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a D D r e S S e S

aB Fagerhult (publ)SE566 80 HaboSwedenTelephone +46 36 10 85 00Fax +46 36 10 87 80

Fagerhults Belysning aBSE566 80 HaboSwedenTelephone +46 36 10 85 00Fax +46 36 10 86 99

Schubergsvägen 20Box 74SE311 21 FalkenbergSwedenTelephone +46 346 71 82 00Fax +46 346 71 82 40

Fyrvaktaregatan 7SE296 35 ÅhusSwedenTelephone +46 44 28 98 00Fax +46 44 28 98 38

ateljé lyktan aBSE296 81 ÅhusSwedenTelephone +46 44 28 98 00Fax +46 44 28 98 38

elenco lighting aBAlmenäsvägen 18SE506 32 BoråsSwedenTelephone +46 33 10 24 65Fax +46 33 13 21 91

Fagerhults Belysning Sweden aBSE566 80 HaboSwedenTelephone +46 36 10 85 00Fax +46 36 10 86 99

Fagerhult retail aBRinnavägen 12SE517 33 BollebygdSwedenTelephone +46 33 23 66 00Fax +46 33 28 58 00

Fagerhult aSSluseholmen 8ADk2450 CopenhagenDenmarkTelephone +45 43 55 37 00Fax +45 43 55 37 30

Fagerhult lighting limited50 Southwark StreetLondon, SE1 1UNEnglandTelephone +44 20 7403 4123Fax +44 20 7378 0906

Fagerhult oÜArtelli 10c 10621 TallinnEstoniaTelephone +372 6 507 901Fax +372 6 507 900

Fagerhult oYPasilankatu 14FI002 40 HelsinkiFinlandTelephone +358 9 777 1580Fax +358 9 777 15 888

Fagerhult France46, Av. Chanoine CartellierF69230 StGenisLaval (Rhône)FranceTelephone +33 47 267 8080Fax +33 47 267 0633

Fagerhult lighting – Dubai BranchBox 126287Dubai – U.A.E.United Arab EmiratesTelephone +971 4329 7120Fax +971 4329 7130

Fagerhult BVEnergieweg 9, Postbus 200NL3400 AE IJsselsteinHollandTelephone +31 30 688 99 00Fax +31 30 688 99 44

Fagerhult lighting Systems (Suzhou) Co ltd. No 11 in Genway 12th workshop10 Gangtian RoadZIP (Suzhou Industrial Park)Suzhou 215021 ChinaTelephone +86 512 62 83 86 76Fax + 86 512 62 83 86 96

Fagerhult aSAslakveien 14Postboks 134, RøaNO0702 OsloNorwayTelephone +47 22 06 55 00Fax +47 22 50 85 40

Fagerhult Sp.z.o.o.Al. Jerozolimske 162PL02342 warszawPolandTelephone +48 22 501 6640Fax +48 22 501 6639

Fagerhult Spb V.O. Srednii pr. 48199178 St PetersburgRussiaTelephone +7 812 380 0148Fax +7 812 335 1138

FagerhultB.Spasskaia 12/16129090 moscowRussiaTelephone/fax +7 495 564 8419

Fagerhult SlC/Estocolmo No 13ES282 30 Las Rozas, madridSpainTelephone +34 91 640 7246Fax +34 91 637 0198

Commtech Commissioning Services SaC/Estocolmo No 13ES282 30 Las Rozas, madridSpainTelephone +34 91 640 7246Fax +34 91 637 0198

Fagerhult gmbhBorsteler Chaussee 85–99APostfach 610520DE22425 HamburgGermanyTelephone +49 40 51 43 84 40Fax +49 40 511 70 79

Fagerhult Central europe gmbhDresdner Strasse 87 A1A1200 ViennaAustriaTelephone +43 1 532 21790Fax +43 1 532 217950

whitecroft lighting limitedBurlington StreetAshtonunderLyneLancashire OL7 OAXEnglandTelephone +44 870 5087 087Fax +44 870 5084 210

eagle lighting Victoria17–19 Jets Courtmelbourne Airport, VIC 3045AustraliaTelephone +61 3 9344 7444Fax +61 3 9344 7433

project lighting equipment ltdUnit F1Calmount ParkBallymountDublin 2IrelandTelephone +35 3 1426 0200Fax +35 3 1429 9606

waco n.V.Handelgemsesteenweg 80B9890 BaaigemBelgiumTelephone +32 9362 4494Fax +32 9277 5000

Production: Intellecta Corporate and Fagerhult. Printers: NRS Printing 2010. Photography: Brahl Fotografi (page 34). Nils Petter Dahle (page 39). Åke E:son Lindman (pages 23, 26, 31–33, 35). Örjan Henriksson (cover, page 6, 10–11, 14, 50, 52). Seth Joel / gettyimages (page 18). Lena koller (page 29). Sesse Lind / link images (page 43). Adam mørk (pages 22, 24). Peel media (page 22). picture garden / gettyimages (page 21). Chris Stein / gettyimages (page 37).ISO No: 800.EXP.1.10.12.2

C o n t e n t S

Investing in Fagerhult 2Fagerhult in brief 4Comments from the Group CEO 6About Fagerhult 10External environment and markets 12How Fagerhult creates value 16Fagerhult’s business model 17Goals and strategies 18

B r I l l I a n t w o r K D a Y 20The art of largescale customisation 22Design on the client’s terms 24Safe solutions in demanding environments 26

F I n a n C I a l g l o w 28New technologies, new possibilities 31Systematic intelligence 33when creativity meets effi ciency 34

g r e e n l I g h t 36Sustainable lighting solutions 39knowledge as a competitive advantage 40

Employees 42The Fagerhult share and ownership structure 48The Board 50management 52

Five year overview 54Administration report 55Corporate governance 59Income statements 64Balance sheets 65Change in equity 67Cash fl ow analyses 68Accounting principles 69Notes 76Signatures 94Audit report 95Calendar 96Defi nitions 96

Addresses

On the cover: Fagerhult’s new fi ttings series Avion, was awarded the prestigious Red Dot Design Award in 2009. Designer: Propeller.

F a g e r h u l t a n n u a l r e p o r t

2 0 0 9

I N V E S T I N G I N F A G E R H U L T

Knowledge of lighting and insight into our client’s needs are always at the core of how we create value. Our clients receive more than just products – they receive all-inclusive lighting solutions. The right lighting ensures that people work better, stay healthier and feel more secure. The right lighting can also lead to major financial gains, since today’s smart systems consume increasingly less energy. In turn, such solu tions lead to important environmental advantages, as customers look to decrease their environmental impact. Of course, our all-inclusive solutions, client insight, and

I N V E S T I N G I N F A G E R H U L T

strong brand identity also create sustainable benefits for our shareholders in the long-term. Since Bertil Svensson founded Fagerhult’s first factory in 1945, we have a parti-cularly stable history of profitable growth and good yields, and today we have become the Nordic region’s largest, and one of Europe’s leading, operators in the lighting industry. To date, we have never reported a deficit, and considering the possibilities we have before us for positive growth, this looks set to continue. In the following pages, we describe our strategies and choices for the future in greater detail.

4 5

F A G E R H U L T I N B R I E F

B u S I n e S S C o n C e p t

Fagerhult’s business concept is to develop, manufacture and

market lighting systems for public environments.

V I S I o n

Fagerhult’s vision is to create energy-efficient lighting solutions contributing to an ergonomically sound environment

in an international arena.

V a l u e S

Passion for innovation. Entrepreneurship.

Customer obsession.Performance culture.

t h I S I S a B F a g e r h u l t

Fagerhult is one of Europe’s leading lighting groups with approximately 2,000 employees and operations in 17 countries. We create modern products and exciting, energy-efficient and environmentally-adapted lighting installations,

successfully integrated into their individual environments. The Group includes such strong brands as Fagerhult, Waco, Ateljé Lyktan and Whitecroft Lighting. AB Fagerhult is listed on the Nasdaq OMX Nordic Exchange in Stockholm.

We offer tailor-made solutions for, amongst other products:

a) Sweden: 29%

b) Other Nordic countries: 20%

c) Europe: 43%

d) Rest of the world: 8%

a)

b)

c)

d)

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sales, msek 1,232 1,410 1,475 1,403 1,382 1,759 2,162 2,527 2,770 2,436

Operating profit, mSEk 131 135 132 101 55 108 95 198 272 104

1 000

2 000

3 000 300

200

100

3,000

2 ,000

1,000

Fig. 1

SaleS anD proFIt DeVelopMentFig. 2

SaleS per MarKet

oFFICe lIghtIng

SChool lIghtIng

InDuStrIal lIghtIng

retaIl lIghtIng

outDoor lIghtIng

Products and solu-tions for both modern office environments and hotels and other public spaces.

Systems, applications and products for industrial and other demanding environ-ments.

Lighting solutions and service for boutiques, developed from the knowledge and experi-ence of the importance of light to consumer attitude and behaviour.

Lighting solutions specially adapted for educational premises, from lecture halls to study rooms and libraries.

Medical technical equipment, such as panels for intensive care units and treat-ment rooms, and dialysis columns in hospitals.

