Nobia

Quarterly Report • Feb 13, 2015

Interim report January-December 2014

(All figures in brackets refer to the corresponding period in 2013)

Net sales for the fourth quarter amounted to SEK 3,231 million (2,909). Organic growth was a 3 per cent (neg: 1). Operating profit for the period excluding restructuring costs of SEK 107 million (–) amounted to SEK 240 million (199), corresponding to an operating margin of 7.4 per cent (6.8). Currency gains of approximately SEK 5 million (losses: 20) affected the Group's operating profit excluding restructuring costs. Profit after tax including restructuring costs amounted to SEK 57 million (98), corresponding to earnings per share of SEK 0.33 (0.59). Operating cash flow amounted to SEK 301 million (210). The Board of Directors proposes a dividend of SEK 1.75 per share.

The market is deemed to have improved slightly compared with the year-earlier period. The UK market continued to grow and the Nordic market increased slightly. Combined, other relevant markets remained unchanged.

Organic sales growth was 3 per cent (neg: 1). Currency effects impacted net sales positively for the quarter in an amount of SEK 186 million (neg: 17).

The gross margin fell to 41.4 per cent (42.0), negatively impacted by a changed sales mix and the effect of the acquisition of Rixonway Kitchens, which was only partially offset by higher sales values.

Operating profit increased primarily due to higher sales values and lower costs.

Currency gains of approximately SEK 5 million (losses: 20) affected the Group's operating profit, of which SEK 15 million (0) comprised translation effects and negative SEK 10 million (neg: 20) transaction effects.

Restructuring costs primarily pertained to the transition to the Group's common standard dimension in Magnet and in Finland, but also to costs relating to the sale of Hygena and the acquisition of Rixonway

Kitchens announced during the fourth quarter.

Return on capital employed including restructuring costs amounted to 8.9 per cent over the past twelve-month period (14.6), negatively affected by goodwill impairment in Hygena in the third quarter.

Operating cash flow rose as a result of the positive change in working capital and higher earnings generation compared with the preceding year.

Comments from the CEO

"Sales increased in our two largest regions and organic growth totalled 3 per cent. The operating margin continued to improve, meaning that it has now strengthened for a full eleven consecutive quarters.

We expect to finalise the divestment of Hygena shortly. Following this transaction and with the additional improvement opportunities that we have, we will come closer to our operating-margin target of 10 per cent, although I do not expect the target to be achieved as early as 2015.

We are continuing to work on generating organic growth through a number of initiatives. The transition to the Group's standard dimension is progressing according to plan and we are now focusing on the successful integration of Rixonway Kitchens," says Morten Falkenberg, President and CEO.

	Oct-Dec				Jan-Dec
Nobia Group summary	2013	2014	Change, %	2013	2014	Change, %
Net sales, SEK m	2,909	3,231	11	11,773	12,392	5
Gross margin, %	42.0	41.4	–	41.0	41.8	–
Operating margin before depreciation and impairment, %	10.4	9.7	–	9.2	9.9	–
Operating profit (EBIT), SEK m	199	240	21	690	845	22
Operating margin, %	6.8	7.4	–	5.9	6.8	–
Profit after financial items, SEK m	176	220	25	596	769	29
Profit/loss after tax, SEK m	98	571)	-42	350	-272)	–
Earnings/loss per share excl restructuring, after dilution, SEK	0.59	0.85	44	2.29	3.20	40
Earnings/loss per share, after dilution, SEK	0.59	0.33	-44	2.10	-0.17	–
Operating cash flow, SEK m	210	301	43	601	779	30

All figures, except for net sales, profit after tax and operating cash flow are adjusted for restructuring costs.

Additional information about restructuring costs is provided on pages 3-5, 7 and 10.

1) Affected by restructuring costs of SEK 87 million.

2) Affected by restructuring costs of SEK 564 million.

Net sales and operating margin, Oct-Dec

Net sales amounted to SEK 3,231 million and operating margin to 7.4 per cent.

Profitability trend including restructuring costs

Return on capital employed including restructuring costs was 8.9 per cent during the past twelve-month period.

Earnings/loss per share

Earnings per share after dilution excluding restructuring costs amounted to SEK 3.20 over the past twelve-month period.

Analysis of net sales and regional reporting

Currency gains of SEK 186 million (losses: 17) impacted fourth-quarter net sales. Organic growth was positive in the Nordic and UK regions, but negative in the Continental Europe region. Combined, organic growth was 3 per cent (neg: 1).

Analysis of net sales		Oct-Dec		Jan-Dec
	%	SEK m	%	SEK m
2013		2,909		11,773
Organic growth	3	83	0	-11
– of which UK region	1	15	1	35
– of which Nordic region	6	73	2	85
– of which Continental Europe region	-1	-5	-5	-131
Currency effect	6	186	6	675
Divested operations1)	0	-4	-1	-102
Acquired operations2)	2	57	0	57
2014	11	3,231	5	12,392

1) Pertains to the sale of Optifit on 1 May 2013.

2) Pertains to the acquisition of Rixonway Kitchens, which was consolidated on 1 November 2014.

Net sales and profit/loss per region (operating segment)

	UK		Nordic		Continental Europe		eliminations			Group
	Oct-Dec		Oct-Dec		Oct-Dec		Oct-Dec			Oct-Dec
SEK m	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	Change, %
Net sales from external customers	1,003	1,192	1,275	1,381	631	658	–	–	2,909	3,231	11
Net sales from other regions	26	30	0	1	1	1	-27	-32	–	–	–
Net sales	1,029	1,222	1,275	1,382	632	659	-27	-32	2,909	3,231	11
Gross profit excluding restructuring costs	422	496	521	553	277	286	3	3	1,223	1,338	9
Gross margin excluding restructuring costs, %	41.0	40.6	40.9	40.0	43.8	43.4	–	–	42.0	41.4	–
Operating profit excluding restructuring costs	73	86	162	193	2	10	-38	-49	199	240	21
Operating margin excluding restructuring costs, %	7.1	7.0	12.7	14.0	0.3	1.5	–	–	6.8	7.4	–
Operating profit/loss	73	3	162	187	2	2	-38	-59	199	133	-33
Operating margin, %	7.1	0.2	12.7	13.5	0.3	0.3	–	–	6.8	4.1	–

Nobia develops and sells kitchens through some twenty strong brands in Europe, including Magnet in the UK; Hygena in France; HTH, Norema, Sigdal, Invita, Marbodal in Scandinavia; Petra, Parma and A la Carte in Finland; Ewe, FM and Intuo in Austria, as well as Poggenpohl globally.

