year-end report - gunnebo group · 1 gunnebo year-end report 2016 year-end report 2016 2016 2015...

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Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776 1,677 6,088 6,052 EBITDA excl. non-recurring items, MSEK 203 181 561 505 EBITDA margin excl. non-recurring items, % 11.4 10.8 9.2 8.3 Operating profit (EBIT) excl. non-recurring items, MSEK 172 149 438 397 Operating margin (EBIT) excl. non-recurring items, % 9.7 8.9 7.2 6.6 Operating profit (EBIT), MSEK 142 121 366 320 Operating margin (EBIT), % 8.0 7.2 6.0 5.3 Net profit for the period, MSEK 96 80 209 168 Basic earnings per share, SEK 1.25 1.05 2.71 2.18 Free cash flow, MSEK 107 218 159 56 Dividend per share (*proposed), SEK - - 1.20* 1.00

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Page 1: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

1 GUNNEBO YEAR-END REPORT 2016

Year-End Report 2016

2016 2015 2016 2015

Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales, MSEK 1,776 1,677 6,088 6,052

EBITDA excl. non-recurring items, MSEK 203 181 561 505

EBITDA margin excl. non-recurring items, % 11.4 10.8 9.2 8.3

Operating profit (EBIT) excl. non-recurring items, MSEK 172 149 438 397

Operating margin (EBIT) excl. non-recurring items, % 9.7 8.9 7.2 6.6

Operating profit (EBIT), MSEK 142 121 366 320

Operating margin (EBIT), % 8.0 7.2 6.0 5.3

Net profit for the period, MSEK 96 80 209 168

Basic earnings per share, SEK 1.25 1.05 2.71 2.18

Free cash flow, MSEK 107 218 159 56

Dividend per share (*proposed), SEK - - 1.20* 1.00

Page 2: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

2 GUNNEBO YEAR-END REPORT 2016

CEO’s COMMENTS ON THE FOURTH QUARTER 2016

he fourth quarter was a strong end to the year with a turnover of MSEK 1,776, which is an increase of 6%. Organically, sales

increased by 3% and the operating margin ex-cluding non-recurring items amounted to 9.7%.

For the full year, we reported an operating margin excluding non-recurring items of 7.2%, which means we have met our financial target of a 7% operating margin.

DEVELOPMENT OF OUR BUSINESS

Region EMEA showed organic sales growth of 2% during the fourth quarter. Sales were strong primarily in Southern Europe, Central Europe and Eastern Europe whereas they were weaker in France and the UK.

Region Asia-Pacific continued to show organic growth also during the fourth quarter. Sales were strong in South Korea, mainly due to a larger installation within Entrance Security, and in India where the ATM business continued to perform well.

Region Americas had organic sales growth of 4% during the fourth quarter. In both North and South America sales developed positively.

The positive trend in Entrance Security’s sales continued. The sales in mass transit continued to develop well, with deliveries of several orders for metro systems in both Asia and Europe.

In Cash Management, sales in Europe of the closed cash management system, SafePay, continued positively during the period and several major customers placed new orders. In North America we received several large orders for airtube systems from American banks.

In Safes & Vaults, both sales in the ATM and certified safe segments developed positively.

In Electronic Security sales during the quarter were below last year, due to weaker sales in Europe.

Q4 FINANCIAL RESULTS

For the fourth quarter, we reported organic sales growth of 3%, as well as an operating profit excluding non-recurring items of MSEK 172, giving an operating margin of 9.7%.

With a strong fourth quarter, it is a milestone to report an operating margin of 7.2% for the year. With a clear strategy and structure, we are now equipped to continue executing our strategy for profitable growth.

Gothenburg, February 2, 2017

Henrik Lange President and CEO

FINANCIAL TARGETS & OUTCOME Target

2016 2015 2016 2015

Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Organic growth 3% 2% 1% 0% 5%

Operating margin1)

9.7% 8.9% 7.2% 6.6% 7.0%

Return on capital employed1) 2)

12.8% 12.4% 12.8% 12.4% 15.0%

Equity ratio 34% 34% 34% 34% 30%

1) Excluding non-recurring items2) During the last twelve-month period

T

Page 3: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

3 GUNNEBO YEAR-END REPORT 2016

SALES & PROFITABILITY IN BRIEF SALES BY REGION YTD 2016 SALES BY PRODUCT GROUP YTD 2016

SALES Q4 2016 VS Q4 2015 SALES YTD 2016 VS 2015

GROUP SALES & OPERATING MARGIN BY QUARTER

SALES BY PRODUCT GROUP YTD 2016 VS 2015

64%

19%

17%EMEA

APAC

Americas

17%

22%

35%

19%

7%Cash Management

Entrance Security

Safes & Vaults

Electronic Security

Other

Organic Structure Currency Total

EMEA 2% 0% 2% 4%

APAC 3% 0% 5% 8%

AMERICAS 4% 0% 5% 9%

TOTAL 3% 0% 3% 6%

Organic Structure Currency Total

EMEA 0% 2% -1% 1%

APAC 5% 0% -1% 4%

AMERICAS -2% 0% -3% -5%

TOTAL 1% 1% -1% 1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1 2 3 4 1 2 3 4 1 2 3 4

2014 2015 2016

EMEA APAC Americas Total

Cash Management ++ --- +/- +/-

Entrance Security +++ +/- +/- +++

Safes & Vaults + + + +

Electronic Security --- --- --- ---

Other +++ +++ +/- +++

+/- Unchanged + or - Slightly better/Slightly worse ++ or -- Better/Worse +++/--- Much better/Much worse

Page 4: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

4 GUNNEBO YEAR-END REPORT 2016

SALES DEVELOPMENT Q4 2016 Organically, the region’s sales during the fourth quarter increased by 2%. Sales in the sub-regions South, Central and Eastern Europe continued to develop well. The development was weaker in France and the UK.

