Year-End Report. Net sales, MSEK 1,776 1,677 6,088 6,052 EBITDA excl. non-recurring items, MSEK

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1 Year-End Report 2016 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776 1,677 6,088 6,052 EBITDA excl. non-recurring items, MSEK EBITDA margin excl. non-recurring items, % Operating profit (EBIT) excl. non-recurring items, MSEK Operating margin (EBIT) excl. non-recurring items, % Operating profit (EBIT), MSEK Operating margin (EBIT), % Net profit for the period, MSEK Basic earnings per share, SEK Free cash flow, MSEK Dividend per share (*proposed), SEK * 1.00 GUNNEBO YEAR-END REPORT 2016

2 CEO s COMMENTS ON THE FOURTH QUARTER 2016 T he fourth quarter was a strong end to the year with a turnover of MSEK 1,776, which is an increase of 6%. Organically, sales increased by 3% and the operating margin excluding non-recurring items amounted to 9.7%. For the full year, we reported an operating margin excluding non-recurring items of 7.2%, which means we have met our financial target of a 7% operating margin. DEVELOPMENT OF OUR BUSINESS Region EMEA showed organic sales growth of 2% during the fourth quarter. Sales were strong primarily in Southern Europe, Central Europe and Eastern Europe whereas they were weaker in France and the UK. Region Asia-Pacific continued to show organic growth also during the fourth quarter. Sales were strong in South Korea, mainly due to a larger installation within Entrance Security, and in India where the ATM business continued to perform well. Region Americas had organic sales growth of 4% during the fourth quarter. In both North and South America sales developed positively. The positive trend in Entrance Security s sales continued. The sales in mass transit continued to develop well, with deliveries of several orders for metro systems in both Asia and Europe. In Cash Management, sales in Europe of the closed cash management system, SafePay, continued positively during the period and several major customers placed new orders. In North America we received several large orders for airtube systems from American banks. In Safes & Vaults, both sales in the ATM and certified safe segments developed positively. In Electronic Security sales during the quarter were below last year, due to weaker sales in Europe. Q4 FINANCIAL RESULTS For the fourth quarter, we reported organic sales growth of 3%, as well as an operating profit excluding non-recurring items of MSEK 172, giving an operating margin of 9.7%. With a strong fourth quarter, it is a milestone to report an operating margin of 7.2% for the year. With a clear strategy and structure, we are now equipped to continue executing our strategy for profitable growth. Gothenburg, February 2, 2017 Henrik Lange President and CEO FINANCIAL TARGETS & OUTCOME Oct - Dec Oct - Dec Jan - Dec Jan - Dec Target Organic growth 3% 2% 1% 0% 5% Operating margin 1) 9.7% 8.9% 7.2% 6.6% 7.0% Return on capital employed 1) 2) 12.8% 12.4% 12.8% 12.4% 15.0% Equity ratio 34% 34% 34% 34% 30% 1) Excluding non-recurring items 2) During the last twelve-month period 2 GUNNEBO YEAR-END REPORT 2016

3 SALES & PROFITABILITY IN BRIEF SALES BY REGION YTD 2016 SALES BY PRODUCT GROUP YTD % EMEA 19% 7% 17% Cash Management Entrance Security 19% 64% APAC Americas 35% 22% Safes & Vaults Electronic Security Other SALES Q VS Q SALES YTD 2016 VS 2015 Organic Structure Currency Total EMEA 2% 0% 2% 4% APAC 3% 0% 5% 8% AMERICAS 4% 0% 5% 9% TOTAL 3% 0% 3% 6% Organic Structure Currency Total EMEA 0% 2% -1% 1% APAC 5% 0% -1% 4% AMERICAS -2% 0% -3% -5% TOTAL 1% 1% -1% 1% GROUP SALES & OPERATING MARGIN BY QUARTER 2,000 1,800 1,600 1,400 1,200 1, % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% SALES BY PRODUCT GROUP YTD 2016 VS 2015 EMEA APAC Americas Total Cash Management /- +/- Entrance Security +++ +/- +/- +++ Safes & Vaults Electronic Security Other / /- Unchanged + or - Slightly better/slightly worse ++ or -- Better/Worse +++/--- Much better/much worse 3 GUNNEBO YEAR-END REPORT 2016

