annual repor t 2009 Camfil Farr

Annual Repor t 2 0 0 9

Annual Report and Consolidated Financial Statements Camfil Farr – Clean Air Solution s

COn TEn TS 2

Presentation of Camfil Farr

3

Highlights of 2009

4

CEO’s Comments

6

Business Concept

7

Core Values

8

Our Important Mission – to Provide Clean Air

10 Aiming to Become the Industry Leader in

Sustainability 13 Comfort Air Business Segment

Camfil Farr. Leading the world in clean air solutions. The Camfil Farr Group is a world leader in the production and development of air filters and clean air solutions. Camfil Farr is also one of the most global air filtration

17 Clean Processes Business Segment

specialists in the world with 23 production units and R&D

21 Power Systems Business Segment

centres in four countries in the Americas, Europe and the

25 Safety & Protection Business Segment

Asia-Pacific region.

28

Historical Review

30 Camfil Around the World Americas Europe Asia-Pacific Region Camfil Farr Power Systems Other Markets 32 Financial Analysis 2009 34 Board of Directors’ Report

and Consolidated Financial Statements 82 Auditors’ Report 83

Group Management

84 Board of Directors 85 Five-Year Summary

The Group, headquartered in Stockholm, Sweden, has approximately 3,250 employees and sales in the range of SEK 4.5 billion. International markets account for almost 90 percent of sales. The company’s business concept is to provide customers with best-in-class air filtration products and services within four main segments: Comfort Air, Clean Processes, Power Systems and Safety & Protection. With 46 years of experience in air filtration products and solutions, Camfil Farr delivers value to customers all over the world while contributing to something essential to everyone – clean air.

Highlights of 2009 Despite the global recession, 2009 was a good overall year for Camfil Farr in which the Group demonstrated its strength and readiness to cope with possible market downturns. Net sales increased to SEK 4,503 M (4,361), an increase of SEK 142 M, but decreased by 5% in fixed currency. Operating profit totalled SEK 417 M (400), corresponding to an EBIT margin of 9.3 (9.2). Sales in Europe remained stable level and increased again in Asia after last year’s negative growth. However, the financial crisis had the largest negative impact on markets in the Americas, where the Comfort Air, APC and Railroad segments all showed double-digit declines in sales. Several measures carried out to boost efficiency and expand resources: Railroad products closed in Oklahoma and relocated to other North American units; Swedish production unit (Alingsås) moved to Trosa, where a new warehouse and Nordic logistics centre was built; Comfort Air production relocated from Germany to Slovakia; new sales office and warehouse opened in southern Germany. Camfil Farr acquired its distributor in Austria, Firma Mecke Klima GmbH. The joint venture in India, Camfil Farr Air Filtration India Ltd, including Anand Industrial Filtration Systems, was integrated into Camfil Farr Power Systems. Camfil Farr published the air filtration industry’s first Sustainability Report and launched CamfilCairing, a Groupwide initiative to further develop and maintain sustainable business practices. Hi-Flo-XL, a new and revolutionary low-energy air filter series, was successfully introduced in the Nordic region.

The aftermarket for filter products, a major

CEO's comments:

component of Camfil Farr sales, was also rather stable. All together, sales were down

Continuing to write our success story W

4% year-on-year in Europe. The impact from the economic downturn was more apparent in North America, where Camfil Farr achieved strong growth in 2008. Not surprisingly, the investment climate – straight-jacketed by the financial crisis – resulted in the deferral or cancella-

e have always run a tight ship at

tion of many projects. However, even the

Camfil Farr and our organization was

aftermarket, normally less sensitive to the

mobilized in 2009 across our markets,

general economic environment, was affect-

ready to sail rough seas. When your com-

ed as customers postponed orders for

pany is ship-shape, you can weather a harsh

replacement filters. The railroad segment

storm like a recession. All in all, Camfil Farr

is an example of an entire market that was

performed reasonably well during the year,

severely impacted, with a sharp reduction

although we should keep in mind that we

in new projects and replacement orders,

rode into 2009 on top of a very high wave,

due to a lower transportation volume in

as 2008 was a record year for us in terms

general and many locomotives being taken

of sales and earnings.

out of service.

Characteristic for 2009, however, were the different categories of “bad weather”

Asia-Pacific Region

on different fronts. Camfil Farr’s global

The Asian market was one of the first to

markets were basically rather stable during

taste the bitterness of the global crisis.

2009, but varied from region to region. We

There were clear indications of an immi-

held our own in all business segments. We

nent downturn in the region already in

also fared better than our competitors.

the last quarter of 2008, especially in the semiconductor industry, on which several

Demonstrating our strength

Camfil Farr subsidiaries in Asia are rather

Considering the global recession, 2009 was

heavily dependent for cleanroom business.

a good overall year for Camfil Farr in which

However, the full-year effect of our acqui-

the Group demonstrated its strength.

sition in New Zealand, and the fact that

At this time last year, the global

In general, the positive sales contin-

China was able to bring home several large

ued to be strong in 2009. Net sales in

projects, contributed to growth of 8% for

economy stood on the brink of

2009 amounted to SEK 4,503 M (4,361),

the region, compared with 2008.

what would turn out to be the

an increase of SEK 142 M, compared

deepest downturn of the post-war

with 2008. In fixed currency, Group sales

Business segments

era. Camfil Farr was well pre-

decreased by 5%. Operating profit of the

In terms of business segments, the steady

pared but braced for the worst.

Camfil Farr Group, after depreciation and

growth of the Comfort Air segment was

amortization, amounted to SEK 417 M

paralyzed in part by the financial crisis’s

in 2009 (400), corresponding to an EBIT

impact on the new construction market,

margin of 9.3% (9.2). Let me recap 2009

which resulted in a sharp drop in sales to

briefly before commenting on what lies

air handling unit manufacturers.

The good news was that it turned out to be rather smooth sailing in most markets.

ahead for Camfil Farr.

The cyclical Clean Processes segment was severely hit by the world-wide decline

C A M F I L FA R R 2009 / 4

Europe and North America

in industrial production during 2009. Overall

In Europe, the downturn had no real app-

sales for Clean Processes decreased 10%

reciable impact on some markets, such as

year-on-year, but with large variations within

France, while the situation was more dif-

the segment, with negative growth in the

ficult in other European countries. Comfort

microelectronics and automotive sub-seg-

Air and Clean Processes had a more turbu-

ments but higher sales in food & beverage

lent year while other customer categories

and service.

were steadier, such as food and bever-

After several years of constant stable

age, hospitals and chemical industries.

growth, Camfil Farr Power Systems’ sales

declined 8%, compared with the year

Initiatives to maintain leadership

hold in 2009 because of all the fire fighting.

before. In regions, such as China, India and

Our good financial health in 2009 was

Now we will rev them up.

Canada, the segment achieved satisfac-

reflected in our ability to make strategic

As we enter 2010, we’re doing it from a

tory growth. Here, I would like to especially

investments while the engines of our com-

solid platform for going forward. We plan to

applaud the fine efforts of our Canadian

petitors stalled in 2009. One example is

segmentize our operations further, increas-

and Indian Power Systems units which

the acquisition of Mecke Klima GmbH, our

ing the potential of the addressable market,

performed very well in 2009.

former Austrian distributor. Investments on

and allowing us to develop our markets

Safety & Protection enjoyed robust

the technology front are another. These

from different angles and create additional

growth of 50% last year, largely due to

included the establishment of new logistics

synergies within the Group. This will also

the expanding nuclear industry in Europe.

centres in Sweden and in Germany, the

enable us to build critical mass quickly.

Air Pollution Control (APC), part of Safety

expansion of the R&D lab in Riverdale (NJ)

We’re in great shape and we have a

& Protection, has achieved a high growth

in the U.S., the addition of new mobile

strong cash flow. Our new five-year plan is

rate over the last few years. Although sales

testing units, and the development of new

in progress. It is aggressive and growth-

decreased slightly in 2009, the outlook is

in-house machinery that boosts production

oriented as usual and we intend to develop

still strong for this business. In 2009, APC

for certain filters considerably.

our business units and truly broaden the scope of what we mean by “clean air”.

expanded into Europe and Asia and addi-

Much more is in the pipeline because

tional investments will be made in these

technological leadership is a mainstay of

Furthermore, there are many positive

markets in the coming year.

the Camfil Farr Group along with commit-

air filtration trends to leverage in our

ment, reliability, teamwork and customer

business, for example, new legislation to

care and satisfaction.

promote cleaner air and higher indoor air

From a green to sustainable

We aim to sharpen our focus even more

quality, and global awareness of green-

Camfil Farr is in the clean air business

on R&D in the near term to incorporate

house gases and the need to save energy

all over the world and we added sustain-

sustainability as a standard component in

– something every ventilation system can

ability to our agenda in 2009 when we

all our products, further develop our life

do with our products.

became the first air filtration company to

cycle assessment software, increase the

All of this will favour our operations and

publish a Sustainability Report. Camfil Farr

energy efficiency of our already low-energy

we welcome the challenge as we continue

firmly believes in the importance of having

filters, lead the next generation of air qual-

to upgrade our skills, technology, broaden

sustainable operations and our current

ity awareness and help customers develop

the product range and make it easier for

programme categorizes what we have been

smarter ventilation systems.

our customers to do business with us.

enterprise

doing all the time: greening our operations

These investments, and those to come,

There’s always sunshine after rain, but

and those of our customers by providing

are a show of continuing strength and they

there will be no “calm” for us after the 2009

air filtration products offering the lowest

will benefit our customers considerably.

storm. For the international Camfil Farr, we will continue to write our success story.

energy consumption and life cycle costs while improving the environment, human

What’s on the horizon?

health and productivity.

The global economic recovery could lose

On the note of sustainability, I would like

pace later this year, dashing hopes for a

to commend our fantastic employees who

rapid escape from the downturn. It’s true

not only rallied to help us cope effectively

that the economy is growing again, but it

Alan O’Connell

with the 2009 crisis, but also responded

isn’t out of the woods yet. The world faces

President and CEO

tremendously to our sustainability initiative

a long, slow recovery, and we’re keeping on

during the year, contributing a wealth of

our eye on developments in the euro zone.

ideas and proposals to reduce our energy

We will continue to work hard from a

consumption and green our manufacturing

Gibraltar-like position in the industry, with

facilities even more.

a cadre of professionals that has delivered

Their enthusiasm was also effectively

Camfil Farr excellent results over the years.

demonstrated in our Camfilcairing activi-

We stay close to our customers, stick

ties in 2009 and the beginning of 2010.

to our core business and use common

Camfilcairing, our internal programme to

business sense. If we keep putting great

integrate sustainability and good corporate

products in front of customers, they will

citizenship, includes many volunteer com-

continue to turn to Camfil Farr.

munity initiatives in many different coun-

To increase our competitiveness year

tries. You will find this described further on

by year, we steadily evolve our organiza-

in the Annual Report.

tion, although some measures were put on

C A M F I L FA R R 2 0 0 9 / 5

Camfil Farr’s clean air business concept Camfil Farr’s business concept is to deliver value to customers all over the world while contributing to something essential to everyone – clean air. Clean air benefits human health and well-being, safety, production and operating reliability. As the leader in air filtration, Camfil Farr realizes this concept by: >>> Developing, producing and providing the best air filtration products, systems and solutions to protect people, processes and the environment in local, regional and global markets. >>> Providing the best customer support and service in the industry, including leading-edge knowledge for any air filtration application. >>> Maintaining the best R&D, production and logistics resources for customers. >>> Being a sustainable and socially responsible supplier that maintains the highest professional standards and works to raise awareness of the importance and benefits of clean air.

C A M F I L FA R R 2009 / 6

Camfil Farr’s core values Commitment: we are committed to do our best in all situations. As a responsible company, we consider global citizenship as part of our philosophy and also adhere to the values and principles of sustainable development. Reliability: our fundamental business principle is based on trust and transparency, the basis to build long-term relationships with our stakeholders. Teamwork: our strength and competitive advantage is, and will always be, people. We encourage cooperative efforts and knowledge sharing across all our activities and at every level of the company, to make every workday a fulfilment for our employees, as well as to provide the best service possible to our clients. Customer satisfaction: we permanently strive to im prove the quality of our products and services. We also provide filtration solutions to help our customers meet their own sustainability objectives and increase the sustainability of their facilities and operations. Local presence: wherever Camfil Farr is present, we provide products and services through an organization that understands local customer and market needs, and respects local cultural, business and environmental practices.

C A M F I L FA R R 2 0 0 9 / 7

Camfil Farr filtration technology – for a cleaner and greener world

In addition to the beneficial effects of IAQ on health, numerous studies are also pointing out the important links between good IAQ, work productivity and general well-being. This is another reason why standards and recommendations for modern air filters are being geared towards much higher filtration levels today. IAQ is also essential for production and equipment efficiency. In this arena, Camfil Farr is a key supplier of air filtration systems to customers requiring high IAQ for ultra-clean processes, for gas turbines and even locomotives. Whatever the need for clean air, Camfil Farr has a full range of air filters satisfying all requirements for particle and gas filtration. We also work “outdoors” to clean emissions and stop pollution at the source, specializing in air pollution control, supplying dust and fume collectors for heavy industrial processes, or systems to collect harmful chemicals, contain bacteria or radioactive particles.

Helping customers to save energy and select the right products Due to rising oil prices and electricity rates, the cost of cleaning, supplying and exhausting air in buildings is another major concern today. Improving the energy efficiency of

Our important mission

disease. This is catching the attention of

HVAC systems is also a way to make build-

– to provide clean air

govern mental health and environmental

ings greener and combat climate change.

agencies more and more. There are pri-

In the facilities management area,

Camfil Farr has a vital mission to carry out:

mary pollutants to remove, such as sulphur

Camfil Farr has provided guidance and

to provide clean air to protect people, proc-

dioxide, nitric oxides and volatile organic

solutions for customers for years, demon-

esses, equipment and the environment,

compounds; secondary pollutants like

strating time after time – in lab tests and

both indoors and outdoors.

ozone from photochemical processes; and

real operating conditions – that it always

Within the heating, ventilation and air

solid pollutants – the fine particles in air,

pays to buy quality Camfil Farr air filters

conditioning (HVAC) industry, clean air is

such as polycyclic aromatic hydrocarbons,

with a low pressure drop, instead of low-

usually associated with Indoor Air Quality

identified as a potential cause of cancer,

cost products with poorly functioning filter

(IAQ), which is essential for providing a

which can find their way into our lungs and

media and/or insufficient filtration area.

comfortable and healthy indoor environ-

even penetrate into our bloodstream.

ment for the well-being of people.

Camfil Farr has also pioneered and

Today’s sharper focus on harmful

developed Life Cycle Cost (LCC) software

IAQ is being focused on more than ever

gases, such as ozone, has also stimulated

for performing HVAC system analyses,

because human beings spend 80 percent

the development of filters for molecular

allowing customers to choose the right fil-

of their time in indoor spaces, making IAQ

filtration of supply air, which are now being

ter for the right application for the right air

a key aspect of public health. The air we

specified and used in facilities such as com-

cleanliness. A Camfil Farr analysis typically

breathe today is also more heavily and

mercial and public buildings in urban envi-

shows that energy accounts for 70 percent

diversely polluted than before, increasing

ronments. Regulatory and pollution control

of a filter’s LCC, while the actual cost of

both the amount and complexity of the

efforts are setting protective health-based

the filter represents only 15-20 percent,

pollutants in the atmosphere that find their

standards for ozone in the air we breathe

with the balance being disposal and labour

way into ventilation systems.

and creating programmes to clean up air,

costs. With the right filter, energy consump-

reduce harmful emissions and influence

tion in air handling units can be reduced

ozone’s impact by the way we live.

without compromising IAQ. A new and more

As air pollution increases, so does the risk of respiratory illness and heart

C A M F I L FA R R 2009 / 8

comprehensive LCC software tool was

determine the greenness of facilities.

A number of these industries, such as phar-

Regulating authorities and policymak-

maceuticals and food and beverage, are

ers are also setting out various categories

required to comply with global standards

As energy and climate change con-

of outdoor air quality, several categories

and regulations for hygienic production,

cerns grow, Camfil Farr is continuing to

of desirable indoor air quality (IAQ) and the

which in turn requires stringent air cleanli-

make its mark and contribution to the

air filtration steps to advance from one

ness standards provided by high efficiency

energy efficiency of our customers by

category to another.

HVAC and filtration systems.

launched for customers in the beginning of 2010.

offering new environmentally friendly and

When designing mechanical supply and

As customers move across borders

low-energy products like the new Hi-Flo ®

exhaust ventilation systems, consideration

and regions, Camfil Farr’s products and

XL generation of filters, and new tools to

has to be given to the quality of the outdoor

systems follow them and can be supplied

analyze real-life filter performance, such

air around a building or proposed location

through the Group’s multi-regional produc-

as S.A.V.E.R., which helps building own-

of a facility. Atmospheric dust and particles

tion and logistics infrastructure. Products

ers manage costs associated with any air

come in different concentrations and parti-

are also developed in state-of-the art facili-

handling systems and to select and main-

cle sizes that have to be eliminated to fulfil

ties at four regional R&D centres. As a

tain the filters they use.

hygienic and IAQ requirements. The same

service-driven business, Camfil Farr also

Camfil Farr has also developed and

goes for the presence of potential aller-

places the strictest of demands on its own

introduced an Energy and Quality Rating

gens, carcinogenic pollutants from traffic,

production quality and logistics to ensure

System in Europe that is completely trans-

odours and gases.

that customers get the right product when

parent and gives customers the data and

For example, standards are being intro-

facts they need for choosing the right

duced to monitor nitrogen oxide emissions

Clean air is an essential commodity for

Camfil Farr filter for the application at hand.

in high-risk zones like urban communities

people, buildings and industry all over the

In the United States, Camfil Farr is also

near roadways. Here, Camfil Farr is leading

planet. Camfil Farr, as the global leader in

in the forefront of energy ratings for air

the industry by developing dual-action com-

air filtration technology, has the know-how

filters and classifies filters according to the

bination particle and molecular air filters

and professional staff and resources to

Energy Cost Index, a system that rates a

to remove harmful external urban pollution

ensure its supply and maintenance all over

filter’s energy usage and its ability to main-

from ventilation air distributed in public

the world.

tain published efficiency over its lifetime.

and commercial buildings, or in museums,

In addition, initiatives are being carried out to make it easier for customers to

they want it.

where pollutants can deteriorate valuable

Sustainability for a bright future

artefacts and art treasures.

In 2009, Camfil Farr became the first air

do business with Camfil Farr. To facilitate

These urban pollutants are requiring

filtration company in the world to publish

ordering and purchasing, new versions of

the use of finer filters to filter outdoor air,

a corporate Sustainability Report. Leading

Camfil Farr’s Web shops also went online in

recycled air and exhaust air. This is driving

efforts in this area, within our industry, is

Sweden and Finland during 2009. Additional

the choice of filters towards products of

a way to maintain the company’s global

e-business sites are planned or in progress

higher efficiency, a Camfil Farr specialty.

leadership position, retain the respect of

There are other signs that IAQ is a

the market and strengthen Camfil Farr’s

Camfil Farr has also entered another

growing concern among governments and

credibility as the greenest air filtration

new product area by launching the

the public, such as increased site monitor-

company in the world.

CamCleaner series of room air cleaners.

ing of indoor air quality, new devices for

Camfil Farr has always been clean and

These mobile units, equipped with HEPA

proactive IAQ surveys, the emergence of

green, so our sustainability efforts are a

micro-filters, address the need for an easy-

more and more IAQ assessment consult-

continuation of what we have always done.

to-implement solution for providing addi-

ants and remedial contractors, and the

We are basically greening our operations

tional filtration, and creating a cleaner and

creation of indoor air pollution databases,

further by designing more sustainability

healthier workplace, in everything from

programmes and guidelines.

into Camfil Farr products, recognizing that

in other countries.

small offices and rooms, to large commercial and public premises.

A growing regulatory

All these factors combined will help grow the market for effective air filtration,

HVAC industry is facing increased pressure

responsibility are all interlinked.

especially for filters offering the highest

We are looking forward to a bright and

efficiency and lowest energy consumption.

sustainable future with our customers. For further information, see the summary of

environment In many countries around the world, the

the economy, the environment and social

An expanding and sustainable business

our present sustainability programme in the Board of Directors’ Report and on our corporate website.

from green initiatives of governments and

As economies in new markets develop, the

their environmental agencies to reduce

market for air filtration expands and rides

You can read more about Camfil Farr’s entire

energy consumption and alleviate the

on the wave of globalization trends. Asia,

operations, product range and international

effects of climate change. For example,

Eastern Europe and India are examples of

organization by visiting www.camfilfarr.com

Indoor Environmental Quality (IEQ) has now

regions where major international indus-

emerged as a new term to analyze and

tries have expanded and set up business.

C A M F I L FA R R 2 0 0 9 / 9

Aiming to become the industry leader in sustainability Camfil Farr is a recognized leader in providing clean air solutions to a broad range of customers for numerous applications and industries. For more close to 50 years, our approach has been to provide clients with the “right” air quality at the lowest possible total cost. We have always helped customers recognize that energy costs, maintenance, disposal and purchase price are each important elements of the Total Cost of Ownership (TCO) for our products, which reduce their energy consumption, carbon emissions, transportation costs and solid waste disposal. We carried out these pioneering efforts long before “sustainability” and “greenness” became fashionable terms. In 2009, Camfil Farr embarked on the mission to become the first sustainable air filtration company in the world and also published the industry’s first corporate Sustainability Report on a voluntary basis. In Camfil Farr’s view, sustainability is vital for continuing growth as well as essential for understanding the social and environmental concerns of customers, employees and other stakeholders. We recognize that climate change and a growing awareness about conserving resources in society also requires responsible actions and solutions from the air filtration industry. Delivering high IAQ, reducing the energy consumption of air handling systems with better filters, and continuing our cradle-to-grave approach to product management will all play a role in this process.

C A M F I L FA R R 2009 / 10

Sustainability initiatives in 2009 Driving the industry towards true sustainability and reducing our own environmental footprint involves steady improvement of company processes, practices and products from a sustainability standpoint, as well as designing sustainability into Camfil Farr products and services. During 2009 we set up a consistent approach to communicating sustainability through five main directions: energy efficiency, indoor air quality, green products, the supply chain, and risk assessment and management. The Group’s sustainability programme was launched early in the year, internally through the CamfilCairing initiative, and externally with the publication of the Sustainability Report and information on Camfil Farr’s corporate website.

at Camfil Farr’s 23 production facilities are trained in sustainability and related compliance activities, guidelines and policies. All this work is closely developed, supervised and coordinated by the Corporate Sustainability Officer to ensure a helicopter view of sustainability efforts and to monitor progress towards goals. The majority of production facilities have implemented extensive energy and resource conservation programmes, among other measures. Camfil Farr’s sustainability programme also strives to follow the UN’s Global Compact Principles and Global Reporting Initiative, which comprise the regulations and guidelines for how the Group reports its own sustainability initiatives.

Essential for the future Customers who have already integrated corporate social respon-

Internal Camfilcairing programme “Camfilcairing” is the framework and name of the internal programme to integrate sustainability and corporate citizenship in every aspect of our business strategy. The name is built around Camfil, our environment, caring and air – key words that are to be associated with the Camfil Farr name. Camfilfcairing and the Group’s sustainability mission were launched simultaneously at all subsidiaries in early 2009. Sustainability guidelines and policies were formulated for Camfil Farr’s day-to-day operations. These also comprise the basis for Camfilcairing activities, which in 2009 embraced energy conservation programmes, life cycle assessments to mitigate the environmental impact of products and operations, the introduction of green transportation modes and co-ordinated shipments in

sibility (CSR) in their operations now appreciate having a primary CSR/sustainability contact within the Camfil Farr Group. Financial institutions have also given positive feedback on the first Sustainability Report and a second will be published in the spring of 2010. Experts on CSR issues recognise the relevance of our actions and have no doubts about Camfil Farr’s strong commitment and long track record. Camfil Farr wants to be the leader in a business we are currently leading. We want the rest of the air filtration industry to follow our example. For more information about our sustainbility programme, please download our corporate Sustainability Report. http://www.camfilfarr.com/campaign/sustainability/

Europe and the U.S., and caring for people in our local markets through community initiatives. During 2009, data from sustainability measurements were also compiled and action plans developed for energy efficiency, the indoor climate, environmental products, suppliers and risk management. These efforts are continuing and will involve further refinement of policies and guidelines and an evaluation of how they are functioning at our companies and plants around the world and within the operations of suppliers. In early 2010, the second Camfilcairing Week was also held across the Group. As in 2009, employees were actively engaged in a wide variety of sustainability-related activities ranging from sharing local good practices and green tips for the office, to reporting on local sustainability activities, such as gender equality and employee health programmes, and verification assessment activities for energy conservation at facilities. Local community initiatives were also carried out extensively (photo).

Sustainability guidelines and policies for 23 production facilities on 4 continents Camfil Farr conducts business in the Americas, Europe and AsiaPacific region. To ensure effective and uniform implementation of the Group’s sustainability measures, designated representatives

“Camfilcairing” involves in-house sustainability initiatives ranging from energy conservation and green transportation to reducing environmental impact. In one of the activities conducted in 2009, Camfil Farr Thailand planted 500 trees to reforest and protect mangroves threatened by coastal erosion and possible inundation in Samutsongklam Province. Several key customers participated in the effort. Photographer: Supansa Keautthong, Customer Service Department, Camfil Farr Thailand.

C A M FI L FA R R 2 0 0 9 / 1 1

Business a re a :

Comfort Air – protecting people Air filters for ventilation systems in schools, office buildings, hotels and similar public and commercial facilities to provide clean air for high indoor air quality (IAQ), a healthy and more productive working environment and reduce energy consumption.

Comfort Air 45 percent of Group sales

The Comfort Air business

Research proves that filters with high efficiency very

segment accounts for almost

effectively reduce problems that small particles can

half of Group sales. Most

cause for sensitive people, especially in urban environ-

air filters for this segment

ments. It has been documented that people gener-

are installed in ventilation

ally perform and feel better in a healthy indoor climate

systems in schools, offices,

supplied with clean filtered air.

homes, hospitals and air-

In many countries, concerns about the harmful

ports, among other facilities,

effects of gases, such as bad ozone, have also stimulated

in order to provide the basis for a clean and healthy

regulatory efforts to set protective health-based stand-

indoor environment. A well-designed ventilation solution

ards for the air people breathe, as well as programmes

with high-performance filters also reduces operating

to clean up air and reduce harmful emissions.

costs for the customer and reduces energy consumption significantly.

In today’s energy-conscious society, customers are also reducing the power consumption of their ventilation

Since the Comfort Air market consists mainly of

systems to reduce operating costs and improve the

replacement filters, operations in this segment are

overall greenness of their facilities. The cost to venti-

relatively insensitive to fluctuations in the economy.

late a building is significant. The typical energy cost

Customers include facilities management companies,

of filters, as a percentage of the total HVAC system, is

local government agencies and buildings, as well as

approximately 30%. Selecting the correct filter efficiency

companies providing ventilation and air conditioning

and lowest pressure

service to offices, hotels, restaurants, airports and

drop can create sig-

similar public facilities.

nificant savings on

In Europe, bag filters are dominant, with the Hi-Flo ®

energy while maintain-

and energy-saving Hi-Flo XL® filters being the common

ing healthy Indoor Air

products. In the U.S., compact filters with pleated filter

Quality (IAQ). Camfil

media are more common. The best known are Camfil

Farr offers the most

Farr’s 30/30 ® and Durafil® pleated panel filters.

energy-efficient filters

The need for effective air filtration is becoming more and more obvious to people all around the world.

C A M F I L FA R R 2009 / 14

on the market.

T H E R E F E R E N C E I N S TA L L AT I O N S O N T H E S E PA G E S R E P R E S E N T T Y P I C A L R E C E N T D E L I V E R I E S A N D S O L U T I O N S F R O M T H E C A M F I L FA R R G R O U P.

A healthier and happier hospital. What does a major general hospital do when it wants to eliminate poor indoor air quality and ventilation problems in public spaces and operating theatres? Ask Martini Hospital (Netherlands) and its maintenance specialist Wolter en Dros, which contacted Camfil Farr to find a solution. A competitor’s synthetic filters were causing pressure surges in the ventilation system and losing their efficiency. As a test, Camfil Farr supplied a complete set of its own filters for one filtration unit, analyzed the results and performed a particle count after two months showing a major difference between the performance and efficiency of Camfil Farr glass-fibre filters vs. synthetic filters. Two life cycle cost reports also specified the large energy savings and reduced filter change costs with Camfil Farr filters. Today, Martini has switched 100 percent to Camfil Farr products, pays less for energy and has a significantly improved filtration plan with the added advantage of a secure ventilation system with a smaller carbon footprint.

Keeping ar t fine for future generations. Camfil Farr, a recognized expert in molecular filtration, has designed and supplied activated carbon filtration systems to preserve the art treasures and artefacts of many prestigious museums and galleries around the world, including the Uffizi in Florence, the British Library in London and Moderna Museet in Stockholm. Forced or natural ventilation introduces external particulate or molecular pollutants in museums, especially in city centre locations. Sulphur dioxide blackens old paintings, oxides of nitrogen corrode bronzes and stone sculptures, and ozone accelerates the ageing and deterioration of paper, textile and other organic materials. Camfil Farr’s activated carbon filters provide a very cost-effective method of controlling these harmful gases. Various grades of material can be used in filters to meet specific preventative conservation requirements. Typical products include filters from the Camcarb, Camsure and GDM series, and special urban pollution filters like Citysorb and Cityflo. Camfil Farr also helps cultural facilities reduce their energy costs and carbon footprint by recommending a selection of the right filters with the least flow resistance, or pressure drop, to reduce power consumption of the ventilation system and improve operating economy.

