CARDO AB: Report on Operations 2002

11.02.2003

As of January 2002, Cardo Pump includes the acquired companies Swedmeter AB and Nopon Oy with a combined annual turnover of approximately SEK 150 million.

The Group

The Group's inflow of orders stood at SEK 10,493 million (11,197), which is a decrease of 3 percent at a comparable structure of the Group after adjustment for the effects of exchange rate movements.Invoiced sales amounted to SEK 10,376 million (10,777). Adjusted for the effects of exchange rate movements and the disposal of Rail, growth was 4 percent, which is attributable to company acquisitions. Invoiced sales to customers outside Sweden made up 93 percent (92) of Group invoicing.Including non-recurring items, operating earnings amounted to SEK 930 million (758) and earnings after financial items SEK 856 million (660). Exchange rate movements had only a marginal effect on Group earnings. The Group's tax expense amounted to SEK 177 million (212), which excluding the capital gain on the disposal of Rail is equivalent to a tax rate of 33 percent (32) on earnings after financial items.

Including non-recurring items, earnings per share after full tax were SEK 22.50 (14.81).

Remaining operations

After the disposal of the Rail business area, the Group's operations consist of the Cardo Door and Cardo Pump business areas. Operating earnings in the remaining operations amounted to SEK 472 million (527) during the year. Pump's earnings increased.

Cardo Pump

The inflow of orders rose by 1 percent at the current structure after adjustment for the effects of exchange rate movements. Demand rose somewhat in all Cardo Pump's segments - water and wastewater, building services and the process industry. However, slightly lower demand was noted in the USA at the end of the year. Invoiced sales amounted to SEK 3,057 million (2,825), which adjusted for the effects of exchange rate movements is a rise of 10 percent. Company acquisitions account for 8 percentage points of this figure. Operating earnings amounted to SEK 214 million (previous year: SEK 176 million excluding restructuring costs). The action program that was initiated during the fall of 2001 with a view to reducing costs ran according to plan during the year, and the objective is to achieve an annual 10-11 percent operating margin at Cardo Pump at the end of 2003. By acquiring Swedmeter and Nopon, Cardo Pump has enhanced its process know-how and become a more complete system supplier in the water and wastewater segment. In Portugal and Malaysia, the operations of the former distributors were taken over and subsidiaries started in order to strengthen Cardo Pump's presence in these markets, in which there are extensive expansion plans in the area of water and wastewater.

Liquidity and financing

At year-end, the Group's liquid assets amounted to SEK 922 million (264). In addition, there are unutilized credit facilities of approximately SEK 3.0 billion (approximately 3.5). Cash flow from operations amounted to SEK 933 million (509) after tax, which is equivalent to SEK 31.10 (16.97) per share. Adjusted for the effects of exchange rate movements on the change in working capital, cash flow was SEK 27.97 (21.60) per share after tax. The Group's gross investments, exclusive of company acquisitions, stood at SEK 309 million (305). Net liquid funds at year-end amounted to SEK 593 million

(-1,242). Equity amounted to SEK 3,875 million (3,595), which is equivalent to SEK 129.17 (119.84) per share. At year-end, the Group's equity ratio was 63.4 percent (44.5).

Personnel

The average number of employees in the Group was 7,851 (8,179).

Accounting principles

The report has been drawn up in accordance with recommendation RR20 of the Swedish Financial Accounting Standards Council concerning interim reports. The accounting principles used are the same as in the annual report for 2001 except for the new recommendations of the Swedish Financial Accounting Standards Council effective as of January 1 2002. The application of the new recommendations has not given rise to any adjustment of previously reported periods.

Parent company

The parent company's earnings after financial items amounted to SEK 969 million (269), gross investments to SEK 0 million (1) and liquid assets to SEK 176 million (0).

Dividend

The Board of Directors and President propose a regular dividend for the financial year 2002 of SEK 8.00 (8.00) per share and an extra dividend of SEK 32.00 per share: in total a dividend of SEK 40.00 per share. The regular dividend requires SEK 240 million and the extra dividend SEK 960 million. The dividend proposal is to be viewed in the light of the sale of the Rail business area, which freed up approximately SEK 2 billion and gave a capital gain of SEK 323 million. If the Annual General Meeting resolves to adopt the proposal of the Board of Directors, Cardo's equity ratio after payment is expected to be approximately 50 percent, which will provide continued

financially good prospects of expanding the business.

Election committee

An election committee has been appointed consisting of representatives of the Company's three largest owners. The Chairman of the Board is the convener. The duties of the election committee are to submit proposals to the Annual General Meeting in respect of

the election of the Board of Directors, the appointment of auditors whenever applicable and the determination of fees. The election committee that has been appointed ahead of the 2003 Annual General Meeting consists of:

- Fredrik Lundberg (Chairman of Cardo), L E Lundbergföretagen AB, Stockholm

- Tomas Nicolin, National Swedish Pension Fund, Third Fund Board, Stockholm

- Peter Rudman, Nordea's funds, Stockholm

Annual General Meeting and financial reports

- The Annual General Meeting will be held in Malmö on Monday, April 7 2003 at 5 pm at Storan, Malmö Opera och Musikteater.

- The Annual Report will be distributed in early March.

- The first quarter Interim Report will be published on May 6.

- The half year Interim Report will be published on August 12.

- The third quarter Interim Report will be published on October 29.

Market prospects

There is uncertainty about the market trend in most of Europe and no sign at present indicating imminent improvement. When it comes to the USA, the general uncertainty has increased, while the level of activity in the Asiatic markets remains high. For Cardo's part, the uncertainty means continued focus on cost adjustment and improvements in efficiency.

About Cardo AB

Cardo is an international engineering group and a leading supplier of high-quality products and systems with a good aftermarket. Cardo holds strong positions in the markets for doors and pumps. Cardo has subsidiaries in about 30 countries with the focal point resting in western Europe.

For further information, please contact:

Kjell Svensson, President and CEO, phone +46 40 35 04 53, 35 04 00

Göran Axeheim, Executive Vice President and CFO, phone +46 40 35 04

42, 35 04 00

Christer Roskvist, Head of Public Relations, phone +46 40 35 04 25,

35 04 00

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