Lighting for public spaces such as roads, streets and parks as well as architectural lighting.

health anD hoSpItal Care proDuCtS

4 5

F A G E R H U L T I N B R I E F

o p e r a t I n g M a r g I n

4.3%5.87

2,436M S E K104.2M S E K

S E K

t h e p a S t Y e a r n e t S a l e S

o p e r a t I n g p r o F I t

e a r n I n g S p e r S h a r e

new group Ceo: Johan Hjertonsson took on the role of Group CEO in May.

eConoMIC CYCle eFFeCtS: A continued weak eco-nomic cycle has negatively impacted the earnings trend. Order inflow was 5 percent lower in comparison with the equivalent operations in 2008, however, demand stabilised during the second half of the year.

BuSIneSS area-SpeCIFIC eFFeCtS: The business area Professional Lighting saw total sales decline by 4.4 percent due to the downturn in the economy. However, sales increased in Holland, Australia, United Arab Emirates and Ireland. The Business Area Retail Lighting was affected by a downturn in sales of 32 percent due to the very weak market development, although there are signs of increased market activity within the segment. The Business Area Outdoor Light-ing saw decreased net sales from msek 175 to msek 172, although here also the conditions are positive for a higher level of net sales in the near future.

StruCtural MeaSureS: The decision was made to phase out the manufacturing plants in Falkenberg and Borås and transfer production to Habo, Åhus and China. This decision negatively impacted annual income for 2009 by msek 35, although the termination of operations at these factories, together with the other reorganisational measures, is expected to result in future savings of msek 40 per year.

new FaCtorY: An Australian manufacturing plant was opened in April.

new aCquISItIonS: Fagerhult S.L. and Commtech Commissioning Services S.A. in Spain were acquired during the year. The acquisition of the Belgian lighting company, Waco, was completed.

BranD CeleBratIon: Ateljé Lyktan celebrated its 75th year with, amongst other things, the produc-tion of a jubilee light fitting in carbon-fibre with LED technology, the design for which was inspired by the sports car Koenigsegg’s rear lights.

prIze-wInnIng proDuCtS: Fagerhult’s new lighting fittings Avion and Catwalk Spotlights & Downlights were both awarded with the Red Dot Design Award. (Avion is featured on the cover of the annual report.)

6 7

“we are goIng to Be eVen More oFFenSIVe In our DrIVe to oFFer More than JuSt proDuCtS – we wIll oFFer

all-InCluSIVe SolutIonS anD ConCeptS.”

6 7

C O M M E N T S F R O M T H E G R O U p C E O

the effects of the financial crisis and the weak economic cycle were issues high on the agenda in May 2009 when I assumed the position of CEO for the Fagerhult Group. In hindsight, this was also a tough year. The financial crisis impacted the order inflow significantly, and we had to strive to really show our capacity for business and adaptation under very difficult market conditions. However, in spite of the turbulence, it was an exciting year full of new developments, with many positive elements and new ideas coming to the fore. Most importantly, we began to establish a steady foundation on which Fager-hult will stand when the economic climate improves – and then we will be ready for major successes.

S T R U C T U R A L M E A S U R E S T O D E A L W I T H L O W E R V O L U M E S

Let me first say something about the manner in which the financial crisis impacted the market during the year. When order inflow decreased as a result of the weaker economic cycle, production had to be quickly adapted to the decreased volumes. Consequently, Fagerhult executed a number of tough structural mea-sures during the year. The most difficult decisions concerned the reduction of the number of employees and the phasing out of the manufacturing plants in Borås and Falkenberg. The phasing out was possible as extensive investment in production technology, primarily in Fagerhult’s major factory in Habo, now means that production can be increased with fewer factories. In August, Employment Act negotiations were initi-ated and, thereafter, Fagerhult worked very closely throughout the entire process with both union repre-sentatives and local authorities. The phasing out work is progressing according to plan and is expected to be completed in the first quarter of 2010. When all of the restructuring plans initiated in 2009 are com-pleted, the Group will see a saving of msek 40 per year.

As expected, the weak economic climate negatively affected net sales and income for the entire year. However, it is worth noting that the cash flow during the year was strong and Fagerhult also defended its gross margins very well which, amongst other things, is evidence that we have been able to maintain our price levels.

p O S I T I V E L O N G - T E R M S I G N S

Fagerhult is a company working within the latter end of the economic cycle and it is our assessment that the majority of our markets will remain weak during 2010. But this does not mean that we see a dark period ahead of us. Fagerhult quickly adapted its costs to the decrease in market volumes and the company’s good reputation in the market means that we are well positioned for competition in the next few years.

8 9

C O M M E N T S F R O M T H E G R O U p C E O

Furthermore, there are a number of applicable factors which, in the long-term, will create a positive and open market for new business possibilities. These factors include, for example, new legislation, directives for environmental efficiency measures and, not least, exciting changes in technological preferences towards LED and intelligent lighting systems. All of these will impact the clients’ desire to modernise and enhance the efficiency of their lighting solutions.

Fagerhult’s strategy continues to be to grow both organically and via acquisition, with continued com-mitment to international investment. We will always strive to be the industry leader. Fagerhult is already the industry leader in the Nordic Region and the goal is to be in the top three in all markets and segments in which we choose to operate. Otherwise, the phrase, ”Dig deep where you stand” sums up Fagerhult’s current operations quite well – the largest growth opportunities are found in the markets in which the company is already established. One example is retail lighting, which was hit hard by the economic downturn, but where the Nordic market will be of particular interest when the economic situation improves. The same can be said of outdoor lighting, a market which is expected to continue to grow dur-ing the forthcoming years, due to the EU’s energy directives on the phasing out of light sources involving mercury amongst other things.

F R O M p R O D U C T S T O S O L U T I O N S

I mentioned initially that during the year we established a stable base for future development. This refers to Fagerhult becoming even more offensive in its drive to offer more than just products – we will offer all-inclusive solutions and concepts. Fagerhult’s solutions are not just based on the production of the actual lighting fixtures themselves, but also on the concept that, with our expertise to support them, clients can also drastically improve their finances and decrease their environmental impact. The lighting systems offered by Fagerhult today, consumes only one quarter of the energy previously required, which saves money and decreases the environmental impact for the client.

The base we have established is comprised of a number of strategic strengths. One of our most impor-tant strengths is our deep understanding of our clients’ needs. Fagerhult is widely trusted among our cli-ents for our level of knowledge, our quality and the reliability of our deliveries, and we will certainly continue to build on these areas. We constantly strive to have a greater understanding of what our cli-ents look for, regardless of whether this is lighting to help make people feel better, design quality, or cost and environmental efficiency.

8 9

C O M M E N T S F R O M T H E G R O U p C E O

A K N O W L E D G E - B A S E D C O M p A N Y W I T H p O T E N T I A L

Another important strength for the future is our brand identity. A strong brand doesn’t only impact the clients’ willingness to pay, it also increases the possibility for participation and competition in major pro-jects. A strong brand image is also an advantage when the time comes to expand into new segments. Today, Fagerhult works with a number of various brands in a number of different markets. The next step is a clearer brand strategy.

A third strategic strength is innovational power. The current technological shift towards LED lighting and intelligent control systems opens the way for new solutions in efficiency and design. Fagerhult’s know-ledge-based approach means that we have every chance of leading the industry in the development of new and creative solutions and products.

F O C U S O N E N V I R O N M E N T A L I S S U E S

Of course, the increased focus in society today on energy saving provides business possibilities, but it also impacts our own work with the environment, and social responsibility. We see our work with sustainabil-ity as a continual process, a process which is, and will remain, a natural part of both our everyday life and the everyday life of our clients. Beginning in 2008, Fagerhult reported on its sustainability work on the basis of the guidelines found in the Global Reporting Initiative (GRI). During 2009, we have, amongst other things, undertaken a review of our governance documents and have produced a revised code of ethics, which now applies for the entire group. During 2010, we will continue to develop and systemise our sustainability work.

In conclusion, I wish to say something about the Fagerhult culture: Fagerhult’s success is created by the people in the group. With our personnel’s documented innovational power, performance capabilities, focus on entrepreneurship and understanding of our clients, I am convinced that we can face 2010 with confidence.

Habo, March 2010

J O H A N H J E R T O N S S O N

10 11

FAGERHULT

AB Fagerhult is the Nordic Region’s largest lighting group and one of Europe’s leading players in the industry. The Group has operations in 17 countries with sales companies in Sweden, Norway, Denmark, Finland, Uk, Ireland, Holland, France, Spain, Germany, Austria, Estonia, Poland, Russia, the United Arab Emirates, Australia and China. manufacturing units are found in Habo and Åhus in Sweden, manchester in the Uk, melbourne in Australia and Suzhou in China. In the following pages we provide additional information concerning our market, our business model, our strategies and our projects.

10 11 In the photo Orosso designed by Olle Lundberg. Orosso was awarded the Red Dot Design Award 2006.

FAGERHULT

12 13

E X T E R N A L E N V I R O N M E N T A N D M A R K E T S

Shifts in technology, changes in customer behaviour and new legislation – these are a few of the powerful forces characterising the lighting industry at this time. The result is a dynamic and exciting market with great international development potential for Fagerhult. Today, Fagerhult is the largest lighting group in the Nordic region. Fagerhult is one of the industry leaders in Europe and Australia. The Group is represented in a total of 17 countries.

F A G E R H U L T ’ S M A R K E T S

Fagerhult has the potential to expand into new countries, but above all, there is still a great deal to develop in existing markets. Today, our position is much stronger within the area of Professional Lighting, which delivers solutions, for example, for office lighting, school lighting, industry lighting and lighting in hospitals. Above all, Fagerhult is successful in the Nordic countries and within important European mar-kets, such as the United Kingdom, France and Germany.

