Hexagon - Annual Report 2005

Contents OPERATIONS Hexagon in Brief 2 Page 4 CEO’s Statement CEO’s Statement 4 In many respects, 2005 was a record year for Hexagon. The concentration of operations continued. A number of Strategies and Financial Objectives 6 aggressive transactions enabled Hexagon to advance its The Acquisition of Leica Geosystems 8 world-leading market positions in selected segments. Group Overview 10 Hexagon Measurement Technologies 12 Hexagon Polymers 18 Hexagon Engineering 22 Page 6 Strategies and Financial Objectives Being number one or two in each strategic business Corporate Responsibility 24 is a prerequisite for developing long-term profitability and sustainable competitiveness. Hexagon’s strategic Risk and Sensitivity Analysis 26 orientation is to be the most cost-efficient and innova- The Hexagon Share 28 tive supplier on the market. Hexagon’s Corporate Governance 31 Board of Directors 36 Senior Executives 37 Page 12 Hexagon Measurement Technologies The business area offers total systems for measuring Financial Performance 38 objects in one, two or three dimensions, and comprises Definitions of Key Financial Ratios 39 the former Hexagon Metrology and metrology corporation Leica Geosystems, consolidated from 14 October ANNUAL REPORT 2005. Directors’ Report 40 Consolidated Income Statement, Balance Sheet and Cash Flow Statement 46 Parent company Income Statement, Page 18 Hexagon Polymers Balance Sheet and Cash Flow Statement 50 The business area is market leading in the product area Comments and Notes 54 of gaskets for Plate Heat Exchangers, a world leader in rubber compounds as semi-finished goods, and one Proposed Allocation of Earnings 79 of the world’s largest suppliers of wheels for truck and track drive applications. Audit Report 80 Shareholder Information 81 Addresses 81 Page 22 Hexagon Engineering The business area comprises the two main businesses; metals and key components of customer-specific parts mainly for the automotive industry. A concentration on precision processing of key components resulted in the divestment and restructuring of non-core businesses. Page 31 Corporate Governance Hexagon has clearly defined division of responsibility between the Board, management and the company’s control bodies. Hexagon complies with prevailing listing regulations, and in all essential respects also with the Swedish Corporate Governance Code. HEXAGON ANNUAL REPORT 2005