Lagercrantz Group — Annual Report 2009

Jun 30, 2009

Annual Report 2008/09

Content

About Lagercrantz

The Year in Brief	1
Lagercrantz Group in Brief	3
President's Statement	5

Our Business

Business Concept, Vision, Goals and Strategy	6
Market	9
Division Electronics	12
Division Mechatronics	15
Division Communications	18
Acquisitions	20
The Lagercrantz Share	21

Financial reports

Several-year Overview	24
Key Financial Indicators	25
Board of Directors' Report 2008/09	26
Proposed allocation of earnings	32
Consolidated Financial Statements	33
Parent Company Financial Statements	38
Notes	43
Audit report	64

Corporate Governance

Corporate Governance	65
Board of Directors and Auditors	69
Management	70

Other Information

Annual Meeting	71
About the Annual Report	72
Addresses	73

The Year in Brief

1 April 2008 –31 March 2009

• Net revenue for 2008/09 amounted to MSEK 2,138 (2,172). The second half of the year was marked by increasing uncertainty, financial crisis and recession, which meant lower sales for many profit centres. Units acquired during the year contributed revenue of MSEK 53.
• Forceful action taken in the latter part of the year to cut costs and reduce working capital. The most forceful measure is to reduce the number of employees. Capital tied up in inventories and trade receivables declined sharply during the second half of the year.
• The operating result amounted to MSEK 105 (131). This result was impacted by items affecting comparability of MSEK -21 (+4), mainly during the fourth quarter. Adjusted for these items, the operating margin was 5.9 percent (5.8).
• The result after financial items amounted to MSEK 94 (121) and the result after taxes amounted to MSEK 115 (117).
• Earnings per share amounted to SEK 3.05 (3.92).
• Cash flow from operating activities per share increased to SEK 6.15 (5.17).
• The return on equity was 14 percent (21) and the equity ratio was 49 percent (44) at the end of the period.
• The Board of Directors proposes a dividend of SEK 1.50 (1.50) per share.

¹ Not including items affecting comparability.

Earnings performance by quarter

¹ Not including items affecting comparability.

Outcome by quarter 2008/09¹ and 2007/08¹

¹ Not including items affecting comparability.

Return on equity

Key financial indicators

2008/09	2007/08
2,138	2,172
105	131
4.9	6.0
94	121
68	91
137	120
49	44
3.05	3.92
742	763
14	21
1.50	1.50

¹ Calculated based on average number of shares outstanding.

² As proposed by the Board of Directors for 2008/09.

Lagercrantz Group in Brief

Lagercrantz Group is a technology-trading group in electronics, electrics, communication and adjacent areas. The Group works with value-creating sales in close proximity to its customers and has market-leading positions in several expansive niches. The business is organised in three divisions:

• Electronics markets special products in industrial wireless communication and embedded electronic systems for customers' products.
• Mechatronics sells electric and electro-mechanical products and offers electric connection systems and customised production of cable harnesses.
• Communications offers products, systems and services in digital image transmission/technical security and access and distributes software.

Lagercrantz works with a decentralised management model pursuant to which decisions are made by the subsidiaries close to customers and suppliers. This creates a large measure of engagement on the part of associates, at the same time as the good businessmanship among the employees becomes an important competitive advantage.

Lagercrantz creates value by offering advanced knowledge in technology and business in combination with products from world-leading manufacturers or proprietary products. Through Lagercrantz, the customer gets the best possible solution for performance, immediate availability and total cost. Customers are mostly industrial companies.

Lagercrantz is active in eight countries in northern Europe and in China. The Group has revenue of just over SEK 2 billion and 700 employees. The Company's share is listed on Nasdaq OMX Stockholm since 2001.

Numbers in brackets refer to 2007/08.

Sale per geographic market 2008/09 Other = mainly China, Poland, Switzerland and UK. Sweden 39% (38) Denmark 35% (33) Norway 9% (9) Finland 9 % (10) Germany 4% (5) Other 4% (5)

President's Statement

Two six-month periods with vastly different prerequisites

The 2008/09 operating year began with continued successes for Lagercrantz Group. After six months had passed, we had added two more quarters to the string of 14 consecutive quarters with better results than in the same year-ago period. We also continued our acquisition strategy and consummated two acquisitions. We feel that these successes stem from the strategy we adopted almost four years ago. In brief, the strategy involves an organisational model with decentralisation and management by objective, a broadening of operations into new areas, a sharper focus on value added and continued acquisitions. Those changes, in combination with a favourable market trend, explain the positive development for Lagercrantz in recent years.

The second six-month period, on the other hand, was marked by uncertainty, financial crisis and recession. The first markets to be affected were the UK and Germany, and certain parts of our operations focused on the construction sector. Subsequently, many of our businesses have been impacted. Market conditions have deteriorated and this has meant declining sales for many of our profit centres.

FORCEFUL ACTION

During the last four months of the year, forceful action was taken to reduce costs and working capital. Measures taken are extensive and are expected to yield positive effects in coming quarters. The focus on costs is therefore across the board, with special emphasis on personnel reduction. This means that approximately 110 employees unfortunately will have to leave the Group. There has also been sharp focus on a reduction of the amount of capital tied up in the business. During the second quarter cash flows from operating activities amounted to MSEK 112. The largest decreases in capital tied up in the business were seen in inventories and trade receivables.

THE LAGERCRANTZ MODEL IN TIMES OF DOWNTURN

In uncertain times Lagercrantz Group's structure with about 25 niche-oriented, autonomous companies is a strength. The niche orientation means risk diversification with respect to product groups, business models, geography, segments and end customer markets. Each entity also constitutes a focused, flexible unit that works very close to its customers and suppliers. This close relationship makes for rapid response to customer needs, which is translated into business opportunities. All employees in every business unit also know how things are

going, which means short lead times between words and action when extraordinary efforts are required. Our model also means that we have mostly variable costs that can be adjusted relatively quickly. The fact that we don't have a large pool of assets, and at the same time focus on reducing working capital, means that we are able to make swift adjustments, making positive cash flows possible also in an economic slowdown.

THE FUTURE

Continued recession, with downward pressure on our sales volumes, is the most probable scenario for the 2009/10 operating year. No improvement in the state of the market is yet to be seen. At the same time, certain macro-economic signals, including lower interest rates, increased infrastructure investment and a more positive stock market climate nurture some hope. The market's development is closely followed by the Group's companies and action is taken as needed. Despite the challenges close at hand, we believe that Lagercrantz Group's exciting orientation, a well functioning strategy and organisational model, and our strong financial position mean great opportunities when the market stabilises.

In closing, I wish to extend my heart-felt thanks to all of the Group's highly motivated employees. These times require extraordinary efforts and that's just what we have seen during the past year.

Stockholm, June 2009

Jörgen Wigh President & CEO

Business Concept, Vision, Goals and Strategy

Lagercrantz is a technology trading group that creates customer benefits based on high technical and business knowledge, combined with products from world-leading manufacturers or proprietary products. The vision is to be a leader in value-creating technology trade with market-leading positions in several expansive niches.

Lagercrantz Group's business concept is – within well-defined niches and in partnership with customers and suppliers – to offer value-creating technical solutions in electronics, electrics, communication and adjacent areas. Lagercrantz offers customised products, standard components, services, software and systems its technology areas. The value added created by Lagercrantz gives the Group a place as an integral part of customers' product development and day-to-day production. Customers are offered a high degree of competence, availability and service. For Lagercrantz Group's suppliers, this business model means partnership with a player with effective marketing based on extensive knowledge of the local market and strong customer relationships.

VISION

"A leader in value-creating technology trade with marketleading positions in several expansive niches" is Lagercrantz Group's vision. The vision encompasses three basic concepts: leading, value-creation and market-leading positions.

Leading means that, over time, the Group must live up to three basic tenets: growth, profitability and development. The first two requirements make up the Group's financial goals. The third requirement, development, means that we must create positive changes based on new technology or new solutions in the niches where we conduct business; we must lead the sector's development and develop the organisation of our own business.

Value-creation means that Lagercrantz Group in its sales shall add value to the goods and services offered to the market. By nurturing Lagercrantz Group's collective experience, technical and business knowledge and broad contact surface, added value is created for those customers who choose to buy from Lagercrantz Group. Customers are offered development of new solution based on new products and technologies, design and adaptation to a specific need, as well as service, support and training.

Market-leading positions in several expansive niches are also a basic maxim. Historically, Lagercrantz Group has succeeded best in businesses that have had a significant role in a niche. Lagercrantz Group typically defines a niche as a well defined market. A market-leading position means being number one or two on the strength of market shares in the niche.

That position offers excellent opportunities for sustained profitability and development by functioning as an important link between the foremost technology suppliers and the most demanding customers. Another benefit is that opportunities are created for building a strong product line adapted to a specific customer need. A strong position in a well-defined area also means that competent staff can be recruited and retained. That is an important factor for securing leadership and competence over the longer term.

GOALS

Lagercrantz Group's financial goals are:

• Earnings growth of 15 percent per year over an economic cycle, in the sense of result after net finance items.
• Return on equity of not less than 25 percent.

This means that earnings will double over a five-year period. Lagercrantz' general goals are broken down and set before each year in connection with the drawing-up of business plans performed by each subsidiary. The requirement for profitability means that the return on working capital in a business unit must be at least 45 percent. The goals are continually followed up during the year in order to allow for quick response as needed. For the last couple of years the Group has been working with clear internal benchmarking in such a way that each subsidiary can measure the outcome for one's own unit relative to other companies in the Group. Important work has been going on within the Group to train all employees in the basic economic metrics and the key performance indicators used.

For an extended period, fourteen consecutive quarters by the end of the second quarter of 2008/09, the Group has reported an improved result compared to the corresponding year-ago period. This has meant that the internal goal for earnings growth has been exceeded. This improvement in earnings has been achieved through consistent work to develop existing businesses, at he same time as a number of successful acquisitions have been made. The focus for this work has been to strengthen business models, organisational development and product line changes. Acquisitions have meant that Lagercrantz has been able to grow into new areas, such as power generation and technical security, and that the incidence of new products has increased. Much like other companies, the Group was hit

during the second half of 2008/09 by the deep financial crisis that subsequently turned into a clear recession. As a result hereof the Lagercrantz Group has taken a number of steps in its business units, especially aimed at cost-cutting and capital rationalisation. The worsening market situation, in combination with the costs for these measures, impacted the result and goal fulfilment during the second half of the year. The return on equity has increased steadily in recent years in lock-step with the improved result. The level of 25 percent was not achieved, however. At the end of 2008/09 the return achieved was 17 percent adjusted for items affecting comparability.

STRATEGIES

Lagercrantz Group shall consolidate its position as a profitable and stable growth company by continuing to develop existing businesses in the Group and by acquiring more companies with strong positions in well-defined niches. In order to achieve these goals for earnings growth and profitability, Lagercrantz Group works with six common main strategies:

• Decentralisation and management by objective
• A strong corporate culture
• Businessmanship
• Strong market positions in niches
• Increased value added
• Acquisitions

Decentralisation and management by objective

Lagercrantz Group has about 25 operating subsidiaries, each of which operates as an individual profit centre with its own clear business concept, its own goals and with its own strategy. Each management group develops its own business with a great deal of freedom under its own responsibility. In this way the mission-critical decisions are made close to customers and market. It is here that the knowledge about customers needs is the greatest. This also creates short decision-making paths and promotes a high degree of participation.

The subsidiaries are managed by objective, goals that are of a long-term nature and based on the Group's three main requirements, for growth, profitability and development. Business plans are drawn up each year for every company with quarterly goals for earnings and how much capital is tied up in the business. Plans are followed up on a regular basis and action is taken as needed.

The 2008/09 operating year brought dramatic changes in the general business situation. This meant that extensive action was taken to adapt the organisation, activities and cost levels correspondingly to the business premises at hand.

Strong corporate culture

Lagercrantz Group nurtures a strong corporate culture, which traces its origin in the way of working and the approach to business that is characteristic of a successful technology trading company. There is rich lode of collective experience in the Group and this is systematically exploited and disseminated in the form of courses and training, but also by encouraging engagement and team play between associates in different parts of the Group.

The common value base for Lagercrantz Group's corporate culture rests on four concepts:

• Businessmanship the ability to see opportunities, to create good relationships and to focus on earnings.
• Responsibility and freedom the ability to take control and realise own ideas that generate earnings.
• Simplicity and efficiency the ability to work in a concentrated manner and to find simple solutions, to prioritise the right things and to do them in the right way.
• Willingness to change the ability to grasp onto new things and to adapt to the market.

Businessmanship

Businessmanship is something very basic for Lagercrantz Group and distinguishes all work that is done. This concept includes contributing knowledge and acting in such a way that added value is created for the customer – by refining the products of others or by offering our own products. Businessmanship means having a holistic perspective and the ability to recognise new business opportunities and future needs in the marketplace. It also means working close to your customers and to create good sustainable relationships on a long-term basis based on high ethics and honesty. Personal selling is an important component of businessmanship. Lagercrantz is a value-creating partner for buyers of technology.

Strong market positions in niches

Lagercrantz Group's subsidiaries strive to achieve a strong market position in their niche. A niche consists of a welldefined technology area, customer segment or geographic area with a total market value that is normally in the range of MSEK 200–1,000.

This means working on a defined market with considerable possibilities of impacting business terms and conditions. Proximity to the customers, high technical competence and a focused method of working make it possible for us to create sustainable competitive advantages, even in relation to the largest international players. For Lagercrantz Group, having a leading position means to be number one or two in each respective niche.

Increased value added

Lagercrantz Group is focused on delivering high value added to its customers, and continually strives to raise it. With knowledge of a local market and specialised technical know-how, Lagercrantz Group contributes to the added value by customising, developing and combining products from

different suppliers in the solutions presented to the customers. There is also customer benefit in the fact that Lagercrantz Group makes different manufacturers' products available on the market and offers training, support and service. The degree of refinement is continually enhanced by phasing out standard components and replacing them with products that generate greater customer value. New products and services are also increasingly being offered. The development is in the direction of areas which are technically complex, or open the doors for a unique offer.

Acquisitions

Lagercrantz Group's goal for earnings growth will be realised in part by organic growth and in part by acquisitions. The acquired companies strengthen the market position in existing areas, or make it possible to enter new, interesting markets. It is crucial that acquired companies have a well-tested business model and earnings capacity, great competency among its leaders and associates and good growth opportunities. Expansion in the technology areas where Lagercrantz Group is already established is accomplished all over northern Europe.

For other areas, which are new to Lagercrantz Group, acquisitions will in the first instance be made in the Nordic Region. Given the state of the market prevailing in 2009, the focus will be on finding and acquiring companies primarily in the Nordic Region.

STRATEGIES STAND FIRM

The steep economic downturn towards the end of 2008 and in the beginning of 2009 has meant that Lagercrantz Group's focus has shifted to ensure a stable, profitable business also in turbulent times. Measures will be aimed at cutting costs and reducing capital tied up in the Group. Lagercrantz Group's long-term efforts at creating growth, profitability and development in the Group based on these strategies will continue, however, and the assessment is that decentralisation and management by objective, nurturing a strong corporate culture, businessmanship, niche thinking, increased value added and acquisitions are at least as important in a downturn phase.

Market

Lagercrantz Group is a technology trading group in the areas of electronics, electrics, communication and adjacent areas. Customers are mainly industrial companies in northern Europe. Lagercrantz Group has the largest part of its sales in Denmark and Sweden. The largest end customer segments are power generation, electricity distribution and electronics.

Lagercrantz Group is a technology trading group active in northern Europe. The largest markets are Sweden and Denmark. Lagercrantz Group works exclusively with sales to other companies, so-called business-to-business. Customers are mostly industrial companies. As the service sector in the Nordic Region and northern Europe grows ever larger, Lagercrantz Group's sales to the sector have increased.

Lagercrantz Group is made up of some 25 units that work with a clear niche focus, which means focus on a limited market, where the individual company can achieve a leading market position.

End customers for Lagercrantz Group's products are found primarily in electrical power generation and distribution, electronics, transportation and telecommunication.

DRIVING FORCES

The major driving forces affecting Lagercrantz Group's customers, and hence the demand for Lagercrantz Group's products, is the constantly growing demand for energy, the ongoing globalisation of trade, the increasing flows of information and the growth of new markets, especially in Asia. These driving forces has been affected by the dramatic decline in industrial output in the end of 2008 and beginning of 2009, but even so, investments in infrastructure to meet the global demand for electricity are in a phase of long-term growth, primarily tied to the economic development in China, India and other parts of Asia. Energy distributors around the world need to build new grids and expand already existing ones in order to increase capacity. Regulations and the economic situation speak for expansion of ever more efficient energy production with minimal environmental impact.

Growing world trade and global competition make for increased productivity in manufacturing industry, so focus has been directed at such areas as purchasing functions and line processes.

The increasing volumes of information in stationary and wireless networks, is enforcing the expansion of capacity and development of new technology.

The emergence of new, large markets in Asia has led to growing expansion investments to meet the large demand thus created.

TYPES OF BUSINESS IN TECHNOLOGY TRADE

There are two main business models on the technical markets: Direct sales from manufacturer to end user and sales via some kind of partner. Only a small number of global companies can reach out to all their end customers via their own channels. Large companies often choose to act on their own on a few key markets, while they seek a strong local partner on other markets. For smaller manufacturing companies, partnerships with local sales companies are often the only way to reach out to their customers.

Lagercrantz Group is a technology trading company with strong ties to its customers as well as its suppliers. The location in the supply chain is motivated by the fact that Lagercrantz Group can offer technical and business knowledge, problemsolving, localisation, combinations and systems, as well as training and service. The technology trading company is the local link that makes world-leading technology available on a small market. For manufacturers it is a way out to small markets and ensures qualified counselling, service and aftermarket activities.

The subsidiaries within Lagercrantz are mainly operating on a well defined market. This is an important part of the overall strategy of Lagercrantz enabling the companies to build up sharp local business intelligence and long-term customer relationships.

Trading in different forms constitutes the largest part of the Group's sales, or just below 60 percent. The trading companies are represented in divisions Electronics and Communications in particular. Trading comprises hardware (e.g. electronic components, network products, IT hardware) as well as software (e.g. CAD software) for customers in several market areas and includes sales of everything from individual components to various sub-systems for integration in the products manufactured by the customers.

Some companies in the Group work with an export perspective. These are mostly companies with their own products that sell on a world market, either themselves via subsidiaries, or with the help of partners. Just over 15 percent of the Group's revenue is sales in this form, especially in divisions Mechatronics and Electronics (electrical connection systems) and Electronics (embedded PC solutions, routers).

The ambition is to increase this proportion of the Group's revenue.

Niche production makes up just over 15 percent of consolidated revenue and means that the companies manufacture special solutions for account of the customer. This type of selling is done mostly in division Mechatronics in conjunction with production of cable harnesses for use especially in wind power stations or static frequency changers.

Approximately 5 percent of the Group's revenue is derived from systems integration where the companies in Lagercrantz Group undertake to deliver a complete solution, often with after-market service. This type of sales is common in division Communications in particular (integrated security systems, CCTV infrastructure, video conference solutions).

THE SUPPLY CHAIN

Lagercrantz Group works with value-adding technology trade. That is why it is important for the companies in the Group to make the value-creation clearly visible to the customer. One aspect hereof is to work as close to the end customer as possible. Today just short of 40 percent of consolidated sales go directly to end customers. A little less than 35 percent of sales go via selling partners and resellers to end customers. Examples of such partners are installation companies, distributors and wholesalers. About 15 percent of consolidated sales go to contract manufacturers. Another important customer group is systems integrators, who account for just over 10 percent of the Group's sales.

CHANGING PURCHASING PATTERNS

Important trends among Lagercrantz Group's customers that affect conditions for the Group are shorter lead times (time-tomarket), outsourcing of certain functions and moving out production. The first two of these trends can be said to constitute positive factors, while moving out constitutes a threat to Lagercrantz Group's local sales.

Shorter time-to-market and outsourcing mean that the customers to a greater extent need to work with partners for a part of the work previously done internally. This opens opportunities for a strong technology trade company in the development phase as well as later in a product's life cycle. For the customer this means greater security since the customer can buy well-tested solutions where focus can be placed on adaptation to the customer's specific needs. The customer can free up resources for marketing work and the entire supply chain is rendered more efficient.

Among the effects of the economic downturn are that manufacturers' inventories of components have been reduced to a minimum, thereby raising the demands for short delivery times and flexible solutions in the interface between Lagercrantz and the customers.

In general, the purchasing pattern has become choppy, with less long-term planning and growing demand for quick deliveries. The tolerance level for logistical errors has been significantly reduced. Lagercrantz Group's business model, with key words such as proximity and flexibility, has proved to be successful in this environment and many customer relationships have thus been strengthened, even though the overall volumes have been reduced.

COMPETITION

Lagercrantz Group is active on niche markets and competition is different between them depending on products, volumes and geographic scope. In general, it can be said that in technology trade there is often many alternative products and players on each market. Small local suppliers who represent foreign manufacturers dominate on the Nordic markets. They possess a high level of knowledge about their products that may be on a par with the expertise in Lagercrantz Group. Several of the global manufacturers have their own sales organisations in the Nordic Region and can offer good service and technical competence. There are also a number of major wholesale companies with a broad product line and who distribute large volumes. Among these, specialist knowledge about individual products is not as pronounced.

CUSTOMERS AND SUPPLIERS

Lagercrantz Group's sales are spread over a large number of markets and many customers. This means that the dependence on individual customers is relatively limited. No individual customer accounts for more than about 5 percent of consolidated sales. Even for individual subsidiaries, the dependency on the largest customers is limited. On average, a subsidiary's 10 largest customers account for about 65 percent of that company's sales.

A corresponding situation prevails with respect to suppliers, where Lagercrantz Group's subsidiaries operate in a number of different technology niches. Very few supplier relationships comprise more than one company in the Group. Lagercrantz Group tries to work close to its suppliers and to develop active co-operation.

CURRENCIES

A majority of the Group's sales and purchases are made in currencies other than Swedish kronor. The largest transaction currency is euro, which accounts for about 35 percent of sales and 50 percent of purchases. The Danish krona, the exchange rate of which is linked to euro, accounts for about 20 percent of sales and 10 percent of purchases. The American dollar is the third largest currency with about 10 percent of sales and almost 20 percent of purchases. Currencies other than Swedish kronor stand for 75 percent of sales and 85 percent of purchases respectively.

Lagercrantz continually analyses its risk exposure in foreign currencies. Based on sales volume and volatility experienced during the 2008/09 financial year, the Group's revenue was affected most by euro and U.S. Dollars, followed by Danish kronor measured against the Swedish krona. The biggest effect on gross profit, where weight is also given to the purchasing volume in foreign currency, came from the exchange rate for Norwegian kroner, followed by the U.S. Dollar. This is due to the big difference in purchasing volume in these currencies.

Major changes in recent years in the exchange rates, have prompted more and more customers to choose to work with the euro as transaction currency. Lagercrantz works actively in trying to minimise the risk that emanates from exchange rate fluctuations by pricing in purchasing currency and by using currency clauses. Refer also to Note 41 "Risk management."

• Power generation and electricity distribution 19% (18)
• Elektronics 16% (15)
• Construction 11% (13)
• Telecommunication 10% (11) Security 9% (9)
• IT 9% (5)
• Transportation 8% (12)
• Other 18% (17)

Numbers in brackets refer to 2007/08.

Revenue by market channel

• Direct to end customer 39% (35)
• Distributors/resellers 29% (38)
• Contract manufacturers 17% (16)
• Systems integrators 12% (6) Other 3% (5)

Revenue by business type

• Trade, software 14% (15)
• Nich production 14% (12)
• Systems integration 5% (9)
• Service 4% (4)
• Other 1% (2)

Division Electronics

Division Electronics offers solutions based on special components from world-leading manufacturers as well as proprietary products. Customers are typically manufacturing companies in the fields of marine industry, medical technology, automation, telecommunication and other industry with stringent demands. The division operates mainly in Denmark, Norway, Finland, Germany, Poland and China.

Most companies in division Electronics act as value-adding distributors. The customer is offered products and solutions from world-leading manufacturers with a high degree of customer adaptation, support and services. For the suppliers our businesses serve as a sales organisation that builds demand by exercising good businessmanship and a high level of technical expertise. In order to further enhance the value-adding feature, the offer is complemented with products developed inhouse. This is especially true in the marine business. Many of the customers pose stringent requirements, particularly when they are subject certification and regulatory control. Examples are marine navigation equipment, sensors for gas measurement and medical-technical equipment in the health care area.

MARKET

Division Electronics mainly addresses OEM customers in electronics in the Nordic Region, Germany and Poland. Electronics is active in growth areas and seeks leading positions. In communication Electronics is a leader in areas such as distribution of GSM modules. In embedded electronics the division commands advanced positions in a number of areas, including marine PCs.

2008/09 OPERATIONS

Revenue for Electronics fell during the year to MSEK 727 (778). Already early during the period flagging demand was seen in the markets outside the Nordic Region, especially in Germany and the UK. The decline was a result of lower propensity to invest among many companies due to the recession. As the year passed, lower demand spread to most companies in the division. Cost-cutting and capital-reducing measures were therefore introduced during the second half of the year. These measures consisted of streamlining and concentrating operations to the larger markets. In Sweden this means that the company for wireless communication (Acte Wireless) and the company for embedded systems (Acte

Embedded) are integrated from 1 April 2009 into one company: Acte Solutions. The UK and Swiss operations are integrated into the Danish and German operations, respectively.

The operating result declined during the year to MSEK 24 (38). This result contains costs affecting comparability in an amount of MSEK 4 (0), mainly during the fourth quarter, as a result of the measures taken, personnel reductions in particular. The operating margin not including these items affecting comparability was 3.9 percent (4.9).

STRATEGY AND BUSINESS DEVELOPMENT

Development work in the division is focused on building strong market positions in growth niches and to increase the value-added component in sales. The gross margin continued to grow during the year thanks to product line improvement and competence enhancement measures taken. The proportion of project sales of semi-finished articles and modules for small and medium-sized production series is on the rise at the expense of standard components for large production series. The element of services and proprietary products is also growing.

One example of successful strategic development is the small acquisition made in Norway during the past year. This acquisition brings the Norwegian business into a new customer segment, IT solutions for digitising and computerisation of health care.