Within the area of Retail Lighting, there is a huge growth potential. Fagerhult has a solid foundation to work from and has, still, only a relatively small share of the market. This segment has been hit hard by the downturn in the economy, but is set to become important in the future with retail lighting account-ing for a quarter of the entire European market. The company who can combine an understanding of how consumers’ purchasing behaviour is influenced by light, and who can translate this into energy-efficient and cost-effective solutions, has considerable potential for expansion in the area when the economy performs well.

Further growth potential lies in the area of Outdoor Lighting, prompted by the rapid phasing-out of mer-cury light bulbs and the growing demand for energy-efficient lighting systems. Today, Fagerhult’s opera-tions in this area are concentrated to the Nordic countries. There is a possibility of taking further market shares by, amongst other things, cooperation with the Spanish Indal Group; one of Europe’s largest play-ers in the outdoor lighting market.

N E W T E C H N O L O G Y D R I V E S D E V E L O p M E N T

One of the most important drivers behind market development is the extensive shift in technology that is taking place in conjunction with the conversion to new, energy-efficient light bulbs. The development towards LED-lighting, so-called Light Emitting Diodes, has continued over the last few years. LEDs were first used as signal lighting, in traffic lights amongst other things, but a few years ago, the technology began to be used for spot-lighting and facade lighting. This technology is now so advanced that LEDs can also be used for general lighting at low and mid-levels, which opens up entirely new possibilities, both for the lighting environment and the economy. The advantages of LEDs are significant, compared to older light bulbs: LED lighting offers a long lifespan, energy efficiency, a lifespan that is unaffected by the num-ber of times the light is switched on or off, and a light source containing no dangerous substances, such as lead or mercury. In line with LED lighting’s efficiency, expected demand is rising as new solutions become available.

12 13

Fagerhult’s lighting solution for the Swedish Embassy in Berlin followed the architect’s theme of “Insight and Outlook.” The light is flexible with energy efficient T5 light sources.

“one oF the MoSt IMportant DrIVIng ForCeS BehInD MarKet DeVelopMentS IS

the eXtenSIVe teChnologICal ShIFt whICh IS unDerwaY anD whICh IS taKIng

plaCe In ConJunCtIon wIth the MoVe to new, energY-eFFICIent lIght SourCeS.”

14 15

The development towards intelligent management systems is also intensive. By designing lighting solu-tions on the basis of information technology, the system and fixtures can be made to track, for example, the amount of time people are present in a given premise, visibility conditions and so on. This can, in turn, lead to advantages for users in the form of both a better quality of life, improved production conditions and reduced energy usage. The light management system also makes it possible for clients to save time in maintenance, as the system can predict when something will happen with a light bulb.

R E G U L A T I O N S C O N T R O L D E M A N D

The lighting industry’s strong relationship to energy consumption implies that decisions on behalf of the authorities affect the market very concretely. The EU’s climate target to reduce carbon dioxide emissions by 30 percent by 2020 has had a marked effect on the market and has opened up new business opportu-nities. The EU’s so called 2016 Directive, which proposes to phase out all mercury-containing light bulbs over the course of a few years, is an example of the decisions generating orders for the lighting industry. For example, 50 percent of all outdoor lighting consists of this old style of mercury light bulb, and this will need to be changed over the coming years.

Another decision affecting Fagerhult’s businesses is the EU Directive stipulating that real estate owners must energy-declare their buildings. This has led to real estate owners with older lighting systems start-

Open Box, designed by design agency Propeller, awarded the “Best of the Best” in Red Dot Design Award 2007. The year after, the Open Box also won the Design S / Lithuanian Design Award.

14 15

E X T E R N A L E N V I R O N M E N T A N D M A R K E T S

ing to look to effective solutions, which opens the possibility for Fagerhult to sell its modern, intelligent, complete systems.

C H A N G I N G C O N S U M E R B E H A V I O U R

Consumer behaviour is changing. An increasing number of people take the significance of light for their well being very seriously. The interest in design products and the possibilities that lighting design can offer has grown over several years. Today, health aspects, the form of a room and the atmosphere are equally as important as the technology and brightness was previously. There is also increasing price awareness when investing, whereby consumers pay great attention to the cost of the lighting system in comparison with its life expectancy. Consumers also look for solutions that can be tailored to meet their unique concept and demand an ever higher level of service and ensured delivery.

The consumer’s growing awareness about their own effects on the environment also implies that solu-tions dealing with energy consumption and their inherent reduction of climate impact are gaining ground. Parallel with this development, many consumers have a continued need for suitable solutions using existing technology.

F R A G M E N T E D C O M p E T I T I O N

As regards competition, the lighting industry is far from being static. The industry is in the middle of a con-solidation phase, with a relatively high number of acquisitions and sales in the last five years. The industry is still fragmented, with many different types of market players. There can be many local differences in the competitive situation. In addition, the industry is seeing a move in a new direction, whereby new players are entering the ring. An example of this is electronics companies, which in line with the development of LED technology, see the possibility to develop their own products and solutions.

M E G A T R E N D S I N T H E E N V I R O N M E N T

In a larger perspective, there are a further three overall drivers, mega trends, all impacting the market in a different manner. Considering the fact that the population is ageing, there will continue to be a demand, for example, in hospitals, and for lighting systems of high quality suitable for use in care homes for the elderly. In line with the pensionable age rising at the same time, the need for lighting in workplaces suited to older people will also increase.

Another major trend is that people now tend to work more intensively during a given time period but, in turn, try to get more out of their free time. This fuels demand for both suitable light fixtures at work-places as well as lighting solutions for leisure facilities, such as hotels and spas. This also affects methods for competing for personnel.

The third trend deals with the importance of taking responsibility for your actions as regards the environ-ment and society. The increasing awareness of this amongst businesses and individuals fuels the interest for energy efficient lighting solutions throughout all of society.

16 17

H O W F A G E R H U L T C R E A T E S V A L U E

Fagerhult’s business model is designed partly to encourage the creativity that our employees stand for in their daily work with clients, and partly to encourage the effectiveness needed to optimally utilise resources and synergies. Fagerhult can be found in 17 countries and, therefore, management of daily operations is structured geographically, but operationally, business activities can be grouped into three business areas. Professional Lighting, which offers solutions for offices, industries, schools, hotels and hospitals, is the largest business area with around 80 percent of sales. Retail Lighting is a growing area specialising in solutions for detailed trade and comprises 13 percent of sales. Outdoor Lighting, which is also a growing area, offers solutions for, for example, entrance ways, parking areas and comprises 7 percent of sales (read more about market conditions on page 12).

S Y N E R G I E S A N D C O S T E F F I C I E N C I E S

All three business areas are served by Operations, which takes responsibility for purchases, production and logistics. Organisationally this provides the possibility of synergies and cost efficiencies in the form of, for example, better coordination of resources. By coordinating purchases for the entire company and maintaining the number of suppliers, purchase expenses can decrease sharply. The ambition is to consis-tently hit the target of working smarter and quicker, without needing to reduce the quality of our prod-ucts. With sound controls on the entire supply chain, the firm can continue to offer the best solutions in the industry, yet still at competitive prices. Operations also form the foundations for the firm’s well-docu-mented ability to deliver reliably, which is an important competitive advantage. Today, production takes place in five factories; in Habo and Åhus in Sweden, Manchester in the UK, Suzhou in China, as well as Melbourne, Australia. The plants in Falkenberg and Borås will be closed down during 2010 (see CEO’s comments on page 6).

A C A D E M Y A N D B U S I N E S S R O L E S

Protecting our knowledge concerning lighting’s effect on people is an important factor in the business model. The knowledge base in the firm’s research and development currently consists of the Fagerhult Lighting Academy, which was established in 2004 in order to combine the firm’s knowledge, which refers to all aspects from lighting design to environmental impact. But the Fagerhult Lighting Academy has sev-eral important business roles. Being able to demonstrate your expertise is, for example, a major advan-tage when it comes to a company’s position in a new market. The Academy also plays an important role in integration work in the context of acquisitions, by educating new employees in the initiation period, as well as by identifying, emphasising on and developing the new employee’s spectra of competence.

A L W A Y S A N I N D U S T R Y L E A D E R

An important part of our value is also the powerful brands that are included in our firm, which provide extra weight in the different markets. In the United Kingdom, for example, Whitecroft Lighting is one of the market leaders, and in Europe, Waco is well known for products making creative use of light’s ability to shape and mould. In our cooperation with independent designers in order to produce new fixtures and systems, we always work collaboratively with industry leaders.

Work on sustainability issues permeates all levels of the company. We report our environmental work under GRI guidelines. Read more on pages 18–19 and in our Sustainability Report on www.fagerhultgroup.com.

