Annual Report • Apr 15, 2021
Annual Report
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NCAB ANNUAL REPORT 2020 1
NCAB manufactures PCBs for industries whose technology must never malfunction. Reliable PCBs – Because it simply has to work.
You depend on a multitude of products in your everyday life. The car you drive, the train you travel in or the ECG system that monitors your heart. You expect them to work – because they must.
All electronic products contain a printed circuit board (PCB). At first glance, they may all look the same. But there can be a world of difference between a common PCB and a reliable PCB. It's in the detail and the precision.
It all starts with the design, the right specifications and in choosing the right manufacturing partner. It also includes efficient logistics, on-time deliveries and that the entire manufacturing process is conducted in a manner that fulfils our customers' and, not least, NCAB's sustainability requirements.
Because it simply has to work.
The number 1 PCB producer – wherever we are.
PCBs for demanding customers, on time with zero defects, produced sustainably at the lowest total cost.
Quality first. Strong relationships. Full responsibility.
NCAB purchases PCBs from a network of manufacturers, primarily in China. Using the "Integrated PCB production" concept, NCAB assumes overall responsibility in relation to its customers – from design support, prototyping, production and quality control to final delivery.
The business model, where NCAB is a fullservice supplier, has several advantages: minimal stocks and limited investments, resulting in low capital tied-up and strong cash flows.
This is a translation of the original Swedish annual report. In the event of difference between the English translation and the Swedish original, the Swedish annual report shall prevail.
| 2020 in brief 4 |
|---|
| CEO's statement 6 |
| Operations 10 |
| What is a printed circuit board? 16 |
| Market 18 |
| Customers 20 |
| Segments 22 |
| Organisation 26 |
| Sustainability 28 |
| Risks 32 |
| The share34 |
| Board of Directors 38 |
| Group management40 |
| NCAB in numbers 42 |
| Corporate governance44 |
| Directors' Report 49 |
| Financial statements54 |
| Auditor's report 91 |
| Information to shareholders 95 |
For most countries, businesses and communities, 2020 was a challenging year. Relative to other industries, however, the electronics sector performed well.
SALES, SEK billion
2.1
NCAB also performed relatively well during this special year. One reason for this could be that NCAB is highly diversified. The Group has many customers and these are spread across the globe, in 45 countries. Each order is small and customers are active in many different sectors. When the transport sector experienced problems in the spring and summer, order bookings increased in the medtech sector. And NCAB does not own its factories.
The coronavirus pandemic struck in China during the first quarter, which closed factories for three weeks and resulted in substantial delivery problems. Thanks to NCAB's size and the long and strong relationships NCAB has with the factories, NCAB coped better than many others and NCAB's orders were often prioritised when production resumed. NCAB also reported an unusually large order intake during the first quarter due to customers wishing to secure deliveries when production restarted after the shutdown. Chinese factories resumed operations during the second quarter, while many countries in which customers are operational experienced various forms of lockdowns or restrictions that resulted in reduced order intake for NCAB. During the first part of the third quarter, order intake remained low. In the fourth quarter, the relationship between order intake and sales normalised despite the economic impact in many countries of the second wave of the coronavirus pandemic and new restrictions. Despite new restrictions, the year finished on a positive note and order intake accelerated in the fourth quarter and is the highest in the history of the company. This is in part due to the announced price increases from China.
The year's acquisitions of Flatfield in the Netherlands and Bare Board Group in the USA have given NCAB a strong customer base and improved market position in both Europe and the USA together with about eighty new skilled employees. NCAB's philosophy when it comes to integration is to incorporate the business into the NCAB family as quickly as possible. Creating new and improved opportunities for the acquired business through NCAB's systems and culture, while allowing NCAB to learn from the new operations, provides a good start. NCAB can often offer the new acquisitions several benefits. Normally this includes better payment conditions from factories and often better prices. Something customers appreciate.
Overall, despite the coronavirus pandemic, the Nordic segment reported a stable year, notwithstanding a 4.4 per cent decrease in net sales. The Europe segment was weaker, particularly in southern Europe, which was adversely impacted by lockdowns and restrictions. Sales in Germany remained strong throughout the year, but the UK, which has considerable sales to the transport sector, had a
EBITA, SEK million 190.7
weak spring and summer but has since recovered. Flatfield, which was acquired in March, has been integrated into NCAB – a feat that was achieved almost entirely through virtual meetings. During the year, NCAB's customers in the USA have been operating at a healthy pace, particularly in the first half of the year. NCAB's operations in North America have more than doubled following the acquisitions of Altus PCB in 2019 and Bare Board Group in April 2020. During the spring, sales in the East segment were relatively severely affected in China and Russia, though a recovery has since been noted. Many of NCAB's customers in China were also negatively impacted by the trade war with the USA.
NCAB has failed to reach its growth target of 8 per cent, excluding acquisitions, this year, though profitability in terms of EBITA margin has exceeded the target of 8 per cent.
The NCAB share price performed well during the year, with an increase in share price of 68 per cent, compared with an index that rose 11 per cent. The final share price in 2020 was SEK 262, compared with SEK 156 one year earlier.
In April, a directed share issue was completed yielding SEK 287 million at the daily rate and in June the general meeting voted not to pay any dividend to shareholders. This was decided in order to offer NCAB flexibility to act swiftly if and when suitable acquisitions arise and to manage any potential negative effects of the pandemic. NCAB has thus strengthened its financial position.
The number of employees increased from 395 to 474 in 2020. The increase is a result of the acquisitions of Flatfield and Bare Board Group. In April, it was announced that Peter Kruk had been recruited as new CEO and was replacing NCAB's former CEO Hans Ståhl, who has retired. Peter Kruk assumed his new role on 1 October.
In 2020, NCAB further strengthened its sustainability work, which is of increasing interest to external stakeholders.
During the year, improvements were made to working conditions, health and safety, and environmental responsibility at NCAB's main factories in China. Thanks to NCAB's local sustainability teams, work with ongoing sustainability audits could restart on-site at factories at the end of May, despite the coronavirus pandemic. During the year, the share of PCB deliveries by rail increased, which has a lower environmental impact compared with air freight. NCAB offered webinars during the year and launched additional design guidelines to support customers in the construction stage. NCAB continued to focus on training and developing employees. One key success factor for NCAB is to retain a high level of engagement among employees.
Despite the coronavirus pandemic, NCAB performed well in 2020, though growth was from acquisitions rather than organic. Earnings were strong and profitability exceeded the financial target. This was in part due to lower costs for travel, trade fairs and other marketing. Planned new recruitments were also postponed. In 2020, NCAB's sales grew by 19 per cent, driven by the acquisitions of Flatfield and Bare Board Group. Profitability also improved year-on-year.
Total net sales amounted to SEK 2,115 million compared with SEK
1,718 million in 2019. Gross margin fell slightly to 30.3 per cent (31.7). EBITA improved from SEK 165.4 million to SEK 190.7 million and the EBITA margin was 9.0 per cent (9.3). Profit after tax amounted to SEK 127.5 million (128.4) and earnings per share was SEK 7.03 (7.61).
2,600
CUSTOMERS
NCAB has four segments, Nordic, Europe, North America and East, and of these North America and Europe reported growth during the year due to the acquisitions. In Europe, Germany was strong throughout the year, while the UK noted a poorer performance in the second and third quarters due to the weaker transport sector.
North America benefited from improvements in its own business, which has now completed its transitional phase, and from the acquisitions of Bare Board Group and the earlier acquisition of Altus PCB.
178
MILLION
474 EMPLOYEES
EBITA, share by segment East 21%
45
MARKETS
| KEY PERFORMANCE INDICATORS | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|
| Order intake, SEK million | 2,243.4 | 1,818.3 | 1,664.5 | 1,509.2 | 1,280.8 |
| Order intake, USD million | 243.8 | 192.2 | 191.1 | 176.8 | 149.6 |
| Net sales, SEK million | 2,115.2 | 1,781.2 | 1,617.0 | 1,400.1 | 1,218.7 |
| Net sales, USD million | 229.8 | 189.1 | 186.0 | 163.8 | 142.3 |
| Gross margin, % | 30.3 | 31.7 | 31.3 | 30.2 | 30.4 |
| EBITA, SEK million | 190.7 | 165.4 | 132.2 | 70.2 | 100.3 |
| EBITA margin, % | 9.0 | 9.3 | 8.2 | 5.0 | 8.2 |
| Adjusted* EBITA, SEK million | 190.7 | 165.4 | 143.8 | 113.7 | 100.3 |
| Adjusted* EBITA margin, % | 9.0 | 9.3 | 8.9 | 8.1 | 8.2 |
| Operating profit, SEK million | 182.3 | 161.7 | 127.6 | 65.6 | 95.8 |
| Profit after tax, SEK million | 127.5 | 128.4 | 104.6 | 40.4 | 65.1 |
| Earnings per share before dilution**, SEK | 7.03 | 7.61 | 6.37 | 2.42 | 4.09 |
| Earnings per share after dilution**, SEK | 7.03 | 7.61 | 6.24 | 2.38 | 4.00 |
| Cash flow from operating activities, SEK million | 194.3 | 153.0 | 69.9 | 37.4 | 81.5 |
| Return on equity, % | 24.3 | 39.8 | 51.9 | 30.3 | 54.0 |
| Average exchange rate, SEK/USD | 9.20 | 9.46 | 8.57 | 8.54 | 8.56 |
| Average exchange rate, SEK/EUR | 10.49 | 10.58 | 10.26 | 9.63 | 9.47 |
| Dividend | 5.00*** | – | 4.50 | – | – |
* Adjusted for non-recurring items of SEK 11.6 million for the full-year 2018 and SEK 43.5 million for the full-year 2017. The
adjustments refer to costs for the IPO and final settlement costs related to the agreement with the Russian tax authority.
** The Annual General Meeting on 14 March 2018 resolved to approve a 10:1 stock split. Earnings per share have been calculated retrospectively based on the total number of shares after the stock split for each period.
*** Dividend proposed by the Board of Directors.
For NCAB, 2020 was not only a year in which the business and the wider world were dominated by the coronavirus pandemic, but also the year the company gained a new CEO. In October, Peter Kruk joined NCAB following the retirement of the former CEO Hans Ståhl.
"I am really enjoying the work. This is a first-rate company with talented employees and interesting projects in the pipeline. The pandemic has meant I have been unable to travel and hold physical meetings with customers and employees, which has been a challenge, but thanks to digital solutions it's still been a productive time."
"Several things. Partly it was the entrepreneurial culture and values, the clear added value NCAB creates for its customers. And finally the growth potential that exists in NCAB's fragmented market, which is a very exciting prospect."
"Yes, I can honestly say they have. The company has a very deeply rooted culture where employees truly adhere to the values and have significant autonomous responsibility. A decentralised culture only works with clear, shared values and a simple and distinct strategy that everyone agrees with and follows, which is the case at NCAB. Our market has demanding customers and the products are technically complex, so we can make a clear difference every day."
"The start of the problems linked to the coronavirus pandemic coincided with the Chinese New Year in February and meant the risk of delivery problems from China were imminent. NCAB's primary focus was then to secure deliveries from our suppliers at the same time as we handled a sharp increase in order intake from our customers, which wanted in turn to secure their purchases and future deliveries.
During the third quarter, order intake began to recover to normal levels in Europe, Asia and the USA. The year ended with a very strong order intake, as industry picked up pace and optimism grew about the impending vaccinations. The order intake was reinforced due to anticipated price increases, which convinced many customers to bring forward parts of their orders.
We acquired two companies during the year, Flatfield in the Netherlands and Bare Board Group in the USA. Almost all of the integration work with both companies was conducted remotely, which still worked well. Flatfield's organisation to support factories was also integrated into our Factory Management team. The acquisition of Bare Board Group also gave us access to new factories in Taiwan."
"We can see signs that the pandemic may have further accelerated the process whereby PCB manufacturing in Western Europe and the USA is being outcompeted and transferred to Asia. PCB manufacturers have been weighed down by their significant fixed costs as volumes have fallen during the pandemic and we have witnessed a number of factory closures in Europe.
Similarly, we can see that customers who source directly from factories in China, or via traders, have had the problem that they were unable to visit or audit any factories. NCAB had the advantage of its local presence near customers, and our Factory Management has maintained continuity in our audit and development work at factories. This has enabled our offering to grow distinctly stronger; we are present both locally close to the customer and onsite at the factories at the same time as our size was an advantage when factories were perhaps forced to prioritise deliveries.
Acquisition of Altus PCB
We believe this will favour us as we move forward and provide better growth. We also have low financial exposure to volume fluctuations and a good distribution of customers in different sectors, making us less vulnerable."
"We are basically optimistic about opportunities in 2021. Some uncertainty remains about the development of the pandemic and we cannot rule out future setbacks. However, we leave 2020 with excellent momentum in order intake and a strong offering and we believe this will help us to continue to gain market shares in the future."
"Our focus remains on demanding customers in the High-Mix-Low-Volume (HMLV) segment. We can see tremendous global growth opportunities, particularly in markets where we already operate, such as the USA and Europe. We have expertise in many sectors, which allows us to balance developments in different markets. This became clear during the pandemic when the automotive industry was adversely affected while medtech grew sharply.
At present, we can see strong growth in green technology, such as equipment for charging electric vehicles, a segment where we have a strong position. We can become even better at learning lessons from successes in one market and transferring this knowledge to other markets, to further improve our success rate."
"There are very few limits. Certain projects may have a military connection that we reject because of specific requirements for local production in the country.
NCAB's business model is based on improving the competitiveness of our customers by offering them the lowest overall cost. We achieve this by helping them to find the right solution and by supplying a better quality with a high level of delivery reliability. Developing new business may therefore take slightly longer than selling at the lowest price, but we normally have very satisfied customers and tend to build long business relationships with them."
"The financial targets stand firm. Our ambition remains high, and we are striving for annual sales growth of 8 per cent while retaining favourable profitability. Additionally, we have a strong ambition to make an active contribution to market consolidation. In the past, our combined average sales growth was in excess of 15 per cent."
"It is confirmation of the company's excellent performance in recent years and the trust shown by our customers. Hopefully, it will also mean that more potential investors will discover us."
"NCAB has a good, solid business model that we will not change. The company's performance in recent years and our growth ambitions in the future, will however entail new opportunities to leverage synergies and further strengthen our service to the market."
"Well, there were different challenges in the different phases. Initially, when the pandemic first hit, our Factory Management in China conducted intensive work together with our companies and factories
Hans Ståhl, CEO of NCAB 2007–2020, Board member since 2007
to ensure we could continue with our deliveries. Everyone did an outstanding job and I believe the energy and commitment we demonstrated to our customers meant we have now gained many new, satisfied customers.
In the second phase, many countries in the west went into lockdown and the challenge was then to reach out to our customers in new ways. And to cut costs. We talked a lot about seeing opportunities in the new situation, and I believe that everyone played a part in creating these too. Our organisation has a wonderful attitude that I am very proud of!"
"It feels great. Peter is a perfect fit as new CEO and I have a new perspective, though my focus remains very much on NCAB!"
"At the moment, I feel like creating a strong perspective for the future in the Board's agenda, to see things from a customer viewpoint and to draw up new KPIs that can drive opportunities moving forward.
"I recently bought a mobile cool box that I am very pleased with. You can control the temperature using Bluetooth and it is perfect to have with you when travelling to our summer cottage on the west coast or in the boat on a hot, summer day."
Peter Kruk President and CEO, NCAB Group AB Bromma, January 2021
Carolina Hållenius, Junior Product Specialist, NCAB Group Sweden, checks PCBs at NCAB's lab in Sweden.
Using the "Integrated PCB production" concept, NCAB offers added value to both customers and manufacturers by taking overall responsibility in relation to customers – from design support, prototyping, production, quality control and logistics to final delivery. Quality is one of NCAB's most important cornerstones and strongest values.
NCAB does not own any factories. Instead, the company purchases its products from a network of quality and capacity assured manufacturers. Currently, NCAB has 27 main factories in its network, of which 17 in China, four in Taiwan, five in Europe and one in the USA. The factories in Europe and the USA are used primarily for prototyping or for orders with very short lead times.
NCAB aims to account for at least 15 per cent of each manufacturers' sales to secure – thanks to its purchasing power – a close relationship and high priority at the manufacturer. Through the contracted manufacturers, NCAB can offer its customers a wide range of PCBs while reducing dependency on a single manufacturer.
The factories that NCAB has chosen to collaborate with combine to cover the existing capacity needs and are approved by NCAB to manufacture a controlled range of PCB technology. To guarantee high flexibility and capacity in its customer offering, NCAB has several manufacturers in each technology and thereby reduces the risk that it will be affected by utilisation levels among individual manufacturers.
Using the "Integrated PCB production" concept, NCAB offers added value to both customers and manufacturers by taking overall responsibility in relation to customers – from design support, prototyping, production, quality control and logistics to final delivery. Quality is an important watchword for NCAB. Preventive quality work is particularly important since errors that arise later in the process are more costly and time consuming. This also benefits factories as NCAB's rigorous demands on quality also means they review and improve
NCAB offers design support to all orders and ensures that the PCBs are optimally designed for production and in accordance with specifications. NCAB's technicians often cooperate directly with customers' designers.
About 30 per cent of all design files that customers send to NCAB contain errors or are incomplete – which NCAB's design support and proactive quality work helps to rectify.
NCAB offers prototyping services through special factories in Europe, the USA, Taiwan and China.
Total station used for
The prototypes are manufactured as a means of verifying that the PCB design will operate in practice, which guarantees shorter lead times and an efficient manufacturing process.
The aim of NCAB's quality assurance work is the on-time delivery of a zero-defect product. To ensure this, work is carried out proactively and reactively throughout the chain – from design support to delivery. If a problem arises, NCAB takes full responsibility and allows a rapid analysis of any errors and rectification of the problem. NCAB's Factory Management team conducts quality assurance on site at, and together with, the factories.
their own processes and procedures in conjunction with the regular audits, checks and training courses carried out by NCAB.
Asia, and particularly China, accounts for just over 80 per cent of total PCB manufacturing. In China alone, there are more than 1,300 factories that can serve international customers. Success factors for these manufacturers of High-Mix-Low-Volume (HMLV) PCBs, which is NCAB's main focus segment, include flexibility to rapidly meet customers' demands and, in order to do this, manufacturers must have a production system adapted to low volumes. PCB production is very capital-intensive with large-scale plants and factories often specialising in specific areas to become more competitive. This means a PCB supplier that collaborates with one or a few manufacturers cannot meet the wider needs of customers at attractive terms.
Quality is a top purchasing criteria in relation to PCBs, due to the fact that PCBs often represent a relatively small share of the value of the end-products, but are crucial to the function of the end-product, where a faulty PCB can cause significant costs.
The sales and distribution of PCBs are normally conducted using two channels: directly from factories or through a supplier, such as NCAB. Purchasing PCBs directly from factories is more common in the high-volume segment (high volumes, low prices and small margins) than in the HMLV segment.
Aggregating demand and supply for PCBs creates value, particularly in the HMLV segment, partly for customers who can benefit from NCAB's purchasing power and expertise, partly for manufacturers that can benefit from a highly specialised counterparty. Furthermore, manufacturers can benefit from the fact that NCAB provides them with large volumes of PCBs through its substantial customer base and suitable level of technology. NCAB's established Factory Management team also helps the factories to improve processes, quality and technological know-how, enabling further advancements in their product offering.
NCAB's multi-sourcing leads to secure production capacity and flexibility during the product life cycle of almost all PCB technologies. At the same time, NCAB's aggregated purchasing power ensures a competitive offering.
Factory presence, thorough processes and frequent follow-ups with manufacturers reduce lead times and ensure high delivery reliability.
NCAB also has logistics functions in every country where it has a local presence. Delivery reliability is a key factor given that PCBs are often the final components to arrive at an assembly line.
Acting in a sustainable way while assuming great responsibility is an integrated part of NCAB's business model and long-term strategy. A clear sustainability strategy guides NCAB in the right direction, with the aim of realising sustainable growth and the positive changes the company wants to see in the industry.
NCAB's Factory Management team works closely to the manufacturers with which the company cooperates. This proximity to the factories, both geographically and personally, is crucial in creating long-term relationships with the factories.
QUALITY ASSURANCE 99.3%
The Factory Management team plays a key role in NCAB's quality and sustainability work related to the factories with which NCAB cooperates. The organisation currently consists of 85 employees, mainly in China, but following the acquisition of Bare Board Group in 2020, a Factory Management team has also been set up in Taiwan. The Factory Management team works closely with the factories to ensure production quality through auditing and optimisation of production processes and sustainability practices. Every manufacturer is regularly assessed according to quality, delivery reliability, sustainability aspects and levels of service and price. In addition to its own personnel, NCAB has special teams at the main factories, all selected by NCAB, that consist of employees at the factory and include production control, customer support, pre-production and inspection teams. Each team member receives an extra 40 hours of training each year, related to NCAB's quality and service requirements. Because the Factory Management team builds strong relationships with the factories, NCAB's orders are given top priority and the best possible support.
Another key focus area for Factory Management is to assess and approve new factories that are up to standard as partners to NCAB. Finding PCB factories is relatively simple, but identifying a reliable factory that meets NCAB's rigorous demands is much more difficult. A broad range of expertise and effective methods are needed to find and develop the best factories. NCAB's extensive sourcing process includes the collection and analysis of performance data and manufacturing capacity, factory visits and the verification of PCB tests. The sourcing process also involves detailed quality and sustainability audits on-site and follow-up visits to ensure any changes have been implemented.
NCAB only approves factories for the technology and volumes that they can reliably supply – so that the anticipated performance is attained – meaning that even if the factory can manufacture everything from simple 2-layer PCBs to advanced HDI cards, NCAB will only use the factory for technologies that meet NCAB's rigorous quality standards. When a manufacturer is approved, it is integrated into NCAB's continuous development programme.
Every year, NCAB conducts quality audits at all main factories.
The focus is then on the manufacturing process and other related aspects. In addition to these, NCAB carries out annual audits of pre-production processes. These look closer at initial processes and checks. The annual audits are supplemented with monthly process audits focusing on details in specific areas to guarantee continuous improvement. All main factories also undergo a sustainability audit aimed at improving working conditions and environmental work.
NCAB measures quality performance as the number of deliveries without customer complaints in relation to the total number of deliveries. Delivery performance is measured as the number of order lines delivered within the confirmed delivery time, in relation to the total number of delivered order lines. Since Factory Management was launched in 2006, quality has increased from 96.5 per cent to 99.3 per cent in 2020, which is high in the industry, and delivery reliability to the customer from 84.0 per cent to 92.4 per cent. NCAB is perceived as one of the leading players in the market in terms of quality control and quality assurance.
Delivery reliability for 2020 was negatively impacted by the coronavirus pandemic, which started in China. For the second half of the year, reliability was 95.1 per cent, which is close to NCAB's target. Thanks to NCAB's size and strong relationships, NCAB's orders were prioritised to a large extent when production restarted following the shutdown in February. During 2020, transportation from Hong Kong to Europe and the USA was also a challenge as many passenger flights were cancelled, and here NCAB was again able to benefit from its size to obtain better conditions.
NCAB has strong and close relationships with the factories with which the company cooperates. In 2020, NCAB cooperated with 27 main factories – 17 in China, four in Taiwan, five in Europe and one in the USA – which offers a good risk spread while allowing NCAB to provide a broad range of PCBs to its customers. In addition, NCAB engages other manufacturers for different needs. The two other factory categories are spot factories and special project factories. All three factory categories are described in more detail to the right.
NCAB conducts proactive quality work, including regular follow-ups on-site, at the main factories and the dedicated teams are also stationed here. Additionally, they are subjected to NCAB's annual quality audit and continuous assessment of processes. A sustainability audit is also carried out at the main factories in China every second year. European and US factories are mainly used for manufacturing prototypes and orders with very short lead times.
NCAB uses spot factories when the main factories lack either technical capacity or commercial flexibility. NCAB does not carry out an annual audit of these manufacturers, but assesses them on a continuous basis with regard to performance.
Special project factories are used in individual projects when both the main factories and spot factories lack the ability to carry out the project. These factories are used for individual customer projects and are assessed and approved for each project.
Tina Han, Production Quality Engineer at NCAB Group Factory Management in China, audits one of NCAB's partner factories.
Most of the PCBs NCAB sells are manufactured in China. However, our ambition is to spread out production to more countries
Share of manufacturing by geography 2020
NCAB is methodically developing the company according to a well-established strategy in order to continue to grow with good profitability – and sees major opportunities to strengthen its market position in the years ahead.
Outside the Nordic region, NCAB has a relatively small market share and thus strong growth potential. The aim is to increase market share in countries such as France, Italy, Germany, China and the USA by investing in sales and marketing. In Germany, China and USA, the ambition is also to open additional offices to move closer to customers. Europe and the USA still have a high level of domestic PCB production and NCAB is aiming to gain market share as domestic production decreases.
The pandemic had a negative impact on demand during the year, but despite this NCAB has initiated cooperation with many new customers, mainly in the company's growth markets. NCAB's companies in Germany, Italy and the USA reported organic growth, despite the pandemic. Growth in Germany exceeded 10 per cent.
In markets where NCAB has a strong position, for example in the Nordic region, the aim is to further deepen relationships with existing customers. The value of the customer offering can be improved by: focusing on the largest customers, creating global customer accounts and by generally increasing the share of wallet of PCBs. By creating global customer accounts, NCAB can have a broad geographical reach and serve and receive orders from the same customer in several markets, and will furthermore be less dependent on finding new customers when entering a new market.
Work was strengthened with global accounts during the year, which generated growth from most of NCAB's global customers. Strong relationships with customers in more mature markets has led to a smaller loss of sales than the overall market downturn caused by the pandemic.
There are several large markets where NCAB has yet to establish local presence, including well-developed markets with many similarities to NCAB's current main markets, for example, large and growing markets in Asia.
No new markets were entered or local offices opened during the year. In 2019, the new company in Benelux developed favourably and indirectly resulted in the acquisition of Flatfield.
NCAB holds a strong position to drive market consolidation and has completed successful acquisitions in recent years. Acquisitions may be of interest both in NCAB's existing markets and in market where NCAB is yet to establish a local presence. Potential synergies from acquisitions are mainly derived from economics of scale, from the implementation of NCAB's working methods and systems and increased purchasing power towards manufacturers.
NCAB has strong potential for growth as factories in Europe become less competitive or close down. Customers instead choose to buy from advanced traders.
Two companies were acquired during the year: Flatfield in the Netherlands and Bare Board Group in the USA.
* Compounded Annual Growth Rate
The PCB market in Europe and the USA is relatively fragmented with many small and medium-sized enterprises with only a few major players, such as NCAB. Company size will become increasingly important in the future, both in attracting larger customers and in gaining access to the best factories in China.
"Acquisitions are, and will continue to be, an important part of NCAB's growth. Acquisitions allow us to quickly expand our customer base and gain more talented employees. Factories in China are expanding rapidly and if we are to retain our strong purchasing power we must continue to grow. Acquisitions are also a good way to establish NCAB in a new market.
"There are many small trading companies in both Europe and the USA. Often, these have started when a factory is closed and the sales department with many customer relationships has continued as a trading company. These have reached a certain size, but have found it more difficult to grow further in recent years. By working within NCAB, we can together offer their customers better factories and more service. So, this type of company is interesting to us and we are actively looking to build a pipeline of potential acquisitions. However, as these are often small, family-owned companies it can sometimes take a long time between the first meeting until a finalised deal."
"First and foremost, we achieve good growth, which is important in retaining our strong purchasing power. Higher volumes will generally offer better terms and conditions from our factories and our logistics partners. As a general rule, NCAB has better agreements with factories
than the acquired companies, which could relate to anything from pricing and payment conditions to quality assurance. We have successfully reduce capital employed in most of the acquisitions. NCAB often collaborates with more advanced factories that are not available to smaller trading companies, which means we can offer the acquired company's customers a broader product portfolio and thereby increase sales. The company's customers will retain their contacts, but through NCAB gain access to better factories, logistics and our large Factory Management team in China and Taiwan.
SALES, SEK million 285 EMPLOYEES 50 SALES, SEK million 220 EMPLOYEES 30
The Dutch company Flatfield was acquired in March 2020. This has greatly strengthened NCAB's European segment. Flatfield sales in 2020 amounted to approximately SEK 285 million, of which approximately half to customers in Germany and the remainder in Benelux.
Bare Board Group in the USA was acquired in April. The acquisition has in principle doubled NCAB's sales in the USA. Bare Board Group also provided several factories and a Factory Management team in Taiwan. The new factories are particularly attractive to the USA market as no import tariffs are charged on PCBs from Taiwan to the USA. In 2020, Bare Board Group reported sales of approximately SEK 220 million.
SALES, SEK million 210
PreventPCB in Italy was acquired in February. Together with NCAB's company in Italy, NCAB will become the leading PCB supplier in Italy. PreventPCB has customers in Italy and Switzerland and reported sales of approximately SEK 210 million in 2020 with good profitability. The acquisition includes 12 employees in Italy and 10 in China.
PCBs are at the heart of all electronic equipment. Superficially, they can look very similar, regardless of their actual quality. But under the surface, there are substantial differences that influence durability and functionality throughout the PCBs life cycle.
