Fagerhult

Quarterly Report • Apr 28, 2011

FAGERHULT

Interim report, January – March 2011

• Orders received MSEK 680 (606). Adjusted for acquired operations and currency effects, the orders received remain unchanged
• Net sales MSEK 693 (567). After adjustments for acquired operations and currency effects, sales have increased by 8 %
• Operating profit MSEK 52.7 (12.9)
• Profit after tax MSEK 31.2 (10.3)
• Earnings per share SEK 2.47 (0.82)

Comments by CEO Johan Hiertonsson:

• A strong increase in profit during the first quarter
• Successes in Germany as a result of the acquisition of the German company LTS during 2010.
• Increased demand in Sweden
• Acquisition of the British company Designplan Lighting Ltd $\frac{1}{2}$
• New award for design Red Dot Design Award

THE GROUP

JANUARY-MARCH

The Group's net sales amounted to MSEK 693, which is an improvement of 22 %. Adjusted for acquired operations and currency effects, net sales have increased by 8 %. The product area that increased most strongly was Retail Lighting, which is ahead of the economic upturn. Indoor Lighting occurs later on in the building process, but increased activity can be observed through increased requests for projects. However, it takes some time before this is evidenced in sales. Sales outside Sweden amounted to MSEK 505 (397) and constitute an ever increasing proportion of the Group's sales, 73 (70) %.

Operating profit increased by MSEK 40 compared with the previous year. This increase in profit can be explained by successes in Germany as a result of the acquisition of the German company LTS during 2010, but also by organic growth, improved productivity in our factories and low fixed costs. The strengthening of the Swedish krona has negatively impacted profits by MSEK 4 compared with the first quarter of 2010.

The Group's orders received amounted to MSEK 680 (606). After adjustment for acquired operations and currency effects, orders received remained unchanged. At year-end 2010, orders received were high, which meant that invoicing for the first quarter was somewhat higher than orders received.

In March, the British lighting company Designplan Lighting Ltd (Designplan) was acquired and will be consolidated into Fagerhult from the second quarter onwards. The company's turnover for the entire year 2010 amounted to MGBP 11, with profitability in the range of the average of companies within the Fagerhult Group. Designplan has 180 employees and manufactures light fittings and lighting systems for environments needing robust products, for example, for public transport and detention centers.

Earnings per share amounted to SEK 2.47, which was an increase of SEK 1.65.

$2(11)$

Fagerhult has, for the fourth time, been awarded the Red Dot Design Award for innovative and distinctive design, this time for the light fitting, Wrap. This further strengthens Fagerhult in the international arena.

Turnover for Indoor Lighting (formerly Professional Lighting) has stabilized. We believe that this product area will turn up from present level. Adjusting for currency effects, the volume increased slightly. The sharp improvement in Retail Lighting from the previous year is continuing and turnover has increased organically by 18 %. The acquired German lighting company, LTS, should also be added to this, which gives a total growth of 153 %. Outdoor Lighting has increased slightly and shows a turnover of MSEK 30 for the first quarter.

BUSINESS AREAS

NET SALES AND OPERATING PROFIT PER BUSINESS AREA
	Net Sales Q 1		Operating profit Q 1		Operating margin, % Q1
	2011	2010	2011	2010	2011	2010
Northern Europe	387.9	379.6	17.3	1.4	4.5	0.4
UK, Ireland and the Middle East	144.7	146.2	10.0	9.0	6.9	6.2
Other Europe	181.1	75.9	28.0	0.8	15.5	1.1
Asia and the Pacific	46.1	38.0	3.8	3.4	8.2	8.9
Other			$-6.4$	$-4.8$
Elimination	$-66.6$	$-72.8$		3.1
Total	693.2	566.9	52.7	12.9	7.6	2.3
Financial unallocated items			$-8.3$	1.7
Profit before tax			44.4	14.6

Net sales per product area
	Q1
	2011	2010
Indoor Lighting (Professional Lighting)	452.8	456.1
Retail Lighting	210.7	83.3
Outdoor Lighting	29.7	27.5
	693.2	566.9

NORTHERN EUROPE

This business area comprises our units and companies in the Nordic countries, the Baltic countries and Russia. The Group also includes the factory in China, including manufacturing and purchases. In Sweden, operations are comprised of development, manufacture and sales, while operations in other markets, with the exception of China, consist only of marketing.