Cash Management solutions continued to develop well. Several large deliveries in Southern Europe and France of the closed cash management system, SafePay, had a positive impact. Sales in the Middle East in collaboration with a cash services partner also developed well.

Sales in Safes & Vaults developed positively, driven by channel partner sales in the Nordics as well as a strong development of the delivery of ATM safes.

Entrance Security had a strong development during the quarter in the majority of the markets across the region.

Electronic Security sales were weaker in the fourth quarter.

RESULT DEVELOPMENT Q4 2016

Operating profit excluding non-recurring items improved to MSEK 76 (69) giving an operating margin of 6.7% (6.4). The improved profits were mainly driven by increased productivity in Europe.

Non-recurring items had a negative impact on operating profit by MSEK -23 (-26). These were mainly caused by continued structural changes in Europe.

QUARTER HIGHLIGHTS

French La Poste places an order for over 500 customized safes.

Dubai-based cash services company Transguard continues to order solutions for cash management for installation at their retail customers.

Danish indoor multifunctional arena, Royal Arena, turns to Gunnebo for an entrance security solution.

UK Post Office agrees to trial Gunnebo’s anti-gas attack protection system for ATM’s (GP-X ATM).

Several orders for Entrance Security have been placed by public & commercial buildings in the Middle East.

EMEA IN BRIEF

SVP: Heinz Jacqui | Sales Companies: 17

Europe, Middle East & Africa (EMEA) is the Group’s largest region. It is divided into eight sub-regions: Nordic, Central Europe, Southern Europe, UK/ Ireland, France, Eastern Europe, Middle East and Africa.

SALES BY PRODUCT GROUP YTD 2016

0%

1%

2%

3%

4%

5%

6%

7%

0

200

400

600

800

1 000

1 200

1 2 3 4 1 2 3 4 1 2 3 4

2014 2015 2016

Operating margin %, excl. non-recurring items

Operating margin % 12M, excl. non-recurring items

Sales per quarter

18%

22%

34%

23%

3%

Cash Management

Entrance Security

Safes & Vaults

Electronic Security

Other

% GROUP SALES YTD

2016 2015 2016 2015

Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales, MSEK 1,131 1,084 3,907 3,860

Organic growth, % 2 3 0 0

Operating profit (EBIT) excl. non-recurring items, MSEK 76 69 172 151

Operating margin (EBIT) excl. non-recurring items, % 6.7 6.4 4.4 3.9

Non-recurring items, MSEK -23 -26 -59 -67

Operating profit (EBIT), MSEK 53 43 113 84

REGION EMEA

64%

% GROUP SALES YTD

Page 5: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

5 GUNNEBO YEAR-END REPORT 2016

SALES DEVELOPMENT Q4 2016 Sales in the region increased organically by 3% during the fourth quarter. The markets in India, China, South Korea and Singapore have developed well, while sales were weaker in the rest of South-East Asia.

Sales in Safes & Vaults continued to develop well on all markets in the region during the quarter, especially the sale of safes to manufacturers of ATMs. The bank business in India developed weaker, being affected by the demonetisation programme.

Sales of Entrance Security solutions were good, mainly driven by a major delivery in South Korea.

Gunnebo also has a fire security business in the region. Both the fire products and project business developed well in India and Indonesia.

Sales in Cash Management and Electronic Security developed weaker in the quarter.

RESULT DEVELOPMENT Q4 2016 Strong sales and tight cost control contributed to the improvement in operating profit excluding non-recurring items, which was MSEK 55 (41). This corresponded to an operating margin of 15.7% (12.7).

QUARTER HIGHLIGHTS

A Swedish retailer places an order for Gunnebo's retail stations for efficient cash management in their stores in Singapore and Malaysia.

The Chinese city of Guiyang chooses Gunnebo entrance security solutions for its metro Line 1.

Bank Central Asia (BCA) in Jakarta, Indonesia installs high-security perimeter protection and entrance control solutions.

Samsung Electronics Institute in Seoul University in South Korea invests in Gunnebo’s SpeedStile for entrance security.

ASIA-PACIFIC IN BRIEF

SVP: Sacha de La Noë | Sales Companies: 7

Australia/New Zealand, India, Indonesia, China South-Korea, South-East Asia: Malaysia, Singapore (with offices in Thailand, Vietnam and Myanmar)

SALES BY PRODUCT GROUP YTD

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

50

100

150

200

250

300

350

400

1 2 3 4 1 2 3 4 1 2 3 4

2014 2015 2016

Operating margin %, excl. non-recurring items

Operating margin % 12M, excl. non-recurring items

Sales per quarter

6%

22%

48%

3%

21%

Cash Management

Entrance Security

Safes & Vaults

Electronic Security

Other

% GROUP SALES YTD

2016 2015 2016 2015

Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales, MSEK 351 323 1,129 1,085

Organic growth, % 3 1 5 -8

Operating profit (EBIT) excl. non-recurring items, MSEK 55 41 138 115

Operating margin (EBIT) excl. non-recurring items, % 15.7 12.7 12.2 10.6

Non-recurring items, MSEK -3 -2 -5 -7

Operating profit (EBIT), MSEK 52 39 133 108

REGION ASIA-PACIFIC

19%

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6 GUNNEBO YEAR-END REPORT 2016

SALES DEVELOPMENT Q4 2016 Organic sales for the region increased by 4% during the fourth quarter. Growth in Americas was primarily driven by sales within Safes & Vaults, Entrance Security and Electronic Security.

