Q3 Report 2006 Johan Molin President & CEO
Financial Highlights Q3 Continued high growth pace High stable demand in Europe and North America Fargo developing very well Sales SEK 7 736 M +10% +8% organic, +5% acquired growth, -3% currency EBIT* SEK 1 235 M +12% EPS* SEK 2.02 + 7% *Excluding restructuring cost of SEK 437 M 2
Financial Highlights Nine Months Sales SEK 23 078 M +14% +9% organic, +3% acquired, +2% currency EBIT* SEK 3 496 M +16% EPS* SEK 5.85 +14% *Excluding restructuring cost of SEK 957 M 3
14 12 10 Target 5,0% Actual 8,5% Organic Growth % 8 6 4 2 0-2 2003 2004 2005 2006-4 Quarter Rolling 12-months Target 4
Group Sales in Local Currencies Nine Months 2006 38 +15 50 +9 4 +16 2 +22 1 +25 5 +3 Portion of Group sales 2005 % Year-to-date vs previous year % 5
% 18 16 Sales Growth - Currency Adjusted MSEK 31000 30000 14 12 10 8 6 29000 28000 27000 26000 25000 12 12 months monthsgrowth run runrate rate 12,0 12,0 %: %: organic organic 8,5 8,5 % acquired 3,5 3,5 % 4 24000 2 23000 0-2 2003 2004 2005 2006 22000 21000 Acquired growth Organic growth Sales rolling 12-months in fixed currencies 6
Growth Highlights Rapid growth of Intelligent Door Openings El.mech components and electronic cylinders Access control Automatic doors Intelligent Door Openings ITG important new orders for e-passports Currently more than 10 countries Collaboration with Cisco on HiOtechnology Brings network intelligence to doors Reinforced investments in R&D 7
Fargo: Secure Card Issuance Integration running well Market leader in secure card issuance Respected brand Reputation for innovation Completes HID s future distributed card issuance strategy Sales synergies with HID 8
1250 Operating Income* (EBIT) SEK M 5000 1200 1150 1100 1050 1000 950 900 850 4800 4600 4400 4200 4000 3800 3600 3400 800 3200 2004 Quarter 2005 2006 12-months Quarter Rolling 12-months *Excluding Q2-Q3 restructuring 9
Margin Highlights Raw material increases offset through price increases Price increase +3% in Q3 Dilution expected to disappear in H1 2007 Restructuring progressing in line with plan Projects started in Q3 with costs of SEK 437 M (957 YTD) Reduction of 300 employees, accumulated savings 35 MSEK Low cost sourcing increasing Factory extension in CZ for cylinders Total program SEK 1250 + 200 M, savings SEK 600 M 10
Division - EMEA Continued growth across Europe Strong sales development in Nordic countries, Germany, Eastern Europe and Africa Improved trend in Benelux and Spain SALES share of Group total % 39 Operating margin (EBIT) + Volume + Restructuring savings progressing well = Price increase offset cost increase 20 18 16 14 12 10 EBIT % 2004 2005 2006 11
EMEA Financial Review Third Quarter Nine months EUR M 2006 2005 Change 2006 2005 Change Sales 316 295 +7% 992 925 +7% Organic growth +8% +8% Acquired growth -1% -1% EBIT 51* 45 +13% 155* 136 +14% EBIT-margin (%) 16.1* 15.2 15.6* 14.7 RoCE (%) 17.9* 15.6 18.5* 16.1 Operating cash flow before paid interest 58 59-2% 134 119 +13% *Excluding restructuring of EUR 34 M QTD, 79 M YTD 12
Division - Americas Continued strong sales especially within Electromechanical and Residential Groups Improved sales trend in Architectural Hardware Group SALES share of Group total % 33 Operating margin (EBIT) + Volume - Acquisitions dilutive as expected = Price increase offset cost increase 20 18 16 14 12 10 EBIT % 2004 2005 2006 13
Americas Financial Review Third Quarter Nine months USD M 2006 2005 Change 2006 2005 Change Sales 359 308 +17% 1034 889 +16% Organic growth +9% +10% Acquired growth +7% +5% EBIT 71* 58 +22% 198* 163 +21% EBIT-margin (%) 19.8* 18.9 19.2* 18.3 RoCE (%) 23.2* 21.6 22.8* 20.0 Operating cash flow before paid interest 68 80-15% 164 165-1% *Excluding restructuring of USD 3 M QTD, 11 M YTD 14