Net sales in the fourth quarter amounted to MSEK 388, compared with MSEK 380 in the previous year. Adjusted for currency effects, the increase is 5.5%. Operating profit for the same period amounted to MSEK 17.3 (1.4) and the operating margin to 4.5%. Turnover has increased in Sweden and Finland, while Norway shows slightly lower sales.

Northern Europe
		01
	2011	2010
Net Sales	387.9	379.6
(of which to group companies)	(65.4)	(71.7)
Operating profit	17.3	1.4
Operating margin, %	4.5	0.4
Sales growth, %	2.2	$-2.8$
Sales growth, adjusted for exchange rate differences.%	5.5	$-1.4$
Growth in Operating profit, %	135.7	-86.4

UK, IRELAND AND THE MIDDLE EAST

This business area comprises our companies in England and Ireland and operations in the Middle East. The dominant unit is Whitecroft Lighting, which engages in the development, manufacture and sale of lighting systems. Other units are engaged in marketing activities.

Net sales during the first quarter amounted to MSEK 145, compared with MSEK 146 in 2010. Operating profit for the same period amounted to MSEK 10.0 (9.0) and the operating margin to 6.9 %. After adjustment for currency effects, the increase is 7.3 %.

Turnover in the Middle East has increased, whilst demand in Ireland has continued to be very low. Designplan will be included in this region's turnover and profit from the second quarter onwards.

UK, Ireland and the Middle East
	Q 1
	2011	2010
Net Sales	144.7	146.2
(of which to group companies)	(1.1)	(1.0)
Operating profit	10.0	9.0
Operating margin, %	6.9	6.2
Sales growth, %	$-1.0$	$-15.5$
Sales growth, adjusted for exchange rate differences, %	7.3	$-8.5$
Growth in Operating profit, %	11.1	$-21.1$

OTHER EUROPE

This business area includes operations in Germany, Holland, France, Spain, Austria and Poland. The dominant operations are the newly acquired company in Germany, LTS Licht & Leuchten GmbH, which engages in the development, manufacture and sale of lighting systems. The operations of the German subsidiary, Fagerhult GmbH, are now incorporated into LTS. The German market's reception has been positive and should open opportunities for increased sales within Fagerhult's product range in the future.

Net sales in the first quarter amounted to MSEK 181, compared with MSEK 76 the previous year. Operating profit for the same period amounted to MSEK 28.0 (0.8).

LTS is going strongly and shows high margins each month, while the majority of other markets are on the same level as the previous year, after conversion to comparable currency.

Other Europe
		Q1
	2011	2010
Net Sales	181.1	75.9
(of which to group companies)	(0.1)	(0.0)
Operating profit	28.0	0.8
Operating margin, %	15.5	1.1
Sales growth, %	138.6	$-11.9$
Sales growth, adjusted for exchange rate differences, %	167.7	$-4.5$
Growth in Operating profit, %	3400.0	$-166.7$

ASIA AND THE PACIFIC

This business area is mainly comprised of operations in Australia, which also include, in addition to sales, a certain amount of production. Australia has displayed the most positive development of all of the markets in which Fagerhult is active. Operations in China refer to sales on the Chinese market.

Net sales in the first quarter amounted to MSEK 46, compared with MSEK 38 the previous year. The currency is at the same level as the previous year. Operating profit for the same period amounted to MSEK 3.8 (3.4) and the operating margin to 8.2 %.

Asia and the Pacific
		Q 1
	2011	2010
Net Sales	46.1	38.0
(of which to group companies)	(0.0)	(0.0)
Operating profit	3.8	3.4
Operating margin, %	8.2	8.9
Sales growth, %	21.3	19.9
Sales growth, adjusted for exchange rate differences . %	21.3	1.6
Growth in Operating profit, %	11.8	-10.5

OTHER

This business area is mainly comprised of corporate functions and the Parent Company, AB Fagerhult.

FINANCIAL POSITION

The Group's equity/assets ratio was 29 (42) %. Cash and bank funds at the end of the period amounted to MSEK 155 (142) and the Group's equity totalled MSEK 732 (701). Net liabilities amounted to MSEK 1,097.

Cash flow from operating activities amounted to MSEK -9.2 (-25.0). Working capital has, since the beginning of the year, increased by MSEK 52, which was primarily atributable to accounts receivable as a result of increased sales.

Pledged assets and contingent liabilities amounted to MSEK 4.7 (4.7) and MSEK 1.4 (3.1), respectively.

