Annual Report 2007/2008

> Organic growth of 5.6% to CHF 1.3 billion

> Overproportional rise in EBIT to CHF 164 million

> EBIT margin goes up to 12.6% thanks to higher productivity

> Consolidated profit reaches CHF 97.1 million (+14.5%)

> Confident outlook – medium-term goals confirmed

Kaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.com

Annu

al R

epor

t 200

7/20

08

Security in a dynamic world

Annual Report 2007/2008

> Organic growth of 5.6% to CHF 1.3 billion

> Overproportional rise in EBIT to CHF 164 million

> EBIT margin goes up to 12.6% thanks to higher productivity

> Consolidated profit reaches CHF 97.1 million (+14.5%)

> Confident outlook – medium-term goals confirmed

Kaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.com

Annu

al R

epor

t 200

7/20

08

Security in a dynamic world

in CHF million, except per share amounts/personnelFinancial-Year ended

30. 6. 2008 in %Financial-Year ended

30. 6. 2007 in %

Net sales 1,303.7 100.0 1,248.7 100.0

Operating profit before depreciation (EBITDA) 206.6 15.9 186.5 15.0

Operating profit (EBIT) 164.0 12.6 143.7 11.5

Profit before taxes 131.5 10.1 113.3 9.1

Net profit before minority interests 97.1 7.5 84.8 6.8

Basic earnings per share (in CHF) 25.6 22.6

Diluted earnings per share (in CHF) 25.6 22.5

Market capitalization 1,183.0 1,365.0

Return on net operating assets (RONOA) 23.8 % 19.4 %

Net debt/EBITDA (gearing) 2.00 2.64

Average number of full-time equivalent employees 9,151 8,585

Consolidated income statement

EBIT by segments

in CHF million

Sales by segments

in % and CHF million

EBIT margin by segments

Share price development

Kaba is one of the leading providers in the worldwide secu-rity industry. A globally active, listed company, it employs around 9,000 staff in more than 60 countries. Kaba provides innovative and comprehensive solutions for security, organization and convenience at access points to buildings, rooms and facilities, as well as for recording personnel and enterprise data.

> DOOR SYSTEMS

As a specialist in automatic, security and convenience doors,

Kaba Group offers a comprehensive range of products all

over the world. Its diverse product portfolio covers all current

market needs, including automatic doors, physical access

systems and platform screen doors.

> ACCESS + DATA SYSTEMS

Kaba has firmly established itself as a leading innovator,

with customized solutions in the mechanical, mechatronic

and electronic locks and locking cylinders sector, as well as

integrated systems for access control and time and data

recording. Its product range also includes hotel locking

systems and high security locks.

> KEY + IDENT SYSTEMS

Through its two subsidiaries Silca and Ilco, Kaba Group is

the leading manufacturer of key blanks for the key replace-

ment and OEM business. As well as key blanks with inte-

grated transponders for the automotive industry, the two

companies make a wide range of mechanical, electronic and

industrial key cutting and coding machines as well as key

duplication machines.

The contactless smart-card technology manufactured

by Kaba‘s subsidiary Legic provides an integrated platform

for state-of-the-art authorization management. It can be

used for practically any operational requirement, including

contactless identification, organization, verification and

cash-free payments.

Door Systems 6.5 % 8.6 %

18.5 % 17.0 %

10.2 % 9.4 %

Access + Data Systems

Key + Ident Systems

Total 12.6 % 11.5 %

2007/2008 2006/2007

Key figures 2007/2008Kaba Group

July 07 October 07 January 08 April 08 June 08

450

400

350

300

250

200

150

100

50

0

60,000

50,000

40,000

30,000

20,000

10,000

0

Kaba share price SPI (rebased) Kaba volume

Door Systems17.8 Others

–18.8

Key + Ident Systems26.7

Access +Data Systems

138.3

Others

Door Systems

Key + Ident Systems

Access + Data Systems

49%

22%

26%

3%

49%

22%

26%

3%

55%

21%

22%

2%

57%

20%

21%

2%

2004/2005 2005/2006 2006/2007 2007/2008

Share price in CHF Trade volume

EditorKaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.cominvestor@kaba.com

Project managementKaba Management + Consulting AG, RümlangJean-Luc FerrazziniChief Communications Officer

Concept, design and realizationWirz Corporate AG, Zurich

Publishing systemMultimedia Solutions AG, Zurich

Copyrights© Kaba Holding AG 2008

Photograph© Klaus Andorfer, Zurich© Jonas Kuhn, Zurich

PrintNZZ Fretz AG, Schlieren

This information contains certain forward-looking statements including those using the words “believes”, “assumes”, “expects” or formulations of a similar kind. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company’s continuing capital require-ments, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company’s ability to recruit and retain qualified employees, unfavorable changes to the applicable tax laws, and other factors identified in this publication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-look-ing statements. The Company accepts no obligation to continue to report or update such forwardlooking statements or adjust them to future events or developments.

Kaba®, Com-ID®, Ilco®, La Gard®, LEGIC®, SAFLOK®, Silca®, etc. are registered trademarks, CardLinkTM, etc. trademarks of the Kaba Group.

Due to country-specific constraints or marketing considerations, some of the Kaba Group products and systems may not be available in every market.This product was climate-neutrally produced.

in CHF million, except per share amounts/personnelFinancial-Year ended

30. 6. 2008 in %Financial-Year ended

30. 6. 2007 in %

Net sales 1,303.7 100.0 1,248.7 100.0

Operating profit before depreciation (EBITDA) 206.6 15.9 186.5 15.0

Operating profit (EBIT) 164.0 12.6 143.7 11.5

Profit before taxes 131.5 10.1 113.3 9.1

Net profit before minority interests 97.1 7.5 84.8 6.8

Basic earnings per share (in CHF) 25.6 22.6

Diluted earnings per share (in CHF) 25.6 22.5

Market capitalization 1,183.0 1,365.0

Return on net operating assets (RONOA) 23.8 % 19.4 %

Net debt/EBITDA (gearing) 2.00 2.64

Average number of full-time equivalent employees 9,151 8,585

Consolidated income statement

EBIT by segments

in CHF million

Sales by segments

in % and CHF million

EBIT margin by segments

Share price development

Kaba is one of the leading providers in the worldwide secu-rity industry. A globally active, listed company, it employs around 9,000 staff in more than 60 countries. Kaba provides innovative and comprehensive solutions for security, organization and convenience at access points to buildings, rooms and facilities, as well as for recording personnel and enterprise data.

> DOOR SYSTEMS

As a specialist in automatic, security and convenience doors,

Kaba Group offers a comprehensive range of products all

over the world. Its diverse product portfolio covers all current

market needs, including automatic doors, physical access

systems and platform screen doors.

> ACCESS + DATA SYSTEMS

Kaba has firmly established itself as a leading innovator,

with customized solutions in the mechanical, mechatronic

and electronic locks and locking cylinders sector, as well as

integrated systems for access control and time and data

recording. Its product range also includes hotel locking

systems and high security locks.

> KEY + IDENT SYSTEMS

Through its two subsidiaries Silca and Ilco, Kaba Group is

the leading manufacturer of key blanks for the key replace-

ment and OEM business. As well as key blanks with inte-

grated transponders for the automotive industry, the two

companies make a wide range of mechanical, electronic and

industrial key cutting and coding machines as well as key

duplication machines.

The contactless smart-card technology manufactured

by Kaba‘s subsidiary Legic provides an integrated platform

for state-of-the-art authorization management. It can be

used for practically any operational requirement, including

contactless identification, organization, verification and

cash-free payments.

Door Systems 6.5 % 8.6 %

18.5 % 17.0 %

10.2 % 9.4 %

Access + Data Systems

Key + Ident Systems

Total 12.6 % 11.5 %

2007/2008 2006/2007

Key figures 2007/2008Kaba Group

July 07 October 07 January 08 April 08 June 08

450

400

350

300

250

200

150

100

50

0

60,000

50,000

40,000

30,000

20,000

10,000

0

Kaba share price SPI (rebased) Kaba volume

Door Systems17.8 Others

–18.8

Key + Ident Systems26.7

Access +Data Systems

138.3

Others

Door Systems

Key + Ident Systems

Access + Data Systems

49%

22%

26%

3%

49%

22%

26%

3%

55%

21%

22%

2%

57%

20%

21%

2%

2004/2005 2005/2006 2006/2007 2007/2008

Share price in CHF Trade volume

EditorKaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.cominvestor@kaba.com

Project managementKaba Management + Consulting AG, RümlangJean-Luc FerrazziniChief Communications Officer

Concept, design and realizationWirz Corporate AG, Zurich

Publishing systemMultimedia Solutions AG, Zurich

Copyrights© Kaba Holding AG 2008

Photograph© Klaus Andorfer, Zurich© Jonas Kuhn, Zurich

PrintNZZ Fretz AG, Schlieren

This information contains certain forward-looking statements including those using the words “believes”, “assumes”, “expects” or formulations of a similar kind. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company’s continuing capital require-ments, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company’s ability to recruit and retain qualified employees, unfavorable changes to the applicable tax laws, and other factors identified in this publication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-look-ing statements. The Company accepts no obligation to continue to report or update such forwardlooking statements or adjust them to future events or developments.

Kaba®, Com-ID®, Ilco®, La Gard®, LEGIC®, SAFLOK®, Silca®, etc. are registered trademarks, CardLinkTM, etc. trademarks of the Kaba Group.

Due to country-specific constraints or marketing considerations, some of the Kaba Group products and systems may not be available in every market.This product was climate-neutrally produced.

�Kaba Annual Report 2007/2008

Corporate Reporting

2 LettertotheShareholders

6 ReportonFinancial2007/2008

13 SegmentDoorSystems

17 SegmentAccess+DataSystems

21 SegmentAccess+DataSystems:

Europe,MiddleEastandAfrica

23 SegmentAccess+DataSystems:

AsiaPacific

25 SegmentAccess+DataSystems:

Americas

27 SegmentKey+IdentSystems

32 KabaGroupstrategy

35 Kaba–sustainablysuccessful

38 Kaba–thepremiumbrandforsecurityandcontrol

40 SharingresponsibilityforthesuccessofKaba

42 Qualityisourtrademark

47 Corporate Governance

75 Financial Statements

78 Group

128 HoldingCompany

140 AddressesKabaGroup

144 Agenda,CommunicationDevices

Contents

2 Kaba Annual Report 2007/2008 Corporate Reporting

Ulrich Graf, Chairman of the Board of Directors Rudolf Weber, CEO

LettertotheShareholders

‘‘We are well on our way to achieving our medium-term goals.’’

�Kaba Annual Report 2007/2008Corporate Reporting

DearShareholder

Kabahaspostedanotherverygoodresult,withorganic

growthofalmostCHF70million.Thisfigureisparticularly

notablebecauseinthepast,Kabahashadtomakefairly

largeacquisitionstogenerateadditionalsalesonthiskind

ofscale.Giventhepricesthatarebeingpaidforacquisitions,

wewouldhavehadtopayalargeramounttosecurethis

levelofadditionalsales.

Kabainagoodposition

Realistically,wehavetoacceptthattheeconomicdownturn

couldalsoaffecttheperformanceoftheKabaGroup.Kaba

Group’sdynamicgrowthoverthelasttwoyearsislikely

toslowdownalittleinthecomingfinancialyear.Itshould

beremembered,however,thattheGroup’spositioningis

excellentandthatitisactiveinthemostattractivemarkets.

Thetrendtowardsdigitallockingsystemscontinuesun-

broken,andwillundoubtedlygatherfurthermomentum.

Kabaisoneofthemostwell-knownandmostvaluable

brandsinthewholesecurityindustry.Thewidespread

installmentofitsproducts,itsstrongpresenceinthemost

importantEuropeanmarketsanditsoutstandingmarket

positioninAmericanspecialistmarketsgivetheGroup

stabilityeveninuncertaintimes.Atemporaryslowdown

inthemarketsshouldnot,therefore,beacausefortoomuch

concern.Quitetheopposite,infact:weareconfidentthat

inthemediumtermKabawillcontinuetogrowfasterthan

themarket.Wearewellonourwaytoachievingourmedium-

termgoals.

Successfulintegrationofacquisitions

CSSInc.,thecompanyacquiredin2006,hasbeencarefully

integratedintotheKabaGrouptogetherwithitsSaflok

andLaGardbrands.Duplicationofeffortinproductionhas

beeneliminated,whilemarketinganddistributionactivities

havebeenmergedwiththoseoftheestablishedKaba

firms.Thishasallowedustoexploitsynergiesbetween

thecompanies.Theprofitabilityofthenewfirmshasalready

beensignificantlyincreasedasaresult,andtheyarenow

approachingthehighprofitfiguresattainedbyotherKaba

companies.

TheChineseWahYuetGroup,whoseacquisitionwas

completedinAugust2006,hasalsoperformedverywell.

PricepressureonmechanicallocksintheUSAhasincreased

notleastbecauseofthesubprimecrisis,andtheWahYuet

Grouphasprofitedfromtheincreasingdemandforpro-

ductioncapacityinChinathatthishasunleashed.

Thankyouverymuch

InthenameoftheBoardofDirectorsandExecutiveBoard

wewouldliketothankyou,ourvaluedshareholders,foryour

trustandyourloyalty.Yourcommitmenttothecompany

providestheplatformfromwhichKabacanstrivetomain-

tainitsplaceinthepremierleagueofsecuritytechnology

firms.

Wealsothankourcustomers.Wearelinkedtomany

ofourbusinesspartnersthroughlong-standingrelationships

thathaveseenbothsidesdevelopandgrow.The9,000

peopleemployedbyKabaallhelpedproducetheexcellent

resultsofthelastfinancialyear.Wethankthemfortheir

greatdedicationandoutstandingefforts.

Rümlang,17September2008

UlrichGraf RudolfWeber

ChairmanoftheBoardofDirectors CEO

In one year, the 3,020 Kaba Platform Screen Doors (PSDs)

on the Hong Kong underground railway registered over

322 million door movements. The PSDs facilitate a higher

frequency because trains can arrive and depart at greater

speed. Other benefits are gains in energy efficiency in air-

conditionned stations, the unhindered flow of passengers

and greater security.

322,609,384

� Kaba Annual Report 2007/2008 Corporate Reporting

Markets

Theworld’ssecuritysolutionsmarketswereingoodshape

overthelastfinancialyear.The25%organicgrowthposted

byWahYuetGroupofChinaisagoodindicatorofthis

generallyhealthysituation.Pricesformechanicaldoorlocks

havecomeunderpressurebecauseofthecrisisintheUS

housingmarket,somanyAmericancompaniesarelooking

forgoodsuppliersintheFarEasttotakeoverproduction.

WahYuetGroupprofitedfromthistrend.

TheproductsthatKabamanufacturesinAmericatend

tobesoldtocommercialorgovernmentclients;theAmerican

marketforsecuritysolutionsincommercialandgovern-

mentbuildingsshoweditselftoberobust.InEuropetoo,all

ourbusinessunitsbenefitedfromtheveryhealthyoperating

environment.

ThesituationintheAsiaPacificregionwasparticularly

positive,andKabawasabletopostdouble-digitgrowthhere.

KabaGroupiscurrentlygeneratingabout10%ofitsoverall

salesintheAsiaPacificregion.However,individualmarkets

withinAsiashowverydifferentcharacteristics.Whilethe

pricewarinthelow-pricesegmentcontinuedtointensify,

thepremiummarket,focusedoncommercialbuildingsand

luxuryapartments,isbecomingincreasinglyattractive.

Goodsalesperformance

KabaGrouppostedsalesofCHF1,303.7millionforfinancial

2007/2008,ariseof4.4%overthepreviousyear’s

CHF1,248.7million.Growththroughacquisitionscameto

CHF18.1million,or1.4%.Currencyeffectsreducedthe

totalbyCHF32.7millionor2.6%.TheeffectoftheweakUS

dollarwasparticularlyobvious.Overall,then,KabaGroup

achievedorganicgrowthofCHF69.6million,or5.6%,

infinancial2007/2008(previousyear5.7%).

Withthisresult,Kabaexceededthegrowthtargetsit

setfortheyearunderreview.Salesgrowthwasalsoin

linewithmedium-termplanning,whichenvisagesGroup

salesofCHF1.5billionby2011.Thestrategyoffocusingon

organicgrowth,steppingupmarketingactivitiesand

concentratingonasmallnumberofstrongmarketsisclearly

payingoff.

Earningssituation

Consolidatedoperatingearnings(EBIT)roseby14.1%,

orCHF20.3milliontoCHF164million.TheGroup’sEBIT

marginincreasedfrom11.5%inthepreviousyearto

12.6%.Thisexceededexpectationsandisinlinewiththe

ambitiousmedium-termgoalssetbytheGroup’sExecutive

management.Thepositiveperformanceisbasedon

anumberofimportantadjustmentsmadebytheGroup

overthepasttwoyears.Aboveall,KabaGroup’searning

powerhasbeenboostedbyefficiencygains,manyofwhich

resultedfromthenewdistributionstructureinEurope

andtheGroup’sconcentrationonasmallnumberofstrong

brands.Atthesametime,intensifiedmarketingactivities

andadeliberateefforttostayclosetothemarketalsohad

apositiveimpactonsales.

Report on Financial 2007/2008

‘‘The organic growth will furtherstrengthen Kaba Group’s solid financing.’’

Dr. Werner Stadelmann,CFO

7Kaba Annual Report 2007/2008Corporate Reporting

Consolidatednetprofitalsotrendedpositively,climbing

CHF12.3million,or14.5%higherthanthepreviousyear’s

figuretoCHF97.1million.

Liabilitiesandequitycapital

KabaGroupisingoodfinancialhealth,netdebtwasreduced

byCHF79milliontostandatCHF412.7millionattheend

oftheyearunderreview.Thenetdebtratio(gearing,netdebt

dividedbyEBITDA)wasreducedto2.Ayearearlier,the

gearingwasupat2.6becauseofthetwomajoracquisitions

madein2006.

Duringtheperiodunderreview,ongoinggeneration

ofprofitspushedequitycapitaluptoCHF239.2million,

or22%oftotalassets,asat30June2008.In2006/2007

thisequityratiowas18.5%.Inpreviousyearsequitycapital

wasnegativebecauseKabachargedgoodwillfromacqui-

sitionsdirectlyagainstequitycapitalontheacquisitiondate

asprescribedatthetimebySwissGAAPFERaccounting

standards.Futureprofitswillleadtofurtherincreases

inequitycapital.

Cashflow

Netcashfromoperatingactivities(i.e.cashprofitafter

allowingforchangesinnetcurrentassets)wasmaintained

atlastyear’shighlevel.Kaba’snetfreecashflow(after

investments)exceededtheCHF100millionmarkforthefirst

time,reachingCHF101.8million.

Effectofexchangerates

KabaGroupismainlyexposedtofluctuationsinthevalueof

theeuroandtheUSdollar.Thankstoitsdecentralized

structureandlocalproductionsites,mostoftheGroup’s

foreigncurrencyrisksarelimitedtothenetflowofpay-

ments,sinceearningsinforeigncurrenciesaresetagainst

expenditureandfinancingcostsinthesamecurrencies.

Currencyinfluences–primarilythedevaluationofthe

Segments growth per segment

in CHF million

Sales growth by segments and regions

by location, acquisition- and currency-adjusted

Door Systems Access + Data Systems

Key + Ident Systems

Kaba Group*

+0.4%

+9.9%

0.0%

+4.4%

275.

427

4.3

749.

06

81.6

261.0

261.0

130

3.7

124

8.7

Europe

AsiaPacific

Americas 5.2% 1.7%

8.5% 3.5%

14.5%

1.2%

Access+DataSystems

Key+IdentSystems

DoorSystems

2006/2007 2007/2008 * incl.«Others/Finance»

8 Kaba Annual Report 2007/2008 Corporate Reporting

USdollar–reducedthesalesfigureforthelastfinancial

yearbyCHF32.7million,equivalentto2.6%oftheprevious

year’ssales.AttheEBITlevel,currencyinfluencescost

CHF5.3million,or3.7%,duringtheyearunderreview.

Trendsinrawmaterialsprices

Theexorbitantriseinthepriceofrawmaterialslikezinc

andcopperhitkeyduplicationbusinessesparticularlyhard

inthelasttwofinancialyears.Ithas,however,beenpossible

topassonmostofthehighercoststocustomers.Inthe

meantime,rawmaterialspriceshavestabilized,somargins

havebecomemoreattractiveagain.

Itisinthenatureofthebusinessmodelandofour

supplycontractsthatrisesinthepriceofrawmaterialscan

onlybepassedontothevariousmarketsafteratimelag.

Ifpricesshootupquickly,thiscanleadtoatemporary

narrowingofmargins.Thehealthyriseinmarginsoverthe

lastfinancialyearatKey+IdentSystemssimplyrepresents

adelayedcorrectiontothepriceexplosioninnickel,zinc

andcopperseeninrecentyears.

Itseemslikelythatrawmaterialswillnowstabilizeat

thecurrenthighpricelevel.ThiscouldwellhelpKeySystems

toreturntothehealthymarginsitenjoyedpriortothe

explosioninrawmaterialsprices.

Acquisitions/divestments

Thetwomajoracquisitionsofthepreviousyear,WahYuet

andCSSInc.,werecompletedon10August2006(WahYuet)

andon1October2006(CSSInc.),andconsolidatedfrom

thesedates.Thismeantthattheyhadapositiveeffect

onsalesforthefirstfewweeksoftheyearunderreview,but

thisnon-organicsalesgrowthwaspartiallyoffsetbythe

saleoftheCanadianzincfoundryCapitol.KabaGroupsold

thisbusinesson5November2007toaprivateinvestor.

Capitol,whoseheadofficeisinMontreal,wasanarmof

Kaba’sCanadiancompanyIlcoInc.Withits210employeesit

producedannualsalesofaboutCHF26.4millionandhad

aneutraloveralleffectonprofits.Thecompanywassoldfor

aboutCHF1 1million.Theincomestatementcontains

aone-offpost-EBITprofitofCHF0.8millionfromthissale.

CapitolwastheoriginofUnican,acompanywhichwas

acquiredbytheKabaGroupin2001.Thecompanymakes

zinccomponentsforexternalcompaniesaswellasfurniture

fittings,abusinessthatwasnolongerappropriatetoKaba

Group’sstrategyintheaccessbusiness.Capitolcandevelop

moresuccessfullyasanindependentcompany.

Personnel/labormarket

Kabacancopewiththecurrentgrowthratesof5%ormore

withanalmostidenticalheadcount.Thisyear’ssalesgrowth

ofalmostCHF70millionwasachievedwithonly38more

staffthanthepreviousyear.Headcountfellfrom9,265

atthestartoftheyearunderreviewto9,093attheendof

thefinancialyear.210employeesleftKabainthewakeof

theCapitoldisposalinCanada.

Acrosstheindustrythereisalargedemandforskilled

employeeswithabasictechnicalgrounding.Inengineering

disciplinesinparticulargreateffortshavetobemadeto

fillvacancies.

Dividend/extensionofauthorizedequitycapital

Owingtoanotherhealthyincreaseinprofitsduringthe

yearunderreview,theBoardofDirectorsisconfirmingits

investor-friendlydistributionspolicybyproposingto

theAnnualGeneralMeetingof21October2008thatthe

dividendbeincreasedbyCHF1.30toCHF7.80pershare.

UnderSwisslegislation,theexistingauthorizedcapital

of377,200sharesexpireson24October2008.TheBoard

ofDirectorsisthereforeaskingtheAnnualGeneralMeeting

tocreatenewauthorizedcapitalof380,000shares,which

isonceagainequivalentto10%ofequitycapital.This

wouldgivetheBoardofDirectorsscopeoverthenexttwo

yearstorefinanceKabaand,inparticular,tomakefurther

acquisitions.

�Kaba Annual Report 2007/2008Corporate Reporting

Are you satisfied with the last financial year?

Kaba’sstaffhavedoneoutstandingworkandhaveachieved

alltheobjectives,sometimesmorethanachievingthem.

AstheCEOIcansayquitecategoricallythatIamsatisfied

withtheworkthathasbeendone.

What are the prospects for Kaba?

Wearetechnologicalleadersandareverywellpositioned

inthesecuritymarket.Kabaalsohassoundfinances.

Wewanttomakethemostofthissolidpositionandachieve

furtheradvances.Theprospectsareexcellent.

What about the weaker economic climate?

Insomeregions,theeconomicclimateisnotasgoodas

itwas.However,theareaswhereKabaisstrongaremore

resistanttomacroeconomiccyclesthan,forinstance,

housingconstruction.Inaddition,someofourbusinessis

ofarecurringnature,basedonawell-establishedposition.

Finally,wehavemanynewproductswithgoodgrowth

prospects.

Will you be able to achieve the medium-term goals

which have been set?

Thelatestannualresultsshowthatweareoncourseto

achieveourmedium-termgoalsfor2010/2011.Whetherwe

canachievethesegoalsonayear-by-yearbasiswilldepend

onexternalfactors.Butweremainfirmlyfixedonthegoals

whichhavebeenset.

That sounds optimistic ...

Wehaveverycommitted,forward-thinking,innovativestaff

tocounton.Wehaveoutstandingproducts,particularly

inhigh-growthmarkets.Wearewellpositionedinintegrated

accesssystems.Buttherearealsoareaswherewecanand

wanttoimprove.Wewillmakebestuseofthispotential.

ElectionstotheBoardofDirectors

ThetermsofofficeofUlrichGrafandKlausSchmidtexpire

onthedateoftheAnnualGeneralMeetingof21October2008.

TheBoardofDirectorsproposesthattheybere-elected.

TheBoardofDirectorshasalsodecidedtoasktheAGM

aheadoftimetore-electRietCadonauforafurthertermof

threeyears.

5questionsonfinancial2007/2008

Rudolf Weber, CEO

Over the past year, Saflok systems have secured approxi-

mately 500,000 reservations to the 1,300 rooms in

the Marriott Renaissance Center in Detroit, the tallest

all-hotel skyscraper in the western hemisphere. The Kaba

Group is at the forefront with access solutions for the

booming hotel industry.

500,000

�2 Kaba Annual Report 2007/2008 Corporate Reporting

Elevator lobby access at One Island East in Hong Kong takes the form of specially designed, automatic sliding glass doors which merge seamlessly into the surrounding architecture. A patent application has been submitted for the new drive system for the doors.

��Kaba Annual Report 2007/2008Corporate Reporting

Segment’scorebusiness

KabaDoorSystemsspecializesinautomaticdoorsanddoor

systemsdesignedtoincreasesecurityandprovidegreater

controloptions,whichalsomakeorganizingflowsofpeople

simplerandmoreuser-friendly.Kabaoffersawiderange

ofproductsandcomprehensiveadviceforclient-andproject-

specificsolutionsinthisarea.Thebusinessisdividedinto

AutomaticDoors,PhysicalAccessSystemsandPlatform

ScreenDoors.Europeiscurrentlythemostimportantmarket

andKaba’smarketshareinEuropeancountriesvariesbe-

tween8%and15%.Switzerlandplaysaparticularlypositive

role,withKabaenjoyingamuchhigher,44%shareofits

homemarket.However,activitiesinAsiaarealsodeveloping

verypromisingly.Kabahaspositioneditselfsuccessfully

intheregion,withmajorprojectsinthePlatformScreen

Systemssectorinparticular.

Currentmarketdevelopments

Theoverallmarketisgrowingbybetween3%and5%.

Thisgrowthisdrivenbyincreasingdemandforsecurityand

convenienceinthemanagementandcontroloflarge

volumesofpeople–atentrancestocorporatebuildings

andshoppingcenters,andatpublicfacilitieslikestadiums

andmetrostations.Consequently,demanddependsto

alargeextentonconstructionandmodernizationactivities

inthissector.ThisisparticularlyapparentinAsia,where

Kabaisbenefitinggreatlyfromtheconstructionofmetro

> 1.2% organic growth, 24.3% fall in EBIT Performanceheldbackbyrestructuringdelays

> Platform screen doors project in Paris on schedule Successfulstarttomajorproject–initialcostsweighonincomestatement

> New vertical organization meets expectations but requires optimization OEMbusinesswithdriveunitcomponentsperformsverywell

> Healthy European market for automatic doors Restructuringallowsbetterexploitationofavailablepotential

Segment Door Systems

�4 Kaba Annual Report 2007/2008 Corporate Reporting

systemsandnumerousotherlarge-scaleprojects.Thebest

examplesofthisaretheplatformscreendoorsprovided

forthe“OlympicLine“andtheaccesssolutionsinstalledat

theOlympicStadiuminBeijing.

Theincreasingdemandsbeingmadeofproductdesign

representanimportantmarkettrend.Onemanifestation

isthatmoreandmoreclientswantautomaticdoorstobe

tailoredspecificallytothearchitecturaldesignoftheir

constructionprojects.WiththeOneIslandEastskyscraper

inHongKong,forexample,automaticdoorshavebeen

developedthatintegrateseamlesslyintothefacade.Atthe

sametime,standardproductsinthismarketareincreasingly

regardedasconsumergoodsratherthancapitalequipment.

Infuture,themarketingofproductsolutionswillhavetopay

dueconsiderationtothischangeincustomerperceptions.

Operationalperformance

InSwitzerland,variousadjustmentsweremadetothe

organizationofthebusinessduringthelastfinancialyear

inordertomeetnewmarketrequirements.Verticalmanage-

ment–whereonesingleprojectmanagerisresponsiblefor

everythingfrommarketingandsalestomanagingtheactual

construction–wasreorganizedandreplacedbyahorizontal

approach.Thismeansthatwithineachproject,different

specialistsareinchargeofmarketing,theactualtender,the

engineeringandtheconstructionphase.Asaresult,synergies

withintheseareasareexploitedmoreeffectively,whilethe

clientbenefitsfromspecialistexpertisethroughoutthe

wholeprocess.Intermsofbusinessperformanceduringthe

yearunderreview,therestructuringledtoareductionin

organicgrowthto1.2%andasubstantial24.3%fallinEBIT.

However,thereorganizationwillcreatepositivemomentum

inthemediumterm.Thefinalstructuraladjustmentsand

processoptimizationsarecurrentlybeingcarriedoutwith

thisobjectiveinmind.

TheKITsystemsbusinessperformedparticularlywell.

Kabasuppliesothercompanieswiththedrivesandcontrols

forautomaticdoorsasOEM(originalequipmentmanu-

facturer)products.Withthesetechnicallydemandingcom-

ponents,Kabamakesanimportantcontributiontoadded

valuewithintheclient’sproductionprocess.Thisgenerates

ahighlevelofcustomerloyaltyaswellasattractivemargins.

Consequently,OEMbusinesswasexpandedstillfurther

duringthelastfinancialyear.

Theplatformscreendoorsbusinessalsoperformed

positively,asexpected.ThemajorParisMetroprojectbegun

inspring2007isrunningaccordingtoschedule.Thisisthe

firstandsofarthelargestmodernizationprojectinvolving

platformscreendoorsinEurope.

Outlook

Inthesecondhalfofthe2007/2008financialyear,theKaba

Grouplaunchedapackageofmeasuresintendedtohave

apositiveimpactonprofitabilityinDoorSystems.These

measureswillbeimplementedinthefirsthalfof2008/2009

andincludestepstoimproveprocessesattheSwisslocation

(KabaGilgen,Schwarzenburg).Alsoenvisagedarethe

swiftsaleorclosureofasmaller-sizeddistributionunitand

therestructuringofaninternationalrepresentativeoffice.

‘‘We are pushing our OEM business involving sophisticated drives and controls because this is where we can create the greatest value.’’

Jakob Gilgen, COO Door Systems

�5Kaba Annual Report 2007/2008

Asaresultofthesemeasures,Kabaaimstoimprovecost

structuresanditsearningspositionfrom2009.

Key figures

in CHF million 2007/2008 200�/2007

Change on previous year

in %

Total segment sales 275.4 274.3 0.4 %

Segment operating

profit (EBIT) 17.8 23.5 — 24.3 %

in % segment sales 6.5 % 8.6 %

Growth segment sales 1.1 2.9

in % 0 % 1 %

Whereof currency impact — 2.2 5.3

in % — 1 % 2 %

Whereof acquisition

(disposal) impact 0 0

in % 0 % 0 %

Currency-adjusted

internal growth segment

sales 3.3 — 2.4

in % 1 % — 1 %

Average number

of full-time equivalent

employees 1,308 1,302 0 %

PRODUCTGROUPS

Platform Screen Doors

Thisproductgroupfocusesonintegratedsolutions

forhalf-andfull-heightplatformscreendoorsfor

undergroundrailwaysystems.Kabaoffersacomplete

packagefromasinglesource,includingconsultancy,

projectmanagement,construction,installationand

maintenanceofthesystems.

Automatic Doors

Theproductsinthisgrouprangefromdoorsystems–

includingallkindsofslidingdoors,automaticdoors

withfire-protectionandescapewayoptions,anddoor

driveunits–togatesystems,personalinterlocksand

wallsystems.

Physical Access Systems

Thewell-consideredproductfamiliesincludehalf-

andfull-heightphysicalaccesscontrolunitssuchas

turnstiles,tripodbarriers,securityrevolvingdoors

andsensorandsecurityinterlocks.

GROWTHDRIVERS

User-friendliness

Organization

Security

Costsavingsonenergyconsumption

•

•

•

•

SegmentDoorSystem

�� Kaba Annual Report 2007/2008 Corporate Reporting

Banks around the world count on Cencon locks. The system was specially developed to provide security for ATMs and uses a constantly changing one-time code.

�7Kaba Annual Report 2007/2008Corporate Reporting

Segment’scorebusiness

WithitsAccess+DataSystemsSegment,Kabaoperatesin

averyfragmentedmarket.ApartfromKaba,thereareonly

afewcompaniesinthissegmentthathaveacomparable

internationalpresencesincethemarketismadeupmainlyof

localsmall-scaleproviders.Kaba’sproductportfolioranges

frommechanicallockcylinderstocomplexelectronicaccess

controlandworkforcemanagementsystems(seepage19).

TheacquisitionofLaGardandSaflokin2006extended

theproductrangeevenfurtherandopenedupimportant

newsegmentssuchasthehigher-endhotelmarket.InAsia,

theacquisitionofWahYuetbroughtKabaGroupahigh

qualityproductionfacilityforitsinternationalmarkets.As

atechnologyleaderKabaisbenefitingfromtheincreasing

digitalizationoflocksandlockingsystems.Asmechanical,

mechatronicandelectronicsystemsmergetogether,

Kabaisabletoprovideuser-friendlysolutionsthatcover

allcustomerrequirements.

Currentmarketdevelopments

Thetrendtowardsdigitalproductsmeansthattechnologies

andapplicationsarebeingbroughttogether.Thetechno-

logicalconvergenceofsystemsinbuildings,andthedemand

forgreaterqualityandefficiencywillleadtoafurthercon-

solidationoftheAccessControlmarketinthemediumtolong

term.Thenumeroussmallprovidersinthemarketwillfind

itveryhardontheirowntomakethenecessaryinnovations

> 8 % organic growth Kabaisonceagaingrowingfasterthanthemarket

> EBIT growth 19.6% StablefixedcostandgrowingsalesgenerateoverproportionalEBITmargin

> EMEA outperforms the market SignificantgainsofmarketsharesinEurope

> Sales in the US have stabilized at a high level Kabaservesstablecommercialpropertymarkets

> Wah Yuet posts strong sales and earnings growth GrowingimportanceofWahYuetasaninternationalsupplier

Segment Access + Data Systems

�8 Kaba Annual Report 2007/2008 Corporate Reporting

overthelongterm.LargeinternationalcompanieslikeKaba

Groupwillcontinuetobenefitfromthistrend.

Thesharpriseinrawmaterialspricesisincreasingthe

pressuretoconsolidatethemarkets.Highercostsdrive

constantimprovementsinboththevaluechainandthesup-

plychain.Companiesthatdonotachieveacertaincritical

masswillfinditdifficulttoabsorbhighercostsorpassthem

ontocustomers.Thereisalwaysatime-lagbeforeprice

increasescanbepassedontothemarket,somarginsare

ratherlagging,eventhoughKabaisabletosmoothoutthis

effectbetterthansmallercompetitorsowingtothelarger

volumesithandles.

Operationalperformance

OutsideSwitzerland,Kabamainlysuppliescommercial

customers,sooverthelastfinancialyearithasbenefited

fromtherobusthealthofcompaniesinitsrelevantinter-

nationalmarkets.Thesecustomersareincreasinglydemand-

ingintegratedsolutionsforaccesscontrol.Oftenthesought-

forsolutionalsoincludesmanagementcapabilitiessuch

asemployeedataadministration.