Dropping c o s t s w i t h l o w p re s s u re d ro p . Emory Healthcare in the U.S. knows that issues like indoor air quality affect cleanliness. The health care provider recently took the opportunity to upgrade its IAQ, with the added advantage of substantially reduced filtration costs, by replacing the synthetic filters for its 90,000 cubic-feet-per-minute (2,549 m3/min) air handling unit system with three energy-rated filters from Camfil Farr: 30/30, Hi-Flo and Durafil. Pressure drop is central to decisions on filtration because of its correlation with both filter performance and energy consumption. The three Camfil Farr filters with an energy cost index of five stars are stellar performers because they maintain their efficiency over their life and use less energy to move air through the filter. Eleven months after Emory’s upgrade, pressure drop was less than one third of the previous level, impacting power requirements and cutting energy costs. Final filter service life was also extended from 12 to 24 months for significant savings. Considering only the cost of energy to operate the air handling system, the return on investment is normally less than one year for 5 Star filters from Camfil Farr.

M a k i n g t h e c a s e f o r e n e rg y s a v i n gs . Filters fi t f o r K i n g ’s .

Snare for bad city air. Heavily polluted air is a constant challenge in Bergen, the second largest city in Norway. Recently, the situation was made worse by unusually cold weather and the lack of wind which nearly forced the municipality to close schools and day centres in the most polluted areas of northern Bergen. To improve overall indoor air quality in urban areas, Norway’s leading indoor climate contractor, GK Norge A/S, recommends installing Camfil Farr’s energy-efficient City-Flo XL for particulate and molecular filtration. Camfil Farr develops new innovative products to deal with the growing need for higher and healthier indoor air quality (IAQ) in city environments and City-Flo XL has a proven broad spectrum capability against concentrations of most indoor and outdoor pollutants. These filters remove particles, odours and gases, including ozone, VOCs, sulphur dioxide, nitrogen oxide and carbon dioxide, to provide occupants with the highest level of IAQ as set out in European Standard EN13779. GK Norge is also working for switching to City-Flo XL for its HVAC service contracts in Oslo.

The fact that an air filter does not have a plug attached to it does not mean that it does not affect energy consumption. The more effective surface area of Camfil Farr filters in relation to the air flow reduces resistance and consequently the energy consumption of air handling systems. Ask King’s College in London. After conducting an air handling plant assessment, Camfil Farr is helping King’s College to secure major savings on its air conditioning plant. Over several buildings, including 28 air handling units, savings are projected to be GBP 55,000 over 5 years with a capital payback of less than 12 months. This is being accomplished in part by installing low-energy Camfil Farr filters. Other sustainable gains include improved air quality and savings on filters, energy, labour and waste disposal.

In today’s increasingly energy-conscious society, all kinds of manufacturers are reducing the power consumption of their facilities to cut costs and improve the overall greenness of their operations. This was the case for the international pharmaceutical company Lundbeck (Denmark), which requested an on-site test with Camfil Farr’s new Hi-Flo XLT filter. The test documented substantial savings and made this filter a natural choice for Lundbeck’s air handling units. Hi-Flo XLT is a member of the Hi-Flo XL series of filters that combine cost efficiency, environmental thinking and low energy consumption all in the same series. Compared with most standard pocket filters on the market, Hi-Flo XL filters can reduce the operating cost of a ventilation system because they keep pressure drop low over a longer period. The ventilation system operates more efficiently and uses less energy when the speed of the fan is reduced in the air handling unit.

Ta m i n g o f t h e f l u . The A/H1N1 influenza virus, or swine flu pandemic, prompted preventive emergency measures globally to avoid its transmission and reduce the number of potential deaths. The flu can be spread through airborne droplets generated from coughing, sneezing or talking, or it can be contracted from contact with body secretions and the eyes, nose or mouth. Camfil Farr responded by briefing customers and medical/critical care facilities on recommended filtration solutions for preventing contamination risk and also developed the Pandemic Barrier 20 and 2000, two highly efficient air filters for particle sizes less than 80 nanometres in size. These filters provide effective protection against bacteria or viruses in air handling systems with high security and hygiene requirements.

C A M FI L FA R R 2 0 0 9 / 1 5

Business segm e n t :

Clean Processes – protecting processes Camfil Farr’s filters and clean air solutions are used in most industries where demands for extremely clean air are crucial for manufacturing processes. Customers include the microelectronics, pharmaceuticals, food and beverage, and automotive industries.

Clean air is an important

In clean manufacturing processes, filtration often takes

requirement in many pro-

place in several stages, where pre-filtration is first

duction processes. There

carried out to protect the high-efficiency particulate

are

require-

air (HEPA) and ultra-low particulate air (ULPA) filters,

ments for ultra-clean air

which are much more complex and require a larger

in cleanroom applications.

investment. Pre-filters here are similar to those used

Semiconductors,

pharma-

in the Comfort Air sector. HEPA filters often cover the

ceuticals, food and beverages have to be produced

entire ceiling in a cleanroom environment. Megalam® is

in strictly controlled environments, where very small

a typical final stage filter for clean processes. The need

and undesirable particles can be devastating and lead

for gas filtration is steadily increasing. Camfil Farr has

Clean Processes 31 percent of Group sales

stringent

to biocontamination, product spoilage and high costs.

developed the Gigapleat ® for this purpose, among other

Using effective air filtration to combat microbiological

molecular filters.

contamination of foodstuffs, for example, is highly regulated to ensure the safety of food and protect human health. Other critical filtration applications in this business sector include paint spraying facilities for the automotive industry, which demand a constant supply of fresh filtered air for performance, hygiene and safety reasons, and hospital operating theatres, which need cleanroom conditions to eliminate airborne infectious contaminants. Camfil Farr supplies complete ceiling systems for hospital surgery and has also pioneered a range of supply and exhaust housings specifically for the biopharmaceutical industry, including high-temperature filters and bag-in, bag-out systems for containing contaminants.

C A M F I L FA R R 2009 / 18

T H E R E F E R E N C E I N S TA L L AT I O N S O N T H E S E PA G E S R E P R E S E N T T Y P I C A L R E C E N T D E L I V E R I E S A N D S O L U T I O N S F R O M T H E C A M F I L FA R R G R O U P.

Best products for best value proposition. A number of major pharmaceutical companies world-wide have been signing multi-year HVAC supply and installation contracts with Camfil Farr, converting to our filter products to replace HEPA filters, coarse-fibre synthetic box and bag filters, and low-grade pre-filters. Camfil Farr’s best value for money proposition has been demonstrated time-after-time in filter tests proving the winning benefits of Camfil Farr products in terms of filtration efficiency, low pressure drop, and long operating life, which can substantially improve the operating economy of energyintensive air handling systems in pharma plants while also safeguarding the all-important cleanliness of their production environment. These agreements often require networking with global engineering teams and facility engineers, on-site filter tests in real manufacturing conditions, and close collaboration with international procurement units. Camfil Farr is the only air filtration company that can truly offer the technical support and global coverage that pharma companies need to leverage their global investments in air filtration, capitalize on the energy reduction opportunity with Camfil Farr air filters and keep their plants cleaner and greener in the face of economic uncertainty or volatility in energy prices.

Hot appli c a t i o n . The Italian-based Marchesini Group is one of the largest international providers of packaging machinery for pharmaceuticals, food and cosmetics, and its NERI subsidiary has a long tradition in designing and manufacturing sterilization tunnels. For years, NERI has conducted research in collaboration with Camfil Farr to design high-temperature filters that maintain their integrity and rated performance values in applications with extremely high temperatures. Marchesini’s new NLT 60S-C depyrogeneration tunnel with sterilization line has been specially engineered to incorporate Camfil Farr’s Termikfil high-temperature filter with microfine glass media. Termikfil is the only HEPA filter guaranteed to operate for a minimum of one year at a temperature of 350°C/662°F while maintaining the leak-free integrity required to pass validations. The filter is typically installed in high-temperature depyrogeneration and sterilization processes, which use a laminar flow of hot air to eliminate viable matter and reduce the amount of endotoxin on ampoules, vials or other containers used in pharmaceutical processing and distribution.

Clean for vaccine.

Good filtration goes underground. Mass transit systems help relieve massive city congestion and their energy consumption and emissions are a fraction of those of the individual transportation vehicles they replace. As the leading supplier of air filters for subway cars in North America, Camfil Farr provides filters for the cooling air of traction motors to keep the interior of motors clean – allowing them to run cooler and reducing motor failure – and for breathing air to improve the cleanliness of car interiors, passenger air quality and the efficiency of air conditioning systems. Because of size and pressure drop limitations, Camfil Farr’s R30/30WR pleated panel filters give the best combination of efficiency, pressure drop and long life in on-board subway air filtration systems. Camfil Farr’s Railroad Products group also manufactures a wide range of products for the rail and transit industries, including exhaust components and air and liquid filtration products for locomotives.

The new state-of-the art plant of a major drug manufacturer in the U.S. – the most automated pharmaceuticals facility in the world – produces vaccines for measles, mumps, rubella and shingles. When completed, the site will eventually manufacture two-thirds of the company’s live virus stock. The automatic vial distribution system can handle more than 100,000 doses of product in an aseptic manufacturing environment and the plant includes the latest lyophiliser line for filling and sealing vials of glass. The cleanroom areas of this flagship site utilize a large number of Camfil Farr’s Pharmaseal terminal housings, Megalam filters in Cleanpack ceiling grids and other areas, as well as 30/30 and Durafil filters in all air handling units for fine-fibre efficiency, minimum energy consumption and long filter life. The Pharmaseal ducted ceiling module has been made the standard for clean room air filtration at a number of production plants belonging to this pharma group.

C A M FI L FA R R 2 0 0 9 / 1 9

Business segm e n t :

Power Systems – protecting gas turbines Camfil Farr is a leading supplier of heavy-duty filtration and noise control equipment for the gas turbines used by major power-generating and offshore operators worldwide. Solutions include air inlet filtration systems, acoustic enclosures and ventilation, exhaust systems, diverter dampers, ducting, silencers, de-icing systems, and service and refurbishment.

Power Systems 17 percent of Group sales

Protecting equipment such

Turbines are also sensitive to inlet system resistance,

as gas turbines, compres-

which requires large filter surfaces to maintain a low

sors and diesel engines is

average pressure drop.

a key Camfil Farr segment.

Camfil Farr Power Systems is a global partner that

Air filtration and noise con-

can support customers with complete packages for all

trol equipment has been

gas turbine applications by leveraging its proprietary

supplied to thousands of

expertise in the field and Camfil Farr's global presence

installations all over the globe, assuring reliable and efficient operation of power generation systems and other production processes.

and market-leading technology in air filtration. Today, Camfil Farr products are being used in every conceivable operating environment around the world to

Demand for energy and reliable power is stimulating

protect gas turbines from erosion and fouling for higher

demand for gas turbines and other power production

efficiency and production economy, and longer running

equipment. Air filtration for air intakes, enclosures,

times with lower emissions. Land-based, offshore, and

silencers and cooling systems for gas turbines are one

marine systems

of the cornerstones of Camfil Farr’s expanding interna-

are supplied, as

tional business.

well as retrofits

Since high-performance gas turbines typically operate in some of the most severe environments, their filtration systems are involving increasingly higher grades of efficiency in pre-filtration and the final filtration stage – including the use of HEPA filters – to keep guide vanes and turbine blades in perfect shape.

C A M F I L FA R R 2009 / 22

and upgrades.

T H E R E F E R E N C E I N S TA L L AT I O N S O N T H E S E PA G E S R E P R E S E N T T Y P I C A L R E C E N T D E L I V E R I E S A N D S O L U T I O N S F R O M T H E C A M F I L FA R R G R O U P.

Powering up for the next Winter Olympics.

In the pipeline again with HemiPleat ® . One of the original four large infrastructure projects in China’s tenth five-year plan (2001-05) was the construction of the West-East Gas Pipeline (WEGP), which transports clean fuel from Xinjiang to the energy-hungry Yangtze River Delta. Energy giants like the Royal Dutch/Shell Group, Russia’s Gazprom and Exxon Mobil participated in this first pipeline project. So did Camfil Farr Power Systems (CFPS), which supplied a total of 77 Tenkay Hemipleat inlet pulse filter systems for 30 MW gas turbines running gas compressors at 18 gas compression stations along the pipeline. Each system is equipped with 240 filter elements. Another 27 filter units have been confirmed for connecting pipelines in Uzbekistan and Kazakhstan. Tenkay Hemipleat is designed for pulse cleaning cartridges and uses state-of-the-art pleating technology for superior performance. The filter’s new PolyTech HE media is an advanced pulse-cleaned media combining high efficiency and high cleanability with low pressure drop.

With Vancouver finished, it’s already high time to plan for the next Winter Olympics which will be held in Sochi, Russia. The Olympics are always a huge major world event and getting all the people together, and running all the activities, will also require a lot of electric power. As a well known supplier of inlet systems for the power generation industry, Camfil Farr Power Systems (CFPS) has been selected to supply air inlet filtration systems for the gas turbine power plants providing electric power and heat for the Olympic Village and town of Sochi. These systems will provide clean and silenced air for seven gas turbines with a total installed power of 450 MW. The inlet systems will be installed on three Siemens SGT-800s and four Ansaldo Energia V64.3A gas turbines.

The louver that outmanoeuvres snow and rain. Camfil Farr Power Systems’ product range includes the CamVane droplet separator, a heavy-duty and highly effective rain protection unit solving moisture problems that affect the performance of ventilation or filtration systems. The louvered CamVane, typically installed in the air intake filtration system of gas turbines operating in marine environments and coastal areas, has recently found new applications in Sweden. One is at the Karolinska Institute, one of Europe’s largest medical universities, where CamVane units prevent snow or rain from being drawn in the hospital’s sensitive indoor environment. Another is the Malmö Sports Arena, where the separator stops drifting snow from entering the ventilation system. By preventing rain and fine droplets from entering, the complete air intake system has a better chance to perform as expected and provide the expected Indoor Air Quality (IAQ) or equipment protection.

A growin g m a r k e t . The two main market drivers for Camfil Farr Power Systems are the growing demand for electric power and the shrinking level of the world’s known oil reserves. Global electricity demand is forecast to increase strongly up to 2030, and will mostly likely grow more with the implementation of coal gasification technology combined with CO2 separation technology. Greater use of biogas can also add valuable growth when it comes to clean and decentralised power generation. Since high-performance gas turbines typically operate in some of the most severe environments, their filtration systems are involving increasingly higher grades of efficiency in pre-filtration and the final filtration stage – including the use of HEPA filters – to keep guide vanes and turbine blades in perfect shape. Turbines are also sensitive to inlet system resistance, which requires large filter surfaces to maintain a low average pressure drop.

C A M FI L FA R R 2 0 0 9 / 2 3

Business segm e n t:

Safety & Protection – protecting the environment Camfil Farr is the industry leader in high-efficiency particle/gas filtration and containment systems for nuclear power plants and also specializes in biocontainment systems and filter housings for high-risk facilities, such as biosafety labs studying disease. Camfil Farr filters are also used in the chemical, biological and space industries. The business segment also designs and develops Air Pollution Control (APC) products for dust collection in the manufacturing, pharmaceutical and mining industries in the Americas, Europe and Asia.

Emissions from dirty and

Dust collection for pollution control and product re-

potentially dangerous proc-

covery is another fast-growing area in this segment. The

esses, such as nuclear power

main markets are currently North America, Europe and

generation, mining, labora-

Asia, where saving energy and increasing production

Safety & Protection

tory research and chemical

efficiency, while controlling indoor air quality, is a chal-

7 percent of Group sales

factories, can harm human

lenging aspect of plant management. The metalwork-

beings and nature. Camfil

ing, pharmaceutical and mining industries are typical

Farr's filter solutions are designed to prevent emissions of foul-smelling and unhealthy substances that constitute a direct threat to people and the environment. The high-tech end of this market consists of biocontainment systems – a Camfil Farr specialty – which include everything from systems for sterile and particlefree air in mini-environments, to special high-security housings for high-risk laboratories, buildings and environments, biosafety cabinets for hazardous materials, high-temperature filters for sterilisation processes, bag in-bag out systems for handling contaminants and specially designed terminal and exhaust housings. Biopharma facilities, high-security research labs, nuclear power plants and chemical factories use these systems, among other customers.

C A M F I L FA R R 2009 / 26

customers. A significant part of the market consists of changeable filters.

T H E R E F E R E N C E I N S TA L L AT I O N S O N T H E S E PA G E S R E P R E S E N T T Y P I C A L R E C E N T D E L I V E R I E S A N D S O L U T I O N S F R O M T H E C A M F I L FA R R G R O U P.

Dust coll e c t i o n t h a t ’s a s g o o d as gold f o r O y s t a r.

Quality and speed for customer satisfaction. Like the rest of the Group, Camfil Farr APC values its relationships with customers and is highly service-minded. When a U.S. company operating one of the largest blast and paint facilities in Northern Indiana accidentally lost its Gold Series dust collector in a fire, it was on its way to being shut down for not being able to collect blasting dust at their facility. Camfil Farr was contacted and a new GS16 collector was shipped on a Friday and installed by the following Monday with no loss of production for the customer. The new collector was delivered personally by Camfil Farr’s own field service technician.

There are two key concerns when handling potential dust generated in connection with the production of pharmaceuticals: the potent, toxic or allergenic properties of the compound as it relates to personnel exposure, and the explosion properties of the compound. In most cases, dust containment is required. This is why an international leader in pharmaceutical equipment like UK-based Oystar needs a top-notch dust collector partner that can offer genuine global support. Since ATEX safety directives and full containment of dust are of paramount importance to Oystar Manesty’s customers, the company chose Camfil Farr APC as its supplier and the Gold Series® Camtain™ (GSC) as its collector. Due to its build quality, strength and very simple and extremely quick filter-change system, the GSC is a used for a variety of pharmaceutical dust collection applications, including tablet presses, coating, fluid bed drying, spray drying, blending, granulation and general room ventilation. Pharmaceutical companies are using GSC dust collectors in North, South and Central America, Asia and Europe today.

Filters for a mouse house in space. In 2009, Camfil Farr filters were integrated into the Mice Drawer System (MDS) facility whose development, funded by the Italian Space Agency (ASI), has been carried out by an industrial consortium led by Thales Alenia Space Italia (Milan plant). The MDS has been designed to support the execution of scientific experiments on board the International Space Station (ISS), using mice as a model. In its first mission, from August 28 to November 27, 2009, the MDS supported the research of Professor R. Cancedda to study human bone formation and specific counter-measures to prevent osteoporosis. The MDS facility, deployed in the JEM module of the ISS, was equipped with five custom filters designed and built by Camfil Farr Sweden on behalf of Thales Alenia Space Italia. The filters ensured the prevention of possible microbiological contamination through air exchanged between the ISS cabin and the MDS. This was Camfil Farr’s second venture into space – we also designed the filters for the Mars Pathfinder mission (1997) to prevent contamination of the Martian atmosphere from bacteria and spores. Camfil Farr Sweden has also been the air filter supplier for Bradford Engineering’s Portable Glovebox (PGB), a multi-user facility for biological research during longduration space flights on the ISS.

A trusted p a r t n e r s h i p . AREVA, ranked first in the global nuclear power industry, provides customers with nuclear power solutions for carbon-free power generation and electricity transmission. In 2009, the company named Camfil Farr France an AREVA certified supplier, which required meeting almost 25 different criteria regarding quality, sustainable development values, competitiveness, innovation, R&D, safety, security and the environment. Camfil Farr, with more than 50 years of experience in the nuclear power industry, has furnished more than 90 nuclear power plants around the world with air filtration systems handling toxic, hazardous, and radioactive gas streams. Products range from HEPA filters to housings for particle/gas filtration, containment and safe changes of used filters, as well dampers and mobile filter units. All meet applicable government and industry codes and qualifications and the stringent standards of the international nuclear power industry.

Dust busting. Camfil Farr’s Air Pollution Control (APC) teams in Europe and Australia recently helped two key customers with a dust containment solution and a retrofit based on the highly efficient Gold Series® dust collector and HemiPleat® cartridge concept. In Spain, Camfil Farr APC Europe helped a manufacturer deal with dust issues related to the company’s mixing and blending suite for a blood pressure medication. A Gold Series GS-4 dust collector was installed with a ventilator, explosion suppression system and control panel designed for the application. The chemical suppression system includes a chemical barrier system to isolate the GS-4 collector and prevent an explosion from entering the duct system. In Australia, Camfil Farr APC teamed up with its appointed technical distributor to supply a Gold Series dust collector and retrofit a competitor’s oval cartridge collector with Hemipleat® cartridges. The GS-4 cleans blasting grit from a large abrasive blasting booth and recycles only usable grit returns to the blasting pot.

Molecular for kids. For the first time, paediatric researchers have apparently linked pre-natal exposure to air pollution with lower IQ scores in early childhood. The findings of a recent report suggest that such exposure affects the developing brain in a manner similar to lead exposure. The main airborne chemicals implicated in the study are polycyclic aromatic hydrocarbons (PAHs), a constituent of particulate matter associated with soot, fuel combustion, vehicle exhaust, factory emissions and tobacco smoke. Camfil Farr, a specialist in molecular filtration, manufactures particle filters and activated carbon filters that can control soot and PAHs. An efficiency of MERV 11 or better particulate filter is recommended, as well as a broad-spectrum carbon filter for VOC and ozone removal, for installation in air handling systems. Camfil Farr’s CityCarb cartridge filters and CityFlo bag filters for urban pollution are combination particulate and molecular filters that exceed this specification.

C A M FI L FA R R 2 0 0 9 / 2 7

Camfil Farr in the air filtration industry:

An unrivalled track record of growth and success The global Camfil Farr Group started out as a family business in the town of Trosa, Sweden, located about 70 km (42 miles) south of Stockholm. Camfil was founded in Trosa in 1963 by the Larson family, still one of the company’s principal owners, as a joint venture with Cambridge Filtration Corporation in the United States. In 1983, the family bought Cambridge’s shares. Camfil was wholly owned by the family until 2000, when Ratos AB, a Swedish private equity company, received 29.7 percent of the shares in connection with the acquisition of Farr in the United States. Camfil has always been profitable since the start of operations more than four decades ago. Today, the company is the global leader in clean air technology and air filter production, with operations in more than 50 countries. H ISTO R I CA L H I G H L I G H TS 1963 – Joint venture Founding of Camfil AB in Sweden as a joint venture with Cambridge (U.S.). 1966-1982 – Start of international expansion Establishment of subsidiaries in Germany (1966), Switzerland (1969), Denmark (1972), the Netherlands (1973), Belgium (1974), Italy (1975), France (1976), Finland (1979) and England (1982). 1983 – Wholly owned family business Camfil becomes independent after the Larson and Markman families acquire Cambridge’s stake. 1985-1999 – Acquisitions and more start-ups Acquisition of Allied Filters and Pumps, Ireland (1985), and Solfiltra, France, and Filtra, U.S. (1989); Start of Camfil Component AB, Sweden, and Camfil España, S.A., Spain (1995); Acquisition of Automet Filtration Ltd., U.K., and start of Camfil Air Filter SDN BHD, Malaysia (1997); Acquisition of Industrifilter, Sweden (1998) and Delcon Filtration Group, Inc., Canada (1999). 2000 – Entrance into the North American and Chinese markets Acquisition of Farr Co., United States; Start of Camfil Pty Ltd, Australia, Camfil Polska Sp.z.o.o., Poland, and opening of a Representative Office, Shanghai, China.

2006 – Formation of Power Systems organization Acquisition of IF Luftfilter in Sweden, Denmark and Finland, Australian Air Filters, Australia, and Kaefer Raco Engineering GmbH, Germany (integrated with Camfil Industrifilter, Sweden, and Camfil’s GT business in Canada, to form the new Power Systems unit); New production unit, U.K., and opening of a new sales office, Singapore (serving as regional HQ for Asia). 2007-2008 – Production expansion, new pan-Nordic organization and Asian manufacturing hub New production units in Slovakia and Shanghai; new sales subsidiaries in Japan and Taiwan for Clean Processes; complete integration of Swedish, Danish, Finnish and Norwegian units in a new pan-Nordic organization. Four plants combined in a single large facility in Malaysia to form new Asian manufacturing hub; Acquisition of Air Technology Ltd. and Total Air Care Ltd. in New Zealand, incorporated in Camfil NZ Ltd; Acquisition of Anfilco in India, with the formation of Camfil Farr Air Filtration India Ltd as a joint venture with the Anand Group. 2009 – Austrian acquisition, APC expansion, first sustainability report and new Nordic distribution centre Acquisition of Firma Mecke Klima GmbH (Austria); APC expands: APC Europe established, operating from Denmark, and APC Asia, based in Malaysia; new sales and logistic center opened in Ellwangen in south of Germany; Publication of filtration industry’s first sustainability report; Launch of Hi-Flo XL series of low-energy filters; New modern distribution and logistics centre opened in Trosa (Sweden) for Nordic region; Further consolidation of

2001-2005 – Additional expansion

manufacturing base for efficiency gains: in Sweden, Alingsås plant closed

Start of Camfil New Zealand and acquisition of Nordfilter, Sweden (2001);

and production moved to Trosa; in U.S., production of railroad products

Plant opened, Shanghai (2002); Two plants merged, Malaysia (2003); New

closed in Oklahoma and transferred to Washington facility.

sales company, Thailand, and opening of Representative Office, Russia. (2004); New production units started in Mexico and Brazil (2005).

Camfil Farr has opened a modern logistics centre in Trosa (Sweden) for the Nordic region to provide even better customer service. The new 3,300 square metre features a modern high-bay warehouse built with sustainable construction techniques: all 8,000 tonnes of blasted rock were reused at community sites and all excavated material was used in the building project, minimizing vehicle transports and emissions. The new building is heated by a local district heating plant fired with biomaterial. The centre’s ventilation system is also equipped with Camfil Farr filters and heat recovery to reduce power consumption.

Camfil Farr around the world Camfil Farr's headquarters, including functions such as Group Finance, Corporate Sourcing and Corporate Marketing, is based in Stockholm, Sweden. Central resources

AMERICAS

EUROPE

With six production units and seven

THE NORDIC REGION

branches in the U.S, two production units

The region's headquarters, as well as its

and four branches in Canada, Camfil Farr

main production site, are situated in Trosa,

provides excellent coverage of the entire

Sweden. An additional metal workshop is

North American through distributors and

located in Österbymo, Sweden. The sales

agents across the continent. Camfil Farr

force operates from more than 10 sales

also has a small production and sales com-

offices across Sweden. Camfil Farr also has

pany in Brazil to serve the South American

strong presence in other Nordic countries

market. With its broad product range, the

with well established sales companies in

company is an attractive partner for the

Finland, Denmark and Norway. The company

best distributors.

has 415 employees in the Nordic region.

for research and development are located in Trosa, south of Stockholm.

C A M F I L FA R R 2009 / 30

NUMBERS OF

SALES IN

EMPLOYEES: 864

SEK MILLIONS: 1,046

• • • •

HEADQUARTERS P R O D U C T I O N U N I T, I N C L . S A L E S SALES OFFICE AGENT

A S I A - PA C I F I C The subsidiary in Singapore also serves as Camfil Farr’s regional headquarters in Asia. Camfil Farr’s production units in Malaysia and China specialize in high efficiency (HEPA) filters for the Clean Processes segment and also produce filters for ventilation systems in the Comfort Air segment. Camfil Farr also has subsidiaries in Thailand, Japan, Taiwan New Zealand, and Australia.

NUMBER OF

SALES IN

EMPLOYEES: 526

S E K M I L L I O N S : 319

CAMFIl

FA R R P O W E R S y S T E M S

The Power Systems segment, with 206 employees, has units operating in Sweden, Germany, Canada, China and India. The division provides air filtration solutions for the global power generation industry.

