainline roof drainage system, LindabSafe ventilation product ranges and Building Systems for pre-engi- neered steel buildings are three very obvious examples. Simpler for everyone Lindab simplifies the construction process for installation companies and builders by offering smart system solutions that maintain a high standard of quality. The actual installation process is made more effective, more economical and quicker. It results in lower installation and operating costs for the end customer. Focus on installers Lindab simplifies the work of installing duct systems for builders and ventilation companies and offers tremendous savings in time by providing the systems as complete packages. The products arrive just-in-time and the com- ponents are clearly marked, which simplifies the work of assembling the parts on the construction site. Product development Lindab s business operations are based on simplifying the construction process through the development of innovative products. The Company aims to remain at the forefront of product design and development in its two business areas. To make this possible, customer thoughts and feedback are utilised as aconstant source of information for product development. Development is carried out in close collaboration with universities and materials suppliers. LindabRainline roof drainage system is manufactured in eight different colours, making it easy to match roof and wall colours. LindabSafe circular duct system can be supplied with a simulated computer model so that property owners can see how the ventilation system will operate when in place. The exchangeable diffusers ( Versio ) in the Comfort division are attached with magnetic locks, making it easy to mount, remove and replace them. Lindab Building Systems speed up the construction of entire supermarket buildings, sports halls and warehouses with ready-to-assemble, pre-engineered steel construction kits. Interior walls half the weight and thickness of walls with traditional wooden battens are possible with Construline steel battens. The Coverline roof and wall cladding system is available in more than ten different profiles and in two colour systems with a total of eight colours, allowing freedom to design roofs and facades. 14 Innovative system solutions

15 Close customer relations The customer s best friend We provide significant business advantages for our customers by offering them systems that make their work quicker, easier and more cost-effective. This in turn creates the foundation for increased sales and profits for both the customer and for Lindab. Providing customers with high levels of service, in the best manner possible, is therefore given the highest priority throughout Lindab s organisation. Proximity to products Contractors and installation companies demand proximity and Lindab creates this through its network of branches, retailers and distributors and, in certain markets, with distribution via builders merchants and DIY stores. Combined with efficient logistics systems this guarantees the right product in the right place at the right time. Proximity to support Lindab offers support throughout the planning and specification process. Sales and product specialists provide constant support to contractors, installation engineers, consultants and architects, whether they are offering basic advice to those working with specifications or giving practical training to installation engineers. IT support unique in the sector Lindab offers a range of proprietary software for design, dimensioning and other calculations of the systems and products marketed by the Group. These different types of IT support are intended for those involved in the specifications stage ( architects and consultants ) and increasingly for installation engineers and builders. Lindab s unique IT support includes Cyprion, CADvent and ADT- Tools. Lindab operates in close collaboration with installation companies and building contractors. Wide market presence Lindab works through its own branches and Lindab s strategy is to build up alocal market through a number of distributors that serve presence based on the conditions that each installation companies. In Central and Eastern local market offers. This means that sales and Europe, products are primarily distributed distribution are allowed to vary between different through an extensive network of retailers. In geographical regions and between the the US, products are distributed through a different business areas. In the Nordic region, large number of stockists whose businesses Lindab has an extensive own branch network focus on products for ventilation and indoor common to both the Ventilation and Profile climate solutions. business areas. The Profile business area is complemented with distribution through building material chains. In Western Europe, Close customer relations 15

16 lindab annual report Optimised production system Efficient supply of materials Steel is Lindab s primary raw material and the Company s business is forged on its expertise in the rational processing and finishing of sheet metal. Today, Lindab is one of Sweden s largest purchasers of sheet metal. This places great demands on material supply and distribution. Centralised purchasing, efficient production processes and well-coordinated logistics are therefore important cornerstones in Lindab s approach to profitability. Furthermore, the Company is committed to responsible environmental practices. Centralised purchasing With a centralised organisation for companywide purchasing, Lindab has a strong negotiating position. Suppliers always negotiate with one and the same party. Negotiations become clearer and it is always quite obvious that Lindab s centralised purchasers are fully authorised to make decisions. Lindab has progressed a long way with regard to the purchasing of steel and sheet metal, and is a major player in the European market. Rational production By designating a number of competence centres, clear business hubs have been created. These competence centres are central production units of strategic importance to operations and bring together responsibility for product development, production and high product quality. The facilities in Grevie in Sweden and Haderslev in Denmark are Lindab s competence centres for the Air Duct Systems division. In Grevie, there is an air laboratory for product development, measure ment and customer tests. The facility in Farum in Denmark is acompetence centre for the Comfort division. One of the world s leading audio laboratories for acoustic measurements of ventilation systems and a complete air laboratory are situated there. Lindab s new facility in Prague, in the Czech Republic, is a state-of-the-art, streamlined production unit for ventilation products. Within the Profile business area, the facility in Förslöv in Sweden is a competence centre for LindabRainline and Construline product groups, while Building Systems competence centre for pre-engineered steel buildings is in Diekirch in Luxembourg. Coordinated logistics Freight is Lindab s second largest purchas- ing cost after steel. It is therefore important to optimise the transportation of the Group s goods. Lindab handles large volumes of heavy and light goods. Heavy goods often consist of processed raw materials for the Company s production facilities across Europe. Bulky light goods often consist of finished products such as packed ventilation parts or roof drainage parts. Coordinated loading of these two categories results in optimisation with regards to weight and volume. The result is a shared transport system that provides greater cost and environmental benefits. Optimised material supplies and efficient logistics are two of the cornerstones in Lindab s operations. 16 Optimised production system

17 Strong corporate culture Deeply rooted entrepreneurial spirit The entrepreneurial spirit that has characterised Lindab since its beginnings has been maintained even though the Company has grown into an international, stock market listed group. Dedication and interest among employees is especially important when settling in new markets and building up new production units. The Company s employees are encouraged to participate in ongoing improvement efforts and many employee suggestions contribute to developments at various levels throughout the organisation. The Lindab Awards honourable mentions are presented regularly to Lindab companies and employees who have made outstanding development proposals. Lindab Lifestyle For many years, Lindab has had a deeplyrooted and very distinct corporate culture. It is well documented and the factors behind Lindab s success are continuously communicated within the Company. This means that the requirements placed on managers and employees are clearly formulated. Behind all this, which is summarised under the motto Lindab Lifestyle, lies an aspiration to be continually developing the entire organisation by making optimum use of the Company s strengths and injecting it with new energy. This will be particularly important when integrating newly-acquired organisations. Professional leadership Lindab s Business Acumen training programme provides continual development for Group employees. The programme provides knowledge of financial relationships and, through practical training and simulation of various processes, gives individual employees a fine insight into all possible outcomes. In Lindab has a strong and deeply-rooted corporate culture stretching back many decades. order to train people in leading positions how have been an increasing number of dedicated to formulate clear and useful arguments when sales campaigns run centrally. One example marketing Lindab s products and systems, is the campaign for LindabRainline, which has the programme includes analysis and discussion of the added value that Lindab offers past two years and has contributed to acon- been implemented in six countries during the its customers. Almost 450 employees have siderable increase in sales. It is worth noting completed this programme to date. that more and more products, following the example of LindabRainline, are now carrying Dedicated market communication the Lindab name. Lindab is focused on building astrong brand, based on a clear platform and consistent Personnel development strategy. The sales companies websites based on common values have a generic structure and appearance In order to be able to develop the Company in every market and all product areas are at all levels, both externally and internally, well-documented in printed matter and on Lindab has been working for a number of the websites. Lindab Direct, the customer years with three distinct, well-founded operational core values Simplified construction, magazine, is distributed to more than 40,000 people and is produced in Swedish, English, German, Hungarian, Polish, Czech and These are constantly used as the starting Down-to-earth and Neatness and order. Romanian. Flotation on the Stock Market point for ongoing personnel development in was followed by an advertising campaign in the Company. Training courses are held at the trade press and on the Internet. There various levels in the Company. Strong corporate culture 17

18 lindab annual report Dedicated environmental work Environmental work Lindab places a high priority on environmental issues. As part of its work, the Group shall: Use its expertise and personal commitment to continually strive to achieve ecologically sustainable development. This means that all operations shall be characterised by consideration for the environment, health and safety. Develop, manufacture and market products that have the least possible negative impact on the environment. Give priority to materials that can be recycled and do not have a negative impact on the environment. Make overall assessments of the products and continually improve resource utilisation. Comply with legislation and regulations. Environmental targets Lindab pursues continuous improvement to minimise adverse impacts on the environment. Current environmental targets: Develop coatings that have less impact on the environment and minimise the use of zinc. Reduce energy consumption. Reduce the use of packaging, especially plastic packaging. Improve waste management. Reduce the use of oils in production processes. Reduce the impact on the environment from the transportation of goods on vehicles. Steel can be recycled Lindab s operations primarily consist of the manufacture of steel and sheet metal products. Given the production processes and the products involved, the environmental impact is minimal. Above all, steel can be recycled both the waste steel from the production process and the products at the end of their useful lives. Transport By loading heavy and light-weight goods on the same vehicles, each truck is optimised with regards to weight and volume. The result is ashared transport system that eases the burden on the environment. Surface treatment The use of solvent-based paint for coatings is now more or less obsolete. Today, weuse HB polyester, an environmentally-friendly plastic, to coat most sheet metal products. The coating process is performed by suppliers. Most of Lindab s sheet metal products have zinc coating to protect them from corrosion. The goal is to minimise this use of zinc. Environmental impact The Group has no environmental liabilities and the business is not of a type that causes the contamination of land or water, which can require clean-up measures. An independent third-party expert has conducted environmental investigations at 14 of the Company s production units. It concluded that there are no environmental liabilities associated with the production units. Regular tests are carried out to check for any impact on the immediate environment. Energy consumption As a result of a series of energy-saving measures, energy consumption per tonne of manufactured sheet metal products has now been reduced. Lindab s environmental accountability starts with the Company s immediate environment. Accreditation Most of the Group s companies that have extensive production operations implement the ISO environmental management standard. Environmental insurance for operations performed at sites in Sweden covers liability to damages under the Swedish Environ mental Code. 18 Dedicated environmental work

19 Responsible personnel policy 4percent work in the UK, Switzerland and Germany respectively. The Company also has employees in Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Estonia, Finland, France, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Romania, Russia, Ukraine and the USA. 20 percent of Lindab s employees were located throughout these countries as of 31 December Gender distribution Women 19 % Trade union membership A workplace health promotion programme is a fundamental part of Lindab s personnel policy. Clear personnel policy The Company has given priority to internal recruitment, thereby creating opportunities for its employees to develop, promoting business continuity and reducing employee turnover. As a result, a large proportion of Lindab s employees have been with the Company for a number of years and many have been promoted to leading positions. Employees On 31 December 2006, Lindab employed a staff of 4,942 ( 4,479 ), of which 2,013 ( 1,890 ) worked in the Profile business area and 2,771 ( 2,443 ) in the Ventilation business area. International distribution Approximately 22 percent of Lindab s employees work in Sweden, 17 percent in the Czech Republic, 13 percent in Denmark, 9 percent in Hungary, 7 percent in Luxembourg. In some countries, ( chiefly Sweden, Denmark, Norway, Luxembourg and the USA ) Lindab s employees are members of trade unions. Lindab considers it has a good relationship with its employees and their trade unions and the Company has not experienced or been the subject of any major stoppage of work, reduced working pace or collective action. Furthermore, Lindab has had no problems in the recent past, and expects no problems in the foreseeable future, with the recruitment of personnel for its operations. Skills development Lindab s training programme is the basis for the Company s strategy of internal recruitment of executive personnel. Training activities are conducted at both a local and Group level with courses for new employees through to specialist leadership training. Lindab Business Acumen combines practical exercises and simulations to give employees in leading positions a deeper insight into Lindab s operations, markets and financial circumstances. On average, every Lindab employee spends two to three days on courses each year. Men 81 % Age distribution 30 years 25 % 51 years and over 22 % Average no. of employees 3,766 4,138 4, years 53 % 4,

20 lindab annual report Profi le business area Peter Andsberg, Business Area Manager for Profile. Sales and profit Net sales for the Profile business area rose during the year by 37 percent to SEK 3,979 M ( 2,905 ). The business area s operating profit ( EBITA ) amounted to SEK 647 M ( 356 ) in The Nordic market demonstrated continued healthy growth while Central and Eastern Europe continued their very robust development. Western Europe too has shown an improvement in growth. Building Systems operations are producing excellent results. Overview The Profile business area offers the building industry a broad range of components and building systems with sheet metal and steel as common denominators. Building contractors, sheet-metal workers, open plan builders and consumers are the main customer groups. Depending on market structure, sales are made through our own branches, retailers and distributors within the professional segment, and through builders merchants. Profile s operations are managed in two divisions Building Systems and Building Components. Building Components The past year The Building Components division has had another successful year. The year began with aharsh winter, causing a delayed start to the building season across much of Europe. Once the winter eased, construction began in earnest. There was strong underlying demand and considerable accumulated need. The last five months of the year were extremely intensive. The Nordic market has enjoyed excellent demand. The same can be said of the markets in Central and Eastern Europe. Lindab s progress has continued particularly well in Romania, increasing from relatively small volumes to levels that represent an important part of the division s operations today. Sales in Russia have also shown very positive development during the year. The market in Western Europe accounts for a relatively small share of sales. We also expect our new initiatives, with the main focus on LindabRainline, to result in increased sales volumes. Future prospects We expect to see the construction market in the Nordic region continue its strong growth in Lindab s goal is to maintain its market-leading position. In Central and Eastern Europe, Lindab will be starting up stock-keeping subsidiaries and some production in four countries that are new to Lindab. These countries are Ukraine, Slovakia, Bosnia-Herzegovina and Bulgaria. The Company continues its marketing investments in LindabRainline in all countries. We anticipate good sales development in the UK market and 2007 may very well be a breakthrough year. Aforceful marketing campaign will be launched in the spring of 2007 for Lindab- Rainline. LindabRainline currently has a small market share in the UK, which is why we believe there is great potential. Construline is a product group where lightweight beams and steel battens can be sold as individual components, but can also be sold in parts to form complete systems. We are seeing an increasing use of these products in the construction process. We will also be opening new production lines in Romania and Hungary. Efforts are being intensified in Russia, particularly for LindabRainline. Building Systems Key figures, Profile business area The past year 2006 was the first full year of operations with Amounts in SEK M unless otherwise specified Change % Net sales 3,979 2, Operating profit (EBITA ) Operating margin ( EBITA),% Gross investment in fixed assets Number of employees 2,013 1, Profile business area

21 Astron. Performance in most of the Company s markets has exceeded expectations. The integration process is running according to plan and the products and markets of the three former businesses in Building Systems ( Lindab, Butler and Astron ) should be fully integrated by the end of The greatest expansion has been in Central and Eastern Europe. Furthermore, for the first time in many years, Germany has shown positive growth. Synergies with the Ventilation business area have developed during the year, where notably a system for coordinating customer contacts between the business areas has been initiated. Distribution of net sales per product area SEK M Building Components Building Systems 647 Future prospects One of the most important projects during 2007 is the investment in the new factory in Yaroslavl, approximately 300 kilometres north of Moscow, Russia, estimated at SEK 150 M. This is due to be operational in Q The aim is to get closer to our customers in Russia and Ukraine and strengthen relationships and the level of service. Lindab continues to expand eastwards with a move into an additional four countries. The initiatives to sell finished system solutions are continuing and include both Building Systems and Building Components. Components are combined using IT support to create ready-to-assemble, pre-engineered systems. Operating profit (EBITA ) SEK M Other The key figures for have not been restated on an IFRS basis

22 lindab annual report Ventilation business area Hannu Paitula, Business Area Manager for Ventilation. Sales and profit Net sales for the Ventilation business area rose during the year by 10 percent to SEK 3,568 M ( 3,241 ). The business area s operating profit ( EBITA ), when adjusted for restructuring costs, amounted to SEK 364 M ( 223 ) in Greater demand in the main markets in Northern and Western Europe has had a positive impact on profit growth. Developments in Central and Eastern Europe have been positive, while the new distribution channel in the US has developed well. Air Duct Systems The past year All targets set for 2006 were reached or surpassed. The strategies formulated in 2005 have been followed, resulting in a successful turnaround for the entire business area. The restructuring process has now been completed. Eight production units have been closed down, while the production unit in Prague has good capacity utilisation. Furthermore, the construction trend has been favourable over the past year. Alarge proportion of these excellent results can be attributed to the new strategy focusing on the core products and the sale of machinery, leading to an expansion of the distribution network, increased volumes and improved profitability. In particular, sales of the LindabSafe airtight duct system have developed favourably. Above all, LindabSafe has gained market share from rectangular duct systems in Western, Central and Eastern Europe. In Central and Eastern Europe growth has accelerated with net sales growth of more than 30 percent during the year. The marketing of proprietary software for installation engineers and those working with specifications has developed positively. The pilot project conducted in the Nordic countries with Lindab Partnership, where ITsupport is combined with product deliveries, has shown excellent results. Three acquisitions have been made during the year. CCL Veloduct Ltd. is the largest ventilation distributor in the UK market. CCL sells circular duct systems and traded goods. The company s operations will be consolidated into CCL Lindab and will form avery strong network of distributors. Airbat S.A.S. is a distributor of circular ventilation ducts in the region of Paris. Earlier in the year, some of the operations of Gowco Texas, USA, were acquired. Future prospects The market prospects look bright. Lindab will continue to implement strategic improvements in its Ventilation business area. Lindab supplies circular duct systems to Berliner Luft GmbH. At the same time, Lindab outsources its rectangular duct system production to Berliner Luft. New products will be launched in 2007, including the next generation of the circular Overview The business area s product and system solutions focus on installation engineers and other clients in the ventilation industry who work on the installation and sale of complete ventilation systems. The product areas are circular duct systems and accessories ( Air Duct Systems ), technical ventilation products and ventilation systems ( Comfort ). Additionally there is machinery for the manufacture of products for circular duct systems. Sales of Spiro machinery have been successful, particularly in Russia. Key figures, Ventilation business area Amounts in SEK M unless otherwise specified Change % Net sales 3,568 3, Operating profit (EBITA ) ) ) Operating margin ( EBITA),% Gross investment in fixed assets Number of employees 2,771 2,443 1 ) Excluding SEK 41 M in restructuring costs. 2 ) Excluding SEK 40 M in restructuring costs. 22 Ventilation business area

23 and highly energy-efficient LindabSafe duct system. The Company will continue to work with and develop traded goods so that it can offer one-stop shopping under one brand name. Developments in this area have come furthest in the Nordic countries, but a lot of experience will be drawn from the British company CCL. Efforts in Russia are being intensified. A new production unit in St. Petersburg has been established during the year in order to supply the rapidly expanding Russian market. Sales of machinery have increased significantly and are expected to remain strong. Distribution of net sales per product area SEK M Air Duct Systems Comfort Comfort Other Machinery The past year The operations have now been merged and the head office, with its marketing and product development activities, is located in Farum in Denmark. Production has been streamlined so that most of the standard production takes place in Prague in the Czech Republic and customised products are made in Farum. A range of interesting new products has been launched over the year, in particular a new generation of diffusers ( Versio ). The Nordic market remains the dominant region for Comfort and developments have been favourable here during the year. Among other countries, Italy has shown a positive development. Sales in Central and Eastern Europe continue to be very modest however. Operating profit (EBITA ) SEK M Future prospects The favourable trend will continue for Comfort in 2007 with the launch of new products and services. After a successful introduction of Lindab Partnership and products such as Versio, marketing efforts will be expanded and intensified. Following a strong year in 2006, Comfort will be increasing its activities in Eastern Europe. The key figures for have not been restated on an IFRS basis. The operating profit for has been adjusted for non-recurring items

24 lindab annual report Corporate Governance Report Lindab International AB is a Swedish public limited company, which under the Articles of Association, shall develop, produce and sell products to both the ventilation industry and the building industry. The Group s business concept is: Lindab develops, manufactures, markets and distributes products and system solutions in sheet metal for simplified construction and improved indoor climate. Its two business areas are Ventilation and Profile, and its products are distinguished by their high quality, ease of assembly, energy efficiency and environmentally friendly design and are delivered with high levels of service, all of which increases the value for customers. The governance of the Group is based on the Articles of Association, the Companies Act, the regulations of the Stockholm Stock Exchange, including the Swedish code for corporate governance and other applicable Swedish and foreign laws and regulations. The Swedish code for corporate governance came into effect on the flotation date, 1 December The Corporate Governance Report specifies how the code is applied from the flotation date. Share capital and voting rights Lindab s share capital amounted to SEK 78,707,820 at the end of the year. All shares have a face value of SEK 1, which means that the number of shares of class A only, totals 78,707,820. Each share entitles the holder to one vote and an equal right to a share in the company s assets and results. Shareholders Lindab s shares are listed on the Stockholm Stock Exchange and, at the end of the year, had a market capitalisation of SEK 10,252 M. At the end of 2006, there were 8,500 shareholders in Lindab. The three largest shareholders were Ratos AB with percent, Skandia Liv with percent and Sjätte AP-fonden with percent. Annual General Meeting Notice of the Annual General Meeting must, under the Articles of Association approved at the Extraordinary General Meeting on 13 October 2006, be published in Post- och Inrikes Tidningar and Dagens Industri. Shareholders wishing to participate in the General Meeting must be entered in the Company s share register five ( 5 ) days before the meeting and must notify the Company of their wish to participate as specified in the summons to the 2007 AGM. Shareholders who wish to have a matter discussed at the Annual General Meeting must, as specified on the Company s website, submit such a proposal to the Chairman of the Board by 1 March Nomination Committee At an Extraordinary General Meeting in October 2006, it was decided that the Company shall have an Nomination Committee comprising the Chairman of the Board and a representative for each of the three shareholders controlling the largest number of votes. In accordance with this, the Company s majority shareholders have appointed an Nomination Committee with Svend Holst-Nielsen, the Chairman of the Board, as convener of the meetings. The Nomination Committee has held one minuted meeting. The Nomination Committee consists of: Arne Karlsson, representative for Ratos AB ( publ ) Caroline af Ugglas, representative for Skandia Liv Urmas Kruusval, representative for Sjätte AP-fonden Svend Holst-Nielsen, Chairman of Lindab International AB In compliance with the decision of the General Meeting, the Nomination Committee shall evaluate the work and structure of the Board and produce proposals for the 2007 AGM with regard to: election of the Board of Directors, election of the Chairman of the Board of Directors, fees for the Board of Directors and auditors, election of Chairman for the meeting A notice has been posted on the Company s website stating that shareholders wishing to make contact with the Nomination Committee can send: an to carlgustav.nilsson@lindab. com ( the heading should be To the Nomination Committee ) or a letter to Lindab s Nomination Committee, Carl-Gustav Nilsson, Lindab International AB, Båstad, Sweden. The term of mandate for the Nomination Committee runs until a new Nomination Committee has been appointed. The Chairman of the Nomination Committee, unless otherwise agreed upon by the members, must be the member who represents the shareholder controlling the largest number of votes. Board of Directors It was decided at an Extraordinary General 24 Corporate Governance Report

