Interim Report January-March 2012

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Loraine Woods
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Traction is an investment company the operations of which are based on its own methodology for developing and refining the companies in which Traction is an owner.

1 Traction is an investment company the operations of which are based on its own methodology for developing and refining the companies in which Traction is an owner. Traction s role as owner is based on an active and long-term engagement, together with an entrepreneur or corporate management and other part-owners. At present, Traction is involved in some 20 companies, several of which are publicly traded. In addition, Traction is engaged in investment activities for the purpose of obtaining a good yield on the Company s capital. Traction s share is traded on the NASDAQ OMX Nordic Exchange in Stockholm (the Small Cap list). Read more about Traction at Interim Report January-March 2012 Period January-March Profit after taxes attributable to the Parent Company s shareholders amounted to MSEK 219 (64). Earnings per share amounted to SEK (4.09). Consolidated net revenue amounted to MSEK 129 (121). Operating profit amounted to MSEK 216 (63), of which: o Change in value of securities MSEK 201 (52). o Dividend income MSEK 8 (5). o Operating income in operating companies MSEK 8 (9). Return on equity was 14 (4) percent. Equity per share amounted to SEK 105 (99). Events during the quarter Active listed holdings increased by 27 percent, equivalent to MSEK 139. Traction repurchased 165,000 shares for a total of MSEK 12.5 (price SEK 75.50). Events after the end of the period under review The change in value of listed holdings, including dividend income since 31 March, amounts to MSEK -19 as of 8 May.

2 2 (12) President s statement Traction recorded a strong first quarter with sharp increases in value for the active listed holdings, which increased by 27 percent. It s a well-know fact that equity prices are very volatile at present, so one should avoid drawing far-reaching conclusions from the increases in value during the first quarter. It is notable, however, that several of Traction s active listed companies showed a strong trend in earnings during the first quarter, especially OEM International and PartnerTech. GROUP FINANCES PERIOD JANUARY -MARCH Summary Net revenue amounted to MSEK 129 (121). Operating profit amounted to MSEK 216 (63), which includes changes in value of MSEK 201 (52), dividend income of MSEK 8 (5) and the result of operative subsidiaries MSEK 8 (9). Net finance items amounted to MSEK 4 (4). Operative subsidiaries Revenue amounted to MSEK 128 (121), of which Ankarsrumbolagen contributed MSEK 62 (49) and Nilörngruppen MSEK 66 (72). Operating profit amounted to MSEK 8 (9), of which Ankarsrumbolagen contributed MSEK 6.2 (3.4) and Nilörngruppen 2.3 (6.6). Weaker demand in the retail sector affected revenue and hence the profit of Nilörngruppen during the first quarter. The dividend resolved to Nilörngruppen s shareholders is SEK 13 per share, equivalent to MSEK 34. Listed holdings The change in value of listed securities amounted to MSEK 201 (52), whereof active listed holdings (ownership >10 percent) contributed MSEK 139. Large changes in the value of Traction s active listed holdings were recorded by BE Group MSEK +34, OEM MSEK +26, PartnerTech MSEK +21 and Softronic MSEK +23. The change in value of other listed holdings amounted to MSEK +62, of which the holdings in SCA contributed MSEK +14 and Swedbank contributed MSEK +17. In addition hereto, dividend income was MSEK 8. Unlisted holdings There was no revaluation during the period of the unlisted, minority-owned holdings (-1). Capital expenditures and disposals Investments in shares in listed companies amounted to MSEK 38 (66). Shares in listed companies were sold in an amount of MSEK 91 (3). Shares in Swedbank, for instance, were sold for MSEK 44. Corporate bonds and other financial assets were also sold in an amount of MSEK 27, net (net purchases of 18). Traction repurchased 165,000 of its own class B shares during the quarter at a price of SEK each, or a total of MSEK The total holding of Traction shares held in treasury is now 956,000 class B shares, equivalent to 5.8 percent of the total number of shares outstanding.