Increasingdigitalizationfacilitatestheintegrationand

managementofaccesssolutionswithincomplexsystems

bothofflineandonline.Forexample,inthehotelindustry,

Saflokprovideslockswithwirelessfunctionalitythat

inter-facewithothersystemsusedtosetlightingandair

conditioningcontrolsautomaticallytosuitthehotelguests’

individualpreferences.Despitethewealthoffunctions

itoffers,thesystemisconvenienttouse;thisconvenienceis

anotherimportantgrowthdriverwithintheaccesscontrol

market.

Oneofthemaintaskscompletedoverthelastyearwas

theintegrationofLaGardandSaflok.Asaresult,important

synergieshavebeenquicklyrealized,whichhasraised

theprofitabilityofthenewlyacquiredfirms.TheChinese

companyWahYuetwasalsosuccessfullyintegratedand

isplayinganincreasinglyimportantroleinEuropetoo

asasupplierofsemi-manufactures.Inordertofurtherim-

provethealreadyleanstructureofKaba’sproductionsites,

theHerzogenburgfacilityinAustriaisbeingdevelopedinto

alogisticscentreforEuropeinthemediumterm.Thesite

inSwitzerlandcontinuestodevelopasadesigncenter

formechanical,mechatronicanddigitalcylindersandlocks.

ProductioncontinuesonahighlevelforthespecificSwiss

andJapanesemarkets.Theestablishmentofabranch

inDubaihasopenedupanotherattractivemarketforKaba

products.

Alongsidetheexpansionofourinternationalpresence,

theswitchtoanewdistributionconceptinEuropemarked

anotherimportantmilestoneinthe2007/2008financial

year.Kaba’sabilitytosupplyitscustomerswitheverything

theyneedfromasinglesourcehelpstodifferentiateus

clearlyfromcompetitorsandmakesKabaapreferredsup-

plierforintegratedsystems.

Outlook

Thetrendtowardsdigitalproductswillcontinueandwill

increasinglybecomeafeatureoftheAmericanmarkettoo.

Kabaintendstostayattheforefrontofthistrendwith

‘‘The newly acquired La Gard brand has completed our product portfolio in the safe lock sector as well as opening up new regional markets.’’

Carl Sideranko, COO Safe Locks

innovativeproductsandsolutions.Inthecomingfinancial

year,Kabawillbeabletopresentaworld’sfirstintheform

ofitsRCIDtechnology.Thisallowsadoortobeunlocked

merelybytouchingthedoorhandle.Therearealsoplans

tooptimizespecificaspectsoftheITinfrastructurein

Europeinordertooptimizetheefficiencyofprocessesand

proceduresinanenvironmentcharacterizedbyincreasing

complexity.

Key figures

in CHF million 2007/2008 200�/2007

Change on previous year

in %

Total segment sales 749.0 681.6 9.9 %

Segment operating

profit (EBIT) 138.3 115.6 19.6 %

in % segment sales 18.5 % 17.0 %

Growth segment sales 67.4 176.1

in % 10 % 35 %

Whereof currency impact — 21.4 — 4.3

in % — 3 % — 1 %

Whereof acquisition

(disposal) impact 33.8 144.3

in % 5 % 28 %

Currency-adjusted

internal growth segment

sales 55.0 36.1

in % 8 % 7 %

Average number

of full-time equivalent

employees 6,353 5,524 15.0 %

PRODUCTGROUPS

Cylinders + Locks

Thisproductgroupcoverskeysandkeycylinders,

mechanicalandmechatroniccylinders,aswellasplans

forlockingsystems,digitallockingsystemsandcard

readers.

Access Management

Thisproductportfolioincludesacompleterange

ofaccessmanagementsystems.

Workforce Management

Thisgroupbringstogethermultifunctionalentry

terminals,softwareandhardwareapplications

foremployeedataandvisitormanagement,door

managers,remote-controlledreadermodulesand

biometriccomponents.

Lodging Products

Theportfoliocompriseslockingsystemsfor

thehospitalityandresidentialmarketsaswell

ascommercialmarketproducts.

Safe Locks

Thisproductgroupincludeselectronichighsecurity

lockingsolutionsforgovernmentandcommercial

buildings,ATMlocks,transitandcargosecurity

products,safesandstrongrooms.

GROWTHDRIVERS

Technology:frommechanicaltoelectronic

Security,convenience,organization

Costsavingsonintegratedsystems

•

•

•

��Kaba Annual Report 2007/2008

SegmentAccess+DataSystem

20 Kaba Annual Report 2007/2008 Corporate Reporting

DZ Bank in Berlin relies on secure access solutions from Kaba. As well as physical solutions, the bank also uses series DML2 door managers to provide controlled access for the doors on its premises.

2�Kaba Annual Report 2007/2008Corporate Reporting

client’snetworks.Thewholesystemissimpleandcost-

effectivetoinstallandcanbemanagedcentrally.This

significantlyreducespurchaseandoperationcosts,sothe

successfulintroductionofthisproducttothemarketcame

asnosurprise.Kabaiscurrentlytheleadingproviderof

such“VirtualNetworkedAccessSystems“.

RCID(ResistiveCapacitiveIdentification)isanewtech-

nologybyKabathatwillbepresentedinfall2008.Bycon-

trastwithRFID(RadioFrequencyIdentification),RCIDtrans-

mitsdatabycapacitivecouplingratherthanamagneticfield.

AnRCIDlockopensbytouchaloneifapersonisauthorized,

withoutpresentingakeyorsmartcard.

Thesoftwareproductssegmentsawthelaunchof

thenewB-COMMsoftwareforDynamicsAX,Microsoft’sshop-

floorcontrolmodule.B-COMMtransfersinformationfrom

Kaba’stimeandworkrecordingterminalstoDynamicsAX.

Thedataneededtoevaluateshop-flooractivityiscollected

quicklyandreliably.Automaticdatacollectiongenerates

significantefficiencygains.

Business performance

OrganicgrowthinEMEAmarketscameto8.5%.Withthe

marketasawholeincreasingbyabout4%,thismeantthat

Kabaoutperformedthemarketforthefifthconsecutive

year.Thetwomainreasonsforthisoutstandingperformance

arefirstlyKaba’suniquerangeofintegratedaccesssystems,

andsecondlyitsdistributionsystem,whichoffersallthecom-

ponentsofaccessmanagementfromasinglesource.

Fromthecustomer’spointofview,integratedaccess

systemsoptimizetheprocessesinvolved,reducethetotal

costofownership,andthusgeneratenewpotentialfor

costreductions.Asaresult,demandforthesesystems

ispositiveregardlessofthegeneralhealthoftheeconomy.

Asthetechnologyleader,Kababenefitsoverproportionally

fromthisindustrytrend.

International position

TheMomentumproject,aimedatreorganizingdistribution

inEurope,wascompletedsuccessfully.Kabanowoffersits

entireproductrangefromasinglesourceandunderasingle

brand.Thisconceptiscurrentlyuniquewithintheindustry,

asisthebreadthoftherangeonoffer,sounsurprisingly

themarketisshowingagreatdealofinterest.Salesfigures

reflectthissuccess.

Therehavebeensomeimportantstrategicchanges

outsideEuropetoo.Anewbranch–KabaFZE,Dubai/AE–

hasopenedinDubai,forexample.Kabaintendstousethis

subsidiarytotapintohighlypromisingmarketsthrough-

outtheMiddleEast.Kabahasalsolaunchedajointventure

withMarsIndustries,asubsidiaryoftheMindaGroup,

tomanufactureanddistributemechanicalandmechatronic

lockingsystemsinIndia.Thenewcompanyfocuseson

institutionalandcommercialcustomers,aswellashigh-end

privatecustomersandOEMs.Theinitialresponsefromthe

markethasbeenextremelypositive.

Product and technology trends

Themarketfordigitallocksisgrowingrapidly.Digitalization

canbeusedtooptimizeexistingprocessesandconnect

lockingsystemstoestablishedprogramslikeSAP.Within

thismarket,KabaoffersanewsolutioncalledCardLink,

whichintegratesstand-alonedigitallockswirelesslyintothe

Europe, Middle East and AfricaSegment Access + Data Systems

‘‘Kaba’s new distribution concept sets the benchmark for the international access industry.’’

Ulrich Wydler, COO Access + Data Systems EMEA

22 Kaba Annual Report 2007/2008 Corporate Reporting

Tokyo’s exclusive Conrad Hotel combines modern Japanese design with high-tech installations. Kaba star cylinders provide secure access for example to the meeting rooms, restaurants and spa.

2�Kaba Annual Report 2007/2008Corporate Reporting

Access control systems

Astheeconomiesofthesecountriescontinuetogrow,

demandformechanicallocksandcylindersisrising.How-

ever,electronicaccesscontrolsystemsarebecomingthe

maindriversoftheentiresegmentastheybenefitfroman

increasingneedforsecurity,controlandconvenience.Key

marketsarecommercialbuildingsandoffices,infrastructure

projectssuchasairportsandrailwaystationsaswellas

high-endprivateapartmentcomplexes.

Lodging products

Themarketforhotellockingsystemsisprofitingfrom

extensiveinvestmentincasinos,hotelsandresortsinChina,

HongKong,MacaoandSingaporeaswellasothermarkets

inSouthEastAsia.

Workforce management

Themarketforworkforcemanagementsolutionsisstill

young,butwillgrowoverthemedium-termasSAP,Microsoft

andOracleERPsolutionsareincreasinglybecomingmain

platformsofourtargetedindustrialcustomers.

Business performance

TheoverallaccesscontrolmarketintheAsiaPacificregion

(APAC)isgrowingbyatotalofbetween5%and7%.There

werecleardifferencesintheperformanceofvariouslocal

markets.GrowthinJapan,forexample,wasrelativelyweak

owingtothelowlevelofconstructionandmodernization

activity,butChinagrewbymorethan10%.Kabaitself

achievedorganicsalesgrowthof14.5%inthe2007/2008

financialyearandabsolutegrowthof18%.Oneofthe

numerousreasonsforKaba’shealthygrowthinAsiaisthat

theWahYuetGroupisbenefitingfromashiftinproduc-

tionfromtheUSAtotheFarEast.Atthesametimeithas

successfullyestablisheditselfasasuppliertotheEuropean

Kabacompanies.Thishasproducedsalesgrowthof25%

atWahYuet.Inparallelwithitspositivesalesperformance

intheAPACregion,Kabahaspressedaheadwiththe

optimizingthestrategyandtherestructuringofloss-

makingunits.

Developments in national markets

Japanhashadanewmanagementteaminplacesince

January2008.Themainaiminthismarketistopushfor-

wardthebusinesswithphysicalaccesssystems(PAS)and

accessmanagement(AM)solutions.Tothisend,thefirst

PASshowroomwasinauguratedinTokyo.InMalaysia,anew

managementteamhastakenoverinSeptember2007.

HeretoothebuildingupofthePASbusinessisatoppriority.

Verygoodresultshavealreadybeenachievedwithhalf-

heightsensorbarriersolutionincommercialbuildingsin

KualaLumpurandBangkok.InChina,asmallteamis

focusingontheincreasingdemandforhigh-endelectronic

accesssolutionsforcommercialprojects.

Physical access systems

Demandforsecuritysolutionsforsportsstadiums,airports

etc.isgrowingsignificantlyacrossallAPACcountries.

Thedemandforsecurityisalsoincreasingforcommercial

buildings.Severalprojectshavebeencompletedineach

market.Malaysiaisbeingdevelopedtobecomeamajorhub

forlocalizationandassemblyofPAS.Ahighfocusislaid

ontheleadingtechnologyandsolutionsinthisarea.

Asia PacificSegment Access + Data Systems

‘‘The Asia Pacific market is in good shape. Kaba is posting double-digit sales growth and is determined to secure its slice of the cake!’’

Andreas Brechbühl, COO Access + Data Systems Asia Pacific

24 Kaba Annual Report 2007/2008 Corporate Reporting

Saflok systems ensure controlled access to 1,300 rooms at the Marriott Renaissance in Detroit. The MT locks (Multi-Technology Locking System) are managed from a central point.

25Kaba Annual Report 2007/2008Corporate Reporting

intheATMindustry(automatedtellermachines),theretail

tradeandinsecuritysolutionsforgovernmentalorganiza-

tions.Businesswiththecontainerindustryfluctuates,while

demandfromlow-costsafemanufacturersisfallingasthis

sectormovesincreasinglytotheFarEast.Thereisnew

marketpotentialinthetransportindustry,butthismarket

isstillveryyoungsoKabamayhavetowaitsometimefor

areturnoninvestmenthere.

Thelowerpricesegmentofthesafelocksbusinessis

exposedtoagreatdealofpricepressure.Tocopewiththis

situation,Kabaoffersahealthymixofhighvolumemid-

priceproductsandtechnicallyoutstanding,patent-protected

high-marginproducts.Itisalsoprovidingsomenewservices

thathelpjustifyahigherprice.

Selected new products in this segment:

Cencon3.1–securityandcontrolsoftwarefortheATM

industry;SafeLock528–securitylocksystemthatcanbe

controlledviatheInternet;Gitcon(GPS-compatible)–

combinesvehicletrackingwithlockingfunctions

Business performance

Kabaachieved5.2%organicgrowthintheAmericasover

thelastfinancialyear.CSSInc.wassuccessfullyintegrated

withtheLaGardandSaflokbrands,andsignificantsyner-

gieswerequicklyrealized.Bothbrandshavesincebecome

increasinglyprofitableandareapproachingthehighmargins

attainedbyKaba’sAmericanfirms.Atthesametime,the

integrationhassignificantlyexpandedtheproductportfolio

andcoverageofregionalmarkets.InNovember2007,Kaba

GroupsolditsCanadianzincdiecastingspecialistCapitol,

basedinMontreal,foraboutCHF11million,becauseitdidnot

fitinwithKaba’scorebusiness.Thistransactiongenerated

aone-offpost-EBITprofitofCHF0.8million.

Locks/Access control systems

ThemarketforlockingsystemsintheAmericasisstill

growingcontinuously,butdespitesomeacquisitionactivity

itisveryfragmented.Risingrawmaterialspricespresent

achallenge.Kabahasrespondedbyincreasingpricesacross

itsproductrangeandthusmaintainingitsmargin.

Themostinterestingcurrenttechnologicaltrendsare

RFIDfunctionalityandwirelessapplications,especially

inthesegmentforhotellockingandaccesssystems.This

businesshasbenefitedfromtheexcellenthealthoftheUS

hotelindustry,whichhaslaunchednumerousnewbuild

andmodernizationprojects.Duringtheyearunderreview

thismarketexpanded,withparticularlyhighgrowthrates

amonghigher-endhotels.Thingsweremoredifficultinthe

privateresidentialmarketowingtopricepressureandthe

subprimecrisis.WiththeexceptionoftheChineseWahYuet

Group,Kabahaslittleexposuretothispartofthemarket.

Selected new products in this segment:

ILCO790–averysuccessfullylaunchedRFIDhotellock;

KabaCardConnect–resultofatechnologicalpartnership

withCorestreet;OracodeDeadbolt–anewadditiontothe

hotelsandresortsportfolio;3000NarrowStile–anaddition

totherangeofelectroniclocks

Safe locks

Kabaoffershighsecuritylocksfornumerousindustries.

Thereispotentialforgrowth–albeittodifferentdegrees–

AmericasSegment Access + Data Systems

‘‘By merging Saflok and Ilco into Kaba Hospitality, we have very successfully gained synergies that allowed us to expand our market and product portfolio.’’

Frank Belflower, COOAccess + Key Systems Americas

2� Kaba Annual Report 2007/2008 Corporate Reporting

With around 60,000 different types of key blank, Silca and Ilco boast the world’s widest range of keys. Areas in which the keys are used include residential premises and the car industry.

27Kaba Annual Report 2007/2008Corporate Reporting

Segment’scorebusiness

Kaba’stwosubsidiariesSilca(Europe/Asia)andIlco

(Americas)specializeinreplacementkeysandkeycutting

machines.Withapproximately60,000differenttypesof

keyblankandthemachinestogowiththem,thetwofirms

togetherofferthewidestrangeofkeysintheworld.This

makesthempreferredsupplierstokeyshopsandlocksmiths

inWesternandEasternEurope,Asia,America,Australia

andtheMiddleEast,aswellasinsomeNorthernAfrican

countriesandSouthAfrica.ThetwoKabasubsidiarieshave

beenabletobuildupsubstantialmarketshareinsome

countries:over50%formechanicalkeys,intheelectronic

segmentpartiallyevensignificantlyhigher.Apartfrom

thetwomarketleadersSilcaandIlco,themarketistypically

populatedbyalotofsmallercompetitorsthattendtofocus

ononlyafewtypesofhigh-volumereplacementkeys.

Currentmarketdevelopments

Especiallyindevelopedterritories,themarketforreplace-

mentkeysisshowingnosignificantgrowthintermsofthe

numberofitemssold,butweareseeingasubstantialrisein

demandforhigh-valuekeyssuchastransponders.Overall,

thismarketcanbeexpectedtogrowby2%to3%.Thein-

creaseinoutsourcing,especiallyamongOEMfirms,offers

significantopportunitiesonthecustomerside.Marketsin

EasternEurope,especiallyRussia,andinSouthAmericaand

theFarEastarebenefitingmostfromthistrend.

> 2.7% organic growth Expensiverawmaterialshavedrivena“pricebeforevolume”strategy

> EBIT growth 9 % Higherrawmaterialspricespassedontocustomers

> New distribution strategy surpasses expectations IntroductionofSAPinEuropemakeslogisticsmanagementmoreefficient

> Acquisitions perform very well Significantsynergiesrealizedafteronlyashorttime

> Raw materials prices present a great challenge Highestrawmaterialspricesfor20yearswillcontinuetoaffectthemarket

Segment Key + Ident Systems

28 Kaba Annual Report 2007/2008 Corporate Reporting

Thewholemarkethastocopewithagreatdealofprice

pressure.Thisisbeingemphasizedbysharprisesintheprice

ofrawmaterialssuchasnickel,zincandcopper.Priceshad

tobeincreasedduringtheyearunderreviewinordertocope

withhigherrawmaterialscostsandtheeffectofexchange

ratesonexportbusiness.

Inthekeycuttingmachinebusiness,theautomotive

sectorshowsagreatdealofpotentialbecausecarkeysare

beingfittedwithmoreandmoresecurityandconvenience

features.Thismeansthatcopyingandprogramming

keysisbecomingincreasinglycostlyandcomplex.As

thetechnologyleader,Kabaprovidesitsclientswiththe

machinestheyneedtoservicethisattractivebutvery

sophisticatedmarket.

Operationalperformance

Duringthefinancialyearjustcompleted,anumberofcrucial

newdevelopmentscametofruition:thenewproduction

siteinIndia,thenewsalesofficeinMadridandthesuccessful

roll-outoftheSAPplatforminEuropeaswellasthedevelop-

mentandthebeginningimplementationoftheEuropean

supplychainmodel.Ontopofthis,variousmeasureswere

takentostrengthenmanagementatthenationalandEuro-

peanlevels.ThesemeasuresensuredthatKabahasexactly

thepersonnelitneedsinthissegment.

Meanwhile,newproductsanddevelopmentsareunder-

liningKabaGroup’sinnovativepowerandtechnological

leadership.ExamplesincludeourOPTIKA-seriesmachines.

Usinglightrefractioninanewway,thesemachinesmake

itmucheasierforoperatorstoidentifytherightkeyblank

whencopyingkeys,aswellasensuringhighqualityand

enablingfurtherefficiencygains.Stayinginthemechanical

sector,anewcuttingmachinecalledNEWREKORDwas

introducedduringtheyearunderreview.Othermachines,

includingtheUNOCODEEVO,werecarefullyimproved–

partlyinresponsetocustomerfeedback–tomakethem

evenmoreuser-friendly.

Thiscontinuousprocessofdevelopmentalsoapplies

toourwholeproductrangeintheautomotivesectorandto

thecopyingmachinesusedfortranspondersinthecar

industry.Forexample,theEASYCODEwasintroducedinthe

Americastocapitalizeontheexpandingautomotivemarket.

Another150newkeyswereaddedtotherangeduringthe

yearunderreview(excludingproductsforOEMs).Withinthis

segmentKabacontinuestoofferaselectionunmatchedby

anyotherproviderintheworld.

LegicIdentsystemsAG

LegicIdentsystemsAGisalsopartoftheKey+IdentSystems

Segment.WithitsLegicbrand,itisaleadingproviderof

contactlesssmartcardtechnology.Inapositivemarketenvi-

ronmentLegicIdentsystemsAGperformedverysuccess-

fullyinthe2007/2008financialyear.Itisbenefitingfrom

thegrowingtrendtowardsconvergenceinidentification

solutions,i.e.moreandmoredifferentapplications,including

logicalandphysicalaccesscontrols,arebeingbrought

togetheronasinglesmartcard.Successfulprojectsinthe

governmentsectorandtheintroductionofmultifunctional

CityCardsstrengthenedLegic’smarketshareinnewareas

‘‘Another excellent year of successful product launches and process optimization has put us in a great position for the future.’’

Roberto Gaspari, COO Key + Ident Systems Europe/Asia Pacific

ofbusinessandreinforceditspositionastheleadingpro-

viderofhighfrequencycontactlesstechnology.Investments

innewproducts,includingcard-in-cardsolutions,willhelp

LegicIdentsystemsAGtoexpandthisstrongmarketposition

stillfurtherinfuture.

Outlook

Overall,themarketforkeysystemshasalong-termorganic

growthpotentialof0%–5%.Meanwhile,themostimpor-

tantfactorinfluencingtheearningstrendisthecostofraw

materials.

Themarketishighlyfragmented,withalargenumberof

smallnicheproviders.Consolidationislikelytoproceedat

aslowpace,butthereisgrowingpressureonmedium-sized

competitorstokeepraisingvolumesandefficiencyinavery

competitivemarketenvironment.

Key figures

in CHF million 2007/2008 200�/2007

Change on previous year

in %

Total segment sales 261.0 261.0 0.0 %

Segment operating

profit (EBIT) 26.7 24.5 9.0 %

in % segment sales 10.2 % 9.4 %

Growth segment sales 0 29.2

in % 0 % 13 %

Whereof currency impact — 9.4 — 1.4

in % — 4 % — 1 %

Whereof acquisition

(disposal) impact 2.3 4.5

in % 1 % 2 %

Currency-adjusted

internal growth segment

sales 7.1 26.1

in % 3 % 11 %

Average number

of full-time equivalent

employees 1,340 1,460 — 8.2 %

PRODUCTGROUPS

Keys + Key Cutting Machines

Thisproductgroupincludesawiderangeofkeyblanks

andmechanical,electronicandindustrialkeycutting

andcodingmachines,aswellaskeyduplication

machines.

Identification/Legic

WithLegicastheleadingproviderofsmartcard

technology,thisproductgroupcoverspracticallyevery

operationalapplicationofcontactlessidentification,

includingorganization,verificationandcash-free

payments.

GROWTHDRIVERS

Productinnovations

Stablekeyreplacementbusiness

Growthmarkets

Expansionofdistributionnetwork

•

•

•

•

2�Kaba Annual Report 2007/2008

SegmentKey+IdentSystems

Kaba sells more than 23 key blanks. Every second! With annual

sales of 732 million keys, the two subsidiaries Silca and Ilco

offer the fullest and most up-to-date range of products, with over

60,000 key profiles suitable for any usage.

23.2

�2 Kaba Annual Report 2007/2008 Corporate Reporting

Kaba provides tailor-made solutions that can be integrated into clients’ existing systems

very effectively in terms of security, organization and convenience. In accordance

with the Total Access strategy, Kaba Group continues to build on its leading position in

the market for security at access points to buildings, rooms and sites, and in the market

for enterprise data collection.

KabaGroup’scorebusinessisdevelopinginnovative

productscombinedwithfirst-classservices.Itsportfolioof

digitalpremiumproductsinparticularhaspostedstrong

growthandhasgreatmarketpotentialforthefuture.

Kabaexpectsaverageorganicrevenuegrowthofatleast

5%onaconsolidatedbasis.TheGroup’sorganicgrowth

shouldproduceoverproportionatelylargeprofitsbecause

fixedcostswillgrowmoreslowlythansales.Thisfixed-

costleverageisreinforcedbyacontinualreductioninthe

costofgoodssold.Bygrowingrevenueorganicallyand

optimizingfreecashflow,Kabaisaimingforasignificant

increaseinearningspershare(EPS)growth.

Growthstrategy

Aconcentrationonprofitableorganicexpansionliesatthe

heartoftheGroup’sgrowthinitiatives.Itsmechanical

productsbusinesshasgoodgrowthpotential,whiledigital

productspromiseoutstandingratesofgrowth.Thisgrowth

isbeingdrivenmainlybyincreasingadministrationand

ITcostsontheclientsideaswellasthedesireforgreater

flexibility,comfortandsecurity.Asanestablishedprovider

ofhigh-qualitypremiumproductsandasatechnology

leaderforintegratedsystems,Kabaisprofitingfromthis

marketdynamic.TheGroup’swidelyinstalledmechanical

productsalsorepresentakeyplatformforfuturegrowth.

Segmentsandpositioning

Overthelastfewyears,Kabahastakenanintelligentap-

proachtoroundingoutitsproductrange,anditnowenjoys

anexcellentposition.Thethreemainsegments–Door

Systems,Access+DataSystemsandKey+IdentSystems–

complementeachotherperfectly.TheygiveKabathesize

andstabilityrequiredtooperatesuccessfullyintheglobal

securitybusiness.Thankstoitsinternationalorganization,

KabaGroupcanprovideclientsallovertheworldwith

integratedsecuritysolutionsfromasinglesource.This

hashelpedKababecomeapreferredsuppliertorespected

globallyactivecompaniessuchasBMW.

Salesandmarketing

Salesarehandledbylocaldistributionandmarketing

organizations.ThisputsKabaclosetoitsmarkets,allowing

ittoaddresschangingmarketrequirementsquicklyand

efficiently.WhileGroupordivisionmanagementdealswith

Kaba Group strategy

��Kaba Annual Report 2007/2008Corporate Reporting

strategicissues,suchasfinancialmanagementandbrand

positioning,responsibilityforoperationalbusinesslies

almostentirelywiththeregionalmarketingorganizations.

Bygivingsomuchresponsibilitytotheindividualcountries,

theGroupensuresthatalldecisionsandactivitiestake

fullaccountoflocalmarketandclientperspectives.

Researchanddevelopment

Kabaisaworldwidetechnologyleaderinaninnovation-

drivenmarketenvironment.Maintaininganddevelopingthis

technicalexpertiseisakeyfactorintheGroup’ssuccessful

positioningasapremiumbrand,socorecompetencieslike

KabaGroupintendstomaintain

itspositionastheleadingtechno-

logicalproviderofhighquality

accesscontrolsolutions.Kaba

productsarethereforebasedon

state-of-the-arttechnology

withoutbeingover-engineered.

AtKaba,technologyisalways

usedintheserviceofoptimizing

operationalcosts,user-friendliness

andsecurity.

Kabacombinesandintegrates

thedifferentelementsofsecurity

inauniqueway.Someyearsago,

KababrokenewgroundinEurope

withitsTotalAccessportfolio.

ThisstrategyhelpedKabatotake

apioneeringrolewithininthe

industry,whichitstillplaystoday.

KabaGroupoffersintegrated

solutionsthatexceeditsclients’

expectationswithregardto

security,convenienceandorga-

nizationaswellasinvestment

protection.Intelligent,integrated

solutionswithflexible,compat-

iblecomponentsreducethe

overallpurchasingandoperating

costsofsecuritysystemsand

guaranteeasignificantreturnon

investment(ROI)foroperators.

R&Dandproductionwillalwaysbekeptin-house.TheGlobal

TechnologyManagement,aconsortiumofdevelopment

engineers,assessestechnologytrendsandcoordinates

theactivitiesoflocalR&Ddepartments.Thisensuresthat

synergiesareexploitedeffectivelyandencouragestargeted

internationalknowledgetransfer.

Technologyleadership

TotalAccess Integratedsolutions

�4 Kaba Annual Report 2007/2008

Access+DataSystems

Technologicalchange:

frommechanicaltoelectronic

Thedigitalizationofsecuritysystems

isenablingnewformsofnetworking

andcreatingnewmarkets.Demandis

growingforsimpleall-in-onesolutions

forcomplexjobs.

Combiningsecurity

andorganization

Agenerallystrongneedforsecurity

isgeneratinggrowingdemandfor

suitablesolutions.Companiesarealso

increasinglyusingsecuritysystems

fortargetedcontroloforganizational

processesandresponsibilities.

Costsavingsfrom

integratedsolutions

Digitalizationenablescompaniesto

achievesignificantcostsavingsby

consolidatingawidevarietyofsolu-

tionsanddatabasesystems.

DoorSystems

Demandforsimplicity

andconvenience

Thereisageneraltrendtowards

convenience,whichKabaisaddressing

withautomaticandsecuritydoors

(physicalaccesssystems).

Generalsecuritytrend

Thegrowingneedforsecurityinthe

privateandpublicsphereiscreating

strongdemandforsecuritydoorsand

interlocks.Thisaffectseverything

fromcorporatebuildingstoairports

andsportsstadiums.

Savingsthroughenergy

efficiency

Intelligentdoorsystemscanmassively

increasetheenergyefficiencyoflarge

climate-controlledspacessuchas

entryhallsandundergroundrailway

stations.

Key+IdentSystems

Productinnovations

Newsalesmarketsarebeingcreated

byinnovationssuchaslaser-assisted

machinesforrecognizingkeyprofiles.

Investmentinreplacements

createsasolidbusiness

Replacingkeysandlockingsystems

remainsasubstantialbusiness.

Newgrowthmarkets

Kabaissuccessfullytappingintonew

growthmarketssuchasIndia.

Expansionofdistribution

network

Kabacontinuestoexpanddistribution

throughspecialistlocksmiths,which

isincreasingthedemandforKaba

products.

Growthdrivers

�5Kaba Annual Report 2007/2008Corporate Reporting

Sustainabilitycanbeinterpretedinmanyways.ForKaba,

doingbusinesssustainablymeansbeingfinanciallyhealthy,

leadingthemarketandinnovating.Overalmost150years

ofcorporatehistoryKabahasfollowedtheseprinciples

toestablishitselfasasuccessfulinternationalcompany,

areliablepartnerandanattractiveemployer.Overthede-

cades,thinkingandactingsustainablyhasbecomeanintegral

partofthecorporatecultureand,therefore,theKaba

brand.Strategicallythismeansthatthecompany’sactions

aredeterminednotbyshort-termtrendsbutbyafocuson

long-termprofitablegrowthinattractivemarkets.

Long-termpartnershipsarethefoundation

Kaba’sdevelopmentintoaleadinginternationalprovider

inthesecurityindustryisbuiltonlong-establishedcustomer

relationshipsandpartnerships.Thesearethefoundations

andtheengineofasustainablysuccessfulbusiness.Kaba

hasearnedthisconfidencethroughitsreliabilityandfairness

indailybusiness,butaboveallthroughitshighstandards

ofqualityandservice.Kabaiscommittedtothesestandards

allovertheworld.Itinvestsinthecontinuousdevelopment

ofthecompanysothatitcanmeettheexpectationsof

itsclients,shareholders,employeesandpartnersintothe

future.

Innovativepowershapesthefuture

Maintainingitspositionasthetechnologyleaderplaysakey

roleinKaba’slong-termdevelopment.Fromthebeginning,

Kaba’ssuccesshasbeenshapedbytheexpertiseandpio-

neeringspiritofitsemployees.Sustainabilityintheinterests

ofthecompanymeanspressingaheadwithtechnological

developmentsandkeepingaleadovercompetitors.Sustain-

abilityintheinterestofcustomersmeanspassingonthe

benefitsoftechnologicalchangetocustomerswithouten-

dangeringthesecurityoftheinvestmentstheyhavealready

made.Kabacombinesthesetwofacetsbymaintaininga

sharpcustomerfocusinitsresearchanddevelopmentwork.

Thisisreflectedbytheforwardcompatibilityofourtechnical

solutionsandthegreatuser-friendlinessofourproducts.

Corporateculturesetstheframework

Despiteitscontinuousgrowthandinternationalposition,

Kabaisnotableforitsdecentralizedstructuresandflat

hierarchies.Individualresponsibilityandactiveknowledge

transferarerequiredandencouraged.Thedynamicmarket

environmentandthecompany’sglobalexpansionofferem-

ployeesnumerousopportunitiesforpersonaldevelopment.

Flexibleworkingmodelsallowthemtofindthebestarrange-

menttomeetthespecificdemandsoftheirjobortheirlife

ingeneral.ThismakesKabaanattractiveand,accordingto

surveys,popularemployer.Infinancial2007/2008,Kaba

trainedselectedhighlyqualifiedyoungprofessionalsaround

theworldandcreatednumeroussecurejobs.Runninga

sustainablysuccessfulbusinessrequiresproperinvestment

inemployeesandexpertise.Withaviewtothecompany’s

long-termsuccessandtheinterestsofitsvariousstake-

holders,thisistheroutethatKabafollows–rigorouslyand

responsibly.

Kaba – sustainably successful

Around 3,000 keys a day are produced by a robotic key cutting

machine at Kaba Japan’s production site. Eleven discrete

operations are involved in cutting one key. This amounts to

a total of 33,000 automatic operations per day, or around

12 million a year.

3,000

�8 Kaba Annual Report 2007/2008 Corporate Reporting

Kaba develops user-friendly solutions using the most sophisticated technology. It

always focuses on its customers’ requirements with regard to security, reliability and

convenience. The company’s ability to offer the best and most efficient solutions to

these needs has made it a leading premium brand around the world and the industry’s

foremost innovator. Kaba Group’s pioneering role is being expanded with the develop-

ment of its international brand.

Outstandingengineeringskillsandapioneeringspirit

aretwoofthegreatstrengthsoftheKababrand.Theydrive

thehighqualityofthesecurity,accesscontrolanddata

collectionsystemsthattheGroupsuppliesallovertheworld.

However,thecentralissueforKabaisnevertechnology,

butalwaysthebenefittocustomers.Rigorousconcentration

onthespecificneedsofcustomersandindustrieshascon-

tributedsignificantlytothebrand’sinternationalsuccess.

ForKabaemployees,developingsimple,buthigh-gradesolu-

tionstocomplexissuesisthechallengeandtheattraction

oftheirjobs.

Concentratingonbuildingtheinternationalbrand

Kabanowaimstobuildworldwideawarenessofitsbrand

evenfurtherandtomakeitsinternationalbusiness

evenstronger.Tothisendthecompanyhasspentthelast

twoyearsbringingmostofitssub-brandstogetherunder

theoverallKababrand.Thishassignificantlyincreased

brandawarenessandtheeffectivenessofmarketing

activitiesinthegroup’s60ormoreforeignmarkets.Having

aconsistentinternationalbrandpresencealsohelpsto

leveragesynergiesfrommarketingspend.Additionaloppor-

tunitiesarecreatedtopushtheprofileofthepremium

Kababrandinlinewiththenewsinglebrandstrategy,and

toexpandKabaGroup’spositioninatargetedmannerincore

marketsthroughoutEurope,theUSAandAsia.

Securingmarketpositionwithastrongbrand

Theonlycurrentexceptionstothesinglebrandstrategyare

theSilca,IlcoandLegicbrands.Theirindependenceallows

thesebusinessestobenefitfromthestrongimageandclient

relationshipstheyhaveestablishedintheirspecificseg-

ments.Theproductlinesacquiredin2006,Saflok/LaGard

andWahYuet,arealsoretainingtheirvisualautonomyfor

thetimebeing.Withtheirestablisheddistributionnetworks,

theygiveKabaasolidplatformforfurthergrowthinthekey

salesmarketsoftheUSAandAsia.

Thepremiumstatusoftheseproductbrandsisalso

beingupgradedcontinuallythroughtargetedinvestment

inmarketinganddevelopment.Highstandardsofquality

andserviceremainakeypartofKabaGroup’sinternational

brandstrategyatalllevels.

Kaba – the premium brand for security and control

��Kaba Annual Report 2007/2008

Kabastandsfor

�. Security

Kabaprovidesclientswithtailor-madesolutionsthatoffer

thebestpossiblecombinationofsecurityandconvenience.

ExpectationsofKabaproductsareveryhigh–andrightly

so,becausetheseproductsareusedtoprotectpeople

andvaluableitems.Itisaresponsibilitythatwetakevery

seriously.

2. Reliability

Kabaproductsarerenownedfortheirgreatreliability.And

whatgoesfortheproductsalsogoesforthecompany:

Kabaiscommittedtolong-term,trustingrelationshipswith

itscustomers,partners,shareholdersandstaff.Its145-year

corporatehistoryisthebestpossibleproofofitsunmatched

reliabilityandcontinuity.Maintaininginternalandexternal

transparencyatalltimes,Kabafulfilstheresponsibilities

andexpectationsofaglobalcompany.