4 REGION EMEA Oct - Dec Oct - Dec Jan - Dec Jan - Dec % GROUP SALES YTD Net sales, MSEK 1,131 1,084 3,907 3,860 Organic growth, % Operating profit (EBIT) excl. non-recurring items, MSEK Operating margin (EBIT) excl. non-recurring items, % Non-recurring items, MSEK Operating profit (EBIT), MSEK % GROUP SALES YTD 64% SALES DEVELOPMENT Q Organically, the region s sales during the fourth quarter increased by 2%. Sales in the sub-regions South, Central and Eastern Europe continued to develop well. The development was weaker in France and the UK. Cash Management solutions continued to develop well. Several large deliveries in Southern Europe and France of the closed cash management system, SafePay, had a positive impact. Sales in the Middle East in collaboration with a cash services partner also developed well. Sales in Safes & Vaults developed positively, driven by channel partner sales in the Nordics as well as a strong development of the delivery of ATM safes. Entrance Security had a strong development during the quarter in the majority of the markets across the region. Electronic Security sales were weaker in the fourth quarter. RESULT DEVELOPMENT Q Operating profit excluding non-recurring items improved to MSEK 76 (69) giving an operating margin of 6.7% (6.4). The improved profits were mainly driven by increased productivity in Europe. Non-recurring items had a negative impact on operating profit by MSEK -23 (-26). These were mainly caused by continued structural changes in Europe Sales per quarter Operating margin %, excl. non-recurring items Operating margin % 12M, excl. nonrecurring items 7% 6% 5% 4% 3% 2% 1% 0% QUARTER HIGHLIGHTS French La Poste places an order for over 500 customized safes. Dubai-based cash services company Transguard continues to order solutions for cash management for installation at their retail customers. Danish indoor multifunctional arena, Royal Arena, turns to Gunnebo for an entrance security solution. UK Post Office agrees to trial Gunnebo s anti-gas attack protection system for ATM s (GP-X ATM). Several orders for Entrance Security have been placed by public & commercial buildings in the Middle East. EMEA IN BRIEF SVP: Heinz Jacqui Sales Companies: 17 Europe, Middle East & Africa (EMEA) is the Group s largest region. It is divided into eight sub-regions: Nordic, Central Europe, Southern Europe, UK/ Ireland, France, Eastern Europe, Middle East and Africa. SALES BY PRODUCT GROUP YTD % 34% 3% 18% 22% Cash Management Entrance Security Safes & Vaults Electronic Security Other 4 GUNNEBO YEAR-END REPORT 2016

5 REGION ASIA-PACIFIC Oct - Dec Oct - Dec Jan - Dec Jan - Dec % GROUP SALES YTD Net sales, MSEK ,129 1,085 Organic growth, % Operating profit (EBIT) excl. non-recurring items, MSEK Operating margin (EBIT) excl. non-recurring items, % Non-recurring items, MSEK Operating profit (EBIT), MSEK % SALES DEVELOPMENT Q Sales in the region increased organically by 3% during the fourth quarter. The markets in India, China, South Korea and Singapore have developed well, while sales were weaker in the rest of South- East Asia. Sales in Safes & Vaults continued to develop well on all markets in the region during the quarter, especially the sale of safes to manufacturers of ATMs. The bank business in India developed weaker, being affected by the demonetisation programme. Sales of Entrance Security solutions were good, mainly driven by a major delivery in South Korea. Gunnebo also has a fire security business in the region. Both the fire products and project business developed well in India and Indonesia. Sales in Cash Management and Electronic Security developed weaker in the quarter. RESULT DEVELOPMENT Q Strong sales and tight cost control contributed to the improvement in operating profit excluding non-recurring items, which was MSEK 55 (41). This corresponded to an operating margin of 15.7% (12.7) Sales per quarter Operating margin %, excl. non-recurring items Operating margin % 12M, excl. nonrecurring items 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% QUARTER HIGHLIGHTS A Swedish retailer places an order for Gunnebo's retail stations for efficient cash management in their stores in Singapore and Malaysia. The Chinese city of Guiyang chooses Gunnebo entrance security solutions for its metro Line 1. Bank Central Asia (BCA) in Jakarta, Indonesia installs high-security perimeter protection and entrance control solutions. Samsung Electronics Institute in Seoul University in South Korea invests in Gunnebo s SpeedStile for entrance security. ASIA-PACIFIC IN BRIEF SVP: Sacha de La Noë Sales Companies: 7 Australia/New Zealand, India, Indonesia, China South-Korea, South-East Asia: Malaysia, Singapore (with offices in Thailand, Vietnam and Myanmar) SALES BY PRODUCT GROUP YTD 3% 21% 48% 6% 22% Cash Management Entrance Security Safes & Vaults Electronic Security Other 5 GUNNEBO YEAR-END REPORT 2016

