Other Financial information

Profitability, financial position and cash flow

The return on equity at the end of the period was 29 percent (24), and return on capital employed was 23 percent (18). Return on working capital P/WC (EBITA in relation to working capital) amounted to 53 percent (48).

At the end of the period the equity ratio amounted to 36 percent (38). Equity per share, excluding non-controlling interest, totalled SEK 25.70 (22.60). The Group's net debt at the end of the period amounted to SEK 1,135 million (833), excluding pension liabilities of SEK 218 million (201). The net debt/equity ratio, calculated on the basis of net debt excluding provisions for pensions, amounted to 0.6 (0.5).

Cash and cash equivalents consisting of cash and bank equivalents and approved but non-utilised credit facilities amounted to SEK 529 million (857) at 30 September 2017.

Cash flow from operating activities amounted to SEK 136 million (214) during the period. Changes in working capital consist mainly of higher accounts receivable. Company acquisitions and disposals including settlement of contingent consideration regarding acquisitions implemented in previous years amounted to SEK 140 million (90). Investments in non-current assets totalled SEK 16 million (27) and disposal of non-current assets amounted to SEK 1 million (2). Dividend from associated company amounted to SEK 3 million (3). Repurchase of treasury shares amounted to SEK 31 million (40) and repurchase of call options amounted to SEK 0 million (6). Exercised call options totalled SEK 21 million (0). During the second quarter, dividend of SEK 3.50 per share was paid, totalling SEK 235 million (218).

Employees

At the end of the period, the number of employees was 2,262, compared to 2,176 at the beginning of the financial year. During the period, completed acquisitions and disposal resulted in a net increase of the number of employees by 84. The average number of employees in the latest 12-month period was 2,201.

Ownership structure

At the end of the period the share capital amounted to SEK 51.1 million.

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In accordance with a resolution of the August 2017 AGM, 24 members of management were offered the opportunity to acquire 300,000 call options on repurchased Class B shares. The programme was fully subscribed. Altogether, Addtech has four outstanding call option programmes for a total of 1,435,047 shares. Call options issued on repurchased shares entail a dilution effect of about 0.3 percent during the latest 12-month period. During the quarter, 200,000 treasury shares were repurchased. Addtech's own shareholdings are estimated to meet the needs of the outstanding call option programmes.

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Acquisitions and disposal

During the period, 1 April to 30 September 2017, the following acquisitions have been completed; Dovitech A/S and Altitech A/S to become part of the Components business area and Craig & Derricott Holdings Ltd to become part of the Power Solutions business area. The Group has also sold Batteriunion i Järfälla AB, formerly part of the Power Solutions Business Area.

If all the acquisitions had been completed on 1 April 2017, their impact would have been an estimated SEK 118 million on Group net sales, about SEK 11 million on operating profit and about SEK 8 million on profit after tax for the period.

Acquisitions and disposals (information in parentheses) completed as of the 2016/2017 financial year are distributed among the Group’s business areas as follows:

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The amount of contingent consideration depends on future results achieved in the companies. The estimated outcome for the year's acquisitions amounts to SEK 62 million, which is due for payment within one to two years. The amounts are estimated to be able to reach a maximum total of SEK 72 million. Of the contingent consideration not yet paid for acquisitions during the period, the discounted value amounts to SEK 58 million.

Transaction costs for acquisitions that resulted in an ownership transfer during the period, amounted to SEK 3 million (6) and are reported under Selling expenses.

During the period contingent consideration was net revalued by SEK 2 million (3). The impact on profits are reported under Other operating income and Other operating expenses, respectively. 

According to the preliminary acquisitions analyses, the assets and liabilities included in the acquisitions were as follows, during the period:

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Parent Company

Parent Company net sales amounted to SEK 27 million (25) during the period and profit after financial items was SEK -6 million (-3). Net investments in non-current assets were SEK 0 million (0). The Parent Company's net financial debt was SEK 41 million (85) at the end of the period.

Other Disclosures

Accounting policies

This interim report was prepared as per International Financial Reporting Standards (IFRS) and IAS 34 Interim Financial Reporting. The accounting policies and basis for calculations applied in the latest annual report were also used here. The interim report for the parent company was prepared in accordance with the Swedish Annual Accounts Act and the Securities Market Act, in compliance with recommendation RFR 2 Accounting for Legal Entites, of the Swedish Financial Reporting Board. The new and revised IFRS standards and IFRIC interpretations that come into force as of the 2017/2018 financial year have had no material effect on the Group's financial reports. New IFRS standards will come into force in the 2018/2019 financial year. For more information, see Note 1 Accounting and valuation policies in the annual report for 2016/2017. Disclosure in accordance with IAS 34.16A is presented both in the financial statements and related notes, as well as in other parts of the interim report.

Alternative perfomance measures

The Company presents certain financial measures in the interim report that are not defined according to IFRS. The Company believes that these measures provide valuable supplemental information to investors and the Company's management as they allow for evaluation of trends and the Company's performance. Since all companies do not calculate financial measures in the same way, they are not always comparable to measures used by other companies. These financial measures should therefore not be considered to be a replacement for measurements as defined under IFRS. For definitions of the performance measures that Addtech uses, please see page 16.

Risks and factors of uncertainty

Addtech's profit and financial position, as well as its strategic position, are affected by a number of internal factors under Addtech's control and by a number of external factors over which Addtech has limited influence. The most important risk factors for Addtech are the state of the economy, combined with structural change and the competitive situation. Risk and uncertainty factors are the same as in previous periods, please see section Risks and uncertainties (page 22-25) in the annual report for 2016/2017 for further details. The Parent Company is indirectly affected by the above risks and uncertainty factors due to its role in the organisation.

Transactions with related parties

No transactions between Addtech and related parties that have significantly affected the Group's position and earnings have taken place during the period.

Seasonal effects

Addtech's sales of high-tech products and solutions in the manufacturing industry and infrastructure are not subject to major seasonal variations. The number of production days and customers' demand and willingness to invest can vary over the quarters.

Significant events after the end of the period

On 4 October 2017, an agreement to acquire Sensor ECS A/S, Denmark, to become part of the Components business area, was signed. Sensor ECS delivers embedded industrial and medical computer systems. The business is mainly focused on the Nordic OEM industry and health care. The company has sales of around DKK 120 million, and nine employees. The closing is estimated to take effect in November 2017.

On 9 October 2017, Mobile Control Systems SA, Belgium, was acquired to become part of the Power Solutions business area. Mobile Control Systems develops and supplies electronic throttle- and transmission controls for on and off highway vehicle OEMs. The company has sales of around EUR 5 million, and 17 employees.

On 24 October 2017, an agreement to acquire Ingenjörsfirma Pulsteknik AB, Sweden, to become part of the Components business area, was signed. Pulsteknik delivers products and solutions in the field of sensor, control and drives. The business is mainly focused on the Nordic OEM and automation market. The company has sales of around SEK 50 million, and ten employees. The closing is estimated to take effect in November 2017.

Affirmation

The Board of Directors and the President deem that the interim report on the first six months gives a true and fair picture of the Company's and the Group's operations, position and earnings, and describes the significant risks and uncertainty factors to which the Company and the Group are exposed.

This report has not been subject to review by the company's auditor.