Indutrade

Quarterly Report • Apr 24, 2008

Indutrade AB (publ) Box 6044, SE-164 06 Kista Office address: Raseborgsgatan 9 Reg. no. 556017-9367 Phone: +46 8 703 03 00 Fax: +46 8 752 79 39 E-mail: info@indutrade.se www.indutrade.se

The information provided herein is such that Indutrade AB (publ) is obligated to disclose pursuant to the Securities and Clearing Operations Act (SFS 1992:543) and/or the Financial Instruments Trading Act (SFS 1991:980). Submitted for publication at 2 p.m. on 24 April 2008.

INTERIM REPORT 1 JANUARY–31 MARCH 2008

• Net sales rose 19% during the first quarter, to SEK 1,525 million (1,286). The increase for comparable units was 5 percentage points.
• Operating profit before amortisation of intangible assets (EBITA) rose 26% to SEK 175 million (139), and the EBITA margin was 11.5% (10.8%).
• Profit after tax rose 22% to SEK 109 million (89).
• Earnings per share were SEK 2.73 (2.23) for the period.
• The return on operating capital was 37.8% (37.1%).

Indutrade in brief

Indutrade markets and sells components, systems and services with a high-tech content to industrial customers in selected niches. The Group creates value for its customers by structuring the value chain and increasing the efficiency of its customers' use of technological components and systems. For the Group's suppliers, value is created through the offering of an efficient sales organisation with high technical expertise and solidly developed customer relations. Indutrade's business is distinguished by the following factors, among others:

• High-tech products for recurring needs
• Growth through a structured and tried-and-tested acquisition strategy
• A decentralised organisation characterised by an entrepreneurial spirit

The Group is structured into four business areas: Engineering & Equipment, Flow Technology, Industrial Components and Special Products. Indutrade is listed on the OMX Nordic Exchange in Stockholm.

Figures in parentheses pertain to the first three months of 2007. Comparison figures for 2003 have not been adjusted for IFRS.

NET SALES AND EARNINGS, ETC.

Incoming orders during the first three months of the year amounted to SEK 1,736 million (1,425), an increase of 22%. For comparable units, incoming orders accounted for 7 percentage points of the increase, while acquired growth accounted for 15 percentage points.

Net sales rose 19% during the first quarter, to SEK 1,525 million (1,286). For comparable units, net sales accounted for 5 percentage points of the increase, while acquired growth accounted for 14 percentage points. Currency movements had a marginal impact on incoming orders and net sales during the first quarter.

The gross margin was 33.4% (33.0%).

Incoming orders, net sales and earnings were adversely affected by the fact that the number of business days was approximately 4% fewer than in the first quarter of 2007.

Of the company's business areas, Special Products had the strongest development compared with the first quarter of 2007, with a 24% rise in net sales, due in part to strong demand for the business area's products and in part to completed company acquisitions.

Operating profit before amortisation of intangible assets (EBITA) was SEK 175 million (139), corresponding to an increase of 26% and a strengthening of the EBITA margin by 0.7 percentage points, to 11.5% (10.8%). The improved EBITA margin was mainly an effect of an improved gross margin on net sales during the quarter. Net financial items totalled SEK -11 million (-7).

Profit after tax rose 22% to SEK 109 million (89).

The return on operating capital for the last 12 months increased to 37.8% (37.1%). Interest-bearing net debt increased by SEK 275 million to SEK 812 million (537), and the net debt/equity ratio was 63.5% (53.9%).

Financial development	2008	2007	Change	2007/2008	2007
SEK million	Jan.-March	Jan.-March	Jan.-March 08/07	April-March	Jan.-Dec.
Net sales	1,525	1,286	18.6%	5,912	5,673
Sales growth, %	18.6	26.1	-7.5%1)	23.6	25.6
EBITA, SEK million	175	139	25.9%	686	650
EBITA margin, %	11.5	10.8	0.7%1)	11.6	11.5
Profit after financial items, SEK million	151	124	21.8%	605	578
Profit after tax, SEK million	109	89	22.5%	439	419
Earnings per share, SEK	2.73	2.23	22.5%	10.98	10.48
Return on operating capital %	37.8	37.1	0.7%1)	37.8	40.6
Net debt/equity ratio, %	63.5	53.9	9.6%1)	63.5	54.7

1) Change in percentage points.

