Annual Report • May 19, 2020
Annual Report
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2019 Annual Report
28 Board of Directors' Report on Internal Control
29 Income Statement & Statement of Comprehensive Income
SinterCast supplies process control technology and solutions for the reliable high volume production of Compacted Graphite Iron (CGI). The SinterCast technology measures and controls the iron before it is cast into moulds, reducing scrap, conserving energy, and ensuring cost-effective series production. The primary application of CGI is in diesel and petrol engine cylinder blocks used in passenger vehicles, and cylinder blocks and heads used in commercial vehicle and industrial power applications. The SinterCast technology is also used for the production of a variety of other CGI components, including exhaust manifolds, turbocharger housings, bedplates and industrial components.
SinterCast will promote CGI within the foundry and end-user communities to increase the overall market opportunity for CGI and to define the forefront of CGI development, production and application. SinterCast will also develop and promote novel technologies beyond the core CGI market, including tracking and traceability solutions and other precision measurement products that bring enhanced control and profitability to the foundry industry. These focused activities will provide long-term benefits for foundries, end-users, shareholders, and society.
Compacted Graphite Iron is a form of cast iron that provides at least 75% higher tensile strength and 45% higher stiffness, and approximately double the fatigue strength of conventional grey cast iron and aluminium. In engine applications, the use of CGI enables the production of smaller, more efficient, more performant, and more durable engines with reduced fuel consumption, lower emissions and less noise.
Tracking Technologies: With our background in precision measurement in the demanding foundry environment, SinterCast has expanded its technical offering to include a suite of traceability solutions that enable foundries to track ladles, sand cores, moulds and castings. These technologies provide the ability to measure every step of the foundry process, and to use these measurements to determine and implement corrective actions that resolve the root cause of defects and process bottlenecks. The Tracking Technologies, including SinterCast Ladle Tracker® and SinterCast Cast Tracker®, can be applied to grey iron, ductile iron, and CGI foundries, and to other metallurgical facilities such as steel mills and heat treating plants.
Contents
Dr Steve Dawson, President & CEO
For those of us who put on the SinterCast shirt to go to work, 2019 was a year of extraordinary pace, progress and pride.
Operationally, we set new records across the board. Series production increased by 30%, revenue increased by 33%, the operating result increased by 36%, earnings per share increased by 48%, and cashflow from operations increased by 52%. Beyond the financial results, we fielded our busiest year ever with ten new installations and upgrades. We also surpassed the three million Engine Equivalent milestone; commissioned our first full Cast Tracker installation; achieved high-volume production in the last of the Five Waves, fulfilling a vision that we first presented in 2002; and, we launched the fourth generation of our CGI process control technology, System 4000. It was an exceptional year.
With the positive momentum of the last two years, we entered 2020 full of optimism. But the COVID-19 pandemic quickly eclipsed our ambitions. Containment actions implemented by governments resulted in shutdowns at several of our foundry customers and automotive end-users in March and April. While the market started to show signs of recovery in May, it is still too early to quantify the full impact of the virus or the evolution of the recovery ramp. This uncertainty led the Board to withdraw the original dividend proposal and to announce the ambition to convene an Extraordinary General Meeting in the autumn. We share the frustration and we trust that our shareholders will understand and embrace this change.
While the series production may be temporarily influenced by the COVID-19 virus, we remain confident in our long-term growth. The market demand for improved fuel efficiency and reduced emissions is irreversible. This demand will continue to drive our market opportunity. During 2019, every one of our Five Waves grew by at least 15%, providing a production split of 60% passenger vehicle, 35% commercial vehicle and 5% for industrial power plus automotive components other than cylinder blocks and heads. With only one petrol engine in our line-up, SinterCast remains closely linked to the diesel engine. But we don't feel exposed. In total, 36% of our engine castings are used in commercial vehicles and 3% are used in off-road industrial power applications. These are the domain of diesel. Another 39% are used in Super Duty pick-up applications in North America, where the diesel take rate is more than 75%, and 10% of our engine castings are used in petrol and hybrid applications. That leaves 12%, and these are primarily used in SUV and pick-up applications, where diesel demand has remained stable in Europe and increased in the US. Indeed, in the US – our largest end-user market – the opportunity for SinterCast has increased, as SUVs and pick-ups have grown from 50% of the market in 2013 to 72% in 2019, and as each of the top-three best-selling vehicles have introduced new diesel engine options.
We continue to regard commercial vehicles as our largest growth opportunity. During 2019, our commercial vehicle production grew by 20% to become our largest individual wave and our largest contribution to the environment. Since the start of our commercial vehicle production in 2007, the renewal of the commercial vehicle fleet in the US with clean diesel engines has resulted in the elimination of 126 million tonnes of CO2, 18 million tonnes of nitrogen oxides, one tonne of particulate matter, 47 million litres of diesel fuel and 296 million barrels of crude oil. In perspective, these reductions are equivalent to producing 26 million electric cars or building 27,000 wind turbines. The increasing demand for CGI in the commercial vehicle sector provides the basis for our long-term growth and our continued contribution to the environment.
Commercial vehicles also provide the genesis for our positive installation outlook. During 2019, we received new System 4000 orders from Scania in Sweden, from First Automobile Works (FAW) in China and WHB in Brazil. The Scania and FAW orders are for commercial vehicle engine components, with start of production planned before year-end. We entered 2020 poised for a second consecutive year of record installation revenue, but the COVID-19 virus has made the timing of new installations less clear, as foundries reduce their spending plans to preserve liquidity. Regardless of the timing, we remain confident in our installation pipeline and the continued growth of our manufacturing base.
Another important milestone of 2019 was the commissioning of our first full Cast Tracker system at the Tupy foundry in Mexico. This exciting new technology brings Industry 4.0 traceability and process control to the foundry industry. Together with the display of our Tracking Technologies at the GIFA World Foundry Trade Fair in June, this first installation has provided a powerful production reference. We are – and will continue to be – primarily a CGI company, but the Tracking Technologies provides an interesting supplemental business opportunity. As I have told the employees, I grew up on the CGI side of the business, but I really love the Tracking Technologies.
And for me, 2020 brings a personal milestone. After joining the company as Technical Director in 1991, I will celebrate half a lifetime in SinterCast this year. It is a testimony to the fascination of our technology and the industry that we work in; to the sense of satisfaction of each new achievement; to the camaraderie of customers who have become friends; and, to the support and loyalty of colleagues who selflessly keep the wheels turning. I am honoured to be a part of the SinterCast story.
Dr Steve Dawson President & CEO
SinterCast sells or leases the process control hardware, leases the software, sells the sampling consumables, and charges a running Production Fee for each tonne of CGI castings produced using the SinterCast technology. Revenue is also derived from spare parts, customer service, field trials and sales of test pieces. The individual components of the CGI business model are described as follows:
System 4000
CGI Sampling
The total running fees (sampling consumables, software licence and Production Fee) depend on the ladle size and the casting yield. For typical cylinder block production, the current running fees provide a revenue of approximately €40-50 per tonne of castings, equivalently, €2.00-2.50 for each 50 kg Engine Equivalent. The SinterCast business model is highly scalable, allowing profitability to rise as the installed base grows and as more products enter series production.
Introduced in 2016, the Tracking Technologies include the SinterCast Ladle Tracker® and the SinterCast Cast Tracker®. As of the end of 2019, three Ladle Tracker and two Cast Tracker systems have been installed in five foundries in four countries. The SinterCast Tracking Technologies offer the potential to provide supplemental income to the core CGI business and to enhance the technical reputation of SinterCast as a provider of innovative solutions to improve process control and profitability in the foundry industry.
SinterCast Ladle Tracker®
SinterCast Cast Tracker®
SinterCast provides process control technology for CGI series production, product development and R&D activities. The SinterCast technology is currently used in 57 installations, in 14 countries with operator interaction in 11 languages.
ASIMCO International Castings, China Caterpillar, USA Daedong Metals, Korea Dashiang Precision (2), China Döktas, Turkey Fagor Tafalla, Spain FAW - First Automobile Works, China Federal Mogul, Sweden Gusswerke Leipzig (2), Germany Hyundai Jeonju, Korea Scania (2), Sweden SKF Mekan, Sweden Teksid do Brasil, Brazil Teksid Monclova, Mexico Tupy Joinville (2), Brazil Tupy Ramos Arizpe, Mexico Tupy Saltillo (2), Mexico VDP Fonderia, Italy Volvo, Sweden WHB, Brazil Zhongding Power, China
ASK Chemicals, USA Case Western Reserve University, USA CSIC No. 12 Research Institute, China Dongfeng Trucks, China Doosan Infracore (2), Korea FAW - First Automobile Works, China FAW Wuxi Diesel, China Ford Casting Development, USA Grainger & Worrall (2), UK Gusswerke Saarbrucken, Germany Impro Industries, China Jiangling Motors, China Jönköping University, Sweden Kimura Foundry, Japan Kimura Foundry America, USA Mid-City Foundry, USA Shanxi Sanlian, China Teksid Funfrap, Portugal Toa Koki, Japan Total Solutions & Power, Korea Undisclosed (2), Japan University of Alabama, Birmingham, USA YTO Group, China
Poitras Foundry, Canada (Ladle Tracker) Scania, Sweden (Cast Tracker) Tupy Joinville, Brazil (Ladle Tracker) Tupy Saltillo, Mexico (Ladle Tracker) Tupy Saltillo, Mexico (Cast Tracker)
Automated System 4000 SinterCast Tracking Technologies Fully automated series production
Mini-System 4000 Niche volume production, product development and R&D
With series production of 3.3 million Engine Equivalents in 2019, SinterCast has achieved 23% compounded annual growth over the past decade. Series production grew by 19% in 2018 and by 30% in 2019.
Annualised series production surpassed the 3.0 million Engine Equivalent milestone in February 2019. The mid-year run-rate stabilised at approximately 3.5 million Engine Equivalents, reaching an all-time high of 3.9 million Engine Equivalents in September. Series production decreased to 3.1 million Engine Equivalents in the fourth quarter due to planned year-end shutdowns. Year-on-year production for the fourth quarter increased by 19% while full-year production grew by 30%.