Another example is the establishment of a competence centre in Poland for customer-specific development of products in the communications area. This means new opportunities for increased value added for customers in Poland as well as in other markets.

PROSPECTS

The strategies and the business model, with distinct decentralisation and management by objective, have led to clear improvements in the business. In the long term division Electronics will continue to develop along the path staked out. The economic outlook for the year ahead is fraught with significant uncertainty, however. In the short term Electronics will therefore follow the development closely and adapt its operations to the situation at hand.

Revenue by business type

Key figures

Division Electronics		2008/09 2007/08 2006/07
Net revenue, MSEK	727	778	751
Operating result, MSEK	24	38	23
Operating margin, %	3.9	4.9	3.1

Operating margin shown not including items affecting comparability.

ACTE AS provides important support in clinical environments

ACTE Norway's solution allows information to be presented for quick decisions. Increased use of IT systems in health care is in our future and can be vital to life and health.

ACTE possesses deep specialist knowledge of how modern IT can be adapted to and installed in clinical environments to suit the users. Information on which decisions within seconds are based must be correct and available at the right place in an often complex situation.

Helse Midt-Norge is responsible for hospitals and health care in the three central counties in Norway. HEMIT is a regional IT unit within Helse Midt-Norge charged with management of the central servers, common software and infrastructure. Some 20,000 of Norway's most demanding IT users must have 24/7 access to 600 servers via 12,000 PCs. Some 3,500 PCs are normally used for work where speed, precision and reliability can be the difference between life and death.

The development is in the direction of ever smaller units with total mobility. Intel has launched the "Mobile Clinical Assistant" concept – a hand-held PC that makes vital information about the patient available regardless of location. For the Norwegian market, ACTE has launched a solution based on a PC made by Motion Computing and which is based on Intel's MCA technology.

For more information:

• ACTE AS: www.acte.no
• Helse Midt-Norge: www.hemit.no
• Intel Mobile Clinical Assistant: www.intel.com/healthcare/ps/mca/

Electronics' business model – value adding distribution

Division Electronics' subsidiaries under the name of Acte in the Nordic Region and Poland, and Unitronic in Germany, operate as value-adding distributors. The business model is described in simplified form in the above illustration. The companies operate focused with a small number of suppliers' products in niches, seek out and operate close to customers in the product development phase, customise and offer many different types of added value, such as support and service. Deliveries are effected to the customer or to appointed contract manufacturer.

Several other distributors in the market are global players with a very broad product line, the focus of whom will be to maintain inventory of and to provide logistics for more standard-type components.

Division Mechatronics

Mechatronics offers systems and products to customers in manufacturing industry, power generation and electricity distribution with high requirements for quality, proximity and support. Mechatronics conducts business in Denmark, Finland, Sweden, Germany and China.

The offer of division Mechatronics comprises production of customised cable harnesses and adjacent products and services, production and marketing of electrical connection systems, and dealing in mechanical and electro-mechanical products and electronic products. The products manufactured by the division's companies are characterised by high quality, reliability and extended user life. Trade in Mechatronics comprises proprietary products and complementary products from leading manufacturers. The main focus for the companies in the division is on proximity to its customers in order to be able to offer customer-unique products, provide the best possible technical advice and to offer short delivery times and high availability.

MARKET

Division Mechatronics' offer is aimed at two main customer categories. Dominating is Nordic manufacturing industry, especially in power generation, trains and railway, heavy vehicles and machinery, and in telecommunication. The second category is electrical grid owners and electric power distribution. The division holds a market leader position within electrical connection systems on the utility market in the Nordic countries and is an important supplier of cable for several large manufacturers.

2008/09 OPERATIONS

Mechatronics recorded higher revenue in 2008/09 than in the year before. Net revenue increased to MSEK 628 (604). Growth was seen during the first three quarters of the year. Demand declined during the third quarter and this was further accentuated during the fourth quarter. The division was particularly impacted towards the end of the year by the lower rate of capital spending among end customers. Gradually lower demand followed as the effect spread in the production chain,

in part through inventory reductions among the division's customers. As a consequence of lower revenue during the latter part of the year, the division's capacity utilisation was affected, leading to lower profit. At the end of the year measures were taken to reduce overcapacity in the division's producing units, in part by personnel reductions and by delaying capacity investments. Additional action includes measures to reduce working capital, especially in the form of inventory and trade receivables.

The operating result amounted to MSEK 49 (50). This result contains costs affecting comparability in an amount of MSEK 4 (0), mainly during the fourth quarter, as a consequence of action taken. The operating margin, not including these items affecting comparability, was 8.4 percent (8.3) for 2008/09.

STRATEGIES AND BUSINESS DEVELOPMENT

During the year Mechatronics worked on strengthening, improving and streamlining the production apparatus. Mechatronics' shall assume responsibility for quality, management, control and material supply together with its customers.

Mechatronics' offer has been complemented with a view to developing the business in the direction of larger undertakings in the prioritised niches. With more complex deliveries consisting of several products assembled in accordance with the requirements of the customer, full justice will be done to Mechatronics' technical expertise and wide range of products and the value added can be further increased. During the year Mechatronics has therefore strengthened its marketing and support functions.

Several companies in the division have managed to broaden their customer base in recent years. This has been accomplished on existing geographic markets as well as on new ones. The establishment by subsidiary Elpress in China has been a success

in this regard. Initially, the offer has been aimed at existing customers from the home market in the Nordic Region setting up operations in China. A broadening towards local players in the same segment has begun. Also in other parts of the world export efforts towards a few selected segments has continued successfully.

In some areas low-cost production initiatives were taken outside the Nordic countries. A partner network has been created and manufacturing has been initiated for some of the division's products.

PROSPECTS

The global climate issue and requirements for safe and secure electricity distribution to the various functions in society drives the demand. Mechatronics and its customers are active in market segments that are likely to be interesting investment targets, for example, wind power production, energy efficiency and effective transportation.

Services 2%

Key figures

628	604	541
49	50	35
8.4	8.3	6.5
		2008/09 2007/08 2006/07

Operating margin shown not including items affecting comparability.

Elpress contributes to augmenting safety and performance at Sweden's largest nuclear power plant.

Knowledge about strong connections is included as an important part in the improvements to Sweden's largest nuclear power plant – Ringhals. Through training, high quality and a holistic approach Elpress contributes to the development.

A total of SEK 12 billion will be invested at Sweden's largest nuclear power plant

Ringhals to upgrade its security systems and strengthen its protection, but also at the same time raising output. This involves the replacement of many components and digital technology will be introduced. There will be a larger number of electrical connections and these will have to stand up to greater loads. For a comparatively small share of the total investment, a mechanically and electrically strong connection with a long life is secured with the Elpress system.

System Elpress is a solution comprising both the crimping tool and the connection, and also trains the installers. All material in the system is selected and tested to fit together. All material in the crimping tool as well as the connection itself is load-tested in accordance with international standards. The installers attend advanced training and given an opportunity for certification. By delivering an entire system, Elpress has good control over all elements of the process.

To ensure the security as well as the performance increase, very close tolerances and genuine, age-resistant capacity is of the essence. This is what system Elpress offers.

For more information:

• Elpress AB: www.elpress.se
• The Swedish radiation safety authority: www.stralsakerhetsmyndigheten.se
• IAEA: www.iaea.org
• Sweden's first nuclear reactor R1: http://sv.wikipedia.org/wiki/R1_(reaktor)

Division Communications

Division Communications offers products, systems and services in the areas of digital image transmission/technical security, access products and software. The division's companies are active in Sweden, Denmark, Norway and Finland.

The division's eight companies offer their solutions to the market based on being value-creating distributors and systems integrators. A growing portion of the division's revenue is comprised of different forms of services.

MARKET

The division is a market leader in several areas, including video conferencing solutions in Sweden and CAD software in Denmark and Norway. The division also has a strong position in camera-based surveillance systems, health care security and other products for technical security, and in access products for telecom and broadband networks and data security.

Regardless of which business they are in, Lagercrantz has chosen a clear niche strategy for its companies, either with an aim at a certain type of customer, or in the form of product segmenting. In all cases the businesses are local, with deep customer and market knowledge.

2008/09 OPERATIONS

Net revenue amounted to MSEK 783 (790). The division's digital image/technical security area saw a positive development. Revenue increased and earnings improved. COBS AB, the company acquired during the year, contributed to the positive development.

The access area continued to be strong contributor to the division's result, although revenue as well as earnings declined from last year, particularly due to weaker demand for the division's data security products. Revenue in Norway also declined due to weaker overall demand in satellite communication in shipping. Demand for niched IT products remained at a good level.

Revenue increased in the division's software area. The company CAD Kompagniet acquired during the year was a contributor here.

The operating result amounted to MSEK 52 (51). This result includes items affecting comparability in the amount of

MSEK 5 (0). Without theses costs, the operating margin increased to 7.3 percent (6.5).

STRATEGY AND BUSINESS DEVELOPMENT

In the access area the adaptation of the product line and the offer continued in the quest to find more distinct niches within which to operate.

The organisation in technical security was overhauled last year, which means that operations are focused on a small number of areas where the division already today has a strong position. Additional focus was placed on developing the aftermarket offer. This change has been a positive one and the business has been able to strengthen its market position, especially vis à vis the retail trade. COBS AB is a part of the division since September 2008. This company has a strong position in telephony and alarm solutions for health care and correctional institutions in the Nordic Region. The company's exports showed a positive development during the year. At present the company is developing the next generation handheld unit.

CAD Kompagniet is a part of the division since the beginning of the year. The division has thereby broadened its offer in CAD solutions to include consultancy.

The growing flow of information is a strong driving force which pushes investments in IT/telecom infrastructure. Video conferencing is becoming an increasingly appealing alternative to travel as companies are scaling back their travel budgets. Another driving force is the trend towards a more closely monitored society in the form of security and camera systems that are relatively unaffected by the state of the market.

In the access area the division focuses on niched products for telecom operators needed to build infrastructure. The area also includes niched IT products.

PROSPECTS

There are possibilities in several areas to strengthen the role in the supply chain, in part through in-house-developed concepts/solutions and in part through a growing proportion of services. This work, together with acquisitions, will be the most important factors for future growth in the division. In addition hereto, a broadening of the product line and increased sales of proprietary products are other ways for the division to strengthen its market position.

During the coming year the change work in the access business will continue.

Revenue by business type

Proprietary products 2%

Key figures

Division Communications		2008/09 2007/08 2006/07
Net revenue, MSEK	783	790	682
Operating result, MSEK	52	51	43
Operating margin, %	7.3	6.5	6.3

Operating margin shown not including items affecting comparability.

Sörmlands Sparbank invests in security

Sörmlands Sparbank offers long-term support for the regions citizens and businesses. Security for the customer, concern and a comprehensive approach is at the heart of the bank's work. This calls for responsible management and genuine security.

Security and IT are the most important systems for a banking operation. Investments here are significant and to run them takes a lot of personnel – often around the clock. Lars Fogelberg is

head of security at Sörmlands Sparbank. He has been developing a structure for the bank's security system since the mid-1990s. The basic alarm functions in banking operations cover burglary alarm, assault alarm, access control, TV surveillance and fire alarm systems. Theses systems must also be upgradeable to handle additional functions in the future. In order to meet these requirements software is needed that is modular in structure, which can be developed as the needs change, and there must be a stable central computer with extremely high accessibility to back the systems.

All alarm functions shall be integrated and information must be presented to the operator in easy-to-use and clear interface. There must also be functions for authorisation levels and history. The system must be programmable so that it is possible to track what has been done by whom and which events have occurred. If an alarm is triggered, sound and image must be ready to be played back when the police arrive at the bank.

Nordic Alarm was chosen, and its integrated security system Nordic Integral meets all of Sörmlands Sparbank's requirements. Seen over a longer period of time, the total cost of the investment, its operation and service also proved to be favourable.

For more information:

• Nordic Alarm and Nordic Integral: www.nordicalarm.se
• Sörmlands Sparbank: www.sormlandssparbank.se

Acquisitions

Acquisitions are an important part of Lagercrantz Group's growth strategy. The strategic target group of possible acquisition targets is broad in the interest of raising the rate of growth. The ambition is to grow into new technology areas, and to acquire three to five companies on average per year.

PROCESS

Interesting complementary acquisitions are identified by the subsidiaries; acquisitions to broaden a division's operations are dealt with at the division level, whereas larger strategic acquisitions are handled by the management of Lagercrantz Group. Two persons in the Group devote their time to acquisition issues. Making successful acquisitions requires a well-structured process to identify, evaluate and consummate corporate acquisitions. Lagercrantz Group works with a process that consists of five phases:

• Identifying potential target companies based on different strategic perspectives and financial key ratios.
• Contact with companies and their owners, clarifying idea, prerequisites, purpose and common grounds.
• Analysis of market and company, drawing up a business plan and negotiating the terms.
• Final negotiations, quality assurance, contract of sale and press release.
• Closing, implementation of business plan, introduction of governance and reporting, and information to employees, customers and suppliers.

The subsidiaries in the Group have a very important function, especially in contacts and the initial evaluation thanks to their local market knowledge. A growing number of potential target companies are identified via Lagercrantz Group's subsidiaries.

TARGET COMPANIES

Businesses that Lagercrantz Group looks for are often entrepreneur-led companies. It is then important that the seller feels that the company ends up in the right environment and continues to have good opportunities for development. Lagercrantz Group offers a stable and financially strong platform in a decentralised organisation, with a large measure of freedom and a clear responsibility where the company often retains its name, location and organisation.

ACTIVITIES DURING THE YEAR

During the 2008/09 operating year two companies were acquired: CAD Kompagniet AS in Denmark, with the closing taking place 1 April 2008, and COBS AB in Gothenburg, with the closing taking place 1 September 2008. The level of activity was high at the beginning of the year with a number of parallel processes. As the state of the economy deteriorated, Lagercrantz chose to reduce the level of activity in the acquisition area. A number of dialogues are continuing, which creates opportunities to initiate processes quickly once the business situation stabilises. During the year the Group also strengthened its financial position, which resulted in an improved equity ratio and lower net liabilities. The Group's basis for consummating acquisitions has been strengthened.

OUTLOOK

Lagercrantz Group sees good prospects for making acquisitions going forward and look for companies with a proven earnings record and good management. The geographic area is the Nordic Region in the first instance. Target companies should have a niche orientation and a strong market position within this niche. Lagercrantz Group's contribution in the form of competence and development opportunities make it possible for acquired companies to continue the development.

The Lagercrantz share

Over a five-year period, the market price performance of the Lagercrantz share shows a gain of 5 percent. The broad OMX Stockholm Price Index fell during the same period by 6 percent, and the benchmark Carnegie Small Cap Index scored a gain of 4 percent. During this five-year period the highest price was SEK 42.80, in July 2007. This is the highest quotation since the Company was listed in September 2001. The lowest price was SEK 16.50, in November 2004. The share price on 31 March 2009 was SEK 23.50 (28.80). The trend during the 2008/09 financial year (April–March) involved a drop of 20 percent (13). During the same period OMX Stockholm Price Index fell by 45 percent (22) and Carnegie Small Cap Index, which shows the aggregate development for smaller companies, fell by 38 percent (19).

Lagercrantz, with a market capitalisation of approximately MSEK 546 at the end of March 2009, is included in the Small Cap segment for companies with a market capitalisation below EUR 100 million on Nasdaq OMX Stockholm's main list.

PROPOSAL TO THE 2009 ANNUAL MEETING

The dividend proposed by the Board of Directors for the 2008/09 financial year is SEK 1.50 (1.50) per share. This is equivalent to a total dividend payment of MSEK 33 (34).

TRADING IN THE SHARE ON THE STOCK EXCHANGE

The number of shares traded during the financial year was just over 4.4 million (9.8), equivalent to a value of MSEK 115 (327). The turnover rate for free floating shares was 24 percent (51). The average rate of turnover in the Small Cap segment during 2008 was 35 percent (74). The number of transactions per day in the Lagercrantz share was 14 (19) per trading day.

SHARE CAPITAL

As of 31 March 2009 the share capital amounted to MSEK 48.9, divided into 1,094,654 class A shares and 22,078,655 class B shares. Each share has a quotient value of SEK 2.11. Class A shares entitle their holders to ten votes, while class B shares entitle their holders to one vote. Both classes of shares entitle their holders to the same rights with respect to the Company's assets and earnings. The Articles of Incorporation allow for conversion of class A shares to class B shares. A total of 1,344 shares (-) were converted during the year. The number of votes in the Company is 33,025,195 thereafter.

The 2008 Annual Meeting resolved to cancel class B shares without repayment. During 2008 a total of 1,240,923 class B shares were cancelled. Through a concurrent bonus issue of just over MSEK 2.5, the share capital remains intact.

REPURCHASE OF OWN SHARES

The 2008 Annual Meeting resolved to authorize the Board of Directors to repurchase shares. During the year 500,000 (1,200,000) class B shares were repurchased. Lagercrantz Group's total holding of shares in treasury on 31 March was 1,195,000 (1,36,423) class B shares, equivalent to 5.2 percent (7.9) of the number of shares outstanding and 3.6 percent (5.6) of the votes in Lagercrantz. 695,500 of the repurchased shares are intended to fulfil the Company's commitment under outstanding option programmes, where the redemption price is SEK 36.00, SEK 44.40 and SEK 38.60, respectively, per call option. The average acquisition price for repurchased shares is SEK 25.57 per share.

INCENTIVE PROGRAMME

In 2006 an incentive programme was introduced for managers and members of senior management in the Group in accordance with an Annual Meeting resolution. The purpose of the programme is to raise the motivation and create participation for managers and members of senior management regarding opportunities for the Company's development. The purpose is also to motivate managers and members of senior management to continued employment in the Group. The programme is a revolving three-year programme based on call options on class B shares held in treasury. The total number of outstanding call options issued under the programme may at no time exceed approximately three percent of the total number of shares outstanding (class A as well as class B shares). The 2006 Annual Meeting resolved to award 255,000 call options and the 2007 Annual Meeting resolved to award 260,000 call options. The 2008 Annual Meeting resolved to award 180,500 additional call options. The programmes were fully subscribed. Each option gives its holder the right to purchase one share at a redemption price of SEK 36.00 (2006 programme), SEK 44.40 (2007 programme) and SEK 36.80 (2008 programme, respectively. The options can be exercised between 20 September and 20 December 2009 (2006 programme), 21 September 2010 and 21 December 2010 (2007 programme) and between 27 September and 27 December 2011 (2008 programme). In all, the programme is equivalent to 3 percent of the total number of shares outstanding and approximately 2 percent of the votes in the Company.

OWNERS

Skandia Liv is the Company's largest owner in terms of proportion of capital. Anders Börjesson and Tom Hedelius own class A as well as class B shares and hold 13.4 percent and 11.4 percent of the votes, respectively. During the past year Swedbank Robur fonder acquired Carnegie fonder. Robur thereby increased its ownership in Lagercrantz. The proportion of foreign ownership was 25.3 percent (26.7) on the balance sheet date. The number of shareholders changed marginally during the year and as of 31 March 2009 Lagercrantz had 3,497 shareholders (3 614).

INFORMATION PROVIDING

Lagercrantz Group provides information about important events in the Company by publishing press releases. The Company also provides financial information in the form of quarterly reports. Press releases and quarterly reports are available at the Company's website, where economic surveys and current corporate governance information are also

published. At the website it is also possible to download pdffiles for printout to subscribe to press information via e-mail. There is also a list of analysts who follow Lagercrantz Group.

The Annual Report, interim reports and press releases are made immediately available in Swedish and English via Lagercrantz Group's website. They are simultaneously distributed via an established service provider and registered with the Swedish Financial Supervisory Authority. In the opinion of the Company this is the procedure that best fulfils the requirements of the EU directive about non-discriminatory dissemination and immediate European availability. As a consequence hereof the reports are not distributed in printed form other than upon request.

Market price performance and trading volume 5 years

Ownership structure in Lagercrantz Group 31 March 2009

Share facts
Shortname	LAGR B
ID	SSE14335
ISIN code	SE0000808396
Segment	Small Cap
Sector	45203030 Technology Distributors
Listed since	3 September 2001

Number of shares	Number of owners	Stake	Votes
1–500	1,980	1,.9%	1.3%
501–1,000	634	2.5%	1.7%
1,001–10,000	759	11.1%	9.1%
10,001–50,000	78	7.7%	6.5%
50,001–100,000	18	6.1%	4.7%
100,001–	28	70.6%	76.6%
Total	3,497	100.0%	100.0%
Legal entities	381	58.9%	42.4%
Individuals	3,116	41.1%	57.6%
Total	3,497	100.0%	100.0%
Of whom Swedish residents	3,343	74.7%	82.5%

Largest owners in Lagercrantz Group 31 March 2009

Owners	A shares	B shares	Stake	Votes
Anders Börjesson with family	377,982	402,500	3.6%	13.1%
Tom Hedelius with family	362,982	5,400	1.7%	11.4%
Pär Stenberg	229,152	919,122	5.2%	10.1%
Skandia Liv		2,436,041	11.1%	7.7%
Swedbank Robur Fonder		2,283,513	10.4%	7.2%
Odin Fonder		1,810,503	8.2%	5.7%
Nordea Bank Finland		1,505,522	6.9%	4.7%
Brita Säve, estate	30,000	973,983	4.6%	4.0%
Aktia Sparbank		752,500	3.4%	2.4%
Marianne Rapp		716,000	3.3%	2.2%
Länsförsäkringar Fonder		712,751	3.2%	2.2%
Stiftelsen för kunskaps och kompetensutveckling		400,000	1.8%	1.3%
Björn Nordenwall		270,000	1.2%	0.8%
Annika Wendell	15,000	100,000	0.5%	0.8%
Kronprissessan Margaretas Minnesfond	17,476	75,000	0.4%	0.8%
Citibank		233,635	1.1%	0.7%
Mörner family		221,070	1.0%	0.7%
Handelsbanken Fonder		205,751	0.9%	0.6%
Matern family		200,806	0.9%	0.6%
Nordic Small Cap		149,962	0.7%	0.5%
Total, 20 largest owners	1,032,592	14,374,059	70.1%	77.6%
Total, other owners	62,062	6,509,096	29.9%	22.4%
Total, not including repurchased shares	1,094,654	20,883,155	100.0%	100.0%
Lagercrantz Group (shares held in treasury)		1,195,500
Total	1,094,654	22,078,655

Evolution of share capital

		Change number	Number of shares	Proportion of capital, %	Number of votes	Proportion of votes, %
	Event
Class A Opening
balance			1,840,286	7%	18,402,860	41%
2001/02	Conversion A to B shares	-725,464	1,114,822	4%	11,148,220	29%
2002/03	Conversion A to B shares	-8,320	1,106,502	4%	11,065,020	29%
2003/04	Conversion of repurchased shares		1,106,502	4%	11,065,020	31%
2003/04	Conversion A to B shares	-4,692	1,101,810	4%	11,018,100	31%
2004/05	Conversion A till B shares	-4,468	1,097,342	4%	10,973,420	31%
2005/06	Cancellation of repurchased shares		1,097,342	4%	10,973,420	32%
2006/07	Conversion A to B shares	-1,344	1,095,998	4%	10,959,980	32%
2008/09	Cancellation of repurchased shares		1,095,998	5%	10,959,980	33%
2008/09	Conversion A to B shares	-1,344	1,094,654	5%	10,946,540	33%
Class B
Opening
balance			26,023,946	93%	26,023,946	59%
2001/02	Conversion A t to ill B shares	725,464	26,749,410	96%	26,749,410	71%
2002/03	Conversion A to B shares	8,320	26,757,730	96%	26,757,730	71%
2003/04	Conversion of repurchased shares	-1,950,000	24,807,730	96%	24,807,730	69%
2003/04	Conversion A to B shares	4,692	24,812,422	96%	24,812,422	69%
2004/05	Conversion A to B shares	4,468	24,816,890	96%	24,816,890	69%
2005/06	Cancellation of repurchased shares	-1,500,000	23,316,890	96%	23,316,890	68%
2006/07	Conversion A to B shares	1,344	23,318,234	96%	23,318,234	68%
2008/09	Cancellation of repurchased shares	-1,240,923	22,077,311	95%	22,077,311	67%
2008/09	Conversion A to B shares	1,344	22,078,655	95%	22,078,655	67%

Several-year Overview

Income Statement

Amounts in MSEK	2008/09	2007/08	2006/07	2005/06	2004/05
Net revenue	2,138	2,172	1,974	1,608	1,518
Operating result before depreciation and amortisation	130	154	120	72	23
Depreciation and amortisation	–25	–23	–21	–15	–19
Operating result	105	131	99	57	4
Finance income and expense	–11	–10	–9	–2	–5
Result after finance items	94	121	90	55	–1
Taxes & minority interest	–26	–30	–25	–16	6
Net result for the year	68	91	65	39	5

Balance Sheet

Amounts in MSEK	2009-03-31	2008-03-31	2007-03-31	2006-03-31	2005-03-31
Assets
Intangible non-current assets	306	238	225	63	38
Tangible non-current assets	56	51	83	95	92
Financial non-current assets	23	30	39	38	42
Other current assets	604	657	678	501	479
Liquid funds and short-term investments	60	79	94	55	78
Total assets	1,049	1,055	1,119	752	729
Shareholders' equity and liabilities
Shareholders' equity and minority interest	518	459	432	393	374
Interest-bearing provisions and liabilities	138	172	255	46	73
Non-interest-bearing provisions and liabilities	393	424	432	313	282
Total shareholders' equity and liabilities	1,049	1,055	1,119	752	729
Capital employed	656	631	687	439	447
Pledged assets and contingent liabilities	63	61	61	48	58

Cash Flow Statement

Amounts in MSEK	2008/09	2007/08	2006/07	2005/06	2004/05
Result after finance items	94	121	90	55	1
Adjustment for paid taxes and items not included in cash flow	1	–19	3	–3	6
Cash flow before changes in working capital	95	102	93	52	7
Cash flow from changes in working capital	42	18	–17	34	29
Cash flow from operating activities	137	120	76	86	36
Cash flow from investment activities	–77	17	–170	–45	–6
Cash flow from operating activities and investment activities	60	137	–94	41	30
Cash flow from financing activities	–77	–151	134	–65	–89
Cash flow for the year	–17	–14	40	–24	–59

Key Financial Indicators

2008/09	2007/08	2006/07	2005/06	2004/05
–1.6	10.0	22.8	5.9	–3.2
4.9	6.0	5.0	3.5	0.3
4.4	5.6	4.6	3.4	0.1
17.0	20.6	18.0	13.4	1.3
13.9	20.5	15.8	10.2	1.3
49.4	43.5	38.6	52.3	51.3
0.3	0.4	0.6	0.1	0.2
0.2	0.2	0.4	0.0	0.0
7	9	9	14	1
78	93	161	–9	–5
742	763	751	541	512
782	769	741	551	562
442	409	381	288	298
1,486	1,496	1,352	1,053	941

Per-share Data

	2008/09	2007/08	2006/07	2005/06	2004/05
Number of shares outstanding at year-end after repurchases ('000)	21,978	22,478	23,678	23,678	24,078
Weighted number of shares outstanding after repurchases ('000)	22,287	23,212	23,678	23,923	24,078
Operating result per share, SEK	4.71	5.64	4.18	2.38	0.17
Earnings per share, SEK	3.05	3.92	2.75	1.63	0.21
Cash flow per share, SEK	–0.76	–0.60	1.69	–1.00	–2.45
Cash flow from operating activities per share, SEK	6.15	5.17	3,21	3,59	1,50
Dividend per share, SEK (year's dividend as proposed)	1.50	1.50	1.25	1.00	0.75
Shareholders' equity per share, SEK	23.60	20.40	18.20	16.60	15.70
Last market price per share, SEK	23.50	28.80	33.50	30.10	19.50

Definitions

Average number of employees

Average number of employees during the year.