Safes & Vaults had a strong sales development in the quarter, primarily to the banking sector in the US and Canada.

Entrance Security had a positive development with a number of larger installations across the region and also strong sales of electronic article surveillance to major retail chains in Brazil.

Cash Management sales were primarily derived from strong sales of drive-up equipment in the US market, as well as a number of installations of cash deposit systems in the retail sector in both US and Mexico.

Electronic Security had a strong quarter, driven by good sales to American banks.

RESULT DEVELOPMENT Q4 2016 The region’s operating profit excluding non-recurring items was MSEK 41 (39) and the operating margin 13.9% (14.4).

QUARTER HIGHLIGHTS

Carrefour in Brazil signs a major contract for installation and service of electronic article surveillance and electronic security.

The retail business in Mexico continues to grow. In the quarter, contracts for installation and service of electronic security are signed with several companies including Costco and Telefónica.

Raia Drogasil and DPSP, the two largest drugstore chains in Brazil, continue to upgrade their loss prevention with solutions from Gunnebo.

Major American banks turn to Gunnebo for the installation of a cash management system to improve the customer experience.

Canadian Correction Facility signs a two-year service agreement.

AMERICAS IN BRIEF

SVP: Dan Schroeder | Sales Companies: 4

North America: Canada, USA Latin America: Brazil, Mexico

SALES BY PRODUCT GROUP YTD

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

50

100

150

200

250

300

350

1 2 3 4 1 2 3 4 1 2 3 4

2014 2015 2016

Operating margin %, excl. non-recurring items

Operating margin % 12M, excl. non-recurring items

Sales per quarter

26%

22%26%

20%

6%Cash Management

Entrance Security

Safes & Vaults

Electronic Security

Other

% GROUP SALES YTD

2016 2015 2016 2015

Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales, MSEK 294 270 1,052 1,107

Organic growth, % 4 -2 -2 8

Operating profit (EBIT) excl. non-recurring items, MSEK 41 39 128 131

Operating margin (EBIT) excl. non-recurring items, % 13.9 14.4 12.2 11.8

Non-recurring items, MSEK -4 0 -8 -3

Operating profit (EBIT), MSEK 37 39 120 128

REGION AMERICAS

17%

Page 7: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

7 GUNNEBO YEAR-END REPORT 2016

FINANCIAL PERFORMANCE OCTOBER-DECEMBER 2016 Net sales The Gunnebo Group’s net sales during the fourth quarter amounted to MSEK 1,776 (1,677) representing a 6% increase. Organic growth was 3%, with EMEA at 2%, Asia-Pacific at 3% and Americas at 4%. The currency effect was 3%.

Operating results Operating profit was MSEK 142 (121), equaling an operating margin of 8.0% (7.2). Excluding non-recurring items, operating profit amounted to MSEK 172 (149), equaling an operating margin of 9.7% (8.9). EBITDA excluding non-recurring items reached MSEK 203 (181) corresponding to 11.4% (10.8) of net sales. Depreciations were MSEK 17 (15) and amortisations MSEK 14 (17) of which MSEK 6 (6) derived from acquisition related intangibles.

The gross profit margin excluding non-recurring items for the quarter was 29.7% compared to 29.2% last year. Selling and administrative expenses in percent of net sales excluding non-recurring items was 20.1% in the quarter compared to 19.8% last year.

Non-recurring items impacted the result by MSEK-30 (-28) in the quarter. These were mainly caused by continued structural changes in Europe.

Changes in the operating profit in the fourth quarter, as compared to the corresponding quarter 2015, were explained by:

The 3% increase in organic sales growth, which

improved the profit by MSEK 9.

The positive net structural effects of MSEK 16

included the change in non-recurring items

between the periods, as well as savings

realized from previous restructuring initiatives.

Currency effects for the quarter of MSEK 21, of

which translation effect was MSEK 5 and

transaction effect was MSEK 16 caused by all

major currencies.

A strategically important software

development initiative, general cost increases

and inflation, as well as the positive impact of

an improved gross profit margin which were

included in Other.

Research and development expenses amounted to MSEK 33 (29) equaling 1.9% (1.7) of net sales.

Other financial highlights Net financial items totaled MSEK -13 (-7) being on a level consistent with previous quarters. Tax expense was MSEK -33 (-34) resulting in an effective tax rate of 26% (30) reflecting the positive effects of previously unrecognized tax losses.

Free cash flow was MSEK 107 (218), affected negatively by the strong sales development in the end of 2016 which resulted in the build up of trade receivables.

A lower rate of investing activities was seen in the quarter. Cash flow from financing activities totaled MSEK -36 (-139) including both repayments of credit facilities and loan amortisations.

Equity was positively impacted by both currency translations of MSEK 18 (-13) and by actuarial gains of MSEK 37 (19) on the Group’s pension provisions, net of tax, primarily caused by an increase in the discount rate in the UK. Additionally, in November, Gunnebo AB issued 50,000 new shares in line with the incentive programme adopted in 2012, which increased equity by MSEK 1.

FULL YEAR 2016 Net sales The Group’s net sales amounted to MSEK 6,088 (6,052) representing a 1% increase. Organic growth was 1%, with EMEA at 0%, Asia-Pacific at 5% and Americas at -2%. The currency effect was -1% and structure was 1% related to the acquired business Sallén in the second part of 2015.

