Lagercrantz Group — Annual Report 2010

Jul 21, 2010

Annual Report 2009/10

The Year in Brief
Lagercrantz Group in Brief
President's Statement

Business Concept, Vision, Goals and Strategy	6
Market	q
Division Electronics	12
Division Mechatronics	16
Division Communications	19
Aquisitions	22
The Lagercrantz share	フ3

Several-year Overview	26
Board of Directors' Report 2009/10	28
Consolidated Income Statement	39
Consolidated statement of comprehensive Income	39
Consolidated Statement of Financial Position	40
Consolidated Statement of Changes in Equity	42
Consolidated Statement of Cash Flows	43
Parent Company Income Statement	44
Parent Company Balance Sheet	45
Parent Company Statement of Changes in Equity	47
Parent Company Statement of Cash Flows	48
Notes to the Financial Statements	49
Audit report	71

Annual Meeting	74
Calendar	74
About the Annual Report	75
Addresses

The Year in Brief

1 April 2009–31 March 2010

• The year was marked by adaptation to lower business volumes. Action taken had a mounting positive effect during the financial year, especially with respect to profit and cash flow. An improvement in the business climate was seen towards the end of the financial year.
• Net revenue for 2009/10 amounted to MSEK 1,720 (2,138).
• The operating result amounted to MSEK 67 (105), equivalent to an operating margin of 3.9 percent (4.9). This result includes items affecting comparability of MSEK –1 (–21). The result after financial items amounted to MSEK 58 (94) and the result after taxes amounted to MSEK 42 (68).
• Earnings per share amounted to SEK 1.91 (3.05).
• Cash flow from operating activities per share amounted to SEK 87 (137), equivalent to a per-share cash flow of SEK 3.96 (6.15).
• The return on equity was 8 percent (14) and the equity ratio was 56 percent (49) at the end of the period.
• The Board of Directors proposes a dividend of SEK 1.50 (1.50) per share.

Outcome by quarter 2009/10 and 2008/09

Return on equity

Key financial indicators

	2009/10	2008/09
Net revenue, MSEK	1,720	2,138
Operating result, MSEK	67	105
Operating margin, %	3.9	4.9
Result after financial items, MSEK	58	94
Result after taxes, MSEK	42	68
Cash flow from operating activities, MSEK	87	137
Equity ratio, %	56	49
Earnings per share, SEK¹	1.91	3.05
Number of employees at end of period	608	742
Return on equity, %	8	14
Dividend, SEK²	1.50	1.50

¹ Calculated based on average number of shares outstanding.

² As proposed by the Board of Directors for 2009/10.

Lagercrantz Group AB (publ) – Annual Report 2009/10

Lagercrantz Group in Brief

Lagercrantz Group is a technology 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, electrical installation material 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 short of SEK 2 billion and about 600 employees. The Company's share is listed on Nasdaq OMX Stockholm since 2001.

Numbers in brackets refer to the preceding year.

Other 2% (4)

Other = mainly China, Poland, Switzerland and UK.

President's Statement

The 2009/10 operating year was marked by financial crisis and recession. With a clear start in November 2008, business volumes in most of the Group's units began to fall. Customers' planning horizon was shortened, many customers wanted to cancel orders already placed and some encountered financial problems. This trend was accentuated during the first six calendar months of 2009. We reacted early in Lagercrantz Group. Plans for a negative scenario were drafted unit by unit and these plans were implemented in lockstep with the deteriorating situation. At this stage our decentralised structure with relatively small and easy-to-grasp units with purposeful, responsible managers constituted a considerable strength. The plans had been drafted locally and were implemented by the subsidiary chief executives, forcefully and with good judgment, which meant a minimum of conflicts and costs.

All in all, the business volume declined by just over 20 percent from the peak in autumn of 2008 and we reduced our staff and our costs by as much. In total, we were forced to have approximately 200 persons leave the Group, which has contributed to a reduction of the cost load by about MSEK 80 compared to the preceding financial year.

Focus during the decline was also to strengthen cash flows and reduce risk by freeing up capital tied up in inventories and trade receivables. We introduced stricter routines for follow-up of outstanding accounts receivable and intensified our efforts to reduce inventories. We therefore managed to end the year without significant bad debt losses and we reduced capital tied up in inventories and trade receivables by about MSEK 70.

During the second half of the operating year we began to see a gradual improvement in the market situation. Action taken took effect simultaneously and we regained the balance between revenue and costs. In terms of profit we have not yet returned to pre-recession levels, but the situation still feels stable and hopeful for the future.

I also wish to say an extra big thank you to all of the Group's employees. I do express my gratitude every year in my comments, but last year called for something extra and everybody put their hearts into it.

FUTURE

When we now look forward we see great potential for developing Lagercrantz Group along the course entered upon. This means that we will continue to focus on increasing value added, in part by increasing the proportion of solution sales, system integration and proprietary products.

The proportion of proprietary products has now reached a level of more than 20 percent of the total business volume, from having been almost non-existent a few years ago. Our most recent acquisitions of Norwesco and SwedWire will increase that proportion further.

The Group's strategy is also to broaden operations into new technology areas. Here high tension current and electromechanics have been examples during the past few years, but we have also looked into segments such as camera surveillance and technical security, with a clear niche strategy. Other new areas may be considered as we see that our decentralised organisational model and niche strategy can be put to good use in several technology areas.

We intend to accomplish the transformation of Lagercrantz Group by organic growth and acquisitions. Projects are in progress in several companies for increased value creation, including a larger portion of systems sales. We are also focusing on winning back the business volume we have lost. With lower costs, higher volume will have beneficial effects on profit. In the current situation we will also increase the rate of acquisitions. During the recession we pursued a wait-and-see policy with respect to acquisitions, but now we intend to resume the pace of three to five acquisitions per year. In an extended perspective Lagercrantz Group shall consist of a number of well managed, profitable, clearly niched technology companies, each a leader in its respective area.

We now have an excellent platform on which to continue building Lagercrantz. We have some 20 strong, well-functioning units and we have a financial position that makes pursuing an active acquisitions policy possible.

Stockholm, June 2010

Jörgen Wigh President & CEO

Business Concept, Vision, Goals and Strategy

Lagercrantz is a technology group that creates customer benefits based on high technical knowledge and business skills, 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 custommised products, standard components, services, software and systems within its technology areas. The value added created by Lagercrantz gives the Group a place as an integrated 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

Lagercrantz Group's 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 to create positive changes based on new technology or new solutions in the niches where business is conducted; to lead the sector's development and develop the organisation of Lagercrantz.

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 in terms of market shares in the niche.

Such a 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 the Group has worked consistently to develop existing businesses, at the 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 2009/10 financial year 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. Among other things, some

200 employees have had to leave the Group. The worsening market situation impacted the result and goal fulfilment during the year. As the measures taken had greater impact on the Group's costs, margins gradually strengthened during the year, however. Compared with the year before, total costs were reduced by about MSEK 80. It was also possible to lower capital tied up in inventories and trade receivables by about MSEK 70.

The return on equity was 8 percent (14). The lower figure is the effect of lower consolidated earnings.

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 works with six common main strategies for the Group:

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

Decentralisation and management by objectives

Lagercrantz Group has more than 20 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. That's where the knowledge about customers needs is the greatest. This also creates short decisionmaking paths and promotes a high degree of participation.

The subsidiaries are managed by objectives, 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.

During the 2009/10 operating year most of the subsidiaries took extensive action to adapt their organisation, cost level and capital structure to a situation with weaker demand.

Strong corporate culture

Lagercrantz Group nurtures a strong corporate culture, which traces its origin to 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 customers and to create good sustainable relationships on a long-term basis based on high ethics and honesty.

Businessmanship also encompasses to work resource efficiently and to take responsibility for the effect the business has on the environment. The Group's companies are continually working on reducing the environmental impact of their operations. 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 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 know-

7

ledge 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.

STRATEGIES STAND FIRM

In response to the steep economic downturn during 2009, Lagercrantz Group's focus has been on ensuring a stable, profitable business also in turbulent times. Measures were taken to cut costs and reduce capital tied up in the Group. In a strategic perspective, acquisitions had to be deferred but by the end of the financial year the focus thereon has resumed. Lagercrantz Group's long-term efforts to create growth, profitability and development in the Group based on these strategies have continued. The most important strategies for the immediate future are a broadening of operations in new technology areas, continued work on decentralisation and management by objectives, higher value added and more acquisitions.

Market

Lagercrantz Group is a technology 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 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 20 subsidiaries 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, construction, IT, 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 have been affected by the dramatic decline in industrial output during 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 impelling 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 LAGERCRANTZ GROUP

Trading in different forms constitutes the largest part of the Group's sales, or just below 55 percent (59). Large manufacturers often choose to act on their own with direct sales to end users 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.

The trading companies in Lagercrantz Group step into the role of being the ideal partner with strong ties to their customers as well as their suppliers. The location in the supply chain is motivated by the fact that Lagercrantz Group can offer technical and business knowledge, problem-solving, localisation, combinations and systems, as well as training and service. The technology trading company is the local link that makes world-leading technology accessible to a larger market. For manufacturers the technology trading company ensures qualified counselling, service and after-market activities on the local market.

Lagercrantz Group operates mainly on well defined markets. This is an important part of the overall strategy of Lagercrantz Group, enabling its companies to operate on the strength of indepth knowledge about the market and long-term customer relationships.

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.

Sales of proprietary products are an increasingly salient type of business in Lagercrantz Group. This means that the subsidiary develops, markets and sells products and offer aftermarket services based on their own products under their own brand name. Manufacturing of the products takes place inhouse or with the aid of partners. These businesses in Lagercrantz Group operate in well defined technology niche, and often with a clear export focus. Sales outside the home market are through the company's own resources or with the aid of partners, such as, for example, local distributors. Approximately 20 percent (17) of consolidated sales in the form of this type of selling, which is found in division Mechatronics (electrical connection systems), Electronics (embedded electronics, such as, for instance, PC solutions and proprietary routers) and Communications (communication solutions for the health care industry). The ambition is to increase selectively the element of businesses with proprietary products in the Group. Experience gained from niched proprietary products is that the margins are higher and that the competitive landscape is different as a consequence of a unique product offer.

Niche production makes up about 12 percent (14) 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 in, for example, wind power stations or static frequency changers.

Approximately 8 percent (5) 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 on the increase and is common in division Communications in particular (integrated security systems, CCTV infrastructure and video conferencing 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 over 40 percent (39) of consolidated sales go directly to end customers. Approximately 30 percent (29) of sales go via selling partners and resellers to end customers. Examples of such partners are installation companies, distributors and wholesalers. About 15 percent (17) of consolidated sales go to contract manufacturers. Another important customer group is systems integrators, who account for approximately 13 percent (12) 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 initial 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.

In general, the purchasing pattern is marked by less longterm planning and growing demand for quick deliveries. Lagercrantz Group's business model, with key words such as proximity and flexibility, has proved to be successful in this environment of change and many customer relationships have thus been strengthened.

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 are 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.

In business types proprietary products and systems integration the competitive landscape is different. The element of totally unique and customised products, or tailor-made solutions for a specific customer's needs, have the effect that there are only a small number of competitors who are able to offer comparable solutions.

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 two thirds 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 5 percent of sales and just over 15 percent of purchases. Currencies other than Swedish kronor account for more than 70 percent of sales and 80 percent of purchases, respectively.

Lagercrantz continually analyses its risk exposure in foreign currency. Based on sales volume and volatility experienced during the 2009/10 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 versus sales 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 40 "Risk management."

• Power generation and electricity distribution 17% (19) Electronics 19% (16)
• Construction 10% (11)
• Telecommunication 7% (10)
• Security 8% (9)
• IT 12% (9)
• Transportation 6% (8)
• Other (including Public sector) 21% (18)

Numbers in brackets refer to the preceding year.

Revenue by market channel

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 in Denmark, Norway, Sweden, 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 there 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.

2009/10 OPERATIONS

Revenue for division Electronics fell during the year to MSEK 552 (727). The drop in sales is a consequence of the state of the economy, restructuring of operations with low profitability and also of moving the electronics business in Finland to the Finnish trading business in division Mechatronics. Sales volumes stabilised during the latter part of the year for most businesses in the division. Since autumn of 2009, increased activity has been seen in some of the division's customer segments. This has gradually strengthened demand. Business operations have been adapted which has meant higher margins during the year. Measures taken have included a concentration of the businesses to the Nordic Region,

Germany and Poland, product line development with focus on gross margins, cost-cutting measures and organisational

contraction. The operating profit declined during the year to MSEK 17

(24). The operating margin was 3.1 percent (3.3).

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.

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. Further stabilisation of the market situation is expected to be seen during the coming year Division Electronics will follow the development closely and adapt its operations to the situation at hand.

Revenue by business type

Division Electronics	2009/10	2008/09	2007/08
Net revenue, MSEK	552	727	778
Operating result, MSEK	17	24	38
Operating margin, %	3.1	3.3	4.9

Key figures

• Trading, 78% (70)
• Proprietary products, 19% (17)
• Systems integration, 2% (4)
• Special production, 1% (3)
• Other, 0% (6)

Unitronic contributes to well-functioning emergency service

The ability of emergency services to save lives depends to a great degree on how well alarms and information can be brought to the attention of emergency response personnel at a stage when the outcome of the emergency still can be influenced. Lagercrantz Group's subsidiary

Unitronic has developed a system with personal alarm terminals that enhances that ability.

When the alarm is sounded the alarm response centre must understand the emergency and call out the right units. Every person gets an alarm directly to their personal alarm receiver. An audiovisual alarm provides initial information about the emergency site's location and needs. The person alarmed can in a secure manner acknowledge receipt of the alarm and provide immediate information on availability. This kind of two-way communication with individual persons and entire groups of personnel makes it possible for the emergency response coordinator to locate available resources quickly and then prioritise and plan the emergency response accordingly.

This two-way communication operates via GSM networks and the internet. Communication is constantly on-line and cannot be intercepted and is not subject to interference from other traffic. This gives unsurpassed reliability with response times of less than a second. A nationwide alarm will reach everybody within five seconds.

Thanks to full-coverage information, it is possible for the emergency response coordinator to determine which units should be directed to the scene, which route they should take and when they can be expected to show up at the scene of the emergency. Reserves can be held available and be kept informed for as long as deemed necessary. Specialists and equipment can be summoned as needed and the emergency response can be adapted to the course of events.

The technology that makes this possible has been developed by Lagercrantz Group's Unitronic subsidiary. By combining reliable communications technology, such as GPRS and internet, with a newly developed protocol for information transmission, Unitronic has solved several difficult problems at one fell swoop: reliability, speed, protection against interception and interference, as well as cost efficiency. Unitronic has combined hardware and its software, also assuming responsibility for the carrier wave and transmission over already established GSM networks.

For more information: www.selectric.de/cms/startseite www.unitronic.de

Electronics' business model – value adding distribution

What is value-adding distribution? Division Electronics' subsidiaries under the name of Acte in the Nordic Region and Poland, and Unitronic in Germany, operate as valueadding 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 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-specific 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, primarily wind power, 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.

2009/10 OPERATIONS

Net revenue declined to MSEK 511 (628).

The decrease is explained mainly by the state of the economy. During the last quarter of the fiscal year an increase in demand from the division's customers was sensed, both from industry customers, as well as from customers in power generation and electricity distribution.