PCBs represent a small share, between 1 per cent and 3 per cent, of the value of the end product. Often, PCBs have a greater share of the value in basic end products, for example an electric toothbrush, and a smaller share in more complex end products, such as an industrial robot. Regardless of the complexity, PCBs are critical for the end product – a defective PCB is often very expensive to rectify. This makes quality one of the most important purchasing criteria for NCAB's customers.
The demand for PCBs is driven by PCB-A production, since PCBs are the platform on which electronic components are mounted to produce a PCB-A. The PCB is the first unit needed in the assembly process, and without the PCB neither the PCB-A nor the end product can be manufactured. The PCB is the only component that the customer adds value to. This makes it particularly important that the PCB is of high quality, as it is expensive to discard a PCB-A with expensive components due to a malfunctioning PCB.
NCAB's PCB portfolio includes a wide range of products: everything from basic 2-layer PCBs to advanced HDI PCBs and flexible PCBs. Even if the PCBs delivered by NCAB vary greatly in terms of functionality and application, they share one characteristic: all PCBs have been examined by NCAB's PCB experts.
Neuromonitoring – Neural Informatix System for spine surgery. Provides surgeons with real-time information about the status of nerves during spine surgery.
Mirror Eye Camera – digital camera with displays that replace traditional rear view mirrors. NCAB has designed 12–16 different PCBs from metal core PCBs to multilayer PCBs.
NCAB operates in the global PCB market and has sales in 45 markets around the world. The company focuses on the HMLV segment that has a higher level of technology, lower volumes – and stronger margins.
The market for PCBs can be divided into two main segments that cover different customer needs: High-volume and HMLV, respectively. The high-volume segment is characterised by strong competition and small margins – in industries manufacturing cars or consumer goods, such as mobile phones. The large volumes often mean customers prioritise price. Due to these conditions, buying directly from manufacturers is the most common alternative in the high-volume segment.
The HMLV segment is for orders that encompass many different types of PCBs manufactured at lower volumes. These types of PCB are often used in more technically advanced products, in the engineering industry, medtech and transport/logistics industry.
The PCB market in Europe and North America is a fragmented market with many local players. NCAB's primary competitors are, for example, Fineline in Germany, ICAPE in France and PalPilot in the USA. These operate in a similar fashion to NCAB, with a local customer presence and organisations in China to ensure quality and capacity. Other types of competitors include Asian manufacturers that sell directly to customers in Europe and North America, mainly active in the high-volume segment, and domestic manufacturers and small trading companies without their own presence in China. In the HMLV segment, NCAB is one of the largest suppliers in the European and North American markets. In Sweden and Denmark, NCAB is the largest player in the market, and one of the largest suppliers in Norway, Finland, the UK and Russia.
However, there is significant potential to increase market shares in the segment, for example in Germany and the USA, as some local production that previously operated in these countries is now slowly but steadily closing down.
Nico Liu, QC Technician at NCAB Factory Management in China, checks PCBs at one of the factories.
NCAB ANNUAL REPORT 2020 19
NCAB has about 2,600 customers located in 45 countries worldwide. The customer base is far-reaching – the 10 largest customers accounted for 23 per cent of sales in 2020. The distribution across different countries, industries and types of companies increases diversification and reduces risk, which became clear during the coronavirus pandemic in 2020 when the broad customer base provided security for NCAB.
About half of NCAB's customers are active in the industrial sector. Typical industrial customers manufacture electronic systems for advanced industrial products. NCAB also has customers in sectors such as medtech, rail, telecom and heavy vehicles. There are two main types of PCB purchasers: EMS and OEM companies*. Normally, an EMS customer demands a wider
product mix of PCBs than a single OEM customer, as its range of products is wider. EMS customers have greater focus on price than OEM customers, which is explained by, inter alia, that PCBs account for a much larger share of the value of an EMS customer's product, approximately 8–12 per cent of a completed PCB-A, but also by the lower margins EMS customers typically have. PCBs constitute about 1–3 per cent of the value of an OEM customer's end product.
EMS companies offer assembly and purchasing services to primarily ODM* and to some extent OEM customers. Assembly can extend from PCB-A assembly to a completed end product.
The typical EMS customer needs to source numerous different types of PCBs due to its wide range of customers and products. EMS companies generally have several preferred suppliers of PCBs in the HMLV segment. They mainly engage a supplier such as NCAB in order to benefit from their expertise and breadth when purchasing PCBs. EMS customers accounted for about 60 per cent of NCAB's sales in 2020.
OEM customers are manufacturers of their own products, and operate in their own end-industry. They purchase both components and PCBs, and assemble the components themselves into a PCB-A. Typically, they source PCBs for HMLV orders from suppliers, such as NCAB, while high-volume orders are purchased directly from Asian manufacturers. Direct sales to OEM customers accounted for about 40 per cent of NCAB's sales in 2020.
ODM companies have no in-house production and normally work only with design, marketing and sales distribution of a product. Instead, they use EMS companies to assemble the complete product, and are therefore indirect customers to NCAB and are reported as sales to EMS customers.
In approximately one quarter of NCAB's orders from an EMS customer, the ODM customer decides which PCB supplier the EMS company with which they placed the order must use. This often concerns high-tech and demanding applications, and the PCB supplier has a strong bargaining position.
ODM customers consider, for example, design support as a value-creating factor.
| EMS (ODM) | OEM | |||
|---|---|---|---|---|
| SHARE | ABOUT 60 PER CENT | EMS ABOUT 40 PER CENT |
||
| KNOWLEDGE OF PCBS |
HIGH | LOW/MEDIUM | ||
| PURCHASING PATTERNS |
Much wider product offering Structured purchasing process European and US EMS companies typically purchase via suppliers for the broader product portfolio and better factory control Greater focus on KPIs, such as quality and price |
Small and medium-sized Few products Less structured Less price sensitive |
Large Slightly wider product offering Structured purchasing – High volume directly from Asian factories and HMLV from suppliers Low to medium in terms of |
|
| PURCHASING STRATEGY |
Has a "Preferred Supplier List" Typically purchases from a small number of PCB suppliers |
Small and medium-sized One or a small number of preferred suppliers and/or domestic factories |
price sensitivity Large Has a "Preferred Supplier List" Chooses suppliers based on qualitative metrics, such as quality, delivery reliability and customer service Typically purchases from a small number of PCB suppliers |
*NCAB's different customer types: EMS – Electronics Manufacturing Services OEM – Original Equipment Manufacturer ODM – Original Design Manufacturer
DENMARK, ESTONIA, FINLAND, NORWAY AND SWEDEN
| NET SALES, SEK million | EBITA, SEK million | EBITA MARGIN |
|---|---|---|
| 493.8 | 77.0 | 15.6% |
In the Nordic segment, NCAB has a long track record and strong market position. The strong position, combined with a relatively mature market, means NCAB's focus is on enhancing profitability rather than growth and recruitment. Customers are mainly active in the industrial segment, and in medtech and telecommunications. The segment's favourable profitability is mainly due to strong customer relationships, as a result of long-term work focusing primarily on quality and reliability, and the strategy is to further deepen these customer relationships over time. In 2020, the segment accounted for 23 per cent of the Group's total sales and 37 per cent of EBITA.
The year had a positive start and, despite the impact of the coronavirus pandemic, net sales were relatively stable in the initial months, positively affected by the high volume of orders in medtech. However, during the summer and early autumn activity was lower for many customers, which had an adverse impact on net sales for the second half of the year. Nevertheless, there was
a highly positive end to the year with rising order intake, where strong growth was noted primarily in the market for electric car chargers. During the year, Denmark reported growth, while other companies in the segment had slightly lower net sales year-onyear. Profitability for the segment was retained at a high level. Sales for the year amounted to SEK 493.8 million, corresponding to lower net sales of 4 per cent in SEK and 2 per cent in USD yearon-year. EBITA decreased to SEK 77.0 million (77.9), while the EBITA margin rose to 15.6 per cent (15.1).
| KEY PERFORMANCE INDICATORS | 2020 | 2019 |
|---|---|---|
| Net sales, SEK million | 493.8 | 516.6 |
| Sales growth, % | –4.4 | 26.2 |
| EBITA, SEK million | 77.0 | 77.9 |
| EBITA margin, % | 15.6 | 15.1 |
| Average number of employees | 55 | 55 |
SEGMENT'S SHARE OF EBITA
FRANCE, GERMANY, ITALY, NETHERLANDS, NORTH MACEDONIA, POLAND, SPAIN, AND THE UNITED KINGDOM
NET SALES, SEK million 859.5
EBITA, SEK million 56.3
Europe is the Group's largest segment and also has the greatest growth potential. The main focus is on growth. A key factor for achieving continued growth is recruitment, which is putting shortterm pressure on profitability.
In France, Italy and Germany, NCAB still has a relatively small market share, partly as these countries and markets still have significant domestic production of PCBs. As domestic production decreases in these countries, NCAB is aiming to gain market shares. In March, the Dutch company Flatfield was acquired, through which NCAB strengthened its position in both Benelux and Germany. Integration was conducted remotely, but nevertheless with highly positive results and stronger customer relationships. In 2020, the segment accounted for 41 per cent of the Group's total sales and 27 per cent of EBITA. Customers are primarily in the industrial segment. In February 2021, NCAB strengthened its position in Italy with the acquisition of PreventPCB.
2020 was marked by substantial fluctuations in the segment. Southern Europe (Italy, France and Spain) was severely affected by
EBITA MARGIN 6.6%
the coronavirus pandemic with a large initial drop in sales during the spring and summer. The transport sector was also severely affected in the spring, mainly impacting NCAB's company in the UK. Germany, on the other hand, reported a positive performance throughout the year.
Net sales for the year amounted to SEK 859.5 million, corresponding to growth of 27 per cent in SEK and 31 per cent in USD. Net sales for comparable companies decreased, however, by 8 per cent year-on-year and in USD by –6 per cent. EBITA increased to SEK 56.3 million (41.2), corresponding to a margin of 6.6 per cent (6.1).
| KEY PERFORMANCE INDICATORS | 2020 | 2019 |
|---|---|---|
| Net sales, SEK million | 859.5 | 675.0 |
| Sales growth, % | 27.3 | 6.9 |
| EBITA, SEK million | 56.3 | 41.2 |
| EBITA margin, % | 6.6 | 6.1 |
| Average number of employees | 146 | 114 |
SEGMENT'S SHARE OF EBITA
USA
NET SALES, SEK million 428.2 EBITA, SEK million 32.5
NCAB has a relatively small share of the USA market, so focus is on the establishment of new operations and activities targeting new customers. Customers are primarily active in the industrial segment and medtech. In November 2019, Altus PCB was acquired and Bare Board Group in Florida was acquired in April 2020. These acquisitions have doubled NCAB's presence and sales.
NCAB now has five regional offices in the USA as a means of working close to customers and thereby strengthening relationships with them. Focus is on recruitment, new customers and growth. Like the Europe segment, NCAB has a small market share in North America due to significant domestic production of PCBs. As domestic production decreases, NCAB is aiming to gain market shares. The trade war between the USA and China together with the introduction of import tariffs has created some market uncertainty. The acquisition of Bare Board Group also added a number of factories and a Factory Management team in Taiwan, which was positive for NCAB in the USA.
Political unrest, the trade war and the effects of the coronavirus
EBITA MARGIN 7.6%
pandemic have had some impact on performance, but NCAB has nonetheless succeeded is reporting unchanged comparable net sales year-on-year. The import tariff has been invoiced in full to customers and is included in reported net sales as of 2020. The segment's sales amounted to SEK 428.2 million (236.9), corresponding to growth of 81 per cent in SEK and 82 per cent in USD. During the year, profitability also improved significantly despite the fact that EBITA margin in Bare Board Group was some 3 percentage points lower than the rest of NCAB USA. EBITA increased to SEK 32.5 million (15.3), corresponding to a margin of 7.6 per cent (6.5).
| KEY PERFORMANCE INDICATORS | 2020 | 2019 |
|---|---|---|
| Net sales, SEK million | 428.2 | 236.9 |
| Sales growth, % | 80.8 | –8.2 |
| EBITA, SEK million | 32.5 | 15.3 |
| EBITA margin, % | 7.6 | 6.5 |
| Average number of employees | 74 | 53 |
SEGMENT'S SHARE OF EBITA
Segment Segment
NET SALES, SEK million 333.6 EBITA, SEK million
EBITA MARGIN 12.9%
NCAB's market position varies in the different countries of the East segment. In China, NCAB has a small market share while its position is relatively strong in Russia. Continued growth is expected in the segment, even if the coronavirus pandemic had a negative impact on growth in 2020. Great potential remains for growth in China. Customers are largely in the industrial segment, new energy and the automotive industry in Russia.
The Chinese business sells to Chinese customers and to European and American customers who are establishing a presence in China. However, growth is strongest to local EMS companies in China. NCAB still has a small share of the Chinese market, but sees exciting growth opportunities with Chinese EMS customers who appreciate NCAB's level of service and the offer of easier access to the highly-regarded PCB factories that NCAB works with. NCAB expects to open more local sales offices in China to further increase its level of service and local presence among customers. In the Chinese market, NCAB has four sales companies that sell in CNY and one company in Hong Kong that sells in USD. The company in Malaysia remains in an early development phase.
The market in the East segment was initially affected by the shutdown in China in February, and Russia was then adversely impacted by the coronavirus pandemic in April. The trade war between the USA and China also affected NCAB's operations in China, partly as many of NCAB's customers in China that sell to the USA noted falling orders and that import restrictions on American components to China had a negative impact on a number of NCAB's customers. There was, however, a gradual recovery in the autumn and a positive trend in order intake in the final quarter. Sales for the year in the segment amounted to SEK 333.6 million (352.6), corresponding to decline of 5 per cent in SEK and 3 per cent in USD. EBITA decreased to SEK 43.1 million (43.5), corresponding to an EBITA margin of 12.9 per cent (12.3) despite the negative impact in Russia of substantial one-off effects of the weak RUB.
| KEY PERFORMANCE INDICATORS | 2020 | 2019 |
|---|---|---|
| Net sales, SEK million | 333.6 | 352.6 |
| Sales growth, % | –5.4 | 10.7 |
| EBITA, SEK million | 43.1 | 43.5 |
| EBITA margin, % | 12.9 | 12.3 |
| Average number of employees | 75 | 81 |
NCAB has a decentralised organisation with local subsidiaries that are supported by central group functions. A distinctive corporate culture pervades the whole of the company – a conviction that the best business decisions are made close to the customer and the market.
Of NCAB's approximately 474 employees, some 20 work with central functions, while the remainder work in 16 local companies, or in the Factory Management team. NCAB does not control every aspect of the local companies: the aim is that they are to work close to the market and be sensitive to the needs of customers, receiving support from the central organisation. The local companies are headed by a Managing Director and are accountable for their own performance. They are responsible for customer relationships and handling of orders and deliveries. The central organisation is to support the business strategy and has overriding responsibility to develop systems, processes and markets. It handles issues including global sales, marketing, People & Culture, system development, quality, sustainability, Factory Management, logistics and technology.
Despite the fact that NCAB's companies are spread across three continents, there is an established and clear corporate culture and shared values that link together employees and provide direction moving forward. NCAB's values have been developed by all employees. They are based on the premise that all employees, regardless of position, should be able to make their own decisions, quickly and easily and in line with the company's strategy. The three values that
characterise NCAB are to always put quality first, to build strong relationships with the people it works and interacts with – such as customers, colleagues and factories – and to always assume full responsibility for its obligations.
The expertise and engagement of employees forms the basis for NCAB's development. To remain a leading company in its industry, it is important to retain and constantly develop the expertise and specialist know-how of the company, through different types of learning and by regularly meeting colleagues from the whole organisation to exchange experiences. To this end, NCAB strives to provide a stimulating and challenging work environment where every individual is respected and included, with the long-term aim of attracting, engaging and developing together.
At 31 December 2020, the number of employees was 474 (395), of whom 214 (181) were women and 260 (214) were men. The average number of employees in the organisation during the period was 452 (387), of whom 202 (179) were women and 250 (208) were men.
"An important aspect of NCAB's business and culture is our engaged and skilled employees, and it has been of the utmost importance to ensure their engagement, development and well-being throughout this special situation."
"We were forced to rethink and find new solutions. Activities such as global onboarding meetings and training sessions where participants from different companies normally meet physically were now held online. Instead of the annual global conference, we held NCAB Live – a virtual event where employees from across NCAB met and interacted with each other. It became clear how important it is for our employees to meet – even if this was in a virtual setting. As part of our endeavour to maintain our corporate culture, we also worked with online workshops and recorded video messages from our CEO and Chairman that were sent to all
employees. We were lucky to have launched the digital training platform, NCAB Academy, in 2019. It has been an excellent tool to safely continue various internal training courses during the year."
"One lesson we have learnt is that in certain situations an well-functioning digital tool can be a effective replacement for, or complement to, a physical meeting, while in other situations it is unbeatable to meet in person.
Eva Holm, VP People & Culture, and Michael Larsson, VP Sales, talk about their individual business areas during a global onboarding meeting.
All employees take part in a structured onboarding programme during their first three months, as a means of firmly establishing the company's processes and corporate culture. The onboarding program goes through NCAB's global business targets and plans, KPIs, working methods, processes and systems. All new employees are also given a mentor as part of the onboarding program.
NCAB offers leadership training to all employees in senior positions. Managers must be able to engage their employees and act as good role models. Internal training courses are also held for internal and external
sales personnel, and technicians to develop them in their roles.
Every employee draws up, together with their manager, an individual development plan that meets both NCAB's needs for expertise and the individual employee's needs and wishes. Follow-up takes place once or twice per year.
The NCAB Academy is a digital platform for training and development that is available for everyone, wherever the employee works. This offers all employees an opportunity for continuous development.
NCAB regularly conducts employee engagement surveys to ensure a high level of engagement, a high level of team efficiency and good leadership. The results of the survey are followed up and discussed in local workshops.
NCAB regularly brings together all of its employees for a global conference to exchange knowledge and experience, strengthen ties between the offices, and ensure NCAB's shared direction moving forward. In 2020, the conference was replaced with NCAB Live, a virtual event attended by the whole company.
Acting in a sustainable way while assuming great responsibility is an integrated part of NCAB's business model and long-term strategy. A clear sustainability strategy guides NCAB in the right direction, with the aim of realising sustainable growth and the positive changes the company wants to see in the industry.
NCAB's sustainability strategy was launched in 2014. Dialogue with the company's stakeholders together with the ISO 26000 standard form the foundation in identifying and specifying the business's long-term goals and focus areas. These include ethical, social and environmental dimensions.
In 2019, the links were clarified to the Agenda 2030 Sustainable Development Goals (SDGs) that include interim targets that are considered the most significant for operations and where NCAB has the greatest opportunity to contribute.
NCAB has divided its sustainability strategy into three focus areas in relation to its stakeholder groups; customers, employees and supply chain. The company creates value for its stakeholders by conducting operations in a responsible manner in the value chain, by identifying opportunities to effect positive change and by minimising risks for adverse effects within and outside the company's areas of operation. This is achieved in close collaboration with suppliers and customers, and through a high level of engagement from the company's employees.
In accordance with Chapter 6, Section 11 of the Annual Accounts Act, NCAB has decided to prepare a statutory Sustainability Report as a separate report to its Annual Report that is available to read at ncabgroup.com/sustainability
Clear demands, strong relationships, close dialogue and cooperation, detailed sustainability audits.
Toxic chemicals, health and safety risks and overtime work.
Continue our sustainability audit programme, focus on the environment, working conditions, and health and safety.
Our culture, employee engagement, continuous learning and development, global working environment.
GREATEST RISKS
transportation.
Environmental impact through
Failure to attract and recruit the right people and technical competence in a competitive market. Uphold the corporate culture during growth.
MEASURABLE GOALS
Top scores in employee satisfaction and engagement,
Strengthen the company's brand and attractiveness as an employer, in addition to empowering and offering every individual an opportunity to make decisions that are aligned with our values.
Systematic work with sustainability and quality issues, close relationships with customers and factories, PCB technology and manufacturing knowhow and experience.
MEASURABLE GOALS
GOING FORWARD Continued quality work in the factory, and cooperation with customers for optimised design of the PCB to reduce the environmental impact through reduced waste in production. Examine and assess transport flows and more actively offer different transportation alternatives for reduced environmental impact.
Top scores in customer satisfaction, including sustainability
For many years, NCAB Group has been active in improving sustainability in its operations. One important key to achieve this is a close collaboration with customers and factories, and a strong focus on employees.
"Essentially, sustainable business is a survival strategy that will enable us to continue conducting business in the future. We are to carry out operations that are sustainable in the long-term and create growth and profitability for NCAB, our customers, suppliers and investors. This includes a responsibility for contributing towards global sustainable development. Important enablers for this are that we are a reliable and responsible partner and attractive employer."
"We conduct structured work to move operations in a sustainable direction and have therefore chosen the ISO 26000 Guidance Standard as our framework. It covers environmental, social and ethical aspects and, in combination with stakeholder dialogues, has helped us to identify issues to focus on. We have drawn up a strategy that highlights a number of focus areas and targets for sustainability work in the supply chain and in relation to employees and customers. At the same time, sustainability is not something separate, but is integrated into operations and processes in the same way as other prioritised issues."
"When we develop and conduct operations, our focus in on creating value for our stakeholders and taking full responsibility for this. It is important that we can define the value chain, define the physical flow and the activities that we conduct and contribute value to the company's offerings and thus value to our stakeholders, such as customers and employees. This approach helps us to identify opportunities to effect positive change and to minimise risks for adverse effects within and outside our areas of operation."
"In the design phase, we support our customers when it comes to optimising PCB construction for product reliability and for manufacturing. Our technicians offer design support through individual talks with the customer, through seminars and in customer meetings, or from our website where our design guidelines are available. Optimised PCB construction leads to less waste and less use of materials, water, electricity and chemicals in production. In the factories, our work related to social responsibility, environment and quality contributes to the customer's own sustainability agenda and minimises risk in the supply chain."
"Together with our production partners, we focus on quality, social responsibility and environmental responsibility in the supply chain. Recurring audits on-site at the factories examine areas such as working conditions, human rights, health and safety, materials (chemical content and conflict minerals), chemicals management, waste handling and recycling, business ethics and quality. Employees in our Factory
Management team conduct these audits and follow up deviations and improvement activities to ensure that these are carried out."
"As a knowledge-based company, our success is due to our employees and their high level of engagement. We offer both individuals and teams considerable scope for development, for example through internal training courses. We also have a strong focus on leadership, team building, ethics and equal opportunities. Follow-up and activities take place through individual talks and through the employee satisfaction survey where indexes for engagement, leadership, and ability to cooperate are key performance indicators in our operational controls.
"When the 2030 Agenda was launched, we had already initiated a structured sustainability agenda with a strategy and defined targets. Using the SDGs we can, however, clarify the strategic objectives and the understanding that we are all responsible for contributing towards global sustainable development. These goals can help guide us when we further develop our sustainability strategy and our operations to contribute to a better future for everyone. In 2019, we therefore conducted a review to define the goals and targets that are relevant to us from the palette presented in the 2030 Agenda. We mainly contribute to nine of the goals."
"The main issue for the future is clearly to obtain a better grasp of our climate impact and to take action to reduce this impact. We know that the main sources of our greenhouse gases are manufacturing and transportation, but we need to analyse in detail where these arise in our processes, how large they are and how we can reduce them. For this, we want to use the Greenhouse Gas Protocol to identify emissions in our value chain. Obtaining all data may be challenging, but we will do this where it is possible to take measurements and where we can make a difference."
Safety shower check during sustainability audit.