16 17

F A G E R H U L T ’ S B U S I N E S S M O D E L

B u S I n e S S a r e a

p r o F e S S I o n a l l I g h t I n gLighting solutions for public environments such as offices, schools, industrial structures, hospitals, hotels and museums.

mSEk 2007 2008 2009

Sales 1,763 2,049 1,958

Operating profit 153.1 217.1 130.0

Fig. 3

Share oF the group’S SaleS

Change since the previous year, + 6%

Fig. 4

orIgIn oF the InCoMe

a) Sweden: 27%

b) Other Nordic countries: 20%

c) Europe: 44%

d) Rest of the world: 9%

B r a n D S I n t h e g r o u p

B u S I n e S S a r e a

r e t a I l l I g h t I n g

Solutions for retail environments specifically aimed at the significance of the lighting for customer relations and sales.

mSEk 2007 2008 2009

Sales 420 447 306

Operating profit 35.0 48.5 –11.4

Fig. 5

Share oF the group’S SaleS

Change since the previous year, – 3%

Fig. 6

orIgIn oF the InCoMe

a) Sweden: 26%

b) Other Nordic countries: 17%

c) Europe: 55%

d) Rest of the world: 2%

B u S I n e S S a r e a

o u t D o o r l I g h t I n g

Solutions for outdoor lighting, e.g. parks, walkways, recreational areas and facades.

mSEk 2007 2008 2009

Sales 153 175 172

Operating profit 2.5 2.9 –14.4

Fig. 7

Share oF the group’S SaleS

Change since the previous year, + 1%

Fig. 8

orIgIn oF the InCoMe

a) Sweden: 62%

b) Other Nordic countries: 27%

c) Europe: 11%

More information regarding 2009 can be found in the Administration Report on page 55.

More information regarding 2009 can be found in the Administration Report on page 55.

More information regarding 2009 can be found in the Administration Report on page 55.

80%

a)d)

b)c)

7%

a)

c)

b)

13%

a)d)

b)c)

o p e r a t I o n SJoint responsibility for production, logistics and purchases create synergies. Production facilities located in Sweden (Habo and Åhus. Borås and Falkenberg under liquidation), England (manchester), China (Suzhou), as well as Australia (melbourne).

F a g e r h u l t l I g h t I n g a C a D e M YOur knowledge base. Here, we coordinate our research and training. Guaranteeing and continuously raising the competence of our salespeople and personnel through training, by means of an extensive network. make use of our leading edge when acquiring new companies. This leading edge is used when meeting the customer’s need for training on the importance of lighting.

18 19

G O A L S A N D S T R A T E G I E S

o u r M a I n g o a l S o u r S t r a t e g I e S

•   Growth in existing markets•   Growth within the Retail lighting sector•   Growth within the Outdoor 

Lighting sector•   Maintain market leadership in 

the Nordic countries•   Reach a position within the top three in 

all markets and in all segments where we are active

•  Offensive efforts towards being a leading player•  Increased internationalisation•  Deep customer insight as a basis for everything we do•   Increased focus in order to develop innovative 

solutions within all technologies• Strengthen brand work•   Transition from selling only products, to selling 

complete solutions•   Decrease costs by finding synergies in 

manufacturing and purchasing•   Grow organically and through acquisition  

•   Increase our employees’ knowledge and  awareness about our environmental impact

•   Increase our clients’ awareness about our  lighting solutions’ environmental impact

•   Optimise raw products and energy consumption  in our factories

•   Optimise our choice of materials in our manufacturing processes by comparing the environmental impact and taking into account transport

•   Longterm cooperation with our suppliers

•   Reach CO2 neutral production•   Continually decrease the company’s 

total energy consumption on a per electrical fitting basis

•   Increase knowledge about the meaning and importance of light and stir interest in Fagerhult’s solutions by taking part in various collaborations with universities and high schools

•   Take part in social activities with affiliated organisations, industry organisations and administration

•   Strive for an equal standard in our international operations as found in our Swedish working environment conditions, working conditions and preventive health care

•   Enlighten our suppliers concerning Fagerhult’s requirements on working conditions and human rights

•   Focus on leadership development•   Encourage employees’ internal career possibilities

•   Contribute to good social development through lighting solutions, increasing people’s wellbeing

•   Create positive work conditions for our coworkers regardless of country

•   Develop Fagerhult as an attractive  employer

long-terM ValueS through SuStaInaBle StrategIeS

e n V I r o n M e n t

p e o p l e

F I n a n C I a l p o S I t I o n

18 19

G O A L S A N D S T R A T E G I E S

w h a t w e a C h I e V e D I n 2 0 0 9 p r I o r I t I e S F o r 2 0 1 0

•   Established several production efficiencies which, when fully implemented, are expected to save approximatley mSEk 40 annually

•   Gained market shares in several key markets •   Established an Australian factory •   Received the Red Dot Design Award for products 

Avion and Catwalk

•   New survey of the views of stakeholders internally and externally about Fagerhult’s sustainability work

•   Implementing new code of conduct in the Group •   Initiate the process of Groupwide employee surveys •   Continued focus on leadership development •   Continued development of internal career paths

•   All major fixings are fully recyclable and are made for easy disassembly and sorting

•   As of 2009, Fagerhult’s Swedish electricity was sourced from hydro power plants as a renewable energy source

•   95 percent of all waste from Habo factory is recycled •   The plant in Åhus, as well as production units in Suzhou, 

China, manchester and Habo, are now environmentally certified according to ISO 14001

•   Acted as the sponsor company for approximately forty students from Swedish and international colleges and universities

•   Adopted a new code of conduct for the Group •   Initiated English lessons for some 200 Chinese employees •   Worked for the company’s home region, Södra Vättern

bygden, was certified as the home of the so called Technology College

At Fagerhult we are always striving to be one of the leaders in the business, as we already are in the Nordic countries. Fagerhult’s goal is also to reach a position amongst the three leading players on each market and in each segment in which we choose to compete. In order to deliver long-term value we will need stamina. Financially, we are well prepared – we are known for our stable finances and we have, thus far, never had a year in which we have reported losses. We also need stamina when it comes to the environment and human resources. This is why we are striving to ensure that our sustainability work permeates throughout all levels of the company. Here, we describe our most important goals and efforts of our work. For further, more detailed informa-tion regarding the sustainability work, see the separate report on www.fagerhultgroup.com.

•  Focus on brand strength •  Continued work with the technology shift to LED lighting •  Continued cost control •  Focus on better delivery capabilities to customers 

Each client is unique and requires an individual light ergonomic and technical solution. Fagerhult’s knowledge con-cerning lighting’s effect on people is, therefore, fundamental to all projects, regardless of the projects’ size and scope. During 2009, we have assisted our clients with everything from the lighting of the UK’s first real media dis-trict to equipping Qatar’s most modern hospital. The following pages provide further information about our various assignments.

BRILL IANTWORKDAy

T H E A R T O F L A R G E S C A L E C U S T O m I S A T I O N

1. The UK’s first truly media-dedicated district, MediaCityUK, currently under construction in Salford, is inspired by media clusters in cities such as Dubai and Singapore. The first phase stretches over almost 15 hectares, making this one of Europe’s largest construction projects. It also represents an important project for Fagerhult, in which the ability to customize solu-tions for the client are tested to the full. The predominant tenant is the BBC, which is relocating five London-based units to Salford in 2011. Fagerhult’s subsidiary, Whitecroft Lighting, the market leader in the UK has, together, with the main contractor and architect, designed customized lighting solu-tions solely for this project. The result is hanging fluorescent-lamp fittings, with micro-prismatic anti-glare devices, which illuminate both the ceiling and floor – New Media Luminaire. So far, Whitecroft have supplied both cus-tomized and standard lighting solutions, amounting to a value of £1.2 mil-lion, to buildings across the entire area.

2. The lighting of schools and universities is a science in itself. Lighting impacts the ability to both learn and comprehend. During 2009, Whitecroft Lighting in the UK initiated a large project together with authorities, archi-tects and designers called “Building Schools for the Future”. The aim is to improve the student’s work environment, with a focus on light quality and sustainability issues. The picture shows the educational centre at Alsion, the Danish education, research and cultural centre.

3. No two workplaces are alike. When Millimeter Arkitekter in Stockholm moved into former police premises in southern Stockholm, the challenge was to introduce light and air into these originally gloomy spaces. The solu-tion was lighting from Fagerhult and a glass lantern for which Millimeter later received the Swedish award for glass design.

1.

2.

3.

24

D E S I G N O N T H E C L I E N T ’ S T E R m S

1. Fagerhult Retail has assisted many clients in finding the right light-ing solutions, from trendy Gina Tricot in Sweden to the deluxe Boscos flagship store in Moscow with interior design by the famous designer Karim Rashid (picture). Working with retail lighting demands an under-standing of psychology. A gloomily lit retail environment can cause a client to turn around in the doorway, whilst carefully prepared and attractive lighting can both strengthen an image and inspire the client to make further purchases. The right lighting tools are as decisive to a successful result, as the design aspect is. Evidence that Fagerhult are way ahead in their product development efforts is the fact that the fittings series Catwalk, developed solely with the needs of the retail sector in mind, was awarded the prestigious Red Dot Award for excel-lent design in 2009.

2. Can a lighting fitting have any shape or form? Of course. When Ateljé Lyktan celebrated its 75 year anniversary in 2009 it did it with, amongst other things, a specially designed fitting, playfully designed to resem-ble the rear lights of a Koenigsegg car.

3. The right lighting can enhance and emphasize a building’s architec-tural qualities. The photo shows the connection between Terminal 1 and Terminal 2 at Copenhagen airport.

1.

2.

24

3.

26

S A F E S O L U T I O N S I N D E m A N D I N G E N V I R O N m E N T S

1. Talk about climate challenges – when Dubai’s famous indoor ski slope was built in 2005, Fagerhult delivered a solution suited to the extreme conditions arising when a building located in the desert heat is filled with artificial snow.

