Lagercrantz Group — Interim / Quarterly Report 2009

Nov 11, 2008

Q2

Interim Report

1April – 30 September 2008 (6 months)

• Netrevenue for 6 months 2008/09 increased to MSEK1,053 (1,048).
• Operating profitincreased by 14 percent to MSEK65 (57), equivalentto an operating margin of 6.2 percent(5.4 percent). Thisresultincludes one-time itemsin the amount of MSEK–3 compared to MSEK +2 during the preceding year.
• Profit afterfinance itemsrose to MSEK 61 (52).
• During the second quarterrevenue increased to MSEK521 (515). Q 2 operating profit was MSEK32 (29), including onetime items of MSEK–3 (0).
• Profit aftertaxesfor 6 monthsincreased to MSEK42 (38).
• Earnings pershare amounted to SEK1.87 (1.61) during thefirstsix months ofthe financial year. Forthe mostrecent 12 month period earnings pershare was SEK4.20.
• The return on equity was 21 percent(18 percent)forthe mostrecenttwelvemonth period. The debt-to-equity ratio stood at 43 percent atthe end ofthe period.

Currentreportingperiod1 April – 30 September 2008

Lagercrantz is a technology trading group in electronics, electricity, communication and adjacent areas. The Group works with value-adding sales in close proximity to its customers and commands market-leading positions in several expansive niches. Operations are organised in three divisions.

Net revenue and profit

The Lagercrantz Group's net revenue during the first six months of year 2008/09 (1 April– 30 September 2008) increased to msek 1,053 (1,048). Acquired units contributed revenue during the six-month period in the amount of msek 18. During the second quarter revenue was msek 521 (515).

First half-year revenue for the Group as a whole showed a similar trend as last year. Slightly lower revenue was recorded for the second quarter at the beginning of the period, while revenue toward its end again were at a level similar to last year's. The Group operates with a clear niche focus and is well diversified in terms of markets, customers as well as geographically. At the same time unrest on the world's financial markets and growing expectations of a broadly based weaking of the economy increases uncertainty. Measures to reduce costs have therefore been implemented at some of the Group's twenty-five subsidiaries. All subsidiaries are called upon to exercise extra caution and restraint with respect to costs and capital expenditures.

Operating profit for six months increased to msek 65 (57). This result includes the effect of non-recurring items in a net amount of msek –3, compared to a positive effect of msek 2 during the year before. Costs refer to changes of the organisation during the second quarter. Operating profit for the second quarter amounted to msek 32 (29) including these non-recurring items. The operating margin increased to 6.2 percent (5.4) for the first six months of the year and to 6.1 percent (5.6) during the second quarter.

Profit after net finance items amounted to msek 61 (52) during the first six months of the year and msek 30 (27) during the second quarter. Cleared of items of a non-recurring character profit thus rose by 28 percent during the first six months of the year. The increase in profit is the fourteenth consecutive quarter with an improved result compared to the corresponding quarter one year earlier. Changes in foreign exchange rates affected consolidated earnings by approximately msek 0 (–2) during the first six months of the financial year.

Profit for the period amounted to msek 42 (38), equivalent to earnings per share for the first six months of sek 1.87 (1.61). For the most recent 12-month period earnings per share amounted to sek 4.20, compared to sek 3.92 for the 2007/08 financial year.

Profitability, financial position and capital expenditures

The return on capital employed for the most recent 12-month period increased to 22 percent compared to 17 percent during

MSEK	Net revenue 6 months 2008/09	6 months 2007/08	O 12 months 2007/08	perating income 6 months 2008/09	6 months 2007/08	12 months 2007/08
Electronics Operating margin	359	377	778	14 3.9%	15 4.0%	38 4.9%
Mechatronics Operating margin	325	297	604	32 9.8%	22 7.4%	50 8.3%
Communications Operating margin	369	374	790	28 7.6%	22 5.9%	51 6.5%
Parent company/consolidation items	-	-	-	–9	-2	–8
Group total Operating margin	1 053	1 048	2 172	65 6.2%	57 5.4%	131 6.0%

the corresponding year-ago period. The corresponding figures for return on equity were 21 percent and 18 percent, respectively. Cash flow from current operations amounted to msek 25 (16) during the first half year. Investments in non-current assets during the corresponding period amounted to msek 8 (11), gross, and acquisition of companies were made for a total of msek 47 (18). No shares were repurchased during the period. Dividends of msek 34 (30) were paid during September 2008.

