OTHER FINANCIAL INFORMATION
Profitability, financial position and cash flow
The return on equity at the end of the period was 29 percent (29), and return on capital employed was 21 percent (23). Return on working capital P/WC (EBITA in relation to working capital) amounted to 53 percent (53).
At the end of the period the equity ratio amounted to 33 percent (36). Equity per share, excluding non-controlling interest, totalled SEK 31.40 (25.70). The Group's net debt at the end of the period amounted to SEK 1,953 million (1,135), excluding pension liabilities of SEK 252 million (218). The net debt/equity ratio, calculated on the basis of net debt excluding provisions for pensions, amounted to 0.9 (0.6).
Cash and cash equivalents consisting of cash and bank equivalents and approved but non-utilised credit facilities amounted to SEK 378 million (529) at 30 September 2018.
Cash flow from operating activities amounted to SEK 145 million (136) during the period. Company acquisitions and disposals including settlement of contingent consideration regarding acquisitions implemented in previous years amounted to SEK 500 million (140). Investments in non-current assets totalled SEK 28 million (16) and disposal of non-current assets amounted to SEK 5 million (1). Dividend from associated company amounted to SEK 2 million (3). Repurchase of treasury shares amounted to SEK 38 million (31) and repurchase of call options amounted to SEK 11 million (0). Exercised call options totalled SEK 18 million (21). During the second quarter, dividend of SEK 4.00 (3.50) per share was paid, totalling SEK 269 million (235).
At the end of the period, the number of employees was 2,654, compared to 2,358 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 256. The average number of employees in the latest 12-month period was 2,407.
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||100.0%||100.0%|
|Repurchased class B shares||1,229,824||1.8%||1.3%|
|Total number of shares after repurchases||66,968,672|
In accordance with a resolution of the August 2018 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. Addtech has four outstanding call option programmes for a total of 1,233,330 shares. Call options issued on repurchased shares entail a dilution effect of about 0.2 percent during the latest 12-month period. During the quarter, 200,000 treasury shares were repurchased. Addtech's own shareholding is 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||271,000||333,330||0.5%||154.50||125.10||17 Sep 2018 - 3 Jun 2019|
Acquisitions and disposal
During the period, 1 April to 30 June 2018 the following acquisitions were completed, Synthecs Group, Scanwill Fluid Power ApS and Willtech ApS to became part of business area Components, Xi Instrument AB to became part of business area Energy and KRV AS became part of business area Industrial Process.
During the second quarter, seven company acquisition took place:
On 2 July, Duelco A/S, Denmark, was acquired to become part of business area Energy. Duelco is a well-established supplier of products for electrical distribution to customers in installation, industry, electric power supply, wind power and railway. The company has sales of about DKK 110 million and 30 employees.
On 2 July, Fibersystem AB, Sweden, was acquired to become part of business area Components. Fibersystem is a high-tech cyber security innovation company that develops fiber optic transmission solutions and IT security products. The company has sales of about SEK 140 million and 12 employees.
On 2 July, TLS Energimätning AB, Sweden, was acquired to become part of business area Industrial Process. TLS Energimätning delivers measurement equipment for heat, cooling and water for thermal power plants and waterworks in the Swedish, Norwegian and Danish markets. The company has sales of about SEK 50 million and 9 employees.
On 3 July, Diamond Point International (Europe) Ltd, Great Britain, was acquired to become part of business area Components. Diamond Point develops, manufactures and markets innovative embedded computer systems for demanding OEM-applications. The company has sales of about GBP 3,5 million and 9 employees.
On 3 July, Power Technic ApS, Denmark, was acquired to become part of business area Power Solutions. Power Technic is a well-established supplier of power supply products mainly for the Danish market. The company has sales of about DKK 35 million and 6 employees.
On 4 July, Prisma Teknik AB and Prisma Light AB, Sweden, was acquired to become part of business area Energy. Prisma Teknik AB is a leading supplier of advanced pedestrian crossing signals, elbow switches for demanding environments and instruments for measuring crankshaft deflection. Prisma Light AB develops and supplies LED lighting for outdoor environments. The companies have together sales of about SEK 70 million and 27 employees.
On 11 September, Nordautomation Oy, Finland, was acquired to become part of business area Industrial Process. Nordautomation is the Nordic market leader in designing, manufacturing and delivering of log handling equipment. The company has sales of about EUR 15 million and 85 employees.
On 31 August, Solar Supply System AB, Sweden, which was part of business area Power Solutions, was sold. The company has annual sales of about SEK 80 million and 5 employees.
The purchase price allocation calculations for the acquisitions completed during the period 1 April – 30 September 2017 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, SEKm*||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|
|* Refers to assessed condition at the time of acquisition and disposal, respectively, on a full-year basis.|
If all acquisitions had been completed on 1 April 2018, the impact would have been an estimated SEK 388 million on Group net sales, about SEK 21 million on operating profit and about SEK 14 million on profit after tax for the period.
Addtech normally employs an acquisition structure comprising basic purchase consideration and contingent consideration. The outcome of contingent purchase considerations is determined by the future earnings reached by the companies and is subject to a fixed maximum level. Of considerations not yet paid for acquisitions during the period, the discounted value amounts to SEK 71 million. The contingent purchase considerations fall due for payment within three years and the outcome is subject to a maximum of SEK 99 million. If the conditions are not fulfilled, the outcome may fall within the range of SEK 0-99 million.
Transaction costs for acquisitions that resulted in an ownership transfer during the period, amounted to SEK 5 million (3) and are reported under Selling expenses.
Revaluation of contingent consideration had a positive net effect of SEK 2 million (2) during the period. 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:
|Carrying amount at acquisition date||Adjustment to fair value||Fair value|
|Intangible non-current assets||9||284||293|
|Other non-current assets||60||3||63|
|Other current assets||262||-||262|
|Deferred tax liability/tax asset||-5||-63||-68|
|Acquired net assets||168||209||377|
|Less: cash and cash equivalents in acquired businesses||-91|
|Less: consideration not yet paid||-99|
|Effect on the Group’s cash and cash equivalents||467|
|1) The consideration is stated excluding acquisition expenses.|
Parent Company net sales amounted to SEK 30 million (27) and profit after financial items was SEK -11 million (-6). Net investments in non-current assets were SEK 0 million (0). The Parent Company's financial net debt was SEK 147 million (41) 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 judgement is that the new impairment recognition model had no 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 income and included for the first time in the interim report for the first quarter of 2018/2019.
At the end of the interim report period, the Group’s assessment is that no changes are necessary in the analysis relating to IFRS 9 and IFRS 15 for presentation in the 2017/2018 Annual Report.
IFRS 16 Leases will be applied as of 1 April 2019. Work on identifying and evaluating current leases and the impact of the new standard is in progress. When the standard enters into effect, Addtech will apply the modified retrospective transition method.
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 19.
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 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.
Events after the end of the period
On October 4, Wood Recycling Sweden AB, Sweden, was acquired to become part of the Industrial Process business area. Wood Recycling designs, constructs and delivers wearing and spare parts for bark shredders for the Swedish market. The company has sales of about SEK 7 million and 2 employees.
Preliminary purchase price allocations has not yet been completed.
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.
Stockholm, 25 October 2018
This report has not been subject to review by the company's auditor.
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 25 October 2018.
2019-02-07 Interim report 1 April - 31 December 2018
For further information, please contact:
Niklas Stenberg, President and CEO, +46 702 679 499