Nolato B

Annual Report • Feb 8, 2017

Nolato AB (publ) year-end report 2016

Strong performance by Nolato Medical and proposed dividend increase

Fourth quarter of 2016 in brief

• ‒ Sales increased to SEK 1,352 million (1,289)
• ‒ Operating profit (EBITA) amounted to SEK 130 million (138)
• ‒ Profit after tax was SEK 95 million (97)
• ‒ Earnings per share were SEK 3.61 (3.69)
• ‒ Cash flow after investments increased to SEK 135 million (116), excl. acquisitions
• ‒ Acquisition of Treff AG completed during quarter

Full year 2016 in brief

• ‒ Sales totalled SEK 4,447 million (4,726)
• ‒ Operating profit (EBITA) was SEK 457 million (570)
• ‒ Earnings per share were SEK 12.77 (15.97)
• ‒ The equity/assets ratio was 47% (54) and net financial liability SEK 408 million (+122, net fin. asset)
• ‒ The Board of Directors proposes a dividend of SEK 10.50 (10.00) per share

	Q4	Q4	Full year	Full year
SEK million unless otherwise specified	2016	2015	2016	2015
Net sales	1,352	1,289	4,447	4,726
Operating profit (EBITDA) 1)	180	180	636	737
Operating profit (EBITA) 2)	130	138	457	570
EBITA margin, %	9.6	10.7	10.3	12.1
Operating profit (EBIT) 3)	126	135	443	556
Profit after financial income and expense	125	135	438	555
Profit after tax	95	97	336	420
Earnings per share, basic and diluted, SEK *	3.61	3.69	12.77	15.97
Adjusted earnings per share, SEK 4) *	3.72	3.77	13.19	16.35
Cash flow after investments, excl. acquisitions and disposals	135	116	245	288
Net investm. affecting cash flow, excl. acq. and disposals	55	37	221	244
Cash conversion, % 5)	—	—	55	52
Return on capital employed, %	20.6	29.6	20.6	29.6
Return on shareholders' equity, %	19.0	25.3	19.0	25.3
Equity/assets ratio, %	47	54	47	54
Net financial liabilities (-) / assets (+)	– 408	122	– 408	122

Group highlights

* The company has a share warrant programme (Series 1) which may result in dilution of the number of shares.

1) Operating profit (EBITDA): Earnings before financial income and expense, taxes and depreciation/amortisation.

2) Operating profit (EBITA): Earnings before financial income and expense, taxes and amortisation of intangible assets arising from acquisitions.

4) Adjusted earnings per share: Profit after tax, excluding amortisation of intangible assets arising from acquisitions, divided by the average number of shares.

5) Cash conversion: Cash flow after investments, excl. acquisitions and disposals, divided by operating profit (EBIT). Cash flow and operating profit have been adjusted by non-recurring items, if any.

This document is a translation from Swedish. In the event of any difference between this version and the Swedish original, the latter shall prevail.

³⁾ Operating profit (EBIT): Earnings before financial income and expense and taxes.

Fourth quarter 2016

• Sales rose by 5% to SEK 1,352 million (1,289); adjusted for currency and acquisitions, sales decreased by 6%
• Operating profit (EBITA) was SEK 130 million (138)
• The acquisition of Switzerland-based Treff AG was consolidated from 3 October
• and an equity/assets ratio of 47% Continued strong financial position, with net liabilities of SEK 408 million

Sales

Consolidated sales rose to SEK 1,352 million (1,289). Adjusted for currency and acquisitions, sales decreased by 6%, which was fully attributable to Nolato Telecom.

Nolato Medical's sales increased to SEK 463 million (387); adjusted for currency and acquisitions, sales grew by 8%. Sales have increased primarily within the Medical Devices sector owing to strong volume growth and rampups of new customer projects.

Nolato Telecom's sales amounted to SEK 448 million (581); adjusted for currency, sales decreased by 25%. Last year, volumes were very strong owing to high demand for customers' handsets on the consumer market. Sales increased for the second consecutive quarter.

Nolato Industrial's sales rose to SEK 443 million (325); adjusted for currency and acquisitions, sales increased by 10%. Volumes in the automotive and hygiene segments showed positive performance, and high project activity relating to new products resulted in higher sales.

Profit

The Group's operating profit (EBITA) was SEK 130 million (138). Nolato Medical's operating profit (EBITA) increased to SEK 59 million (47), Nolato Telecom's decreased to SEK 41 million (61) and Nolato Industrial's increased to SEK 36 million (34).

Nolato Medical's EBITA margin rose to 12.7% (12.1). The previous year's margin was negatively affected by an unfavourable product mix. The EBITA margin for Nolato Telecom was 9.2% (10.5). The margin was negatively affected by lower volumes and a change in product mix. The past quarter was also positively impacted by currency effects. Nolato Industrial's EBITA margin was 8.1% (10.5). Higher costs associated with new project start-ups and fluctuating volumes had a negative impact. In addition, the acquisition had some effect.

Overall, the Group's EBITA margin was 9.6% (10.7).