2. Tough demands are put on supplies of equipment to hospitals; the picture shows the inten-sive care equipment at Karolinska University Hospital in Huddinge, Sweden. Two important hospital assignments in 2009 for the subsidiary, Whitecroft Lighting, referred to an order worth £5 million from the world-famous St Bartholomew Hospital in London, UK and an order from the future Al Wakrah Hospital in Qatar, which will start to accept patients in the first half of 2011. The latter project encompasses 70,000 m2, with administrative and clinical build-ings, accident and emergency, operating theatres, lecture theatres, intensive care units and X-ray rooms.

3. Sensitive environments, such as museums and historic buildings need suitable solutions that do not put strains on the exhibits or the interiors. The picture shows a solution with Wacos spotlight series, Orso Major, at the Borbiago Church just west of Venice in northern Italy.

2.

1.

26

3.

A new lighting system is a significant investment, but it is an investment that can pay off quickly. Today’s modern lighting systems can not only assist clients with improved lighting but can also contribute to the reduction of nearly three quarters of their energy consumption. Fagerhult are continuously developing new energy effective products and intelligent control systems.

FINAN CIALGLOW

S I D H U V U D

31

1.

S I D H U V U D

31

N E w T E C H N O L O G I E S , N E w P O S S I B I L I T I E S

1. The development towards LED technology, light-emitting diodes, is on the verge of revolutionising the entire lighting industry. It is not far-fetched to believe that a technological shift towards LED’s can be just as revolutionary as when the first fluorescent lamps broke through. The new technology not only opens up new opportunities for lighting design, it also leads to significant savings as a result of energy efficiency. The user receives more light per energy unit and the lighting does not need to be replaced during its entire lifespan. LED’s have long been used in such applications as indication lights, in signs and in small fittings, but LED’s are now expected to be used as an alternative to the light bulb and halogen bulbs. In order to satisfy the customer’s clear curiosity about this business area, Fagerhult have gathered all their expertise on the website www.fagerhult-led.com. This is a virtual showroom, Fager-hult LED House, where the client gains knowledge about the opportuni-ties of LED technology. The picture shows The Media Shop, which can be found on the fourth floor of the house.

2. The student building at Chalmers University of Technology in Goth-enburg, Sweden, designed by Wingårdh architects in 2001, has a glazed façade which shines up like a lighthouse in the evening.

3. ABB Arena Syd in Västerås, Sweden is one of the world’s most modern floorball arenas. The ceiling is 12 meters in height, which puts great demands on the lighting solution. Fagerhult‘s modern fittings and con-trol systems allow the arena to be both adaptable and energy efficient.

2.

3.

32 33

32 33

S Y S T E m A T I C I N T E L L I G E N C E

In order to get the most out of a new lighting system, the requirements of the system must be considered. Are the lights supposed to automatically switch off at a certain time? Is the number of people in the room going to be the controlling factor? Will the strength of the lighting follow daylight? Will lighting be able to switch between different types of atmospheres and moods? Fagerhult is one of the branch leaders when it comes to intel-ligent control systems. The picture shows the lecture hall at the Östra Senior High School in the Municipality of Huddinge, south of Stockholm, with Fagerhult’s flexible downlight Pleiad in the ceiling. The school was completed in 2005 and is characterised by light, openness and modern thinking as regards both lighting and acoustics.

34

w H E N C R E A T I V I T Y m E E T S E F F I C I E N C Y

1. An illuminated tube visually connecting all of the floors was requested when the University College CVU Öresund in Copenhagen, Denmark was built. Fagerhult produced a tailored solu-tion for this purpose following the architect’s descriptions.

2. Marrying design and function is a constant challenge. The picture shows a solution from the London offices of the architects, Austin-Smith:Lords with energy efficient ceiling fittings which both make the most of and enhance this classic milieu.

3. Fagerhult has many years of experience in finding the best and most modern solutions to enhance architectural qualities. The picture shows the Swedish headquarters of ITT Water & Wastewaters in Sundbyberg. Another address to bear in mind is 110 Bishopsgate, London. Heron Tower, designed by Kohn Pedersen, which will be completed in 2011 and will be one of the UK’s tallest buildings. Fagerhult are delivering the lighting solutions together with its sub-sidiary, Whitecroft Lighting. Fagerhult was able to be competitive by, amongst other things, sourcing certain parts of the production of fittings in the Group’s factory in China. In total, the Suzhou factory will deliver close to 10 ,000 products to London’s new skyscraper.

2.

1.

34

3.

Energy efficiency has always been a prestige word for Fagerhult. Knowledge in the area has become increasingly important as customers have come to understand that energy efficiency means profit in the form of a reduced envi-ronmental impact. If Fagerhult’s lighting systems can function on a quarter of previous energy consumption, the customer will also be able to reduce their impact on the climate. But it is also important to have an overall approach regarding environmental impact. Consequently, Fagerhult’s business activities are permeated with an environmen-tal perspective on choice of materials, packaging techniques and transport routes.

3.

GREENLIGHT

38 39

1.

38 39

S U S T A I N A B L E L I G H T I N G S O L U T I O N S

1. Frescati in Stockholm is current evidence of LED technolo-gy’s breakthrough into the outdoor market. This was one of the first locations to install Fagerhult’s new outdoor fitting, Stela. Stela combines ground-breaking technology with a recycling mentality. LED technology allows carbon dioxide emissions to be reduced by up to 68 percent compared to a traditional solution, plus the fitting is manufactured from recycled aluminium. Furthermore, there is, in principle, no maintenance required during the fitting’s 100,000 hour lifespan.

2. For several years, Fagerhult has worked with customers to replace old energy intensive fluorescent lights with modern, energy-saving alternatives. The next stride in development comes in 2010 when the new fluorescent light, T5 Eco, will be standard in all Fagerhult’s fittings delivered with light sources. T5 Eco is part of the new generation of fluorescent, in which the light source can be run at lower energy levels, while main-taining levels of light. The picture shows the award winning Open Box at KIT Finance Investment Bank in Moscow.

3. In February 2009, the super modern nursery, Steinsprang-ets Barnehage, was completed in Nordstrand outside Oslo. Together with the architect Enerhaugen Arkitektkontor, Fagerhult have delivered lighting solutions serving both to maximise energy-savings, and to enhance the architecture.

2. 3.

40

k N O w L E D G E A S A C O m P E T I T I V E A D V A N T A G E

1. The significance, in terms of business strategy, of communicating a clear plan on climate issues and carbon dioxide emissions continues to grow for Fagerhult’s customers. In order to help clients in the right way, Fagerhult works with different knowledge and information processes. Fagerhult Retails Green Lighting Concept is and example of this, assist-ing customers in finding an efficient lighting solution which simultane-ously makes a difference from an environmental perspective. One such customer is the Danish organic grocery chain, Irma. The result here was both an environment that reinforced the ecological lifestyle, and a sig-nificantly decreased impact on the climate.

2. During 2009, Fagerhult’s acquisition of the Belgian lighting company Waco was completed. Waco’s inspiring and powerfully designed prod-ucts, combined with Fagerhult’s energy effective lighting systems, establish a completely new, attractive all-encompassing concept on the market for retail lighting. The picture shows a solution with Waco’s flex-ible fitting series, Straight Edger, for Thierry Mugler’s boutique in Paris.

3. Waco’s solution for the Spanish designer Angel Schlesser’s flagship store in Madrid, also based on the Straight Edger series.

1.

2.

40

3.

42

EMPLOyEESThe skill, engagement, innovation capability and client knowledge of our personnel is a decisive factor in our success. Developing Fagerhult’s brand as an employer is, therefore, of great strategic importance. maintenance and development of our skills, together with leadership development, are three key cornerstones in these efforts.

42

44

S I D H U V U DE M p L O Y E E S

Fagerhult is a knowledge-based company with approximately 2,000 employees and operates in over 17 countries. The skill and commitment of its employees are critical success factors. Maintain-ing and developing our brand as an employer is, therefore, of great importance. We wish to create a sense of participation on many levels, from driving forces on a business level to individual devel-opment. An important tool in this process is the establishment of a strong employee culture.

T H E C U L T U R E W E A R E B U I L D I N G

The Fagerhult culture can be summarised as four key values: passion for innovation, a strong sense of entrepreneurship, a strong client focus and a clear performance-oriented culture. Passion for innovation means that we encourage our employees to be continuously on the hunt for information that can drive us forward in the area of new, cutting edge products and solutions. Exceptional products and good solu-tions are competitive advantages and strengthen both the brand and margins. A strong sense of entre-preneurship among employees allows us to encourage them to take responsibility for their areas, to move forward, daring to find new, unconventional solutions, rather than becoming stuck in the decision-making process. A constant focus on the client, punctual delivery, and attention to the client’s needs are natural parts of this. Finally, the Fagerhult culture’s origins lie in the fact that our employees dare to set ambitious goals and take pride in achieving them.

T H E F I R S T F O U N D A T I O N S T O N E : M A I N T A I N I N G S K I L L S

In our efforts to attract and retain the most qualified manpower, and strengthen Fagerhult’s brand as an employer, we have three foundation stones to work from. The first of these foundation stones is to ensure that skills are maintained. We work on several fronts in order to reach potential employees. For example, we work with higher education institutions in order to create positive and continuous contacts with both students and teachers and, in addition, we organise an annual mentorship programme for students. Dur-ing 2009, a total of 20 students took part in the programme. We also conduct trainee programmes on an ongoing basis. We wish to provide our trainees with a broad knowledge of the company’s flows and pro-cesses, to create networks and provide valuable experience at an international level. In 2009, five trainees took part in our two programmes, of which two trainees were placed with Whitecroft Lighting in Man-chester, England and three with Fagerhults Belysning in Sweden.