3 3 (12) Liquidity and cash flow The Group s liquid funds as of 31 March amounted to MSEK 212 (239), of which central Traction accounted for MSEK 158 (188). Traction s current assets include financial investments in the amount of MSEK 467, which refers to investments in equities and corporate bonds. In addition hereto, AB Traction has an unutilised credit facility of MSEK 150. The proposed dividend to Traction s shareholders amounts to SEK 2.35 per share, or a total of MSEK During the second quarter Traction will receive approximately MSEK 28 in dividends from the listed active holdings. Dividend s from Traction s unlisted holdings is expected to amount to approximately MSEK 29, of which Nilörngruppen accounts for MSEK 24. The dividend from Nilörngruppen does not affect Traction s consolidated profit since Nilörngruppen AB is a subsidiary in the Traction Group. The Group s interest-bearing liabilities amount to MSEK 7 (7), which refers to the operative subsidiaries. Equity Equity as of 31 March 2012 amounted to MSEK 1,651 (1,445), of which attributable to the Pant Company s shareholders MSEK 1,621 (1,416), equivalent to SEK 105 (95) per share. The number of shares outstanding as of 31 march was 16,400,000, of which 1,800,000 class A shares. Not including shares held in treasury, the number of shares outstanding is 15,444,000, of which 1,800,000 are class A shares. Parent Company AB Traction s profit amounted to MSEK 179 (44). Liquid funds as of 31 March amounted to MSEK 77 (30). The Parent Company s equity/assets ratio as of 31 March was 100 (100) percent. The Parent Company has no external loans. The Parent Company has an unutilised credit facility in the amount of MSEK 150.

4 4 (12) Summary of net assets of the Traction Group The compilation of the Group s equity in the table below shows how the Group s net assets are distributed. In the opinion of the Company, the compilation below of the net assets provides a better understanding of Traction s financial position than the Consolidated Balance Sheet, which contains the assets and liabilities of the operating subsidiaries. It should be noted that subsidiaries and real estate are carried at book value and not at market value. Holdings MSEK % of total SEK/share Listed active holdings BE Group % 10 Drillcon 54 3% 3 Duroc 33 2% 2 Hifab Group 73 5% 5 OEM International 130 8% 9 PartnerTech 63 4% 4 Softronic 86 5% 6 Switchcore 31 2% 2 Other active holdings (Refer to Note 2) 17 1% 1 Total active listed holdings % 42 Unlisted holdings (Refer to Note 2) Bricad Holding 52 3% 3 Recco Holding 43 3% 3 Other 32 2% 2 Total unlisted holdings 127 8% 8 Operative subsidiaries¹ Ankarsrum Motors 21 1% 1 Nilörngruppen² 70 4% 4 Other subsidiaries 7 1% 1 Total subsidiaries 98 6% 6 Total active holdings % 56 Other assets Loans to active holdings³ 87 6% 7 Other assets, including real estate 36 2% 2 Total other assets 123 8% 9 Financial investments Catella 32 2% 2 SCA 123 8% 8 Swedbank 62 4% 4 Other listed shares 159 9% 9 Interest-bearing investments 91 5% 6 Liquid funds⁴ % 11 Total financial investments % 40 TOTAL 1, % Valued at book value, not market value. 2 Traction s stake is 70 percent of the capital. 3 Refers primarily to Creatum Holding, Ankarsrum Die Casting and Ankarsrum Motors. 4 There is also an unutilised credit facility in the amount of MSEK 150.