�. Innovative solutions

Kabafollowsalong-termentrepreneurialgrowthstrategy.

Inaglobal,technology-drivenworld,sustainableconduct

alsoentailscontinuallydevelopingthecompany’sinnovative

power.ThisistheonlywaythatKabacankeepplayingits

leadingroleintheindustryandmaintainitsabilitytorecruit

highlyqualifiedemployees.

4. Outstanding engineering skills

Kabaisatechnologyleader.Thecompanydevelopshigh

quality,long-lasting,intelligentproductsthatcanbe

integratedefficientlyandflexiblyintocustomers’existing

systems.Dependingonthepreciserequirements,Kaba

cancombinemechanical,electronicanddata-collection

elementswithinasinglebespokecustomersolution.The

keyfactoratalltimesisthebenefitdeliveredtocustomers

ratherthantechnologyitself.

Goingforward,Kaba’slong-termsuccessasabusinessisbuiltonfourmainpillars.ThesedefinethecoreoftheKababrandandrepresentapromisetoallcurrentandfutureclients,partners,shareholdersandemployeesaroundtheworld.

ThecoreoftheKababrand

40 Kaba Annual Report 2007/2008 Corporate Reporting

An entrepreneurial attitude and taking responsibility for your own actions: these are

the keys to success. And this is why Kaba staff are given the freedom they need to make

a real contribution to the company’s success through their own initiative and dedication.

At the same time, Kaba believes that by handing them responsibility it is giving all

employees the best possible opportunity for personal development. A shared understand-

ing of what it means to think and act responsibly is the basis of worldwide cooperation

at Kaba.

EverybodywhoworksforKabaacceptsresponsibility.

Delegatingbusinessresponsibilityasfardownthecorporate

hierarchyaspossibleisoneofthecoreelementsofour

corporatephilosophy.AtKaba,everyonehasthefreedom

theyneedtomaketherightdecisionsintheinterestsof

thecompanyandtoachievethebestpossibleresults.This

appliestoindividualemployeesaswellastotheGroup’s

entireinternationalorganization.Itishowweguarantee

thateverydecision,largeorsmall,incorporatestheperspec-

tiveoftherelevantmarketorclient.Individualinitiative

isencouragedanddecision-makingisstreamlined.Agood

exampleofhowthisallworksinpracticeatKabaisthe

localresponsibilitygiventodifferentcountryorganizations

fortheirownmarketing;anotheristheGlobalTechnology

ManagementProgramforthepromotionofinternational

knowledgetransferandtheworldwidecoordinationof

researchanddevelopment.Anyoneinterestedinexploring

theareaswheretechnology,peopleandinformationmeet

willfindKabaafascinatingplacetowork.

ResponsibilityforKaba’sfuture

Asaninternationalbusiness,Kabatakesitsresponsibilities

veryseriously–asanemployerinmorethan60countries,

asatrainerofhighlyqualifiedyoungtalents,andasan

organizationpromotingthecareersofover9,000em-

ployeesaroundtheworld.Kabaoffersnumerousexciting

challengesanddevelopmentopportunitiesinaninnovative

internationalenvironment.Everyyearweevaluatethe

employeeswhowebelievehavethepotentialtotakeon

highermanagementtasks.Tohelpthempreparefortheir

demandingfutureroles,thesepeoplearesentoninter-

nationaltrainingcourseslastingseveraldays.Thisscheme,

ourotherattractivetraininganddevelopmentprograms,

andthegeneroussocialbenefitsweofferensurethat

weattractoutstandingpeoplewhocanhelpmaintainour

positionasatechnologyleaderintothefuture.Ourhigh

levelofemployeeretentionandtheGroup’scontinuous

worldwidegrowtharethebestevidenceofKaba’sappeal

asanemployer.

Highstandardsofbusinessconduct

Peoplecanonlytakeresponsibilityproperlyiftheythinkand

actresponsibly.ThestandardsofbehaviorexpectedofKaba

employeesarethereforeveryhigh.

Kabaiscommittedtofairnessandequalopportunity.

Itfightsdiscriminationinallitsformsandadheresstrictlyto

Sharing responsibility for the success of Kaba

4�Kaba Annual Report 2007/2008Corporate Reporting

thelawsofthecountriesinwhichitoperates.Thesestan-

dardsareformulatedinthecompany’s“CodeofConduct“,

whichisbindingonallemployeesworldwide.ButKaba

demonstratesitssenseofresponsibilityattheoverallcom-

panylevelaswell.Itis,forexample,committedtoupholding

thetensustainabilityprinciplessetoutintheUNGlobal

CompactInitiative,underliningitsexemplarysocialandeco-

logicalcredentialsasasustainableandresponsiblebusiness.

Workforce per segment (average)

Sales in % Employees in %

Door Systems 275.4 21.1 1,308 14.3

Access + Data Systems 749.0 57.5 6,353 69.4

Key + Ident Systems 261.0 20.0 1,340 14.6

Others/eliminations/finances 18.3 1.4 150 1.7

Total 1,303.7 100 .0 9,151 100.0

Workforce development

�0,000

�,000

8,000

7,000

�,000

5,000

4,000

�,000

2,000

�,000

0

as per �0. �. 2007 Acquisitions/Divestments Operational as per �0. �. 2008

9,265

38

9,093

—210

42 Kaba Annual Report 2007/2008 Corporate Reporting

The quality of Kaba’s products is one of the main elements for success in the marketplace.

Over the decades, quality has become a key component of the Kaba brand. But quality

is not just a feature of our products; it is a consistent element of the corporate philosophy

that extends from the initial development of a product idea right through to after-sales

service. Throughout, the yardstick is not what is technically possible, but what the

customer expects. A combination of customer focus and quality makes Kaba the leading

premium provider in the security industry.

Thereisnosecuritywithoutquality,whichiswhycustomers

havesuchhighandvariedexpectationsofKaba.Qualitycan

havemanyfacets:competentadvice,specialindividualized

solutions,easeofuse,technicalexcellenceorfirst-class

service.Inordertocoveralltheseareasinthemosteffective

wayandinlinewithcustomerexpectations,Kabahasestab-

lishedacomprehensiveandefficientqualitymanagement

systembasedonyearsofexperience.Liketheproducts

themselves,thisprocessiscontinuallybeingdevelopedand

optimized.

Customerfocusintheinnovationprocess

Crucialfactorsthathelpensurethequalityofthefinished

productareputinplaceintheearlystagesofdevelopment.

Alongsidespecialistproductexpertise,thoroughknowledge

ofthemarketandofcustomerrequirementsisabsolutely

essential.Customerwishesandexperiencesarecarefully

evaluatedandsystematicallybroughtintotheinnovationpro-

cess.Atthesametime,Kabadevelopersusethecompany’s

internationalscopetoexchangeknowledgeandinforma-

tionaboutcross-bordertrendsinmarketsandtechnology,

aswellasaboutmarketrequirementsandsolutions.

Inthisway,Kabaensuresthatitstechnologicalleadershipis

consistentlyunderlinedbystate-of-the-artproductsolu-

tions,alwaystakingcarenottoover-engineerthesesolutions

orpushthembeyondwhattheobjective.Currently,highly

skilledengineersandsoftwaredevelopersareworking

forKabathroughouttheworldonnewandgroundbreaking

securitysolutions.

Quality is our trademark

Quality is an essential part of the Kaba philosophy and extends to all business processes.

Qualityassuranceinproduction

Withintheproductionprocess,qualitycontrolstartswith

oursuppliers.Kabaevaluatesallitssuppliersandagrees

clearlydefinedqualitylevels.Thesearecheckedregularly.

4�Kaba Annual Report 2007/2008Corporate Reporting

TheSupplyChainManagementsystemintroducedinEurope

in2007/2008isthecurrentbenchmarkfortheindustry.

Thewholesupplyandvaluecreationchainiscontrolled

byKabausingspecificqualitycriteria.Allbusinessprocesses

–includingproductionprocesses–arecertifiedunderthe

ISO9001standard.Finalproducttestingandregularprocess

reviewsensurethatqualitystandardsaremaintainedaswell

asfacilitatingcontinualoptimization.Thesehighstandards

ofdevelopmentandproductionapplyineverycountryatall

relevantKabasites.

Workingwithdistributionpartners

Ourdistributionandservicepartnersplayacentralrole.

TheyarethepeoplethatmostcommonlypresenttheKaba

brandandKabaproductstoourcustomers.Thestandards

expectedoftheirexpertiseandspecificproductknowledge

arecorrespondinglyhigh.Acomprehensivesystem,which

includestrainingandcertificationforourpartners,ensures

thatqualityismaintainedinthesale,assemblyandmain-

tenanceofourproductsolutions.Ourdistributionpartners

alsohavetoundergospecifictrainingbeforetheycanstart

marketingoursolutions.Partnersaregenerallytrainedat

alocalKabaorganizationintherelevantsalesmarketbefore

eachproductroll-out.Duringtheseintroductorysessions,

thereisalsoanopportunitytoexplorecountryormarket-

specificrequirements.Withitscertificationandquality

assurancesystem,Kabaisapioneerwithintheworldwide

industry.

Kaba leads the way at the 32nd Americas Cup: Kaba solutions

were used for the security of around 40,000 people,

including team members, journalists and spectators around

Valencia’s harbour. Accreditation and automatic access

control could be carried out at any time throughout

the site thanks to turnstiles mounted on platforms and

PDAs (Personal Digital Assistant).

40,000

Corporate Governance

48 Generalframework

49 Corporatestructure

50 Shareholders

51 Capitalstructure

56 Boardofdirectors

63 Executivemanagement

67 Compensation,shareholdingsandloans

69 Shareholders’participationrights

70 Changesofcontrolanddefensemeasures

71 Auditors

72 Informationpolicy

48 Kaba Annual Report 2007/2008 Corporate Governance

ThisCorporateGovernancereportexplainstheprinciples

ofmanagementandcontrolatthehighestleveloftheKaba

GroupinaccordancewiththeDirectiveonInformationRe­

latingtoCorporateGovernance(theCorporateGovernance

Directive,RLCG)issuedbytheSWXSwissExchange.The

informationcontainedinthisreportforfinancial2007/2008

isvalidasat30June2008,unlessotherwisestated.

CorporategovernanceattheKabaGroupcomplies

largelywiththeprinciplesandrecommendationsoftheSwiss

CodeofBestPracticeforCorporateGovernancedated

25March2002and6September2007.However,because

ofitsshareholderstructureandsize,theKabaGrouphas

adoptedcertainchangesandsimplificationstotheCode.

Theprinciplesandrulesoncorporategovernanceatthe

KabaGrouparelaiddownintheArticlesofIncorporation 1),

theOrganizationalRegulationsandtheregulationsofthe

BoardofDirectorscommittees.Theyareregularlyreviewed

bytheChiefExecutiveOfficer,whofromtimetotimesub­

mitsproposalsforamendmentstotheBoardofDirectorsfor

adecision.

General framework

1) TheArticlesofIncorporationarepublishedonKaba’swebsitewww.kaba.com

49Kaba Annual Report 2007/2008Corporate Governance

Europe/Asia PacificCOORobertoGaspariExecutiveVicePresident

AmericasCOOFrankBelflowerExecutiveVicePresident

EMEA(Access+DataSystems)COOUlrichWydlerExecutiveVicePresident

Americas(Access+LodgingSystems)COOFrankBelflowerExecutiveVicePresident

Asia Pacific(Access+DataSystems)COOAndreasBrechbühlExecutiveVicePresident

Worldwide(SafeLocks)COOCarlSiderankoExecutiveVicePresident

COOJakobGilgenExecutiveVicePresident

Corporate structure

KabaHoldingAGBoardofDirectors

KabaGroupCEORudolfWeber

Finance,Controlling,Legal+CommunicationsCFODr.WernerStadelmannExecutiveVicePresident

DoorSystems Access+DataSystems Key+IdentSystems

TheGroup’sorganizationalstructureisbasedonthemainfunctionsrequiredbyitsbusinessoperations.

ThenamesofthecompanieswhichgotomakeuptheconsolidatedGroupcanbefoundintheFinancialStatements

onpages124to126.

50 Kaba Annual Report 2007/2008 Corporate Governance

Thefollowingtablesetsouttheshareholdingstructureof

KabaHoldingAGasattheendofthefinancialyearandpro­

videsthenamesofthoseshareholdersthathavedisclosed

votingrightsof3%ormoretoKabaHoldingAG.Duetothe

reductionofthethresholdfordisclosureofshareholdings

from5%to3%,infinancial2007/2008,CreedKuenzlehas

notifiedKabaHoldingAGon25February2008thatheholds

atotalof127,452registeredshares,amountingto3.3%of

thetotalsharecapital.Further,CapitalGroupCompaniesInc.,

LosAngeles,holdingitssharesindirectlyviavariousgroup

companies(CapitalResearchandManagementCompany,

LosAngeles;CapitalGuardianTrustCompany,LosAngeles;

CapitalInternationalLimited,London;CapitalInternational

Inc.,LosAngeles;CapitalInternationalS.A.,Geneva)has

disclosedon19October2007thatitholds196,869regis­

teredsharesofKabaHoldingAG,amountingto5.2%ofthe

totalsharecapital.

Shareholders

Shareholder group

as at 30. 6. 2008 No. of shares at

CHF 0.10 par value in %

as at 30. 6. 2007 No. of shares at

CHF 0.10 par value in %

Heirs of Leo Bodmer

Creed Kuenzle 1) 127,452 3.3 127,452 3.4

Karin Forrer 2) 196,910 5.2 206,520 5.4

Other heirs of Leo Bodmer 386,645 10.2 421,747 11.1

Total heirs of Leo Bodmer 711,007 18.7 755,719 19.9

Public shareholders

Ulrich Bremi 3) 193,500 5.1 193,500 5.1

Allianz Group 190,366 5.0 191,050 5.0

Capital Group Companies, Inc. 196,869 5.2

Other public shareholders 2,245,832 59.0 2,400,006 63.4

Total public shareholders 2,826,567 74.3 2,784,556 73.5

Members of the Board and current executives

Kin Shek Ng (non-executive member of the Board) 4) 236,039 6.2 220,142 5.8

Other members of the Board (non-executive) 57,218 1.5 56,287 1.5

Current executives (incl. executive Board member) 16,015 0.4 16,907 0.4

Total members of the Board and current executives 309,272 8.1 293,336 7.7

Less doublecounting in respect of heirs of Leo Bodmer

who are members of the Board 5) — 43,068 — 1.1 — 42,918 — 1.1

Total shares 3,803,778 100.0 3,790,693 100.0

1) CreedKuenzle,Herrliberg,wasChairmanoftheBoardofDirectorsofKabaHoldingAGfrom1978to2001. 2) KarinForrer,Ittigen,wasamemberoftheBoardofDirectorsofKabaHoldingAGfrom1978to1997. 3) UlrichBremi,Zollikon,wasemployedbyKabaHoldingAGfrom1962to1992andwasPresidentfrom1975to1992. 4) KinShekNg,Kowloon,amemberoftheBoardofDirectorsofKabaHoldingAG,holdsthesharesindirectlythroughhisowncompanies(BillionPowerInvestmentsLtd.,Kowloon; RightEliteLtd.,Kowloon;SinoOriginInvestmentsLtd.,Kowloon;Ng’sInternationalCo.Ltd.,Kowloon). 5) TheshareholdingsofheirsofLeoBodmer,whoarealsomembersoftheBoardofDirectorsareincludedunderboth“OtherheirsofLeoBodmer” and“OthermembersoftheBoard”.

AsfarasKabaHoldingAGknows,theabove­mentioned

principalshareholdersarenotlinkedbyanyshareholders’

agreementsorsimilararrangementswithrespecttotheir

KabaHoldingAGregisteredsharesortheexerciseofshare­

holders’rights.

Cross­Shareholdings

TheKabaGrouphasnotenteredinanycapital­basedorvoting

rights­basedcross­shareholdingswithothercompanies.

51Kaba Annual Report 2007/2008Corporate Governance

Capital

At30June2008,thesharecapitalofKabaHoldingAGwas

CHF380,377.80,dividedinto3,803,778fullypaid­upregis­

teredshareswithaparvalueofCHF0.10each.Inaddition,

at30June2008,KabaHoldingAGhadatitsdisposalautho­

rizedcapitalofCHF37,720(dividedinto377,200registered

shareswithaparvalueofCHF0.10each)andconditional

capitalamountingtoamaximumofCHF44,063.20forthe

issueofbondsorsimilarinstruments(maximumCHF36,000

dividedinto360,000registeredshareswithaparvalueof

CHF0.10each)andforemployeeshareownershipschemes

(maximumCHF8,063.20dividedinto80,632registered

shareswithaparvalueofCHF0.10each).

KabaHoldingAGhasissuedneithernon­votingshares

(Partizipationsscheine)norprofit­sharingcertificates

(Genussscheine).

ConditionalCapital

ThesharecapitalofKabaHoldingAGmaybeincreased

byanamountnotexceedingCHF36,000byissuingup

to360,000registeredshares,tobefullypaidup,withapar

valueofCHF0.10each,throughexerciseofconversion

and/oroptionrightsthathavebeengrantedinconnection

withtheissueofbondsorsimilarinstrumentsbyKaba

HoldingAGoraGroupcompany,and/orthroughtheexercise

ofoptionrightsthathavebeenconferredonshareholders.

Ifbondsorsimilarinstrumentsareissuedinconnectionwith

conversionand/oroptionrights,thesubscriptionrights

ofexistingshareholdersareexcluded.Therighttosubscribe

forthenewregisteredsharesfallstotherespectiveholders

ofconversionand/oroptionrights.Thepurchaseofregis­

teredsharesbyexerciseofconversionand/oroptionrights,

aswellaseverysubsequenttransferofregisteredshares,

aresubjecttothetransferandvotingrightrestrictions

pursuanttotheArticlesofIncorporation.TheBoardof

Directorsisentitledtolimitorabolishthepreemptivesub­

scriptionrightofshareholdersinconnectionwiththeissue

ofbondsorsimilarinstrumentswithconversionand/or

optionrightsifsuchinstrumentsareissuedforthepurpose

offinancingtheacquisitionofcompanies,partsofcompa­

niesorequityinterests.IftheBoardofDirectorsabolishes

thepreemptivesubscriptionright,thefollowingapplies:

theconvertiblebondsorbondswithwarrantswillbeissued

onmarketterms,andthenewregisteredshareswillbe

issuedpursuanttothethenapplicabletermsofconversion

orwarrantexercise;conversionrightsmaybeexercised

fornomorethantenyearsandoptionrightsmaybe

exercisedfornomorethansevenyearsafterthetimeof

therelevantissueofbonds.

ThesharecapitalofKabaHoldingAGmaybeincreased

bynomorethanCHF8,063.20byissuingtoemployees

andmembersoftheBoardofDirectorsofKabaHoldingAG

andofGroupcompaniesnomorethan80,632registered

shareswithaparvalueofCHF0.10each,whichmustbefully

paidup.Thesubscriptionrightsofexistingshareholders

tosuchnewsharesareexcluded.Registeredsharesor

optionrightsinthisrespectwillbeissuedtoemployees

ormembersoftheBoardofDirectorssubjecttooneofmore

setsofregulationstobedefinedbytheBoardofDirectors

andtakingintoaccountperformance,function,andlevel

ofresponsibility.Saidregisteredsharesoroptionrightsmay

beissuedtoemployeesormembersoftheBoardofDirectors

atapricebelowthemarketprice.Inconnectionwith

theissueofoptionrightstoemployeesandmembersof

theBoardofDirectors,thepreemptivesubscriptionrightof

existingshareholdersisexcluded.Thepurchaseofshares

withinthecontextofemployeeshareownershipschemes,

aswellasanysubsequenttransfersofsuchshares,are

subjecttothetransferandvotingrightrestrictionspursuant

totheArticlesofIncorporation.

AuthorizedCapital

TheBoardofDirectorsisauthorizedwithinaperiodending

24October2008toincreasethesharecapitalbyan

amountnotexceedingCHF37,720byissuingupto377,200

registeredshares,tobefullypaidup,withaparvalueof

CHF0.10each.TheBoardofDirectorsintendstopropose

totheAnnualGeneralMeetingthatthisauthorization

berenewed(notexceedingCHF38,000byissuingupto

Capital structure

52 Kaba Annual Report 2007/2008 Corporate Governance

380,000registeredshareswithaparvalueofCHF0.10

each)withvalidityupto21October2010.Theincreasemay

besubdividedintopartialamounts.Thenewregistered

shares,onceacquired,aresubjecttothetransferandvoting

rightrestrictionspursuanttotheArticlesofIncorporation.

TheBoardofDirectorswilldeterminethetimeofissue

ofnewregisteredshares,theirissueprice,thetypeof

payment,thesubscriptionconditionsandthebeginningof

dividendentitlement.TheBoardofDirectorsmayissue

newregisteredsharesviafirmunderwritingbyabankor

aconsortiumandsubsequentoffertoexistingshareholders.

TheBoardofDirectorsmaydeclarenon­exercisedsub­

scriptionrightsnullandvoidorplacethemonthemarket,

includingregisteredsharesforwhichsubscriptionrights

aregrantedbutnotexercised.

TheBoardofDirectorsisalsoentitledtorestrict,or

torepealandtransfertothirdparties,thesubscriptionrights

ofshareholdersincaseswheretheregisteredsharesare

usedfortheacquisitionofcompanies,partsofcompaniesor

equityinterestsaswellasincasesofshareplacementsmade

tofinanceorrefinancesuchtransactions.

ChangesinCapitalStructurewithintheLastThreeFinancialYears

Duetotheexerciseofoptionsunderthestockoptionplans,

(i)asat30June2006,thesharecapitalofKabaHoldingAG

wasincreasedbyCHF10,322fromCHF18,590,509.60to

CHF18,600,831.60bytheissueof1,985registeredshares

withaparvalueofCHF5.20each.Accordingly,conditional

capitaldeclinedbyCHF10,322fromCHF2,456,490.40to

CHF2,446,168.40(representedby470,417registeredshares

withaparvalueofCHF5.20each);and(ii)asat30June

2007,thesharecapitalofKabaHoldingAGwasincreasedby

CHF1,670fromCHF377,399.30toCHF379,069.30bythe

issueof16,700registeredshareswithaparvalueofCHF0.10

each.Accordingly,conditionalcapitaldeclinedbyCHF1,670

fromCHF47,041.70toCHF45,371.70(representedby

453,717registeredshareswithaparvalueofCHF0.10each).

Asat30June2008,duetotheexerciseofoptionsunder

the2002StockOptionPlanandtheallocationandissue

ofsharesundertheKabaExecutiveStockAwardPlan,

thesharecapitalofKabaHoldingAGwasincreased

byCHF1,308.50fromCHF379,069.30toCHF380,377.80

bytheissueof13,085registeredshareswithaparvalue

ofCHF0.10each.Accordingly,conditionalcapitaldeclined

byCHF1,308.50fromCHF45,371.70toCHF44,063.20

(representedby440,632registeredshareswithaparvalue

ofCHF0.10).

TheAnnualGeneralMeetingof25October2005

decidedtoreducetheordinarysharecapitalofthecompany

bymeansofareductionintheparvalueoftheindividual

registeredsharesfromCHF10byCHF4.80toCHF5.20and

topaytheamountofCHF4.80persharetoshareholders.

Asaresultofthiscapitalreduction,theAnnualGeneral

Meetingadjustedtheauthorizedcapitalasfollows:itbecame

amaximumof350,000registeredshareswithaparvalueof

CHF5.20each,amountingtoamaximumofCHF1,820,000

(fordetails,see“AuthorizedCapital”above).

Changes of Capital during the last three reporting years Kaba Holding AG

in CHF 30. 6. 2008 30. 6. 2007 30. 6. 2006 30. 6. 2005

Equity

Share capital 380,378 379,069 18,600,832 35,750,980

Legal reserves

— General reserves 600,160,951 596,607,713 534,811,527 534,387,895

— Reserve for treasury shares 1,818,846 939,734 2,012,971 0

Other reserves 158,461,654 119,340,766 98,267,529 80,280,500

Unappropriated retained earnings 52,974,456 87,257,961 73,439,000 58,538,740

Total equity 813,796,285 804,525,243 727,131,859 708,958,115

53Kaba Annual Report 2007/2008Corporate Governance

Inaddition,theAnnualGeneralMeetingof25October

2005approvedanincreaseinconditionalcapitalby60,000

registeredshareswithaparvalueofCHF10each(following

thecapitalreductiontoCHF5.20each).

Aspartofthecapitalincreaseof10August2006from

authorizedcapital,andinaccordancewiththeagreementof

8August2006relatingtoanon­cashcapitalcontribution

betweenthecompany,NgKinShekUnitedCompanyLimited,

inTortola,BritishVirginIslands,andBillionPowerInvest­

mentsLimited,SinoOriginInvestmentsLimited,RightElite

LimitedandWahYuet(China)Limited(foursubsidiaries

ofNgKinShekUnitedCompanyLimited),thecompany

tookover24fullypaid­upsharesofWahYuet(Ng’s)Group

HoldingsLimited.Thesesharesweretransferredatnet

bookvaluetotalingCHF59,256,126.30.Inreturnforthis

non­cashcapitalcontribution,NgKinShekUnitedCompany

Limitedreceivedatotalof196,910fullypaid­upregistered

sharesofthecompanywithaparvalueofCHF5.20each,

which,accordingtoinstructions,weretobetransferredto

thesubsidiaries.Withthiscapitalincreasethesharecapital

ofthecompanyamountedtoCHF19,614,441.60(previously

CHF18,590,509.60),dividedinto3,772,008(previously

CHF3,575,098)registeredshareswithaparvalueof

CHF5.20each,andtheauthorizedcapitalwasreduced

fromamaximumofCHF1,820,000,dividedintoamaximum

of350,000registeredshareswithaparvalueofCHF5.20

each,toamaximumofCHF796,068,dividedintoamaxi­

mumof153,090registeredshareswithaparvalueof

CHF5.20each.

Becauseofthiscapitalincreasefromauthorizedcapital,

theAnnualGeneralMeetingof24October2006decided

toincreasetheauthorizedcapitalby224,110from153,090

toamaximumof377,200registeredshareswithaparvalue

ofCHF5.20(totalingamaximumofCHF1,961,440).

Furthermore,theAnnualGeneralMeetingof24October

2006decidedtoreducetheordinarysharecapitalofthe

companybymeansofareductionintheparvalueoftheindi­

vidualsharesfromCHF5.20byCHF5.10toCHF0.10and

topaytheamountofCHF5.10persharetoshareholders.

Asaresultofthiscapitalreduction,theAnnualGeneralMeet­

ingadjustedtheauthorizedcapitalandconditionalcapital

asfollows:toamaximumof377,200and470,417registered

sharesrespectively,withaparvalueofCHF0.10,amounting

toamaximumofCHF37,720andCHF47,041.70respectively

(fordetails,see“AuthorizedCapital”and“Conditional

Capital”,pages51/52).

TheShares

Eachregisteredsharecarriesonevoteatthegeneral

meetingsofKabaHoldingAG(subjecttovotingrightrestric­

tions,page69).Votingrightsmaybeexercisedonlyafter

ashareholderhasbeenenteredintheshareregisterofKaba

HoldingAGasashareholderwithvotingrights.

TheregisteredsharesofKabaHoldingAGarenot

issuedassharecertificates(theyareregisteredshareswith

deferredprintingofcertificates)butasbook­entrysecurities

heldincustodybySISSegaInterSettleAG.Shareholders

havetheright,however,torequestthatKabaHoldingAG

printanddelivercertificatesfortheirregisteredshares,

freeofcharge,andKabaHoldingAGmayatanytimeorder

theprintingofnot­certificatedregisteredshares.Ifthe

registeredsharesareprinted,KabaHoldingAGmayissue

certificatesrepresentingapluralityofregisteredshares.

Theregisteredshareswillbearthefacsimilesignatures

oftheChairmanandamemberoftheBoardofDirectors.

Theregisteredshareshavefulldividendrights.There

arenoshareswithprivilegeddividendentitlementorother

preferentialrights.

LimitationsonTransferabilityandNomineeRegistrations

Non­certificatedregisteredshares,includingtherights

associatedtherewith,mayonlybetransferredbyassignment.

KabaHoldingAGmustbenotifiedforassignmentstobe

valid ;thetransferrestrictionssetoutbelowalsoapply

tonon­certificatedregisteredshares.KabaHoldingAGmay

notifytheassignmenttothebankwhichholdstheassigned

registeredsharesinbook­entryformfortheshareholder.

Ifnon­certificatedregisteredsharesaremanagedbyabank

onbehalfoftheshareholder,suchregisteredsharesand

54 Kaba Annual Report 2007/2008 Corporate Governance

therightsassociatedtherewithcanonlybetransferredin

cooperationwiththebank.

Non­certificatedregisteredsharesandtheasset­

relatedrightsassociatedtherewithmayonlybepledgedby

awrittenpledgeagreementinfavorofthebankwhich

holdsthesharesinbook­entryformfortheshareholder.

KabaHoldingAGdoesnotneedtobenotifiedofthepledge.

TheBoardofDirectorsmaintainsashareregisterin

whichtheownersandusufructuariesareenteredwiththeir

namesandaddresses.Withrespecttoregisteredshares,

onlythoseenteredintheshareregisterwillberecognized

asshareholdersvis­à­visKabaHoldingAG.Approvalfor

transferofregisteredsharesmayberefusedforthefollow­

ingreasons:

a) Inthecaseofindividuals,legalentitiesorpartner­ships,

iftheywouldacquiremorethan5%ofallsharevotes

asaresultofthesharetransfer.Legalentitiesand

partnershipslinkedbycapital,votingrights,common

managementorotherwise,aswellasallnaturalpersons

andlegalentitiesthathavecombinedforthepurpose

ofcircumventingthisrestriction,aredeemedtocon­

stituteasingleperson.

Thelimitationto5%ofallsharevotesalsoappliesin

thecaseofsubscriptionfororacquisitionofregistered

sharesbyexerciseofsubscription,optionorconversion

rights.

Forshareholderswhowereenteredintheshareregister

withmorethan5%ofallsharevoteson13November

1995,theBoardofDirectorsmayprovideforexceptions

tothisrestrictionviaregulations.Therefore,theBoard

ofDirectorsresolvedon27October1997toissuea

regulationwithrespecttothelimitationsontransfer­

abilityofregisteredsharesofKabaHoldingAG.Accord­

ingtotheseregulations,theBoardofDirectorshas

generallyapprovedtheregistrationofshareholderswho

werealreadyenteredintheshareregisterwithmore

than5%ofallvotingrightson13November1995.These

shareholderswillnotbeenteredforregisteredshares

thereafteracquiredifsuchregistrationincreasestheir

percentageofvotingrightsabovethetotalpercentage

registeredon13November1995.TheBoardofDirectors

will,however,approvesuchacquisitionsinsofarasthey

areintendedtooffsetdisposalsthathavebeenorwill

becompletedafter13November1995.Suchrightto

restockisonlyvaliduptosuchtotalpercentageofvoting

rightsforwhichtheshareholdersconcernedwere

registeredon13November1995.TheBoardofDirectors

willalwaysapproveregistrationofregisteredshares

thathavebeenacquiredthroughsuccession,division

ofanestateormaritalpropertylaw(article685d

paragraph3,SwissCodeofObligations).Theexisting

rightstorestockwillinsuchcasesbeproportionally

transferred.

b) Ifauthorizationofthetransferofregisteredshares

couldpreventKabaHoldingAGfromfurnishinglegally

requiredevidenceregardingtheconstituencyofits

bodyofshareholders.

c) Iftheregisteredsharesareheldintrust.

Fortheyearunderreview,theBoardofDirectorshasnot

grantedanyexemptionsfromthelimitationsontransfer­

ability.Tocancelorchangetherestrictionsontransferability

ofregisteredshares,aresolutionoftheGeneralMeeting

approvedbyatleasttwo­thirdsofthevotesrepresentedis

required.

ConvertibleBondsandOptions

On18January2002,KabaFinanceLuxembourgS.A.issued

a4%convertiblebond2002to2010intheamountof

CHF138,240,000atparvalue,unconditionallyandirrevo­

cablyguaranteedbyKabaHoldingAG.Theconvertible

bondswillberedeemedon18January2010,at130.78%

oftheparvalue.Thisconvertiblebondislistedonthemain

segmentoftheSWXSwissExchange(securityno/ISIN:

1 336 276/CH0013 362766).Duringtheconversionperiod,

i.e.from18January2002untilandincluding13January

2010,eachconvertiblebondwithaparvalueofCHF5,000

isconvertible,freeofcharge,atanytime(Americanstyle)

into13.02083registeredsharesofKabaHoldingAGwith

aparvalueofCHF0.10each;fractionsarepaidoutincash.

Forthisconvertiblebond,amaximumof360,000registered

sharesofKabaHoldingAGwithaparvalueofCHF0.10each

55Kaba Annual Report 2007/2008Corporate Governance

inthetotalamountofCHF36,000arereserved.Theinitial

conversionpricewasCHF450perregisteredshare(i.e.,

eachconvertiblebondwasconvertibleinto1 1.1 1 1 1registered

shares).Pursuanttotheconversionterms,theconversion

pricewasreducedbecausetheaverageofallclosingprices

ofKabaHoldingAGregisteredsharesdeterminedonthe

SWXSwissExchangeduringthelast20tradingdaysimmedi­

atelybeforeandincluding29November2002(thereference

price)wasbelowCHF384.Effective6December2002,

theconversionpricewasresettoCHF384(basedonthepar

valueofthebonds).Ineconomicterms,theconversionprice

willriseduringthetermoftheconvertiblebondbecause

theredemptionpriceuntilmaturity(i.e.18January2010)

continuouslyincreasesto130.78%ofthebond’sparvalue,

andeachbondofCHF5,000parvalueisconvertibleinto

afixedrateof13.02083registeredsharesofKabaHolding

AGduringtheconversionperiod.Theactualconversionprice

isderivedfromthetheoreticalearlyredemptionpriceof

thebondatthetimeofconversionusingthefollowingequa­

tion:100% x (1+3.4112212%)(d/360),where“d”isthenumber

ofdaysbetweenpaymentandconversionofthebond.At

theendoftheconversionperiod,applicationofthisequation

resultsinaconversionpriceofCHF502(rounded).

Earlyredemptionattheearlyconversionpriceispos­

sible(i)iftheclosingpriceoftheregisteredsharesofKaba

HoldingAGontheSWXSwissExchangeexceeds130%of

therespectiveconversionpricefor30consecutivetrading

days,(ii)ifmorethan95%oftheoriginallyissuedbond

amounthasbeenconverted,or(iii)fortaxreasonswitha

60­dayperiodofnotice.

Informationonoptionsandsharesgrantedtoemployees

maybefoundonpage67.

56 Kaba Annual Report 2007/2008 Corporate Governance

TheprimarydutiesoftheBoardofDirectorsofKaba

HoldingAGaredefinedintheSwissCodeofObligations,

theArticlesofIncorporationandtheOrganizational

Regulations.

MembersoftheBoardofDirectors

TheBoardofDirectorsofKabaHoldingAGconsistsofnine

members.TwoofthecurrentmembersoftheBoardof

Directorshavebeenmembersoftheexecutivemanagement

ofKabaHoldingAGoroftheKabaGroupinthelastfour

financialyears:UlrichGrafandHeribertAllemann.KinShek

Ng,anon­executivememberoftheBoardofDirectors,

holds20%ofthesharesoftheWahYuetGroup,ofwhich

heistheCEO,andinwhichtheKabaGrouphasastake

of80%.Theothernon­executivemembersoftheBoard

ofDirectorshavenoimportantbusinessconnectionswith

KabaHoldingAGortheKabaGroup.

