Strong cash flow significant growth for Nolato Medical

Transcription

1 Nolato year-end report 2006, page 1 of 12 Nolato AB (publ) year-end report 2006 Strong cash flow significant growth for Nolato Medical Fourth quarter 2006 in brief Sales totaled SEK 603 M (613) EBITA excluding non-recurring items was SEK 45 M (70) Non-recurring costs of SEK 125 M for BenQ s insolvency charged to income Income after financial items was SEK 81 M (67) Strong cash flow, SEK 61 M (62) after investments, excluding acquisitions Acquisition of Medical Rubber completed Full-year 2006 in brief Group sales increased 20 % to SEK 2,702 M (2,256) EBITA excluding non-recurring items was SEK 209 M (221) Non-recurring costs totaled SEK 130 M (0) Income after financial items was SEK 69 M (208) Net income was SEK 48 M (181) Earnings per share were SEK 1.82 (6.88) Adjusted earnings per share excluding amortization on acquisition goodwill and non-recurring items totaled SEK 6.08 (6.31) Cash flow after investments was SEK 142 M (158), excluding acquisitions The Board of Directors proposes an unchanged dividend of SEK 2.40 per share Group highlights SEK M unless otherwise specified Q Q Full year 2006 Full year 2005 Net sales ,702 2,256 EBITDA excluding non-recurring items 1) EBITA excluding non-recurring items 2) EBITA margin excluding non-recurring items, % Income after financial items Net income Earnings per share, SEK Adjusted earnings per share, SEK 3) Average number of shares, thousands 26,307 26,307 26,307 26,307 Cash flow after investments, excluding acquisitions Investments affecting cash flow, excluding acquisitions Return on capital employed, % Return on capital employed, excluding non-recurring items, % Return on shareholders equity, % Equity/assets ratio, % Net liabilities ) EBITDA Earnings before interest, taxes, depreciation/amortization and non-recurring items. 2) EBITA Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items. 3) Adjusted earnings per share Net income, excluding amortization of acquisition goodwill and non-recurring items, divided by average number of shares. This document is a translation from Swedish. In the event of any difference, the Swedish original shall govern. Nolato AB, SE Torekov, Sweden Phone Fax Corporate identity number SE info@nolato.se Internet

2 Nolato year-end report 2006, page 2 of 12 Sales by quarter SEK M SEK M Q4 Q1 Q2 Q3 Q EBITA by quarter Q4 Q1 Q2 Q3 Q Earnings before interest, taxes and amortization of acquisition goodwill, excluding nonrecurring items. Fourth quarter 2006 Sales totaled SEK 603 M (613) EBITA excluding non-recurring items was SEK 45 M (70) Income after financial items was SEK 81 M (67) Acquisition of Medical Rubber completed Sales Consolidated sales of the Nolato Group during the fourth quarter totaled SEK 603 M (613), with SEK 18 M (0) of this from acquisitions. Sales for Nolato Telecom decreased as a result of lost volumes to its customer BenQ. Sales for Nolato Medical increased a total of 54 percent, with 20 percent of this organic. Sales for Nolato Industrial increased 7 percent. Sales at Nolato Telecom decreased 16 percent to SEK 277 M (330). Deliveries to Nolato s customer BenQ basically stopped for the entire quarter, which explains the decline in sales. There was growth in volume for Nolato Telecom s other customers during the quarter, but at the same time, price pressure intensified. Sales at Nolato Medical increased to SEK 83 M (54), which is growth of 54 percent compared to the same period in 2005, with 20% of this organic. Volumes were good during the quarter for most of Nolato s customers. Medical Rubber was consolidated as of November 1. The acquisition went well, and performance was in line with expectations. Nolato Industrial s sales increased 7 percent compared to the same period in 2005 to SEK 250 M (233). The higher sales are due to an increase in the volume of previously placed orders for the automotive industry, while volumes for other manufacturers were high. BenQ On September 28, the Board of Directors of the Taiwanese company BenQ reported that it would discontinue investing in its German mobile phone unit, which was acquired from Siemens in Following this, BenQ applied for bankruptcy protection in Germany for its German subsidiary, BenQ Mobile GmbH & Co OHG. That company was then operated by an administrator. On January 1, bankruptcy proceedings were begun and a trustee was appointed. Nolato previously reported that BenQ accounted for 18 percent of the Group s sales in the third quarter of During the fourth quarter, there were virtually no deliveries made to BenQ, either in Europe or Asia, which as noted above had a negative impact on Nolato Telecom s sales. At this time, Nolato believes there will be no further deliveries of any significance to the customer in The financial risk associated with BenQ for accounts receivable, inventories, project costs accrued, commitments to material suppliers, personnel costs and equipment writedowns has been calculated at a net SEK 125 M, which is equal to an effect on earnings per share of SEK 4.07, after taking tax deductions into account. This amount was charged to the fourth quarter. Of this cost, roughly SEK 18 M consists of equipment writedowns which has no effect on the cash flow. The remaining Sales, EBITA and EBITA margin by profit center SEK M Sales Q4/2006 Sales Q4/2005 EBITA Q4/2006 EBITA Q4/2005 EBITA margin Q4/2006 EBITA margin Q4/2005 Nolato Telecom % 14.8 % Nolato Medical % 20.4 % Nolato Industrial % 7.3 % Intra-Group adj, Parent Co Group total % 11.4 % EBITA: Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items.