6 REGION AMERICAS Oct - Dec Oct - Dec Jan - Dec Jan - Dec % GROUP SALES YTD Net sales, MSEK ,052 1,107 Organic growth, % Operating profit (EBIT) excl. non-recurring items, MSEK Operating margin (EBIT) excl. non-recurring items, % Non-recurring items, MSEK Operating profit (EBIT), MSEK % SALES DEVELOPMENT Q Organic sales for the region increased by 4% during the fourth quarter. Growth in Americas was primarily driven by sales within Safes & Vaults, Entrance Security and Electronic Security. Safes & Vaults had a strong sales development in the quarter, primarily to the banking sector in the US and Canada. Entrance Security had a positive development with a number of larger installations across the region and also strong sales of electronic article surveillance to major retail chains in Brazil. Cash Management sales were primarily derived from strong sales of drive-up equipment in the US market, as well as a number of installations of cash deposit systems in the retail sector in both US and Mexico. Electronic Security had a strong quarter, driven by good sales to American banks. RESULT DEVELOPMENT Q The region s operating profit excluding nonrecurring items was MSEK 41 (39) and the operating margin 13.9% (14.4) Sales per quarter Operating margin %, excl. nonrecurring items Operating margin % 12M, excl. non-recurring items 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% QUARTER HIGHLIGHTS Carrefour in Brazil signs a major contract for installation and service of electronic article surveillance and electronic security. The retail business in Mexico continues to grow. In the quarter, contracts for installation and service of electronic security are signed with several companies including Costco and Telefónica. Raia Drogasil and DPSP, the two largest drugstore chains in Brazil, continue to upgrade their loss prevention with solutions from Gunnebo. Major American banks turn to Gunnebo for the installation of a cash management system to improve the customer experience. Canadian Correction Facility signs a two-year service agreement. AMERICAS IN BRIEF SVP: Dan Schroeder Sales Companies: 4 North America: Canada, USA Latin America: Brazil, Mexico SALES BY PRODUCT GROUP YTD 20% 26% 6% 26% 22% Cash Management Entrance Security Safes & Vaults Electronic Security Other 6 GUNNEBO YEAR-END REPORT 2016