25 Meeting on 13 October 2006 that the Board shall consist of six ( 6 ) members without deputies. Based on the decision reached at the 2006 AGM and the aforementioned Extraordinary General Meeting, the Board comprises the following members: See page 28, which also shows the independence of the Board members. Work of the Board The work of the Board is governed by an annually approved agenda. The agenda sets out instructions to the Company s CEO, the duties of the Chairman, the Board s meeting procedures and the decision-making procedures. The Board held 17 meetings in Twelve ( 12 ) of these meetings have dealt mainly with the stock exchange listing process and the refinancing operation that was implemented during the first six months of The structure of the Board has changed during the financial year, since Carl-Gustaf Sondén, Hans Schmidt-Hansen and Walther Vishof Paulsen have resigned while Annette Sadolin was elected as board member at the Extraordinary General Meeting held on 13 October At the Board meetings, one member was absent on six occasions, three of which were ordinary meetings. One member was absent on two occasions and two members on one occasion. All of these were not ordinary Board meetings. The secretary of the Board was Carl- Gustav Nilsson, company lawyer, who wrote the minutes of the Board meetings. An assessment of the work of the Board was conducted at the beginning of It was felt that the work of the Board is performed extremely well and that the dialogue between the Board and the Company s man- agement has been good. In conjunction with this assessment, an assessment of the CEO was also conducted. Board fees The Extraordinary General Meeting on 13 October 2006 fixed the Board fees at SEK 1,540,000, SEK 500,000 of which will be paid to the Chairman of the Board, SEK 250,000 to each of the Board s elected members and SEK 20,000 to each ordinary employee representative. No remuneration is paid for committee work. Remuneration Committee The Remuneration Committee consists of Chairman of the Board Svend Holst-Nielsen and Board members Stig Karlsson and Anders C. Karlsson. The Committee shall assist the Board to prepare proposals for principles for remuneration of the Company management, for approval by the Annual General Meeting. The Committee also has the responsibility for preparing questions concerning remuneration of the Company management, to be decided by the Board. The Remuneration Committee was appointed at the Board meeting held on 18 October 2006 and has held two minuted meetings. Audit Committee Lindab s Board has decided not to set up an audit committee. Instead, the Board (excluding the CEO ) will comprise an audit committee and guarantee the quality of the financial statements, maintain ongoing contact with the auditors, evaluate the auditing work, assist the Nomination Committee during its preparations for the election of auditors, ensure that the Company has an efficient system for internal accounting controls and deal with other related matters that would otherwise be delegated to an audit committee. In 2006, the Board held two meetings with the auditors, with one further meeting in February 2007, and thereby has obtained information from the auditors concerning the financial statements. In its role of audit committee, the Board ( without the attendance of the CEO or any of the Company s management ) held a minuted meeting with the auditors in February Auditors At the 2006 AGM, Ingvar Ganestam and Staffan Landén, both of Ernst &Young, were elected to be the Company s auditors for a term up until the 2010 AGM. They have had the primary responsibility since On the same occasion and for the same period, Stefan Kylebäck and Kerstin Mouchard, both of Ernst & Young, were elected as deputy auditors. The auditors also perform some services for other stock market-listed companies, but the time devoted to these services does not encroach upon the time needed for their work with Lindab. None of the auditors are carrying out any services that might bring their independence into question. Nor do the services that the auditors have performed for Lindab, over and above the auditing services, change this opinion. Auditors fees For 2006, the auditors fees for the Parent Company amounted to SEK 0.8 M and SEK 8.7 M for the Group. In addition to that, their fees for other services in the Group were SEK 7 M. Services have included advice on tax matters, investigations and analyses in connection with acquisitions, and investigations into certain accounting matters. Corporate Governance Report 25

26 lindab annual report Internal controls and audits Financial reporting All units, i.e. operating units, provide monthly financial reports under the IFRS accounting principles applied by the Group. The Group reporting system, Cognos Controller, is used for financial reports. This system consolidates and provides the data for quarterly reports and monthly operative reviews of everything from operating units to the whole Group. Operative reviews have long been produced using daily sales statistics, including information about the situation of each business unit and product group with regard to orders. Monthly sales, results and balance sheets, cash flows, other key figures for the Group and trends are compiled to provide data for analyses and action by the management and controllers on different levels. Other important and Group-wide areas of the internal control are the annual business plans and budget process, plus quarterly financial forecasts for the current calendar year. Quality assurance of financial reporting It is the responsibility and duty of the Board to guarantee the quality of the Company s financial reports, the main purpose of which is to protect the owners investment and the Company s assets. Instructions about financial reporting are set out in the Board s agenda. The Board has met with the auditors ( see above under Audit Committee ). to company acquisitions and expansion, an investigation will be conducted during 2007 to assess the need for an internal audit department. Policies For the adoption of guidelines for Company and Group operations, the Board has approved a number of policies as detailed below. The basis for Lindab s corporate governance comprises organisation, decision-making paths, authorities and responsibilities that are documented and communicated, plus the culture and the values that the Board and management advocate and act upon. Lindab s brands are summarised by three core values: Simplified construction Downto-earth and Neatness and order These core values are well founded in our Company and they represent both historical success factors and our vision for product development, communication and behaviour. Some key elements in the corporate governance environment are documented as different policies. Lindab s Board has approved the following policies: Code of Ethics For Lindab and all its employees, it is important that laws, regulations and general ethical values are respected and followed. Lindab will be implementing its Code of Ethics in early 2007 to ensure that this is the case. Financial Policy This will ensure that Lindab s business is accurately represented in its financial accounts and that reporting is carried out in a correct and uniform manner. Information Policy This will ensure that the market is given consistent and correct information about Lindab and its business, including financial targets and that Lindab fulfils the requirements of the Stockholm Stock Exchange for information to the stock market. Insider Policy This will ensure that no trading in shares or other financial instruments in Lindab is carried out by persons who have information that can affect the price of Lindab s financial instruments and which is not publicly known. IT Policy This will ensure high security and reliability with regard to operations and unauthorised access. Competition Law Handbook The Group s and the employees observance Internal audit Lindab has no separate internal audit department. Monitoring the observance of critical policies and compliance with internal controls follows the line organisation. Based on Company operations so far, the Board s opinion is, that it has not been necessary to have an internal audit department. With respect Deviation from the Code Provision Announcement of Nomination Committee Motive An announcement was made on 16 January 2007, one and a half months after the flotation date and in compliance with the decisions reached at the Extraordinary General Meeting 26 Corporate Governance Report

27 of competition legislation is important. Some 450 members of senior management and employees in the Group have taken part in training courses to learn about the Policy on Competition Law to ensure that this Policy is fully effective. Environmental Policy An international Environmental Policy is being developed for the Group. In addition to the above-mentioned policies for the Group, there are also a number of operative policies that have been approved by the respective subsidiaries within the Group. Both in its strategy and historically, Lindab has also created growth through acquisitions that strategically suit the Group. A separate Acquisition Manual has been produced to safeguard the acquisition process. The acquisition process focuses on analyses of the target company, due diligence, implementation, integration and follow-up. Financial targets and dividend policy The Board has approved the following financial targets: Six ( 6 ) percent organic growth rate per year A twelve ( 12 ) percent EBITA margin Net debt/equity ratio, in the interval of times The dividend policy approved by the Board of Directors states that the dividend should represent percent of net earnings. The proposed dividend takes into consideration Lindab s financial targets, acquisition opportunities, the Company s future results, financial position, cash flow, credit terms and other factors. Remuneration and other benefits for the Group management in 2006 SEK ( thousands ) Kjell Åkesson, CEO Other members of the Group management ( 3 persons ) Total Fixed salary including holiday pay 4,810 6,826 11,636 Variable salary 3,525 2,682 6,207 Pension expenses 3,668 1,296 4,964 Other benefi ts Payroll overheads 2,425 2,360 4,785 Total 14,550 13,439 27,989 There are no share-related or share price-related incentive programmes. Group management Lindab s operations are divided into two business areas. The Group management consists of four people: the CEO, managers for the Group s two business areas and the CFO. This group structure ensures that decision-making paths are short. As well as the Group management, there is a management group comprising the Group management plus managers for the staff departments: HR & Communications, Legal & IPR, Purchasing & Logistics, IT, and the operational manager for Building Systems. Corporate Governance Report 27

28 lindab annual report Board of Directors and Group Management Members of the Board Svend Holst-Nielsen Born in Appointed to the Board in 1995, independent. Chairman of the Board since Chairman of the Boards of Sreg International AB, Unilever Sverige AB, Spendrups Bryggaktiebolag and Glashuset Design Studio Malmö AB. Board member of Ballingslöv International AB, Wallenius Water AB and Besthand Holding AB. He was previously the President of Unilever Norden and a member of Unilever s European management team. Main qualifications: Graduate of Business Administration, School of Business and Economics in Copenhagen. Holding: Indirectly 357,000 shares through Nordben Life and Pension Insurance Company Ltd. Kjell Åkesson Born in CEO and Group President, dependent on the Company. Employed since Appointed to the Board in Formerly the CEO of Bilia AB. Prior to that he was deputy CEO of Svedala AB. Main qualifications: B.A. in Economics from Uppsala University and a degree in electronics. Holding: 492,900 shares. Anders C. Karlsson Born in Appointed to the Board in 2001, independent. Chairman of the Boards of IPEG AB, Rapid Granulator AB, Inwido AB, H&H International A/S and Ludesi AB. He is also a member of the Boards of Air Liquide Gas AB and Lasabotte AB. Deputy Board member of Tele P AB. He has previously held various senior positions at Skanska and been part of Skanska s group management. Main qualifications: Graduate of Business Administration, Uppsala University. Holding: Indirectly 57,600 shares through Lasabotte AB. Stig Karlsson Born in Appointed to the Board in 2004, dependent on the shareholders in Ratos AB. Senior Investment Manager at Ratos and Chairman of the Boards of Haendig AB and Haglöfs Scandinavia AB. He is also a member of the Boards of Diab International AB, HL Display AB, Hägglund Drives AB, Lagerstedt & Krantz AB and Sign Communication Sweden AB. He was formerly the CEO of Atle Tjänste och Handel. Main qualifications: B.A. in Economics from Örebro University. Holding: 0 shares. Hans-Olov Olsson Born in Appointed to the Board in 2001, independent. Senior Vice President and Chief Marketing Officer at Ford Motor Company in Dearborn, USA, Chairman of the Boards of Volvo Personvagnar AB and Teknikföretagen and Board member of Vattenfall AB ( publ ), Höganäs Aktiebolag, IQ-initiativet AB and Svenskt Näringsliv. He was formerly the CEO of Volvo Personvagnar AB. Main qualifications: M.A. in Economics from Gothenburg University. Holding: 57,600 shares. Annette Sadolin Born in Appointed to the Board in 2006, independent. Member of the Boards of Topdanmark A/S, Skodsborg Kurhotel og Spa A/S and Danish Standards. Member of the Advisory Board MBA, Copenhagen Business School. She is a former member of the management board of GE Frankona Re, Munich and GE Employers Re, Copenhagen. Main qualifications: B.A. in Law, Copenhagen University and Special Law Program, Columbia University, New York. Holding: 0 shares. 28 Corporate Governance Report

29 Employee Representatives Markku Rantala Born in Appointed to the Board in Employee representative with LO ( Swedish Trade Union Confederation ). Employed since 1993 and currently working as Chairman of the local union branch of Lindab IF Metall. Holding: 250 shares. Pontus Andersson Born in Appointed to the Board in Employee representative with SIF ( Swedish Union of Clerical and Technical Employees in Industry ). Employed since 1987 and currently working as a development engineer. He has professional qualifications in engineering. Holding: 250 shares. Deputy Employee Representatives Bjarne Larsson Born in Appointed to the Board in Deputy employee representative. Employed since 1993 and currently working as a machine operator at Lindab Steel. He was formerly a deputy employee representative at Båstad Utvecklingbolag Aktiebolag. Not pictured. Staffan Råberg Born in Appointed to the Board in Deputy employee representative. Employed since 1988 and currently working as an inside salesman at Lindab Steel. He has professional qualifications in engineering. Not pictured. Group management Kjell Åkesson Born in CEO and Group President. Employed since Appointed to the Board in Holding: 492,900 shares. Nils-Johan Andersson Born in CFO Employed since Holding: 164,295 shares. Peter Andsberg Born in Business Area Manager for Profile. Employed since Holding: 164,295 shares. Hannu Paitula Born in Business Area Manager for Ventilation. Employed since Holding: 164,295 shares. Corporate Governance Report 29

30 lindab annual report Directors Report The Board and the CEO of Lindab International AB ( publ ), with headquarters in Båstad, registered in Sweden under registration number , have the pleasure in presenting their Annual Report for the financial year Operations Lindab develops, manufactures, markets and distributes products and system solutions in sheet metal for simplified construction and improved indoor climate. Its products are distinguished by their high quality, ease of assembly, energy efficiency and environmentally-friendly design and are delivered with high levels of service, all of which increases the value for customers. Lindab s primary segments are its two business areas, Ventilation and Profile. The Group s secondary division of segments is geographical markets. Ownership and legal structure Lindab International AB ( publ ) is the Parent Company of the Lindab Group. Lindab shares were floated on Stockholm s Stock Exchange, on the Mid Cap list of the Nordic Exchange, on 1 December The Company had approximately 8,500 shareholders on 31 December The largest shareholder is Ratos AB with a percent holding. After the largest shareholder come two institutional investors - Skandia Liv and Sjätte AP-fonden each with an percent holding. These three together hold percent of the share capital and the voting rights. Prior to flotation, the owners were Ratos AB ( 45.7 percent ), Skandia Liv ( 22.7 percent ), Sjätte AP-fonden ( 22.7 percent ), the Board, company management, former company management and senior executives ( 8.9 percent ). Company acquisitions On 6 November, Lindab acquired all shares in the British ventilation company CCL Veloduct Ltd. CCL is a leading distributor of circular ventilation ducts and products to the UK market. As a consequence of this acquisition, the UK becomes one of the most important markets for the Ventilation business area. The acquisition price amounted to SEK 282 M and was based on the preliminary acquisition analysis. Costs directly relating to the acquisition of CCL amounted to SEK 9 M, giving apreliminary acquisition price of SEK 291 M. The value of the acquired net assets is estimated at SEK 47 M, which gives SEK 244 M in consolidated goodwill. The acquisition goodwill can be explained by the excellent profitability and the anticipated synergies Segment reporting from the merger of CCL s operations with Lindab s UK operations. The acquisition was financed through existing credit frameworks in the Lindab Group. The consolidation of CCL on 1November resulted in a SEK 82 M increase in Group net sales in 2006 but it had no effect on the consolidated after-tax profit. Upon acquisition, SEK 82 M in debts were taken over, increasing the net indebtedness by SEK 364 M. The company had 245 employees with net sales of SEK 545 M in the 2006 calendar year. The pro-forma operating profit (EBITA ) for the same period was SEK 49 M. In the fourth quarter, costs of SEK 41 M were reserved to provide for the synergies that are estimated to reach SEK 40 M annually. In early December, Lindab acquired the Lindab s primary segments are its two business areas, Ventilation and Profile. SEK M unless otherwise specified. Business area Ventilation Change % Net sales 3,568 3, Operating profit ( EBITA ) ) ) Operating margin ( EBITA ), % Gross investments Number of employees 2,771 2,443 Business area Profile Change,% Net sales 3,979 2, Operating profit ( EBITA ) Operating margin ( EBITA ), % Gross investments Number of employees 2,013 1,890 1 ) Excluding SEK 41 M in restructuring costs. 2 ) Excluding SEK 40 M in restructuring costs. 30 Directors Report

31 French ventilation company Airbat S.A.S., a distributor of circular ventilation ducts. The preliminary acquisition price was SEK 20 M, which gave SEK 12 M in consolidated goodwill. The consolidation of Airbat on 1 December resulted in a SEK 3 M increase in Group net sales but it had a marginal effect on the consolidated results. In 2006, Airbat had 25 employees and net sales of about SEK 50 M. Lindab intends to combine its current operations with Airbat to create a strong, onestop supplier in the French market, which is expected to generate positive synergies. Lindab signed a strategic partnership agreement with Berliner Luft GmbH in Germany last November. This agreement came into effect on 1 January and covers the supply of circular duct systems to Berliner Luft by Lindab. At the same time, Lindab outsources its rectangular duct system production to Berliner Luft. This production streamlining means that the number of employees in Lindab s German organisation will be reduced by 44. In March 2006, some of the operations of Gowco Texas, USA, were acquired. The acquisition price was approximately SEK 4 M. In 2005, the business had net sales of approximately SEK 30 M and employed 22 people. Previously, Lindab USA has principally been represented in the eastern and southeastern regions of the USA. This acquisition furnishes Lindab with a solid base in the expanding Texas market. The acquisition has only had a marginal impact on profits in The acquisition analysis for the acquisition of Astron Buildings S.A. was finalised in the third quarter. The following adjustments have been made; goodwill has decreased by SEK 33 M, non-interest bearing provisions by SEK 14 M and finally non-interest bearing liabilities by SEK 19 M. These adjustments are reported from the acquisition date, which means that the comparative figures as at 31 December 2005 have been adjusted by corresponding amounts. Divestments In 2006, Scandab AB s business operations were sold. The sale was part of the process of focusing on duct systems, the core product within the Ventilation business area. The business was purchased by Dantherm Filtration AB. The sale had a marginal effect on earnings, but provided a positive cash flow of SEK 10 M. In 2005, Scandab AB s net sales amounted to approximately SEK 60 M. Sale of properties In 2006, Lindab sold nine distribution facilities in Sweden. Lindab has signed aten-year leasing contract with the purchasers, Brinova AB, on current market conditions. The transaction means that net debt was reduced by SEK 78 M and generated a capital gain of SEK 27 M. The Group s financial targets The Group s financial targets are that organic sales growth will be six ( 6) percent ayear, the EBITA margin will reach twelve (12) percent and the net debt/equity ratio will stand between 1.0 and 1.4. Dividend policy The Board ofdirectors has approved a dividend policy for the Company stating that the dividend should represent percent of the previous financial year s net earnings. Under this dividend policy, when presenting the proposed dividend, the Board shall take into consideration Lindab s financial targets, acquisition opportunities, forecast future results, financial position, cash flow, credit terms and other factors. It is not possible to guarantee that a dividend will be proposed or resolved in any one year. Net sales Net sales increased by 22 percent to SEK 7,609 M(6,214 ). If sales are adjusted for acquisitions and divestments, the increase in sales amounts to 9 percent. When adjusted for exchange rate fluctuations, the increase was 10 percent. Net sales abroad rose by 3 percentage points to SEK 6,063 M ( 4,804 ). This represents 80 percent ( 77 )of Group sales. Market Today, Lindab has its own operations in 29 countries. Lindab s main markets are the Nordic countries, Central and Eastern Europe and parts of Western Europe. The Nordic countries represented 42 percent (47) of the Company s net sales in 2006, the markets of Central and Eastern Europe represented 28 percent (23) and Western Europe represented 24 percent ( 24 ). The European construction market can be divided into three distinct subcategories: housing, commercial buildings and infrastructure. Lindab s products are primarily intended for the construction market for commercial buildings, which accounts for about 80 percent of the Company s sales. Housing accounted for the remaining 20 percent. Today, the Company is a leading supplier of Profile products in the Nordic countries and areas of Central and Eastern Europe and a leading supplier of Ventilation products in the Nordic countries and of circular duct systems in parts of Western Europe and in Central and Eastern Europe. The commercial sector accounts for up to 90 percent of sales for the Ventilation business area, and about 70 percent for Profile. Directors Report 31

32 lindab annual report The new construction market accounts for 60 percent of consolidated sales and the renovation market for 40 percent. Demand has generally been good throughout 2006, resulting in a rise in sales. According to Euroconstruct ( survey institute for the construction industry ) the Nordic market has expanded by almost 4 percent. Western Europe is expected to increase to more than 1 percent, which is positive news following the weak demand in Western Europe in recent years. Lindab is well represented in many markets in Central and Eastern Europe, which are still growth markets for our Company and have grown by almost 8 percent. In most of its markets, Lindab s sales have grown at a greater rate compared with the market, meaning that Lindab has increased its market share. In the USA, Lindab has continued developing its new distribution strategy throughout the year and four new distribution channels have been established. The goal is to achieve a better geographical spread. Today, Lindab is principally represented in northern and eastern USA, but with the acquisition of Gowco, Lindab has now established itself in the southern and western regions. The operating profit In 2006, Lindab reported the best financial results in its history. Operating profit before consolidated amortisation of surplus value on intangible assets, EBITA, amounted to SEK 942 M, which has been adjusted for restructuring expenses of SEK 41 M, flotation expenses of SEK 25 M and a capital gain of SEK 27 M from the sale of property. This is a 70 percent improvement on the SEK 553 M for 2005, which was adjusted for restructuring expenses of SEK 40 M and a capital gain of SEK 47 M from the sale of property. Sales per geographic market SEK M The Nordic region 3,222 2,945 Central and Eastern Europe 2,139 1,432 Western Europe 1,854 1,497 USA Other markets Total 7,609 6,214 This year s improvement is partly due to the continued focus on core products, which are circular duct systems, roof drainage, Construline and Building Systems. In addition to this, the Company has seen ageographical shift towards Central and Eastern Europe, which has also boosted profitability. The acquisition of Astron, and the synergies that this has produced, have had ahighly favourable impact on results. Profitability in Western Europe has improved during the year after several weak years. The restructuring programme that was launched in 2005 has also contributed to the improvement in results. Profit after financial items Profit after financial items was SEK 797 M ( 484 ). Net profit for the year Net profit for the year rose to SEK 585 M (351 ). The effective tax rate for Lindab was 26.6 percent ( 27.5 ). Earnings per Share After-tax basic earnings per share amounted to SEK 6.45 ( 2.93 )Diluted earnings totalled SEK 6.29 (2.86 ). Earnings per share calculated on the actual number of shares amounted to SEK Investments Gross investments for 2006 amounted to SEK 530 M(891 ). The largest single investments were the acquisition of CCL Veloduct Ltd. at SEK 291 M, and Airbat S.A.S. at SEK 20 M. Excluding these acquisitions, investments amounted to SEK 146 M ( 218 ). Total depreciation and amortisation for the period amounted to SEK 209 M ( 194 ), of which SEK 9 M ( 3) relates to consolidated amortisation of surplus value on intangible assets. Financial position Return Return on capital employed increased to 18.2 percent (12.3 )due to improved results. Return on equity increased to 26.8 percent (13.4 ). Return on operating capital increased to 18.8 percent ( 12.5 ). Cash flow Cash flows from operating activities were SEK 778 M(730 ). This increase over the previous year is mainly attributable to a higher operating profit, which has however, been offset by increased working capital. The three acquisitions have affected cash flow from investing activities. The preliminary acquisition price for CCL Veloduct Ltd. was SEK 291 M and the preliminary acquisition price for Airbat was SEK 20 M. Some of the operations of Gowco Texas were acquired for SEK 4 M. The final settlement of the acquisition of Astron Buildings resulted in a negative cash flow of SEK 69 M. The sale of distribution facilities and the operations in Scandab AB resulted in a positive cash flow of SEK 85 M. 32 Directors Report

