MAKING MODERN LIVING POSSIBLE Annual Report 2010 The Danfoss Group www.danfoss.com THE ORGANIZATION The Organization on December 31, 2010 Frontpage: Four different natural materials reflect Danfoss’ extensive work with Climate & Energy:water, vegetation, natural stone and wood. Water is the central element and it refers directly to Danfoss’ former production. The fascination with water and the existing opportunities to control the natural elements are staged. Guests arriving at the middle axis of the building are met by an eye-catching 1.6m high soundless water whirl. The whirl is surrounded by water mirror walls. Their subdued trickle creates a comfortably cushioned atmosphere and cleanses the air, thereby contributing to the comfort and efficient indoor climate of the building. In the lounge area, guests will find a 20m long, green wall. The wall is planted with a lively green and smooth surface of fine leaves. Behind this, sophisticated and refined technology controls the watering of the vegetation, creating a fresh indoor climate. The wall is, at the same time, very noise-absorbing and adds significantly to improved acoustics. The green wall’s regulation of the air humidity also lowers the need for cooling in the building. Thinly cut natural stone plates only a few millimeters thick form conference room partitions in the east-west wing. The natural stone is transparent and intensifies the open and light atmosphere of the conference rooms. 2 MANAGEMENT REPORT Contents Management Report Financial Highlights of the Danfoss Group (DKK) ........................................................................................................................................................................................................................................................ 5 Management Report for the Danfoss Group .................................................................................................................................................................................................................................................................. 6 – The Danfoss Group 2010 in brief ............................................................................................................................................................................................................................................................................................ 6 – Danfoss comes out of the crisis stronger ......................................................................................................................................................................................................................................................................... 9 – The new strategy ........................................................................................................................................................................................................................................................................................................................... 10 – Danfoss Corporate Citizenship ............................................................................................................................................................................................................................................................................................. 12 – Financial Report for the Danfoss Group ......................................................................................................................................................................................................................................................................... 24 – Corporate Governance and risk management .......................................................................................................................................................................................................................................................... 29 – Events after the end of the accounting year ............................................................................................................................................................................................................................................................ 38 – Expectations for 2011 ............................................................................................................................................................................................................................................................................................................... 39 – Danfoss Climate & Energy ...................................................................................................................................................................................................................................................................................................... 40 – Sauer-Danfoss ................................................................................................................................................................................................................................................................................................................................ 42 – Danfoss Development ...............................................................................................................................................................................................................................................................................................................44 – Danfoss Business Support .................................................................................................................................................................................................................................................................................................... 46 Management Report for Danfoss A/S (Parent Company) ..................................................................................................................................................................................................................................... 49 Financial highlights (quarterly) .............................................................................................................................................................................................................................................................................................. 50 Statements Management Statement ............................................................................................................................................................................................................................................................................................................ 52 Auditors’ Report ................................................................................................................................................................................................................................................................................................................................ 53 Accounts and notes Accounts ................................................................................................................................................................................................................................................................................................................................................ 56 Notes ........................................................................................................................................................................................................................................................................................................................................................ 63 Danfoss Group companies ....................................................................................................................................................................................................................................................................................................... 120 Accounts and notes, Corporate Citizenship Assurance statement .................................................................................................................................................................................................................................................................................................................. 126 Accounting principles, Corporate Citizenship ........................................................................................................................................................................................................................................................... 128 Significant CSR parameters ...................................................................................................................................................................................................................................................................................................... 131 Significant HR parameters........................................................................................................................................................................................................................................................................................................