11.07.2015 Views

Systemair Annual report 2012/13

Systemair Annual report 2012/13

Systemair Annual report 2012/13

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

<strong>Annual</strong> <strong>report</strong><strong>2012</strong>/<strong>13</strong>


Contents<strong>Systemair</strong> in Brief 1<strong>2012</strong>/20<strong>13</strong> in Brief 2CEO’s Statement 4Business Concept, 8Goal and StrategyOrganisation 11Acquisitions 14History 15Case Study: Turkey 16Market 20Market Areas 22Brands 25Case Study: Russia 26Products 28Product Development 32Case Study: India 34Production Facilities 36Logistics 38E-commerce 39Personnel 40Sustainability 44The <strong>Systemair</strong> Share 46Directors’ Report 49Description of the Business 49and Financial InformationProposed Distribution of 52Unappropriated ProfitsCorporate Governance Report 53Board of Directors 59Group Management 60Consolidated Income Statement 61Consolidated Statement of 61Comprehensive IncomeConsolidated Balance Sheet 62Changes in Equity – Group 64Consolidated Cash Flow Statement 65Parent Company – Income statement 66Parent Company Statement of 66Comprehensive IncomeParent Company Balance Sheet 67Changes in Equity Parent Company 69Parent Company Cash Flow Statement 70Accounting Policies and 71Notes to the AccountsAuditors’ Report 92Key Ratios and Definitions 93


SYSTEMAIR IN BRIEFSimpleEffectiveReliable<strong>Systemair</strong> has operationsin 44 countries44<strong>Systemair</strong> is a leading ventilation company with operations in44 countries. We manufacture and market high-quality ventilationproducts. Our product range spans a broad range of energy-efficientfans, air handling units, air distribution products, chillers, air curtainsand heating products. Our products are robust and easy to choose,install and use.Our strengthsFactsThe Group has 19 factories19Trust- Reliability, is our most importantwatchword.Our customers can trust that they willreceive the right products, with thecorrect performance, and delivered ontime.High quality at the best possible price<strong>Systemair</strong> is a well-known brand inthe ventilation industry. We offer themarket what it wants: consistentlyhigh-quality products at the bestpossible price.Growth is part of our cultureWe will continue to grow organicallyand by acquisitions. Credibility andongoing product development createthe framework for stable growth.Sales for the <strong>2012</strong>/<strong>13</strong> financial yeartotalled SEK 4.55 billion.Established in 1974 by Chief ExecutiveOfficer Gerald Engström and others.The Company has its registered officeand headquarters in Skinnskatteberg,Sweden.Operations in 44 countries in Europe,North and South America, the MiddleEast, Asia and South Africa.The Group is made up of 55 operatingcompanies with a total of 3,600 employees.19 factories with warehouse andproduction facilities extending overmore than 200,000 m 2 .<strong>Systemair</strong> shares have been quoted onNASDAQ OMX Stockholm (Mid Cap List)since October 2007.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 1


<strong>2012</strong>/20<strong>13</strong> in Brief<strong>2012</strong>/20<strong>13</strong>in Brief• In April 20<strong>13</strong>, Pär Johansson was appointed as new Managing Director ofthe Parent Company, <strong>Systemair</strong> AB. Gerald Engström remains as ChiefExecutive Officer of the Group and member of the Board of Directors.• In March 20<strong>13</strong>, <strong>Systemair</strong> acquired Holland Heating, a leadingmanufacturer of air handling units in the Netherlands.• In March 20<strong>13</strong>, we participated in the ISH trade fair in Frankfurt, Germany,with a display of exclusively new products on a major exhibition stand.• In February 20<strong>13</strong>, <strong>Systemair</strong> established a sales company in Croatia.• In January 20<strong>13</strong>, work started on relocation to a new, 12,000 m 2factory complex in Istanbul, Turkey, complete with state-of-the-art,high-efficient production lines.• In December <strong>2012</strong>, <strong>Systemair</strong> established a sales company in Peru.• In September <strong>2012</strong>, construction of a new development centre inWindischbuch, Germany, began.• In August <strong>2012</strong>, <strong>Systemair</strong> acquired Ratos’ shareholding in Lindab,bringing <strong>Systemair</strong>’s stake to 11.6 percent of the shares outstanding.• In August <strong>2012</strong>, work started on construction of a development centre,production facilities and offices 8,000 m 2 in India.• In August <strong>2012</strong>, <strong>Systemair</strong> acquired 70 percent of the shares in Turkishcompany HSK. HSK is Turkey’s leading manufacturer of air handling units.In December <strong>2012</strong>, <strong>Systemair</strong> acquired a further 20% of the shares inthe company.• In June <strong>2012</strong>, Change’Air, Canada, was acquired. The company is one ofthe North American market’s leading producers of air handling units forclassrooms.After the close of the period:• In May 20<strong>13</strong>, <strong>Systemair</strong> completed the acquisition of Menerga GmbH,Germany, a leading European producer of air handling units for swimmingpool halls and comfort ventilation with extra high efficiency.• In May 20<strong>13</strong>, <strong>Systemair</strong> entered an agreement to acquire Reftec AS, asupplier of commercial cooling and heat pumps for the Norwegian market.2 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


<strong>2012</strong>/20<strong>13</strong> in BriefNet sales, SEK m.Return on capital employed, %5,0004,0003,0002,0001,00030252015105008/0909/1010/1111/1212/<strong>13</strong>008/0909/1010/1111/1212/<strong>13</strong>Operating profit (EBIT), SEK m./EBIT-margin,%5004003002001001512963Cash flow from operatingactivities, SEK m.400300200100008/09 09/10 10/11 11/12 12/<strong>13</strong> 0008/0909/1010/1111/1212/<strong>13</strong>Number of employees at end of periodGrowth in sales, %4,000203,5003,000152,5002,0001,5001051,0005000008/0909/1010/1111/1212/<strong>13</strong>-508/0909/1010/1111/1212/<strong>13</strong>Key Ratios<strong>2012</strong>/<strong>13</strong> 2011/12 2010/11 2009/10 2008/09Net sales, SEK m. 4,551.0 3,996.9 3,467.3 3,218.6 3,333.1Growth, % <strong>13</strong>.9 15.3 7.7 -3.4 7.8Operating profit, SEK m. 365.2 319.8 367.0 274.7 341.0Operating margin, % 8.0 8.0 10.6 8.5 10.2Profit margin, % 7.3 7.4 9.8 7.6 9.0Return on capital employed, % <strong>13</strong>.8 14.7 18.0 15.2 21.3Earnings per share, SEK 4.6 4.1 5.3 3.7 4.5Equity per share, SEK 30.3 26.9 24.4 22.2 19.7Equity/assets ratio, % 40.7 45.1 48.6 49.0 43.3Dividend per share, SEK 1.50* 1.25 1.75 1.25 0.75Number of employees at year-end 3,649 3,127 2,506 2,208 1,945*Dividend to be recommended by the Board at the AGM on 29 August 20<strong>13</strong> in Skinnskatteberg, Sweden.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 3


CEO’s StatementOrganic growth for <strong>13</strong>thsuccessive quarterGrowth amounted to 14% over the year, 5% of which wasorganic. We are satisfied with our sales growth, but had expecteda somewhat higher profit figure. The less satisfactory result wasattributable above all to the new acquisitions and weakness inseveral of our markets. A strong Swedish krona and a severewinter also impacted adversely on the business.Sales in Other markets showed verysharp growth of 63% over the year.63%The marketOur sales in the Nordic region were on thesame level as in the preceding year. Salesin Norway rose by 3%, while the Swedishmarket declined by the same amount.The West European market was uneven,with reasonable growth in the north but aconsiderably weaker trend in the south. Ourbusinesses in Italy, Spain and Portugal haveexperienced a tough year.In Eastern Europe, we performed strongly inRussia and the Baltic States. In North America,the Canadian market was buoyant, but thegoing was harder in the USA. An upturnemerged towards the end of the period.Sales in Other markets showed very sharpgrowth of 63% over the year. <strong>Systemair</strong>’sacquisition of Turkish air handling unitmanufacturer HSK accounted for a majorshare of the increase. Adjusted for theimpact of exchange rates and acquisitions,sales advanced 22% in the region. Thebiggest markets are Turkey, India and theUnited Arab Emirates.Product developmentMore than 160 engineers are busydeveloping new and better products. Overthe past year, we launched an unusuallyhigh number of new products, with theemphasis on energy-efficiency. Wehave expanded our product range andconcentrated solely on new products atthe major ISH trade fair held in Frankfurt,Germany, in March 20<strong>13</strong>. Most of our newproducts incorporate energy-efficient ECmotors, which offer both higher efficiencyand loss-free speed regulation. The newmotors enable simple control of variableairflows and thus substantial energysavings.Our efforts on integrating cooling andventilation continue to move in the rightdirection.The <strong>Systemair</strong> business model of keepinga majority of our products in stock forprompt delivery is continuing to deliverexcellent results. Today, the market consistslargely of renovation projects and minorworks where prompt delivery is a decisivefactor in clinching an order. Our businessmodel also offers us the advantage ofbeing able to produce in higher-volumeseries, which creates the scope for lowerproduction costs.Sound acquisitions creating a base forcontinued growthDuring the year, we acquired the Canadianmanufacturer Change’Air, which makes airhandling units for classrooms. The companyholds a strong position in that niche in NorthAmerica. We are also delighted to havesucceeded in acquiring HSK, a marketleadingproducer of air handling units inTurkey. The acquisition was completed intwo stages, 70% in August and a further20% in December <strong>2012</strong>. In March 20<strong>13</strong>, weacquired Holland Heating from Carrier B.V.Holland Heating is a leading manufacturer ofair handling units in the Netherlands. It alsoholds a strong position and is a strong brandin Belgium, France and the United Kingdom.The acquisition also includes an agreementto continue with deliveries to Carrier.Acquisitions after the end of thefinancial yearIn early May 20<strong>13</strong>, we acquired MenergaGmbH of Mülheim an der Ruhr, just outsideDüsseldorf. Menerga is a well-knownmanufacturer of air handling units forswimming pool halls and comfort ventilationwith extra high efficiency. The company hasan excellent reputation for high-technology,innovative products. The company's salesin <strong>2012</strong> totalled EUR 56 million. In May20<strong>13</strong>, we also acquired Reftec, a supplier ofchillers and heat pumps based in Trondheim,Norway, with net sales of NOK 34 million.The company will valuably complement<strong>Systemair</strong> in selling to major projectsincluding chillers and heat pumps.InvestmentOver the year, we completed majorinvestments at our facility in India. Weconstructed a new 8,000 m 2 industrialbuilding while at the same time renovatingthe existing building for offices, product4 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


CEO’s StatementFactsGerald EngströmCEOIn 2005, Gerald Engström was namedEntrepreneur of the Year in Sweden.In 2011, he was honoured by theaward of H.M. the King's Medal, 12 thsize with the ribbon of the Orderof the Seraphim, for outstandingcontributions to Swedish business.exhibition and a development centre for airdistribution products. Occupancy was takenup in stages during spring 20<strong>13</strong> and threeformer operations have now been mergedin modern premises.We also invested extensively in modernproduction equipment at our recentlyacquiredsubsidiary <strong>Systemair</strong>-HSK. We areleasing a new 12,000 m 2 industrial propertysituated between our two existing productionfacilities. During the spring, we movedoperations into the new premises and allmachinery installations are now in place.Commissioning is under way and productionefficiency is gradually being increased.Future and potential still strongIn the <strong>2012</strong>/<strong>13</strong> financial year, we carriedout major investments and made goodbusiness acquisitions during the year andat the start of our new financial year. Up tonow, the results from our investments haveboosted sales only to a minor extent.We look forward to the new year withconfidence and anticipate a considerablerise in sales through the acquisitions madeand organic growth in a number of markets.»Our businessmodel of keepinga majority ofour productsin stock forprompt deliveryis continuing todeliver excellentresults.Gerald EngströmCEO<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 5


1Our three core values#1 QUALITYTo us, quality means offering reliable products.In addition, quality must permeate throughto every part of the business, from productdevelopment and manufacture to logisticsand customer support. Our aim is to be the firstchoice for our customers, and we have thereforedeveloped a broad, well-balanced productportfolio of standardised quality products.6 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 7


Business Concept, Goal and StrategyOur vision is to be aworld leaderMission statementWith our businessconcept and anoffensive strategy,we will take aclear position atthe top.Our mission is to develop,manufacture and market high-qualityventilation products. With ourcustomers in focus, we aim to be themost reliable company for quality,availability and delivery reliability.We aim to also keep customerrelationships with <strong>Systemair</strong> simple.8 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Business Concept, Goal and StrategyOVERARCHING GOALSTRATEGY<strong>Systemair</strong>’s overarchinggoal is to become one of theleading players in the globalventilation industry and themost reliable one in everylocal market.●By being a major player,we will influence and helpdrive trends and developmentin the ventilation sector.●We will consistentlyexploit benefits of scalewithin production, productdevelopment,logistics and sales.●Our financial strengthenables us to enter a newmarket through acquisitionor establishment. A localpresence in priority marketsis fundamental to our abilityto achieve our goal. Wealso intend to expand ouroperations in priority marketsin Western Europe and EasternEurope & the CIS.●●●●●●●Innovative product development and a broad productrange focusing on energy-efficient ventilationproducts.High product availability and fast delivery via efficientproduction, logistics and IT systems.Development and expansion of <strong>Systemair</strong>’s own salesorganisation.We will be the most reliable company for quality,availability and delivery reliability. Through this, ouraim is to create good relationships with ventilationcontractors, distributors and consultants, and tobecome the first choice for our customers.A highly diversified customer base and widegeographical coverage reduce our vulnerability tofluctuations in the economy.We have an early presence in growth markets.An offensive strategy for acquisitions andestablishments to assure continued growth.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 9


Business Concept, Goal and StrategyObjectiveGrowthObjectives Description AchievementTo achieve average annual growthof at least 12% in sales over abusiness cycle.12%The objective is to be achievedthrough both organic growth andacquisitions. Sales growth duringthe past ten years has averaged 9%per year. Organic growth is to beachieved through product developmentand increased market shares. Newgeographic markets will be enteredthrough acquisitions or new businessestablishments.Net sales for the financial year roseby <strong>13</strong>.9% to SEK 4,551 million (3,997)million. Growth in sales, %Growth in sales, %201520101551005-508/0909/1010/1111/1212/<strong>13</strong>ProfitabilityTo achieve an average operatingmargin of no less than 10% over abusiness cycle.10%Financial positionThe Group’s equity/assets ratio shouldbe no less than 30%.30%Dividend policyBased on <strong>Systemair</strong>’s ambitionsfor growth, the dividend target isapproximately 30% of the Company’sprofit after tax.30%The operating margin has averaged9.4% during the past ten years and9.1% over the past five years. TheCompany considers that the conditionsfor achieving this objective arefavourable, given its current structureand product programme.The Group’s financial position is strong;its equity/assets ratio on 30 April 20<strong>13</strong>was 40.7%. The Company continuallyanalyses opportunities for strategicacquisitions and our financial positionallows scope for acquisitions andinvestments.The AGM determines the dividend tobe paid, having considered the Board’srecommendation. The aim is to securea stable financial position for continuedacquisitions, the establishment ofsales companies and gradual build-upof production capacity. At the sametime, shareholders are to receive areasonable share of the Company’sannual earnings.0-5Operating margin, %Operating margin, %1414 1212 1010 88664422050504040 3030 2020 1001008/0908/0909/1009/1010/11Equity/assets ratio, %Equity/assets ratio, %Goal08/090Goal 08/090GoalGoal08/0909/1009/1009/1010/1110/1110/1110/1111/1211/1211/1211/1211/1212/<strong>13</strong>12/<strong>13</strong>12/<strong>13</strong>The Board of Directors has proposed adividend of SEK 1.50 (1.25) per share,corresponding to 32.3% of profit aftertax.12/<strong>13</strong>12/<strong>13</strong>10 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


OrganisationOrganisationOwned sales companies offer effective control anddirect communication with the market. Through ourlocal companies, we have good knowledge of therequirements and trends in various markets andcan respond quickly to change. To ensure smoothinformation transfer between subsidiaries and headoffice, we have Business Boards. These are informalboards made up of the local managing directorplus one or two senior individuals representing theGroup. We also have Centres of Excellence, whichserve as centres for knowledge transfer betweenproduct managers and sales staff.CEOGerald EngströmPresident,<strong>Systemair</strong> ABPär JohanssonMarketSvein NilsenFinance and IRGlen NilssonProductionMats LundFinance/Admin.Anders UlffMarketing - ProductsRoland KasperBusiness DevelopmentJonas Valentin,MD FricoBusiness DevelopmentKurt Maurer, MD<strong>Systemair</strong> GmbHProduct DevelopmentMats SándorCommunicationThomas HanhelaPurchasingVolker KuraITJürgen HernadiBusiness BoardsSubsidiariesin the Nordic regionSubsidiariesin Western EuropeSubsidiariesin Eastern Europe& OSSSubsidiariesin North AmericaOthersubsidiaries<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 11


12 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


2Our three core values#2 AVAILABILITYTo ensure availability, we have chosen toproduce a substantial proportion of our productrange for stock. Instead of starting to producewhen we receive an order, we can deliver rightaway from a local or central warehouse. Thestrategy of producing for stock, rather than inresponse to customer orders, also translatesinto higher productivity and secure control overthe entire flow of goods.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> <strong>13</strong>


ACQUISITIONSOffensive acquisition strategy»<strong>Systemair</strong> isexpandingthrough acombination oforganic growthand acquisitions.Acquisitions in <strong>2012</strong>/<strong>13</strong><strong>Systemair</strong>’s overall objective is to become one of the leading playersin the global ventilation industry. An offensive and consistentacquisition and establishment strategy is fundamental to our abilityto achieve our goal.<strong>Systemair</strong> is expanding through acombination of organic growth andacquisitions. A number of areas areanalysed in each acquired company:corporate culture and fundamental values;customers and suppliers; organisation; andcosts and margins.A shared corporate culture andfundamental values are essential tosuccessful integration of the new company.We allocate major resources to this process.For example, Group management conductsthe review with the personnel of thecompany acquired. This may take place,for example, in the form of seminars andGroup-wide activities lasting several days at<strong>Systemair</strong> headquarters.If practicable, all members of personnelare invited to Skinnskatteberg. We seethis as an effective means of quicklyestablishing contacts at different levels ofthe company. During each of these visits– whether they involve management onlyor all employees – we review our values,or "tablets of stone" as we call them. Theydescribe how each and every employee at<strong>Systemair</strong> shall, can and may act in his orher work (see page 42).The integration is further reinforcedthrough <strong>Systemair</strong> Academy, our in-housetraining programme that offers basic andadvanced courses in ventilation technology,products, finance, IT and sales.Acquisitions after the financial year-endHolland HeatingIn March 20<strong>13</strong>, <strong>Systemair</strong> acquiredHolland Heating, a leading manufacturerof air handling units in the Netherlands.Holland Heating, established in 1955, hasproduction facilities and headquarters inWaalwijk. The company has been ownedby Carrier since 1997. As a result ofthe acquisition, <strong>Systemair</strong> becomes themarket leader in air handling units in theNetherlands.Shareholding in LindabIn August <strong>2012</strong>, <strong>Systemair</strong> acquireda major shareholding in Lindab,making <strong>Systemair</strong> currently the largestshareholder in Lindab, with a total of11.6% of the share capital.Change’AirIn June <strong>2012</strong>, Change’Air, Canada,was acquired. The company is one ofthe North American market’s leadingmanufacturers of air handling units forclassrooms. The company, which has 86employees, has its headquarters andproduction facility in Ontario, Canada.The acquisition has provided <strong>Systemair</strong>with access to 59 sales agents in 71cities, and a total of approximately 300sales engineers in North America. Thelatter cover 42 states in the USA and sixprovinces in Canada.HSKIn August <strong>2012</strong>, <strong>Systemair</strong> acquired70 percent of the shares in Turkishcompany HSK. In December <strong>2012</strong>,<strong>Systemair</strong> acquired a further 20% of theshares in the company. HSK is Turkey’sleading manufacturer of air handling units.We see great potential for developingsales in Turkey and neighbouringcountries such as Azerbaijan, Georgia,Turkmenistan, Dubai and Iraq. Afteracquisition, the name of the companywas changed to <strong>Systemair</strong>-HSK.Menerga GmbHMenerga GmbH, Germany, is a leadingEuropean producer of air handling unitsfor swimming pool halls and comfortventilation with extra high efficiency.Established in 1981, Menerga has itsheadquarters and production facilitiesin Mülheim an der Ruhr, just outsideDüsseldorf.Reftec ASIn May, <strong>Systemair</strong> entered an agreementto acquire Reftec AS, a supplier ofcommercial cooling and heat pumpsfor the Norwegian market. Reftec,founded in 2007, has its headquartersin Trondheim and a sales office in Oslo.It has 14 employees.14 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


HistoryHistory» 1970s and 1980s 2000s<strong>Systemair</strong> wasawarded theSwedish TradeCouncil’s ExportPrize in 2007/08.Own representative office openedin Moscow, Russia.1997The circular duct fanFormer design1974 The Company was founded asLHG Kanalfläkt, and production began inSkinnskatteberg. More than 50% of productionwas exported to Norway.1976 First sales subsidiary, LHG Kanavapuhallin,Finland.1985 German fan motor manufacturers Ziehl-Abegg and ebm-papst were initially suppliersand became partners through their Swedishsubsidiary Ziehl-ebm. Today ebm-papst AB is thesecond largest shareholder in <strong>Systemair</strong>.1986 Gerald Engström took over as President.1987 Acquisition of 50% of the shares in RBKanalflakt, USA; the remaining 50% was acquiredin 2001/2002.1989 Sales company acquired in Denmark.1989/91 Norwegian company Jolin ProdukterA/S was acquired in stages.1990s1992 Acquisition of then OTC-listed Frico AB,a specialist in air curtains and fan heaters.1995 Environment Air, Canada, manufacturerof residential air handling units, acquired.1996 Acquisition of factory in Bouctouche,Canada, a production facility for the NorthAmerican market.1997 Own representative office in Moscow,Russia.Acquisition of SCIE <strong>Systemair</strong>, previously salesagent in France. The name was later adoptedas the name for the Group.1998/99 Acquisition of Europair, Södertälje,manufacturer of air terminal devices. LTILüftungstechnik, Windischbuch, Germany,now the second largest production unit andcentral warehouse. LTI’s sales companies inthe UK, Poland and Singapore became the firstsubsidiaries to be renamed <strong>Systemair</strong>.1999/00 Acquisition of the sales companyAPF Group, Estonia, with subsidiary in Latvia.Establishment of representative office inShanghai, China.2000/01 New distribution centre inSkinnskatteberg.Acquisition of Danvent, Denmark, which producesair handling units, and 75% of the shares in UABAlitas, Lithuania.Sales subsidiary in Turkey under the <strong>Systemair</strong>name.2001/02 <strong>Systemair</strong> adopted as the commonname for the entire Group.Acquisition of VEAB Heat Tech, Hässleholm,Auranor Aggregater of Eidsvoll, Norway, and salescompany Bivent, Austria.Sales companies founded in Hong Kong, Hungaryand Ireland.2002/03 Acquisition of sales companyMeijdijk Ventilatietechnik of the Netherlands,Klockargården in Skinnskatteberg, 26,000 m 2 ofbuildings and 30 ha of land.2003/04 Acquisition of Fans & Spares, UK, Gelu,a German manufacturer of air curtains, Antlia, adistributor in Switzerland; establishment of a newsales company in Belgium.2004/2005 Sales companies in Romania andSouth Africa established. Start-up of productionfacility in Ukmergé, Lithuania.2005/06 Acquisition of Marvent, Slovenia,Multiventilacao, a sales company in Portugal;establishment of sales companies in the UnitedArab Emirates, Spain and India.Gerald Engström, President, <strong>Systemair</strong>, namedEntrepreneur of the Year in Sweden.2006/07 Acquisition of Altexa, Austria and Imos,Slovakia, as well as the assets of Matthews &Yates, United Kingdom.2007/08 Acquisition of Koolclima, Spain,Climaproduct, Italy and establishment of<strong>Systemair</strong> Software, India.<strong>Systemair</strong> awarded the Swedish Trade Council’sExport Prize.<strong>Systemair</strong> listed on the NASDAQ OMX StockholmExchange.2008/09 Acquisition of Megcool Industries,Malaysia, and the assets of Emerson VentilationProducts, United States.2009/10 Acquisition of Energo Plus, Slovenia,W.C. Wood, Air Humidifier Dept, Canada, andRavistar, India.2010/11 Acquisition of Polish sales companyFoko, Czech sales company VKV, Dutch ventilationcompany Rucon and companies in the AalderingGroup engaged in the production and sales ofair curtains in Germany and the Netherlands. InJanuary, minority stakes in <strong>Systemair</strong> AS, Estonia,and IMOS-<strong>Systemair</strong>, Slovakia, were acquired.Establishment of sales company in Chile.2011/12 Acquisition of sales companies DTTermo, Serbia and Montenegro and Frivent,Germany. Acquisition of the Russian salescompany Ventrade.Acquisition of Airwell, Italy, manufacturer ofchillers, and IAPL, India, manufacturer of airhandling units and Kryotherm, Sweden.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 15


CASE STUDY<strong>Systemair</strong> is strengthening its position in Turkey. The acquisitionof HSK, a manufacturer of air handling units, will strengthenthe Company’s position in the Turkish market. At the same time,<strong>Systemair</strong> is establishing an excellent platform for the CIS market,setting its sights above all on the countries around the Black Sea.With a population of just over 75million and its geo-strategic locationbetween Europe and Asia, Turkey hasfigured in <strong>Systemair</strong>’s sphere of interest– in the form of a sales subsidiary andwarehouse – since 2000. Through theacquisition of HSK (70% in August<strong>2012</strong> and a further 20% in December),<strong>Systemair</strong> is now laying down a seriousmarker that it intends to expand furtherin the Turkish market and the CIS sphere,with its sights set on the countriesaround the Black Sea.Turkey has been a centre for East-West trade for centuries. Turks arerecognised as excellent at businessand the legacy of the mighty OttomanEmpire is that Turks have a cultural andeconomic influence in several importantneighbouring countries, not least inthose of the CIS countries with a largeMuslim population and many traditionalties to Turkey.HSK, which was formerly a familyownedbusiness, has systematicallybuilt up a strong position in the Turkishmarket and today is a market leaderin air handling units. A cost-efficientorganisation along with technologicalexpertise in, for example, control<strong>Systemair</strong> isstrengtheningits positionin Turkey16 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


CASE STUDY»The acquisitionof HSK, a leadingoperator in theair-conditioningsector, willstrengthen theCompany’s gripon the Turkishmarket.systems and flat packaging havebeen instrumental in building HSK’sleading position in the sector. Inpace with the company’s successes,it has expanded its operations bothwithin Turkey’s borders and outside.<strong>Systemair</strong>-HSK is represented in themajor cities of Ankara, Istanbul, Izmirand Adana. Istanbul is also the basefor manufacturing and just in time forsummer 20<strong>13</strong>, a brand-new 12,000 m 2 ,state-of-the-art production facilitywas inaugurated, some parts of whichare world-unique. Outside Turkey,<strong>Systemair</strong>-HSK has sales offices inAzerbaijan, Georgia, Iraq and the UnitedArab Emirates.<strong>Systemair</strong> also enjoys a goodreputation, built up over a period of <strong>13</strong>years. Just as in other markets, the keyto <strong>Systemair</strong>’s business is reliability.The very ability to operate via a localpresence, with fast, reliable deliverycapacity – either from the company’sown warehouse or from centralisedwarehouses in Skinnskatteberg orGermany – and high quality in every linkof the chain, have made <strong>Systemair</strong> arespected and highly regarded name inthe sector.Via the acquisition, <strong>Systemair</strong>-HSKwill market itself in Turkey via cobrandingand will benefit from HSK’sstrong position in the market. The mostimportant product range will continueto be air handling units supplementedwithfire safety and garage ventilation.The most important clients aredevelopers – contractors – with totalresponsibility for projects such as newairports, new hospitals or new officecomplexes.View of the production facility justoutside Istanbul, midway betweenthe two former facilities.The market is expanding while atthe same time awareness of energyefficientsolutions is steadily increasing.A decisive factor is to keep "top-ofmind"among the developers, not leastbecause the developers are also highlysuccessful in Turkey’s neighbouringcountries, where Turkish constructioncompanies operate on a major scale.The biggest challenge in allacquisitions is to change the corporateculture and introduce the <strong>Systemair</strong>philosophy in every part of the business.Turkey is no exception. One basicprinciple is to keep things simple anddo them properly from the start. Thisrepresents in turn a prerequisite foroperating the business more efficientlyresulting in better profitability, withhigher volumes and benefits of scale inthe Group.Through the acquisition, <strong>Systemair</strong>holds a strong position in the Turkishmarket and neighbouring countries.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 17


Our three core values#3 DELIVERY RELIABILITYDelivery reliability means the ability to deliver,without delay, the products and solutionsthat the customer needs. The standard rangeis delivered directly from stock. Ventilationsystems are installed late in the constructionprocess, and the installation contractor oftenneeds the products at short notice. Againstthat background, we have built up an efficientproduction and logistics organisation in whichthe local and central warehouses are integratedwith each other via a shared ERP system.318 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 19


MARKETGrowth in several markets<strong>Systemair</strong> is taking a firmer grip on the European market and furtherconsolidating its position. Despite tough competition and a weakeconomy, the Group has succeeded in maintaining a good marginin its most important markets. In Western Europe, the French andGerman markets are expanding while the Nordic region continues toshow stable development. The markets in southern European havebeen adversely affected by the financial crisis. Russia is the biggestmarket, with new branches being established every year.Percentage of <strong>Systemair</strong> salesin Eastern Europe & CISIncrease in salesin Eastern Europe & CIS25% 20%20 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


MARKET»<strong>Systemair</strong>’sformula forsuccess isconsistent focuson standardised,high-qualityproducts whichare simple tochoose, installand maintain.<strong>Systemair</strong>’s policy is set in stone: no marketshares through price wars. On the contrary,the Company is consistently strengtheningits position using high delivery capacity,quality and availability as its competitiveweapons. The strategy is holding up well –despite the emergence of local competitorsoffering lower prices as an enticement. TheGroup’s reliability is proving its strength inthe long run and is a quality that customershave learnt to value highly. <strong>Systemair</strong>’sformula for success – a consistent focus onstandardised, high-quality products whichare simple to choose, install and maintain –offers clear advantages in the competitionwith both multinational suppliers and localcompetitors.Western EuropeIn Western Europe, we are expanding inFrance, while the neighbouring UK and theNetherlands markets have been hit harderby the economic recession. Germany is stillperforming strongly, as are Switzerland andAustria.Southern European countries such asItaly, Spain and Portugal are grappling witheconomic recession, which is also beingreflected in the propensity to invest in theimportant construction sector. <strong>Systemair</strong> hassucceeded in maintaining its market sharesin these areas, although volumes havedeclined in the past financial year.Nordic region and Eastern EuropeThe Nordic market continues to show stablegrowth, led by Norway.A glance at the Eastern Europe marketindicates that the otherwise strongPolish market, too, is suffering from grimeconomic times. Hungary, the CzechRepublic and Slovakia are relatively small,but stable markets.<strong>Systemair</strong>’s products are developedwith the focus on energy efficiency. As aresult, our products fit well with demandsthroughout the EU area, without anyneed for modifications by <strong>Systemair</strong> forcompliance with national regulations.In the various sub-markets, <strong>Systemair</strong> is,of course, dependent on the business cyclein the construction industry. One importantfactor in <strong>Systemair</strong>’s stable position is awell-diversified customer base with a goodmix of newbuild projects and renovationprojects for existing buildings. That makes<strong>Systemair</strong> less vulnerable to fluctuationsin the general economy. Combined withcost-efficient logistics systems reaching 44countries over four continents, this creates asolid base for the Group.Europe and the CIS remain prioritymarkets. Russia (see separate article onpages 26-27) is <strong>Systemair</strong>’s biggest marketand is expanding at a rate of around twonew branches every year. At the same time,<strong>Systemair</strong> is continuing to build on its globalstrategy. Turkey, India and Southeast Asiaare among markets showing steadily-risinggrowth.North AmericaIn North America, we identify anincreasingly stable market for our subsidiaryFantech. At the same time, our newacquisition Change’Air is providing newimpulses and market contacts in NorthAmerica and Canada. The Canadian markethas been treading water since year-end.To summarise, the situation in theventilation segment is favourable to<strong>Systemair</strong>. The new product sector ofchillers is growing in parallel, and valuablycomplements <strong>Systemair</strong>’s overall offering.Steadily rising demands for low-energyhouses and increased demand for "passivehouses", are favouring <strong>Systemair</strong>’sstandardised product range of air handlingunits with high energy recovery and lowenergyfans.It is not only in Europe that environmentalawareness and demands for efficient, lowenergysystems that also minimise the riskof damp and mould damage are high on theagenda. This is very much a global trend.With a presence on four continents and, inall, 44 countries, <strong>Systemair</strong> can deliver thesolutions to its customers’ needs.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 21