Cash flow per share

Cash flow in relation to weighted number of shares outstanding after repurchases.

Cash flow from operating activities per share

Cash flow from operating activities in relation to weighted number of shares outstanding after repurchases.

Capital employed

Balance sheet total reduced by interest-bearing provisions and liabilities.

Change in net revenue

Change in net revenue in percent of preceding year's net revenue.

Debt equity ratio

Interest-bearing liabilities in relation to shareholders' equity, plus minority interest.

Earnings per share

Net result attributable to the Parent Company's shareholders in relation to weighted number of shares outstanding after repurchases.

Equity ratio

Shareholders' equity, plus minority interest, in percent of balance sheet total.

Net debt equity ratio

Interest-bearing provisions and liabilities, less liquid funds and short-term investments in relation to shareholders' equity, plus minority interest.

Net interest-bearing liabilities/receivables

Interest-bearing provisions and liabilities, less liquid funds and short-term investments.

Operating margin

Operating result in percent of net revenue.

Profit margin

Result after finance items, less share in affiliated company in percent of net revenue.

Return on capital employed

Result after finance items, plus finance costs in percent of average capital employed.

Return on equity

Net result for the year in percent of average shareholder's equity.

Shareholders' equity per share

Shareholders' equity in relation to number of shares outstanding at year-end after repurchases.

Times interest earned

Result after finance items, plus financial expense divided by financial expense.

Board of Directors' Report 2008/09

The Board of Directors and the President of Lagercrantz Group AB (publ), organisation number 556282-4556, hereby submit their Annual Accounts and consolidated financial statements for the 2008/09 operating year.

BUSINESS

Lagercrantz Group AB (publ) and its subsidiaries are a technology trading group in electronics, electrics, communication and adjacent areas. The Group's products and services are distinguished by high technology content.

The Group is active in specific product segments and with a distinct niche focus. The Group is characterised by decentralised business responsibility where each subsidiary has significant responsibility for its chosen strategy. The Lagercrantz Group consists of the Parent Company, Lagercrantz Group AB, and some 25 subsidiaries, which are organised in three divisions: Electronics, Mechatronics and Communications.

NET REVENUE AND RESULT

Lagercrantz Group's net revenue for 2008/09 (1 April 2008– 31 March 2009) amounted to MSEK 2,138 (2,172). Acquired units contributed with MSEK 53 in revenue during the year. Forceful action was taken during the third and fourth quarter to adapt the Group's operations to a clear economic downturn. Action was concentrated on measures to cut costs and streamline the use of capital. During the fourth quarter some 60 permanent employees and more than 15 temporary employees have left the Group. Further personnel reductions were initiated during the fourth quarter, which means that a total of about 110 persons have left the Group since September 2008. Further more a general restraint on costs is prevailing. Certain structural action has also been taken, which means that the subsidiaries in the U.K. and Switzerland in division Electronics have been integrated with other profit centres. Streamlining the use of capital has mainly taken the form of reducing inventories trade receivables. Thanks to focused efforts in this regard, trade receivables declined sharply during the second six month period and cash flow improved.

As a consequence of the above mentioned action, the fourth quarter was impacted by items affecting comparability in an amount of approximately MSEK –17. Total items affecting comparability for the year amounted to MSEK –21 compared with a positive effect of MSEK 4 in the preceding year. The operating result for 2008/09 amounted to MSEK 105 (131), and not including items affecting comparability to

MSEK 126 (127). The operating margin, not including items affecting comparability, increased to 5.9 percent (5.8).

The result after net finance items was MSEK 94 (121) for the full year. The corresponding figures not including items affecting comparability were MSEK 115 (117).

Changes in foreign exchange rates affected the Group's result after net finance items by a total of MSEK +4 (–2) during the full year. The period's result for 2008/09 amounted to MSEK 68 (91), equivalent to earnings per share of SEK 3.05 (3.92).

PROFITABILITY AND FINANCIAL POSITION

The return on capital employed for 2008/09 was 17 percent as compared with 21 percent for the preceding year. The corresponding return not including items affecting comparability was 20 percent for both years. The return on equity was 14 percent (21) and not including items affecting comparability 17 percent (20). The return on equity was affected by, inter alia, the weaker Swedish krona when translating foreign subsidiaries in an amount of approximately MSEK 39 (3). Equity per share amounted to SEK 23.60, as against SEK 20.40 at the beginning of the year. The equity ratio at the end of the period was 49 percent compared to 44 percent at the beginning of the year. The Group showed a financial net liability at the end of the period of MSEK 78, as compared with MSEK 93 at the beginning of the year. At the end of the year there was a positive balance of MSEK 7 on the Parent Company's committed credit facility as against utilisation of MSEK 19 at the beginning of the period. The net debt equity ratio for the Group is unchanged at 0.2 times.

CASH FLOW AND CAPITAL EXPENDITURES

Cash flow from operating activities amounted to MSEK 137 (120) during 2008/09 and to MSEK 56 (82) during the fourth quarter. Cash flow per share from operating activities amounted to SEK 6.15 (5.17) during 2008/09. Efforts to reduce working capital have meant that the Group's inventories and trade receivables were reduced sharply towards the end of the year. Investments in non-current assets amounted to MSEK 23 (gross) (25) and in corporate acquisitions MSEK 57 (27) for the full year. During the year – all during the third quarter – shares were repurchased for the equivalent of MSEK 11 (37). Dividends were paid in the amount of MSEK 34 (30). Last

year's cash flow was affected by sales of real property for MSEK 70.

NET REVENUE AND RESULT BY DIVISION

Electronics

Net revenue for 2008/09 amounted to MSEK 272 (778). Flagging demand was seen during the year. First hit were the businesses in Germany and the UK. The effects of weaker demand spread gradually during the year to most companies in the division. Cost-cutting measures were therefore taken in the division's companies during the year. In addition, the UK and Swiss operations were shrunk and consolidated with other units in the division so as to create increased cost efficiency. In total, this has meant that the division was affected by items affecting comparability in the amount of MSEK -4 (0), a major portion thereof during the fourth quarter.

In part, a higher gross margin as a result of changed product mix helped offset the decline in revenue. The operating result declined to MSEK 24 (38); MSEK 28 (38) not including items affecting comparability.

Mechatronics

Net revenue amounted to MSEK 628 (604). Even though the year's revenue exceeded last year's figure, a sharp decline was recorded towards the end of the year. Since a major part of the division's operations are aimed at customers in manufacturing, prompt action has been taken to adapt capacity to the lower level of demand. This work includes a lower rate of capital expenditures and personnel reductions. Action has also been taken to reduce working capital. The cost of these measures was charged to earnings in an amount of approximately MSEK 4 (0) during the year. Not including these costs, the result was MSEK 53 (50), equivalent to a margin of 8.4 percent (8.3). The reported result amounted to MSEK 53 (50).

Communications

Net revenue amounted to MSEK 783 (790). Among the division's various businesses, revenue increased in the area of digital image transmission/technical security, especially because the acquisition of COBS is included from September 2008. In the access and software area revenue declined during the year. Action was taken in most companies in the division to meet the lower demand. In total, this meant that the division was impacted by items affecting comparability in an amount of MSEK –5 (0) during the fourth quarter. Operating profit for the year was MSEK 57 (51), equivalent to an operating margin of 7.3 percent (6.6) not including items affecting comparability. The reported result amounted to MSEK 57 (51).

PARENT COMPANY AND OTHER CONSOLIDATION ITEMS

The Parent Company's net revenue for the full year amounted to MSEK 26 (26) and the result after net finance items was MSEK 77 (32). This result includes exchange rate adjustments on intra-Group lending in the amount of MSEK 3 (-1). Dividends from subsidiaries amounted to a net of MSEK 140 (81). Investments in non-current assets amounted to MSEK 0 (0). The Parent Company has an approved committed credit facility of MSEK 250. At year-end the balance was a positive MSEK 7, compared to utilisation of MSEK 19 at the beginning of the financial year. The Parent Company has a long-term acquisition credit in the amount of MSEK 69. In addition, the Company held liquid funds of MSEK 0 compared to MSEK 0 at the beginning of the financial year. The Parent Company's equity ratio was 65 percent at the end of the period compared to MSEK 56 percent at the beginning of the period.

Among Parent Company/Other consolidation items are items affecting comparability, which during 2008/09 had a total negative impact on profit of MSEK 9, as against a positive effect of MSEK 4 in the preceding year. Costs during the fourth quarter amounted to MSEK 5, primarily referring to personnel reductions and other restructuring. Last year the corresponding quarter was affected positively by items affecting comparability in a net amount of MSEK 4, pertaining mostly to real property sales.

EMPLOYEES

At the end of the period the number of employees in the Group was 742, as compared with 763 at the beginning of the period. The number of employees increased during the year to a maximum of 810 persons during September 2008 due to acquired businesses. The decrease during the later part of the year is explained by the cost reduction action taken in the Group.

SHARES, REPURCHASES AND MAJOR SHAREHOLDERS

The share capital amounted to MSEK 48.9 at the end of the period. The distribution on classes of shares is 1,094,654 class A shares and 22,078,655 class B shares, a total of 23,173,309 shares. Class A shares entitle their holders to 10 votes; class B shares entitle their holders to one vote per share. The Company's share capital shall be not less than SEK 25 million (25,000,000) and not more than SEK 100 million (100,000,000). The number of shares shall be not less than 12,500,000 and not more than 50,000,000.

The class A share is not listed. Both classes of shares entitle their holder to the same rights with respect to the Company's assets and earnings. Each share has a quotient value of SEK 2.11. The Articles of Association allow for conversion of class A shares to class B shares. During the financial year

1,344 class A shares were converted to class B shares on request from a single shareholder.

The 2008 Annual Meeting resolved to authorise the Board of Directors to repurchase shares up to 10 percent of the total number of shares outstanding until the next Annual Meeting. Repurchases shall be made via the stock exchange. The mandate included the option of using shares held in treasury as payment for acquisitions and to cover the Company's obligations under incentive programmes.

During the year 500,000 shares were acquired for a total of approximately MSEK 11. At the Year-end Lagercrantz hold 1,195,500 class B shares in treasury, equivalent to 5.2 percent of the total number of shares outstanding and 3.6 percent of the votes in Lagercrantz. Repurchased shares cover, among other things, the Company's obligation under outstanding incentive programmes with a total of 695,500 options granted (awards 2006, 2007 and 2008) where the redemption price is SEK 36.00, SEK 44.40 and SEK 36.80 per call option, respectively (see Note 6 for further information). The average cost of repurchased shares amounts to SEK 25.57 per share.

On 31 March 2009 the number of shareholders was 3,497. Three shareholders have more than 10 percent of the votes: Anders Börjesson with family, 13.4 percent Tom Hedelius with family, 11.4 percent and Pär Stenberg, 10.1 percent. Skandia Liv, with 10.2 percent of the capital is the largest single shareholder in terms of holding.

ARTICLES OF ASSOCIATION AND CERTAIN AGREEMENTS

The Articles of Association stipulate that members of the Board of Directors shall be elected by the annual meeting of shareholders. The Board of Directors shall be comprised of a minimum of three and a maximum of nine directors.

There are no significant agreements to which the Company is a party that are activated or changed as a result of a change of control due to a public take-over offer. There are no agreements between the Company and its directors or employees that prescribe remunerations if such person as a result of a public take-over offer resigns.

CORPORATE ACQUISITIONS

Acquisitions this year were COBS AB with day of taking possession during the second quarter of the year and CAD Kompagniet A/S in Denmark during the first quarter. Both companies are part of division Communications. The acquired businesses have affected consolidated net revenue in an amount of approximately MSEK 53 and the consolidated result before taxes by MSEK 1 during 2008/09. Had all acquisitions taken place at the beginning of the financial year the effect on consolidated revenue and result before taxes would have been approximately MSEK 72 and MSEK 3, respectively.

TRANSACTIONS WITH CLOSELY RELATED PARTIES

Transactions between Lagercrantz and closely related parties with a significant impact on the Company's financial position and results have not occurred.

WORK OF THE BOARD OF DIRECTORS

The Board of Directors held six meetings during the 2007/08 operating year during which minutes were taken, one of which was a statutory Board of Directors meeting in conjunction with Annual General Meeting.

The Board of Directors has rules of procedure that are confirmed on an annual basis at the statutory Board of Directors meeting. The rules of procedure lay down the division of labour between the Board of Directors and the President, the Chairman's and the President's responsibility and the forms for the financial reporting.

The President is a member of the Board of Directors and presents reports at Board of Directors meetings. The Board has appointed the Group's Executive Vice President to serve as secretary. The Board of Directors has a quorum when at least four directors are present and, where possible, decisions are made after discussion that leads to consensus. The Board of Directors was complete at all meetings during the year. During regularly scheduled Board of Directors Meetings the Company's economic and financial position are dealt with; one item on the agenda deals with acquisitions. The Board of Directors is kept informed by way of information in writing about the Company's business and other relevant information.

During 2008/09 the Board of Directors devoted special attention to issues surrounding acquisitions, structure and market situation. The work of the Board of Directors was subsequently marked by structural issues and action programmes to meet the economic downturn. The Board of Directors also held one meeting solely aimed at discussing the Group's position and strategy.

The work of the Board of Directors is evaluated annually following an established procedure. The most recent evaluation was dealt with during a meeting in the month of February Among items discussed are:

• Agenda and material for the Board of Directors
• Number of meetings
• Strategic plan and orientation
• Audit review
• Overall responsibility
• Competence
• Work of the Chairman
• Meeting technique and group dynamics

SOCIAL RESPONSIBILITY

Lagercrantz builds its long-term development on responsible enterprise with respect to moral values and businessmanship. The Group's business is based on long-term and strong relationships with customers and suppliers, as well as good ethics and great respect for all individuals in the company as well as with external contacts.

Much like in other parts of the Group's business, the concrete work with social responsibility is highly decentralised within the framework of the guidelines Lagercrantz has adopted and which is based on the ethics policy adopted by IT & telecom companies in Almega 15 October 2008. This policy can be seen at Lagercrantz Group's website and includes important basic principles with respect to: Discrimination, Work Environment, Environment, Intangible Rights, Child Labor, Bribery and Corruption.

ENVIRONMANTAL IMPACT

Responsibility for improving the environment and participating in a sustainable development is an important prerequisite for the Group's business. The principal activity consists of trading and distribution and only a small number of companies in the Group have their own manufacturing operations. The Group's impact on the environment is therefore limited and is mainly associated with transportation of finished goods, business travel and waste management. The Group's companies are continually working on reducing the environmental impact of their operations. Environmental work is conducted locally, based on the specific conditions for each individual company. The Group's companies strive for high efficiency in their use of energy and natural resources, promote systems for renewed use and recycling of material and energy and also prevent and limit environmental pollution. The ambition is to be sensitive to customers' and suppliers' wishes, thereby meeting the market's demands for proactive environmental work. Several of the companies in the Group work with quantitative goals in their environmental efforts. In one subsidiary the Group conducts business that requires a permit under the Swedish Environmental Act. The permit refers to "facilities for engineering industry with surface treatment." There are no known threats from an environmental viewpoint that could jeopardise the Group's operations.

RESEARCH AND DEVELOPMENT

In the interest of strengthening and developing Lagercrantz Group's position as one of the leading suppliers of solutions in electronics, electrics and communication, the Group assigns resources primarily to development of different concepts for customers and co-operation partners, and certain establishment of proprietary trademarks. Activities during 2008/09 included product development. Expenditure for research and development constitutes less than one percent of revenue. Outlays for

development of certain software and development of a new product generation in embedded computing was capitalised during the year.

RISKS AND FACTORS OF UNCERATINTY

Lagercrantz Group's result, financial position and the future development are affected by internal factors over which the Company exerts control, as well as by external factors where opportunities to affect the course of events are limited. The most important risk factors are the state of the economy, structural changes on the Group's markets, supplier and customer dependence, the competitive situation and financial risks. During 2008 and beginning of 2009 unrest in the world financial markets and a global weakening of the economy have contributed to creating increased uncertainty and have affected demand for several of the Group's companies. The Group is therefore taking a number of measures with respect to costs, capital tied up in receivables and inventory and capital spending. All companies are also very watchful of the continued development. Because of the nature of Lagercrantz Group's operations, with some 25 operating subsidiaries active in several geographic markets and in different market segments, the business risks are significantly curtailed.

The economic situation

Lagercrantz is affected by the overall economic development, typically measured in terms of GDP growth. Since Lagercrantz almost exclusively sells its products and services to companies and government agencies, it is primarily these entities' purchasing plans that affect Lagercrantz. Lagercrantz tries to meet the risks that result from cyclical changes in the economy by sector diversification and niche focus. Sector diversification means that, seen across the entire Group, its customers will find themselves in different phases on an economic cycle. As a consequence of the Group's niche focus, the Group is less dependent on one or a few end markets for its growth and profitability. This means that cyclical changes in one sector, transportation for instance, or one country, may have major impact on an individual company niched towards parts of this sector or geography, but will have less effect on the Group's overall development. Lagercrantz Group endeavours to have a growing part of its sales in the form of aftermarket sales and service revenue, which is deemed to be less sensitive to economic cycles than investment-type goods.

Structural changes

Lagercrantz works actively on increasing the value element in its offer, irrespective of customer group. This has clearly been a contributing reason for the Group's improved profitability, and the fact that the Group continues to be a prioritised supplier to many customers. An important part of this work has been to be more selective in choosing customers and market segments

where the Group has an opportunity of creating a strong market position, which makes it more difficult to replace us with another supplier.

Another structural change that affects our business is the ever more rapid technological development and overall shorter product life cycles. This places ever more rigorous demands on the companies to stay close to the customers in order to catch new trends and to know when it is commercially warranted to adopt a new technology area, or to phase out an existing one.

Supplier and customer dependence

Dependency on individual suppliers is one of the most important operational risks for an individual subsidiary to handle. Many of the companies in the Group have developed their business based on one or a few strong supplier relationships. If one of these were to disappear, it would hurt the company, especially in the short term before alternatives have been located. In order to minimise this risk the subsidiaries work closely with their suppliers so as to create strong relationships at multiple levels. The Group also increasingly works on analysing supplier and customer relationships based on contract structure, product liability issues and insurable risks to minimise the consequences of the loss of a supplier or customer.

Overall in the Group, there is a large number of suppliers and distribution agreements and of these some 20 are of such major economic importance that special action would be required if one or more of these were lost. No individual supplier represents more than 10 percent of the Group's aggregate sales. A number of supplier agreements expire and are added each year in the normal course of business, however.

Lagercrantz has a broad customer structure, split over a number of industry segments and geographic markets. No customer represents more than about 5 percent of the Group's aggregate sales.

Competitive situation

In general, it can be said that the market segments where Lagercrantz is active are marked by change and increased consolidation, even if there are major variations. In the electronic industry in particular, the consolidation that swept the market in the beginning of the 2000s, created pricing pressures in the area of standard components to major customers. There are nevertheless still many niches that offer good profitability, especially because the customer structure there is different, with more small and local customers. This is the type of niche where Lagercrantz wants to be. In other areas where Lagercrantz is active, moves among customers led to a situation where the remaining players compete for the same customers and organic growth is low. This is the case in the wiring harness business. Here Lagercrantz attempts to assume a unique position through flexible production, high quality and

strong customer relationships. In several other markets where Lagercrantz Group's businesses are active, market growth is so good and the degree of consolidation so low that the competitive situation allows for growth as well as improved profitability.

Seasonal variations

Lagercrantz Group's business is only to a limited degree marked by seasonal variations. Operations normally follow the seasonal pattern for the manufacturing industry, which means lower sales during holiday periods. Based on a historical pattern, just short of half of the result is generated during the first two quarters, and just over half during the last two quarters of the financial year, October to March in other words. Deviations from this pattern may appear when rapid economic changes occur during a financial year, like those experienced during 2008/09.

Financial risks and sensitivity analysis

For an account of the Group's and the Parent Company's financial risks and a sensitivity analysis, reference is made to Note 41.

ACCOUNTING POLICIES AND COMMENTS

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretations statements by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the EU Commission for application within EU. Recommendation RR 30:05 Supplementary rules for consolidated accounting of the Swedish Financial Accounting Standards Council has also been applied.

The Parent Company applies the same accounting policies as the Group, except in the cases stated in the section "Parent Company accounting policies" in Note 1. Any discrepancies that do exist between the Parent Company's and the Group's policies are prompted by limitations in applying IFRS to the Parent Company as a result of the Swedish Annual Accounts Act (ÅRL) and the Swedish act on securing pension obligations, and in certain cases for tax reasons.

PRINCIPLES FOR COMPENSATING SENIOR MANAGEMENT

Guidelines resolved by the 2008 Annual Meeting for compensating members of senior management are set forth in Note 6 of this Annual Report.

The proposal of the Board of Directors to the 2009 Annual Meeting for guidelines mean that compensation to the President and other members of senior management may consist of basic salary, variable compensation, pension, other benefits and financial instruments. The aggregate compensation should be adjusted to market conditions and be

competitive and should be commensurate with responsibility and authority. The annual variable portion of the compensation should be maximised and never exceed the fixed salary. The variable portion should also be based on actual performance relative to set goals, and on individual performance. The retirement age shall be 60–65 years and in addition to the ITP plan, there should in the normal instance only be defined contribution pension plans. In case of termination, there may be severance pay equivalent to a maximum of one year's salary. There shall be no other share-price-based incentive programmes than the present incentive programme.

In individual cases and if special reasons exist, the Board of Directors may diverge from the above guidelines.

EVENTS AFTER THE BALANCE SHEET DATE

No for the Company significant events have occurred after the balance sheet date, 31 March 2009.

FUTURE DEVELOPMENT

The Group's two most important future tasks are to continue raising profitability and to continue focusing on growth, particularly through acquisitions. The short-term focus is to adapt costs in the Group to the level of demand prevailing in the beginning of 2009, and to continue streamlining efforts in the use of working capital.

DIVIDEND

The Board of Directors proposes a dividend of SEK 1.50 (1.50) per share. The dividend is equivalent to a total of MSEK 33 (34) and constitutes 49 percent of the year's earnings. The size of the dividend is based on consideration to the Group's capital structure and future possibilities for expansion. The Board of Directors is of the opinion that the proposed dividend leaves room for the Group to fulfil its obligations and to make the necessary capital expenditures.

PROPOSED ALLOCATION OF EARNINGS

The Board of Directors proposes that that the funds available for distribution, SEK 372,461 thousand, are allocated as follows:

339,494
32,967

BOARD ASSURANCE

The consolidated and the Parent Company income statements and balance sheets will be subject to approval at the Annual Meeting to be held 31 August 2009. We regard the consolidated financial statements as prepared in accordance with the international financial reporting standards referred to in regulation (EG) No. 1606/2002 of 19 July 2002 of the European Parliament and the Council on the application of international financial reporting standards and give a true and fair view of the financial position and performance of the Group. The annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view of the financial position and results of the Parent Company. The Board of Directors Report for the Group and the Parent Company gives a true and fair overview of the business activities, financial position and results of the Group and the Parent Company and describes the significant risks and uncertainty factors facing the Group and the Parent Company.