3 Nolato year-end report 2006, page 3 of 12 SEK 107 M consists of typical working capital items net of insurance compensation, which do have an effect on cash flow. Of this cash flow effect, roughly SEK 20 M net is expected to have a negative impact on cash flow in Earnings The Group s EBITA excluding nonrecurring items was SEK 45 M (70). Nolato Telecom s EBITA excluding non-recurring items was SEK 18 M (49), Nolato Medical s was SEK 12 M (11) and Nolato Industrial s SEK 18 M (17). Nolato Telecom s lower earnings were largely due to lower capacity utilization during the quarter as a result of lost sales to BenQ. Adjustments were made in operating expenses, but the loss of contribution margin from sales to BenQ had a negative impact on earnings. The EBITA margin excluding nonrecurring items for Nolato Telecom was 6.5 percent (14.8). Remaining fixed costs, which cannot be adjusted, resulted in a lower margin in the quarter given lower capacity utilization. The EBITA margin for Nolato Medical was 14.5 percent (20.4). In 2006, production costs were abnormally high given the ramp-up of customer projects. The costs for rejects and more staffing were high when these projects increased in volume. A stringent program of costcutting measures was implemented to improve the cost structure. The program has been successful and resulted in lower costs in the third and fourth quarters. Nolato Industrial s EBITA margin was 7.2 percent (7.3), which was unchanged compared to the same period in Overall, the Group s EBITA margin excluding non-recurring items was 7.5 percent (11.4). Prices of raw materials for plastic manufacturing were essentially unchanged in the fourth quarter of 2006 compared to the third quarter, but remained at a very high level historically. As the result of various measures, the increases in raw price materials had only a marginal effect on earnings for the fourth quarter compared to the same period in Effects of currency exchange rate differences totaling SEK 2 M ( 5) were charged to operating income in the fourth quarter. Operating income excluding nonrecurring items was SEK 44 M (70). Including non-recurring items, operating income totaled 81 M (70). Nonrecurring costs for BenQ of SEK 125 M (0) were charged to income. Income after financial items totaled SEK 81 M (67). Net financial items included SEK 3 M (0) in effects of currency exchange rate differences during the fourth quarter, most of which was related to translation differences for loans in foreign currencies in operations outside Sweden. Net income was SEK 75 M (71). Earnings per share were SEK 2.86 (2.70). Adjusted earnings per share excluding amortization of acquisition goodwill and non-recurring items were SEK 1.25 (2.13). The effective tax rate excluding nonrecurring items was 27 percent (16). The increase is mainly due to lower earnings in the Group s Chinese operations, where the tax rate is significantly lower than elsewhere in the Group. Sales by profit center Nolato Industrial 34% Sales by geographic region Nordic countries SEK 1,058 M North America etc. SEK 41 M Nolato Telecom 57% Nolato Medical 9% Other Europe SEK 1,132 M Asia SEK 471 M

