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InvItatIon to subscrIbe For shares In hexagon ab

VIEWS: 34 PAGES: 100

									    InvItatIon to subscrIbe For shares In hexagon ab




PLEASE NOTE THAT THE SUBSCRIPTION RIGHTS ARE EXPECTED TO HAVE AN ECONOMIC VALUE.
In order not to lose the value of the subscription rights, holders must either:
●  Exercise the subscription rights received and subscribe for new shares no later than 16 December 2010; or
●  Sell the subscription rights received, but not exercised, no later than 13 December 2010.
Please note that shareholders with nominee-registered shareholdings subscribe for new shares through their nominee.




THE DISTRIBUTION OF THIS PROSPECTUS AND THE SUBSCRIPTION FOR
NEW SHARES ARE SUBJECT TO RESTRICTIONS IN CERTAIN JURISDICTIONS.
SEE “RESTRICTIONS ON SALE AND TRANSFER OF SECURITIES.”
This prospectus has been prepared in Swedish and translated into English. In the
event of any discrepancies between the Swedish document and the translation,
the former shall prevail.




                                                    Joint Lead Managers and Joint Bookrunners




                                                                Co-lead Managers
DEFINITIONS                                                                                   Notice to investors in the United States
In this prospectus “Hexagon” or “Company” means, depending on the context,                    the securities have not been, and will not be, registered under the securities act or
either hexagon ab (publ) or the group in which hexagon ab (publ) is the parent                the securities laws of any state or other jurisdiction of the united states and may not
company. the “group” means hexagon ab (publ) and its subsidiaries. In this pro-               be offered, subscribed for, exercised, pledged, sold, resold, delivered or transferred,
spectus “Intergraph” means Intergraph corporation.                                            directly or indirectly, within the united states, except pursuant to an applicable
   the “Joint Lead Managers and Joint Bookrunners” refers to seb enskilda,                    exemption from the registration requirements of the securities act and in compli-
skandinaviska enskilda banken (“SEB Enskilda”) and crédit agricole corporate                  ance with the securities laws of any state or other jurisdiction of the united states.
and Investment bank (“Crédit Agricole”). the “Co-lead Managers” refers to                     there will be no public offer of securities in the united states. any subscription for,
commerzbank, Danske Markets, Dnb nor Markets, handelsbanken capital                           or transaction relating to, securities in contravention of the above may be deemed
Markets, Ing, nordea and swedbank. the Joint Lead Managers and Joint book-                    to be invalid.
runners, the co-lead Managers and certain of their affiliates have provided and may               the securities have not been approved or disapproved by the u.s. securities and
in the future provide various banking, financial, investment, commercial or other             exchange commission, any state securities commission in the united states or any
services to hexagon, hexagon’s shareholders or hexagon’s directors and officers,              other u.s. regulatory authority nor have any of the foregoing authorities passed
for which they may receive compensation. the Joint Lead Managers and Joint                    upon or endorsed the merits of the offering of the securities or the accuracy or
bookrunners, the co-lead Managers or certain of their affiliates act as lending insti-        adequacy of this document. any representation to the contrary is a criminal offense
tutions and/or arrangers of loans granted to hexagon.                                         in the united states.
   “Euroclear Sweden” refers to euroclear sweden ab. “NASDAQ OMX Stock-                           the securities are being offered and sold outside the united states in reliance of
holm” refers to nasDaQ oMx stockholm ab. “SEK” refers to swedish kronor,                      regulation s under the securities act. any offering of the securities to be made in
“USD” refers to u.s. dollars, “EUR” refers to euro, “CHF” refers to swiss Franc and           the united states will be made only to a limited number of existing shareholders who
“CNY” refers to china Yuan renminbi. “M” refers to millions.                                  (i) are reasonably believed to be qualified institutional buyers (as defined in rule
                                                                                              144a under the securities act) pursuant to an exemption from registration under the
IMPORTANT INFORMATION TO INVESTORS                                                            securities act in a transaction not involving any public offering, and (ii) have execut-
this prospectus has been approved and registered by the swedish Financial super-              ed and returned an investor letter to hexagon. For a description of these and certain
visory authority (Finansinspektionen) (the “SFSA”) pursuant to the provisions of              other restrictions on offers, sales and transfers of the securities and the distribution
chapter 2, sections 25 and 26 of the swedish Financial Instruments trading act                of this document, see “restrictions on sale and transfer of securities – united
(lagen (1991:980) om handel med finansiella instrument) (the “Trading Act”).                  states.”
approval and registration by the sFsa do not imply that the sFsa guarantees that                  until 40 days after the commencement of the rights issue, any offer or sale of
the information provided in this prospectus is correct and complete. the prospectus           securities within the united states by any dealer (whether or not participating in the
is also compliant with the requirements of art. 652a swiss code of obligations and            rights issue) may violate the registration requirements of the securities act.
has been submitted to sIx swiss exchange regulation for review as the hexagon
class b shares are also listed on the sIx swiss exchange.                                     Notice to investors in the European Economic Area
    this prospectus and the offering hereunder are governed by swedish law. the               In member states of the european economic area which have implemented Direc-
courts of sweden have exclusive jurisdiction to settle any dispute arising out of or in       tive 2003/71/ec of the european Parliament and the council (the “Prospectus
connection with this prospectus or the offering. this prospectus has been prepared            Directive”), other than sweden, Denmark and the united Kingdom, an offer of any
in swedish and english language versions. In case of any inconsistency between                securities may only be made under an exemption under the Prospectus Directive.
the swedish and the english versions of the prospectus, the swedish version shall             see “restrictions on sale and transfer of securities – european economic area”.
prevail.
    no action has been, or will be, taken by hexagon to permit a public offering in any       FORWARD-LOOKING STATEMENTS AND MARKET DATA
jurisdiction other than sweden, switzerland, Denmark and the united Kingdom. the              the prospectus contains certain forward-looking statements that reflect hexagon’s
subscription rights, paid subscription shares (betalda tecknade aktier, bta) and new          current views or expectations with respect to future events and financial and opera-
shares (the “Securities”) may not be offered, subscribed for, sold or transferred,            tional performance. the words “intend”, “estimate”, “expect”, “may”, “plan”, “antici-
directly or indirectly, within the united states except pursuant to an exemption from         pate” or similar expressions regarding indications or forecasts of future develop-
the registration requirements of the united states securities act of 1933 (the “Secu-         ments or trends, which are not statements based on historical facts, constitute
rities Act”). the offering is not directed to investors domiciled in canada, australia        forward-looking information. although hexagon believes that these statements are
and Japan or in any other jurisdiction where participation would require additional           based on reasonable assumptions and expectations, hexagon cannot give any
prospectuses, registration or measures other than those pursuant to swedish,                  assurances that such statements will materialize. because these forward-looking
swiss, Danish or uK law. accordingly, the prospectus may not be distributed in any            statements involve known and unknown risks and uncertainties, the outcome could
country where the distribution or the offering requires such measures or would con-           differ materially from those set out in the forward-looking statement.
flict with regulations in such country or jurisdiction. acquisition of securities in viola-      Factors that could cause hexagon’s actual operations, result or performance to
tion of the restrictions described above may be void. Persons into whose posses-              differ from the forward-looking statements include, but are not limited to, those
sion this prospectus may come are required to inform themselves about, and                    described in “risk factors”. the forward-looking statements included in this
comply with, such restrictions. any failure to comply with such restrictions may              prospectus apply only to the date of the prospectus. hexagon undertakes no obli-
result in a violation of applicable securities regulations. see “restrictions on sale and     gation to publicly update or revise any forward-looking statements, whether as a
transfer of securities”.                                                                      result of new information, future events or otherwise, other than as required by law.
    this prospectus has been prepared by hexagon based on its own information                 any subsequent forward-looking information that can be ascribed to hexagon or
and sources that hexagon believes to be reliable. no representation or warranty,              persons action on hexagon’s behalf is subject to the reservations in or referred to in
expressed or implied, is made by the Joint Lead Managers and Joint bookrunners                this section.
or the co-lead Managers as to the accuracy or completeness of any of the informa-                the prospectus contains market data and industry forecasts, including informa-
tion set out in this prospectus and nothing in the prospectus is or shall be relied           tion related to the sizes of the markets in which the group participates. the informa-
upon as a promise or representation, whether as to the past or the future, as the             tion has been extracted from a number of sources, and hexagon is responsible for
Joint Lead Managers and Joint bookrunners and the co-lead Managers have con-                  such information having been reproduced correctly. although hexagon regards
ducted no independent verification of the information.                                        these sources as reliable, the information contained in them has not been independ-
    Investing in the securities involves certain risks, see “risk factors”. anyone mak-       ently verified and therefore it cannot be guaranteed that this information is accurate
ing an investment decision must rely on its own assessment of hexagon and the                 and complete. however, as far as hexagon is aware and can assure by comparison
offering under this prospectus, including, but not limited to, facts and risks involved.      with other information made public by these sources, no information has been omit-
before making any investment decision, prospective investors should consult their             ted in such a way as to render the information reproduced incorrect or misleading. In
own professional advisers, and carefully review and consider such an investment               addition to the above, certain data in the prospectus is also derived from estimates
decision in the light of this. Investors may only rely on the information contained in        made by hexagon.
this prospectus and any supplements to this prospectus. no person has been
authorized to provide any information or make any statements other than those                 PRESENTATION OF FINANCIAL INFORMATION
contained in this prospectus. should such information or statements nevertheless              hexagon’s audited consolidated financial statements for 2007, 2008 and 2009 and
be furnished, it or they must not be relied upon as having been authorized or                 the reviewed interim financial statement for the period January – september 2010,
approved by hexagon and hexagon takes no responsibility for such information or               which have been prepared in accordance with International Financial reporting
statements. neither the publication of this prospectus nor any transaction as a result        standards (“IFRS”) as enacted by the eu, are incorporated through reference and
of the prospectus will, under any circumstances, imply that the information in this           constitute part of this prospectus. as regards financial information concerning
prospectus is correct and current as at any date other than the date of this prospec-         Intergraph, please see “Financial overview Intergraph”. certain financial and other
tus or that there have not been any changes in hexagon’s business since the date of           information presented in this prospectus has been rounded off for the purpose of
this prospectus. If the information in this prospectus becomes subject to any mate-           making this prospectus more easily accessible for the reader. as a result, the figures
rial change, such material change will be made public in accordance with the provi-           in tables may not tally with the stated totals.
sions governing the publication of supplements to prospectuses in the trading act.               With the exception of the company’s audited consolidated financial statements
    as a condition for exercising subscription rights or subscribing for new shares           for 2007, 2008 and 2009, the reviewed interim financial statement for the period
pursuant to the offering in this prospectus, each exercising holder or subscriber will        January – september 2010 and the pro forma financial statements on pages 66–70
be deemed to have made, or, in some cases, be required to make, certain represen-             in this prospectus, no other information in the prospectus has been reviewed or
tations and warranties that will be relied upon by hexagon, the Joint Lead Managers           audited by the company’s auditor.
and Joint bookrunners and others. see “restrictions on sale and transfer of securi-
ties.” hexagon reserves the right, in its sole and absolute discretion, to reject any
exercise, subscription or purchase of securities that it or its agents believe may give
rise to a breach or violation of any law, rule or regulation.
Contents                                                                                 The rights issue in brief
                                                                                         Preferential right:
                                                                                         For every share of series A held in Hexagon the holder is entitled to one (1) series A
                                                                                         subscription right and for every held share of series B the holder is entitled to one
                                                                                         (1) series B subscription right. Three (3) series A or series B subscription rights
     2    summary
                                                                                         entitles the holder to subscribe for one (1) new share of the corresponding series
                                                                                         (primary preferential right). Shares not subscribed for by primary preferential right
     6    risk factors
                                                                                         shall be offered to all shareholders for subscription (subsidiary preferential right).
                                                                                         Upon transfer of the subscription right (the primary preferential right), the subsidi-
    10    Invitation to subscribe for shares in hexagon
                                                                                         ary preferential right is also passed on to the new holder. In addition to the above,
                                                                                         investors are given the opportunity to subscribe for shares without preferential
    11    background and reasons
                                                                                         rights.

    12    comments by the ceo
                                                                                         Subscription price:
                                                                                         74 SEK per share of series A and series B.
    13    terms, conditions and instructions

                                                                                         Subscription by exercising subscription rights (primary preferential right):
    17    how to proceed
                                                                                         Subscription takes place during the subscription period through simultaneous cash
                                                                                         payment.
    18    Market overview

                                                                                         Subscription with subsidiary preferential right and without preferential right:
    22    Description of hexagon
                                                                                         Registration for subscription with subsidiary preferential right or without preferen-

    35    Financial overview hexagon                                                     tial right shall be made to SEB no later than 16 December 2010 on a special appli-
                                                                                         cation form that can be obtained from any branch of SEB or from www.seb.se/

    40    commentary on hexagon’s financial development                                  prospekt or from www.hexagon.se. Payment for allotted shares shall be made in
                                                                                         cash in accordance with the instructions on the notice of allotment. Custody
    45    capitalisation and other financial information for hexagon                     account holders with nominees shall instead register with and in accordance with
                                                                                         instructions from the nominee.
    51    Description of Intergraph
                                                                                         Important dates:
    58    Financial overview Intergraph                                                  Record date for participation in the rights issue:                 29 November 2010

                                                                                         Subscription period:                                             2–16 December 2010
    61    commentary on Intergraph’s financial development
                                                                                         Trading in subscription rights:                                  2–13 December 2010
    63    the new group                                                                  Trading in paid subscribed shares (BTAs):                        2–23 December 2010

                                                                                         Preliminary results of subscription take-up:         On or around 20 December 2010
    66    Pro forma financial statements
                                                                                         Final results of subscription take-up:               On or around 22 December 2010
    71    auditor’s report on the pro forma financial statements
                                                                                         First day of trading for new shares subscribed
                                                                                         for by using primary preferential rights:            On or around 28 December 2010
    72    board of Directors, group Management and auditors
                                                                                         First day of trading for new shares subscribed
    75    corporate governance                                                           for by using subsidiary preferential rights or
                                                                                         subscription without preferential rights:              On or around 11 January 2011
    79    share capital and ownership structure
                                                                                         Ticker:
    84    articles of association and other information                                  Shares of series B:                                                           HEXA B
                                                                                         Series B subscription rights:                                             HEXA B TR
    86    Legal considerations and supplementary information
                                                                                         Series B BTAs:                                                           HEXA B BTA

    89    certain tax considerations in sweden
                                                                                         ISIN-codes:
    91    restriction on sale and transfer etc.                                          Shares of series B:                                                    SE0000103699
                                                                                         Series B subscription rights:                                          SE0003620939
    95    glossary                                                                       Series B BTAs:                                                         SE0003620947


    96    addresses                                                                      Documents incorporated by reference:
                                                                                         1. Hexagon’s audited annual accounts for 2009, including the auditor’s report
                                                                                         2. Hexagon’s audited annual accounts for 2008, including the auditor’s report
                                                                                         3. Hexagon’s audited annual accounts for 2007, including the auditor’s report
                                                                                         4. Hexagon’s reviewed interim report for January – September 2010

This prospectus is available for order (subject to certain legal restrictions) free of
charge at Hexagon’s registered office located at Lilla Bantorget 15, Stockholm,          Financial information:
Sweden, on the Company’s website (www.hexagon.se) as well as on SEB’s website            Year-end report January – December 2010                               9 February 2011
(www.seb.se/prospekt). The prospectus can also be ordered from Hexagon at                Interim report January – March 2011                                      10 May 2011
e-mail: rightsissue2010@hexagon.se or tel: +46 8 6012620.




                                                                                                                           InvItatIon to subscrIbe For shares In hexagon ab       1
    Summary

    This summary shall be regarded as an introduction to the prospectus. Each decision to
    invest in the Hexagon share shall be based on an assessment of the prospectus in its
    entirety. Investors that file a lawsuit in a court of law on account of information in the
    prospectus may be liable for costs in connection with translation of the prospectus.
    A person may be held liable for information included in or missing from the summary or
    a translation of the summary, only if the summary or the translation is misleading or
    incorrect in relation to the other parts of the prospectus.

    The transaction in brief                                                                  According to Hexagon’s analysis, the acquisition of Inter-
    On 7 July 2010, Hexagon announced that the Company had                                graph is expected to immediately contribute positively to Group
    entered into an agreement whereby Hexagon would carry out a                           earnings, excluding impact of non-recurring cash integration
    cash acquisition of US-based software company Intergraph                              and transaction and refinancing costs, and is expected to gener-
    Corporation. The agreed purchase price amounted to 2 125                              ate significant cost and revenue synergies. Pre-tax synergies are
    MUSD on a cash and debt free basis. The acquisition was sub-                          expected to amount to approximately 30 MUSD in 2011, 40
    ject to certain conditions, including clearance from the relevant                     MUSD in 2012 and 70 MUSD to EBIT as from 2013 and
    competent competition authorities and CFIUS (Committee on                             onwards, growing sequentially in the years thereafter.
    Foreign Investment in the United States). On 28 October 2010,                             Prior to entering into the agreement to acquire Intergraph,
    all necessary approvals had been obtained and the acquisition                         Hexagon secured commitments from its banks to finance the
    was completed, whereupon Hexagon became the sole owner of                             cash purchase price and to refinance the Company’s existing
    Intergraph.                                                                           1 000 MEUR revolving credit facility. Hexagon also declared
         The combination of Hexagon’s leadership in measurement                           that the company intended to pursue a rights offering corre-
    solutions using aerial and ground-based point cloud sensor                            sponding to approximately 6 500 MSEK as soon as practically
    technology, with Intergraph’s leadership in enterprise engineer-                      possible following completion of the acquisition in order to
    ing software and geospatially powered software is expected to                         reduce the Company’s leverage.
    enable the enlarged Group to develop and provide integrated                               The net proceeds from the rights offering of approximately
    solutions to clients. Following the acquisitions of Brown &                           6 414 MSEK will therefore be used to substantially strengthen
    Sharpe in 2001, Leica Geosystems in 2005 and NovAtel in                               Hexagon’s balance sheet and reduce Hexagon’s debt.
    2007, Intergraph was considered the natural next step for                                 On 22 October 2010, the Board of Directors of Hexagon
    Hexagon due to its global software capabilities. With the inte-                       resolved, subject to the subsequent approval of the General
    gration of Intergraph, Hexagon will cover all aspects of the                          Meeting, to increase the Company’s share capital through a
    measurement technology market from capturing three dimen-                             rights issue with preferential rights for the Company’s
    sional data from ground, air and space, processing data to                            shareholders. On 24 November 2010, the Extraordinary
    creating, managing and delivering information via enterprise                          General Meeting approved the resolution by the Board of Direc-
    engineering software and geographic information systems                               tors. The share issue resolution means that the Company’s share
    (“GIS”).                                                                              capital will increase by a maximum of 176 244 814 SEK, from



    Timetable

                                      Subscription period (simultaneous payment)



                  29                2                              13          16         20       22                28                           11
               November          December                       December    December   December December          December                      January


     2010                                                                                                                           2011

             Record date                                                               Preliminary    Final                                  First day of trading for new
             for participation                                                         results of     results of                             shares subscribed for by
             in the rights                                                             subscription   subscription                           using subsidiary preferential
             issue                    Trading of subscription rights                   take-up        take-up                                rights or subscription
                                                                                                                  First day of trading for   without preferential rights
                                                                                                                  new shares subscribed
                                                                                                                  for by using primary
                                                                                                                  preferential rights




2       InvItatIon to subscrIbe for shares In hexagon ab
                                                                                                                                        Summary




531 039 540 SEK to not more than 707 284 354 SEK, through           Geosystems (59 per cent of net sales of Measurement
an issue of not more than 88 122 407 new shares, of which           Technologies in 2009)
3 937 500 series A shares and 84 184 907 series B shares. Those     Geosystems satisfies the growing need for measurement tech-
persons who, on the record date of 29 November 2010 are             nologies in infrastructure development, among other areas.
registered as Hexagon shareholders may subscribe for one (1)        Customers include building and construction companies, map
new share for every three (3) existing shares. Series A shares      companies, surveyors, mining companies and agriculture.
give entitlement to subscription for series A shares and series B
shares give entitlement to subscription for series B shares. The    Metrology (35 per cent of net sales of Measurement
issue price has been fixed at 74 SEK per each share of series A     Technologies in 2009)
and series B, which means that the new issue in total, if the       Metrology offers measurement technologies and measurement
rights issue is fully subscribed, provides Hexagon with approxi-    data management to increase quality and reduce cost in the pro-
mately 6 521 MSEK before transaction related expenses.              duction process. Customers include automotive, aerospace,
    Subscription for shares with primary preferential rights        engineering, medical and energy industries.
shall be made through cash payment during the period from
2 December 2010 until 16 December 2010. Application for             Technology (6 per cent of net sales of Measurement
subscription for shares on the basis of subsidiary preferential     Technologies in 2009)
rights or without subscription rights shall be made on 16           Technology is a sub-supplier of technology, systems and preci-
December 2010 at the latest. Payment for allotted shares shall      sion components for OEM customers. End customers are locat-
be made in cash in accordance with the instructions on the          ed in sectors such as surveying, marine applications, navigation,
notice of allotment.                                                port management, aerospace, building and construction.
    Melker Schörling AB, Ramsbury Invest AB, Hexagon’s
President and CEO, Ola Rollén and Hexagon’s CFO, Håkan              Intergraph in brief
Halén, together representing approximately 53.3 per cent of the     Intergraph is a leading global provider of enterprise engineering
votes and 34.6 per cent of the capital of Hexagon, have under-      software and geospatially powered solutions that enables cus-
taken to subscribe for shares corresponding to their respective     tomers to visualise complex data. Businesses and governments
pro rata shares in the right issue. Ramsbury Invest AB has          rely on Intergraph’s industry-specific software solutions to
undertaken to subscribe for shares corresponding to a further       organise vast amounts of data into understandable visual repre-
15.6 per cent of the rights issue. Consequently, subscription and   sentations and actionable intelligence.
guarantee undertakings total 50.2 per cent of the rights issue          In 2009, net sales amounted to 770 MUSD and Intergraph
have been obtained.                                                 operates through two divisions: Process, Power & Marine
    The subscription and guarantee undertakings are, however,       (“PP&M”) and Security, Government & Infrastructure
not secured. For further information see section “Risk Factors      (“SG&I”).
– Risks related to the share and rights issue”.
                                                                    PP&M (41 per cent of net sales of Intergraph in 2009)
Hexagon in brief                                                    PP&M provides enterprise engineering software for the design,
Hexagon is a leading measurement technology company and             construction and operation of plants, ships and offshore facili-
supplier of systems for measurement of objects in one, two or       ties. Customers rely on Intergraph software to create, manage,
three dimensions. The measurement systems measure with great        and use critical engineering data to increase productivity and
precision and provide access to large amounts of measurement        provide for safe and clean operations.
data.
    In 2009, net sales amounted to close to 12 billion SEK and      SG&I (59 per cent of net sales of Intergraph in 2009)
operating earnings before non-recurring items (“EBIT1”) to          SG&I provides geospatially powered solutions to the defence
1 784 MSEK. The Hexagon Group operates through two busi-            and intelligence, public safety, government, transportation,
ness areas: Measurement Technologies and Other Operations.          photogrammetry, utilities, and communications industries.
The core business, Measurement Technologies, representing           Customers rely on Intergraph solutions to organize vast
approximately 97 per cent of net sales in 2009, delivers solu-      amounts of complex data into understandable visual represen-
tions within the three application areas Geosystems, Metrology      tations.
and Technology.




                                                                                           InvItatIon to subscrIbe For shares In hexagon ab   3
Summary




    Market in brief                                                                             Risk factors
    Dimensional measurement technology is a prerequisite for                                    Ownership of shares in Hexagon and Hexagon’s operations are
    modern social planning, effective construction and manufactur-                              associated with risks related to the economy’s effect on demand,
    ing with minimal environmental impact. Measurement technol-                                 competition, technical development and price pressure, custom-
    ogy is utilized everywhere in society and in industrial applica-                            ers and suppliers, acquisitions and integration, acquisition and
    tions to save time and resources, as well as to increase knowledge                          integration risks specific to Intergraph, human capital, restruc-
    and understanding. There is an increasing demand for enhanced                               turing, legislation and regulation and intellectual property
    capability to measure and position objects, infrastructures and                             rights. Furthermore, ownership of shares in Hexagon and
    environments.                                                                               Hexagon’s operations are associated with risks related to the
         The market for measurement technologies can be divided                                 environment, tax, currency, interest rates and credits, financing
    into the macro, micro and nano segments. Boundaries between                                 and liquidity, goodwill, the stock market, trading in subscrip-
    the three segments are based on the precision required by the                               tion rights, dilution, future dividends, non-secured subscription
    customer: the smaller the object to be measured, the greater the                            undertakings and guarantees and shareholders with significant
    precision required. At the end of 2009, Hexagon estimated the                               influence. The above mentioned risks are merely the headings
    size of the measurement technologies market at about 83 billion                             relating to the risks described in more detail under “Risk fac-
    SEK, with annual growth of approximately 8 per cent over a                                  tors”. The omission or inclusion of a risk factor in this summary
    business cycle. In 2009, Hexagon estimated its market share in                              is not an indication of its importance.
    the micro segment to be approximately 14 per cent and its mar-
    ket share in the macro segment to approximately 17 per cent.                                Other information
    Hexagon’s presence in the nano segment is to be regarded as                                 Board of Directors, Group Management and auditors
    marginal.                                                                                   The Board of Directors comprises Melker Schörling (Chair-
         Data collected through measurement technologies is proc-                               man), Mario Fontana, Ulrika Francke, Ulf Henriksson, Gun
    essed to create, manage and deliver vast amounts of data into                               Nilsson, Ola Rollén and Ulrik Svensson.
    understandable visual representations and actionable intelli-                                   Group Management comprises Ola Rollén (President and
    gence. The market for advanced 3D software includes enter-                                  CEO), Jürgen Dold, William Gruber, Håkan Halén, Norbert
    prise engineering software and GIS. Security organisations,                                 Hanke, Li Hongquan, Frederick London and Bo Pettersson.
    businesses, and governments rely on advanced 3D software to                                     Hexagon’s auditors are Ernst & Young AB with Hamish
    build and operate more efficient plants and ships, create intelli-                          Mabon as auditor in charge.
    gent maps, and protect critical infrastructure.                                                 For more information on the members of the Board of
         The size of the advanced 3D software market can be broken                              Directors, Group Management and the Company’s auditors see
    down as follows1):                                                                          “Board of Directors, Group Management and Auditors”.
    ●    the process engineering tools market is estimated to grow to
         1.9 billion USD by 2012, which represents a 13 per cent                                Financial advisors
         compound annual growth rate (“CAGR”) from 2009 (1.3                                    Hexagon’s financial advisors in connection with the rights issue
         billion USD);                                                                          are Credit Agricole Corporate and Investment Bank and
    ●    the spatial information management market is expected to                               SEB Enskilda as Joint Lead Managers and Joint Bookrunners,
         grow to 2.1 billion USD by 2012, which represents a 9 per                              and Commerzbank, Danske Markets, DnB NOR Markets,
         cent CAGR from 2009 (1.6 billion USD).                                                 Handelsbanken Capital Markets, ING, Nordea and Swedbank
                                                                                                as Co-lead Managers.
    The competitive landscape includes companies of varying size
    and with differing specialisations located across the globe. Some                           Major shareholders and transactions with closely related
    companies provide only hardware, others only software. Multi-                               parties
    national companies compete with national companies that are                                 Hexagon’s largest shareholder as per 30 September 2010 was
    sometimes market leaders within specific regions or niche tech-                             Melker Schörling AB with approximately 29.6 per cent of the
    nologies.                                                                                   share capital and 49.8 per cent of the votes in Hexagon. For
                                                                                                further information, see “Share capital and ownership struc-
                                                                                                ture”. For information regarding transactions with related par-
                                                                                                ties, see “Legal considerations and supplementary informa-
                                                                                                tion”.




    1) Source: Based on internal industry knowledge and Process Engineering Tools Worldwide Outlook. Market Analysis and Forecast Through 2013. Arc Advisory Group.



4        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                                                       Summary




Financial development of Hexagon in brief
Below is a summary of Hexagon’s financial development during the years 2007–2009 and the periods January – September 2009 and
2010.
                                                                               January – September
                                                                              2010                    2009                 2009                   2008                  2007
net sales, MseK                                                               9 458                   8 735              11 811                14 479                 14 587
operating earnings (ebIt), MseK                                               1 635                   1 043               1 600                  2 448                  2 270
operating earnings excluding non-recurring
items (ebIt1), MseK                                                           1 635                   1 218               1 784                  2 548                  2 421
operating margin, %                                                            17.3                    13.9                 15.1                  17.6                   16.6
Profit margin before taxes, %                                                  16.1                    10.5                 12.2                  14.7                   14.1
return on shareholders’ equity, %                                              13.8                    10.0                 10.3                  18.2                   19.5
return on capital employed, %                                                    9.8                     8.1                 7.8                  12.5                   15.2
equity ratio, %                                                                49.6                    47.6                 49.1                  43.7                   40.3
net indebtedness                                                               0.58                    0.74                 0.66                  0.89                   0.88
Interest coverage ratio                                                        13.5                      7.5                 9.5                    7.0                      8.8
average number of shares, (‘000)                                          264 537                  264 263              264 284               265 317                265 278
basic earnings per share excluding
non-recurring items, seK                                                       4.93                    3.54                 5.31                  7.28                   7.11
basic earnings per share, seK                                                  4.93                    2.97                 4.71                  6.96                   6.79
cash flow per share, seK                                                       6.55                    5.97                 9.92                  6.61                   7.64
cash flow per share before
change in working capital, seK                                                 7.10                    4.80                 7.58                  9.75                   9.32
cash dividend per share, seK                                                       –                           –            1.20                  0.50 1)                2.35
share price, seK                                                                145                       83                106                      38                      135
1) In addition to ordinary dividends, the polymers business, hexpol, was spun off to hexagon’s shareholders.




Significant changes since publication                                                             graph, as well as the effects of Hexagon being considered to
of the interim report for the period                                                              have acquired the inventories of Intergraph at market value, i.e.
January – September 2010                                                                          sales of the inventories will entail a lesser than normal profit
Since the publication of the interim report for the period January                                and finally that revenue recognition for acquired deferred reve-
– September 2010, Hexagon’s financial and market positions                                        nues will be affected negatively. The total profit and loss impact
have changed substantially through the acquisition of Inter-                                      is expected to amount to approximately 670 MSEK.
graph. See “Pro forma financial statements”, for an illustration                                       As a consequence of the completion of the acquisition of
of the consolidated balance sheet as per 30 September 2010,                                       Intergraph, Hexagon will also revisit the divestment strategy
including net indebtedness. See “Description of Intergraph” for                                   for certain entities within the “Other operations” segment.
a description of Intergraph.                                                                      Impairment charges related to such entities of approximately
    The General Meeting of Hexagon resolved on 24 Novem-                                          250 MSEK are expected to be incurred in the fourth quarter of
ber 2010 to replace SEK with EUR as the accounting currency                                       2010.
for Hexagon from 1 January 2011. Furthermore Hexagon has                                               Cash transaction costs (both operational and financial)
determined to use EUR as the reporting currency in the consoli-                                   related to the acquisition of Intergraph (excluding rights issue
dated financial statements from 1 January 2011. For more                                          costs) will amount to approximately 510 MSEK, of which
information see “Capitalisation and other financial informa-                                      approximately 380 MSEK will be charged in the fourth quarter
tion for Hexagon – Currency exposure”.                                                            2010. The remaining part, relating to loans, will be capitalised
    In the fourth quarter of 2010, Hexagon is expected to                                         over the length of the loans, which is 5 years.
record non-recurring and non-cash costs related to the write-                                          In other respects, no major changes have taken place in
downs of overlapping technologies in both Hexagon and Inter-                                      Hexagon’s financial or market position.




                                                                                                                          InvItatIon to subscrIbe For shares In hexagon ab         5
    Risk factors

    A number of factors, not entirely controllable by Hexagon, affect and may come to
    affect Hexagon’s business. There are risks both regarding circumstances linked to
    Hexagon and those which bear no specific relation to Hexagon. Described below are
    some of the risk factors, which are considered to be of particular significance to
    Hexagon’s future development. The below summary of risk factors does not claim to
    be complete, nor are the risks ranked according to degree of importance. Not all
    factors are described in detail, and accordingly, a complete evaluation of the informa-
    tion in this prospectus as well as a general evaluation of external factors must be
    made. Additional risks of which the Company is not currently aware or which the
    Company currently considers insignificant can exert substantial influence on Hexagon’s
    business, financial position or result.


    Market risks and operational risks                                  Customers and suppliers
    Impact of the economy                                               The majority of operational risks are attributable to Hexagon’s
    Hexagon engages in worldwide operations that are dependent          customer and supplier relations. Hexagon’s business activities
    on both the general economic trend and conditions that are          are conducted in a large number of geographical markets with
    unique for a certain country or region. As in virtually all busi-   multiple customer categories. Surveying is the single largest cus-
    nesses, general market conditions affect the inclination and the    tomer category and accounted for 35 per cent of the Measure-
    capabilities of Hexagon’s existing and potential customers to       ment Technologies business’ net sales in 2009. For Hexagon,
    invest in measurement technologies. A weak economic trend in        this customer category may involve certain risks. A downturn
    the whole or part of the world may therefore result in lower        or weak development in the surveying sector can impact nega-
    market growth that falls below expectations. Although               tively on Hexagon’s business. Surveying is followed by customer
    Hexagon’s business is well spread geographically with a broad       categories heavy construction (12 per cent), automotive (9 per
    customer base within numerous markets segments, there is a          cent) and manufacturing (9 per cent).
    risk that Hexagon’s operations, financial position and results           Hexagon’s products consist of components from several
    may be adversely impacted by a weak economic trend.                 different suppliers. To be in a position to manufacture, sell and
                                                                        deliver products, Hexagon is dependent upon deliveries from
    Competition, technical development and price pressure               third parties in accordance with agreed requirements relating
    Parts of Hexagon’s operations are carried out in sectors which      to, for example, quantity, quality and delivery times. Erroneous
    are subject to price pressure and rapid technological progress.     or default deliveries by suppliers can cause delay or default in
    Competitors may, by means of enhanced technology and prod-          Hexagon’s deliveries, which can result in reduced sales.
    uct knowledge, come to produce at lower cost and increase the
    competition. The ability to compete in the market environment       Acquisitions and integration
    by introducing new products with enhanced functionality while       An important part of Hexagon’s strategy is to work actively
    simultaneously cutting costs on new and existing products is        with acquisitions of companies and businesses, which has
    very important. It is also essential to attract the right compe-    resulted in a number of successful acquisitions. Strategic acqui-
    tence in the areas of research, product development, marketing      sitions will continue to be part of the growth strategy going for-
    and sales. There is a risk that this will necessitate significant   ward. It cannot be guaranteed, however, that Hexagon will be
    financial resources, relative to Hexagon’s competitors, which       able to find suitable acquisition targets nor can it be guaranteed
    can impact Hexagon’s operations, financial position and results     that the necessary financing for future acquisition targets can be
    adversely.                                                          obtained on terms acceptable to Hexagon. This may lead to
        Changes in environmental requirements and customers’            decreasing growth rate for Hexagon.
    requirements to increase productivity and efficiency may affect          The execution of acquisitions also implies risk. In addition
    the demand for Hexagon’s products. To a certain extent,             to company-specific risks, the acquired company’s relations
    Hexagon’s future growth depends on the Company’s ability to         with customers, suppliers and key personnel may be negatively
    develop new and successful products, as well as to improve          affected. There is also a risk that integration processes may
    existing products, in order to meet this demand and to avoid        prove more costly or more time consuming than estimated and
    losing market share to competitors. Research and development        that anticipated synergies in whole or in part fail to materialise.
    efforts are costly and new product development always entails a
    risk of unsuccessful product launches or commercialization,
    which could have material consequences.



6       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                       Risk factors




Acquisition and integration risks specific to Intergraph             Restructuring
Subsequent to Hexagon’s acquisition of Intergraph, senior man-       Hexagon works with various structural programs to strengthen
agement of Intergraph has in part been replaced. Since the new       the Group’s position and competitiveness through, for example,
management of Intergraph does not have a track record in rela-       rationalization measures, restructurings and similar measures.
tion to Intergraph, there is a risk that the new management’s        There is a risk that the measures taken will not generate the
impact on the business of Intergraph may not achieve their tar-      anticipated outcome.
gets. A mean for achieving cost synergies in relation to the
acquisition of Intergraph may be reduction of overlapping            Legal risks
resources, including reduction of staff, which may entail some       Legislation and regulation risks
financial risk.                                                      Hexagon’s main markets are subject to extensive regulation.
     Intergraph has ongoing business operations and contractual      Hexagon closely monitors the legislation, regulations and ordi-
relationships with entities within the U.S. Government. There is     nances applicable in each market, and seeks to adapt the busi-
a risk that this may limit Hexagon’s insight in such businesses      ness to identified future changes in the area. Hexagon’s opera-
activities and restrict Hexagon’s possibilities to exert influence   tions may however be affected by regulatory changes, changes
in relation to the part of Intergraph’s business comprised by        to customs duties and other trading obstacles, pricing and cur-
such contracts.                                                      rency controls as well as other central government regulations
     In order to comply with U.S. requirements relating to the       and restrictions in the countries where Hexagon is active.
mitigation of foreign ownership, control or influence (“FOCI”)
over the affairs of a business having access to such information,    Intellectual property rights risks
Intergraph has transferred the contracts involving access to         The Group seeks to protect its technological innovations to
classified information and certain related business into a new       safeguard the returns on the resources that Hexagon assigns to
subsidiary – Intergraph Government Solutions Corp (“IGS”).           research and development (“R&D”). The Group strives to pro-
Hexagon will enter into a proxy agreement with the U.S.              tect its technical innovations though patents when the Group
Defense Security Service relating to IGS pursuant to which IGS       considers it justified. All products are hence not protected by
will be managed by a minimum of three proxy board directors          patent. Patent infringement and plagiarism are risks to which
who are completely independent of Hexagon and will be sub-           Hexagon are exposed. Where the Company considers it justi-
ject to a variety of procedures designed to mitigate FOCI. As a      fied, Hexagon protects its intellectual property rights through
result, a substantial portion of the assets and business being       legal action. There is no guarantee that Hexagon will be able to
acquired through the Intergraph transaction will be managed          protect obtained patents, trademarks and other intellectual
by a proxy board which will have the legal ability to exercise       property rights or that submitted applications for registration
substantial control over the conduct of the business of IGS. In      will be granted. Furthermore, the sectors that Hexagon operates
addition, the ability of IGS to continue to conduct operations       in produce rapid technical developments. Accordingly, there is
that involve access to classified information will be dependent      a risk that new technologies and products are developed which
upon its ability to comply with the relevant FOCI mitigation         circumvent or replace Hexagon’s intellectual property rights.
requirements and to maintain the necessary security clearances.      Hexagon believes that the Company does not currently intrude
Despite the implemented safeguards, Hexagon believes it to be        on other companies’ intellectual property rights. Hexagon can-
appropriate to consolidate IGS with Hexagon.                         not however guarantee that the Company cannot be considered
     In connection with the acquisition of Intergraph, parts of      to infringe the intellectual property rights of others. Infringe-
the purchase price been classified as goodwill. There is a risk      ment disputes can, like disputes in general, be costly and time-
that Hexagon may not be able to support the value of such            consuming and may therefore adversely affect the Company’s
goodwill in the future. In the event that future tests display a     business.
sustainable decrease in the value of goodwill, this will lead to
impairment, which will have a negative impact on Hexagon’s           Environmental risks
financial position and results.                                      Certain companies within the Group have operations with an
                                                                     environmental impact. Hexagon complies with applicable laws
Human capital                                                        and obligations and obtained relevant approvals where needed.
The future success of Hexagon is largely dependent on the            Possible stricter regulation of environmental matters can result
capacity to retain, recruit and develop skilled key employees        in increased costs or further investments for the companies
and other staff. Accordingly, being an attractive employer is an     within the Group which are subject to such regulation.
important success factor for Hexagon. The resignation of key
employees or Hexagon’s failure to attract skilled personnel may
have an adverse impact on the Group’s operations.



