hl display

1HL DispLay annuaL report 2007

HL Displayannual report 2007

Contents

3 the year in brief 4 this is HL Display 6 statement by the Ceo 8 Business concept, goals and strategies 11 HL Display operations 12 Core process 1 Market, sales and customer relations 17 Core process 2 Development, launch and product range management 21 Core process 3 production and delivery of goods and services 23 HL Display’s environmental activities 25 support processes 28 Customer case study 30 the share 32 Risk and sensitivity analysis 33 nine year summary 33 Definitions 34 Directors’ Report the Group 36 Consolidated income statements 37 Consolidated balance sheets 38 Consolidated statement of changes in equity 38 Consolidated cash flow statements the Parent Company 39 parent company’s income statements 40 parent company’s balance sheets 41 statement of changes in the parent company’s equity 41 parent company’s cash flow statements 42 notes 61 Audit Report 62 Work of the Board of Directors during 2007 64 Board of Directors 65 senior executives 66 History 67 Financial Information

this annual report has been prepared in swedish and translated into english. in the event of any discrepancies between the swedish and the translation, the former shall have precedence.


tHe yeAR In BRIeF

the year in brief

net sales increased to MseK 1,571 (1,448).Profit before tax was MseK 155 (92).earnings per share after tax amounted to seK 13.95 (7.87).equity per share amounted to seK 61.04 (50.10) as of 31 December 2007.new long term financial goals: organic growth 5-10 percent and eBItA-margin of at least 12 percent.Acquisitions of Display team and sooni.

Acquisitions during 2007HL Display made two acquisitions during 2007, both in Finland.

in February HL Display acquired Display team, a leading supplier of shelf merchan-dising systems. the systems are primarily aimed at the Brand manufacturer customer segment. the acquisition strengthens HL Display’s offerings to Brand manufac-turers and is in line with the company’s increased efforts towards this customer segment. Display team’s net sales amounted to approximately MseK 60 for 2006.

in May HL Display acquired the business in sooni, a company that for the past 15 years has acted as HL Display’s distributor in Finland. the acquisition provides HL Display with an opportunity to strengthen relations with customers in the Finnish market. net sales in the acquired business amounted to approximately MseK 35 for 2006.

slimline™ is HL Display’s latest shelf edge strip, which

makes it easy to place price labels next to each product.

Key ratios 2007 2006 2005net sales, MseK 1,571 1,448 1,285operating profit, MseK 161 107 63profit before tax, MseK 155 92 62profit after tax, MseK 108 62 35earnings per share, seK 13.95 7.87 4.59eBita-margin, % 10.3 7.4 4.9eBt-margin, % 9.8 6.4 4.8equity/assets, % 53.3 44.2 45.0equity per share, seK 61.04 50.10 44.52average number of employees 968 952 933

For key ratio definitions, refer to page 33.

HL DispLay annuaL report 2007 4

tHIs Is HL DIsPLAy

this is HL Display

HL Display’s marketsthe company has 31 sales companies in 30 countries in Western and eastern europe, and asia. the five largest markets are found in France, uK, sweden, russia and norway. Distributors are used in a further 15 countries.

HL Display’s customersHL Display primarily aims at three customer segments:– Food retail– non-food retail – Brand manufacturers

HL Display’s offeringsTo food and non-food retail:

optishop– products and solutions that present goods to consumers in an attractive manner. Well organised product display means optimal utilisation of shelf space which stimulates the consumer to purchase.

– products and solutions that provide the consumer with all necessary purchasing information and helps them to find items easily in the store.

To brand manufacturers:

Brandman– products and solutions that ensure that brand manufacturers are able to exploit their space on store shelves in the most advantageous manner.

– products and solutions for merchandis-ing the brand manufacturer’s products in parts of the store other than the shelves, for example on floor stands.

some of HL Display’s largest customers

Food retail Brand manufacturers

ahold (incl iCa)auchanCarrefourCasinoChampionintermarchéMetrosysteme utescoWal-Mart (asDa)

BatDanoneColgateKraftL’orealMasterfoodsnestléphilip Morrisprocter & Gambleunilever

non-food retail

DecathlonDsG retail LtdiKeaMüller

sales Companies

austriaBelgium China (Hong Kong)China (shanghai)Czech republicFinlandFrance GermanyGreat BritainHungaryindiaindonesiaLatviaMalaysianetherlandsnorway

polandromaniarussiaserbiasingaporeslovakiasloveniaspainsouth Koreaswedenswitzerlandtaiwanthailandturkeyukraine

Distributors

australiaBulgariaCanadaDenmark estoniaGreeceicelandireland

israelitalyKazakhstanLithuanianew Zealandportugalusa

Net sales MSEK

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

20072006200520042003

1,1291,249 1,285

1,4481,571

Operating profit MSEK

-20

0

20

40

60

80

100

120

140

160

180

2007 2006 2005 2004 2003

-4

108

63

107

161

HL Display is a leading, international supplier of products and solutions for in-store communication and merchandising to the food and non-food retail sectors. the company is also a major supplier of products and solutions to brand manufacturers for product display on shelves and in other parts of stores. HL Display was founded in 1954. the company’s shares were listed in 1993 and are currently quoted on the oMX nordic exchange’s small Cap list.


tHIs Is HL DIsPLAy

Benefits of HL Display solutionsFor food and non-food retail:

– Creates more clearly defined in-store communications which means that stores avoid lost sales due to consumers not locating the relevant goods, or their price, quickly enough.

– Displays goods in a manner that enables consumers to find all information necessary, as well as stimulating them to buy.

– streamlines activities in the stores which creates cost savings. one example is automatic forward feeding of products which decreases the time spent keeping the shelves in good order as well as speeding up the refilling process.

For brand manufacturers:

– Creates attractive merchandising that inspires the consumer to purchase and is easy to maintain.

– enables the best possible exploitation of shelf space available.

Average number of employees

900

920

940

960

980

1,000

20072006200520042003

975

967

933

952

968

The Nordic countries 356Western Europe 734Eastern Europe 344Asia and Australia 118North America 19

Net sales per region MSEKEBITA-margin %

-2

0

2

4

6

8

10

12

14

2007 2006 2005 2004 2003

9

Goal 12%

5

7

10

-1

HL Display’s production plantssweden (four factories of which one is jointly owned)uK (one factory)China (one factory)usa (one factory, jointly owned)

HL Display’s solutions facilitate

re-merchandising on the shelves.


stAteMent By tHe Ceo

and printing of plastic. other production is outsourced to sub-contractors in for example the Czech republic and poland. For example, at the plant in Falun we have outsourced 20 percent of the production to sub-contractors. at the same time, we are increasing investments in Falun in order to become even more efficient within printing.

the plant in suzhou, China, has been in operation for a little over a year and has been extremely successful. therefore, we have expanded the operation with addi-tional production lines. in total, there are now six extrusion lines and three injection-moulding lines in operation in suzhou.

We are also planning to start a produc-tion facility in russia for the russian mar-ket. this should mean that we could avoid import customs, and through that, further strengthen our competitive power in russia.

Profitable environmental workone area that we are actively working with right now is the recycling of waste materials from our production. the goal is to recycle all materials. this is important for two rea-sons. the first is that the majority of our environmental impact comes from waste materials. secondly, an increased degree of recycling will create cost savings, espe-cially in view of the prevailing high cost of raw materials.

the plant in suzhou has come a long way in this work and all waste materials are reused. they are used in our own produc-tion or sold to other producers.

this is part of our increased environmen-tal efforts that will be a prioritised area for 2008. We are currently in the process of creating an environmental chart to inform customers about our approach, including long-term goals, choice of materials and recycling of old products. We will also initiate studies together with selected customers to evaluate procedures for a more environ-mentally sustainable cooperation.

through the efficiency improvements that have been carried out at the plants, we have been able to counteract the negative profit effects of high raw material prices. However, there are substantial price differ-ences for raw materials between europe and asia, which means that we will increase

Continued profit improvement for HL Display

During 2007, we have had the pleasure of seeing a continued profit improvement for HL Display. operating profit totalled MseK 161, a 50-percent increase compared to last year. there are two primary reasons for this development. Firstly, we continue to achieve noticeable profit effects from pro-duction rationalisation. increased speciali-sation and automation combined with out-sourcing of non-core production means that we are increasing our overall production efficiency. secondly, we have been suc-cessful in reducing operating expenses in relation to net sales. although there remains work to be done, a pronounced focus on costs in the sales companies and the parent company has led to improved resource utilisation throughout the group.

sales increased by 8 percent during the year to MseK 1,571 and organic growth was 4 percent. the remaining 4 percent comes from the acquired operations in

Display team and sooni. i am satisfied with sales growth in view of the fact that we car-ried out major reorganisations in the sales companies in Germany and Great Britain during the year; two of our larger markets. the actions were mainly directed towards re-establishing stable profitability in these sales companies and meant that growth had to temporarily take a backseat, which was in accordance with the plan. now, we have the organisations in place to take advantage of the potential that exists in these markets in a better way.

Growth markets increasingly more important in growth markets such as russia and asia, growth is also this year at very high levels. We are also showing strong growth in certain mature markets such as norway and sweden. in norway, growth totalled 33 percent for the year.

the increases in sales that we have expe-rienced in the growth markets during recent years means that their importance to the group’s total sales and profits is increasing. this is positive since it contributes to equal-ising the differences in turnover between the regions, where the nordic region and Western europe currently account for the largest percentage. through that, we will become less sensitive to market develop-ments in individual regions.

at the same time, risks in these markets are somewhat higher. to reduce these risks we are working to ensure that we have a high level of competence among personnel and that the procedures and structures are the best in the entire group. We also hedge important trade currencies such as euro, British pounds, and the singapore dollar.

ProductionGross margin increased during the year to 47 percent (46 percent) despite the fact that raw material prices are still at a high level. the rea-son is, as i mentioned earlier, that we have achieved an additional positive impact on profit as a result of our comprehensive ration-alisation work in production in recent years.

We are continuing with the specialisa-tion of our production to become even stronger within our prioritised production technologies, extrusion, injection moulding,

through the acquisition of Display team,

HL Display has reinforced its offering with

the established and successful Brandman

range. this widens the company’s offering

to the brand manufacturers, which is a

prioritised customer segment for HL Display.


stAteMent By tHe Ceo

the percentage of materials that are pur-chased from asia.

Focus on profitabilityan important part of the work during the year has been to turn the profitability trend around in the sales companies that showed a loss previous years. We have managed to take all of these companies very close to break-even for 2007, some are even report-ing small profits. the work is now continuing to create conditions for profitability in line with the group as a whole.

another important area to increase prof-itability involves centralising the sales com-panies’ functions for warehousing and administration. this is a central part in our new logistics structure, which is based on service centres located in strategic places around the world. today, we have a service centre for Western europe in France, a serv-ice centre for asia in singapore and a serv-ice centre for the nordic and Baltic regions in sweden. the service centre in sweden is located in Falkenberg along with a global centre for the products that the group pur-chases. analysis and preparation work is underway for establishing service centre for central and eastern europe. this work is highly prioritised since it will not only result in cost reductions but also create a struc-ture that will support continued growth.

successful acquisitionsthe two acquisitions that were carried out in Finland during the year are now fully inte-grated in the group, and with hindsight we can say that the work has been extremely successful. through the acquisition of Display team, our offer to the customer segment, brand manufacturers, was strengthened, a segment where we assess future potential to be very good. the prod-ucts have been well received, both by our sales companies and our customers. sales of Display team’s products have increased by approximately 30 percent compared with how things looked before we acquired the company, which illustrates the strength of our global sales organisation.

We also acquired our Finnish distributor, sooni, during the year. together with parts of Display team, they now make up HL Display suomi, an operation that has positively contributed to the group’s profits from the very beginning.

new financial goalsin the interim report for the period, January-september 2007, the board communicated

new financial goals for HL Display. the financial goal was previously an eBt-margin of 10 percent. since the majority of public companies today are measured at the eBita-level, the board decided to change to an eBita-based goal. at the same time, the goal was raised, to an eBita-margin of 12 percent. our profit for 2007 corresponds to an eBt-margin of 9.8 percent and an eBita-margin of 10.3 percent.

in addition, the board decided to reintro-duce a growth goal for HL Display. the goal is organic growth of between 5 and 10 percent.

How are we going to work to achieve the goals?in recent years we have primarily concen-trated on rationalisation measures in pro-duction to ensure a good gross margin, and also efficiency measures in the rest of the organisation to reduce operating expenses. this has been totally necessary to achieve profitability that is close to our long-term profitability goals. We will con-tinue our rationalisation work in production to become even more efficient. operating expenses have decreased substantially in relation to net sales, but we believe that there are additional savings to be made. During 2007 we had quite a large amount on non-recurring expenses, a consequence of out sourcing production and moving ware-houses. We estimate that these non-recurring expenses will decrease during the next year.

We will now complement our efficiency work with actions that can create conditions

for increased growth. We shall strengthen our sales work, in part by improving our work-ing methods and procedures, and in part through continued geographic expansion.

We shall also direct our efforts within product development towards increased innovation which is central in creating addi-tional growth. We are currently planning several major product launches for 2008.

today, we are investing more than anyone in the industry in development and shall retain our position as an innovator and trendsetter. at the same time, it is impor-tant that product development provides visible results. We have a very strong market focus in development and place distinct requirements. those products that we invest in shall have support among our customers and the final price shall be competitive.

as a complement to this, we plan to continue strengthening our range and our market presence through acquisitions.

i would like to take this opportunity to thank all employees who have worked so hard to implement the changes and achieve results in 2007. their continued commit-ment is the single-most important factor in enabling us to successfully be able to develop the operation and reach our financial goals.

stockholm February, 2008Gérard Dubuy, Managing Director and Ceo


Comments regarding the new profitability goal and goal achievementHL Display has had a financial goal of an eBt-margin (earnings before taxes) of 10 percent for some time now. since the majority of public companies are currently measured at the eBita-level, the board of HL Display has decided that henceforth, the profitability goal will be set at an eBita-level.

During 2007, the eBt-margin totalled 9.8 percent, and the eBita-margin 10.3 percent. this means that the company now delivers results on par with the previous profitability goal. therefore, the board has decided, parallel with changing the meas-urement point to the eBita-level, to raise the goal to an eBita-margin of 12 percent.

the single most important reason for the improved profit margin in 2007 is the com-pany’s successful work with reducing oper-ating expenses in relation to net sales. this, in combination with good efficiency in production and sales growth of 8 percent, has created conditions for increased profits.

BusIness ConCePt, GoALs AnD stRAteGIes

new financial goals for HL Display

Growth with profitability is one of the cornerstones in HL Display’s operation. In recent years, the company’s work has clearly been focused on creating and improving profitability in the operation. today, HL Display is characterised by a higher level of cost-efficiency than before and the profitability focus will be complemented by measures to facilitate strengthened growth.

Business conceptHL Display’s business concept is to increase its customers’ profitability by offering the retail sector and brand manufacturers cost-efficient products and solutions for in-store communication and merchandising. Focus is to make the products and solutions adap-tive to the customers’ specific needs.

new financial goalsin connection with the interim report for the period, January-september 2007, HL Display presented new, long-term finan-cial goals for the group. However, the com-prehensive business objective remains unchanged. HL Display shall be a market-leading growth company with good profit-ability and value growth for shareholders. profitability shall be prioritised. – the new profitability goal is an eBita-

margin (earnings before interest, taxes and amortizations) of at least 12 percent.

– the new growth goal is an organic growth of between 5-10 percent.

EBITA-margin %

-2

0

2

4

6

8

10

12

14

2007 2006 2005 2004 2003

9

Goal 12%

5

7

10

-1

EBT-margin 1) %

1) An EBT-margin of 10 percent was HL Display's long-term financial goal until the third quarter 2007.

-1

0

1

2

3

4

5

6

7

8

9

10

20072006200520042003

-1

5

Goal 10%

6

10

7

Organic growth %

-4

-2

0

2

4

6

8

10

12

14

2007 2006 2005 2004 2003

11 Goal for organic growth 5-10%

Acquisition

Organic growth

3

13

8

-2

HL Display’s long-term goals

With Jegab, price information can be displayed

in a simple manner next to the products in the

refrigerated cabinets.



prerequisites for achieving the profitability goal

HL Display is actively working with three parameters in order to achieve its profitability goal – gross margin, operating expenses and sales growth. the collective effects of sales growth, maintained/in creased gross margin and further reduced operating expenses is what should make it possible for HL Display to achieve the profitability goal.

Gross margin – in recent years, HL Display has carried out comprehensive measures to make production more efficient – an effort that will continue in the future. With more efficient production and reduced fixed pro-duction costs, the possibility to withstand price increases in raw materials is created, and makes the company less sensitive during periods where there is a weaker market climate. For example, the measures of recent years have resulted in an improved gross margin despite significant price in creases in raw materials.

Operating expenses – HL Display has actively worked to improve resource utilisa-tion in order to reduce operating expenses. this work will be strengthened. one exam-ple of measures to reduce operating expenses is the logistics centres where administration and warehousing are com-bined for several sales companies. today, such centres are located in singapore, France and sweden. these will be complemented with logistics centres for the countries in central and eastern europe. the company’s policy is that operating expenses are allowed to increase by a maximum of 50 percent of the sales growth.

Sales growth – HL Display’s goal is to grow organically by 5-10 percent per year. in addition, sales growth can also be achieved through acquisitions.

Efficiency measures in production – maintained/ improved gross margin

Efficiency measures in the operation – reduced operating expenses

Sales growthGoal for organic growth:5-10 percent/year

Improved EBITA-marginGoal: 12 percent

Reinforced sales focus

Product development

IT

strategiesWith the aim of achieving the group’s financial goals, HL Display operates based on the following strategies.HL Display shall:– focus on the company’s core processes

and products– be perceived as a natural cooperative

partner by the world’s leading retail companies and brand manufacturers

– focus on design and innovation for the purpose of setting new standards

– continually make the organisation more efficient and adapt it in accordance with the market’s requirements and needs

– preserve the corporate culture and its focus on profitable growth

– actively investigate the possibilities to strengthen offers and market position through acquisitions. »

Operating expenses, excluding freight, in relation to net sales %

0

5

10

15

20

25

30

35

40

45

2007 2006 2005 2004 2003

39.2

34.3 35.4 33.531.5

the shelf divider system optimal™ with

automatic pusher or gravity feed system

ensures that the shelves always appear

attractive and properly merchandised.



outlook for 2008For 2008 the organic growth is expected to reach the interval of 5-10 percent which is the company’s long-term goal. Like in latest years, profitability will be prioritized. Further cost reduction is planned.

HL Display plans to strengthen the company’s offering and market position through further acquisitions. a detailed forecast will, as usual, be presented in the nine-month interim report.

Follow-up on 2007 and focus for 2008in the annual report for 2006, HL Display reported a number of focus areas for 2007. in the table below, a follow-up of these is given as well as a description of how the work will be further developed in 2008.

Focus areas for 2007 Result 2007 Focus areas for 2008

intensified product range evaluation with the aim of reinforcing the positive effects achieved in 2006. a second phase of product range ration-alisation was initiated on January 1, 2007. the measures are expected to have effect on profits in the second quarter of 2007 at the earliest.

phase two of the product range rationalisation has been implemented and has provided the desired result effects. the greatest benefit has been created in production. Larger order sizes and fewer retoolings have meant that HL Display has freed-up production capacity despite increased volumes.

the work with the product range is today firmly anchored in the organisation and will be a natural component in the operations.

Continued efforts to limit operating expenses throughout the Group and to ensure best possible resource utilisation. in addition, HL Display will further increase focus on profitability issues in sales companies that are currently making a loss. the aim is to at least reach break even in these companies in 2007.

the work with limiting operating expenses has pro-vided the expected result effects. strengthened work with profitability in the sales companies that showed a loss last year has had an obvious effect. these com-panies are now close to break-even, some are even reporting profits.

the work with operating expenses will be strengthened. the goal is that the operating expenses, excluding freight, in time should be below 30 percent of net sales.

Continued efforts to evaluate and streamline the sales process and the sales companies. a new CrM-system is being implemented to improve customer relations and allow cost savings through more efficient routines. in addition, a sales Manager has been appointed to further strengthen the execution and follow-up of the sales work.

administration and warehousing is currently being increasingly centralised compared to the way things were previously, which is concentrating the sales companies’ work with sales. the CrM-system is implemented gradually and is currently in operation in six companies.

the implementation of the CrM system will continue according to plan.

Continued work with production development concerning technology and materials, as well as relocation and outsourcing opportunities. HL Display will continue to invest in the Chinese factory in order to increase production capacity.

the plant in China has proven to be very efficient. therefore, new investments in production capacity are being carried out. new sub-contractors have been added in russia and the slovak republic. production at the plant in Falkenberg and parts of the production at the plant in Falun has been outsourced.

Continued work to further increase efficiency in production. increased co-ordination between the production facilities will improve utilization of capacity and shorten lead times. the plan is to establish a new factory in russia during 2008 as well as investigate further needs for local production.

HL Display will implement a total review and reorganisation of its logistics function. a supply Chain Director was recruited in January 2007. the supply Chain Director will design the new logistics function for imple-mentation during the fourth quarter of 2007.

During the year, HL Display has improved handling at the logistics centre in France. a new logistics centre for the nordic region has been established in Falkenberg and also functions as a global centre for the products that HL Display purchases. the analysis work prior to the establishment of logistics centres for central and eastern europe has been initiated.

the establishment of logistics centres for central and eastern europe is a high priority for HL Display.

new focus: Focus efforts within product development on increased innovation.

new focus area: increased efforts within environmental issues, for example increased recycling of waste material in HL Display’s own production process.

new focus area: HL Display is planning to continue to strengthen the range and market presence through acquisitions.

»


HL DIsPLAy oPeRAtIons

Customer

Core Process 3Production and delivery of goodsand services

Core processesHL Display’s core processes manage the entire chain

from purchase to customer cooperation

Support Processes

Core Process 2Development, launch and product range management

Core Process 1Market, sales and customerrelations

Finance and Financial administration

IT

Human Resources

HL Display operations

HL Display has defined the business processes that manage its core operations as three core processes. these are complemented by corporate support processes.

HL Display’s operations consist of three central business processes known as core processes.

Core process 1 concerns all activities, planning and operative activities connected with sales and customer relations. read more on pages 12-16.

Core process 2 concerns all activities connected to HL Display’s products and solutions, from product range development and launch to product range management and phasing out. read more on pages 17-20.

Core process 3 concerns everything to do with production, purchasing and logistics. read more on pages 21-24.

as a complement to this, HL Display runs three processes that support operations in the core processes. these are:– Finance and Financial administration– it– Human resources. read more on pages 25-27.

HL Display offers complete solutions for

the exposure of Health & Beauty products.


within the food retail and non-food retail segments in spite of the fact that these companies operate in a large number of countries.

Within the brand manufacturers segment, the proportion of global or regional con-tracts is higher. Consequently HL Display’s sales activities within this segment show a more global emphasis and direction.

Direct sales primary channelsales primarily occur through direct sales from the sales companies. it is, however, HL Display’s intention to increase the volume of catalogue and internet sales. as part of this process HL Display’s exten-sive product catalogue has been revamped. there are currently locally adapted cata-logues for each market containing the basic range offered to all as well as the “plus” range specific to each market. there are also pilot projects currently underway con-cerning e-commerce in poland, russia and Great Britain. the results of these projects will form the basis of HL Display’s future investments within this field.

strong focus on salesthe sales companies’ efforts must be channelled into sales only. this is one of the basic concepts behind HL Display’s new logistics structure that includes regional service centres to gather together stock management and administration for sales companies in several countries.

sales activities are carefully followed up. all sales companies are allocated clearly defined goals that are stated in terms of key ratios which are reported on a continu-ous basis. any deviation from forecast is dealt with immediately. six area Managers bear full budget and earnings accountability for their countries and are responsible for planning, coordination and controlling of all operations in the countries of their region.

CoRe PRoCess 1 MarKet, saLes anD CustoMer reLations

Market and sales

HL Display is currently operating on all the important markets in Western europe, eastern europe and Asia. sales are carried out via 31 of the Group’s own sales companies. these are complemented by distributors who work in another 15 countries.

HL Display’s business strategy is based on a strong local presence in the form of wholly owned subsidiaries on all the impor-tant markets. these are complemented by distributors on another 15 markets.

the reason for this strong local opera-tional emphasis is that purchasing of the products and solutions offered by HL Display primarily occurs locally in each country. a strong relationship with custom-ers on the local market is decisive for suc-cess. this is especially true for customers

oPeRAtIonAL eMPHAses FoR 2007

– improved cost control in sales companies.

– integration of the newly acquired companies Display team and sooni.

– implementation of CrM system in the sales companies.

– introduction of locally adapted catalogues with mail order possibility.



HL Display’s customersHL Display’s prioritised customer segments are food retail and non-food retail, plus brand manufacturers who deliver the goods bought in stores. the customer stock includes most of the world’s largest food retail chains, non-food retail chains and brand manufacturers.