Nobia generates profitability by combining economies of scale with attractive kitchen offerings. The Group has approximately 6,900 employees and net sales of about SEK 12 billion. The Nobia share is listed on the NASDAQ OMX Stockholm under the short name NOBI. Website: www.nobia.com.

UK region

Net sales for the fourth quarter amounted to SEK 1,222 million (1,029). Organic growth was 1 per cent (8). Operating profit excluding restructuring costs of SEK 83 million (–) amounted to SEK 86 million (73) and the operating margin was 7.0 per cent (7.1). Currency gains of approximately SEK 20 million (losses: 10) on operating profit comprised a translation effect of SEK 10 million and a transaction effect of SEK 10 million.

Kitchen market

The UK kitchen market continued to grow, particularly in the lower price segments.

Nobia

Organic sales growth was primarily attributable to increased B2B sales. Sales via Magnet were unchanged compared with the year-earlier period. Magnet's sales to the project segment increased, which however was offset by lower sales to builders (Trade).

Rixonway Kitchens, which was acquired during the quarter and has been included in Nobia's UK region since 1 November 2014, generated net sales of SEK 57 million during the final two months of the year.

Currency gains of SEK 117 million (losses: 13) impacted net sales for the quarter.

The gross margin declined as a result of a changed sales mix and the

effect of the acquisition of Rixonway Kitchens, which was only partly offset by higher sales values and positive currency effects.

Operating profit excluding restructuring costs improved based on positive currency effects, lower prices of materials and higher sales values. Operating profit was adversely affected by seasonally low volumes in Rixonway Kitchens.

Restructuring costs for the period pertains to Magnet's transition to the Group's common standard dimension, but also to costs arising in connection with the acquisition of Rixonway Kitchens.

In January 2015, more than 85 per cent of the kitchens sold via Magnet had the Group's common standard dimension.

The Simply Magnet range that was launched in the third quarter was well-received by customers.

Measured in local currency, operating profit for the region totalled GBP 7.4 million (6.9).

Quarterly data in SEK		2013			2014
	I	II	III	IV	I	II	III	IV
Net sales, SEK m	991	1,086	1,034	1,029	1,099	1,173	1,208	1,222
Gross profit excl restructuring costs, SEK m	394	429	407	422	444	477	505	496
Gross margin excl restructuring costs, %	39.8	39.5	39.4	41.0	40.4	40.7	41.8	40.6
Operating profit excl restructuring costs, SEK m	32	77	65	73	51	103	108	86
Operating margin excl restructuring costs, %	3.2	7.1	6.3	7.1	4.6	8.8	8.9	7.0
Operating profit, SEK m	32	77	65	73	51	103	108	3
Operating margin, %	3.2	7.1	6.3	7.1	4.6	8.8	8.9	0.2

Quarterly data in GBP		2013			2014
	I	II	III	IV	I	II	III	IV
Net sales, GBP m	99.1	108.0	101.7	97.6	102.7	105.7	103.8	104.1
Gross profit excl restructuring costs, GBP m	39.4	42.6	40.1	40.1	41.5	42.9	43.4	42.3
Gross margin excl restructuring costs, %	39.7	39.5	39.4	41.0	40.4	40.6	41.8	40.6
Operating profit excl restructuring costs, GBP m	3.2	7.6	6.5	6.9	4.8	9.4	9.3	7.4
Operating margin excl restructuring costs, %	3.2	7.0	6.4	7.1	4.7	8.9	8.9	7.1
Operating profit, GBP m	3.2	7.6	6.5	6.9	4.8	9.4	9.3	0.0
Operating margin, %	3.2	7.0	6.4	7.1	4.7	8.9	8.9	0.0

Store trend, Oct-Dec
Renovated or relocated	–
Newly opened, net	7*
Number of own kitchen stores	208

Percentage of consolidated net sales, fourth quarter

*whereof 4 stores in Rixonway Kitchens.

Nordic region

Net sales for the fourth quarter amounted to SEK 1,382 million (1,275). Organic growth was 6 per cent (neg: 3). Operating profit excluding restructuring costs of SEK 6 million (–) totalled SEK 193 million (162) and the operating margin was 14.0 per cent (12.7). Currency losses of approximately SEK 20 million (losses: 10) on operating profit comprised a translation effect of SEK 5 million and a transaction effect of negative SEK 25 million.

Kitchen market

The Nordic kitchen market increased slightly compared with the year-earlier period. The professional customer developed favourably, while consumer demand remained cautious. Sweden was the strongest market.

Nobia

Organic sales growth was primarily attributable to the professional segment, although sales to the consumer segment also increased.

Sales in the professional segment rose in all markets except for the Finnish market. Sales to consumers increased in Sweden and Denmark, but declined in Norway and Finland.

Currency gains of SEK 33 million (losses: 17) impacted net sales for the quarter.

The gross margin weakened, negatively affected by currency effects and a changed sales mix, and positively impacted by higher sales values.

Operating profit excluding restructuring costs improved as a result of higher sales values and cost savings, which offset negative currency effects.

Restructuring costs for the period pertains to the Finnish operation's transition to the Group's common standard dimension.

In Norway, Norema launched a limited, attractively priced kitchen range entitled Norema Best Price during the fourth quarter.

In Finland, the Finnish brand portfolio will be streamlined in 2015 by phasing out the Parma brand and instead focusing resources on strengthening the A la Carte and Petra brands.