4 Nolato year-end report 2006, page 4 of 12 Sales SEK M , , , , , SEK M SEK 8.00 EBITA 1) Adjusted earnings per share 2) Full-year 2006 Sales and earnings Consolidated sales totaled SEK 2,702 M (2,256) in The Group s EBITA excluding non-recurring items in 2006 was SEK 209 M (221). The EBITA margin excluding non-recurring items was 7.7 percent (9.8). Consolidated operating income excluding non-recurring items was SEK 209 M (221). Including non-recurring items, consolidated operating income was SEK 78 M (221). Non-recurring items for BenQ totaling SEK 125 M were charged to income, as was SEK 5 M for the dismissal of the president of a subsidiary, resulting in a total charge of SEK 130 M (0). Consolidated income after financial items was SEK 69 M (208). Net financial items included SEK 1 M ( 1) in effects Consolidated performance analysis of currency exchange rate differences, most of which was related to translation differences for loans in foreign currencies in operations outside Sweden. Net income was SEK 48 M (181). Earnings per share were SEK 1.82 (6.88). Adjusted earnings per share excluding amortization of acquisition goodwill and non-recurring items were SEK 6.08 (6.31). The effective tax rate excluding nonrecurring items was 20 percent (20). The return on capital employed was 7.4 percent in 2006 (21.0). Excluding non-recurring items, the return on operating capital was 19.4 percent (21.0). The return on operating capital was 8.3 percent in 2006 (25.5). Excluding nonrecurring items, the return on operating capital was 22.3 percent (25.5) SEK M Cash flow after investments 3) ) EBITA Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items. 2) Adjusted earnings per share Net income excluding amortization of acquisition goodwill and non-recurring items, divided by average number of shares. 3) Excluding acquisitions and divestments. SEK M Q Q Full year 2006 Full year 2005 Net sales ,702 2,256 Gross income excl. amortization and non-recurring items As a percent of net sales Costs 1) As a percent of net sales EBITDA excluding non-recurring items As a percent of net sales Amortization and writedowns EBITA excluding non-recurring items As a percent of net sales Amortization of acquisition goodwill 1 1 Non-recurring items 2) EBIT Financial items Income after financial items Tax excluding non-recurring items As a percent of income after financ. items excl. non-recurring items Lump-sum tax income 3) Net income ) Excluding non-recurring items. 2) SEK 125 M pertains to costs for BenQ s feared bankruptcy and SEK 5 M to costs for the dismissal of a subsidiary president. 3) SEK 18 M for Q and full-year 2006 pertains to tax income for BenQ s feared bankruptcy and SEK 1 M for full-year 2006 to other non-recurring items. SEK 15 M in Q4 pertains to tax income resulting from a government agency decision.