HL Display’s competitorsHL Display meets a fragmented competition situation, as concerns both markets and products. the company has no competitor with the same global presence or with such a broad range of products. as far as turn over is concerned, HL Display is most often con-siderably larger than its competitors. there are large companies in the usa which oper-ate in competition with HL Display. these, however, are not present on the european market to any greater degree.

Competition is, however, tough within each product area. HL Display meets differ-ent competitors on different markets and for different products. Consequently the number of competitors is considerable. around 150 more or less direct competitors, of extremely varying size, can be identified.

in order to be able to give a comprehen-sive picture, HL Display has divided its competitors into three groups (see below).

Sales per customer segment MSEK

Retail food 616Brand manufacturers 293Retail non-food 272Shop-fitters 144Distributors 115Other 131

some of HL Display’s largest customers

Food retail Brand manufacturers

ahold (incl iCa)auchanCarrefourCasinoChampionintermarchéMetrosysteme utescoWal-Mart (asDa)

BatDanoneColgateKraftL’orealMasterfoodsnestléphilip Morrisprocter & Gambleunilever

non-food retail

DecathlonDsG retail LtdiKeaMüller

1. International actors (operate on > 5 markets)

2. Regional actors (operate on 2-4 markets)

3. Local actors (operate on one market)

example Checkpoint systems (usa) oechsle (Germany)

Kleerex (ireland)Wilson & Brown (poland)

aL-Display (Germany) ppe (england)Visioplast (France)

strengths – Well developed product range within its niche.

– efficient production process.– Low price levels.

– often family firms with low overheads.– Flexible production processes

for short series.– Good contacts with customers

in the region.

– Good customer contacts.– High degree of individual

customer adaptation.

HL Display’s competitive advantages

– Full range of products that answer all customer needs.

– offers complete category solutions.– Considerable investment in product

development which gives leading position.

– Good relationships with end customer in contrast to competitors who often work through agents and distributors.

– Full range of products that answer to all customer needs.

– offers complete category solutions.– through its global presence,

HL Display is able to follow its large scale customers when they expand and can therefore become a preferred supplier.

– Large-scale, global retail companies and brand manufacturers value a supplier who can help them on many markets.

– Considerable investment in product development which gives leading position.

–



General factors affecting demand– HL Display’s establishment on

new markets.– product development.

Factors that affect demand on mature markets– implementation of new store concepts/

re-profiling of stores.– new trends within store design.– shifts in technology, for example the

introduction of electronic price labelling.– Campaigns on the part of brand

manufacturers aimed at strengthening their brands.

Factors that affect demand on growth markets– establishment of new stores.– Campaigns on the part of brand

manufacturers aimed at strengthening their brands.

after-market sales form an important element of HL Display’s total sales. Demand within this field is generally stable and consists of spare parts and additional sales as stores carry out renovation and remodelling on a regular basis.

HL Display’s market

HL Display offers products and solutions aimed at creating an attractive, selling in-store environment on an international market. the development of the market is closely connected to the development of HL Display’s customers. Consequently global and regional developments within the retail sector form a central factor affecting demand for HL Display’s products and solu-tions. a number of other factors also impact demand for the company’s products.

Developments in the retail sectorthe retail sector in europe has been charac-terised by rapid consolidation during the last ten year period. one strong driving force has been opportunities to achieve econo-mies of scale. Greater volumes bring lower costs per unit sold, logistical benefits and opportunities for increased profitability.

the consolidation trend has shown strongest within the food retail sector with Western european chains acting as the driving force of the process. in many european countries, for example sweden and Great Britain, it is common that three or four major chains dominate the market. overall it can be observed that the 30 largest food retail chains own a market share of approximately 60 percent of modern retail in europe.

in pace with the decrease in expansion opportunities on home markets – a result of both market saturation and restrictions from authorities – chains have turned their expansion plans on new, relatively frag-mented markets in eastern europe and asia. »



Development per region sales Companies Distributors

nordic countriesnet sales MseK 356

HL Display enjoys an extremely strong market position in the nordic countries. the company is the leading supplier of products and solutions for store communications and merchandising to both the retail sector and to brand manufacturers. sales development has also continued strongly in 2007. in spite of already owning a high market share HL Display has increased sales by 30 percent (18). primarily sales in norway have developed in a positive direction with 33 percent growth.

Finlandnorwaysweden

Denmarkiceland

Western europenet sales MseK 734

Just as in the nordic countries, HL Display enjoys a strong market position in Western europe. the company supplies around 95 percent of the largest retail sector companies and is a leading supplier to brand manufacturers. Western europe is a mature market that is characterised by stiff competition within practically all HL Display’s product areas. the streamlining measures recently completed in HL Display operations, combined with strong offerings and local presence, makes HL Display a competitive actor on the market. sales in the region decreased by 4 percent during the year, com-pared with an increase by 3 percent 2006.

austriaBelgium FranceGermanyGreat Britainnetherlandsspainswitzerland

Greeceirelanditalyportugal

eastern europenet sales MseK 344

HL Display is currently a leading supplier to the food retail sector and to brand manufacturers in eastern europe with a local pres-ence on all the important markets. the company has established operations in many countries in the region at a very early stage of their development. this has been extremely important in russia where HL Display’s early presence on the market has been a deci-sive factor for success. Growth differs from country to country as retail sectors are at different stages of maturity. total sales growth in the region has also this year been considerable and amounted to 22 (29) percent. this strong growth, not least in russia, means that the region’s importance to the Group as a whole continues to increase.

Czech republicHungaryLatviapolandromaniarussiaserbiaslovakiasloveniaturkeyukraine

BulgariaestoniaisraelKazakhstanLithuania

Asia/Australianet sales MseK 118

HL Display’s market position has been strengthened in asia. in that HL Display currently runs production in the region, costs have decreased considerably which has resulted in an enhanced com-petitive edge as concerns prices. as in eastern europe, the pace of growth varies between the countries in the region. HL Display currently runs operations on all the major markets and has estab-lished itself very early in China and india – countries which are gen-erally considered to belong to the most important growth countries for the retail sector in the near future. operations in the region have developed extremely well during the course of the year. total sales in the region increased by 25 (39) percent in 2007.

China (Hong Kong)China (shanghai)indiaindonesiaMalaysiasingaporesouth Koreataiwanthailand

australianew Zealand

north Americanet sales MseK 19

trion industries is responsible for sales operations on the american market. sales are currently aimed exclusively at retail sector companies. sales on the north american market amounted to MseK 19 (32) in 2007.

Canadausa



Rapid expansion on growth marketsthe retail sector in growth markets such as eastern europe, asia, Latin america and the Middle east are currently experiencing forceful change as a result of the rapid expansion of the international chains.

interest in these markets is based on considerable economic growth in several countries with stronger purchasing power as a result. at the same time these markets are fragmented and consequently offer good expansion opportunities. For example the one hundred largest retail companies in China have a market share of approximately 10 percent only.

the liberalisation of potentially lucrative markets such as China and india has attracted great interest from the global chains. China and india, together with russia, are generally regarded as the most attractive countries of the retail sector markets to expand into just now.

the retail sector in China is expected to grow by approximately 14 percent annually and the major chains, such as Wal-Mart, Carrefour and tesco, have already estab-lished stores in the larger cities. expansion will now continue to the middle-sized cities in the country. at the same time local chains are also expanding rapidly in order to capture a market position before the global chains strengthen their position on the market.

strong growth in Russiathe russian retail sector is also expanding by more than 10 percent annually, sup-ported by a growing economy and annual income increases of 10 percent. in pace with big city markets such as Moscow or st petersburg becoming increasingly saturated, expansion then progresses into other towns. it is primarily the domestic chains that are driving this expansion, but also international chains such as auchan and iKea are starting up in towns all over the country.

in india the element of “modern retail sector” according to the western model is still extremely small and amounts to

company’s assessment is that the Shelf Ready Packaging trend is now beginning to slow down. today it is used mostly within certain specific categories that are well suited to this method such as flour and sugar. For other categories, stores choose to invest in order to create attractive expo-sure of goods, for example within health and beauty products. Chains are well aware that display is vital in order to create a clearly-defined concept as far as the consumer is concerned. product display is, together with the service level in the store, one of the two essential methods for chains to create their own store profile.

Within non-food retail stores appearance and product presentation are important parts of differentiating companies on the market. Here, solutions unique to each chain are in demand. HL Display is a natu-ral partner as concerns the development of customer-specific solutions.

the cross merchandising trend that has developed within the food retail sector dur-ing the last two years has been reinforced in 2007. Cross merchandising involves goods that are closely connected to each other being displayed together, for example ice cream and sprinkles. the larger chains are working consistently with this method as a way to increase sales. For HL Display’s part this means increased demand for solutions within this field.

»

the most attractive growth markets (based on the variables country risk, market attractiveness, market saturation and time pressure.)

1. india2. russia3. China4. Vietnam5. ukraine

source: the a.t. Kearney 2007 Global retail Development index™

HL Display offers a large number of

accessories to draw the attention to

selected products, for example in

connection with a launch.

only around 3 percent of the total retail sector. the modern retail sector is, how-ever, expected to expand by up to 40 percent annually. one serious constraint on establishment on this market is the coun-try’s legislation which limits opportunities for foreign direct investments in the coun-try. Consequently the international chains are now attempting to establish themselves with the help of joint ventures or based on the franchise model together with local companies. at the same time there is sub-stantial expansion from local chains who wish to acquire a strong market position as the legislation on foreign investment may be relaxed in the future.

Increased retail sector sales2007 has been yet another year of positive development within the world economy. this has also laid the foundation for pos-itive development for the retail sector during the year. according to forecasts from planet retail, global retail sector sales are expected to amount to BusD 12,329 in 2007, a growth of 8 percent on the pre-vious year. Global food retail sales are expected to amount to BusD 5,031, growth of 9 percent on 2006.

trends affecting HL DisplayFor a number of years the food retail sec-tor has been characterised by an unambig-uous cost-conscious approach. one impor-tant cause of this attitude is the success of the hard discount chains on the mar-ket, which can be observed very clearly in Western europe. as a part of this trend, many major chains began to look at solu-tions for Shelf Ready Packaging, i.e. solu-tions where boxes are taken straight from the transport to the shelf. this trend has had a negative impact on HL Display. the


CoRe PRoCess 2 DeVeLopMent, LaunCH anD proDuCt ranGe ManaGeMent

HL Display’s offerings

During the year HL Display has initiated the restructuring of its offerings to customers. offerings to the retail sector (food and non-food retail) are collected together under the brand name optishop and offerings to brand manufacturers under the name Brandman.


– emphasis on solutions for rapidly-growing customer segments with the aim of becoming an even more self-evident partner for brand manufacturers and non-food retailers.

– improvement and rationalisation of existing solutions.

– exploit the benefits of the company’s size and geographical range in order to identify the correct cooperation partners for the different stages of the development process – everything from strategic partnerships with suppliers for the manufacture of certain products to certifying toolmakers in various parts of the world in order to establish a broader supplier base.

in 2007, HL Display has initiated the restructuring of its product and solution range offered to customers. the intention has been to clearly define the strengths of HL Display offerings to each of the three prioritised customer segments – food retail, non-food retail and brand manufacturers. this is in line with the company’s strategy to increase focus on the brand manufacturer segment in which HL Display assesses that future potential is strong. in addition, the products and solutions included in the acqui-sition of Display team this year have rein-forced offerings to brand manufacturers.



optishoptM

HL Display’s offerings to the retail sector are to be found under the brand name optishop. this range includes individual products and complete solutions within in-store communication and merchandising.

Merchandising – presents the goods to the consumer in an attractive manner. through well organised merchandising, shelf space is utilised in an optimal fashion and the con-sumer is tempted to buy. HL Display’s prod-ucts also allow cost savings by streamlining the work of the store. one example of this is the automatic forward feeding of products, which means that the time necessary to keep the shelves well organised and shelf filling time is decreased.

Kund

Products and solutions forin-store communication

and merchandising

Retail(food and non-food retail)

Making the most out of your selling space

IT

Personal

In-store communication – provide con-sumers with all the necessary purchasing information and help them to find what they want in the store quickly. through well organised in-store communication busi-nesses avoid losing sales because the consumers cannot find what they want or what it costs quickly enough.

Positioning of offeringsHL Display is to be the natural cooperating partner for the retail sector and for brand manufacturers as concerns enhancing the consumer’s shopping experience. the com-pany differentiates itself from its competi-tors primarily as concerns:

Degree of innovation – HL Display’s investment in product development is without equal in the business.Quality – the quality of its products may never need to be questioned.Competence – With more than 50 years’ experience, HL Display has built up a major pool of expertise as concerns displaying products in stores.Customer focus – HL Display’s local market presence creates proximity to customers and enables a high level of service.

HL Display’s solutions for sales of

goods by weight are simple to use

and allow the customers themselves

to choose the amount.



BrandmantM

the Brandman brand includes HL Display’s offerings to brand manufacturers. one important part of offerings to this cus-tomer segment is the successful range of products included in the acquisition of Display team. Here individual products as well as complete solutions are provided for primary placement and secondary placement.

Primary Placement – HL Display offers products and solutions that ensure that brand manufacturers are able to utilise their space in the store’s shelves to their best possible advantage. the solutions create an attractive product display that is easy to maintain. this is combined with products to, for example, provide custom-ers with information related to the product or solutions that support the launching of new products.

Kund

Products and solutions forPrimary Placement

Secondary Placement

Brand manufacturers

Bring your brand to life

IT

Personal

Increased production efficiency

Eliminates short series in production with associated

long turnaround times

Increased average size of orders results in longer

production series

Phasing out

Price differentiation

Secondary Placement – HL Display offers products and solutions for display of brand manufacturers’ goods in other parts of the store as well as on the shelf. one example of this is a floor display specifically adapted to individual customers as well as solutions for cross merchandising, i.e. that products whose use is closely related to each other are displayed together in order to create added sales.

»

Continuous range improvementsHL Display’s total product range amounts to almost 40,000 items. Continuous review of range and analysis of demand for individual products is consequently a vital part of the work of creating increased profitability. products for which demand is low mean short production series and extend turna-round time in the factories, which affect profitability negatively. in order to coun-teract this, HL Display works actively to identify and phase out these products.

Price differentiationHL Display has also introduced clear price differentiation in its range. the company’s products are divided into three groups:– standard– modified standard (for example a stand-

ard product in a special colour)– specially adapted products

price levels of these products follow their degree of specialisation.

the results of this process have meant considerable increases in average order size, average sales per article and sales of standard products.

Continuous review of product range creates increased production efficiency which, in turn, provides the preconditions for increased profitability.



Concept Engineering Tooling Industrialisation Market launch

Product specification

Market analysis

Project approval

Drawings and technical specifications

Design review

Tenders for tooling invited

Investment is approved

Tool order

Tooling design approved

Final acceptance of tooling

Tooling validated

Product samples produced

Production parameters validated

Launch material

Full scale launch

» Product range developmentHL Display’s expressed ambition is to become the leading innovator and trend-setter within the business. this requires continuous development of the company’s offerings to customers. there are three major methods of developing HL Display’s product range. the most important is the company’s in-house product develop-ment (please refer to the description of HL Display’s product development process above).

product range can also be expanded with attractive products through cooperation with other producers. one example of this is the cooperation with the american company trade Fixtures and their solutions for sales of goods by weight – Bulk Bins. HL Display owns exclusive rights to sell

this product range on the european market. a third method is to strengthen the com-pany’s product range through acquisition. By acquiring the Finnish company Display team, HL Display’s offerings to the brand manufacturer customer segment have been strengthened with a shelf tray range.

In-house product developmentHL Display’s product development is market controlled and applies clearly defined requirements for development projects. these projects must be supported by one or more of the company’s customers. put simply, the company must know that there is a demand for the product that is to be developed. a clearly defined cost focus is integrated into all HL Display’s product development. the aim is to optimise quality

based on the operational area of the prod-uct and a competitive price is an absolute requirement for all new products.

HL Display has concentrated its product development to products manufactured by the extrusion or injection moulding processes – two production techniques in which HL Display possesses leading edge competence. the final responsibility for the company’s development strategy and deci-sions on new products to be developed lies with a market council which includes mem-bers of HL Display’s management team. a market unit consisting of product managers at HL Display is responsible for identifying and initiating development projects. product managers also bear the overall responsibility for these projects over the entire development period.

in 2007, HL Display had 40 develop ment projects underway. 40 projects were suc-cessfully completed during the year and 10 projects were assessed as not fulfilling stated requirements and were closed down. over the course of the year MseK 38 was invested in product development, which is the equivalent of 2 (3) percent of turnover.

Patent and design protectionHL Display’s patent strategy is primarily aimed at protecting its best selling products developed within the prioritised production areas extrusion and injection moulding. at the end of the year HL Display owned 80 (70) registered patents and 21 (50) patent applications were under processing. the number of new patents in 2007 amounted to 10 (6). the number of registered designs amounted to 88 (104) and 3 (11) applica-tions were in the pipeline. total costs for patent and design protection in 2007 was MseK 2 (2).

HL Display’s product development process


CoRe PRoCess 3 proDuCtion anD DeLiVery oF GooDs anD serViCes

Continued specialisation in production

HL Display operates seven production plants of which four are located in sweden. Production is concentrated to the three strategically important production methods – extrusion, injection moulding and printing on plastic (please refer to explanation of production methods on page 23). the company’s production maintains leading edge quality and efficiency within all these methods. Production outside these prioritised production methods is outsourced to sub-contractors. Currently HL Display is working with sub-contractors in sweden, eastern europe and Asia. Approximately 80 percent of the products are manufactured in HL Display’s own factories.

Continued specialisation and increased coordination have been the key concepts within HL Display’s production during the past year. the factories in sundsvall and Karlskoga have continued their speciali-sation towards automated production and all labour intensive production has been moved to the factory in suzhou, China. Consequently the suzhou factory is not only producing for the asian market but also partially for europe.

this year HL Display increased the share of production that is outsourced to selected sub-contractors. Consequently the produc-tion plant in Falkenberg has been closed and cutbacks of production staff have been carried out at the factory in Falun.

Coordination of production has increased during the year. HL Display has, however, the intention of making more improvements to this aspect. the goal of this coordina-tion process is to create cost advantages by being able to rapidly shift production between the different factories according to where there is free capacity and where the total cost is most beneficial to the company.

Investments during the yearinvestments in production at suzhou in China have been very successful and results have exceeded company expectations. the factory is technically well advanced and delivers high quality products. Consequently HL Display has continued its expansion in 2007. three new extrusion production lines have been commissioned and injection moulding production has started up. By theend of 2007 there were six extrusion pro-duction lines and three injection mouldinglines in operation at suzhou.

HL Display has also continued its invest-ment programme at the factory in Falun with the aim of becoming “top of the class” within printing on plastic.

in total, Group investments in production

plant amounted to MseK 31 (24), of which the majority of the funding was spent on tooling for extrusion and injection moulding.

Future changesin 2007 HL Display initiated analysis and preparatory activities aimed at starting up production in russia. through local pro-duction, competitiveness on the russian market would be improved considerably as there is currently a 20 percent customs levy on imported goods. the company’s ambition is to begin production in russia during the course of 2008.

supply Chain ManagementLogistics and warehouse management have been one of the most important develop-ment areas for HL Display in 2007 and will continue to enjoy high priority in 2008. the

reason for these efforts is that the com-plexity of operations has increased over the last few years. HL Display uses produc-tion sub-contractors to a greater degree and more products are purchased from other suppliers. in addition, the Group now has 31 sales companies and 15 distributors all around the world that must be supplied with products. taken together, this situation requires much of supply chain management within the company.

HL Display’s new logistics structure is based on regional service centres at strategic locations around the world. these service centres house functions for stock management and freight as well as admin-istration of the sales companies in the region concerned. the new structure has created several advantages for HL Display. Firstly, costs are decreased and secondly, »



– Closure of production within the pictoria product group in Falkenberg. in the future, this range of products is to be manufactured by external suppliers.

– Manufacturing of labour-intensive simpler plastic products at the factory in Falun was outsourced for production in eastern europe.

– expansion of production at the factory in suzhou.

– specialisation of production at the factory in Karlskoga.


QualityHL Display’s quality activities are run locally at each production plant. the quality sys-tem established at each factory is con-structed in accordance with the iso 9001 international quality standard. Detailed quality goals are followed up each month. the factories in Falun, Karlskoga and sundsvall are certified in accordance with iso 9001.

Lead time (in days)Average lead time from order to deliveryProduction facility target Result 2007 Result 2006sundsvall 11 11 13 Falun 12 14 11 Karlskoga 7 9 7

Delivery performance (as a percentage)Defines the proportion delivered within the agreed delivery timeProduction facility target Result 2007 Result 2006sundsvall 98.0 96.1 95.0 Falun 97.0 95.6 97.0 Karlskoga 98.0 97.4 98.0

Proportion of complaints (as a percentage)Refers to the number of complaints in relation to the total number of ordersProduction facility target Result 2007 Result 2006sundsvall 0.3 0.4 0.5 Falun 0.6 0.7 0.7 Karlskoga 0.3 0.3 0.2



flexibility is increased as this structure sup-ports growth. thirdly, a standardised and improved service level to customers is assured.

the service centre for the asian market has been located in singapore for some time. this year the service centre for Western europe, located in France, has been further developed. in addition a new service centre for the nordic countries and the Baltic region has been established in Falkenberg. in Falkenberg, an organisation has also been established responsible for Group product purchasing from subcontractors.

Currently underway is a data collection and analysis project that uses simulation of pos-sible locations for service centres for Central and eastern europe. this will be a prioritised area for logistics activities in 2008.

HL Display’s environmental activitiesHL Display’s environmental activities are based on the company’s environmental policy. the work is undertaken locally under the leadership of an environment and Quality Manager at each production plant.

HL Display production lines Location Method

extrusion – High speedon the High speed line, shelf edge strips suitable for rapid production are manufactured.

sundsvall extrusion this production method presses melted plastic through a nozzle. the profile of the nozzle forms the cross section of the product. products are extruded in strips that are then cooled in water baths and cut to the required lengths. shelf edge strips are examples of products manufactured using this production method.

extrusion – Flexibleon the Flexible line mature products are made – often in many different variations – and the process is characterised by short series and rapid changes.

sundsvall

extrusion – Complexon the Complex line newly developed shelf edge strips are produced as well as strips that combine several materials or functions.

sundsvall

extrusion – High Manning Ratein addition to production for asia and australia, the factory manufactures standard articles and labour-intensive products for europe.

suzhou (China)

Injection moulding – Dividersthe primary product is shelf dividers of transparent plastic material that are produced on integrated, robot injection moulding lines.

sundsvall Injection moulding in this production method, melted plastic is injected into a hollow mould. the shape of the mould determines the product’s appearance. shelf dividers and frames are examples of products manufactured using this method.

Injection moulding – Frames etc. in the Karlskoga factory injection moulding of frames and accessories in plastic is carried out.

Karlskoga

Printing and bendingthe major products are printing and bending of shelftalkers.

Falun Printing and bending printing of plastic sheets, which in many cases are further refined through punching or cold/hot bending.

other production in shipley, uK, acrylic display stands are produced using cold and hot bending. in a joint venture in Lesjöfors (jointly owned with trion international LLC) metal display hooks are manufactured while at Wilkes-Barre, pennsylvania, usa (also jointly owned with trion) products are extruded for the us market.

this person initiates and follows up day-to-day environmental activities as well as individual projects.

environmental certificationHL Display’s largest production plants, located in sundsvall, Karlskoga and Falun, are iso 14001 certified. these factories are responsible for approximately 89 percent of HL Display’s production. HL Display’s inten-tion is that all its production plants will be certified according to iso 14001.

Duty of notification operationsthe production plant in Falun runs oper-ations that they are obliged to report to authorities due to the fact that a certain solvent is used for screen printing – in the actual printing ink and also for clean-ing the screens used in the printing proc-ess. However the use of this solvent has decreased radically as uV printing is cur-rently applied to approximately 50 percent of this printing. in contrast to traditional, solvent-based ink the uV ink (VoC-free) contains no volatile organic solvents.

uV ink is dried using uV light instead of through evaporation of solvent.

the Falun factory works on the principle of substitution as concerns chemicals. Consequently chemicals used are ex - changed as soon as products come onto the market that are better from an environ-mental point of view. one example of this is that VoC free chemicals have been used for almost two years to clean the screens after printing. this has decreased annual solvent use by approximately two tons. total sol-vent use amounts to five tons annually.

Waste materialthe major part of HL Display’s environmen-tal impact comes from pVC waste from pro-duction. the pVC used by HL Display con-tains no lead or phtalates (softeners). the factories currently recycle 100 (70) percent of all pVC waste and generally speaking all other plastic waste material is re-used either through in-plant recycling or by selling on to other producers.