* Annualised average production of Engine Equivalents during the quarter (1 Engine Equivalent = 50 kg)
Introduced in 2002, the Five Waves strategy continues to provide the basis for how the company views the overall market development. The production status for each of the Five Waves, based on the full-year production rate of 3.3 million Engine Equivalents is summarised in the following table:
| Wave 1 V-Diesel Passenger Vehicle Engines in Europe |
Full-year production: 300,000 Engine Equivalents (15,000 tonnes) Series production for: Audi, Ford, Jaguar, Land Rover, Maserati and Volkswagen SinterCast-CGI Components: Cylinder blocks ranging from 2.7 to 4.4 litres Overview: 15% growth in 2019, despite overall reduction in diesel penetration |
|---|---|
| Wave 2 Commercial Vehicle Engines Worldwide |
Full-year production: 1,180,000 Engine Equivalents (59,000 tonnes) Series production for: DAF, Ford-Otosan, Hyundai, Jiangling Motors, MAN, Navistar and Scania SinterCast-CGI Components: Cylinder blocks and cylinder heads ranging from 3.9 to 16.0 litres Overview: 20% growth in 2019 with near-term and long-term global growth opportunities |
| Wave 3 In-Line Passenger Vehicle Diesel Engines |
Full-year production: 500,000 Engine Equivalents (25,000 tonnes) SinterCast-CGI Components: Cummins 6.7 litre for Ram Super Duty pick ups Overview: Long-term potential depends on performance demands, downsizing and emissions legislation |
| Wave 4 V-Diesel Passenger Vehicle Engines Beyond Europe |
Full-year production: 850,000 Engine Equivalents (42,500 tonnes) Series production for: Ford, Kia, Nissan and Ram SinterCast-CGI Components: Cylinder blocks ranging from 2.7 to 6.7 litres Overview: 15% growth in 2019. Growth potential as North American pick ups provide diesel options |
| Wave 5 Passenger Vehicle Petrol Engines Worldwide |
Full-year production: 325,000 Engine Equivalents (16,250 tonnes) Series production for: Ford and Lincoln SinterCast-CGI Components: Cylinder blocks ranging from 2.7 to 3.0 litres Overview: 40% growth in 2019. Growth potential for additional engines and vehicle applications, including hybrids |
| Automotive - Other than Passenger Vehicle Cylinder Blocks |
Full-year production: 65,000 Engine Equivalents (3,250 tonnes) Series production for: Various OEMs and Tier l suppliers including BorgWarner and Honeywell SinterCast-CGI Components: Exhaust manifolds, turbocharger housings and bedplates Overview: 65% reduction in 2019 due to reduced exhaust component production in China |
|---|---|
| Industrial Power | Full-year production: 115,000 Engine Equivalents (5,750 tonnes) Series Production for: Allen Diesels, Cameron Compression, Caterpillar, Cummins, Deutz, Doosan, Federal Mogul, General Electric, Jenbacher, MAN, MTU and Waukesha SinterCast-CGI components: Agriculture, marine, locomotive, off-road and stationary power applications Overview: 30% reduction in 2019. Growth opportunity as new products come on-stream |
SinterCast continues to view the overall market development in terms of the Five Waves strategy that was first introduced in 2002. The Five Waves are presented in terms of the main types of engines found in the automotive sector, and the types of vehicles that the engines are used in. For each type of product, SinterCast presents the production volume in terms of Engine Equivalents, where each Engine Equivalent is defined to weigh 50 kg. Accordingly, there are 20 Engine Equivalents per tonne of castings. The SinterCast series production revenue is approximately €2.00~2.50 per Engine Equivalent.
The First Wave started in 1999. Today, all V-diesel engines in Europe are based on CGI cylinder blocks. The First Wave grew by 15% in 2019 to provide 300,000 Engine equivalents, corresponding to approximately 10% of the total production. V-diesel engines will continue to be favoured in luxury vehicle and SUV applications, although the First Wave volume may decrease if the overall diesel take-rate decreases.
The Second Wave started in 2006 and, with the exception of the economic downturns in North America in 2009 and in Europe in 2012, the volume has grown almost linearly. The Second Wave grew by 15% in 2019 to become the largest wave, providing 1,180,000 Engine equivalents, corresponding to approximately 35% of the total production. With increasing demand for higher performance, downsizing and lower emissions, commercial vehicle engines provide the largest long-term growth potential for SinterCast.
The Third Wave started in 2018, with the launch of the Cummins 6.7 litre turbodiesel used in Ram Super Duty pick up applications. As the replacement of an existing engine, the ramp was vertical and the full-year volume reached 500,000 Engine equivalents, corresponding to approximately 15% of the 2019 production. Cummins and Ram stated that the CGI upgrade provided 27 kg of weight reduction while becoming the first Super Duty engine to offer 1,000 foot-pounds (1,356 Nm) of torque.
The Fourth Wave started in 2009. During 2019, SinterCast-CGI V-diesel cylinder blocks were used in pick up applications for Ford, Jeep and Ram, and in SUV applications for Jeep and Kia. The Fourth Wave grew by 15% in 2019 to provide 850,000 Engine equivalents, corresponding to approximately 25% of the total production. With the increasing popularity of trucks and SUVs in North America, and more stringent fuel economy standards, the Fourth Wave provides future growth potential.
The Fifth Wave started in 2013, with the launch of the Ford and Lincoln V6 petrol engines. The 2.7 litre version is the base engine for the Ford F-150 and has been referred to as the most popular engine in the world's most popular vehicle. The Fifth Wave grew by 40% in 2019 to provide annualised volume of 325,000 Engine equivalents, corresponding to approximately 10% of the total production. Petrol engines provide growth opportunities as the Ford engines are applied to additional vehicles, and with the potential approval of new petrol engines.
Beyond the Five Waves related to the core cylinder block and head applications, SinterCast also supports the production of passenger vehicle exhaust components and bedplates, and of large castings used in the industrial power industry. After 35% growth in 2018, the 'other' category decreased by 38% in 2019 to account for 180,000 Engine Equivalents and approximately 5% of the total production. The decline was due to reduced exhaust component production in China and a slowdown in the industrial power market. The ambition remains for automotive components other than cylinder blocks and heads, plus industrial power components, to contribute approximately 5~10% of the total volume, even as the core automotive waves continue to grow.
Watch the video > CGI Microstructures and Properties
These benefits contribute to the ongoing trend toward downsizing in passenger vehicle and commercial vehicle engines – more power and improved fuel economy from small and lighter engine packages. Compared to aluminium, CGI is stronger, consumes less energy, generates less CO2 during production, is more recyclable, and less expensive.
Watch the video > CGI Engine Benefits
Watch the video > SinterCast Process Control
Watch the video > SinterCast Ladle Tracker® Watch the video > SinterCast Cast Tracker®
STRENGTH & DURABILITY +75% Tensile Strength +45% Elastic Modulus +100% Fatigue Strength
ENGINE PERFORMANCE 10-20% Weight Reduction 10-20% Power-up (kW/litre) 5-10% Noise Reduction 75-100% Improved Durability
PROVEN RELIABILITY 52 CGI installations >100,000 cylinder blocks/month 2.7 to 16.0 litre displacement >75 components in series production
The newly upgraded, fully automated System 4000 provides a flexible, robust and accurate hardware and software platform that enables SinterCast customers to independently control CGI series production and product development. The System 4000 is comprised of individual hardware modules that can be configured to suit the layout, process flow and production volume of any foundry, both for ladle production and pouring furnaces. The basic configuration consists of one Sampling Module (SAM), one Operator Control Module (OCM), a Power Supply, and a network-linked Wirefeeder for automated addition of magnesium and inoculant prior to casting. This configuration provides sampling capacity for approximately 15 ladles per hour. Additional Sampling Modules can be added to increase the throughput. The System 4000 Plus upgrade additionally incorporates automatic feedback control of the base treatment process.
Fully Automated System 4000 with two Sampling Modules
Larger graphical OCM display for user-friendly operator interaction Re-engineered SAM with improved Thermocouple Holder
The newly upgraded Mini-System 4000 is a purpose-built thermal analysis system for product development, prototyping and niche volume production. The Mini-System 4000 uses the same sampling technology and software as the fully automated System 4000 but is based on a simplified hardware platform. The Mini-System 4000 does not include an integrated wirefeeder. The foundry can source a separate wirefeeder and manually input the magnesium and inoculant wire addition results provided on the operator display screen. As with the fully automated System 4000, all analysis results and thermal analysis process parameters are available to foundry supervisors and engineers.
All product calibrations developed using the Mini-System 4000 can be directly transferred to the fully automated System 4000 to provide continuity as products evolve to series production.
| Components | Operator Control Module (OCM) Sampling Mechanism SAM Lighthouse Operator Box |
|---|---|
| Foot-print | 1,400 x 550 mm |
| Max Height | 1,630 mm |
| Weight | 190 kg |
| Power Supply | 110–120V, 50–60Hz, 2kW max. 220–240V, 50–60Hz, 2kW max. Single Phase. To be specified on order |
SinterCast Mini-System 4000
– Improved Thermocouple Holder to simplify the installation and alignment of the Thermocouple Pair.
Larger graphical OCM display for user-friendly operator interaction Re-engineered SAM with improved Thermocouple Holder
SinterCast Ladle Tracker provides complete traceability of every ladle; from tapping through to pouring, by measuring the ladle movement and compiling the process information in a single database. Ladle Tracker provides Industry 4.0 traceability of the liquid metal process flow to ensure that every ladle successfully passes each step of the foundry process; to prevent the pouring of out-of-spec iron; and, to identify and eliminate the root cause of process bottlenecks.
Ladle Tracker measures and documents the progress of every ladle as it moves through the foundry. Radio Frequency Identification (RFID) tags are affixed to every ladle and RFID reader antennae are installed at key locations throughout the foundry to track and control the ladle movement. 2D optical matrix plates can also be used to identify ladles, particularly in high temperature applications.
RFID Ladle Tags affixed to each ladle
Antennae located at the pouring car identify the RFID Tag on the ladle. If all steps have been successfully completed and all process parameters are within the specified range, pouring can begin. However, if any parameter is out-of-spec, signal lamps will be illuminated to define control actions, or the pouring car can be automatically locked-out. Automation replaces operator discipline, providing increased control for the foundry and increased confidence for the customer.
Ladle Tracker is comprised of individual hardware modules that can be configured to suit the layout, process flow, and production volume of any metalcasting facility. The layout is mirrored on the Tracker Control Module to show the ladle flow. All data is saved in a central database that can be fully accessed by the foundry engineers. The database can also include ancillary data such as temperature, weight and chemistry to augment the process control and to enhance Industry 4.0 traceability.