Members

Name/PositionYear

of birthFirst

electionRemaining

term

Ulrich Graf

Chairman, executive 1945 1989 2008

Rolf Dörig

Vice-Chairman, non-executive 1957 2004 2010

Heribert Allemann

Non-executive member 1944 2006 2009

Maurice P. Andrien

Non-executive member 1941 2001 2010

Riet Cadonau

Non-executive member 1961 2006 2006

Karina Dubs-Kuenzle

Non-executive member 1963 2001 2010

Kin Shek Ng

Non-executive member 1940 2006 2009

Klaus Schmidt

Non-executive member 1958 2005 2008

Thomas Zimmermann

Non-executive member 1945 1992 2009

Board of directors

Thefollowingtablesetsforththename,position,age,

timeoffirstelectionandremainingtermofofficeofeach

memberoftheBoardofDirectors:

57Kaba Annual Report 2007/2008Corporate Governance

Swisscitizen,hasbeenexecutiveChair­manoftheBoardofDirectorssince2006andamemberoftheCompensationandNominationCommitteesofKabaHoldingAG.HealsoservesasChairmanoftheBoardofDirectorsofDätwylerHoldingAG,Altdorf,GriesserAG,Aadorf,andFr.SauterAG,Basle,andisaDirectorofGeorgFischerAG,Schaffhausen,andFellerAG,Horgen.Furthermore,heisamemberoftheBoardofTrusteesofREGA(SwissAir­Rescue)andoftheSupervisoryBoardofDEKRAe.V.(Stutt­gart,Germany).UlrichGrafstudiedattheSwissFederalInstituteofTechnology(ETH),andheholdsadegreeinelec­tricalengineering.Until2006,hewasPresidentandCEOofKabaHoldingAG.

Swisscitizen,isthenon­executiveVice­ChairmanoftheBoardofDirectorsofKabaHoldingAGandamemberoftheCompensationandNominationCommittees.RolfDörigstudiedlawattheUniversityofZurich,earninghisDr.iur.,andobtainedadmissiontothebarasanattorney­at­lawin1985.From1986to2002,heheldanumberofvariousexecutivepositionsatCreditSuisse.AsamemberoftheGroupExecutiveBoard,hewasassignedresponsibilityforSwisscorporateandretailbankingfrom2000onwards.In2002,heheldthepositionofChairmanSwitzerland.SinceNovember2002untilMay2008,RolfDörighasbeenChiefExecutiveOfficerofSwissLifeGroup.RolfDörigistheDelegateoftheBoardofDirectorsofSwissLife 1),Vice­ChairmanoftheBoardofDirectorsofAdecco 1),ChairmanoftheBoardofDirectorsofDanzerAG,amemberoftheExecutiveCommitteeofeconomiesuisse,amemberoftheBoardofDirectorsoftheZurichChamberofCommerceandChairmanoftheGrasshopperClubZurich;allinSwitzerland.

Swisscitizen,waselectedanon­executivememberoftheBoardofDirectorsofKabaHoldingAGin2006whenheretiredfromoperationalmanagement.AmemberoftheExecutiveBoardsincejoiningthecompanyin1990,hewasappointeddeputyCEOin2001.HeribertAllemannwasinstrumentalindevelopingtheAccessSystemsandtheTime+AttendancedivisionsinEuropeandNorthAmerica,playedadecisiveroleinvariousacquisi­tionsandintegrationprograms,andspearheadedKaba’sexpansionintoAsiaandthebuild­upofCentralServices.BeforejoiningKaba,hewasCEOoftheCelfa­Folexgroupfrom1984to1989;priortothat,from1976to1984,heheadedaprofitcenterofHolderbankManagementandConsulting(re­namedHolcim).Heisaqualifiedengineerinthefieldofmicro­engineering(UniversityofAppliedSciences,Biel)andhasadegreeineconomicsandbusinessadmin­istrationfromtheUniversityofBerne;hefurtheredhiseducationinbusinessmanagementattheHarvardBusinessSchool.HeribertAllemanniscurrentlyPresidentoftheBoardofAlpaPartnersAGandVice­PresidentofContractFarmingIndiaAG,bothdomiciledinZug.Healsoactsascoachandconsultantincompanymanagement,andlecturesattheZfUInternationalBusinessSchool(Switzerland).

UlrichGrafChairman

RolfDörigVice­Chairman

HeribertAllemann

1) Listedcompany

58 Kaba Annual Report 2007/2008 Corporate Governance

Swisscitizen,isanon­executivememberoftheBoardofDirectorsofKabaHoldingAGandmemberoftheAuditCommittee.RietCadonauhasbeenappointedCEOoftheAscomGroupon20August2007.Prior,hewasSeniorVicePresident&ManagingDirectorofACSEurope&TransportRevenue,agloballineofbusinessofACS,Inc.(AffiliatedComputerServices)head­quarteredinDallas(USA).From2001to2005,hewasamemberoftheExecu­tiveBoardoftheAscomGroup;from2002,hewasDeputyCEOandGeneralManageroftheTransportRevenueDivision,whichwasacquiredbyACSatend2005.From1990to2001,RietCadonauheldvariousmanagementpositionsatIBMSwitzerland,lastlyasamemberoftheManagementBoardandDirectorofIBMGlobalServices.Inaddition,heisPresidentoftheSwissManagementAssociation(SMG)andamemberoftheBoardofDirectorsofGriesserGroupinAadorf.RietCadonauholdsamaster’sdegreeineconomicsfromtheUniversityofZurich.Hecom­plementedhiseducationatINSEAD(Fontainebleau,Paris)withtheAdvancedManagementProgram.

Swisscitizen,isanon­executivememberoftheBoardofDirectorsofKabaHoldingAG.SheisapartnerandmemberoftheBoardofDirectorsofDubsKonzepteAG,Zurich,aconsultingandservicecompanysheandherhusbandfoundedin1997,wheresheisco­responsibleforthestrategicplanninganddesign.ShealsoisamemberoftheBoardofDirectorsofFileawayAG,Zurich.KarinaDubs­Kuenzleisthemotherofthreechildren.ShehasabackgroundinadvertisingandworkedforseveralyearsasanadvertisingassistantwithWirzWerbeberatungAGandHeiriSchererCreativeDirection,bothlocatedinZurich.

U.S.citizen,isanon­executivememberoftheBoardofDirectorsaswellasamemberoftheCompensationandNominationCommitteesofKabaHoldingAG.UntilMarch2004,heservedTheHillmanGroupinCincinnati(Ohio,USA)asChairman;heremainsaMemberofthatcompany’sBoard.HeisalsoaMemberoftheBoardofStateIndustrialProducts,Inc.inCleveland(Ohio,USA)aswellasofthesofwarecompanyCogniscapeLLCinSwarthmore(Philadelphia,USA).From1999to2003,MauriceP.AndrienwasPresident,CEOandDirectorofSunSourceInc.inAddison(Illinois,USA);from2003to2004,hewasChairmanoftheBoardofSunSourceTechnologyServicesCompany.In1998and1999,hewasPresident,COOandMemberoftheBoardofUnicanSecuritySystemsLtd.inMontreal(Canada).Hehasabache­lor’sdegreeinelectricalengineeringandamaster’sdegreeinmanagementfromtheMassachusettsInstituteofTechnology(MIT).

MauriceP.Andrien

RietCadonau

KarinaDubs­Kuenzle

59Kaba Annual Report 2007/2008Corporate Governance

Germancitizen,isanon­executivememberoftheBoardofDirectorsaswellasChairmanoftheAuditCommitteeofKabaHoldingAG.KlausSchmidthasbeenwithDEKRAAG(Stuttgart,Ger­many)since1996,servingthecompanyinvariousfunctionsasamemberoftheboardofmanagementbeforebeingnominatedasCEOin2003.Currently,heservesthecompanyasCEOaswellasamemberofvarioussupervisionboards.Heisalsoamemberofthefollowingbodiesandorganizations:AdvisoryBoard,DeutscheBankAG;AdvisoryBoard,GothaerVersicherungsbankVVaG;AdvisoryBoardofHUKCoburgVVaG;NORISKOS.A.(France),asChairman;andamemberoftheBoardofDirectorsofVinçotteInternationalS.A.(Belgium).Previously,KlausSchmidtwasManag­ingDirectorofAlcatelAirNavigationSystemsGmbHandheldvariousposi­tionswithStandardElektrikLorenzAG(SELAlcatelAG).KlausSchmidtreceivedadegreeintechnicallyorientedbusi­nessadministrationfromtheTechnicalUniversityofStuttgart.HeroundedouthisacademicbackgroundintheMBAProgramoftheUniversityofOregon(USA)andcompletedtheAdvancedManagementProgrammeatINSEAD(Fontainebleau,Paris).

Swisscitizen,isanon­executivememberoftheBoardofDirectorsaswellasamemberoftheAuditCommitteeofKabaHoldingAG.Helivesonaprivatein­come.From1994to1997,ThomasZimmermannwasdirectorofprivatebankingoperationsSwitzerlandatSwissBankCorporation.Before,hewasadirectorwithCreditSuisseinZurichandservedforeignmultinationalcompaniesandSwissinstitutionalinvestors.ThomasZimmermannstudiedattheTechnicalUniversityofZurich(SwissFederalInstituteofTechnologyETH)andhasadegreeinengineering.HereceivedanMBAfromtheHarvardBusinessSchoolinCambridge(Massachusetts,USA).

Chinesecitizen,isanon­executivememberoftheBoardofDirectorsofKabaHoldingAGaswellasChairmanandCEOoftheWahYuetGroupwhichhefoundedin1973.Soleshareholder,Chair­manandCEObeforeitbecameaKabasubsidiaryin2006,hedevelopedWahYuetGroupintoagloballyactivelockmanufacturerwithproductionfacilitiesinChinaandofficesinMacaoandHongKong.KinShekNgwashonoredoneofthe“Best100CreativeCEOsinChina”byChinaEnterprise’sCreativeCEOHonorsCommitteeOrganizationand“2007Top10InnovativePeopleofAsiaEconomy”byAsiaEconomyInter­nationalResearchAssociationin2006and2007respectively.KinShekNgwasaconsultanttoToyotaandsuccessfullylaunchedtheJapanesebrandontotheChinesemarketintheearly1970s.KinShekNghadbeeninvolvedindraw­ingupthereformsandinformulatingChina’sopen­doorpolicy.In2007,hewasrecognizedbytheChineseGovernmentofhismeritoriouscontributionstothedevelopmentandreformofChina.BesideshisactivitiesforWahYuet,KinShekNginvestsinrealestateandthefinancialmarket.Heholdsabachelor’sdegreeinpoliticalscienceandeconomicsandlivesinHongKong.

KinShekNg

KlausSchmidt

ThomasZimmermann

60 Kaba Annual Report 2007/2008 Corporate Governance

AppointmentanddismissalthemembersoftheGroup

ManagementCommitteeandotherkeyexecutives;

Overallsupervisionofbusinessoperation;

Preparationoftheannualreportsandthegeneral

meetingsaswellastheexecutionofitsresolutions.

ResolutionsoftheBoardofDirectorsaretakencollectively

byitsmembers.TheChiefExecutiveOfficerandtheChief

FinancialOfficerattendthemeetingsoftheBoardof

Directorsonaregularbasisinanadvisorycapacity.Other

membersoftheexecutivemanagementarecalledinin

anadvisorycapacityasnecessarytoadviseonindividual

agendaitems.Duringfinancial2007/2008,theBoard

ofDirectorsmetsixtimesatregularlyscheduledmeetings,

whichusuallylastedoneworkingday.Externaladvisors

participatedinaBoardmeetingonce.Inaddition,six

meetingsofthecommitteestookplace.Theagendasfor

BoardmeetingsaresetbytheChairmanbasedonproposals

fromtheChiefExecutiveOfficer.Anymemberofthe

BoardofDirectors,however,mayrequestthatanitembe

includedontheagenda.InadvanceofBoardmeetings,

themembersoftheBoardofDirectorsreceivedocuments

allowingthemtopreparefordiscussionoftheitemson

theagenda.

TheBoardofDirectorsmaintainsanexchangeofideas

withthecompany’smanagersandusuallyvisitsoneormore

locationsoftheKabaGroupperyear.

Committees

TheBoardofDirectorshasestablishedanAuditCommittee,

aCompensationCommitteeandaNominationCommittee.

Eachofthecommitteeshasregulationsinwriting,outlining

itsdutiesandresponsibilities.Thechairpersonsareelected

bytheBoardofDirectors.Thecommitteesmeetregularly

andarerequiredtosubmitfullminutesandrecommen­

dationstotheBoardofDirectorsatitsregularmeetings.

Theagendasforthecommitteemeetingsaresetbytheir

chairpersons.Inadvanceofmeetingsthemembersof

thecommitteesreceivedocumentsallowingthemtopre­

parefordiscussionoftheitemsontheagenda.

•

•

•

ElectionsandTermsofOffice

TheGeneralMeetingelectstheBoardofDirectorsofKaba

HoldingAG.TheArticlesofIncorporationofKabaHoldingAG

providethattheBoardofDirectorsmustconsistoffiveto

tenmembersatanytime.EachmemberoftheBoardof

Directorsiselectedforatermofthreeyearsandmaybere­

electedtosuccessiveterms.Aboutone­thirdofthemembers

oftheBoardofDirectorsarerecommendedforre­election

eachyear;theBoardofDirectorsdecidesonhowtenure

isallocated.Whentheyreachedtheageof70,themembers

oftheBoardofDirectorsresignatthenextAnnualGeneral

Meeting.

ThetermsofUlrichGrafandKlausSchmidtexpireat

theAnnualGeneralMeetingof21October2008.TheBoard

ofDirectorswillproposetheirre­election.TheBoardof

DirectorsalsohasdecidedtoproposetotheAnnualGeneral

MeetingayearearlythatRietCadonaubere­electedfor

atermofthreeyears.

InternalOrganizationalStructure

TheBoardofDirectorsisultimatelyresponsibleforbusi­

nessstrategyandoverallguidanceoftheKabaGroup.

TheBoardofDirectorsisthehighestdecision­makingbody

andestablishesthestrategic,organizational,accounting

andfinancialplanningpoliciestobefollowedbytheKaba

Group.TheBoardofDirectorshasdelegatedthemanage­

mentofday­to­daybusinessoperationstotheGroup

ManagementCommittee,whichisheadedbytheChief

ExecutiveOfficer.TheChiefExecutiveOfficerisresponsible

fortheoverallexecutivemanagementoftheKabaGroup

andforallothermattersexceptforthosereservedbylaw,

theArticlesofIncorporationandOrganizationalRegulations

toanothercorporatebody.

TheprimarydutiesoftheBoardofDirectors,asdefined

intheSwissCodeofObligationsandtheArticlesofIncor­

porationofKabaHoldingAG,areasfollows:

StrategicdirectionandmanagementofKaba;

Accountingmatters,financialcontrol,andfinancial

planning;

•

•

61Kaba Annual Report 2007/2008Corporate Governance

Audit Committee

TheAuditCommitteeconsistsofthreenon­executive

membersoftheBoardofDirectorsexperiencedinfinancial

andaccountingmattersbecauseoftheirprofessional

background.TheBoardofDirectorshasdeterminedthat

themembersmustmeetcertainrequirementswithrespect

toindependenceandqualificationandmaynotbepart

oftheGroupManagementCommittee.Eachmemberofthe

AuditCommitteeiselectedforatermofoneyearandmay

bere­electedtosuccessiveterms.Currently,theAudit

Committeeiscomposedofthefollowingthreemembers:

KlausSchmidt,RietCadonauandThomasZimmermann.

TheAuditCommitteeischairedbyKlausSchmidt.

ThechairpersoninvitesthemembersoftheAuditCom­

mitteetoconveneasoftenasbusinessrequires,butmeet­

ingsareheldatleastonceayear.Infinancial2007/2008,

theAuditCommitteemettwice.TheChiefExecutiveOfficer,

theChiefFinancialOfficerand,asarule,representatives

ofthestatutoryauditorsaswellas,ifnecessary,representa­

tivesofinternalauditandcontrollingattendthemeetings

inanadvisorycapacity.Infinancial2007/2008,represen­

tativesofthestatutoryauditorsandofinternalaudit/con­

trollingattendedbothmeetings.TheAuditCommitteekeeps

minutesofitsdiscussionsandresolutions.

TheprincipalresponsibilityoftheAuditCommitteeis

tomaintainacomprehensiveandeffectiveauditingapproach

forKabaHoldingAGandtheKabaGroup.Inparticular,the

AuditCommitteehasthefollowingresponsibilities:

Withintheregardofexternalauditing

Approvalofthefocalpointsoftheauditingprogram;

Acceptanceofthestatutoryauditors’reportandanyre­

commendationsfromthestatutoryauditorsbefore

theannualaccounts(individualandGroupaccounts)are

submittedtotheBoardofDirectorsforapproval;

SubmissionofaproposaltotheBoardofDirectorsas

awholeastowhichexternalauditoristobeproposedto

theGeneralMeetingforelectionasthestatutoryauditor

andGroupauditor,includingappraisalofthestatutory

auditors’performanceandcompensationaswellasoftheir

independence,andassessmentofthecompatibilityof

theirauditingactivitieswithanyconsultancymandates.

•

•

•

Withregardtointernalauditing

Approvalofguidelinesgoverningtheorganizationand

responsibilitiesofinternalauditing;

Outsourcingofinternalauditingactivitiestothirdparties

ifnecessary;

Approvaloftheauditingprogram;

Checkingauditingresultsandrecommendations

byexternalorinternalauditors.

TheAuditCommitteereportsyearlytotheBoardofDirectors

asawholeonitsactivities.ItnotifiestheBoardofDirectors

immediatelyofanyimportantmatters.

Compensation Committee

TheCompensationCommitteeconsistsofthreemembers

oftheBoardofDirectors.EachmemberoftheCompensation

Committeeiselectedforatermofoneyearandmaybe

re­electedtosuccessiveterms.Currently,thechairpersonis

UlrichGraf,ChairmanoftheBoardofDirectors;theother

membersareMauriceP.AndrienandRolfDörig.

TheCompensationCommitteeisresponsibleforsub­

mittingproposalstotheBoardofDirectorsasawhole

astothecompensation(includingshareoptionschemes)

oftheindividualmembersoftheBoardofDirectors.Upon

applicationfromtheChiefExecutiveOfficer,italsodeter­

minesthesalarypolicyforthemembersoftheExecutive

Managementaswellasapprovingthecompensation

ofthemembersoftheGroupManagementCommittee.

TheCompensationCommitteemeetsatleastonceperyear.

Infinancial2007/2008,theCompensationCommitteemet

twice.Usually,theChiefExecutiveOfficerandtheChief

FinancialOfficerattendthemeetings,butnotexternal

advisors.Onemeetinginfinancial2007/2008wasattended

byrepresentativesoftheKabaLegalDepartmentinan

advisorycapacity.DetailsofthesalarypolicyattheKaba

Groupmaybefoundonpages67/68.

Nomination Committee

TheNominationCommitteeiscomposedofthreemembers,

themajorityofwhommustbenon­executivemembersof

theBoardofDirectors.TheNominationCommitteecurrently

comprisesUlrichGraf(Chairman),MauriceP.Andrienand

•

•

•

•

62 Kaba Annual Report 2007/2008 Corporate Governance

RolfDörig.Themeetingsaregenerallyalsoattendedinan

advisorycapacitybytheChiefExecutiveOfficer,asthesole

memberoftheexecutivemanagement.Externaladvisors

donotattend.TheNominationCommitteeconvenesatleast

onceayear.Infinancial2007/2008,theNominationCom­

mitteemetonce,andthismeetingwasattendedinpartand

inanadvisorycapacitybytheChiefFinancialOfficer.The

Committee’smembersareelectedforatermofoneyear,

andre­electionispossible.

TheNominationCommitteeestablishestheprinciples

forthenominationandre­electionofmembersoftheBoard

ofDirectorsandpursuanttotheseprinciplessubmitsto

theBoardofDirectorsproposalsregardingtheBoard’scom­

position.DecisionsonnominationsaremadebytheBoard

ofDirectorsitself.TheBoardofDirectorsmayalsodelegate

theresponsibilityforthenominationandevaluationof

membersoftheExecutiveManagementtotheNomination

Committee.TheNominationCommitteekeepsminutes

ofitsdiscussionsandresolutions,andregularlyreportsto

theBoardofDirectors.

Information and Control Instruments vis-à-vis

the Executive Management

TheKabaGroup’smanagementinformationsystem(MIS)

operatesasfollows:individualfinancialstatements

(balancesheet,incomestatement,cashflowstatement)

ofeachofthesubsidiariesarepreparedmonthly,quarterly,

semi­annuallyandannually.Thesefiguresaresummarized

persegmentandconsolidatedfortheGroup.Theyare

comparedwiththeprecedingfinancialyearandthebudget.

Thebudget,whichconstitutesthefirstyearofathree­

yearmid­termplanpersubsidiary,isassessedonthebasis

ofthequarterlystatementsintheformofforecastswith

respecttoitsachievability.

Asarule,theChiefOperatingOfficersreportmonthly,

withrespecttothestatusofachievingthebudget,inwriting

totheChiefExecutiveOfficeroftheKabaGroup,who

inturnreportsmonthlyonthistotheBoardofDirectors.

AtthemeetingsoftheBoardofDirectors,thesereportsare

discussedwiththeChiefExecutiveOfficerandtheChief

FinancialOfficer.

63Kaba Annual Report 2007/2008Corporate Governance

ManagementPhilosophy

TheKabaGroupdelegatesentrepreneurialresponsibility

tothelowestpossiblelevel.Managementorganization

atKabaisbasedondecentralizedresponsibilityandswift

decision­makingchannelsthatareclosetolocalmarkets.

Thisstructurecallsforpersonalinitiativeatalllevelsand

ensuresmaximumcustomersatisfaction.Asarolethe

divisionsareresponsiblefortheirbusinessactivitiesworld­

wide,includingdevelopment,productionanddistribution.

ManagementOrganization

TheBoardofDirectorshasappointedaGroupManagement

Committee,chairedbytheChiefExecutiveOfficer.Itsfunc­

tionsandresponsibilitiesaredefinedinOrganizational

Regulations.TheChiefOperationalOfficersandtheChief

FinancialOfficerreporttotheChiefExecutiveOfficer,who

isresponsibleforoverallmanagementandcollaboration

acrossdivisions.TheGroupManagementCommitteeincludes

theChiefOperationalOfficersandtheChiefFinancialOfficer.

ChiefExecutiveOfficer

TheChiefExecutiveOfficermanagestheKabaGroup.

Heisentrustedwithallfunctionsexceptforthosematters

reservedbylaw,theArticlesofIncorporationandthe

OrganizationalRegulationsforanothercorporatebody.

AfterconsultationwiththeGroupManagementCommittee,

theChiefExecutiveOfficersubmitsstrategy,long­term

andmedium­termobjectivesandthemanagementguide­

linesoftheKabaGrouptotheBoardofDirectorsasa

wholeforapproval.UponproposalssubmittedbytheChief

ExecutiveOfficer,theBoardofDirectorsasawholemakes

decisionsinrelationtoannualbudgets(consolidatedand

fortheholdingcompany),individualprojects,annualstate­

ments(individualandconsolidated)andpersonnel.Upon

applicationfromtheChiefExecutiveOfficer,theCompensa­

tionCommitteeoftheBoardofDirectorsapprovesthe

compensation(includingtheallocationofsharesunderthe

ExecutiveStockAwardPlan)ofthemembersoftheGroup

ManagementCommitteeaswellasinsuranceaspects.

TheChiefExecutiveOfficerreportsregularlytothe

BoardofDirectorsasawholeoncurrentbusinessdevelop­

ments,anticipatedopportunitiesandrisksaswellaschanges

atthelowermanagementlevel.ThemembersoftheBoard

ofDirectorsmayrequestandreviewotherinformation.The

ChiefExecutiveOfficermustimmediatelynotifytheChair­

manoftheBoardofDirectorsifsignificantunanticipated

developmentsoccur.

TheChiefExecutiveOfficerregularlyreviewswhether

theArticlesofIncorporation,theregulationsissuedby

theBoardofDirectorsandsignatorypowersmustbechanged

and,ifnecessary,submitstherespectiveamendments.

MembersoftheGroupManagement

Thefollowingtableprovidesthename,age,positionand

datefirstelectedforthoseindividualswhocurrentlyserve

asmembersoftheGroupManagementCommittee:

Members

Name/Position Year of birth Entry

Rudolf Weber

Chief Executive Officer 1950 2006

Frank Belflower

Chief Operating Officer, Access + Key

Systems Americas Division 1953 2001

Andreas Brechbühl

Chief Operating Officer, Access + Data

Systems Asia Pacific Division 1958 2005

Roberto Gaspari

Chief Operating Officer, Key + Ident

Systems Europe/Asia Pacific Division 1959 2006

Jakob Gilgen

Chief Operating Officer,

Door Systems Division 1955 2003

Carl Sideranko

Chief Operating Officer,

Safe Locks Division 1954 2006

Dr. Werner Stadelmann

Chief Financial Officer,

Finance Division 1947 1981

Ulrich Wydler

Chief Operating Officer,

Access + Data Systems EMEA Divison 1947 1994

Executive management

64 Kaba Annual Report 2007/2008 Corporate Governance

U.S.citizen,isChiefOperatingOfficerandHeadoftheAccess+KeySystemsAmericasDivision.AftertheacquisitionofUnicanSecuritySystemsLtd.bytheKabaGroup,hebecamememberoftheGroupManagementCommitteein2001.HehadbeenwiththeUnicangroupsince1978wherehehadfilleddifferentmanagementpositions.FrankBelflowerbecameamemberoftheUnicangroupmanagementin1993.Heholdsadegreeofbachelorofarts(BAPsychology).FrankBelflowerisontheIndustryAdvisoryBoardofALOAandisamemberofthestrategiccommitteesofSHDAandBHMA,twomajorNorthAmericanindustryassociations.

Swisscitizen,is,since1July2005,ChiefOperatingOfficeroftheAccess+DataSystemsDivisionAsiaPacificandmemberoftheGroupManagementCommittee.From2003untiljoiningKaba,hewasGeneralManagerofHiltiinHongKong.From1994to2002,heworkedfortheDiethelmKellerGroupasseniorVice­presidentAsia.Previously,heservedinvariousexecutivepositionswithCibaVision,JacobsSuchardandUnilever.AndreasBrechbühlstudiedattheUniversityofSt.Gallenandgraduatedaslic.oec.HSG.HeresidesandworksinHongKong.

Swisscitizen,hasbeenChiefExecutiveOfficersinceJuly2006.From1986to1996hewasamemberoftheExecutiveCommittee,withvariousmarketing­orientedfunctions,atElcoLooserHoldingAG,Zurich.From1996to2001,hewasChiefOperatingOfficerofHovalHeiztechnik,Feldmeilen,andfrom2002to2006CEOofFr.SauterAG,Basle.HeismemberoftheBoardofDirectorsofEnicsAG,Baden,ofElmaAG,Wetzikon,andofVitrashopHoldingAG,Muttenz.HefinishedhisstudiesattheSwissFederalInstituteofTechnology(ETH)withadegreeinengineeringandattheUniversityofSt.Gallen(HSG)withadegreeinbusinessadministration.

RudolfWeberCEO

FrankBelflowerCOOAccess+KeySystemsAmericas

AndreasBrechbühlCOOAccess+DataSystemsAsiaPacific

65Kaba Annual Report 2007/2008Corporate Governance

Swisscitizen,wasappointedChiefOperatingOfficerandHeadoftheDoorSystemsDivisionon1July2003.Asof1993,hewasPresidentandManagingDirectoroftheformerGilgenAG.Afterthe1996acquisitionofGilgenTür­undTorautomationAGbytheKabaGroup,heheadedupKabaGilgenAGinthisposition.JakobGilgenisChairmanoftheBoardofDirectorsofGilgenLogisticsAGandapart­timecommercial­lawjudgeattheSuperiorCourtoftheCantonofBerne.HestudiedattheUniversityofAppliedSciencesinBielandgraduatedwithdiplomasinbothmechanicalandelectricalengineering.Afterhavinggainedseveralyearsofprofessionalex­perience,hecomplementedhisacademicqualificationswithpost­graduatestudiesinbusinessmanagement.

U.S.citizen,isChiefOperatingOfficerandHeadoftheSafeLockDivision.CarlSiderankobecameamemberoftheGroupManagementCommitteeaftertheformationoftheSafeLockdivisionin2006.PriortohiscurrentpositionhewasGeneralManagerofKabaMasCorp.andStrategicBusinessSegmentManagerforSafeLocks.HewasheadofdistributionoftheMas­HamiltonGroupfrom1998until2001whenUnicanacquiredMas­Hamilton.Since1976,CarlSiderankoheldvariousmanage­mentpositionsinthesecurityindustryatEmhartIndustriesandAssaAbloyaffiliates.Hefinishedhisstudieswithabachelorofscience(BSMarketing).

Italiancitizen,assumedresponsibilityforKey+IdentSystemsDivisionEurope/AsiaPacificon1January2006,becom­ingamemberoftheGroupManagementCommitteeatthesametime.HejoinedKabainMarch2002,sincewhenhehasbeenGeneralManagerofSilcaS.p.A.inVittorioVeneto(Italy).From1997to2002,RobertoGaspariworkedforthemultinationalAmericancompanyWattsIndustriesInc.asManagingDirectorItalyandFrance.Between1988and1997,heheldthepostofManagingDirectoratCisaS.p.A.HegraduatedinbusinessstudiesfromBocconiUniversityinMilan(Italy).

RobertoGaspariCOOKey+IdentSystemsEurope/AsiaPacific

JakobGilgenCOODoorSystems

CarlSiderankoCOOSafeLocks

66 Kaba Annual Report 2007/2008 Corporate Governance

Swisscitizen,isChiefOperatingOfficerandHeadoftheAccess+DataSystemsEMEA.HejoinedKabain1984andbecameamemberoftheGroupManage­mentCommitteein1994.From1972to1984,hewasheadofdevelopmentandmanagerofprojectsintheairdefensedivisionofOerlikon­BührleContraves.UlrichWydlerisChairmanoftheBoardofDirectorsofBridgeBetriebsdatenAG.HestudiedatthetechnicaluniversityinBruggandgraduatedwithadegreeinelectricalengineering.

Swisscitizen,is,since1990,HeadoftheFinanceDivision.HejoinedKabaasgroupcontrollerin1981andbecameamemberoftheGroupManagementCommittee.From1974to1981,hehadvariousmanagementpositionsincontrollingintheGuritgroup.WernerStadelmannstudiedattheHochschulefürWirtschafts­,Rechts­undSozial­wissenschaften(HSG)inSt.GallenandgraduatedasDr.oec.HSG.

WernerStadelmannCFO

UlrichWydlerCOOAccess+DataSystemsEMEA

ManagementContracts

KabaHoldingAGanditsGroup

companieshavenotentered

intomanagementcontractswith

thirdparties.

67Kaba Annual Report 2007/2008Corporate Governance

ContentandMethodofDeterminingCompensationandShareholdingPrograms

Fortheirwork,themembersoftheBoardofDirectorsreceive

compensationthatisproposedbytheCompensationCom­

mitteeandratifiedbytheBoardofDirectorsasawhole.

TheexecutivesofKabareceiveperformance­related

compensation.Thevariablecomponent–15%to30%

oftotalcompensation–dependsontheachievementofindi­

vidualperformancegoals,whicharedefinedinadvance

everyyear.Thesizeofthiscomponentalsodependspartly

ontheprofitgeneratedintherelevantoperatingunitor

divisionandonconsolidatednetincome.TheCompensation

Committeeapproves,uponapplicationfromtheChief

ExecutiveOfficer,thecompensationofthemembersof

theGroupManagementCommittee(includingtheallocation

ofsharesundertheExecutiveStockAwardPlan).

Astockoptionplan,andnowtheExecutiveStockAward

Plan,areafurthercompensationcomponentformembers

oftheBoardofDirectorsandtheGroupManagement

Committeeand,since1July2002,tootherselectedem­

ployees.AccordingtotheKabaExecutiveStockOptionPlan

institutedon2July2002(2002StockOptionPlan),which

supersededtheRegulationsontheIssuanceofOptions

onStocksdated16September1998(1998StockOption

Plan),thoseentitledreceiveoptionsthatcanbeexercised

instepsoveracertainperiodoftimewithinthescope

determinedbytheCompensationCommitteeortheBoard

ofDirectors.

Infinancial2007/2008,nomoreoptionswereissued

underthe2002StockOptionPlan.The2002StockOption

PlanwasreplacedbyanExecutiveStockAwardPlan.

However,the2002StockOptionPlanremainsinforcewith

respecttoalloptionsissuedunderit,untiltheseoptions

areexercisedorexpire.

Allotherfactsandfiguresonmanagementcompensa­

tioncanbefoundintheFinancialStatementsofKaba

HoldingAG(frompage134)andintheaccompanyingNotes.

StockOptionandStockAwardPlans

TheGeneralMeetingheldon27October1997authorizedthe

creationofconditionalcapitalintheamountofCHF200,000

forthecreationofastockoptionplan.TheExtraordinary

GeneralMeetingofKabaHoldingAGheldon8February

2001increasedthisconditionalcapitalbyCHF400,000

toCHF600,000(issuedas60,000registeredshares

withaparvalueofCHF10).TheAnnualGeneralMeeting

of25October2005approvedanincreaseintheconditional

capitalbyanadditional60,000shares.

2002 Stock Option Plan

Thepurposeofthe2002StockOptionPlanistoofferthose

eligibleashareinthecapitalofKabaHoldingAGandin

thefinancialsuccessoftheKabaGrouptoencouragetheir

identificationwiththeKabaGroup.MembersoftheBoard

ofDirectorsanduppermanagementlevels,includingthe

GroupManagementCommitteemembersandotherselected

managers,areeligiblefortheplan.

Everyyearon1September,attheChiefExecutive

Officer’srequest,theCompensationCommitteedefinesthe

eligibilitycriteriaandthenumberofoptionstobeallotted.

TheallotmentofoptionstomembersoftheBoardof

DirectorsasproposedbytheCompensationCommitteeis

ratifiedbytheBoardofDirectors.Eachoption,allotted

freeofchargetotheeligiblepersons,entitlestheownerto

purchasearegisteredshareofKabaHoldingAG(atthe

optionowner’sdiscretion:physicaldeliveryorcashpayment

inlieu).Theexercisepricecorrespondstotheaverage

closingpriceofKabaHoldingAGregisteredshareson

theSWXSwissExchangeduringthelasttwomonthsprior

to31Augustoftherespectiveallotmentyear(2002:

CHF293.90;2003:CHF199.90;2004:CHF250.35;

2005:CHF352.72;2006:CHF322.83).Theoptionsare

subjecttoagraduatedblockingperiodofonetofouryears

duringeachofwhich25%oftheannualallotmentvests

andisexercisableuntiltheexpiryoffiveyearsfromthedate

ofallotmentwhenanyunexercisedoptionswilllapse.

Atotalof1 13,752registeredshareswithaparvalue

ofCHF0.10each(totalingCHF1 1,375.20)oftheconditional

sharecapitalwereoriginallyreservedforthe2002Stock

Compensation, shareholdings and loans

68 Kaba Annual Report 2007/2008 Corporate Governance

OptionPlan.69,080optionshavebeenallotted,where­

of120optionshavebeenexercisedinreturnforregistered

sharesand29,180inreturnforconditionalsharecapital.

Executive Stock Award Plan

The2002StockOptionPlanhasbeenreplacedbythe

ExecutiveStockAwardPlan(ESAP1).TheBoardofDirectors

approvedtheregulationsforESAP1on1March2007.The

listofparticipantsfor2007wasapprovedbytheCompensa­

tionCommitteeon17July2007.Thefirstshares(atotal

of3,940sharesoutofconditionalcapital)wereissuedon

15August2007.

ThepurposeoftheExecutiveStockAwardPlanisto

offerthoseeligibleashareinthecapitalofKabaHoldingAG

andinthefinancialsuccessoftheKabaGroupandtoen­

couragetheiridentificationwiththeKabaGroup.Thefollow­

ingareeligiblefortheplan:membersoftheBoardof

Directors,theExecutiveManagement,SeniorCorporate

Management,membersofthegeneralmanagement

businessunitsandGroupcompaniesasdesignatedbythe

ChiefExecutiveOfficer.TheCompensationCommitteeis

responsibleforapprovingthelistofparticipantsofthe

ExecutiveStockAwardPlan.Eligibilityforparticipationmay

beextendedtootherselectedmembersofstaff.

TheCompensationCommitteeisresponsibleonapplica­

tionfromtheChiefExecutiveOfficer,fordeterminingthe

individuallevelsandthenumbersofsharesallotted.Partici­

pantswillbeinformedofthenumberofsharesallottedto

themon21Julyofeachyear;participantscanthenchoose

whethertoaccepttheshares,rejectthem,oracceptthem

withablockingperiodof5years.Theshareswillbealloted

onorabout15August.

Ifaparticipantshoulddieorifthereisachange

ofcontrolofKabaHoldingAG(forchangesofcontrolsee

“ChangesofControlandDefenseMeasures”onpage70),

theblockingperiodwillbelifted.

