INTERIM REPORT JANUARY-SEPTEMBER 2016.

In the third quarter, we continued to report better results compared with last
year, and all business areas reported improved results in 2016. Business area
Engineering Services Nordic noted continued strong demand from the automotive
industry, while the energy sector was relatively weak.

In business area Engineering Services Germany, a reorganisation was initiated at
the end of last year and a new organisation is now in place to achieve improved
productivity with an even greater customer focus. During the autumn,
construction will also commence of a new facility for engineering services and
advanced testing in Ingolstadt with the aim of strengthening Semcon’s role as
premium partner to the German automotive industry.

In business area Engineering Services International, we are increasing our
deliveries in projects for Europe, such as in autonomous vehicles. The Group’s
higher number of project commitments also means that we have greater
possibilities to use the expertise available in Semcon’s international
organisation, which generates distinct added value for our customers.

The interest in Business Area Product Information’s customers’ aftermarket
business offering remains strong. More companies are seeing the benefits of
employing a partner whose core business is to create, digitalize and distribute
product information. The new partnership agreements signed earlier this year are
clear evidence of this.

During the third quarter, we launched our new communication strategy and it is
positive to see the attention and spread that the launch of the “Smiling Car”
concept has had globally. In addition, a new graphic profile and new website
were launched. With our new communication strategy, we are increasing our
visibility and becoming even more distinct in our communication in relation to
our position and our customer offering. We have a clear ambition to increase
Semcon’s market share and further strengthen the brand.

Our international expertise in product development in several industries is a
key element in contributing to our customers’ success. Our mission, to develop
products that make life simpler for the end-user, is becoming increasingly
important now that the next generation of smart products is being launched.
Third quarter
• The operating income amounted to SEK 591 million (611) and organic growth was
-3%
• The operating profit amounted to SEK 23 million (13), yielding an operating
margin of 3.8% (2.2)
• The profit after tax amounted to SEK 16 million (9)
• Earnings per share (EPS) after dilution amounted to SEK 0.89 (0.51)

January–September
• The operating income amounted to SEK 1,957 million (1,920) and organic growth
was 2%
• The operating profit amounted to SEK 77 million (19), yielding an operating
margin of 3.9% (1.0)
• The profit after tax amounted to SEK 55 million (12)
• Earnings per share (EPS) after dilution amounted to SEK 3.05 (0.66)
• The equity/assets ratio amounted to 51% (47)

Income and result
Third quarter
Operating income amounted to SEK 591 million (611). Adjusted for currency
effects and acquisitions, income decreased by 3%. The business areas Engineering
Services Nordic and Engineering Services International showed growth, while the
business areas Engineering Services Germany and Product Information had reduced
sales. Operating profit amounted to SEK 23 million (13), yielding an operating
margin of 3.8% (2.2). In particular, it was the business areas Engineering
Services Nordic and Product Information that reported improved operating profit
compared with the preceding year. Net financial items amounted to SEK -1 million
(-1), yielding profit before tax of SEK 22 million (12). The tax expense
amounted to SEK 5 million (3). Profit after tax was SEK 16 million (9) and EPS
after dilution was SEK 0.89 (0.51).

January-September
Operating income amounted to SEK 1,957 million (1,920). Adjusted for currency
effects and acquisitions, income increased by 2%. Operating profit was SEK 77
million (19), yielding an operating margin of 3.9% (1.0). All business areas
reported improved operating profit compared with the preceding year. Last year,
the business area Engineering Services Germany’s operating profit was affected
by SEK 20 million in restructuring costs. Business area Product Information’s
operating profit was positively affected this year by recovered write-downs  of
accounts receivable of SEK 7 million. Net financial items amounted to SEK -3
million (-3), yielding profit before tax of SEK 74 million (16). The tax expense
amounted to SEK 18 million (4). Profit after tax was SEK 55 million (12) and EPS
after dilution was SEK 3.05 (0.66).

Financial position
Operating cash flow from current activities was SEK 8 million (-107). Cash flow
is seasonally weak in the first three quarters. Investments in hardware,
licenses, office supplies and equipment amounted to SEK 30 million (29). The
Group’s cash and cash equivalents amounted to SEK 56 million (43), with
additional non-utilised credit of SEK 257 million (179) as per September 30.
Shareholders’ equity amounted to SEK 638 million (617) and the equity/assets
ratio was 51% (47). During the second quarter, a dividend of SEK 22 million (45)
was paid to shareholders. The Group’s net debt amounted to SEK 133 million
(214). Excluding pension commitments, net debt amounted to SEK 60 million (146).
The debt/equity ratio was 0.2 times (0.3).

Employees
The head count on September 30 was 2,858 (2,864) and the number of employees in
active service was 2,699 (2,783). In the respective business areas the head
count is as follows: Engineering Services Nordic 1,092 (1,011), Engineering
Services Germany 822 (980), Engineering Services International 363 (345) and
Product Information 581 (528). A restructuring has taken place over the past
year in business area Engineering Services Germany resulting in a fall of number
of employees.
For more information, contact
Björn Strömberg, CFO Semcon AB, +46 31-721 03 06
www.semcon.com
Semcon is an international technology company that develops products based on
human needs and behaviours. We strengthen our customers’ competitiveness by
always starting from the end user, because the person who knows most about the
user’s needs creates the best products and the clearest benefits to humans.
Semcon collaborates mainly with companies in the automotive, industry, energy
and life science sectors. With almost 3,000 specialised employees, Semcon has
the ability to take care of the entire product development cycle, from strategy
and technology development to design and product information. Semcon was founded
in Sweden in 1980 and has offices in over 40 locations in nine different
countries. In 2015, the Group reported annual sales of SEK 2.6 billion. Read
more on semcon.com.