HL Display’s aim is to recycle all pVC waste and in 2007 the company initiated

»

»



Percentage of recycled waste(of total plastic waste in production)

year recycled waste (tonne)

recycled waste in relation to total waste (%)

2007 1,118 100

2006 926 81

2005 768 73

2004 698 76

2003 599 70

HL Display suzhou – a swedish factory in Chinain January 2006, HL Display started up pro-duction at its newly constructed factory in suzhou, a city located a couple of hours’ travel by car north west of shanghai. the intention was clear – regional production in asia would cut costs and make the com-pany considerably more competitive in price on the asian market. previously all products had been transported from sweden with high freight costs as a result.

a year or so after start HL Display can observe that operations in suzhou have exceeded the company’s expectations both as concerns price and technical results. Currently there are approximately 80 people working at the factory which is being sub-stantially expanded.

operations in China are characterised by high levels of quality and technical com-petence and a very positive atmosphere. production is carried out with the same degree of automation as in sundsvall and Karlskoga. in addition the suzhou factory stands out in the field of production devel-opment. High levels of competence and a great degree of creativity have, for example, moved this factory into a leading position as concerns recycling of waste materials. Currently 100 percent of all waste materi-als from production are recycled.

the lower salary levels in China have also brought HL Display major cost advantages

as concerns labour intensive production. However, it must be remembered that even though salaries are lower, employees are protected by clearly stated, closely moni-tored labour legislation.

the rapid pace of growth in China has brought severe competition for labour force. people with a good knowledge of english are especially in demand on the labour market. HL Display must respond to this situation. the company has placed great emphasis on offering employees good work-ing conditions, development opportunities and career paths in order to become an attractive employer on the market.

» a project aimed at developing sustainable methods of achieving this. one of the driv-ing forces in this recycling project is the production plant in suzhou, China. the majority of their waste material is reused within the factory’s own production proc-esses. Material that cannot be reused is sold to another producer for recycling. this development is not only positive from an environmental point of view but also brings costs reductions for HL Display, not unim-portant when considering the current high costs of raw materials.

Decreased amount of waste products for dumping and incinerationin 2007 the intention was to decrease the amount of waste products for dumping and incineration from the extrusion and injection moulding processes by 60 percent. this goal was achieved in July 2007.

this percentage has now decreased even more due to continued efforts to iden-tify new recyclable waste products. By the end of 2007, more than 80 percent of all waste products were recycled and a further step has been taken towards totally dump-ing free production. the 2008 target is to reduce the remaining volumes of waste to be dumped or incinerated by half through measures such as improved recycling of packaging material from incoming goods.

energy utilisationHL Display uses around 18 GWh electric-ity in production every year. in order to decrease energy utilisation a system has been introduced at HL Display’s produc-tion plant in sundsvall to utilise waste heat from machines to heat up the building. the property needed additional heating for only seven days during 2007.

at the factory in suzhou, HL Display has introduced a sealed water system for the water pools used to cool down shelf edging after production. Water can now be recycled which has decreased consumption considerably.


suPPoRt PRoCesses

support processes

itIsIt (Information systems and information technology)isit in HL Display is intended to facilitate day-to-day operations by offering efficient working tools and a high level of service. this is to be achieved in a cost-efficient manner at a quality level that provides the company with a competitive advantage.

IT organisationHL Display maintains an in-house it organ-isation focused on systems development related to the Jeeves business administra-tion system. the majority of the develop-ment of this system is managed in-house. operations and support of all the other systems have been outsourced to a contractor, Xlent aB. they are responsible for systems administration, all support matters, operation of all systems, security and backup. total it costs for 2007 amounted to MseK 41 (35).

Review of IT in 2007 HL Display has carried out an over-all review of its it function in order to pro-vide background information on which to base improvements in working methods and a new organisational structure. aims are to improve efficiency in development projects to ensure that schedules and budgets are adhered to. one important part of this review has consisted of monitoring all the Group’s supplier agreements on the it side in order to identify areas for improve-ment and to achieve cost reductions. the results and conclusions of this review will form the basis of improvement activities to be implemented in 2008.

Continued introduction of Jeevesthe Jeeves business administration sys-tem is a central component in HL Display’s it environment. During the year Jeeves was introduced into another five companies in the Group, including russia and india. Currently 38 of the Group’s companiesare working in Jeeves. 2007 also saw HL Display initiate strategic cooperation with the Jeeves company. the aim is to enjoy mutual benefit from the competence

possessed by HL Display within Jeeves and to discuss future systems development.

this year the CrM system (Customer relationship Management) that had been developed in 2006 was implemented in a number of sales companies. a new con-solidation tool for the Group entitled aaro is underway. in addition HL Display is currently working with the introduction of improved tools for supply chain, market and sales as well as product development.

Finance and financial administrationthe finance and financial administration function at HL Display has five primary areas of responsibility: accounting, Controlling/Mis, internal Banking/Finance, Group accounting and investor relations plus acquisitions.

HL Display requires high standards as concerns accounting from all its Group companies. accounting and controlling of multiple legal entities are increasingly co -ordinated through regional service centres. administrative centres are already located in sundsvall, stockholm, tours (France) and singapore. this year a centre was started in riga which will gather most of the sales administration for the swedish, norwegian, Finnish and Latvian operations under its roof.

these regional service centres, as well as the larger individual companies, employ a regional controller who deals with control-ling, follow up and Management information systems. in addition there are controllers with the equivalent global responsibility who also work with operational development, often functioning as a link between opera-tions and the it function. this role is vital during organisational changes, and several such major changes have occurred in the company during 2007.

as a part of the Group’s increased focus on acquisitions, in 2007 a specialist con-troller at Group level has worked with this task and is responsible for financial analysis and valuation, as well as project manage-ment of the acquisition process and initial integration phase.

the task of Controller also includes

identifying and introducing efficient working methods and routines into the various Group companies, ensuring compliance to internal control guidelines and acting as support to users during the introduction or develop-ment of the Jeeves business system, and other reporting systems, into HL Display subsidiaries.

HL Financial services (HFs) is HL Display’s in-house bank. HFs’s responsibilities in - clude management of currency risks and all the financing in the Group. HFs is also a service centre for the swedish production companies as concerns management of accounts receivable including netting, and for scanning in and e-authorisation of sup-pliers’ invoices. in 2007 the majority of the Group flows and balances have been concentrated so that a deficit in one cur-rency can be netted against surplus in other currencies. this advanced solution has suc-ceeded in decreasing Group financing costs.

Group accounting and investor relations HL Display maintains a high level of ambi-tion for its external reporting and makes strenuous efforts to achieve rapid report-ing without loss of quality. the basis of its dialogue with the market is transparency and honesty. However starting 2008, the monthly reporting routines previously pro-vided to the company’s stakeholders will no longer be in place. HL Display was awarded the title stockmarket Listed Company of the year in 2005 and its annual reports for 2005 and 2006 won honourable mentions in the stockholm stock exchange’s compe-tition for the Best annual report, smaller-scale company class.


suPPoRt PRoCesses

employees

employees who would like to – and are offered – the opportunity to influence oper-ations in order to achieve improved results are essential if HL Display is to achieve its goals. providing good working conditions and opportunities for continuous development are central to the creation of motivation and commitment at all levels of the company.

Management vital to operational developmentHL Display places considerable emphasis on good management within the company and requires much from individuals who work in management roles. the employee satisfaction survey that is implemented every two years shows that individual lead-ership is more important for operational development – as well as for employee loyalty, motivation and performance – than any other factor. the managers who live up to these high standards as concerns the manager’s role also achieve better results as far as business is concerned.

to date, the employee satisfaction sur-vey, which is totally anonymous, has been carried out in more than 80 percent of the sales companies and at all the factories except suzhou, China. response rate aver-ages 83 percent.

results of these surveys have extended HL Display’s knowledge of the manage-ment role’s importance for the company. they clearly demonstrate a number of fac-tors that characterise good management. successful managers maintain close, open dialogue with their employees and col-leagues, build trust and respect and are inspiring and involved. at the same time they have high levels of expectations and set up clear goals.

survey results also form an important

part of HL Display’s efforts to strengthen the management of the company. Measures include offering the company’s manag-ers the opportunity to receive support and further training within the field. proof that this work has shown results came when 68 percent of the companies who carried out the survey for the second or third time achieved considerably improved results.

Management planningstrengthening the recruitment base for future managers and other key employ-ees is an important element of Human resource activities at HL Display. During the year the company has continued to work with the systematic identification and development of managers assessed as possessing the force and potential to take greater responsibility than they have today, either in their current role or in a new man-agement role. this is complemented with the “fast track positions” currently available at HL Display. individuals recruited to these positions must possess the capacity to go on to new positions within the company. this is in line with the company’s ambition to fill management and international posi-tions primarily through in-house recruit-ment. the share of in-house recruitment has also increased in 2007.

Restructuringin 2007 restructuring of production was carried out. production at the Falkenberg factory and certain elements of produc-tion at the factory in Falun have been out-sourced to sub-contractors. Consequently 51 posts have been cut from swedish pro-duction plants. the employees who have been made redundant have been offered help in finding a new job through outplace-ment insurance. HL Display’s goal – that at least 85 percent of the redundant staff will

Average number of employees

900

920

940

960

980

1,000

20072006200520042003

975

967

933

952

968

Number of years employed %

>24 years 220-24 years 315-19 years 1210-14 years 185-9 years 26<5 years 39

Age distribution year

0

50

100

150

200

250

300

350

400

60-51-6041-5031-4021-30-20

8

320

363

206

60

11

be employed elsewhere within a year – will be achieved.

in Falkenberg a new logistics centre has been created in order to manage logistics for the nordic countries plus all purchasing. this new organisation will employ 20 people.

in 2007, also the two companies acquired – Display team and sooni – have been suc-cessfully integrated into HL Display.

Long term healthHL Display undertakes long term health promotion activities with the aim of pre-venting ill health at an early stage. this will be achieved by offering employees regu-lar health profiles which are followed up by advice and personal development plans.

in 2006, HL Display initiated its long term health promotion activities at the com-pany’s largest production plant with 188


suPPoRt PRoCesses

HL Display’s fundamental values

target fulfilmentHL Display’s ambitious aims create a result-ori-ented corporate culture. targets are set high, and create positive challenges for the company and its employees. Day-to-day activities are character-ised by an insistent striving towards target fulfilment.

trust and respectHL Display also emphasises the importance of open, honest dialogue within the company. showing trust in all employees and an atti-tude that everyone is doing their best for the company combined with a stated policy of maintaining and developing a good, honest business ethic.

Driveproblems must be solved where and when they arise. personal drive is encour-aged. the basic idea is that everyone must have the competence and the ability to deal independently with their daily tasks. this is in line with the company’s entrepreneurial heritage.

Commitmentsuccessful managers lead by example by showing commitment in day-to-day activities, while at the same time retaining an overall view of the business. the ability to set a good example is an important ele-ment of daily management.

non-prestigiousthe company’s employees are non-prestigious. results are more important than job titles, and the company’s heroes are those involved in day-to-day activities.

Value added per employee KSEK

0

100

200

300

400

500

600

700

20072006200520042003

399

514 510 525

601

Employee categories No. of persons

Production 331Administration and management 118Warehouse 100Product development 39Sales and marketing 384

employees located in sundsvall. the goal was to improve employee health levels and decrease sick leave frequency. all employ-ees underwent a health profile examination and HL Display has, based on the results, provided information and inspiration for its employees as concerns how a healthy life style can generally affect their lives. a great deal of this work has been implemented in cooperation with Feelgood and has included inspiration days on diet and health. During the autumn and winter employees who have experienced problems with back pain and tiredness have been offered a place on a relevant course which lasted over a ten-week period. results to date have been encouraging.

During the year the company has also continued to work with the rehabilitation of employees on long term sick leave. these

activities are carried out in cooperation with occupational health care and the social insurance office. the number of people on long term sick leave has decreased by 60 percent and short term absence due to illness by 2 percentage points. Costs for preventative health care in 2007 amounted to MseK 1.7 (2.0).

Employee factsas per 31 December 2007, the number of employees in the Group amounted to 972 (949). average number of employees during the year was 968 (952) and staff turnover rate was 8.5 (7.6) percent. Gender struc-ture is 38 percent women and 62 percent men. of the total number of employees, 40 percent work with sales and marketing, 44 percent with production and stock man-agement and the rest with management,

administration and product development. in sweden there are 43 percent of all employ-ees. there are 32 percent of employees with university level education, 49 percent with upper secondary school qualifications and 19 percent with compulsory school-ing. added value per employee in 2007 amounted to tseK 601 (525). investment in staff training in 2007 cost MseK 3.2 (1.9) which is the equivalent of seK 3,218 (1,978) per employee. Health and safety risks at HL Display are extremely low and primarily related to production. safe work-places and a good working environment are the aim of company preventative activities. in 2007 a total of 8 (15) minor incidents and 5 (0) incidents with permanent injury were reported. HL Display regularly updates health and safety routines and examines the various risks involved. the company has received no negative comments from the swedish Work environment authority during the year. there have been no fatal accidents in the history of HL Display.


CustoMeR CAse stuDy

procter & Gamble was founded in 1837 and is currently one of the world’s lead-ing consumer goods companies. its prod-uct port folio includes many popular brand names with worldwide recognition, for example always, ariel, Braun, Duracell, Gillette, pampers and Wella. procter & Gamble employs over 140,000 people in more than 80 countries.

HL Display’s cooperation with procter & Gamble began more than a decade ago. procter & Gamble has also been an impor-tant customer of Display team, which was

acquired by HL Display in 2007. in fact, procter & Gamble was Display team’s first customer 16 years ago for its then newly launched shelf tray concept – and they have worked together ever since.

When procter & Gamble invited tenders for a shelf display solution for its Febreze brand to be used in France, Great Britain and Germany, HL Display adopted an un conventional approach. instead of ten-dering exactly according to specifications, HL Display presented its own solution. each modification of the original specification was explained and justified.

procter & Gamble appreciated the improvements proposed in HL Display’s tender. these improvements, together with HL Display’s excellent reputation as a supplier in the business, helped procter & Gamble select HL Display as a supplier.

in the introductory phase, HL Display will deliver the new solution for Febreze to approximately 100 test stores. the results of these tests will then be analysed and validated. if results live up to expectations then HL Display will be supplying the solu-tion to several european countries.

procter & Gamble

When Procter & Gamble was planning a new solution for shelf display for its Febreze brand, it chose HL Display.


HL Display’s merchandising solution for Febreze includes a scent

button and an extensible product guide where the consumer

receives in-depth information about the product.


CustoMeR CAse stuDy

Coop norge is one of norway’s largest food retail chains and consists of approxi-mately 1,000 stores. the company uses five different store concepts for food retail – from smaller local stores going under the brand name Marked, to major hypermarkets called obs!. in between there is Coop Mega which is a traditional large scale store, Coop prix which is a cut-price store and Coop extra which is a larger establishment in which foodstuffs are complemented with a wide variety of traditionally specialist store products. almost one in four food pur-chases made in norway comes from one of Coop’s stores.

HL Display’s cooperation with Coop norge goes back more than 15 years. Coop was one of HL Display’s first customers when norwegian operations started in 1990. Currently HL Display supplies products and solutions within in-store communications and merchandising to all Coop store con-cepts, including its latest new product – roller track – to five stores in norway.

“Coop norge is very satisfied with HL Display as a supplier. our long term cooperation with HL Display is based on good products and high levels of delivery accuracy as well as support in the opening phase of upgrading or the establishment of new stores,” says ole Martin Grønhaug, Head of Department, store Development at Coop norge.

Lars svenkerud, Managing Director of HL Display norway feels that HL Display’s commitment and proactive approach in its cooperation with customers is something Coop values and that this is consequently one essential element of their long-term cooperation.

“We are often out in our customers’ stores to help them identify or develop solutions based on their needs,” says Lars svenkerud.

Coop norge

serious commitment and a high level of service have created good customer relations and long term cooperation with Coop norge.

HL Display norge is also very careful to fol-low up joint projects with customers properly.

“We are not just offering good products and solutions; we also supply the highest level of service from order to after sales. For example we are on site for delivery and installation in order to ensure that everything works perfectly from day one,” states Lars svenkerud. “this creates good customer relations and provides us with references for the future. it is also one good reason why we can show very positive sales increases even in a mature market such as norway.”


Coop norway uses HL Display’s latest

product pusher solution, roller track,

in its refrigerated cabinets.


tHe sHARe

the HL Display share

the HL Display share was listed in 1993 and is currently quoted on the oMX nordic exchange’s small Cap list. as at 31 December 2007 the share capital in HL Display totalled seK 38,673,860, divided among 7,734,772 shares, of which 913,024 are class a shares and 6,821,748 class B shares. each share has a quota value of seK 5. Class a shares carry one vote and class B shares 1/10 of a vote. all shares provide equal entitlement to a share of the compa-ny’s assets and profits. a block of shares amounts to 100 shares.

share price developmentsince its stock exchange launch, the share’s value has increased by 1,257 percent from seK 14.37 (corrected for bonus issues) to seK 195 on 31 December 2007. During the same period the siX General index increased by 326 percent. in 2007 the price rose by 18 percent, while the siX General index recorded a decrease of 7 percent. the highest price paid during the year for the HL Display share was seK 230, and the lowest seK 165. at the end of 2007 HL Display’s market capitalisation reached MseK 1,330.

trade volumesDuring the year 724,000 shares were traded at a value of MseK 141, corresponding to a turnover rate of 10.7 percent.

shareholdersas at 31 December 2007 the number of shareholders was 1,791 (1,942). the proportion of institutional shareholders is estimated

at 57 (56) percent of capital and the proportion of foreign share-holders is 3 (2) percent.

option schemesthere are two option schemes aimed at employees in upper manage-ment positions. the option schemes totals 75,000 employee stock options and 64,000 warrants, which represents a total of 1.8 per-cent of share capital and 0.9 percent of votes in HL Display if fully subscribed. if the warrants are fully subscribed, the number of shares will amount to 7,873,772. the warrants have been issued on commercial terms, defined in accordance with the so called Black & scholes valuation model, and the purchase price was paid in cash. utilisation of subscription rights is not subject to continued employ-ment. the employee stock options have been issued to the Ceo with-out fee. the entitlement of the Ceo to utilise these options is conditional on his continued employment plus the achievement of certain Group goals. the programme has been reported in accordance with iFrs 2.

Dividend policyin the long term the Board is striving to achieve a dividend propor-tion corresponding to 30-50 percent of the profit per share after tax.

DividendFor the financial year 2007 the Board proposes a dividend of seK 5.50 (3.50) per share, equivalent to 39 (44) percent of earnings per share after tax.

Foreign owners 3,2Swedish unit-trusts 18,8Swedish institutions 37,8Swedish private owners 40,2

Shareholder structure %

200

400

600

800

1,000240

220

200

180

160

140

120

100

80

60

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Share price trends

B-shareSIX General IndexNumber of shares traded, thousands (incl. after-hours)

© OMX AB


tHe sHARe

Decided option schemes

number of Proportion of number of employee share capital if Proportion of votes year implemented warrants stock options fully subscribed if fully subscribed subscription price exercise period2006 75,000 0,97% 0,47% 157 2009-03-31--2011-03-312007 64,000 1) 0.83% 0.40% 234 2010-03-01--2010-04-30total 64,000 75,000 1.80% 0.87%

1) on the balance sheet date 49,000 warrants had been acquired by employees.

ownership structure on 31 December 2007

no. of shares no. of shareholders no. of shares % of shares1 - 500 1,449 194,527 2.5%501 - 2000 257 272,425 3.5%2001 - 10000 56 242,149 3.1%10001 - 50000 9 255,448 3.3%50001 - 100000 9 663,050 8.6%100001 - 11 6,107,173 79.0%total 1,791 7,734,772 100%

Data per share 1, 2)

2007 2006 2005 2004 2003 2002 2001 2000 1999 1998earnings per share after tax, seK 13.95 7.87 4.59 6.06 -1.31 5.71 7.22 3.48 4.20 5.81earnings per share after dilution and tax, seK 13.92 7.85 4.58 6.05 -1.31 5.71 7.22 3.48 4.20 5.81Dividend per share, seK 5.50 3) 3.50 3.00 2.50 1.65 1.65 1.55 1.40 1.30 1.30Dividend, % of earnings after tax 39.4 44.5 65.4 41.2 n/a 28.9 21.5 40.2 31.0 22.4share price end of period, seK 195.00 184.00 141.00 137.00 111.00 91.00 128.00 73.00 161.00 205.50equity per share, seK 61.04 50.10 44.52 42.70 38.10 41.08 36.89 31.07 28.89 26.00equity per share, after dilution, seK 60.94 49.99 44.40 42.60 38.05 41.06 36.89 31.07 28.89 26.00Direct yield, % 1.8 1.9 2.1 1.8 1.5 1.8 1.2 1.9 0.8 0.6p/e ratio, 31 December 14.00 23.39 30.72 22.59 -84.43 15.94 17.73 20.99 38.35 35.37operational cash flow per share, seK 18.36 15.25 4.58 10.26 4.12 8.62 5.51 1.28 3.99 -1.11

no. of shares 7,734,772 7,727,172 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872Weighted-average no. of shares 7,733,294 7,693,508 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872 7,688,872Weighted- average no. of shares, diluted 7,746,111 7,710,959 7,709,538 7,707,139 7,700,360 7,692,389 7,688,872 7,688,872 7,688,872 7,688,872 1) see page 33 and note 14 for definitions of key ratios. 2) years 1998-2003 not restated according to iFrs. 3) according to the Board’s proposal.

Largest shareholders, 31 December 2007

no. of no. of total no. share of no. of share of A shares B shares of shares capital, % votes votes, %ratos aB 109,216 2,115,854 2,225,070 28.8% 320,801 20.1%the remius family 803,808 1,408,698 2,212,506 28.6% 944,678 59.2%Lannebo fonder – 747,385 747,385 9.7% 74,739 4.7%Livförsäkringsaktiebolaget skandia – 438,812 438,812 5.7% 43,881 2.8%Didner & Gerge mutual fund – 380,000 380,000 4.9% 38,000 2.4%unionen – 117,100 117,100 1.5% 11,710 0.7%Carnegie fond aB/small cap – 107,900 107,900 1.4% 10,790 0.7%invus investment aB – 82,800 82,800 1.1% 8,280 0.5%Göran Källebo – 80,400 80,400 1.0% 8,040 0.5%aktia sparbank – 75,000 75,000 1.0% 7,500 0.5%aMF pensions aktiefond – small cap – 67,300 67,300 0.9% 6,730 0.4%others – 1,200,499 1,200,499 15.4% 120,050 7.5%total 913,024 6,821,748 7,734,772 100.0% 1,595,199 100.0%


RIsK AnD sensItIVIty AnALysIs

sensitivity analysis effect on operatingFactor Change profit/loss, MseKnet sales 1% volume 7.4Decline in the largest market -1% volume -1.5price of pVC 1% 1.0price of polycarbonate 1% 0.2price of electricity 1% 0.1Cost of personnel 1% 4.2interest rates 1 percentage point 0.1Depreciation 1% 0.4euro exchange rate 10 öre 2.4

Raw material sensitivityplastic raw materials constituted 65 percent of the Group’s raw material purchases. the major raw material, pVC, was responsi-ble for 38 percent the Group’s total raw material costs. the price of pVC is currently extremely high and, in 2007 reached its highest recorded level. Customer agreements are generally renegotiated once annually and price adjustment clauses covering raw material fluctuations are rare in this business. an increase of one percent in pVC purchasing costs in 2007 would have reduced profit before tax by MseK 1.0. HL Display purchases raw materials on longer terms, often with currency clauses. in order to decrease raw material price sensitivity, HL Display is successfully developing methods for use of alternative materials.

Currency riskHL Display’s main markets are within the euro area. Consequently the company is exposed to exchange rate fluctuations as produc-tion mainly takes place in sweden and invoicing in foreign curren-cies. invoicing to subsidiaries is carried out in local currency in order to concentrate the Group’s currency exposure to sweden. external distributors are invoiced in seK. the currency effects that impact the company’s earnings are the transaction flows in the different cur-rencies, flow exposure, and recalculation of the foreign subsidiaries’ profit and loss statements and balance sheets, conversion exposure.

Flow exposureFlow exposure is caused partly by invoicing in foreign currencies and partly by purchases in foreign currency or purchases where price is regulated by a currency clause. the average exchange ratios for HL Display’s most important export currencies in relation to seK have been relatively stable in comparison to those 2006. on aver-age the seK has been somewhat stronger. 38 percent of turnover is invoiced in euro, 9 percent in GBp, 8 percent in ruB and 7 percent in noK. HL Display’s purchases that affect exposure primarily consist of overhead expenses for the overseas sales companies and of mate-rial purchases whose prices are regulated through a currency clause. HL Display’s general policy is to hedge future cash flows. HL Display’s export currencies have, as compared to 2006, affected operating profit negatively for 2007 by MseK 2.7 according to the table below.