Net sales, SEK million EBITA, SEK million

OVERVIEW OF BUSINESS AREA DEVELOPMENT

Engineering & Equipment

Engineering & Equipment offers customised niche products, design solutions, aftermarket service and special processing. Products consist primarily of hydraulics, automotive workshop equipment, flow products and transmission products.

Net sales rose 16% during the first quarter, to SEK 515 million (443). For comparable units, net sales accounted for 6 percentage points of the increase, while acquired growth accounted for 8 percentage points. Currency movements accounted for 2 percentage points of growth in net sales for the quarter. EBITA was SEK 46 million (48), corresponding to an EBITA margin of 8.9% (10.8%). The lower EBITA margin is mainly attributable to weak growth during the latter part of the quarter. The company KG Enterprise was acquired during the period.

Flow Technology

Flow Technology offers components and systems for the management, control and supervision of flows. Products primarily consist of valves, pumps, and measurement and analytical instruments.

Net sales, which totalled SEK 318 million during the first quarter of 2007, increased during the period by 19% to SEK 378 million. For comparable units, net sales accounted for 1 percentage point of the increase, while acquired growth accounted for 17 percentage points. Currency movements accounted for 1 percentage point of the increase in net sales. EBITA was SEK 36 million (27), corresponding to an EBITA margin of 9.5% (8.5%). The improved EBITA margin is attributable to a shift in net sales towards products with better gross margins.

Industrial Components

Industrial Components offers a wide range of technically advanced components and systems for production and maintenance. Products, consisting mainly of consumables for recurring needs, include fasteners, filters, adhesives and cutting tools.

Net sales amounted to SEK 261 million (225), an increase of 16%. For comparable units, net sales accounted for 4 percentage points of the increase, while acquired growth accounted for 11 percentage points. Currency movements accounted for 1 percentage point of the increase in sales during the quarter. EBITA was SEK 29 million (26), and the EBITA margin was 11.1% (11.6%). The slightly lower EBITA margin is mainly due to weaker growth in March as a result of fewer business days. The company EssMed was acquired during the period.

Special Products

Special Products offers specially manufactured niche products, design solutions, aftermarket service and assembly, and special processing. Products include temperature sensors, special plastics, tool holders, electrical components, industrial springs and high pressure valves.

Net sales rose 24% during the quarter, to SEK 382 million (307). For comparable units, net sales accounted for 8 percentage points of the increase, while acquired growth accounted for 15 percentage points. Currency movements accounted for 1 percentage point of the increase in net sales for the quarter. EBITA was SEK 75 million (50), and the EBITA margin increased to 19.6% (16.3%). The margin improvement is mainly attributable to volume growth for the business area during the first quarter.

The companies Ammertech, Precision Products and Douwes International were acquired during the period.

FINANCIAL POSITION

Shareholders' equity amounted to SEK 1,278 million (997), and the equity ratio was 36% (37%).

Cash and cash equivalents amounted to SEK 168 million (138). In addition, the Company has SEK 139 million (368) in unutilised credit facilities. Interest-bearing net debt after deducting cash and cash equivalents amounted to SEK 812 million (537). The net debt/equity ratio was 64% (54%). The increase in net debt is due to acquisitions carried out.

CASH FLOW

Cash flow from operating activities was SEK -11 million (15) and was affected by a greater need for operating capital as a result of growth in business volume as well as a significant supplementary tax payment. Cash flow after net investments in property, plant and equipment (excluding company acquisitions) was SEK -30 million (4).

CAPITAL EXPENDITURES AND DEPRECIATION

The Group's net capital expenditures (excluding company acquisitions) totalled SEK 19 million (11). Depreciation of property, plant and equipment totalled SEK 18 million (14). Capital expenditures in company acquisitions amounted to SEK 112 million (43).

EMPLOYEES

The number of employees was 2,216 (1,808) at the end of the quarter, of whom approximately 107 were added through acquired companies.

ACQUISITIONS

The Group completed the following company acquisitions, which are being consolidated in 2008 for the first time.

Month acquired	Acquisition	Business area	Sales/SEK million*	No. of employees*
January	Ammertech BV Precision Products Ltd	Special Products Special Products	60 70	25 56
February	Douwes International BV	Special Products	34	14
March	KG Enterprise Oy EssMed AB	Engineering & Equipment Industrial Components	8 60	2 10
Total			232	107

Completed acquisitions

* Annual sales and number of employees at the time of acquisition.