7 FINANCIAL PERFORMANCE OCTOBER-DECEMBER 2016 Net sales The Gunnebo Group s net sales during the fourth quarter amounted to MSEK 1,776 (1,677) representing a 6% increase. Organic growth was 3%, with EMEA at 2%, Asia-Pacific at 3% and Americas at 4%. The currency effect was 3%. Operating results Operating profit was MSEK 142 (121), equaling an operating margin of 8.0% (7.2). Excluding nonrecurring items, operating profit amounted to MSEK 172 (149), equaling an operating margin of 9.7% (8.9). EBITDA excluding non-recurring items reached MSEK 203 (181) corresponding to 11.4% (10.8) of net sales. Depreciations were MSEK 17 (15) and amortisations MSEK 14 (17) of which MSEK 6 (6) derived from acquisition related intangibles. The gross profit margin excluding non-recurring items for the quarter was 29.7% compared to 29.2% last year. Selling and administrative expenses in percent of net sales excluding nonrecurring items was 20.1% in the quarter compared to 19.8% last year. Non-recurring items impacted the result by MSEK-30 (-28) in the quarter. These were mainly caused by continued structural changes in Europe. OPERATING PROFIT BRIDGE Oct - Dec Operating profit 2015, MSEK 121 Organic 9 Structure 16 Currency 21 Other -25 Operating profit Changes in the operating profit in the fourth quarter, as compared to the corresponding quarter 2015, were explained by: The 3% increase in organic sales growth, which improved the profit by MSEK 9. The positive net structural effects of MSEK 16 included the change in non-recurring items between the periods, as well as savings realized from previous restructuring initiatives. Currency effects for the quarter of MSEK 21, of which translation effect was MSEK 5 and transaction effect was MSEK 16 caused by all major currencies. A strategically important software development initiative, general cost increases and inflation, as well as the positive impact of an improved gross profit margin which were included in Other. Research and development expenses amounted to MSEK 33 (29) equaling 1.9% (1.7) of net sales. Other financial highlights Net financial items totaled MSEK -13 (-7) being on a level consistent with previous quarters. Tax expense was MSEK -33 (-34) resulting in an effective tax rate of 26% (30) reflecting the positive effects of previously unrecognized tax losses. Free cash flow was MSEK 107 (218), affected negatively by the strong sales development in the end of 2016 which resulted in the build up of trade receivables. A lower rate of investing activities was seen in the quarter. Cash flow from financing activities totaled MSEK -36 (-139) including both repayments of credit facilities and loan amortisations. Equity was positively impacted by both currency translations of MSEK 18 (-13) and by actuarial gains of MSEK 37 (19) on the Group s pension provisions, net of tax, primarily caused by an increase in the discount rate in the UK. Additionally, in November, Gunnebo AB issued 50,000 new shares in line with the incentive programme adopted in 2012, which increased equity by MSEK 1. FULL YEAR 2016 Net sales The Group s net sales amounted to MSEK 6,088 (6,052) representing a 1% increase. Organic growth was 1%, with EMEA at 0%, Asia-Pacific at 5% and Americas at -2%. The currency effect was -1% and structure was 1% related to the acquired business Sallén in the second part of Operating results Operating profit was MSEK 366 (320), equaling an operating margin of 6.0% (5.3). Excluding nonrecurring items, it amounted to MSEK 438 (397), equaling an operating margin of 7.2% (6.6). EBITDA excluding non-recurring items reached MSEK 561 (505) equaling 9.2% (8.3) of net sales. Depreciations were MSEK 68 (61) and amortisations MSEK 55 (47) of which MSEK 24 (14) derived from acquisition related intangibles. The gross profit margin excluding non-recurring items was 29.5% compared to 29.7% last year. Selling and administrative expenses in percent of 7 GUNNEBO YEAR-END REPORT 2016

8 net sales excluding non-recurring items was 22.5% compared to 23.1% last year. Non-recurring items impacted the result by MSEK -72 (-77). The main items were the change into an indirect sales model in Austria, Hungary and Czech Republic which was finalized during quarter three, the closure of Trier manufacturing facility and continued structural and management changes in Europe. OPERATING PROFIT BRIDGE Jan - Dec Operating profit 2015, MSEK 320 Organic 8 Structure 50 Currency 16 Other -28 Operating profit The changes in the operating profit for the year compared to last year, were explained by: The 1% increase in organic sales growth, which affected the result by MSEK 8. Structural effects between the periods of MSEK 50 including the change in non-recurring items, savings realized from previous restructuring initiatives and the effect from the Sallén acquisition. The currency effect of MSEK 16 being the net of transaction effects of MSEK 18 and translation effects of MSEK -2. The software development initiative, general cost increases and inflation, as well as increased spending on research and development which were included in Other. Research and development expenses were MSEK 101 (87), representing 1.7% (1.4) of net sales, an increase reflective of the Group s strategy to strengthen the product development roadmap for all product areas. Other financial highlights Net financial items totaled MSEK -53 (-43) where the currency development on loans impacted negatively. Tax expense was MSEK -104 (-109) resulting in an effective tax rate of 33% (39) reflecting the continued focus on income taxes during the year in addition to positive effects of previously unrecognized tax losses. Free cash flow was MSEK 159 (56), reflecting a strong operating profit, a lower rate of investments in property plant and equipment as well as higher sales of property, plant and equipment mainly in the UK. Cash flow from financing activities totaled MSEK -115 (176) including both repayments of credit facilities and loan amortisations as well as new loans. In 2015 additional loans were taken related to the financing of the acquisition of Grupo Sallén. Equity was impacted both positively by currency translations of MSEK 100 (-82) and negatively by actuarial losses of MSEK -99 (+42) on the Groups pension provisions net of tax. The actuarial losses are primarily caused by a decrease in the discount rate in the UK. Additionally, Gunnebo AB issued a total of 135,000 new shares during the year in line with the incentive programme adopted in 2012, which increased equity by MSEK 4. The incentive program 2012 is now fully settled. In line with the Long Term Incentive Programme (LTIP 2015), Gunnebo AB issued 730,800 new shares of series C in March at a nominal value of SEK 5 per share, increasing the share capital by MSEK 4 during the year. All of these shares were then repurchased by Gunnebo AB at the same value. The shares will be held by Gunnebo AB until the closure of LTIP in 2018, when they may be converted to shares of series B in line with LTIP. Proposed dividend The Board propose a dividend of SEK 1.20 (1.00) per share for the 2016 financial year. Gothenburg, February 2, 2017 Henrik Lange President and CEO This interim report is a translation of the original report in Swedish and has not been reviewed by the company s auditors. 8 GUNNEBO YEAR-END REPORT 2016

