Reporting period January – September · Net sales increased by 13.4 per cent to SEK 6,552 (5,780) million. Organically, net sales grew by 4.1 per cent · EBITA* increased by 15.5 per cent to SEK 997 (863) million · The EBITA margin* increased to 15.2 (14.9) per cent · Earnings before tax grew by 12.0 per cent to SEK 889 (794) million · Net profit for the period grew by 13.5 per cent to SEK 667 (587) million · Earnings per share increased by 13.4 per cent to SEK 7.18 (6.33) · Cash flow from operating activities remained strong, increasing by 7.5 per cent to SEK 655 (610) million · During the period Lifco acquired nine businesses with combined annual sales of around SEK 1,200 million Reporting period July – September · Net sales increased by 11.4 per cent to SEK 2,128 (1,910) million, organically net sales decreased by 0.2 per cent · EBITA* increased by 12.6 per cent to SEK 316 (280) million · The EBITA margin* increased to 15.2 (14.7) per cent · Earnings before tax grew by 8.0 per cent to SEK 277 (257) million · Net profit for the period grew by 9.5 per cent to SEK 208 (190) million · Cash flow from operating activities decreased by 6.8 per cent to SEK 230 (248) million · During the three-month period Lifco acquired two businesses with combined annual sales of around SEK 300 million · After the end of the period two companies in the Sawmill Equipment division have been sold Summary of financial performance NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK 2016 2015 change 2016 2015 change change 2015 million Net sales 6,552 5,780 13.4% 2,128 1,910 11.4% 8,673 9.8% 7,901 EBITA* 997 863 15.5% 316 280 12.6% 1,319 11.3% 1,186 EBITA 15.2% 14.9% 0.3 15.2% 14.7% 0.5 15.2% 0.2 15.0% margin* Profit 889 794 12.0% 277 257 8.0% 1,177 8.8% 1,082 before tax Net 667 587 13.5% 208 190 9.5% 904 9.6% 825 profit for the period Earnings 7.18 6.33 13.4% 2.22 2.02 10.0% 9.76 9.5% 8.91 per share Return on 19.1% 19.3% -0.2 19.1% 19.3% -0.2 19.1% -0.8 19.9% capital employed Return on 136% 118% 18 136% 118% 18 136% 13 123% capital employed excl. goodwill * Before restructuring, integration and acquisition costs. COMMENTS FROM THE CEO Net sales increased by 13.4 per cent in the first nine months of 2016, to SEK 6,552 (5,780) million, driven by organic growth as well as acquisitions. All three business areas increased their sales and earnings in the first nine months of the year. The weaker organic development in the third quarter relates to lower net sales in the Sawmill Equipment division. The market environment remained generally favourable in the three business areas. EBITA before restructuring, integration and acquisition costs increased by 15.5 per cent to SEK 997 (863) million during the nine-month period while the EBITA margin expanded by 0.3 percentage points, to 15.2 (14.9) per cent. Earnings per share increased by 13.4 per cent in the first nine months, to SEK 7.18 (6.33). Profitability in the Dental business area remained stable in the first nine months. Profitability in the Demolition & Tools and Systems Solutions business areas showed strong performance during the same period. However, the third quarter was slightly weaker in the Systems Solutions business area, mainly due to the development within the Sawmill Equipment division. Lifco works continuously to improve its product portfolios, strengthen its distribution systems and improve productivity in the Group’s companies. The earnings impact of such measures will fluctuate from one quarter to the next, however. Cash flow from operating activities remained strong, increasing by 7.5 per cent to SEK 655 (610) million in the first nine months. Our Estonian subsidiary Hekotek, which sells equipment to sawmills and the biofuel industry, has been named Company of the Year and Export Company of the Year by Estonian Employers’ Confederation, Enterprise Estonia and the Estonian Chamber of Commerce and Industry. This is an important recognition of the successful work performed by Hekotek’s management and employees. We have continued to deliver on our strategy of investing in market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. In the first nine months of the year Lifco consolidated nine new businesses with combined annual sales of around SEK 1,200 million, see also pages 7 and 16. Taken together, the acquisitions will have a positive impact on Lifco’s results and financial position in the current year. After the end of the quarter we concluded an agreement for the sale of two companies in Systems Solutions, which