Interim Report January-June 1998

Continued strong market development Orders received, SEK 4,391 m. (2,403) Invoiced sales, SEK 4,121 m. (2,202) Income after net financial items +87%, SEK 247 m. (132) Acquisition of MHC implemented in May nancial Summary January- January- Full-year Amounts in SEK m. June June 1997 1) 1998 1997 Orders received 4,391 2,403 6,113 Net sales 4,121 2,202 5,956 EBITDA 2) 425 211 656 Operating income 251 121 389 Income after net financial 247 132 370 items The Raymond Corporation was consolidated in BT as of August 1, 1997. 2) EBITDA = Earnings Before Interest, Tax, Depreciation and Amortisation of intangible assets Market and sales In Europe, demand has developed strongly. In North America as well, the market continues to show good growth. The overall good market development has led to continued stable order inflow in Europe as well as in North America. The new AC-truck, introduced in Europe this spring, had a very positive reception by the market with high growth and increased market shares in this segment as a consequence. In the segment for smaller trucks BT market shares in Europe decreased, primarily due to strong market growth in customer segments where the BT coverage is low. Orders received for the first half-year amounted to SEK 4,391 m. (2,403). For comparable units - prior to the acquisition of Raymond - orders received rose by 14%. Translated to comparable exchange rates, this corresponds to an increase of 13% compared with the same period of 1997. Net sales amounted to SEK 4,121 m. (2,202). For comparable units and at comparable exchange rates, the increase was 13% compared with the same period of 1997. The delivery rate primarily from the Swedish production unit was increased during the second quarter. Still, the order backlog continued to grow during the spring. This is in line with the normal seasonal pattern and will result in higher shipments during the second half of the year. Net sales by product area Net sales for the first half of 1998 and 1997 for the various product areas were as follows: January-June Change Amounts in SEK m. 1998 1997 % Warehouse trucks 2,236 1,111 + 101% Manual trucks 203 188 + 8% Spare parts 619 334 + 85% Service 467 335 + 39% Short-term rentals 182 125 + 46% Other areas *) 414 109 + 280% Net sales 4,121 2,202 + 87% *) Incl. counterbalanced trucks Net sales by market area Approx. 50% of sales are in Europe and 46% in North America. The financial crisis in Asia has impacted BT only marginally. Asia's share of total sales amounted to 1.2%, against 1.5% at year-end 1997. [REMOVED GRAPHICS] Income EBITDA for the Group amounted to SEK 425 m. (211). For comparable units, EBITDA rose by approximately 23% compared with the first half of 1997. Operating income, which amounted to SEK 251 m. (121), was charged with total depreciation of SEK 174 m. (90), including goodwill amortisations of SEK 46 m. (5). The integration process between Raymond and BT is ongoing according to plan. A number of projects are under way, and previously estimated synergies are expected to be met, with a gradual impact on income during the years 1998-2000. To date impact on income is very limited. Net financial items amounted to SEK -4 m. (11). Financial items include a positive interest margin on long-term rentals/leasing of SEK 54 m. (19). Excluding the margin on long-term rentals/ leasing net financial items improved significantly during the second quarter compared with the first quarter. The positive development during the second quarter is primarily due to the fact that non-recurring financial expenses of approximately SEK 5 m. were charged to the first quarter connected to the syndicated loan, while the second quarter contained both non-recurring financial income and positive exchange rate effects of approximately SEK 10 m. each. Thus income after net financial items amounted to SEK 247 m. (132). Capital expenditures Consolidated net capital expenditures for fixed assets amounted to SEK 191 m., compared with SEK 123 m. in the previous year. In early May BT implemented its previously announced acquisition of MHC Ltd, which is active in sales and service primarily of counter-balanced trucks and warehouse trucks through its own companies in Eastern Europe. MHC is consolidated in the BT Group as of May 1998. The impact on sales and income is marginal for the period May-June. Since the late 1980's