Quarterly data in SEK		2013			2014
	I	II	III	IV	I	II	III	IV
Net sales, SEK m	1,200	1,449	1,104	1,275	1,262	1,448	1,123	1,382
Gross profit excl restructuring costs, SEK m	476	612	439	521	503	599	457	553
Gross margin excl restructuring costs, %	39.7	42.2	39.8	40.9	39.9	41.4	40.7	40.0
Operating profit excl restructuring costs, SEK m	111	224	136	162	128	207	138	193
Operating margin excl restructuring costs, %	9.3	15.5	12.3	12.7	10.1	14.3	12.3	14.0
Operating profit, SEK m	111	224	136	162	128	207	138	187
Operating margin, %	9.3	15.5	12.3	12.7	10.1	14.3	12.3	13.5

Store trend, Oct-Dec

Renovated or relocated	–
Newly opened, net	-1
Number of own kitchen stores	68

Continental Europe region

Net sales for the fourth quarter amounted to SEK 659 million (632). Organic growth was a negative 1 per cent (neg: 9). Operating profit excluding restructuring costs of SEK 8 million (–) amounted to SEK 10 million (2) and the operating margin was 1.5 per cent (0.3). Currency gains of approximately SEK 5 million (0) on operating profit comprised a translation effect of SEK 0 million and a transaction effect of SEK 5 million.

Kitchen market

The overall market trend in Nobia's main markets remained unchanged. The German market grew slightly, while both the French and Austrian markets performed negatively during the period.

Nobia

The decline in organic sales was attributable to the French kitchen chain Hygena and the operations in Austria.

The increased sales in Poggenpohl were primarily the result of higher project deliveries in Asia and the US.

Currency gains of SEK 36 million (14) impacted net sales for the quarter.

The gross margin fell as a result of higher prices of materials and

negative mix effects, which were only partly offset by higher sales values and positive currency effects.

Operating profit excluding restructuring costs improved primarily due to cost savings and higher sales values, which offset negative mix effects and lower volumes.

Restructuring costs for the period were related to the divestment of Hygena.

In the fourth quarter, Nobia signed an agreement for the divestment of Hygena to the French kitchen company Fournier Group for EUR 20 million, on a cash and debt-free basis. An application for approval of the transaction has been submitted to the French competition authorities and the transaction is expected to be finalised during the first quarter of 2015.

Quarterly data in SEK		2013			2014
	I	II	III	IV	I	II	III	IV
Net sales, SEK m	622	756	685	632	561	724	647	659
Gross profit excl restructuring costs, SEK m	240	300	288	277	226	312	299	286
Gross margin excl restructuring costs, %	38.6	39.7	42.0	43.8	40.3	43.1	46.2	43.4
Operating profit excl restructuring costs, SEK m	-48	-10	9	2	-39	0	18	10
Operating margin excl restructuring costs, %	-7.7	-1.3	1.3	0.3	-7.0	0.0	2.8	1.5
Operating profit/loss, SEK m	-48	-46	9	2	-39	0	18	2
Operating margin, %	-7.7	-6.1	1.3	0.3	-7.0	0.0	2.8	0.3

–
–
160

Percentage of consolidated net sales, fourth quarter

Consolidated earnings, cash flow and financial position January-December 2014

Net sales for 2014 amounted to SEK 12,392 million (11,773). Organic growth totalled 0 per cent (0). Operating profit excluding restructuring costs of SEK 433 million (36) amounted to SEK 845 million (690), corresponding to an operating margin of 6.8 per cent (5.9). Loss after tax and including restructuring costs was SEK 27 million (profit: 350), corresponding to earnings per share of negative SEK 0.17 (pos: 2.10). Operating cash flow amounted to SEK 779 million (601).

Nobia's organic growth during the period totalled 0 per cent (0), specified as follows: positive 1 per cent (6) in the UK, 2 per cent (neg: 2) in the Nordic region and negative 5 per cent (neg: 5) in the Continental Europe region.

Currency effects had a positive impact of SEK 675 million (neg: 347) on net sales. The divestment of Optifit had an adverse effect of SEK 102 million on sales compared with 2013. The acquisition of Rixonway Kitchens in the fourth quarter of 2014 had a positive impact of SEK 57 million on sales compared with 2013.

Currency gains on operating profit amounted to approximately SEK 10 million (losses: 60), comprising a translation effect of positive SEK 50 million (neg: 20) and a transaction effect of negative SEK 40 million (neg: 40).

Operating profit excluding restructuring costs strengthened primarily due to higher sales values and lower prices for materials, which offset lower volumes.

An operating loss of SEK 158 million (loss: 143) excluding restructuring costs was reported for Group-wide items and eliminations.

Net financial items amounted to an expense of SEK 78 million (expense: 94). Net financial items include the net of return on pension assets and interest expense for pension liabilities corresponding to an expense of SEK 41 million (expense: 41).

The net interest expense totalled SEK 37 million (expense: 53). Operating cash flow improved, primarily as a result of higher earnings generation compared with the year-earlier period.

The return on capital employed including restructuring costs over the past twelve-month period amounted to 8.9 per cent (14.6) and the return on shareholders' equity including restructuring costs was a negative 0.9 per cent (12.0). The return over the past twelve-month period was adversely affected by goodwill impairment pertaining to Hygena, and regarding return on shareholders' equity, impairment of deferred tax receivables, in the third quarter of 2014.

Nobia's investments in fixed assets amounted to SEK 316 million (251), of which SEK 135 million (87) was related to store investments.

Goodwill at the end of the period amounted to SEK 2,278 million (2,153), corresponding to 71 per cent (68) of the Group's shareholders' equity. Net debt including pension provisions amounted to SEK 1,206 million (1,176). The debt/equity ratio was 38 per cent at the end of the period (37).