sells equipment to sawmills. The two companies had a combined turnover of SEK 153 million in 2015 and had 63 employees in total. The sale will not have a significant impact on Lifco’s financial position and performance in the current year. Even after the nine acquisitions we still have significant financial scope for further acquisitions, as net debt is 2.3 times EBITDA before restructuring, integration and acquisition costs, well below our target of a net debt of less than three times EBITDA. Fredrik Karlsson CEO GROUP PERFORMANCE IN JANUARY – SEPTEMBER Net sales increased by 13.4 per cent to SEK 6,552 (5,780) million, driven by acquisitions and organic growth. Acquisitions contributed 10.4 per cent and organic growth 4.1 per cent while changes in exchange rates had a negative impact of 1.1 per cent. Nine new businesses were consolidated during the nine -month period. EBITA* increased by 15.5 per cent to SEK 997 (863) million and the EBITA margin* improved to 15.2 (14.9) per cent. EBITA* improved on the back of organic growth and acquisitions. Changes in exchange rates had a negative impact on EBITA* of 1.0 percentage points. In the first nine months 40 per cent of EBITA* was generated in EUR, 28 per cent in SEK, 11 per cent in NOK, 6 per cent in DKK, 4 per cent in GBP, 4 per cent in USD and 7 per cent in other currencies. Earnings before tax increased by 12.0 per cent to SEK 889 (794) million. Net profit grew by 13.5 per cent to SEK 667 (587) million. Average capital employed excluding goodwill increased marginally from 30 September 2015 to SEK 969 (964) million. EBITA* in relation to average capital employed excluding goodwill increased to 136 (118) per cent at 30 September 2016. At year-end the figure was 123 per cent. The improvement was due to a higher profit and good control of capital employed. The Group’s net interest-bearing debt increased by SEK 1,345 million from 31 December 2015 to SEK 3,295 million at 30 September 2016. The net debt/equity ratio was 0.7 (0.6) at 30 September 2016 and net debt in relation to EBITDA* was 2.3 (1.8) times. Cash flow from operating activities improved by 7.5 per cent to SEK 655 (610) million in the first nine months. The continued strong cash flow was due to a higher profit and good control of capital employed. Cash flow from investing activities was SEK -1,600 (-570) million, which was mainly attributable to acquisitions. GROUP PERFORMANCE IN THE THIRD QUARTER Net sales increased by 11.4 per cent to SEK 2,128 (1,910) million, driven by acquisitions. Acquisitions contributed 12.1 per cent, organically net sales decreased by 0.2 per cent while changes in exchange rates had a negative impact of 0.4 per cent. The weaker organic development in the third quarter relates to lower net sales in the Sawmill Equipment division. EBITA* increased by 12.6 per cent to SEK 316 (280) million and the EBITA margin* improved by 0.5 percentage points to 15.2 (14.7) per cent. Acquisitions and organic growth had a positive impact on EBITA*. Changes in exchange rates had a negative impact on EBITA* of 0.3 percentage points. In the first nine months 41 per cent of EBITA* was generated in EUR, 26 per cent in SEK, 10 per cent in NOK, 6 per cent in DKK, 5 per cent in USD, 5 per cent in GBP and 7 per cent in other currencies. Earnings before tax increased by 8.0 per cent to SEK 277 (257) million. Net profit grew by 9.5 per cent to SEK 208 (190) million. Average capital employed excluding goodwill increased by SEK 16 million over the three-month period, to SEK 969 million at 30 September 2016, compared with SEK 953 million at 30 June 2016. EBITA in relation to average capital employed excluding goodwill improved by 1.0 percentage point from 30 June 2016. The improvement was due chiefly to a higher profit and good control of capital employed. The Group’s net interest-bearing debt increased by SEK 437 million to SEK 3,295 million over the three-month period. The net debt/equity ratio remained unchanged at 0.7. At the end of the period 45 per cent of the Group’s interest -bearing liabilities were denominated in EUR. Cash flow from operating activities decreased by 6.8 per cent to SEK 230 (248) million during the three-month period. Cash flow from investing activities was SEK -594 (-54) million, which was mainly attributable to acquisitions. FINANCIAL PERFORMANCE – BUSINESS AREAS Dental NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK 2016 2015 change 2016 2015 change change 2015 million Net 2,576 2,513 2.5% 804 750 7.2% 3,499 1.9% 3,435 