Market AreasMarket areasOur broad and diverse customer base offers considerable stabilityand reduces our exposure to fluctuations in individual economies.Nordic regionWestern EuropeMarket descriptionPercentage of<strong>Systemair</strong> salesSales in the Nordic region during the yearwere on the same level as in the precedingyear. The Norwegian market is the biggestin the region and the second biggest overall,with sales of SEK 536 million.In Western Europe, sales were up 7%.Companies acquired contributed 11% ofthe total. The biggest market in the regionis Germany. The Spanish, Portuguese andItalian markets remain depressed, withnegative growth during the year.Focusl To sell more products from our extensiveproduct portfolio to every customer.l To start marketing chillers.l To develop project sales.l To develop sales of fire dampers.25% 32%l The factory in Spain has been convertedfor manufacture of units identical to thosemade at our factory in Denmark. To usethe factory to serve Southern Europe andNorth Africa.l To develop sales of chillers in all markets.l To develop sales of fire dampers.Sluseholmen, a former industrial districtin Copenhagen, Denmark, has beentransformed into a high-status residentialarea reminiscent of Amsterdam. <strong>Systemair</strong>delivered air handling units, cooker hoods,roof fans and accessories in the area.Montabaur Castle is a four-star conferencehotel in Germany with a unique atmosphere.<strong>Systemair</strong> supplied air handling units andfans for the castle.22 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Market AreasIn <strong>2012</strong>/<strong>13</strong>, <strong>Systemair</strong>increased sales by 14%.14 %Eastern Europe and CIS North America Other marketsThe market in Eastern Europe & CIS roseby 20% during the year. Robust growth isevident in Russia and the Baltic States. Majormarkets for <strong>Systemair</strong> in the region are Russia,Poland, the Czech Republic and Slovenia.Sales in the North American market were30% higher than in the preceding year.The increase was largely attributable tothe acquisition of Change’Air, Canada. TheNorth American market performed stronglytowards year-end.Sales in Other markets rose 63% during theyear, largely as a result of the acquisition ofHSK in Turkey. Major markets for <strong>Systemair</strong>in the region are Turkey, India and the UnitedArab Emirates.l To increase the proportion of own productssold in the Russian market.l To start selling chillers in other EastEuropean markets.l To extend the scope of our product range.25% 8% 10%l To develop sales of <strong>Systemair</strong> productsfor the commercial market, by extendingcollaboration with Change’Air’s distributors.l To build up production of air handling unitsin North America.l To further coordinate production betweenUSA and Canada.l To utilise the production capacity at ournew factories in Turkey and Italy.l To upscale our operation in the marketsnorth of Turkey.l To increase the proportion of project salesin the Middle East.The Černý Most Centre, Czech Republic, anextended, totally renovated shopping centre,is the most modern in the country. <strong>Systemair</strong>supplied air distribution products, fire safetyand air curtains.Mt. St. Alphonsus Spiritual Retreat Center,Hyde Park, New York, has recently beenrenovated and converted into a high school.Its ventilation systems were replaced byenvironment-friendly, energy-efficient airhandling units from Fantech.Dubai Mall is one of the biggest shoppingcentres in the world. <strong>Systemair</strong> deliveredmore than 1,800 jet fans to ventilatethe centre’s huge multi-storey car park,accommodating approximately 16,000 cars.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 23


MARKET areasStrengths and competitive advantages• An early presence in growth marketshas proved to be an excellentplatform for continued growth.• High product availability and promptdelivery via an efficient production,logistics and IT organisation.• Focused product development and abroad, standardised product range.We allocate major resources to thedevelopment of energy-efficient,user-friendly ventilation products.• We have a structured acquisitionprocess and solid experience ofintegrating businesses.• A highly diversified customerbase reduces our vulnerability tofluctuations in the business cycleand lower demand from individualcustomers.• Good relationships with leadingsuppliers have played an importantrole in the Group’s growth andproduct development, confirming theperception of <strong>Systemair</strong> as a leadingsupplier of high-quality ventilationproducts.CustomersThe Group’s customers are primarilyventilation contractors and distributorsof ventilation and electrical products.Ventilation consultants are a keytarget group indirectly, as they specifywhich products are to be installed. Ininfrastructure projects, customers aremainly large construction firms.<strong>Systemair</strong> has an extensive customerbase with customers of different sizesin a number of markets. We sell tomore than 100 countries worldwide.Our ten biggest customers togetheraccount for just 7% of sales. This broad,geographically diverse customer baseoffers considerable stability and reducesour exposure to fluctuations in individualeconomies.TrendsHealth issues will become a higherpriority, driving up the need forventilation systems. More and morehouses which are being built – aboveall in Europe and North America – arelow-energy or passive houses, whichare built airtight, with strict demandsfor effective ventilation and lowenergy consumption. Calls for lowenergy consumption are fuelling theneed for demand-led ventilation andbuilding management systems, whichgovern ventilation and energy use. Wealso anticipate more comprehensiveregulations on safety ventilation.CompetitorsProduct areasPresence in our ten biggest markets in EuropeCompanyFansCentralunitsResidentialunitsCompactunits ChillersAirterminaldevicesAircurtains Fire Safety SE NO DK UK DE PL FR ES RU NL<strong>Systemair</strong> FläktWoods, CH – – –Flexit, NO () – – – – – – – – – – –Swegon, SE – – () Exhausto, DK – – – – – – – – –Östberg, SE – – – – – – – – –Trox, DE – – – – – – VTS, PL – – – – – () – – – – – – – –Nuaire, UK – – – – – – – – – – – –Vent-Axia, UK – – – – – – – – – – – – –GEA, DE – – – – – – – – Nicotra-Gebhardt, DE – – – – – – – – – – – – Rosenberg, DE – – – – – – – –S&P, ES – – – – – – – Wolf, DE – () () – – – – – – – –Ciat, FR – – – – – – – – – – –Aldes, FR – – – – – – – – – – – Novenco, DK – – – – – – – – – – – – Zehnder Group, CH – – () () – – – – – – 24 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Strong brands offeringunique solutionsBrandsThe Group’s brand strategyis based on consolidatingoperations globally under the<strong>Systemair</strong> hat. Businesseswith strong brands alreadyestablished in specific areascontinue to operate under theirparticular brand.The <strong>Systemair</strong> brand spans a widerange of high-quality ventilationproducts, including fans, airdistribution products, chillers and airhandling units for both comfort andsafety ventilation. We hold a strongposition as a leading manufacturer ofenergy-efficient ventilation productsin several geographic markets.Frico is the market leader in aircurtains and heating products inEurope. Frico is represented viasubsidiaries or distributors in 70countries. The brand represents 80years of accumulated experiencein developing products that offercustomers a comfortable indoorclimate. Frico offers a comprehensivesolution consisting of products forheating and energy saving.VEAB Heat Tech AB, Hässleholm,Sweden, specialises in developing,manufacturing and marketingheating products for ventilationsystems, movable and stationary fanheaters and dehumidifier systems.The product range includes bothelectric and water heaters, as well ascooling coils for residential, industrialand commercial premises etc. It alsoincludes hygiene-certified coolingcoils for hospitals, food halls andcatering establishments.Fantech develops, designs andmarkets solutions in North America.Products are sold to resellers in theUnited States and Canada by theGroup's own sales staff and agents.The <strong>Systemair</strong> brand has beenestablished as a new sales channelin North America, alongside Fantech.Fantech concentrates its operationslargely on the residential sector, while<strong>Systemair</strong> focuses on commercialprojects where the demand forenergy-efficient systems is strong.Holland Heating is a leadingmanufacturer of air handlingunits in the Netherlands. Itsproducts are marketed primarilyin the Netherlands, but also inneighbouring European countries.Holland Heating was establishedback in 1955. The company suppliessystems to, for example, hospitals,sports arenas, airports and offshoreplatforms. Its product rangealso includes specially designedequipment for large cruise liners.Menerga is a leading Europeanproducer of air handling units forswimming pool halls and comfortventilation with extra high efficiency.Menerga, established in 1980,markets its products throughoutEurope. The company’s biggestmarket is Germany. Its state-of-theart,high-quality products are used,for example, in swimming pool halls,museums, shopping centres, airportsand the process industry.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 25


CASE STUDYThe Russian market – <strong>Systemair</strong>’s single biggest – continuesto expand. Systematic cultivation of contacts with ventilationinstallers combined with strongly placed distributors and alocal presence create a strong advantage for <strong>Systemair</strong>. Atthe same time, the Company is communicating its key valueof reliability –Trust – which is to permeate through the entireorganisation in this mega-country of 142 million inhabitants,50 or more languages and nine time zones.The Russianmarketcontinuesto growPulkovo Airport, approximately 15 kmsouth of Saint Petersburg, Russia.<strong>Systemair</strong> delivered air handling untisand fan coils for the new terminal.<strong>Systemair</strong> can look back on a strongyear, with both increased market sharesand higher sales. The 2011 acquisitionof former joint venture partner andcustomer Ventrade, with 12 branchesacross the country, has deliveredhighly satisfactory results. <strong>Systemair</strong>is constantly developing its productrange with the focus on increasing theproportion of its own-manufacturedproducts. Products are stocked in an8,000 m 2 warehouse in Moscow anddistributed to the company’s branches,as well as to construction sites acrossRussia. <strong>Systemair</strong> does not currentlyconduct any production in Russia.Instead, it relies on an efficient logisticssystem from the Group’s factories inEurope.The Russian economy has rollercoasteredover a couple of decades,but in recent years has stabilised and agrowing economy has emerged. Russia’sgovernment is driving developmentof the infrastructure in the form ofroads, schools, hospitals, airports andcommercial buildings. To <strong>Systemair</strong>, thisopens up major business opportunities,26 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


CASE STUDYas the Company can offer a broad rangeof products to satisfy most needs.<strong>Systemair</strong> has since 1997 beenrepresented in Moscow, a city of morethan <strong>13</strong> million inhabitants, and slowlybut surely has built up a strong reputation.The Company is seen as a trustworthy,reliable supplier of products that keeptheir promises. With that background, ithas become an easy decision to operatesolely under the <strong>Systemair</strong> brand in recentyears. At the same time, the messageis being communicated that reliability– Trust – is <strong>Systemair</strong>’s most importantquality. By avoiding price wars andinstead bringing values such as deliveryreliability, availability and quality to thefore, <strong>Systemair</strong> has been successful in thetough competition.In-house, management is hard at workrolling out the <strong>Systemair</strong> philosophy. Thisis based on doing things right from thestart, doing them simply and focusingon standardised own-manufacturedproducts that are simple to install andmaintain. At the same time, the aim isto roll out the Swedish managementphilosophy, which encourages theinvolvement of employees in a learningprocess. This is a pretty challenging taskin any hierarchically structured countrywhere the pendulum has swung hardtowards more materialistic and bonusorientedvalues.The highest priority is marketing,and it is important not to lose focus.Contacts with installers and consultantsare cultivated on an ongoing basis viacustomer seminars and sales visits.These are key people who play adecisive role in establishing trust andrelationships – both in day-to-daybusiness and in complex major projects.The structure of the industry isnot as highly developed as in theWest. <strong>Systemair</strong> may be dealing withcompanies that turn out to act indifferent roles, and this may createa certain degree of confusion to theWesterner. <strong>Systemair</strong> is convincedthat, with time, excess will be trimmedfrom the value chain and unproductiveintermediaries will be cast aside. Bymaintaining a straightforward and clearposition right from the start, <strong>Systemair</strong>has clearly set out the ethical rulesthat apply – whatever the field of play,market or part of the world.Russia may be viewed more as acontinent than a country, being hometo different ethnic groups, religions andlanguages. So learning the differentcultures will take time. This makesrecruitment of key people hugelyimportant – particularly those whose jobwill be to manage a branch that maybe located hundreds of miles from headoffice. <strong>Systemair</strong> has set itself the goalof The expanding key value the of organisation reliability – Trust by at – playsleast a vital two branches a year. In May thisyear, role we in the opened Russian branches market in Irkutsk,Vologda and Vladivostok.Growth continues in the Russianeconomy and <strong>Systemair</strong> has everyreason to anticipate further growth andincreased market shares.» Products arestocked in an8,000 squaremetrewarehouse inMoscow anddistributed tothe company’sbranches, aswell as toconstructionsites acrossRussia.Systematic development of customer contacts via customer visits, seminars and activeparticipation in trade fairs is proving to be a winning concept in the Russian market.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 27


PRODUCTSAn extensive portfolio ofenergy-efficient productsThe focus of the product area is optimisation aimed at developinghigh-efficient products with low energy consumption.A series of new products is helping to reinforce <strong>Systemair</strong>’soffering as a full-line supplier."To simplify" was our principal objectivewhen <strong>Systemair</strong> entered the market in1974 with the circular duct fan, a productthat considerably simplified installation."The straight way" soon became aconcept for work in the Group and thebasis of our values. Since then, it hasdeveloped into a business philosophy.The driving force is constantly to discovernew ways of making <strong>Systemair</strong> productseven more attractive to our customers.Our product range has expanded at arapid pace since 1974, when the circularduct fan first saw the light of day. Today,<strong>Systemair</strong> focuses on developing energyefficientair handling units with energyrecovery and EC-technology, which aresimple to install and use.28 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


PRODUCTSProduct overviewFansand AccessoriesAir HandlingUnitsChillersAir DistributionProductsFans and accessories, oneof <strong>Systemair</strong>’s biggestproduct areas, includecircular and rectangularduct fans, roof fans and boxfans, as well as axial fans.The Air Handling Unitproduct area covers awide range, from smallunits for apartments andsingle-family homes, up tolarge, container-sized unitsdesigned for industry andcommerce.The Chillers product areaspans a wide range ofliquid- and air-cooledchillers and heat pumps forcomfort cooling.Air Distribution Productsinclude supply and exhaustdiffusers, iris dampers andgrilles. The function ofthese devices is to supplyand distribute fresh air torooms, or to extract used airfrom rooms.Air Curtains andHeating ProductsFire SafetyGarageVentilationTunnelVentilationAir curtains, fan heatersand radiant heaters aremarketed under theFrico brand.Fire Safety includesproducts which havebeen tested and certifiedto withstand hightemperatures for along period.Garage Ventilation offerscomprehensive systemsolutions for multi-storeycar parks.Tunnel Ventilation includesfans and systems forventilating all types oftunnels, for roads, railwaysand metro systems.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 29


PRODUCTSFrom product supplierto full-line supplierInterviewRoland KasperVice President Marketing - ProductsFrom product supplier to full-line supplier. This role comesincreasingly into focus to <strong>Systemair</strong> when it enters new marketswith an enhanced product range. The new Chillers product areais opening up new business opportunities for the Group nowthat its total offering is being extended to comprise both heatingand cooling systems. The total <strong>Systemair</strong> product offering hasnever been stronger than now. That’s how Roland Kasper, VicePresident Marketing - Products, summarises the Company’sposition on the product side.Last year’s acquisition of <strong>Systemair</strong> AC,Italy, forms the base for the Chillers& Heat Pumps product area, whichrepresents an important piece of thejigsaw puzzle of full-line supplier of arange comprising both heat pumps andchiller systems. With a renewed productrange, the Group is now equipped to takeon the role of full-line supplier in earnest.At the same time, <strong>Systemair</strong> hasstarted to turn its attention to newbusiness opportunities, including inthe property market for residentialventilation outside Scandinavia. Agigantic market is opening up here – notleast against the background of the EUdirectives on the energy performance ofbuildings, in which stricter requirementsfor energy-efficient systems for newand existing buildings are graduallybeing introduced. In addition to EUrequirements, countries are definingdifferent requirements for renovationand newbuilds.Under Germany’s new energysaving regulations, more than 300,000apartments are to be renovated inthe near future, with considerablystricter demands as to energy-efficientventilation than previously. The trend inAustria, Switzerland, Italy, the Beneluxcountries and France is the same. Thisalso applies to the countries of EasternEurope, headed by Poland, the CzechRepublic and Slovakia.The competition is tough, but<strong>Systemair</strong> is trying to set itself apart hereby offering added value via, for example,its in-house developed dimensioningsoftware provided free of charge toventilation contractors and propertyowners. Using the software, a scannedplan of the property is generally enoughto obtain the optimal solution.Alongside its property operations,<strong>Systemair</strong> has taken a step into themarine sector through its acquisitionof Holland Heating and its strongpenetration of the market for ventilationsystems for large ships.Frico has launched the all-new PAseries of air curtains, which are in a classof their own for performance and design.<strong>Systemair</strong> has never had a productrange as strong as it does now. At thesame time, every individual productis subjected to a lifecycle analysis.Every single aspect of a productarea is analysed in the quest for theoptimal product mix. Allied to a veryhigh degree of automation in themanufacturing process, this makes usless labour-intensive and relieves us ofthe need to hunt for low-pay countriesfor manufacturing. To put it anotherway, production at Skinnskatteberg inSweden, for example, stands up stronglyin comparison with options in China,for example.Roland Kasper emphasises theimportance of having productdevelopment close to the strategicmarket. Solutions have to be found inthe place where the problems arise. Thissaves both time and money. Againstthat background, <strong>Systemair</strong> operates 11technology centres spread throughoutthe world (see also the section onProduct Development in this annual<strong>report</strong>) which provide very effectivesupport. However, it is at least asimportant to retain the unique expertiseof companies acquired, whether this liesin the market, technology or production.30 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


PRODUCTSFansFans represent the product area in which<strong>Systemair</strong> started out in business. For thatreason, we are delighted to be able topresent a brand-new solution in an areathat is so important to us, duct fans.At the ISH trade fair in Frankfurt in March20<strong>13</strong>, we officially launched our new PrioAirfan. With a range of brand-new solutions,this takes us a major step forward. Energyandefficiency-wise, the product is unique,with performance characteristics thatare equal or superior to those of today’sproduct.At the same time, ERP requirements havebeen a major driving force and we haveadapted the product range, documentationand selection accordingly.Our focus remains concentrated onoptimisation to ensure higher efficiency.Residential ventilationWe have launched a number of new unitsincorporating counter-flow heat exchangersand rotating heat exchangers. Thesewill help us to take a major step into theEuropean market, with the aim of gainingmarket shares where our range in the pastwas more limited. As well as supplying theunits themselves, we have worked hard onadding value for installation contractors andend-customers, and have set up a separatebusiness area to be able to focus on andmeet customer needs.Compact unitsWe have expanded our existing productranges by adding reversible heat pumpsystems, which creates a new position forus, as well as new applications enabling usto offer heating or cooling as needed. Withour larger models, we are continuing towork on bringing in user-friendlier selectionsoftware and more energy-efficientcomponent solutions on the control andmotor side.Central unitsOur Lithuanian venture, based on a productrange adapted for Eastern Europe, hasdelivered good results. As a result, weare continuing to expand the range andoffer more customer values. In Turkey,our acquisition of HSK has proved highlyproductive. The flexible concept of smartproduct and logistics solutions has been asuccess. In Spain, we have created a newunit that we have launched in the local andinternational markets. Furthermore, ouracquisition in the Netherlands has enabledus to move into the marine sector with newapplications. All these lines are backed byfurther developments in control systemswith integrated webserver or cloud systemsfor monitoring and effective operationaloptimisation.Air terminal devices –air distribution productsDuring the year, we mostly focused onmarket development and new productlaunches. With our broad product range anduser-friendly product selection software,we have established a base from which toroll these products out to more markets andcustomers. At the same time, we have beeninvesting in new machinery and tools tomaintain quality and increase volumes.Air curtainsA new generation of air curtains is currentlyin the process of being launched. Theproducts are equipped with a uniquecontrol system which in combination withThermozone technology helps to create theenergy-efficient air curtains in the market.During development, our key values wereuser-friendliness, design and operatingeconomy.ChillersVia <strong>Systemair</strong> AC, Italy, we acquired astrategic resource enabling us to providea comprehensive package offering toproperty owners. Over the past year, wehave worked hard on a new platformof products, adapted for two differentgeographical areas of application, with quitedifferent demands on technology content.We can offer the whole system in allcapacity ranges for integral and standalonesystems covering most needs.Fire SafetyAxial fans are used to extract fire gasesand smoke from buildings in the eventof fire. We focus to a large extent onstandardisations, which are important in thistype of ventilation.We spend a great deal of time oncertification of our products in differentmarkets. Every country has its ownregulations, as well as its own requirementsfor specific certification tests. Productsare tested for function and durability atdifferent temperatures and for differentperiods of time.Garage and tunnel ventilationOur factory in Germany has developed new,less space-consuming tunnel fans withaerodynamic characteristics that deliverimproved energy efficiency. It has alsodeveloped a new range of garage fans. Weoffer comprehensive system solutions forgarage ventilation.In addition, we launched a softwareproduct, AXC Selection, as an aid in thechoice of axial fans.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 31


Product DevelopmentOur product developers arepushing boundaries forwardWith more than 160 engineers in 15 countries and 11 technologycentres on three continents, <strong>Systemair</strong> is at the forefront inleading product development in ventilation. Product developers at<strong>Systemair</strong> have a mission to fulfil – to improve the indoor climatefor us all. Working from three fundamental principles – knowledge,tools and systematic process conceptualising – they are strivingconstantly to push boundaries forwards.»160 engineers in15 countries and11 technologycentres in threecontinents.With people spending 90% of their timeindoors, there is of course a major demandfor capacity to ventilate not only moreenergy-efficiently but also with cleaner air.The heart of all product development liesin the 11 technology centres across a totalof 15 countries. The development centre inSkinnskatteberg, Sweden, is one of Europe’smost modern facilities for measuring airflow, sound levels, pressure and energyconsumption.A centre is under construction in India,while the German centre is undergoinga major expansion enabling engineersand measuring equipment to be broughttogether under one roof.Research and development is in progress24 hours a day across the different timezones around the world. The capacity andefficiency of the products are carefullydocumented to provide product developerswith a better basis for improvements. At thesame time, the documentation is importantto the customer, who can see in black andwhite that the products actually deliverwhat they promise.The hub that links together 160 productdevelopers around the world is a commontechnical platform, common database andthe same project management routinesand software. In addition, harmonisationand standardisation make it easier to shareand acquire research results and newlygenerated knowledge.The Group’s watchword, to keep thingssimple and do them right from the start,is also very much to the fore in productdevelopment. By using a lean-based modelthat focuses on benefit to the customer, itis possible to eliminate unnecessary timedrains that otherwise tend to drag out,delay and increase the cost of productdevelopment.<strong>Systemair</strong>’s engineers operate within theframework of Group Management’s overallstrategic planning for the particular productarea. Impulses are also gathered fromoutside, in the form of customer viewpoints,but also from the world of academicresearch. Collaboration with universitiesand university colleges contributes valuableresearch findings.32 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Product DevelopmentFactsEco-DesignEco-design requires products todeliver a certain level of energyefficiency if they are to be usedin the EU.The Eco-Design Directive wasadopted by the EU in 2005. The aimis to reduce the environmental impactof energy-consuming products and sohelp move towards more sustainabledevelopment. It is a frameworkdirective that encompasses basicallyall energy-consuming productsother than modes of transport.Air-conditioning, air curtain and fanproducts make up one of a total of <strong>13</strong>product categories to be scrutinised.Other categories include lighting,washing machines and dishwashers,electric motors, refrigerators, TV setsetc.»The Eco-DesignDirective wasadopted by theEU in 2005.Energy DeclarationEU energy declaration rules require astatement to be issued for buildings,showing how much energy isneeded to heat the building, anyair-conditioning and electric powerneeded to operate fans and lifts, forexample. An energy declaration mustbe issued for all buildings with a"right of use", for example, buildingswith owner-occupied or rentedapartments.To achieve these goals, regulationsconcerning both existing and newbuildings are continually beingtightened. In other words, it willbecome necessary to build more andmore "climate-smartly". Climatesmartbuildings are either energyconservingbuildings that mainlyuse renewable energy, or they are"passive houses" that dispensewith traditional heating systems.These air-tight buildings place greatdemands on efficient ventilation toprevent mould and damp.The work of the product developerImportant to havean influence innew regulationsAlways to stay one step ahead, always to be drivingdevelopment, never to rest on their laurels; these are the keyvalues to product developers at <strong>Systemair</strong>. At the same time, thisprovides <strong>Systemair</strong> with credibility and legitimacy, which makesdecision-takers listen – before they take their decisions.Product development is very muchdetermined by the political agenda, inthat the industry is affected in the shortand the long term by new regulations andlaws. To <strong>Systemair</strong>, it is of course not anoption merely to follow developments.We have to be part of shaping the trend.Thanks to a wide geographical spreadover four continents, <strong>Systemair</strong> canmonitor current trends at close quartersand follow developments when newstandards are introduced at national level.The European market is importantto <strong>Systemair</strong> from several angles. Howthis market develops will in all likelihoodboth influence, and set standards in,non-European markets. The EU has beenengaged for a year or two in widerangingwork on new directives that willaffect the EU Member States in a highlytangible way. The directives fall under thecollective working titles of Eco-Designand Energy Declaration (see fact boxes).To <strong>Systemair</strong>, it is important to have aninfluence in the work of standardisationfor its products but also over the overallformulation of the directives themselves.The Eco-Design and Energy DeclarationDirectives are important tools in termsof the EU’s objective of achieving a 20%reduction in energy consumption by2020. There are several distance-markersalong on this journey. Last year, directiveswere introduced concerning componentsin products, while in 2016 a directivewill come into force on how efficientfans must be. We can confirm that theEU’s requirements for more efficientenergy consumption accord closelywith <strong>Systemair</strong>’s business concept ofoffering energy-efficient, quality productsmeeting the demands of tomorrow. Butthat does not mean that we can rest onour laurels. We will need to meet withEU representatives of the EU and otherimportant decision-makers in orderto have an influence over how futurelaws and regulations are formulated.It will also be necessary to work withother stakeholders where national andinternational standards are established.Important organisations include SIS(Swedish Standards Institute), CEN(European Committee for Standardization)and ISO (International StandardsOrganization).Eurovent, another important Europeanorganisation, is responsible for certifyingproducts for the ventilation industry etc.Eurovent’s certification process is tocheck that performance characteristicsaccord with those that the manufacturercommunicates to the customer.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 33


PRODUCTION FACILITIESProduction FacilitiesWe have chosen to own the majority of our production facilities,a policy that delivers lower costs and better profitability overtime. The facilities that we lease are indicated below.Facility Country Area Number of employees Production Activities <strong>2012</strong>/<strong>13</strong>Skinnskatteberg Sweden 50,000 m 2 459 Fans and accessories, compactunits, air curtains and heatingproducts.Hässleholm,VEABSweden 10,000 m 2 91 Heating products for air handlingunits, mobile and fixed fan heaters,plus dehumidifiers.Eidsvoll Norway 5,800 m 2 30 (115) Air handling unitsÅrhus Denmark 15,600 m 2 142 Large air handling units – "centralunits".Windischbuch Germany 19,700 m 2 220 Extensive range of axial and rooffans, plus tunnel and garageventilation.Ukmergé Lithuania 15,000 m 2 165 Residential units and large airhandling units.Maribor Slovenia 3,600 m 2 69 High-temperature fans for smokeextract ventilation.Bratislava Slovakia 6,000 m 2 166 Air distribution products; firedampersMadrid(leased)Spain 6,000 m 2 51 Large air handling units and boxfans for markets in southernEurope, the Middle East and NorthAfrica.Bouctouche Canada <strong>13</strong>,000 m 2 147 Air handling units for residentialuse in North America, plusdehumidifiers.Lenexa, Kansas USA 16,000 m 2 90 Duct, axial and roof fans chiefly forthe North American market. Distributioncentre for the USA market.Kuala Lumpur(leased)Hyderabad(leased)Greater Noida,New DelhiLangenfeld(leased)Milan(leased)Istanbul(leased)WaalwijkMülheim an derRuhr, DüsseldorfMalaysia 4,000 m 2 61 Duct and axial fans. l New property measuring10,000 m 2 , occupancy tobe taken up in September20<strong>13</strong>.India 3,200 m 2 80 Air distribution products.India 10,000 m 2 250 Production of duct, axial and boxfans, air handling units and airdistribution products.Germany 4,300 m 2 26 Air curtains.Italy 19,400 m 2 165 Production of a wide range ofliquid- and air-cooled chillers andheat pumps for comfort cooling.Turkey 12,000 m 2 150 Production of a wide range of airhandling units and fan coils.TheNetherlandsl New multi-coil facility,stamping and nibblingpresses, plus edging presses.7,800 m 2 141 Production of air handling units. l Acquired in March 20<strong>13</strong>.Germany 19,000 m 2 400 Production of air handling units forswimming pool halls and comfortventilation with extra highefficiency.l Acquired in May 20<strong>13</strong>.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 37


LogisticsBetter availability throughcontrolling the flow of goodsAvailability is key to our competitiveness. This means maintainingour control over the flow of goods between our production units,central and local warehouses and our customers.A substantial proportion of our product rangeis available from stock and can be deliveredwithin 24 hours from a local warehouse inEurope or within 72 hours from one of ourthree centralised warehouses.Efficient organisationThe Group has built up an efficientproduction and logistics organisation.Both local and centralised warehouses areintegrated with each other via a commonERP system. Our factories specialise indifferent product areas and we produce forstock. This means that we can manufacturein larger production runs, offering higherefficiency.When a subsidiary sells an article that thecompany stocks itself, the stock is toppedup automatically as it nears depletion. Ifthe item is not an stock article, it will besent with the next dispatch from one of ourcentral warehouses.38 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


