INTERIM REPORT 1 JANUARY – 30 SEPTEMBER 2017 “Strong organic growth during summer quarter!” 1 JULY – 30 SEPTEMBER 2017 (3 MONTHS) Net sales rose by 26 percent to SEK 517 million (409), of which organic growth totalled 9 percent and acquired growth totalled 18 percent. EBITA rose by 39 percent to SEK 44 million (31), corresponding to an EBITA-margin of 8.5 percent (7.7). Profit after tax rose by 22 percent and amounted to SEK 22 million (18). Cash flow from operating activities amounted to SEK 27 million (28). 1 JANUARY – 30 SEPTEMBER 2017 (9 MONTHS) Net sales rose by 25 percent to SEK 1,665 million (1,327), of which organic growth totalled 8 percent and acquired growth totalled 16 percent. EBITA rose by 37 percent to SEK 155 million (113), corresponding to an EBITA-margin of 9.3 percent (8.5). Profit after tax rose by 27 percent and amounted to SEK 80 million (63). Earnings per share amounted to SEK 3.28 (2.79). For the 12-month period, earnings per share amounted to SEK 5.29 (4.13). Cash flow from operating activities amounted to SEK 111 million (37). The equity ratio amounted to 38 percent (49). Return on working capital (P/WC) amounted to 65 percent (55). Three acquisitions have been carried out during the interim period, TM Techno Medica AB, Hepro AS and Krabat AS, with a combined annual sale of about SEK 225 million. 3 months ending 9 months ending . 12 months ending SEKm 30 Sep 17 30 Sep 16 change 30 Sep 17 30 Sep 16 change 30 Sep 17 31 Dec 16 Net sales 517 409 26 % 1,665 1,327 25 % 2,276 1,938 EBITA 44 31 39 % 155 113 37 % 231 189 EBITA-margin, % 8.5 7.7 9.3 8.5 10.1 9.7 Profit before tax 25 22 14 % 101 81 25 % 162 142 Profit for the period 22 18 22 % 80 63 27 % 129 112 Earnings per share SEK 0.88 0.72 22 % 3.27 2.79 17 % 5.29 4.87 AddLife in brief AddLife is an independent provider in Life Science that offers high-quality products, services and advice to both the private and public sector, mainly in the Nordic region. The Group is divided into two business areas: Labtech and Medtech. The Group comprises 32 operating subsidiaries that provide equipment, instruments, medical devices and reagents, as well as advice and technical support to customers primarily in healthcare, research and academia, along with the food and pharmaceutical industries. The Company is mainly active in the Nordic countries and is also represented by smaller businesses in Germany, the Benelux countries, Estonia, Italy, UK, China and USA. AddLife is the market leader in the Nordic region in several well-defined niches in the market areas of diagnostics, medical devices, biomedical research and laboratory analysis. 1 AddLife Interim report 1 January – 30 September 2017 Comments by the CEO Strong summer quarter! Sales in the quarter rose 26 percent to SEK 517 million and organic sales growth was an impressive 9 percent. EBITA rose 39 percent and the EBITA margin strengthened to 8.5 percent (7.7). Organic growth was high in the quarter, showing that our value proposition is in demand and that we are steadily capturing market share. One of our major strengths in the market is that we can offer pan-Nordic solutions for our suppliers. We serve as an independent operator and can offer our customers both high expertise and a wide range of advanced products Market trends The public debate continues on how health care and social services will manage the increased challenges of a growing and aging population with chronic diseases requiring lengthy treatment. There is clearly a growing need for active cooperation between society, research and the business community. AddLife’s value proposition for researchers, health care and home care is attractive in the market and makes a difference in terms of both new treatment options and technical aids. The business situation in Sweden has developed positively and we see increased demand for our offering. Research grants from both the public and private sectors continue to drive the growing demand in several of our companies. Life Science is a high-priority growth area in Sweden, which can also be seen in the increased interest from both the private and the public sectors. Our ever-growing range of healthcare products has enabled us to submit both larger and more tenders. During the quarter we began to streamline our warehouse and logistics function within Medtech, including the coordination of certain functions between Sweden and Denmark. Demand in Denmark has developed well in the third quarter from both health care and research. The major investments being made in Denmark in projects such as large new hospitals have increased the demand for several of our companies in both diagnostics and healthcare