                                                                                            InvItatIon to subscrIbe For shares In hexagon ab     7
Risk factors




    Tax risks                                                              Interest and credit risks
    Hexagon operates through subsidiaries in a number of jurisdic-         The interest rate risk is the risk that changes in interest rates will
    tions. Transactions between Group companies are carried out            adversely affect the Group’s net interest expense and/or the cash
    in accordance with Hexagon’s interpretation of prevailing tax          flow. Interest rate exposure arises primarily from outstanding
    law, tax treaties, OECD’s guidelines and agreements entered            loans. The impact on the Group’s net interest expense depends,
    into with foreign tax authorities and normally at arm’s length.        among other things, on the average interest fixing period for
    However, Hexagon’s interpretation of such rules and regula-            borrowings. The average interest fixing period as of the end of
    tions may be challenged by tax authorities in some countries.          2009 was less than two months.
    They may also be subject to future changes which can have an                Credit risk, i.e. the risk that customers may be unable to
    effect on the Group’s tax position. Furthermore, a change of the       fulfil their payment obligations, account for the majority of
    business or part of the business can have an impact on agree-          Hexagon’s counterparty risk. Credit risk also includes the risk
    ments entered into with tax authorities in some tax jurisdictions.     that customers will not pay receivables that Hexagon has
    The Group has a low average corporate tax rate from an inter-          invoiced or intends to invoice. Financial credit risk is the expo-
    national perspective. The average corporate tax rate may               sure to default of counterparties with which the Group has
    increase if large acquisitions of new groups of companies are          invested cash, short-term bank investments or contracted finan-
    made in high tax jurisdictions or if the corporate tax rates           cial instruments.
    change in countries where Hexagon carries out substantial                   If Hexagon’s measures to minimize interest and credit risks
    business.                                                              are not sufficient, Hexagon’s financial position and results may
                                                                           be adversely affected.
    Financial risks
    Currency risks                                                         Financing and liquidity risks
    Hexagon is exposed to various financial risks, of which curren-        Hexagon’s business may require additional financial resources
    cy risk, i.e. the risk that currency exchange rate fluctuations will   in the future in order to carry out company acquisitions or
    have an adverse effect on cash flow, income statement or               otherwise attain strategic objectives. Hexagon’s possibility of
    balance sheet, is the major one. Exchange rate fluctuations            satisfying future capital needs is to a large degree dependent on
    affect Hexagon’s results partly when sales and purchase in for-        successful sales of the Company’s products and services. There
    eign subsidiaries are conducted in different currencies (transac-      is no guarantee that Hexagon will be able to raise the necessary
    tion exposure), and partly when the profit and loss accounts           capital. In this regard, the general development on the capital
    and balance sheets are translated into SEK (translation expo-          and credit markets is also of major importance. Liquidity risk is
    sure). Furthermore, the comparability of Hexagon’s result              the risk of the Group not being able to meet its payment obliga-
    between periods is affected by changes in currency exchange            tions in full as they fall due or can only do so at materially dis-
    rates.                                                                 advantageous terms due to lack of cash resources.
         Hexagon’s operations are mainly located outside Sweden.                Hexagon, moreover, require sufficient financing in order to
    During 2009, total net operating earnings from operations in           refinance maturing debt. Securing these requirements demands
    foreign currencies amounted to an equivalent of 1 580 MSEK.            a strong financial position in the Group, combined with active
    The foreign currencies that have the biggest impact on Hexagon’s       measures to ensure access to credit. There is no guarantee that
    earnings and net assets are USD, EUR, CHF and CNY.                     Hexagon will be able to raise the sufficient funds in order to
         Translation exposure related to actual and forecasted earn-       refinance maturing debt.
    ings in foreign operations are not hedged.                                  The financing of the 2 125 MUSD acquisition of Intergraph
         The General Meeting of Hexagon resolved on 24 Novem-              consists of three components, a bridge to equity loan of 850
    ber 2010 to replace SEK with EUR as the accounting currency            MUSD with maturity 6 of July 2011, a bridge to bond loan of
    for the parent Company Hexagon AB from 1 January 2011.                 375 MUSD with maturity 6 of July 2012 and a term loan of 900
    The amendment is expected to become effective as per 1 Janu-           MUSD with maturity 6 of July 2015. The proceeds from the
    ary 2011. Furthermore Hexagon AB has determined to use EUR             rights issue offering and the subsequent bond issue will refi-
    as the reporting currency in the consolidated financial state-         nance the equity and bond loans. The term loan of 900 MUSD
    ments from 1 January 2011. Even if the purpose of this change          together with the term and multicurrency revolving credit facili-
    is to reduce the currency exposure in both the Group’s profit          ties of 1 000 MEUR, with maturity 6 of July 2015, forms the
    and loss statement as well as in comprehensive income, there is        foundation of the Group’s financing. All of the above financing
    a risk that the effect of such change in reporting currency may        agreements include standard financial covenants. It cannot be
    not, in whole or in part, entail the effects anticipated.              ruled out that Hexagon in the future may breach such cove-
                                                                           nants due to, for example, the general economic trend or dis-
                                                                           ruptions in the capital or credits markets. This could adversely
                                                                           affect Hexagon’s financial position and results.


8       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                         Risk factors




Goodwill                                                              Future dividends
A substantial share of Hexagon’s intangible fixed assets consists     Future dividends will be proposed by the Board of Directors of
of goodwill. Goodwill is tested at least annually to identify any     Hexagon. Hexagon’s dividends depend on, among other things,
necessary impairment requirements. In the event that future           the Company’s earnings and equity ratio. Hexagon’s dividend
impairment tests in respect of decreases in the value of goodwill     policy stipulates that 25–35 per cent of earnings per share after
should lead to impairment, this may have a negative impact on         tax should be paid as a dividend to shareholders, assuming the
Hexagon’s financial position and earnings.                            Company satisfies its equity ratio objective. There are risks that
                                                                      may affect the Company’s earnings and equity ratio negatively,
Risks related to the share and the rights issue                       and there are no guarantees that Hexagon in the future will be
Stock market risk                                                     able to permit a dividend to the shareholders during each finan-
Risk and risk-taking is an inevitable part of investing in shares.    cial year.
Since an investment in shares may fluctuate in value both
upwards and downwards, it can never be guaranteed that an             Non-secured subscription undertakings and guarantees
investor is able to recuperate the invested capital in full. The      A number of Hexagon’s major shareholders have undertaken to
market price of the Company’s shares may fall below the sub-          subscribe for and guarantee a total of approximately 50.2 per
scription price in the rights issue. A subscriber for new shares      cent of the new shares. Said subscription undertakings and
then would sustain a loss in the event of a sale of such shares.      guarantees are, however, not secured. Therefore, there is a risk
The share price performance depends on a number of factors,           that one or a number of the shareholders who have given sub-
some of which are company specific and others that are related        scription undertakings and guarantees are unable to meet their
to the stock market in general. Such factors may also increase        respective undertakings. If the above mentioned subscription
the share price volatility. It is impossible for a particular com-    undertakings or guarantees are not met, this could have a nega-
pany to control all the factors that may impact the share price       tive effect on Hexagon’s ability to obtain an amount of approx-
of the Company and, accordingly, all decisions to invest in           imately 6 500 MSEK before transaction costs through the rights
shares should be preceded by a careful analysis.                      issue.

Trading in subscription rights                                        Shareholder with significant influence
Subscription rights of series B shares will be traded on NASDAQ       At the time of this prospectus, approximately 29.6 per cent of
OMX Stockholm during the period from 2 December 2010 up               the share capital and 49.8 per cent of the votes in Hexagon are
to and including 13 December 2010. However, no assurance              controlled by Melker Schörling AB. Melker Schörling AB has
can be given that active trading in subscription rights will devel-   undertaken to subscribe for shares in the rights issue equivalent
op or that sufficient liquidity will exist. If such a market does     to its pro rata share in Hexagon. Melker Schörling AB can
develop, the market price of the subscription rights will depend,     therefore, both before and after the rights issue, exercise a sig-
among other things, on the market price development of the            nificant influence over the Company in matters that are subject
outstanding shares in the Company and may be subject to               to the shareholders’ approval. It cannot be ruled out that the
greater price volatility than such shares.                            interests of Melker Schörling AB may deviate from those of
                                                                      other shareholders.
Dilution
Shareholders who do not exercise part or all of their subscrip-
tion rights will experience a dilution of the percentage interest
they hold in the Company’s share capital and voting rights
respectively.




                                                                                              InvItatIon to subscrIbe For shares In hexagon ab     9
     Invitation to subscribe for shares
     in Hexagon
     On 22 October 2010, the Board of Directors of Hexagon resolved, subject to the subsequent approval of the General
     Meeting, to increase the Company’s share capital through a rights issue with preferential rights for the Company’s
     shareholders. On 24 November 2010, the Extraordinary General Meeting approved the resolution by the Board of
     Directors.
         The share issue resolution means that the Company’s share capital will increase by a maximum of 176 244 814
     SEK, from 531 039 540 SEK to not more than 707 284 354 SEK, through an issue of not more than 88 122 408 new
     shares, whereof 3 937 500 series A shares and 84 184 907 series B shares. Those persons who, on the record date of 29
     November 2010 are registered as Hexagon shareholders may subscribe for one (1) new share for every three (3) exist-
     ing shares. Series A shares give entitlement to subscription for series A shares and series B shares give entitlement to
     subscription for series B shares (primary preferential right). Shares not subscribed for by primary preferential right
     shall be offered to all shareholders for subscription (subsidiary preferential right). Upon transfer of the subscription
     right (the primary preferential right), the subsidiary preferential right is also passed on to the new holder. In addition
     to the above, investors are given the opportunity to subscribe for shares without preferential rights.
         The issue price has been fixed at 74 SEK per each share of series A and series B, which means that the new issue in
     total, if the rights issue is fully subscribed, provides Hexagon with approximately 6 521 MSEK before transaction
     related expenses1).
         Melker Schörling AB, Ramsbury Invest AB, Ola Rollén and Håkan Halén, together representing approximately
     53.3 per cent of the votes and 34.6 per cent of the capital of Hexagon, have undertaken to subscribe for shares corre-
     sponding to their respective pro rate shares in the right issue. Ramsbury Invest AB has undertaken to subscribe for
     shares corresponding to a further 15.6 per cent of the rights issue. Consequently, subscription and guarantee under-
     takings total 50.2 per cent of the rights issue have been obtained2).
         Pursuant to the terms and conditions of this prospectus, the shareholders of Hexagon are hereby invited to sub-
     scribe for new shares.

                                                        Stockholm, Sweden, 26 November 2010

                                                                     Hexagon AB (publ)

                                                                   The Board of Directors




     1) From the proceeds of the new share issue of approximately 6 521 MSEK, deductions for transaction costs are estimated to amount to approximately 107 MSEK,
        of which approximately 25 MSEK corresponds to compensation to Ramsbury Invest AB for subscription guarantee in excess of its pro rata share of the issue.
        Subsequent to these deductions, the rights offering is estimated to raise approximately 6 414 MSEK.
     2) The subscription commitments have not been secured. For more information, see “Risk factors – Risks related to the share and the rights issue”.




10        InvItatIon to subscrIbe for shares In hexagon ab
Background and reasons

On 7 July 2010, Hexagon announced that the Company had entered into an agreement whereby Hexagon would
carry out a cash acquisition of US-based software company Intergraph Corporation. The agreed purchase price
amounted to 2 125 MUSD on a cash and debt free basis. The acquisition was subject to certain conditions, including
clearance from the relevant competent competition authorities and CFIUS (Committee on Foreign Investment in the
United States). On 28 October 2010, all necessary approvals had been obtained and the acquisition was completed,
whereupon Hexagon became the sole owner of Intergraph. The background to the rights issue is to finance part of the
acquisition of Intergraph.
     The combination of Hexagon’s leadership in measurement solutions using aerial and ground-based point cloud
sensor technology, with Intergraph’s leadership in enterprise engineering software and geospatially powered software,
is expected to enable the enlarged Group to develop and provide integrated solutions to clients. Following the acquisi-
tions of Brown & Sharpe in 2001, Leica Geosystems in 2005 and NovAtel in 2007, Intergraph is considered the natu-
ral next step for Hexagon due to its global software capabilities. With the integration of Intergraph, Hexagon will
cover all aspects of the measurement technology market from capturing three dimensional data from ground, air and
space, processing data to creating, managing and delivering information via enterprise engineering software and GIS.
     In recent years, Intergraph has shown strong and resilient financial results. The strong results are expected to con-
tinue and growth is expected to be driven by global trends in key end-markets, particularly energy consumption and
the need for security and infrastructure development. For full-year 2010, Hexagon expects Intergraph to have net
sales of 830–840 MUSD and operating earnings before depreciation and amortisation (“EBITDA”) of 200–210
MUSD1). Based on current market conditions and the expectations for the market segments which Intergraph operates
in, Hexagon expects Intergraph to grow organically with approximately 10 per cent in the coming years. Further-
more, Hexagon expects Intergraph’s EBITDA-margin to increase gradually from the current level.
     According to Hexagon’s analysis, the acquisition of Intergraph is expected to immediately contribute positively to
Group earnings, excluding impact of non-recurring cash integration and transaction and refinancing costs, and is
expected to generate significant cost and revenue synergies. Pre-tax synergies are expected to amount to approxi-
mately 30 MUSD in 2011, 40 MUSD in 2012 and 70 MUSD to EBIT as from 2013 and onwards, growing sequen-
tially in the years thereafter. Synergies have primarily been identified to arise by i) combining Hexagon and Intergraph
technologies, ii) cross selling of existing products, iii) rationalisation of overlapping resources at Hexagon and
Intergraph, iv) enlarged market for Intergraph’s PP&M division via Hexagon measuring products, v) the use of
Hexagon sensors in combination with response GIS within Intergraph’s SG&I division and vi) allowing Intergraph to
sell its products through Hexagon’s emerging markets organisation. Cash integration, transaction and refinancing
costs are expected to amount to approximately 510 MSEK of which the main part will be charged in the fourth quar-
ter of 2010. See “Significant changes since publication of the interim report for the period January – September 2010”
under “Capitalisation and other financial information for Hexagon” for more information on integration, transaction
and financing costs.
     Prior to entering into the agreement to acquire Intergraph on 6 July 2010, Hexagon had secured commitments
from its banks to finance the cash purchase price and to refinance the Company’s existing 1 000 MEUR revolving
credit facility. Hexagon also declared that it intended to pursue a rights offering corresponding to approximately
6 500 MSEK as soon as practically possible following completion of the acquisition in order to reduce leverage.
     Assuming that the rights offering is fully subscribed, the gross proceeds received by Hexagon from the rights offer-
ing will be approximately 6 521 MSEK. Hexagon’s issue costs, including commissions to counsels and other transac-
tion costs are expected to amount to approximately 107 MSEK. The net proceeds from the rights offering of approxi-
mately 6 414 MSEK will be used to substantially strengthen Hexagon’s balance sheet through reducing Hexagon’s
debt.

The Board of Directors of Hexagon is responsible for the contents of this prospectus. The Board of Directors hereby
declares that, having taken all reasonable care to ensure that such is the case, the information in this prospectus is, to
the best of the Board of Directors’ knowledge, in accordance with the facts and contains no omission likely to affect its
import.

                                                   Stockholm, Sweden 26 November 2010
                                                           Hexagon AB (publ)
                                                          The Board of Directors

1) Prior to any acquisition-related adjustments.


                                                                                                InvItatIon to subscrIbe For shares In hexagon ab   11
     Comments by the CEO

     Ten years ago, Hexagon was a small conglomerate consisting of many Scandinavian
     engineering companies and with no core business. Back in 2000 it was obvious
     that Hexagon needed a platform for future growth and profitability. The decision
     was made to concentrate the Group’s activities and measurement technologies
     were deemed to have great potential. As a result, we acquired the NYSE listed
     metrology company Brown & Sharpe in 2001 and thereby added a future core
     business to the Hexagon Group. Hexagon established a world leading position in
     the micro segment of the measurement technologies market using 3D measure-
     ment technologies.
         In 2005, the acquisition of the Swiss listed Leica Geosystems added core com-
     petences in non-contact measurement technology and established Hexagon as a
     leader in the macro segment of the measurement technologies market. Synergies
     within technology, distribution and software strengthened Hexagon’s product
     offering significantly.                                                                     “Intergraph fulfils all
         The subsequent acquisition of the NASDAQ listed Canadian company                           prerequisites that
     NovAtel in 2007 complemented Hexagon’s product portfolio with core compe-                  Hexagon has set for
     tences in GPS and inertial technologies. This acquisition was an important step in               software driven
     further strengthening Hexagon’s world leading position in the macro segment of                          expansion”
     the measurement technologies market.
         Following the acquisitions of Brown & Sharpe, Leica Geosystems and NovAtel, Intergraph is the natural next step
     due to its global software capabilities. Intergraph fulfils all prerequisites that Hexagon has set for software driven
     expansion. Intergraph adds the core competence to present and manage complex geospatial data and enables Hexagon
     to develop and provide unrivalled integrated solutions to customers. The development of the Hexagon Group into a
     global measurement technologies Group with strong market positions, has been a fantastic journey of which we who
     are working at Hexagon are very proud.
         The new Hexagon Group has more than 11 000 employees in 42 countries. Hexagon will cover all aspects of the
     measurement technology market from capturing three dimensional data from ground and air, processing data to
     creating, managing and delivering information via enterprise engineering software and GIS. Hexagon will provide
     technologies to thousands of customers across the globe enabling increased productivity, enhanced quality and better,
     faster operational decisions.
         As part of the financing of the acquisition of Intergraph, Hexagon intends to carry out a rights issue for existing
     shareholders with the aim of reducing the net debt/equity ratio of the combined entity. Hexagon’s ultimate objective
     remains the same: to generate favourable long-term value growth for its shareholders. The goal is to increase earnings
     per share by 15 per cent annually. Also Hexagon’s dividend policy remains unchanged. The policy is to pay 25–35 per
     cent of earnings per share after tax as a dividend to shareholders, assuming the Company satisfies its equity ratio
     objective.
         The future looks promising and I am convinced that the new Hexagon Group will continue to create value for
     Hexagon’s shareholders.

                                                                    Ola Rollén
                                                       President and Chief Executive Officer
                                                                Hexagon AB (publ)




12      InvItatIon to subscrIbe For shares In hexagon ab
Terms, conditions and instructions

This section refers to the terms, conditions and instructions of the rights issue. For
further details on the new shares being issued, see “Share capital and ownership
structure”.


Preferential right and subscription rights                             Issue statements
Those persons who, on the record date of 29 November 2010              Directly registered shareholders
are registered as Hexagon shareholders have a preferential right       A prospectus and a pre-printed issue statement with attached
to subscribe for new shares of the same series in proportion to        bankgiro form will be sent to directly registered shareholders
the number of shares already held (primary preferential right).        and representatives of shareholders, who, on the record date,
Shares that are not subscribed for under primary preferential          are registered in the share register maintained by Euroclear
right shall, regardless of share series, be offered to all other       Sweden on Hexagon’s behalf. The issue statement includes, for
shareholders for subscription (subsidiary preferential right).         example, the number of subscription rights received and the
     Persons who are registered as shareholders in Hexagon on          number of shares that may be subscribed for. No securities noti-
the record date will therefore receive one (1) series A subscrip-      fication (Sw: VP-avi) will be sent out regarding the registration
tion right for every share of series A held in Hexagon and one         of subscription rights on securities accounts.
(1) series B subscription rights for every share of series B held in       Those who are included in the special list of pledge holders
Hexagon. The subscription rights entitle the holder to, with pri-      and trustees that is maintained in connection with the share
mary preferential right, subscribe for shares, wherein three (3)       register will not receive any issue statement, however, they will
series A and series B subscription rights carry an entitlement to      be informed separately.
subscribe for one (1) new share of series A and series B, respec-
tively. On sale of the subscription right (the primary preferential    Nominee-registered shareholdings
right), the subsidiary preferential right also passes to the new       Shareholders whose holdings are nominee-registered at a bank
holder.                                                                or other nominee will not receive an issue statement.
     Shareholders who choose not to participate in the rights
issue will have their ownership diluted by 25 per cent, but can        Subscription and payment for shares subscribed for by primary
be compensated for this dilution through the sale of their sub-        as well as subsidiary preferential right should instead be made
scription rights.                                                      to the respective nominee and in accordance with instructions
                                                                       from the nominee, or if the holding is registered with several
Subscription price                                                     nominees, from each of these nominees.
The new shares in Hexagon will be issued at a price of 74 SEK
per each share of series A and series B, respectively. No commis-      Shareholders resident in certain unauthorized jurisdictions
sion will be charged.                                                  The allotment of subscription rights and the issuance of new
                                                                       shares by exercise of subscription rights to persons who are
Record date                                                            resident in countries other than Sweden may be affected by
The record date at Euroclear Sweden to determinate which per-          securities legislation in such countries. See section “Restrictions
sons are entitled to receive subscription rights in the rights issue   on sale and transfer of securities”. Consequently, subject to
is 29 November 2010. Hexagon shares will be traded exclusive           certain exceptions, shareholders whose shares in Hexagon are
of the right to participate in the rights issue commencing on 25       registered directly in a securities account and whose registered
November 2010. The final day for trading inclusive of the right        address is in the United States, Canada, Australia or Japan will
to participate was 24 November 2010.                                   not receive this prospectus. Nor will they receive any subscrip-
                                                                       tion rights on their respective securities accounts. The subscrip-
Subscription period                                                    tion rights that otherwise would have been delivered to such
Subscription for the new shares can take place during the period       shareholders will be sold and the sales proceeds, less a deduc-
from and including 2 December 2010 up to and including 16              tion for costs, will be paid to such shareholders. Amounts of
December 2010. Hexagon’s Board of Directors is entitled to             less than 100 SEK will not be paid out.
extend the subscription period. Any such extension will be
announced by Hexagon through a press release no later than 16
December 2010. Subscription of new shares on the basis of sub-
scription rights is irrevocable and a shareholder may not cancel
or modify a subscription of new shares.




                                                                                               InvItatIon to subscrIbe For shares In hexagon ab   13
Terms, conditions and instructions




     Trading in subscription rights                                        Directly registered shareholders resident in Sweden
     Subscription rights of series B shares will be traded at NASDAQ       Subscription of new shares on the basis of primary preferential
     OMX Stockholm during the period from and including                    rights will be effected by means of simultaneous payment in
     2 December up to and including 13 December 2010. SEB and              cash, either by using the pre-printed bankgiro form or a special
     other securities institutions in possession of the required licenc-   application form and making simultaneous payment in accord-
     es will provide brokerage services in connection with the pur-        ance with one of the options below:
     chase and sale of subscription rights. Subscription rights of         ●   The bankgiro form is to be used if all subscription rights,
     series A shares will not be traded. The ISIN-code for the                 designated as evenly subscribable, in the issue statement
     subscription rights of series B is SE0003620939.                          from Euroclear Sweden are to be exercised. No additions or
                                                                               changes may be made to the bankgiro form.
     Central sale of excess subscription rights                            ●   The application form is to be used if subscription rights
     For shareholders who are entitled to a number of subscription             have been purchased or transferred from another securities
     rights not equally divisible by three (3), excess subscription            account or if, for some other reason, the number of sub-
     rights (between one (1) and two (2)) will be withdrawn from               scription rights to be exercised for subscription differs from
     such shareholders’ VP accounts on or around 30 November                   the number specified on the pre-printed issue statement.
     2010, whereupon such subscription rights will be sold centrally           Application forms may be obtained from any SEB branch in
     at the prevailing market price. The sale will be effected by SEB          Sweden. The pre-printed bankgiro form must not be used.
     on instruction from Hexagon. The sale proceeds will be distrib-
     uted to each shareholder through Euroclear. No commission             Directly registered shareholders not resident in Sweden
     will be charged for the central sale of excess subscription           Shareholders eligible for subscription rights who are not resi-
     rights.                                                               dent in Sweden and who cannot use the pre-printed bankgiro
         Note that after excess subscription rights have been with-        form must use the application form issued in order to subscribe
     drawn, shareholders with any remaining subscription rights on         for shares. When submitting the form to the address indicated
     their VP accounts will have a holding that is equally divisible by    below, payment must be made in SEK to the Swedish bank
     three (3). If shareholders wish to purchase subscription rights to    account indicated below.
     subscribe for more shares, such purchases should total a number
                                                                           SEB
     that is evenly divisible by three (3).
                                                                           Issue Department R B6
                                                                           SE- 106 40 Stockholm, Sweden
     Subscription pursuant to primary preferential
                                                                           Bank account number: 5865 10 029 47
     rights
                                                                           IBAN: SE5350000000058651002947
     Subscription of shares on the basis of primary preferential rights
                                                                           BIC: ESSESESS
     will take place during the period from and including 2 Decem-
     ber up to and including 16 December 2010. On expiry of the
                                                                           In connection with payment, the subscriber’s name and address
     subscription period, unexercised subscription rights will expire
                                                                           and the securities account number (Sw: VP-konto) or payment
     and will be deleted from the securities accounts without notifi-
                                                                           identity in accordance with the issue statement must be quoted.
     cation from Euroclear Sweden.
                                                                           The application form and payment must be received by SEB no
                                                                           later than 16 December 2010. Application forms are available
     In order not to lose out on the value of subscription rights
                                                                           from SEB’s website at www.seb.se/prospekt and from Hexagon’s
     received, a shareholder must either:
                                                                           website at www.hexagon.se.
     ●   exercise the subscription rights received, and subscribe for
         new shares no later than 16 December 2010; or
                                                                           Nominee-registered shareholdings
     ●   sell subscription rights received but not exercised no later
                                                                           Subscription and payment for shares subscribed for pursuant to
         than 13 December 2010.
                                                                           primary preferential rights shall be made to the respective nom-
                                                                           inee and in accordance with instructions from the nominee, or
     Hexagon’s Board of Directors is entitled to extend the subscrip-
                                                                           if the holding is registered with several nominees, from each of
     tion period. Any such extension will be announced by Hexagon
                                                                           these nominees.
     through a press release no later than 16 December 2010.
     Subscription of new shares on the basis of subscription rights is
     irrevocable and a shareholder may not cancel or modify a
     subscription of new shares.




14       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                           Terms, conditions and instructions




Paid subscribed shares (BTAs)                                        Allotment of shares subscribed for on the basis of
A few days after payment and subscription, Euroclear Sweden          subsidiary preferential right
will send a securities notification confirming that the paid         If the number of shares offered in this manner is insufficient for
subscribed shares (Sw: betalda tecknade aktier, “BTAs”) have         subscription, based on subsidiary preferential rights, the shares
been registered on the securities account. The newly subscribed      shall be distributed among the subscribers in proportion to the
shares are entered as BTAs on the securities account until such      number of shares subscribed for with primary preferential right
time as the issue has been registered at the Swedish Companies       and, to the extent that this is not possible, by lottery.
Registration Office. It is expected that shares subscribed for            As confirmation of the allotment of shares subscribed for
with preferential rights through payment will be registered on       with subsidiary preferential rights, a settlement note will be sent
or around 23 December 2010. After that date, BTAs will be re-        to directly registered shareholders and nominees. No separate
registered as ordinary shares, on or around 29 December 2010.        notification will be sent to those who do not receive an allot-
No securities notification will be issued in connection with this    ment.
re-classification. Custody account holders represented by a               Shares subscribed for and allotted must be paid for in cash
nominee will receive BTAs and information according to each          no later than 5 January 2011. Shareholders whose holdings are
respective nominee’s procedures.                                     nominee-registered will receive confirmation of the allotment in
                                                                     accordance with the procedure of the respective nominee.
Trading in paid subscribed shares (BTAs)                                  Newly issued shares will be delivered as soon as the required
Trading in BTAs of series B shares on NASDAQ OMX Stock-              registration has taken place at the Swedish Companies Regis-
holm is expected to take place during the period from and            tration Office. This is expected to take place on or around 10
including 2 December 2010 up to and including 23 December            January 2011. A securities notification will be sent to the direct-
2010. SEB and other securities institutions in possession of the     ly registered shareholders or nominees as confirmation that the
required licenses will provide brokerage services in connection      shares have been registered on the securities account.
with the purchase and sale of BTAs. The ISIN-code for BTAs of             Ramsbury Invest AB has undertaken to subscribe for shares
series B is SE0003620947. BTAs of series A shares will not be        corresponding to 15.6 per cent of the rights issue in addition to
traded.                                                              their pro rata share. Subscription in relation hereto be made
                                                                     through subsidiary preferential right during the subscription
Subscription for shares on the basis of                              period.
subsidiary preferential right and allotment
Directly registered shareholders and others                          Subscription for shares without preferential
Application for subscription for shares on the basis of subsi-       right and allotment
diary preferential right must be made on a special application       Application for subscription for shares without preferential
form. More than one application form may be submitted,               right must be made on a special application form. More than
although only the most recently dated form will be considered.       one application form may be submitted, although only the most
Application forms are available at all SEB’s branches in Sweden,     recently dated form will be considered. Application forms are
as well as from SEB’s website at www.seb.se/prospekt and from        available at all SEB’s branch offices in Sweden, as well as from
Hexagon’s website at www.hexagon.se.                                 SEB’s website at www.seb.se/prospekt and from Hexagon’s
    Completed forms may be sent to SEB, Issue Department             website at www.hexagon.se.
R B6, SE-106 40 Stockholm, Sweden, or may be handed in at                Completed forms may be sent to SEB, Issue Department
any branch office of SEB in Sweden. Application forms must be        R B6, SE-106 40 Stockholm, Sweden, or may be handed in at
received by SEB Issue Department no later than 16 December           any branch office of SEB in Sweden. Application forms must be
2010. Hexagon’s Board of Directors is entitled to extend the         received by SEB Issue Department no later than 16 December
subscription period.                                                 2010. Hexagon’s Board of Directors is entitled to extend the
                                                                     subscription period.
Nominee-registered shareholdings                                         Shares not subscribed for by the exercise of primary or sub-
Custody account holders represented by a nominee who wish to         sidiary preferential right will be distributed among sharehold-
subscribe for shares on the basis of subsidiary preferential right   ers and others who have subscribed for shares without prefer-
should not register according to the instructions in the above       ential right in proportion to the number of shares thus
section but must register for subscription to and in accordance      subscribed for and, to the extent this is not possible, by lottery.
with instructions from the nominee, or nominees, who will also           As confirmation of the allotment of shares subscribed for
handle notification regarding allotment as well as other ques-       without preferential right, a settlement note will be sent to
tions.                                                               directly registered shareholders and nominees. No separate
                                                                     notification will be sent to those who do not receive an allot-
                                                                     ment.

                                                                                             InvItatIon to subscrIbe For shares In hexagon ab   15
Terms, conditions and instructions




          Shares subscribed for and allotted must be paid for in cash       Other information
     no later than 5 January 2011. Shareholders whose holdings are          Hexagon is not entitled to revoke the offering under this pro-
     nominee-registered will receive confirmation of the allotment in       spectus.
     accordance with the procedure of the respective nominee.                    In the event that too large an amount of money is paid by a
          Newly issued shares will be delivered as soon as the required     subscriber, Hexagon will arrange for the excess amount to be
     registration has taken place at the Swedish Companies Regis-           refunded.
     tration Office. This is expected to take place on or around 10              Incomplete or incorrectly completed application forms may
     January 2011. A securities notification will be sent to the direct-    be rejected. Furthermore, if the subscription payment is made
     ly registered shareholders or nominees as confirmation that the        late or is insufficient, the subscription application may be reject-
     shares have been registered on the securities account.                 ed. In such a case, the subscription payment will be refunded.

     Listing of the new shares                                              Special notice to shareholders with shares
     Hexagon will apply for listing of new shares of series B on            traded on the SIX Swiss Exchange
     NASDAQ OMX Stockholm in connection with the implemen-                  Shareholders with Hexagon shares traded on the SIX Swiss
     tation of the rights issue. Registration at the Swedish Compa-         Exchange (Ticker: “HEXN”; Val. 526 772, trading currency:
     nies Registration Office of the new shares subscribed for on the       Swiss francs) and held in custody with Swiss banks should fol-
     basis of primary preferential rights is expected to take place on      low the instructions they will receive from their respective cus-
     or around 23 December 2010. Trading in these new shares of             tody bank in relation to the capital increase and the rights issue
     series B is expected to start on or around 28 December 2010,           in Hexagon. SIX SIS AG, Olten, Switzerland, is clearing agent
     subject to registration. The new shares of series B subscribed for     for Hexagon shares traded on the SIX Swiss Exchange. Also,
     with subsidiary preferential rights or without exercising sub-         for Hexagon shares held in custody with SIX SIS AG, dividend
     scription rights are expected to be registered at the Swedish          payments, if any, will be effected via SIX SIS AG.
     Companies Registration Office on or around 10 January 2011                 There will be no trading in subscription rights or BTAs on
     and trading is expected to start on or around 11 January 2011.         the SIX Swiss Exchange. However, trade in subscription rights
     The new shares of series A will not be listed.                         and/or BTAs will be arranged on NASDAQ OMX Stockholm.
                                                                            Shareholders holding their shares in custody with a Swiss bank
     Right to dividends                                                     are invited to consult their custody bank if they wish to trade in
     The new shares will carry right to dividends commencing from           subscription rights and/or BTAs.
     the first record date for dividends occurring after the rights issue
     has been registered at the Swedish Companies Registration
     Office.

     Announcement of subscription take-up in the
     rights issue
     The preliminary subscription take-up in the rights issue will be
     announced through a press release from Hexagon on or around
     20 December 2010. The final subscription take-up will be
     announced through a press release from Hexagon on or around
     22 December 2010.




16       InvItatIon to subscrIbe For shares In hexagon ab
How to proceed

This section refers to shareholders with shares traded on NASDAQ OMX Stockholm
and not to shareholders with shares traded at the SIX Swiss Exchange. Shareholders
with Hexagon shares traded at the SIX Swiss Exchange should follow the instructions
from their respective nominee.
Subscription pursuant to primary preferential right

1. You will be allotted subscription rights
                                                                                                                                                                     Subscrip-
                                                                   Share
                                                                                             …you will receive one (1) subscription right                            tion right
   For each share in hexagon you
   hold on 29 november 2010…


2. Your holding of subscription rights is made evenly divisible by three (3)

   surplus subsciption rights i.e. those subscription rights                                           nb! as surplus subscription rights are being sold automatically, you
   which are not evenly divisible by three (3), are to be sold                                         need not buy nor sell any subscription rights in order to make hold-
   automatically at the market price                                                                   ings of subscription rights evenly divisible by three (3)

3. How to exercise your subscription rights (simultaneous payment)



                                                                     + 74 seK                                   … gives one (1) new share in hexagon
   three (3) subscription rights…                 Subscrip-
                                                                                              Share
                                                  tion rights




4. Are you a directly registered shareholder or are your holdings nominee-registered?

                                                                              If you want to exercise all subscription rights use the pre-printed bank giro form from
                                                                              Euroclear Sweden.
                                                  You are
                                                resident in
                                                 Sweden                       If you have purchased, sold or transferred subscription rights to/from your securities
                                                                              account, use the special subscription form available at all SEB branch offices in Sweden.
    You have a securities                                                     Payment can be made at any Swedish bank office.
            account,
     i.e. directly registered
                                                                              Use the sent out application form. The application form must be sent to the address stated
                                                You are not                   on the application form and in the chapter ”Terms, conditions and instructions” and
                                                resident in                   payment must be made in SEK to the Swedish bank account that is also stated on the
                                                 Sweden1)                     application form and in the chapter ”Terms, conditions and instructions”.


      You have a custody                    If your Hexagon shares are held in one or more custody accounts at a bank                             Follow the instructions you receive
           account,                         or other securities institution, your nominee(s) will inform you of the number                        from your nominee/nominees.
    i.e. nominee-registered                 of subscription rights that you have received.



Subscription for remaining shares pursuant to subsidiary preferential right or without preferential right
(by shareholders and others)2)

                                            Use the special application forms available at all SEB branch offices in Sweden, as well as from SEB’s website at
      You are a directly                    www.seb.se/prospekt and from Hexagon’s website at www.hexagon.se. Completed forms may be sent to SEB Issue
   registered shareholder                   Department R B6, SE-106 40 Stockholm, Sweden, or may be handed in at any branch office of SEB in Sweden and
                                            must be received by no later than on 16 December 2010.


  Your holdings are nomi-                   Subscription and payment should be made to the respective nominee.                                 Follow the instructions you receive
      nee-registered                                                                                                                           from your nominee/nominees.


1) Please note the rules regarding shareholders resident in the united states, canada, australia or Japan, in chapter ”terms, conditions and instructions” under the heading ”shareholders
   resident in certain unauthorised jurisdictions”.
2) allotment will be made as described the section ”terms, conditions and instructions” under the heading ”allotment of shares subscribed for on the basis of subsidiary preferential right“
   and under the heading “subscription for shares without preferential right and allotment“.


                                                                                                                                     InvItatIon to subscrIbe For shares In hexagon ab          17
     Market overview

     Definitions of the market sub segments                                 Measurement technology segments
     Dimensional measurement technology is a prerequisite for               Macro
     modern social planning, effective construction and manufactur-         In the macro segment, large objects such as mountains, cities,
     ing with minimal environmental impact. Measurement technol-            roads, bridges, tunnels, dams, and buildings, are measured.
     ogy is utilized everywhere in society and in industrial applica-       These measurements require precision ranging from 10 metres
     tions to save time and resources, as well as to increase knowledge     to 100 micrometres. Customers in this market segment consist
     and understanding. There is an increasing demand for enhanced          of surveyors, cartography companies, authorities, construction
     capability to measure and position objects, infrastructures and        and mining companies, aerospace and defence industries.
     environments.
         The market for measurement technologies can be divided             Micro
     into the macro, micro and nano segments. Boundaries between            In the micro segment, industrial components, from large air-
     the three segments are based on the precision required by the          craft to micro components in electronic and medical applica-
     customer: the smaller the object to be measured, the greater the       tions, are measured. These measurements require precision
     precision required.                                                    ranging from 100 to 0.3 micrometres. Customers in this seg-
         Data collected through measurement technologies are proc-          ment are primarily in the automotive, aerospace, engineering,
     essed to create, manage and deliver vast amounts of data into          medical and energy industries.
     understandable visual representations and actionable intelli-
     gence. Advanced 3D software includes enterprise engineering            Nano
     software and GIS. Security organisations, businesses, and gov-         In the nano segment, objects such as microchips for the elec-
     ernments rely on advanced 3D software to build and operate             tronic industry, medical application and materials with new
     more efficient plants and ships, create intelligent maps, and          properties are measured. These applications require precision
     protect critical infrastructure.                                       from 0.3 micrometres.




                                                              NANO
                                                            SEGMENT

                                                                                                                      MACRO
                                                                                                                     SEGMENT



                    MICRO
                   SEGMENT




                                                                                                 16APR200910311118




                                                                       ADVANCED
                                                                      3D SOFTWARE




18       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                          Market overview




Advanced 3D software                                                              Intergraph SG&I is a supplier of geospatially powered solu-
Enterprise engineering software                                               tions to the defence and intelligence, public safety and security,
Enterprise engineering software provides input regarding the                  government, transportation, photogrammetry, utilities, and
processes of design, drafting, documentation and manufactur-                  communications industries. Intergraph estimates themselves to
ing. It is used in many applications, including the automotive,               be one of the world’s leading suppliers in the spatial informa-
shipbuilding, industrial, architectural and aerospace industries.             tion management market.
Intergraph PP&M is active in the process engineering tools
(“PET”) business.                                                             Market development
                                                                              Measurement technologies
Geographic information systems (GIS)                                          At the end of 2009, Hexagon estimated the size of the measure-
GIS capture, store, analyze, manage, and present position-                    ment technologies market at around 83 billion SEK, with annu-
related data. It is used in cartography, remote sensing, land                 al growth of approximately 8 per cent over a business cycle.
surveying, utility management, natural resource management,                   The size of the measurement technologies market can be broken
photogrammetry, geography, urban planning, emergency man-                     down as follows:
agement, navigation, and localised search engines. Intergraph                 ●    the macro segment is estimated at around 45 billion SEK,
SG&I is active in the spatial information management                               with annual growth of about 10 per cent over a business
business.                                                                          cycle;
                                                                              ●    the micro segment is estimated at around 28 billion SEK,
Market positioning                                                                 with annual growth of about 6 per cent over a business
Hexagon is a world leading measurement technology company                          cycle;
and through the acquisition of Intergraph also a leading com-                 ●    the nano segment is estimated at around 10 billion SEK,
pany within advanced 3D software.                                                  with strong growth potential.
                                                                              The above estimates are Hexagon’s assessment, based on inter-
Hexagon                                                                       nal industry knowledge.
Hexagon entered into the measurement technologies market in                        Demand for measurement technologies is expected to
2001 when acquiring the US-listed metrology company Brown                     increase in the long-term due to structural changes in the global
& Sharpe whereby Hexagon established a leading position in                    economy. Population growth and urbanisation lead to a large
the micro segment. In 2009, Hexagon estimated its market                      need for infrastructure. Rising prosperity in developing coun-
share in the micro segment to be approximately 14 per cent.                   tries creates demand for consumer products and thus produc-
    Through the acquisition of Leica Geosystems in 2005,                      tion capacity. As a consequence, measurement technologies are
Hexagon entered into the macro segment of the measurement                     in demand in all affected sectors.
technologies market. In 2009, Hexagon estimated its market                         In addition to these megatrends, the measurement market is
share in the macro segment to approximately 17 per cent.                      affected by driving forces within the manufacturing and con-
    Hexagon’s presence in the nano segment is to be regarded                  struction industries. The need to increase productivity and effi-
as marginal.                                                                  ciency is always at the heart of the manufacturing industry. An
                                                                              increasing number of companies have seen that by integrating
Intergraph                                                                    advanced measurement technologies into their production
Intergraph PP&M is a provider of enterprise engineering soft-                 processes, quality can be increased and costs reduced. In the
ware for the design, construction and operation of plants, ships              automotive, aerospace and other manufacturing industries, this
and offshore facilities. The ARC Advisory Group1) ranked                      is bound to increase demand for measurement technologies.
Intergraph the No. 1 overall worldwide leader in engineering                  The construction industry is also driven by constant improve-
design 3D software and process engineering tools. Intergraph                  ments in productivity. Efficiency can be considerably improved
PP&M is also a leading provider of software and services to the               through control and coordination of construction machinery
overall process engineering industry, including engineering                   and vehicles.
design.




1) Source: PET Worldwide Outlook Market Analysis and Forecast through 2013.



