Nobia

Quarterly Report • Oct 26, 2018

Interim report January-September 2018

July-September 2018

• Net sales for the third quarter amounted to SEK 3,143 million (2,905).
• Organic growth was a negative 5 per cent (neg: 1).
• Operating profit amounted to SEK 267 million (318), corresponding to an operating margin of 8.5 procent (10.9).
• Currency gains had an impact of approximately SEK 5 million on the Group's operating profit, of which a positive SEK 25 million in translation effects and a negative SEK 20 million in transaction effects.
• Profit after tax amounted to SEK 201 million (264), corresponding to earnings per share before and after dilution of SEK 1.19 (1.56).
• Operating cash flow amounted to SEK 213 million (216).

		Jul-Sep			Jan-Sep		Jan-Dec	Oct-Sep
			Change,			Change,			Change,
	2017	2018	%	2017	2018	%	2017	2017/2018	%
Net sales, SEK m	2,905	3,143	8	9,628	9,819	2	12,744	12,935	1
Gross margin, %	39.3	37.7	–	39.4	39.1	–	39.3	39.1	–
Operating margin before depreciation and impairment, %	13.4	11.1	–	12.7	11.6	–	12.3	11.6	–
Operating profit (EBIT), SEK m	318	267	-16	1,004	909	-9	1,286	1,191	-7
Operating margin, %	10.9	8.5	–	10.4	9.3	–	10.1	9.2	–
Profit after financial items, SEK m	310	258	-17	978	886	-9	1,250	1,158	-7
Profit/loss after tax, SEK m	264	201	-24	783	691	-12	1,015	923	-9
Profit/loss after tax excluding IAC, SEK m	264	201	-24	783	691	-12	1,015	923	-9
Earnings/loss per share, before dilution, SEK	1.56	1.19	-24	4.64	4.10	-12	6.02	5.48	-9
Earnings/loss per share, after dilution, SEK	1.56	1.19	-24	4.64	4.10	-12	6.02	5.48	-9
Operating cash flow, SEK m	216	213	-1	510	461	-10	706	657	-7

Nobia Group summary

Nobia develops and sells kitchens through some twenty strong brands in Europe, including Magnet in the UK; HTH, Norema, Sigdal, Invita, Marbodal in Scandinavia; Petra and A la Carte in Finland; Ewe, FM and Intuo in Austria as well as Bribus in the Netherlands. Nobia generates profitability by combining economies of scale with attractive kitchen offerings. The Group has approximately 6,300 employees and net sales of about 13 billion. The Nobia share is listed on Nasdaq Stockholm under the ticker NOBI. Website: www.nobia.com

Comments from the President and CEO

Double digit growth in Magnet Retail continued, but a hot summer and lower B2B and project sales in the UK led to disappointing sales in the third quarter. To improve profit generation, we will initiate a cost-reduction programme that will generate annual savings of SEK 100 million, in addition to rectifying the operational issues that have affected the quarter.

In the Nordics, we estimate the consumer market to be down, partly on the back of the hot summer. In the consumer segment, we maintained, and in certain markets even captured, market shares, despite lower consumer sales. Deliveries to the project market were flat in the quarter, however we believe that the Nordic kitchen market will continue to grow, mainly driven by the Danish and Finnish project markets.

In the beginning of the quarter, we carried out extensive maintenance work in our Swedish factory, which continued to hamper productivity. The manufacturing issues were resolved by September, and we expect improved performance going forward.

In the UK, there is fierce price competition in the lower-end segments. Magnet Retail grew for the third consecutive quarter, backed by our successful new retail offering. However, that was not enough to compensate for the shortfall of project deliveries and lower B2B sales, and thus organic sales growth was a negative 9 per cent. Commodore/CIE has an order book of more than SEK 1 billion, which is up more than 60 per cent compared to last year.

The Austrian and Dutch kitchen markets remain strong. In Austria, our new management is making progress to get the business back to performing in line with financial targets. The integration of Bribus is proceeding according to plan.

Due to uncertainties in our major markets we will initiate a costreduction programme to adjust the cost base and safeguard our profitability. This will be in addition to rectifying the operational issues that have affected the quarter. The programme will be initiated during the fourth quarter of 2018 and is expected to generate savings of SEK 80 million in 2019 and SEK 100 million per year from 2020. The measures include store closures and staff reductions in both commercial units and production units. The programme will entail a restructuring charge of SEK 80-100 million in the fourth quarter.

Cash flow remained strong in the period which gives us continued financial headroom to focus on profitable growth, both organically and through acquisitions. The financial targets including the dividend policy remain unchanged.

Morten Falkenberg President and CEO

Third quarter, consolidated

Market overview

The overall Nordic kitchen market is deemed to have grown slightly compared with the third quarter of 2017. New housing construction continued to drive the favourable trend, but at a slower pace.

The UK kitchen market is deemed to have weakened due to the political and macroeconomic uncertainty, which has negatively impacted consumer confidence. Price competition remains high.

The kitchen market in Central Europe is deemed to have grown slightly compared with the year-earlier period.

Net sales, earnings and cash flow

The Group's net sales amounted to SEK 3,143 million (2,905). Currency gains of SEK 228 million impacted sales. Bribus, which was consolidated on 1 July 2018, reported sales of SEK 144 million in the quarter.

Organic sales growth was a negative 5 per cent (neg: 1) due to lower sales volumes and a changed sales mix.

The gross margin declined to 37.7 per cent (39.3), negatively impacted by the acquisition of Bribus, which has a structurally and seasonally lower gross margin, and by higher material prices and lower productivity.

Operating profit declined, primarily due to the weaker gross margin and lower productivity in the Nordic region.

The return on operating capital was 28.2 per cent in the past twelve-month period (Jan-Dec 2017: 31.5). The return on equity was 25.1 per cent in the last twelve-month period (Jan-Dec 2017: 27.8).

Operating cash flow declined slightly, negatively impacted by increased investments compared with the year-earlier period and positively impacted by a positive change in working capital.

