Hexagon confirms the synergies from the acquisition of Leica Geosystems

12 January 2006

In order to facilitate the external market's analysis of the company's annual report for 2005 and the future financial development of the company, Hexagon has decided to present the effects due to accounting standards of the acquisition of Leica Geosystems.

In accordance with current accounting standards, the acquisition cost of Leica Geosystems has been allocated to all assets and liabilities at market value. The effect of these PPA adjustments (Purchase Price Allocation) leads to increased annual amortisation for Leica Geosystems. Also, when Leica Geosystems was taken over by Hexagon, overlapping software development in Leica Geosystems has been written off by 162 MSEK. The net effect of these two adjustments, the PPA adjustment and the write-down of software, results in a marginal decrease of the total annual amortisation costs in comparison to what Leica Geosystems showed as a stand alone company.

The effect of that Hexagon is considered to have acquired the inventories of Leica Geosystems at market value, i.e. that sales of the inventories give only marginal profit, entails a non-recurring cost in the fourth quarter of 150 MSEK. This non-recurring item will occur only in the fourth quarter when these inventories are sold.

The restructuring costs arising in the integration of Leica Geosystems and Hexagon in the fourth quarter amounts to 116 MSEK. Annually these costs are expected to give savings of about 150 MSEK. We cannot eliminate the possibility that additional restructuring costs might affect the result in 2006.

In total, for the year 2005, this result in a net of non-recurring income and costs of -80 MSEK, including extraordinary capital gains of 457 MSEK and costs of -109 MSEK reported during the third quarter 2005.

The integration of Leica Geosystems and Hexagon proceeds according to plan and synergies previously communicated, i.e. 270 MSEK to be realised over a 3-4 years period, of which the target of 100 MSEK during 2006, will be exceeded.

The Hexagon Board of Directors intends to decide on a rights issue for existing shareholders of about 2 700 MSEK in order to finance the acquisition of Leica Geosystems and the planned further expansion of Hexagon. This new issue is expected to be carried out during the second quarter of 2006.

A presentation of the effects of the acquisition of Leica Geosystems will be given at a telephone conference on Thursday 12 January at 15:00 CET. To participate, please see the instructions on our webpage www.hexagon.se

 For more information please contact:
 Ola Rollén, CEO, Hexagon AB	+46 8 601 26 20
 Håkan Halén, CFO, Hexagon AB	+46 8 601 26 20
 Sara Kraft, IR Manager, Hexagon AB	+46 8 601 26 27
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