Stockholm, 24 June 2009

Anders Börjesson Chairman

Pirkko Alitalo Director

Tom Hedelius Vice Chairman Lennart Sjölund Director

Jörgen Wigh President & CEO

Income Statement for the Group

Amounts in MSEK	Note	2008/09	2007/08
Net revenue	3, 4	2,138	2,172
Cost of goods sold		-1,576	-1,622
Gross profit		562	550
Other operating expenses	7	16	24
Selling costs		-302	-301
Administrative expenses		-157	-128
Research and development expenses		-10	-8
Other operating expense	8	-4	-6
Operating profit	3, 5, 6, 9, 10, 13	105	131
Result from finance items
Finance income	11	7	7
Finance expense	12	-18	-17
Profit before taxes	13	94	121
Taxes	14	-26	-30
Net income for the year		68	91
Income attributable to
The Parent Company's equity holders		68	91
Minority interest		0	0
Net income for the year		68	91
Earnings per share, SEK	40	3.05	3.92
Number of shares outstanding after the year's repurchases ('000)		21,978	22,478
Weighted number of shares outstanding after the year's repurchases ('000)		22,287	23,212
Proposed dividend per share, SEK		1.50	1.50

Balance Sheet for the Group

Amounts in MSEK	Note	2009-03-31	2008-03-31
ASSETS	3
Non-current assets
Intangible non-current assets
Goodwill	15	192	140
Trademark	16	40	36
Other intangible assets	17	74	62
		306	238
Tangible non-current assets
Buildings, land & land improvements	18	2	2
Leasehold improvements	19	5	2
Plant and machinery	20	30	31
Equipment, tools, fixtures and fittings	21	19	16
		56	51
Financial non-current assets
Deferred tax asset	31	21	26
Other long-term receivables	24, 33	2	4
		23	30
Total non-current assets		385	319
Current assets
Inventories, etc	25
Raw materials and consumables		66	63
Work in progress		8	12
Finished products and goods for resale		166	163
		240	238
Short-term receivables	33
Trade receivables	26	301	339
Earned but not invoiced revenue	27	15	13
Tax assets		14	11
Other receivables		10	10
Prepaid expenses and accrued income		24	46
		364	419
Short-term investments		0	0
Cash and cash equivalents	33	60	79
Total current assets		664	736
TOTAL ASSETS		1,049	1,055

Amounts in MSEK	Note	2009-03-31	2008-03-31
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	29
Share capital		49	49
Other capital contributed Reserves		345 41	345 5
Retained earnings		15	-31
Net income for the year attributable to the Parent Company's equity holders		68	91
Total shareholders' equity attributable to the Parent Company's		518	459
shareholders
Minority interest		0	0
Total shareholders' equity		518	459
Long-term liabilities	3,33,34
Long-term interest-bearing liabilities
Provisions for pensions	30	52	59
Liabilities to credit institutions Other long-term interest-bearing liabilities	34	70 0	83 0
		122	142
Long-term non-interest-bearing liabilities
Long-term non-interest-bearing liabilities		0	0
Deferred tax liability Other provisions	31 32	35 5	29 3
		40	32
Total long-term liabilities		162	174
Current liabilities	3,33,34
Short-term interest-bearing liabilities
Committed credit facility	34	2	17
Liabilities to credit institutions	34	13	13
		15	30
Short-term non-interest-bearing liabilities
Advance payments from customers		4	1
Trade payables		168	219
Tax liabilities		9	12
Other liabilities		89	83
Accrued expenses and prepaid income Provisions	32	74 10	74 3
		354	392
Total current liabilities		369	422
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		1,049	1,055
Pledged assets and contingent liabilities
Amounts in MSEK	Note	2009-03-31	2008-03-31
Pledged assets	34
For own liabilities and provisions Corporate mortgages		58	57
		58	57
Contingent liabilities	39
Guaranty undertakings, FPG/ PRI		1	1
Other guarantees		4 5	3 4

Changes in Equity for the Group

			Reserves
Amount in MSEK 2009-03-31	Share capital	Other contributed capital	Hedging reserve	Translation reserve	Retained earnings	Minority interest	Total equity
Opening balance	49	345	0	5	60	0	459
Cancellation of own B-shares	-2				2		0
Bonus issues	2				-2		0
Dividend					-34		-34
Purchase of own shares					-11		-11
Net profit for the year					68	0	68
Income from option programme		0					0
Change in hedging reserve			-3				-3
Exchange rate differences				39			39
Closing balance	49	345	-3	44	83	0	518

			Reserves
Amount in MSEK 2008-03-31	Share capital	Other contributed capital	Hedging reserve	Translation reserve	Retained earnings	Minority interest				Total equity
Opening balance	49	344	0	3	36	0	432
Dividend					-30		-30
Purchase of own shares					-37		-37
Net profit for the year					91	0	91
Income from option programme		1					1
Change in hedging reserve			0				0
Exchange rate differences				2			2
Closing balance	49	345	0	5	60	0	459

Note 29 contain additional information about shareholder's equity.

Cash flow analysis for the Group

Amounts in MSEK Note	2008/09	2007/08
Operating activities
Profit after finance items 36	94	121
Adjustments for items not included in cash flow etc 37	27	15
	121	136
Current taxes	-26	-34
Cash flow from operating activities before changes in working capital	95	102
Cash flow from changes in working capital
Increase (–)/Decrease (+) in inventories	17	1
Increase (–)/Decrease (+) in operating receivables	95	16
Increase (+)/Decrease (–) in operating liabilities	-70	1
Cash flow from operating activities	137	120
Investing activities
Investment in businesses 38	-57	-27
Acquisition of intangible non-current assets	-6	-7
Acquisition of tangible non-current asset	-17	-18
Disposal of tangible non-current asset	1	70
Disposal of/decrease in financial assets	2	-1
Cash flow from investment activities	-77	17
Financing activities
Repurchase of own shares	-11	-37
Dividend paid	-34	-30
Change in loan liabilities	-32	-84
Cash flow from financing activities	-77	-151
Cash flow for the year	-17	-14
Liquid funds at beginning of year	79	94
Exchange rate difference in liquid funds	-2	-1
Liquid funds at year-end	60	79
Change in net financial liability/claim	2008/09	2007/08
Net financial liability (+)/claim (–) at beginning of year Change in interest-bearing liabilities	93 -28	161 -85
Interest-bearing liabilities in acquired businesses Change in interest-bearing provisions for pensions	1 -7	0 2
Liquid funds in acquired businesses	-1	6
Change in liquid funds	20	9
Net financial liability (+)/claim (–) at end of year	78	93

Income Statement for the Parent Company

Amounts in MSEK	Note	2008/09	2007/08
Net revenue	3, 4	26	26
Administrative expenses		-32	-36
Gross profit	3, 6, 9, 10, 13	-6	-10
Operating profit
Finance income	11	146	86
Finance expense	12	-63	-44
Profit before appropriations and taxes	13	77	32
Appropriations
Change in untaxed reserves		0	0
Profit before taxes		77	32
Taxes	14	3	4
Net income for the year		80	36

Balance sheet for the Parent Company

Amounts in MSEK	Note	2009-03-31	2008-03-31
Non-current assets
Non-current assets
Tangible non-current assets
Equipment, tools, fixtures and fittings	21	0	0
		0	0
Financial non-current assets
Shares in Group companies	22	553	578
Due from Group companies	23	58	58
Deferred tax asset	31	0	6
		611	642
Total non-current assets		611	642
Current assets
Short-term receivables	33
Trade receivables		49	31
Tax assets		1	0
Other receivables		1	1
Prepaid expenses and accrued income	28	1	1
		52	33
Cash and cash equivalents	33	7	0
Total current assets		59	33
TOTAL ASSETS		670	675

Amounts in MSEK	Note	2009-03-31	2008-03-31
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	29
Share capital		49	49
Legal reserve		13	13
		62	62
Retained earnings		293	280
Net income for the year		80	36
		373	316
Total shareholders' equity		435	378
Untaxed reserves		0	0
Long-term liabilities	33, 34
Long-term interest-bearing liabilities
Liabilities to Group companies		54	67
Liabilities to credit institutions	34	69	78
Total long-term liabilities		123	145
Current liabilities	33, 34
Short-term interest-bearing liabilities
Committed credit facility	34	–	19
Liabilities to credit institutions	34	10	10
		10	29
Short-term non-interest-bearing liabilities
Trade payables		1	1
Due to Group companies		84	100
Tax liabilities		0	–
Other liabilities		13	12
Accrued expenses and prepaid income	35	4	7
Provisions	32	0	3
		102	123
Total current liabilities		112	152
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		670	675
Pledged assets and contingent liabilities
Amounts in MSEK	Note	2009-03-31	2008-03-31
Pledged assets		-	-
Contingent liabilities	39
Guaranty undertakings, FPG/ PRI		43	43
Other guarantees		7	4
		50	47

Changes in Equity for the Parent Company

Amounts in MSEK
2009-03-31	Share capital	Legal reserve	Retained earnings	Total equity
Opening balance	49	13	316	378
Cancellation of own B-shares	-2		2	0
Bonus issue	2		-2	0
Dividend			-34	-34
Purchase of own shares			-11	-11
Income from option programme			0	0
Group contributions			30	30
Tax effect of group contributions			-8	-8
Net profit for the year			80	80
Closing balance	49	13	373	435

Amounts in MSEK
2008-03-31	Share capital	Legal reserve	Retained earnings	Total equity
Opening balance	49	13	332	394
Dividend			-30	-30
Purchase of own shares			-37	-37
Income from option programme			1	1
Group contributions			19	19
Tax effect of group contributions			-5	-5
Net profit for the year			36	36
Closing balance	49	13	316	378

Note 29 contain additional information about shareholder's equity.

Cash flow analysis for the Parent Company

Amounts in MSEK	Note	2008/09	2007/08
Operating activities
Profit after finance items	36	77	32
Adjustments for items not included in cash flow etc	37	48	29
		125	61
Current taxes		0	0
Cash flow from operating activities before changes in working capital		125	61
Cash flow from changes in working capital
Increase (–)/Decrease (+) in operating receivables		-10	10
Increase (+)/Decrease (–) in operating liabilities		-19	4
Cash flow from operating activities		96	75
investing activities
Investment in businesses		-28	-32
Capital extracted from subsidiary		–	17
Acquisition of tangible non-current asset		0	0
Disposal of/decrease in financial assets		1	27
Cash flow from investment activities		-27	12
Financing activities
Repurchase of own shares		-11	-37
Dividend paid		-34	-30
Change in loan liabilities		-36	-27
Group contribution received/rendered		19	6
Cash flow from financing activities		-62	-88
Cash flow for the year		7	-1
Liquid funds at beginning of year		0	1
Liquid funds at year-end		7	0

Notes

Note 1 Accounting policies

(a) Compliance with standards and law

The consolidated financial statements have been compiled in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and interpretation statements issued by the International Financial Reporting Interpretations Committee (IFRIC) as approved by the EU Commission for application within EU. Recommendation RFR 1.1 Supplementary Accounting Rules for Groups of the Swedish Financial Reporting Board has also been applied.

The Parent Company applies the same accounting policies as the Group, except in the cases stated below under the section "Parent Company accounting policies." Discrepancies that do exist between the Parent Company's and the Group's policies are prompted by limitations in applying IFRS to the Parent Company as a result of the Swedish Annual Accounts Act (ÅRL) and the Swedish act on securing pension obligations, and in certain cases for tax reasons.

(b) Assumptions for preparing the Parent Company's and the Group's financial statements

The Parent Company's functional currency is SEK, which also constitutes the reporting currency for the Parent Company and the Group. This means that the financial statements are presented in Swedish kronor. All amounts, unless otherwise specifically stated, are rounded to the nearest million. Assets and liabilities are reported at historical acquisition values, except in the case of certain financial assets and liabilities which are valued at fair value. Financial assets and liabilities reported at fair value consist of derivative instruments, financial assets classified as financial assets valued at fair value via the income statement, or as available-forsale financial assets.

Non-current assets and available-for-sale groups of disposals are reported at the lower of previously reported value and fair value, after deduction of selling expenses.

Set-off of receivables and liabilities and of revenue and costs occurs only where required or is expressly permitted in the accounting recommendation.

The financial statements encompass the report of the Board of Directors with the proposed allocation of earnings, together with the financial statements. The consolidated financial statements and the annual accounts of the Parent Company have been approved for publication by the Board of Directors 24 June 2009. The Group's and the Parent Company's income statements and balance sheets are subject to approval by the Annual General Meeting to be held 31 August 2009.

Preparing the financial statements in accordance with IFRS requires that management makes judgments and estimates and make assumptions that affect the application of accounting policies and the reported amounts of assets, revenue and costs. Estimates and assumptions are based on historical experience and a number of other factors that under prevailing circumstances are deemed reasonable. The result of these judgments and assumptions is then used to judge the reported value of assets and liabilities that would not be clearly evident from other sources. The actual outcome may differ from these estimates and judgments.

Estimates and assumptions are reviewed on a regular basis. Changes in estimate are reported in the period when the change is made, where the change affects this period only, or in the period when the change is made and in future periods where the change affects the current period as well as future periods.

Judgments made by management with application of IFRS with significant impact on the financial reports and estimates made that may lead to significant adjustments in the financial reports of subsequent years are described in Note 2 and elsewhere.

By events after the balance sheet date are meant favourable as well as unfavourable events that occur between the balance sheet date and the date in the next following financial year when the financial reports are

signed by the members of the Board of Directors. Information is provided in the annual report about significant events after the balance sheet dates that are not accounted for when the balance sheet and the income statement are adopted. Only events that confirm circumstances prevailing before the balance sheet date are taken into account at the time of adoption of the financial statements.

The stated accounting policies for the Group have been consistently applied for all periods presented in the Group's financial reports, unless otherwise specifically stated. The Group's accounting policies have been consistently applied in reporting and consolidating the Parent Company and subsidiaries.

Amended accounting policies

No new or amended standards and interpretations have been applied in preparing these financial statements:

Early application of IFRS interpretations issued or revised during the 2008/2009 financial year

No newly issued IFRS or interpretations are subject to early application.

New or revised IFRS and interpretations not yet applied

A number of new or amended standards and interpretation statements will not come into force until during the coming financial year and have not been applied early in preparing these financial statements. There are no plans for early adoption of new features or amendments that come into force with effect in financial years commencing after 2009. To the extent expected effects on the financial statements of the application of the below mentioned new or amended standards and interpretation statement are not described below, the Company has not yet made an assessment of these effects.

Revised IFRS 3 Business Combinations and amended IAS 27 Consolidated and Separate Financial Statements lead to changes in the consolidated financial statements and the way acquisitions are accounted for. The revised standards shall be applied to financial years commencing 1 July 2009 or later.

IFRS 8 Operating segments defines what an operating segment is and the information to be supplied about segments in the financial statements. The standard, which has been adopted by EU, is to be applied to financial years commencing 1 January 2009 or later.

Change in IAS 1 Presentation of Financial Statements means that the presentation of the financial statements will be changed in some respects and that new, non-mandatory designations for the reports are proposed. The change does not affect the adoption of the amounts reported. The amended IAS 1 shall be applied for financial years commencing 1 January 2009 or later.

Amendments to IAS 23 Borrowing Costs states that borrowing costs directly attributable to acquisition of, design or production of assets that take considerable time to complete for use or sale. The amendment shall be applied to financial years commencing 1 January 2009 or later.

Changes in IAS 27 Consolidated and Separate Financial Statements, Cost of an investment in a subsidiary jointly controlled entity or associate is applied to financial years commencing 1 January 2009 or later. The changes affect, inter alia, the reporting of dividends received from subsidiaries, associated companies and joint venture companies, and how to report the formation of a new parent company.

(c) Segment reporting

A business segment is part a of the Group that is identifiable in terms accounting that either provides products or services (operating segments) or goods and services in a certain economic environment (geographic area) that is subject to risks and opportunities that differ from other segments. In accordance with IAS 14, segment information is provided for the Group only. The Group's primary segments are operating segments.

(d) Classification, etc.

Non-current assets and long-term liabilities in the Parent Company and the Group essentially consist only of amounts that are expected to be recovered or paid more than twelve months from the balance sheet date. Current assets and short-term liabilities in the Parent Company and the Group essentially consist only of amounts that are expected to be recovered or paid within twelve months of the balance sheet date.

(e) Principles of consolidation

i. Subsidiaries

Subsidiaries are all entities over which Lagercrantz Group AB has a controlling influence. Controlling influence means a direct or indirect right to govern an entity's financial and operative strategies for the purpose of obtaining economic advantages. When judging whether controlling influence exists, the existence and effect of potential voting rights that are exercisable, or can be converted without delay, should be taken into consideration.

Subsidiaries are reported in accordance with the acquisition method of accounting. This method means that the acquisition of a subsidiary is viewed as a transaction where the Group indirectly acquires the assets of the subsidiary and assumes its debt and contingent liabilities. The acquisition cost to the Group is determined by an acquisition analysis in conjunction with the acquisition. In this acquisition analysis the fair values of acquired identifiable assets, and assumed liabilities and contingent liabilities, are determined. The excess of the cost of acquisition of the shares in the subsidiary over the fair value of acquired assets, assumed liabilities and contingent liabilities is recorded as goodwill. A negative value is recorded directly in the income statement.

The financial reports of subsidiaries are consolidated from the time of acquisition until the date when the controlling influence ceases to exist.

ii. Transactions eliminated in consolidation

Intra-Group receivables and liabilities, revenue or costs and unrealised gains or losses arising in intra-Group transactions between Group companies are eliminated in their entirety when preparing the consolidated financial statements.

(f) Foreign currency

i. Transactions in foreign currency

Transactions in foreign currency are restated to the functional currency using the rate of exchange prevailing on the day of the transaction. Monetary assets and liabilities in foreign currency are converted to the functional currency at the rate of exchange prevailing on the balance sheet date. Foreign exchange rate differences that arise in conversion are accounted for in the income statement. Non-monetary assets and liabilities reported at historical acquisition values are converted at the rate of exchange prevailing at the time of the transaction. Non-monetary assets and liabilities reported at fair value are converted to the functional currency at the rate of exchange prevailing at the time of fair value valuation. The exchange rate change is then reported in the same manner as other changes in value.

ii. Financial statements of foreign entities

Assets and liabilities in foreign entities, including goodwill and other surplus values and impairment arising in consolidation, are converted to Swedish kronor at the rate of exchange prevailing on the balance sheet date. Revenue and costs in a foreign entity are converted to Swedish kronor at the average rate of exchange. Translation differences arising as a result of currency conversion in foreign entities and the resultant effects of hedging of net investments are reported directly to the translation reserve in equity. When foreign entities are sold, the accumulated translation differences attributable to the entity are realised directly in the income statement, after deduction of any hedging.

With respect to its foreign entities, Lagercrantz Group elected to set to zero the accumulated translation differences attributable to the time before 1 April 2004, i.e. the time for adopting IFRS.

(g) Revenue recognition

i. Sale of goods

Revenue from the sale of goods is reported in the income statement when significant risks and rewards associated with ownership of the goods have been transferred to the buyer, i.e. typically in connection with delivery. If the product requires installation at the buyer, and the installation constitutes a significant part of the delivery, revenue is recognised when the installation is completed. Revenue is not recognised in cases where it is probable that the economic rewards will not inure to the benefit of the Group.

Revenue from the sale of real property

Revenue from the sale of real property is normally recorded on the closing date, unless risks and rewards have been transferred to the buyer on an earlier occasion.

ii. Service assignments

Revenue from service assignments is normally reported when the service is performed. Revenue from service assignments of the service and maintenance agreements type is reported in accordance with the principles for so-called gradual revenue recognition. The degree of completion is normally determined based on the relationship between sunken expenditure on the balance sheet date and the estimated total expenditure. In certain companies recorded time is used as a basis for degree of completion. A probable loss is accounted for immediately in the consolidated income statement.

iii. Rental income

Rental income from real properties is reported on a straight-line basis in the income statement based on the terms of the lease. The aggregate cost of benefits provided is reported as a reduction of rental income on a straight-line basis over the term of the lease.

iv. Government grants

Government grants are reported in the balance sheet as prepaid income when there is reasonable assurance that the grant will be received and that the Group will be able to fulfil the conditions associated with the grant. Grants are systematically assigned to the right periods in the same way and over the same periods as the costs the grants are intended to compensate for. Government grants related to assets are reported as a reduction of the reported value of the asset.

(h) Operating expenses and finance income and expenses

i. Payments related to operating leases

Payments related to operating leases are reported on a straight-line basis in the income statement. Benefits received in connection with signing a contract are reported as a part of the total leasing cost in the income statement.

ii. Payments related to financial leases

The minimum leasing fees are allocated to interest expense and repayment of the outstanding liability. The interest expense is distributed over the leasing period in such a way that each accounting period is charged with an amount equivalent to a fixed rate of interest for the liability reported during the respective period. Variable fees are expensed in the periods when they arise.

iii. Finance income and expense

Finance income and expenses consist of interest income on bank balances, receivables and interest-bearing securities, interest expense on loans, dividend income, exchange rate differences, change in value of financial assets valued at fair value via the income statement, impairment losses on financial assets and gains and losses on hedging instruments accounted for in the income statement.

Interest income on receivables and interest expense on liabilities are calculated using the effective rate method. The effective rate is the interest rate that is the present value of all estimated future payments during the expected period of fixed interest that equals the reported value of the receivable or the liability. The interest component of financial

Interest expense includes accrued and deferred amounts of issuing costs and similar direct transaction costs in connection with raising loans.

The Group and the Parent Company do not capitalise interest in the acquisition cost of assets.

Dividend income is reported when the right to receive payment has been determined.

(i) Financial instruments

Financial instruments are valued and reported in the Group in accordance with the rules in IAS 39. Financial instruments reported among assets in the balance sheet include cash and cash equivalents, accounts receivables, advance payments to suppliers and derivatives.

Liabilities include trade payables, loan liabilities, advance payments from customers and derivatives.

Reporting in and removal from the balance sheet

A financial asset or a financial liability is recorded in the balance sheet when the company becomes party to the contractual terms of the instrument in question. Trade receivables are recorded in the balance sheet when an invoice has been sent out. A liability is recorded when the counterparty has performed and a contractual obligation exists to pay, even if an invoice has not been received. Trade payables are recorded when an invoice has been received. A financial asset is removed from the balance sheet when the rights in the contract are realised, fall due or the company loses control over it. The same holds true for a part of a financial asset. A financial liability is removed from the balance sheet when the obligation in the contract is fulfilled, or when the liability is extinguished in some other way. Acquisition and disposal of financial assets are reported on the transaction date.

Valuation

Financial instruments that are not derivatives are initially valued at acquisition cost, equivalent to the fair value of the instrument. A financial instrument's classification determines how it is valued after the first recording occasion. IAS 39 classifies financial instruments in categories based on the original purpose of the financial instrument. The categories below are relevant for the Group: Financial assets valued at fair value via the income statement, Loans and trade receivables, Financial liabilities valued at fair value via the income statement, Other financial liabilities and Derivative instruments used for hedge accounting.

Financial assets valued at fair value via the income statement

This category consists of two sub-groups: financial assets held for trading and other financial assets that the Company initially has chosen to place in this category (in accordance with the so-called Fair Value Option). Financial instruments in this category are valued on an ongoing basis at fair value with the change in value in the income statement. The first subgroup includes derivative instruments with a positive fair value with the exception of derivative instruments which are an identified and effective hedging instrument.

Loans and trade receivables

Loans receivable and trade receivables are non-derivative assets with fixed payments or with payments that can be determined, and which not are listed on an active market. Receivables arise when companies provide funds, goods or services directly to a customer without intention of trading in the receivable that arises. They are included in current assets, with the exception of items that mature later than 12 months after the balance sheet date, which are classified as non-current assets. Loan receivables and trade receivables include items Trade receivables and Other receivables in the balance sheet. Assets in this category are valued at accrued acquisition value. Trade receivables are carried at the amount expected to be collected, i.e. after a deduction for doubtful credits. Impairment losses are reported as part of operating expenses.

Financial liabilities valued at fair value via the income statement This category consists of financial liabilities held for trading and derivative instruments not used for hedge accounting. Liabilities in this category are valued on an ongoing basis at fair value with the change in value in the income statement.

The Group held no material instruments belonging to this category during the financial year.

Other financial liabilities

Financial liabilities not held for trading are valued at accrued acquisition value. The Group's loan liabilities, financial lease liabilities, trade payables and advance payments from customers belong to this category.

Derivative instruments used for hedge accounting

All derivative instruments are accounted for at fair value in the balance sheet. Changes in value are accounted for in the income statement in the case of actual hedge accounting. Hedge accounting is described in greater detail below, under Derivative instruments and hedge accounting.

Cash and cash equivalents

Cash and cash equivalents consist of cash and immediately available balances with banks and equivalent institutions, and short-term liquid investments with a term to maturity of less than three months, exposed to minimal risk for fluctuation in value.

Financial investments

Financial investments are classified either as non-current assets or shortterm investments depending on the purpose of the holding. Where the term or the expected holding period is more than one year, they are classified as non-current assets.

(j) Derivative instruments and hedge accounting

Derivative instruments are primarily acquired by the Group to reduce interest, foreign exchange rate exposure and transaction exposure. Builtin derivatives should be accounted for separately, unless they are not closely related to the host contract. Derivative instruments are originally accounted at fair value meaning that transaction costs are affecting the earnings in the period. After the initial accounting, the instrument is valued at fair value and changes accounted for in line with what is stated below.

To fulfil the demands for hedge accounting as stated in IAS 39, there must be a close connection to the hedged item. Further, the hedge must effectively protect the hedged item, documentation must be established and it must be possible to measure the effect of the hedge. Gains and losses in hedges are accounted for at the same time as gains and losses for the hedged items.

Fixed interest hedging – cash flow hedging

Interest rate swaps are used to hedge against the uncertainty of future interest rate flows relating to loans at variable rates. Interest rate swaps are valued at fair value in the balance sheet. In the income statement the interest coupon part is recorded on a current basis as interest income or interest expense. Other changes in value of the interest rate swap are directly to the hedging reserve in equity until the hedged item affects the income statement and as long as the criteria for hedge accounting and effectiveness are fulfilled.

Receivables and liabilities in foreign currency

Forward contracts can be used for hedging an asset or a liability against foreign exchange rate risk. For such hedging no hedge accounting is required since the hedged item as well as the hedging instrument is reported at fair value via the income statement with respect to foreign exchange rate differences. Changes in value of operations-related receivables and liabilities are recognised in the operating result, while changes in value of financial receivables and liabilities are reported in net finance items.

Net investments

Investments in foreign subsidiaries (net assets including goodwill) have been partially hedged by raising loans in the corresponding currency. Such loans are translated at the period-end rate of exchange at the time of closing of the books. Exchange rate differences recognised in the

Parent Company are eliminated in the consolidated financial statements against conversion of net assets in subsidiaries carried directly to equity.

(k) Tangible non-current assets

i. Owned assets

Tangible non-current assets are reported as assets in the balance sheet if it is probable that future economic advantages will inure to the Company's benefit and the acquisition value of the asset can be calculated in a reliable manner.

Tangible non-current assets are reported in the Group at acquisition value, less accumulated depreciation and any impairment losses. The acquisition value includes the purchase price and costs directly attributable to the asset to bring it to location and make it usable for the purpose intended with its procurement. Examples of costs directly attributable included in the acquisition value are costs for shipping and handling, installation, legal ratification, consulting services and legal services.

Tangible non-current assets that consist of parts with different periods of utilisation are treated as separate components of tangible non-current assets.

The reported value of a tangible non-current asset is removed from the balance sheet upon disposal or sale, or when no future economic benefits are expected to be derived from use or disposal/sale of the asset. Gains or losses that arise upon sale or disposal of an asset are defined as the difference between the selling price and the reported value of the asset, less direct selling expenses. Gains and losses are recognised as other operating income/expense.

ii. Leased assets

IAS 17 is applied to leased assets. Leases are classified either as financial or operating leases. Leases where substantially all of the economic risks and rewards associated with ownership have been transferred to the lessee are classified as financial leases. Where that is not the case, the lease is an operating lease.