U.K. AND IRELAND

Germany, Switzerland, and Slovakia, Camfil

The Group has one production and sales

Farr also operates through companies in

company in the U.K. and one in Ireland. A

the Netherlands, Austria and Poland.

total of 239 employees work in the region.

in France, where Camfil Farr also has sev-

SALES IN

EMPLOYEES: 206

S E K M I L L I O N S : 719

OTHER MARKETS Through agents and distributors around the world, Camfil International AB serves all other markets where Camfil Farr does

SOUTHERN EUROPE Both plants in southern Europe are located

NUMBER OF

not have its own subsidiaries. Camfil NUMBER OF

SALES IN

EMPLOYEES: 1,560

SEK MILLIONS: 2,345

International AB is based in Trosa, Sweden.

eral local sales offices. Together with sales companies in Italy, Belgium and Spain, the region has 370 employees. CENTRAL EUROPE

NUMBER OF

SALES IN

EMPLOYEES: 12

S E K M I L L I O N S : 51

A total of 538 employees work in Central Europe. Besides production plants in

C A M F I L FA R R 2 0 0 9 / 3 1

Financial Analysis 2009

eral sub-segments were severely hit by the world-wide decline in industrial production during 2009. Overall sales for Clean Processes decreased by 10% year-on-year, but with large variations within the seg-

Sales grow despite global

growth in this segment. In 2009, fore-

financial crisis

market market sales declined steeply since

The positive sales trend of the previous year

new construction was on a very low level.

continued in 2009, although it was mainly due to currency effects. The global financial crisis had a negative impact on some Camfil Farr markets and segments and Group sales in fixed currency decreased by 5%. Net sales in 2009 amounted to SEK 4,503 M (4,361), an increase of SEK 142 M, compared with 2008. Currency fluctuations had a positive impact of SEK 388 M, while fixed currency growth was SEK -246 M. Demand for Camfil Farr products was generally low throughout the year. Market segments that were affected the most by the financial crisis recovered slightly towards the end of the year. Sales in Europe remained on a stable level, decreasing 2% overall, but with deeper declines in some markets. The Group expanded its market share within Power Systems, despite an 8-percent decline in sales. After negative growth in Asia during 2008, Camfil Farr’s sales increased again, growing by 7%, especially in China. The financial crisis had the largest negative impact on the Group’s markets in the Americas, where the Comfort, APC and Railroad segments all showed double-digit

Service companies, which perform filter changes and service of ventilation systems, are Camfil Farr’s largest customers in this segment. Service companies represent a growing customer segment as outsourcing of facility management becomes an increasingly strong trend. Sales to service companies rose in Europe. Reducing the energy consumption of ventilation systems is a core sales argument for selecting Camfil Farr filter solutions for comfort air applications, which is in line with growing awareness of sustainability and energy conservation world-wide. Sales to the service sub-segment continued to increase by actively focusing on these arguments, and by continuously improving logistics and developing new software tools for e-commerce and LCC analysis for customer service. This has helped Camfil Farr gain a higher market share. The integration of Mecke Klima (Austria) contributed to stable Comfort Air sales in Europe. In North America, sales declined in the Comfort Air sector as overall market demand fell sharply. Camfil Farr is established as a supplier of quality filters and

declines in sales.

filtration solutions offering lower life cycle

Sales trend by business segment

benefitting from a growing need for better

costs and higher efficiency and sales are

Camfil Farr operates in four business seg-

Indoor Air Quality (IAQ), effective air filtration

ments: Comfort Air, Clean Processes, Safety

and the demand for a lower Total Cost of

& Protection and Power Systems (gas

Ownership for filtration systems. Success

turbine-related business).

factors for Camfil Farr in this business are

Comfort Air – the replacement business The Comfort Air segment is normally very stable since it does not fluctuate with business cycles in the same way as industrial sectors within Clean Processes. However, sales to Air Handling Unit (AHU) manufacturers and contractors, comprising initial

the North American organization’s work to develop new sales channels and especially Camfil Farr’s focus on reducing the energy consumption of HVAC systems, allowing customers to also lower their carbon emissions for a greener environmental footprint. Clean Processes – different business cycles within a heterogeneous segment

sales to suppliers of ventilation systems

ment. The sub-segments Microelectronics and Automotive continued to show negative sales growth, while sales in the subsegments Food & Beverage and Service Companies increased. The global sales and marketing organization has been successfully targeting these selected customer segments. As in the Comfort Air segment, sales to fore-market customers, such as OEMs and contractors, were the most negatively impacted. After strong growth in previous years, the North American market for Clean Processes decreased radically in 2009, as a result of the downturn in capital investments. In Asia, sales increased in several subsegments, such as Pharmaceuticals and Chemicals, but not enough to compensate for the continuing low activity in the microelectronics industry. Railroad sales in North America, which target the OEM market and depend on the production of new locomotives, decreased by almost 25% as the transport sector came to a standstill with thousands of locomotives taken out of service. Despite the economic climate, overall profitability of the segment remained strong. Safety & Protection Market activity within the nuclear power industry is rising in line with the worldwide focus on non-greenhouse-gas energy production. Several large projects are in the planning or construction phase for new plants and for fuel process and nuclear weapons disarmament. The containment business, focusing on safety labs for research and medical applications, increased both in Europe and the Americas and the market trend is positive. Combined nuclear and containment sales increased by more than 50% during 2009. Air Pollution Control, APC, sales have been growing rapidly over the past few

and AHUs, are normally an exception since

The Clean Processes segment is normally

years, but in 2009, the dust collector busi-

increased building activity tends to spur

more cyclical than Comfort Air and sev-

ness in North America decreased by more

C A M F I L FA R R 2009 / 32

than 20%, due to delays and cancelled

Market prices have been stable but price

interest rate in the loan portfolio decreased

capital investments. Camfil Farr continues

pressure is expected to be heavier in view

decreased from 4.6 percent to 3.3 percent

to focus on key fore-market segments and

of the slow economic recovery of certain

during the year, representing an decrease

market activity started to pick up during

markets.

of SEK 9 M in interest expense, calculated

the last quarter. In light of the market prospects and potential growth in APC, Camfil

on the loan portfolio at year-end 2009.

Operating profit

Farr has decided to expand its APC market

Operating profit of the Camfil Farr Group,

to Europe and Asia to offer customers a

after

complementary product range for dust

amounted to SEK 417 M in 2009 (400).

depreciation

and

amortization,

Cash flow and debt Net cash flow for the Group amounted to SEK 224 M (-113), including a debt reduc-

collection, initially in the manufacturing,

Operating profit in 2009 was charged

tion of SEK 161 M. Share acquisitions

pharmaceutical and mining industries. The

with restructuring costs of SEK 19 M (7)

totalled SEK 18 M and were related to

new European arm of the APC business

that were mainly related to the closure of

the acquisition of Mecke Klima in Austria.

launched activities in 2009 from a new

two production units and the completed

Working capital decreased by SEK 241 M,

focused APC subsidiary in Denmark that

transfer of production to Slovakia.

due to projects focusing on improvements

covers almost all European countries with

Underlying operating profit, excluding

in receivable and inventory management

local sales and support staff. The new

restructuring costs and items affecting

and somewhat lower sales volumes.

Asian APC unit is based in Malaysia.

comparability, was SEK 437 M (407), an

Interest-bearing net liabilities amounted to

increase of SEK 30 M, corresponding to an

SEK 410 M at year-end (789).

Power Systems

operating margin of 9.7 percent (9.3). Europe was the most profitable area

Capital investments

Camfil Farr Power Systems serves cus-

and margins improved slightly. Margins

Gross capital expenditures on tangible

tomers with mid-sized and large-size gas

in the Americas improved substantially in

and intangible assets, excluding goodwill,

turbines, and the addressable market is

spite of the decline in sales. The profitabil-

totalled SEK 163 M (188). in 2009. The

expanding as demand for energy continues

ity of Asian and Power Systems operations

main investments in 2009 were in the

to increase world-wide. The global Power

remained stable.

new warehouse in Trosa, Sweden and new

Systems business segment has operations in Americas, Asia and Europe. Camfil Farr

Restructuring to boost profitability

Power Systems’ business includes after-

In the U.S., the production unit in Oklahoma,

market sales of replacement filters on a

focused on Railroad products, was closed

global basis.

production lines in the U.S. for increasing productivity. Tax level

and production was relocated to other

The Group’s average tax level was 29.9%

The market has shown stable develop-

units. In Sweden, the production unit in

(30.0%). This was an effect of mix chang-

ment, but with large variations between the

Alingsås, incorporated in the Group as

es in profit generation from low to high

continents. Total sales in 2009 decreased

part of the IF Luftfilter group acquisition

tax countries such as the U.S., generally

by 8%, but the global market showed a

in 2006, was closed and production con-

lowered tax rates in many countries and

larger reduction and Camfil Farr’s market

centrated to the main unit in Trosa. A new

incentives related to recent investments.

share increased as a consequence, espe-

warehouse was built in Trosa to serve as a

cially in Asia. Business in the Americas and

logistics centre for the Nordic region and

Asia is showing strong growth.

further improve customer service.

Gross margin

Personnel The Camfil Farr Group had an average of

Production of labour-intensive Comfort

3,249 employees in 2009 (3,321). The

Air products has been relocated from

number of employees was reduced mainly

The gross margin increased to 38.4%

Germany to Slovakia. This move was final-

in the U.S., Canada and Sweden to adjust

(35.8%), mainly through the closure of two

ised during 2009 and the Slovak unit is

for lower production volumes. The only

production units, one in the U.S. and one in

expanding and adding new product lines.

area where staff increased was in Asia,

Sweden, in combination with staff reduc-

A new sales office and warehouse was

where the joint venture in India is expand-

tions to adjust to lower sales volumes.

opened in Ellwangen, southern Germany,

ing its activities for both Power Systems

More effective project execution within

to better serve the local market with short-

business and filter markets.

the Power Systems business segment

er lead-times for deliveries and improve

improved gross margins. In addition, the

customer service.

full-year effect of operating the new production facilities in Slovakia and China also had

Result from financial items

a positive impact on gross margin.

The result from financial items for the

The Group’s work to leverage its total

Group was SEK -41 M in 2009 (-44). Higher

purchasing power has continued to be

interest rates during the year were com-

successful.

pensated by decreased borrowings due to

PERSONNEl

W PRODUCTION

53%

W SALES

22%

W ADMINISTRATION AND WAREHOUSE

17%

W R&D, TECHNOLOGY DEPARTMENT

8%

the strong cash flow. The Group’s average

C A M F I L FA R R 2 0 0 9 / 3 3

CAMFIL   AB

Swedish Corporate ID No. 556230-1266

Annual Report and Consolidated  Financial Statements Fo R t h e  FISCAL y e AR JAn u ARy  1, 2009 – De Ce MBe R 31, 2009

B o a r d   o f   D i r e c t o r s ’   Re p o r t

Safet y & Protect ion Camfil Farr also manufactures and markets air filters to protect

I n f o r m a t i o n   a b o u t  C a m f i l   Fa r r ’s  o perations

the environment. Nuclear power stations and research laboratories are examples of application areas in this segment for Camfil Farr air filters and filtration systems. The Safety & Protection segment also includes dust collection systems to remove heavily

Camfil Farr is one of the leading groups in the air filtration market,

polluted and dust-laden air from industrial processes.

offering air filtration solutions to protect people (Comfort Air), production processes (Clean Processes), the environment (Safety

Business development

& Protection) and gas turbines (Power Systems). In 2009, Group sales totaled SEK 4,503 M (4,361) with 3,249 (3,321) employees.

Camfil Farr constantly develops its products, processes and

During the year, Comfort Air accounted for 45 (45) percent of the

human resources. Investments in R&D are made on a continuous

Group’s net sales, Clean Processes for 31 (32), percent, Power

basis mainly by the Parent Company in Sweden but also at the

Systems for 17 (17) percent and Safety & Protection for 7 (6)

Group’s primary production units.

percent.

Significant events occurring during    t he Group’s business areas

t he fiscal year

Comfor t Air

Acquisit ions

To protect people from harmful particles in indoor air, Camfil Farr

During the year Camfil Farr acquired Mecke Klima GmbH (Austria).

offers air filtration solutions for air handling systems in housing,

The company, headquartered in Vienna, had been Camfil Farr’s

office buildings and hotels, among other facilities. Municipal,

distributor in Austria since 1965. In 2009, Mecke Klima had sales

county and government agencies are also important customers

of EUR 4 M. Consolidated goodwill totaling SEK 17 M has arisen in

for which Camfil Farr offers air filters for schools and hospitals,

connection with the acquisition.

among other public facilities. A substantial part of the market consists of replacement filters since filters in air handling systems

Product ion and logist ics

have to be changed at regular intervals.

The Alingsås plant was closed in Sweden in 2009. The facility’s production and warehouse operations were transferred to Trosa,

Clean Processes

where a new logistics and distribution center has been built.

The trend within most industrial manufacturing plants is to use

Structural costs for the move were charged in the amount of

increasingly automated production processes. Advanced produc-

SEK 8 M in the consolidated financial statements.

tion equipment and sensitive products require a clean indoor

The factory in Oklahoma was closed in 2009 in the U.S.

air environment to protect machinery, enhance product quality

The facility manufactured products for the Railroad segment

and boost the efficiency of product processes. This is a typical

and production has been transferred to other factories in North

requirement in the electronics, pharmaceutical and food process-

America. Other manufacturing operations were transferred during

ing industries, among others.

the year to further specialize North American production units. Restructuring costs in North America totaled SEK 5 M in 2009.

Power Systems

A new logistics center and sales office was established in

The Camfil Farr Power Systems business area offers air inlet

Ellwangen in the south of Germany. The new center will strengthen

systems, exhaust systems, acoustic enclosures, ventilation

Camfil Farr’s market position by offering customers shorter

systems and heavy-duty air filters for medium-size and large gas

delivery times and improved local support.

turbines to ensure high operating efficiency and reduce turbine wear-and-tear. The business area also offers a range of services,

Market developments

including upgrades and retrofits of existing systems and filter replacements.

Sales in the European market were on a relatively stable and high level during 2009 in spite of the economic recession that prevailed in most European countries. Sales as a whole declined by 2 percent in Europe in fixed currency. The OEM and automotive industries were hit harder by the financial crisis, while the replace-

C A M F I L FA R R 2009 / 34

Annual Report and Consolidated  Financial Statements

ment market, representing a large part of Camfil Farr’s market,

n et financials

was less sensitive to economic developments.

Net financials improved by SEK 3 M to SEK -41 M (-44). The

Sales in the North American market, which showed strong growth in 2008, declined in 2009. New product sales took the

improvement was due to lower interest rates in 2009, compared with 2008.

most severe hit since many projects were postponed or cancelled. Sales in the Railroad segment, where investments come late in the economic cycle, did not start to decline until the second half of the year. Overall sales in North America decreased by 14 percent, calculated in fixed currency. The Asian market was weighed down as a result of low industrial activity already in 2008, especially in the electronics industry, where the economic cycle changes relatively early. The region recovered in 2009 and Asian sales grew by 7 percent, calculated in fixed currency. Camfil Farr Power Systems develops and manufactures filtration and acoustic control systems for gas turbines. Sales in the segment, which have shown very strong growth over a longer period, declined by 5 percent, compared with the preceding year.

o perat ing results and posit ion 

Profit af ter tax Group profit after tax increased by 6 percent to SEK 264 M (248), corresponding to 6 percent (6) of net sales. The Group’s tax rate was on the same level as last year at 30 percent. Current assets Current assets of the Group, excluding cash and cash equivalents, amounted to SEK 1,409 M (1,787). The decline in current assets was attributable to work in 2009 to reduce operating capital mainly in trade receivables and inventories, the timing of invoicing for projects in progress during the year and the lower sales volume in 2009. Current assets corresponded to 41 percent (41) of the Group’s annual sales. Borrowings

n et sales

The Group’s interest-bearing liabilities, including pension provi-

Net sales of the Camfil Farr Group totaled SEK 4,503 M (4,361),

sions, amounted to SEK 905 M (1,099) at year-end, of which SEK

an increase of SEK 142 M (3 percent), compared with the previ-

731 (911) comprised long-term loans. The average interest rate

ous year. Net sales were positively impacted by acquisitions and

on the Group’s interest-bearing loans was 3.3 percent (4.6) on

exchange rates, while the underlying volume of sales declined

December 31, 2009.

during the year.

Financial risk management 

Change in net sales: 2009 

2008

Since Camfil Farr’s operations are located primarily in countries

Structural changes (acquisitions)

0.6%

0.8%

outside Sweden, the Group is exposed to several different types

Currency changes

8.9%

0.6%

of financial risks. As a consequence, income, cash flow and equity

Price/mix and volume changes

-6.2%

4.6%

may vary from year to year, due to fluctuations in exchange rates

t otal 

3.3% 

6.0%

o perat ing income Operating income of the Camfil Farr Group totaled SEK 417 M (400). Restructuring costs related to the Group’s business plan amounted to SEK 19 M (8) and were charged against operating income. These costs consisted mainly of expenses for restructuring the production platform in Sweden, Germany and the United States. Eliminating structural costs, operating income was SEK 28 M higher than last year, of which the acquisition of Mecke

and interest rates. The risks are related to financial instruments, such as cash and cash equivalents, trade receivables, trade payables, loans and derivative financial instruments. Risks related to these instruments are primarily: – Interest rate risks related to cash and cash equivalents and borrowings, – Financing risks related to the Group’s capital requirements, – Currency risks related to income and net investments in foreign subsidiaries, – Risks related to prices of raw materials and components that impact products manufactured for the Group, and – Credit risks attributable to financial and commercial activities.

Klima GmbH accounted for SEK 5 M. Adjusted for items affecting comparability, the operating margin was 9.7 percent (9.3). Depreciat ion Depreciation for the year totaled SEK 130 M (114).

The financial risk management function is centralized in the Finance Department of the Parent Company and its main task is to support operations and to identify and limit the Group’s financial risks in the most effective way possible, following a finance policy that is approved by the board of directors and updated each year.

C A M F I L FA R R 2 0 0 9 / 3 5

Annual Report and Consolidated  Financial Statements

Risks are managed by means of derivatives and other financial

Asia

instruments in accordance with limits set in the finance policy.

Sales in Asia increased by SEK 52 M to SEK 319 M (267).

For detailed information on the management of financial

Eliminating exchange rate effects, sales were SEK 22 M higher

items, see the following sections of this annual report: Accounting

in 2009. The increase in sales was attributable to the Group’s

policies (Notes 2 and 3), Financial risk management (Note 4),

Chinese subsidiary, which developed favorably during the last

Financial assets (Note 27), Derivative financial instruments (Note

quarter of 2009.

31) and Borrowings (Note 42).

The operating margin decreased from 9.1 percent to 7.3 percent.

Cash flow Cash flow in 2009 amounted to SEK 224 M, as against SEK -114 M

Gas turbines

last year. Cash flow from operating activities was SEK 407 M

The segment comprises the Group’s global sales of products and

higher than in 2008. This was primarily the effect of a major focus

systems to the gas turbine market (Power Systems), a business

on trade receivables and inventory management. Reduced sales

conducted from units in Sweden, Canada, Germany and India.

volumes within certain segments also affected cash flow. Adjusted

Segment sales totaled SEK 719 M (719). Eliminating exchange

for investments in companies during 2009, investments in fixed

rate effects, sales declined by SEK 38 M, due mainly to reduced

and intangible assets decreased by SEK 10 M. Cash and cash

demand during the year within the sub-sector for large gas

equivalents amounted to SEK 441 M (242) at year-end.

turbines.

Invest ments

7.4 percent (8.3).

The operating margin decreased by 0.9 percentage points to

Investments in property, plant and equipment totaled SEK 155 M (165). No individual major investments were made in facilities

o t her markets

during the year. Investments in property, plant and equipment

Other markets include companies selling through agents to

amounted to 3.4 percent (3.8) of net sales.

markets where Camfil Farr does not have its own subsidiaries, the Group’s production company in Brazil and a newly started

e quit y rat io and net debt-equit y rat io

company in Denmark that is the base for building business in the

The equity ratio was 53 percent (47) at year-end and the net debt-

dust collection segment (APC) in Europe. Sales in other markets

equity ratio decreased to 21 percent (43).

totaled SEK 73 M (72). Operating income decreased from SEK 3 M till SEK -10 M,

Developments by geographical segment Air filt rat ion: Europe In 2009, sales in Europe increased by SEK 109 M to SEK 2,345 M (2,236), or 5 percent. Sales increased as a result of the acquisition of Mecke Klima GmbH and a low exchange rate for the Swedish krona, among other factors. Eliminating exchange rate effects, underlying sales were 2 percent lower than in 2008. Operating income, as a percentage of sales, was 12.4

due mainly to start-up costs for the Danish company.

Incent ive programs Camfil has introduced several long-term incentive programs for senior executives in the company since 2000. The purpose is to offer programs linked to the value of the company in order to attract, retain and motivate senior executives. On December 31, 2009, the Group had one ongoing convertible debenture loan to 59 senior executives in a nominal value of SEK 51 M (Note 42).

percent (11.8).

Work of t he Board of Directors North America Sales in North America decreased by SEK 20 M to SEK 1,047 M (1,067). Adjusted for exchange rate effects, sales declined by SEK 170 M. Despite the lower sales volume, the operating margin increased by 2.2 percentage points to 11.7 percent (9.5) as a result of cost-saving measures, structural changes to production and differences in the mix of product sales in 2009.

C A M F I L FA R R 2009 / 36

The overall task of Camfil Farr’s board of directors is to administer the Group’s business on behalf of the owners in such a way that the owners’ interest in receiving a sound long-term return on their capital is met in the best possible way. The board’s work is regulated by the Swedish Companies Act, the company’s Articles of Association and the formal work plan that the board has established for its work.

Annual Report and Consolidated  Financial Statements

The board decides on issues concerning the Group’s basic goals,

their comments and observations from their audit and their opin-

its strategic orientation and significant policies, as well as impor-

ion of the company’s internal control procedures.

tant questions concerning financing, investments, acquisitions and divestments. The board supervises and deals with monitoring and

e nvironmental impact

controlling the Group’s operations, the information issued by the Group and organizational matters.

Camfil Farr operates in a field where more efficient products, longer product life, lower energy consumption and a better indoor

Formal work plan The board develops a formal plan for its work each year. Guidelines for the board’s work, as well as instructions for del-

climate are all important components for sustainable development. e nerg y consumpt ion

egating work tasks between the board and the President, and

Ventilation accounts for up to 30 percent of the total energy costs

procedures for reporting to the board, are described in this formal

associated with modern office buildings. Camfil Farr has been

work plan. This plan covers, among other things, the basic tasks,

working with product Life Cycle Analysis (LCA) and Total Cost of

functions and responsibilities of the board, board work, board

Ownership (TCO) programs for filtration systems for a number of

meetings, and information and reporting requirements.

years. The energy consumption of a ventilation system is directly affected by a filter’s performance and pressure drop develop-

Board members and meet ings Camfil Farr’s board consists of seven members and three deputy members elected by shareholders at the Annual General Meeting, as well as one member and one deputy appointed by the largest trade union. No member of company management serves on the board. The board held six meetings in 2009. Remunerat ion Commit tee Under the management of the Chairman, the company’s board had a Remuneration Committee during 2009 to prepare and make proposals concerning the principles for compensation paid to the President and Executive Vice President. These proposals contain the goals for variable remuneration, the basis for calculating variable salary, basic salary, long-term incentives, and pension terms and conditions. Audit Commit tee The board also has an Audit Committee chaired by the Vice Chairman of the board. The committee’s main task is to assist the board in monitoring processes, internal control of financial reports and the auditing of financial statements. The Audit Committee consists of two board members, the Group’s Chief Financial Officer and the Group’s Financial Controller. In 2009, the committee held three meetings, of which all meetings were with the Group’s auditors. The Audit Committee examines the audited year-end financial statements, reviews the audit of the company’s administration and gives advanced approval of proposed auditing services and the costs for such services. To meet the board’s requirements for information, the company’s auditors participate in one board meeting per year to give

ment. The Group develops products and services to help customers reduce their energy consumption and environmental impact. Globally, Camfil Farr’s products and services can play an important role in the environmental sustainability of buildings by providing the optimum filter solution for every air handling unit and ventilation application. e nvironmental impact of operat ions Camfil Farr is also working on reducing its own direct environmental impact by decreasing the Group’s consumption of resources and energy. By carrying out LCA studies, Camfil Farr has identified the largest environmental impact of a filter – the energy it consumes over its life cycle. Compared with other industries, air filter production does not require large quantities of energy or water. However, the transport of relatively bulky filters consumes energy. Group The Camfil Farr Group has 23 production facilities, of which three in Sweden. The majority of the Group’s production units are required to report the quantity of consumed casting compounds and/or casting compound waste to regulatory agencies. Many of the production units in the United States also have permits covering process wastewater effluent and flue gas emissions. These operations impact the environment in the form of evaporative emissions and effluent. Camfil Farr applies and complies with local laws and regulations in all countries where the Group conducts operations. Several production units are certified to ISO 14001 and two more units were certified during 2009 – one in Switzerland and one in Malaysia. A program to benchmark energy savings has been implemented at all Group production units with a view to reducing their consumption of power, gas and heat. Major savings have

C A M F I L FA R R 2 0 0 9 / 3 7

Annual Report and Consolidated  Financial Statements

been accomplished in the U.K. and France and their experience is

tion with the same pressure drop development as a 12-bag filter,

now being systematically applied at other production units in the

reducing raw material and resource consumption without affecting

Group.

performance. This has also resulted in lower transport volumes.

Sweden

by more efficient methods. Most company cars have been

In Sweden, manufacturing is conducted at three facilities: pro-

replaced with environmentally friendly vehicles.

In Österbymo, the oil-fired heating system has been replaced

duction of air filters and sheet-metal parts for filters in Trosa;

During the year, three Energy and Environment Conferences

production of metal filters in Österbymo and production of air

were arranged. More than 200 people attended the conferences,

intake, acoustic and enclosure systems for gas turbines in Borås.

which focused on life cycle costs and the total energy consump-

Production of filters for the Comfort Air sector was closed in

tion of ventilation systems, as well as the handling and disposal of

Alingsås during the year and transferred to Trosa.

used air filters. Videoconferencing systems have been introduced within the

The operations of the Trosa plant require a permit in accordance with Sweden’s environmental protection act, while the Borås

Group to reduce the number of business trips globally but also

facility is required to file an environmental report. The unit in

travel between local units in Sweden. The production units in Trosa and Österbymo are certified to

Österbymo is also required to file an environmental report. Production in Trosa has permits regulating effluent consisting

ISO 14000. ISO 9001 certification has been upgraded to version

of process wastewater, maximum permissible noise limits, the

9001-2008. A separate environmental report has been published

handling of environmentally hazardous liquids, and the production

for operations in Sweden. Operations requiring environmental permits account for about

of air filters using thermosetting plastics, such as isocyanate. The reporting requirement only concerns different types of casting

11 percent of Group sales, while activities requiring both permits

compounds, which can affect the environment by either evaporat-

and reporting represent approximately 18 percent of Group sales.

ing into the atmosphere or being discharged in wastewater. Rinse water is cleaned in a dedicated filtration system. An Environmental Report is filed with the County Administrative Board each year. During the year, part of the air handling system in Trosa was

Sustainabilit y Repor t In 2009, Camfil Farr became the first air filter manufacturer to publish a complete sustainability report. Camfil Farr has joined the UN’s Global Compact program and endorsed its ten principles.

replaced and a climate chamber was installed that utilizes the

Camfil Farr also follows the Global Reporting Initiative, which is a

latest ventilation and filtration technology. This system reduced

sustainability reporting framework.

energy consumption by an additional 13 percent in 2009. The closing of the Alingsås unit has reduced internal product

Future grow t h 

shipments and improved logistics and product handling considerably. All sheet metal operations have been concentrated at the

The financial crisis and subsequent economic downturn affected

production unit in Österbymo, which provides the prerequisites

Camfil Farr’s operations in different ways in different countries,

for more efficient production and utilization of input goods and

depending on the country’s general economic development and

resources, and for reducing wastage and waste products.

the market segment that dominates local sales. Sales as a whole

A new distribution warehouse has been built in Trosa that

decreased by 5 percent in fixed currency in 2009. Growth is

reduces internal transports between facilities in Trosa. The new

expected to return to Camfil Farr’s normal figures during 2010.

warehouse also directly lowers energy usage and carbon dioxide

The market for Camfil Farr’s products is developing favorably at

emissions.

present because of several factors:

With the assistance of freight forwarding companies, new

•

attracting more and more attention and contributing to under-

transportation routes have been introduced for more direct ship-

lying market growth.

ments to the south of the country. This has reduced the load on forwarding centers in Stockholm and has sharply reduced driving

The health and environmental benefits of good air quality are

•

Industry, especially pharmaceutical, electronics and food pro-

distances to save the equivalent of 20,000 liters of diesel fuel per

ducers, are increasingly requiring higher and higher air quality

year. Order handling times and lead-times to customers have also

in their processes, which is creating a need for new air filtration solutions.

been shortened. Production was further retooled for the manufacture of the

•

Demand for energy is constantly increasing and benefitting

Hi-Flo XLT bag filter. This product uses 10 bags of filter media,

the operations of the Power Systems division serving the gas

which is the main material used in a bag filter, but achieves filtra-

turbine market.

C A M F I L FA R R 2009 / 38

Annual Report and Consolidated  Financial Statements

Camfil Farr’s operations are well distributed geographically,

o wnership st ructure

which means there is less of a risk that the Group’s income will be affected if the economy of one country should decline. Since

On December 31, 2009, the company was owned by:

the aftermarket accounts for a large part of sales, Camfil Farr

 

is affected to a lesser extent by fluctuations in the more cyclical

Jan Eric Larson

market for air handling units and cleanroom facilities.

and family

Demand is expected to rise within a number of market seg-

and family

chemical filtration systems. Many projects have been postponed

Ratos AB

B-shares

500 000

2 465 000

500 000

1 960 000

1 035 000

Johan Markman

ments within Clean Processes, primarily for cleanrooms and

 A-shares 

1 540 000 422 414

2 956 896

but are expected to be resumed, which will benefit the Asian market

t otal number of shares 

in particular. Demand in the automotive industry is expected to

Class A common shares carry 10 votes each and Class B common

remain weak. The large stimulus packages launched in a number

shares 1 vote each.

1 422 414 

9 956 896

of countries will create a need for major expenditures to upgrade existing premises and investments in environmental technology. This will stimulate demand in a number of market segments to retrofit air handling systems in hospitals, for example. Replacement filter sales are relatively stable in the Comfort

Proposed disposit ion of earnings A total of SEK 1,136,481,621.58 in profits is available for distribution by the Annual General Meeting.

Air segment. OEM sales to air handling unit manufacturers for new installations fell drastically in 2009 as a consequence of

The Board of Directors and the President propose that the above

the decline in building construction. The new and lower level of

sum be distributed as follows:

demand is expected to continue during the coming year.

to the shareholders, a dividend of

A number of new production lines have been added at the manufacturing unit in Slovakia to meet the demand for low-cost production for the entire European market and for sales to the growing local market in Eastern Europe. The facility also assembles dust collection equipment for the new European division for APC systems, an area that is expected to expand during 2010. Camfil Farr’s program for continuous improvement – “The

SEK 7.50 per share balance to be carried forward t otal 

85 344 825.00 1 051 136 796.58 1 136 481 621.58

The dividend will be paid on March 29, 2010. t he board’s statement about t he proposed dividend

Green Tornado” – is expected to generate additional efficiency

The proposed dividend to shareholders reduces the company’s

gains within production and logistics in North America and

equity ratio to 53 percent and the Group’s equity ratio to 52 per-

Europe.

cent. The equity ratio is acceptable against the background that

In Power Systems, the Power Systems division is now well

the operations of the company and Group can be continued with

equipped for the future as a result of internal programs to inte-

satisfactory profitability. The board estimates that liquid funds in

grate the business acquired in India, restructure the division,

the company and Group can be maintained on a similar adequate

procure common sub-suppliers and establish an engineering pool.

level.