NCAB ANNUAL REPORT 2020 31
Probability (P) Impact (I)
| • • • | ||||
|---|---|---|---|---|
| Types of risk | Description | Management | P | I |
| MARKET AND EXTERNAL RISKS |
||||
| Demand | The demand for PCBs is dependent on general economic conditions and the activity within relevant markets and different end-industries. Demand for the PCBs sold by NCAB is ultimate ly dependent on the underlying demand for the end-products in which they are used. |
NCAB's products are used in a wide variety of end-indus tries, such as industrial, telecom, medtech, aerospace and defence. NCAB's business model has historically also proven resilient against macroeconomic fluctuations. 2020 showed how a substantial drop in demand from the transport sector was offset by increased demand in medtech. |
• | • |
| Competition | NCAB operates in competitive markets and customers may choose to purchase PCBs from another supplier. NCAB faces competition both from trading companies and manufactur ers, on a regional, national and multi-national level. Some of NCAB's suppliers compete with NCAB through direct sales to customers. |
NCAB has a robust full-service offering to both customers and manufacturers. The principal competitive factors in NCAB's business include quality and quality control, price, design and technical support, purchasing power, the range of products on offer, ability to make on-time deliveries and access to volume capability. |
• | • |
| Capacity | Both high and low utilisation levels at manufacturers may entail risks for NCAB, either in the form of inferior product quality or that prices increase and deliveries are delayed. If a factory files for bankruptcy or chooses another direction, then NCAB's future deliveries may be threatened. |
NCAB cooperates with a range of manufacturers for different levels of technology and purposes and always has at least du al-sourcing, meaning there is little dependence on individual manufacturers and that NCAB has a high level of flexibility and capacity in its offering. |
• | • |
| Dependence on China | NCAB purchases most, about 85 per cent, of its PCBs in China. Political unrest, natural disasters or other export restrictions from China may have a negative impact on sales. There is also increasing political reluctance to buy products from China, which may impact NCAB's sales. |
Although NCAB has alternative factories outside China, it remains dependent on the country. Due to its size, NCAB has greater opportunities to find alternatives than many minor players. NCAB is often prioritised by suppliers during temporary problems. Following the acquisition of Bare Board Group, NCAB now also has a factory base and a Factory Management team in Taiwan. NCAB has initiated a process to find competitive factories outside of China. |
• | • |
| Pandemic | NCAB may be adversely impacted by a pandemic. The impact may be from supplier closures, disruptions in deliveries of materials to NCAB's suppliers, a drop in demand from NCAB's customers and disruptions to supply chains from Asia to Europe and the USA. |
NCAB works with more than 27 preferred supply partners and also has suppliers outside of China. NCAB sells to many different customers in a variety of customer sectors, which reduces risk. NCAB has low fixed costs and with relative ease can adapt costs in the event of major changes in demand. |
• | • |
| OPERATIONAL RISK | ||||
| Brand and reputation | NCAB may be adversely impacted if the company's reputation among its suppliers or customers deteriorates. Failure by NCAB or its suppliers to comply with ethical, social, product, labour, health and safety, environmental and other standards could damage NCAB's reputation and could lead to loss of customers or to adverse actions by NCAB's customers. |
NCAB reviews its manufacturers' compliance with applicable employment, environmental and other laws, regulations and standards through regular audits. NCAB has two individuals in China who work solely with sustainability audits. NCAB can discontinue an existing collaboration, or refrain from begin ning a new one, if the manufacturer does not comply with the demands made by NCAB. |
• | • |
| Customer dependence | NCAB has a diverse customer base consisting of about 2,600 customers, spread across 45 countries and in many different industries. Despite good risk spread, NCAB is dependent on the success of, and orders from, individual customers. |
NCAB is constantly striving to develop a customer base with more customers and closer collaboration. The 50 largest customers accounted for approximately 45 per cent of the company's revenues in 2020, and the 10 largest for about 23 per cent, which means a good risk spread. |
• | • |
| Organisation | Being able to attract and retain qualified staff and executive management is important to NCAB's future strategy and opera tions. Employees with a high level of technical competence are important, at the same time as PCB expertise is on the decline as more production is transferred to Asia. |
NCAB has applied a decentralised organisation where every subsidiary and employee is offered significant autonomous responsibility. On account of its global presence, NCAB offers substantial development opportunities for employees. NCAB has particular focus on education and training in all positions. Furthermore, corporate culture is an important cornerstone of NCAB's strategy, which is also reflected in the excellent results of the employee satisfaction surveys carried out. |
• | • |
| Acquisitions | NCAB may experience difficulties completing acquisitions, integrating acquired businesses and achieving anticipated synergies. Furthermore, acquisitions could expose NCAB to other unknown liabilities. |
NCAB has extensive experience of company acquisitions. All acquisition candidates are carefully assessed with internal and external resources to ensure the price is correct and no unforeseen risks are acquired. Furthermore, an assessment is made that the conditions are right for a successful integration – particularly that the corporate culture is appropriate, and that key customers and employees can be retained. |
• | • |
| Laws and regulations | NCAB is subject to numerous international, EU, national and local laws, regulations, rules, decisions and other actions, such as trade restrictions, implemented by the authorities in the countries where NCAB operates and must observe a large number of different regulatory systems which are continuously evolving and may require additional investments by NCAB. |
NCAB's local companies work closely to their respective markets and may therefore follow the developments in terms of public decisions, changes in legislation, regulations and other provisions. |
• | • |
| IT functionality | Disruptions in the functions of NCAB's IT systems, such as outages, cyber attacks or the IT systems not meeting relevant integration requirements from customers, could have a material adverse effect on the business. Since NCAB stores customer data, it is also highly important to follow GDPR legislation. |
The management of NCAB's computer hardware is out sourced to a third party, whereas software and IT system management is handled in-house. To meet its customers' expectations, NCAB continuously monitors and upgrades its IT systems. |
• | • |
| Probability (P) Impact (I) |
|---|
| ---------------------------- |
| • • • | ||||
|---|---|---|---|---|
| Types of risk | Description | Management | P | I |
| Decentralisation | NCAB's decentralised structure and geographic breadth expose the Group to local problems that it may fail to identify and ad dress in a timely manner. NCAB's decentralised structure plac es high demands on financial reporting and internal control. Deficiencies in this regard could result in errors in the reports. |
NCAB has a well defined system for the control of compliance to ensure correct financial reporting, together with the employees complying with NCAB's agreements, internal guidelines and policies, as well as internal credit limits. |
• | • |
| SUSTAINABILITY RISKS | ||||
| Environment | NCAB's main environmental risks arise from the PCB manu facturers' resource use, chemicals and waste management, emissions to water and air, and contamination of soil. Another main area is transportation; most of NCAB's carbon emissions are caused by transportation from manufacturer to customer. NCAB primarily uses air transportation as customers place high demands on quick deliveries. |
NCAB has clear policies governing environmental work and assessing the risks and impact. NCAB imposes demands on, and monitors, that PCB manufacturers have identified and comply with local environmental demands and the RoHS and REACH directives. NCAB maintains close dialogue with cus tomers and manufacturers about how the supply chain can reduce its environmental impact in the design and production phases. NCAB offers various transport alternatives (air, sea, rail, road), all with a different impact on the environment. |
• | • |
| Human rights | In its business, NCAB can be exposed to challenges involving human rights. NCAB operates in a global environment where certain markets limit insights into human rights. |
The company applies a Code of Conduct that encompass suppliers and employees, that include support and respect for human rights. NCAB has zero tolerance towards discrimi nation and harassment. NCAB employs working methods that provide systematic prevention and follow up, both internally and externally. |
• | • |
| Social conditions |
Shortcoming in efforts by NCAB and PCB manufacturers in work environment, health and safety, labour and work conditions may have adverse implications at an individual and company level. |
NCAB imposes demands on, and monitors, that PCB manufac turers, and their own operations, have identified and comply with local demands. The company applies Codes of Conduct that encompass suppliers and employees. NCAB employs working methods that provide systematic prevention and follow up, both internally and externally. A whistleblower function is available on NCAB's website, where any misconduct can be reported. |
• | • |
| Corruption | Corruption is present in all countries and industries to varying degrees. NCAB and NCAB's suppliers are exposed to various ethical risks in their operations, including corruption, busi ness ethics and bribery. |
NCAB has procedures and processes in place to avoid and counteract bribery and corruption. In addition, NCAB employ ees and suppliers are trained using the Code of Conduct and through courses. |
• | • |
| FINANCIAL RISK | ||||
| Currency | Exchange rate fluctuations may affect NCAB's cash flow, income statement and balance sheet and the sale prices for PCBs. The main part of NCAB's purchases and sales are made in USD. Consequently, NCAB's profits and its assets are affected by fluctuations in the price of USD compared to SEK. NCAB is also exposed to fluctuations in EUR and CNY compared to SEK. |
Instead of hedging the currency exposure of cash flows, the Group's risk management policy is, as far as possible, to price and invoice goods in USD, which is also the currency used for most purchases. Approximately 85 per cent of the Group's pricing is in USD and around 75 per cent of the Group's invoicing is in USD. Goods purchases and shipping are 95 per cent denominated in USD. |
• | • |
| Tax | The businesses in NCAB's subsidiaries are run according to NCAB's understanding or interpretation of current tax laws, tax treaties, other tax laws stipulations and the requirements of the tax authorities concerned. There is a risk that NCAB's tax position could change as a result of the decisions of the tax authorities concerned or as a result of changed laws, treaties and other regulations. |
NCAB's local companies work close to their respective markets and may therefore closely monitor developments in terms of public decisions, changes in legislation, regulations and other provisions. |
• | • |
| Goodwill | NCAB's consolidated balance sheet includes significant good will.Changed market conditions or other factors that have an adverse impact on the acquired companies' operations may entail a risk of future impairment losses on goodwill. |
For acquisitions, NCAB is careful that the acquisition price prop erly reflects the acquired company's future prospects. There are well-established procedures, processes and quality demands used by NCAB to minimise the risk of being overcharged for an acquisition. Impairment testing of goodwill takes place on an annual basis and if there is an indication of impairment. |
• | • |
| Interest | NCAB is exposed to interest rate risks that could cause fair values, financial income and expenditure, cash flow and/or results to vary as a result of changes in market interest rates. |
The Group's borrowing mainly uses variable interest rates. Interest-rate exposure can if agreed by the Board be reduced through the use of derivatives that convert variable interest to fixed interest. |
• | • |
| Credit | NCAB is exposed to credit and counterparty risk. Subsidiaries within NCAB sell PCBs through contracts that are not secured by collateral or other security. In addition, the company is exposed to credit risks in relation to the financial institutions in which NCAB has deposited funds. |
Each Group company is responsible for monitoring and as sessing the credit risk for each new customer before offering standard terms of payment and delivery. The Group insures credit risk in subsidiaries through a credit insurance compa ny. The use of credit limits is monitored regularly. Counterpar ty risk for financial assets is managed at Group level and only a small number of approved banks may be used. |
• | • |
| Financing | NCAB may have a shortage of liquidity and may not be able to obtain loans at favourable terms, or obtain loans at all. Should NCAB fail to meet its obligations under the credit facility or breach any covenant, it could have a negative impact on NCAB. |
NCAB's has a financial goal concerning a maximum debt/ equity ratio.Due to its asset-light business model, NCAB has strong cash flows. |
• | • |
At the end of 2020, NCAB had been listed on Nasdaq Small Cap Stockholm for two and a half years. In January, the share was transferred to Mid Cap. During the spring of 2020, a share issue was conducted to increase stability and flexibility. The company gained a number of new shareholders and share liquidity increased. Since its listing in June 2018 until December 2020, NCAB's share price rose from SEK 75 to SEK 262 – an increase of 250 per cent.
In 2020, the NCAB share generated returns of 59 per cent (from SEK 165 to SEK 262). In the same period, OMX Stockholm PI rose by 11 per cent. The highest price paid during the period was SEK 286 on 12 October and 18 November. The lowest price paid was SEK 101 and was noted on 23 March. The closing price at the end of the period was SEK 262, which means the total market value at the end of the year was SEK 4,899 million. In January 2021, NCAB was transferred up to Mid Cap.
Pursuant to the authorisation granted to the Board by the Annual General Meeting on 13 May 2019, the Board of NCAB resolved in April 2020 on a directed share issue of 1,850,000 new shares at a subscription price of SEK 155 per share. The new share issue contributed approximately SEK 287 million to NCAB before issuance costs. The subscription price in the new share issue was established through an accelerated book building process. The new share issue was fully subscribed by a number of Swedish and international institutional investors at the daily value.
On 31 December 2020, NCAB Group's share capital amounted to SEK 1.9 million distributed between 18,697,124 shares with a quotient value of SEK 0.01 per share. According to the Articles of Association, share capital is to be a minimum of SEK 1,500,000 and a maximum of SEK 6,000,000 distributed between a minimum of 15,000,000 shares and a maximum of 60,000,000 shares. The table below sets forth the changes in the share capital of NCAB for the period covered by the historical financial information and up to and including 2020.
NCAB's dividend policy aims to distribute available cash flow, after taking into account the company's indebtedness as well as future growth opportunities, including acquisitions. The dividend is expected to correspond to at least 50 per cent of net profit. No dividend was paid for the full-year 2019. For the full-year 2020, the Board has proposed a dividend of SEK 5.00 per share, totalling SEK 93.5 million.
The number of shareholders in NCAB amounted to 1,708 (1,463) according to Euroclear Sweden AB at 31 December 2020. NCAB's ten largest owners held shares corresponding to 65.1 per cent of both votes and capital in the company. Foreign owners amounted to about 22.3 per cent at 31 December 2020.
| Date for registration |
Event | Change in number of shares |
Total number of shares |
Change in share capital (SEK) |
Total share capital (SEK) |
|---|---|---|---|---|---|
| 13 April 2018 | 10:1 share split | 13,614,111 | 15,126,790 | – | 1,512,679 |
| 24 April 2018 | Exercise of options | 285,000 | 15,411,790 | 28,500 | 1,541,179 |
| 8 June 2018 | Conversion of preference shares to ordinary shares | – | 15,411,790 | – | 1,541,179 |
| 8 June 2018 | Exercise of options | 102,000 | 15,513,790 | 10,200 | 1,551,379 |
| 8 June 2018 | Issue of new shares | 1,333,334 | 16,847,124 | 133,333 | 1,684,712 |
| 24 April 2020 | Issue of new shares | 1,850,000 | 18,697,124 | 185,000 | 1,869,712 |
| Owners | Number of shares | Capital | Votes |
|---|---|---|---|
| R12 Kapital | 3,385,155 | 18.1% | 18.1% |
| Swedbank Robur Fonder | 1,723,516 | 9.2% | 9.2% |
| SEB Fonder | 1,187,758 | 6.4% | 6.4% |
| Fourth Swedish National Pension Fund (AP4) | 1,121,015 | 6.0% | 6.0% |
| Montanaro | 1,109,150 | 5.9% | 5.9% |
| C WorldWide Asset Management | 878,834 | 4.7% | 4.7% |
| AMF Pension & Fonder | 753,740 | 4.0% | 4.0% |
| Second Swedish National Pension Fund (AP2) | 710,757 | 3.8% | 3.8% |
| Hans Ståhl | 673,860 | 3.6% | 3.6% |
| Third Swedish National Pension Fund (AP3) | 633,333 | 3.4% | 3.4% |
| Total | 12,177,118 | 65.1% | 65.1% |
The information above refers to 31 December 2020.
| Size of shareholding | Number of shares |
Capital | Votes | Number of known owners |
Share of known owners |
|---|---|---|---|---|---|
| 1–1 000 | 202,011 | 1.1% | 1.1% | 1,565 | 91.6% |
| 1,001–10,000 | 249,159 | 1.3% | 1.3% | 81 | 4.7% |
| 10,001–50,000 | 782,630 | 4.2% | 4.2% | 32 | 1.9% |
| 50,001–100,000 | 241,820 | 1.3% | 1.3% | 4 | 0.2% |
| 100,001–500,000 | 3,636,149 | 19.4% | 19.4% | 14 | 0.8% |
| 500,001–1,000,000 | 4,762,118 | 25.5% | 25.5% | 7 | 0.4% |
| 1,000,001 – | 8,526,594 | 45.6% | 45.6% | 5 | 0.3% |
| Anonymous ownership | 296,643 | 1.6% | 1.6% | ||
| Total | 18,697,124 | 100.0% | 100.0% | 1,708 | 100.0% |
The information above refers to 31 December 2020. Source: Modular Finance.
OWNERSHIP TYPE, % OF CAPITAL
OWNERSHIP DISTRIBUTION BY COUNTRY, % OF CAPITAL
CONCENTRATION, OWNERSHIP
To distribute available cash flow, which is expected to correspond to at least 50 per cent of net profit
The motion to the 2021 Annual General Meeting is the payment of a dividend of SEK 93.5 million, corresponding to 69 per cent of net profit
Flexible, semi-flexible and rigid-flex PCBs are PCBs that are partially or entirely flexible. The flexible PCBs are used in installations in cramped spaces and in movable applications, such as digital cameras and in compact medical devices.
A large share of NCAB's production comprises multilayer PCBs, which have a wide range of uses. The Neuromonitoring product on page 16 uses an 8-layer board with a surface finish of immersion gold.
Metal Core PCBs (IMS) are used in sectors including automotive, medical and aerospace as well as in lightning applications and industrial controls. The digital camera with displays – Mirror Eye Camera – on page 17 uses metal core PCBs.
HDI An HDI PCB has several copper layers, finer lines and via holes where many of the holes do not penetrate the entire board as with traditional PCBs. The technology is used in products where there is very little space, and when many functions are grouped
together.
Born 1961. Chairman since 2007.
Education: M.Sc. in Engineering Physics from the KTH Royal Institute of Technology, Stockholm and an MBA from Harvard Business School, Boston, USA.
Other current assignments: Chairman of OSM Holding AB and the Sweden-America Foundation, Board member of Altor Fund Manager AB and Industrifonden, and advisor to eEquity.
Shareholding: 501,610 shares via the 100 per cent owned Gogoy AB.
Independent: Independent in relation to the company and its executive management and independent of the company's main owners.
Born 1942. Board member since 2007.
Education: M.Sc. in Engineering from the Chalmers University of Technology in Gothenburg and a M.Sc. in Business and Economics from the Gothenburg School of Business, Economics and Law and has studied at the Carnegie Mellon University in the USA.
Other current assignments: Chairman of Millistream Market Data AB and Magic Formula Sweden AB.
Shareholding: 20,000 shares.
Independent: Independent in relation to the company and its executive management and independent of the company's main owners.
Born 1971. Board member between 2007 and 2010, and returned to the Board in 2016.
Education: M.Sc. in Business and Economics from the Stockholm School of Economics.
Chairman of MEWAB Holding AB as well as Board member of Aditro Group AB, Oriflame Holding AG, OSM Holding AB and Nimbus Boats Sweden AB.
Shareholding: No own shares but holds 10.1 per cent of shares and 35.7 per cent of votes in R12, which owns 3,385,155 shares corresponding to 18.1 per cent of the capital in NCAB.
Independent: Independent in relation to the company and its executive management and dependent of the company's main owners.
Born 1971. Board member since 2017.
Education: M.Sc. in Business Administration and a Licentiate of Economics and Management from Linköping University.
Other current assignments: Chairman of Iver AB and of Nexon Asia Pacific, owner and Board member of Myrtel Management AB as well as Board member of Intrum (publ).
Shareholding: 2,000 shares.
Independent: Independent in relation to the company and its executive management and independent of the company's main owners.
Born 1964. Board member since 2007.
Education: M.Sc. in Business and Economics from the Stockholm School of Economics.
Other current assignments: Board member of af Jochnick Foundation, Aditro Group AB and OSM Holding AB.
Shareholding: No own shares but holds 10.7 per cent of shares and 36.0 per cent of votes in R12, which owns 3,385,155 shares corresponding to 18.1 per cent of the capital in NCAB.
Independent: Independent in relation to the company and its executive management and dependent of the company's main owners.
Born 1959. Board member since 2017.
Education: M.Sc. in Business and Economics from the Stockholm School of Economics.
Other current assignments: Board member of Ambea AB (publ), Oriflame Holding AG and Skistar AB (publ).
Shareholding: 6,666 shares.
Independent: Independent in relation to the company and its executive management and independent of the company's main owners.
Born 1955. Board member since 2007.
Other current assignments: –
Shareholding: 673,860 shares.
Independent: Dependent in relation to the company and its executive management and independent of the company's main owners.
The information pertaining to shareholdings refers to 31 December 2020.
Born 1968. President and Chief Executive Officer since 2020.
Education: M.Sc. in Engineering Physics from Chalmers University of Technology in Gothenburg with studies at Ecole Polytechnique Federale de Lausanne.
Shareholding: 2,852 shares.
Born 1962. Chief Financial Officer since 2008. Education: B.Sc. in Business Administration and Finance from Linköping University. Shareholding: 330,000 shares.
Born 1980. VP Asia and MD China Sales since 2007. Education: Industrial System Engineering,
University of Regina, Canada. Shareholding: 32,000 shares.
Born 1977. Sustainability Manager since 2013. Education: B.Sc. in Electrical Engineering and Economics from the KTH Royal Institute of Tech-
nology, Stockholm and a Graduate Certificate in Marketing from the University of Wollongong, Australia.
Shareholding: 46,900 shares.
Born 1973. Chief Operating Officer since 2009. Education: M.Sc. in Quality Management and a B.Sc. in Technology & Management from Paisley University, United Kingdom. Shareholding: 18,290 shares.
Born 1962. VP People and Culture since 2015. Education: M.Sc. in Business and Economics from Stockholm University. Shareholding: 400 shares.
Born 1962. VP Europe since 2018, MD NCAB Group UK since 2010. Education: HND in Aerospace Engineering from the University of West England, United Kingdom.
Shareholding: –
Born 1975. Chief Information Officer since 2005.
Education: – Shareholding: 53,000 shares.
Born 1976. VP NCAB Group North America since 2017.
Education: MBA from Växjö University. Shareholding: 135,000 shares.
Born 1968. VP Sales since 2017.
Education: – Shareholding: 41,410 shares.
Born 1972. VP Nordic since 2018 and MD NCAB Group Sweden since 2011.
Education: Corporate Management Program at the Swedish Institute for Management (IFL) at the Stockholm School of Economics, and studied Strategic Management & Leadership at the Chartered Management Institute, United Kingdom.
Shareholding: 25,500 shares.
Born 1979. Global Marketing Manager since 2006.
Education: B.Sc in Marketing and Human Resources Management from Unitec Institute of Technology, Auckland, New Zealand. Shareholding: 24,000 shares.
The information pertaining to shareholdings refers to 31 December 2020.
NCAB views sound corporate governance as an important foundation on which to build a trusting relationship with shareholders and other important parties. The Swedish Corporate Governance Code, which is applied by NCAB, aims to create a good balance between shareholders, the Board of Directors and senior management. Reasonable corporate governance, with a high standard in respect of transparency, reliability and ethical values, is a guiding principle for NCAB.
NCAB's shares are traded on Nasdaq Stockholm and therefore apply, in addition to the rules of the Swedish Companies Act (2005:551) and the Swedish Annual Accounts Act (1995:1554), the Nasdaq Stockholm's Rule Book for Issuers and the Swedish Corporate Governance Code (the "Code") as well as other Swedish and foreign laws and regulations, where relevant. The Code defines a norm for corporate governance on a higher level of ambition than the Swedish Companies Act and other regulations' minimum requirements. The Code is based on the principle of "comply or explain." It means that the company must not, at every occasion comply with every rule of the Code, but may choose other solutions that are deemed to better respond to the circumstances in the individual case. Provided that the company openly reports every such non-compliance, describes the alternative solution chosen and states the reasons for this.
No violations of applicable rules and regulations occurred in 2020 and NCAB's operations were conducted in accordance with good practice in the equities market. The company has not deviated from the Code.
NCAB's shareholders' register is maintained by Euroclear Sweden AB. On 31 December 2020, NCAB had 1,708 shareholders according to the shareholders' register and the total number of shares was 18,697,124, all with one vote each. More about NCAB's shares and its shareholders can be found in the section of the NCAB share on pages 34–35.
According to the Articles of Association, the registered name of the company is NCAB Group AB (publ) and the financial year is the calendar year, 1 January to 31 December. To view the Articles of Association in its entirety, which in its current form was approved at the General Meeting on 5 June 2020, refer to the company's website www.ncabgroup.com, under the section Investors/Corporate Governance/Articles of Association.
The General Meeting is NCAB's highest decision-making body and can resolve upon every issue for the company, which is not specifically reserved for another company body's exclusive competence. At the Annual General Meeting, which shall be held within six months from the end of the financial year, shareholders exercise their voting
rights on issues, such as the adoption of income statement and balance sheet, allocation of company's profit or loss, resolutions to discharge the members of the Board of Directors and the CEO from liability for the financial year, the appointment of members of the Board of Directors and auditor as well as remuneration for the Board of Directors and the auditor. At Annual General Meetings, at least one member of the Nomination Committee, the company's auditor and, to the extent possible, all other members of the Board of Directors, shall participate. In accordance with the Articles of Association, notice to convene the General Meeting shall be published in Post- och Inrikes Tidningar (the Swedish Official Gazette) and be kept available at the company's website. An announcement shall be placed in Svenska Dagbladet with information that the Meeting has been convened. In addition to the Annual General Meeting, Extraordinary General Meetings can be convened. The Chairman of the Board of Directors, as many other members of the Board of Directors as possible and the CEO shall be present at Extraordinary General Meetings of the company.
All shareholders who are registered directly in the share register kept by Euroclear Sweden AB ("Euroclear"), five weekdays prior to the General Meeting and who has notified the company of their intention to attend the General Meeting at the latest by the date specified in the notice convening the Meeting shall be entitled to attend the General Meeting and vote according to the number of shares they hold. Shareholders may attend General Meetings in person or through a proxy, and may also be accompanied by not more than two assistants.
Shareholders who wish a matter to be discussed at the General Meeting must submit a written request to the Board of Directors. Requests must normally be received by the Board of Directors seven weeks prior to the General Meeting.
The Annual General Meeting on 5 June 2020 adopted the income statement and balance sheet and approved the allocation of the company's earnings. A decision was made not to distribute a dividend. Decisions were also taken to grant discharge from liability for the Board of Directors and CEO, to elect Board members, auditors and on the remuneration of the Board of Directors. In addition, the Board of Directors was authorised to resolve on an increase in the company's share capital through new share issues. Lastly, a decision was taken to adopt new Articles of Association.
NCAB's Annual General Meeting 2021 will be held on 10 May. For further information about the Annual General Meeting 2021, see page 95 and NCAB's website www.ncabgroup.com.
The Annual General Meeting on 5 June 2020 resolved to appoint a Nomination Committee. The Nomination Committee shall comprise representatives of the four largest shareholders according to Euroclear's register on the final banking day in August 2020. The Chairman of the Board of Directors shall be a member of the Nomination Committee. The Nomination Committee appoints the Chairman of the Committee. If a representative leaves the Nomination Committee or in case of an ownership change, meaning that a represented shareholder no longer belongs to the largest shareholders, the composition should be changed according to the Nomination Committee's resolution if the Nomination Committee finds it appropriate. The composition of the Nomination Committee should be published as soon as the representatives and the Chairman of the Nomination Committee have been appointed. No remuneration should be paid for work in the Nomination Committee.
The Nomination Committee is tasked with presenting proposals for:
In accordance with the General Meeting's decision, the following individuals were appointed to the Nomination Committee: Per Hesselmark, R12 Kapital, Jannis Kitsakis, Fourth Swedish National Pension Fund, Christoffer Geijer, SEB Investment Management, Ulrik Grönvall, Swedbank Robur and Christian Salamon, Chairman of the Board. The composition of the Nomination Committee was announced in a press release on 14 October 2020. Ulrik Grönvall was appointed Chairman of the Nomination Committee
The Nomination Committee has, prior to the 2021 Annual General Meeting, held three minuted meetings, where all members were present, and also maintained informal contact. The Nomination Committee has interviewed a selection of Board members. The Nomination Committee also received a presentation of the Board's own evaluation of its work. Particular attention has been devoted to the Board of Directors' composition and how the Board of Directors performed as a group and the Nomination Committee has discussed the evaluation of the Board of Directors' work. The Nomination Committee has also discussed and assessed remuneration of the Board of Directors and compared this to remuneration in comparable companies. Information has been available on NCAB's website about how shareholders have been able to submit proposals to the Nomination Committee. On the issue of the composition of the Board of Directors, the stipulations in Item 4.1 of the Code were applied as the diversity policy.
The Nomination Committee's proposal to the 2021 Annual General Meeting will be presented in connection with the official notification and made available on NCAB's website.
The Board of Directors is the highest decision-making body after the General Meeting and also the highest executive body. The responsibilities of the Board of Directors are primarily set forth in the Swedish Companies Act, the Swedish Annual Accounts Act, the company's Articles of Association, instructions given by the shareholders at the General Meeting and the rules of procedure for the Board of Directors. In addition thereto, the Board of Directors shall comply with the Code and Nasdaq Stockholm's Rule Book for Issuers, as well as other Swedish and foreign laws and regulations, as applicable.
The Board of Directors is responsible for the organisation of the company and management of the company's business operations in accordance with the Swedish Companies Act. The rules of procedure for the Board of Directors, which have been adopted by the Board of Directors and are reviewed annually, govern the division of work and responsibilities among the Board of Directors, its Chairman and the CEO. The Board of Directors also adopts instructions for the committees of the Board of Directors and an instruction for the CEO, as well as an instruction for financial reporting.
The Board of Directors' tasks include adopting strategies, business plans and budgets, interim reports, year-end financial statements and annual reports and setting instructions, policies and guidelines. The Board of Directors also determines the sustainability strategy and establishes sustainability targets. The Board of Directors is also required to follow economic developments and ensure the quality of financial reporting and internal controls and evaluate operations on the basis of the objectives and guidelines set by the Board of Directors. Finally, the Board of Directors decides on the company's major investments and changes in the organisation and activities.
The Chairman of the Board of Directors is in charge of the work of the Board of Directors and is responsible for ensuring that the Board fulfils its obligations in accordance with applicable laws and regulations and that the work is carried out efficiently and according to the Board's rules of procedure. The Chairman is to ensure that the Board of Directors' resolutions are implemented, that the Board of Directors receives necessary information punctually to perform its assignment and that the Board of Directors continuously deepens its knowledge about the company and its operations. The Chairman is also responsible for ensuring that the work of the Board is assessed every year. The Chairman represents the Board of Directors in relation to the shareholders of the company. Members of the Board of Directors are appointed annually by the General Meeting for the period until the end of the next Annual General Meeting. According to the company's Articles of Association, the Board of Directors shall consist of a minimum of three members and a maximum of ten members appointed by the General Meeting, without deputy members.
The Board of Directors has appointed an Audit Committee in accordance with the Swedish Companies Act. According to the Swedish Companies Act, members of the Audit Committee may not be employed by the company and at least one member of the Audit Committee shall hold accounting or audit competence.
The Audit Committee consists of three members, Gunilla Rudebjer (Chairman), Hans Ramel and Christian Salamon, all of whom
are independent to the company and its executive management. Gunilla Rudebjer and Christian Salamon are also independent of the company's major shareholders.
The Audit Committee is responsible for monitoring the company's financial reporting, risk management and internal control, as well as accounting and auditing. The Audit Committee also reviews and monitors the auditors' impartiality and independence, other services provided by the company's auditors and assists the company's Nomination Committee with the preparation of proposals for election of auditors. The members of the Audit Committee possess competence and experience within accounting, auditing and/or risk management allowing them to fulfil the obligations of the Committee. During the year, the Audit Committee held six meetings, of which four with the participation of the company's auditor. The main focus for the Committee's work during the year has been on the financial reporting, reporting acquisitions, the financial impact of the coronavirus pandemic, risk monitoring and internal controls as well as audit issues.
The Board of Directors has appointed a Remuneration Committee. According to the rules of procedure for the Board of Directors, a member serving on the Remuneration Committee may not be employed by the company or any other company within the Group. The members shall be independent of the company and its executive management. At least one of the members of the Remuneration Committee is also to be independent of the company's major shareholders. The Chairman of the Board of Directors shall chair the Committee. The Remuneration Committee consists of three members: Christian Salamon (Chairman), Magdalena Persson and Per Hesselmark. All members are independent of the company and its executive management, Christian Salamon and Magdalena Persson are also independent of the company's major shareholders. The Remuneration Committee's main tasks are to prepare the Board of Directors' decisions on issues concerning, among other things, terms of employment and compensation to the executive management. The Remuneration Committee prepares the guidelines for remuneration principles presented by the Board of Directors for resolution by the Annual General Meeting and the Remuneration Report that the Board of Directors presents to the Annual General
Meeting. Furthermore, the Remuneration Committee shall prepare documentation in certain remuneration matters of principal nature or otherwise of significant importance. For example, stock option programmes, profit sharing systems, monitoring and evaluation of the application of the guidelines for remuneration that the Annual General Meeting is legally obliged to adopt, as well as the current remuneration structures and levels in the company.
The Remuneration Committee held four meetings during the 2020 financial year. The main purpose of these meetings was to discuss the issue of a new CEO, to evaluate compensation for 2020, to prepare decisions and reports prior to the Annual General Meeting and to prepare the question of adjusting management's compensation for 2021.
The CEO reports to the Board of Directors. The CEO's responsibility is governed by the Swedish Companies Act, the Swedish Annual Accounts Act, the company's Articles of Association, instructions given by shareholders at the General Meeting, the instruction for the CEO and other internal instructions and guiding principles adopted by the Board of Directors, as well as other Swedish and foreign laws and regulations, as applicable. In addition thereto, the CEO must comply with the Code and Nasdaq Stockholm's Rule Book for Issuers. According to the Swedish Companies Act, the CEO shall handle the day-to-day management pursuant to the Board of Directors' guidelines and instructions. In addition, the CEO shall take any measures necessary in order for the company's accounts to be maintained pursuant to law and that the management of funds is conducted in an appropriate manner. The division of work between the Board of Directors and the CEO is described in the instruction for the CEO. The CEO shall administrate the operative management and execute the resolutions passed by the Board of Directors. The CEO is responsible to present the matters to be dealt with by the Board of Directors according to applicable legislation, the Articles of Association and internal instructions. The Chairman of the Board of Directors is also to be kept informed about the company's operations, its earnings and financial position, as well as any other events, circumstances or conditions that cannot be assumed to be irrelevant to the Board of Directors or the shareholders. The operating
| Attendance | ||||||||
|---|---|---|---|---|---|---|---|---|
| Member | Elected | Born | Board meet ings |
Audit Com mittee |
Remunera tion Commit tee |
Independent of company |
Independent of major sharehold ers |
Total remuneration |
| Christian Salamon (Chairman) | 2007 | 1961 | 15 (15) | 5 (6) | 4 (4) | Yes | Yes | 775,000 |
| Jan-Olof Dahlén | 2007 | 1942 | 15 (15) | Yes | Yes | 350,000 | ||
| Per Hesselmark 1) | 2016 | 1971 | 14 (15) | 4 (4) | Yes | No | 375,000 | |
| Magdalena Persson | 2017 | 1971 | 15 (15) | 4 (4) | Yes | Yes | 375,000 | |
| Hans Ramel | 2007 | 1964 | 14 (15) | 6 (6) | Yes | No | 400,000 | |
| Gunilla Rudebjer | 2017 | 1959 | 15 (15) | 6 (6) | Yes | Yes | 500,000 | |
| Hans Ståhl 2) | 2007 | 1955 | 15 (15) | No | Yes | – |
1) Per Hesselmark was also Board member in 2007–2010.
