Annual General Meeting, Nefab AB (publ)

The Annual General Meeting of shareholders in Nefab AB was held on May 18, 2006. Dividend In accordance with the Board’s proposal, the Meeting resolved to distribute SEK 1.00 per share. The distribution in the preceding year was an ordinary dividend and an extraordinary dividend of SEK 0.90 per share, combined totaling SEK 1.80 per share. The record date for the dividend this year is May 23, 2006. The dividend is expected to be distributed through VPC on May 29, 2006. Board of Directors Ing-Marie Nordgren, Jochum Pihl, Björn Svedberg, Hans Nilsson, Reinhold Geijer, Cecilia Daun-Wennborg, Sune Karlsson and Lars-Åke Rydh were re-elected as Board members for the forthcoming year. Björn Svedberg was elected Board Chairman. The fees to the Board for the forthcoming fiscal year were set at a total of SEK 1,460,000, of which SEK 500,000 to the Chairman of the Board, SEK 100,000 to the representatives of the principal owner and SEK 190,000 to other Board members except the President, who does not receive a Board fee. By-election of deputy auditor Because the Company’s deputy auditor Linus Brandt left his employment at Deloitte, Authorized Public Accountant Jan Nilsson was elected as deputy auditor for the period up until the next Annual General Meeting. Nomination procedure The Annual General Meeting took decision on the nomination procedure for Board members and auditors. The proposal entails establishing a Nomination Committee based on ownership at May 31. The three largest owners in the Company each appoint a member of the Committee. Reconciliation will take place at September 30 to ensure that the Committee still consists of representatives for the three largest owners. Any changes in the Committee’s composition will be made if necessary. The Nomination Committee’s term will extend until such time as a new Committee is formed. Amendment of the Articles of Association In accordance with the Board’s proposal, the Articles of Association were amended. The changes are the result of the new Swedish Companies Act. Financial information Interim Report January – June 2006 August 16, 2006 Interim Report January – September 2006 October 31, 2006 Year-end Report 2006 February 14, 2007 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 18, 2006 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 2005 amounted to slightly above SEK 1.5 billion. The Nefab share is listed on Stockholmsbörsen. President’s speech at Nefab’s Annual General Meeting 2006 Mr. Chairman, shareholders and guests: The Nefab share was listed on the Stockholm Stock Exchange in the spring of 1996 or ten years ago. Since then, invoicing has increased from SEK 0.5 to 1.5 billion, corresponding to annual growth of about 11 percent. During the past year, growth was 14 percent and was generated both organically and through acquisitions. During the first quarter of this year, growth was fully 28 percent. This growth also generated profits that measured in earnings per share increased from SEK 1.27 in 1996 to SEK 3.15 in 2005. For shareholders, this has meant an increase in value from the introduction price of SEK 10.25 to the current price of SEK 61.50. What is it that has enabled us to achieve these results? The foundation is the vision established from the start: The global partner for complete packaging solutions. This vision has allowed us to work conscientiously year after year to build a global company based on partnerships and a complete product offering. Enough history. Let us instead look at the present. Our interest in acquiring complementary units is increasing over time. We have acquired a good picture of what is available in the market and have also gained experience of implementing acquisitions in a professional manner. Over the past 12-month period, we acquired five units in the Netherlands, Austria, Norway, Hungary and now most recently in Spain. Combined, these acquisitions add invoiced sales of about SEK 150 M. The new units also contribute production expertise and supplier relationships that will be valuable for the Nefab Group as a whole. We continue our acquisition strategy and hope to be able to add suitable new pieces to the puzzle over the coming year. In strategy discussions, Nefab often emphasizes its special focus on the telecom and automotive industries. These are two very important industries. Our ambition is to retain market leadership in transport packaging for telecom infrastructure, where Nefab has more than half of the global market. The fact remains, however, that growth is strongest in the segment that we call Industry, which accounts for slightly more than half of invoiced sales. My assessment is that this share will increase further over the coming years through both organic growth and via acquisitions. Over a number of years, Nefab has developed from a production-oriented company to a supplier of total solutions. This means that proprietary products are complemented by products from sub-suppliers. As a consequence, the share of trading operations