33 Net debt/equity ratio and equity/assets ratio The net debt ( the difference between interest-bearing assets and interest-bearing liabilities ) was SEK 2,602 M ( 1,846 ) at the end of December Interest-bearing liabilities amounted to SEK 2,808 M ( 2,096 ), of which SEK 106 M ( 105 ) was allocated to pensions. Equity/assets ratio was 31 percent ( 43 ). At the end of December, the debt/equity ratio was 1.2, compared to 0.7 on the same date the previous year. Net financial income The net financial income for the year as a whole was SEK 97 M ( 73 ). The SEK 24 M decrease is mainly due to a higher net debt and higher interest rates. Cash and Cash Equivalents At the end of the year, consolidated cash and cash equivalents amounted to SEK 199 M ( 244 ). Available cash and cash equivalents, including unused credit facilities, totalled SEK 1,468 M ( 1,102 ). Research and development Lindab s business operations are based on simplifying the construction process through the development of innovative products. The Company aims to remain at the forefront of product design and development in its two business areas. Simplified construction is one of our core values and a cornerstone of our product development process, resulting in products that provide extra value to our customers. To make this possible, customer views and feedback are utilised as a constant source of information for product development. Development projects are conducted in close collaboration with universities and materials suppliers. This ensures that we always have access to the latest developments in our areas and can thereby create the solutions that best meet our customers expectations. Considerable resources are also dedicated to the development of products to enable optimal manufacturing with enhanced performance, lower costs and better environmental properties. Research and development is conducted at nine facilities. In 2006, costs for research and development amounted to SEK 43 M ( 40 )ofwhich SEK 21 M(13 )was in the Profile business area, SEK 21 M ( 26 )in the Ventilation business area and SEK 1 M ( 1) in other operations. The Group s product design and development departments employed a staff of60 (59),of which 30 ( 30 )worked in Ventilation and 30 ( 29 ) in Profile. The environment Most of the Group s companies that have extensive production operations implement the ISO environmental management standard. Operations involve the manufacture of sheet steel products. Given the production processes and the products involved, the environmental impact is minimal. Two of the Swedish companies have permits and six must be registered under the Swedish Environmental Code. These permits are for engineering businesses with more than 20,000 m 2 of workshop floor space and for the surface treatment of metals. One company is planning to apply for a permit since its use of cutting fluid will exceed 2,000 litres. The main impacts on the environment are dust emissions, discharge of metals into wastewater and noise from traffic and ventilation facilities. The Group has no environmental liabilities and the business is not of a type that causes the contamination of land or water, which can require clean-up measures. Environmental insurance has been taken out to cover liability for damages in accordance with the Swedish Environmental Code for operations conducted in properties in Sweden. The Lindab Group will abide by Swedish and international legislation. Profit-sharing system For all employees with a permanent position of employment in the Swedish Lindab companies, there is an agreement for the payment of contributions into a profit-sharing foundation. The annual payments are based on the earnings of the Swedish group companies. This agreement stipulates that from 2001 contributions are to be invested in Ratos AB shares. However, up to the end of 2000, before the Group was owned by Ratos AB, contributions were invested in Lindab shares under the terms of the agreement. Now that Lindab s shares are traded on the stock exchange, the investment will be transferred back to Lindab shares. As older funds are withdrawn, remaining contributions can be transferred from Ratos shares for investment in Lindab shares. By April 2011, it will be possible for all non-cash funds to consist of Lindab shares again. In 2006, SEK 6.0 M ( 5.8 ), including special employers contribution, was paid into the profit-sharing foundation. Personnel and personnel development CCL Veloduct Ltd. was acquired at the end of the year. The number of employees at the time of acquisition was 245. Airbat S.A.S. was acquired in December. This company had 25 employees when it was acquired. Directors Report 33

34 lindab annual report Astron Buildings S.A. is also included in this year s figures for the whole year, compared with just four months the previous year. This along with other changes in the Group s operations, meant that the number of employees at the end of the year increased by 463 ( 468 ) to 4,942 ( 4,479 ). The average number of employees in the Lindab Group increased by 554 to 4,689 ( 4,135 ). The average number of employees in Sweden was 1,078 ( 1,124 ), equivalent to 23 percent ( 27 ) of the overall workforce. Information on HR costs and the average number of employees can be found in Note 6. In some countries, ( chiefly Sweden, Denmark, Norway, Luxembourg and the USA ) Lindab s employees are members of trade unions. Lindab considers it has a good relationship with its employees and their trade unions and the Company has not experienced or been the subject of any major stoppage of work, reduced working pace or collective action. Furthermore, Lindab has had no problems in the recent past, and expects no problems in the foreseeable future, with the recruitment of personnel for its operations. In order to be able to develop the Company at all levels, both externally and internally, Lindab has been working for a number of years with three distinct, wellfounded operational core values Simplified construction, Down-to-earth and Neatness and order. These are constantly used as the starting point for ongoing personnel development in the Company. The Company s employees are encouraged to participate in ongoing improvement efforts and employee suggestions contribute greatly to developments at various levels in the organisation. The Swedish companies are particularly good in this respect. By recruiting, training and retaining proficient and dedicated personnel, Lindab strives to maintain the entrepreneurial spirit that has characterised the Company since its inception. Lindab actively recruits personnel internally to senior positions and offers its employees training programmes in leadership development. The Company has given priority to internal recruitment, thereby creating opportunities for its employees to develop, promoting business continuity and reducing employee turnover. As a result, a large proportion of Lindab s employees have been with the Company for a good number of years and many have been promoted to leading positions. Lindab s training programme is the basis of the Company s strategy for internal recruitment of executive personnel. Training activities are conducted at both alocal and Group level with courses for new employees through to specialist leadership training. Lindab Business Acumen is a training programme that combines practical exercises and simulations to give employees in leading positions a deeper insight into Lindab s operations, markets and financial circumstances. In order to train people in leading positions how to formulate clear and useful arguments when marketing Lindab s products and systems, the programme includes analysis and discussion of the added value that Lindab offers its customers. To date, more than 450 of the Company s employees have completed the Business Acumen programme. On average, every Lindab employees spends two to three days on courses each year. Disputes The Company is currently the subject of a cartel investigation being carried out by the Finnish Competition Authority, where the Company s and some of its competitors operations in the ventilation industry in Finland are being scrutinised. The investigation began in 2003 and the Company has hitherto provided the Finnish Competition Authority with all the information that it has requested. The Finnish Competition Authority may continue its investigation with requests for further information, but the Company does not know, at the present time, whether the investigation will continue. If it does, the Company intends to continue to maintain its standpoint that the accusations of a cartel are unfounded. The investigation has focused solely on, and been directed at, the Company s Finnish subsidiaries. Following discussions with its Finnish legal advisors, the Company considers that any consequential fines ( fines for breach of competition ), in accordance with previous practice in Finland, should probably be based on the turnover of the Finnish subsidiaries in question and therefore not exceed SEK 10 M. However, if it finds there has been abreach of the competition laws, the Market Court can formally rule that a consequential fine, up to 10 percent of Lindab s total net sales, be imposed. The Company has no funds reserved in relation to this investigation. The Company was also the subject of a claim for compensation under an agreement in France relating to a building supplied by Astron. A settlement was achieved after yearend closure of accounts without any financial impact for the Company. In 2006, two buildings that had been supplied by Astron, one in the Czech Republic and one in Germany, collapsed under the weight of unusually large amounts of snow. The Company has not received any claims related to these buildings, but there is no guarantee that claims will not be asserted in the future. Even though an independent examination of the building in the Czech Republic, carried out at the request of the 34 Directors Report

35 Company, showed that the building had been assembled incorrectly by a third party, the incident is currently the subject of an investigation that is being carried out by a Czech public prosecutor. Tax Disputes The Company is involved in a tax dispute in the Czech Republic. The dispute is the result of a 2003 tax audit of the Company s Czech subsidiary, Lindab s.r.o., for the 2001 and 2000 fiscal years. In the light of what was unveiled in the tax audit, the Czech tax authorities instructed Lindab s.r.o. to pay a total amount of SEK 8 M in corporate tax, VAT and penalty fees. The tax authority claimed that Lindab s.r.o. had reported the transactions in question in an unsatisfactory manner. The amount that Lindab has been instructed to pay is based on an assessment performed by the tax authority. The Company does not share the opinion of the Czech tax authority and appealed against the decision in February 2005 to the Department of Finance in the Czech Republic. The Company has already paid the corporate tax and VAT established by the tax authority. After the close of the operating year, the court in the Czech Republic has rejected the Company s appeal. The Company will appeal to the Supreme Administrative Court. Furthermore, the Company has recovered, after the close of the operating year, half the penalty fee for corporate tax and is expected to recover half the penalty fee for VAT. The total sum of SEK 8 M for the dispute has been recognised as a commitment in the consolidated annual report. See Note 30. Events After the Balance Sheet Date No significant events have occurred after the balance sheet date to affect the adoption of the income statements and balance sheets. New initiatives One of the most important, projects during 2007 will be the new factory unit in Yaroslavl, 300 kilometres north of Moscow. This is due to be operational in Q The factory in St. Petersburg has been completed and Air Duct Systems will be launched in this rapidly expanding Russian market. The goal is to get closer to our customers in Russia and Ukraine and strengthen relationships and the level of service. The Company is continuing to focus on Eastern Europe with amove into a further four countries ( Ukraine, Slovakia, Bosnia-Herzegovina and Bulgaria ). Outlooks for 2007 In light of the analyses from Euroconstruct, we remain positive about our market growth in Our geographical spread is favourable with establishments also in markets where growth is particularly strong. All things considered, it is our opinion that the coming year will continue to show positive growth. Parent company results Profit amounted to SEK 241 M(-30 ). Group contributions received by the Parent Company from its subsidiaries during the year have contributed to this year s improved results. Dividend proposal The Board ofdirectors and CEO propose that SEK 3.25 per share, a maximum of SEK 256 M, should be paid in dividends to shareholders for the financial year of Monday 30 April 2007 is proposed as the dividends record date. If the Annual General Meeting resolves to accept the proposal, it is expected that the dividend will be paid through VPC ( Swedish Securities Register Center )on Friday 4 May The Board ofdirectors considers that the proposed dividend is justifiable and that the Company s and the Group s equity, consolidation requirements, liquidity and position have been taken into consideration, including estimated future cash flows, in order for it to be able to fulfil short-term and long-term obligations and maintain the ability to make necessary investments. Furthermore, the proposed dividend is in line with the dividend policy adopted by the Board of Directors. Profit allocation proposal The Annual Report will be presented at the Annual General Meeting on 25 April 2007 as follows: At the disposal of the Annual General Meeting SEK Opening balance, brought forward 400,000,007 Unredeemed shares 4,476,000 Exercised options 90,164,757 Bonus issue 74,541,451 Profit for the year 241,487,687 Closing balance, brought forward 661,587,000 The Board of Directors and CEO propose that SEK 3.25 per share, a maximum of SEK 255,800,415, should be paid to the shareholders and that the remaining SEK 405,786,585 be carried forward. Directors Report 35

36 lindab annual report The Group s Key Figures SEK M unless otherwise specified Net sales and profit * 2002* Net sales 7,609 6,214 5,477 5,302 5,235 Growth, % Sales abroad, % Operating profit ( EBITDA ) 1, Operating profit ( EBITA ) ) ) Depreciation Operating profit ( EBIT ) Profit after financial items ( EBT ) Profit for the year Cash flow Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash flow for the year Operating cash flow Capital employed and financing Total assets as per balance sheet 7,077 6,525 5,510 5,178 5,298 Capital employed 4,998 4,949 4,377 4,247 4,316 Operating capital 4,792 4,699 4,227 4,001 4,183 Net debt 2,602 1,846 1,858 1,791 1,931 Equity 2,190 2,853 2,369 2,210 2,252 Data per share, SEK Undiluted average number of shares 90,701, ,000, ,000, ,000, ,000,000 Diluted average number of shares 93,061, ,940, ,736, ,736, ,736,000 Basic number of shares at end of year 78,707, ,000, ,000, ,000, ,000,000 Diluted number of shares at end of year 78,707, ,940, ,736, ,736, ,736,000 Undiluted earnings per share Diluted earnings per share ( EPS ) Shareholders equity per basic share Shareholders equity per diluted share Cash flow from operating activities per share Dividend per share ( for 2006 as proposed by the Board ) P/E ratio 20.7 ET ET ET ET Quoted price at end of year, LIAB A ET ET ET ET Market value at end of year 10,252 ET ET ET ET Investments Fixed assets ( gross ) * ) The key figures for have not been restated on an IFRS basis. 1 ) Adjusted for SEK 41 M in restructuring expenses, SEK 25 M in flotation expenses and a capital gain of SEK 27 M from the sale of property. 2 ) Adjusted for SEK 40 M in restructuring expenses and a capital gain of SEK 47 M from the sale of property. 3 ) To enable comparison with , is calculated on the operating profit ( EBITA ). 36 The Group s Key Figures

37 SEK M unless otherwise specified Key figures * 2002* Operating margin ( EBITDA ), % Operating margin ( EBITA ), % Operating margin ( EBIT ), % Profit margin ( EBT ), % Return on capital employed, % Return on operating capital, % ) ) Return on shareholders equity, % Equity/assets ratio, % Net debt/equity ratio ( times ) Interest coverage ratio ( times ) Personnel Average number of employees 4,689 4,135 4,138 3,920 3,766 of which abroad 3,611 3,011 2,936 2,617 2,400 Salary costs including social contributions and pensions costs 1,706 1,480 1,385 1,374 1,360 Sales per employee, SEK thousands 1,623 1,503 1,324 1,352 1,390 Definitions: Operating profit ( EBITDA ) Operating profit comprises results before planned depreciation/amortisation, and before consolidated amortisation of surplus value on intangible assets ( EBITDA ). Operating profit ( EBITA ) Operating profit comprises results after planned depreciation/amortisation, but before consolidated amortisation of surplus value on intangible assets ( EBITA ). Operating profit ( EBIT ) Operating profit comprises results before financial items and tax. Operating cash flow See chart on page 46, Consolidated Cash Flow Statement. Capital employed Total assets minus non-interest-bearing liabilities, including deferred tax liabilities. Operating capital Total net debt, minority interest and shareholders equity. Net debt Long-term and current interest-bearing liabilities, including interest-bearing provisions, minus interest-bearing assets and cash and bank. Number of shares Average number of shares and number of shares at end of year are adjusted taking into account the 8-for-1 and 15-for-1 splits in Diluted number of shares Number of shares calculated, subject to dilution of stock options issued by the Company in accordance with IAS 33. Earnings per share Profit for the year attributable to the Parent Company s shareholders in relation to the average number of outstanding shares. Shareholders equity per share Shareholders equity, excluding minority interest, in relation to the number of outstanding shares at the end of the period. Cash flow from operating activities per share The cash flow from operating activities in relation to the average number of shares at the end of the year. P/E ratio The quoted price at the end of the year divided by earnings per share. Operating margin ( EBITDA ) The operating margin has been calculated as the results before planned depreciation/amortisation, and before consolidated amortisation of surplus value on intangible assets ( EBITDA ), expressed as a percentage of net sales for the year. Operating margin ( EBITA ) The operating margin has been calculated as the results after planned depreciation/amortisation, but before consolidated amortisation of surplus value on intangible assets ( EBITA ), expressed as a percentage of net sales for the year. Operating margin ( EBIT ) The operating margin has been calculated as the results before financial items and tax ( EBIT ), expressed as a percentage of net sales for the year. Profit margin ( EBT ) The profit margin has been calculated as the results after financial items ( EBT ), expressed as a percentage of net sales for the year. Return on capital employed Return on capital employed comprises consolidated results after financial items plus financial expenses as a percentage of average capital employed. Return on operating capital Operating profit ( EBIT ) as a percentage of average opera ting capital. Return on shareholders equity Return on shareholders equity comprises the year s results as a percentage of weighted average equity. Equity/assets ratio The equity/assets ratio has been calculated as shareholders equity as a percentage of total assets as per the balance sheet. Net debt/equity ratio The net debt in relation to shareholders equity. Interest coverage ratio The interest coverage ratio has been calculated as results after net financial income plus financial expenses in relation to financial expenses. The Group s Key Figures 37

38 lindab annual report Consolidated Income Statement Amounts in SEK M Note Net sales 7 7,609 6,214 Cost of goods sold 8, 9 5,251 4,440 Gross profit 2,358 1,774 Other operating income Selling expenses 8, Administration expenses 8, 9, R & D costs 8, 9, Other operating expenses 9, Operating profit Interest income Interest expenses Other financial income and expenses Profit after financial items Tax on profit for the year Profit for the year Attributable to Parent company shareholders Profit for the year Undiluted earnings per share, SEK Diluted earnings per share, SEK Consolidated Income Statement

39 Notes to the Income Statement Notes 7 to 15 are specific to items in the Income Statement. Information on segment reporting is included in Note 7. Net sales Net sales totalled SEK 7,609 M ( 6,214 ), which represents a 22 percent increase against the previous year. When adjusted for acquisitions and divestments, consolidated net sales increased by 9 percent. When adjusted for exchange rate fluctuations, the increase was 10 percent. The increase, not adjusted for currency, business acquisitions and divestments, was greatest in the Central and Eastern European markets, where the increase was 49 percent in Western Europe came next with 24 percent, the Nordic countries with 9 percent and the USA with 4 percent. Gross profit Gross profit increased by 32.9 percent to SEK 2,358 M ( 1,774 ). The gross margin increased to 31.0 percent ( 28.5 ) of the net sales. The chief reason for this was the Group s streamlining of production. This was achieved with the set-up of the production unit in Prague, which came into operation at the start of 2004 and now has good capacity utilisation. Another contributory factor is the focus on the core products. Other operating income Other operating income amounted to SEK 77 M ( 92 ). This includes a capital gain of SEK 27 M ( 47 ) from the sale of real estate. In addition to this capital gain, most of other operating income comprises exchange rate gains on operating receivables/liabilities. Indirect costs Selling and administration expenses increased by 12 percent to SEK 1,382 M ( 1,233 ), which is 18 percent ( 20 )ofnet sales. Research and development costs increased to SEK 43 M ( 40 ), which is 0.6 percent ( 0.6 ) of net sales. Other operating expenses This includes a SEK 41 M restructuring cost, and also mainly exchange rate losses on operating liabilities/receivables. Operating profit Operating profit (EBITA ) was SEK 903 M ( 560 ), an increase of 61.3 percent. Operating profit ( EBIT )was SEK 894 M ( 557 ), which is a 60.5 percent improvement over the previous year. The operating margin ( EBITA) adjusted for one-off items, increased to 12.4 percent ( 8.9 ). Depreciation/amortisation and writedowns amounted to SEK 209 M ( 194 ), of which SEK 9 M ( 3) relates to consolidated amortisation of surplus value on intangible assets. A SEK 41 M restructuring reserve for Ventilation, SEK 25 M in flotation expenses and a capital gain of SEK 27 M from the sale of property have been charged to operating profit. Net financial income Net financial income for the year were SEK 97 M( 73 ). The lower net financial income is mainly due to higher net debt and higher interest rates. Profit after financial items Profit after financial items increased by 64.7 percent to SEK 797 M ( 484 ). Taxes The tax expenses for the year amounted to SEK 212 M(133 ), of which SEK 207 M ( 140 ) was income tax and SEK 5 M tax expenses for deferred tax. Deferred tax in the previous year was SEK 7 M in tax income. The effective tax rate was 26.6 percent ( 27.5 ). Earnings per Share After-tax basic earnings per share amounted to SEK 6.45 (2.93 )Earnings per share calculated on the actual number of shares amounted to SEK After-tax diluted earnings per share amounted to SEK 6.29 ( 2.86 ). Consolidated Income Statement 39

40 lindab annual report Consolidated Balance Sheet Amounts in SEK M Note 31 Dec Dec 2005 ASSETS Fixed assets Intangible fixed assets Capitalised expenditure for development work, etc Other intangible fixed assets Patents and similar rights Goodwill 16 2,616 2,398 Total intangible assets 2,690 2,479 Tangible fixed assets Buildings and land 17, 18, Machinery and equipment Construction in progress and advanced payments on tangible fixed assets Total tangible fixed assets 1,391 1,527 Financial fixed assets Financial investments ) Deferred tax assets Holdings of other long-term securities Other long-term receivables Total financial fixed assets Total fixed assets 4,402 4,336 Current assets Stock 21 1, Accounts receivable 22 1, Other receivables Tax assets Prepaid expenses and accrued income Prepaid expenses and accrued income, interest-bearing Cash and bank Total current assets 2,675 2,189 TOTAL ASSETS 7,077 6, Consolidated Balance Sheet

