Future prospects and events after the reporting period

Future prospects

The business situation improved gradually during the financial year, but demand continues to vary between the different segments and geographic areas in which we operate. In Q4 demand improved further in Sweden and Denmark, and we expect to see some recovery in industry in these markets in coming years. The operations in Norway and Finland are observing some unease in several segments, and in these markets we expect a more modest growth rate in general in the coming year. Growth for companies outside the Nordics is expected to be stable. Our companies, which are run independently using a freedom with responsibility approach, have shown that they are able to rapidly adapt to changes in their various markets. Based on the market situation, some of our companies will implement activities to adapt their costs and working capital, while other companies will earmark extra resources with which to develop their operations. We are also continuing to actively attract new companies that are seeking a new long-term owner that can further develop their operations.

Historically, the combination of organic growth in our companies and new acquisitions has given the Group favourable opportunities for growth. This has resulted in strong cash flow and, teamed with a robust financial position, we expect continued good future opportunites. The Group's goal is earnings growth of at least 15 percent per year over a business cycle, combined with profitability.

Events after the reporting period

The Group's organisational structure which has been in place since 2008 with business areas in which Group companies are grouped into different market segments (business units), has been good for cooperation between the companies, but also successful as we have had a focused acquisition strategy in order to further reinforce our positions in various market segments.

As of the start of the new financial year the Group implemented a reorganisation, meaning that we formed a fifth business area, moved a number of business units between our business areas and appointed two new business area managers from within the company, who also became part of Group Management. The aim of the organisational change is to achieve greater potential for growth and efficiency, both through cooperation between companies and through further acquisitions. The reorganisation is a result of the recent years' operational development, new contacts between companies in the Group and new opportunities created by acquired companies. The reorganisation did not affect the Components business area. As of the first quarter of 2015/2016, reporting for the Group will be according to the new structure. Note 5 contains segment reporting pro forma based on the new structure.

On 1 April Johan Dyberg became the business area manager of Industrial Process (previously Industrial Solutions). He succeeds Håkan Franzén who will retire. Johan Dyberg had previously been a business unit manager at Addtech since 2012. On 1 April Niklas Stenberg became the business area manager of the new business area, Power Solutions. Niklas Stenberg had previously been a business unit manager at Addtech since 2010. Both Johan and Niklas are part of Group Management since 1 April.

Two Company acquisitions took place after the end of the reporting period.

On 1 April Addtech acquired Dafine Engineering Oy to become part of the Energy business area. Dafine is a technology trading company that markets and sells equipment for cable harness manufacturing such as machines, accessories and testing systems. The Company has 4 employees and sales of about EUR 2,5 million.

On 4 June an agreement were signed to acquire all shares in Mediplast AB. Mediplast AB is the parent company of the Mediplast Group and is a leading Nordic supplier of medical technology equipment and consumables. The company has its head offices in Malmö and pursues operations via its own trading companies in Sweden, Denmark, Finland, Norway and the Netherlands. Mediplast also has its own production facilities in Denmark, Finland and Italy. The company holds a strong position in the Nordic countries and markets both its own products as well as those of leading suppliers in the areas of surgery, intensive care, thorax/neuro, ENT and ostomy care. Mediplast’s customers operate in both the private and public sectors. In the 2014 financial year, the Mediplast Group generated sales totalling approximately SEK 465 million, an operating profit before amortisation of intangible assets (EBITA) of around SEK 45 million and had roughly 120 employees. The total purchase consideration of the acquisition of Mediplast amounts to approximately SEK 480 million. Of the total purchase consideration for Mediplast, roughly 50 percent will be paid in cash and 50 percent through an issue in kind in the parent company that owns the companies in Addtech’s Life Science business area.

The acquisition analyses are not yet complete and will be presented in the next interim period.

In connection with the acquisition of the Mediplast Group, the Board of Directors of Addtech has decided to initiate the process of a separate listing on Nasdaq OMX Stockholm by distributing the shares in the Life Science’s operations to Addtech’s shareholders. The ambition is to carry out the listing in the first half of 2016. The motive for a separate listing is that Life Science has achieved a size and level of profitability that makes the business attractive as an independent, listed company. Life Science is today one of the leading independent suppliers in the Nordic region on its markets and the addition of Mediplast will mean that sales will exceed SEK 1,500 million.

Proposed allocation of earnings

See "Financial Statements" for details.

Latest updated: 7/14/2015 2:02:51 PM by martin.almgren@addtech.com