Sales, operating profit (EBITA) and EBITA margin by business area

	Sales	Sales	Op. Profit	Op. Profit	EBITA margin	EBITA margin
SEK million	Q4/2016	Q4/2015	EBITA Q4/2016	EBITA Q4/2015	Q4/2016	Q4/2015
Nolato Medical	463	387	59	47	12.7%	12.1%
Nolato Telecom	448	581	41	61	9.2%	10.5%
Nolato Industrial	443	325	36	34	8.1%	10.5%
Intra-Group adj., Parent Co	– 2	– 4	– 6	– 4	—	—
Group total	1,352	1,289	130	138	9.6%	10.7%

Sales 0 500 1,000 1,500 2015 2016 2016 2016 2016 Q4 Q1 Q2 Q3 Q4 SEK milliion

Operating profit (EBITA): Earnings before financial income and expense, taxes and amortisation of intangible assets arising from acquisitions.

Operating profit (EBIT) was SEK 126 million (135).

Profit after net financial income/expense was SEK 125 million (135). Net financial income/expense included currency exchange rate fluctuations affecting earnings by SEK 1 million (2).

Profit after tax was SEK 95 million (97). Earnings per share, basic and diluted, were SEK 3.61 (3.69). Adjusted earnings per share excluding amortisation of intangible assets arising from acquisitions were SEK 3.72 (3.77).

Full year 2016

Sales and earnings

Consolidated sales totalled SEK 4,447 million (4,726) in 2016. Adjusted for currency and acquisitions, sales decreased by 8%.

Nolato Medical's sales increased by 12% to SEK 1,645 million (1,464), Nolato Telecom's decreased by 30% to SEK 1,402 million (2,017) and Nolato Industrial's rose by 13% to SEK 1,409 million (1,251).

Consolidated operating profit (EBITA) amounted to SEK 457 million (570), giving an EBITA margin of 10.3% (12.1). Operating profit (EBIT) was SEK 443 million (556).

Profit after net financial income/expense was SEK 438 million (555).

Profit after tax was SEK 336 million (420). Earnings per share, basic and diluted, stood at SEK 12.77 (15.97). Adjusted earnings per share excluding amortisation of intangible assets arising from acquisitions were SEK 13.19 (16.35). The effective tax rate was 23% (24), which was the same tax rate as earlier in the year.

The return on capital employed was 20.6% (29.6%). Return on equity was 19.0% (25.3). The return has decreased owing to lower profit and an increase in tied-up capital following the acquisition. Cash conversion was 55% (52). Cash conversion was negatively affected by increased working capital requirements and continued high investments principally due to continued expansion efforts.

Nolato Medical

Sales and profit full year (SEK million)	2016	2015
Sales	1,645	1,464
Operating profit (EBITA)	216	191
EBITA margin (%)	13.1	13.0
Operating profit (EBIT)	203	178

Nolato Medical's sales rose to SEK 1,645 million (1,464). Completed acquisitions contributed SEK 47 million. Adjusted for currency and acquisitions, sales increased by 11%. Volumes increased in both the Medical Devices and Pharma Packaging sectors and most customer segments experienced healthy growth. The year was marked by high project activity and healthy capacity utilisation.

Operating profit (EBITA) rose to SEK 216 million (191). The EBITA margin was 13.1% (13.0).

Switzerland-based Treff AG was acquired in the fourth quarter. The company has annual sales of just over SEK 450 million, one-third of which is reported within Nolato Medical. The acquisition has been consolidated from 3 October. The acquisition has proceeded well and work to integrate the business is underway.

Nolato Telecom

Sales and profit full year (SEK million)	2016	2015
Sales	1,402	2,017
Operating profit (EBITA)	131	272
EBITA margin (%)	9.3	13.5
Operating profit (EBIT)	131	272

Nolato Telecom's sales totalled SEK 1,402 million (2,017); adjusted for currency, sales decreased by 30%. Last year, volumes were very strong owing to extremely high demand for customers' handsets on the consumer market. Product changeovers took place as planned during the period. Activity in the EMC (electromagnetic compatibility) area continued to develop well, as did this business area's activities in segments other than mobile phones.

Operating profit (EBITA) was SEK 131 million (272). The EBITA margin was 9.3% (13.5). Last year the margin was exceptionally strong due to very high volumes and a favourable product mix.

Nolato Industrial

Sales and profit full year (SEK million)	2016	2015
Sales	1,409	1,251
Operating profit (EBITA)	134	132
EBITA margin (%)	9.5	10.6
Operating profit (EBIT)	133	131

Nolato Industrial's sales rose to SEK 1,409 million (1,251). Completed acquisitions contributed SEK 82 million. Adjusted for currency and acquisitions, sales rose by 6%. Volumes in primarily the automotive and hygiene segments showed positive performance. Continued investments in technology and increased market share are having a positive effect.

Operating profit (EBITA) totalled SEK 134 million (132), with an EBITA margin of 9.5% (10.6). Higher costs associated with new project start-ups and fluctuating volumes and the acquisition had an impact on the margin. The acquisition has been consolidated from 3 October. The acquisition has proceeded well and work to integrate the business is underway.