2) Remuneration is not paid to members who are employed by NCAB. Hans Ståhl stepped down as CEO on 1 October and has since been independent of the company.
activities are controlled in four segments, Nordic, Europe, North America and East together with Factory Management, staff functions for economy/finance, sales/market, sustainability, IT and HR.
Peter Kruk, who assumed the role of CEO on 1 October 2020, most recently held the position of President of EMEA and member of the group management at Dometic Group. Prior to this, he spent nine years in various senior positions at the US supplier to the automotive industry Stoneridge Inc. For most of this period, Peter was a member of group management in the role of Global Division President for Stoneridge Electronics, headquartered in Stockholm. Previously, Peter had a lengthy career that included employment at ABB, both in Switzerland and in Sweden. He was born in 1968 and holds an M.Sc. in Engineering Physics from Chalmers University of Technology in Gothenburg with studies at Ecole Polytechnique Federale de Lausanne. Peter has no other commitments. More information about the CEO and executive management is presented in the Management section on pages 40–41.
According to the rules of procedure for the Board of Directors, the Board shall, in addition to one statutory meeting, meet six times per year and also when the situation requires. At one of the meetings, the Board of Directors shall address the Group's strategic direction, risks and business plan. In accordance with the rules of procedure, the Board of Directors is to meet the company's auditor at least once per year without the presence of company management, to assess the work of the Board of Directors and evaluate the CEO. Board meetings usually begin with a discussion about the business and the company's financial performance. Financial statements and the Annual Report are reviewed and approved prior to publication. Other issues discussed at Board meetings include; general strategy issues, general business issues, potential acquisitions, long and short-term targets,
HR issues, compliance with policies and laws as well as remuneration models. At what is normally the last meeting of the year, the CEO and CFO present the budget for the forthcoming year.
The budget is discussed and, following any adjustments, approved. In connection with this meeting, presidents from several of the company's subsidiaries/segments are invited to present developments in their respective markets. The company's CFO is normally always invited to attend the Board meetings and is responsible for keeping minutes. Other members of the company's management are invited to present issues concerning their areas of responsibility. In 2020, NCAB's Board of Directors paid particular attention to issues related to the long-term business plan, acquisitions and follow-up of entries into new markets, risk management and internal control. 15 Board meetings were held in 2020, of which eight were ordinary and seven extra. The extra Board meetings primarily dealt with resolutions in conjunction with acquisitions, impact of the coronavirus pandemic and the new share issue in April. Board members' attendance and remuneration are presented in the table above. A self-assessment of the work of the Board was carried out.
The Group's finance department works with the Group's operating units to identify and evaluate financial and operational risks. In business operations, the main risks relate to quality issues. These are continuously monitored within the scope of the operational controls, and through internal and external ISO audits. Risk management is handled by the Group's quality department and in accordance with policies approved by the Board of Directors. A risk evaluation in accordance with the COSO model is conducted on an annual basis where risks are identified and controls evaluated. Both operational and financial risks are tested internally through self-monitoring and these are followed up by the Audit Committee. Some of the self-monitoring, which is carried out by subsidiaries, is also followed up by the company's external auditors. The Group's financial policy for financial risk management has been formulated by the Board of Directors and provides a framework of guidelines and rules in the form of a risk mandate for financial activities. The overall aim of the finance function is to ensure that the financial risks are optimised to a risk level that gives the shareholders a good return, within the framework of the risk mandate provided by the Board of Directors.
Risk management is handled by the Group's finance department and in accordance with policies approved by the Board of Directors. NCAB's risk management process also includes drawing up of the annual business plan, which contains an analysis of trends, business opportunities and risks that enables an assessment and swift reaction to changes in social, environmental and legal requirements. Each process owner is responsible for the ongoing evaluation, development and implementation of risk control methods and processes.
For more about risks and risk management, see pages 32–33.
The Board of Directors and the CEO are ultimately responsible for ensuring that internal controls are developed, communicated to and understood by the employees of the company. Managers at all levels are responsible for ensuring that internal controls are established within their own area and that these controls have the desired effect. The procedures for internal control, risk assessment, control activities and monitoring for financial reporting have been designed to ensure reliable financial reporting in accordance with IFRS, applicable
laws and regulations as well as other Stock Exchange requirements. This work involves the Board of Directors, the executive management and other personnel. The way in which the Board of Directors monitors and ensures quality in the internal control is documented in the adopted rules of procedures of the Board of Directors and the instructions for the Audit Committee. NCAB uses an internal control model based on the three lines of defence model.
The Board of Directors has resolved not to establish any separate function for the internal audit as the company believes the business systems, in terms of risk and quality, as well as financial function and monitoring by the Audit Committee, with regard to financial internal control, satisfy the requisite control and follow-up.
The company has established a number of policies and control documents that are approved annually by the Board of Directors. Both policies and control documents are managed in the company's ISO system to ensure uniform and simple handling. The following policies and governing documents are approved by the Board of Directors:
Accounting and Finance policy
Information policy
Öhrlings PriceWaterhouseCoopers, with Johan Engstam as Auditor-in-Charge, was elected at the Annual General Meeting on 5 June 2020. The auditor shall audit the company's annual report and accounts, the consolidated annual report and the consolidated companies' interrelations, as well as the management by the Board of Directors and the CEO. Following each financial year, the auditor shall submit an audit report to the Annual General Meeting. Pursuant to the company's Articles of Association, the company shall have one auditor, and not more than one deputy auditor. For remuneration of auditors, see Note 10 on page 66. In connection with the adoption by the Board of the year-end accounts for 2020, the Board of Directors has conducted an examination and received reports from the company's external auditors. On this occasion, the Board also held a meeting with the auditors without the presence of the CEO or others from company management.
To the general meeting of the shareholders inNCAB Grooup AB, corporate identity number 556733-0161
It is the board of directors who is responsible for the corporate governance statement for the year 2020 on pages 38–41 and 44- 48, and that it has been prepared in accordance with the Annual Accounts Act.
Our examination has been conducted in accordance with FAR's auditing standard RevR 16 The auditor's examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions.
A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2-6 the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the annual accounts and the consolidated accounts and are in accordance with the Annual Accounts Act.
Stockholm 30 March 2021
Öhrlings PricewaterhouseCoopers AB
Johan Engstam Authorized Public Accountant
The Board of Directors and the CEO of NCAB Group AB (publ), with the postal address Mariehällsvägen 37A, SE-168 65, Bromma, Corporate Registration Number 556733-0161, hereby submit the Annual Report and consolidated financial statements for the 2020 financial year. Comparative figures in parentheses pertain to the preceding year. The financial statements are presented, in SEK thousands (kSEK), which means rounding differences may arise.
NCAB Group ("NCAB", "the company" or "the Group") is a leading maker of printed circuit boards (PCBs) with a local presence in 17 countries and customers in 45 global markets. At year-end 2020, NCAB had approximately 2,600 customers and 474 employees.
NCAB's vision is to be the leading PCB supplier wherever the company operates. Growth is important for NCAB – the company wants to grow with its customers in existing and new markets. PCBs are an important and complex component of electronic products. The company's business concept is to provide defect-free printed circuit boards for demanding customers, at the right time, produced in a sustainable manner and at the lowest overall cost. The goal is to help our customers become as competitive as possible and minimise their time to market by providing PCBs in a sustainable manner with the help of the company's expertise, product quality and delivery precision. To ensure compliance with its high standards in these areas, the company has established an organisation which regularly monitors and quality-assures all selected manufacturers.
NCAB is one of the world's leading suppliers of printed circuit boards. The global market for PCBs has annual sales of about USD* 63 billion and growth of approximately 3–4 per cent per year. NCAB focuses on PCBs for the High-Mix Low-Volume segment (HMLV), which represents approximately 30 per cent of the global market. NCAB's growth is also driven by the continuing transfer of PCB production from Europe and North America to Asia.
NCAB takes overall responsibility for supplying its customers with high-quality PCBs at the right price. NCAB does not own any factories, but thanks to local sales companies and Factory Management teams, it "owns" the most important elements: the entire supply chain as well as the relationships with the customer and the factory. This gives NCAB access to the best technology without being dependent on factory investments.
NCAB's operations are conducted on the basis of four operating segments: Nordic, Europe, North America and East. Each segment provides a broad range of PCBs to the geographical markets in which it operates. The PCBs are purchased from external suppliers, mainly in China. Most of the PCBs are of the HMLV type, i.e. specialised products that are produced in small quantities. NCAB has a local presence through technicians and customer support staff to ensure that its customers receive support throughout the process.
For full-year 2020, net sales increased 19 per cent to SEK 2,115.2 million (1,781.2). Underlying growth in USD was approximately 22 per cent. In 2020, the USD exchange rate fluctuated considerably and had a positive impact on growth during the first half of the year and a negative impact in the second half of the year. For the year as a whole, the USD exchange rate had a negative impact on growth. Excluding acquisitions, net sales decreased 3 per cent. The North America and Europe segments reported strong growth due to acquisitions. Net sales, excluding acquisition in North America, were in line with the preceding year while comparable net sales were slightly weaker in other segments. The negative growth was a result of the impact of the coronavirus pandemic, which affected different markets and customer segments in different ways. In Nordic, net sales were mainly affected in the second half of the year, while markets in East and southern Europe were severely affected in the second quarter. NCAB's end customers operate in many different segments. Sales to the transport sector were substantially negatively affected during the second and third quarters, while sales to medtech rose very sharply. A significant increase took place at the end of 2020 in products such as charging stations for electric vehicles and new energy.
Operating profit increased to SEK 182.3 million (161.7). The improvement was due to a positive contribution from the acquired companies and a general reduction in costs. The coronavirus pandemic has entailed lower costs for travel, trade fairs and that recruitment has, to some extent, been postponed. NCAB also received government grants of SEK 5.0 million in 2020. In conjunction with the outbreak of the coronavirus pandemic, authorities in the USA provided support in the form of Paycheck Protection Program loans, which were to be remitted if used correctly. NCAB applied for and received loans totalling USD 1.2 million. An application to have these loans remitted has been filed and the response will likely be received during the first half of 2021. These loans have not affected earnings for 2020. The government grants were received by companies in southern Europe and China. The gross margin was 30.3 per cent (31.7). The reduction is due to lower gross margins in the acquired companies. For comparable companies, gross margin was unchanged at 31.7 per cent. EBITA increased 15 per cent to SEK 190.7 million (165.4), while the EBITA margin fell to 9.0 per cent (9.3). EBITA for 2020 was positively impacted by synergies from the acquisition of Flatfield and Bare Board Group but also adversely impacted by transaction costs of SEK 14.9 million relating to the
acquisitions. Excluding transaction costs, EBITA amounted to SEK 205.6 million, corresponding to an EBITA margin of 9.7 per cent. Net financial items amounted to SEK –19.4 million (–0.9), of which SEK –5.6 million (3.4) refers to foreign exchange differences. Net financial items also increased due to new loans to finance the year's acquisitions. Income tax amounted to SEK –35.4 million (–32.5). The average tax rate was 21.8 per cent (20.2). Profit after tax for the period totalled SEK 127.5 million (128.4).
Cash flow from operating activities was SEK 194.3 million (153.0). The increase is due to earnings improvements and rationalisation of working capital requirements in the acquired companies, mainly from the acquisition in the Netherlands. During the year, there was a strong focus on monitoring customer payments on a continuous basis, which resulted in fewer past due trade receivables and lower bad debt losses. NCAB has credit insurance that covers most of the trade receivables outstanding. Cash flow from investing activities, excluding acquisitions, was SEK –3.7 million (–7.4). Two companies were acquired during the year, Flatfield in the Netherlands and Bare Board Group in the USA, and the total purchase consideration impacting cash flow was SEK –164.1 million.
The Group's net cash at the end of the year was SEK 85.3 million, compared with net debt of SEK 44.8 million at the end of 2019. In conjunction with the acquisition of Bare Board Group in April, a directed share issue was completed of 1,850,000 shares at SEK 155/share, raising proceeds for the company of SEK 287 million before issuance costs. In addition to the new share issue, two new loans were also raised totalling SEK 265 million, and the company's overdraft facility was extended by SEK 100 million. At 31 December, the equity/assets ratio was 47.2 per cent (39.9) and equity was SEK 699.9 million (348.1). The substantial exchange-rate changes at the end of 2020 entailed translation differences on equity of SEK –52.3 million (–1.0). At the end of the period, the Group had available liquidity, including undrawn overdraft facilities, of SEK 661.3 million (196.2). At 31 December, NCAB had loans totalling SEK 332.7 million, split between four loans. Two of the loans are being repaid in quarterly instalments of SEK 9.1 million and mature in 2023 and 2025 respectively. The two remaining loans – SEK 50.0 million and SEK 132.5 million – are free of instalments, and mature in 2023 and 2025 respectively. In addition to the loans, there is an overdraft facility of SEK 212 million. At the balance sheet date of 31 December 2020, the company was in compliance with all covenants under the financing agreement.
The Group has relatively small seasonal variations over the year. However, the fourth quarter is often weakest in terms of sales and EBITA, due to few deliveries in the second half of December in combination with the fact that the Group has most employees in the final quarter as recruitment is carried out continuously during the year.
NCAB Group was listed on Nasdaq Stockholm, Small Cap, on 5 June 2018. The price in the Offer was SEK 75 per share, which corresponded to a market capitalisation for the total number of shares in the company of SEK 1,264 million. Since its IPO in June 2018, total return until 31 December 2020 was 250 per cent. On 31 December 2020, NCAB Group's share capital amounted to SEK 1.9 million distributed between 18,697,124 shares with a quotient value of SEK 0.01 per share. In 2020, the NCAB share generated a return of 59 per cent. In the same period, OMX Stockholm PI rose by 11 per cent. For more information, see pages 34–35.
NCAB is exposed to a range of risks and great emphasis is placed on continuously following up, analysing and acting to mitigate potential risks. The most material risks are described on pages 32–33.
The company has chosen to introduce the Board of Directors on pages 38–39.
The 2020 Annual General Meeting adopted the following guidelines for determining salary and other remunerations to the executive management. Executive management refers to the Chief Executive Officer (CEO) and other members of the Group management. The guidelines shall apply to remuneration agreed and amendments to remuneration already agreed, after adoption of the guidelines by the 2020 Annual General Meeting. These guidelines do not apply to any remuneration decided or approved by the general meeting, including long-term share-based incentive plans.
A prerequisite for the successful implementation of the company's business strategy and safeguarding of its long-term interests, including its sustainability agenda, is that the company is able to recruit and retain qualified personnel. To this end, it is necessary that the company offers competitive remuneration. These guidelines enable the company to offer the executive management a competitive total remuneration. Variable cash remuneration covered by these guidelines shall aim at promoting the company's business strategy and long-term interests, including its sustainability agenda. This is implemented by way of a clear link between the financial and non-financial objectives that determine the variable cash remuneration outcome and the business strategy and the company's sustainability agenda. The variable cash remuneration is further described under "Fixed and variable remuneration" below.
The company's objective for having a program relating to variable cash remuneration and share-based incentive plans is to (i) encourage behaviours supporting long-term and short-term business results and to generate value for the shareholders, (ii) make the company an attractive employer for top talents, (iii) retain key persons within the company and (iv) increase the personnel's interest and engagement in the business and development of the company.
For information regarding the company's business strategy, please see the company's website www.ncabgroup.com
The Group applies market-based salaries and remuneration based on a fixed and a variable portion. The total remuneration shall reflect market practice and be competitive, but not necessarily market-leading, and reflect the individual's performance and responsibilities. Remuneration consists of a basic salary, variable salary, pension benefits and other benefits. Additionally, the general meeting may – irrespective of these guidelines – resolve on, among other things, share-based or share price-based remuneration. Fixed and variable remuneration shall be related to the executive's responsibilities and authority.
The allocation between basic salary and variable remuneration shall be proportionate to the executive's responsibilities and authorities. The variable remuneration shall be based on financial objectives linked to the development of NCAB, such as, for example, sales, EBITDA and capital efficiency. Under special circumstances, non-financial objectives may be included as a basis for the variable remuneration, however, not exceeding 25 per cent. Financial and non-financial objectives shall contribute to the company's business strategy and long-term interests, including its sustainability agenda, by having a clear link to the company's business strategy and sustainability agenda. The satisfaction of criteria for awarding variable cash remuneration shall be measured over a period of one year. The yearly variable salary to the CEO shall not exceed 100 per cent of the fixed yearly salary. Other members of executive management may receive yearly variable salary in an amount not exceeding the equivalent of 40–100 per cent of the yearly fixed salary. Variable cash remuneration shall not qualify for pension benefits. To which extent the criteria for awarding variable cash remuneration has been satisfied shall be evaluated/determined when the measurement period has ended. The Remuneration Committee is responsible for the evaluation so far as it concerns variable remuneration to the CEO. For variable cash remuneration to other executives, the CEO is responsible for the evaluation and shall consult the Remuneration Committee. With regards to financial targets, the evaluation shall be based on the latest internal or external financial reporting.
Members of executive management shall be entitled to pension benefits according to a defined contribution plan with premiums of up to 30 per cent of the executive's annual salary, or according to applicable occupational pension scheme.
Other benefits may include, for example medical insurance, company health services and company cars. Such benefits may amount to not more than 15 per cent of the fixed annual cash salary.
For employment contracts governed by rules other than Swedish, pension benefits and other benefits may be duly adjusted for compliance with mandatory rules or established local practice, taking into account, to the extent possible, the overall purpose of these guidelines. Members of executive management who are expatriates in a country other than their country of residence may receive additional remuneration and other benefits to the extent reasonable in light of the special circumstances associated with the expat arrangement, taking into account, to the extent possible, the overall purpose of these guidelines. Such benefits may not in total exceed 50 per cent of the fixed annual cash salary.
The CEO shall have a notice period of no more than 12 months if termination is made by the company and six months if termination is made by the CEO. No severance pay shall be made. Other members of executive management shall have a notice period of no more than nine months if termination is made by the company and no more than six months if the termination is made by the senior executive. No severance pay shall be made. Additionally, remuneration may be paid for non-compete undertakings. Such remuneration shall compensate for loss of income and shall only be paid in so far as the previously employed executive is not entitled to severance pay. The remuneration shall be based on the fixed cash salary at the time of termination of employment, in the absence of any mandatory collective agreement provisions, and be paid during the time the non-compete undertaking applies, however not for more than 12 months following termination of employment.
In the preparation of the Board of Directors' proposal for these remuneration guidelines, salary and employment conditions for employees of the Group have been taken into account by including information on the employees' total income, the components of the remuneration and increase and growth rate over time, in the Remuneration Committee's and the Board of Directors' basis of decision when evaluating whether the guidelines and the limitations set out herein are reasonable.
The Board of Directors has established a Remuneration Committee. The Committee's tasks include preparing the Board of Directors' decision to propose guidelines for remuneration of executive management. The Board of Directors shall
prepare a proposal for new guidelines at least every fourth year and submit it to the Annual General Meeting. The guidelines shall be in force until new guidelines are adopted by the general meeting. The Remuneration Committee shall also monitor and evaluate programs for variable remuneration for the executive management, the application of the guidelines for executive remuneration as well as the current remuneration structures and remuneration levels in the company. The members of the Remuneration Committee are independent of the company and its executive management. The CEO and other members of the executive management do not participate in the Board of Directors' processing of and resolutions regarding remuneration-related matters in so far as they are affected by such matters.
The Board of Directors may temporarily resolve to derogate from the guidelines, in whole or in part, if in a specific case there is special cause for the derogation and a derogation is necessary to serve the company's long-term interests, including its sustainability agenda, or to ensure the company's financial viability. As set out above, the Remuneration Committee's tasks include preparing the Board of Directors' resolutions in remuneration-related matters. This includes any resolutions to derogate from the guidelines.
There are no remunerations resolved but not yet due.
In 2020, the company has complied with applicable remuneration guidelines as adopted by the general meeting, with the following derogation: The ceiling for potential variable remuneration has been raised for 2020 to up to 120 per cent of basic salary for three members of Group management. The derogation was prepared by the Remuneration Committee and adopted by the Board in accordance with the guidelines for remuneration of executive management. No other derogation was made from the decision-making process stipulated in the guidelines for determining remuneration.
Corporate governance is included as a separate section of these annual accounts and is not part of NCAB's formal Annual Report for 2020. Refer to the Corporate governance section, or NCAB's website ncabgroup.com, in the section Investors/Corporate governance where corporate governance is also available as a separate report.
At 31 December 2020, the number of employees was 474 (395), of whom 214 (181) were women and 260 (214) were men. The average number of employees in the organisation during the period was 435 (387), of whom 197 (179) were women and 237 (208) were men.
Sustainability has been a prioritised area for NCAB for many years and acting in a sustainable way and assuming great responsibility is an integrated part of the company's business model and long-term strategy. Sustainability work is divided into three focus areas in relation to the company's stakeholder groups: customers, employees and factories. This illustrates how sustainability work reinforces and creates value in these relationships. NCAB Group has also been verified against ISO 26000 in respect of its sustainability strategy. In accordance with Chapter 6, Section 11 of the Annual Accounts Act, NCAB has decided to prepare a statutory Sustainability Report as a separate report to its Annual Report that is available to read at www. ncabgroup.com/sustainability.
The Dutch company Flatfield was acquired on 12 March 2020. The acquisition of Flatfield has strengthened NCAB's position in both Benelux and Germany. The acquisition contributed annual net sales of almost SEK 300 million, with profitability comparable with NCAB's. Flatfield had some 50 employees, of whom 15 in China. During the year, Flatfield was integrated with NCAB's existing operations in Benelux and Germany, and Flatfield's employees in China were integrated and co-located with NCAB's Factory Management team in China.
On 24 April 2020, Bare Board Group in Florida, USA, was acquired. Bare Board Group contributed almost SEK 250 million to NCAB's net sales and essentially doubled NCAB's presence in the USA. The acquisition included some 30 employees, of which 10 in Taiwan, and supplier base in Taiwan, which is particularly important for NCAB's customers in the USA, as no import tariffs are paid on PCBs imported from Taiwan.
On 24 April, the company completed a directed share issue of 1,850,000 shares at SEK 155/share, which raised approximately SEK 287 million before issuance costs. The issue was fully subscribed by a number of Swedish and international institutional investors.
In conjunction with the acquisitions, two new bank loans of SEK 132.5 million each were raised and the overdraft facility was extended by SEK 100 million.
On 1 October, Peter Kruk assumed the role of new President and CEO of NCAB. Peter has extensive experience as a leader of industrial companies and joined NCAB from Dometic. Peter has succeeded Hans Ståhl, who announced in November 2019 that he planned to retire in 2020. Hans Ståhl will remain as a Board member and is a major shareholder in NCAB.
With the outbreak of the coronavirus pandemic, NCAB's suppliers closed for two extra weeks after the Chinese New Year, which resulted in substantial supply disruptions. However, production restarted after the closure. As the outbreak of COVID-19 shifted to Europe and the USA, NCAB transitioned from problems with supply to problems with demand. NCAB is carefully monitoring developments to be able to quickly adapt activities and costs. Thanks to NCAB's many customers in a range of different segments and markets, the total impact of the coronavirus pandemic was limited.
PreventPCB in Italy was acquired in February 2021. PreventPCB will contribute just over SEK 200 million in increased sales with a higher EBITA margin than NCAB as a whole and 22 new employees in Italy and China. The consideration paid amounted to SEK 185 million corresponding to a multiple of approximately six times EBITA. The preliminary acquisition analysis will be presented in the interim report for the first quarter.
NCAB Group AB (publ) is the Parent Company in the NCAB Group. The company's operations comprise management services to subsidiaries and the management of shares in subsidiaries. The Parent Company's net sales amounted to SEK 60.0 million (55.9). Earnings before tax amounted to SEK 9.7 million (8.8). The improvement was due to both lower overheads and increased dividends from subsidiaries, despite a negative impact on the Parent Company resulting from an increase in foreign exchange losses. Equity was SEK 478.4 million (161.1).
The Board of Directors proposes the payment of a dividend of SEK 5.00 per share to those shareholders who are registered on the record date and that the remaining non-restricted equity be retained in the Parent Company. For more information, see NCAB's dividend policy.