41 Amounts in SEK M Note 31 Dec Dec 2005 EQUITY AND LIABILITIES Shareholders' equity Equity attributable to Parent Company shareholders Share capital Other capital contributed 2,225 2,209 Reserves Profit brought forward incl. profit for the year Total shareholders' equity 2,190 2,853 Long-term liabilities Interest-bearing liabilities Liabilities to credit institutions 27 2,239 1,666 2 ) Provisions for pensions and similar obligations ) Total interest-bearing liabilities 2,345 1,771 Non-interest-bearing liabilities Deferred tax liabilities Other provisions ) Other liabilities ) Total non-interest-bearing liabilities Total long-term liabilities 2,710 2,092 Current liabilities Interest-bearing liabilities Liabilities to credit institutions Overdraft facilities Accrued expenses and deferred income Total interest-bearing liabilities Non-interest-bearing liabilities Advance payments from customers Accounts payable Tax liabilities Other provisions ) Other liabilities Accrued expenses and deferred income ) Total non-interest-bearing liabilities 1,714 1,255 Total current liabilities 2,177 1,580 TOTAL EQUITY AND LIABILITIES 7,077 6,525 Pledged assets 30 4,647 4,451 Contingent liabilities The following reclassifications for the full year of 2005 have been made compared to previously published reports: 1 ) A total of SEK 78 M in current non-interest-bearing liabilities has been transferred to non-interest-bearing provisions. 2 ) SEK 8 M has been transferred from long-term interest-bearing liabilities to non-interest-bearing liabilities. 3 ) Financial fixed assets ( interest bearing ) and pension provisions have been reduced by SEK 48 M each in order to net account for provisions. Consolidated Balance Sheet 41

42 lindab annual report Notes to the Balance Sheet Notes 14 and 16 to 30 are specific to items in the Balance Sheet. For definitions of the Key Figures, see page 37. Net liabilities At the end of the year, the net liabilities amounted to SEK 2,602 M ( 1,846 ). Capital employed Consolidated capital employed, including goodwill and surplus values, totalled SEK 4,998 M ( 4,949 ). Interest-bearing liabilities Interest-bearing liabilities increased to SEK 2,808 M(2,096 ), of which SEK 106 M ( 105 ) was for pension obligations. Return on capital employed Return on capital employed, including goodwill and consolidated surplus value, increased to 18.2 percent ( 12.3 ) in Equity/assets ratio The consolidated equity/assets ratio, i.e. shareholders equity in relation to total assets, decreased to 31 percent (43). Return on shareholders equity This year s profit in relation to shareholders equity has risen to 26.8 percent ( 13.4 ). Operating capital The operating capital amounted to SEK 4,792 M ( 4,699 ). Return on operating capital Return on operating capital increased to 18.8 percent ( 12.5 ). Net debt/equity ratio The net debt/equity ratio, i.e. the net debt in relation to shareholders equity, was 1.2 times ( 0.7 ) compared with the previous year. Interest coverage ratio The interest coverage ratio was 8.4 times ( 6.4 ), which is a measurement of how many times the interest could be paid from available profit. 42 Consolidated Balance Sheet

43 Consolidated Equity Capital Changes in consolidated equity Equity relating to Parent Company s shareholders Minority interest Total equity Amounts in SEK M Share capital Other capital contributed Reserves Profit brought forward Opening balance, 1 January , ,369 Translation differences Acquisition of minority interests 2 2 Premium for managements options 1 1 Changes in equity not recognised in income statement Profit for the year Closing balance, 31 December , ,853 Translation differences Premium for managements options 3 3 Exercised options Bonus issue New shares issue 0 1 ) 0 Redemption of shares 0 2 ) 1,196 1,196 Changes in equity not recognised in income statement ,196-1,248 Profit for the year Closing balance, 31 December , ,190 1 ) During the year, a specific issue of new B shares to Ratos AB was implemented. The issue totalled SEK 373,601.25, which increased share capital by the equivalent amount. 2 ) As a result of the common share redemption offer that has been effected, the share capital decreased by SEK 373,601.25, which is equivalent to 2,988,810 shares at a nominal value of SEK Furthermore, a specific redemption of B shares to Ratos AB has been implemented during the second quarter to a total amount of SEK 373,601.25, which reduced the share capital by the equivalent amount. In conjunction with this, SEK 373, was transferred from profit brought forward to restricted reserves. Changes in Consolidated Equity 43

44 lindab annual report Notes to changes in consolidated equity Outstanding shares The share capital on 31 December 2006 was SEK 78,707,820 split between 78,707,820 class A shares only. All shares have a face value of SEK On 1 January 2006, the number of shares was 1,000,000. In the first quarter, an 8-for-1 stock split was effected. The decision was also then taken to implement the redemption of 2,988,810 shares and a specific issue of the same number of new B shares to Ratos AB. In May, the share redemption was completed and the decision was taken to redeem all 2,988,810 B shares. The implemented 15-for-1 split is equivalent to 44,832,150 shares. The Extraordinary General Meeting on 13 October 2006 decided to issue bonus shares through a transfer from non-restricted equity to share capital. The increase in share capital did not entail the issue of new shares. It was also decided to implement a 15-for-1 stock split, which together with the aforementioned issue of bonus shares meant that the face value of each share changed from SEK to SEK The share capital thereafter rose to SEK 78,707,820. For further information, see Note 24 Share Capital. Options At an Extraordinary General Meeting on 16 February 2006, it was decided to issue 37,600 stock options to senior executives. SEK 3 M of this has been exercised by senior executives for these option premiums. Together with previously issued options, this gives a total of 62,398 stock options. As at 14 November 2006, all stock options had been exercised in connection with the proposed flotation of the Company s shares. As a consequence, 3,539,970 shares were subscribed for at a per-share subscription price of SEK The Company s capital increased by SEK 91,154, from the options that have been exercised. 44 Changes in Consolidated Equity

45 Consolidated Cash Flow Statement Amounts in SEK M Note Operating activities Operating profi t Reversal of depreciation/amortisation Provisions, not affecting cash flow 54 5 Adjustments for other items not affecting cash flow Total 1, Interest received Interest paid Tax paid Cash flow from operating activities before change in working capital Change in working capital Stock ( increase /decrease + ) Operating receivables ( increase /decrease + ) Operating liabilities ( increase + /decrease ) Total change in working capital Cash flow from operating activities Investing activities Acquisitions of Group companies Divestment of Group companies Investments in intangible fixed assets Investments in tangible fixed assets Decrease of ( + ) /increase of ( ) investments in fi nancial fi xed assets 12 8 Sale/disposal of intangible fixed assets 16-6 Sale/disposal of tangible fixed assets Cash flow from investing activities Financing activities Loans raised 3, Amortisation of debt 2, Exercised options 91 - Redemption of Shares 1,196 - Issue of new shares 0 - Option premiums 3 0 Change of minority interest - 3 Cash flow of financing activities Cash flow for the year Cash and cash equivalents at start of the year Effect of exchange rate changes on cash and cash equivalents 4 7 Cash and cash equivalents at end of year Consolidated Cash Flow Statement 45

46 lindab annual report Amounts in SEK M Operating cash flow Operating profit ( EBIT ) One-off items 39 7 Depreciation/amortisation Investment/sale of tangible and intangible fixed assets Change in working capital Interest paid and received Items not affecting cash flow Operating cash flow Operating cash flow/profit before tax Correlation between Cash flow from operating activities and Operating cash flow Amounts in SEK M Cash flow from operating activities One-off items 39 7 Investment/sale of tangible and intangible fixed assets Reversal of tax paid Operating cash flow One-off items for 2006 consist of SEK 41 M in restructuring expenses for the Ventilation business area, SEK 25 M in flotation expenses and a capital gain of SEK 27 M from the sale of property. In the previous year, the oneoff items consisted of a capital gain of SEK 47 M from the sale of property and SEK 40 M in restructuring expenses for the Ventilation business area. 46 Consolidated Cash Flow Statement

47 Notes to the Cash Flow Statement For a more detailed description of some of the items in the Cash Flow Statement, see Notes 5 and 8. Cash flow The cash flow from operating activities and investing activities was SEK 354 M ( 63 ). Items not affecting cash flow Items not affecting the cash flow relate mainly to realised gains and losses resulting from the sale of assets. These have to be eliminated because the cash impact from the sale of fixed assets and operations is recognised separately in cash flow from investing activities. Provisions are also items that do not affect the cash flow and should therefore also be taken into account. Finally, depreciation is reversed as it is a non-cash item. Working capital Working capital increased by SEK 104 M for the year. The comparable figure for 2005 was a decrease of SEK 143 M. The decrease in working capital is attributable to price increases in steel, which in turn increased inventories and operating receivables/liabilities. Investments and divestments Investments in intangible fixed assets amounted to SEK 15 M ( 15 ). Investments in tangible fixed assets totalled SEK 131 M ( 203 ). The investments relate principally to expansion and maintenance investments, mainly in production facilities. The investments focus on a number of facilities within the Group. Nine distribution properties have been sold during the year, resulting in a positive cash flow of SEK 78 M. Company acquisitions and divestments CCL Veloduct Ltd. was acquired on 6 November and was consolidated into the Lindab Group from 1 November. The acquisition amounted preliminarily to SEK 291 M. The French company Airbat S.A.S., which operates in the ventilation industry with a focus on circular ducts, was acquired in December and the preliminary acquisition price was SEK 20 M. During the year, some of the operations of Gowco Texas, USA, were acquired. The acquisition price was approximately SEK 4M. A final settlement of the acquisition of Astron Buildings S.A. was made, which resulted in a negative cash flow of SEK 69 M. For amore detailed report, see Note 5, Business Combinations. During the year, the Group sold its operations in Scandab AB, resulting in apositive cash flow of SEK 10 M. Consolidated Cash Flow Statement 47

48 lindab annual report The Parent Company Parent Company Income Statement Amounts in SEK M Note Administration expenses 28 - Operating profit 28 0 Group contributions External interest income 0 0 External interest expenses Internal interest expenses Profit after financial items Tax on profit for the year Profit for the year Parent Company Cash Flow Statement Amounts in SEK M Operating profi t 28 0 Adjustments for other items not affecting cash flow - - Total 28 0 Interest received 0 0 Interest paid Cash flow from operating activities before change in working capital Change in working capital Operating receivables 14 - Operating liabilities 34 - Cash flow operating activities Financing activities Loans raised 1, Amortisation of debt Exercised options 91 - Redemption of Shares 1,196 - Issue of new shares 0 - Option premiums 3 1 Cash flow from financing activities Cash flow for the year 0 0 Cash and cash equivalents at start of the year 0 0 Cash and cash equivalents at end of the year The Parent Company

49 Parent Company Balance Sheet Amounts in SEK M Note 31 Dec Dec 2005 ASSETS Fixed assets Financial fixed assets Shares in Group companies 32 3,467 3,467 Total fixed assets 3,467 3,467 Current assets Accounts receivable 10 - Other receivables 4 - Cash and bank 0 0 Total current assets 14 0 TOTAL ASSETS 3,481 3,467 EQUITY AND LIABILITIES Shareholders' equity Restricted equity Share capital 79 1 Statutory reserv Non-restricted equity Share premium reserve 90 - Profi t brought forward 330 1,630 Profit for the year Total shareholders' equity 1,448 2,309 Long-term liabilities Interest-bearing liabilities Liabilities to credit institutions Liabilities to Group companies 909 1,058 Total interest-bearing liabilities 1,701 1,058 Total long-term liabilities 1,071 1,058 Current liabilities Interest-bearing liabilities Liabilities to credit institutions Accrued expenses and deferred income Total interest-bearing liabilities Non-interest-bearing liabilities Accounts payable 18 - Tax liabilities 94 - Other liabilities 5 - Accrued expenses and deferred income Total non-interest-bearing liabilities Total current liabilities TOTAL EQUITY AND LIABILITIES 3,481 3,467 Pledged assets 30 3,467 3,467 Contingent liabilities The Parent Company 49

50 lindab annual report Changes in Parent Company Equity Equity relating to Parent Company s shareholders Total equity Amounts in SEK M Share capital Share premium reserve Statutory reserve Share premium reserve Profit brought forward Profit for the year Opening balance, 1 January , ,309 Transfer of previous year s profit Transfer from statutory reserve to profit brought forward 1,500 1,500 - Group contribution received Standard tax assessment on Group contribution Premium for managements options 1 1 Transfer from share premium reserve to statutory reserve Changes in equity not recognised in income statement - 8 1,491 1, Profit for the year Closing balance, 31 December , ,309 Transfer of previous year s profit Bonus issue Exercised options Premium for managements options 3 3 Issue of new shares 0 1 ) 0 Redemption of shares 0 2 ) 1,196 1,196 Changes in equity not recognised in income statement , ,102 Profi t for year Closing balance, 31 December ,448 1 ) During the second quarter, a specific issue of new B shares to Ratos AB was implemented. The issue totalled SEK 373,601.25, which increased share capital by the equivalent amount. 2 ) As a result of the common share redemption offer that has been effected, the share capital decreased by SEK 373,601.25, which is equivalent to 2,988,810 shares at a nominal value of SEK Furthermore, a specific redemption of B shares to Ratos AB has been implemented during the second quarter to a total amount of SEK 373,601.25, which reduced the share capital by the equivalent amount. In conjunction with this, SEK 373, was transferred from profit brought forward to restricted reserves. 50 The Parent Company

51 Notes to changes in Parent Company equity Outstanding shares The share capital on 31 December 2006 was SEK 78,707,820 split between 78,707,820 class A shares only. All shares have a face value of SEK On 1 January 2006, the number of shares was 1,000,000. In the first quarter, an 8-for-1 stock split was effected. The decision was also then taken to implement the redemption of 2,988,810 shares and a specific issue of the same number of new B shares to Ratos AB. In May, the share redemption was completed and the decision was taken to redeem all 2,988,810 B shares. The implemented 15-for-1 split is equivalent to 44,832,150 shares. The Extraordinary General Meeting on 13 October 2006 decided to issue bonus shares through a transfer of SEK 74 M from non-restricted equity to share capital. The increase in share capital did not entail the issue of new shares. It was also decided to implement a 15-for-1 stock split, which together with the aforementioned issue of bonus shares meant that the face value of each share changed from SEK to SEK The share capital thereafter rose to SEK 78,707,820. For further information, see Note 24 Share Capital. Options At an Extraordinary General Meeting on 16 February 2006, it was decided to issue 37,600 stock options to senior executives. SEK 3 M of this has been exercised by senior executives for these option premiums. Together with previously issued options, this gives a total of 62,398 stock options. As at 14 November 2006, all stock options had been exercised in connection with the proposed flotation of the Company s shares. As a consequence, 3,539,970 shares were subscribed for at a per-share subscription price of SEK The Company s capital increased by SEK 91,154, from the options that have been exercised. The Parent Company 51

52 Notes to the Consolidated Financial Statements Amounts in SEK M unless otherwise specified. Note 1 General Information Lindab International AB, with headquarters in Båstad, registered in Sweden under registration number ( Parent Company ), and its subsidiaries ( known collectively as the Group ) and their activities, are described in the Directors Report. These consolidated financial statements have been approved for issue by the Board of Directors and the CEO on 14 February The Consolidated Income Statements and Balance Sheets and the Parent Company s Income Statements and Balance Sheets will be matters for approval at the Annual General Meeting on 25 April The LIndab Hall in Grevie, Sweden. Note 2 Summary of Significant Accounting Principles The most significant accounting principles that have been adopted when preparing these consolidated financial statements are presented below. These policies have been applied consistently for all the years presented, unless otherwise stated. All standards that the Group has adopted have to be applied retroactively, with the exception of IAS 39 Financial Instruments, which has been adopted with effect from 1 January Basis for preparation of accounts As of 1 January 2005, Lindab compiles its consolidated financial statements in accordance with the International Financial Reporting Standards ( IFRS ) and Recommendation RR 30 of the Swedish Financial Accounting Standards Council. Accordingly, this is Lindab s second Annual Report that has been prepared in accordance with the International Financial Reporting Standards. Consolidated and Separate Financial Statements The consolidated financial statements include the accounts of the Parent Company, Lindab International AB, and of the companies and business operations which the Parent Company has a direct or in direct controlling interest, and of associated companies. The consolidated financial statements have been prepared using the acquisition method. The consolidated financial statements do not show appropriations and untaxed reserves. These are divided into deferred tax liabilities, which are reported as anoninterest-bearing liability and other reserves in equity. This is divided on the basis of the tax rate applicable in each particular country. The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. The areas that involve considerable judgment, are of a complex nature or where the use of assumptions and estimates are of critical significance to the financial statements are outlined in Note 4. Elimination of intra- group transactions All profits and losses from the sale of goods or services by one Group company to another are eliminated, unless impairment has been identified. The same applies for associated companies, to the amount that is equal to the Group s share in the associated company. See Note 31 Transactions with Related Parties. The Acquisition Method Acquisitions are managed according to the acquisition method as defined in IFRS 3, Business Combinations. This is distinguished by the recognition of the acquired assets, liabilities and contingent liabilities at their market value after taking into account deferred tax at the time of acquisition. If the acquisition value of the subsidiary exceeds the market value of the entity s net assets, taking into account contingent liabilities, the difference is recognised as consolidated goodwill. Goodwill is not amortised, but is assessed for impairment at least once a year. Other acquired intangible assets are amortised over an estimated useful life. Entities acquired and sold are presented in the Consolidated Income Statement and Balance Sheet and the Cash Flow Statement during the holding period. If the acquisition cost is below the fair value of the acquired subsidiary s net assets, the difference is reported directly in the income statement. The cost of an acquisition is the fair value of assets acquired, equity instruments issued and liabilities incurred or assumed on the date of acquisition, and any costs directly attributable to the acquisition. Companies sold during the year are included in the consolidated financial statements until the time of divestment. Companies acquired during the year are included in the consolidated financial statements from the time of acquisition. Subsidiaries Companies in which the Parent Company directly or indirectly holds more than Notes to the Consolidated Financial Statements

53 percent of the voting rights, or in some other way exercises a controlling interest, are consolidated in their entirety. For subsidiaries in Lindab, see Note 32, Group Companies and Associated Companies. Associated Companies Associated companies are companies in which the Group controls percent of the voting rights. Ownership in associated companies is reported in the Consolidated Income Statement and Balance Sheet as defined in IAS 28, Investments in Associates, and thus under the equity method. These are reported on the balance sheet as part of financial fixed assets. The Group s share in the profits of the associated company after financial items, which have arisen in the associated company after the acquisition, is reported in the income statement under the heading Other Financial Income and Expenses. The purchase value of shares is recognised in the balance sheet, after adjustment for the Group s share in the associated company s profits, as part of financial fixed assets. The Group s share of changes in reserves after the acquisition is recognised in reserves. Undistributed profit from associated companies is recognised in consolidated equity as restricted reserves. When the Group s share in the losses of an associate is equal to or greater than its holding in the associate, including any doubtful receivables, the Group does not recognise any further losses, unless it has covered liabilities or made payments on behalf of the associate. Translation of Foreign Subsidiaries and Foreign Currency The consolidated financial statements are presented in Swedish krona ( SEK ). This is the Parent Company s functional currency and reporting currency. The income statements and balance sheets of operations abroad ( subsidiaries and associates ) are submitted in their functional currency and are translated into the Group s reporting currency according to the current rate of exchange method as defined in IAS 21 The Effects of Changes in Foreign Exchange Rates. Functional currency is the same as the local currency for the reporting entity s accounts. All assets and liabilities of subsidiary companies are translated using the rate on the balance sheet date and income and expenses are translated at average rates of exchange for the year. The exchange rate differences that arise when consolidating are carried directly to shareholders equity. If a subsidiary is sold, the accumulated translation differences are reported in the consolidated income statement in accordance with IAS 21. Transactions in foreign currencies are translated to the functional currency at the exchange rate prevailing on the date of the transaction. The Swedish Group companies receivables and liabilities in foreign currencies are valued at the rate on the balance sheet date. Exchange rate profits and losses that arise when paying and when translating monetary assets and liabilities in foreign currencies at the exchange rate on the balance sheet date are reported in the income statement. Exchange rate differences of a financial nature are recognised in financial income and expenses. Internal Pricing Market-based pricing is used for intragroup transactions. Income Recognition Income is accounted for under IAS 18, Revenue, except for construction contracts for which IAS 11, Construction Contracts, is used ( see page 56 ). Income from the sale of products and services is recognised once delivery has been made and significant risks and benefits associated with the ownership of the goods have been transferred to the purchaser. Sales are reported net of VAT, less taxes on goods, returns, freights and discounts. Work in progress is reported through recognition of contract revenue and expenses in the income statement, to the degree of completion on the balance sheet date. Impairment of Assets IAS 36, Impairment of Assets is applied when assessing the impairment of assets. Assets with an indefinite useful life are not amortised, but are tested for impairment at least once a year. Depreciated assets are assessed with regard todepletion in value whenever events or changes in circumstances indicate that the carrying value might not be recoverable. Impairment is recognised in the amount by which the asset s carrying value exceeds its recoverable value. The recoverable value is the greater of an asset s fair value, less costs to sell and value in use. When performing an impairment test, the assets are grouped at the lowest level, i.e. cash-generating units ( CGU ). For the Lindab Group, impairment testing is performed at Group level and in each business area. Borrowing Costs Borrowing is initially reported at fair value, i.e. net after transaction costs. Borrowing costs are charged as incurred during the period in which they arise, as defined in IAS 23, Borrowing Costs. Income Taxes The Group applies IAS 12, Income Taxes. Income tax comprises current tax and deferred tax. Current tax is tax that is to be paid or received during the current fiscal year. This also includes adjustments of tax attributable to previous periods. Deferred tax is reported as temporary differences between the reported values and the fiscal values of assets and liabilities to be paid in the future. The valuation of deferred tax is based on anticipated liabilities and receivables on the balance sheet date using the tax rates for the individual companies decided or announced on the balance sheet date. Deferred tax receivables are only reported to the extent that it is likely that future taxable surplus will be available and against which the temporary differences may be utilised. Deferred tax receivables and liabilities are offset when there is a legal right to offset current tax receivables and liabilities and when the deferred taxes are levied by the same tax authority. Taxloss carry-forwards are recognised to the extent that the losses are expected to be utilised to lower tax payments in the foreseeable future. See Note 14 for information on tax on profit/loss for the year and deferred tax receivables and liabilities. Segment Reporting Lindab has classified its operations into primary and secondary segments so that its reporting complies with IAS 14, Segment Reporting. The Group s primary segment is its two business areas, Ventilation and Profile, and the secondary segment is geographical markets. The geographical markets are the Nordic countries, Western Europe, Central and Eastern Europe, the USA and other markets. Segment reporting is presented in Note 7, Segment Reporting. Earnings per Share Earnings per share are reported in accord- Notes to the Consolidated Financial Statements 53