sales EBITA* 472 450 5.0% 144 127 13.5% 636 3.6% 614 EBITA 18.3% 17.9% 0.4 17.9% 16.9 1.0 18.2% 0.3 17.9% margin* % The companies in the Dental business area are leading suppliers of consumables, equipment and technical service for dentists across Europe and the business area also has operations in the US. Lifco sells dental technology to dentists in the Nordic countries and Germany, and develops and sells medical record systems in Denmark and Sweden. The business area also includes a number of smaller manufacturing companies which produce disinfectants, saliva ejectors as well as material for bite registration, impressions and bonding sold to dentists through distributors across the world. Net sales in Dental increased by 2.5 per cent to SEK 2,576 (2,513) in the first nine months of the year. Net sales were negatively affected by the sale of NetDental at the end of the second quarter 2015 while the acquisitions of Smilodent, Preventum Partner, Dens Esthetix, Praezimed and Parkell had a positive impact on net sales for the nine-month period. EBITA* improved by 5.0 per cent to SEK 472 (450) million in the first nine months and the EBITA margin* increased to 18.3 (17.9) per cent. The dental market remains generally stable. The results for individual companies in Lifco’s dental business may in any individual quarter be influenced by significant fluctuations in exchange rates, calendar effects (such as Easter), gained or lost contracts in procurements of consumables by public-sector or major private-sectors customers as well as fluctuations in the delivery of equipment. In the first nine months of the year there was no individual event having a substantial impact on the earnings of the dental group as a whole. In February Lifco consolidated two acquisitions in Dental: the German dental laboratory Dens Esthetix and the German dental company Praezimed. Dens Esthetix had net sales of around EUR 1.4 million in 2015 and has 14 employees. Praezimed provides servicing and repair of dental instruments used by dentists and dental laboratories in Germany. Praezimed had net sales of around EUR 2.5 million in 2015 and has 15 employees. The acquisition of endodontic products that was announced in December 2015 was consolidated as of January 2016. The business had a turnover of around SEK 10 million in 2015. In the third quarter the acquisition of the US dental company Parkell was completed. The company produces and sells dental consumables and smaller equipment used by dentists. The products are sold mainly in the US but to some extent also internationally. Parkell had a turnover of around USD 29 million in 2015. The company was consolidated from September 2016. Demolition & Tools NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK 2016 2015 change 2016 2015 change change 2015 million Net 1,284 1,138 12.8% 431 379 13.8% 1,719 9.3% 1,574 sales EBITA* 297 273 8.8% 104 89 16.6% 420 6.1% 396 EBITA 23.1% 24.0% -0.9 24.1% 23.5% 0.6 24.4% -0.7 25.1% margin* DDemolition & Tools develops, manufactures and sells equipment for the construction and demolition industries. The Group is the world’s leading supplier of demolition robots and crane attachments. The Group is also one of the leading global suppliers of excavator attachments. The operations are divided into two divisions – Demolition Robots and Crane & Excavator Attachments – which are of roughly equal size in terms of sales. In the first nine months net sales increased by 12.8 per cent to SEK 1,284 (1,138) million. The market situation was generally good and sales increased in the majority of markets. Among the larger markets, Germany, France, China and the Nordic region saw the fastest growth. In the first nine months EBITA* increased by 8.8 per cent to SEK 297 (273) million. The EBITA margin* was 23.1 (24.0) per cent, with the main negative impact coming from the weakening of the British pound. Lifco works continuously to improve its product portfolios, strengthen its distribution systems and improve productivity in the Group’s companies. The earnings impact of such measures will fluctuate from one quarter to the next, however. Systems Solutions NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK 2016 2015 change 2016 2015 change change 2015 million Net 2,692 2,129 26.4% 893 781 14.3% 3,455 19.5% 2,892 sales EBITA* 296 204 44.9% 88 85 3.0% 355 34.8% 263 EBITA 11.0% 9.6% 1.4 9.8% 10.9% -1.1 10.3% 1.2 9.1% margin* Through its operating units Systems Solutions operates in industries offering systems solutions. Systems