5 Nolato year-end report 2006, page 5 of 12 Nolato Telecom Sales and earnings (SEK M) Full-year Sales 1,558 1,172 EBITA * EBITA margin (%) Op. income excl. non-rec. items Op. income incl. non-rec. items Sales increased 33 percent to SEK 1,588 M (1,172), thus accounting for 57 percent (52) of total Group sales. Nolato s value per delivered unit increased relative to 2005, which had a positive impact on sales. The higher value is a result of greater vertical integration, more purchased components being assembled and a greater share of complex mobile phones with more plastic components, higher demands for surface finishes like painting, metallization etc. Under the heading BenQ on page 2, Nolato reported on the circumstances affecting Nolato Telecom as a result of its customer BenQ filing first for bankruptcy protection and then for bankruptcy for its German operations. The expansion of the tooling and painting facility in China was completed as planned, both through new investments and a shifting of Nolato s operations in Europe. The business area continues to invest in technology. Flat window production started, and a decision was made to invest in equipment for vacuum metallization. In 2006, a decision was made to terminate manufacturing of products included in mobile phones in Kristianstad, Sweden, and 45 employees were given notice in August. Nolato Telecom s set-up of a manufacturing unit in Kuala Lumpur, Malaysia, was completed, and the unit had small-scale production during the second half of the year. EBITA excluding non-recurring items was SEK 124 M (137). The EBITA margin was 8.0 percent (11.7). The lower margin compared to the same period in 2005 was largely the effect of a changed product mix with greater vertical integration and a higher share of purchased components. In the fourth quarter, lost sales to Nolato Telecom s customer BenQ squeezed the margin. Price pressure remained strong and intensified towards the end of the year. Nolato Medical Sales and earnings (SEK M) Full-year Sales EBITA * EBITA margin (%) Operating income Sales increased 33 percent to SEK 244 M (184), thus accounting for 9 percent (8) of total Group sales. Organic growth was 23 percent. The project to take over production of the insulin pen for Novo Nordisk gradually expanded in the first half of the year, as expected. In the fourth quarter, volumes for this project further increased. The strong growth, excluding non-recurring items, in this business area is largely explained by the higher volumes for this project. At the same time, efforts to develop European operations, which began in 2005, were successful and resulted in new projects for production in Hungary, which also contributed to the growth in sales. EBITA was SEK 36 M (42). The EBITA margin was 14.8 percent (22.8). During 2006, production costs were abnormally high as a result of the rampup of customer projects, including the insulin pen. Costs were high for rejects and more staffing when these projects increased in volume. A streamlining program was implemented with good results, leading to lower costs in the third and fourth quarter. On October 23, Nolato signed an agreement to acquire the company Medical Rubber, which is one of Europe s leading manufacturers of medical precision components in silicone rubber and thermoplastic elastomers. The company had sales of SEK 100 M in 2006 and some 100 employees in Hörby, Sweden. The acquisition enhances Nolato Medical s position as a leading manufacturer of polymer systems components for medical devices and is fully in line with Nolato s expansion strategies in the medical field. The takeover took effect on November 1, The company has been consolidated with the Group since then and has had a positive impact on the Group s earnings per share since the takeover. The purchase price was SEK 157 M (on a debt-free basis). The acquisition is described in the tables on page 12. Nolato Industrial Sales and earnings (SEK M) Full-year Sales EBITA * EBITA margin (%) Operating income Sales increased 1 percent to SEK 924 M (911), thus accounting for 34 percent (40) of total Group sales. On whole, volumes were stable in Investments carried out to attract new projects for the automotive industry and other selected general industrial segments are yielding results in the form of higher sales. At the same time, Nolato Industrial reduced sales to the consumer electronics and household appliance industries, both as a result of an active marketing strategy and as a consequence of some customers moving operations to other countries. Nolato Industrial continued its investment in greater automation, expansion of capacity for two-component injection moulding and injection moulds with higher clamping force. EBITA increased to SEK 74 M (71), and the EBITA margin increased to 8.0 percent (7.8). Streamlining in both Swedish and Hungarian operations had a positive effect on the margin while the strong pressure on prices had a negative impact. * EBITA: Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items.

