Q2 2019 Interim financial report

Sørlie). Robust commercial development across most business areas. EBITDA of SEK 15.0m in Q2 (SEK 16.0m). Unrealized foreign exchange loss 1H 2019 of ...

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Q2 2019 Interim financial report North Investment Group AB (publ)

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Highlights 

Group revenue of SEK 225m during the quarter comprising growth of 22.9% (+2.8% proforma 2018 incl Sørlie). Robust commercial development across most business areas.



EBITDA of SEK 15.0m in Q2 (SEK 16.0m).



Unrealized foreign exchange loss 1H 2019 of SEK 5.3m (SEK 1.1m gain 1H 2018).



Appointment of Ole Vinje as CEO, effective from 1st of September.



Integration of Sørlie Prosjektinnredninger continues at full strength.



The Agentur for Fossafe products in Norway taken over in June.



Order backlog of SEK 155m per Q2 2019 (SEK 136m Q2 2018).

Key consolidated figures Q2 2019

Q2 2018

Jan-Jun 2019

Jan-Jun 2018

Unaudited

Unaudited

Unaudited

Unaudited

225.0

183.1

464.2

362.3

Gross profit

86.8

72.4

176.9

141.6

EBITDA

15.0

16.0

37.8

39.1

6.3

5.2

18.3

17.4

Net profit

-4.2

-1.0

-3.9

2.7

Cash flow from operations

-1.8

-0.4

-19.3

-2.3

759,201

725,344

759,201

725,344

-5.47

-1.41

-5.08

3.74

38.9

40.7

38.6

40.3

6.7

9.0

8.2

11.1

(SEKm, unless stated) Revenue

EBIT

No of outstanding shares Net earnings per share (SEK) Gross profit margin (%) EBITDA margin (%)

Proforma Revenue incl Sørlie Prosjektinnredninger AS was SEK 219.9m in Q2 2018 and SEK 434.1m Jan-Jun 2018. Proforma EBIT incl Sørlie Prosjektinnredninger AS was SEK 5.4m in Q2 2018 and SEK 18.1m Jan-Jun 2018.

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CEO statement "NIG continued to perform well during the second quarter of 2019, following our long term strategy. The sales figures are well ahead of previous year. With a negative difference in currency-effect YTD of SEK 6.4m compared to 2018 in mind, the underlying EBITDA of the Group is strong. Both operating segments (Norway and Sweden) have performed well. The sales related to the school market in Sweden have not been at the expected level so far into 2019. But the underlying trend in Sweden is good for this market and we see our Group well positioned to take part in this growth in the years to come. The remaining business areas of the Group delivers according to, or better than, plan. The integration of Sørlie Prosjektinnredninger will be accelerated further for the remaining of 2019. Different projects related to IT, purchase, sales etc will be initiated. During second quarter Sørlie Prosjektinnredninger renewed its frame agreement to the major municipalities in its main home region for the next 2-4 years with a yearly estimated sales value of NOK 20m, giving comfort that they will meet the Group's ambitious targets for the company. Through Sørlie NIG aims to increase its turnover towards customers requesting fixed furniture fittings. The Group has through its daughter company Sarpsborg Metall agreed to take over the Agentur for Fossafe products in Norway. The product range is mainly fireproof filing cabinets, document cabinets, secure office cabinets, etc. This will broaden our portfolio making us more complete towards our customers, with an estimated revenue of appr. NOK 10m per year. Our growth within workstations in Sweden to industrial customers continues at full strength. The agreement with Volvo Car Corporation gives us necessary volumes to further invest in employees within this segment, and we see this business area as one of the most exciting growth sectors for our Group in the years to come."

Ståle Eide, CEO Tranås, 30th August 2019

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Financial review Q2 2019 Income statement The Group reported revenue of SEK 225m (SEK 183m) and EBITDA of SEK 15m (SEK 16m) in Q2 2019. Order intake was SEK 262m (SEK 234m), corresponding to an increase of 12 % compared to Q2 2018. EBIT for the Group was SEK 6.3m (SEK 5.2m) and net profit SEK -4.2m (SEK -1.0m). Gross margin for the Group in Q2 2019 was 38.9% (40.7%). The main reason for the decrease in gross margin is the acquisition of Sørlie Prosjektinnredninger that has somewhat lower gross margin compared to Group average. As described above we have several initiatives ongoing to improve Sørlie Prosjektinnredninger's margin going forward. Segments NIG is divided into two segments, NIG Norway (Norway) and NIG Sweden (Sweden). Norway delivered SEK 116m in revenue (SEK 73m) and SEK 11.2m in EBITDA (SEK 14.3m) during the quarter. Sweden reported revenue of SEK 114m (SEK 113m) and EBITDA of SEK 3.9m (SEK 1.7m).

