Report on operations for the six months ended June 30, 1999

Report on operations for the six months ended June 30, 1999 (Comparisons for 1998 exclude the divested businesses of Meto and Nielsen & Bainbridge) Meto was dividended to shareholders on June 17, completing the transition of Esselte into a focused pure office products company, ahead of schedule. *Sales increased by 33% for the second quarter and by 28% for the first six months against same periods for the previous year. *Strong cash flow from operations of SEK 341 million as a result of 18% increase in EBITDA and reductions in working capital. *Continued commitment to strategic investment to support build up of global structure, new product launches and web marketing development, resulting in a loss before tax of SEK 41 million for the second quarter. Sales Sales for the first six months of the year totalled SEK 5,699 million (4,460) and for the second quarter SEK 2,662 million (2,001). The sales growth is mainly due to the acquisition of Leitz. Based on comparable exchange rates and excluding acquisitions and divestments, sales in the second quarter grew by 2.4% against the same quarter for the previous year, representing the largest increase in organic sales on a comparable period basis since the first quarter of 1998. Sales in Germany and the USA picked up in the second quarter after a weak start to the year, with strong performances for Eastern Europe, the Netherlands, Denmark, Italy and Portugal. Earnings Income before tax for the first six months of 1999 amounted to SEK 93 million (168) having a loss before tax for the second quarter, SEK -41 million (37). The loss in the second quarter is primarily as a result of an increase in strategic investment across the business. Gross margin for the second quarter improved by 1.5 percentage point. Cash flow A strong cash flow from operations of SEK 341 million was achieved in the first six months. This reflects high EBITDA, lower working capital in Leitz and net capital expenditure lower than depreciation. Financial items Net financial expenses for the quarter were SEK 34 million, comprising net interest of SEK 26 million and SEK 8 million of other financial costs. The figure for the first six months of the year totals SEK 20 million. Business areas Filing & Document Management Sales for the second quarter rose to SEK 1,583 million (1,079), bringing thetotal for the first six months to SEK 3,444 million. The increase is mainly due to the acquisition of Leitz. Gross margins remain stable in a highly competitive market environment. Sales in the business area represent 60% of the group total. Identification Labelling Sales growth of 50% in the second quarter to SEK 312 million was driven by the continuing success of the Dymo Letratag and PC Labelwriter products which were launched at the beginning of the year. However, the high marketing costs associated with the launch of Letratag into the consumer market has kept a check on operating margin. Sales in the business area represent 11% of group total. Presentation Solutions The business area experienced a modest increase in sales during the second quarter to SEK 133 million. Sales in the business area represent 5% of group total. Computer Products Sales for the second quarter were down 18% to SEK 151 million (185) of which SEK 49 million was a result of the divestment of the fax paper business at the outset of the year. The performance of this area continues to be impacted by the termination of a major customer relation. New higher-margin products were launched contributing to increased gross margin. Sales in the business area represent 6% of group total. Desktop Organization Sales increased by 124% to SEK 228 million in the second quarter as a result of the Leitz acquisition. Sales in the business area represent 9% of group total. This report has not been examined by the Company´s auditors. Next report Interim report for the first nine months of 1999 will be released October 21. Stockholm July 22, 1999 Jan Kvarnström CEO Esselte brings innovation, efficiency and style to the way people work at home and in the office. By designing, manufacturing and delivering innovative office products from esteemed brands; Curtis, Dymo, Leitz and Pendaflex. Esselte is the world's leading office supplies manufacturer. For further information: Jan Kvarnström, CEO or Mats Lönnqvist, CFO, phone: +46-8 545 219 00 (Stockholm) or 0200-214 796 (London). Attachments: Tables, 2 pages ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/07/22/19990722BIT00290/bit0001.xls Tables http://www.bit.se/bitonline/1999/07/22/19990722BIT00290/bit0002.doc http://www.bit.se/bitonline/1999/07/22/19990722BIT00290/bit0003.pdf