Other Financial information
Profitability, financial position and cash flow
The return on equity at the end of the financial year was 29 percent (28), and return on capital employed was 21 percent (22). Return on working capital P/WC (EBITA in relation to working capital) amounted to 53 percent (53).
At the end of the financial year the equity ratio amounted to 36 percent (39). Equity per share, excluding non-controlling interest, totalled SEK 36.80 (31.10). The Group's net debt at the end of the year amounted to SEK 1,700 million (1,176), excluding pension liabilities of SEK 260 million (229). The net debt/equity ratio, calculated on the basis of net debt excluding provisions for pensions, amounted to 0.7 (0.6).
Cash and cash equivalents consisting of cash and bank equivalents and approved but non-utilised credit facilities amounted to SEK 566 million (573) at 31 March 2019. Additional credit facilities totalling SEK 600 million were granted before the end of the financial year. These were made available on 1 April 2019, when SEK 100 million was also repaid. Addtech consequently had a further SEK 500 million available at 1 April 2019 in addition to the credit facilities recognised.
Cash flow from operating activities amounted to SEK 524 million (539) during the financial year. 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 645 million 477). Investments in non-current assets totalled SEK 94 million (54) and disposal of non-current assets amounted to SEK 12 million (7). Dividend from associated company amounted to SEK 2 million (4). Repurchase of treasury shares amounted to SEK 38 million (31) and repurchase of call options amounted to SEK 11 million (5). Exercised and issued call options totalled SEK 33 million (36). Dividends paid to the shareholders of the Parent Company totalled SEK 269 million (235), corresponding to SEK 4.00 (3.50) per share.
At the end of the financial year, the number of employees was 2,759, compared to 2,358 at the beginning of the financial year. During the financial year, implemented acquisitions and the disposal increased the number of employees by 271. The average number of employees in the latest 12-month period was 2,590.
At the end of the financial year the share capital stood at 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||100.0||100.0|
|Of which repurchased class B shares||1,141,387||1.7||1.2|
|Total number of shares after repurchases||67,057,109|
Addtech has four outstanding call option programmes, se table below. Call options issued on repurchased shares entail a dilution effect of about 0.2 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|
|2018/2022||300,000||300,000||0.4%||232.90||-||6 Sep 2021 - 3 Jun 2022|
|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||199,100||244,893||0.4%||154.50||125.10||17 Sep 2018 - 3 Jun 2019|
During the period 1 April to 31 December 2018, the following acquisitions have been completed; Synthecs-group, Scanwill Fluid Power ApS and Willtech ApS, Fibersystem AB and Diamond Point International (Europe) Ltd to become part of the Components business area, Xi Instrument AB, Duelco A/S, Prisma Teknik AB and Prisma Light AB to become part of the Energy business area, KRV AS, TLS Energimätning AB, Nordautomation Oy and Wood Recycling Sweden AB to become part of the Industrial Process business area and Power Technic ApS to become part of the Power Solutions business area. The Group has also sold Solar Supply System AB, formerly part of the Power Solutions Business Area.
On 2 January, Nylund Industrial Electronics, Finland, was acquired to become part of the Components business area. The company has sales of about EUR 3.4 million and 3 employees. The operations will become part of an existing company.
On 29 January, Birepo A/S, Denmark, was acquired to become part of the Components business area. Birepo A/S develops and delivers customized locks and security solutions under its own brand. The business is mainly focused on industrial applications, infrastructure, energy and transportation. The company has sales of about DKK 25 million and 10 employees.
The purchase price allocation calculations for the acquisitions completed during the period 1 April 2017 – 31 March 2018 have now been finalised. No significant adjustments have been made to the calculations. Acquisitions completed as of the 2017/2018 financial year are distributed among the Group’s business areas as follows:
|Acquisitions (disposals)||Closing||Net sales,
|Number of employees*||Business Area|
|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|
|Synthecs Group, Netherlands**||April, 2018||145||50||Components|
|Xi Instrument AB, Sweden||April, 2018||13||2||Energy|
|KRV AS, Norway||April, 2018||55||27||Industrial Process|
|Scanwill Fluid Power ApS, & Willtech ApS, Denmark||April, 2018||15||4||Components|
|Duelco A/S, Denmark||July, 2018||150||30||Energy|
|Prisma Teknik AB and Prisma Light AB, Sweden||July, 2018||70||27||Energy|
|Fibersystem AB, Sweden**||July, 2018||140||12||Components|
|TLS Energimätning AB, Sweden||July, 2018||50||9||Industrial Process|
|Diamond Point International (Europe) Ltd, Great Britain**||July, 2018||40||9||Components|
|Power Technic ApS, Denmark||July, 2018||50||6||Power Solutions|
|(Solar Supply Sweden AB, Sweden)||(August, 2018)||(80)||(5)||(Power Solutions)|
|Nordautomation Oy, Finland||September, 2018||155||85||Industrial Process|
|Wood Recycling Sweden AB, Sweden||October, 2018||7||2||Industrial Process|
|Nylund Industrial Electronics (assets and liabilities), Finland||January, 2019||35||3||Components|
|Birepo A/S, Denmark||January, 2019||35||10||Components|
|Omni Ray AG, Switzerland||April, 2019||330||65||Automation|
|Thurne Teknik AB, Sweden||April, 2019||100||19||Industrial Process|
|AB N.O. Rönne, Sweden||April, 2019||8||4||Industrial Process|
|Best Seating Systems Walter Tausch GmbH, Austria||May, 2019||23||5||Power Solutions|
|* Refers to assessed condition at the time of acquisition and disposal, respectively, on a full-year basis.|
|**As of April 1, 2019, the company belongs to the Automation business area.|
If all acquisitions during the financial year had been completed on 1 April 2018, their impact would have been an estimated SEK 870 million on Group net sales, about SEK 60 million on operating profit and about SEK 45 million on profit after tax for the period.