9 GROUP INCOME STATEMENT, CONDENSED MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales 1,776 1,677 6,088 6,052 Cost of goods sold -1,257-1,202-4,319-4,278 Gross profit ,769 1,774 Selling and administrative expenses ,417-1,452 Other operating items, net Operating profit Net financial items Profit after financial items Taxes Net profit Net profit attributable to: Parent company shareholders Non-controlling interests Net profit Basic earnings per share, SEK Earnings per share after dilution, SEK GROUP STATEMENT OF COMPREHENSIVE INCOME, CONDENSED MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net profit Other comprehensive income for the period Items that will not be reclassified to the income statement Actuarial gains and losses* Subtotal Items that may be reclassified to the income statement Translation differences on foreign operations Other* Subtotal Total other comprehensive income Total comprehensive income for the period *Net of taxes Total comprehensive income attributable to: Parent company shareholders Non-controlling interests Total comprehensive income for the period GUNNEBO YEAR-END REPORT 2016

10 GROUP STATEMENT OF FINANCIAL POSITION, CONDENSED MSEK Dec 31 Dec 31 Goodwill 1,628 1,517 Other intangible assets Property, plant and equipment Financial assets Deferred tax assets Total non-current assets 2,615 2,488 Inventories Accounts receivable 1,317 1,150 Other current receivables Liquid funds Total current assets 2,936 2,597 Total assets 5,551 5,085 Total equity 1,890 1,747 Deferred tax liabilities Pension commitments Loans, long-term 1,152 1,139 Total non-current liabilities 1,726 1,594 Accounts payable Other current liabilities Loans, short-term Total current liabilities 1,935 1,744 Total equity and liabilities 5,551 5,085 CHANGES IN GROUP EQUITY, CONDENSED MSEK Jan - Dec Jan - Dec Opening balance 1,747 1,694 Total comprehensive income for the period Dividend Other, including new share issue 7 3 Closing balance 1,890 1, GUNNEBO YEAR-END REPORT 2016

11 GROUP CASH FLOW STATEMENT MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec OPERATING ACTIVITIES Operating profit Adjustment for depreciations Adjustment for amortisations* Other including non-cash items Net financial items Taxes paid Cash flow from operating activities before changes in working capital Cash flow from changes in working capital Cash flow from operating activities INVESTING ACTIVITIES Capital expenditure on intangibles, property, plant and equipment Sales of non-current assets Acquisition of operations Cash flow from investing activities Cash flow after investing activites, before financing activites FINANCING ACTIVITIES Change in loans and other financial items New share issue Dividends paid to shareholders Cash flow from financing activities Cash flow for the period Liquid funds at the beginning of the period Translation differences in liquid funds Liquid funds at the end of the period Free cash flow** *Amortisations from acquisition related intangibles amounted to Q M SEK 6 (6) and full year 2016 M SEK 24 (14) **Equals to cash flow from operating and investing activities, excluding acquisitions and divestments CHANGE IN NET DEBT Closing Opening balance balance MSEK Dec 31 Organic Structure Currency January 1 Loans, long- and short-term 1, ,353 Post employment benefits, net * Interest-bearing assets Liquid funds Net debt 1, ,212 *Includes net actuarial losses of GUNNEBO YEAR-END REPORT 2016