2015 2016 2016 2016 2016 Q4 Q1 Q2 Q3 Q4

0

0.0

Cash flow Cash flow after investments

Earnings and lower working capital requirements have principally contributed to strong cash flow after investments of SEK 135 million (116) in the fourth quarter, excluding acquisitions. The acquisition of Treff had an impact of SEK 382 million on cash flow (excluding cash and cash equivalents).

Cash flow after investments for the full year amounted to SEK 245 million (288), excluding acquisitions. Lower earnings and higher working capital requirements had a negative effect on cash flow, while a slightly lower level of investment than the previous year had a positive impact. The change in working capital was a negative SEK 41 million (–20). Investments affecting cash flow totalled SEK 221 million (244), excluding acquisitions. Including acquisitions, investments affecting cash flow totalled SEK 619 million (244). For the full year, including acquisitions, cash flow after investments was SEK –153 million (288).

Financial position

Interest-bearing assets totalled SEK 411 million (403), and interest-bearing liabilities and provisions totalled SEK 819 million (281). Net financial liabilities consequently totalled SEK 408 million (+122, net asset). Shareholders' equity was SEK 1,850 million (1,759). The equity/assets ratio was 47% (54). In the second quarter of the year, dividends totalling SEK 263 million (224) were paid out.

Excluding acquisitions and disposals Net financial liabilities (-) 0 50 100 150 2015 2016 2016 2016 2016 Q4 Q1 Q2 Q3 Q4 SEK million

	Q4	Q4	Full year	Full year
SEK million	2016	2015	2016	2015
Net sales	1,352	1,289	4,447	4,726
Gross profit excl. depreciation/amortisation	242	248	891	986
As a percentage of net sales	17.9	19.2	20.0	20.9
Costs	– 62	– 68	– 255	– 249
As a percentage of net sales	4.6	5.3	5.7	5.3
Operating profit (EBITDA)	180	180	636	737
As a percentage of net sales	13.3	14.0	14.3	15.6
Depreciation and amortisation	– 50	– 42	– 179	– 167
Operating profit (EBITA)	130	138	457	570
As a percentage of net sales	9.6	10.7	10.3	12.1
Amortisation of intangible assets arising from acquisitions	– 4	– 3	– 14	– 14
Operating profit (EBIT)	126	135	443	556
Financial income and expense	– 1	—	– 5	– 1
Profit after financial income and expense	125	135	438	555
Tax	– 30	– 38	– 102	– 135
As a percentage of profit after financial income and expense	24.0	28.1	23.3	24.3
Profit after tax	95	97	336	420

Financial position

SEK million	31/12/2016	31/12/2015
Interest-bearing liabilities, credit institutions	– 617	– 154
Interest-bearing pension liabilities	– 202	– 127
Total borrowings	– 819	– 281
Cash and bank	411	403
Net financial liabilities (-) / assets (+)	– 408	122
Working capital	327	196
As a percentage of sales (avg.) (%)	5.9	3.2
Capital employed	2,668	2,039
Return on capital employed (avg.) (%)	20.6	29.6
Shareholders' equity	1,850	1,759
Return on shareholders' equity (avg.) (%)	19.0	25.3

Consolidated performance analysis

Personnel

The average number of employees during the year was 6,418 people (7,759). The reduction in the number of employees in the year is primarily attributable to Nolato Telecom's operations in China.

Significant risks and uncertainty factors

The business risks and risk management of the Group and the Parent Company, along with the management of financial risks, are described in the 2015 Annual Report on pages 14, 48 – 49, and in Note 4 on pages 59 – 60.

No significant events have occurred during the period that would significantly affect or change these descriptions of the Group's and the Parent Company's risks or the management thereof.

Seasonal effects

Nolato does not experience any significant seasonal variations. However, in the third quarter sales within Nolato Industrial, and to a certain degree Nolato Medical, can be negatively affected by the fact that the holiday period falls in this quarter both for Nolato and its customers.

Events after the balance sheet date

No significant events have occurred since the end of the period.

Dividend

At the Annual General Meeting, the Board of Directors and the President and CEO will propose that the dividend be increased to SEK 10.50 per share (SEK 10.00), which corresponds to SEK 276 million (263). The pay-out ratio is 82% (63). The dividend yield was 4.0% in relation to the listed share price at 31 December 2016. Nolato's dividend policy is to propose a dividend that exceeds 50% of profit after tax, taking accounting of Nolato's long-term development opportunities, financial position and investment needs.

Ownership and legal structure

Nolato AB (publ), with Swedish corporate identity number 556080-4592, is the Parent Company of the Nolato Group.

Nolato's Class B shares are listed on Nasdaq Stockholm in the Mid Cap segment, where they are included in the Industrials sector.

There were 11,982 shareholders at 31 December. The largest shareholders are the Jorlén family with 10%, the Boström family with 9%, Didner & Gerge Funds with 8%, the Hamrin family with 6%, Lannebo Funds, Swedbank Robur Funds and SEB Investment Management with 4% of the capital each.

The Parent Company

For the parent company, which has no operating activities, sales amounted to SEK 46 million (45). Profit after financial income and expense decreased to SEK 70 million (101), owing mainly to lower earnings from investments in group companies.

