Cloetta — Earnings Release 2011

Mar 23, 2011

1 September 2010 – 28 February 2011

second quarter 1 december 2010 – 28 february 2011

Net sales	SEK 224 million	(249)
of which, Cloetta products	SEK 202 million	(212)
Operating profit/loss	SEK –23 million	(–7)
Operating margin	neg	(neg)
Profit/loss before tax	SEK –23 million	(–9)
Profit/loss after tax	SEK –17 million	(–7)
Earnings per share
basic	SEK –0.71 (–0.28)
diluted	SEK –0.71 (–0.28)

First half 1 september 2010 – 28 february 2011

Net sales	SEK 557 million	(581)
of which, Cloetta products	SEK 496 million	(499)
Operating profit	SEK 22 million	(37)
Operating margin	3.9%	(6.4)
Profit before tax	SEK 21 million	(35)
Profit after tax	SEK 15 million	(25)
Earnings per share
basic	SEK 0.63	(1.05)
diluted	SEK 0.63	(1.05)

Comments from the CEO Lower sales and margins

Cloetta's sales for the second quarter decreased mainly in the pick-and-mix and seasonal products segments. Our ongoing focus on new product launches and the related costs for product development and increased sales and marketing activities did not result in the anticipated sales during the second quarter. Together with a decrease in products manufactured on contract and continued high prices for our most important raw materials, this led to lower earnings for the quarter.

Contract manufacture of products has decreased, which together with falling sales volumes had a negative impact on productivity. At the same time, margins are under pressure from persistent high raw material prices, even taking recent months' strengthening of the Swedish krona into account.

All in all, the drop in sales for the period combined with high raw material prices and lower capacity utilisation in production led to a weaker gross margin and a decrease in operating profit compared to the same period of last year.

The Christmas sales, which for Cloetta fall in the first quarter, developed well. A falling trend for in-store sales in December and January caused the total confectionary market to decline by 1.5%* and Cloetta by 3%* compared to the same period of last year, which inhibited our opportunities to sell to customers during the quarter. On a rolling 12-month basis, however, Cloetta outperformed the total confectionary market by 1.4 percentage points*.

In the second quarter we relaunched Cloetta's chocolate bags with Polly, Bridge, Kexchoklad mini bars and the new Pops Crunchy under a uniform concept to increase visibility in the stores, which met with a positive reception. During the quarter we also launched a whole new design for Cloetta's largest brand, Kexchoklad, in order to modernise and strengthen the brand as Sweden's most sold confectionery item. To complement the original with new flavours, we launched Kexchoklad blueberry for the start of the year's ski season. Sales of our leading brands remained strong during the quarter, while sales of pick-and-mix and seasonal products declined.

We are now working with an increased focus on efficiency-enhancement programmes throughout the value chain and are engaged in ongoing discussions with our customers regarding product range and category development, the business model and the need for price increases. Sales and marketing activities are being optimised and we are analysing the entire company to ensure the conditions to sell and produce our products efficiently.

* Nielsen, value sales (in stores) Curt Petri, Managing Director and CEO

ABOUT CLOETTA

Founded in 1862, Cloetta is the oldest confectionery company in the Nordic region. The company's best known brands are Kexchoklad, Center, Plopp, Polly, Tarragona, Guldnougat, Bridge, Juleskum, Sportlunch, Extra Starka and the chocolate bar series Good. Cloetta has two production units in Sweden, one in Ljungsbro and one in Alingsås. For the period from 1 September 2009 to 31 August 2010, Cloetta posted net sales of SEK 1,061 million. The company's class B shares have been traded on NASDAQ OMX Stockholm Nordic since 16 February 2009.

FINANCIAL INFORMATION

			Second quarter First half			Rolling 12	Full year
		Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Mar 2010 –Feb 2011	Sep 2009 –Aug 2010
Net sales	SEK M	224	249	557	581	1,037	1,061
Operating profit/loss	SEK M	–23	–7	22	37	20	35
Operating margin	%	neg	neg	3.9	6.4	1.9	3.3
Profit/loss before tax	SEK M	–23	–9	21	35	17	31
Profit/loss for the period	SEK M	–17	–7	15	25	12	22
Cash flow from operating activities	SEK M	16	17	38	–4	61	19

Financial overview

The financial year runs from 1 September 2009 to 31 August 2011.

