Operating loss of SEK 148.0 M

The abbreviated fiscal year (May 2009 – December 2009) • Net sales amounted to SEK 916.8 M (1,012.2), down 9.4% compared with the preceding year. Sales in the Group’s comparable stores decreased by 9.2% (neg: 16.4). • Loss after tax amounted to SEK 121.3 M (profit: 23.0). A loss per share before dilution of SEK 3.04 (earnings: 0.78). • Operating cash flow after investments was positive SEK 37.8 M (pos: 35.2), up 7 % compared with the preceding year. • The operating result was charged with nonrecurring costs of SEK 109.7 M (13.0). Before these costs, an operating loss of SEK 38.3 M (profit: 53.2) was reported. • No dividend is proposed for the abbreviated 2009 fiscal year of May 2009 to December 2009. The abbreviated third quarter (November 2009 – December 2009) • Net sales amounted to SEK 331.5 M (350.4), down 5.4% from the preceding year. Sales in the Group’s comparable stores decreased by 1.2% (neg: 11.7). • Loss after tax amounted to SEK 44.6 M (profit: 23.2). A loss per share before dilution of SEK 1.09 (earnings: 0.79). • Operating cash flow after investments was positive SEK 117.5 M (pos: 89.5), up 31 % from the preceding year. • The operating result was charged with nonrecurring costs of SEK 87.0 M (13.0). Accordingly, before these costs, an operating profit of SEK 26.0 M (47.9) was reported. Events after the closing date • The Group will divest all of its stores in Denmark and reduce the portfolio of stores in Finland by about half, while reviewing its presence in Norway CEO’S COMMENTS In the Swedish market for home textiles, 2009 was an eventful year. The economic downturn resulted in an increase in competition among players in the market and increased pressure on prices. Against this background, our changed price strategy from previously having protracted periods of retail sales to having continuously attractive prices had an adverse short-term impact on sales, while simultaneously providing us with an opportunity to reposition the brand and increase our attractiveness. The prospects for the success of these key transformation efforts are favorable. For the third quarter of the abbreviated fiscal year (November 2009 – December 2009), we reported an operating profit, before nonrecurring costs. An increase of SEK 26 M was achieved and, for December, the corresponding operating profit amounted to SEK 44 M. Cash flow from investments also increased. During the abbreviated fiscal year, cash flow increased by 7% and, during the abbreviated third quarter, a 31% improvement was noted. Overall, the strong third quarter demonstrates that we are on the right track, although much remains before we can reach the targeted profitability objective of 13 to 15%. During 2009, we took the first necessary steps towards becoming the new Hemtex. We have devoted time and energy to analyzing and evaluating the Group’s structure, costs, customer offering and market conditions in Sweden and internationally. This work has formed the foundation for our business plan, which now constitutes the strategic roadmap for the years ahead. The basic aim is to increase Hemtex’s competitiveness, while maintaining its position as the distinct market leader in Sweden. To achieve this, comprehensive rationalization measures and cost reductions are required, as is good order in the Group’s finances. Accordingly, we are implementing a review of all financial income and cost items and adopting a consistent approach to unprofitable structures. However, we must also take necessary development steps in order to satisfy customer demand in an increasingly competitive market for home textiles. In other words, today’s abbreviated annual accounts may be viewed as an account of the adjustments required for the future. During 2010, we decided to implement a responsible divestment of the Group’s presence in Denmark and to terminate the remaining cooperation with franchisees in Poland. In Finland, we are reducing the portfolio of stores by about half and in Norway we are initiating a review of our market presence. During the year, we endeavored to adapt operations in Denmark to local conditions in the Danish market without any significant success. In 2009, we incurred a loss of SEK 27 M in Denmark. In the Finnish market, our loss during the corresponding period amounted to SEK 45 M. We are also implementing changes in depreciation/amortization periods, in order to better reflect the actual useful lives in the Group and are simultaneously impairing goodwill amounts in Sweden and Denmark. Accordingly, operating profit was charged with nonrecurring costs SEK 87 M during the abbreviated third quarter and SEK 110 M for the entire abbreviated fiscal year. In other words, we are in the midst of an adjustment process which will result in the new Hemtex becoming both slimmer and more efficient, while being given a clearer direction. On the whole, this will provide us with a better platform for changing our direction and with increased security in our continued efforts to achieve a more profitable store concept and a more attractive customer offering. For these adjustments to be successful, however, increased cost control is essential. In view of this, we have introduced system support for flows of goods and clarified the responsibility for the control of goods. Among other consequences, this resulted in a decrease in store inventories by SEK 68 M in 2009. Quite simply, we are cleaning up the Group’s finances and changing into more market-adapted clothing. These efforts will form the foundation for opening the door to the new Hemtex during the autumn. We will be presenting a new store concept based on a more modern and more attractive range of products, combined with a more distinct identity. During 2010, the focus will be on increased profitability, healthy Group finances and renewal. Erik Gumabon, President and Chief Executive Officer

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