Accounting and valuation principles Contact:

Nolato's consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.

The consolidated year-end report has been prepared in accordance with IAS 34 (Interim Financial Reporting) and the applicable provisions of the Swedish Annual Accounts Act. The Swedish Securities Market Act has been applied in relation to publication of this interim report.

The consolidated accounts have been prepared in accordance with the same principles as those applied in the most recent Annual Report, which are described in the 2015 Annual Report on pages 56 – 58.

The new or revised IFRS standards or IFRIC interpretations, which came into effect on 1 January 2016, have not had any material effect on the consolidated income statement or balance sheet.

The interim report for the Parent Company was prepared in accordance with Chapter 9 of the Swedish Annual Accounts Act.

Annual General Meeting

The Annual General Meeting will be held at 4 pm on 26 April 2017 in Grevie, Sweden. Shareholders who would like to submit proposals to the nomination committee can contact the Chairman of the nomination committee, Henrik Jorlén by email at henrik.jorlen@gmail.com or by post at Kommendörsgatan 4, 269 77 Torekov, Sweden.

Financial calendar

• 2016 Annual Report: Nolato's Annual Report will be published on the company's website, www.nolato.se, during week 13. A copy of the Annual Report will also be sent to those Nolato shareholders who have specifically requested such.
• Three-month interim report 2017: 26 April 2017
• 2017 Annual General Meeting: 26 April 2017
• Six-month interim report 2017: 19 July 2017
• Nine-month interim report 2017: 25 October 2017

Torekov, 8 February 2017 Nolato AB (publ) The Board of Directors

• Christer Wahlquist, President and CEO, tel. +46705 804848.
• Per-Ola Holmström, CFO, tel. +46705 763340.

This information is information that Nolato AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 14:30 CET on 8 February 2017.

This report has not been audited by the Company's auditors.

THE COMPANY IN BRIEF

Nolato's business

Nolato develops and manufactures products in polymer materials such as plastic, silicone and TPE for customers within medical technology,

pharmaceuticals, telecom, automotive and other selected industrial sectors. Operations encompass everything from individual components, which the customer assembles in its own product, to complete products that are ready for delivery to a customer's client.

Nolato also develops and manufactures its own products, such as pharmaceutical packaging.

Nolato's business model

Nolato's business model is based on close, long-term, innovative collaboration with our customers. By being part of their process at an early stage and providing support during both the development and production phases, Nolato helps its customers create a product that is as competitive as possible.

Nolato creates added value for its customers and owners through progressive, leading technology, extensive expertise in development and design, advanced project management and highly efficient production.

Nolato's strategies

• Early involvement in customers' development processes
• Close and long-term collaboration/partnerships with our customers
• Innovative, integrated and high-tech solutions
• High productivity/Lean manufacturing
• Advancing up the value chain/Greater added value
• Global presence
• Responsible business practice

Consolidated income statement (summary)

	Q4	Q4	Full year	Full year
SEK million	2016	2015	2016	2015
Net sales	1,352	1,289	4,447	4,726
Cost of goods sold	– 1,160	– 1,083	– 3,733	– 3,904
Gross profit	192	206	714	822
Other operating income	14	1	18	13
Selling expenses	– 33	– 28	– 115	– 109
Administrative expenses	– 43	– 44	– 170	– 170
Other operating expenses	– 4	—	– 4	—
	– 66	– 71	– 271	– 266
Operating profit	126	135	443	556
Financial income and expense	– 1	—	– 5	– 1
Profit after financial income and expense	125	135	438	555
Tax	– 30	– 38	– 102	– 135
Profit after tax	95	97	336	420
All earnings are attrib. to the Parent Co.'s shareholders
Depreciation/amortisation	54	45	193	181
Earnings per share, basic and diluted (SEK) *	3.61	3.69	12.77	15.97
Number of shares at period end	26,307,408	26,307,408	26,307,408	26,307,408
Average number of shares	26,307,408	26,307,408	26,307,408	26,307,408

* The company has a share warrant programme (Series 1) which may result in dilution of the number of shares.

Consolidated comprehensive income

	Q4	Q4	Full year	Full year
SEK million	2016	2015	2016	2015
Profit after tax	95	97	336	420
Other comprehensive income
Items that cannot be transferred to profit for the period
Revaluations of defined benefit pension plans	10	1	8	1
Tax attributable to items that cannot be transferred to	– 2	—	– 2	—
profit for the period
	8	1	6	1
Items that have been converted or can be converted into
profit for the period
Translation differences for the period on transl. of foreign oper.	5	– 24	12	– 7
Changes in the fair val. of cash flow hedges for the per. *	– 1	—	– 2	3
Tax attr. to changes in the fair val. of cash flow hedges *	—	—	—	– 1
	4	– 24	10	– 5
Other comprehensive income, net of tax	12	– 23	16	– 4
Total comp. income for the period attributable to the Parent Co.'s shareholders	107	74	352	416

* Financial instruments are measured at fair value in the statement of financial position, pursuant to measurement hierarchy Level 2.