T H E S E C O N D F O U N D A T I O N S T O N E : S K I L L D E V E L O p M E N T

Fagerhult’s size makes the Group a labour market in itself. Internal flexibility is encouraged, as work rotation increases opportunities for knowledge-sharing, and promotes networking and experience. To further stimulate such internal flexibility, we aim, in the future, to offer all of our vacant positions via our Intranet. During 2009, we also provided training in our Group language, English, for all our employ-ees in China, in order to also increase their opportunities to become acquainted with all of Fagerhult’s business activities. Since 2004, The Fagerhult Group has systemised the distribution of knowledge within the Group through the Fagerhult Lighting Academy. The aim is to build a knowledge network on

44

S I D H U V U D

”the Fagerhult Culture Can Be SuMMarISeD aS Four Core

ValueS: paSSIon For InnoVatIon, Strong SenSe oF entrepreneur-

ShIp, Strong ClIent FoCuS anD a Clear perForManCe-

orIenteD Culture.”

46 47

E M p L O Y E E S

lighting and its importance, partly as a means to raise the level of competence among existing person-nel and partly to offer the client new, unique skills.

T H E T H I R D F O U N D A T I O N S T O N E : M A N A G E M E N T D E V E L O p M E N T

Good management is the key to healthy growth. The purpose of our management development plan is to focus on developing and fostering our managers and those in other senior positions.

In addition to these three foundation stones, there are several other important aspects of our work. As Fagerhult’s employees are widely-distributed geographically, we have set up a new video conferencing system. The system is relatively expensive to run, but there are also great gains to be made. Fewer busi-ness trips make for more effective working hours and lower travel costs, while contributing to reduced environmental impact. Knowledge is more easily transferred, key skills are always easily accessible and communication is much more personal. So far, the Group has installed approximately 20 video confer-encing systems, and each one is used an average of 160 times a year.

E M p L O Y E E S A N D R E S p O N S I B I L I T Y M A T T E R S

Our international presence demands that employees take responsibility for both themselves and for oth-ers. The guidelines for this are detailed in our code of conduct, which everyone in the Group, from the Board and management to the individual employee are to follow. The code regulates, for example, our view on work relationships, diversity and equal opportunities. There are also guidelines on how we con-duct ourselves on the issues of donations, representation and sponsorship. In addition, the code regu-lates our view on environmental issues, our stance regarding the differences between countries’ various laws and statutes, agreements and other regulations that influence our business activities. We also com-municate our code of conduct to our business partners and expect them to follow this code.

H E A L T H A N D S A F E T Y

Furthermore, ensuring that our employees have a healthy work environment, that they receive good healthcare and are offered preventative healthcare are important success factors, not least for our facto-ries. On an annual basis, we undertake various types of training courses, promoting safety and health. During 2009, for example, approximately 40 of our employees undertook a three day training course, focusing on the work environment and safety, with the goal that the employee and the company, together, could further improve the already positive work climate. During 2009, the Group reported a total of 24 work-related accidents resulting in more than one day of absence.

The most frequent cause of accidents was injuries from handling materials and mechanical equipment. The number of reported cases of work-related injuries/illness leading to more than one day of absence at our manufacturing facilities was 8. The majority of the injuries were strain injuries. During 2009, we had an employee turnover equal to about 10 percent, which is roughly the same as the previous year. For fur-ther information, we refer to Fagerhult’s sustainability report at www.fagerhultgroup.com.

46 47

E M p L O Y E E S

a)

b)

a) men: 65% b) women: 35%

a)

b)

a) men: 82% b) women: 18%

a) b)c)

a) worked time: 95.1% b) more than 60 days: 2.5%

c) Less than 60 days: 2.4%

a)

b)

c)

a) < 30 years: 28% b) 30–50 years: 51%

c) > 50 years: 21%

Fig. 9

nuMBer oF eMploYeeS per geographICal MarKet

Fig. 11

BoarD anD SenIor ManageMent BY genDer

Fig. 13

age DIStrIButIon

Fig. 10

eMploYeeS BY genDer

Fig. 12

aBSenCe Due to IllneSS In SweDen, the uK anD ChIna

Fig. 14

aVerage nuMBer eMploYeD

a)

b)

d)

a) Sweden: 48% b) Europe: 30%

c) Rest of the world: 16% d) Other Nordic countries: 6%

c)

400

800

1 200Utlandet

Sverige

Year 2005 2006 2007 2008 2009

Sweden 1,049 1,089 1,098 1,071 909

Abroad 239 551 798 907 972

1,200

800

400

48 49

T H E F A G E R H U L T S H A R E A N D O W N E R S H I p S T R U C T U R E

B Fagerhult was listed on the Stockholm Stock Exchange in 1997 and was previously on the O-List. The Fagerhult share has been traded on Nasdaq OMX, Nordic Exchange, Mid Cap list, Industrial Sector since 1 October 2006. A trading unit consists of 1 share. The abbreviated name is FAG

and the ISIN code is SE0000379844.

S H A R E C A p I T A L

Fagerhult’s share capital amounts to msek 65.5 (65.5), distributed among 12,850,000 shares, with a quo-tient value of sek 5.10 per share. The number of owned shares held by the company is 238,000, at a quo-tient value of SEK 1,213,800. All outstanding shares have the same amount of the Parent Company’s assets and profit, and are fully paid. Each share entitles one vote.

L I Q U I D W A R R A N T Y A G R E E M E N T

An agreement has been reached with HQ Bank in order to support the liquidity of the Fagerhult share within the boundaries of the Stockholm Stock Exchange system for liquidity warranties.

D I V I D E N D A N D D I V I D E N D p O L I C Y

AB Fagerhult’s long-term goal is to distribute dividends corresponding to 30–50 percent of the Group’s net income. At this dividend level, the Board of Directors considers itself to have a satisfactory cash flow for the financing of expected future developments. The Board of Directors proposes a dividend of sek 3.00 (5.50) per share to the Annual General Meeting, corresponding to a yield of 2.4 percent on the share price, as of 31 December 2009.

A C Q U I S I T I O N O F O W N S H A R E S

At the Annual General Meeting held 22 April 2009, it was resolved that the company would have the pos-sibility to acquire its own shares. This opportunity was not utilised during 2009. The number of outstand-ing shares amounts to 12,612,000. The Board of Directors proposes that the Annual General Meeting grant the Board continued authorization to acquire the company’s own shares until the next Annual General Meeting.

0

300

600

900

1,200

1,500

2009200820072006200550

90

130

170

210

250 FagerhultSIX GeneralindexCarnegie Small Cap Index

Number of shares sold, 1,000’s per month

©

Fig. 15

Fagerhult Share’S FIVe Year oVerVIew

48 49

T H E F A G E R H U L T S H A R E A N D O W N E R S H I p S T R U C T U R E

Share turnoVer

Year 2005 2006 2007 2008 2009

Number of shares sold, million 0.8 1.4 2.1 0.9 3.7

Share turnover value, mSEk 103 210 321 123 451

Average number of shares sold per trading day 3,312 5,471 8,593 3,539 14,558

Average value per trading day, TSEk 405 846 1,293 486 1,798

Turnover rate, % 7 11 17 7 28

maximum price paid during the year, SEk 160.00 186.00 164.50 164.00 135.50 1)

minimum price paid during the year SEk 98.00 125.00 134.00 110.50 99.50 2)

1) Paid 21 October 2009 2) Paid 28 July 2009

Data per Share

Year 2005 2006 2007 2008 2009

Profit after taxes, before dilution, SEk 6.03 4.60 10.69 14.62 5.87

Dividend, SEk 3.50 3.75 4.50 5.50 3.00 1)

Share price as per 31 December, SEk 154 150 155 121 127

Yield, % 2.3 2.5 2.9 4.6 2.4

Equity, before dilution, SEk 43.10 42.25 47.80 56.00 56.90

Cash flow per share before dilution, SEk 2) 6.84 7.07 12.84 17.22 17.06

1) Proposed dividend 2) Cash flow from operating activities

owner StruCture (aS oF 31 DeC 2009)

Number of shares, 2009 % of capital and votes, 2009

Investment AB Latour 4,076,800 31.7

Gustaf Douglas, family and company 1,604,000 12.5

SÄkI AB 1,900,000 14.8

The Svensson family, foundation and company 945,525 7.4

Lannebo Fonder 585,000 4.6

Skandia 500,000 3.9

Robur Småbolagsfond 408,870 3.2

The Palmstierna family 222,107 1.7

Fourth Swedish National Pension Fund 218,116 1.7

The knowledge Foundation 140,000 1.1

Handelsbanken Svenska småbolagsfond 135,000 1.1

Other shareholders with 10,000–100,000 shares, 27 650,570 5.1

Other shareholders with 1,000–10,000 shares, 204 552,157 4.3

Other shareholders with up to 1,000 shares, 3,494 673,855 5.2

AB Fagerhult, repurchased shares 238,000 1.9

number of remaining shares at the end of the financial year 12,850,000 100.0

50

T H E B O A R D

Jan SVenSSon erIC DouglaS anna MalM BernSten BJÖrn KarlSSon

eVa nYgren FreDrIK palMStIerna Johan hJertonSSon MagnuS nell

annIKa FrÖBerg per wIKStrÖM peter ForSgren

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Jan SVenSSon

Chairman of the Board.Born 1956.MSc. Engineering; M. Sc. Business Administration.CEO and Board member in Investment AB Latour. Chairman of the Board in OEM International AB and Nederman Holding AB. Board member in Munters AB, Loomis AB and Oxeon AB. Board member in AB Fagerhult since 2007.Shares in Fagerhult: 3,000

erIC DouglaS

Deputy Chairman.Born 1968.Upper secondary economics, and Business for Entrepreneurs at Lund University. Self-employed since 1992. Partner in Pod Venture Partners. Chairman of the Board in Spar-bössan Fastigheter AB. Deputy Chairman of the Board in Link-Tech AB. Board member in Invest-ment AB Latour and Specma AB, among others. Board member in AB Fagerhult since 1993.Shares in Fagerhult: 40,000 and 1,560,000 through company.