12 GROUP KEY RATIOS Jan - Dec Jan - Dec EBITDA, MSEK EBITDA excluding non-recurring items, MSEK EBITDA margin, % EBITDA margin excluding non-recurring items, % Operating margin (EBIT), % Operating margin (EBIT) excluding non-recurring items, % Profit margin (EBT), % Return on capital employed, % 1) Return on capital employed excluding non-recurring items, % 1) Capital employed turnover rate, times Return on equity, % 1) Net debt, MSEK 1,297 1,212 Net debt/ebitda, times 1) Equity ratio, % Interest coverage ratio, times Debt/equity, times Basic earnings per share, SEK Earnings per share after dilution, SEK Equity per share, SEK Free cash flow per share, SEK Total number of shares at end of period 77,050,848 76,185,001 Weighted average number of shares 76,836,889 76,180,114 Weighted average number of basic shares 76,243,567 76,180,114 Weighted average number of diluted shares 76,283,982 76,182,164 1) During the last twelve-month period 12 GUNNEBO YEAR-END REPORT 2016

13 QUARTERLY DATA QUARTERLY DATA GROUP 2014 Income statement, MSEK YTD YTD YTD Net sales 1,250 1,419 1,314 1,574 5,557 1,397 1,516 1,462 1,677 6,052 1,390 1,474 1,448 1,776 6,088 Cost of goods sold , ,088-3, ,053-1,028-1,202-4, ,049-1,020-1,257-4,319 Gross profit , , ,769 Selling and administrative expenses , , ,417 Other operating items, net Operating profit Net financial items Profit after financial items Taxes Profit for the period Key ratios Organic growth, % Gross margin, % Selling and administrative expenses in % of net sales Operating margin (EBIT), % Non-recurring items, MSEK Gross margin excl. non-recurring items, % Selling and adm. expenses, excl. nonrecurring items in % of net sales Operating profit (EBIT) excl. nonrecurring items, MSEK Operating margin (EBIT) excl. nonrecurring items, % Basic earnings per share, SEK QUARTERLY REGIONAL DATA 2014 EMEA YTD YTD YTD Net sales, MSEK ,013 3, ,084 3, ,131 3,907 Organic growth, % Operating profit (EBIT), MSEK Operating margin (EBIT), % Non-recurring items, MSEK Operating profit (EBIT) excl. nonrecurring items, MSEK Operating margin (EBIT) excl. nonrecurring items, % APAC Net sales, MSEK , , ,129 Organic growth, % Operating profit (EBIT), MSEK Operating margin (EBIT), % Non-recurring items, MSEK Operating profit (EBIT) excl. nonrecurring items, MSEK Operating margin (EBIT) excl. nonrecurring items, % AMERICAS Net sales, MSEK , ,052 Organic growth, % Operating profit (EBIT), MSEK Operating margin (EBIT), % Non-recurring items, MSEK Operating profit (EBIT) excl. nonrecurring items, MSEK Operating margin (EBIT) excl. nonrecurring items, % GUNNEBO YEAR-END REPORT 2016