Jan – Jun 2019 Income statement The Group reported revenue of SEK 464m (SEK 362m) and EBITDA of SEK 38m (SEK 39m) in 1H 2019. Order intake was SEK 501m (SEK 397m), corresponding to an increase of 26 % compared to 1H 2018. EBIT for the Group was SEK 18.3m (SEK 17.4m) and net profit SEK -3.9m (SEK 2.7m). Gross margin for the Group in 2019 was 38.6% (40.3%). The main reason for the decrease in gross margin is the acquisition of Sørlie Prosjektinnredninger that has somewhat lower gross margin compared to Group average. The negative difference between the FX-loss in 2019 compared to the FX-gain in 2018 is SEK 6.4m. Segments NIG is divided into two segments, NIG Norway (Norway) and NIG Sweden (Sweden). Norway delivered SEK 256m in revenue (SEK 149m) and SEK 26.5m in EBITDA (SEK 29.1m) during the first half year. Sweden reported revenue of SEK 228m (SEK 228m) and EBITDA of SEK 11.7m (SEK 11.0m). Cash flow The Group’s net cash flow from operations was negative with SEK 19.3m (SEK 2.3m). The Cash and cash equivalents as of 30th June 2019 amounts to SEK 78m (SEK 7m). The liquidity situation of the Group is according to plan. Balance sheet As of Q2 2019, the Group had assets of SEK 870m, mainly related to goodwill, right of use assets, accounts receivable and cash and cash equivalents. During 1st half year 2019, the Group invested SEK 1.2m (SEK 3.7m) in tangible assets and SEK 42.6m (SEK 1.3m) intangible assets. The investment in intangible assets is mainly related to Goodwill from purchase of Sørlie. The investments in tangible assets is mainly relate to replacement of light machinery. Net interest bearing debt (excl. Lease liabilities) was SEK 236.4m (SEK 184.8m).

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Risk and uncertainties The Group´s main risks and uncertainties are related to its high exposure to certain markets. In addition, the Group has financial risk related to primarily currency risk, interest rate risk related to its financing and credit risk related to sales.

Outlook The Board of Directors is pleased with the 2019 first half year results. The order intake is good within most of our business areas. The market is still strong for our main categories. With our broad product portfolio and geographical footprint, the opportunities for succeeding in the sales going forward remains strong. The integration of our latest acquisition, Sørlie Prosjektinnredninger, is progressing according to plan and we expect to generate positive synergy-effects already in 2019. The Board of Directors would also take the opportunity to thank Ståle for a tremendous job growing and streamlining North Investment Group through his persistence and dedication, making the Group ready for its next phase with Ole Vinje as CEO. With Ole's long experience from IT industry we see his experience within digitalization together with operation and automation of logistics as a perfect match for our Group in the years to come. The Group is continuously looking for new strategic acquisition targets mainly in the Nordic region combined with a strong focus on succeeding through profitable organic growth.

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Group financial statements Consolidated income statement All amounts in SEK thousand

Revenue Other operating revenue Total operating revenue Cost of goods sold Other external cost Salaries and personnel expense Other operating expense EBITDA Depreciation and amortization expense Operating profit Interest income and similar Interest expense and similar Net financial income (expenses) Profit before income tax Income taxes Net profit for the period

Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

223 067 1 907 224 974

177 938 5 180 183 118

458 342 5 812 464 154

351 554 10 793 362 347

(128 926) (22 656) (55 487) (2 909) 14 996

(97 419) (16 349) (45 779) (7 547) 16 024

(267 423) (42 457) (108 365) (8 162) 37 747

(194 101) (32 370) (88 929) (7 862) 39 085

(8 667)

(10 865)

(19 497)

(21 725)

6 329

5 159

18 250

17 360

190 -11 840

477 (5 041)

747 (23 935)

550 (12 349)

(11 650)

(4 564)

(23 188)

(11 799)

(4 938)

5 561

(5 321)

595

1 171

(1 617)

1 080

(2 847)

(4 150)

(1 022)

(3 858)

2 714

4 009

5 239

10 085

14 042

-

-

4 009

5 239

10 085

14 042

4 217

6 227

16 756

Consolidated statement of comprehensive income Items that may be reclassified subsequently to income statement Translation differences on net investment in foreign operations

Items that will not be reclassified to income statement Remeasurement of defined benefit pension plans Income taxes Other comprehensive income (loss), net of taxes Total comprehensive income

Total comprehensive income attributable to: Equity holders of North Investment Group AB (publ)

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(141)

-

-

Consolidated balance sheet statement All amounts in SEK thousand

ASSETS

2019

2018

2018

30.06.