Analysis of net sales

	Jul-Sep
	%	SEK m
2017		2,905
Organic growth	-5	-134
– of which Nordic	-1	-14
– of which UK region	-9	-124
– of which CE region	3	4
Acquisitions	5	144
Currency effect	8	228
2018	8	3,143

Currency effect on operating results

	Jul-Sep
SEK m	Trans lation effect	Trans action effect	Total effect
Nordic region	15	-20	-5
UK region	10	0	10
CE region	0	0	0
Group	25	-20	5

Store trend, Jul-Sep 2018

Renovated or relocated	–
Newly opened/closed, net	-8
Number of own kitchen	252
stores

	Nordic		UK		Central Europe		eliminations	Group-wide and	Group
	Jul-Sep		Jul-Sep		Jul-Sep		Jul-Sep		Jul-Sep
SEK m	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	Change, %
Net sales from external customers	1,397	1,474	1,377	1,378	131	291	–	–	2,905	3,143	8
Net sales from other regions	1	0	–	–	0	0	-1	0	–	–	–
Net sales	1,398	1,474	1,377	1,378	131	291	-1	0	2,905	3,143	8
Gross profit	565	557	518	543	41	70	17	14	1,141	1,184	4
Gross margin, %	40.4	37.8	37.6	39.4	31.3	24.1	–	–	39.3	37.7	–
Operating profit/loss	208	185	137	105	7	10	-34	-33	318	267	-16
Operating margin, %	14.9	12.6	9.9	7.6	5.3	3.4	–	–	10.9	8.5	–

Net sales and profit by region

Third quarter, the regions

Nordic Region

Net sales in the Nordic region increased 5 per cent to SEK 1,474 million (1,398). Organic growth was a negative 1 per cent (pos: 3), adversely impacted by lower consumer sales, while project sales were unchanged year on year.

Sales to the customer segment decreased primarily in Denmark. Project sales increased in Finland, remained unchanged in Sweden and Denmark, and fell in Norway.

The gross margin declined to 37.8 per cent (40.4) mainly as a result of currency losses and lower productivity, which were only partially offset by higher sales values.

Operating profit declined to SEK 185 million (208), primarily due to the lower gross margin and lower volumes.

UK region

Net sales in the UK amounted to SEK 1,378 million (1,377). Organic growth was a negative 9 per cent (neg: 4).

The decline in sales was primarily a result of lower B2B sales and of lower sales volumes via CIE/Commodore compared with the yearearlier period. Magnets sales also decreased slightly in the third quarter, negatively impacted by lower sales to builders (Trade) and positively impacted by increased sales to consumers (Retail).

In the third quarter of 2017 Nobia's now discontinued partnership with Homebase generated a sale of around SEK 20 million.

The gross margin improved to 39.4 per cent (37.6), primarily driven by a more favourable sales mix.

Operating profit declined to SEK 105 million (137), primarily as a result of lower sales volumes, which was only partly offset by the higher gross margin.

Central Europe region

Net sales in the Central Europe region totalled SEK 291 million (131). Sales growth was primarily a result of the acquisition of Bribus, which has been part of the Central Europe region since 1 July 2018. Bribus reported sales of SEK 144 million during the quarter. Organic growth was 3 per cent (neg: 12).

In the Austrian operations, domestic sales increased while export sales remained unchanged.

The gross margin decreased to 24.1 per cent (31.3), due primarily to Bribus having a lower gross margin structurally and seasonally, but also owing to a changed sales mix in the Austrian operations.

Operating profit increased to SEK 10 million (7), which was mainly a consequence of the acquisition of Bribus.

January-September, consolidated

January-September 2018

• Net sales for the January-September 2018 period totalled SEK 9,819 million (9,628).
• Operating profit totalled SEK 909 million (1,004), corresponding to an operating margin of 9.3 per cent (10.4).
• Currency effects of SEK 0 million impact the Group's operating profit, of which a positive SEK 45 million in translation effects and a negative SEK 45 million in transaction effects.
• Profit after tax amounted to SEK 691 million (783), corresponding to earnings per share before and after dilution of SEK 4.10 (4.64).
• Operating cash flow amounted to SEK 416 million (510).

Comments on performance

Currency gains had an impact of SEK 440 million on sales. Organic sales growth was a negative 4 per cent (pos: 3).

Operating profit declined due to decreased sales, higher material prices and lower productivity.

Group-wide items and eliminations reported an operating loss of SEK 106 million (loss: 116).

Operating cash flow weakened, primarily due to lower profit generation and increased investments compared with the preceding year. Investments in fixed assets amounted to SEK 237 million (187), of which SEK 51 million (48) related to store investments.

Analysis of net sales

	Jan-Sep
	%	SEK m
2017		9,628
Organic growth	-4	-393
– whereof Nordic region	0	-11
– whereof UK region	-9	-401
– whereof CE region	5	19
Acquisitions	2	144
Currency effect	5	440
2018	2	9,819

Currency effect on operating results

	Jan-Sep
	Trans lation effect	Trans action effect	Total effekt
Nordic region	30	-40	-10
UK region	15	-5	10
CE region	0	0	0
Group	45	-45	0

Store trend, Jan-Sep 2018

Renovated or relocated	–
Newly opened/closed, net	-12
Number of own kitchen	252
stores

Net sales and profit by region
	Nordic UK		Central Europe			Group-wide and eliminations		Group
		Jan-Sep		Jan-Sep	Jan-Sep		Jan-Sep		Jan-Sep
SEK m	2017	2018	2017	2018	2017	2018	2017	2018	2017	2018	Change, %
Net sales from external customers	4,825	5,007	4,424	4,243	379	569	–	–	9,628	9,819	2
Net sales from other regions	1	0	–	–	1	1	-2	-1	–	–	–
Net sales	4,826	5,007	4,424	4,243	380	570	-2	-1	9,628	9,819	2
Gross profit	1,957	1,957	1,676	1,685	119	155	41	40	3,793	3,837	1
Gross margin, %	40.6	39.1	37.9	39.7	31.3	27.2	–	–	39.4	39.1	–
Operating profit/loss	717	676	387	318	16	21	-116	-106	1,004	909	-9
Operating margin, %	14.9	13.5	8.7	7.5	4.2	3.7	–	–	10.4	9.3	–
Net financial items	–	–	–	–	–	–	–	–	-26	-23	12
Profit after financial items	–	–	–	–	–	–	–	–	978	886	-9

Net sales and profit by region

Other information

Financing

In early July 2018, Nobia signed a new syndicated bank loan of SEK 2,000 million, and in connection with the acquisition of Bribus on 13 July 2018 this loan facility was utilised in the amount of approximately SEK 1,080 million. At the end of the third quarter, the syndicated bank load had been utilised in the amount of approximately SEK 1,016 million.

Net debt including pension provisions at the end of the third quarter amounted to SEK 1,256 million (485). Provisions for pensions was SEK 411 million (765) and the decrease was due to changed assumptions about life expectancy and increased discount rate. The debt/equity ratio was 32 per cent (13).

Net financial items amounted to an expense of SEK 23 million (expense: 26). Net financial items include the net of returns on pension assets and interest expenses on pension liabilities corresponding to an expense of SEK 14 million (expense: 20). The net interest expense amounted to SEK 9 million (expense: 6).

Acquisitions

On 13 July 2018 it was announced that Nobia had signed an agreement to acquire 100 per cent of the shares in Bribus Holding B.V, a kitchen company with a leading position in the attractive Dutch project market for kitchens. Bribus delivers kitchens to professional customers in the Netherlands, primarily social housing providers and large-scale property investors.