The Group showed a financial net liability of msek 156, as compared to msek 93 at the beginning of the financial year.

Shareholders' equity per share amounted to sek 21.40, compared to sek 20.40 at the beginning of the year. Shareholders' equity was affected in a positive direction by a change in translation reserve due to the weakening of the Swedish krona. The debt to equity ratio at the end of the period was 43 percent as compared with 44 percent at the beginning of the year.

Net revenue and profit by division Electronics

Net revenue for the second quarter amounted to msek 176 (182). Sales were stable overall during the period, with Germany being the exception, as well as parts of the Danish business, where weaker demand was encountered. Measures to reduce costs have been introduced in these areas. In other areas the efforts continue to phase out standard components with low margins, being replaced by products and solutions with higher margins.

Operating profit amounted to msek 6 (8), which means an operating margin of 3.4 percent (4.4).

Mechatronics

Net revenue for the quarter increased by 10 percent to msek 159 (145). Growth was organic in its entirety. The producing units fared particularly well.

Operating profit increased to msek 17 (13), equivalent to an operating margin of 10.7 percent (9.0). The division's improved margin is due to higher volume, as well as efficiency measures and product line development.

Communications

Net revenue amounted to msek 186 (188). The division's operating profit during the second quarter increased to msek 16 (10), which is equivalent to a margin of 8.6 percent (5.3). The improvement in profit was derived from, among other things, action taken during the past winter and spring to increase profitability in the area of digital imaging/technical security.

The acquisition of COBS AB is included since September 2008, with annual revenue of approximately msek 50 in the division.

Parent Company and other Group items

The Parent Company's internal net revenue during the first six months of the year amounted to msek 13 (13) and profit before net finance items was msek 119 (76). This result includes exchange rate adjustments on intra-group lending in an amount of msek 0 (–1). Dividends from subsidiaries amounted to msek 128 net (81). Investments in non-current assets amounted to msek 0 net (0). The Parent Company has an approved bank overdraft facility in the amount of msek 250. msek 68 hereof was utilised, compared to msek 19 at the beginning of the financial year. A dividend of msek 34 was paid during the period and this affected utilisation. The Parent Company has a long-term acquisition credit facility in the amount of msek 78. Other cash and cash equivalents in the amount of msek 0 were available, compared to msek 0 at the beginning of the financial year. The Parent Company's debt-to-equity ratio was 65 percent at the end of the period as compared with 56 percent at the beginning of the year.

The Parent Company's other consolidation items includes items of a non-recurring character, which during the first six months of 2008/09 affected profit negatively by msek 3. These costs, which were incurred during the second quarter, refer to personnel reductions. Last year the result was affected in a positive direction by non-recurring items in a net amount of msek 2, relating to real property sales during the first quarter.

Financialdevelopmentibrief

Net revenue

Quarterly data		2008/09				2007/08
MSEK	Q 2	Q 1	Q 4	Q 3	Q 2	Q 1
Electronics	176	183	195	206	182	195
Mechatronics	159	166	157	150	145	152
Communications	186	183	210	206	188	186
Parent company/Consolidation items	-	-	-	-	-	-
Group total	521	532	562	562	515	533
Operating profit
Quarterly data		2008/09				2007/08
MSEK	Q 2	Q 1	Q 4	Q 3	Q 2	Q 1
Electronics	6	8	13	10	8	7
Mechatronics	17	15	15	13	13	9
Communications	16	12	14	15	10	12
Parent company/Consolidation items	-7	–2	–2	–4	–2	0
Group total	32	33	40	34	29	28