30.06.

31.12.

Software, licences, etc. Goodwill Total intangible assets

4 708 250 905 255 613

4 668 207 853 212 521

5 029 200 675 205 703

Right of use assets Land, buildings and other property Machinery and plant Office machinery, equipment and similar Total property, plant and equipment

233 824 1 126 4 428 3 452 242 830

242 651 375 5 076 2 891 250 993

214 343 894 4 601 2 693 222 531

126 126

372 372

187 187

39 251

34 338

37 875

TOTAL NON-CURRENT ASSETS

537 820

498 224

466 296

Inventories Raw materials Work in progress Finished products Advance payments to suppliers Total inventories

17 192 11 032 78 314 1 164 107 702

5 194 5 233 67 857 1 743 80 027

10 662 6 832 54 689 1 263 73 446

Accounts receivables Other short term receivables Tax recoverables Prepaid expenses and accrued income Cash and cash equivalents Total receivables

116 538 17 803 2 830 9 494 77 898 224 563

103 999 2 281 4 789 17 304 6 750 135 123

91 682 11 346 1 401 12 348 139 082 255 859

TOTAL CURRENT ASSETS

332 265

215 150

329 305

TOTAL ASSETS

870 085

713 374

795 601

Other long term receivables Total non-current financial assets Deferred tax receivables

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All amounts in SEK thousand

EQUITY AND LIABILITIES

2019

2018

2018

30.06.

30.06.

31.12.

105 619 -11 918 -9 131

100 909 -11 972 -22 612

100 909 -11 871 -39 929

84 570

66 325

49 109

Liabilities to shareholders Liabilities to financial institutions Bonds Pension liabilities Other provisions Non-current Lease liabilities Total non-current liabilities

313 218 30 502 1 029 230 835 575 584

142 203 34 703 2 702 249 651 429 259

310 599 31 944 1 487 224 075 568 105

Liabilities to financial institutions Current lease liabilities Prepayments from customers Accounts payable Tax payable Other short-term liabilities Accrued expenses and deferred income Total current liabilities

1 148 44 852 89 939 73 991 209 930

46 930 41 549 554 63 556 28 332 36 870 217 791

37 37 633 1 196 75 794 484 28 052 35 191 178 387

TOTAL EQUITY AND LIABILITIES

870 085

713 374

795 601

Share capital Other equity This years result Equity attributable to majority shareholders

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Consolidated statement of changes in equity All amounts in SEK thousand

Attributable to equity holders of the parent company Other Equity Other Equity Retained earnings

Share capital

Equity as at 01.01.2018

Total equity

100 909

-11 972

-39 638

49 299

                 2 714 

2 714

Other comprehensive income Items that will not be reclassified in profit or loss  Translation difference, net assets in foreign currency Total comprehensive income

                          -                14 042 -                           -                 16 756 

14 042 16 756

Liquidation of daughter company Total shareholders transactions

                    270 -                           -                      270 

270 270

Comprehensive income Profit for the period

Equity as at 30.06 2018

100 909

-11 972

-22 612

66 325

               14 715

14 715

                   -944

-944

                    101              -10 118                     195 101 3 848

-10 017 195 3 949

Group Contribution Dividends

             -11 421                 -9 744

-11 421 -9 744

Total shareholders transactions

             -21 165

-21 165

Equity as at 31.12 2018

           100 909              -11 871              -39 929

49 109

Equity as at 01.01 2019

           100 909              -11 871              -39 929

49 109

                -3 858

-3 858

               24 524

29 234

Profit for the period Other comprehensive income Items that will not be reclassified in profit or loss  Actuarial loss on pension obligations Items that may be reclassified in profit or loss  Translation difference, net assets in foreign currency  Deffered tax Total comprehensive income

Profit for the period Items that will not be reclassified in profit or loss  Issue of share capital

                4 710

Items that may be reclassified in profit or loss Other income booked towards equity   Translation difference, net assets in foreign currency Total comprehensive income