Measurement and control at every critical process step
On-line process control and traceability
| Ladle Rejection Causes | LT % Exit Pouring OK LT % Timed Out in Pouring |
No. REJ Ladles May19 Roll 12 |
May19 | 100.0% | Percent Ladles Tapped That Arrive To Pouring OK | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LT % REJ before Pour LT % REJ in Corr |
42 3 |
43 3 |
68 Ladles Rejected from |
95.0% 90.0% 85.0% |
|||||||||||||||||
| LT % REJ by Analysis LT % REJ after BT |
8 2 |
6 3 |
1000 Ladles Tapped |
80.0% 75.0% |
|||||||||||||||||
| LT % REJ after Tap | 13 | ( 16 |
) 6.8% | 70.0% | May18 Jun18 Jul18 Aug18 Sep18 Oct18 Nov18 Dec18 Jan19 Feb19 Mar19 Apr19 May19 % Ladles OK to Pouring 83.1% 90.2% 90.2% 90.2% 88.1% 88.7% 88.3% 81.5% 85.0% 86.6% 85.8% 90.4% 82.3% |
||||||||||||||||
| Furn. Tap to BT Start | CGI Process Timing | 01:24 01:24 | May19 Rolling 12 Mo. Avg. Cum. Avg. Cum. 01:27 |
01:27 | May19 | 07:30 07:00 |
Average Time From End Of Correction To End Of Pouring | ||||||||||||||
| BT Start to Anal. Start Anal. Start to Corr. Ready |
01:20 03:14 |
02:44 05:58 |
01:22 03:14 |
02:50 06:04 |
29 Ladles Timed Out in Pouring |
06:30 06:00 05:30 |
|||||||||||||||
| Corr. Ready to Corr. Finsh Corr. Finish to Pour Start Pour Start to Pour Finish |
01:03 02:20 02:55 |
07:01 03:22 09:21 |
01:05 02:19 03:01 |
07:09 09:30 12:29 |
( | 3.0% | ) Pour Car 1 |
05:00 04:30 |
May18 Jun18 Jul18 Aug18 Sep18 Oct18 Nov18 Dec18 Jan19 Feb19 Mar19 Apr19 May19 05:18 05:28 05:26 05:47 05:58 05:45 05:40 05:43 05:38 05:34 05:39 05:30 05:28 |
||||||||||||
| 00:00 02:00 04:00 06:00 08:00 10:00 12:00 | Pour Car 2 | 05:46 05:39 05:33 05:40 05:35 05:39 05:33 05:40 05:43 05:52 05:45 05:41 05:41 50th Percentile Pouring Time 05:05 05:12 05:08 05:16 05:19 05:20 05:15 05:17 05:22 05:29 05:25 05:15 05:15 Benchmark Pouring Time 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 04:58 |
|||||||||||||||||||
| Ladle Rejection Details | May19 Ladles % of Op REJ |
% REJ Op REJ % REJ REJ % REJ Cumulative Cum. Tapped Total Before BT Before BT After BT After BT by Analysis in Analysis REJ % REJ |
REJ for | REJ | % REJ REJ for Failed % REJ Before Before Pour % REJ After Corr in Corr Temp (PT) Temp (PT) Temp (PT) for PT PT OK PT OK REJ % REJ |
Op REJ % REJ | After Total Total | ||||||||||||||
| Furnace 1 Furnace 2 Furnace 3 Totals |
1000 | 280 28.0% 234 23.4% 486 48.6% |
3 3 7 13 |
0.3% 0.3% 0.7% 1.3% |
0 1 1 2 |
0.0% 0.1% 0.1% 0.2% |
4 2 2 8 |
0.4% 0.2% 0.2% 0.8% |
7 6 10 23 |
0.6% Corr 1 1.0% Corr 2 2.3% → Totals |
0.7% Corr 0 (none) 0 | 1 2 3 |
0.0% 0.1% 0.2% 0.3% |
1 2 3 |
0.1% 0.2% 0.3% |
15 21 36 |
1.5% 2.1% 3.6% |
2 1 3 |
0.2% 0.1% 0.3% |
68 | 6.8% |
| Product Pouring Details Products/ PourTime Corr WF Temp Pour Temp (OK PT) to Pour % of Total (End OK) (End OK) (End OK) (End OK) (End OK) in Pouring Out (TO) (Timed Out) (Timed Out) Pouring By (Ladles TO) (All Ladles) (All Ladles) (All Ladles) (All Ladles) |
Avg Time to Pour Arrive for Sent To Arrive OK |
Ladle | Time Req'd Time to Total Ladle Total Timer Tap to Ladles % Ladles Time Req'd Time to Avg Actual Time Req'd Time to Total Tap to For PT Enter Pour Pour Time Pouring End Pour Timed Out Timed For PT Enter Pour Late to Pour Time For PT Enter Pour Pour Time End Pour |
||||||||||||||||||
| V6 Cylinder Block Corr 1 1427 08:00 |
Corr 2 1427 | 1427 | 00:43 Pour Car 1 252 00:41 Pour Car 2 261 Combined 513 |
50% 00:52 02:10 02:58 05:08 52% 00:44 02:09 03:19 05:28 55.0% 00:49 02:09 03:06 05:16 |
12:21 12:41 12:29 |
11 5 16 |
4% 2% 3% |
01:32 01:08 01:17 |
03:27 01:18 03:03 00:57 02:19 05:25 12:38 03:00 00:51 03:30 00:55 02:23 05:52 13:05 03:09 01:00 03:21 01:20 02:21 05:37 12:50 |
||||||||||||
| I6 Cylinder Head Corr 1 1428 07:00 |
Corr 2 1428 | 1428 | 00:45 Pour Car 1 218 00:41 Pour Car 2 201 Combined 419 |
52% 00:55 02:11 03:16 05:27 48% 00:41 02:03 03:33 05:36 45.0% 00:49 02:08 03:23 05:31 |
12:41 12:50 12:45 |
9 4 13 |
4% 2% 3% |
01:46 01:29 01:39 |
03:45 01:34 02:45 01:09 02:36 05:50 13:03 03:20 01:17 03:10 01:04 02:23 05:56 13:09 03:35 01:27 02:55 01:33 02:31 05:52 13:06 |
||||||||||||
| Corr 1 Corr 2 |
Pour Car 1 0 Pour Car 2 0 Combined 0 |
||||||||||||||||||||
| All Products | Corr 1 1428 Corr 2 1428 |
1428 | 00:44 Pour Car 1 470 00:41 Pour Car 2 462 00:42 Combined 932 |
50.4% 00:53 02:10 03:06 05:16 49.6% 00:43 02:06 03:26 05:32 00:49 02:08 03:14 05:22 |
12:30 12:45 12:36 |
20 9 29 |
4% 2% 3% |
01:42 01:17 01:29 |
03:39 01:29 02:51 01:02 02:27 05:36 12:50 03:09 01:03 03:21 00:59 02:23 05:53 13:07 03:23 01:15 03:07 01:26 02:25 05:44 12:57 |
||||||||||||
| RFID Ladle Tags Performance Results | RFID Tags Removed | ||||||||||||||||||||
| Current Month No. tags in service No. tags removed Avg no. days in service 99 Max days in service |
May19 26 5 282 |
Roll 12 Mo Avg 29 7 76 331 |
294 195 352 |
No. Cycles | Tag No. Total Start Date End Date Days in 477 11/9/2019 4/18/2019 160 25 1/2/2019 4/6/2019 95 68 7/2/2018 4/10/2019 282 |
Service | |||||||||||||||
| Avg no. of total cycles 227 | 224 | 347 | 403 2/1/2019 4/10/2019 70 |
System 3000 Plus Ladle Tracker Process Efficiency Benchmarks
Ladle Tracker Summary Report
Summary reports can be independently created on a daily, weekly, monthly or on-demand basis. The Ladle Tracker Summary Report is customised for each foundry to detail the average start time at each tracking position, together with elapsed times for every step in the process, including the locations where ladles fall out of the process. The process flow data provides information that enables the production performance to be measured. Bottlenecks can be identified and eliminated, while process KPIs can be established and measured for each shift.
SinterCast Cast Tracker provides complete traceability of every casting; from core production through to pouring and shake-out, by linking the core history, moulding history, and the liquid metal history in a single database. With Cast Tracker, castings evolve from production batches to individual components with unique process histories. Cast Tracker provides Industry 4.0 traceability of the castings; prevents out-of-spec core packages from being poured; and enables engineers to determine and eliminate the root cause of metallurgical defects.
Cast Tracker begins by engraving a unique identification code into a Tracker Core. The Tracker Core is inserted into the core package at assembly to define the moment of inception and to apply the unique embossed identification code on each casting. Reading the embossed code on the casting provides complete traceability between the casting and every stage of the foundry process through the Cast Tracker database.
Tracker Core
For every Tracker Core, a corresponding 2D Matrix Label is printed and affixed to the core package. The Tracker Camera reads the label as the core package leaves the assembly area, and again when the cores are set into moulds. Registration at core setting identifies the unique code of each core package and determines the shelf storage time of the casting.
2D Matrix Label
The identification of each core package is linked to an RFID Tag affixed to the flask. The flask ID is read by an antenna at pouring to identify the flasks, and thus, the castings being poured from each ladle. The handshake between Cast Tracker and Ladle Tracker provide continuous traceability of the core and liquid metal histories, including the cast sequence within the ladle.
Label and Flask Tag
Cast Tracker Summary Report
All Cast Tracker and Ladle Tracker results – from inception to shakeout and from melting to pouring – are compiled into a single database for traceability, process optimisation, and metallurgical troubleshooting. The database can also include results from microstructure and chemistry analyses. The results are summarised in Performance Summary Reports that can be generated on demand. All data are saved in a central database that can be fully accessed by the foundry engineers.
In the foundry, the improved efficiency of the CGI casting process provides energy savings and reduced CO2 emissions. More than 90% of the raw materials used to produce CGI come from recycled sources.
Improved
Reduction Yield
Weight
The increased strength and stiffness of CGI allows engine engineers to reduce 10-20% weight compared to conventional grey iron designs.
Less
Scrap
Foundry Efficiency: Process Control and Tracking Technologies. The Audi 3.0 litre V6 engine with a CGI cylinder block is 15 kg lighter than the Mercedes 3.0 litre V6 based on an aluminium cylinder block.
On the road, CGI enables the use of more efficient downsized engines, providing higher fuel economy and lower CO2 emissions.
The Ford F-150 offers six engine options. The two SinterCast-CGI engines are the most fuel efficient engine options in the world's most popular vehicle.
Engine downsizing and power-up with SinterCast-CGI can save 100 kg in heavy duty engines, providing 250 kg of CO2 savings per year, per vehicle.
2006 First Full-Year Profit
1983 First Patent
New installations at FAW and Dashiang Precision in China
1999 First Series Production
SinterCast History
First production references in the car, truck and industrial power sectors
tooling suppliers, foundries and research institutes
26 fully automated process control systems, 26 mini-systems & five tracking systems installed in 14 countries and supported in 11 languages Succesful references for Ladle Tracker and Cast Tracker technologies Series production for passenger vehicle, commercial vehicle and industrial power
More than 75 components in series production, from 2.7 kg to 9 tonnes
2019 Three Million Engine Equivalents
2015 Two Million Engine Equivalents
1983
Current Status
First patent filed
SinterCast AB founded
First technical demonstrations
applications
2011 First Dividend
16 Annual Report 2019
One Million Engine Equivalents
2010
Fundamental research on the solidification behaviour of CGI
The executive management with more than 60 years of combined service
Operations Director Rejmyre, Sweden Born 1967
Nationality: British Employed since 2003 *No. of shares: 8,000
*As of 1 May 2020
President & CEO London, United Kingdom Born 1962 BEng, MASc, PhD, PEng, FIMechE Nationality: Canadian, British Employed since 1991 *No. of shares: 37,500
Finance Director Rönninge, Sweden Born 1962 BSc Nationality: Swedish Employed since 2004 *No. of shares: 12,400
The GIFA World Foundry Trade Fair, held every four years in Düsseldorf, provided an opportunity to host customers from around the world, to launch the fourth generation CGI process control technology – System 4000 – and to showcase the SinterCast Ladle Tracker® and SinterCast Cast Tracker® technologies.