The Annual General Meeting is asked to decide on the appropriation of the following earnings:
| SEK 476,501,548 | |
|---|---|
| Net profit for the year | 40,581,875 |
| Retained earnings | –42,189,898 |
| Share premium account | 478,109,571 |
The Board of Directors proposes the following appropriation of retained earnings:
a dividend payment to holders of ordinary shares of SEK 5.00 per share,
| Total | 93,485,620 |
|---|---|
| carried forward | 383,015,928 |
SEK 476,501,548
| kSEK | Note | 2020 | 2019 |
|---|---|---|---|
| Net sales | 5, 6 | 2,115,212 | 1,781,194 |
| Other operating income | 7 | 6,317 | 9,155 |
| Total operating revenue | 2,121,529 | 1,790,349 | |
| Raw materials and consumables | –1,481,298 | –1,225,428 | |
| Other external expenses | 8, 10 | –106,566 | –107,531 |
| Staff costs | 9 | –301,018 | –274,703 |
| Depreciation of property, plant and equipment, and amortisation of intangi ble assets |
17, 18 | –27,544 | –18,183 |
| Other operating expenses | 11 | –22,756 | –2,779 |
| Total operating expenses | –1,939,182 | –1,628,624 | |
| Operating profit | 182,347 | 161,725 | |
| Financial income | 12, 14 | 199 | 4,538 |
| Financial expense | 12, 14 | –19,591 | –5,400 |
| Net financial items | –19,392 | –862 | |
| Profit before tax | 162,955 | 160,863 | |
| Income tax | 13 | –35,444 | –32,460 |
| Profit for the year | 127,511 | 128,403 | |
| Profit attributable to: | |||
| Shareholders of the Parent Company | 127,368 | 128,276 | |
| Non-controlling interests | 143 | 127 | |
| Average number of shares | 18,115,840 | 16,847,124 | |
| Earnings per share, before and after dilution | 15 | 7.03 | 7.61 |
| kSEK | Note | 2020 | 2019 |
|---|---|---|---|
| Profit for the year | 127,511 | 128,403 | |
| Other comprehensive income, | |||
| Items that can subsequently be reclassified to profit or loss: | |||
| Foreign exchange differences | –52,273 | –955 | |
| Total other comprehensive income for the year | –52,273 | –955 | |
| Total comprehensive income for the year | 75,238 | 127,448 | |
| Attributable to: | |||
| – Shareholders of the Parent Company | 75,095 | 127,321 | |
| – Non-controlling interests | 143 | 127 | |
| Total comprehensive income for the year | 75,238 | 127,448 |
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Goodwill | 18 | 382,313 | 206,252 |
| Other intangible assets | 18 | 43,191 | 16,753 |
| Total intangible assets | 425,504 | 223,005 | |
| Property, plant and equipment | |||
| Leasehold improvement costs | 17 | 2,084 | 2,844 |
| Plant and equipment | 17 | 4,507 | 4,077 |
| Right-of-use assets, offices and cars | 17 | 30,038 | 33,535 |
| Total property, plant and equipment | 36,629 | 40,456 | |
| Financial assets | |||
| Financial assets | 20 | 4,929 | 4,018 |
| Total financial assets | 4,929 | 4018 | |
| Deferred tax assets | 28 | 7,355 | 7,671 |
| Total non-current assets | 474,416 | 275,150 | |
| Current assets | |||
| Inventories | |||
| Raw materials and consumables | 22 | 183,135 | 148,832 |
| Total inventories, etc. | 183,135 | 148,832 | |
| Current receivables | |||
| Trade receivables | 21 | 342,878 | 320,014 |
| Other current receivables | 23 | 14,468 | 17,893 |
| Prepaid expenses and accrued income | 24 | 19,078 | 29,031 |
| Cash and cash equivalents | 25 | 449,033 | 82,210 |
| Total current receivables | 825,457 | 449,148 | |
| TOTAL CURRENT ASSETS | 1,008,592 | 597,980 | |
| TOTAL ASSETS | 1,483,008 | 873,130 |
kSEK
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity attributable to shareholders of the Parent Company | 26, 39 | ||
| Share capital | 1,870 | 1,685 | |
| Additional paid-in capital | 478,143 | 201,616 | |
| Reserves | –56,384 | –4,111 | |
| Retained earnings | 276,078 | 148,710 | |
| Non-controlling interests | 228 | 222 | |
| Total equity | 699,935 | 348,122 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 27 | 294,491 | 75,000 |
| Right-of-use liabilities | 21,097 | 22,662 | |
| Deferred tax | 28 | 22,815 | 8,113 |
| Total non-current liabilities | 338,403 | 105,775 | |
| Current liabilities | |||
| Current liabilities | 27 | 38,159 | 17,939 |
| Current right-of-use liabilities | 9,994 | 11,372 | |
| Trade payables | 270,312 | 252,506 | |
| Current tax liabilities | 16,334 | 29,382 | |
| Other current liabilities | 44,592 | 26,850 | |
| Accrued expenses and deferred income | 29 | 65,279 | 81,184 |
| Total current liabilities | 444,670 | 419,233 | |
| TOTAL NET DEBT | 783,073 | 525,008 | |
| TOTAL EQUITY AND LIABILITIES | 1,483,008 | 873,130 |
| Attributable to shareholders of the Parent Company | ||||||||
|---|---|---|---|---|---|---|---|---|
| Note | Share capital | Other addi tional paid-in capital |
Reserves | Retained earnings |
Total | Non-con trolling inter ests |
Total equity | |
| Opening balance on 1 January 2019 | 26 | 1,685 | 201,616 | –3,156 | 96,246 | 296,389 | 202 | 296,592 |
| Profit for the year | 128,276 | 128,276 | 127 | 128,403 | ||||
| Other comprehensive income for the year | –955 | –955 | –955 | |||||
| Total comprehensive income | –955 | 128,276 | 127,321 | 127 | 127,448 | |||
| Share dividend | –75,812 | –75,812 | –107 | –75,919 | ||||
| Total contribution from value transfer to shareholders, recognised directly in |
||||||||
| equity | –75,812 | –75,812 | –107 | –75,919 | ||||
| Closing balance on 31 December 2019 | 1,685 | 201,616 | –4,111 | 148,710 | 347,899 | 222 | 348,122 | |
| Opening balance on 1 January 2020 | 26 | 1,685 | 201,616 | –4,111 | 148,710 | 347,899 | 222 | 348,122 |
| Profit for the year | 127,368 | 127,368 | 143 | 127,511 | ||||
| Other comprehensive income for the year | –52,273 | –52,273 | –52,273 | |||||
| Total comprehensive income | –52,273 | 127,368 | 75,095 | 143 | 75,238 | |||
| Share issue | 185 | 286,565 | 286,750 | 286,750 | ||||
| Costs for issue of shares | –10,037 | –10,037 | –10,037 | |||||
| Share dividend | –137 | –137 | ||||||
| Total contribution from value transfer to shareholders, recognised directly in |
||||||||
| equity | 185 | 276,528 | –276,713 | –137 | 276,576 | |||
| Closing balance on 31 December 2020 | 1,870 | 478,143 | –56,384 | 276,078 | 699,707 | 228 | 699,935 | |
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before net financial income/expense | 182,347 | 161,725 | |
| Adjustment for non-cash items | 30 | 25,010 | 13,917 |
| Interest received | 119 | 1,156 | |
| Interest paid | –12,328 | –5,400 | |
| Income taxes paid | –44,042 | –17,235 | |
| Cash flow from operating activities before changes in working capital |
151,106 | 154,163 | |
| Change in inventories | 12,191 | –25,646 | |
| Change in current receivables | 80,065 | 8,050 | |
| Change in current operating liabilities | –49,028 | 16,454 | |
| Total changes in working capital | 43,228 | –1,143 | |
| Cash flow from operating activities | 194,334 | 153,020 | |
| Cash flow from investing activities | |||
| Investments in property, plant and equipment | 17 | –801 | –4,335 |
| Investments in intangible assets | 18 | –1,258 | –2,476 |
| Investments in subsidiaries | –164,079 | –86,671 | |
| Investments in financial assets | 20 | –1,652 | –562 |
| Cash flow from investing activities | –167,790 | –94,044 | |
| Cash flow from financing activities | |||
| Issue of new shares | 26 | 286,750 | |
| Issue expenses | –10,030 | ||
| Change in overdraft facility | 27 | –7,939 | 353 |
| Borrowings | 27 | 265,000 | |
| Transaction cost, loans | –1500 | ||
| Repayment of loans | 27 | –172,749 | –10,000 |
| Repayment of right-of-use liabilities | –13,965 | –11,338 | |
| Dividend | 0 | –75,812 | |
| Cash flow from financing activities | 31 | 345,560 | –96,797 |
| Decrease/increase in cash and cash equivalents | |||
| Cash flow for the year | 372,104 | –37,821 | |
| Foreign exchange difference in cash and cash equivalents | –5,280 | 6,115 | |
| Cash and cash equivalents at beginning of year | 82,210 | 113,916 | |
| Cash and cash equivalents at end of year | 449,033 | 82,210 |
NCAB Group AB (Parent Company) and its subsidiaries (the Group) form a global company active in printed circuit board (PCB) manufacturing. At 31 December 2020, the Group comprises 21 operational companies in Europe, the USA and Asia. Two acquisitions took place in 2020.
The Parent Company is a public limited liability company registered in Sweden with its head office in Stockholm. The address of the head office is Mariehällsvägen 37 A, SE-168 65 Bromma.
Unless otherwise specifically indicated, all amounts refer to thousands of Swedish kronor (kSEK). Figures in parentheses pertain to the preceding year.
Significant accounting policies applied in preparing these consolidated financial statements are described below. Unless otherwise stated, these policies have been applied consistently for all the years presented.
The consolidated financial statements for NCAB Group have been prepared in accordance with the Swedish Annual Accounts Act, Recommendation RFR 1 Supplementary Financial Reporting Rules for Corporate Groups of the Swedish Financial Reporting Board, the International Financial Reporting Standards (IFRS) and the interpretations of the IFRS Interpretations Committee (IFRS IC), as adopted by the EU. The financial statements have been prepared using the cost method, except with regard to financial assets and liabilities (including derivatives and contingent considerations), which have been measured at fair value through profit or loss.
The preparation of financial statements in compliance with IFRS requires the use of critical accounting estimates. Management is also required to make certain judgements in applying the Group's accounting policies. Areas which involve a high degree of judgement, are complex or where assumptions and estimates have a material impact on the consolidated financial statements are described in Note 4.
The new standards that became effective in 2020 are not considered material for the Group.
Subsidiaries are all companies over which the Group has a controlling influence. Control exists when the Group is exposed to or is entitled to a variable return from its holding in the company and is able to affect the return through its influence in the company. Subsidiaries are included in the consolidated financial statements as of the date on which control is transferred to the Group. They are excluded from the consolidated financial statements as of the date when the Group loses control.
The purchase method is applied in accounting for the Group's business combinations. The consideration paid for the acquisition of a subsidiary comprises the fair value of the transferred
assets and liabilities incurred by the Group to previous owners of the acquired entity. The consideration also includes the fair value of all assets or liabilities that are a consequence of a contingent consideration arrangement. Identifiable assets acquired and liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
The purchase method is applied in accounting for the Group's business combinations. The consideration paid for the acquisition of a subsidiary comprises the fair value of the transferred assets and liabilities incurred by the Group to previous owners of the acquired entity. The consideration also includes the fair value of all assets or liabilities that are a consequence of a contingent consideration arrangement. Identifiable assets acquired and liabilities assumed in a business combination are initially measured at fair value at the acquisition date. Acquisition-related costs are expensed as incurred. Each contingent consideration payable by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of a contingent consideration that has been classified as a financial liability is accounted for in profit or loss in accordance with IFRS 9.
Intercompany transactions and balances, and unrealised gains and losses on transactions between Group companies are eliminated. Where applicable, the accounting policies for subsidiaries have been amended to guarantee a consistent application of the Group's policies.
Items included in the financial statements for the various units of the Group are valued in the currency used in the economic environment in which each company primarily operates (functional currency). Swedish kronor (SEK), the Group's reporting currency, are used in the consolidated financial statements.
Transactions in foreign currency are translated to the functional currency at the exchange rates applying at the transaction date or the date when the items were restated. Foreign exchange gains and losses arising from such transactions and upon translation of monetary assets and liabilities in foreign currency at closing rates are recognised in profit or loss.
Foreign exchange gains and losses attributable to loans and cash and cash equivalents are accounted for in profit or loss as financial income or expense. All other foreign exchange gains and losses are recognised in the items Other operating income/Other external expenses in profit or loss.
Results and financial position for all Group companies which have a different functional currency than the reporting currency are translated to the Group's reporting currency as follows:
Goodwill and fair value adjustments arising from the acquisition of a foreign business are treated as assets and liabilities in this business and translated at the closing rate. Foreign exchange differences are recognised in profit or loss.
Property, plant and equipment mainly comprise improvements to third party's property, and plant and equipment. All property, plant and equipment are stated at cost less depreciation. Cost includes expenditure directly attributable to the acquisition of the asset.
Any additional expenditure is added to the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the asset will accrue to the Group and the cost can be reliably measured. The carrying amount of the replaced component is removed from the balance sheet.
All other forms of repairs and maintenance are expensed in profit or loss in the periods in which they are incurred.
Other assets are depreciated so as to allocate the cost down to the estimated residual value over the assets' estimated useful lives. Assets are depreciated on a straight-line basis as follows:
Residual values and useful lives of assets are tested at the end of each reporting period and adjusted where necessary.
An asset's carrying amount is written down to the recoverable amount immediately if the carrying amount exceeds the estimated recoverable amount (Note 2.6).
Gains and losses from the sale of assets are determined by comparing the sale proceeds and carrying amount. The difference is recognised under Other operating income/Other external expenses – net in profit or loss.
Goodwill arises on the acquisition of subsidiaries and refers to the amount by which the consideration, any non-controlling interest in the acquired entity and the fair value of the previous equity interest in the acquired entity at the acquisition date exceeds the fair value of identifiable acquired net assets.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combination. Each unit or group of units to which goodwill has been allocated represents the lowest level in the Group at which the goodwill is monitored for internal management purposes. Goodwill is monitored at company level.
Goodwill is tested for impairment annually, or more frequently if there are events or changes in circumstances which indicate potential impairment. The carrying amount of the cash-generating unit to which goodwill is allocated is compared with the recoverable amount, which is defined as the higher of value in use and fair value less selling expenses. Any impairment loss is expensed immediately and cannot be reversed.
Other intangible assets that have been acquired separately are recognised at cost. Customer relationships and other intangible assets (such as trademarks and licences) that have been acquired through a business combination are recognised at fair value at the acquisition date. Customer relationships and other intangible assets have a definite useful life and are recognised at cost less accumulated amortisation. Trademarks and licences are amortised on a straight-line basis so that the cost is distributed over their estimated useful life of five years.
Costs for maintenance of IT systems are expensed as incurred. Development costs directly attributable to the development and testing of identifiable and unique IT systems which are controlled by the Group are recognised as intangible assets when the following criteria are met:
Directly attributable expenditure that are capitalised as part of IT systems include costs for employees plus a reasonable portion of indirect costs.
Other development expenditure which does not meet these criteria is expensed as incurred. Previously expensed development costs are not capitalised in later periods.
IT systems development costs recognised as assets are amortised over the estimated useful life, which does not exceed three years.
Intangible assets with indefinite useful lives or intangible assets which are not yet available for use, are not amortised but tested annually for impairment. Assets which are depreciated or amortised are tested for impairment when an event or change of circumstance indicates that the carrying amount may not be recoverable. The difference between the carrying amount and recoverable amount is recognised as an impairment loss. The recoverable amount is the higher of the fair value of the asset less costs to sell and value in use. In testing for impairment, assets are grouped to the lowest levels at which there are essentially independent identifiable cash flows (cash-generating units). For assets (other than goodwill) which have previously been written down, an impairment test is made at each balance sheet date to determine if a reversal is required.
The levels are defined as follows:
• Inputs for the asset or liability which are not based on observable market data (non-observable inputs) (Level 3). The Group holds no financial instruments measured at fair value in the balance sheet, only such measured at fair value for disclosure purposes.
A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the instrument's contractual conditions. A financial asset is derecognised from the balance sheet when the contractual right to cash flow from the asset ceases, is settled or when the Group loses control over it. A financial liability, or part of a financial liability, is derecognised from the balance sheet when the contractual obligation has been fulfilled or in some other manner ceases.
Financial assets are classified according to the business model used to manage the asset and the nature of the asset's cash flow. If the financial asset is held within the framework of a business model whose objective is to collecting contractual cash flows (hold to collect) and the contractual conditions for the financial asset at specified times give rise to cash flows that solely consist of the principal amount and interest on the principal amount outstanding, the asset is recognised at amortised cost.
If the business model's objective can instead be met by both collecting contractual cash flows and selling financial assets (hold to collect and sell) and the contractual conditions for the financial asset at specified times give rise to cash flows that solely consist of the principal amount and interest on the principal amount outstanding, the asset is recognised at fair value through other comprehensive income.
All other business models (other) for the purpose of speculation, held for trading or where the nature of the cash flows excludes other business models, entail recognition at fair value through profit or loss.
The Group applies the hold to collect business model for other non-current receivables, trade receivables, cash and cash equivalents and for financial assets recognised as other receivables.
Financial liabilities are measured at fair value through profit or loss if these are a contingent earn-out to which IFRS 3 is to apply, held for trading or if they are initially identified as liabilities at fair value through profit or loss. Other financial liabilities are measured at amortised cost.
Trade payables pertain to obligations to pay for products and services purchased from suppliers in operating activities. Trade payables classified as financial liabilities are measured at amortised cost. Trade payables are initially stated at fair value and subsequently at amortised cost (applying the effective interest method for durations longer than three months). The carrying amount of trade payables is assumed to correspond to their fair value, given that this item is current by its very nature.
Liabilities to credit institutions are classified as financial liabilities measured at amortised cost. Borrowings are initially recognised at fair value, net, after transaction costs and, subsequently, at amortised cost. Any difference between the amount received (net after transaction costs) and the amount to be repaid is recognised in the statement of comprehensive income over the loan period by applying the effective interest method. Borrowing is included in current liabilities unless the Group has an unconditional right to defer payment of the liability by at least 12 months after the balance-sheet date. The carrying amount of the Group's borrowing is assumed to correspond to its fair value given that the loan has no transaction costs and carries a market interest rate.
The fair value of financial assets and financial liabilities is determined as follows: • The fair value of financial assets and liabilities traded in an active market is deter-
The amortised cost of a financial asset is the amount at which the financial asset is valued on initial recognition less the principal amount, plus the accumulated amortisation with the effective interest method of any difference between the principal amount and the principal amount outstanding, adjusted for any impairment. The recognised gross value of a financial asset is the amortised cost of a financial asset before adjustments for any loss allowance. Financial liabilities are recognised at amortised cost using the effective interest method or at fair value in profit or loss.
Effective interest is the interest upon discounting all the anticipated future cash flows during the expected lifetime that results in the initial carrying amount of the financial asset or financial liability.
Financial assets and liabilities are offset and recognised at the net amount in the balance sheet when a legal right exists to offset and when there is an intention to settle the items net, or simultaneously realise the asset and settle the liability. The Group does not offset any financial assets and liabilities.
The Group recognises a loss allowance for expected credit losses on financial assets measured at amortised cost. On every balance-sheet date, the Group reports the change in expected credit losses since the initial recognition in profit or loss.
For all financial assets, the Group is to measure the loss allowance at an amount that corresponds to 12 months of expected credit losses. For financial instruments where a significant increase in credit risk has occurred since the initial recognition, a provision is reported based on loan losses for the asset's entire lifetime (the general model).
The purpose of the impairment requirements is to recognise expected credit losses for the remaining time to maturity for all financial instruments where a significant increase in credit risk has occurred since the initial recognition, either assessed individually or collectively, given all reasonable and verifiable information, including forward-looking information. The Group measures expected credit losses from a financial instrument using a method that reflects an objective and probability-weighted amount determined by assessing an interval of possible outcomes, monetary values over time and reasonable verifiable information, current circumstances and forecasts of future economic circumstances.
For trade receivables, simplification exit that mean the Group can directly report expected credit losses for asset's remaining time to maturity.
The Group's trade receivables are subject to the modified retrospective model for impairment. Trade receivables were assessed individually when calculating expected credit losses. Expected credit losses for trade receivables are calculated based on previous events, current circumstances and forecasts of future economic circumstances and monetary values over time, if applicable.
The Group defines default when it is deemed improbable that the counterparty will meet its obligations due to indicators such as financial difficulties and missed payments. The Group writes off a receivable when no further opportunities for additional cash flow are deemed to exist.
Financial assets and liabilities are offset and the net amount presented in the balance sheet only when there is a legally enforceable right to set off the recognised amounts and an intention to settle them on a net basis or to realise the asset and settle the liability simultaneously. The legally enforceable right must not depend on future events, and must be legally binding for the company and the counterparty both in case of normal business activities and in case of default, insolvency or bankruptcy.
At the end of each reporting period, the Group assesses whether there is objective evidence of impairment of a financial asset or group of financial assets. A financial asset or group of financial assets is impaired and is written down only if there is objective evidence of impairment as a consequence of one or several events occurring after the initial recognition of the asset ("loss event") and this event, or these events, has an impact on the estimated future cash flows for the financial asset or group of financial assets that can be reliably measured.
Objective evidence of impairment includes, for example, indications of significant financial difficulties of a debtor or group of debtors, non-payment of or arrears on the payment of interest or principal, a growing likelihood that the borrower will enter bankruptcy or reorganise, or observable information pointing to a measurable
decrease in estimated future cash flows, such as changes in arrears or other financial circumstances correlated with credit losses.
For the category of accounts receivable, impairment is calculated as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future loan losses that have not occurred), discounted to the original effective interest of the financial asset. The asset's carrying amount is written down and the impairment loss is recognised in the consolidated income statement.
If the impairment is reduced in a subsequent period and this can objectively be attributed to an event occurring after recognition of the impairment loss (such as an improvement in a debtor's creditworthiness), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
Trade receivables are amounts due from customers for goods sold or services rendered in operating activities. Trade receivables are initially stated at cost and subsequently at amortised cost using the effective interest method, less any provisions for impairment.
Trade payables are obligations to pay for goods or services purchased from suppliers in operating activities. Trade payables are initially stated at fair value and subsequently at amortised cost by applying the effective interest method.
Borrowings are initially recognised at fair value, net of transaction costs. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the first in, first out method (FIFO). Net realisable value is the estimated selling price in the company's operating activities less any applicable variable selling expenses.
Cash and cash equivalents in the balance sheet and in the statement of cash flows includes cash, bank deposits, other short-term investments and utilised overdraft facilities. Other short-term investments are classified as cash and cash equivalents if they expire within three months from the time of acquisition, can easily be converted into cash for a known amount and are exposed to an insignificant risk for fluctuations in value.
Overdraft facilities are recognised in the balance sheet as loans in current liabilities.
Ordinary shares are classified as equity. Transaction costs which are directly attributable to the issue of new ordinary shares or warrants are recognised, net of tax, in equity as a deduction from the proceeds of the issue.
The company only holds ordinary shares.
Provisions for legal claims, warranties and measures of reinstatement are recognised when the Group has a legal or constructive obligation arising from past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably measured. No provisions are made for future operating losses. If a number of similar obligations exist, the probability that an outflow of resources will be required is determined for the settlement of the group of obligations as a whole. A provision is recognised also when there is a low probability of an outflow of resources in respect of a particular item in this group of obligations.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks associated with the obligation. The increase in the provision due to passage of time is recognised as interest expense.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except when the tax refers to items which are recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or equity.
The current tax expense is calculated based on the tax rules that have been enacted or substantively enacted at the balance sheet date in those countries where the Parent Company and its subsidiaries operate and generate taxable revenue. Management regularly evaluates claims made in tax returns which relate to situations where the applicable tax rules are subject to interpretation. When appropriate, management makes provisions for amounts which will probably be payable to the tax authority.
Deferred tax is recognised for all temporary differences between the carrying amounts and tax bases of assets and liabilities in the consolidated financial statements. A deferred tax liability is not recognised if it is incurred as a result of initial recognition of goodwill. Deferred tax is also not recognised if it is incurred as a result of a transaction which constitutes the initial recognition of an asset or liability that is not a business combination and which at the time of the transaction affects neither the accounting profit nor the tax profit. Deferred income tax is calculated by applying tax rates (and tax laws) that have been adopted or announced at the balance sheet date and that are expected to apply when the deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax liabilities are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be wholly or partially offset.
Deferred tax liability is calculated for taxable temporary differences on investments in subsidiaries, except for deferred tax liabilities when the time at which the temporary difference is reversed can be decided by the Group and it is probable that the temporary difference will not be reversed in the foreseeable future. Deferred tax assets related to deductible temporary differences arising from investments in subsidiaries are recognised only to the extent that it is probable that the temporary difference will be reversed in future and that there will be taxable profits against which the deduction can be offset.
Deferred tax assets and liabilities are offset when there is a legally enforceable right of set-off for the tax assets and liabilities concerned, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority and refer to either the same taxable entity or different taxable entities, and there is an intention to settle the balances on a net basis.
The Group companies have defined contribution pension plans. Defined contribution pension plans are post-employment benefit plans under which the Group pays fixed contributions into a separate legal entity. The Group has no legal or constructive obligations to pay further contributions if this legal entity does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
Revenue is measured at the fair value of the consideration received or receivable and comprises the amounts received for sold goods less discounts, returns and value-added tax.
The Group recognises a revenue when control of goods is transferred, which occurs when the goods are delivered to the customer or to the location designated by the customer and when there are no unmet obligations that may impact the customer's approval of the goods. The Group solely has contracts with terms up to six months. Consequently, exemption rules for recognition of contracted but not completed performance obligations are applied.
A receivable is recognised when the goods are delivered, which is the date when remuneration becomes unconditional. The company has also analysed whether there are any contract assets. Contract liabilities exist to a very limited degree in cases where advance payment has been received from customers.
The Group applies the modified retrospective approach for calculating expected credit losses. The method means expected losses over the entire lifetime of the receivable are used as a basis for trade receivables. More information about doubtful debts is provided in Note 21. The majority of the Group's trade receivables are covered by insurance.
The Group sells printed circuit boards (PCBs). The sale of PCBs is recognised as income when control of the goods is transferred, which takes place when the goods are delivered to the designated place. Customers do not have the right to return
goods but have the right to replacement deliveries for any defective products.
PCBs are sold to certain customers with volume discounts based on accumulated sales over a 12-month period. Revenue from the sale of cards is recognised based on the price in the agreement, less estimated volume discounts. Accumulated experience is used to assess and make provisions for discounts.
IFRS 9 provides specific guidance for an embedded currency derivative in a host contract that is not a financial instrument (such as a contract for the purchase or sale of a non-financial item where the price is denominated in a foreign currency). The embedded currency derivative should not be separated from the host contract if it is closely related to its host. A currency derivative is considered closely related to its host if payments are denominated in the functional currency of the buyer or seller, acquired or delivered goods or services are routinely denominated in the currency in commercial transactions around the world or the currency is commonly used in contracts to buy or sell non-financial items in the economic environment in which the transaction takes place. The Group has embedded derivatives in the form of third-party currencies in sales contracts, as pricing and invoicing is largely in USD. The effects of thirdparty currencies are considered to have only a marginal impact on the income statement and balance sheet, and have therefore not been taken into account. The effects of third-party currencies are assessed on a quarterly basis.
Interest income is recognised using the effective interest method.
Dividend income is recognised when the right to receive payment has been established.
IFRS 16 Leases is effective as of the 2019 financial year. The standard replaced IAS 17 Leases and the related interpretations. The standard requires that assets and liabilities attributable to all leases, with a few exceptions, be recognised in the balance sheet. This accounting treatment is based on the view that the lessee has a right to use an asset during a specific period of time as well as an obligation to pay for this right.
The Group leases various offices, warehouse space and vehicles. Rental contracts are typically made for fixed periods of one to ten years but with the option to extend or shorten. Contracts may include both lease and non-lease elements. The Group allocates the consideration in the contract to lease and non-lease components based on the relative stand-alone selling prices. Lease payments for property, where the Group is a tenant, are not separated into lease and non-lease components and instead these are recognised as a single lease component.
Non-lease elements were consolidated in the lease asset. The Group has no leases of intangible assets. The company has no leased assets that are difficult to replace with other assets, which is why the lease term stated in the contract is the lease term included in the lease asset and liability. The discount rate applied was assessed by country taking into account the length of the lease, country-specific currency risk and risk premium. The Group has two primary types of operating leases that are managed as financial leases: office premises and leased cars, where the highest value is for office premises.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments. • Fixed payments made at or before the commencement date less any lease incentives received.
• Amounts expected to be paid by the lessee according to residual value guarantees. Right-of-use assets are normally depreciated over the shorter of the useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use is amortised over the useful life of the underlying asset.
Payments associated with short-term leases relating to equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or shorter. Low-value assets include items of office furniture.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended. Extension options related to leases for office premises and vehicles are not included in lease liability as the Group can replace the assets without material costs or disruption to operations.
Dividend payments to shareholders of the Parent Company are recognised as a liability in the consolidated financial statements in the period in which the payment is approved by the shareholders of the Parent Company.
Segments are accounted for in a way that is consistent with the internal reports submitted to the chief operating decision maker. The chief operating decision maker is the function that is responsible for allocating resources and assessing the results of segments. In the Group, this function has been identified as the Chief Executive Officer, who makes strategic decisions. The Group's operations are evaluated based on geography. The following four segments have been identified: Nordic, Europe, North America and East.
Through its activities, the Group is exposed to a wide range of financial risks: market risk (currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk, liquidity risk and financing risk. The Group's overall risk management policy focuses on the unpredictability of financial markets and strives to minimise potential adverse effects on the Group's financial results. The Group does not, however, apply hedge accounting.
Risk management is handled by a central finance department in accordance with the financial policy adopted by the Board of Directors. The finance department identifies, evaluates and hedges financial risks in close collaboration with the Group's operating units. The financial policy encompasses general risk management as well as for specific areas, such as currency risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments, and the investment of excess liquidity.
The Group operates internationally and is exposed to currency risks arising from various currency exposures, mainly from USD and EUR. Currency risk arises through future business transactions, recognised assets and liabilities, and net investments in foreign operations.
Currency risks also arise when future business transactions are expressed in a currency that is not the functional currency of the unit. Approximately 85 per cent of the Group's pricing is in USD and around 75 per cent of the Group's invoicing is in USD. Goods purchases and shipping are 95 per cent denominated in USD, which means that a strengthening of the USD leads to an improved gross profit while a weakening of the USD leads to a reduced gross profit, but unchanged gross margin.
The Group has a number of investments in foreign businesses whose net assets are exposed to currency risks. These are not hedged.
If the Swedish krona had weakened/strengthened by 10 per cent against the USD, with all other variables held constant, the restated net profit at 31 December 2020 would have been kSEK 18,000 (13,000) lower/higher. Gross profit would have been kSEK 40,000 (40,000) lower/higher, while the gross margin was slightly lower.
EBITA would have been kSEK 26,000 (16,000) lower/higher. Restating trade receivables and trade payables would have had the opposite impact on earnings of kSEK 5,000 (5,000).
If the Swedish krona had weakened/strengthened by 10 per cent against the EUR, with all other variables held constant, the restated net profit at 31 December 2020 would have been kSEK 4,000 (9,000) higher/lower. Foreign exchange differences in current assets are recognised as other operating income or other operating expenses. Exchange rate difference in cash, external and internal loans are recognised in net financial items.
The Group's interest rate risk arises from short-term and long-term borrowing. Variable interest rate borrowings expose the Group to cash flow interest rate risk, which is partly neutralised by cash assets bearing variable interest rates. Fixed interest rate borrowings expose the Group to fair value interest rate risk. The Group's policy is to have variable interest rate borrowings. In 2020, the Group's variable interest rate
borrowings consisted mainly of loans in SEK, which was also the case in 2019. There was also some borrowing in USD in the form of Paycheck Protection Program loans in the USA. These are interest-free in 2020. Lending in other currencies may temporarily occur in the Group's cash pool.
The Group has an opportunity to secure the interest rate if exposure is considered too great. An analysis is always conducted in conjunction with refinancing or when rolling-over existing loans. The analysis shows that the effect of a +/–1.0 per cent change in interest level would entail a maximum increase of kSEK 2,700 (500) or a reduction of kSEK 2,700 (500) in interest expense.
The Group normally takes out long-term loans at variable interest rates.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions as well as credit exposures to customers. Credit risk is managed at Group level, with the exception of credit risk related to outstanding trade receivables. Each Group company is responsible for monitoring and assessing the credit risk for each new customer before offering standard terms of payment and delivery.
The Group's subsidiaries insure credit risk through a credit insurance company. The use of a credit insurance company enables NCAB to make a better proactive selection of new customers and to monitor our existing customers effectively. The use of credit limits is monitored regularly. Only banks and financial institutions that have received a credit rating of "BBB+" or higher from an independent rating agency are accepted. Individual risk limits are defined based on internal or external credit assessments in accordance with the limits set by the Board.
