Observer AB (publ) Interim report January – March 2006, May 4, 2006

Positive market development and improved underlying results. Measures to strengthen development in Nordic region and UK

Operating profit amounted to SEK -404 million (51) and profit before tax was SEK -421 million (39). Profit after tax amounted to SEK -444 million (25), while earnings per share amounted to SEK -5.97 (0.36).

Excluding total goodwill write-downs of SEK 469 million, operating profit rose by 28 percent to SEK 65 million (51). The operating margin, excluding goodwill write-downs, was 13.2 percent (12.0).

The Group’s operating revenue rose by 16 percent to SEK 493 million (424). Organic growth in local currency was 3 percent (0).

Cash flow from operating activities amounted to SEK 49 million (-8). Cash flow after investments amounted to SEK 22 million (-26).

The restructuring of Nordic and UK operations is expected to generate savings of approximately SEK 130 million on an annual basis with full effect by 2008. One-time costs are estimated at SEK 120 million and will primarily be charged against 2006.

Niklas Flyborg took over as President and CEO on February 10, 2006.