                          -                 10 085  4 710

-

Total shareholders transactions Equity as at 30.06 2019

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105 619

-11 871

10 085

30 751

35 461

                          -

-

-9 178

84 570

Consolidated statement of cash flows All amounts in SEK thousand

Cash flows from operations Profit/(loss) before income taxes Taxes paid in the period Depreciation Other adjustments Currency (gains) losses not related to operating activities Change in inventory Change in trade debtors Change in trade creditors Change in other provisions Net cash flow from operations Cash flows from investments Purchase of intangible assets Purchase of fixed assets Purchase of subsidiaries (net of cash) Change in other short- and longterm investments Net cash flows from investments

Cash flow from financing Net change in credit line Proceeds from long term loans Repayment of borrowings Repayment of leasing liabilities Dividends paid to equity holders of NIG AB Transactions with minority interests Other transactions Net cash flow from financing Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the period Exchange rate differences in cash and cash equivalents Cash and cash equivalents at the end of the period

Page 10

2019-04-01 2019-06-30

2018-04-01 2018-06-30

2019-01-01 2019-06-30

2018-01-01 2018-06-30

2018-01-01 2018-12-31

-5 321 -968 8 667 -1 730

595 10 865 -854

-4 938 -1 746 19 497 -1 442

5 561 21 725 -1 695

19 919 42 002 -4 454

-326

6 251

-1 360

6 031

-1 288

799 082 867 306 834

-6 708 -15 660 6 038 -890 -363

-29 893 1 293 3 897 -4 612 -19 304

-11 986 -18 613 249 -3 547 -2 275

-5 405 -5 654 12 487 -5 651 51 956

-151 -492 -

-1 065 -464 -

-321 -1 363 -19 550

-1 253 -908 -

-2 436 -1 834 -

52

-1 033

45

-1 038

-853

-591

-2 562

-21 189

-3 199

-5 123

-6 754 1 029 -12 055 -17 780

-9 130 17 849 1 -10 011 -1 291

1 740 -458 -23 333 -22 051

2 846 17 849 -20 147 270 818

-44 046 310 624 -124 386 -36 909 -24 577 270 80 976

-20 205

-4 216

-62 544

-4 656

127 809

97 777

10 802

139 082

11 022

11 022

326

164

1 360

384

251

77 898

6 750

77 898

6 750

139 082

-19 17 4 -4 -1

Parent Company financial statements - North Investment Group AB (publ.) Income statement All amounts in SEK thousand

Apr-Jun 2019

Apr-Jun 2018

Jan-Jun 2019

Jan-Jun 2018

Other external cost Total operating expense

(171) (171)

(22) (22)

(502) (502)

(1 034) (1 034)

Operating profit

(171)

(22)

(502)

(1 034)

Interest income and similar Interest expense and similar

1 445 (7 124)

(1 478)

2 548 (14 350)

5 (2 956)

Net financial income (expenses)

(5 679)

(1 478)

(11 802)

(2 951)

Profit before income tax

(5 850)

(1 500)

(12 304)

(3 985)

-

-

-

-

(5 850)

(1 500)

(12 304)

(3 985)

-

-

-

-

(5 850)

(1 500)

(12 304)

(3 985)

Income taxes Net profit for the period

Other comprehensive income (loss), net of taxes Total comprehensive income

Total comprehensive income attributable to: Equity holders of NIG AB

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Balance sheet statement All amounts in SEK thousand

ASSETS

2019

2018

2018

30.06

30.06

31.12

Other investments Receivables to group companies Deferred tax receivables Total non-current financial assets

303 390 119 024 321 422 735

303 390 303 390

303 390 56 089 321 359 800

TOTAL NON-CURRENT ASSETS

422 735

303 390

359 800

Other short term receivables Prepaid expenses and accrued income Cash and cash equivalents Total receivables

2 555 31 35 647 38 233

12 713 27 175 12 915

12 490 84 73 925 86 499

TOTAL CURRENT ASSETS

38 233

12 915

86 499

460 968

316 305

446 299

TOTAL ASSETS

All amounts in SEK thousand

EQUITY AND LIABILITIES

2019

2018

2018

30.06

30.06

31.12

Share capital Other equity This years result

105 619 54 401 -12 304

100 909 40 799 -3 985

100 909 31 054 -1 178

Equity attributable to majority shareholders

147 716

137 723

130 785

Liabilities to group companies Bonds Total non-current liabilities

313 218 313 218

178 426 178 426

310 599 310 599

19 15 34

18 138 156

76 4 839 4 915

460 968

316 305

446 299

Accounts payable Other short-term liabilities Short-term liabilities to group companies Total current liabilities