Division - Asia Pacific Growth resumed in the Asian region China in good growth Weak demand in New Zealand and South Pacific residential New Head of Division in place SALES share of Group total % 7 Operating margin (EBIT) - Raw material increases + New price increase in October + Restructuring 20 18 16 14 12 10 8 6 4 EBIT % 2004 2005 2006 15
Asia Pacific Financial Review Third Quarter Nine months AUD M 2006 2005 Change 2006 2005 Change Sales 111 108 +3% 308 284 +8% Organic growth +3% +4% Acquired growth +0% +4% EBIT 12* 15-20% 26* 35-26% EBIT-margin (%) 10.3* 13.9 8.3* 12.2 RoCE (%) 12.7* 18.6 9.5* 14.0 Operating cash flow before paid interest -2 6 12 40-70% *Excluding restructuring AUD 4 M QTD, 11 M YTD 16
Division - Global Technologies Strong growth pace in all segments - HID market investments in Brazil, China and India SALES share of Group total % 13 Operating margin (EBIT) + Volume + Acquisition of Fargo = Consolidation of operations in Norway, Germany and USA 20 18 16 14 12 10 EBIT % 2004 2005 2006 17
Global Technologies Financial Review Third Quarter Nine months SEK M 2006 2005 Change 2006 2005 Change Sales 1107 844 +31% 2,993 2,449 +22% Organic growth +11% +11% Acquired growth +23% +8% EBIT 168 128 +31% 418 347 +20% EBIT-margin (%) 15.1 15.2 14.0 14.2 RoCE (%) 16.1 17.3 13.7 16.5 Operating cash flow before paid interest 108 126-14% 231 246-6% *Excluding restructuring SEK 79 M 18
Entrance Systems Solid growth in all major markets Gain of market share in several markets SALES share of Group total % 8 Operating margin (EBIT) + Volume development - Price increase implemented Q4 - Dilution from acquisitions and mix 20 18 16 14 12 10 EBIT % 2004 2005 2006 19
Entrance systems Financial Review Third Quarter Nine months SEK M 2006 2005 Change 2006 2005 Change Sales 674 591 +14% 1,950 1,672 +17% Organic growth +11% +10% Acquired growth +5% +4% EBIT 87 84 +4% 248 230 +8% EBIT-margin (%) 12.9 14.2 12.7 13.8 RoCE (%) 11.3 11.2 10.3 10.7 Operating cash flow before paid interest 23 44-48% 224 275-19% *Excluding restructuring SEK 1 M 20
Q3 Report 2006 Tomas Eliasson CFO
Financial Highlights Q3 and Nine Months 2006 Third Quarter Nine months SEK M 2006 2005 Change 2006 2005 Change Sales 7,736 7,019 +10% 23,078 20,272 +14% Whereof Organic growth +8% +9% Acquired growth +5% +3% FX-differences -176-3% 384 +2% Operating income (EBIT) 1,235 * 1,103 3,496* 3,015 EBIT-margin (%) 16.0 * 15.7 15.2* 14.9 Operating cash flow 919 1,190 2,339 2,552 EPS (SEK) 2.02 * 1.89 +7% 5.85* 5.13 +14% *Excluding restructuring costs SEK 437 M QTD, 957 YTD 22
1400 Operating Cash Flow SEK M 5500 1200 5000 1000 4500 800 4000 600 3500 400 3000 200 2500 0 2004 Quarter 2005 2006 Quarter Rolling 12-months 2000 12-months 23
135 130 125 120 115 110 105 100 95 90 85 80 Working Capital, Days Collection: 55 MTPT: 110 2004 2005 2006 Collection: 55 MTPT: 111 65 60 55 50 45 40 Material through put time Collection period Material through put time Collection period 24
16000 Gearing % And Net Debt SEK M 160 14000 140 12000 120 10000 100 8000 80 6000 60 4000 40 2000 20 0 2004 Net debt 2005 2006 Net debt Gearing 0 Gearing 25
22 Return On Capital Employed* % 20 Target 20% 18 16 14 12 Roce RoceYTD16.5% (15.7). (15.7). Dilution 50 50 bp bpfrom 2006 2006 acquisitions. 10 2004 2005 2006 Target RoCe *Excluding Q2-Q3 restructuring 26
Conclusion Good growth and market momentum Acquisitions and new products adds growth Strong underlying cash generation Restructuring on track 27
Outlook 2006 Organic sales growth is expected to continue at a good rate The operating margin (EBIT) and operating cash flow are expected to develop well, excluding effects from additional restructuring 28
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