E-commerce – quickand easy to useE-CommerceDoing business with <strong>Systemair</strong> should be simple, fast and problemfree.With e-commerce, it becomes even simpler. In spring 20<strong>13</strong>,a brand-new e-commerce service was launched for <strong>Systemair</strong>customers in Sweden. It’s a totally win-win situation. Customersplace their orders when it suits them. At the same time, <strong>Systemair</strong>can free up resources for more complex operations.A smart, simple registration and loginprocess enables users to get started in veryquick time.Customers can now decide on whatthey want and place orders when it suitsthem, and we can use resources in quitea different way than before. Instead ofdealing with incoming orders, we can focusmore on growth, identify new customersand free up resources for more complexoperations, providing customers with evenbetter service throughout their journey.The e-commerce site is built on the sameplatform as the website, meaning thatcustomers are in familiar surroundings. Thesite makes it easy to find, navigate aroundand see what is in stock, and finalising theorder is a simple process. The logic is clear:the simpler you make it for the customer,and the more accessible you makeproducts, information and prices, the morebusiness you will get.The first market to be served will beSweden. This will be followed by otherEuropean markets such as Germany, Norway,Finland, Switzerland, the Netherlands,Belgium and the United Kingdom.Globally, e-commerce is expanding at arapid pace. With reliable payment systemsand secure websites, private individuals andbusinesses have increasingly grown to trustthis form of commerce. More and morecustomers expect us to be able to offer afacility for doing business 24 hours a day.<strong>Systemair</strong> has invested greatly in assuring astable system that will always be availablefor business when the customer needs it.The more unique values you weave intoa system, the more difficult it is to copy.<strong>Systemair</strong> is unique because we offer awide range of standardised products, wecontrol all production and we operate acommon ERP system and stock worldwide.With values such as these built into thesystem, we are hard to beat.To <strong>Systemair</strong>, e-commerce is an importantsales channel for selling direct to thecustomer. Customers can directly chooseproducts on the basis of price, performanceand availability, depending on what theyvalue most highly for their particular project.The breadth of our product range makesupselling considerably easier.Our e-commerce site also supports otherstrategies. The market has access to ourrange of standardised products directlyfrom stock, creating benefits of scale inproduction and logistics.»To <strong>Systemair</strong>,e-commerce isan importantsales channel forselling direct tothe customer.By logging in to "My Account", the customer sees a clear summary of all orders placed manuallyand via the Internet. The customer can keep track of the current order status, whether the productordered is registered, packed or in transit. The shop is open 24 hours a day, 365 days a year.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 39


personnelSkills decisive in thecompetition for customersAs a leading player in the ventilation sector, it goes withoutsaying that <strong>Systemair</strong> should always be one step ahead, be onthe front foot and find new ways forward with smarter, moreefficient solutions. This is why we focus on developing the skillsof our personnel, while ensuring that <strong>Systemair</strong>’s values areconstantly refreshed.3,127 3,649No. of employees,1 May <strong>2012</strong>No. of employeesat year-end 20<strong>13</strong>45 years 42 yearsAverage age,white-collaremployeesSickness absence -short-term (%)GroupParent Company <strong>2012</strong>/20<strong>13</strong>Average age,blue-collaremployees2.17 1.31Sickness absence -long-term (%) Men 66%Women 34%Gender distribution, employeesWe are especially proud of our focus on ourinternal trainee programme (see separatearticle on page 43). This has created a gooddeal of goodwill within the organisation,but also externally in the ventilation sector– because we as a Company have chosen todevelop our own employees.Skills development is not reserved for anyparticular professional group at <strong>Systemair</strong>; itruns through every part of the organisation.We offer courses both under our ownauspices and via external training resources.<strong>Systemair</strong> Academy is tasked with arrangingtraining for the Group’s employees. Thisprovides a forum where all our personnelcan meet and get to know each other andthe Company. At the same time, <strong>Systemair</strong>Academy communicates our corporateculture, including its values, and our "Trust"concept, which represents reliability andhelps create a "sense of us". We have cooptedleading research experts to providebasic and advanced training in ventilationtheory, products and sales techniques.Further training is also given annually tofinancial control personnel at the Group’ssubsidiaries. In addition to special coursesbased on professional duties, <strong>Systemair</strong> runsa basic ventilation course that is open to allmembers of personnel in the Group.Updating knowledgeA critical aspect of training sales personnelis ensuring that they have solid knowledgeof <strong>Systemair</strong>'s products. Familiarity with theCompany's standard product range (alsoknown as BPR, the Basic Product Range)may seem an obvious requirement, butthis very expertise has proved decisive inthe competition for customers. As moreand more products are launched, salespersonnel must at the same time regularlyupdate their knowledge to be able tounderstand their customers’ needs better,and ultimately to be able to offer the rightsolution. This is evidently very clear atsubsidiaries with expertise in project sales.The success of these companies givesthem an increasingly important role as asounding board for customers - whetherthe point of contact is a ventilationconsultant or installation contractor.The hub of the training programme is<strong>Systemair</strong> Academy, which is based invarious parts of the Group. For example,the <strong>Systemair</strong> Academy for fans is locatedat Skinnskatteberg in Sweden, for tunnelventilation in Germany and for chillers inItaly. At <strong>Systemair</strong> Academy, members ofpersonnel are drilled in developing theirexpertise, depending on their professionalrole. Another aspect of training focuses onenabling them to work in a more systematicway. The program is conducted in variousmodules, each concluding with tests and anexamination."Centre of Excellence" is the collectiveterm for the different knowledge centresbuilt up in production facilities with specialareas of expertise, for example in cooling,ventilation, air curtains etc. At these centres,technicians and specialists benefit fromopportunities to acquire more in-depthknowledge of a particular field, in parallelwith product development and research.Selling the Straight WayTo sharpen performance at all thesubsidiaries, a special programme waslaunched in autumn 2011: "<strong>Systemair</strong>Selling the Straight Way – Train the Trainer".The programme is aimed at MDs of thesubsidiaries, who participate with a salesmanager or a highly experienced salesoperative. The idea is that the local MDor sales manager in turn will train thesales staff in their domestic market. Tobecome a genuinely successful salesperson,knowledge is not enough on its own.The individual also needs to be able tointerpret and understand the customer’sneeds to create and keep good customerrelationships. The successful salespersonshould be able to navigate the customersafety through the process and at thesame time hone his or her technique in thenegotiation process.FeedbackIn all cases, the programme is led by<strong>Systemair</strong>'s own business developers whoobtain examples for exercises from theireveryday work (experience-based learning).The programme constantly delivers feedbackto our company, our values and our strengths.The key value is, of course, reliability -Trust - we keep our promises and makepromises that we can keep. Our mostimportant competitive advantage is reliability,i.e. delivery reliability, follow-up, a globalpresence and continuous customer service.To the customer, it is just as important tobe able to rely on the supplier and to knowthat choosing <strong>Systemair</strong> means buying withsecurity.40 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


personnelEmployee InterviewEvgeny GorelkovProduct ManagerSkinnskatteberg, SwedenWhen I was young, I learned Swedishpurely as a hobby. But if anyone hadtold me that I’d find the language useful,start working for a Swedish companyand even move to Sweden, I probablywould have laughed.Coming from Moscow, a cityof <strong>13</strong> million inhabitants to littleSkinnskatteberg required realadjustment. But I’m happy at thecompany and with my work.I’m a 33-year old Russian who hasalways worked in the industry. I took adegree in Ventilation, Gas and Heatingat Kharkov University and started outon a career as a ventilation and heatingconsultant.After four years, I took a job at<strong>Systemair</strong>’s representative office inMoscow. My responsibility was for theventilation range for the Russian marketand the neighbouring countries of theCIS. There was quite a lot of travelling.After all, we have expandedsubstantially in recent years. But to methe representative office in Moscow hasalways felt like a small part of Sweden.Around me I had Swedish colleaguesfrom whom I received daily influencesfrom Swedish culture, and a good insightinto and understanding of the Swedishmanagement style.When I was asked whether I couldconsider accepting the role of productmanager for air handling units, basedin Skinnskatteberg, I saw it as a naturalstage of my personal development. I’venow worked in Sweden since 1 Februarythis year. While it feels a little strangeto have left a pulsating metropolis,both I and my wife appreciate the calm,relaxed lifestyle here.Employee InterviewHossein MohrsazhaExport Manager<strong>Systemair</strong> DubaiFrom war-torn Iran to the miningcommunity of Svappavaara, in the farnorth of Sweden. This was my firstcontact with Europe and Sweden as afive-year old child refugee.From my birthplace, Teheran, toSvappavaara, Gävle, Chalmers Universityof Technology and Frico in Gothenburg,my journey has now continued to Dubai.My interest in technology grew froman early age. I was privileged to take abrand-new course programme at uppersecondary school in Gävle, where wemoved to after a few years, which Ithink of as my home town. It was acombination of technology and naturalsciences which, in turn, spurred meon to continue my studies at ChalmersUniversity, specialising in Automationand Mechatronics.From Chalmers, it’s not a big stepto Gothenburg-based Frico. Aftergraduating, I got a job there as a supportengineer. Eventually, I was offered a jobas export salesman and that was howmy contact was made with Dubai.As Export Manager for <strong>Systemair</strong>Middle East, there is of course a gooddeal of business travel. I am responsiblefor a total of 17 countries, including Iranand Iraq, plus countries in North Africa,so there is quite a lot to do. At the sametime, it’s important not to forget existingcustomers, who also need attention.I and my wife Nina, whose roots arealso in Iran, married just before we left.Life is so much simpler here if you’remarried.What’s on offer in Dubai istremendous, I really don’t miss anything.OK – pick and mix sweets are a joke. Asa Gävle boy, I more or less grew up withAhlgrens Bilar sweets, so sometimes thisis tough.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 41


personnel<strong>Systemair</strong>’s corporate culture<strong>Systemair</strong> has a corporate culture in which guiding principlesand monthly profit <strong>report</strong>ing govern and lead the organisation.<strong>Systemair</strong>’s organisation is horizontal, pragmatic, direct and efficient.To reinforce its principles in a positive way, <strong>Systemair</strong> has collectedand set down in writing the values the organisation itself has chosenas governing. These values consist of seven key principles. We make the work of theventilation installationcontractor easierThis expresses the central vision andinvolves working consistently to simplifyand be direct. We make it simple –the straight wayThis motto has long been the basicphilosophy at <strong>Systemair</strong>. To always questionwhether decisions and activities take themost straight way, to ensure that thesimplest and most economical solution ischosen. The simplest is often the best, and<strong>Systemair</strong> has a solid tradition of achievingsuch solutions. Everyone is responsibleon a personal level for ensuring that workresponsibilities and day-to-day tasks can becarried out simply and well. To keep on trackand prioritise has, for many, proved to playan important role in simplifying daily routines."Simple and robust" also characterisesall aspects of product development. Ourproducts are intended to be and are easy tochoose, install, maintain and use. We can be relied onTo take collective responsibility for keepingour promises is a high priority in the<strong>Systemair</strong> organisation. The organisation’sexpertise lies in the knowledge of bothpotential and limitations of our products.Through practical action, including rapidresponse times and relevant and accuratefeedback, <strong>Systemair</strong> builds confidence in itsbrands. We do not sit and wait<strong>Systemair</strong>’s basic strategy is to go onthe offensive. The objective is to workproactively by seeking new opportunities,using the information available to takedecisions and then quickly acting on them.Growth is a part of <strong>Systemair</strong>’s corporateculture; it enables us to sustain a hightempo and to continuously focus on whatis actually important. This makes theorganisation pragmatic and dynamic. Takingthe initiative and responsibility is prioritisedin day-to-day activities, and everyone isencouraged to seek information and helpwhen it is needed. We grow stronger throughchange<strong>Systemair</strong> dares to go its own way – it isan organisation that has learnt from majorchanges, is taking on larger and largertasks and does not regard change as aproblem but as a part of everyday life.Major upheavals and rapid growth havealso taught the organisation that somedecisions can turn out to be wrong andneed to be changed. In such cases, it isvital that ego does not take over. The waywe do it at <strong>Systemair</strong> is not to "pull rank". We say what we meanAt <strong>Systemair</strong>, it is both a right and a dutyto speak up when you do not agree, seea problem or mistake or see the needfor a change. Open dialogue is crucial toclear communication between the partiesconcerned, where solutions are the priorityand personal attacks are avoided. Goodefforts are rewarded in day-to-day activities,and everyone sticks by the decisions made. We believe in our concept<strong>Systemair</strong> has a product range on whicheveryone agrees, and which is marketed.It is vital that the Group capitalises on theeconomies of scale present in an extensivesales network and that everyone agreesabout which products to include in thestandard range. The fundamental criterionfor all transactions at <strong>Systemair</strong> is thatthey should contribute to the Company’sprofitability.42 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


personnel»For many years, the ventilationsector has struggled withrecruitment problems, aboveall on the sales and marketingside. At the same time, fewerand fewer people are choosingto study in the construction andtechnology sector. The traineeprogramme may be one way tosolve the problem. But ratherthan setting up a traditionalstyletrainee programme forexternal applicants, <strong>Systemair</strong>decided to take the oppositeapproach, seeking only inhousecandidates. In theautumn, six eager candidateswho took the chance to swaptheir regular workplace for theclassroom will graduate fromthe programme.<strong>Systemair</strong> not onlywants to, but alsocan, get maximumvalue from its ownemployees, theirexpertise andtheir desire to taketheir career toanother level.TrainingParticipants in the trainee programme (left to right): Anna Söderling, Marie Persson,Johan Ringström, Emelie Andersson, David Eriksson and Ulrika KarlssonTrainee programme within-house candidatesPär Johansson, today Managing Directorof <strong>Systemair</strong> AB and formerly head ofmarketing and sales development, hadhad enough of the decline in the industry,with people moving from company tocompany and new recruitment practicallynon-existent. Instead of trying to attractexternal candidates – the normal processwhen you are starting up a traineeprogramme – he chose a totally differentdirection, advertising internally forcandidates who were prepared to taketheir career up a level. A unique approachthat truly aims to get maximum valuefrom <strong>Systemair</strong>’s in-house expertise.At the same time, the Company avoidsrecruiting "doubtful bets" without anylinks at all to <strong>Systemair</strong>.The initiative brought a greatresponse and in the end <strong>Systemair</strong>chose six candidates for inclusion in theprogramme. No restrictions in the formof gender, suitable age, educationalqualifications or past experience applied.The most important criterion was quitesimply, the individual’s willingness to learnand to put the knowledge acquired intopractice. Another key parameter was anability to communicate and make a goodimpression – a not entirely insignificantquality in a sales-based profession.The trainee programme began inSeptember <strong>2012</strong> and ends a year fromthen. The programme concept wasdeveloped in-house – largely to underpinthe <strong>Systemair</strong> way of thinking andselling. The six trainees, four women andtwo men in the 25-40-year age bracket,were then schooled for 65-70 trainingdays in subjects such as ventilationtechnology, financial management,support and sales. The programmealso incorporated five periods of workexperience during which the candidatesgot to accompany sales personnel outin the field to meet customers. Afterthe programme, the trainees were ableto reflect and give feedback on whypeople act in a certain way, which inturn provided useful experience to thesalespeople through new angles on howthe sales process can be made evenmore efficient. It was, in other words, awin-win situation for all parties involved.The examination, scheduled forthe autumn, will be followed by anassessment of the trainee programme.The Company will then decidewhether to continue the programmein Sweden or extend it to othercountries with larger-scale operations,such as Germany and the USA. It isclear, however, that the initiative wasextremely well received by employeesand unions alike.At the same time, it sends a clearsignal, in and outside the organisation,that <strong>Systemair</strong> not only wants to, butalso can, get maximum value fromits own employees, their expertiseand their desire to take their career toanother level.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 43


SustainabilitySustainability -a natural part of our businessCorporate cultureBusiness ethics lead<strong>Systemair</strong> has a corporate culturein which the organisation operatesaccording to guiding principles.These are complemented by a set ofbusiness ethics determining how weshould behave in the market.<strong>Systemair</strong>’s products and servicesshall be marketed and sold ina manner that is justifiable oncommercial as well as ethical grounds,i.e. based on factors such as quality,price, delivery reliability and high-levelservice. <strong>Systemair</strong> shall at all timescomply with each country’s laws.<strong>Systemair</strong>’s employees are notpermitted to demand, offer or acceptbribes or other illegal benefits to retaina customer or close a business deal.<strong>Systemair</strong>’s suppliers shall beevaluated and selected on thebasis of their ability to deliver oncorrect commercial terms and ontheir ability to live up to <strong>Systemair</strong>’scode of conduct. We do not acceptproducts from suppliers who usechild labour directly or indirectlythrough their subcontractors.Social responsibilityResponsibilityto the communitySocial responsibility has long been apart of <strong>Systemair</strong>’s corporate culture,and we are aware of the role ourCompany plays in society. Regardlessof where in the world we aredoing business, good relationshipswith external partners are decisiveto long-term success.We strive to understand each societyand culture in which we live andwork, to become involved in localcommunity activities that promotedevelopment in the community andbenefit local business. Sporting andcultural activities for children andyoung people are a high priority. Wedo not sponsor political or religiousorganisations.<strong>Systemair</strong> always complies withthe laws and regulations in effect inthe countries where we are active.<strong>Systemair</strong>’s business concept is to develop, manufacture and markethigh-quality ventilation products. Focusing on our customers, weaim to be seen as the most trustworthy company where quality,availability and delivery reliability are concerned. We strive at all timesto develop high-quality, long lasting products that help to reduceenergy consumption. In that way, we play a part in making longtermsustainable, environment-friendly and profitable developmentpossible for our customers and society at the same time.Continual improvements in our own workenvironment help to promote well-beingat work and commitment.By engaging in society via activitiesthat contribute to development of thelocality and favour the local businesscommunity, we are exercising active socialresponsibility.More systematicHigh-quality, long lasting and low energyconsumption products reduce impact onthe environment over time. Against thatbackground, our development resources arefocused on creating high-efficiency, lowenergyconsumption products.We have a process-based ERP system,and quality consciousness is built into ourmission and our values. ISO certification isone part of a more systematic approach towork. ISO consists in large part of routinesthat establish order and rationality. Nineof <strong>Systemair</strong>'s production facilities haveISO 9001 certification. Our aim is for allproduction facilities to be ISO 9001 certifiedwithin the near future. One importantaspect of certification is continual workon improvements, whether for productsor production methods. Ideas andsuggestions may be received both fromcustomers and the Company's personnel.Under the general heading of "ConstantImprovement", which basically is a devicefor monitoring and improving operations,systematic work on improvement takesplace at every facility. Simple suggestionsmay be implemented immediately by thedepartment itself, while more complexproposals requiring both time and resourcesare referred to a steering committee thatassigns priority among the suggestions.Always testedThe efficiency and fitness for purpose ofthe products are carefully documented inorder to provide customers with the mostcomprehensive information possible for theirdecision on choosing the most climatesmartand most energy-efficient options.Also, every single product is always testedbefore delivery, and with our own AMCA(Air Movement and Control Association)accredited test laboratory we can guaranteethat all catalogue data is accurate.The focus is 100% on the variousprocesses at the facilities and how throughimprovements we can play our part indelivering added value to customers,in the form of more energy-efficient,lower-energy consumption products thatcontribute to a better environment andlong-term sustainable development.Common languageThe hub that links all processes and allproduct development together is a commontechnical platform and common ERP systemin a language that everyone understands –whether based in New Delhi, India, Kansas,USA, or Skinnskatteberg, Sweden.Green ventilationAt <strong>Systemair</strong>, we are totally serious about taking responsibility.Our contribution to modern environmental conservation isefficient use of energy. The "Green Ventilation" symbol isevidence that our intelligent technology is in harmony withthe environment and that our products are designed for thefuture. It means that we can offer our customers a combinationof sustainability and economy, and that the benefit may beobtained using simple, streamlined installations.44 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


SustainabilityProductionWorking at <strong>Systemair</strong>Environmental efforts<strong>Systemair</strong> develops energy-efficientproducts that create a good indoorenvironment. Our production has noenvironmental impact on air or water.In addition, we are not subject tocompulsory environmental licensing,only to a duty of notification.Nevertheless, environmental issuesand efforts are a high-priority area.We are continuously improving ourproducts, methods and proceduresto minimise the impact on theenvironment. Our products arerecyclable and our componentsenvironment-friendly. Our productionplants in Sweden, Germany andSlovakia have earned ISO 14001environmental certification.BuildingsAt <strong>Systemair</strong>, it is a matter of honour tomaintain high standards in the buildingswe own or lease. The buildings thatwe commission ourselves are of ahigh standard from the start. Theyare well-insulated and incorporateenergy-efficient ventilation systems.With the buildings that we acquire, ourfirst action is often to fit the roof withfresh insulation. This increases comfort,reduces energy consumption and isa profitable investment. Most of thebuildings we have acquired have nowbeen renovated to a good "<strong>Systemair</strong>standard".Logistics flowsWe have consolidated our productioninto our main plants and have mergedor closed smaller production plants.This will result in higher capacityutilisation in existing plants and moreefficient logistics. In turn, this willreduce our environmental impact.Green IT<strong>Systemair</strong> works systematically onGreen IT. This means developingstrategies and guidelines for energyefficientsolutions to minimisenegative environmental impact. Weensure optimal use of hardwareand infrastructure by using energyefficientserver farms and makingmore effective use of all existing datacapacity through what is known asvirtualisation.Work environment<strong>Systemair</strong> contributes to developmentthat is sustainable and profitable inthe long-term through continuousimprovements in the work environment,the external environment and energyconsumption. New technology, productdevelopment and new findings areevaluated taking the work environment,environmental conservation and energyoptimisation into account.We use modern technology, includingvideoconferencing, which cuts down ontravel and at the same time improvescommunication between our facilities.Our employees are to havea stimulating and healthy workenvironment that prevents accidentsand stimulates them to work efficientlyCase StudyLake water heat pumpsA smart investment in renewable energythat not only cuts costs but also sparesthe environment. The investmentcomprises six lake water heat pumpsin Lake Övre Vättern, next to the mainfacility in Skinnskatteberg, Sweden.The message from the latest bill foroil was clear: 160 cubic metres of oilannually has been reduced to three; therest has been replaced by renewableenergy.Lake Övre Vättern functions as a hugestorage facility that is heated by thesun during the warm parts of the year.The stored heat is extracted via a totalof 12 kilometers of hose laid on thelake bed. The hose absorbs heat energyfrom the lake water and conveys it tothe six heat pumps. The pumps raisethe temperature and then transfer theheat to our internal heating systems.The traditional oil-fired boilers remainin place as back-up, but renewableenergy is now delivered instead – cuttingcosts and sparing the environment – to<strong>Systemair</strong>’s major facility.The facts speak a clear message:energy consumption for heating theproduction and office premises wastowards goals, taking responsibility fortheir tasks and developing their skills.No employee may be discriminatedagainst in terms of employment orjob tasks because of age, ethnicity,nationality, sex, religion or disability.All employees will be treated withrespect, and no employee will be subjectto degrading or insulting treatment.<strong>Systemair</strong> employees decide personallywhether to join a labour union inaccordance with the legislation in effectin the country where they work. Violenceor the threat of violence in the workplace,harassment, bullying and similar offencesagainst employees are not tolerated.<strong>Systemair</strong>’s employees must notdistribute, possess, use or work underthe influence of drugs at any of<strong>Systemair</strong>’s workplaces.reduced by all of 70% in the pastseason. At the same time, carbondioxide emissions from heating fell from383 tons to 33.The investment in the heating systemtotalled SEK 3 million. It is estimated thatthe cost will be recovered within justthree years.The investment is in line with ourenvironmental policy on efficient,sustainable processes and supports ourwork for a better environment.Anders Westling, Head of Maintenance,Skinnskatteberg, Sweden<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 45


The <strong>Systemair</strong> ShareStrong performance duringthe year by the <strong>Systemair</strong> shareThe stock market fluctuated during<strong>Systemair</strong>’s financial year, but gathered pacelate in the period. The year was dominatedby the economic and political problems inabove all the EU area.<strong>Systemair</strong>’s shares have been listed onthe Mid Cap list of NASDAQ OMX NordicExchange since 12 October 2007. Theinitial offer price was SEK 78 per share,corresponding to a market capitalisation ofapproximately SEK 4.1 billion. The marketcapitalisation on 30 April 20<strong>13</strong> was justover SEK 5.4 billion. The share’s tradingsymbol is SYSR.Strong rise in share priceAt the end of the <strong>2012</strong>/<strong>13</strong> financial year,the closing share price was SEK 104.75, up22.5% on the price at the beginning of thefinancial year. In the same period, the OMXStockholm Index rose <strong>13</strong>.4%. This indicatesthat the <strong>Systemair</strong> share performed verystrongly in the market.At financial year-end, <strong>Systemair</strong>’s marketcapitalisation was SEK 5.45 (4.45) billion,a rise of SEK 1 billion. The number of<strong>Systemair</strong> shares traded on Nasdaq OMXStockholm totalled 5,<strong>13</strong>8,280 (4,657,561),corresponding to a turnover rate of 10% (9)during the financial year.Share capital and voting rightsThe share capital amounts to SEK52.0 million, represented by 52,000,000shares, each with the same voting right.The quotient value is SEK 1.00 per share.The warranty programme issued bythe Company at its IPO in 2007 expired inSeptember 2011. Given the unfavourabletrend of the price, no warrants weresubscribed for. <strong>Systemair</strong> has not offeredany new option programme. At the financialyear-end, no convertible loans or warrantswere outstanding that could result indilution of the share capital.ShareholdersNo changes took place during the year inthe holdings of the two main shareholders,Färna Invest AB and ebm-papst AB, with42.3% and 21.27%, respectively.Other major shareholders include NordeaFonder, with a holding of 6.20% (4.44),Alecta Pensionsförsäkring 4.81 (4.29) andLannebo Fonder 3.39 (6.21).The number of shareholders at the end ofthe accounting period, 30 April 20<strong>13</strong>, was3,209 (3,519).Dividend policy and dividendFor financial year <strong>2012</strong>/<strong>13</strong>, the Board ofDirectors proposes that the <strong>Annual</strong> GeneralMeeting distribute to shareholders SEK 1.50(1.25) per share, a total of SEK 78 million.This dividend corresponds to 32.3% ofconsolidated profit after full tax and is inline with the Company’s dividend policy.Shareholder informationManagement participates actively inmeetings with analysts, investors, othershareholders and the media. This iscrucial for raising interest in the <strong>Systemair</strong>share and giving both current and newshareholders ample opportunity to valuethe Group as fairly as possible.Press releases are published immediatelywhen an event of significant importanceto the business occurs. <strong>Systemair</strong>’s pressreleases have been archived on theCompany’s website since its IPO in 2007.Year-end <strong>report</strong>s are also published aspress releases and have been archived onthe website since 2007. Interim <strong>report</strong>sand annual accounts are published on thewebsite and have been archived theresince 2005. Financial data since 2007 isalso available via the website. Similarly, pershare data since 2007 can be accessed viathe website.AnalystsAnalysts who continuously trackedthe <strong>Systemair</strong> share over thefinancial year:Handelsbanken Capital MarketsMarcela Kozak, +46-8-701 51 18Nordea MarketsAndreas Brock, +46-8-534 917 68Swedbank MarketsMats Liss ,+46-8-585 900 65RedeyeHenrik Alveskog, +46-8-545 0<strong>13</strong> 45Erik Penser BankOlof Larshammar, +46-8-463 80 27Share price, performance over six yearsShare price, performance over 12 months<strong>Systemair</strong>OMX Stockholm_PINumber of shares traded1,000s per month<strong>Systemair</strong>OMX Stockholm_PINumber of shares traded1,000s per month1107,0001101,000906,0005,000100800704,00090600503,000804002,000301,00070200102008200920102011<strong>2012</strong>20<strong>13</strong>0Source:60MAYJUNJULAUGSEPOCT NOV DECJAN0FEB MAR APRSource:46 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


The <strong>Systemair</strong> ShareShareholder structureSize of holding No. of shareholders No. of shares % of total shares held Market value (SEK 1,000s)1-500 2,498 433,781 0.83% 45,439501-1,000 389 312,754 0.60% 32,7611,001-5,000 216 496,750 0.96% 52,0355,001-10,000 30 233,374 0.45% 24,44610,001-15,000 8 105,291 0.20% 11,02915,001-20,000 5 94,679 0.18% 9,91820,001- 63 50,323,371 96.78% 5,271,373Total 3,209 52,000,000 100.00% 5,447,001Shareholders grouped according to EuroclearSource: Shareholders’ register at Euroclear AB, 30 April 20<strong>13</strong>Ten biggest shareholdersShareholders grouped according to Euroclear Percentage No. of sharesFärna Invest AB 1 42.30% 21,997,752ebm-papst AB 21.27% 11,059,770Nordea Investment Funds 6.24% 3,246,155Alecta Pensionsförsäkring 4.81% 2,500,000Lannebo Fonder 3.39% 1,761,123Handelsbanken Fonder 3.38% 1,759,164Odin Fonder 2.48% 1,287,109SEB Investment Management 2.31% 1,198,976Fondita Nordic Micro Cap 1.57% 818,000Fidelity Funds 0.83% 433,60488.58% 46,061,653Other 11.42% 5,938,347Total 100.00% 52,000,0001Private company wholly owned by CEO Gerald EngströmShareholder categoriesFinancial companies, 16.9%Social insurance funds, 0.6%State 0.4%Other Swedishlegal persons 64.0%Non-categorisedlegal persons 2.7%Foreign-domiciledshareholders 12.6%Swedish natural persons 2.8%Share data<strong>2012</strong>/<strong>13</strong> 2011/12 2010/11 2009/10 2008/09No. of shares at 30 April 52,000,000 52,000,000 52,000,000 52,000,000 52,000,000After tax earnings per share (SEK) 4.63 4.14 5.29 3.66 4.53Cash flow per share (SEK) 6.61 5.58 4.79 6.86 5.71Equity per share (SEK) 30.31 26.90 24.39 22.46 20.00Share price, end of accounting period 104.75 85.50 101.50 70.00 45.00High during the year (SEK) 108.00 110.00 109.00 77.75 67.00Low during the year (SEK) 69.75 65.25 59.00 43.00 27.40Dividend per share (SEK) 1.50* 1.25 1.75 1.25 0.75After tax P/E 23.07 20.65 19.20 19.<strong>13</strong> 9.90Direct yield (%) 1.43 1.50 1.72 1.79 1.70Payout ratio (%) 32.37 30.20 33.10 33.90 16.40Trading volume 5,<strong>13</strong>8,280 4,657,561 4,655,718 7,228,918 7,950,838Turnover rate (%) 10.00 9.00 9.00 <strong>13</strong>.90 15.30*Dividend to be recommended by the Board at the AGM on 29 August 20<strong>13</strong> in Skinnskatteberg.Share capitalIncrease inYear Event Quotient value share capital Total shares Total no. of shares1993/94 Bonus issue, Series A shares 100 7,000,000 10,000,000 100,0001994/95 New issue, Series A shares 100 14,000,000 24,000,000 240,0001995/96 Bonus issue, Series A shares 100 26,000,000 50,000,000 500,0002005/06 New issue, Series B shares 100 2,000,000 52,000,000 520,0002006/07 100:1 split 1 - 52,000,000 52,000,0002007/08 Reregistration of shares to one type 1 - 52,000,000 52,000,000<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 47


ContentsDirectors’ Report 49Description of the Businessand Financial Information 49Proposed Distributionof Unappropriated Profits 52Corporate Governance Report 53Board of Directors 59Group Management 60Consolidated Income Statement 61Consolidated Statement ofComprehensive Income 61Consolidated Balance Sheet 62Changes in Equity – Group 64Consolidated Cash Flow Statement 65Parent Company Income Statement 66Parent Company Statementof Comprehensive Income 66Parent Company Balance Sheet 67Changes in Equity – Parent Company 69Parent Company Cash Flow Statement 70Accounting Policies and Notesto the Accounts 71Auditors’ Report 92Key Ratios and Definitions 93Group Companies 94<strong>Annual</strong> General Meeting 9548 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Directors’ ReportDirectors’ ReportDescription of the Businessand Financial InformationGeneralThe Board of Directors and Chief ExecutiveOfficer of <strong>Systemair</strong> AB (Publ), corporateidentity number 556160-4108, herebypresent the Company’s annual accountsand consolidated accounts for the <strong>2012</strong>/<strong>13</strong>financial year, the Company’s 40th yearof operations. <strong>Systemair</strong> AB (publ) hasits registered office and head office inSkinnskatteberg, Sweden.The Group’s brands are <strong>Systemair</strong>,Frico, Fantech, VEAB, Holland Heatingand Menerga.<strong>Systemair</strong> offers a standardised rangeof ventilation products, including fans, airdistribution products, air handling units andchillers, with the emphasis on simplifyingthe task of ventilation contractors.Frico specialises in heating systems suchas air curtains, fan heaters and radiantheaters.Fantech is a brand that is used in NorthAmerica. Products include duct fans and otherventilation products, as well as heat recoveryunits for single-family homes. The acquisitionof Emerson Ventilation Products in May 2008added axial fans and ceiling fans for commercialbuildings to the product range.VEAB markets heating products such asduct heaters, fan heaters and dehumidifiers.Holland Heating is a well-establishedbrand in the European market for highqualityair handling units.The Menerga brand comprises airhandling units for swimming pool hallsand comfort ventilation with extra highefficiency. The brand was acquired via atakeover completed in May 20<strong>13</strong>.With production facilities in 15 countries(Sweden, Norway, Denmark, Lithuania, theNetherlands, Germany, Slovakia, Slovenia,Italy, Spain, Turkey, Canada, the USA, Indiaand Malaysia) and a total of more than200,000 m 2 of floor space for productionand storage, <strong>Systemair</strong> is a significantinternational player in its product areas.<strong>Systemair</strong>’s products are marketed in44 countries via owned sales companies,as well as via agents and distributors in afurther approximately 60 countries. TheGroup’s customers are primarily ventilationcontractors and distributors of ventilationand electrical products.Stock market listingSince 12 October 2007, <strong>Systemair</strong> shareshave been quoted (trading symbol: SYSR)on the Mid Cap List of the Nasdaq OMXNordic Exchange in Stockholm. The numberof shareholders is approximately 3,200.GroupSales and profitConsolidated sales totalled SEK 4,551million (3,997), <strong>13</strong>.9% more than in thepreceding financial year. Organic growthamounted to 5.1%. Companies acquiredcontributed 12.2%, SEK 487.0 million. Theimpact of exchange rates on translation offoreign subsidiaries was to reduce the valueof sales by -3.4%.Sales – Geographic breakdownSales in the Nordic region during the yearwere on the same level as in the precedingyear. Acquisitions did not materially affectsales. The Norwegian market is the biggestin the region and the second largest overall,with sales of SEK 536 million. Sales inNorway grew by 3% over the year. Salesin the Swedish market declined by 3%. InDenmark, sales fell by 1% but our Danishfactory nevertheless had a record year,thanks to buoyant export sales.In Western Europe, sales were up 7%.Companies acquired contributed SEK 149million, or 11% of the total. Adjustedfor both acquisitions and the impact ofexchange rates, sales were on the samelevel as in the preceding year, indicatingthat changes in exchange rates – notablythe euro – had an adverse impact of4%. The biggest market in the regionis Germany. Other major markets for<strong>Systemair</strong> are France, the United Kingdom,the Netherlands and Italy. The Spanish,Portuguese and Italian markets remaindepressed and showed negative growthduring the year.<strong>2012</strong>/<strong>13</strong> 2011/12May-Apr % of total change May-Apr % of totalNordic region 1,<strong>13</strong>0.2 25% 0% 1,126.1 28%Western Europe 1,436.0 32% 7% 1,346.3 34%Eastern Europe & CIS 1,144.7 25% 20% 951.2 24%North America 365.5 8% 30% 282.1 7%Other markets 474.6 10% 63% 291.2 7%Total 4,551.0 100% 14% 3,996.9 100%<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 49