A division for Power Systems has been established in China with

The company’s equity includes an unrealized capital gain of

the framework of the existing Camfil Farr subsidiary, providing a

SEK 6.0 M from the recognition of financial instruments at market

good platform for expansion in the local Chinese market. Camfil

value.

Farr can now offer solutions for several types of gas turbines and

Group contributions – which are subject to the approval of

markets, which will have a positive impact on the division’s sales.

the Annual General Meeting – have been paid in the amount of

Market growth is anticipated to remain strong over the next few

SEK 11.6 M. As a consequence, unrestricted equity on the balance

years and the aftermarket for replacement filters for gas turbines

sheet date, after taking into account the tax effect, was reduced

is therefore expected to grow further.

by SEK 8.5 M. Group contributions were also received in the

In summary, Camfil Farr estimates that the Group’s growth will be higher than market growth and that the operating margin will gradually improve further in the coming year.

amount of SEK 75.5 M. In the opinion of the board, the proposed dividend does not prevent the company and the other entities of the Group from fulfilling their obligations in the short and long term, or from carrying out necessary investments. The proposed dividend can thus be defended with regard to the Swedish Companies Act, Chapter 17, Section 3, paragraphs 2-3 (the principle of conservatism).

C A M F I L FA R R 2 0 0 9 / 3 9

Consolidated Income Statement SEK M

 

n ote 

Net sales Cost of goods sold

4 361.0

7, 18

-2 775.3

-2 806.3

1 727.5 

1 554.7

 

Selling costs

o perating profit

2008

4 502.8

Gross profit 

Administrative expenses

2009 

6

8 7, 9, 10, 11, 12

-889.8

-786.4

-420.3

-368.1

417.4 

400.2

Financial income

13, 18

84.1

67.3

Financial expenses

14, 18

-125.4

-111.1

376.1 

356.4

-112.3

-108.6

263.8 

247.8

Profit before income tax  Income tax

  17, 33

Profit for the year 

 

Attributable to: 

 

Owners of the Parent Company Minority interest  

 

  262.9

247.4

0.9

0.4

263.8 

247.8

earnings per share attributable to the   owners of the Parent Company during the year: (expressed in SEK per share) – Basic earnings per share

19

23.11

21.74

– Diluted earnings per share

19

22.70

21.44

C A M F I L FA R R 2009 / 40

Consolidated Statement of Comprehensive Income SEK M

 

2009 

2008

Profit for the year 

263.8 

247.8

o ther comprehensive income: Cash flow hedges Currency translation differences Tax attributable to other comprehensive income

5.2

-22.6

-95.5

214.0

-1.4

5.9

o ther comprehensive income for the year, net of tax 

-91.7 

197.3

t otal comprehensive income for the year 

172.1 

445.1 

171.4

444.7

0.7

0.4

Attributable to: Owners of the Parent Company Minority interest  

172.1 

445.1

C A M F I L FA R R 2 0 0 9 / 4 1

Consolidated Statement of Financial Position SEK M

ASSet S 

n ote 

 2009-12-31 

 2008-12-31

n on-current assets Property, plant and equipment

 

24

Land and buildings

21

417.6

390.8

Machinery and production equipment

22

317.6

344.4

Equipment

23

 

 

73.8

106.9

809.0 

842.1

886.7

905.1

Intangible assets

 

Goodwill

25

Other intangible assets

26

 

Financial assets Deferred tax assets Long-term receivables  

8.8

 

8.1

895.5 

913.2

27 33

61.0

66.1

27, 34

45.6

44.4

 

t otal non-current assets 

 

106.6 

110.5

 

1 811.1 

1 865.8

Current assets Inventories, etc.

35

Raw materials and consumables

224.8

307.7

Finished products and goods for sale

220.2

239.5

Work on contract  

 

 

138.5

157.7

583.5 

704.9

939.0

Current receivables 30, 32

699.1

Bills receivable

Trade receivables

30

2.7

13.7

Derivative financial instruments

31

6.3

23.5

Income tax assets

28.3

31.8

Other receivables

64.1

41.3

25.9

32.8

Prepaid expenses and accrued income  

 

36  

826.4 

1 082.1

41, 37 

442.7 

242.5

t otal current assets 

 

1 852.5 

2 029.5

 

 

 

 

3 663.6 

Cash and cash equivalents 

 

t o t AL ASSet S 

C A M F I L FA R R 2009 / 42

3 895.3

Consolidated Statement of Financial Position   SEK M

eQu It y An D LIABILIt IeS   

n ote 

2009-12-31 

 

 

 

2008-12-31

equity Equity and reserves attributable to equity holders of the Parent Company Share capital

38

Other contributed equity Other reserves

39

Retained earnings

113.8

113.8

391.7

391.7

55.7

147.2

1 365.4

1 185.0

1 926.6

1 837.7

Minority interest 

 

4.0 

3.5

t otal equity 

 

1 930.6 

1 841.2

 

 

Liabilities  Non-current liabilities

41, 42

Liabilities to credit institutions, interest-bearing

42

679.2

860.2

Convertible debenture loan, interest-bearing

42

51.4

50.5

Other non-current liabilities

46

18.2

13.6

Derivative financial instruments

31

16.2

24.3

Deferred income tax liabilities

33

49.0

67.2

Provisions for pensions and similar commitments

43

108.5

112.4

Other provisions

44

40.4

34.1

t otal non-current liabilities  Current liabilities Liabilities to credit institutions

 

962.9 

1 162.3

42 42

Trade payables

24.2

17.5

202.5

233.3

Bills payable

11.3

19.2

Current income tax liabilities

32.9

43.6

Other liabilities

46

186.4

234.8

Accrued expenses and deferred income

45

290.0

304.5

Derivative financial instruments

31

11.7

31.0

Other provisions

44

11.1

7.9

t otal current liabilities 

 

770.1 

891.8

t o t AL eQu It y An D LIABILIt IeS 

 

3 663.6 

3 895.3

C A M F I L FA R R 2 0 0 9 / 4 3

Consolidated Statement of Changes in equity (n ote 38 and 39) SEK M

Attributable to owners of the Parent Company  

o ther  

 

 

 

 

 

Share 

contributed  

o ther 

Retained 

 

Minority 

 

capital 

equity 

reserves 

earnings 

t otal 

113.8 

394.4 

-50.1 

1 039.7 

1 497.8 

interest

t otal  equity

o pening balance at   January 1, 2008 

– 

1 497.8

Comprehensive income Profit for the year

–

–

–

247.4

247.4

0.4

247.8

o ther comprehensive income Cash flow hedges, net of tax

–

–

-16.7

–

-16.7

–

-16.7

Currency translation differences

–

–

214.0

–

214.0

–

214.0

Total other comprehensive income

–

–

197.3

–

197.3

–

197.3

t otal comprehenisve income 

– 

– 

197.3 

t ransactions with owners  Redemption of share warrants

  –

  -2.7

247.4 

  –

444.7 

  -23.6

0.4 

 

445.1

 

-26.3

–

-26.3

Minority interest arising on business combination

–

–

–

–

–

3.1

3.1

Dividend

–

–

–

-78.5

-78.5

–

-78.5

t otal transactions with owners 

– 

-2.7 

– 

-102.1 

-104.8 

3.1 

-101.7

113.8 

391.7 

147.2 

1 185.0 

1 837.7 

3.5 

1 841.2

113.8 

391.7 

147.2 

1 185.0 

1 837.7 

3.5 

1 841.2

Closing balance at   December 31, 2008  o pening balance at   January 1, 2009  Comprehensive income Profit for the year

–

–

–

262.9

262.9

0.9

263.8

o ther comprehensive income Cash flow hedges, net of tax

–

–

3.8

–

3.8

–

3.8

Currency translation differences

–

–

-95.3

–

-95.3

-0.2

-95.5

Total other comprehensive income

–

–

-91.5

–

-91.5

-0.2

-91.7

t otal comprehenisve income 

– 

– 

-91.5 

262.9 

171.4 

0.7 

172.1

Dividend

–

–

–

-82.5

-82.5

-0.2

-82.7

t otal transactions with owners 

– 

– 

– 

-82.5 

-82.5 

-0.2 

-82.7

113.8 

391.7 

55.7 

1 365.4 

1 926.6 

4.0 

1 930.6

t ransactions with owners

Closing balance at   December 31, 2009 

C A M F I L FA R R 2009 / 44

Consolidated Statement of Cash Flows SEK M

 

n ote 

2009 

2008

o PeRAt In G ACt IVIt IeS 417.4

400.2

Depreciation

Income before financial items 10

129.5

113.9

Other items not affecting liquidity

48

10.3

-36.7

557.2 

477.4

-45.9

-41.6

-135.3

-97.8

 

 

Interest paid Income tax paid Cash flow from operating activities   before changes in operating capital 

 

Decrease/Increase in inventories Decrease/Increase in trade receivables Decrease in other current receivables Decrease in trade payables

376.0 

338.0

50.7

-0.5

230.5

-102.1

1.3

15.1

-33.2

-53.4

-8.0

13.0

Decrease/Increase in other current operating receivables n et cash generated from operating activities 

 

617.3 

In VeSt In G ACt IVIt IeS 

 

 

210.1

Investments in property, plant and equipment and tangible assets

21, 22, 23, 26, 49

Investments in other financial assets Proceeds from sale of property, plant and equipment

-155.0

-165.1

-9.3

-3.2

32.7

5.1

-18.3

-34.9

Divestments of other financial assets

0.5

6.2

Change in short-term investments

0.4

5.7

Investments in subsidiaries

49

Cash flow from investing activities 

 

-149.0 

FIn An CIn G ACt IVIt IeS 

 

 

Redemption of share warrants Proceeds from borrowings Repayments of borrowings Dividends paid

20

-186.2

–

-26.3

331.1

1 546.2

-492.3

-1 578.9

-82.7

-78.5

Cash flow from financing activities 

 

-243.9 

-137.5

Cash flow for the year 

 

224.4 

-113.6

Cash and cash equivalents at the beginning of the year 

 

242.1 

325.7

Currency translation difference in cash and cash equivalents  Currency translation difference  Cash and cash equivalents at the end of the year 

-3.6 

-6.3

 

-22.1 

36.3

37 

440.8 

242.1

C A M F I L FA R R 2 0 0 9 / 4 5

Parent Company Income Statement SEK M

 

n ote 

2009  466.5

448.0

7, 18

-328.9

-334.8

137.6 

113.2

Net sales Cost of goods sold Gross profit  Administrative expenses

 

-156.1

-136.1

Other operating income

12.8

14.6

Other operating expenses

-12.1

-9.9

o perating profit

8

2008

-17.8 

7, 9, 10, 11, 12

-18.2

Result from financial investments Result from participations in Group companies

15

181.9

63.1

Interest income and similar items

13, 18

158.6

147.6

Interest expenses and similar items

14, 18

-148.1

-133.2

t otal result from financial investments 

 

192.4 

77.5

Profit after financial items 

 

174.6 

59.3

Appropriations

16

-4.6

-13.4

Tax on profit for the year

17

4.5

-1.8

Profit for the year 

C A M F I L FA R R 2009 / 46

 

174.5 

44.1

Parent Company Balance Sheet SEK M

ASSet S  n on-current assets 

n ote 

2009-12-31 

 

 

2008-12-31

Intangible assets Software

26

2.1

2.7

Machinery and production equipment

22

6.3

–

Equipment

23

5.6

5.6

11.9 

5.6

Property, plant and equipment

 

 

 

Financial assets Shares in Group companies Receivables from Group companies Other non-current receivables  

 

t otal non-current assets 

27, 28

1 734.0

1 593.3

27

642.7

797.0

27, 34

0.3

0.3

 

2 377.0 

2 390.6

 

2 391.0 

2 398.9

Current assets Inventories, etc.

35

Raw materials and consumables Work on contract  

 

 

0.0

1.2

14.9

3.0

14.9 

4.2

Current receivables Receivables from Group companies Derivative financial instruments

31

Other receivables Prepaid expenses and accrued income  

36

 

Cash and cash equivalents

371.8

458.1

11.0

33.0

–

3.4

1.0  

41

2.4

383.8 

496.9

275.1 

118.3

t otal current assets 

 

673.8 

619.4

t o t AL ASSet S 

 

3 064.8 

3 018.3

C A M F I L FA R R 2 0 0 9 / 4 7

Parent Company Balance Sheet SEK M

eQu It y An D LIABILIt IeS 

n ote 

2009-12-31 

2008-12-31 

equity Restricted equity Share capital

38

Statutory reserve Other restricted reserves  

113.8

113.8

391.5

391.5

4.1

 

 

4.1

509.4 

509.4

Retained earnings

962.0

948.9

Profit for the year

174.5

44.1

1 136.5

993.0

Unrestricted equity

t otal equity  u ntaxed reserves Non-current liabilities Derivative financial instruments

  40

1 502.4

47.4 

42.8

16.2

24.3

672.0

850.6

51.4

50.5

41, 42 31

Liabilities to credit institutions, interest-bearing Convertible debenture loan, interest-bearing t otal non-current liabilities 

1 645.9 

 

739.6 

925.4

Current liabilities Trade payables Liabilities to subsidiaries Derivative financial instruments

31, 42

Income tax liabilities Other liabilities Accrued expenses and deferred income

45

26.9

28.8

562.6

435.5

15.9

45.9

-

5.2

3.0

2.6

23.5

29.7

t otal current liabilities 

 

631.9 

547.7

t o t AL eQu It y An D LIABILIt IeS 

 

3 064.8 

3 018.3

Pledged assets

46

None

None

Contingent liabilities

47

215.7

195.8

C A M F I L FA R R 2009 / 48

Parent Company Statement of Changes in equity SEK M

  equity at January 1, 2008 

Share 

Statutory 

o ther restricted 

Retained

capital 

reserve 

reserves 

earnings

113.8 

391.5 

6.8 

1 007.8

Group contributions received

101.8

Group contributions paid

-16.3

Tax on Group contributions

-23.9

Redemption of share warrants

-2.7

Hedging reserve

-23.6 -24.9

Tax on hedging reserve

6.5

Dividend

-78.5

Profit for the year

44.1

equity at January 1, 2009 

113.8 

391.5 

4.1 

993.0

Group contributions received

75.5

Group contributions paid

-11.6

Tax on Group contributions

-16.8

Hedging reserve

6.0

Tax on hedging reserve

-1.6

Dividend

-82.5

Profit for the year

174.5

equity at December 31, 2009 

113.8 

391.5 

4.1 

1 136.5

C A M F I L FA R R 2 0 0 9 / 4 9

Parent Company Statement of Cash Flows SEK M

 

n ote 

2009 

 

 

o PeRAt In G ACt IVIt IeS  Income before financial items

-17.8

2008 -18.2

Depreciation

10

4.2

2.3

Other items not affecting liquidity

48

4.4

-24.8

-9.2 

-40.7

51.5

66.3

 

 

Interest received Dividends received

181.9

78.1

Interest paid

-88.9

-81.8

Income tax paid

-17.7

-20.5

Cash flow from operating activities before   changes in operating capital 

 

Increase/Decrease in inventories Decrease/Increase in current receivables Decrease/Increase in trade payables Increase in other current operating receivables n et cash generated from operating activities 

 

117.6 

1.4

-10.6

13.4

100.5

-70.1

-1.8

7.4

95.6

102.1

301.3 

54.2

In VeSt In G ACt IVIt IeS Investments in intangible assets

26

-0.3

22, 23

-9.5

-2.5

27

-140.8

-284.9

Divestments/Repayments of other financial assets

154.3

149.1

Change in short-term investments

110.8

84.7

114.5 

-56.8

Investments in property. plant and equipment Investments in other financial assets

n et cash used in investing activities 

 

-3.2

FIn An CIn G ACt IVIt IeS Redemption of share warrants Group contributions received

–

-26.3

69.2

61.9

Proceeds from borrowings

325.0

1 544.2

Repayments of borrowings

-569.6

-1 569.9

Decrease in short-term financial liabilities Dividends paid

20

–

-17.2

-82.5

-78.5

n et cash used in financing activities 

 

-257.9 

-85.8

Cash flows for the year 

 

157.9 

-88.4

Cash and cash equivalents at beginning of year 

 

118.3 

212.0

Currency translation difference in   cash and cash equivalents  Cash and cash equivalents at end of year 

C A M F I L FA R R 2009 / 50

 

-1.1 

-5.3

37 

275.1 

118.3

t he Camfil Farr Group has more than   3,300 employees world-wide

C A M F I L FA R R 2 0 0 9 / 5 1

n otes to the Financial Statements

n ote 1.

General information

53

n ote 27. Financial assets

70

n ote 2.

Accounting policies of the Parent Company

53

n ote 28. Shares in subsidiaries

71

n ote 3.

Accounting policies of the Group

54

n ote 29. Financial instruments by category

71

n ote 4.

Financial risk management

60

n ote 30. Credit quality of financial assets

72

n ote 5.

Critical judgments in applying the entity’s accounting policies

n ote 31. Derivative financial instruments

72

63 n ote 32. Trade and other receivables

73

n ote 6.

Net sales and operating profit by geographical segment

63

n ote 33. Deferred tax assets and deferred tax liabilities

73

n ote 7.

Expenses by nature

64

n ote 34. Non-current receivables

75

n ote 8.

Compensation paid to auditors

65

n ote 35. Inventories and work on contract

75

n ote 9.

Employee remuneration

65

n ote 36. Prepaid expenses and accrued income

75

n ote 10. Depreciation of property, plant and equipment

66

n ote 37.  Cash and cash equivalents

75

n ote 11. Research and development costs

66

n ote 38. Share capital

75

n ote 12. Operating leases

66

n ote 39. Other reserves

75

n ote 13. Financial income/Interest income and similar items

n ote 40. Untaxed reserves

75

66 n ote 41. Bank overdraft facilities

75

n ote 14.  Financial costs/Interest expenses and similar items

67

n ote 42. Borrowings

75

n ote 15. Result from participations in Group companies

67

n ote 43. Provisions for pensions and similar obligations

77

n ote 16. Appropriations

67 n ote 44. Other provisions

78

n ote 17.  Income tax/Tax on profit for the year

67 n ote 45. Accrued expenses and deferred income

79

n ote 18.  Net foreign exchange gains/losses

67 n ote 46. Pledged assets

79

n ote 19. Earnings per share

68 n ote 47. Contingent liabilities

79

n ote 20.  Dividend per share

68 n ote 48. Adjustments for items not included in cash flow

79

n ote 21. Land and buildings

68 n ote 49. Acquisitions

79

n ote 22. Machinery and production equipment

68 n ote 50. Related party transactions

80

n ote 23. Equipment

69 n ote 51. Events after the balance sheet date

81

n ote 24. Finance leases

69 n ote 52. Exchange rates

81

n ote 25. Goodwill

69 n ote 53. Definitions of key ratios

81

n ote 26. Other intangible assets

70

All amounts in SEK millions unless specified otherwise. Figures in parentheses refer to the preceding year. The notes on pages 53 to 81 are an integral part of these consolidated financial statements.

C A M F I L FA R R 2009 / 52

n otes to the Financial Statements

n ote 1. General information

Shares and par t icipat ions in subsidiaries

Camfil Farr manufactures and sells air filters through 36 companies and

Shares and participations in subsidiaries are recognized at acquisition cost

approximately 50 agents in some 50 countries. The Group has a total of 49 companies. Camfil Farr also has a well-established sales network with approximately 100 distributors in mainly the United States and Canada. The Group has production facilities all over the world and sells mainly products in Europe, North America and Asia. The Parent Company is a limited liability company incorporated and with registered office in Trosa, Sweden. The address of the head office is Sveavägen 56 E, SE-111 34 Stockholm, Sweden. The Board of Directors approved the publication of this Annual Report on March 19, 2010.

after deduction for any impairment. Dividends received are recognized as financial income. If dividends exceed a subsidiary’s comprehensive income for the period, or result in the booked value of the holding’s net assets being less than the book value of the participations in the consolidated financial statements, there is an indication for a need for impairment. When there is an indication that shares and participations in subsidiaries have declined in value, the recoverable amount is assessed. If it is lower than the carrying amount, an impairment loss is recognized. The impairment loss is recognized in the item “Result from participations in Group companies”.

n ote 2. Accounting policies of the Parent Company

Proper t y, plant and equipment

Below is a description of the most significant accounting policies for the

Fixed assets owned by the company

Parent Company that were applied in the preparation of this Annual Report.

In the Parent Company, property, plant and equipment is recognized at

These principles have been consistently applied for all presented years,

acquisition cost after deduction for accumulated depreciation and any

unless specified otherwise.

impairment losses in the same way as for the Group but with the addition

The financial statements of the Parent Company have been prepared in

of any revaluations.

accordance with the Swedish Annual Accounts Act (1995:1554) and standard “RFR 2.2 Accounting for Legal Entities” issued by the Swedish Financial

Fixed assets leased by the company

Reporting Board. In RFR 2.2, the Parent Company, in its financial statements

In the Parent Company, all leasing contracts are recognized in accordance

for the legal entity, shall apply all International Financial Reporting Standards

with the regulations for operating leases.

(IFRS) and interpretations approved by the EU to the greatest extent possible within the framework of the Swedish Annual Accounts Act and taking into

Borrowing costs

account the relationship between accounting and taxation. The recommenda-

In the Parent Company, borrowing costs are charged against income for the

tion states the exceptions and supplementary accounting principles that are

period they refer to.

to be applied from IFRS. The differences between the accounting policies of the Group and Parent Company are described below.

Intangible assets

Revenue recognit ion

Research and development costs In the Parent Company, all expenses for development are recognized as

Sales of goods and provision of service assignments

costs in the income statement.

The Parent Company recognizes revenues from service assignments, when an assignment is completed, in accordance with Chapter 2, Section 4 of the Swedish Annual Accounts. Until the assignment is completed, it is reported

e mployee benefits

as work on contract at the lower of acquisition cost and net sales cost on

Defined benefit plans

the balance sheet date.

In the Parent Company, the calculation of defined benefit plans is based on other principles that those stated in IAS 19. The Parent Company follows

Dividends

the regulations of the Swedish law on safeguarding pension obligations (“Tryggandelagen”) and the instructions of the Swedish Financial Supervisory

Dividend income is recognized when the right to receive payment is

Authority (“Finansinspektionen”) since such plans are a prerequisite for being

considered certain.

entitled to tax deductions. The main differences, compared with the rules in IAS 19, is the way the discount rate is set; the calculation of the defined

Financial ins t ruments The Parent Company does not apply the recognition regulations in IAS 39. However, what is otherwise written about financial instruments also applies to the Parent Company. In the Parent Company, financial assets are recognized at cost less any impairment losses and financial current assets are recognized at the lower of cost or net realizable value.

benefit obligation is based on the present salary level without assumptions for future salary raises, and that all actuarial gains and losses are recognized in the income statement as they arise. The Parent Company recognizes defined benefit pension plans in accordance with “FAR SRS Red R4, Recommendation No. 4, Accounting of pension provisions and pension costs” issued by FAR SRS, the institute for the accounting profession in Sweden. The Parent Company has undertaken defined benefit obligations for salaried workers that are secured through

Derivat ives and hedge account ing Derivatives that are not used for hedging purposes are recognized in the Parent Company at the lower of cost or net realizable value. The recognition of derivatives that are used for hedging depends on the hedged item,

insurance with Collectum and are recognized as a defined contribution plan. The interest portion on the change in pension cost for the year is recognized as financial costs. Other pension costs are charged against operating income.

in which case the derivative is treated as an off-balance item as long as the hedged item is not recognized in the balance sheet at acquisition cost. When the hedged item is recognized in the balance sheet, the derivative is recognized in the balance sheet at fair value.

C A M F I L FA R R 2 0 0 9 / 5 3

n otes to the Financial Statements

t a xes

ment of changes in equity, requiring “non-owner changes in equity” to be presented separately from owner changes in equity in a statement of

In the Parent Company, untaxed reserves are recognized, including deferred

comprehensive income. As a result, the Group presents in the consolidat-

income tax liabilities. However, in the consolidated accounts, untaxed

ed statement of changes in equity all owner changes in equity, whereas

reserves are divided into deferred income tax liabilities and equity.

all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been

Group cont ribut ions

re-presented so that it also is in conformity with the revised standard. As the change in accounting policy only impacts presentation aspects, there

The company recognizes group contributions in accordance with the state-

is no impact on earnings per share.

ment “UFR 2 Group Contributions and Shareholders’ Contributions” issued by the Swedish Financial Reporting Board. Group contributions are recognized

• IFRS 2 (amendment), “Share-based payment” (effective January 1, 2009)

on the basis of their economic significance in which Group contributions that

deals with vesting conditions and cancellations. It clarifies that vesting

are paid to minimize the Group’s total tax are recognized directly in retained

conditions are service conditions and performance conditions only. Other

earnings after deduction for their present tax effect.

features of a share-based payment are not vesting conditions. These

Group contributions that are comparable to dividends are recognized as

features would need to be included in the grant date fair value for trans-

dividends in which Group contributions received and their present tax effect

actions with employees and others providing similar services; they would

are recognized in the income statement. Group contributions paid and their

not impact the number of awards expected to vest or valuation thereof

present tax effect are charged directly against retained earnings.

subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group

Financial risk management

and company have adopted IFRS 2 (amendment) from January 1, 2009. The amendment does not have a material impact on the Group’s financial

A common financial risk management framework is used for all units in the

statements.

Group. The description in Note 4 is therefore also applicable in all essentials to the Parent Company.

(b) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

n ote 3. Accounting policies of the Group

The following standards and amendments to existing standards have been

Below is a description of the most significant accounting policies for the

on or after January 1, 2010 or later periods, but the Group has not early

Group that were applied in the preparation of this Annual Report. These poli-

adopted them:

published and are mandatory for the Group’s accounting periods beginning

cies have been consistently applied for all presented years, unless specified otherwise.

• IFRIC 17, “Distribution of non-cash assets to owners” (effective on or after July 1, 2009). The interpretation is part of the IASB’s annual

3.1 Basis of preparat ion 

improvements project published in April 2009. This interpretation provides guidance on accounting for arrangements whereby an entity distrib-

The consolidated financial statements of the Camfil AB Group have been

utes non-cash assets to shareholders either as a distribution of reserves

generally prepared in accordance with the Swedish Annual Accounts Act

or as dividends. IFRS 5 has also been amended to require that assets are

and “RFR 1.2 Supplementary Accounting Regulations for Groups” and

classified as held for distribution only when they are available for distribu-

International Financial Reporting Standards (IFRS) as adopted by the EU.

tion in their present condition and the distribution is highly probable. The

The consolidated financial statements have been prepared by applying the

Group will apply IFRIC 17 from January 1, 2010. It is not expected to have

cost method except for revaluations of available-for-sale financial assets and

a material impact on the Group’s financial statements.

financial assets and liabilities (including derivative instruments) valued at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires

• IAS 27 (revised), “Consolidated and separate financial statements” (effective from July 1, 2009). The revised standard requires the effects of all

the use of certain critical accounting estimates. It also requires management

transactions with non-controlling interests to be recorded in equity if

to exercise its judgment in the process of applying the company’s account-

there is no change in control and these transactions will no longer result

ing policies. The areas involving a higher degree of judgment or complexity,

in goodwill or gains and losses. The standard also specifies the account-

or areas where assumptions and estimates are significant to the consoli-

ing when control is lost. Any remaining interest in the entity is remeas-

dated financial statements, are disclosed in Note 5.

ured to fair value, and a gain or loss is recognized in profit or loss. The Group will apply IAS 27 (revised) prospectively to transactions with non-

(a) New and amended standards adopted by the Group

controlling interests from January 1, 2010.

The Group has adopted the following new and amended IFRSs as of January 1, 2009: • IFRS 7, “Financial instruments – Disclosures” (amendment) – effective

• IFRS 3 (revised), “Business combinations” (effective from July 1, 2009). The revised standard continues to apply the acquisition method to

January 1, 2009. The amendment requires enhanced disclosures about

business combinations, with some significant changes. For example,

fair value measurement and liquidity risk. In particular, the amendment

all payments to purchase a business are to be recorded at fair value at

requires disclosure of fair value measurements by level of a fair value

the acquisition date, with contingent payments classified as debt subse-

measurement hierarchy. As the change in accounting policy only results

quently re-measured through the income statement. There is a choice on

in additional disclosures, there is no impact on earnings per share.

an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest’s proportion-

• IAS 1 (revised), “Presentation of financial statements” – effective January

ate share of the acquiree’s net assets. All acquisition-related costs should

1, 2009. The revised standard prohibits the presentation of items of

be expensed. The Group will apply IFRS 3 (revised) prospectively to all

income and expenses (that is, “non-owner changes in equity”) in the state-

business combinations from January 1, 2010.

C A M F I L FA R R 2009 / 54

n otes to the Financial Statements

• IAS 38 (amendment), “Intangible Assets”. The amendment is part of the IASB’s annual improvements project published in April 2009 and the Group will apply IAS 38 (amendment) from the date IFRS 3 (revised) is

subsidiary acquired, the difference is recognized directly in the income statement. Inter-company transactions, balances and unrealized gains on transac-

adopted. The amendment clarifies guidance in measuring the fair value of

tions between Group companies are eliminated. Accounting policies of

an intangible asset acquired in a business combination and it permits the

subsidiaries have been changed where necessary to ensure consistency with

grouping of intangible assets as a single asset if each asset has similar

the policies adopted by the Group.

useful economic lives. The amendment will not result in a material impact on the Group’s financial statements.