Efforts to reduce costs and streamline operations were ongoing during the entire year. Steps were taken to shrink the headcount as well as to reduce working capital and to integrate the Finnish electronics business.

Operating profit amounted to MSEK 30 (49), equivalent to a margin of 5.9 percent (7.8).

STRATEGIES AND BUSINESS DEVELOPMENT

During the year Mechatronics worked on strengthening, improving and streamlining the production apparatus. The division shall provide proximity, flexibility and customer adaptation. Mechatronics shall assume responsibility for quality, control and material optimisation and overall improvement of processes for 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.

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.

In some areas low-cost production initiatives were taken outside the Nordic countries. A partner network has been created for manufacturing 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.

Norwesco AB was acquired after the end of the financial year. Norwesco develops, manufactures and markets a niche line of electro-mechanical products for the electronics and construction industries.

SwedWire AB was also acquired after the end of the financial year. The company develops, manufactures and markets a niche range of steel products.

Both Norwesco and SwedWire are examples of the kind of product companies that Lagercrantz wants increase the share of.

Key figures

Division Mechatronics	2009/10	2008/09	2007/08
Net revenue, MSEK	511	628	604
Operating result, MSEK	30	49	50
Operating margin, %	5.9	7.8	8.3

Service, 1% (4)

ACTE Supply's personal engagement develops business

ACTE Supply develops business by focusing on the best complete solution for the customer – the combination of design, development and availability of products and systems. The business model is based on a strong personal engagement.

ACTE Supply is a technical distributor with its focus on contributing to finding solutions for improved performance and development of business, primarily in close co-operation with the customer, but also together with sub-suppliers and producers. Icotek is a producer of cable entry systems and secure electromagnetic compatibility – EMC protection. Demand is strong for Icotek's products from a wide range of manufacturers, but there is often a limitation in adapting the size of the frame to a standard.

ACTE Supply's technical experts, together with Icotek's engineers, have analysed customers' needs and an efficient solution has been devised. A special flanged cable entry that fits most electrical boxes used in the market has been developed. This solution has generated new business opportunities for Icotek's standard program to those customers who previously have been limited to conventional cable entries with standard measurements. Icotek's cable entries offer greater flexibility and ease of installation and also facilitate retrofitting and maintenance since the entries can be accessed through a slot.

The solution with the new adapter flange offers increased business opportunities for Icotek through ACTE Supply, at the same time as customers gain access to high-quality cost-efficient solutions.

ACTE Supply offers high technical competence and quality products from leading manufacturers of electro-mechanical components, connectors, cable material and passive components. ACTE Supply's technical sales force has the full picture of what is being offered in the market and is in a position to guide the customer in the direction of products that are more available in the market, are on hand for immediate delivery and are offered at the right price.

For more information:

Acte Supply at www.actesupply.se

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, Norway, Denmark and Finland.

The division's companies offer solutions to the market based on being a value-creating distributor or a systems integrator. A growing portion of the division's revenue is comprised of different forms of services.

MARKET

The division is a leader in several areas, including video conferencing solutions in Sweden and distribution of 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.

2009/10 OPERATIONS

Net revenue amounted to MSEK 657 (783). The decrease is a consequence of the recession and overall weaker demand. A more stable development was seen towards the end of the year, when demand was strong in the area of digital image transmission/technical security, especially from the public sector. Lower sales were recorded in the software area compared to the year before. A stabilisation of the business climate was noted during the last quarter of the year especially in the area's main business, which is marketing of CAD software. Demand in the Access area was low during the year.

Measures to adapt the businesses were taken during the year. In Norway the Access business was phased out during the year.

The operating result amounted to MSEK 34 (52) and the operating margin was 5.2 percent (6.6).

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.

In technical security the focus on areas where the division already today has a strong position was successful, resulting in a number of new deals. Efforts were also expended on developing the after-market 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 and objects with particularly stringent security requirements. The development was also positive for the export business in telecom and security solutions based on DECT telephony for health care and correctional institutions. At present the company is developing the next generation hand-held unit.

The division has broadened its offer in CAD solutions to include consultancy.

Growing investments in IT/telecom infrastructure are a strong driving force for the division's development. Video conferencing is becoming an increasingly appealing alternative to travel as companies are scaling back their travel budgets and show concern for the environment. 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 niche products for telecom operators needed to build infrastructure. The area also includes niche 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 sales 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.

Revenue by business type

Trading, 60% (70)

Services, 10% (8)

Systems integration, 20% (20)

Proprietary products, 10% (2)

Key figures

Division Communications	2009/10	2008/09	2007/08
Net revenue, MSEK	657	783	790
Operating result, MSEK	34	52	51
Operating margin, %	5.2	6.6	6.5

Nordic Alarm meets greater security requirements with new technology

Physical protection at nuclear facilities has become an important duty for society, where protection of the public is at the forefront. The Swedish security company Nordic Alarm is at the cutting edge of qualified high-security systems.

Clab is the Swedish intermediate depository for spent nuclear fuel. The nuclear fuel is stored here in two storage areas 30 metres down in the rock. A project is in progress at Clab since 2006 to strengthen the physical protection of the facility.

Basic for the physical protection of the facility is that competent protection personnel is present 24/7. The staff performs its duties from a monitoring station, which is well protected against intrusion and where there is a wealth of sophisticated monitoring equipment. Here are just a few examples:

• Two independent systems to detect an attack and sound an alarm;
• A TV surveillance system with complete coverage for controlling and following up on alarms and any attacks.

The next basic component of the system is that Clab in its entirety is surrounded by a guarded area delimited by two high and stable fences with barbed wire atop. In front of this enclosure are also barriers to prevent motor vehicles to penetrate the guarded area.

The third is shell protection, i.e. building walls and roofs. All doors and windows are closed at all times, are locked and alarms are set. All other openings are protected by heavy grating. Simply put: It has to be difficult and take a long time for any unauthorised person to get into Clab and it is absolutely impossible to do so without being discovered.

Together with other suppliers, it is Lagercrantz Group's subsidiary Nordic Alarm that is building area protection and shell protection at Clab. Nordic Alarm supplies a program-controlled integrated security system with great flexibility and high operational reliability. The assignment includes:

• Different systems for detecting intrusion and alarms
• Surveillance cameras
• Central units for alarm and for taping, analysis and presentation of TV images
• Entry control systems
• A network which is difficult to manipulate and can withstand atmospheric disturbances.

The central intermediate depository for spent nuclear fuel – Clab – is a concern for all of Sweden and Nordic Alarm has become an important part of its physical protection.

For more information:

• Nordic Alarm at www.nordicalarm.se
• SKB and Clab at www.skb.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 in existing as well as into new technology areas.

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. 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 beginning of the 2009/10 operating year Lagercrantz Group chose to reduce the level of activity in the acquisition area. A number of dialogues were continued, which created opportunities to initiate processes quickly once the business situation became stable during the end of the financial year. The Group has 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. Towards the end of the financial year a number of processes were initiated and as a result thereof two acquisitions were consummated shortly after the end of the financial year.

OUTLOOK

Lagercrantz Group's management sees good prospects for making acquisitions going forward and looks for companies with a proven earnings record and a well-functioning organisation. Focus is on companies based in the Nordic countries. Target companies should have a strong market position within a niche. Lagercrantz Group's contribution in the form of competence and development opportunities makes it possible for acquired companies to continue their development.

The Lagercrantz share

Over a five-year period, the market price performance of the Lagercrantz share shows a gain of 63 percent. The broad OMX Stockholm Price Index rose during the same period by 33 percent, and the benchmark Carnegie Small Cap Index scored a gain of 49 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 17.60, in May 2005. The share price on 31 March 2010 was SEK 31.50 (23.50). The trend during the 2009/10 financial year (April–March) involved an increase of 34 percent (–20). During the same period OMX Stockholm Price Index rose by 57 percent (–45) and Carnegie Small Cap Index, which shows the aggregate development for smaller companies, rose by 79 percent (–38).

Lagercrantz, with a market capitalisation of approximately MSEK 690 (517) as of 31 March 2010, calculated on the number of shares outstanding after repurchases 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 2010 ANNUAL MEETING

The dividend proposed by the Board of Directors for the 2009/10 financial year is SEK 1.50 (1.50) per share. This is equivalent to a total dividend payment of MSEK 33 (33).

TRADING IN THE SHARE ON THE STOCK EXCHANGE

The number of shares traded during the financial year was just over 3.4 million (4.4), equivalent to a value of MSEK 95 (115). The turnover rate for free floating shares was 21 percent (24). The average rate of turnover in the Small Cap segment during 2009 was 35 percent (35). The number of transactions per trading day in the Lagercrantz share was 13 (14) per trading day.

SHARE CAPITAL

As of 31 March 2010 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. No shares were converted during the year. The number of votes in the Company is 33,025,195.

REPURCHASE OF OWN SHARES

The 2009 Annual Meeting resolved to authorize the Board of Directors to repurchase shares. No shares were repurchased during the 2009/10 financial year. Lagercrantz Group's total holding of shares in treasury on 31 March 2010 was 1,195,000 (1,195,000) class B shares, equivalent to 5.2 percent (5.2) of the number of shares outstanding and 3.6 percent (3.6) of the votes in Lagercrantz. The average acquisition price for repurchased shares is SEK 25.57 per share. Repurchased shares cover the Company's commitment under outstanding option programmes, in which a total of 665,500 options have been acquired by members of senior management and is still outstanding.

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 was to raise the motivation and create participation for managers and members of senior management regarding opportunities for the Company's development. The purpose was also to motivate managers and members of senior management to continued employment in the Group. The programme was a revolving three-year programme based on call options on class B shares held in treasury.

The 2006 Annual Meeting resolved to award 255,000 call options. The term expired for that part of the option programme at the end of December 2009. The strike price exceeded the market price of the share at the time of redemption so the options expired without value.

The 2007 Annual Meeting resolved to award 260,000 call options.

The 2008 Annual Meeting resolved to award 180,500 call options.

The 2009 Annual Meeting resolved to award 255,000 call options.

The programmes were fully subscribed.

Each option gives its holder the right to purchase one share at a redemption price of SEK 44.40 (2007 programme), SEK 36.80 (2008 programme), and SEK 31.10 (2009 programme), respectively. The options can be exercised between 21 September 2010 and 21 December 2010 (2007 programme), 27 September 2011 and 27 December 2011 (2008 programme) and not later than 30 September 2012 (2009 programme). In all, the programme is equivalent to just below 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. The second largest owner is Swedbank Robur fonder. Anders Börjesson and Tom Hedelius own class A as well as class B shares and hold 16.7 percent and 15.0 percent of the votes, respectively. The proportion of foreign ownership was 24.2 percent (25.3) on the balance sheet date. The number of shareholders changed marginally during the year and as of 31 March 2010 Lagercrantz had 3,365 shareholders (3 497).

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.

Lagercrantz Group AB (publ) – Annual Report 2009/10

Ownership structure in Lagercrantz Group 31 March 2010

Share facts
Short name	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	1,920	1.8%	1.2%
501–1,000	608	2.4%	1.7%
1,001–10,000	719	10.6%	8.7%
10,001–50,000	70	6.7%	5.9%
50,001–100,000	19	6.7%	5.6%
100,001–	29	71.8%	77.0%
Total	3,365	100.0%	100.0%
Legal entities	343	59.3%	42.6%
Individuals	3,022	40.7%	57.4%
Total	3,365	100.0%	100.0%
Of whom Swedish residents	3,223	75.8%	83.3%

Largest owners in Lagercrantz Group 31 March 2010

Owners	A shares	B shares	Stake	Votes
Anders Börjesson with family	492,558	402,500	4.1%	16.7%
Tom Hedelius with family	477,558	5,400	2.2%	15.0%
Skandia Liv		2,506,989	11.4%	7.9%
Swedbank Robur funds		2,229,771	10.1%	7.0%
Odin funds		1,760,503	8.0%	5.5%
Nordea Investment funds		1,419,784	6.5%	4.5%
Didner & Gerge funds		1,063,306	4.8%	3.3%
Pär Stenberg		919,122	4.2%	2.9%
Marianne Rapp		716,000	3.3%	2.2%
Fondita Nordic Microcap		650,000	3.0%	2.0%
Carl T. Säve with family	10,000	439,931	2.0%	1.7%
Christina Mörner	10,000	346,411	1.6%	1.4%
Margareta von Matérn	10,000	341,661	1.6%	1.4%
Handelsbanken funds		390,316	1.8%	1.2%
Björn Nordenwall		300,000	1.4%	0.9%
Foundation Crown Princess Margareta's Fund	17,476	65,000	0.4%	0.8%
CBNY Int Small Cap		233,635	1.1%	0.7%
Annika Wendell	15,000	72,000	0.4%	0.7%
Matern family		200,806	0.9%	0.6%
Nordea Bank		200,000	0.9%	0.6%
Total, 20 largest owners	1,032,592	14,263,135	69.6%	77.3%
Total, other owners	62,062	6,620,020	30.4%	22.7%
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	Proportion of	Number	Proportion of
	Event	number	of shares	capital, %	of votes	votes, %
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 to 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 to 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	2009/10	2008/09	2007/08	2006/07	2005/06
Net revenue	1,720	2,138	2,172	1,974	1,608
Operating result before depreciation and amortisation	92	130	154	120	72
Depreciation and amortisation	–25	–25	–23	–21	–15
Operating result	67	105	131	99	57
Finance income and expense	–9	–11	–10	–9	–2
Result after finance items	58	94	121	90	55
Taxes & minority interest	–16	–26	–30	–25	–16
Net result for the year	42	68	91	65	39

Statement of Financial Position

Amounts in MSEK	2010-03-31	2009-03-31	2008-03-31	2007-03-31	2006-03-31
Assets
Intangible non-current assets	283	306	238	225	63
Tangible non-current assets	51	56	51	83	95
Financial non-current assets	17	23	30	39	38
Other current assets	503	604	657	678	501
Liquid funds and short-term investments	29	60	79	94	55
Total assets	883	1,049	1,055	1,119	752
Shareholders' equity and liabilities
Shareholders' equity and minority interest	494	518	459	432	393
Interest-bearing provisions and liabilities	67	138	172	255	46
Non-interest-bearing provisions and liabilities	322	393	424	432	313
Total shareholders' equity and liabilities	883	1,049	1,055	1,119	752
Capital employed	561	656	631	687	439
Pledged assets and contingent liabilities	56	63	61	61	48

Cash Flow Statement

Amounts in MSEK	2009/10	2008/09	2007/08	2006/07	2005/06
Result after finance items	58	94	121	90	55
Adjustment for paid taxes and items not included in cash flow	-2	1	–19	3	–3
Cash flow before changes in working capital	56	95	102	93	52
Cash flow from changes in working capital	31	42	18	–17	34
Cash flow from operating activities	87	137	120	76	86
Cash flow from investment activities	–18	–77	17	–170	–45
Cash flow from operating activities and investment activities	69	60	137	–94	41
Cash flow from financing activities	–99	–77	–151	134	–65
Cash flow for the year	–30	–17	–14	40	–24

Key Financial Indicators

Amounts in MSEK unless otherwise stated	2009/10	2008/09	2007/08	2006/07	2005/06
Change in revenue, %	–19,6	–1.6	10.0	22.8	5.9
Operating margin,%	3.9	4.9	6.0	5.0	3.5
Profit margin, %	3.4	4.4	5.6	4.6	3.4
Return on capital employed, %	11	17	21	18	13
Return on equity, %	8	14	21	16	10
Equity ratio, %	56	49	44	39	52
Debt equity ratio, times	0.1	0.3	0.4	0.6	0.1
Net equity ratio, times	0.1	0.2	0.2	0.4	0.0
Times interest earned	6	7	9	9	14
Net interest-bearing liabilities (+) / receivables (–)	38	78	93	161	–9
Number of employees at year-end	608	742	763	751	541
Average number of employees	661	782	769	741	551
Payroll expenses including social benefits	374	442	409	381	288
Revenue outside Sweden	1,155	1,486	1,496	1,352	1,053

Per-share Data

	2009/10	2008/09	2007/08	2006/07	2005/06
Number of shares outstanding at year-end after repurchases ('000)	21,978	21,978	22,478	23,678	23,678
Weighted number of shares outstanding after repurchases ('000)	21,978	22,287	23,212	23,678	23,923
Operating result per share, SEK	3.05	4.71	5.64	4.18	2.38
Earnings per share, SEK	1.91	3.05	3.92	2.75	1.63
Cash flow per share, SEK	3.96	–0.76	–0.60	1.69	–1.00
Cash flow from operating activities per share, SEK	–1.37	6.15	5.17	3,21	3,59
Dividend per share, SEK (year's dividend as proposed)	1.50	1.50	1.50	1.25	1.00
Shareholders' equity per share, SEK	22.50	23.60	20.40	18.20	16.60
Last market price per share, SEK	31.50	23.50	28.80	33.50	30.10

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 2009/10

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 2009/10 operating year. Starting this year, the Corporate Governance Report is also included in the Board of Directors Report.