Net sales and profit/loss per region (operating segment)

					Continental			Group-wide and
	UK Jan-Dec		Nordic Jan-Dec		Europe Jan-Dec		eliminations Jan-Dec			Group Jan-Dec
SEK m	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	Change, %
Net sales from external customers	4,055	4,590	5,027	5,213	2,691	2,589	–	–	11,773	12,392	5
Net sales from other regions	85	112	1	2	4	2	-90	-116	–	–	–
Total net sales	4,140	4,702	5,028	5,215	2,695	2,591	-90	-116	11,773	12,392	5
Gross profit excl restructuring costs	1,652	1,922	2,048	2,112	1,105	1,123	19	17	4,824	5,174	7
Gross margin excl restructuring costs, %	39.9	40.9	40.7	40.5	41.0	43.3	–	–	41.0	41.8	–
Operating profit excl restructuring costs	247	348	633	666	-47	-11	-143	-158	690	845	22
Operating margin excl restructuring costs, %	6.0	7.4	12.6	12.8	-1.7	-0.4	–	–	5.9	6.8	–
Operating profit (EBIT)	247	265	633	660	-83	-19	-143	-494	654	412	-37
Operating margin, %	6.0	5.6	12.6	12.7	-3.1	-0.7	–	–	5.6	3.3	–
Financial items	–	–	–	–	–	–	–	–	-94	-78	17
Profit after financial items	–	–	–	–	–	–	–	–	560	334	-40

Planned divestment of Hygena

On 24 September 2014, Nobia announced that the company had received an offer to sell its French kitchen chain Hygena to the French kitchen company Fournier Group for a purchase consideration of EUR 20 million on a cash and debt-free basis. Consultation subsequently took place with Hygena's employee representatives, a sales agreement was signed and an application submitted to the French competition authorities. In conjunction with signing the sales agreement, Hygena's net assets were reclassified to Disposal group held for sale, in accordance with IFRS 5.

The transaction is expected to be finalised during the first quarter of 2015.

The sale of Hygena is expected to improve Nobia's operating margin. For 2014, Hygena's net sales amounted to SEK 1,098 million and operating loss excluding restructuring costs to approximately SEK 125 million.

The divestment of Hygena is expected to have a negative impact on earnings of approximately SEK 500 million, primarily attributable to impairment of goodwill and deferred tax assets, and is recognised as a restructuring cost.

In light of the planned sale of Hygena, Hygena's total goodwill value of SEK 328 million as per the closing day rate on 31 December 2014 was impaired in the third-quarter accounts. This impairment is recognised under Group-wide and eliminations. In addition, Hygena's deferred tax assets were impaired from SEK 151 million to SEK 0 on 30 September 2014, which was charged to the tax expense for the year.

During the fourth quarter of 2014, Nobia incurred additional costs of SEK 12 million related to the divestment of Hygena.

When the transaction is completed, the purchasing company will pay Nobia a purchase consideration of EUR 20 million.

Restructuring measures in progress

Restructuring costs pertain to certain nonrecurring costs; see page 10. Restructuring costs of SEK 564 million impacted profit after tax for 2014, of which SEK 433 million was charged to operating profit, SEK 151 million pertained to the impairment of deferred tax assets, negative SEK 22 million pertained to other tax effects and SEK 2 million was charged to net financial items.

The restructuring costs charged to operating profit for the year primarily pertain to the impairment of goodwill in Hygena of SEK 328 million, but also to the transition to the Group's common standard dimension in Magnet in the UK and in Finland, and costs related to the divestment of Hygena and the acquisition of Rixonway Kitchens.

Approved and implemented restructuring measures of SEK 76 million (133) were charged to cash flow, of which 56 (133) derived from previous years' approved restructuring measures.

Earnings for discontinued operations

Nobia holds a number of stores, which were acquired from franchisees with the intention of selling these on. At the end of 2013, Nobia had four stores in Denmark and four stores in Sweden, a total of eight stores.

During the first six months of 2014, two additional stores were acquired in Sweden, of which one was sold on during the third quarter. Two stores were sold on during the fourth quarter. At the end of the fourth quarter, Nobia had four stores in Denmark and three stores in Sweden, which are recognised in the Nordic region as Discontinued operations and Disposal group held for sale, in accordance with IFRS 5. Loss after tax for these stores amounted to SEK 17 million (loss: 15) during the January-December 2014 period.

Corporate acquisitions and divestments

It was announced on 9 December 2014 that Nobia had acquired Rixonway Kitchens, a large kitchen supplier in the UK market, and a leader in the social housing segment. The seller was August Equity LLP and the management of Rixonway Kitchens. The purchase consideration amounted to GBP 31 million on a cash and debt-free basis, and a variable cash consideration of a maximum of GBP 3 million, conditional upon the company's business performance.

The acquisition of Rixonway strengthens Nobia's position in the UK kitchen market. Through synergy effects in primarily sourcing and administration, Nobia expects the acquisition to have a positive effect on the Group's operating margin and earnings per share from 2015.

Rixonway Kitchens has been included in Nobia's financial statements since 1 November 2014. Rixonway Kitchens has annual net sales of approximately GBP 40 million and an EBIT margin of about 10 per cent.

Personnel

The number of employees at the end of the period was 6,925 (6,544). The increase in the number of employees since the third quarter was primarily due to the acquisition of Rixonway Kitchens, which had 463 employees at the end of the year.

Organisation and management changes

The regional organisational structure was strengthened to optimise production, co-ordinate sourcing and harmonise commercial activities between the business units in each region. In connection with this organisational change, the areas of responsibility for Lars Bay-Smidt, Peter Kane and Christian Rösler, were extended regarding the operations in each region.

Following the divestment of Hygena, the Continental Europe region will be renamed Central Europe region.

On 31 December 2014, Titti Lundgren, EVP and Head of Marketing, left Nobia.

From 1 January 2015 the following persons became members of Nobia's Group Management: Nick Corlett, EVP Sourcing and Product Management; Rune Stephansen, EVP Head of Commercial Sweden; Ole Dalsbø, EVP Head of Commercial Norway, Erkka Lumme, EVP Head of Commercial Finland, Annica Hagen, EVP Brand Portfolio and Innovation, and Kim Lindqvist, EVP Digital and Media Strategy.

Currency effects on operating result*

		Translation effect		Transaction effect	Total effect
SEK m	Q4	Jan-Dec	Q4	Jan-Dec	Q4	Jan-Dec
UK region	10	35	10	25	20	60
Nordic region	5	15	-25	-75	-20	-60
Continental Europe region	0	0	5	10	5	10
Group	15	50	-10	-40	5	10

* Pertains to effects excluding restructuring costs.