Transactions with minority interests The Group applies a policy of treating transactions with minority interests as

• IFRS 5 (amendment), “Measurement of non-current assets (or disposal

transactions with parties external to the Group. Disposals to minority inter-

groups) classified as held-for-sale”. The amendment is part of the IASB’s

ests result in gains and losses for the Group and are recorded in the income

annual improvements project published in April 2009. The amendment

statement. Purchases from minority interests result in goodwill, which is the

provides clarification that IFRS 5 specifies the disclosures required in

difference between any consideration paid and the relevant share acquired

respect of non-current assets (or disposal groups) classified as held for

of the carrying value of net assets of the subsidiary. Disposals to minority

sale or discontinued operations. It also clarifies that the general require-

interests, in which the consideration received differs from the carrying value

ments of IAS 1 still apply, particularly paragraph 15 (to achieve a fair pres-

of the net assets that are being disposed of, result in gains or losses which

entation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.

are recognized in the income statement.

The Group will apply IFRS 5 (amendment) from January 1, 2010. It is not expected to have a material impact on the Group’s financial statements. • IAS 1 (amendment), “Presentation of financial statements”. The amend-

3.3 Segment repor t ing Operating segments are reported in a manner consistent with the internal

ment is part of the IASB’s annual improvements project published in April

reporting provided to the chief operating decision-maker. The chief operat-

2009. The amendment provides clarification that the potential settlement

ing decision-maker, who is responsible for allocating resources and assess-

of a liability by the issue of equity is not relevant to its classification as

ing performance of the operating segments, has been identified as the

current or non-current. By amending the definition of current liability, the

steering committee that makes strategic decisions.

amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer

3.4 Foreign currency t ranslat ion

of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the

Functional and presentation currency

counterparty to settle in shares at any time. The Group will apply IAS 1

Items included in the financial statements of each of the Group’s entities are

(amendment) from January 1, 2010. It is not expected to have a material

measured using the currency of the primary economic environment in which

impact on the Group or company’s financial statements.

the entity operates (“the functional currency”). The consolidated financial statements are presented in SEK, which is the Parent Company’s functional

• IFRS 2 (amendments), “Group cash-settled and share-based payment

and presentation currency.

transactions”. In addition to incorporating IFRIC 8, “Scope of IFRS 2”, and IFRIC 11, “IFRS 2 – Group and treasury share transactions”, the amend-

Transactions and balances

ments expand on the guidance in IFRIC 11 to address the classification

Foreign currency transactions are translated into the functional currency

of Group arrangements that were not covered by that interpretation. The

using the exchange rates prevailing at the dates of the transactions or

new guidance is not expected to have a material impact on the Group’s

valuation where items are remeasured. Foreign exchange gains and losses

financial statements.

resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated

3.2 Consolidat ion

in foreign currencies are recognized in the income statement. Foreign exchange gains and losses resulting from the translation of trade receivables

Subsidiaries

and trade payables are recognized in cost of goods sold, while the transla-

Subsidiaries are all entities (including special-purpose entities) over which

tion effects of other financial assets and liabilities are recognized in financial

the Group has the power to govern the financial and operating policies

income and expenses, except when the transactions are deferred in equity

generally accompanying a shareholding of more than one half of the voting

as qualifying cash flow hedges and qualifying net investment hedges.

rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the

Group companies

Group controls another entity. Subsidiaries are fully consolidated from the

The results and financial position of all the Group’s entities (none of which

date on which control is transferred to the Group. They are de-consolidated

has the currency of a hyperinflationary economy as its functional currency)

from the date that control ceases.

that have a functional currency different from the presentation currency are

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable

translated into the presentation currency as follows: • assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; • income and expenses for each income statement are translated at aver-

to the acquisition. Identifiable assets acquired and liabilities and contingent

age exchange rates (unless this average is not a reasonable approxima-

liabilities assumed in a business combination are measured initially at their

tion of the cumulative effect of the rates prevailing on the transaction

fair values at the acquisition date, irrespective of the extent of any minor-

dates, in which case income and expenses are translated at the dates

ity interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the

of the transactions); and • all resulting exchange differences are recognized as a separate com ponent of equity.

C A M F I L FA R R 2 0 0 9 / 5 5

n otes to the Financial Statements

On consolidation, exchange differences arising from the translation of the

3.6 Intangible assets

net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to share-

Goodwill

holders’ equity. When a foreign operation is partially disposed of or sold,

Goodwill represents the excess of the cost of an acquisition over the fair

exchange differences that were recorded in equity are recognized in the

value of the Group’s share of the net identifiable assets of the acquired

income statement as part of the gain or loss on sale.

subsidiary/associate at the date of acquisition. Goodwill on acquisitions

Goodwill and fair value adjustments arising on the acquisition of a

of subsidiaries is included in intangible assets. Goodwill on acquisitions of

foreign entity are treated as assets and liabilities of the foreign entity and

associates is included in investments in associates. Goodwill is tested annu-

translated at the closing rate.

ally for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the

3.5 Proper t y, plant and equipment

entity sold. Land and buildings comprise mainly factories and offices. Property, plant

Goodwill is allocated to cash-generating units for the purpose of impair-

and equipment are stated at acquisition cost less depreciation. The acquisi-

ment testing. The allocation is made to those cash-generating units or

tion cost includes costs that can be directly attributable to the acquisition of

groups of cash-generating units, in accordance with the Group’s operating

the asset. Subsequent costs are included in the asset’s carrying amount or

segments, which are expected to benefit from the business combination in

recognized as a separate asset, as appropriate, only when it is probable that

which the goodwill arose.

future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and main-

Acquired computer software

tenance are charged to the income statement during the financial period in

Standard computer software is normally expensed. Costs for software devel-

which they are incurred.

oped by the company, or software that has been modified considerably for

Depreciation on property, plant and equipment and intangible assets

the Group’s use, as well as standard software of major value, are capitalized

is calculated using the straight-line method over their estimated utilization

and amortized over three years using the straight-line method. In the income

period. The following depreciation periods are applied:

statement, depreciation of software is included in the item “Cost of goods sold”, or in “Selling costs” or “Administrative expenses”, depending on the

Buildings Land improvements

25 years As per local tax regulations

application. Costs associated with maintaining software are recognized as an expense as incurred.

Machinery and production equipment

8 years

Equipment

8 years

Research and development work

Computers

3 years

Research expenditure is recognized as an expense as incurred. Costs

Fork-lift trucks and vehicles

4 years

incurred in development projects (relating to the design and testing of new or improved products) are recognized as intangible assets when it is

Land is not depreciated.

probable that the project will be a success considering its commercial and technological feasibility, and costs can be measured reliably. Other develop-

The residual value of assets and utilization period are tested for impairment

ment expenditures are recognized as an expense as incurred. Development

on each balance sheet date and adjusted if needed.

costs that have been recognized earlier as a cost are not recognized in the

An asset’s carrying amount is written down immediately to its recover-

following period. Development costs with a finite useful life that have been

able amount if the asset’s carrying amount is greater than its estimated

capitalized are amortized from the commencement of the commercial pro-

recoverable amount.

duction of the product on a straight-line basis over the period of its expected

Gains and losses on disposals are determined by comparing proceeds

benefit, not exceeding five years.

with the carrying amount, which are included in the income statement. When revalued assets are sold, the amounts included in other reserves are trans-

3.7 Impairment of non-financial assets

ferred to retained earnings. Assets that have an indefinite useful life are not subject to amortization and Financial leases

are tested annually for impairment. Assets that are subject to amortization

Leases of property, plant and equipment where the Group has substantially

are reviewed for impairment whenever events or changes in circumstances

all the risks and rewards of ownership are classified as finance leases.

indicate that the carrying amount may not be recoverable. An impairment

Finance leases are capitalized at the lease’s inception at the lower of the

loss is recognized for the amount by which the asset’s carrying amount

fair value of the leased property and the present value of the minimum lease

exceeds its recoverable amount. The recoverable amount is the higher of

payments.

an asset’s fair value less costs to sell and value in use. For the purposes

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding.

of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

The corresponding rental obligations, net of finance charges, are included in “Other non-current liabilities”. The interest element of the finance cost is

3.8 Financial assets

charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability

The Group classifies its financial assets in the following categories: at fair

for each period. The property, plant and equipment acquired under finance

value through profit or loss, loans and receivables, and derivative financial

leases is depreciated over the shorter of the useful life of the asset or the

instruments used for hedging purposes. The classification depends on the

lease term.

purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

C A M F I L FA R R 2009 / 56

n otes to the Financial Statements

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired princip-

• The disappearance of an active market for that financial asset because of financial difficulties; or • Observable data indicating that there is a measurable decrease in the

ally for the purpose of selling in the short-term. Derivatives are also catego-

estimated future cash flows from a portfolio of financial assets since the

rized as held for trading unless they are designated as hedges. Assets in

initial recognition of those assets, although the decrease cannot yet be

this category are classified as current assets and are included in derivative

identified with the individual financial assets in the portfolio, including:

instruments.

(i) Adverse changes in the payment status of borrowers in the

Loans and receivables

(ii) National or local economic conditions that correlate with defaults on

Loans and receivables are non-derivative financial assets with fixed or

the assets in the portfolio.

port folio; and

determinable payments that are not quoted in an active market. Loans and receivables are included in current assets, except maturities greater than 12 months after the balance sheet date. These are classified as non-current

The Group first assesses whether objective evidence of impairment exists. The amount of the loss is measured as the difference between the

assets. The Group’s loans and receivables are classified as trade receiv-

asset’s carrying amount and the present value of estimated future cash

ables (Note 32), non-current receivables (Note 27 and Note 34), and as cash

flows (excluding future credit losses that have not been incurred) discounted

and cash equivalents in the balance sheet.

at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognized in

Recognition and measurement

the consolidated income statement. If a loan or held-to-maturity investment

Purchases and sales of financial assets are recognized on the trade date –

has a variable interest rate, the discount rate for measuring any impairment

the date on which the Group commits to purchase or sell the asset. Financial

loss is the current effective interest rate determined under the contract. As

instruments are initially recognized at fair value plus transaction costs for all

a practical expedient, the Group may measure impairment on the basis of an

financial assets not carried at fair value through profit or loss.

instrument’s fair value using an observable market price.

Financial assets recognized at fair value through profit or loss are

If, in a subsequent period, the amount of the impairment loss decreases

initially recognized at fair value, while related transaction costs are recog-

and the decrease can be related objectively to an event occurring after the

nized in the income statement. Financial assets are derecognized when the

impairment was recognized (such as an improvement in the debtor’s credit

rights to receive cash flows from the investments have expired or have been

rating), the reversal of the previously recognized impairment loss is recog-

transferred and the Group has transferred substantially all risks and rewards

nized in the consolidated income statement.

of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans

3.9 Derivative financial instruments and hedging activities

and receivables are carried at amortized cost using the effective interest method. Gains or losses arising from changes in the fair value of the “financial

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured

assets at fair value through profit or loss” category are included in the

at their fair value. The method of recognizing the resulting gain or loss

income statement in the period in which they arise.

depends on whether the derivative is designated as a hedging instrument,

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. Impairment testing

(a) hedges of the fair value of recognized liabilities (fair value hedge) or

of trade receivables is described in section 3.11.

(b) hedges of a particular risk associated with a recognized liability or a highly probable forecast transaction (cash flow hedge).

Impairment of financial assets Assets carried at amortized cost:

The Group documents, at the inception of the transaction, the relationship

The Group assesses at the end of each reporting period whether there

between hedging instruments and hedged items, as well as its risk manage-

is objective evidence that a financial asset or group of financial assets is

ment objective and strategy for undertaking various hedge transactions. The

impaired. A financial asset or a group of financial assets is impaired and

Group also documents its assessment, both at hedge inception and on an

impairment losses are incurred only if there is objective evidence of impair-

ongoing basis, of whether the derivatives that are used in hedging transac-

ment as a result of one or more events that occurred after the initial recog-

tions are highly effective in offsetting changes in fair values or cash flows of

nition of the asset (a “loss event”) and that loss event (or events) has an

hedged items.

impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The criteria that the Group uses to determine that there is objective

The fair values of various derivative instruments used for hedging purposes are disclosed in Note 31. Movements on the hedging reserve in shareholders’ equity are shown in Note 39. The full fair value of a hedging

evidence of an impairment loss include:

derivative is classified as a current asset or long-term liability when the

• Significant financial difficulty of the issuer or obligor;

remaining maturity of the hedged item is more than 12 months; it is classi-

• A breach of contract, such as a default or delinquency in interest or

fied as a current asset or current liability when the remaining maturity of the

principal payments; • The Group, for economic or legal reasons relating to the borrower’s

hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; • It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

C A M F I L FA R R 2 0 0 9 / 5 7

n otes to the Financial Statements

If the hedge no longer meets the criteria for hedge accounting, the adjust-

to collect all amounts due according to the original terms of receivables.

ment to the carrying amount of a hedged item, for which the effective inter-

Significant financial difficulties of the debtor, probability that the debtor will

est method is used, is amortized to profit or loss over the period to maturity.

enter bankruptcy or financial reorganization, and default or delinquency in

The Group only applies fair value hedge accounting for hedging fixed interest

payments (more than 30 days overdue) are considered indicators that the

risk on borrowings. The gain or loss relating to the effective portion of inter-

trade receivable is impaired. The amount of the provision is the difference

est rate swaps hedging fixed rate borrowings is recognized in the income

between the asset’s carrying amount and the present value of estimated

statement within “Financial expenses”. Changes in the fair value of the hedge

future cash flows, discounted at the original effective interest rate.

fixed rate borrowings attributable to interest rate risk are recognized in the income statement within “Financial expenses”.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement within “selling costs”. When a trade receivable is uncollectible, it is

Cash flow hedge

written off against the allowance account for trade receivables. Subsequent

The effective portion of changes in the fair value of derivatives that are des-

recoveries of amounts previously written off are credited against “selling

ignated and qualify as cash flow hedges are recognized in other comprehen-

costs” in the income statement.

sive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within “cost of goods sold” (forward

3.12 Cash and cash equivalents

foreign exchange contracts) or within “financial items” (interest rate swaps). Amounts accumulated in equity are recycled in the income statement in

Cash and cash equivalents includes cash in hand, deposits held at call with

the periods when the hedged item affects profit or loss (for example, when

banks and other short-term highly liquid investments with original maturities

the forecast sale that is hedged takes place). The gain or loss relating to the

of three months or less from the date of the acquisition.

effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement within “financial expenses”. The gain or

3.13 Borrowings

loss relating to the ineffective portion is recognized in the income statement within “costs of goods sold”. However, when the forecast transaction that

Borrowings are recognized initially at fair value, net of transaction costs

is hedged results in the recognition of a non-financial asset (for example,

incurred. Borrowings are subsequently stated at amortized cost; any differ-

inventory) or a liability, the gains and losses previously deferred in equity are

ence between the proceeds (net of transaction costs) and the redemption

transferred from equity and included in the initial measurement of the cost

value is recognized in the income statement over the period of the borrow-

of the asset or liability.

ings using the effective interest method.

When a hedging instrument expires or is sold, or when a hedge no

Compound financial instruments issued by the Group comprise convert-

longer meets the criteria for hedge accounting, any cumulative gain or loss

ible notes that can be converted to share capital at the option of the holder,

existing in equity at that time remains in equity and is recognized when the

and the number of shares to be issued does not vary with changes in their

forecast transaction is ultimately recognized in the income statement. When

fair value.

a forecast transaction is no longer expected to occur, the cumulative gain

The fair value of the liability portion of a convertible bond is determined

or loss that was reported in equity is immediately transferred to the income

using a market interest rate for an equivalent non-convertible bond. This

statement within “cost of goods sold”.

amount is recorded as a liability on an amortized cost basis until extinguished on conversion or maturity of the bonds. The remainder of the pro-

Derivatives that do not qualify for hedge accounting

ceeds is allocated to the conversion option. This is recognized and included

Certain derivative instruments do not qualify for hedge accounting. Changes

in shareholders’ equity, net of income tax effects. Subsequent to initial

in the fair value of any derivative instruments that do not qualify for hedge

recognition, the liability component of a compound financial instrument is

accounting are recognized immediately in the income statement within “cost

measured at amortized cost using the effective interest method. The equity

of goods sold”.

component of a compound financial instrument is not remeasured subsequent to initial recognition except on conversion or expiry.

3.10 Inventories

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months

Inventories are stated at the lower of cost and net realizable value. Cost is

after the balance sheet date.

determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labor, other

3.14 Current and deferred income tax 

direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realizable value is the estimated

The tax expense for the period comprises current and deferred tax. Tax is

selling price in the ordinary course of business, less applicable variable sell-

recognized in the income statement, except to the extent that it relates to

ing expenses. Costs of inventories include the transfer from equity of any

items recognized in other comprehensive income or directly in equity. In this

gains/losses on qualifying cash flow hedges relating to purchases of raw

case, the tax is also recognized in other comprehensive income or equity,

materials.

respectively.

3.11 t rade receivables

enacted or substantively enacted at the balance sheet date in the countries

The current income tax charge is calculated on the basis of the tax laws where the company’s subsidiaries and associates operate and generate Trade receivables are classified as current assets if payment is anticipated

taxable income. Management periodically evaluates positions taken in tax

within one year or earlier, and as non-current assets when payment is antici-

returns with respect to situations in which applicable tax regulations are

pated after one year.

subject to interpretation and establishes provisions where appropriate on

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provi-

the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on all

sion for impairment. A provision for impairment of trade receivables is

temporary differences arising between the tax bases of assets and liabili-

established when there is objective evidence that the Group will not be able

ties and their carrying amounts in the consolidated financial statements.

C A M F I L FA R R 2009 / 58

n otes to the Financial Statements

However, the deferred income tax is not accounted for if it arises from initial

as employee benefit expense when they are due. Prepaid contributions are

recognition of an asset or liability in a transaction other than a business

recognized as an asset to the extent that a cash refund or a reduction in the

combination that at the time of the transaction affects neither accounting

future payments is available to the Group.

nor taxable profit nor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the

Other post-employment benefits

balance sheet date and are expected to apply when the related deferred

Some Group companies (mainly in Italy) provide a type of severance pay

income tax asset is realized or the deferred income tax liability is settled.

when an employee leaves or retires from the company. The right to these

Deferred income tax assets are recognized to the extent that it is prob-

benefits is usually based on the employee receiving a certain percentage of

able that future taxable profit will be available against which the temporary

his annual salary for work at the company, when the employee leaves the

differences can be utilized.

company. The compensation is based on the employee’s salary on the date

Deferred income tax is provided on temporary differences arising on

employment is terminated. The anticipated cost of these benefits is allocat-

investments in subsidiaries and associates, except where the timing of the

ed over the employment period using an accounting method that is similar

reversal of the temporary difference is controlled by the Group and it is

to the method used for defined benefit pension plans. These obligations are

probable that the temporary difference will not reverse in the foreseeable

valued annually by independent qualified actuaries.

future. Deferred income tax assets and liabilities are offset when there is a

Termination benefits

legally enforceable right to offset current tax assets against current tax

Termination benefits are payable when employment is terminated before

liabilities and when the deferred income taxes assets and liabilities relate

the normal retirement date, or whenever an employee accepts voluntary

to income taxes levied by the same taxation authority on either the taxable

redundancy in exchange for these benefits. The Group recognizes termina-

entity or different taxable entities where there is an intention to settle the

tion benefits when it is demonstrably committed to either: terminating the

balances on a net basis.

employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of

3.15 e mployee benefits

an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to their

Pension obligations

present value.

Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-admin-

Bonus plans

istered funds, determined by periodic actuarial calculations. The Group has

The Group recognizes a liability and an expense for bonuses, based on a for-

both defined benefit and defined contribution plans. A defined contribution

mula that takes into consideration the bonus-generating parameters estab-

plan is a pension plan under which the Group pays fixed contributions into a

lished for the bonus. The Group recognizes a provision where contractually

separate legal entity. The Group has no legal or constructive obligations to

obliged or where there is a past practice that has created a constructive

pay further contributions if the legal entity does not hold sufficient assets

obligation.

to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not based

3.16 t rade payables

on defined contributions. A defined benefit plan typically defines an amount of pension benefit that an employee will receive on retirement, usually

Trade payables are recognized initially at fair value and subsequently meas-

dependent on one or more factors such as age, years of service

ured at amortized cost using the effective interest method.

and compensation. The liability recognized in the balance sheet in respect of defined

Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with

3.17 Provisions

adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit obligation is calculated annually by independent

Provisions for environmental restoration, restructuring costs and legal

actuaries using the projected unit credit method. The present value of the

claims are recognized when the Group has a present legal or construc-

defined benefit obligation is determined by discounting the estimated future

tive obligation as a result of past events; it is probable that an outflow of

cash outflows using interest rates of high-quality corporate bonds that are

resources will be required to settle the obligation; and the amount has been

denominated in the currency in which the benefits will be paid, and that have

reliably estimated. Restructuring provisions comprise mainly employee

terms to maturity approximating to the terms of the related pension liability.

termination payments. Provisions for future warranty demands are based on

Actuarial gains and losses arising from experience adjustments and

historical information about the guarantee demand and current trends that

changes in actuarial assumptions exceeding the higher of 10 percent of the

may indicate that future demands may deviate from the historical. Provisions

value of administrative assets and 10 percent of the defined-benefit obliga-

are not recognized for future operating losses.

tion are charged or credited to income over the employees’ expected average remaining working lives.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

Past-service costs are recognized immediately in income, unless the changes to the pension plan are conditional on the employees remaining in

3.18 Revenue recognit ion

service for a specified period of time (the vesting period). In this case, the past-service costs are amortized on a straight-line basis over the vesting

Revenue comprises the fair value of the consideration received or receivable

period.

for the sale of goods and services in the ordinary course of the Group’s

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized

activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the

C A M F I L FA R R 2 0 0 9 / 5 9

n otes to the Financial Statements

entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Sales of goods – wholesale The Group manufactures and sells a range of air filtration solutions in the wholesale market or to end customers. Sales of goods are recognized when a Group entity has delivered products to the customer. Delivery does not occur until the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. The principle for revenue recognition for work in progress is found under the heading Service assignments/contracting projects. Other revenue is recognized as follows: • Rental income is recognized during the period the rental refers to. • Royalties and similar income are recognized in accordance with the economic significance of the current agreement. • Dividend income: when the right to receive payment is established as certain.

3.19 Ser vice assignments/cont ract ing projects For completed service assignments and contracting projects, the income and expenses related to the assignment/project are recognized as revenue and costs, respectively, in relation to the degree of completion on the balance sheet date (gradual revenue recognition). The degree of completion is determined by comparing incurred costs on the balance sheet date with the estimated total expense of the assignment/project. When the outcome of a service assignment or contracting project cannot be estimated in a reliable way, the revenue is recognized only to the extent that it is corresponded to by incurred costs that will most likely be paid for by the customer. Any anticipated losses on an assignment/project are immediately recognized as costs.

3.20 o perat ing leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

3.21 Dividend dis t ribut ion Dividend distribution to the Parent Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which the dividends are approved by the Parent Company’s shareholders.

3.22 Share capit al

n ote 4. Financial risk management 4.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments, such as forward exchange contracts and interest rate swaps, to hedge some financial risk exposure. Risk management is carried out by a central finance department, the Treasury Center, under policies approved by the board of directors, in order to take advantage of economies of scale and synergy effects, and to minimize management risks. The Treasury Center is responsible for the Group’s loan financing, foreign exchange and interest risk management, and functions as an internal bank for the financial transactions of Group companies. The Treasury Center identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The board prepares written policies for overall risk management and for specific areas, such as foreign exchange risks, interest rate risks, credit risks, use of derivative instruments and investment of excess liquidity. The Group’s financial risks are analyzed on a continuous basis and followed up to ensure than the finance policy is being followed. The policy is subject to continuous review, at least once per year. Market risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risks in purchases and sales, and in financial transactions in foreign currency. The currency exposure is primarily against the euro and the U.S. dollar. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Management has set up a policy to require Group companies to manage their foreign exchange risk against their functional currency. The Group companies are required to hedge their entire foreign exchange risk exposure with the Treasury Center. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward contracts, transacted with the Treasury Center. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. The Treasury Center is responsible for hedging net positions in each currency by using loans in foreign currency and external forward exchange contracts. The Group hedges between 65 percent and 95 percent of the anticipated net flow in each major currency for the next six-month period and between 45 percent and 75 percent for the subsequent 7 to 12 months. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities or future transactions on a gross basis. The Parent Company has a number of holdings in foreign subsidiaries with net assets that are exposed to currency translation risks. Currency exposure in the net assets of subsidiaries is not hedged. At December 31, 2009, if the Swedish krona (SEK) had weakened/

Incremental costs directly attributable to the issue of new shares or options

strengthened by 10 percent against the U.S. dollar (USD) with all other vari-

are shown in equity as a deduction, net of tax, from the proceeds.

ables held constant, post-tax profit for the year would have been SEK 0.2 M (4.7) higher/lower, mainly as a result of foreign exchange gains/losses on translation of trade receivables (both internal and external) and internal loans in USD, in which USD is not the functional currency of the subsidiary, and external loans and derivatives in USD. Equity would have been SEK 1.3 M (0.6) lower/higher, arising mainly from changes in value attributable to cash flow hedges.

C A M F I L FA R R 2009 / 60

n otes to the Financial Statements

At December 31, 2009, if the Swedish krona had weakened/strengthened

at least 10 percent of budgeted/forecast sales. Management also monitors

by 10 percent against the euro (EUR) with all other variables held constant,

rolling forecasts of the Group’s liquidity reserve on the basis of expected

post-tax profit for the year would have been SEK 1.4 M (0.7) higher/lower,

cash flow.

mainly as a result of foreign exchange gains/losses on translation of trade

The table below analyzes the Group’s financial liabilities and net-settled

receivables and trade payables (both external and internal) in which EUR is

derivative financial liabilities into relevant maturity groupings based on the

not the functional currency for the subsidiary, and derivatives in EUR. Equity

remaining period at the balance sheet to the contractual maturity date. The

would have been SEK 0.1 M (1.9) lower/higher, arising mainly from changes

amounts disclosed in the table are the contractual undiscounted cash flows.

in value attributable to cash flow hedges.

Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Interest rate risk Since the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash-flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group’s principle is to have a fixed interest rate term of between 0 and 3.5 years. During the year the average fixed interest rate term was 11 months (17 months). The calculation of the average fixed interest rate term includes the effects of interest derivative instruments used to manage the interest rate risk in the loan portfolio. The Group manages its cash flow interest-rate risk by using interest-rate

At December 31, 2009     

Less than   Between  Between    3 months  3 months  1 year and  o ver  a nd 1 year  5 years  5 years

Liabilities to credit institutions

–

504.8

250.0

–

Derivative financial instruments

–

3.1

12.2

–

Trade payables/bills payable

210.2

3.0

0.6

–

t otal 

210.2 

At December 31, 2008     

510.9 

262.8 

–

Less than   Between  Between    3 months  3 months  1 year and  o ver  a nd 1 year  5 years  5 years

Liabilities to credit institutions

310.5

78.5

204.5

1.1

13.2

16.3

–

Trade payables/bills payable

243.2

4.5

4.8

–

t otal 

554.8 

96.2 

swaps. Such interest-rate swaps have the economic effect of converting

Derivative financial instruments

borrowings from floating rates to fixed rates. Generally, the Group raises

128.6

long-term borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly.

225.6 

128.6

Under the interest-rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between

The table below analyzes the Group’s derivative financial instruments which

fixed contract rates and floating-rate interest amounts calculated by refer-

will be settled on a gross basis into relevant maturity groupings based on

ence to the agreed notional principal amounts.

the remaining period at the balance sheet to the contractual maturity date.

Given the same loan liability, cash and cash equivalents, interest rate

The amounts disclosed in the table are the contractual undiscounted cash

derivative and the same fixed interest periods and terms at year-end, a

flows. Balances due within 12 months equal their carrying balances as the

change in the market interest rate by 100 points (1 percentage unit), instead

impact of discounting is not significant.

of using contracted interest rates, would change post-tax profit by SEK 1.9 M SEK 2.6 M (0.3). This would have been an effect mainly of higher/lower

At December 31, 2009     

interest expenses for borrowing at a variable rate.

Forward foreign exchange

(0.2) over the average fixed interest period, and interest income by

Equity would have been SEK 2.3 M (8.2) lower/higher as an effect of a

Less than   3 months   

Between  3 months  and 1 year 

Between  1 year and  5 years

contracts – cash flow hedges

reduction/increase in the fair value of interest rate swaps used as cash flow

– outflow

-154.2

–

-195.5

hedges.

– inflow

154.6

–

194.7

– outflow

-41.4

–

-20.9

– inflow

41.5

–

20.6

– 

-1.1 

Between  3 months  and 1 year 

Between  1 year and  5 years

Credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. The Group has no significant concentrations of credit risks. The Group has policies in place to ensure that sales of products and

Forward foreign exchange contracts – held for trading

t otal 

0.5 

services are made to customers with appropriate credit history and has the necessary provisions for uncertain receivables. Historically, the Group has Derivative counterparties and cash transactions are limited to high-

At December 31, 2008     

credit-quality financial institutions. Most of the Group’s financial assets and

Forward foreign exchange

cash and cash equivalents are placed with the Group’s two main banks, SEB

contracts – cash flow hedges

had very low bad credit losses (Note 30).

and Danske Bank. The credit rating for these banks, according to Standard

– outflow

& Poor’s, is A for both SEB and Danske Bank.