Consolidated balance sheet (summary)

SEK million	31/12/2016	31/12/2015
Assets
Non-current assets
Intangible non-current assets	849	543
Property, plant and equipment	1,205	952
Non-current financial assets	2	2
Other non-current receivables	1	1
Deferred tax assets	46	44
Total fixed assets	2,103	1,542
Current assets
Inventories	393	279
Accounts receivable	819	874
Other current assets * 2)	198	135
Cash and bank	411	403
Total current assets	1,821	1,691
Total assets	3,924	3,233
Shareholders' equity and liabilities
Shareholders' equity	1,850	1,759
Long-term liabilities and provisions 1)	803	159
Deferred tax liabilities 1)	88	69
Current liabilities and provisions * 1) 3)	1,183	1,246
Total liabilities and provisions	2,074	1,474
Total shareholders' equity and liabilities	3,924	3,233
1) Interest-bearing/non-interest-bearing liabilities and provisions:
Interest-bearing liabilities and provisions	819	281
Non-interest-bearing liabilities and provisions	1,255	1,193
Total liabilities and provisions	2,074	1,474
* Financial instruments are measured at fair value in the statement of financial position, pursuant to
measurement hierarchy Level 2. 2) Derivative assets are included in other current assets at	10	7
3) Derivative liabilities are included in current liabilities and provisions at	4	1

Changes in consolidated shareholders' equity (summary)

	Full year	Full year
SEK million	2016	2015
Shareholders' equity at the beginning of the period	1,759	1,567
Total comprehensive income for the period	352	416
Dividends	– 263	– 224
Share warrants included in incentive programme (Series 1)	2	—
Shareholders' equity at the end of period attrib. to Parent Co's shareholders	1,850	1,759

In 2016, a dividend totalling SEK 263 million was paid to the Parent Company's shareholders, corresponding to a dividend of SEK 10.00 per share. The Group has an incentive programme which may result in a dilutive effect on the number of shares.

Consolidated cash flow statement (summary)

Q4	Q4	Full year	Full year
2016	2015	2016	2015
140	129	507	552
50	24	– 41	– 20
190	153	466	532
– 437	– 37	– 619	– 244
– 247	116	– 153	288
414	– 64	157	– 138
167	52	4	150
240	362	403	256
4	– 11	4	– 3
411	403	411	403

Earnings per share

	Q4	Q4	Full year	Full year
SEK million	2016	2015	2016	2015
Profit after tax	95	97	336	420
Adjusted earnings:
Amortisation of intangible assets arising from acquis.	4	3	14	14
Tax on amortisation	– 1	– 1	– 3	– 4
Adjusted earnings	98	99	347	430
Average number of shares *	26,307,408	26,307,408	26,307,408	26,307,408
Earnings per share, basic and diluted (SEK) *	3.61	3.69	12.77	15.97
Adjusted earnings per share (SEK) *	3.72	3.77	13.19	16.35

Five-year overview

	2016	2015	2014	2013	2012
Net sales (SEK million)	4,447	4,726	4,234	4,522	3,874
Operating profit (EBITA) (SEK million)	457	570	470	427	303
EBITA margin (%)	10.3	12.1	11.1	9.4	7.8
Operating profit (EBIT) (SEK million)	443	556	454	411	287
Profit after financial income and expense (SEK million)	438	555	462	403	272
Profit after tax (SEK million)	336	420	364	314	202
Cash flow after investments, excl. acq. and disposals (SEK million)	245	288	127	362	317
Cash conversion (%)	55	52	28	82	111
Return on capital employed (%)	20.6	29.6	28.4	26.7	19.4
Return on shareholders' equity (%)	19.0	25.3	25.0	24.9	17.7
Net financial assets (+) liabilities (-) (SEK million)	– 408	122	59	122	– 113
Equity/assets ratio (%)	47	54	54	52	44
Earnings per share (SEK) *	12.77	15.97	13.84	11.94	7.68
Adjusted earnings per share (SEK) *	13.19	16.35	14.29	12.39	8.13
Dividend per share (2016 proposal) (SEK)	10.50	10.00	8.50	8.00	6.00
Average number of employees	6,418	7,759	8,020	9,357	8,421

* The company has a share warrant programme (Series 1) which may result in dilution of the number of shares.

Quarterly data (summary)