CONSOLIDATED INCOME STATEMENT Moving

MSEK	3 months Jul-Sep 2008/09	3 months Jul-Sep A 2007/08	6 months pr-Sep A 2008/09	6 months pr-Sep O 2007/08	12 months F ct-Sep A 2007/08	inancial year pr – Mar 2007/08
Net revenue	521	515	1 053	1 048	2 177	2 172
Cost of goods sold	–382	–388	–767	–786	–1 603	–1 622
Gross profit	139	127	286	262	574	550
Selling costs	–71	–66	–148	–143	–306	–301
Administrative expenses	–35	–29	–71	–63	–136	–128
Research and development expenses	–3	–3	–5	–6	–7	–8
Other operating income and expenses	2	0	3	7	14	18
Operating profit	32	29	65	57	139	131
(of which depreciation and amortization)	(–6)	(–5)	(–12)	(–11)	(–24)	(–23)
Finance income	1	2	2	3	6	7
Finance expense	–3	–4	–6	–8	–15	–17
Result after finance items	30	27	61	52	130	121
Taxes	–10	–7	–19	–14	–35	–30
Net income for the period	20	20	42	38	95	91
Income associated with the parent company shareholders	20	20	42	38	95	91
Earnings per share, SEK	0.89	0.85	1.87	1.61	4.20	3.92
Earnings per share after dilution, SEK	0.89	0.85	1.87	1.61	4.20	3.92
Weighted nubmer of shares outstanding (thousands) Weighted nubmer of shares outstanding	22 478	23 640	22 478	23 659	22 621	23 212
after dilution (thousands)	22 478	23 651	22 478	23 667	22 621	23 212
Number of shares after repurchases (thousands)	22 478	23 428	22 478	23 428	22 478	22 478

In view of the redemption price on outstanding call options (SEK 36.00 and SEK 44.40) and the average market price of the share (SEK 30.35) during that part of the latest twelve-month period where the options were outstanding, no dilutive effect occured for the latest twelve-months. Also, no dilutive effect occured for the latest quarter or 6 month period when the average market price of the share (SEK30.35 and SEK 30.97 respectively ) waslower than the redemption price.

CONSOLIDATED BALANCE SHEET

MSEK	2008-09-30	2007-09-30	2008-03-31
ASSETS
Goodwill	183	138	140
Other intangible non-current assets	110	97	98
Tangible non-current assets	51	80	51
Financial non-current assets	30	39	30
Inventories	266	241	238
Current receivables	420	409	419
Cash and cash equivalents	60	75	79
TOTAL ASSETS	1 120	1 079	1 055
SHAREHOLDERS ' EQUITY AND LIABILITIES
Equity attributable to the Parent company's shareholders	480	432	459
Minority interests	0	0	-
Total shareholders' equity	480	432	459
Non-current liabilities	170	187	174
Current liabilities	470	460	422
TOTAL SHAREHOLDERS ' EQUITY AND LIABILITIES	1 120	1 079	1 055
Interest-bearing assets	60	75	79
Interest-bearing liabilities	216	260	172

CONSOLIDATED CASH FLO W STATE MENT	3 months Jul – Sep	3 months Jul – Sep A	6 months pr – Sep A	6 months F pr – Sep A	inancial year pr – Mar
MSEK	2008/09	2007/08	2008/09	2007/08	2007/08
Operating activities
Profit after finance items	30	27	61	52	121
Adjustment for items not included in cash flow, etc	2	–2	–5	–7	–19
Cash flow from operating activities before changes in working capital	32	25	56	45	102
Cash flow from changes in working capital
Increase (–) / Decrease (+) in inventories	–5	1	–24	–2	1
Increase (–) / Decrease (+) in operating receivables	10	22	23	28	16
Increase (+) / Decrease (–) in operating liabilities	–3	–15	–30	–55	1
Cash flow from operating activities	34	33	25	16	120
Investing activities
Investments in businesses	–14	–1	–47	–18	–27
Investments in other non-current assets, net	–3	–4	–7	19	44
Cash flow from investing activities	–17	–5	–54	1	17
Financing activities
Dividends and repurchases of own shares	–34	–38	–34	–38	–67
Change in loan liabilities	2	–24	44	3	–84
Cash flow from financing activities	–32	–62	10	–35	–151
Cash flow for the period	–15	–34	–19	–18	–14
Cash and cash equivalents at beginning of the period	75	110	79	94	94
Exchange rate difference in cash and cash equivalents	0	0	0	0	–1
Cash and cash equivalents at end of the period	60	76	60	76	79

change in shareholders' equity

MSEK	Apr – Sep A 2008/09	pr – Sep 2007/08
Opening balance	459	432
Repurchase of own shares	-	–8
Dividend	–34	–30
Change in hedging reserve	0	–1
Period's exchange rate differences	13	1
Profit for the period	42	38
Closing balance	480	432