– inflow

Liquidity risk Liquidity risks are basically managed with caution by maintaining sufficient liquid funds and marketable securities, keeping available financing through adequate contracted credit facilities and having the possibility to close market positions. Due to the dynamic nature of its underlying businesses, the Group aims to have liquid funds and available credits that can amount to

Less than   3 months   

-118.6

-107.5

–

60.1

47.6

–

-13.5

-88.1

–

–

0.0

–

Forward foreign exchange contracts – held for trading – outflow – inflow t otal 

-72.0 

-148.0 

– 

No derivative financial instruments are due over 5 years from now. C A M F I L FA R R 2 0 0 9 / 6 1

n otes to the Financial Statements

Price risk

 

 

 

Level 1 

Level 2 

Level 3 

t otal  

Price risk refers to the risk that costs for direct and indirect materials rise

 

when underlying raw material prices increase in the world market. The Group

Assets

is affected by changes in raw material and energy prices in connection with

Financial assets at fair

delivery agreements the Group has entered into, in which prices are linked

value through profit or loss

to raw material prices in the global market. Raw material price risks are

– Trading derivatives

–

0.1

–

0.1

managed mainly through agreements with suppliers.

– Derivatives used for hedging

–

6.2

–

6.2

4.2 Capit al risk management

t otal assets 

– 

6.3 

– 

6.3

The Group’s objectives when managing capital are to safeguard the Group’s

Liabilities 

 

 

 

ability to continue as a going concern in order to provide returns for share-

Financial liabilities at fair

holders and benefits for other stakeholders and to maintain an optimal capi-

value through profit or loss

tal structure to reduce the cost of capital.

– Trading derivatives

–

0.4

–

0.4

– Derivatives used for hedging

–

27.5

–

27.5

t otal liabilities 

– 

27.9 

– 

27.9

In order to maintain or adjust the capital structure, the Group may adjust

balance

the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total

The fair value of financial instruments traded in active markets is based on

capital. Net debt is calculated as total borrowings (Note 42) less cash and

quoted market prices at the balance sheet date. A market is regarded as

cash equivalents and other interest-bearing assets. Total capital is calcu-

active if quoted prices are readily and regularly available from an exchange,

lated as “Equity” as shown in the consolidated statement of financial position

dealer, broker, industry group, pricing service or regulatory agency, and

plus net debt.

those prices represent actual and regularly occurring market transactions on an arm’s length basis.

The gearing ratios at December 31, 2009 and 2008 were as follows:  

2009 

The fair value of financial instruments that are not traded in an active 2008

Interest-bearing liabilities

904.8

1 092.6

Less: cash and cash equivalents

-440.8

-242.5

-53.7

-58.3

410.3 

791.8

Less: other interest-bearing assets

market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

n et debt  Total equity t otal capital  

1 930.6

1 837.7

2 340.9 

2 629.5

Gearing ratio

18%

30%

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Specific valuation techniques used to value financial instruments include: • Quoted market prices or dealer quotes for similar instruments. • The fair value of interest rate swaps is calculated as the present value of

During the year the Group had a strong cash flow which generated high liquidity that was partly used for repayments of borrowings. This reduced the Group’s net debt and also contributed to reducing the gearing ratio, compared with last year. The requirements from the Group’s principal banks regarding the interest-coverage ratio and gearing ratio were fulfilled at December 31,

the estimated future cash flows based on observable yield curves. • The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. • Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

2009. Note that all of the resulting fair value estimates are included in level 2.

4.3 Fair value es t imat ion

The fair value of financial instruments traded in active markets (such as publicly traded derivatives) is based on quoted market prices at the balance

Effective 1 January 2009, the Group adopted the amendment to IFRS 7 for

sheet date. The quoted market price used for financial assets held by the

financial instruments that are measured in the balance sheet at fair value.

Group is the current bid price.

This requires disclosure of fair value measurements by level of the following

Quoted market prices or dealer quotes for similar instruments are used

fair value measurement hierarchy:

for long-term debt. The fair value of interest rate swaps is calculated as the

• Quoted prices (unadjusted) in active markets for identical assets or liabili-

present value of estimated future cash flows. The fair value of forward for-

ties (level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

eign exchange contracts is determined using quoted foreign exchange rates at the balance sheet date. The recognized value for trade receivables and trade payables, after any impairment losses, is anticipated to correspond to their fair values since these items are current by nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for

The following table presents the Group’s assets and liabilities that are measured at fair value at December 31, 2009.

C A M F I L FA R R 2009 / 62

similar financial instruments.

n otes to the Financial Statements

n ote 5. Critical judgments in applying the entity’s accounting 

judgment is required in determining the worldwide provision for income

policies

taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where

The Group makes estimates and assumptions concerning the future. The

the final tax outcome of these matters is different from the amounts that

resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabili-

were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. There are no current tax audit issues in the Group on December 31, 2009.

ties within the next financial year are summarized and specified below.

Pension benefits

Estimated impairment of goodwill

The present value of the pension obligations depends on a number of factors

The Group tests annually whether goodwill has suffered any impairment in

that are determined on an actuarial basis using a number of assumptions.

accordance with the accounting policy stated in Note 3.6. The recoverable

The assumptions used in determining the net cost (income) for pensions

amounts of cash-generating units have been determined based on value-in-

include the discount rate. Any changes in these assumptions will impact the

use calculations. These calculations require the use of estimates (Note 25).

carrying amount of pension obligations.

A sensitivity analysis indicates that there would be no need for reduc-

The Group determines the appropriate discount rate at the end of each

ing the carrying amount of goodwill if the revised estimated gross margin

year. This is the interest rate that should be used to determine the present

on December 31, 2009 had been 10 percent lower than management’s

value of estimated future cash outflows expected to be required to settle the

estimates, or if the revised estimated pre-tax discount rate applied to the

pension obligations. In determining the appropriate discount rate, the Group

discounted cash flows had been 10 percent higher than management’s

considers the interest rates of high-quality corporate bonds that are denomi-

estimates.

nated in the currency in which the benefits will be paid, and that have terms

If the actual gross margin had been higher or the pre-tax discounted

to maturity approximating the terms of the related pension liability.

rate lower than management’s estimates, the Group would not be able to

Other key assumptions for pension obligations are based in part on

reverse any impairment losses that arose on goodwill.

current market conditions. Additional information is disclosed in Note 43. If the discount rate would increase/decrease 0.5 percentage points from

Income taxes

management’s estimates, the carrying amount of pension obligations would

The Group is subject to income taxes in numerous jurisdictions. Significant

be an estimated SEK 15.2 M lower or SEK 16.2 M higher.

n ote 6. n et sales and operating profit by geographical segment  Fiscal year 2009   

 

n orth 

 

Gas 

europe 

America 

Asia 

turbines 

o ther   

2 344.9

1 046.9

318.8

719.3

72.7

0.2

–

4 502.8

62.5

72.2

38.8

11.4

8.7

400.1

-593.7

0.0

357.6 

730.7 

81.4 

400.3 

-593.7 

54.2

-10.4

-58.7

–

439.1

markets 

h olding 

 

company  elimination 

Group

Revenues External sales Internal sales t otal revenues  o perating profit per market

2 407.4 

1 119.1 

4 502.8

297.5

130.4

26.1

1 663.0

621.4

303.9

420.8

35.8

146.2

-530.0

2 661.1

675.8

101.6

80.2

285.8

29.5

84.7

-530.0

727.6

o ther information Operating assets Operating liabilities Investments in property. plant. equipment and intangible assets

96.8

28.1

13.5

7.9

0.4

9.8

6.5

163.0

Depreciation

-71.2

-26.2

-16.1

-4.5

-1.4

-4.2

-5.9

-129.5

Fiscal year 2008   

 

n orth 

 

Gas 

europe 

America 

Asia 

turbines 

o ther   

2 236.4

1 067.1

267.0

718.8

71.7

0.0

–

4 361.0

60.7

72.2

33.8

24.4

0.3

399.3

-590.7

0.0

300.8 

743.2 

72.0 

399.3 

-590.7 

61.8

3.3

-60.6

–

411.2

markets 

h olding 

 

company  elimination 

Group

Revenues External sales Internal sales t otal revenues  o perating profit per market

2 297.1 

1 139.3 

4 361.0

271.3

108.0

27.3

1 755.3

663.0

274.2

517.1

46.4

212.8

-437.4

3 031.4

566.3

134.3

87.7

341.1

29.0

114.8

-437.4

835.9

o ther information Operating assets Operating liabilities Investments in property. plant. equipment and intangible assets Depreciation

70.6

23.6

66.6

13.3

1.2

6.4

6.7

188.4

-68.5

-21.3

-11.9

-5.4

-0.6

-2.2

-3.8

-113.9

C A M F I L FA R R 2 0 0 9 / 6 3

n otes to the Financial Statements

Management has determined the operating segments based on the reports

The Group’s interest-bearing liabilities are not considered to be segment

reviewed by management that are used to make strategic decisions.

liabilities but rather are managed by the Treasury function.

The Group’s operations are conducted primarily in three geographical segments. Sales figures are based on the country where the company has

The liabilities of reportable segments are reconciled to total liabilities as follows:

its geographic domicile, except for companies operating in the gas turbine segment. The gas turbine segment includes Camfil Farr Power Systems

 

2009 

2008

AB, Camfil Farr Power Systems GmbH, Camfil Farr Air Filtration India Ltd

Segment liabilites for reportable segments

727.6

835.9

and the gas turbine divisions in Canada and China. Other markets include

u nallocated: 11.8

the Swedish company for agent sales, Camfil International AB, the Brazilian

Adjusted for IFRS

13.8

production company in South America and the new dust collection company

Deferred tax

49.0

67.2

in Denmark.

Income tax liability

32.9

43.6

16.2

24.3

to total assets are measured in a manner consistent with that of the financial

Non-current borrowings

748.8

924.3

statements. These assets are allocated based on the operations of the seg-

Provisions for pensions and other provisions

148.9

146.5

ment and the physical location of the asset.

Other

-4.2

0.5

The amounts provided to the strategic steering committee with respect

Non-current derivative financial instruments

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, derivative financial instruments designated as

t otal liabilities per the balance sheet 

1 733.0 

2 054.1

hedges of future commercial transactions, receivables and operating cash. Investment in shares (classified as available-for-sale financial assets or financial assets at fair value through profit or loss) held by the Group are not

Based on where customers are located, net sales are distributed by geographical segments as follows:

considered to be segment assets but rather are managed by the Treasury Group 

function.

2009 

2008

Europe

2 843.5

2 786.1

financial instruments designated as hedges of future commercial transac-

North America

1 145.9

1 133.5

tions). They exclude items such as taxation and corporate borrowings.

Asia

355.8

310.2

Other markets

157.6

131.2

Segment liabilities comprise operating liabilities (including derivative

Capital expenditure comprises additions to property, plant and equipment and intangible assets, including additions resulting from acquisitions

t otal net sales 

through business combinations.

4 502.8 

4 361.0

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to

The company is domiciled in Sweden. The result of its revenues from exter-

unrelated third parties.

nal customers in Sweden is SEK 437.8 M (441.3) and the total revenue from

A reconciliation of operating profit to profit before tax and discontinued

external customers from other countries is SEK 4,065.0 M (3,919.7). The breakdown of revenue per country is disclosed in the table above.

operations is provided as follows:

The total of non-current assets other than financial instruments and  

2009 

2008

deferred tax assets (there are no employment benefit assets and rights aris-

Operating profit for reportable segments

439.1

411.2

ing under insurance contracts) located in Sweden is SEK 284.4 M (252.1)

Adjusted for IFRS

3.3

7.0

Intra-Group profit, inventories

-1.9

-10.7

u nallocated:

and the total of these non-current assets located in other countries is

Restructuring costs

-19.0

-7.5

Financial items. net

-41.3

-43.8

-4.1

0.2

Other

SEK 1,420.1 M (1,503.2).

n ote 7. expenses by nature  Group   

Profit before tax 

376.1 

356.4

Depreciation and impairment

The assets of reportable segments are reconciled to total assets as follows:

Employment benefit expense

(Note 10) (Note 9)   Segment assets for reportable segments

2009  2 661.1

u nallocated:  Goodwill

2008

Raw materials and

3 031.4

consumables used

  839.8

691.6

31.0

29.8

Intra-Group profit, inventories

-31.8

-29.9

Adjusted for IFRS

29.2

30.2

Deferred tax

61.0

66.1

distribution costs and  

Income tax assets

28.3

31.8

administrative expenses 

Long-term receivables

45.6

44.4

-0.6

-0.1

t otal assets per the balance sheet 

C A M F I L FA R R 2009 / 64

3 663.5 

2008 

2009 

2008

129.5

113.9

4.1

2.3

1 422.8

1 293.8

73.9

67.0

1 337.0

1 324.8

-0.1

-0.4

Raw materials and machinery

Surplus values of buildings

Other

Parent Company

2009 

3 895.3

for sale to subsidiaries Other expenses

–

–

324.8

330.6

1 196.1

1 228.3

81.6

66.7

4 085.4 

3 960.8 

484.3 

t otal costs of goods sold,   466.2

n otes to the Financial Statements

n ote 8. Compensation paid to auditors

n ote 9. employee remuneration

Fees and compensation for costs 

   

 

Group 

 

Wages, salaries and other remuneration, and social security contributions: Parent Company

2009 

2008 

2009 

 

 

 

PricewaterhouseCoopers 

2008

2009 

2008

Wages and salaries

51.7

46.9

Social security contributions

18.3

15.2

8.9

8.2

Auditing assignments

5.4

4.1

0.6

0.7

Pension costs – defined

Other assignments

2.2

1.8

0.7

1.1

contribution plans

o ther auditors Auditing assignments

1.6

1.2

–

–

Other assignments

1.7

3.8

0.7

0.3

10.9 

10.9 

2.0 

2.1

t otal in Parent Company 

79.0 

Wages and salaries t otal 

Social security contributions

70.3

1 102.8

1 011.4

246.8

226.3

67.5

50.6

5.7

5.5

Pension costs – defined Auditing assignments involve the auditing of the annual report, the account-

contribution plans

ing records and the administration of the Board of Directors and the

Pension costs – defined

President, other assignments related to the business of the company’s

benefit plans (Note 43)

auditors, as well as advising or other forms of assistance related to findings t otal in Group 

made in such audits or the execution of other such tasks. All other work is

1 422.8 

1 293.8

classified as “Other assignments”.

 

2009 

2008 

 

Wages, salaries  

Sociala security 

 

Wages, salaries 

Sociala security 

 

 

and other  

contributions 

Pension 

and other 

contributions 

Pension 

(excl. pensions) 

costs 

remuneration 

(excl. pensions) 

 

remuneration 

costs

Board members, managing directors and other senior executives

20.0

6.7

4.1

19.7

5.4

3.8

Other employees

31.7

11.6

4.8

27.2

9.8

4.4

t otal in Parent Company 

51.7 

18.3 

8.9 

46.9 

15.2 

8.2

Board members, managing directors and other senior executives

106.8

17.5

10.6

87.9

13.9

10.1

Other employees

996.0

229.3

62.6

923.5

212.4

46.0

246.8 

73.2 

226.3 

56.1

t otal in Group 

1 102.8 

1 011.4 

Average number of employees The number of employees totaled 3,249 (3,321) on December 31, 2009.  

2009 

2008

 

Average  

o f 

Average 

o f 

 

number  

which 

number 

which 

 

of employees  

men 

of employees 

men 

Parent Company France

4

25%

4

25%

Malaysia

6

83%

3

67%

Sweden

57

78%

49

73%

t otal in Parent Company 

67 

75% 

56 

63%

C A M F I L FA R R 2 0 0 9 / 6 5

n otes to the Financial Statements

 

2009 

2008

Absenteeism due to illness in Parent Company

 

Average  

o f 

Average 

o f 

 

number  

which 

number 

which 

 

of employees  

men 

of employees 

men 

Foreign subsidiaries

 

2009 

Total absenteeism due to illness, %

2008

1%

of which long-term absenteeism due to illness – absenteeism due to illness for men

Australia

60

77%

54

74%

– absenteeism due to illness for women

Belgium

21

86%

21

81%

– employees – 29 years old

1%

–

–

1%

1%

2%

3%

10%

2%

Brazil

13

62%

14

51%

– employees 30-49 years old

1%

1%

Denmark

31

58%

29

25%

– employees 50 years old and older

1%

2%

United Kingdom

196

59%

205

57%

Finland

22

73%

25

72%

France

310

68%

298

65%

3

67%

2

50%

In the Group, depreciation totaling SEK 90.2 M (80.7) is included in cost

Netherlands

28

89%

27

85%

of goods sold, SEK 1.2 M (1.5) in selling costs and SEK 38.1 M (31.7) in

India

50

86%

29

86%

administrative expenses. In the Parent Company, depreciation amounting to

Iran

1

0%

1

100%

Ireland

43

79%

45

82%

Italy

21

67%

19

63%

5

60%

5

60%

n ote 11. Research and development costs  Research and development costs for the year totaled SEK 47.5 M (38.3) in

United Arab Emirates

Japan Canada

277

68%

246

61%

China

137

53%

138

57%

Malaysia

256

58%

264

59%

Norway

30

70%

29

69%

New Zealand

15

80%

6

83%

Poland

5

80%

5

80%

Russia

1

100%

1

100%

55

55%

57

51%

9

44%

9

33%

117

38%

104

61%

16

75%

15

73%

429

62%

450

62%

13

62%

9

33%

Switzerland Singapore Slovakia Spain Sweden Taiwan Thailand

27

41%

29

45%

Germany

375

71%

387

73%

United States

602

64%

742

64%

14

71%

–

–

Austria

n ote 10. Depreciation of property, plant and equipment

SEK 4.2 M (2.3) is included in administrative expenses.

the Group and SEK 23.8 M (24.4) in the Parent Company.

n ote 12. o perating leases During the year leasing fees paid for operating leases totaled SEK 41.6 M (41.8) in the Group and SEK 5.4 M (4.1) in the Parent Company. The Group’s operating leases consist mostly of leases for premises, vehicles and office equipment. The nominal value of the Group’s contracted future leasing fees, related to agreements with a remaining term exceeding one year, was as follows: Group    Due for payment within one year

subsidiaries 

3 182 

64% 

3 265 

65%

t otal in Group 

3 249 

64% 

3 321 

64%

2008 

34.1

39.3

2009  5.4

2008 4.1

64.2

56.8

21.6

16.5

4.4

9.7

–

–

Due for payment later than one year but within five years

t otal in foreign  

Parent Company

2009 

Due for payment later than five years t otal 

102.7 

105.8 

27.0 

20.6

Gender distribution in the Group (including subsidiaries) for board members

n ote 13. Financial income/Interest income and similar items

and other senior executives:  

2009 

Group 

2008

 

n umber  

 

 

on balance  

o f which 

 

sheet date 

men 

 

n umber  on balance   o f which  sheet date 

men

Group (incl. subsidiaries) Board members

163

94%

153

94%

President and other senior executives t otal 

102 265 

93% 93% 

100 253 

92% 93%

  Parent Company

2008 

2009 

2008

Interest income on cash and cash equivalents

3.1

8.3

0.6

5.0

Interest income from Group companies

–

–

47.3

62.8

71.6

50.3

109.7

79.4

(Note 43)

8.9

8.6

–

–

Other financial income

0.5

0.1

1.0

0.4

84.1 

67.3 

Exchange rate differences Return on pension assets

t otal 

C A M F I L FA R R 2009 / 66

2009 

158.6 

147.6

n otes to the Financial Statements

n ote 14. Financial costs/Interest expenses and similar items Group    Interest expense – borrowings

Difference between the Group’s tax charge and the tax charge based on

Parent Company

2009 

2008 

2009 

2008

41.5

49.5

36.3

45.6

12.3

10.1

–

–

Interest expense – defined benefit pension liability (Note 43) Interest expense – Group companies Exchange rate differences

–

–

54.3

35.2

71.6

50.3

56.8

51.8

Capital loss on sale

0.0

0.9

–

–

Other financial costs

0.0

0.3

0.7

0.6

t otal 

125.4 

111.1 

148.1 

133.2

nominal tax rates: Parent Company 

2009 

2008

Profit before tax

170.0

45.9

Tax based on the current rate for the Parent Company

-44.7

-12.9

Income not subject to tax

49.8

15.5

Non-deductible expenses

-0.3

-4.4

Tax attributable to prior years

-0.3

0.0

t ax charge for Parent Company 

4.5 

-1.8

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

n ote 15. Result from participations in Group companies Parent Company   

2009 

Write-down of shares in Group companies

2008

–

-15.0

Dividends from subsidiaries

181.9

78.1

t otal 

181.9 

63.1

n ote 16. Appropriations Parent Company   

2009 

Straight-line depreciation in excess of cost

2008

2.2

0.6

Tax allocation reserve

1.9

13.2

Inventory reserve

0.5

-0.4

t otal 

4.6 

13.4

Group 

2009 

2008

Profit before tax

376.1

356.4

-108.2

-106.8

Tax calculated at domestic tax rates applicable to profits in the respective countries Tax effects of: – Income not subject to tax

5.9

12.5

– Non-deductible expenses

-5.5

-13.9

– Net deduction for losses

-0.5

2.2

Remeasurement of deferred tax 0.4

-1.1

Adjustments in respect of prior years -4.4

– change in tax rates

-1.5

t ax charge 

-112.3 

-108.6

The weighted average applicable tax rate was 29.9% (30.0%) in the Group and 8.1% (-10.3%) in the Parent Company. This was an effect of lower tax rates in a number of countries where Camfil Farr conducts operations and

n ote 17. Income tax/t ax on profit for the year Group   

2009 

Current tax 

Parent Company

2008 

 

Current tax on profit for the year -121.8

2009 

2008

  -97.5

3.2

4.6

-1.6

-0.3

0.1

Adjustments in respect of prior years t otal 

-4.4 -126.2 

-99.1 

2.9 

4.7

The income tax relating to components of other comprehensive income, which is charged to equity, is as follows: Group   

2009 

 Parent Company

2008 

2009 

2008

Fair value reserves in – Hedging reserve

Origination and reversal of 12.1

-1.8

–

–

Tax on hedging reserve for equity

1.4

-5.9

1.6

-6.5

Impact of change in tax rates

0.4

-1.8

–

–

13.9 

-9.5 

1.6 

-6.5

-112.3 

-108.6 

4.5 

-1.8

t otal 

in the coming year.

shareholders' equity:

Deferred tax (n ote 33) temporary differences

the Group capitalizing on loss-carry-forwards that are expected to be used

-1.4

5.9

1.5

-6.5

–

–

16.8

24.0

18.3 

17.5

Current tax in received/paid Group contributions t otal 

-1.4 

5.9 

n ote 18. n et foreign exchange gains/losses t otal reported tax charge 

The exchange differences charged to the income statement are as follows: Group   

2009 

Parent Company

2008 

2009 

2008

Cost of goods sold

-0.3

5.0

1.8

4.8

Financial income

71.6

50.3

109.7

79.4

Financial costs

-71.6

-50.3

-56.8

-51.8

t otal 

-0.3 

54.7 

32.4

5.0 

C A M F I L FA R R 2 0 0 9 / 6 7

n otes to the Financial Statements

n ote 19. earnings per share

n ote 21. Land and buildings Group 

Group

 

2009 

2008

 

2009 

2008

Profit attributable to owners of the company

262.9

247.4

Acquisition value at January 1

682.2

607.0

Profit used to determine basic   earnings per share 

Reclassifications 262.9 

247.4

Interest expense on convertible debt

0.9

2.1

Tax attributable to above items

-0.2

-0.6

Investments for the year

29.6

–

5.3

8.5

Sales and disposals for the year

-25.9

–

Translation difference

-29.3

66.7

Acquisition value at December 31 

661.9 

682.2

Straight-line depreciation at January 1

-295.4

-238.8

Profit used to determine diluted   earnings per share 

263.6 

248.9

Average number of shares before dilution

11 379 310

11 379 310

230 000

230 000

Sales and disposals for the year

15.8

–

Straight-line depreciation for the year (Note 10)

-24.2

-21.8

Translation difference

13.3

-34.8

Assumed conversion of convertible debentures

Straight-line depreciation at December 31 

-290.5 

Construction in progress at January 1 Average number of shares after   dilution 

11 609 310 

-295.4

4.0

3.1

Construction in progress

42.2

0.9

Construction in progress at December 31 

46.2 

4.0

417.6 

390.8

11 609 310

Basic earnings per share (SEK)

23.11

21.74

Diluted earnings per share (SEK)

22.70

21.44

Planned residual value at December 31   

 

The Parent Company has a convertible debenture loan with dilutive potential

Book value of buildings in Sweden 

14.4 

14.4

ordinary shares. The convertible debt is assumed to have been converted

t ax assessment value of buildings in Sweden 

38.0 

38.0

into ordinary shares and the net profit is adjusted to eliminate the interest expense less the tax effect. On June 10, 2005, a new convertible subordi-

No bank loans were secured by buildings and land (Note 46).

nated loan was issued with rights to convert to a total of 230,000 shares during the period March 31, 2010 – April 30, 2010. The option program that was subscribed for on October 25, 2004 was redeemed in 2008 at market

n ote 22. Machinery and production equipment

value. The total effect on shareholders’ equity was SEK 26.1 M.

n ote 20. Dividend per share A dividend of SEK 7.50 per share for 2009, amounting to a total of SEK 85.3 M,

Group 

Parent Company

 

2009 

2008 

Acquisition value at January 1

713.0

613.7

–

–

0.0

-1.1

–

–

Reclassifications

2009 

2008

Increase through company

will be proposed. These financial statements do not reflect the dividend

acquisitions (Note 49)

payable. Dividends paid in 2008 and 2007 amounted to SEK 82.5 M and

Investments for the year

–

1.0

–

–

78.6

71.8

7.5

–

SEK 78.5 M, respectively, corresponding to a dividend of SEK 7.25 for 2008

Sales and disposals for the year

and SEK 6.90 for 2007.

Translation difference

-110.3

-30.0

–

–

-22.1

57.6

–

–

at December 31 

659.2 

713.0 

Depreciation at January 1

-392.7

-341.1

–

–

0.0

1.5

–

–

107.5

35.2

–

–

-70.6

-62.6

-1.2

–

6.9

-25.7

–

–

Acquisition value  

Reclassifications Sales and disposals for the year

7.5 

–

Depreciation for the year (Note 10) Translation difference Depreciation   at December 31 

-348.9 

-392.7 

-1.2 

–

Machinery construction in progress at January 1

24.1

5.8

–

–

-16.8

18.3

–

–

7.3

24.1

0.0

–

344.4 

6.3 

–

Machinery construction in progress Machinery construction in progress at December 31 Planned residual value   at December 31  C A M F I L FA R R 2009 / 68

317.6 

n otes to the Financial Statements

n ote 23. equipment

The value of future payment obligations related to finance leases is reported Group 

Parent Company 

equipment 

2009 

2008 

2009 

2008

Acquisition value at January 1

258.0

189.9

21.0

18.8

-29.6

1.1

–

–

0.8

0.5

–

–

Reclassifications Increase through company acquisitions (Note 49) Investments for the year

30.2

65.6

2.0

2.5

Sales and disposals for the year

-23.8

-15.4

-2.1

-0.3

-3.0

16.3

–

–

Translation difference Acquisition value   at December 31 

232.6 

258.0 

20.9 

21.0

Depreciation at January 1

-151.0

-128.6

-15.4

-13.9

Reclassifications

0.0

-1.5

–

–

20.5

12.8

2.1

0.3

Depreciation for the year (Note 10) -29.7

-25.7

-2.0

-1.8

-8.0

–

–

Sales and disposals for the year Translation difference

1.5

-158.7 

-151.0 

Group  equipment 

2009 

-15.3 

-15.4

Parent Company 

2008 

2009 

2008

Value of remeasurement at January 1

-0.1

-0.1

–

–

Impairment charge for the year

0.0

–

–

–

Translation difference

0.0

0.0

–

–

-0.1 

-0.1 

– 

–

Planned residual value   at December 31 

73.8 

106.9 

5.6 

5.6

Depreciation in excess of cost at January 1

–

–

-1.9

-1.3

–

–

-2.2

-0.6

–

–

-4.1

-1.9

Depreciation in excess of cost for the year Depreciation in excess of cost at December 31 Planned residual value in   excess of cost at December 31  73.8 

106.9 

1.5 

3.7

n ote 24. Finance leases

held under finance leases as follows: Acquisition 

Accumulated 

value 

depreciation 

  Land and buildings

2009 

2008 

23.9

25.4

2009  8.2

2008 7.6

Machinery and production equipment

7.3

5.3

3.7

2.3

Equipment

17.3

15.8

6.8

6.5

48.5 

46.5 

18.7 

t otal 

2009 

2008

7.2

10.4

10.6

9.4

Long-term portion Due for payment later than one year but within five years t otal liability recognized in   the consolidated statement of   financial position 

17.8 

19.8

There are no payment obligations due later than five years from the balance sheet date. The majority of the finance leases are attributable to the financing of vehicles in the Group. However, there is a finance lease for a building in Italy. No new significant finance leases were signed in 2009.

n ote 25. Goodwill

 

2009 

2008

Residual value before impairment charge at January 1 Acquisitions for the year (Note 49) Translation difference

1 016.9

899.7

17.7

23.9

-36.1

93.3

Residual value before impairment   charge at December 31 

998.5 

1 016.9

at January 1/December 31

-111.8

-111.8

Planned residual value at December 31 

886.7 

905.1

Impairment tests for goodwill Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to country of operation. EA segment-level summary of the goodwill allocation is presented below: Europe Nordic countries

210.8

206.6

Germany

37.4

39.8

Austria

17.7

–

8.6

8.4

274.5

254.8

United States

436.0

488.9

Canada

131.9

122.3

567.9

611.2

18.2

15.2

18.2

15.2

United Kingdom North America

The Group’s property, plant and equipment include leased equipment that is

 

Short-term portion

Impairment charge

Value of remeasurement   at December 31 

Liability 

Group 

Depreciation at   December 31 

partly as non-current liabilities and partly as current liabilities, as follows:

16.4

Asia Australia Other markets India New Zealand

t otal 

8.6

8.7

17.5

15.2

26.1

23.9

886.7 

905.1

C A M F I L FA R R 2 0 0 9 / 6 9

n otes to the Financial Statements

n ote 27. Financial assets

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management and covering the next year.