		Q1	Q2	Q3	Q4	Full year
Net sales (SEK million)	2016	1,022	1,037	1,036	1,352	4,447
	2015	1,073	1,280	1,084	1,289	4,726
	2014	932	965	1,095	1,242	4,234
Operating profit (EBITDA) (SEK million)	2016	155	152	149	180	636
	2015	164	208	185	180	737
	2014	129	135	149	206	619
Operating profit (EBITA) (SEK million)	2016	113	110	104	130	457
	2015	123	167	142	138	570
	2014	94	100	112	164	470
EBITA margin (%)	2016	11.1	10.6	10.0	9.6	10.3
	2015	11.5	13.0	13.1	10.7	12.1
	2014	10.1	10.4	10.2	13.2	11.1
Operating profit (EBIT) (SEK million)	2016	110	106	101	126	443
	2015	119	163	139	135	556
	2014	90	96	108	160	454
Profit after financial income and expense (SEK million)	2016	109	103	101	125	438
	2015	121	162	137	135	555
	2014	88	104	108	162	462
Profit after tax (SEK million)	2016	83	79	79	95	336
	2015	93	125	105	97	420
	2014	67	81	83	133	364
Cash flow from operating activities (SEK million)	2016	93	113	70	190	466
	2015	217	9	153	153	532
	2014	61	92	39	138	330
Cash flow from operating activities per share (SEK)	2016	3.54	4.30	2.66	7.22	17.71
	2015	8.25	0.34	5.82	5.82	20.22
	2014	2.32	3.50	1.48	5.25	12.54
Cash flow after investments, excl. acq. and disp. (SEK million)	2016	30	61	19	135	245
	2015	104	– 52	120	116	288
	2014	17	33	– 13	90	127
Cash flow after investm., excl. acq. and disp. per share (SEK)	2016	1.14	2.32	0.72	5.13	9.31
	2015	3.95	– 1.98	4.56	4.41	10.95
	2014	0.65	1.25	– 0.49	3.42	4.83
Earnings per share, basic and diluted (SEK) *	2016	3.16	3.00	3.00	3.61	12.77
	2015	3.54	4.75	3.99	3.69	15.97
	2014	2.55	3.08	3.15	5.06	13.84
Adjusted earnings per share (SEK) *	2016	3.23	3.12	3.12	3.72	13.19
	2015	3.65	4.86	4.07	3.77	16.35
	2014	2.66	3.19	3.27	5.17	14.29
Shareholders' equity per share (SEK)	2016	70	63	66	70	70
	2015	65	60	64	67	67
	2014	53	49	53	60	60
Return on total capital (%)	2016	17.8	16.0	14.7	13.7	13.7
	2015	17.6	19.5	19.8	18.3	18.3
	2014	14.3	14.3	14.3	17.1	17.1
Return on capital employed (%)	2016	27.2	24.8	22.4	20.6	20.6
	2015	28.5	31.6	32.0	29.6	29.6
	2014	24.7	24.1	24.6	28.4	28.4
Return on operating capital (%)	2016	34.2	28.9	26.1	24.4	24.4
	2015	34.7	36.4	37.3	35.3	35.3
	2014	29.1	28.0	27.4	33.0	33.0
Return on shareholders' equity (%)	2016	23.2	22.5	19.7	19.0	19.0
	2015	25.1	30.1	29.6	25.3	25.3
	2014	22.3	24.0	23.2	25.0	25.0
Closing share price Nolato B (Nasdaq Stockholm)	2016	227.50	221.50	263.00	263.00	263.00
	2015	208.50	189.50	210.00	257.50	257.50
	2014	163.00	152.00	163.50	178.00	178.00

* The company has a share warrant programme (Series 1) which may result in dilution of the number of shares.

Quarterly data business areas

Net sales (SEK million)			Q1	Q2	Q3	Q4	Full year
Nolato Medical		2016	390	397	395	463	1,645
		2015	344	365	368	387	1,464
		2014	326	343	330	334	1,333
Nolato Telecom		2016	300	311	343	448	1,402
		2015	418	584	434	581	2,017
		2014	320	344	502	633	1,799
Nolato Industrial		2016	334	331	301	443	1,409
		2015	312	332	282	325	1,251
		2014	286	279	264	277	1,106
Group adjustments, Parent Company		2016	– 2	– 2	– 3	– 2	– 9
		2015	– 1	– 1	—	– 4	– 6
		2014	—	– 1	– 1	– 2	– 4
Group total		2016 2015	1,022 1,073	1,037 1,280	1,036 1,084	1,352 1,289	4,447 4,726
		2014	932	965	1,095	1,242	4,234
Operating profit (EBITA) (SEK million)			Q1	Q2	Q3	Q4	Full year
Nolato Medical		2016	52 13.3	53 13.4	52 13.2	59 12.7	216 13.1
	EBITA margin (%)
		2015	46 13.4	47 12.9	51 13.9	47 12.1	191 13.0
	EBITA margin (%)
		2014	45 13.8	46 13.4	42 12.7	43 12.9	176 13.2
	EBITA margin (%)	2016	33	28	29	41	131
Nolato Telecom	EBITA margin (%)		11.0	9.0	8.5	9.2	9.3
		2015	47	101	63	61	272
	EBITA margin (%)		11.2	17.3	14.5	10.5	13.5
		2014	23	30	48	98	199
	EBITA margin (%)		7.2	8.7	9.6	15.5	11.1
Nolato Industrial		2016	34	34	30	36	134
	EBITA margin (%)		10.2	10.3	10.0	8.1	9.5
		2015	34	34	30	34	132
	EBITA margin (%)		10.9	10.2	10.6	10.5	10.6
		2014	31	30	28	29	118
	EBITA margin (%)		10.8	10.8	10.6	10.5	10.7
Group adjustments, Parent Company		2016	– 6	– 5	– 7	– 6	– 24
		2015	– 4	– 15	– 2	– 4	– 25
		2014	– 5	– 6	– 6	– 6	– 23
Group total		2016	113	110	104	130	457
	EBITA margin (%)		11.1	10.6	10.0	9.6	10.3
		2015	123	167	142	138	570
	EBITA margin (%)		11.5	13.0	13.1	10.7	12.1
		2014	94	100	112	164	470
	EBITA margin (%)		10.1	10.4	10.2	13.2	11.1
Depreciation/amortisation (SEK million)			Q1	Q2	Q3	Q4	Full year
Nolato Medical		2016	22	22	23	25	92
		2015	20	22	22	22	86
		2014	18	19	19	20	76
Nolato Telecom		2016	9	9	9	9	36
		2015	11	11	10	10	42
		2014	10	10	11	14	45
Nolato Industrial		2016	14	15	16	20	65
		2015	14	12	14	13	53
		2014	11	10	11	12	44
Group total		2016	45	46	48	54	193
		2015	45	45	46	45	181
		2014	39	39	41	46	165