No credit limits were exceeded during the reporting period and management does not expect any losses due to non-payments from these counterparties.
The Group's loan financing takes place centrally and consists of both fixed loans and an intra-Group cash pool with an associated overdraft facility. The loan conditions include covenants stating that the net debt excluding IFRS 16 must not exceed 2.5 times adjusted EBITDA and that cash flow before financing costs must exceed financing costs. Management regularly measures and monitors covenant calculations and cash flow forecasts from a covenant perspective.
Cash flow forecasts are prepared by the Group's operating companies and aggregated at Group level. Rolling forecasts for the Group's liquidity are monitored continually to ensure that the Group has sufficient cash to meet its day-to-day operational needs while maintaining sufficient unused credit facilities to ensure that it does not breach borrowing limits or loan covenants (where applicable) on any of its loan facilities.
Excess liquidity in the Group's operating companies exceeding that portion which is required to manage working capital requirements is transferred to the Parent Company, which invests the excess liquidity in interest-bearing current accounts, term deposits, money market instruments and marketable securities, depending on what type of instrument has an appropriate maturity or is sufficiently liquid to meet the requirements determined by the aforementioned forecasts. At the balance sheet date, the company had liquid assets of kSEK 449,033 (82,210) and an undrawn overdraft facility of kSEK 212,286 (106,026) that can quickly be converted into cash in order to manage the liquidity risk.
The following table shows an analysis of the Group's non-derivative financial liabilities by remaining maturity from the balance sheet date.
Derivatives that are financial liabilities are included in the analysis if their contractual maturities are essential for understanding the timing of future cash flows. The amounts indicated in the table are the contractual cash flows calculated using the average interest rate for 2020.
| 31 December 2020 | Less than 3 months |
Between 3 months and 1 year |
Between 1 and 2years |
Between 2 and 5years |
|---|---|---|---|---|
| Borrowings | 10,927 | 45,311 | 43,729 | 278,835 |
| Overdraft facility (payable on demand) |
||||
| Trade payables | 270,312 | |||
| 31 December 2019 | ||||
| Borrowings | 2,511 | 7,598 | 10,284 | 70,130 |
| Overdraft facility (payable on demand) |
7,939 | |||
| Trade payables | 252,508 |
The Group's goal in respect of capital structure is to secure its ability to continue its operations with a view to continuing to generate a return for the shareholders and benefits for other stakeholders, and to maintain an optimal capital structure in order to keep the costs of capital down.
To maintain, or adjust, its capital structure, the Group may change the dividend that is paid to the shareholders, return capital to the shareholders, issue new shares or sell assets to reduce its liabilities.
Like other companies in the industry, the Group assesses its capital based on the debt/equity ratio. This key ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowings (comprising the items Short-term borrowings and Long-term borrowings in the consolidated balance sheet) less cash and cash equivalents.
The Group's target is that net debt will not exceed twice adjusted EBITDA (excluding the effect of IFRS 16) and have a credit rating of not less than BB. The Group's BB credit rating was maintained throughout the year. For the reported periods, the debt/equity ratio has been as follows:
| 2020 | 2019 | |
|---|---|---|
| Total borrowings (Note 27) | 332,650 | 92,939 |
| Less: cash and cash equivalents | –449,033 | –82,210 |
| Net debt excl. right-of-use liability | –116,043 | 10,763 |
| Right-of-use liability | 31,097 | 34,000 |
| Total liability | –84,946 | 44,763 |
| Total equity | 699,935 | 348,122 |
| Total capital | 614,989 | 392,885 |
| Debt/equity ratio | –12% | 13% |
| Adjusted EBITDA*, incl. IFRS 16 | 209,891 | 179,908 |
| Net debt / Adjusted EBITDA, incl. IFRS 16 | –0.4 | 0.2 |
Adjusted EBITDA, excl. IFRS 16 196,138 168,570 Net debt / Adjusted EBITDA, excl. IFRS 16 –0.6 0.1
*No adjustment of EBITDA was carried out for 2020 and 2019.
Estimates and judgements are reviewed on an ongoing basis, and are based on historical experiences and other factors, including expectations of future events that are deemed reasonable under existing circumstances.
The Group makes estimates and assumptions about the future. The resulting accounting estimates will by definition seldom equal the related actual results. Estimates and assumptions which
involve a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year are addressed below.
Each year, the Group tests goodwill for impairment in accordance with the accounting policy described in Note 2. Recoverable amounts for cash-generating units have been determined by calculating value in use. For these calculations, certain estimates need to be made (Note 18).
The carrying amount of goodwill is kSEK 382,313 (206,252). The change is due to currency effects and additional goodwill for the acquisition of Flatfield amounting to kSEK 100,117 and kSEK 116,115 for Bare Board Group.
At 31 December 2020, the Group has recognised deferred tax assets of kSEK 7,355 (7,671) arising from unused tax losses for the year and previous years. These tax losses have no final expiration date. A deferred tax asset is recognised for tax losses only to the extent that it is probable that these can be used to offset future taxable profits and taxable temporary differences.
Each year, the Group also assesses whether there is reason to recognise new deferred tax assets in respect of tax losses for the year or previous years.
At 31 December 2020, the Group had unused tax losses from the Group's newly started companies in Malaysia and the Netherlands of kSEK 10,118 (4,498), which
represent unrecognised tax assets of kSEK 2,470 (950) with no final expiration date. Further information on unused tax losses and deferred tax assets is provided in Note 28.
At the closing date, the Group had trade receivables of kSEK 342,878 (320,014). Trade receivables are amounts attributable to customers for sold goods in the ordinary course of business. Trade receivables generally fall due for payment within 30–90 days and all trade receivables are therefore classified as current assets. Trade receivables are initially recognised at transaction price. Trade receivables with a material financing component are measured, on the other hand, at fair value. The Group holds trade receivables for the purpose of collecting contractual cash flow and measures these therefore on subsequent accounting dates at amortised cost.
The Group applies the modified retrospective approach for calculating expected credit losses. The method means expected losses over the entire lifetime of the receivable are used as a basis for trade receivables.
More information about doubtful debts is provided in Note 21. The majority of the Group's trade receivables are covered by insurance.
Breakdown of net sales by geographic location of customers.
| 2020 | 2019 | |
|---|---|---|
| USA | 408,643 | 270,257 |
| Germany | 348,695 | 168,575 |
| Sweden | 169,091 | 194,658 |
| China | 166,230 | 178,901 |
| Russia | 153,457 | 159,054 |
| UK | 110,900 | 110,660 |
| Norway | 94,647 | 85,025 |
| France | 72,454 | 83,597 |
| Denmark | 72,509 | 98,358 |
| Netherlands | 67,374 | – |
| Poland | 62,806 | 55,859 |
| Romania | 57,564 | 30,616 |
| Estonia | 53,803 | 52,519 |
| Canada | 44,727 | 40,175 |
| Finland | 41,424 | 47,998 |
| Spain | 31,452 | 41,506 |
| Other markets | 159,435 | 162,807 |
| Total | 2,115,212 | 1,781,194 |
The company has remaining performance obligations and contract liabilities of kSEK 5,726 (3,712) attributable to advances from customers, primarily in Russia.
In NCAB Group, the CEO is the Group's chief operating decision maker. The segments are based on the information that is handled by the CEO and used as a basis for decisions on the allocation of resources and evaluation of results. NCAB Group has identified four segments, which also constitute reportable segments in the Group's operations:
Provides a broad range of PCBs from NCAB's companies in Sweden, Norway, Denmark, Finland and Estonia. The PCBs are purchased from external suppliers, mainly in China. Most of the PCBs are of the High-Mix-Low-Volume (HMLV) type, i.e. specialised products that are produced in small quantities.
NCAB has a local presence through technicians and customer support staff to ensure that its customers receive support throughout the process.
Provides a broad range of PCBs from NCAB's companies in the UK, Poland, France, Italy, Germany, Spain, the Netherlands and North Macedonia. The PCBs are purchased from external suppliers, mainly in China. Most of the PCBs are of the highmix-low-volume (HMLV) type, i.e. specialised products that are produced in small quantities. NCAB has a local presence through technicians and customer support staff to ensure that its customers receive support throughout the process.
Provides a broad range of PCBs from NCAB's companies in the USA. The PCBs are purchased from external suppliers, mainly in China. Most of the PCBs are of the high-mix-low-volume (HMLV) type, i.e. specialised products that are produced in small quantities. NCAB has a local presence through technicians and customer support staff to ensure that its customers receive support throughout the process.
Provides a broad range of PCBs from NCAB's companies in China, Malaysia and Russia. The PCBs are purchased from external suppliers, mainly in China. Most of the PCBs are of the high-mix-low-volume (HMLV) type, i.e. specialised products that are produced in small quantities. NCAB has a local presence through technicians and customer support staff to ensure that its customers receive support throughout the process.
Revenue is generated from a large number of customers across all segments. There are no sales of goods between segments. Minor amounts may be invoiced for freight and services, which are provided on market terms. The revenue from external parties reported to the CEO is measured in the same way as in profit or loss.
| Nordic | Europe | North America | East | Central functions | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Net sales | 493.8 | 516.6 | 859.5 | 675.0 | 428.2 | 236.9 | 333.6 | 352.6 | 0 | 0.1 | 2,115.2 | 1,781.2 |
| EBITA | 77.0 | 77.9 | 56.3 | 41.2 | 32.5 | 15.3 | 43.1 | 43.5 | –18.1 | –12.6 | 190.7 | 165.3 |
| EBITA margin, % | 15.6 | 15.1 | 6.6 | 6.1 | 7.6 | 6.5 | 12.9 | 12.3 | 9.0 | 9.3 | ||
| Amortisation of intangible assets |
–8.4 | –3.6 | ||||||||||
| Operating profit | 182.3 | 161.7 | ||||||||||
| Operating margin, % | 8.6 | 9.1 | ||||||||||
| Net financial expense | –19.4 | –0.9 | ||||||||||
| Profit before tax | 163.0 | 160.9 | ||||||||||
| Net working capital | 32.9 | 30.4 | 101.2 | 66.2 | 3.2 | 2.6 | 35.6 | 30.7 | –9.9 | –4.1 | 163.0 | 125.8 |
| Non-current assets | ||||||||||||
| Intangible assets | 61.4 | 74.7 | 118.7 | 0.1 | 236.2 | 135.9 | 8.1 | 0.5 | 1.1 | 11.8 | 425.5 | 223.0 |
| Property, plant and equipment | 4.9 | 5.6 | 13.1 | 13.1 | 8.3 | 8.9 | 0.8 | 1.1 | 9.7 | 11.7 | 36.6 | 40.5 |
In Sweden, there are non-current assets valued at SEK 18.9 million (28.0), of which property, plant and equipment of SEK 2.5 million (2.5), and intangible assets of SEK 16.4 million (25.5).
| 2020 | 2019 | |
|---|---|---|
| Operating foreign exchange gains | – | 11,241 |
| Operating foreign exchange losses | – | –6,972 |
| Other income | 6,317 | 4,886 |
| Total | 6,317 | 9,155 |
| 2020 | 2019 | |
|---|---|---|
| Cost of premises | 22,963 | 19,296 |
| Travel expenses | 5,227 | 21,027 |
| External sales commission | 12,477 | 7,082 |
| Marketing | 6,455 | 11,874 |
| IT | 16,091 | 16,940 |
| Other | 43,353 | 31,323 |
| Total | 106,566 | 107,531 |
| 2020 | 2019 | |
|---|---|---|
| Salaries and benefits | 240,774 | 212,892 |
| Social security contributions | 30,605 | 31,894 |
| Retirement benefit costs – defined contribution | ||
| plans | 13,059 | 11,726 |
| Total employee benefits | 284,437 | 256,512 |
| 2020 | 2019 | |||
|---|---|---|---|---|
| Salaries and other bene fits (of which bonuses) |
Retirement benefit costs |
Salaries and other bene fits (of which bonuses) |
Retirement benefit costs |
|
| Directors, CEOs and other execu |
||||
| tive | 26,959 | 27,429 | ||
| management | (5,766) | 2,339 | (4,222) | 1,915 |
| Other employees | 213,815 | 10,720 | 185,463 | 9,812 |
| Total, Group | 240,774 | 13,059 | 212,892 | 11,726 |
The Group applies market-based salaries and remuneration based on a fixed and a variable portion. Remuneration of the CEO and other executive management consists of a basic salary, variable salary and pension. Executive management refers to the individuals who comprise Group management together with the CEO.
The allocation between basic salary and variable remuneration is in proportion to the executive's responsibility and authority. The variable remuneration is based on financial objectives. The yearly variable salary to the CEO is not to exceed 100 per cent of the fixed yearly salary. Other management executives may receive yearly variable salary in an amount not exceeding the equivalent of 40–100 per cent of the yearly fixed salary. Executive management otherwise receives customary benefits, such as a company car, occupational health care, etc.
Management executives shall be entitled to pension benefits according to defined contribution pension plans with premiums of up to 30 per cent of the executive's annual salary, or according to applicable occupational pension scheme.
The CEO has a notice period of 12 months if termination is made by the company and 6 months if termination is made by the CEO. There is no agreement on severance pay.
| Average number of employees: | 2020 | 2019 | ||
|---|---|---|---|---|
| Average number of employees |
Of whom, women |
Average number of employees |
Of whom, women |
|
| Sweden | 35 | 17 | 36 | 17 |
| Denmark | 11 | 5 | 10 | 4 |
| Norway | 9 | 1 | 8 | 2 |
| Finland | 12 | 6 | 16 | 6 |
| Germany | 33 | 10 | 30 | 9 |
| UK | 34 | 14 | 34 | 13 |
| Poland | 12 | 9 | 12 | 9 |
| France | 15 | 9 | 18 | 11 |
| Spain | 9 | 3 | 9 | 3 |
| Italy | 9 | 4 | 10 | 4 |
| Malaysia | 2 | 2 | ||
| Netherlands | 34 | 8 | 1 | 1 |
| North Macedonia | 2 | 1 | ||
| Russia | 45 | 21 | 42 | 18 |
| USA | 76 | 34 | 52 | 20 |
| China | 104 | 56 | 102 | 55 |
| Hong Kong | 3 | 1 | 3 | 1 |
| Taiwan | 7 | 4 | ||
| Total, Group | 452 | 202 | 387 | 179 |
Gender distribution in the Group (incl. subsidiaries) for Directors and other executive management:
| 2020 | 2019 | |||
|---|---|---|---|---|
| Number at balance sheet date |
Of whom, women |
Number at balance sheet date |
Of whom, women |
|
| Board of Directors | 7 | 2 | 6 | 2 |
| CEOs and other execu tive management |
12 | 3 | 11 | 3 |
| Total, Group | 19 | 5 | 17 | 5 |
| 2020 | 2019 | |
|---|---|---|
| PwC | ||
| – Audit engagement | 3,799 | 1,901 |
| – Audit services in addition to audit engagement | 143 | 320 |
| – Tax advisory services | 62 | 28 |
| – Other services | 477 | 0 |
| Total | 4,481 | 2,249 |
| Other auditors | ||
| – Audit engagement | 2,060 | 1,058 |
| – Audit services in addition to audit engagement | 63 | 46 |
| – Tax advisory services | 280 | 29 |
| – Other services | 83 | |
| Total | 2,403 | 1,216 |
| Total, Group | 6,973 | 3,465 |
Fees to Öhrlings PricewaterhouseCoopers AB from companies in the NCAB Group amounted to SEK 2.7 million (1.8) during the year. Of this amount, SEK 2.5 million (1.4) was audit fees and SEK 0.1 million (0.4) was primarily other audit services established in regulations and according to the Group's wishes.
Other operating expenses than non-recurring items, and net operating foreign exchange losses
| 2019 | |
|---|---|
| –7,847 | 0 |
| 15,317 | |
| 14,949 | 2,779 |
| 336 | |
| 22,756 | 2,779 |
| 2020 |
Foreign exchange differences have been recognised in profit or loss as follows:
| 2020 | 2019 | |
|---|---|---|
| Net other operating income (Note 7) | 4,886 | |
| Net other operating expenses (Note 11) | –7,470 | |
| Net financial income/expense (Note 12) | –7,159 | 3,383 |
| Total | 14,629 | 8,269 |
The Parent Company now only holds ordinary shares.
| 2020 | 2019 | |
|---|---|---|
| Profit for the period | 127,368 | 128,276 |
| Average total number of shares | 18,115,840 | 16,847,124 |
| Earnings per share before dilution, SEK | 7.03 | 7.61 |
| 2020 | 2019 | |
|---|---|---|
| Financial expense: | ||
| – interest expenses bank loans | –8,549 | –4,137 |
| Foreign exchange gains on financing activities | 90,860 | |
| Foreign exchange losses on financing activities | –98,019 | |
| Other financial expense | –3,883 | –1,263 |
| Total financial expense | –19,591 | –5,400 |
| Financial income: | ||
| – interest income from short-term bank deposits | 197 | 1,036 |
| Foreign exchange gains on financing activities | 55,333 | |
| Foreign exchange losses on financing activities | –51,950 | |
| Other financial income | 1 | 120 |
| Total financial income | 199 | 4,539 |
| Net financial expense | –19,392 | –862 |
| 2020 | 2019 | |
|---|---|---|
| Current tax: | ||
| Current tax on profit for the year | –26,066 | –30,705 |
| Total current tax | –26,006 | –30,705 |
| Deferred tax (Note 28) | –9,438 | –1,755 |
| Total deferred tax | –9,438 | –1,755 |
| Tax | –35,444 | –32,460 |
The tax on the consolidated profit before tax differs from the theoretical amount that would have resulted from the use of the Swedish tax rate for the results of the consolidated companies as follows:
| 2020 | 2019 | |
|---|---|---|
| Profit before tax | 162,955 | 160,863 |
| Tax calculated at tax rate in Sweden (21.4% (21.4%)) |
–34,872 | –34,425 |
| Effect of foreign tax rates | –2,762 | 4,605 |
| Tax effects of: | ||
| Non-taxable income | 2,029 | 292 |
| Non-deductible expenses | –3,701 | –3,011 |
| Use of previously unrecognised tax losses | –465 | |
| Effect of changed tax rates | –635 | |
| Tax losses for which no deferred tax asset has been recognised |
1,728 | 950 |
| Adjustment relating to prior years | 452 | –252 |
| Change in deferred tax on loss carryforwards | 0 | 16 |
| Transactions posted against equity | 2,146 | 0 |
| Tax expense | –35,444 | –32,460 |
The weighted average tax rate was 21.8 per cent (20.2).
At 31 December 2020, the Group had the following subsidiaries:
| Name | Country of registration and operation |
Percentage of ordinary shares owned directly by the Parent Company (%) |
Percentage of ordinary shares owned by the Group (%) |
|---|---|---|---|
| NCAB Group Asia Ltd. | Hong Kong | 100% | |
| NCAB Group ShenZhen Elec tronics Co Ltd. |
China | 100% | |
| NCAB Group ShenZhen Co Ltd. | China | 100% | |
| NCAB Group Denmark A/S | Denmark | 100% | |
| NCAB Ericon Pte | Russia | 100% | |
| NCAB Group Estonia Oü | Estonia | 100% | |
| NCAB Group Finland OY | Finland | 100% | |
| NCAB Group France SAS | France | 100% | |
| NCAB Group Germany GMBH | Germany | 100% | |
| NCAB Group Iberia S.A. | Spain | 100% | |
| NCAB Group Italy S.r.l. | Italy | 100% | |
| NCAB Group Norway AS | Norway | 100% | |
| NCAB Macedonia A.D. | North Macedonia | 70% | |
| NCAB Group Polska Sp. Z.o.o | Poland | 100% | |
| NCAB Group South East Asia SDN BHD |
Malaysia | 100% | |
| NCAB Group Sweden AB | Sweden | 100% | |
| NCAB Group UK Ltd | UK | 100% | |
| NCAB Group USA Inc. | USA | 100% | |
| Altus PCB | USA | 100% | |
| Bare Board Group | USA | 100% | |
| IPCS B.V. | Netherlands | 100% | |
| Flatfield Holding B.V. | Netherlands | 100% | |
| Flatfield Group B.V. | Netherlands | 100% | |
| NCAB Group Flatfield B.V. | Netherlands | 100% | |
| Flatfield Germany GmbH | Germany | 100% | |
| NCAB Group Benelux B.V | Netherlands | 100% | |
| Flatfield Hong Kong Ltd | Hong Kong | 100% | |
| Flatfield UK Holding B.V. | Netherlands | 100% | |
| Flatfield Multiprint UK Ltd | UK | 100% |
All subsidiaries are consolidated in the Group. The voting interest in subsidiaries which are owned directly by the Parent Company does not differ from the owned share of ordinary shares.
Improvements to third party's property:
| 2020 | 2019 | |
|---|---|---|
| Opening balance | ||
| Cost | 7,199 | 5,347 |
| Accumulated depreciation | –4,355 | –3,826 |
| Carrying amount | 2,844 | 1,521 |
| Period | ||
| Foreign exchange differences | 235 | 43 |
| Purchases | 298 | 1,821 |
| Depreciation | –835 | –541 |
| Sales | –25 | |
| Closing balance | ||
| Cost | 7,316 | 7,199 |
| Accumulated depreciation | –5,232 | –4,355 |
| Carrying amount | 2,084 | 2,844 |
Plant and equipment:
| 2020 | 2019 | |
|---|---|---|
| Opening balance | ||
| Cost | 21,832 | 19,589 |
| Accumulated depreciation | –17,755 | –15,404 |
| Carrying amount | 4,077 | 4,185 |
| Period | ||
| Foreign exchange differences | 133 | 29 |
| Purchases | 3,023 | 2,514 |
| Sales and disposals | –174 | –300 |
| Depreciation | –2,987 | –2,351 |
| Closing balance | ||
| Cost | 22,774 | 21,832 |
| Accumulated depreciation | –18,267 | –17,755 |
| Carrying amount | 4,507 | 4,077 |
Right-of-use assets:
| 2020 | 2019 | |
|---|---|---|
| Opening balance | ||
| Cost | 43,870 | |
| Accumulated depreciation | –10,335 | |
| Carrying amount | 33,536 | |
| Period | ||
| Foreign exchange differences | 91 | |
| Additions | 9,466 | 43,870 |
| Depreciation | –12,681 | –10,335 |
| Closing balance | ||
| Cost | 47,933 | 43,870 |
| Accumulated depreciation | –17,896 | –10,335 |
| Carrying amount | 30,038 | 33,535 |
| Goodwill | Capitalised develop ment costs |
Other intangible assets |
Total | |
|---|---|---|---|---|
| Financial year 2019 | ||||
| Carrying amount at beginning of year | 132,755 | 697 | 2,554 | 136,006 |
| Foreign exchange differences | 262 | 46 | –399 | 269 |
| Added | 73,236 | 2,550 | 17,719 | 93,505 |
| Sales and disposals | –1,642 | –1,515 | ||
| Amortisation | –1,631 | –3,629 | –5,260 | |
| Carrying amount at end of year | 206,253 | 147 | 16,605 | 223,005 |
| Carrying amount | ||||
| Cost | 206,253 | 18,156 | 42,737 | 267,146 |
| Accumulated amortisation and impairment | –18,009 | –26,132 | –44,141 | |
| 31 December 2019 | 206,253 | 147 | 16,605 | 223,005 |
| Financial year 2020 | ||||
| Carrying amount at beginning of year | 206,253 | 147 | 16,605 | 223,005 |
| Foreign exchange differences | –40,172 | 11 | –4,968 | –45,590 |
| Added | 216,232 | 8,155 | 34,282 | 259,130 |
| Amortisation | –2,671 | –8,370 | –11,041 | |
| Carrying amount at end of year | 382,313 | 5,623 | 37,549 | 425,504 |
| Carrying amount | ||||
| Cost | 382,313 | 26,519 | 45,919 | 454,751 |
| Accumulated amortisation and impairment | –20,876 | –13,338 | –34,214 | |
| 31 December 2020 | 382,313 | 5,623 | 37,549 | 425,504 |
| 31 Dec 2019 | Carrying amount at beginning of year |
Added | Other adjustments (foreign exchange effect) |
Carrying amount at end of year |
|---|---|---|---|---|
| Sweden | 15,385 | 15,385 | ||
| Denmark | 2,318 | 26,334 | 28,652 | |
| Norway | 4,575 | 4,575 | ||
| Finland | 9,041 | 9,041 | ||
| USA | 92,617 | 46,902 | 261 | 139,780 |
| Other | 8,819 | 8,819 | ||
| Total | 132,755 | 73,236 | 261 | 206,252 |
| 31 Dec 2020 | Carrying amount at beginning of year |
Added | Other adjustments (foreign exchange effect) |
Carrying amount at end of year |
|---|---|---|---|---|
| Sweden | 15,385 | 15,385 | ||
| Denmark | 28,652 | –1,075 | 27,577 | |
| Norway | 4,575 | –936 | ||
| Finland | 9,041 | 539 | 9,580 | |
| USA | 139,780 | 116,115 | –14,947 | 224,950 |
| Netherlands | 0 | 100,117 | –22,807 | 93,308 |
| Other | 8,819 | –946 | 7,873 | |
| Total | 206,252 | 216,232 | –40,172 | 382,313 |
The recoverable amount for a cash-generating unit (CGU, for the Group, country) is determined based on calculations of value in use. These calculations are made on the basis of estimated future cash flows before tax based on five-year financial budgets that have been approved by management. Cash flows beyond the five-year period are extrapolated using an estimated growth rate, as shown below. The growth rate does not exceed the long-term growth rate for the market in which the CGU operates.
For each CGU to which a significant amount of goodwill has been allocated, the material assumptions, long-term growth rates and discount rates used in calculating value in use are indicated below.
| 31 Dec 2019 | Sweden | Norway | Finland | Denmark | USA |
|---|---|---|---|---|---|
| Long-term growth rate, % | 2 | 2 | 2 | 2 | 2 |
| Pre-tax discount rate, % | 10.4 | 10.2 | 10.3 | 10.5 | 12.7 |
| 31 Dec 2020 | Sweden | Norway | Finland | Denmark | USA | Netherlands |
|---|---|---|---|---|---|---|
| Long-term growth | ||||||
| rate, % | 2 | 2 | 2 | 2 | 2 | 2 |
| Pre-tax discount | ||||||
| rate, % | 10.0 | 9.2 | 10.0 | 7.8 | 9.2 | 7.9 |
The five-year forecasting period is based on the budget and unchanged sales margins and sales composition. The five-year period is also based on previous earnings and management's expectations of market development as well as external information sources.
No reasonable change in critical assumptions for Sweden, Norway, Finland and Denmark would result in the carrying amount exceeding the recoverable amount. USA can cope with a long-term growth rate of –7 per cent or an increase in WACC by 8 percentage points for the carrying amount to exceed the recoverable amount. The Netherlands can cope with a long-term growth rate of –8 per cent or an increase in WACC by 8 percentage points for the carrying amount to exceed the recoverable amount.
| Assets at amortised cost |
Total | |
|---|---|---|
| Assets in balance sheet | ||
| Non-current financial assets | 4,928 | 4,928 |
| Trade receivables | 342,878 | 342,878 |
| Cash and cash equivalents | 449,033 | 449,033 |
| Total | 796,839 | 796,839 |
| Other financial liabilities |
Total | |
|---|---|---|
| Liabilities in balance sheet | ||
| Borrowings | 332,650 | 332,650 |
| Trade payables | 270,312 | 270,312 |
| Total | 602,962 | 602,962 |
| Loans and receiv ables |
Total | |
|---|---|---|
| Assets in balance sheet | ||
| Non-current financial assets | 4,018 | 4,018 |
| Trade receivables | 320,014 | 320,014 |
| Cash and cash equivalents | 82,209 | 82,209 |
| Total | 406,241 | 406,241 |
| Other financial liabilities |
Total | |
|---|---|---|
| Liabilities in balance sheet | ||
| Borrowings | 92,939 | 92,939 |
| Trade payables | 252,505 | 252,505 |
| Total | 345,444 | 345,444 |
For most of the Group's borrowing, the carrying amount on borrowing corresponds to its fair value given that the interest on this borrowing is in parity with prevailing market rates or because the borrowing is short-term.
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Opening value | 4,018 | 3,938 |
| Foreign exchange differences | –742 | 189 |
| Additions | 4,584 | 594 |
| Sales and disposals | –2,931 | –703 |
| Closing value | 4,929 | 4,018 |
Financial assets refer to deposits for leases in Denmark, Finland, France, Italy and the USA. Together with restricted funds for state customers in Russia.
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Trade receivables | 347,706 | 323,672 |
| Provision for doubtful debts | –4,828 | –3,658 |
| Net trade receivables | 342,878 | 320,014 |
The fair value of trade receivables is equal to the carrying amount, as the discount effect is insignificant.
At 31 December 2020, the Group had past due trade receivables of kSEK 52,896 (68,850). The age structure of these trade receivables is shown below:
| Total trade receivables past due | 52,896 | 68,850 |
|---|---|---|
| > 91 days | 2,408 | 5,195 |
| 31–90 | 8,948 | 19,063 |
| 1–30 days | 41,540 | 44,592 |
| 31 Dec 2020 | 31 Dec 2019 |
At 31 December 2020, the Group had recognised impairment of trade receivables of kSEK 4,828 (3,658).