Solutions is divided into five divisions: Interiors for Service Vehicles, Contract Manufacturing, Environmental Technology, Sawmill Equipment and Construction Materials. The divisions are leading players in their geographic markets. Following the acquisition of Cenika in January 2016, the Relining division has changed its name to Construction Materials. Net sales in Systems Solutions increased by 26.4 per cent to SEK 2,692 (2,129) million and all divisions, with the exception of Sawmill Equipment, increased their sales in the first nine months of the year. EBITA* increased by 44.9 per cent to SEK 296 (204) million in the first nine months of the year. All divisions, with the exception of Sawmill Equipment, improved their results during the period and the EBITA margin* increased to 11.0 (9.6) per cent. Lifco works continuously to improve its product portfolios, strengthen its distribution systems and improve productivity in the Group’s companies. The earnings impact of such measures will fluctuate from one quarter to the next, however. Interiors for Service Vehicles grew both in terms of sales and profitability in the first nine months of the year thanks to increased sales activities and an improved product range, as well as an increased number of light trucks registered in Europe. Contract Manufacturing performed well in a stable market. The division’s customers include world-leading manufacturers of equipment for the pharmaceutical industry as well as manufacturers of railway equipment, which require a high standard of quality as well as delivery flexibility and documentation. At the end of December, it was announced that Lifco had acquired Auto-Maskin of Norway, a leading supplier of control and monitoring systems for marine diesel engines. Auto-Maskin generated net sales of around NOK 130 million in 2015 and has 65 employees. The company was consolidated from January 2016. Environmental Technology performed well in the first nine months of the year. In January Lifco acquired Redoma Recycling, a Swedish company specialising in the development and manufacture of recycling machinery for small and medium cables. Redoma Recycling generated net sales of around SEK 25 million in 2015 and has eight employees. In February, it was announced that Lifco had acquired TMC/Nessco of Norway, a world-leading supplier of marine compressors and spare parts. TMC/Nessco generated net sales of approximately NOK 525 million in 2015 and has about 90 employees. The company was consolidated from March 2016. In Sawmill Equipment net sales and earnings have declined over the past two quarters following a strong first quarter. The decline is due to certain problems in individual projects. After the end of the quarter Lifco has concluded an agreement for the sale of AriVislanda AB and Renholmen AB in the Sawmill Equipment division. Both companies sell equipment to sawmills and had a combined turnover of SEK 153 million in 2015. The companies have 63 employees in total. Construction Materials (formerly Relining) had a good sales and earnings performance during the nine-month period due to the acquisition of a majority stake in Cenika of Norway at the beginning of the year. Cenika, which was consolidated from February 2016, is a leading supplier of low-voltage electrical equipment. Cenika generated net sales of NOK 160 million in 2015 and has about 30 employees. In August, Lifco announced that it had acquired Nordesign of Norway, a supplier of LED lighting for the Scandinavia market. Nordesign generated net sales of approximately NOK 64 million in 2015 and has 18 employees. The company was consolidated from September 2016. ACQUISITIONS In the first nine months of 2016 Lifco consolidated the following acquisitions: +-----------------------+-------------------+-----------------+---------+------- --+ |Consolidated from month|Acquisition |Business area |Net sales|Employees| +-----------------------+-------------------+-----------------+---------+------- --+ |January |Auto-Maskin |Systems Solutions|NOK 130m |65 | +-----------------------+-------------------+-----------------+---------+------- --+ |January |Endodontic products|Dental |SEK 10m |- | +-----------------------+-------------------+-----------------+---------+------- --+ |January |Redoma Recycling |Systems Solutions|SEK 25m |8 | +-----------------------+-------------------+-----------------+---------+------- --+ |February |Cenika |Systems Solutions|NOK 160m |30 | +-----------------------+-------------------+-----------------+---------+------- --+ |February |Dens Esthetix |Dental |EUR 1.4m |14 | +-----------------------+-------------------+-----------------+---------+------- --+ |February |Praezimed |Dental |EUR 2.5m |15 | +-----------------------+-------------------+-----------------+---------+------- --+ |March |TMC/Nessco |Systems Solutions|NOK 525m |90 | +-----------------------+-------------------+-----------------+---------+------- --+ |September |Nordesign |Systems Solutions|NOK 64m |18 | +-----------------------+-------------------+-----------------+---------+------- --+ |September |Parkell |Dental |USD 29m |100 | +-----------------------+-------------------+-----------------+---------+------- --+ Further information on acquisitions is provided on page 16 of the interim report. The figures for net sales and number of employees refer to the estimated annual net sales and the number of employees at the acquisition date. Taken together, the acquisitions will have a positive impact on Lifco’s results and financial position in the current year. OTHER FINANCIAL INFORMATION Employees The average number of employees in the third quarter was 3,662 (3,333) and the number of employees at the end of the period was 3,663 (3,372). Acquisitions added 340 employees. Events after the end of the reporting period After the end of the quarter Lifco has concluded agreements for the sale of AriVislanda AB and Renholmen AB in the Sawmill Equipment division in the Systems Solutions business area. Both companies sell equipment to sawmills and had a combined turnover of SEK 153 million in 2015. The companies have 63 employees in total. The companies are not significant to the Group’s or the Sawmill Equipment division’s financial position and the sale will not have a significant impact on Lifco’s financial position and performance in the current year. The companies’ net assets have been reclassified in the consolidated financial statements as “Assets held for sale”. Related-party transactions No significant transactions with related parties took place during the period. Risks and uncertainties The risk factors which have the biggest impact for Lifco are the competitive situation, structural changes in the market and the strength of the economy. Lifco is also exposed to financial risks, including currency risks, interest rate risks, credit and counterparty risks. The Parent Company is affected by the above risks and uncertainties through its function as owner of the subsidiaries. For further information on Lifco’s risks and risk management, see the annual report for 2015. Accounting principles The Group’s interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. In respect of the Parent Company the report has been prepared in accordance with the Annual Accounts Act and Recommendation RFR 2 Financial Reporting for Legal Entities of the Swedish Financial Reporting Board. The accounting principles have been applied in accordance with those which are presented in the annual report for 2015 and should be read in conjunction with these. The interim report presents alternative key performance indicators for assessing the Group’s performance. The primary alternative KPIs presented in this interim report are EBITA, EBITDA, net debt and capital employed. Definitions of the alternative KPIs are presented on pages 19-20 and a reconciliation with the financial statements is presented on pages 21-22. DECLARATION OF THE BOARD OF DIRECTORS The Board of Directors and Chief Executive Officer warrant and declare that this nine-month report gives a true and fair view of the Parent Company’s and Group’s operations, financial positions and results, and that it describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group. Enköping, 25 October 2016 Carl Bennet Gabriel Danielsson Director Ulrika Dellby Director Chairman of the Board Annika Espander Erik Gabrielson Director Annika Ulf Grunander Jansson Norlund Director, employee Director Johan Stern Vice Director Fredrik representative Chairman Karlsson President and CEO, Director Axel Wachtmeister Peter Wiberg Deputy Director Director,employee representative REPORT OF REVIEW OF INTERIM FINANCIAL INFORMATION Introduction We have reviewed the condensed interim financial information (interim report) of Lifco AB (publ) as of 30 September 2016 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Scope of Review We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company. Enköping, 25 October 2016 PricewaterhouseCoopers Magnus Willfors Martin Johansson Auktoriserad