Group financial highlights

	Q4	Q4	Full year	Full year
	2016	2015	2016	2015
Net sales (SEK million)	1,352	1,289	4,447	4,726
Sales growth (%)	5	4	– 6	12
Percentage of sales outside Sweden (%)	83	74	76	77
Operating profit (EBITDA) (SEK million)	180	180	636	737
Operating profit (EBITA) (SEK million)	130	138	457	570
EBITA margin (%)	9.6	10.7	10.3	12.1
Profit after financial income and expense (SEK million)	125	135	438	555
Profit margin (%)	9.2	10.5	9.8	11.7
Profit after tax (SEK million)	95	97	336	420
Return on total capital (%)	13.7	18.3	13.7	18.3
Return on capital employed (%)	20.6	29.6	20.6	29.6
Return on operating capital (%)	24.4	35.3	24.4	35.3
Return on shareholders' equity (%)	19.0	25.3	19.0	25.3
Equity/assets ratio (%)	47	54	47	54
Debt/equity (%)	44	16	44	16
Interest coverage ratio (times)	49	60	67	78
Net investments affecting cash flow, excl. acq. and disposals (SEK million)	55	37	221	244
Cash flow after inv., excl. acq. and disp. (SEK million)	135	116	245	288
Cash conversion (%)	—	—	55	52
Net financial liabilities (-) / assets (+) (SEK million)	– 408	122	– 408	122
Earnings per share, basic and diluted (SEK) *	3.61	3.69	12.77	15.97
Adjusted earnings per share (SEK) *	3.72	3.77	13.19	16.35
Cash flow from operating activities per share (SEK)	7.22	5.82	17.71	20.22
Cash flow per share, excl. acq. and disposals (SEK)	5.13	4.41	9.31	10.95
Shareholders' equity per share (SEK)	—	—	70	67
Average number of employees	—	—	6,418	7,759

* The company has a share warrant programme (Series 1) which may result in dilution of the number of shares.

Reconciliation of consolidated income before tax

	Full year	Full year
SEK million	2016	2015
Operating profit (EBIT)
Nolato Medical	203	178
Nolato Telecom	131	272
Nolato Industrial	133	131
Group adjustments, Parent Company	– 24	– 25
Consolidated operating profit (EBIT)	443	556
Financial income and expense (not distributed by business areas)	– 5	– 1
Consolidated profit before tax	438	555

Acquisition of Treff AG

Description of the acquisition

Nolato has acquired the Swiss company Treff AG. The company will strengthen the customer base and geographical expansion of both Nolato Medical and Nolato Industrial.

Treff manufacturers supply products for medical and self-care diagnostics (in-vitro diagnostics, IVD), as well as technically advanced precision components for various industrial segments.

Nolato acquired 100 percent of the shares in Treff AG, and obtained controlling influence. The company was acquired on 3 October and was consolidated by Nolato as of 3 October. The acquisition was reported using the acquisition method, with the total purchase price being allocated among the assets acquired and liabilities assumed based on their fair values. Fair value was determined using generally accepted principles and methods. The purchase price comprises a cash payment. Around two thirds of Treff's operations will be reported within Nolato Industrial and one third within Nolato Medical. The acquisition contributed SEK 121 million to the Nolato Group's income in 2016. The acquisition analysis of the company is, in its entirety, still preliminary and may be changed according to IFRS regulations.

Acquisition value, goodwill and cash flow effects (provisional)

Acquisition value
Purchase sum	485
Deduction of fair value of acquired net assets (in accordance with itemisation below)	– 234
Goodwill	251

Goodwill arising in connection with the transaction consists of synergies that are expected to be achieved primarily as a result of increased sales volumes for the Nolato Group's customers in Europe and for customers of the acquired company from other companies within the Nolato Group. But also partly by means of lower costs through better purchasing terms from external suppliers, and other involvement at different levels in the Nolato Medical and Nolato Industrial business areas.

Net assets	Balance sheet at	Adjustment to	Fair
	time of acquisition	fair value	value
Intangible non-current assets	—	59	59
Property, plant and equipment	131	63	194
Current assets	149	—	149
Cash and bank balances	103	—	103
Provisions	– 72	– 59	– 131
Non-current financial liabilities	– 27	—	– 27
Deferred tax liabilities	—	– 12	– 12
Current liabilities	– 101	—	– 101
Acquired net assets	183	51	234

Intangible non-current assets in the form of customer relationships are estimated to amount to SEK 59 million and will be depreciated for accounting purposes over a period of 10 years.