The carrying amounts, for each currency, of the Group's trade and other receivables are as follows:
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| SEK | 1,342 | 2,243 |
| EUR | 36,652 | 35,465 |
| USD | 213,755 | 205,598 |
| GBP | 17,125 | 17,565 |
| Other | 74,004 | 59,144 |
| Total | 342,878 | 320,014 |
Changes in the provision for doubtful debts are as follows:
| 2020 | 2019 | |
|---|---|---|
| 1 January | 3,658 | 3,721 |
| Provisions for credit losses | 5,833 | 764 |
| Impairment for the year | –82 | –346 |
| Reversal of unused provisions | –4,581 | –482 |
| 31 December | 4,828 | 3,658 |
Provisions and reversals of provisions for doubtful debts are included in the item Other external expenses in profit or loss (Note 8).
Other categories in trade and other receivables do not include any impaired assets. The maximum exposure to credit risk at the balance sheet date is the carrying amount, as shown above.
The Group has not received any pledge as security for trade receivables but the majority of the Group's trade receivables are insured with a credit insurance company.
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Raw materials and consumables | 183,135 | 148,832 |
The cost for inventories that has been expensed is included in the item Raw materials and consumables in profit or loss, and amounts to kSEK 1,438,573 (1,193,524). The Group did not recognise any reversals of impairment losses on inventories in 2020 or 2019.
Inventories, which totalled kSEK 183,135 (148,832) at the closing date, consist exclusively of goods with fixed orders from customers.
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Tax assets | 5,407 | 12,479 |
| VAT receivables | 5,002 | 1,135 |
| Other receivables | 4,059 | 4,280 |
| Total | 14,468 | 17,893 |
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Prepaid rents | 1,036 | 1,178 |
| Accrued commission | 9,670 | 9,359 |
| Service contracts | 3,365 | 4,764 |
| Other items | 5,007 | 13,730 |
| Total | 19,078 | 29,031 |
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Bank deposits | 449,033 | 82,210 |
| Total | 449,033 | 82,210 |
| Number of shares ('000) |
Share capital |
Other addi tional paid-in capital |
Total | |
|---|---|---|---|---|
| 31 December 2019 | 16,847 | 1,685 | 201,616 | 203,301 |
| 31 December 2020 | 18,697 | 1,870 | 478,143 | 480,013 |
The share capital comprises 18,697,124 shares with a quotient value of SEK 0.10. Each share carries one vote. All shares issued by the Parent Company are fully paid up.
No dividend was paid in 2020. At the General Meeting on 10 May 2021, it will be proposed that a dividend of SEK 5.00 per share be paid.
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Liabilities to credit institutions | ||
| Non-current | 294,491 | 75,000 |
| Current | 38,159 | 17,939 |
| Total borrowings | 332,650 | 92,939 |
The Group's borrowing was primarily conducted in SEK and USD.
Under the covenants associated with liabilities to credit institutions, net debt must not exceed 2.5 times EBITDA adjusted for IFRS 16, cash flow/financing costs (interest and repayments of principal) must exceed 1.0.
At 31 December 2020, NCAB had loans totalling SEK 322.6 million, split between four loans. Two of the loans are being repaid in quarterly instalments of SEK 9.1 million and mature in 2023 and 2025 respectively. The two remaining loans – SEK 50.0 million and SEK 132.5 million – are free of instalments, and mature in 2023 and 2025 respectively. In addition to the loans, there is an overdraft facility of SEK 212 million. At the balance sheet date of 31 December 2020, the company was in compliance with all covenants under the financing agreement. During the year, the average interest rate was 2.125 per cent (2.375). In the USA, there is borrowing in the form of Paycheck Protection Program loans, which are interest-free in 2020 and a loan waiver request has been submitted for 2020.
The collateral for the loans consists of shares in subsidiaries valued at kSEK 587,328 (Note 32).
The Group has an agreed overdraft facility with a limit of kSEK 212,283 in the currencies SEK, EUR, USD, GBP, DKK and NOK. Of the agreed limit, kSEK 0 had been drawn at 31 December 2020 (0). The interest rate on the overdraft facility, if exercised, is STIBOR/LIBOR +1.5% and interest is paid quarterly. The terms of the overdraft facility are linked to the covenants for the bank loans, see above.
The carrying amounts and fair values for borrowings are as follows:
| Carrying amount | Fair value | |||
|---|---|---|---|---|
| 31 Dec 2020 | 31 Dec 2019 31 Dec 2020 | 31 Dec 2019 | ||
| Liabilities to credit institutions |
332,650 | 92,939 | 332,650 | 92,939 |
| Total | 332,650 | 92,939 | 332,650 | 92,939 |
The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant. Liabilities to credit institutions are classified in Level 2 of the fair value hierarchy.
The carrying amounts, by currency, for the Group's borrowings are as follows:
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| SEK | 321,784 | 85,000 |
| USD | 10,866 | 7,939 |
| Total | 332,650 | 92,939 |
The Group has the following undrawn credit facilities:
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Variable interest: | ||
| – no maturity date | 212,283 | 106,026 |
| Total | 212,283 | 106,026 |
In addition to the credit and borrowing referred to above, the Group has liabilities relating to right-of-use assets of kSEK 31,091 (34,034).
The breakdown of deferred tax assets and liabilities is as follows:
| 31 Dec 2020 31 Dec 2019 | |
|---|---|
| 5,099 | 6,263 |
| 2,255 | 1,408 |
| 22,808 | 6,844 |
| 7 | 1,269 |
| –15,460 | –441 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Accrued holiday pay and bonuses | 29,630 | 28,438 |
| Accrued customer bonus | 6,789 | 4,943 |
| Accrued audit fees | 3,210 | 2,403 |
| Deferred income | 3,519 | |
| Additional purchase consideration Altus PCB | 19,697 | |
| Other items | 25,651 | 22,185 |
| Total | 65,279 | 81,184 |
The gross change in respect of deferred taxes is as follows:
| 2020 | 2019 | |
|---|---|---|
| Opening balance | –441 | 4,901 |
| Foreign exchange differences | 4,912 | –499 |
| Additions | –10,909 | –3,089 |
| Recognised in profit or loss (Note 13) | –9,438 | –1,755 |
| Closing balance | –15,460 | –411 |
The change in deferred tax assets and liabilities during the year, without taking account of netting in the same tax jurisdiction, is shown below:
| Deferred tax liabilities | Other | ||
|---|---|---|---|
| 1 January 2019 | 2,860 | 2,860 | |
| Recognised in profit or loss | 1,647 | 1,647 | |
| Adjustment from previous year | 3,089 | 3,089 | |
| Currency adjustment | 517 | 517 | |
| 31 December 2019 | 8,113 | 8,113 | |
| Recognised in profit or loss | 8,814 | 8,814 | |
| Currency adjustment | 795 | 795 | |
| Additions | 5,093 | 5,093 | |
| 31 December 2020 | 22,815 | 22,815 |
| Deferred tax assets |
Intangible assets |
Tax losses | IFRS 16 | Total |
|---|---|---|---|---|
| 1 January 2019 | 744 | 7,014 | 7,761 | |
| Recognised in profit or loss | –744 | 636 | –108 | |
| Foreign exchange differ ences |
0 | 18 | 18 | |
| 31 December 2019 | 0 | 7,671 | 7,671 | |
| Recognised in profit or loss | 717 | –1,756 | 415 | –624 |
| Foreign exchange differ ences |
307 | 307 | ||
| 31 December 2020 | 717 | 6,222 | 415 | 7,355 |
Deferred tax assets are recognised for tax losses to the extent that it is probable that these can be used to offset future taxable profits. The Group has not recognised deferred tax assets of kSEK 2,470 (950) relating to losses of kSEK 10,118 (4,498).
| 2020 | 2019 | |
|---|---|---|
| Adjustments for: | ||
| – depreciation of property, plant and equipment (Note 17) |
16,503 | 13,050 |
| – amortisation of intangible assets (Note 18) | 11,041 | 5,133 |
| – minority share of profit for the year | 143 | 127 |
| – foreign exchange difference | –2,677 | –4,393 |
| Total | 25,010 | 13,917 |
| Non-cash change | ||||
|---|---|---|---|---|
| 1 January 2020 | Cash flow | Unrealised foreign exchange difference |
31 December 2020 | |
| Overdraft facility | 7,939 | –7,939 | – | |
| Other loans | 85,000 | 247,650 | 332,650 | |
| Right-of-use liabilities | 34,034 | –2,937 | 11,028 | 31,097 |
| 126,973 | 236,774 | – | 363,747 | |
| Cash and cash equivalents | –82,210 | 372,104 | 5,280 | –449,033 |
| Non-cash change | ||||
|---|---|---|---|---|
| 1 January 2019 | Cash flow | Unrealised foreign exchange difference |
31 December 2019 | |
| Overdraft facility | 8,162 | 353 | –576 | 7,939 |
| Other loans | 95,000 | –10,000 | 85,000 | |
| Right-of-use liabilities | 45,372 | –11,338 | 34,034 | |
| 148,534 | –20,985 | –576 | 126,973 | |
| Cash and cash equivalents | –113,916 | 37,821 | –6,115 | –82,210 |
For liabilities to credit institutions:
| 31 Dec 2020 |
31 Dec 2019 |
|
|---|---|---|
| Shares in subsidiaries (see below) | 547,328 | 372,826 |
| Total | 547,328 | 372,826 |
| Pledged assets – 100% of the shares of: | ||
| NCAB Group Sweden AB | 69,134 | 64,981 |
| NCAB Group Finland OY | 41,162 | 39,976 |
| NCAB Group Denmark ApS | 76,025 | 11,899 |
| NCAB Group Norway AS | 55,734 | 51,448 |
| NCAB Group Germany GmbH | 9,702 | 802 |
| NCAB Group USA Inc. | 240,528 | 154,083 |
| NCAB Group UK Ltd | 55,043 | 49,637 |
In addition to the above, there are also chattel mortgages issued by NCAB Group Sweden of SEK 55.0 million (55.0).
Right-of-use assets:
| Right-of-use assets | 31 Dec 2020 | 1 Jan 2019 |
|---|---|---|
| Properties | 26,145 | 28,716 |
| Vehicles | 3,891 | 4,819 |
| Other | ||
| Total | 30,037 | 33,535 |
| Lease liability | ||
| Current | 9,994 | 11,372 |
| Non-current | 21,098 | 22,662 |
| Total | 31,091 | 34,034 |
Additions to the right-of-use assets in 2020 were kSEK 9,466.
| Depreciation of right-of-use assets | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| Properties | 8,957 | 6,717 |
| Vehicles | 3,725 | 3,616 |
| Other | ||
| Total | 12,681 | 10,333 |
Future cash flows pertaining to right-of-use assets:
| 31 December 2020 | Less than | Between 1 | More than |
|---|---|---|---|
| 1 year | and 5 years | 5 years | |
| 12,346 | 20,704 | 2,287 | |
| 31 December 2019 | Less than | Between 1 | More than |
| 1 year | and 5 years | 5 years |
11,732 19,962 2,306
| 2020 | 2019 | |
|---|---|---|
| Interest expense | –1,629 | –1,466 |
| Expense relating to short-term leases (included in other external expenses) |
–6,146 | –5,386 |
| Expense relating to leases of low-value assets that are not short-term leases (included in other external expenses) |
0 | 0 |
| Expense relating to variable lease payments not included in lease liabilities (included in other external expenses) |
0 | 0 |
| Repayment of lease liability | –13,964 | –11,338 |
| Total cash flow | –20,668 | –18,190 |
The following transactions have been made with related parties:
| 2020 | 2019 | |
|---|---|---|
| Sale of goods: | ||
| – Ericon (33% owned by Vladimir Makarov, MD in NCAB Russia) |
7,853 | 8,229 |
| – Ericon Assembly (25% owned by Vladimir Makarov, MD in NCAB Russia) |
1,169 | 709 |
| Total | 9,022 | 8,938 |
Executive management has received the following remuneration:
| 2020 | 2019 | |
|---|---|---|
| Salaries and other short-term benefits | 26,271 | 25,515 |
| Share-based remuneration | ||
| Other long-term benefits | ||
| Post-employment benefits (pension contributions) | 1,850 | 1,914 |
| Total | 28,121 | 27,429 |
The Group only has defined contribution pension plans. Retirement benefit cost refers to the cost which affects profit for the year. For more information about pensions, see below.
The retirement age for the Chief Executive Officer is 65 years. The pension premium is 30 per cent of the pensionable pay. Pensionable pay refers to the basic salary plus average variable pay for the last three years.
For other executive management, the retirement age is 65 years. The pension agreement states that the maximum pension premium is 20 per cent of the pensionable pay.
The CEO has a notice period of 12 months if termination is made by the company and 6 months if termination is made by the CEO. There is no agreement on severance pay.
Other members of executive management have a notice period of no more than nine months if termination is made by the company and no more than six months if the termination is made by the senior executive.
| Basic salary/ fees |
Variable remuneration |
Pension costs |
Share-based remuneration |
Other remuneration |
Total | |
|---|---|---|---|---|---|---|
| Christian Salamon, Chairman of the Board | 775 | 775 | ||||
| Jan-Olof Dahlén | 350 | 350 | ||||
| Magdalena Persson | 375 | 375 | ||||
| Gunilla Rudebjer | 500 | 500 | ||||
| Hans Ramel | 400 | 400 | ||||
| Per Hesselmark | 375 | 375 | ||||
| Hans Ståhl, Chief Executive Officer, Jan–Sep | 1,753 | 1,511 | 333 | 78 | 3,475 | |
| Peter Kruk, Chief Executive Officer, Oct–Dec | 831 | 432 | 225 | 24 | 1,512 | |
| Other executive management | ||||||
| (11 persons) | 13,808 | 3,823 | 1,781 | 1,923 | 21,335 | |
| Total | 19,167 | 5,766 | 2,339 | 2,026 | 29,298 |
| Basic salary/ fees |
Variable remuneration |
Pension costs |
Share-based remuneration |
Other remuneration |
Total | |
|---|---|---|---|---|---|---|
| Christian Salamon, Chairman of the | ||||||
| Board | 775 | 775 | ||||
| Jan-Olof Dahlén | 350 | 350 | ||||
| Magdalena Persson | 375 | 375 | ||||
| Gunilla Rudebjer | 500 | 500 | ||||
| Hans Ramel | 400 | 400 | ||||
| Per Hesselmark | 375 | 375 | ||||
| Hans Ståhl, Chief Executive Officer | 2,612 | 1,167 | 400 | 104 | 4,284 | |
| Other executive management | ||||||
| (ten persons) | 14,406 | 3,055 | 1,514 | 1,396 | 20,370 | |
| Total | 19,793 | 4,222 | 1,914 | 1,500 | 27,429 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Receivables from related parties: | ||
| – Trade receivables, Ericon | 1,956 | 1,036 |
| – Trade receivables, Ericon Assembly | 48 | 17 |
Receivables from related parties mainly relate to sales transactions and fall due two months after the sale date. The Group holds no collateral for these receivables. No interest is paid. The Group has not made any provisions for doubtful debts for receivables from related parties.
The Group has no loans to related parties.
The Group has no pledged assets or contingent liabilities on behalf of related parties.
On 12 March 2020, an agreement was signed to acquire 100 per cent of the shares in IPCS B.V., the Parent Company of Flatfield Group, based in Tiel, the Netherlands.
Operating profit together with assets and liabilities associated with the acquired company were consolidated from the transaction date. Goodwill of SEK 100.1 million arose in conjunction with the acquisition, of which SEK 42.1 million in Flatfield. Flatfield contributed SEK 239.6 million in net sales and SEK 11.7 million in EBITA in the period between 12 March and 31 December 2020. Transaction costs of SEK 5.8 million related to the acquisition of Flatfield were expensed in the first quarter as central costs. The goodwill of kSEK 110,117 which arose from the acquisition is attributable to an increased market presence (which is not separable) and expected synergies from the merger of the Group's and Flatfield's operations.
| Purchase consideration | |
|---|---|
| Cash and cash equivalents | 64,752 |
| Total consideration | 64,752 |
| Carrying amounts of identifiable acquired assets and assumed liabilities |
|
|---|---|
| Cash and cash equivalents | 7,818 |
| Non-current assets | 9,295 |
| Customer relationships (included in intangible assets) | 26,711 |
| Other current assets | 86,829 |
| Loans | –126,552 |
| Other operating liabilities | –33,750 |
| Deferred tax | –5,716 |
| Total identifiable net assets | –35,365 |
| Goodwill | 100,117 |
On 24 April, 100 per cent of the shares in Bare Board Group, based in Largo, USA, were acquired. Operating profit together with assets and liabilities associated with the acquired company were consolidated from the transaction date. Goodwill of SEK 116.1 million arose in conjunction with the acquisition. Bare Board Group contributed SEK 155.1 million in net sales and SEK 8.6 million in EBITA in the period between 24 April and 31 December 2020. Transaction costs of SEK 9.1 million related to the acquisition of Bare Board Group were expensed in the second quarter as central costs.
The goodwill of kSEK 116,115 which arose from the acquisition is attributable to an increased market presence (which is not separable) and expected synergies from the merger of the Group's and Bare Board Group's operations.
| Total consideration | 109,082 |
|---|---|
| Cash and cash equivalents | 109,082 |
| Purchase consideration |
Carrying amounts of identifiable acquired assets and assumed liabilities in Bare Board Group on acquisition date:
| Carrying amounts of identifiable acquired assets and assumed liabilities |
|
|---|---|
| Cash and cash equivalents | 4,088 |
| Non-current assets | 0 |
| Customer relationships (included in intangible assets) | 7,571 |
| Other current assets | 42,439 |
| Loans | –16,940 |
| Other operating liabilities | –42,071 |
| Deferred tax | –2,120 |
| Total identifiable net assets | –7,033 |
| Goodwill | 116,115 |
If Flatfield and Bare Board Group had been consolidated on 1 January 2020, net sales for the period between January and December of 2020 would have increased by SEK 119.5 million to SEK 2,234.7 million and EBITA by SEK 8.0 million to SEK 196.8 million.
| Purchase consideration IPCS | –64,752 |
|---|---|
| Purchase consideration Bare Board Group | –111,233 |
| Of which cash received IPCS | 7,818 |
| Of which cash received Bare Board Group | 4,087 |
| Impact on cash flow | –164,079 |
On 22 February 2021, an agreement was signed to acquire 100 per cent of the shares in PreventPCB, Italy. PreventPCB reported sales of approximately SEK 210 million in 2020 and EBITA exceeding SEK 30 million. PreventPCB and NCAB's current operations in Italy will be a market leader in the Italian market. PreventPCB has 12 employees in Italy and 10 in China.
Some of the information contained in this report that is used by management and analysts to assess the Group's performance has not been prepared in accordance with IFRS. Management believes that this information helps investors to analyse the Group's financial performance and financial position. Investors should regard this information as complementary rather than as replacing financial reporting in accordance with IFRS.
| Alternative performance measure | Definition | Purpose |
|---|---|---|
| Gross profit | Net sales less raw materials and consumables and for other operating income, which includes translation differ ences on trade receivables and trade payables |
Gross profit provides an indication of the surplus that is needed to cover fixed and semi-fixed costs in the NCAB Group. |
| Gross margin | Gross profit divided by net sales. | The gross margin provides an indication of the surplus as a per centage of net sales that is needed to cover fixed and semi-fixed costs in the NCAB Group. |
| EBITDA | Operating profit before depreciation, amortisation and impairment of property, plant and equipment, and intan gible assets. |
EBITDA along with EBITA provide an overall picture of operating earnings. |
| Adjusted EBITDA | Operating profit before depreciation, amortisation and impairment of property, plant and equipment, and intan gible assets adjusted for non-recurring items. |
Adjusted EBITDA is adjusted for extraordinary items. NCAB there fore considers that it is a useful performance measure for showing the company's operating earnings. |
| EBITA | Operating profit before amortisation and impairment of goodwill and acquisition-related intangible assets. |
EBITDA provides an overall picture of operating earnings. |
| Adjusted EBITA | Operating profit before amortisation and impairment of goodwill and acquisition-related intangible assets adjusted for non-recurring items. |
Adjusted EBITA is adjusted for extraordinary items. NCAB there fore considers that it is a useful performance measure for showing the company's operating earnings. |
| Adjusted EBITA margin | Operating profit before amortisation and impairment of goodwill and acquisition-related intangible assets adjusted for non-recurring items, divided by net sales. |
Adjusted EBITA margin is adjusted for nonrecurring items. NCAB Group therefore considers that it is a useful performance measure for comparing the company's margin with other compa nies regardless of whether the business is driven by acquisitions or organic growth. |
| Return on equity | Net profit/loss for the year divided by average equity. | Return on equity is used to analyse the company's profitability, based on how much equity is used. |
| Equity/assets ratio | Equity and untaxed reserves net of deferred tax, divided by total assets. |
NCAB considers that this is a useful measure for showing what portion of total assets is financed by equity. It is used by manage ment to monitor the Group's long-term financial position. |
| Net debt | Interest-bearing liabilities less cash and cash equiva lents. |
Net debt is a measure which shows the company's total indebted ness. |
| Net working capital | Current assets excluding cash and cash equivalents less non-interest-bearing current liabilities. |
This measure shows how much working capital that is tied up in the business |
| EBITDA excl. IFRS | EBITDA adjusted for lease expenses pertaining to assets classified as right-of-use assets. |
EBITDA along with EBITA provide an overall picture of operating earnings. Used in covenant calculations to the bank. |
| Net debt excl. IFRS 16 | Interest-bearing liabilities excluding liabilities for right-of use assets less cash and cash equivalents. |
Net debt is a measure which shows the company's total indebted ness and has been adjusted for IFRS 16. Used in covenant calcu lations to the bank. |
| SEK million | 2020 | 2019 |
|---|---|---|
| Net sales | 2,115.2 | 1,781.2 |
| Other operating income | 6.3 | 4.9 |
| Raw materials and consumables | –1,481.3 | –1,225.4 |
| Translation differences | – | 4.3 |
| Total gross profit | 640.2 | 564.9 |
| Gross margin, % | 30.3 | 31.7 |
| SEK million | 2020 | 2019 |
|---|---|---|
| Operating profit | 182.3 | 161.7 |
| Amortisation and impairment of intangible assets | 8.4 | 3.6 |
| EBITA | 190.7 | 165.4 |
| EBITA margin, % | 9.0 | 9.3 |
| SEK million | 2020 | 2019 |
|---|---|---|
| Operating profit | 182.3 | 161.7 |
| Depreciation, amortisation and impairment of property, plant and equipment, and intangible |
||
| assets | 27.5 | 18.2 |
| EBITDA | 209.9 | 179.9 |
| EBITDA margin, % | 9.9 | 10.1 |
| SEK million | 2020 | 2019 |
|---|---|---|
| Profit for the year | 127.5 | 128.4 |
| Equity (average) | 524.0 | 322.4 |
| Return on equity, % | 24.3 | 39.8 |
| SEK million | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| Equity | 699.9 | 348.1 |
| Total | 699.9 | 348.1 |
| Total assets | 1,483.0 | 873.1 |
| Equity/assets ratio, % | 47.2 | 39.9 |
| SEK million | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| Interest-bearing liabilities | 363.7 | 127.0 |
| Cash and cash equivalents | –449.0 | –82.2 |
| Total net debt | –85.3 | 44.8 |
| Adjusted EBITDA | 209.9 | 179.9 |
| Net debt/Adjusted EBITDA | –0.4 | 0.2 |
| SEK million | 2020 | 2019 |
|---|---|---|
| Inventories | 183.1 | 148.8 |
| Trade receivables | 342.9 | 320.0 |
| Other current receivables | 14.5 | 17.9 |
| Prepaid expenses and accrued income | 19.1 | 29.0 |
| Trade payables | –270.3 | –252.5 |
| Current tax liabilities | –16.3 | –29.4 |
| Other current liabilities | –44.6 | –26.9 |
| Accrued expenses and deferred income | –65.3 | –81.2 |
| Net working capital | 163.0 | 125.8 |
| kSEK | Note | 2020 | 2019 |
|---|---|---|---|
| Operating revenue | |||
| Net sales | 41 | 58,187 | 55,903 |
| Other income | 1,767 | ||
| Total | 59,954 | 55,903 | |
| Other external expenses | 42, 44 | –30,632 | –34,265 |
| Staff costs | 43 | –29,638 | –27,640 |
| Depreciation of property, plant and equipment, and amortisation of intangi ble assets |
50, 51 | –548 | –429 |
| Other operating expenses | |||
| Total operating expenses | –60,818 | –62,334 | |
| Operating profit | –864 | –6,431 | |
| Income from investments in Group companies | 45 | 31,320 | 22,460 |
| Other interest income and similar income | 46 | 15,649 | 20,460 |
| Interest expense and similar charges | 46, 49 | –36,415 | –27,677 |
| Net financial income | 10,554 | 15,243 | |
| Profit before tax | 9,690 | 8,812 | |
| Appropriations | 47 | 31,000 | 14,000 |
| Tax on profit for the year | 48 | –108 | –239 |
| Profit for the year | 40,582 | 22,573 |
The Parent Company has no items which are accounted for as other comprehensive income. Total comprehensive income is therefore the same as profit for the year.
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Capitalised development expenditure | 50 | 1,046 | 1,337 |
| Total intangible assets | 1,046 | 1,337 | |
| Property, plant and equipment | |||
| Plant and equipment | 51 | 27 | 61 |
| Total property, plant and equipment | 27 | 61 | |
| Non-current financial assets | |||
| Investments in Group companies | 52 | 336,743 | 265,710 |
| Other non-current receivables | 2,890 | 1,427 | |
| Total non-current financial assets | 339,633 | 267,137 | |
| Total non-current assets | 340,706 | 268,535 | |
| Current assets | |||
| Current receivables | |||
| Trade receivables | 2,218 | ||
| Receivables from Group companies | 53 | 354,317 | 131,138 |
| Tax assets | 394 | 179 | |
| Other current receivables | 54 | 969 | 175 |
| Prepaid expenses and accrued income | 55 | 4,723 | 4,130 |
| Total current receivables | 360,403 | 137,840 | |
| Cash and bank balances | 56 | 294,918 | 6,804 |
| TOTAL ASSETS | 996,027 | 413,179 |
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | 26 | ||
| Restricted equity | |||
| Share capital (18,697,124 ordinary shares) | 1,870 | 1,685 | |
| Non-restricted equity | |||
| Share premium account | 478,110 | 201,582 | |
| Retained earnings | –42,191 | –64,764 | |
| Profit for the year | 40,582 | 22,573 | |
| Total equity | 478,371 | 161,076 | |
| Untaxed reserves | 47 | 8,800 | 8,800 |
| LIABILITIES | |||
| Non-current liabilities | |||
| Liabilities to credit institutions | 57, 60 | 283,625 | 75,000 |
| Total non-current liabilities | 283,625 | 75,000 | |
| Current liabilities | |||
| Liabilities to credit institutions | 57, 60 | 36,500 | 10,000 |
| Trade payables | 3,114 | 3,165 | |
| Liabilities to Group companies | 53 | 173,554 | 145,644 |
| Current tax liabilities | |||
| Other current liabilities | 2,711 | 2,106 | |
| Accrued expenses and deferred income | 58 | 9,352 | 7,388 |
| Total current liabilities | 225,231 | 168,303 | |
| TOTAL EQUITY AND LIABILITIES | 996,027 | 413,179 |
| Restricted equity | Non-restricted equity | ||||
|---|---|---|---|---|---|
| Note | Share capital | Share premium account |
Retained earnings and net profit for the year |
Total equity | |
| Opening balance on 1 January 2019 | 26 | 1,685 | 201,582 | 11,048 | 214,315 |
| Comprehensive income | |||||
| Profit for the year | 22,573 | 22,573 | |||
| Total comprehensive income | 22,573 | 22,573 | |||
| Dividend | –75,812 | –75,812 | |||
| Total transactions with shareholders, rec ognised directly in equity |
–75,812 | –75,812 | |||
| Closing balance on 31 December 2019 | 1,685 | 201,582 | –42,190 | 161,076 | |
| Opening balance on 1 January 2020 | 26 | 1,685 | 201,582 | –42,190 | 161,076 |
| Comprehensive income | |||||
| Profit for the year | 40,582 | 40,582 | |||
| Total comprehensive income | 40,582 | 40,582 | |||
| Issue of new shares | 26 | 185 | 286,565 | 286,750 | |
| Issue expenses | –10,037 | –10,037 | |||
| Total transactions with shareholders, rec ognised directly in equity |
185 | 276,528 | 276,713 | ||
| Closing balance on 31 December 2020 | 1,870 | 478,110 | –1,609 | 478,371 |
| kSEK | Note | 31 Dec 2020 | 31 Dec 2019 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before net financial income/expense | –864 | –6,430 | |
| Adjustment for non-cash items | 59 | –17,676 | –5,946 |
| Interest received | 15,649 | 20,460 | |
| Dividends received | 32,400 | 22,460 | |
| Interest paid | –19,418 | –21,303 | |
| Income taxes paid | –324 | –234 | |
| Cash flow from operating activities before changes in working capital |
9,767 | 9,007 | |
| Change in current receivables | –191,239 | –15,128 | |
| Change in current operating liabilities | 30,428 | 82,170 | |
| Total changes in working capital | –160,811 | 67,042 | |
| Cash flow from operating activities | –151,044 | 76,049 | |
| Cash flow from investing activities | |||
| Investments in property, plant and equipment | 51 | –222 | –1,494 |
| Investments in financial assets | –1,464 | –529 | |
| Investments in subsidiaries | 52 | –70,809 | –50,708 |
| Cash flow from investing activities | –72,495 | –52,731 | |
| Cash flow from financing activities | |||
| Issue of new shares | 26 | 276,528 | 0 |
| Dividend | 26 | –75,812 | |
| Borrowings | 265,000 | ||
| Repayment of loans | –29,875 | –10,000 | |
| Cash flow from financing activities | 511,653 | –85,812 | |
| Decrease/increase in cash and cash equivalents | |||
| Cash flow for the year | 288,114 | –62,494 | |
| Cash and cash equivalents at beginning of year | 6,804 | 69,298 | |
| Cash and cash equivalents at end of year | 294,918 | 6,804 |
NCAB Group AB (publ) is the Parent Company of NCAB Group, which is a global company engaged in the production of printed circuit boards (PCBs). The Parent Company is a public limited liability company registered in Sweden with its head office in Stockholm. The address of the head office is Mariehällsvägen 37 A, SE-168 65 Bromma. Since June 2018, the Parent Company is listed on Nasdaq Stockholm.