The legal Annual Accounts consist of the Board of Directors Report, including the Corporate Governance Report, with proposed allocation of earnings, and the Financial Statements.

BUSINESS

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

The Group is active in a number of product segments on several geographic markets. The Group operates with a distinct niche focus and is characterised by decentralised business responsibility where each subsidiary is a separate profit centre with responsibility for its chosen strategy. The Lagercrantz Group consists of the Parent Company, Lagercrantz Group AB, and some 20 subsidiaries. The subsidiaries are organised in three divisions: Electronics, Mechatronics and Communications.

NET REVENUE AND RESULT

Lagercrantz Group's net revenue for 2009/10 (1 April 2009– 31 March 2010) amounted to MSEK 1,720 (2,138). The lower level of revenue during the financial year is a consequence of the weak economy during most of the period and of the action taken in the Group to restructure certain businesses. An improvement in the business climate was seen during the third quarter. This trend became more pronounced during the fourth quarter. In particular, demand grew stronger from certain export-oriented companies during the second half of the year. Towards the end of the quarter stronger demand was also noted from customers in power generation and electricity distribution. Demand from customers in the public sector, which among other things affects the Group's digital image/technical security area, was stable during the financial year.

The effects of adaptation of the businesses within the Group were seen in the form of gradually stronger margins. Action taken included the phasing-out of the Norwegian business in the Access area and restructuring of the Finnish and Polish operations. In division Electronics there was a concentration of the businesses to the larger markets. In all, action taken

resulted in items affecting comparability in the amount of MSEK –1 (–21) during the year, predominantly related to personnel cutbacks. Through these actions the headcount has been reduced by about 200 persons since autumn 2008 and operating expenses were trimmed by about MSEK 80 compared to the preceding financial year.

In addition to measures to cut costs, action was focused on strengthening the cash flow by reducing working capital in the Group. Streamlining action taken contributed to reducing inventories by MSEK 54 and trade receivables by MSEK 16 during the financial year.

Operating profit for 2009/10 amounted to MSEK 67 (105). The result was impacted by currency effects when translating trade receivables and liabilities in an amount of MSEK –4 (6), aside from the aforementioned items affecting comparability.

Profit after financial items amounted to MSEK 58 (94). The net of finance items was affected by changed foreign exchange rates when translating financial receivables and liabilities in an amount of MSEK –1 (–2) for the financial year.

Profit after taxes for the year amounted to MSEK 42 (68), equivalent to earnings per share of SEK 1.91 (3.05).

PROFITABILITY AND FINANCIAL POSITION

The return on capital employed for the financial year was 11 percent compared to 17 percent for the preceding year. The corresponding figures for return on equity were 8 percent and 14 percent, respectively.

Equity per share amounted to SEK 22.50, as against SEK 23.60 at the beginning of the financial year. The equity ratio was 56 percent compared to 49 percent at the beginning of the financial year.

At year-end the financial net liability was MSEK 38 (78), including a pension liability of MSEK 49 (52). The consolidated net debt equity ratio was 0.1 (0.2).

CASH FLOW AND CAPITAL EXPENDITURES

Cash flow from operating activities amounted to MSEK 87 (137) during the financial year. Cash flow was affected in a positive direction by action to lower working capital. Capital expenditures in non-current assets decreased to a gross amount of MSEK 17 (23). No shares were repurchased during the year.

NET REVENUE AND RESULT BY DIVISION

Electronics

Net revenue for 2009/10 amounted to MSEK 552 (727). Market demand decreased as a result of the recession, restructuring of businesses with low profitability and the move of the electronic business in Finland from the third quarter to the Finnish trading operations in Division Mechatronics. This business was included with about MSEK 28 in business volume during the second half of last year.

Sales volumes stabilised during the latter part of the year for most of the division's businesses. Since autumn 2009 increased activity has been seen in some of the division's customer segments. This has bolstered demand gradually.

Several of the businesses were streamlined during the year and this had a positive effect on margins. Action has included a concentration of the businesses to the Nordic Region, Germany and Poland, product line development with a focus on margins, cost-cutting and measures to reduce the organisation. Operating profit amounted to MSEK 17 (24), which is equivalent to an operating margin of 3.1 percent (3.3).

Mechatronics

Net revenue amounted to MSEK 511 (628). The decrease is explained mainly by the state of the economy. Towards the end of the year an increase in demand was seen from the division's customers, both in industry, power generation and electrical power distribution.

Efforts to reduce costs and streamline operations continued during the year. Measures were taken both to reduce personnel, to make capital utilisation more effective and to integrate the Finnish electronic trading operations.

Operating profit amounted to MSEK 30 (49), equivalent to a margin of 5.9 percent (7.8).

Communications

Net revenue amounted to MSEK 657 (783). Demand was good in the area of digital image/technical security in several customer segments, particularly the public sector during the year. In the area of software, revenue declined compared to the preceding year, but a stabilisation of the business climate was seen towards the end of the financial year, especially in the area's main segment, which is sales of CAD software. Demand continued to be at a low level in the Access area during the entire year.

Action was taken in the division to adapt the business to current conditions. In Norway, the phasing-out of the Access business was completed during the year.

Operating profit amounted to MSEK 34 (52), equivalent to an operating margin of 5.2 percent (6.6.)

PARENT COMPANY AND OTHER CONSOLIDATION ITEMS

The Parent Company's net revenue for the full year amounted to MSEK 22 (26) and the result after net finance items was MSEK 60 (77). This result includes exchange rate adjustments on intra-Group lending in the amount of MSEK –3 (3). Dividends from subsidiaries amounted to MSEK 86 (140). Investments in non-current assets were made in a net amount of MSEK 0 (0). The Parent Company has an approved committed credit facility of MSEK 250. At year-end the utilisation of the facility was MSEK 22 versus a positive balance of MSEK 7 at the beginning of the financial year. 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 76 percent at the end of the period compared to MSEK 65 percent at the beginning of the period.

EMPLOYEES

At the end of the period the number of employees in the Group was 608, as compared with 742 at the beginning of the period and over 800 in the autumn of 2008. The decrease in headcount by over 20 percent is the result of 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. The class A share is not listed. 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. No class A shares were converted during the year.

The 2009 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. Among other things, the mandate included the option of covering the Company's obligations under incentive programmes, under which purchase options on repurchased shares have been acquired by members of senior management and key persons in the Group. No shares were acquired during the year. At the end of the period Lagercrantz held 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.

A total of 665,500 shares held in treasury are intended to cover the Company's obligation under outstanding incentive programmes, corresponding with a total of 665,500 options still outstanding (awards 2007, 2008 and 2009) where the redemption price is SEK 44.40, SEK 36.80 and SEK 31.10, respectively, per call option, respectively (see note 6 for additional information). The average cost of repurchased shares amounts to SEK 25.57 per share.

Two shareholders have more than 10 percent of the votes: Anders Börjesson with family, 16.7 percent and Tom Hedelius with family, 15.0. Skandia Liv, with 11.4 percent of the capital is the largest single shareholder in terms of holding.

The above ownership stakes are calculated based on the number of shares and votes outstanding, not including shares held in treasury by Lagercrantz.

CERTAIN AGREEMENTS

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.

CORPORATE ACQUISITIONS

No acquisitions were made during the financial year.

Norwesco AB was acquired after the end of the financial year (closing 3 May 2010). Note 42 describes the acquisition analysis for acquired businesses. Norwesco develops, manufactures and markets a niche line of electro-mechanical products for the electronics and construction industries. Norwesco had sales in 2009 of approximately MSEK 50 with good profitability. The company's head office is in Täby and production takes place in Öregrund. The company will be a part of division Mechatronics.

Also after the financial year, the company SwedWire AB has been acquired (as of June 22, 2010). The acquisition analysis for the acquisition was at the publishing date for the Annual Report not yet completed. SwedWire develops, manufactures and markets a niche range of steel products such as guy wires and road barrier ropes, wires for reinforced submerged cables and ACSR conductors. SwedWire recorded sales of approximately SEK 80 million in 2009 and displayed good profitability. The company will be part of division Mechatronics.

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.

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 Labour, Bribery and Corruption.

ENVIRONMENTAL 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. There are no known threats from an environmental viewpoint that could jeopardise the 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 2009/10 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 alarm telephones were 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. The unrest in the world financial markets and a global weakening of the economy affected demand in a negative

direction for most of the Group's companies during the financial year. Only towards the end of the year could an improvement in the business climate for the Group's companies be discerned. Expectations are that this will be increasingly reflected in more robust demand during the current financial year. The Group and its subsidiaries continue to keep a watchful eye on surrounding world factors, which are expected to continue to affect the demand situation.

In order to meet lower sales the Group therefore took a number of measures with respect to costs, working capital and capital spending during the 2008/09 and 2009/10 financial years. Because of the nature of Lagercrantz Group's operations, with some 20 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, niche focus and its decentralised structure. 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 or one country, may have major impact on an individual company niched towards parts of this sector or geographic area, 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. The decentralised structure means that it is the responsibility of the individual profit centres to keep on top of their respective markets and take action quickly when fluctuations in the market situation are seen. This makes rapid and effective changes possible and local measures can be taken with a clear link to each profit centre's environment.

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. In recent years the Group has also worked successfully to reduce the risks associated with late payments from or non-payment by customers. Measures have included credit assessment and follow-up of new and existing customers, as well as active management of late payments.

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 weak. 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.

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 40.

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 RFR 2:2 Supplementary rules for consolidated accounting 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 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.

CORPORATE GOVERNANCE REPORT

Starting with the 2009/10 financial year Lagercrantz Group prepares a statutory corporate governance report in accordance with the Swedish Annual Accounts Act (1995:1554), chapter 6, sections 6–9, which is subject to review by the Company's auditor. In addition hereto Lagercrantz Group applies the Swedish Code for Corporate Governance in accordance

with the revised code that came into force 1 February 2010. Since the legislation and the code partially overlap, Lagercrantz Group in the following provides a report that takes the Swedish Annual Accounts Act as well as the Swedish Code for Corporate Governance into account. The Company adheres to the code in all essential aspects. Lagercrantz deviates from the Code in three respects; explanations are provided in each case (of which two are included in the section about the Election Committee and one in the section on Audit Committee). The report also contains an account of the work of the Election Committee leading up to the 2010 Annual General Meeting.

Corporate governance structure

Lagercrantz Group is a Swedish public limited liability company with its registered office in Stockholm. The Company, through its subsidiaries, deals in technology and is publicly traded in Stockholm since 2001. Governance and control of the Company is exercised through a combination of written rules and practice. In the first instance the regulatory framework consists of the Swedish Companies Act and the Swedish Annual Accounts Act, but also the Swedish Code for Corporate Governance and the rules that apply to the regulated market where the Company's shares are listed.

The Swedish Companies Act contains basic rules for the Company's organisation. The Swedish Companies Act stipulates that there should be three decision-making organs: the General Meeting of Shareholders, the Board of Directors and the President & Chief Executive Officer, in a hierarchal relationship with each other. There should also be one control organ, the auditor, who is appointed by the Annual General Meeting.

Shareholders

On 31 March 2010 the number of shareholders was 3,365 compared to 3,497 at the beginning of the financial year.

Private individuals owned approximately 41 percent of the number of shares outstanding and 57 percent of the votes in the Company. The remaining stake was owned by legal entities, primarily mutual funds, insurance companies, and pension funds. Foreign shareholders owned approximately 24 percent of the shares outstanding and 17 percent of the votes. The ten largest shareholders held a total of approximately 58 percent of the shares outstanding and 67 percent of the votes.

The above calculations are based on the number of shares outstanding, not including repurchased shares held in treasury by Lagercrantz Group.

General Meeting and Articles of Association

The general meeting of shareholders is the highest decisionmaking body in Lagercrantz Group. Here, shareholders exercise their influence through discussions and decisions. The General

Meeting decides on all issues that do not expressly fall under the jurisdiction of another corporate organ. Every shareholder has the right to participate in the proceedings of and to vote their shares at the General Meeting in accordance with the provisions of the Articles of Association.

Lagercrantz Group's regularly scheduled Annual General Meeting shall be held in Stockholm within six months of the end of the financial year. 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 and decides on other matters that according to the Articles of Association or legislation should be brought before the General Meeting.

The Articles of Association have been adopted by the General Meeting. This document stipulates that the Company's shares have been issued in two classes, where class A shares give their holder 10 votes and class B shares one vote per share. The Company's share capital shall be a minimum of SEK twenty-five million (25,000,000) and a maximum of SEK one hundred million (100,000,000). The minimum number of shares outstanding shall be 12,500,000 and the maximum number of shares outstanding shall be 50,000,000. Both classes of shares confer the same rights on its holders with respect to the Company's assets and profit. The Articles of Association allows for conversion of class A shares into class B shares. The Articles of Association also stipulate that the Company's Board of Directors shall consist of not less than three and not more than nine directors, and regulates the forms of notice for General Meeting.

Notice for Annual General Meeting and notice for Extraordinary General Meeting where an amendment of the Articles of Association will be on the agenda shall be issued not less than six weeks and not more than four weeks before such Meeting. Notice for other Extraordinary General Meeting shall be issued not more than six weeks and not less than two weeks before such Meeting. The notice to attend shall be published in Dagens Industri and Post och Inrikes Tidningar, and shall be available at the Company's website.

Shareholders who wish to participate in the proceedings of the General Meeting shall (i) be entered in a transcript or other version of the entire share register showing the state of affairs five weekdays before the General Meeting and (ii) give notice to the Company for him- or herself and up to two assistants not later than at 3:00 p.m. on the date set forth in the notice for the General Meeting.

Since 2005 the Annual General Meeting has also determined the form for how an election committee is to be appointed.

2009 Annual General Meeting

The 2009 Annual General Meeting was held 31 August 2009 in Stockholm. Notice for the Annual General Meeting was published in Dagens Industri and Post och Inrikes Tidningar, and was announced the same day in a press release. At the Meeting shareholders representing 7.6 million shares and 16.6 million votes, respectively, were present. This is equivalent to 35 percent of the number of shares outstanding and 52 percent of the votes in the Company.