14 NOTE 1 ACCOUNTING PRINCIPLES AND RISKS Accounting principles Gunnebo complies with the International Financial Reporting Standards adopted by the EU, and the official interpretations of these standards (IFRIC). The Interim Report for the Gunnebo Group has been prepared in accordance with the Swedish Annual Accounts Act and IAS 34 Interim Financial Reporting. The Interim Report for the parent company has been prepared in accordance with the Annual Accounts Act and the recommendation of the Swedish Financial Reporting Board, RFR 2 Accounting for Legal Entities. The same accounting principles and methods of calculation have been used as in the latest Annual Report. No new or revised IFRS standards effective 1 January 2016 had any significant impact on Gunnebo s financial statements. Significant risks and uncertainties The Group s and parent company s significant risks and uncertainties include operational risks and financial risks. Operational risks for Gunnebo mainly include risks posed by the global economy and commercial risks. The Group s risk management is described in more detail in the latest Annual Report. NOTE 2 FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments measured at fair value For all assets and liabilities measured at fair value, which comprise derivative instruments, the fair values have been assessed based on measurement techniques which are, in all essentials, based on observable market data. According to the fair value hierarchy of IFRS 13, such measurement methods are referred to as Level 2. The carrying amount of the Group s derivatives corresponds to their fair values. Other financial instruments For financial instruments such as accounts receivable, accounts payable and other noninterest-bearing financial assets and liabilities, which are recognised at amortised cost less any write-down, the fair value is deemed to be the same as the carrying amount due to the short anticipated duration. The Group s long-term borrowing primarily relates to long-term credit facilities but with short fixed interest rate periods and stable credit margin. The fair value is therefore deemed to be the same as the carrying amount (Level 2 in the IFRS 13 fair value hierarchy). 14 GUNNEBO YEAR-END REPORT 2016

15 NOTE 3 RECONCILIATION TO THE GROUP'S PROFIT AFTER FINANCIAL ITEMS MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec Region EMEA Region APAC Region Americas Operating profit Net financial items Profit after financial items NOTE 4 NON-RECURRING ITEMS PER FUNCTIONAL COST Oct - Dec Oct - Dec Oct - Dec Jan - Dec Jan - Dec Jan - Dec incl. non-rec non-rec excl. non-rec incl. non-rec non-rec excl. non-rec MSEK items items items items items items Net sales 1,776-1,776 6,088-6,088 Cost of goods sold -1, ,249-4, ,294 Gross profit , ,794 Selling and administrative expenses , ,370 Other operating expenses, net Operating profit Gross margin, % 29.2% 29.7% 29.1% 29.5% Selling and administrative expenses in percentage of net sales 21.3% 20.1% 23.3% 22.5% Operating margin, % 8.0% 9.7% 6.0% 7.2% Oct - Dec Oct - Dec Oct - Dec Jan - Dec Jan - Dec Jan - Dec incl. non-rec non-rec excl. non-rec incl. non-rec non-rec excl. non-rec MSEK items items items items items items Net sales 1,677-1,677 6,052-6,052 Cost of goods sold -1, ,187-4, ,252 Gross profit , ,800 Selling and administrative expenses , ,401 Other operating expenses, net Operating profit Gross margin, % 28.3% 29.2% 29.3% 29.7% Selling and administrative expenses in percentage of net sales 20.6% 19.8% 24.0% 23.1% Operating margin, % 7.2% 8.9% 5.3% 6.6% 15 GUNNEBO YEAR-END REPORT 2016

16 PARENT COMPANY PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME, CONDENSED MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales Administrative expenses Operating profit Net financial items Profit after financial items Appropriations Taxes Net profit Total comprehensive income corresponds with net profit for the period PARENT COMPANY STATEMENTS OF FINANCIAL POSITION, CONDENSED MSEK Dec 31 Dec 31 Intangible assets 7 4 Property, plant and equipment 1 2 Investments in subsidiaries 1,585 1,585 Deferred tax assets Total non-current assets 1,660 1,679 Current receivables from subsidiaries Other receivables 16 9 Liquid funds 1 0 Total current assets Totalt assets 1,731 1,719 Total equity 1,563 1,520 Current liabilities to subsidiaries Other liabilities Total current liabilities Total equity and liabilities 1,731 1,719 CHANGES IN PARENT COMPANY EQUITY, CONDENSED MSEK Jan - Dec Jan - Dec Opening balance 1,520 1,485 Total comprehensive income for the period Dividends Other, including new share issue 9 0 Closing balance 1,563 1, GUNNEBO YEAR-END REPORT 2016