Annual General Meeting

Nobia's Annual General Meeting will be held on 14 April 2015 at 3:00 p.m. at Lundqvist & Lindqvist Klara Strand Konferens, Klarabergsviadukten 90, in Stockholm.

The present Chairman of Nobia, Johan Molin, has declined re-election at the 2015 Annual General Meeting. The Nomination Committee has proposed Tomas Billing and Christina Ståhl as new Board members. The Nomination Committee has also proposed Tomas Billing as the new Board Chairman of Nobia.

The Nomination Committee's complete proposals will be published not later than in conjunction with the release of the notice of the Annual General Meeting on 13 March.

The Annual Report is scheduled to be published on www.nobia.com on 24 March and distributed in printed form on 31 March.

Dividend policy and proposed dividend

The Board has revised the dividend policy to the objective that the average dividend shall be 40–60 per cent of net profit after tax. The former target was that the average dividend should be at least 30–60 per cent of net profit after tax.

The Board proposes that a dividend of SEK 1.75 per share be paid for the 2014 fiscal year, corresponding to 7.9 per cent of the Parent Company's shareholders' equity and 9.2 per cent of the Group's shareholders' equity. The proposal entails a total dividend of approximately SEK 293 million. The record day for payment of the dividend is 16 April 2015.

Transfer of treasury shares

The Board of Directors of Nobia has decided to transfer repurchased shares based on the authorisation granted by the 2014 Annual General Meeting. The purpose of the transfer is to deliver shares under an employee share option scheme, according to which each employee share option carries entitlement to the acquisition of one Nobia share during the period from and including 31 May 2014 up to and including 31 December 2015 at an exercise price of SEK 54.10. This employee share option scheme was decided at the 2011 Annual General Meeting and is described in more detail in the 2013 Annual Report.

In June 2014, Nobia transferred 330,000 repurchased shares and 65,000 shares were transferred in November. On 31 December 2014, Nobia held 7,767,300 treasury shares.

The number of additional shares under the aforementioned employee share option scheme that will be transferred during the period until the 2015 Annual General Meeting is based on the number of employee share options that will actually be utilised, but will not exceed 640,000.

For current information regarding the implementation of the transfer of repurchased shares, refer to the stock exchange's website.

Financing

In July 2014, Nobia agreed a new syndicated loan of SEK 1 billion with a small group of banks. The term is five years. Nobia also has a bond loan from AB SEK Securities (Swedish Export Credit Corporation) of SEK 800 million, which expires in 2017.

Related party transactions

The Parent Company invoiced Group-wide services to subsidiaries in an amount of SEK 118 million (77) during the period.

The Parent Company reported profit of SEK 312 million (244) from participations in Group companies.

Financial instruments

Financial instruments measured at fair value in the balance sheet are forward agreements comprised of assets at a value of SEK 20 million (10) and liabilities at a value of SEK 24 million (7). The measurement of these items is attributable to level 2 of the fair value hierarchy, meaning based directly or indirectly on observable market data.

Significant risks for the Group and Parent Company

Nobia is exposed to strategic, operating and financial risks, which are described on pages 35-37 of the 2013 Annual Report. During the January-December 2014 period, the overall Nordic market is deemed to have remained unchanged. Demand in the UK is considered to have increased slightly, while demand in Continental Europe remained weak. Overall, market conditions are deemed to remain challenging. This means that total production and deliveries remain at a low level. Nobia is continuing to capitalise on synergies and economies of scale by harmonising the product range, co-ordinating production and enhancing purchasing efficiency. Nobia's balance sheet contains goodwill of SEK 2,278 million. The value of this asset item is tested annually and if there are any indications of a decline in value.

Accounting policies

This interim report has been prepared in accordance with IFRS, with the application of IAS 34 Interim Financial Reporting. For the Parent Company, accounting policies are applied in accordance with Chapter 9, Interim Reports, of the Swedish Annual Accounts Act. Nobia has applied the same accounting policies in this interim report as were applied in the 2013 Annual Report.

New accounting policies for 2014

New or revised IFRS and interpretations from the IFRS Interpretation Committee (IFRS IC) did not have any effect on the Group's or the Parent Company's financial position, earnings or other disclosures.

For further information

• Please contact any of the following on: +46 (0)8 440 16 00 or
• +46 (0)705 95 51 00:
• Morten Falkenberg, President and CEO
• Mikael Norman, CFO • Lena Schattauer, Head of Investor Relations

Presentation

The interim report will be presented on Friday, 13 February 2015 at 9:00 a.m. CET in a webcast teleconference that can be followed on Nobia's website. To participate in the teleconference, call one of the following numbers:

• From Sweden: +46 (0)8 505 564 74
• From the UK: +44 (0)203 364 5374
• From the US: +1 855 753 22 30

Financial calendar

14 April 2015	2015 Annual General Meeting
27 April 2015	Interim report January-March 2015
20 July 2015	Interim report January-June 2015
30 October 2015	Interim report January-September 2015

Stockholm, 13 February 2015

Morten Falkenberg President and CEO

Nobia AB, Corporate Registration Number 556528-2752

This Year-end Report is unaudited.

The information in this interim report is such that Nobia AB (publ) is obliged to publish in accordance with the Swedish Securities Market Act. The information was released to the media for publication on 13 February 2015 at 8:00 a.m. CET.