Seasonal variations

Cloetta's business follows a seasonal cycle in which the first quarter leading up to Christmas (September–November) is the strongest. To a large extent, the company's full-year profit is therefore dependent on sales during this period. The Easter holiday, which is the second peak season in the confectionery market, falls in Cloetta's third quarter but affects sales in both the second (December–February) and third quarters (March–May) to a varying degree from year to year since Easter falls in either March or April. Cloetta's fourth quarter (June–August) is the weakest of the year in relative terms, as consumption of confectionery is normally lower during the summer months.

SECOND QUARTER (DECEMBER 2010 – FEBRUARY 2011)

Net sales

Sales of Cloetta's products amounted to SEK 202 million (212). Net sales for the quarter totalled SEK 224 million (249), of which sales of products manufactured on contract accounted for SEK 22 million (37).

In the Swedish market, which accounts for around 85% of sales, net sales were down compared to the same period of last year. The second quarter saw weaker in-store sales and the total confectionary market also showed a falling trend. At the same time, the Easter holiday, which does not occur until mid-April this year, had a certain effect on sales particularly in the pick-and-mix and seasonal segments during the quarter. During the quarter Cloetta launched its new chocolate bags with Polly, Bridge, Kexchoklad mini bars and the new Pops Crunchy. A whole new design for Kexchoklad was introduced on the market and was complemented by the new flavour Kexchoklad blueberry. Both launches made a positive contribution to Cloetta's product sales in the Swedish market during the period. In the same quarter of last year, the Good and Tarragona chocolate bars were launched.

In other markets, sales in Finland, Denmark and the Travel Trade rose somewhat compared to the previous year

Profit

Gross profit

Gross profit for the period was SEK 54 million (74), which corresponds to a gross margin of 24.1% (29.7). Lower sales and weaker profitability for the product mix sold during the quarter, compared to the same period of last year, had a negative impact on gross profit. This weaker profitability is partly due to higher costs for discounts but above all to the effects of the de-

Operating profit

The classic Bridge is one of Cloetta's chocolate bags to be launched in a new package during the quarter under a uniform concept. crease in products manufactured on contract that could not be replaced by Cloetta products. At the same time, margins remain under pressure from high raw material prices, even taking recent months' strengthening of the Swedish krona into account. Overall, the combination of decreased sales, high raw material prices and lower capacity utilisation in production led to a weaker gross margin for the period.

Operating profit

Selling and administrative expenses amounted to SEK 76 million (77). Selling expenses increased during the second quarter, partly as a result of customer activities to promote the period's launches, while other expenses were lower. Kexchoklad was supported by advertisements in ski resorts during January and February and by outdoor advertisements in the second half of February.

Operating profit/loss was SEK –23 million (–7) and operating margin for the quarter was negative (neg.) Operating profit was adversely affected by foreign exchange differences of SEK 1 million (–3) which are reported together with other operating income and expenses. Due to the use of forward contracts, the period's strengthening of the Swedish krona will have a delayed effect on earnings.

Profit before tax

Profit/loss before tax is reported at SEK –23 million (–9). Net financial items totalled SEK 0 million, compared to SEK –2 million the year before.

Profit for the period

Profit/loss after tax was SEK –17 million (–7), which is equal to earnings per share of SEK –0.71 (–0.28) before and SEK –0.71 (–0.28) after dilution. The period's income tax expense was SEK +6 million (+2).

FIRST HALF (SEPTEMBER 2010 – FEBRUARY 2011) Net sales

Sales of Cloetta's products amounted to SEK 496 million (499). Net sales for the first half of the year totalled SEK 557 million (581), of which products manufactured on contract accounted for SEK 61 million (82).

Cumulative sales in the Swedish market, which accounts for around 85% of sales, were down somewhat from the same period of last year. Overall sales of Cloetta's leading brands rose slightly for the period from September 2010 to February 2011, driven mainly by the launch of 155-gram Tarragona chocolate bars in three different taste varieties and Juleskum in the autumn of 2010.