Operating results Operating profit was MSEK 366 (320), equaling an operating margin of 6.0% (5.3). Excluding non-recurring items, it amounted to MSEK 438 (397), equaling an operating margin of 7.2% (6.6). EBITDA excluding non-recurring items reached MSEK 561 (505) equaling 9.2% (8.3) of net sales. Depreciations were MSEK 68 (61) and amortisations MSEK 55 (47) of which MSEK 24 (14) derived from acquisition related intangibles.

The gross profit margin excluding non-recurring items was 29.5% compared to 29.7% last year. Selling and administrative expenses in percent of

OPERATING PROFIT BRIDGE

Oct - Dec

Operating profit 2015, MSEK 121

Organic 9

Structure 16

Currency 21

Other -25

Operating profit 2016 142

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8 GUNNEBO YEAR-END REPORT 2016

net sales excluding non-recurring items was 22.5% compared to 23.1% last year.

Non-recurring items impacted the result by MSEK -72 (-77). The main items were the change into an indirect sales model in Austria, Hungary and Czech Republic which was finalized during quarter three, the closure of Trier manufacturing facility and continued structural and management changes in Europe.

The changes in the operating profit for the year compared to last year, were explained by:

The 1% increase in organic sales growth, which

affected the result by MSEK 8.

Structural effects between the periods of

MSEK 50 including the change in non-recurring

items, savings realized from previous

restructuring initiatives and the effect from

the Sallén acquisition.

The currency effect of MSEK 16 being the net

of transaction effects of MSEK 18 and

translation effects of MSEK -2.

The software development initiative, general

cost increases and inflation, as well as

increased spending on research and

development which were included in Other.

Research and development expenses were

MSEK 101 (87), representing 1.7% (1.4) of net

sales, an increase reflective of the Group’s strategy

to strengthen the product development roadmap

for all product areas.

Other financial highlights Net financial items totaled MSEK -53 (-43) where the currency development on loans impacted negatively. Tax expense was MSEK -104 (-109) resulting in an effective tax rate of 33% (39) reflecting the continued focus on income taxes during the year in addition to positive effects of previously unrecognized tax losses.

Free cash flow was MSEK 159 (56), reflecting a strong operating profit, a lower rate of investments in property plant and equipment as well as higher sales of property, plant and equipment mainly in the UK. Cash flow from financing activities totaled MSEK -115 (176) including both repayments of credit facilities and loan amortisations as well as new loans. In 2015 additional loans were taken related to the financing of the acquisition of Grupo Sallén.

Equity was impacted both positively by currency translations of MSEK 100 (-82) and negatively by actuarial losses of MSEK -99 (+42) on the Groups pension provisions net of tax. The actuarial losses are primarily caused by a decrease in the discount rate in the UK.

Additionally, Gunnebo AB issued a total of 135,000 new shares during the year in line with the incentive programme adopted in 2012, which increased equity by MSEK 4. The incentive program 2012 is now fully settled.

In line with the Long Term Incentive Programme (LTIP 2015), Gunnebo AB issued 730,800 new shares of series C in March at a nominal value of SEK 5 per share, increasing the share capital by MSEK 4 during the year. All of these shares were then repurchased by Gunnebo AB at the same value. The shares will be held by Gunnebo AB until the closure of LTIP in 2018, when they may be converted to shares of series B in line with LTIP.

Proposed dividend The Board propose a dividend of SEK 1.20 (1.00) per share for the 2016 financial year.

Gothenburg, February 2, 2017

Henrik Lange President and CEO

OPERATING PROFIT BRIDGE

Jan - Dec

Operating profit 2015, MSEK 320

Organic 8

Structure 50

Currency 16

Other -28

Operating profit 2016 366

This interim report is a translation of the original report in Swedish and has not been reviewed by the company’s auditors.

Page 9: Year-End Report - Gunnebo Group · 1 GUNNEBO YEAR-END REPORT 2016 Year-End Report 2016 2016 2015 2016 2015 Q4 IN BRIEF Oct - Dec Oct - Dec Jan - Dec Jan - Dec Net sales, MSEK 1,776

9 GUNNEBO YEAR-END REPORT 2016

GROUP INCOME STATEMENT, CONDENSED

2016 2015 2016 2015

MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales 1,776 1,677 6,088 6,052

Cost of goods sold -1,257 -1,202 -4,319 -4,278

Gross profit 519 475 1,769 1,774

Selling and administrative expenses -379 -345 -1,417 -1,452

Other operating items, net 2 -9 14 -2

Operating profit 142 121 366 320

Net financial items -13 -7 -53 -43

Profit after financial items 129 114 313 277

Taxes -33 -34 -104 -109

Net profit 96 80 209 168

Net profit attributable to:

Parent company shareholders 95 80 206 166

Non-controlling interests 1 0 3 2

Net profit 96 80 209 168

Basic earnings per share, SEK 1.25 1.05 2.71 2.18

Earnings per share after dilution, SEK 1.24 1.05 2.70 2.18

GROUP STATEMENT OF COMPREHENSIVE INCOME, CONDENSED

2016 2015 2016 2015

MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net profit 96 80 209 168

Other comprehensive income for the period

Items that will not be reclassified to the income statement

Actuarial gains and losses* 37 19 -99 42

Subtotal 37 19 -99 42

Items that may be reclassified to the income statement

Translation differences on foreign operations 18 -13 100 -82

Other* 2 0 2 -2

Subtotal 20 -13 102 -84

Total other comprehensive income 57 6 3 -42

Total comprehensive income for the period 153 86 212 126

*Net o f taxes

Total comprehensive income attributable to:

