R ATOS ANNUAL REPORT 2016 Contents REVIEW OF 1 The year in brief 2 This is Ratos CEO’s OPERATIONS 3 Ratos’s portfolio COMMENTS 4 4 CEO’s comments 6 2016 in 5 minutes 8 Vision, business concept, investment strategy and targets 10 Ratos as owner 15 Sustainable development 20 We at Ratos 24 Ratos share data 26 Companies overview COMPANIES 28 Aibel 29 airteam 30 Bisnode ACTIVE OWNERSHIP 31 DIAB 10 IN PRACTICE 32 GS-Hydro 33 Gudrun Sjödén Group 34 HENT 35 HL Display 36 Jøtul 37 KVD 38 Ledil 39 Nebula 40 Oase Outdoors 41 Plantasjen 42 Serena Properties 43 Speed Group 44 TFS SUSTAINABLE DEVELOPMENT 45 Financial statements – Contents 15 DIRECTORS’ 46 Directors’ report REPORT 50 Chairman’s letter 51 Corporate governance report 60 Board of Directors and CEO 62 Consolidated income statement 62 Consolidated statement of comprehensive income 63 Consolidated statement of financial position 64 Consolidated statement of changes in equity 65 Consolidated statement of cash flows 66 Parent company income statement 66 Parent company statement of comprehensive income 67 Parent company balance sheet 68 Parent company statement of changes in equity 69 Parent company cash flow statement ORGANISATION 70 Index to the notes 20 71 Notes to the financial statements 116 Auditor’s report 119 Additional information – Contents FURTHER 120 Five-year summary, Group INFORMATION 121 Definitions 122 GRI Index 124 Shareholder information OUR 26 COMPANIES The year in brief 2016 was an intensive year for Ratos. In total, five company acquisitions were made and agreements were signed for the full or partial divestment of four companies, while one IPO was carried out. In addition, our portfolio companies undertook several value-generating initiatives and Bisnode, airteam and TFS have made key add-on acquisitions. Some of our companies operate under challenging market conditions. Subsequently, impairments were made of the book values in six companies to better reflect the companies’ market situation. In total, the impairments of investments in associates and goodwill attributable to the owners of the parent amounted to approximately SEK 1.9 billion. 2016 marked Ratos’s 150th anniversary, evidence of a long history of operational development och community involvement. In April, Jonas Wiström took over as new Chairman of the Board and in November, Magnus Agervald assumed the position of Ratos’s new CEO. Read more about the eventful year on pages 4-5 and about the development of our company portfolio on pages 6-7. 18 companies with SEK 38 billion in total sales, LAN IN D F SEK 2.3 billion in adjusted EBITA, W C R A O Y O 4 S N M I E PA N C EDE 14,500 employees, W N O 5 S S M I E 1 PA N C 5 new acquisitions and O 7 S M I E 2 PA N 5 company divestments NMAR E K 1 Includes the acquisition of Serena Properties (completed in 2016), airteam, Oase Outdoors, D Gudrun Sjödén and Plantasjen. 2 C Includes the divestment of Euromaint, Mobile Climate Control and a large part of O 2 S M I E Biolin Scientific, as well as the IPO of Arcus (Ratos maintains a holding of approximately 24%). PA N In 2016, an agreement was concluded for the sale of AH Industries. Dividends* Return (IRR) Exit gains SEK2.00 15% SEK1,672 m per Class A and B share average per last 5 years from companies * Proposed dividend for 2016 Earnings trend 2016 2015 2014 2013 2012 Profit before tax -890 892 1,367 1,083 767 of which, Profit/share of profits from companies 295 664 392 602 -29 of which, Exit gains portfolio companies 1,672 1,101 1,390 895 978 of which, Impairment portfolio companies * -1,895 -565 -250 -308 -375 Earnings per share after dilution -1.79 1.29 3.22 2.13 1.90 Equity (attributable to owners of the parent) 11,283 12,882 14,027 13,778 12,353 * Attributable to owners of the parent. 150 years of operational development and community involvement The year in brief Ratos Annual Report 2016 1 This is Ratos Ratos is an investment company that acquires, develops and divests primarily unlisted Nordic companies. The common denominator for the companies that Ratos acquires is a clear development potential with focus on growth and profitability. VISION Ratos will be the best at developing companies in the Nordic region INVESTMENT STRATEGY Ratos invests mainly in unlisted medium-sized Nordic which Ratos and the companies can together identify and companies with clear development potential. The enter- then realise a potential. Ratos’s investment interval spans prises should have an established business model through from SEK 250m up to SEK 5 billion in equity. RATOS’S BUSINESS MODEL ACQUISITIONS DEVELOPMENT DIVESTMENT Medium-sized companies Ratos’s goal is to generate value by developing Ratos has a flexible ownership with clear potential for successful companies. We lend the horizon and stays on as owner 2. development, tested business innovativeness, experience, expertise, Foc as long as we contribute