KEY FINANCIAL INDICATORS	6 months	6 months
	Apr – Sep A	pr – Sep			F	inancial year
	2008/09	2007/08	2007/08	2006/07	2005/06	2004/05
Change in revenue, %	0.5	18.2	10.0	22.8	5.9	–3.2
Operating margin, %	6.2	5.4	6.0	5.0	3.5	0.3
Profit margin, %	5.8	5.0	5.6	4.6	3.4	–0.1
Equity ratio, %	43	40	44	39	52	51
Return on capital employed, % (12 months)	22	17	21	18	13	1
Return on equity, % (12 months)	21	18	21	16	10	1
Debt equity ratio, times	0.5	0.6	0.4	0.6	0.1	0.2
Net debt equity ratio, times	0.3	0.4	0.2	0.4	0.0	0.0
Times interest earned	11	11	9	9	14	1
Net interest-bearing liabilities(+) / recievables (–), MSEK	156	185	93	161	–9	–5
Number of employees at end of period	809	770	763	751	541	512
Revenue outside Sweden, MSEK	743	718	1 496	1 352	1 053	941
Share date
Number of shares outstanding at end of period
after repurchases ('000)	22 478	23 428	22 478	23 678	23 678	24 078
Weighted number of shares outstanding
after repurchases ('000)	22 478	23 659	23 212	23 678	23 923	24 078
Weighted number of shares outstanding
after repurchases and dilution ('000)	22 478	23 667	23 212	23 678	23 923	24 078
Operating result per share, SEK	2.89	2.41	5.64	4.18	2.38	0.17
Result per share, SEK	1.87	1.61	3.92	2.75	1.63	0.21
Result per share after dilution, SEK	1.87	1.61	3.92	2.75	1.63	0.21
Cash flow per share, SEK	–0.85	–0.76	–0.60	1.69	–1.00	–2.45
Shareholders' equity per share, SEK	21.40	18.40	20.40	18.20	16.60	15.50
Latest market price per share, SEK	26.60	36.00	28.80	33.50	30.10	19.50

Definitions are found on page 27 of the Annual Report 2007/08 .

PARENT COMPANY INCOME STATEMENT Moving

MSEK	3 months Jul – Sep 2008/09	3 months Jul – Sep A 2007/08	6 months pr – Sep A 2008/09	6 months pr – Sep O 2007/08	12 months F ct– Sep A 2007/08	inancial year pr – Mar 2007/08
Revenue	6	6	13	13	26	26
Administrative expenses	–9	–7	–18	–15	–39	–36
Other operating income and expenses	0	0	0	0	0	0
Operating profit	–3	–1	–5	–2	–13	–10
Finance income	60	24	130	84	132	86
Finance expense	–3	–3	–6	–6	–44	–44
Profit before taxes	54	20	119	76	75	32
Taxes	1	0	2	1	5	4
Net income for the period	55	20	121	77	80	36

PARENT COMPaNY BALANCE SHEET

MSEK	2008-09-30	2007-09-30	2008-03-31
ASSETS
Tangible non-current assets	0	0	0
Financial non-current assets	676	703	642
Short-term receivables	42	29	33
Cash and cash equivalents	0	1	0
TOTAL ASSETS	718	733	675
EQUITY AND LIABILITIES
Equity	466	433	378
Long-term liabilities	77	100	145
Current liabilities	175	200	152
TOTAL EQUITY AND LIABILITIES	718	733	675
Assets pledged and contingent liabilites	47	43	47

Otherinformation

Accounting policies

This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The interim report for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Securities Markets Act, which is in accordance with the provisions of RFR 2.1 Accounting for legal entities.

The same accounting policies and methods of calculation have been used for the Group and the Parent Company as in the most recent annual report.

Employees

At the end of the period the number of employees in the Group was 809, which can be compared with 763 at the beginning of the period. The increase is explained by acquired businesses.