 

Parent Company 

Participations in Group companies 

Cash flows beyond the next year are extrapolated using estimated

2009 

Acquisition value at January 1

growth rates. Management determined budgeted gross margin based on past performance and its expectations for the market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relat-

Group 

Parent Company

2008 

2009 

2008

40.4

29.7

3.5

0.3

6.0

6.6

0.3

3.2

Sales for the year

-17.7

0.0

–

–

Translation difference

-0.8

4.1

–

–

Acquisition value   at December 31 

27.9 

40.4 

3.8 

3.5

-32.3

-25.5

-0.8

-0.3

17.7

0.0

–

–

for the year

-5.0

-3.8

-0.9

-0.5

Translation difference

0.6

-3.0

–

–

Sales for the year

69.8

-269.0

-254.0

0.0

-15.0

Impairment charge at   January 1/December 31  Book value at December 31 

-269.0 

-269.0

1 734.0 

1 593.3

Parent Company Receivables from Group companies 

2009 

2008

Acquisition value at January 1

797.0

680.6

15.9

66.2

-150.0

-19.3

-20.2

69.5

Acquisition value at December 31 

642.7 

797.0 

Book value at December 31 

642.7 

797.0

Loans granted for the year Repayments and amortization

Straight-line depreciation at January 1

1 792.5

69.8

Impairment charge for the year

2009 

Investments for the year

19.5

1 933.2 

Impairment charge at January 1

n ote 26. o ther intangible assets 

Acquisition value at January 1

140.7

Revaluation at January 1/December 31

ing to the relevant segments.

 

1 773.0

Investments for the year Acquisition value at December 31 

2008

1 792.5

Straight-line depreciation

of loans for the year Exchange rate differences

Straight-line depreciation   at December 31 

-19.0 

-32.3 

-1.7 

-0.8

Planned residual value   at December 31 

Group  n on-current receivables 

8.8 

8.1 

2.1 

2.7

Intangible assets consist primarily of computer software. Depreciation costs totaling SEK 5.0 M (3.8) are included in the administrative expenses of the Group. Depreciation costs amounting to SEK 0.9 M (0.5) are included in the administrative expenses of the Parent Company.

Parent Company

2009 

2008 

44.4

45.5

0.3

Change for the year

2.7

-4.9

–

–

Translation difference

-1.5

3.8

–

–

45.6 

44.4 

0.3 

 

 

 

45.6 

44.4 

0.3 

Acquisition value at January 1

2009 

2008 0.3

Acquisition value   at December 31    Book value at December 31 

0.3 0.3

There is no concentration of credit risk in non-current receivables. The weighted average effective interest rate on receivables was as follows: Parent Company    

2009 

2008

5.8%

6.2%

Receivables from Group companies

The carrying amounts and fair values of certain receivables were as follows: 2009    

Carrying 

 

amounts  

Group  Other non-current receivables Parent Company  Loans to Group companies Other non-current receivables t otal 

C A M F I L FA R R 2009 / 70

  45.5

2008  Fair 

Carrying 

values 

amounts 

Fair   values

  45.5

 

44.4  

44.4  

642.7

632.5

797.0

773.2

0.3

0.3

0.3

0.3

643.0 

632.8 

797.3 

773.5

n otes to the Financial Statements

Fair values are based on discounted cash flows using a discount rate that is

Indirect holdings 

based on the interest rate that is estimated to be available to a borrower on

Camfil SA

the balance sheet date.

n ote 28. Shares in subsidiaries Directly owned shareholdings,   registration number   

Registered 

h olding 

office 

 

100%

Farr Filter Services Ltd

United Kingdom

100%

Automet Filtration Ltd

United Kingdom

100%

Camfil France Holding SAS

France

100%

Camfil SAS

France

100%

SADI SAS

France

100%

Camfil Airfilter SDN BHD

Malaysia

100%

value

QF Filters Sdn Bhd

Malaysia

100%

New Zealand

100%

Poland

100%

Singapore

100%

Spain

100%

Camfil Farr New Zealand Ltd Trosa, Sweden

Org. no. 55 60 88 - 1327

100%

225.3

Camfil Polska Sp.z.o.o Camfil Farr Singapore Pty Ltd

Camfil Innovation AB Trosa, Sweden

Org. no. 55 64 76 - 6433

100%

5.0

Camfil España SA VVS Amalia AB

Camfil Component AB Org. no. 55 64 96 - 3964

Trosa, Sweden

100%

5.0

Borås, Sweden

100%

10.0

Camfil Farr Power Systems AB Org. no. 55 65 56 - 9356

Camfil International AB Trosa, Sweden

100%

1.0

Trosa, Sweden

100%

20.0

Trosa, Sweden

100%

574.3

Cinisello Balsamo, Italy

100%

0.5

Gemag S.R.L

Cinisello Balsamo, Italy

100%

0.0

Camfil AG

Unterägeri, Switzerland

100%

36.1

Kokkedal, Denmark

100%

8.0

Farr Filtration Ltd

Birmingham, United Kingdom

100%

20.3

Camfil Ltd

Manchester, United Kingdom

100%

34.6

Camfil BV

Ede, The Netherlands

100%

73.3

Reinfeld, Germany

100%

293.2

Helsinki, Finland

100%

5.0

Dublin, Ireland

100%

15.0

Org. no. 55 65 11 - 8501

Sweden

100%

Taiwan

100%

Camfil Farr Power Systems GmbH

Germany

100%

Camfil KG

Germany

100%

Camfil Management GmbH

Germany

100%

United States

100%

India

76%

Camfil Farr Taiwan

Camfil Farr Inc. Camfil Farr Air Filtration India Ltd

Camfil Asia Holding AB Org. no. 55 65 38 - 8344

Mecke Klima GmbH was acquired during the year. The company was previ-

Comlog AB Org. no. 55 62 48 - 9970

Camfil SPA

Camfil A/S

Camfil GmbH Holding Camfil OY Camfil (Irl) Ltd Camfil Farr Australia Pty Ltd

ously Camfil Farr’s agent in Austria (Note 49).

n ote 29. Financial instruments by category The accounting policies for financial instruments have been applied in the Group to the line items below:         

100%

28.3

Laval, Canada

100%

118.4

Camfil Farr Filtration (Kunshan) Co. Ltd Kunshan, China

100%

18.2

Camfil Farr Trading (Shanghai) Co. Ltd Shanghai, China

100%

3.5

Non-current receivables

Sao Paulo, Brazil

100%

2.0

Tokyo, Japan

100%

3.0

Bills receivable

134.6

Camfil Farr Ind. Com. Servicos de Filtros Ltda Camfil Farr Japan KK Camfil Farr s.r.o

Levice, Slovakia

100%

Bangkok, Thailand

100%

4.5

Copenhagen, Denmark

100%

10.6

Camfil Farr (Thailand) Ltd Camfil Singapore Holding PTE Ltd Mecke Klima GmbH t otal 

Singapore

100%

13.3

Oslo, Norway

100%

50.3

Vienna, Austria

100%

20.7

 

 1 734.0

Financial   Derivatives  instruments  Loans and  used for  at fair value  trade  measured  through  receivables  hedging  profit or loss 

December 31, 2009 

Sydney, Australia

Farr Inc.

Kaare A Rustad AS

h olding

Belgium

Book 

Camfil Svenska AB

Camfil APC A/S

Country 

 

 

  t otal

 

Assets as per balance sheet Current derivative financial instruments Trade receivables Cash and cash equivalents t otal 

        

–

6.2

0.1

6.3

45.6

–

–

45.6

699.1

–

–

699.1

2.7

–

–

2.7

442.7

–

–

442.7

1 190.1 

6.2 

Derivatives  used for  measured  hedging 

  o ther  financial  liabilities 

Financial instruments  at fair value  through  profit or loss 

 

 

 

December 31, 2009 

0.1  1 196.4

  t otal

Liabilities as per balance sheet Non-current liabilities to credit institutions

–

679.2

–

679.2 24.2

Current liabilities to credit institutions

–

24.2

–

Convertible debenture loan

–

51.4

–

51.4

Trade payables

–

202.5

–

202.5

Bills payable

–

11.3

–

11.3

16.2

–

–

16.2

instruments

11.3

–

0.4

11.7

t otal 

27.5 

Non-current derivative financial instruments Current derivative financial

968.6 

0.4 

996.5

C A M F I L FA R R 2 0 0 9 / 7 1

n otes to the Financial Statements

          

The percentage of bad debt losses per geographic area is calculated as the

    Financial   Derivatives  instruments  Loans and  used for  at fair value  trade  measured  through  receivables  hedging  profit or loss 

December 31, 2008 

 

 

 

 

n ote 31. Derivative financial instruments Group 

Current derivative financial instruments Non-current receivables Bills receivable Cash and cash equivalents

years in relation to total sales over the past three years.

t otal

Assets as per balance sheet

Trade receivables

average percentage between expensed bad debt losses over the past three

–

20.0

3.5

23.5

 

2009 

2008 

Assets  Liabilities 

44.4

–

–

44.4

Interest rate swaps

939.0

–

–

939.0

– fair value hedges

13.7

–

–

13.7

242.5

–

–

242.5

Assets  Liabilities

–

21.7

–

29.5

6.2

5.8

20.0

16.6

contracts – held for trading

0.1

0.4

3.5

9.2

t otal 

6.3 

27.9 

23.5 

Forward foreign exchange contracts – cash flow hedges Forward foreign exchange

t otal 

1 239.6 

          

  Derivatives  used for  measured  hedging 

20.0 

3.5  1 263.1

  Financial   instruments  o ther  at fair value  financial  through  liabilities  profit or loss 

  t otal

55.3

Of which non-current portion: Interest rate swaps – cash flow hedges

–

16.2

–

24.3

Liabilities as per balance sheet

Non-current portion

–

16.2

–

24.3

Non-current liabilities to

Current portion

6.3

11.7

23.5

31.0

t otal 

6.3 

27.9 

23.5 

55.3

December 31, 2008 

 

credit institutions

 

 

–

860.2

–

860.2

–

17.5

–

17.5

Current liabilities to credit institutions Convertible debenture loan

–

50.5

–

50.5

Trade payables

–

233.3

–

233.3

Bills payable

–

19.2

–

19.2

24.3

–

–

24.3

financial instruments

21.8

–

9.2

31.0

t otal 

46.1 

Parent Company   

financial instruments

9.2 

n ote 30. Credit quality of financial assets

Of which non-current portion:

The credit quality of trade receivables has been historically high in the

Interest rate swaps

Group. However, the payment culture varies to some extent between geographic areas. None of the financial assets that are fully performing has been renegotiated in the last year. The percentage of trade receivables per geographic area are shown in the table below: 2009  % Bad debt    losses/sales  Amount 

–

29.5

10.9

10.0

29.5

31.5

0.1

0.4

3.5

9.2

11.0 

32.1 

33.0 

1 236.0 t otal 

  t rade receivables   

21.7

Forward foreign exchange contracts – held for trading

1 180.7 

–

Forward foreign exchange contracts – cash flow hedges

Current derivative

2008  Assets  Liabilities

Interest rate swaps – fair value hedges

Non-current derivative

2009  Assets  Liabilities 

2008 % Bad debt  losses/sales  Amount

Counterparties

70.2

– cash flow hedges

–

16.2

–

Non-current portion

–

16.2

–

24.3 24.3

Current portion

11.0

15.9

33.0

45.9

t otal 

11.0 

32.1 

33.0 

70.2

Trading derivatives are classified as a current asset or current liability. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or current liability, if the maturity of the hedged item

Nordic countries

0.13%

115.1

0.10%

207.2

Asia

0.02%

84.6

0.07%

91.6

North America

0.21%

144.0

0.16%

213.9

Central Europe

0.06%

141.2

0.16%

162.7

Southern Europe

0.17%

169.3

0.05%

223.3

British Isles

0.10%

45.5

0.11%

51.7

Other markets

0.02%

2.1

0.00%

2.4

is less than 12 months. There was no ineffectiveness to be recorded from cash flow hedges in 2009 or 2008. The maximum exposure to credit risk on the balance sheet date is the fair value of the derivative instruments recognized as assets in the balance sheet. Gains and losses recognized in equity on forward foreign exchange contracts at December 31, 2009 will be released to the income statement

t otal trade receivables 

0.13% 

701.8 

0.13% 

952.8

at various dates between one month and 12 months from the balance sheet date. Gains and losses recognized in the hedging reserve in equity (Note 39) on interest rate swaps at December 31, 2009 will be continuously recognized in the income statement until the borrowing has been repaid (Note 42).

C A M F I L FA R R 2009 / 72

n otes to the Financial Statements

Interest rate swaps

At year-end, the Group had impaired and provided for uncertain trade receiv-

The nominal principal amounts of the Group’s outstanding interest-rate swap

ables. The amount of these provisions is SEK 29.4 M (33.1) at December 31,

contracts at year-end were SEK 424 M (614). At December 31, 2009, the

2009. The aging analysis of trade receivables that have been provided for

fixed interest rates in USD varied from 4.87% till 5.49%. The fixed interest

is shown below.

rates in SEK varied from 1.69% to 5.04%. The fixed interest rates in GBP

Age analysis, provisions for  

were 4.6625%. The floating rates were 3 months and 6 months USD LIBOR,

receivables impairment 

6 months GBP LIBOR and 3 months and 6 months STIBOR.

Trade receivables that

2009 

2008

are not past due

0.6

1.8

Forward foreign exchange contracts

Less than 3 months

0.7

2.3

At December 31, 2009, the Group’s open forward foreign exchange con-

3 to 6 months

tracts had terms of between one month and one year.

More than six months

2.6

6.9

25.5

22.1

29.4 

33.1

The notional principal amounts of the outstanding forward foreign t otal provisions for  

exchange contracts at December 31, 2009 were SEK -133 M (-220).

receivables impairment 

The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. Gains and losses recognized in the hedging reserve in equity (Note

The recognized amounts, per currency, are as follows for the Group’s trade

39) on forward foreign exchange contracts as of December 31, 2009 are

receivables:

recognized in the income statement in the period or periods during which the hedged forecast transaction affects the income statement, normally

Currency (corresponding value in SeK) 

within 12 months from the balance sheet date.

SEK

40.7

79.8

EUR

348.2

471.4

n ote 32. t rade and other receivables Group  2009 

2008 

Trade and bills receivable

731.2

985.8

–

0.0

2009 

2008

-29.4

-33.1

–

–

USD

127.9

215.3

Other currencies

185.0

186.2

t otal trade receivables 

701.8 

952.7

701.8 

952.7 

– 

Movements on the Group’s provision for impairment of trade receivables are

Less: provisions for impairment

as follows:  

t otal 

2008

Parent Company

 

of trade receivables

2009 

0.0

At January 1 Provisions for receivables impairment

2009 

2008

33.1

30.3

9.9

0.3 -1.1

Unused amounts reversed for There is no concentration of credit risk with respect to trade receivables,

uncollectible receivables

-8.6

as the Group has a large number of customers that are internationally

Reclassifications

-3.6

–

dispersed.

Translation difference

-1.4

3.6

The Group has recognized a loss of SEK 5.0 M (7.1) for the impairment At December 31 

of its trade receivables in 2009. The loss has been included in “Selling

29.4 

33.1

costs” in the income statement. The fair value of trade receivables correThe creation and release of provisions for impaired receivables have been

sponds to the carrying amount. Trade receivables that are less than three months past due are not con-

included in “Selling costs” in the income statement. The other classes within

sidered impaired. At December 31, 2009, trade receivables in the amount

trade and other receivables do not contain impaired assets. The maximum

of SEK 228.4 M (304.8) were past due but not impaired. These relate to a

exposure to credit risk at the reporting date is the fair value of each class

number of independent customers for whom there is no recent history of

of receivable mentioned above. The Group does not hold any collateral as

default. The aging analysis of these trade receivables is as follows:

security.

Age analysis of past due   trade receivables 

2009 

2008

Less than 3 months

200.0

271.4

3 to 6 months

15.2

21.2

More than six months

13.2

12.2

n ote 33. Deferred tax assets and deferred tax liabilities Deferred taxes are valued using the nominal tax rate. Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through the future taxable profits is probable.

t otal past due trade receivables 

228.4 

304.8

Deferred income tax assets and liabilities in 2008 were not offset even if there is a legally enforceable right to offset current tax assets again current tax liabilities and when the deferred income taxes relate to the same taxation authority. The amounts that could have been offset totaled SEK 27.9 M on December 31, 2008. In 2009, these amounts were offset in the balance sheet.

C A M F I L FA R R 2 0 0 9 / 7 3

n otes to the Financial Statements

The movement in deferred tax assets and liabilities during the year was as follows: Assets   

2009 

Fixed assets

Liabilities 

2008 

2009 

n et

2008 

2009 

2008

1.3

1.2

9.2

12.2

7.9

11.0

13.3

11.9

19.9

26.1

6.6

14.2

Trade receivables

3.8

3.1

0.0

0.0

-3.8

-3.1

Restructuring reserves

0.0

0.1

–

–

0.0

-0.1

26.5

27.7

0.4

2.2

-26.1

-25.5

3.7

2.7

–

–

-3.7

-2.7

10.2

5.8

0.0

0.0

-10.2

-5.8

Inventories

Pension provisions Warranty risk reserve Loss-carry-forwards Untaxed reserves

–

–

23.9

23.9

23.9

23.9

13.8

13.6

7.2

2.8

-6.6

-10.8

liabilities 

72.6 

66.1 

60.6 

67.2 

-12.0 

Due within 1 year

65.8

60.9

30.1

32.3

-35.7

-28.6

6.8

5.2

30.5

34.9

23.7

29.7

liabilities 

72.6 

66.1 

60.6 

67.2 

-12.0 

1.1

Of which offset

-11.6

n et after offsetting 

61.0 

Other Deferred tax assets/  

Due later than 1 year

1.1

Deferred tax assets/   –

-11.6

66.1 

–

49.0 

 

 

 

Balance 

67.2 

Jan. 1,     Provisions for assets Restructuring reserves Pension provisions

– -12.0 

– 1.1

Recognized 

exchange 

 

in the income 

rate 

Business 

Dec. 31, 

statement 

differences 

combinations 

2009 

2009 

Balance

21.8

-9.8

-1.3

0.0

-0.1

0.0

0.1

0.0

10.7 0.0

-25.5

-1.3

0.0

0.7

-26.1

Warranty risk reserve

-2.7

-0.9

-0.1

0.0

-3.7

Loss-carry-forwards

-5.8

-4.6

0.2

0.0

-10.2

Untaxed reserves

23.9

0.6

-0.6

0.0

23.9

Other

-10.5

3.5

0.4

0.0

-6.6

-1.3 

0.7 

t otal   

1.1 

-12.5 

Balance  Jan. 1,  

  Provisions for assets Restructuring reserves Pension provisions

2008 

Recognized 

exchange 

 

in the income 

rate 

Business 

statement 

differences 

combinations 

-12.0 Balance Dec. 31,  2008

20.8

-4.8

5.8

0.0

-0.3

0.3

-0.1

0.0

21.8 -0.1

-27.7

3.9

-1.7

0.0

-25.5

Warranty risk reserve

-2.9

0.3

-0.1

0.0

-2.7

Loss-carry-forwards

-5.6

3.3

-3.5

0.0

-5.8

Untaxed reserves

24.9

-0.5

-0.5

0.0

23.9

Other

-9.6

1.1

-2.0

0.0

-10.5

t otal 

-0.4 

3.6 

-2.1 

0.0 

1.1

Tax losses for which deferred tax assets are not recognized: Group 

2009 

2008

Tax losses whose utilization period is due Within one year

not certain that the Group will be able to utilize them for settlement against 0.2

1.1

Later than one year but within five years

30.0

4.2

Later than five years

17.1

34.5

t otal tax losses 

47.3 

39.8

C A M F I L FA R R 2009 / 74

Deferred tax losses have not been recognized for these items since it is future taxable profits within the next few years. The Parent Company has no unrecognized deferred tax assets.

n otes to the Financial Statements

n ote 34. n on-current receivables  

The shares have a par (quota) value of SEK 10 each. All issued shares are   Group 

 

Parent Company 

2009 

2008 

2009 

2008

29.0

27.6

–

–

convertible debentures

9.0

8.9

–

–

Deposits

3.9

2.0

–

–

Other financial assets

3.7

5.9

0.3

0.3

45.6 

44.4 

0.3 

0.3

fully paid. A specification of the changes in equity is found in this report under Group changes in equity.

Administration of own pension obligations Employee options and

t otal 

n ote 39. o ther reserves     o pening balance at January 1, 2008 

h edging   t ranslation reserve 

reserve 

t otal

2.1 

-52.2 

-50.1

Cash flow hedges – transfers through profit or loss

-22.6

–

5.9

–

5.9

–

214.0

214.0

Closing balance at December 31, 2008  -14.6 

161.8 

147.2

o pening balance at January 1, 2009 

161.8 

147.2

– tax effect Exchange rate differences in Group

-22.6

n ote 35. Inventories and work on contract Group 

Parent Company

Work on contract 

2009 

2008 

2009 

Accrued expenses

113.2

131.8

14.9

3.0

25.3

25.9

–

–

Gradual revenue recognition

157.7 

t otal 

138.5 

Inventories 

2009 

2008 

617.1

736.4

0.0

1.2

-33.6

-31.5

–

–

Group 

14.9 

2008

3.0

Parent Company 2009 

2008

-14.6 

Cash flow hedges – transfers through profit or loss

5.2

–

5.2

– tax effect

-1.4

–

-1.4

–

-95.3

-95.3

66.5 

55.7

Exchange rate differences in Group

Closing balance at December 31, 2009  -10.8 

Value of inventories before obsolescence

n ote 40. u ntaxed reserves

Less: provision for impairment of inventories t otal 

583.5 

704.9 

0.0 

1.2

Parent Company    depreciation and straight-line depreciation Inventory reserve

“Cost of goods sold” amounted to SEK 1,310.6 M (1,286.0).

2008

Cumulative difference between book Tax allocation reserves

The cost of raw material inventories recognized as expense and included in

2009 

t otal 

4.0

1.9

42.9

40.9

0.5

–

47.4 

42.8

n ote 36. Prepaid expenses and accrued income Group   

2009 

Parent Company

2008 

2009 

2008

Prepaid rent

4.0

5.5

0.2

0.9

Prepaid insurance

3.3

3.2

0.3

0.1

Prepaid employee benefit expenses 6.6

5.7

0.1

–

Prepaid royalties and bonus income 0.2

–

–

–

Other items

11.8

18.4

0.4

1.4

t otal 

25.9 

32.8 

1.0 

2.4

n ote 37. Cash and cash equivalents

Short-term investments

2009 

The Camfil Farr Group has internal cash pools in the following currencies: SEK, USD, GBP, DKK, NOK, CAD and EUR. The Group cash pool system has reduced the external credits of subsidiaries. Each company’s share of the Group cash pools is reported as an internal balance with the Parent Company, which is the company that has the external credit with a credit institution. The Parent Company has been granted overdraft facilities totaling SEK 171.7 M (178.4). Unutilized bank overdraft facilities totaled SEK 171.7 M (163.6) on the balance sheet date.

n ote 42. Borrowings

Group   

n ote 41. Bank overdraft facilities

Parent Company

2008 

2009 

2008

1.8

0.4

–

–

Cash at bank and on hand

440.8

242.1

275.1

118.3

t otal 

442.7 

242.5 

275.1 

118.3

To limit the refinancing risk in the Group’s short-term financing and have a liquidity reserve, the Parent Company has signed several multi-currency revolving credit facilities in varying amounts and with varying maturities. There is a five-year facility starting April 30, 2007 in the amount of SEK 250 M and a facility in the amount of SEK 100 M that matures on May 2, 2011. In addition, there are two five-year credit facilities in the amount of SEK 450 M and SEK 200 M, respectively, which were signed on May 11 and May 9,

n ote 38. Share capital

2005. Negotiations are in progress with the Group’s banks to secure new

n umber of shares 

A-shares 

B-shares 

t otal number

Number at 2008-01-01

1 422 414

9 956 896

11 379 310

Number at 2008-12-31

1 422 414

9 956 896

11 379 310

Number at 2009-12-31

1 422 414

9 956 896

11 379 310

facilities that will replace those that mature during 2010.

C A M F I L FA R R 2 0 0 9 / 7 5

n otes to the Financial Statements

Group  Interest-bearing liabilities: 

2009 

2008 

Parent Company 

 

2009 

 

Carrying 

 

amounts 

2008

n on-current  Liabilities to credit institutions

2008 

Parent Company 

679.2

860.2

672.0

850.6

Convertible debenture loan

51.4

50.5

51.4

50.5

Non-current liabilities to credit institutions

Derivative financial instruments

16.2

24.3

16.2

24.3

Current liabilities to credit institutions

Other liabilities

12.6

2.4

–

–

Convertible debenture loan

108.5

112.4

–

–

t otal 

1.0

0.7

–

–

Fair  values

  850.6

850.8

0.0

0.0

50.5

50.5

Provisions for pensions and similar obligations Other provisions

901.1 

901.3

Fair values are based on discounted cash flows using a discount rate that t otal 

868.9 

1 050.5 

739.6 

925.4

is based on the interest rate estimated to be available to the Group on the balance sheet date. Regarding leasing liabilities, the carrying amount is

Group   

Parent Company

2009 

2008 

2009 

 

 

 

Current  Liabilities to credit institutions

24.2

17.5

–

–

11.7

31.0

15.9

45.9

35.9 

48.5 

15.9 

45.9

 

2009 

904.8 

1 099.0 

755.5 

2008

EUR

2.4

5.7

USD

173.7

228.8

SEK

504.8

548.4

73.9

145.3

754.8 

928.2

Other currencies

t otal interest-bearing   liabilities 

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

Derivative financial instruments t otal 

considered to represent a reasonable approximation of the fair value.

2008

971.3 t otal 

The Parent Company and the Group have no loans due for payment later Interest

than five years after the balance sheet date. As collateral for bank loans, the banks’ credit contracts are subject to

The Group’s bank borrowings mature until 2014 and carry an average

covenant clauses in which the Group has to meet certain key performance

effective interest rate coupon of 3.5% (4.6 %). There is also a convertible

indicators with regard to the interest coverage ratio and net debt-equity

debenture bond maturing in 2010 that carries an average effective interest

ratio.

rate of 0.9% (4.0%).

Fair values

The Group has the following undrawn borrowing facilities:  

The carrying amounts and fair values of certain liabilities are as follows:  

Carrying 

 

amounts 

Group  Non-current liabilities to credit institutions

2009 

2008

Floating rate

2009  Fair  values

– Expires within one year

376.1

100.0

– Expires beyond one year

197.1

322.9

573.2 

422.9

  679.2

683.8

Current liabilities to credit institutions

24.2

24.2

Convertible debenture loan

51.4

51.4

t otal 

The facilities expiring within one year are one-year credit facilities subject to review at various dates during the year.

t otal 

754.8 

759.4 Convertible debenture loan Since 2000, Camfil Farr has established several long-term incentive pro-

2009   

Carrying 

 

amounts 

Parent Company  Non-current liabilities to credit institutions Convertible debenture loan t otal 

Fair  values

grams for senior executives in the company. The purpose of these programs is to offer benefits in the form of long-term incentive programs tied to the company’s performance in order to attract, keep and motivate senior execu-

  672.0

676.6

51.4

51.4

723.4 

728.0

tives. The programs are designed so that incentives for key persons are aligned with the interests of the shareholders. Convertible debenture loan 2005-2010 On June 10, 2005, the Parent Company issued a convertible debenture loan to senior executives in a nominal amount of SEK 52 M. The loan is due five

2008   

Carrying 

 

amounts 

Group  Non-current liabilities to credit institutions

Fair  values

years after the issue date and can be converted into shares, at the request of the holders, at a price of SEK 225 per share. The interest rate for the convertible loan is set at 12 months’ STIBOR less 0.5 percent.