Addtech normally employs an acquisition structure comprising basic purchase consideration and contingent purchase consideration. The outcome of contingent purchase considerations is determined by the future results achieved in the companies and is subject to a set maximum level. Of considerations not yet paid for acquisitions during the financial year, the discounted value amounts to SEK 85 million. The contingent purchase considerations fall due for payment within three years and the outcome is subject to a maximum of SEK 113 million. If the conditions are not fulfilled, the outcome may fall within the range of SEK 0-113 million.
For acquisitions that resulted in an ownership transfer during the financial year, transaction costs totalled SEK 7 million (6) and are reported under selling expenses.
During the financial year contingent consideration was net revalued with SEK 8 million (9). The impact on profits is recognised in 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 year:
|SEK, m||Carrying amount at acquisition date||Adjustment to fair value||Fair value|
|Intangible non-current assets||10||327||337|
|Other non-current assets||61||2||63|
|Other current assets||281||-||281|
|Deferred tax liability/tax asset||-6||-69||-75|
|Acquired net assets||192||245||437|
|Less: cash and cash equivalents in acquired businesses||-96|
|Less: consideration not yet paid||-83|
|Effect on the Group’s cash and cash equivalents||564|
|1) The consideration is stated excluding acquisition expenses.|
Parent Company net sales amounted to SEK 62 million (58) and profit after financial items was SEK -16 million (-11). Net investments in non-current assets were SEK 0 million (0). The Parent Company's net financial liability was SEK 175 million (69) at the end of the period.
This interim report was prepared in accordance with IFRS and IAS 34 Interim Financial Reporting. Disclosures under IAS 34.16A are made not only in the financial statements, with associated notes, but also in other parts of the interim report. The interim report for the parent company was prepared in accordance with the Swedish Annual Accounts Act and the Swedish Securities Market Act, which complies with recommendation RFR 2 Accounting for Legal Entities, issued by the Swedish Financial Reporting Board. The same accounting policies and basis for calculations as in the latest annual report have been applied in this interim report, with the exception of the amended accounting policies described below.
IFRS 9, Financial Instruments, deals with classification, measurement and recognition of financial assets and liabilities and introduces new rules for hedge accounting. It has been applied with effect from 1 April 2018. IFRS 9 introduces, for example, a new model for recognition of impairment losses that is based on expected credit losses and that takes forward-looking information into account. During 2017/2018, Addtech analysed the impact, if any, on introduction of the new standard. The new impairment recognition model has not had any material impact on the Group’s financial position, based on historical information regarding bad debts. Because the Group does not use hedge accounting, the relevant parts of IFRS 9 do not affect Addtech's financial statements.
IFRS 15, Revenue from Contracts with Customers, introduces new requirements for recognition of revenue. The Group began to apply the standard as of 1 April 2018 with the forward-looking retroactive transition method under IFRS 15. An analysis of the impact of IFRS 15 in the Group was carried out in 2017/2018. The conclusion from the analysis was that IFRS 15 will not have any impact on accrual accounting of the Group’s revenue. IFRS 15 introduces increased disclosure requirements – see table Net sales by the subsidiaries geographical location, under the heading Disaggregation of revenue. This table presents a disaggregation of the Group’s revenue and was initially introduced in the interim report for the first quarter of 2018/2019. At the end of the financial year, the Group’s judgement is that no changes are necessary in the analyses relating to IFRS 9 and IFRS 15 presented in the 2017/2018 Annual Report.