54 ance with IAS 33, Earnings Per Share. This is recognised immediately in the Consolidated Income Statement. Earnings per share are not affected by preference shares or convertible debentures as there are none. Nor does Lindab have any outstanding share option schemes, which means that Lindab does not have any dilution effect for 2006 as a whole. If the number of shares is changed during the year, a weighted average is calculated for the period s outstanding shares. Property, Plant and Equipment Buildings and land mainly comprise factories, shops and offices. These are reported at acquisition value, less accumulated planned depreciation and any impairment that has been made. Planned depreciation is based on the acquisition values of the assets and is allocated over the estimated useful life of the asset. Land is not depreciated. Additional expenses are added to the carrying value of the asset, or are reported as a separate asset, depending on whichever is appropriate, but only when it is probable that the future financial benefits associated with the asset will flow to the Group and the cost of the asset can be calculated in a reliable manner. All other forms of repairs and maintenance are recognised as costs in the income statement during the period in which they arise. Lindab applies component depreciation, which means that the acquisition value of each item of property, plant and equipment must be broken down into components, with the individual components depreciated separately over their respective useful lives. This applies to buildings, machinery and equipment. Machinery, equipment, vehicles and computers are depreciated in the year of purchase from the date when they are put into use. If not possible they are depreciated as if they were used for half a year. Depreciation periods are shown below. Financial Fixed Assets Financial fixed assets are recognised at their fair value. If the fair value is less than the acquisition value then there is an impairment loss. For additional information, see Notes 19 and 20, Long-term Fixed Assets, for information about values and categories of assets. Intangible Fixed Assets Goodwill Goodwill arising from the acquisition of a company and business operations is assessed according to IFRS 3, Business Combinations. Goodwill represents the amount by which the acquisition value exceeds the fair value of the Group s share of the acquired subsidiary s/associate s identifiable net assets at the time of acquisition. Goodwill from acquisitions of subsidiaries/associates is recognised as intangible assets. Goodwill is tested annually for impairment, or when there isan indication of impairment, and is reported at the acquisition value less accumulated impairment losses. Impairment is determined by estimating the discounted cash flows projected for the entity to which the goodwill relates. Impairment testing is based on the cash-generating unit ( CGU ). For the Lindab Group, impairment testing is performed at Group level and in each business area. In the Ventilation business area, aseparate test is performed for the USA. The test is not performed at lower levels as the business areas are strongly integrated and function as one unit. Gains or losses on the disposal of a subsidiary/associate include the remaining carrying value of goodwill relating to the entity sold. Brands, Patents and Similar Rights Brands, patents and similar rights are carried at acquisition value less accumulated impairment losses. Amortisation is applied on a straight-line basis across the estimated useful life of between five and ten years. Software Acquired software licences are capitalised on the basis of the costs arising when the software in question was acquired and put into operation. These costs are amortised over an estimated useful life of between three and five years. Capitalised Expenditure for Development Work, etc. Costs for research, undertaken in order to gain new scientific or technical knowledge, are charged to the income statement as incurred. The following depreciation periods have been used: Years Buildings Land improvements 20 Machinery and equipment 5 15 Vehicles and computers 5 Development costs, where the results of research are used for planning or establishing the production of new or greatly improved processes or products, are capitalised if it is considered that the process or product is technically or commercially viable. Costs that are to be capitalised include material costs, direct labour costs and a reasonable amount of indirect costs. Capitalised development costs are carried at the acquisition value less accumulated amortisation and impairment. The estimated useful life is three years. Financial Instruments According to IAS 39, Financial Instruments: Recognition and Measurement, financial instruments are divided into the following categories: Financial assets at fair value through profit and loss, includes financial assets that are held for trading and financial assets to which the fair value option has been applied.the results of this change in fair value on financial instruments in this category is recognised in the income statement during the period in which they arise. Held-to-maturity investments, are nonderivative financial assets with fixed or determinable payments and fixed maturity periods and which the Group does not intend to sell before their maturity date. The Lindab Group has no financial assets in this category. Loans and Receivables, are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. These kinds of loans and receivables usually arise when the Group pays cash to a party or supplies a customer with goods or services without intending to sell it. Loans and receivables are recognised at acquisition value, i.e. the amount that is expected to flow in, less allowance for doubtful accounts, which are assessed on an individual basis. The receivable s expected maturity period is short and the value is subsequently recognised at the nominal amount without discounting. Available-for-sale financial assets, includes non-derivative financial assets that are either classified as assets available for sale or do not fall into any of the other categories.the Group does not normally have any assets in this category. 54 Notes to the Consolidated Financial Statements

55 Financial liabilities at fair value through profit or loss. This group includes financial liabilities that are designated at fair value, for example derivates that are not included in hedge accounting. Changes in fair value are recognised in the income statement. Other financial liabilities. This category includes loans, other financial debts and accounts payable. The liabilities are valued at accumulated acquisition value. A financial asset or financial liability is included in the balance sheet when the Company is party to the instrument s conditions of agreement. Customer receivables are recognised in the balance sheet when the invoice has been sent and supplier invoices are recognised when received. The financial asset is removed from the balance sheet when the right to obtain cash flow from the asset expires or is transferred to another party by transferring all risks and benefits associated with the asset to the other party. A financial liability is removed from the balance sheet when the obligation has been met, cancelled or expired. The dividing line between and the reporting of current and long-term balance sheet items are consistently applied for all financial instruments. When a settlement or sale is expected to take place more than twelve ( 12 ) months after the balance sheet date, a financial asset is recognised as a fixed asset. Financial assets that are expected to be settled or sold within twelve ( 12 ) months after the balance sheet date are thus classified as current assets. Financial liabilities that are due more than twelve ( 12 ) months after the balance sheet date are recognised as long-term liabilities and those that are due for payment within twelve ( 12 ) months after the balance sheet date are recognised as current liabilities. The terms hedge accounting and embedded derivatives are defined in IAS 39. The Lindab Group does not use hedge accounting as it does not engage in hedging activities to secure future cash flows, equity in subsidiaries abroad or to change the fixed interest rate period of loans. Lindab has no purchasing agreements with terms that mean they should be accounted for as derivative instruments or embedded derivatives. Raw materials are purchased in Swedish crowns ( SEK ), the Euro and the US dollar. Some agreements may have currency clauses which allow renegotiation of the agreement. None of the agreements for the purchase of raw materials are binding, i.e. Lindab is not contractually bound to purchase minimum quantities from its suppliers. Receivables and Liabilities in Foreign Currencies All assets and liabilities of subsidiary companies are translated using the rate on the balance sheet date and income and expenses are translated at average rates of exchange for the year. The exchange rate differences that arise when consolidating are carried directly to equity. When subsidiaries abroad are sold, the accumulated exchange rate differences are recognised in the Consolidated Income Statement as defined in IAS 21, The Effects of Changes in Foreign Exchange Rates. Carrying Value and Fair Value of Financial Instruments Non-interest bearing financial instruments such as accounts receivable and accounts payable are recognised at their fair value. Interest bearing financial instruments such as consolidated borrowing is also recognised at its fair value. Otherwise, there are no financial instruments in the Group where there is a difference between the carrying value and the fair value. Inventories The Group s inventories have been reported after deductions have been made for internal profit, which has affected the operating profit. Inventories are valued at the lower of acquisition value and net selling value for raw materials, consumables and purchased finished goods, and the manufacturing cost of goods produced. Inventories have not been valued at more than their fair value. Goods are supplied between Group companies at market prices.the necessary obsolescence deductions have been made. Accounts Receivable Accounts receivable are reported at the original invoice amount, less allowance for doubtful accounts. The amount of the provision for doubtful accounts is based upon management s regular assessment of the status of receivables. Cash and Cash Equivalents Cash and cash equivalents include cash in hand and bank balances. Bank overdrafts are reported on the balance sheet as part of borrowings in current liabilities. Shareholders Equity Share Capital Transaction costs directly attributable to the issue of new shares or options are reported net, after tax, in shareholders equity as a deduction from the issue proceeds. Reporting Group Contributions and Shareholder Contributions Group contributions and shareholder contributions in the Parent Company are reported in accordance with URA 7 issued by the Swedish Financial Accounting Standards Council. Group contribution received in 2006 has been recognised as dividend distributions in the income statement, unlike 2005 when it was recognised directly in equity with the effects of tax taken into account. Group contributions were then paid to minimise tax costs for the Group. Redemption of Shares Redemption of shares has been carried directly to retained earnings. For redemption of shares, see page 43, the Consolidated Statement of Changes in Shareholders Equity and Note 24, Share Capital and Number of Shares. Provisions IAS 37, Provisions, Contingent Liabilities and Contingent Assets is applied for provisions except for provisions for personnel where IAS 19, Employee Benefits, is applied. when: A provision is reported when, and only there is an actual legal or informal obligation resulting from an event, it is probable that an expense will arise to settle the obligation and a reliable estimate of the amount can be made. The amount reported as a provision is the best estimate of the cost that is required to meet the current obligation on the balance sheet date. Notes to the Consolidated Financial Statements 55

56 Provisions for Pensions and Similar Obligations Lindab applies IAS 19, Employee Benefits, which means that pension benefits and other forms of compensation, which are payable e.g. upon termination or resignation to employees after conclusion of employment, are calculated on the basis of estimated future earnings and inflation. The recommendation makes a distinction between Defined Benefit and Defined Contribution Plans. Defined Benefit Plans are defined as plans where the company pays set contributions to a separate legal entity and has no obligation to pay additional contributions, even if the legal entity does not have sufficient assets to pay the benefits to employees attributable to their service until the reporting date. All plans that are not Defined Contribution Plans are considered to be Defined Benefit Plans. The Group has both Defined Benefit and Defined Contribution Plans. Sweden, Norway, Luxembourg and Germany have the most comprehensive Defined Benefit Pension Plans. Italy has a benefit plan for termination of employment. Sweden, Denmark, Finland and Germany and other countries have significant defined contribution pension plans. Defined contribution plans do not entail a re-evaluation in the consolidated financial statements. The costs for these are reported as an expense during the period that the employees carried out the services to which the charge relates. All expenses are recognised in the operating statement. However, benefit commitments are, in principle, assessed annually. Commitments of lesser amounts are re-evaluated at reasonable intervals and when necessary. These calculations are performed by independent actuaries. Expenses which arise due to re-evaluation are reported in the operating statement. However, the interest portion from changes in pension liability is recognised as financial expenses. Defined benefit plans can be unfunded or entirely or partially funded. In the case of funded plans, the company contributes to specific funds or foundations, for example. These pension plan assets are valued at their fair value and reduce the calculated pension obligations so they are recognised as net expense on the balance sheet. The liability for these defined benefit plans is valued at the present value of the expected future payments using a discount rate. The Projected Unit Credit Method is used to determine the present value. The Projected Unit Credit Method looks to each period of service giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final, total obligation on the balance sheet date. In this way, pension payments are recognised on a straight-line basis over the period of employment. Actuarial assumptions are used to quantify the amount of expected salary and pension increases and the expected return on plan assets. The discount rate is the rate at balance sheet date on AAA credit rated bonds or government bonds for each currency. The interest rate has a remaining maturity period equal to the pension obligations. Changes in actuarial assumptions and outcomes that vary from the assumptions give rise to so-called actuarial gains and losses. Calculated actuarial gains and losses are not recognised when they fall within the so-called 10% corridor. Income or expenses are recognised if the actuarial gains and losses are outside the corridor, i.e. they exceed 10 percent of the present value of the obligation or of the fair value of any plan assets. Actuarial gains and losses outside the 10 percent corridor are distributed over the expected average remaining working lives of the employees. Other contributions to employees are reported as an expense during the period when the employee performs the services to which the benefits pertains. Contractors and Similar Services Recognition of Contract Revenue and Expenses The Group complies with IAS 11, Construction Contracts, which prescribes the accounting treatment of revenue and expenses associated with construction contracts. By applying this standard, contract revenue and contract expenses are allocated to the accounting periods during which construction work is performed. To establish what results have been accomplished at a given point in time, information about the following components is required: Contract revenue Revenue attributable to the contract. The revenue should be such that the recipient can profit by them in the form of payments or other compensation. Contract expenses Expenses attributable to the contract activity that correspond to the contract revenue. Stage of completion Recognised expenses in relation to the estimated total cost of the contract. Basic terms and conditions for revenue recognition is that the contract revenue and expenses must be capable of being reliably measured. If the outcome of a contract cannot be estimated reliably at a specific point in time, e.g. at the end of the accounting year, no profit should be recognised. This means that contract revenue is recognised only to the extent of contract expenses incurred, i.e. the result is zero, until a reliable estimate of the amount can be made. As soon as this is possible, the contract switches to recognition of contract revenue and expenses. Leasing Lindab complies with IAS 17, Leases. Leases are classified as either finance leases or operating leases in the consolidated financial statements. With a finance lease, fixed assets are recognised in the balance sheet as an asset and long-term and current liabilities are recognised at an equal amount. Fixed assets are depreciated according to plan over the useful economic lifetime, while the leasing payments are reported as interest and amortisation of liabilities. The assets are reported in the balance sheet under the category of assets to which they belong. In the case of operating leases, no asset or liability is recognised in the balance sheet and payments made during the lease term are recognised as an expense in the income statement on a straight-line basis over the lease term. For further information on leasing, see Note 29. Dividends Dividend distributions to the Parent Company s shareholders are recognised as a liability in the consolidated financial statements in the period in which the dividends are approved by the Company s shareholders. Cash Flow Statements Lindab uses the indirect method allowed under IAS 7, Cash Flow Statements. The purpose is to provide a basis on which to assess the company s ability to generate cash flows and the company s need for these cash flows. The indirect method is used to prepare the cash flow statement. The following definitions have been used: 56 Notes to the Consolidated Financial Statements

57 cash and bank consists of cash in hand and deposits held at call with banks and similar institutions. Other cash and cash equivalents than cash and bank consists of current liquid investments that can easily be converted into cash and that are exposed to an insignificant risk from foreign currency exchange rate fluctuations. Cash flow is the flow of money coming into and going out from the company. Operating activities are the main income-generating activities of the company and other activities that are not investing or financing activities. Investing activities are the acquisition and disposal of fixed assets and such investments not qualifying as cash equivalents. Financing activities are activities that result in changes in the size and composition of the equity and borrowings of the company. Parent Company Statements compared with Consolidated Financial Statements The Parent Company s financial statements are prepared and presented in accordance with the Swedish Annual Accounts Act and the Swedish Financial Accounting Standards Council s Recommendations RR 30:05, Supplementary Accounting Regulations for Groups and RR 32:05, Reporting for Legal Entities. The Parent Company s accounting principles conform to the Group s principles in all respects, except for: Associated Companies Income taxes Leasing Financial Instruments Pensions Pledged Assets and Contingent Liabilities Pledged assets are reported if Lindab has pledged assets for the Company s or the Group s liabilities or obligations. These may include debts and provisions that might be shown in the balance sheet, but not necessarily. The pledged assets may be tied to assets in the balance sheet or encumbrances. The assets are entered at their carrying value and the encumbrances are reported at their nominal value. Shares in the Group companies are reported at their value in the Group. For additional information, see Note 30. Non-current Assets Held for Sale and Discontinued Operations Non-current assets held for sale and operations that are being wound down are reported in compliance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. The assets must be available for sale and it must be probable that the sale will take place within one year of reclassification. No non-current assets or operations have been subject to this standard in the financial years 2006 and Events After the Balance Sheet Date Events after the balance sheet date are reported in accordance with IAS 10, Events After the Balance Sheet Date. Government Grants Government grants are accounted for under IAS 20, Accounting for Government Grants and Disclosure ofgovernment Assistance. Government assistance is action by the government designed to provide an economic benefit specific to an entity or a category of entity qualifying under certain criteria. Government assistance is given on the condition that the recipient complies with, or will comply with, certain conditions. Government refers to government agencies or authorities and similar bodies, whether local, national or international. Grants related to assets are presented as a deduction in the carrying amount of the assets and grants related to income are presented as a deduction of the related expense. Sick Leave and Gender Balance Sick leave and gender balance among senior executives are reported in accordance with the recommendation of the Swedish Financial Accounting Standards Council, RR 32, Accounting for Legal Entities. Information about absence from work (due to illness ) for employees in Sweden is submitted for the financial year. Information about gender balance is reported as the balance between women and men among members of the Board, CEO and other people in Lindab s management. The balance is reported separately and the information refers to the situation on the balance sheet date. Related Party Disclosures Transactions and agreements with related parties and/or private individuals are accounted for under IAS 24, Related Party Disclosures. In the Group, expenses arising from intra-group transactions are eliminated and are thus not included in this disclosure/reporting requirement. See Note 31, Related Party Transactions, for the scope of these transactions. Amendments to published standards The following amendments that are relevant to the Group came into effect on 1 January 2006: IAS 1 and IAS 19 Actuarial Gains and Losses, Group Plans and Disclosures. IAS 21 Net Investment in a Foreign Operation. IAS 19 Alternative Fair Value. IAS 39 and IFRS 4 Financial Guarantee Contracts. IFRIC 4 Determining whether an Arrangement contains a Lease. None of these standards and interpretations has had any impact on the consolidated accounts. New Accounting Recommendations The International Accounting Standards Board (IASB )has issued the following new accounting recommendations that come into force for financial years beginning on 1 January 2007 or later. IAS 1, Presentation of Financial Statements, has been extended to include paragraphs 124 a c. These refer to new disclosure requirements relating to the entity s goals, policies and how it manages capital. Lindab will be assessing the effects of the application of IAS 1 paragraphs 124 a c in Principle sections of IAS 32, Financial Instruments: Disclosures and Presentation, were replaced by IRFS 7, Financial Instruments: Disclosures. IAS 32 will henceforth only contain requirements for the presentation of financial instruments. IFRS 7 includes all the disclosure requirements relating to the significance of financial instruments for an entity s financial position and performance, as well as quantitative and qualitative information about exposure to risks arising from financial instruments. Lindab will be assessing the effects of the application of IFRS 7 in Notes to the Consolidated Financial Statements 57

58 Note 3 Financial and Operational Risk Management Financial Risk Management The operations of the Group are exposed to financial risks. Financial risks refer to financing risk, liquidity risk, interest rate risk and currency risk. Lindab s financial policy for the management of financial risks has been approved by the Board of Directors and constitutes a framework of guidelines and regulations for the financing operations, which are centralised at Group Staff Economy and Finance. This enables Lindab to monitor all the Group s financial risk positions and to achieve cost-effectiveness, advantages of large-scale operation, skills development and protection of the Group s concerted interests. Financing Risk The financing risk is the risk that financing of the Group s capital requirements and refinancing of outstanding credits is impeded or becomes more expensive. In the spring of 2006, the Lindab Group implemented a SEK 3,700 M refinancing operation that replaced existing credit agreements, which matured in June Financing is split between two credits, one of which was used in a redemption procedure in the Parent Company amounting to SEK 1,196 M. SEK 200 M of this was amortized in The remaining amount, totalling SEK 2,500 M, is being used within the Group. The financing agreement includes three covenants, which are net debt in relation to EBITDA, equity/assets ratio and interest coverage ratio. These are reviewed quarterly. The remaining terms for these credits are five ( 5 ) and six ( 6 ) years respectively. Undrawn credit in the Group amounted to SEK 1,269 M ( 858 ) at the end of the year. Exchange rate movements, SEK SEK/EUR SEK/USD Liquidity Risk Liquidity risk is defined as the risk that the Group would incur increased costs due to lack of liquidity. All centrally managed loan maturities are planned in relation to the consolidated cash flow. Lindab s operations are seasonal, which has an adverse impact on the cash flow from January to June and a positive impact from July to December each year. Interest Rate Risk Interest rate risk is the risk that changes in the current interest rates will have an adverse impact on the Group. Lindab is a net borrower. The net liability at the end of the year was SEK 2,602 M(1,846 ), which means that rising interest rates have an adverse impact on the Group. Under the finance policy, any surplus liquidity must be used to repay existing loans. The finance policy also determines the fixed interest rate period for all borrowing. The policy stipulates that the average fixed interest rate period must be one to twelve months. As at 31 December 2006, the period was 6 months ( 2.5 ). Any increase in the interest rate will affect the Group s interest and rent expenses. A one ( 1 ) percentage point increase in interest rates increases the Group s expenses by SEK 32 M ( 26 )of which SEK 27 M ( 19 )are interest expenses and SEK 5 M ( 7 ) are rent expenses. Currency Risks The currency risk can be divided into two categories, depending on how the exposure arises. Transaction Risk Transaction risk arises from trading between Group companies, suppliers and customers if payment is made in a currency other than the Group company s local currency. Lindab s net exposure translated into SEK is about SEK 400 Mannually. SEK 35 M ( 45 )of the transaction exposure was hedged at the end of the year. To reduce currency exposure, the Group attempts to match inflows and outflows of different currencies by using the same currency for invoicing as for purchasing. The finance policy specifies that each individual Group company is responsible for its own transaction exposure. Any hedging of currency exposure is undertaken by Lindab AB. Currency forwards as at 31 December 2006 Equivalent in SEK M Sell GBP Sell USD Sell CZK Sell CHF 30 - Sell EUR Sell NOK Sell PLN 9 22 Sell total Buy EUR Buy DKK Buy CHF Buy RON 40 - Buy NOK Buy EEK 2 - Buy HUF Buy total Net Translation Exposure This arises when the foreign Group companies equity is translated into SEK. In accordance with Lindab s finance policy, this exposure has not been hedged in Operational Risk Management Financial Risk Competition In the various markets, Lindab faces a large number of small local companies and a small number of relatively large regional, national and multinational companies. The Company s competitors include Rauta ruukki Corporation ( operating under the Ruukki brand name ), Fläkt Woods, Lafarge, Plannja, Corus Panels and Profiles, Swegon, Trox and Marley, all of whom are competing in one or both of the business areas. To face up to this competition, Lindab has decided to work with highly automated central production units for volume products. These are products that can be easily transported. This is combined with smaller, local production units for products that require local adaptation and are difficult to transport. Lindab decided at an early stage to set up production in low-cost countries in order to be able to be competitive. The relatively new production unit in Prague enables labour intensive products to be manufactured at competitive costs. Lindab s extensive distribution network makes it possible to keep abreast of changes, trends and new demands from 58 Notes to the Consolidated Financial Statements