INVESTMENTS

The Group's gross investments in fixed assets amounted to MSEK 16 (24) and relate mainly to machinery and equipment.

Additionally, investments in subsidiaries were made amounting to MSEK 117.

ACQUISITION

To further strengthen the Fagerhult Group's position in the UK Market and to create a new platform for growth on the international market, Fagerhult acquired 100 % of the shares in Designplan Lighting Ltd, with its registered offices in Sutton, UK. The company's turnover during 2010 was MGBP 11, and the number of employees was 180.

Purchase price paid amounted to MGBP 10.8, with a possible supplementary consideration of a further MGBP 2, dependent on performance trends over the next two years. A preliminary acquisition analysis indicates that goodwill and other intangible assets with indefinite useful lives amount to approximately MSEK 80. The company will be consolidated into Fagerhult from the second quarter onwards.

PERSONNEL

The average number of employees during the period was 2,115 (1,833).

PARENT COMPANY

AB Fagerhult's operations consist of corporate management, financing and coordination of marketing, production and business development. The company reported no turnover during the period. Profit after financial items amounted to MSEK-9.2 (39.6).

The number of employees during the period was 6 (6).

ACCOUNTING PRINCIPLES

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The interim report of the Parent Company has been prepared in accordance with the Annual Accounts Act and the recommendations of the Financial Reporting Council FRC 2.2. The principles applied are unchanged compared to previous years.

For further information on the accounting policies applied, see AB Fagerhult's website under Financial Information.

RISKS AND UNCERTAINTIES

The Group's significant risks and factors of uncertainty consist primarily of business risks and financial risks relating to currency and interest rates. Through our international operations, the Fagerhult Group is subject to financial exposure related to currency fluctuations. Most prominent are the currency risks associated with export sales and the import of raw materials and components. This exposure is reduced through the flow of sensitive currencies being hedged after individual assessment. Currency risks also exist when translating net foreign assets and income. Additional information about the Company's risks can be found in the annual financial statements for 2010. In addition to the risks described in the Company's annual financial statements, no further significant risks have arisen.

PROSPECTS FOR 2011

The Group has, in recent years, had a strong sales and earnings trend through good organic growth, but also through a series of acquisitions. This strategy remains, and the Group will continue with significant efforts in the areas of product development and marketing, as well as increased internationalisation.

The restructuring measures implemented, the acquisition of LTS and Designplan, and the improved economy create good opportunities for improved profit in 2011.

Habo, 28 April 2011 AB Fagerhult (publ)

Johan Hjertonsson CEO

Interim reports for 2011 will be presented on 23 August 2011 and 27 October 2011.

Disclosures can be provided by Johan Hjertonsson, CEO or Ulf Karlsson, CFO, telephone + 46 (0) 36 10 85 00.

AB Fagerhult (publ) Corporate Identity Number 556110-6203 SE-566 80 Habo Tel +46 (0) 36 10 85 00 headoffice@fagerhult.se www.fagerhult.se

THE GROUP

	2011	2010	2010/11	2010
INCOME STATEMENT	Jan - Mar	Jan - Mar	Apr - Mar	Jan-Dec
	3 months	3 months	12 months 12 months
Net sales	693.2	566.9	2631.9	2505.6
(of which outside Sweden)	(505.5)	(396.5)	(1914.4)	(1805.4)
Cost of goods sold	$-477.7$	$-405.0$	$-1809.5$	$-1736.8$
Gross profit	215.5	161.9	822.4	768.8
Selling expenses	$-130.0$	$-113.9$	$-491.3$	$-475.2$
Administrative expenses	$-37.9$	$-38.9$	$-154.1$	$-155.1$
Other operating income	5.1	3.8	15.7	14.4
Operating profit/loss	52.7	12.9	192.7	152.9
Financial items	$-8.3$	1.7	28.3	$-18.3$
Profit after financial items	44.4	14.6	164.4	134.6
Tax	$-13.2$	$-4.3$	$-49.0$	$-40.1$
Net profit for the period	31.2	10.3	115.4	94.5
Profit attributed to owners of the parent company	31.2	10.3	115.4	94.5
Earnings per share, calculated on profit attributed to owner of the parent company:
Earnings per share before dilution, SEK	2.47	0.82	9.15	7.49
Earnings per share after dilution, SEK	2.47	0.82	9.15	7.49
Average no, of outstanding shares before dilution	12612	12612	12612	12612
Average no, of outstanding shares after dilution	12612	12612	12612	12612
No, of outstanding shares, thousands	12612	12612	12612	12612
Report of the comprehensive income for the period
Net profit for the period	31.2	10.3	115.4	94.5
Other comprehensive income:
Exchange differences on translation foreign operations	$-21.4$	$-27.1$	$-46.0$	$-51.7$
Other comprehensive income for the period, net of tax	$-21.4$	$-27.1$	$-46.0$	$-51.7$
Total comprehensive profit for the period	9.8	$-16.8$	69.4	42.8
Total comprehensive profit for the period attributed to the owners of the parent company	9.8	$-16.8$	69.4	42.8