                                                                                                      InvItatIon to subscrIbe For shares In hexagon ab   19
Market overview




     Advanced 3D software                                                                            Intergraph PP&M enterprise engineering software solu-
     The size of the advanced 3D software market can be broken                                  tions are highly relevant in today’s environment of rising global
     down as follows:                                                                           energy demands and growing infrastructure development. The
     ●   the PET market is estimated to grow to 1.9 billion USD by                              BRIC-countries (Brazil, Russia, India and China) are expected
         2012, which represents a 13 per cent CAGR from 2009 (1.3                               to continue to invest heavily in infrastructure and power-related
         billion USD);                                                                          projects. The power sector is expected to experience strong
     ●   the spatial information management market is expected to                               growth, underpinned by the nuclear industry with increased
         grow to 2.1 billion USD by 2012, which represents a 9 per                              public demand for alternative/clean energy sources. Upstream
         cent CAGR from 2009 (1.6 billion USD).                                                 oil and gas investments are heavily weighted towards the
     Above estimates are Hexagon’s assessment, based on internal                                offshore industry. Incremental oil supplies are becoming more
     industry knowledge and ARC1) estimates.                                                    difficult with future discoveries further offshore.
         Demand for software solutions is expected to increase in                                    Demand for Intergraph SG&I’s technologies is driven by
     the long-term due to global growth trends such as rising energy                            heightened security concerns, changed threat level and increased
     demand, infrastructure development growth around the world,                                focus on improved inter-agency collaboration largely driven by
     increasing global needs for security, and growing importance of                            information technology. Increasing adoption and impact of
     location-aware technology solutions.                                                       location-aware technologies are also contributing to demand
                                                                                                growth while geospatial technology is moving beyond tradi-
                                                                                                tional mapping uses and addressing the essential workflows of
                                                                                                core industries.




     Process engineering tools market                                                           Spatial information management market



     Billion USD                                                                                 Billion USD
                          CAGR            1.9                                                                         CAGR
                           13%                      Refining                                                           9%
                                                                                                                                     2.1
                                                    Pharma and bio                                                                             Telecom
                   1.3                                                                                         1.6
                                                    Oil and gas                                                                                State and local

                                                    Mining and minerals                                                                        Government

                                                    Power                                                                                      Defence
                                                                                                                                               Water and waste
                                                    Chemical                                                                                   Power

                                                    Other                                                                                      Other
                   2009                  2012E                                                                 2009                 2012E

     source: Process engineering tools Worldwide outlook. Market analysis and Forecast          source: geospatial Information systems Worldwide outlook, Market analysis and
             through 2013. arc advisory group.                                                          Forecast through 2014. arc advisory group.




     1) Source: Process Engineering Tools Worldwide Outlook. Market Analysis and Forecast Through 2013. Arc Advisory Group.



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                                                                                                                                Market overview




Competitive landscape
The competitive landscape includes companies of varying size and with differing specialisations located across the
globe. Some companies provide only hardware, others only software. Multinational companies compete with national
companies that are sometimes market leaders within specific regions or niche technologies. The table below list those
competitors which Hexagon considers to be the largest competitors with each segment that Hexagon and Intergraph
operates in1).
                                                                                            Enterprise       Geographic
                                                                                           engineering       information
Company                              Domiciled              Macro   Micro        Nano        software          systems
Hexagon                              Sweden                  l        l           l

Intergraph                           USA                     l                                  l                 l

autodesk                             usa                     l                                  l                 l

aveva                                united Kingdom          l                                  l

bentley systems                      usa                     l                                  l                 l

carl Zeiss                           germany                          l           l

Dassault systemes                    France                           l                         l

esrI                                 usa                     l                                                    l

Faro technologies                    usa                     l        l

KLa tencor                           usa                                          l

Mitutoyo                             Japan                            l

nikon                                Japan                            l           l

Pitney bowes                         usa                                                                          l

QvI                                  usa                              l

renishaw                             united Kingdom                   l

south survey                         china                   l

topcon                               Japan                   l                    l

trimble                              usa                     l

Zygo                                 usa                                          l




1) Source: Hexagon, based on internal industry knowledge.



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     Description of Hexagon

     This section focuses primarily on the operations of Hexagon prior to the acquisition of
     Intergraph. Through the acquisition of Intergraph, Hexagon’s operations are broad-
     ened. See “Description of Intergraph” for a more detailed description of Intergraph.


     Overview                                                                      The Hexagon Group operates through two business areas:
     Hexagon is a leading measurement technology company and                       Measurement Technologies and Other Operations. The core
     supplier of systems for measurement of objects in one, two or                 business, Measurement Technologies, representing approxi-
     three dimensions. The measurement systems measure with great                  mately 97 per cent of net sales in 2009, delivers solutions within
     precision and rapidly provide access to large amounts of meas-                the three application areas Geosystems, Metrology and Tech-
     urement data.                                                                 nology.
         In 2009, net sales amounted to close to 12 billion SEK and
     the operating result EBIT1 to 1 784 MSEK.




     GEOSYSTEMS                                            METROLOGY                                          TECHNOLOGY
     59 per cent of net sales of Measurement               35 per cent of net sales of Measurement            6 per cent of net sales of Measurement
     Technologies in 2009.                                 Technologies in 2009.                              Technologies in 2009.
     Geosystems satisfies the growing need for             Metrology offers measurement technolo-             Technology is a sub-supplier of technolo-
     measurement technologies in infrastruc-               gies and measurement data management               gy, systems and precision components for
     ture development, among other areas.                  to increase quality and reduce cost in the         OEM customers. End customers are locat-
     Customers     include     building   and              production process. Customers include              ed in sectors such as surveying, marine
     construction companies, map companies,                automotive, aerospace, engineering, medi-          applications, navigation, port manage-
     surveyors, mining companies and agricul-              cal and energy industries.                         ment, aviation, building and construction.
     ture.

     Hexagon operations in the world                                                     Hexagon 2009 net sales breakdown by geography
     Hexagon is headquartered in Stockholm, Sweden and employs
     approximately 7 500 people in 39 countries. The Group has a                            Easter Europe, Russia,        South America
                                                                                            Middle East and Africa                 3%
     strong local presence and conducts business activities through                                            7%

     138 operating companies throughout the world. In total,                                   Rest of Asia
                                                                                                      11%
     Hexagon’s products and services are sold in more than 140
                                                                                                                                   Europe excluding
     countries.                                                                                                                     Eastern Europe
                                                                                                    China                                      40%
         In 2009 approximately 40 per cent of Hexagon’s net sales                                    17%
     were generated from Europe excluding Eastern Europe.
     Approximately 22 per cent were derived from North America,                                 North America
                                                                                                        22%
     17 per cent from China, 11 per cent from the rest of Asia, 7 per
     cent from Eastern Europe, Russia, Middle East and Africa and
     3 per cent from South America. China is the fastest growing
     market and grew from 13 per cent of the Group’s net sales in
     2008 to 17 per cent in 2009.


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                                                                                                                     Description of Hexagon




Targets and strategies                                                 The goal is for earnings per share to increase by at least 15
Hexagon’s ultimate objective is to generate favourable long-       per cent annually. The Company has a number of well-defined
term value growth for its shareholders. The aim is to strengthen   goals and strategies to achieve this.
Hexagon’s market position as a world-leading measurement
technology company and to deliver long-term profitability and      Financial targets
sustainable competitiveness.                                       Hexagon’s long-term financial targets were launched in Decem-
    Hexagon’s vision is to be number one or number two, in         ber 2007. A review of existing financial targets will be carried
each core business, in order to generate growth and shareholder    out by the Board of Directors during 2011. Hexagon’s current
value.                                                             financial targets are:




FINANCIAL TARGETS                                                  COMMENT
Net sales
Net sales of 20 billion SEK by the end of 2011.                    Hexagon’s sales objective of 20 billion SEK in 2011 is to be
                                                                   achieved through a mix of organic growth and acquisitions.

Operating margin
Operating margin of 20 per cent by the end of 2011.                Hexagon’s objective of an operating margin of 20 per cent is to
                                                                   be achieved through an increase in the operating margin in the
                                                                   core businesses to at least 23 per cent and the acquisition of
                                                                   operations with an average operating margin of at least 15 per
                                                                   cent.

Earnings per share
Annual increase of earnings per share of at least 15 per cent.     Strong growth in earnings per share is the best way to produce
                                                                   favourable long-term return.

Equity ratio
An equity ratio of 25 to 35 per cent.                              The equity ratio should be at least 25 per cent. Hexagon shall
                                                                   strive to minimise the weighted average cost of capital (WACC)
                                                                   for the Company’s financing. A strong equity ratio provides
                                                                   opportunities for using loans to finance parts of future expan-
                                                                   sion.

Cash flow
Positive cash flow over a business cycle.                          Cash flow should be positive over a business cycle. A positive
                                                                   cash flow creates freedom of action for long-term expansion
                                                                   and allows for a greater degree of loan financing, all else being
                                                                   equal.

Return on capital
Return on capital employed of at least 15 per cent.                The long-term return on capital employed over a business cycle
                                                                   should amount to more than 15 per cent annually. The required
                                                                   return has been set based on an assumption of a long-term, risk-
                                                                   free interest rate of approximately 5 per cent and a risk premi-
                                                                   um of approximately 10 per cent.




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Description of Hexagon




     Operational targets                                                   Market existing products in current markets
     Hexagon has determined that it is necessary to be the market          With a focus on core operations, growth is created through
     leader in order to achieve its financial targets. For Hexagon,        product modifications and implementation of complementary
     market leadership means both ability to innovate and increas-         technologies, both of which create cost benefits and thus
     ing cost efficiency.                                                  enhanced competitiveness.

     Cost efficiency                                                       Introducing new products in existing markets
     A competitive cost structure is necessary to defend a market-         Through successful R&D and sound knowledge of customer
     leading position, or to enhance an operation’s position as a          needs, growth is created in the form of unique product offer-
     challenger. This is needed in order to more easily manage fluc-       ings. Hexagon typically renews its product portfolio every 18
     tuations in demand and changes in currency exchange rates.            months.
     Cost efficiency is also a prerequisite for being the innovator in
     the industry.                                                         Introducing existing products in new markets
                                                                           A new application area or a new geographical market creates
     Innovation                                                            growth for an existing product through access to a larger cus-
     In the measurement technology industry, capacity for innova-          tomer group. The challenge is to have sufficient knowledge of
     tion is central to Hexagon’s opportunities to become an attrac-       the new market, ensure that the product meets the market’s
     tive business partner for customers in the long term. Invest-         quality requirements and establish smoothly functioning distri-
     ments in R&D are therefore highly prioritised and each year           bution channels.
     approximately 10 per cent of net sales are invested in R&D.
                                                                           Introducing new products in new markets
     The industry’s best management                                        The introduction of a new product or service in new markets
     Management know-how and experience are decisive factors               creates growth through expansion of the total market. The
     that are essential for being able to operate successfully. Hexagon    challenge is to have sufficient knowledge of the new market,
     recruits local personnel and is therefore regarded as a local         understand the needs of the customers, quality-assure the new
     company within its respective geographical markets.                   product or service and gain access to smoothly functioning dis-
                                                                           tribution channels, thus ensuring that the new offering reaches
     ”Speed management”                                                    the market.
     Short and fast decision-making processes, along with a time-
     efficient implementation, enhance competitiveness and raise           Acquisition strategy
     organisational capacity. Hexagon strives to have a working            Hexagon monitors a large number of companies to find acqui-
     environment in which there are clear responsibilities, a flat hier-   sitions that can strengthen the product portfolio or improve the
     archy and minimal bureaucracy.                                        distribution network. The acquisition targets are regularly eval-
                                                                           uated financially, technologically and commercially. Every
     Growth strategy                                                       acquisition candidate’s potential place in Hexagon is deter-
     Hexagon aims to create profitable growth in selected segments         mined on the basis of synergy simulations and implementation
     through a combination of acquisitions and organic growth.             strategies.
     Hexagon works on the basis of four growth strategies:




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                                                                                                                     Description of Hexagon




Brand strategy                                                         At the same time, the individual brands and companies are
The Hexagon brand is the Group brand, supplemented with            part of the larger Hexagon Group from which they can benefit
subsidiaries’ brands targeting specific customer segments, mar-    from an extensive network of professionalism, knowledge,
kets or geographical areas. Hexagon’s brand portfolio compris-     people and global culture.
es a large number of world-class brands that represent strong          Hexagon works continuously to strengthen the Hexagon
traditions and are well known in their individual sectors. The     brand globally and to utilise the synergies between the individu-
brands represent high quality and reliability.                     al brands. The Hexagon brand strategy supports the Hexagon
    As part of the Hexagon brand strategy it is vital to let the   growth strategy and helps create long-term sustainability and
individual brands and subsidiaries work and “live” as individu-    profitability for the Hexagon Group.
al companies. They each have their history and culture, and a          Below is Hexagon’s brand portfolio in the Hexagon core
deep knowledge of their market’s needs and a professional          business Measurement Technologies. In line with the Hexagon
approach to their customers. Hexagon aims to preserve these        brand strategy, Intergraph will operate under the Intergraph
strengths.                                                         name and branding.




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Description of Hexagon




     Products and services                                               position and determine a target by measuring the angles and
     With Hexagon’s solutions, customers can collect and utilise         distance and then using trigonometry for calculating the posi-
     measurement data of significant strategic and economic impor-       tion. By combining terrestrial- and satellite-based systems sur-
     tance. This information can for instance be used to create pre-     veyors can conduct measurements with less personnel in the
     cise models to map discrepancies from the measurement object’s      field, thus increasing productivity, speed of data acquisition,
     original form or to modify and correct the object’s production      and reducing costs.
     process.                                                                 Within Monitoring, Hexagon’s products track movements
          Hexagon’s systems are designed for measurement in one,         of objects such as dams, bridges and buildings, but also of natu-
     two or three dimensions, as well as positioning and updating of     ral structures such as potential landslides. Highly precise total
     objects. The systems consist of core technologies common to         stations, GPS equipment and specially designed software are
     each instrument, under a generally coordinated development          important products within this area. Many customers take
     and production system.                                              advantage of accessing their data via Internet thanks to
          As a complement to its product portfolio, Hexagon offers a     Hexagon’s special software solutions.
     complete range of after-sales services. Services can vary from           Hexagon’s laser scanners are also used to create precise 3D
     regular routine maintenance such as calibration, supply of          models of objects, such as an oil rig without updated blueprints
     reserve parts, upgrades and equipment repairs, to added-value       or a historical building of which a digital copy is needed.
     offerings such as contract measuring of customer components,
     temporary outsourced personnel, custom programming of               Construction
     equipment or adaptation and integrated automatisation with          Hexagon’s customers in the Construction application area use
     Hexagon’s software. There is currently a growing demand for         machine control systems to steer heavy machinery by one or
     long-term contracts for Hexagon’s software, in which custom-        several measurement instruments and software. The largest cus-
     ers subscribe to regular software updates.                          tomer segments include construction companies, along with
          The Hexagon Group consists of two business areas:              mining and agricultural industries. Road grading, excavation,
     Measurement Technologies and Other Operations. Measure-             trenching and asphalting equipment can be controlled with the
     ment Technologies includes the application areas Geosystems,        help of two- and three-dimensional solutions. Machine control
     Metrology and Technology.                                           can, according to Hexagon, be used to achieve efficiency
                                                                         improvements of up to 30 to 50 per cent in construction.
     Geosystems                                                              On the software side, integration for fleet monitoring,
     Hexagon’s Geosystems solutions are sold within the measure-         remote diagnostics, data exchange and machine performance
     ment technologies market’s macro segment, where specifica-          metrics (telemetry) will be the cornerstone of Hexagon’s
     tions range in accuracy from 10 metres to 100 micrometres           machine control solutions in the future. Wireless data transfer
     (millionths of a metre). A wide array of technologies and           is expected to be the key growth enabler for these value-added
     systems is used for multidimensional measurement and posi-          services.
     tioning.                                                                Optical or digital levels for measuring plane surfaces and
         Geosystems is divided into three application areas: Geo-        easy-to-use total stations and GPS instruments for measuring
     matics, Construction and GIS.                                       angles and distances are examples of other major product
                                                                         groups for construction customers.
     Geomatics
     Hexagon’s customers in the Geomatics product area capture,          Geographic Information Systems
     reference, measure, analyse, process, store, present and use geo-   GIS are computer-based systems for collecting, storing, analys-
     graphical information. Measurements can involve anything            ing and presenting position related information. Urban plan-
     from simple distances to hundreds of thousands of points used       ning, landscape design, updating of maps and prevention, mon-
     to position complex objects or to transform measurement data        itoring and management of natural disasters are examples of
     into 3D drawings and images. The measurement systems are            GIS applications.
     used in all types of infrastructural projects: buildings, roads,        Hexagon’s product and service offering in this area consists
     bridges, railways, tunnels, airports and seaports, as well as for   of airborne cameras and Light Detection and Ranging
     instance relocation and modification of production facilities.      (“LIDAR”) scanners and software. LIDAR is a technology used
         Within Geomatics both terrestrial- and satellite-based          to collect topographical data with airplane-mounted lasers.
     systems are used to depict measurement objects. Hexagon’s           From heights of several kilometres, these lasers are capable of
     primary products in Geomatics are theodolites and fully             registering data at speeds of up to 200 000 points per second,
     electronic total stations which are optical instruments used to     with centimetre precision.




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                                                                                                                                            Description of Hexagon




Metrology                                                               Hexagon’s product offering includes handheld measure-
In the measurement technologies market’s micro segment,             ment devices, articulated arms, laser trackers, software and
Hexagon offers customers in the automotive, aerospace, elec-        aftermarket services.
tronics, general metal fabrication, energy and medical technolo-
gies industries a complete range of products and a strong service   Technology
organisation.                                                       In addition to its Geosystems and Metrology product offerings,
    Metrology is used to improve efficiency, quality and pro-       Hexagon functions as a sub-supplier of technologies, systems
ductivity in manufacturing processes. Hexagon’s products            and precision components to customers outside the Hexagon
measure an object and compare it with the customer’s Compu-         Group. The strategy of offering Hexagon’s technologies to
ter Aided Design (“CAD”) drawings in order to confirm whether       other OEMs guarantees continued cost-efficient development
the object was produced correctly.                                  of Hexagon’s technologies.
    The systems measure objects as large as aircraft and as small       Technology is a world-leading supplier of receivers, anten-
as medical components with a precision ranging from 100 to          nae and middle-ware integrated into high-precision positioning
0.3 micrometres. Smaller objects are normally measured with         applications. Technology’s customers are internal and external
stationary measurement systems whereas larger objects are           OEM’s in land survey, marine, navigation, security and defence,
usually measured with portable equipment.                           port management, aviation, construction and mining.
    Automatisation and robotisation are clear trends within the
Metrology segment. By integrating measurement systems into          Other Operations
the manufacturing process, the repetition and risk of errors and    Hexagon’s Other Operations consist of two companies, Euro-
stoppages can be reduced. Simultaneously, customers can also        pean Body Panels (“EBP”) and SwePart Transmission, which
increase productivity, efficiency and reduce costs in the produc-   are focused on providing high quality components, primarily to
tion phase.                                                         the automotive industry. These operations accounted for 3 per
                                                                    cent of Hexagon Group net sales in 2009.
Stationary Measurement Systems                                          EBP manufactures bodywork parts for several of Europe’s
Hexagon’s product offering in the area of stationary measure-       leading automotive manufacturers. SwePart Transmission is a
ment systems includes vertically and horizontally coordinated       manufacturer of custom gearbox housings, precision-ground
measuring machines (“CMMs”), sensors, software and after-           gearwheels and other transmission parts for industrial and
market services.                                                    automotive applications.
    Stationary measurement systems are generally automated,
which means that they can be programmed and run repetitive          Customers
inspections of components in large volumes. These systems are       Measurement technologies are used in nearly every market seg-
often part of manufacturing cell integration directly on the        ment around the world, for example building and construction,
workshop floor.                                                     urban planning, agriculture, mining, petroleum and gas. Meas-
    High-precision measuring machines measure objects such          urement technologies are a prerequisite for improving efficien-
as engine blocks and gearwheels. Machines with a lower level        cy, quality and productivity in the automotive, aerospace and
of precision are used to measure sheet-metal parts, such as car     manufacturing industries.
doors or aircraft wings, or machined casted parts (housing for          No individual customer represented more than 1.5 per cent
gearboxes or turbine blades).                                       of the Group’s net sales in 2009. Below is summarised each cus-
    The measurement systems are also used for measurements          tomer groups share of net sales of Measurement Technologies
of small components requiring high precision such as lenses and     during 2009.
gears or complex high-precision parts such as implants or pros-                  Surveying                                                             35
thetics in the medical technologies industry.                           Heavy construction                            12
                                                                               Automotive                         9
Portable Measurement Systems                                                Manufacturing                         9
Portable measurement systems are used to measure objects that                   Aerospace                    7
cannot be moved to a measuring machine, that are produced in                    Geospatial                   7
small volumes or that are specially manufactured in a way that           Light construction              4
entails rapidly changing specifications. The largest customer                 Raw material               4

categories in portable measurement systems comprise manufac-                Heavy vehicles        1

turing companies in the automotive, aerospace, energy, medical                       Other                            12
                                                                                              0         5        10        15      20       25   30   35 %
technology, general metal fabrication and design industries.
                                                                                                      Geosystems                Metrology




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Description of Hexagon




     Surveying                                                           Geospatial (Geographic information systems)
     Surveying account for Hexagon’s largest single customer cate-       Geospatial information is information about the earth’s surface.
     gory, representing 35 per cent of net sales of Measurement          Hexagon’s measurement systems are used in applications such
     Technologies in 2009.                                               as urban and landscape planning, updating of maps and
         Land surveyors map land surfaces, for example when defin-       preventing, mapping and managing natural disasters.
     ing the legal boundaries of land ownership. The results are used        The largest customer groups for geospatial information are
     to create or update cadastres, which are public registers con-      cartographic companies and government authorities, defence-
     taining the boundaries of land property ownership. Building         related industries, system administrators and companies selling
     and engineering surveying involves measurements taken before,       GIS services. However, these solutions are increasingly used by
     during and after all types of construction.                         new customers such as urban planners, real estate agents, envi-
                                                                         ronmental consulting firms, civil engineering or oil and gas
     Heavy construction                                                  companies.
     Hexagon’s measurement systems are used by construction com-
     panies for the preparation, execution and monitoring of build-      Light construction
     ings, roads, bridges, railroads, tunnels, airports and ports,       Hexagon’s offering includes optical and digital levels for the
     among other projects.                                               measurement of flat surfaces at construction sites. Hexagon’s
                                                                         total stations and construction lasers are used to measure
     Automotive                                                          angles, distance and grade. The primary customers in this sector
     Hexagon has a broad customer base within the automotive             are construction companies building private housing and com-
     industry. Demand is driven by the need to increase quality, pro-    mercial properties. This category also includes private custom-
     ductivity and cost efficiency in the manufacturing process.         ers using handheld products for home use.
          Hexagon’s measurement systems are well integrated into
     the R&D processes of car manufacturers. Because customer            Raw materials
     investments are often driven by new model launches and the          The increased global demand for energy and minerals has made
     relocation of production facilities, demand is not solely driven    the mining industry an increasingly important customer sector.
     by the number of units produced.                                    Mining companies require solutions for guiding and coordinat-
          While the western world’s automotive industry experienced      ing fleets of heavy machinery, both above and below ground,
     a significant decline in sales during 2009, investments in new      and for steering individual pieces of equipment. By using
     technology were made in existing and future production facili-      Hexagon’s systems for steering and controlling of agricultural
     ties in Asia, South America and Eastern Europe – a market trend     and construction equipment, customers in these sectors can
     which benefits Hexagon due to Hexagon’s strong position in          increase productivity and efficiency with greater environmental
     these markets.                                                      responsibility.

     Manufacturing                                                       Heavy vehicles
     Hexagon has a large number of customers within the manufac-         Hexagon’s measurement systems are used by truck manufactur-
     turing, electronics, industrial machine and energy industries. As   ers to increase quality, productivity and cost efficiency in the
     in the automotive industry, measurement systems are used to         manufacturing process.
     increase efficiency, quality and productivity in manufacturing
     processes.                                                          Other customers
                                                                         This category includes a number of smaller applications such as
     Aerospace                                                           the use of measurement systems by police authorities to docu-
     Applications for Hexagon’s measurement systems in the aero-         ment crime scenes or the manufacturing of high-precision parts
     space industry are similar to those of the automotive industry.     and components for products such as implants and prosthetics
     In short, they are integrated into the R&D process. As opposed      within the medical device industry.
     to the automotive industry, where regular random vehicle
     inspections take place, the aerospace industry measures and
     inspects every individual aircraft.




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                                                                                                                        Description of Hexagon




Distribution                                                              Operations at Hexagon’s facilities around the world are
Geosystem’s products are sold mainly through a worldwide net-        carefully coordinated. Both skill and scale advantages are uti-
work of distributors. Hexagon Metrology’s products are prima-        lised and the assembly facilities’ ability to meet the demands in
rily sold through an in-house sales organisation, with some 50       terms of precision and quality of the measurement system is
local demonstration and service centers throughout the world.        guaranteed.
Within the in-house sales organisation, Hexagon’s staff demon-            Sourcing of components and subsystems is coordinated in a
strates the products and customers are offered the chance to         systematic manner throughout the Hexagon Group. The aim is
personally carry out their own test measurements. Because            to minimize costs, ensure quality and eliminate bottlenecks in
measurement systems often involve significant investment costs       the supply of components.
for customers, it is of vital importance for both Hexagon and             Hexagon purchases components from sub-suppliers
the customer to establish close relationships for continued serv-    throughout the world. The selection of suppliers is based on an
ice and future upgrades.                                             assessment of the overall competitiveness of the offering. This
                                                                     assessment includes a number of factors, other than financial
Assembly operations                                                  aspects, such as competency, technology, process management,
Hexagon develops and assembles measurement systems in facil-         logistics, leadership and investments in continuous improve-
ities in about 20 countries around the world. Highly educated        ment.
personnel assemble measurement components into complete                   Critical sub-systems are produced in-house. The decision
systems and integrate proprietary software. The systems are          for in-house manufacturing is taken in order to protect the intel-
also being calibrated and carefully tested in Hexagon’s facilities   lectual property as well as due to lack of suppliers that are able
before being shipped to the customer.                                to achieve required quality to a lower cost. Examples of sub-
     Hexagon’s policy is to localise operations whenever feasi-      systems produced in Hexagon’s facilities are precision rotary
ble. Assembly facilities are established in locations where it is    axis systems, housing and surface technologies used in the
justified from a customer-base perspective. For environmental        assembly of theodolites, laser scanners and laser trackers.
reasons Hexagon aims to limit shipping of measurement sys-
tems as far as possible.




   assembly operations
   research units




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Description of Hexagon




     Research and Development (R&D)                                                   In 2009, a total of about 950 engineers, equal to over 10 per
     In order for Hexagon to be successful, whether in terms of                       cent of the Group’s employees, were engaged in R&D at
     launching new products, improving existing products and serv-                    Hexagon. Whereas most of them work on product develop-
     ices or finding new application areas for established technolo-                  ment, about 10 per cent of R&D spending was allocated to new
     gies, it is necessary to be able to meet the needs of our custom-                technology development. The results are adapted and trans-
     ers’ end-user markets. The objective for Hexagon’s R&D                           formed into innovative products in the individual R&D depart-
     division is to transform customer needs into products and serv-                  ments of the Hexagon companies, brands and units.
     ices, even before they are articulated by inventing and applying                      Hexagon’s R&D department forms a worldwide network
     cutting-edge technology.                                                         of knowledge exchange and close cooperation with employees
     ●   Efficiency – Hexagon will detect market and technological                    based in Sweden, Denmark, Switzerland, Germany, France,
         opportunities in advance. The balance between the two                        Italy, Israel, the US, Canada, Singapore, India, China, Japan
         elements results in new products being available when the                    and Australia.
         need for them arises. There is also a constant focus on costs
         of development and production, as well as on product price.                  Current patent portfolio
         Clearly defined objectives help control and realise cost                     In order to secure the return on Hexagon’s investments in R&D,
         targets.                                                                     the Group strives to protect its technical innovations through
     ●   Responsiveness – Hexagon will quickly and precisely meet                     patents when the Group considers it justified. All products are
         customer requirements. Hexagon’s R&D integrates cus-                         hence not protected by patent. Hexagon submits a large number
         tomers, partners and internal and external experts at an                     of patent applications each year. The Company carefully moni-
         early stage, so that new product specifications reflect a clear              tors its competitors to ensure that its patents are respected,
         picture of the required product from the very beginning.                     views patent infringement seriously and has a policy of legally
         The sooner a project reaches completion, the better it fits                  defending its rights. The patent portfolio consisted of 1 704
         the defined market expectations – thus Hexagon continu-                      patents as of 8 October 2010. Furthermore, Hexagon has 766
         ously works to reduce time to market to increase respon-                     outstanding patent applications as of 8 October 2010, which
         siveness.                                                                    Hexagon estimates will be approved during the coming 18
     ●   Learning – Hexagon will avoid rigidity and inflexibility.                    months. See below for details regarding the patent portfolio as
         Monitoring innovation provides data and facts to continu-                    end of 2009.
         ously improve the innovation process. Employee develop-
         ment is a key component of this process. A comprehensive                     Recently launched customer offerings
         framework of process rules allows Hexagon to develop a                       During 2010, Hexagon has launched a large number of new
         range of R&D projects simultaneously and to gain syner-                      products and released numerous software upgrades. As part of
         gies across the Group.                                                       the material customer offerings launched during the year are
                                                                                      the new Leica SP Technology, Leica Absolute Tracker AT401,
                                                                                      ROMER Absolute Arm and Robotic Imaging Total Station
                                                                                      Leica Viva TS15.


                                                                                                 Product groups
                    Market segments                                    MACRO                                                    MICRO
       Number                                           Total                Laser     Const-                     Articulated     Laser    Hand-    Probe
     of patents     Technologies                      stations   DISTOTM   scanners    ruction       CMMs            arms       trackers   tools   systems
           328      Linear distance measurement             l      l           l         l                                         l        l        l

           310      sensors                                 l      l           l         l             l              l            l        l        l

           221      optics                                  l      l           l         l                                         l                 l

           210      gPs and gnss                            l      l           l         l

           170      Mechanical structures                   l                                          l              l            l                 l

           137      signal and image processing             l      l           l         l             l                           l

            92      calibration and compensation            l      l           l         l             l              l            l        l        l

            92      components                                                                         l              l

            55      Laser                                                                l

            38      Machine guidance                        l                            l

            38      control and electronics                 l                  l                       l                           l

            10      software                                l      l           l         l             l              l            l

         1 701




30       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                     Description of Hexagon




LEICA SP TECHNOLOGY
SP Technology provides improved hydraulic control that allows faster grading without
loss of precision at higher speeds, increasing machine utilization and productivity.
Bulldozers can now take on more fine grading jobs, allowing contractors to complete
their work with fewer machines and helping them to finish their projects ahead of
schedule and under budget.
    By using Inertial Guidance with the most responsive hydraulic control on the mar-
ket, GPS performance is enhanced. SP technology reduces the need for rework and
increases uptime during poor GPS/GLONASS coverage or temporary loss of correc-
tion signals. This allows for consistent and precise grading even under the most diffi-
cult conditions.



LEICA ABSOLUTE TRACKER AT401
A laser tracker is a portable measurement system that relies on a laser beam to accu-
rately measure and inspect in a radial volume of up to 320 metres.
    The Leica Absolute Tracker AT401 is powered by its own internal battery and is
able to work in highly demanding environments, yet with a high level of precision. The
Leica Absolute Tracker AT401 has an “All in One” system design that incorporates
accessories such as built in live video, level to gravity, environmental monitoring and
even an integrated IR remote control. By utilizing the integrated Wireless LAN com-
munication the sensor can be used completely wirelessly.




ROMER ABSOLUTE ARM
For workpieces that are large, difficult to move, or cannot be moved to an offline
inspection station, dimensional inspection at the point of production is essential. The
ability to quickly measure parts wherever and whenever required allows manufactur-
ers to ensure quality, control processes, reduce scrap and eliminate re-work.
     The new generation portable 3D measuring arms, the ROMER Absolute Arm, is,
according to Hexagon, the first measuring arm to have absolute encoders, a develop-
ment that will simplify the inspection process. The user can now easily switch the sys-
tem on and start measuring without having to initialize the encoders. The ROMER
Absolute Arm is notable for its low weight and systematic, ergonomic design. With its
WiFi capability and high-capacity rechargeable batteries, the ROMER Absolute Arm
can operate wirelessly.


ROBOTIC IMAGING TOTAL STATION LEICA VIVA TS15
Leica Viva combines a wide range of innovative hardware and software designed to
meet the daily challenges for all positioning tasks.
    The new robotic Imaging Total Station, the Leica Viva TS15, provides advanced
imaging functionality combined with dynamic tracking capabilities for one-person
surveying. The Leica Viva TS15 also adds a high-resolution camera with advanced
picture treatment to further enhance the total station productivity. The system incor-
porates Leica SmartWorx Viva onboard software providing a wide range of applica-
tions.




                                                                                          InvItatIon to subscrIbe For shares In hexagon ab   31
Description of Hexagon




     History


     1975 Eken Industri & Handel AB is founded.                       2004 A record year with earnings per share after tax increas-
                                                                           ing by 62 per cent. Net sales and operating margin have
     1976 Initial public offering for Eken Industri & Handel AB.
                                                                           doubled compared to 2000 and the number of strategic
     1992 A number of investors acquired a major shareholding in           businesses has decreased from 24 to 4. Metodsvets i
          Eken Industri & Handel AB.                                       Kungälv AB and Tjust Mekaniska Verkstads AB are
                                                                           divested. The shares in the listed company VBG AB are
     1993 Eken Industri & Handel AB changed its registered name
                                                                           spun off to Hexagon’s shareholders.
          to Hexagon in connection with a change of investing
                                                                      2005 Technologies and applications increasingly drive the
          strategy.
                                                                           two main micro and macro segments closer together.
     1998 Mr Melker Schörling acquires a controlling stake in              Hexagon acquires Leica Geosystems that manufactures
          Hexagon.                                                         advanced products in macro segments. Hexagon Auto-
                                                                           mation is divested.
     1999 Mr Melker Schörling is elected the Chairman of the
          Board of Hexagon.                                           2006 Synergies between Leica Geosystems and Metrology
                                                                           realised more rapidly than expected and earnings per
     2000 4.6 billion SEK in net sales, 4 per cent operating mar-
                                                                           share increase by 60 per cent. Major acquisitions in
          gin, 24 different businesses – a large number of small
                                                                           Geosystems include the Swedish company Scanlaser
          subcontractors supplying components to the Swedish
                                                                           AB, Norway-based Scanlaser AS and Danish Mikrofyn
          engineering sector. Hexagon’s President and CEO Ola
                                                                           A/S that strengthen Hexagon’s market position in the
          Rollén is hired and new strategies set. Decision is made
                                                                           fast-growing machine control sector.
          to concentrate the Group’s activities. Measurement
          technologies deemed to have substantial potential. The      2007 Hexagon acquires NovAtel Inc. A total of 18 acquisi-
          business area Norfoods is divested.                              tions were completed, with net sales of approximately
                                                                           1.4 billion SEK, to complement Hexagon’s measure-
     2001 Acquisition of US-based measurement technologies
                                                                           ment technologies activities primarily in the macro seg-
          company Brown & Sharpe Inc., additional acquisitions
                                                                           ment. Johnson Metall AB, Eurosteel AB and Tidamek
          in the Metrology sector both in distribution and in tech-
                                                                           AB are divested.
          nology, with software company Wilcox being the larg-
          est. Gustaf Fagerberg AB, Tecla, Johnson Metal Bearing      2008 Hexagon Polymers is distributed to the shareholders of
          Components and the business area Hexagon Wireless                Hexagon and is listed separately as Hexpol AB on
          are divested.                                                    NASDAQ OMX Stockholm. Streamlining of Hexagon
                                                                           as a measurement technologies company is completed.
     2002 Hexagon’s transformation begins to take effect and
                                                                           A series of complementary acquisitions are made both
          earnings per share after tax increased by 19 per cent. At
                                                                           in the micro and macro segments.
          the same time, acquisitions have been made in measure-
          ment technologies. Hexagon’s main acquisition in 2002       2009 11.8 billion SEK in net sales, 15 per cent operating mar-
          was C E Johansson, a metrology company.                          gin, one core business and a leading global measure-
                                                                           ment technologies group. The French software compa-
     2003 Hexagon has at this time four separate business areas:
                                                                           ny Technodigit is acquired. The Spatial Systems division
          Metrology, Engineering, Automation and Polymers.
                                                                           of the American company Loyola Enterprises Inc. is
          Metrology has the best development and within that
                                                                           acquired. The German optical measuring machine com-
          business a number of important acquisitions are made
                                                                           pany Mahr Multisensor GmbH and German multisen-
          in China such as Qingdao Brown & Sharpe Quinshao
                                                                           sor manufacturer Mycrona GmbH are acquired.
          Technology Co Ltd and Qingdao Brown & Sharpe
          Trading Co Ltd. Boliden and Hexagon form a joint            2010 On 7 July Hexagon announced the acquisition of US-
          venture comprising their respective brass operations,            based software provider Intergraph. The acquisition
          Nordic Brass AB and Boliden Gusum AB.                            fulfils all prerequisites that Hexagon has set for soft-
                                                                           ware driven expansion. The acquisition was closed on
                                                                           28 October.




32     InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                         Description of Hexagon




Organisation, employees and environmental                              of the Vice President, CFO, CTO, General Counsel and applica-
policy                                                                 tion area- and region directors (Geosystems, Metrology and
Operational structure                                                  Asia). For more information see “Board of Directors, Group
Hexagon’s operations are organised into two business areas:            Management and auditors”. The Group functions consist of
Measurement Technologies and Other Operations. Measure-                Finance, Technology, Legal, Business Development and Corpo-
ment Technologies includes the application areas Geosystems,           rate Communications. For an overview of the new Group
Metrology and Technology. The President and CEO is responsi-           including Intergraph, see “The new Group”. Hexagon’s organi-
ble for the daily management and decision-making together              sation excluding Intergraph is illustrated in the figure below:
with the other members of the Group Management, consisting




                                                                                 President and CEO




                                                             Finance                                       Business Development


                                                        Technology                                      Corporate Communications



                                                              Legal




                                        Measurement Technologies                                              Other Operations




             Geosystems                          Metrology                              Technology



                                               Sales regions




                                                                                              InvItatIon to subscrIbe For shares In hexagon ab   33
Description of Hexagon




     Employees
     Hexagon has operations in 39 countries. As of 30 September 2010 Hexagon had 7 763 employees. The average number of employees
     for the first nine months of 2010 amounted to 7 432. About 93 per cent of the employees work outside Sweden.


                                                                   1 January –
                                                            30 September 2010                  2009                2008               2007
     at end of the period                                                 7 763                7 476              8 436             10 062
     average during the period                                            7 432                7 549              9 062              8 406
     – sweden                                                                 497                517                750                995
     – china                                                              1 474                1 454              1 581                899
     – switzerland                                                        1 360                1 423              1 550              1 421
     – us                                                                 1 088                1 142              1 462              1 346
     – germany                                                                548                516                524                458
     – France                                                                 329                354                374                266
     – other countries                                                    2 136                2 143              2 821              3 021
     – Men                                                           77 per cent          77 per cent        77 per cent        81 per cent
     – Women                                                         23 per cent          23 per cent        23 per cent        19 per cent




     Environmental policy                                                 ●     The ergonomic features of the measurement systems lead to
     Hexagon strives to contribute to an environmentally sustaina-              improvements in the work environment.
     ble society by providing solutions that reduce resource con-         ●     By upgrading and servicing instruments, the lifecycle of
     sumption and environmental impact, primarily within produc-                measurement systems is extended.
     tion processes.                                                      ●     Hexagon’s machine control system is an example of a tech-
     ●   Measurement systems integrated in the production process               nology that helps customers achieve their sustainability
         help decrease scrapping, whereby consumption of compo-                 goals.The system can increase the customer’s productivity
         nents and raw material is reduced.                                     by more than 30 per cent, give substantial material savings
     ●   Productivity and energy efficiency are improved.                       and in some cases nearly halve fuel consumption.




34       InvItatIon to subscrIbe For shares In hexagon ab
Financial overview Hexagon

The information concerning financial years 2007–2009 is based                                graph, Hexagon’s future financials may deviate significantly
on Hexagon’s annual reports, which was prepared in compli-                                   from the impression given in this section. Consolidated pro for-
ance with IFRS and audited by Hexagon’s auditors. The infor-                                 ma financial statements for Hexagon including Intergraph for
mation concerning the first nine months of 2009 and 2010 is                                  2009 and January – September 2010 can be found under “Pro
based on Hexagon’s interim report for the period 1 January                                   forma financial statements”.
2010 – 30 September 2010, which was prepared in compliance                                        The reader should note that the income statement, balance
with IFRS and reviewed by Hexagon’s auditors.                                                sheet and cash flow statement in 2007 and the income state-
     The summary of the accounts below should be read in con-                                ment and cash flow statement of the first five months of 2008
junction with Hexagon’s annual reports for 2007–2009 and                                     include the polymers business, Hexpol AB, which was distrib-
Hexagon’s interim report for the first nine months of 2010,                                  uted to the shareholders of Hexagon as a dividend during 2008.
which all are referenced in the prospectus and constitute a part                             See section “Commentary on Hexagon’s financial develop-
of this prospectus. All reports are available on Hexagon’s web-                              ment” for further information.
site at www.hexagon.se.                                                                           The reporting of income statement and balance sheet for
     The financial impact of the acquisition of Intergraph has                               Hexagon differs between annual and interim. Interim reporting
been excluded from all financial information in this section.                                is less detailed and certain items below is accumulated.
The reader should note that, through the acquisition of Inter-



Income statement

                                                                                 January – September
MSEK                                                                             20101)               20091)                    20092)              20082)               20072)
net sales                                                                       9 458                8 735                    11 811               14 479             14 587
cost of goods sold                                                            –4 641                –4 630                    –6 231               –7 881             –8 490
Gross earnings                                                                  4 817                4 105                     5 580                6 598               6 097

sales expenses                                                                       –                    –                   –2 074               –2 238             –1 990
administration expenses                                                              –                    –                     –943               –1 007             –1 080
research and development expenses                                                    –                    –                     –911                –944                 –811
other operating revenues                                                             –                    –                      139                   84                      59
other operating expenses                                                             –                    –                     –189                 –46                  –88
sales and administration costs, etc.3)                                        –3 183                –3 060                           –                  –                       –
share in associated company earnings                                                 1                   –2                        –2                   1                 –31
capital gain/loss from sales of shares in group companies                            –                    –                          –                  –                 114
Operating earnings (EBIT)*                                                      1 635                1 043                     1 600                2 448               2 270

Interest income                                                                      –                    –                         9                  36                      48
Interest expenses                                                                    –                    –                     –167                –355                 –262
Interest income and expenses, net                                                –114                 –128                           –                  –                       –
Earnings before tax                                                             1 521                  915                     1 442                2 129               2 056

tax on earnings for the period                                                   –208                 –124                      –188                –270                 –245
Net earnings                                                                    1 313                  791                     1 254                1 859               1 811

Attributable to:
Parent company shareholders                                                     1 302                  785                     1 244                1 847               1 800
non-controlling interests                                                           11                    6                         9                  12                      11

*) of which non-recurring items                                                       –                –175                      –184                –100                 –151

1) reviewed by auditors.
2) audited by auditors.
3) accumulated sales expenses, administration expenses, research and development expenses, other operating revenues and other operating expense.




