Other Financial information
Profitability, financial position and cash flow
The return on equity at the end of the period was 29 percent (26), and return on capital employed was 22 percent (20). Return on working capital P/WC (EBITA in relation to working capital) amounted to 53 percent (50).
At the end of the period the equity ratio amounted to 36 percent (39). Equity per share, excluding non-controlling interest, totalled SEK 27.30 (23.65). The Group's net debt at the end of the period amounted to SEK 1,232 million (753), excluding pension liabilities of SEK 240 million (217). The net debt/equity ratio, calculated on the basis of net debt excluding provisions for pensions, amounted to 0.7 (0.5).
Cash and cash equivalents consisting of cash and bank equivalents and approved but non-utilised credit facilities amounted to SEK 528 million (950) at 31 December 2017.
Cash flow from operating activities amounted to SEK 388 million (391) during the period. Company acquisitions and disposals including settlement of contingent consideration regarding acquisitions implemented in previous years amounted to SEK 381 million (152). Investments in non-current assets totalled SEK 35 million (44) and disposal of non-current assets amounted to SEK 3 million (3). Dividend from associated company amounted to SEK 4 million (3). Repurchase of treasury shares amounted to SEK 31 million (40) and repurchase of call options amounted to SEK 5 million (6). Exercised and issued call options totalled SEK 33 million (7). Dividends paid to the shareholders of the Parent Company totalled SEK 235 million (218), corresponding to SEK 3.50 (3.25) per share. The dividend was paid out in the second quarter.
Employees
At the end of the period, the number of employees was 2,307, 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 133. The average number of employees in the latest 12-month period was 2,238.
Ownership structure
At the end of the period the share capital amounted to SEK 51.1 million.
| Class of shares | Number of shares | Number of votes | Percentage of capital | Percentage of votes |
|---|---|---|---|---|
| Class A shares, 10 votes per share | 3,229,500 | 32,295,000 | 4.7 | 33.2 |
| Class B shares, 1 vote per share | 64,968,996 | 64,968,996 | 95.3 | 66.8 |
| Total number of shares before repurchases | 68,198,496 | 97,263,996 | 100 | 100.0 |
| Of which repurchased class B shares | 1,243,291 | 1.8 | 1.3 | |
| Total number of shares after repurchases | 66,955,205 |
Addtech has four outstanding call option programmes, see table below. Call options issued on repurchased shares entail a dilution effect of about 0.3 percent during the latest 12-month period. Addtech's own shareholdings are estimated to meet the needs of the outstanding call option programmes.
| Outstanding programme | Number of options | Corresponding number of shares | Proportion of total shares | Initial exercise price | Adjusted exercise price | Expiration period |
|---|---|---|---|---|---|---|
| 2017/2021 | 300,000 | 300,000 | 0.4% | 178.50 | - | 14 Sep 2020 - 4 Jun 2021 |
| 2016/2020 | 300,000 | 300,000 | 0.4% | 159.00 | - | 16 Sep 2019 - 5 Jun 2020 |
| 2015/2019 | 350,000 | 430,500 | 0.6% | 154.50 | 125.10 | 17 Sep 2018 - 3 Jun 2019 |
| 2014/2018 | 208,800 | 256,824 | 0.4% | 116.70 | 94.50 | 17 Sep 2017 - 1 Jun 2018 |
| Total | 1,158,800 | 1,287,324 |
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.
On 9 October 2017, The Mobile Control Systems Companies, Belgium, were 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 companies have sales of around EUR 5 million, and 17 employees.
On 1 November 2017, Ingenjörsfirma Pulsteknik AB, Sweden, was acquired to become part of the Components business area. 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.
On 7 November 2017, Sensor ECS A/S, Denmark, was acquired to become part of the Components business area. 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.
On 1 December 2017, the assets of Fintronic OY, Finland, were acquired to become part of the Components business area and part of an existing company. The business has sales of around SEK 7 million and one employee.
On 1 December 2017, STIGAB Stig Ödlund AB, Sweden, was acquired to become part of the Components business area. STIGAB delivers products and solutions in the field of joysticks, sensors, switches and other electromechanical components. The business is mainly focused on the Nordic OEM market. The company has sales of around SEK 115 million, and twelve employees.
