Lagercrantz Group — Audit Report / Information 2015

May 7, 2015

Year-end Report 2014/15

1 April 2014 – 31 March 2015 (12 months)

• Net revenue for 2014/15 increased by 12 percent to MSEK 2,846 (2,546). Organic growth measured in local currency was 5 percent for comparable units.
• Operating profit increased by 14 percent to MSEK 276 (242), equivalent to an operating margin of 9.7 percent (9.5).
• Profit after finance items increased by 15 percent to MSEK 265 (230).
• Profit after taxes amounted to MSEK 203 (177). Earnings per share after dilution increased by 15 percent and amounted to SEK 8.96 (7.81).
• Cash flow from operating activities increased by 16 percent and amounted to MSEK 268 (231) equivalent to SEK 11.83 (10.19) per share after dilution.
• Return on equity amounted to 24 percent (24). The equity ratio stood at 44 percent at the end of the period under review compared to 43 percent at the beginning of the financial year.
• Five acquisition were made during the 2014/15 financial year, with aggregate annual revenue of approximately MSEK 165. Cue Dee was acquired after the end of the period, with annual revenue of about MSEK 180.
• The Board of Director proposes an increase of the dividend to SEK 4.50 (4.00) per share.

1 January – 31 March 2015 (fourth quarter)

• Net revenue for the fourth quarter increased by 13 percent to MSEK 784 (694), equivalent to organic growth of 5 percent measured in local currency.
• Operating profit increased by 16 percent to MSEK 78 (67), equivalent to an operating margin of 10.0 percent (9.7).
• Profit after finance items increased by 17 percent to MSEK 74 (63) and profit after taxes was MSEK 56 (49).

Lagercrantz Group AB (publ) PO Box 3508 SE-103 69 Stockholm, Sweden Phone +46-8-700 66 70 Fax +46-8-28 18 05 Corporate identity number: 556282-4556 Registered office: Stockholm www.lagercrantz.com

LAGERCRANTZ CONTINUES.

The past year

The strategy behind the successes

Future

NET REVENUE AND PROFIT

12 Months April 2014 – March 2015

Fourth quarter January – March 2015

Cash flow and capital expenditures

Divisions

			Net revenue			Operating profit
	3 months	3 months	12 months	12 months	3 months	3 months	12 months	12 months
MSEK	Jan-Mar 2014/15	Jan-Mar 2013/14	Apr-Mar 2014/15	Apr-Mar 2013/14	Jan-Mar 2014/15	Jan-Mar 2013/14	Apr-Mar 2014/15	Apr-Mar 2013/14
Electronics	226	186	803	691	19	18	66	56
Operating margin					8.4%	9.7%	8.2%	8.1%
Mechatronics	203	186	784	750	30	25	118	108
Operating margin					14.8%	13.4%	15.1%	14.4%
Communications	224	229	870	802	10	12	55	51
Operating margin					4.5%	5.2%	6.3%	6.4%
Niche Products	131	93	389	303	28	15	61	45
Operating margin					21.4%	16.1%	15.7%	14.9%
Parent Company/ consolidation items
	-	-	-	-	–9	–3	–24	–18
GROUP TOTAL	784	694	2,846	2,546	78	67	276	242
Operating margin					10.0%	9.7%	9.7%	9.5%
Finance items					–4	–4	–11	–12
PROFIT BEFORE TAXES					74	63	265	230

NET REVENUE AND PROFIT BY DIVISION, FOURTH QUARTER

Electronics

Mechatronics

Communications

Niche Products

PROFITABILITY AND FINANCIAL POSITION

OTHER FINANCIAL INFORMATION Parent Company and other consolidation items

Share capital

Classes of shares
Class A shares	1,087,934
Class B shares	22,085,375
Repurchased Class B shares	–582,450
Total	22,590,859

Employees

Acquisitions

	Book value in	Fair value	Fair value
Acquired net assets at time of acquisition	companies	adjustment	condsolidated
Intangible non-current assts	7	171	178
Other non-current assets	15	8	23
Inventories and w ork in progress	40	0	39
Other short-term receivables	159	0	159
Interest-bearing liabilities	-15	0	-15
Other liabilities	-67	-39	-105
Net of identified assets/liabilities	139	140	279
Goodw ill	-	-	183
Estimated Purchase price	-	-	462

Preliminary purchase price allocation

Accounting policies

Related party disclosures

Risks and uncertainty factors

Events after the balance sheet date

Annual General Meeting 2015

Election Committee

Dividend

REVIEW REPORT

Introduction

Scope of review

ISRE

Conclusion

Segment information by quarter

Net revenue			2014/15				2013/14
MSEK	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Electronics	226	204	189	184	186	178	157	170
Mechatronics	203	178	195	208	186	190	185	188
Communications	224	262	189	195	229	212	169	192
Niche Products	131	89	79	90	93	83	66	61
Parent Company/Consolidation items	-	-	-	-	-	-	-	-
KONCERNEN TOTALT	784	733	652	677	694	663	577	611

