Annual General Meeting, Nefab AB (publ)

The Annual General Meeting of shareholders in Nefab AB was held on May 19, 2005. Dividend In accordance with the Board’s proposal, the Meeting resolved to distribute SEK 3.60 per share as an ordinary dividend and an extraordinary dividend of SEK 3.60 per share, combined totaling SEK 7.20 per share. The dividend in the preceding year was SEK 3.00 per share. The record date for the dividend this year is May 24, 2005. The dividend is expected to be distributed through VPC on May 27, 2005. Board of Directors Ing-Marie Nordgren, Jochum Pihl, Björn Svedberg, Hans Nilsson, Reinhold Geijer, Cecilia Daun-Wennborg and Lars-Åke Rydh were re-elected as Board members for the forthcoming year, Sune Karlsson was elected a new member of the Board. The fees to the Board for the forthcoming fiscal year were set at a total of SEK 1,290,000, to be divided between the board members. Split The Meeting resolved, in accordance with the Board’s proposal, to revise the Articles of Association so that the par value per share is change from SEK 5.00 to SEK 1.25. As a result, the number of shares is quadrupled, from 6,907,370 to 27,629,480. Consequently, shareholders receive four new shares for each old share held. The company’s shares will be traded and listed after the split from and including Tuesday, June 7, 2005. Financial information Interim Report January – June 2005 August 10, 2005 Interim Report January – September 2005 October 28, 2005 Year-end Report 2005 February 15, 2006 For further information, contact President Lars-Åke Rydh, +46 (0)70-592 45 70, e-mail lars-ake.rydh@nefab.se or CFO Anna Stålenbring, +46 (0)70-814 23 44, e-mail anna.stalenbring@nefab.se Alfta May 19, 2005 Lars-Åke Rydh President and CEO Appended President’s speech at the Annual General Meeting Facts about Nefab Nefab delivers complete packaging solutions to international industrial groups, primarily within the telecom and automotive industries. Nefab companies are located in Europe, North and South America and Asia. Invoiced sales in 2004 amounted to slightly above SEK 1.3 billion. The Nefab share is listed on Stockholmsbörsen. President’s speech at Nefab’s Annual General Meeting 2005 Mr. Chairman, shareholders and guests! This is the tenth time that Nefab is holding an Annual General Meeting as a listed company, if we included the listing year of 1996. Much has changed during these years. • In 1996, we had invoicing of SEK 560 M. This year, we are approaching SEK 1.5 billion. • In 1996, we were active in 16 countries in Europe and North America. Today, we are a global company, with sales in 36 countries. • In 1996, we were a production-oriented company, with operations based on plywood boxes. Today, we are a global partner that delivers complete packaging solutions. One thing has not changed. It is a tradition to hold the Meeting here in Runemo, despite operations here today being only a small part of a worldwide organization. A global company needs a home, a place with which to identify. For Nefab, this place is Runemo and Hälsingland. The expectations for 2004 were high. The outcome was better. So could one summarize the past year simply. After a period with sales at a relatively steady level, demand accelerated sharply. We increased sales in virtually all segments and geographic markets. In total, sales rose 27 percent to slightly more than SEK 1.3 billion. Profit after net financial items rose from SEK 65 M to SEK 122 M, nearly a two-fold increase. The most important reason for the improvement in earnings is the increased volume. Despite high materials prices, gross margin could be retained at a favorable level. The reason is an increased capacity utilization in the plants as well as in the organization. At the same time, production has shifted from high- to low-cost countries. With respect to the high materials costs, the ambition has been to fully offset this cost increase. However, this has proven to be difficult, which affected gross margin negatively, particularly during the later part of 2004. Nefab’s dependence on the telecom industry has declined in recent years. During 2004, this trend reversed and the share of invoicing increased from 37 to 39 percent. We view the cooperation in the years ahead with key players in this segment with optimism. Without any doubt, Nefab is the global market leader in transport packaging to the telecom industry, However, our ambition, through growth in other segments, is to reduce dependence long term so that the telecom industry accounts for less than one third of the Group’s total invoicing. Our focus on the automotive industry continued to yield results. During the year, invoicing rose by 11 percent. It is also pleasing to note that we are growing in other segments. As a result , we become less sensitive to fluctuations in demand. Slightly more than half of invoicing is to customers outside the telecom and