                                                                                                                            InvItatIon to subscrIbe For shares In hexagon ab        35
Financial overview Hexagon




     Balance sheet

                                                                                                      30 September                                                  31 December
     MSEK                                                                                       20101)                 20091)                       20092)             20082)      20072)
     Intangible fixed assets                                                                  16 110                 15 973                       16 396              16 832      14 151
     tangible fixed asset                                                                      1 576                   1 698                        1 694              1 903       2 277
     Financial fixed assets                                                                    1 147                     116                          129               109          76
     Deferred tax assets                                                                          549                    485                          590               587         492
     Total fixed assets                                                                       19 382                 18 272                       18 809              19 431      16 996

     Inventories                                                                               2 789                   2 692                        2 597              3 294       2 586
     current receivables                                                                       3 271                   3 165                        3 226              3 857       3 746
     short-term investments                                                                          –                       –                          21               20         781
     cash and bank balances                                                                          –                       –                        773               899         831
     cash and cash equivalents                                                                    883                    551                              –                –           –
     Total current assets                                                                      6 943                   6 408                        6 617              8 070       7 944
     Total assets                                                                             26 325                 24 680                       25 426              27 501      24 940

     attributable to the parent company’s shareholders                                        13 002                 11 706                       12 433              11 957      10 002
     attributable to non-controlling interests                                                     50                      48                           51               57          44
     Total shareholder’s equity                                                               13 052                 11 754                       12 484              12 014      10 046

     Liabilities to credit institutions                                                              –                       –                      9 223             10 470       9 762
     other long-term liabilities – interest bearing                                                  –                       –                          28               39          27
     Interest bearing liabilities4)                                                            2 0793)                 9 462                              –                –           –
     other long-term liabilities – non-interest bearing                                            12                      15                           14               26          17
     Provisions for pensions                                                                      320                    396                          383               452         433
     Deferred tax liabilities                                                                     290                    273                          409               331         668
     other provisions                                                                              23                    144                            65              174         192
     Total long-term liabilities                                                               2 724                 10 290                       10 122              11 492      11 099

     other provisions – current portion                                                           147                    261                          265               339         208
     Liabilities to credit institutions                                                        6 8053)                     82                         117               500         170
     accounts payable                                                                             885                    735                          864              1 185       1 473
     advance payments from customers                                                                 –                       –                        146               121          89
     current tax liabilities                                                                         –                       –                        138               185         236
     other liabilities – interest-bearing                                                            –                       –                            –                –          7
     other liabilities – non-interest bearing                                                        –                       –                        193               239         432
     other liabilities5)                                                                       1 414                     417                              –                –           –
     accrued expenses and deferred income                                                      1 298                   1 141                        1 097              1 426       1 187
     Total short-term liabilities                                                             10 549                   2 636                        2 820              3 995       3 795
     Total equity and liabilities                                                             26 325                 24 680                       25 426              27 501      24 940
     1)   reviewed by auditors.
     2)   audited by auditors.
     3)   hexagon’s syndicated loan facility expires in June 2011 and was therefore reclassified as a short-term liability in the second quarter of 2010.
     4)   accumulated liabilities to credit institutions and other longterm liabilities – interest bearing.
     5)   accumulated advance payments from customers, current tax liabilities, other liabilities – interst-bearing and other liabilities – non-interest bearing.




36          InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                                             Financial overview Hexagon




Cash flow statement

                                                                                        January – September
MSEK                                                                                    20101)                 20091)                      20092)              20083)               20074)
cash flow from operations before
change in working capital                                                               1 8225)               1 1276)                     1 813               2 587                2 472
cash flow from change in working capital                                                 –145                    311                         618               –832                 –445
cash flow from ordinary investing activities                                             –600                  –605                        –821              –1 055                 –825
Operating cash flow                                                                     1 077                    833                      1 610                 750                1 202

Cash flow from other investment activities                                               –162                  –131                        –268              –1 048              –3 031

Dividends paid                                                                           –329                  –148                        –148                –634                 –448
cash flow from other financing activities                                                –469                  –925                      –1 327                 262                3 374
Cash flow from financing activities                                                      –798                –1 073                      –1 475                –397                2 926

Cash flow for the period                                                                  117                  –371                        –133                –695                1 097
1)   extraction from revlewed interim report for January – september 2010.
2)   extraction from audited annual report for 2009.
3)   extraction from audited annual report for 2008.
4)   extraction from audited annual report for 2007.
5)   Including cash flow from restructuring of –55 MseK
6)   Including cash flow from restructuring of –141 MseK



Key figures

                                                                                        January – September
MSEK                                                                                    20101)                 20091)                      20092)              20082)               20072)
operating margin, %                                                                      17.3                   13.9                        15.1                17.6                16.6
Profit margin before taxes, %                                                            16.1                   10.5                        12.2                14.7                14.1
return on shareholders’ equity, %                                                        13.8                   10.0                        10.3                18.2                19.5
return on capital employed, %                                                              9.8                   8.1                          7.8               12.5                15.2
equity ratio, %                                                                          49.6                   47.6                        49.1                43.7                40.3
net debt / equity ratio                                                                  0.58                   0.74                        0.66                0.89                0.88
Interest coverage ratio                                                                  13.5                    7.5                          9.5                7.0                  8.8
average number of shares, (‘000)                                                    264 537                264 263                     264 284             265 317              265 278
basic earnings per share excluding non-recurring items, seK                              4.93                   3.54                        5.31                7.28                7.11
basic earnings per share, seK                                                            4.93                   2.97                        4.71                6.96                6.79
cash flow per share, seK                                                                 6.55                   5.97                        9.92                6.61                7.64
cash flow per share before change in working capital, seK                                7.10                   4.80                        7.58                9.75                9.32
cash dividend per share, seK                                                                  –                     –                       1.20                0.503)              2.354)
share price, seK                                                                          145                     83                         106                  38                 135

1)   reviewed by auditors.
2)   audited by auditors.
3)   In addition to ordinary dividends, the polymers business, hexpol, was spun off to hexagon’s shareholders through a so called distribution in kind.
4)   the cash dividend per share for 2005 and 2006 amounted to 0.92 seK and 1.67 seK respectively.




                                                                                                                                       InvItatIon to subscrIbe For shares In hexagon ab      37
Financial overview Hexagon




     Financial information per business area
     Net sales
                                                                                   January – September
     MSEK                                                                          20101)        20091)    20092)    20082)    20072)
     Measurement technologies                                                      9 110         8 481    11 458    12 356    10 937
     Polymers3)                                                                       –             –          –     1 419     2 730
     other operations                                                               348           254       353       704       922
     group-wide and adjustments                                                       –             –          –         –         –
     eliminations                                                                     –             –          –         –       –2
     Group                                                                         9 458         8 735    11 811    14 479    14 587


     Operating earnings excluding non-recurring items (EBIT1)
                                                                                   January – September
     MSEK                                                                          20101)        20091)    20092)    20082)    20072)
     Measurement technologies                                                      1 703         1 313     1 905     2 469     2 141
     Polymers3)                                                                       –             –          –      143       310
     other operations                                                               –16           –59       –74         6        30
     group-wide and adjustments                                                     –52           –36       –47       –70       –60
     eliminations                                                                     –             –          –         –         –
     Group                                                                         1 635         1 218     1 784     2 548     2 421
     1) reviewed by auditors.
     2) audited by auditors.
     3) Polymers (hexpol ab) was de-consolidated from hexagon as of 1 June 2008.



     Financial information per geographical market
     Net sales
                                                                                   January – September
     MSEK                                                                          20101)        20091)    20092)    20082)    20072)
     eMea                                                                          4 406         4 159     5 729     8 006     8 646
     americas                                                                      2 255         2 172     2 883     3 589     3 551
     asia and the Pacific                                                          2 797         2 404     3 199     2 884     2 390
     Group                                                                         9 458         8 735    11 811    14 479    14 587
     1)   extraction from reviewed interim report for January-september 2010.
     2)   extraction from audited annual report for 2009.
     3)   extraction from audited annual report for 2008.
     4)   extraction from audited annual report for 2007.




38          InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                             Financial overview Hexagon




Definitions

Capital employed                 total assets less non-interest bearing liabilities.

Capital turnover rate            net sales divided by average capital employed.

Cash flow                        cash flow from operating activities, excluding non-recurring items, after change in working capital.

Cash flow per share              cash flow from operating activities, excluding non-recurring items, after change in working capital, divided by
                                 average number of shares.

Earnings per share               net earnings divided by average number of shares.

Equity ratio                     shareholders’ equity including non-controlling interests as a percentage of total assets.

Interest cover ratio             earnings before taxes plus financial expenses divided by financial expenses.

Investments                      Purchases less sales of tangible and intangible fixed assets, excluding those included in acquisitions and divesti-
                                 tures of subsidiaries.

Net debt / equity ratio          Interest-bearing liabilities less interest-bearing and liquid assets divided by shareholders’ equity excluding non-
                                 controlling interests.

Operating cash flow              cash flow from operations, after change in working capital and ordinary investing activities.

Operating earnings excluding     operating earnings excluding capital gains on shares in group companies and other non-recurring items.
non-recurring items (EBIT1)

Operating margin                 operating earnings excluding non-recurring items (ebIt1) as a percentage of net sales.

Profit margin before taxes       earnings before taxes as a percentage of net sales.

Return on capital employed       twelve months to end of period earnings before taxes, excluding non-recurring items, plus financial expenses as
                                 a percentage of twelve months to end of period average capital employed.

Return on shareholders’ equity   twelve months to end of period net earnings excluding non-controlling interests as a percentage of twelve
                                 months to end of period average shareholders’ equity excluding non-controlling interests last twelve months.

Share price                      Last settled transaction on nasDaQ oMx stockholm on the last business day for the period.




                                                                                                       InvItatIon to subscrIbe For shares In hexagon ab   39
     Commentary on Hexagon’s financial
     development
     Comparison between January – September                             Gross profit
     2010 and January – September 2009                                  Gross profit amounted to 4 817 MSEK (4 105). The gross mar-
     The numbers within parentheses represents the corresponding        gin was 51 per cent (47).
     period the previous year.
                                                                        Operating earnings
     Income statement                                                   EBIT increased to 1 635 MSEK (1 043). Operating earnings
     Net sales and order intake                                         during the first nine months of 2010 was positively effected by
     Demand for Hexagon’s products and services increased in the        several new product innovations including new technology,
     first nine months 2010. Order intake increased to 10 035 MSEK      lower manufacturing costs and an increasing software content.
     (8 697) and net sales to 9 458 MSEK (8 735). Using fixed           Exchange rate movements had a negative effect on operating
     exchange rates and a comparable group structure, order intake      earnings of –103 MSEK. EBIT1 increased to 1 635 MSEK
     increased by 22 per cent and net sales by 14 per cent.             (1 218).
          Measurement Technologies’ net sales increased to 9 110            Hexagon Measurement Technologies’ EBIT1 increased dur-
     MSEK (8 481) during the first nine months 2010. Using fixed        ing first nine months 2010 to 1 703 MSEK (1 313). In the first
     exchange rates and a comparable group structure, order intake      nine months 2010 the margin improved to 18.7 per cent (15.5).
     and net sales increased by 20 per cent and 14 per cent, respec-        EBIT1 from Other Operations amounted to –16 MSEK
     tively.                                                            (–59), corresponding to an margin of –4.6 per cent (–23.2).
          Net sales from Other Operations increased to 348 MSEK
     (254) during the first nine months 2010. Using fixed exchange      Non-recurring items
     rates and a comparable group structure, order intake and net       In the first nine months 2010 there are no non-recurring items.
     sales increased by 92 per cent and 37 per cent, respectively.      In the first nine months of 2009, non-recurring items amounted
          Demand for Hexagon’s products and services in Europe,         to –175 MSEK related to the cost reduction programme.
     Middle East and Africa (“EMEA”) increased during the first
     nine months 2010 compared to the corresponding period 2009.        Amortisation of intangible fixed assets
     The major markets in Western Europe experienced increased          Amortisation of intangible fixed assets for the first nine months
     activity levels backed by improved demand for measurement          2010 was 640 MSEK (548).
     solutions used in connection to infrastructural investments as
     well as for equipment used in industrial segments such as auto-    Financial revenue and expenses
     motive and aerospace. Demand in Southern Europe remained           The financial net for the first nine months 2010 was –114
     weak while Eastern Europe, Russia, the Middle East and Africa      MSEK (–128).
     continue to grow. Organic net sales growth in EMEA was 14
     per cent during the first nine months 2010.                        Earnings before taxes
          Demand in North America, South America and Central            Earnings before taxes, excluding non-recurring items, amount-
     America (“Americas”) increased during the first nine months        ed to 1 521 MSEK (1 090). In the first nine months of 2009,
     2010. Several industries in NAFTA were recovering such as          non-recurring items amounted to –175 MSEK. Earnings before
     automotive, aerospace and general engineering. South America,      taxes, including non-recurring items, amounted to 1 521 MSEK
     led by Brazil, was experiencing strong demand. The mining and      (915). Earnings were negatively affected by exchange rate fluc-
     oil exploration activity is increasing and Hexagon is gaining      tuations of –99 MSEK.
     market share in these segments. Organic net sales growth in
     Americas was 12 per cent during the first nine months 2010.        Tax rate
          Asia, Australia and New Zeeland (“Asia and the Pacific”)      The Group’s tax expense fro the first nine months 2010 totalled
     recorded continuous strong organic growth during the first nine    208 MSEK (124), corresponding to an effective tax rate of 14
     months 2010. The growth in the region was obtained from            per cent (14). The tax expense is affected by the fact that the
     infrastructural activities in China, as well as, strong demand     majority of Hexagon’s earnings is generated in foreign subsidi-
     from the Chinese and Indian automotive and aerospace indus-        aries located in countries where the tax rates differ from the
     tries. In addition to India and China, several other markets and   ones enacted in Sweden.
     industries in the region are growing, as for example Japan,
     Korea, Australia and Southeast Asia. Organic net sales growth
     in Asia and the Pacific was 18 per cent during the first nine
     months 2010.




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                                                                                      Commentary on Hexagon’s financial development




Net earnings                                                        Hexagon’s net debt was 7 588 MSEK (8 678). The net indebt-
Net earnings, excluding non-recurring items, amounted to            edness was 0.58 times (0.74). The interest coverage ratio was
1 313 MSEK (942), or 4.93 SEK (3.54) per share. Net earnings,       13.5 times (7.5).
including these items, increased to 1 313 MSEK (791). This cor-
responds to an increase in earnings per share of 66 per cent to     Comparison between the 2009 and 2008
4.93 SEK (2.97).                                                    financial years
                                                                    The numbers within parentheses represents the corresponding
Investments                                                         period the previous year.
Hexagon’s net investments, excluding acquisitions and divesti-
tures, amounted to 600 MSEK (605) during the first nine             Income statement
months and consisted mainly of investments in production            Net sales and order intake
facilities, production equipment and intangible assets, primarily   Demand for Hexagon’s products and services declined during
capitalised development costs. Investments corresponded to 6        2009 on the back of the financial crisis. The size of the market
per cent (7) of net sales. Depreciation and write-downs amount-     for measurement technologies contracted by approximately 25
ed to 640 MSEK (548) in the first nine months.                      per cent in 2009. Order intake, excluding Hexpol, which was
                                                                    deconsolidated from Hexagon as of 1 June 2008, amounted to
Cash flow                                                           11 842 MSEK (13 168) and net sales to 11 811 MSEK (13 060).
Cash flow from operations before changes in working capital         Using fixed exchange rates and a comparable group structure,
and restructuring amounted to 1 877 MSEK (1 268), corre-            order intake decreased by 16 per cent and net sales by 19 per
sponding to 7.10 SEK (4.80) per share. Cash flow from opera-        cent. For the first five months of 2008, net sales in Hexpol
tions was positively effected by the improved operating earn-       amounted to 1 419 MSEK.
ings. Cash flow from change in working capital amounted to              Hexagon Measurement Technologies’ net sales amounted
–145 MSEK (311). Cash flow from change in working capital           to 11 458 MSEK (12 356) during the year. Using fixed exchange
was negatively effected by increasing inventories and current       rates and a comparable group structure, order intake and net
receivables. The cash flow was negatively affected by the settle-   sales decreased by 15 per cent and 17 per cent, respectively.
ment of restructuring programme obligations, amounting to               Net sales from Other Operations amounted to 353 MSEK
–55 MSEK (–141). Including changes in working capital, cash         (704) during the year. Using fixed exchange rates and a compa-
flow from operations was 1 732 MSEK (1 579), corresponding          rable group structure, order intake and net sales decreased by
to 6.55 SEK per share (5.97). Cash flow from ordinary invest-       47 per cent and 50 per cent, respectively. The negative trend
ing activities amounted to –600 MSEK (–605) and consisted           was caused by a severe downturn in the Swedish heavy vehicle
mainly of investments in production facilities, production          industry.
equipment and intangible assets. Operating cash flow amount-            Hexagon’s sales in Asia and the Pacific increased through-
ed to 1 077 MSEK (833). Cash flow from other investments            out 2009. Within the region several submarkets and industries
activities was –162 MSEK (–131) consisting of investments in        grew at double-digit rates. The healthy growth was primarily
subsidiaries and financial fixed assets. The change in borrow-      obtained from Hexagon’s strong position in the region in com-
ings was –469 MSEK (–925). Cash flow for the period amount-         bination with good demand from the infrastructure-related
ed to 117 MSEK (–371).                                              construction industry primarily in China. Organic net sales
                                                                    growth in Asia and the Pacific was 9 per cent in 2009.
Profitability                                                           Demand for Hexagon’s products in EMEA was reduced
Capital employed, defined as total assets less non-interest bear-   during 2009 compared to 2008. The negative organic growth in
ing liabilities, increased to 22 267 MSEK (21 761). Return on       net sales was 27 per cent. By the end of the year, however,
average capital employed, excluding non-recurring items, for        customers stopped reducing inventory levels which for the first
the last twelve months was 9.8 per cent (8.1). Return on aver-      nine months of the year had caused reductions in sales volumes
age shareholders’ equity for the last twelve months was 13.8        in both the industrial and construction-related segments across
per cent (10.0). The capital turnover rate was 0.8 times (0.5).     Western Europe. The sales volume was reduced in Eastern
                                                                    Europe as well. Russia, the Middle East and Africa continued to
Financial position                                                  grow albeit at significantly lower growth rates.
Total shareholders’ equity increased to 13 052 MSEK (11 754).           In Americas a similar situation as in EMEA occurred, where
The equity ratio increased to 50 per cent (48). Hexagon’s total     customers reduced inventory levels during the first nine months
assets increased to 26 325 MSEK (24 680). Goodwill at 30 Sep-       of the year thus reducing demand for Hexagon’s products.
tember 2010 amounted to 9 937 MSEK (9 950), corresponding           Demand from the manufacturing industry in Americas was
to 39 per cent (40) of total assets. On 30 September 2010,          weak during 2009. South America, led by Brazil, was growing



                                                                                           InvItatIon to subscrIbe For shares In hexagon ab   41
Commentary on Hexagon’s financial development




     throughout the year mainly due to increasing activity in the         Earnings before taxes
     mining and automotive industries. Americas displayed negative        Earnings before taxes, excluding Hexpol and non-recurring
     organic growth in net sales of 23 per cent, in 2009.                 items, amounted to 1 626 MSEK (2 104). Including Hexpol and
                                                                          non-recurring items of –184 MSEK for 2009 and non-recurring
     Gross profit                                                         items of –100 MSEK for 2008, earnings before taxes amounted
     Gross profit, excluding Hexpol, amounted to 5 580 MSEK               to 1 442 MSEK (2 129).
     (6 365). The gross margin was 47.3 per cent (48.7).
                                                                          Tax rate
     Operating earnings                                                   The Group’s tax cost for the year totalled 188 MSEK (270),
     EBITDA, excluding Hexpol, amounted to 2 537 MSEK (3 087),            corresponding to an effective tax rate of 13 per cent (13). The
     corresponding to an EBITDA margin of 21 per cent (24).               tax cost is affected by the fact that a considerable part of
         EBIT, excluding Hexpol, amounted to 1 600 MSEK (2 305),          Hexagon’s earnings are generated in foreign subsidiaries locat-
     corresponding to an operating margin of 14 per cent (18).            ed in countries where tax rates differ from those in Sweden.
     Operating earnings during 2009 was negatively effected by the
     rapid global economic downturn, which made it difficult to           Net earnings
     match costs with income. EBIT1, excluding Hexpol, amounted           Net earnings, excluding Hexpol and non-recurring items,
     to 1 784 MSEK (2 405), corresponding to an margin of 15 per          amounted to 1 412 MSEK (1 857), or 5.31 SEK (6.95) per
     cent (18).                                                           share. Net earnings, including these items, amounted to 1 254
         Measurement Technologies’ EBIT1 amounted to 1 905                MSEK (1 859), or 4.71 SEK (6.96) per share. The non-control-
     MSEK (2 469), corresponding to an margin of 17 per cent (20).        ling interest of net earnings was 9 MSEK (12).
         EBIT1 from Other Operations decreased during the year to
     –74 MSEK (6), corresponding to an margin of –21 per cent (1).        Investments
         Hexpols’ EBIT1 for the first five months 2008 were 143           Hexagon’s net investments, excluding acquisitions and divesti-
     MSEK.                                                                tures, were 821 MSEK (1 005) during the year and consisted
                                                                          mainly of investments in production facilities, production
     Non-recurring items                                                  equipment and intangible assets, primarily capitalised develop-
     During the fourth quarter of 2008 and into 2009 Hexagon              ment costs. Investments corresponded to 7 per cent (7) of net
     reacted to the weakened demand and accelerated planned               sales. Depreciation and writedowns during the year, including
     rationalisations and extract synergies from acquisitions made        –4 MSEK (4) for reversed impairment losses, amounted to 756
     in recent years. Previously decided rationalisation projects have,   MSEK (719).
     in view of the situation, been possible to carry out in just six
     months time. In total, the cost savings affected approximately       Cash flow
     1,200 employees including both lay-offs and temporary leaves         Cash flow from operations before changes in working capital
     of absence. As a consequence, Hexagon reported restructuring         and restructuring amounted to 2 003 MSEK (2 587), corre-
     charges of 100 MSEK in the fourth quarter of 2008 and of 184         sponding to 7.58 SEK (9.75) per share. Cash flow from opera-
     MSEK in 2009. Annualised savings amount to approximately             tions was negatively effected by deteriorating operating earn-
     900 MSEK by the end of 2009 compared to the cost level seen          ings. Cash flow from change in working capital amounted to
     in September 2008. Of the total savings, approximately 500–          618 MSEK (–832) and was positively effected by decreasing
     600 MSEK are structural, and consequently enabling Hexagon           inventories and current receivables. The cash flow was nega-
     to improve its EBIT-margins, especially once the volumes             tively affected by the settlement of restructuring programme
     resume to grow.                                                      obligations, amounting to –190 MSEK (–). Including changes in
                                                                          working capital, cash flow from operations was 2 621 MSEK
     Amortisation of intangible fixed assets                              (1 755), corresponding to 9.92 SEK per share (6.61). Cash flow
     Amortisation of intangible fixed assets for the 2009 financial       from ordinary investing activities amounted to –821 MSEK
     year was 472 MSEK (418).                                             (–1 005) and consisted mainly of investments in production
                                                                          facitities, production equipment and intangible assets. Operat-
     Financial revenue and expenses                                       ing cash flow amounted to 1 610 MSEK (750). Cash flow from
     The financial net amounted to –158 MSEK (–319) in 2009. The          other investments activities was –268 MSEK (–1 048) consist-
     decrease is mainly explained by lower interest rates and a lower     ing of investments in subsidiaries and financial assets. The
     net debt.                                                            change in borrowings was –1 327 MSEK (262). Cash flow for
                                                                          the period amounted to –133 MSEK (–695).




42       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                        Commentary on Hexagon’s financial development




Profitability                                                         fourth quarter. Reductions in net sales were recorded in both
Capital employed, defined as total assets less non-interest bear-     the industrial and construction segments across Western
ing liabilities, decreased to 22 300 MSEK (23 668). Return on         Europe. For the full year, organic growth in EMEA amounted
average capital employed, excluding non-recurring items, for          to 3 per cent.
the last twelve months was 7.8 per cent (12.5). Return on share-          In the Americas, the negative trend continued in the US con-
holders’ equity for the last twelve months was 10.3 per cent          struction and automotive industries during the year. However,
(18.2). The capital turnover rate was 0.5 times (0.7).                increased demand was recorded in infrastructure investments
                                                                      and non-automotive related segments such as mining, aerospace
Financial position                                                    and electronics industries. For the full year, organic growth in
Total shareholders’ equity, including non-controlling interests,      Americas amounted to 8 per cent.
amounted to 12 484 MSEK (12 014). The equity ratio increased              In Asia and the Pacific, strong organic growth continued
to 49 per cent (44). Hexagon’s total assets decreased to 25 426       during the year. For the full year, organic growth in Asia
MSEK (27 501). As a consequence of goodwill no longer being           amounted to 20 per cent.
amortised according to a plan, regular tests are made to deter-
mine whether the value of goodwill and/or similar fixed assets        Gross profit
is justifiable or whether there is any impairment charges need in     Gross profit increased 8 per cent to 6 598 MSEK (6 097) during
full or in part. Such a test was conducted at the end of 2009 and     the year. The gross margin improved to 46 per cent (42).
no impairment requirement arose. Goodwill at 31 December
2009 amounted to 10 196 MSEK (10 522), corresponding to               Operating earnings
40 per cent (38) of total assets. On 31 December 2009,                EBITDA grew to 3 267 MSEK (3 054). The EBITDA margin
Hexagon’s net debt was 8 298 MSEK (10 676). The net indebt-           improved to 23 per cent (21).
edness was 0.66 times (0.89). The interest coverage ratio was             EBIT grew to 2 448 MSEK (2 270), corresponding to an
9.5 times (7.0).                                                      operating margin of 17 per cent (16). Operating earnings dur-
                                                                      ing 2008 was positively effected by several new product innova-
Comparison between the 2008 and 2007                                  tions including new technology, lower manufacturing costs and
financial years                                                       an increasing software content. EBIT1 grew to 2 548 MSEK
The numbers within parentheses represents the corresponding           (2 421), corresponding to an margin of 18 per cent (17).
period the previous year.                                                 Hexagon Measurement Technologies’ EBIT1 increased by
                                                                      15 per cent to 2 469 MSEK (2 141) during the year, correspond-
Income statement                                                      ing to an margin of 20 per cent (20). The improvement in earn-
Net sales and order intake                                            ings derived primarily from a favourable product mix and a
Order intake amounted to 14 593 MSEK (15 139) and net sales           healthy volume trend.
to 14 479 MSEK (14 587) during the year. Order intake, exclud-            The polymers business, Hexpol, EBIT1 for the first five
ing Hexpol, amounted to 13 168 MSEK (12 315) and net sales,           months 2008 was 143 MSEK (310: full year 2007). EBIT1 from
excluding Hexpol, to 13 060 MSEK (11 857). Using fixed                Other Operations decreased during the year to 6 MSEK (30),
exchange rates and a comparable group structure, order intake         corresponding to an operating margin of 1 per cent (3).
grew by 5 per cent and net sales by 7 per cent.
     Hexagon Measurement Technologies’ net sales amounted             Amortisation of intangible fixed assets
to 12 356 MSEK (10 937) during the year. The increase was due         Amortisation of intangible fixed assets for the 2008 financial
in part to companies acquired during the year. Using fixed            year was 418 MSEK (305).
exchange rates and a comparable group structure, net sales
increased by 7 per cent. The polymers business, Hexpol, was           Financial revenue and expenses
deconsolidated from Hexagon as of 1 June 2008. For the first          Financial net amounted to –319 MSEK (–214) in 2008. The
five months of 2008, net sales amounted to 1 419 MSEK (2 730:         increase is primarily explained by the acquisition of NovAtel in
full year 2007).                                                      December 2007 which increased the net debt.
     Net sales from Other Operations amounted to 704 MSEK
(922). The decline in net sales is attributable to operations         Earnings before taxes
divested during the year. Using fixed exchange rates and a com-       Earnings before taxes amounted to 2 129 MSEK (2 056).
parable group structure, net sales increased by 2 per cent.
     Demand for Hexagon’s products in EMEA was solid during
the first half of the year but was significantly reduced during the




                                                                                             InvItatIon to subscrIbe For shares In hexagon ab   43
Commentary on Hexagon’s financial development




     Tax rate                                                           Profitability
     The Group’s tax cost for the year totalled 270 MSEK (245),         Capital employed, defined as total assets less non-interest bear-
     corresponding to an effective tax rate of 13 per cent (12). The    ing liabilities, increased to 23 668 MSEK (20 630). Return on
     tax cost is affected by the fact that a considerable part of       average capital employed was 12.0 per cent (14.3). Return on
     Hexagon’s earnings is generated in foreign subsidiaries located    average shareholders’ equity was 18.2 per cent (19.5). The capi-
     in countries where tax rates differ from those in Sweden as well   tal turnover rate was 0.7 times (0.9).
     as the fact that capital gains are essentially exempt from tax.
                                                                        Financial position
     Net earnings                                                       Total shareholders’ equity, including non-controlling interests,
     Net earnings increased by 3 per cent to 1 859 MSEK (1 811),        was 12 014 MSEK (10 046). The equity ratio increased to 44
     corresponding to earnings per share of 6.96 SEK (6.79). The        per cent (40). Hexagon’s total assets increased to 27 501 MSEK
     non-controlling interests of net earnings were 12 MSEK (11).       (24 940). As a consequence of goodwill no longer being amor-
                                                                        tised according to a plan, regular tests are made to determine
     Investments                                                        whether the value of goodwill and/or similar fixed assets is jus-
     Hexagon’s net investments, excluding acquisitions and divesti-     tifiable or whether there is any impairment need in full or in
     tures, were 1 005 MSEK (825) during the year and consisted         part. Such a test was conducted at the end of 2008 and no
     mainly of investments in production facilities, production         impairment requirement arose. Goodwill at 31 December 2008
     equipment and intangible assets (primarily capitalised develop-    amounted to 10 522 MSEK (9 523), corresponding to 38 per
     ment costs). Investments corresponded to 7 per cent (6) of net     cent (38) of total assets. On 31 December 2008, Hexagon’s net
     sales. Depreciation and write-downs during the year, including     debt was 10 676 MSEK (8 887). The net debt was adversely
     4 MSEK (195) for impairment losses, was 719 MSEK (803).            affected by the fact that SEK weakened significantly against all
                                                                        major currencies used by Hexagon for debt financing. The net
     Cash flow                                                          indebtedness was 0.89 times (0.88). The interest coverage ratio
     Cash flow from operations before changes in working capital        was 7.0 times (8.8).
     increased by 5 per cent to 2 587 MSEK (2 472), corresponding
     to 9.75 SEK (9.32) per share. Cash flow from operation was
     positively effected by improved operating earnings. Cash flow
     from change in working capital amounted till –832 MSEK
     (–445) and was negatively effected by increasing inventories
     and decreasing current liabilities. Including changes in working
     capital, cash flow from operations was 1 755 MSEK (2 027),
     corresponding to 6.61 SEK per share (7.64). Cash flow from
     ordinary investing activities amounted to –1 005 MSEK (–825)
     and consisted mainly of investments in production facities, pro-
     duction equipement and intangible assets. Operating cash flow
     amounted to 750 MSEK (1 202). Cash flow from other invest-
     ments was –1 048 MSEK (–3 031) and consisted mainly of
     investments in subsidaries and financial fixed assets as well as
     divestments of subsidiaries. The change in borrowings was 262
     MSEK (3 374). Cash flow for the period amounted to –695
     MSEK (1 097).




44      InvItatIon to subscrIbe For shares In hexagon ab
Capitalisation and other
financial information for Hexagon
Shareholders’ equity and liabilities1)                                                   Hexagon has short term based financing that stretches into
Hexagon’s capitalisation as of 30 September 2010 is presented                            2011 through a syndicated loan of 1 000 MEUR (9 160
below.                                                                                   MSEK2)), of which 6 751 MSEK was utilized and 2 409 MSEK
                                                                                         was unutilized as of 30 September 2010. Further, Hexagon had
MSEK                                                        30 September 2010            utilized short term un-committed/committed bilateral credit
Total current interest-bearing debt                                              6 805
                                                                                         lines amounting to 54 MSEK. Hexagon’s 1 000 MEUR syndi-
guaranteed                                                                          –
                                                                                         cated loan includes certain financial covenants to be complied
secured                                                                             –
                                                                                         with to avoid additional financing cost. Hexagon met all its
unguaranteed/unsecured                                                           6 805
                                                                                         financial covenants as of 30 September 2010.
Total non-current interest-bearing debt                                          2 079        As of 30 September 2010 Hexagon’s non-current financial
guaranteed                                                                          –    debt amounted to 2 079 MSEK, consisting of 2 000 MSEK in
secured                                                                            12    an issued bond together with non-current bilateral bank debt of
unguaranteed/unsecured                                                           2 067   79 MSEK.
Total equity                                                                 13 052
                                                                                              As of 30 September 2010 Hexagon’s net financial indebted-
share capital                                                                     531    ness amounted to 7 956 MSEK.
other capital provided                                                           5 505        As of 30 September 2010 Hexagon’s secured debt amount-
other reserves                                                                   –183    ed to 12 MSEK arising from the fact that a subsidiary has
Profit brought forward                                                           7 149   pledged receivables against bank loans.
Minority interest                                                                  50         With respect to Hexagon’s net financial indebtedness, the
                                                                                         reader should note that the effect from the acquisition of Inter-
                                                                                         graph is not included. See also “Pro forma financial state-
Net financial indebtedness1)
                                                                                         ments”, for an illustration of the manner in which the balance
Hexagon’s net financial indebtedness as of 30 September 2010
                                                                                         sheet as per September 30, 2010, including net financial indebt-
is presented below.
                                                                                         edness, could have been affected by the acquisition and its
MSEK                                                        30 September 2010            financing, after an implemented new issue pursuant to this pro-
(a) cash                                                                          867    spectus. Note however also that the information in “Pro forma
(b) cash equivalents                                                               16    financial statements” is not intended to describe Hexagon’s
(c) trading securities                                                              –    actual or anticipated financial position or earnings.
(D) Liquidity (A) + (B) + (C)                                                     883


(e) current financial receivables                                                  10
(F) current bank debt                                                              54
(g) current portion of non-current debt                                          6 751
(h) other current financial debt                                                    –
(I)   Current financial debt (F) + (G) + (H)                                     6 805
(J) Net current financial
    indebtedness (I) – (E) – (D)                                                 5 912


(K) non-current financial receivables                                              35
(L) non-current bank debt                                                          79
(M) bond issue                                                                   2 000
(n) other non-current financial debt                                                –
(O) Non-current financial debt (L) + (M) + (N)                                   2 079
(P) Non-current financial indebtedness (O) – (K)                                 2 044
(Q) Net financial indebtedness (J) + (P)                                         7 956




1) Does not include short term derivatives with negative market value.
2) Converted into SEK using the exchange rate 9.1600, as of 30 September 2010.



                                                                                                                InvItatIon to subscrIbe For shares In hexagon ab   45
Capitalisation and other financial information for Hexagon




     Credit facilities and loans                                              Unutilised part of the credit facilities and loans below is consid-
     The table below display the Group’s total credit facilities              ered to be fully sufficient to finance the Group’s operations
     and loans, before the rights issue, with the date of maturity.           going forward.


     Credit facilities and loans                                          Total facility                   Utilised1)                   Maturity
     credit facilities in parent company                                     383 MseK                    195 MseK                   below 1 year
     credit facilities in subsidiaries                                       496 MseK                    147 MseK                   below 1 year
     bridge-loan to rights issue                                             850 MusD                   850 MusD2)                    6 July 2011
     bridge-loan to bond issue                                               375 MusD                   375 MusD                      6 July 2012
     real estate loan                                                         43 MusD                    43 MusD                1 December 2013
     bond                                                                   2 000 MseK                 2 000 MseK             27 november 2014
     term loan                                                               900 MusD                   900 MusD                      6 July 2015
     revolving loan                                                         1 000 Meur                  751 Meur                      6 July 2015
     1) 29 october 2010.
     2) Will be repaid with the net proceed from the rights issue.


     Credit agreements                                                        the needs in question unless the rights issue has been conducted.
     In order to finance the the acquisition of Intergraph and to refi-       The deficit at that time could amount to approximately 3 billion
     nance the Company’s 1 000 MEUR revolving credit facility,                SEK unless the rights issue has been conducted.
     Hexagon entered into a 900 MUSD and up to 1 000 MEUR                          Through the rights issue, Hexagon is expected to raise
     term revolving credit facilities agreement (the “Long Term               approximately 6 521 MSEK before transactions costs. The
     Facilities Agreement”) and a 1 225 MUSD Bridge Term Credit               rights issue is partly supported by subscription commitments
     Facilities Agreement (the “Bridge Facilities Agreement”) with a          and underwriting undertakings from shareholders in Hexagon.
     syndicate of banks in July 2010. The Long Term Facilities                The proceeds will be used to repay the bridge-loan and to
     Agreement forms the foundation in the Group’s financing and              strengthen the Company’s financial position. It is the opinion of
     is intended to meet the Group’s ongoing financial requirements.          the Company that the working capital requirement will be cov-
     The facilities provided under the Long Term Facilities Agree-            ered during the upcoming 12 months following completion of
     ment mature in July 2015.                                                the rights issue. Furthermore, it is the opinion of the Company
          The Bridge Facilities Agreement consists of two facilities          that the working capital requirement will be covered during the
     which mature on 6 July 2011, although Hexagon has the option             upcoming 12 months following completion of the rights issue
     to extend the maturity date of Facility B, corresponding to 375          even if only the portion of the rights issue that is supported
     MUSD, by one year. The Bridge Facilities Agreement is intended           through subscription commitments and underwriting undertak-
     to be refinanced with the proceeds from the rights offering and          ings (50.2 per cent) is subscribed for.
     a subsequent bond issue.                                                      The Company’s working capital requirements are secured
          For debt diversification and refinancing risk purposes,             through a combination of cash and cash equivalents, credit
     Hexagon issued a 2 000 MSEK five year bond in the fourth                 facilities as well as through cash flow from operating activities.
     quarter of 2009. The bond was placed with a Swedish institu-             If the rights issue cannot be completed, Hexagon may have to
     tional investor.                                                         renegotiate the bridge-loan and possibly seek new financing.

     Statement regarding working capital                                      Research and development
     It is the opinion of the Company that the current working capital        Hexagon places a high priority on investments in R&D.
     is not sufficient for the current needs during the upcoming 12           Hexagon’s R&D costs during the full year 2007–2009 and the
     months.                                                                  periods January–September 2009 and 2010 are presented in the
           In connection with the acquisition of Intergraph, Hexagon          table below. Development expenses are capitalised only if they
     entered into an agreement regarding a bridge-loan to rights issue        pertain to new products, the cost is significant and the product
     of 850 MUSD which matures on 6 July 2011. The bridge-loan is             is believed to have major earnings potential. The current level
     intended to be repaid with the net proceeds from the rights issue.       of R&D investments is in line with those of other leading mar-
     After 6 July 2011, there is not enough working capital to cover          ket players in the industry.

                                                                     January – September
     MSEK                                                            2010              2009                2009            2008             2007
     capitalised                                                      471                  484              672             613              389
     expensed                                                         389                  332              583             651              617
     Total                                                            860                  816            1 255            1 264           1 005


46        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                       Capitalisation and other financial information for Hexagon




Investments                                                               Hexagon’s ordinary investments, amounted to 600 MSEK
The table below summarizes Hexagon’s investments during the           (605 MSEK corresponding period 2009) during the first nine
full years 2007–2009 and for the periods January – September          months 2010 and consisted of approximately 78 per cent intan-
2009 and 2010. The ordinary investments consist mainly of             gible assets of capitalised expenses for development work.
investments in production facilities, production equipment and            All ordinary investments during the periods have been
intangible assets, primarily capitalised development costs.           financed by operational cash flow.
     Of the ordinary investments of 821 MSEK during 2009                  No material investments are being performed at the time of
approximately 80 per cent was capitalised expenses for devel-         the prospectus. Hexagon does not expect any material change
opment work. The development work is mainly performed in              in the near future to current ordinary investment level as per-
Hexagon’s R&D centres within the organisation, with its main          centage of net sales. By the time of this prospectus, no single
units located in Switzerland, China and the United States. The        significant investment in the near future had been decided. Total
development work results in products and services which are           investments from 30 September 2010 until the time of this
sold world-wide. The remaining part of the ordinary invest-           prospectus, including Intergraph from the consolidation on 28
ments, approximately 20 per cent, is widely spread and was            October 2010, amounted to approximately 150 MSEK. In
mainly maintenance for buildings, business equipment,                 addition, the purchase price for Intergraph amounted to 15 452
machines and inventories.                                             MSEK.