Jan Åke Jonsson Chairman, Board Member BBA
Göteborg, Sweden Born 1951, Nationality: Swedish
Chairman of the Board of Directors of Polstiernan Industri AB, Västkustens Affärsänglar AB, Datachassi Larm AB and Intervex AB
Former CEO Saab Automobile, former Director for After Sales & Services of Saab, Vice President for Sales and Marketing for Saab USA, Vehicle Line Executive and Director Commercial Vehicles at General Motors Europe
5,000 SinterCast Shares 1,249 SinterCast Shares 2,000 SinterCast Shares 613 SinterCast Shares
Lars Hellberg Board Member BsC
Göteborg, Sweden Born 1959, Nationality: Swedish
Other Assignments President & CEO of Fortaco Group Oy, Member of the Board of Directors at Komas Oy
Former Executive Board Member of Wärtsilä Group, Saab Automotive Group, General Motors Europe Quality Board and Volvo Cars Senior leadership teams
600 SinterCast Shares 37,500 SinterCast Shares
Robert Dover Board Member FR Eng, FIMechE, FIED, FRSA
London, United Kingdom Born 1945, Nationality: British
Chairman, e-PPI Ltd, Autoscan Ltd, Advanced Propulsion Centre UK Ltd and Dymag Ltd
Professor of Manufacturing, Warwick University, Professor of Engineering, Coventry University, Former Chairman and CEO of Jaguar and Land Rover. Former Chairman and CEO Aston Martin, Former Vice President, Ford Motor Company
Steve Dawson President & CEO, Board Member BEng, MASc, PhD, PEng, FIMechE London, United Kingdom
Born 1962, Nationality: Canadian, British Other Assignments
No other Board duties
Former Technical Director and Chief Operating Officer, SinterCast Group Senior Research Engineer, LTV Steel
Elected 2018 Elected 2007
Caroline Sundewall Board Member MBA
Skillinge, Sweden Born 1958, Nationality: Swedish
Board Member of Elanders, Hemfosa, Mertzig Asset Management and the Tillväxt Helsingborg Found-ation. Founder & owner Caroline Sundewall AB, Chairman and co-founder of Streber Cup Tennis Foundation
Former Business Journalist, Commentator and Editor for Dagens Industri, Affärsvärlden, Sydsvenska Dagbladet and Finanstidningen. Business Controller at Ratos, worked at Chase Manhattan Bank, London and Handelsbanken.
Jun Arimoto Board Member BEng
Rickmansworth, United Kingdom Born 1954, Nationality: Japanese
Other Assignments No other Board duties
Professional background Former Powertrain Executive of ISUZU MOTORS Ltd, Japan. Former Managing Director and Member of the Board of ISUZU subsidiary companies in Europe and China for 16 years in total. Former General Sales Manager of Perkins Engines (Peterborough) Ltd.
Elected 2019 Elected 2004 Elected 2017 Elected 2018
The Board of Directors and the Managing Director of SinterCast AB (publ), corporate identity number 556233-6494, hereby submit the Annual Report and consolidated financial statements for 2019. SinterCast AB, the Parent Company of the SinterCast Group, is a publicly traded limited liability company with its registered office located in Stockholm, Sweden.
SinterCast is the world's leading supplier of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI). With at least 75% higher tensile strength and 45% higher stiffness, and approximately double the fatigue strength of conventional grey cast iron and aluminium, CGI allows engine designers to improve performance, fuel economy and durability while reducing engine size, weight, noise and emissions. The SinterCast technology is used for the production of petrol and diesel engine cylinder blocks and exhaust components for passenger vehicles, medium-duty and heavy-duty cylinder blocks and heads for commercial vehicles, and industrial power engine components for agriculture, marine, rail, off-road and stationary engine applications. SinterCast supports the series production of components ranging from 2.7 kg to 9 tonnes, all using the same proven process control technology. As a specialist supplier of precision measurement and process control solutions to the metals industry, SinterCast also supplies the SinterCast Ladle Tracker® and SinterCast Cast Tracker® technologies, to improve process control, productivity and traceability in a variety of applications. With 57 installations in 14 countries, SinterCast is a publicly traded company, quoted on the Small Cap segment of the Nasdaq Stockholm stock exchange (SINT).
With successful high volume CGI production in customer foundries located in Europe, Asia and the Americas, SinterCast has established a global organisation with employees and offices in Sweden, the United Kingdom, the United States, China and Korea.
The global organisation includes functions for Sales & Marketing, Operations, Research & Development, Process Engineering and Finance & Administration. All of these functions report directly to the President & CEO of the SinterCast Group and Managing Director of SinterCast AB. The global Sales & Marketing function is responsible for supporting the commercial needs of existing customers and for the active development of new foundry and OEM business opportunities. The Operations function is responsible for the production and supply of the control systems, tracking systems and sampling consumables, commissioning of new installations, and quality management, including the current ISO 9001:2015 certification. The Research & Development function is responsible for the continuous improvement of the core thermal analysis technology, the process control software, new product development and general metallurgical support. The Process Engineering function is responsible for the metallurgical planning and commissioning of new installations and customer training, technical support of ongoing foundry production activities, field trials, and technical support of prospective customers. The centralised Finance & Administration function, based at the Technical Centre in Katrineholm, is responsible for supporting the needs of all Group companies with regard to finance, control, administration, human resources and information technology. The Finance & Administration function also supports the Board and the President & CEO in various matters.
SinterCast AB (publ) is the Parent Company of the SinterCast Group, with its registered office located in Stockholm, Sweden. On 31 December 2019, the Parent Company had 18 (16) employees, four (four) of whom are female. The majority of the operations are managed by the Parent Company while local operations in the United Kingdom, United States, Korea and
Ordered in December 2019, the System 3000 Plus capacity upgrade at the Teksid do Brasil foundry was successfully commissioned in February 2020. The upgrade converted the twowirefeeder System 3000 Plus into a four-wirefeeder system, doubling the production capacity.
China are managed by the local companies. The information given for the Group in this report corresponds in all material respects to the Parent Company. However, the result for the period may differ between the Group and the Parent Company due to intercompany transactions between the Parent Company and its subsidiaries.
The Parent Company holds all of the patents and trademarks and controls the activities of the Group. The legal structure of the SinterCast Group includes the Parent Company, SinterCast AB (publ), and its subsidiaries SinterCast Ltd in the United Kingdom, SinterCast Inc in the USA, SinterCast Trading (Beijing) Co., Ltd in China, SinterCast Korea Co., Ltd in Korea and SinterCast SA de CV and SinterCast Servicios SA de CV, both in Mexico.
As of 31 December 2019, the Group had 23 (21) employees, four (four) of whom are female. SinterCast is well positioned to support global market activities and to drive the future growth of the company.
The company has implemented a strategy to protect its technology through patents or other intellectual property rights to preserve its leading position within CGI process control and Tracking Technologies. The company applies for patents in selected countries that are relevant to the foundry and/or automotive industries, while retaining some core technology as knowhow.
SinterCast currently holds 8 (8) patents, granted or pending, and maintains 42 (42) individual national phase patents worldwide. These patents address the SinterCast metallurgical technology, thermal analysis, the Sampling Cup, product applications and machining.
The emphasis of the R&D activity is to continuously improve the accuracy and the reliability of the thermal analysis and process control software and to develop the SinterCast Tracking Technologies. The SinterCast Ladle Tracker®
technology ensures that all treatments and processes are performed within the specified limits, improving process efficiency, product quality, and productivity. The SinterCast Cast Tracker® offers complete traceability of each casting from the date of manufacture of the cores (inception), shelf storage time, pouring (birth) to shake out. Installation discussions are ongoing for CGI process control systems and for the new Tracking Technologies, for, grey, CGI and ductile iron foundries, and for other metal processing applications. As production references become established, the suite of Tracking Technologies will begin to contribute to the total installation revenue. SinterCast is also investigating the development of other unique technologies – within and beyond the scope of thermal analysis – to improve quality and production efficiency in the cast iron foundry industry.
SinterCast operates within the environmental limits established by local and national legislation and does not have any operations that require specific environmental permission or concessions from the authorities. The accuracy of the SinterCast process enables foundries to produce CGI castings with a lower scrap rate, thus reducing the emissions and the cost associated with re-manufacturing. As a CGI-enabler, the SinterCast technology contributes to the production of smaller and more fuel-efficient engines, thus reducing CO2 emissions in passenger vehicle and commercial vehicle applications. In general, the engines produced using SinterCast-CGI provide approximately 20-30% better fuel efficiency and 20-30% less CO2 emissions than the nearest available petrol engine options.
Uncertainty factors for SinterCast include the timing of OEM decisions for new CGI engines and other components, adherence to start-of-production dates and ramp projections, the global economy for new vehicle sales, technology trends and emissions legislation, and the individual sales success of vehicles equipped with SinterCast-CGI components.
Ordered in November 2019, the System 4000 Plus destined for First Automobile Works in China was shipped in January 2020. This system is scheduled to be commissioned during 2020.
Prior to the onset of the COVID-19 virus, most forecasters were predicting near-term stabilisation or softening of the global passenger vehicle, commercial vehicle and industrial power markets. The outlook for Europe generally indicated stable near-term sales for passenger vehicles and moderate growth for commercial vehicles. In China, the outlook for commercial vehicles – the main opportunity for SinterCast in China – indicated moderate growth, with the market opportunity for SinterCast depending primarily on the enforcement of emissions legislation and acceptance of the SinterCast business model. In North America, currently the largest end-user market for SinterCast, commercial vehicle sales were forecast to soften while passenger vehicle sales were forecast to remain near historical high levels, with the growth of larger crossovers, SUVs and pick ups benefitting SinterCast. Although the top three best-selling vehicles in America have recently committed to diesel engine options, the long-term outlook for diesel passenger vehicles remains uncertain. Prior to the onset of the COVID-19 virus, the main market risk for SinterCast and its end-user industries related to the impact of political uncertainty, the renegotiation of international tariffs and free-trade agreements on vehicle sales, and the demand for goods transportation. However, the COVID-19 virus has quickly evolved to dominate the near-term risk outlook for the global automotive and foundry industries, and the overall global economy. Most industry forecasts suggest that it is prudent to anticipate a weak second quarter with the start of recovery in the second half of year, although it is not yet possible to predict the recovery ramp or the influence on the SinterCast market development. While the series production may be temporarily influenced by the COVID-19 virus, SinterCast remains confident in the long-term growth of CGI.