Box 70376 • SE-107 24 Stockholm, Sweden • Street address: Klarabergsviadukten 70 A5 • Tel +46 (0)8 440 16 00 • Fax +46 (0)8 503 826 49 • www.nobia.se Corporate Registration Number: 556528-2752 • The registered office of the Board of Directors is in Stockholm, Sweden

Condensed consolidated income statement

	Oct-Dec			Jan-Dec
SEK m	2013	2014	2013	2014
Net sales	2,909	3,231	11,773	12,392
Cost of goods sold	-1,686	-1,950	-6,949	-7,275
Gross profit	1,223	1,281	4,824	5,117
Selling and administration expenses	-1,039	-1,132	-4,163	-4,707
Other income/expenses	15	-16	-7	2
Operating profit	199	133	654	412
Net financial items	-23	-22	-94	-78
Profit/loss after financial items	176	111	560	334
Tax	-73	-52	-195	-344
Profit/loss after tax from continuing operations	103	59	365	-10
Profit/loss from discontinued operations, net after tax	-5	-2	-15	-17
Profit/loss after tax	98	57	350	-27
Total profit attributable to:
Parent Company shareholders	98	57	351	-28
Non-controlling interests	0	0	-1	1
Total profit/loss	98	57	350	-27
Total depreciation	97	81	377	378
Total impairment	6	10	13	344
Gross margin, %	42.0	39.6	41.0	41.3
Operating margin, %	6.8	4.1	5.6	3.3
Return on capital employed, %	-	-	14.6	8.9
Return on shareholders equity, %	-	-	12.0	-0.9
Earnings per share before dilution, SEK1)	0.59	0.34	2.10	-0.17
Earnings per share after dilution, SEK1)	0.59	0.33	2.10	-0.17
Number of shares at period end before dilution, 000s2)	167,131	167,526	167,131	167,526
Average number of shares after dilution, 000s2)	167,131	167,504	167,131	167,334
Number of shares after dilution at period end, 000s2)	167,366	168,002	167,351	167,526
Average number of shares after dilution, 000s2)	167,366	167,982	167,310	167,334

1) Earnings/loss per share attributable to Parent Company shareholders.

2) Excluding treasury shares.

Consolidated statement of comprehensive income

	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
Profit/loss after tax	98	57	350	-27
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange-rate differences attributable to translation of foreign operations	121	112	109	369
Cash flow hedges before tax	-5	25	4	-5
Tax attributable to change in hedging reserve for the period	1	-5	-1	1
	117	132	112	365
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans	131	-25	150	-202
Tax relating to remeasurements of defined benefit pension plans	-33	6	-37	41
	98	-19	113	-161
Other comprehensive income/loss	215	113	225	204
Total comprehensive income/loss	313	170	575	177
Total comprehensive income/loss attributable to:
Parent Company shareholders	313	170	576	176
Non-controlling interests	0	0	-1	1
Total comprehensive income/loss	313	170	575	177

Specification of restructuring costs 1)

Restructuring costs per function	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
Cost of goods sold	–	-57	–	-57
Selling and administrative expenses	–	-38	–	-364
-Whereof impairment of goodwill in Hygenga	–	-2	–	-328
Other expenses	–	-12	-36	-12
Total restructuring costs	–	-107	-36	-433
Restructuring costs per region	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
UK	–	-83	–	2) -83
Nordic	–	-6	–	-6

Group	–	-107	-36	-433
-Whereof impairment of goodwill in Hygenga	–	-2	–	-328
Group-wide and eliminations	–	-10	–	-336
Continental Europe	–	-8	-36	-8

1) Refers to costs affecting operating profit. Restructuring costs affects profit after tax for the fourth quarter of SEK 87 million and for the period January-December 2014 of SEK 564 million.

2) Impairment of SEK 17 million referring to Kitchen Exhibitions.

Condensed consolidated balance sheet

	31 dec
SEK m	2013	2014
ASSETS
Goodwill	2,153	2,278
Other intangible fixed assets	176	158
Tangible fixed assets	1,876	1,672
Long-term receivables	55	35
Deferred tax assets	410	303
Total fixed assets	4,670	4,446
Inventories	849	853
Accounts receivable	949	1,091
Other receivables	424	403
Total current receivables	1,373	1,494
Cash and cash equivalents	278	470
Assets held for sale	15	592
Total current assets	2,515	3,409
Total assets	7,185	7,855
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital	58	58
Other capital contributions	1,463	1,470
Reserves	-366	7
Profit brought forward	1,999	1,656
Total shareholders' equity attributable to Parent Company shareholders	3,154	3,191
Non-controlling interests	4	5
Total shareholders' equity	3,158	3,196
Provisions for pensions	654	869
Other provisions	209	159
Deferred tax liabilities	162	143
Other long-term liabilities, interest-bearing	806	811
Total long-term liabilities	1,831	1,982
Current liabilities, interest-bearing	2	4
Current liabilities, non-interest-bearing	2,192	2,313
Liabilities attributable to assets held for sale	2	360
Total current liabilities	2,196	2,677
Total shareholders' equity and liabilities	7,185	7,855
BALANCE-SHEET RELATED KEY RATIOS
Equity/assets ratio, %	44	41
Debt/equity ratio, %	37	38
Net debt, SEK m	1,176	1,206
Capital employed, closing balance, SEK m	4,620	4,880

Statement of changes in consolidated shareholders' equity

	Attributable to Parent Company shareholders
SEK m	Share capital	Other capital contributions	Exchange rate differences attributable to translation of foreign operations	Cash-flow hedges after tax	SEK m	Share capital	Other capital contributions	Exchange rate differences attributable to translation of foreign operations
Opening balance, 1 January 2013	58	1,458	-470	0	1,611	2,657	5	2,662
Profit/loss for the period	–	–	–	–	351	351	-1	350
Other comprehensive income/loss for the period	–	–	109	3	113	225	0	225
Total comprehensive income for the period	–	–	109	3	464	576	-1	575
Dividend	–	–	–	–	-84	-84	–	-84
Allocation of employee share option and share saving schemes	–	5	–	–	–	5	–	5
Closing balance, 31December 2013	58	1,463	-361	3	1,991	3,154	4	3,158
Opening balance, 1 January 2014	58	1,463	-361	3	1,991	3,154	4	3,158
Profit/loss for the period	–	–	–	–	-28	-28	1	-27
Other comprehensive income/loss for the period	–	–	369	-4	-161	204	0	204
Total comprenhensive income/loss for the period	–	–	369	-4	-189	176	1	177
Dividend	–	–	–	–	-167	-167	0	-167
Allocation of employee share option and share saving schemes	–	7	–	–	–	7	–	7
Treasury shares sold	–	–	–	–	21	21	–	21
Closing balance, 31December 2014	58	1,470	8	-1	1,656	3,191	5	3,196