Parent company shareholders 150 91 205 129

Non-controlling interests 3 -5 7 -3

Total comprehensive income for the period 153 86 212 126

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10 GUNNEBO YEAR-END REPORT 2016

GROUP STATEMENT OF FINANCIAL POSITION, CONDENSED

2016 2015

MSEK Dec 31 Dec 31

Goodwill 1,628 1,517

Other intangible assets 294 295

Property, plant and equipment 347 358

Financial assets 14 14

Deferred tax assets 332 304

Total non-current assets 2,615 2,488

Inventories 726 678

Accounts receivable 1,317 1,150

Other current receivables 312 273

Liquid funds 581 496

Total current assets 2,936 2,597

Total assets 5,551 5,085

Total equity 1,890 1,747

Deferred tax liabilities 90 93

Pension commitments 484 362

Loans, long-term 1,152 1,139

Total non-current liabilities 1,726 1,594

Accounts payable 739 635

Other current liabilities 945 895

Loans, short-term 251 214

Total current liabilities 1,935 1,744

Total equity and liabilities 5,551 5,085

CHANGES IN GROUP EQUITY, CONDENSED2016 2015

MSEK Jan - Dec Jan - Dec

Opening balance 1,747 1,694

Total comprehensive income for the period 212 126

Dividend -76 -76

Other, including new share issue 7 3

Closing balance 1,890 1,747

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11 GUNNEBO YEAR-END REPORT 2016

GROUP CASH FLOW STATEMENT

2016 2015 2016 2015

MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec

OPERATING ACTIVITIES

Operating profit 142 121 366 320

Adjustment for depreciations 17 15 68 61

Adjustment for amortisations* 14 17 55 47

Other including non-cash items -9 17 11 18

Net financial items -5 -4 -45 -46

Taxes paid -29 -36 -99 -95

Cash flow from operating activities before changes in working

capital 130 130 356 305

Cash flow from changes in working capital 7 131 -122 -119

Cash flow from operating activities 137 261 234 186

INVESTING ACTIVITIES

Capital expenditure on intangibles, property, plant and equipment -31 -44 -106 -135

Sales of non-current assets 1 - 31 4

Acquisition of operations - - - -160

Cash flow from investing activities -30 -44 -75 -291

Cash flow after investing activites, before financing activites 107 218 159 -105

FINANCING ACTIVITIES

Change in loans and other financial items -37 -139 -43 252

New share issue 1 - 4 0

Dividends paid to shareholders - - -76 -76

Cash flow from financing activities -36 -139 -115 176

Cash flow for the period 71 78 44 71

Liquid funds at the beginning of the period 496 427 496 447

Translation differences in liquid funds 14 -9 41 -22

Liquid funds at the end of the period 581 496 581 496

Free cash flow** 107 218 159 56

*Amortisations from acquisition related intangibles amounted to Q4 2016 M SEK 6 (6) and full year 2016 M SEK 24 (14)

**Equals to cash flow from operating and investing activities, excluding acquisitions and divestments

CHANGE IN NET DEBT Closing Opening

balance balance

MSEK Dec 31 Organic Structure Currency January 1

Loans, long- and short-term 1,403 -43 - 93 1,353

Post employment benefits, net 484 120* - 2 362

Interest-bearing assets -9 -2 - - -7

Liquid funds -581 -44 - -41 -496

Net debt 1,297 31 - 54 1,212

*Includes net actuarial losses of -133

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12 GUNNEBO YEAR-END REPORT 2016

2016 2015

GROUP KEY RATIOS Jan - Dec Jan - Dec

EBITDA, MSEK 489 428

EBITDA excluding non-recurring items, MSEK 561 505

EBITDA margin, % 8.0 7.1

EBITDA margin excluding non-recurring items, % 9.2 8.3

Operating margin (EBIT), % 6.0 5.3

Operating margin (EBIT) excluding non-recurring items, % 7.2 6.6

Profit margin (EBT), % 5.1 4.6

Return on capital employed, % 1) 10.8 10.1

Return on capital employed excluding non-recurring items, % 1) 12.8 12.4

Capital employed turnover rate, times 1.7 1.8

Return on equity, % 1) 11.7 9.9

Net debt, MSEK 1,297 1,212

Net debt/EBITDA, times 1) 2.6 2.9

Equity ratio, % 34 34

Interest coverage ratio, times 7.4 7.8

Debt/equity, times 0.7 0.7

Basic earnings per share, SEK 2.71 2.18

Earnings per share after dilution, SEK 2.70 2.18

Equity per share, SEK 24.40 22.65

Free cash flow per share, SEK 2.09 0.73

Total number of shares at end of period 77,050,848 76,185,001

Weighted average number of shares 76,836,889 76,180,114

Weighted average number of basic shares 76,243,567 76,180,114

Weighted average number of diluted shares 76,283,982 76,182,164

1) During the last twelve-month period

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13 GUNNEBO YEAR-END REPORT 2016

QUARTERLY DATA

QUARTERLY DATA GROUP

Income statement, MSEK 1 2 3 4 YTD 1 2 3 4 YTD 1 2 3 4 YTD

Net sales 1,250 1,419 1,314 1,574 5,557 1,397 1,516 1,462 1,677 6,052 1,390 1,474 1,448 1,776 6,088