59 customers and form the basis for adaptation of products and services to new situations. Lindab s primary raw material is steel, mainly thin sheet metal, and Lindab s competitive strength is obviously affected by increasing prices. Lindab is trying to streamline its production processes and organisation in order to remain competitive. In the past few years, the prices of many input goods for competitive materials, such as plastic and concrete, have increased, meaning that overall the competitive situation has not deteriorated. Economy Lindab is affected by the economy of the construction sector, especially commercial construction. Today, Lindab has operations in 29 countries. As the economic situation varies throughout different regions, the economic risk for Lindab is spread. In the Ventilation business area, one trend not affected by the economy is the growing demand for a better indoor climate: Air should be replaced more often, silently and be clean, while the energy cost for doing so should be minimal. There isasimilar trend in the Profile business area, where steel as aconstruction material is gaining ground in the market at the expense of wooden constructions. Among its many advantages, steel does not develop mould and in most instances it can be recycled. Furthermore, most products can be manufactured in factories, resulting in lower costs and better logistics. Raw Material Prices Lindab purchases large quantities of steel, mainly thin sheet metal, and is subject to developments in the market for raw materials. The purchasing strategy developed by Lindab is based on long-standing relations with its main steel and sheet metal suppliers, enabling it to purchase straight from the steel manufacturers instead of through middlemen. Lindab s close relationship with steel manufacturers has also allowed it to develop special grades of steel and finishes adapted to the Company s systems and products. Lindab has decided to centralise all steel purchasing in order to benefit from its size by securing competitive prices and terms with steelworks, thereby creating competitive advantages. The Group is also conducting a thorough internal review that will enable it to react and adapt its prices for customers in the event that prices increase without it being possible for the Group to absorb these increases by implementing rationalisation measures. Lindab only purchases steel according to requirement. It does not speculate or secure future steel prices. Risk of Bad Debts This is the risk that the customer is unable to pay for products that have been delivered due to its financial position. The Group sells products to a great number of customers worldwide. Naturally enough, some customers go into liquidation or encounter payment problems. This can result in Lindab not receiving payment for the products it has sold. To minimise bad debts, agreat many companies in the Group have insured their customers against bad debts. As part of its process to minimise bad debts, the Group obtains credit information about new customers and monitors old customers. The single largest customer represents about one The following currency exchange rates have been used to translate the income statements and balance sheets of foreign Group companies Average rate Jan-Dec Balance sheet date rate Country Currency Currency code Bosnia-Herzegovina 1 BAM Bulgaria 1 BGN Croatia 100 HRK Czech Republic 100 CZK Denmark 100 DKK Estonia 1 EEK Finland 1 EUR France 1 EUR Germany 1 EUR Hungary 100 HUF Italy 1 EUR Latvia 1 LVL Lithuania 1 LTL Luxembourg 1 EUR The Netherlands 1 EUR Norway 100 NOK Poland 1 PLN Romania 1 RON Russia 100 RUB Serbia and Montenegro 1 CSD Slovakia 100 SKK Switzerland 100 CHF UK 1 GBP Ukraine 100 UAH USA 1 USD Notes to the Consolidated Financial Statements 59

60 ( 1 ) percent of sales. Bad debts in 2006 amounted to SEK 38 M ( 42 ), which corresponds to 0.5 percent ( 0.7 ) of net sales. Seasonal Risks The two business areas, Ventilation and Profile, both experience seasonal variations. Ventilation produces indoor products and is therefore not immediately affected by changes in the weather. Traditionally, it sells less during the key holiday periods in July and December. Sales are also down during Easter. June is a strong month when wholesalers and distributors build up their stocks before July, when their own employees are on vacation. Profile s products are almost entirely for outdoor use and follow the seasons accordingly. Winter is low season for Profile, whose sales figures peak from summer until early autumn. Demand for some products, especially roofing products, can increase temporarily as resulting from isolated events such as fierce storms. Risk of Claims Historically, there have been very few claims in the product areas Air Duct Systems Ventilation and Building Components Profile. The Topline product group has incurred some costs due to the Plastisol cladding material having loosened. This has now been replaced by a new cladding material. In Comfort Ventilation, the level of claims has been slightly higher due to the more complicated technical nature of its products. In Building Systems Profile, Lindab is essentially the sole supplier to local building contractors that are responsible for the construction. This means that there should be no risk of claims. However, some sales are made directly to end customers and, in such cases, the responsibility for claims for the construction rests with Lindab. Regardless of who has the construction risk, Astron is responsible for ensuring that the material supplied is correct. Claims for rust on roof parts have been filed during 2005 and SEK 82 M ( 78 ) has been reserved for the financial year of See Note 26, Other Provisions. Environmental Risks This risk pertains to costs that the Group may incur in adapting its operations to new or more stringent environmental legislation. It may also pertain to the clearance of land for previously owned or currently owned properties, waste management, etc. The Group has no environmental liabilities and the business is not of atype that causes the contamination of land or water, which can require clean-up measures. The Group will work according to, and abide by, Swedish and international legislation. Risk for and in connection with litigations This risk pertains to costs that the Group many incur in managing litigations. These costs can occur, for example, in connection with settlements and costs for imposed penalties. The Group is involved in the following litigations. At the time of its acquisition, Astron Buildings S.A. was involved in disputes concerning faults in buildings that it had delivered. Lindab has come to an agreement with the vendor of Astron that the vendor shall take the risk for the outcome of these disputes. No dispute has arisen following the acquisition. In 2006, two buildings that had been supplied by Astron, one in the Czech Republic and one in Germany, collapsed under the weight of unusually large amounts of snow. The Company has not received any claims related to these buildings, but there is no guarantee that claims will not be asserted in the future. An independent examination of the building in the Czech Republic, carried out at the request of the Company, showed that the building had been assembled incorrectly by athird party. The incident is also the subject of an investigation that is being carried out by a Czech public prosecutor. The Company was also the subject of a claim for compensation under an agreement in France relating to a building supplied by Astron. Reconciliation was achieved after year-end closure of accounts without any financial impact for the Company. The Company is currently the subject of a cartel investigation being carried out by the Finnish Competition Authority, where the Company s and some of its competitors operations in the ventilation industry in Finland are being scrutinised. The investigation began in 2003 and the Company has hitherto provided the Finnish Competition Authority with all the information that it has requested. The Finnish Competition Authority may continue its investigation with requests for further infor- mation, but the Company does not know, at the present time, if the investigation will continue. If it does, the Company intends to continue to maintain its standpoint that the accusations of a cartel are unfounded. The investigation has focused solely on, and been directed against, the Company s Finnish subsidiaries. Following discussions with its Finnish legal advisors, the Company considers that any consequential fines ( fines for breach of competition ), in accordance with previous practice in Finland, should probably be based on the turnover of the Finnish subsidiaries in question and therefore not exceed SEK 10 M. However, if it finds there has been a breach of the competition laws, the Market Court can formally rule that a consequential fine, up to 10 percent of Lindab s total net sales, be imposed. The Company has no funds reserved in relation to this investigation. Tax Disputes The Company is involved in a tax dispute in the Czech Republic. The dispute is the result of a 2003 tax audit of the Company s Czech subsidiary, Lindab s.r.o., for the 2001 and 2000 fiscal years. In the light of what was unveiled in the tax audit, the Czech tax authorities instructed Lindab s.r.o. to pay a total amount of SEK 8 M in corporate tax, VAT and penalty fees. The tax authority claimed that Lindab s.r.o. had reported the transactions in question in an unsatisfactory manner. The amount that Lindab has been instructed to pay is based on an assessment performed by the tax authority. The Company does not share the opinion of the Czech tax authority and appealed against the decision in February 2005 to the Department of Finance in the Czech Republic. The Company has already paid the corporate tax and VAT established by the tax authority. After the close of the operating year, the court in the Czech Republic has rejected the Company s appeal. The Company will appeal to the Supreme Administrative Court. Furthermore, the Company has recovered, after the close of the operating year, half the penalty fee for corporate tax and is expected to recover half the penalty fee for VAT. The total sum of SEK 8 M for the dispute has been recognised as a commitment in the consolidated annual report. See Note 30. Risk for Product Liability This risk refers to costs that Lindab may 60 Notes to the Consolidated Financial Statements

61 incur if any product delivered by the Group causes damage to life and/or property. In Building Systems Profile, Lindab is responsible for product construction and therefore has a risk for product liability in the event of damage. The Group has product liability insurance. Procedures for eliminating the risk of damage are also in place and are continually being developed. Insurance Risks These risks refer to costs that Lindab may incur due to inadequate insurance coverage for products, property, business interruption, liability, transport, life and pensions. The Group has standard global insurance that provides cover for its head office, manufacturing plants, warehouses and its own transport operations. The Group s insurance covers damage to property, operational interruptions, mechanical breakdowns, general accountability and product liability, transportation of goods on the Company s vehicles, vehicles and breach. Lindab s senior executives and Board members are also insured with cover that the Company deems appropriate for a company of its size and in this industry. Lindab considers that it has adequate insurance that is usual in this industry and which covers the risks that its business operations are normally associated with. Naturally there is no guarantee that Lindab will not incur losses over and above what is covered by this insurance. Note 4 Key Estimates and Assumptions for Accounting Purposes These estimates and assumptions are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are deemed reasonable in the circumstances. Test of Impairment for Goodwill Following the implementation of IFRS 3, Business Combinations, it is no longer possible to amortise goodwill and other intangible assets with indeterminable lives. Instead, goodwill shall be subjected to an impairment test at least once a year or when there is an indication of impairment. The effect of IFRS 3 can be considerable if the profitability falls in the Group, or in some areas of the Group, as this could trigger a substantial impairment writedown of goodwill. Such a write-down would affect the income for the year. At the end of the year, goodwill amounted to SEK 2,616 M ( 2,398 ). In the application of accounting principles, various assumptions have been made, unlike estimates, which can have a considerable affect on the amounts presented in our financial reports. Deferred Tax Receivables Deferred tax receivables are only reported to the extent that it is likely that future taxable surplus will be available and against which the temporary differences may be utilised. Legal Proceedings According to IFRS, a liability is reported when there is an obligation that is a consequence of an incident and it is probable that an outflow of economic resources is required to settle the obligation, and that a reliable estimate of the amount can be made. Outstanding legal matters are reviewed regularly. An assessment is then made as to whether reserves are required in the financial reports. An assessment that does not correspond with the actual outcome may have an effect on the financial reports. Obsolete Inventories Inventories are valued at the lowest of acquisition value and net realisable value. Discontinued items, surplus items, damaged goods, etc. are assessed to calculate the net realisable value. Provisions The amount reported as a provision is the best estimate of the cost that is required to meet the current obligation on the balance sheet date. Provisions for future expenses on account of the guarantee commitments are reported at the estimated amount required to settle the commitment on the balance sheet date. The estimated amount is based on calculations, assessments and experience. The Group s reporting of provisions, as defined in IAS 37, means that SEK 126 M (78) is reported as other provisions, constituting 1.7 percent ( 1.3 )ofnet sales. This is important for the assessment of the Group s financial position, since provisions are normally based on assessments of probability and cost and risk estimates. Determination of the Percentage of Project Completion To establish what results have been accomplished at any given point in time, information about the following components is required: project revenues, project costs and the percentage of completion. This involves a certain amount of estimation and judgment. Doubtful Accounts An assessment of the unpaid accounts provides the basis for doubtful accounts. In our opinion, the assumptions that have been made about the future donot involve any material risk of significant adjustments in the carrying amounts for the next financial year. Notes to the Consolidated Financial Statements 61

62 Note 5 Business Combinations Acquisitions in 2006 During the year, the Lindab Group acquired all the shares in two companies and acquired assets in one further business. In November 2006, it acquired CCL Veloduct Ltd., which is a supplier of ventilation ducts and other ventilation products to the UK market. The preliminary acquisition price was SEK 291 M. The company had net sales of approximately SEK 545 M and employed 245 people. As a consequence of this acquisition, the UK becomes one Acquisition price, goodwill and the effect on cash and cash equivalents The following is a summary of acquisition prices, goodwill and the effect of acquisitions on consolidated cash and cash equivalents. The acquisition analyses for CCL Veloduct Ltd. and Airbat S.A.S. are preliminary but will most likely be approved before 30 June 2007, as these acquisitions took place during the last two months of the financial year. Acquisition price CCL Veloduct Ltd. Other acquisitions Total Cash paid Direct costs relating to the acquisition Expected additional earn-out payment 9 9 Total acquisition price Fair value of net assets acquired Goodwill Cash paid, acquisition price Direct costs relating to the acquisition Cash and cash equivalents in acquired subsidiaries Final settlement of acquisition price for acquisitions in previous years 69 Effect of acquisition on consolidated cash and of the most important markets for the Ventilation business area. The French company Airbat S.A.S., which also operates in the ventilation industry, was acquired in December and the preliminary acquisition price was SEK 20 M. Airbat has 25 employees and net sales of about SEK 50 M. There are plans to combine Lindab s current operations in France with Airbat to create a strong, one-stop supplier in the French market, which is expected to generate positive synergies. Furthermore, some cash equivalents of the operations of Gowco Texas, USA, were acquired in March. The business has net sales of approximately SEK 30 M and employs 22 people. This acquisition furnishes Lindab with a solid base in the expanding Texas market. During the year, an additional earnout payment relating to the buy-out of the minority interests in Lindab Building Systems Kft. also affected consolidated goodwill by SEK 4 M. The amount was not paid during the year and has therefore not affected consolidated cash and cash equivalents. Financial impact of acquisitions in 2006 Following the acquisition of CCL Veloduct Ltd. and Airbat S.A.S., the Group reported an increase in net sales of SEK 85 M for the period 1 November to 31 December 2006 and an increase in profit after tax of SEK 1 M. If the acquisitions had been made on 1 January 2006, net sales would have been SEK 511 M higher, equivalent to net sales of SEK 8,120 M for the Group. The Group s profit after tax would have been SEK 609 M, representing a SEK 24 M increase. Tax has not been calculated for CCL Veloduct Ltd. as there is a deficit that can be offset. Interest rates have been taken into account for acquisition borrowings. The acquisition of Gowco has had a marginal impact. Acquired assets and assumed liabilities Acquired net assets, assumed liabilities and goodwill relating to the acquisitions of CCL Veloduct Ltd., Airbat S.A.S. and Gowco operations are as follows: Book value CCL Veloduct Ltd. Other Adjustments Fair value Tangible Fixed Assets Intangible Fixed Assets Stock Accounts receivable and other current assets Cash and cash equivalents and current investments 0 0 Total acquired assets Deferred tax liabilities 1 1 Current liabilities Total assumed liabilities Acquired net assets Goodwill 260 Acquisition price 324 The acquisition goodwill for CCL Veloduct Ltd. and Airbat S.A.S. is attributable to their good profitability as well as the anticipated synergies from the consolidation of both the companies into the Group. During the year, a final acquisition analysis of Astron Buildings S.A. has been carried out, which led to a decrease in consolidated goodwill by SEK 33 M, noninterest bearing provisions by SEK 14 M and current liabilities by SEK 19 M. The adjustment has been made retroactively from the date of acquisition. 62 Notes to the Consolidated Financial Statements

63 Note 6 Employees and Senior Management Average no. of employees Men Women Total Men Women Total Parent Company, Sweden 1 ) Subsidiaries Sweden , ,124 Belgium Bosnia-Herzegovina Bulgaria Croatia Czech Republic Denmark Estonia Finland France Germany Hungary Italy Latvia Lithuania Luxembourg The Netherlands Norway Poland Romania Russia Switzerland UK Ukraine USA Subsidiaries total 3, ,689 3, ,135 Group total 3, ,689 3, ,135 Gender balance among senior executives The Parent Company Board CEO/Management Group The Group Board CEO/Management Group Sick leave Sick leave only refers to the Group s Swedish operations, % Total sick leave as a proportion of ordinary working hours Proportion of the total sick leave that refers to a continuous period of sick leave of 60 days or more Sick leave by gender Women Men Sick leave by age 29 or younger Between 30 and or older continued on next page Notes to the Consolidated Financial Statements 63

64 cont. Note 6 Employees and Senior Management Personnel Costs Wages, salaries and other remunerations Board and CEO Other employees Total salaries and benefits Board and CEO Other employees Total salaries and benefits Parent Company, Sweden 1 ) Subsidiaries Sweden Belgium Bosnia-Herzegovina Bulgaria Croatia Czech Republic Denmark Estonia Finland France Germany Hungary Italy Latvia Lithuania Luxembourg The Netherlands Norway Poland Romania Russia Switzerland UK Ukraine USA Subsidiaries total , , , ,149.0 Group total , , , ,149.0 Payroll overheads Parent Company, Sweden of which pensions Group total of which pensions Total personnel costs , , , , ) The CEO and the Board of Directors for the Group received salaries and benefits from the Group company Lindab AB up to and through August 2006 and December 2006 respectively. Pension obligations of SEK 24.6 M ( 21.3 ) to the Board and the CEO in the Group are made up of agreements with previous CEOs and deputy CEOs. The majority of the obligations are invested in endowment insurance funds totalling SEK 16.4 M (19.7 ). The cost of pension obligations for the year, attributable to previous CEOs and Board members, is SEK 6.4 M. continued on next page 64 Notes to the Consolidated Financial Statements

65 cont. Note 6 Employees and Senior Management Board Members and Fees The total remuneration paid to Board members was SEK 954,000 ( 777,000 ), broken down as shown below. In addition to the decisions made at the Annual General Meeting and at the Extraordinary General Meeting on 13 October 2006, Walther Vishof Paulsen has been paid SEK 52,100. None of the Board members or deputy members is entitled to any benefits upon termination of their Board service. The Extraordinary General Meeting on 13 October 2006 decided that Board members would thereafter receive fees totalling SEK 1,540,000. Of this, SEK 500,000 shall be paid to the Chairman of the Board, SEK 250,000 to each of the Board s elected members, with the exception of the CEO Kjell Åkesson, and SEK 20,000 to each of the employee representatives. Annette Sadolin was elected at this meeting. Walther Vishof Paulsen, Carl- Gustaf Sondén and Hans Schmidt-Hansen resigned earlier in the year. Board fees SEK thousands Svend Holst-Nielsen, Chairman Hans-Olov Olsson Anders C. Karlsson Annette Sadolin Walther Vishof Paulsen Pontus Andersson Markku Rantala Stig Karlsson Carl-Gustaf Sondén - - Hans Schmidt-Hansen - - Kjell Åkesson, President and CEO - - Total fees to Board members Remuneration to Senior Management and Other Terms of Employment Fixed and Variable Salaries Senior executives receive remuneration in the form of fixed and variable salaries. The variable salary is based on achieved results and individual targets. At present, 60 to 80 percent of the variable salary is based on consolidated results and 20 to 40 percent on individual targets, which are established for each employee. The variable salary amounts to a maximum of 40 percent of the employee s total annual gross salary, with the exception of the Company s CEO and President, Kjell Åkesson, who is entitled to a variable salary up to a maximum of 75 percent of his annual gross salary. In 2006, the CEO received a fixed salary of SEK 4,747,000 ( 4,331,000 ) and a variable salary of SEK 3,525,000 (2,673,000 ). Kjell Åkesson currently has a basic salary of SEK 4,700,000 ( 4,244 )per annum. Other senior executives, CFO Nils-Johan Andersson and the two business area managers Peter Andsberg and Hannu Paitula received a total remuneration of SEK 6,800,000 ( 6,714,000 ) in fixed salary and SEK 2,682,000 ( 2,501,000 ) in variable salary. Members of the Group management are also entitled to the use of acompany car. Termination Regulations The notice period for Kjell Åkesson s employment is twelve ( 12 )months from the Company and six ( 6) months from Kjell Åkesson. Moreover, his contract includes a non-competition clause effective for twelve ( 12 ) months following termination. He is then entitled to remuneration equivalent to the total sum of his fixed annual salary on the date of termination, pension premiums for that period and an amount equal to the average variable salary per annum over the last three years. The period of notice for other senior executives is 6 to 24 months from the Company and 6 to 12 months from the employee. These senior executives are also bound by non-competition clauses effective for twelve ( 12 )months following termination. Pensions Kjell Åkesson or the Company has the right to demand that he retires at the age of 60. The retirement age for other senior executives is 65. The Company has agreed to pay pension premiums for Kjell Åkesson equivalent to 45 percent of his annual gross salary and 35 percent of the variable salary he has received. However, the total pension premium must not be less than 55.5 percent of the annual fixed gross salary, excluding vacation pay and other benefits. The cost of the premiums was SEK 3,668,000 ( 2,797,000 ). Other senior executives have pension benefits, over and above their legal right to a pension, equivalent either to the Swedish ITP pension system or benefits that are limited to a maximum of percent of their fixed annual salary. The cost of premiums for these persons, over and above their legal right to a pension, totalled SEK 1,296,000 ( 1,172,000 ). Incentive Scheme An incentive scheme was implemented in This offered those in the scheme the opportunity to purchase shares in Lindab and stock options, entitling holders to subscribe for new shares. The scheme was offered to key employees in the Company and members of the Board. In conjunction with the refinancing operation in 2006, senior executives were offered the opportunity to reinvest the redemption proceeds in new stock options. A total of 62,600 stock options were issued, of which 62,398 went to 51 employees and members of the Board. Following the proposal to float the Company s shares on the Stockholm Stock Market, all shares in the option scheme were redeemed in November. As a result of the option redemption, the Company s share capital increased by SEK 3,540,000, equal to 3,539,970 shares. The Company s capital subsequently increased by SEK 91,154,000. As a result of the incentive scheme, the Company s Board members and senior executives have thus gained, in respect of the exercised options, approximately 5.37 percent of the shares in the Company. At the time of exercising the option rights, the purchase price was based on the estimated market value of the shares in May 2002, with an 8 percent upward adjustment each year. In November 2006, the purchase price was SEK Bonus Scheme In addition to a variable salary for senior executives, a bonus scheme was introduced in 2004 for members of the management groups and for the business unit managers in the Profile and Ventilation business areas. The bonus scheme is based on results-oriented and individual goals. Dependent on the person s position, bonuses are 20, 30 or 40 percent of the annual salary. There are approximately 80 employees currently in the scheme. Astron has its own bonus system, which currently includes some 55 employees. Astron s scheme is also based continued on next page Notes to the Consolidated Financial Statements 65