Directors’ ReportThe market in Eastern Europe & CISrose by 20% over the year. Sales in theregion totalled SEK 1,145 million (951).Adjusted for foreign exchange effects andacquisitions, sales in Eastern Europe & CISrose 12% during the year. Robust growth isin evidence in Russia and the Baltic States.Major markets for <strong>Systemair</strong> in the regionare Russia, Poland, the Czech Republicand Slovenia. Strong growth is expectedto continue in Russia, with the opening ofthree new regional offices.Sales in the North American marketwere 30% higher than in the precedingyear. Sales totalled SEK 366 million (282),an increase that was largely attributableto the acquisition of Change Air, Canada.Adjusted for foreign exchange effects andacquisitions, sales rose by 4%. Growth indemand in the North American market wasstrong in the latter part of the year.Sales in other markets rose 63%during the year, largely as a result of theacquisition of the Turkish company HSK. Theacquisitions boosted sales by 45%. Adjustedfor the impact of exchange rates andacquisitions, sales advanced 22%. Majormarkets for <strong>Systemair</strong> in the region areTurkey, India and the United Arab Emirates.ProfitOperating profit for the financial year fromMay <strong>2012</strong> to April 20<strong>13</strong> totalled SEK 365.2million (319.8). In the preceding year,operating profit was charged with nonrecurringitems of SEK -39.6 million, seeNote 29. The non-recurring items consistedof amortisation of goodwill in the amountof SEK -18.7 million, relating to the Spanishsubsidiary <strong>Systemair</strong> HVAC, as well asmeasures totalling SEK -20.9 million to reducethe cost burden in new company acquisitions.The operating margin was 8.0% (8.0).Selling expenses for the full year werecharged with SEK 20.2 million (10.8) foranticipated bad debts and impairmentlosses on trade receivables. Companyacquisitions added SEK 91.2 million (107.5)to selling and administration expenses forthe year. Acquisition-related costs duringthe year totalled SEK 7.4 million (4.4).Financial income totalled SEK 1.2 million(2.7), including SEK 1.2 million (2.5)in interest income. Financial expensesfor the year totalled SEK -35.8 million(-25.9), SEK 30.7 million (-24.7) of whichconsisted of interest expense. The rise ininterest expense is a result of increasedborrowing during the year to fund companyacquisitions and the purchase of the sharesoutstanding in Lindab.The tax expense for the year amounts toSEK -89.6 million (-81.1), corresponding toa tax charge of 27.1% (27.4).InvestmentThe Group’s investment during the yeartotalled SEK 692.5 million (265.4), includingthe financial investment of SEK 406.6million in shares in Lindab. The value ofthe Group’s shareholding in Lindab on thebalance sheet date was SEK 464.4 million.Gross investments, excluding divestments,in new construction and machinery totalledSEK 123.9 million (85.8). Major investmentscomprise a new factory building with officesin Greater Noida, India, a new developmentcentre and expanded warehousing capacityin Germany, production equipment for anew factory in Turkey and completion ofcapacity and replacement investmentsin the factories in Denmark, Sweden andLithuania. The total paid for acquisitionsand previously withheld purchase price inthe financial year was SEK 164.4 million(184.2). Depreciation and amortisationof non-current assets totalled SEK 116.6million (100.2) for the year.Business combinationsIn March 20<strong>13</strong>, <strong>Systemair</strong> acquiredHolland Heating, a leading manufacturerof air handling units in the Netherlands.Holland Heating, established in 1955, hasproduction facilities and headquartersin Waalwijk. The company, owned byCarrier since 1977, <strong>report</strong>ed sales of EUR32.5 million in <strong>2012</strong>. The agreementalso stipulates continued deliveries ofair handling units to the Carrier Groupin Europe. As a result of the acquisition,<strong>Systemair</strong> becomes market leader in airhandling units in the Netherlands.On 20 August <strong>2012</strong>, <strong>Systemair</strong> acquiredRatos’ holding of shares in Lindab. Theholding represented 11.2% of the sharecapital and comprised 8,849,157 shares.At the same time, <strong>Systemair</strong> acquired afurther 300,000 shares in the market andconsequently is the largest shareholderin Lindab, with in all 11.6% of the sharecapital.In June <strong>2012</strong>, <strong>Systemair</strong> acquired ChangeAir, Canada. The company is one of theNorth American market’s leading producersof air handling units for classrooms. In2011, Change Air had sales equivalent toSEK 84 million and an operating profit ofSEK 11.9 million. The company, which has86 employees, has its headquarters and aproduction facility in Ontario, Canada. Theacquisition has provided <strong>Systemair</strong> withaccess to 59 sales agents in 71 cities, and atotal of approximately 300 sales engineersin North America. The latter cover 42 statesin the USA and six provinces in Canada.In August <strong>2012</strong>, <strong>Systemair</strong> acquired 70%of the shares in the Turkish company HSK,with an option to acquire the remaining 30.In December <strong>2012</strong>, <strong>Systemair</strong> acquired afurther 20% of the shares in the company.HSK is Turkey’s leading manufacturer ofair handling units, with sales of SEK 160million in 2011. After the acquisition, anew industrial property measuring justover 12,000 m 2 was leased, into which twoformer production facilities have relocatedand major investments have been made inmodern sheet metal forming equipment.The investments provide us with theregion’s most up-to-date production facilityfor air handling units. We also see greatpotential for developing sales in Turkey andneighbouring countries such as Azerbaijan,Georgia, Turkmenistan, Dubai and Iraq, plusmarket synergies with our Italian chillerfactory. After acquisition, the name of thecompany was changed to <strong>Systemair</strong> HSK.HSK has been consolidated into <strong>Systemair</strong>since the beginning of August <strong>2012</strong>.If Holland Heating, Change Air andHSK had been consolidated as of 1 May<strong>2012</strong>, net sales for the period May <strong>2012</strong>through April 20<strong>13</strong> would have totalledapproximately SEK 4,833 million. Operatingprofit for that period would have beenapproximately SEK 356 million.PersonnelThe average number of employees in theGroup was 3,394 (2,839). At the end of theperiod, <strong>Systemair</strong> had 3,649 employees(3,127), 522 more than a year earlier. Newemployees were recruited chiefly in Russia(38), Malaysia (22), Slovakia (16), Germany(15) and Sweden (11). Through acquisitions,404 employees joined the Group, including177 at <strong>Systemair</strong> HSK, Turkey, 141 atHolland Heating and 86 at Change Air,Canada.In April, Pär Johansson was appointedManaging Director of the Parent Company,<strong>Systemair</strong> AB, with responsibility for<strong>Systemair</strong>’s Swedish operations. GeraldEngström remains in his role as CEO ofthe Group and member of the Board ofDirectors.50 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Directors’ ReportCash flow and financial positionCash flow from operating activities beforechanges in working capital during the periodtotalled SEK 408.2 million (337.5); theincrease was chiefly attributable to an improvedoperating profit. As a result of lowertrade accounts payable and higher tradeaccounts receivable, tied-up capital wasaffected by SEK -64.3 million (-47.6). Thecash flow from financing operations totalledSEK 364.5 million (-11.1) net, as a result ofhigher borrowing. Interest-bearing liabilitieson the balance sheet date, translated toSwedish kronor, totalled SEK 1,310.3 million(866.8). Net indebtedness at year-end wasSEK 1,238.1 million (785.0).The consolidated equity/assets ratio was40.7% (45.1) at financial year-end. Thetarget adopted by the Board for the equity/assets ratio, 30% or more, was comfortablyattained.Transactions in foreign currencies<strong>Systemair</strong> has established subsidiariesthat operate in 44 countries, with ourown production in 15 of these. <strong>Systemair</strong>products are sold in 100 or so countriesaround the world. <strong>Systemair</strong> AB hasgranted long-term loans to its subsidiaries.The value of these loans, translated intoSwedish kronor, was SEK 64.5 million(391.3) on the balance sheet date.Treasury operations for the Group, inthe form of risk and foreign exchangemanagement, as well as borrowing, areconducted centrally by the Parent Companyin Skinnskatteberg. The Group’s financialpolicy serves as the framework not onlyfor financial risk management but also forfinancial activities in general. Paymentsand settlement flows are managed viacentralised Group account systems.The AAA Soliditet AB credit-rating agencymaintained its AAA rating for <strong>Systemair</strong>, ABfor the 18th year in a row.Risks and uncertainties<strong>Systemair</strong> is exposed to operational andfinancial risks in its business. Operationalrisk is inherent in the international natureof the operations, tough competition andthe sensitivity of the construction industryto the business cycle. The financial risksthat <strong>Systemair</strong> has identified in its businessconsist of foreign exchange risk, borrowingand interest rate risk, credit risk andliquidity risk, among others. The materialrisks and uncertainty affecting <strong>Systemair</strong> aredescribed in more detail in Note 2.Financial reviewIn the past five years, growth in Group saleshas averaged 8%. The annual operatingmargin (EBIT) has averaged 9% over thesame period. The Group has targeted anequity/assets ratio of at least 30%. Theaverage equity/assets ratio for the past fiveyears has been 45%. Of total Group sales,92% (91) are to customers outside Sweden.Further information on changes in theGroup’s financial position is provided in thetable of key ratios, after the notes to thefinancial statements.OutlookIn most markets, <strong>Systemair</strong> is still arelatively small player, and we see excellentopportunities – with our broad productportfolio and ample capacity to deliver – forthe Company to win greater market shares. InSeptember 2011, an interim <strong>report</strong> within theEU Directive on Eco-Design was delivered.The <strong>report</strong> advocates exhaust and supplyair ventilation with energy recovery as thebest solution for energy-efficient buildings.One focus of production development at<strong>Systemair</strong> is to create exactly that – energyefficientventilation products with a longservice life. We also see major futurepotential in developing the combination ofventilation and cooling in our products.During the year, we continued to stepup the pace in developing our productsand cultivating our markets, which willstrengthen the Group in the long run. Welook forward to the coming year and willcontinue our work on integrating acquiredbusinesses in order to achieve anticipatedsynergies and higher profitability.Seasonal factors<strong>Systemair</strong>’s business operations areinfluenced by seasonal variations associatedwith cold weather. Usually, activity in theautumn is higher because much constructionwork is being completed before winter.During the coldest parts of the year, demandfor heating products increases, too. Normallythe second quarter, August to October, iswhen <strong>Systemair</strong> records its strongest sales.Financial targetsIn April 2007, the Board of Directors of<strong>Systemair</strong> adopted three financial targetsand a dividend policy.Sales growth 12%Over a business cycle, both organic andacquiredEBIT >10%Over a business cycleEquity/assets ratio >30%DividendApproximately 30% of profit after taxProposed guidelines on remuneration tosenior executivesIt is proposed that the Board of Directors’guidelines on remuneration to seniorexecutives, for the period starting from the20<strong>13</strong> <strong>Annual</strong> General Meeting, should be asfollows. These guidelines are identical to thosethat have applied since the preceding AGM.Remuneration to senior executives shall,based on the conditions in the marketin which the Company operates andthe environment in which the particularexecutive works, be competitive, enablethe recruitment of new executives andmotivate senior executives to remain withthe Company.The system of remuneration shall consistof a fixed salary and pension but mayinclude variable salary and benefits suchas a company car. In addition to the above,special incentive programmes approvedFive-year review <strong>2012</strong>/<strong>13</strong> 2011/12 2010/11 2009/10 2008/09Net sales 4,551 3,997 3,467 3,219 3,333EBIT 365 320 367 275 341Operating margin 8.0% 8.0% 10.6% 8.5% 10.2%Equity/assets ratio 41% 45% 49% 49% 43%Return on capital employed 14% 15% 18% 15% 21%Average number of employees 3,394 2,839 2,430 2,0<strong>13</strong> 1,925<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 51


Directors’ Reportby the AGM may apply. Fixed salary andbenefits shall be determined individuallybased on the aforementioned criteria andthe specific competence of the executive.Variable salary will be paid subject to theattainment of clearly established targets.The variable salary will be paid as aproportion of the fixed salary and shall besubject to a predetermined limit, normallytwo months’ salary. As a rule, pensions shallbe paid through defined contribution plans.The pension contributions shall be basedon market conditions in the sector in theparticular country and shall be based on thefixed salary.The Board shall be entitled to depart fromthese guidelines if justified in any particularcase.Product development<strong>Systemair</strong> has chosen a strategy in whichone mainstay is product development,and the Company strives to remain at thecutting edge in technology and productdesign. One focus is the development ofenergy-efficient ventilation products with along service life.Product development is conductedprimarily at the large manufacturing units.In <strong>2012</strong>/<strong>13</strong>, the product developmentorganisation excluding Menerga GmbHemployed around 140 people; about 20 ofthese work at the largest development unit,in Skinnskatteberg. Product developmentcosts totalled approximately SEK 114 millionin <strong>2012</strong>/<strong>13</strong> and SEK 68 million in 2011/12.The Group has ten development centresequipped to test ventilation products usingstandardised measurement procedures. Thelaboratories are located in Sweden, Germany,Canada, Slovakia, Italy, the Netherlands,Turkey and the USA. The laboratory inSkinnskatteberg is among the most modernin Europe for testing ventilation products.Quality system<strong>Systemair</strong> AB has been ISO 9001 certifiedsince 1993. In addition to <strong>Systemair</strong> AB, thesubsidiaries <strong>Systemair</strong> GmbH in Germany,<strong>Systemair</strong> Ltd in Canada, VEAB Heat Techin Hässleholm, Sweden, <strong>Systemair</strong> HVACin Spain, <strong>Systemair</strong> in Slovenia, Imos-<strong>Systemair</strong> in Slovakia, <strong>Systemair</strong> in Malaysia,<strong>Systemair</strong> AC in Italy, Holland Heating in theNetherlands, <strong>Systemair</strong> in India and <strong>Systemair</strong>in Denmark also have ISO certification. Workon certification is also under way at <strong>Systemair</strong>in Lithuania and is expected to be completein the autumn this year.Environmental management system<strong>Systemair</strong> attaches great importance tostrict compliance with the requirements ofenvironmental law. Environmental issues andconservation are a priority area, and we focuson constantly improving methods and workpractices to reduce environmental impact.<strong>Systemair</strong>’s production facilities inSweden and in Germany have ISO 14001certification. <strong>Systemair</strong> regards theCompany’s manufacturing facilities andoperations as meeting the requirementsof all significant environmental laws andregulations that affect the Company.The Parent Company is engagedin activities subject to environmentalregistration. They are Category C activities,which means that the Municipality ofSkinnskatteberg is responsible for theenvironmental inspection.Parent CompanyThe Parent Company develops,manufactures and sells ventilation andheating products in Skinnskatteberg. TheGroup’s largest development centre andGroup Management functions are alsobased there.During the financial year, sales totalledSEK 947 million (939) and profit after netfinancial items SEK 35 million (45).The proportion of sales and purchasesin EUR remains high. Sales by the ParentCompany to subsidiaries in Europe aremainly transacted in EUR. As a result,the gross margin declined by around 1percentage point over the year.Exports accounted for 63% (63) of salesfrom Skinnskatteberg.Exports represent a significant shareof sales by <strong>Systemair</strong> AB to its subsidiaryFrico AB. Adjusted for the re-exportsfrom Frico AB, 72% (73) of all sales fromSkinnskatteberg were exported.Investments in buildings, technicalfacilities, machinery, equipment andconstruction in progress amounted toapproximately SEK 6.6 million (16.3).These include investments in a modernlake water heating system for the factoryat Skinnskatteberg and in productionmachinery.The cash flow from operating activitiesin the Parent Company totalled SEK 310.3million (75.2). The increase was largelyattributable to a fall in current receivables.The balance sheet shows a strong equity/assets ratio of 33% (36).Significant events after financial year-endIn May, <strong>Systemair</strong> completed the acquisitionof Menerga GmbH, Germany, a leadingEuropean producer of air handling units forswimming pool halls and comfort ventilationwith extra high efficiency. Established in1981, Menerga has its headquarters andproduction facilities in Mülheim an derRuhr, just outside Düsseldorf. Sales in <strong>2012</strong>totalled EUR 56.7 million, 53 percent inGermany. The company currently employsapproximately 400 people. The purchaseconsideration is provisionally calculated atSEK 111 million, including transaction costs.In May, <strong>Systemair</strong> entered an agreementto acquired Reftec AS, a supplier ofcommercial cooling and heat pumps onthe Norwegian market. Reftec, founded in2007, has its headquarters in Trondheimand a sales office in Oslo. It has 14employees. The company recorded sales ofNOK 34 million in <strong>2012</strong> and sales growthof more than 30 percent. The acquisitionis subject to approval by Norway’scompetition authority. The company wasformerly a reseller of <strong>Systemair</strong> products inthe Norwegian market.Proposed Distribution ofUnappropriated ProfitsAvailable for distribution by the <strong>Annual</strong>General Meeting:Share premium reserve SEK 35,206,751Fair value reserve SEK 47,984,247Retained earnings SEK 585,390,608Profit for the year SEK 161,854,738SEK 830,436,344The Board proposes that the AGM to beheld on August 20<strong>13</strong> approves a dividendof SEK 1.50 (1.25) per share, giving a totaldistribution of SEK 78.0 (65.0) million,and that the remaining profits be carriedforward. The proposed dividend correspondsto 32% (30) of net consolidated profit. Thenumber of shares entitled to a dividend is52,000,000.52 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Corporate governance <strong>report</strong>Corporate GovernanceAt <strong>Systemair</strong> AB (publ), corporate governance is exercised via the<strong>Annual</strong> General Meeting (AGM), the Articles of Association, theBoard of Directors and the President and Chief Executive Officer inaccordance with the Swedish Companies Act, the Swedish <strong>Annual</strong>Accounts Act, Nasdaq OMX Stockholm’s Rule Book for Issuers andthe Swedish Code of Corporate Governance.Application of the Swedish Code ofCorporate Governance ("the Code")In the market for shares in Swedishcompanies whose shares are quotedfor trading in a regulated market,implementation of the Code is generallyaccepted practice. <strong>Systemair</strong> applies theCode with the following exceptions:The AGM has appointed a nominatingcommittee consisting of representativesof the three largest shareholders. Thechairman of the nominating committee isthe Company’s majority shareholder, GeraldEngström, who owns 42.3% of the sharecapital and votes in <strong>Systemair</strong> via his whollyowned company Färna Invest AB. Engströmis also a member of the Board of Directorsand is the Chief Executive Officer. Thesecond largest shareholder, ebm-papst AB,owns 21.3% of the capital and votes and isrepresented on the nominating committeeby Gerhard Sturm.The Code states for example that themajority of the members of the nominatingcommittee must be independent of theCompany and company management.Furthermore, the chairman of thenominating committee must not be adirector of the company.The majority of the members of<strong>Systemair</strong>’s nominating committeeare, however, not independent, whichrepresents a deviation from the Code.The Company’s view is that the saidarrangement is in the interests, and tothe benefit, of the Company and the othershareholders.Shareholders and share capital<strong>Systemair</strong> (corp. id. no. 556160-4108) hasits registered office in Skinnskatteberg inVästmanland County. Its shares have beenHow <strong>Systemair</strong> is governedAuditors<strong>Annual</strong>General MeetingNominating committeeBoard of DirectorsAudit committeeRemunerationcommitteeCEOGroup ManagementBusiness BoardsControl environmentSubsidiaries<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 53


Corporate GovernanceFacts<strong>2012</strong> <strong>Annual</strong>General MeetingThe <strong>Annual</strong> General Meeting held inSkinnskatteberg on 29 August <strong>2012</strong>was attended by 63 shareholders,representing 85.8% of the number ofshares and votes in the Company. LarsHansson, <strong>Systemair</strong>’s Chairman, wasappointed to chair the meeting.Lars Hansson informed the AGM ofthe work of the Board and <strong>report</strong>edon the guidelines for remuneration tosenior executives, and on the workof the nominating committee andaudit committee. In addition, GeraldEngström, then President and CEO, helda speech about <strong>Systemair</strong>’s businessduring financial year 2011/12. ThomasForslund, auditor in charge, presentedsections of the audit <strong>report</strong>.Resolutions approved at the AGM:– To discharge the Board of Directorsand the Chief Executive Officer fromliability for the past financial year– To re-elect Elisabeth Westberg, LarsHansson, Gerald Engström, JürgenZilling, Göran Robertsson and HannuPaitula to the Board of Directors– To re-elect Lars Hansson asChairman of the Board.– That a Board fee of SEK 400,000be paid to the Chairman andSEK 200,000 to each director notemployed by the Company. That afee of SEK 25,000 be paid to eachemployee representative.– That a fee of SEK 50,000 be paid tothe chairman of the audit committeeand SEK 25,000 be paid to the othermembers of the audit committee.– That a dividend of SEK 1.25 pershare be paid– That the nominating committeeconsist of representatives of thethree biggest shareholders, basedon details of the shareholders as per31 January 20<strong>13</strong>, together with theChairman of the Board– That during the period until the20<strong>13</strong> AGM the Board be authorisedto approve the issue of new sharesequal to no more than 10% of thenumber of shares in the Company.The minutes from the <strong>2012</strong> AGM areavailable on the Company’s website atwww.systemair.com, Investor & Media.quoted on Mid Cap list of the OMX NordicExchange in Stockholm since 12 October2007. The Company’s trading symbol isSYSR. At the end of the accounting period,<strong>Systemair</strong> AB had 3,209 shareholders. Thelargest individual shareholder is Färna InvestAB, which owns 42.3% of the capital andvotes, and is 100%-controlled by GeraldEngström, Chief Executive Officer andmember of the Board of Directors. Othermajor shareholders are ebm-papst AB,Järfälla, Sweden, wholly owned subsidiaryof ebm-papst GmbH, Mulfingen, Germany,with 21.3% of the capital and votes, andNordea Fonder, with 6.2%. All shares havea quotient value of SEK 1. At the end ofthe accounting period, 30 April 20<strong>13</strong>, thetotal number of shares outstanding was52,000,000, all of the same class.For more information, see section "The<strong>Systemair</strong> Share", on page 46.Articles of Association<strong>Systemair</strong> is a public limited liabilitycompany, whose business it is inter aliato conduct the manufacture and sale ofventilation and heating products. TheBoard of Directors shall consist of nofewer than three and no more than eightmembers and no more than three deputymembers. In addition, the trade unions areentitled by Swedish law to appoint twoComposition of the nominating committee for the 20<strong>13</strong> AGMmembers and two deputies. The Board ofDirectors shall have its registered office inSkinnskatteberg Municipality, VästmanlandCounty. The Company’s <strong>Annual</strong> Report andthe management of the Company by theBoard of Directors and the CEO shall beaudited by a registered public accountingfirm or an auditor, with or without a deputyauditor. The Company’s financial year shallbe 1 May–30 April.For the complete Articles of Association,please visit <strong>Systemair</strong>’s website: www.systemair.com, Investor & Media<strong>Annual</strong> General MeetingThe <strong>Annual</strong> General Meeting (AGM) is<strong>Systemair</strong>’s ultimate governing body. TheAGM shall be held within six months fromthe end of the financial year. Notice of themeeting is given on the <strong>Systemair</strong> websiteand confirmed via an announcement inDagens Industri.All shareholders who are entered in theshare register five weekdays before theAGM and who have notified the Companyno later than 3.00 p.m. on the day specifiedin the notice for the AGM that they willattend, are entitled to attend and to vote inaccordance with their total shareholdings.Any shareholder unable to attend can berepresented by a representative.Member Representative of Contact (e-mail)Gerald Engström,Chairman of the nominating committeeFärna Invest AB,Chief Executive Officer, <strong>Systemair</strong>gerald.engstrom@systemair.seGerhard Sturm ebmpapst AB gerhard.sturm@de.ebmpapst.comBjörn Henriksson Nordea Fonder bjorn.henriksson@nordea.comLars Hansson Chairman of the Board lars.hansson@systemair.seBoard members - attendance and dependence/independenceBoard ofDirectorsAuditcommitteeRemunerationcommitteeNumber of meetings 9 4 1YearelectedDep./Indep.Company ShareholderLars Hansson, Chairman 9 4 1 2006 Indep. Indep.Gerald Engström 9 - - 1974 Dep. Dep.Elisabeth Westberg 9 4 1 2006 Indep. Indep.Jürgen Zilling 9 - - 2008 Indep. Indep.Göran Robertsson 9 4 1 2006 Indep. Indep.Hannu Paitula 9 - - 2011 Indep. Indep.Kevin Rowland 1 9 - - 2002 - -Åke Henningsson 1 9 - - 2010 - -1Employee representative54 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Corporate GovernanceThe AGM deals with several key mattersof business, such as the dividend, anyamendments to the Articles of Association,election of auditor, discharge of the Boardfrom liability, remuneration to the Boardand auditor, as well as decisions on thecomposition of the Board until the next AGM.Nominating committeeThe <strong>2012</strong> AGM resolved that the nominatingcommittee shall consist of representativesfrom three of the biggest shareholders.It was resolved that the record date fordetermining the three largest shareholdersshould be 31 January 20<strong>13</strong>. The nominatingcommittee shall submit nominations forthe Chairman of the AGM, the Boardand Chairman of the Board, the choiceof auditors in consultation with the auditcommittee and proposals for fees to theChairman of the Board and other Boardmembers, for remuneration committee workand for auditors’ fees. These proposals shallbe presented at the AGM.In <strong>2012</strong>, the nominating committee heldtwo meetings. No remuneration was paidfor work on the nominating committee.The nominating committee’s proposals tothe 20<strong>13</strong> AGM are stated in the Notice ofAGM published on the <strong>Systemair</strong> website,www.systemair.se. Shareholders wishingto submit proposals to the nominatingcommittee may do so via e-mail to any ofthe members of the committee.Board of DirectorsBoard structure<strong>Systemair</strong>’s Board of Directors is made upof six directors, elected at the AGM, namelyLars Hansson (Chairman) , Gerald Engström(<strong>Systemair</strong> CEO), Elisabeth Westberg, GöranRobertsson, Jürgen Zilling and Hannu Paitula.The employees have two representatives,Kevin Rowland, Unionen, and ÅkeHenningsson, IF Metall. Further details ofthe members of the Board of Directors arepresented on page 59 of this annual <strong>report</strong>.Glen Nilsson, CFO, serves as BoardSecretary.As the table on the previous pageshows, all members of the Board electedby the AGM, except for Gerald Engström,are independent of the Company. Seniorexecutives participate in Board meetings ina <strong>report</strong>ing capacity, as the need arises.Work of the Board of DirectorsDuring the <strong>2012</strong>/<strong>13</strong> financial year, theBoard held eight meetings and onestatutory meeting. According to the Board’srules of procedure, the Board must meet atleast six times during the financial year.Work of the Board of Directors during the yearVisits to subsidiariesto gain a deeperunderstanding oftheir businessStrategy– during the autumn,the Board has anin-depth discussionof strategyThe Company’s auditor attendedproceedings dealing with the year-end<strong>report</strong> and presented his <strong>report</strong>, at whichpoint the Board had opportunity to askquestions. All resolutions approved by theBoard were unanimous and are recorded inthe minutes of the meeting.The work of the Board is governedby written rules of procedure, approvedannually, that regulate the work of theBoard and the allocation of work within it,including committee work, the procedurefor decision-making within the Board andrules of procedure for Board meetings.Each month, the Board receives theCompany’s <strong>report</strong>ing package on resultsand financial position, consolidated atGroup level and for all subsidiaries. The CEOalso maintains ongoing contact with theChairman of the Board.During the year, the Board of Directorsassessed his work, and all directorsparticipated in the assessment and providedobservations. The Chairman of the Board isresponsible for this evaluation.During the year, the Board discussed andadopted a financial policy, an insider policy,an IT policy, a communication policy and acode of conduct. Each policy is presented onthe Company’s website, www.systemair.com.Attendance of Board membersand remunerationAs the table indicates, all Board membersattended all meetings. Information onRegular items on Board’sagenda:• Business situation and major events• Internal financial monitoring – results,liquidity, foreign exchange situationand financing• External financial <strong>report</strong>ing(quarterly <strong>report</strong>s)• Investments of more than SEK 10 million• Acquisitions• Organisation and personnel• PoliciesTalks by external speakere.g. about generaleconomic situationBudget– during the spring, the Boardconsiders the Group’s budgetfor the year ahead<strong>Annual</strong> accounts– in June, the Board discusses the annualaccounts for the past year; the meeting isalso attended by the Company’s auditorremuneration to the Board is provided inNote 9.Remuneration committeeThe Board has appointed a remunerationcommittee comprising Lars Hansson(chairman), Elisabeth Westberg and GöranRobertsson. The committee’s tasks are:– to prepare proposals on behalf of theBoard regarding remuneration in theform of fixed and variable salary, pension,severance payment and any other typesof remuneration for senior executives– to monitor and assess programmes,in progress and concluded during theyear, for variable remuneration to seniorexecutives– to monitor and assess the applicationof guidelines for remuneration to seniorexecutives, as well as current structuresand levels of remuneration.The members of the committee areappointed annually by the Board at thefirst regular Board meeting; the committeeshall consist of three members. No membermay participate in issues related to his orher own remuneration. The Chairman ofthe Board shall chair the committee. Thecommittee held one minuted meeting,which was attended by all members.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 55


Corporate GovernanceOrganisationCEOGerald Engströmstyle of communication, so ongoing informalcontacts among Company executives is alsoa key part of the management culture. GroupManagement is supported by functions forGroup financing, Group accounting, businessdevelopment, product development,production, purchasing, communication and IT.Subsidiariesin the Nordic regionFinance & IRGlen NilssonFinance/Adm.Anders UlffMarketing - ProductsRoland KasperSubsidiariesin Western EuropeAudit committeeDuring the financial year, the Board hadan audit committee comprising Boardmembers Elisabeth Westberg (chairman),Lars Hansson and Göran Robertsson.The committee’s tasks include:– supervising the Company’s internalcontrol, risk management and internalaudits– keeping informed about the externalaudit– reviewing and monitoring the impartialityand independence of the auditor– assisting in the preparation of proposalsfor the selection of auditors.– supervising financial <strong>report</strong>ing– discussing valuation issues such asimpairment testing of goodwill.The committee held four minuted meetingsin which the Company’s CFO, Vice Presidentof Administration and auditor took part.These meetings addressed issues such asthe risk assessment of internal control andrisk management with respect to financial<strong>report</strong>ing. Reports were submitted frominternal audits performed. Minutes werekept of the meetings and were presented atthe subsequent Board meeting.Managing Director and Chief ExecutiveOfficerIn April 20<strong>13</strong>, Pär Johansson was appointedas new Managing Director of the ParentCompany, <strong>Systemair</strong> AB. Pär Johanssonformerly served as marketing managerin Sweden, with overall responsibilityBusiness BoardsSubsidiariesin Eastern Europe& CISSubsidiariesin North AmericaMarketSvein NilsenProductionMats LundBusiness DevelopmentJonas Valentin,MD FricoBusiness DevelopmentKurt Maurer, MD<strong>Systemair</strong> GmbHOtherSubsidiariesfor sales, customer service and technicalsupport. Gerald Engström, who untilApril 20<strong>13</strong> served as both Presidentand Chief Executive Officer, remains asChief Executive Officer for the Groupand Board member. Pär Johansson willassume operational responsibility at theParent Company, <strong>Systemair</strong> AB, basedin Skinnskatteberg, and for the Swedishbusiness. As Chief Executive Officer,Gerald Engström will manage day-to-dayadministration and control of the Group’soperations and Group Management will<strong>report</strong> to him.Group ManagementGroup Management consists of: SveinNilsen, VP Sales and Marketing; GlenNilsson, CFO; Mats Lund, VP Production;Roland Kasper, VP Products; Anders Ulff,VP Administration; Jonas Valentin, MD ofFrico AB; and Kurt Maurer, MD of <strong>Systemair</strong>GmbH, Germany. As Chief Executive Officer,Gerald Engström oversees the work ofGroup Management.Group Management holds regular meetingsduring the year to review the results of theGroup and of individual subsidiaries, as wellas the market and business situation, and totake decisions on strategic and operationalmatters within frameworks established bythe Board. One of these yearly meetingsis more extensive, involving more detaileddiscussion and planning for operations andthe formulation of targets at the Group andsubsidiary levels. <strong>Systemair</strong>’s organisation ischaracterised by a simple, straightforwardBusiness Boards governanceat subsidiariesThe <strong>Systemair</strong> Group consists of in all 64companies. The Parent Company is <strong>Systemair</strong>AB (corp. id. no. 556160-4108), whichdirectly owns all subsidiaries. No other legalsub-structures exist. All subsidiaries are100%-owned, apart from Turkish subsidiary<strong>Systemair</strong>-HSK, which is 90%-owned.Operations at the subsidiaries arecontrolled via Business Boards, which mightbest be described as executive steeringcommittees for the subsidiaries. Each ofthese consists of one or two membersof Group Management and/or anotherkey person from the Parent Company,plus the subsidiary’s MD. Each BusinessBoard sets targets and monitors financialoutcomes, takes decisions on major marketand product issues and serves as the linkbetween Parent Company and the particularsubsidiary in various organisational issues.Business Boards meet two to four timeseach year. Each subsidiary also has a formalboard of directors, if required by law in thecountry concerned.Senior executive remunerationGuidelinesThe <strong>2012</strong> AGM adopted guidelinesfor senior executive remuneration.Remuneration to senior executives shall– based on the conditions in the marketin which the Company operates andthe environment in which the particularexecutive works – be competitive, enablethe recruitment of new executives andmotivate senior executives to remain withthe Company.The system of remuneration shallconsist of a fixed salary and pension butmay include variable salary and benefitssuch as a company car. In addition to theabove, special incentive programmesapproved by the AGM may apply. Fixedsalary and benefits shall be determinedindividually based on the aforementionedcriteria and the specific competence of theparticular executive. Variable salary will bepaid subject to the attainment of clearlyestablished targets. The variable salary willbe paid as a proportion of the fixed salaryand can normally amount to no more thantwo months’ salary. As a rule, pensions shall56 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Corporate Governancebe paid through defined contribution plans.The size of the pension shall adhere to thesame criteria as above and shall be basedon the fixed salary. The Board is entitled todepart from these guidelines if justified inany particular case.Information on remuneration to thePresident, CEO and other senior executivesis presented in Note 9.Notice of termination and severancepaymentsThe President’s and the Chief ExecutiveOfficer’s employment may be terminatedon 12 months’ notice by the Company or sixmonths’ notice by the President or CEO. Forother senior executives, the period of notice isas per collective bargaining agreement, or isno more than 12 months from the Companyor six months from the employee. No otheragreements entitle the President, CEO orother senior executives to severance pay.PensionsThe Chairman of the Board and membersof the Board have no entitlement topension benefits arising from their Boardduties. As Chief Executive Officer, GeraldEngström is covered by defined-contributionpension insurance; other senior executivesare covered by the ITP Pension Plan. Thepensionable age for all senior executives is65 years. Pension costs for senior executivestotalled SEK 3.0 million in <strong>2012</strong>/<strong>13</strong>.Auditor and auditingThe <strong>2012</strong> AGM resolved to appoint Ernst& Young AB, with Thomas Forslund,Authorised Public Accountant, as auditorin charge until the end of the 20<strong>13</strong> AGM.Thomas Forslund has served as seniorauditor since 2006 and will therefore resignfrom this position at the 20<strong>13</strong> AGM. Aproposal for new auditor will be made in theNotice of the 20<strong>13</strong> AGM.The external audit is performed inaccordance with generally acceptedaccounting principles in Sweden. <strong>Annual</strong><strong>report</strong> documents for legal entities domiciledoutside Sweden are audited in accordancewith the legal requirements and otherapplicable rules of the countries in question.The work of auditing the Group’saccounts adheres to an audit plan that isadapted to the size of the companies andthat sets guidelines for the auditors’ workin each subsidiary. In addition to auditengagements, the audit firm has performedcertain consulting assignments during theyear, primarily consisting of advice on taxand accounting issues. The auditors havesubmitted oral and written <strong>report</strong>s to theaudit committee and the Board on the auditengagement as well as on the audit of theCompany’s internal control.<strong>Systemair</strong>’s mid-year <strong>report</strong> during the<strong>2012</strong>/<strong>13</strong> financial year was audited by theCompany’s auditor.Information on remuneration to theauditors is provided in Note 5.Internal control offinancial <strong>report</strong>ingReport of the Board of Directors on internalcontrol for financial year <strong>2012</strong>/<strong>13</strong>Under the Swedish Companies Act and theCode, the Board is responsible for internalcontrol. This <strong>report</strong> has been drawn upin accordance with the Swedish <strong>Annual</strong>Accounts Act and describes how internalcontrol of financial <strong>report</strong>ing is organised.The audit committee exercises theimportant function of preparing the workof the Board in assuring the quality offinancial <strong>report</strong>ing. Such preparation coversissues of internal control and compliancewith regulations, scrutiny of <strong>report</strong>edvalues and estimates and other issues thatcould influence the quality of the financialdisclosures. Internal control is based onthe structure in the framework for internalcontrol referred to as the COSO model, fromthe Committee of Sponsoring Organizationsof the Treadway Commission (COSO).Control environmentEffective Board work lays the foundationsfor effective internal control. The controlenvironment in <strong>Systemair</strong> is characterisedby short paths between Group Managementand the operational units. The Boardof Directors has adopted a number ofbasic documents to create and maintain asmoothly functioning control environmentof importance to the financial <strong>report</strong>ing.These include the Board of Directors’ setof procedures, instructions for the CEO, afinancial policy and accounting manuals.Instructions and guidelines for financial<strong>report</strong>ing are prepared and updatedcontinuously by the Parent Company’scontroller organisation.An audit committee has been establishedwithin the Board of Directors. Its task is toensure that policies adopted on financial<strong>report</strong>ing and internal control are observedand developed. The committee alsomaintains day-to-day relationships with theCompany’s auditor.Risk assessment<strong>Systemair</strong>’s Board of Directors is responsiblefor ensuring that material financial risksand risks of errors in financial <strong>report</strong>ing areidentified and managed.As regards financial <strong>report</strong>ing, the primaryrisk is deemed to be that errors mayarise in the disclosures of the Company’sresults and position. The Board, auditcommittee and management continuouslyassess <strong>report</strong>ing from a risk viewpoint, inwhich comparisons of income statementand balance sheet items with previousdisclosures and budgets provide crucialsupport. In addition, risk assessments areperformed on an ongoing basis duringstrategic planning, budgeting, forecastingand acquisition activities.Control activitiesEssential instructions and guidelinesfor financial <strong>report</strong>ing are preparedand updated continuously by theParent Company’s centralised controllerorganisation and are easily accessible onthe Group’s intranet.All companies in the Group <strong>report</strong> fiveworking days after the end of the monthvia a common Group consolidation and<strong>report</strong>ing system, enabling any deviations orerrors to be detected quickly and corrected.At the end of the accounting period, theGroup comprised around 60 subsidiariesowned directly by the Parent Company<strong>Systemair</strong> AB. The subsidiaries are legalentities with their own comprehensiveincome statements and balance sheets.Each individual subsidiary <strong>report</strong>smonthly to the Parent Company, at whichconsolidation takes place.Central controllers are directly responsiblefor following up for a number of companiesthat they monitor and analyse continuously.Outcomes are reviewed against plansand targets on an ongoing basis withrepresentatives from the subsidiaries,Business Boards and Group Management.For the majority of its subsidiaries, theGroup has a common, fully integrated ERPsystem that provides a highly efficienttool for management, internal controland follow-up. Major decisions such asacquisitions, investments and significantagreements are subject to explicit decisionmakingprocedures and processes.In addition, every unit is also visitedregularly by representatives of BusinessBoards and Group Management forcontinuous evaluation of internal controland financial <strong>report</strong>ing.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 57