Cost of goods sold -894 -1,007 -922 -1,088 -3,911 -995 -1,053 -1,028 -1,202 -4,278 -993 -1,049 -1,020 -1,257 -4,319

Gross profit 356 412 392 486 1,646 402 463 434 475 1,774 397 425 428 519 1,769

Selling and administrative expenses -338 -348 -318 -380 -1,384 -372 -383 -352 -345 -1,452 -346 -349 -343 -379 -1,417

Other operating items, net 0 77 3 10 90 -1 0 8 -9 -2 2 4 6 2 14

Operating profit 18 141 77 116 352 29 80 90 121 320 53 80 91 142 366

Net financial items -8 -11 -8 -8 -35 -17 -9 -10 -7 -43 -14 -12 -14 -13 -53

Profit after financial items 10 130 69 108 317 12 71 80 114 277 39 68 77 129 313

Taxes -13 -24 -33 -20 -90 -23 -20 -32 -34 -109 -19 -26 -26 -33 -104

Profit for the period -3 106 36 88 227 -11 51 48 80 168 20 42 51 96 209

Key ratios

Organic growth, % 9 6 -5 -2 2 -3 -4 4 2 0 1 -1 -1 3 1

Gross margin, % 28.5 29.0 29.8 30.9 29.6 28.8 30.5 29.7 28.3 29.3 28.6 28.8 29.6 29.2 29.1

Selling and administrative expenses

in % of net sales 27.0 24.5 24.2 24.1 24.9 26.6 25.3 24.1 20.6 24.0 24.9 23.7 23.7 21.3 23.3

Operating margin (EBIT), % 1.5 9.9 5.9 7.4 6.3 2.0 5.3 6.2 7.2 5.3 3.8 5.4 6.3 8.0 6.0

Non-recurring items, MSEK -20 43 -5 -32 -14 -9 -22 -18 -28 -77 -5 -23 -14 -30 -72

Gross margin excl. non-recurring

items, % 29.0 30.0 30.4 31.1 30.2 28.8 30.7 30.2 29.2 29.7 28.6 29.4 30.0 29.7 29.5

Selling and adm. expenses, excl. non-

recurring items in % of net sales 26.1 23.5 24.2 22.3 23.9 26.1 24.0 23.4 19.8 23.1 24.6 22.7 23.2 20.1 22.5

Operating profit (EBIT) excl. non-

recurring items, MSEK 38 98 82 148 366 38 102 108 149 397 58 103 105 172 438

Operating margin (EBIT) excl. non-

recurring items, % 3.1 6.9 6.2 9.4 6.6 2.7 6.7 7.4 8.9 6.6 4.2 7.0 7.3 9.7 7.2

Basic earnings per share, SEK -0.04 1.40 0.47 1.15 2.98 -0.13 0.64 0.62 1.05 2.18 0.26 0.55 0.65 1.25 2.71

QUARTERLY REGIONAL DATA

EMEA 1 2 3 4 YTD 1 2 3 4 YTD 1 2 3 4 YTD

Net sales, MSEK 842 925 864 1,013 3,644 887 962 927 1,084 3,860 888 966 922 1,131 3,907

Organic growth, % 7 0 0 -4 0 -3 -2 1 3 0 -1 -1 0 2 0

Operating profit (EBIT), MSEK -20 81 19 28 108 -3 19 25 43 84 4 25 31 53 113

Operating margin (EBIT), % -2.4 8.8 2.2 2.8 3.0 -0.3 2.0 2.7 4.0 2.2 0.5 2.6 3.4 4.7 2.9

Non-recurring items, MSEK -19 51 -4 -29 -1 -8 -16 -17 -26 -67 -3 -22 -11 -23 -59

Operating profit (EBIT) excl. non-

recurring items, MSEK -1 30 23 57 109 5 35 42 69 151 7 47 42 76 172

Operating margin (EBIT) excl. non-

recurring items, % -0.1 3.2 2.7 5.6 3.0 0.6 3.6 4.5 6.4 3.9 0.8 4.9 4.6 6.7 4.4

APAC

Net sales, MSEK 221 281 228 299 1,029 245 273 244 323 1,085 258 267 253 351 1,129

Organic growth, % 15 24 -11 5 8 -12 -20 -2 1 -8 10 4 2 3 5

Operating profit (EBIT), MSEK 23 37 27 44 131 12 31 26 39 108 26 29 26 52 133

Operating margin (EBIT), % 10.4 13.2 11.8 14.7 12.7 4.9 11.4 10.7 12.1 10.0 10.1 10.9 10.3 14.8 11.8

Non-recurring items, MSEK -1 -5 0 -3 -9 -1 -3 -1 -2 -7 0 -1 -1 -3 -5

Operating profit (EBIT) excl. non-

recurring items, MSEK 24 42 27 47 140 13 34 27 41 115 26 30 27 55 138

Operating margin (EBIT) excl. non-

recurring items, % 10.9 14.9 11.8 15.7 13.6 5.3 12.5 11.1 12.7 10.6 10.1 11.2 10.7 15.7 12.2

AMERICAS

Net sales, MSEK 187 213 222 262 884 265 281 291 270 1,107 244 241 273 294 1,052

Organic growth, % 7 9 -14 2 0 9 5 21 -2 8 -1 -6 -5 4 -2

Operating profit (EBIT), MSEK 15 23 31 44 113 20 30 39 39 128 23 26 34 37 120

Operating margin (EBIT), % 8.0 10.8 14.0 16.8 12.8 7.5 10.7 13.4 14.4 11.6 9.4 10.8 12.5 12.6 11.4