5 5 (12) Risks and uncertainty factors The Group s and the Parent Company s significant risk and uncertainty factors include business risks in the form of exposure to certain industries, or an individual holding, as well as dependency on individual key persons in the Companies in which Traction is involved or has an ownership interest. Then there are financial risks, which primarily consist of price risks, i.e. the risk of a change in value of a financial instrument due to changes in share prices, foreign exchange rates or interest rates. In addition to the risks described in Traction s Annual Report in general by reason of the Company s business orientation, specific reference can be made to the Report of the Board of Directors and accompanying notes for a more detailed discussion of the Group s and the Parent Company s risk exposure and risk management procedures. Beyond that, no additional significant risks are deemed to have been added Accounting and valuation policies This summary interim report has been prepared for the Group in accordance with IAS 34 and applicable rules in the Swedish Annual Accounts Act. The Interim Report for the Parent Company has been prepared in accordance with Chapter 9 of the Swedish Annual Accounts Act, Interim report. This report has been prepared in accordance with the same accounting policies and using the same calculation methods as set out in the most recent Annual Report. Below is a brief description of the accounting policies of vital importance in compiling Traction s financial reports. Comparative data refer to the corresponding year-ago period, except in the case of balance sheet items and liquidity metrics which refer to the prior year-end. Accounting for and valuation of holdings Subsidiaries Companies defined as subsidiaries are consolidated in accordance with the purchase method of accounting pursuant to IAS 27 and IFRS 3. In the Parent Company subsidiaries are carried at acquisition values. Associated companies In the Group and the Parent Company associated companies are carried as financial instruments at fair value in accordance with IAS 39 and IAS 28, item 1. The Parent Company carries listed, associated companies at fair value pursuant to IAS 39 and IAS 28, item 1. Listed holdings All other holdings are reported as financial instruments and are valued as financial instruments at fair value in accordance with IAS 39. Unlisted holdings Valuation of unlisted holdings is performed on the basis of International Private Equity and Venture Capital Valuation Guidelines developed and published jointly by venture capital organisations EVCA, BVCA and ACIF. DEFINITIONS Equity/assets ratio Shareholders equity, including minority interest, as a percentage of balance sheet total. Earnings per share Net profit for the period, fully diluted, divided by the average number of shares outstanding during the year. Equity per share Equity at the end of the period, divided by the number of shares outstanding.

6 6 (12) Return on equity Net profit for the year after taxes as a percentage of shareholders equity at the beginning of the year adjusted for repurchased shares and dividend paid. Listed active holdings Holdings where Traction s ownership exceeds 10 percent of the votes in each respective company. Unlisted active holdings Holdings where Traction s ownership is less than 50 percent of the votes and the remainder of the shares outstanding are owned by one or more entrepreneurs or other active participants. Subsidiaries Traction s subsidiaries have usually been turnaround projects where the chief executive is an employee of the company, but participates in an incentive programme. Financial investments Refers to shares and interest-bearing investments in companies where Traction is not an active owner. Central Traction Central Traction includes, aside from AB Traction, the Parent Company, wholly owned companies that manage securities, are active as a lender and underwriter, or engage in consulting, mainly for Traction s wholly and partially owned holdings. Schedule of future information Publication dates for financial information: 23 August 2012 Interim Report January-June 25 October 2012 Interim Report January-September The information in this Interim Report is of the type Traction is under obligation to publish in accordance with the Securities Markets Act. The information herein was provided for publication at 07:00 p.m., 9 May. Stockholm, 9 May 2012 Petter Stillström President & CEO AB Traction Tel: Box 3314 Fax: Birger Jarlsgatan 33 E-post: post@traction.se SE Stockholm SWEDEN Organisation number

7 7 (12) MSEK Note Jan-March Full year OPERATING REVENUE Net revenue Dividend income Other operating income Total operating revenue OPERATING EXPENSES Raw materials and supplies Other external expenses Personnel expenses Depreciation and amortisation Total operating expenses Change in value of securities Operating income PROFIT FROM FINANCIAL ITEMS Financial income Financial expense Total net financial items Profit after financial items Taxes Net profit for the period Of which attributable to: Parent Company s shareholders Holdings without controlling interest Earnings per share (SEK) Earnings per share after dilution (SEK) Number of shares outstanding (thousands) 15,444 15,689 15,609 Average number of shares outstanding (thousands) 15,540 15,689 15,681 Average number of shares outstanding after dilution (thousands) 15,540 15,689 15,681 RAPPORT ÖVER TOTALRESULTATET FÖR KONCERNEN Net profit for the period Translation differences attributable to non-swedish operations -1, Comprehensive result for the period Period s comprehensive result attributable to: Parent Company s shareholders Holdings without controlling interest