Resolutions passed at the Annual Meeting included the following:

• 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 2008/09.
• All directors and the Chairman of the Board of Directors 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 senior management were resolved.
• In accordance with the proposal of the Board of Directors, the Annual General Meeting resolved that the Company – in a departure from the pre-emptive rights if shareholders – to offer managers and members of senior management to acquire up to 255,000 call options on repurchased class B shares.
• The Board of Directors was authorised to acquire and sell shares in the Company, representing up to 10 percent of the shares – on one or more occasions – during a period ending immediately before the next following Annual General Meeting.

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 consisted during 2009/10 of five regular members who together represent broad commercial, technical and public experience:

• Pirkko Alitalo
• Anders Börjesson, Chairman of the Board of Directors
• Tom Hedelius
• Lennart Sjölund
• Jörgen Wigh, President & CEO

A detailed presentation of the members of the Board of Directors, including information about other assignments will be found in the Board of Directors section. Other members of management of the Group participate in Board of Directors meetings as reporters or Secretary.

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 corporate management 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 eleven meetings during the 2009/10 operating year during which minutes were taken, one of which was a statutory Board of Directors meeting in conjunction with Annual General Meeting.

The work of the Board of Directors follows rules of procedure that are confirmed on an annual basis at the statutory Board of Directors meeting. These 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 2009/10 the Board of Directors devoted special attention to structural issues and action programs to meet the recession. The work of the Board of Directors was also marked by issues surrounding market development, business model and acquisitions. A few extra Board of Directors meetings were held during the year to deal solely with acquisitions. 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 which includes individual interviews and group discussions. Among items discussed are:

• Agenda and material for the Board of Directors
• Number of meetings
• Strategic plan and orientation
• Overarching responsibility
• Competence
• Work of the Chairman

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

In accordance with the Code, the Board of Directors evaluated the work of the President & CEO at a meeting without the presence of corporate management.

The total fee to the Board of Directors of Lagercrantz Group for 2009/10 amounted to SEK 1,100 thousand (1,100). In accordance with an Annual Meeting resolution the Chairman of the Board of Directors received SEK 400 thousand (400), the Vice Chairman SEK 300 thousand (300) and the other regular directors who are not employees of the Company received SEK 200 thousand (200) 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. During 2009/10 the Compensation Committee consisted 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 Committee

The Board of Directors has appointed an audit committee the duty of which is to analyse and discuss the Company's risk management, governance and internal control. During 2009/10 the Committee consisted 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. The Audit Committee stays in contact with the Company's auditors to discuss the orientation and scope of the audit work. In connection with the adoption of the annual financial statements the Company's auditors report on their observations in the course of their audit and

their assessment of the internal control. At its disposal the Audit Committee also has an internal control group.

The Committee held one meeting during the year.

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 semi-annual report or the 9-month interim report.

Auditors

At the 2009 Annual General Meeting registered Audit Company KPMG AB was elected to serve as auditor. The audit firm has appointed Joakim Thilstedt, Authorised Public Accountant, to serve as auditor in charge.

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.

The independence of the auditors is ensured by the audit firm's internal guidelines. Their independence has been confirmed to the Company.

Management

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 division heads/ business area managers, in total seven persons that constitutes senior management. 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. At these meetings are present also the Group Controller and one person in business development. 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.

Compensation to members of senior management

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

Guidelines adopted for compensation of members of senior management as resolved by the 2009 Annual General Meeting and information about existing incentive programmes are set forth in Note 6 of this Annual Report and are summarized below.

The aggregate compensation should be in line with market conditions as well as competitive, and should be commensurate with responsibility and authority. The annual variable portion of the compensation should be maximised to about 40 percent of 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 and to the Annual Meeting proposed incentive programme.

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

The proposal of the Board of Directors to the 2010 Annual General Meeting for guidelines for compensation to members of senior management is that the principles for compensation to the President & CEO and other senior managers should be unchanged.

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 set 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.

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.

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 persons from the finance department. The group is charged with responsibility to review the Group's internal control routines and compliance therewith and report its observations and recommendations to the Audit Committee.

Controls are made taking transaction flows, manning and control mechanisms into account. There is focus on possible errors in the financial reporting with respect to significant earnings and balance sheet items 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 require 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 adopted 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 General 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.

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 General Meeting can make wellfounded decisions. The 2009 Annual General Meeting decided to give the Chairman of the Board of Directors the assignment of contacting the largest shareholders by vote before 31 December 2009, 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, Vice Chairman of the Board of Directors
• Kerstin Stenberg, Swedbank Robur Fonder
• Erik Sjöström, Skandia Liv
• Tomas Ramsälv, Odin Fonder

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 as well as its motives will be published in connection with the notice for the Annual General Meeting and will also be made available at the Company's website. 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. 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.

The Board of Directors and the Election Committee is of the opinion that a majority of the members of the Board of

Directors is independent relative to the Company and corporate management and that at least two of these directors also are independent relative to the Company's major shareholders.

INCENTIVE PROGRAMME

A long-term incentive programme was introduced in 2006 for managers and members of senior management in the Group in accordance with an annual general meeting resolution. The programme is aimed at raising motivation and creating participation for managers and members of senior management regarding the opportunities for the company's development. The purpose of the programme is also to motivate managers and members of senior management to continued employment in the group. The programme is a revolving programme based on call options on repurchased class B shares held in treasury. Options have been issued in 2006, 2007, 2008 and 2009 based on the decision by the annual general meeting each year. A complete description of outstanding option programmes will be found in note 6.

EVENTS AFTER THE BALANCE SHEET DATE

Norwesco AB was acquired on May 3 2010. SwedWire AB was acquired on June 22 2010. Refer to Acquisitions above for additional information.

FUTURE DEVELOPMENT

The Group's two most important future tasks are to continue raising profitability and to continue focusing on growth, both organically and through acquisitions.

The improved business climate towards the end of the financial year means better opportunities for the Group's companies to increase their sales. In combination with lower costs and increased added value this creates opportunities for improved profitability. In addition, there are the added sales and profit that follows from successful acquisitions. The Group's ambition is to increase the element of proprietary products and system integration.

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 (33) and constitutes 79 percent (49) 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 422,981 thousand, are allocated as follows:

BOARD ASSURANCE

The consolidated and the Parent Company income statements and the consolidated statement of financial position and the Parent Company's balance sheet will be subject to approval at the Annual General Meeting to be held 31 August 2010. 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 as providing 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 provides 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 2010

Anders Börjesson Chairman

Pirkko Alitalo Director

Tom Hedelius Vice Chairman Lennart Sjölund Director

Jörgen Wigh President & CEO

Consolidated Income Statement

Amounts in MSEK	Note	2009/10	2008/09
Net revenue	3, 4	1,720	2,138
Cost of goods sold		-1,265	-1,576
Gross profit		455	562
Other operating expenses	7	10	16
Selling costs		-257	-302
Administrative expenses		-120	-157
Research and development expenses		-13	-10
Other operating expense	8	-8	-4
Operating profit	3, 5, 6, 9, 10, 13	67	105
Result from finance items
Finance income	11	3	7
Finance expense	12	-12	-18
Profit before taxes	13	58	94
Taxes	14	-16	-26
Net income for the year		42	68
Earnings per share, SEK	39	1.91	3.05
Number of shares outstanding after the year's repurchases ('000)		21,978	21,978
Weighted number of shares outstanding after the year's repurchases ('000)		21,978	22,287
Proposed dividend per share, SEK		1.50	1.50

Consolidated statement of comprehensive income

Belopp i MSEK Note	2009/10	2008/09
Profit for the period
Other comprehensive income	42	68
Change in fair value of hedging reserve	1	-3
Change in translation reserve	-34	39
Comprehensive income for the year	9	104

Consolidated Statement of Financial Position

Amounts in MSEK	Note	2010-03-31	2009-03-31
ASSETS	3
Non-current assets
Intangible non-current assets
Goodwill	15	179	192
Trademark	16	39	40
Other intangible assets	17	65	74
		283	306
Tangible non-current assets
Buildings, land & land improvements	18	2	2
Leasehold improvements	19	4	5
Plant and machinery	20	29	30
Equipment, tools, fixtures and fittings	21	16	19
		51	56
Financial non-current assets
Deferred tax asset	31	15	21
Other long-term receivables	24, 33	2 17	2 23
Total non-current assets		351	385
Current assets
Inventories, etc	25
Raw materials and consumables		51	66
Work in progress		9	8
Finished products and goods for resale		117	166
		177	240
Short-term receivables	33
Trade receivables	26	254	301
Earned but not invoiced revenue	27	15	15
Tax assets		13	14
Other receivables		14	10
Prepaid expenses and accrued income		30	24
		326	364
Short-term investments		0	0
Cash and cash equivalents	33	29	60
Total current assets		532	664
TOTAL ASSETS		883	1,049

Consolidated Statement of Financial Position

Amounts in MSEK	Note	2010-03-31	2009-03-31
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	29
Share capital		49	49
Other capital contributed		345	345
Reserves Retained earnings		8 50	41 15
Net income for the year attributable to the Parent Company's equity holders		42	68
Total shareholders' equity attributable to the Parent Company's		494	518
shareholders
Long-term liabilities	3,33,34
Long-term interest-bearing liabilities
Provisions for pensions	30	49	52
Liabilities to credit institutions	34	0	70
Other long-term interest-bearing liabilities		0	0
		49	122
Long-term non-interest-bearing liabilities
Long-term non-interest-bearing liabilities		0	0
Deferred tax liability	31	30	35
Other provisions	32	2	5
		32	40
Total long-term liabilities		81	162
Current liabilities	3,33,34
Short-term interest-bearing liabilities
Committed credit facility	34	16	2
Liabilities to credit institutions	34	2 18	13 15
Short-term non-interest-bearing liabilities
Advance payments from customers		1	4
Trade payables		158	168
Tax liabilities		7	9
Other liabilities Accrued expenses and prepaid income		60 58	89 74
Provisions	32	6	10
		290	354
Total current liabilities		308	369
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		883	1 049
Pledged assets and contingent liabilities
Amounts in MSEK	Note	2010-03-31	2009-03-31
Pledged assets	34
For own liabilities and provisions
Corporate mortgages		28	58
		28	58
Contingent liabilities	39
Guaranty undertakings, FPG/ PRI		0	1
Other guarantees		3	4
		3	5

Consolidated Statement of Changes in Equity

			Reserves
Amount in MSEK 2010-03-31	Share capital	Other contributed capital	Hedging reserve	Translation reserve	Retained earnings	Total equity
Opening balance	49	345	–3	44	83	518
Comprehensive income for the year			1	–34	42	9
Dividend					–33	–33
Option programme payments		0				0
Closing balance	49	345	–2	10	92	494
			Reserves
Amount in MSEK 2009-03-31	Share capital	Other contributed capital	Hedging reserve	Translation reserve	Retained earnings	Total equity
Opening balance	49	345	0	5	60	459
Comprehensive income for the year			–3	39	68	104
Bonus issues	2				–2	–
Cancellation of own B-shares	–2				2	–
Dividend					–34	–34
Purchase of own shares					–11	–11
Option programme payment		0				0
Closing balance	49	345	–3	44	83	518

Note 29 contain additional information about shareholder's equity.

Consolidated Statement of Cash Flows

Amounts in MSEK	Note	2009/10	2008/09
Operating activities
Profit after finance items	36	58	94
Adjustments for items not included in cash flow etc	37	14	27
		72	121
Current taxes		-16	-26
Cash flow from operating activities before changes in working capital		56	95
Cash flow from changes in working capital
Increase (–)/Decrease (+) in inventories		54	17
Increase (–)/Decrease (+) in operating receivables		16	95
Increase (+)/Decrease (–) in operating liabilities		-39	-70
Cash flow from operating activities		87	137
Investing activities
Investment in businesses	38	-2	-57
Acquisition of intangible non-current assets		-6	-6
Acquisition of tangible non-current asset		-11	-17
Disposal of tangible non-current asset		1	1
Disposal of/decrease in financial assets		0	2
Cash flow from investment activities		-18	-77
Financing activities
Repurchase of own shares		–	-11
Dividend paid		-33	-34
Change in loan liabilities		-66	-32
Cash flow from financing activities		-99	-77
Cash flow for the year		-30	-17
Liquid funds at beginning of year		60	79
Exchange rate difference in liquid funds		-1	-2
Liquid funds at year-end		29	60
Change in net financial liability/claim		2009/10	2008/09
Net financial liability (+)/claim (–) at beginning of year		78	93
Change in interest-bearing liabilities		-68	-28
Interest-bearing liabilities in acquired businesses		–	1
Change in interest-bearing provisions for pensions		-3	-7
Liquid funds in acquired businesses		–	-1
Change in liquid funds		31	20
Net financial liability (+)/claim (–) at end of year		38	78

Parent Company Income Statement

Amounts in MSEK	Note	2009/10	2008/09
Net revenue	3, 4	22	26
Administrative expenses		-34	-32
Gross profit	3, 6, 9, 10, 13	-12	-6
Operating profit
Finance income	11	88	146
Finance expense	12	-16	-63
Profit before appropriations and taxes	13	60	77
Appropriations
Change in untaxed reserves		-2	0
Profit before taxes		58	77
Taxes	14	5	3
Net income for the year		63	80

Parent Company Balance Sheet

Amounts in MSEK	Note	2010-03-31	2009-03-31
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	539	553
Due from Group companies	23	47	58
Deferred tax asset	31	0	0
		586	611
Total non-current assets		586	611
Current assets
Short-term receivables	33
Trade receivables		46	49
Tax assets		1	1
Other receivables		2	1
Prepaid expenses and accrued income	28	2	1
		51	52
Cash and cash equivalents	33	0	7
Total current assets		51	59
TOTAL ASSETS		637	670

Parent Company Balance Sheet

Amounts in MSEK	Note	2010-03-31	2009-03-31
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	29
Share capital		49	49
Legal reserve		13	13
		62	62
Retained earnings		360	293
Net income for the year		63	80
		423	373
Total shareholders' equity		485	435
Untaxed reserves		3	0
Long-term liabilities	33, 34
Long-term interest-bearing liabilities
Provisions for pensions	30	22	–
Liabilities to Group companies		17	54
Liabilities to credit institutions	34	–	69
Total long-term liabilities		39	123
Current liabilities	33, 34
Short-term interest-bearing liabilities
Committed credit facility	34	22	–
Liabilities to credit institutions	34	–	10
		22	10
Short-term non-interest-bearing liabilities
Trade payables		2	1
Due to Group companies		72	84
Tax liabilities		2	0
Other liabilities		7	13
Accrued expenses and prepaid income	35	5	4
Provisions	32	–	0
		88	102
Total current liabilities		110	112
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES		637	670
Pledged assets and contingent liabilities
Amounts in MSEK	Note	2010-03-31	2009-03-31
Pledged assets		-	-
Contingent liabilities
Guaranty undertakings, FPG/ PRI		23	43
Other guarantees		7	7
		30	50

Parent Company Statement of Changes in Equity

Amounts in MSEK 2010-03-31	Share capital	Legal reserve	Retained earnings	Total equity
Opening balance according to last year's balance sheet	49	13	373	435
Dividend			–33	–33
Payment under option programme			0	0
Group contributions			27	27
Tax effect of group contributions			–7	–7
Profit for the year			63	63
Closing balance	49	13	423	485
Amounts in MSEK 2009-03-31	Share capital	Legal reserve	Retained earnings	Total equity
Opening balance
	49	13	316	378
Bonus issues	2		–2	–
Cancellation of own B-shares	–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

Note 29 contain additional information about shareholder's equity.