Non-recurring items, MSEK 0 -3 -1 0 -4 0 -3 0 0 -3 -2 0 -2 -4 -8

Operating profit (EBIT) excl. non-

recurring items, MSEK 15 26 32 44 117 20 33 39 39 131 25 26 36 41 128

Operating margin (EBIT) excl. non-

recurring items, % 8.0 12.2 14.4 16.8 13.2 7.5 11.7 13.4 14.4 11.8 10.2 10.8 13.2 13.9 12.2

2016

2016

2014

2014

2015

2015

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14 GUNNEBO YEAR-END REPORT 2016

NOTE 1 ACCOUNTING PRINCIPLES AND RISKS

Accounting principles Gunnebo complies with the International Financial Reporting Standards adopted by the EU, and the official interpretations of these standards (IFRIC). The Interim Report for the Gunnebo Group has been prepared in accordance with the Swedish Annual Accounts Act and IAS 34 Interim Financial Reporting. The Interim Report for the parent company has been prepared in accordance with the Annual Accounts Act and the recommendation of the Swedish Financial Reporting Board, RFR 2 Accounting for Legal Entities. The same accounting principles and methods of calculation have been used as in the latest Annual Report. No new or revised IFRS standards effective 1 January 2016 had any significant impact on Gunnebo’s financial statements.

Significant risks and uncertainties The Group’s and parent company’s significant risks and uncertainties include operational risks and financial risks. Operational risks for Gunnebo mainly include risks posed by the global economy and commercial risks. The Group’s risk management is described in more detail in the latest Annual Report.

NOTE 2 FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments measured at fair value For all assets and liabilities measured at fair value, which comprise derivative instruments, the fair values have been assessed based on measurement techniques which are, in all essentials, based on observable market data. According to the fair value hierarchy of IFRS 13, such measurement methods are referred to as Level 2.

The carrying amount of the Group’s derivatives corresponds to their fair values.

Other financial instruments For financial instruments such as accounts receivable, accounts payable and other non-interest-bearing financial assets and liabilities,

which are recognised at amortised cost less any write-down, the fair value is deemed to be the same as the carrying amount due to the short anticipated duration.

The Group’s long-term borrowing primarily relates to long-term credit facilities but with short fixed interest rate periods and stable credit margin. The fair value is therefore deemed to be the same as the carrying amount (Level 2 in the IFRS 13 fair value hierarchy).

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15 GUNNEBO YEAR-END REPORT 2016

NOTE 3 RECONCILIATION TO THE GROUP'S PROFIT AFTER FINANCIAL ITEMS

2016 2015 2016 2015

MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Region EMEA 53 43 113 84

Region APAC 52 39 133 108

Region Americas 37 39 120 128

Operating profit 142 121 366 320

Net financial items -13 -7 -53 -43

Profit after financial items 129 114 313 277

NOTE 4 NON-RECURRING ITEMS PER FUNCTIONAL COST

2016 2016 2016 2016 2016 2016

Oct - Dec Oct - Dec Oct - Dec Jan - Dec Jan - Dec Jan - Dec

incl. non-rec non-rec excl. non-rec incl. non-rec non-rec excl. non-rec

MSEK items items items items items items

Net sales 1,776 - 1,776 6,088 - 6,088

Cost of goods sold -1,257 8 -1,249 -4,319 25 -4,294

Gross profit 519 8 527 1,769 25 1,794

Selling and administrative expenses -379 22 -357 -1,417 47 -1,370

Other operating expenses, net 2 0 2 14 0 14

Operating profit 142 30 172 366 72 438

Gross margin, % 29.2% 29.7% 29.1% 29.5%

Selling and administrative

expenses in percentage of net sales 21.3% 20.1% 23.3% 22.5%

Operating margin, % 8.0% 9.7% 6.0% 7.2%

2015 2015 2015 2015 2015 2015

Oct - Dec Oct - Dec Oct - Dec Jan - Dec Jan - Dec Jan - Dec

incl. non-rec non-rec excl. non-rec incl. non-rec non-rec excl. non-rec

MSEK items items items items items items

Net sales 1,677 - 1,677 6,052 - 6,052

Cost of goods sold -1,202 15 -1,187 -4,278 26 -4,252

Gross profit 475 15 490 1,774 26 1,800

Selling and administrative expenses -345 13 -332 -1,452 51 -1,401

Other operating expenses, net -9 - -9 -2 - -2

Operating profit 121 28 149 320 77 397

Gross margin, % 28.3% 29.2% 29.3% 29.7%

Selling and administrative

expenses in percentage of net sales 20.6% 19.8% 24.0% 23.1%

Operating margin, % 7.2% 8.9% 5.3% 6.6%

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16 GUNNEBO YEAR-END REPORT 2016