8(11)
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	31 Mar	31 Mar	31 Dec
BALANCE SHEET	2011	2010	2010
Intangible fixed assets	974.9	459.1	928.1
Tangible fixed assets	344.0	320.7	350.2
Financial fixed assets	22.4	15.9	20.7
Inventories, etc.	464.1	298.2	436.2
Accounts receivable - trade	505.1	382.5	448.4
Other non interest-bearing current assets	80.4	68.2	78.5
Liquid funds	155.2	142.0	207.5
Total assets	2 5 4 6.1	1686.6	2469.6
Equity	732.2	700.6	722.4
Long-term interest-bearing liabilities	1 207.2	496.8	1 0 4 8 .0
Long-term non interest-bearing liabilities	60.8	62.2	63.0
Short-term interest-bearing liabilities	44.8	3.0	114.7
Short-term non interest-bearing liabilities	501.1	424.0	521.5
Total equity and liabilities	2546.1	1686.6	2469.6

CASH FLOW STATEMENT	2011 Jan - Mar 3 months	2010 Jan - Mar 3 months	2010/11 Apr - Mar 12 months 12 months	2010 Jan-Dec
Operating profit	52.7	12.9	192.7	152.9
Adjustment for items not included in the cash flow	19.1	19.8	95.4	96.1
Financial items	$-0.8$	$-1.7$	$-10.2$	$-11.1$
Paid tax	$-28.2$	$-22.1$	$-56.4$	$-50.3$
Cash flow generated by operations	42.8	8.9	221.5	187.6
Changes in working capital	$-52.0$	$-33.9$	$-97.3$	$-79.2$
Cash flow from continuing operations	$-9.2$	$-25.0$	124.2	108.4
Cash flow from investing activities	$-127.6$	$-19.0$	$-702.0$	$-593.4$
Cash flow from financing activities	89.1	$-2.8$	604.3	512.4
Cash flow for the period	$-47.7$	$-46.8$	26.5	27.4
Liquid funds at the beginning of the period	207.5	197.4	142.0	197.4
Translation differences in liquid funds	$-4.6$	$-8.6$	$-13.3$	$-17.3$
Liquid funds at the end of the period	155.2	142.0	155.2	207.5

	2011	2010	2010/11	2010
KEY RATIOS AND DATA PER SHARE	Jan - Mar	Jan - Mar	Apr - Mar	Jan-Dec
	3 months	3 months	12 months	12 months
Sales growth, %	22.3	$-6.8$	5.0	2.8
Growth in operating profit, %	308.5	$-43.7$	26.0	46.7
Growth in profit after financial items, %	204.1	$-39.9$	22.1	28.6
Operating margin, %	7.6	2.3	7.3	6.1
Profit margin, %	6.4	2.6	6.2	5.4
Liquid ratio, %	28	33	28	33
Debt/equity ratio	1.7	0.7	1.7	1.6
Equity/assets ratio, %	29	42	29	29
Capital employed, MSEK	1984	1 200	1984	1885
Return on capital employed, %	12.5	6.2	13.3	11.0
Return on equity, %	17.2	5.8	16.1	13.1
Net liability, MSEK	1097	358	1097	955
Gross investments in fixed assets, MSEK	15.5	24.0	75.1	83.6
Net investments in fixed assets, MSEK	15.5	23.4	75.1	83.0
Depreciation of fixed assets, MSEK	21.9	19.2	86.3	83.6
Number of employees	2 1 1 5	1833	1896	1926
Equity per share, SEK	58.06	55.55	58.06	57.28
No. of outstanding shares, thousands	12612	12612	12612	12612

