Interim report January - June 2007 HL Display AB (publ)

*    The Group's net sales amounted to MSEK 779 (703) during the
  period.
*    Operating profit was MSEK 77 (47) and profit before taxes was
  MSEK 73 (39).
*    Net profit for the period was MSEK 51 (26).
*    Earnings per share after dilution was SEK 6.55 (3.34).
*       Net sales for the second quarter amounted to MSEK 389 (360).
  Operating profit   was MSEK 39 (25) and profit before taxes was
  MSEK 36 (19).  Net profit after taxes was MSEK 25 (13), and
  earnings per share after dilution amounted to SEK 3.22 (1.62) for
  the same period.
*    During the past 12-month period the Group's net sales amounted
  to MSEK 1 525 (1 384) and profit before tax to MSEK 136 (91).
*    Acquisition of Display Team and Sooni Oy in Finland.

Net sales and earnings for the first half of the year
The consolidated sales for the period amounted to MSEK 779 (703).
This is an increase of 11 per cent compared with the same period in
2006. If the acquisitions of Display Team and Sooni are excluded, the
growth in sales was 7 per cent. The change in the value of the
Swedish krona in relation to export currencies and by comparison with
the previous year had a negative effect on sales of MSEK 11.
 The operating profit for the first half of the year was MSEK 77 (47)
and profit before taxes amounted to MSEK 73(39). The change in the
value of the Swedish krona in comparison with last year had a
negative effect on operating profit of MSEK 5. The net interest for
the period amounted to MSEK -5 (-5), while rates of exchange
differences and other currency effects amounted to MSEK 2 (-3). HL
Display's most important export currencies are the Euro, the British
pound and the Russian rouble.

Net sales and earnings for the second quarter of 2007
The group's net sales amounted to MSEK 389 (360) for the second
quarter. This was an increase of 8 per cent compared with the
corresponding quarter in 2006. The operating result for the same
period was MSEK 39 (25) and the profit before tax amounted to MSEK 36
(19). The profit was affected by one-off costs amounting to MSEK 2
and concerns the close-down of the Pictoria factory in Falkenberg.
There was also one-off capital gain of MSEK 3 relating to sale of
real estate. The costs foreseen in relation to the close-down of the
service centre Bergen op Zoom has turned out according to plan.
Net interest for the second quarter amounted MSEK -2 (-2) whereas
rate of exchange differences and other currency effects amounted to
MSEK -1 (-4) during the same period.

The year in brief
The first half of the year has been positive for HL Display, both in
terms of sales and profit. Sales increased by 11 per cent to MSEK 779
compared with the same period last year and profit before taxes
improved by 87 per cent to MSEK 73.
The most pleasing aspect during the first half of the year 2007 was
the significantly improved earnings. Already in the annual accounts
for 2006 we could see that the effects of the measures that were
initiated in recent years are being reflected in the earnings. This
trend has clearly been strengthened and this is the principal reason
for the improvement in earnings. The profit margin for the first half
of the year increased to 9.4 per cent and we now sense that a profit
margin target of 10 per cent is within reach.

Measures implemented
Several of the measures communicated previously have now been
implemented and have produced the desired effects. This means that we
have increased production efficiency and that we now have better
control of operating costs in our activities. The service centre in
Bergen op Zoom that was not able to show satisfactory earnings has
been shut down and activities transferred to the service centre for
France and Spain in the French town of Saint- Avertin. The measures
for changing growth in earnings in the sales companies that were
unprofitable, primarily Germany and the United Kingdom, have also
been implemented. This has had positive effects during the first half
of the year. Production of the Pictoria frame system that previously
took place at the factory in Falkenberg has now been transferred to a
subcontractor in the Czech Republic. Furthermore, parts of our
production in the factory in Falun will gradually be sub-contracted.
This is in line with our new production strategy of concentrating
manufacturing using the production methods where we have leading edge
skills and high cost-efficiency. The effect of these measures will be
reflected in the earnings during the second half of 2007 and during
2008.