is increasing and amounted to 35 percent last year. In pace with this increase in volumes, Nefab becomes increasingly attractive as a sales channel for important product suppliers. This gives us advantages both in terms of price and in the form of product offerings. The increase in trade invoicing, however, entails a risk that the net margin will decline over time. On the other hand, that means that the business can expand rapidly with favorable returns. Return on equity is also the overriding financial goal. During the first quarter of 2006, we nonetheless improved the gross margin somewhat. The reason was that we are beginning to realize the effects of restructuring of production in Europe while achieving economies of scale in purchases of supplementary packaging products from sub-suppliers. With respect to our own production, manufacture of sheet material-based transport packaging was supplemented by the manufacture of shock-absorbing materials based on different plastic materials. These products are used inside an outer packaging and are intended to protect the goods from the effects of handling. The value of invoicing in this area currently amounts to about SEK 75 M annually and is expected to increase further over the coming year. We have the resources to manufacture this type of products in no less than seven of our production facilities. Shock-absorbing materials will be an increasingly important component in Nefab’s product concept. Business continued to develop positively in Europe and China. In China, which accounts for 15 percent of invoicing, we now have three plants. Over the past year, Nefab’s market organization was expanded significantly, and we now anticipate continued growth in this exciting market. Business is thus favorable in Europe and China. What is even more positive, however, is that the trend has also been reversed in Brazil and North America. These two units, which for some time have had a negative impact on earnings, now contribute positively. Our vision is naturally to be the global partner that offers complete packaging solutions. The global organization is our most important asset and the greatest differentiator with respect to typical competitors. Being able to finance our global presence through local revenues strengthens our conviction that this strategy is correct. The past year was characterized by restructuring of production in Europe. We phased out a production plant in Germany, while starting a new one in Slovakia. In addition, the production mix was changed in other units. The labor-intensive processes are localized to low-cost countries, while more automated production takes place closer to customers in Western Europe. Of total capacity for production of export packaging, about 40 percent is now in what are termed low-cost countries. This restructuring of production resulted in costs of SEK 18 M charged against 2005 earnings. This means that profit declined from SEK 122 M in 2004 to SEK 117 M in 2005. However, we are convinced that these investments will quickly pay for themselves. During the first quarter of 2006, we could already see the effects, with profit rising to SEK 35 M, compared with SEK 24 M last year. Nefab currently has 1,500 employees in 25 countries. We are aware that it is often the expertise of our local employees that is decisive when customers choose us as a supplier. To further strengthen this expertise, we are working intensively with web-based training and trainee programs. During the past year, we also created three European design centers in Sweden, Portugal and Hungary. Each of these design centers has its own area of specialization in which it can contribute to other Nefab companies. During the initial year of operation, this new organization had already actively contributed to creating solutions for potential customers that resulted in contracts. I began today’s presentation by describing Nefab’s growth in recent years. Nefab’s invoicing of SEK 1.5 billion must be placed in relation to the global potential in the packaging market of about SEK 4,000 billion. Our share is thus vanishingly small. However, the packaging market is characterized by being extremely fragmented, meaning that we are one of the larger players. This becomes even clearer when the packaging market is limited to transport packaging, thus excluding the retail and food industries, which are not Nefab’s focus. Seen in this perspective, the global potential is slightly less than SEK 700 billion. The number of players of our size that also have the capacity to coordinate a global contract is relatively limited. As is evident in my description of the market potential, there are undeniably future expansion opportunities for Nefab through both organic growth and via acquisitions. With a strong financial base, a stable global organization and a well-conceived customer offering, there is all reason to take a positive view of the future. Shareholders, this concludes my presentation of the Nefab Group’s operations in 2005. Thank you for you attention!