revisor Auktoriserad revisor Huvudansvarig revisor FINANCIAL CALENDAR 2017 The report for the fourth quarter and year-end report 2016 will be published at noon on 15 February The annual report for year 2016 will be published during the week of 3-7 April The report for the first quarter will be published on 4 May The Annual General Meeting will be held at 3 pm on 4 May at Bonnierhuset, Torsgatan 21, Stockholm The report for the second quarter will be published on 17 July The report for the third quarter will be published on 26 October ANNUAL GENERAL MEETING The Annual General Meeting of Lifco AB will be held on Thursday 4 May 2017, at 3 pm, in Bonnierhuset, Torsgatan 21, Stockholm. Shareholders wishing to raise an issue for discussion at the AGM on 4 May 2017 may do so by submitting their proposal to the Chairman of Lifco by e-mail: ir@lifco.se or by post to: Lifco AB, Attn: Bolagsstämmoärenden, Verkmästaregatan 1, SE-745 85 Enköping. To ensure their inclusion in the notice and thus on the agenda for the AGM, proposals must be received by the Company no later than 2 March 2017. THE NOMINATION COMMITTEE Prior to the Annual General Meeting 2017 the Nomination Committee consists of Carl Bennet, Carl Bennet AB, Anna-Karin Celsing, representative of small shareholders, Per Colleen, the Fourth Swedish National Pension Fund (AP4), Hans Hedström, Carnegie Fonder, Marianne Nilsson, Swedbank Robur Fonder and Adam Nyström, Didner & Gerge Fonder. Carl Bennet is chairman of the Nomination Committee. Shareholders wishing to submit proposals to the Nomination Committee for the 2017 AGM may do so by send an e-mail to ir@lifco.se or writing to: Lifco, Attn: Valberedningen, Verkmästaregatan 1, SE-745 85 Enköping, Sweden. FURTHER INFORMATION Media and investor relations: Åse Lindskog, ir@lifco.se, telephone +46 (0)730 24 48 72 TELECONFERENCE Media and analysts are welcome to call in to a teleconference, where CEO Fredrik Karlsson, CFO Therése Hoffman and Head of Business Area Dental Per Waldemarson will present the interim report. The presentation is expected to take around 20 minutes, after which participants will be invited to ask questions. Time: 25 October, 3 pm Link to the presentation: https://wonderland.videosync.fi/lifco-q3-report -2016 (https://webmail.lifco.se/owa/redir.aspx?REF=FRJdX3je69oZ4MGyUtDwHcAkOvbT4 D IhjWL9LTYAjvdIyxliefDTCAFodHRwczovL3dvbmRlcmxhbmQudmlkZW9zeW5jLmZpL2xpZmNvLXEzLX J lcG9ydC0yMDE2) Call-in numbers: Sweden: +46 8 566 426 93 UK: +44 203 008 98 01 US: +1 855 831 59 45 LIFCO IN BRIEF Lifco acquires and develops market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. Lifco is guided by a clear philosophy centred on long-term growth, a focus on profitability and a strongly decentralised organisation. At year-end, the Lifco Group consisted of 133 companies in 28 countries. In 2015 the Group reported EBITA of SEK 1,186 million on net sales of around SEK 7.9 billion. The EBITA margin was 15.0 per cent. Read more at www.lifco.se +-----------------------------------------------------------------------------+ |This information constitutes information that Lifco AB is required to publish| |under the EU’s Market Abuse Regulation.The information was submitted for | |publication through the aforementioned contact person on | |25 October 2016, at 1 pm. | +-----------------------------------------------------------------------------+ CONDENSED CONSOLIDATED INCOME STATEMENT NINE MONTHS THIRD QUARTER FULL YEAR SEK million 2016 2015 change 2016 2015 change 2015 Net sales 6,552 5,780 13.4% 2,128 1,910 11.4% 7,901 Cost of goods sold -3,975 -3,592 10.7% -1,301 -1,209 7.7% -4,865 Gross profit 2,577 2,188 17.8% 827 701 17.9% 3,036 Selling expenses -592 -449 31.8% -197 -144 36.3% -625 Administrative -1,007 -868 16.1% -323 -271 19.1% -1,205 expenses Development costs -65 -52 24.9% -20 -19 2.9% -73 Other income and -3 -11 -71.9% -7 -4 84.3% -26 expenses Operating profit 910 808 12.7% 280 263 6.6% 1,107 Net financial items -21 -14 52.7% -3 -6 -47.2% -25 Profit before tax 889 794 12.0% 277 257 8.0% 1,082 Tax -222 -207 7.7% -69 -67 3.8% -257 Net profit for the 667 587 13.5% 208 190 9.5% 825 period Profit attributable to: Parent Company 653 575 13.4% 202 183 10.0% 810 shareholders Non-controlling 14 12 19.9% 6 7 -4.9% 15 interests Earnings per share 7.18 6.33 13.4% 2.22 2.02 10.0% 8.91 before and after dilution for the period, attributable to Parent Company shareholders EBITA* 997 863 15.5% 316 280 12.6% 1,186 Depreciation of 69 60 14.7% 24 21 15.5% 81 tangible