                                                            January – September
MSEK                                                        2010                 2009                       2009                  2008                 2007
Investments in intangible fixed assets                       489                  498                        673                   634                   416
Investments in tangible fixed assets                         136                  111                        157                   387                   508
Divestments of tangible fixed assets                         –25                    –4                         –9                  –16                   –99
Total ordinary investments                                   600                  605                        821                 1 005                   825
Investment in subsidiaries                                   112                  130                        222                   798                 3 592
Divestment of subsidiaries                                        –                   –                          –                 220                  –569
Investment of financial fixed assets                             50                 43                         54                    44                     8
Divestment of financial fixed assets                              –               –42                          –8                  –14                      –
Total other investments                                      162                  131                        268                 1 048                 3 031
Total investments                                            762                  736                      1 089                 2 053                 3 856




Property, plant and equipment                                         Sensitivity analysis
Property, plant and equipment amounted to 1 576 MSEK as of            The table below illustrates how Hexagon’s profit before tax
30 September 2010 and consisted primarily of buildings,               could have been affected by an isolated change in some key
machines and inventories. Leased and rented assets amounted           income and expense factors in 2009.
to 108 MSEK with respect to machinery and inventories and
561 MSEK with respect to premises as of 31 December 2010.                                                        Approximate effect on profit
                                                                                                                         before tax
Costs for leasing/rents amounted to 226 MSEK during 2009.
                                                                                                          Change                            Effect, MSEK
Pledged assets amounted to 29 MSEK as of 31 December 2009.
                                                                      Foreign exchange rates1), 2)        1 per cent                              16 MseK
                                                                      sales price                         1 per cent                             118 MseK
                                                                      Payroll expenses                    1 per cent                              39 MseK
                                                                      Market interest rates               1 percentage point                      82 MseK

                                                                      1) change in seK against other currencies. excluding effects of currency hedging of
                                                                         revenues and expenses.
                                                                      2) effect from foreign exchange rates ahead of change of reporting currency from seK to
                                                                         eur.




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Capitalisation and other financial information for Hexagon




     Risk management and financial exposure                              political development in the countries where the Group is
     General                                                             active.
     Hexagon’s risk management activities are designed to identify,          To secure a return on Hexagon’s investments in R&D, the
     control and reduce risks associated with its business. Opera-       Group protects its technological innovations against infringe-
     tional risks are primarily managed within each subsidiary of the    ment. Hexagon protects its intellectual property through legal
     Hexagon Group, while financial risks are managed at Group           proceedings when warranted.
     level. The Group’s Treasury Policy, which is updated and
     approved annually by the Board, stipulates the rules and limita-    Human capital
     tions for the management of financial risk throughout the           Since future success is largely dependent on the capacity to
     Group.                                                              retain, recruit and develop skilled staff, being an attractive
                                                                         employer is an important success factor for Hexagon. Group
     Operational risk management                                         and business area management jointly handle risks associated
     Since the majority of operational risks are attributable to         with human capital.
     Hexagon’s customer and supplier relations, ongoing risk
     analysis of customers and suppliers are conducted to assess         Insurance
     business risks.                                                     To ensure well-balanced insurance coverage and financial econ-
                                                                         omies of scale, Hexagon’s insurance includes Group-wide prop-
     Industry and market conditions                                      erty and liability insurance, travel insurance, errors and omis-
     During 2009, the real global economy was hit by a recession         sions insurance and transport insurance. As Hexagon develops
     that started as a financial crisis in the autumn of 2008. A weak-   and damage-prevention programmes are completed, the insur-
     er economy increases the risk in business processes that can        ance programme is periodically amended so that own risk and
     affect customers’ decision to invest in measurement technolo-       insured risk are optimally balanced.
     gies. The negative effects of a downturn on Hexagon’s perform-
     ance are somewhat balanced by sales of growth technologies          Financial risk management
     and sales to growth markets with differing economic cycles.         Hexagon is a net borrower and has operations in many coun-
     Emerging markets and new technologies accounted for about           tries around the world. Hexagon is therefore exposed to vari-
     33 per cent of net sales in 2009 and Hexagon is continuously        ous forms of financial risk. The Group’s Treasury Policy, which
     focusing on increasing its local presence in regions where          is updated and approved annually by the Board, stipulates the
     growth is expected to remain strong.                                rules and limitations for the management of financial risks
                                                                         throughout the Group.
     Customers and suppliers                                                  Hexagon’s treasury operations run the Group’s internal
     Hexagon’s business activities are conducted in a large number       bank, which is responsible for coordinating the financial risk
     of geographical markets, with numerous customer categories.         management. The internal bank is also responsible for the
     The largest customer represents about 1.5 per cent of the           Group’s external borrowing and its internal financing. Centrali-
     Group’s total net sales and the largest supplier accounts for       sation generates substantial economies of scale, lower financing
     some 1 per cent of total net sales. Customer credits account for    costs, as well as better control and management of the Group’s
     the majority of Hexagon’s counterparty risk. Hexagon believes       financial risks. Within Hexagon, there is no mandate to con-
     there is no significant concentration of counterparty risk.         duct independent trading in currencies and interest rate instru-
     Hexagon has favourable risk diversification and dependence on       ments. All relevant exposures are monitored continuously and
     a single customer, customer category or supplier is not decisive    are reported to Group Management on a regular basis.
     for the Group’s performance.
                                                                         Currency exposure
     Price development                                                   Currency risk is the risk that currency exchange rate fluctua-
     Parts of Hexagon’s operations are affected by price pressure        tions will have an adverse effect on cash flow, income statement
     and rapid technological change. Hexagon’s ability to minimize       or balance sheet. Furthermore, the comparability of Hexagon’s
     price pressure is dependent on their ability to introduce new       results between periods will be affected by changes in currency
     products and reducing costs for new and existing products.          exchange rates. Hexagon’s operations are mainly located out-
                                                                         side Sweden and net sales, costs and net assets are therefore pri-
     Legal framework                                                     marily denominated in currencies other than SEK. The table on
     Hexagon closely monitors regulations and ordinances applica-        next page illustrates the movements of those currencies having
     ble in each market and rapidly works to adapt the Company to        a large impact on Hexagon’s earnings and net assets and the
     identified future changes in the area. To manage country specific   effect on Hexagon’s EBIT in 2009 compared to 2008.
     risks, Hexagon observes local legislation and monitors the


48       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                  Capitalisation and other financial information for Hexagon




                                                                      Movement1)              Net income/cost2)               Profit impact of movement
chF                                                                   strengthened            net cost                        negative
usD                                                                   strengthened            net income                      Positive
eur                                                                   strengthened            net income                      Positive
cnY                                                                   strengthened            net income                      Positive
effect on ebIt in 2009, MseK                                                                                                  106

1) compared to seK.
2) Indicates whether group has net income or net cost in each currency.




The General Meeting of Hexagon resolved on 24 November                               Interest rate exposure
2010 to replace SEK with EUR as the reporting currency for                           The interest rate risk is the risk that changes in interest rates will
Hexagon from 1 January 2011. Furthermore Hexagon has                                 adversely affect Hexagon’s net interest expense and/or the cash
determined to use EUR as the presentation currency in the con-                       flow. Interest rate exposure arises primarily from the external
solidated financial statements from 1 January 2011. The reason                       interest bearing debt. In accordance with the Group Treasury
for the change is that due to the accelerating globalisation of                      Policy all external debt has short interest rate duration, on aver-
Hexagon’s operations, the Group’s sales, costs and net assets                        age shorter than six months.
are as stated above primarily denominated in currencies other
than SEK. Today, only 5 per cent of sales and 5 per cent of net                      Credit exposure
assets are denominated in SEK. The foreign currencies that have                      Credit risk is the risk that counterparties may be unable to fulfil
the biggest impact on Hexagon’s earnings and net assets today                        their payment obligations. Financial credit risks arise when
are USD, EUR, CHF and CNY. The acquisition of Intergraph                             investing cash and cash equivalents and when trading in finan-
will further increase the importance of these currencies for                         cial instruments. To reduce Hexagon’s financial credit risk,
Hexagon. As a result of the change, the currency risk may there-                     surplus cash is only invested with a limited number of approved
fore, in whole or in part, change from what is described above                       banks and derivative transactions are only conducted with
in the future. A change of accounting currency from SEK to                           counterparties where an ISDA (International Swap Dealers
EUR will decrease the currency exposure in both the profit and                       Association) netting agreement has been established.
loss statement as well as in comprehensive income. It will also
allow the Hexagon Group to better match debt with net assets                         Liquidity
which will have a stabilising effect on certain key ratios that are                  Liquidity risk is the risk of not being able to meet payment
of importance to Hexagon’s cost of capital.                                          obligations in full as they become due or being able to do so at
                                                                                     materially disadvantageous terms due to lack of cash resources.
Transaction exposure                                                                 To minimise the liquidity risk the policy is that total liquidity
Sale and purchase of goods and services in currencies other than                     reserve shall at all times be at least 10 per cent of the Hexagon
the subsidiary’s functional currency give rise to transaction                        Group’s forecasted annual net sales.
exposure. Transaction exposure is as far as possible concentrat-
ed to the countries where manufacturing entities are located.                        Financing
This is achieved by invoicing the sales entities in their respective                 Financing risk refers to the risk that Hexagon does not have
functional currency.                                                                 sufficient financing available when needed to refinance matur-
    Transaction exposure is hedged in accordance with the                            ing debt, because existing lenders decline extending or difficul-
Group Treasury Policy. Contracted transactions, i.e. accounts                        ties arise in procuring new lines of credit at a given point in
receivable and payable, and orders booked, are fully hedged. In                      time. Securing these requirements demands a strong financial
addition, 40 to 100 per cent of a rolling six month exposure                         position in the Hexagon Group, combined with active measures
forecast is hedged. Hedging of transaction exposure is done by                       to ensure access to credit. In order to ensure that appropriate
using foreign exchange forward contracts. Cash flow hedge                            financing is in place and to decrease the refinancing risk, no
accounting is applied and thereby the market value is partly                         more than 20 per cent of the Hexagon Group’s gross debt,
deferred in the hedge reserve in equity to offset the gains/losses                   including committed credit facilities, is allowed to mature with-
on hedged future sales and purchases in foreign currencies.                          in the next 12 months unless replacing facilities has been
                                                                                     agreed.




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Capitalisation and other financial information for Hexagon




     Significant trends during the current financial                       Significant changes since publication
     year                                                                  of the interim report for the period
     In total, world economy has developed positively during 2010,         January – September 2010
     however with differences between the different parts of the           Since the publication of the interim report for the period January
     world. Western Europe has experienced increased activity levels       – September 2010, Hexagon’s financial and market positions
     backed by improved demand for measurement solutions used in           have changed substantially through the acquisition of Inter-
     connection to infrastructural investments as well as for equip-       graph. See “Pro forma financial statements”, for an illustration
     ment used in industrial segments such as automotive and aero-         of the consolidated balance sheet as per 30 September 2010,
     space. Demand in Southern and Southeast Europe remained               including net indebtedness. See “Description of Intergraph” for
     weak while Eastern Europe, Russia, the Middle East and Africa         a description of Intergraph.
     continue to grow.                                                          The General Meeting of Hexagon resolved on 24 Novem-
          Recovery in demand in Americas has increased for both            ber 2010 to replace SEK with EUR as the reporting currency for
     Geosystems and Metrology. South America, led by Brazil, was           Hexagon from 1 January 2011. Furthermore Hexagon has
     experiencing strong demand for Geosystems and Metrology               determined to use EUR as the presentation currency in the con-
     products, especially within mining and oil exploration.               solidated financial statements from 1 January 2011. For more
          Asia and the Pacific have recorded continuous strong             information, see “− Currency exposure” above.
     organic growth. The growth in the region was obtained from                 In the fourth quarter of 2010, Hexagon is expected to
     infrastructural activities in China, as well as, strong demand        record non-recurring and non-cash costs related to the write-
     from the Chinese and Indian automotive and aerospace indus-           downs of overlapping technologies in both Hexagon and Inter-
     tries. In addition to India and China, several other markets and      graph, as well as the effects of Hexagon being considered to
     industries in the region are growing, as for example Korea,           have acquired the inventories of Intergraph at market value, i.e.
     Australia and Southeast Asia.                                         sales of the inventories will entail a lesser than normal profit
          The price pressure which prevailed in 2009 has slowed            and finally that revenue recognition for acquired deferred reve-
     down with the increasing demand. Increasing volumes and the           nues will be affected negatively. The total profit and loss impact
     effect of the Group’s cost reduction program in 2009 has posi-        is expected to amount to approximately 670 MSEK.
     tively affected the Group’s cost base and hence the operating              As a consequence of the completion of the acquisition of
     margin. Efforts to reduce the inventory build-up that occurred        Intergraph, Hexagon will also revisit the divestment strategy
     due to lower sales in 2009, has given effect in 2010, with inven-     for certain entities within the “Other operations” segment.
     tory levels in relation to current sales level being closer to nor-   Impairment charges related to such entities of approximately
     mal compared to the previous year. However, as a result of the        250 MSEK are expected to be incurred in the fourth quarter of
     global financial crisis in 2009, the world has experienced            2010.
     increased volatility in foreign exchange markets and some coun-            Cash transaction costs (both operational and financial)
     tries’ fiscal positions can lead to national constraints that could   related to the acquisition of Intergraph (excluding rights issue
     dampen consumption and therefore also the upswing.                    costs) will amount to approximately 510 MSEK, of which
                                                                           approximately 380 MSEK will be charged in the fourth quarter
                                                                           2010. The remaining part, relating to loans, will be capitalised
                                                                           over the length of the loans, which is 5 years.
                                                                                In other respects, no major changes have taken place in
                                                                           Hexagon’s financial or market position.




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Description of Intergraph

This section focuses primarily on the operations of Intergraph prior to the acquisition
by Hexagon. Through the acquisition by Hexagon, Intergraph’s operations will be
broadened. See “Description of Hexagon” for a more detailed description of
Hexagon.


Overview                                                            organise vast amounts of data into understandable visual repre-
Intergraph is a leading global provider of enterprise engineering   sentations and actionable intelligence.
software and geospatially powered solutions that enable cus-            In 2009, net sales amounted to 770 MUSD and Intergraph
tomers to visualise complex data. Businesses and governments        operates through two divisions, PP&M and SG&I.
rely on Intergraph’s industry-specific software solutions to




PROCESS, POWER & MARINE (PP&M)                                      SECURITY, GOVERNMENT & INFRASTRUCTURE (SG&I)
41 per cent of net sales of Intergraph in 2009.                     59 per cent of net sales of Intergraph in 2009.
PP&M provides enterprise engineering software for the design,       SG&I provides geospatially powered solutions to the defence
construction and operation of plants, ships and offshore facili-    and intelligence, public safety, government, transportation,
ties. Customers rely on Intergraph software to create, manage       photogrammetry, utilities and communications industries. Cus-
and use critical engineering data to increase productivity and      tomers rely on Intergraph solutions to organize vast amounts of
provide for safe and clean operations.                              complex data into understandable visual representations.




Intergraph operations in the world                                       Intergraph 2009 net sales breakdown by geography
Intergraph is headquartered in Huntsville, Alabama, USA and
employs approximately 4 000 people in 34 countries. In total,
                                                                                                 Canada        Rest of the World
Intergraph’s solutions are sold in more than 60 countries.                                           6%                     3%
    In 2009 approximately 40 per cent of Intergraph’s net sales                       Asia Pacific
were generated from USA, 36 per cent from EMEA, 15 per cent                                 15%
                                                                                                                           USA
from Asia and the Pacific, 6 per cent from Canada and 3 per                                                                40%
cent from the rest of the world.
    In 2009 approximately 40 per cent of PP&M’s net sales
were generated from EMEA, 25 per cent from Asia and the                                       EMEA
                                                                                               36%
Pacific, 23 per cent from USA, 6 per cent from Canada and 6
per cent from the rest of the world.                                                                                        source: Intergraph.
    In 2009 approximately 51 per cent of PP&M’s net sales
were generated from USA, 34 per cent from EMEA, 8 per cent
from Asia and the Pacific, 6 per cent from Canada and 1 per
cent from the rest of the world.



                                                                                             InvItatIon to subscrIbe For shares In hexagon ab     51
Description of Intergraph




     Products and services                                                (“HAZOP”) knowledge and apply it across the enterprise to
     Intergraph’s technologies enable customers to manage and             aid in daily plant operations and protection.
     understand complex data through visual representations and
     actionable intelligence. Businesses and governments are actively     SG&I products and services
     seeking to utilise technologies to capture these efficiency gains,   Intergraph SG&I provides geospatially powered solutions to
     and Intergraph is well positioned to capitalise on this growth       the defence and intelligence, public safety and security, govern-
     trend.                                                               ment, transportation, photogrammetry, utilities, and communi-
                                                                          cations industries. Intergraph’s software is designed to create a
     PP&M products and services                                           data-centric, user-defined operational picture that enables
     Intergraph PP&M provides enterprise engineering software for         organisations to capture, integrate, manage, analyse and then
     the design, construction, and operation of among others plants,      act on unorganised and complex event data.
     ships, and offshore facilities. Intergraph PP&M’s software suite         Intergraph differentiates its solutions through a distinctive
     spans across 3D modelling and visualisation, engineering and         combination of security and geospatial technologies and the
     schematics, materials management and project controls, and           ability to better utilise the data created by an incident or emer-
     engineering information management.                                  gency through this datacentric, user-defined operational
                                                                          picture.
     Process
     Intergraph’s plant design and engineering software is used by        Defence
     chemical, pharmaceutical, metals and mining, oil and gas, con-       Intergraph has been serving defence and intelligence agencies
     sumer goods, and other process plants. Its plant drawing soft-       for more than 40 years and is intimately familiar with the
     ware and design solutions provide 3D layout capabilities with        unique and inherent issues and needs of these organizations.
     support for collaboration throughout the enterprise.                 Defence and intelligence agencies worldwide use Intergraph
                                                                          intelligence, data management and advanced analytics open-
     Power                                                                standards software. Intergraph geospatial security software, as
     Intergraph’s fossil and nuclear power plant layout software is       well as motion video exploitation, geospatial intelligence
     used worldwide in applications including nuclear technology          exploitation and geospatial intelligence production solutions,
     such as the pebble bed modular reactor design that will offer        improve analysis and deliver actionable intelligence to facilitate
     increased efficiency and operations safety. These solutions sup-     situational awareness and mission success.
     port nuclear plant construction and maintenance and provide
     engineers with the ability to create 3D plant models and inter-      Government
     active visualisations to meet nuclear plant requirements. The        Intergraph’s border security systems for military and govern-
     software is also able to maintain a comprehensive engineering        ment organisations use third-party video, sensor technology,
     database to track and manage components essential for projects       and wide area surveillance equipment to enable users to locate
     such as nuclear plants that have long operational life cycles, and   and coordinate valuable assets and see potential threats.
     create new plant efficiency models before plant construction         Intergraph also offers local, regional, and national government
     begins.                                                              agencies comprehensive geospatial information systems for
                                                                          managing complex spatial data infrastructures. This geospatial
     Marine and Offshore                                                  technology is compliant with OpenGIS specifications as defined
     Intergraph’s 3D and marine engineering design solutions for          by the Open Geospatial Consortium (“OGC”). Intergraph’s
     ship design, production, and overall life-cycle management are       map and 3D terrain visualisation systems are based on Geo-
     used for shipbuilding, as well as offshore applications. Inter-      Media software and support the manipulation and maintenance
     graph’s SmartMarine 3D naval architecture and marine engi-           of geospatial data related to property, parcel, easement, or
     neering software supports a multi-disciplined design environ-        cadastre. Intergraph’s terrain analysis software delivers exten-
     ment and global concurrent engineering for any size shipbuilding     sive topographical and strategic information, providing prepar-
     or offshore platform.                                                atory support for mission planning systems and other applica-
                                                                          tions.
     Safe Operations and Maintenance
     SmartPlant Enterprise plant management software streamlines          Photogrammetry
     structural plant automation and planning, optimises material         From acquisition to exploitation to digital distribution, Inter-
     flow, and supports workflow management. To address plant             graph’s aerial mapping and photogrammetry solutions provide
     security issues, Intergraph’s plant safety and maintenance solu-     complete systems for the production and management of maps,
     tions use a plant’s current organisational hazard and operability    digital terrain models (“DTMs”), and other geographic data.



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                                                                                                                       Description of Intergraph




Intergraph also provides integrated flight management systems        Transportation
that combine the capabilities of a traditional flight management     Intergraph assists airports and transportation agencies in build-
system with sensor control modules (“SCMs”), allowing users          ing intelligent transportation systems networks through its
to access and control a variety of sensors and peripherals.          transportation GIS solutions, which include airport manage-
Intergraph’s flight planning software for aviation planning and      ment systems, highway asset management systems, rail man-
aerial survey procedures can access a wide variety of data,          agement systems, and more. Intergraph also provides integrated
including vector mapping data and digital orthophotos, as well       transportation security solutions for incident management,
as any georeferenced raster backdrop.                                command and control, and infrastructure management.

Public Safety and Security                                           Utilities & Communications
Intergraph’s emergency response management software pro-             Intergraph offers a variety of software systems to help utility
vides public safety and government agencies with the technolo-       companies enhance their infrastructure through development
gy and tools to achieve a common operational picture, which          of a more intelligent power grid, or smart grid. These utility GIS
provides consistent and standardised information and geospa-         solutions include outage management and smart grid command
tial intelligence to all relevant parties. This common operational   and control centre solutions that provide a single point of refer-
picture also supports agencies in disaster planning, incident        ence for equipment monitoring and mobile resource manage-
management, and police records management.                           ment.
     The core of Intergraph’s public safety technology is its
Computer-Aided Dispatch incident management response soft-
ware for police, fire and EMS.
     Intergraph’s emergency dispatch software provides an inte-
grated emergency management system that addresses every-
thing from call handling and dispatching to remote access and
mobile data. In addition, Intergraph forensic video analysis and
enhancement solutions provide law enforcement, military, and
security agencies with tools for data capture, analysis, enhance-
ment, and editing of raw surveillance video footage.




                                                                                             InvItatIon to subscrIbe For shares In hexagon ab   53
Description of Intergraph




     Customers                                                                               PP&M customer base
     Intergraph has customers in over 60 countries that span a                               Intergraph software is used by most large EPC firms and nearly
     variety of end-users including Engineering, Procurement and                             all Fortune Global 500 energy, chemical, petroleum, and phar-
     Construction (“EPC”) firms, Facility Owners/Operators                                   maceutical companies to design plants across multiple indus-
     (“O/Os”), shipbuilders, public safety and security organiza-                            tries.
     tions, military and intelligence agencies, national, regional and                            Broadly, Intergraph’s customers are segmented into two
     local governments, departments of transportation and utility                            categories, EPCs and O/Os. Intergraph’s global customer
     and communications companies.                                                           base includes EPC firms such as Bechtel, ENI Saipem, Fluor,
         Intergraph’s industry leading technology solutions and glo-                         Samsung, Siemens and Technip, and facility owner/operators
     bal direct sales force have led to long-term customer relation-                         such as BASF, Bayer, BP, Dow, Exxon and Shell.
     ships, many of which extend more than 10 years.
         No individual government or commercial customer repre-
                                                                                             Intergraph PP&M 2009 net sales breakdown
     sented more than 5 per cent of net sales in 2009 and the top 5                          by customer segment
     customers represented only 12 per cent of net sales in 2009.
                                                                                                              Oil and Gas                                                          49
     SG&I customer base
                                                                                               Chemical and Petrochemical                            18
     Intergraph SG&I’s customers include security and public safety
     agencies protecting over 500 million people around the world                                                  Power                       16
     and include national, regional and local governments in 80 per                                     Metals and Mining             4
     cent of the world’s largest countries. Intergraph SG&I’s tech-
                                                                                                              Shipbuilding            4
     nologies are focused on addressing the specific needs of its four
     target vertical segments:                                                                        Pharma and Biotech          2

     ●   Defense and Intelligence (for example Italian Ministry of                                                  Other                 7
         Defence, US Navy and US Air Force)
                                                                                                                              0           10        20     30         40        50%
     ●   Public Safety and Security (for example Office of Unified
         Communications Washington D.C., the Kingdom of Jor-                                                                                                    source: Intergraph.
         dan, the German Federal Police and New Zealand Police
         and Fire)
     ●   Utilities and Communications (for example Oncor, Florida                            Intergraph PP&M 2009 net sales breakdown
         Power & Light and Helsinki Energy)                                                  by customer category
     ●   Government and Transportation (for example EU Commis-
                                                                                                           Engineering,
         sion Joint Research Center, Italian Region of Veneto,                               Procurement & Construction
         SBB Swiss Railways and Deutsche Bahn).                                                                 (EPCs)


                                                                                                 Owner/Operator (O/Os)
     .
     Intergraph SG&I 2009 net sales breakdown
     by customer segment                                                                                                  0       10      20   30    40   50     60    70    80%



              Defence and Intelligence                                                                                                                          source: Intergraph.


            Public Safety and Security


          Utilities and Communication


       Government and Transportation

                                         0   5    10        15   20      25     30     35%


                                                                      source: Intergraph.




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                                                                                                                         Description of Intergraph




Research and Development (R&D)                                              Further, Intergraph is one of a very few firms that can
For Intergraph continual investment in R&D is critical to the           engage directly in the federal, state and local government and
development and enhancement of innovative products and                  commercial markets. Intergraph employs many former law
technologies. Intergraph employs approximately 1 050 engi-              enforcement officials and has approximately 600 employees
neers in R&D-related activities, equal to over 25 per cent of           with U.S. Federal security clearances from the U.S. Department
Intergraph’s total workforce. In the past five years, Intergraph        of Defense.
has invested more than 500 MUSD in R&D and product devel-
opment and expanded its intellectual property portfolio to over         Recently launched customer offerings
300 patents. Whereas the majority of the Intergraph’s R&D               Each year, Intergraph introduces a number of new product
workforce is focused on product development, a significant              launches and updates to existing applications as part of Inter-
component of R&D spending is allocated toward new technol-              graph’s effort to reinvest into future R&D. Material product
ogy development. Intergraph is an innovative company which              offerings launched during 2010 are the following:
through its more than 40-years history has positioned itself as a
leader in its core industries.
     Intergraph’s R&D department is based on a worldwide net-
work of R&D capability centres based throughout the U.S.,
Canada, India, China, Israel, UK, Germany and Australia.
During the past several years, Intergraph has produced increased
efficiencies from incremental utilization of offshore facilities
with the recent opening of the China Capability Centre and
expansion of its existing India Capability Centre.




SMARTPLANT CONSTRUCTION
SmartPlant Construction is a SmartPlant Enterprise application that addresses the spe-
cific needs of construction firms and facilitates efficient work processes with engineer-
ing and procurement. It aims to enable for the construction groups to better plan and
manage their projects with 3D visual planning tools. This results in a construction
planning and simulation environment that improves quality and the speed of construc-
tion, while reducing many common project construction risks.




MOTION VIDEO ANALYST/EXPLOITATION SOLUTION
Intergraph has also introduced its Motion Video Exploitation solution that enables
analysts to geospatially integrate video with multiple intelligence sources to provide
unprecedented situational awareness and strategic decision making capabilities.
Intergraph’s Motion Video Exploitation solution fuses and displays video data, includ-
ing data from unmanned aircraft systems, with satellite imagery and geo-intelligence,
delivering an exceptional level of actionable intelligence in real time.




                                                                                               InvItatIon to subscrIbe For shares In hexagon ab   55
Description of Intergraph




     NEW VERSION OF SMARTPLANT 3D
     SmartPlant 3D is a multi-purpose design solution for design, construction, materials
     and engineering data management capabilities. Users of Intergraphs SmartPlant3D are
     constantly looking for ways to improve productivity and reduce project schedules and
     design errors. Intergraph released during 2010 a new version of its SmartPlant 3D
     enterprise engineering design software with new capabilities for multiple 3D model
     referencing, enhanced model data reuse and laser scanning integration capabilities.




     INCIDENT MANAGEMENT SOLUTIONS AT WINTER
     OLYMPICS
     Intergraph, along with its customers E-Comm 9-1-1 and B.C. Ambulance (BCAS),
     played a key role in protecting the athletes, officials and spectators at venues through-
     out British Columbia, Canada, during the XXI Winter Olympic Games. In addition,
     Intergraph’s integrated incident management solutions promoted multi-agency and
     multi-jurisdictional interoperability for rapid incident response at Olympic venues in
     greater Vancouver.




     PUBLIC SAFETY NEXT-GENERATION ECC (EMERGENCY COMMUNICATIONS
     CONVERGENCE)
     Intergraph’s next-generation 9-1-1 digital emergency communications convergence
     enables the delivery and processing of digital or IP-based multi-media content, such as
     text messages and mobile phone images, within incident management software to pro-
     vide police, fire, emergency and security forces with access to more comprehensive and
     actionable information. This capability improves incident management through the
     full spectrum of an incident: from prevention and preparedness to response, recovery
     and mitigation.




     NEW VERSION OF SMARTMARINE 3D
     Intergraph released the new version of its SmartMarine 3D, an enterprise engineering
     and manufacturing software with expanded automation capabilities to further increase
     design quality, consistency, productivity and accelerate project schedules. The updated
     version of SmartMarine 3D increases productivity according to Intergraph with
     enhanced rule-based design automation capabilities.




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                                                                                                                  Description of Intergraph




History


 1969 Intergraph was founded as M&S Computing Inc. by             2000 Intergraph underwent a major transformation in its
      former IBM engineers who had been working with             –2006 market strategy, allowing the company to redeploy
      NASA and the U.S. Army in developing systems that                assets and resources to further invest in its differentiat-
      would apply digital computing to real-time missile               ed capabilities and focus on the areas of business and
      guidance.                                                        technology that provided the greatest value. Intergraph
                                                                       consolidated its operations to be more closely aligned
 1980 From this initial work, M&S Computing was among
                                                                       to its strategic plan and experienced its strongest annu-
      the pioneers in the development of interactive compu-
                                                                       al revenue growth in more than ten years.
      ter graphics systems, which allowed engineers to
      display and interact with drawings and associated           2006 On 29 November, Intergraph was acquired by an inves-
      alphanumeric information. The company changed its                tor group led by Hellman & Friedman LLC, Texas
      name to Intergraph Corporation to reflect this activity.         Pacific Group and JMI Equity, making the company
                                                                       privately held.
 2000 Intergraph exited the hardware business and became
      purely a software company. On 21 July, Intergraph           2006 Intergraph further focused its offering on comprehen-
      sold its Intense3D graphics accelerator division to        –2010 sive enterprise engineering and geospatially powered
      3DLabs, and its workstation and server division to               software solutions.
      Silicon Graphics.
                                                                  2010 On 7 July, Hexagon announced the acquisition of
                                                                       Intergraph. The acquisition was closed on 28 October.




                                                                                        InvItatIon to subscrIbe For shares In hexagon ab   57
     Financial overview Intergraph

     The financial information below is a summary of the 2007–                     It should be noted that the income statements and balance
     2009 financial years and was extracted from Intergraph’s annu-           sheets below include a period when Intergraph was a privately
     al accounts for the relevant years, which were prepared in com-          held company and include items which was not acquired by
     pliance with US accounting principles (“US GAAP”) and                    Hexagon, among others costs for share-related compensation
     audited by Intergraph’s auditors. The information concerning             to key employees and non-recurring write-downs of intangible
     the first nine months of 2009 and 2010 was obtained from                 fixed assets. Hexagon has a longer time-perspective and differ-
     Intergraph’s interim financial statements for the nine months            ent focusing of its ownership. As a result of this, Hexagon does
     period ending 30 September 2010 and was prepared in compli-              a different analysis and allocation of Intergraph’s assets com-
     ance with US GAAP and reviewed by Intergraph’s auditors.                 pared to the previous owner. Consolidated pro forma financial
         Information regarding key differences between US GAAP                statements for Hexagon including Intergraph for 2009 and Jan-
     and IFRS can be found under “Pro forma financial state-                  uary – September 2010 can be found under “Pro forma finan-
     ments”.                                                                  cial statements”.



     Income statement

                                                                 January – September
     USD 000s                                                  20101)          20091)               20092)            20082)           20072)
     net sales                                               622 701         558 989              770 337          805 174          706 643
     cost of goods sold                                      –271 952       –248 642             –345 635         –357 550         –321 862
     Gross earnings                                          350 749         310 347              424 702          447 624          384 781

     Product development                                      –58 903        –53 910              –71 832          –77 979           –72 718
     sales and marketing                                     –119 437       –101 107             –138 754         –157 115         –150 699
     general and administrative                               –60 644        –58 291              –75 319          –79 712           –70 091
     amortisation of acquired intangibles                     –17 514        –16 808              –22 503          –22 473           –46 912
     restructuring charges                                     –1 520         –3 930               –4 232           –2 480                 –
     transaction costs                                         –2 383              –                    –                –                 –
     Income from operations                                    90 348         76 301              112 062          107 865            44 361

     Intellectual property income and expenses, net             –524           1 787               –1 927              201            10 109
     Interest income and expenses, net                        –56 080        –38 119              –50 621          –54 046           –60 623
     Debt extinguishment costs                                –13 566              –                    –                –                 –
     other expense, net                                        –1 302         –4 948               –9 969           –2 740           –10 438
     Earnings or loss before taxes                             18 876         31 447               49 545           51 280           –16 591

     taxes                                                     –5 745        –10 923              –18 527          –17 409             1 266
     Net earnings                                              13 131         20 524               31 018           33 871           –15 325

     Loss attributable to non-controlling interest
     in variable interest entity                                1 453          1 562                2 017            2 430             2 768
     Net income / loss attributable
     to controlling interest                                   14 584         22 086               33 035           36 301           –12 557
     1) reviewed by auditors.
     2) audited by auditors.




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                                                                                                 Financial overview Intergraph




Balance sheet

                                                    30 September                      31 December
USD 000s                                        20101)         20091)        20092)                20082)                 20072)
cash and cash equivalents                    102 269        118 609       148 145              209 272                106 906
restricted cash                                1 530          1 729         2 191                   250                  6 241
accounts receivable, net                     156 557        146 691       151 754              161 959                181 725
Inventories, net                              33 883         39 662        39 468                33 203                30 634
refundable income taxes                          774          5 197         5 501                 6 093                  2 986
Deferred income taxes                         17 085          5 766         7 909                 5 203                14 280
Prepaid assets                                14 427         10 252         9 673                11 975                12 235
other current assets                           5 409          6 298         5 820                 9 143                  8 438
Total current assets                         331 934        334 204       370 461              437 098                363 445

Investments in affiliates
(variable interest entity)                    70 000         70 000        70 000                70 000                70 000
capitalised software, net                     75 919         87 014        84 540                99 749               109 607
goodwill                                     522 976        488 771       491 618              488 771                503 176
customer relationships, net                  231 594        236 460       233 156              251 104                270 428
other intangibles                             47 742         49 935        49 182                53 431                63 171
other assets, net                             17 107         21 300        20 762                23 763                26 492
Long-lived assets held for sale                    –                 –           –                     –               41 232
Property, plant and equipment, net           117 501        120 051       119 246              124 201                 87 274
Total assets                                1 414 773      1 407 735     1 438 965           1 548 117              1 534 825

trade accounts payable                        16 963         14 503        26 338                27 851                19 979
accrued compensation                          67 607         54 964        56 866                52 573                53 693
other accrued expenses                        68 018         54 021        59 098                53 179                54 239
Deferred revenue                             108 766         98 029        98 849                97 325                86 448
Income taxes payable                           4 282               691      3 409                 3 376                14 037
current portion of long-term debt                642               630        640                   602                    535
Total current liabilities                    266 278        222 838       245 200              234 906                228 931

Deferred income taxes                        138 128        136 744       139 070              146 861                190 018
Long-term debt associated with long-lived
assets held for sale                               –                 –           –                     –               35 000
Long-term debt associated with variable
interest entity                               32 714         31 274        31 535                29 883                27 605
Long-term debt                               898 445        629 127       628 969              629 605                595 617
other noncurrent liabilities                  53 114         57 935        56 942                65 423                41 335
Total noncurrent liabilities                1 122 401       855 080       856 516              871 772                889 575
Total liabilities                           1 388 679      1 077 918     1 101 716           1 106 678              1 118 506

common stock                                     768               767        767                   767                    767
additional paid-in capital                    14 478        256 419       289 813              395 477                391 069
retained earnings                            –12 612         44 492        21 711                22 406               –13 895
accumulated other comprehensive loss         –10 786        –10 574       –13 300              –17 486                 –4 327
Total shareholder's equity                   –10 786        291 104       298 991              401 164                373 614
noncontrolling interest in variable
interest entity                               36 880         38 713        38 258                40 275                42 705
Total equity                                  26 094        329 817       337 249              441 439                416 319
Total equity and liabilities                1 414 773      1 407 735     1 438 965           1 548 117              1 534 825
1) reviewed by auditors.
2) audited by auditors.




                                                                             InvItatIon to subscrIbe For shares In hexagon ab      59
Financial overview Intergraph




     Cash flow statement

                                                                  January – September
     USD 000s                                                    20101)          20091)      20092)     20082)     20072)
     net income (loss) attributable to controlling interest     14 584         22 086       33 035     36 301    –12 557
     adjustments to reconcile net income (loss)
     to net cash provided by operating activities               74 903         60 891       79 412     80 252     93 364
     net changes in other assets and liabilities               –13 272        –14 369        –362      16 665     36 725
     Net cash provided by operating activities                  76 215         68 608     112 085     133 218    117 532

     Net cash used for investing facilities                    –54 126        –16 629      –28 853    –30 105    –16 988

     Debt repayment                                            –30 521           –453        –602      –1 201    –99 848
     borrowings, net of financial cost paid                   288 656               –            –          –     22 000
     Dividends paid to stock and option holders,
     net of tax                                               –323 837       –139 427     –139 427          –          –
     other cash used for financing activities                     843          –4 191       –4 653      5 994      2 660
     Net cash (used for) provided by financing
     activities                                                –64 859       –144 071     –144 682      4 793    –75 188

     effect of exchange rate on cash                            –3 106          1 429         323      –5 540      1 323
     Net (decrease) increase in cash
     and cash equivalents                                      –45 876        –90 663      –61 127    102 366     26 679
     Cash and cash equivalents at beginning
     of period                                                148 145         209 272     209 272     106 906     80 227
     Cash and cash equivalents at end of period               102 269         118 609     148 145     209 272    106 906
     1) reviewed by auditors.
     2) audited by auditors.




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Commentary on Intergraph’s financial
development
Comparison between January – September                              acquisition of COADE. Intergraph has achieved operating lev-
2010 and January – September 2009                                   erage with total operating expenses as a percentage of revenue
Bookings and backlog                                                of 38.4 per cent in 2010.
Intergraph bookings (excluding maintenance) for the first nine
months of 2010 were 421 MUSD, an increase of 12.6 per cent          Net sales by divisions
from the corresponding period in 2009. The 2010 bookings            Process, Power & Marine (PP&M)
increase was primary due to a substantial increase in deals         Intergraph PP&M’s net sales for the first nine months of 2010
closed in the Americas in the SG&I division and from PP&M’s         were 273 MUSD, an increase of 17.8 per cent over the corre-
global alliance agreement bookings and the January 2010             sponding period of 2009. Excluding the impact for changes of
acquisition of COADE.                                               the USD against foreign currencies, net sales for the first nine
    Intergraph’s bookings results produced an ending backlog        months of 2010 increased 16.5 per cent compared to the corre-
(excluding maintenance) of 352 MUSD as of 30 September              sponding period of 2009. The 2010 net sales increase was pri-
2010. Ending backlog represents bookings that will be recog-        marily due to higher one-time perpetual license activity, increas-
nised as revenue in the future based on timing of project imple-    es in maintenance renewals and higher demand for consulting
mentations, services performed and other revenue recognition        services.
milestones. Ending backlog excludes recurring maintenance
revenue and multi-year subscription agreements.                     Security, Government & Infrastructure (SG&I)
                                                                    Intergraph SG&I’s net sales for the first nine months of 2010
Net sales and gross margin                                          was 350 MUSD, an increase of 6.9 per cent from the corre-
Intergraph’s net sales for the first nine months of 2010 were 623   sponding period of 2009. Excluding the impact for changes of
MUSD, an increase of 11.4 per cent from the corresponding           the USD against foreign currencies, 2010 net sales was an
period of 2009. Excluding the impact for changes of the USD         increase of 5.9 per cent against 2009 results. 2010 revenue was
against foreign currencies, 2010 net sales increased 10.3 per       positively impacted by increases in activity on SG&I percentage
cent compared to 2009 (assuming 2010 exchange rates). Inter-        of completed contracts and an increase in third party Federal
graph generated approximately 54 per cent of its sales outside      hardware revenue, partially offset by a decline in Intergraph
of the US, with 31 per cent from EMEA, 15 per cent from Asia        hardware revenue.
Pacific, 6 per cent from Canada and 2 per cent from the rest of
the world.                                                          Investments
    Intergraph’s gross margin for the first nine months of 2010     Intergraph’s net investments were 54 MUSD during the first
was 56.3 per cent, an improvement from 55.5 per cent for the        nine months of 2010, compared to 17 MUSD during the corre-
corresponding period in 2009. The gross margin increase in          sponding period of 2009, and consisted mainly of the invest-
2010 was primarily due to higher one-time perpetual license         ment in COADE. Depreciation and write-downs during the first
activity, increases in maintenance renewals, and higher demand      nine months of 2010 amounted to 7 MUSD compared to 8
for consulting services.                                            MUSD for the corresponding period of 2009.