The transaction was completed on 13 July 2018. The purchase price consisted of a consideration of EUR 60 million, on a cash and debt-free basis, and a variable consideration of EUR 5 million, conditional upon the business performance until the end of 2020.

The acquisition creates opportunities for continued expansion, and is expected to make a positive contribution to Nobia's earnings per share. Bribus's sales in 2017 totalled approximately EUR 65 million and its operating margin was in line with Nobia's financial targets. Bribus was consolidated into Nobia's accounts on 1 July 2018.

Earnings from discontinued operations

No earnings from discontinued operations were recognised for the first nine months of 2018. Earnings from discontinued operations after tax for the equivalent period in 2017 amounted to SEK 20 million and pertained to Poggenpohl.

For more information on Nobia's discontinued operations, refer to page 41 in the 2017 Annual Report.

Items affecting comparability

Nobia recognises items affecting comparability separately to distinguish the performance of the underlying operations. Items affecting comparability refer to items that affect comparisons insofar as they do not recur with the same regularity as other items.

No items affecting comparability (–) were recognised for the first nine months of 2018.

Store network in Norway

Nobia has decided to convert its own stores selling Norema brand kitchens into franchise stores. The reason for this is that Nobia believes that the Norema kitchen chain is not large enough to generate synergies and the franchise model has proven to be successful in the Norwegian market.

During the January-September 2018 period, eight own Norema stores were converted into franchise stores. One Norema store was closed in the same period. At the end of the period, Nobia had one own Norema store,

Return on shareholders' equity and on operating capital

Net debt and net debt/equity ratio

which is planned for conversion to a franchise store. The effect of the conversion on earnings is marginal.

Personnel

The number of employees on 30 September 2018 was 6,284 (6,131). The increase is primarily a result of the acquisition of Bribus, which had 302 employees on the same date.

Changes in management

Annika Vainio was named Executive Vice President and Head of Commercial Finland. She is Managing Director of Snellman Pro and previously held positions in the Fazer Group and Candy King. Annika Vainio will take office on 1 December 2018.

Annual General Meeting

Nobia's Annual General Meeting will take place in Stockholm at 5:00 p.m. on 2 May 2019.

Shareholders in Nobia are welcome to submit proposals to the Annual General Meeting not later than 14 March 2019 via email: bolagsstamma@nobia.com or by post: Nobia AB, Bolagsstämma, Box 70376, SE-107 24 Stockholm, Sweden.

Nomination Committee

The 2017 Annual General Meeting appointed a Nomination Committee tasked with submitting proposals for the Board of Directors, auditors, Chairman of the Annual General Meeting and the Nomination Committee. The Nomination Committee has the following composition: Tomas Billing, Nordstjernan (Chairman); Torbjörn Magnusson, If Skadeförsäkring; Mats Gustafsson, Lannebo fonder and Arne Lööw, Fourth Swedish National Pension Fund.

Shareholders are welcome to submit views and proposals to the Chairman of the Nomination Committee, Tomas Billing, by telephone: +46 (0)8 788 55 00 or by post to: Nobia AB, Valberedningen, Box 70376, SE-107 24 Stockholm, Sweden.

Transfer and withdrawal of treasury shares

During the first six months, Nobia transferred 103,003 shares under a Performance Share Plan resolved by the 2015 Annual General Meeting. The 2015 Performance Share Plan, which covered approximately 100 senior executives, was based on the participants investing in Nobia shares that were locked into the plan. Each Nobia share invested in under the framework of the plan entitled participants, following a vesting period of approximately three years and provided that certain conditions were fulfilled, to allotment of performance shares and matching shares in Nobia.

On 9 July 2018, the cancellation of 5,000,000 treasury shares went into effect in accordance with the resolution by the 2018 Annual General Meeting to reduce share capital through withdrawal of treasury shares. After the

completed cancellation, as at the end of the third quarter on 30 September 2018, Nobia's holding of treasury shares amounted to 1,606,568 shares, which are to be used to safeguard Nobia's commitments under the Group's sharebased remuneration plans. The total number of shares in Nobia is 170,293,458.

Significant risks

Nobia is exposed to strategic, operating and financial risks, which are described on pages 46-48 of the 2017 Annual Report.

In the January-September 2018 period, demand in the Nordic region and Central Europe is deemed to have improved compared with the preceding year. In the UK, macroeconomic uncertainty as a result of Brexit had a negative impact on the kitchen market. 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 as at 30 September 2018 contained goodwill of SEK 2,922 million (2,311). The value of this asset item is tested if there are any indications of a decline in value, and at least once annually.

Stockholm, 26 October 2018

Morten Falkenberg President and CEO

Nobia AB, Corporate Registration Number 556528-2752

Review report

Introduction

We have reviewed the interim report for Nobia AB (publ) for the period 1 January-30 September 2018. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, 26 October 2018

Deloitte AB

Daniel de Paula

Authorised Public Accountant

Condensed consolidated income statement

	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
SEK m	2017	2018	2017	2018	2017	2017/2018
Net sales	2,905	3,143	9,628	9,819	12,744	12,935
Cost of goods sold	-1,764	-1,959	-5,835	-5,982	-7,730	-7,877
Gross profit	1,141	1,184	3,793	3,837	5,014	5,058
Selling and administrative expenses	-843	-922	-2,807	-2,954	-3,751	-3,898
Other income/expenses	20	5	18	26	23	31
Operating profit	318	267	1,004	909	1,286	1,191
Net financial items	-8	-9	-26	-23	-36	-33
Profit/loss after financial items	310	258	978	886	1,250	1,158
Tax	-67	-57	-215	-195	-256	-236
Profit/loss after tax from continuing	243	201	763	691	994	922
operations
Profit/loss from discontinued operations, net after tax	21	–	20	–	21	1
Profit/loss after tax	264	201	783	691	1,015	923
Total profit attributable to:
Parent Company shareholders	264	201	783	691	1,015	923
Non-controlling interests	–	–	0	–	0	–
Total profit/loss	264	201	783	691	1,015	923
Total depreciation¹	71	82	213	232	285	304
Total impairment¹	1	–	1	–	2	1
Gross margin, %	39.3	37.7	39.4	39.1	39.3	39.1
Operating margin, %	10.9	8.5	10.4	9.3	10.1	9.2
Return on operating capital, %	–	–	–	–	31.5	28.2
Return on shareholders equity, %	–	–	–	–	27.8	25.1
Earnings per share before dilution, SEK²	1.56	1.19	4.64	4.10	6.02	5.48
Earnings per share after dilution, SEK²	1.56	1.19	4.64	4.10	6.02	5.48
Number of shares at period end before
dilution, 000s³	168,584	168,687	168,584	168,687	168,584	168,687
Average number of shares before dilution, 000s³	168,584	168,687	168,535	168,641	168,547	168,627
Number of shares after dilution at period end, 000s³	168,670	168,726	168,712	168,730	168,712	168,730
Average number of shares after dilution, 000s³	168,670	168,726	168,697	168,711	168,702	168,705

1 Excluding depreciation and impairment recognised on the line "Profit/loss from discontinued operations, net after tax".