Operating profit			2014/15				2013/14
MSEK	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Electronics	19	19	15	13	18	15	11	11
Mechatronics	30	25	29	34	25	27	31	25
Communications	10	21	13	11	12	14	11	15
Niche Products	28	13	10	10	15	12	9	9
Parent Company/Consolidation items	–9	–7	–4	–4	–3	–5	–4	–6
GROUP TOTAL	78	71	63	64	67	63	58	54

Consolidated Income Statement

MSEK	3 months Jan-Mar 2014/15	3 months Jan-Mar 2013/14	Financial year 2014/15	Financial year 2013/14
Net revenue	784	694	2,846	2,546
Cost of goods sold	–530	–480	–1,932	–1,741
GROSS PROFIT	254	214	914	805
Selling costs	–124	–108	–462	–409
Administration costs	–56	–42	–188	–161
Other operating revenue and operating costs	4	3	12	7
OPERATING PROFIT	78	67	276	242
(of which depreciation)	(–13)	(–12)	(–51)	(–44)
Net finance items	–4	–4	–11	–12
PROFIT AFTER FINANCE ITEMS	74	63	265	230
Taxes	–18	–14	–62	–53
PROFIT FOR THE PERIOD	56	49	203	177
Earnings per share, SEK	2.48	2.18	8.99	7.85
Earnings per share after dilution, SEK	2.47	2.16	8.96	7.81
Weighted number of shares outstanding after repurchases ('000)	22,591	22,524	22,573	22,544
Weighted number of shares outstanding after repurchases adjusted for dilution ('000)	22,691	22,673	22,655	22,665

In view of the strike price on outstanding options during the period (SEK 69.40, SEK 125.40, and SEK 161.80) and the average market price of the share during the most recent twelve-month period (SEK 139.71) when the option programmes were outstanding, there was a dilutive effect of 0.4 percent for the most recent twelve-month period. For the past quarter there was a dilutive effect of 0.4 percent as the average market price of the share (SEK 150.29) was higher than the strike price for outstanding programmes.

Consolidated Statement of Comprehensive Profit

MSEK	3 months Jan-Mar 2014/15	3 months Jan-Mar 2013/14	Financial year 2014/15	Financial year 2013/14
Profit for the period	56	49	203	177
Other comprehensive profit
Reposted items that may be reposted to net profit for the period
Change in translation reserve	–2	0	13	13
Items that cannot be reposted to net profit for the period
Actuarial effects on pensions	–14	3	–14	3
Taxes attributable to actuarial effects	4	–1	4	–1
COMPRHENSIVE PROFIT FOR THE PERIOD	44	51	206	192

Consolidated Statement of Financial Position

MSEK	2015-03-31	2014-03-31
ASSETS
Goodwill	628	584
Other intangible non-current assets	355	296
Tangible non-current assets	167	140
Financial non-current assets	11	9
Inventories	313	279
Short-term receivables	552	531
Cash and cash equivalents	80	38
TOTAL ASSETS	2,106	1,877
EQUITY AND LIABILITIES
Equity	917	805
Long-term liabilities	195	211
Current liabilities	994	861
TOTL EQUITY AND LIABILITIES	2,106	1,877
Interest-bearing assets	80	38
Interest-bearing liabilities, not including pension liabilities	382	323

Statement of Changes in Consolidated Equity

MSEK	Financial year 2014/15	Financial year 2013/14
Opening balance	805	699
Comprehensive profit for the period	206	192
Transactions with owners
Dividend	–90	–73
Redemption and acquisition of options on repurchased shares, net	–4	–2
Repurchase of own shares	-	–11
CLOSING BALANCE	917	805

Consolidated Statement of Cash Flow

	3 months	3 months	Financial	Financial
MSEK	Jan-Mar 2014/15	Jan-Mar 2013/14	year 2014/15	year 2013/14
Operating activities
Profit after finance items	74	63	265	230
Adjustments for paid taxes, items not included in cash flow, etc.	4	-7	-6	-15
Cash flow from operating activities before changes in working capital	78	56	259	215
Cash flow from changes in working capital
Increase (–)/Decrease (+) in inventories	10	–6	1	–18
Increase (–)/Decrease (+)in operating receivables	–38	–77	11	–30
Increase (+)/Decrease (–) in operating liabilities	45	66	–3	64
Cash flow from operating activities	95	39	268	231
Investment activities
Investment in businesses	–54	0	–128	–130
Investment in/disposals of other	–13	–21	–38	–45
non-current assets, net
Cash flow from investment activities	–67	–21	–166	–175
Financing activities
Dividend, option redemption & repurchase of own shares/options	0	0	–94	–86
Other financing activities	0	–16	34	32
Cash flow from financing activities	0	–16	–60	–54
CASH FLOW FOR THE PERIOD	28	2	42	2
Cash and cash equivalents at beginning of period	52	36	38	36
Translation difference in cash and cash equivalents	0	0	0	0
Cash and cash equivalents at end of period	80	38	80	38

Financial instruments

For all of the Group's financial assets, fair value is estimated to equal carrying value. Liabilities valued at fair value consist of contingent consideration valued at discounted estimated cash flow and are thus included at level 3 in accordance with IFRS 13.