8 8 (12) SUMMARY CONSOLIDATED BALANCE SHEETS MSEK Note ASSETS 31/3 31/3 31/12 Intangible non-current assets Tangible non-current assets Shares, etc Long-term receivables Deferred tax asset Total non-current assets Inventories Other current assets Financial investments under active management Loan receivables Cash and cash equivalents Total current assets , TOTAL ASSETS 1, , ,573.1 EEQUITY AND LIABILITIES Equity Attributable to the Parent Company s shareholders 1, , ,415.6 Attributable to holders without controlling interest 29, Total equity 1, , ,445.2 Long-term liabilities* Current liabilities* Total liabilities TOTAL LIABILITIES AND EQUITY 1, , ,573.1 * Of which interest-bearing liabilities Summary Report of Changes in Consolidated Equity MSEK 31/3 31/3 31/12 Opening balance 1, , ,533.3 Change in holders without controlling interest Dividend to shareholders Dividend attributable to holders without controlling interest Repurchase of own shares -12, Comprehensive profit for the period 217,8 61, Closing balance 1, , ,445.2

9 9 (12) CASH FLOW STATEMENTS Jan-March Full year MSEK Operating activities Consolidated profit before taxes Adjustment for items not included in cash flow Paid taxes Cash flow from operating activities Before changes in working capital Changes in working capital Cash flow from operating activities Cash flow from investment activities Purchase of shares in unlisted companies Purchase of shares in listed companies Sale of shares in listed companies Purchase/sale of tangible non-current assets Change in other financial assets Cash flow from investment activities Financing activities Change in loan liabilities Purchase of holdings without controlling interest Dividend paid Dividend to holders without controlling interest Repurchase of own shares Cash flow from financing activities Period s cash flow Cash and cash equivalents at beginning of period Translation difference in cash and cash equivalents Cash and cash equivalents at end of period Jan-March Full year NYCKELTAL Return on equity for the period, % Equity per share, SEK Market price at end of period, SEK Market price/equity, % Equity/assets ratio, %

10 10 (12) (Note 1) Group 2012 Listed Unlisted Central Consolidation Period Jan -March holdings holdings Subsidiaries Traction eliminations Total Net revenue Dividend income Other operating revenue Operating expenses Changes in value Operating profit Group 2011 Listed Unlisted Central Consolidation Period Jan-March holdings holdings Subsidiaries Traction eliminations Total Net revenue Dividend income Other operating revenue Operating expenses Changes in value Operating profit (Note 2) Shares Number Market Market Percentage of shares Market price price, MSEK price trend Percentage Of votes Company (thousands) 31/ / , %* of capital Listed active holdings BE Group 6, Drillcon 13, Duroc 1, Hifab Group 14, Nordic Camping & Resort 2, OEM International 1, PartnerTech 1, Softronic 11, Switchcore 1,037, Total active holdings 648 *Each respective share s development during entire period. Market value, MSEK Revaluation, Proportion Proportion of votes, Unlisted holdings 31/ , MSEK of capital, % % Banking Automation Bricad Holding Recco Holding Sigicom Other unlisted holdings 6 - Total unlisted holdings Total shares 775

11 11 (12) (Note 3) Financial investments Number Market price, of shares Market price MSEK Company (thousands) 31/ / SCA 1, Swedbank Catella 4, Other equity investments 159 Total equity investments 376 Other interest-bearing investments 91 Total financial investments 467

12 12 (12) SUMMARY PARENT COMPANY INCOME STATEMENTS MSEK Jan-March Dividend income Other operating revenue - - Total operating revenue Other external costs Personnel expenses - - Total operating expenses Change in value of securities Operating profit Shares in Group companies Financial income/expense Profit before taxes Taxes - - Net profit for the period SUMMARY REPORT ÖF COMPREHENSIVE PROFIT FÖR THE PARENT COMPANY Net profit for the period Comprehensive profit for the period SUMMARY PARENT COMPANY BALANCE SHEETS MSEK /3 31/12 ASSETS Shares Total non-current assets Due from Group companies Other receivables Financial investments Cash and cash equivalents Total non-current assets TOTAL ASSETS 1, ,206.4 EQUITY AND LIABILITIES Equity 1, ,206.1 Current liabilities Total current liabilities TOTAL LIABILITIES AND EQUITY 1, ,206.4 Pledged assets None None Contingent liabilities None None

Interim Report January-June 2012

Interim Report January-June 2012 Traction is an investment company the operations of which are based on its own methodology for developing and refining the companies in which Traction is an owner. Traction s role as owner is based on