2 Earnings per share attributable to Parent Company shareholders.

3 Excluding treasury shares.

Consolidated statement of comprehensive income

	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
SEK m	2017	2018	2017	2018	2017	2017/2018
Profit/loss after tax	264	201	783	691	1,015	952
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange-rate differences attributable to translation of foreign operations	-46	-79	-122	188	-18	292
Cash flow hedges before tax	-11	-7	9 1	2 -17	3 14	-12
Tax attributable to change in hedging reserve for the period	2	2	4 -2	5 4	6 -3	3
	-55	-84	-115	175	-7	283
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans	40	-39	78	144	277	343
Tax relating to remeasurements of defined benefit pension plans	-6	6	-13	-25	-46	-58
	34	-33	65	119	231	285
Other comprehensive income/loss	-21	-117	-50	294	224	568
Total comprehensive income/loss	243	84	733	985	1,239	1,520
Total comprehensive income/loss attributable to:
Parent Company shareholders	243	84	733	985	1,239	1,491
Non-controlling interests	–	–	0	–	0	–
Total comprehensive income/loss	243	84	733	985	1,239	1,491

1 Reversal recognised in profit and loss amounts to SEK 5 million. New provision amounts to SEK 4 million.

2 Reversal recognised in profit and loss amounts to a negative SEK 10 million. New provision amounts to a negative SEK 7 million.

3 Reversal recognised in profit and loss amounts to SEK 5 million. New provision amounts to SEK 9 million.

4 Reversal recognised in profit and loss amounts to a negative SEK 1million. New provision amounts to a negative SEK 1 million.

5 Reversal recognised in profit and loss amounts to SEK 2 million. New provision amounts to SEK 2 million.

6 Reversal recognised in profit and loss amounts to a negative SEK 1 million. New provision amounts to a negative SEK 2 million.

Condensed consolidated balance sheet

	30 Sep		31 Dec
SEK m	2017	2018	2017
ASSETS
Goodwill	2,311	2,922	2,361
Other intangible fixed assets	115	136	149
Tangible fixed assets	1,333	1,534	1,367
Long-term receivables, interest-bearing (IB)	4	3	5
Long-term receivables	34	42	34
Deferred tax assets	155	90	118
Total fixed assets	3,952	4,727	4,034
Inventories	928	1,020	908
Accounts receivable	1,526	1,667	1,282
Current receivables, interest-bearing (IB)	18	30	18
Other receivables	451	524	465
Total current receivables	1,995	2,221	1,765
Cash and cash equivalents (IB)	264	145	473
Total current assets	3,187	3,386	3,146
Total assets	7,139	8,113	7,180
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital	58	57	58
Other capital contributions	1,485	1,485	1,486
Reserves	-372	-89	-264
Profit brought forward	2,476	2,501	2,874
Total shareholders' equity attributable to Parent Company	3,647	3,954	4,154
shareholders
Total shareholders' equity	3,647	3,954	4,154
Provisions for pensions (IB)	765	411	567
Other provisions	61	32	40
Deferred tax liabilities	82	85	89
Other long-term liabilities, interest-bearing (IB)	5	1,023	5
Other long-term liabilities, non interest-bearing	–	44	–
Total long-term liabilities	913	1,595	701
Current liabilities, interest-bearing (IB)	1	0	1
Current liabilities	2,578	2,564	2,324
Total current liabilities	2,579	2,564	2,325
Total shareholders' equity and liabilities	7,139	8,113	7,180
BALANCE-SHEET RELATED KEY RATIOS
Equity/assets ratio, %	51	49	58
Debt/equity ratio, %	13	32	2
Net debt, closing balance, SEK m	485	1,256	77
Operating capital, closing balance, SEK m	4,132	5,210	4,231
Capital employed, closing balance, SEK m	4,418	5,388	4,727

1

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	Profit brought forward	Total	Non controlling interests	Total share holders equity
Opening balance, 1 January 2017	58	1,481	-253	-4	2,133	3,415	4	3,419
Profit/loss for the period	–	–	–	–	783	783	0	783
Other comprehensive income/loss for the period	–	–	-122	7	65	-50	0	-50
Total comprehensive income for the period	–	–	-122	7	848	733	0	733
Dividend	–	–	–	–	-505	-505	–	-505
Change in non-controlling interests	–	–	–	–	–	–	-4	-4
Allocation of share saving schemes	–	4	–	–	–	4	–	4
Closing balance, 30 September 2017	58	1,485	-375	3	2,476	3,647	–	3,647
Opening balance, 1 January 2018	58	1,486	-271	7	2,874	4,154	–	4,154
New accounting principles, financial instruments¹	–	–	–	–	-4	-4	–	-4
Restated opening balance, 1 January 2018	58	1,486	-271	7	2,870	4,150	–	4,150
Profit/loss for the period	–	–	–	–	691	691	–	691
Other comprehensive income/loss for the period	–	–	188	-13	119	294	–	294
Total comprenhensive income/loss for the period	–	–	188	-13	810	985	–	985
Cancellation of treasury shares	-1	–	–	–	1	–	–	–
Dividend	–	–	–	–	-1,180	-1,180	–	-1,180
Allocation of share saving schemes	–	-1	–	–	–	-1	–	-1
Closing balance, 30 September 2018	57	1,485	-83	-6	2,501	3,954	–	3,954

1 See IFRS 9 Financial instruments on pages 14-15.

Condensed consolidated cash flow statement

	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
SEK m	2017	2018	2017	2018	2017	2017/2018
Operating activities
Operating profit	318	267	1,004	909	1,286	1,191
Operating profit/loss for discontinued operations	21	–	19	–	20	1
Depreciation/Impairment	72	82	1 214	2 232	3 287	305
Adjustments for non-cash items	-27	-14	-51	-17	-30	4
Tax paid	-16	-29	-117	-152	-248	-283
Change in working capital	-88	-2	-388	-287	-328	-227
Cash flow from operating activities	280	304	681	685	987	991
Investing activities
Investments in fixed assets	-70	-95	-187	-237	-319	-369
Other items in investing activities	6	4	16	13	38	35
Interest received	1	0	2	1	3	2
Change in interest-bearing assets	-2	1	-19	-10	-19	-10
Acquisistion of operations	–	-558	–	-558	0	-558
Divestment of operations	-5	–	-90	–	–93	-3
Cash flow from investing activities	-70	-648	-278	-791	-390	-903
Operating cash flow before acquisition/divestment of operations interest, increase/decrease of interest-bearing assets	216	213	510	461	706	657
Total cashflow from operating and investing
activities	210	-344	403	-106	597	88
Financing activities
Interest paid	-1	-4	-8	-11	-10	-13
Change in interest-bearing liabilities	-44	399	4 -851	5 932	6 -872	911
Dividend	–	0	-505	-1,180	-505	-1,180
Cash flow from financing activities	-45	395	-1,364	-259	-1,387	-282
Cash flow for the period excluding exchange rate differences
in cash and cash equivalents	165	51	-961	-365	-790	-194
Cash and cash equivalents at beginning of the period	138	52	1,266	473	1,266	264
Cash flow for the period	165	51	-961	-365	-790	-194
Exchange-rate differences in cash and cash equivalents	-39	42	-41	37	-3	75
Cash and cash equivalents at period-end	264	145	264	145	473	145