Growth in sales
Sales for the first half of the year has exceeded our expectations.
We have experienced a significant sales growth for several of the
months during the period. Growth was exceptionally strong in January
- 30 per cent compared with the same month in 2006. This was due to
an increased order book combined with deliveries delayed from
December to January. Growth was also very strong during June, with an
increase in sales of 15 percent compared to the same period last
year.
Sales at the sales companies that have gone through a restructuring
programme suffered as a consequence of the measures. This applies
primarily to the sales company in the UK where at present we are in
the process of building up a new sales organisation that can better
exploit the potential that exists in the UK market.
We are still experiencing a stable growth in many markets in Asia and
Eastern Europe, markets which for several years have been important
to the Group's overall sales growth.

Aggressive actions
The measures implemented in recent years have been directed at
improving efficiency in our activities. We are now beginning to shift
focus to more aggressive measures designed to strengthen our position
and capturing new market shares. The two acquisitions implemented
during the first half of the year are good examples of this. Through
the acquisition of the Finnish company Display Team, HL Display now
has a stronger range in the brand manufacturer customer segment. This
is a segment where we consider future potential to be good. Sales of
the acquired products are now managed completely by HL Display's own
sales organisation and our experience to date is very good.
 During spring the activities of the Finnish company Sooni Oy were
acquired, the distributor who represented
HL Display on the Finnish market. We have strengthened our market
presence through this acquisition and will increase our opportunities
for benefiting from the potential on the Finnish market. We will also
continue to actively examine the potential for strengthening the
company's offering and market position through acquisitions.

Further investments in China
As was stated earlier we are now concentrating our production to the
methods where we have leading edge skills and efficiency with regards
to extrusion, injection moulding and screen printing. Most of the
remaining production will gradually be sub-contracted.
 During the first half of the year we decided to further increase
production capacity at our factory in Suzhou in China. The factory is
today characterised by a very efficient production process. Six
extrusion lines are now in use for manufacturing mainly for the Asian
markets but also for certain customers in  Europe. About 70 percent
of what is sold in Asia is today manufactured locally and we are
currently planning on expanding production capabilities to also
include injection moulding.  Labour-intensive production operated at
our factories in Sundsvall and Karlskoga are gradually being
transferred to our factory in Suzhou. Activities at these factories
are instead being concentrated on production with a high degree of
automation - an area where both the Sundsvall and Karlskoga factories
have achieved good productivity.

Continued high raw material prices
As was the case last year, raw material prices were high during the
first half of 2007. It has been possible to neutralise these negative
effects through the efficiency measures implemented at the factory.
We have also invested in increasing the level of recycling of
production waste. This means that we now recycle a significant
proportion of all waste material. The waste that cannot be recycled
in our own production can be sold on for recycling by other
producers. These measures have created positive effects from an
environmental as well as a financial perspective.

Improved logistics flows
The production premises in Falkenberg will be rebuilt to provide HL
Display's new central warehouse for the Nordic and Baltic countries.
It will also be our central warehouse globally for all products
purchased by the group. We reckon that activities will be up and
running during September.
It is part of our work to improve and streamline the logistics flows
in the company. We consider there to be good opportunities for cost
savings as well as increased service levels to customers. Today there
is a central warehouse for Asia located in Singapore and a central
warehouse for Western Europe in France. These will eventually augment
with a strategically-located central warehouse for countries in
central and Eastern Europe.

Leasing
HL Display has since a number of years rented factory facilities in
Sundsvall and Falkenberg from the associated company Optimus KB. The
facilities have previously been accounted for according to the
regulations for financial leasing and hereby been included as assets
in the balance sheet of the group with adherent leasing debt. During
the interim period new leasing contracts have been signed for the
facilities whereas the rent contracts no longer are classified as
financial leasing contracts but are accounted for according to the
regulations for operational leasing. The premises in Falkenberg has
in addition been sold to an external party and the group share of the
capital gain was MSEK 3. The book value of the premises was according
to the regulations for financial leasing MSEK 69 and the adherent
leasing debt amounted to MSEK 59 at the time for the
reclassification.