6 Nolato year-end report 2006, page 6 of 12 Cash flow Cash flow before investments totaled SEK 280 M (307). The change in working capital was a positive SEK 55 M ( 66). Cash flow after investments totaled SEK 142 M (158), excluding acquisitions and divestments. Including acquisitions, cash flow after investments was SEK 11 M (158). During the third quarter, SEK 15 M was paid for the purchase of assets relating to the takeover of insulin pen production for Novo Nordisk while in the fourth quarter SEK 153 M was paid for the acquisition of Medical Rubber. Both transactions were included in net investments affecting cash flow. A production property in Hungary was sold during the second quarter, which entailed a payment to Nolato of SEK 14 M. Net investments affecting cash flow totaled SEK 291 M (149). Excluding acquisitions and divestments, net investments affecting cash flow totaled SEK 138 M (149). Financial position Interest-bearing assets totaled SEK 131 M (163), and interest-bearing liabilities and provisions totaled SEK 297 M (242). The market value of derivatives related to interest-bearing liabilities was SEK +4 M (+9). Net liabilities thus totaled SEK 162 M (70). Shareholders equity was SEK 789 M (832). The equity/assets ratio was 46 percent (50). In early 2007, Nolato extended a loan agreement with credit institutions for SEK 250 M for another two years. This means that, in all, Nolato has loan agreements for roughly SEK 600 M with maturity dates of between zero and two years Personnel The average number of employees in the Nolato Group in the period was 4,144 (2,790). The average number of employees increased in Asia and Estonia. At the end of 2006, the number of employees had been sharply reduced, especially in Asia, as a result of adjustments made for lost volumes to BenQ. Ownership and legal structure Nolato AB (publ), with Swedish corporate identity number , is the parent company of the Nolato Group. Nolato had 7,254 shareholders (8,376) on December 31, The largest shareholders were the Jorlén family with 11 percent (12), the Boström family with 10 percent (10) and the Paulsson family with 7 percent (6) of the capital. The next largest shareholders were seven institutional investors, who together owned another 27 percent of the capital, with Livförsäkringsaktiebolaget Skandia, Skandia/Carlson Fonder and IF Skadeförsäkrings AB representing the largest. The ten larg- est shareholders held 55 percent (57) of the shares and 77 percent (78) of the voting rights. Dividends At the Annual Meeting, Nolato s Board of Directors will propose an unchanged dividend of SEK 2.40 per share (2.40) for a total of SEK 63 M (63). The Board also decided to maintain its current dividend policy along with its other financial objectives. Future prospects Volume growth in the mobile phone market is expected to remain good in 2007, but with a lower rate of growth than in As a result of Nolato Telecom s normal seasonal variation, temporarily lower volumes in a major customer project in progress and the loss of sales to BenQ, Nolato Telecom s sales are expected to decreased percent in the first quarter of 2007, compared to the fourth quarter of In the first quarter of 2007, Nolato Medical is expected to continue its healthy growth in sales, while Nolato Industrial s sales are expected to be stable. The Parent Company Sales totaled SEK 55 M (30). Income before tax totaled SEK 69 M (111). No significant investments were made during the period. Financial position SEK M Interest-bearing liabilities credit institutions Interest-bearing pension liabilities Market value of derivatives 4 9 Total borrowings Cash, bank balances and short-term investments Net financial liabilities Working capital As a percent of sales (avg.) (%) 6,5 9,8 Capital employed 1,086 1,074 Return on capital employed, excluding non-recurring items (avg.) (%) Shareholders equity Return on equity (avg.) (%) Accounting and valuation principles The consolidated accounts for the Nolato Group are prepared according to International Financial Reporting Standards (IFRS), which are described in the 2005 Annual Report on pages The year-end report has been prepared according to IAS 34, Interim Financial Reporting, with the Swedish Financial Accounting Standards Council recommendation RR 31, Interim Group Financial Reporting and the Swedish Annual Report s Act. The new or revised IFRS standards or

7 Nolato year-end report 2006, page 7 of 12 IFRIC Interpretations that entered into force since January 1, 2006, have not had any material effect on the Group s income statements or balance sheets. Financial information schedule Three-month interim report 2007: April 25, Annual Meeting: April 25, 2007 Six-month interim report 2007: July 19, 2007 Nine-month interim report 2007: October 24, 2007 Annual Meeting The Annual Meeting will be held on April 25 at 6 p.m. at the Grevie Sports Park (Idrottsparken), not far from the Group s headquarters in Torekov, Sweden. The income statement and balance sheet will be adopted at the Annual Meeting on April 25. Annual Report The complete annual report is expected be made available at Nolato s headquarters in Torekov from early April, for those shareholders wishing to study the report. The printed annual report is expected to be mailed at that time to shareholders who have expressed an interest in receiving the report. It will be published at the same time on Nolato s website, Review report Introduction We have reviewed this year-end report Management is responsible for the preparation and presentation of this year-end report in accordance with IAS 34 and the Swedish Annual Report s Act. Our responsibility is to express a conclusion on this year-end report based on our review. Scope of review We conducted our review in accordance with the Standard on Review Engagements SÖG 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Federation of Authorised Public Accountants, FAR. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the year-end report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Report s Act. January 31, 2007 Ernst & Young AB Ingvar Ganestam Authorized Public Accountant Chief Auditor Torekov January 31, 2007 Nolato AB (publ) The Board of Directors