69Kaba Annual Report 2007/2008Corporate Governance

VotingRightRestrictionandProxyVoting

AttheGeneralMeetingofKabaHoldingAG,eachregistered

shareentitlesitsownertoonevote.However,singleshare­

holdersmayexercisenomorethan5%ofallvotingrights

whendirectlyrepresentingtheirownregisteredsharesand

indirectlyactingasproxiesforregisteredsharesowned

byothers.Inthiscontext,legalentitiesorpartnershipsthat

arelinkedbycapital,votingrights,commonmanagementor

otherwise,aswellasallindividuals,legalentitiesorpartner­

shipsthatcombinewiththeintentionofcircumventing

thevotingrightrestriction,aredeemedtoconstituteasingle

person.Thisvotingrightrestrictiondoesnotapplytobanks

representingshareholders,membersofacorporatebody

actingasproxies,orindependentproxiespursuanttoarticle

689coftheSwissCodeofObligations.Thisvotingright

restrictiondoesnotapplytoshareholderswhowerealready

listedintheshareregisterwithmorethan5%ofthevoting

rightswhenthevotingrightsrestrictionclausewasratified.

Ashareholdermayberepresentedonlybyanother

shareholderwithawrittenproxy.Representationbybanks,

bymembersofacorporatebodyactingasproxiesorby

independentproxiespursuanttoarticles689cand689dof

theSwissCodeofObligationsremainsreserved.

Thevotingrightrestrictioncanonlybeliftedbyare­

solutionoftheGeneralMeetingwithamajorityofthevotes

submitted.

MajoritiesRequiredbytheArticlesofIncorporation

Forresolutionscovering

conversionofregisteredsharesintobearershares,

dissolutionofKabaHoldingAG(includingasaresult

ofmerger),and

amendmentstoprovisionsoftheArticlesofIncorporation

regardingtherestrictionsonthetransferabilityofregis­

teredshares,themajoritiesrequiredbytheArticlesof

Incorporationandtheelectionandre­electionofmembers

oftheBoardofDirectors

approvalrequiresatleasttwo­thirdsofthevotesrepresented.

•

•

•

Mandatoryprovisionsofthelawarereserved.Inallother

cases,theGeneralMeetingofKabaHoldingAGpassesits

resolutionsandconductsitsvotes,withoutregardfor

thenumberofshareholderspresentorrepresentedshares,

onthebasisofthemajorityofvotescast.

ConvocationoftheGeneralMeetingofShareholdersandAgenda

ConvocationoftheGeneralMeetingisinaccordancewith

thelegalrequirements.

TheBoardofDirectorsofKabaHoldingAGisobliged

toincludemotionsbyshareholderscollectivelyrepresenting

0.5%ofthesharecapitalintheagendasentoutwiththe

invitationtotheGeneralMeeting,providedthatsuchmotions

aresubmittedinwritingtotheBoardofDirectorsatleast

fourweekspriortotheGeneralMeeting.Proposalsfor

inclusionintheagendamustbemadeinwriting,stating

thesubjectmatterandthemotions.

EntryintheShareRegister/InvitationtotheGeneralMeetingon21October2008

Shareholdersenteredintheshareregisterwithvotingrights

asat5September2008willreceivetheinvitationtothe

AnnualGeneralMeetingon21October2008withthepro­

posalsoftheBoardofDirectors;thematerialswillbemailed

starting17September2008.Shareholderswhoreturn

theirreplyslipwillreceivetheadmissioncardandvoting

materials.Shareholderswhoarenotyetregisteredon

5September2008,butpurchasesharesatalaterdate,will

receivetheinvitationtotheGeneralMeetinglater,provided

therequestforregistrationisreceivedbytheShareRegister

officeofKabaHoldingAGbynolaterthan13October2008.

Theshareregisterwillbeclosedfrom14to21October2008.

ShareholderswhosellalloftheirsharesbeforetheGeneral

Meetingwillnolongerbeeligibletovote.Shareholders

whosellpartoftheirsharesorpurchaseadditionalshares

aretohavetheiradmissioncardsupdatedattheinformation

deskatthevenueoftheGeneralMeeting.

Shareholder’s participation rights

70 Kaba Annual Report 2007/2008 Corporate Governance

DutytoMakeaPublicOffer

TheArticlesofIncorporationdonotcontainopting­outor

opting­upprovisions(article22oftheSwissFederalLawon

StockExchangesandSecuritiesTrading).

ChangeofControlprovisions

IntheeventofachangeofcontrolofKabaHoldingAG,

KabaManagement+ConsultingAG(withjointliabilityonthe

partofKabaHoldingAG)isobligedtomakeapaymentin

theamountofapproximatelyoneannualsalary(including

bonus)–the“change­of­controlamount”–tomembers

oftheextendedGroupManagementCommitteewhohave

hadtheiremploymentrelationshipterminatedorhave

terminatedtheiremploymentrelationshipthemselveswithin

oneyearafterthechangeofcontroleventdate,withaview

toimprovingtheirpensionentitlements.

Moreover,KabaManagement+ConsultingAG(withjoint

liabilityonthepartofKabaHoldingAG)hasgrantedatake­

overbonustofivemembersoftheextendedGroupManage­

mentCommitteewhoinatakeoversituation(i.e.inthe

caseofapublictakeoverbidoramergerofKabaHoldingAG

followingwhichtheoriginalshareholdersofKabaHoldingAG

holdlessthan50%ofthevotingrightsinthemergedcom­

pany)maybeheavilyexposedduringthetakeoverprocess

intheinterestofKabaHoldingAGandtheshareholders.

Thetakeoverbonusonlyarisesifatakeoveroccursandthe

BoardofDirectorshasapprovedthenegotiationsorthe

takeoverormerger.Thetakeoverbonuswillbecomepayable

atthetimethenewownerisenteredintheshareregister

forKabaHoldingAGwithmorethan50%ofallshares

withvotingrights,orwhenthemergerisenteredinthe

commercialregister.Thetakeoverbonuswillbecalculated

asfollows:change­of­controlamountforthepersoneligible

forthebonus,multipliedbytheincreaseinthesharepricein

percentagepoints,dividedby12.5;theincreaseintheshare

pricewillbedeterminedonthebasisoftheaverageopening

priceofKabaHoldingAGsharesinthefourthmonthbefore

thepointintime(thebaseprice)atwhichtheBoardof

DirectorsofKabaHoldingAGdecidestoenterintothetake­

overbidormergerortoenterintonegotiations.Iftheshare

pricewassignificantlyaffectedbytakeoverspeculationin

themonthwhichdeterminesthebaseprice,anearlierpoint

intimewillbechosenbytheparties.Thegrossamountof

atakeoverbonuswillbenomorethanfivetimesthechange

ofcontrolamountforthepersoneligibleforthebonus.

2002 Stock Option Plan

Therulesofthe2002StockOptionPlanprovidethat,upon

achangeofcontrol(asdefinedtherein)ofKabaHoldingAG,

allunvestedoptionsshallimmediatelyvestandshallto­

getherwithotheroutstandingvestedoptions,beexercizable

immediately.

Executive Stock Award Plan

TherulesoftheExecutiveStockAwardPlanprovidethat,

intheeventofachangeofcontrol(asdefinedtherein)of

KabaHoldingAG,allblockingperiodschosenbyparticipants

shallbelifted.

Changes of control and defense measures

71Kaba Annual Report 2007/2008Corporate Governance

DurationoftheMandateandTermofOfficeoftheHeadAuditor

PricewaterhouseCoopersAG,Zurich,wasappointedauditor

ofKabaHoldingAGin1907andoftheKabaGroupin1982.

Theheadauditorresponsiblefortheexistingauditing

mandatewasappointedeffectivefinancial2002/2003.

AuditingHonorariumsandAdditionalHonorariums

AuditfeeschargedbytheGroupauditorsPricewaterhouse­

Coopersforservicesinconnectionwithauditingthefinancial

statementsofKabaHoldingAGandtheGroupcompanies

andtheconsolidatedfinancialstatementsoftheKabaGroup

infinancial2007/2008wereapproximatelyCHF1,662,000.

Inaddition,infinancial2007/2008theKabaGroupincurred

feesofaroundCHF462,000fromPricewaterhouseCoopers

forotherservicesrendered(managementconsultancy,

especiallyinconnectionwithacquisitions,taxstructuring,

etc.).

TheAuditCommitteeoftheBoardofDirectorsannually

assessestheperformance,remunerationandindepen­

denceofthestatutoryandGroupauditorsandsubmitsto

theBoardofDirectorsaproposalastowhichexternalaudi­

torsshallbeproposedforelectionbytheGeneralMeeting.

TheAuditCommitteealsoannuallymonitorsthescope

oftheexternalauditingprocess,theauditingprogramand

therelevantproceduresanddiscussestheauditingresults

withtheexternalauditors.

Auditors

72 Kaba Annual Report 2007/2008 Corporate Governance

TheKabaGroupiscommittedtoatransparentinformation

policyforthebenefitofthepublicandfinancialmarkets.

Thiscommitment(whichfarexceedslegalrequirements)and

thecontinuityininvestorrelationsareunderlinedbythe

Investor’sHandbook,whichKabapublishesannually(since

1996)togetherwiththeAnnualReport.TheInvestor’sHand­

bookmaybedownloadedfromthewebsitewww.kaba.com.

Inaddition,KabahaspublishedaSustainabilityCharta,con­

taininginformationaboutthesustainabilityofitscorporate

strategy,aboutenvironmentalprotectionandthecompany’s

socialcitizenshipresponsibility.

Thefollowingschedulelistsimportantdates:

Dates

Financial 2007/2008

Closure of financial year 30 June 2008

Announcement of annual results 17 September 2008

Publication of Annual Report 17 September 2008

Annual General Meeting 21 October 2008

Financial 2008/2009

Semi-annual statement 31 December 2008

Announcement of semi-annual

statement 4 March 2009

Closure of financial year 30 June 2009

Announcement of annual results 16 September 2009

Publication of Annual Report 16 September 2009

Annual General Meeting 20 October 2009

KabaHoldingAGinformsitsshareholdersinsemi­annual

shareholders’lettersaboutitsoperations(includingthe

consolidatedbalancesheetandconsolidatedincomestate­

mentforthehalf­yearasat31December).

Reportingonfinancial2007/2008togetherwiththe

financialstatementsasat30June2008includestheAnnual

Report,theFinancialReportandtheCorporateGovernance

report.Thisdocumentationcanbeorderedusingtheform

thatisdistributedtoshareholderstogetherwiththeinvi­

tationtotheAnnualGeneralMeeting.Itcanalsobeordered

onlineatwww.kaba.com.Theshareprice,annualreports,

pressreleasesandpresentationsmaybedownloadedfrom

www.kaba.com.Pressconferencesandanalystmeetings

takeplaceatleastonceayear.

TheKabaGroupalsoholdsmeetingsforinvestors.

Thesemeetingsallowfinancialanalystsandinvestorstogain

anin­depthinsightintothecompany’sbusinessbyenabling

themtoseethecompany’soperationsforthemselvesand

tomeetmembersofseniorandmiddlemanagement.In

financial2007/2008,theKabaInvestors’Daytookplaceat

ourproductionfacilityinHerzogenburg(Austria).Theevents

arealsoopentojournalists.

KabaHoldingAGpublishesprice­sensitiveinformation

inaccordancewiththeobligationtodiscloseprice­sensitive

facts(ListingRules,art.72–guidelineonadhocpublicity)

asrequiredbytheSWXSwissExchange.

Contact

Investor relations

Dr.WernerStadelmann

ChiefFinancialOfficer

Hofwisenstrasse24

8153Rümlang,Switzerland

Phone +41448189061

Fax +41448189052

E­Mail investor@kaba.com

Media relations

Jean­LucFerrazzini

ChiefCommunicationsOfficer

Hofwisenstrasse24

8153Rümlang,Switzerland

Phone +41448189201

Fax +41448189194

E­Mail jferrazzini@kaba.com

Information policy

Financial Statements

76 Informationsforinvestors

Group

79 Consolidatedincomestatement

80 Consolidatedbalancesheet

82 Consolidatedstatementofcashflows

83 Consolidatedchangesinequityforfinancial2007/2008

84 Notesontheconsolidatedfinancialstatements

124 LegalstructureoftheKabaGroup

127 Reportofthegroupauditors

HoldingCompany

129 HoldingCompanybalancesheet

130 HoldingCompanyincomestatement

131 Notesonthefinancialstatements

137 Reportofthestatutoryauditors

138 Commentsonthefinancialstatements

76 KabaAnnualReport2007/2008 FinancialStatements

inCHFmillion,exceptwhereindicated 2007/2008 2006/2007 2005/2006 2004/2005 2003/2004

Netsales 1,303.7 1,248.7 1,041.0 980.1 978.1

Earningsbeforeinterest,tax,depreciationandamortization

(EBITDA) 206.6 186.5 150.4 152.6 151.1

EBITDA in % of net sales 15.9 % 15.0 % 14.4 % 15.6 % 15.5 %

Earningsbeforeinterestandtax(EBIT) 164.0 143.7 118.8 121.3 118.3

EBIT in % of net sales 12.6 % 11.5 % 11.4 % 12.3 % 12.1 %

Netprofit 97.1 84.8 68.1 65.9 47.2

Net profit in % of net sales 7.5 % 6.8 % 6.5 % 6.7 % 4.8 %

Net cash from operating activities 135.8 134.0 103.1 85.5 115.9

Net cash used in investing activities — 34.0 — 278.3 — 32.7 — 28.5 — 27.0

Freecashflow(net)beforedividend 101.8 —144.3 70.4 57.0 88.9

Net cash flows from financing activities — 117.0 198.4 — 74.0 — 123.5 — 115.2

Wherof dividends paid — 24.7 — 19.3 — 17.2 — 14.3 — 10.7

Personnel expenses 456.1 448.9 405.2 376.9 382.7

Average number of full-time equivalent employees 9,151 8,585 5,721 5,836 5,889

Personnel expenses per employee (in CHF) 49,842 52,289 70,827 64,582 64,986

Basic earnings per share (in CHF) 25.6 22.6 19.0 18.4 13.2

Diluted earnings per share (in CHF) 25.6 22.5 19.0 18.4 13.2

Dividend per share (in CHF) 1) 7.8 6.5 5.1 4.8 4.0

Payout ratio in % of consolidated earnings 31 % 29 % 27 % 26 % N / A

Totalassets 1,077.9 1,162.7 693.2 680.2 729.6

Net operating assets 687.7 740.1 354.9 347.0 334.7

Growth in % vs previous year — 7.1 % 108.5 % 2.3 % 3.7 % N / A

Return on net operating assets (RONOA) 23.8 % 19.4 % 33.5 % 35.0 % 35.3 %

Assetsstructure

Total assets in % of net sales 82.7 % 93.1 % 66.6 % 69.4 % 74.4 %

Property, plant and equipment in % of net sales 15.9 % 17.7 % 18.8 % 20.3 % 20.8 %

Inventories in % of net sales 18.2 % 19.2 % 18.0 % 18.5 % 17.5 %

Receivables in % of net sales 18.9 % 20.2 % 18.6 % 18.9 % 18.1 %

Networkingcapital

(Current assets less cash and cash equivalents,

less accounts payable trade, accrued and

other current liabilities, provisions) 254.5 272.8 201.9 190.7 169.3

Net working capital in % of net sales 19.5 % 21.8 % 19.4 % 19.5 % 17.3 %

Netdebt 412.7 491.6 264.6 307.7 339.3

Net debt / EBITDA (gearing) 2.00 2.64 1.76 2.01 2.25

Shareholders’ equity 237.6 215.1 77.5 32.3 — 28.8

Shareholders’ equity in % of total assets 22.0 % 18.5 % 11.2 % 4.8 % — 4.0 %

Return on equity (ROE) 40.9 % 39.4 % 87.9 % 204.0 % N / A

Shareholders’ equity per share (in CHF) 62.6 56.8 21.7 9.0 — 8.1

1) 2004/2005and2005/2006asrepaymentofparvalue(freeofwithholdingtax).2007/2008proposaltotheAnnualGeneralMeeting.

per 30 June

Information for investors

77KabaAnnualReport2007/2008FinancialStatements

per share data

Information for investors 2007/2008 2006/2007 2005/2006 2004/2005 2003/2004

Capitalstock

Registered shares at CHF 0.10 par value No. 3,803,778 3,790,693 3,577,083 3,575,098 3,573,748

Outstanding shares at end of financial year No. 3,797,871 3,787,592 3,570,683 3,575,098 3,573,748

Weighted average number of shares outstanding

(diluted) No. 3,798,435 3,763,162 3,581,977 3,580,753 3,569,670

Par value of average outstanding shares CHF m 0.4 0.4 18.6 35.7 35.7

Par value of year-end outstanding shares CHF m 0.4 0.4 18.6 35.8 35.7

Shareholders as at 30 June No. 5,928 6,075 7,482 6,326 6,295

Figurespershare(fullydiluted)

Profit and depreciation per share (Group) CHF 36.8 33.9 27.8 27.1 22.4

EBIT per share (Group) CHF 43.2 38.2 33.2 33.8 33.1

Earnings per share (Group) CHF 25.6 22.5 19.0 18.4 13.2

Growth in earnings per share % 14 % 19 % 3 % 39 % N / A

Dividend (gross) per share 1) CHF 7.8 6.5 5.1 4.8 4.0

Payout ratio in % of consolidated earnings 31 % 29 % 27 % 26 % 30 %

Shareholders’ equity per share (Group) CHF 62.6 57.2 21.6 9.0 — 8.1

Pricepershare

— high CHF 392.5 407.0 378.0 392.0 300.0

— low CHF 294.5 298.3 287.0 213.5 190.0

— 31 December CHF 355.0 369.0 322.0 352.5 250.0

— 30 June CHF 311.0 360.0 299.0 350.0 358.5

Marketcapitalization

— high CHF m 1,493 1,543 1,352 1,401 1,072

— low CHF m 1,120 1,131 1,027 763 679

— 30 June CHF m 1,183 1,365 1,070 1,251 924

— in % of net sales 91 % 109 % 103 % 128 % 94 %

Dividendyield

— low % 2.6 % 2.2 % 1.3 % 1.2 % 1.3 %

— high % 2.0 % 1.6 % 1.8 % 2.2 % 2.1 %

1) 2004/2005and2005/2006asrepaymentofparvalue(freeofwithholdingtax).2007/2008proposaltotheAnnualGeneralMeeting.

78 KABAAnnualReport2007/2008 FinancialReport

Financial ReportGroup

inCHFmillionexceptpershareamounts Note

Financialyearended30.6.2008 in%

Financialyearended30.6.2007 in%

Netsales 5 1,303.7 100.0 1,248.7 100.0

Changes in finished goods and work in progress 5.0 0.4 0.7 0.1

Other operating income 6 14.0 1.1 15.2 1.2

Material expenses 7 — 460.0 — 35.3 — 431.8 — 34.6

Personnel expenses 8 — 456.1 — 35.0 — 448.9 — 35.9

Other operating expenses 9 — 200.0 — 15.3 — 197.4 — 15.8

Operatingprofitbeforedepreciation(EBITDA) 206.6 15.9 186.5 15.0

Depreciation and amortization 16, 17 — 42.6 — 3.3 — 42.8 — 3.5

Operatingprofit(EBIT) 164.0 12.6 143.7 11.5

Disposal of subsidiary 4 0.8 0.1 0.0 0.0

Result from associates and joint ventures 18 0.1 0.0 — 0.2 0.0

Financial expenses 10 — 35.3 — 2.7 — 32.4 — 2.6

Financial income 11 1.9 0.1 2.2 0.2

Profitbeforetaxes 131.5 10.1 113.3 9.1

Income taxes 12 — 34.4 — 2.6 — 28.5 — 2.3

Netprofitbeforeminorityinterests 97.1 7.5 84.8 6.8

Net profit attributable to minorities 0.0 0.0

Net profit attributable to equity holders of the company 3 97.1 84.8

Basic earnings per share (in CHF) 3 25.6 22.6

Diluted earnings per share (in CHF) 3 25.6 22.5

Thenotesonpages84to123areanintegralpartoftheseconsolidatedfinancialstatements.

Consolidated income statement

79KABAAnnualReport2007/2008FinancialReport

80 KabaAnnualReport2007/2008 FinancialStatements

inCHFmillion NoteFinancialyear

ended30.6.2008 in%Financialyear

ended30.6.2007 in%

Currentassets

Cash and cash equivalents 67.2 6.2 86.0 7.4

Accounts receivable trade 13 246.2 22.9 252.7 21.7

Inventories 14 237.8 22.1 239.4 20.6

Current income taxes 5.4 0.5 6.8 0.6

Other current assets 15 19.6 1.8 24.0 2.1

Totalcurrentassets 576.2 53.5 608.9 52.4

Non-currentassets

Property, plant and equipment 16 207.7 19.3 221.5 19.0

Goodwill and other intangible assets 17 263.5 24.4 292.1 25.1

Investments in associated and joint ventures 18 6.0 0.6 6.3 0.5

Non-current financial assets 18a 15.5 1.4 15.1 1.3

Deferred income taxes 24 9.0 0.8 18.8 1.7

Totalnon-currentassets 501.7 46.5 553.8 47.6

Totalassets 1,077.9 100.0 1,162.7 100.0

Thenotesonpages84to123areanintegralpartoftheseconsolidatedfinancialstatements.

Consolidated balance sheet Assets

81KabaAnnualReport2007/2008FinancialStatements

inCHFmillion NoteFinancialyear

ended30.6.2008 in%Financialyear

ended30.6.2007 in%

Currentliabilities

Current borrowings 19 258.0 23.9 367.4 31.6

Accounts payable trade 72.6 6.7 76.8 6.6

Current income tax liabilities 24.5 2.3 26.1 2.2

Accrued and other current liabilities 20 166.1 15.4 158.0 13.6

Provisions 21 15.8 1.5 15.3 1.4

Totalcurrentliabilities 537.0 49.8 643.6 55.4

Non-currentliabilities

Non-current borrowings 19 221.9 20.6 210.2 18.0

Accrued pension cost and benefits 22 46.7 4.3 54.5 4.7

Deferred income taxes 24 33.6 3.1 37.8 3.2

Other non-interest bearing liabilities 1.1 0.2 1.5 0.2

Totalnon-currentliabilities 303.3 28.2 304.0 26.1

Totalliabilities 840.3 78.0 947.6 81.5

Equity

Share capital 3 0.4 0.0 0.4 0.0

Additional paid-in capital 618.4 57.3 614.7 52.9

Equity conversion element of convertible bond 9.3 0.9 9.3 0.8

Retained earnings — 335.3 — 31.0 — 407.5 — 35.0

Treasury stock — 1.8 — 0.2 — 1.1 — 0.1

Cumulative translation adjustment — 53.4 — 5.0 — 0.7 — 0.1

Totalshareholders’equity 237.6 22.0 215.1 18.5

Minority interests 0.0 0.0

Totalequity 237.6 22.0 215.1 18.5

Totalliabilitiesandequity 1,077.9 100.0 1,162.7 100.0

Thenotesonpages84to123areanintegralpartoftheseconsolidatedfinancialstatements.

Consolidated balance sheet Liabilities and equity

82 KabaAnnualReport2007/2008 FinancialStatements

inCHFmillion NoteFinancialyear

ended30.6.2008Financialyear

ended30.6.2007

Netprofitfortheyear 97.1 84.8

Depreciation and amortization 16, 17 42.6 42.8

Income tax expenses 12 34.4 28.5

Interest expenses 10 34.1 34.2

Interest income 11 — 1.8 — 1.8

(Gain) loss on disposal of fixed assets, net — 0.4 — 1.9

Adjustment for non-cash items 0.6 1.1

Change in accounts receivable trade — 16.4 — 18.5

Change in inventories — 20.2 — 2.3

Change in other current assets — 1.1 5.0

Change in accounts payable trade 1.6 2.3

Change in accrued pension cost — 6.2 — 1.6

Change in accrued and other current liabilities 20.9 3.3

Cashgeneratedfromoperations 185.2 175.9

Income taxes paid — 25.4 — 17.7

Interest paid — 25.8 — 26.0

Interest received 1.8 1.8

Netcashfromoperatingactivities 135.8 134.0

Cashflowsfrominvestingactivities

Purchase of property plant and equipment 16 — 40.6 — 26.5

Proceeds from sale of property plant and equipment 16 1.9 11.2

Acquisition of subsidiaries, net of cash acquired 0.0 — 251.7

Sale of subsidiaries, net of cash sold 4 11.7 0.0

Acquisition of associates and joint ventures 0.0 — 6.4

Purchases of other intangible assets 17 — 4.2 — 4.6

Decrease of other non-current financial assets 0.2 0.6

Increase of other non-current financial assets — 3.0 — 0.9

Netcashusedininvestingactivities —34.0 —278.3

Cashflowsfromfinancingactivities

Issuance (repayment) of short-term debt, net 19 — 94.3 212.0

Proceeds from borrowings 19 2.2 2.6

Repayment of long-term debt 19 — 1.2 — 0.4

Decrease in other non-current liabilities — 0.3 — 0.1

Treasury stock (purchased) re-issued — 0.9 0.0

New shares issued 2.2 3.6

Dividends paid to company’s shareholders — 24.7 0.0

Repayment of par value (free of withholding tax) 0.0 — 19.3

Netcashflowsfromfinancingactivities —117.0 198.4

Translation exchange differences — 3.6 — 6.9

Netincrease(decrease)incashandcashequivalents —18.8 47.2

Cash and cash equivalents at beginning of period 86.0 38.8

Cash and cash equivalents at end of period 67.2 86.0

Netincrease(decrease)incashandcashequivalents —18.8 47.2

Thenotesonpages84to123areanintegralpartoftheseconsolidatedfinancialstatements.

Consolidated statement of cash flows

83KabaAnnualReport2007/2008FinancialStatements

inCHFmillonShare

capital

Additionalpaid-incapital

Equityconvers.elementofconv.

bond1)

Cashflowhedgingreserve

Retainedearnings

Treasurystock

Cumul.trans-lation

adjustm.Minority

interestsTotal

equity

Financialyearended30.6.2007

Balanceat30.6.2006 18.6 546.9 9.3 0.0 —492.7 —1.9 —2.9 0.2 77.5

Adjustment cash flow hedging reserve 0.0

Tax effect on adjustment cash flow

hedging reserve 0.0

Valuation adjustment treasury stock 0.4 — 0.4 0.0

Translation adjustments 2.2 — 0.2 2.0

Netincomedirectlyrecognized

inequity 0.4 —0.4 2.2 —0.2 2.0

Net profit for the year 84.8 84.8

Totalrecognizedincome 85.2 —0.4 2.2 —0.2 86.8

Repayment of par value

(free of withholding tax) — 19.3 — 19.3

New shares issued 1.1 66.7 67.8

Treasury stock (purchased) re-issued 1.2 1.2

Employee options granted 1.1 1.1

Balanceat30.6.2007 0.4 614.7 9.3 0.0 —407.5 —1.1 —0.7 0.0 215.1

Financialyearended30.6.2008

Balanceat30.6.2007 0.4 614.7 9.3 0.0 —407.5 —1.1 —0.7 0.0 215.1

Adjustment cash flow hedging reserve 0.0

Tax effect on adjustment cash flow

hedging reserve 0.0

Valuation adjustment treasury stock — 0.2 0.2 0.0

Translation adjustments — 52.7 — 52.7

Netincomedirectlyrecognized

inequity —0.2 0.2 —52.7 0.0 —52.7

Net profit for the year 97.1 97.1

Totalrecognizedincome 96.9 0.2 —52.7 0.0 44.4

Dividend paid — 24.7 — 24.7

New shares issued 0.0 3.5 3.5

Treasury stock (purchased) re-issued — 0.9 — 0.9

Employee options granted 0.2 0.2

Balanceat30.6.2008 0.4 618.4 9.3 0.0 —335.3 —1.8 —53.4 0.0 237.6

1) netofincometax

Thenotesonpages84to123areanintegralpartoftheseconsolidatedfinancialstatements.

Consolidated changes in equity for financial year 2007 / 2008

84 KabaAnnualReport2007/2008 FinancialStatements

1.Generalinformation

Descriptionofbusiness

Kaba’sstrategyistomaximizethecreationofvalueforthe

stakeholdersbymaintainingitsfocusonTotalAccessap-

proachandtherebyconsolidatinganddevelopingthelead-

ingpositionitalreadyholdsintheareasofphysicaland

logicalaccesstosites,buildings,containersandenterprise

data.

Kabastrivestoofferitscustomerssolutionsthat

optimizethebenefitsintermsofsecurity,organizationand

convenience.

Kaba’sofferingrangesfromindividualcomponents,

productsandsystemstofullyintegratedsolutionsfrom

asinglesource.

TotalAccessasdefinedbyKabameansintegratingthe

differentproductoffersintoacoordinatedmarketapproach.

Thisisacontinuous,long-termprocesstopromoteKaba’s

progressinthedifferentmarketsstepbystep.

Kaba’sactivitiescanbedividedintothreebusiness

segments:

DoorSystems

DoorSystemsconsistsofaflexibleandextensiverangeof

automaticdoors,gatesandwallsystems.Thefullrange

alsoincludespedestrianinterlocksandsecuritydoorsas

wellasplatformscreendoorsforpublictransportsystems.

Access+DataSystems

Access+DataSystemsincludesallhardwareandsoftware-

basedcomponentsandsystemsforaccesscontrolsolu-

tions.Accessmanagementsoftware(Exos)isthebasisfor

TotalAccessapplications.Thoseconsistofcomprehensive

mechanical,mechatronicanddigitalcomponents,likecylin-

ders,locks,readers,terminalsandcontrollers.

TheworkforcemanagementpartcomprisesERPandwork-

forceoptimizationsolutionswithB-Netterminalsbased

onB-CommandAutotimeSoftware.Itincludesalsosubsys-

temsforsoftwarepartners.

•

•

Key+IdentSystems

Key+IdentSystemsconsistsofkeyblanksandkeyencoding

machinesfortheduplicationofkeys.Thebusinessseg-

mentalsoincludescontactlessidentificationbasedonthe

Legicsmartcardtechnology.

TheparentcompanyoftheGroup

isKabaHoldingAG,whichisacompanylimitedbyshares

incorporatedanddomiciledinRümlang(Switzerland).

Theaddressofitsregisteredofficeis:Hofwisenstrasse24,

8153Rümlang,Switzerland.

ThecompanyislistedontheSwissStockExchange

(SWX).

2.Significantaccountingpolicies

2.1 Basisofpreparation

TheconsolidatedfinancialstatementsofKabaGrouphave

beenpreparedunderthehistoricalcostconvention,except

asdisclosedintheaccountingpoliciesbelow,andinaccor-

dancewithInternationalFinancialReportingStandards(IFRS),

andtheycomplywithSwisslaw.Thefinancialstatements

arepreparedinSwissfrancs(CHF).Theaccountingpolicies

havebeenappliedconsistentlybyGroupcompanies.

Asummaryofthesignificantaccountingpoliciesisprovided

below.

For the financial year 2007/2008, the following standards,

amendments and interpretations have become effective for

the Kaba Group:

IFRS7,Financialinstruments:Disclosures,andthecom-

plementaryamendmenttoIAS1,Presentationoffinancial

statements—Capitaldisclosures,introducesnewand

extendeddisclosuresrelatingtofinancialinstrumentsand

financialriskmanagementanddoesnothaveanyimpacton

theclassificationandvaluationofthegroupsfinancial

instruments.

•

•

Notes to the consolidated financial statements for financial 2007 / 2008

85KabaAnnualReport2007/2008FinancialStatements

Theresultingadditionaldisclosureshavebeenincludedin

thefollowingnotestothefinancialstatements:

2.6 Financialassets

2.16 Financialliabilities

2.20 Financialriskmanagement

13 Accountsreceivabletrade

25 Financialinstruments

26 Financialriskmanagement

27 Capitalmanagement

IFRIC10—Interimfinancialreportingandimpairment

IFRIC11,IFRS2—Groupandtreasurysharetransactions

Exceptwhendescribedabovetheserevisedandnew

standardsandinterpretationsdidnothaveanyadditional

materialeffectontheconsolidatedfinancialstatements.

The following new or revised IFRS Standards and

interpretation will become effective for financial periods

of the Kaba Group beginning on or after 1 July 2008:

IAS1(amended),Presentationoffinancialstatements

(effective1January2009)

IAS23(amended),Borrowingcosts(effective1January

2009).Itrequiresanentitytocapitaliseborrowingcosts

directlyattributabletotheacquisition,constructionor

productionofaqualifyingasset(onethattakesasubstan-

tialperiodoftimetogetreadyforuseorsale)aspart

ofthecostofthatasset.Theoptionofimmediatelyexpens-

ingthoseborrowingcostswillberemoved.Thechange

mayhaveanimpactontheaccountingforconstruction

contracts.

IAS27(amended),Consolidatedandseparatefinancial

statements(effective1July2009)

IAS32,Financialinstrumentpresentations(amended)and

IAS1,Presentationoffinancialstatements(amended)

(effective1January2009)

IFRS2(amended),Sharebasepayments(effective

1January2009)

IFRS3(revised)(effective1July2009),Businesscombina-

tions,requiressignificantchangesintheapplicationofthe

acquisitionmethodtobusinesscombinations.Allpayments

topurchaseabusinessaretoberecordedatfairvalueat

theacquisitiondate,withsomecontingentpayments

•

•

•

•

•

•

•

•

subsequentlyre-measuredatfairvaluethroughprofitor

loss.Goodwillmaybecalculatedbasedontheparent’s

shareofnetassetsoritmayalsoincludegoodwillrelated

totheminorityinterest.Alltransactioncostswillbeex-

pensed.

Thechangemayhaveasignificantimpactonthe

accountingforfuturebusinesscombinations.

IFRS8,Operatingsegments,(effective1January2009).

IFRS8replacesIAS14andalignssegmentreportingwith

therequirementsoftheUSGAAPSFAS131,Disclosures

aboutsegmentsofanenterpriseandrelatedinformation.

Thenewstandardrequiresamanagementapproach,

underwhichsegmentinformationispresentedonthesame

basisasthatusedforinternalreportingpurposes.

Thisnewstandardmayimpactthemannerinwhich

segmentsarereportedsuchasthenumberofreport-

ablesegmentsandmeasurestobereported.Thechange

mayalsorequiremanagementtoreallocategoodwillto

thenewlyidentifiedoperatingsegments.

IFRIC12,Serviceconcessionarrangements(effective

1January2008).

IFRIC13,Customerloyaltyprogrammes(effective

1July2008).

IFRIC14,IAS19—Thelimitonadefinedbenefitasset,

minimumfundingrequirementsandtheirinteraction

(effective1January2008).

IFRIC15,Agreementsfortheconstructionofrealestate

(effective1January2009).

IFRIC16,Hedgesofanetinvestmentinaforeignoperation

(effective1October2008).

TheGrouphasassessedtheeffectofthechangesofthese

StandardsandInterpretationsandhasconcludedthat

exceptasdescribedabovetherewillbenosignificanteffect

ontheKabaGroup’sresultandfinancialposition.

•

•

•

•

•

•

86 KabaAnnualReport2007/2008 FinancialStatements

2.2 Basisofconsolidation

TheconsolidatedfinancialstatementsofKabaGroupinclude

theoperationsofKabaHoldingAGandallitsdirectand

indirectsubsidiariesinwhichKabaGroupcontrolsmorethan

50%ofvotesorotherwisehasthepowertogovernthe

financialandoperatingpolicies.

Theconsolidatedaccountsarebasedontheannual

financialstatementsoftheindividualsubsidiaries.Allcom-

paniesfollowuniformvaluationandreportingpractices

prescribedbytheGroup.

Applyingthefullconsolidationmethod,theassets,

liabilities,incomeandexpensesofallsubsidiariesare

includedintheirentirety.Minorityinterestsinequityand

profitaredisclosedseparately.

Subsidiariesareconsolidatedfromthedateatwhich

controlisacquired.Theidentifiableassetsandliabilitiesare

revaluedandincludedaccordingtothepurchasemethod.

Anydifferencesbetweenthecostofacquisitionandthefair

valueoftheGroup’sshareofnetassetsacquiredconstitutes

goodwill.Thevalueofrecordedgoodwillistestedforimpair-

mentannuallyormorefrequentlyifindicationsofpossible

impairmentexist.Ifmanagementdeterminesthatthenet

bookvalueofthegoodwillisactuallyimpaired,animpairment

lossisrecognized.Subsidiariessoldareexcludedfromcon-

solidationfromthedateonwhichcontrolceases.

Allintercompanybalances,transactionsandintercom-

panyprofitsareeliminatedonconsolidation.

Investmentsinassociatesandjointventureswhere

KabaGroupexercisessignificantinfluence,butdoesnothave

control,normallywithaninterestbetween20%and50%,

areaccountedforusingtheequitymethodofaccounting.