anna MalM BernSten

Born 1961.MSc. Engineering.Chief marketing officer of GE Health Care Life Sciences. Board member in Artimplant AB and Medivir AB. Board member of AB Fagerhult since 2003.Shares in Fagerhult: 0.Call options: 2,000

BJÖrn KarlSSon

Born 1961.MSc. Business Administration, MBA.CEO of Lecrima AB. Board member in Skaraborgs-mäklaren AB and Arkitekthuset Jönköping AB. Board member in AB Fagerhult since 1997.Shares in Fagerhult: 32,324

eVa nYgren

Born 1955.MSA, Architecture.CEO of SWECO Sverige AB. Board member in AB Fagerhult since 2004.Shares in Fagerhult: 0.Call options: 2,000

FreDrIK palMStIerna

Born 1946.MSc. Business Administration, MBA.CEO of SÄKI AB. Chairman of the Board in Invest-ment AB Latour. Board member in Securitas AB, Hultafors AB, Nobia AB and Academic Work AB. Board member in AB Fagerhult since 1992.Shares in Fagerhult: 222,107

Johan hJertonSSon

CEO. Born 1968.Business AdministrationBoard member in Cloetta AB and BRIO AB. Board member in Fagerhult since 2009.Shares in Fagerhult: 25,000Call options: 28,000

MagnuS nell

Born 1964.Employee representative.Shares in Fagerhult: 0

annIKa FrÖBerg

Born 1974.Employee representative.Shares in Fagerhult: 0.

per wIKStrÖM

Born 1969.Deputy employee represen tative.Shares in Fagerhult: 0.

peter ForSgren

Born 1977.Deputy employee representative.Shares in Fagerhult: 0.

T H E B O A R D

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M A N A G E M E N T

DaVID FranCIS

Responsible for Retail Lighting and western Europe

ulF KarlSSon

Financial Director

paul Barton

Responsible for the Uk, Ireland and the middle East

Johan hJertonSSon

CEO

MatS JohanSSon 1)

Responsible for Australia and Asia

1) As of February 2010, mats Johansson has been replaced by Christer kämpeskog.

F I n a n C I a l I n F o r M a t I o n

Five Year Summary 54Administration Report 55Corporate Governance 59Income Statements 64Balance Sheets 65Change in Equity 67Cash flow analyses 68Accounting principles 69Notes 76Signatures 94Audit Report 95Calender 96Definitions 96

54

Profit loss items (MSEK) 2005 2006 2007 2008 2009

Net sales 1,759 2,162 2,527 2,770 2,436(of which outside Sweden) (969) (1,311) (1,651) (1,919) (1,735)Cost of goods sold –1,188 –1,526 –1,705 –1,835 –1,672Gross profit 571 636 822 935 764Selling expenses –347 –394 –451 –508 –498Administration expenses –125 –159 –187 –170 –172Other operating income 8 12 13 15 10Operating profit 108 95 197 272 104Financial income 10 8 21 34 16Financial expenses –10 –20 –28 –46 –15Profit after financial net 108 83 190 260 105

Balance sheet items (MSEK)Intangible assets 347 381 459 430 475Tangible fixed assets 267 280 279 289 320Financial fixed assets 11 7 20 24 19Inventories, etc. 336 349 379 353 302Accounts receivable 338 356 409 391 363Other current assets 40 52 36 33 40Cash and cash equivalents 125 92 132 200 197Total assets 1,464 1,517 1,714 1,720 1,716

Equity 545 535 601 706 717Pension debts 36 37 39 41 42Deferred income tax liabilities 75 65 59 58 55Other long-term interest-bearing liabilities 335 370 460 431 459Other long-term non-interest-bearing liabilities 58 – 7 – 9Short-term interest-bearing liabilities 51 35 57 50 2Short-term non-interest-bearing liabilities 364 475 491 434 432Total equity and liabilities 1,464 1,517 1,714 1,720 1,716

Key ratios and data per shareSales growth, % 27.3 22.9 16.9 9.6 –12.1Growth in operating profit, % 96.7 –11.8 108.2 37.9 –61.7Growth in profit after financial items, % 97.3 –23.5 129.7 36.7 –59.7Operating margin, % 6.1 4.4 7.8 9.8 4.3Profit margin, % 6.1 3.8 7.5 9.4 4.3Liquid assets, % 30 18 24 41 45Debt/equity ratio 0.8 0.8 0.9 0.7 0.7Equity/assets ratio, % 37 35 35 41 42Capital employed, MSEK 968 977 1,158 1,228 1,220Return on capital employed, % 16.0 10.6 20.5 25.7 9.8Return on equity, % 14.9 10.8 23.8 28.2 10.4Net debt, MSEK 298 350 424 322 305Net investment in fixed assets, MSEK 78 43 85 104 90Depreciation of fixed assets, MSEK 43 56 62 63 75Number of employees 1,288 1,640 1,896 1,978 1,881Shareholders’ equity per share, SEK 43.10 42.25 47.80 55.98 56.88Earnings per share, SEK 6.03 4.60 10.69 14.62 5.87Dividend per share, SEK 3.50 3.75 4.50 5.50 3.001)Cash flow per share, SEK 6.84 7.07 12.84 17.22 17.062)No. of outstanding shares, thousands 12,650 12,654 12,583 12,612 12,612Average number of remaining shares, thousands 12,546 12,653 12,629 12,596 12,612

1) Proposed dividend. 2) Cash flow from the ongoing operations.

F I V E Y E A R O V E R V I E W

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The Board of Directors and CEO for AB Fagerhult (publ), Corporate Identity Number 556110-6203, hereby pres-ent the Annual Report for the Group and the Parent Com-pany for the year 2009.O P E R A T I O N S

The Fagerhult Group is Scandinavia’s largest, and one of Europe’s leading, lighting groups. We develop, manufacture, and market professional lighting systems for public environ-ments with a focus on design, function, flexibility and energy-efficient solutions. The Group has sales companies in 17 countries and manufacturing facilities in Europe, China and Australia.

Fagerhult’s shares are listed on the NASDAQ OMX, Nordic Exchange, Mid Cap list in Stockholm.

C H A N G E S I N T H E G R O U P

During 2009, a total of 100 percent of the shares of Fagerhult SL, which has acted as an agent for Fagerhult, were acquired, as well as 100 percent of the shares of Commtech Commis-sioning Services, which is an aftersales service company for lighting and ventilation. The companies are operating in Spain and had a turnover of MSEK 30 and 13 employees.

In 2007, Fagerhult acquired a 50 percent stake in the Bel-gian lighting company, Waco, with an option to purchase the remaining shares in 2009. This option was exercised in early July. The company develops and manufactures products for retail purposes and other applications with a high design content. Since 2007, sales have primarily been managed by Fagerhult.

N E T S A L E S A N D I N C O M E

The economy has been weak this year and both sales and earnings have declined. The business is late in the economic cycle. We see that demand stabilised at the end of the year.

Consolidated net sales amounted to MSEK 2,436, which is a reduction of 12 percent compared to 2008. After adjust-ments for acquired and divested operations, the decline is 10 percent. Exchange rate fluctuations have affected sales pos-itively by 3 percent. Sales outside Sweden amounted to MSEK 1,735 (1,918), representing 71 (69) percent of Group sales. The markets in which Fagerhult best weathered the economic storm are Holland and Australia, while Sweden, Norway and France were the hardest hit.

The Group’s order intake for comparable units amounted to MSEK 2,497 (2,629), which exceeds the net turnover of MSEK 84.

To adapt costs to the reduced volume, it was determined to close two factories located in Falkenberg and Borås. The closing of these factories was possible as a result of the sub-stantial investments that had been made in new production technologies in the other factories, which are now able to

produce increased volumes. Production is to be relocated to the factories in Habo and Åhus and to Suzhou, China, and the closure and relocation process should be completed by the first quarter of 2010. These closures and the relocation process, together, negatively impacted results for 2009 by MSEK 35, but are expected to decrease the level of fixed costs by MSEK 15 per year. The Group’s operating profit excluding these costs amounted to MSEK 139, which is a decrease of MSEK 133 compared with 2008. The operating margin has declined and amounted to 5.7 (9.8) percent before restructur-ing costs. The deterioration in margin is due, on the first hand to reduced volumes, primarily in the business area Retail Lighting, where margins is usually good, and is also due to the investments in Central Europe.

b U S I N E S S A R E A S P R O F E S S I O N A L L I G H T I N G

The business area comprises of sales of indoor lighting for public areas, such as offices, schools, hospitals, factories, etc. In its marketing efforts, the business area primarily targets those working at the design and construction stage, i.e. archi-tects and building technical consultants, whose role is to deliver functional and energy efficient lighting installations with a high level of design. Working closely with installation companies is also important. Development is largely driven by the production of lighting installations with high energy efficiency. New technologies, new sources of light, and a larger component of lighting control, create the conditions for significantly reduced energy consumption.

