Financial statement 2008

FOURTH QUARTER HIT NEGATIVELY BY MAJOR STRUCTURAL COSTS

FOURTH QUARTER
• Operating income rose to SEK 820 million (896)
• The operating loss was SEK -36 million (-58), giving an operating margin of -4.4% (-6.5)
• The loss after tax was SEK 26 million (-80*)
• Earnings per share (EPS) was SEK -1.45 (10.30)

JANUARY - DECEMBER
• Operating income rose by 32% to SEK 3,299 million (2,497)
• The operating profit climbed by SEK 161 million and amounted to SEK 150 million (-11), giving an operating margin of 4.5% (-0.4)
• The profit after tax was SEK 92 million (-56*)
• Earnings per share (EPS) was SEK 5.14 (12.84)

* Refers to the profit/loss after tax for the remaining business activities

INCOME AND RESULTS

FOURTH QUARTER
Operating income amounted to SEK 820 million (896). The fall of SEK 76 million is mainly attributable to the drop in business volumes in the automotive industry. This has caused negative organic growth of 8%. Amongst others, Volvo Cars’ share of Group sales fell amounting to 11% (21% in 2007) in Q4.

During the quarter the operating loss was reduced by SEK 22 million amounting to SEK -36 million (-58), giving an operating margin of -4.4% (-6.5). The operating loss includes income and one-off costs totalling SEK 90 million (-127). This refers to lower pension costs due to a premium discount from Alecta of SEK 10 million and costs of SEK 100 million for staff cuts and a reduction of office space in Sweden and Germany, plus reserves for bad debts. See note 2 on page 14. The amount for 2007 included a write down of goodwill of SEK 112 million and costs relating to the integration of acquired companies. The operating profit, excluding income and one-off costs, amounted to SEK 54 million (69), which gave an operating margin of 6.6% (7.7).

The loss before tax was SEK 41 million (-69). Net financial items amounted to SEK -5 million (-11). The improvement in net financial items is due to lower net borrowing and a new credit agreement being signed in Q2, which has meant lower financing costs. The loss after tax was SEK 26 million (-80). The EPS was SEK -1.45 (10.30). The companies in the business area Zpider was sold on 31 December 2007.

JANUARY – DECEMBER
Operating income for the year climbed by SEK 802 million and was SEK 3,299 million (2,497). Organic growth was 1%. The Informatic and Design & Development business areas had organic growth of 9% and 7% respectively. Lower business volumes at Automotive R&D have meant negative organic growth of 3%.

During the year the operating profit rose by SEK 161 million amounting to SEK 150 million (-11), giving an operating margin of 4.5% (-0.4). The operating profit includes income and one-off costs of SEK -66 million (-162). See note 2 on page 14. The income refers to the pension premium discounts from Alecta of SEK 34 million and costs of SEK 100 million refer to the structural changes carried out in Sweden and Germany, plus the reserves for bad debts. The profit excluding income and one-off costs amounted to SEK 216 million (151), giving an operating margin of 6.6% (6.0).

The profit before tax was SEK 128 million (-36). Net financial items amounted to SEK -22 million (-24). Tax costs amounted to SEK 36 million (-21), representing 27.9% of the profit before tax. Swedish corporate tax has been cut to 26.3% (28.0) for 2009. The drop in corporate tax has meant that the deferred tax liability has been re-valued and a tax income of SEK 3 million has been reported. The profit after tax was SEK 92 million (-56). The EPS was SEK 5.14 (12.84).

EVENTS DURING THE YEAR
- An extraordinary general meeting on 7 February 2008 decided to:
• appoint Hans-Erik Andersson as Chairman of the Board
• introduce a long-term share savings scheme for the Group’s employees
• appoint Kjell Nilsson as the new president and CEO from 8 February 2008
- Semcon signed an agreement to acquire the brand Projektema
- The AGM on 24 April 2008 elected
Marianne Brismar, Jorma Halonen and Håkan Larsson as new board members
- Activities in Germany, Brazil, the UK and India changed name and are now marketed under the Semcon brand
- Staff cuts took place in Q4 in Sweden and Germany

STAFF AND ORGANISATION
The headcount at year’s end was 3,310 (3,648), of which 2,050 (2,511) in Sweden and 1,260 (1,137) abroad. The average number of employees was 3,630 (2,672). The number of employees in the respective business areas at year’s end was: Automotive R&D 2,025 (2,401), Design & Development 869 (906) and Informatic 416 (341).

OUTLOOK
Despite insecurity on the market for some industries and individual customers there is still a strong need for technical development services. The long-term trend where the market’s demand for companies to develop more products, models and versions benefits the company and means that we predict good business opportunities when the global financial crisis ebbs out. The outlook is however difficult to predict from a short-term perspective. Because most of Semcon’s customers are continuing to lay-off staff and reduce purchasing consultancy services, we predict that we might be forced to introduce further cutbacks.

SHARE DIVIDEND
In accordance with Semcon’s dividend policy, consideration is given to the company’s financial position and capital requirements for continued expansion.Due to the major instability currently affecting the market the Board proposes that no dividend be paid for 2008 (0).