Cash flow effects

Cash paid acquisition value	485
Deduction of acquired cash and bank balances	– 103
Net cash flow from the acquisition	382

Parent Company income statement (summary)

	Q4	Q4	Full year	Full year
SEK million	2016	2015	2016	2015
Net sales	6	7	46	45
Selling expenses	– 2	– 2	– 5	– 1
Administrative expenses	– 10	– 20	– 44	– 55
Other operating income	—	—	2	—
Other operating expenses	– 8	– 2	– 27	– 39
Operating profit	– 14	– 17	– 28	– 50
Profit from participations in Group companies	24	128	92	146
Financial income	5	– 11	20	21
Financial expenses	– 12	– 14	– 14	– 16
Profit after financial income and expense	3	86	70	101
Appropriations	241	262	241	262
Tax	– 50	– 55	– 49	– 53
Profit after tax	194	293	262	310
Depreciation/amortisation	—	—	—	—

Parent Company balance sheet (summary)

SEK million	31/12/2016	31/12/2015
Assets
Property, plant and equipment	1	1
Financial assets	1,653	1,151
Deferred tax assets	13	7
Total fixed assets	1,667	1,159
Other receivables	498	520
Cash and bank	75	37
Total current assets	573	557
Total assets	2,240	1,716
Shareholders' equity and liabilities
Shareholders' equity	1,118	1,119
Untaxed reserves	163	129
Other provisions	13	11
Long-term liabilities	545	55
Current liabilities	401	402
Total shareholders' equity and liabilities	2,240	1,716

Transactions with related parties:

SEK million	Period	Services	Services	Interest	Interest	Res. from shares	Rec. fr. rel. part.	Liab. to rel. part.
Related party		sold	bought	income	expenses	in Group comp.	on bal. sh. date	on bal. sh. date
Subsidiary	Full year 2016	46	– 4	20	—	92	907	344
Subsidiary	Full year 2015	45	– 4	21	—	146	931	290

None of the company's Board members or senior executives currently have, or have previously had, any direct or indirect involvement in any business transaction with the company which is, or was, of an unusual character in terms of its conditions. Nor has the Group issued any loans, pledged any guarantees or entered into any surety arrangements for any of the company's Board members or senior executives.

Definitions

Return on total capital Net debt

Profit after financial income and expense, plus financial expenses as a percentage of average total capital in the balance sheet.

Return on capital employed

Profit after financial income and expense, plus financial expenses as a percentage of average capital employed. Capital employed consists of total capital less non-interestbearing liabilities and provisions.

Return on operating capital Operating profit (EBITDA)

Operating profit as a percentage of average operating capital. Operating capital consists of total capital less non-interest-bearing liabilities and provisions, less interest-bearing assets.

Return on shareholders' equity

Profit after tax as a percentage of average shareholders' equity. intangible assets arising from acquisitions.

Operating profit (EBITA) as a percentage of net sales.

Adjusted earnings per share Debt/equity ratio

Profit after tax, excluding amortisation of intangible assets arising from acquisitions, divided by the average number of shares.

Cash flow from operating activities per share

Cash flow from operating activities, divided by the average number of shares.

Cash flow per share, excl. acq. and disposals

Cash flow before financing activities, divided by the average number of shares.

Cash conversion

Cash flow after investments, excl. acquisitions and disposals, divided by operating profit (EBIT). Cash flow and operating profit have been adjusted by non-recurring items, if any.

Earnings per share Interest coverage ratio Profit after tax, divided by the average number of shares. Profit after financial income and expense, plus financial expenses, divided by Interest-bearing liabilities and provisions less interest-bearing assets.

financial expenses.

Earnings before financial income and expense, taxes and depreciation/ amortisation.

Operating profit (EBITA) Earnings before financial income and expense, taxes and amortisation of

EBITA margin Operating profit (EBIT)

Earnings before financial income and expense and taxes.

Equity/assets ratio Interest-bearing liabilities and provisions divided by shareholders' equity.

Profit margin Shareholders' equity as a percentage of total capital in the balance sheet.

Profit after financial income and expense as a percentage of net sales.

Nolato presents certain financial measures in this report that are not defined according to IFRS. Nolato considers that these measures provide valuable supplementary information for investors and company management, as they enable an assessment of trends and the company's performance. Since not all companies calculate financial measures in the same way, these are not always comparable to measures used by other companies. These financial measures should not therefore be regarded as substitutes for measures defined according to IFRS.

Forward-looking information

Some of the items reported relate to future events and actual outcomes may differ materially. In addition to those factors explicitly commented on, other factors may also materially affect the actual outcome, such as economic conditions, exchange rates and interest rate levels, political risks, competition and pricing, product development, commercialisation and technical difficulties, supply problems and customer credit losses.

Nolato AB, SE-269 04 Torekov, Sweden • Tel. +46 431 442290 • Fax +46 431 442291 Corp. id. number 556080-4592 • E-mail info@nolato.com • Website www.nolato.com