66 cont. Note 6 Employees and Senior Management on results-oriented and individual goals. Dependent on the person s position, bonuses are between 5 and 40 percent of the annual salary. Profit Share Plan Since 1980, the Company has been paying contributions into a profit-sharing foundation for employees in Sweden, under agreement. The current agreement is effective through The payments are made annually based on the earnings of the Swedish Group companies. The maximum amount is adjusted upwards annually using the Consumer Price Index. Payments for the year amounted to SEK 6,035,000 ( 5,800,000 ) including special employers contribution. The maximum amount per employee was SEK 5,864. Since 2001, the foundation s assets have been invested in Ratos shares. Now that Lindab s shares are traded on the stock exchange, the investment will be transferred to Lindab shares. By April 2011, it will be possible for all non-cash funds to consist of just Lindab shares again. Employees in the Group s Danish companies are included in a cash-based profit share plan. Under this plan, Lindab contributes five (5) percent of profit in the Danish Group companies to the employees in Denmark, up to a maximum of DKK 3,300 per employee. Those who have been employed for more than one ( 1) calendar year are entitled to full cash reimbursement and those who were employed before 1 July of a certain year are entitled to half the full cash reimbursement. Post-Employment Benefits/Pension Obligations Most employees in the Lindab Group are covered by defined-contribution pension plans. In Sweden, Luxembourg and Norway in particular, employees may also be covered by defined-benefit plans. Italy has a defined-benefit plan for termination benefits. In 2006, reserves for post-employment benefits amounted to SEK 106 M ( 105 ). Lindab s new shop concept in Helsingborg, Sweden. 66 Notes to the Consolidated Financial Statements

67 Note 7 Segment Reporting Ventilation Profile Other Total Eliminations Total External sales 3,568 3,241 3,979 2, ,609 6, ,609 6,214 Internal sales Total sales 3,573 3,261 3,995 2, ,630 6, ,609 6,214 Operating profit ( EBITA ) Operating profit ( EBIT ) Net financial income and expenses Profit after financial items ( EBT ) Tax on profit for the year Profit for the year Fixed assets, excluding financial assets 1,943 1,771 1,851 1, ,081 4, ,081 4,006 Stock , , Other assets ,343 2, ,551 1,298 Unallocated assets Total assets 7,507 6, ,077 6,525 Equity 2,190 2,853 Other liabilities 1, , ,564 1, ,071 1,549 Unallocated liabilities 2,816 2,123 Total equity and liabilities 2,564 1, ,077 6,525 Gross investment in fixed assets Depreciation and amortisation Geographical distribution of sales by segment Ventilation Profile Other Total The Nordic region 1,767 1,640 1,393 1, ,222 2,945 Western Europe 1,184 1, ,854 1,497 Central and Eastern Europe ,853 1, ,139 1,432 USA Other markets Total 3,568 3,241 3,979 2, ,609 6,214 The above shows the distribution of net sales per market, regardless of where the product has been manufactured. Geographical distribution Assets total Investments total The Nordic region 3,397 3, Western Europe 1,982 1, Central and Eastern Europe 1,486 1, USA Total 7,077 6, The Ventilation business area covers the whole of the Group s ventilation and indoor climate system operations. The Profile business area covers the Group s operations in products and product systems for the construction sector. Other operations include the Parent Company, steel services and steel processing for external customers. Inter-segment transfer pricing is determined on an arms-length basis, i.e. between parties that are independent of one another, are well informed and have an interest in the implementation of the transaction. Assets and investments are reported where the asset is located. The above shows the distribution in the geographic areas according to where the assets are located. Notes to the Consolidated Financial Statements 67

68 Note 8 Depreciation and amortisation by class of assets and by function Group Capitalised development costs ( Note 16 ) 6 4 Patents ( Note 16 ) 1 5 IT and other intangible assets ( Note 16 ) 12 6 Brands ( Note 16 ) 9 3 Properties ( Note 17 ) Machinery and other technical facilities ( Note 17 ) Equipment, tools and installations ( Note 17 ) Total Total depreciation and amortisation distributed by function Cost of goods sold Selling expenses Administration costs Research and development costs 3 2 Total Amortisation of surplus value on intangible assets distributed by function Selling costs ( Note 16 ) 9 3 Total 9 3 Note 9 Costs broken down into cost categories Group Cost of direct materials 3,468 3,083 Personnel costs ( Note 6 ) 1,706 1,480 Depreciation/amortisation and write-downs ( Notes 8, 16, 17 ) Other operating expenses 1, ,792 5,749 The costs are categorised according to function in the income statement. Cost of goods sold, selling expenses, administration expenses, R&D costs and other operating expenses total SEK 6,792 M ( 5,749 ). This shows abreakdown of these costs into the key cost categories. Note 10 Auditors fees and expenses Auditors fees An audit includes an examination of the annual report, an assessment of the accounting principles used and the significant estimates made by the management. It also includes an examination to determine whether the Board and CEO may be discharged from liability in respect of their management during the financial year. The cost of audits for the year also includes audits of the prospectus published in conjunction with flotation, amounting to SEK 2.1 M. Other services refer to advice on accountancy matters, such as reporting, due diligence and taxation. Group Parent Company Ernst & Young Auditing Other services Total Note 11 Research and development Costs for research and development amount to SEK 43 M ( 40 )and are recognised immediately in the income statement. SEK 3 M ( 2 ) of this relates to the amortisation of the capitalised payments for development costs. 68 Notes to the Consolidated Financial Statements

69 Note 12 Other operating income and expenses Group Income Exchange rate differences in operating receivables/liabilities Capital gains on sale of fixed assets Other 1 3 Total Costs Exchange rate differences in operating liabilities/receivables Capital losses on sale of fixed assets 11 1 Restructuring expenses 41 - Other 4 8 Total Note 13 Financial income and expenses Group Parent Company Interest income External interest income Total Interest expenses External interest expenses Internal interest expenses Interest expenses for pensions Total Other financial income and expenses Exchange rate gains Exchange rate losses Total Note 14 Tax on profit for the year Group Parent Company Total current tax expense Deferred tax income Tax effect on Group contributions Total reported tax expense The year s tax expense for the Group was SEK 212 M ( 133 ) or 26.6 percent (27.5 )ofprofit after financial items. The standard tax rate in Sweden is 28 percent. Group Group 2006 Percent 2005 Percent Profi t before tax Tax using current rates of taxation for the Company Reconciliation with reported tax Effect of other rates of taxation for companies abroad Unrecognised loss carry-forwards Tax from previous years Non-deductible expenses Non-taxable income Tax benefits of loss carry-forwards Other items, net Reported tax expense continued on next page Notes to the Consolidated Financial Statements 69

70 cont. Note 14 Tax on profit for the year Deferred tax receivables and liabilities for the year, not taking into account any offsets made within the same fiscal jurisdiction, are shown below: Deferred tax asset Deferred tax liability Net Intangible fixed assets Tangible fixed assets Financial fixed assets Stocks Receivables Provisions Leasing Other Loss carry-forward Tax allocation reserves Total Reconciliation of net deferred assets/liabilities Opening balance Recognised in income statement 5 7 Acquisitions of subsidiaries ( Note 5 ) Final acquisition analysis of Astron 14 - Reclassifi cation - 2 Other 2 14 Translation differences 3 - Closing balance 7 12 Deferred tax assets relating to loss carryforwards of SEK 297 M ( 270 ), corresponding to adeferred tax receivable of SEK 102 M ( 79 ), have not been recognised as it is not currently likely that Lindab will be able to offset them in the foreseeable future. Note 15 Earnings per share Undiluted Profit attributable to Parent Company shareholders, SEK M Weighted average number of ordinary shares in issue 90,701, ,000,000 Undiluted earnings per share ( SEK per share ) Undiluted earnings per share Undiluted earnings per share are calculated by dividing the earnings attributable to the Parent Company s shareholders by a weighted average number of ordinary shares in issue during the period, excluding repurchased shares held by the Parent Company as its own shares. Diluted Profit attributable to Parent Company shareholders, SEK M Weighted average number of ordinary shares in issue 90,701, ,000,000 Share options 3,539,970 2,940,000 Weighted average number of ordinary shares for computation of diluted EPS 93,061, ,940,000 Diluted earnings per share ( SEK per share ) Diluted earnings per share To compute diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. 70 Notes to the Consolidated Financial Statements

71 Note 16 Intangible fixed assets 1 January - 31 December 2005 Capitalised expenditure for development work, etc. Patents etc. IT and other intangible assets Brands Goodwill Total Accumulated acquisition values Opening balance ,348 2,449 Assets gained through acquisitions New acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance ,789 2,992 Acc. planned depreciation/amortisation Opening balance Depreciation for the year Acc. depreciation gained through acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance Accumulated write-downs Opening balance Write-downs for the year Translation differences for the year Closing balance Planned residual value at start of year ,006 2,025 Planned residual value at end of year ,431 2,512 1 January - 31 December 2006 Accumulated acquisition values Opening balance ,789 2,992 Assets gained through acquisitions New acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance ,950 3,197 Acc. planned depreciation/amortisation Opening balance Depreciation for the year Acc. depreciation gained through acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance Accumulated write-downs Opening balance Write-downs for the year Translation differences for the year Closing balance Planned residual value at start of year ,431 2,512 Planned residual value at end of year ,616 2,690 continued on next page Notes to the Consolidated Financial Statements 71

72 cont. Note 16 Intangible fixed assets Capitalised expenditure for development work, etc. mainly relates to internally generated capitalised costs for program development. Other intangible assets consist of software and customer lists. Consideration of write-down requirements of goodwill Goodwill is assessed annually by the Group for impairment under the accounting principle outlined in Comments on the annual accounts under Item 2. Impairment is determined on the basis of the strategic plan for the next three-year period. Impairment testing is based on cash generating units ( CGUs ). Cash-generating units in the Lindab Group are each of the business areas. In the Ventilation business area, aseparate test is performed for the USA. The test is not performed at lower levels as the business areas are strongly integrated and function as one unit. The Weighted Average Cost of Capital ( WACC )has been calculated based on equity yield requirements and loan interest rates and an estimated debt/equity ratio based on an analysis of similar companies average debt/equity ratio. The Weighted Average Cost of Capital, according to this calculation, will be 12 percent before tax. The forecast period is six years. The long-term business plan and a sustained growth rate of 3 percent were applied in the calculation for the 2007 budget and for the remaining years. The results indicated that no impairment was necessary. Goodwill allocated per business area Ventilation 1,409 1,202 Profi le 1,188 1,177 Other Total goodwill 2,616 2,398 Note 17 Tangible fixed assets Land and buildings Machinery and other techn. facilities Equipment, tools and installations Plant under construction, buildings Plant under construction, machinery Total 1 January - 31 December 2005 Accumulated acquisition values Opening balance 883 1, ,662 Assets gained through acquisitions New acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance 992 1, ,909 Accumulated planned depreciation Opening balance ,266 Depreciation for the year Acc. depreciation gained through acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance ,377 Accumulated write-downs Opening balance 3 0, Write-downs for the year Translation differences for the year Closing balance Planned residual value at start of year ,394 Planned residual value at end of year ,527 continued on next page 72 Notes to the Consolidated Financial Statements

73 cont. Note 17 Tangible fixed assets Land and buildings Machinery and other tech. facilities Equipment, tools and installations Plant under construction, buildings Plant under construction, machinery Total 1 January - 31 December 2006 Accumulated acquisition values Opening balance 992 1, ,909 Assets gained through acquisitions New acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance 908 1, ,889 Accumulated planned depreciation Opening balance ,377 Depreciation for the year Acc. depreciation gained through acquisitions Divestments and disposals Reclassifi cation Translation differences for the year Closing balance 179 1, ,492 Accumulated write-downs Opening balance Write-downs for the year Translation differences for the year Closing balance Planned residual value at start of year ,527 Planned residual value at end of year ,391 Note 18 Ratable values Group Property Buildings - 9 Land 1 3 Total 1 12 These property values for tax purposes relate solely to Swedish Group companies property holdings. The net book value of these properties is SEK 1 M ( 14 ). Note 19 Other securities held as fixed assets Group Opening balance 6 11 Divestments - 2 Write-downs - 3 Reclassifi cation 1 - Book value 5 6 This shows the long-term holding of shares and interests not related to Group or associated companies. Notes to the Consolidated Financial Statements 73

74 Note 20 Other long-term receivables Group Opening balance 3 17 Increase/decrease 1 1 Reclassifi cation 2 15 Book value 4 3 Other long-term receivables mainly consist of deposits for rented premises. Note 21 Stock Group Raw materials and supplies Goods in progress Finished goods and goods for resale Total 1, Internal gains reduced stock by SEK 82 M(39 ). SEK 48 M of the stock value on 31 December 2006 was reported at net realisable value. Direct material costs during the year amounted to SEK 3,468 M ( 3,083 ), of which SEK 11 M ( 5 ) was stock write-down. Note 22 Accounts receivable Group Parent Company Accounts receivable 1,240 1, Provision for doubtful receivables Total 1, Note 23 Prepaid expenses and accrued income Group Prepaid rental and leasing payments 19 8 Prepaid interest 2 1 Insurance premiums 7 5 Accrued bonus income Other prepaid expenses Total Notes to the Consolidated Financial Statements

75 Note 24 Share capital and number of shares The table below presents the changes in Lindab s share capital and the number of shares as from Year Action No. of shares Class A Class B 1 ) Change in share capital ( SEK 000 s ) Total share capital ( SEK 000 s ) 2001 New formation 1, New shares issue 9, , Share split ( 100:1 ) 1,000, , Share split ( 8:1 ) 8,000, ,000 New shares issue - 2,988, ,374 Redemption of shares and reduction of share capital 2,988, ,000 Redemption of shares and reduction of share capital - 2,988, Bonus issue ,542 75,168 Share split ( 15:1 ) 75,167, ,168 Exercised options 3,539,970-3,540 78,708 Closing balance 78,707, ,708 1 ) All Class B shares were redeemed in May 2006 and this type of share has been removed by a change to the Articles of Association. The share capital of SEK 78,708,000 is split into 78,707,820 shares. Face value per share is SEK 1. All shares have the same right to profits and surplus in the event of liquidation and they entitle the holder to one vote at Lindab s Annual General Meeting. Under Lindab s Articles of Association, the issued share capital must not fall below SEK 60 M nor exceed SEK 240 Mand the number of shares must not fall below 60,000,000 nor exceed 240,000,000. Lindab International AB does not hold any of its own shares and none of its subsidiaries own shares in the Company. No shares are reserved for issue. On 1 December 2006, the Company was quoted on the Mid Cap list, which is on the Nordic Exchange list of the Stockholm Stock Exchange. Note 25 Provisions for pensions and similar obligations Provisions for pensions and similar obligations include, apart from pensions, other post-employment benefits paid to employees, e.g. upon termination of employment.most employees in the Lindab Group are covered by defined-contribution pension plans. Some countries also have defined-benefit pension or termination plans. The table below presents costs and liabilities for pensions and the material assumptions made in producing them. Note 2 explains how the pension costs are calculated. Retirement and family pension plans for salaried employees in Sweden are guaranteed through insurance coverage with Alecta. According to a statement from the Emerging Issues Task Force (URA 42 ) of the Swedish Financial Accounting Standards Council, this is adefined-benefit plan that includes several employers. The Company did not have access to the information, which would make it possible to report this plan as a defined-benefit plan for the 2006 financial year. The pension plan according to ITP, guaranteed through insurance with Alecta, has therefore been reported as a defined-contribution plan. Contributions for pension insurance coverage with Alecta amount to SEK 8 M ( 8) for the year. Reported in the income statement Pensions and benefits earned during the year 7 4 Interest expenses for commitments 7 5 Expected return on plan assets 2 2 Actuarial gain/loss reported during the year 2 0 Expenses for past service 1 0 Total expenses for defined-benefit plans 13 7 Expenses for defined-contribution plans Total expenses for post-employment benefits of which reported in operating profit ( Note 6 ) of which reported in net financial income ( Note 13 ) 5 1 continued on next page Notes to the Consolidated Financial Statements 75

76 cont. Note 25 Provisions for pensions and similar obligations Reported in the balance sheet Net obligations for benefit-based plans Present value of pension obligations, etc Financial investments Net liabilities Unreported actuarial gains ( + )/losses ( ) 11 7 Specification of benefit-based pension obligations, etc. Present value of funded pension obligations Fair value of plan assets Net value of funded plans Present value of unfunded benefit-based obligations Unreported actuarial gains ( + )/losses ( ) 11 7 Unreported expenses relating to past service - - Net liability in the balance sheet for benefit-based obligations Allocated to pensions, contribution-based obligations 7 6 Pension liability as per the balance sheet Fair value of plan assets for contribution-based obligations 6 6 Financial investments as per the balance sheet 6 6 For benefit-based funded plans, the pension commitment, net after deductions have been made for the plan assets, is reported in the balance sheet. Funded plans with net assets, i.e. assets exceeding the commitments, are reported as financial investments. Contribution-based plans that are funded are reported gross in the balance sheet, the assets as Financial investments, and the commitments as Provisions for pensions and similar obligations. In the balance sheet, provisions for pensions total SEK 106 M ( 105 ), of which SEK 24.6 M ( 21.3 ) are pension obligations to former CEOs and deputy CEOs. The majority of the obligations are invested in endowment insurance funds at a total value of SEK 16.4 M ( 19.7 ). Change in plan assets and pension obligations during the year Assets Obligations Assets Obligations Opening balance Expected return Interest expenses Funds contributed Pensions earned during the year Pensions earned in previous years Pensions paid Assets assumed upon acquisition Pension liabilities assumed upon acquisition Actuarial gains or losses Reclassifi cation Translation differences Closing balance Most important actuarial assumptions Sweden Luxembourg Norway Other All Discount rate, % Expected return on assets, % Future salary increases, % Future pension increases, % Breakdown of net debt, SEK M The Parent Company In 2006, the CEO became an employee of the Parent Company. The Company s pension obligation comes into the contribution-based plan category. For additional information, see Note Notes to the Consolidated Financial Statements

77 Note 26 Other provisions Structural reserve Group Warranty provision Other Total Opening balance Utilised/increase during the year Exchange rate differences Closing balance Breakdown in the balance sheet Other long-term provisions Other short-term provisions Total The structural reserve of SEK 41 M shall cover the cost of redundancies and cancelled property agreements, to ensure the anticipated synergies from the acquisition of CCL Veloduct Ltd. The warranty provisions of SEK 82 M include estimated future outlays for defects in items or faults in construction, and provisions for actual claims. The general provisions are reported at the time of sale and the majority of these are based on three ( 3 ) percent of sales volumes in the past three months. The guarantee period often covers five ( 5) years, but in most cases problems are solved within one ( 1) year, meaning that most of the warranty provision is reported as short-term. A large proportion of the warranty provision relates to Building Systems. Note 27 Consolidated borrowing Group Parent Company Long-term Bank loans 2,239 1, Current Liabilities to credit institutions Overdraft facilities Total borrowing 2,698 1, This table shows a breakdown of long-term borrowing: Group Parent Company between 1 and 2 years between 2 and 5 years more than 5 years 1,274 1, ,239 1, Consolidated borrowing in different currencies: Group Parent Company Amounts in SEK M SEK 1,888 1, DKK EUR USD GBP HUF PLN Other currencies ,698 1, Leasing liabilities of SEK 147 M ( 239 ) are included in bank loans in accordance with IFRS. The short-term amount of the leasing liability was SEK 8 M ( 8 ) and was included in liabilities to credit institutions. The amount of borrowing includes pledged liabilities ( loans with collateral ) amounting to SEK 2,454 M ( 775 ). Collateral for these loans comprise shares in subsidiaries, floating charges and mortgage deeds in real estate. According to Group financial policy, the fixed interest rate period must not exceed 12 months. As at 31 December 2006, it was 6 months ( 2.5 months ). This means that most of the Group s borrowing has variable interest rates. Only loans for real estate in Denmark and Switzerland have fixed interest rates. These loans totalled SEK 181 M ( 194 ). Undrawn credit in the Group amounted to SEK 1,269 M ( 858 ). The Parent Company has no undrawn credit. Notes to the Consolidated Financial Statements 77

78 Not 28 Accrued expenses and deferred income Group Parent Company Salaries and holiday pay Share of profits Payroll overheads Bonuses to customers Valuation of forward contracts Interest expenses Other costs Total Note 29 Leasing Operational leasing agreements Leasing costs for assets held via operational leasing agreements, such as rented premises, machinery and office equipment, are recognised in operating expenses and amount to SEK 48 M ( 29 ). Future payments under non-cancellable operational leasing agreements total SEK 281 M ( 242 ) and are due as follows: ( variable payments in this do not constitute significant amounts ) and thereafter Companies in the Group have contractual options to buy back properties sold to sale-leaseback companies. The lease payments for these properties amounted to SEK 34 M ( 24 ). If buyback options were exercised for all of the properties, this would reduce the equity ratio from its current 31 percent to 29 percent. Financial leasing agreements Financial leasing agreements amounting to SEK 138 M ( 183 ) are included in the balance sheet under Buildings and Land. The SEK 45 M change is mainly attributable to the sale of nine properties to an external party. The net book value of these properties is SEK 32 M. In 2006, the cost of these agreements, not allowing for deferred taxes, was SEK 15 M ( 18 ). Future obligations for financial leasing agreements total SEK 188 M ( 306 ) and are as follows: (variable payments in this do not constitute significant amounts ) Nominal value ( present value ) Year 1 15 ( 14 ) 22 ( 21 ) Year ( 116 ) 226 ( 201 ) Year 6 and later 38 ( 28 ) 58 ( 46 ) 188 ( 158 ) 306 ( 268 ) Note 30 Pledged assets and contingent liabilities Group Parent Company Pledged assets Mortgages on property Floating charges Net assets in subsidiaries/shares in subsidiaries 4,208 4,011 3,467 3,467 Total 4,647 4,451 3,467 3,467 All pledged assets refer to security for liabilities to credit institutions. Group Parent Company Contingent liabilities Other guarantees and sureties Pension obligations Ongoing tax lawsuit Total Notes to the Consolidated Financial Statements