Carrying value, MSEK	2015-03-31	2014-03-31
Assets valued at fair value	-	-
Assets valued at accrued acquisition value	519	479
Total assets, financial instruments	519	479
Liabilities valued at fair value	95	97
Liabilities valued at accrued acquisition cost	647	535
TOTAL ASSETS, FINANCIAL INSTRUMENTS	742	632

	Financial year	Financial year
Change in contingent consideration	2014/15	2013/14
Opening balance	97	72
Liabilities settled during the year	–30	–2
Revaluation of liabilities during the year	–24	–4
Year's liabilities from year's acquisitions	51	31
Translation difference	1	0
Carrying value at year-end	95	97

Key Financial Indicators

				Financial year
	2014/15	2013/14	2011/12	2010/11	2009/10
Revenue	2,846	2,546	2,328	2,265	2,029
Change in revenue, %	12	9	3	12	18
Profit after taxes	203	177	159	126	102
Operating margin, %	9.7	9.5	9.1	8.1	7.2
Profit margin, %	9.3	9.0	8.6	7.5	6.8
Equity ratio, %	44	43	44	46	42
Operating profit/Working capital (P/WC), %	58	55	52	48	45
Return on capital employed, %	22	22	23	22	21
Return om equity, %	24	24	24	22	20
Debt equity ratio	0.4	0.4	0.4	0.3	0.5
Net debt equity ratio	0.3	0.4	0.4	0.2	0.4
Interest coverage ratio	18	16	13	11	12
Net interest-bearing liabilities (+)/receivables (–), MSEK	302	285	248	135	193
Number of employees at end of period	1,139	1,010	932	780	731
Revenue outside Sweden, MSEK	1,931	1,676	1,553	1,533	1,355

Per-share data

			Financial year
	2014/15	2013/14	2011/12	2010/11	2009/10
Number of shares outstanding at end of period after repurchases ('000)	22,591	22,524	22,520	22,217	22,196
Weighted number of shares outstanding after repurchases ('000)	22,573	22,544	22,426	22,242	22,046
Weighted number of shares outstanding after repurchases & dilution ('000)	22,655	22,665	22,501	22,392	22,133
Operating profit per share after dilution, SEK	12.18	10.68	9.47	8.22	6.64
Earnings per share, SEK	8.99	7.85	7.09	5.66	4.63
Earnings per share after dilution, SEK	8.96	7.81	7.07	5.63	4.61
Cash flow from operations per share after dilution, SEK	11.83	10.19	7.87	7.82	5.33
Cash flow per share after dilution, SEK	1.85	0.09	0.00	-0.89	1.22
Equity per share, SEK	40.59	35.70	31.00	27.90	24.60
Latest market price per share, SEK	158.00	127.00	88.25	57.25	61.75

Definitions are found in the 2013/14 Annual Report.

Parent Company Balance Sheet

MSEK	2015-03-31	2014-03-31
ASSETS
Tangible non-current assets	1	1
Financial non-current assets	1,499	1,345
Current liabilities	109	70
Cash and cash equivalents	0	0
TOTAL ASSETS	1,609	1,416
EQUITY AND LIABILITIES
Equity	905	769
Untaxed reserves	5	5
Long-term liabilities	21	72
Current liabilities	678	570
TOTAL EQUITY AND LIABILITIES	1,609	1,416

Parent Company Income Statement

MSEK	3 months Jan-Mar 2014/15	3 months Jan-Mar 2013/14	Financial year 2014/15	Financial year 2013/14
Net revenue	9	10	34	34
Administrative costs	–12	–13	–47	–48
Other operating income and operating costs	–1	–1	–1	–1
OPERATING PROFIT	–4	–4	–14	–15
Financial income	35	61	258	215
Financial expense	–3	–30	–10	–38
PROFIT AFTER FINANCE ITEMS	28	27	234	162
Change in untaxed reserves	0	0	0	0
Taxes	–6	–6	–4	–3
PROFIT FOR THE PERIOD	22	21	230	159
Other items in comprehensive profit for the period	-	-	-	-
COMPREHENSIVE PROFIT FOR THE PERIOD	22	21	230	159

2015-07-17	Quarterly Report Q1 for the period 1 April $2015 - 30$ June 2015
2015-08-25	Annual General Meeting for the 2014/15 financial year
2015-10-22	Quarterly Report Q2 for the period 1 July $2015 - 30$ September 2015
2016-01-28	Quarterly Report Q3 for the period 1 October $2015 - 31$ December 2015
2016-05-10	Year-end Report for the period 1 April $2015 - 31$ March $2016$

www.lagercrantz.com