Income from operations and operating expenses                       Cash flow
Intergraph’s income from operations for the first nine months       Cash flow from operating activities for the first nine months of
of 2010 was 90 MUSD, or 14.5 per cent of revenue, an increase       2010 amounted to 76 MUSD in 2010 compared to 69 MUSD
of 18.4 per cent from the corresponding period of 2009. Exclud-     for the corresponding period in 2009. Cash flow from financing
ing the impact for changes of the USD against foreign curren-       activities was –65 MUSD in the first nine months of 2010
cies, 2010 income from operations grew 16.3 per cent from           corresponding to –144 MUSD in the same period of 2009.
2009 results. The increase in 2010 income from operations was
driven by increased revenue and an overall improvement in           Financial position
margins.                                                            Shareholders’ equity, including minority interests, was
    Intergraph’s operating expenses for the first nine months of    26 MUSD at 30 September 2010 compared to 330 MUSD at
2010 were 239 MUSD, an increase of 12.0 per cent from the           20 September 2009. The change was mainly due to a dividend
same period of 2009 results. Excluding the impact for changes       to shareholders in 2010 of 324 MUSD. Intergraph’s total assets
of the USD against foreign currencies, 2010 operating expenses      increased to 1 415 MUSD in the first nine months of 2010 com-
increased 10.5 per cent compared to 2009 results. The increase      pared to 1 408 MUSD in the corresponding period of 2009.
in operating expenses in 2010 resulted primarily from the




                                                                                            InvItatIon to subscrIbe For shares In hexagon ab   61
Commentary on Intergraph’s financial development




     Comparison between the 2009 and 2008                                  ing expenses decreased 5.4 per cent compared to 2008 results.
     financial years                                                       The decrease in operating expenses in 2009 is the result of effec-
     Bookings and backlog                                                  tive cost control efforts, especially in sales and marketing. Inter-
     Intergraph 2009 bookings (excluding maintenance) were 528             graph has achieved operating leverage with total operating
     MUSD, a decrease of 9.7 per cent from 2008 results. The 2009          expenses as a percentage of revenue of 37.1 per cent in 2009.
     bookings decline was primary due to a large U.S. public safety
     deal in 2008 (approximately 50 MUSD) in Intergraph’s SG&I             Net sales by divisions
     division, lower one-time perpetual license activity in Intergraph’s   Process, Power & Marine (PP&M)
     PP&M division and the general impact of the global macro              Intergraph PP&M’s 2009 net sales were 317 MUSD, a decrease
     economic conditions. These bookings challenges were partially         of 6.2 per cent from 2008 results. Excluding the impact for
     offset by strength from global alliance agreement bookings that       changes of the USD against foreign currencies, 2009 net sales
     represent a large recurring revenue stream in PP&M and solid          declined 2.8 per cent compared to 2008 results. The 2009 net
     European bookings activity in SG&I.                                   sales decline was primarily due to lower one-time perpetual
         Intergraph’s bookings results produced an ending backlog          license activity, decreases in standard leases and less demand for
     (excluding maintenance) of 360 MUSD as 31 December 2009.              services training work.
     Ending backlog represents bookings that will be recognised as
     revenue in the future based on timing of project implementa-          Security, Government & Infrastructure (SG&I)
     tions, services performed and other revenue recognition mile-         Intergraph SG&I’s 2009 net sales were 454 MUSD, a decrease
     stones. Ending backlog excludes recurring maintenance revenue         of 3.0 per cent from 2008 results. Excluding the impact for
     and multi-year subscription agreements.                               changes of the USD against foreign currencies, 2009 revenue
                                                                           was flat with 2008 results. 2009 revenue was negatively impact-
     Net sales and gross margin                                            ed by decreases in utilities and communications software sales
     Intergraph’s 2009 net sales were 770 MUSD, a decrease of              activity, less digital mapping camera sales and lower federal
     4.3 per cent from 2008. Excluding the impact for changes of the       professional service revenue, partially offset by increases in
     USD against foreign currencies, 2009 net sales declined only 0.9      annual recurring maintenance contracts and new public safety
     per cent compared to 2008 (assuming 2009 exchange rates).             and security system implementations and revenue.
     Intergraph generated approximately 54 per cent of its sales out-
     side of the U.S., with 34 per cent from EMEA, 12 per cent from        Investments
     Asia Pacific, 6 per cent from Canada and 2 per cent from the          Intergraph’s net investments were 29 MUSD during 2009, com-
     rest of the world.                                                    pared to 30 MUSD during 2008 and consisted mainly of capi-
         Intergraph’s 2009 gross margin was 55.1 per cent, a decline       talised software development costs. Depreciation and write-
     from 55.6 per cent in 2008. The slight gross margin contraction       downs during 2009 amounted to 11 MUSD compared to
     in 2009 was primarily due to lower one-time perpetual licens-         12 MUSD in 2008.
     ing activity.
                                                                           Cash flow
     Income from operations and operating expenses                         Cash flow from operating activities amounted to 112 MUSD in
     Intergraph’s 2009 income from operations was 112 MUSD, or             2009 compared to 133 MUSD in 2008. Cash flow from financ-
     14.5 per cent of revenue, an increase of 3.9 per cent from 2008       ing activities was –145 MUSD in 2009 compared to 5 MUSD in
     results. Excluding the impact for changes of the USD against          2008. The change was mainly due to a dividend to shareholders
     foreign currencies, 2009 income from operations grew 7.2 per          in 2009 of 139 MUSD.
     cent from 2008 results. The increases in 2009 income from
     operations were driven by cost controls and proactive steps           Financial position
     taken by management to align the Intergraph’s cost structure          Shareholders’ equity, including minority interests, was 337
     with the global economic environment in 2009.                         MUSD in 2009 compared to 441 MUSD in 2008. Intergraph’s
         Intergraph’s 2009 operating expenses were 286 MUSD, a             total assets decreased to 1 439 MUSD in 2009 compared to
     decrease of 9.2 per cent from 2008 results. Excluding the impact      1 548 MUSD in 2008.
     for changes of the USD against foreign currencies, 2009 operat-




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The new Group

Rationale for the new Group                                               New Group organisation
Intergraph meets the objectives that Hexagon has set for soft-            The new Group has more than 11 000 employees in 42 coun-
ware driven expansion. The combination of Hexagon’s leader-               tries. Intergraph will operate as a separate application area
ship in measurement solutions using aerial and ground based               within Hexagon’s business area Measurement Technologies
point cloud sensor technology, with Intergraph’s leadership in            under the Intergraph name and branding. Hexagon will report
enterprise engineering software and geospatially powered solu-            Intergraph’s sales and order intake separately as currently being
tions, is expected to enable the enlarged Group to develop and            done for the other Hexagon application areas. Within certain
provide integrated solutions to clients.                                  areas, such as product development, all application areas will
    The acquisitions of Brown & Sharpe in 2001, Leica Geo-                collaborate on a strategic level.
systems in 2005 and NovAtel in 2007 extended Hexagon’s                         Hexagon’s President and CEO, Ola Rollén, has also
product offering to become a comprehensive provider of meas-              assumed the role as CEO of Intergraph in accordance with the
urement technologies. The acquisition of Intergraph is the                Hexagon model for integration into the Hexagon Group. The
natural next step in Hexagon’s technology development. With               two Intergraph divisions PP&M and SG&I, will continue to
the integration of Intergraph, Hexagon’s product portfolio will           operate under the leadership of Gerhard Sallinger and John
comprise all critical key technologies that are in demand on the          Graham, respectively.
measurement technology market from capturing three dimen-                      In order to comply with U.S. requirements relating to the
sional data from ground, air and space, processing data to                mitigation of FOCI over the affairs of a business having access
creating, managing and delivering information via enterprise              to classified information, Intergraph has transferred the con-
engineering software and GIS. By combining Hexagon’s                      tracts involving access to classified information and certain
hardware with Intergraph’s software, the new Group will be                related business into a new subsidiary – IGS. Hexagon will enter
positioned to offer unique solutions in the measurement                   into a proxy agreement with the U.S. Defense Security Service
technology industry.                                                      relating to IGS pursuant to which IGS will be managed by a
                                                                          minimum of three proxy board directors who are completely
                                                                          independent of Hexagon and will be subject to a variety of pro-
                                                                          cedures designed to mitigate FOCI.
                                                                               As a result of Intergraph’s geographical distribution of sales
                                                                          and employees, where North America represents a large part,
                                                                          the new Group’s sales and the employee distribution will be
                                                                          more balanced between regions in the western world. Further-
                                                                          more, Hexagon expects the combined tax rate for the new
                                                                          Group going forward to be 18–22 per cent.




                                     Measurement Technologies                                       Other Operations




           Geosystems                         Metrology                            Technology



                                                                Sales regions




                                                                                                  InvItatIon to subscrIbe For shares In hexagon ab   63
The new Group




     Synergies                                                         strategic fit and goals of this acquisition. Hexagon is strongly
     Hexagon and Intergraph both have strong positions in their        positioned to successfully integrate Intergraph into the new
     respective markets. Intergraph is positioned to capture the       Group.
     increased market growth and market share due to performing            The acquisition is expected to be earnings accretive from
     software solutions. Hexagon’s hardware and Intergraph’s soft-     closing of the acquisition and should also generate significant
     ware activities are highly complementary and the combination      cost and sales synergies.
     of technologies will create new customer offerings, which will
     allow Hexagon to move up the value chain and to become a          The main sources of cost synergies are:
     global solutions provider. Hexagon has identified substantial     ●  The combination of technologies
     potential for gross margin contribution of new product sales in   ●  Optimisation of distribution network and cross selling of
     the medium term.                                                     existing products
         The acquisition of Intergraph will give Hexagon a greater     ●  Reduction of overlapping resources
     balance between regions in the Western world. Hexagon and
     Intergraph will benefit from both companies’ global sales chan-   The main sources of revenue synergies are:
     nels and service networks, and the combination will bring         ●  Sale of Intergraph’s PP&M product offering on construc-
     broader geographical diversification of the new Group’s net          tion, re-design and assets management retrofit markets
     sales. Through the leveraging of Hexagon’s existing network       ●  Selling Hexagon sensors in combination with response GIS
     and distribution channels for the distribution of Intergraph’s       systems on Intergraph’s SG&I’s markets
     products in Asia, where Intergraph today is under-represented,    ●  Distribution of Intergraph’s products through Hexagon’s
     high potential for growth exists.                                    well established network and distribution channels in
                                                                          emerging markets
     Integration expertise and identified synergies
     During the period 2000 to 2009, Hexagon made some 70              Sales synergies are expected to take slightly longer to achieve
     acquisitions, including the key strategic and transformational    than cost synergies. Overall, synergies on a pre-tax basis are
     acquisitions of Brown & Sharpe in 2001, Leica Geosystems in       expected to amount to approximately 30 MUSD in 2011,
     2005 and NovAtel in 2007. Based on the substantial experience     40 MUSD in 2012 and 70 MUSD to EBIT as from 2013
     of acquisition and integration, in combination with the clear     onwards, growing sequentially in the years thereafter.



     Synergies


     MUSD

                   Estimated total EBIT impact per annum

                                                           >100
                                                                       Combining Hexagon and Intergraph technologies




                                                                       Cross selling of existing products
                                             70

                                                                       Rationalisation of overlapping resources
                                                                       at Hexagon and Intergraph


                              40                                       Enlarge PP&M market via point cloud scanning
              30

                                                                       Sensors in combination with response
                                                                       GIS systems for SG&I


                                                                       Intergraph selling through Hexagon’s emerging
                                                                       markets organisation
             2011            2012           2013           2017




64      InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                   The new Group




Development of an integrated solutions offering                         Hexagon’s technologies are positioning and measuring with
Overview                                                            an accuracy of sub millimetres and in distances up to 10th of
The combination of Hexagon’s leadership in measurement solu-        kilometres. The positioning equipment is used to position the
tions using aerial and ground-based point cloud sensor technol-     parts to be assembled in the correct place. For example, a laser
ogy, with Intergraph’s leadership in enterprise engineering soft-   tracker could be used to position a tube in the right place to
ware and geospatially powered solutions, is expected to enable      avoid errors in the building process. The measuring equipment
the enlarged Group to develop and provide integrated solutions      is comparing measured data with the enterprise engineering
to clients. Hexagon believes that having a strong sensor tech-      software design.
nology docked into verticalised application software will               Combining the Hexagon and Intergraph technologies
become a very powerful technology.                                  would give powerful and efficient tools to design, build and
    Hexagon’s sensor technology will enable Intergraph to enter     operate a plant. The design would be done with the Smartplant
into several areas with strong growth perspectives.                 Suit. The build would involve having prefabricates measured at
●   Asset management and re-design, retrofit applications           the vendor and positioning done at the plant site. The construc-
    (Intergraph’s PP&M),                                            tion would be surveyed and the design updated. The operation
●   Construction control and management (Intergraph’s               of the plant and asset management would be performed with
    PP&M): The input from Intergraph’s enterprise engineering       Smartplant Suit.
    software combined with Hexagon’s sensor technology will
    improve the quality of a plant construction process reduc-      Example of the optimisation of agriculture operations
    ing construction cost and time significantly, and               Hexagon’s aircraft mounted multispectral imaging sensors are
●   Pre-emptive activities rather than just incident control        used to capture data. Depending of what resolution is needed,
    (Intergraph’s SG&I): Intergraph’s solutions have an excel-      there are different measuring systems, for example Hexagon’s
    lent reputation in helping organisations out “when it’s hap-    high resolution ADS80 camera and the new revolutionary
    pened”. Through integration with Hexagon scanners, these        medium format camera RCD30. The information from the sen-
    solutions will be able to warn “before it happens” or “how      sor is fed into a GIS system and an agronomist can by using the
    to cure the problem”                                            spectral information determine if the crop needs additional fer-
                                                                    tilisers or if there is a need for pesticide. The agronomist is send-
Hexagon expects significant revenue synergies from new appli-       ing a report to the farmer with a description of the situation and
cation areas as from 2013.                                          with recommended actions to take. The farmer can then use a
                                                                    GPS guided steering system (either complete automatic or with
Examples of integrated solutions offering                           guidance only) to, in an efficient way, take care of the problem
The combination of Hexagon’s and Intergraph’s technologies          by optimising the path and avoid overlaps. Today the total
can be applied into several areas which will provide customers      workflow is inefficient in some regards, partly due to that the
with new value added solutions to improve project execution         systems are disconnected.
and efficiency whilst reducing costs.                                    By merging the Intergraph and Hexagon technologies com-
                                                                    bined with some additional development, it will be possible to
Example of the conception and construction of an                    in a seamless way directly program the activities from the farm-
Oil & Gas rig                                                       ers’ machines from the GIS system. This means that the total
One application area for Intergraph’s Smartplant Suit is to         workflow can be optimized and substantial cost savings can be
design oil rigs. The design is often done by an EPC company         obtained when minimising consumption of fuel, fertiliser, pesti-
which is in charge also of building the plant. In addition to       cide, labour usage etc. In addition, an optimised workflow will
designing the oil rig in the most efficient way, the Smartplant     enable Unmanned Airborne Vehicles to be used, which will
Suit generates Bill of Materials (“BOM”) including the logistics    allow much faster response and make optimisation of the yield
behind it. In the process of building and assembling the oil rig,   possible.
some leeway may appear between the original design and the
manufactured pieces, which can lead to deviations between the
finalised project and the original design.




                                                                                             InvItatIon to subscrIbe For shares In hexagon ab   65
     Pro forma financial statements

     Purpose of the pro forma financial statements                                                      The pro forma financial information has been compiled on
     Hexagon’s acquisition of Intergraph, which was completed on                                    a basis consistent with the accounting policies of Hexagon as
     28 October 2010, will have a direct impact on future earnings                                  described in the 2009 annual report, with the above mentioned
     of Hexagon, in part due to the acquired group and in part due                                  differences, and as will be applied by the new Group. Account-
     to the use of loan financing. Following a decision by the Board                                ing principles and calculation methods are unchanged from
     of Directors, pursuant to authorisation granted by the EGM,                                    those applied in the annual report for 2009 with the following
     Hexagon will in order to replace parts of the loan financing                                   exception: the new IFRS 3 Business Combinations, which came
     with equity, carry out a new issue with preferential rights for                                into effect on 1 January 2010, has changed how acquisitions
     Hexagon’s shareholders. The new issue will, in a corresponding                                 are to be reported, where, among others, transaction expenses
     manner, affect Hexagon’s earnings and financial position.                                      are no longer allowed for capitalisation but must be expensed
          The purpose of the pro forma consolidated financial state-                                over the income statement as incurred.
     ments below is to show the hypothetical impact which the                                           EBITDA was not explicitly stated in Hexagon’s previous
     acquisition, the loan financing and the new issue would have                                   annual report but will be stated in Hexagon’s coming annual
     had on Hexagon’s condensed consolidated income statements                                      report. As a result of this, EBITDA is included in the pro forma
     for 2009 and the condensed consolidated income statement for                                   financial statements.
     the nine month period ending 30 September 2010, as well as the                                     See section “Legal considerations and supplementary infor-
     condensed consolidated balance sheet as per 30 September                                       mation” for more information on the credit agreements for the
     2010.                                                                                          new loan financing.
          The purpose of the pro forma financial statements is to
     inform and elucidate facts. The pro forma financial statements                                 Pro forma adjustments
     is, by its very nature, meant to describe a hypothetical situation                             Purchase price for Intergraph and ensuing rights offering
     and thus is not intended to describe Hexagon’s actual or antici-                               The impact of settling the purchase price has been made by
     pated financial position or earnings, and is not representative of                             means of reflecting the rights offering proceeds to be received as
     the results of operations for any future periods. Investors are                                well as the proceeds to be obtained by means of debt financing.
     cautioned not to place undue reliance on the pro forma finan-                                  The cost to acquire Intergraph reflects the change in fair value
     cial information.                                                                              of foreign exchange futures entered into at the time of signing
                                                                                                    to hedge portions of the USD purchase price. All debt in
     Structure of the pro forma financial statements                                                Intergraph, net of loan origination costs, has been considered as
     Hexagon reports in accordance with IFRS, whereas Intergraph                                    repaid as part of the acquisition.
     reports in accordance with US GAAP. In connection with the                                         The pro forma income statement will thus show interest
     pro forma financial statements, a review has been conducted by                                 expense related to the portion of the purchase price that has
     Hexagon of the most important differences between US GAAP                                      been financed by means of debt. Interest costs for Intergraphs
     and IFRS. Two areas of differences have been identified;                                       loan financing have been eliminated in the pro forma income
     accounting for capitalised development expenses and revenue                                    statement.
     recognition. In both cases the differences entail timing only, i.e.                                The estimated rights offering proceeds have been shown net
     the impact on the profit and loss statement is the same over                                   of the estimated rights offering expenses, net of tax.
     time, subject to a consistent application of the selected account-
     ing policies. Pro forma adjustments have only been made for                                    Purchase price allocation
     the impact of these accounting differences as of the transaction                               Hexagon has performed a tentative purchase price allocation
     date, see under heading “Pro forma adjustments”, and conse-                                    whereby fair values have been assigned to all assets and liabili-
     quently no further adjustments have been made for these differ-                                ties of Intergraph, thereby adjusting the carrying values previ-
     ences in accounting policies.                                                                  ously shown. The tentative purchase price allocation has entailed
         Pro forma adjustments have been made to reflect the impact                                 assigning significant values to intangible assets, such as capital-
     of the acquisition of Intergraph, the loan financing and the                                   ised software, customer relationships, patents and trademarks,
     ensuing rights offering.                                                                       as well as adjustments to tangible fixed assets and inventory.
         Intergraph was acquired on 28 October 2010 for 2 125                                       Deferred taxes have been reflected as appropriate.
     MUSD or 15 106 MSEK1) on a cash and debt free basis. Trans-
     action costs used in the pro forma have been estimated at
     59 MSEK.




     1) Based on exchange rate of 6.7375 SEK/USD and includes loss on forward contract entered into at signing.



66        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                Pro forma financial statements




    Acquired deferred revenue liabilities related to post contract    Loan origination expenses
sales (service, maintenance and upgrades) have been analysed          Expenses for obtaining new financing will be incurred as a
to determine what portion of the liability represents an actual       result of the transaction. The following pro forma adjustments
future obligation and what amount does not. The portion of the        have been made to the balance sheet as of September 30, 2010:
liability that does not represent an obligation has been set to       1. Unamortised loan origination expenses related to previous
zero in the purchase price allocation. The portion of the obliga-         financing structure in Hexagon have been removed with a
tion that represents an obligation has been adjusted to fair value.       corresponding increase of long term debt and reduction of
Fair value for a deferred revenue balance is defined as the costs         equity,
for a third party to fulfill the obligation, including a normal       2. Unpaid loan origination expenses deemed to represent a
sales margin.                                                             normal cost of financing for Hexagon and which will be
    The difference between the purchase price and the fair value          capitalised and amortised over the life of each financing
of net assets acquired has been shown as goodwill in the pro              facility under the effective interest method are treated as a
forma balance sheet. Goodwill and trademarks are not subject              liability and a reduction of interest bearing long term debt,
to amortisation; however annual impairment tests will be per-             and
formed to determine if the carrying value can be defended.            3. Loan origination expenses for Hexagon that are related to
    Historical amortisations of intangible and tangible assets in         bridge financing, commitment fees or which are deemed to
Intergraph have been reversed and have been replaced by the               be in excess of normal cost of financing have been consid-
estimated amortisation of the assets identified in the tentative          ered an increase of long term debt and a corresponding
purchase price allocation.                                                reduction of equity. However, loan origination expenses for
    All stock compensation plans in Intergraph have been ter-             Hexagon that are deemed to be in excess of normal cost of
minated as part of the transaction. Consequently a pro forma              financing are not reflected in the pro forma income state-
adjustment has reversed historical stock compensation expenses            ment.
recorded related to such plans.
    Certain operations within Intergraph have been excluded           Non-recurring items and expenses related to the
from the acquisition by Hexagon. The financial fixed assets,          transaction
non-controlling interests and corresponding debt of these             See heading “Significant changes since publication of the inter-
operations have been adjusted in the pro forma, as well as the        im report for the period January – September 2010” in section
corresponding interest expense related to this debt.                  “Capitalisation and other financial information for Hexagon”
                                                                      for information on non-recurring items occurred after the
                                                                      acquisition and integration-, transaction- and financing costs
                                                                      which will be charged in the fourth quarter 2010 and which
                                                                      have not been included in the pro forma financial statements.




                                                                                             InvItatIon to subscrIbe For shares In hexagon ab   67
Pro forma financial statements




     Pro forma financial statements January–September 2010
     The pro forma consolidated financial statements are based on Hexagon’s reviewed interim financial statements for the period January
     – September 2010 and Intergraph’s reviewed interim financial statements for the period January – September 2010.

     Income statement January – September 2010
     The pro forma consolidated income statement for the period ended January – September 2010 give effect to the acquisition of Inter-
     graph and the rights issue as if it had occurred on 1 January 2010. The translation of Intergraph from USD to SEK has taken place at
     the average rate for the first nine months of the year 2010: 7.3475 SEK/USD.

                                                                                                                                                        Effect of
                                                                                                                                                         the loan
                                                                                                              Acquisition-                             financing
                                                                                                                   related                                 of the       Effects of      New Group
                                                               Hexagon           Intergraph        Intergraph adjustment                             transaction     rights issue      pro forma in
                                                               in MSEK          in 000’ USD          in MSEK     in MSEK                                in MSEK          in MSEK             MSEK
     net sales                                                      9 458            622 701               4 575                     –                         –                  –            14 033
     cost of goods sold                                            –4 641           –271 952              –1 998                 1051)                         –                               –6 534
     Gross earnings                                                 4 817            350 749               2 577                 105                           –                  –             7 499


     sales and administration costs etc.                           –3 183           –262 227              –1 927                 1741), 2), 3), 4)             –                  –
                                                                                                                                                                                               –4 936
     earnings from shares in associated
     companies                                                            1                    –                 –                   –                         –                  –                   1
     Operating earnings                                             1 635              88 522                 650                279                           –                  –             2 564

     Interest income and expenses, net                               –114             –69 646               –512                 4954), 5)                  –3026)                –              –433
     Earnings before taxes                                          1 521              18 876                 138                774                        –302                  –             2 131

     taxes                                                           –208              –5 745                 –42               –2907)                        837)                –              –457
     Net earnings                                                   1 313              13 131                  96                484                        –219                  –             1 674

     attributable to:
     Parent company shareholders                                    1 302              14 584                 107                473                        –219                  –             1 663
     Minorities                                                         11             –1 453                 –11                  114)                        –                  –                  11

     EBITDA                                                         2 275            144 050               1 059                   38                          –                  –             3 372
     Depreciation                                                    –205              –7 425                 –55                    21)                       –                  –              –258
     amortisation                                                    –435             –44 200               –325                 2101)                         –                  –              –550

     non-recurring items in operating earnings                            –            –3 903                 –29                  292)                        –                  –                   –
     – of which impairment of fixed assets                                –                    –                 –                   –                         –                  –                   –
     taxes related to non-recurring items                                 –              1 483                 11                –117)                         –                  –                   –

     1) historical, Intergraph financial statements have reflected the purchase price allocation performed in 2006 where values were assigned to certain intangible assets, which have subse-
        quently been amortised. hexagon has performed a purchase price allocation of its own in 2010, where the longer term ownership perspective of hexagon has led to different values being
        assigned to intangible assets. Future amortisation will consequently differ from historical amortisation. amortisation of previous values, mainly referring to the 2006 acquisition by previous
        owners, are reversed and estimated amortisation of the values identified in the preliminary 2010 purchase price allocation are added. adjustments in the income statement, as a result of
        this, amounts to 105 MseK for cost of goods sold and 107 MseK for sales and administration costs etc.
     2) the income statement includes a period when Intergraph was a privately held company and includes non-recurring transaction and redundancy costs of 29 MseK and costs for stock
        compensation plans of 29 MseK. adjustments have been made in sales and administration costs etc.
     3) adjustments regarding the translation of foreign subsidiaries of 8 MseK have been made within sales and administration costs etc.
     4) certain parts within Intergraph have been excluded from the acquisition by hexagon. sales and administration costs etc. have been adjusted with 1 MseK as a result of this.
     5) removal of historical interest expenses in Intergraph, i.e. related to financing that will not remain after the acquisition.
     6) Interest expense related to loan financing of the transaction, net of rights issue proceeds.
     7) tax effect of pro forma adjustments.




68        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                                                            Pro forma financial statements




Balance sheet 30 September 2010
The pro forma consolidated condensed balance sheet has been prepared as if both the acquisition of Intergraph and the rights issue
had taken place on 30 September 2010. The translation of Intergraph from USD to SEK has taken place at the closing day rate on 30
September 2010: 6.7375 SEK/USD.

                                                                                                                                            Effect of
                                                                                                                                             the loan
                                                                                                      Acquisition-                         financing
                                                                                                            related                            of the        Effects of           New Group
                                                       Hexagon           Intergraph         Intergraph adjustment                        transaction      rights issue           pro forma in
                                                       in MSEK          in 000’ USD           in MSEK     in MSEK                           in MSEK           in MSEK                  MSEK
goodwill                                                     9 937            522 976               3 524             7 6621)                     7892)                  –               21 912
other intangible fixed assets                                6 173            355 255               2 394             1 8511)                        –                   –               10 418
tangible fixed asset                                         1 576            122 207                 823               1091)                        –                   –                2 508

Financial fixed assets                                       1 147              82 401                555              –5203)                   –9152)                   –                   267
Deferred tax assets                                            549              17 085                115                 –41)                    2112)                  –                   871
Total fixed assets                                         19 382          1 099 924                7 411             9 098                        85                    –               35 976

Inventories                                                  2 789              33 883                228                 531)                       –                   –                3 070

customer receivables                                         2 706            156 557               1 055                   –                        –                   –                3 761
other receivables                                              306               6 183                  42                  –                        –                   –                   348
Prepaid expenses and accrued income                            259              14 427                  97                  –                        –                   –                   356
Total current receivables                                    3 271            177 167               1 194                   –                        –                   –                4 465

cash & cash equivalents                                        883            103 799                 699          –14 6634)                  14 6634)                   –                1 582
Total current assets                                         6 943            314 849               2 121          –14 610                    14 663                     –                9 117
Total assets                                               26 325          1 414 773                9 532           –5 512                    14 748                     –               45 093

attributable to the parent company’s
shareholders                                               13 002             –10 786                 –73                 73                         –              6 4145)              19 416
attributable to minority                                         50             36 880                248              –2483)                        –                   –                     50
Total shareholder’s equity                                 13 052               26 094                175              –175                          –              6 414                19 466

Interest bearing liabilities                                 2 079            931 159               6 274           –5 9893), 6), 7)          22 3428)            –6 4145)               18 292
other long-term liabilities                                      12             53 114                358              –127     3), 6)
                                                                                                                                                     –                   –                   243
Pension provisions                                             320                     –                 –                  –                        –                   –                   320
Deferred tax provisions                                        290            138 128                 931               9921)                        –                   –                2 213
other long-term provisions                                       23                    –                 –                  –                        –                   –                    23
Total long-term liabilities                                  2 724         1 122 401                7 563           –5 124                    22 342              –6 414                 21 091

other short-term provisions                                    147                     –                 –                  –                        –                   –                   147
Interest bearing liabilities                                 6 805                  642                  4                  –                 –6 8058)                   –                      4
accounts payable                                               885              16 963                114                 –31)                       –                   –                   996
other liabilities                                            1 414               4 282                  29                –11)                  –7892)                   –                   653
accrued expenses and
deferred income                                              1 298            244 391               1 647              –2091), 3)                    –                   –                2 736
Total short-term liabilities                               10 549             266 278               1 794              –213                   –7 594                     –                4 536
Total equity and liabilities                               26 325          1 414 773                9 532           –5 512                    14 748                     –               45 093
1) based on the preliminary purchase price allocation fair value adjustments have been made to other intangible fixed assets, tangible fixed assets, inventories and deferred revenue.
   Deferred taxes have been considered for all fair value adjustments. the residual between the purchase price and the fair value of net assets acquired has been allocated to goodwill.
2) hexagon has hedged a portion of the usD purchase price by entering into a forward exchange contract. the change in fair value of the contract between signing and closing has been
   treated as part of the acquisition price of Intergraph, whereby a reclassification from financial assets has been recorded, in that this was where the changes in value were recorded prior to
   closing and settlement of the purchase price.
3) certain operations within Intergraph have been excluded from the acquisition by hexagon. the assets, non-controlling interest and corresponding debt of these operations have been
   adjusted in the pro forma, as well as the corresponding interest expense related to this debt.
4) estimated impact on cash of acquisition and subsequent loan financing and rights issue.
5) Impact of the rights issue.
6) Includes elimination of Intergraph debt that will not remain after the acquisition.
7) Includes pro forma adjustments related to loan origination expenses.
8) Impact of loan financing of the acquisition.



                                                                                                                                         InvItatIon to subscrIbe For shares In hexagon ab           69
Pro forma financial statements




     Pro forma financial statements 2009
     The pro forma consolidated financial statements are based on the audited annual reports for 2009 with respect to both Hexagon and
     Intergraph.

     Income statement 2009
     The pro forma consolidated condensed income statement for 2009 gives effect to the acquisition of Intergraph and the rights issue as
     if it had occurred 1 January 2009. The translation of Intergraph from USD to SEK has taken place at the average rate for the year
     2009: 7.6457 SEK/USD.

                                                                                                                                                        Effect of
                                                                                                                                                         the loan
                                                                                                        Acquisition-                                   financing
                                                                                                     related adjust-                                       of the       Effects of New Group
                                                              Hexagon          Intergraph Intergraph           ment                                  transaction     rights issue pro forma in
                                                              in MSEK         in 000’ USD   in MSEK        in MSEK                                      in MSEK          in MSEK        MSEK
     net sales                                                    11 811            770 337              5 890                       –                         –                   –          17 701
     cost of goods sold                                           –6 231          –345 635              –2 643                   1451)                         –                   –           –8 729
     Gross earnings                                                5 580            424 702              3 247                   145                           –                   –            8 972

     sales and administration costs                               –3 978          –324 536              –2 481                   1901), 2), 3), 4)             –                   –           –6 269
     earnings from shares in associated
     companies                                                          –2                   –                 –                     –                         –                   –                –2
     Operating earnings                                            1 600            100 166                 766                  335                           –                   –            2 701

     Interest income and expenses, net                              –158            –50 621               –387                   3714), 5)                  –3356)                 –             –509
     Earnings before taxes                                         1 442              49 545                379                  706                        –335                   –            2 192

     taxes                                                          –188            –18 527               –142                  –2617)                       1067)                 –             –485
     Net earnings                                                  1 254              31 018                237                  445                        –229                   –            1 707

     attributable to:
     Parent company shareholders                                   1 245              33 035                252                  430                        –229                   –            1 698
     Minorities                                                          9            –2 017                –15                    154)                        –                   –                  9

     EBITDA                                                        2 537            174 290              1 332                     40                          –                   –            3 909
     Depreciation                                                   –287            –10 597                 –81                      21)                       –                   –             –366
     amortisation                                                   –469            –59 295               –453                   2931)                         –                   –             –629

     non-recurring items in operating earnings                      –184              –4 232                –32                      –                         –                   –             –216
     - of which impairment of fixed assets                              –3                   –                 –                     –                         –                   –                –3
     taxes related to non-recurring items                              26              1 608                 12                      –                         –                   –                38

     1) historical, Intergraph financial statements have reflected the purchase price allocation performed in 2006 where values were assigned to certain intangible assets, which have subse-
        quently been amortised. hexagon has performed a purchase price allocation of its own in 2010, where the longer term ownership perspective of hexagon has led to different values being
        assigned to intangible assets. future amortisation will consequently differ from historical amortisation. amortisation of previous values, mainly referring to the 2006 acquisition by previous
        owners, are reversed and estimated amortisation of the values identified in the preliminary 2010 purchase price allocation are added. adjustments in the income statement, as a result of
        this, amounts to 145 MseK for cost of goods sold and 151 MseK for sales and administration costs etc.
     2) the income statement includes a period when Intergraph was a privately held company and includes non-recurring transaction and redundancy costs of 32 MseK and costs for stock
        compensation plans of 34 MseK. adjustments have been made in sales and administration costs etc.
     3) adjustments regarding the translation of foreign subsidiaries of –30 MseK have been made within sales and administration costs etc.
     4) certain parts within Intergraph have been excluded from the acquisition by hexagon. sales and administration costs etc. have been adjusted with 2 MseK as a result of this.
     5) removal of historical interest expenses in Intergraph, i.e. related to financing that will not remain after the acquisition.
     6) Interest expense related to loan financing of the transaction, net of rights issue proceeds.
     7) tax effect of pro forma adjustments.




70        InvItatIon to subscrIbe for shares In hexagon ab
Auditor’s report on the pro forma
financial statements
To the Board of Directors in Hexagon AB (publ)
Corp. reg. 556190-4771

We have examined the pro forma financial information to be found on pages 66–70 in the Prospectus of Hexagon AB
dated 26 November 2010 (the “Prospectus”).
    The pro forma financial information has been prepared for illustrative purposes only to provide information
about how the acquisition of all shares in Intergraph Corporation might have affected the consolidated income state-
ment for Hexagon AB for the period January 1 – December 31, 2009 and 1 January – 30 September, 2010 and the
consolidated balance sheet as of 30 September 2010.

Responsibility of the Board of Directors and the Chief Executive Officer
It is the responsibility of the Board of Directors and the Chief Executive Officer to prepare the pro forma financial
information in accordance with the requirements of the Prospectus Regulation 809/2004/EC.

The Auditor’s responsibility
It is our responsibility to provide an opinion pursuant to Annex II Item 7 of the Prospectus Regulation 809/2004/EC,
as to the proper compilation of the pro forma. We are not obligated to express any other opinion on the pro forma
financial information or any parts thereof. We do not assume any responsibility for the financial information used in
compilation of the pro forma financial information beyond that owed to those to whom any reports on that financial
information were addressed by us at the date of their issue.

Work performed
We have conducted our work in accordance with Far’s recommendation RevR 5 Examination of Prospectuses. Our
work – which did not include an independent review or audit of the underlying financial information, the adjustments
to conform the accounting policies of Intergraph to the accounting policies of Hexagon AB or the assumptions sum-
marised on pages 66–70 – have mainly consisted of comparing the unadjusted financial information with the source
documents as described on pages 66–70, assessing the evidence supporting the pro forma adjustments and discussing
the pro forma financial information with the management of Hexagon AB.
    We have planned and performed our work in an effort to obtain the information and explanations that we believed
necessary in order to achieve reasonable assurance that the pro forma financial information has been compiled in
accordance with the basis stated on pages 66–70 of the Prospectus and that this basis complies with the accounting
policies applied by Hexagon AB.

Opinion
In our opinion, the pro forma financial information has been properly compiled on the basis stated on pages 66–70 of
the Prospectus; and that basis, except for what is stated on page 66, is consistent with the accounting policies of
Hexagon AB.

                                          Stockholm, 26 November 2010

                                                Ernst & Young AB
                                                 Hamish Mabon
                                           Authorized Public Accountant




                                                                                            InvItatIon to subscrIbe For shares In hexagon ab   71
     Board of Directors,
     Group Management and Auditors
     Board of Directors

                                                                                                                                          Remuneration
     Name                      Born       Position                             Elected       Independent         Audit Committee           Committee                  Shareholding1)
     Melker schörling          1947       chairman                             1999          no2)                                                  •           11 812 500 a shares3)
                                                                                                                                                               66 374 551 b shares3)
     Mario Fontana             1946       Member                               2006          Yes                            •                                       30 000 b shares
     ulrika Francke            1956       Member                               2010          Yes                                                                      3 000 b shares
     ulf henriksson            1963       Member                               2007          Yes                                                                    56 350 b shares
     gun nilsson               1955       Member                               2008          Yes                            •                      •                  5 000 b shares
     ola rollén                1965       Member, President and ceo            2000          no2)                                                               2 801 152 b shares
     ulrik svensson            1961       Member                               2010          no2)                           •                                                             –

     1) as per 30 september 2010.
     2) Melker schörling and ulrik svensson are not deemed to be independent of the company’s major shareholders. ola rollén is not deemed to be independent of the company as a result
        of his position as hexagon’s President and ceo.
     3) shares held through Melker schörling ab.



     MELKER SCHöRLING, BORN 1947                                                                    ULRIKA FRANCKE, BORN 1956
     Chairman and Member of the Board of Directors since 1999.                                      Member of the Board of Directors since 2010.
     Chairman of Remuneration Committee.                                                            Education: University studies.
     Education: B.Sc. (Econ.).                                                                      Work Experience: City Planning Director and Street and Prop-
     Work Experience: CEO Securitas AB, President and CEO Skan-                                     erty Director City of Stockholm and CEO SBC.
     ska AB.                                                                                        Other assignments: CEO Tyréns AB. Chairman of the Board of
     Other assignments: Chairman of Melker Schörling AB,                                            Stockholms Stadsteater AB and Board Member of Stockholms
     AarhusKarlshamn AB, Securitas AB, Hexpol AB and Edeby-                                         Stads Brandförsäkringskontor and Swedbank AB.
     Ripsa Skogsförvaltning AB. Board Member of Hennes &                                            Previous assignments in the past five years: Managing Director
     Mauritz AB and Mexab Holding AB. Deputy Board Member of                                        of SBC BostadesrättsCentrum AB. Board Member of Skanska
     Hasta Holding AB.                                                                              AB and Stockholms Business Region AB.
     Previous assignments in the past five years: Chairman of                                       Shareholding: 3 000 shares of series B.
     Niscayah Group AB. Board Member of Assa Abloy AB and
                                                                                                    Independent of the Company, its management and major share-
     Noxys Invest AB.
                                                                                                    holders.
     Shareholding: 11 812 500 shares of series A and 66 374 551
     shares of series B through Melker Schörling AB.                                                ULF HENRIKSSON, BORN 1963
     Independent of the Company and its management.                                                 Member of the Board of Directors since 2007.
                                                                                                    Education: Master of Engineering.
     MARIO FONTANA, BORN 1946
                                                                                                    Work Experience: Executive and Senior Leader Eaton Corpora-
     Member of the Board of Directors since 2006.
                                                                                                    tion, Honeywell International/Allied Signal Inc. and Volvo
     Member of Audit Committee.
                                                                                                    Aero.
     Education: Master of Engineering.
                                                                                                    Other assignments: CEO of Invensys plc.
     Work Experience: Chief of Staff and CIO Brown Boveri Brazil,
                                                                                                    Previous assignments in the past five years: Operative Vice
     Country General Manager Storage Technology Switzerland,
                                                                                                    President Eaton Hydraulics.
     Country General Manager Hewlett-Packard Switzerland,
     General Manager Computer Business Hewlett-Packard Europe                                       Shareholding: 56 350 shares of series B.
     and General Manager Financial Services worldwide Hewlett-                                      Independent of the Company, its management and major share-
     Packard USA.                                                                                   holders.
     Other assignments: Chairman of Swissquote and Regent Light-
     ing. Board Member of Dufry.
     Previous assignments in the past five years: Board Member of
     Büro Fürrer, Inficon, SBB – Swiss Railways, Sulzer and X-Rite.
     Shareholding: 30 000 shares of series B.
     Independent of the Company, its management and major share-
     holders.