Parent Company Statement of Cash Flows

Amounts in MSEK Note	2009/10	2008/09
Operating activities
Profit after finance items 36	60	77
Adjustments for items not included in cash flow etc 37	8	48
	68	125
Current taxes	0	0
Cash flow from operating activities before changes in working capital	68	125
Cash flow from changes in working capital
Increase (–)/Decrease (+) in operating receivables	-5	-10
Increase (+)/Decrease (–) in operating liabilities	-5	-19
Cash flow from operating activities	58	96
Investing Activities
Investment in businesses	-2	-28
Sale of subsidiaries	3	–
Acquisition of tangible non-current assets	0	0
Sale of/decrease in financial assets	10	1
Cash flow from investment activities	11	-27
Financing activities
Repurchase of own shares	–	-11
Dividend paid	-33	-34
Change in loan liabilities	-95	-36
Group contribution received/rendered	29	19
Cash flow from financing activities	-99	-62
Cash flow for the year	-30	7
Liquid funds at beginning of year	7	0
Merger of subsidiaries	23	–
Exchange rate difference in cash and cash equivalents	–	–
Liquid funds at year-end	0	7

Notes to the Financial Statements

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 1.2 Supplementary rules for consolidated accounting 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 compiling the Parent Company's and the Group's financial reports

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 reports 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 for 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 through the income statement, or as available-for-sale 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 expressly permitted in an accounting recommendation.

The financial reports are comprised of Board of Directors Report with proposed allocation of earnings, financial statements and notes. The consolidated financial statements and the Parent Company's annual accounts have been approved for publication by the Board of Directors 24 June 2010. The consolidated income statement and statement of financial position and the Parent Company's income statements and balance sheets are subject to approval by the Annual General Meeting to be held 31 August 2010.

Preparing the financial reports 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, liabilities, 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 estimates are reported in the period when the change is made, where the change affects that 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 greater detail in Note 2 and elsewhere.

By events after the end of the period under review are meant favourable as well as unfavourable events that occur between the end of the period under review 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 end of the period under review that are not accounted for when the income statement and the statement of financial position are adopted. Only events that confirm circumstances prevailing before the end of the reporting period 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.

Changed accounting policies

Described below are the changed accounting policies applied by the Group starting 1 April 2009. Other revisions of IFRS applied starting 1 April 2009 have not had any significant effect on the Group's accounting.

Presentation of financial reports

The Group applies the amended IAS 1 Presentation of Financial Statements (2007) since 1 April 2009. The amendment means that income and expenses previously reported directly in equity now instead are reported in other comprehensive profit that Lagercrantz presents in a separate income statement termed statement of comprehensive profit, presented directly after the income statement. Lagercrantz has elected to use the new titles for the reports introduced in IAS 1 (2007) – statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows.

Comparative periods have been changed in the annual report to adhere to the new form of presentation. Since the changes only affect the presentation, no figures have been changed, neither with respect to earnings per share or other items in the financial reports.

Segment information

Since 1 April 2009 the Group applies the new IFRS 8 Operating Segments, which replaces IAS 14 Segment Reporting. IFRS 8 introduces a management perspective of how operating segments should be separated and presented. The new principles are described below among the accounting policies in this note. The standard has been applied in accordance with its transitional rules, so that information about the comparative year is adapted to the requirements set forth in IFRS 8. For Lagercrantz the application of IFRS 8 has not meant any change in the breakdown into segments since the segments identified in accordance with IAS 14 are identical to the ones followed up by management. The Group continues to apply the same accounting policies in the operating segments as in the consolidated financial statements, i.e. IFRS. Consequently, none of the amounts reported have been changed in comparison with previously reported amounts.

Disclosures about financial instruments

Changes in IFRS 7 Financial Instruments: Disclosures applied from 1 April 2009 affects Lagercrantz Group's financial reporting starting with the Annual Report for 2009/2010. The changes mainly involve the introduction of new disclosure requirements for financial instruments valued at fair value in the statement of financial position. Instruments are broken down into three levels depending on the quality of measurement input data. The breakdown into levels determines how and which information is to be supplied about the instruments, where level 3 with the lowest quality input data calls for more stringent disclosure requirements than the other levels. These disclosure requirements have

mainly affected Note 33. In addition hereto, the amendment of IFRS 7 gives rise to some changes in disclosures regarding liquidity risk.

Borrowing costs

The Group applies the revised IAS 23 Borrowing Costs since 1 April 2009. The change has the effect that the Group capitalises borrowing costs in the acquisition value of qualifying assets with a beginning date 1 April 2009 or later. Previously borrowing costs were charged to income in the period to which they are attributable rather than being capitalised. In accordance with the transitional provisions for IAS 23 the amendment is applied from the effective date and later. Since the revision is applied going forward, it has no effect on prior years. The effect of this change was minimal.

Early adoption of newly issued or revised IFRS and interpretations during the 2009/2010 financial year

No newly issued IFRS or interpretations were subject to early adoption.

New or revised IFRS that will be adopted in the coming periods

A number of new or revised standards and interpretation statements take effect during future financial years and have not been applied early when preparing these financial statements. There are no plans to apply new rules or revisions that take effect starting in financial years after 2009/2010. To the extent expected effects on the financial statements of the application of new or revised standards and interpretation statements are not described below, Lagercrantz Group has not yet made an assessment of such effects.

Revised IFRS 3 Business Combinations and revised IAS 27 Consolidated and Separate Financial Statements entail the following changes, among other: definition of business is changed; transaction costs in connection with business combinations are to be expensed; conditional purchase money shall be measured at fair value at the time of acquisition and effects of revaluation of liabilities related to conditional purchase money shall be recognised as income or cost in the year's result. Other news is that there will be two alternative ways of reporting minority and goodwill, either at fair value, i.e. goodwill is included in the minority, or, alternatively, that the minority consists of a share of net assets. The choice between these two methods will be done for each individual acquisition. Also, additional acquisitions occurring after assumption of a controlling interest are regarded as owner transactions and are reported directly in equity, which is a change of Lagercrantz Group's present principle, which is to report excess amounts as goodwill. The revised and amended standards will be applied starting in the next following financial year, i.e. from 1 April 2010. The amendments will affect Lagercrantz Group only going forward.

(c) Operating segment reporting

An operating segment is a part of the Group that conducts business from which it can generate income and incur costs and for which independent financial information is available. An operating segment's earnings are also followed up by the Group's highest executive decision-maker to evaluate the result and to be able to allocate resources to the operating segment in question. Refer to Note 3 for additional description of the breakdown and presentation of 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 end of the reporting period. 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 reporting period.

(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 purchase 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 difference between the acquisition cost of the shares in the subsidiary and the fair value of acquired assets, assumed liabilities and contingent liabilities is recorded as goodwill in the Group. When the difference is negative it is recorded directly in the income statement.

The financial statements of subsidiaries are consolidated from the time of acquisition until the date when such 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 at the end of the reporting period. 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 way as other changes in value.

(ii) Financial statements of foreign entities

Assets and liabilities in foreign entities, including goodwill and other surplus values, and other surpluses and deficits in the Group are converted to Swedish kronor at the rate of exchange prevailing at the end of the reporting period. Revenue and costs in a foreign entity are converted to Swedish kronor at an average rate Translation differences that arise in connection with conversion of a foreign net investment, and the resultant effects of hedging of net investments, are reported directly in other comprehensive income and are accumulated as a separate component of equity, the translation reserve. When foreign entities are sold, the accumulated translation differences attributable to the entity are realised after deduction of any foreign exchange hedging and reclassified from the translation reserve in equity to profit/loss for the year.

Lagercrantz Group has elected to zero out the accumulated translation differences in foreign entities 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 if it is probable that the economic rewards will not inure to the benefit of the Group.

(ii) 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 at an earlier occasion.

(iii) 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 at the end of the reporting period 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.

(iv) 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.

v) Government grants

Government grants are reported in the statement of financial position 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 expense

(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) Financial income and expense

Financial income and expense consists of interest income on bank funds, receivables and interest-bearing securities, interest expense on loans, dividend income, exchange rate differences, changes in value of financial assets valued at fair value through the income statement, impairment of financial assets and gains and losses on hedging instruments reported 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 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 lease payments is reported in the income statement using the effective rate method. Interest income includes accruals and deferrals of transaction costs and any rebates, discounts, premiums and other differences between the original value of the receivable and the amount received at maturity.

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

Borrowing costs are reported in the income statement using the effective rate method, except to the extent they are directly attributable to the purchase, design or production of assets that take significant time to complete for their intended use or for sale, in which case they are part of the acquisition cost of the assets in question.

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 statement of financial position include on the asset side liquid funds, trade 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 statement of financial position

A financial asset or a financial liability is recorded in the statement of financial position when the company becomes party to the contractual terms of the instrument in question. Trade receivables are recorded in the statement of financial position 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 statement of financial position 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 statement of financial position 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 which 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. The classification depends on the purpose behind acquiring the financial instrument. The relevant categories for the Group are as follows: Financial assets at fair value through the income statement, Loans receivable and trade receivables, Financial liabilities valued at fair value through the income statement, Other financial liabilities and Derivatives used for hedge accounting.

Financial assets valued at fair value through 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 a current basis at fair value with changes in value reported through the income statement. The first sub-group includes derivatives with positive fair value, except for derivatives which are identified and effective hedging instruments.

Loan receivables and trade receivable

Loan receivables 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 twelve months after the e, which are classified as non-current assets. Loan receivables and trade receivables include items Trade receivables and Other receivables in the statement of financial position. Assets in this category are valued at accrued acquisition value. Trade receivables are reported in the amount expected to be collected, i.e. after deduction for doubtful credits. Impairment charges are reported as operating expenses.

Financial liabilities valued at fair value through the income statement

This category consists of financial liabilities held for trading and derivatives 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.

Derivatives used for hedge accounting

All derivatives are accounted for at fair value in the statement of financial position. 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 Derivatives and hedge accounting.

Liquid funds

Liquid funds 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 short-term investments depending on the purpose of the holding. If the term or the expected holding period is more than one year, they are classified as non-current assets and if they are shorter than one year as short-term investments.

(j) Derivatives and hedge accounting

The Group's derivative instruments are acquired to hedge interest and foreign exchange rate risks to which the Group is exposed. An embedded derivative is reported separately unless it is closely related to the host contract. Derivatives are valued initially at fair value, with the effect that transaction costs are charged to the period's earnings. After the initial reporting derivative instruments are valued at fair value and changes in value are reported as described below.

In order to meet the requirements for hedge accounting in accordance with IAS 39, there must be an unambiguous link to the secured item. It is also required that the hedge protects the secured item in an effective manner, that hedging documentation has been drafted and that the efficiency can be measured. Gains and losses are reported in the income statement for items that have been hedged.

Hedging of period of fixed interest – cash flow hedging

Interest rate swaps are used to hedge against the uncertainty of future interest flows relating to loans with variable interest. Interest rate swaps are valued at fair value in the statement of financial position. In the income statement the interest coupon portion is reported on a current basis as interest income or interest expense. Other changes in the value of interest rate swaps are reported in other comprehensive income and are included as a part of 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 through 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 financial 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 end-of-period exchange rate. The period's translation differences relating to financial instruments used as hedging instruments in hedging a net investment in a Group company is reported, to the extent the hedge is effective, in other comprehensive income and the accumulated changes are reported as a special component of equity (the translation reserve). This procedure is used to neutralise the translation differences that affect other comprehensive income when the Group's companies are consolidated.

(k) Tangible non-current assets

(i) Owned assets

Tangible non-current assets are reported as assets in the statement of financial position 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 charges for impairment. 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 directly attributable costs included in the acquisition value are costs for shipping and handling, installation, legal ratification, consulting services and legal services. Borrowing costs directly attributable to the purchase, design or production of assets that take significant time to complete for their intended use or for sale are included in the acquisition value.

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 statement of financial position 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 in the consolidated financial statements 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 statement of financial position. The obligation to pay future leasing fees is reported as long- and short-term liabilities. 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.

(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.

Assessment of the residual value and period of use of assets is made on an annual basis.

(I) 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 to goodwill in acquisitions after 1 August 2002 and 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 charges. Goodwill is distributed to cash-generating units and 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, 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 statement of financial position, 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. 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 statement of financial position 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:

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 first-in 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 utilisation.

(n) Impairment of assets

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 applied for testing for any need for impairment charges for assets other than financial assets, which are tested in accordance with IAS 39, assets held for sale and groups of assets reported in accordance with IFRS 5, inventories, assets under management used for financing compensation to employees and deferred tax assets.

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

If there is any indication that impairment has been suffered, the recoverable value of the asset is calculated. The recoverable value of goodwill, other intangible assets with indefinable period of use 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 socalled cash-generating unit) for purposes of testing whether impairment has been suffered. An impairment loss is recorded when an asset's or a cash-generating 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 recovery value of other assets is the higher of fair value less selling expenses and the value in use. Future cash flows are discounted using a discount factor that reflects risk-free interest and the risk associated with the specific asset for the purpose of calculating the value in use.

(i) Impairment of financial assets

The recoverable value of assets belonging to the categories held-to maturity investments, loans and trade receivables are reported at accrued acquisition value is calculated as the present value of future cash flows 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 reported as a cost in the income statement.

(ii) Reversal of impairment losses

Impairment losses on 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 loss was incurred.

Impairment losses on other assets are reversed where there has been a change in the assumptions on which the calculation of the recoverable value was made.

An impairment loss 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 impairment loss had been incurred, taking into account the amortisation that would then have been made. Impairment losses on goodwill are not reversed.

(o) Shareholders' equity

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

(i) Repurchase of own shares

Holdings of own shares in treasury and other equity instruments are reported as a reduction of equity. The acquisition of such instruments is reported as a deduction item against equity. Proceeds from the sale of equity instruments are reported as an increase in 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

Calculating earnings per share is based on consolidated net income attributable to the parent company's shareholders and the weighted average number of shares outstanding during the year. When calculating earnings per share after dilution the average number of shares outstanding is adjusted to account for the effects of diluting potential shares of common stock, which during reported periods are attributable to options issued to employees. Dilution from options affects the number of shares outstanding and occurs only when the strike price is lower than the market price.

(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.

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 at the end of the reporting period 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 2009, Alecta's surplus in the form of collective solvency margin was 141 percent (2008: 112 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 anticipated return on the relevant managed assets is reported in the net of finance items. Other components are reported in operating income.

(iii) Benefits in case of termination

In connection with termination of personnel, a provision is set aside only where the company is demonstrably obligated, without a realistic opportunity to reverse the decision, by a formal detailed plan to terminate an employment before the normal point in time. When benefits are given as an offer to encourage voluntary termination, a cost is reported where it is probable that the offer will be accepted and that the number of employees who will accept the offer can be estimated with reliability.

(iv) Option Programme

The call option programme for the group 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 cash compensation. Payment of the subsidy is 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 the options. This subsidy including social cost is distributed as a personnel expense over the two-year vesting period.