Currency’s effect on operating profit (as compared to average exchange rate in 2006, MSEK) net sales -7.2Costs goods/services sold 3.4selling expenses 1.2administrative expenses 0.5Development expenses 0.0other operating income/expenses 0.0exchange rate profit/loss on operative receivables and payables -0.6total effect of currency exchange rate changes on operating profit -2.7

Conversion exposurethe net value of assets in currencies (equity in subsidiaries) other than the reporting currency (seK) will change according to exchange rate fluctuations. this risk is termed conversion exposure. For more information please refer to note 2.

Financial risks and financial instrumentsFor a description of financial instruments and financial risks in HL Display, please refer to note 2.

risk and sensitivity analysis

500

600

700

800

900

1000

1,100

2007 2006 2005 2004 2003 2002

Price of crude PVC EURO/TONNE

Source: ICIS-LOR

Exchange rate EURO/SEK

8.5

9.0

9.5

10.0

2007 2006 2005 2004 2003 2002

Source: Riksbanken

Aluminium, steel and wire 5Packaging 5Semi manufactured articles 8Polycarbonate (PC) 8PVC 38Other plastic raw materials 19Tape 8Electricity 5Other 4

Raw materials 2007 %


nIne yeAR suMMARy

nine year summary

Income statement (KseK) 2007 2006 2005 2004 2003 1) 2002 1) 2001 1) 2000 1) 1999net sales 1,571,181 1,448,138 1,284,824 1,249,029 1,129,005 1,154,407 1,071,934 873,921 768,451 operating profit/loss 160,540 106,727 62,727 107,753 -3,888 75,967 83,031 47,731 55,401 Depreciation 39,515 44,379 46,798 46,460 47,556 49,231 46,572 40,197 31,255 profit/loss before taxes 154,688 92,254 61,720 92,837 -9,212 65,353 81,831 44,095 47,125 Loss from discontinued operations, net after taxes – – -7,709 -15,950 – – – – – net profit/loss for the year 108,236 61,874 34,745 46,621 -10,109 43,900 55,513 26,747 32,277 Balance sheet (KseK) non-current assets 195,644 233,793 241,993 247,637 171,456 193,697 197,742 186,099 168,241 Current assets 696,053 642,768 518,478 519,778 474,088 456,711 436,897 315,701 262,131 total assets 891 697 876 561 760 471 767 415 645 544 650 408 634,639 501,800 430,372 shareholders’ equity 474,865 387,756 342,329 328,293 292,979 315,821 283,667 238,919 222,201 provisions – – – – 13,876 23,478 26,121 16,997 14,051 non-current liabilities 111,444 129,540 123,083 138,807 66,421 66,444 107,037 84,949 53,461 Current liabilities 305,388 359,265 295,059 300,315 272,268 244,665 217,814 160,935 140,659 shareholders’ equity and liabilities 891,697 876,561 760,471 767,415 645,544 650,408 634,639 501,800 430,372 Key ratios average number of employees 968 952 933 967 975 925 855 773 706 revenue per employee, KseK 1,623 1,521 1,377 1,292 1,158 1,248 1,254 1,131 1,088 eBita-margin, % 10.3 7.4 4.9 8.6 -0.3 6.6 7.7 5.5 7.2 eBt-margin, % 9.8 6.4 4.8 7.4 -0.8 5.7 7.6 5.0 6.1 equity/assets ratio, % 53.3 44.2 45.0 42.8 45.4 48.6 44.7 47.6 51.6 Debt/equity ratio 0.27 0.52 0.55 0.63 0.49 0.44 0.45 0.42 0.32 return on total capital, % 18.6 13.0 9.5 14.9 -0.2 12.0 16.0 11.0 12.9 return on equity after tax, % 25.2 16.6 10.4 15.0 -3.3 14.6 21.2 11.6 15.3 return on capital employed, % 27.6 19.0 13.5 20.8 -0.3 16.8 23.3 15.5 18.6 interest coverage ratio 16.5 7.4 6.6 6.5 -0.2 6.6 10.2 7.0 9.3 net investments, KseK 70,179 31,662 39,506 64,999 39,344 44,401 47,517 58,099 67,913 Cash and cash equivalents, KseK 177,079 163,244 81,131 112,013 94,840 100,388 65,201 31,328 22,935 Development costs, KseK 37,545 39,070 40,378 42,142 36,958 32,897 30,589 26,902 24,581

1. years 1999-2003 not restated according to iFrs. Data per share, see page 31. Definitions

Average collection periodaccounts receivables on 31 December divided by net sales increased by 20 percent Vat (average Vat in the Group) multiplied by 365 days.

Capital turnover ratenet sales in relation to average balance sheet total.

Development expensesDevelopment expenses are expenses for production, materials and product development.

Debt/equity ratiointerest bearing liabilities in relation to total equity.

Direct yieldDividend as percentage of share price on 31 December.

earnings per share after dilutionprofit after tax, attributable to parent company shareholders, divided by the weighted average number of shares after dilution.

earnings per share after taxprofit after tax, attributable to parent company shareholders, divided by the weighted average number of shares.

eBItA-marginearnings before interest, taxes and amortisations. operating profit added for depreciation and impairment of goodwill on consolidation of intangible assets, in relation to net sales.

eBt-marginearnings before taxes. profit before taxes in relation to net sales.

equity/assets ratioequity including minority share in relation to balance sheet total.

equity per share after dilutionreported equity divided by the weighted average number of shares after dilution.

equity per sharereported equity divided by the weighted average number of shares.

Interest-bearing net liabilityinterest-bearing liabilities minus interest-bearing assets.

Interest coverage ratioprofit before taxes plus financial expenses in relation to financial expenses.

operational cash flow per shareChanges in cash and cash equiva-lents in any given year from operational activities after deduction of interests and tax payments, plus investments in intangible and tangible operational fixed assets, divided by the weighted average number of shares.

P/e ratioshare price on 31 December divided by earnings per share after tax.

Return on capital employedprofit after financial items plus finan-cial expenses in relation to average capital employed. Capital employed is the balance sheet total less non-in-terest bearing liabilities.

Return on equity after tax profit after tax in relation to average equity. Minority shares have been excluded from both profit and capital.

Return on total capitalprofit before taxes plus financial expenses in relation to average balance sheet total.

share turnover velocity %share turnover during the year/average Market Cap during period * 250/number of trading days * 100.

staff turnoverno. of employees that have left the company divided by average number of employees.

Value added per employeeoperating profit plus cost of salaries and social security payments divided by the average number of employees.

Working capitalCurrent assets excluding cash and cash equivalents minus non interest-bearing current liabilities.

1)


DIReCtoRs’ RePoRt

Directors’ report

HL Display aB (publ), corporate registration number 556286-9957, is a swedish, publicly owned limited company. the company’s registered office is in stockholm, at Horisontvägen 26, 128 34 skarpnäck.

Group

GeneralHL Display is a market-leading, international supplier of products and solu-tions for in-store communication and merchandising to the retail sector. HL Display shall be a growth company with good profitability, thus generating value growth for shareholders.

The economyHistorically HL Display has experienced very little vulnerability to changes in the economy. a large number of small orders from customers in different markets creates stable income flows. the transition to selling category solutions brings greater sensitivity to conditions in the economy. HL Display is affected negatively by seasonal variations in December and January, as client companies are mainly retailers who do not plan for any changes in their stores during the Christmas shopping period. DemandHL Display’s customer structure, with many customers in different markets, means that market risk is well spread. HL Display produces and delivers directly in response to customer orders. Changeover time in production is short, and the company has very short lead times, mostly less than two weeks. HL Display’s development towards a larger proportion of customer-specific total solutions will create bigger and bigger orders, consequently an increasing degree of fluctuation in income flows is anticipated.

CompetitionHL Display encounters global competition at product level, with a few interna-tional suppliers able to provide individual products to several markets. in the field of merchandising and in-store communication the company encounters competition at local level, i.e. in a country or a region. HL Display currently has no direct competitor being a global supplier of total solutions. retail companies need uniform, common solutions across several markets which means that the risk for HL Display is low in mature markets and among large client companies. as HL Display follows its established companies into new markets, it is judged that the risk is also relatively low on new markets.

Manufacturing, products and patentsHL Display is a world leader in the company’s most important production methods. Forward-thinking and innovative design have contributed to HL Display setting new standards in many parts of the retail sector. it is consequently quite natural that several instances of the company’s products being copied have been reported. HL Display’s patent strategy is aimed at protecting high level sales products within the core competencies of extrusion and injection moulding.

Political riskpolitical risks include legislation, taxation matters and trade policy factors. HL Display is not exposed to any significant political risk.

EmployeesHL Display has a large number of key employees with a high level of expertise and well-developed customer relations. as the expertise within the company is transferred further out in the organisation, closer to the customer, it is becoming increasingly important to document customer activities in data-bases. a new CrM system (Customer relations Management) that facilitates documentation and supports work within customer relations is currently implemented in the Group. activities with different customers takes place

in teams so the financial effect of the loss of any key employee is limited. the average number of employees in HL Display was during the year 968 (952) and at year end, the number of employees was 972 (949). refer to note 8.

Ownership situationHL Display shares were listed in 1993 and are now quoted on the oMX nordic exchange’s small Cap list. as of 31 December 2007 the number of shareholders was 1,791 (1,942). the proportion of institutional shareholders is estimated at 57 (56) percent of capital and the proportion of foreign share-holders at 3 (2) percent. the largest shareholder is ratos aB with 28.8 per-cent of capital followed by the remius family with 28.6 percent of capital.

Comments on the company’s results, financial status and cash flow Consolidated income statementsthe Group’s net sales totalled MseK 1,571 (1,448) during the year reflecting growth of 8 percent as compared to 2006. excluding the acquired businesses in Display team and sooni sales growth amounted to 4 percent. the change in the value of seK compared to export currencies exerted a negative effect on net sales to the order of MseK 7, compared to last year.

operating profit for the year amounted to MseK 161 (107) and profit before taxes was MseK 155 (92). Changes in the value of seK have, in comparison to the previous year, exerted a negative affect of MseK 3 on operating profit. the period’s net interest expenses amounted to MseK -6 (-9) while translation differences and other currency effects amounted to MseK 0 (-5). HL Display’s most important export currencies are eur, GBp and ruB. For 2007 the cur-rent method has been applied when recalculating foreign subsidiaries’ finan-cial reports, which means that translation differences are reported as part of equity and not, as previously was the case, in the net financial income/expenses. if the equivalent method had been applied in 2006 the reported profit before taxes for the comparison year would have been MseK 2 higher. the comparison year has not been recalculated as the effect is negligible.

Consolidated balance sheetsthe balance sheet total increased by MseK 15 or 2 percent. operating capital increased by MseK 36 and liquidity has improved. During the period, net investments in fixed assets, excluding the reclassification of leasing contracts, totalled MseK 70 (32). the acquisitions of operations in Finland are responsible for MseK 33 of the net investment increase. the capital turnover rate remained unchanged at 1.8 (1.8) times.

planned depreciation during the period was MseK 40 (44). stocks increased by MseK 17 as of 31 December, and constitute 10 (9) percent of net turnover. accounts receivable had increased by MseK 12 as of 31 December. in relation to net turnover, accounts receivable decreased to 18 (19) percent. the average credit period decreased to 56 (58) days.

Equityas of 31 December 2007, HL Display’s equity totalled MseK 475 (388). equity per share was seK 61.04 (50.10). the equity/assets ratio was 53 (44) percent. this ratio has, in addition to the strong earnings situation, been positively affected by the sale of the operations property in Falkenberg and the renegotiation of the leasing agreement of the property in sundsvall so that it can now be classified as operational leasing. Long-term liabilities decreased by MseK 18 to MseK 111. short-term liabilities decreased by MseK 54. the debt-equity ratio fell to 0.27 (0.52) times. as of 31 December, interest bearing liabilities amounted to MseK 128 (202), of which short-term liabilities accounted for MseK 44 (102).

Changes to equity primarily consist of the profit for the year and this year’s dividend to shareholders. in 2007 seK 3.50 per share was distributed, i.e. MseK 27. During the year 7,600 new ordinary shares were issued as a result of the options programmes previously decided by the company. existing options programmes may cause changes in equity during the period 2008-2011 when these options may be converted into shares (please refer to page 49).


DIReCtoRs’ RePoRt

Cash flowthe cash flow statement was drawn up using the indirect method. the cash flow reported includes only transactions that involved payments received or made. Cash flow from current operations increased to MseK 138 (121), mainly due to improved operating profit. Working capital increased and exerted a negative effect on cash flow to the order of MseK 10. Cash flow from invest-ment activities decreased due to increased investments of MseK -68 (-33). investments relate mainly to tangible fixed assets, such as production equip-ment including tools for new products. also financial and intangible invest-ments have increased due to the two Finnish acquisitions. Cash flow from financing activities totalled MseK -57 (-4). Dividends were paid to the order of MseK 27 (23), and loans were amortised to the net amount of MseK 32. the parent company’s cash and cash equivalents have decreased some -what, due to a new structure of the agreement with the bank. the subsidiary, HL Financial services, is now holder of the Group account.

events of significant importance that occurred during the financial year orafter the balance sheet dateOperationin 2007 HL Display showed satisfactory levels of sales growth, even if its organic growth did not live up to expectations. this can be explained primarily by the restructuring that was implemented in several sales companies which instead resulted in a considerably increased operating profit. several markets have developed positively, especially russia, the nordic markets and in asia. production efficiency has increased and operating costs decreased in rela-tionship to net turnover. operating profit increased by 50 percent from MseK 107 to MseK 161. profits from property sales amounted to MseK 7 during the year and profit margin rose to 9.8 (from 6.4 percent last year).

the two acquisitions implemented in Finland during the year have been inte-grated into HL Display’s organisation and product range and have contributed positively to the company’s profit levels. HL will continuously explore opportu-nities to strengthen company offerings and market position through additional acquisitions.

raw material prices have, as last year, been extremely high. However pos-sible negative effects on earnings have been counteracted by production streamlining measures. additional measures are planned in order to reduce costs even more.

in the fourth quarter of 2007 HL Display started up a nordic Logistics Centre in Falkenberg. stores for the swedish and norwegian markets have been moved there and coordinated. this operation will also work as a global logis-tics centre for purchased products. there already are logistics centres for asia in singapore and for Western europe in France. in order to complete this new logistics model the establishment of logistics centres for the countries of Central and eastern europe remains.

Organisational changesDuring the year two Finnish companies have been acquired. the number of sales companies thereby amounts to 31. the service centre in Bergen op Zoom has been closed down. a new nordic service centre has been established.

Research and development operationsproduct development is an important element of HL Display’s growth strategy. in 2007 the focus has been on value engineering, i.e. to identify cheaper solutions that do not affect the functionality of the finished product. activities in 2007 resulted in cost reductions. Development costs in 2007 totalled MseK 38 (39).

Risks and uncertainty factors Variations in raw material prices and currency fluctuations form uncertainty factors which are not, however, serious risks. For a more detailed description of the risks and uncertainty factors faced by HL Display, please refer to the risk and sensitivity analysis on page 32.

Financial risks and risk managementFor a description of the finance policy, financial instruments, financial risks and risk management utilised within HL Display, please refer to note 2.

environmental informationintensive environmental activities have been under way for several years at all production facilities, please refer to page 23. the screen-printing plant in Falun must be registered under swedish environmental laws due to possible effect on the air. HL Display does not run any operations that require permits.

Report on the Board’s work during the yearFor a report on the work of the Board and committees, please refer to page 62-63.

expectations with regard to future developments Business objectives the HL Display Group’s financial objectives are to grow organically by 5-10 percent annually and to achieve an eBita margin of at least 12 percent within the period of a few years.

Outlook for 2008 For 2008, organic growth will be within the interval 5-10 percent which is also the company’s long-term goal. profitability will be prioritised as in previous years. additional cost streamlining is planned.

HL Display plans to continue to strengthen the company’s product range and market position through acquisitions.

a detailed forecast for the entire year will be submitted, as usual, in connection with the Q3 quarterly report.

the parent company

the parent company has its registered office in stockholm. its activities include Group services and Group management functions. the parent company’s profit after financial items was MseK 107 (86).

Remuneration of senior executivesFor information regarding remuneration of individuals in senior management positions, please refer to note 8.

option schemesDuring the year a new options scheme has been established encompassing 64,000 warrants intended for the Group management, of which 49,000 had been acquired by employees as of the balance sheet date. if these warrants are fully realised then the new shares will amount to 0.83 percent of total share capital. During 2007 7,600 shares have been subscribed for from previous schemes. previously 75,000 employee stock options have been issued. if this programme is fully utilised the new shares will be the equivalent of 0.97 percent of total share capital. For more information, please refer to pages 30-31.

Proposed distribution of the company’s profit

the Board of Directors propose that the profit available, seK 280,844,213 be distributed as follows:

Dividend, 7,734,772 * seK 5.50 42,541,246retained earnings carried forward 238,302,967total 280,844,213

For information on the company’s results and financial status in general please refer to the following income statement and Balance sheet with associated disclosures.


ConsoLIDAteD FInAnCIAL stAteMents

the Group

Consolidated income statements

KseK, 1 January-31 December note 2007 2006net sales 3,4 1,571,181 1,448,138Cost of goods/services sold -833,768 -779,736Gross profit 737,413 668,402 selling expenses -421,685 -386,384administrative expenses -123,533 -135,604research and development expenses -37,545 -39,070other operating income 6 11,893 4,659other operating expenses 7 -6,003 -5,276operating profit 8,9,10 160,540 106,727 Financial income 4,103 2,426Financial expenses -9,955 -16,899net financial items 11 -5,852 -14,473 Profit before taxes 154,688 92,254 income tax expense 13 -46,452 -30,380net profit for the year 108,236 61,874 attributable to: the parent company’s shareholders 107,864 60,524Minority interest 372 1,350 108,236 61,874 earnings per share 14 before dilution (seK) 13.95 7.87 after dilution (seK) 13.92 7.85



Consolidated balance sheets

KseK, 31 December note 2007 2006Assets 4,15,16

non-current assetsintangible assets 17 35,350 5,570property, plant and equipment 18 138,359 208,494participations in associated companies and joint ventures 20 5,000 –non-current receivables 21 2,029 1,806Deferred tax assets 13 14,906 17,923total non-current assets 195,644 233,793 Current assetsinventories 23 153,585 136,403tax assets 9,775 8,275trade and other receivables 24 288,081 276,456prepaid expenses and accrued income 25 26,580 24,760other current assets 26 40,953 33,630Cash and cash equivalents 27 177,079 163,244total current assets 696,053 642,768total assets 891,697 876,561 equity and liabilitiesequity 28 share capital 38,674 38,637reserves 580 –retained earnings including profit/loss for the year 435,611 349,119total equity 474,865 387,756 Liabilities non-current liabilitiesLong-term interest-bearing liabilities 2, 30 84,023 100,449other non-current liabilities 860 1,328pension provisions 31 3,614 2,732other provisions 32 – 6,558Deferred tax liabilities 13 22,947 18,473total non-current liabilities 111,444 129,540 Current liabilitiesshort-term interest-bearing liabilities 2, 30 44,190 101,584trade and other payables 94,256 91,112tax liabilities 13,588 12,099other current liabilities 51,824 48,818accrued expenses and prepaid income 34 101,530 105,652total current liabilities 305,388 359,265total liabilities 416,832 488,805total equity and liabilities 891,697 876,561 For information about assets pledged as collateral and contingent liabilities, see note 35.



Consolidated statement of changes in equity

equity relating to the parent company’s shareholders Retained Minority total

KseK note 28 share capital Reserves earnings total interest equityopening balance Jan 1, 2006 38,444 -1,487 305,819 342,776 -447 342,329Cash flow hedge reserve – 1,487 – 1,487 – 1,487total changes posted directly to equity – 1,487 – 1,487 – 1,487profit for the year – – 60,524 60,524 1,350 61,874total changes in equity, excl. distributions to shareholders – 1,487 60,524 62,011 1,350 63,361Dividend – – -23,066 -23,066 – -23,066equity-settled share-based instruments (iFrs 2) – – 460 460 – 460new share issue through warrants 192 – 3,102 3,294 1,378 4,672Closing balance Dec 31, 2006 38,636 – 346,839 385,475 2,281 387,756 equity relating to the parent company’s shareholders

Retained Minority totalKseK note 28 share capital Reserves earnings total interest equityopening balance Jan 1, 2007 38,636 – 346,839 385,475 2,281 387,756Cash flow hedge reserve – 580 – 580 – 580translation difference – – 2,448 2,448 188 2,636total changes posted directly to equity – 580 2,448 3,028 188 3,216profit for the year – – 107,864 107,864 372 108,236total changes in equity, excl. distributions to shareholders – 580 110,312 110,892 560 111,452Dividend – – -27,072 -27,072 – -27,072equity-settled share-based instruments (iFrs 2) – – 460 460 – 460Warrant premiums paid – – 1,615 1,615 – 1,615new share issue through warrants 38 – 616 654 – 654Closing balance Dec 31, 2007 38,674 580 432,770 472,024 2,841 474,865

Consolidated cash flow statements

KseK 1 January-31 December note 36 2007 2006operating activities operating profit/loss 160,540 106,727Depreciation 39,515 44,379other items not affecting cash flow -7,948 15,072interest received 4,085 2,423interest paid -9,072 -12,002income tax paid -38,969 -19,132Cash flow from operating activities before changes in working capital 148,151 137,467 Cash flow from changes in working capital increase (-)/Decrease (+) in inventories -10,676 -3,419increase (-)/Decrease (+) in operating assets 3,545 -40,305increase (-)/Decrease (+) in operating liabilities -3,337 27,080net cash flow from operating activities 137,683 120,823 Investing activities investments in property, plant and machinery -32,526 -27,880sale of property 3,585 –investments in intangible assets -7,145 -4,361acquisitions of subsidiaries, net effect on liquidity -36,550 –Change in other financial assets 5,061 -343net cash flow from investing activities -67,575 -32,584 Financing activities new share issue, warrant premiums 2,268 4,672Borrowing 82,662 29,775repayment of debt -114,483 -8,654repayment of leasing debt – -6,807Dividend paid to parent company’s shareholders -27,072 -23,066net cash flow from financing activities -56,625 -4,080 net cash flow for the year 13,483 84,159Cash and cash equivalents at beginning of the year 163,244 81,131Foreign exchange differences 352 -2,046Cash and cash equivalents at end of the year 177,079 163,244


tHe PARent CoMPAny

the parent Company

Parent company’s income statements

KseK, 1 January–31 December note 2007 2006net sales 3,4 100,505 84,624Cost of services sold -96,528 -82,489Gross profit/loss 3,977 2,135 selling expenses -5,964 -1,226administrative expenses -13,035 -18,618research and development expenses -15,105 -14,148other operating income 6 6,059 2,631other operating expenses 7 -185 –operating loss 8,9 -24,253 -29,226 Financial income and expenses: income from participations in Group companies 128,733 111,571income from other securities and receivables that are non-current assets 3,457 4,615other interest income and financial income 394 685interest and other financial expenses -954 -1,167Profit before appropriations and taxes 11 107,377 86,478 appropriations 12 -9,848 -11,874Profit before taxes 97,529 74,604 income tax expense 13 -19,142 -13,054net profit for the year 78,387 61,550


Parent company’s balance sheets

KseK, December 31 note 2007 2006Assets non-current assets intangible assets 17 10,026 4,935property, plant and equipment 18 321 589Financial assets participations in Group companies 19 81,528 52,261 participations in associated companies and joint ventures 20 12,147 17,147 other non-current receivables 21 644 644Total financial assets 94,319 70,052total non-current assets 104,666 75,576 Current assets Current receivables receivables from Group companies 22 326,532 244,848 prepaid expenses and accrued income 25 8,244 9,090 other current assets 26 5,952 9,278Total current assets 340,728 263,216 Cash and cash equivalents 2,089 76,609total current assets 342,817 339,825total assets 447,483 415,401 equity and liabilities equity 28 Restricted equity share capital (913,024 shares class a and 6,821,748 shares class B) 38,674 38,636 statutory reserve 8,010 8,010Unrestricted equity retained earnings 202,457 176,479 net profit for the year 78,387 61,550total equity 327,528 284,675 untaxed reserves 29 39,752 29,904 Current liabilities trade and other payables 14,011 17,861 Liabilities to Group and associated companies, joint ventures 33 32,545 50,981 tax liabilities 5,531 5,925 other current liabilities 17,053 14,089 accrued expenses and prepaid income 34 11,063 11,966Total current liabilities 80,203 100,822total equity and liabilities 447,483 415,401 Assets pledged and contingent liabilities for the parent company KseK, as at 31 December note 2007 2006assets pledged 35 – 40,674Contingent liabilities 35 150,325 163,633

tHe PARent CoMPAny


statement of changes in the parent company’s equity

Restricted equity unrestricted equity share statutory Retained Profit/loss totalKseK note 28 capital reserve earnings for the year equity opening balance Jan 1, 2006 38,444 8,010 202,220 – 248,674Group contributions paid – – -6,237 – -6,237total changes posted directly to equity – – -6 237 – -6 237profit for the year – – – 61,550 61,550total changes in equity, excl. distributions to shareholders – – -6 237 61,550 55 313equity-settled share-based instruments (iFrs 2) – – 460 – 460new share issue through warrants 192 – 3,102 – 3,294Dividend – – -23,066 – -23,066Closing balance Dec 31, 2006 38,636 8,010 176,479 61,550 284,675 Restricted equity unrestricted equity share statutory Retained Profit/loss totalKseK capital reserve earnings for the year equity opening balance Jan 1, 2007 38,636 8,010 238,029 – 284,675Group contributions paid – – -11,191 – -11,191total changes posted directly to equity – – -11 191 – -11 191profit for the year – – – 78,387 78,387total changes in equity, excl. distributions to shareholders – – -11 191 78,387 67 196equity-settled share-based instruments (iFrs 2) – – 460 – 460new share issue through warrants 38 – 616 – 654Warrant premiums paid – – 1,615 – 1,615Dividend – – -27,072 – -27,072Closing balance Dec 31, 2007 38,674 8,010 202,457 78,387 327,528

Parent company’s cash flow statements

KseK, 1 January-31 December note 36 2007 2006operating activities operating loss -24,253 -29,226Depreciation 1,757 1,072other items not affecting cash flow 1,651 1,044interest received 3,983 5,356Dividends received and group contribution 112,228 122,239interest paid -551 -1,167income tax paid -15,013 -61Cash flows from operating activities before change in working capital 79,802 99,257 Cash flow from changes in working capital increase (-)/Decrease (+) in operating assets -58,819 -6,552increase (+)/Decrease (-) in operating liabilities -29,139 -14,723net cash flow from operating activities -8,156 77,982 Investing activities investments in property, plant and equipment – -331investments in intangible assets -6,580 -4,298investments in subsidiaries -29,767 -5,083investments in associated companies – -396sale of shares and participations 5,000 –net cash flow from investing activities -31,347 -10,108 Financing activities new share issue, warrant premiums 653 3,294Dividend paid -27,072 -23,066Group contributions paid -8,598 -8,662net cash flow from financing activities -35,017 -28,434 net cash flow for the year -74,520 39,440Cash and cash equivalents at beginning of the year 76,609 37,169Cash and cash equivalents at end of the year 2,089 76,609

tHe PARent CoMPAny


notes

notes

note 1 significant accounting principles

Compliance with standards and lawsthe consolidated financial statements have been produced in accordance with the international Financial reporting standards (iFrs) issued by the international accounting standards Board (iasB) and interpretations announced by the international Financial reporting interpretations Committee (iFriC), as approved by the eu. Furthermore the swedish Financial accounting standards Council’s recommendation rr 30:06, supplementary accounting rules for groups, have been applied. the Group accounting policy stated below has been consistently applied to all periods presented in Group financial reports unless otherwise stated.

the parent company applies the same accounting principles as the Group expect in the cases specified below in the section entitled “the parent com-pany’s accounting principles”. the annual accounts and consolidated finan-cial statements were approved for publication by the Board on 21 February 2008. the consolidated income statement and balance sheet, and the parent company’s income statement and balance sheet will be presented for adop-tion at the annual meeting of shareholders on 2 april 2008.