Further information on completed company acquisitions can be found on page 9 of this interim report.

PARENT COMPANY

The main function of Indutrade AB is to take responsibility for business development, major acquisitions, financing, business control and analysis. The Parent Company's sales, which consist exclusively of intercompany invoicing of services, amounted to SEK 0 million (0) during the first quarter. The Parent Company's capital expenditures in property, plant and equipment amounted to SEK 0 million (0). The number of employees on 31 March was 8 (8).

RISKS AND UNCERTAINTIES

The Indutrade Group conducts business in 12 countries in northern Europe through some 90 companies. This spread, together with a large customer base in various industries and a large number of suppliers, mitigates the business and financial risks. In addition to the risks and uncertainties that are described in

Indutrade's 2007 Annual Report, no significant risks or uncertainties are judged to have emerged or been eliminated.

Since the Parent Company is responsible for the Group's financing, it is subject to financing risk. The Parent Company's other activities are not subject to risks other than indirectly via subsidiaries. For a more complete report on risks that affect the Group and Parent Company, please see the 2007 Annual Report.

RELATED-PARTY TRANSACTIONS

No transactions between Indutrade and related parties, which have significantly affected the Company's position and earnings, took place during the period.

ACCOUNTING PRINCIPLES

Indutrade reports in accordance with International Financial Reporting Standards (IFRS). This interim report has been prepared in accordance with IAS 34 and RFR 1.1. The Parent Company applies RFR 2.1. The same principles of consolidation and calculation methods are used in this report as those used in Indutrade's 2007 Annual Report and described under the section "Accounting principles and notes".

Indutrade has not begun applying any new IFRS recommendations in 2008. Nor has the new IFRIC 11 interpretation had any impact on Indutrade's earnings or financial position. IFRIC 12, 13 and 14 are expected to be approved by the EU in 2008, at which time they will be applied. However, IFRIC 12 and 13 are not relevant for Indutrade, and IFRIC 14 is not judged to have any impact on Indutrade's earnings or financial position upon application.

Stockholm, 24 April 2008

Johnny Alvarsson President and CEO

This report has not been reviewed by the Company's auditors.

Further information

For further information, please contact: Johnny Alvarsson, President and CEO, phone +46-(0)70 589 17 95.

Financial calendar

The interim report for the period January–June 2008 will be published on 4 August 2008. The interim report for the period January–September 2008 will be published on 27 October 2008.

INDUTRADE CONSOLIDATED INCOME STATEMENT

– condensed
	2008	2007	2007/2008	2007
SEK million	Jan.-March	Jan.-March	April-March	Full year
Net sales	1,525	1,286	5,912	5,673
Cost of goods sold	-1,016	-862	-3,980	-3,826
Gross profit	509	424	1,932	1,847
Development costs	-5	-4	-21	-20
Selling costs	-278	-224	-1,026	-972
Administrative expenses	-69	-63	-256	-250
Other operating income and expenses	5	-2	11	4
Operating profit	162	131	640	609
Net financial items	-11	-7	-35	-31
Profit after financial items	151	124	605	578
Income tax	-42	-35	-166	-159
Net profit for the period attributable
to equity holders of the parent company	109	89	439	419
Operating profit includes:
Amortisation of intangible assets	-13	-8	-46	-41
Depreciation of property, plant and equipment	-18	-14	-67	-63
Operating profit before amortisation/impairment of
intangible assets (EBITA)	175	139	686	650
Earnings per share for the period 1)	2.73	2.23	8.30	10.48
1) Earnings for the period divided by 40,000,000 shares. There is no dilutive effect.
Income and expenses reported directly against equity

Actuarial gains/losses	0	0	6	6
Exchange rate differences on foreign operations	-20	16	-12	24
Tax on items reported directly against equity	0	0	-2	-2
	-20	16	-8	28
Profit for the period	109	89	439	419
Total reported income and expenses
for the period	89	105	431	447

BUSINESS AREAS

SEK million	Net sales				EBITA
	2008	2007	2008/07	2007	2008	2007	2008/07	2007
	Jan.-	Jan.-	April-	Jan.-	Jan.-	Jan.-	April-	Jan.-
	March	March	March	Dec.	March	March	March	Dec.
Engineering & Equipment	515	443	2,040	1,968	46	48	202	204
Flow Technology	378	318	1,534	1,474	36	27	154	145
Industrial Components	261	225	976	940	29	26	106	103
Special Products	382	307	1,397	1,322	75	50	259	234
Parent Company and Group items	-11	-7	-35	-31	-11	-12	-35	-36
Indutrade Group	1,525	1,286	5,912	5,673	175	139	686	650