products. However, some caution remains from the pharmaceutical industry with respect to instrument investments. The positive trend has continued in Norway in the third quarter. Demand was robust in health care, especially within primary care and home care. The Norwegian government is investing in strengthening Life Science research in various segments, which also increased the demand for our offering. The market developed favourably in Finland for both research and diagnostic laboratories, though the healthcare sector was slightly weaker. The delay in the comprehensive health care reform has led to some uncertainty and planned investments can also be expected to be postponed as a result. Exports of our own products in health care and home care have developed well, but demand for our own advanced instruments has been weaker than expected during the quarter. The Group reorganised the management team during the third quarter in order to shorten decision-making pathways between business area managers and the CEO. The reorganisation was carried out in conjunction with the decision by the VP to leave the company. Acquisitions On 13 July, we acquired Krabat AS, which develops, designs and markets assistive equipment for children and young people with special needs. Krabat has sales of about NOK 30 million and is primarily active in Norway. During the first nine months of the year we carried out a total of three acquisitions. In addition to Krabat we acquired Techno Medica on 12 January and the Hepro Group on 1 March. Techno Medica is mainly active in enteral nutrition and in the second quarter, the company was integrated into Mediplast. The Hepro Group is one of the leading companies in Norway in home care and welfare technology. Together these two businesses are expected to contribute about SEK 225 million in annual sales. All acquisitions are included in the Medtech business area. Kristina Willgard President and CEO 2 AddLife Interim report 1 January – 30 September 2017 Group development in the quarter Net sales in the third quarter increased by 26 percent to SEK 517 million (409). Organic growth totalled 9 percent and acquired growth totalled 18 percent. Exchange rate changes had a negative effect on net sales of 1 percent, corresponding to SEK 4 million, and a negative effect on EBITA of 2 percent corresponding to SEK 1 million. EBITA increased by 39 percent to SEK 44 million (31) and EBITA-margin amounted to 8.5 percent (7.7). The increase in profit is both related to the acquisitions and to the existing companies. During the quarter, SEK 10 million has been recognized as other operating income due to estimated contingent considerations deviated from the actual outcome and costs amounting to SEK 7 million for coordination of warehousing and logistics. Net financial items amounted to SEK -1 million (1) and profit after financial items reached SEK 25 million (22). Profit after tax for the quarter increased by 22 percent to SEK 22 million (18). Group development during the interim period During the interim period net sales increased by 25 percent to SEK 1,665 million (1,327). Organic growth totalled 8 percent and acquired growth totalled 16 percent. Exchange rate changes had a positive effect on net sales of 1 percent, corresponding to SEK 20 million, and a positive effect on EBITA of 2 percent corresponding to SEK 2 million. EBITA increased by 37 percent to SEK 155 million (113) and EBITA-margin amounted to 9.3 percent (8.5). The increase in profit is related to organic growth and acquisitions. Net financial items amounted to SEK -5 million (-3) and profit after financial items reached SEK 101 million (81). Profit after tax for the interim period increased by 27 percent to SEK 80 million (63) and the effective tax rate was 21 percent (22). Development in the business areas Labtech The Labtech business area consists of 18 companies active in the market areas diagnostics, biomedical research and laboratory equipment. 3 months ending 9 months ending 12 months ending SEKm 30 Sep 17 30 Sep 16 change 30 Sep 17 30 Sep 16 change 30 Sep 17 31 Dec 16 Net sales 299 246 21 % 978 816 20 % 1,380 1,218 EBITA 25 21 21 % 99 88 13 % 161 150 EBITA-margin, % 8.6 8.6 10.2 10.8 11.7 12.3 Labtechs net sales increased in the third quarter by 21 percent to SEK 299 million (246), of which organic growth totalled 14 percent and acquired growth totalled 9 percent. EBITA increased by 21 percent to SEK 25 million (21), corresponding to an EBITA-margin of 8.6 percent (8.6). Net sales increased during the interim period by 20 percent to SEK 978 million (816), of which organic growth totalled 10 percent and acquired growth totalled 8 percent.