Total cumulative sales in Cloetta's other markets were on a level with the year-earlier period. Sales in the Travel Trade increased mainly thanks to the new large-sized bags of Kexchoklad and Polly intended for passenger ferries, charter tour operators and airports.

Profit Gross profit

Gross profit for the period was SEK 174 million (188), which is equal to a gross margin of 31.2% (32.4). Somewhat lower sales compared to the same period of last year and a decrease in products manufactured on contract that could not be offset by increased volumes of Cloetta products during the period contributed to the drop in gross profit. The prices of certain key raw materials remain high, including the price of cocoa which is holding steady at a historically very high level.

Operating profit

Selling and administrative expenses amounted to SEK 151 million (151). Administrative expenses were lower than in the previous year. Marketing activities increased in connection with media and joint promotional campaigns with customers in preparation for the autumn's launch of large-sized Tarragona bars in the grocery retail trade and ahead of the Christmas sales, among other things for Juleskum. Product development costs have also risen.

Operating profit was SEK 22 million (37) and operating margin was 3.9% (6.4). Operating profit was negatively affected by foreign exchange differences of SEK 1 million (+1) which are reported together with other operating income and expenses. Due to the use of forward contracts, the period's strengthening of the Swedish krona will have a delayed effect on earnings.

Profit before tax

Profit before tax was SEK 21 million (35). Net financial items totalled SEK –1 million, compared to SEK –2 million the year before.

Profit for the period

Profit after tax is reported at SEK 15 million (25), which is equal to earnings per share of SEK 0.63 (1.05) before and SEK 0.63 (1.05) after dilution. The period's income tax expense was SEK 6 million (10).

Rolling 12 months

Net sales for the rolling 12-month period reached SEK 1,037 million. Operating profit for the rolling 12-month period was SEK 20 million.

Financing and liquidity

Cash and cash equivalents and short-term investments amounted to SEK 244 million (245). Cloetta's working capital requirement is exposed to seasonal variations, partly resulting from a build-up of inventories in preparation for increased sales during the Christmas holiday. This means that the working capital requirement is normally highest during the autumn, i.e. in the first quarter, and lowest at year-end, i.e. in the second quarter.

Cash flow from operating activities for the period from September 2010 to February 2011 was SEK 38 million (–4), which is mainly explained by a decrease in working capital compared to the same period of last year. Net cash of SEK 21 million (28) was utilised for investments in property, plant and equipment in the first half of the year. Other cash flow from investing activities consists of ongoing investments. The dividend approved by the Annual General Meeting was charged to financing operations in an amount of SEK 18 million during the second quarter. Interest-bearing assets exceeded interest-bearing liabilities by a net amount (i.e. a net receivable) of SEK 139 million (148). The equity/assets ratio was 66.2% (63.3).

Investments

Investments in property plant and equipment during the period totalled SEK 21 million (28) and included both efficiency-enhancing and replacement investments in the existing production lines. Depreciation amounted to SEK 27 million (24).

Other disclosures

Employees

The average number of employees during the period from September 2010 to February 2011 was 441 (453). The decrease refers mainly to the previous year's workforce reductions at the factory in Alingsås, but also to redundancies among the production staff in Ljungsbro as announced in the preceding quarter.

Parent Company

Cloetta AB's primary activities include head office functions such as group-wide management and administration. The comments below refer to the period from September 2010 to February 2011 (cumulative).

Net sales in the Parent Company reached SEK 13 million (17) and referred mainly to intragroup services. Operating profit was SEK 1 million (0).

Net financial items totalled SEK –1 million (–1). Profit/loss before tax was SEK 0 million (–1) and profit/loss after tax was SEK 0 million (–1).

Cash and cash equivalents and short-term investments amounted to SEK 51 million (67).

Cloetta's SEK 30 million convertible note programme for the employees runs from 14 May 2009 to 30 March 2012 and will bear interest at a rate equal to STIBOR plus 2.5 percentage points. The convertible notes can be converted to class B shares in Cloetta during the period

Kexchoklad is head sponsor of sporting Sweden's crowning achievement – A Swedish Classic. During last year's Vasaloppet cross-country ski race, we let the participants try Kexchoklad blueberry with a positive response, and the product was launched for the start of the year's ski season.