(q) Provisions

A provision is reported in the statement of financial position where the Company has a formal or informal undertaking or 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 undertaking or 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 in other comprehensive income, or directly against equity, in which case the associated tax effect is also reported in other comprehensive income or in 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 end of the reporting period. 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 end of the reporting period.

Deferred tax claims 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 claims 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, investing activities and financing activities. The indirect method is used for flows from operating activates.

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 operations.

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

(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 2:2 Accounting for legal entities of the Swedish Financial Reporting Board. Statements issued by the Swedish Financial Reporting Board for listed companies are also applied. RFR 2:2 means that the Parent Company in the annual accounts for the legal entity should apply all IFRS and statements approved by 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 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 presentation

The Parent Company's income statement and balance sheet are presented in accordance with the format used in the Swedish Annual Accounts Act. Differences compared to IAS 1 Presentation of Financial Statements applied in preparing the consolidated financial statements are primarily in the area of reporting of finance 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

Due to the relationship between accounting and taxation, the rules regarding financial instruments and hedge accounting in IAS 39 are not applied to 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 reported at acquisition value after deduction of accumulated depreciation and any impairment losses in the same way as the Group, but with the addition of any write-ups.

Borrowing costs

In the Parent Company borrowing costs are charged to income during the period to which they apply. No borrowing costs are capitalised among assets.

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 necessary. Group contributions are reported according to economic purport. 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 through 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.

(x) Mergers

Mergers are accounted for in accordance with BFNAR 1999:1.

(y) Financial guarantees

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

Note 2 Critical estimates and judgements

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 and 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 operating segments and geographic areas. The Group's internal reporting system is thus built based on follow-up of the earnings, cash flows and return generated by the Group's goods and services. Directly attributable items have been included in segment earnings and non-current assets, as well as items that can be allocated in a reasonable and reliable manner. Segment investments in non-current assets include all capital expenditures, both in intangible and tangible assets. Assets added as a result of acquisitions are not included, but amortisation of group surplus values is.

Operating segments

The Group consists of the following operating segments:

• Division Electronics: Sells special components and solutions for electronics.
• Division Mechatronics: Active in niche production of cable harnesses, electrical connection systems and similar products.
• Division Communications: Active in IT-related areas such as Digital image/digital security, Access and Software.

Sales and profit by operating segment

	Electronics		Mechatronics		Communications
		2009/10 2008/09 2009/10 2008/09 2009/10 2008/09
Revenue
External sales	552	727	511	628	657	783
Internal sales	12	16	1	3	–	–
Total revenue	564	743	512	631	657	783
Result
Operating result	17	24	30	49	34	52
Revenue External sales		Parent Company and eliminations 2009/10 –	2008/09	–	Total 2009/10 1,720	2008/09 2,138
Internal sales		–13		–19	–	–
Total revenue		–13		–19	1,720	2,138
Result
Operating result		–14		–20	67	105
Finance income					3	7
Finance expense					–12	–18
Result before taxes					58	94

Transfer pricing between operating segments are on market terms.

Taxes and minority interest –16 –26 Net result 42 68

Other information by operating segment

	Electronics			Mechatronics		Communications
					2009/10 2008/09 2009/10 2008/09 2009/10 2008/09
Assets	216	297	302	327	332	388
Undistributed assets	–	–	–	–	–	–
Total assets	216	297	302	327	332	388
Liabilities	68	95	90	99	132	150
Undistributed liabilities	–	–	–	–	–	–
Total liabilities	68	95	90	99	132	150
Capital expenditures	4	8	7	10	6	5
Depreciation and amortisation	6	5	10	10	9	9
Costs, in addition to depreciation and amortisation that do not result in disbursements	–	–	–	–	–	–

	Parent Company		Total
	2009/10	2008/09	2009/10	2008/09
Assets	9	9	859	1,021
Undistributed assets	–	–	24	28
Total assets	9	9	883	1,049
Liabilities	38	18	328	362
Undistributed liabilities	–	–	61	169
Total liabilities	38	18	389	531
Capital expenditures	0	0	17	23
Depreciation and amortisation	0	1	25	25
Costs, in addition to depreciation and amortisation that do not result in disbursements	–	–	–	–

External sales by geographic market

	2009/10	2008/09
Sweden	565	652
Denmark	362	463
Norway	262	349
Finland	137	179
United Kingdom	47	52
Germany	106	120
Poland	37	42
Other Europe	100	146
Other world	104	135
	1,720	2,138

Investment in non-current assets by geographic market

		Capital expenditures		Non-current assets
	2009/10	2008/09	2009/10	2008/09
Sweden	10	8	191	195
Denmark	4	5	71	84
Norway	1	3	4	5
Finland	1	6	50	59
Germany	1	1	19	20
Poland	0	0	1	1
Other Europe	0	0	0	0
Other world	0	0	0	0
Undistributed assets	–	–	15	21
	17	23	351	385

Internal net revenue by operating segment

Parent Company	2009/10	2008/09
Electronics	7	10
Mechatronics	7	7
Communications	8	9
	22	26

Internal net revenue by geographic market

Parent Company	2009/10	2008/09
Sweden	10	11
Denmark	7	8
Norway	2	2
Finland	2	3
Germany	1	1
Other countries	0	1
	22	26

Note 4 Distribution of net revenue

Net revenue by product category	2009/10	2008/09
Group
Trading	938	1,230
Niche production	222	312
Proprietary production	345	396
System integration	131	118
Service and other	84	82
	1,720	2,138

In the case of other types of revenue, dividend and interest income are reported in net finance items. See note 11. Lagercrantz Group earned no royalty income during 2009/2010 and 2008/2009.

Note 5 Operating expenses by type of cost

Group	2009/10	2008/09
Compensation-related personnel costs	366	441
Depreciation and amortisation	25	25

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

Average number of employees

	2009/10	Of whom men	2008/09	Of whom men
Parent Company
Sweden	9	78%	9	78%
Other Group companies
Sweden	352	76%	407	73%
Denmark	162	54%	184	47%
Norway	25	68%	39	74%
Finland	72	46%	82	43%
Germany	20	65%	24	67%
Poland	17	82%	27	74%
Other countries	4	75%	10	60%
Total in Group companies	652	66%	773	64%
Group total	661	66%	782	64%

Salaries, other compensation and social benefits

	2009/10 Salaries and compensation Social benefits		2008/09 Salaries and	compensation Social benefits
Parent company (of which pension	11	7	12	7
cost)		(3)¹		(3)¹
Other Group companies	272	76	325	97
(of which pension cost)		(19)		(17)
Group total	283	83	337	104
(of which pension cost)		(22)²		(20)²

¹ Of the Parent Company's pension costs 1 (1) refers to the group Board of Directors and President. This group also includes executive vice presidents. There are no outstanding pension obligations.

² Of the Group's pension costs, MSEK 3 (4) refers to the group Board of Directors and President, executive vice presidents and chief executives in subsidiaries. The Group's pension obligations to this group amount to MSEK 0 (0).

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

	2009/10		2008/09
	Board of	Board of	Board of
	Directors	Directors	Directors
	and President	and President	and President	Other employees
Parent Company
Sweden	6	5	6	6
(of which bonus, etc.)	(–)	(0)	(0)	(0)
Other Group companies in
Sweden	7	116	9	134
(of which bonus, etc.)	(1)	(2)	(1)	(2)
Total Sweden	13	121	15	140
	(1)	(2)	(1)	(2)
Outside Sweden
Denmark	9	80	8	92
(of which bonus, etc.)	(1)	(2)	(3)	(3)
Norway	2	15	3	20
(of which bonus, etc.)	(0)	(0)	(0)	(0)
Finland	4	21	3	29
(of which bonus, etc.)	(0)	(1)	(0)	(1)
United Kingdom	1	0	2	3
(of which bonus, etc.)	(–)	(0)	(0)	(0)
Germany	1	10	1	11
(of which bonus, etc.)	(–)	(0)	(–)	(0)
Poland	1	3	2	5
(of which bonus, etc.)	(–)	(–)	(0)	(0)
Other countries	–	2	1	2
(of which bonus, etc.)	(–)	(–)
Group companies
outside Sweden, total	18	131	20	162
(of which bonus, etc.)	(1)	(3)	(3)	(4)
Group total	31	252	35	302
(of which bonus, etc.)	(2)	(5)	(4)	(6)

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

Gender distribution in management

	3/31/2010 Proportion of women	3/31/2009 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	7%	6%
Other members of management	3%	3%

Absence due to illness

Data refer to the Swedish companies	2009/10	2008/09
Total absence due to illness as a proportion of regular working hours	5%	4%
Proportion of total absence referring to continuous absence due to illness for 60 days or more	58%	60%
Absence due to illness by gender
Men	4%	3%
Women	7%	7%
Absence due to illness by age category
29 years or younger	5%	3%
30–49 years	3%	4%
50 years or older	9%	6%

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, pension and financial instruments. The total compensation shall be adjusted to conditions on the market and competitive and should be commensurate with responsibility and authority. The variable portion of the compensation shall be maximised at about 40 percent of 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 reporter. 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 2010 Annual General Meeting is set forth in the Board of Directors Report.

Compensation and other benefits, Parent Company 2009/10

SEK thousand	Basic salary, directors fee	Variable compensation	Other 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			94	650	2,890
Executive Vice Presidents
Niklas Enmark	1,226			88	255	1,569
Magnus Söderlind	1,371			120	349	1,840
Other members of senior management
3.5 persons	3,615	60	13	271	1,061	5,020
Total	9,458	60	13	573	2,315	12,419

Compensation and other benefits, Parent Company 2008/09

SEK thousand	Basic salary, directors fee	Variable compensation	Other 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

Members of senior management comprise the management team who in addition to the President and Chief Executive Officer consist of executive vice presidents (2), executives with division and business area responsibility (4 persons, one of whom assumed office during the year and hence is included in the above table as 0.5). Also during the preceding year one person was included as a member of senior management for six months.

Compensation to this group, which in 2009/10 consisted of 6.5 (6.5) persons, was covered by the resolution of the 2009 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 President, the President is entitled to a severance payment of the equivalent of one year's salary in addition to salary during period of notice. No severance payment is payable in the case of termination at the initiative of the President.

The period of notice for the other members of senior 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 senior 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.

Option programmes

The 2009 Annual General Meeting resolved an incentive programme for managers and members of senior management in the Lagercrantz Group. This call option programme consists of call options for Lagercrantz Group repurchased shares, where each call option gives the holder a right to acquire one class B repurchased share.

Redemption can take place during three time periods: (i) during four weeks from the day when the Company publishes its interim report for the period 1 April 2011–30 September 2011, (ii) during four weeks from the day when the Company publishes its interim report for the period 1 April 2011–31 March 2012, and (iii) during the period 17–30 September 2012.

A previous call option program for managers and members of senior management was resolved by the 2006 Annual General Meeting. Remaining programmes refer to the years 2007 and 2008.

These option programmes are for call options for Lagercrantz Group repurchased shares, where each call option entitles its holder to acquire one repurchased class B share after 3.25 years, with possible redemption after three years.

In all cases the share is acquired at a redemption price determined as a percentage mark-up of an average share price ten days after the Annual General Meeting in accordance with listed paid prices.

The programme will cover employees with a direct possibility of affecting the Group's income.

The members of the Board of Directors do 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.

Pre-emption 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 premium for the call options shall be 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 in the programme, 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 was made two years after the issue resolution provided the option holder was still in the employment of the Group at this point in time and still owns call 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.

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 the other members of senior management 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 at SEK 3.50 per option by an independent valuation institution. The cost for programme 2007 amounted to approximately MSEK 1.0, for the most part attributable to the subsidy, but with only a minimal effect on earnings per share. About MSEK 0.5 of the cost for the current option programme was charged to 2007/08 earnings. The effect on equity was MSEK 0.8. The award resolved by the 2008 Annual General Meeting comprised 27 persons and a total of 180,500 call options. 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 shares resolved was 125 percent of the average price, was set as SEK 36.80. The market value of the call options was set at SEK 2.10 per option by an independent valuation institution. The cost for programme 2008 amounted to about MSEK 0.6, for the most part attributable to the subsidy, but with only a minimal effect on earnings per share. About MSEK 0.3 of the cost for the current option programme was charged to 2008/09 earnings. The effect on equity amounted to MSEK 0.2. The award resolved by the 2009 Annual General Meeting comprised 23 persons and a total of 255,000 call options. Awards varied between 3,000 and 44,000 options per person. The President & CEO acquired 44,000 and other members of senior management 108,000.

The measuring period to determine the average share price, which was SEK 25.92 was 7 September–18 September 2009. The redemption price for the shares resolved was 120 percent of the average price, was set as SEK 31.10. The market value of the call options was set at SEK 2.00 per option by an independent valuation institution. The cost for programme 2009 amounted to about MSEK 1.0, for the most part attributable to the subsidy, but with only a minimal effect on earnings per share. About MSEK 0.4 of the cost for the current option programme was charged to 2009/10 earnings. The effect on equity amounted to MSEK 0.1.

Fees and reimbursement to auditors

	Group 2009/10	2008/09	Parent Company 2009/10	2008/09
KPMG
Audit assignments	3	3	0.6	0.6
Other assignments	0	1	0.2	0.1
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

	2009/10	2008/09
Group
Capital gains	0	0
Rental income	0	0
Other compensation	2	6
FX gains on receivables/liabilities of an operating
character	3	8
Other	5	2
	10	16

Note 8 Other operating expenses

	2009/10	2008/09
Group
FX losses on receivables/liabilities of an
operating character	–7	–3
Other expenses	–1	–1
	–8	–4

Note 9 Depreciation and amortisation of tangible and intangible assets

	2009/10	2008/09
Group
Depreciation and amortisation according to plan by type of asset
Intangible assets	–11	–10
Buildings and land	0	0
Leasehold improvements	–1	–1
Plant and machinery	–5	–6
Equipment, tools, fixtures and fittings	–8	–8
	–25	–2
Depreciation and amortisation according to plan by function
Cost of goods sold	–9	–9
Research and development	–3	–3
Selling costs	–9	–9
Administrative expenses	–4	–4
	–25	–25
Parent Company
Depreciation and amortisation according to plan by type of asset
Equipment, tools, fixtures and fittings	0	0
	0	0
Amortisation according to plan by function
Administrative expenses	0	0
	0	0

Note 10 Leasing fees relating to operating leases and rental contracts

	2009/10	2008/09
Group
Leasing fees and rents paid during the financial year	29	33
Amounts of future annual payments:
1 year after current financial year	23	29
2 years after current financial year	16	17
3 years after current financial year	11	10
4 years after current financial year	3	5
5 years after current financial year	2	3
	55	64
Parent Company
Leasing fees and rents paid during the financial year	2	2
Amounts of future annual payments:
1 year after current financial year	1	2
2 years after current financial year	1	1
More than 3 years after the current financial year	0	–
	2	3

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

Note 11 Finance income

	2009/10	2008/09
Group
Interest income	1	3
FX gains	2	4
	3	7
Parent Company
Result from shares in Group companies
Interest income from Group companies	1	3
Dividends	86	140
	87	143
Other interest income and similar items
FX gains	0	3
Other interest income	1	0
	1	3
	88	146

Note 12 Finance costs

Group	2009/10	2008/09
Interest costs, pensions	–2	–2
Other interest cost	–5	–10
Effect interest hedging	–2	0
FX losses	–3	–6
Other	0	0
	–12	–18
Parent Company
Result from shares in Group companies
Interest costs to Group companies	0	–3
FX losses	–3	0
Impairment charges	–7	–52
	–10	–55
Other interest costs and similar items
Other interest costs	–4	–8
Effect lowering of interest rates	–2	0
Other	0	0
	–6	–8
Total finance costs in the Parent Company	–16	–63