to the us models and employees with contacts and capital needed to real- s cr o development of the company e ea n lu t strong drive are interesting ise the potential of the companies a io v and meet our return target. V a . n l u 1 investment opportunities for in which we invest. Our primary e We endeavour to combine long- Ratos. Ratos primarily invests focus is to work together with term sustainable growth with the in unlisted companies in the the companies’ executive DEVELOPMENT highest possible return. MODEL e Nordic countries and ideally management to increase growth c 4 n . T a in partnerships with entrepre- and improve profitability. That n o r o e neurs and other stakeholders the companies develop in terms l b v o Go who see the advance of our of environmental, climate and social x 3. flexible ownership horizon and sustainability is a prerequisite for long- active ownership model. term economic value creation. FINANCIAL TARGETS Company-specific return target (IRR) of a minimum 15% R ATOS’S VALUES Entrepreneurial since we encourage Committed and dedicated in our Responsible since we have high demands original approaches, curiosity and harness businesses, companies and the people who lead on business ethics and weigh in the conse- opportunities, conduct business and build and work at Ratos and its companies. quences of the decisions we are involved in for companies. people and the environment. 2 Ratos Annual Report 2016 This is Ratos Ratos’s portfolio Ratos’s portfolio consists of 18 medium-sized Nordic companies and the largest segments in terms of sales are Consumer goods/Commerce, Construction and Energy. A detailed description of each company is presented on pages 26-44. SALES BREAKDOWN BY SEGMENT – CONSUMER GOODS/COMMERCE – Plantasjen The Nordic region’s leading chain for sales of plants and gardening accessories with more than 120 stores in Norway, Sweden and Finland and a primary focus on consumers. Arcus A leading supplier of wine and spirits in the Nordic region through its own brands and well-known agency brands. Gudrun Sjödén Group International design company with a unique, colourful style and clear sustainability profile. 34% Jøtul One of Europe’s largest manufacturers of stoves and fireplaces with global distribution through its own sales organisations and via distributors. HL Display An international supplier of products and solutions for in-store communication and merchandising. Oase Outdoors Designs, produces and sells high-quality camping and outdoor equipment. – CONSTRUCTION – HENT A construction company that focuses on newbuild of public and commercial real estate in the Nordic countries. 25% airteam Supplier of high-quality, effective ventilation solutions in Denmark. – ENERGY – Aibel Norwegian supplier of maintenance and modification services as well as new construction projects in oil, gas and renewable energy. 14% – TECHNOLOGY, MEDIA, TELECOM – Bisnode A leading European data and analytics company. By transforming data into insight, Bisnode helps decision makers to make smart decisions. KVD Sweden’s largest independent online marketplace offering broker services for second-hand vehicles and related services. 12% Nebula A provider of cloud-based services, IT infrastructure and network services to small and medium-sized enterprises in Finland. – INDUSTRIALS – Diab A global company that manufactures and develops core material for sandwich composite structures including blades for wind turbines. Ledil A leading global supplier of high-quality secondary optics for LED lighting. 10% GS-Hydro Global supplier of non-welded piping solutions. The products are used in the marine and offshore industries, among others. – CORPORATE SERVICES – Speed Group Supplier of logistics, staffing and production services, with comple- 2% mentary services in recruitment and training. – HEALTH CARE – TFS A global service company that performs clinical trials on behalf of 2% pharmaceutical, biotechnology and medical device industries. – REAL ESTATE – Serena Properties A commercial retail properties in Finland with tenants in grocery and 1% discount retail. Adjusted for the size of Ratos’s holding. Ratos’s portfolio Ratos Annual Report 2016 3 CEO’s comments An eventful and transaction- intense anniversary year 2016 was an unusually eventful year for Ratos. The year marked the celebration of Ratos’s 150th anniversary, and its long, noteworthy history of operational development and community involvement. In addition, a new chairman and new CEO joined Ratos. The Annual General Meeting elected Jonas Wiström Chairman and I, Magnus Agervald, assumed my position as CEO for Ratos in November. The year was also one of the most transaction-intense ever in the company’s history. Ratos concluded a total of five new acquisitions, signed agreements to divest four companies, in full or in part, and con- ducted an IPO of one company.