72        InvItatIon to subscrIbe For shares In hexagon ab
                                                                              Board of Directors, Group Management and Auditors




GUN NILSSON, BORN 1955                                         Group management
Member of the Board of Directors since 2008.
Member of Audit Committee and Remuneration Committee.          OLA ROLLéN, BORN 1965

Education: B.Sc. (Econ.).                                      President and CEO since 2000.
Work Experience: CFO Nobia Group, CEO Gambro Holding           See above.
AB, Managing Director Indap Sweden AB, Deputy CEO and
Executive Vice President Duni AB.                              JüRGEN DOLD, BORN 1962
Other assignments: CFO Sanitec. Deputy Board Member of         President Hexagon Geosystems
Vinpröjsaren AB and Art Photo Foundation Sweden AB.            Employed since 2005.
Previous assignments in the past five years: Chairman of Yra   Education: M.Sc. (Engineering).
AB and Svenska Golftourerna AB. Board Member of Duni AB,       Work Experience: Academic counsel and assistant professor at
Husqvarna AB, LFV, Lidingö Golfklubbs Fastighets AB, SPP       the Technical University of Braunschweig, Germany.
Fonder AB and Svenska Golfförbundet Affärsutveckling AB.
                                                               Other assignments: –
Shareholding: 5 000 shares of series B
                                                               Previous assignments in the past five years: –
Independent of the Company, its management and major share-
                                                               Shareholding: 6 929 shares of series B and 25 000 warrants for
holders.
                                                               shares of series B.

OLA ROLLéN, BORN 1965
                                                               WILLIAM GRUBER, BORN 1953
President and CEO since 2000.
                                                               Vice President
Member of the Board of Directors since 2000.
                                                               Employed since 2003.
Education: B.Sc. (Econ.).
                                                               Education: B.Sc. (Econ.).
Work Experience: President Sandvik Materials Technology,
                                                               Work Experience: Various positions within Milacron Group.
Executive Vice President Avesta-Sheffield and President of
Kanthal.                                                       Other assignments: -

Other assignments: Board Member of Vestas Wind Systems         Previous assignments in the past five years: Premier Advisory
A/S.                                                           Board (Premier Manufacturing Support Services, Inc.).

Previous assignments in the past five years: –                 Shareholding: 108 818 shares of series B and 50 000 warrants
                                                               for shares of series B.
Shareholding: 2 801 152 shares of series B.
Independent of major shareholders.
                                                               HåKAN HALéN, BORN 1954
                                                               Chief Financial Officer
ULRIK SVENSSON, BORN 1961
                                                               Employed since 2001.
Member of the Board of Directors since 2010.
                                                               Education: B.Sc. (Econ.).
Chairman of Audit Committee.
                                                               Work Experience: Various positions within Skandia Group and
Education: B.Sc. (Econ.).
                                                               Trygg-Hansa Group.
Work Experience: CFO Esselte and CFO Swiss International
                                                               Other assignments: –
Air Lines.
                                                               Previous assignments in the past five years: Board Member of
Other assignments: CEO of Melker Schörling AB. Board
                                                               Tradimus AB.
Member of Assa Abloy AB, AarhusKarlshamn AB, Loomis AB,
Niscayah Group AB, Hexpol AB and Flughafen Zürich AG.          Shareholding: 1 054 441 shares of series B through capital
Deputy Board Member of EM Holding AB.                          insurance.

Previous assignments in the past five years: Board Member of
Securitas Direct AB and Absolent Invest AB. Deputy Board
Member of Mekius Invest AB.
Shareholding: –
Independent of the Company and its management.




                                                                                         InvItatIon to subscrIbe For shares In hexagon ab   73
Board of Directors, Group Management and Auditors




     NORBERT HANKE, BORN 1962                                         BO PETTERSSON, BORN 1952
     President Hexagon Metrology                                      Chief Technical Officer
     Employed since 2001.                                             Employed since 2001.
     Education: B.Sc. (Econ.).                                        Education: M.Sc. (Engineering).
     Work Experience: Various positions within Kloeckner Group,       Work Experience: Research & Development positions within
     Financial Director Brown & Sharpe.                               ABB Group and Erisoft Group.
     Other assignments: Board Member of Elcome Private Limited,       Other assignments: –
     India.                                                           Previous assignments in the past five years: –
     Previous assignments in the past five years: Board Member of     Shareholding: 194 750 shares of series B and 50 000 warrants
     Brown & Sharpe Precizika.                                        for shares of series B.
     Shareholding: 70 897 shares of series B and 50 000 warrants
     for shares of series B.                                          Auditors
                                                                      Ernst & Young AB (P.O. Box 7850, SE-103 99 Stockholm,
     LI HONGQUAN, BORN 1966                                           Sweden) is the Company’s elected auditor since the financial
     President Hexagon Asia                                           year 2004. At the Annual General Meeting 2008, Ernst &
     Employed since 2001.                                             Young AB was re-elected as the Company’s auditor for the
                                                                      period up until the 2012 Annual General Meeting. Hamish
     Education: M.Sc. (Engineering).
                                                                      Mabon (authorised public accountant and member of FAR-
     Work Experience: President Qingdao Brown & Sharpe Qian-          SRS) serves as auditor in charge since 2007.
     shao Technology Co. Ltd. Operation Manager, VP, President
     Qingdao Qianshao Indivers Technology Co. Ltd. Mechanical         Other information on the Board of Directors
     designer, Quality Dept. Manager Qingdao Qianshao Precision       and Group Management
     Machinery Company.                                               All members of the Board of Directors and Group Management
     Other assignments: -                                             can be reached at the Company’s address, Hexagon AB (publ),
     Previous assignments in the past five years: -                   P.O. Box 3692, SE-103 59 Stockholm, Sweden.
                                                                          There are no family ties between the members of the Board
     Shareholding: 99 000 shares of series B and 50 000 warrants
                                                                      of Directors and/or Group Management. No member of the
     for shares of series B.
                                                                      Board of Directors or Group Management has been convicted
                                                                      in any fraudulent offences in the past five years. Neither have
     FREDERICK LONDON, BORN 1952
                                                                      any of these persons been involved in any bankruptcy, receiver-
     General Counsel                                                  ships or liquidations in the past five years. Nor has any of them
     Employed since 2007.                                             in the past five years been the subject of any incrimination and/
     Education: B.A. (Econ.), J.D. (Law).                             or sanction by statutory or regulatory authorities (including
                                                                      designated professional bodies), or been disqualified by a court
     Work Experience: General Counsel Securitas AB.
                                                                      from acting as a Board member or executive, or otherwise been
     Other assignments: –
                                                                      banned from engaging in commercial activities.
     Previous assignments in the past five years: –                       No member of the Board of Directors or Group Manage-
     Shareholding: 3 360 shares of series B and 40 000 warrants for   ment has any private interests that could conflict with those of
     shares of series B.                                              Hexagon. As stated above, there are several members of the
                                                                      Board of Directors and Group Management with financial
                                                                      interests in Hexagon as a consequence of their holdings of
                                                                      shares and/or warrants in Hexagon. With the exception of
                                                                      Melker Schörling, Ola Rollén and Håkan Halén, who have
                                                                      undertaken not to divest their direct or indirect holdings in
                                                                      Hexagon prior to the rights issue, no members of the Board of
                                                                      Directors and Group Management have agreed to any limita-
                                                                      tions in their right to dispose their holdings in Hexagon.




74       InvItatIon to subscrIbe For shares In hexagon ab
Corporate governance

The corporate governance in Hexagon is based on Swedish legislation, primarily the
Swedish Companies Act (aktiebolagslagen), Hexagon’s Articles of Association, the
Board of Director’s internal rules, the rules and regulations of NASDAQ OMX Stock-
holm and the regulations and recommendations issued by relevant organisations. The
Company applies the Swedish Code of Corporate Governance (the “Code”). The
Code is based on the principle “comply or explain”. This means that a company which
applies the Code may deviate from individual provisions, but, if doing so, has to pro-
vide an explanation for each deviation. The overall corporate governance at Hexagon
can be described as illustrated below.


                                            SHAREHOLDERS VIA ANNUAL GENERAL MEETING



             AUDITORS                                   BOARD OF DIRECTORS                              NOMINATION COMMITTEE



          AUDIT COMMITTEE                           CEO AND GROUP MANAGEMENT                          RENUMERATION COMMITTEE



                                                             OPERATIONS




General Meetings                                                        The Nomination Committee shall consist of five members
The Annual General Meeting (or, when applicable, an Extra-          elected by the Annual General Meeting. In case a shareholder,
ordinary General Meeting) is Hexagon’s supreme executive            whom a member of the Nomination Committee represents, is
body in which all shareholders may participate. At the Annual       no longer one of the major shareholders of Hexagon, or if a
General Meeting, the Board presents the Annual Report, con-         member of the Nomination Committee is no longer employed
solidated accounts and audit report. Hexagon issues the notice      by such shareholder, or for any other reason leaves the
convening the Annual General Meeting no later than four weeks       Committee before the Annual General Meeting, the Committee
prior to the meeting. The Annual General Meeting is held in         shall be entitled to appoint another representative among the
Stockholm, Sweden, usually in the month of May. The Annual          major shareholders to replace such member. No fees are paid to
General Meeting resolves on a number of issues, such as the         the members of the Nomination Committee. In respect of the
adoption of the income statement and balance sheet, the alloca-     2011 Annual General Meeting, the Nomination Committee
tion of the Company’s profit and the discharge from liability to    comprises Chairman Mikael Ekdahl (Melker Schörling AB),
the Company for the Board members and the CEO, remunera-            Anders Algotsson (AFA Försäkring), Fredrik Nordström (AMF
tion to the Board and auditors, the principles for remuneration     Pension), Jan Andersson (Swedbank Robur fonder) and Henrik
and employment terms for the CEO and other senior execu-            Didner (Didner & Gerge Aktiefond).
tives, appointment of members and Chairman of the Board or
Directors, election of auditor and any amendments to the Arti-      Board of Directors
cles of Association, etc.                                           Composition and independence
                                                                    In accordance with the Articles of Association, the Board of
Nomination Committee                                                Directors of Hexagon shall consist of no fewer than three and
Hexagon’s Annual General Meeting resolves on procedures for         not more than nine members, elected annually by the Annual
the appointment and work of the Nomination Committee. The           General Meeting for the period until the end of the next Annual
Annual General Meeting has resolved that the Nomination             General Meeting. The Annual General Meeting 2010 elected
Committee’s assignment shall comprise the preparation and           seven members, including the CEO. Hexagon’s CFO, Vice
presentation of proposals to the shareholders at the Annual         President and General Counsel participate in the Board
General Meeting on the election of Board members, Chairman          meetings. Other Hexagon employees participate in the Board
of the Board and Chairman of the Meeting. In addition, the          meetings to make presentations on particular matters if request-
Nomination Committee presents proposals regarding appoint-          ed. Hexagon’s auditors attend the first Board meeting of the
ment of auditors, and remuneration to the Board of Directors        year and report their observations from their examination of
(including for committee work) and the auditors.                    the Group’s internal controls and financial statements.


                                                                                           InvItatIon to subscrIbe For shares In hexagon ab   75
Corporate governance




         The Board of Directors’ assessment of the members’                    Committees
     independence in relation to the Company, its management and               The Board of Directors has, within itself, established two
     major shareholders, which is shared by the Nomination Com-                committees, the Remuneration Committee and the Audit
     mittee, is presented in “Board of Directors, Group Management             Committee.
     and Auditors”. According to the requirements set out in the                   Hexagon’s Remuneration Committee is appointed by the
     Code, the majority of the Board members elected by the Gener-             Board annually, and its task is to consider issues regarding
     al Meeting must be independent in relation to the Company                 remuneration to the CEO and executives that report directly to
     and its management, and at least two of such Board members                the CEO, on behalf of the Board, and other similar issues that
     shall also be independent in relation to the Company’s major              the Board assigns the Committee to consider. The Committee
     shareholders. As evident from the table on page 72, Hexagon               has not been authorized to make any decisions of behalf of the
     complies with these requirements.                                         Board.
                                                                                   The Audit Committee is appointed annually by the Board,
     Responsibility and work                                                   and its purpose is to consider issues regarding tendering and
     The Board of Directors is responsible for determining the                 remunerating auditors on behalf of the Board, considering plans
     Group’s overall objectives, developing and monitoring the over-           for auditing and the related reporting, to quality assure the
     all strategy, deciding on major acquisitions, divestments and             Company’s financial reporting, and to meet the Company’s
     investments, and ongoing monitoring of operations. The Board              auditors on an ongoing basis to stay informed on the orienta-
     is also responsible for ongoing evaluation of management, as              tion and scope of the audit. The Audit Committee’s tasks
     well as systems for monitoring and internal control and the               include monitoring external auditors’ activities, and the
     Company’s financial position. The Board also ensures that the             Company’s internal control systems, monitoring the current
     Company’s external disclosure of information is characterized             risk situation and the Company’s financial information, and
     by openness and that it is accurate, relevant and clear. Proce-           other issues the Board assigns the Committee to consider. The
     dural rules and instructions for the Board and the CEO govern             Committee has not been authorized to make any decisions on
     issues requiring Board approval, and financial information and            behalf of the Board.
     other reporting to be submitted to the Board. The Chairman                    For information on the composition of the Board Commit-
     directs the Board’s activities to ensure that they are conducted          tees, see “Board of Directors, Management and Auditors”.
     pursuant to the Swedish Companies Act, the prevailing regula-
     tions for listed companies and the Board’s internal control               Remuneration to the Board of Directors 2009–2010
     instruments. At all scheduled Board meetings, information con-            Remuneration to the Board of Directors is resolved by the
     cerning the Group’s financial position and important events               Annual General Meeting on the proposal from the Nomination
     affecting the Company’s operations are presented.                         Committee. The tables below and on next page set forth the
                                                                               remuneration to the Board of Directors in 2009 and 2010, as
     Internal control                                                          distributed among the respective Board members. The remu-
     The responsibility of the Board of Directors for internal control         neration to the Board is fixed with no variable component. No
     is regulated in the Swedish Companies Act and in the Code,                remuneration is paid to Board members who are also employed
     which also includes requirements on annual external informa-              by the Group.
     tion disclosure concerning how internal control is organized
     insofar as it affects financial reporting. The Board of Directors
     bears the overall responsibility for internal control of the finan-
     cial reporting. The Board of Directors has established written
     formal rules of procedure that clarifies the Board of Directors’
     responsibilities and regulates the Board of Directors’ and its
     committees’ internal distribution of work.


     Remuneration to the Board of Directors 2009 (SEK)

                                                                                                 Audit       Remuneration
     Name                            Position                              Annual fee        Committee         Committee                 Total
     Melker schörling                chairman                                650 000                  –             75 000            725 000
     Mario Fontana                   Member                                  350 000            100 000                  –            450 000
     ulf henriksson                  Member                                  350 000                  –                  –            350 000
     gun nilsson                     Member                                  350 000            150 000             50 000            550 000
     ola rollén                      Member, President and ceo                      –                 –                  –                  –
     Total                                                                  1 700 000           250 000            125 000           2 075 000

76       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                            Corporate governance




Remuneration to the Board of Directors 2010 (SEK)

                                                                                         Audit         Remuneration
Name                     Position                                  Annual fee        Committee           Committee                          Total
Melker schörling         chairman                                    650 000                   –                 75 000                  725 000
Mario Fontana            Member                                      350 000             100 000                        –                450 000
ulrika Francke           Member                                      350 000                   –                        –                350 000
ulf henriksson           Member                                      350 000                   –                        –                350 000
gun nilsson              Member                                      350 000             100 000                 50 000                  500 000
ola rollén               Member, President and ceo                          –                  –                        –                        –
ulrik svensson           Member                                      350 000             150 000                        –                500 000
Total                                                               2 400 000            350 000                125 000                2 875 000




External auditors                                                          The CEO has appointed a Group Management comprising
The Annual General Meeting appoints the Company’s auditors.            heads of application areas, heads of geographical regions and
On behalf of the shareholders, the auditors’ task is to examine        certain Group staff functions, a total of eight persons. Group
the Company’s Annual Report and accounting records and the             Management is responsible for overall business development,
administration of the Board of Directors and the CEO. In addi-         and apportioning financial resources between the business
tion to the audit, the auditors occasionally have other assign-        areas, as well as matters involving financing and capital struc-
ments, such as work relating to acquisitions. Hexagon’s audi-          ture. Where necessary, specialist know-how from leading
tors normally attends the first Board meeting each year, at            experts is also commissioned.
which the auditors report observations from the examination of             Regular management meetings constitute the Group’s
the Group’s internal controls and the annual financial state-          forum for implementing overall controls down to a particular
ments. Moreover, the auditors report to and regularly meet with        business operation, and in turn, down to individual company
the Audit Committee. In addition, the auditors participate in          level.
the Annual General Meeting to present the auditors’ report,
which describes the audit work and observations made.                  Remuneration
    The auditors are remunerated according to agreement. In            Principles
the past three fiscal years, remuneration has been paid to Ernst       The following principles for remuneration to senior executives
& Young AB in the order of 93 MSEK in total, of which 28               in the Group were adopted by the Annual General Meeting
MSEK related to 2009. In addition to auditing (20 MSEK), the           2010. The guidelines for the remuneration of senior executives,
remuneration for 2009 includes remuneration for other services         essentially entail that such remuneration should comprise a
(8 MSEK).                                                              basic salary, variable remuneration, other benefits and pension,
    For more information regarding Hexagon’s auditors, see             and that all in all this remuneration shall be competitive and in
“Board of Directors, Group Management and Auditors”.                   accordance with market practice. The variable remuneration
                                                                       shall be maximized in relation to the basic salary, tied to such
CEO and group management                                               performance that the relevant individual may influence and
The CEO is responsible for leading and controlling Hexagon’s           based on the outcome in relation to individual targets. The
operations in accordance with the Swedish Companies Act,               Board shall annually consider whether a share- or share price
other legislation and regulations, applicable rules for listed         related incentive program shall be proposed to the Annual
companies, including the Code, the Articles of Association and         General Meeting. The executive must normally provide six-
the instructions and strategies determined by the Board. The           months notice of termination of employment. If the Company
CEO shall ensure that the Board is provided with objective,            terminates the executive’s employment, the period of notice and
detailed and relevant information required in order for the            severance pay should not exceed a total of 24 months. Pension
Board to make well-informed decisions. Furthermore, the CEO            rights shall be either benefit or fee-based, or a combination of
is responsible for keeping the Board informed of the Company’s         both, with an individual pension age, however, not lower than
development between Board meetings.                                    60 years.




                                                                                              InvItatIon to subscrIbe For shares In hexagon ab       77
Corporate governance




     Remuneration to Group Management 2009                                                         declined salary increases as well as bonus payments in consid-
     Remuneration to CEO and other senior executives comprises                                     eration to the fact that the Group at the same time were carry-
     basic salary, variable remuneration, other benefits and pension.                              ing out a cost reduction program. For 2008 and 2009, remu-
     In 2009, the President and CEO and the other senior executives                                neration was paid as per the table below.


                                                                                   Variable                 Other                                      Other
     SEK 000s                            Year                Basic salary      remuneration               benefits 1)            Pension 2)      remuneration                    Total
     President and ceo                   2008                     10 135                  4 000                    –                2 027                         –            16 162
                                         2009                     10 135                       –                   –                2 027                         –            12 162
     other senior executives3)           2008                       9 619                 4 175                 149                 1 927                         –            15 870
                                         2009                     17 666                       –              1 756                 2 013                         –            21 435

     1) other benefits comprise company car and benefits from free rent.
     2) the President and ceo and the other members of the group Management do not have any amounts deposited for pension obligations since they have fee-based, and not benefit based,
        pension.
     3) three people during 2008 and five people during 2009 (Jürgen Dold, norbert hanke and Li hongquan are members of the group Management since 1 april 2010, while one person has
        left the group Management since 2009).




     Severance pay                                                                                 Incentive programs
     The notice period for CEO is six months. Only if the CEO’s                                    In 2007 Hexagon implemented a warrant program for senior
     employment is terminated by the Company will severance pay,                                   executives and key employees in the Group by means of an issue
     corresponding to 18 months’ basic salary, be paid. No salary                                  of 2 500 000 warrants. 1 391 000 of the warrants have been
     during the period of notice will be paid in addition to the sever-                            transferred to approximately 80 senior executives and key
     ance pay. Notice periods for other senior executives are depend-                              employees identified by the Board, and the remaining warrants
     ing on age and correspond to 6 to 18 months. During the notice                                have been reserved for future recruitment of senior executives
     period, only basic salary is payable.                                                         and key employees in the Group. The outstanding incentive
                                                                                                   programs are described in further detail under “Share capital
                                                                                                   and ownership structure”.




78        InvItatIon to subscrIbe For shares In hexagon ab
Share capital and ownership structure

Share information                                                     Preferential right to new shares, etc.
Under its current Articles of Association, the Company’s share        If the Company issues new shares of both series A and series B
capital shall be not less than 400 000 000 SEK and not more           in a cash issue or a set-off issue (kvittningsemission), the hold-
than 1 600 000 000 SEK, divided into not fewer than                   ers of shares of series A and shares of series B, as the case may
200 000 000 shares and not more than 800 000 000 shares.              be, have preferential right to subscribe for new shares of the
The General Meeting of Hexagon resolved on 24 November                same series in proportion to the number of shares held prior to
2010 to replace SEK with EUR as the reporting currency for the        the rights issue (primary preferential right). Shares not sub-
Group. The change is expected to become effective as per 1 Jan-       scribed for by virtue of such primary preferential right are
uary 2011. For more information see “Capitalisation and other         offered to all shareholders for subscription (secondary prefer-
financial information of Hexagon – Currency exposure”.                ential right). If the shares so offered are insufficient to cover the
    The Company may issue two series of shares: shares of             subscription by virtue of subsidiary preferential right, the shares
series A and shares of series B (see “Voting rights” below).          are distributed among the subscribers in proportion to the
Shares of series A may be issued in a quantity corresponding to       number of shares they already own, and, to the extent this can-
no more than 50 percent and shares of series B in a quantity          not be done, by drawing of lots. If the Company decides,
corresponding to no more than 95.6 percent of the shares in the       through a cash issue or a set-off issue, to issue shares of one
Company. The Company’s registered share capital as of the date        series only, such shares shall be offered to all shareholders for
of this prospectus is 531 039 540 SEK represented by                  subscription, irrespective of whether they hold shares of series
265 519 770 shares, of which 11 812 500 shares are of series A        A or shares of series B, in proportion to the number of shares
and 253 707 270 shares are of series B (including 1 152 547           already held by such shareholders. If the Company issues war-
treasury shares of series B held by Hexagon). Each share has a        rants or convertibles through a cash issue or a set-off issue, the
quota value of 2 SEK. The shares in Hexagon have been issued          shareholders have the same preferential right to subscribe for
in accordance with Swedish legislation, are fully paid and are        warrants or convertibles as if such new shares as the warrants
denoted in SEK. A shareholder’s rights can only be changed in         or convertibles pertain to were issued. If the Company’s share
accordance with the procedure stated in the Swedish Compa-            capital is increased by way of a bonus issue (fondemission), new
nies Act (2005:551). The forthcoming rights issue will, if fully      shares of series A and series B are to be issued in proportion to
subscribed for, result in an increase in the number of shares in      the number of shares of the respective series already issued. In
the Company from a total of 265 519 770 shares to a total of          such case, old shares of a certain series shall carry the right of
353 642 177 shares, corresponding to an increase of 33 per            new shares of the same series.
cent. For shareholders who refrain from subscribing for shares
in the forthcoming rights issue, there will be a dilution effect of   Right to dividend and liquidation proceeds
a total of not more than 88 122 407 newly issued shares, corre-       All shares carry equal rights to dividends as well as to the Com-
sponding to 25 per cent of the share capital in the Company           pany’s assets and potential surplus in the event of liquidation.
after the rights issue.

Certain rights attached to the shares
Voting rights
Each series A share entitles the holder to ten votes and each
series B share entitles the holder to one vote. At General Meet-
ings of shareholders each qualified voter is entitled to vote for
the full number of shares of series A and series B that such
shareholder holds, or represents, in the Company, without
limitation of voting powers.




                                                                                               InvItatIon to subscrIbe For shares In hexagon ab   79
Share capital and ownership structure




     Share capital development
                                                               Nominal value,              A shares,           B shares,            A shares,            B shares, Share capital,
     Year            Transaction                                        SEK                  change              change                 total                total          SEK
     2000                                                                      10                     –                   –           840 000          13 953 182         147 931 820
     2002            rights issue                                              10            210 000            3 488 295           1 050 000          17 441 477         184 914 770
     2004            new issue, options exercised                              10                     –            10 170           1 050 000          17 451 647         185 016 470
     2005            new issue, options exercised                              10                     –           722 635           1 050 000          18 174 282         192 242 820
     2005            bonus issue                                               12                     –                   –         1 050 000          18 174 282         230 691 384
     2005            split 3:1                                                   4         2 100 000          36 348 564            3 150 000          54 522 846         230 691 384
     2005            new issue, options exercised                                4                    –           154 500           3 150 000          54 677 346         231 309 384
     2005            Private Placement1)                                         4                    –       11 990 765            3 150 000          66 668 111         279 272 444
     2005            Private Placement1)                                         4                    –            82 000           3 150 000          66 750 111         279 600 444
     2006            rights issue                                                4           787 500          16 687 527            3 937 500          83 437 638         349 500 552
     2006            new issue, options exercised                                4                    –           508 933           3 937 500          83 946 571         351 536 284
     2006            compulsory redemption, Leica
                     geosystems                                                  4                    –           198 635           3 937 500          84 145 206         352 330 824
     2006            new issue, options exercised                                4                    –           309 119           3 937 500          84 454 325         353 567 300
     2007            new issue, options exercised2)                              4                    –            58 170           3 937 500          84 512 495         353 625 470
     2007            bonus issue                                                 6                    –                   –         3 937 500          84 512 495         530 699 970
     2007            split 3:1                                                   2         7 875 000        169 024 990            11 812 500         253 537 485         530 699 970
     2008            new issue, options exercised2)                              2                    –           169 785          11 812 500         253 707 270         531 039 540
     2008            repurchase of treasury shares                               2                    –       –1 311 442           11 812 500         252 395 828         531 039 540
     2009            options exercised                                           2                    –           138 825          11 812 500         252 534 653         531 039 540
     2010            options exercised                                           2                    –            20 070          11 812 500         252 554 723         531 039 540
     2010            Pending rights issue                                        2         3 937 500          84 184 907           15 750 000         336 739 630         707 284 354

     1) Issues in kind in connection with the acquisition of Leica geosystems whereby shares in Leica geosystems were contributed in exchange for b-shares in the company.
     2) Issue in kind in connection with annual block exercise in Leica geosystems’ option programme whereby shares in Leica geosystems received by the programme participants based on
        the exercise of options were contributed in exchange for b-shares in the company.




80        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                                 Share capital and ownership structure




Ownership structure                                                           issue, exercise a significant influence over the Company in
Hexagon’s largest shareholder as per 30 September 2010 was                    matters that are subject to the shareholders’ approval. Such
Melker Schörling AB with approximately 29.6 per cent of the                   influence is, however, limited by the provisions of the Swedish
share capital and 49.8 per cent of the votes in the Company.                  Companies Act. The Company’s largest shareholders, owner-
Melker Schörling AB has undertaken to subscribe for shares                    ship structure and the distribution of the ownership divided by
corresponding to the company’s pro rata share in the rights                   country, according to information from Euroclear Sweden as
issue, see “Legal considerations and supplementary informa-                   per 30 September 2010 (with subsequent changes known to the
tion – Subscription undertakings and guarantees”. Melker                      Company) are illustrated below.
Schörling AB can therefore, both before and after the rights




Largest shareholders, 30 september 20101)
                                                                                                                           Share                    Voting
Owner/manager/deposit bank                                                  A shares              B shares             capital, %                rights, %
Melker schörling ab                                                        11 812 500            66 374 551                    29.6                    49.8
swedbank robur Funds                                                               0             15 123 740                     5.7                        4.1
columbia Wanger asset Management                                                   0             11 418 570                     4.3                        3.1
aMF Pension Funds                                                                  0              9 451 903                     3.6                        2.6
ramsbury Invest ab                                                                 0              9 312 000                     3.5                        2.5
aFa Insurance                                                                      0              7 242 247                     2.7                        2.0
Didner & gerge aktiefond                                                           0              6 088 814                     2.3                        1.6
nordea Investment Funds sweden                                                     0              5 637 343                     2.1                        15
seb Investment Management                                                          0              4 233 705                     1.6                        1.1
First aP Fund                                                                      0              3 608 175                     1.4                        1.0
Total 10 largest shareholders                                              11 812 500           138 491 048                    56.9                    69.2
other                                                                              0            114 063 675                    43.1                    30.8
Total number of shares excluding Hexagon’s treasury shares                 11 812 500           252 554 723                   100.0                   100.0

source: euroclear sweden.

1) excluding hexagon’s holding of 1 152 547 treasury shares of series b.




Ownership structure, 30 september 20101)
                                                                                Number of                   Number of                      Number of
Holding per shareholder                                                       shareholders        outstanding shares A           outstanding shares B
             1 – 500                                                                11 725                                0                      2 007 032
         501 – 1 000                                                                    2 952                             0                      2 482 108
        1 001 – 2 000                                                                   1 846                             0                      2 875 516
        2 001 – 5 000                                                                   1 540                             0                      5 061 457
        5 001 – 10 000                                                                   627                              0                      4 628 043
      10 001 – 20 000                                                                    347                              0                      4 879 722
     20 001 – 50 000                                                                     208                              0                      6 325 269
     50 001 – 100 000                                                                     83                              0                      6 061 601
    100 001 – 500 000                                                                    122                              0                    28 752 724
    500 001 – 1 000 000                                                                   34                              0                    25 076 651
  1 000 001 – 5 000 000                                                                   36                              0                    67 904 947
  5 000 001 – 10 000 000                                                                   4                              0                    30 125 102
10 000 001 –                                                                               1                  11 812 500                       66 374 551
        Total                                                                       19 525                    11 812 500                      252 554 723

source: euroclear sweden.

1) excluding hexagon’s holding of 1 152 547 treasury shares of series b.




                                                                                                        InvItatIon to subscrIbe For shares In hexagon ab         81
Share capital and ownership structure




     Ownership by country, 30 september 20101)                                                                    Hexagon. Treasury shares may, according to the Swedish
     Country                                                     Proportion of total number of shares, %          Annual Accounts Act (1995:1554), not be included as an asset
     sweden                                                                                           73.9        in the Company’s balance sheet.
     usa                                                                                              10.5
     united Kingdom                                                                                    6.7        Share performance
     Luxemburg                                                                                         2.6        Hexagon’s series B share is listed on NASDAQ OMX Stock-
     Portugal                                                                                          1.5        holm, previously the Stockholm Stock Exchange, since 1988. It
     switzerland                                                                                       1.4        is traded on NASDAQ OMX Stockholm’s Large Cap list. The
     germany                                                                                           0.7        Hexagon series B share is also listed on the SIX Swiss Exchange.
     other countries                                                                                   2.8        The chart below illustrates the share price development and the
     Total                                                                                           100.0        number of shares traded in Hexagon on NASDAQ OMX Stock-
     source: euroclear sweden.
                                                                                                                  holm during the period from 1 January 2005 up to and includ-
     1) excluding hexagon’s holding of 1 152 547 treasury shares of series b.
                                                                                                                  ing 29 October 2010.

                                                                                                                  Central securities depository affiliation
     Treasury shares
                                                                                                                  Hexagon’s Articles of Association contains a record date provi-
     Hexagon’s Annual General Meeting 2010 authorized the Board
                                                                                                                  sion and the Company’s shares are cleared through the electronic
     of Directors to resolve on the acquisition and transfer of shares
                                                                                                                  securities system operated by Euroclear Sweden, the Swedish
     of series B in the Company for the purpose of giving the Board
                                                                                                                  central securities depository, meaning that the Company’s share
     the opportunity to adjust the Company’s capital structure and
                                                                                                                  register is maintained by Euroclear Sweden (Euroclear Sweden
     of enabling the financing of acquisitions. The authorization for
                                                                                                                  AB, P.O. Box 7822, SE-103 97 Stockholm, Sweden). No share
     repurchase also aims at enabling the Company to utilize repur-
                                                                                                                  certificates are issued or will be issued with respect to the new
     chased treasury shares in order to cover the Company’s future
                                                                                                                  shares. The shares of series B have ISIN code SE0000103699.
     undertakings to deliver shares in accordance with the warrant
     program resolved upon by the Extraordinary General Meeting
                                                                                                                  Shareholder agreements
     held in December 2007. The authorization totals repurchase
                                                                                                                  To the knowledge of Hexagon’s Board of Directors, no share-
     and transfers of a maximum of ten percent of outstanding
                                                                                                                  holder agreements or equivalent agreements exist between
     shares in the Company. The total number of treasury shares
                                                                                                                  shareholders in Hexagon with the objective of creating a joint
     held by Hexagon as per 30 September 2010 was 1 152 547
                                                                                                                  influence over the Company. To the best of the Board of Direc-
     series B shares (each with a quota value of 2.00 SEK), corre-
                                                                                                                  tors’ knowledge, there are no agreements or equivalent arrange-
     sponding to 0.45 per cent of the total number of shares in
                                                                                                                  ments that may lead to a change in control over the Company.



                                                  160                                                                                                             50 000 

                                                                                                                                                                  45 000 
                                                  140 
                                                                                                                                                                  40 000 
                                                  120 
                Price _ Share of series B, SEK 




                                                                                                                                                                  35 000 
                                                  100 
                                                                                                                                                                  30 000 
                                                                                                                                                                            Volyme 




                                                   80                                                                                                             25 000 

                                                                                                                                                                  20 000 
                                                   60 
                                                                                                                                                                  15 000 
                                                   40 
                                                                                                                                                                  10 000 
                                                   20 
                                                                                                                                                                  5 000 

                                                    0                                                                                                            0 
                                                         2005            2006              2007               2008              2009            2010 

                                                                                 Traded number of shares in 1 000s per month 
                                                                                  Hexagon B                  NASDAQ OMX Stockholm 




82        InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                     Share capital and ownership structure




Dividends and dividend policy                                       Incentive program
Future dividends will be adjusted in line with, for example,        Hexagon’s Extraordinary General Meeting in December 2007
Hexagon’s earnings and equity ratio, financial position and         resolved on the implementation of an incentive programme
future development possibilities. The dividend policy of the        through a directed issue of 2 500 000 warrants to the wholly-
Group provides that, over the long-term, dividends should com-      owned subsidiary Hexagon Förvaltning AB. The issue price was
prise 25–35 per cent of earnings per share after tax, assuming      20 SEK per warrant. Each warrant entitles the holder to sub-
that the Company satisfies its equity ratio objective.              scribe for one series B share in Hexagon during the period from
    Dividends are resolved upon by the General Meeting and          2 July 2011 up to and including 2 January 2012. Under the
the payment is administered by Euroclear Sweden. Dividends          terms and conditions of the warrants, the price to be paid upon
may only be made if the Company, after such dividends, still        subscription for new shares (the exercise price) is based on a
enjoys full coverage of its restricted equity and further to the    market valuation upon allotment, considering the issue price
extent that such dividends appear justified taking into consid-     and the exercise period using the Black-Scholes model. In April
eration (i) the demands with respect to size of shareholders’       2008, 1 391 000 options, with the exercise price established to
equity which are imposed by the nature, scope and risks associ-     177.00 SEK per share, were allotted to 80 management and
ated with the operations, and (ii) the Company’s need to            other key staff in the Group. Remaining warrants have been
strengthen its balance sheet, liquidity and financial position in   reserved for future recruitment of managment and key employ-
general (the so-called prudence rule). As a general rule, the       ees. Following the distribution of the shares in Hexpol AB in
shareholders may not decide upon larger dividends than those        2008, the number of series B shares that each warrant entitles
proposed or approved by the Board of Directors.                     to was recalculated to 1.04 and the exercise price to 170.20
    The right to dividends vests in any person who is registered    SEK.
as a shareholder in the share register maintained by Euroclear          Upon full exercise of Hexagon’s warrant program, the
Sweden on the record date as determined by the General Meet-        dilutive effect would be 1.0 per cent of the current share capital
ing. If a shareholder cannot be contacted through Euroclear         and 0.7 per cent of the current number of votes in Hexagon.
Sweden, the shareholder’s claim on Hexagon with respect to the
dividend remains and is limited only by the statute of limita-
tions rule (10 years). Where the statute of limitations applies,
the dividend amount accrues to Hexagon. Neither the Swedish
Companies Act or Hexagon’s Articles of Association contain
any restriction on the right to dividends with respect to share-
holders domiciled outside of Sweden. Other than in case of pos-
sible restrictions in connection with bank or clearing systems in
the concerned jurisdictions, payments of dividends to such
shareholders are made in the same way as to other shareholders
domiciled in Sweden. However, in relation to shareholders who
are subject to restricted taxation in Sweden, Swedish withhold-
ing tax is normally payable, see “Certain tax considerations in
Sweden”.




                                                                                            InvItatIon to subscrIbe For shares In hexagon ab   83
     Articles of association and other
     information
     Articles of Association                                                from the pre-emptive rights of the shareholders. In the event of
     §1                                                                     an increase of the share capital through a bonus issue of shares,
     The corporate name of the company is Hexagon Aktiebolag.               new shares of each series shall be issued in proportion to the
     The company is a public limited liability company.                     number of shares already issued of that series. In such an event,
                                                                            existing shares of a certain series shall carry pre-emptive rights
     §2                                                                     to new shares of the same series. The aforementioned shall not
     The object of the company’s operations is to own and manage            constitute any restriction on the possibility to issue shares of a
     shares in industrial, trade and service companies and to own           new series through a bonus issue, subject to required amend-
     and manage real property, securities, and to manage adminis-           ments to the Articles of Association. All shares shall carry equal
     trative operations for the subsidiaries as well as to carry on         rights to the company’s assets and profit.
     other operations compatible therewith.
                                                                            §5
     §3                                                                     At the General Meeting a share of series A entitles to ten (10)
     The company shall have its registered office in Stockholm in the       voting rights and a share of series B entitles to one (1) voting
     county of Stockholm.                                                   right.

     §4                                                                     §6
     The share capital of the company shall be not less than four           The Board of Directors shall consist of at least three (3) but not
     hundred million SEK (400 000 000) and not more than one                more than nine (9) Directors. The Directors are appointed by
     billion six hundred million SEK (1 600 000 000). The number            the General Meeting and have a term of office up to and includ-
     of shares issued shall be not less than two hundred million            ing the first Annual General Meeting held the year after the
     (200 000 000) and not more than eight hundred million                  election of the Director.
     (800 000 000). Shares may be issued in two series, series A
     (A-share) and series B (B-share). If the shares are issued in two      §7
     series, series A shares shall not exceed 50 per cent and series B      For the audit of the management by the board and the manag-
     shares shall not exceed 95.6 per cent of the total amount of out-      ing director and the company’s accounts, one (1) or two (2)
     standing shares from time to time. Should the company resolve          auditors, with one (1) or two (2) deputy auditors, shall be elect-
     on a cash issue or a set-off issue of new shares of series A and       ed at a General Meeting. Alternatively, an authorized public
     series B, a holder of shares of series A and series B shall have a     accounting firm may be appointed.
     pre-emptive right to subscribe for new shares of the same series
     in proportion to the number of shares previously held by that          §8
     shareholder (primary preferential right). Shares not subscribed        The chairman of the board or whomever the board appoints
     for with primary preferential right shall be offered for subscrip-     thereto shall open the General Meeting, after which the present
     tion to all shareholders (secondary preferential right). If the        shareholders who are entitled to vote through open voting shall
     number of shares issued is not sufficient to cover the number of       elect a chairman to preside over the meeting.
     shares subscribed for with secondary preferential right, the
     shares shall be distributed among the subscribers in proportion        §9
     to the number of shares they previously held and, to the extent        The company’s financial year shall be the calendar year.
     that is not possible, by drawing lots. Should the company
     resolve on a cash issue or a set-off issue of new shares of series A   § 10
     only, or series B only, all shareholders shall, no matter if their     An Annual General Meeting shall be held within six months of
     shares are shares of series A or series B, have a pre-emptive right    the expiry of each financial year. The following items of busi-
     to subscribe for new shares in proportion to the number of             ness shall be dealt with at the Annual General Meeting:
     shares previously held. Should the company decide to issue war-        1) Election of a chairman to preside over the meeting
     rants or convertibles through a cash issue or a set-off issue, the     2) Preparation and verification of the voting list
     shareholders shall have pre-emptive rights to subscribe for war-       3) Approval of the Agenda
     rants as if the issue was in respect of the shares that may be         4) Election of one or two persons to verify and sign the
     subscribed for by exercising the warrants and to subscribe for             minutes of the meeting
     convertibles as if the issue was in respect of the shares that the     5) Decision as to whether the meeting has been properly con-
     convertibles may be exchanged against. The aforementioned                  vened
     shall not constitute any restriction on the possibility to resolve     6) Presentation of the annual report and the auditors’ report
     on a cash issue or a set-off issue of new shares with deviation            and the group annual report and the group auditors’ report



84       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                              Articles of association and other information




7) Decision to adopt the profit and loss statement, the balance      Change of reporting currency and manner for
    sheet, the group profit and loss statement and the group         convening notices
    balance sheet                                                    The General Meeting of Hexagon on 24 November 2010
8) Decisions on appropriation of the company’s profit or loss        resolved to change Hexagon’s accounting currency from SEK to
    according to the adopted balance sheet                           EUR as from 1 January 2011. Hexagon has also decided to use
9) Decisions as to whether to discharge the Directors and the        EUR as reporting currency in the Group as from 1 January
    Managing Director from liability                                 2011, meaning that the financial reports will be presented in
10) Decision on the number of Directors and deputy Directors         EUR. As a result of this change, the following addition to Sec-
    and, when required, auditors and deputy auditors                 tion 4 of the Articles of Association (to be included as a new
11) Decision on Directors’ fees, auditors’ fees and deputy audi-     first sentence in Section 4) was resolved: “The company shall
    tors’ fees                                                       have euro as its accounting currency and the share capital shall
12) Election of Directors                                            be denominated in euro.” For more information, see “Capitali-
13) Election, whenever required, of one or two auditors and          sation and other financial information of Hexagon – Currency
    one or two deputy auditors                                       exposure”.
14) Any other item of business resting with the Annual General            At the Annual General Meeting 2009, it was resolved to
    Meeting in accordance with the Companies Act or the Arti-        change the provision regarding convening notices to General
    cles of Association                                              Meetings in section 11 of the Articles of Association, primarily
                                                                     to the effect that a notice convening a General Meeting shall be
§ 11                                                                 published in Post- och Inrikes Tidningar (the Swedish Official
Convening notice of General Meetings shall be published in           Gazette) and on the Company’s website and that it shall be
Dagens Industri and the Swedish Official Gazette. Convening          announced in Dagens Industri that such a notice has been
notice of Annual General Meetings as well as of Extraordinary        issued. The Annual General Meeting’s resolution was condi-
Shareholders Meetings the agenda of which comprises proposed         tional upon the provisions in the Swedish Companies Act relat-
changes in the company’s Articles of Association shall be pub-       ing to the manner for convening General Meetings being
lished not earlier than six (6) weeks but not later than four (4)    amended in such a way that the new wording of section 11
weeks before such Shareholders Meeting. The convening notice         becomes compatible with the said Act. Such a change in the
of other Extraordinary Shareholders Meetings shall be pub-           Swedish Companies Act is expected to enter into force on 1 Jan-
lished not earlier than six (6) weeks but not later than two (2)     uary 2011, whereupon Hexagon intends to apply for registra-
weeks before such Shareholders Meeting. Other messages to the        tion of the new wording with the Swedish Companies Registra-
shareholders shall be published as stated above or delivered to      tion Office.
the shareholders by mail at the address recorded in the share
register.                                                            Other corporate information
                                                                     Hexagon’s corporate ID number is 556190-4771 and the regis-
§ 12                                                                 tered office of the Company is located in Stockholm. The Com-
To attend a General Meeting the shareholder must be recorded         pany was incorporated in Sweden on 29 August 1975 and was
in a transcript or other presentation of the complete share          registered with the Swedish Companies Registration Office on
register relating to facts recorded five (5) weekdays prior to the   25 September 1975. The Company has conducted its business
General Meeting and must notify the company of his/her inten-        since that time. The Company is a public limited liability com-
tion to attend the Meeting not later than 12.00 hrs on the date      pany regulated by the Swedish Companies Act (2005:551).
stated in the convening notice. This day must never be a Sun-            The Articles of Association currently in force were adopted
day, public holiday, Saturday, Midsummer Eve, Christmas Eve          by the Annual General Meeting held on 2 May 2007.
or New Year’s Eve, nor may this day fall earlier than five week-
days before the General Meeting.