Undertheequitymethod,investmentsinassociatedcompa-

niesandjointventuresareinitiallyrecognizedatcost,and

thecarryingamountisincreasedordecreasedtorecognize

KabaGroup’sshareoftheprofitorlossoftheinvesteeafter

thedateofacquisition.

InvestmentsinwhichKabadoesnothavesignificant

influence(usuallyinwhichKabaGroup’sinterestisless

than20%)arerecordedatfairvalue.Theyareclassifiedas

“Available-for-saleinvestments”(seenote2.6).

2.3 Useofestimates

Thepreparationoffinancialstatementsinaccordancewith

IFRSrequirestheuseofestimatesandassumptions

whichhaveaneffectonthereportedamountsofassetsand

liabilities,disclosureofcontingentassetsandliabilities

atthedateofthefinancialstatements,andthereported

amountsofrevenuesandexpensesduringthereporting

period.Althoughtheseestimatesarebasedonmanage-

ment’sbestknowledgeofcurrenteventsandactions

KabaGroupmayundertakeinthefuture,actualresultsmay

ultimatelydifferfromthoseestimates.Suchestimates

areapplied,amongothers,intheevaluationofthefollowing

balancesheetpositions:

Deferredtaxassetsarecreatedfortemporary

differencesandforlossescarriedforwardprovidedthattheir

utilizationappearsprobable.Therecoverableamountis

thereforebasedonforecastsofthecorrespondingtaxable

entityoveraperiodofseveralyears.Deviationsbetween

actualandprojectedresultscancauseimpairmentlosses.

Forinformationoncarryingamountsseenote24.

Kabaoperatesdefinedbenefitplansinvariouscountries.

Thecalculationofdefinedbenefitobligationsisbasedon

actuarialassumptionsthatmaydifferfromactualresults.For

informationoncarryingamountsseenote22.

Whentestingassetsforimpairmentstherecoverable

amountisdeterminedonthebasisofexpectedfuture

cashflows.Themainassumptionsonwhichthesecashflows

arebasedincludegrowthratesandexpectedusefullife.

Thecashflowsactuallygeneratedcandifferconsiderably

fromtheestimates.Forinformationoncarryingamounts

seenote17.

87KabaAnnualReport2007/2008FinancialStatements

2.4 Foreigncurrencytranslation

TheconsolidatedfinancialstatementsarepresentedinSwiss

Francs(CHF),whichisKabaGroup’spresentationcurrency.

ItemsincludedinthefinancialstatementsofeachKabaGroup

companyaremeasuredusingthecurrencyoftheprimary

economicenvironmentinwhichthatcompanyoperates(the

functionalcurrency).

Foreigncurrencytransactionsaretranslatedintothe

functionalcurrencyusingtheexchangeratesprevailing

atthedatesofthetransactions.Foreignexchangegainsand

lossesresultingfromthesettlementofsuchtransactions

andfromthetranslationofmonetaryassetsandliabilities

denominatedinforeigncurrenciesatyearendexchangerates

arerecognizedintheincomestatement,exceptwhende-

ferredinequityasqualifyingcashflowhedges.

Assetsandliabilitiesofsubsidiariesreportingincurren-

ciesotherthanCHFaretranslatedattheratesofexchange

Exchangeratesat

30.6.2008Exchangeratesat

30.6.2007Averagerate2007/2008

Averagerate2006/2007

GBP 2.033 2.459 2.235 2.378

EUR 1.609 1.654 1.633 1.607

USD 1.019 1.229 1.112 1.230

CAD 1.009 1.153 1.102 1.093

AUD 0.980 1.036 0.996 0.966

SGD 0.748 0.800 0.773 0.794

SEK 0.171 0.179 0.175 0.175

CNY 0.149 0.162 0.153 0.158

HKD 0.131 0.157 0.143 0.158

MXP 0.099 0.114 0.104 0.112

JPY 0.010 0.010 0.010 0.010

HUF 0.007 0.007 0.007 0.006

prevailingatthebalancesheetdate.Allresultingexchange

differencesarerecognizedasaseparatecomponentof

equity.Income,expenses,cashflowsandothermovement

itemsaretranslatedattheaverageexchangeratesofthe

period.

Onconsolidation,exchangedifferencesarisingfromthe

translationofthenetinvestmentinforeigncompaniesand

fromborrowingsandothercurrencyinstrumentsdesignated

ashedgesofsuchinvestmentsaretakentoequity.When

aforeignoperationissold,suchexchangedifferencesare

recognizedintheincomestatementaspartofthegain

orlossonsale.

Goodwillarisingontheacquisitionofaforeignentity

istreatedasanassetoftheforeigncompanyandtranslated

atclosingrate.

Significantexchangeratesareasfollows:

2.5 Cashandcashequivalents

Cashincludespettycash,cashatbanksandcashondeposit.

Cashequivalentsincludetermdepositswithbanksand

short-termmoneymarketinvestmentscarriedatmarket

value,bothwithoriginalmaturitydatesofthreemonths

orless.

88 KabaAnnualReport2007/2008 FinancialStatements

2.6 Financialassets

Allfinancialassetsareinitiallyrecordedatfairvaluewhich

usuallyisequivalenttocost.Allpurchasesandsalesare

recognizedonthetradedate.

TheKabaGroupclassifiesfinancialassetsotherthan

cashandcashequivalentsintothefollowingcategories(see

note25):

Financial assets at fair value through profit and loss

classified as held for trading in accordance with IAS 39

Financialassetsatfairvaluethroughprofitandlossclassi-

fiedasheldfortradingarerecordedatfairvalue.Changes

infairvaluearerecognizedintheincomestatement.

Loans and receivables

Loansandreceivablearerecordedatamortizedcost.

Available-for-sale financial assets

Available-for-salefinancialassetsarerecordedatfairvalue

andfluctuationsinvaluearerecordedinshareholders’equity.

Whensuchfinancialassetsaresold,impairedorotherwise

disposedof,theaccumulatedgainsorlossessincetheywere

purchased,whichhavepreviouslybeenrecordedinshare-

holders’equity,arerecognizedinthefinancialresultofthe

currentperiod.

2.7 Tradeaccountsreceivable

Tradereceivablesarerecognisedinitiallyatfairvalueand

subsequentlymeasuredatamortisedcostusingtheeffective

interestmethod,lessprovisionforimpairment.

Theamountoftheprovisionisthedifferencebetween

theasset’scarryingamountandthepresentvalueofesti-

matedfuturecashflows,discountedattheoriginaleffective

interestrate.

2.8 Inventories

Inventoriesarevaluedatthelowerofpurchaseormanufac-

turingcostandnetrealizablevalue.Costisdeterminedusing

theweightedaveragemethod.Manufacturingcostincludes

directlabourandmaterialaswellasacommensurateshareof

relatedoverheadcost.Allowancesaremadeforobsoleteand

slow-movingitems.

2.9 Property,plantandequipment

Property,plantandequipmentarerecordedatcostless

accumulateddepreciation.Subsequentcostsareincludedin

theasset’scarryingamountorrecognizedasaseparate

asset,asappropriate,onlywhenitisprobablethatfuture

economicbenefitsassociatedwiththeitemwillflowto

theGroupandthecostoftheitemcanbemeasuredreliably.

Thecarryingamountofthereplacedpartisderecognized.

Allotherrepairsandmaintenancearechargedtotheincome

statementduringthefinancialperiodinwhichtheyare

incurred.

Borrowingcostsincurredduringtheconstructionof

property,plantandequipmentareexpensedasincurred.

Depreciationiscomputedusingthestraight-linemethod

basedonthefollowingestimatedusefullives:

Buildings 20—50yearsMachinery,equipment,installationsandtools 4—15yearsOthertangiblefixedassets 3—15years

Landisnotdepreciated.Whereanassetcomprisesvarious

componentshavingdifferentusefulliveseachcomponentis

depreciatedseparately.

Itemsofminorvaluearechargeddirectlytotheincome

statement.

Allgainsandlossesondisposalofproperty,plantand

equipmentarerecognizedintheincomestatement.

2.10 Intangibleassets

Intangibleassetsembodyingfutureeconomicbenefits,such

asacquiredlicences,patentsandsimilarrightsarecapital-

izedatcost.

Depreciationiscomputedusingthestraight-linemethod

basedonthefollowingestimatedusefullives:

Customerrelationships 10—15yearsPatents/technology 10—15yearsOtherintangiblefixedassets 2—5years

89KabaAnnualReport2007/2008FinancialStatements

Goodwill,beingthedifferencebetweenthepurchaseprice

ofacquisitionsandtheGroup’sshareofthefairvalueofnet

assetsacquired,iscapitalizedandtestedforimpairment

annually.Goodwillfromacquisitionspriortothedateof

transitiontoIFRSwassetoffagainstshareholders’equity.

IncompliancewithIFRS1KabaelectednottoapplyIFRS3

BusinessCombinationsretrospectivelytopastbusiness

combinations.

Allresearchcostsarerecognizedintheincomestate-

mentasincurred.Developmentcostsarerecognizedas

anassetonlyinrarecasesandtotheextentthatspecific

recognitioncriteriaaremetandtheamountrecognized

isassessedtoberecoverablethroughfutureeconomicben-

efitsnetofanysalesdeductionsincludingrebates,discounts

andotheragreeddeductionsaswellasvalue-addedtaxes

andcommissions.

2.11 Impairmentofassets

Goodwillandotherintangibleassetswithanindefiniteuseful

lifearetestedforimpairmentannuallyduringthesecondhalf

ofthebusinessyear.

Property,plantandequipmentandothernon-current

assets,includingotherintangibleassetswithaninfinite

usefullife,aretestedforimpairmentlosseswheneverevents

orchangesincircumstancesindicatethatthecarrying

amountmaynotberecoverable.

Forthepurposeoftestingimpairment,goodwilland

otherassetsaregroupedincash-generatingunitsforwhich

cashflowsareseparatelyidentifiable.TheGroupestimates

therecoverableamountofthosecash-generatingunits,

whichgenerallyrepresentstheirvalueinuse.Valueinuse

isassessedusingthediscountedcashflowmethod.The

estimatesusedinthesecalculationsarebasedonupdated

budgetsandmedium-termplanscoveringaperiodofthree

years.Cashflowsbeyondtheprojectionperiodareextrapo-

latedinperpetuity.

Whenthecarryingamountexceedsitsrecoverable

amount,animpairmentlossisrecognizedseparatelyinthe

incomestatement.Therecoverableamountisthehigher

offairvaluelesscosttosellandvalueinuse.

2.12 Leases

Assetsacquiredunderleasingagreementswhicheffectively

transfersubstantiallyalltherisksandrewardsincidental

toownershipfromthelessortothelesseeareclassifiedas

financeleases.Assetsheldunderfinanceleasesarere-

cordedattheloweroftheestimatednetpresentvalueof

thefutureminimumleasepaymentsandtheirfairvalue

attheinceptionofthelease.Theestimatednetpresentvalue

ofthefutureminimumleasepaymentsisrecordedcor-

respondinglyasafinanceleaseobligation.Assetsunder

financeleasesareamortizedovertheirestimateduseful

lives.Operatingleasepaymentsarechargedtoincomeon

astraightlinebasisovertheleaseterm.

2.13 Netsalesandrevenuerecognition

Netsalesincludeallsalesofgoodsandrelatedservices,net

ofanysalesreductionsincludingrebates,discountsand

otheragreeddeductionsaswellasvalue-addedtaxesand

commissions.

Salesfromsuppliedgoodsandservicesarerecognized

uponperformance.Salesofgoodsarerecognizedwhen

KabaGrouphasdeliveredtheproductstothecustomer,

thecustomerhasacceptedtheproductsandcollectibility

oftherelatedreceivablesisreasonablyassured.

Salesfromlong-termconstructioncontractsarerecog-

nizedapplyingthepercentage-of-completionmethod.

Therespectivestageofcompletionismeasuredbyreference

totherelationshipofcontractcostsincurredforwork

performedtodateinproportiontotheestimatedtotalcosts

forthecontract.

2.14 Retirementbenefits

Therearevariouspost-employmentbenefitplansinexistence

withintheGroupwhichareindividuallyalignedwithlocal

conditionsintheirrespectivecountries.Theyarefinanced

eitherbymeansofcontributionstolegallyindependent

pension/insurancefunds,orbyrecognitionasliabilitiesinthe

balancesheetoftherespectiveGroupcompanies.

Fordefinedcontributionplans,thenetperiodcosttobe

recognizedintheincomestatementequalsthecontributions

madebytheemployer.

90 KabaAnnualReport2007/2008 FinancialStatements

Formaterialdefinedbenefitplansthepensioncostsin

eachperiodarecalculatedonthebasisofanactuarial

valuationpreparedusingtheprojectedunitcreditmethod.

Suchactuarialvaluationsareperformedeverythirdyear,

attheleast.

Thedeficitorexcessofthefairvalueofplanassetsover

thepresentvalueofthedefinedbenefitobligationisre-

cognizedasaliabilityoranassetinthebalancesheet,taking

intoaccountanyunrecognizedactuarialgainsorlosses

andpastservicecosts.

However,anexcessofassetsiscapitalizedonlytothe

extentthatitrepresentsafutureeconomicbenefitwhichis

actuallyavailabletotheGroup,forexampleintheformof

refundsfromtheplanorreductionsinfuturecontributions

totheplan,orincaseofexistenceofactuariallosses.

Actuarialgainsandlossesarisemainlyfromchanges

inactuarialassumptionsanddifferencesbetweenactuarial

assumptionsandwhathasactuallyoccurred.Theyare

recognizedinthebalancesheettotheextentthattheyexceed

10%ofthegreaterofthepresentvalueofthebenefit

obligationorofthefairvalueofplanassets.Suchexceeding

amountsarechargedorcreditedtoincomeinequalamounts

overtheestimatedremainingservicelivesofparticipating

employees.

2.15 Provisions

Provisionsarerecorded,

whentheGrouphasanactualobligation

(legalorconstructive)asaresultofapastevent,

whenitisprobablethatauseofresources

willberequiredtosettletheobligation,and

whentheamountoftheobligationcanbereliably

estimated.

Costsrelatingtorestructuringplansoragreements,including

thereductionofexcessstaffing,thediscontinuationof

certainactivitiesorthestreamliningoffacilitiesandopera-

tionsandotherrestructuringmeasures,arerecorded

intheperiodinwhichtheGroupcommitsitselftoaplanand

itisannounced.

•

•

•

2.16 Financialliabilities

Financial liabilities measured at amortized cost

Financialliabilitiesmeasuredatamortizedcostareinitially

recordedatfairvalue,netoftransactioncostsincurredand

subsequentlymeasuredatamortizedcost.Anydifferences

betweentheproceeds(netoftransactioncosts)andthere-

demptionvalueisrecognizedintheincomestatementover

theperiodoftheborrowingsusingtheeffectiveinterest

method.

Whenconvertiblebondsareissued,thefairvalueofthe

liabilityportionisdeterminedusingamarketinterestrate

foranequivalentnon-convertiblebond;thisamountisrecorded

ontheamortizedcostbasis.Theremainderoftheproceeds

isallocatedtotheconversionoptionwhichisrecognizedand

includedinshareholders’equity.Thevalueoftheconversion

optionisfixed.

Financial liabilities at fair value through profit and loss

classified as held for trading in accordance with IAS39

Financialliabilitiesatfairvaluethroughprofitandlossare

recordedatfairvalue.Changesinfairvaluearerecognized

intheincomestatement.

2.17 Incometaxes

Currentincometaxesarebasedontaxableincomeofthe

currentyearandchargedtoincomeasincurred.

Deferredincometaxesaredeterminedusingtheliability

methodwiththeapplicableenactedincometaxratesapplied

onacomprehensivebasistoalltemporarydifferences.Tax

savingsresultingfromtaxlossescarriedforwardapplicable

tofuturetaxableincomeandotherdeferredincometax

assetsareonlyrecognizedtotheextentthatitisprobable

thatfuturetaxableprofitwillbeavailableagainstwhich

thetemporarydifferencescanbeutilized.

91KabaAnnualReport2007/2008FinancialStatements

2.18 Earningspershare

Basicearningspersharearecalculatedbydividingnetprofit

excludingminorityinterestsbytheweightedaveragenumber

ofsharesoutstandingduringthereportingperiod.Diluted

earningspersharealsoincludeallpotentiallydilutiveeffects.

2.19 Derivativefinancialinstruments

Derivativefinancialinstrumentsareinitiallyrecognizedat

fairvalueonthedatethederivativecontractisenteredinto

andaresubsequentlyremeasuredattheirfairvalue.The

methodofrecognizingtheresultinggainorlossdependson

whetherthederivativefinancialinstrumentisdesignated

asahedginginstrumentornot:

Derivativesthatdonotqualifyforhedgeaccounting:

changesinthefairvalueofanyderivativeinstrumentsthat

donotqualifyforhedgeaccountingarerecognizedim-

mediatelyintheincomestatement.

Cashflowhedges:Theeffectiveportionofchangesinthe

fairvalueofderivativesthataredesignatedandqualify

ascashflowhedgesisrecognizedinequity.Thegainorloss

relatingtotheineffectiveportionisrecognizedimmedi-

atelyintheincomestatement.Amountsaccumulatedin

equityaretransferredtotheincomestatementinthe

periodswhenthehedgeditemaffectsprofitorloss.How-

ever,whentheforecasttransactionthatishedgedresults

intherecognitionofanon-financialasset(e.g.inventory)or

anon-financialliability,thegainsandlossespreviously

deferredinequityaretransferredfromequityandincluded

intheinitialmeasurementofthecostoftheassetorliability.

•

•

•

2.20 Financialriskmanagement

Risk policy

TheKabaGroupisexposedtovariousrisksinconnection

withfinancialinstruments,inparticulartomarketrisksof

fluctuationsinforeignexchangeratesandinterestrates.

Managementmonitorstheserisksonaregularbasis.In

managingtheexposureresultingfromsuchfluctuations,the

KabaGroupusesderivativefinancialinstrumentswherever

managementdeemsitappropriatetodosoinalltheprevail-

ingcircumstances.Counterpartiesinvolvedarehigh-ranking

financialinstitutions.TheKabaGroupdoesnotenterinto

financialtransactionsiftheassociatedriskcannotbeesti-

mated,e.g.nouncoveredshorttransactionsareexecuted.

Hedgingtransactionsalwaysrelatetoexistingassetsand

liabilitiesortohighlyprobablefuturebusinesstransactions.

InadditiontheKabaGroupisexposedtoliquidity

riskandcreditrisk.Riskmanagementalsoinvolvessecuring

comprehensiveandefficientinsuranceprotection.

Foreign exchange risk

TheKabaGroupisactiveallovertheworldandtherefore

exposedtofluctuationsinforeignexchangerates.Foreign

exchangerisksarisewhenfuturecommercialtransactions,

recognizedfinancialassetsandliabilitiesandnetinvest-

mentsinforeignoperationsaredenominatedinacurrency

thatisnottheentity’sfunctionalcurrency.

InmostcompaniesoftheKabaGroupexpendituresand

earningsoccurmainlyinthelocalcurrenciesofthesecompa-

niesandchangesinforeignexchangeratesaffectonlythe

netpaymentflow.Futurecashflowsinforeigncurrenciesare

hedgedinlimitedcasesonly.

Foreignexchangerisksonintercompanyloansare

coveredtoalargeextentbyforwardexchangecontracts.

TheKabaGroupdoesnotactivelymanagethetrans-

lationriskfromnetinvestmentinforeigncurrenciesandfrom

netincomegeneratedbyforeignoperations.

92 KabaAnnualReport2007/2008 FinancialStatements

Interest rate risk

TheKabaGroup’sinterestratecashflowrisksarisesfrom

borrowingsatvariablerates.Thisinterestrateriskisonly

hedgedinlimitedcases.Managementstrivesforawell-

balancedmixoflong-andshort-terminterestrates.Financ-

ingandrelatedinterestaremanagedcentrally.Cash

andcashequivalentsareinvestedonashorttermbasis.

Liquidity risk

TheliquidityriskistheriskthattheKabaGroupisunable

tomeetitsobligationswhentheyfalldue.Thegrouptreasury

functionensuresthatoptimalliquidityandcreditlinesare

availabletotheGroup’soperationsatanytimetomeetits

obligationsandtofinanceitsprojects.Procurementofbank

loansismanagedcentrally.

Thetableinnote25showsthecontractuallyagreed

maturities(includinginterests)oftheKabaGroup’sfinancial

liabilities.

Credit loss risk

Creditlossrisksarisefromthepossibilitythatthecounter-

partytoatransactionisunableorunwillingtofulfilits

obligationsandthattheKabaGrouptherebysuffersfinan-

cialdamage.

Tradereceivablesaremonitoredonanongoingbasis

locallyandviagroupmanagementreportingprocedures.The

dangerofclusterrisksontradeaccountsreceivableislimited

duetothelargenumberandwidegeographicalspreadof

customers.Theextentofthecreditriskisdeterminedmainly

bytheindividualcharacteristicsofeachcustomer.Assess-

mentofthisriskinvolvesareviewofthecustomer‘scredit-

worthinessbasedonitsfinancialsituation,andpastexperi-

ence.

Cashandcashequivalentsaremainlyheldintheform

ofcurrentaccountsandcurrentfixed-termdeposits.The

counterpartyrisksareminimizedandmonitoredviastrictly

limitingourassociationstohighrankingbanks.

2.21 Segmentreporting

Abusinesssegmentisagroupofassetsandoperations

engagedinprovidingproductsorservicesthataresubject

torisksandreturnsthataredifferentfromthoseofother

businesssegments.Ageographicalsegmentisengagedin

providingproductsorserviceswithinaparticulareconomic

environmentthataresubjecttorisksandreturnsthatare

differentfromthoseofsegmentsoperatinginothereconomic

environments.

Intersegmenttransactionsarebeingconductedon

normalcommercialterms.

2.22 Share-basedpayments

Stock option plan:

Thefairvalueoftheemployeeservicesreceivedinexchange

forthegrantofshareoptionsisrecognizedasanexpense

withacorrespondingentryinequity.Thetotalamounttobe

expensedoverthevestingperiodisdeterminedbyreference

tothefairvalueoftheoptionsgranted,excludingtheimpact

ofanynon-marketvestingconditions.Non-marketvesting

conditionsareincludedinassumptionsaboutthenumberof

optionsthatareexpectedtobecomeexercisable.Thefair

valueoftheshareoptionsiscalculatedbasedontheEnhanced

AmericanModel(EAModel).Ateachbalancesheetdate,

theentityrevisesitsestimatesofthenumberofoptionsthat

areexpectedtobecomeexercisable.Itrecognizesthe

impactoftherevisionoforiginalestimates,ifany,inthe

incomestatement,withacorrespondingadjustmentto

equity.

Stock award plan:

Sharesgrantedtoemployeesinexchangefortheirservices

vestimmediately.Thefairvalueoftheemployeeservices

receivedinexchangeforthesesharesismeasuredatfairvalue

ofthesharesatthegrantdateandrecognisedasanexpense

withcorrespondingentryinequity.

94 KabaAnnualReport2007/2008 FinancialStatements

3.Shares

Financialyear

ended30.6.2008Financialyear

ended30.6.2007

Forbasicnumberofshares ParvalueCHF0.10 ParvalueCHF0.10

Number of shares outstanding beginning of financial year 3,787,592 3,570,683

New shares issued 13,085 213,610

Own shares (acquired) re-issued — 2,806 3,299

Number of shares outstanding end of financial year 3,797,871 3,787,592

Weighted average number of shares outstanding (basic) 3,795,017 3,756,561

Profit applicable for calculation of earnings per share (basic and diluted) in CHF million 97.1 84.8

Basicearningspershare(inCHF) 25.6 22.6

Fordilutednumberofshares

Weighted average number of shares outstanding (basic) 3,795,017 3,756,561

Eligible shares under stock option plans 3,418 6,601

Weighted average number of shares outstanding (diluted) 3,798,435 3,763,162

Profit applicable for calculation of earnings per share (basic and diluted) in CHF million 97.1 84.8

Dilutedearningspershare(inCHF) 25.6 22.5

Dividend(proposedfor2007/2008)pershare(inCHF) 7.8 6.5

Conditional shares beginning of year 453,717 470,417

New conditional shares created 0 0

New conditional shares issued — 13,085 — 16,700

Conditional shares end of financial year 440,632 453,717

Authorized shares 377,200 377,200

Number of shares authorized but not yet issued 377,200 377,200

Number of own shares held 5,907 3,101

95KabaAnnualReport2007/2008FinancialStatements

4.Disposalofasubsidiary

On2November2007,theKabaGroupsoldCapitol(Montreal,Canada)toaprivateinvestor.

CapitolwasabranchofKabaIlcoInc.inCanada.

Detailsofthedisposalareshownbelow:

inCHFmillion Carryingamount

Other current assets 3.2

Inventories 2.6

Property, plant and equipment 8.2

Other current liabilities — 2.3

Indentifiablenetassetsdisposed 11.7

Cashinflowondisposal 11.7

Thedisposalofthesubsidiaryresultedinreducednetsalesandnetprofitfortheperiod

from3November2007to30June2008andbasedonprioryearresultsofCHF18million

andCHF0.2millionrespectively.

TheKabaGroupholdsaparticipationofCHF0.2million(19.5%)inthenewentity

CapitolIndustriesInc.andhasgrantedaloanofCHF0.7million.

96 Kaba Annual Report 2007/2008 Financial Statements

5. Net sales

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Total net sales 1,303.7 1,248.7

Additional information for long-term contracts

applying the percentage-of-completion method

Amounts included in net sales based

on the percentage-of-completion method 83.9 70.7

Cumulative progress invoices on contracts in progress 65.2 174.9

Construction contracts in progress (assets) 14.4 8.8

Billings in excess of cost of construction contracts

(liabilities see note 20) — 3.5 — 2.8

Accumulated contract costs incl. recognized profits (losses) 76.1 180.9

Advances for construction contracts (liabilities) — 9.1 — 2.1

Retentions on construction contracts in progress (assets) 0.1 1.3

6. Other operating income

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Capitalized assets produced by the company 2.8 1.7

Rent 1.6 1.6

Gain from the sale of fixed assets 1.2 2.7

Re-invoiced cost 3.3 3.6

Licence income 1.7 1.5

Insurance reclaim 0.4 0.9

Other revenues 3.0 3.2

Total other operating income 14.0 15.2

7. Material expenses

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Material expenses 409.9 385.7

Contracted services and labour 50.1 46.1

Total material expenses 460.0 431.8

97Kaba Annual Report 2007/2008Financial Statements

8. Personnel expenses

in CHF millionFinancial year

ended 30. 6. 2008 in %Financial year

ended 30. 6. 2007 in %

Salaries and wages 377.6 364.5

Social security expenses 65.8 65.6

Share based payments 1.6 1.1

Pension cost material defined benefit plans

(note 22) 3.5 8.1

Pension cost other plans 6.8 5.4

Other benefits 0.8 4.2

Total personnel expenses 456.1 448.9

Employees at balance sheet date 9,093 9,265

Average number

of full-time equivalent employees 9,151 8,585

Average number

of employees per geographic region

Switzerland 1,121 12 1,057 11

Germany 737 8 736 9

Rest of Europe 1,836 20 1,966 23

Americas 1,725 19 1,849 22

Asia Pacific 3,732 41 2,977 35

Total 9,151 100 8,585 100

9. Other operating expenses

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Licence fees 1.5 1.5

Postage and relocation expenses 2.7 2.7

Warranty /guarantees /compensations 1.8 3.0

Other administrative and sales expenses 20.5 19.6

Research and development 5.9 5.2

Advertising, travel and entertainment expenses 45.0 45.2

Rent, leasing, other services 63.1 57.7

Maintenance, repairs, consumables, fuel 43.7 45.2

Insurance, fees, contributions 12.2 13.3

Bad debt expenses 2.9 3.2

Losses on sales of fixed assets 0.7 0.8

Total other operating expenses 200.0 197.4

98 Kaba Annual Report 2007/2008 Financial Statements

10. Financial expenses

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Interest expenses on financial instruments at fair value through profit and loss 3.2 3.2

Other interest expenses 30.9 31.0

Foreign exchange losses (gains) 0.2 — 2.5

Other financial expenses 1.0 0.7

Total financial expenses 35.3 32.4

11. Financial income

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Interest income 1.8 1.8

Other financial income 0.1 0.4

Total financial income 1.9 2.2

12. Income taxes

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Profit before taxes 131.5 113.3

Weighted applicable tax rate 21.1 % 23.2 %

Tax calculated at applicable tax rate 27.7 26.2

Current income taxes 27.9 26.4

Deferred income taxes 6.5 2.1

Income taxes 34.4 28.5

Difference between applicable and effective income taxes 6.7 2.3

Impact of losses and tax loss carry-forwards 7.1 2.6

Non-deductible expenses — 4.6 — 5.4

Tax-exempt income 2.8 5.0

Non recoverable withholding tax expenses 0.4 0.5

Tax charges (credits) relating to prior periods, net 0.6 — 1.8

Other 0.4 1.4

Difference between expected and effective income taxes 6.7 2.3

Tax charged to equity amounts to 0.0 0.0

The weighted applicable tax rate is calculated using the expected income tax rates of the

individual Group companies in each jurisdiction. The change from prior year is mainly

due to a reduction of tax rates in Germany as well as changes in profits within different tax

jurisdictions.

99Kaba Annual Report 2007/2008Financial Statements

13. Accounts receivable trade

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Accounts receivable from third parties 244.0 255.7

Construction contracts in progress 14.4 8.8

Total accounts receivable trade, gross 258.4 264.5

Allowance for doubtful accounts — 12.2 — 11.8

Total accounts receivable trade, net 246.2 252.7

Maturity analysis of accounts receivable trade

Not yet due 160.5 172.1

1 — 30 day(s) overdue 47.9 46.8

31 — 60 days overdue 17.7 14.8

61 — 90 days overdue 8.3 7.4

91 — 120 days overdue 5.0 5.6

121 — 150 days overdue 4.8 3.6

more than 150 days overdue 14.2 14.2

Total accounts receivable trade, gross 258.4 264.5

The credit-worthiness of not yet due and not impaired accounts receivable is

considered good, based on the low losses in the past.

Details allowance for doubtful accounts

Allowance beginning of year — 11.8 — 9.6

Additions — 3.5 — 4.4

Releases 0.6 3.0

Usage 1.7 1.2

Translation effect 0.8 — 2.0

Allowance end of year — 12.2 — 11.8

Accounts receivable trade by currency

CHF 50.0 49.1

USD 39.6 48.4

CAD 7.0 10.3

EUR 103.1 101.7

GBP 22.1 22.5

HKD 19.4 15.2

CNY 0.2 0.3

Other 17.0 17.0

Total accounts receivable trade, gross 258.4 264.5

100 Kaba Annual Report 2007/2008 Financial Statements

14. Inventories

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Raw material and supplies 107.1 109.3

Semi-finished goods and work in progress 91.3 88.1

Finished goods 85.3 91.2

Prepayments to suppliers 1.0 1.1

Total inventories, gross 284.7 289.7

Allowance for obsolete and slow-moving items — 46.9 — 50.3

Total inventories, net 237.8 239.4

15. Other current assets

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Prepaid expenses 6.0 6.2

Retentions 1.0 2.3

Sales, withholding and other tax recoverable 12.1 15.3

Fair value of forward contracts (see note 29) 0.4 0.1

Other receivables and miscellaneous 0.1 0.1

Total other current assets 19.6 24.0

101Kaba Annual Report 2007/2008Financial Statements

16. Property, plant and equipment

in CHF millonLand and buildings

Plant, machinery

and equipmentFurniture

and fixtures Prepayments Total

Cost

30 June 2006 177.9 170.1 125.6 4.1 477.7

Additions 1.8 7.9 11.4 5.4 26.5

Disposals — 8.8 — 2.9 — 14.8 0.0 — 26.5

Reclassifications 0.1 1.3 — 1.0 — 0.7 — 0.3

Acquisition of subsidiaries 15.0 16.6 2.6 0.0 34.2

Translation exchange differences 4.2 6.6 4.9 0.2 15.9

30 June 2007 190.2 199.6 128.7 9.0 527.5

Accumulated depreciation

30 June 2006 56.7 127.0 98.2 0.0 281.9

Additions 5.3 15.5 10.8 31.6

Disposals — 0.1 — 2.2 — 14.4 — 16.7

Reclassifications — 0.3 0.0 — 0.1 — 0.4

Translation exchange differences 1.1 4.7 3.8 9.6

30 June 2007 62.7 145.0 98.3 0.0 306.0

Net book value as of

30 June 2006 net 121.2 43.1 27.4 4.1 195.8

30 June 2007 net 127.5 54.6 30.4 9.0 221.5

Net carrying amount of assets under finance leases

30 June 2006 net 1.7 1.7

30 June 2007 net 1.8 1.8

Cost

30 June 2007 190.2 199.6 128.7 9.0 527.5

Additions 7.8 13.1 13.4 6.3 40.6

Disposals — 5.5 — 5.1 — 10.3 — 0.1 — 21.0

Reclassifications 1.3 5.7 1.7 — 8.8 — 0.1

Acquisition of subsidiaries 0.0 0.0 0.0 0.0 0.0

Translation exchange differences — 10.2 — 15.6 — 5.7 — 0.5 — 32.0

30 June 2008 183.6 197.7 127.8 5.9 515.0

Accumulated depreciation

30 June 2007 62.7 145.0 98.3 0.0 306.0

Additions 5.4 14.8 10.7 30.9

Disposals — 0.4 — 1.6 — 9.4 — 11.4

Reclassifications 0.0 — 0.1 0.1 0.0

Translation exchange differences — 2.0 — 11.9 — 4.3 — 18.2

30 June 2008 65.7 146.2 95.4 0.0 307.3

Net book value as of

30 June 2007 net 127.5 54.6 30.4 9.0 221.5

30 June 2008 net 117.9 51.5 32.4 5.9 207.7

Net carrying amount of assets under finance leases

30 June 2007 net 1.8 1.8

30 June 2008 net 1.7 1.7

102 Kaba Annual Report 2007/2008 Financial Statements

17. Goodwill and other intangible assets

in CHF million GoodwillCustomer

relationshipsPatents/

technologyOther

intangible assets Total

Cost

30 June 2006 0.0 0.0 0.0 35.7 35.7

Additions 4.6 4.6

Disposals — 0.7 — 0.7

Reclassifications 1.1 — 0.8 0.3

Acquisition of subsidiaries 188.4 80.1 11.2 0.0 279.7

Translation exchange differences 2.2 — 0.2 1.0 3.0

30 June 2007 189.5 82.3 11.0 39.8 322.6

Accumulated depreciation

30 June 2006 0.0 0.0 0.0 18.8 18.8

Additions 5.5 0.8 4.8 11.1

Disposals — 0.6 — 0.6

Reclassifications 0.4 0.4

Translation exchange differences — 0.1 0.0 0.9 0.8

30 June 2007 0.0 5.4 0.8 24.3 30.5

Net book value as of

30 June 2006 net 0.0 0.0 0.0 16.9 16.9

30 June 2007 net 189.5 76.9 10.2 15.5 292.1

in CHF million GoodwillCustomer

relationshipsPatents/

technologyOther

intangible assets Total

Cost

30 June 2007 189.5 82.3 11.0 39.8 322.6

Additions 0.4 4.2 4.6

Disposals 0.0 — 2.4 — 2.4

Reclassifications 0.0 0.1 0.1

Acquisition of subsidiaries 0.0 0.0 0.0 0.0 0.0

Translation exchange differences — 10.9 — 8.7 — 1.7 — 2.2 — 23.5

30 June 2008 179.0 73.6 9.3 39.5 301.4

Accumulated depreciation

30 June 2007 0.0 5.4 0.8 24.3 30.5

Additions 0.0 5.1 1.0 5.6 11.7

Disposals 0.0 — 2.2 — 2.2

Reclassifications 0.0 0.0 0.0

Translation exchange differences 0.0 — 0.8 — 0.2 — 1.1 — 2.1

30 June 2008 0.0 9.7 1.6 26.6 37.9

Net book value as of

30 June 2007 net 189.5 76.9 10.2 15.5 292.1

30 June 2008 net 179.0 63.9 7.7 12.9 263.5

103Kaba Annual Report 2007/2008Financial Statements

Goodwill is allocated to following cash generating units:

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Safe Locks 28.2 34.0

Hotel Locks 24.8 29.9

Access + Data Systems 124.9 124.5

Key Systems 1.1 1.1

Net book value as of 30 June 179.0 189.5

The discount rates used for impairment testing have been determined based on the basis

of the Group’s weighted average cost of capital adjusted by differences in expected

inflation rates between Switzerland and the economic zones of the individual cash-

generating units. They are between 9.72 % and 10.65 %.