For full risk and uncertainty factor information, please see note 26 on pages 50-52.
The revenue for the SinterCast Group relates primarily to income from equipment, series production and engineering service.
| Revenue Breakdown | January-December | ||||
|---|---|---|---|---|---|
| Amounts in SEK million if not otherwise stated | 2019 | 2018 | |||
| Number of Sampling Cups shipped | 189,800 | 197,900 | |||
| Equipment1 | 11.9 | 4.6 | |||
| Series Production2 | 102.3 | 81.3 | |||
| Engineering Service3 | 2.3 | 1.8 | |||
| Total | 116.5 | 87.7 |
1 Includes revenue from system sales and leases and sales of spare parts
2 Includes revenue from production fees, consumables and software licence fees
3 Includes revenue from technical support, on-site trials and sales of test pieces
The 2019 revenue amounted to SEK 116.5 million (SEK 87.7 million). Revenue from series production increased to SEK 102.3 million (SEK 81.3 million), due to approximately 30% increase in series production and a 5% increase in Sampling Cup revenue. Equipment revenue amounted to SEK 11.9 million (SEK 4.6 million) primarily due to the installation of new CGI systems and capacity upgrades, and the installation of a Cast Tracker system at the Tupy foundry in Mexico.
| Results Summary | January-December | |||
|---|---|---|---|---|
| Amounts in SEK million if not otherwise stated | 2019 | 2018 | ||
| Operating Result | 40.1 | 29.4 | ||
| Income Tax | 8.3 | 3.3 | ||
| Result for the period after tax | 48.2 | 32.7 | ||
| Earnings per share (SEK) | 6.8 | 4.6 |
The business activities of SinterCast are best reflected by the Operating Result. This is because the "Result for the period after tax" and the "Earnings per Share" are influenced by the financial income and costs and by the revaluation of tax assets.
The 2019 operating result amounted to SEK 40.1 million (SEK 29.4 million), as a result of higher gross results of SEK 20.1 million primarily derived from higher revenue, combined with higher operating costs of SEK 9.4 million, primarily due to increased expenses for additional sales personnel plus onetime costs for sales consultants and the GIFA World Foundry Trade Fair held every four years. The Result for the period after tax amounted to SEK 48.2 million (SEK 32.7 million), primarily related to the SEK 10.7 million increase in the operating result and the increase of SEK 5.0 million due the reassessed deferred tax calculation. The implementation of IFRS 16 – Leases increased the Operating Result by approximately SEK 0.2 million by transferring lease expenses to depreciation and interest expenses.
Tax income for 2019 period amounted to SEK 8.3 million (SEK 3.3 million), of which SEK 8.5 million was due the reassessed deferred tax calculation and SEK -0.2 million was due to paid income tax. The estimated future taxable profit and deferred tax asset calculation is reassessed every quarter. As of 31 December 2019, SEK 213.1 million (SEK 171.6 million) of the SinterCast total carried-forward tax losses are the basis of the updated calculation, resulting in SEK 44.1 million (SEK 35.6 million) being capitalised as a deferred tax asset. The deferred tax asset calculation is based on historical eight-year average currency rates.
The 2019 cashflow from operations increased by SEK 13.0 million due to the increase in cashflow before changes in working capital of SEK 11.4 million and the decrease in working capital of SEK 1.6 million. Total investments amounted to SEK 1.2 million. The total cashflow amounted to SEK 0.1 million (SEK 2.7 million), primarily due to the dividend payment in the amount of SEK 35.5 million (SEK 19.5 million). Liquidity on 31 December 2019 was SEK 32.9 million (SEK 32.8 million). SinterCast has no loans.
The Annual General Meeting 2020 of SinterCast AB (publ) will be held on Tuesday 23 June 2020.
Shareholders wishing to have a matter considered at the Annual General Meeting were previously requested to provide written submissions to [email protected] or to the company: SinterCast AB (publ), Kungsgatan 2, 641 30 Katrineholm, Sweden, at least seven weeks prior to the Annual General Meeting for the proposal to be included in the notice
Directors' Report
of the meeting. Further details on how and when to register will be published in advance of the Annual General Meeting.
The Annual General Meeting (AGM) of the shareholders, held on 23 May 2019, decided upon an ordinary dividend of SEK 3.50 per share (SEK 2.75 per share) and an extraordinary dividend of SEK 1.50 per share (SEK 0.0 per share), representing a distribution of SEK 35.5 million (SEK 19.5 million) to the shareholders of SinterCast AB (publ) for the financial year 2018.
On 19 February, in accordance with the dividend policy, the Board of Directors proposed an ordinary dividend of SEK 4.50 per share (SEK 3.50 per share) plus an extraordinary dividend of SEK 2.25 (SEK 1.50 per share), representing a distribution of SEK 47.9 million (SEK 35.5 million) to the shareholders of SinterCast AB (publ) for the financial year 2019, distributed in two payments of SEK 3.38 and SEK 3.37 per share (SEK 2.50 per share). The Board proposed 22 May 2020 as the record date for the first payment and 23 November 2020 as the record date for the second payment. In deciding the amount of the ordinary dividend to be proposed to the AGM 2020 the Board considered cashflow from operations, the financial position, investment requirements and other factors, such as market outlook, growth strategy and the internal financial forecast for the Group. However, the onset of the COVID-19 pandemic since 19 February resulted in rapidly changing market conditions and increased uncertainty. The Board has therefore decided to withdraw the original dividend proposal and has announced the ambition to convene an Extraordinary General Meeting (EGM) in the autumn of 2020 to decide upon the dividend for the 2019 financial year.
As a basis for the Board's dividend proposal, the Board of Directors made an assessment in accordance with Chapter 18, Section 4 of the Swedish Companies Act including the liquidity of the Parent Company and the Group, the need for financial resources, the current financial position, and the long-term ability to meet commitments. At year-end, the Group reported an equity ratio of 90% (90%) and a net cash amount of SEK 32.9 million (SEK 32.8 million). Unrealised changes in the value of assets and liabilities at fair value have had a net effect on equity of SEK -0.2 million (SEK -0.2 million). The Board of Directors also considered the Parent Company's result and financial position, recent changes in market risk and uncertainty, and the Group's position in general. In this respect, the Board of Directors has taken into account known commitments that may have an impact on the financial positions of the Parent Company and its subsidiaries. It is the Board's assessment that the withdrawal of the original dividend proposal and the suggestion of an autumn EGM is well-balanced considering the nature, scope and risks of the business activities as well as the capital requirements for the Parent Company and the Group.
The following earnings in the Parent Company are at the disposal of the Annual General Meeting.
| (Amounts in SEK) | |
|---|---|
| ------------------ | -- |
| Total non-restricted equity of the Parent Company | 81,601,992 |
|---|---|
| Result for the year | 46,366,879 |
| Result brought forward | -101,497 |
| Share premium reserve | 35,336,610 |
The Board of Directors proposes to the AGM that earnings be distributed as follows.
(Amounts in SEK)
| To be retained by the Parent Company | 81,601,992 |
|---|---|
| Total | 81,601,992 |
Since the beginning of 2020, the onset of the COVID-19 pandemic has resulted in rapidly changing market conditions and increased uncertainty. This has impacted the global foundry and automotive industries. It is not yet possible to quantify the full impact of the virus or the evolution of the recovery ramp. The following press releases have been issued:
19 February 2020 – SinterCast Results October–December 2019 and Full Year Results 2019
17 March 2020 – Productions starts up; new orders received
30 March – SinterCast postpones Annual Report and AGM
21 April 2020 – SinterCast Results January–March 2020
15 May 2020 – SinterCast withdraws original dividend proposal. Extraordinary General Meeting planned for autumn
On 29 January 2019, Scania ordered a SinterCast System 4000 Plus process control system for its new purpose-built CGI production facility. The installation will be commissioned in 2020, providing the potential for SEK 20 million of incremental annual revenue within three-to-five years after the installation.
SinterCast focuses primarily on providing process control technology and know-how for the reliable high volume production of Compacted Graphite Iron. SinterCast promotes CGI within the foundry and end-user communities to increase the overall market opportunity for CGI and to define the forefront of CGI development, production and application. This focus and these efforts will secure SinterCast's global leadership in the field of CGI. SinterCast also builds upon its technical expertise in thermal analysis and cast iron process control to develop new technologies beyond the core CGI market. These focused activities will provide the foundation for increasing the long-term value of the company. As a technology led company, SinterCast is able to grow and prosper by earning the respect of its customers.
Corporate Governance at SinterCast is aimed to ensure continued strong development of the company and, consequently, that the Group fulfils its obligations to shareholders, customers, employees, suppliers and society.
Corporate Governance includes: establishing the overall operational goals and strategy of the company; ensuring that there is an effective system for follow-up and control of the company's operations; ensuring that there is a satisfactory process for monitoring the company's compliance with laws and other regulations relevant to the company's operations; and, defining necessary guidelines to govern the company's ethical conduct and ensuring that the company's external communications are characterised by openness and that such communications are accurate, reliable and relevant. The Group's risks are well-analysed and risk management is integrated in the work of the Board and in operational activities.
The Swedish Annual Accounts Act prescribes that listed companies shall, on a yearly basis, present a Corporate Governance Report, to be included in the Annual Report. The Swedish Companies Act defines the legal framework for limited liability companies including rules for the Articles of Association, the share, the Annual General Meeting (AGM), and the management of the company. The Corporate Governance Report must be in accordance with the Swedish Code of Corporate Governance which is applicable to all Swedish companies whose shares are traded on a regulated market in Sweden.
The SinterCast shares have been listed since 26 April 1993 and are quoted on the Small Cap segment at Nasdaq Stockholm stock exchange. SinterCast had 4,019 (2,783) shareholders on 31 December 2019. The ten largest, of which five were nominee shareholders, controlled 53.0% (53.8%) of the capital and votes. On 31 December 2019, Swedish shareholders held and controlled 82.7% (80.6%) of the capital and votes in SinterCast AB. The largest shareholder, Försäkringsbolaget Avanza Pension AB (Sweden), held 11.7 % (12.4%) of the capital and votes as a nominee shareholder. As of 31 December 2019, the SinterCast Board, management and employees controlled 1.1 % (1.1%) of the capital and votes. During the year, shareholders have provided feedback and proposals to the Board, the Managing Director and to the Nomination Committee.