Net sales amounted to MSEK 1,958 compared with MSEK 2,049 last year. Operating profit excluding closure costs amounted to MSEK 150.0 (217.1) and operating margin was 7.7 (10.6) percent. The area has since been impacted by clo-sure costs totalling MSEK 20, which impacted operating mar-gin by 1.1 percent to 6.6 percent. The business area accounted for a larger share of the Group’s expenses when its share of total sales increased.

Full year results for 2009 show Holland, Australia, UAE and Ireland as having higher sales compared with last year, while, the majority of other markets had reduced turnover. In Swe-den and Norway, the situation stabilised in the second half, while the UK showed continued volume reductions.

R E T A I L L I G H T I N G

The business area comprises sales of lighting systems, light sources and services to retailers. The area is particularly focused on the importance of light for customer relations and sales. The business area’s focus is on energy-efficient and environmentally-friendly products, coupled with good design for all types of outlets.

Net sales amounted to MSEK 306, compared with MSEK 447 last year. Operating income was MSEK –11.4 (48.5).

Of all business areas, Retail Lighting has been the area

A D M I N I S T R A T I O N R E P O R T

56

hardest hit by the financial turmoil, showing a decline in sales of 32 percent. This decline in sales has been reported in virtu-ally all markets in which the Group has activities, which dem-onstrates both the power and the extent of the downturn in the market. The business area’s largest markets are Sweden, the UK and France. We see a continued increase in activity in the market. Earnings in the fourth quarter declined compared with last year, but the deterioration was significantly less than during the year’s earlier quarter.

O U T D O O R L I G H T I N G

The business area comprises sales of outdoor products for the lighting of buildings, parks, recreational areas, walkways, etc.

Net sales amounted to MSEK 172, compared with MSEK 175 last year. Operating profit before closure costs amounted to MSEK 0.6 (2.9). The business area has since been impacted by MSEK 15 million in closure costs.

The business area’s sales are primarily found in the Nor-dic countries. There is an increased interest in newly launched products, laying the ground for a higher turnover in coming years. From 2015, the sale of mercury light bulbs will be pro-hibited in the EU. It is not possible to replace the existing light sources with approved light sources in older lighting installations, implying that in Sweden, alone, a large number of outdoor fixtures will need to be replaced. The potential for savings is great, due to the resulting decrease in energy con-sumption.

F I N A N C I A L P O S I T I O N

The Group has a strong financial position. The Group’s equity/assets ratio is 42 (41) percent. Cash and bank balances at the end of the period amounted to MSEK 197 (200) and con-solidated equity to MSEK 717 (706). Net debt amounted to MSEK 305. Net debt in relation to profit before depreciation and amortisation (EBITDA) for the last 12-month period amounted to MSEK 1.7. An adjustment of EBITDA for non-recurring costs results in a ratio of 1.4.

In recent years, the exposure of the Group’s net assets abroad has increased; previously concerning only sales com-panies, exposure now also encompasses production units. Conversion of net foreign assets at the closing rate has increased equity by MSEK 6.8.

Cash flow from operating activities amounted to MSEK 215.1 (216.9). Cash flow was positively affected by a reduced working capital tied up, MSEK 116.6.

Pledged assets and contingent liabilities amounted to MSEK 4.7 (5.0) and MSEK 3.1 (5.9), respectively.

E M P L O Y E E S

During 2009, the average number of employees decreased by 5 percent to 1,881 (1,978). The number of employees in the Group’s foreign companies continues to increase and now

totals 972 (907), representing 52 percent of the workforce. The portion of women is 35 (35) percent. In order to strengthen the Group’s knowledge base, the established goals for indi-vidual development, as well as that for the organisation have continued to be prioritised. In order to decrease absence due to illnes and ill-health, the company has focused on illness prevention and well-being. Information regarding salaries and allowances can be found in Note 2.

G U I D E L I N E S F O R R E M U N E R A T I O N T O S E N I O R M A N A G E M E N T

Remuneration to the CEO and other senior management con-stitutes base salary, variable remuneration, company car ben-efits, as well as pension benefits. The annual variable remu-neration is based on achieved goals and is maximised at 30–58 percent of the base salary. Long-term incentive pro-grammes are in place in certain cases. These guidelines are also proposed to apply for the following year.

I N V E S T M E N T S

The Group’s gross investments in tangible fixed assets amounted to MSEK 84 (93), primarily referring to machinery and equipment. At year-end, current investments amounted to MSEK 14. Gross investments in intangible fixed assets amounted to MSEK 6 (11) excluding acquisition of subsidiaries.

Depreciation/amortisation for the year amounted to MSEK 75 (63), of which tangible fixed assets were MSEK 58 (48).

P R O D U C T D E V E L O P M E N T

Fagerhult undertakes continual product development with the aim of improving existing products, as well as developing new products. A basic principle is that development work should take place near the markets in co-operation with customers and end-users.

Fagerhult is also prominent within lighting technology from an international perspective.

Cooperation with the leading manufacturers of light sources and components is essential.

Fagerhult’s engineering centre includes one of Northern Europe’s best equipped laboratories, where we can both test the safety of and approve our products.

Development costs of MSEK 6 (8) were capitalised in the year’s balance sheet. Other costs are expensed as they arise, see Notes 10 and 25.

E N V I R O N M E N T A L I M P A C T

The Group’s operations impact the external environment pri-marily through the evaporation of organic solvents into the air, and through noise pollution. For several years, targeted efforts have been undertaken to minimise the environmental

A D M I N I S T R A T I O N R E P O R T

57

A D M I N I S T R A T I O N R E P O R T

impact, including the introduction of new coating facilities using alkaline washing processes and closed systems. In 2009, a new heating system was put into use at the Group’s largest production facility in Habo, which completely elimi-nates oil consumption by more than 300 m3. All of the com-pany’s remaining production facilities, except those in Australia, are environmentally certified according to ISO 14001, and these manufacturing facilities are responsible for more than 95 percent of the Group’s total production. Further information is provided in the section regarding the Group’s sustainability work.

A C Q U I S I T I O N O F O W N S H A R E S

The Annual General Meeting, held on 21 April 2008, autho-rised the company to acquire its own shares. No acquisitions of own shares have been made. Holdings of own shares amount to 238,000. The total number of outstanding shares was 12,612,000 at year end. The company owns 1.9 percent of its own shares.

The Board of Directors proposes that the Annual General Meeting resolve to grant the Board continued authorisation to acquire the company’s own shares until the next Annual General Meeting. As acquired shares do not grant entitle-ment to dividends, they are excluded from the total number of shares in the proposed appropriation of profits as stated below.

R I S K S

A review of potential risks, including the manner in which these are managed, is found in Note 32.

F A G E R H U L T S H A R E S

There are no limitations in the transferability of shares (pre-emption). Neither are there any limitations as to the number of votes which each shareholder can exercise at the Annual General Meeting of shareholders. The company is not aware of any agreements between shareholders which could involve limitations on the right to transfer shares. For further infor-mation, refer to Notes 30 and 31, as well as page 48, The Fagerhult Share and Ownership Structure.

A P P O I N T M E N T A N D R E M O V A L O F M E M b E R S O F T H E b O A R D

There are no specific regulations in the Articles of Association regarding the appointment or removal of members of the Board.

P A R E N T C O M P A N Y

Operations in AB Fagerhult consist of the management of the Group, financing and the coordination of marketing activi-

ties, production and business development. The company’s net sales amounted to MSEK 5.9 (4.8). Profit after financial items amounted to MSEK 63.2 (143.6).

There were 6 (6) employees during the period.

P R O S P E C T S F O R 2 0 1 0

In recent years, the Group has experienced a strong sales and earnings trend as a result of favourable organic growth, but also through a series of acquisitions of companies. This strat-egy remains unchanged and the Group will continue on this path with further investments and increased internationali-sation.

The financial uncertainty has had a marked effect on net sales and results during 2009. Implemented structural mea-sures, including the closure of two factories, meant that we adapted to the current market situation. If the business cycle recovers, there are good prospects for improved earnings.

P R O P O S E D A P P R O P R I A T I O N O F P R O F I T S

The Group’s profit brought forward, according to the consoli-dated balance sheet, amounts to MSEK 508.5 (503.9). The following profits are at the disposal of the Annual General Meeting:Profit brought forward 70.2Net profit for the year 78.8 MSEK 149.0

The total number of dividend-bearing shares on 15 March 2010 amounted to 12,612,000, excluding repurchased shares. The Board of Directors proposes the profit to be appropriated as follows:Dividend to shareholders, totalling SEK 3.00 per share 37.8To be carried forward 111.2 MSEK 149.0

b O A R D O F D I R E C T O R S ’ S T A T E M E N T R E G A R D I N G T H E P R O P O S E D D I V I D E N D

It is the opinion of the Board of Directors that the proposed dividend does not prevent the company from fulfilling its short or long-term obligations, nor does it prevent the com-pany from making necessary investments. The proposed div-idend can, therefore, be justified in accordance with the pro-visions of the Swedish Companies Act, 17:3, paragraphs 2–3.

Considering that the company continues to be operated profitably, the equity/assets ratio is at a satisfactory level. It is the company’s assessment that liquidi