79 Note 31 Transactions with related parties Transactions with related parties can affect an entity s financial results and position. Information must therefore be provided about parties that can be considered related to the Lindab Group. Closest circle Since stock market flotation, the Company has no new shareholders that can be regarded as major shareholders with control over Group operations. Ratos AB, Skandia Liv and Sjätte AP-fonden, currently and previously the principal shareholders, have been regarded as related parties during the year. Carl-Gustaf Sondén, Hans Schmidt- Hansen and Walther Vishof Paulsen as members of the Board, together with other members of the Board, and the Group management, with their respective closest circles, have also been related parties. Also regarded as related parties are the associated companies IT-Clean i Åstorp AB and Meak B.V. in the Netherlands. However, as the extent of these transactions is negligible, they have not been included below. In addition to this, the Parent Company has direct and indirect control over its subsidiaries (see Note 32 ). The only transactions and dealings of the Parent Company with subsidiaries are Group contributions and what follows from agreements with the corporate management ( see Note 6 ). Salaries, remuneration, benefits, pension entitlements, termination benefits, etc. for the CEO and other senior executives are presented in Notes 6 and 25. Other transactions with related parties are specified below Group Parent Company Share redemption proceeds Ratos AB Skandia Liv Sjätte AP-fonden Carl-Gustaf Sondén ( Hans Schmidt-Hansen has transferred his right to Ratos AB ) Kjell Åkesson, CEO Others ( senior executives and some key persons ) Pension liability to Carl-Gustaf Sondén Hans Schmidt-Hansen Group companies Parent Company Parent Company Interest income from Parent Company N/A N/A Long-term receivables in the Parent Company 909 1,058 N/A N/A Current liabilities to the Parent Company 0 - N/A N/A Group companies Interest expenses to Group companies N/A N/A Long-term liabilities to Group companies N/A N/A 909 1,058 Current receivables in Group companies N/A N/A 0 - Other transactions with related parties Scandab AB s business was sold to Dantherm Filtration AB in February At the time, Walther Vishof Paulsen was a member of the Board in both Lindab and the acquiring company. The sale was based on current market conditions at a selling price of SEK 10 M. In addition to what has been presented above, none of Lindab s Board members, deputy Board members, senior executives or shareholders is participating, or has participated, in any business transaction with the Company that is of an unusual nature, unusual terms or of significance to the Company s business as a whole, and that has taken place during the current financial year or in the last three financial years. This also applies to transactions in previous financial years that in some respect have not yet been settled or concluded. Lindab does not have any outstanding loans to any of these persons, nor has it given any guarantees or stood surety for any of them. In general, transactions with related parties have taken place on terms equivalent to those that apply for business transactions. Notes to the Consolidated Financial Statements 79

80 Note 32 Group companies and associated companies Currency Share Book code Corp. ID no. Registered office in % value Lindab International AB SEK Båstad, Sweden Lindab AB Lindab Sweden AB Lindab Steel AB Lindab Ventilation AB OOO Lindab Lindab Profi l AB Spiro Development AB (f.d. Lindab Development AB ) Lindab Climate AB Lindab Nord AB Lindab Plåt AB U-nite Fasteners Technology AB Folke Perforering AB Lindab i Grevie AB IT-Clean i Åstorp AB Astron Buildings OOO OOO Lindab Astron Buildings S.A. Astron Buildings Sp. z o.o. Astron Buildings S.A.S. Astron Buildings s.r.o. Astron Buildings OOO Astron Buildings GmbH Astron Buildings Sp. z o.o Astron Buildings OOO SEK Båstad, Sweden ) 3,467 2 ) SEK Båstad, Sweden 100 SEK Båstad, Sweden 100 SEK Båstad, Sweden 100 RUB St. Petersburg, Russia 1 SEK Båstad, Sweden 100 SEK Båstad, Sweden 100 SEK Askim, Sweden 100 SEK Båstad, Sweden 100 SEK Kvänum, Sweden 100 SEK Uddevalla, Sweden 100 SEK Borlänge, Sweden 100 SEK Örebro, Sweden 100 SEK Åstorp, Sweden 31.3 RUB OGRN Tutaev, Russia 99 RUB St. Petersburg, Russia 99 EUR RC B91774 Diekirch, Luxembourg 100 PLN KRS Lomianki, Poland 1 EUR RCS Marne-la-Vallée, France 100 CZK Prerov, Czech Republic 100 RUB Moskva, Russia 100 EUR HR B8007 Mainz, Germany 100 PLN KRS Lomianki, Poland 99 RUB OGRN Tutaev, Russia 1 Inatherm Holding B.V. EUR Waalwijk, The Nederlands 100 Lindab SIA LVL Riga, Latvia 100 UAB Lindab LTL Vilnius, Lithuania 100 Lindab d.o.o. HRK Gornji Stupnik, Croatia 100 Ventlandia Oy EUR Vimpeli, Finland 100 Lindab AS EEK Harju ml, Estonia 100 Oy Lindab Ab EUR Esbo, Finland 100 Lindab s.r.o. CZK Prag, Czech Republic 100 Spiro International S.A. Spiro S.A. Protol AG. Lindab Holding Inc. Spiral Helix Inc. Lindab Inc. Lindab Building Systems Kft. Lindab SRL Lindab EOOD Lindab d o o LLC Lindab Ukraine Lindab Kft. Lindab AS Lindab AG Benone AG Lindab Ltd. Fans & Grills Ltd. Excelsior Fans Ltd. Excelsior Air Conditioning Ltd. Fans & Grills Scotland Ltd. CHF CH Boesingen, Switzerland 100 CHF CH Boesingen, Switzerland 100 CHF CH Boesingen, Switzerland 100 USD Portsmouth VA, USA 100 USD Chicago IL, USA 100 USD Portsmouth VA, USA 100 HUF Cg Nyiregyháza, Hungary 100 RON J23/1168/2002 Ilfov, Romania 100 BGN Sofi a, Bulgaria 100 BAM Sarajevo, Bosnia 100 UAH Ukraine 100 HUF Biatorbagy, Hungary 100 NOK MVA Oslo, Norway 100 CHF CH Wetzikon, Switzerland 100 CHF CH Muttenz, Switzerland 100 GBP Northampton, UK 100 GBP Northampton, UK 100 GBP London, UK 100 GBP Northampton, UK 100 GBP SC Glasgow, UK 100 CCL Veloduct Ltd. GBP Northampton, UK 100 DK Holding DKK CVR nr Haderslev, Denmark 100 Lindab A/S DKK CVR nr Haderslev, Denmark 100 Spiro France S.A.S. EUR Montluel, France 100 Lindab Sp. z o.o. PLN KRS Lomianki, Poland 100 Lindab S.r.l EUR Turin, Italy 95 Lindab N.V. EUR BE Nazareth, Belgium 100 Lindab Door B.V. EUR Utrecht, The Nederlands 100 Meak B.V. EUR Utrecht, The Nederlands 40 Lindab GmbH EUR HRB 2276 Bargteheide, Germany 100 Grundstücksgesellschaft kassel GmbH EUR HRB 4936 Bargteheide, Germany 100 Lindab N.V. EUR BE Nazareth, Belgium 0 Lindab S.r.l EUR Turin, Italy 5 Lindab S.A.S. EUR Montluel, France 100 Lindab Production S.A.S EUR Montluel, France 100 Airbat S.A.S. EUR RCS Freneuse, France ) The remaining 1.7 percent in Lindab AB, i.e. 417,143 shares, represents its own bought-back shares. 2 ) Shares owned total 23,582, Notes to the Consolidated Financial Statements

81 We affirm that, to the best of our knowledge, this Annual Report has been prepared in accordance with generally accepted accounting practices for listed companies, that the information submitted corresponds with the actual situation and that nothing of material significance has been omitted that could affect the picture of the Company presented in the Annual Report. Båstad, 14 Februari 2007 Svend Holst-Nielsen Chairman Stig Karlsson Anders C. Karlsson Hans-Olov Olsson Annette Sadolin Pontus Andersson Markku Rantala Auditors Report Kjell Åkesson CEO and President To the Annual General Meeting of Lindab International AB Corporate identification no.: We have examined the Annual Report, the consolidated financial statements, the accounts and the administration of the Board of Directors and the CEO of Lindab International AB for the financial year The Company s Annual Report and consolidated financial statements are presented in the printed version of this document on pages The Board of Directors and the CEO are responsible for the accounts and the administration of the Company, and for ensuring that the Swedish Annual Accounts Act is applied when preparing the Annual Report and for ensuring that the International Financial Reporting Standards ( IFRS ), as approved by the European Union, and the Annual Accounts Act are applied when preparing the consolidated financial statements. Our responsibility is to express an opinion on the annual accounts, consolidated accounts and the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden, meaning that we planned and performed the audit to obtain reasonable, but not absolute, assurance that the Annual Report and the consolidated financial statements are free of material misstatement. An audit includes the examination of a selection of the documentation with respect to amounts and other information in the accounting records. An audit also includes assessing the accounting principles used and their application by the Board ofdirectors and the Chief Executive Officer, and evaluating the most critical estimates made by the Board and Chief Executive Officer in preparing the Annual Report and the consolidated accounts, and the overall presentation of information in the Annual Report and the consolidated accounts. As a basis for our pronouncement on discharge from liability, we have examined significant decisions, actions taken and circumstances at the Company in order to be able to determine the liability, if any, to the Company of any Board member or the Chief Executive Officer. Wehave also examined the question as to whether any Board member or the Chief Executive Officer has otherwise acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion as set out below. The Annual Report has been prepared in accordance with the Swedish Annual Accounts Act and, consequently, provides a true picture ofthe company s income and position in accordance with generally accepted accounting practice in Sweden. The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS ), as approved by the European Union, and the Swedish Annual Accounts Act, and provide a true picture of the Group s income and position. The report of the Board of Directors is consistent with the other parts of the Annual Report and consolidated accounts. We recommend that the Annual General Meeting adopts the income statement and balance sheet of the Parent company and the Group, that the unappropriated earnings in the Parent Company be disposed of as proposed in the Board ofdirectors report and that the members of the Board of Directors and the Chief Executive Officer be discharged from liability for the financial year. Båstad, 14 Februari 2007 Ingvar Ganestam Staffan Landén Authorised Accountant Authorised Accountant Auditors Report 81

82 lindab annual report Information to Shareholders Annual General Meeting The Annual General Meeting for Lindab International AB will be held at Lindab Profil AB, Vistorps Industriområde, Båstad, Sweden on Tuesday 25 April 2007 at 2 p.m. Shareholders wishing to participate in the Annual General Meeting must: The application must specify: Name Personal ID no. ( registration number ) Address and telephone number (day time ) Any advisors attending Any representatives attending Be registered in the register of shareholders maintained by VPC AB ( Swedish Securities Register Center ) no later than Thursday 19 April Notify Lindab International AB of their intention to attend no later than 4 p.m. on Thursday 19 April Registration in the Register of Shareholders Shareholders whose shares are registered in the names of trustees through a bank or another fund manager must request to have their own names entered in the register of shareholders maintained by VPC AB by Thursday 19 April 2007 to be eligible to participate in the Annual General Meeting. The shareholders must notify their bank or other fund manager in ample time before this date. Notice to Attend Shareholders wishing to attend the Annual General Meeting must submit an application by 4 p.m. on Thursday 19 April 2007: Shareholders represented by proxy must provide apower of attorney for the representative. If the power of attorney is issued by a legal entity, a certified copy of the proof of registration for the legal entity must be enclosed. The document must not be more than one ( 1 ) year old. The original of the power of attorney and any related documents should be forwarded to the Company by Thursday 19 April Nomination Committee It is the duty of the Nomination Committee to prepare and present nominations for the offices of Chairperson, members of the Board, auditors, Chairperson of the Annual General Meeting, as well as issues pertaining to fees and similar matters. The Nomination Committee for the 2007 Annual General Meeting comprises: Arne Karlsson, representative for Ratos AB ( publ ) Duct system for good ventilation. Caroline af Ugglas, representative for Skandia Liv Urmas Kruusval, representative for Sjätte AP-fonden Svend Holst-Nielsen, Chairman of Lindab International AB Dividends Monday 30 April 2007 is proposed as the dividends record date. If the Annual General Meeting resolves to accept the proposal, it is expected that the dividend will be paid through VPC AB ( Swedish Securities Register Center )on Friday 4 May Reports can be ordered from Lindab International AB Lindab s website: By post: Lindab International AB Reports, Båstad, Sweden On the website: By calling Lindab International AB on +46 ( 0 ) By post to Lindab International AB Årsstämma, Båstad, Sweden Financial Reports Interim Report January-March, Q1 25 April 2007 Interim Report January-June, Q2 17July 2007 Interim Report January-September, Q3 25 October 2007 Q4 and Annual Results for 2007 February Annual Report March Information to Shareholders

83 Glossary Ventilation Air Duct Systems Products Ducts, couplings, bends, dampers, etc. with which all types of ventilation ducts can be built. Circular Duct systems based on circular ducts and fittings, which thanks to the circular design, provides greater scope for building airtight, economical and functional ventilation systems. Consists of mass-produced products often fitted with rubber seals to ensure swift assembly and energy-efficient operation. Rectangular Duct systems based on rectangular ducts and fittings. Normally consists of hand-made products, manufactured in short runs or as one-offs. Manually sealed when assembled. Less efficient airflow and acoustic properties than the circular system. Comfort Indoor climate products Technical products, which heat and/or cool a room and alter the indoor climate. Technical products include grills, diffusers and valves whose function is to distribute air into the room in desired quantities and directions. Profile Building Systems A building kit, which in its basic form, consists of a steel frame, steel girders, bolts, sheeting and fasteners and is supplied to the customer as a complete, ready-to-assemble system solution. Building Components Individual products for use in construction projects, such as roof drainage products, bolts and sheeting for walls and roofs. High Built Polyester This is an environmentally friendly cladding material. Steel sheet clad with HB polyester is easily worked and has excellent resistance to corrosion. Lindab in general Specification The process carried out by consultants, designers, engineers or architects at an early stage in the construction process to specify which products are to be used for the project in question. The choice of products is based on the unique needs of each project and must meet the subsequent requirements for performance, aesthetics and cost. Prefabricated Components that are manufactured and combined in the factory to make a complete solution that is ready-to-assemble upon delivery. Pre-engineered A unique, integrated solution that has first been defined and whose components are then manufactured and combined in the factory to make a complete solution that is ready-to-assemble upon delivery. Ventilation Ducts. Building Components. Circular Duct Systems. Glossary 83

84 lindab annual report Lindab Group addresses Head Office Sweden Lindab AB SE Båstad Tel: Fax: Lindab International AB SE Båstad Tel: Fax: Belgium Lindab N.V. Begoniastraat 13a BE-9810 Eke Tel: Fax: info@lindab.be Bosnia-Herzegovina Lindab d.o.o. Luzansko Polje 40 BA Ilidza, Sarajevo BiH Tel: Fax: info@lindab.ba Bulgaria Lindab EOOD 14 Munchen Street BG-1528 Sofia Tel: Fax: office@lindab.bg Croatia Lindab d.o.o. Gornjostupnicka 96 HR Gornji Stupnik Tel: Fax: lindab@lindab.hr Astron Buildings Representative Office Gornjostupnicka 96 HR Gornji Stupnik Tel: Fax: info.hr@astron.biz Czech Republic Lindab s.r.o. Na hürce 1081/6 CZ Prag 6 - Ruzynê Tel: / Fax: / info@lindab.cz Astron Buildings s.r.o. Kojetínská 71 CZ Prerov Tel: Fax: info.cz@astron.biz Denmark Lindab A/S Postbox 1071 Langkaer 20 DK-6100 Haderslev Tel: Fax: lindab@lindab.dk Lindab A/S Comfort Lucernemarken 17 DK-3520 Farum Tel: Fax: comfort@lindab.dk Lindab Profil A/S Finnmarken 1, Jels DK-6630 Rødding Tel: Fax: profil@lindab.dk Estonia Lindab AS Saha-Loo tee 4 EE Joelähtme v. Harju mk. Tel: Fax: lindab@lindab.ee Finland Oy Lindab Ab Juvanteollisuuskatu 3 FI Espoo Tel: Fax: info@lindab.fi Ventlandia Oy Puusepäntie 3 FI Vimpeli Tel: Fax: info@lindab.fi France Lindab S.A.S. Parc d Activités FR Montluel Tel: Fax: lindab.france@wanadoo.fr Lindab Production S.A.S. Parc d Activités FR Montluel Tel: Fax: lindab.france@wanadoo.fr Astron S.A.S. 20 rue Pierre Mendès-France Torcy - B.P. 73 FR Marne-la-Vallée Cédex 01 Tel: Fax: info.fr@astron.biz Spiro France S.A.S. Parc d Activités FR Montluel Tel: Fax: lindab.france@wanadoo.fr Airbat S.A.S. Zi de La Ravine - BP 7 FR Freneuse Tel: Fax: airbat-stm@club-internet.fr Germany Lindab GmbH Carl-Benz Weg 18 DE Bargteheide Tel: Fax: lindab@lindab.de Lindab Building Systems Franz - Kissing - Str. 7 DE Menden Tel: Fax: infogermany@lindab-buildings.com Astron Buildings GmbH Wilh.-Theod.-Römheld-Str. 32 DE Mainz Tel: Fax: info@astron.biz Hungary Lindab Kft. Állomás u. 1/A. HU-2051 Biatorbágy Tel: Fax: / info@lindab.hu Lindab Building Systems Kft. Derkovits u HU-4400 Nyíregyháza Tel: Fax: info@lindab-buildings.com Lindab Building Systems Kft. Representative Office Állomás. u. 1/A HU-2051 Biatorbágy Tel: Fax: infohungary@lindab-buildings.com Astron Buildings S.A. Állomás u. 1/A. HU-2051 Biatorbágy Tel: Fax: info.hu@astron.biz Italy Lindab S.r.l Via Pisa 5-7 IT Volpiano ( TO ) Tel: Fax: lindab@lindab.it 84 Addresses

85 Astron Buildings Representative Office Via S. Martino Solferino 40 IT Padova Tel: Fax: Kazakhstan Representative Office Makataeva str., KZ-Almaty Tel: Fax: Latvia Lindab SIA Kurzemes Pr. 23 LV-1067 Riga Tel: Fax: GSM Lithuania Lindab UAB Mokslininku g. 20 LT Vilnius Tel: Fax: GSM Luxembourg Astron Buildings S.A. P.O. Box 152 LU-9202 Diekirch Tel: Fax: The Netherlands Lindab Door B.V. Postbus 9025 NL-3506 Ga Utrecht Tel: Fax: Norway Lindab A/S Postboks 171 Kalbakken NO-0903 Oslo Tel: Fax: Poland Lindab Sp. z o.o. ul. Kolejowa 311, Sadowa PL Lomianki Tel: Fax: info@lindab.pl Lindab Building Systems Representative Office ul. Kolejowa 311, Sadowa PL Lomianki Tel: Fax: hale@lindab.pl Astron Buildings Sp. z o.o. ul. Kolejowa 311, Sadowa PL Lomianki Tel: Fax: info.pl@astron.biz Romania Lindab SRL Soseaua de Centura, nr. 8 Stefanestii de Jos RO Ilfov Tel: Fax: office@lindab.ro Lindab Building Systems Soseaua de Centura, nr. 8 Stefanestii de Jos RO Ilfov Tel: Fax: inforomania@lindab-buildings.com Astron Buildings S.A. Representative Office Soseaua de Centura, nr. 8 Stefanestii de Jos RO Ilfov Tel: Fax: info.ro@astron.biz Russia OOO Lindab t. Sestroretsk, st. Voskova, h.2., Litera V RU S:t Petersburg Tel: Fax: vent@lindab.ru OOO Astron Buildings LLC 14G, 2-ya Magistralnaya str., bld. 1,34 RU Moskva Tel: Fax: info.ru@astron.biz Serbia and Montenegro Representative Office YU Biznis centar Bulevar Mihaila Pupina 10D lok CS Belgrad Tel: Fax: lindab@yubc.net Representative Office Enver Maloku Street 4/A. CS-3800 Pristine, Kosovo Tel: Fax: lindab@ipko.net Spain Astron Buildings Representative Office La Hormaza 9 ES Artziniega ( Alava ) Tel: Fax: info.es@astron.biz Sweden Lindab Sverige AB SE Båstad Tel: Fax: sve@lindab.se Lindab Ventilation AB SE Båstad Tel: Fax: ventilation@lindab.se Lindab Profil AB SE Båstad Tel: Fax: profil@lindab.se Lindab Plåt AB Edsvära SE Kvänum Tel: Fax: info@lindabplat.com Lindab Nord AB Box 66 SE Boliden Tel: Fax: nord@lindab.se Lindab Steel AB SE Båstad Tel: Fax: steel@lindab.se U-nite Fasteners Technology AB Hogstorp SE Uddevalla Tel: Fax: info@unitefasteners.com Folke Perforering AB Lustbergsgatan 8 SE Borlänge Tel: Fax: info@folkeperf.se Switzerland Spiro International S.A. Industriestrasse 173 CH-3178 Bösingen Tel: Fax: info@spiro.ch Lindab AG Hofstrasse 94 CH-8620 Wetzikon Tel: Fax: info@lindab.ch Benone AG Ventilationsspenglerei Wildensteinerstrasse 21 Postfach 124 CH-4132 Muttenz Tel: Fax: UK Lindab Ltd. Units 9-10 Carousel Way Riverside Business Park GB-Northampton NN3 9HG Tel: Fax: sales@lindab.co.uk Lindab Ltd. Building Products Division Shenstone Industrial Estate Bromsgrove Road Halesowen GB-West Midlands, B63 3XB Tel: Fax: buildingproducts@lindab.co.uk Lindab Building Systems Kft. Evans Business Centre Mitchelston Industrial Estate Mitchelston Drive GB-Kirkcaldy, Fife Scotland KY1 3UF Tel: Fax: infouk@lindab-buildings.com CCL Veloduct Ltd. 10 Woodall Road Redburn Industrial Estate Enfield GB-Middlesex, EN3 4LE Tel: Fax: enfield@cclveloduct.co.uk Ukraine LLC Lindab Ukraine Saksaganskogo Street 123, office 3. UA Kiev Tel: Fax: lindab@lindab.kiev.ua USA Lindab Inc Airline Blvd US-Portsmouth, VA Tel: Fax: info@lindabusa.com Spiral-Helix Inc. 840 Dillon Drive US-Wood Dale, IL Tel: Fax: info@spiral-helix.com Addresses 85

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