Assets rented under financial leases are reported as assets in the balance sheet. The leased assets are depreciated according to plan, whereas lease payments are reported as interest and repayment of debt.

In the case of operating leases the lease payment is expensed over the term of the lease based on usage, which may vary from what has actually been paid as leasing fees during the year.

Under operating leases the leasing fee is expensed over the term of the lease based on usage, which may differ from what actually has been paid in leasing fees during the year.

iii. Additional expenditure

Additional expenditure is added to the acquisition value only to the extent it is probable that the future economic benefits associated with the asset will inure to the benefit of the company and the acquisition value can be calculated in a reliable manner. All other additional expenditure is recognised as an expense in the period when it arises.

iv. Depreciation principles

Assets are depreciated on a straight-line basis over their estimated period of use. Land is not depreciated. The Group applies component depreciation, which means that depreciation is based on the estimated period of use of individual components.

Estimated periods of use:

Buildings, property used in operations	15–50 years
Plant and machinery	3–10 years
Equipment, tools, fixtures and fittings	3–5 years

Property used in operations consists of a number of components with varying periods of use. The main classification is buildings and land. The land component is not depreciated since its period of use is considered to be unlimited. Buildings, however, consist of a number of components the period of use of which varies.

The periods of use have been deemed to vary between 15 and 50 years for these components. Impairment tests regarding assets is performed yearly.

(l) Intangible assets

i. Goodwill

Goodwill represents the difference between the acquisition value for an acquisition and the fair value of the acquired assets, assumed debt and contingent liabilities.

In adopting IFRS, the Group has applied IFRS retroactively from 1 August 2002 to goodwill in acquisitions before 1 April 2004. The classification and accounting procedures of acquisitions before 1 August 2002 have not been re-assessed in accordance with IFRS 3 when preparing the consolidated opening balance in accordance with IFRS as 1 April 2004.

Goodwill is valued at acquisition cost, less any accumulated impairment losses. Goodwill is distributed to cash-generating units and is no longer amortised, but instead tests are performed on an annual basis to determine if assets have suffered any impairment. (Refer to Accounting policies (n)).

For acquisitions where the acquisition cost is less than the net value of acquired assets and assumed debt and contingent liabilities, the difference is carried directly to the income statement.

ii. Research and development

Expenditure for research and development aimed at obtaining new scientific or technological knowledge is reported as costs as incurred.

Expenditure for development, where the research result or other knowledge is applied to achieve new or improved products or processes, is reported as an asset in the balance sheet, if the product or the process is technically or commercially usable and the company has sufficient resources to complete the development and then utilise or sell the intangible asset. The reported value includes expenditure for material, direct expenditure for salaries and indirect expenditure attributable to the asset in a reasonable and consistent manner. Other expenditure for development is reported as costs directly in the income statement as incurred. Development costs reported in the balance sheet are carried at acquisition value, less accumulated amortisation and any impairment losses.

iii. Other intangible assets

Other intangible assets acquired by the Group are reported at acquisition value, less accumulated amortisation and impairment losses. Also included here are capitalised IT expenditure for development and purchase of software. Sunk costs for internally generated goodwill and internally generated trademarks are reported in the income statement when the cost is incurred.

iv. Additional expenditure

Additional expenditure for capitalised intangible assets is recorded as an asset in the balance sheet only to the extent it increases the future economic benefits for the specific asset to which it is attributable. All other expenditure is expensed as incurred.

v. Amortisation

Amortisation is recorded in the income statement on a straight-line basis over the estimated period of use of intangible assets, unless such periods of use are indefinable. Goodwill, trademarks and intangible assets with an indefinable period of use are tested on an annual basis for any impairment suffered, or as soon as there are indications that the asset in question has suffered a loss of value. Intangible assets subject to amortisation are amortised from the date when they are available for use. The estimated periods of use are:

Estimated periods of use:

Patents, innovations and customer relationships	5–20 years
Capitalised development expenditure and software	3–7 years

(m) Inventories

Inventories are valued at the lower of acquisition value and net realisable value. Net realisable value is the estimated selling price in current operations, after deduction of estimated costs for completion and for accomplishing a sale.

The acquisition value of inventories is calculated by applying the firstin first out method (FIFO) or weighted average acquisition cost and

includes expenditure arising at the acquisition of the inventory assets and transportation thereof to their current location and state. For manufactured goods and work in progress, the acquisition value includes a reasonable portion of indirect costs based on normal capacity.

(n) Impairment losses

The reported value of the Group's assets is tested on each balance sheet date with a view to determining if any impairment has been suffered. IAS 36 is used for impairment tests of assets other than financial assets where IAS 39 is used, for available-for-sale assets where IFRS 5 is used, inventories, assets under management used for financing compensation to employees and deferred tax claims.

The value of exempted assets as above the valuation is tested in accordance with each respective standard.

Where there is an indication of a need for an impairment charge, the recoverable value of the asset is calculated. The recoverable value of goodwill, intangible assets with indefinite usage and intangible assets not yet ready for use is calculated annually.

Where it is not possible to allocate essentially independent cash flows to an individual asset, assets are grouped to the lowest level where essentially independent cash flows can be determined (a so-called cashgenerating unit) for purposes of testing whether impairment has been suffered. An impairment loss is recorded when an asset's or a cashgenerating unit's value exceeds the recovery value. An impairment loss is charged to the income statement.

Impairment losses of assets attributable to a cash-generating unit are in the first instance allocated to goodwill. Proportional impairment charges are then made against other assets in the unit.

The recoverable value is the higher of fair value, less selling costs and the value in use. When calculating the value in use future cash flows are discounted using a discount factor equivalent to risk-free interest and the risk associated with the specific asset.

i. Impairment of financial assets

The recoverable value of assets belonging to the categories held-tomaturity investments, loans and trade receivables are reported at accrued acquisition value is calculated as the present value of future cash flow discounted using the effective rate of interest prevailing when the asset was first accounted for. Assets with short remaining term are not discounted. An impairment loss is recorded as a cost in the income statement.

ii. Reversal of impairment losses

Impairment charges against held-to-maturity investments, or loans and accounts receivable reported at accrued acquisition value, are reversed if a later increase of the recovery value can objectively be attributed to an event that occurred after the impairment was charged.

Impairment charges against goodwill are not reversed. Impairment charges against other assets are reversed if there is a change in the assumptions used for calculating the recoverable value.

An impairment charge is reversed only to the extent the reported value of the asset after the reversal does not exceed the value the asset would have had if no charge impairment had been charged, taking into account the amortisation that would then have been made. Impairment losses against goodwill are not reversed.

(o) Equity

The Group's equity is divided into share capital, other capital contributed, reserves, retained earnings and minority interest.

i. Repurchase of own shares

The holding of own shares in treasury and other equity instruments are reported as a reduction of shareholders' equity. The acquisition of such instruments is reported as a deduction item against shareholders' equity. Proceeds from the sale of equity instruments are reported as an increase in shareholders' equity. Any transaction costs are carried directly to equity.

ii. Dividends

Dividends are reported as a liability after the General Meeting has approved the dividend.

iii. Earnings per share

Earnings per share is based on net income attributable to the parent company equity holders and the weighted average numbers of shares outstanding during the year. When calculating earnings per share after dilution, the average number of shares outstanding is adjusted to take into account any effects of the dilutive effect of common shares, which during the period under review is attributable to options issued to the employees. The dilutive effect of options affects the number of shares outstanding and arises only when the redemption price is lower than the market price of the share.

(p) Employee benefits

i. Defined contribution plans

Obligations relating to fees for defined contribution plans are reported as an expense in the income statement when it occurs.

ii. Defined benefit plans

The Group's net obligations relating to defined benefit plans are calculated separately for each plan through an estimate of the future compensation that the employee has earned as a result of his/her employment in both the current and prior periods.

The calculations are performed by a qualified actuary using the socalled projected unit credit method. Commitments are then valued at the present value of expected future payments with due consideration to future pay increases. The discount rate used is the interest on the balance sheet date on an investment grade corporate bond with a term equivalent to the Group's pension commitments. When there is no active market for such corporate bonds, the market rate for government bonds with an equivalent term is used. In the cases of funded plans, the fair value of managed assets reduces the calculated value.

When the calculation leads to an asset for the Group, the reported value of the asset is limited to the net of unreported actuarial losses and unreported costs for service during prior periods and the present value of repayments from the plan, or reduced future payments into the plan.

When the benefits under a plan are improved, the proportion of the increase in benefits pertaining to the employee's service during prior periods is reported as a cost in the income statement, distributed on a straight-line basis over the average period until the benefits are fully vested. Where the benefits are fully vested, the cost is reported in the income statement directly.

All actuarial gains and losses as of 1 April 2004, the date for adoption of IFRS, have been reported. The so-called corridor rule is applied for actuarial gains and losses arising when the Group's obligations for different plans are calculated after 1 April 2004. Under the corridor rule, the portion of the accumulated actuarial gains and losses that exceed 10 percent of the greater of the obligations' present value and the fair value of managed assets is reported in the result over the expected average remaining employee service period of the employees covered by the plan. No other actuarial gains and losses are taken into account.

Obligations for retirement pension to salaried employees in Sweden in accordance with the ITP plan are handled mainly within the so-called FPG/PRI system. Obligations for family pensions are secured by insurance in Alecta, however. These obligations are also of the defined benefit type, although the Company has not had access to the information necessary to report these obligations as a defined benefit plan. These pensions secured by insurance in Alecta are therefore reported as defined contribution plans. At the end of 2008, Alecta's surplus in the form of collective solvency margin was 112 percent (2007: 152 percent). The collective solvency margin is defined as the market value of Alecta's assets in percent of the insurance commitments calculated in accordance with Alecta's actuarial calculation assumptions, which do not correspond to IAS 19. Alecta's surplus can be distributed to the policy holders and/or the insured.

When there is a difference between how the pension cost is determined in a legal entity and a group, a provision or a receivable is reported relating to special payroll tax based on this difference. Such provision or receivable is not subject to present value calculation. The net of interest on pension liabilities and the expected return on the associated managed assets is reported in the net finance item. Other components are reported in operating earnings.

iii. Benefits in case of termination

A cost for compensation in connection with termination of personnel is reported only where the company is demonstrably obligated, without a realistic opportunity for retraction, by a formal detailed plan to terminate an employment before the normal point in time. When compensation is given as an offer to encourage voluntary termination, a cost is reported where it is probable that the offer will be accepted and the number employees who will accept the offer cab be reliably estimated.

iv. Option programme

The Group's call option programme enables members of senior management to acquire shares in the Company. The employees have paid a market valuated premium for this opportunity. The programme contains a subsidy which states that the employee receives the equivalent as the premium paid in the form of salary. Payment of the subsidy is proposed to be paid two years after the issue resolution provided that the option holder is still in the employment of the Group at this point of time and still owns purchase options. This subsidy, including social cost, is distributed as administrative expense over the two-year vesting period.

(q) Provisions

A provision is reported in the balance sheet where the Company has a formal or informal legal obligation as a consequence of a transpired event and where it is probable that an outflow of economic resources will be required to settle the obligation, and an accurate assessment of the amount can be made. Where the effect of the timing of the payment is significant, provisions are calculated based on discounting the expected future cash flow at an interest rate that reflects current market assessments of the time value of money and, where applicable, the risks associated with the obligation.

i. Warranties

A provision for warranties is reported when the underlying products or services are sold. The provision is based on historical data on warranties and compilation of possible outcomes in relation to the probabilities associated therewith.

ii. Restructuring

A provision for restructuring is reported when the Group has adopted a comprehensive and formal restructuring plan, and the restructuring has either begun, or been publicly announced. No provisions are set aside for future operating costs.

iii. Loss contracts

A provision for loss contracts is reported when the anticipated benefits that the Group expects to receive from a contract are lower than the inevitable costs to fulfil the obligation or contract.

(r) Taxes

Income taxes consist of current taxes and deferred taxes. Income taxes are reported in the income statement, except when the underlying transaction is reported directly against equity, in which case the associated tax effect is also reported against equity.

Current taxes are taxes to be paid or refunded relating to the current year, with application of the tax rates resolved, or in practice resolved, as of the balance sheet date. Also included are adjustments of current taxes attributable to prior periods.

Deferred taxes are calculated in accordance with the balance sheet method based on temporary differences between reported values and values for tax purposes of assets and liabilities. The following temporary differences are not taken into account: Temporary difference arising upon first recording of goodwill, first recording of assets and liabilities that are not acquisition of a business, and at the time of the transaction do not affect either the reported result or the result for tax purposes. Also not accounted for are temporary differences attributable to shares in subsidiaries and associated companies not expected to be reversed within the foreseeable future. The valuation of deferred taxes is based on how the reported values of assets or liabilities are expected to be realised or settled. Deferred taxes are calculated using the tax rates and tax rules resolved, or in practice resolved, as of the balance sheet date.

Deferred tax assets relating to deductible temporary differences are reported only to the extent that it is probable that it will be possible to

utilise them. The value of deferred tax assets is reduced when it no longer is deemed probable that it will be possible to utilise them.

(s) Contingent liabilities

A contingent liability is reported when there is a possible undertaking emanating from events that have occurred and the existence of which are confirmed only by the occurrence of one or more future uncertain events, or when there is an undertaking not reported as a liability or provision because it is unlikely that an outflow of resources will be required.

(t) Cash flow statement

Payments have been divided into categories: operating activities, investment activities and financing activities. The indirect method is used for flows from operating activities.

The year's changes of operating assets and operating liabilities have been adjusted for effects of exchange rate differences. Acquisitions and disposals are reported in investment operations. The assets and liabilities held by the entities acquired and sold at the time of change are not included in the statement of changes in working capital, nor are changes of balance sheet items reported in investment and financing activities.

Cash and cash equivalents include cash and bank flows and also short-term investments, the conversion to bank balances of which can occur at a beforehand essentially known amount. Cash and cash equivalents include short-term investments with a term of less than three months.

Statements issued by the Emergency Task Force of the Swedish Accounting Standards Council for listed companies also apply.

(u) Parent Company accounting policies

The Parent Company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act (1995:1554) and recommendation RFR 2:1 Accounting for legal entities of the Swedish Financial Reporting Board. RFR 2:1 means that the Parent Company in the annual accounts for the legal entity should apply all IFRS and statements of EU to the greatest extent possible within the framework of the Swedish Annual Accounts Act and with due regard to the relationship between accounting and taxation. The recommendation sets out which exceptions and additions that are to be made from IFRS.

In all, this results in differences between the Group's and the Parent Company's accounting in the areas indicated below.

Classification and forms of presentation

The Parent Company's income statement and balance sheet are presented in accordance with the schedules of the Swedish Annual Account Act. The difference to IAS 1 Presentation of Financial Statements applied to the presentation of the Group's financial statements is primarily the reporting of financial income and expense, non-current assets and equity.

Subsidiaries

Shares in subsidiaries are reported in the Parent Company in accordance with the purchase method of accounting. Dividends received are reported as revenue only to the extent they originate from profit earned after the acquisition. Dividends that exceed such earned profit are regarded as a repayment of the investment and reduce the reported value of the share.

Revenue

Financial instruments and hedge accounting

In view of the relationship between accounting and taxation, the rules for financial instruments and hedge accounting in IAS 39 are not applied in the Parent Company as a legal entity.

Anticipated dividends

Anticipated dividends from subsidiaries are reported in those cases when the Parent Company alone has the right to decide on the size of the dividend and the Parent Company has decided on the size of the dividend before publication of its financial reports.

Tangible non-current assets

Owned assets

Tangible non-current assets in the Parent Company are carried at acquisition value after deduction of accumulated depreciation and any impairment losses in the same way as the Group, but with any write-ups added.

Leased assets

In the Parent Company all lease contracts are reported in accordance with the rules for operating leases.

Taxes

In the Parent Company, untaxed reserves are reported including deferred tax liability. In the consolidated financial statements, on the other hand, untaxed reserves are divided into deferred tax liability and equity.

(v) Group contributions and shareholder contributions for legal entities

The Company reports group contributions and shareholder contributions in accordance with the statement of the Swedish Financial Reporting Board. Shareholder contributions are carried directly to the recipient's equity and are capitalised in the form of shares with the donor, to the extent an impairment charge is not called for. Group contributions are reported according to economic purpose. This means that group contributions rendered for the purpose of minimising the Group's total taxes are carried directly to retained earnings after deduction of their current tax effect.

Group contributions in lieu of dividends are reported as dividends. This means that a group contribution received, and its current tax effect, are reported via the income statement. Group contributions rendered and their current tax effect are carried directly to retained earnings.

Group contributions in lieu of shareholder contributions are reported by the recipient directly against retained earnings, taking the current tax effect into account. The donor reports the group contribution and its current tax effect as an investment in shares in group companies, to the extent an impairment charge is not necessary.

(w) Mergers

Mergers are reported in accordance with BFNAR 1999:1.

(x) Financial guarantees

Lagercrantz Group has chosen not to apply the recommendations in IAS 39 regarding financial guarantees for subsidiaries in accordance with RFR 2:1.

Note 2 Critical estimates and judgments

The Board of Directors and management have discussed the development, the choice of and disclosures relating to the Group's important accounting policies and estimates, and the application of these policies and estimates. Certain critical accounting estimates performed in conjunction with application of the Group's accounting policies are described below.

Test for impairment of goodwill

Each year the Group investigates if any impairment of goodwill has occurred. The recoverable value of the cash-generating units is determined through a calculation of the value in use. This calculation is based on the strategic plan of the business in question and expected future cash flows for the operation. The discount factor used for present value calculations of expected future cash flows is the weighted average cost of capital (WACC). The year's review has demonstrated that there is no need for an impairment charge.

Deferred taxes

The value of tax loss carryforwards and other deferred tax claims/liabilities is taken into consideration to the extent that it is deemed probable that it will be possible to utilise them in the future.

Exposure to foreign currencies

An analysis of the exposure to foreign currencies and the risks associated with changes in foreign exchange rates is provided in Note 41.

Pension assumptions

Pension assumptions are an important element of the actuarial methods used to measure pension obligations and they can have an effect on the reported pension liability and the annual cost of pensions. Two critical assumptions − the discount rate and expected return on managed assets − are important for measuring the year's pension cost as well as the present value of the defined benefit pension obligations. These assumptions are reviewed at least once per year for each plan in each country. Other assumptions may relate to demographic factors, such as retirement age, mortality and personnel turnover are not reviewed as often. The current outcome often differs from the actuarial assumptions for economic and other reasons. The discount rate makes it possible to measure future cash flows at present value at the time of measurement. This interest rate should correspond to the return on investment grade corporate bonds, or government bonds, if a functioning market for corporate bonds does not exist. A lowered discount rate increases the present value of the pension liability and the annual cost.

Note 3 Segment reporting

Segment reporting is drawn up for the Group's lines of business and geographic areas. The Group's internal reporting system is based on followup of the return on the Group's goods and services, which makes lines of business the primary basis of division. The segments' results, assets and liabilities are included in directly attributable items, as well as items that can be allocated to the segments in a reasonable and reliable manner. The segments' investments in non-current assets include all capital expenditure, i.e. in intangible as well as tangible assets. Assets added as a result of acquisitions are not included in the investment value. Amortisation of Group surplus values is included, however. The segment reporting does not include receivables and liabilities relating to taxes or intra-Group transactions.

Lines of business

Lines of business are the Group's primary segments. The Group consists of the following lines of business:

• Division Electronics: Sells special components and solutions in electronics.
• Division Mechatronics: Conducts niche production of cable harnesses, electric connection systems and similar products.
• Division Communications: Operates within IT-related areas, such as Digital Image/Technical Security, Access and Software.

Geographic areas

Geographic areas constitute the Group's secondary segment. Information presented about assets of the segments and the period's capital expenditures in tangible and intangible non-current assets is based on geographic areas grouped according to where the assets are located.

Sales and result by line of business

		Electronics		Mechatronics		Communications
					2008/09 2007/08 2008/09 2007/08 2008/09 2007/08
Revenue
External sales	727	778	628	604	783	790
Internal sales	16	15	3	5	–	–
Total revenue	743	793	631	609	783	790
Result
Operating result	24	38	49	50	52	51

		Parent Company and eliminations
	2008/09	2007/08	Total 2008/09	2007/08
Revenue
External sales	–	–	2,138	2,172
Internal sales	–19	–20	–	–
Total revenue	–19	–20	2,138	2,172
Result Operating result	–20	–8	105	131
Finance income			7	7
Finance expense			–18	–17
Result before taxes			94	121
Taxes and minority interest			–26	–30
Net result			68	91

Transfer pricing between lines of business is on market terms.

Other information by line of business

	Electronics		Mechatronics		Communications
					2008/09 2007/08 2008/09 2007/08 2008/09 2007/08
Assets	297	322	327	335	388	349
Undistributed assets	–	–	–	–	–	–
Total assets	297	322	327	335	388	349
Liabilities	95	116	99	110	150	156
Undistributed liabilities	–	–	–	–	–	–
Total liabilities	95	116	99	110	150	156
Capital expenditures Depreciation and	8	8	10	13	5	4
amortisation Costs, in addition to depreciation and amortisation that do not result in disbursements	5 –	5 –	10 –	9 –	9 –	8 –

Parent Company
2008/09	2007/08	2008/09	2007/08
9	2	1,021	1,008
–	–	28	47
9	2	1,049	1,055
18	23	362	405
–	–	169	191
18	23	531	596
0	0	23	25
1	1	25	23
			–
	–	–	Total –

External sales by geographic market

	2008/09	2007/08
Sweden	652	676
Denmark	463	495
Norway	349	347
Finland	179	189
United Kingdom	52	45
Germany	120	126
Poland	42	60
Other Europe	146	154
Other world	135	80
	2,138	2,172

Capital expenditures and assets by geographic market

		Capital expenditures		Assets
	2008/09	2007/08	2008/09	2007/08
Sweden	8	10	480	472
Denmark	5	10	293	282
Norway	3	3	52	65
Finland	6	1	117	110
United Kingdom	0	0	4	12
Germany	1	1	51	51
Poland	0	0	11	15
Other Europe	0	0	3	5
Other world	0	0	4	6
Undistributed assets	–	–	34	37
	23	25	1,049	1,055

Internal net revenue by line of business

Parent Company	2008/09	2007/08
Electronics	10	11
Mechatronics	7	6
Communications	9	9
	26	26

Internal net revenue by geographic market

	2008/09	2007/08
Sweden	11	11
Denmark	8	7
Norway	2	2
Finland	3	3
Germany	1	1
Other countries	1	2
	26	26

Note 4 Distribution of net revenue

Net revenue by product category	2008/09	2007/08
Group
Special products and systems	1,137	1,238
Standard components	181	188
Service and Consulting	92	66
Proprietary production	728	680
	2,138	2,172

In the case of other types of revenue, dividend and interest income are reported in net finance items. See note 11. Lagercrantz Group had no royalty income during 2008/09 and 2007/08.

Note 5 Operating expenses by type of cost

Group	2008/09	2007/08
Compensation-related personnel costs	441	409
Depreciation and amortisation	25	23

Note 6 Number of employees, personnel costs and fees to Board of Directors and auditors

Average number of employees

	2008/09	Of whom men 2007/08		Of whom men
Parent Company
Sweden	9	78%	10	80%
Other Group companies
Sweden	407	73%	384	74%
Denmark	184	47%	198	45%
Norway	39	74%	40	73%
Finland	82	43%	80	44%
United Kingdom	4	50%	8	63%
Germany	24	67%	24	67%
Poland	27	74%	18	61%
Other countries	6	67%	7	43%
Total in Group companies	773	64%	759	61%
Group total	782	64%	769	61%

Salaries, other compensation and social benefits

	Salaries and compensation	Social benefits	Salaries and compensation	Social benefits
Parent Company	12	7	14	7
(of which pension cost)		(3)¹		(3)
Other Group companies	325	97	303	85
(of which pension cost)		(17)		(19)
Group total	337	104	317	92
(of which pension cost)		(20)²		(22)

¹ Of the Parent Company's pension costs 1 (1) refers to the group Board of Directors and President. The group also includes executive vice presidents and presidents of subsidiaries.

² Of the Group's pension costs, 4 (4) refers to the group Board of Directors and President, as well as to Presidents in subsidiaries. The Group's pension obligations to this group amount to 0 (1).

Salaries and other compensation by country and among directors, etc. and other employees

	2008/09 Board of		2007/08 Board of
	Directors and President	Other employees	Directors and President	Other employees
Parent Company
Sweden	6	6	5	9
(of which bonus, etc.)	(0)	(0)	(1)	(2)
Other Group companies in
Sweden	9	134	11	123
(of which bonus, etc.)	(1)	(2)	(1)	(3)
Total Sweden	15	140	16	132
	(1)	(2)	(2)	(5)
Outside Sweden
Denmark	8	92	8	88
(of which bonus, etc.)	(3)	(3)	(1)	(3)
Norway	3	20	2	21
(of which bonus, etc.)	(0)	(0)	(–)	(0)
Finland	3	29	3	23
(of which bonus, etc.)	(0)	(1)	(0)	(1)
United Kingdom	2	3	1	3
(of which bonus, etc.)	(0)	(0)	(–)	(–)
Germany	1	11	1	11
(of which bonus, etc.)	(–)	(0)	(0)	(1)
Poland	2	5	1	4
(of which bonus, etc.)	(0)	(0)	(0)	(1)
Other countries	1	2	1	2
(of which bonus, etc.)			(–)	(–)
Group companies outside Sweden, total	20	162	17	152
(of which bonus, etc.)	(3)	(4)	(1)	(6)
Group total	35	302	33	284
(of which bonus, etc.)	(4)	(6)	(3)	(11)

The Group Board of Directors and Presidents includes directors, presidents and executive vice presidents.