INDUTRADE CONSOLIDATED BALANCE SHEET

– condensed

	2008	2007	2007
SEK million	31 March	31 March	31 Dec.
Goodwill	412	293	378
Other intangible assets	415	229	364
Property, plant and equipment	412	333	388
Financial assets	41	34	43
Inventories	992	809	936
Accounts receivable, trade	911	779	859
Other receivables	157	112	100
Cash and cash equivalents	168	138	203
Total assets	3,508	2,727	3,271
Equity	1,278	997	1,189
Long-term borrowings and pension obligations	363	461	470
Other non-current liabilities	238	159	198
Short-term borrowings	617	214	383
Accounts payable, trade	465	456	470
Other current liabilities	547	440	561
Total equity and liabilities	3,508	2,727	3,271

CHANGE IN GROUP EQUITY

– condensed
	2008	2007	2007
SEK million	Jan.-March	Jan.-March	Full year
Opening equity	1,189	892	892
Translation effects	-20	16	24
Actuarial pension effects	-	-	6
Tax effect on actuarial pension effects	-	-	-2
Net profit for the period	109	89	419
Dividend 1)	-	-	-150
Closing equity	1,278	997	1,189

1) SEK 3.75 per share.

INDUTRADE CONSOLIDATED CASH FLOW STATEMENT

– condensed
-------------

	2008	2007	2007/2008	2007
SEK million	Jan.-March	Jan.-March	April-March	Full year
Cash flow from operating activities before change
in working capital	99	99	566	526
Change in working capital	-110	-84	-193	-127
Cash flow from operating activities	-11	15	373	399
Net capital expenditures in non-current assets	-19	-11	-75	-67
Company acquisitions and divestments	-112	-43	-376	-307
Change in other financial assets	0	0	1	1
Cash flow from investing activities	-131	-54	-450	-373
Net borrowings	109	56	256	203
Dividend paid out	-	-	-150	-150
Cash flow from financing activities	109	56	106	53
Cash flow for the period	-33	17	29	79
Cash and cash equivalents at start of period	203	119	138	119
Exchange rate differences	-2	2	1	5
Cash and cash equivalents at end of period	168	138	168	203

KEY DATA

	2008	2007	2007/2008	2007
	Jan.-March	Jan.-March	April-March	Full year
Net sales, SEK million	1,525	1,286	5,912	5,673
Sales growth, %	18.6	26.1	23.6	25.6
EBITA, SEK million	175	139	686	650
EBITA margin, %	11.5	10.8	11.6	11.5
Operating capital, SEK million	2,090	1,534	2,090	1,839
Return on operating capital, %
(12 mos)	37.8	37.1	37.8	40.6
Interest-bearing net debt, SEK million	812	537	812	650
Net debt/equity ratio, %	63.5	53.9	63.5	54.7
Equity ratio, %	36.4	36.6	36.4	36.3
KEY RATIOS PER SHARE 1)
Earnings per share, SEK	2.73	2.23	10.98	10.48
Equity per share, SEK	31.95	24.93	31.95	29.73
Cash flow from operating activities per share, SEK	-0.28	0.38	9.32	9.98

1) Based on 40,000,000 shares, which corresponds to the number of shares outstanding during all periods in the table. There is no dilutive effect.

ACQUISITIONS

Acquisitions during the first quarter of 2008

All of the shares were acquired in Ammertech BV and Douwes International BV (the Netherlands), in Precision Products Ltd (UK), KG Enterprise Oy (Finland), and in EssMed AB, with operations in Sweden and Finland.

Engineering & Equipment

KG Enterprise, with annual sales of approximately SEK 8 million, is a supplier of raw material and semifinished products to the composite industry. The company is consolidated in the Group as from 1 March 2008.

Industrial Components

EssMed markets ophthalmology products and technical service in Sweden and Finland. The company has annual sales of approximately SEK 60 million and is consolidated in the Group as from 1 March 2008.