The Nomination Committee, elected by the AGM 2018, consisted of Ulla-Britt Fräjdin-Hellqvist (Chairman), Hans-Erik Andersson (Chairman of the Board of Directors), Andrea Fessler and Aage Figenschou. The Committee concluded that the current Board fulfilled the demands imposed on it in consideration of the company's position and future focus. Also, prior to the AGM 2019, the Chairman of the Board Hans-Erik Andersson and alternate Board Member Andrea Fessler declined re-election. As a result of the declined re-elections and the Board composition review, and after consultations with the shareholders, the Nomination Committee proposed to the AGM 2019 that the Board Members, Robert Dover, Caroline Sundewall, Jun Arimoto, Lars Hellberg and Steve Dawson be re-elected and that Jan Åke Jonsson be proposed as a new Board Member and Chairman of the Board. The Nomination Committee proposed the Board remuneration to the AGM and nominated the Auditor for election, for the period until the next AGM.
The AGM was held on Thursday 23 May 2019, in Stockholm, Sweden. All Members of the Board, the Group Management, the Nomination Committee and the external Auditor were represented during the meeting. The AGM was attended by 36 (36) shareholders and employees, in person or by proxy, representing 1,303,729 (1,959,209) votes.
Hans-Erik Andersson was elected as Chairman of the AGM. During the AGM, presentations were provided by Dr Steve Dawson, Managing Director. During his presentation, Dr Dawson provided an overview of recent market activities and presented an outlook for the potential market development of SinterCast.
The Auditor presented how the audit work was conducted and presented the annual Audit Report to the AGM. The AGM adopted the Annual Report and the consolidated financial statements as of 31 December 2018, as presented by the Board of Directors and the Managing Director; decided upon allocation of the company's result; and, granted the Directors and the Managing Director discharge from liability.
The Nomination Committee presented how it conducted its work during the year and presented its proposals. Thereafter, the AGM decided, for the period until the next AGM, six ordinary Board Members; that the company shall have a registered auditing company as auditor; that the Board shall receive a total remuneration of SEK 1,110,000 (SEK 960,000), with no remuneration for the Managing Director and that the Nomination Committee shall consist of four (four) Members.
The AGM also decided upon a remuneration policy in respect of the Managing Director and other members of the Group Management and authorised the Board to decide upon acquisition and disposal of SinterCast shares, as proposed by the Board of Directors. During the AGM the shareholders raised various questions to the Board and management.
The SinterCast Nomination Committee is, after consultation with the shareholders, responsible for nominating candidates for election to the Board; to propose remuneration for the Board and for each member of the Board; to nominate Auditors for election; to make recommendations on remuneration for the external auditors; and, to establish certain other proposals for consideration at each AGM. The majority of the members of the Nomination Committee are to be independent of the company and its Group Management. No members of the Group Management are to be members of the Nomination Committee and at least one member of the Nomination Committee is to be independent of the company's largest shareholder. The AGM appoints members of the Nomination Committee or specifies how members shall be appointed. The Nomination Committee also considers the merits of equal gender distribution on the SinterCast Board with regard to the requirements of the company and the potential contribution of each new candidate.
The Shareholders' main influence to govern the company is during the AGM, which is the company's highest decision-making body, where the Shareholders meet the Board of Directors, the Management and the Company Auditors and where the Shareholders are given the opportunity to raise questions and to vote on the proposals distributed prior to the meeting. The shareholders shall be given the opportunity to exercise their ownership role in an active, well-informed manner. All shares represented at the AGM have the same voting rights. The Board is elected annually at the AGM and the majority of the Directors elected shall be independent of the company and its Group Management. Independence shall be determined by a general assessment of all factors that may give cause to question the individual's independence.
Association
The Articles of Association of SinterCast defines the name, location, objectives of the company, number of shares, number of Board Members, number of Auditors, and proceedings for convening Annual General Meetings. Changes to the Articles of Association must be decided by the AGM. The Articles of Association of SinterCast do not regulate dismissal of Directors.
The Articles of Association is available on SinterCast's website.
The Board shall appoint a Compensation Committee whose main tasks are to monitor and evaluate the remuneration guidelines that the AGM is legally obliged to establish, as well as the current remuneration structures and levels in the company and to propose new incentive programmes to the Board to decide upon. The Compensation Committee shall also agree on the principles for remuneration and other terms of employment of the Managing Director and, after advice from the Managing Director, for Directors and Managers reporting directly to the Managing Director. The Compensation Committee shall also monitor and evaluate programmes for variable remuneration, both ongoing and for those that have ended during the year.
The Board is appointed at the Annual General Meeting. The Board is responsible for establishing the overall operational goals and strategy of the company and for ensuring that there is an effective system for follow-up and control of the company's operations. The Board shall fulfil applicable independence rules. The AGM appoints the Chairman of the Board. The Chairman's role is to head the Board's work and ensure that the Board completes its mandate. The Board has executed a Work Programme including instructions regarding the distribution of work and financial reporting, as a complement to the regulations of the Swedish Companies Act, Articles of Association of the Company and the Swedish Code of Corporate Governance and other instructions.
On behalf of the Board, the responsibility of the Audit Committee is to ensure that the company has adequate internal controls and formal routines to ensure that the company's financial reports are produced in accordance with legislation, applicable accounting standards and other requirements for listed companies. The primary task of the Audit Committee is to ensure the quality of the financial reports. The Audit Committee is also responsible for the evaluation of the Auditors' work, fees and independence and assists the Nomination Committee with proposals for potential Auditors. The Audit Committee also assists the Group Management in determining how identified risks will be handled in order to ensure good internal control and risk management. The Audit Committee prepares and decides on the Corporate Governance Report.
Each year the Board adopts a written Work Programme documenting the Board's responsibilities and regulating the internal division of duties between the Board; its Committees and Group Management; the decision-making process within the Board; the Board's meeting schedule; summonses to Board meetings; agendas and minutes, and the work of the Board and its committees on accounting and auditing matters and financial reporting. The Work Programme also regulates how the Board shall receive information and documentation in order to be able to make well informed decisions. Other controlling documents adopted by the Board include the Finance Policy and the Authorisation Policy, including the organisation chart and the Code of Conduct for the company.
The Board appoints the Managing Director who is responsible for the operational and strategic management of the company in accordance with the Board of Directors' instructions and guidelines.
The Managing Director has established, as the President & CEO for the SinterCast Group, the Group Management including the Operations Director and the Finance Director.
The company shall appoint one or two Auditors with not more than two Alternate Auditors. A registered accounting firm may also be appointed as Auditor.
The company's statutory Auditor shall be appointed by the AGM to examine the company's annual accounts and accounting practices and to review the Board's and the Managing Director's management of the company.
The Auditor shall present its report to the owners at the AGM in the annual audit report.
All of the proposals presented to the AGM were approved by the shareholders.
At the AGM 2019, Robert Dover, Caroline Sundewall, Jun Arimoto, Lars Hellberg and Steve Dawson were re-elected as Board Members. Jan Åke Jonsson was elected as new Board Member and appointed as Chairman. Hans-Erik Andersson and Andrea Fessler declined re-election and were thanked for their many contributions. The Board remuneration, decided at the AGM 2019, shall be divided between the Chairman SEK 390,000 (SEK 320,000) and four (four) ordinary Board Members SEK 180,000 (SEK 160,000) each, with no remuneration for the Managing Director. With the exception of the Managing Director, no member of the Board holds an operational position in the company. The Board is judged to be independent of the company and its management. A more detailed description of the Board of Directors is presented on page 18. The content of the main meetings is summarised in the table below.
In the statutory Board meeting held immediately after the AGM, Jan Åke Jonsson was re-confirmed as Chairman of the Board. Jan Åke Jonsson and Caroline Sundewall were elected to constitute the Compensation Committee. Steve Dawson was re-elected Managing Director for SinterCast AB (publ) and President & CEO of the SinterCast Group. Further, the entire Board was elected to constitute the Audit Committee.
The Chairman directed the Board's activities and promoted the overall efficiency of the Board. The Chairman ensured that the Board's activities were conducted in accordance with the Swedish Companies Act and other applicable laws and regulations and ensured that the resolutions of the Board were implemented. The Chairman also conducted the evaluation of the Board's activities and shared the evaluation with the Nomination Committee. The Chairman approved the agenda for each Board meeting in consultation with the Managing Director. The Chairman had regular communication with the Managing Director, relayed opinions from shareholders to the other Board Members and acted as spokesperson on behalf of the Board.
During 2019, in connection with every quarterly report, the Managing Director presented the market and financial outlook and reported on operations and important current events. The Board of Directors dealt with long-term strategies, structural organisational issues, approval of the budget for the following year, the annual evaluation of the Board of Directors, and risk assessment. Individual Board Members also assisted the Group Management in various strategic and operational matters. The Work Programme defines the Board's work during the year.
The SinterCast Board appointed Steve Dawson as the Managing Director for SinterCast AB (publ) and President & CEO for the Group. The Managing Director, as responsible for the operational and strategic management of the company, has managed the company in accordance with the Board of Directors' instructions and guidelines. The Managing Director assisted the Chairman with the preparation for each Board and Audit Committee Meeting and distributed information, according to the Work Programme, to be decided upon by the Board. In addition, the Managing Director provided the Board with monthly reports including significant events and financial information.
| February | April | May | July/August | November |
|---|---|---|---|---|
| Market Report and Financial outlook |
Approve 1Q financial report |
Market Report and Financial outlook |
Market Report and Financial outlook |
Market Report and Financial outlook |
| Approve Book Closing Report |
Approve Annual Report | AGM preparations | Approve 2Q financial report |
Approve 3Q financial report |
| Evaluate Managing Director |
Approve AGM notice | Statutory Board Meeting |
Approve Strategy and Business plan |
Approve Finance Policy |
| AGM preparations and decisions |
Auditor participated in Audit Committee Meeting |
Auditor present at Audit Committee Meeting |
Revise and approve Work Programme |
Approve Budget for the coming year |
| Decide upon incentive programmes, if any |
Auditor participated in Audit Committee Meeting |
| Presence 2 | |||||
|---|---|---|---|---|---|
| Board Remuneration (SEK) 1 |
Board Meetings |
Audit Committee |
Compensation Committee |
Independent 3 | |
| Jan Åke Jonsson 4, 5 | 390,000 | 9/11 | 3/4 | 2/2 | Yes |
| Robert Dover | 180,000 | 11/11 | 4/4 | - | Yes |
| Caroline Sundewall 4 | 180,000 | 11/11 | 4/4 | 2/2 | Yes |
| Jun Arimoto | 180,000 | 11/11 | 4/4 | - | Yes |
| Lars Hellberg | 180,000 | 11/11 | 3/4 | - | Yes |
| Steve Dawson | - | 11/11 | 4/4 | - | No |
Decided on 23 May 2019 at the AGM 2019, until the next AGM
Member of the Compensation Committee
Between publication of Annual Report 2018 (4 April 2019) and Annual Report 2019 (19 May 2020) 5. Jan Åke Jonsson was elected on 23 May 2019 at the AGM 2019
Independent of the company, the management and major shareholders
The Managing Director established, as the President & CEO for the SinterCast Group, the Group Management including the Operations Director and the Finance Director. More detailed information of the Managing Director and the Group Management is presented on page 17.