Condensed consolidated cash-flow statement

	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
Operating activities
Operating profit	199	133	654	412
Depreciation/Impairment	103	91	1) 390	2) 722
Adjustments for non-cash items	-13	97	18	99
Tax paid	-81	-84	-159	-194
Change in working capital	85	160	-72	12
Cash flow from operating activities	293	397	831	1,051
Investing activities
Investments in fixed assets	-90	-109	-251	-316
Other items in investing activities	7	13	21	44
Interest received	2	4	4	6
Change in interest-bearing assets	0	0	-2	1
Acquisition of operations	–	-250	–	-250
Divestment of operations	-10	-14	-38	-16
Cash flow from investing activities	-91	-356	-266	-531
Operating cash flow before acquisition/divestment of com panies, interest, increase/decrease of interest-bearing assets Operating cash flow after aquisition/divestment of companies, interest, increase/decrease of interest-bearing assets	210 202	301 41	601 565	779 520
Financing activities
Interest paid	-11	-13	-58 3)	-43 4)
Change in interest-bearing liabilities	-66	-145	-318	-190
Treasury shares sold	–	3	–	21
Dividend	–	–	-84	-167
Cash flow from financing activities	-77	-155	-460	-379
Cash flow for the period excluding exchange-rate differences in cash and cash equivalents	125	-114	105	141
Cash and cash equivalents at beginning of the period	149	546	171	278
Cash flow for the period	125	-114	105	141
Exchange-rate differences in cash and cash equivalents	4	38	2	51
Cash and cash equivalents at period-end	278	470	278	470
1) Impairment amounted to SEK 13 million of which SEK 6 million pertained to buildings, SEK 5 million to machinery and equipment and SEK 2 million to kitchen exhibitions. 2) Impairment amounted to SEK 351 million of which SEK 328 million pertained to goodwill, SEK 2 million to other intangible assets and SEK 21 million to kitchen exhibitions. Reverse of previous impairment amounted to SEK 7 million and refers to buidings. 3) Loan repayments totalling SEK 130 million.

4) Loan repayments totalling SEK 100 million.

Analysis of net debt		Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
Opening balance	1,462	1,099	1,707	1,176
Acquisition of operations	–	361	–	361
Divestment of operations	10	14	38	16
Translation differences	20	2	1	14
Operating cash flow	-210	-301	-601	-779
Interest paid, net	9	9	54	37
Remeasurements of defined benefit pension plans	-131	18	-150	195
Other change in pension liabilities	16	7	43	40
Dividend	–	–	84	167
Treasury shares sold	–	-3	–	-21
Closing balance	1,176	1,206	1,176	1,206

Note 1 – Corporate acquisitions

Note 1 – Corporate acquisitions

On 9 December 2014, Nobia acquired the UK kitchen company Rixonway Kitchens by acquiring 100 per cent of the shares in Rollfold Holdings Limited. The company is a leader in the social housing segment.

Rixonway Kitchens generated sales of SEK 57 million after the acquisition. Net profit for the year from the acquisition dates and sales and earnings as if the company had been owned since the start of the year are not reported. The acquisition analysis below is preliminary since the acquisition amounts of fair value had not been finally determined.

Goodwill is attributable to synergies that are expected to be achieved through additional co-ordination of sourcing, production distribution and administration.

Acquired net assets and goodwill

Goodwill	260
Fair value of acquired net assets	-27
Additional purchase consideration	35
Purchase consideration	252
SEK m

Assets and liabilities included in the acquisition

SEK m	Fair value	Expected value
Cash and cash balances	2	2
Tangible assets	112	112
Intangible assets	2	2
Inventories	23	23
Receivables	90	90
Liabilities	-86	-86
Interest-bearing liabilities	-112	-112
Taxes, net	-3	-3
Deferred taxes, net	-1	-1
Acquired net assets	27	27

Purchase consideration paid in cash	252
Cash and cash equivalents in acquired subsidiaries	2
Reduction in the Group's cash and cash equivalents in
conjunction with acquisition	250

Parent Company

Condensed Parent Company income statement	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
Net sales	13	20	77	118
Administrative expenses	-46	-84	-167	-238
Operating loss	-33	-64	-90	-120
Profit from shares in Group companies	244	295	244	312
Other financial income and expenses	-10	-17	-41	-39
Profit/loss after financial items	201	214	113	153
Tax on profit/loss for the period	0	0	0	1
Profit/loss for the period	201	214	113	154

SEK m 2013 2014 ASSETS Fixed assets Shares and participations in Group companies 2,231 2,234 Total fixed assets 2,231 2,234 Current assets Current receivables Accounts receivable 13 8 Receivables from Group companies 2,501 3,195 Other receivables 6 12 Prepaid expenses and accrued income 47 54 Cash and cash equivalents 152 184 Total current assets 2,719 3,453 Total assets 4,950 5,687 SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES Shareholders' equity Restricted shareholders' equity Share capital 58 58 Statutory reserve 1,671 1,671 1,729 1,729 Non-restricted shareholders' equity Share premium reserve 52 52 Buy-back of shares -468 -447 Profit brought forward 2,261 2,215 Profit/loss for the period 113 154 1,958 1,974 Total shareholders' equity 3,687 3,703 Provisions for pensions 11 13 Long-term liabilities Liabilities to credit institutes 800 800 Current liabilities Liabilities to credit institutes 0 0 Accounts payable 14 22 Liabilities to Group companies 406 1,110 Other liabilities 4 2 Accrued expenses and deferred income 28 37 Total current liabilities 452 1,171 Total shareholders' equity, provisions and liabilities 4,950 5,687 Pledged assets – – Contingent liabilities 172 179	Parent Company balance sheet	31 dec