Corporate GovernanceInformation and communicationThe President and CFO are jointlyresponsible for the accuracy and goodquality of all information publishedexternally, such as for example quarterly<strong>report</strong>s, press releases, companypresentations etc. in conjunction withanalysts’ meetings. The tasks of theCompany’s auditor include reviewingaccounting issues that are material tofinancial <strong>report</strong>ing, and <strong>report</strong>ing his or herobservations to the audit committee andBoard.Each month, the Board receives a<strong>report</strong>ing package that includes thecomplete final accounts for each subsidiaryas well as the consolidated accounts for theGroup. Several key ratios and benchmarksare also included; these enable the resultsfor the period to be compared with budgetand with outcomes for preceding years.The Board’s set of procedures regulateswhich <strong>report</strong>s and information of a financialnature will be presented on an ongoingbasis and at each Board meeting.In order to promote awareness of policiesand manuals among the Group’s employees,information is available to all concerned onthe Group’s intranet. To ensure that externalinformation is accurate and comprehensive,the Board of Directors has thereforeadopted a Communication Policy.Follow-up<strong>Systemair</strong> is characterised by simplicity inits legal and operational structures and bysmoothly functioning and well-establishedmanagement and control systems. TheBoard’s audit and remuneration committees,together with Group Management,follow up on compliance with policiesand guidelines adopted. At every Boardmeeting, the Company's financial situationis discussed, and prior to the publicationof quarterly <strong>report</strong>s and annual <strong>report</strong>, theBoard reviews the financial information.Each month, Group Management andBusiness Board members review the resultsfor each subsidiary and discuss deviationsfrom plan with that subsidiary’s CEO.The tasks of the external auditors includesupervising internal control in the Groupcompanies annually. The auditors maintaincontact with the audit committee and also<strong>report</strong> directly to the Board of Directors.During the year, the controller organisationconducted a number of internal audits ofsubsidiaries, aided by the Company's auditors.This work adheres to a standardised model,in which for example various significantissues associated with internal guidelines andpolicies are reviewed.Procedures associated with internal auditsare being developed continuously, and anannual plan for audit activities is in place,implemented by the audit committee.Internal audit<strong>Systemair</strong> has a simple operational structurethat provides effective means for internalcontrol. Compliance with the managementand internal control systems developed bythe Company is regularly monitored by theGroup’s controllers. In addition, BusinessBoards and Group Management also followup compliance on a regular basis. Furthercontrol and supervision are exercised by theaudit committee and the external auditors.Day-to-day dialogue between theCompany and the external auditors, as wellas the checks by the above-mentionedparties are considered at present to beadequate in ensuring that an acceptablelevel of internal control is maintained. Everyyear, the Board evaluates the need forinternal auditing. To date, it has concludedthat a separate internal auditing functionwould not deliver any material benefit.This judgement is subject to continualreview, and the issue will be re-examinedin the 20<strong>13</strong>/14 financial year.58 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Board of DirectorsCorporate GovernanceGerald EngströmChief Executive Officer, DirectorDirector of Lindab AB, Chairman of BluefishPharmaceuticals ABEducation: Upper secondary schoolqualification in Engineering, Business Studiesat Stockholm UniversityFormerly: CEO, Ziehl-ebm AB etc.Holding: 21,997,752 shares(shares owned by Färna Invest)Born: 1948Year elected: 1974Independent: NoLars HanssonChairman of the BoardChairman of S-Group Holding AB, Director ofStarkraft ABEducation: M.Sc. EngineeringHolding: 50,000 sharesBorn: 1942Year elected: 2006Independent: YesGöran RobertssonDirectorChairman, Eurovent Certification CompanyEducation: B.Sc. Engineeringand leadership programme at StockholmSchool of Economics IFL Executive EducationFormerly: CEO of Stifab Farex AB etc.Holding: 15,000 sharesBorn: 1943Year elected: 2006Independent: YesJürgen ZillingDirectorSales Manager, Ziehl-Abegg, Kuenzelsau1967-1980. VP Sales & Marketing ebm,Mulfingen 1980-2002Holding: 10,500 sharesBorn:1938Year elected: 2008Independent: YesElisabeth WestbergDirectorDirector of Jämtkraft AB, Scandem AB andAB Fr RamströmEducation: B. A.Formerly: Vice President HandelsbankenCapital Markets etc.Holding: 21,357 sharesBorn: 1948Year elected: 2006Independent: YesHannu PaitulaDirectorChairman of WinGroup AG, Switzerland;Director, Oras Ltd, Finland, Kährs Holding AB,Sweden, and Karelia-Upofloor Oy, Finland.Education: EngineerHolding: -Born: 1948Year elected: 2011Independent: YesKevin RowlandEmployee RepresentativeEducation: B. A. History, La Salle Univ.,Philadelphia, USA; Personnel Management,Org. Development, University of GothenburgPresent position: Operations Manager/ITHolding: 500 sharesBorn: 1954Year elected: 2002Åke HenningssonEmployee RepresentativePresent position: Industrial electricianHolding: -Born: 1957Year elected: 2010<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 59


Corporate GovernanceGroup ManagementGerald EngströmChief Executive Officer, DirectorDirector of Lindab AB, Chairman of BluefishPharmaceuticals ABEducation: Upper secondary schoolqualification in Engineering, Business Studiesat Stockholm UniversityFormerly: CEO, Ziehl-ebm AB etc.Holding: 21,997,752 shares(owned by Färna Invest)Born: 1948In current position since: 1986Svein NilsenVice President Sales and MarketingEducation: B. Sc. Engineering with Heating,Ventilation & Sanitation, Norwegian Universityof Science and Technology (NTNU)Formerly: CEO, Pyrox Jolin, Trondheim, Norway(acquired 1988)Holding: 100,000 sharesBorn: 1947In current position since: 2000Glen NilssonChief Financial OfficerEducation: MSc, Business Administration,Uppsala UniversityFormerly: CFO, Transwede Airways AB;Head of Admin., ICA Detaljhandel ABHolding: 27,667 sharesBorn: 1952In current position since: 1999Mats LundVice President ProductionEducation: Computer Programming and ITstudiesFormerly: Head of IT Purchasing and Logistics,<strong>Systemair</strong>; computer programmer, ASEA.Holding: 103,000 sharesBorn: 1957In current position since: 2003Roland KasperVice President Marketing - ProductsEducation: Energy and Heating TechnologyEngineering Diploma, University of AppliedSciences Giessen-Friedberg, GermanyFormerly: Product Manager, FläktWoodsGroup and ABB Ventilation Products GmbHHolding: 1,000 sharesBorn: 1969In current position since: 2011Kurt MaurerMD <strong>Systemair</strong> GmbH, GermanyEducation: Heilbronn UniversityFormerly: Technical Director, LtiLüftungstechnik; Product Dvpt, Rosenberg;Product Dvpt, Ebm-papstHolding: 70,925 sharesBorn: 1959In current position since: 1998Anders UlffVice President, Finance and AdministrationEducation:M.Sc. Business Administration,Uppsala UniversityFormerly:Auditor and consultant,Ernst & Young; CFO, <strong>Systemair</strong>Holding:60,600 sharesBorn:1967In current position since:2009Jonas ValentinMD, Frico ABEducation:M.Sc. Engineering, ChalmersUniversity of TechnologyFormerly:Product and Key Account ManagerFrico AB; Project Man., Volvo and SaabHolding:85,000 sharesBorn:1958In current position since:200160 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Financial StatementsConsolidated Income StatementSEK m., 1 May–30 April Note <strong>2012</strong>/<strong>13</strong> 2011/12Net sales 3 4,551.0 3,996.9Cost of goods sold 4 -2,923.6 -2,505.2Gross profit 1,627.4 1,491.7Other operating income 7 61.5 55.9Selling expenses 4 -1,041.4 -961.6Administration expenses 4, 5 -226.1 -208.0Other operating expenses 8 -56.2 -58.2Operating profit 4, 6, 9, 10 365.2 319.8Financial income 11 1.2 2.7Financial expenses 12 -35.8 -25.9Profit after financial items 330.6 296.6Tax <strong>13</strong> -89.6 -81.1Profit for the year 241.0 215.5Attributable to:Parent Company shareholders 241.0 215.4Shareholdings without controlling influence 0.0 0.1Earnings per share 1 36 4.63 4.14Average no. of shares during period 1 52,000,000 52,000,0001At present, <strong>Systemair</strong> does not have any option programme in operation and so no dilution effect is to be taken into account.Consolidated Statement of Comprehensive IncomeSEK m., 1 May–30 April <strong>2012</strong>/<strong>13</strong> 2011/12Profit for the period 241.0 215.5Other comprehensive incomeTranslation differences, foreign operations -56.1 10.5Hedging of net assets in foreign operations, gross before tax -0.8 -5.6Tax on hedging of net assets in foreign operations 0.2 1.5Change in fair value of securities held for sale 57.7 -Disposal of securities held for sale - -Other comprehensive income, net after tax 1.0 6.4Total comprehensive income for the period 242.0 221.9Attributable to:Parent Company shareholders 242.0 221.9Shareholdings without controlling influence 0.0 0.0<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 61


Financial StatementsConsolidated Balance SheetSEK m., 30 April Note 30/04/20<strong>13</strong> 30/04/<strong>2012</strong>ASSETSNon-current assetsIntangible assets 3, 14Goodwill 457.7 367.3Brands, customer relationships etc. 163.6 118.1Other intangible assets 8.1 8.1629.4 493.5Property, plant and equipment 3, 14Buildings and land 530.3 553.5Plant and machinery <strong>13</strong>4.3 154.0Equipment and tools 82.8 74.5Construction in progress 66.0 10.08<strong>13</strong>.4 792.0Financial and other assetsOther securities held as non-current assets 15 464.7 0.4Deferred tax assets <strong>13</strong> 78.4 99.3Other non-current receivables 16 7.8 7.3550.9 107.0Total non-current assets 1,993.7 1,392.5Current assetsInventory 18Raw materials and consumables 310.9 282.5Products in progress 39.5 32.5Finished products 439.6 452.3790.0 767.3Current receivablesAccounts receivable – trade 19 875.7 764.5Other receivables 60.6 33.9Prepaid expenses and accrued income 17 49.1 43.4Miscellaneous short-term deposits 7.2 6.6992.6 848.4Cash and bank balances 98.4 91.6Total current assets 1,881.0 1,707.3TOTAL ASSETS 3,874.7 3,099.862 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Financial StatementsConsolidated Balance SheetSEK m., 30 April Note 30/04/20<strong>13</strong> 30/04/<strong>2012</strong>EQUITY AND LIABILITIESEquityShare capital 20 52.0 52.0Additional paid-in capital 2.2 2.2Other reserves -29.6 -30.6Profit brought forward, incl. profit for the year 1,551.4 1,375.4Equity attributable to Parent Company shareholders 1,576.0 1,399.0Shareholdings without controlling influence 0.0 0.1Total equity 1,576.0 1,399.1Non-current liabilitiesNon-current liabilities, interest-bearing 21 586.3 185.4Provisions for pensions 25 29.6 15.3Provisions for deferred tax liabilities <strong>13</strong> 75.5 80.6Other provisions 49.4 36.3Total non-current liabilities 740.8 317.6Current liabilitiesCurrent liabilities, interest-bearing 21 724.0 681.4Trade payables 410.4 354.5Income tax liability 61.0 54.0Other liabilities 160.1 116.0Accrued expenses and deferred income 22 202.4 177.2Total current liabilities 1,557.9 1,383.1Total liabilities 2,298.7 1,700.7TOTAL EQUITY AND LIABILITIES 3,874.7 3,099.8Pledged assets 32 263.4 347.2Contingent liabilities 33 80.4 30.0<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 63


Financial StatementsChanges in Equity – GroupAttributable to shareholders in Parent CompanySEK millionSharecapitalAdditionalpaid-incapitalHedgingreserveTranslationreserveFair valuereserveProfitbroughtforward,incl. profitfor the yearShareholdingswithoutcontrollinginfluenceTotalequityEquity, 30 April 2011 52.0 2.2 4.6 -41.6 0.0 1,250.9 0.1 1,268.2Dividends -91.0 -91.0Profit for the year 215.5 0.0 215.5Other comprehensiveincome -4.1 10.5 6.4Equity, 30 April <strong>2012</strong> 52.0 2.2 0.5 -31.1 0.0 1,375.4 0.1 1,399.1Dividends -65.0 -65.0Profit for the year 241.0 -0.1 240.9Other comprehensiveincome -0.6 -56.1 57.7 1.0Equity, 30 April 20<strong>13</strong> 52.0 2.2 -0.1 -87.2 57.7 1,551.4 0.0 1,576.064 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Financial StatementsConsolidated Cash Flow StatementSEK m., 1 May–30 April Note <strong>2012</strong>/<strong>13</strong> 2011/12Operating activitiesOperating profit 365.2 319.8Interest received 1.2 2.5Interest paid -28.7 -25.3Adjustment for non-cash items etc. 34 147.4 98.0Income tax paid -76.9 -57.5Cash flow from operating activities before changes in working capital 408.2 337.5Changes in working capitalInventory -3.0 -26.8Current receivables -57.5 54.7Trade payables -17.7 -96.3Current liabilities <strong>13</strong>.9 20.8Cash flow from operating activities 343.9 289.9Investing activitiesAcquisition of subsidiaries 30 -164.4 -172.5Acquisition of lossmaking companies - -11.7Acquisition of intangible assets -2.0 -5.1Acquisition of property, plant and equipment -123.9 -85.8Disposal of property, plant and equipment 4.4 9.4Acquisition of financial assets -406.6 -Sale of financial assets - 0.3Cash flow from investing activities -692.5 -265.4Financing activitiesBorrowings 618.0 221.0Amortisation of loans -188.5 -141.1Dividend to shareholders -65.0 -91.0Cash flow from financing activities 364.5 -11.1Increase/Decrease in cash and cash equivalents 15.9 <strong>13</strong>.4Cash and cash equivalents at start of year 91.6 76.8Exchange rate difference in cash and cash equivalents -9.1 1.4Cash and cash equivalents at year-end 98.4 91.6<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 65


Financial StatementsParent Company Income StatementSEK m., 1 May–30 April Note <strong>2012</strong>/<strong>13</strong> 2011/12Net sales 3 946.8 939.2Cost of goods sold -716.9 -701.5Gross profit 229.9 237.7Other operating income 7 47.7 31.8Selling expenses -165.3 -158.8Administration expenses 5, 6 -62.3 -59.9Other operating expenses 8 -15.5 -5.6Operating profit 9, 10 34.5 45.2Profit/loss from participations in Group companies 26 176.0 141.1Other interest income and similar profit/loss items 11 18.9 28.4Interest expense and similar profit/loss items 12 -46.7 -36.5Profit after financial items 182.7 178.2Appropriations 23 -20.7 -51.6Pre-tax profit 162.0 126.6Tax on profit for the year <strong>13</strong> -0.1 1.7Profit for the year 161.9 128.3Parent Company Statement of Comprehensive Income<strong>2012</strong>/<strong>13</strong> 2011/12Profit for the period 161.9 128.3Other comprehensive incomeTranslation effects of long-term loans to subsidiaries with no settlement planned -7.6 6.5Tax effect from translation of long-term loans to subsidiaries 2.0 -1.7Result of business combination -0.1 -Change in fair value of securities held for sale 57.7 -Other comprehensive income, net after tax 52.0 4.8Total comprehensive income for the period 2<strong>13</strong>.9 <strong>13</strong>3.166 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Financial StatementsParent Company Balance SheetSEK m., 30 April Note 30/04/20<strong>13</strong> 30/04/<strong>2012</strong>ASSETSNon-current assetsIntangible assets 14Licences and other intangible assets 4.8 5.64.8 5.6Property, plant and equipment 14Buildings and land 79.4 49.4Plant and machinery 34.1 41.7Equipment and tools <strong>13</strong>.5 8.7Construction in progress 2.9 6.9129.9 106.7Financial assetsParticipations in Group companies 27 1,471.9 1,030.1Receivables from Group companies 31 64.5 391.3Other securities held as non-current assets 15 464.3 -Deferred tax assets <strong>13</strong> 0.2 -Other non-current receivables 16 3.8 3.82,004.7 1,425.2Total non-current assets 2,<strong>13</strong>9.4 1,537.5Current assetsInventoryRaw materials and consumables 52.2 48.1Products in progress 4.5 4.5Finished products 71.1 69.8127.8 122.4Current receivablesAccounts receivable – trade 19 55.4 49.1Receivables from Group companies 490.9 536.9Taxes recoverable 10.9 -Other receivables 1.2 2.4Prepaid expenses and accrued income 17 <strong>13</strong>.4 12.5571.8 600.9Cash and bank balances - -Total current assets 699.6 723.3Total assets 2,839.0 2,260.8<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 67


Financial StatementsParent Company Balance SheetSEK m., 30 April Note 30/04/20<strong>13</strong> 30/04/<strong>2012</strong>EQUITY AND LIABILITIESEquityRestricted equityShare capital 20 52.0 52.0Statutory reserve 10.0 10.062.0 62.0Non-restricted equityShare premium reserve 35.2 35.2Fair value reserve 47.9 -4.1Profit brought forward 585.4 522.1Profit for the year 161.9 128.3830.4 681.5Total equity 892.4 743.5Untaxed reserves 24 63.3 92.7Provisions 2.8 1.4Non-current liabilitiesLiabilities to credit institutions 21 446.3 68.7Deferred tax liability <strong>13</strong> 0.2 0.1Liabilities to Group companies 296.8 502.5743.3 571.3Current liabilitiesBank overdraft facilities 21 547.2 555.1Liabilities to credit institutions 21 117.4 82.1Trade payables 57.9 71.7Income tax liability - 1.8Liabilities to Group companies 353.5 79.8Other liabilities 12.3 15.9Accrued expenses and deferred income 22 48.9 45.51,<strong>13</strong>7.2 851.9Total equity and liabilities 2,839.0 2,260.8Pledged assets 32 550.1 225.1Contingent liabilities 33 247.8 151.568 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Financial StatementsChanges in Equity – Parent CompanyUnrestricted equitySEK millionShare capitalStatutoryreserveSharepremiumreserveFair valuereserveProfitbroughtforward,incl. profitfor the yearTotal equityEquity, 30 April 2011 52.0 10.0 35.2 -8.9 6<strong>13</strong>.1 701.4Dividend -91.0 -91.0Profit for the year 128.3 128.3Other comprehensive income 4.8 4.8Equity, 30 April <strong>2012</strong> 52.0 10.0 35.2 -4.1 650.4 743.5Dividend -65.0 -65.0Profit for the year 161.9 161.9Other comprehensive income 52.1 -0.1 52.0Equity, 30 April 20<strong>13</strong> 52.0 10.0 35.2 48.0 747.2 892.4<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 69


Financial StatementsParent Company Cash Flow StatementSEK m., 1 May–30 April Note <strong>2012</strong>/<strong>13</strong> 2011/12Operating activitiesOperating profit 34.5 45.2Interest received 18.8 28.4Interest paid -30.4 -26.5Adjustment for non-cash items etc. 34 18.3 14.7Income tax paid -16.5 14.3Cash flow from operating activities before changes in working capital 24.7 76.1Changes in working capitalInventory -5.4 5.4Current receivables 320.9 <strong>13</strong>.6Trade payables -29.0 -20.0Current liabilities -0.9 0.1Cash flow from operating activities 310.4 75.2Investing activitiesAcquisition of property, plant and equipment, net -6.6 -16.3Acquisitions/capital injections in subsidiaries -153.0 -374.3Dividends on shares in subsidiaries 176.0 207.3Group contributions paid -50.2 -57.0Investments in intangible assets -1.8 -5.1Acquisition of financial assets -406.6 -Cash flow from investing activities -442.2 -245.4Financing activitiesDividend to shareholders -65.0 -91.0Borrowings 494.0 364.1Amortisation of loans -297.1 -102.9Cash flow from financing activities <strong>13</strong>1.9 170.2Increase/Decrease in cash and cash equivalents 0.0 0.0Cash and cash equivalents at start of year - -Cash and cash equivalents at year-end - -70 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesNotes to the Accounts – ContentsNotePage1 Accounting and valuation policies 722 Risks and risk management 743 Information on geographical regions 764 Classification according to type of cost 775 Auditor’s fees 776 Leases 777 Other operating income 778 Other operating expenses 779 Employees and staff costs 7810 Amortisation of intangible non-current assets and depreciationof property, plant and equipment 7911 Financial income 7912 Financial expenses 79<strong>13</strong> Tax on profit for the year 8014 Intangible non-current assets and property, plant and equipment 8115 Other securities held as non-current assets 8216 Other non-current receivables 8217 Prepaid expenses and accrued income 8218 Inventory 8319 Accounts receivable – trade 8320 Share capital and proposed dividend 8321 Borrowing and financial instruments 8422 Accrued expenses and deferred income 8623 Appropriations, other 8624 Untaxed reserves 8625 Provisions for pensions 8626 Profit/loss from participations in Group companies 8727 Participations in Group companies 8728 Integration of wholly owned subsidiary 8829 Non-recurring items 8830 Changes in Group structure – business combinations 8931 Receivables from Group companies 8932 Pledged assets 8933 Contingent liabilities 8934 Supplementary information regarding the cash flow statement 9035 Information on the Parent Company 9036 Earnings per share 9037 Related party transactions 9038 Significant events after financial year-end 90<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 71


NotesNotesNote 1 Accounting and valuation policies<strong>Systemair</strong> AB’s consolidated accounts for the year ended 30 April 20<strong>13</strong> wereapproved by the Board of Directors and the President on 5 July 20<strong>13</strong> for publicationand will be submitted for adoption to the 20<strong>13</strong> <strong>Annual</strong> General Meeting. TheParent Company is a Swedish limited liability company with its registered office inSkinnskatteberg, Sweden.Basis of preparation<strong>Systemair</strong>’s consolidated accounts are based on historical cost, with the exceptionof Financial derivative instruments and Financial assets available for sale. Thelatter assets and liabilities are recognised at fair value. Unless otherwise indicated,all amounts are in millions of Swedish kronor (SEK million). "Income statement"refers either to the Consolidated Income Statement or the Parent Company IncomeStatement.Amended and new accounting policies for the yearIn <strong>2012</strong>/<strong>13</strong>, no new standards entered into force that affected the Group to anymajor extent.Future amendments to accounting policies<strong>Systemair</strong> has not elected for early adoption of any new standards, amendmentsof standards or interpretations that enter into force with effect from 1 May 20<strong>13</strong>or later. The Company has not started applying the following new standards andamendments.IAS 1. Presentation of Items of Other Comprehensive Income – amendment(Approved by the EU in June <strong>2012</strong>)IAS 1 is to be applied for financial years beginning on or after 1 July <strong>2012</strong>. Underthis amendment, transactions accounted for within other comprehensive incomeare to be classified differently. Items that are to be reclassified to profit or lossare to be accounted for separately from those that are not reclassified to profitor loss. The proposed amendment does not alter the actual content of othercomprehensive income, only the way it is presented.IFRS 9 Financial Instruments: Recognition and Measurement(not yet approved by the EU and no timetable for approval is currently in place.)This standard is part of a comprehensive overhaul of the current standard, IAS 39. Thestandard represents a reduction of the number of valuation categories for financialassets, and requires the main categories for <strong>report</strong>ing of financial assets and liabilitiesto be <strong>report</strong>ed at cost (amortised cost) and fair value through profit or loss. Certaininvestments in equity instruments may be recognised at fair value on the balancesheet with any change in value being recognised directly in other comprehensiveincome, and not transferred to profit or loss for the period, on disposal. Furthermore,new rules have been introduced on how changes in a company’s own credit spreadare to be presented when liabilities are recognised at fair value.The standard will be supplemented by rules on impairment losses and hedgeaccounting.IFRS 10 Consolidated Financial Statements: this standard replaces IAS 27 and SIC-12Consolidation – Special Purpose Entities, and describes a model for judging whethera controlling interest exists or not. A company or investment shall be included inconsolidated financial statements if a controlling interest exists, based on a conceptof control. The standard entered into force on 1 January 20<strong>13</strong>, but companies in theEU are allowed to defer application of the standard until a financial year startingafter 1 January 2014, and <strong>Systemair</strong> will opt for this alternative. The standard is notdeemed to affect <strong>Systemair</strong>’s financial statements to any material extent.IFRS 12 Disclosure of Interests in Other Entities – lays down new disclosurerequirements for all types of holding in other companies, irrespective of whether theholding is consolidated or not. The standard entered into force on 1 January 20<strong>13</strong>, butcompanies in the EU are allowed to defer application of the standard until a financialyear starting after 1 January 2014, and <strong>Systemair</strong> will opt for this alternative.IAS 19 Employee Benefits - AmendmentsIAS 19 is to be applied for financial years beginning on or after 1 July 20<strong>13</strong>.The amendments introduce major changes in accounting for defined-benefitpension plans. For example, the option of deferring actuarial gains and losses in the"corridor" approach is eliminated; these are to be recognised immediately withinother comprehensive income. Any items relating to the earning of defined-benefitpension, as well as gains and losses arising on settlement of a pension liability areto be recognised via the income statement, together with the financial net of thedefined-benefit plan. Sensitivity analyses are to be drawn up to reflect reasonablyanticipated changes in all assumptions made during calculation of the pensionliability. <strong>Systemair</strong> will implement the amendments to IAS 19 as of the financialyear starting on 1 May 20<strong>13</strong>. In <strong>2012</strong>/<strong>13</strong>, the amendments would have increasedthe pension liability by approximately SEK 7.7 million net and would have reducedequity by around SEK 5.6 million (after deduction of a deferred tax liability)Statement of compliance with applicable regulationsThe consolidated accounts were prepared in compliance with InternationalFinancial Reporting Standards (IFRS) as adopted for use in the European Union.Further, the consolidated accounts were prepared in compliance with Swedish law,by application of Recommendation RFR 1 (Supplementary Accounting Rules forGroups) of the Swedish Financial Accounting Standards Council. In preparing thefinancial <strong>report</strong>s for the Parent Company, the Council’s Recommendation RFR 2(Accounting for Legal Entities) has been applied.Consolidated accountsBasis of consolidationThe consolidated accounts comprise the Parent Company and its subsidiaries.The financial <strong>report</strong>s for the Parent Company and the subsidiaries included inthe consolidated accounts refer to the same period and have been prepared inaccordance with the accounting policies applied to the Group.All intra-Group receivables and liabilities, revenues and costs, profits and lossesarising in transactions between companies included in the consolidated accountsare eliminated in their entirety.A subsidiary is included in the consolidated financial statements from the dateof acquisition, that is, the date on which the Parent Company gains a controllinginfluence over the company, and is included in the consolidated accounts until thedate on which the controlling influence ceases. Normally, controlling influence overa subsidiary is obtained by owning more than 50% of shares entitled to vote but itmay be obtained by other means, such as an agreement.Subsidiaries acquired are <strong>report</strong>ed in the consolidated accounts based onacquisition accounting. The same applies to businesses acquired directly. Using thismethod, the historical cost of the shares, or of the directly acquired business, isapportioned over the assets acquired and undertakings and liabilities assumed atthe time of acquisition based on their fair value at that time. If the historical costexceeds the fair value of the net assets of the company acquired, the differenceis recognised as goodwill. If the historical cost is less than the fair value of the netassets of the company acquired, the difference is recognised directly in the incomestatement.The non-controlling interest is that share of profits and net assets in a partlyowned company that accrues to other owners. The non-controlling interest in profitis included in the profit after tax <strong>report</strong>ed in the consolidated income statement.The non-controlling interest in net assets is included in equity on the consolidatedbalance sheet but is recognised separately from equity attributable to theshareholders in the Parent Company.Investments in associated companiesAn associated company is an entity in which the Group exercises a significantinfluence but which is not a joint venture. A significant influence normally existsif the shareholding represents 20%–50% of the votes. Holdings in associatedcompanies are recognised based on the equity method. In this method, thecarrying amount of the Group’s shares in associated companies corresponds to theGroup’s participation in the equity of the associated companies plus goodwill onconsolidation and any other remaining value adjustments at the time of acquisition.Goodwill and other value adjustments at acquisition are calculated in the sameway as in business combinations, as described above. In the Consolidated IncomeStatement, the Group’s share of associated companies’ stated profit after tax,adjusted where appropriate for any depreciation, amortisation, impairment lossesor reversals of value adjustments, is <strong>report</strong>ed under Participations in associatedcompanies’ profits. Dividends received from an associated company reducethe carrying amount of the investment. Holdings in associated companies arerecognised on the Parent Company Balance Sheet based on the cost method.Translation of accounts of foreign operationsA foreign operation is one that is conducted in an economic environmentwith a functional currency other than the Group’s <strong>report</strong>ing currency (SEK).Assets, including goodwill and other surplus values, as well as liabilities in suchoperations are translated into the <strong>report</strong>ing currency at the closing day rate.The income statements of foreign operations are translated using a weightedaverage of exchange rates for the year. Any exchange rate differences resultingfrom translation are recognised directly in equity. Upon the divestment of anindependent foreign operation, the accumulated exchange rate differences arerecognised in the income statement together with the capital gain or loss.Translation of receivables and liabilities denominated in foreign currenciesTransactions in foreign currency are valued at transaction date exchange rates. Onthe balance sheet date, monetary receivables and liabilities denominated in foreigncurrencies are translated at the rate on that date. All exchange rate differences arecharged to the income statement except for those differences arising in loans inforeign currencies that are raised to hedge net investments in foreign operations,or those arising in claims on subsidiaries that are not planned to be settled or areunlikely to be settled in the foreseeable future. Exchange rate differences in suchloans or claims are recognised in other comprehensive income, under the headingsHedging of net assets in foreign operations and Translation differences, and aretransferred to the income statement in the event of any future divestment of the72 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Notesforeign operation. Effective 1 November 2008, the Group chose to recognise theassets in Koolclima-<strong>Systemair</strong> in Spain and in Imos in Slovakia net after hedging withloans in EUR. Hedging reduces the effects of foreign exchange rate fluctuations inthe income statement and, in the past financial year, resulted in a foreign exchangeloss of SEK -0.6 million (-4.1), recognised directly in equity net after tax. At the sametime, several loans to subsidiaries were reclassified as net investments in foreignoperations. During the year, foreign exchange losses of SEK -5.6 million (4.8) wererecognised directly in equity, net after tax.Net salesNet sales are recognised at the fair value of the consideration received or theconsideration that will be received for goods and services sold in the regularoperations of the Group. Revenue is recognised once delivery has been madeto the customer in accordance with the terms of sale. Net sales are recognisedexcluding value-added tax and net of discounts. <strong>Systemair</strong>’s net sales consistpredominantly of sales of ventilation and heating products and, to a minor extent,service such as installation, service and design.Segment <strong>report</strong>ing<strong>Systemair</strong>’s top executive decision-makers govern and manage the Company’soperations in the form of legal corporations. The number of legal corporationswithin <strong>Systemair</strong> is about 60 and so the Group, as required by the FRS 8 standard,has the same number of segments. Because the presentation of 60 segmentswould entail excessively detailed information, the standard proposes aggregatingthese at a suitable level if there are similar economic characteristics and thesegments resemble one another. <strong>Systemair</strong> cannot see how such an aggregation,into 10 segments or less, could be done so that the information was meaningful.<strong>Systemair</strong> has therefore chosen to aggregate all segments into a main segmentdesignated Ventilation.Property, plant, equipment and intangible assets with a limited useful lifeProperty, plant, equipment and intangible assets are recognised at historical cost,less accumulated depreciation/amortisation and any impairment losses. Depreciation/Amortisation is charged on a straight-line basis over the useful life of the asset, to anestimated residual value. Land and goodwill are not depreciated or amortised.The following depreciation/amortisation periods are applied.Brands, customer relationships etc.BuildingsPlant and machineryEquipment and tools5-10 years25-50 years3-7 years3-5 yearsResearch and developmentDevelopment expenditure is recognised as an intangible asset, but only if thefollowing criteria are satisfied. The development project must be well defined andinclude concrete plans as to how and when the asset will be used in operations;it must be possible to calculate expenses reliably; the asset must be consideredlikely to create future economic benefits; the project must be considered technicallyfeasible; and the Group must be deemed to have the resources required toconclude development. The historical cost of the intangible asset includes not onlythe cost of personnel and direct purchases but also the share of indirect costsattributable to the asset. Other development expenditure is expensed as incurred.As of the balance sheet date, there were no development projects judged to meetthe above criteria.Impairment of assetsRegular tests are made during the year to establish whether any assets havedeclined in value. In such tests, the recoverable amount of the asset is calculated.In the case of goodwill and other intangible assets with an indeterminate usefullife, as well as intangible assets not yet ready for use, the recoverable amount iscalculated annually.If essentially independent cash flows cannot be determined for a particularasset, the impairment test assets shall be grouped in cash-generating units, thatis, at the lowest level where essentially independent cash flows can be identified.An impairment loss is recognised when the carrying amount of an asset or cashgeneratingunit exceeds its recoverable amount. Impairment losses are charged tothe income statement.An impairment loss on an asset attributable to a cash-generating unit is chargedfirst to goodwill. The loss is then applied proportionately to other assets in the unit.Calculation of the recoverable amountThe recoverable amount is the higher of an asset’s net realisable value or value in use.The value in use is the present value of future cash flows discounted at a rate basedon the risk-free interest rate adjusted to reflect the risk associated with that particularasset. In the case of an asset that does not generate cash flows; the recoverableamount is calculated for the cash-generating unit in which the asset is included.Reversal of impairment lossesImpairment losses are reversed if a subsequent increase in the recoverable amountis objectively attributable to an event that has occurred following recognition of theimpairment loss.Impairment losses on goodwill are not reversed.An impairment loss is reversed only to the extent that the asset’s carryingamount after the reversal does not exceed the carrying amount that the assetwould have had if no impairment had been recognised.InventoryInventory is measured at the lower of historical cost and net realisable valuefor raw materials and purchased finished products, and at production cost forgoods produced. Net realisable value is the estimated selling price in normalcircumstances, less the costs required to conduct the sale. Historical cost isbased on the current purchase price. Deductions for obsolescence are made asrequired. Deliveries between Group companies are priced in line with the market.Inter-company gains on the inventory of Group companies are eliminated in theconsolidated accounts. These eliminations are charged to operating profit.Financial assetsFinancial assets are classified in categories determined by the intention behind theacquisition of each particular asset. The classification is determined at the time ofacquisition. A financial asset is taken off the balance sheet when the contractualrights to the cash flow cease.Financial assets measured at fair value through the income statementIn <strong>Systemair</strong>’s balance sheet, this category contains derivative instruments notclassified as hedging instruments. The assets are measured at fair value, andchanges in value are recognised in the income statement.Loan receivables and Accounts receivable – tradeLoan receivables and trade accounts receivable are financial assets with fixedpayments or payments for which the amounts can be determined. Thesereceivables are associated with the Group’s deliveries of goods and services andare measured at historical cost. They are recognised in the amount expected tobe received, less doubtful receivables based on individual assessment. Within theGroup, the general rule is that 50% provision should be made for receivables 180–360 days overdue, and 100% for those more than 360 days overdue. However,credit insurance and the like are to be taken into account. Loan receivables andtrade accounts receivable are anticipated to be of short duration and thus aremeasured at their nominal amounts, undiscounted.Investments held to maturityInvestments held to maturity are financial assets that are not derivatives with fixedpayments or payments that may be fixed, are of a fixed duration and that will beheld until maturity. They are recognised at amortised cost.Financial assets available for saleInvestments available for sale are financial assets that have either been assignedto this category or not been classified in any of the other categories. They areincluded in non-current assets if management does not intend to dispose of theassets within 12 months from the balance sheet date. Financial assets available forsale are stated at fair value after the date of acquisition. Unrealised gains and lossesresulting from changes in the fair value of non-monetary instruments classified asassets are recognised in other comprehensive income. When instruments that areclassified as assets available for sale are divested or impaired, the accumulatedadjustments to fair value are recognised in the income statement.Financial liabilitiesFinancial liabilities measured at fair value through the income statementIn <strong>Systemair</strong>’s balance sheet, this category contains derivative instruments not classifiedas hedging instruments. The fair value of these liabilities is measured on anongoing basis, with changes in value being recognised in the income statemenOther financial liabilitiesThis category includes interest-bearing and non-interest-bearing financial liabilitiesnot held for trading. They are measured at amortised cost.Non-current liabilities have more than one year to maturity, while liabilities maturingbefore that are recognised as current liabilities. Trade accounts payable have a shortanticipated maturity and are thereby measured at their nominal amount, undiscounted.ProvisionsProvisions are recognised on the balance sheet when the Group has an obligation(legal or constructive) as a result of a past event and it is probable that an outflowof resources associated with economic benefits will be required to settle theobligation, and the amount can be estimated reliably. If the Group anticipatesreceiving compensation corresponding to a provision that has been made, forexample through an insurance agreement, the compensation is recognised as anasset in the balance sheet only when it is almost certain that the compensation will<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 73