8 Nolato year-end report 2006, page 8 of 12 Income statement SEK M Q4 Q4 Full year Full year Net sales ,702 2,256 Cost of goods sold ,429 1,851 Gross income Selling expenses Administrative expenses Other operating income 10 Other operating costs Operating income Financial items Income after financial items Tax Net income Total amortization and writedowns charged to income Earnings per share after full tax (SEK) Number of shares at the end of the period (000) 26,307 26,307 26,307 26,307 Average number of shares (000) 26,307 26,307 26,307 26,307 Non-recurring items SEK M Q4 Q4 Full year Full year BenQ s feared bankruptcy Salary for dismissal of subsidiary president 5 Tax resulting from government decision Tax effect Net income Effect of non-recurring items on income statement Cost of goods sold Selling expenses Administrative expenses 5 Tax Net income Balance sheets SEK M Dec 31, 2006 Dec 31, 2005 Non-current tangible assets Non-current intangible assets Financial fixed assets 13 4 Total non-current assets Inventories Accounts receivable Other current assets Cash, bank balances, and short-term investments Total current assets Total assets 1,724 1,668 Shareholders equity Interest-bearing provisions Non-interest-bearing provisions Interest-bearing liabilities Non-interest-bearing liabilities Total shareholders equity and liabilities 1,724 1,668

9 Nolato year-end report 2006, page 9 of 12 Quarterly data Consolidated financial results in brief Q1 Q2 Q3 Q4 Full year Net sales (SEK M) , ,256 EBITDA 1) excluding non-recurring items (SEK M) EBITA 2) excluding non-recurring items (SEK M) EBITA margin excluding non-recurring items (%) Operating income (SEK M) Operating income excluding non-recurring items (SEK M) Income after financial items (SEK M) Net income (SEK M) Cash flow after investments excl. non-rec. items(sek M) Earnings per share (SEK) Adjusted earnings per share 3) (SEK) Average number of shares (thousands) ,307 26,307 26,307 26,307 26, ,307 26,307 26,307 26,307 26,307 Net sales by profit center (SEK M) Q1 Q2 Q3 Q4 Full year Nolato Telecom , ,172 Nolato Medical Nolato Industrial Group adjustments, Parent Company Group total , ,256 EBITA 2) by profit center (SEK M) Q1 Q2 Q3 Q4 Full year Nolato Telecom EBITA margin 9.0% 7.8% 8.5% 6.5% 8.0% EBITA margin 8.4% 10.1% 12.7% 14.8% 11.7% Nolato Medical EBITA margin 18.2% 12.1% 14.6% 14.5% 14.8% EBITA margin 20.5% 24.5% 26.2% 20.4% 22.8% Nolato Industrial EBITA margin 8.5% 7.7% 8.8% 7.2% 8.0% EBITA margin 6.9% 7.8% 9.4% 7.3% 7.8% Group adjustments, Parent Company Group total EBITA margin 8.6% 7.2% 8.0% 7.5% 7.7% EBITA margin 7.4% 9.0% 11.2% 11.4% 9.8% 1) EBITDA Earnings before interest, taxes, depreciation and amortization, excluding non-recurring items. 2) EBITA Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items. 3) Adjusted earnings per share Net income, excluding amortization of acquisition goodwill and non-recurring items, divided by average number of shares.