Comparative data per region

Net sales	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
UK	1,029	1,222	4,140	4,702
Nordic	1,275	1,382	5,028	5,215
Continental Europe	632	659	2,695	2,591
Group-wide and eliminations	-27	-32	-90	-116
Group	2,909	3,231	11,773	12,392
Gross profit excluding restructuring costs	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
UK	422	496	1,652	1,922
Nordic	521	553	2,048	2,112
Continental Europe	277	286	1,105	1,123
Group-wide and eliminations	3	3	19	17
Group	1,223	1,338	4,824	5,174
Gross margin excluding restructuring costs	Oct-Dec		Jan-Dec
%	2013	2014	2013	2014
UK	41.0	40.6	39.9	40.9
Nordic	40.9	40.0	40.7	40.5
Continental Europe	43.8	43.4	41.0	43.3
	42.0	41.4	41.0	41.8
Group
	Oct-Dec		Jan-Dec
Operating profit excluding restructuring costs
SEK m	2013	2014	2013	2014
UK	73	86	247	348
Nordic	162	193	633	666
Continental Europe	2	10	-47	-11
Group-wide and eliminations	-38	-49	-143	-158
Group	199	240	690	845
Operating margin excluding restructuring costs	Oct-Dec		Jan-Dec
%	2013	2014	2013	2014
UK	7.1	7.0	6.0	7.4
Nordic	12.7	14.0	12.6	12.8
Continental Europe	0.3	1.5	-1.7	-0.4
Group	6.8	7.4	5.9	6.8
Operating profit	Oct-Dec		Jan-Dec
SEK m	2013	2014	2013	2014
UK	73	3	247	265
Nordic	162	187	633	660
Continental Europe	2	2	-83	-19
Group-wide and eliminations	-38	-59	-143	-494
Group	199	133	654	412
Operating margin	Oct-Dec		Jan-Dec
%	2013	2014	2013	2014
UK	7.1	0.2	6.0	5.6
Nordic	12.7	13.5	12.6	12.7
Continental Europe	0.3	0.3	-3.1	-0.7
Group	6.8	4.1	5.6	3.3

Quarterly data per region

Net sales		2013				2014
SEK m	I	II	III	IV	I	II	III	IV
UK	991	1,086	1,034	1,029	1,099	1,173	1,208	1,222
Nordic	1,200	1,449	1,104	1,275	1,262	1,448	1,123	1,382
Continental Europe	622	756	685	632	561	724	647	659
Group-wide and eliminations	-9	-29	-25	-27	-25	-31	-28	-32
Group	2,804	3,262	2,798	2,909	2,897	3,314	2,950	3,231
Gross profit excluding restructuring costs		2013				2014
SEK m	I	II	III	IV 422	I 444	II	III 505	IV 496
UK Nordic	394 476	429 612	407 439	521	503	477 599	457	553
Continental Europe	240	300	288	277	226	312	299	286
Group-wide and eliminations	8	3	5	3	3	6	5	3
Group	1,118	1,344	1,139	1,223	1,176	1,394	1,266	1,338
Gross margin excluding restructuring costs		2013				2014
%	I	II	III	IV	I	II	III	IV
UK	39.8	39.5	39.4	41.0	40.4	40.7	41.8	40.6
Nordic	39.7	42.2	39.8	40.9	39.9	41.4	40.7	40.0
Continental Europe	38.6	39.7	42.0	43.8	40.3	43.1	46.2	43.4
Group	39.9	41.2	40.7	42.0	40.6	42.1	42.9	41.4
Operating profit excluding restructuring costs		2013				2014
SEK m	I	II	III	IV	I	II	III	IV
UK	32	77	65	73	51	103	108	86
Nordic	111	224	136	162	128	207	138	193
Continental Europe	-48	-10	9	2	-39	0	18	10
Group-wide and eliminations	-33	-42	-30	-38	-43	-35	-31	-49
Group	62	249	180	199	97	275	233	240
Operating margin excluding restructuring costs		2013				2014
%	I	II	III	IV	I	II	III	IV
UK Nordic	3.2 9.3	7.1 15.5	6.3 12.3	7.1 12.7	4.6 10.1	8.8 14.3	8.9 12.3	7.0 14.0
Continental Europe	-7.7	-1.3	1.3	0.3	-7.0	0.0	2.8	1.5
Group	2.2	7.6	6.4	6.8	3.3	8.3	7.9	7.4
Operating profit		2013				2014
SEK m	I	II	III	IV	I	II	III	IV
UK	32	77	65	73	51	103	108	3
Nordic	111	224	136	162	128	207	138	187
Continental Europe	-48	-46	9	2	-39	0	18	2
Group-wide and eliminations	-33	-42	-30	-38	-43	-35	-357	-59
Group	62	213	180	199	97	275	-93	133
Operating margin		2013				2014
%	I	II	III	IV	I	II	III	IV

Definitions

Return on shareholders´equity

Profit for the period as a percentage of average shareholders´equity. The calculation of average shareholders´equity has been adjusted for increases and decreases in capital.

Return on capital employed

Profit after financial revenue as a percentage of average capital employed. The calculation of average capital employed has been adjusted for acquisitions and divestments.

Gross margin

Gross profit as a percentage of net sales.

EBITDA

Profit before depreciation and impairment.

Net debt

Interest-bearing liabilities less interest-bearing assets. Interest-bearing liabilities include pension liabilities.

Operating cash flow

Cash flow from operating activities including cash flow from investing activities, excluding cash flow from acquisitions/divestments of subsidiaries, interest received, increase/decrease of interest-bearing assets.

Region

Region corresponds to operating segment according to IFRS 8.

Earings per share

Profit after tax for the period divided by a weighted average number of outstanding shares during the period.

Operating margin

Operating profit as percentage of net sales.

Debt/equity ratio

Net debt as a percentage of shareholders´equity, including noncontrolling interests.

Equity/assets ratio

Shareholders´equity, including non-controlling interests, as a percentage of total assets.

Capital employed

Total assets less non-interest-bearing provisions and liabilities.

Currency effects

Translation effects refer to the currency effects arising when foreign results and balance sheets are translated to SEK.

Transaction effects refer to the currency effects arising when purchases or sales are made in currency other than the currency of the producing country (functional currency).