TOTAL EQUITY AND LIABILITIES

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Accounting policies    The interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish  Annual Accounts Act. The consolidated financial statements were prepared in accordance with the cost  method. All amounts are in thousands of Swedish kroner, unless otherwise stated.     The Parent Company applies Recommendation RFR 2 Accounting for Legal Entities, issued by the Swedish  Financial Reporting Board, and the Annual Accounts Act. The application of RFR 2 means that the Parent  Company, in the interim report for a legal entity, applies all IFRS and statements approved by the EU as far as  possible within the framework of the Swedish Annual Accounts Act and the Pension Obligations Vesting Act,  with consideration taken to the relationship between accounting and taxation.     The accounting policies applied correspond to the accounting policies and measurement principles presented  in the 2018 Annual Report. The 2018 Annual Report is available at www.northinvestmentgroup.se.     The Group applied IFRS 16 Leases as of January 1, 2017. For more information see Annual report. The Group  has not implemented new or changed standards in 2019 with material effects on the Group's financial position  and results.     

Critical accounting estimates and judgements The preparation of financial statements requires the use of accounting estimates which, by definition, will  seldom equal the actual results. Management also needs to exercise judgement in applying the Group’s  accounting policies.    Estimates and judgements are continually evaluated, and are based on historical experience and other factors,  including expectations of future events that may have a financial impact on the entity and that are believed to  be reasonable under the circumstances.    Management makes estimates and assumptions concerning the future. The resulting accounting estimates will,  by definition, seldom equal the related actual results.     

Risks and risk management Exposure to risk is a natural part of business activity and this is reflected in NIG's approach to risk management.  Responsibility for the management of the group’s financial transactions and risks is centralised to the parent  company. The main risk exposure is related to financial risks. See note 3 in the Annual Report. 

Seasonal variations The Group has seasonal variations related to one of its main categories; school furniture. A high share of these  deliveries is related to 3rd quarter.  

Related party transactions The Group has immaterial transactions with other companies in the majority share owners´ Group. In addition;  through the acquisition of Sørlie there has been a private placement towards the previous owner of Sørlie, who  is also an employee in Sørlie. 

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Events after the reporting date No events have occurred after the balance sheet date that have any significant effect on the submitted  accounts. 

Acquisitions No acquisitions were made in Q2 2019.   

Audit review report This interim report has not been examined by the company's auditor. 

Segments/revenue Operating segments are reported in a manner consistent with the internal reporting provided to the chief  operating decision maker.   North Investment Group AB (publ.) has defined its two segments as:   

Business area NIG Sweden  Business area NIG Norway 

All amounts in SEK million

Revenue per segment Net sales to other segments Revenue from external customers

Apr-Jun 2019 Apr-Jun 2018 Jan-Jun 2019 Jan-Jun 2018   NIG NIG   NIG NIG   NIG NIG   NIG NIG Norway Sweden Norway Sweden Norway Sweden Norway Sweden 116,4 114,2 72,9 112,5 253,0 224,6 140,7 225,5 -3,9

-3,6

-4,0

-3,5

-10,0

-9,3

-9,4

-5,3

112,5

110,6

68,9

109,0

243,0

215,3

131,3

220,2

Apr-Jun 2019

Apr-Jun 2018

Jan-June 2019

Jan-Jun 2018

NIG Norway

11,2

14,3

26,5

29,1

NIG Sweden

3,9

1,7

11,7

11,0

EBITDA  for the Group’s operating segments is  reconciled with the Group’s profit  before tax in accordance with the  following: NIG AB and elimination

15,1

16,0

38,2

40,1

-0,2

0,0

-0,5

-1,0

EBITDA for the Group

15,0

16,0

37,7

39,1

Amortisation and depreciation

-8,7

-10,8

-19,5

-21,7

-11,7

-4,6

-23,2

-11,8

-5,3

0,5

-5,0

5,6

Financial items net Profit before tax

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Additional information Please contact

Ståle Eide CEO [email protected] (+47) 913 49 322

Tore Skedsmo CFO [email protected] (+47) 952 25 306

Ellen Hanetho Investor Relations [email protected] (+47) 482 20 750

North Investment Group AB (publ) Bredmyra 4- 1739 Borgenhaugen, Norway Corporate Identity Number 556972-0468 Financial Calendar: 2019 3rd Quarter Report: 29.11.2019

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