1 Impairment amounted to SEK 1 million and pertained to kitchen displays.

2 No impairment took place during the period.

3 Impairment amounted to SEK 2 million and pertained to kitchen displays.

4 Repayment of loans totalling SEK 800 million.

5 Raising of loans totalling SEK 1 billion, net.

6 Repayment of loans totalling SEK 800 million.

Analysis of net debt

	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
SEK m	2017	2018	2017	2018	2017	2017/2018
Opening balance	711	825	493	77	493	485
Acquisition of operations	–	618	–	618	–	618
Divestment of operations	5	–	28	–	30	2
Translation differences	21	-17	22	-33	-3	-58
Operating cash flow	-216	-213	-510	-461	-706	-657
Interest paid, net	0	4	6	10	7	11
Remeasurements of defined benefit pension plans	-40	39	-78	-144	-277	-343
Other change in pension liabilities	4	0	19	9	28	18
Dividend	–	–	505	1,180	505	1,180
Closing balance	485	1,256	485	1,256	77	1,256

Note 1 – 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 2017 Annual Report, except for the recognition of revenue from contracts with customers (IFRS 15) and financial instruments (IFRS 9). A description of the new accounting policies is provided in the 2017 Annual Report.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 is a comprehensive standard for determining the amount of revenue to be recognised and when this revenue is to be recognised. It replaces IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

Transition

Nobia applies IFRS 15 from 1 January 2018 and applied the introduction retrospectively. In 2017, it conducted a Group-wide review of Nobia's revenue streams to assess the effects of IFRS 15. The primary conclusions from this review are described below.

Sale of goods

Under IFRS 15, the revenue is recognised at the point in time control over the goods passes to the customer. Revenue recognition for certain project sales that include installations of kitchens will be affected by the new standard. In a few of Nobia's units, the revenue for goods was previously recognised when the installation was completed. From 2018, revenue for kitchen products will be recognised under IFRS 15 upon delivery and when control over the goods passes to the customer, and revenue for the installation will be recognised separately when it is completed. Altogether, this will result in revenue attributable to goods of this type of project sales being recognised earlier than previously. The time between delivery and installation is very brief, however, since the deliveries are governed by customer orders. Additionally, this type of project sales occurs only by way of exception in the markets where Nobia is active; the effects of the transition will therefore be negligible.

Nobia applies IFRS 15 retrospectively using what is known as the full retrospective method. The aggregate effect of the transition on revenue in the Group for 2017 has been estimated at approximately negative SEK 5 million, and on closing equity at approximately negative SEK 2 million, which is not deemed to be material in relation to the Group's total revenue of SEK 12,744 million for 2017. The revenue for the 2017 fiscal year was not restated for comparison with 2018, since the true and fair view, and thus the assessment of our stakeholders, of Nobia's historical or future financial performance is not deemed to be impacted. For more information see page 61 in the 2017 Annual Report.

Nobia recognises revenue for kitchen products and other products at a certain point in time, while installation services are recognised over time in line with the installation being performed. Installation services comprise about 5-6 per cent of Nobia's total sales. For more information, refer to page 22.

IFRS 9 Financial instruments

IFRS 9, which replaces IAS 39 Financial instruments: Recognition and Measurement, contains rules for recognition, classification and measurement, impairment, derecognition and general hedge accounting.

Transition

Nobia applies IFRS 9 from 1 January 2018 and in 2017 it conducted a Group-wide review of Nobia's financial instruments and related business models to assess the effects of IFRS 9. Nobia's assessment is that IFRS 9 will only entail an increase regarding expected credit losses on accounts receivable. From 2018, Nobia bases any impairment requirements on an expected credit losses model and no longer bases impairment on loss events occurred. The effect for 2017 is expected to amount to approximately SEK 5 million. In calculating expected credit losses, Nobia has taken into consideration historical bad debt losses and analysis of the respective customer segments, and observed the macroeconomic effects on customers' conditions such as the impact of Brexit on the local market.

As the transition method, Nobia has chosen to utilise the exception to not restate comparable information for previous periods regarding classification and measurement (including impairment). Differences in carrying amounts attributable to financial assets and liabilities in connection with the introduction of IFRS 9 will be

recognised in profit brought forward at 1 January 2018 totalling a negative SEK 4 million after tax. See table below.

31 Dec 2017 (MSEK)	Before adjustment	Adjustment	After adjustment
Accounts receivable	1,282	-5	1,277
Deferred tax assets	118	1	119
Profit brought forward	2,874	-4	2,870

For other information regarding financial instruments, refer to Note 3 in this report and Note 30 in the 2017 Annual Report.

IFRS 16 Leases

IFRS 16 Leases will replace existing IFRSs related to recognising leases such as IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease. The Group plans to apply the standard from 1 January 2019.

The Group has started to assess the potential effects of the standard but has not yet performed a more detailed analysis. The final effect of the introduction of IFRS 16 on the financial statements will depend on future financial circumstances, including the composition of the Group's lease portfolio at that time, the Group's most recent assessment of whether it will make use of any options to extend leases and the extent to which the Group will decide to use relaxation rules and exemptions from recognition in the balance sheet/statement of financial position.

The most significant effects identified to date are that the Group will need to recognise new assets and liabilities for its operating leases regarding stores, plants and warehouse premises. An indication of the scope under the current circumstances can be obtained from the disclosures on operating leases provided in Note 11 in the 2017 Annual Report.

The preliminary effects of IFRS 16 will be described in the 2018 year-end report. The Group does not expect the introduction of IFRS 16 to impact its ability to meet the conditions of the loan agreements the Group has.

Note 2 – References

Segment information, pages 3 and 4. Loan and shareholders' equity transactions, pages 6 and 7. Acquisition and divestment of operations, page 6. Items affecting comparability, page 6. Net sales per product group, page 22.

Note 3 – Financial instruments – fair value

Nobia's financial assets essentially comprise non-interest-bearing and interest-bearing receivables whereby cash flows only represent payment for the initial investment and, where applicable, for the time value and interest. These are intended to be held to maturity and are recognised at amortised cost, which is a reasonable approximation of fair value. Financial liabilities are primarily recognised at amortised cost.