Kexchoklad has been given a new design that is aimed at strengthening the brand's position as Sweden most sold confectionery item.

Pops Crunchy is a new addition to Cloetta's chocolate bag range that combines chocolate and salt. Pops Crunchy has a crispy consistency and a core of lightly salted yoghurt-based filling.

Extra Starka is one of Sweden's most sold throat lozenges.

from 25 February 2011 to 25 February 2012 at a conversion rate of SEK 30.40, which upon full conversion will increase the number of class B shares by 1,004,889. The interest rate for the period from 10 November 2010 to 10 November 2011 has been set at 4.48%. The next interest instalment is due for payment on 10 November 2011.

The Cloetta share

Trading of the class B share of Cloetta AB (publ) commenced on NASDAQ OMX Stockholm on 16 February 2009. The share is traded under the ticker symbol CLA B with ISIN code SE0002626861.

During the period from 1 September 2010 to 28 February 2011, a total of 1,000,887 shares were traded, equal to around 5% of the total number of class B shares. The highest quoted bid price for the Cloetta share was SEK 39.90 and the lowest was SEK 35.00. The share price on 28 February 2011 was SEK 38.00 (last price paid).

Shareholders

AB Malfors Promotor is the principal shareholder in Cloetta AB (publ). At 28 February 2011 Cloetta AB had 4,278 shareholders and the principal shareholder Malfors Promotor held 74.6% of the votes and 52.3% of the share capital. Other institutional investors held 12.7% of the votes and 23.9% of the share capital. The number of shares amounted to 24,119,196, of which 21,759,196 were of class B and 2,360,000 were of class A.

Related party transactions

The principal shareholder is AB Malfors Promotor and any buying and selling of goods and services between Cloetta and the principal shareholder is regarded as a related party transaction. Aside from the dividend approved by the Annual General Meeting, no such transactions took place during the period.

The Parent Company has related party transactions with subsidiaries in the Group. The majority of such transactions refer to the sale of services, which amounted to SEK 7 million (8) for period from December 2010 to February 2011 and to SEK 13 million (17) for the period from September 2010 to February 2011, which is equal to 100% of each period's total sales. At 28 February 2011, the Parent Company's receivables from subsidiaries amounted to SEK 27 million (38) and liabilities to subsidiaries amounted to SEK 0 million (0). Transactions with related parties are priced on market-based terms.

Events after the balance sheet date

After the end of the reporting period, no significant events have taken place that could affect the company's operations.

Other

The interim report for the third quarter (March – May 2011) will be published on 23 June 2011.

In 2009 a lawsuit was filed against Karamellpojkarna AB, a subsidiary of Cloetta AB, regarding the copyright to certain illustrations. Cloetta and Karamellpojkarna do not feel that there are any grounds for these claims. Cloetta has provided information about the lawsuit in the past two years' annual reports. In February 2011 the dispute came under discussion in the media. For additional information, see the company's website under the heading "Press".

Future

In view of the negative earnings trend for the quarter, Cloetta will increase the focus on efficiency-enhancing measures throughout its operations. Continued product development is critical and discussions with customers regarding product range and category development are prioritised. The long-term financial targets remain in place and aside from creating organic growth in the existing operations, Cloetta intends to grow through acquisitions and new partnerships. The financial targets are shown on page 8 of the 2010 annual report.

The Board of Directors and the Managing Director hereby give their assurance that the interim report provides a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and the Group companies are exposed.

Ljungsbro, 23 March 2011

Cloetta AB (publ)

Olof Svenfelt Chairman

Lennart Bohlin Johan Hjertonsson Board member Board member

Ulrika Stuart Hamilton Mikael Svenfelt Meg Tivéus Board member Board member Board member

Lena Grönedal Birgitta Hillman Employee representative Employee representative

Curt Petri Managing Director and CEO

The information in this interim report has not been reviewed by the company's auditors.

The large-sized (155 gram) Tarragona bar that was launched in three taste varieties in the autumn of 2010 has generated growth in sales.