assets Amortisation of 7 7 - 2 2 - 10 intangible assets Amortisation of 83 46 79.2% 31 17 84.1% 66 intangible assets arising from acquisitions CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NINE THIRD FULL YEAR MONTHS QUARTER SEK million 2016 2015 change 2016 2015 change 2015 Net profit for the 667 587 13.5% 208 190 9.5% 825 period Other comprehensive income Items which can -5 - - -21 - - - later be reclassified to profit or loss:Hedge of net investment Translation 1600 -29- -643%- 974 29- 235%- -92- differencesTax related to other comprehensive income Total comprehensive 822 558 47.3% 288 219 31.7% 733 income for the period Comprehensive - income attributable to: Parent Company 804 546 47.1% 279 212 31.8% 720 shareholders Non-controlling 18 12 56.6% 9 7 28.8% interests 13 822 558 47.3% 288 219 31.7% 733 SEGMENT OVERVIEW Lifco’s operations are monitored and evaluated by the CEO and resources are allocated based on information from the three operating segments: Dental, Demolition & Tools and Systems Solutions. The defined quantitative limits are exceeded only by Dental and Demolition & Tools. One further operating segment, Systems Solutions, is presented. This operating segment consists of a merger of those divisions which have similar economic characteristics and which do not individually meet the defined quantitative limits. These divisions are Interiors for Service Vehicles, Contract Manufacturing, Environmental Technology, Sawmill Equipment and Construction Materials (formerly Relining). NET SALES TO EXTERNAL CUSTOMERS No sales are made between the segments. NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK 2016 2015 change 2016 2015 change change 2015 million Dental 2,576 2,513 2.5% 804 750 7.2% 3,499 1.9% 3,435 Demolition 1,284 1,138 12.8% 431 379 13.8% 1,719 9.3% 1,574 & Tools Systems 2,692 2,129 26.4% 893 781 14.3% 3,455 19.5% 2,892 Solutions Group 6,552 5,780 13.4% 2,128 1,910 11.4% 8,673 9.8% 7,901 EBITA A breakdown of results by segment is made up to and including EBITA. EBITA is reconciled to profit before tax in accordance with the following table: NINE THIRD Rolling FULL MONTHS QUARTER 12 YEAR months SEK million 2016 2015 change 2016 2015 change change 2015 Dental 472 450 5.0% 144 127 13.5% 636 3.6% 614 Demolition & 297 273 8.8% 104 89 16.6% 420 6.1% 396 Tools Systems 296 204 44.9% 88 85 3.0% 355 34.8% 263 Solutions Central Group -68 -64 7.2% -20 -21 -3.9% -92 5.2% -87 functions EBITA before 997 863 15.5% 316 280 12.6% 1,319 11.3% 1,186 restructuring, integration and acquisition costs Restructuring, -4 -9 -56.5% -5 0 951% -8 -41.0% -13 integration and acquisition costs EBITA 993 854 16.3% 311 280 11.3% 1,311 11.9% 1,173 Amortisation of -83 -46 79.2% -31 -17 84.1% -102 56.0% -66 intangible assets arising from acquisitions Net financial -21 -14 52.7% -3 -6 47.2% -32 28.4% -25 items Profit before 889 794 12.0% 277 257 8.0% 1,177 8.8% 1,082 tax CONDENSED CONSOLIDATED BALANCE SHEET SEK million 30 Sep 2016 30 Sep 2015 31 Dec 2015 ASSETS Intangible assets 6,756 5,050 5,010 Tangible fixed assets 459 423 417 Financial assets 105 60 87 Inventories 1,163 998 960 Accounts receivable - trade 1,119 929 863 Current receivables 354 341 257 Cash and cash equivalents 410 645 464 Assets held for sale 26 - - TOTAL ASSETS 10,392 8,446 8,058 EQUITY AND LIABILITIES Equity 4,516 3,795 3,964 Non-current interest-bearing 1,121 1,137 1,103 liabilities incl. pension provisions Other non-current liabilities 518 323 371 and provisions Current interest-bearing 2,600 1,777 1,341 liabilities Accounts payable - trade 528 438 370 Other current liabilities 1,109 976 909 TOTAL EQUITY AND LIABILITIES 10,392 8,446 8,058 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to Parent Company shareholders SEK million 30 Sep 2016 30 Sep 2015 31 Dec 2015 Opening equity 3,939 3,455 3,455 Comprehensive income for the period 804 546 720 Dividend -273 -236 -236 Closing equity 4,470 3,765 3,939 Equity attributable to: Parent Company shareholders 4,470 3765 3,939 Non-controlling interests 46 30 25 4,516 3,795 3,964 CONDENSED CONSOLIDATED CASH FLOW STATEMENT NINE THIRD FULL MONTHS QUARTER YEAR SEK million 2016 2015 2016 2015 2015 Operating activities Operating 910 808 280 263 1,107 profit Non-cash 132 113 44 40 157 items Interest and -21 -14 -3 -6 -25 financial items, net Tax paid -232 -183 -67 -50 -239 Cash flow 789 724 254 247 1,000 before changes in working capital Changes in working capital Inventories -60 -75 1 -13 -59 Current -118 -223 -13 -39 -113 receivables Current 