CHANGE IN EQUITY
-------------------------	--	--

Attributed to the owners of the parent company

	Share capital	Other contributed capital	Difference on Profit carried translation	forward	Total equity
Equity as at 1 January 2010	65.5	159.4	$-16.0$	508.5	717.4
Change in differences on translation			$-27.1$		$-27.1$
Net profit for the period				10.3	10.3
Total comprehensive profit for the period			$-27.1$	10.3	$-16.8$
Equity as at 31 March 2010	65.5	159.4	$-43.1$	518.8	700.6
Equity as at 1 January 2011	65.5	159.4	$-67.7$	565.2	722.4
Change in differences on translation			$-21.4$		$-21.4$
Net profit for the period				31.2	31.2
Total comprehensive profit for the period			$-21.4$	31.2	9.8
Equity as at 31 March 2011	65.5	159.4	$-89.1$	596.4	732.2

PARENT COMPANY

	2011	2010	2010/11	2010
	Jan - Mar	Jan - Mar	Apr - Mar	Jan-Dec
INCOME STATEMENT	3 months	3 months	12 months 12 months
Net sales		0.1	4.8	4.9
Selling expenses	$-1.9$	$-0.4$	$-3.2$	$-1.7$
Administrative expenses	$-5.2$	$-4.5$	$-17.8$	$-17.1$
Operating profit	$-7.1$	$-4.8$	$-16.2$	$-13.9$
Income from shares in subsidiaries		43.3	25.3	68.6
Financial items	$-2.1$	1.1	$-7.6$	$-4.4$
Profit after financial items	$-9.2$	39.6	1.5	50.3
Changes in tax allocation reserve			10.0	10.0
Tax			$-0.9$	$-0.9$
Net profit	$-9.2$	39.6	10.6	59.4

BALANCE SHEET	31 Mar 2011	31 Mar 2010	31 Dec 2010
Financial fixed assets	1653.0	883.9	1 545.4
Other non interest-bearing current assets	33.3	13.7	26.2
Cash and bank balances		8.0
Total assets	1686.3	905.6	1571.6
Equity	386.3	413.5	395.5
Untaxed reserves	21.4	31.4	21.4
Long-term interest-bearing liabilities	1 1 6 6.4	456.0	1 0 0 6.3
Long-term non interest-bearing liabilities			1.7
Short-term interest-bearing liabilities	106.2		140.2
Short-term non interest-bearing liabilities	6.0	4.7	6.5
Total equity and liabilities	1686.3	905.6	1571.6

CHANGE IN EQUITY		Statutory	Profit brought
	Share capital	reserve	forward	Total equity
Equity as at 1 January 2010	65.5	159.4	149.0	373.9
Net profit for the period			59.4	59.4
Dividend paid, SEK 3.00 per share			$-37.8$	$-37.8$
Equity as at 31 December 2010	65.5	159.4	170.6	395.5
Net profit for the period			$-9.2$	$-9.2$
Equity as at 31 March 2011	65.5	159.4	161.5	386.3

1.85 0.57 2.09 0.82 1.42 3.24 2.01 2.47 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 Q 2 - 09 Q 3 - 09 Q 4 - 09 Q 1 - 10 Q 2 - 10 Q 3 - 10 Q 4 - 10 Q 1 - 11 SEK

					2010/11
KEY RATIOS AND DATA PER SHARE					Apr -Mar
	2007	2008	2009	2010	12 Months
Net sales	2527	2770	2436	2506	2632
Operating profit	197	272	104	153	193
Profit after financial items	190	260	105	135	164
Earnings per share, SEK	10.69	14.62	5.87	7.49	9.15
Sales growth, %	16.9	9.6	$-12.1$	2.8	5.0
Growth in operating profit, %	108.2	37.9	$-61.7$	46.7	26.0
Growth in profit after financial items, %	129.7	36.7	$-59.7$	28.6	22.1
Operating margin, %	7.8	9.8	4.3	6.1	7.3
Debt/equity ratio	0.9	0.7	0.7	1.6	1.7
Equity/assets ratio, %	35	41	42	29	29
Capital employed, MSEK	1158	1 2 2 8	1 2 2 0	1885	1984
Return on capital employed, %	20.5	25.7	9.8	11.0	13.3
Return on equity, %	23.8	28.2	10.4	13.1	16.1
Net liability, MSEK	424	322	305	955	1097
Net investments in fixed assets, MSEK	85	104	90	83	75
Depreciation of fixed assets, MSEK	62	63	75	84	86
Number of employees	1896	1978	1881	1926	1896