17 DEFINITIONS In the Interim Report, Gunnebo presents certain financial figures that are not defined according to IFRS. The Group believes that these figures provide investors and the company s management with valuable supplementary disclosures, since they enable a valuation of the company s financial results and position. Since not all companies calculate financials in the same way, these are not always comparable with figures used by other companies. These financials should not, therefore, be considered a substitute for figures defined according to IFRS. Basic earnings per share Capital employed Capital employed turnover rate Debt/equity Earnings per share after dilution EBITDA EBITDA margin Equity ratio Free cash flow per share Gross margin Interest coverage ratio Net debt Net debt/ebitda Non-recurring items Operating margin (EBIT) Organic growth Profit margin Return on capital employed Return on equity Net profit attributable to the parent company s shareholders divided by the weighted average number of shares excluding C-shares as these have no dividend rights. Total assets less non-interest-bearing provisions and liabilities. Net sales rolling 12 months in relation to average capital employed. Net debt in relation to equity. Net profit attributable to the parent company s shareholders divided by the weighted average number of shares excluding C-shares as these have no dividend rights, after dilution. Operating profit before depreciation/amortisation and impairments of intangible assets and property, plant and equipment. EBITDA as a percentage of net sales. Equity as a percentage of the total assets. Cash flow from operating and investing activities, excluding acquisitions and divestments, divided by the weighted average number of shares excl. C-shares as these have no dividend rights. Gross profit as a percentage of net sales. Profit/loss after financial items excluding interest costs, divided by interest costs. Interest-bearing provisions and liabilities less liquid funds and interestbearing receivables. Average net debt divided by EBITDA rolling 12 months. Non-recurring items encompass restructuring programmes (closure of businesses and/or employee related costs) and other non-recurring items. Operating profit as a percentage of net sales. Growth in net sales adjusted for acquisitions, divestments and exchange rate effects. Profit after financial items as a percentage of net sales. Operating profit plus financial income rolling 12 months as a percentage of average capital employed. Profit for rolling 12 months as a percentage of average equity. 17 GUNNEBO YEAR-END REPORT 2016

18 Financial Calendar Annual General Meeting April 5, 2017 Interim Report Q October 25, 2017 MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Annual Report 2016 March 2017 About Gunnebo Interim Report Q April 28, 2017 Gunnebo is a global security provider with an offering covering safes and vaults, cash management, entrance security and electronic security. The Group has an annual turnover of MSEK 6,100 and 5,600 employees in 28 countries worldwide. Gunnebo has 11 production units in ten countries. Gunnebo s shares (GUNN) are traded on NASDAQ Stockholm under Mid Cap and Industrials. Interim Report Q July 19, 2017 Capital Market Day 2017 November 23, 2017 Vision To be the leading global provider of a safer future. Mission Gunnebo s mission is to offer products, services and solutions that increase security and efficiency, and create value for shareholders, customers, partners, employees and society on a global scale. Strategy for profitable growth Focus on growth in the product groups Cash Management, Entrance Security, Safes & Vaults and Electronic Security. Focus on solutions-selling to key accounts in target customer segments. Focus on operational excellence and productivity. Product Groups Cash Management Development, production, installation and service of intelligent cash management solutions for deposit, dispense, recycling and closed cash management. Marketed and sold under the Gunnebo brand with strong product brands as SafePay and Sallén. Entrance Security Development, production, installation and service of turnstiles, security doors & partitions and electronic article surveillance (EAS). Marketed and sold under the Gunnebo and Gateway (EAS) brands. Safes & Vaults Development, production, installation and service of safes, vaults, vault doors, safe deposit lockers (SDL s) and ATM safes. Marketed and sold under leading brands such as Chubbsafes and Fichet-Bauche. Electronic Security Development, production, installation and service of solutions for remote surveillance, access control, intrusion detection and electronic locking. Marketed and sold under the Gunnebo brand. Other Development, production, installation and service of solutions for fire safety and other traded products. 18 GUNNEBO YEAR-END REPORT 2016

19 Contacts Karin Wallström Nordén, SVP Marketing & Communications +46 (0) Susanne Larsson, Group Chief Financial Officer +46 (0) Gunnebo Gunnebo AB (publ) Reg. no Box 5181, SE Gothenburg, Sweden. Tel: +46 (0) This information is information that Gunnebo AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons, at CET on February 2, GUNNEBO YEAR-END REPORT 2016