Summary consolidated profit and loss accounts

		Second quarter	First half		Rolling 12	Full year
SEK M	Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Mar 2010 –Feb 2011	Sep 2009 –Aug 2010
Net sales	224	249	557	581	1,037	1,061
Cost of goods sold	–170	–175	–383	–393	–722	–732
Gross profit/loss	54	74	174	188	315	329
Other operating income	0	0	0	1	5	6
Selling and administrative expenses	–76	–77	–151	–151	–299	–299
Other operating expenses	–1	–4	–1	–1	–1	–1
Operating profit/loss	–23	–7	22	37	20	35
Financial items	0	–2	–1	–2	–3	–4
Profit/loss before tax	–23	–9	21	35	17	31
Income tax expense	6	2	–6	–10	–5	–9
Profit/loss for the period	–17	–7	15	25	12	22
Profit/loss for the period attributable to:
Owners of the Parent Company	–17	–7	15	25	12	22
Earnings per share
Basic	–0.71	–0.28	0.63	1.05	0.48	0.90
Diluted	–0.71	–0.28	0.63	1.05	0.48	0.90
Number of shares at end of period1)	24,119,196	24,119,196	24,119,196	24,119,196	24,119,196	24,119,196

1) Which also corresponds to the average number of shares during the period.

Consolidated statements of comprehensive income

		Second quarter		First half	Rolling 12	Full year
SEK M	Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Mar 2010 –Feb 2011	Sep 2009 –Aug 2010
Profit/loss for the period	–17	–7	15	25	12	22
Other comprehensive income
Translation differences	0	0	0	0	0	0
Other comprehensive income for the period	0	0	0	0	0	0
Total comprehensive income for the period	–17	–7	15	25	12	22
Comprehensive income for the period attributable to:
Owners of the Parent Company	–17	–7	15	25	12	22

Quarterly data

		Q2	Q1	Q4	Q3	Q2
		Dec 2010 –Feb 2011	2010 Sep–Nov	2010 Jun–Aug	2010 Mar–May	Dec 2009 –Feb 2010
Net sales	SEK M	224	333	213	267	249
Of which, Cloetta products	SEK M	202	293	185	230	212
Operating profit/loss	SEK M	–23	45	–6	4	–7
Operating margin	%	neg	13.5	neg	1.5	neg
Earnings per share
Basic	SEK	–0.71	1.35	–0.24	0.09	–0.28
Diluted	SEK	–0.71	1.32	–0.24	0.09	–0.28

Summary consolidated balance sheets

SEK M	2011 28 Feb	2010 28 Feb	2010 31 Aug
ASSETS
Non-current assets
Intangible assets
Goodwill	91	91	91
Other intangible assets	53	53	53
Property, plant and equipment	454	464	460
Financial assets	1	2	1
Total non-current assets	599	610	605
Current assets
Inventories	126	138	145
Current receivables	133	170	121
Short-term investments	0	46	50
Cash and cash equivalents	244	199	195
Total current assets	503	553	511
TOTAL ASSETS	1,102	1,163	1,116
EQUITY AND LIABILITIES
Equity	730	736	733
Non-current liabilities
Deferred tax liability	102	107	103
Other provisions	77	74	74
Convertible debenture loan	29	27	28
Total non-current liabilities	208	208	205
Current liabilities	164	219	178
TOTAL EQUITY AND LIABILITIES	1,102	1,163	1,116
Pledged assets	1	2	1
Contingent liabilities	2	2	2

Consolidated statements of changes in equity

SEK M	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Sep 2009 –Aug 2010
Equity at beginning of period	733	711	711
Dividend	–18	–	–
Total comprehensive income for the period	15	25	22
Equity at end of period	730	736	733