Financial instruments measured at fair value in the balance sheet are currency forward contracts comprised of assets at a value of SEK 5 million (31 Dec 2017: 50) and liabilities at a value of SEK 31 million (31 Dec 2017: 43). These items are measured according to level 2 of the fair value hierarchy, meaning based on indirect observable market data. Nobia's financial instruments are measured at fair value and included in the balance sheet on the rows "Other receivables" and "Current liabilities".

The purchase consideration in connection with the acquisition of Bribus constitutes a financial liability measured at fair value according to Level 3 of the fair value hierarchy. For further information, see Note 5.

Note 4 – Related-party transactions

There is no sale and manufacturing of kitchens in the Parent Company. The Parent Company invoiced Groupwide services to subsidiaries in an amount of SEK 191 million (164) during the first three quarters of 2018. The Parent Company's financial income mainly consists of currency effects. The Parent Company's reported dividends from participations in Group companies totalled SEK 0 million (0).

Note 5 – Company acquisition

On 13 July 2018, Nobia acquired 100 per cent of the shares and the votes in Bribus Holding B.V, a Dutch kitchen supplier with annual sales of approximately SEK 650 million. Bribus supplies kitchens to professional customers in the Netherlands, primarily to social housing providers and large-scale property investors. The acquisition is the first step in Nobia's growth strategy of expanding into attractive and adjacent markets.

Bribus was consolidated on 1 July and reported sales of SEK144 million after the acquisition. Sales from the beginning of the year totalled approximately SEK 478 million. Transaction costs for the acquisition amounted to SEK 8 million and are recognised in the Group's other income and expenses. The additional purchase consideration of a maximum SEK 52 million is conditional upon the business performance for the 2018, 2019 and 2020 financial years and is measured according to level 3 of the fair value hierarchy. The additional purchase consideration, which will be paid out in three annual portions beginning in 2019, are recognised as both a current and long-term non-interest-bearing financial liability and measured at fair value based on Nobia's best estimate regarding future payments. Currently, the assessment is an outcome of 100 per cent.

Goodwill is attributable to Bribus's underlying earnings, the expected growth in the project market over the next few years, and synergies that are expected to be achieved through further coordination of purchasing, production, distribution and administration.

The acquisition analysis below is preliminary since the acquisition amounts of fair value have not been finally determined.

Net assets and goodwill acquired

SEK m
Cash purchase consideration	560
Additional purchase consideration	52
Fair value of net assets acquired	-150
Goodwill	462

Assets and liabilities included in acquisition

MSEK
	Fair
	value
Cash and bank balances	2
Tangible assets	96
Intangible assets	6
Inventories	39
Receivables	132
Liabilities	-63
Interest-bearing liabilities	-60
Tax	-2
Net deferred tax	-0
Acquired net assets	150
Purchase consideration, paid in cash	560
Cash and cash equivalents in subsidiary acquired	2
Decrease in Group's cash and cash equivalents on acquisition	558

Parent Company

Condensed Parent Company income statement

	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
SEK m	2017	2018	2017	2018	2017	2017/2018
Net sales	56	64	171	192	224	245
Administrative expenses	-65	-59	-216	-202	-267	-253
Administrative expenses	1	0	3	3	5	5
Administrative expenses	-3	-1	-8	-2	-9	-3
Operating loss	-11	4	-50	-9	-47	-6
Profit from shares in Group companies	-4	0	-8	–	969	977
Other financial income and expenses	-13	-29	-28	83	-2	109
Profit/loss after financial items	-28	-25	-86	74	920	1,080
Tax on profit/loss for the period	0	0	0	0	-31	-31
Profit/loss for the period	-28	-25	-86	74	889	1,049

Parent company balance sheet

	30 Sep
SEK m	2017	2018	2017
ASSETS
Fixed assets
Shares and participations in Group companies	1,379	1,379	1,379
Deferred tax assetts	4	4	5
Total fixed assets	1,383	1,383	1,384
Current assets
Current receivables
Accounts receivable	0	2	1
Receivables from Group companies	2,317	2,304	2,839
Other receivables	44	48	44
Prepaid expenses and accrued income	50	70	52
Cash and cash equivalents	119	64	334
Total current assets	2,530	2,488	3,270
Total assets	3,913	3,871	4,654
SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES
Shareholders' equity
Restricted shareholders' equity
Share capital	58	57	58
Statutory reserve	1,671	1,671	1,671
	1,729	1,728	1,729
Non-restricted shareholders' equity
Share premium reserve	52	52	52
Buy-back of shares	-385	-92	-385
Profit brought forward	1,261	679	1,262
Profit/loss for the period	-86	74	889
	842	713	1,818
Total shareholders' equity	2,571	2,441	3,547
Long term liabilities
Provisions for pensions	17	18	17
Deferred tax liabilities	4	4	5
Total long-term liabilities	21	22	22
Current liabilities
Liabilities to credit institutes	0	0	0
Accounts payable	13	17	23
Liabilities to Group companies	1,246	1,336	956
Current tax liabilities	0	12	44
Other liabilities	33	24	42
Accrued expenses and deferred income	29	19	20
Total current liabilities	1,321	1,408	1,085
Total shareholders' equity, provisions and liabilities	3,913	3,871	4,654

Comparative date per region

	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
Net sales, SEK m	2017	2018	2017	2018	2017	2017/2018
Nordic	1,398	1,474	4,826	5,007	6,516	6,697
UK	1,377	1,378	4,424	4,243	5,710	5,529
Central Europe	131	291	380	570	521	711
Group-wide and eliminations	-1	0	-2	-1	-3	-2
Group	2,905	3,143	9,628	9,819	12,744	12,935
	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
Gross profit, SEK m	2017	2018	2017	2018	2017	2017/2018
Nordic	565	557	1,957	1,957	2,638	2,638
UK	518	543	1,676	1,685	2,172	2,181
Central Europe	41	70	119	155	152	188
Group-wide and eliminations	17	14	41	40	52	51
Group	1,141	1,184	3,793	3,837	5,014	5,058
	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
Gross margin, %	2017	2018	2017	2018	2017	2017/2018
Nordic	40.4	37.8	40.6	39.1	40.5	39.4
UK	37.6	39.4	37.9	39.7	38.0	39.4
Central Europe	31.3	24.1	31.3	27.2	29.2	26.4
Group	39.3	37.7	39.4	39.1	39.3	39.1
	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
Operating profit, SEK m	2017	2018	2017	2018	2017	2017/2018
Nordic	208	185	717	676	963	922
UK	137	105	387	318	454	385
Central Europe	7	10	16	21	12	17
Group-wide and eliminations	-34	-33	-116	-106	-143	-133
Group	318	267	1,004	909	1,286	1,191
	Jul-Sep			Jan-Sep	Jan-Dec	Oct-Sep
Operating margin, %	2017	2018	2017	2018	2017	2017/2018
Nordic	14.9	12.6	14.9	13.5	14.8	13.8
UK	9.9	7.6	8.7	7.5	8.0	7.0
Central Europe	5.3	3.4	4.2	3.7	2.3	2.4
Group	10.9	8.5	10.4	9.3	10.1	9.2