44 184 -12 53 120 liabilities Cash flow 655 610 230 248 948 from operating activities Business -1,517 -498 -569 -38 -573 acquisitions and sales, net Net -80 -64 -24 -19 -82 investment in tangible fixed assets Net -3 -8 -1 3 -9 investment in intangible assets Cash flow -1,600 -570 -594 -54 -664 from investing activities Borrowings/re 1,174 319 356 -82 -88 payment of borrowings, net Dividends -283 -245 -3 - -252 paid Cash flow 891 74 353 -82 -340 from financing activities Cash flow -54 114 -11 112 -56 for the period Cash and 464 536 429 537 536 cash equivalents at beginning of period Cash and -24 - -24 - - cash equivalents in operations held for sale Translation 24 -5 16 -4 -16 differences Cash and 410 645 410 645 464 cash equivalents at end of period ACQUISITIONS IN 2016 In the first nine months of the year nine new businesses were consolidated and are included in the preliminary purchase price allocation. The acquisitions refer to all shares of Auto-Maskin, Praezimed, TMC/Nessco and Parkell as well as a majority stakes in Cenika and Nordesign. The acquisitions of Redoma Recycling, Dens Esthetix and endodontic products were asset deals. The preliminary purchase price allocation covers all acquisitions made in the first nine months of the year. Acquisition-related expenses of SEK 17 million are included in administrative expenses in the consolidated income statement for the first nine months of 2016. If the businesses had been consolidated from 1 January 2016 consolidated net sales would have increased by around SEK 306 million. The acquisitions would have had a positive impact on earnings if the companies had been consolidated from 1 January 2016. Acquired net assets Net assets, SEK Carrying amount Value adjustment Fair value million Trademarks, customer 4 914 918 relationships, licences Tangible assets 29 - 29 Trade and other 360 -17 343 receivables Trade and other -227 -139 -366 payables Cash and cash 139 - 139 equivalents Net assets 305 758 1,063 Goodwill 634 634 Total net assets 305 1,392 1,697 Effect on cash flow, SEK million Consideration 1,697 of which -42 considerations not paid Cash and cash -139 equivalents in the acquired companies Consideration paid 1 relating to acquisitions from previous yearsk Total cash flow effect 1,517 FINANCIAL INSTRUMENTS CARRYING AMOUNT FAIR VALUE SEK million 30 Sep 2016 30 Sep 2015 30 Sep 2016 30 Sep 2015 Loans and receivables Accounts receivable - 1,119 929 1,119 929 trade Other non-current 3 6 3 6 financial receivables Cash and cash 410 645 410 645 equivalents Total 1,532 1,580 1,532 1,580 Liabilities at fair value through profit or loss Other liabilities 16 - 16 - Other financial liabilities Interest-bearing 3,672 2,842 3,672 2,842 borrowings Accounts payable - 528- 43830 528- 43830 tradeOther liabilities Total 4,216 3,310 4,216 3,310 Financial instruments at fair value are classified into different levels depending on how fair value is determined. All financial instruments at fair value in the Lifco Group have been classified as level 3, i.e. non-observable inputs. The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant. Other liabilities classified as financial instruments refer to mandatory put/call options relating to non -controlling interests. Changes in financial liabilities attributable to mandatory put/call options are recognised in profit or loss. CONDENSED PARENT COMPANY INCOME STATEMENT NINE MONTHS THIRD QUARTER FULL YEAR SEK million 2016 2015 2016 2015 2015 Administrative expenses -79 -74 -24 -24 -104 Other operating income* 40 - - - 84 Operating profit -39 -74 -24 -24 -20 Net financial items** 376 277 -18 14 307 Profit after financial items 337 203 -42 -10 287 Appropriations - - - - -12 Tax 28 5 17 4 -8 Net profit for the period 365 208 -25 -6 267 * Preliminary invoicing of Group-wide services. ** Net financial items include received dividends of SEK 407 (227) million during the nine-month period. CONDENSED PARENT COMPANY BALANCE SHEET SEK million 30 Sep 2016 31 Dec 2015 ASSETS Tangible fixed assets 0 0 Financial assets 4,243 3,369 Current receivables 2,819 2,223 Cash and cash equivalents 210 307 TOTAL ASSETS 7,272 5,899 EQUITY AND LIABILITIES Equity 2,278 2,186 Untaxed reserves 32 32 Provisions - 4 Non-current interest-bearing liabilities 1,088 1,031 Current interest-bearing liabilities 2,573 1,330 Current non-interest-bearing liabilities 1,301 1,316 TOTAL EQUITY AND LIABILITIES 7,272 5,899 Pledged assets - - Contingent liabilities 42 92
INTERIM REPORT JANUARY – SEPTEMBER 2016
| Source: Lifco AB