Notesbe received. If the effect of the time value of the future payment is deemed to bematerial, the value of the provision is determined by estimating the present valueof the expected future payment using a discount factor (before tax) that reflectsthe market’s current valuation of the time value and any risks associated with theobligation. The gradual increase in the amount of the provision resulting from thismethod is recognised as an interest expense in the income statement.Employee benefitsPensions and similar post-employment benefit obligations<strong>Systemair</strong> operates several different post-employment benefit plans. These areclassified as either defined-benefit or defined-contribution plans. A definedbenefitpension plan is one that specifies an amount for the pension benefit thatan employee will receive on retirement. A defined-contribution pension planis one in which the Group pays fixed contributions to a separate legal entity.Defined-contribution plans are recognised as a cost in the period during whichthe employees perform the service to which the remuneration refers. Definedbenefitplans are measured separately for each plan based on the benefitsearned during prior and current periods. The liability recognised as Provisions forpensions, defined-benefit pension plans, is the present value of the defined-benefitobligation at the balance sheet date, less the fair value of plan assets, adjusted forunrecognised actuarial gains and losses.The Group’s obligations with regard to other defined-benefit pension plansare calculated separately for each plan using the Projected Unit Credit Method. Inthis method, the obligation is calculated as the present value of estimated futurepension payments. The obligation thus estimated is compared to the fair value ofthe plan assets that secure the obligation. Any difference is recognised as a liability/asset taking into account actuarial gains and losses, as accrued. The estimation offuture payments is based on actuarial assumptions including assumptions as to lifeexpectancy, future salary increases, personnel turnover and factors relevant to theselection of discount rate.Any changes to or deviations from the actuarial assumptions normally lead toactuarial gains or losses.Actuarial gains or losses are not recognised as long as the accumulated gainsor losses are less than 10% of the highest present value of the obligations. Ifthe accumulated gain or loss exceeds the said limit, the excess gain or loss willbe recognised in the income statement, distributed over the expected averageremaining periods of service of the employees participating in the plans.If the calculation results in an asset for the Group, the carrying amount of theasset is limited to the net of unrecognised actuarial losses and unrecognised costsof service from previous periods, and the present value of future refunds from theplan or future reduced contributions to the plan.Share-based remunerationNo agreements on share-based remuneration exist within the Group.LeasesAt <strong>Systemair</strong>, leases are generally only used to a limited extent, and as a rule solelyin connection with company cars and rental agreements. Leasing contracts in whichall risks and benefits associated with ownership essentially do not accrue to theGroup are classified as operating leases. Fees for such contracts are recognisedas costs in the income statement on a straight-line basis for the duration of thecontract. <strong>Systemair</strong> classifies all current leasing contracts as operating leases.Borrowing costsBorrowing costs are charged to income in the period to which they relate. Costs incurredin raising loans are distributed over the life of the loan, based on the liability recognised.Income taxIncome tax consists of current tax and deferred tax. Income taxes are recognisedin the income statement when referring to income statement items anddirectly in equity when the underlying transaction is recognised directly in othercomprehensive income.Current tax is tax to be paid or recovered for the current year, based on the taxrates enacted, or substantively enacted, by the balance sheet date. This includesany adjustments in current tax attributable to prior periods.Deferred tax is recognised in accordance with the balance sheet method, i.e. iscalculated for all temporary differences between the taxable values of assets andliabilities and their carrying amounts, identified at the balance sheet date. Deferredtax assets are also recognised in the balance sheet for unused loss carry-forwards.However, a deferred tax liability is not recognised in the balance sheet fortaxable temporary differences relating to goodwill. Deferred tax is also notrecognised if the temporary difference pertains to investments in subsidiaries orassociated companies in which the Group has a controlling influence over when atemporary difference will be reversed and it is likely that the temporary differencewill not be reversed in the foreseeable future.Deferred tax assets are recognised only to the extent that it is probable thatfuture taxable profits will be available against which the temporary differences orunutilised loss carry forwards can be applied. The carrying amounts of deferred taxassets are tested at each balance sheet date and are reduced to the extent that it isno longer probable that sufficient taxable profit will be available to allow all or partof the deferred tax assets to be utilized.Deferred tax assets and tax liabilities are calculated using the tax rates thatare expected to apply in the period when the assets are realized or the liabilitiessettled, based on the tax rate (and tax legislation) in force, or substantively in force,at the balance sheet date. Deferred tax assets and tax liabilities are recognised netin the balance sheet provided that the tax will be paid in the net amount.In the Parent Company, untaxed reserves are recognised including deferredtax liabilities. In the consolidated accounts, untaxed reserves are divided into twocomponents: a deferred tax liability recognised as a provision, and a portion of equity.Statement of cash flowsThe cash flow statement presents incoming and outgoing payments. The indirectmethod is used for operating activities. In addition to cash and bank balances, cashand cash equivalents consist of current ready assets with an original maturity ofless than three months.Government subsidiesGovernment subsidies are recognised when there is reasonable assurance thatthe Company will meet the conditions attached to the grant and will receive thegrant. In the past, the Group has received three types of government subsidy:government grants, loans that may be cancelled and grants relating to assets.The Parent Company received an employment grant from the Swedish LabourMarket Board totalling SEK 0.1 million (0.2). The employment grant was offsetagainst salaries disbursed in the functions affected.In Lithuania, <strong>Systemair</strong> received government grants for investments inmachinery. The grants totalled SEK 0.3 million. The amount was offset against thetax expense this year and against the investment expense last year.In Canada, <strong>Systemair</strong> received government loans amounting to SEK 0.2 millionfor product development. Investment grants of SEK 0.4 million were also receivedfor investments in machinery.Material estimates and assumptionsThe preparation of financial <strong>report</strong>s requires complex estimates and assessmentsfor accounting purposes. Management also makes various judgements whenapplying the Group’s accounting policies. Estimates and assessments may affectthe income statement, balance sheet and supplementary disclosures provided inthe financial <strong>report</strong>s. The estimates and assumptions that could constitute a risk ofsignificant adjustments to the recognised amounts during the next financial yearare described below.Impairment testing of goodwillEvery year, Group Management tests goodwill for impairment in accordance withthe accounting policy described above. A number of estimates must be made forthis test. If an impairment is not to arise, goodwill must absorb a reduction in theassumed rate of growth or a rise of two percentage points in the assumed discountrate. For more detailed information on impairment testing of goodwill, see Note 14.Provisions for pensionsEstimates and assessments play a major role in measuring provisions for pensions.The present-value calculation of this item is based on actuarial assumptions.Estimates and assessments are evaluated continuously, on the basis of pastexperience and reasonable expectations for the future. In the case of pensionobligations, the present-value calculation is based on assumptions described in theaccompanying note.Deferred tax assets<strong>Systemair</strong> benefits from loss carry-forwards that have arisen mainly throughthe acquisition of companies that made losses on previous operations but havealso arisen in day-to-day operations, especially in start-ups. Group managementhas made assumptions and assessments as to the future earning capacity ofthese subsidiaries over the next three years and, on that basis, has assessed thepossibilities for offsetting future profits against these losses. If <strong>Systemair</strong>’s operationsdo not succeed in generating sufficient taxable surpluses in the future, the deferredtax assets stated in the Company’s accounts may be written down. Tax assets mayalso be written down if the tax authorities are of the opinion that the losses are nottax-deductible in whole or in part. If the Company cannot fully utilise the loss carryforwards,the Company’s earnings and financial position may be adversely affected.Note 2 Risks and risk management<strong>Systemair</strong>’s activities involve risks that may to varying extent adversely affect theGroup. Such risks may be divided into operating risks, including the market risk inthe cyclical construction industry and any change in the competition situation, andfinancial risks, notably currency exposure. Both operating and financial risks may inthe short and long term affect <strong>Systemair</strong>’s ability to achieve the goals establishedin the Company’s business plan. <strong>Systemair</strong> continuously updates the Group’s risk74 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Notessituation via a documented and systematic process at Board level that identifies,assesses, monitors and <strong>report</strong>s on risks. Priority is focused on the risks that arejudged to represent potentially the most negative effect, on the basis of theprobability that such will materialise and of conceivable impact on the business.The table below illustrates how changes in certain factors hypothetically affect<strong>Systemair</strong>’s <strong>2012</strong>/20<strong>13</strong> operating profit. The calculations below are hypotheticaland should not be interpreted as indicating that changes in certain factors are anymore or less likely or, if any change takes place, the extent of such change. Actualchanges and their effect may be greater or lesser than indicated in the table below.In addition, it is likely that actual changes will affect several items. Thus, caution iscalled for when interpreting the sensitivity analysis since changes in various itemsmay have a counteractive effect.Sensitivity analysis: Effects on operating profit in <strong>2012</strong>/<strong>13</strong>SEK millionOperating profit±5% in selling prices ±228±5% in material costs ±112±5% in selling andadministration expenses ±63±5% in the SEK/EUR exchange rate ±17±5% in the SEK/USD exchange rate 0The table shows that a change of ±5% in the SEK/EUR exchange rate would havean impact of approximately SEK 17 million (24) on operating profit for <strong>2012</strong>/<strong>13</strong>.This effect is largely offset by the net effects of exchange gains and losses onborrowing denominated in EUR.Operating risksCompetition<strong>Systemair</strong>’s markets are fragmented and exposed to competition; a large numberof small, local businesses and a small number of major international corporationsoperate in <strong>Systemair</strong>’s markets. Some of <strong>Systemair</strong>’s current or future competitorsmay have greater resources than <strong>Systemair</strong> and may use these resources to expandtheir market shares through aggressive pricing strategies. This could force <strong>Systemair</strong>to reduce its prices to remain competitive and not lose market shares. If <strong>Systemair</strong>is exposed to increased price competition or loses market shares, the Company’soperations, earnings and financial position may be adversely affected. The ventilationsector still consists largely of a number of minor, relatively local players. In theevent that a rapid international consolidation takes place in the ventilation sectorand <strong>Systemair</strong> is not part of this process, there is a risk of exclusion. <strong>Systemair</strong> hasaddressed this risk by establishing factories in low-cost countries such as India andLithuania, and by establishing new sales companies in new markets.Market risks<strong>Systemair</strong>’s products are used in new construction as well as in the renovation,conversion and extension ("RCE") sector. The construction industry normallyfollows a cyclical pattern, above all in new construction, while RCE projects oftenmoderate the cyclical effect. Developments in the industry are largely influencedby the state of the economy in general, which in turn is affected by interest rates,unemployment, inflation, political decisions, taxes, stock market trends and otherfactors. Changes in circumstances for the construction industry may be difficultto foresee, and a slowdown in the industry in <strong>Systemair</strong>’s markets could reducedemand for the Company’s products and/or lead to lower prices for the Company’sproducts, which could adversely affect <strong>Systemair</strong>’s operations, earnings andfinancial position. <strong>Systemair</strong>’s sales are also vulnerable to seasonal fluctuations,with sales mostly being lower during July and December.SuppliersZiehl-Abegg and ebmpapst, two German manufacturers of fan motors, are majorsuppliers to <strong>Systemair</strong>. Some of <strong>Systemair</strong>’s products have been developed inassociation with these suppliers, so to some extent <strong>Systemair</strong> depends on theability of these manufacturers to continue supplying motors to the Company.Thus, delivery problems at either of these suppliers could disrupt <strong>Systemair</strong>’sproduction and have a negative impact on <strong>Systemair</strong>’s operations, earnings andfinancial position. Another important component in <strong>Systemair</strong>’s products is steel,in the form of steel plate, so the Company’s operations are to a certain extentaffected by fluctuations in the price of steel and any disruptions in deliveries ofsteel. Historically, it has been possible to spread price increases among the variousoperators, but there is no guarantee that this will continue. If future price increasescannot be distributed among the operators in the market, <strong>Systemair</strong>’s operations,earnings and financial position may be adversely affected.Brands<strong>Systemair</strong>’s brands are vital to the Company’s operations. <strong>Systemair</strong>’s major brandsinclude <strong>Systemair</strong>, Frico and Fantech. The Group’s other less established brandsare VEAB, Matthew & Yates and Holland Heating. <strong>Systemair</strong> assesses the brandsituation on an ongoing basis and registers each brand in the countries in whichthey are used to any significant extent. However, the Company cannot guaranteethat these measures are sufficient to protect <strong>Systemair</strong>’s brands. Neither can<strong>Systemair</strong> guarantee that the Company’s competitors will not try to use its brandsin the marketing of their products or otherwise infringe its intellectual propertyrights. If the Company’s brands cannot be protected, for whatever reason, theCompany’s operations, earnings and financial position may be adversely affected.Production plant and distribution centres<strong>Systemair</strong>’s operations are dependent on its production plant and distributioncentres. If any of them is destroyed or closed or if the equipment at the plantsuffers serious damage, the production and distribution of <strong>Systemair</strong>’s productscould be disrupted or suspended for some time. An extensive and prolongedshutdown could have a huge impact on the Company’s ability to produce ordistribute the products affected. <strong>Systemair</strong> has contracted insurance againstproperty damage and stoppages for the amounts that the Company deemssufficient; however, there is no guarantee that the overall loss to the Companywould be indemnified in the event of any damage. As a result, damage toproduction or distribution facilities may adversely affect the Company’s operations,earnings and financial position.Business combinationsFor several years running, <strong>Systemair</strong> has completed a considerable numberof business combinations. The companies acquired have been integrated into<strong>Systemair</strong>’s other operations. Many of the companies acquired had operationaland financial problems, which required substantial input by <strong>Systemair</strong>, not least inthe form of management resources. <strong>Systemair</strong> maintains an ambition to expandthrough acquisition, and in the future more companies that complement oraugment the Company’s operations may be acquired. The acquisition of companiesmay involve many different operational and financial risks. Along with well orlesser-known company-specific risks, these risks include the possible departureof suppliers, customers or key personnel from the company acquired. In addition,the integration of companies acquired may turn out to be more costly or timeconsumingthan expected and the anticipated synergistic benefits may not beachieved as expected, or at all. These and other acquisition-related risks mayadversely affect the Company’s operations, earnings and financial position.IT infrastructure<strong>Systemair</strong> has a highly developed IT infrastructure, the core of which is its enterpriseresource planning (ERP) system. The ERP system is vital to <strong>Systemair</strong>’s abilityto deliver products to its customers at the time appointed and to manage tradeaccounts receivable and inventory levels. Problems in maintaining, upgrading andintegrating these systems may adversely affect the Company’s reputation among itscustomers, increase operating costs and reduce profitability. These systems are alsovulnerable to power outages, system errors, computer viruses and network faults.In the event of a breakdown in the IT infrastructure, the Company’s operations,earnings and financial position may be adversely affected.Product liability<strong>Systemair</strong>’s customers normally expect detailed performance data on theirventilation products. <strong>Systemair</strong> therefore provides detailed product specificationsin its marketing and sales activities and the Company conducts continuous tests inits own test facilities to ensure that its products meet their specifications. However,the possibility cannot be ruled out that a product the Company has sold may notlive up to its specifications, which may result in compensation claims against theCompany. Furthermore, the Company is subject to legal regulations on productliability that, in the event of personal injury or damage to property, may entitlethe injured party to compensation from the Company. The Company has takenout global product liability insurance that, in the Company’s view, is sufficient tocover any claim for damages. However, this cannot be guaranteed. If a claim forcompensation against the Company is upheld and the claim is not covered by theCompany’s insurance, the Company’s operations, earnings and financial positionmay be adversely affected.International business operationsVia subsidiaries or representative offices, <strong>Systemair</strong> conducts its own operationsin 44 countries, some of which are rapidly developing and transforming intomarket economies. As a result, the Company is exposed to risks associated withinternational business operations, such as trade policy decisions in the form of theintroduction or extension of excise duties in the Company’s markets, which couldsignificantly disrupt the Company’s business. Other risks include differences in theregulatory frameworks of different countries, limited legal protection for intellectualproperty rights in certain countries, different accounting standards and systems oftaxation, changing terms and conditions of payment between different countriesand the possibility of political instability. <strong>Systemair</strong> has substantial sales to Russia,for example, which is one of <strong>Systemair</strong>’s single largest export markets. Politicaltensions in the development of that society and uncertainty in its legal system,as well as uncertainty in trade policy, mean that conditions in the Russian marketcould change quickly and that <strong>Systemair</strong>’s assets in the country could become<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 75


Notesuncertain. Each of the abovementioned risks could adversely affect <strong>Systemair</strong>’soperations, earnings and financial position.Financial risks and other risksThe <strong>Systemair</strong> Group is exposed to financial risks through its internationaloperations and its borrowing. Financial risk arises when interest and exchangerates fluctuate, which causes variations in the Group’s cash flows, and when creditlines are to be renegotiated. Financial risk includes the risk of a counterpartyfailing to meet its obligations. The objective of risk management in the Group isto limit any possible adverse impact on the Group’s earnings and cash flow. Risk ismonitored and followed up on an ongoing basis by the Group treasury as well as atthe major subsidiaries.Foreign exchange risk – transaction exposureIn trading between Group companies and with suppliers and customers, atransaction risk arises if payment is made in a currency other than the localcurrency of the particular Group company. <strong>Systemair</strong>’s major internationaloperations represent substantial sales in various currencies and thus exposure toforeign exchange risk. This risk arises primarily vis-à-vis the EUR and USD and ispartly hedged as per <strong>Systemair</strong>’s foreign exchange policy. <strong>Systemair</strong> does not usehedge accounting.In <strong>2012</strong>/<strong>13</strong>, Group companies in Sweden invoiced 39% (39) of their business inSEK, 51% (51) in EUR, 5% (5) in NOK and 5% (5) in other currencies.Each year, an estimate is made of the future net inflow of EUR, 50% of which isusually hedged. Forward contracts extend for a maximum of 18 months ahead. Onthe balance sheet date, the Group had forward foreign exchange contracts in EUR.Foreign exchange risk – translation exposureTranslation exposure arises upon consolidation, when the assets and liabilities offoreign subsidiaries are translated to SEK. <strong>Systemair</strong> applies the current method, inwhich assets, liabilities and equity are translated at the exchange rates prevailingat the balance sheet date, while the income statements are translated at averagerates for the year. Any exchange differences resulting from the use of this methodare recognised directly in equity. <strong>Systemair</strong> has adopted the policy of hedging partof this translation exposure. This may result in exchange rate differences that affectthe Group’s equity.At the balance sheet date, the value of net foreign assets totalled SEK 982million (854). Major net assets consist of SEK 439 million (394) in EUR, SEK 107million (101) in NOK, SEK 105 million (102) in LTL, SEK 75 million (65) in DKK, SEK69 million (56) in CAD and SEK 65 million (66) in INR.The impact of foreign exchange on equity is recognised as a translationdifference and amounted to SEK -56.1 million (10.5).Borrowing and interest rate risk<strong>Systemair</strong> intends to continue to finance some portion of its operations byborrowing from credit institutions. Loan agreements include conditions consistingof standard restrictions (covenants). This borrowing represents certain risks to theCompany’s shareholders. For example, if major changes occur in the Company’smarkets, <strong>Systemair</strong> may have difficulty securing new credit facilities and as aresult may need to use a larger portion of its cash flow for interest payments andamortisation.Interest rate risk is the risk that changes in current interest rates will adverselyaffect the Group. <strong>Systemair</strong>, a net borrower, <strong>report</strong>s net indebtedness at year-endtotalling SEK 1,238.1 million (785.0), i.e. the Group was adversely affected byrising interest rates. Interest-bearing liabilities on the balance sheet date, translatedto Swedish kronor, totalled SEK 1,310.3 million (866.8). According to <strong>Systemair</strong>’sFinancial Policy, the fixed-interest period for <strong>2012</strong>/<strong>13</strong> is to be 3-12 months. Achange of ±1% in the interest rate on borrowing would have an impact of aboutSEK <strong>13</strong> million on the Group’s net financial items for the following 12-monthperiod.Credit and liquidity riskCredit risk is the risk that one of <strong>Systemair</strong>’s counterparties may be unable tomeet its payment obligations and thus may cause a loss for the Company. Acredit appraisal is made based on knowledge the Company’s management hasof the customer and, if necessary, with the aid of credit rating companies. Everycustomer also has a credit limit, which may only be exceeded subject to a newcredit appraisal. Liquidity risk is the risk that a lack of ready funds will preventthe Company from fulfilling its financial obligations or will reduce its capacity toconduct its operations in an effective manner. Liquidity is greatly affected by creditto customers and credit from suppliers. As <strong>Systemair</strong>’s operations have expandedin new markets with different payment customs, credit periods have lengthenedsomewhat. This has increased the cost of tied-up capital as well as the risk ofcredit losses and consequently the risk of negative effects on the Company’s readycash and earnings.Share price riskOn the balance sheet date <strong>Systemair</strong> had Other securities held as non-currentassets, consisting of shares in Lindab listed on the OMX Nordic Exchange. Theshares are designated as a financial asset available for sale. The shares weremeasured at fair value, any adjustments being recognised in other comprehensiveincome, and are therefore exposed to share price risk. If the value of the Lindabshares were to fall by 10%, this would affect other comprehensive income in theamount of SEK 46 million. Any sale of the shares would affect consolidated profitin the same amount.Note 3 Information on geographical regionsThe Group’s operations are geographically divided mainly into the Nordic region,Western Europe (excluding the Nordic region), Eastern Europe and CIS, NorthAmerica and Other markets.Region Nordic comprises Denmark, Finland, Iceland, Norway, Sweden and Åland.Region Western Europe includes Austria, Belgium, Cyprus, the Faeroes, France,Germany, Greece, Ireland, Italy, Liechtenstein, Luxembourg, Malta, Netherlands,Portugal, Spain, Switzerland and the United Kingdom.Region Eastern Europe including CIS consists of Albania, Armenia, Azerbaijan,Belarus, Bosnia & Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia,Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldavia,Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkmenistan,Ukraine and Uzbekistan.North America consists of the United States and Canada.Other markets includes Afghanistan, Angola, Australia, Bahrain, Bangladesh,Barbados, Bolivia, Botswana, Brazil, Brunei, Chile, China, Costa Rica, Egypt,Ethiopia, Guatemala, India, Indonesia, Iran, Iraq, Israel, Ivory Coast, Japan,Jordan, Kenya, Kuwait, Lebanon, Libya, Malaysia, Mauritius, Mexico, Mongolia,Morocco, Mozambique, Namibia, New Zealand, Nigeria, Oman, Pakistan, Peru, thePhilippines, Puerto Rico, Qatar, Saudi Arabia, Singapore, South Africa, South Korea,Sri Lanka, Surinam, Syria, Taiwan, Thailand, Tunisia, Turkey, Uganda, the United ArabEmirates, Uruguay, Vietnam, Zambia and Zimbabwe.Sales income is allocated to the geographical market where the customer islocated. Assets and investments are recognised where the asset is located.The table below shows external net sales in <strong>Systemair</strong>’s ten biggest marketsbased on the customer’s domicile. <strong>Systemair</strong>’s biggest customer accounts for1.9% of the Group’s total sales. <strong>Systemair</strong> thus has limited exposure to individualcustomers.Geographical breakdown Net sales Non-current assets *Group <strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Norway 536.0 518.8 50.9 52.3Sweden 362.7 373.1 196.8 217.9Denmark 154.9 156.6 75.0 82.7Rest of Nordic region 76.7 77.6 1.4 1.3Total Nordic region 1,<strong>13</strong>0.3 1,126.1 324.1 354.2Germany 3<strong>13</strong>.7 295.6 143.6 <strong>13</strong>8.6France 296.7 216.5 4.5 4.6United Kingdom 216.8 206.2 19.1 21.0Netherlands 193.1 190.4 <strong>13</strong>1.8 79.3Italy 143.9 115.5 74.6 84.4Rest of Western Europe 271.7 322.1 47.8 50.4Total Western Europe 1,435.9 1,346.3 421.4 378.3Russia 688.6 514.0 94.4 104.2Rest of Eastern Europe and CIS 456.1 437.2 195.7 199.6Total Eastern Europe and CIS 1,144.7 951.2 290.1 303.8USA 243.4 200.9 84.5 90.5Rest of North America 122.1 81.2 67.8 28.2Total North America 365.5 282.1 152.3 118.7Other markets 474.6 291.2 254.9 <strong>13</strong>0.54,551.0 3,996.9 1,442.8 1,285.5*Non-current assets refers to intangible assets and property, plant and equipment.76 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesOf sales by the Parent Company, sales to other Group companies accounted forSEK 585.7 million (569.6), and sales to related companies (ebmpapst AB)SEK 2.9 million (2.4).By geographical marketParent CompanyNet sales <strong>2012</strong>/<strong>13</strong> 2011/12Nordic region 429.4 424.9Western Europe 201.3 201.1Eastern Europe and CIS 301.5 298.5North America 6.6 5.9Other markets 8.0 8.8946.8 939.2Note 4 Classification according to type of costCost ofgoods soldSellingexpensesAdministrationexpensesTotal<strong>2012</strong>/<strong>13</strong>Material costs -2,239.4 - - -2,239.4Personnel expenses -454.2 -521.6 -<strong>13</strong>9.6 -1,115.4Depreciation/Amortisation costs -61.7 -41.1 -9.7 -112.5Other expenses -168.3 -478.7 -76.8 -723.8-2,923.6 -1,041.4 -226.1 -4,191.12011/12Material costs -1,930.6 - - -1,930.6Personnel expenses -385.8 -480.7 -125.9 -992.4Depreciation/Amortisation costs -52.4 -33.1 -9.1 -94.6Other expenses -<strong>13</strong>6.4 -447.8 -73.0 -657.2-2,505.2 -961.6 -208.0 -3,674.8Product development costs totalled approximately SEK 114 million in <strong>2012</strong>/<strong>13</strong> andSEK 68 million in 2011/12, the major share consisting of personnel costs in the costof goods sold category.Note 5 Auditor’s feesGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Auditing–Ernst & Young -3.9 -3.1 -0.8 -0.7–Other -2.1 -2.1 - --6.0 -5.2 -0.8 -0.7Note 6 LeasesGroupParent CompanyLeasing costs recognised <strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Operating leases 38.1 35.5 4.8 6.0Operating leases consist mainly of leases for office properties and company cars foremployees.The amounts for future lease fees under leases with more than one yearremaining are distributed as follows for the Group and the Parent Company.GroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Operating leases – nominal valuePayable within 1 year 31.6 31.6 3.8 7.3Payable in 2-5 years 76.2 57.7 4.6 2.0Payable after 5 years 6.1 39.0 - -1<strong>13</strong>.9 128.3 8.4 9.3The Group has no financial lease.Note 7 Other operating incomeGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Exchange gains in operations 28.9 27.3 10.0 10.9Intra-Group income - - 25.8 14.8Gain on sale of property,plant and equipment 2.6 6.7 - 5.5Other miscellaneous income 30.0 21.9 11.9 0.661.5 55.9 47.7 31.8Note 8 Other operating expensesGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Exchange rate losses in operations -37.6 -17.0 -5.5 -0.6Intra-Group expenses - - -8.7 -4.9Amortisation of goodwill - -18.7 - -Loss on sale of property,plant and equipment -0.9 -0.4 - -Other miscellaneous expenses -17.7 -22.1 -1.3 -0.1-56.2 -58.2 -15.5 -5.6Other auditing services outsidescope of audit assignment:–Ernst & Young -0.5 -0.6 - -0.3–Other -2.2 -0.5 - --2.7 -1.1 - -0.3<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 77