Conditions for drawing up the parent company’s and the Group’s financial statementsthe parent company’s functional currency is swedish kronor. this means that the financial statements are presented in the reporting currency (swedish kronor) rounded to the nearest thousand. assets and liabilities are reported at historical cost, except certain financial assets and liabilities, which are reported at their fair value.

producing the financial statements in accordance with iFrs requires com-pany management to perform evaluations and estimates, and to make assumptions that affect the application of the accounting principles and reported amounts for assets, liabilities, income and expenses. the estimates and assumptions are based on historical experience and a number of other factors that are considered reasonable in the prevailing circumstances. the actual result may deviate from these estimates and evaluations.

the estimates and assumptions are reviewed regularly. Changes from esti-mates are reported in the period when the change is made and, where appli-cable, in future periods.

Critical estimates and evaluations by company management in the applica-tion of iFrs are described in greater detail in note 40. the accounting princi-ples described below for the Group have been applied consistently to all peri-ods presented in the Group’s financial statements, unless specified other-wise below. the Group’s accounting principles have been applied consistently when consolidating the parent company, subsidiaries, associated companies and joint ventures.

Changes to accounting policythe new standards and interpretations described below have been applied to the establishment of 2007 financial reports. From 2007 the current method has been used for recalculation of foreign subsidiaries’ financial reports (please refer to overseas operations - financial reports). Consequently translation differences are reported via equity instead of via the income statement. Comparison years have not been recalculated as effects are immaterial.

iFrs 7 Financial instrument: information and contextual changes in ias 1 Design of financial reports requires extensive information on the impor-tance of the role of financial instruments in the company’s financial posi-tion and profit/loss plus qualitative and quantitative information concerning the character and scope of risks. this standard has not caused any change of accounting policy, only changes to information requirements concerning financial instruments.

iFriC 7 application of restatement approach according to ias 29 concerning accounting in hyperinflationary economies, iFriC 8 application

area for iFrs 2 concerning accounting of share-based payment, iFriC 9 reassessment of embedded derivatives plus iFriC 10 interim financial report-ing and impairment have been introduced without exerting any effect on the Group financial reports.

segment reportinga segment is a part of the Group that is identifiable in accounting terms and that either supplies goods or services (lines of business), or products or services within a specific economic environment (geographical area), which are exposed to risks and opportunities that are different from other segments. in accordance with ias 14, segment information is only reported for the Group.

HL Display is a distinct niche company with production and sales of a homogenous product range. the products have varying functions, but are designed for the same areas of application (in-store communication and mer-chandising). the company’s opportunities and risks are on a global market, where the crucial factor for success is to be a supplier to the leading multi-national and national retail chains and brand manufacturers (the company’s key accounts). HL Display achieves this by means of global key account man-agement, by being a leader in cost-efficient production, logistics and sales, by being innovative in product development and design, and by offering a broad range of products. HL Display is therefore active solely within one line of busi-ness, which is why the primary segment for reporting is the same as report-ing for the company as a whole. the geographical regions are reported as secondary segments, see note 4. these divisions correspond with the com-pany’s internal reporting.

Classificationnon-current assets and non-current liabilities essentially consist of amounts that are expected to be recovered or paid after more than twelve months from the balance sheet date. Current assets and current liabilities essentially consist of amounts that are expected to be recovered or paid within twelve months from the balance sheet date.

Consolidation principlesSubsidiariessubsidiaries are companies that are subject to a deciding influence from HL Display aB. a deciding influence means directly or indirectly a right to define a company’s financial and operational strategies with the aim of achieving financial benefits. When assessing whether there is a deciding influence, consideration is given to shares that potentially provide entitlement to vote and that can be used or converted without delay.

subsidiaries are consolidated using the purchase method. this method means that the acquisition of a subsidiary is treated as a transaction in which the Group indirectly acquires the subsidiary’s assets and takes on its liabilities. the Group acquisition cost is defined by means of an acquisition analysis in connection with the business acquisition. the analysis defines the acquisition cost and the fair value of acquired, identifiable assets and debts and contingent liabilities taken on. a positive difference constitutes Group goodwill. a negative difference is reported directly in net income.

subsidiaries’ are consolidated from the date when deciding influence starts until the date it ceases.

Associated companies and joint venturesassociated companies are companies that are not subsidiaries, but where HL Display aB holds, either directly or indirectly, more than 20 percent of the votes or by some other means has a significant influence on operational and financial control. participations in associated companies are reported in the consolidated financial statements according to the equity method. Joint ventures where HL Display controls more than 50 percent of the number of votes and holds a deciding influence are consolidated as subsidiaries. Joint ventures where HL Display through partnership agreements with one or more


notes

parties, holds a joint, deciding influence over operational and financial control, are consolidated using the proportionate method. the proportionate method means that HL Display’s share of the joint venture companies’ income, expenses, assets and liabilities, is reported on an item by item basis.

Transactions that are eliminated during consolidationinternal Group receivables, payables, income and expenses, and unrealised profits/losses arising from transactions between Group companies are elimi-nated in full when the consolidated financial statements are prepared.

unrealised profits resulting from transactions with associated companies and jointly controlled companies are eliminated to the extent that they cor-respond to the Group’s shareholding in the company. unrealised losses are eliminated in the same way as unrealised profits, but only to the extent that there is no indication of any impairment losses.

Foreign currencyTransactions in foreign currencytransactions in foreign currencies are converted to the functional currency at the exchange rate prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are converted to the functional currency at the exchange rate prevailing at the year-end. exchange rate differences that arise from these conversions are reported in the income statement. non-monetary assets and liabilities that are reported at the historical cost are converted at the exchange rate on the transaction date.

Translation of foreign currency financial statementsassets and liabilities in foreign operations, including goodwill and other Group surplus and deficit values, are recalculated from the functional currency of the foreign operations to the Group reporting currency, seK (swedish kronor), at the exchange rate prevailing on reporting date. revenues and expenses in foreign operations are recalculated to seK at an average exchange rate that forms an approximation of the currency exchange rates occurring at each transaction point in time. translation differences that occur when recal-culating currency for foreign operations are reported directly to equity as a translation reserve.

since 1 January 2007, i.e. the point in time of transfer to calculations according to current method, translation differences have been reported in the translation reserve in equity.

Revenuethe Group’s net turnover consists almost exclusively of sale of products. revenues from sale of products are reported in the income statement when extensive risks and benefits that are connected to the ownership of the prod-ucts have been transferred to the purchaser. revenues from sale of services are reported in the income statement based on the degree of completion of the assignment on the reporting date. the degree of completion is estab-lished by calculating the relationship between value delivered and total value of order. revenues are not reported if it is probable that financial advantage will not accrue to the Group. sales are reported net after Vat and discounts.

operating expenses and financial income and expensesOperational leasesCosts in respect of operational leases are reported in the income statement on a linear basis over the leasing term. Benefits received in connection with the signing of an agreement are reported in the income statement on a linear basis over the leasing term.

Financial leasesthe minimum charges are divided between interest expense and repayment of debt. the interest expense is reported over the leasing period so that each accounting period is charged with an amount corresponding to a fixed interest rate for the debt reported during each period. Variable charges are reported as expenses in the periods in which they occur.

Financial income and expensesFinancial income and expenses consist of interest income from bank funds, receivables and interest-bearing securities, interest expenses of loans, dividend income, exchange rate differences, unrealised and realised profits from financial investments and derivatives. interest income from receivables and interest expenses from debts are calculated using the effective inter-est method. the effective interest is the interest that means that the current

value of all future payments received and made during the fixed-rate interest term are equal to the reported value of the receivables or debt. Dividend income is reported when the right to receive payment is confirmed.

the Group do not capitalise interest on the purchase value of assets as would be possible in some cases according to ias 23.

Income tax expensesincome tax expenses comprise both current and deferred tax expenses. income tax expenses are reported in the income statement, except when an underlying transaction is reported directly to equity, in which case the tax effect is also taken to equity.

Current tax is tax that must be paid or received in respect of the current year, applying the tax rates that have been adopted or effectively adopted as at the year-end, including adjustment of current tax relating to previous periods.

Deferred tax is calculated on the basis of temporary differences between reported and tax values of assets and liabilities. temporary differences are not taken into account for difference that has occurred on neither first report-ing of goodwill nor first reporting of assets and liabilities other than acquisi-tions where the transaction do not effect either the reported, or the taxable profit/loss, nor is consideration given to temporary differences relating to participations in subsidiaries and associated companies. the valuation of deferred tax is based on how reported values of assets or liabilities are expected to be realised or regulated. Deferred tax is calculated by applying the tax rates and tax rules that have been adopted or effectively adopted as at the year-end.

Deferred tax assets relating to deductible temporary differences and tax loss carryforwards are only reported to the extent it is probable that it will be possible to utilise these. the value of deferred tax assets is reduced when it is no longer considered probable that they can be utilised.

any additional income tax that arises from a dividend is reported at the same time as the dividend is reported as a liability.

Financial instrumentsFinancial instruments reported in the balance sheet include on the assets side cash and cash equivalents, loans receivables, trade receivables and derivatives. Liabilities include trade payables, loan debts and derivatives.

Reporting in and removal from the balance sheeta financial asset or financial liability is reported to the balance sheet when the company becomes a party in accordance with the contractual terms of the instrument. trade receivables are included in the balance sheet when an invoice has been issued. Liabilities are included when the counterparty has delivered and there is a contractual obligation to pay, even if an invoice has not yet been received. trade payables are included when an invoice has been received.

a financial asset is removed from the balance sheet when the rights in the agreement have been realised, fall due, or the company loses control over them. the same applies for part of a financial asset. a financial liability is removed from the balance sheet when the obligation in the agreement is honoured or redeemed in any other way. the same applies for part of a financial liability.

a financial asset and a financial liability are offset and the net amount is reported in the balance sheet only if there is a legal right to offset this amount, plus that the intention is to regulate the items at the same time or with a net amount.

the acquisition or divestment of financial assets is reported on the date when the company undertakes to acquire or dispose of the asset.

Classification and valuationa financial instrument is classified at acquisition point depending on the intention of the acquisition. Classification determines how the financial instru-ment is valued after the first accounting occasion which is described below. Financial instruments that are not derivatives are initially reported using the acquisition value, the equivalent of the instrument’s fair value with addition for transaction costs for all financial instruments, except the category that is reported at its fair value via the income statement. these are reported exclu-sive of transaction costs. the derivative instrument is initially reported at real value meaning that transaction costs are included in the period’s profit/loss.

Cash and cash equivalents consist of cash and immediately available credit balances in banks and corresponding institutes, as well as short


notes

maturity investments with a duration from the acquisition date of less than three months that are only exposed to an insignificant risk of value fluctuations.

Financial assets and debts valued at their fair value via the income statementthis category is divided into two sub-groups: financial assets/liabilities main-tained for trading and other financial assets/liabilities that the company has initially chosen to place in this category according to the Fair Value option. HL Display had no assets in this category in 2007 and 2006.

Loans receivables and trade receivablesLoans receivables and trade receivables are financial assets that do not constitute derivatives with fixed payments or with payments that can be defined, and that are not quoted on an active market. assets in this category are valued at the accrued acquisition cost. the accrued acquisition cost is determined on the basis of the effective interest rate that was calculated on the acquisition date. trade receivables are reported at the amount that is expected to be received after deductions for impairment losses.

Investments held until maturityinvestments held until maturity are financial assets that includes securities with payments that are fixed, or that can be defined in advance, with a fixed term, and that the company has an explicit intention and ability to hold until maturity. assets in this category are valued at the accrued acquisition cost. HL Display had no assets in this category in 2007 and 2006.

Financial assets that can be soldassets in this category are continuously valued at fair value with value changes reported in equity. HL Display had no assets in this category in 2007 and 2006.

Other financial liabilitiesLoans and other financial liabilities, for example trade payables belong to this category. other financial liabilities are valued at the accrued acquisition cost.

Derivatives and hedge accountingHL Display’s derivative instrument has been acquired in order to hedge the risks the Group is exposed to due to currency exchange rate fluctuations. Derivative instruments can consist of items such as forward contracts, options and swaps. Derivatives also include so called embedded derivatives, contractual terms that are embedded into other agreements. HL Display had no embedded derivatives in 2007 and 2006. Derivatives are initially reported at fair value, consequently transaction costs are debited to the period’s income. then the derivative instruments are valued at fair value and value changes reported in the manner described below.

profit and losses in respect of hedges are reported in the income state-ment on the same date as profit and losses are reported for the items hedged. to satisfy the requirements for hedge accounting in accordance with ias 39, there must be an unambiguous link to the hedged item. it is also a requirement that the hedge provides effective protection for the hedged item, that hedging documentation has been drawn up and that the effectiveness can be measured. in the event that the conditions for hedge accounting are no longer satisfied, the derivative instrument is reported at its fair value with the value change in the income statement.

Hedging of net monetary assets investments in foreign subsidiaries (net assets including goodwill) have, to a certain degree, been hedged via the raising of of loans in foreign cur-rency. Hedge accounting is not applied as financial hedging is reflected in the accounting as both the underlying receivable or debt and the hedge instru-ment are reported at closing date currency exchange rate.

Transaction exposure – cash flow hedgingthe currency forward rates used to hedge future cash flows and forecast sales in foreign currencies are reported in the Balance sheet at fair value. Value changes are taken directly to equity in a hedge reserve until the hedged flow is reported in the income statement, at which point the cumulative value changes of the future hits the income statement, were they meet and match the income statement effects of the hedged transaction.

Property, plant and equipmentAssets ownedproperty, plant and equipment are reported as an asset in the balance sheet if it is probable that future financial benefits will accrue to the company and the acquisition cost of the asset can be calculated in a reliable way.

HL Display valuates property, plant and equipment according to the pur-chase method. property, plant and equipment are reported in the Group at the acquisition cost after deductions for cumulative depreciation and possible impairment losses. the acquisition cost includes the purchase price and costs directly attributable to put the asset in place and in a fit state to be used.

the acquisition cost of fixed assets manufactured in-house includes expenses for material, for remuneration of employees plus other manufacturing overheads that may be considered to be attributable to this particular asset.

the reported value of property, plant and equipment is removed from the balance sheet when it is disposed or sold off, or when no future financial bene-fits are expected from use or disposal/sale of the asset. any profit/loss arising from the disposal or retirement of an asset comprises the difference between the sale price and the asset’s reported value with a deduction for direct sales costs. such profit/loss is reported as other operating income/expense.

Leased assetsias 17 is applied for leased assets. Leasing is classified in the consolidated financial statements as either financial or operational leasing. Financial leas-ing means that the financial risks and benefits associated with ownership are essentially transferred to the lessee; if not, it is a case of operational leasing.

assets that are hired under financial lease agreements have been reported as assets in the consolidated balance sheet. the obligation to pay future leasing charges has been reported as non-current and current liabilities. the leased assets are depreciated according to plan, while lease payments are reported as interest and repayment of debts. operational leasing means that the leasing charge is reported as an expense on a linear basis over the term of the agreement, based on utilisation.

Additional expensesadditional expenses are added to the acquisition cost if it is probable that future financial benefits associated with the asset will accrue to the company and the acquisition cost can be calculated reliably. other additional expenses are reported as a cost in the period when they are incurred.

if the expense relates to the replacement of identified components, or parts thereof, or if a new component has been added, the expense is added to the acquisition cost. any non-depreciated, reported values of replaced components are retired and reported as expenses. repair expenditures are expensed as they occur.

Deprecation principlesDepreciation takes place over the asset’s estimated useful life. there is no depreciation of land. Leased assets are also written off over their estimated lifetime, or if shorter, over the agreed leasing period. the Group applies com-ponent depreciation. For property, plant and equipment that consist of parts with different utilisation periods, are the estimated useful lives the basis for depreciation.

estimated useful lives:– internal and external surface of business properties 27- 40 years– fixed installations, business properties 12- 50 years– plant and machinery 5- 12 years– equipment, tools, fixtures and fittings 3- 7 years– rebuilding of other party’s property 20 years

there is an annual review of depreciation methods and of each asset’s residual value and useful life.

Intangible assetsGoodwillGoodwill represents the difference between the acquisition cost for the business acquisition and the fair value of acquired identifiable assets, assumed debts and contingent liabilities.


notes

Other intangible assets Computer systems and market based assets acquired by the Group are reported at acquisition value minus accumulated amortizations (please see below) and impairments (please refer to the section entitled impairment). acquisition value of computer systems constructed or adapted in-house include licenses, costs for remuneration to employees plus consultancy costs that can be considered to be directly connected to the computer system. acquisition value of acquired, market based assets concerns customer agreements and value of customer relationships.

Amortization principlesamortization is reported in the income statement on a linear basis over the estimated useful life of assets, unless such useful life is undefined. Goodwill and intangible assets with an undefined useful life are reviewed to ascertain any need for impairment on an annual basis or as soon as there is an indi-cation that the asset in question has been impaired. other intangible assets are amortized from the date on which they become available for use.

the useful life is:– computer systems 4 years– acquired market assets 5 years

Research and developmentexpenditures for development, where the results are used to achieve new or improved products or processes, are capitalised and recognized as an asset in the balance sheet if the product or process is technically and commercially viable and the company has sufficient resources to complete the develop-ment and then use or sell the intangible asset. the reported value includes all directly attributable expenses such as costs of materials and services, salaries and wages and other indirect costs that can be attributed to the asset in a reasonable, consistent way. other development expenditures are reported in the income statement as research and development expenses as they are incurred. in HL Display’s balance sheet capitalised develop-ment expenses are reported at acquisition cost minus cumulative deprecia-tion and any impairment losses as tangible non-current assets. the reason is that once a decision has been made on commercial production, product development work essentially consists of designing the production equipment required to manufacture the product.

Inventoriesinventories are valued at the lower of the acquisition cost and the net realisable value. the acquisition cost is calculated as weighted average prices using the first in, first out principle (FiFo) and includes costs incurred in the acquisition and transport to the current location and status. For products manufactured in-house and work in progress the acquisition cost is including a reasonable proportion of indirect manufacturing costs based on normal capacity.

the net realisable value is the estimated sale price in current operations, with a deduction for estimated costs of production and to achieve a sale.

Impairments, recoverable amounts and reversalsthe carrying amounts of the assets are tested at each balance sheet date to assess whether there is any indication of impairment losses.

if there is such an indication, the asset’s recoverable amount is calcu-lated as the higher of fair value less costs to sell and value in use. the value in use is calculated by discounting estimated future cash flows at a discount factor taking the risk-free interest and the risk relating to the specific asset into account.

an asset that is dependent on other assets is attributed to the smallest cashgenerating unit for which independent cash flows can be identified. there is an impairment loss that affects the income statement if the recoverable amount is less than the carrying amount.

if there is a change in the calculations used to determine the recoverable amount, the impairment loss is reversed. However, impairment losses of goodwill are never reversed.

an impairment loss is only reversed if the asset’s reported value after recovery does not exceed the assets value before impairment less any depreciation that would have been performed.

Impairment test of financial assetson each reporting occasion, the company evaluates if there are objective evi-dence that a financial asset needs to be written down in accordance with ias 39.

the recoverable amount of assets belonging to the categories investments to be held until maturity and loans receivables and trade receivables which are reported to accrued acquisition value are calculated as current value of future cash flow discounted by the effective annual interest rate that applied when the asset was first reported. assets with a brief duration are not discounted. impairment is reported in the income statement.

impairments of investments that are held until maturity or loan and trade receivables that are carried at accrued cost are reversed if a subsequent increase in recoverable amount can be objectively assigned to an event that has occurred after the impairment was performed.

share capitalDividend is reported as a liability in the parent company once the annual general meeting of shareholders has approved the proposed dividend.

earnings per shareCalculation of the earnings per share is based on this year’s profit in the Group that is attributable to the parent company’s shareholders and to the weighted average number of shares outstanding during the year. When cal-culating the earnings per share after dilution, the profit/loss and the average number of shares are adjusted in order to take into consideration the effects of diluted, potential ordinary shares which have arisen from employee stock option programmes.

employee benefitsDefined contribution pension plansthe following is classified as a defined contribution pension plan: where the size of the employee’s pension is dependent on the fee the company pays to the plan and the capital yield that these fees generate. the employee bears the actuarial risk (i.e. that pension payments will be lower than expected) and the investment risk (i.e. that the invested assets will not be sufficient to provide the expected pension payments). the company’s commitments concerning fees into defined contribution plans are reported as costs in the income statement as they are earned by employees through length of employment period.

Defined benefit pension plansHL Display has defined benefit pension plans for employees in norway, austria, switzerland and France. the Group’s net obligation with regard to these plans is calculated separately for each plan by means of an estimate of the future benefits that employees have earned through their employment during both the current period and previous periods; these benefits are dis-counted to a net present value, and the fair value of any managed assets is deducted. the discount rate is the market rate for government bonds with a corresponding term. the calculation is performed by a qualified actuary using the projected unit Credit Method.

the Corridor rule will be applied. Consequently, any part of actuarial profits and losses in excess of 10 percent of the largest commitment’s current value and the plan assets’ fair value is reported over the income statement over the average remaining service period of those covered by the plan.

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

When the benefits in a plan are improved, the proportion of increased ben-efits relating to the employees’ employment during earlier periods is reported as an expense to the income statement on a linear basis, allocated over the average period until the benefits have been earned in full. if the benefits have been earned in full, an expense is reported directly in the income statement.

Severance payCosts for severance pay are reported only if the company is demonstratively obliged, without realistic opportunities to withdraw, by a formal detailed plan to terminate employment before the normal point in time.

