Interim Report, January - March 2006

Positive trend for all divisions

• Inflow of orders: SEK 2,092 million (1,835) • Net sales: SEK 1,812 million (1,621) • Net earnings: SEK 26 million (-16), equivalent to earnings per share of SEK 0.87 (-0.53) • Improvement in earnings in all four divisions The group’s inflow of orders amounted to SEK 2,092 million (1,835), up 9% after adjustment for the effects of exchange rate movements. The inflow of orders increased compared with the previous year in all divisions. Net sales amounted to SEK 1,812 million (1,621), up 7% after adjustment for the effects of exchange rate movements. All four divisions increased their net sales. Operating earnings amounted to SEK 43 million (SEK -10 million). Improvements in earnings have occurred in all divisions as a consequence of increased sales and lower costs. The effects of the restructuring program are appearing according to plan. The impact of exchange rate movements on operating earnings was only marginal. Net earnings amounted to SEK 26 million (-16), which is equivalent to SEK 0.87 (-0.53) per share. Cash flow from operating activities was SEK 111 million (50) after tax, which is equivalent to SEK 3.70 (1.67) per share. Accounting in accordance with Cardo’s new divisions From the turn of the year 2005/2006, Cardo has been divided into four divisions. The previous separation into the business areas Cardo Door and Cardo Pump no longer applies, and the comparative figures for 2005 shown below have therefore been recalculated in accordance with the new group structure on January 1 this year. Appendix 4 shows sales, operating earnings and operating margin per quarter for 2005 in accordance with the new divisional structure. In terms of Cardo’s net sales for 2005, the divisions make up the following shares of the group: • Door & Logistics Solutions: 48% • Wastewater Technology Solutions: 29% • Pulp & Paper Solutions: 8% • Residential Garage Doors: 15% Door & Logistics Solutions For Cardo’s division Door & Logistics Solutions with its corporate brand Crawford, the inflow of orders amounted to SEK 1,022 million (894), up 10% on the corresponding period the previous year adjusted for the effects of exchange rate movements. Sales of both products and service showed an increased inflow of orders, and the increase relates to virtually all markets. Net sales amounted to SEK 925 million (848), up 5% adjusted for the effects of exchange rate movements. Operating earnings were SEK 69 million (43). The improvement in earnings is an effect of increased sales and lower costs. Wastewater Technology Solutions For the division Wastewater Technology Solutions with its corporate brand ABS, the inflow of orders amounted to SEK 628 million (541), up 9% on the previous year adjusted for the effects of exchange rate movements. The positive inflow of orders relates to all major markets in Europe and to North and South America. Net sales amounted to SEK 522 million (458), up 8% on the corresponding period the previous year adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK 26 million (13). The rise in earnings is primarily a result of the higher sales. Pulp & Paper Solutions The division Pulp & Paper Solutions includes the Lorentzen & Wettre and Scanpump operations. The inflow of orders amounted to SEK 175 million (166), up 2% on the previous year adjusted for the effects of exchange rate movements. Net sales amounted to SEK 136 million (109), up 20% adjusted for the effects of exchange rate movements. Operating earnings amounted to SEK -1 million (-10). Residential Garage Doors Residential Garage Doors’ operation is run under the Crawford, Normstahl and Henderson brands. The inflow of orders amounted to SEK 273 million (239), up 10% on the corresponding period the previous year adjusted for the effects of exchange rate movements. Net sales amounted to SEK 235 million (211), up 7% adjusted for the effects of exchange rate movements. Earnings amounted to SEK -35 million (-41). There are still difficulties in passing on increases in the price of materials to customers. Company acquisition finalized Late March saw finalization of the acquisition of Combursa. The acquisition was made at an enterprise value of SEK 320 million. Combursa is one of Spain’s leading suppliers of docking systems and industrial doors and has annual sales of approximately SEK 275 million and employs about 150 people. Combursa will be accounted for as part of the division Door & Logistics Solutions and will be included in group earnings from April 1 2006. Liquidity and financing At March 31, the group's cash and cash equivalents amounted to SEK 183 million (192) as against SEK 168 million at the beginning of the year. In addition, there are unutilized credit facilities of approximately SEK 1.8 billion (approximately 2.3). The group's gross investments, exclusive of company acquisitions, stood at SEK 39 million (62). Net interest bearing debt at March 31 amounted to SEK 795 million (277) as against SEK 554 million at the beginning of the year. The increase during the first quarter is explained by the acquisition of Combursa. Equity amounted to SEK 2,957 million (2,919), which is equivalent to SEK 98.57 (97.30) per share. At March 31, the group's equity ratio was 50.7% (57.4). Personnel The average number of employees in the group was 5,597 (5.801). Repurchase of shares At this year’s Annual General Meeting of Cardo AB a resolution was passed authorizing the Board of Directors to acquire up to so many own shares before the next Annual General Meeting that the Company’s holding at no time exceeds 10% of all shares in the Company. Acquisition is to be made on the Stockholm Stock Exchange at the market value applying on the occasion of acquisition. The purpose of the repurchase is to give the Board the opportunity to adjust the capital structure of the Company during the period until the next Annual General Meeting. The Board has yet to resolve to utilize the authorization and thus no repurchase has been made. Accounting principles This interim report has been drawn up in accordance with IAS 34, Interim Financial Reporting, which accords with the requirements of recommendation RR 31 of the Swedish Financial Accounting Standards Council concerning interim reports for groups. The same accounting principles have been applied in the interim report as in the latest annual report. Parent company The parent company's earnings after financial items amounted to SEK 440 million (-1), gross investments to SEK 0 million (0) and cash and cash equivalents to SEK 10 million (0) as against SEK 10 million at the beginning of the year. Previous market prospects In the report on operations that was published on February 7 2006, the following information was given: We assess that the general market trend for industrial products will be relatively favorable during 2006, even if there are differences between different geographical regions. For Cardo’s garage door division, the market trend is difficult to assess because of a large excess capacity in the industry and changes announced to local building legislation within the EU. Market prospects We assess that the market trend for industrial products will be generally relatively favorable during 2006, even if there are differences between different geographical regions. There is still uncertainty in the garage door division owing to the large excess capacity within the industry. Malmö, Sweden, May 3 2006 Cardo AB (publ) Peter Aru President and CEO This report has not been subjected to special examination by the Company’s auditors. Cardo's interim report for January-June will be published on August 10 2006. For further information, please contact: Peter Aru, President and CEO, tel +46 40 35 04 53 Göran Axeheim, Executive Vice President and CFO, tel +46 40 35 04 42 Maria Bergving, Senior Vice President Group Communications, tel +46 40 35 04 25, +46 70 602 61 81 Appendices: 1. Consolidated income statement in brief Net sales, operating earnings and operating margin by division 2. Consolidated balance sheet in brief 3. Consolidated cash flow statement in brief 4. Net sales, operating earnings and operating margin by division 2005 5. Group financial summary