Gender distribution in management

	3/31/2009 Proportion of women	3/31/2008 Proportion of women
Parent Company
Board of Directors	20%	20%
Other members of senior management	0%	0%
Group total
Board of Directors in parent company and
subsidiaries	6%	3%
Other members of senior management	3%	0%

Absence due to illness

Data refer to the Swedish companies	2008/09	2007/08
Total absence due to illness as a proportion of regular working hours	4 %	4 %
Proportion of total absence referring to continuous absence due to illness for 60 days
or more Absence due to illness by gender	60 %	56 %
Men	3 %	4 %
Women	7 %	5 %
Absence due to illness by age category
29 years or younger	3 %	5 %
30–49 years	4 %	3 %
50 years or older	6 %	7 %

In the Parent Company total absence due to illness was 1 (1) percent. Absence due to illness by category is not reported for reasons of integrity.

Principles for compensation to the Board of Directors and other members of senior management

Fees paid to the Chairman of the Board of Directors and to members of the Board of Directors were set by the Annual Meeting. No separate fees are paid for committee work. In accordance with Annual Meeting resolution, compensation to the President & CEO and other members of senior management consists of basic salary, variable compensation, other benefits, pension and financial instruments. The total compensation shall be adjusted to conditions on the market and competitive and should be in line with responsibility and authority. The variable portion of the compensation shall be maximised at and never exceed the fixed salary. The variable portion of the compensation should also be based on outcome relative to set goals and on individual performance. The retirement age shall be 60−65 years and in addition to an ITP plan only defined contribution pension plans may be offered. In the case of termination, a severance payment in a maximum amount of one year's salary may be offered in addition to salary during the period of notice. In addition to the incentive programme proposed to the Annual General Meeting, no other sharebased or share-price-related programmes will be offered.

As far as compensation to the President and other members of senior management is concerned, the Board of Directors has appointed a compensation committee consisting of the Chairman of the Board of Directors and the Vice Chairman of the Board of Directors, with the President as reported. The task of the committee is to evaluate and suggest principles of compensation for members of senior management to the Board of Directors. The Board of Directors submits proposals to the Annual Meeting for resolution. The proposal to the 2009 Annual General Meeting is set forth in the Board of Directors Report.

Compensation and other benefits, Parent Company 2008/09

	Basic salary,	Variable	Other
SEK thousand	directors fee	compensation	compensation	Other benefits	Pension cost	Total
Chairman of the Board of Directors
Anders Börjesson	400					400
Directors
Tom Hedelius	300					300
Pirkko Alitalo	200					200
Lennart Sjölund	200					200
President & CEO
Jörgen Wigh	2,146		88	95	650	2,979
Executive Vice Presidents
Niklas Enmark	1,226			90	255	1,571
Magnus Söderlind	1,371		58	132	349	1,910
Other members of senior management
3.5 persons	3,730	88	25	326	1,113	5,282
Total	9,573	88	171	643	2,367	12,842

Compensation and other benefits, Parent Company 2007/08

SEK thousand	Basic salary, directors fee	Variable compensation	Other compensation	Other benefits	Pension cost	Total
Chairman of the Board of Directors
Anders Börjesson	350					350
Directors
Tom Hedelius	250					250
Pirkko Alitalo	175					175
Lennart Sjölund	175					175
President & CEO
Jörgen Wigh	1,962	511		91	550	3,114
Executive Vice President
Niklas Enmark	1,141	256		91	244	1,732
Other members of senior management
3.5 persons	5,462	1,051		500	1,646	8,659
Total	9,515	1,818	0	682	2,440	14,455

Other members of senior management consist executives with division responsibility. For the composition of the management group, refer to section Management. Compensation to this group, which in 2008/2009 consisted of 3.5 (5) persons, was covered by the resolution of the 2008 Annual Meeting dealing with principles of compensation of members of senior management. The Compensation Committee has verified compliance with the resolution of the Annual Meeting and conformity of the compensation with market conditions has been confirmed by comparing with compensation in other similar listed companies.

Pensions

The retirement age for the President & CEO is 60 years. The retirement age of other members of senior management is 65 years. Pension is paid equivalent to the ITP plan, which is a defined contribution plan.

Severance payment

The period of notice for the President is 12 months when termination is at the initiative of the Company and 6 months when termination is at the initiative of the President. In the case of termination at the initiative of the Company, the President is entitled to a severance payment of the equivalent of one year's salary in addition to salary during the period of notice. No severance payment is payable in the case of termination at the initiative of the President. The severance payment is not prorated against other income. The period of notice for the other members of Group management is 6–12 months when termination is at the initiative of the Company and up to 6 months when termination is at the initiative of the employee. In the case of termination at the initiative of the Company, members of Group management are entitled to a severance payment of the equivalent of up to one year's salary, in addition to salary during the period of notice. No severance payment is payable in the case of termination at the initiative of the employee. The severance payment is not prorated against other income.

Option programme

A three-year call option programme for members of senior management was resolved by the 2006 Annual General Meeting. The call option programme will consist of call options for shares repurchased by Lagercrantz Group where each option gives its holder the right to acquire one repurchased class B share after 3.25 years, with a potential for redemption after three years. The share was acquired at a redemption price determined as percentage mark-up to the average market price of the share during ten trading days after the Annual General Meeting in accordance with quoted paid prices. The programme covered members of senior management with a direct possibility of affecting the Group's income.. The members of the Board of Directors did not have the right to acquire call options, with the exception of the Company's President & CEO.

One prerequisite for being awarded call options is that the employee has concluded a special pre-emption agreement with the Company. Preemption shall occur at the market value at the time of termination of employment, a tender offer for all outstanding shares of the Company by a third party and in cases when the call options are to be transferred to a third party. In all other respects the call options are freely transferable. The premiums for the call options have been equivalent to the market value of the call options in accordance with external valuation applying the generally accepted valuation method (the Black & Scholes model).

For the purpose of encouraging participation, a subsidy will be payable up to the equivalent to the premium paid. The employee will be responsible for paying income tax on the amount of the subsidy, which thereby will only be equivalent to a part of the premium paid. Payment of the subsidy is paid two years after the issue resolution provided the option holder still was in employment of the Group at this point in time and still owns the options. Call options equivalent to a maximum of 3.0 percent of the total number of shares outstanding, including class A and class B shares, and also including shares held in treasury, may be issued. Since call options have been awarded every year, loyal employees have been rewarded and market price increases and decreases were managed more effectively with better risk diversification.

The award resolved by the 2006 Annual Meeting for 2006 comprised 27 persons and a total of 255,000 call options. Awards varied between 5,000 and 37,600 options per person. The President & CEO acquired 37,600 and other members of Group management acquired 112,900. The measuring period to determine the average share price, which was SEK 28.81, was 31 August–13 September 2006. The redemption price for the shares resolved was 125 percent of the average price, was set as SEK 36.00. The market value of the call options was set to be SEK 2.90 per option by an independent valuation institute. The cost for the 2006 programme amounted to MSEK 1.0 mostly related to the subsidy, with only a marginal effect on earnings per share. About MSEK 0.2 of the cost was charged to earnings for 2006/07. The effect on equity was zero.

The award resolved by the 2007 Annual Meeting for 2007 comprised 27 persons and a total of 260,000 call options. Awards varied between 5,000 and 43,300 options per person.. The President & CEO acquired 43,300 and other members of Group management acquired 111,500. The measuring period to determine the average share price, which was SEK 35.48, was 3 September–14 September 2007. The redemption price for the shares resolved was 125 percent of the average price, was set as SEK 44.40. The market value of the call options was set to be SEK 3.50 per option by an independent valuation institute. The cost for the 2007 programme amounted to about MSEK 1.0 mostly related to the subsidy, with only a marginal effect on earnings per share. MSEK 0.5 of the cost is charged to the 2007/08 result. The effect on equity was MSEK 0.8.

The award resolved for 2008 by the 2008 Annual Meeting covered 27 persons and a total of 180,500 call options. The awards varied between 3,500 and 29,600 options per person. The President & CEO acquired 29,600 and other members of senior management 102,100. The measuring period to determine the average share price, which was SEK 29.41 was 4 September–17 September 2008. The redemption price for the call options, which was set at 125 percent of the average share price, was set as SEK 36.80. The market value of the call options was set to be SEK 2.10 per option by an independent valuation institute. The cost of the 2008 programme amounted to about MSEK 0.6 mostly related to the subsidy, with only a marginal effect on earnings per share. MSEK 0.3 of the cost is charged to the 2008/09 result. The effect on equity was MSEK 0.2.

Fees and reimbursement to auditors

	Group		Parent Company
	2008/09	2007/08	2008/09	2007/08
KPMG
Audit assignments	3	3	0.6	0.6
Other assignments	1	1	0.1	0.3
Other auditors
Audit assignments	0	0	–	–
Other assignments	0	0	–	–

By audit assignment is meant examination of the annual accounts and the administration by the Board of Directors and the President, other tasks the Company's auditors are obligated to perform, and advice or other assistance prompted by such examination or the performance of such tasks. Everything else is other assignments.

Note 7 Other operating income

	2008/09	2007/08
Group
Capital gains	0	13
Rental income	0	0
Other compensation	6	5
FX gains on receivables/liabilities of an operating
character	8	4
Other	2	2
	16	24

Note 8 Other operating expenses

	2008/09	2007/08
Group
FX losses on receivables/liabilities of an operating character	–3	–5
Other expenses	–1	–1
	–4	–6

Note 9 Depreciation and amortisation of tangible and intangible non-current assets

	2008/09	2007/08
Group
Depreciation and amortisation according to plan by type of asset
Intangible assets	–10	–8
Buildings and land	0	0
Leasehold improvements	–1	–1
Plant and machinery	–6	–5
Equipment, tools, fixtures and fittings	–8	–9
	–2	–23
Depreciation and amortisation according to plan by function
Cost of goods sold	–9	–8
Research and development	–3	–2
Selling costs	–9	–9
Administrative expenses	–4	–4
	–25	–23
Parent Company Depreciation and amortisation according to plan by type of asset
Equipment, tools, fixtures and fittings	0	0
	0	0
Depreciation and amortisation according to plan by function
Administrative expenses	0	0
	0	0

Note 10 Leasing fees relating to operating leases and rental contracts

	2008/09	2007/08
Group
Leasing fees and rents paid during the financial year	33	37
Amounts of future annual payments:
1 year after current financial year	29	29
2 years after current financial year	17	19
3 years after current financial year	10	12
4 years after current financial year	5	8
5 years after current financial year	3	7
	64	75
Parent Company
Leasing fees and rents paid during the financial year	2	2
Amounts of future annual payments:
1 year after current financial year	2	2
2 years after current financial year	1	2
More than 3 years after the current financial year	–	1
	3	5

Rent for premises accounts for the largest part of leasing costs.

Note 11 Finance income

	2008/09	2007/08
Group
Interest income	3	5
Effect of lowering of interest rates	–	0
FX gains	4	2
	7	7
Parent Company
Result from shares in Group companies
Interest income from Group companies	3	4
Dividends	140	81
	143	85
Other interest income and similar items
FX gains	3	1
Effect of lowering of interest rates	–	0
Other interest income	0	0
	3	1
	146	86

Note 12 Finance expense

Group	2008/09	2007/08
Interest expense, pensions	–2	–2
Other interest expense	–10	–12
Effect of lowering of interest rates	0	0
FX losses	–6	–3
Other	0	0
	–18	–17
Parent Company
Result from shares in Group companies
Interest expense to Group companies	–3	–3
FX losses	0	0
Impairment charges	–52	–30
	–55	–33
Other interest expense and similar items
Other interest expense	–8	–10
Effect of lowering of interest rates	0	0
Other	0	–1
	–8	–11
Total finance expenses in the Parent Company	–63	–44

Note 13 Exchange rate differences affecting the result

	2008/09	2007/08
Group
Exchange rate differences affecting the operating result	6	–1
Financial exchange rate differences	–2	–1
	4	–2
Parent Company
Financial exchange rate differences	3	1
	3	1

Note 14 Taxes on the year's result

	2008/09	2007/08
Group
Current tax expense (–)/tax income (+)
Tax expense for the period	–18	–26
Adjustment of taxes attributable to prior years	–2	2
	–20	–24
Deferred tax expense (–)/tax income (+)
Deferred taxes on temporary differences	0	2
Deferred taxes on change of capitalised tax value of tax
loss carryforwards	–6	–8
	–6	–6
Total reported tax expense/tax income in the Group	–26	–30

The value of tax loss carryforwards is taken into account when it is believed that they will result in lower tax payments in the future.

Reconciliation of effective tax	2008/09	2007/08
Group
Result before taxes	94	121
Tax according to Parent Company's tax rate, 28%	–26	–34
Effect of other tax rates for foreign subsidiaries	1	1
Non-deductible expenses	–1	–1
Other taxable income	0	–
Effect of changed tax rate	1	2
Tax attributable to prior years	–1	2
Reported effective tax	–26	–30
Current tax expense (–)/tax income (+)	2008/09	2007/08
Parent Company
Period's tax expense	8	5
	8	5
Deferred tax expense (–)/tax income (+)
Deferred taxes on temporary differences	–1	0
Deferred taxes on change of capitalised tax value
of tax loss carryforwards	–4	–1
	–5	–1
Total reported tax expense/tax income in the
Parent Company	3	4
Reconciliation of effective tax	2008/09	2007/08
Parent Company
Result before taxes	77	32
Tax according to current tax rate, 28%	–22	–9
Effect of impairment charges	–14	–8
Dividend income from Group companies	39	22
Non-deductible expenses	0	–1
Reported effective tax	3	4
Tax items carried directly to equity	2008/09	2007/08
Parent Company
Current tax component of group contributions received	–8	–5
	–8	–5

Note 15 Goodwill

	3/1/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	140	128
Additions	45	11
Exchange rate difference	7	1
Closing balance	192	140
Goodwill allocated to Group companies
Direktronik AB	9	9
STV Sv Tele & Video Konsult AB	5	5
ISG Systems AB	12	12
Elpress AB	40	40
Nordic Alarm AB	20	20
COBS AB	15	–
K&K Active OY	35	27
K&K Sales OY	–	4
CAD-Kompagniet A/S	30	–
ISIC A/S	6	5
Unitronic AG	20	18
Total Goodwill	192	140

Test for impairment of goodwill

The value of goodwill is not amortised. Each year an investigation is made to determine if any impairment of goodwill has occurred. The calculation is based on expected future cash flows for each cash-generating unit, based on each respective unit's business plan.

For present value calculation of expected future cash flows the current weighted average cost of capital (WACC) and expected growth is used based on the unit's in question return on equity requirement and a market rate for borrowing. In addition hereto, the unique risk associated with the individual unit is taken into account in the form of a special

adjustment factor. The weighted average cost of capital used in the Group amounted to 12.0−13.5 percent before taxes.

Discounted cash flows are then compared with the book value per cash-generating unit. The test for impairment is normally performed during the fourth quarter each year and the test performed during the past three years have shown that there is no need for an impairment charge.

Note 16 Trademarks

3/31/2009	3/31/2008
36	34
3	2
1	0
40	36
2	2
3	3
15	15
7	7
3	–
10	9
40	36

Each year an assessment is made to determine if any impairment of trademarks has occurred in accordance with the same principles as for goodwill.

Note 17 Other intangible assets

	3/31/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	84	77
Additions	17	7
Additions via new companies	0	–
Sales and disposals	–	0
Exchange rate difference	7	0
	108	84
Accumulated amortisation according to plan
Opening balance	–22	–14
Additions via new companies	0	–
Year's amortisation according to plan	–10	–8
Sales and disposals	–	0
Exchange rate difference	–2	0
Reclassification	–	–
	–34	–22
Closing balance	74	62

Other intangible assets primarily consist of patents, customer relationships, capitalised development costs and software. Of the total reported value, 26 (24) refers to intangible assets. A total of MSEK 8 (6) was expensed as research and development during the year.

Note 18 Buildings, land and land improvements

	3/31/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	3	49
Additions	–	0
Sales and disposals	–	–46
Exchange rate difference	–	0
¹	3	3
Accumulated amortisation according to plan
Opening balance	–1	–11
Sales and disposals	–	10
Year's amortisation according to plan	0	0
Exchange rate difference	–	0
	–1	–1
Closing balance	2	2
Tax assessment values, buildings (Sweden)	1	1
Tax assessment values, land (Sweden)	0	0

¹ Acquisition values do not include capitalised interest.

Note 19 Leasehold improvements

	3/31/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	4	2
Additions	3	2
Exchange rate difference	1	0
	8	4
Accumulated amortisation according to plan
Opening balance	–2	–1
Year's amortisation according to plan	–1	–1
Exchange rate difference	0	0
	–3	–2
Closing balance	5	2

Note 20 Plant and machinery

	3/31/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	69	60
Additions	4	10
Reclassification	0	–
Sales and disposals	–1	–1
Exchange rate difference	3	0
	75	69
Accumulated amortisation according to plan
Opening balance	–38	–34
Sales and disposals	1	1
Reclassification	–	0
Year's amortisation according to plan	–6	–5
Exchange rate difference	–2	0
	–45	–38
Closing balance	30	31

Note 21 Equipment, tools, fixtures and fittings

	3/31/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	111	104
Additions	9	6
Additions via new companies	2	5
Sales and disposals	–5	–5
Reclassification	0	1
Exchange rate difference	7	0
	124	111
Accumulated amortisation according to plan
Opening balance	–95	–86
Additions via new companies	–1	–3
Sales and disposals	4	3
Reclassification	0	0
Year's amortisation according to plan	–8	–9
Exchange rate difference	–5	0
	–105	–95
Closing balance	19	16

	3/31/2009	3/31/2008
Parent Company
Accumulated acquisition values
Opening balance	1	1
Additions	0	0
	1	1
Accumulated amortisation according to plan
Opening balance	-1	-1
Year's amortisation according to plan	0	0
	-1	-1
Closing balance	0	0

Note 22 Shares in Group companies

	3/31/2009	3/31/2008
Parent Company
Accumulated acquisition values
Opening balance	638	631
External acquisitions	27	24
Sales to Group companies	–	0
Capital withdrawal	–	–17
Mergers	–	0
	665	638
Accumulated impairment charges
Opening balance	–60	–30
Year's impairment charges	–52	–30
	–112	–60
Closing balance	553	578

External acquisitions and sales are reported in Note 38. Group company K&K Sales OY was merged with K&K Active OY during the year. Inactive Group companies 2B Electronics A/S, Heath Comm A/S and BBE A/S were liquidated during the year.

Specification of the Parent Company's and the Group's holdings of shares in Group companies

Group company²/ Organisation number / Registered office	Number of shares	Stake in %¹	Book value 3/31/200 9	Book value 3/31/200 8
Acte Solutions AB, 556600-8032, Norrköping	500	100.0	13	13
Acte Systems AS, 927 714 574, Bergen, Norway	600	100.0	1	1
Acte Components Ltd, 4209447, Hampshire, UK	49,999	100.0	2	7
Acte AS, 923 148 442, Oslo, Norway	5,000	100.0	33	33
Acte Supply AB, 556213-2406, Norrköping	50,000	100.0	20	25
Acte Oy, 239 992, Helsinki, Finland	300	100.0	3	3
Acte Wireless AB, 556530-0406, Solna	1,000	100.0	8	8
B2B Tech AB, 556201-1154, Stockholm	5,000	100.0	1	7
COBS AB, 556524-3788, Göteborg	3,000	100.0	27	–
Drektronik AB, 556281-9663, Nynäshamn	3,000	100.0	24	24
Elpress AB, 556031-5607, Kramfors	80,000	100.0	99	99
Elpress A/S, CVR 26162629, Silkeborg, Denmark	100	100.0	–	–
Elpress GmbH, HBR 3252, Viersen, Germany	100	100.0	–	–
Elpress (Beijing) Electrical Components Co. Ltd, Beijing,
China Kablema AB,	100	100.0	–	–
556746-2196, Kramfors EFC Finland Oy,	100	100.0	–	–
1750567-0, Korsholm, Finland HeathComm AB,	1,550	100.0	13	13
556552-1217, Solna HeathComm AS,	500	100.0	2	2
933 199 665, Bergen, Norway ISG Systems AB,	7,,000	100.0	8	13
556468-2192, Höganäs K& K Active OY,	200	100.0	21	21
0980670-5, Helsinki, Finland Kablageproduktion i Västerås AB,	100	100.0	50	42
556509-1096, Västerås Lagercrantz Communication AB,	5,000	100.0	20	30
556260-2127, Solna Nordic Alarm AB,	1,000	100.0	3	3
556318-0032, Solna STV Sv Tele & Video Konsult AB,	38,300	100.0	30	42
556307-4565, Stockholm	65,000	100.0	16	16
Unitronic AG, HRB 40042 , Düsseldorf, Germany	153,600	100.0	28	38
Secos GmbH , Baar, Switzerland Lagercrantz A/S,	20,000	100.0	–	–
81 74 67 10 , Copenhagen, Denmark Acte A/S, 71 28 89 19,	6	100.0	131	131
Copenhagen, Denmark Lagercrantz Asia Ltd, Hong Kong	2 20,000	100.0 100.0	– –	– –
Acte Poland Sp Z o.o., 5 753, Warszawa, Poland	2	100.0	–	–
IWSFE Sp Z o o., 296 322, Warszawa, Poland	4,000	100.0	–	–
Elfac A/S, 17 46 50 31, Silkeborg, Denmark	1	100.0	–	–
ISIC A/S, 16 70 45 39, Århus , Denmark	33,400	100.0	–	–
Betech Data A/S, 10 51 07 32, Copenhagen, Denmark	1	100.0	–	–
CAD-Kompagniet A/S, 21 69 77 88, Copenhagen,
Denmark Companies sold and merged during the	8	100.0	–	–
year			553	7 578

¹ Refers to ownership stake of capital, which also coincides with the proportion of votes for the total number of shares outstanding.

² Group companies are reported at book value; other companies are owned indirectly via Group companies.

Note 23 Due from Group companies

	3/1/2009	3/31/2008
Parent Company
Accumulated acquisition values
Opening balance	58	85
Incremental receivables	54	9
Receivables paid	–59	–35
Translation difference	5	–1
Closing balance	58	58

Note 24 Other long-term receivables

	3/1/2009	3/31/2008
Group
Accumulated acquisition values
Opening balance	4	4
Incremental receivables	0	0
Receivables paid	–2	0
Closing balance	2	4

Note 25 Inventories

Major one-time impairment charges were made during the year in the amount of MSEK 11 (9).

Note 26 Trade receivables

Aging of unimpaired trade receivables due	3/1/2009	3/31/2008
Group
Trade receivables not due	276	254
Trade receivables due in 0–30 days	19	54
Trade receivables due in > 30–90 days	4	21
Trade receivables due in > 90–180 days	2	5
Trade receivables due in > 180 days	0	5
Total	301	339

Provision account

Provision account for bad debt losses	3/1/2009	3/31/2008
Group Opening balance	4	5
Reversal of previously sustained impairment charges	0	–1
Year's impairment losses	1	0
Translation difference	0	0
Closing balance	5	4

Bad debt losses realised during the year have been carried to the income statement in the amount of MSEK 3 (1).

Note 27 Earned but not yet invoiced revenue

	3/1/2009	3/31/2008
Group
Contract assignments
Accumulated contract income recognised as revenue	138	115
Invoiced revenue	123	102
Total due from clients	15	13
Accumulated contract expenditure and recognised profit (after deduction of reported loss) at the end of
the period	138	115
Advance payments received	–	0
Amount held back by client	–	–

Contract income from current fixed-price assignments is reported with gradual profit recognition. Calculations are made based on completed time at the end of the period relative to estimated time to complete the entire assignment.

Note 28 Prepaid expenses and accrued income

	3/1/2009	3/31/2008
Parent Company
Prepaid rent	0	0
Prepaid insurance premiums	0	0
Other items	1	1
	1	1

Note 29 Equity

Parent Company

According to Swedish law, shareholder's equity shall be divided between funds that may not be paid as dividends (restricted funds) and funds that may be paid as dividends (unrestricted funds).

Restricted reserves

• Restricted funds consist of share capital and the following reserves:
• Revaluation reserve When a tangible or financial non-current asset is revalued, the amount by which it is revalued is allocated to a revaluation reserve.
• Legal reserve

The purpose of the legal reserve is to set aside the portion of net earnings not required to cover a loss brought forward.

Unrestricted equity

• Unrestricted funds consist of retained earnings and premium reserve: Retained earnings Consist of the preceding year's unrestricted equity after any allocation to legal reserve and after any dividends paid. Constitute the total unrestricted equity together with this year's income, i.e. the amount
• available for payment as dividends to the shareholders.

Premium reserve

When shares are issued at a premium, when payment for shares is made in excess of their nominal value, an amount equivalent to the amount received in excess of the quotient value of the shares must be credited to the premium reserve.

Share capital

Distribution and change of class of shares

Classes of shares	Shares outstanding	Number of votes
Class A shares, 10 votes per share	1,094,654	10,946,540
Class B shares, 1 vote per share	22,078,655	22,078,655
Class B shares held in treasury	–1,195,500	–1,195,500
Total	21,977,809	31,829,695

	Class A shares	Class B shares
Number of shares outstanding at beginning of period	1,095,998	23,318,234
Redemption of shares		–1,240,923
Conversion of class A shares	–1,344	1,344
Number of shares outstanding at end of period	1,094,654	22,078,655

Repurchased shares	Class A shares	Class B shares
Number of repurchased shares at beginning of period	–	1,936,423
Redemption of shares		–1,240,923
Shares repurchased during the year		500,000
Number of shares held in treasury at end of period	–	1,195,500

The share capital amounted to MSEK 48.9 at the end of the period. The class B shares is listed on OMX Nordic Exchange Stockholm. According to the Articles of Association the share capital is a minimum of MSEK 25 and a maximum of MSEK 100. The quotient value of the share is SEK 2.11. The proposed dividend for the year is SEK 1.50 (1.50) per share.

The option programmes described in Note 6 are secured by shares held in treasury at an average price of SEK 25.57.

When the call options are exercised at a redemption price of SEK 36.00, SEK 44.00 and SEK 36.80 per share, respectively, the number of shares outstanding can potentially increase by the number of redeemed call options, which are 675,000. In such a case the number of shares held in treasury decreases accordingly.

Group

The Group's equity consists of share capital and the following items:

Other contributed capital

Refers to equity capital contributed by the owners.

Reserves

Reserves refer to restatement reserve hedging reserve.

The restatement reserve includes all FX rate translation differences that arise when translating the financial statements of foreign operations. These entities prepare their financial statements in other currencies than the Group and the Parent Company, which report in Swedish kronor (SEK). The restatement reserve additionally consists of exchange rate differences that arise upon revaluation of net investments in foreign operations.