The Compensation Committee, elected by the Board, consists of Jan Åke Jonsson and Caroline Sundewall. The tasks and responsibilities of the Compensation Committee are defined in the Board's Work Programme. During the year, the Compensation Committee has evaluated variable remuneration programmes, special remuneration given for extraordinary efforts and the remuneration policy approved by the AGM. The Committee has also reviewed the remuneration for the Managing Director and the Group Management.
Since the AGM 2019, the Compensation Committee carried out two minuted meetings. The Board was informed of the Compensation Committee's activities and ratified its proposals.
The Annual General Meeting 2019 decided upon a remuneration policy in respect of the Managing Director and other members of the Group Management as follows:
The remuneration shall consist of a balanced combination of fixed remuneration, variable remuneration, pension and other benefits. The total remuneration shall be in accordance with market practice and shall be based on performance. The fixed remuneration shall be individually determined and shall be based on each individual's responsibility, role, competence and position. Variable remuneration shall be based on predetermined targets on the Group level and the individual level, considering the effect on the long term result. In extraordinary situations a special compensation may be paid out to attract and retain key competence. Variable remuneration and special compensation may not exceed an amount corresponding to 75 percent of the fixed annual salary.
Pension benefits are in the form of defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the entity does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Variable remuneration and special compensation in extraordinary situations shall not constitute a basis for pension as far as this does not conflict with applicable collective agreement or applicable law. Upon termination by the company, the notice period for the Managing Director is nine months, and six months for the other members of the Group Management. Upon termination of the Managing Director by the company the Managing Director is entitled to a severance payment corresponding to nine months compensation. Deduction shall not be made for remuneration paid by another employer. No severance payments have been agreed with the other members of the Group Management.
The Board of Directors and, on behalf of the Board of Directors, the Compensation Committee, shall be entitled to deviate from the guidelines if there are specific reasons in an individual case.
The main conditions for remuneration to the Group Management in the current employment agreements are described in Note 5 in this Annual Report.
There were no material transactions between the company and any of the Board Members during the year, with the exception of the ordinary Board fees.
The remuneration policy to be proposed to the AGM 2020 will be the same as the remuneration policy in 2019.
During the Statutory Board Meeting, all Board Members were elected to sit on the Audit Committee.
During the year, the Audit Committee has ensured that the company has adequate internal controls and formal routines to ensure that approved principles for financial reporting and internal controls have been applied, and that the company's financial reports have been produced in accordance with legislation, applicable accounting standards and other requirements for listed companies.
The Audit Committee met the Auditor during the year to discuss the Audit Report and the audit plan. The Audit Committee also met the Auditor in the absence of the Group Management. The Audit Committee evaluated the Auditors' work and provided feedback to the Nomination Committee in preparation for the election of the Auditor during the Annual General Meeting 2020. The Audit Committee also determined and identified risks to be handled in order to ensure good internal control and risk management. The Audit Committee prepared and approved the Corporate Governance Report for 2019.
At the AGM 2019, Öhrlings PricewaterhouseCoopers was re-appointed as Auditor and Tobias Stråhle was re-appointed as Auditor in charge by PwC. The Auditor in charge has had three Auditors assisting in the audit work during the year. The audit follows an audit schedule, based on the Auditor's risk assessment, in agreement with the Audit Committee.
Prior to the AGM 2019, in conjunction with the approval of the Annual Report 2018, the Auditor met with the Audit Committee. The Auditor reported on the audit of the company's annual accounts and consolidated accounts and accounting practices and reported observations directly to the Audit Committee. The Auditor audited the company's annual accounts and accounting practices and reviewed the Board's and the Managing Director's management of the company. The Auditor presented the annual Audit Report at the AGM 2019 and provided a presentation of the Audit Plan for 2019. The Audit Report contained a statement that the Annual Report has been compiled in accordance with the relevant legislation and recommended that the Directors and the Managing Director be discharged from liability.
The Auditor provided a presentation of the Audit Plan for 2019 during the April Audit Committee meeting and met with the Board of Directors at the Board meeting in May, where the Auditor reported observations directly to the Board of Directors both with and without the presence of the Group Management. The Auditor provided a follow-up of the Audit Plan for 2019 during the May, November and April Audit Committee meetings and presented the result from the review of the financial report for the period January–September 2019 and gave audit feedback from the interim audit procedures that were conducted during the third quarter of 2019. The Auditor also had separate discussions and meetings with the Chairman and company management during the year.
In conjunction with the approval of this Annual Report 2019, the Auditor met with the Audit Committee. The Auditor reported on the audit of the company's annual accounts and consolidated accounts and accounting practices and reported observations directly to the Audit Committee. The Auditor audited the company's annual accounts and accounting practices and reviewed the Board's and the Managing Director's management of the company.
At the AGM 2019, Ulla-Britt Fräjdin-Hellqvist, Andrea Fessler and Aage Figenschou were re-elected as members of the Nomination Committee and Ulla-Britt Fräjdin-Hellqvist
Auditor Öhrlings PricewaterhouseCoopers AB Tobias Stråhle, Authorised Public Accountant
Company auditor since 2013. Assignments: Medivir AB, Trention AB Hoist Group Holding Intressenter AB, Liv Ihop AB, Saxlund Group AB, Advanced Stabilized Technologies Group AB, Stockwik Förvaltning AB
was appointed as Chairman. Hans-Erik Andersson declined re-election and Jan Åke Jonsson, Chairman of the Board of Directors, was elected as a new member of the Nomination Committee. The committee is judged to be independent of the company and the largest shareholder.
The Chairman of the Board has described to the Nomination Committee the process applied for the annual evaluation of the Board of Directors and Managing Director and has provided information regarding the results of these evaluations to the Nomination Committee. The Nomination Committee's proposals to the AGM 2020 are to be presented in the notice of the AGM and on the company website. During the AGM 2020 the Nomination Committee will also present how it conducted its work and explain its proposals. Since the AGM 2019, the Nomination Committee of SinterCast carried out several informal meetings and two minuted meetings. According to rules regarding equal gender representation, the Nomination Committee intends to report to the upcoming AGM how it has fulfilled its work regarding gender representation in the Board. The Nomination Committee can be contacted at the following e-mail address: [email protected].
SinterCast must comply with the EU Market Abuse Regulation nr 596/2014 (MAR), which include strict requirements of how SinterCast shall manage inside information. The MAR-rules include rules of how insider information shall be disclosed; under which conditions the disclosure may be postponed; and when SinterCast is obliged to keep a list of persons having access to inside information (a so-called logbook).
During 2019, the company has used the digital tool InsiderLog to ensure compliance under the EU market abuse regulation MAR and the insider policy of the company; from the decision to postpone the disclosure of insider information; up to the mandatory message including the close of the logbook and the disclosure date, to the Swedish Finansinspektionen. Only authorised personnel have access to InsiderLog.
According to the Swedish Companies Act, the Board is responsible for ensuring that the company's organisation is designed in such a way that the bookkeeping, financial management and the company's financial conditions are controlled in a satisfactory manner. The Swedish Code of Corporate Governance clarifies and prescribes that the Board is to ensure that the company has adequate internal controls and formal routines to ensure that approved principles for financial reporting and internal controls are applied, and that the company's financial reports comply with legislation, applicable accounting standards and other requirements for listed companies.
It has been decided by the Board that SinterCast shall comply with the Swedish Code of Corporate Governance and present a Corporate Governance Report in accordance with the Code including the Board of Directors' Report on internal control of financial reporting. The procedure and routines of SinterCast are compliant with the Corporate Governance code and this Corporate Governance Report does not indicate any significant deviations from the code.
The Board of Directors has the overall responsibility for internal control related to financial reporting. An important part of the Board's internal control management is to issue policies and instructions for the organisation with the objective to maintain a low risk profile regarding financial and legal matters, including: the Work Programme that clarifies the Board of Directors' responsibilities and regulates the internal distribution of work between the Board, its committees and the management; the Finance Policy, to define the Board of Directors' instructions regarding risk management and financial reporting, to ensure an effective risk profile and correct financial reporting; and the Authorisation Policy, including the organisation chart. In addition to the policies and instructions, the Board has established the Audit Committee. The entire Board constitutes the Audit Committee and the primary task of the Audit Committee is to ensure that established principles for financial reporting and internal control regarding financial reporting are followed, to ensure the quality of the financial reports and that appropriate relations are maintained with the Auditor. The management and the Audit Committee assess the most critical accounting areas on an annual basis to prepare instructions for the financial reporting and to define how to apply the accounting policies according to IFRS, including accounting judgements and estimates.
The Business is monitored in a structured process and associated risks have been discussed and evaluated during most Board Meetings. Any change in significant risks will result in changes in the instructions for the preparation of financial reports. Processes to track changes in accounting regulations and to ensure that these changes are implemented correctly in the financial reporting are in place, in which the Auditors play an important role. The most critical accounting areas for SinterCast have been defined and include the valuation of deferred tax on tax losses carried forward, the principle of capitalisation of research and development costs and patent costs.
The primary purpose of control activities is to prevent, or to discover at an early stage, errors in the financial reporting so that these can be addressed and rectified. Control activities take place on both the overview and the detail levels within the Group. Routines and activities are designed in order to find and rectify significant risks associated with the financial reporting. Regarding control activities in critical areas of the financial reporting, the management follows the business regularly and conducts normal control activities on daily operation, monthly, quarterly and year-end closings. Quarterly reports and the Annual Report have been sent to the Board and the Audit Committee for review and approval. The management and the Board especially monitored critical accounting areas, including: quarterly review of the estimated future taxable profit and deferred tax asset calculation, by reviewing the forecast for secured series production programmes and probability factors (the forecasted contribution from secured production, reduced by the forecasted expenses for the operations provides the base for the final deferred tax asset calculation); the revenue recognition of system sales and related revenue streams, in which contract review including delivery terms and fulfilment of contractual obligations are included to define the individual revenue streams (equipment, Engineering Service, Annual Software Licence Fee); and, review of research and development projects during the period to assess to what extent expensed costs should be capitalised.
The Board's monitoring of the internal control with respect to financial reporting took place through the Audit Committee followup on the financial reporting. In advance of each major Board Meeting, management distributed pre-defined and various ad hoc reports to the Board. The reports and key audit areas were reviewed and discussed during the Board Meetings. The results of internal self-assessment and reports from the Auditors have been reported to the Board.