BT has manufactured manual trucks in North America through its Canadian subsidiary, Lift-Rite Inc. During the third quarter a new, efficient production facility will be placed in operation in newly constructed, leased premises. This will result in more effective and expanded production resources for manual trucks designed primarily for the North American market. A new wholly owned company - BT Lift Trucks Pty Ltd - was established during the second quarter for sales and service in the Australian market. Financing and liquidity Total assets for the Group increased to SEK 7,562 m., against SEK 7,061 m. at the beginning of the year, and net borrowings increased to SEK 2,244 m., compared with SEK 1,783 m. at the beginning of the year. The net gearing ratio has risen to 121% primarily due to the acquisition of MHC and an increase in working capital, as a consequence of the overall growth in operations. The equity ratio was 24.5%, against 25.6% at the beginning of the year. Cash flow before financial activities amounted to SEK -521 m. (29). Company acquisitions accounted for SEK 218 m., increased capital tied up in operations for SEK 208 m. and continued investments in leasing operations in North America for SEK 160 m. A program is running in order to reduce working capital. Work is also ongoing to review the way of financing leasing operations in the U.S. The lease portfolio amounted to SEK 1,462 m. as of June 30. Other An expanded cooperation agreement was signed during the spring between BT Raymond and Toyota Industrial Equipment in the U.S. The agreement calls for expanded product deliveries from BT Raymond to Toyota. Manufacturing will involve all of BTs three manufacting plants for warehouse trucks in North America. Personnel At the end of the period there were 6,767 (3,776) employees. During the year the number of employees increased by 323, of whom over 200 were added through the acquisition of MHC. The remaining increase is attributable mainly to the increased production capacity in Europe and North America. Parent company The Parent Company's net sales amounted to SEK 12 m. (12) during the period and relate to rents from Group companies. Income after net financial items amounted to SEK 177 m. (74). The improvement is attributable to dividends from subsidiaries of SEK 192 m. (105). Net capital expenditures for fixed assets remained unchanged at nearly SEK 1 m. Total assets amounted to SEK 4,837 m., against SEK 4,575 m. at the beginning of the year. Interest-bearing liabilities rose by SEK 187 m. during the year. The number of employees at the end of the period was 54 (52). NEXT FINANCIAL REPORT FROM BT INDUSTRIES AB Interim Report, January-September October 21 Information can be ordered from BT Industries AB, Information, phone +46-142-86 000. Mjölby, August 7, 1998 Carl-Erik Ridderstråle President and CEO For further information, please contact: Carl-Erik Ridderstråle, CEO Per Zaunders, CFO Phone: +46-142-86 000 AUDITORS´ REPORT We have reviewed this six-month interim report and in doing so followed the recommendation of the Swedish Institute of Authorised Public Accountants. A review is considerably limited in comparison with an audit. We have found nothing that would indicate that this interim report does not meet the requirements of Sweden's securities exchange and annual accounts laws. Mjölby, August 7, 1998 Öhrlings Coopers & Lybrand AB Hans Scheja Håkan Thörnholm Authorised Public Authorised Public Accountant Accountant INCOME STATEMENTS Consolidated January-June Full- year Amounts in SEK m. 1998 1997 1997 Net sales 4,121 2,202 5,956 Cost of sales -2,911 -1,530 -4,202 Gross income 1,210 672 1,754 Product development -71 -25 -79 Marketing and sales -544 -346 -831 Administration -285 -172 -435 Amortisation of goodwill -46 -5 -43 Other operating income 29 11 82 Other operating expenses -47 -13 -64 Income in associated 5 -1 5 companies Operating income 251 121 389 Income from financial investments Interest margin, long-term 54 19 68 rentals/leasing Interest income and other 24 5 16 financial income Interest expenses and other -82 -13 -103 financial expenses Income after net financial 247 132 370 items Income tax *) -104 -46 -156 Non-recurring tax - - -42 Minority interests 1 - -4 Net income 144 86 168 Reported operating income has been charged total depreciation and -174 -90 -267 amortisation according to *) Six months tax