§ 13
The shares of the company shall be registered in a record day
register in accordance with the Financial Instruments Accounts
Act (1998:1479).




                                                                                            InvItatIon to subscrIbe For shares In hexagon ab   85
     Legal considerations and supplementary
     information
     Material agreements                                                      For debt diversification and refinancing risk purposes,
     Customers and suppliers                                              Hexagon issued a 2 000 MSEK five year bond in the fourth
     Hexagon’s customer and supplier contracts are related to the         quarter of 2009. The bond was placed with a Swedish institu-
     continuing operations. The Group does not depend on any sin-         tional investor.
     gle supplier. A single supplier interruption could entail a tempo-       All of the above financing agreements include standard cov-
     rary decline in sales or increased costs for the individual Group    enants and terms. For more detailed information regarding the
     company concerned, but is not assessed to result in any material     debts and borrowings of the Group, see “Capitalisation and
     consequences for the Group as a whole as there are essentially       other financial information of Hexagon”.
     always alternative suppliers. Long-term customer contracts
     historically have not been common in the industries in which         Acquisitions and divestments
     Hexagon is active and the customer contracts relatively often        During the past two years, Hexagon has conducted three acqui-
     contain short notice periods for termination. However,               sitions of material importance to the Group.
     Hexagon’s business is characterised by solid customer relation-           In July 2010, Hexagon entered into an agreement to acquire
     ships, which to a certain extent offers Hexagon the possibility      the US based software provider Intergraph. The acquisition was
     to perceive and react to changes in customer behaviour and           completed on 28 October 2010. The acquisition of Intergraph
     preferences. Furthermore, Hexagon is not dependent on any            will in part be financed by the proceeds from the rights issue.
     single customer contract within any of the business areas, as the    For more information, see “Description of Intergraph”.
     business is highly diversified.                                           In December 2009, Hexagon acquired all outstanding assets
                                                                          and intellectual property of the German companies Mahr
     Credit agreements                                                    Multisensor GmbH and Mycrona GmbH within the vision
     In order to finance the acquisition of Intergraph and to refinance   metrology industry.
     the Company’s 1 000 MEUR revolving credit facility, Hexagon               In October 2009, Hexagon acquired the Spatial Systems
     entered into a 900 MUSD and up to 1 000 MEUR term revolv-            division of the American company Loyola Enterprises Inc.
     ing credit facilities agreement, the Long Term Facilities Agree-
     ment, and a 1 225 MUSD Bridge Term Credit Facilities Agree-          Licensing agreement
     ment, the Bridge Facilities Agreement, with a syndicate of banks     Hexagon’s subsidiary Leica Geosystems does not own the trade-
     in July 2010. The Long Term Facilities Agreement forms the           mark Leica, but has a global right to use it pursuant to a licens-
     foundation in the Group’s financing and is intended to meet the      ing agreement with the trademark owner Leica Microsystems
     Group’s ongoing financial requirements. The facilities provided      IR GmbH. For the right to use the trademark (as well as the
     under the Long Term Facilities Agreement mature in July 2015.        company name) Leica Geosystems pays an annual royalty. The
         The Bridge Facilities Agreement consists of two facilities       licensing agreement has a validity period which extends until
     which mature on 6 July 2011, although Hexagon has the option         2096.
     to extend the maturity date of one of these, corresponding to
     375 MUSD, by one year. The Bridge Facilities Agreement is
     intended to be refinanced with the proceeds from the rights
     offering and a subsequent bond issue.




86       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                     Legal considerations and supplementary information




                                                                            Subscription                                 Guarantee                       Total
                                                                     undertaking (priority                             undertaking,             undertaking,
                                              No. of current            right), proportion          Guarantee          proportion of            proportion of
Shareholder                                          shares                of rights issue         undertaking          rights issue             rights issue
Melker schörling ab1)                  11 812 500 a shares
                                       66 374 551 b shares                         29.58%                      –                      –                29.58%
ramsbury Invest ab2)                     9 312 000 b shares                         3.52%     1 018 589 278 seK               15.62%                   19.14%
ola rollén3)                             2 801 152 b shares                         1.06%                      –                      –                  1.06%
håkan halén3)                            1 054 441 b shares                         0.40%                      –                      –                  0.40%
Total                                    91 354 644 shares                         34.56%     1 018 589 278 SEK               15.62%                   50.18%
1) birger Jarlsgatan 13, 4 tr., se-111 45 stockholm, sweden.
2) se-106 38 stockholm, sweden.
3) May be reached at c/o hexagon ab, P.o. box 3692, se-103 59 stockholm, sweden.




Subscription and guarantee undertakings                                              Legal and arbitration proceedings
Subscription and guarantee undertakings                                              The Group conducts operations in several countries and, in
Four of Hexagon’s major shareholders, together holding shares                        connection with ongoing operations, disputes with and claims
corresponding to 53.3 per cent of the votes and 34.6 of the                          against the companies of the Group arise from time to time.
share capital in Hexagon, have undertaken to subscribe for and                       Hexagon considers that the disputes currently in progress are in
guaranteed subscription of, respectively, a total of approxi-                        all material respects covered by the Group’s insurance or that
mately 50.2 per cent of the new shares. Melker Schörling AB,                         provisions corresponding to the assessed risk have been made.
Ramsbury Invest AB, Ola Rollén and Håkan Halén have under-                               Hexagon has not been party to any legal or arbitration pro-
taken to subscribe for shares corresponding to their respective                      ceedings (including any such proceedings which are pending or
pro rate shares in the right issue. In addition, Ramsbury Invest                     threatened of which Hexagon is aware), during a period cover-
AB has undertaken to subscribe for shares corresponding to a                         ing the last twelve months which may have, or have had in the
further 15.6 per cent of the rights issue. Subscription in relation                  recent past, significant effects on the Company’s or the Group’s
hereto be made during the subscription period. Hexagon shall                         financial position or profitability.
pay a fee for the guarantee amounting to 2.5 per cent of the
guaranteed amount, or approximately 25 464 732 SEK.                                  Related party transactions
    Melker Schörling AB, Ramsbury Invest AB, Ola Rollén and                          When Group companies deliver products or provide services to
Håkan Halén have also undertaken not to reduce their holdings                        other Group companies, such transactions are performed at
in Hexagon prior to the registration of the current rights issue                     what Hexagon considers to be market price and market terms.
with the Swedish Companies Registration Office.                                      Intra-group transactions and balance sheet items are eliminated
                                                                                     in connection with the consolidation of the Group’s accounts.
Non-secured undertakings                                                                 The Group’s holdings in associated companies and receiva-
The subscription and guarantee undertakings described above                          bles from and liabilities to associated companies are, and have
are not secured. Consequently there is a risk that one or more of                    during the period comprised by the historical financial informa-
the relevant shareholders fail to fulfill their respective undertak-                 tion been, immaterial. There have been no significant transac-
ings. See “Risk Factors – Risks related to the share and the                         tions between Hexagon and its associated companies. Similarly,
rights issue”.                                                                       there have been no significant transactions between Hexagon
                                                                                     and Melker Schörling AB (or the companies through which
Total undertakings                                                                   Maths O. Sundqvist previously held shares in Hexagon).
To summarize, the subscription and guarantee undertakings                                As stated above under “– Subscription and guarantee under-
total 50.2 per cent of the rights issue, as further detailed in the                  takings”, certain major shareholders in Hexagon have under-
table above. All undertakings were entered into on 24 June                           taken, in relation to Hexagon, to subscribe for shares in the
2010.                                                                                current rights issue.
                                                                                         For information on remuneration to the members of the
                                                                                     Board of Directors and Group Management, see “Board of
                                                                                     Directors, Group Management and Auditors”.




                                                                                                            InvItatIon to subscrIbe For shares In hexagon ab     87
Legal considerations and supplementary information




     Significant subsidiaries etc.                                             Incorporation through reference
     The Company is the parent of the Group, which consists of 138             The financial reports of the Company from 2007, 2008 and
     operating companies in 36 countries. The Group’s holdings of              2009 and from January – September 2010 form part of this
     associated companies are insignificant. The schedule below sets           prospectus and are to be read as such. The financial reports
     out the principal Group companies.                                        referred to above are presented in Hexagon’s Annual Reports
                                                                               for 2007 (with reference to pages 50–88), 2008 (with reference
                                                                     Holding   to pages 48–88) and 2009 (with reference to pages 56–94) and
                                                                   of shares
                                                                               in Hexagon’s Interim Report for January – September 2010
     Subsidiary                                   Country          and votes
     Intergraph corporation                       usa                  100%
                                                                               (with reference to all pages). Pages of the Annual Reports not
     hexagon Metrology ab                         sweden               100%
                                                                               referred to contain information otherwise presented in other
     Leica geosystems ag                          switzerland          100%    parts of this prospectus. The financial reports have been audited
     Leica geosystems                                                          by the Company’s auditor and the respective audit report form
     technologies Pte Ltd.                        singapore            100%    part of the Annual Reports. The Interim Report for January –
     erDas Inc.                                   usa                  100%    September 2010 has been reviewed by the Company’s auditor
     Leica geosystems Ltd.                        united Kingdom       100%    and the review report form part of the Interim Report.
     Leica geosystems sarL                        France              100%     The Annual Reports and the Interim Report for January – Sep-
     Leica geosystems gmbh vertrieb               germany             100%     tember 2010 are available on the Company’s website,
     Leica geosystems s.p.a.                      Italy               100%     www.hexagon.se, and are also provided free of charge by the
     Leica geosystems Inc.                        usa                 100%     Company.
     Jigsaw technologies, Inc.                    usa                 100%
     Leica geosystems Ltd.                        china               100%     Documents on display
     Leica geosystems trade                                                    The following documents can be downloaded on the Compa-
     (beijing) co. Ltd.                           china               100%
                                                                               ny’s website www.hexagon.se. Copies of the documents can
     hexagon Metrology, Inc.                      usa                 100%
                                                                               also be obtained at the head office of Hexagon, Lilla Bantorget
     hexagon Metrology
     (Qingdao) co. Ltd.                           china               100%
                                                                               15 in Stockholm, Sweden, during the validity period of this
     Wilcox associates, Inc.                      usa                 100%     prospectus (regular office hours on business days).
     hexagon Metrology gmbh                       germany             100%     ●   Hexagon’s Articles of Association.
     tesa sa                                      switzerland         100%     ●   Hexagon’s Annual Reports for 2007, 2008 and 2009
     hexagon Metrology s.p.a.                     Italy               100%         (including auditors’ reports).
     novatel Inc.                                 canada              100%     ●   Hexagon’s interim report for the period January –
                                                                                   September 2010.




88       InvItatIon to subscrIbe For shares In hexagon ab
Certain tax considerations in Sweden

The following is a summary of certain tax consequences of the present offering to sub-
scribe for new shares to holders of shares of series B in Hexagon that are individuals
or limited liability companies tax resident in Sweden, unless otherwise stated. The
summary is based on the legislation currently in force and is intended as general
information only. The summary does not address securities held by partnerships or
securities held as current assets in business operations. Moreover, the summary does
not address the specific rules on tax-exempt capital gains (including non-deductibility
for capital losses) in the corporate sector that may be applicable when shares or
subscription rights are considered to be held for business purposes (Sw. närings­
betingade andelar) by the shareholder. Special tax rules apply to certain categories of
taxpayers, e.g. mutual funds, investment companies and insurance companies. The
tax treatment of each individual shareholder depends on such investor’s particular
circumstances. Each holder of shares and subscription rights should therefore consult
a tax advisor for information on the specific implications that may arise in an individual
case, including the applicability and effect of foreign rules and tax treaties.


Individuals                                                           Dividend taxation
Capital Gains Taxation                                                For individuals, dividends are taxed as income from capital at a
Upon the sale or other disposition of listed shares or other equi-    rate of 30 per cent. A preliminary tax of 30 per cent is generally
ty-related securities, such as subscription rights, a taxable capi-   withheld on dividends paid to individuals resident in Sweden.
tal gain or deductible capital loss may arise, which is taxed as      The preliminary tax is withheld by Euroclear Sweden or,
income from capital at a rate of 30 per cent. The capital gain or     regarding nominee-registered shares, by the Swedish nominee.
loss is normally calculated as the difference between the sales
proceeds, after deducting sales costs, and the tax basis (for spe-    Exercise and Disposal of Subscription Rights
cific information on the tax basis for subscription rights, see “–    The exercise of subscription rights does not give rise to any
Exercise and Disposal of Subscription Rights” below). The tax         taxation. Shareholders that do not wish to utilise their preferen-
basis for all equity-related securities of the same class and type    tial right to participate in the rights issue of shares and therefore
are added together and computed collectively in accordance            dispose of their subscription rights will realise a taxable capital
with the “average method”. It should be noted that the BTAs           gain. Subscription rights based on a shareholding of existing
(paid subscription shares) in this context are not considered to      shares are considered to have been acquired at 0 SEK. The total
be of the same class and type as the existing shares that entitled    sales proceeds, after deducting sales costs, are thus taxable. The
the shareholder to the preferential right in the rights issue until   “notional rule” (see above) is not applicable in this case. The
the resolution of the rights issue has been registered with the       tax basis for the original shares is not affected.
Swedish Companies Registration Office.                                     For subscription rights purchased or otherwise acquired
     Upon the sale of listed shares, such as shares of series B in    (i.e. that are not received based on a holding of existing shares),
Hexagon, the tax basis may alternatively be determined as 20          the price paid for the rights constitutes the acquisition cost. The
per cent of the sales proceeds after deducting sales costs under      acquisition cost of such subscription rights shall be included
the “notional rule”.                                                  when calculating the tax basis for the subscribed shares. The
     Capital losses on listed shares and on other listed equity-      “notional rule” (see above) may be applied on disposal of listed
related securities are fully deductible against taxable capital       subscription rights in this case.
gains on shares and on other listed equity-related securities,             A subscription right that is not exercised or sold, and thus
with the exception of units in mutual funds which consist exclu-      expires, is deemed disposed of at 0 SEK.
sively of Swedish receivables (“interest funds”). 70 per cent of
capital losses on shares that cannot be offset in this way are
deductible against other capital income. If there is a net loss in
the capital income category, a tax reduction is allowed against
municipal and national income tax, as well as against real estate
tax and municipal real estate charges. A tax reduction of 30
percent is allowed on the portion of such net loss that does not
exceed 100 000 SEK and 21 per cent of any remaining loss.
Such net loss cannot be carried forward to future fiscal years.



                                                                                               InvItatIon to subscrIbe For shares In hexagon ab   89
Certain tax considerations in Sweden




     Limited liability companies                                             Specific tax considerations for shareholders
     Capital Gains and Dividend Taxation                                     and holders of subscription rights who are not
     For a limited liability company, all income, including taxable          tax resident in Sweden
     capital gains and dividends, is taxed as business income at a           Dividend taxation
     rate of 26.3 per cent. Capital gains and capital losses are             For shareholders not tax resident in Sweden who receive divi-
     calculated in the same manner as set forth above with respect to        dends from a Swedish limited liability company, Swedish with-
     individuals. Deductible capital losses on shares and other equity       holding tax is normally payable. The withholding tax rate is 30
     related securities may only be deducted against taxable capital         per cent. However, the tax rate is often reduced by tax treaties
     gains on such securities. Such capital losses may also, if certain      for the avoidance of double taxation between Sweden and other
     conditions are fulfilled, be offset against such capital gains in a     countries. The majority of Sweden’s tax treaties enable a reduc-
     company within the same group, provided that the require-               tion of the Swedish tax to the tax rate stipulated in the treaty
     ments for exchanging group contributions (Sw. koncernbidrag)            directly at the payment of dividends, provided necessary
     are met. A capital loss that cannot be utilized during a given          information is available in relation to the person entitled to
     year may be carried forward and be offset against taxable capi-         such dividends. In Sweden, Euroclear Sweden or, for nominee-
     tal gains on shares and other equity-related securities during          registered shares, the nominee, normally carries out the with-
     subsequent fiscal years without any limitation in time.                 holding. The receipt of subscription rights does not give rise to
                                                                             any withholding tax liability.
     Exercise and Disposal of Subscription Rights                                 If a 30 per cent withholding tax is deducted from a payment
     The exercise of subscription rights does not give rise to any           to a person entitled to be taxed at a lower rate, or in the case too
     taxation. Shareholders that do not wish to utilise their preferen-      much withholding tax has otherwise been withheld, a refund
     tial right to participate in the rights issue of shares and therefore   can be requested from the Swedish Tax Agency prior to the
     dispose of their subscription rights will realise a taxable capital     expiry of the fifth calendar year following the dividend
     gain. Subscription rights based on a shareholding of existing           distribution.
     shares are considered to have been acquired at 0 SEK. The total
     sales proceeds, after deducting sales costs, are thus taxable. The      Capital gains taxation
     “notional rule” (see above) is not applicable in this case. The         Holders of shares and subscription rights not tax resident in
     tax basis for the original shares is not affected.                      Sweden and who are not operating a business from a permanent
          For subscription rights purchased or otherwise acquired            establishment in Sweden are generally not liable for Swedish
     (i.e. that are not received based on a holding of existing shares),     capital gains taxation on the disposal of shares or subscription
     the price paid for the rights constitutes the acquisition cost. The     rights. The holders may, however, be subject to tax in their
     acquisition cost of such subscription rights shall be included          country of residence. Under a specific tax rule, individuals that
     when calculating the tax basis for the subscribed shares. The           are not tax resident in Sweden may, however, be subject to tax
     “notional rule” (see above) may be applied on disposal of listed        in Sweden on the sale of certain securities (such as shares, BTAs
     subscription rights in this case.                                       and subscription rights) if they have been resident or lived per-
          A subscription right that is not exercised or sold, and thus       manently in Sweden at any time during the calendar year of
     expires, is deemed disposed of at 0 SEK.                                such disposal or during any of the previous ten calendar years.
                                                                             The application of this rule may be limited by tax treaties
                                                                             between Sweden and other countries.




90       InvItatIon to subscrIbe For shares In hexagon ab
Restriction on sale and transfer of securities

The distribution of subscription rights and the offer to subscribe for new shares in the
Company by exercise of subscription rights as well as without subscription rights (the
“Offering”) to persons resident in, or who are citizens of, countries other than Sweden,
Switzerland, Denmark and the United Kingdom may be affected by the laws of the
relevant jurisdiction. Investors should consult their professional advisers as to whether
they require any governmental or other consents or need to observe any other
formalities to enable them to exercise subscription rights or to subscribe for new
shares without subscription rights.


General                                                                    tion or measures other than those pursuant to Swedish,
Hexagon has not taken and will not take any action to permit a             Swiss, Danish or UK law (an “Ineligible Jurisdiction”,
public offering of the new shares being offered in the Offering            together the “Ineligible Jurisdictions”);
(through the exercise of the subscription rights or otherwise) in
                                                                       (ii) the prospectus may not be sent to any person in any Ineligi-
any jurisdiction other than Sweden, Switzerland, Denmark and
                                                                            ble Jurisdiction; and
the United Kingdom. Receipt of this prospectus will not consti-
tute an offer in those jurisdictions in which it would be illegal to   (iii) the transfer of subscription rights to an account of a share-
make an offer and, in those circumstances, this prospectus is for            holder or other person in an Ineligible Jurisdiction or of a
information only and must not be copied or redistributed. No                 citizen of an Ineligible Jurisdiction (referred to as “Ineligible
action has been or will be taken by Hexagon, the Joint Lead                  Persons”) does not constitute an offer to such persons of
Managers and Joint Bookrunners or the Co-lead Managers to                    new shares and Ineligible Persons may not exercise sub-
permit the possession of this prospectus (or any other offering              scription rights.
or publicity materials or applications form(s) relating to the
                                                                       If an investor receives, delivers, transfers, exercises, trades or
Offering) in any jurisdiction where such distribution may lead
                                                                       otherwise deals in the Securities, that investor will be deemed to
to a breach of any law or regulatory requirement.
                                                                       have made, or, in some cases, be required to make, among other
    Except as otherwise disclosed in this prospectus, if an inves-
                                                                       things, the following representations and warranties to Hexagon
tor receives a copy of this prospectus in any jurisdiction other
                                                                       and any person acting on Hexagon’s behalf, unless such require-
than Sweden, Switzerland, Denmark and the United Kingdom,
                                                                       ment is waived by Hexagon:
the investor may not treat the prospectus as constituting an
invitation or offer to it, nor should the investor in any event        (a) the investor is not located in an Ineligible Jurisdiction;
deal in the subscription rights, paid subscription shares (betalda
                                                                       (b) the investor is not an Ineligible Person;
tecknade aktier, BTA) or new shares being granted or offered,
respectively, in the Offering (the “Securities”), unless, in the       (c) the investor is not acting, and has not acted, for the account
relevant jurisdiction, such an invitation or offer could lawfully          or benefit of an Ineligible Person;
be made to that investor, or the Securities could lawfully be
                                                                       (d) unless the investor is an existing shareholder and a qualified
dealt in without contravention of any unfulfilled registration or
                                                                           institutional buyer as defined in, and in accordance with,
other legal requirements.
                                                                           Rule 144A under the United States Securities Act of 1933
    Accordingly, if an investor receives a copy of this prospec-
                                                                           (the “Securities Act”), the investor is located outside the
tus, the investor should not distribute or send the same, or
                                                                           United States and any person for whose account or benefit
transfer the Securities to any person, in or into any jurisdiction
                                                                           the investor is acting on a non-discretionary basis is located
where to do so would or might contravene local securities laws
                                                                           outside the United States, and, upon acquiring new shares,
or regulations. If any investor forwards this prospectus into any
                                                                           the investor and any such person will be located outside the
such jurisdictions (whether under a contractual or legal obliga-
                                                                           United States;
tion or otherwise), such investor should draw the recipient’s
attention to the contents of this section. Except as otherwise         (e) the investor understands that the Securities have not been
expressly noted in this prospectus, the following applies:                 or will not be registered under the Securities Act and may
                                                                           not be offered, subscribed for, exercised, pledged, sold,
(i) the Securities being granted or offered, respectively, in the
                                                                           resold, granted, allotted, delivered or otherwise transferred
    Offering may not be offered, subscribed for, sold or trans-
                                                                           within the United States, or for the account or benefit of
    ferred, directly or indirectly, to or in the United States,
                                                                           persons in the United States, except pursuant to an exemp-
    Canada, Australia, Japan or any other jurisdiction in which
                                                                           tion from, or in a transaction not subject to, registration
    it would not be permissible to offer the Securities or where
                                                                           under the Securities Act; and
    such action would require additional prospectuses, registra-



                                                                                                 InvItatIon to subscrIbe For shares In hexagon ab   91
Restriction on sale and transfer of securities




     (f) the investor may lawfully be offered, take up, subscribe for        Ineligible Jurisdiction will be deemed to be invalid and the Secu-
         and receive Securities in the jurisdiction in which it resides      rities will not be delivered to an addressee in any Ineligible
         or is currently located.                                            Jurisdiction. Hexagon reserves the right to reject any exercise or
                                                                             revoke any accepted exercise made in the name of any person
     Hexagon and any persons acting on behalf of Hexagon will rely
                                                                             who provides an address in an Ineligible Jurisdiction for accept-
     upon the investor’s representations and warranties. Any provi-
                                                                             ance, revocation of exercise or delivery of such new shares, who
     sion or false information or subsequent breach of these repre-
                                                                             does not or is unable to represent or warrant that such person is
     sentations and warranties may subject the investor to liability.
                                                                             not in an Ineligible Jurisdiction and is not an Ineligible Person,
          If a person is acting on behalf of a holder of subscription
                                                                             who is not acting on a discretionary basis for such persons, or
     rights (including, without limitation, as a nominee, custodian
                                                                             who appears to Hexagon or its agents to have executed its exer-
     or trustee), that person will be required to provide the foregoing
                                                                             cise instructions or certifications in, or dispatched them from,
     representations and warranties to Hexagon with respect to the
                                                                             an Ineligible Jurisdiction. Furthermore, Hexagon reserves the
     exercise of subscription rights on behalf of the holder. If such
                                                                             right, with sole and absolute discretion, to treat as invalid any
     person does not or is unable to provide the aforementioned
                                                                             exercise or purported exercise of subscription rights which
     representations and warranties, Hexagon will not be bound to
                                                                             appears to it to have been executed, effected or dispatched in a
     authorize the allocation of any Securities to that person or the
                                                                             manner that may involve a breach or violation of the laws or
     person on whose behalf the other is acting.
                                                                             regulations of any jurisdiction.
          Subject to the specific restrictions described below, if an
                                                                                  Notwithstanding any other provision of this prospectus,
     investor (including, without limitation, its nominees, custodi-
                                                                             Hexagon reserves the right to permit a holder to exercise its
     ans and trustees) who is located outside of Sweden, Switzer-
                                                                             subscription rights if Hexagon in its absolute discretion is satis-
     land, Denmark and the United Kingdom wishes to exercise,
                                                                             fied that the transaction in question is exempt from or not sub-
     deal in or subscribe for Securities, the investor must satisfy itself
                                                                             ject to the laws or regulations giving rise to the restrictions in
     as to full observance of the applicable laws of any relevant juris-
                                                                             question. Applicable exemptions in certain jurisdictions are
     diction including obtaining any requisite governmental or other
                                                                             described further below. In any such case, Hexagon does not
     consents, observing any other requisite formalities and paying
                                                                             accept any liability for any actions that a holder takes or for any
     any taxes due in such territories.
                                                                             consequences that such holder may suffer by the Company’s
          The information set out in this section is intended as a
                                                                             acceptance of the holder’s exercise of subscription rights.
     general guide only. If the investor is in any doubt as to whether
                                                                                  None of Hexagon, the Joint Lead Managers and Joint
     it is eligible to exercise subscription rights or subscribe for
                                                                             Bookrunners, the Co-lead Managers, or any of their respective
     Securities, that investor should consult professional advisers
                                                                             representatives is making any representation to any offeree,
     without delay.
                                                                             subscriber or purchaser of the Securities regarding the legality
          Subscription rights will initially be credited to financial
                                                                             of an investment in the Securities by such offeree, subscriber or
     intermediaries for the accounts of shareholders that hold shares
                                                                             purchaser under applicable laws. Each investor should consult
     in the Company through such intermediaries as of the record
                                                                             with its own advisors and make its independent assessment of
     date, 29 November 2010. A financial intermediary may not
                                                                             the legal, tax, business, financial and other consequences of a
     exercise any subscription rights on behalf of any person in the
                                                                             subscription or purchase of the Securities.
     Ineligible Jurisdictions or any Ineligible Persons and may be
                                                                                  Investing in the Securities involves risks. See “Risk factors”
     required in connection with any exercise of subscription rights
                                                                             for a discussion of selected risks that prospective investors
     to certify the same.
                                                                             should consider before investing in the Securities.
          Subject to certain exceptions, financial intermediaries are
     not permitted to send this prospectus or any other information
                                                                             United States
     about the Offering into any Ineligible Jurisdiction or to any
                                                                             The Securities have not been and will not be registered under
     Ineligible Person. The crediting of subscription rights to the
                                                                             the Securities Act or with any securities regulatory authority of
     account of persons in Ineligible Jurisdictions or to Ineligible
                                                                             any state or other jurisdiction of the United States and may not
     Persons does not constitute an offer of Securities to such per-
                                                                             be offered, subscribed for, exercised, pledged, sold, resold,
     sons. Financial intermediaries, which include banks, brokers,
                                                                             granted, allotted, delivered or otherwise transferred, directly or
     custodians and nominees, holding for Ineligible Persons may
                                                                             indirectly, within the United States except pursuant to an appli-
     consider selling any or all subscription rights held for the bene-
                                                                             cable exemption from the registration requirements of the Secu-
     fit of such persons to the extent permitted under their arrange-
                                                                             rities Act and in compliance with the securities laws of any state
     ments with such persons and applicable law and to remit the
                                                                             or other jurisdiction of the United States. The Securities are
     net proceeds to the accounts of such persons.
                                                                             being offered an sold outside the United States in reliance of
          Subject to certain exceptions, exercise instructions or certi-
                                                                             Regulation S under the Securities Act. Any offering of the Secu-
     fications regarding subscription sent from or postmarked in any
                                                                             rities to be made in the United States will be made only to a


92       InvItatIon to subscrIbe For shares In hexagon ab
                                                                                                  Restriction on sale and transfer of securities




limited number of existing shareholders who (i) are reasonably         NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
believed to be qualified institutional buyers as defined in Rule       NEITHER THE FACT THAT A REGISTRATION STATE-
144A under the Securities Act (“QIB”) pursuant to an exemp-            MENT OR AN APPLICATION FOR A LICENSE HAS BEEN
tion from registration under the Securities Act in a transaction       FILED UNDER CHAPTER 421-B OF THE NEW HAMP-
not involving any public offering, and (ii) have executed an           SHIRE REVISED STATUTES (“RSA 421-B”) WITH THE
returned an investor letter, in form and substance acceptable, to      STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
Hexagon.                                                               SECURITY IS EFFECTIVELY REGISTERED OR A PERSON
     Accordingly, subject to certain limited exceptions, this          IS LICENSED IN THE STATE OF NEW HAMPSHIRE CON-
document will not be sent to, and no subscription rights will be       STITUTES A FINDING BY THE SECRETARY OF STATE OF
credited to, any shareholder with a registered address in the          NEW HAMPSHIRE THAT ANY DOCUMENT FILED
United States. In addition, Hexagon the Joint Lead Managers            UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MIS-
and Joint Bookrunners, and the Co-lead Managers reserves the           LEADING. NEITHER ANY SUCH FACT NOR THE FACT
right to reject any instruction in respect of the Securities sent by   THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
or on behalf of any Euroclear account holder with a registered         FOR A SECURITY OR A TRANSACTION MEANS THAT
address in the United States.                                          THE SECRETARY OF STATE HAS PASSED IN ANY WAY
     Until 40 days after the commencement of the Offering, an          UPON THE MERITS OR QUALIFICATIONS OF, OR REC-
offer, sale or transfer of the Securities within the United States     OMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
by a dealer (whether or not participating in the Offering) may         SECURITY OR TRANSACTION. IT IS UNLAWFUL TO
violate the registration requirements of the Securities Act.           MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
     The Securities have not been approved or disapproved by           PURCHASER, CUSTOMER OR CLIENT, ANY REPRESEN-
the U.S. Securities and Exchange Commission, any state                 TATION INCONSISTENT WITH THE PROVISIONS OF
securities commission in the United States or any other U.S.           THIS PARAGRAPH.
regulatory authority nor have any of the foregoing authorities
passed upon or endorsed the merits of the offering of the Securi-      Agreement of confidentiality
ties or the accuracy or adequacy of this document. Any repre-          Any recipient of this document in the United States is hereby
sentation to the contrary is a criminal offense in the United          notified that this document is being furnished to it on a confi-
States.                                                                dential basis and must not be reproduced, resent or otherwise
     Each person to which Securities are distributed, offered or       redistributed, in whole or in part, under any circumstances.
sold within the United States will, by accepting delivery of this      Furthermore, recipients are authorized to use this document
prospectus or by its subscription for Securities, be deemed to         solely for the purpose of considering a subscription for Securi-
have represented and agreed, on its behalf and on behalf of any        ties and may not disclose any of the contents of this document
investor accounts for which it is subscribing for Securities, as       or use any information herein for any other purpose. This
the case may be, that, among other things:                             document is personal to each offeree and does not constitute an
                                                                       offer to any other person or to the public generally to subscribe
1) it is an existing shareholder and QIB; and                          for or otherwise acquire Securities. Any recipient of this
                                                                       document agrees to the foregoing by accepting delivery of this
2) the Securities have not been offered to it by Hexagon by
                                                                       document.
   means of any form of “general solicitation” or “general
   advertising” (within the meaning of Regulation D under the
                                                                       Enforcement of liabilities and service of process
   Securities Act).
                                                                       Hexagon is organized under the laws of Sweden. Substantially
Each person to which Securities are distributed, offered or sold       all members of the Board of Directors and Group management
outside the United States will, by its subscription for, or pur-       are non-residents of the United States. A substantial portion of
chase of, Securities, be deemed to have represented and agreed,        the assets of Hexagon and other such non-resident persons are
on its behalf and on behalf of any investor accounts for which it      located outside the United States. As a result, it may not be pos-
is subscribing for Securities, as the case may be, that:               sible for investors to effect service of process upon Hexagon or
                                                                       such persons or to enforce against them in U.S. courts judg-
(i) it is acquiring the Securities from Hexagon in an “offshore
                                                                       ments obtained in such courts. Original actions, or actions for
    transaction” as defined in Regulation S under the Securities
                                                                       the enforcement of judgments of a U.S. court, relating to the
    Act; and
                                                                       civil liability provisions of the federal or state securities laws of
(ii) the Securities have not been offered to it by Hexagon by          the United States are not directly enforceable in Sweden. The
     means of any “directed selling efforts” as defined in Regula-     United States and Sweden do not have a treaty providing for
     tion S under the Securities Act.                                  reciprocal recognition and enforcement of judgments, other



                                                                                                InvItatIon to subscrIbe For shares In hexagon ab   93
Restriction on sale and transfer of securities




     than arbitration awards, in civil and commercial matters.             For the purpose of this provision, the expression an “offer to
     Accordingly, a final judgment for the payment of money                the public” in relation to any Securities in any Relevant Mem-
     rendered by a U.S. court based on civil liability will not be         ber State means the communication in any form and by any
     directly enforceable in Sweden. However, if the party in whose        means of sufficient information on the terms of the Offering
     favor such final judgment is rendered brings a new lawsuit in a       and the Securities so as to enable an investor to decide to
     competent court in Sweden, that party may submit to the               subscribe for or acquire any of the Securities, as the same may
     Swedish court the final judgment that has been rendered in the        be varied in that Relevant Member State by any measure imple-
     United States. A judgment by a federal or state court in the          menting the Prospectus Directive in that Relevant Member State
     United States against the Company or the Group will neither be        and the expression “Prospectus Directive” means Directive
     recognized nor enforced by a Swedish court, but such judgment         2003/71/EC of the European Parliament and the Council and
     may serve as evidence in a similar action in a Swedish court.         any relevant implementing measure in each Relevant Member
                                                                           State.
     European Economic Area
     In relation each member state of the European Economic Area,          Canada, Australia and Japan
     which have implemented the Prospectus Directive (each, a              The Securities have not been, and will not be, registered under
     “Relevant Member State”), other than Sweden, Denmark and              the laws of Canada, Australia and Japan or any other jurisdic-
     the United Kingdom, each Joint Lead Manager and Joint Book-           tion thereof and may not be offered, subscribed for, exercised,
     runner and Co-lead Managers has represented and agreed, and           pledged, sold, resold, granted, allotted, delivered or otherwise
     each recipient of this document will be deemed to have repre-         transferred, directly or indirectly, within Canada, Australia or
     sented and agreed, that it has not made and will not make an          Japan, except in such exempt cases that do not require any
     offer of the Securities to the public in that Relevant Member         prospectus, registration or other measure under applicable
     State except that such an offer may be made under the follow-         Canadian, Australian or Japanese law.
     ing exemptions under the Prospectus Directive, as implemented
     in that Relevant Member State:

     (a) to legal entities which are authorized or regulated to operate
         in the financial markets or, if not so authorized or regulated,
         whose corporate purpose is solely to invest in securities;

     (b) to any legal entity which has two or more of (1) an average
         of at least 250 employees during the last financial year, (2) a
         total balance sheet of more than 43 MEUR and (3) an
         annual net turnover of more than 50 MEUR, as shown in
         its last annual or consolidated accounts;

     (c) in any other circumstances which do not require the publi-
         cation by Hexagon of a prospectus pursuant to Article 3 of
         the Prospectus Directive.




94       InvItatIon to subscrIbe For shares In hexagon ab
Glossary

Americas           north america, south america and central america

Asia and Pacific   asia, australia and new Zeeland

BCAs               b.c. ambulance

BOM                bill of Materials

Bridge loan        a short-term loan that is used to secure financing until more permanent financing can be obtained by way of, for example,
                   a share issue or a bond issue

BTAs               Paid subscribed shares (betalda tecknade aktier)

CAD                computer aided Design – digital-based design used when creating technical drawings

CAGR               compound annual growth rate

CMM                coordinate Measuring Machine

DTM                Digital terrain Model – detailed models of the land surface

EBIT1              operating earnings before non-recurring items

EBITDA             operating earnings before depreciation and amortisation

ECC                emergency communications convergence

EMEA               europe Middle east and africa

EMS                emergency Medical services

EBP                european body Panels

EPC                engineering, Procurement, and construction

Geomatics          the study of depicting the earth’s surface

GIS                geographic Information systems

GNSS               global navigation satellite system

GPS                global Posituning system

HAZOP              haZard and oPerability analysis

Laser trackers     a portable measurement system that uses a laser beam to measure

LIDAR              Light Detection and ranging – technology to collect topographic data using lasers

O/O                owner operator

OEMs               original equipment Manufacturers

OGC                open geospatial consortium

PET                Process engineering tools

PP&M               Process, Power & Marine

R&D                research and development

SCM                sensor control Modules

Revolving loan     a loan where the borrower may increase and reduce the size of outstanding debt up to the available
                   commitment during the term of the loan

SG&I               security, government & Infrastructure

Syndicated loan    a loan provided by two or more lenders (referred to as a syndicate)

Term loan          a loan in a specific amount where the borrower is not entitled to reborrow any amount which it has repaid

Theodolites        an angle measuring instruments used in geodetic measurements

Total station      an electronic theodolite with integrated distance meter

UAS                unmanned aircraft system

US GAAP            us accounting principles


                                                                                                 InvItatIon to subscrIbe For shares In hexagon ab   95
     Addresses

     Hexagon                                               Legal advisor to the Joint Lead Managers and
     Head office                                           Joint Bookrunners
     Visiting address:                                     Linklaters Advokatbyrå
     Lilla Bantorget 15                                    Visiting address:
     Mailing address:                                      Regeringsgatan 67
     P.O. Box 3692                                         Mailing address:
     SE-103 59 Stockholm                                   P.O. Box 7833
     Telephone: +46 8 601 26 20                            SE-103 98 Stockholm
                                                           Telephone: +46 8 665 66 00
     Joint Lead Managers and Joint Bookrunners
     Crédit Agricole Corporate and Investment Bank         Auditors to Hexagon
     Visiting address:                                     Ernst & Young AB
     Regeringsgatan 38                                     P.O. Box 7850
     Mailing address:                                      SE-103 99 Stockholm
     P.O. Box 7734
     SE-103 95 Stockholm                                   Account operator
     Telephone: +46 8 723 51 00                            Euroclear Sweden AB
                                                           P.O. Box 7822
     SEB Enskilda                                          SE-103 97 Stockholm
     Visiting address:
     Kungsträdgårdsgatan 8
     Mailing address:
     SE-106 40 Stockholm
     Telephone: +46 8 522 295 00

     Legal advisor to Hexagon
     Mannheimer Swartling
     Visiting address:
     Södergatan 22
     Mailing address:
     P.O. Box 4291
     SE-203 14 Malmö
     Telephone: +46 40 698 58 00




96      InvItatIon to subscrIbe For shares In hexagon ab
                                       Intellecta Finanstryck 102972




         Hexagon AB (publ)
           P.O. Box 3692
Visiting address: Lilla Bantorget 15
   103 59 Stockholm, Sweden

								
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