If all the acquisitions had been completed on 1 April 2017, their impact would have been an estimated SEK 450 million on Group net sales, about SEK 42 million on operating profit and about SEK 30 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:
| Acquisitions (disposals) | Closing | Net sales, SEKm* | Number of employees* | Business Area |
|---|---|---|---|---|
| Sammet Dampers Oy, Finland | April, 2016 | 45 | 12 | Industrial Process |
| Poryan China Company Ltd, China | April, 2016 | 50 | 22 | Power Solutions |
| E.T.S. Portsmouth Ltd, Great Britain | April, 2016 | 100 | 35 | Energy |
| Elektro-Tukku Oy, Finland | May, 2016 | 8 | 3 | Components |
| Penlink AB, Sweden | October, 2016 | 25 | 5 | Components |
| Itek AS, Norway | November, 2016 | 65 | 13 | Industrial Process |
| Carmac Inc (assets and liabilities), USA | December. 2016 | 10 | 2 | Power Solutions |
| Sensor Companies, Sweden | January, 2017 | 160 | 30 | Components |
| Vallentin Elektronik A/S, Denmark | January, 2017 | 20 | 4 | Components |
| EX-Tekniikka Oy, Finland | March, 2017 | 20 | 3 | Components |
| Dovitech A/S, Denmark | April, 2017 | 100 | 5 | Components |
| Craig & Derricott Holdings Ltd, Great Britain | April, 2017 | 110 | 90 | Power Solutions |
| Altitech A/S, Denmark | June, 2017 | 15 | 5 | Components |
| (Batteriunion i Järfälla AB, Sweden) | (June, 2017) | (140) | (16) | (Power Solutions) |
| Mobile Control Systems Companies, Belgium | October, 2017 | 50 | 17 | Power Solutions |
| Ingenjörsfirma Pulsteknik AB, Sweden | November, 2017 | 50 | 10 | Components |
| Sensor ECS A/S, Denmark | November, 2017 | 155 | 9 | Components |
| Fintronic Oy (assets and liabilities), Finland | December, 2017 | 7 | 1 | Components |
| STIGAB Stig Ödlund AB, Sweden | December, 2017 | 115 | 12 | Components |
| Finn-Jiit Oy, Finland | January, 2018 | 40 | 10 | Components |
| 2 Wave Systems AB, Sweden | January, 2018 | 16 | 2 | Components |
| IPAS AS, Norway | January, 2018 | 40 | 10 | Energy |
| * Refers to assessed condition at the time of acquisition and disposal, respectively, on a full-year basis. | ||||
The amount of contingent consideration depends on future results achieved in the companies. The estimated outcome of the year's acquisitions amounts to SEK 146 million, which is due for payment within one to four years. The amounts are estimated to be able to reach a maximum total of SEK 178 million. Of the contingent consideration not yet paid for acquisitions during the period, the discounted value amounts to SEK 138 million.
Transaction costs for acquisitions that resulted in an ownership transfer during the period, amounted to SEK 6 million (7) and are reported under Selling expenses.
During the period contingent consideration was net revalued by SEK 8 million (5). The impact on profits is 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:
| Carrying amount at acquisition date | Adjustment to fair value | Fair value | |
|---|---|---|---|
| Intangible non-current assets | 0 | 300 | 300 |
| Other non-current assets | 9 | - | 9 |
| Inventories | 54 | - | 54 |
| Other current assets | 171 | - | 171 |
| Deferred tax liability/tax asset | -1 | -65 | -66 |
| Other liabilities | -148 | -8 | -156 |
| Acquired net assets | 85 | 227 | 312 |
| Goodwill | 292 | ||
| Non-controlling interests | - | ||
| Consideration 1) | 604 | ||
| Less: cash and cash equivalents in acquired businesses | -41 | ||
| Less: consideration not yet paid | -184 | ||
| Effect on the Group’s cash and cash equivalents | 379 | ||
| 1) The consideration is stated excluding acquisition expenses. | |||
Parent Company
Parent Company net sales amounted to SEK 44 million (39) during the period and profit after financial items was SEK -13 million (-11). Net investments in non-current assets were SEK 0 million (0). The Parent Company's net financial debt was SEK 43 million (89) 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. Work with the new standards introduced in 2018, IFRS 9 Financial Instruments and IFRS 15 Revenue from contracts with customers, is proceeding according to plan. Our conclusion is that these standards will not have any significant effects that affect the balance sheet and income statement. 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 performance 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 17.
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.
Nomination committee
The 2017 Annual General Meeting authorised the Board Chairman to establish a nomination committee for upcoming elections to the Board, by appointing members among representatives of the five shareholders who controlled the largest number of votes in the Company at 31 December 2017, to serve with the Chairman on the nomination committee. In accordance with the above, the committee comprises these appointed members: Anders Börjesson (Chairman of the Board), Tom Hedelius, Åsa Nisell (appointed by Swedbank Robur Fonder), Martin Wallin (appointed by Lannebo Fonder) and Johan Strandberg (appointed by SEB Investmant Management). Information on how to contact the committee is available on the Addtech website.
Significant events after the end of the period
On 2 January 2018, Finn-Jiit Oy, Finland, was acquired to become part of the Components business area. Finn-Jiit delivers customised subsystems in the field of machine components and flow technology. The business is mainly focused on the Nordic OEM market. The company has sales of around EUR 4 million, and ten employees.
On 2 January 2018, 2 Wave Systems AB, Sweden, was acquired to become part of the Components business area. 2 Wave Systems offers fibre and copper testing tools, and primarily has installation and telecom companies and network owners as customers. The company has sales of around SEK 16 million, and two employees. The operations will become part of an existing company.
On 3 January 2018, IPAS AS, Norway, was acquired to become part of the Energy business area. IPAS is a well established supplier of products and solutions within professional lighting to in Norway. The company is established in the segments industrial lighting, outdoor lighting and indoor lighting. The products are sold to installers, wholesalers, industry and municipalities. The company has sales of around NOK 40 million, and ten employees.
Stockholm 6 February 2018
Johan Sjö
CEO and President
This report has not been subject to review by the company's auditor.
FURTHER INFORMATION |
PublicationThis information is information that Addtech AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out below, at 8.15 a.m CET on 6 February 2018. Future information2018-05-15 Year-end report 1 April 2017 - 31 March 2018 For further information, please contact:Johan Sjö, CEO and President, +46 8 470 49 00 |