Short-term benefitsshort-term benefits to employees are calculated without discounting and reported as a cost when the related services are received.

provisions are reported for anticipated costs for profit sharing and bonus pay-ments when the Group has entered into a valid legal or informal under taking to make such payments as a result of services provided by employees, and it is possible to calculate the extent of the financial undertaking in a reliable fashion.


notes

Share-based benefitsan employee stock options programme enables employees to acquire shares in the company. the fair value of the allocated options is reported as costs for personnel with an equivalent increase of equity. the fair value is calculated at the point in time when the allocation is made and spread over the vesting period. the fair value of the allocated options is calculated using the Black & scholes formula and the conditions and prerequisites that applied at the point of allocation are taken into consideration. the expense that is reported is the equivalent of the fair value of an estimate of the number of options that are expected to be subscribed. this expense is adjusted in the following periods in order to reflect the actual amount of options earned. However adjustment is not made when a decrease is only caused by the fact that the share price does not achieve the required level for the options to be cashed in.

social costs relating to the employee stock options are written off over the accounting periods during which the services are provided. provisions for social insurance charges are based on the fair value of the options at the reporting date. the fair value is calculated using the same formula as that used when the options were issued.

Provisionsa provision is reported in the balance sheet when the Group has a legal or informal obligation as a consequence of a past event, and it is probable that an outflow of financial resources will be required to regulate the obligation, and a reliable estimate of the amount can be made.

Restructuringa provision for restructuring is reported when the Group has established and approved a formal restructuring plan, and the restructuring has either commenced or been publicly announced. no provision is made for future operating costs.

Loss-making contracta provision for a loss-making contract is reported when the benefits that the Group expects to receive from a contract are lower than the unavoidable costs of fulfilling the obligations under the contract.

non-current assets held for sale and discontinued operationsthe reason why a non-current asset (or a divestment group) is classified as a holding for sale is that its reported value will be recovered primarily through the sale and not through utilisation.

a discontinued operation is a part of a company’s business that repre-sents an independent line of business or a significant business within a geographical region, or is a subsidiary that has been acquired for the sole purpose of being resold.

Contingent liabilitiesa contingent liability is reported when there is a possible commitment origi-nating from a past event but the outflow of resources is contingent on one or more uncertain future events or, when there is a commitment that is not reported as a liability or provision because it is not probable that an outflow or resources will occur.

events after the balance sheet dateinformation shall be provided concerning significant events that have occurred after the balance sheet date, but prior to the point in time when the financial statements are signed, and that are not of the nature that they will affect the balance sheets and income statements. if significant events have occurred, information will be provided in the Directors’ report or in a separate note.

the parent company’s accounting principlesthe parent company has produced its annual accounts in accordance with the swedish annual accounts act (1995:1554) and the Financial accounting standards Council’s recommendation rr 32:06 accounting for Legal entities. in addition statements issued by the swedish Financial accounting standards Council’s emerging issues task Force have been applied. under rr 32:06 the parent company must apply all of the eu-approved iFrs and statements as far as is possible within the framework of the swedish annual accounts act and with due regard to the relationship between accounting and taxation in the annual accounts for the legal entity. this recommendation specifies which exceptions and additions must be applied with regard to iFrs.

the accounting principles described below for the parent company have

been applied consistently for all periods presented in the parent company’s financial statements.

Financial guaranteesthe parent company’s financial guarantee agreement consists of sureties for the benefit of subsidiaries and joint ventures. Financial guarantees mean that a company undertakes to reimburse the owner of a debt instrument for losses this owner may have incurred due to the fact that a stated debtor has not fulfilled payment when due according to contractual agreement. For the reporting of financial guarantee agreements the parent company applies one of the exceptions to regulations permitted by swedish Financial accounting standards Council as compared to regulations in ias 39. this exception concerns the financial guarantee agreement established for the benefit of subsidiaries, joint ventures and associated companies. the parent company reports financial guarantee agreements as provisions for warrantees in the Balance sheet when the company has an undertaking for which payment will probably be required in order to regulate this undertaking.

Group contributions and shareholders’ contributionsHL Display is reporting group contributions and shareholder’s contributions in accordance with the statement issued by the swedish Financial accounting standards Council’s emerging issues task Force (ura 7). shareholders’ con-tributions are reported directly to equity at the recipient and are capitalised as shares and participations by the donor, if no impairment loss prevails.

Group contributions are reported according to their financial nature. this means that Group contributions issued for the purpose of reducing the Group’s total tax expense are reported directly to retained profits, with a deduc-tion for the current tax effect. Group contributions that are in substance a divi-dend are reported as a dividend. in this case Group contributions received, and their current tax effect, are reported in the income statement and that Group contribution issued, and its current tax effect, affects retained profits. a Group contribution that is in substance a shareholder contribution is reported, with due consideration of the current tax effect for the recipient, directly to retained profits. the donor reports the Group contribution and its current tax effect as an investment in interests in Group companies, if no impairment loss prevails.

Leased assetsin the parent company, all leasing agreements are reported according to regulations for operational leasing.

Income tax expensesin the parent company, untaxed reserves plus deferred tax debt are reported. in Group accounts, however, untaxed reserves are divided between deferred tax debts and equity.

note 2 Financial Risks and Financial Policies

the Group is exposed to various types of financial risks in its business. Financial risks mean fluctuations in the company’s profits and cash flows as a result of changes in exchange rates or interest rate levels as well as re financing risks and credit risks. HL Display’s financing and financial risks are managed under the control and auspices of the Board. Financing activi-ties are centralised within the subsidiary HL Financial services aB, which acts as an internal bank, with responsibility for financing and managing financial risks. HL Financial services aB’s ultimate objective is to provide cost-efficient financing and to minimise negative effects on the Group’s results caused by market fluctuations.

Liquidity risksa liquidity risk means a risk that financing cannot be obtained at all, or only at a significantly increased cost. it is HL Display’s policy to only invest its liq-uid funds in banks or bank-related institutions. the instruments in which the funds are invested must, if they are not simple cash deposits, be fully liquid so that there is no risk in terms of time or value.

a group wide cash pool for seK, euro and GBp, gives HL Financial services good control over the Group’s liquidity. the credit rating institute Dun & Bradstreet has rated the parent company’s creditworthiness as aaa.


notes

Maturity analysis for financial liabilities the Group KseK 2007 2006Maturity: 0-3 months 97,979 96,2533-6 months 64 –6-12 months 44,040 102,1321-5 years 1,424 6,6025- years 79,630 89,486total 223,137 294,473

Interest rate riskinterest rate risk is the risk that the value of a financial instrument varies due to changes in market interest rates. an interest rate risk can consist of a change in fair value, a price risk, or changes in cash flow, a cash flow risk. one significant factor that affects the interest rate risk is the fixed-rate inter-est term. Long fixed-rate interest terms primarily affect the price risk, while shorter fixed-rate interest terms affect the cash flow risk. the interest rate risk in HL Display is low, as there is a high degree of self-financing. interest-bearing liabilities are almost exclusively subject to variable interest rates. HL Display’s policy is to not use interest rate derivatives. the equity/assets ratio was 53 percent at the year-end, and the interest-bearing net receivable was MseK 49 (-40). net interest expense amounted to MseK -6 (-10). the company’s interest-bearing liabilities at the year-end totalled MseK 128 (203), of which long-term liabilities totalled MseK 84 (100). the average effective interest rate on interest-bearing long-term liabilities was 6.1 percent and on short-term liabilities 4.7 percent.

Credit riskthe credit risk within HL Display arises almost exclusively on trade receiva-bles. HL Display experiences a very low level of bad debt losses the com-pany’s customers are large, well-established companies that are financially sound and distributed over several geographical markets. the biggest single customer accounts for five percent of turnover. Most orders are low in value. HL Display controls the risk of bad debts through well defined routines for credit control, debt collection and invoicing of interest on overdue payments. refer to note 24 trade receivables.

isDa’s (international swaps and Derivatives association) Master agreement is used to settle counterparty risk regarding transactions in derivatives.

Currency risksTransaction exposureHL Display’s transaction exposure relates to purchases and sales in foreign currencies. the policy is to invoice every subsidiary in their local currency. in the event that a country’s currency is not convertible, the subsidiary is invoiced in seK. external distributors are always invoiced in seK. the swedish krona was strengthened during 2007. the most important inflow currencies are the eur, the GBp, the ruB and the noK. purchases that affect exposure consist mainly of operating expenses in the foreign sales companies.

the Group’s transaction exposure is divided among the following currencies:

the Group’s net flow in local currency AmountCurrency 2007 2006Meur 24 25MGBp 4 4 MruB 315 254 MnoK 46 37

HL Display’s financial policy states that the Group should hedge future net flows in foreign currencies that are of significant importance to HL Display. Currently these are euro, British pounds and singapore dollars. each quarter, the Group carries out moving 12 month forecasts as a basis for estimating the size of the hedge. as stated in the financial policy, 50-75 percent of the net flow should be hedged 12 months on and 75-90 percent hedged 6 months on.

the Group Forward exchange exchange exchangecontracts MeuR rate MGBP rate MsGD rate2008 11.1 9.405 3.3 13.131 2.0 4.482

the exchange rate refers to the average contract exchange rate.

the forward contracts used to hedge forecast transactions are classified as cash flow hedges. Hedged cash flows are expected to be realised in the coming 12 months. the hedges were efficient during 2007.

Translation exposureMonetary net assets (equity in subsidiaries) in currencies other than the func-tional currency (seK) will fluctuate according to exchange rate fluctuations. this risk is known as translation exposure. exchange rate gains/losses that occur as a result of recalculation are reported to equity. Foreign monetary net assets in the Group are divided primarily among the following currencies:

the Group AmountCurrency 2007 2006Meur 10 6MGBp -1 -1MruB 112 69

During 2007 HL Display has hedged most of the net assets in subsidiaries through forward agreements (equity hedge). in accordance with a new policy, this type of hedge has been closed. to limit the Groups’ exposure, the loans, when refinancing, are raised in currencies representing the major net assets, which provides a natural hedge.

sensitivity analysisa general one percent change in the market interest rate would mean that the Group’s profit before taxes would change by approximately MseK 0.1. it has been calculated that a general o.1 change in the value of the seK against the euro would affect the Group’s profit before taxes by approximately MseK 2.4 for 2007. For an explanation of the Group’s sensitivity to other factors, see risk and sensitivity analysis on page 32.

Fair valuethe Groupon the balance sheet date there were financial instruments in the categories trade receivable, trade payable and other liabilities plus derivatives used for hedge accounting. in the item other current assets, Group derivatives used for hedge accounting valued at fair value amounting to KseK 580, are accounted for.

For other financial instruments there is no difference between reported and fair value.

Interest-bearing liabilities and financial lease liabilities as all interest-bearing liabilities and financial lease liabilities have variable interest rates, the carrying amount is considered to reflect the fair value.

Trade receivables and payablesFor trade receivables and payables with an outstanding term of less than one year, the carrying amount is considered to reflect the fair value. there are no trade receivables or payables with a term of more than one year.

Cash flow hedgesCurrency derivatives that are cash flow hedges are valued at fair value.

The parent companythe parent company has no financial instruments at all with a valuation that deviates from their fair value.

note 3 Distribution of income Income per each significant type of income the Group the parent companytseK 2007 2006 2007 2006net sales product sales 1,519,858 1,399,468 – –installations and other services 51,323 48,670 100,505 84,624total sales 1,571,181 1,448,138 100,505 84,624 of the parent company’s net sales, KseK 99 770 (84 129) relates to consultancy services sold to Group companies.


notes

note 4 segment Reporting HL Display applies ias 14 segment reporting. as a primary basis for seg-mentation HL Display uses one single, vertically integrated line of business, and as a secondary basis for segmentation it uses geographical markets. these bases for segmentation correspond with the company’s internal reporting. HL Display is a distinct niche company with production and sales of a homogenous product range. the products have varying functions, but are designed for the same areas of application (in-store communication and mer-chandising). the company’s opportunities and risks are on a global market, where the crucial factor for success is to be a supplier to the leading multina-tional and national retail chains and brand manufacturers (the company’s key accounts). HL Display achieves this by means of global key account manage-ment, by being a leader in cost-efficient production, logistics and sales, by being innovative in product development and design, and by offering a broad range of products.

Lines of business the lines of business constitute the Group’s primary segment. the Group consists of one single, vertically integrated line of business.

see pages 36-37 for income statements and balance sheets. Geographical markets Geographical regions constitute the Group’s secondary segment. the Group’s segments are divided into the following geographical regions: the nordic region, Western europe, eastern europe, asia/australia and north america. the business operations in the nordic region, Western europe, eastern europe and asia/australia are run primarily through the Group’s own subsidiaries. in north america the business is run as a joint venture. the information presented with regard to the segments’ income relates to the geographical regions, grouped according to where the customers are located. information relating to the segments’ assets and investments during the period in non-current assets is based on the geographical regions, grouped according to where the assets are located.

Geographical regions the Group Western europe eastern europe north America Asia/Australia nordic region totalKseK 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006external income 734,427 766,781 343,930 281,165 19,206 32,321 117,756 94,239 355,862 273,632 1,571,181 1,448,138assets 259,530 237,184 113,516 80,647 17,675 20,001 78,095 69,146 422,881 469,583 891,697 876,561investments 2,269 1,521 4,730 2,534 812 933 5,997 4,424 56,372 22,829 70,180 32,241 the parent company Western europe eastern europe north America Asia/Australia nordic region totaltseK 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006net sales 7,546 9,866 4,685 2,476 – – 1,378 1,074 86,896 71,208 100,505 84,624

note 5 Acquisition of operations

on 31 January 2007 all shares in the Finnish company Display team oy were acquired. on 1 June, HL Display acquired the operations of the Finnish company sooni oy which had previously acted as distributor for HL Display products in Finland.

through the acquisition of Display team, HL Display has obtained a stronger global offering to the brand manufacturer customer segment and both acquisi-tions have strengthened the company’s market position in Finland. operations in Finland are now run by HL Display suomi oy which consists of sooni oy’s operations and parts of Display team operations. remaining parts have been integrated into HL Display’s international operations.

During the months in 2007 that these acquisitions have been part of the Group, additional sales have amounted to MseK 66. if these acquisitions had occurred on 1 January, the equivalent figure would have been MseK 78. effects of acquisitionsthe acquisitions have had the following effect on the Group assets and liabilities according to preliminary acquisition analyses. Acquired companies’ Reported Fair Fairnet assets at value before value, value, point of acquisition acquisition adjustment Groupintangible fixed assets – 2,652 2,652property, plant and equipment 6,202 – 6,202inventories 4,229 – 4,229trade and other receivables 14,416 – 14,416Cash and cash equivalents 10 – 10interest-bearing liabilities -8,755 – -8,755trade and other payables -5,100 – -5,100Deferred tax liability -18 – -18net identifiable assets and liabilities 10,984 2,652 13,636Goodwill – 22,924 22,924Purchase consideration paid, cash 10,984 25,576 36,560Cash (acquired) -10net cash outflow 36,550

note 6 other operating income

the Group the parent companyKseK 2007 2006 2007 2006exchange rate gains on receivables/liabilities of an operative nature 839 812 – –royalty income 1,295 1,186 1,224 1,186rental income 1,304 1,408 1,304 1,408Capital gain on sale of non-current assets 7,593 – 3,511 –Government grants 20 37 20 37other 842 1,216 – –total 11,893 4,659 6,059 2,631

note 7 other operating expenses the Group the parent companyKseK 2007 2006 2007 2006exchange rate losses on receivables/liabilities of an operative nature -782 -2,737 – –impairments/disposals non-current assets -3,029 – -185 –Damages -251 – – –other -1 941 -2,539 – –total -6,003 -5,276 -185 –

note 8 employees, personnel expenses and remuneration to senior executives expenses for employee benefits Group KseK 2007 2006salaries and remuneration etc. 308,779 304,190pension costs defined benefit plans (see note 31) 1,405 868pension costs defined contribution plans 1) 14,142 14,464other social security contributions 96,490 73,998 420,816 393,5201) including premiums to alecta.


notes

Average number of which of whichof employees 2007 men 2006 menThe parent company sweden 43 72% 44 77%total for parent company 43 72% 44 77%

subsidiaries nordic region 412 70% 416 71% Western europe 241 55% 253 55% eastern europe 122 44% 114 48%asia/australia 140 62% 114 61%north america 10 74% 11 68%total in subsidiaries 925 61% 908 63%Group total 968 62% 952 63% 2007 2006 Proportion ProportionGender distribution in the executive management of women of womenThe parent company the Board 13% 13% senior management 13% 0% Group total the Board 12% 6% senior management 32% 25%

salaries, other remuneration and social security expenses 2007 2006 salaries and social salaries and socialKseK remuneration security exp remuneration security expThe parent company 29,995 16,775 30,194 14,423 (of which pension cost) 1) 4,742 5,245Subsidiaries 278,784 84,361 273,996 77,872(of which pension cost) 10,805 10,087 Group total 308,779 101,136 304,190 92,295 (of which pension cost) 2) 15,547 15,332

1) of the parent company’s pension costs KseK 1,522 (1,599) relates to senior executives. the company’s outstanding pension commitments to these people amount to KseK 0 (128). 2) of the Group’s pension costs, KseK 2,802 (2,597) relates to senior executives. the company’s outstanding pension commitments to these people amount to KseK 0 (0).

salaries and other remuneration per country and senior executives etc and other employees 2007 2006 senior senior executives other executives otherKseK etc 1) employees etc 1) employeesThe parent company sweden 11,273 18,722 10,157 20,037(of which bonus, etc) 1,939 – 2,087 –Parent company total 11,273 18,722 10,157 20,037 (of which bonus, etc) 1,939 – 2,087 –

social security expenses 6,305 10,470 4,852 9,571 Subsidiaries nordic region 6,487 140,140 5,746 172,839(of which bonus, etc) 697 4,413 580 4,249Western europe 8,255 81,137 6,933 52,738 (of which bonus, etc) 1,292 5,085 287 2,932 eastern europe 5,245 17,748 4,791 16,131 (of which bonus, etc) 604 2,100 668 1,969 Asia/Australia 1,647 14,655 970 10,332 (of which bonus, etc) 350 2 829 – 678north America 416 3,054 334 3,182(of which bonus, etc) 37 214 30 223subsidiaries, total 22,050 256,734 18,774 255,222(of which bonus, etc) 2,980 14,641 1,565 10,051Group total 33,323 275,456 28,931 275,259 (of which bonus, etc) 4,919 14,641 3,652 10,051

1) senior executives comprise the Board (6 people excl Ceo), the Group manage-ment team (7 people) and chief executives in the Group companies (23 people).

total absence through illness as a percentage of normal working hours, the parent company 2007 2006Men 0.5% 1.7% Women 0.4% 2.1%

age -29 0.1% 0.7% age 30-39 0.7% 2.2%age 50- 0.1% 0.3% Long-term absentees 0.4% 0.6%total 0.9% 1.9% For information on items such as employee benefits after the end of employment, see note 31 post-employment benefits. share-based benefits HL Display (aB) has on four occasions (2001, 2002, 2003 and 2007), via its wholly owned subsidiary HL Financial services aB, issued debentures with separable options (warrants), which were sold to senior executives within the Group. the purpose of offering warrants is to promote long-term commitment to the company and to encourage senior executives to become future share-holders in the company. the term of the warrants is approximately three years, which the Board wishes to be acknowledged as an aim to gain warrant hold-ers’ long-term commitment to the company’s future. the options have been issued on commercial terms, defined in accordance with the Black & scholes model, and the purchase price was paid in cash. Fifty percent of the purchase price paid is subsidised over a three-year period. utilisation of subscription rights is not subject to continued employment. as allocations have been carried out according to market conditions and no benefit has been gained from these programmes on the balance sheet date, no accounting consequences accord-ing to iFrs 2 have arisen.

in 2006 the programmes from 2001 and 2002 fell due. in 2006, an employee stock options programme aimed at the Ceo was decided upon as part of his remuneration agreement when entering upon office.

in 2007 the programme from 2003 fell due whereupon additional 7,600 shares were subscribed.

in 2007 a new option programme (warrants) has been issued to senior executives, please refer to table below.

outstanding options as per 31 December 2007 have strike prices of seK 234 and seK 157 and an average contractual duration of 3.5 years.

year implemented 2007 2006 totalnumber of options 64,000 75,000 139,000of which acquired 49,000 75,000 124,000proportion of share capital if fully subscribed 0.83 0.97 1.80proportion of votes if fully subscribed 0.40 0.47 0.87subscription price 234 157subscription period 01/03/2010 31/03/2009 - 30/04/2010 - 31/03/2011


notes

Cont. note 8 employees, personnel expenses and remuneration to senior executives Remuneration to senior executives

Principlesthe Chairman of the Board and Board members are paid a fee in accordance with the decision of the annual meeting of shareholders. employees’ repre-sentatives and persons operative in the company do not receive a Board fee.

remuneration to the Ceo and other senior executives consists of a basic salary, variable benefits (bonus), other benefits, and pension. remuneration to the Ceo also includes an employee stock options scheme as well as a partly subsidised warrant scheme. the other senior executives are the five people who, together with the Ceo and the deputy Ceo, constitute Group management. For the composition of Group management, see page 64. the Board intends to submit proposed Guidelines for remuneration to senior executives to the 2008 aGM for decision.

Remuneration and other benefits during the year Basic salary/ Flexible other Pension Financial KseK Board fee benefits benefits expense instruments totalthe Chariman of the Board, anders remius 250 250Jan-ove Hallgren 150 150stig Karlsson 200 200Mats-olof Ljungkvist 200 200Åke Modig 150 150Lis remius 150 150the Ceo, Gérard Dubuy 2,236 963 109 99 460 3,867the deputy Ceo, Kent Hertzell 1,856 450 218 458 2,982other senior executives (5 people) 5,090 511 273 965 6,839total (13 people) 10,282 1,924 600 1,522 460 14,788

Comments on the table other benefits include company car, allowances and subsidy of warrants. the Ceo, the deputy Ceo and other senior executives have defined contribution pension plans. the Ceo has previously had a defined benefit pension plan. the pension expense relates to the expense that affected the profit/loss for the year. For further information about pensions, see note 31. the Chairman of the Board has not received any remuneration other than the Board fee. option schemes schemes from previous years schemes from this year employee stock options 2006/2011 Warrants 2007/2010 KseK Quantity Quantity Acquisition price the Ceo, Gérard Dubuy 75,000 20,000 33 the deputy Ceo, Kent Hertzell 20,000 33 other senior executives 9,000 33 total 75,000 49,000

Pensions the retirement age for all senior executives is 65. severance payment there is a mutual period of notice of 6 months in force between HL Display and the Ceo. if the company cancels the Ceo’s employment contract, sev-erance pay to the equivalent of 24 monthly salaries will be paid. there is a mutual period of notice of 3-18 months in force between the company and other senior executives in the Group.

Loans to senior executives there are no loans to senior executives.