The hedging reserve includes the effective portion of the accumulated net change in fair value of a cash flow hedging instrument attributable to hedging transactions that have not yet transpired.

Retained earnings

Retained earnings include earned profit in the Parent Company and its subsidiaries. Profit for the year is reported separately in the balance sheet. Prior provisions to the legal reserve, not including transferred premium reserves, are included in this equity item.

Capital management

The Group's goal, as expressed in its finance policy, is to have a good capital structure and financial stability in the interest of retaining the confidence of investors, credit institutions and the market in general. In addition, this constitutes a foundation for continued development of the business operations. Capital is defined as total shareholders' equity, not including minority interests.

The ambition of the Board of Directors is to retain a balance between a high return and the security of a large capital base. The Group's goal is to achieve a return on equity of at least 25 percent per year. For the 2008/09 financial year the return was 14 percent (21).

The Group's dividend policy is to pay a dividend amounting to 30-50 percent of the year's profit. Before the 2009 Annual Meeting the Board of Directors has proposed a dividend of SEK 1.50 (1.50) per share. The proposed dividend translates to a dividend share of 49 percent (38). The dividend is also equivalent to 6 percent (7) of consolidated equity as of 31 March 2009.

The Group's Board of Directors has a mandate from the 2008 Annual Meeting to repurchase shares. The Group has made repurchases of shares on several occasions. In part, the timing of these repurchases has been determined by the market price of the share. A portion of the repurchased shares are intended cover the Group's commitment under outstanding option programmes, where members of senior management and certain key persons have the opportunity to acquire class B shares by exercising acquired options. There is no formal repurchase plan. Decisions to buy and sell shares in the Group are instead made by the Board of Directors within the framework of the mandate given by the Annual Meeting. The Board of Directors is again proposing to the 2009 Annual Meeting to pass a resolution to repurchase own shares. There was no change in the Group's capital management during the year.

Note 30 Provisions for pensions and similar obligations

Defined benefit obligations and the value of managed assets

Lagercrantz Group has defined benefit pension plans in just a few countries. These plans cover virtually all employees in Norway and also certain subsidiaries in Sweden. The plans provide benefits based on the compensation and the years of service the employees have at or close to retirement. The pension plan according to ITP secured by insurance with Alecta is reported as a defined contribution plan since the Company has not had access to information detail making it possible to report this plan as a defined benefit plan.

	3/1/2009	3/31/2008
Group
Present value of wholly or partially funded
obligations	19	28
Fair value of managed assets	–11	–17
Surplus (–)/Deficit (+) in the pension plan	8	11
Present value of unfunded defined benefit
obligations	50	60
Net obligations before adjustments	58	71
Adjustments:
Adjustments of pension obligations based on
experience	–1	–2
Other actuarial gains and losses on pension
obligations	–5	–10
Subtotal of accumulated unreported actuarial
gains(+) and losses(–)	–6	–12
Net amount of obligation in balance sheet (+),
asset (–)	52	59
The net amount is recorded in the following items in the balance sheet:
Provision for pensions and similar obligations	52	59
Net amount in the balance sheet	52	59

Distribution of amount on plans in the

following countries:	3/1/2009	3/31/2008
Sweden	47	46
Norway	4	10
Germany	1	3
Amount in the balance sheet	52	59

Actuarial gains and losses may arise when the present value of the obligation and the fair value of managed assets are determined. They arise either when the actual outcome differs from the previously made assumption, or when assumptions are changed. The portion of the accumulated actuarial gains and losses at the end of the preceding year that exceeds 10 percent of the higher of present value of the obligations and the fair value of managed assets is expensed and distributed evenly over the average remaining time of employment of the employees.

Pension cost	2008/09	2007/08
Group
Defined benefit plans
Cost of pensions earned during the year	–2	–2
Interest expense	–3	–3
Expected return on managed assets	1	1
Actuarial gains (–) and losses (+) reported during
the year	0	0
Cost defined benefit plans	–4	–4
Cost of defined contribution plans	–16	–18
Total cost of compensation after termination of
employment	–20	–22

The pension cost relating to the most important defined benefit pension plans in the amount of MSEK 4 (4) is reported in the income statement on the lines Selling costs, Administrative expenses and Interest expense. The interest component of the pension cost reported as financial expense amounted to MSEK -3 (-3). The pension cost of defined contribution pension plans was MSEK 16 (18). The total cost of defined benefit and defined contribution pension plans amounted to MSEK 20 (22).

Reconciliation of net amount of pensions in the balance sheet

The following table explains how the net amount in the balance sheet has changed during the period.

	2008/09	2007/08
Opening balance of fair value of managed assets	–17	–16
Expected return on managed assets	–1	–1
Funds contributed by employers	–2	–1
Benefits paid	5	–
Compensation transferred operations	3	1
Actuarial gain (+) or loss (–) on managed assets	1	0
Other	0	0
Closing balance of fair value of managed assets	–11	–17
Opening balance of present value of obligation	76	73
Cost of defined benefit plans	4	5
Disbursement of compensation	–6	–2
Payment of fees from the Company	–2	0
Change in actuarial gains/losses	–1	0
Redemption of transferred obligations	–9	–
Exchange rate differences	1	0
Closing balance of present value of obligation	63	76
Net amount in the balance sheet, closing balance	52	59

The managed assets consist of risk-diversified investments via established life insurance companies.

Actuarial assumptions

The following significant actuarial assumptions have been applied when calculating the obligations: (weighted average values)

	3/31/2009	3/31/2008
Discount interest rate	4.0%	4.3%
Expected return on managed assets	5.8%	5.5%
Expected inflation	2.0%	2.2%
Future salary increases	3.0%	3.5%
Personnel turnover	5.0%	5.0%
Change in income amount	3.0%	3.4%

Historic information

	2008/09	2007/08	2006/07
Group
Present value of wholly or partially funded obligations	19	28	20
Fair value of managed assets	–11	–17	–16
Surplus (–)/Deficit (+) in pension plan	8	11	4
Adjustment of defined benefit pensions based on experience	–1	–2	–4

The Group estimates that MSEK 5 will be paid during 2009/10 to funded and unfunded defined benefit plans.

Parent Company	3/31/2009	3/31/2008
Provision for pensions	–	–
Other pension prohibitions	–	–

Pledged assets for pension obligations

The Parent Company has issued its guarantee for Group company PRI liabilities.

Note 31 Deferred taxes

3/31/2009	Deferred tax asset	Deferred tax liability	Net
Group
Other non-current assets	8	–28	–20
Other provisions	2	–	2
Untaxed reserves	–	–6	–6
Other	4	–1	3
Tax loss carryforwards	7	–	7
	21	–35	–14

3/31/2008	Deferred tax asset	Deferred tax liability	Net
Group
Other non-current assets	9	–26	–17
Other provisions	1	–	1
Untaxed reserves	–	–3	–3
Other	3	0	3
Tax loss carryforwards	13	–	13
	26	–29	–3

Unreported deferred tax assets

Deferred tax claims relating to tax loss carryforwards of MSEK 1 (2) have not been recognised. The value of tax loss carryforwards is taken into account to the extent it is deemed possible that they will result in lower tax payments in the future.

Change in deferred taxes in temporary differences and tax loss carryforwards

Group

	Opening balance	Reported via the income statement	Closing balance
Other non-current assets	–17	3	–20
Other provisions	1	1	2
Untaxed reserves	–3	–3	–6
Other	3	0	3
Tax loss carryforwards	13	–6	7
	–3	–5	–14

The difference on the change by type of tax not carried via the income statement is explained by deferred taxes in connection with acquisitions and by translation differences. The Company reports no deferred taxes on temporary differences attributable to investments in Group companies. Any effects in the future will be recognised when the Company can no longer control the reversal of such differences, or when it for other reasons is no longer probable that reversal will take place within the foreseeable future.

The Parent Company has a deferred tax asset of MSEK 0 (6).

Note 32 Other provisions

	2008/09	2007/08
Group
Other provisions as long-term liabilities
Costs for restructuring measures	4	–
Guarantee provisions	1	2
Other	0	1
	5	3
Other provisions as current liabilities
Costs for restructuring measures	10	2
Other	0	1
	10	3
Opening balance	6	7
Provisions set aside during the period	15	4
Amounts utilised during the period	1	-5
Closing balance	22	6

Restructuring

Restructuring costs for which provisions are set aside primarily refer to measures attributable to personnel changes.

Other

The item contains guarantee provisions, et al. The Parent Company has a provision for restructuring in the amount of 0 (3), of which the short-term portion is 0 (3).

Note 33 Financial assets and liabilities

Financial instruments by category

The fair value of financial assets and liabilities essentially agrees with reported values.

3/31/2009	Loan and trade receivables	Derivative instruments for hedge accounting	Total
Assets in the balance sheet
Long-term receivables	2		2
Trade receivables	301		301
Other short-term receivables	–	0	0
Cash and cash equivalents	60		60
Total	363	0	363

The consolidated balance sheet shows short-term receivables in the amount of 10 and financial derivative instruments as 0. The other items are non-financial.

3/31/2009	Other financial liabilities	Derivative instruments for hedge accounting	Total
Liabilities in the balance sheet
Long-term liabilities to credit institutions	70		70
Current liabilities to credit institutions	15		15
Trade liabilities	168		168
Other current liabilities	–	4	4
Total	253	4	257

The consolidated balance sheet shows trade liabilities in the amount of 89 and financial derivative instruments as 0. The other items are nonfinancial.

3/31/2008	Loan and trade receivables	Derivative instruments for hedge accounting	Total
Assets in the balance sheet
Long-term receivables	4		4
Trade receivables	339		339
Other short-term receivables	–	0	–
Cash and cash equivalents	79		79
Total	422	0	422

The consolidated balance sheet shows short-term receivables in the amount of 10 and financial derivative instruments as 0. The other items are non-financial.

3/31/2008	Other financial liabilities	Derivative instruments for hedge accounting	Total
Liabilities in the balance sheet
Long-term liabilities to credit institutions	83		83
Current liabilities to credit institutions	30		30
Trade liabilities	219		219
Total	332	-	332

The consolidated balance sheet shows trade liabilities in the amount of 83 and financial derivative instruments as 0. The other items are nonfinancial

Parent Company

3/31/2009	Loan and trade receivables	Derivative instruments for hedge accounting	Total
Assets in the balance sheet
Due from subsidiaries, long-term	58		58
Other short-term receivables	49		49
Cash and cash equivalents	7		7
Total	114	–	114

	Other	Derivative instruments
3/31/2009	financial liabilities	for hedge accounting	Total
Liabilities in the balance sheet
Long-term liabilities to credit
institutions	69		69
Due to Group companies, long-term	54		54
Short-term liabilities to credit
institutions	10		10
Trade payables	1		1
Other current liabilities	84		84
Total	218	–	218
	Loan and trade	Derivative instruments for hedge
3/31/2008	receivables	accounting	Total
Assets in the balance sheet
Due from subsidiaries, long-term	58		58
Other short-term receivables	31	0	31
Cash and cash equivalents	0		0
Total	89	0	89
3/31/2008	Other financial liabilities	Derivative instrument s for hedge accounting	Total
Liabilities in the balance sheet
Long-term liabilities to credit institutions	78		78
Due to Group companies, long-term	67		67
Current liabilities to credit institutions	29		29
Trade payables	1		1
Other current liabilities	100		100
Total	275	–	275

Note 34 Interest-bearing liabilities and provisions

The Group's interest-bearing liabilities are allocated in the balance sheet as follows: Provisions for pensions MSEK 52 (59), Long-term liabilities MSEK 70 (83), Current liabilities to credit institutions MSEK 15 (30) and Other current liabilities MSEK 0 (0). Total, MSEK 137 (172). Provisions for pensions are defined as an interest-bearing provision since the defined benefit pension obligations in accordance with IAS 19 are computed to present value using a discount interest rate. For details, refer to Note 30.

Credit terms on trade payables in the Group follow normal industry practice. The interest rate swap acquired by the Parent Company in the amount of MSEK 100 matures on 30 March 2012. The Parent Company's hedges of MDKK 15 and MEUR 1, respectively, mature on 1 September 2009.

Other maturity dates are reported below. The nominal value of interest-bearing liabilities and provisions essentially agree with book values.

Liabilities to credit institutions

Group	3/31/2009	3/31/2008
Current portion	13	13
Maturity, 2–5 years from the balance sheet date	41	44
Maturity, more than five years from the balance
sheet date	29	39
	83	96

Parent Company	3/31/2009	3/31/2008
Current portion	10	10
Maturity, 2–5 years from the balance sheet date	40	40
Maturity, more than five years from the balance
sheet date	29	38
	79	88

Refers to acquisition loans without specific assets pledged. The loan is repaid over ten years and carries interest at a variable rate.

Committed credit facility

Group	3/31/2009	3/31/2008
Approved credit limit	315	306
Utilised portion	–313	–289
Credit facility utilisation	2	17

Credit limits on committed credit facilities are renewed on an annual basis.

Parent Company	3/1/2009	3/31/2008
Approved credit limit	250	250
Utilised portion	–250	–231
Credit facility utilisation	–	19

Assets pledged for committed credit facility

Group	3/1/2009	3/31/2008
Corporate mortgages	58	57
	58	57

Note 35 Accrued expenses and prepaid income

Parent Company	2008/09	2007/08
Personnel expenses	2	4
Other items	2	3
	4	7

Note 36 Interest paid

	2008/09	2007/08
Group
Interest income	4	5
Interest expense	–13	–11
Parent Company
Interest income	5	4
Interest expense	–11	–13

Note 37 Adjustments for items not included in cash flow

Group	2008/09	2007/08
Depreciation and amortisation	25	23
Other provisions	2	4
Impairment charges and disposals	0	0
Capital gain/loss on non-current assets sold	0	–13
Change in interest accrual	2	–1
Other items	–2	2
	27	15
Parent Company	2008/09	2007/08
Depreciation and amortisation	0	0
Impairment charges	52	30
Restructuring reserve	–2	0
Change in interest accrual	–2	–1
	48	29

Note 38 Investments in businesses

During the year, 100 percent of COBS AB and CAD-Kompagniet A/S were acquired. The total value of acquired assets and liabilities, purchase money and effect on the Group's cash and cash equivalents was as follows:

Group	2008/09	2007/08
Intangible non-current assets	–54	–13
Tangible non-current assets	–1	–2
Inventories	–4	–4
Other current assets	–14	–12
Deferred tax liability	5	0
Current liabilities	11	5
Total purchase money	–57	–26
Cash and cash equivalents in the acquired businesses	1	7
Effect on the Group's cash and cash equivalents of the year's acquisitions	–56	–19
Repayment of/increase in liabilities relating to acquired businesses	–1	–8
Cash flow attributable to investment in businesses	–57	–27

No temporary tax differences arose in connection with the acquisitions.

Distribution of intangible assets in connection

with acquisitions	2008/09	2007/08
Group goodwill	41	9
Trademarks	3	2
Other intangible assets	10	–
Acquired intangible assets	54	11
Incremental investment in existing company	–	2
Total intangible assets via acquisitions	54	13

Acquired units' contribution to consolidated

revenue and result	2008/09	2007/08
Revenue	53	55
Result contributed before acquisition costs	3	7
Amortisation of surplus values	–1	–
Result contributed after acquisition costs	2	7
Financing costs	–1	–1
Result contributed after financing costs	1	6

Acquired units' contribution to consolidated

revenue and result if the units had been included for the full year	2008/09	2007/08
Revenue	72	55
Contribution to result before acquisition costs	5	7
Amortisation of surplus values	–1	–
Contribution to result after acquisition costs	4	7
Financing costs	–1	–1
Contribution to result after financing costs	3	6

Specification of major acquisitions

On 1 April 2008 Lagercrantz Group acquired all shares outstanding in CAD Kompagniet A/S for MDKK 24; the acquisition took place via subsidiary Betech Data A/S. CAD Kompagniet is active as a consultant in the CAD area (computer-aided design and will be co-operating with the software operation that Lagercrantz Group conducts in division Communications. CAD Kompagniet has 10 employees and 2008/09 revenue of MDKK 18. On 1 September 2008 Lagercrantz Group acquired all shares outstanding in COBS AB for MSEK 30. COBS develops and markets wireless telephony systems with functions for, among other things, personal security and positioning in one and the same portable handset. COBS has 21 employees and annual revenue of approximately MSEK 50. Goodwill consists of the value of the companies' technical expertise in the form of co-operation/streamlining within the division. Both acquisitions are part of Communications.

Acquired companies' net assets at time of acquisition, MSEK	Reported value in the companies	Fair-value adjustment	Fair value in the Group
Intangible non-current assets	–	14	14
Other non-current assets	1	–	1
Inventories	5	–	5
Other current assets	11	–	11
Cash and cash equivalents	1	–	1
Interest-bearing liabilities	0	–	0
Long-term liabilities	–1	–	–1
Other liabilities	–11	–4	–15
Net identifiable assets/liabilities	6	10	16
Goodwill			41
Estimated purchase money			57

Note 39 Contingent liabilities

Group	3/1/2009	3/31/2008
Guaranty undertakings towards FPG/PRI	1	1
Bank guarantees	4	3
	5	4

Note 40 Earnings per share

	2008/09	2007/08
Earnings per share, SEK	3.05	3.92

The calculation of earnings per share for 2008/09 was based on the year's result attributable to the Parent Company's equity holders amounting to MSEK 68 (91) and a weighted number of shares outstanding during 2008/09 of 22,287,398 (23,211,689).

Instruments that may give rise to future dilutive effect

During 2009/09 the Company had three outstanding call option programmes, the redemption price of which (SEK 36.00, SEK 44.40 and SEK 36.80, respectively) exceeded the average market price of the shares (SEK 26.10 per share). These options are therefore regarded as having no dilutive effect and have been excluded from the calculations of earnings per share after dilution. Refer to Note 6 for a description of the option programme. If the market price of the share at some future point in time reaches a level over the redemption price, these options will entail dilution. Shares held in treasury are used as a hedge for this programme.

Note 41 Risk management

Financial risks

Efficient and systematic risk evaluation of financial risks as well as business risks is essential to Lagercrantz. Lagercrantz Group's model for risk management does not involve avoidance of risk, but is rather aimed at identifying, managing and pricing these risks.

The Board of Directors of Lagercrantz is responsible for adopting the finance policy that sets guidelines, goals and limits for financial management within the Group. The finance policy governs the distribution of responsibility between the Board of Directors of Lagercrantz, Group management and the subsidiaries. Group management has the operative responsibility to secure the Group's financing and to manage cash liquidity, financial assets and liabilities in an efficient manner.

Foreign exchange risk

Despite the fact that Lagercrantz has an international presence, its operations are local in nature as far as foreign exchange risk is concerned. Foreign exchange risk is the greatest financial risk to which Lagercrantz Group is exposed. It is defined as the risk for negative effect on profit caused by foreign exchange rate fluctuations. Foreign exchange rate fluctuations affect the Company's profit, equity and competitive situation in different ways:

• The result is affected when sales and purchases are in different currencies (transaction exposure).
• The result is affected when assets and liabilities are in different currencies (translation exposure).
• The result is affected when profit of subsidiaries in different currencies is translated into Swedish kronor (translation exposure).
• Equity is affected when the subsidiaries' net assets in different currencies are translated into Swedish kronor (translation exposure).

Transaction exposure

In an internationally active trading company such as Lagercrantz Group it is important to offer customers and suppliers opportunities to pay in their own currency. This means that the Group continually assumes currency risks, both in terms of trade receivable and trade payables in foreign currency.

Since the largest part of sales is in the Nordic Region, Lagercrantz Group has a surplus of foreign currency flows in that region. These flows are exposed to transaction risks. The Group's purchases and sales in important foreign currencies amounted to MSEK 1,336 and MSEK 1,601, respectively, during the year.

Purchases/sales in important currencies

Amounts in MSEK	Purchases	Sales
USD	291	181
EUR	826	707
GBP	18	39
DKK	134	443
NOK	23	170
JPY	43	27
PLN	1	34
Group total	1,336	1,601

Cash and cash equivalents by currency

Amounts in MSEK	3/31/2009	3/31/2008
SEK	5	9
USD	6	11
EUR	27	32
DKK	3	8
NOK	9	8
Other currencies	10	11
Group total	60	79

According to the guidelines of Lagercrantz Group, its foreign exchange exposure should be reduced to a certain extent. Currency exposure that arises is eliminated to the greatest extent possible by currency clauses and invoicing in the same currency as that in which purchases are made. Forward cover of day-to-day exposure to foreign currency is used sparingly. The long-term benefit of forward foreign exchange cover is deemed to be small in combination with the growing complexity of reporting financial derivative instruments.

Translation exposure in the balance sheet

An individual subsidiary should normally have no translation risk in its own balance sheet. This means that a subsidiary's receivables and liabilities in foreign currency should be balanced. Subsidiaries also normally do their borrowing in their own currency. In practice, this only comes into play when loans are raised in conjunction with the acquisition and in the case of loans between subsidiary and parent company. Equity in foreign Group companies is normally not hedged since investments in subsidiaries are considered to be of a long-term character. There may be exceptions, however. The translation exposure in consolidated equity can, during certain periods with sharp foreign currency rate fluctuations, be substantial. The largest exposures are in DKK, EUR and NOK. Currency hedges exist in the amount of MDKK 15 and MEUR 1, respectively. The agreed rate of exchange are DKK 1.47 and EUR 11.00. The effect of translation differences on equity is set forth in the summary of changes in shareholders' equity.

Currency sensitivity

As a rule of thumb it can be said that a change of the euro exchange rate (including also the correlating currency exchange effect of the Danish krona that is tied to the euro) by plus or minus 5 percent is estimated to change Lagercrantz Group's gross profit by plus or minus MSEK 10 on an annual basis, given the conditions that prevailed during the financial year. A change of the US dollar exchange rate by plus 5 percent would give a corresponding effect of minus MSEK 5.

Foreign exchange rate changes also have other effects on earnings, as a portion of the Groups costs are in foreign currency (predominantly EUR och DKK), and that actions are taken on a day-to-day basis to minimise the negative effects of foreign exchange rate fluctuations. This makes the ultimate effects on earnings difficult to predict and analyse. The rule of thumb should therefore be used with caution.

Interest risk

The Group's financial policy states that borrowing and the term of fixed interest on borrowing should be up to the period during which a borrowing need is deemed to exist. The overarching policy is that up to 50 percent of the borrowing should be for a term of one to five years. A company's exposure arises in two ways:

• The company may have invested in interest-bearing assets the value of which changes when there is an interest rate change.
• The cost of the company's borrowing may change when the interest rate level changes.

Lagercrantz Group has no long-term surplus liquidity and does not normally invest funds in anything but short-term bank deposits/short-term money market instruments with a term of less than 90 days. As a consequence, there is no appreciable interest rate risk in the Group's shortterm investments. Changes in the interest rate level therefore primarily affect the Company's borrowing cost. A change in the weighted average interest rate by 1 percent for the Group is expected to affect the interest expense before taxes by approximately MSEK 2 on an annual basis, given the conditions that prevailed during the financial year. An interest rate hedge has been acquired in an amount of MSEK 100. Interest on this amount will not exceed 4.55 percent over the next three years. The Group's goal is to have a well balanced liquidity reserve available in the form of cash and cash equivalents and committed credit facilities.

Weighted average effective interest rates on loans

	Group		Parent Company
Percent	2008/09	2007/08	2008/09	2007/08
Long-term liabilities to credit institutions	5,97%	4,09%	5,99%	4,04%
Short-term liabilities to credit institutions	4,33%	4,53%	4,11%	4,52%

Credit risk

Lagercrantz Group's credit risk with respect to trade receivables is highly diversified through a large number of projects and other business agreements of varying size and type, with a large number of customer categories in a multitude of geographic markets. The Company therefore has no significant concentration of credit risks. Financial credit and counterparty risk is identified, managed and reported in accordance with the framework defined in the Group's finance policy, risk policy and rules of attestation. In connection with financing of projects and other business agreements Lagercrantz may in certain cases assume responsibility for bank guarantees, in the form Parent Company guarantees towards a third party, for the purpose of securing financing during a limited period of time. According to the finance policy, as few credit counterparties as possible shall be strived for and they should always be highly creditworthy.

No material losses of a financial character were sustained during the year.

Liquidity risk

Established relationships with the capital markets is a prerequisite for Lagercrantz Group's prospects for securing a supply of capital on a longterm basis on terms and conditions in tune with conditions on the market. Given the credit facilities in place, there is good preparedness for temporary fluctuations in the Group's liquidity needs.

• Lagercrantz Group's confirmed bank credit facilities consist of: Acquisition loan in the amount of MSEK 79.
• Committed credit facility in the amount of MSEK 250 in the Parent Company.
• Committed credit facilities in the amount of MSEK 64 in subsidiaries.

Capital risk

The Group's goal with respect to its capital structure is in line with the purpose of securing the ability to continue operations, allowing it to continue generating a return to its shareholders and benefits for other stakeholders, and to maintain a capital structure that gives a low overall capital cost.

The risk inherent in the Group's level of capital is judged in terms such as equity ratio and interest coverage ratio. The present levels of these metrics adequately fulfil the requirements imposed by providers of capital.

Note 42 Related party disclosures

Related party relationships

The Parent Company has a related party relationship with its Group companies. The Company's directors and their family members control approximately 24 percent of the Company's votes.

Related party transactions

The Parent Company invoices subsidiaries for intra-Group services. Sales have occurred between Group companies in small amounts. Transactions are on terms and conditions in line with market conditions. No other purchases and sales have occurred between the Parent Company and Group companies.

Note 43 Events after the balance sheet date

No for the Company significant events have occurred after the 31 March balance sheet date.

Note 44 Information about Lagercrantz Group AB

Lagercrantz Group AB (publ) with its registered office in Stockholm. Address: Box 3508, Torsgatan 2, SE-103 69 Stockholm, Sweden Organisation number: 556282-4556

The Company's primary object is to deal in and manufacture products in the fields of data and electronics – either itself or through wholly or partially owned Group companies – and to engage in other business compatible therewith. The average number of employees for the year is 9. The Parent Company's shares are registered with OMX Nordic Exchange.