Special Products

Ammertech is a leading technology sales company in the Benelux market in the area of bearings and transmissions, with annual sales of approximately SEK 60 million. Douwes International is a technology sales company with products and specialist know-how in fasteners and assembly tools, with annual sales of approximately SEK 34 million. Precision Products is a well-established manufacturer of piston rings and supplier to the international marine engine industry as well as of products for other industrial applications in 48 countries. Annual sales amount to approximately SEK 70 million. Ammertech and Precision Products are consolidated in the Group as from 1 January 2008, and Douwes as from 1 February 2008.

Acquired assets in Ammertech BV, Douwes International BV, Precision Products Ltd, KG Enterprise Oy and EssMed AB.

Preliminary acquisition calculation

SEK million
Purchase price, incl. earn-out payment	143

		Fair value
Acquired assets	Book value	adjustment	Fair value
Goodwill	-	39	39
Agencies, trademarks, customer lists,
licences, etc.	-	69	69
Property, plant and equipment	31	-	31
Financial assets	1	-	1
Inventories	37	-	37
Other current assets	43	-	43
Cash and cash equivalents	6	-	6
Deferred tax liability	-3	-18	-21
Interest-bearing loans	-9	-	-9
Other operating liabilities	-53	-	-53
	53	90	143

Agencies, trademarks, customer lists, etc. will be amortised over a 10-year period.

Cash flow impact
Purchase price, excl. earn-out payment	143
Purchase price not paid out	-31
Cash and cash equivalents in acquired
companies	-5
Earn-out payments pertaining to previous years' acquisitions	5
	112

Effect of completed acquisitions

SEK million		Net sales	EBITA
Company	Business area	Jan.-March	Jan.-March
Labkotec Oy, Elra AS, Recair Oy and
KG Enterprise Oy	Engineering & Equipment	37	5
Axelvalves AB, SAV-Danmark Trading A/S,
Sigurd Sørum AS, MWS Ventil Service AB,
Palmstiernas Svenska AB and International
Plastic Systems Ltd	Flow Technology	54	9
AluFlex System AB and EssMed AB	Industrial Components	24	3
Carrab Industri AB, Ammertech BV, Douwes
International BV and Precision Products Ltd	Special Products	47	6
Effect on Group		162	23
Acquisitions carried out in 2007		116	17
Acquisitions carried out in 2008		46	6
Effect on Group		162	23

If the acquired units had been consolidated as from 1 January 2008, net sales for the period January– March would have amounted to SEK 1,542 million, and EBITA would have been SEK 178 million.

PARENT COMPANY INCOME STATEMENT

– condensed

	2008	2007	2007
SEK million	Jan.-March	Jan.-March	Full year
Net sales	0	0	1
Gross profit	0	0	1
Administrative expenses	-10	-10	-39
Other income and expenses	-1	0	1
Operating profit	-11	-10	-37
Financial income/expenses	-3	-2	-3
Profit from participations in Group companies	0	0	427
Profit after financial items	-14	-12	387
Income tax	0	0	-69
Net profit for the period	-14	-12	318
Depreciation of property, plant and equipment	0	0	-1

– condensed
	2008	2007	2007
SEK million	31 March	31 March	31 Dec.
Property, plant and equipment	2	2	2
Financial assets	1,054	776	950
Current receivables	594	345	567
Cash and cash equivalents	24	12	9
Total assets	1,674	1,135	1,528
Equity	729	562	743
Non-current liabilities	177	351	296
Provisions	48	23	38
Current interest-bearing liabilities	635	186	378
Current noninterest-bearing liabilities	85	13	73
Total equity and liabilities	1,674	1,135	1,528

DEFINITIONS

Earnings per share	Net profit for the period divided by the average number of shares outstanding
EBITA	Operating profit before amortisation of intangible assets
EBITA margin	EBITA as a percentage of net sales for the period
Equity ratio	Shareholders' equity as a percentage of total assets
Gross margin	Gross profit divided by net sales
Intangible assets	Goodwill, agencies, trademarks, customer lists, licences and leaseholds, among other things
Interest-bearing net debt	Interest-bearing liabilities, incl. pension liability less cash and cash equivalents
Net capital expenditures	Purchases less sales of intangible assets, and of property, plant and equipment, excluding those included in acquisitions and divestments of subsidiaries and operations
Net debt/equity ratio	Interest-bearing net debt divided by shareholders' equity
Operating capital	Interest-bearing net debt and shareholders' equity
Property, plant and equipment	Buildings, land, machinery and equipment
Return on operating capital	EBITA as a percentage of average operating capital