Quarterly data per region

		2017		2018
Net sales, SEK m	I	II	III	IV	I	II	III
Nordic	1,672	1,756	1,398	1,690	1,682	1,851	1,474
UK	1,527	1,520	1,377	1,286	1,367	1,498	1,378
Central Europe	116	133	131	141	124	155	291
Group-wide and eliminations	0	-1	-1	-1	0	-1	0
Group	3,315	3,408	2,905	3,116	3,173	3,503	3,143

	2017				2018
Gross profit, SEK m	I	II	III	IV	I	II	III
Nordic	671	721	565	681	669	731	557
UK	570	588	518	496	543	599	543
Central Europe	36	42	41	33	35	50	70
Group-wide and eliminations	14	10	17	11	13	13	14
Group	1,291	1,361	1,141	1,221	1,260	1,393	1,184

		2017				2018
Gross margin, %	I	II	III	IV	I	II	III
Nordic	40.1	41.1	40.4	40.3	39.8	39.5	37.8
UK	37.3	38.7	37.6	38.6	39.7	40.0	39.4
Central Europe	31.0	31.6	31.3	23.4	28.2	32.3	24.1
Group	38.9	39.9	39.3	39.2	39.7	39.8	37.8

	2017				2018
Operating profit, SEK m	I	II	III	IV	I	II	III
Nordic	212	297	208	246	213	278	185
UK	96	154	137	67	79	134	105
Central Europe	4	5	7	-4	2	9	10
Group-wide and eliminations	-39	-43	-34	-27	-39	-34	-33
Group	273	413	318	282	255	387	267

	2017				2018
Operating margin, %	I	II	III	IV	I	II	III
Nordic	12.7	16.9	14.9	14.6	12.7	15.0	12.6
UK	6.3	10.1	9.9	5.2	5.8	8.9	7.6
Central Europe	3.4	3.8	5.3	-2.8	1.6	5.8	3.4
Group	8.2	12.1	10.9	9.1	8.0	11.0	8.5

Operating capital per region

	30 Sep		31 Dec
Operating capital Nordic region, SEK m	2017	2018	2017
Operating assets	2,144	2,283	1,919
Operating liabilities	1,187	1,219	1,206
Operating capital	957	1,064	713
	30 Sep		31 Dec
Operating capital UK region, SEK m	2017	2018	2017
Operating assets	2,789	2,863	2,769
Operating liabilities	1,138	1,012	945
Operating capital	1,651	1,851	1,824
	30 Sep		31 Dec
Operating capital Central Europe region, SEK m	2017	2018	2017
Operating assets	236	519	226
Operating liabilities	97	173	109
Operating capital	139	346	117
	30 Sep		31 Dec
Operating capital Group-wide and eliminations, SEK m	2017	2018	2017
Operating assets	1,684	2,270	1,769
Operating liabilities	299	321	192
Operating capital	1,385	1,949	1,577
	30 Sep		31 Dec
Operating capital Group, SEK m	2017	2018	2017
Operating assets	6,853	7,935	6,683
Operating liabilities	2,721	2,725	2,452
Operating capital	4,132	5,210	4,231

Comparative data by product group

	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
Net sales Nordic by product group, %	2017	2018	2017	2018	2017	2017/2018
Kitchen furnitures	66	68	65	67	65	66
Installation services	6	6	6	6	6	6
Other products	28	26	29	27	29	28
Total	100	100	100	100	100	100
	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
Net sales UK by product group, %	2017	2018	2017	2018	2017	2017/2018
Kitchen furnitures	61	64	61	63	60	61
Installation services	6	5	6	6	7	7
Other products	33	31	33	31	33	32
Total	100	100	100	100	100	100
	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
Net sales Central Europe by product	2017	2018	2017	2018	2017	2017/2018
group, % Kitchen furnitures	91	64	91	78	91	81
Installation services	0	10	0	5	0	4
Other products	9	26	9	17	9	15
Total	100	100	100	100	100	100
	Jul-Sep		Jan-Sep		Jan-Dec	Oct-Sep
Net sales Group by product group, %	2017	2018	2017	2018	2017	2017/2018
Kitchen furnitures	64	66	64	66	64	65
Installation services	6	6	6	6	6	6
Other products	30	28	30	28	30	29
Total	100	100	100	100	100	100

Reconciliation of alternative performance measures

Nobia presents certain financial performance measures in the interim report that are not defined according to IFRS, known as alternative performance measures. Nobia believes that these measures provide valuable complementary information to investors and the company's management since they facilitate assessments of trends and the company's performance. Because not all companies calculate performance measures in the same way, these are not always comparable with those measures used by other companies. Consequently, the performance measures are not to be seen as replacements for measures defined according to IFRS. For definitions of the performance measures that Nobia uses, see pages 25–26.

	Jul-Sep		Jan-Sep
Analysis of external net sales Nordic Region	%	SEK m	%	SEK m
2017		1,397		4,825
Organic growth	–1	–14	–	–11
Currency effecs	6	91	4	193
2018	5	1,474	4	5,007

	Jul-Sep		Jan-Sep
Analysis of external net sales UK Region	%	SEK m	%	SEK m
2017		1,377		4,424
Organic growth	–9	–124	–9	–401
Currency effecs	9	125	5	220
2018	0	1,378	–4	4,243

	Jul-Sep			Jan-Sep
Analysis of external net sales Central Europe Region	%	SEK m	%	SEK m
2017		131		379
Organic growth	3	4	5	19
Acquired units	110	144	38	144
Currency effecs	9	12	7	27
2018	122	291	50	569

		Jul-Sep		Jan-Sep	Jan-Dec	Oct-Sep
Operating profit before depreciation and impairment SEKm	2017	2018	2017	2018	2017	2017/2018
Operating profit	318	267	1,004	909	1,286	1,191
Depreciation and impairment	72	82	214	232	287	305
Operating profit before depreciation and impairment	390	349	1,218	1,141	1,573	1,496
Net Sales	2,905	3,143	9,628	9,819	12,744	12,935
% of sales	13.4%	11.1%	12.7%	11.6%	12.3%	11.6%
		Jul-Sep		Jan-Sep	Jan-Dec	Oct-Sep

Profit/loss after tax excluding IAC	2017	2018	2017	2018	2017	2017/2018
Profit/loss after tax	264	201	783	691	1,015	923
Items affecting comparability net after tax	–	–	–	–	–	–
Profit/loss after tax excluding IAC	264	201	783	691	1,015	923

Reconciliation of alternative performance measures, cont.