Summary consolidated cash flow statements

		Second quarter		First half	Rolling 12	Full year
SEK M	Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Mar 2010 –Feb 2011	Sep 2009 –Aug 2010
Cash flow from operating activities
before changes in working capital Changes in working capital	–13 29	–7 24	42 –4	39 –43	74 –13	71 –52
Cash flow from operating activities	16	17	38	–4	61	19
Net investments in property, plant
and equipment	–11	–12	–21	–28	–44	–51
Other cash flow from investing activities	10	–25	50	–25	46	–29
Cash flow after investing activities	15	–20	67	–57	63	–61
Cash flow from financing activities	–18	–	–18	–	–18	–
Cash flow for the period	–3	–20	49	–57	45	–61
Cash and cash equivalents at beginning of period	247	219	195	256	199	256
Cash and cash equivalents at end of period	244	199	244	199	244	195
Cash, cash equivalents and short-term
investments < 3 months	244	199	244	199	244	195
Short-term investments > 3 months	0	46	0	46	0	50
	244	245	244	245	244	245

Key ratios

			Second quarter	First half		Full year
		Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Sep 2009 –Aug 2010
Operating profit/loss	SEK M	–23	–7	22	37	35
Operating margin	%	neg	neg	3.6	6.4	3.3
Profit/loss before tax	SEK M	–23	–9	21	35	31
Earnings per share
Basic	SEK	–0.71	–0.28	0.63	1.05	0.90
Diluted	SEK	–0.71	–0.28	0.63	1.05	0.90
Return on capital employed1)	%	3.00	2.5	3.00	2.5	4.7
Return on equity after tax1)	%	1.58	1.1	1.58	1.1	3.0
Cash flow from operating activities	SEK M	16	17	38	–4	19
Cash flow after investments in property, plant and equipment	SEK M	5	5	17	–32	–32
Net receivable	SEK M	139	148	139	148	144
Equity/assets ratio	%	66.2	63.3	66.2	63.3	65.7
Equity per share	SEK	30.25	30.52	30.25	30.52	30.38
Average number of employees		434	450	441	453	452
Number of shares at end of period2)		24,119,196	24,119,196	24,119,196	24,119,196	24,119,196

1) Refers to rolling 12-month period.

2) Which also corresponds to the average number of shares during the period.

For definitions of key ratios, see page 101 of the 2010 annual report.

Summary parent company profit and loss accounts

		Second quarter		First half	Full year
SEK M	Dec 2010 –Feb 2011	Dec 2009 –Feb 2010	Sep 2010 –Feb 2011	Sep 2009 –Feb 2010	Sep 2009 –Aug 2010
Net sales	7	8	13	17	35
Costs for property management and sold services	0	0	0	0	–1
Gross profit	7	8	13	17	34
Administrative expenses	–6	–7	–12	–17	–31
Other operating income and expenses	0	0	0	0	0
Operating profit	1	1	1	0	3
Other financial income and expenses	–1	0	–1	–1	–2
Profit before tax	0	1	0	–1	1
Appropriations	–	–	–	–	–1
Income tax expense	0	0	0	0	0
Profit/loss for the period	0	1	0	–1	0

Summary parent company balance sheets

SEK M	2011 28 Feb	2010 28 Feb	2010 31 Aug
ASSETS
Non-current assets
Property, plant and equipment	4	4	4
Financial assets	540	539	540
Total non-current assets	544	543	544
Current assets	79	96	101
TOTAL ASSETS	623	639	645
EQUITY AND LIABILITIES
Equity
Restricted equity	121	121	121
Non-restricted equity	463	480	481
Total equity	584	601	602
Untaxed reserves	2	1	2
Non-current liabilities
Other provisions	1	0	1
Convertible debenture loan	29	27	28
Total non-current liabilities	30	27	29
Current liabilities	7	10	12
TOTAL EQUITY AND LIABILITIES	623	639	645
Pledged assets	None	None	None
Contingent liabilities	78	74	75

Operating and financial risks in the Group and the Parent Company

Through its operations, the Cloetta Group is exposed to both operating and financial risks. The operating risks and handled by the operating units and the financial risks by the central finance function.

The Group's manufacturing costs account for approximately 65% of total costs. Of total manufacturing costs, raw materials and packaging make up approximately 60%. The most significant raw materials in terms of value are cocoa, sugar and milk products. The prices of our most important raw materials, such as cocoa, remain high. Due to the use of forward contracts, the impact of price changes on earnings is somewhat delayed. Price development for raw materials is monitored and analysed continuously.