Preparation and decision-making processremuneration to the Ceo and deputy Ceo for the financial year 2007 wasdecided by the Board after being prepared by the remuneration Committee.

remuneration to other senior executives has been decided by the Ceo in consultation with the remuneration Committee. the remuneration Committee has developed principles for decision on salary and other remuneration to senior executives in the Group. For information about the composition of the remuneration Committee, see page 63.


notes

note 9 Lease agreements properties that the Group rents through finance lease agreements are reported as Buildings and land. Cumulative acquisition values total KseK 8,002 and cumulative depreciation totals KseK 2,816. KseK 64 is reported as a short-term lease liability. Lease agreements in which the company is the lessee Lease of Machinery and equipment the Group the Group the parent company Finance operating operating leases leases leasesKseK 2007 2006 2007 2006 2007 2006Lease payments 1,612 5,402 22,647 24,533 6,554 8,135 Minimum lease payments Fall due for payment: Within one year – 1,612 16,365 17,059 6,554 8,135Between one year and five years – – 19,250 20,382 6,554 8,135Later than five years – – 478 – – –total – 1,612 36,093 37,441 13,108 16,270 Lease of Properties and premises the Group the Group the parent company Finance operating operating leases leases leasesKseK 2007 2006 2007 2006 2007 2006Lease payments 4,005 6,458 26,657 21,120 1,480 1,438 Minimum lease payments Fall due for payment: Within one year 66 6,674 24,161 19,318 1,499 1,499Between one year and five years – 24,517 46,641 25,704 3,089 3,089Later than five years – 45,671 53,496 321 – –total 66 76,862 124,298 45,343 4,588 4,588 Reconciliation of current finance leasing Group 2007 MachineryKseK and equipment Properties totalMinimum lease payments – 66 66Leasing liability – 64 64Finance charge – 2 2 the Group has, for a number of years, rented factory premises in sundsvall and Falkenberg from optimus KB – an associated company. the premises have previously been reported according to the regulations for financial leas-ing and consequently included in the consolidated balance sheet as assets with appurtenant lease liability. During the year new lease agreements for the premises have been signed whereby the rental agreements no longer are clas-sified as financial lease agreements but instead reported according to the regu-lations for operational leasing. the Falkenberg premises have been sold to an external party. By optimus debited rent for 2007 amount to KseK 5,011.

note 10 Cost of operations per type of cost Group KseK 2007 2006Cost of goods/services sold -833,768 -779,736non-production staff costs -294,673 -293,875Cost of premises -29,407 -33,289Communication costs -15,209 -16,109Depreciation -39,515 -44,379other operating expenses -209,962 -178,682total -1,422,534 -1,346,070

note 11 net Financial items

Group KseK 2007 2006interest income 1) 3,707 1,933 net translation difference 2) – – net exchange rate changes 77 –other financial income 319 493Financial income 4,103 2,426

interest expenses 1) -9,193 -11,125 net translation difference 2) -2,474net exchange rate changes – -2,313other financial expenses -762 -987Financial expenses -9,955 -16,899 net financial items -5,852 -14,473 1) interest income and interest expenses are largely attributable to cash in bank and borrowings.2) From 2007 the current method has been used for recalculation of foreign subsidiaries’ financial reports. Consequently translation differences are reported via equity instead of via the income statement. the parent company Profit/loss from participations in Group companiesKseK 2007 2006Dividends 129,673 122,811impairment losses -940 -11,240total 128,733 111,571 the parent company Profit/loss from other securities and receivables Interest income that are non-current assets and similar profit itemsKseK 2007 2006 2007 2006interest income, Group companies 3,244 4,406 –interest income, others 213 209 394 685total 3,457 4,615 394 685

the parent company Interest expenses and similar profit itemsKseK 2007 2006 interest expenses, Group companies -380 -631 interest expenses, others -171 -173net exchange rate changes -403 -363total -954 -1 167

note 12 Appropriations to untaxed reserves

the parent company KseK 2007 2006Machinery and equipment -890 -900tax allocation reserve, provision -17,413 -10,974tax allocation reserve, reversal 8,455 –total -9,848 -11,874


notes

note 13 taxes the Group the parent companyKseK 2007 2006 2007 2006Current tax expense Current income tax for the year -38,957 -28,288 -19,150 -12,217Current income-tax related to previous years -4 -12 8 –total -38,961 -28,300 -19,142 -12,217 Deferred tax cost (-)/tax income (+) Deferred tax relating to temporary differences -2,854 -3,292 – –Deferred tax income relating to tax loss carryforwards recognised during the year 687 3,792 – –Deferred tax expense relating to the use of tax loss carryforwards recognised in prior years -5,324 -2,580 – -837total -7,491 -2,080 – -837

total tax expense in the income statement -46,452 -30,380 -19,142 -13,054

tax expense/income taken directly to equity Current tax relating to expense/income taken directly to equity (Group contributions) 4,352 2,425 Deferred tax expense/income in the Group and in the parent company is reported in full in the income statement. Reconciliation between profit/loss before taxes and tax expense the Group the parent companyKseK 2007 2006 2007 2006profit/loss before taxes 154,688 92,254 97,529 74,604tax according to swedish tax rate, 28% -43,313 -25,831 -27,308 -20,889adjustment for other tax rates outside sweden 3,331 -379 – – adjustment of previous years’ current tax -4 -12 8 –tax effect of reassessment of tax loss carryforwards due to changed estimates, tax rates and exchange rates -3,321 -2,645 – – tax effect of deficits for which tax assets were not taken into account -2,241 -636 – – tax effect of non-taxable share dividends – – 8,653 11,167tax effect of impairment loss of shares in subsidiaries – – -263 -3,147tax effect of other non-taxable or non-deductible items -904 -877 -232 -185Current tax expense -46,452 -30,380 -19,142 -13,054 specification of deferred tax assets and liabilities the Group the parent companyKseK 2007 2006 2007 2006tax loss carryforwards 4,430 9,067 – –internal profit in inventories 7,900 6,702 – –other temporary deductible differences 3,410 6,215 – –Deferred tax assets 15,740 21,984 – – untaxed reserves relating to machinery and equipment -9,977 -9,848 – –untaxed reserves, tax allocation reserves -11,141 -8,562 – –other temporary taxable differences -2,663 -4,124 – –Deferred tax liabilities -23,781 -22,534 – –

net deferred tax assets in the balance sheet 14,906 17,923 – –net deferred tax liability in the balance sheet -22,947 -18,473 – – in the Group deferred tax assets totalling KseK 670 (4,866) have been reported, relating to tax loss carryforwards in companies that have reported losses in the last two financial years. these are companies where Group contributions and other tax-balancing measures can be used, as well as newly started companies where growth in revenue is prioritized ahead of profitability during a market development phase.

in the Group deferred tax assets were not recognised for tax loss carryforwards of KseK 24,027 (12,185). there are no time restrictions or legal obstacles to the potential utilisation of these tax loss carryforwards. no recognised tax loss carryforward have a limited asset-right (KseK 123 for 2006).

temporary differences between the Group and the parent company in the book value of subsidiaries and joint ventures total KseK 131,807 (89,923). these values can be realized without tax consequences. However, this is at present only possible through tax exempt dividends.


notes

note 14 earnings per share Before dilution After dilutionseK 2007 2006 2007 2006earnings per share 13.95 7.87 13.92 7.85

the calculation of the numerators and denominators used in the above calcu-lations is specified below.

earnings per share before dilution Calculation of the earnings per share for 2007 was based on the profit for the year attributable to the parent company’s shareholders, totalling KseK 107,864 (60,524) and a weighted average number of outstanding shares in 2007, totalling 7,733,294 (7,693,508).

earnings per share after dilution Calculation of the earnings per share after dilution for 2007 was based on the profit for the year attributable to the parent company’s shareholders, totalling KseK 107,864 (60,524) and a weighted average number of out-standing shares in 2007, totalling 7,746,111 (7,710,959). Weighted aver-age number of outstanding shares has been calculated as follows:

Weighted average number of outstanding shares, after dilution 2007 2006Weighted average number of shares during the year, before dilution 7,733,294 7,693,508effect of issued warrants 12,817 17,451Weighted average number of shares during the year, after dilution 7,746,111 7,710,959 Instruments that can have a potential dilution effect and changes after the year-end in 2007 the company had an outstanding warrant scheme, the subscriptionprice of which (seK 234 per share) exceeded the average price of the shares (seK 193 per share). these warrants are therefore not considered to have a dilution effect and have been excluded from the calculation of the profit/loss per share after dilution. if, in future, the stock exchange price of outstanding shares in HL Display rises to a level above the redemption prices, these warrants will cause dilution.

note 15 Participations in joint ventures

Group the Group has 50 percent holdings in the joint venture companies HL trion aB and trion HL LLC, whose primary operations involve production in the field of wire-bending and extrusion respectively.

the Group’s share of average number of employees in HL trion aB was 7, and in trion HL LLC 10.

the Group’s financial statements include the items below, which consti-tute the Group’s ownership of the joint venture companies’ assets, liabilities, income and expenses. KseK 2007 2006net sales 27,974 38,437expenses -30,146 -38,634Profit/loss before taxes -2,172 -197 non-current assets 7,502 10,987Current assets 10,173 12,396total assets 17,675 23,383 Current liabilities 5,336 5,832non-current liabilities 3,917 5,517total liabilities 9,253 11,349net assets/net liabilities 8,422 12,034

note 16 Investment commitments in 2007 the Group entered into agreements to acquire non-current assets tothe order of KseK 5,734 (7,024). it is expected that these commitments will be regulated during the following financial year.

note 17 Intangible assets Acquisition cost Group Parent Company Computer systems Acquired Computer systems developed market developedKseK in-house assets Goodwill in-houseopening balance 1 January 2006 27,025 – – 12,250sales and disposals -645 – – –expenditure capitalised during the year 4,361 – – 4,296Closing balance 31 December 2006 30,741 – – 16,546

Group Parent Company Computer systems Acquired Computer systems developed market developedKseK in-house assets Goodwill in-houseopening balance 1 January 2007 30,741 – – 16,546sales and disposals -11,463 – – -10,957assets developed in-house 9,287 – – 6,580acquisitions – 767 23,447 –exchange rate differences for the year 44 – -36 –Closing balance 31 December 2007 28,609 767 23,411 12,169

Cumulative depreciation and impairment losses Group Parent Company Computer systems Acquired Computer systems developed market developedKseK in-house assets Goodwill in-houseopening balance 1 January 2006 -24,181 – – -10,764sales and disposals 643 – – –Depreciation for the year -1,633 – – -847Closing balance 31 December 2006 -25,171 – – -11,611

Group Parent Company Computer systems Acquired Computer systems developed market developedKseK in-house assets Goodwill in-houseopening balance 1 January 2007 -25,171 – – -11,611sales and disposals 10,915 – – 10,957Depreciation for the year -2,615 -379 – -1,489exchange rate differences for the year -187 – – –Closing balance 31 December 2007 -17,058 -379 – -2,143

Carrying amounts 1 January 2006 2,844 – – 1,48631 December 2006 5,570 – – 4,935

1 January 2007 5,570 – – 4,93531 December 2007 11,551 388 23,411 10,026

Depreciation and impairments Depreciation is included in the following items in the income statement the Group the parent companyKseK 2007 2006 2007 2006Cost of goods sold -499 – – –selling expenses -1,062 – -394 –administrative expenses -1,394 -1,633 -1 069 -847research and development expenses -39 – -26 –total -2,994 -1,633 -1,489 -847


notes

Cont. note 17 Intangible assets

Intangible assetsComputer systems are defined as systems that lead to improved products or processes. in accordance with ias 38 expenses for these are activated. a useful life of four years is applied. For acquired market assets a useful life of five years is applied. Goodwill has an unspecified useful life.

Impairment tests of goodwillCarrying value of goodwill in the consolidated balance of MseK 23 is related to the year’s acquisitions of operations in Finland, see note 5 for further information. Goodwill was tested for impairment at the balance sheet date and the recoverable amounts were in excess of their carrying values.the companies in which operations have been performed since the acquisi-tions have been identified as the cash-generating units in the tests, Display

team oy and HL Display suomi oy respectively. For Display team the product sales have subsequently been integrated into HL Display’s sales companies why also the cash-flows from additional margin in the sales companies have been considered.

Research and developmentexpenses for production, material and product development up until a decision is taken to finally develop the product are reported as expenses for research and development in the income statement. When a develop-ment decision has been made, expenses are activated in accordance with ias 38 intangible assets. as product development activities after this point almost exclusively consist of constructing the necessary production equip-ment to manufacture the product, expenses are then activated as tangible fixed assets.

note 18 Property, plant and equipment the Group the parent company Rebuilding of Buildings Machinery and other party’s Machinery andKseK and land equipment property total equipmentAcquisition cost opening balance 1 January 2006 100,485 431,845 13,102 545,432 3,310purchases during the year – 27,019 863 27,882 330sales – -15,869 -102 -15,971 –Closing balance 31 December 2006 100,485 442,995 13,863 557,343 3,640 opening balance 1 January 2007 100,485 442,995 13,863 557,343 3,640purchases during the year – 36,797 2,707 39,504 –sales -92,770 -21,029 – -113,799 -2,559exchange rate differences – -6,410 -1,552 -7,962 –Closing balance 31 December 2007 7,715 452,353 15,018 475,086 1,081

Depreciation and impairment losses opening balance 1 January 2006 -22,159 -294,128 -5,208 -321,495 -2,829Depreciation during the year -2,427 -39,507 -812 -42,746 -222sales – 15,290 102 15,392 –Closing balance 31 December 2006 -24,586 -318,345 -5,918 -348,849 -3,051 opening balance 1 January 2007 -24,586 -318,345 -5,918 -348,849 -3,051Depreciation during the year -1,290 -34,564 1) -667 -36,521 -268sales 23,347 18,719 – 42,066 2,559exchange rate differences – 6,651 -74 6,577 –Closing balance 31 December 2007 -2,529 -327,539 -6,659 -336,727 -760

Carrying amounts 1 January 2006 78,326 137,717 7,894 223,937 48131 December 2006 75,899 124,650 7,945 208,494 589

1 January 2007 75,899 124,650 7,945 208,494 58931 December 2007 5,186 124,814 8,359 138,359 321

1) economic life of certain production equipment has been reviewed as of 2007. if the principle would have been applied retrospectively, depreciation for the year would have been MseK 1.5 higher.

tax assessment values, Group KseK 31/12/2007 31/12/2006tax assessment values, buildings (in sweden) – 43,380 tax assessment values, land (in sweden) – 6,758

Depreciation and impairment losses are distributed to the following rows in the income statement

the Group Depreciation Impairment losses KseK 2007 2006 2007 2006Cost of goods sold -28,375 -37,146 – – selling expenses -5,365 -2,177 – –administrative expenses -2,408 -3,132 – –other operating expenses -373 -291 – –total depreciation and impairments for property, plant and equipment -36,521 -42,746 – –

the parent company Depreciation Impairment lossesKseK 2007 2006 2007 2006selling expenses -4 -5 – –administrative expenses -100 -113 – –research and development expenses -164 -104 – –total depreciation and impairments for property, plant and equipment -268 -222 – –

Leased buildings and land the Group’s only remaining lease agreement classified as a financial lease agreement relate to a business property in tours, France. When the lease agreement expire, the Group has the right to buy the property. on 31 December 2007 the carrying value of leased assets was MseK 5 (76). refer also to note 9.


notes

note 19 Investments in Group companies Corporate Capital number Book value Book valueDirectly owned Reg. office identity number share, % Votes, % of shares 31-12-2007 31-12-2006Display team oy espoo 0865289-8 100 100 100 24,670 –HL Display Belgium n.V. antwerp 0431.244.677 100 100 1,000 283 283HL Display Ceská republika s.r.o prague 65410394 100 100 1 26 26HL Display Deutschland GmbH Langenfeld HrB2713 100 100 1 2,614 2,614HL Display d.o.o. Ljubljana 47556722 100 100 1 93 93HL Display d.o.o. Beograd Beograd sr103831628 100 100 1 5 5HL Display españa s.L Madrid B83488213 100 100 100 1,267 32HL Display Falun aB Falun 556545-6976 100 100 1,000 100 100HL Display France sas tours rCsB377988704 100 100 2,500 268 268HL Display Hungaria Budapest 01-09-667938 100 100 1 487 487HL Display inc. Wilkes-Barre 23-2869204 100 100 1 1 1HL Display Latvia sia riga 50003303821 100 100 100 1,522 1,522HL Display Lesjöfors aB Filipstad 556439-7429 100 100 5,000 2,513 2,513HL Display Ltd sti istanbul 428930-376512 100 100 200 1,707 1,707HL Display nordic aB Falkenberg 556446-0557 100 100 1,500 3,383 3,883HL Display norge a/s asker 955437071 100 100 1,100 5,598 5,598HL Display ooo Moscow 7701211771 100 100 1 832 832HL Display pictoria aB Filipstad 556654-4952 100 100 1,000 100 100HL Display polska sp.zo.o Warszaw 521-04-17-996 100 100 200 236 236HL Display product supply aB Falkenberg 556738-6577 100 100 1,000 100 –HL Display regional service Center Bergen op Zoom 20085397 100 100 1,671 5,344 5,344HL Display srL Bukarest ro14633525 100 100 2,500 103 103HL Display schweiz aG aarau CH-4003018955-6 100 100 100 543 543HL Display (asia) pte Ltd. singapore 200004486H 100 100 1 576 576HL Display slovensko s.r.o. Bratislava 36547662 100 100 1 1,134 1,134HL Display suomi oy Helsinki Fi21185753 100 100 100 93 –HL Display sundsvall aB sundsvall 556124-0481 100 100 1,500 11,125 11,125HL Display (suzhou) Co., Ltd suzhou Qi Du su no. 016307 100 100 1 15,128 11,459HL Display sverige aB stockholm 556351-9528 100 100 100 50 50HL Display (uK) Ltd Kirmington 2187037 100 100 10,000 935 935HL Display ukraine Kiev 31305470 100 100 100 223 223HL Display Österreich GmbH Wienna Fn140307i 100 100 1 327 327HL Financial services aB stockholm 556435-0832 100 100 500 128 128sCi L’eclipse tours rCs414745026 100 100 100 14 14total 81,528 52,261 Indirectly owned HL Design sasu saint avertin rCs484754379 100 100 37,000 HL Display Hong Kong Ltd Hong Kong 783 663 100 100 2 HL Display india pvt Ltd Mumbai 05MH2006FtC164731 100 100 10,000 HL Display Karlskoga aB Karlskoga 556457-7202 100 100 1,000 HL Display Korea Co Ltd seoul 110111-3042176 100 100 16,800 HL Display Malaysia sdn Bhd Kuala Lumpur 569116-0 100 100 2 HL Display nederland BV Bergen op Zoom 30152867 100 100 200HL Display (shanghai) Co Ltd shanghai prC 310230757570910 50 50 2 HL Display shipley Ltd shipley 256682 100 100 1,000 HL Display taiwan Ltd taipei 27578266 100 100 1 HL Display thailand Ltd Bangkok 10454600434 100 100 1 pt. HL Display indonesia Jakarta 0904.5.51.20945 100 100 100 the Group owns 50 percent of the votes in HL Display (shanghai) Co Ltd. By agreement with the other owner of HL Display (shanghai) Co Ltd. the Group has the right to appoint the management group and owns all of the rights to the name, products and product names. HL Display (shanghai) Co Ltd. is therefore consolidated as a subsidiary.

Cumulative Impairment losses the parent companyKseK 2007 2006opening balance -37,258 -26,018 impairment losses -940 -11,240Closing balance 31 December -38,198 -37,258 Carrying amount 81,528 52,261

Acquisition cost the parent companyKseK 2007 2006opening balance 89,519 84,436 Capital contributions paid 5,344 5,083 newly started/acquired companies 24,863 –Closing balance 31 December 119,726 89,519


notes

note 20 Parent company investments in associated companies and joint ventures the parent company Acquisition cost KseK 2007 2006opening balance 17,147 16,751shareholder contribution – 396sales -5,000 –Closing balance 31 December 12,147 17,147 the parent company’s directly owned holding in associated companies and joint venture companies.

Joint venture company, corp. reg. no. and registered office

Voting and capital share Carrying2006 as a % amountAssociated companies optimus KB, 916620-1450, stockholm – 10,000Joint ventures – directly owned HL trion aB, 556539-1637, Filipstad 50% 7,147Joint ventures – indirectly owned trion HL LLC 50% –total 17,147

Voting and capital share Reported2007 as a % valueAssociated companies optimus KB, 916620-1450, stockholm – 5,000Joint ventures – directly owned HL trion aB, 556539-1637, Filipstad 50% 7,147Joint ventures – indirectly owned trion HL LLC 50% –total 12,147

the Group’s holding refer to participations in optimus KB.

note 21 other non-current receivables the Group the parent companyKseK 2007 2006 2007 2006Deposits 1,385 1,162 – –other 644 644 644 644total 2,029 1,806 644 644

note 22 Parent company receivables from Group companies

Acquisition cost Receivables from Group companies KseK 2007 2006opening balance 244,848 241,993increases 115,317 4,053redemptions -33,633 -1,198Closing balance 31 December 326,532 244,848 at the year-end the parent company had no receivables from associated companies or joint ventures.

note 23 Inventories the Group the parent company KseK 2007 2006 2007 2006raw materials and consumables 25,560 24,694 – – Work in progress 1,693 2,600 – – Finished goods and goods for resale 126,266 109,072 – – Work in progress on behalf of third parties 66 37 – – total 153,585 136,403 – –

selling expenses for the Group include impairment losses of inventories to the order of MseK 7 (5).

note 24 trade receivables trade receivables are reported after taking into account anticipated bad debt losses that amounted to KseK 4,042 (3,331) in the Group. there were no trade receivables in the parent company.

Age analysis, overdue not impaired trade receivables 2007-12-31 2006-12-31trade receivables not yet due 187,042 187,630overdue trade receivables 0 - 30 days 57,411 50,909overdue trade receivables > 30 days - 90 days 27,643 23,317 overdue trade receivables > 90 days - 180 days 9,825 7,993 overdue trade receivables > 180 days - 360 days 6,532 5,458overdue trade receivables > 360 days 3,670 4,480provision for doubtful receivables -4,042 -3,331total 288,081 276,456 Provision for doubtful receivables 2007-12-31 2006-12-31opening balance -3,331 -4,115Bad debt losses 730 871provision for anticipated bad debt losses -2,143 -2,103Cancelling of previous year’s provisions 702 2,016Closing balance -4,042 -3,331

note 25 Prepaid expenses and accrued revenue the Group the parent companyKseK 2007 2006 2007 2006prepaid expenses: rents 5,612 4,193 377 367 leasing expenses 1,204 3,006 1,120 1,450 insurance expenses 1,420 2,077 451 254 it support and communication 3,543 2,836 3,508 2,836accrued interest income 270 377 172 304other 14,531 12,271 2,616 3,879total 26,580 24,760 8,244 9,090

note 26 other current assets

in the item other current assets, Group derivatives used for hedge accounting valued at fair value amounting to KseK 580, are reported.

Withholding tax concerning dividends from foreign subsidiaries of KseK 3,374 (4,577) is included in the parent company’s other current assets.


notes

note 29 untaxed reserves the parent companyKseK 2007 2006Cumulative depreciation in excess of plan: Computer systems opening balance 1 January 886 –Depreciation for the year in excess of plan 1,574 886sales and disposals – –Closing balance 31 December 2,460 886 Machinery and equipment opening balance 1 January 14 –Depreciation for the year in excess of plan -684 14sales and disposals – –Closing balance 31 December -670 14 Allocation reserves appropriations in conjunction with taxation 2002 – 8,455appropriations in conjunction with taxation 2003 6,919 6,919appropriations in conjunction with taxation 2005 2,656 2,656appropriations in conjunction with taxation 2007 10,974 10,974appropriations in conjunction with taxation 2008 17,413 –Closing balance 37,962 29,004 total untaxed reserves 39,752 29,904

note 30 Interest-bearing liabilities this note contains information about the company’s contractual terms in respect of interest-bearing liabilities. For more information about the compa-ny’s exposure to interest rate risk and risks of exchange rate changes, refer to note 2. the GroupKseK 2007 2006non-current liabilities Bank loans 83,267 46,498 Financial leasing liabilities – 53,638other interest-bearing liabilities 756 313total 84,023 100,449 Current liabilities Bank overdraft facility 42,337 92,992 short-term element of bank loans 1,789 392short-term element of financial leasing liabilities 64 8,200total 44,190 101,584 terms and repayment period – the Group For information about assets pledged, see note 35. Financial leasing liabilities For information about leasing liabilities, see note 9. authorised bank overdraft facilities in the Group total KseK 158,494 (110,449). authorised bank overdraft facilities in the parent company total KseK - (55,000).

note 27 Cash and cash equivalents the GroupKseK 2007 2006Cash and bank balance 75,973 58,165Current investments 20,109 30,000Credit balance in Group account 80,997 75,079total according to cash flow statement 177,079 163,244

note 28 equity

the GroupFor a specification of the Group’s equity, see the financial report on page 38.

share capitalas at 31 December 2007 the registered share capital comprised 7,734,772 (7,727,172) ordinary shares, 913,024 of which are class a and 6,821,748 class B. the Group has not issued preference shares.

Holders of ordinary shares are entitled to a dividend as decided subse-quently and are entitled to vote at the annual meeting of shareholders with one vote per share for class a shares and 1/10 vote per share for class B shares.

Hedge reservethe hedge reserve constitutes the effective proportion of the cumulative net change in fair value of a cash flow hedging instrument attributable to hedging transactions that have not yet occurred.

Retained earningsretained earnings include profits earned in the parent company and its sub-sidiaries, associated companies and joint ventures. previous allocations to the statutory reserve are included in this equity item.

Dividendafter closing date the Board has proposed the following dividend. this divi-dend has yet to be confirmed and there are no income tax consequences.

KseK 2008 1) 2007 2006Dividend, KseK 42,541 27,072 23,066Dividend per share, seK 5.50 3.50 3.00

1) according to the Board of Directors’ proposal.

Parent companyFor a specification of the parent company’s equity, see the financial report on page 41.

Restricted equityrestricted equity may not be reduced through dividends.