		30 Jun	31 Dec
Net debt SEKm	2017	2018	2017
Provisions for pensions (IB)	765	411	567
Other long-term liabilities, interest-bearing (IB)	5	1023	5
Current liabilities, interest-bearing (IB)	1	0	1
Interest-bearing liabilities	771	1,434	573
Long-term receivables, interest -bearing (IB)	-4	-3	-5
Current receivables, interest-bearing (IB)	-18	-30	-18
Cash and cash equivalents (IB)	-264	-145	-473
Interest-bearing assets	-286	-178	-496
Net debt	485	1,256	77

		30 Jun	31 Dec
Operating capital SEK m	2017	2018	2017
Total assets	7,139	8,113	7,180
Other provisions	-61	-32	-40
Deferred tax liabilities	-82	-85	-89
Other long-term liabilities, non interest-bearing	–	-44	–
Current liabilities, non interest-bearing	-2,578	-2,564	-2,324
Non-interest-bearing liabilities	–2,721	-2,725	-2,453
Capital employed	4,418	5,388	4,727
Interest-bearing assets	-286	-178	-496
Operating capital	4,132	5,210	4,231

	Jan-Dec	Oct-Sep
Average operating capital SEK m	2017	2017/2018
OB Operating capital	3,912	4,132
OB Net operating assets discontinued operations	22	–
CB Operating capital	4,231	5,210
Average operating capital before adjustments of acquistion and
divestments	4,083	4,671
Adjustment for acquisitions and divestments not occurred in the middle of the
period	–	–153
Average operating capital	4,083	4,518

	Jan-Dec	Oct-Sep
Average equity SEK m	2017	2017/2018
OB Equity attributable to Parent Company shareholders	3,415	3,647
CB Equity attributable to Parent Company shareholders	4,154	3,954
Average equity before adjustment of increases and decreases in capital	3,785	3,800
Adjustment for increases and decreases in capital not occured in the middle of the period	-127	0
Average equity	3,658	3,800

Definitions

Performance measure	Calculation	Purpose
Return on shareholders' equity	Net profit for the period as a percentage of average shareholders' equity attributable to Parent Company shareholders based on opening and closing balances for the period. The calculation of average shareholders' equity has been adjusted for increases and decreases in capital.	Return on shareholders' equity shows the total return on shareholders' capital in accounting terms and reflects the effects of both the operational profitability and financial gearing. The measure is primarily used to analyse shareholder profitability over time.
Return on operating capital	Operating profit as a percentage of average operating capital based on opening and closing balances for the period excluding net assets attributable to discontinued operations. The calculation of average operating capital has been adjusted for acquisitions and divestments.	Return on operating capital shows how well the operations use net capital that is tied up in the company. It reflects how both cost and capital efficient net sales are generated, meaning the combined effect of the operating margin and the turnover rate of operating capital. The measure is used in profitability comparisons between operations in the Group and to assess the Group's profitability over time.
Gross margin	Gross profit as a percentage of sales.	This measure reflects the efficiency of the part of the operations that is primarily linked to production and logistics. It is used to measure cost efficiency in this part of the operations.
EBITDA	Earnings before depreciation/ amortisation and impairment.	To simplify, the measure shows the earnings generating cash flow in the operations. It provides a view of the ability of the operations, in absolute terms, to generate resources for investment and payment to financers and is used for comparisons over time.
Items affecting comparability	Items that affect comparability in so far as they do not reoccur with the same regularity as other items.	Reporting items affecting comparability separately clearly shows the performance of the underlying operations.
Net debt	Interest-bearing liabilities less interest bearing assets. Interest-bearing liabilities include pension liabilities.	Net debt is used to monitor the debt trend and see the level of the refinancing requirement. The measure is used as a component in the debt/equity ratio.
Operating capital	Capital employed excluding interest bearing assets.	Operating capital shows the amount of capital required by the operations to conduct its core operations. It is mainly used to calculate the return on operating capital.
Operating cash flow	Cash flow from operating activities including cash flow from investing activities, excluding cash flow from acquisitions/divestments of operations, interest received, and increase/ decrease in interest-bearing assets.	This measure comprises the cash flow generated by the underlying operations. The measure is used to show the amount of funds at the company's disposal for paying financers of loans and equity or for use in growth through acquisitions.
Organic growth	Change in net sales, excluding acquisitions, divestments and changes in exchange rates.	Organic growth facilitates a comparison of sales over time by comparing the same operations and excluding currency effects.
Region	Region corresponds to an operating segment under IFRS 8.
Earnings per share	Net profit for the period divided by a weighted average number of outstanding shares during the period.
Operating margin	Operating profit as a percentage of net sales.	This measure reflects the operating profitability of the operations. It is used to monitor the flexibility and efficiency of the operations before taking into account capital tied up. The performance measure is used both internally in governance and monitoring of the operation, and for benchmarking with other companies in the industry.

Definitions, cont.

Performance measure	Calculation	Purpose
Debt/equity ratio	Net debt as a percentage of shareholders' equity including non controlling interests.	A measure of the ratio between the Group's two forms of financing. The measure shows the percentage of the loan capital in relation to capital invested by the owners, and is thus a measure of financial strength but also the gearing effect of lending. A higher debt/equity ratio means a higher financial risk and higher financial gearing.
Equity/assets	Shareholders' equity including non controlling interests as a percentage of balance-sheet total.	This measure reflects the company's financial position and thus its long-term solvency. A healthy equity ratio/strong financial position provides preparedness for managing periods of economic downturn and financial preparedness for growth. It also provides a minor advantage in the form of financial gearing.
Capital employed	Balance-sheet total less non-interest bearing provisions and liabilities.	The capital that shareholders and lenders have placed at the company's disposal. It shows the net capital invested in the operations, such as operating capital, with additions for financial assets.
Currency effects	"Translation effects" refers to the currency effects arising when foreign results and balance sheets are translated to SEK. "Transaction effects" refers to the currency effects arising when purchases or sales are made in currency other than the currency of the producing country (functional currency).

Information to shareholders

For further information

Contact any of the following on +46 (0)8 440 16 00 or +46 (0)705 95 51 00:

• Morten Falkenberg, President and CEO
• Kristoffer Ljungfelt, CFO
• Lena Schattauer, Head of Communication and Investor Relations

Presentation

The interim report will be presented on Friday, 26 October at 2:00 p.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

6 February 2019	Interim Report January-December 2018
2 May 2019	Interim Report January-March 2019
2 May 2019	2019 Annual General Meeting

This interim report is information such that Nobia is obliged to make public pursuant to the EU's Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, on 26 October 2018 at 1:00 p.m. CET.