NotesNote 9 Employees and staff costsAveragenumber ofemployees<strong>2012</strong>/<strong>13</strong> 2011/12Of whom,menAveragenumber ofemployeesOf whom,menParent Company 421 280 399 255Subsidiaries in:Nordic region 433 357 414 345Sweden 142 110 141 111Denmark 151 <strong>13</strong>7 141 129Finland 14 10 11 8Norway 126 100 121 97Western Europe 781 598 635 481Belgium 6 4 5 3United Kingdom 86 69 90 66Greece 5 3 5 3France 43 35 41 32Netherlands 76 67 54 45Ireland 5 4 5 4Italy 201 145 93 65Portugal 28 17 28 17Switzerland <strong>13</strong> 10 <strong>13</strong> 11Spain 46 40 47 41Germany 255 193 238 182Austria 17 11 16 12Eastern Europe and CIS 776 501 700 442Bulgaria 5 3 6 3Estonia <strong>13</strong> 8 <strong>13</strong> 8Croatia 2 2Latvia 8 7 6 6Lithuania 153 90 <strong>13</strong>9 79Poland 37 31 34 28Romania 6 5 6 5Russia 251 143 206 112Serbia 8 5 8 4Slovakia 187 123 183 118Slovenia 70 60 69 57Czech Republic 23 16 23 16Ukraine 9 5 3 2Hungary 4 3 4 4North America 269 189 247 159Canada 171 1<strong>13</strong> 157 89USA 98 76 90 70Rest of World 715 648 444 410Australia 1 1 2 1Chile 5 4 3 2United Arab Emirates 12 10 14 12India 379 374 290 287China 4 3 4 3Malaysia 99 79 88 75Singapore 10 6 9 6South Africa 10 7 10 7Taiwan 2 2 2 2Turkey 190 159 22 15Qatar 3 33,395 2,573 2,839 2,092Percentage of women on boardsGroupParent Companyand in management<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Board, excluding employeerepresentatives - - 17% 17%Group Management - - - 11%Company management 7% 5% - -Salaries, other remuneration andsocial security expensesBoard and CEOSalaries andremunerationSocial securityexpenses<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Parent Company 3.9 3.8 1.6 1.6Subsidiaries in the Nordic region 8.4 8.5 2.9 2.6Western Europe 15.2 <strong>13</strong>.3 3.3 2.9Eastern Europe and CIS 8.4 7.9 1.8 1.5North America 2.4 2.3 0.4 0.3Rest of World 8.8 6.8 0.3 0.9Total, Board and CEO 47.1 42.6 10.3 9.8Senior executive remunerationrecognised during theyear<strong>2012</strong>/<strong>13</strong>Basicsalary/FeeVariablepayOtherbenefitsPensioncostTotalLars Hansson – Chairman 0.4 - - - 0.4Elisabeth Westberg 0.3 - - - 0.3Göran Robertsson 0.2 - - - 0.2Jürgen Zilling 0.2 - - - 0.2Hannu Paitula 0.2 - - - 0.2Gerald Engström, Presidentand CEO 2.4 0.2 - 0.4 3.0Other senior executives * 9.5 0.5 0.6 2.6 <strong>13</strong>.2Total <strong>13</strong>.2 0.7 0.6 3.0 17.52011/12Lars Hansson – Chairman 0.4 - - - 0.4Elisabeth Westberg 0.3 - - - 0.3Göran Robertsson 0.2 - - - 0.2Jürgen Zilling 0.2 - - - 0.2Hannu Paitula 0.2 - - - 0.2Gerald Engström, Presidentand CEO 2.4 0.2 - 0.4 3.0Other senior executives * 9.7 0.4 0.7 2.7 <strong>13</strong>.5Total <strong>13</strong>.4 0.6 0.7 3.1 17.8*During <strong>2012</strong>/<strong>13</strong>, Group Management consisted of seven persons in addition to the CEO.In April, it was announced that Pär Johansson had been appointed ManagingDirector of <strong>Systemair</strong> AB with responsibility for <strong>Systemair</strong>’s Swedish operations. PärJohansson took up his new position on 1 May 20<strong>13</strong> with a basic salary of SEK 1.2million.In <strong>2012</strong>/<strong>13</strong>, the Board fees were SEK 400 thousand (400) for the Chairman ofthe Board and SEK 200 thousand (200) for other directors. In addition to regularfees, separate fees may be paid for particular tasks. The fee paid to the chairmanof the audit committee in <strong>2012</strong>/<strong>13</strong> was SEK 50 thousand (50) for the chairmanand SEK 25 thousand (25) for other members.78 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesSalaries, other remunerationand social security expensesSalaries andremunerationSocial securityexpenses<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Other employeesParent Company 153.5 149.3 61.6 57.5Subsidiaries in the Nordic region 195.7 191.6 37.8 37.8Western Europe 246.1 202.7 64.9 51.8Eastern Europe and CIS 101.2 87.9 26.0 23.7North America 84.9 60.9 <strong>13</strong>.5 10.2Rest of World 45.6 24.7 6.0 4.1Total, other employees 827.0 717.1 209.8 185.1Of social security expenses in the Parent Company, pension expenses accountedfor SEK 14.1 million (11.7), including SEK 0.4 million (0.4) for the Board and CEO.In other Group companies, pension expenses totalled SEK 19.3 million (17.3),including SEK 1.8 million (1.7) for boards and CEOs.Remuneration policyThe Chairman and members of the Board receive remuneration in accordance withresolution of the <strong>Annual</strong> General Meeting. Fees totalling SEK 25 thousand (25) arepaid to employee representatives each year.Remuneration to the President is determined by the Board based on a proposalfrom the compensation committee, consisting of Lars Hansson, Elisabeth Westbergand Göran Robertsson. Remuneration to other senior executives is determined bythe Chief Executive Officer in consultation with the compensation committee.In addition to the President Gerald Engström (up to and including 30 April 20<strong>13</strong>),the other senior executives are Mats Lund, VP Production; Svein Nilsen, VP Salesand Marketing; Glen Nilsson, CFO; Anders Ulff, VP Finance and Administration; KurtMaurer, MD of <strong>Systemair</strong> in Germany; Jonas Valentin, MD of Frico AB; and RolandKasper, VP Marketing - Products. Taina Veittikoski, former VP Purchasing, left heremployment at <strong>Systemair</strong> on 30 March <strong>2012</strong>.Remuneration to the President and other senior executives consists of the basicsalary, variable pay, car benefit and pension. For the President and other seniorexecutives, variable pay may amount to between one and two extra monthlysalary payments. Variable pay normally is based on any improvement in anindividual’s area of responsibility compared to the preceding year, the consolidatedprofit after net financial items and the outcome of individual development plans.PensionsThe pensionable age for the President and other senior executives is 65 years. Forthe former President, defined-contribution pension insurance premiums totallingSEK 0.4 million (0.4) were paid. Pension benefits for the President-elect andother senior executives are paid within the scope of the contractual ITP plan andalternative ITP schemes.Severance payFor the Managing Director, Pär Johansson and other senior executives, the periodof notice is as stated in the applicable collective bargaining agreement or is nomore than 12 months from the Company or six months from the employee. Noother agreements entitle the President or other senior executives to severance pay.Agreements are in place with MDs of subsidiaries such that benefits will be paidfor 6-12 months upon termination of employment by the Company.Note 10Amortisation of intangible non-current assets anddepreciation of property, plant and equipmentGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Brands, customer relationships etc. 19.2 <strong>13</strong>.1 1.5 1.0Other intangible assets 3.5 1.7 1.1 1.0Buildings and land improvements 25.1 23.7 6.0 4.5Plant and machinery 39.2 36.0 11.2 10.9Equipment and tools 29.6 25.7 4.3 3.7116.6 100.2 24.1 21.1Straight-line depreciation/amortisation, by functionCost of goods sold 61.7 52.4 15.8 <strong>13</strong>.9Selling expenses 41.1 33.1 5.1 4.4Administration expenses 9.7 9.1 3.2 2.8Other operating expenses 4.1 5.6 - -116.6 100.2 24.1 21.1Note 11Financial incomeGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Interest income, external 1.2 2.5 0.2 0.7Interest income, related companies - - 18.7 27.7Other financial income - 0.2 - -1.2 2.7 18.9 28.4Note 12Financial expensesGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Interest expenses, external -30.7 -24.7 -23.3 -18.1Interest expenses,related companies - - -8.3 -8.7Net exchange rate changes infinancial instruments - -0.3 -4.3 -6.5Other financial expenses -5.1 -0.9 -10.8 -3.2-35.8 -25.9 -46.7 -36.5<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 79


NotesNote <strong>13</strong> Tax on profit for the yearGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Current tax -117.3 -107.7 -0.2 -0.8Deferred tax 27.7 26.6 0.1 2.5-89.6 -81.1 -0.1 1.7The Group’s tax expense represents 27.1% (27.4) of consolidated pre-tax profit.In November <strong>2012</strong>, Sweden’s Riksdagen (Parliament) voted to cut corporationtax from 26.3% to 22.0 % with effect from 1 January 20<strong>13</strong>. This reduced<strong>Systemair</strong>’s deferred tax liabilities and receivables attributable to Swedish units on30 April 20<strong>13</strong>. The change increased the net value of the Group’s deferred taxes ina total amount of SEK 3.6 million.At the financial year-end, the <strong>Systemair</strong> Group had deferred tax receivables totallingSEK 31.0 million (22.1) that were not included in the calculation of deferredtax assets. Deferred tax receivables are recognised provided that it is probable thatthe loss carry-forwards can be applied to future taxable surpluses based on assessmentsin each individual company. No time restrictions are applied to the losscarry-forwards that correspond to the deferred tax assets capitalised.GroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Pre-tax profit 330.6 296.6 162.0 128.3Tax at current tax rate for ParentCompany -87.0 -78.1 -42.6 -33.3Effect of foreign tax rates 5.1 0.3 - -Non-deductible expenses -8.1 -8.6 -3.4 -18.7Tax-exempt income 0.3 1.6 - -Net tax effect of non-capitalisedloss carry-forwards 1.5 -2.9 - -Adjusted assessment of futureutilisation of loss carry-forwards - -<strong>13</strong>.7 - -Deferred income tax recoverable,attributable to loss carry-forwardsnot capitalised at acquisition - 24.4 - -Dividends from subsidiaries - - 46.3 54.5Adjustment for previous years’taxes -1.0 -1.2 -0.2 -0.4Change in tax rate 3.6 - 0.0 -Miscellaneous -4.0 -2.9 -0.2 -0.4-89.6 -81.1 -0.1 1.7GroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Deferred tax receivablesProperty, plant and equipment 0.4 - - -Inventory 12.6 15.1 - -Current receivables 5.5 2.6 0.2 -Pension provisions 6.3 3.9 - -Loss carry-forwards 45.0 69.9 - -Miscellaneous 8.6 7.8 - -78.4 99.3 0.2 -Deferred tax liabilitiesIntangible assets 42.9 30.2 - -Property, plant and equipment 14.5 22.2 - -Inventory 0.5 0.8 - -Untaxed reserves 14.2 25.8 - -Miscellaneous 3.4 1.6 0.2 0.175.5 80.6 0.2 0.180 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesNote 14 Intangible non-current assets and property,plant and equipmentGroup<strong>2012</strong>/<strong>13</strong> GoodwillAccumulated historical costAt start of yearAcquired in business combinationsAcquisitions for the yearSales/DisposalsRe-classificationTranslation differenceBrands,customerrelationshipsetc.OtherintangibleassetsBuildingsand landPlant andmachineryEquipmentand toolsConstructionin progress385.8 142.3 12.7 790.6 501.2 280.4 10.0106.7 69.1 3.8 41.2 18.1 24.7 -- 2.0 - 5.9 15.6 31.2 71.2- - - -5.4 -5.9 -14.7 -- - - 2.0 3.5 9.6 -15.1-17.1 -7.4 -0.3 -21.8 -11.9 -8.8 -0.1475.4 206.0 16.2 812.5 520.6 322.4 66.0Accumulated depreciation/amortisationAt start of year - -24.2 -4.6 -231.4 -346.7 -205.9 -Depreciation/Amortisation acquired in business combinations - -0.6 -0.1 -25.3 -15.0 -20.2 -Sales/Disposals- - - 0.1 5.2 12.7 -Re-classification- - - - 2.7 -2.7 -Translation difference- 1.6 0.1 4.9 7.3 6.1 -Depreciation/Amortisation for the year- -19.2 -3.5 -25.1 -39.2 -29.6 -- -42.4 -8.1 -276.8 -385.7 -239.6 -Accumulated impairmentAt start of year-18.5 - - -5.6 -0.5 - -Translation difference0.8 - - 0.2 -0.1 - -Impairment for the year- - - - - --17.7 - - -5.4 -0.6 - -Carrying amount457.7 163.6 8.1 530.3 <strong>13</strong>4.3 82.8 66.0Group2011/12 GoodwillAccumulated historical costAt start of yearAcquired in business combinationsAcquisitions for the yearSales/DisposalsRe-classificationTranslation differenceAccumulated depreciation/amortisationAt start of yearDepreciation/Amortisation acquired in business combinationsSales/DisposalsRe-classificationTranslation differenceDepreciation/Amortisation for the yearAccumulated impairmentAt start of yearTranslation differenceImpairment for the yearCarrying amountBrands,customerrelationshipsetc.OtherintangibleassetsBuildingsand landPlant andmachineryEquipmentand toolsConstructionin progress263.5 77.8 5.5 709.1 418.2 258.7 37.7120.0 61.8 5.8 31.6 29.7 6.1 1.5- 3.7 1.4 18.9 5.3 22.3 39.3- - - - -4.5 -<strong>13</strong>.9 -0.8- - - 18.5 46.5 4.2 -69.22.3 -1.0 - 12.4 6.0 3.0 1.5385.8 142.3 12.7 790.5 501.2 280.4 10.0- -11.4 -2.9 -205.4 -308.5 -192.0 -- - - -1.8 -0.2 -0.7 -- - - 1.1 3.5 11.6 -- - - - -2.4 2.4 -- 0.3 - -1.6 -3.1 -1.5 -- -<strong>13</strong>.1 -1.7 -23.7 -36.0 -25.7 -- -24.2 -4.6 -231.4 -346.7 -205.9 -- - - -5.5 -0.5 - -0.2 - - -0.1 - - --18.7 - - - - --18.5 - - -5.6 -0.5 - -367.3 118.1 8.1 553.5 154.0 74.5 10.0<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 81


NotesImpairment testing of goodwillGoodwill has been allocated to cash-generating units, legal entities, and hasbeen tested for impairment. The recoverable value for cash-generating units hasbeen determined based on the value-in-use of the units, which consists of thepresent value of the expected future cash flows. The discount rate before taxvaries among the various cash-generating units between 10.0 and 14.0% (10.0).Future cash flows are estimated using an assessment of the anticipated rateof growth and changes in margins based on the budget for the following year,management’s long-term expectations for the business and the historical trend.The long-term rate of growth is assumed to be 2%. Given the sensitivity includedin all calculations, the goodwill value will continue to be maintained even if thediscount rate were to rise by one percentage point or if long-term growth were tofall by one percentage point. The year’s test applied to goodwill does not indicateany impairment.The goodwill amortisation for the preceding year, SEK 18.7 million, related tothe Spanish subsidiary, <strong>Systemair</strong> HVAC and reflects the depressed market situationin that country and forecasts of poorer cash flows for the future.The allocation of goodwill to cash-generating units for the ten largest individualgoodwill items is shown below.GroupCash-generating unitCountry<strong>2012</strong>/<strong>13</strong> 2011/12<strong>Systemair</strong> HSK Turkey 66.7 -<strong>Systemair</strong> LLC Russia 63.7 69.0<strong>Systemair</strong> India Pvt. Ltd India 53.0 55.6Rucon <strong>Systemair</strong> Beheer B.V. Netherlands 32.8 32.9<strong>Systemair</strong> S.p.A. Italy 25.3 26.2Change Air Canada 20.3 -<strong>Systemair</strong> AC Italy 20.1 20.9Holland Heating Netherlands 18.9 -Tekador GmbH Germany 16.3 16.9Fantech Inc. USA 15.7 16.1Other - 124.9 129.7457.7 367.3Parent Company<strong>2012</strong>/<strong>13</strong>Accumulated historical costLicences Buildingsetc. and landPlant andmachineryEquipmentand toolsConstructioninprogressAt start of year 9.5 120.2 187.5 57.1 6.9Acquisitions for the year 1.8 - 0.3 2.0 4.3Transfer via businesscombination - 43.4 0.7 2.2 -Re-classification - - 3.1 5.2 -8.311.3 163.6 191.6 66.5 2.9Accumulated depreciation/amortisationAt start of year -3.9 -70.8 -145.8 -48.4 -Transfer via businesscombination - -7.4 -0.5 -0.3 -Depreciation/Amortisationfor the year -2.6 -6.0 -11.2 -4.3 --6.5 -84.2 -157.5 -53.0 -Carrying amount 4.8 79.4 34.1 <strong>13</strong>.5 2.9Parent Company2011/12Accumulated historical costLicences Buildingsetc. and landPlant andmachineryEquipmentand toolsConstructioninprogressAt start of year 4.4 122.0 160.4 52.5 16.8Acquisitions for the year 5.1 0.0 0.8 1.0 20.6Sales/Disposals - -1.8 -0.6 - -Re-classification - - 26.9 3.6 -30.59.5 120.2 187.5 57.1 6.9Accumulated depreciation/amortisationAt start of year -1.9 -67.5 -<strong>13</strong>5.5 -44.7 -Sales/Disposals - 1.2 0.6 - -Depreciation/Amortisationfor the year -2.0 -4.5 -10.9 -3.7 --3.9 -70.8 -145.8 -48.4 -Carrying amount 5.6 49.4 41.7 8.7 6.9Note 15 Other securities held as non-current assetsThe major share of this balance sheet item in <strong>2012</strong>/<strong>13</strong> consists of shares in Lindablisted on the OMX Nordic Exchange. The shares are designated as a financial assetavailable for sale. The shares are measured at fair value, any adjustments beingrecognised in other comprehensive income.GroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Opening balance 0.4 0.4 - -Acquisitions 406.6 - 406.6 -Revaluation 57.7 - 57.7 -464.7 0.4 464.3 -Note 16Other non-current receivablesGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Opening balance 7.3 9.7 3.8 6.3Additional receivables 1.6 0.8 - -Receivables settled -0.7 -3.0 - -2.5Reclassifications -0.2 -0.3 - -Translation difference -0.2 0.1 - -Closing balance 7.8 7.3 3.8 3.8Note 17Prepaid expenses and accrued incomeGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Prepaid rent 10.3 9.2 1.7 1.5Prepaid insurance premiums 8.8 7.2 0.3 -Miscellaneous 30.0 27.0 11.4 11.049.1 43.4 <strong>13</strong>.4 12.5"Miscellaneous" covers standard items such as service agreements, licenceexpenses and limit fees.82 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesNote 18 InventoryInventory in the Group is recognised at historical cost less deductions forobsolescence. The direct cost of materials during the year totalled SEK2,239.4 million (1,930.6).Note 19 Accounts receivable – tradeAge breakdown of tradeGroupParent Companyaccounts receivable<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Not yet due 657.2 569.3 53.1 46.7360 - - - -Total 875.7 764.5 55.4 49.1Provisions for impairment of trade accounts receivable in the Group totalled 5.4%(5.9) of total trade accounts receivable.Customer credit risk is managed by the individual subsidiaries, which operate acredit policy in accordance with a centralised standard format. Outstanding customerreceivables are monitored and accounted for on a regular basis at each companyand at Group level. <strong>Systemair</strong> is exposed to individual customers to a limited extent,as the Group’s biggest customer accounts for 1.9% of the Group’s sales.Provision for impairment of tradeGroupParent Companyaccounts receivable<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Opening balance 47.7 51.0 0.2 0.1Provision for anticipated losses 15.8 11.1 0.6 0.2Reversal of amount unused -1.6 -4.1 - -Confirmed losses -12.9 -10.3 -0.1 -0.1Provisions acquired 3.4 0.2 - -Exchange rate effects -2.1 -0.2 - -Closing balance 50.3 47.7 0.7 0.2Note 20 Share capital and proposed dividendQuotientChange inshare capital, Share capital, Change in Change in Total no. ofYearActionvalue SEK m. SEK m. A shares B shares sharesOpening balances, May 2007 - 52.0 500,000 20,000 520,0002007/08 100:1 split 1 - 52.0 50,000,000 2,000,000 52,000,0002007/08 Reregistration of shares to one class 1 1 - 52.0 -50,000,000 -2,000,000 52,000,000At year-end, April 20<strong>13</strong> 1 - 52.0 - - 52,000,0001The <strong>Annual</strong> General Meeting held 25 June 2007 resolved that the Company would have one class of share only.At 30 April 20<strong>13</strong>, the registered share capital totalled SEK 52,000,000, representedby 52,000,000 shares, each carrying an entitlement to one vote, and of one andthe same class. All the shares are fully paid up.The Board proposes to the 20<strong>13</strong> AGM that a dividend of SEK 1.50 (1.25) per sharebe paid, a total of SEK 78.0 million (65.0).Capital managementThe Board of <strong>Systemair</strong> has adopted a target for the Company’s equity/assets ratio ofno less than 30% and a target for dividend of approximately 30% of profit after tax.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 83


NotesList of shareholders<strong>Systemair</strong>’s 10 largest shareholders according to Euroclear at 30 April 20<strong>13</strong>.OwnerNo. of shares% of capitaland votesFärna Invest AB 1 21,997,752 42.30%ebm-papst AB 11,059,770 21.27%Nordea Investment Funds 3,246,155 6.24%Alecta Pensionsförsäkring 2,500,000 4.81%Lannebo Fonder 1,761,123 3.39%Handelsbanken Fonder 1,759,164 3.38%Odin Fonder 1,287,109 2.48%SEB Investment Management 1,198,976 2.31%Fondita Nordic Micro Cap 818,000 1.57%Fidelity Funds 433,604 0.83%Other 5,938,347 11.42%Total 52,000,000 100%1Färna Invest AB is a company owned by <strong>Systemair</strong>’s CEO Gerald Engström.Note 21 Borrowing and financial instrumentsGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Non-current liabilitiesBank loans of one to five years 554.7 142.8 446.3 68.7Bank loans longer than five years 31.6 42.6 - -586.3 185.4 446.3 68.7Loanamount<strong>2012</strong>/<strong>13</strong> 2011/12WeightedinterestrateLoanamountWeightedinterestrateLong-term loansGroup 586.3 2.76% 185.4 2.95%Parent Company 446.3 2.99% 68.7 3.33%Short-term loansGroup 724.0 2.59% 681.4 2.52%Parent Company 664.6 1.93% 637.2 2.08%External credit facilities granted for bank overdrafts totalled SEK 831.2 million(722.0) for the Group and SEK 755.0 million (660.0) for the Parent Company.Unutilised bank overdraft facilities for the Group SEK 236.7 million (157.0).The Group’s financing agreements with Nordea Bank AB and SvenskaHandelsbanken AB include financial covenants. The key ratios measured areinterest coverage ratio, net debt/equity ratio and equity/assets ratio, which aremeasured quarterly as a rolling 12-month value. On 30 April 20<strong>13</strong>, the Group metall the current terms and conditions of its covenants.Maturity structureMaturity structure of future agreed interest payments based on current interestrates and loan amortisations.20<strong>13</strong>/14 2014/15 2015/16 2016/17 2017/18 laterInterest on loans 15.5 9.0 6.2 4.1 1.9 2.1Interest andoperating credit <strong>13</strong>.0Total interestexpense 28.5Current liabilitiesBank overdraft facilities 569.1 565.0 547.2 555.1Current portion of bank loans 154.9 116.4 117.4 82.1724.0 681.4 664.6 637.2Total borrowing 1,310.3 866.8 1,110.9 705.9Distribution among banksNordea Bank AB 663.7 464.4 537.9 363.2Svenska Handelsbanken AB 608.9 365.6 570.9 339.0Other banks 37.7 36.8 2.1 3.71,310.3 866.8 1,110.9 705.9AmortisationsLoans 154.9 171.3 126.7 119.2 75.5 93.8Operating credit 569.1Total 752.5 180.3 <strong>13</strong>2.9 123.3 77.4 95.9Classification and categorisation of financial assets and liabilities in the GroupA financial instrument is defined as any contract that gives rise to a financial assetin one company and a financial liability or equity instrument in another company.The existence of financial instruments, other than those arising in operatingactivities, is relatively limited at <strong>Systemair</strong>.Currency derivatives are recognised at fair value via the income statement,based on input data corresponding to level 2 in IFRS 7. Available-for-sale financialassets consist of shares in Lindab and are recognised at fair value based on inputdata in accordance with level 1 in IFRS 7. The carrying amounts of interest-bearingassets and liabilities on the balance sheet may deviate from their fair values, forexample because of changes in market interest rates. <strong>Systemair</strong>’s lines of creditcarry variable interest rates, or in certain cases fixed rates for a short period, sotheir approximate market values essentially are equal to fair value. For financialinstruments such as trade accounts receivable and payable and other non-interestbearingfinancial assets and liabilities, which are stated at amortised cost less anyimpairment losses, the fair value is assessed as the same as the carrying amount.SHB Nordea Other TotalLoans, by currency <strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12EUR 141.3 206.1 60.0 305.6 17.7 17.5 219.0 529.2SEK 451.8 142.7 525.3 118.3 - - 977.1 261.0USD - 1.1 71.5 60.2 0.3 0.2 71.8 61.5NOK - - -65.7 -52.6 - - -65.7 -52.6DKK - - 22.0 - 6.5 - 28.5 -Other currencies 15.8 15.7 50.6 32.9 <strong>13</strong>.2 19.1 79.6 67.7Total 608.9 365.6 663.7 464.4 37.7 36.8 1,310.3 866.884 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Notes<strong>2012</strong>/<strong>13</strong>AssetsDerivativesLoan receivables andAccounts receivable– tradeFinancial assetsavailable for saleTotal financialassetsNon-financialassetsIntangible assets - - - - 629.4 629.4Property, plant and equipment - - - - 8<strong>13</strong>.4 8<strong>13</strong>.4Financial investments - - 464.7 464.7 - 464.7Non-current receivables - - - - 7.8 7.8Deferred tax receivables - - - - 78.4 78.4Inventory - - - - 790.0 790.0Other receivables 0.8 874.9 - 875.7 116.9 992.6Cash and cash equivalents - 98.4 - 98.4 - 98.4Total assets 0.8 973.3 464.7 1,438.8 2,435.9 3,874.7TotalEquity and liabilities Derivatives Financial liabilitiesTotal financialliabilitiesNon-financialliabilitiesEquity - - - 1,576.0 1,576.0Provisions for pensions - - - 29.6 29.6Deferred tax liabilities - - - 75.5 75.5Provisions - - - 49.4 49.4Interest-bearing liabilities - 1,310.3 1,310.3 - 1,310.3Other liabilities - 471.4 471.4 362.5 833.9Total equity and liabilities - 1,781.7 1,781.7 2,093.0 3,874.7Total2011/12AssetsDerivativesLoan receivables andAccounts receivable– tradeFinancial assetsavailable for saleTotal financialassetsNon-financialassetsIntangible assets - - - - 493.5 493.5Property, plant and equipment - - - - 792.0 792.0Financial investments - - 0.4 0.4 - 0.4Non-current receivables - - - - 7.3 7.3Deferred tax receivables - - - - 99.3 99.3Inventory - - - - 767.3 767.3Other receivables 0.5 764.0 - 764.5 83.9 848.4Cash and cash equivalents - 91.6 - 91.6 - 91.6Total assets 0.5 855.6 0.4 856.5 2,243.3 3,099.8TotalEquity and liabilities Derivatives Financial liabilitiesTotal financialliabilitiesNon-financialliabilitiesEquity - - - 1,399.1 1,399.1Provisions for pensions - - - 15.3 15.3Deferred tax liabilities - - - 80.6 80.6Provisions - - - 36.3 36.3Interest-bearing liabilities - 866.8 866.8 - 866.8Other liabilities - 408.5 408.5 293.2 701.7Total equity and liabilities - 1,275.3 1,275.3 1,824.5 3,099.8On the balance sheet date, the Group had a number of outstanding EUR currency derivatives. The market value of the contracts is SEK 0.8 million (0.5). The total hedgedvalue was EUR 16.0 million (10.0).TotalGroupCurrency derivatives – hedged valuesEUR m.Maturity< 1 year 10.9May <strong>2012</strong>–July 2014 2.4Aug. 2014–Oct. 2014 1.5Nov. 2014–Jan. 2015 1.2Total outstanding 16.0<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 85