Based on the impairment tests as of the closing date the values of all goodwill

balances are supported. The calculation of the break even discount rate showed that an

increase of 1 % in the discount rate would not cause any impairment losses.

Growth rates used to extrapolate cash flows beyond the period covered by the most

recent budgets and plans are based on expected inflation rates. An inflation adjusted

growth rate of 1.5 % for all segments has been applied.

104 Kaba Annual Report 2007/2008 Financial Statements

18. Investments in associates and joint ventures

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Associates

Beginning of year 3.9

Acquisition of investments in associates 3.9

Share of profit (loss) 0.2 — 0.1

Translation exchange differences — 0.3 0.1

Total investments in associates 3.8 3.9

Details for investments in associates

Entity name

Dorset Kaba Security Systems Pvt. Ltd., New Delhi

Assets 3.4 1.8

Liabilities 2.4 0.9

Revenues 7.2 0.3

Profit (Loss) 0.5 — 0.1

Interest held in % 49 49

Goodwill included in investments in associates 3.2 3.4

Joint ventures

Beginning of year 2.4

Acquisition of investments in joint ventures 2.5

Share of profit (loss) — 0.1 — 0.1

Translation exchange differences — 0.1 0.0

Total investments in joint ventures 2.2 2.4

Details for investments in joint ventures

Entity name

Minda Silca Engineering Ltd., New Delhi

Assets 7.0 6.7

Liabilities 5.2 4.2

Revenues 11.3 7.2

Profit (Loss) — 0.2 — 0.2

Interest held in % 50 50

Total investments in associates and joint ventures 6.0 6.3

105Kaba Annual Report 2007/2008Financial Statements

18a. Non-current financial assets

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Non-current financial assets

Loans 2.7 2.1

Reimbursement rights relating to pension funds (note 22) 2.8 0.7

Long-term prepaid expenses 9.0 11.5

Available-for-sale financial assets 1.0 0.8

Total non-current financial assets 15.5 15.1

19. Borrowings

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Short-term debt

Bank overdraft 8.9 7.1

Bank short-term loans 241.3 352.7

Current portion of long-term debt 7.6 7.4

Current portion of finance lease obligation 0.2 0.2

Total short-term debt 258.0 367.4

Bank overdraft and bank short-term loans are repayable within one year and are

subject to financial debt convenants.

The short-term debts are fixed for a period of one to three months and the

interest rates are based on LIBOR/EURIBOR.

The carrying amounts of short-term financial debts approximate their fair value.

Long-term debt

Bank loans 2.6 1.0

Convertible bond 166.0 157.4

Fair value of expected purchase price payments (note 33) 51.8 50.1

Finance lease obligation 1.5 1.7

Total long-term debt 221.9 210.2

Details of convertible bond

Face value 138.2 138.2

Transaction costs — 3.1 — 3.1

Equity conversion component — 13.3 — 13.3

Liability component on initial recognition 121.8 121.8

Interest imputed 44.2 35.6

Total liability component of convertible bond 166.0 157.4

106 Kaba Annual Report 2007/2008 Financial Statements

to 130.78 % of the bond’s par value, and each bond of

CHF 5,000 par value is convertible into a fixed rate of

13.02083 registered shares of Kaba Holding AG. The actual

conversion price is derived from the theoretical redemption

price of the bond at the time of premature conversion using

the following equation: 100 %x(1 + 3.4112212%)(d / 360), where

“d” is the number of days between payment and conversion

of the bond. At maturity, application of this equation results

in a conversion price of CHF 502 (rounded).

An early redemption at the premature conversion price

is possible (i) if the closing price of the registered shares

of Kaba Holding AG on the SWX Swiss Exchange exceeds 130 %

of the respective conversion price for 30 consecutive

trading days, (ii) if more than 95 % of the originally issued

bond capital has been converted, or (iii) for tax reasons

with a 60-day period of notice.

Interest expense on the bond is calculated on the effective

yield basis using an effective interest rate of 8.98 %. The

fair value of the convertible bond as of 30 June 2008 based on

quoted market prices was CHF 175.6 million (CHF 181.1 million).

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

At year end, maturities of debt were as follows:

Within one year 7.8 7.6

Within 2 to 5 years 219.3 209.0

After 5 years 2.6 1.2

Total 229.7 217.8

Current portion of long-term debt 7.8 7.6

Total long-term debt 221.9 210.2

Convertible Bonds

Kaba Finance Luxembourg S. A. issued, on 18 January 2002,

a 4 % convertible bond 2002 to 2010 in the amount of

CHF 138.2 million, unconditionally and irrevocably guaran-

teed by Kaba Holding AG. The convertible bonds shall be

redeemed on 18 January 2010, at 130.78 % of the par value.

This convertible bond is listed on the main segment

of the SWX Swiss Exchange (security no. / ISIN: 1 336 276/CH

001 336 276 6). From 18 January 2002, until and including

13 January 2010, each convertible bond with a par value of

CHF 5,000 is convertible, free of charge, at any time

(American Style) into 13.02083 registered shares of Kaba

Holding AG with a par value of CHF 0.10 each; fractions

are paid out in cash. For this convertible bond, a maximum

of 360,000 registered shares of Kaba Holding AG with

a par value of CHF 0.10 each in the total amount of CHF 36,000

are reserved. The conversion price was set to CHF 384

(based on the par value of the bonds). In economic terms,

the conversion price of the convertible bond will rise

during the term of maturity because the redemption price

until maturity (i. e. 18 January 2010) continuously increases

107Kaba Annual Report 2007/2008Financial Statements

20. Accrued and other current liabilities

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Advances from customers 18.0 9.8

Billings in excess of cost of construction contracts 3.5 2.8

Deferred income 26.2 24.2

Sales, withholding and other tax payable 13.1 15.5

Social security payable 8.3 6.3

Payable to pension fund 1.7 1.4

Accruals for vacation, overtime and other employee benefits 50.5 50.0

Accrued interest 2.7 3.0

Fair value of forward contracts (see note 29) 0.1 0.1

Other accruals and current non-interest-bearing liabilities 42.0 44.9

Total accrued and other current liabilities 166.1 158.0

21. Provisions

in CHF millionWarranty and

customer returns Restructuring Other Total

Beginning of year 6.8 0.8 7.7 15.3

Additions 3.8 0.0 4.3 8.1

Releases — 1.7 0.0 — 0.8 — 2.5

Usage — 2.4 — 0.7 — 1.3 — 4.4

Exchange differences — 0.5 0.0 — 0.2 — 0.7

End of year 6.0 0.1 9.7 15.8

Other provisions include mainly environmental risks, litigation and sales agents’ indemnities.

108 Kaba Annual Report 2007/2008 Financial Statements

22. Accrued pension cost and benefits

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Material defined benefit plans 38.5 48.1

Defined benefit plans covered by insurance policy (note 18) 1) 1.1 0.7

Other pension plans 3.3 1.8

Other long-term employee benefits 3.8 3.9

Total long-term accrued pension cost and benefits 46.7 54.5

1) The liability is covered by an insurance policy. The related asset is capitalized under “Non-current financial assets” (note 18). The return on plan assets directly impacts plan liabilities.

Details of material defined benefit plans

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007Financial year

ended 30. 6. 2006

Present value of funded obligations — 283.3 — 298.0 — 276.6

Fair value of plan assets 282.9 307.7 272.6

— 0.4 9.7 — 4.0

Present value of unfunded obligations — 33.7 — 35.3 — 34.6

Actuarial (gains) losses not recognized — 4.4 — 22.4 — 9.0

Effect of IAS19.58b limitation 0.0 — 0.1 0.0

Net assets (liability) recognized — 38.5 — 48.1 — 47.6

Change in present value of defined benefit obligations

Beginning of year — 333.3 — 311.2

Current service cost net of employees’ contributions — 7.9 — 9.5

Interest cost — 12.6 — 11.9

Contributions by plan participants — 6.3 — 6.3

Actuarial gains (losses) 11.7 — 1.7

Translation exchange differences 5.9 — 3.7

Benefits paid 5.9 10.1

Settlement payments 19.7 0.0

Curtailments — 0.1 0.9

End of year — 317.0 — 333.3

Change in fair value of plan assets

Beginning of year 307.7 272.6

Expected return on plan assets 14.2 12.3

Actuarial gains (losses) — 25.8 14.9

Translation exchange differences — 5.7 1.5

Employer’s contributions 10.0 8.6

Employees’ contributions 6.3 6.3

Benefits paid — 4.0 — 8.5

Settlement payments — 19.7 0.0

End of year 283.0 307.7

109Kaba Annual Report 2007/2008Financial Statements

Plan assets are comprised as follows

in CHF millionFinancial year

ended 30. 6. 2008 in %Financial year

ended 30. 6. 2007 in %

Equity instruments 79.4 28.1 104.2 33.9

Debt instruments 142.0 50.2 150.3 48.8

Property occupied by a third party 40.5 14.3 36.1 11.7

Other plan assets 21.1 7.4 17.1 5.6

Total plan assets 283.0 100.0 307.7 100.0

Periodic pension cost for material defined benefit plans

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Current service cost net of employee’s contributions — 7.9 — 9.5

Interest cost — 12.6 — 11.9

Expected return on plan assets 14.2 12.3

Net actuarial (gains) losses recognized — 0.8 0.2

Gain on curtailment /settlement 3.5 0.9

Effect of IAS19.58b limitation 0.1 — 0.1

Expenses recognized in income statement (note 8) — 3.5 — 8.1

Actual return on plan assets — 12.0 27.0

Principal actuarial assumptions (weighted average)

in CHF million

2007/2008

2006/2007

2005/2006

Discount rate 4.26 % 3.78 %

Expected net return on plan assets 4.58 % 4.70 %

Projected average future salary increases 1.77 % 2.22 %

Projected pension benefit increases 0.59 % 0.58 %

Experience adjustments

Experience adjustments on plan assets — 26.2 14.6 5.8

Experience adjustments on plan liabilities — 1.1 — 1.4 — 2.1

The expected return on plan assets is based on the historical development of the

different asset categories of the funded plans. The expected employer’s contribution

to defined benefit plans for the next financial year is estimated at CHF 6.6 million.

110 Kaba Annual Report 2007/2008 Financial Statements

23. Lease commitments

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Operating leases

Expenses for operating leases amounted to 17.7 18.0

Future minimum lease payments resulting from non-cancellable

operating lease contracts are due as follows:

Liabilities under leases up to 1 year 15.2 15.2

Liabilities under leases 2 to 5 years 28.4 28.1

Liabilities under leases over 5 years 11.6 14.7

Total future payment commitments for operating leases 55.2 58.0

Operating lease commitments mainly refer to the lease of buildings

which are used for operational purposes.

Finance leases

Expenses for finance leases amounted to 0.2 0.1

Future minimum lease payments resulting from non-cancellable

finance lease contracts are due as follows:

Liabilities under leases up to 1 year 0.2 0.2

Liabilities under leases 2 to 5 years 1.4 0.6

Liabilities under leases over 5 years 0.1 1.1

Total finance lease obligation including its current portion (net present value) 1.7 1.9

Less current portion (note 19) — 0.2 — 0.2

Long-term finance lease obligation 1.5 1.7

111Kaba Annual Report 2007/2008Financial Statements

24. Deferred income taxes

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Expiration of tax losses not recognized as deferred tax asset

Expiry in 1 year 2.0 0.1

Expiry in 2 to 5 years 11.0 15.3

Expiry after 5 years 9.5 9.6

No expiry 133.3 128.2

Balance tax losses carried forward end of year 155.8 153.2

Temporary differences (differences between balance sheet values according to IFRS

and taxable balance sheet values) for which no deferred tax assets have been capitalized

amount to 10.1 16.1

Total deferred taxes calculation

Deferred income tax assets and liabilities relate to the following

assets and liabilities:

Assets

Current assets 7.7 10.6

Property, plant and equipment 0.0 0.0

Other non-current assets 1.9 2.6

Tax loss carry forwards 4.3 9.7

Current liabilities 7.9 8.9

Non-current liabilities 4.1 6.6

Total deferred income taxes, assets 25.9 38.4

Liabilities

Current assets 12.8 11.7

Property, plant and equipment 14.2 18.1

Other non-current assets 13.9 19.2

Current liabilities 6.9 4.3

Non-current liabilities 2.7 4.1

Total deferred income taxes, liabilities 50.5 57.4

Net

Current assets — 5.1 — 1.1

Property, plant and equipment — 14.2 — 18.1

Other non-current assets — 12.0 — 16.6

Tax loss carry forwards 4.3 9.7

Current liabilities 1.0 4.6

Non-current liabilities 1.4 2.5

Total deferred income taxes, net — 24.6 — 19.0

112 Kaba Annual Report 2007/2008 Financial Statements

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Balance sheet presentation of deferred income taxes

Deferred income tax assets 9.0 18.8

Deferred income tax liabilities 33.6 37.8

Total deferred income taxes, net — 24.6 — 19.0

Deferred tax assets are only recognized to the extent that it is probable that future taxable

profit will be available against which the asset can be utilized.

113Kaba Annual Report 2007/2008Financial Statements

25. Financial instruments

The two tables below summarize all financial assets and liabilities as defined in IAS 39 by

category:

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Categories of financial instruments per IAS 39

Cash and cash equivalents 67.2 86.0

Accounts receivable trade 246.2 252.7

Retentions 1.0 2.3

Sales, withholding and other tax recoverable 12.1 15.3

Other receivables and miscellaneous 0.1 0.1

Loans 2.7 2.1

Total loans and receivables 262.1 272.5

Total held to maturity financial assets 0.0 0.0

Securities held for long term 1.0 0.8

Total available for sale financial assets 1.0 0.8

Derivative financial instruments 0.4 0.1

Total financial assets at fair value through profit and loss classified as held

for trading in accordance with IAS 39 0.4 0.1

Total financial assets 330.7 359.4

The maximum credit risk is equivalent to the carrying amount of financial assets

Current borrowings — 258.0 — 367.4

Accounts payable trade — 72.6 — 76.8

Non-current borrowings — 221.9 — 210.2

Sales, withholding and other tax payable — 13.1 — 15.5

Social security payable — 8.3 — 6.3

Payable to pension fund — 1.7 — 1.4

Accruals for vacation, overtime and other employee benefits — 50.5 — 50.0

Accrued interest — 2.7 — 3.0

Other accruals and current non-interest-bearing liabilities — 42.0 — 44.9

Other non-interest bearing liabilities — 1.1 — 1.5

Total financial liabilities measured at amortized cost — 671.9 — 777.0

Derivative financial instruments — 0.1 — 0.1

Total financial assets at fair value through profit and loss classified as held

for trading in accordance with IAS 39 — 0.1 — 0.1

Total financial liabilities — 672.0 — 777.1

114 Kaba Annual Report 2007/2008 Financial Statements

The following table shows the carrying amounts and the contractually agreed future

(undiscounted) payments of interest and principal amount of all derivative and non-derivative

financial liabilites at the balance sheet date:

Maturity analysis of financial liabilities Maturity

in CHF million

Carrying amount

30. 6. 2008within

6 monthswithin

6 to 12 monthswithin

2 to 5 yearsmore

than 5 years

Current borrowings 258.0 253.2 6.3

Accounts payable trade 72.6 72.6

Non-current borrowings 221.9 7.1 242.6 3.3

Other financial liabilities measured at amortized cost 119.4 117.2 0.3 1.0

Total financial instruments at fair value through profit and loss

classified as held for trading in accordance with IAS 39 166.8 166.8

Total 838.7 609.8 13.4 242.9 4.3

Total credit lines agreed with banks 721.0

in CHF million

Carrying amount

30. 6. 2007within

6 monthswithin

6 to 12 monthswithin

2 to 5 yearsmore

than 5 years

Current borrowings 367.4 363.5 6.4

Accounts payable trade 76.8 76.8

Non-current borrowings 210.2 7.0 248.3 1.2

Other financial liabilities measured at amortized cost 122.6 121.0 0.3 1.3

Total financial instruments at fair value through profit and loss

classified as held for trading in accordance with IAS 39 171.0 171.0

Total 948.0 732.3 13.4 248.6 2.5

Total credit lines agreed with banks 570.0

The fair value of the convertible bond as of 30 June 2008 based on quoted market prices

was CHF 175.6 million.

The carrying amounts of all other financial instruments approximate their fair value.

115Kaba Annual Report 2007/2008Financial Statements

26. Financial risk management

Interest rate risks:

An increase in the interest rate by 100 basis points would have reduced the group profit by

CHF 2.6 million (previous year CHF 3.7 million). A corresponding reduction of the interest

rate would have had a reciprocal positive impact. The analysis is based on the assumption

that all other variables remained constant.

Currency risks:

A revaluation or devaluation of 5 % would have had the following impact on group profit.

The analysis is based on the assumption that all other variables remained constant.

Currency risks Financial year ended 30. 6. 2008 Financial year ended 30. 6. 2007

Currency Revaluation Devaluation Revaluation Devaluation

CHF/USD 0.3 — 0.3 — 3.3 3.3

EUR/CHF — 1.8 1.8 — 1.4 1.4

HKD/USD 2.4 — 2.4 2.9 — 2.9

CNY/USD — 0.5 0.5 — 1.0 1.0

116 Kaba Annual Report 2007/2008 Financial Statements

27. Capital Management

Management of capital is governed by the following objectives:

securing sufficient liquidity to meet the Group’s needs to fulfill its financial liabilities

securing sufficient financing capacity for future investments and acquisitions

ensuring sufficient credit lines and a creditworthiness (gearing not exceeding 3.0)

achieve an risk-adequate return for investors

continuous monitoring and reporting of key figures to management ensure that

appropriate action is taken as soon as required.

The corresponding key figures as per 30 June 2008 and 30 June 2007 respectively are

shown below:

Financial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Gearing:

Earnings before interest, tax, depreciation and amortization (EBITDA) 206.6 186.5

Net debt 412.7 491.6

Net debt/EBITDA (gearing) 2.00 2.64

Financial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Earnings per share:

Basic earnings per share (in CHF) 25.6 22.6

Diluted earnings per share (in CHF) 25.6 22.5

A portion of profits generated is paid out to owners as dividends, taking into account

current financing needs and compliance with legal requirements.

Kaba is committed to a flexible dividend policy in line with the capital required to

implement the corporate strategy.

The Group is not subject to externally imposed capital restrictions.

•

•

•

•

•

117Kaba Annual Report 2007/2008Financial Statements

28. Commitments and contingencies

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Current endorsement liabilities 3.4 3.3

Investments committed to purchase from third parties:

Tangible fixed assets 12.7 5.9

Intangible fixed assets 0.2 0.1

The pension scheme of some of the employees taken over in the UK has made a claim for

a total of ca. GBP 1.7 million against two UK non-operational Group companies, which were

acquired in 1999, relating to a deficit in such scheme. Each of the companies ceased to

participate in the scheme on 30 June 1999. The purchase contract for the two companies

contains a full indemnity from the vendor against such liability.

Lawsuit

Three Kaba companies located in North America have been notified by the Servicio de

Administración Tributaria (“SAT”) — the Mexican Tax Authorities — of an alleged violation

of NAFTA preferential tariff regulations. Assessments requesting the payment of import

duties, interest and penalties amounting to a total of MXP 133 million have been presented

for 2002, 2003 and 2004 to Corporación Cerrajera Alba S.A. de CV (“Alba”), a Kaba

company located in Mexico.

Alba has lodged a recourse in revocation (an administrative appeal) for each of the

three years against the assessments. Additional documentary evidence demonstrating

compliance with the NAFTA regulations was filed with SAT. Kaba expects that the revocation

will finally be granted. However, a provision amounting to CHF 2.5 million was made for

legal costs in relation to the appeal.

29. Derivative financial instruments

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

The following forward contracts existed for hedging purposes

per balance sheet date:

Currencies

— contract value 166.8 171.0

— fair value — held for trading 0.3 0.0

118 Kaba Annual Report 2007/2008 Financial Statements

30. Segment reporting — primary segments

Door Systems

Access + Data Systems

Key + Ident Systems

Other / Eliminations / Finance

Group

in CHF million 2007/08 2006/07 2007/08 2006/07 2007/08 2006/07 2007/08 2006/07 2007/08 2006/07

Net sales third parties 274.3 272.9 746.9 679.6 256.2 256.0 26.3 40.2 1,303.7 1,248.7

Intercompany sales 1.1 1.4 2.1 2.0 4.8 5.0 — 8.0 — 8.4 0.0 0.0

Total segment sales 275.4 274.3 749.0 681.6 261.0 261.0 18.3 31.8 1,303.7 1,248.7

Segment operating profit

(EBIT) 17.8 23.5 138.3 115.6 26.7 24.5 — 18.8 — 19.9 164.0 143.7

in % segment sales 6.5 % 8.6 % 18.5 % 17.0 % 10.2 % 9.4 % N / A N / A 12.6 % 11.5 %

Segment operating profit

currency- and acquisition-

adjusted 17.8 23.4 138.2 103.1 27.0 23.8 — 19.1 — 19.7 163.9 130.6

Growth segment sales 1.1 2.9 67.4 176.1 0.0 29.2 — 13.5 — 0.5 55.0 207.7

in % 0.4 % 1.1 % 9.9 % 34.8 % 0.0 % 12.6 % N / A N / A 4.4 % 20.0 %

Whereof currency impact — 2.2 5.3 — 21.4 — 4.3 — 9.4 — 1.4 0.3 0.0 — 32.7 — 0.4

in % — 0.8 % 2.0 % — 3.1 % — 0.9 % — 3.6 % — 0.6 % N / A N / A — 2.6 % 0.0 %

Whereof acquisition

(disposal) impact 0.0 0.0 33.8 144.3 2.3 4.5 — 18.0 0.0 18.1 148.8

in % 0.0 % 0.0 % 5.0 % 28.5 % 0.9 % 1.9 % N / A N / A 1.4 % 14.3 %

Currency-adjusted internal

growth segment sales 3.3 — 2.4 55.0 36.1 7.1 26.1 4.2 — 0.5 69.6 59.3

in % 1.2 % — 0.9 % 8.0 % 7.2 % 2.7 % 11.3 % N / A N / A 5.6 % 5.7 %

Assets 130.1 135.6 637.3 660.8 193.4 202.4 117.1 163.9 1,077.9 1,162.7

Liabilities — 56.2 — 58.5 — 162.6 — 152.8 — 60.1 — 65.0 — 561.4 — 671.3 — 840.3 — 947.6

Segment net operating assets 73.9 77.1 474.7 508.0 133.3 137.4 N / A N / A N / A N / A

Return on net operating

assets (RONOA) 24.1 % 30.5 % 29.1 % 22.8 % 20.0 % 17.8 % N / A N / A N / A N / A

Capital expenditure 8.8 6.5 25.9 16.3 9.0 6.3 1.5 2.0 45.2 31.1

Depreciation and

amortization 6.0 5.7 24.7 24.8 9.7 9.5 2.2 2.8 42.6 42.8

Average number of full-time

equivalent employees 1,308 1,302 6,353 5,524 1,340 1,460 150 299 9,151 8,585

119Kaba Annual Report 2007/2008Financial Statements

31. Segment reporting — geographical segments

in CHF millionNet sales

third parties in %Operating

assets in %Capital

expenditure in %

Prior year ended 30. 6. 2007

Total assets 1,162.7

Unallocated assets — 121.1

Operating assets 1,041.6

Switzerland 186.5 15 152.4 15 8.5 27

Germany 127.7 10 67.7 7 3.1 10

Rest of Europe 458.7 37 249.6 24 10.5 34

Americas 374.7 30 286.1 27 6.6 21

Asia Pacific 101.1 8 285.8 27 2.4 8

Total 1,248.7 100 1,041.6 100 31.1 100

Financial year ended 30. 6. 2008

Total assets 1,077.9

Unallocated assets — 91.9

Operating assets 986.0

Switzerland 204.7 16 158.7 16 10.6 23

Change in % to previous year 10 % 4 % 25 %

Germany 138.2 11 70.8 8 4.9 11

Change in % to previous year 8 % 5 % 58 %

Rest of Europe 477.2 35 251.0 25 21.0 46

Change in % to previous year 4 % 1 % 100 %

Americas 372.1 29 238.8 24 6.2 14

Change in % to previous year —1 % —17 % —6 %

Asia Pacific 111.5 9 266.7 27 2.5 6

Change in % to previous year 10 % —7 % 4 %

Total 1,303.7 100 986.0 100 45.2 100

120 Kaba Annual Report 2007/2008 Financial Statements

32. Stock option and stock award plans

There is an equity settled stock option plan as well as a stock award plan in existence

for the remuneration of Members of the Board of Directors, the Executive Committee and

Senior Management of the Group.

The Executive Stock Option Plan 2002 operated from 2002 until 2006. Under it,

participants, determined each year by the Compensation Committee, were allotted free

of charge options at an exercise price corresponding to the average closing price of

Kaba Holding AG registered shares at the SWX Swiss Exchange during the July and August

immediately preceding the allotment on 1 September each year. The options are subject

to a graduated blocking period of one to four years during each of which 25% of the annual

allotment vests and is exercisable until the expiry of five years from the date of allotment

when any unexercised options will lapse. Under the stock option plan one option is convert-

ible into one Kaba Holding AG share.

The Executive Stock Award Plan commenced in 2007. Under it, participants, deter-

mined each year by the Compensation Committee, are allotted shares free of charge. The

award value corresponds to the closing price of the Kaba Holding AG share at the SWX

Swiss Exchange on 14 August.

On 15 August 2007, 3,940 shares have been allotted under the Executive Stock Award

Plan with an award value of CHF 355.25. The impact on Kaba’s 2007/2008 income statement

amounts to CHF 1,399,685.

CHF 8,063.20 (divided into 80,632 registered shares with a par value of CHF 0.10)

of conditional capital is reserved for the option and stock award plans.

Movements in the number of share options outstanding and their related weighted

average exercise prices are as follows:

Financial year ended 30. 6. 2008 Financial year ended 30. 6. 2007

Average

exercise price OptionsAverage

exercise price Options

1 July 298.31 43,885 277.26 47,615

Granted 0.00 0 322.83 14,320

Forfeited 307.63 1,520 284.64 1,350

Exercised 1) 245.96 9,145 260.44 16,700

Expired 0.00 0 0.00 0

30 June 312.29 33,220 298.31 43,885

Thereof exercisable 301.98 15,730 274.30 13,645

1) The weighted average share price at the date of exercise amounted to CHF 346.11 (CHF 364.76).

121Kaba Annual Report 2007/2008Financial Statements

Options outstanding at the end of the period have the following expiry date and exercise

prices:

Financial year ended 30. 6. 2008 Financial year ended 30. 6. 2007

Exercise price Options Exercise price Options

31. 8. 2007 293.90 2,140

31. 8. 2008 199.90 1,680 199.90 5,900

31. 8. 2009 250.35 6,780 250.35 9,165

31. 8. 2010 352.72 11,640 352.72 12,560

31. 8. 2011 322.83 13,120 322.83 14,120

Total 33,220 43,885

The impact on Kaba’s 2007/2008 income statement amounts to CHF 0.2 million

(CHF 1.1 million).

The significant input parameters for the calculation of the fair value of the share options

in the previous year were a share price of CHF 333, volatility of 31.6 %, a risk free interest

rate of 2.44 %, an average option life of 3.53 years and a continuous dividend of 1.23 %.

122 Kaba Annual Report 2007/2008 Financial Statements

33. Related parties

in CHF millionFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Management compensation

Short-term employee benefits 1) 8.7 8.2

Share-based payments 0.7 0.5

Contributions to pension plans 0.9 0.7

Total remuneration 10.3 9.4

Borrowings from a board member

Fair value of expected purchase price payments 51.8 50.1

Transactions with Joint ventures and associates 2)

Sales of goods and services

Joint ventures 0.5

Associates 0.2

Purchase of goods and services

Joint ventures 2.3

Accounts receivable

Associates 0.2

Accounts payable

Joint ventures 0.3

1) This amount includes the compensation to one board member for his function as a general manager of a Group company.2) There were no material transactions in the previous financial year.

On 10 August 2006, Kaba acquired 80 % of the issued share capital of Wah Yuet (Ng’s)

Group Holdings Limited. For the remaining 20 % of the company share capital, reciprocal

options have been put in place which cannot be exercised for at least three years.

Applying a discount rate of 6 %, Kaba has recognized a liability in its Group Financial

Statements for this 20 % representing the discounted redemption value in the event

of an exercise of the put option and consequently consolidates the Wah Yuet Group at 100 %.

The redemption value is based on assumptions on the date of the exercise of the put

option and the profit of Wah Yuet Group in the two years preceding the exercise. It is assessed

and adjusted on each balance sheet date and it can vary considerably if the assumptions

are changed. Adjustments of the redemption are debited or credited to goodwill. The change

in the discount element of the liability is expensed as a finance cost. Consideration will

be provided in cash. The liability is not secured.

The Management includes members of the Board of Directors as well as members of the

Executive Board.

123Kaba Annual Report 2007/2008Financial Statements

34. Release of consolidated financial statements for publication

These financial statements have been approved for issue by the Board of Directors

on 29 August 2008.

124 Kaba Annual Report 2007/2008 Financial Statements

List of substantial group and associated companies Share Capital

in local currencyVoting

rights in % Participation of...

Kaba Holding AG, Rümlang / CH CHF 380,377.80 Public Quoted Company

Kaba Management + Consulting AG, Rümlang / CH CHF 50,000.00 100 Kaba Holding AG

Division Door Systems

Kaba Access Technology (Suzhou) Co., Ltd., Suzhou / CN CNY 26,446,067.43 100 Kaba Gilgen AG

Kaba Door Systems Ltd., Telford / GB GBP 2,000,002.00 100 Kaba Holding (UK) Ltd.

Kaba Gilgen AG, Schwarzenburg / CH CHF 2,001,000.00 100 Kaba Holding AG

Kaba Porte Automatiche S.p.A., Cermenate / IT EUR 13,577,000.00 97 Unican Luxembourg S.A.

3 Kaba Holding AG

Kaba Portes Automatiques France S.A.S., Antony / FR EUR 40,000.00 100 Ilco Unican France S.A.S.

Vega Ltd., (trading as Kaba Garog), Warrington / GB GBP 5,000.00 100 Kaba Holding (UK) Ltd.

Division Access + Data Systems EMEA

Dorset Kaba Security Systems Pvt. Ltd., New Delhi / IN INR 29,996,160.00 49 Kaba Security Pte. Ltd.

Fecosa SCI, Le Mesnil St Denis / FR EUR 152.45 99 Kaba Saflok S.A.S.

1 Ilco Unican France S.A.S.

Iberkaba S.A., Valencia / ES EUR 841,416.95 100 Kaba Holding AG

Kaba (UK) Ltd., Tiverton / GB GBP 2,000,000.00 100 Kaba Holding (UK) Ltd.

Kaba AB, Eskilstuna / SE SEK 13,000,000.00 100 Unican Luxembourg S.A.

Kaba AG, Wetzikon / CH CHF 6,800,000.00 100 Kaba Holding AG

Kaba Belgium NV / SA, Turnhout / BE EUR 460,981.10 100 Kaba Holding AG

Kaba Benzing America Inc., Miramar / US USD 19,712.76 100 Kaba U.S. Holding Ltd.

Kaba Elzett Zrt., Budapest / HU HUF 250,000,000.00 51 Silca S.p.A.

49 Unican Luxembourg S.A.

Kaba FZE, Dubai / AE AED 1,000,000.00 100 Kaba AG

Kaba Nederland BV, Nijmegen / NL EUR 90,756.04 100 Unican Luxembourg S.A.

Kaba Gallenschütz GmbH, Bühl / DE EUR 2,556,459.40 100 Kaba Holding GmbH

Kaba GmbH, Herzogenburg / AT EUR 835,737.59 100 Kaba Holding AG

Kaba GmbH, Villingen-Schwenningen / DE EUR 3,455,000.00 100 Kaba Holding GmbH

Kaba S.A.S., Suresnes / FR EUR 500,000.00 100 Ilco Unican France S.A.S.

Kaba Saflok S.A.S., Le Mesnil St Denis / FR EUR 1,561,978.00 100 Ilco Unican France S.A.S.

Kaba Security Sp.z.o.o., Warszawa / PL PLN 50,000.00 100 Kaba Holding AG

Kaba srl, Castel Maggiore / IT EUR 260,000.00 100 Kaba AG

Division Access + Data Systems Asia Pacific

A.C.N. 087 916 738 Pty Ltd., Wetherill Park / AU AUD 2,000,000.00 100 Kaba Gilgen AG

Kaba Australia Pty Ltd., Wetherill Park / AU AUD 32,887,426.00 100 Kaba Holding AG

Kaba Ltd., Kwun Tong, Kowloon / HK HKD 85,250,000.00 100 Kaba Gilgen AG

Kaba Jaya Security Sdn. Bhd., Kuala Lumpur / MY MYR 277,384.00 70 Kaba AG

Kaba Macau Limitada, Macau / MO MOP 25,000.00 100 Kaba Ltd.

Kaba New Zealand Ltd., Auckland / NZ NZD 1,900,000.00 100 Kaba Gilgen AG

Kaba Security Pte. Ltd., Singapore / SP SGD 1,890,000.00 100 Kaba AG

Nihon Kaba K.K., Yokohama / JP JPY 120,000,000.00 100 Kaba AG

As per 30 June 2008

Legal Structure of the Kaba Group

125Kaba Annual Report 2007/2008Financial Statements

List of substantial group and associated companies Share Capital

in local currencyVoting

rights in % Participation of...

Wah Yuet

Path Line (China) Ltd., Hong Kong / HK HKD 1,000,000.00 100 Wah Yuet (Ng’s) Group Holdings Ltd.

Wah Mei (Toishan) Hardware Co., Ltd., Taishan / CN USD 15,000,000.00 100 Path Line (China) Ltd.

Wah Yuet Co. Ltd. — Macao Commercial Offshore, Macau / MO MOP 1,000,000.00 100 Wah Yuet (Ng’s) Group Holdings Ltd.

Wah Yuet Industrial Co. Ltd., Hong Kong / HK HKD 1,000,000.00 100 Wah Yuet (Ng’s) Group Holdings Ltd.

Wah Yuet (Ng’s) Group Holdings Ltd., Tortola / VG USD 100.00 80 Kaba Holding AG

20 Ng Kin Shek United Co. Ltd.

Wah Yuet (Ng’s) Overseas Co. Ltd., Tortola / VG USD 2.00 100 Wah Yuet (Ng’s) Group Holdings Ltd.

Division Access + Lodging/Key Systems Americas

Computerized Security Systems Inc., Madison Heights / US USD 16,638.00 100 Kaba Corporation

Corporacion Cerrajera Alba, S.A. de C.V., Edo de México / MX MXP 191,744,593.65 99 Kaba Ilco Inc.

1 Ilco Mexico S.A. de C.V.

Ilco Mexico, S.A. de C.V., Edo de México / MX MXP 10,315,310.00 100 Kaba Ilco Inc.

Kaba Ilco Corp., Rocky Mount / US n /a 100 Kaba Corporation

Kaba Ilco Inc., Montreal / CA CAD 10,000,000.00 100 Kaba Gilgen AG

Division Safe Locks Worldwide

Kaba Mas LLC, Lexington / US USD 880,679.00 100 Kaba Corporation

Kaba Mauer GmbH, Heiligenhaus / DE EUR 819,100.00 100 Unican Holding und Management GmbH

Mauer Sicherheitstechnik Beteiligungs GmbH, Heiligenhaus / DE EUR 26,250.00 100 Unican Holding und Management GmbH

Mauer Sicherheitstechnik GmbH + Co. KG, Heiligenhaus / DE EUR 255,645.94 100 Mauer Sicherheits Beteiligungs GmbH

Mauer Thüringen GmbH, Bad Berka / DE EUR 255,700.00 100 Kaba Mauer GmbH

MR Electronic SA, Wetzikon / CH CHF 50,000.00 100 Kaba Holding AG

Division Key + Ident Systems Europe/Asia Pacific

H. Cillekens & ZN BV, Roermond / NL EUR 15,882.31 100 Kaba Nederland BV

Kaba do Brasil Ltda., Sao Paulo / BR BRL 20,014,978.00 100 Kaba Gilgen AG

Legic Identsystems AG, Wetzikon / CH CHF 500,000.00 100 Kaba AG

Richard Lenoir (SCI), Paris / FR EUR 15,244.90 100 Silca S.A.S.