Statutory reservethe purpose of the statutory reserve has been to restrict a portion of the net profit each year of dividend distribution.

unrestricted equityRetained earningsretained earnings comprises the previous year’s unrestricted equity after any dividend distributions. together with the profit/loss for the year, it constitutes total unrestricted equity, i.e. the amount available for dividend distribution to the shareholders. Concerning dividend policy etc, refer to page 30.


notes

note 31 Post-employment benefits

Defined benefit pension plans the Group has four defined benefit plans providing remuneration to employees after they retire. in defined benefit plans the payment made to employees and former employees is based on the salary at retirement and the number of years worked. the Group bears the risk for ensuring that the promised payments are made. KseK 2007 2006present value of wholly or partly funded obligations 8,273 3,020Fair value of managed assets -5,981 -1,206net wholly or partly invested obligations 2,292 1,814present value of unfunded obligations 1,658 1,544Present value of net obligations 3,950 3,358 unreported actuarial profits (+) and losses (-) -336 -626net amount in balance sheet relating to defined benefit plans 3,614 2,732 the net amount KseK 3,614 (2,732) is reported in the item pension provisions in the balance sheet. Managed assets consists of investment in mixed funds. the net amount is per country: KseK France 867 502norway 1,988 1,479switzerland 165 –austria 594 751total 3,614 2,732 Changes in the defined benefit obligations: KseK 2007 2006obligations to defined benefit plans as per 1 January 4,564 3,250Fees paid in -190 –Current service costs plus interest cost 1,554 898reclassification 1) 4,125 –actuarial gains (+) and losses (-) -513 626exchange rate differences 391 -210obligations to defined benefit plans as per 31 December 9,931 4,564 Changes in fair value of managed assets: KseK 2007 2006Managed assets’ fair value 1 January 1,206 942reclassification 1) 4,426 –Contribution from employer 402 316payments -193 –expected return on managed assets 225 26actuarial gains (+) and losses (-) -236 4exchange rate differences 151 -82Fair value of managed assets 31 December 5,981 1,206

1) refers to switzerland, previously reported as defined contribution plan.

expense reported to the income statement for defined benefit plans: KseK 2007 2006Current service cost 1,261 648administration cost 58 170interest cost 285 108expected return on managed assets -208 -67actuarial profits (-) and losses (+) 9 9total expense 1,405 868Cost of defined contribution plans 14,142 14,464total cost of remuneration after end of employment 15,547 15,332

the expense is reported in the following rows in the income statement KseK 2007 2006Cost of goods sold 4,976 5,089selling expenses 8,102 7,809administrative expenses 1,806 1,797research and development costs 663 637total 15,547 15,332

Assumptions for defined benefit plans the most significant actuarial assumptions as at the year-end (expressed as averages) KseK 2007 2006Discount rate 31 December 3.88% 3.50%expected return on managed assets 31 December 4.38% 5.50%Future salary increase 2.43% 2.17%Future increase in pensions 1.60% 1.6%expected remaining service, years 19.6 22.8

Commitments for retirement pensions and family pensions for salaried employees in sweden are secured through an insurance policy with alecta. according to a statement issued by the swedish Financial accounting standards Council’s emerging issues task Force, ura 42, this is a defined benefit plan involving several employers. For the financial year 2007 the com-pany did not have access to information that enabled it to report this plan as a defined benefit plan. the itp pension plan that is secured through an insurance policy with alecta is therefore reported as a defined contribution plan. this year’s charges for pension policies arranged with alecta total KseK 4,435 (5,366). alecta’s surplus can be distributed to those arranging the insurance and/or the insured parties. at the end of 2007 alecta’s surplus in the form of the collective consolidation level totalled 147 (128) percent. the collective consolidation level comprises the market value of alecta’s assets as a percentage of insurance commitments, calculated according to alecta’s insurance calculation assumptions, which do not correspond with ias 19.

Historical information KseK 2007 2006 2005 2004present value of benefit-based obligations -9,931 -4,564 -3,524 -2,142Fair value of managed assets 5,981 1,206 942 913Deficit in plan -3,950 -3 358 -2 582 -1 229 experience-based adjustments concerning managed assets amounted to KseK 225 (26) for 2007. experience-based adjustments concerning the reported obligations amounted to KseK 73 (-111).

actual return on managed assets amounted to KseK -11 (30). the group estimates that KseK 924 (327) will be paid out as defined benefit plans during 2008. Defined contribution plans in defined contribution plans the company pays fixed contributions to a separate legal entity and has no obligation to make any further payments. the Group’s profit/loss is charged with expenses in line with earnings. the Group the parent companyKseK 2007 2006 2007 2006payments to defined contribution plans 14,142 14,464 4,742 5,245


notes

note 32 other provisions

RestructuringDuring the financial year 2006, provision of KseK 6,558 was made to cover the estimated costs of closing down the service centre in Bergen op Zoom, the netherlands. During 2007 the provision has been realised in payments with no effect on profit.

note 33 Liabilities to Group and associated companies, joint ventures

as at year-end, the parent company’s liabilities to group companies amounted to KseK 32,545 (50,981). there were no liabilities to associated companies or joint ventures.

note 34 Accrued expenses and prepaid income the Group the parent companyKseK 2007 2006 2007 2006accrued social security expenses 16,630 16,616 3,411 3,337accrued holiday pay 25,387 24,373 4,076 4,148accrued salaries & wages 19,190 16,619 – –accrued expenses concerning reorganisation – 6,435 – –Customer bonuses 10,944 10,154 – –prepaid income 4,982 12,084 – –other 24,397 19,371 3,576 4,481total 101,530 105,652 11,063 11,966

note 35 Assets pledged and contingent liabilities a competitor has sued HL Display in court alleging patent infringement. HL Display lost the case in the lower court but has appealed. Management assess that the results of this case will not exert any significant effect on the financial position of the Group. the Group the parent companyKseK 2007 2006 2007 2006Assets pledged for liabilities and provisions Corporate mortgages 6,490 56,490 – –shares in subsidiaries – 137,855 – 40,674total assets pledged 6,490 194,345 – 40,674

Contingent liabilities securities for the benefit of subsidiaries – – 91,956 134,349Guarantees issued for the benefit of subsidiaries – – 55,144 25,209securities for the benefit of joint ventures 1,612 2,038 3,225 4,075total contingent liabilities 1,612 2,038 150,325 163,633

HL Display aB has, to seB, undertaken that no company in the Group will pro-vide guarantees for loans or that the parent company will transfer the owner-ship of its shares or control of subsidiaries that have credits in this bank with-out the permission of the bank. in addition the company guarantees that net debt/eBitDa, measured at the end of every calendar quarter as a moving, 12-month level, will not exceed 2.0 plus that equity/assets ratio will not be less than 35 percent on every measurement occasion.

note 36 Cash flow statement

Adjustments for items not included in cash flow the Group the parent companyKseK 2007 2006 2007 2006Disposals of non-current assets 3,029 575 – –Costs concerning share-based benefits 460 460 460 460pension provisions 152 424 – –Changes in provisions -5,807 6,558 – –translation difference 77 -424 – – sale of properties -7,050 – – –provision for reorganisation – 6,435 – –other provisions 1,191 1,044 1,191 584total -7,948 15,072 1,651 1,044

note 37 Related party transactions

Related parties Chairman of the Board anders remius and Deputy Ceo Kent Hertzell own, through company, 10 percent of the shares in XLent Consulting Group. other major owners are Capman through swedestart tech KB with 33 percent, erik Fröberg 9 percent and employees 30 percent.

XLent Consulting Group is a consultancy company with approximately 200 employees working in customer focused business and it development.

in 2007 XLent Consulting Group invoiced Group companies KseK 23,117 (18,386). the Group’s debt to XLent Consulting Group totals KseK 4,995 (5,376).the invoices concern work carried out on management, development and support of the Group’s it network and erp system.

of the parent company’s revenue, KseK 99,770 (84,129) relates to consultancy services sold to Group companies.

transactions with key people in a managerial position the company’s Board members and their immediate family members represent 81 (81) percent of votes in the company. there are no loans to Board members. For further information, see note 8 employees, personnel expenses and remuneration to senior executives.


notes

note 38 Fees to auditors

the Group the parent companytseK 2007 2006 2007 2006KPMG audit engagement 2,472 2,165 300 200audit related counselling 507 588 335 379other engagements 162 19 162 19total KPMG 3,141 2,772 797 598 other auditors audit engagement 128 160 – – audit engagement and audit related counselling relate to the audit of the annual accounts and bookkeeping as well as the Board’s and the Ceo’s administration, other tasks that are the duty of the company’s auditor as well as advice or other activities arising from observations during such an audit or the performance of such other tasks. anything else is reported as other engagements.

note 39 events after the balance sheet date no significant events after the balance sheet date have occurred in the Group or the parent Company. the financial statements were approved for issuing by the Board of the parent company on 21 February 2008.

note 40 Critical estimates and evaluations Company management has discussed with the audit committe developments, the selection of and information in respect of the Group’s critical accounting principles and estimates, as well as the application of these principles and estimates. Critical evaluations in the application of the Group’s accounting principles Certain critical accounting estimates made in applying the Group’s accounting principles are described below. exposure to foreign currencies Changes in exchange rates can have a relatively major effect on the company as a whole. note 2 contains a detailed analysis of the exposure to foreign currencies and the risks related to changes in exchange rates.

note 41 Details of the parent company HL Display aB is a swedish-registered limited liability company with its registered office in stockholm. the parent company’s shares are quoted on the oMX nordic exchange’s small Cap list. the address of head office is Horisontvägen 26, 128 34 skarpnäck, sweden. the consolidated finan-cial statements for 2007 comprise the parent company and its subsidiaries, together referred to as the Group. the Group also includes owned holdings in associated companies and joint ventures.

stockholm, 21 February 2008

anders remiusChairman

Åke Modig Lis remius Jan-ove Hallgren Mats-olof Ljungkvist Member of the Board Member of the Board Member of the Board Member of the Board

stig Karlsson Magnus Jonsson Kent Mossberg Member of the Board Member of the Board, Member of the Board, employee repr. employee repr.

Gérard DubuyMember of the Board,

Managing Director and Ceo

our auditor’s report was submitted on 21 Februari 2008.

KpMG Bohlins aB

Bo ribersauthorised

public accountant

the consolidated financial statements have been prepared in accordance with international accounting standards as prescribed by the european parliament and the regulation (eC) no 1606/2002 dated 19 July 2002 and the parent company financial statements have been prepared in accordance with generally accepted account-ing principles in sweden and give a true and fair view of the group’s and parent company’s financial position and results of operations.the administration report for the group and parent company pro-vides a true and fair overview of the group’s and parent company’s

business activities, financial position and results of operations as well as the significant risks and uncertainties which the parent company and its subsidiaries are exposed to.

the annual accounts and the consolidated accounts as reported above have been approved for publication by the Board on February 21, 2008. the consolidated income statement and balance sheet and the parent company’s income statement and balance sheet will be submitted for adoption at the annual meeting of shareholders on april 2, 2008.


AuDIt RePoRt

audit report

to the annual meeting of the shareholders of HL Display aB (publ).Corporate identity number 556286-9957

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of direc-tors and the managing director of HL Display aB (publ) for the year 2007. the annual accounts and the consolidated accounts are pre-sented in the printed version of this document on pages 34-60. 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 high but not absolute assur-ance 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 princi-ples used and their application by the 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 dis-charge 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 any 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 gen-erally accepted accounting principles in sweden. the consolidated accounts have been prepared in accordance with international Financial reporting standards iFrs as adopted by the eu and the annual accounts act and give a true and fair view of the group’s financial position and results of operations. the statutory admin-istration report is consistent with the other parts of the annual accounts and the consolidated accounts.

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

stockholm February 21, 2008KpMG Bohlins aB

Bo ribersauthorised public

accountant


Work of the Board of Directors during 2007

WoRK oF tHe BoARD oF DIReCtoRs DuRInG 2007

HL Display’s Board of Directors consists of seven members elected by the annual General Meeting of shareholders, as well as two members and one deputy elected by the employees. the chairman of the Board is elected by the annual General Meeting of share-holders. at the annual General Meeting (aGM) on 14 March, 2007, anders remius was elected Chairman of the Board.

Members of the Board include people who have an association with HL Display’s major shareholders, and also people who are independent of the owners. as a rule the Board meets six times a year, with additional meetings as required. the Board held twelve Board meetings during the financial year 2007. the dates of Board meetings are confirmed in connection with the inaugural Board meeting. Certain Board meetings coincide with the dates for finan-cial information. these are the quarterly, half-yearly and year-end accounts. the Board’s work follows an annual presentation plan with special topics and fixed decision-making points.

a normal agenda for a Board meeting contains:– review of the minutes of the previous meeting– the Ceo’s report on operations– Finance– the Board’s data for decision making – any other business

the secretary of the Board is the Group’s Deputy Ceo, Kent Hertzell.

Attendance at the Board’s meetings Attendance/number of meetingsanders remius, Chairman of the Board 12/12Gérard Dubuy, Ceo and member of the Board 12/12Lis remius, member of the Board 11/12stig Karlsson, member of the Board 12/12Åke Modig, member of the Board 12/12Jan-ove Hallgren, member of the Board 12/12Mats-olof Ljungkvist, member of the Board since March 14 7/8Kent Mossberg, employee representative 9/12Magnus Jonsson, employee representative 0/12Henrik smedlund, deputy employee representative 9/12

Rules of procedurethe Board’s work is regulated by a set of specially drawn up rules of procedure. put briefly, the rules of procedure establish that the Board of Directors is responsible for the Company’s organisation and administration of the Company’s affairs. the Board must make sure that the Company’s organisation is structured so that book-keeping, fund management and the Company’s financial situation in general is managed in a secure way. the Board must on an on going basis monitor the Company’s and the Group’s financial situation, which is reported monthly, so that the Board can perform its duty of evaluation pursuant to law, listing rules and best practice for Boards of Directors. Generally the Board deals with matters of significant importance for the Group, such as:– strategic plans– Marketing plans– product planning– acquisitions and divestments of companies or businesses– purchases and sales of other significant assets

Important matters during 2007– investment matters– organisational matters– review of systems for, and the securing of, well-functioning

internal control– Follow-up on cost control and investments– review of long-term objectives– Measures for increased profitability

Instructionsthe Board has issued special instructions on the responsibilities and authority of the Ceo of HL Display. the Board has also drawn up special reporting instructions for the management.

evaluation of the Board’s workthe Board has, during 2006, implemented a new method for evalu-ating the Board’s work. evaluation is based on an anonymous sur-vey among the Board members, which deals with issues such as the Board’s composition, working procedures and responsibilities. the survey is put together and evaluated by an external party.

Feethe total fee to the Board of HL Display in 2007 totalled seK 1,100,000, of which the chairman of the Board received seK 250,000. no remuneration was paid other than that decided by the aGM of shareholders.

Committeesthe nomination Committee has been appointed and presented in accordance with the decision by the aGM. the Board has appointed a remuneration Committee and an audit Committee.

nomination Committeein accordance with a 2007 aGM decision, the Chairman of the Board – in consultation with the company’s major shareholders – has appointed a nomination Committee. the names of the repre-sentatives appointed were published on the company website on 5 september 2007.

the nomination Committee for the 2008 aGM has consisted of anders remius, Chairman of Board of HL Display aB (and Chairman of nomination Committee), arne Karlsson, Ceo ratos aB, Johan Lannebo, Lannebo Fonder and eva roth, Controller ericsson.

in accordance with a 2007 aGM decision the nomination Committee has been tasked to develop proposals to be placed before the 2008 aGM as follows;– election of Chairman of aGM– number of Board members/proposals for members– proposed Chairman of the Board– fees to non-employee Board members elected by aGM– remuneration for committee assignments– election of auditors and auditors’ fees– proposals for appointment procedures for nomination Committee


the remuneration Committee. Decisions concerning remuneration to other senior executives are taken by the Ceo after consultation with the remuneration Committee. the remuneration Committee also submits recommendations to the Board on how the remuneration Guidelines for senior executives, adopted by the aGM, are to be applied in practice.

it is the responsibility of the remuneration Committee to monitor the development of remuneration levels applied by competitors and other comparable actors in order to ensure that the HL Display’s offers are competitive. the remuneration Committee met three times during 2007.

Audit Committeeit is the audit Committee’s task to prepare the election of auditors and conduct a dialogue with the auditors about the audit. the audit Committee consists of Mats-olof Ljungkvist and stig Karlsson. the audit Committee met four times during 2007. KpMG were elected for four years at the 2004 aGM.

proposals from individual shareholders can be made to the committees by post via HL Display’s head office in skarpnäck, or by e-mail to [email protected].

WoRK oF tHe BoARD oF DIReCtoRs DuRInG 2007

The work of the Nomination Committeethe nomination Committee has held three meetings and members have maintained telephone contact between times. in accordance with the swedish Code of Corporate Governance the company has provided information on its website as to how shareholders may submit proposals to board members.

the nomination Committee has studied how the work of the Board is carried out and how well it functions in detail, as well as becoming familiar with company strategy and future challenges. the Committee has also assessed the competence and experience that members of the company Board should possess. this assess-ment has guided their activities. an external Board evaluation has been carried out and has provided more information on which to base decisions. the nomination Committee has also taken into consideration the value of both continuity and renewal among Board members and has also made an assessment of the suitable size of the Board.

it is the assessment of the nomination Committee that the cur-rent Board has been working well during 2007 and that it fulfils very high level requirements as concerns composition and competence. in addition the Committee has also examined the issue of fees to non-employee, aGM elected Board members and found that the current fees appear to be properly balanced and that there is no reason at present to propose any changes to fee levels.

the Company’s audit Committee has provided an evaluation which has been utilised as underlying information when proposing auditors and auditor’s fees.

the Committee has also discussed the procedure to be applied for the appointment of the nomination Committee and has developed a proposal to the 2008 aGM.

Remuneration Committeein 2007 the remuneration Committee has consisted of the Chairman of the Board anders remius plus Board members Jan-ove Hallgren and Mats-olof Ljungkvist. the Committee deals with issues concerning remuneration to Ceo and Deputy Ceo. Decisions, however, are taken by the Board after proposals from


BoARD oF DIReCtoRs

Board of Directors

Anders RemiusBorn: 1947.Chairman of the Board.Chairman of the Board since 2006, member of the Board since 1982.education: Financial qualification.Holding: 879,954 shares, of which 401,904 a-shares. not independent in relation to major owners.

Lis RemiusBorn: 1945.Member of the Board since 2004 (member 1982-2001).education: sales and marketing qualification.Holding: 873,252 shares, of which 401,904 a-shares. not independent in relation to major owners.

Jan-ove HallgrenBorn: 1943.Member of the Board since 2006.education: secondary school Certificate in Commercial subjects, officer in the regular army for 9 years. positions with the iCa Group 1971-2000. Holding: 4,000 shares.independent member.

Magnus JonssonBorn: 1969.employee representative.Member of the Board since 1998.position: Machine operator.education: structural engineering qualification.Holding: –

Deputy member

Henrik smedlundBorn: 1976.employee representative.position: Machine operator.education: Financial qualification.Holding: –

Gérard DubuyBorn: 1961.Ceo of HL Display aB.Member of the Board since 2006.education: Master of science in economics and Business administration.Holding: 3,300 shares, 95,000 stock options.not independent in relation to the company.

Åke ModigBorn: 1945.Member of the Board since 2006.education: Master of science in economics and Business administration. Harvard Business school (isMp). other appointments: Chairman of the Board in engelhardt & Co aB, Magnificent solutions aB and Coloplus aB. Member of the Board in spendrups Bryggeri aB and ecoclean international a/s. Holding: –. independent member.

stig KarlssonBorn: 1952. Member of the Board since 2001.position: industrial advisor, ratos aB. education: Master of science in economics and Business administration. other appointments: Chairman of the Board in Haendig aB and Haglöfs aB. Member of the Board in DiaB aB, Hägglund Drives aB, Lagerstedt & Krantz aB and Lindab aB. Holding: –not independent in relation to major owners.

Kent MossbergBorn: 1957.employee representative.Member of the Board since 1995.position: property Manager.education: engineering qualification.Holding: 1,330 shares.

Mats-olof LjungkvistBorn 1951. Member of the Board since 2007. education: Master of science in economics and Business administration. other appointments: Chairman of the Board in Carnegie Fastigheter i sverige aB. Member of the Board in swedsec aB, swegro aB, the swedish securities Dealers association and tema aB.Holding: 1,000 shares.independent member.


senior executives

senIoR eXeCutIVes

Gérard DubuyCeo.Born: 1961.employed since: 1995.education: Master of science in economics and Business administration.Holding: 3,300 shares,95,000 stock options

Håkan erikssonsales and Marketing Director.Born: 1966.employed since: 1992.education: Master of science in industrial engineering and Management.Holding: 200 shares, 3,000 stock options.

Birger nilssonDevelopment Director.Born: 1961.employed since: 1999.education: Master of science in economics and Business administration.Holding: 3,300 shares, 3,000 stock options.

Kent HertzellDeputy Ceo, Financial Director and production Director.Born: 1950.employed since: 1995. education: engineering qualification, Master of science in economics and Business administration, Master in science in Management from Mit.Holding: 6,000 shares, 20,000 stock options.

staffan ForslundHuman resources Director.Born: 1949.employed since: 2000.education: Bachelor of science.Holding: 3,000 stock options.

AuditorsKpMG Bohlins aB.auditors since 2004.

Bo RibersBorn: 1942.authorised public accountant, KpMG.other assignments: elected auditor for Hufvudstaden.

elisabeth tylstedtit Director.Born: 1964employed since: 2007.education: Master of science in economics and Business administration.Holding: –

Xavier Volpatosupply Chain Director.Född: 1969.employed since: 2007.education: eM Lyon (Lyon Graduate school of Management) and MBa university of texas in austin.Holding: –


HIstoRy

History

HL Display’s history started in Borlänge, sweden, in 1954 by Harry Lundvall. His first product for shops was a plate stand made of shaped metal wire. in due course, by hot-bending plastic he also produced an item for displaying the price next to the product.

In 1969 Harry’s son Åke Westberg took over the business, which was at the time turning over about seK two million and had five employees.

In 1975 Åke Westberg obtained a patent for the shelf edge strip that he had developed. the HL Datastrip is the product for which HL Display is still best known, and it remains an important part of the product range. the patent was the breakthrough for HL Display. the largest swedish retail chains recognised the benefits of Åke’s solution, and they soon became major customers.

In 1993 HL Display was listed on the stockholm stock exchange.

In 1996 a partnership was set up with trion industries as a means of entry into the american market. international expan-sion continued in line with the rapid growth of the retail trade. Between the mid-1990s and 1999 sales companies were established in poland, austria, the Czech republic, Latvia, russia and turkey.

In 2000 and 2001 the number of sales companies in eastern europe was aug-mented with new ones in ukraine, slovenia and slovakia. During 2000 HL Display also began to look further to the east, towards southeast asia. Many of the company’s customers, such as Carrefour, already had a presence in several major asian markets. it was therefore natural for HL Display to have its own presence in these markets. the first asian company was launched in 2000 in singapore, and it now serves as the hub of HL Display’s activities in the region.

In 2002 and 2003 expansion contin-ued apace in asia, with new companies being established in Hong Kong, Malaysia, taiwan, thailand and China.

In 2005 HL Display was awarded the title public Company of the year by the finan-cial newspaper Dagens industri and the swedish shareholders’ association.

At the 2006 annual General Meeting anders remius was succeeded by Gèrard Dubuy as Ceo of HL Display. anders remius’ commitment to the company con-tinues, now as the Chairman of the Board.

in 2006 production started up at HL Display’s factory in China, situated in suzhou, to the northwest of shanghai.Local production is a very important step to increase competitiveness in the region.

During 2007 HL Display made two acquisitions in Finland; Display team, a leading supplier of merchandising solutions to brand manufacturers, and sooni, HL Display’s previous distributor in Finland.

In 1977 Åke Westberg’s daughter Lis remius and her husband anders remius started a sales company that mainly sold products from HL Display’s product range.

In 1986 Lis and anders remius bought HL Display from the investment company parcon, which had acquired the company from Åke Westberg in 1982. they recog-nised a potential in HL Display that they wanted to develop themselves, including the establishment of sales companies in other countries.

International expansion began in 1987. sales abroad had previously been chan-nelled through direct sales and distributors, but now HL Display set up its own sales companies in Belgium and the uK. sales companies were then set up in Germany in 1989, and in norway and France in 1990.

At the turn of the year 92/93 the company completed its first company acquisition, with the purchase of Jegab Display. since then HL Display has acquired a number of smaller companies, which have strengthened the product range or added expertise within a specific field of production technology.


FInAnCIAL InFoRMAtIon

Financial information

produced by ir stockholm och HL DisplayDesign: John Blomqvistphotography: Magnus Fond and andreas eklundprinting: Wassberg+skotte tryckeri

HL Display will publish financial information on the following dates during 2008: annual report 2007 week 11annual General Meeting 02/04/2008interim report 3 month 2008 15/04/2008interim report 6 month 2008 16/07/2008interim report 9 month 2008 22/10/2008

www.hl-display.comall relevant financial information about HL Display is available on the company’s website, www.hl-display.com, under the “investors” tab. the website also provides a comprehensive overview of the company.

interim reports are available in swedish and in english. the website also includes an archive of monthly and interim reports dating back to 1997 and an archive of annual reports dating back to 1996. Financial information can be ordered by using the order form avail-able on the website. it is also possible to subscribe to information from the company.

Distribution of Annual and Interim ReportsHL Display prints and distributes the annual report and the interim report for January-June. these are distributed to all shareholders.

Monthly reporting to ceasesince 1998, HL Display has published monthly reports. recently an increasing number of investors have reacted to this in a negative manner. Consequently HL Display has taken a decision to cease publication of monthly reports and report only on a quarterly basis from the beginning of 2008.

HL DIsPLAy AB • HORISONTVÄGEN 26 • 128 34 SKARPNÄCK • SWEDEN • TEL +46 8 683 73 00 • FAX +46 8 683 73 01www.hl-display.com

hl display

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