automotive industries. During the first quarter of 2005, invoicing to the Industrial segment rose sharply, accounting for 54 percent of total sales. Our customers are placing increasingly greater demands on service and problem solving. A broad product program is required to be able to offer what the customer demands. Step-by-step, since the start slightly more than 50 years ago, Nefab has developed from a production-oriented company to a modern, market- and service-oriented company. This is reflected in the number of trading products, which now amount to about 30 percent. Our assessment is that we are just at the beginning of this development process. It will not take too many years until production and trading account for an equal proportion of total invoicing. Combined with proprietary products and services, these trading products create what we call the CPS concept. CPS stands for Complete Packaging Solutions and is a central element in our vision. Part of this concept is VMI (Vendor Managed Inventory) services. This means that we, as supplier, assume responsibility for the customer’s inventory and packaging products. Nefab has assumed this responsibility on assignment from major customers, in China and other countries. Historically, Nefab has been totally focused on organic growth. In pace with the broadening of the concept, the interest in acquisitions has increased. By acquiring established units, we can accelerate the process of developing into a full-service company. Our interest is primarily in trading companies, particularly those with some form of product specialty. Geographically, we are focusing on Europe. During the year, we acquired a company in Belgium and in the beginning of 2005, a company in the Netherlands. The packaging market is fragmented and a number of the companies we are studying today have invoicing of EUR 3-5 M. I make the assessment that during 2005 we will acquire another such company in this range in Europe. To strengthen our competitiveness, we have work for some time with redistributing production to low-cost countries. During 2004, it was decided to establish another production unit in Eastern Europe, this time in Slovakia. We already have a plant in Estonia. The Slovakian plant is now largely complete and production is expected to start in the near future. With this start-up, about 50 percent of European production of export packaging will be carried out in low-cost countries. As a consequence, it was decided to shut down the German plant. At the same time, we are undertaking an extensive redistribution of existing production. Much of the labor-intensive production is being transferred to Eastern Europe, while the other European units are concentrating on more automated manufacturing. Nefab is working in an increasing global market and is currently active in 36 countries. Through the international organization, we have resources to provide service to multinational customers virtually wherever they conduct their operations. In our opinion, the global organization today is our most important competitive factor. Few players can compete with us in terms of globality. Being global is not just having operations in many countries. It also involves these units cooperating with one another and not acting like isolated islands. We consider that we have found the right organization and right people to accomplish this coordination. The customer surveys we have conducted indicate that the ability to coordinate global business is appreciated by the market. During 2005, we have decided to become established in India. India is still a small, but rapidly growing market. I estimate the potential at about one percent of the world market. Why should we become established there? Would it not be better to intensify efforts on already established markets? The answer is that a local presence in India strengthens our position in the prioritized markets in Europe and China. Our vision is to be a global partner. This effort is initially modest, but consequently strengthens our global concept. We have a fantastic year behind us. As we turn and look ahead, there is reason to be optimistic. We have started 2005 generally as expected. Growth during the quarter was 11 percent and earnings amounted to SEK 24 m. Earnings were charged with about SEK 5 M due to restructuring of production in Europe. We are planning for continued growth, organic as well as through acquisition. Restructuring of production in Europe will also cost money in the future, but I am convinced that long term this is a necessary and profitable investment. 2005 will be an exciting year for Nefab. The vision is set. Nefab shall be the global partner for complete packaging solutions. Combining this vision with a well-planned strategy, we view the future with optimism. Shareholders, this concludes my presentation of the Nefab Group’s operations in 2004. Thank you for your attention