Distribution of shares and repurchases

The share capital at the end of the period amounted to MSEK 48.9. The distribution on classes of shares is as follows:

Class of shares

Total	22 477 809
Repurchased Class B shares	–695 500
Class B shares	22 078 655
Class A shares	1 094 654

Lagercrantz holds 695,500 class B shares in treasury, equivalent to 3.0 percent of the number of shares outstanding and 2.1 percent of the number of votes in Lagercrantz Group. No shares were repurchased during the second quarter. Shares held in treasury are intended to fulfil the Company's undertaking under outstanding option programmes (awards for 2006, 2007 and 2008) where the redemption price is sek 36.00, sek 44.40 and sek 36.80 per call option, respectively. The average acquisition cost of the shares held in treasury amounts to sek 28.25 per share. The quotient value per share is sek 2.11.

Acquisition of business

On 1 September 2008, Lagercrantz Group acquired the company COBS AB. This company develops and markets wireless telephony systems. COBS had revenue during 2007 of approximately msek 50, with good profitability. The company has about 20 employees.

CAD Kompagniet in Denmark was acquired earlier in the year. Both companies are part of division Communications.

Acquired businesses affected consolidated net revenue by approximately msek 18 and consolidated profit before taxes by msek 1 during the first six months of the year. If all acquisitions had been consummated at the beginning of the financial year, the effect on consolidated net revenue and profit before taxes would have been an estimated msek 36 and msek 2, respectively.

Risks and factors of uncertainty

The Lagercrantz Group's earnings performance and financial position, as well as its strategic position, are affected by a number of internal factors over which the Company's exerts control, and by a number of external factors where the possibility of exerting control over the course of events is limited. The risk factors with the greatest impact on the Lagercrantz Group are the state of the market, structural changes in the market, dependency on suppliers and customers, the competitive situation and foreign exchange rate trends. The financial market turbulence at the same time as expectations of a general weakening of the economy grew, is sure to result in greater uncertainty. Therefore action has been taken to reduce costs and investments and extra vigilance is the order of the day. For additional detail, please refer to the 2007/08 Annual Report. The Parent Company is affected by the above mentioned risks and factors of uncertainty in its function as owner of its subsidiaries.

Transactions with closely related parties

Transactions between Lagercrantz Group with a significant effect on financial position and earnings have not occurred.

Events after the balance sheet date

No events with a significant effect on the Company have occurred after the balance sheet date, 30 September 2008.

Upcoming reports

10 February 2009	Interim report for the period 1 April – 31
	December 2008
13 May 2009	Year-end report for the period 1 April 2008
	– 31 March 2009

Affirmation

The Board of Directors and the President are of the opinion that this semi-annual report provides a true and fair overview of the Company's and the Group's business, financial position and results, and describes significant risks and factors of uncertainty facing the Company and the Group.

Stockholm, 11 November 2008

Anders Börjesson Tom Hedelius Chairman Vice Chairman

Director Director

Pirkko Alitalo Lennart Sjölund

Jörgen Wigh Director, President and CEO

This report has not been subject to review by the Company's auditors.

The information herein is published in accordance with the Swedish Securities Market Act, the Swedish Act Trading in Financial Instruments, or requirements posed by the contract with OMX Nordic Exchange. The information was submitted for publication at 12.45, 11 November 2008.

Lagercrantz Group IN BRIEF

Lagercrantz Group is a technology trading group in electronics, electrics, communication and adjacent areas. The Group operates in a decentralised mode with value-creating sales in close proximity to its customers and markets and has a leading position in several expansive niches.

Operations are organised in three divisions: Division Electronics is primarily involved in marketing solutions in wireless industrial communication and embedded systems. Division Mechatronics offers electro-mechanical componentsand production of cable harnesses and electric connection systems. Division Communications provides solutions in digital image transmission/technical security, access products and design software.

Lagercrantz is today active in eight countries in Northern Europe, and in China. The Group has sales of approximately sek 2.2 billion and has approximately 800 employees.

FOR ADDITIONAL INFORMATION, CONTACT

Jörgen Wigh, President & CEO, telephone + 46 (0)8 700 66 70 Niklas Enmark, CFO, telephone + 46 (0)8 700 66 70

LAGERCRANTZ GROUP AB (PUBL)

Box 3508 · Torsgatan 2, 103 69 Stockholm, SWEDEN Telephone + 46 (0)8 700 66 70 · Fax + 46 (0)8 28 18 05 info@lagercrantz.com · www.lagercrantz.com Company number 556282-4556.