Note 13 Exchange rate differences affecting the result

2009/10	2008/09
–4	6
–1	–2
–5	4
–3	3
–3	3

Note 14 Taxes on the year's profit

	2009/10	2008/09
Group
Current tax expense (–)/tax income (+)
Tax expense for the period	–13	–18
Adjustment of taxes attributable to prior years	–1	–2
	–14	–20
Deferred tax expense (–)/tax income (+)
Deferred taxes on temporary differences	–2	0
Deferred taxes on change of capitalised tax value of tax
loss carryforwards	0	–6
	–2	–6
Total reported tax expense/tax income in the Group	–16	–26

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	2009/10	2008/09
Group
Result before taxes	58	94
Tax according to Parent Company's tax rate, 26,3%(28)	–15	–26
Effect of other tax rates for foreign subsidiaries	0	1
Non-deductible expenses	0	–1
Other taxable income	0	0
Effect of changed tax rate	–	1
Tax attributable to prior years	–1	–1
Reported effective tax	–16	–26

Current tax expense (–)/tax income (+)	2009/10	2008/09
Parent Company
Period's tax expense	5	8
	5	8
Deferred tax expense (–)/tax income (+)
Deferred taxes on temporary differences	0	–1
Deferred taxes on change of capitalised tax value of tax
loss carryforwards	–	–4
	0	–5
Total reported tax expense/tax income in the Parent
Company	5	3

Reconciliation of effective tax	2009/10	2008/09
Parent Company
Profit before taxes	56	77
Tax according to current tax rate, 26.3% (28%)	–15	–22
Effect of impairment charges	–2	–14
Dividends fro Group companies	22	39
Non-deductible expenses	0	0
Reported effective tax	5	3
Tax items carried directly to equity	2009/10	2008/09

	–7	–8
Current taxes on group contributions received	–7	–8
Parent Company
Tax items carried directly to equity	2009/10	2008/09

Note 15 Goodwill

	3/1/2010	3/1/2009
Group
Accumulated acquisition values
Opening balance	192	140
Additions	–	45
Adjustment additional purchase price	-3	-
Exchange rate difference	–10	7
Closing balance	179	192
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	11	15
K&K Active OY	33	35
CAD-Kompagniet A/S	26	30
ISIC A/S	5	6
Unitronic AG	18	20
Total Goodwill	179	192

Test for impairment of goodwill

The Group's reported goodwill amounts to MSEK 179 (192). After adoption of IFRS goodwill is no longer amortised. Its value is instead tested annually in accordance with IAS 36. Tests were performed during March of 2010.

Goodwill is allocated to cash-generating units, which in normal instances coincides with the acquired company. In cases where the acquired business is integrated with another Lagercrantz unit to an extent that separate assets and cash flows attributable to the acquired company can no longer be identified, the test is performed at the next higher level.

The recovery value is calculated based on the value in use and on a current estimate of cash flows for the coming five-year period. Assumptions have been made with respect to sales growth, gross margin, level of overhead, working capital requirements and needs for capital investment. In the normal instance parameters have been set to coincide with prognosticated levels for the next-following operating year, mainly based on the company's business plan. For subsequent years a growth rate based on estimated GDP growth with minor adjustments has been used. In cases where major changes are expected an adaptation has been made to reflect these expectations better.

Cash flows have been discounted using a weighted cost of capital equivalent to approximately 12–13.5 percent before taxes, equivalent to the preceding year. This calculation shows that the value in use exceeds the reported value. The test for impairment did thus not result in any need for an impairment charge. The sensitivity of the calculations means that the value of goodwill can still be defended even where certain parameters used may have changed.

Other tests for impairment

No events or changes in conditions have been identified to make testing for the need for impairment charges against other intangible fixed assets warranted.

Note 16 Trade marks

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
At the beginning of the year	40	36
Additions	–	3
Exchange rate difference	–1	1
Closing balance	39	40
Trademarks are allocated to Group companies as follows
Direktronik AB	2	2
STV Sv Tele & Video Konsult AB	3	3
Elpress AB	15	15
Nordic Alarm AB	7	7
COBS AB	3	3
ISIC A/S	9	10
Total trademarks	39	40

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

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
Opening balance	108	84
Additions	6	17
Additions via new companies	–	0
Exchange rate difference	–5	7
	109	108
Accumulated amortisation according to plan
Opening balance	–34	–22
Additions via new companies	–	0
Year's amortisation according to plan	–11	–10
Exchange rate difference	–1	–2
	–44	–34
Closing balance	65	74

Other intangible assets primarily consist of patents, customer relationships, capitalised development costs and software. Of the total reported value MSEK 24 (26) refers to internally generated intangible assets. A total of MSEK 10 (8) was expensed as research and development during the year.

Note 18 Buildings, land and land improvements

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
Opening balance	3	3
Additions	0	–
¹	3	3
Accumulated amortisation according to plan
At beginning of year	–1	–1
Year's depreciation according to plan	-	-
	–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

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
At beginning of year	8	4
Additions	0	3
Exchange rate difference	–1	1
	7	8
Accumulated amortisation according to plan
At beginning of year	–3	–2
Year's amortisation according to plan	–1	–1
Exchange rate difference	1	0
	–3	–3
Closing balance	4	5

Note 20 Plant and machinery

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
At beginning of year	75	69
Additions	5	4
Reclassification	0	0
Sales and disposals	0	–1
Exchange rate difference	–3	3
	77	75
Accumulated amortisation according to plan
At beginning of year	–45	–38
Sales and disposals	0	1
Year's amortisation according to plan	–5	–6
Exchange rate difference	2	–2
	–48	–45
Closing balance	29	30

Note 21 Equipment, tools, fixtures and fittings

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
At beginning of year	124	111
Additions	6	9
Additions via new companies	–	2
Sales and disposals	–15	–5
Reclassification	0	0
Exchange rate difference	–5	7
	110	124
Accumulated amortisation according to plan
At beginning of year	–105	–95
Additions via new companies	–	–1
Sales and disposals	15	4
Reclassification	0	0
Year's amortisation according to plan	–8	–8
Exchange rate difference	4	–5
	–94	–105
Reported value at end of period	16	19

Closing balance	0	0
	–1	–1
Year's amortisation according to plan	0	0
At beginning of year	–1	–1
Accumulated amortisation according to plan
	1	1
Additions	0	0
At beginning of year	1	1
Accumulated acquisition values
Parent Company
	3/31/2010	3/31/2009

Note 22 Shares in Group companies

	3/31/2010	3/31/2009
Parent Company
Accumulated acquisition values
At beginning of year	665	638
External acquisitions	–	27
Sales to Group companies	–10	–
Adjustment of additional purchase money	–3	–
Mergers	–7	–
	645	665
Accumulated impairment charges
At beginning of year	–112	–60
Mergers	6	–
Year's impairment charges	–	–52
	–106	–112
Closing balance	539	553

Subsidiaries Heath Comm AB and Acte Wireless were merged into sister companies during the year. Subsidiary B2B Tech was merged into the Parent Company during the year. See also Note 43.

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 3/31/2010	Book value 3/31/2009
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	2
Acte AS, 923 148 442, Oslo, Norway	5,000	100.0	33	33
Acte Supply AB, 556213-2406, Norrköping	50,000	100.0	20	20
Acte Oy, 239 992, Helsinki, Finland	300	100.0	3	3
COBS AB, 556524-3788, Göteborg	3,000	100.0	23	27
Direktronik 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, 556746-2196, Kramfors	100 100	100.0 100.0	– –	– –
EFC Finland Oy, 1750567-0, Korsholm, Finland	1,550	100.0	13	13
HeathComm AS, 933 199 665, Bergen, Norge	7,000	100.0	8	8
ISG Systems AB, 556468-2192, Höganäs	200	100.0	21	21
K& K Active OY, 0980670-5, Helsingfors, Finland	100	100.0	51	50
Kablageproduktion i Västerås AB, 556509-1096, Västerås	5,000	100.0	20	20
Lagercrantz Communication AB, 556260-2127, Solna	1,000	100.0	3	3
Nordic Alarm AB, 556318-0032, Solna	38,300	100.0	30	30
STV Sv Tele & Video Konsult AB, 556307-4565, Stockholm	65,000	100.0	16	16
Unitronic AG, HRB 40042 , Düsseldorf, Germany	153,600	100.0	28	28
Secos GmbH , Baar, Switzerland	20,000	100.0	–	–
Lagercrantz A/S, 81 74 67 10 , Copenhagen, Denmark	6	100.0	131	131
Acte A/S, 71 28 89 19, Copenhagen, Denmark	2	100.0	–	–
Lagercrantz Asia Ltd, Hong Kong	20,000	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	8	100.0	–	–
the year			539	11 553

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

	3/31/2010	3/31/2009
Parent Company
Accumulated acquisition values
Opening balance	58	58
Incremental receivables	50	54
Receivables paid	–58	–59
Translation difference	–3	5
Closing balance	47	58

Note 24 Other long-term receivables

	3/31/2010	3/31/2009
Group
Accumulated acquisition values
Opening balance	2	4
Incremental receivables	0	0
Receivables paid	0	–2
Closing balance	2	2

Note 25 Inventories

Major one-time impairment charges were made against inventories in the amount of MSEK 7 (11).

Note 26 Trade receivables

Aging of unimpaired trade receivables due	3/31/2010	3/31/2009
Group Trade receivables not due	235	276
Trade receivables due in 0–30 days	15	19
Trade receivables due in > 30–90 days	1	4
Trade receivables due in > 90–180 days	1	2
Trade receivables due in > 180 days	2	0
Total	254	301

Provision account

Closing balance	4	5
Translation difference	0	0
Year's impairment losses	1	1
Reversal of previously sustained impairment charges	–2	0
Group Opening balance	5	4
Provision account for bad debt losses	3/31/2010	3/31/2009

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

Note 27 Earned but not yet invoiced revenue

	3/31/2010	3/31/2009
Group
Work in progress
Accumulated recognised contract income	113	138
Invoiced revenue	98	123
Total claim on clients	15	15
Accumulated contract expenditure and recognised profit (after deduction of reported loss) at the end of
the period	113	138
Advance payments received	–	–
Amount held back by client	–	–

Contract income from fixed price contracts are reported using gradual profit recognition. Calculations are made based on completed time relative to estimated time to complete the entire contract.

Note 28 Prepaid expenses and accrued income

	3/31/2010	3/31/2009
Parent Company
Prepaid rent	0	0
Prepaid insurance premiums	0	0
Other items	2	1
	2	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 and end of period	1,094,654	22,078,655
Total	1,094,654	22,078,655
Repurchased shares	Class A shares	Class B shares
Number of shares repurchased at beginning and end of period	–	1,195,500
Total		1,195,500

The share capital amounted to MSEK 48.9 at the end of the period. The class B share is listed on OMX Nordic Exchange Stockholm. According to the Articles of Association the share capital shall be not less than MSEK 25 and not more than 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 options programmes described in Note 6 are secured by shares repurchased at an average price of SEK 25.57.

When the call options are exercised at a redemption price per share of SEK 44.40, SEK 36.80 and SEK 31.10, respectively, the number of shares outstanding will increase by the number of call options exercised, a total of 665,500. The number of shares held in treasury will then decrease 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 and 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 2009/10 financial year the return was 8 percent (14).

The Group's dividend policy is to pay a dividend amounting to 30-50 percent of the year's profit. Before the 2010 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 79 percent (49). The dividend is also equivalent to 7 percent (6) of consolidated equity as of 31 March 2010.

The Group's Board of Directors has a mandate from the 2009 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 2010 Annual General Meeting to pass a resolution to repurchase own shares. There was no change in the Group's capital management during the year.

Note 30 Provision 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. The plans in Sweden cover certain Group companies. 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. In Norway the defined benefit pension plans were cancelled during the year and replaced by a contribution-based pension solution. Previously existing funded obligations are thus extinguished.

	3/31/2010	3/31/2009
Group
Present value of wholly or partially funded obligations	–	19
Fair value of managed assets	–	–11
Surplus (–)/Deficit (+) in the pension plan	–	8
Present value of unfunded defined benefit obligations	57	50
Net obligations before adjustments	57	58
Adjustments:
Adjustments of pension obligations based on experience	–	–1
Other actuarial gains and losses on pension
obligations	–8	–5
Subtotal of accumulated unreported actuarial gains(+) and losses(–)	–8	–6
Net amount of obligation in the consolidated statement of financial position (+), asset (–)	49	52
The net amount is recorded in the following items in the consolidated statement of financial position:
Provision for pensions and similar obligations	49	52
Net amount in the the consolidated statement of financial position	49	52
Distribution of amount on plans in the following countries:	3/31/2010	3/31/2009
Sweden	48	47
Norway	0	4
Germany	1	1
Amount in the consolidated statement of financial position	49	52

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	2009/10	2008/09
Group
Defined benefit plans
Cost of pensions earned during the year	–1	–2
Interest expense	–2	–3
Expected return on managed assets	–	1
Actuarial gains (–) and losses (+) reported during
the year	0	0
Cost defined benefit plans	–3	–4
Cost of defined contribution plans	–19	–16
Total cost of compensation after termination
of employment	–22	–20

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 financial expense amounted to MSEK –3 (–3). The pension cost of defined contribution

pension plans was MSEK 18 (16). The total cost of defined benefit and defined contribution pension plans amounted to MSEK 22 (20).

Reconciliation of net amount of pensions in the consolidated statement of financial position

The following table explains how the net amount in the consolidated statement of financial position has changed during the period.

	2009/10	2008/09
Opening balance of fair value of managed assets	–11	–17
Expected return on managed assets	–	–1
Funds contributed by employers	–	–2
Benefits paid	–	5
Compensation transferred operations	11	3
Actuarial gain (+) or loss (-) on managed assets	–	1
Other	–	0
Closing balance of fair value of managed assets	–	–11
Opening balance of present value of obligation	63	76
Cost of defined benefit plans	3	4
Disbursement of compensation	–1	–6
Payment of fees from the Company	0	–2
Change in actuarial gains/losses	0	–1
Redemption of transferred obligations	–16	–9
Exchange rate differences	0	1
Closing balance of present value of obligations	49	63
Net amount in the consolidated statement of financial position, closing balance	49	52

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)

	3/31/2010	3/31/2009
Discount interest rate	3.9%	4.0%
Expected inflation	2.0%	2.0%
Future salary increases	3.0%	3.0%
Personnel turnover	5.0%	5.0%
Change in income amount	3.0%	3.0%

Historic information

	2009/10	2008/09	2007/08
Group
Present value of wholly or partially funded obligations	–	19	28
Fair value of managed assets	–	–11	–17
Surplus (–)/Deficit (+) in pension plan	–	8	11
Adjustment of defined benefit pensions based on experience	–	–1	–2

The Group estimates that MSEK 2 will be paid during 2009/10 to funded and unfunded defined benefit plans.

Parent Company	3/31/2010	3/31/2009
Provision for pensions	22	–
Other pension prohibitions	–	–
	22	–

Pledged assets for pension obligations

The Parent Company has guaranteed the PRI liabilities of Group companies.