Investments
During the first half of the year net investments in fixed assets,
excluding re-classification of leasing contracts, amounted to MSEK 54
(15). Scheduled depreciation amounted to MSEK 21 (23). MSEK 33 of the
increase in net investment is related to the acquisition of the
activities in Finland.
According to a preliminary acquisition analysis for Display Team,
acquired assets, apart from working capital, consist of order backlog
of MSEK 1, non-current assets of MSEK 7 and goodwill of MSEK 16.
Acquired interest-bearing debt amounted to MSEK 9. Corresponding
information concerning the acquisition of operations in Sooni Oy is
acquired assets apart from working capital relating to customer
relations of MSEK 2 and goodwill of MSEK 7.

Financial position
Liquidity as at 30 June 2007 amounted to MSEK 147 (95) and was MSEK
163 at the beginning of the year. The interest-bearing net liability
that was MSEK 39 at the beginning of the year has now changed into an
interest-bearing net receivable of MSEK 8 (-93). A dividend of MSEK
27 (23) has been paid. Cash flow from current activities increased to
MSEK 75 (52) and to MSEK 34 (35) during the second quarter. Operating
cash flow was SEK 9.56 (6.52) per share and SEK 4.09 (4.40) during
the second quarter. The equity/assets ratio at the balance sheet date
amounted to 49 (46) and was 44 per cent at the beginning of the year.
The improved financial strength is to a large extent a consequence of
the sale of the premises and of the reclassification of the leasing
contracts.

Personnel
The average number of employees during the period was 949 (924). The
number of employees on the balance sheet date amounted to 956 (931)
and was 947 at the beginning of the year.

Information on risks and uncertainty factors
Fluctuations in raw material prices and exchange rates constitute
uncertainty factors but not considerable risks. Reference is made to
the risk and sensitivity analysis on page 32 of the 2006 annual
report for a more detailed description of the risks and uncertainty
factors that HL Display faces.

Parent company
The parent company's profit after net financial items for the first
half year of 2007 amounted to MSEK -33 (-32). The liquidity has
decreased due to a change in the contractual agreement with the bank.
No other significant changes have affected the profit or balance
sheet calculations. A new option programme was set up during the
first half of the year and comprised 64,000 warrants directed to the
company's management group. If fully utilized, the new shares will
correspond to 0.8 per cent of the share capital.

Prospects for the rest of 2007
HL Display has its largest markets in the Nordic Area and Western
Europe. These are characterised by limited growth and tough
competition. The recent years' market investments have therefore been
directed at Eastern Europe and Asia. HL Display will also continue to
actively examine the potential for strengthening the company's
offering and market position through acquisitions. As in recent
years, profitability will be prioritised and a profit margin
objective of ten per cent is within reach. HL Display does not expect
the same sales growth in 2007 as in 2006. A detailed forecast will be
provided in connection with the report for the third quarter.

This interim report has not been reviewed by the company's auditors.

The Board and the Managing Director hereby certifiy that the interim
report gives a fare view on the business, position and result for the
group and the parent company. It also describes essential risks and
factors for unsecurity that the parent company and the companies that
form the group are facing.


Stockholm, July 13th, 2007

Anders Remius
Chairman of the Board

Åke Modig
Member of the Board

Lis Remius
Member of the Board
Jan-Ove Hallgren
Member of the Board

Mats-Olof Ljungkvist
Member of the Board

Stig Karlsson
Member of the Board

Magnus Jonsson
Member of the Board, Employee Repr.

Kent Mossberg
Member of the Board, Employee Repr.

Gérard Dubuy
Member of the Board, Managing Director and CEO

The full report incl tables can be downloaded from the enclosed link.