Administration Report

1 april 2014 - 31 march 2015

The Board of Directors and the CEO of Addtech AB, company ID number 556302-9726, hereby submit the annual accounts and consolidated financial statements for the 2014/2015 financial year.

Market trend during the year

On the whole, the business climate for the 2014/2015 financial year stabilised and improved compared to the most recent financial years, which were more hesitant and uneven with major variations between different parts of our operations. Overall, the Group is reporting growth in both sales and profit. This growth comes primarily from acquisitions. The business situation gradually improved during the year, but demand continues to vary between product segments, customer segments, geographic areas and companies.

Demand for our operations in Sweden and Denmark was generally better than in the preceding year. We also continued to experience positive development in both Finland and Norway, despite underlying unease in several segments in those markets. In our markets outside the Nordics the business situation was positive from an overall perspective, but weakened somewhat in Q4.

The market situation for operations in the Components and Industrial Solutions business areas gradually improved during the year. Demand for production components from Nordic manufacturing companies increased, and several of our operations report sound organic growth in both sales and profit. The market situation for the Energy business area was stable during the year, but organic growth decreased, which is entirely attributable to weaker demand for projects in electricity transmission compared to the preceding year. Demand for the Life Science business area developed well during the year, but the business area’s profit was affected by low profitability in certain process technology projects.

Key events during the year

The Group continued to work actively on measures that affected the costs and working capital of the operations that have experienced a weaker business situation. In parallel we actively invested resources in boosting other operations in the Group. There was a focus on further developing the various operations and carrying out acquisitions in selected segments and niches. Nine acquisitions were implemented in our business areas during the year.

The growth in sales and profit in the Group during the financial year generated a positive impact on profit. Organic growth was favourable in the Components, Industrial Solutions and Life Science business areas. Overall, the Energy business area did not match the robust growth of the preceding year, which is entirely attributable to electricity transmission projects. The profit for the year, combined with our focus on working capital, resulted in good cash flow and a strong financial position, which creates good future opportunities.

Performance by quarter

• First quarter. During Q1 business was relatively stable on the whole, but the market variations in terms of geographic areas, customer segments and product segments prevailed from previous years. Demand for production components from Nordic manufacturing companies in the Components and Industrial Solutions business areas was slightly more positive. Customers in the vehicle, engineering and electronics industries remained hesitant, while other customer segments developed more favourably. The Energy business area experienced a largely stable business climate,  but is adversely affected by lower demand for products for electric power distribution and transmission. In general, demand for the Life Science business area developed well. In total, the Group's sales for comparable units decreased slightly compared to the strong first quarter of the preceding year.
• Second quarter. During Q2 the business situation was further stabilised, but some geographic markets and customer segments continued to display uncertainty and volatile demand. Growth in sales and profit during Q2 was both organic and from previously implemented acquisitions. Net sales for comparable units rose by 3 percent during the second quarter. Demand from Nordic manufacturing companies improved for the Components business area in the second quarter, while the Industrial Solutions business area experienced subdued demand in certain customer segments and product segments. In the Energy business area we saw an improved business situation and above all a recovery in products for electric power distribution and transmission. Demand in Life Science continued to develop well.
• Third quarter. With good organic growth in all business areas and contributions from previously implemented acquisitions, the Group reported growth in both sales and profit during Q3. Generally speaking, the business situation was relatively stable and unchanged compared to the first six months of the financial year. Organically, net sales rose by 4 percent in Q3. On the whole demand from the Group's operations improved somewhat in Sweden and Denmark. In both Finland and Norway unease remained in several market segments, but in spite of this, our operations continued their positive development in these countries. Demand improved for the Components and Industrial Solutions business areas. The business situation was somewhat subdued in the Energy business area and despite falling sales in process technology, the Life Science business area continued to develop well overall thanks to increased demand from Nordic healthcare.
• Fourth quarter. All in all, business during Q4 was relatively stable for the Group. Demand improved for the Group's operations in Sweden and Denmark during the quarter. We continued to experience positive development in both Finland and Norway, despite prevailing unease in several segments in those markets. Demand was slightly subdued for the Group's companies that operate in markets outside the Nordics. The market for the operations in the Components and Industrial Solutions business areas developed well during the quarter. Organic growth for the Energy business area decreased in Q4, which is entirely attributable to weaker demand for projects in electricity transmission compared to the same quarter in the preceding year, which was very strong. On the whole demand for the Life Science business area developed positively, but the business area's profit is affected by certain process technology operations.