Ballingslöv discontinues the Svane Project

PRESS RELEASE Ballingslöv June 15, 2005

The first quarter 2004 Ballingslöv made an agreement to acquire the brand, franchise concept as well as all other intangible assets of the Danish kitchen chain of stores, Svane, consisting of 26 retailers. Ballingslöv’s Swedish factory, Ballingslöv AB, was supposed to manufacture the full Svane volume of kitchens and bathroom furniture from the turn of the year 2005/2006 (appr. 250 MSEK/year). The integration of the Svane-production has turned out to be more complex than expected and despite big efforts the expected profitability of the project has not been reached. To continue the project would require further substantial investments, and even so, the outcome would be uncertain. Ballingslöv’s board of directors has therefore decided to discontinue the project and sell the intangible assets to the previous supplier, the Danish kitchen manufacturer Tvis & Modulia. A letter of intent has been signed with Tvis & Modulia as well as with representatives for Svane. A final agreement is expected to be signed at the turn of the month June / July 2005. As a result of this sale of the intangible assets, future payments (2008, 2010) of appr. 100 MSEK will be avoided. The termination costs for the project, i.e. closing of assembly plant in Denmark as well as winding up the component production in Ballingslöv, are estimated to a lump sum of appr. 45 MSEK (after tax slightly above 30 MSEK) which will be affecting the result of the 2nd quarter. On the employment side this will imply 50 redundancies at Ballingslöv as well as 20 at the assembly plant in Denmark. All the investments made in Ballingslöv AB’s factory, regarding the Svane project, will now fully be used for Ballingslöv’s own product range thereby strengthening the competitiveness considerably. The other companies and activities within Ballingslöv International including the 1st of April acquired Kvik group are developing according to plan. Nils-Erik Danielsson, CEO and President Ballingslöv International AB (publ)