Audit report

To the Annual Meeting of the shareholders of Lagercrantz Group AB

Organisation number 556282-4556

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and the President of Lagercrantz Group AB for the financial year 1 April 2008 – 31 March 2009. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 26–63. The Board of Directors and the President are responsible for these accounts and the administration of the company as well as for the application of the Swedish Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards (IFRSs) as adopted by the EU and the Swedish Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the Board of Directors and the President and significant estimates made by the Board of Directors and the President when preparing the annual accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any director or the President. We also examined whether any director or the President has, in any other way, acted in contravention of the Swedish Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Swedish Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards (IFRSs) as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the statutory Board of Directors report and that the members of the Board of Directors and the President be discharged from liability for the financial year.

Stockholm, June 24 2009

KPMG AB

Joakim Thilstedt Authorised Public Accountant

Corporate Governance

Lagercrantz Group is a Swedish public limited liability company with its registered office in Stockholm. The Company deals in technology and is publicly traded in Stockholm since 2001. Governance and control of the Company is allocated in accordance with the Swedish Companies Act and the Articles of Association among shareholders at general meetings for shareholders, the Board of Directors and the Chief Executive Officer.

Lagercrantz Group AB (publ) applies the Swedish Code of Corporate Governance and hereby submits its corporate governance report for the 2008/09 operating year. The Company adheres to the Code in all essential respects. An explanation is provided for non-adherence with respect to three items. This report has not been examined by the Company's auditor.

The owners' governance of the Company and the Group is based on the Swedish Companies Act and a number of other Swedish and foreign laws and regulations. Control is also exercised by a listing agreement between the Company and OMX Nordic Exchange Stockholm, where the Company's shares are listed.

GENERAL MEETING OF SHAREHOLDERS

The general meeting of shareholders is the highest decisionmaking body in Lagercrantz Group AB. In addition thereto, shareholders exercise their influence through discussions and decisions.

All shareholders of record five days before the general meeting of shareholders may participate, personally or via proxy. Notice must be given in accordance with the terms of the notice to attend.

Lagercrantz Group's regularly scheduled Annual General Meeting shall be held in Stockholm within six months of the end of the financial year. The notice to attend is published in Dagens Industri and Post och Inrikes Tidningar, and is published on the Company's website – www.lagercrantz.com.

The Annual General Meeting appoints the Board of Directors and the auditors and sets their fees. The Annual General Meeting also adopts the financial statements and decides on the allocation of earnings and on discharge from liability for the Board of Directors and the President. The Annual General Meeting also decides on the form for appointment of an election committee.

Annual Meeting 2008

The 2008 Annual Meeting was held 1 September in Stockholm. Notice for the meeting was published 25 July 2008 in Dagens Industri and Post och Inrikes Tidningar, and was announced the same day in a press release. Shareholders representing 7.4 million shares and 16.4 million votes

participated in the proceedings of the Annual Meeting. This is equivalent to 33 percent of the number of shares outstanding and 51 percent of the votes in the Company.

Resolutions passed at the Annual Meeting included the following:

• Anders Börjesson was elected Chairman of the meeting in accordance with the proposal of the Election Committee.
• A dividend of SEK 1.50 per share was declared in accordance with the proposal of the Board of Directors.
• Discharge from liability was granted to the Board of Directors and the President for their administration during 2007/08.
• All directors and the Chairman were re-elected in accordance with the proposal of the Election Committee.
• Fees for the Board of Directors and the auditors were determined.
• Routines were established for appointment of an election committee in preparation for the next Annual Meeting.
• Principles for remuneration and other terms of employment for management were resolved.
• The Annual Meeting resolved to reduce the Company's share capital by SEK 2,481,846 through cancellation without repayment of 1,240,923 class B shares, which the Company based on resolutions of prior annual meetings has repurchased.
• The Annual Meeting also resolved to eliminate the language about class C shares in the Articles of Association.
• In accordance with the proposal of the Board of Directors, the Annual Meeting resolved that the Company – in a departure from the pre-emptive rights if shareholders – to offer members of senior management to acquire up to 180,500 call options on repurchased class B shares.
• The Board of Directors was authorised to acquire and sell shares in the Company – on one or more occasions –during a period ending immediately before the next following Annual Meeting.

ELECTION COMMITTEE

The principal task of the Election Committee is to suggest directors, Chairman of the Board of Directors and auditors and to suggest the fees for directors, the Chairman and the auditors in such a way that the Annual Meeting can make well-founded

decisions. The 2008 Annual Meeting decided to give the Chairman of the Board of Directors the assignment of contacting the largest shareholders by vote before 31 December 2008, requesting them to appoint candidates, thereby forming an election committee together with the Chairman of the Board of Directors. In accordance herewith, an election committee was formed consisting of:

• Anders Börjesson, Chairman of the Board of Directors
• Tom Hedelius
• Pär Stenberg
• Kerstin Stenberg, SwedbankRobur fonder
• Erik Sjöström, Skandia Liv

The Election Committee has access to the evaluation made by the Board of Directors of its work and information about the Company's business and strategic orientation. The suggestions of the Election Committee will be published in connection with the notice for the Annual Meeting and will also be made available at the Company's website followed by a brief report of the Committee's work. The mandate period of the Election Committee lasts until a new Election Committee has been appointed. No fees are payable for Election Committee work.

In a deviation from the Swedish Code of Corporate Governance, the Chairman of the Board of Directors, Anders Börjesson, has also held the post of Chairman of the Election Committee. Tom Hedelius, Vice Chairman of the Board, has also been a member of the Election Committee. The explanation for this deviation is that Anders Börjesson as well as Tom Hedelius also are the Company's largest owners in terms of votes and the fact that Lagercrantz Group's strategic orientation, as well as its business and governance model, are based on aspects such as strong engagement and know-how on the part of the Company's principal owners. This approach permeates Lagercrantz Group's corporate culture and has proved to be important for the Group's successful development.

BOARD OF DIRECTORS

It is the duty of the Board of Directors to manage the affairs of the Company in the best possible way and in so doing look after the interests of the shareholders. Lagercrantz Group AB's Board of Directors consists of five regular members who together represent broad commercial, technical and public experience. The 2008 Annual Meeting elected the following Board of Directors:

• Pirko Alitalo
• Anders Börjesson, Chairman
• Tom Hedelius
• Lennart Sjölund
• Jörgen Wigh, President & CEO

The Board of Directors and the Election Committee are of the opinion that a majority of the directors are independent vis à vis the Company and its management and at least two of these directors also are independent of the Company's major shareholders.

Chairman of the Board of Directors

The Chairman of the Board of Directors leads the work of the Board of Directors and has a special responsibility to follow the Company's development between the Board of Directors meetings, and to ensure that the members of the Board of Directors are provided with the information necessary to perform satisfactorily. The Chairman maintains contact with the President and the Executive Vice President and holds meetings with them as needed. The Chairman is also responsible for evaluation of the work of the Board of Directors and for the Election Committee being informed of the result of such evaluation.

Work of the Board of Directors

The Board of Directors held six meetings during the 2007/08 operating year during which minutes were taken, one of which was a statutory Board of Directors meeting in conjunction with Annual General Meeting.

The Board of Directors has rules of procedure that are confirmed on an annual basis at the statutory Board of Directors meeting. The rules of procedure lay down the division of labour between the Board of Directors and the President, the Chairman's and the President's responsibility and the forms for the financial reporting.

The President is a member of the Board of Directors and presents reports at Board of Directors meetings. The Board has appointed the Group's Executive Vice President to serve as secretary. The Board of Directors has a quorum when at least four directors are present and, where possible, decisions are made after discussion that leads to consensus. The Board of Directors was complete at all meetings during the year.

During regularly scheduled Board of Directors Meetings the Company's economic and financial position are dealt with; one item on the agenda deals with acquisitions. The Board of Directors is kept informed by way of information in writing about the Company's business and other relevant information.

During 2008/09 the Board of Directors devoted special attention to issues surrounding acquisitions, structure and market situation. The work of the Board of Directors was subsequently marked by structural issues and action programmes to meet the economic downturn. The Board of Directors also held one meeting solely aimed at discussing the Group's position and strategy.

The work of the Board of Directors is evaluated annually following an established procedure. Among items discussed are:

• Agenda and material for the Board of Directors
• Number of meetings
• Strategic plan and orientation
• Audit review
• Overall responsibility
• Competence
• Work of the Chairman
• Meeting technique and group dynamics

The Board of Directors dealt with the most recent evaluation during a meeting in the month of February.

Fees to the Board of Directors

The total fee to the Board of Directors of Lagercrantz Group AB for 2008/09 amounted to SEK 1,100 thousand (950). In accordance with an Annual Meeting resolution the Chairman of the Board of Directors received SEK 400 thousand (350), the Vice Chairman SEK 300 thousand (250) and the other regular directors who are not employees of the Company received SEK 200 thousand (175) each.

COMPENSATION COMMITTEE

The Board of Directors has appointed a compensation committee within itself with the task of preparing the proposal of the Board of Directors for the Annual Meeting's guidelines for compensation to the President and CEO, and other members of senior management. The Committee also has the task of following up on and implementing the resolutions of the Annual Meeting with respect to principles for compensation to members of senior management. The Compensation Committee consists of Anders Börjesson, Chairman of the Board of Directors, and Tom Hedelius, Vice Chairman of the Board of Directors. The President & CEO presents reports but does not participate in matters concerning himself. The Compensation Committee held one meeting during the year.

AUDIT AND AUDIT COMMITTEE

The Board of Directors has appointed an audit committee consisting of all directors with the exception of the President & CEO. In the opinion of the Board of Directors, this is most appropriate in view of Lagercrantz Group's size and business. At its disposal the Audit Committee has an internal control group consisting of persons who are independent of management. This group has the task of reviewing the Group's internal control routines and compliance thereto, and to report their observations and recommendations to the Board of Directors. The meetings of the Audit Committee have been held in conjunction with the regularly scheduled Board of Directors meetings.

Because of the structure with an internal control group that supervises and reports discrepancies to the Committee, and the extensive work that a traditional examination by the

Company's auditors would entail, the Board of Directors has chosen to deviate from the recommendation of the Swedish Code of Corporate Governance calling for a review of the semiannual report.

In order to ensure oversight and control by the Board of Directors, it is annually given an opportunity to voice its opinion on the auditors' planning of the audit's scope and focus. After completing its review of internal control and accounting records, the auditors report on their findings at the Board of Directors meeting in May. In addition hereto the auditors are offered to attend Board of Directors meetings when the Board of Directors or the auditors feel that there is a need.

AUDITORS

At the 2005 Annual Meeting registered Audit Company KPMG Bohlins AB was elected to serve as auditor for the period ending with the 2009 Annual Meeting. During 2008 the audit firm has appointed Joakim Thilstedt, Authorised Public Accountant, to serve as auditor in charge.

CEO AND MANAGEMENT TEAM

The Chief Executive Officer and Group management draw up and implement Lagercrantz Group's over-arching strategies and deal with issues such as acquisitions, disposals and major capital outlays. Such issues are prepared by Group management for decision by the Parent Company's Board of Directors. The President & CEO is responsible for day-to-day management of the Company in accordance with decisions and guidelines of the Board of Directors.

Lagercrantz Group's group management consists of a president and two executive vice presidents. The management team consists of Group management and three division heads. The management team meets on a monthly basis to discuss the Group's and the subsidiaries' results and financial position, as well as issues pertaining to strategy, result follow-up, forecasts and the general development of the business. Among the tasks are also issues concerning acquisitions, joint projects, consolidated financial reporting, communication with the stock market, internal and external communication and coordination and follow-up of security, environment and quality.

OPERATIVE GOVERNANCE

The Group's operative activities are handled in subsidiaries of the Lagercrantz Group. There is active board-of-directors work in all subsidiaries under the management of division heads. Subsidiary boards of directors follow day-to-day operations and sets business plans. Operations are conducted in accordance with the rules, guidelines and policies adopted by Group management, and by guidelines instituted by each respective subsidiary Board of Directors. Subsidiary chief executives are charged with profit centre and profitability responsibility for

their respective companies, as well as responsibility to secure growth and development in their respective companies. Allocation of investment capital in the Group is determined following a decision by parent company Lagercrantz Group's Board of Directors in accordance with an annually updated capital expenditure policy.

Operative governance in the Lagercrantz Group is marked by clear demands from Group management and considerable liberty for each respective subsidiary to make decisions and act to fulfil set goals.

COMPENSATION TO SENIOR MANAGEMENT

Lagercrantz Group's principles for compensation to senior management mean that compensation to the President & CEO and other persons in management may consist of basic salary, pension, other benefits and financial instruments.

The aggregate compensation should be should be adjusted to market conditions and competitive, and also attuned to responsibility and authority. The variable portion of the compensation shall be maximised at approximately 40 percent of the fixed salary. The variable compensation shall also be based on actual performance relative to set goals, and by individual performance.

The retirement age shall be 60–65 years and in addition to ITP plan there should typically only be defined contribution pension plans. Upon termination, there may be a severance payment equivalent to a maximum of one year's salary, in addition the regular salary. There shall be no share-based or share-price-based programs beyond the incentive programme proposed to the Annual Meeting.

In individual cases and if there are compelling reasons, the Board of Directors may deviate from the above guidelines.

INCENTIVE PROGRAMME

A long-term incentive programme was introduced in 2006 for chief executives and members of senior management in the Group in accordance with an Annual Meeting resolution. The programme is aimed at raising motivation and creating participation for chief executives and members of senior management regarding the opportunities for the Company's development. The purpose of the programme is also to motivate chief executives and members of senior management to continued employment in the Group. The programme is a revolving three-year programme based on call options on repurchased class B shares held in treasury. The total number of call options issued under the programme may at no time exceed approximately three percent of the total number of shares outstanding (of class A shares as well as class B shares).

INTERNAL CONTROL

The purpose of internal control is to ensure that the Company's strategies and goals are followed up and that the investment of the shareholders is protected. A secondary purpose is to ensure Group-wide accurate and relevant information to the stock market in compliance with generally accepted accounting principles in Sweden, laws, regulations and other requirements on listed companies. The Board of Directors of Lagercrantz Group has delegated the practical responsibility to the President & CEO, who in turn has allocated the responsibility to the other members of senior management and to subsidiary chief executives.

Control activities take place in the entire organisation at all levels. Follow-up is included as an integrated element of management's day-to-day work.

For the financial reporting there are policies and guidelines, and also automatic control in systems as well as reasonability assessment of flows and amounts. Guidelines and follow up actions are managed by the Audit Committee.

Management makes regular assessments of any new financial risks that may arise and the risk for errors in the existing financial reporting. To its aid in this regard, management has an internal control group consisting of two persons from the finance department. Assessments are made taking transaction flows, manning and control mechanisms into account. There is focus on errors in the financial reporting with respect to significant earnings and balance sheet items in high amounts and areas where there is a risk that the consequences of any errors would be considerable.

The Board of Directors is of the opinion that a trading operation of Lagercrantz Group's scope, in a decentralised organisation, in a well-defined market, does not need a more extensive review function. The Board of Directors makes a renewed assessment of this issue on an annual basis.

So as to ensure good capital market communication, the Board of Directors has set a communications policy. This policy dictates what should be communicated, by whom and how. The basic premise is that regular financial information is provided in the form of:

• Press releases about significant events or price-sensitive information.
• Interim reports, year-end report and press release in conjunction with the Annual Meeting
• Annual Report

Through openness and transparency, the Board of Directors and management of Lagercrantz Group works provide the Company's owners and the stock market with relevant and accurate information.

Board of Directors and Auditors

Anders Börjesson

Chairman. Born 1948. Bachelor of Science (Econ.). Chairman of Addtech AB, Boomerang AB and Cibenon AB. Vice Chairman of B&B Tools AB. Director of Inomec AB, Bostad Direkt AB and Futuraskolan AB. Holding (family): 377,982 class A shares and 402,500 class B shares. Director since 2001.

Tom Hedelius

Vice Chairman. Born 1939. Doctor h. c. Economics, Bachelor of Science (Econ.) Honorary Chairman of Svenska Handelsbanken AB. Chairman of Anders Sandrews stiftelse, B&B Tools AB, Industrivärden AB and Jan Wallanders and Tom Hedelius stiftelse. Vice Chairman of Addtech AB. Director of SCA AB and LE Lundbergföretagen AB. Holding (family): 362,982 class A shares and 5,400 class B shares. Director since 2001.

Pirkko Alitalo Director. Born 1949. Bachelor of Science (Econ.) Holding: 5,000 class B shares. Director since 2001.

Lennart Sjölund Director. Born 1949. Bachelor of Science (Econ.) Chairman of Quickcool AB, ErySave AB and Parkallen Invest AB. Director of Godiva AB. Holding (family): 110,000 class B shares. Director since 2001.

Jörgen Wigh President & Chief Executive Officer. Born 1965. Bachelor of Science (Econ.) Holding: 6,720 class A shares , 28,000 class B shares and 110,500 call options on class B shares. Director since 2006.

Auditors

Auditors appointed by the 2005 Annual Meeting are the registered auditing company KPMG Bohlins AB. Auditor in charge is Joakim Thilstedt, Authorised Public Accountant.

Management

From left to right: Magnus Söderlind, Per Ikov, Kjell Eriksson, Jörgen Wigh, Gunnar Almeling, Anders Larsson, Niklas Enmark, Ulf Gladh.

Jörgen Wigh

President & Chief Executive Officer. Born 1965. Bachelor of Science in economics Holding: 6,720 class A shares, 28,000 class B shares and 110,500 call options on class B shares.

Gunnar Almeling

Vice President, Mechatronics. Born 1956. Holding: 1,800 class B shares and 45,000 call options on class B shares.

Niklas Enmark

Executive Vice President and Chief Financial Officer. Born 1972. Bachelor of Science in economics. Holding: 6,000 class B shares and 62,250 call options on class B shares.

Kjell Eriksson

Vice President, Communications. Born 1954. Product area Digital Image Transmission/Technical Security. Holding: 45,000 call options on class B shares.

Ulf Gladh

Vice President, Electronics. Born 1961. Product area Embedded Systems. Holding: 10,000 class B shares and 45,000 call options on class B shares.

Per Ikov

Vice President, Business Development. Born 1961. Bachelor of Science (Economic.) Holding: 9,600 class B shares and 30,500 call options on class B shares.

Anders Larsson

Group Controller. Born 1961. Holding: 4,000 class B share and 16,000 call options on class B shares.

Magnus Söderlind

Executive Vice President. Responsible for business development. Born 1966. Bachelor of Science in economics and engineering. Holding: 7,500 class B share and 40,500 call options on class B shares.

Annual Meeting

The 2009 Annual Meeting of Lagercrantz Group AB will be held at 16.00 CET, Monday, 31 August 2009 at IVA conference centre at Grev Turegatan 16 in Stockholm.

NOTICE OF PARTICIPATION

Shareholders who wish to participate in the proceedings of the Annual Meeting must:

• be entered in the share register under their own name (not in the name of a nominee) in the share register maintained by Euroclear Sweden (former VPC) no later than Tuesday, 25 August 2009, and;
• file notice of their desire to attend to the Company's head office under address Lagercrantz Group AB, Box 3508, SE-103 69 Stockholm, by telephone +46 (0)8-700 66 70, fax +46 (0)8-28 18 05, or by e-mail to info@lagercrantz.com not later than at 15.00 CET, Thursday, 27 August 2009.

Such notice must contain the following information: shareholder's name, personal registration number (organization number), address, telephone and number of shares represented and the number of any assisting counsel.

Shareholders whose shares are registered in the name of a nominee must, in order to exercise their rights at the Annual Meeting, temporarily register their shares in their own name. Such re-registration must be completed no later than 25 August 2009. Request for such re-registration must be made to the custodian a few banking days before 25 August for the registration to take place in time.

Calendar

21 JULY 2009

Interim report for the period 1 April–30 June 2009.

31 AUGUST 2009 Annual Meeting 2009.

11 NOVEMBER 2009

Interim report for the period 1 April–30 September 2009.

9 FEBRUARY 2010 Interim report for the period 1 April–31 December 2009.

11 MAY 2010 Year-end report for the financial year 2009/10.

Published information is available at www.lagercrantz.com

About the annual report

PERSONAL INFORMATION POLICY

Lagercrantz Group does not forward personal information collected through the annual report. Information collected from visitors is not used to track individuals who visited/displayed the annual report.

Lagercrantz Group's annual report uses cookies. Their purpose is to simplify the visit, collect statistics on the number of visitors, and see which pages were visited.

CONTACT LAGERCRANTZ GROUP

Lagercrantz Group AB PO Box 3508, SE-103 69 Stockholm, Sweden Office address: Torsgatan 2, Stockholm, Sweden Tel: +46 (0)8-700 66 70 Fax: +46 (0)8-28 18 05 info@lagercrantz.com www.lagercrantz.com

COMMUNICATION TEAM

Content: Lagercrantz Group and Taurus Kommunikation Production: Lagercrantz Group, Taurus Kommunikation and Hallvarsson & Halvarsson Technical production: Hallvarsson & Halvarsson Art and design: Tintin Timén and Hallvarsson & Halvarsson Photo: Magnus Fond and Annika Örnborg Translation: Ole Böök

This report is a translation of the Swedish language Annual Report. In the event of any discrepancies between this document and the Swedish original, the latter shall govern.

The whole PDF version of Lagercrantz Annual Report 2008/09 can be downloaded here.

Addresses

LAGERCRANTZ GROUP AB

Torsgatan 2 P.O. Box 3508 SE-103 69 Stockholm SWEDEN Tel: + 46 8 700 66 70 Fax: + 46 8 28 18 05 www.lagercrantz.com

ELECTRONICS

ACTE A/S Vallensbaeksvej 41 DK-2605 Brøndby DENMARK Tel: + 45 46 900 400 Fax: + 45 46 900 500 www.acte.dk

ACTE AS

P.O. Box 190 Vestvollveien 10 NO-2021 Skedsmokorset NORWAY Tel: + 47 63 898 900 Fax: + 47 63 879 000 www.acte.no

ISIC A/S

Edwin Rahrs Vej 54 DK-8220 Brabrand DENMARK Tel: + 45 70 207 077 Fax: + 45 70 207 976 www.isic.dk

ACTE OY

P.O. Box 36 Larin Kyöstin tie 4 FI-00641 Helsinki FINLAND Tel: + 358 9 752 761 Fax: + 358 9 752 766 59 www.acte.fi

ACTE SOLUTIONS AB

P.O. Box 4115 Allén 6 A, Sundbyberg SE-171 04 Solna SWEDEN Tel: + 46 8 445 28 00 Fax: + 46 98 26 19 www.actesolutions.se/

UNITRONIC AG

Mündelheimer Weg 9 DE-40472 Düsseldorf GERMANY Tel: + 49 211 951 10 Fax: + 49 211 951 11 11 www.unitronic.de

ACTE SP. Z O.O.

ul Krancowa 49 PL-02-493 Warsawa POLAND Tel: + 48 22 336 02 00 Fax: + 48 22 336 02 01 www.acte.pl

IWSFE SP. Z O.O.

146 D Jerozolimskie Avenue PL-02-305 Warsawa POLAND Tel: + 48 22 257 02 40 Fax: + 48 22 257 02 40 www.iwsfe.com

MECHATRONICS

ELFAC A/S Priorsvej 23 DK-8600 Silkeborg DENMARK Tel: + 45 86 801 555 Fax: + 45 86 824 050 www.elfac.dk

EFC FINLAND OY Nyåkersvägen 6 FI-65610 Korsholm FINLAND Tel: + 358 6 322 62 22 Fax: + 358 6 322 62 00 www.efc.fi

KABLAGEPRODUKTION I

VÄSTERÅS AB Omformargatan 12 SE-721 37 Västerås SWEDEN Tel: + 46 21 81 51 51 Fax: + 46 21 81 51 61 www.kablageproduktion.com

ACTE SUPPLY AB

P.O. Box 13 Allén 6 A, Sundbyberg SE-601 02 Norrköping SWEDEN Tel: + 46 8 445 28 00 Fax: + 46 8 98 26 19 www.acte.se

ELPRESS AB

P.O. Box 186 Industrivägen 15 SE-872 24 Kramfors SWEDEN Tel: + 46 612 71 71 00 Fax: + 46 612 130 20 www.elpress.se

COMMUNICATIONS

ISG SYSTEMS AB Sporthallsvägen 10 SE-263 34 Höganäs SWEDEN Tel: + 46 42 36 21 40 Fax: + 46 42 36 21 49 www.isg.se

STV VIDEO DATA AB

Anderstorpsvägen 12, 2tr SE-171 54 Solna SWEDEN Tel: + 46 8 568 441 00 Fax: + 46 8 568 441 01 www.stv.se

NORDIC ALARM AB

Englundavägen 11 SE-171 41 Solna SWEDEN Tel: + 46 8 27 27 27 Fax: + 46 8 735 52 58 www.nordicalarm.se

COBS AB

Norra Långebergsgatan 4 SE- 421 32 VÄSTRA FRÖLUNDA SWEDEN Tel: + 46 31 333 38 40 Fax: + 46 31 14 80 90 www.cobs.se

HEATH COMM AS

P.O. Box 7265 C. Sundtsgate 29 NO-5020 Bergen NORWAY Tel: + 47 55 304 600 Fax: + 47 55 304 602 www.heathcomm.no

LAGERCRANTZ

COMMUNICATION AB P.O. Box 6004 Korta Gatan 9 SE-171 54 Solna SWEDEN Tel: + 46 8 626 41 00 Fax: + 46 8 754 77 59 www.lagercrantz.se

K & K ACTIVE OY

Itälahdenkatu 22 B FI-00210 Helsinki FINLAND Tel: + 358 9 6855 0550 Fax: + 358 9 6855 0551 www.kandk.fi

DIREKTRONIK AB

P.O. Box 234 Konsul Johnsons väg 15 SE-149 23 Nynäshamn SWEDEN Tel: + 46 8 52 400 700 Fax: + 46 8 520 181 21 www.direktronik.se

BETECH DATA A/S

Herstedvang 7C, 2. Sal DK-2620 Albertslund DENMARK Tel: + 45 43 487 470 Fax: + 45 43 487 488 www.betechdata.dk

CAD KOMPAGNIET A/S

Dampfærgevej 8 DK-2100 Köpenhamn DENMARK Tel: + 45 70 22 22 17 Fax: + 45 70 22 22 84 www.cad-komp.dk