From 1 January 2019 IFRS 16 Leases replaces the current standard IAS 17 Leases and related interpretations IFRIC 4, SIC 15 and SIC 27. IFRS 16 involves the majority of all leases being recognised in the balance sheet. Addtech has analysed and assessed the Group’s leases and analysed the impact of the transition to IFRS 16, which takes place for the 2019/2020 financial year starting on 1 April 2019.
Addtech will apply the simplified transition method, which means that comparative information from previous periods will not be published. Lease liabilities consist of the discounted remaining lease payments at 1 April 2019. Right-of-use assets for all leases total an amount corresponding to lease liabilities adjusted for prepaid or accrued lease payments recognised in the balance sheet at the initial date of application. The transition to IFRS 16 therefore does not have any impact on equity.
Addtech’s leases currently consist of rented premises, vehicles and other leases (e.g. lease of production equipment, office equipment and other assets that separately are not deemed material). Upon transition to IFRS 16 these will be recognised in the balance sheet, which will result in an increase in the Group’s total assets because right-of-use assets and lease liabilities are included. Those lease payments that were previously recognised as operating expenses will be replaced by depreciation costs for rights of use recognised in operating profit/loss and interest on lease liabilities recognised as a finance cost. Lease payments are divided between repayment of lease liabilities and payment of interest.
Addtech has opted to apply the relief rule for leases of less than 12 months and for leases in which the underlying asset is of low value. Leases that end within 12 months from transition but that originally had a term of more than 12 months will not be included in the calculation of lease liabilities and right-of-use assets. These will therefore not be included in the amounts recognised in the balance sheet and will instead continue to be recognised as operating expenses in the income statement. In assessing the term of leases, where there are extension and cancellation options both business strategy and lease-specific conditions are considered to establish whether the Group is reasonably certain of using them.
As a result of the transition to IFRS 16, the net present value of all remaining lease payments has been calculated applying the incremental borrowing rate. The transition impact on the balance sheet at 1 April 2019 will result in an addition of right-of-use assets to total assets of SEK 550 million. To total liabilities an additional lease debt of SEK 550 million will be added of which long-term liabilities amount to SEK 408 million and short-term liabilities amount to SEK 142 million.
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 and reconciliation tables of the performance measures that Addtech uses, please see page 24-28.
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. Addtech has four operating subsidiaries within the UK as well as a few other subsidiaries doing business with the UK. The effects of Brexit are to this date unknown, but all affected subsidiaries are closely monitoring the developments. Addtech Group’s total exposure to possible negative effects from Brexit are not considered material. Beside this, risks and uncertainty factors are the same as in previous periods, please see section Risks and uncertainties (page 38-40) in the annual report for 2017/2018 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.
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.
Annual report 2018/2019
The annual report for 2018/2019 will be published on Addtech’s website www.addtech.com in July 2019. A printed version will be distributed to the shareholders who request this.
Annual General Meeting 2019
The Annual General Meeting (AGM) of Addtech AB will take place at 1:00 p.m on Thursday 29 August 2019 at IVA at the address Grev Turegatan 16 in Stockholm. A notice of the AGM will be published in July 2019 and will also be available on www.addtech.com.
The Board of Directors proposes dividend of SEK 5.00 (4.00) per share, which corresponds to a dividend payment of about SEK 336 million (268), which is in line with Addtech's dividend policy with the objective of a dividend that exceeds 30 percent of average Group profit after tax over a business cycle.
Significant events after the end of the financial year
On 1 April, Omni Ray AG, Switzerland, was acquired to become part of the Automation business area. Omni Ray AG is a Zürich-based technical trading company and service provider with a strong position on the Swiss market for automation solutions, mainly focused on industrial applications, infrastructure, transportation and medical industry. The company has a sales of about CHF 36 million and 65 employees.
On 1 April, Thurne Teknik AB, Sweden, was acquired to become part of the Industrial Process business area. Thurne Teknik is a leading supplier of components, equipment and advanced process systems to primarily the chemical and the pharmaceutical industry in the Nordic and Baltic regions. The company has sales of about SEK 100 million and 19 employees.
On 1 April, AB N.O. Rönne, Sweden, was acquired to become part of the Industrial Process business area. N.O.Rönne’s main business is manufacturing of customized gaskets and seals by punching and cutting. The company has sales of about SEK 8 million and 4 employees.
On 6 May, Beat Seating Systems Walter Tausch GmbH, Austria, was acquired to become part of the Power Solutions business area. The company is a niche player that supplies ergonomic driver's seats and peripheral components for trains, busses and off-highway machines in Central Europe. The company has sales of about EUR 2.1 million and 5 employees.
Stockholm, 15 May 2019
President and CEO
This 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 15 May 2019.
July 2019 Annual report 2018/2019
For further information, please contact:
Niklas Stenberg, CEO and President, +46 702 679 499