has been estimated at approximate 35% of income before tax and amortisation of intangible assets. For the full-year 1997, full tax is reported. [REMOVED GRAPHICS] QUARTERLY DEVELOPMENT BALANCE SHEETS Consolidated Amounts in SEK m. June 30, JuneDec.31, 1998 30,19971997 ASSETS Fixed assets Intangible assets 1,763 139 1,685 Tangible assets 1,224 678 1,153 Financial fixed assets 1,215 7 1,068 Total fixed assets 4,202 824 3,906 Current assets Inventories 932 497 879 Current receivables 2,257 890 1,991 Cash and banks 171 108 285 Total current assets 3,360 1,495 3,155 TOTAL ASSETS 7,562 2,319 7,061 EQUITY AND LIABILITIES Equity 1,847 891 1,774 Minority share 5 0 34 Provisions 528 127 497 Liabilities Long-term liabilities 3,282 202 588 Short-term liabilities 1,900 1,099 4,168 TOTAL EQUITY AND LIABILITIES 7,562 2,319 7,061 NET BORROWINGS Consolidated Amounts in SEK m. June 30,June 30,Dec.31, 1998 19971997 Interest-bearing assets 1,639 111 1,578 Interest-bearing liabilities 3,883 423 3,361 NET BORROWINGS 2,244 312 1,783 STATEMENTS OF CASH FLOW Consolidated January-June Full- year Amounts in SEK m. 1998 1997 1997 Net income 144 86 168 Cash flow adjustments - Depreciations according 174 90 267 to plan - Other -63 13 86 Total 111 103 353 Change in working capital -208 -33 -169 Cash flow before investments 47 156 352 Net investments excl. acquisitions/disposals of -350 -123 -390 companies *) OPERATING CASH FLOW -303 33 -38 Acquisitions/disposals of -218 -4 -2,759 companies Cash flow before financial -521 29 -2,797 activities Cash flow from financial activities Changes in interest-bearing 483 -24 2,183 liabilities Dividend to the shareholders -77 -70 -70 Rights issue - - 793 Total 406 -94 2,906 Change in cash and banks - excl. translation -115 -65 109 differences - translation differences 1 5 8 Change in cash and banks -114 -60 117 *) A continued increase in leasing operations in North America reduced cash flow with approx. SEK 160 m. during the first six months of 1998. During the 5-months period in 1997 in which Raymond was consolidated in BT the corresponding amount was approximately SEK 116 m. KEY RATIOS Consolidated January-June Full- 1998 1997 1997 EBITDA-margin, % 11.6% 10.4% 12.2% Operating margin, % 7.4% 6.4% 7.7% Profit margin, % 6.0% 6.0% 6.2% Interest coverage, 4.0 11.8 4.9 Net gearing ratio, % 121% 35% 99% Equity ratio, % 24.5% 38.4% 25.6% DEFINITIONS EBITDA margin Operating income plus depreciation and the interest margin on long-term rentals/leasing divided by net sales. Operating margin Operating income plus the interest margin on long-term rentals/leasing in relation to net sales. Profit margin Income after net financial items in relation to net sales. Interest coverage Operating income plus interest income divided by interest expenses. Net gearing ratio Net borrowings in relation to shareholders' equity and the minority share at the end of each period. Equity raio Shareholders' equity including the minority share in relation to total assets at the end of the period. SHARE DATA *) Consolidated January-June Full- year 1998 1997 1997 Earnings per share after estimated tax, 5.15 3.80 9.15 SEK 1) EBITDA per share, SEK 2) 17.10 10.15 31.05 Cash flow per share, SEK -10.80 1.45 -1.65 3) Euity per share, SEK 4) 65.95 39.30 63.35 Number of shares at the 28,000 20,000 28,000 end of the period, thousands Average number of shares, 28,000 20,000 23,333 thousands 5) Number of shareholders at 4 678 4 433 4 129 the end of the period *) Due to the new share issue of 8,000,000 shares equalling SEK 800 m. in 1997, per-share data for the first six months of 1997 has been translated using a factor of 0.88235. 1)Income before tax is charged with estimated of 35% on income before tax and amortisation of intangible assets divided by the average number of shares during the period. 2)Operating income plus depreciation and the amortisation of intangible assets plus the interest margin on long-term rentals/leasing divided by the average number of shares. 3)Cash flow from operations according to the cash flow analysis divided by the average number of shares. 4)Shareholders' equity divided by the number of shares on the closing day. Average number of shares during the year. For 1997 calculated as: (No. at beginning of year, 20,000,000 x 7 mos. + 28,000,000 x 5 mos./12) = 23,333,333.*) [REMOVED GRAPHICS] [REMOVED GRAPHICS] [REMOVED GRAPHICS] [REMOVED GRAPHICS]