Our long-term creation of a leading technology trading group has produced results. Market positions have been moved forward in selected niches and we have gained market share with sound profitability in a challenging environment.

The financial year offered a mixed market trend seeing as certain segments and geographic markets grew robustly, while others faced more of a headwind. Overall, the market conditions have not been optimal even though our business situation was strengthened, above all in Sweden and Denmark compared to the preceding year.

Addtech is a group of approximately 140 companies that are focused on niches of various products and markets. Our business model creates good risk diversification, which is a major strength, while also giving our subsidiaries the opportunity to develop their offer within their niches. Our subsidiaries are relatively independent and are run under the motto of freedom with responsibility. As a result, they are agile and accustomed to continuously managing changed market conditions. Our subsidiaries excel at accelerating and braking at the same time that they create demand for our products and solutions through their long-term hard work.

GOOD AVERAGE VALUE GROWTH

Since its listing in 2001, Addtech has developed well, increasing its sales about threefold and its profit more than sixfold. For shareholders this has led to average share value growth, including dividends, of about 19 percent per year. One central success factor is our focus on striving to attain strong cash flows in our companies. The money earned is invested in expansion of existing operations and in acquisitions of new complementary companies, which in turn contribute to future profit and cash flow and dividends to shareholders.

"We create demand through long-term hard work"

A prerequisite for our positive trend is that, through our strategic decisions at subsidiary and Group levels, we have invested in product areas and customer areas that have thrived. We took a major step in 2008 when the Group organised its subsidiaries into business units. Our goal was to position ourselves in a number of carefully selected product or market areas that were judged to have particularly favourable development opportunities. The strategy has resulted in the acquisition of about 50 companies, which have all contributed to reinforcing our market position in these areas. With our current subsidiaries as a basis, we have good opportunities of further boosting our business by developing our cooperation within and between business units. This may concern cooperation regarding customers, suppliers, product knowledge and application knowledge that creates competitive advantages for each subsidiary.

FOUR BUSINESS AREAS BECOME FIVE

Our business growth and focus on selected market areas have led to greater affinity between various operations. Prior to the new financial year we decided to further streamline the Group and turn four business areas into five. In other words, we are continuing to apply our success strategy of active ownership through operating mobility. The aim of the organisational change is to encourage growth and increase profitability in the companies. By streamlining Life Science we can enable a separate listing on NASDAQ OMX and payment of dividends from the operation to Addtech shareholders. We are also creating a new exciting business area: Power Solutions. The Industrial Solutions business area is being renamed Industrial Process to highlight a strategic focus on industrial processes in conjunction with this business area gaining the Process Technology business unit, which was previously part of Life Science. This change deepens our focus on our market segments, which also creates suitable conditions for further value-adding acquisitions. 

STRATEGIC ACQUISITIONS

All our acquisitions have a strategic perspective. In relation to our size we generally make small acquisitions, which both limits risk and speeds up the integration of the acquired companies so that they adopt our corporate philosophy and corporate governance. Acquisitions are a key part of our operations and a necessity for achieving our average profit growth target of 15 percent. We always have several acquisition candidates in the pipeline, and in this past year we made nine acquisitions with total annual sales of about SEK 540 million. The acquisitions took place at the start of the year and the integration of our new companies has gone well.

At the time of writing, two months into the new financial year, we were able to announce our acquisition of Mediplast, which brings its 120 employees and sales of about SEK 465 million to Addtech. Mediplast complements the Life Science business area and forms the foundation of the new Medical Technology business unit. For several years we have worked on making Life Science a robust and independent business area with a critical size and level of profitability suited to a listed company. And we are truly proud to now be able to proceed in preparing payment of dividend from the operation to Addtech shareholders and a separate listing on Nasdaq OMX Stockholm.

"All our acquisitions have a strategic perspective."

SUSTAINABLE VALUE-ADDING TECHNOLOGY TRADING

Our vision of being the leading value-adding tech provider also involves considerable responsibility for sustainability. In the same way that we work with a long-term approach to developing our business, we also work on our focus regarding sustainability. Development takes place continuously in small steps and takes account of the subsidiaries’ capacity and resources. The goal of our sustainability work is that it will develop us so that we become even stronger in our markets. To us, sustainability means working with development issues concerning employees, suppliers and the environment.

In terms of our employees, we have identified several areas for development. Like many others, we have potential for improvement, mainly in age and gender distribution, diversity and career advancement. The introduction of structured employee surveys and performance appraisals with employees in recent years has helped the Group, our companies and their leaders to evolve and become more proficient at harnessing the enthusiasm of our employees.

Addtech has long-standing and close relationships with its suppliers, and sustainability work has always been conducted at subsidiary level based on market requirements and environmental consideration. This year Addtech has introduced a structured dialogue and analysis process, in which the Group’s 30 largest suppliers and those in risk areas have been initially selected. The aim of the survey is to give us insights and thereby opportunities to improve.

Now that we have added yet another year to our records, I would like to take this opportunity to thank all our employees for the past year. Your commitment is crucial to Addtech’s continuous development and it makes us a world-class technology trading group.

Stockholm, June 2015

Johan Sjö, President and CEO, Addtech AB