The Group's financial risks consist primarily of currency risk, interest rate risk and credit risk. Cash and cash equivalents and short-term investments at 28 February 2011 amounted to SEK 244 million. The Group's investment strategies are based on the guidelines set out in the Board's finance policy. With regard to the Group's currency hedging, 72% of the forecasted net flows at 28 February 2011 were hedged for a period of 9 months forward, which is in line with the Group's finance policy. Due to the use of forward exchange contracts, exchange rate fluctuations affect profit at a certain delay.

Because the Parent Company's operations consist mainly of group-wide management and administration, its risks are limited to interest rate risk and liquidity risk. However, these risks are minor in view of the company's low interest expenses and good liquidity. For further information about risk management, see the annual report for 2010 at www.cloetta.se.

Accounting policies and other disclosures

The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) established by the International Accounting Standards Board (IASB) and the interpretations issued by the IFRS Interpretations Committee (IFRIC) which have been endorsed by the European Commission for application in the EU. The applied standards and interpretations are those that were in force and had been endorsed by the EU at 1 September 2010. Furthermore, the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups, has been applied.

The consolidated interim report is presented in accordance with IAS 34 Interim Financial Reporting and in compliance with the relevant provisions in the Swedish Companies Act and the Swedish Securities Market Act. The same accounting and valuation methods have been applied as in the most recent annual report. The interim report for the Parent Company has been prepared in accordance with the Swedish Companies Act and the Swedish Securities Market Act, which are consistent with the provisions in recommendation RFR 2, Accounting for Legal Entities. The same accounting and valuation methods have been applied as in the most recent annual report.

For detailed information about the accounting policies, see Cloetta's annual report for 2010 at www.cloetta.se.

Critical accounting estimates and assumptions

The preparation of financial statements in conformity with IFRS requires the management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual outcomes may differ from these estimates and assumptions.

The estimates and assumptions are evaluated on a regular basis. Changes in estimates are reported in the period of the change, if the change affects that period only; or in the period of the change and future periods, if the change affects both.

Through advertisements and other activities, Kexchoklad is visible in ski resorts throughout the winter season.

For information about risk management, see pages 62 and 95 of Cloetta's annual report for 2010 at www.cloetta.se

For detailed accounting policies, see page 77 of Cloetta's annual report for 2010 at www.cloetta.se

Cloetta's Fairtrade-labelled Good chocolate bar series has been extended with a new taste variety – almond macaroon. Cloetta's traditional almond macaroons have been chopped and mixed with our delicious milk chocolate.

FINANCIAL CALENDAR 2011

Q3, September 2010 – May 2011 23 June 2011 Q4, September 2010 – August 2011 18 October 2011

For additional information contact

Managing Director and CEO Curt Petri, mobile +46 (0)70-593 21 69 or CFO Kent Sandin, mobile +46 (0)70-582 77 95.

The annual report and interim reports are also published on www.cloetta.com

KEY EVENTS DURING THE QUARTER

• • Kexchoklad was given a new design that is aimed at increasing the brand's visibility. In the second quarter, Kexchoklad was featured in a nationwide outdoor campaign.
• • The new Kexchoklad blueberry was launched at the start of the year's ski season. As part of the collaboration with A Swedish Classic, Kexchoklad took part in the Engelsbrektsloppet cross-country ski race.
• • Cloetta's chocolate bags were given a new family identify. The bag series initially consists of Polly, Bridge, Kexchoklad mini bars and the new Pops Crunchy. The cohesive concept results in clearer exposure in the store and is therefore more attractive to the retail trade. Pops Crunchy is a new taste combination for Cloetta, a mixture of chocolate and salt.
• • Cloetta Good almond macaroon is another new taste combination. Cloetta's traditional almond macaroons have been chopped and mixed with our Fairtrade-labelled chocolate bar.
• • In connection with Valentine's Day, Plopp mini bars were relaunched with the messages Kiss, Hug, Joy and Love.

Cloetta AB (publ) • CIN 556308-8144 • SE-590 69 Ljungsbro, Sweden Tel +46 (0)13-28 50 00 • Fax +46 (0)13-655 60 • www.cloetta.com