Unless otherwise specifically indicated, all amounts refer to thousands of Swedish kronor (kSEK). Figures in parentheses pertain to the comparative year.
Significant accounting policies applied in preparing these annual accounts are described in the following. Unless otherwise stated, these policies have been applied consistently for all the years presented.
The annual accounts of NCAB Group AB (the Parent Company) have been prepared in accordance with RFR 2 Financial Reporting for Legal Entities and the Swedish Annual Accounts Act. In cases where the Parent Company applies other accounting policies than the Group's accounting policies, as described in Note 2 to the consolidated financial statements, this is indicated in the following.
The annual accounts have been prepared in accordance with the cost method. Preparing financial statements in compliance with RFR 2 requires the use of critical accounting estimates. Management is also required to make certain judgements in applying the Parent Company's accounting policies. Areas which involve a high degree of judgement, are complex or where assumptions and estimates have a material impact on the annual accounts are described in Note 4 to the consolidated financial statements.
Through its activities, the Parent Company is exposed to a wide range of financial risks: market risk (comprising currency risk, fair value interest rate risk, cash flow interest rate risk), credit risk and liquidity risk. The Parent Company's overall risk management policy focuses on the unpredictability of financial markets and strives to minimise potential adverse effects on the Group's financial results. For more information on financial risks, see Note 3 to the consolidated financial statements.
The Parent Company applies other accounting policies than the Group in the cases indicated below.
The format prescribed in the Swedish Annual Accounts Act is used for the income statement and balance sheet. The statement of changes in equity follows the format used in the Group but is required to contain the components specified in the Annual Accounts Act. This also means that different names are used than in the consolidated financial statements, primarily with regard to financial income and expense, and equity.
Investments in subsidiaries are stated at cost less any impairment. Cost includes acquisition-related costs. When there is an indication that investments in subsidiaries are impaired, an estimate is made of the recoverable amount. If the recoverable amount is less than the carrying amount, an impairment loss is recognised. Impairment losses are recognised in the item Income from investments in Group companies.
IFRS 9 is not applied in the Parent Company, and financial instruments are measured at cost. In subsequent periods, financial assets which have been acquired with the intention of being held for the short term are recognised at the lower of cost or market value in accordance with the lower of cost or market method.
At each balance sheet date, the Parent Company assesses whether there are any indicators that financial assets may be impaired. An impairment loss is recognised if the decline in value is deemed to be permanent. Impairment losses on interest-bearing financial assets at amortised cost are defined as the difference between the carrying amount of the asset and the present value of management's best estimate of future cash flows discounted at the asset's original effective interest rate. The impairment loss for other non-current financial assets is defined as the difference between the carrying amount and the higher of fair value less selling expenses and the present value of future cash flows (based on management's best estimate).
Net sales by geographic location of customers. The Parent Company's revenue comes exclusively from services to Group companies.
| 2020 | 2019 | |
|---|---|---|
| Nordic region | 16,698 | 18,073 |
| Rest of Europe | 29,602 | 25,589 |
| North America | 11,591 | 7,517 |
| Asia | 296 | 4,725 |
| Total | 58,187 | 55,904 |
| 2020 | 2019 | |
|---|---|---|
| Cost of premises | 775 | 833 |
| Travel expenses | 320 | 2,133 |
| Marketing | 3,488 | 6,579 |
| IT | 9,545 | 10,732 |
| Other | 16,503 | 13,988 |
| Total | 30,632 | 34,265 |
| 2020 | 2019 | |
|---|---|---|
| Salaries and other benefits | 19,864 | 18,006 |
| Social security contributions | 6,560 | 6,230 |
| Retirement benefit costs – defined contribution | ||
| plans | 2,582 | 2,142 |
| Total employee benefits | 29,006 | 26,378 |
Salaries and other benefits:
| 2020 | 2019 | |||
|---|---|---|---|---|
| Salaries and other benefits (of which bonuses) |
Retire ment ben efit costs |
Salaries and other benefits (of which bonuses) |
Retire ment ben efit costs |
|
| Directors, CEOs and other |
||||
| executive | 10,940 | 10,207 | ||
| management | 2,968 | 1,023 | (2,073) | 845 |
| Other employees | 8,924 | 1,559 | 7,798 | 1,297 |
| Total | 19,864 | 2,582 | 18,005 | 2,142 |
Average number of employees by country:
| 2020 | 2019 | |||
|---|---|---|---|---|
| Average number of employees |
Of whom, women |
Average number of employees |
Of whom, women |
|
| Sweden | 16 | 9 | 15 | 8 |
| Total | 16 | 9 | 15 | 8 |
Gender distribution for Directors and other executive management:
| 2020 | 2019 | |||
|---|---|---|---|---|
| On balance sheet date |
Of whom, women |
On balance sheet date |
Of whom, women |
|
| Board of Directors | 7 | 2 | 6 | 2 |
| CEO and other executive management |
3 | 3 | ||
| Total | 10 | 2 | 9 | 2 |
| 2020 | 2019 | |
|---|---|---|
| PwC | ||
| – Audit engagement | 2,524 | 1,058 |
| – Audit services in addition to audit engagement | 30 | 320 |
| – Tax advisory services | 52 | 28 |
| – Other services | ||
| Total | 2,606 | 1,406 |
| 2020 | 2019 | |
|---|---|---|
| Dividends | 32,400 | 22,460 |
| Income from divestment of subsidiaries | –1,080 | |
| Total | 31,320 | 22,460 |
| 2020 | 2019 | |
|---|---|---|
| Interest income on bank balances | 81 | 758 |
| Interest income on receivables from Group companies |
15,569 | 19,702 |
| Total interest income and similar income | 15,649 | 20,460 |
| 2020 | 2019 | |
| Interest expenses on liabilities to credit institutions | 7,163 | 2,479 |
| Interest expenses on liabilities to Group | ||
| companies | 9,864 | 18,182 |
| Foreign exchange gains | –87,196 | –39,471 |
| Foreign exchange losses | 105,319 | 45,846 |
| Other financial expense | 1,265 | 641 |
| Total interest expenses and similar charges | 36,415 | 27,677 |
| Net financial income/expense | –20,766 | –7,217 |
| 2020 | 2019 | |
|---|---|---|
| Group contributions from NCAB Group Sweden AB | 31,000 | 14,000 |
| Total appropriations | 31,000 | 14,000 |
The total tax allocation reserve is kSEK 8,800 (8,800).
| Tax recognised in income statement | 2020 | 2019 |
|---|---|---|
| Current tax: | ||
| Current tax on profit for the year | –108 | –239 |
| Total current tax | –108 | –239 |
The income tax on profit before tax differs from the theoretical amount that would have resulted from the use of the tax rate for the earnings of the Parent Company as follows:
| 2020 | 2019 | |
|---|---|---|
| Profit before tax | 40,690 | 22,813 |
| Income tax calculated at tax rate in Sweden (21.4%) |
–8,708 | –4,882 |
| Tax effects of: | ||
| Non-taxable income | ||
| Non-taxable dividend | 6,934 | 4,806 |
| Non-deductible expenses | –482 | –163 |
| Deductible expenses not included in profit or loss |
2,148 | |
| Adjustments for previous year | ||
| Total reported tax | –108 | –239 |
Foreign exchange differences have been recognised in profit or loss as follows:
| 2020 | 2019 | |
|---|---|---|
| Net financial income/expense (Note 47) | –18,123 | –6,375 |
| –18,123 | –6,375 |
As of 2018, the company recognises foreign exchange differences on a net basis in Other interest income and similar income and Interest expenses and similar charges.
Capitalised development costs:
| 2020 | 2019 | |
|---|---|---|
| Cost | ||
| Opening balance | 5,793 | 4,338 |
| Purchases for the period | 222 | 1,455 |
| Closing balance | 6,015 | 5,793 |
| Accumulated amortisation and impairment | ||
| Opening balance | –4,456 | –4,135 |
| Amortisation | –516 | –321 |
| Closing balance | –4,970 | –4,456 |
| Carrying amount | ||
| Cost | 6,015 | 5,793 |
| Accumulated amortisation and impairment | –4,970 | –4,456 |
| Closing balance | 1,046 | 1,337 |
Plant and equipment:
| 2020 | 2019 | |
|---|---|---|
| Opening balance | ||
| Cost | 1,375 | 1,337 |
| Accumulated depreciation | –1,314 | –1,207 |
| Carrying amount | 61 | 130 |
| Purchases for the period | 0 | 38 |
| Depreciation for the period | –34 | –107 |
| Closing balance | ||
| Cost | 1,375 | 1,375 |
| Accumulated depreciation | –1,348 | –1,314 |
| Carrying amount | 27 | 61 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Cost at beginning of year | 265,710 | 215,005 |
| Acquisition, subsidiaries | 70,809 | 51,554 |
| Capital contributions/adjustment | 1,305 | –846 |
| Divestment, subsidiaries | –1,081 | |
| Cost at end of year | 336,743 | 265,710 |
| Carrying amount at end of year | 336,743 | 265,710 |
| Name | Country of registration and operation |
Corp. ID no. | Percentage of ordinary shares owned directly by the Parent Company |
Percentage of ordinary shares owned by the Group |
Carrying amount 31 December 2020 |
Carrying amount 31 December 2019 |
|---|---|---|---|---|---|---|
| IPCS B.V. | Netherlands | NL859059613B01 | 100% | 100% | 70,809 | 0 |
| NCAB Group Asia Ltd. | Hong Kong | 51293694-000-10-09-6 | 100% | 100% | 9 | 9 |
| NCAB Group Benelux B.V | Netherlands | 860209222B01 | 0% | 100% | 0 | 1,081 |
| NCAB Group Denmark A/S | Denmark | 25872231 | 100% | 100% | 56,499 | 6,247 |
| NCAB Group Multiprint | Denmark | 15094893 | 0% | 0% | 0 | 50,252 |
| NCAB Ericon Pte | Russia | 7816197682 | 100% | 100% | 11,322 | 11,322 |
| NCAB Group Estonia Oü | Estonia | 14267913 | 100% | 100% | 25 | 25 |
| NCAB Group Finland OY | Finland | FI1098064-7 | 100% | 100% | 38,388 | 38,388 |
| NCAB Group France SAS | France | RCS Orleans 530 469 634 | 100% | 100% | 88 | 88 |
| NCAB Group Germany GMBH | Germany | HRB166986 | 100% | 100% | 1,791 | 1,791 |
| NCAB Group Iberia S.A. | Spain | A83663161 | 100% | 100% | 2,976 | 2,976 |
| NCAB Group Italy S.r.l. | Italy | 9729860966 | 100% | 100% | 16,529 | 15,224 |
| NCAB Macedonia A.D. | North Macedonia | 01012278-3-o3-ooo | 70% | 70% | 82 | 82 |
| NCAB Group Norway AS | Norway | 980025985 | 100% | 100% | 19,723 | 19,723 |
| NCAB Group Sweden AB | Sweden | 556622-9364 | 100% | 100% | 57,081 | 57,081 |
| NCAB Group Polska Sp. Z.o.o | Poland | KRS0000281188 REGON 140982368 |
100% | 100% | 122 | 122 |
| NCAB Group South East Asia SDN BHD |
Malaysia | 1305701-D | 100% | 100% | 221 | 221 |
| NCAB Group UK Ltd | UK | 7071477 | 100% | 100% | 1 | 1 |
| NCAB Group USA Inc. | USA | n/a | 100% | 100% | 61,077 | 61,077 |
| 336,743 | 265,710 |
| Receivables | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| NCAB Group Germany GMBH | 11,398 | 2,864 |
| NCAB Group Polska Sp. Z.o.o | 315 | 439 |
| NCAB Group UK Ltd | 6,316 | |
| NCAB Group France SAS | 22,117 | 20,858 |
| NCAB Group USA Inc. | 174,772 | 80,180 |
| NCAB Group Italy S.r.l. | 9,667 | 9,813 |
| NCAB Group Estonia Oü | 6,496 | |
| NCAB Group Southeast Asia | 3,689 | 4,065 |
| NCAB Group Benelux B.V | 5,924 | 107 |
| IPCS B.V. | 126,435 | |
| Total | 354,317 | 131,138 |
| Liabilities | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| NCAB Group Sweden AB | 46,782 | 48,468 |
| NCAB Group Norway AS | 51,775 | 38,251 |
| NCAB Group Finland OY | 23,662 | 25,637 |
| NCAB Group Denmark A/S | 10,014 | 7,966 |
| NCAB Group Asia Ltd. | 27,723 | 23,759 |
| NCAB Group Iberia S.A. | 1,347 | 1,563 |
| NCAB Group UK Ltd | 12,099 | |
| NCAB Group Flatfield B.V. | 152 | |
| Total | 173,554 | 145,644 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Tax assets | 447 | 0 |
| Other receivables | 522 | 175 |
| Total | 969 | 175 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Service contracts | 1,588 | 899 |
| Other items | 3,135 | 3,231 |
| Total | 4,723 | 4,130 |
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Bank deposits | 294,918 | 6,804 |
| Total | 294,918 | 6,804 |
| Long-term | 31 Dec 2020 31 Dec 2019 | |
|---|---|---|
| Liabilities to credit institutions | 283,625 | 75,000 |
| Total | 283,625 | 75,000 |
| Short-term | 31 Dec 2020 31 Dec 2019 | |
| Overdraft facilities | ||
| Liabilities to credit institutions | 36,500 | 10,000 |
The Parent Company's borrowing is in SEK. The Parent Company's borrowings consist of loans from Nordea.
Under the covenants associated with liabilities to credit institutions, net debt must not exceed 2.5 times EBITDA, cash flow/financing costs (interest and repayments of principal) must exceed 1.0.
Two bank loans, one of which is free of instalments, mature in June 2023 and have an average annual interest rate of STIBOR 2.245 per cent (2.375). Two new loans were raised in 2020, one of which is free of instalments, that mature in 2025 and have an average annual interest rate of STIBOR +2.125 per cent. Total borrowings include bank loans secured by shares in subsidiaries (Note 32).
The Parent Company has an agreed overdraft facility in the currencies SEK, USD, EUR, GBP, NOK and DKK, and is part of a European cash pool for NCAB's companies in Sweden, Finland, Norway, Denmark and the UK. Of the available overdraft facility of kSEK 200,000, kSEK 0 had been drawn at 31 December 2020 (0). The overdraft facility is subject to a variable interest rate defined as STIBOR +1.5 per cent. The interest is paid on a quarterly basis. The terms of the overdraft facility are covered by the terms applying for other bank loans from Nordea.
The carrying amounts and fair values for long-term borrowings are as follows:
| Carrying amount | Fair value | |||
|---|---|---|---|---|
| 31 Dec 2020 |
31 Dec 2019 |
31 Dec 2020 |
31 Dec 2019 |
|
| Liabilities to credit institutions |
320,125 | 85,000 | 320,125 | 85,000 |
| Total | 320,125 | 85,000 | 320,125 | 85,000 |
The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant.
The carrying amounts, by currency, for the Parent Company's borrowings are as follows:
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| SEK | 320,125 | 85,000 |
| Total | 320,125 | 85,000 |
The Parent Company has the following undrawn credit facilities:
| 31 Dec 2020 31 Dec 2019 | ||
|---|---|---|
| Variable interest: | ||
| – no maturity date | 200,000 | 100,000 |
| 200,000 | 100,000 |
The following table shows an analysis of the Parent Company's non-derivative financial liabilities that are financial liabilities by remaining maturity from the balance sheet date. The amounts indicated in the table are the contractual, undiscounted cash flows.
| 31 December 2020 | Less than 3 months | Between 3 months and 1 year | Between 1 and 2 years | Between 2 and 5 years |
|---|---|---|---|---|
| Borrowings | 9,125 | 27,375 | 36,500 | 247,125 |
| Trade payables | 3,114 | |||
| Accrued expenses and deferred income | 1,595 | |||
| 31 December 2019 | Less than 3 months | Between 3 months and 1 year | Between 1 and 2 years | Between 2 and 5 years |
| Borrowings | 2,511 | 7,598 | 10,284 | 70,130 |
| Trade payables | 3,165 | |||
| Accrued expenses and deferred income | 1,371 |
| 31 Dec 2020 |
31 Dec 2019 |
|
|---|---|---|
| Accrued holiday pay and bonuses, and social security contributions |
6,695 | 5,639 |
| Accrued audit fees | 1,182 | 680 |
| Other items | 1,475 | 1,069 |
| Total | 9,352 | 7,388 |
| 2020 | 2019 | |
|---|---|---|
| Adjustment for: | ||
| – depreciation of property, plant and equipment (Note 51) |
34 | 107 |
| – amortisation of intangible assets (Note 50) | 514 | 321 |
| – foreign exchange difference | –18,224 | –6,374 |
| Total | –17,676 | –5,946 |
| Pledged assets – 100% of the shares of: | 2020 | 2019 |
|---|---|---|
| NCAB Group Sweden AB | 57,081 | 57,081 |
| NCAB Group Finland OY | 38,388 | 38,388 |
| NCAB Group Denmark A/S | 56,499 | 6,247 |
| NCAB Group Norway AS | 19,723 | 19,723 |
| NCAB Group Germany GmbH | 1,791 | 1,791 |
| NCAB Group USA Inc. | 61,077 | 61,077 |
The Group's income statements and balance sheets will be presented for approval to the Annual General Meeting on 10 May 2021.
The Board of Directors and Chief Executive Officer affirm that the consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and provide a true and fair view of the Group's financial position and results. The annual accounts have been prepared in accordance with generally accepted accounting standards and provide a true and fair view of the Parent Company's financial position and results. The audit report for the Group and Parent Company provides a true and fair overview of the development of the Group's and Parent Company's business, financial position
and results, and describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group.
Bromma, 30 March 2021
Christian Salamon Jan-Olof Dahlén
Board member Board member
Hans Ståhl Board member
Chairman Board member
Per Hesselmark Magdalena Persson Board member Board member
Hans Ramel Gunilla Rudebjer
Peter Kruk Chief Executive Officer
We submitted our audit report on 30 March 2021 Öhrlings PricewaterhouseCoopers AB
Johan Engstam Authorised Public Accountant
To the general meeting of the shareholders of NCAB Group AB (publ), Corporate Identity Number 556733-0161
We have audited the annual accounts and consolidated accounts of NCAB Group AB (publ) for 2020. The annual accounts and consolidated accounts of the company are included on pages 49-90 in this document.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company as of 31 December 2020 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2020 and their financial performance and cash flow for the year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.
Our opinion in this report on the annual accounts and consolidated accounts is consistent with the content of the supplementary report that has been submitted to the parent company's and the group's audit committee in accordance with Article 11 of the Auditors regulation (537/2014).
We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in
Materiality
Key Audit Matters
Scope
accordance with these requirements. It means that, based on our best knowledge and belief, no prohibited services referred to in Article 5.1 of the Auditors Regulation (537/2014) have been provided to the audited company or, as the case may be, its parent company or its controlled company in the EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The focus and scope of the audit
We designed our audit by determining materiality and assessing the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the group operates.
NCAB Group is a multinational PCB supplier. The group does not own any plants and thus does not have any own production but instead works with a selection of contracted suppliers, mainly in China. NCAB Group has a clear goal to grow and has grown gradually both organic and through acquisitions. Due to this, we put extra focus on valuation of goodwill and revenue recognition in our audit. Our audit covers the parent company and the larger subsidiaries in the group. We visit a selection of subsidiaries also outside of Sweden in order to build our understanding of the local business and their routines and controls in the financial reporting process.
• Overall materiality level: MSEK 15,75 which corresponds to approximately 0,75% of the Group's net sales.
• We have executed an audit covering NCAB Group AB and 10 larger subsidiaries in 10 different countries.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole (see table below). These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
| Group materiality level | MSEK 15,75 |
|---|---|
| How we determined this level |
The materiality level is based on approximately 0,75 percent of the Group's net sales |
| Motivation behind the determination of the materiality level |
We have chosen to determine the materiality level calculated from group sales, as that is, according to our opinion, the most relevant measure by which the group's development is usually assessed., especially since the group continues to grow. The level of 0,75 % is seen in auditing standards to comprise an acceptable quantitative materiality threshold. |
We agreed with Audit Committee that we would report identified errors in excess of MSEK 0,8, as well as errors less than this amount but which we deemed should be reported for qualitative reasons.
Key audit matters of the audit are those matters that, in our professional judgment, were most significant in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
| Key audit matter | How our audit addressed the Key audit matter |
|---|---|
| Valuation of Goodwill We refer to Notes 2 (Accounting principles), 4 (Estimates and assessments), and 18 (Impairment test). Goodwill in the amount of MSEK 382 comprise a significant portion of NCAB Group's balance sheet, approximately 26 % of total Group assets. Goodwill is not amortized but is subject to an annual impair ment test. The valuation of goodwill is based on company management's subjective assessments regarding future cash flows and on assumptions regarding the yield requirement, etc. which implies that the valuation is in its nature characterized by uncertainty, since it might be affected by unexpected future events. There is a risk that the impairment tests prepared are based on inaccurate or unreasonable estimations and assumptions and that this could result in an undetected need for impairment. The company's impairment testing has not resulted in a write-down. |
We have put emphasis on management's test of potential impairment need in our audit. In evaluating the assumptions, as reported in Note 18, we have undertaken the following audit measures to assess the valuation of such assumptions and model: • We have examined the manner in which the valuation model has been determined. • We have tested and evaluated management's assumptions regarding the discount rate, growth and margins. We test the assumptions based on what is included in the budgets and business plans, the results of the units and our knowledge of the NCAB Group group's development as well as other verifiable information. This includes the follow-up of the accuracy of the forecasts for historical periods and provides us with a basis for testing the assumptions regarding future development. In terms of discount rate, this is based on our review of the company's calculation of WACC and the assessment of the inherent risk of operating in current markets. • We have also, in conjunction with the testing of possible impairment requirements, checked the sensitivity of the valuations through sensitivity analyses, to determine if there are negative changes in significant parameters which individually, or on a collective basis, could imply the existence of an impairment requirement. • We have also assessed if the accounting principles and disclosures in the annual report are correct and in accordance with IFRS. No significant observations were made from these audit procedures. |
| We refer to the Notes 2 (Accounting principles, 4 (Estimates and assessments) 6 (Segments) and 21 (Account receivables) for further details. The Group's revenue amounts to MSEK 2 115 in 2020. At year- end, accounts receivables amount to MSEK 343. The majority of NCAB Group Group's revenue consists of sale of goods, to a large extent designed to the specific needs of each customer. The sale of goods is recognized when control has been transferred to the purchaser according to the contract terms. The risk is that there can exist a difference between the point in time when NCAB Group provides goods and when the control is transferred to clients. When the goods or services are seen to have been provided to the clients, and when revenues can, then, be reported, is based on the contractual stipulations found in the established agreements. The risk is that recorded revenue is recorded at different amounts or in different periods as compared to established agreements. |
controls regarding revenue recognition in order to obtain an understanding of how they operate and where potential errors could occur. This analysis has been performed to enable us to focus our substantive procedures on the right areas. Our audit procedures included the following: • Analysis of revenues as compared with the prior period and the expectation. • We have tested, on a random basis, the reported revenue against customer orders to determine if these items have been reported in the correct amounts in the correct periods. • On a sample basis, we have confirmed outstanding receivables directly with customers. We have also tested a sample of receivables against payments received after the year end. • We have also assessed if the accounting principles and disclo sures in the annual report are correct and in accordance with IFRS. The results of these activities have not led to significant observations as regards the audit. |
|---|---|
| Accounting for significant acquisitions We refer to the Notes 2(Accounting principles) and 36 (Acquisitions). During 2020 NCAB Group made two larger acquisitions at a purchase price of MSEK 65 (Flatfield, The Netherlands) and MSEK 110 (Bare Board Group, US) respectively. In connection with acquisitions a Purchase Price Allocation analysis is prepared, in which all acquired assets and liabilities are accounted for at fair value. The difference between the purchase price and the fair value of acquired assets and liabilities consists of goodwill. The value of identified assets and liabilities depends on estimates and assessments made by management. There is a risk that management valuations are based on inaccurate or unreasonable estimates and assumptions and that this could result in undetected value misstatements of acquired assets, liabilities or goodwill were not detected. |
Management have shared their acquisition analysis and relevant documents such as the Share price agreement with us. • We have assessed management's purchase price allocation to identifiable assets and liabilities included. • Evaluated management's estimates and assessments made in relation to these valuations. • Finally, we checked the completeness and accuracy of the information provided in the annual report and they give a true and fair view in accordance with IFRS. The result of these procedures did not give rise to any significant observations as regards the audit. |
Cut-off and existence of revenue
This document also contains other information than the annual accounts and consolidated accounts and is found on pages 1-48. Other information also consists of "NCAB Group remuneration report 2020" to be published on the company web page at the same time as this report. The Board of Directors and the Managing Director are responsible for this other information.
Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
In our audit, we have analyzed NCAB Group's processes and
The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company's and the group's ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.
The Audit Committee of the Board of Directors shall, without prejudice to the Board of Director's responsibilities and tasks in general, among other things oversee the company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.
A further description of our responsibility for the audit of the annual accounts and consolidated accounts is available on Revisorsinspektionen's website: http://www.revisorsinspektionen. se/rn/showdocument/documents/rev_dok/revisors_ansvar.pdf. This description is part of the auditor´s report.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of NCAB Group AB for 2020 and the proposed appropriations of the company's profit or loss.
We recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.
We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor's Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group's type of operations, size and risks place on the size of the parent company's and the group's equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company's organization and the administration of the company's affairs. This includes among other things continuous assessment of the company's and the group's financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company's financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors' guidelines and instructions and among other matters take measures that are necessary to fulfil the company's accounting in accordance with law and handle the management of assets in a reassuring manner.
Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:
Our objective concerning the audit of the proposed appropriations of the company's profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company's profit or loss are not in accordance with the Companies Act.
A further description of our responsibility for the audit of the administration is available on Revisorsinspektionen's website: www. revisorsinspektionen.se/rn/showdocument/documents/rev_dok/ revisors_ansvar.pdf. This description is part of the auditor's report.
Öhrlings PricewaterhouseCoopers AB, Torsgatan 21, 113 97 Stockholm, was appointed as NCAB Group AB's auditor on the Annual General Meeting on 5 June 2020 and has been the company's auditor since 2 July 2007. NCAB Group (publ) AB has been a company of public interest since 5 June 2018.
Stockholm 30 March 2021 Öhrlings PricewaterhouseCoopers AB
Johan Engstam Authorized Public Accountant
The Annual General Meeting (AGM) of NCAB Group AB (publ.) will be held on Monday, 10 May 2021 at 1:00 p.m. in Stockholm. The official notification will be distributed not later than 9 April 2021.
Due to the ongoing pandemic, the board of directors has decided that the annual general meeting shall be held without physical presence of shareholders, representatives and external participants, and that voting may only be done by post prior to the annual general meeting.
The Board of Directors proposes a dividend of SEK 5.00 per share. The dividend is equivalent to a total of SEK 93.5 million. The AGM's decision on dividends will include the day when shareholders must be registered in the shareholders' register maintained by Euroclear Sweden AB in order to be entitled to dividends. The Board has proposed 12 May 2021 as the record date for dividends. On the condition that the AGM resolves in accordance with this proposal, dividends are expected to be distributed by Euroclear Sweden AB's on 18 May 2021 to those who are registered in the shareholders' register on the record date.
Interim report January–March 2021 7 May 2021 2021 Annual General Meeting 10 May 2021 Interim report January–June 2021 22 July 2021 Interim report January–September 2021 12 November 2021
Mariehällsvägen 37 A, SE-168 65 Bromma, Sweden www.ncabgroup.com
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