Note 31 Deferred taxes

3/31/2010	Deferred tax asset	Deferred tax liability	Net
Group
Other non-current assets	5	–25	–20
Other provisions	1	–	1
Untaxed reserves	–	–5	–5
Other	2	0	2
Tax loss carryforwards	7	–	7
	15	–30	–15

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

Unreported deferred tax assets

Deferred tax claims relating to tax loss carryforwards of MSEK 1 (1) 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	–20	0	–20
Other provisions	2	–1	1
Untaxed reserves	–6	1	–5
Other	3	–1	2
Tax loss carryforwards	7	0	7
	–14	–1	–15

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 (0).

Note 32 Other provisions

	3/31/2010	3/31/2009
Group
Other provisions as long-term liabilities
Costs for restructuring measures	0	4
Guarantee provisions	1	1
Other	1	0
	2	5
Other provisions as current liabilities
Costs for restructuring measures	6	10
Other	0	0
	6	10
Opening balance	15	6
Provisions set aside during the period	6	15
Amounts utilised during the period	–13	-6
Closing balance	8	15

Restructuring

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

The item contains warranty provisions, et al.

Note 33 Financial assets and liabilities

Financial instruments by category

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

3/31/2010	Loan and trade receivables	Derivative instruments for hedge accounting	Total
Assets in the consolidated statement of financial position
Long-term receivables	2		2
Trade receivables	254		254
Other short-term receivables	–	1	1
Cash and cash equivalents	29		29
Total	285	1	286

The consolidated statement of financial position shows other receivables in the amount of 14 and financial instruments reported as derivatives in the amount of 1. Other items are non-financial.

3/31/2010	Other financial liabilities	Derivative instruments for hedge accounting	Total
Liabilities in the consolidated statement of financial position
Long-term liabilities to credit institutions	0		0
Current liabilities to credit institutions	18		18
Trade liabilities	158		158
Other current liabilities	–	3	3
Total	176	3	179

The consolidated statement of financial position shows other receivables in the amount of 60 and financial instruments reported as derivatives in the amount of 3. Other items are non-financial.

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

The consolidated statement of financial position 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 consolidated statement of financial position
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

Parent Company

3/31/2010	Loan and trade receivables	Derivative instruments for hedge accounting	Total
Assets in the balance sheet
Due from subsidiaries, long-term	47		47
Other short-term receivables	46		46
Cash and cash equivalents	0		0
Total	93	–	93
3/31/2010	Other financial liabilities	Derivative instruments for hedge accounting	Total
Liabilities in the balance sheet
Long-term liabilities to credit institutions	17		17
Current liabilities to credit
institutions	22		22
Trade payables	2		2
Other current liabilities Total	72 113	–	72 113
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
3/31/2009	Other financial liabilities	Derivative instruments 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

Note 34 Interest-bearing liabilities and provisions

The Group's interest-bearing liabilities are allocated in the consolidated statement of financial position as follows: Provision for pensions MSEK 49 (52), Long-term liabilities MSEK 0 (70), Current liabilities to credit institutions MSEK 18 (15) and Other current liabilities MSEK 0 (0). Total MSEK 677 MSEK (137). Provision for pensions is defined as an interest-bearing provision since the defined benefit pension obligations according to 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 7 and MEUR 0.5 respectively, mature on 1 July 2010 (MDKK 3.5) and 1 September 2010, respectively, for the remaining amounts.

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	3/31/2010	3/31/2009
Current portion	2	13
Maturity, 2–5 years from the date of the statement of financial position	0	41
Maturity, more than five years from the date of the statement of financial position	–	29
	2	83

Parent Company	3/31/2010	3/31/2009
Current portion	–	10
Maturity, 2–5 years from the balance sheet date	–	40
Maturity, more than five years from the balance
sheet date	–	29
	–	79

The acquisition loan raised in 2006 was repaid during the year.

Committed credit facility

Group	3/31/2010	3/31/2009
Approved credit limit	309	315
Utilised portion	–293	–313
Credit facility utilisation	16	2

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

Parent Company	3/31/2010	3/31/2009
Approved credit limit	250	250
Utilised portion	–228	–250
Credit facility utilisation	22	–

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

Pledged assets for committed credit facility

Group	3/31/2010	3/31/2009
Corporate mortgages	28	58
	28	58

Note 35 Accrued expenses and prepaid income

Parent Company	2009/10	2008/09
Personnel expenses	2	2
Other items	3	2
	5	4

Note 36 Interest paid

	2009/10	2008/09
Group
Interest income	1	4
Interest expense	–7	–13
Parent Company
Interest income	1	5
Interest expense	–6	–11

Note 37 Adjustment for items not included in cash flow

Group	2009/10	2008/09
Depreciation and amortisation	25	25
Other provisions	–11	2
Impairment charges and disposals	0	0
Capital gain/loss on non-current assets sold	0	0
Change in interest accrual	2	2
Other items	–2	–2
	14	27
Parent Company	2009/10	2008/09
Depreciation and amortisation	0	0
Impairment losses	7	52
Restructuring reserve	0	–2
Other items	1	–2

8 48

Note 38 Contingent liabilities

Group	3/31/2010	3/31/2009
Guarantee undertakings FPG/PRI	0	1
Bank guarantees	3	4
	3	5

Note 39 Earnings per share

3.05
1.91

The calculation of earnings per share for 2009/10 was based on profit for the year attributable to the Parent Company's equity holders amounting to MSEK 42 (68) and on the weighted average number of shares outstanding during 2009/10 amounting to 21,977,809 (22,287,398).

Instruments that may give rise to future dilutive effect During 2009/10 the Company had three outstanding option programmes, the redemption prices of which (SEK 44.40, 36.80 and 31.10 per share) exceeded the average market price of the shares (SEK 27.60 per share). These options are therefore regarded as having no dilutive effect and have been excluded from the calculation of earnings per share after dilution. Refer to Note 6. If the market price of the share at some future point in time reaches a level above the redemption price, these will entail dilution. Shares held in treasury are used as a hedge for this programme.

Note 40 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 990 and MSEK 1,236, respectively.

Purchases/sales in important currencies

Amounts in MSEK	Purchases	Sales
USD	197	90
EUR	616	645
GBP	6	17
DKK	115	346
NOK	3	94
JPY	37	22
PLN	16	22
Group total	990	1,236

Cash and cash equivalents by currency

Amounts in MSEK	3/31/2010	3/31/2009
SEK	1	5
USD	3	6
EUR	8	27
DKK	3	3
NOK	4	9
Other currencies	10	10
Group total	29	60

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 consolidated statement of financial position

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. The effect of translation differences on equity is set forth in the summary of changes in shareholders' equity. Currency hedges relating to future dividend payments exist in the amount of MDKK 7 and MEUR 0.5, respectively, with maturity dates 2010-07-01 and 2010-09-01, respectively. The transaction forward exchange rates are DKK 1.39 and EUR 10.41, respectively.

Exchange rate sensitivity

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

Exchange rate fluctuations also have other effects on profit since a significant portion of costs is denominated in foreign currency, especially DKK and EUR; measures are continually being taken to

minimise the negative effects of foreign exchange rate fluctuations. This makes the ultimate effects on profit difficult to predict and analyze. The rule of thumb should therefore be used with caution.

Interest risk

The Group's financial policy states the borrowing and the period of fixed interest thereon should not be longer than 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. The Company's exposure to interest rate fluctuations (interest risk) is considerably smaller than the foreign exchange risk. Interest risk 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/shortterm 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 short-term 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	2009/10	2008/09	2008/09	2008/09
Long-term liabilities to credit institutions	4.66%	5.97%	4.67%	5.99%
Short-term liabilities to credit institutions	1.51%	4.33%	1.11%	4.11%

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 of 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 long-term 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. For maturity dates, refer to Note 34.

Lagercrantz Group's confirmed bank credit facilities consist of:

• Committed credit facility in the amount of MSEK 250 in the Parent Company.
• Committed credit facilities in the amount of MSEK 59 in subsidiaries.

The acquisition facility in the Parent Company raised in 2006 was repaid during the year.

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 41 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 just over 32 percent of the votes in the Company.

Related party transactions

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

Note 42 Events after the balance sheet date

Lagercrantz Group AB has May 3, 2010 acquired all shares in Norwesco AB for MSEK 61. Norwesco develops, manufactures and markets a niche range of electro-mechanical products for the electronics and construction industries. Norwesco recorded sales of approximately SEK 50 million in 2009 and displayed good profitability. The company's head office is situated in Täby and production takes place in Öregrund.

Lagercrantz Group AB has June 22, 2010 acquired all shares in SwedWire AB. The analysis of the acquisition was at the publishing date of the Annual Report not yet completed. The acquisitions are

expected to make a positive contribution to the group's earnings per share during the financial year 2010/11. No for the Company significant events have occurred after the balance sheet date 31 March 2010.

Net assets of the acquired entity at the time of acquisition	Value reported in Norwesco	Fair value adjustment	Fair value in the Group
Intangible non-current assets	–	20	20
Other tangible non-current assets	4	2	6
Inventories	9		9
Other current assets	1		1
Cash and cash equivalents	6		6
Interest-bearing liabilities	0		0
Trade payables	–2		–2
Other liabilities	–4	–6	–10
Net identifiable assets/liabilities	14	16	30
Consolidated goodwill			31
Purchase money paid			61

Note 43 Merger

The following company was merged into the parent Company during the year: B2B Tech AB, organisation number 556201-1154. Merger as of 2009-04-06. Income statement and balance sheet items in the companies as of the date of the merger were as follows:

0
–23
23
–
–
B2B Tech AB as of 2009-04-06

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 (publ) Corporate identity 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 managing director of Lagercrantz Group AB (publ) for the financial year 2009–04–01–2010–03–31. The annual accounts and the consolidated accounts of the company are included in the printed version of this document on pages 28-70. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the 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 board of directors and the managing director and significant estimates made by the board of directors and the managing director 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 board member or the managing director. We also examined whether board member or the managing director has, in any other way, acted in contravention of the 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 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 corporate governance statement has been prepared in accordance with the Annual Accounts Act. The statutory administration report and the corporate governance statement are consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statement and balance sheet of the parent company and the income statement and the statement of financial position of the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the statutory administration report and that the board of directors and the managing director be discharged from liability for the financial year.

Stockholm, 24 June 2010

KPMG AB

Joakim Thilstedt Authorised Public Accountant

Board of Directors and Auditors

Anders Börjesson

Chairman. Born 1948. Bachelor of Science (Econ.). Chairman of Addtech AB, Cibenon AB and Stockholms Byggplåt AB. Vice Chairman of B&B Tools AB. Director of Boomerang AB, Bostad DirektAB, Futuraskolan AB and Inomec AB. Holding (family): 492,558 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 and Jan Wallanders and Tom Hedelius stiftelse. Vice Chairman of Addtech AB.

In addition, Tom Hedelius was during the financial year 2009/10 also Chairman of AB Industrivärden, Director of LE Lundbergföretagen AB and SCA AB, among others. Holding (family): 477,558 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 ErySave AB. Director of Godiva AB, Quickcool AB and Zarismo AB. Holding (family): 110,000 class B shares. Director since 2001.

Jörgen Wigh President & Chief Executive Officer. Born 1965. Bachelor of Science (Econ.) Holding: 12,096 class A shares, 33,000 class B shares and 116,900 call options on class B shares. Director since 2006.

Auditors

Auditors appointed by the 2009 Annual Meeting are the registered auditing company KPMG AB. Auditor in charge is Joakim Thilstedt, Authorised Public Accountant.

Lagercrantz Group AB (publ) – Annual report 2009/10

Management

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

Gunnar Almeling, born 1956

Vice President, Mechatronics. Holding: 1,800 class B shares and 44,500 call options on class B shares.

Niklas Enmark, born 1972 Executive Vice President and Chief Financial Officer. Bachelor of Science in economics. Holding: 11,000 class B shares and 63,750 call options on class B shares.

Kjell Eriksson, born 1954 Vice President, Communications. Product area Digital Image Transmission/Technical Security. Holding: 44,500 call options on class B shares.

Ulf Gladh, born 1961 Vice President, Electronics. Holding: 11,000 class B shares and 44,500 call options on class B shares.

Per Ikov, born 1961 Vice President, Business Development. Bachelor of Science in economics. Holding: 9,600 class B shares and 24,500 call options on class B shares.

Olli-Pekka Kulmala, born 1957 Vice President, Communications. Product area Access. Bachelor of Science in engineering. Holding: 26,500 call options on class B shares.

Anders Larsson, born 1961

Group Controller.Bachelor of Science in economics. Holding: 4,000 class B share and 16,800 call options on class B shares.

Magnus Söderlind, born 1966 Executive Vice President. Responsible for business development. Bachelor of Science in economics and engineering. Holding: 7,500 class B share and 62,250 call options on class B shares.

Jörgen Wigh, born 1965 President & Chief Executive Officer. Bachelor of Science in economics. Holding: 12,096 class A shares, 33,000 class B shares and 116,900 call options on class B shares.

Lagercrantz Group AB (publ) – Annual report 2009/10

Annual Meeting

The 2010 Annual Meeting of Lagercrantz Group AB will be held at 16.00 CET, 31 August 2010 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 25 August 2010, 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, 27 August 2010.

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 2010. Request for such re-registration must be made to the custodian in ample time before 25 August for the registration to take place in time.

Calendar

21 JULY 2010 Interim report for the period 1 April–30 June 2010.

31 AUGUST 2010 Annual Meeting 2010.

9 NOVEMBER 2010 Interim report for the period 1 April–30 September 2010.

8 FEBRUARY 2011 Interim report for the period 1 April–31 December 2010.

10 MAY 2011 Year-end report for the financial year 2010/11.

Published information is available at www.lagercrantz.com

About the Annual Report

PERSONAL INFORMATION POLICY

Lagercrantz Group does not share 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 web-based annual report uses cookies. Their purpose is to simplify the visit, to collect statistics on the number of visitors, and to see which pages have been visited.

CONTACT LAGERCRANTZ GROUP

Lagercrantz Group AB P.O. 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: Henrik Ekelund and Lagercrantz Group

Production: Hallvarsson & Halvarsson Art and design: Tintin Timén and Hallvarsson & Halvarsson Photo: Magnus Fond and Mikael Silkeberg 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 2009/10 Annual Report 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 SOLUTIONS AB P.O. Box 4115 Löfströms Allé 6 A, Sundbyberg SE-171 04 Solna SWEDEN Tel: + 46 8 445 28 00 Fax: + 46 98 26 19 www.actesolutions.se/ From September 2010 P.O.Box 4115 Karlsbodavägen 20A, Bromma SE-171 04 Solna

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

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 Järvvägen 6 FI-655 20 Helsingby FINLAND Tel: + 358 6 322 62 22 Fax: + 358 6 322 62 00 www.efc.fi

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

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 4115 Löfströms Allé 6 A, Sundbyberg SE-171 04 Solna SWEDEN Tel: + 46 8 445 28 00 Fax: + 46 8 98 26 19 www.acte.se From September 2010 P.O. Box 4115 Karlsbodavägen 20A, Bromma SE-171 04 Solna

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

NORWESCO AB P.O. Box 603 Enhagsslingan 19 SE-187 26 Täby SWEDEN Tel: + 46 8 792 27 00 Fax: + 46 8 792 27 09 www.norwesco.se

SWEDWIRE AB P.O. Box 170 Birger Svenssons väg 16 SE-432 24 Varberg SWEDEN Tel: +46 340 64 54 30 Fax: +46 340 64 54 34 www.swedwire.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

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