PARENT COMPANY

PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME, CONDENSED

2016 2015 2016 2015

MSEK Oct - Dec Oct - Dec Jan - Dec Jan - Dec

Net sales 100 129 236 265

Administrative expenses -93 -77 -201 -181

Operating profit 7 52 35 84

Net financial items -3 -3 -11 -11

Profit after financial items 4 49 24 73

Appropriations 113 75 113 75

Taxes -29 -29 -27 -37

Net profit 88 95 110 111

Total comprehensive income corresponds with net profit for the period

PARENT COMPANY STATEMENTS OF FINANCIAL POSITION, CONDENSED

2016 2015

MSEK Dec 31 Dec 31

Intangible assets 7 4

Property, plant and equipment 1 2

Investments in subsidiaries 1,585 1,585

Deferred tax assets 67 88

Total non-current assets 1,660 1,679

Current receivables from subsidiaries 54 31

Other receivables 16 9

Liquid funds 1 0

Total current assets 71 40

Totalt assets 1,731 1,719

Total equity 1,563 1,520

Current liabilities to subsidiaries 120 164

Other liabilities 48 35

Total current liabilities 168 199

Total equity and liabilities 1,731 1,719

CHANGES IN PARENT COMPANY EQUITY, CONDENSED

2016 2015

MSEK Jan - Dec Jan - Dec

Opening balance 1,520 1,485

Total comprehensive income for the period 110 111

Dividends -76 -76

Other, including new share issue 9 0

Closing balance 1,563 1,520

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17 GUNNEBO YEAR-END REPORT 2016

DEFINITIONS

In the Interim Report, Gunnebo presents certain financial figures that are not defined according to IFRS. The Group believes that these figures provide investors and the company’s management with valuable supplementary disclosures, since they enable a valuation of the company’s financial results and position. Since not all companies calculate financials in the same way, these are not always comparable with figures used by other companies. These financials should not, therefore, be considered a substitute for figures defined according to IFRS.

Basic earnings per share Net profit attributable to the parent company’s shareholders divided by the weighted average number of shares excluding C-shares as these have no dividend rights.

Capital employed Total assets less non-interest-bearing provisions and liabilities.

Capital employed turnover rate Net sales rolling 12 months in relation to average capital employed.

Debt/equity Net debt in relation to equity.

Earnings per share after

dilution

Net profit attributable to the parent company’s shareholders divided by the weighted average number of shares excluding C-shares as these have no dividend rights, after dilution.

EBITDA Operating profit before depreciation/amortisation and impairments of intangible assets and property, plant and equipment.

EBITDA margin EBITDA as a percentage of net sales.

Equity ratio Equity as a percentage of the total assets.

Free cash flow per share Cash flow from operating and investing activities, excluding acquisitions and divestments, divided by the weighted average number of shares excl. C-shares as these have no dividend rights.

Gross margin Gross profit as a percentage of net sales.

Interest coverage ratio Profit/loss after financial items excluding interest costs, divided by interest costs.

Net debt Interest-bearing provisions and liabilities less liquid funds and interest-bearing receivables.

Net debt/EBITDA Average net debt divided by EBITDA rolling 12 months.

Non-recurring items Non-recurring items encompass restructuring programmes (closure of businesses and/or employee related costs) and other non-recurring items.

Operating margin (EBIT) Operating profit as a percentage of net sales.

Organic growth Growth in net sales adjusted for acquisitions, divestments and exchange rate effects.

Profit margin Profit after financial items as a percentage of net sales.

Return on capital employed Operating profit plus financial income rolling 12 months as a percentage of average capital employed.

Return on equity Profit for rolling 12 months as a percentage of average equity.

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18 GUNNEBO YEAR-END REPORT 2016

Financial Calendar 2017

MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

About Gunnebo

Gunnebo is a global security provider with an offering covering safes and vaults, cash management, entrance security and electronic security.

The Group has an annual turnover of MSEK 6,100 and 5,600 employees in 28 countries worldwide.

Gunnebo has 11 production units in ten countries.

Gunnebo’s shares (GUNN) are traded on NASDAQ Stockholm under Mid Cap and Industrials.

Vision

To be the leading global provider of a safer future.

Mission

Gunnebo’s mission is to offer products, services and solutions that increase security and efficiency, and create value for shareholders, customers, partners, employees and society on a global scale.

Strategy for profitable growth

Focus on growth in the product groups Cash Management, Entrance Security, Safes & Vaults and Electronic Security.

Focus on solutions-selling to key accounts in target customer segments.

Focus on operational excellence and productivity.

Product Groups

Cash Management Development, production, installation and service of intelligent cash management solutions for deposit, dispense, recycling and closed cash management. Marketed and sold under the Gunnebo brand with strong product brands as SafePay and Sallén.

Entrance Security Development, production, installation and service of turnstiles, security doors & partitions and electronic article surveillance (EAS). Marketed and sold under the Gunnebo and Gateway (EAS) brands.

Safes & Vaults Development, production, installation and service of safes, vaults, vault doors, safe deposit lockers (SDL’s) and ATM safes. Marketed and sold under leading brands such as Chubbsafes and Fichet-Bauche.

Electronic Security Development, production, installation and service of solutions for remote surveillance, access control, intrusion detection and electronic locking. Marketed and sold under the Gunnebo brand.

Other Development, production, installation and service of solutions for fire safety and other traded products.

Annual Report 2016 March 2017

2017 Annual General Meeting April 5, 2017

Interim Report Q1 2017 April 28, 2017

Interim Report Q2 2017 July 19, 2017

Interim Report Q3 2017 October 25, 2017

Capital Market Day 2017 November 23, 2017

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19 GUNNEBO YEAR-END REPORT 2016

Contacts

Karin Wallström Nordén, SVP Marketing & Communications +46 (0)10 2095 026

Susanne Larsson, Group Chief Financial Officer +46 (0)10 2095 092

This information is information that Gunnebo AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the contact persons, at 08.01 CET on February 2, 2017.

Gunnebo

Gunnebo AB (publ) | Reg. no. 556438-2629 | Box 5181, SE-402 26 Gothenburg, Sweden.

Tel: +46 (0)10 2095 000 | e-mail: [email protected] | www.gunnebogroup.com