Silca GmbH, Velbert / DE EUR 358,000.00 90 Unican Holding und Management GmbH

10 Unican Luxembourg S.A.

Silca Key Systems S.A., Barcelona / ES EUR 162,296.90 100 Silca S.p.A.

Silca Ltd., Sutton / GB GBP 411,050.00 100 Kaba Holding (UK) Ltd.

Silca S.A.S., Paris / FR EUR 797,670.00 100 Ilco Unican France S.A.S.

Silca S.p.A., Vittorio Veneto / IT EUR 10,000,000.00 97 Kaba Porte Automatiche S.p.A.

3 Kaba Gilgen AG

Minda Silca Engineering Ltd., New Delhi / IN INR 88,111,000.00 50 Kaba Security Pte. Ltd.

126 Kaba Annual Report 2007/2008 Financial Statements

List of substantial group and associated companies Share Capital

in local currencyVoting

rights in % Participation of...

Division Finance

Bauer AG, Rümlang / CH CHF 100,000.00 100 Kaba Holding AG

Ilco Unican France S.A.S., Le Mesnil St Denis / FR EUR 2,840,000.00 100 Kaba Holding AG

Ilco Unican Properties, Inc., Rocky Mount / US USD 100.00 100 Kaba Corporation

Kaba Corporation, Rocky Mount / US USD 201,731,000.00 100 Kaba Finance Corp.

Kaba Delaware, LLC, Wilmington / US n /a 100 Kaba AG

Kaba Finance Corp., Wilmington / US USD 1,010.00 100 Kaba Benzing America Inc.

Kaba Finance Luxembourg S.A. Luxembourg / LU EUR 32,000.00 100 Kaba Holding AG

Kaba Holding (UK) Ltd., London / GB GBP 15,600,000.00 100 Kaba Holding AG

Kaba Holding GmbH, Villingen-Schwenningen / DE EUR 3,070,000.00 100 Kaba Holding AG

Kaba U.S. Holding Ltd., Jersey / GB USD 93,000,000.00 97 Kaba Delaware, LLC

3 Kaba AG

Unican Holding und Management GmbH, Velbert / DE EUR 51,200.00 90 Kaba Holding GmbH

10 Unican Luxembourg S.A.

Unican Luxembourg S.A., Luxembourg / LU EUR 15,191,535.94 100 Kaba Gilgen AG

Apart from Kaba Holding AG in Rümlang, there are no companies in the Kaba Group’s scope of consolidation whose securities are listed on a stock exchange. The registered shares of Kaba Holding AG are traded on the main board of the SWX Swiss Exchange (security no. / ISIN: 1179595 / CH 001179595 9). As at 30 June 2008, the company’s market capitalization was CHF 1,183 million.

127Kaba Annual Report 2007/2008Financial Statements

As auditors of the group, we have audited the consolidated financial statements (consoli-

dated income statement, consolidated balance sheet, consolidated statement of cash

flows, consolidated changes in equity and notes to the consolidated financial statements/

pages 79 to 126) of Kaba Holding AG for the year ended 30 June 2008.

These consolidated financial statements are the responsibility of the board of directors.

Our responsibility is to express an opinion on these consolidated financial statements

based on our audit. We confirm that we meet the legal requirements concerning professional

qualification and independence.

Our audit was conducted in accordance with Swiss Auditing Standards and with the

International Standards on Auditing, which require that an audit be planned and

performed to obtain reasonable assurance about whether the consolidated financial

statements are free from material misstatement. We have examined on a test basis

evidence supporting the amounts and disclosures in the consolidated financial statements.

We have also assessed the accounting principles used, significant estimates made

and the overall consolidated financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the

financial position, the results of operations and the cash flows in accordance with the

International Financial Reporting Standards (IFRS) and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be

approved.

PricewaterhouseCoopers AG

Stefan Räbsamen Reto Tognina

Auditor in charge

Zurich, 29 August 2008

Report of the group auditors to the General Meeting of Kaba Holding AG, Rümlang

Financial StatementsHolding

129Kaba Annual Report 2007/2008Financial Statements Holding Company

Assets

in CHFFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Long-term assets

Investments 479,897,764 554,434,544

Total long-term assets 479,897,764 554,434,544

Current assets

Receivables: Third parties 33,993 51,835

Receivables: Group companies 385,576,098 282,584,625

Accruals 19,200 11,250

Cash, cash equivalents and securities 1,859,995 3,333,243

Total current assets 387,489,286 285,980,953

Total assets 867,387,050 840,415,497

Shareholders’ equity and liabilities

in CHFFinancial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Shareholders’ equity

Share capital 380,378 379,069

Legal reserves: General reserves 600,160,951 596,607,713

Legal reserves: Reserve for treasury shares 1,818,846 939,734

Other reserves 158,461,654 119,340,766

Unappropriated retained earnings 52,974,456 87,257,961

Total shareholders’ equity 813,796,285 804,525,243

Provisions 15,440,376 16,800,996

Short-term liabilities

Bank overdraft 584,621 0

Other short-term liabilities: Third parties 1,199,495 695,754

Other short-term liabilities: Group companies 36,366,273 18,393,504

Total short-term liabilities 38,150,389 19,089,258

Total shareholders’ equity and liabilities 867,387,050 840,415,497

Holding Company balance sheet

130 Kaba Annual Report 2007/2008 Financial Statements Holding Company

in CHF Financial year

ended 30. 6. 2008Financial year

ended 30. 6. 2007

Operating revenues

Financial income 53,255,030 43,289,208

Proceeds from services 8,345,417 7,585,774

Other operating revenues 989 900

Total operating revenues 61,601,436 50,875,882

Operating expenses

Personnel expenses — 725,069 — 539,870

Other operating expenses — 6,203,746 — 5,870,770

Financial expenses — 4,428,969 — 1,431,084

Taxation — 1,287,448 — 2,175,238

Net profit for the period before depreciation 48,956,204 40,858,920

Depreciation

Depreciation on investments — 18,555,757 — 7,039,959

Net profit for the period 30,400,447 33,818,961

Unappropriated retained earnings at the beginning of the period 87,257,961 73,439,000

Appropriations of retained earnings resolved by general meeting:

— Other reserves — 40,000,000 — 20,000,000

— Dividend — 24,683,952 0

Unappropriated retained earnings at the end of the period 52,974,456 87,257,961

Holding Company income statement

131Kaba Annual Report 2007/2008Financial Statements Holding Company

1. Investments: Company, Business, Country

Nominal capital

in local currencies Interest in %

Bauer AG, Finance, Rümlang / CH CHF 100,000 100.0

Iberkaba S.A., Access+Data Systems EMEA, Valencia / ES EUR 841,417 100.0

Ilco Unican France S.A.S., Finance, Le Mesnil-Saint-Denis / FR EUR 2,840,000 100.0

Kaba AG, Access+Data Systems EMEA, Wetzikon / CH CHF 6,800,000 100.0

Kaba Australia Pty Ltd., Access+Data Systems Asia Pacific, Wetherill Park / AU AUD 32,887,426 100.0

Kaba Belgium NV / SA, Door Systems, Turnhout / BE EUR 460,981 100.0

Kaba Finance Luxembourg S.A., Finance, Luxembourg / LU EUR 32,000 100.0

Kaba Gilgen AG, Door Systems, Schwarzenburg / CH CHF 2,001,000 100.0

Kaba GmbH, Access+Data Systems EMEA, Herzogenburg / AT EUR 835,738 100.0

Kaba Holding (UK) Ltd., Finance, London / GB GBP 15,600,000 100.0

Kaba Holding GmbH, Finance, Villingen-Schwenningen / DE EUR 3,070,000 100.0

Kaba Management + Consulting AG, Finance, Rümlang / CH CHF 50,000 100.0

Kaba Porte Automatiche S.p.A., Door Systems, Cermenate / IT EUR 13,577,000 3.0

Kaba Security Sp. z o.o., Access+Data Systems EMEA, Warszawa / PL PLN 50,000 100.0

MR Electronic SA, Safe Locks, Wetzikon / CH CHF 50,000 100.0

Wah Yuet (Ng’s) Group Holdings Ltd., Wah Yuet Group, Tortola / VG USD 100 80.0

Notes to the financial statements

132 Kaba Annual Report 2007/2008 Financial Statements Holding Company

2. Principal shareholders

The following table sets out the shareholding structure of Kaba Holding AG as at the

end of the financial year and provides the names of those shareholders that have disclosed

voting rights of 3 % or more to Kaba Holding AG.

Due to the reduction of the threshold for disclosure of shareholdings from 5 % to 3 %,

in financial 2007/2008, Creed Kuenzle has notified Kaba Holding AG on 25 February

2008 that he holds a total of 127,452 registered shares, amounting to 3.3 % of the total

share capital. Further, Capital Group Companies Inc., Los Angeles, holding its shares

indirectly via various group companies (Capital Research and Management Company,

Los Angeles; Capital Guardian Trust Company, Los Angeles; Capital International Limited,

London; Capital International Inc., Los Angeles; Capital International S.A., Geneva) has

disclosed on 19 October 2007 that it holds 196,869 registered shares of Kaba Holding AG,

amounting to 5.2 % of the total share capital.

Shareholder group

as at 30. 6. 2008 No. of shares at

CHF 0.10 par value in %

as at 30. 6. 2007 No. of shares at

CHF 0.10 par value in %

Heirs of Leo Bodmer

Creed Kuenzle 1) 127,452 3.3 127,452 3.4

Karin Forrer 2) 196,910 5.2 206,520 5.4

Other heirs of Leo Bodmer 386,645 10.2 421,747 11.1

Total heirs of Leo Bodmer 711,007 18.7 755,719 19.9

Public shareholders

Ulrich Bremi 3) 193,500 5.1 193,500 5.1

Allianz Group 190,366 5.0 191,050 5.0

Capital Group Companies, Inc. 196,869 5.2

Other public shareholders 2,245,832 59.0 2,400,006 63.4

Total public shareholders 2,826,567 74.3 2,784,556 73.5

Members of the Board and current executives

Kin Shek Ng (non-executive member

of the Board) 4) 236,039 6.2 220,142 5.8

Other members of the Board (non-executive) 57,218 1.5 56,287 1.5

Current executives

(incl. executive Board member) 16,015 0.4 16,907 0.4

Total members of the Board

and current executives 309,272 8.1 293,336 7.7

Less doublecounting in respect of heirs of

Leo Bodmer who are members of the Board 5) — 43,068 — 1.1 — 42,918 — 1.1

Total shares 3,803,778 100.0 3,790,693 100.0

1) Creed Kuenzle, Herrliberg, was Chairman of the Board of Directors of Kaba Holding AG from 1978 to 2001.2) Karin Forrer, Ittigen, was a member of the Board of Directors of Kaba Holding AG from 1978 to 1997.3) Ulrich Bremi, Zollikon, was employed by Kaba Holding AG from 1962 to 1992 and was President from 1975 to 1992.4) Kin Shek Ng, Kowloon, a member of the Board of Directors of Kaba Holding AG, holds the shares indirectly through his own

companies (Billion Power Investments Ltd., Kowloon; Right Elite Ltd., Kowloon; Sino Origin Investments Ltd., Kowloon; Ng’s International Co. Ltd., Kowloon).

5) The shareholdings of heirs of Leo Bodmer, who are also members of the Board of Directors are included under both “Other heirs of Leo Bodmer” and “Other members of the Board”.

133Kaba Annual Report 2007/2008Financial Statements Holding Company

3. Guarantees in favor of group companies

in CHF 30. 6. 2008 30. 6. 2007

Guarantees 941,575,154 787,395,394

thereof used 440,019,522 552,429,003

The Kaba companies in Switzerland are treated for VAT purposes as one single entity

(Group taxation art. 22 Swiss VAT law). If one company is unable to meet its payment obliga­

tions to the taxation authorities, the other group companies within the entity are jointly

and severally liable.

4. Treasury shares

30. 6. 2008

in CHF30. 6. 2008

Number30. 6. 2007

in CHF30. 6. 2007

Number

Treasury shares at the beginning of the period 1,116,360 3,101 1,913,600 6,400

Purchased/Revaluation/Sold 720,717 2,806 — 797,240 — 3,299

Treasury shares at the end ot the period 1,837,077 5,907 1,116,360 3,101

5. Share capital increases

30. 6. 2008

CHF 0.10 par value30. 6. 2008

Number30. 6. 2007

CHF 0.10 par value30. 6. 2007

Number

Conditional capital at the end of the period 44,063 440,632 45,372 453,717

Authorized capital at the end of the period 37,720 377,200 37,720 377,200

Conditional capital of CHF 36,000.00 (CHF 36,000.00 in the prior year) is earmarked for

the coverage of convertible bonds and warrant bonds plus CHF 8,063.20 (CHF 9,371.70

in the prior year) for shares or share options to employees and members of the Board of

Directors whereof CHF 1,308.50 (CHF 1,670.00 in the prior year) have been exercised in

financial year 2007/2008.

The authorized capital at year­end amounts to CHF 37,720.00 (CHF 37,720.00 in the

prior year) and allows the Board of Directors to increase the share capital at any time up to

24 October 2008.

134 Kaba Annual Report 2007/2008 Financial Statements Holding Company

6. Compensation to the Board of Directors and Executive Board in 2007/2008

Base compensation

Variable compensation

Social and other

benefits

Total CHF

Cash Number of shares Value of shares Bonus in cash

Board of Directors

Allemann Heribert 60,000 50 17,763 11,766 89,529

Andrien Maurice P. 60,000 50 17,763 77,763

Cadonau Riet 60,000 50 17,763 8,110 85,873

Dörig Rolf 80,000 50 17,763 8,442 106,205

Dubs-Kuenzle Karina 60,000 50 17,763 9,591 87,354

Ng Kin Shek 60,000 50 17,763 77,763

Schmidt Klaus 60,000 50 17,763 77,763

Zimmermann Thomas 60,000 50 17,763 8,240 86,003

Total Board of Directors 500,000 400 142,104 n.a 46,149 688,253

Executive Board

Graf Ulrich, executive Chairman

of the Board of Directors 343,462 250 88,813 999,338 231,258 1,662,871

Other Executive Board 2,851,132 1,300 461,829 2,188,187 1,417,970 6,919,118

Total Executive Board 3,194,594 1,550 550,642 3,187,525 1,649,228 8,581,989

Total Board of Directors

and Executive Board 3,694,594 1,950 692,746 3,187,525 1,695,377 9,270,242

In addition payments of CHF 213,577 were made to two former members of Executive

Board and the Board of Directors respectively.

The Board of Directors and the Executive Board are entitled to a base compensation

in cash. In addition the Board of Directors decided on an allotment of shares which

was applied by the Compensation Committee. The value per share amounted to CHF 355.25

and is equivalent to the closing price of a Kaba Holding AG share on the SWX Swiss

Exchange on 14 August 2007.

Members of the Executive Board are entitled to an additional variable compensation

which is based of performance and profit. The amount shown in the table represents

the compensation earned in 2007/2008 which will be paid out in the following year.

The column “Social and other benefits” includes all cost for pension plans as

well as other social benefits and expenses.

135Kaba Annual Report 2007/2008Financial Statements Holding Company

7. Shares and share options held by Board of Directors and Executive Board

As per 30 June 2008, the individual members of the Board of Directors and the Executive

Board (including related parties) held the following number of shares and share options

in Kaba Holding AG

Number

of sharesNumber of options Total options

Grant year 2006 2005 2004

Excercise price (CHF) 322.83 352.72 250.35

Phased vesting over 4 years 2007 — 2010 2006 — 2009 2005 — 2008

Life (years) 5 5 5

Board of Directors

Allemann Heribert 13,200 600 600 150 1,350

Andrien Maurice P. 325 200 200 50 450

Cadonau Riet 525 0 0 0 0

Dörig Rolf 170 200 200 0 400

Dubs-Kuenzle Karina 35,450 150 200 50 400

Ng Kin Shek 236,039 0 0 0 0

Schmidt Klaus 50 200 0 0 200

Zimmermann Thomas 7,618 200 200 200 600

Total Board of Directors 293,377 1,550 1,400 450 3,400

Executive Board

Belflower Frank 450 600 600 600 1,800

Brechbühl Andreas 150 600 0 0 600

Gaspari Roberto 150 400 200 50 650

Gilgen Jakob 2,382 600 600 300 1,500

Graf Ulrich 10,054 1,200 1,200 300 2,700

Sideranko Carl 275 200 200 200 600

Stadelmann Werner 598 600 600 150 1,350

Weber Rudolf 790 200 200 200 600

Wydler Ulrich Peter 2,064 600 600 300 1,500

Total Executive Board 16,913 5,000 4,200 2,100 11,300

One share option entitles the owner to purchase a registered share of Kaba Holding AG.

136 Kaba Annual Report 2007/2008 Financial Statements Holding Company

Proposal of the Board of Directors for appropriation of retained earnings

at 30 June 2008

The Board of Directors proposes the following appropriation: Distribution of a gross

dividend of CHF 29,669,468 (CHF 24,683,952 in the prior year) on the share

capital of CHF 380,378 (CHF 379,069 in the prior year), no contribution to other reserves

(CHF 40,000,000 in the prior year).

in CHF 2008 2007

Dividend 29,669,468 24,683,952

Appropriation to other reserves 40,000,000

To be carried forward 23,304,988 22,574,009

Unappropriated retained earnings 52,974,456 87,257,961

After approval of this prosposal the dividend will be paid out net on 24 October 2008

as follows according to instructions received: CHF 7.80 (CHF 6.50 in the prior year) gross

per listed registered share at CHF 0.10 par value. 35 % withholding tax is going to be

deducted.

137Kaba Annual Report 2007/2008Financial Statements Holding Company

As statutory auditors, we have audited the accounting records and the financial state-

ments (balance sheet, income statement and notes/pages 129 to 136) of Kaba Holding AG

for the year ended 30 June 2008.

These financial statements are the responsibility of the Board of Directors. Our

responsibility is to express an opinion on these financial statements based on our audit. We

confirm that we meet the legal requirements concerning professional qualification and

independence.

Our audit was conducted in accordance with Swiss Auditing Standards, which require

that an audit be planned and performed to obtain reasonable assurance about whether

the financial statements are free from material misstatement. We have examined on a test

basis evidence supporting the amounts and disclosures in the financial statements. We

have also assessed the accounting principles used, significant estimates made and the over-

all financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

In our opinion, the accounting records and financial statements and the proposed

appropriation of available earnings comply with Swiss law and the company’s articles

of incorporation.

We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG

Stefan Räbsamen Reto Tognina

Auditor in charge

Zürich, 29 August 2008

Report of the statutory auditorsto the General Meeting of Kaba Holding AG, Rümlang

138 Kaba Annual Report 2007/2008 Financial Statements Holding Company

Balance Sheet

Kaba Holding AG’s investments are lower than last year

owing to restructuring within the group.

Most refinancing of subsidiary companies is centralized

through Kaba Holding AG, so receivables from and liabilities

to Group companies fluctuate according to the subsidiaries’

liquidity requirements. During the year under review re­

ceivables from subsidiaries increased as a result of liquidity

management. This increase reflects the funds recouped

by the holding company from the sale of investments.

However, on the liabilities side there was a rise in liabilities

to Group companies.

Unappropriated retained earnings added further to

shareholders’ equity. The exercise of options drawing

on conditional equity capital led to a small capital increase

and a rise in “General Reserves” (share premiums). The

legally prescribed reserve based on the acquisition cost of

own shares increased as a result of the purchase of own

shares. “Other Reserves” were higher as a result of the

General Meeting’s decision last year to transfer CHF 40 million

from retained earnings to strengthen these reserves.

Income Statement

Financial income comprises income from investments and

interest income. Interest income correlates directly

with receivables from Group companies. Because the above­

mentioned increase in receivables from subsidiaries only

occurred towards the end of the year, the level of interest in­

come is about the same as last year. Income from invest­

ments increased significantly thanks to the first­time dividend

payment from Wah Yuet. Overall, financial income increased

from CHF 43.3 million to CHF 53.3 million.

Subsidiaries are charged for using the Kaba brand.

These payments are shown under “Proceeds from Services”.

Financial expenses are dependent on the level of

liabilities to Group companies.

Depreciation on investments includes a value adjust­

ment to allow for the fall in the value of the US dollar.

Net profit for the period was slightly lower than a year

ago (CHF 30.4 million compared with CHF 33.8 million).

Based on the Group’s consolidated results for the

2007/2008 financial year, the Board of Directors proposes

an increase in the dividend from CHF 6.50 to CHF 7.80.

Comments on the financial statements for Kaba Holding AG

140 Kaba Annual Report 2007/2008

Headquarters

Kaba Holding AG

Hofwisenstrasse 24

CH­8153 Rümlang

Phone +41 44 818 90 11

Fax +41 44 818 90 18

Kaba Management + Consulting AG

Hofwisenstrasse 24

CH­8153 Rümlang

Phone +41 44 818 90 11

Fax +41 44 818 90 18

Asia Pacific

Kaba Access Technology (Suzhou) Co. Ltd.

Block No. 28, Unit A/B

Suchun Industrial Square

428 Xinglong Street

Suzhou Industrial Park

CN­215126 Suzhou

Phone +86 512 6283 6228

Fax +86 512 6283 6338

Door Systems

Europe

Kaba Gilgen AG

Freiburgstrasse 34

CH­3150 Schwarzenburg

Phone +41 31 734 41 11

Fax +41 31 734 43 79

Kaba Gallenschütz GmbH

Nikolaus­Otto­Strasse 1

DE­77815 Bühl

Phone +49 7223 286 0

Fax +49 7223 286 111

Kaba Door Systems Ltd.

Halesfield 4

GB­Telford, Shropshire TF7 4AP

Phone +44 1952 682 100

Fax +44 1952 682 101

Kaba Garog/Vega Ltd.

Unit 9, Eagle Park

Eagle Park Drive

GB­Warrington, Cheshire WA2 8JA

Phone +44 1925 825 225

Fax +44 1925 820 347

Kaba Porte Automatiche S.p.A.

Via L. Muratori 60

IT­21040 Uboldo (VA)

Phone +39 02 962 5026

Fax +39 02 962 48356

Kaba Portes Automatiques France S.A.S

21, rue Alexis de Tocqueville

FR­92160 Antony

Phone +33 1 4666 6680

Fax +33 1 5645 2966

According to reporting segment as per September 2008

Addresses Kaba Group

141Kaba Annual Report 2007/2008

Access + Data Systems

Europe

Kaba AG

Mühlebühlstrasse 23

CH­8620 Wetzikon

Phone +41 848 85 86 87

Fax +41 44 931 63 85

Kaba AG

Access Management

Hofwisenstrasse 24

CH­8153 Rümlang

Phone +41 44 818 93 11

Fax +41 44 818 93 93

Kaba AG

Safes + Vaults

Hofwisenstrasse 24

CH­8153 Rümlang

Phone +41 44 818 92 11

Fax +41 44 818 92 04

Kaba GmbH

Philipp­Reis­Strasse 14

DE­63303 Dreieich

Phone +49 6103 9907 0

Fax +49 6103 9907 133

Kaba GmbH

Albertistrasse 3

DE­78056 Villingen­Schwenningen

Phone +49 7720 603 0

Fax +49 7720 603 102

Kaba Mauer GmbH

Frankenstrasse 8—12

DE­42579 Heiligenhaus

Phone +49 2056 596 0

Fax +49 2056 596 139

Iberkaba S.A.

Calle Maria Tubau 4

ES­28050 Madrid

Phone +34 91 736 24 60

Fax +34 91 736 24 30

Kaba Polska sp. z o.o.

ul. Kontuszowa 22 A

PL­01­345 Warszawa

Phone +48 22 665 88 27

Fax +48 22 665 88 62

Kaba Elzett Zrt.

Megyeri u. 51

HU­1044 Budapest

Phone +36 1 350 1011

Fax +36 1 329 0692

Kaba srl

Via A. Costa 6

IT­40013 Castel Maggiore (BO)

Phone +39 051 417 8311

Fax +39 051 417 8333

Kaba Nederland BV

Bijsterhuizen 3136

NL­ 6604 LV Wijchen

Phone +31 883 523 333

Fax +31 883 523 399

Kaba Belgium NV/SA

Steenweg op Gierle 339 F

BE­2300 Turnhout

Phone +32 1 444 8044

Fax +32 1 444 8040

Kaba GmbH

Ulrich­Bremi­Strasse 2

AT­3130 Herzogenburg

Phone +43 2782 808 0

Fax +43 2782 808 5505

Kaba Ltd.

Lower Moor Way

Business Park

GB­Tiverton, Devon EX16 6SS

Phone +44 1884 256 464

Fax +44 1884 234 415

Kaba S.A.S.

9­11 rue Pagès

FR­92150 Suresnes

Phone +33 1 4138 9860

Fax +33 1 4138 0106

Kaba S.A.S.

5/7 rue Edouard Jeanneret

Le Technoparc

FR­78306 Poissy Cedex

Phone +33 1 3922 4242

Fax +33 1 3922 9926

Kaba Saflok S.A.S.

3, rue Descartes

ZAC de la Ferme des Roses

FR­78320 Le Mesnil­St­Denis

Phone +33 1 3013 0404

Fax +33 1 3013 0405

Kaba AB

Filargatan 12

P.O. Box 353

SE­63105 Eskilstuna

Phone +46 1616 15 00

Fax +46 1616 15 73

142 Kaba Annual Report 2007/2008

Americas

Kaba Ilco Corp.

(Access Systems)

2941 Indiana Avenue

US­Winston Salem, NC 27105

Phone +1 336 725 1331

Fax +1 336 725 8814

Kaba Ilco Inc.

(Access Systems Montreal)

7301 Decarie Boulevard

CA­Montreal, Quebec H4P 2G7

Phone +1 514 735 5410

Fax +1 514 735 8707

Computerized Security Systems Inc.

(Saflok Division)

31750 Sherman Avenue

US­Madison Heights, MI 48071

Phone +1 248 837 3700

Fax +1 248 583 3228

Kaba Mas LLC

749 W. Short Street

US­Lexington, KY 40508

Phone +1 859 253 4744

Fax +1 859 253 0310

Kaba Benzing America Inc.

3015 N. Commerce Parkway

US­Miramar, FL 33025

Phone +1 954 416 1720

Fax +1 954 416 1721

Kaba New Zealand Ltd.

Unit A/39A Sir William Avenue

P.O. Box 58, 432 Greenmount

East Tamaki

NZ­Auckland

Phone +64 9 274 3341

Fax +64 9 274 3301

Wah Yuet Co., Ltd.

Macao Commercial Offshore

Alameda Dr. Carlos D’assumpção

Nos. 411–417, Dynasty Plaza Building

4th Floor “F”

Macau, P.R. China

Phone +853 28 702 591

Fax +853 28 702 502

Wah Mei (Toishan) Hardware Co., Ltd.

Xinhua Industrial Zone

Guanghai Town

Taishan City, Guangdong Province

P.R. China

Wah Yuet Industrial Co. Ltd.

Room 101, 1/F Wing on Plaza

62 Mody Road

Tsimshatsui, Kowloon

Hong Kong

Phone +852 2739 5592

Fax +852 2517 3667

Kaba Macau Ltda

Rua do Campo No. 202,

Edf Associacao das Senhoras 7, andar D

Macau, P.R. China

Phone +853 2870 3810

Fax +853 2835 3358

Asia Pacific

Kaba Ltd.

2108 Futura Plaza

111–113 How Ming Street

Kwun Tong, Kowloon

Hong Kong

Phone +852 2375 6110

Fax +852 2406 2602

Nihon Kaba K.K.

German Industry Center

1­18­2 Hakusan, Midori­ku

JP­Yokohama 226­0006

Phone +81 45 931 8900

Fax +81 45 931 9100

Kaba Security Pte Ltd.

Block 203A, Henderson Road

#07–03, Henderson Industrial Park

SG­159546 Singapore

Phone +65 6275 12 11

Fax +65 6275 12 33

Kaba Jaya Security Sdn Bhd

No. 9, Jalan Pengacara U1/48

Temasya Industrial Park, Shah Alam

MY­40150 Selangor Darul Ehsan

Phone + 60 3 5569 8188

Fax + 60 3 5569 8088

Kaba Australia Pty Ltd.

Unit 4, 42–44 Redfern Street

P.O.Box 6671

AU­Wetherill Park, NSW 2164

Phone +61 2 8787 47 77

Fax +61 2 9609 66 10

143Kaba Annual Report 2007/2008

Dorset Kaba Security

Systems Pvt. Ltd.

A­88, Road No. 2

Mahipalpur Extn.

IN­110037 New Delhi

Phone +91 11 461 38800

Fax +91 11 461 38880

Kaba FZE

Dubai Silicon Oasis HQ

Office C103

P.O Box 341038

Dubai, UAE

Phone + 971 4 501 56 36

Fax + 971 4 501 56 37

H. Cillekens & ZN BV

Produktieweg 7

or: P.O. Box 187

NL­6045 JC Roermond

Phone +31 475 325 147

Fax +31 475 323 640

Americas

Kaba Ilco Corp.

(Ilco Rocky Mount)

400 Jeffreys Road

US­Rocky Mount, NC 27804

or: P.O. Box 2627

US­Rocky Mount, NC 27804­2627

Phone +1 252 446 3321

Fax +1 252 446 4702

Kaba do Brasil Ltda

Rua Guilherme Asbahr Neto 510

BR­São Paulo, SP 04646­001

Phone +55 11 5521 3040

Fax +55 11 5521 3040

Corporación Cerrajera Alba, S.A. de C.V.

Circ. Gustavo Baz No. 16, Col. México

Nuevo, Atizapán de Zaragoza

MX­52966 Edo. de México

Phone +52 55 5366 7200

Fax +52 55 5366 7291

Asia Pacific

Minda Silca Engineering Limited

Plot No. 37, Toy City

IN­201308 Greater Noida

Phone +91 987 1397 630 or 31

Fax +91 120 2351 301

Key + Ident Systems

Europe

Silca S.p.A.

Via Podgora 20

IT­31029 Vittorio Veneto (TV)

Phone +39 0438 913 6

Fax +39 0438 913 800

Silca S.A.S.

12, rue de Rouen

B.P. 37

ZI de Limay

FR­78440 Porcheville

Phone +33 1 3098 3500

Fax +33 1 3098 3501

Silca GmbH

Siemensstrasse 33

DE­42551 Velbert

Phone +49 2051 271 0

Fax +49 2051 271 172

Silca Ltd.

Unit 2, Kimpton Trade and

Business Centre, Kimpton Road

GB­Sutton, Surrey SM3 9QP

Phone +44 208 641 6515

Fax +44 208 644 1181

Silca Key Systems S.A.

c / Santander 73 A

ES­08020 Barcelona

Phone +34 93 4981 400

Fax +34 93 2788 004

Legic Identsystems AG

Binzackerstrasse 41

P.O. Box 1221

CH­8620 Wetzikon

Phone +41 44 933 64 64

Fax +41 44 933 64 65

144 Kaba Annual Report 2007/2008

21 October 2008, Tuesday, 3 p.m.

Annual General Meeting of Kaba Holding AG

4 March 2009, Wednesday

Shareholder Newsletter and press release

on the half­year results to 31. December 2008

16 September 2009, Wednesday

Presentation for financial analysts

Results press conference

Shareholder Newsletter with results

for the 2008/2009 financial year

Distribution of Annual Report

20 October 2009, Tuesday, 3 p.m.

Annual General Meeting of Kaba Holding AG

•

•

•

•

•

•

•

Communicative devices

Annual Report

Financial Report

Corporate Governance

Letter to Shareholders

Investor’s Handbook

Security Update (customer’s magazine)

www.kaba.com

•

•

•

•

•

•

Agenda, Communication Devices

in CHF million, except per share amounts/personnelFinancial-Year ended

30. 6. 2008 in %Financial-Year ended

30. 6. 2007 in %

Net sales 1,303.7 100.0 1,248.7 100.0

Operating profit before depreciation (EBITDA) 206.6 15.9 186.5 15.0

Operating profit (EBIT) 164.0 12.6 143.7 11.5

Profit before taxes 131.5 10.1 113.3 9.1

Net profit before minority interests 97.1 7.5 84.8 6.8

Basic earnings per share (in CHF) 25.6 22.6

Diluted earnings per share (in CHF) 25.6 22.5

Market capitalization 1,183.0 1,365.0

Return on net operating assets (RONOA) 23.8 % 19.4 %

Net debt/EBITDA (gearing) 2.00 2.64

Average number of full-time equivalent employees 9,151 8,585

Consolidated income statement

EBIT by segments

in CHF million

Sales by segments

in % and CHF million

EBIT margin by segments

Share price development

Kaba is one of the leading providers in the worldwide secu-rity industry. A globally active, listed company, it employs around 9,000 staff in more than 60 countries. Kaba provides innovative and comprehensive solutions for security, organization and convenience at access points to buildings, rooms and facilities, as well as for recording personnel and enterprise data.

> DOOR SYSTEMS

As a specialist in automatic, security and convenience doors,

Kaba Group offers a comprehensive range of products all

over the world. Its diverse product portfolio covers all current

market needs, including automatic doors, physical access

systems and platform screen doors.

> ACCESS + DATA SYSTEMS

Kaba has firmly established itself as a leading innovator,

with customized solutions in the mechanical, mechatronic

and electronic locks and locking cylinders sector, as well as

integrated systems for access control and time and data

recording. Its product range also includes hotel locking

systems and high security locks.

> KEY + IDENT SYSTEMS

Through its two subsidiaries Silca and Ilco, Kaba Group is

the leading manufacturer of key blanks for the key replace-

ment and OEM business. As well as key blanks with inte-

grated transponders for the automotive industry, the two

companies make a wide range of mechanical, electronic and

industrial key cutting and coding machines as well as key

duplication machines.

The contactless smart-card technology manufactured

by Kaba‘s subsidiary Legic provides an integrated platform

for state-of-the-art authorization management. It can be

used for practically any operational requirement, including

contactless identification, organization, verification and

cash-free payments.

Door Systems 6.5 % 8.6 %

18.5 % 17.0 %

10.2 % 9.4 %

Access + Data Systems

Key + Ident Systems

Total 12.6 % 11.5 %

2007/2008 2006/2007

Key figures 2007/2008Kaba Group

July 07 October 07 January 08 April 08 June 08

450

400

350

300

250

200

150

100

50

0

60,000

50,000

40,000

30,000

20,000

10,000

0

Kaba share price SPI (rebased) Kaba volume

Door Systems17.8 Others

–18.8

Key + Ident Systems26.7

Access +Data Systems

138.3

Others

Door Systems

Key + Ident Systems

Access + Data Systems

49%

22%

26%

3%

49%

22%

26%

3%

55%

21%

22%

2%

57%

20%

21%

2%

2004/2005 2005/2006 2006/2007 2007/2008

Share price in CHF Trade volume

EditorKaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.cominvestor@kaba.com

Project managementKaba Management + Consulting AG, RümlangJean-Luc FerrazziniChief Communications Officer

Concept, design and realizationWirz Corporate AG, Zurich

Publishing systemMultimedia Solutions AG, Zurich

Copyrights© Kaba Holding AG 2008

Photograph© Klaus Andorfer, Zurich© Jonas Kuhn, Zurich

PrintNZZ Fretz AG, Schlieren

This information contains certain forward-looking statements including those using the words “believes”, “assumes”, “expects” or formulations of a similar kind. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which could lead to substantial differences between the actual future results, the financial situation, the development or performance of the Company and those either expressed or implied by such statements. Such factors include, among other things: competition from other companies, the effects and risks of new technologies, the Company’s continuing capital require-ments, financing costs, delays in the integration of acquisitions, changes in the operating expenses, the Company’s ability to recruit and retain qualified employees, unfavorable changes to the applicable tax laws, and other factors identified in this publication. In view of these uncertainties, readers are cautioned not to place undue reliance on such forward-look-ing statements. The Company accepts no obligation to continue to report or update such forwardlooking statements or adjust them to future events or developments.

Kaba®, Com-ID®, Ilco®, La Gard®, LEGIC®, SAFLOK®, Silca®, etc. are registered trademarks, CardLinkTM, etc. trademarks of the Kaba Group.

Due to country-specific constraints or marketing considerations, some of the Kaba Group products and systems may not be available in every market.This product was climate-neutrally produced.

Annual Report 2007/2008

> Organic growth of 5.6% to CHF 1.3 billion

> Overproportional rise in EBIT to CHF 164 million

> EBIT margin goes up to 12.6% thanks to higher productivity

> Consolidated profit reaches CHF 97.1 million (+14.5%)

> Confident outlook – medium-term goals confirmed

Kaba Holding AGHofwisenstrasse 248153 RümlangSwitzerlandPhone +41 44 818 90 61Fax +41 44 818 90 52www.kaba.com

Annu

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Security in a dynamic world