NotesIn its Finance Policy, <strong>Systemair</strong> states that 50% of the anticipated EUR inflows overa maximum of 18 months may be hedged. This means that the Company will sellEUR over this period of time. At the end of the financial year, the forward contractswere <strong>report</strong>ed only in the Parent Company. The forward contracts are stated at fairvalue. Hedge accounting is not used. Changes in value are recognised via the incomestatement.Selling currency on forward contracts involves a binding contract that establishesa redemption price (rate) in advance, on a specific date.Note 22 Accrued expenses and deferred incomeGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Salary and holiday pay liability 96.7 85.3 29.6 28.8Employer’s social securitycontribution liability 26.0 25.5 <strong>13</strong>.0 12.4Commission payments andbonuses <strong>13</strong>.7 <strong>13</strong>.9 2.3 2.0Miscellaneous 66.0 52.5 4.0 2.3202.4 177.2 48.9 45.5Note 23 Appropriations, otherParent Company<strong>2012</strong>/<strong>13</strong> 2011/12Group contributions paid -50.2 -57.0Reversal of tax allocation reserve 27.6 8.5Difference between depreciation andamortisation charged and according to plan 1.9 -3.1-20.7 -51.6Note 24 Untaxed reservesParent Company<strong>2012</strong>/<strong>13</strong> 2011/12Difference between depreciation andamortisation charged and according to plan 24.5 26.4Tax allocation reserve, provision for tax 2008 27.5Tax allocation reserve, provision for tax 2009 22.8 22.8Tax allocation reserve, provision for tax 2010 0.6 0.6Tax allocation reserve, provision for tax 2011 15.4 15.463.3 92.7Note 25 Provisions for pensions<strong>Systemair</strong> operates several different post-employment benefit plans. These areclassified as either defined-benefit or defined-contribution plans. A defined-benefitpension plan is one that specifies an amount for the pension benefit that anemployee will receive on retirement. A defined-contribution pension plan is onein which the Group pays fixed contributions to a separate legal entity. Definedcontributionplans are recognised as a cost in the period during which the employeesperform the service to which the remuneration refers. Defined-benefit plans aremeasured separately for each plan based on the benefits earned during prior andcurrent periods. The liability recognised as Provisions for pensions, defined-benefitpension plans, is the present value of the defined-benefit obligation at the balancesheet date, less the fair value of plan assets, adjusted for unrecognised actuarialgains and losses.Defined-benefit plans are operated primarily in Norway. The majority of pensionobligations in the Group’s Swedish operations consist of a defined-benefit pensionplan to which several employers subscribe. The plan is insured with Alecta, a mutualinsurance company. Insufficient information is available to present an account of theGroup’s proportional share of its defined-benefit obligation and of the plan assetsand costs associated with the plan. As a result, the plan is presented as a definedcontributionplan, and consequently premiums paid are recognised as an expense.The pension obligation is calculated annually with the aid of independent actuariesusing the Projected Unit Credit Method. The calculation makes use of actuarialassumptions. These assumptions include anticipated salary and pension increasesand anticipated returns on plan assets. Changes in actuarial assumptions andoutcomes that deviate from assumptions give rise to actuarial gains and losses.For salaried employees in Sweden, <strong>Systemair</strong> subscribes to the ITP Plan throughinsurance with Alecta. Statement UFR 3 from the Emerging Issues Task Force ofthe Swedish Financial Accounting Standards Council recommends that ITP pensionsmanaged by Alecta be recognised as defined-contribution plans, as per section 30of IAS 19. The year’s premiums for pension insurance policies with Alecta totalledSEK 4.1 million (3.3). Surpluses at Alecta under the plan may be distributed amongthe policyholders and/or the insured. At the end of <strong>2012</strong>, Alecta’s surplus in the formof the collective consolidation level was calculated at 129% (1<strong>13</strong>). The collectiveconsolidation level is the market value of Alecta's assets as a percentage of itsinsurance commitments measured by Alecta's actuarial assumptions, which do notaccord with IAS 19.<strong>Systemair</strong> will implement the amended rules in IAS 19 as of the financial yearstarting on 1 May 20<strong>13</strong>. In <strong>2012</strong>/<strong>13</strong>, the amendments would have increased thepension liability by approximately SEK 7.7 million net and would have reduced equityby around SEK 5.6 million (after deduction of a deferred tax liability).Defined-benefit pension plans <strong>2012</strong>/<strong>13</strong> 2011/12Present value of obligations 92.5 88.9Fair value of plan assets -59.0 -55.5Present value of net obligations 33.5 33.4Unrecognised actuarial gains and losses -5.2 -21.5Net liability before payroll tax 28.3 11.9Payroll tax liability 1.3 3.4Net liability as per the balance sheet 29.6 15.3Defined-benefit pension plans <strong>2012</strong>/<strong>13</strong> 2011/12Changes in defined-benefit plan obligationDefined-benefit plan obligation, 1 May88.9 70.9Benefits paid-2.8 -2.1Cost of service in current period, plus interest expense9.6 8.2Actuarial gain or loss-14.1 7.3Business combinations- -Pension plans taken over14.6 3.0Exchange rate differences-3.7 1.6Defined-benefit plan obligation, 30 April92.5 88.9Changes in plan assetsFair value of plan assets, 1 May 55.5 45.9Receipts 7.1 5.9Benefits paid -2.6 -1.9Anticipated return 2.3 2.8Difference between anticipated and actual return(actuarial gain or loss) -1.0 -1.2Plan assets taken over - 2.8Exchange rate differences -2.3 1.2Fair value of plan assets, 30 April 59.0 55.5Cost recognised in income statement <strong>2012</strong>/<strong>13</strong> 2011/12Cost of service in current period 6.9 6.3Payroll tax 0.9 0.7Interest expenses relating to obligation 3.4 2.8Anticipated return on plan assets -2.3 -2.5Net cost recognised in income statement 8.9 7.3Actuarial assumptions, % <strong>2012</strong>/<strong>13</strong> 2011/12Discount rate 4.00 2.60Anticipated return on plan assets 4.00 4.10Anticipated rate of increase in salaries 3.50 3.50Anticipated rate of inflation 3.00 1.1086 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesNote 26Profit/loss from participations inGroup companiesParent Company<strong>2012</strong>/<strong>13</strong> 2011/12Impairments - -66.2Dividends from subsidiaries 176.0 207.3176.0 141.1Note 27 Participations in Group companiesSubsidiary Corp. id. no. Reg’d office % equity No. of shares Carrying amountAnimac AB 556311-3926 Motala, Sweden 100 2,500 2.7Frico Engineering AB 556362-9<strong>13</strong>7Skinnskatteberg,Sweden 100 1,000 0.1Frico AB 556573-3812 Partille, Sweden 100 50,000 288.5Kanalfläkt Industrial Service AB 556063-2530Skinnskatteberg,Sweden 100 5,000 1.2VEAB Heat Tech AB 556<strong>13</strong>8-3166 Hässleholm, Sweden 100 3,000 65.6Matthews & Yates Australia Pty. Ltd. Australia 100 - 0.0<strong>Systemair</strong> NV Belgium 100 - 3.1<strong>Systemair</strong> EOOD Bulgaria 100 - 0.1<strong>Systemair</strong> SpA Chile 100 - 0.1Welmo Trading Ltd Cyprus 100 1,000 94.3<strong>Systemair</strong> a/s Denmark 100 10,101 35.1<strong>Systemair</strong> Middle East FZEDubai, United ArabEmirates 100 - 2.1<strong>Systemair</strong> Trading LLCDubai, United ArabEmirates 100 - 0.0<strong>Systemair</strong> Fans & Spares Ltd United Kingdom 100 1,000,000 19.9Villavent Ltd United Kingdom 100 349,999 2.0<strong>Systemair</strong> AS Estonia 100 3,128 17.3<strong>Systemair</strong> Oy Finland 100 20 0.3<strong>Systemair</strong> SAS France 100 9,994 6.5<strong>Systemair</strong> Hellas Greece 100 15,000 8.7L.S.A. Handelsonderneming B.V. Netherlands 100 40 11.0Holland Heating Netherlands 100 180 50.8Rucon <strong>Systemair</strong> Beheer B.V. Netherlands 100 - 69.6<strong>Systemair</strong> Hong Kong Ltd. Hong Kong 100 300 0.2<strong>Systemair</strong> India Pvt. Ltd India 100 320,000 161.3<strong>Systemair</strong> Ltd Ireland 100 1 0.0<strong>Systemair</strong> AC Italy 100 - 55.4<strong>Systemair</strong> S.p.A. Italy 100 2,754 55.2<strong>Systemair</strong> Ltd Canada 100 44,600 29.6<strong>Systemair</strong> Shanghai Co. Ltd China 100 - 1.3<strong>Systemair</strong> SIA Latvia 100 2,500 1.1<strong>Systemair</strong> UAB Lithuania 100 500 10.9<strong>Systemair</strong> Sdn Bhd Malaysia 100 500,000 20.6<strong>Systemair</strong> AS Norway 100 82,000 21.4<strong>Systemair</strong> SA Poland 100 200 0.9<strong>Systemair</strong> SA Portugal 100 200,000 26.0<strong>Systemair</strong> Middle East LLC. Qatar 100 - 0.4<strong>Systemair</strong> Rt Romania 100 1,000 4.1<strong>Systemair</strong> ZAO Russia 100 865 0.5<strong>Systemair</strong> d.o.o. Belgrade Serbia 100 - 7.2<strong>Systemair</strong> Suisse AG Switzerland 100 250 31.9<strong>Systemair</strong> (SEA) PTE Ltd. Singapore 100 1,000,000 6.2IMOS-<strong>Systemair</strong> spol. s.r.o. Slovakia 100 - 68.2(cont. on next page) sub-total 1,181.6<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 87


NotesSubsidiary Corp. id. no. Reg’d office % equity No. of shares Carrying amountCont. from preceding page carried forward 1,181.6<strong>Systemair</strong> AS Slovakia 100 22 0.5<strong>Systemair</strong> d.o.o. Slovenia 100 - 42.9<strong>Systemair</strong> HVAC S.L.U. Spain 100 - 26.3<strong>Systemair</strong> (Pty) Ltd South Africa 100 1,000 2.4<strong>Systemair</strong> SA Czech Republic 100 - 21.5<strong>Systemair</strong> Co. Ltd Taiwan 100 - 0.2<strong>Systemair</strong> HSK Turkey 90 2,150 77.6<strong>Systemair</strong> Hav. Ekip. San.ve Tic. Ltd Sti. Turkey 100 649 1.5<strong>Systemair</strong> GmbH Germany 100 - 10.4LGB GmbH Germany 100 - 38.9Tekadoor GmbH Germany 100 - 30.3<strong>Systemair</strong> TOV Ukraine 100 - 0.4<strong>Systemair</strong> Rt Hungary 100 2,000 4.5Fantech Inc. USA 100 500 32.1<strong>Systemair</strong> GmbH Austria 100 - 0.91,471.9Subsidiaries indirectly held by Parent CompanyIndirectly held Parent Company Reg’d office % equityChange Air <strong>Systemair</strong> Ltd Canada 100Frico SAS Frico AB France 100Frico BV Frico AB Netherlands 100Frico AS Frico AB Norway 100Frico GmbH AT Frico AB Austria 100Kanalfläkt ManagementServices ABKanalfläkt Vent ABRepant Production ABKanalfläkt IndustrialService ABKanalfläkt IndustrialService ABKanalfläkt IndustrialService ABSkinnskatteberg,Sweden 100Skinnskatteberg,Sweden 100Skinnskatteberg,Sweden 100Tekadoor LufttechnischeGeräte GmbH Tekadoor GmbH Austria 50<strong>Systemair</strong> LLC Welmo Trading Ltd Russia 100Note 28 Integration of wholly owned subsidiaryThe wholly owned subsidiary Klockargårdens Företagsby AB, corp. id.no. 556632-5774, was merged with the Parent Company, <strong>Systemair</strong> AB, in<strong>2012</strong>/<strong>13</strong>. The merger took place on 18 March 20<strong>13</strong>. Klockargården’s businessconsisted of management and rental of the office and production property atSkinnskatteberg, which was exclusively rented by <strong>Systemair</strong> on the date of merger.Klockargården’s net sales and operating profit on the date of the merger totalledSEK 6.0 million and SEK 1.2 million, respectively.Summarised balance sheet for Klockargården on 18 March 20<strong>13</strong> (SEK million):Non-current assets 36.5Current receivables 0.1Total assets 36.6Equity 0.5Current liabilities 36.1Total liabilities and equity 36.6Parent CompanyChange in Group companies<strong>2012</strong>/<strong>13</strong> 2011/12At start of year 1,030.1 779.8Acquisitions during the year 128.8 2<strong>13</strong>.0New share issues during the year 3<strong>13</strong>.0 37.31,471.9 1,030.1Note 29 Non-recurring items<strong>2012</strong>/<strong>13</strong> 2011/12Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1Note1Cost of goods sold - - - - -5.6 - - -Other operating income - - - - - - - -Selling expenses - - - - -10.0 - - -Administration expenses - - - - -5.3 - - -Other operating expenses - - - - -18.7 - - -Total non-recurring items - - - - 39.6 - - -Operating profit, incl.non-recurring items 36.0 89.8 140.9 98.5 5.6 97.2 <strong>13</strong>0.2 86.8Operating profit, excl.non-recurring items 36.0 89.8 140.9 98.5 45.2 97.2 <strong>13</strong>0.2 86.8Note 1 -Amortisation of goodwill, SEK -18.7 million, in Spain, on line "Other operating expenses".The remaining portion consists of measures above all in Italy to reduce the future burdenof costs.88 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesNote 30 Changes in Group structure –business combinationsCompanies acquiredIn March, <strong>Systemair</strong> acquired Holland Heating, a leading manufacturer of airhandling units in the Netherlands. Holland Heating, established in 1955, hasproduction facilities and headquarters in Waalwijk. The company, owned byCarrier B.V. since 1997, <strong>report</strong>ed sales of EUR 32.5 million in <strong>2012</strong>. The agreementalso stipulates continued deliveries of air handling units to the Carrier Group inEurope. As a result of the acquisition, <strong>Systemair</strong> becomes market leader in airhandling units in the Netherlands.On 20 August <strong>2012</strong>, <strong>Systemair</strong> acquired Ratos’ holding of shares in Lindab. Theholding represented 11.2% of the share capital and comprised 8,849,157 shares.At the same time, <strong>Systemair</strong> acquired a further 300,000 shares in the market andis currently the largest shareholder in Lindab, with a total of 11.6% of the sharecapital.In June, <strong>Systemair</strong> acquired Change Air, Canada. The company is one of theNorth American market’s leading producer of air handling units for classrooms. In2011, Change Air had sales equivalent to SEK 84 million and an operating profitof SEK 11.9 million. The company, which has 86 employees, has its headquartersand a production facility in Ontario, Canada. The acquisition has provided <strong>Systemair</strong>with access to 59 sales agents in 71 cities, and a total of approximately 300 salesengineers in North America. The latter cover 42 states in the USA and six provincesin Canada.In August <strong>2012</strong>, <strong>Systemair</strong> acquired 70% of the shares in the Turkish companyHSK, with an option to acquire the remaining 30%. In December <strong>2012</strong>, <strong>Systemair</strong>acquired a further 20% of the shares in the company. HSK is Turkey’s leadingmanufacturer of air handling units, with sales of SEK 160 million in 2011. Followingthe acquisition, a new industrial property measuring just over 12,000 m 2 wasleased, into which two former production facilities have relocated and wheremajor investments have been made in modern sheet metal forming equipment.The investments provide us with the region’s most up-to-date production facilityfor air handling units. We also see great potential for developing sales in Turkeyand neighbouring countries such as Azerbaijan, Georgia, Turkmenistan, Dubai andIraq, plus market synergies with our Italian refrigeration equipment factory. Afteracquisition, the name of the company was changed to <strong>Systemair</strong> HSK. HSK hasbeen consolidated into <strong>Systemair</strong> since the beginning of August <strong>2012</strong>.If Holland Heating, Change Air and HSK had been consolidated as of 1 May<strong>2012</strong>, net sales for the period May <strong>2012</strong> through April 20<strong>13</strong> would have totalledapproximately SEK 4,833 million. Operating profit for that period would have beenapproximately SEK 356 million.The price paid to acquire 100 percent of the shares in HSK, Holland Heating andChange Air was provisionally made up as follows:Total historical cost, lesscosts of acquisitionAssets acquiredFair value of assets acquired, netGoodwillSEK 196.5 millionSEK 88.5 millionSEK 108.0 millionAssets and liabilities acquiredHSKHollandHeatingChangeAir TotalGoodwill 67.7 19.0 21.3 108.0Brands and customer relationships 30.1 22.5 20.9 73.5Buildings and land - 15.3 - 15.3Machinery and equipment 3.5 1.1 3.5 8.1Deferred tax assets - - 0.8 0.8Inventory 16.4 16.9 14.5 47.8Other current assets 52.1 50.5 17.9 120.5Cash and cash equivalents 2.5 3.4 - 5.9Non-interest-bearing liabilities(incl. deferred tax liability) -5.3 -5.0 -5.2 -15.5Interest-bearing liabilities -18.9 - -15.0 -33.9Other operating liabilities -52.6 -74.0 -7.4 -<strong>13</strong>4.095.5 49.7 51.3 196.5Impact of acquisitions on cash flowPurchase consideration -196.5Purchase consideration not paid 42.5Cash and cash equivalents in companies purchased 5.9Purchase consideration paid for prior years’ acquisitions -12.9Transaction costs, acquisition of subsidiaries -3.4Change in consolidated cash and cash equivalents after acquisition -164.4Brands and customer relationships have been stated at the net present value offuture cash flows. The useful life of these assets has been estimated at 5-10 years.Goodwill upon acquisition is attributable to the strong market positions of thecompanies acquired, synergy effects expected to emerge after the acquisitions andthe companies’ estimated future earning capacity.No significant changes had been made to the provisional acquisition analyses inthe preceding year.Companies divestedNo companies were divested during the year.Note 31 Receivables from Group companiesParent Company<strong>2012</strong>/<strong>13</strong> 2011/12At start of year 391.3 331.0Loans 0.1 88.7Repayments -78.6 -5.8Reclassifications -240.3 -26.2Foreign exchange adjustments -8.0 3.664.5 391.3Note 32 Pledged assetsGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Assets pledged to credit institutionsfor own liabilitiesChattel mortgages 100.4 180.8 97.4 97.4Real estate mortgages 163.0 166.4 30.0 30.0Other collateral pledged - - 422.7 97.7263.4 347.2 550.1 225.1Pledged assets, per bankNordea Bank AB 127.0 127.3 286.7 186.7Svenska Handelsbanken AB 16.0 125.4 238.0 <strong>13</strong>.0Other banks 120.4 94.5 25.4 25.4263.4 347.2 550.1 225.1Note 33 Contingent liabilitiesGroupParent Company<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Guarantees on behalf ofsubsidiaries - - 201.3 142.9Guarantees and other contingentliabilities 80.4 30.0 46.5 8.680.4 30.0 247.8 151.5<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 89


NotesNote 34 Supplementary information regarding thecash flow statementGroupParent CompanyGroup<strong>2012</strong>/<strong>13</strong> 2011/12 <strong>2012</strong>/<strong>13</strong> 2011/12Adjustment for non-cashitems etc.Depreciation/Amortisation 116.6 100.2 24.1 21.1Impairment of assets - 18.7 - -Changes in provisions 11.9 3.2 1.4 0.1Exchange gains and losses 1.8 -2.2 -7.2 2.0Provisions for pensions 14.9 -1.6 - -Gain/Loss on divestment ofnon-current assets -1.3 -6.0 - -8.5Other items 3.5 -14.3 - -147.4 98.0 18.3 14.7Note 35 Information on the Parent Company<strong>Systemair</strong> AB is a Swedish-registered limited liability company. Its registered officeis in Skinnskatteberg. The address of the Company’s head office is Industrivägen 3,SE-739 30 Skinnskatteberg, Sweden. The Company’s corporate identity number is556160-4108. The consolidated accounts for financial <strong>2012</strong>/<strong>13</strong> include the ParentCompany and its subsidiaries, jointly referred to as the "Group".Note 37 Related party transactionsDuring the year, <strong>Systemair</strong> AB (publ.) sold products for SEK 2.8 million (2.4) toebmpapst AB. Product purchases from ebmpapst AB totalled SEK 1.1 million(0.7). During the year, products purchased by the Group from ebmpapst AB’sparent company in Germany, ebmpapst GmbH, totalled SEK 168.9 million (171.8).<strong>Systemair</strong> AB (publ.) purchased hotel and conference services for SEK 4.0 (4.2)million from WG Hotelldrift AB, which is owned by Gerald and Wenche Engström.Parent Company purchases from other Group companies totalled SEK143.4 million (155.7). Parent Company sales to Group companies are shown inNote 3.Note 38 Significant events after financial year-endIn May, <strong>Systemair</strong> completed the acquisition of Menerga GmbH, Germany, aleading European producer of air handling units for swimming pool halls andcomfort ventilation with extra high efficiency. Established in 1981, Menerga hasits headquarters and production facilities in Mülheim an der Ruhr, just outsideDüsseldorf. Sales in <strong>2012</strong> totalled EUR 56.7 million, 53 percent in Germany. Thecompany currently employs approximately 400 people. The purchase considerationis provisionally calculated at SEK 111 million, including transaction costs.In May, <strong>Systemair</strong> entered an agreement to acquired Reftec AS, a supplier ofcommercial cooling and heat pumps to the Norwegian market. Reftec, foundedin 2007, has its headquarters in Trondheim and a sales office in Oslo. It has 14employees. The company recorded sales of NOK 34 million in <strong>2012</strong> and salesgrowth of more than 30 percent. The acquisition is subject to approval by Norway’scompetition authority. The company was formerly a reseller of <strong>Systemair</strong> productsin the Norwegian market.Note 36 Earnings per shareGroup <strong>2012</strong>/<strong>13</strong> 2011/12Basic earnings per share (SEK) 4.63 4.14Diluted earnings per share (SEK) 4.63 4.14Profit for the year attributable toParent Company shareholders 241.0 215.4Weighted average number of sharesoutstanding, basic 52,000,000 52,000,000Weighted average number of sharesoutstanding, diluted 52,000,000 52,000,000On the occasion of its stockmarket flotation in October 2007, <strong>Systemair</strong> issueda total of 223,500 warrants to certain employees of the Group. Because thesubscription price relative to the market price of <strong>Systemair</strong> shares was unfavourableon the occasions set for redemption, no subscription rights were exercised. Theoption programme expired in September 2011. No new option programme hasbeen offered.90 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


NotesThe undersigned declare that the consolidated accounts and annual accounts were prepared in compliance with International Financial Reporting Standards (IFRS), asadopted by the European Union, and generally accepted accounting principles, and give a true and fair view of the Group’s and Company’s financial position and results,and that the Group’s and Company’s administration <strong>report</strong>s give a fair review of the development of the Group’s and Company’s operations, financial position and earningsand describe the material risks and uncertainties facing the companies in the Group.Skinnskatteberg, 5 July 20<strong>13</strong>Lars HanssonChairman of the BoardGerald EngströmDirectorHannu PaitulaDirectorGöran RobertssonDirectorElisabeth WestbergDirectorJürgen ZillingDirectorÅke HenningssonEmployee RepresentativeKevin RowlandEmployee RepresentativePär JohanssonManaging DirectorOur Audit Report concerning this <strong>Annual</strong> Report was submitted on 5 July 20<strong>13</strong>.Ernst & Young ABThomas ForslundAuthorised Public Accountant<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 91


Auditors' ReportAuditors' ReportTo the annual meeting of the shareholders of <strong>Systemair</strong> AB (publ) corp. id. no. 556160-4108Report on the <strong>Annual</strong> Report and Consolidated AccountsWe have conducted an audit of the annual accounts and the consolidated accountsfor <strong>Systemair</strong> AB (publ) for the financial year 1 May <strong>2012</strong>–30 April 20<strong>13</strong>, exceptfor the corporate governance <strong>report</strong> on pages 53-60. The annual <strong>report</strong> and theconsolidated accounts are included on pages 61-91 of the printed version of thisdocument.Responsibilities of the Board of Directors and the President with regard to theannual <strong>report</strong> and the consolidated accountsThe Board of Directors and the President are responsible for preparing an annual<strong>report</strong> that provides a true and fair view in accordance with the Swedish <strong>Annual</strong>Accounts Act and consolidated accounts that provide and true and fair view inaccordance with International Financial Reporting Standards (IFRS), as adopted bythe EU, and the Swedish <strong>Annual</strong> Accounts Act, as well as for the internal controlthat the Board of Directors and President deem to be necessary in order to preparean annual <strong>report</strong> and consolidated accounts that are free of material misstatement,whether caused by irregularity or error.Responsibilities of the auditorOur responsibility is to express our opinion on the annual <strong>report</strong> and consolidatedaccounts on the basis of our audit. We conducted our audit in accordance withInternational Standards on Auditing and generally accepted auditing practice inSweden. Those standards require that we observe the requirements of professionalethics and that we plan and perform the audit to obtain reasonable assurance thatthe annual <strong>report</strong> and the consolidated accounts are free from material misstatement.An audit includes obtaining, by variety of measures, accounting evidencesupporting the amounts and disclosures in the annual <strong>report</strong> and consolidatedaccounts. The auditor decides which actions should be taken, for example bydetermining the risks of material misstatements in the annual <strong>report</strong> and theconsolidated accounts, whether caused by irregularity or error. In determiningrisks in this way, the auditor considers which aspects of internal control arerelevant to how the company prepares the annual <strong>report</strong> and the consolidatedaccounts to provide a true and fair view, in order to devise audit measures thatare fit-for-purpose with regard to the circumstances, but not in order to state anopinion as to the efficacy of the company’s internal control. An audit also includesan assessment of the suitability of the accounting policies applied and of thereasonableness of the estimates by the Board of Directors and the President in theaccounts, as well as an assessment of the overall presentation of the annual <strong>report</strong>and the consolidated accounts.We believe that the accounting evidence we have obtained provides anadequate and appropriate basis for our opinions.OpinionsIn our view, the annual <strong>report</strong> has been prepared in accordance with the Swedish<strong>Annual</strong> Accounts Act and provides in all material respects a true and fair view ofthe parent company’s financial position on 30 April 20<strong>13</strong> and of its financial resultsand cash flows for the year in accordance with the Swedish <strong>Annual</strong> Accounts Act.The consolidated accounts have been prepared in accordance with the Swedish<strong>Annual</strong> Accounts Act and provide in all material respects a true and fair view ofthe Group’s financial position on 30 April 20<strong>13</strong> and of its financial results and cashflows in accordance with International Financial Reporting Standards, as adoptedby the EU, and the Swedish <strong>Annual</strong> Accounts Act. Our opinions do not include thecorporate governance <strong>report</strong> on pages 53-60. The statutory administration <strong>report</strong>is consistent with the other parts of the annual accounts and the consolidatedaccounts.We therefore recommend that the <strong>Annual</strong> General Meeting adopt theconsolidated income statement and consolidated balance sheet and the parentcompany income statement and parent company balance sheet.Report on other requirements under legislation andother regulationsIn addition to our audit of the annual <strong>report</strong> and the consolidated accounts, wehave also reviewed the proposed treatment of the company’s profit or loss andthe administration by the Board and the President of the affairs of of <strong>Systemair</strong> AB(publ) for the financial year 1 May <strong>2012</strong>–30 April 20<strong>13</strong>,. We have also performed astatutory review of the corporate governance <strong>report</strong>.Responsibilities of the Board of Directors and the PresidentThe Board of Directors is responsible for the proposed treatment of the company’sprofit or loss, and the Board and the President are responsible for administrationunder the Swedish <strong>Annual</strong> Accounts Act and for ensuring that the corporate governance<strong>report</strong> on pages 53-60 has been prepared in accordance with the Swedish<strong>Annual</strong> Accounts Act.Responsibilities of the auditorOur responsibility is to express an opinion with a reasonable degree of assuranceas to the proposed treatment of the company’s profit or loss and of theadministration based on our review. We conducted our audit in accordance withgenerally accepted auditing practice in Sweden.As a basis for our opinion on the Board’s proposed treatment of the company’sprofit or loss, we have examined the Board’s reasoned statement, as well asdocuments, on a test basis, in support of this statement, in order to be able todetermine whether the proposed treatment is consistent with the Swedish <strong>Annual</strong>Accounts Act.As a basis for our opinion concerning discharge from liability we examined, inaddition to our audit of the annual accounts, significant decisions, actions taken andcircumstances of the company in order to be able to determine the liability, if any,to the company of any Board member or the President. We also examined whetherany Board member or the President has, in any other way, acted in contraventionof the Swedish Companies Act, the Swedish <strong>Annual</strong> Accounts Act or the company’sArticles of Association.We believe that the accounting evidence we have obtained provides anadequate and appropriate basis for our opinions.Furthermore, we have read the corporate governance <strong>report</strong> and on thebasis of this reading and our knowledge of the company consider that we havesufficient grounds for our opinions. This means that our statutory examination ofthe corporate governance <strong>report</strong> is different and substantially less in scope thanan audit conducted in accordance with International Standards on Auditing andgenerally accepted auditing standards in Sweden.OpinionsWe recommend to the annual general meeting of shareholders that the profit betreated in accordance with the proposal in the administration <strong>report</strong> and that themembers of the Board of Directors and the President be discharged from liabilityfor the financial year.In our opinion, the corporate governance <strong>report</strong> has been prepared and itsstatutory content is consistent with the annual accounts and the consolidatedaccounts.Stockholm, 5 July 20<strong>13</strong>Ernst & Young ABThomas ForslundAuthorised Public Accountant92 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


Key RatiosKey Ratios for the Group<strong>2012</strong>/<strong>13</strong>May-Apr2011/12May-Apr2010/11May-AprNet sales SEK million 4,551.0 3,996.9 3,467.3Growth % <strong>13</strong>.9 15.3 7.7Operating profit SEK million 365.2 319.8 367.0Operating margin % 8.0 8.0 10.6Profit after net financial items SEK million 330.6 296.6 338.5Profit margin % 7.3 7.4 9.8Return on capital employed % <strong>13</strong>.8 14.7 18.0Equity/assets ratio % 40.7 45.1 48.6Per share ratiosBasic earnings per share SEK 4.63 4.14 5.25Diluted earnings per share SEK 4.63 4.14 5.25Basic equity per share SEK 30.31 26.90 24.39Diluted equity per share SEK 30.31 26.90 24.39No. of shares at end of period no. 52,000,000 52,000,000 52,000,000DEFINITIONS OF KEY RATIOSCapital employedTotal assets less non-interest-bearingliabilities.Earnings per shareProfit for the period attributable to ParentCompany shareholders, divided by theaverage number of shares during theperiod.EBITEarnings before financial items and tax.Equity/assets ratioEquity, including non-controlling interests,divided by total assets.Equity per shareEquity, excluding non-controlling interests,divided by the number of shares at the endof the period.GrowthGrowth is defined as the change in netsales, relative to net sales for the precedingperiod.Interest coverage ratioProfit after financial items plus financialexpenses, divided by financial expenses.Net debtNet interest-bearing liabilities (includingprovisions for pensions) less the totalof interest-bearing receivables, currentinvestments and cash and cash equivalents.Net debt/equity ratioNet debt divided by equity at year-end.Number of employeesThe number of employees at the end ofthe accounting period. New employees,appointments terminated, part-timeemployees and paid overtime are convertedinto full-time equivalents.Operating marginOperating profit divided by net sales.Profit marginProfit after financial items divided by netsales.Return on capital employedProfit after financial income, for the trailing12 months (TTM), divided by averagecapital employed.Sales per employeeNet sales for the period, divided by theaverage number of employees.<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 93


The companies of the <strong>Systemair</strong> GroupHead office:<strong>Systemair</strong> ABPhone: +46 (0)222 440 00mailbox@systemair.seSubsidiariesBelgium<strong>Systemair</strong> NVBulgaria<strong>Systemair</strong> EOODChile<strong>Systemair</strong> SpADenmark<strong>Systemair</strong> a/sDubai, United Arab Emirates<strong>Systemair</strong> Middle East FZE<strong>Systemair</strong> Trading LLCUnited Kingdom<strong>Systemair</strong> Fans & Spares LtdEstonia<strong>Systemair</strong> ASFinland<strong>Systemair</strong> OyFrance<strong>Systemair</strong> SASFrico SASGreece<strong>Systemair</strong> HellasNetherlandsRucon <strong>Systemair</strong> Beheer B.V.L.S.A. Handelsonderneming B.V.Hong Kong<strong>Systemair</strong> Hong Kong Ltd.India<strong>Systemair</strong> India Pvt. LtdIreland<strong>Systemair</strong> LtdItaly<strong>Systemair</strong> AC<strong>Systemair</strong> S.p.A.Canada<strong>Systemair</strong> LtdChina<strong>Systemair</strong> Shanghai Co. LtdCroatia<strong>Systemair</strong> d.o.o.Latvia<strong>Systemair</strong> SIALithuania<strong>Systemair</strong> UABMalaysia<strong>Systemair</strong> Sdn BhdNorway<strong>Systemair</strong> ASFrico ASPoland<strong>Systemair</strong> SAPortugal<strong>Systemair</strong> SAQatar<strong>Systemair</strong> Middle East LLC.Romania<strong>Systemair</strong> RtRussia<strong>Systemair</strong> LLCSwitzerland<strong>Systemair</strong> Suisse AGSerbia<strong>Systemair</strong> d.o.o. BelgradeSingapore<strong>Systemair</strong> (SEA) PTE Ltd.SlovakiaIMOS-<strong>Systemair</strong> spol. s.r.o.<strong>Systemair</strong> ASSlovenia<strong>Systemair</strong> d.o.o.Spain<strong>Systemair</strong> HVAC S.L.U.SwedenFrico Engineering ABSouth Africa<strong>Systemair</strong> (Pty) LtdTaiwan<strong>Systemair</strong> Co. LtdCzech Republic<strong>Systemair</strong> SATurkey<strong>Systemair</strong> Hav. Ekip. San.ve Tic. Ltd Sti.<strong>Systemair</strong> – HSKGermany<strong>Systemair</strong> GmbHLGB GmbHTekadoor GmbHUkraine<strong>Systemair</strong> TOVHungary<strong>Systemair</strong> RtAustria<strong>Systemair</strong> GmbHSubsidiaries with ownbrand:Frico AB Gothenburgmailbox@frico.seFantech Inc., United Statesinfo@fantech.netFantech Ltd., Canadainfo@fantech.netHolland Heatinginfo@hollandheating.nlMenergainfo@menerga.comVEAB Heat Tech AB, Hässleholmveab@veab.comContact details:Contact information and address details forour companies worldwide are available on<strong>Systemair</strong>’s website at www.systemair.com.94 <strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong>


<strong>Annual</strong> General Meeting<strong>Systemair</strong> will hold its <strong>Annual</strong> General Meeting (AGM) at 3.00p.m. on 29 August 20<strong>13</strong> in the Lecture Hall at <strong>Systemair</strong> Expo,Skinnskatteberg, SwedenA factory tour and product presentation will take place before the meeting. Those wishingto take part should assemble at 1.00 p.m. at <strong>Systemair</strong> Expo, Skinnskatteberg.Shareholders who wish to participate in the AGM must be entered in the share registermaintained by Euroclear Sweden AB on Friday, 23 August 20<strong>13</strong> and must notify theCompany of their intention to attend by no later than 3.00 p.m. on Friday, 23 August 20<strong>13</strong>.Notification should preferably be made by e-mail to agm@systemair.se, or by phoneon +46-(0)222-440 00, by fax to +46-(0)222-440 99, or by post to <strong>Systemair</strong> AB,Receptionen, SE-739 30 Skinnskatteberg, Sweden. Notification shall include details ofname, personal or corporate identity number, address, telephone number, any advisors(no more than two) and the number of shares held. It should also be observed thatany participation in the factory tour must be notified at the same time. Shareholdersrepresented by a proxy are required to issue a dated power of attorney for his/her proxy.The period of validity of the power of attorney may be no more than five years from thedate of issue. A power of attorney form is available on the Company’s website www.systemair.com and may also be requested from the address above.Any person representing a legal entity must present a registration certificate orequivalent document confirming that person’s right to sign on behalf of the entity. Powersof attorney, registration certificates and other authorisation documents must be availableat the AGM and should, in order to facilitate admission to the AGM, be received by theCompany by no later than Friday, 23 August 20<strong>13</strong>. Any power of attorney must bepresented in its original form.To be entitled to participate in the AGM, any shareholder who has had his/her sharesregistered in the name of a nominee must have the nominee temporarily re-register theshares in the shareholder’s name so that the shareholder is entered in the share registerno later than on the record date, Friday, 23 August 20<strong>13</strong>. Any such registration may betemporary. This means that the shareholder must inform his/her nominee in good timebefore the said date.Complete noticeA complete notice of the <strong>Annual</strong> General Meeting, as well as financial and otherinformation, is available on the <strong>Systemair</strong> website www.systemair.com.Calendar29 August 20<strong>13</strong> Q1 Interim Report (May–July 20<strong>13</strong>/14)28 November 20<strong>13</strong> Q2 Interim Report (August–October 20<strong>13</strong>/14)6 March 2014 Q3 Interim Report (November–January 20<strong>13</strong>/14)10 June 2014 Q4 Interim Report (February–April 20<strong>13</strong>/14)28 August 2014<strong>Annual</strong> General Meeting and simultaneouspublication of Q1 Interim Report 2014/15QuestionsAny questions regarding the content of the Company’s financial information should bedirected to: CFO Glen Nilsson, Telephone +46 (0)222 440 03<strong>Systemair</strong> <strong>Annual</strong> Report <strong>2012</strong>/20<strong>13</strong> 95


Design and production <strong>Systemair</strong> in cooperation with NarvaPhoto Mats Lundqvist and Benny Blomqvist (cover) Print Navii, 20<strong>13</strong>


<strong>Systemair</strong> ABIndustrivägen 3SE-739 30 SkinnskattebergSwedenTel +46 222 440 00Fax +46 222 440 99mailbox@systemair.sewww.systemair.com

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!