10 Nolato year-end report 2006, page 10 of 12 Group financial highlights Q4 Q4 Full year Full year Net sales (SEK M) ,702 2,256 Sales growth (%) Percentage of sales outside Sweden (%) EBITDA excluding non-recurring items (SEK M) EBITA excluding non-recurring items (SEK M) EBITA margin excluding non-recurring items (%) Income after financial items (SEK M) Profit margin (%) neg Net income (SEK M) Return on total assets (%) Return on capital employed (%) Return on capital employed excluding non-recurring items (%) Return on operating capital (%) Return on operating capital excluding non-recurring items (%) Return on shareholders equity (%) Equity/assets ratio (%) Debt/equity ratio (%) Interest coverage ratio (%) neg Investments affecting cash flow excluding acquisitions (SEK M) Cash flow after investments excluding acquisitions (SEK M) Net liabilities (SEK M) Earnings per share (SEK) Adjusted earnings per share (SEK) Cash flow per share (SEK) Shareholders equity per share (SEK) Number of shares on December 31 (thousands) 26,307 26,307 26,307 26,307 Average number of shares (thousands) 26,307 26,307 26,307 26,307 Average number of employees 4,144 2,790 Definitions EBITDA Earnings before interest, taxes, depreciation/amortization and non-recurring items. EBITA Earnings before interest, taxes and amortization of acquisition goodwill, excluding non-recurring items. Return on total assets Income after financial items plus financial expenses as a percentage of average total assets in the balance sheet. Return on capital employed Income after financial items plus financial expenses as a percentage of average capital employed. Capital employed consists of total assets less non-interest-bearing liabilities and provisions. Return on operating capital Operating income as a percentage of average operating capital. Operating capital consists of total assets less non-interest-bearing liabilities and provisions, less interest-bearing assets. Return on shareholders equity Net income as a percentage of average shareholders equity. Equity/assets ratio Shareholders equity as a percentage of total assets in the balance sheet. Debt/equity ratio Interest-bearing liabilities and provisions divided by shareholders equity. Interest coverage ratio Income after financial items plus financial expenses divided by financial expenses. Earnings per share Net income, divided by average number of shares. Adjusted earnings per share Net income, excluding amortization of acquisition goodwill and non-recurring items, divided by average number of shares.

11 Nolato year-end report 2006, page 11 of 12 Cash flow SEK M Q4 Q4 Full year Full year Cash flow from operations Changes in working capital Investment activities * Cash flow before financing activities Financing activities Cash flow for the period Liquid funds at January Exchange rate difference in liquid funds Liquid funds at December * SEK 153 M included in Q and full-year 2006 for acquisition of Medical Rubber Change in shareholders equity SEK M Full year Full year Amount on January Effect of change in accounting principle to IFRS 1 Opening balance, shareholders equity, adjusted in accordance with new principle Dividend to shareholders Translation differences Change in revaluation reserve hedge accounting 3 4 Net income Amount at December Five-year overview * 2002 * Net sales (SEK M) 2,702 2,256 2,401 2,671 2,011 EBITA excluding non-recurring items (SEK M) EBITA margin excluding non-recurring items (%) Operating income including non-recurring items (SEK M) Operating income excluding non-recurring items (SEK M) Income after financial items (SEK M) Net income (SEK M) Return on capital employed (%) Return on capital employed excluding non-recurring items (%) Return on shareholders equity (%) Equity/assets ratio (%) Earnings per share (SEK) Adjusted earnings per share (SEK) * Not restated to comply with IFRS

12 Nolato year-end report 2006, page 12 of 12 Acquisition of Medical Rubber AB Description of the acquisition On November 1, 2006, Nolato acquired 100% of the shares in Medical Rubber AB. The acquisition has been reported using the acquisition method, under which the total purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. Fair value has been determined by using generally accepted accounting principles and methods. Medical Rubber AB s earnings have been included in Nolato s consolidated accounts since November 1, Acquisition value, goodwill and cash flow effects Acquisition value Purchase price 169 Unpaid portion of purchase price 4 Total purchase price 173 For fair value of acquired net assets (as per breakdown below) 54 Goodwill 119 Goodwill consists of the synergies expected to be achieved as a result, in particular, of greater sales volumes but also, to some extent, lower costs through better purchase terms from external suppliers and the coordination of various levels of the business area. The cash flow effects from the acquisition are: Cash paid purchase price 169 For liquid funds acquired 16 Net cash flow from the acquisition in Additional purchase price to be paid in 2007, still unpaid 4 Net cash flow from the acquisition 157 Assets acquired and liabilities assumed Reported value Adjustment to fair value Fair value Customer relations Fixed assets Current assets Liquid funds Total acquired assets Deferred tax liabilities Current liabilities Total liabilities assumed Acquisition assets, net