 

The fair values of the liability portion and equity portion were deter-

860.2

860.4

Current liabilities to credit institutions

17.5

17.5

mined when the convertible debentures were issued. The fair value of the

Convertible debenture loan

50.5

50.1

liability portion, including in non-current liabilities, is determined using a market interest rate for an equivalent non-convertible bond. The remaining

t otal 

C A M F I L FA R R 2009 / 76

928.2 

928.0

amount is included in equity.

n otes to the Financial Statements

The convertible debentures are recognized in the balance sheet as follows:

Total pension costs recognized in the consolidated income statement are as

Nominal value of convertible debentures issued on June 10, 2005

follows:

51.8

Equity portion

-1.3

 

2009 

Total costs for defined benefit plans Closing balance of liability portion in 2008 

50.5

Total costs for defined contribution plans

o pening balance of liability portion on January 1, 2009 

50.5

Costs for special employer's contribution

Interest expenses (Note 15)

0.9

Liability portion on December 31, 2009 

51.4

n ote 43. Provisions for pensions and similar obligations Provisions for pensions 

 

and similar obligations 

2009 

Defined benefit pension plans Post-employee benefits

Provisions at the end of the period 

t otal pension cost 

56.1

4.3

3.6

78.0 

59.7  

Post- 

 

 

Defined benefit 

employment 

   

4.2

3.5

108.5 

73.7

 

79.7

29.2

50.6

  2008

30.1

5.5

68.0

Costs are distributed in the consolidated income statement as follows: 

74.2

Capitalized defined contribution pension plan under own management

and tax on return

2008

5.7

pension plans  2009 

benefits 

2008 

2009 

2008

Cost of goods sold

-0.8

-1.6

-0.1

0.0

Selling costs

-0.8

-1.4

-0.1

0.0

Administrative expenses

-0.3

-0.9

0.0

-0.2

Financial items

-3.4

-1.4

-0.2

0.0

t otal 

-5.3 

-5.3 

-0.4 

-0.2

112.4

Defined benefit pension plans The Group operates defined benefit pension plans in France, Germany, the

The amounts recognized in the consolidated statement of financial position

United Kingdom, Canada, Norway, Sweden, the Netherlands and Austria

are determined as follows: Post- 

based on employee pensionable remuneration and length of service.   Pension insurance with Alecta and Collectum

 

The obligations for retirement pensions and family pensions for salaried

 

workers in Sweden are secured through pension insurance with Alecta. In

Current service cost

accordance with a statement by the Swedish Financial Reporting Board

Interest cost

(UFR 3), this is a multi-employer defined benefit plan. For the 2009 fiscal

Return on plan assets

year, the Group has not had access to information that would enable the

Net actuarial losses (+) and

reporting of this plan as a defined benefit plan. The pension plan in accord-

gains (-) recognized for

ance with ITP is secured through insurance with Alecta and is therefore

the year

reported as a defined contribution plan. Fees in 2009 for pension insur-

Defined benefit  pension plans  2009 

 

employment  benefits

2008 

2009 

-3.4

-5.2

-0.2

2008 -0.2

-12.3

-10.1

-0.2

-0.1

8.9

8.6

0.0

0.0

1.5

1.4

0.0

0.1

0.0

0.0

0.0

0.0

-5.3 

-5.3 

-0.4 

-0.2

ance signed with Alecta and Collectum amount to SEK 7.4 M (6.3). Alecta’s surplus can be distributed to policyholders and/or the insured. At year-end

t otal 

2009, Alecta’s surplus in the form of its collective funding ratio was 141 percent (112 percent) and consists of the market value of Alecta’s assets

The amounts recognized in the consolidated statement of financial position

as a percentage of its insurance commitments, which is not in agreement

are determined as follows:  

2009 

Present value of fund obligations

226.0

201.7

Plan for severance benefit after termination of employment

Fair value of plan assets

-140.3

-122.0

The Group operates plans for severance benefits after termination of

 

with IAS 19.

85.7 

2008

79.7

employment in which the employees have the right to post-employment benefits. These benefits are based on the employee’s final salary and years

Present value of unfunded obligations

6.7

3.5

of service. This plan exists primarily in Italy and Austria.

Pension plan under own management

30.1

29.2

Unrecognized actuarial losses/gains

-14.0

0.0

Defined contribution plan under own management In the United States, there is a defined contribution pension plan under the

n et liability in balance sheet 

108.5 

112.4

company’s own management. Pension assets for this plan are booked as non-current financial receivables (Note 34). There is also a defined contribution plan in Norway for a few senior executives. Plan assets Pension plan assets include shares and interest-bearing assets. The actual return on plan assets was SEK 8.9 M (8.6).

C A M F I L FA R R 2 0 0 9 / 7 7

n otes to the Financial Statements

The movement in defined benefit obligations for the year was as follows: Defined  benefit  pension  plans  2009 

        Beginning of the year Service cost for the year Interest cost Contributions by plan participants Benefits paid Acquisitions Actuarial gains (-) and losses (+)

Exchange rate differences in foreign plans

Post-  employ-  ment  benefits  2009 

Were the discount rate used to increase/decrease by 0.5 percentage points

Defined contribution  pension  plans 2009

201.7

3.5

29.2

3.4

0.2

0.9

12.4

0.2

–

0.3

–

–

-10.4

–

–

2.8

–

–

from management’s estimates, the carrying amount of pension obligations would be an estimated SEK 15.2 M lower or SEK 16.2 M higher. Plan assets consist of the following:  

2009 

2008 

Shares

69.5

50%

54.9

45%

Interest-bearing securities

28.7

20%

29.4

24%

Other

42.1

30%

37.7

31%

t otal 

140.3 

100% 

122.0 

100%

18.4

0.1

–

Investments are well diversified, such that the failure of any single invest-

0.3

-0.1

–

ment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in equities. The Group believes that

n et liability at end of the year 

228.9 

3.9 

30.1

equities offer the best returns over the long term with an acceptable level of risk.

The movement in defined benefit obligations for the year was as follows:       Defined Defined  Post-  contri  benefit  employ-  bution    pension  ment  pension    plans  benefits  plans   2008  2008  2008 Beginning of the year Service cost for the year Interest cost

209.1

2.9

33.6

4.6

0.2

-8.5 –

The estimated return on plan assets was determined by considering the estimated returns available on the assets underlying the current investment policy. Estimated yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Estimated returns on equity and property investments reflect long-term real rates of return experienced in the respective markets. Contributions to post-employment benefit plans for the year ending December 31, 2010 are expected to amount to SEK 2.2 M.

10.9

0.2

Contributions by plan participants

0.4

–

–

At December 31 

Benefits paid

-9.1

–

–

Present value of defined

-14.5

-0.2

–

0.3

0.4

4.1

Actuarial gains (-) and losses (+) Exchange rate differences in foreign plans

2009 

2008 

2007 

2006 

2005

benefit obligations

232.7

205.2

Fair value of plan assets

140.3

122.0

212.0

212.0

226.8

149.8

128.3

92.4

135.2

83.2

62.2

83.7

91.6

–

–

–

–

-6.6

gains/losses

-14.0

0.0

17.9

-9.0

-8.2

n et liability 

78.4 

83.2 

80.1 

74.7 

76.8

Deficit in the plan n et liability at end of the year 

201.7 

3.5 

29.2

Unrecognized past service cost

The movement in the fair value of plan assets for the year was as follows: Defined benefit pension plans  

2009 

2008

Beginning of the year

122.0

149.8

8.9

8.6

Actuarial gains (+) and losses (-)

7.5

-31.1

Employer contributions

9.7

10.3

Estimated return on plan assets

Employee contributions

Unrecognized actuarial

n ote 44. o ther provisions

0.3

0.4

 

 

-10.7

-8.6

 

  employ- 

Acquisitions (Note 49 )

0.0

0.0

 

Restructuring 

ment 

commit- 

o ther 

Exchange rate differences in foreign plans

2.6

-7.4

 

reserve 

benefits 

ments 

items 

t otal

10.6

42.0

31.8

Benefits paid

At January 1, 2009

PostWarranty

0.4

–

31.0

– Additional provisions

–

4.0

23.0

4.8

– Unused amounts reversed

–

–

-5.2

-2.0

-7.2

Important actuarial assumptions on the balance sheet date (expressed as

Exchange rate differences

–

-0.1

-1.3

-0.4

-1.8

weighted average):

Utilized during the year

-0.2

-0.1

-9.7

-3.3

-13.3

At December 31, 2009 

0.2 

3.8 

37.8 

9.7 

51.5

end of the year 

140.3 

122.0

Charged to consolidated income statement

There are no plan assets for post-employment benefits.

 

u nited 

 

 

Kingdom 

Canada 

n orway 

Discount rate

5.50

6.50

Estimated return on plan assets

6.50

Future annual salary increases

4.30

Inflation

3.30

Rest of   world

4.50

5.50

6.50

5.50 4.00

4.50 3.5*)

Of which:

4.00

–

2.5

34.0

3.9

40.4

2.50

1.50

2.00

Current portion

0.2

1.3

3.8

5.8

11.1

At December 31, 2009 

0.2 

3.8 

37.8 

9.7 

51.5

*) The exception is Austria, where future annual salary increases are assumed to be 2.75%.

Assumptions regarding future mortality experience are set based on actuarial advice, published statistics and experience in each territory.

C A M F I L FA R R 2009 / 78

Non-current portion

n otes to the Financial Statements

 

 

     

  Restructuring  reserve 

At January 1, 2008

n ote 47. Contingent liabilities

Postemploy-  ment  benefits 

Warranty commit-  ments 

Group 

o ther  items 

Parent Company

t otal

 

2009 

2008 

2009 

2008

Warranty commitments

249.2

279.6

215.7

195.8

t otal 

249.2 

279.6 

215.7 

195.8

194.8

172.7

1.5

2.1

27.0

9.8

40.4

–

–

16.9

3.3

20.2

– Unused amounts reversed -0.4

–

-5.2

-2.2

-7.8

Of which contingent liabilities on

Exchange rate differences

–

–

3.2

1.4

4.6

behalf of other Group companies

Utilized during the year

-0.7

-2.1

-10.9

-1.7

-15.4

At December 31, 2008 

0.4 

– 

31.0 

10.6 

42.0

–

–

29.2

4.9

34.1

0.4

–

1.8

5.7

7.9

Charged to consolidated income statement – Additional provisions

–

–

Warranty commitments are made primarily within the gas turbine segment.

n ote 48. Adjustments for items not included in cash flow

Of which: Non-current portion Current portion At December 31, 2008 

0.4 

– 

31.0 

10.6 

42.0

Group 

Parent Company

 

2009 

2008 

Depreciation and amortization

129.5

113.9

4.2

2.3

8.7

-16.1

–

-6.5

Provisions

2009 

2008

Interest portion in pension Warranty commitments

expenses according to IAS 19

-12.5

-10.0

–

–

In certain cases the Group provides guarantees for projects that involve

Return on pension plan assets

8.9

8.6

–

–

measures to replace or repair defect products. The provisions are based on

Derivative financial instruments

the estimated probability of the warranty commitments. New provisions for

recognized as hedges

5.2

-22.6

4.4

-18.3

warranty commitments were made during the year as the project-based gas

Other

0.0

3.4

–

0.0

turbine division expanded its business. t otal 

139.8 

77.2 

8.6 

-22.5

Other items Other items include provisions for future legal disputes. In the Group there

n ote 49. Acquisitions

is an ongoing large legal dispute concerning a product delivery made in 2004. In the Group’s opinion, it is not likely that this dispute will result in the

On March 4, 2009, Camfil Farr acquired Mecke Klima GmbH in Austria. The

payment of any major damages. Therefore, no provision has been made for

company was previously Camfil Farr’s agent in the country. In 2009, Mecke

this dispute.

Klima’s sales totaled SEK 42 M. Information about purchased net assets and goodwill: 

n ote 45. Accrued expenses and deferred income Group    Accrued interest expenses

2009 

The amounts have been estimated using the Group’s accounting principles.

Parent Company 

2008 

2009 

2008

1.7

9.3

1.9

9.2

185.0

188.3

19.9

17.7

9.9

8.7

–

–

14.1

12.9

0.2

1.5

Accrued costs for finished projects 15.1

19.7

–

–

64.2

65.6

1.5

1.3

290.0 

304.5 

23.5 

Accrued personnel expenses Accrued commission expenses Accrued consulting fees Other accrued expenses and deferred income

Purchase price  Cash payment

t otal purchase price 

1.9

 

20.7

Fair value of acquired net assets Goodwill 

t otal 

18.8

Direct costs in connection with the acquisition

-3.0  

17.7

29.7 Fair value   

n ote 46. Pledged assets

Intangible assets Group 

 

2009 

2008 

 

Acquired  recognized value

17.7

Parent Company 

Property, plant and equipment

0.8

2009 

Inventories

1.6

1.6

10.8

10.8

2008

Other current assets

For own liabilities and provisions

Provisions

-2.1

Chattel mortgages

1.2

3.2

–

–

Current liabilities

-8.1

t otal 

1.2 

3.2 

– 

–

t otal purchase price 

For other liabilities

20.7 

0.8

-8.1  

Cash and cash equivalents in the No chattel mortgages are pledged as assets.

acquired company

-2.4

t otal cash flow attributable to   investment in subsidary 

18.3

C A M F I L FA R R 2 0 0 9 / 7 9

n otes to the Financial Statements

Effect of investments for the year on cash and cash equivalents:  

Intangible 

Investments for the year

Purchases and sales were on market terms. t angible

-17.7

-163.0

–

5.2

Financed with financial leases

Farr Inc. in Canada rents a building used for its operations from Silvan Hills Holding, which is owned by Michael Dobbs, sales manager in Canada for Comfort Air and Clean Processes.

or amortization payments Consolidated value of facilities in

Kaare Rustad AS rents premises in Oslo and Trondheim from Rustad Eiendom AS, which is owned by the former owners of Kaare Rustad AS. One

new subsidiaries

17.7

0.8

effect on cash and cash equivalents   from investments for the year 

of these owners is an employee of Kaare Rustad AS. o perating liabilities attributable to related parties:

0.0 

-157.0

Group 

2009 

2008

Trosa Stadshotell AB

–

0.0

t otal 

– 

0.0

Payment of liabilities attributable to previous investments

–

2.0

effect on cash and cash equivalents in   investing activities 

Remuneration paid to senior executives 0.0 

-155.0 Principles Fees are paid to the Chairman of the board and board members in accord-

n ote 50. Related party transactions

ance with the decision of the Annual General Meeting. No fees are paid to union representatives.

Intra-Group purchases and sales

Remuneration paid to the Managing Director and other senior executives

In the Parent Company, 100 (100) percent of sales for the year consisted of sales to Group subsidiaries. No purchases were made by the Parent

consists of basic salary, variable salary, other benefits, pension and financial

Company from Group companies.

instruments. “Other senior executives” in the Parent Company refers to executive vice

Purchases and sales between Group companies are made on an arm’s length basis. The internal price is based on the actual production cost plus

presidents and the Group’s vice presidents of marketing and production,

a mark-up. When setting the mark-up, business risks and market prices are

who together comprise Group Management together with the President. The distribution between basic salary and variable salary is to be in pro-

taken into account, among other factors.

portion to the executive’s responsibilities and authority. Variable salary for the President has been set at a maximum of 125 percent of his bonus based

Sales to related parties Group 

2009 

2008

Jungfrutomten AB

0.0

0.0

t otal 

0.0 

0.0

on goals. The bonus based on goals corresponds to 50 percent of basic salary. For other senior executives, the bonus based on goals varies between two months of salary and 50 percent of basic salary. Variable salary is based on the outcome in relation to individually set performance goals. The Group basically has only defined contribution pension plans for senior executives. The pension expense refers to the cost that has impacted

Purchases of goods and services from related parties: Group 

2009 

2008

profit for the year. The retirement age for the President is 60 years. The

Industriekonomi Eric Giertz AB

0.2

0.0

pension premium is to amount to 35 percent of pension-based salary.

Resolvator

0.0

0.0

Pension-based salary consists of basic salary and the variable salary paid in

Åda Krog & Hotel

0.1

0.0

the most recent year. The retirement age for other senior executives varies

Trosa Stadshotell AB

0.9

1.7

between 60 and 65 years.

Quickbutton Badges AB

0.0

–

Silvan Hills Holding

3.1

3.5

Rustad Eiendom AS

4.4

–

t otal 

8.7 

A mutual six-month term of notice applies between the President and the company. If the company terminates his employment, the President will receive severance pay corresponding to 18 months of salary. Severance pay is not deducted from other income. If the President resigns, he receives no

5.2

severance pay. Severance pay for other senior executives varies between 6 and 18 months of salary.

Parent Company/Group 2009

    Compensation     Fees for assign- for redeemed  Basic   ments and other  subscription   remuneration remuneration warrants

Social security   contributions,   excl. pension  costs

    Pension   costs

  Compensation   from other Group   companies

      t otal

Jan Eric Larson, Executive Chairman

3.0

–

–

1.0

0.0

–

4.0

Johan Markman, Vice Chairman

2.0

–

–

0.6

0.0

–

2.6

CW Ros, Director

0.2

–

–

0.0

–

–

0.2

C Zetterberg, Director

0.2

–

–

0.1

–

–

0.3

Erik Giertz, Director

0.2

–

–

0.1

–

0.1

0.4

Mats Lönnqvist, Director

0.3

–

–

0.1

–

–

0.4

President and CEO

6.0

–

–

2.4

2.0

–

10.4

Other senior executives (3)

8.1

–

–

2.4

2.1

–

12.6

20.0

–

–

6.7

4.1

0.1

30.9

t otal

C A M F I L FA R R 2009 / 80

n otes to the Financial Statements

Parent Company/Group 2008

    Compensation    Fees for assign- for redeemed  Basic   ments and other  subscription  remuneration remuneration warrants

Social security   contributions,  excl. pension  costs

    Pension   costs

  Compensation   from other Group   companies

      t otal

Jan Eric Larson, Executive Chairman

3.0

–

–

1.0

–

–

4.0

Johan Markman, Vice Chairman

2.0

–

–

0.6

–

–

2.6

CW Ros, Director

0.2

–

–

0.0

–

–

0.2

C Zetterberg, Director

0.2

–

–

0.0

–

–

0.2

Erik Giertz, Director

0.2

0.1

–

0.1

–

0.0

0.4

Mats Lönnqvist, Director

0.2

0.0

–

0.1

–

–

0.3

President and CEO

5.1

0.1

10.2

0.9

2.1

–

18.4

Other senior executives (3)

7.7

0.3

9.3

2.6

1.7

–

21.6

18.6

0.5

19.5

5.3

3.8

0.0

47.7

t otal

Basic remuneration for fiscal year 2009 includes expensed bonuses, which are paid in 2010. Company car benefits and private health care insurance are included in other remuneration. The company does not have pension costs for board directors.

n ote 53. Definitions of key ratios EBIT margin (operating margin) Earnings before financial items, appropriations and taxes, as a percentage of sales.

Preparation and decision-making process for remuneration The formal work plan for the board states that remuneration paid to the President and Executive Vice President is to be proposed by a working committee. This committee consists of the Chairman, the Vice Chairman and two other board directors. Since the Annual General Meeting in 2009, these committee members have been Jan Eric Larson, Johan Markman, Mats Lönnqvist and Eric Giertz.

EBT margin (profit margin before tax) Earnings before tax, as a percentage of sales. Equity ratio Equity as a percentage of total assets. Interest-bearing net debt Interest-bearing liabilities less cash and cash equivalents and other interest-

Audit Committee Board members serving on the Audit Committee during 2009 included Johan Markman, Vice Chairman, and Mats Lönnqvist, Director.

bearing receivables, such as derivative financial instruments. Debt-equity ratio (gearing ratio) Interest-bearing liabilities less cash and cash equivalents as a percentage

Financial instruments The President and other senior executives hold the following number of convertible debentures within the company’s program: Number of convertible debentures President

10 000

Other senior executives (3)

17 000

t otal 

 

27 000

of equity. Capital employed Total assets less non-interest-bearing liabilities including non-interest-bearing provisions. Average capital employed is calculated as capital employed at January 1 plus capital employed at December 31 divided by two. Return on capital employed Profit after financial items plus financial expenses as a percentage of average capital employed.

Note 42 describes the terms and conditions of the program.

Return on equity

n ote 51. events after the balance sheet date

Profit after tax as a percentage of average equity. Average equity is

No events having a material effect on reported financial information or their underlying estimates have occurred after the balance sheet date.

calculated as equity at January 1 plus equity at December 31 divided by two. Investments

n ote 52. exchange rates

Investments in intangible assets and property, plant and equipment.

The following exchange rates were used when preparing the consolidated year-end accounts: Rate on  Average  Currency

Rate on  

 balance  

rate

sheet date

USD

7.6457

7.1363

EUR

10.6213

10.2752

CAD

6.1684

6.3025

Average  Currency

balance  

rate

sheet date

GBP 11.9260

11.5037

CHF

6.0586

7.3455

C A M F I L FA R R 2 0 0 9 / 8 1

The income statement and balance sheet were presented for adoption by the Annual General Meeting on March 19, 2010. Trosa, March 19, 2010

Jan Eric Larson

Arne Karlsson

Johan Markman

EXECUTIVE CHAIRMAN

Carl Wilhelm Ros

Eric Giertz

Mats Lönnqvist

VICE CHAIRMAN

Christer Zetterberg

Rolf Wikström

Alan O’Connell

EMPLOYEE REPRESENTATIVE

PRESIDENT AND CEO

Our audit report was submitted on March 19, 2010

Carina Åkesson AUTHORISED PUBLIC ACCOUNTANT

Bertil Johanson AUTHORISED PUBLIC ACCOUNTANT

AUDITORS' REPORT

t o the Annual Meeting of    the shareholders of Camfil AB Corporate identity number 556230-1266

We have audited the annual accounts, the consolidated accounts,

basis for our opinion concerning discharge from liability, we exam-

the accounting records and the administration of the Board of

ined significant decisions, actions taken and circumstances of the

Directors and the President of Camfil AB for the year 2009. (The

company in order to be able to determine the liability, if any, to the

company’s annual accounts and the consolidated accounts are

company of any board member or the President. We also examined

included in the printed version on pages 34-81). The Board of

whether any board member or the President has, in any other way,

Directors and the President are responsible for these accounts and

acted in contravention of the Companies Act, the Annual Accounts

the administration of the company as well as for the application of

Act or the Articles of Association. We believe that our audit provides

the Annual Accounts Act when preparing the annual accounts and

a reasonable basis for our opinion set out below.

the application of international financial reporting standards IFRS as

The annual accounts have been prepared in accordance with

adopted by the EU and the Annual Accounts Act when preparing the

the Annual Accounts Act and give a true and fair view of the com-

consolidated accounts. Our responsibility is to express an opinion

pany’s financial position and results of operations in accordance with

on the annual accounts, the consolidated accounts and the adminis-

generally accepted accounting principles in Sweden. The consoli-

tration based on our audit.

dated accounts have been prepared in accordance with international

We conducted our audit in accordance with generally accepted

financial reporting standards IFRS as adopted by the EU and the

auditing standards in Sweden. Those standards require that we

Annual Accounts Act and give a true and fair view of the Group’s

plan and perform the audit to obtain reasonable assurance that the

financial position and results of operations. The statutory administra-

annual accounts and the consolidated accounts are free of mate-

tion report is consistent with the other parts of the annual accounts

rial misstatement. An audit includes examining, on a test basis,

and the consolidated accounts.

evidence supporting the amounts and disclosures in the accounts.

We recommend to the annual meeting of shareholders that the

An audit also includes assessing the accounting principles used

income statement and balance sheet of the Parent Company and

and their application by the Board of Directors and the President

the income statement and the statement of financial position of the

and significant estimates made by the Board of Directors and the

Group be adopted, that the profit of the Parent Company be dealt

President when preparing the annual accounts and consolidated

with in accordance with the proposal in the administration report

accounts as well as evaluating the overall presentation of informa-

and that the members of the Board of Directors and the President

tion in the annual accounts and the consolidated accounts. As a

be discharged from liability for the financial year.

Stockholm, March 19, 2010

C A M F I L FA R R 2009 / 82

Carina Åkesson

Bertil Johanson

AUTHORIZED PUBLIC ACCOUNTANT

AUTHORIZED PUBLIC ACCOUNTANT

Group  Management

From left:

Alan O’Connell Chief Executive Officer, Camfil Group, President, Camfil AB, employed by Camfil Farr in 1983. Johan Ryrberg Chief Financial Officer, Camfil Group, Executive Vice President, Camfil AB, employed by Camfil Farr in 1995. Alain Bérard Vice President Sales and Marketing, Camfil Farr Group, Managing Director Camfil España, employed by Camfil Farr in 1995.

C A M F I L FA R R 2 0 0 9 / 8 3

B o a rd  o f   D i re c t o r s  o f  Camfil   A B  a n d  C e o   o f   t h e  C a m f i l  Farr   Group

Jan eric Larson, born 1947.

Carl Wilhelm Ros, born 1941.

Executive Chairman. Elected to Camfil’s board

Elected to Camfil’s board in 1999. Chairman

in 1983. Chairman, Swede Ship Marine.

of Martin Olsson. Board member, INGKA (IKEA

Board member, Nederman Holding,

Holding), Anders Wilhelmsen o Co. AS, Bisnode

Trosa Stadshotell, Sweden;

and SEB, among other companies. Member of

Kaare A Rustad A/S, Norway; and various

the Royal Academy of Engineering Sciences.

Camfil Farr Group companies.

Holds 3,500 convertible debentures.*

Holds 2,965,000 shares.

Johan Markman, born 1949.

Mats Lönnqvist, born 1954.

Vice Chairman. Elected to Camfil’s board in

Elected to Camfil’s board in 2000.

1983. Chairman, Atteviks Bil, Trosa Stadshotell,

Deputy President and CFO, SAS Group.

Quickbutton. Managing Director, Jungfrutomten.

Chairman, Intellecta. Board member, Bordsjö

Board member, various Camfil Group subsidiaries

Skogar, Ledstiernan, Ovacon, Resolvator,

and other companies.

Spendrups Bryggeri, Telge Kraft, A/S Det

Holds 2,460,000 shares.

Østasiatiske Kompagni and other companies. Holds 3,500 convertible debentures.*

Arne Karlsson, born 1958.

Alan o ’Connell, born 1957.

Elected to Camfil’s board in 2004.

President and CEO of the Camfil Farr Group

President and CEO of Ratos. Chairman SNS,

since 2001. Board member, various

(Studieförbundet Näringsliv och Samhälle),

Camfil Farr companies.

Board member, Bonniers.

Holds 10,000 convertible debentures*.

Member of Sweden's Securities Council (Aktiemarknadsnämnden).

eric Giertz, born 1949.

Rolf Wikström, born 1946.

Elected to Camfil’s board in 1992. Professor

Employee representative on the board since

in Industrial Economics and Management at

2001. Employee representative on the board

the Royal Institute of Technology (KTH) and

of Camfil Svenska AB.

Dean of KTH Business Liaison. Chairman, KTH Holding and KTH Executive School. Board member, Einar Mattsson Byggnads. Member of the Royal Academy of Engineering Sciences. Holds 3,500 convertible debentures.*

Christer Zetterberg, born 1941. Elected to Camfil’s board in 1998. Chairman Boo-Forssjö. Board member, Nike Hydraulics, Svensk Bilprovning, Swedship and

Deputy Board Members Henrik Joelsson, born 1969. Dan Larson, born 1980. Erik Markman, born 1978. Christer Stavström, born 1951 (employee representative).

L E Lundberg-företagen. Member of the Royal Academy of Engineering Sciences. Holds 3,500 convertible debentures.*

C A M F I L FA R R 2009 / 84

*One convertible debenture is equal to one share upon conversion.

F i v e - year  S u m m a r y   –   C a m f i l   F a r r   G r o u p

SeK M (see n ote 53 for definitions) 

2009 

2008 

2007 

2006 

 

 

 

 

Income statement  Net sales

2005

4 503

4 361

4 115

3 763

3 083

Operating income

417

400

352

279

290

Profit after financial items

376

356

313

246

265

Tax

-112

-109

-77

-62

-79

Profit for the year 

264 

248 

236 

184 

186

Balance sheet Goodwill and other intangible assets

896

913

792

782

664

Property, plant and equipment

809

842

711

622

620

Financial assets

107

111

112

99

102

Inventories

583

705

625

531

459

Cash and cash equivalents

443

243

326

262

215

Other non-current assets

826

1 082

892

838

713

Assets 

3 664 

equity

3 895 

3 458 

3 134 

2 773  1 312

1 931

1 841

1 498

1 330

Interest-bearing liabilities

905

1 099

1 051

983

795

Interest-free liabilities

828

955

909

821

666

equity and liabilities 

3 664 

3 895 

3 458 

3 134 

2 773 

Cash flow Cash flow from operating activities

617

210

306

241

174

Cash flow from investing activities

-149

-186

-243

-396

-144

Cash flow from financing activities

-244

-138

-7

213

1

Cash flow for the period 

225 

-114 

56 

58 

31 

Key ratios Operating margin, EBIT

9.3%

9.2%

8.6%

7.4%

9.4%

Profit margin before tax, EBT

8.4%

8,0%

7.6%

6.5%

8.6% 48%

Equity ratio

53%

47%

43%

42%

Interest-bearing net liabilities

410

789

666

676

531

Net debt-equity ratio (gearing ratio)

21%

43%

44%

51%

41%

Return on capital employed

17.4%

17.0%

16.3%

15.1%

18.4%

Return on equity

13.9%

14.8%

16.7%

14.1%

15.1%

163

188

260

357

205

3 249

3 321

3 192

2 949

2 693

Investments Employees (average for the year)

C A M F I L FA R R 2 0 0 9 / 8 5

C A M F I L FA R R 2008 / 86

...Camfil Farr is the leader in clean air technology and air filter production. Camfil Farr has its own product development, R&D and world-wide local representation. Our overall quality goal is to develop, produce and market products and services of such quality that we aim to exceed our customers’ expectations. We see our activities and products as an expression of our quality. To reach a level of total quality it is necessary to establish an internal work environment where all Camfil Farr employees can succeed together. This means an environment characterised by openness, confidence and good business understanding.

www.camfilfarr.com FOR FURTHER INFORMATION PLEASE CONTACT YOUR NEAREST CAMFIL FARR OFFICE. YOU WILL FIND THEM ON OUR WEBSITE.

Camfil AB, Sveavägen 56E, SE-111 34 STOCKHOLM, Sweden. Phone: + 46 8 545 12 500. Fax: + 46 8 24 96 50.

Artwork: Ymer Reklambyrå AB. Text: Thorn PR Sweden and Camfil Farr. Photos. Lars Clason, Folio, Fotolia, Getty Images. Printer: Trosa Tryckeri AB, Sweden. ©Camfil Farr

O n world standards...