All external information must be provided in accordance with the listing agreement for listed companies in Sweden and according to EU market abuse regulation MAR. Information concerning the SinterCast Group and the Parent Company may only be provided by the Managing Director. The Board of Directors has issued and approved the Interim Reports and the Annual Report of the financial year. The reports have been published on the website after having first been sent to Nasdaq Stockholm stock exchange.
| GROUP | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| Amounts in SEK million | Note | 2019 | 2018 | 2019 | 2018 | |
| Revenue | 1, 9 | 116.5 | 87.7 | 115.2 | 87.1 | |
| Cost of goods sold | 3, 17 | -27.5 | -18.8 | -27.8 | -18.8 | |
| Gross result | 89.0 | 68.9 | 87.4 | 68.3 | ||
| Gross result % | 76% | 79% | 76% | 78% | ||
| Cost of sales and marketing | 3, 5, 9 | -27.3 | -21.4 | -27.3 | -21.4 | |
| Cost of administration | 3, 4, 5, 9 | -8.9 | -7.4 | -8.9 | -7.4 | |
| Cost of research & development | 2, 3, 5, 9 | -12.0 | -10.3 | -12.0 | -10.3 | |
| Other operating income | 10 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Other operating costs | 10 | -0.7 | -0.4 | -1.2 | -1.1 | |
| Operating result | 40.1 | 29.4 | 38.0 | 28.1 | ||
| Financial income | 0.2 | 0.1 | 0.2 | 0.1 | ||
| Financial costs | -0.4 | -0.1 | -0.1 | -0.1 | ||
| Financial net | 11 | -0.2 | 0.0 | 0.1 | 0.0 | |
| Result before income tax | 39.9 | 29.4 | 38.1 | 28.1 | ||
| Income tax | 12 | 8.3 | 3.3 | 8.3 | 3.3 | |
| Result for the period for the Parent Company shareholders | 48.2 | 32.7 | 46.4 | 31.4 | ||
| Average number of shares, thousands | 25, 29 | 7,090.1 | 7,090.1 | 7,090.1 | 7,090.1 | |
| Earnings per share, SEK | 29 | 6.8 | 4.6 | 6.5 | 4.4 | |
| Earnings per share diluted, SEK | 29 | 6.8 | 4.6 | 6.5 | 4.4 | |
| Dividends per share, SEK | 5.0 | 2.8 | 5.0 | 2.8 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Amounts in SEK million Results for the period for the Parent Company shareholders Other comprehensive income Items may be reclassified to the income statement: Translation differences, foreign subsidiaries Other comprehensive income, net of tax Total comprehensive income for the period Total comprehensive income attributable to: |
2019 | 2018 | 2019 | 2018 |
| 48.2 | 32.7 | 46.4 | 31.4 | |
| -0.2 | -0.1 | – | – | |
| -0.2 | -0.1 | – | – | |
| 48.0 | 32.6 | 46.4 | 31.4 | |
| Shareholder of the Parent Company | 48.0 | 32.6 | 46.4 | 31.4 |
| Non-controlling interests | – | – | – | – |
| GROUP | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| Amounts in SEK million | Note | 2019 | 2018 | 2019 | 2018 |
| Operating activities | |||||
| Operating result | 40.1 | 29.4 | 38.0 | 28.1 | |
| Adjustments for items not included in the cashflow | |||||
| Depreciation | 13, 14 | 3.2 | 2.2 | 2.0 | 2.2 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | |
| Unrealised exchange rate differences | -0.2 | 0.0 | 0.0 | 0.0 | |
| Received interest | 0.1 | 0.1 | 0.1 | 0.1 | |
| Paid interest | -0.2 | -0.1 | -0.1 | -0.1 | |
| Paid income tax | 0.0 | 0.0 | 0.0 | 0.0 | |
| Total cashflow from operating activities before change in working capital | 43.0 | 31.6 | 40.0 | 30.3 | |
| Change in working capital | |||||
| Inventory | 17 | -1.9 | -2.3 | -1.8 | -2.4 |
| Operating receivables | 15 | -5.3 | -6.9 | -7.1 | -6.7 |
| Operating liabilities | 18, 19, 21, 22 | 2.0 | 2.4 | 4.9 | 3.4 |
| Total change in working capital | -5.2 | -6.8 | -4.0 | -5.7 | |
| Cashflow from operating activities | 37.8 | 24.8 | 36.0 | 24.6 | |
| Investing activities | |||||
| Acquisition of intangible assets | 13 | -0.6 | -1.7 | -0.6 | -1.7 |
| Acquisition of tangible assets | 14 | -0.6 | -0.9 | -0.6 | -0.9 |
| Cashflow from investing activities | -1.2 | -2.6 | -1.2 | -2.6 | |
| Financing activities | |||||
| Dividend | -35.5 | -19.5 | -35.5 | -19.5 | |
| Payment lease liability | -1.0 | – | – | – | |
| Cashflow from financing activities | -36.5 | -19.5 | -35.5 | -19.5 | |
| Exchange rate differences in cash and cash equivalents | 0.0 | 0.0 | 0.0 | 0.0 | |
| Change in cash and cash equivalents* | 0.1 | 2.7 | -0.7 | 2.5 | |
| Cash – opening balance | 32.8 | 30.1 | 31.2 | 28.7 | |
| Cash – closing balance | 26 | 32.9 | 32.8 | 30.5 | 31.2 |
* The cash and cash equivalents comprise of short-term deposits and cash at bank and in hand.
| Amounts in SEK million | Note | 31 Dec 2019 | 31 Dec 2018 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 13 | ||
| Capitalised development | 5.6 | 6.4 | |
| Patents | 1.1 | 1.2 | |
| Total intangible assets | 6.7 | 7.6 | |
| Tangible assets | 14 | ||
| Laboratory & Production Equipment, Facility Upgrades & Computers | 1.8 | 2.1 | |
| Process Control Equipment | 0.0 | 0.0 | |
| Right of Use Asset* | 2.7 | - | |
| Total tangible assets | 4.6 | 2.1 | |
| Financial assets | 16 | ||
| Other long-term receivables | 23 | 0.4 | 0.4 |
| Total financial assets | 0.4 | 0.4 | |
| Deferred tax asset | 12, 16 | 44.1 | 35.6 |
| Total deferred tax assets | 44.1 | 35.6 | |
| Total fixed assets | 55.8 | 45.7 | |
| Current assets | |||
| Inventory | 17 | 8.4 | 6.5 |
| Total inventory | 8.4 | 6.5 | |
| Short-term receivables | |||
| Trade debtors | 15, 23, 26 | 27.9 | 22.9 |
| Other debtors | 18, 23, 26 | 1.3 | 0.5 |
| Prepaid expenses and accrued income | 19 | 1.3 | 1.8 |
| Total short-term receivables | 30.5 | 25.2 | |
| Cash and cash equivalents | 26 | 32.9 | 32.8 |
| Total cash and cash equivalents | 32.9 | 32.8 | |
| Total current assets | 71.8 | 64.5 | |
| TOTAL ASSETS | 127.6 | 110.2 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholder's Equity | |||
| Share capital | 24, 25 | 7.1 | 7.1 |
| Additional paid in capital | 44.9 | 44.9 | |
| Translation differences, foreign subsidiaries Accumulated result |
26 | 1.6 | 1.9 45.3 |
| Total shareholders' equity | 58.1 111.7 |
99.2 | |
| Long-term liabilities | |||
| Other long-term liabilities* | 20 | 1.9 | 0.0 |
| Total long-term liabilities | 1.9 | 0.0 | |
| Current liabilities | |||
| Accounts payable | 23, 26 | 5.1 | 3.4 |
| Other current liabilities | 21, 23, 26 | 1.4 | 1.0 |
| Accrued expenses and prepaid income* | 22 | 7.5 | 6.3 |
| Provisions | 22 | 0.0 | 0.3 |
| Total current liabilities | 14.0 | 11.0 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 127.6 | 110.2 |
*Includes right of use assets (SEK 2.7 Million), long term lease liability (SEK 1.9 million) and short term lease liability (SEK 0.9 million)
| Share | Additional Paid | Exchange | Accumulated | Total | ||
|---|---|---|---|---|---|---|
| Amounts in SEK million | Note | Capital | In Capital | Differences* | Results | Equity |
| Opening Balance 1 January 2018 | 7.09 | 44.87 | 1.91 | 31.92 | 85.79 | |
| Change in accounting principles | – | – | – | 0.28 | 0.28 | |
| Revised opening balance 1 January 2018 | 7.09 | 44.87 | 1.91 | 32.20 | 86.07 | |
| Total comprehensive income | – | – | -0.06 | 32.65 | 32.59 | |
| Dividend | – | – | – | -19.50 | -19.50 | |
| Closing balance 31 December 2018 | 25 | 7.09 | 44.87 | 1.85 | 45.36 | 99.17 |
| Opening balance 1 January 2019 | 7.09 | 44.87 | 1.85 | 45.36 | 99.17 | |
| Total comprehensive income | – | – | -0.23 | 48.19 | 47.96 | |
| Dividend | – | – | – | -35.45 | -35.45 | |
| Closing balance 31 December 2019 | 25 | 7.09 | 44.87 | 1.62 | 58.10 | 111.68 |
* Translation of foreign subsidiaries financial statements
| Amounts in SEK million | Note | 31 Dec 2019 | 31 Dec 2018 |
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Intangible assets | 13 | ||
| Capitalised development | 5.6 | 6.4 | |
| Patents | 1.1 | 1.2 | |
| Total intangible assets | 6.7 | 7.6 | |
| Tangible assets | 14 | ||
| Laboratory & Production Equipment, Facility Upgrades & Computers | 1.8 | 2.0 | |
| Process Control Equipment | 0.0 | 0.0 | |
| Total tangible assets | 1.8 | 2.0 | |
| Financial assets | |||
| Shares in subsidiaries | 24 | 1.9 | 1.9 |
| Intercompany receivables long term | 0.3 | - | |
| Other long-term receivables | 23, 16 | 0.1 | 0.4 |
| Deferred tax asset | 12, 16 | 44.1 | 35.6 |
| Total financial assets | 46.4 | 37.9 | |
| Total fixed assets | 54.9 | 47.5 | |
| Current assets | |||
| Inventory | 17 | 8.3 | 6.5 |
| Total inventory | 8.3 | 6.5 | |
| Short-term receivables | |||
| Trade debtors | 23, 26 | 26.7 | 21.7 |
| Inter company receivables | 3.1 | 1.1 | |
| Other debtors | 18, 23, 26 | 1.3 | 0.5 |
| Prepaid expenses and accrued income | 19 | 1.1 | 1.6 |
| Total short-term receivables | 32.2 | 24.9 | |
| Liquidity | 23, 26 | 30.5 | 31.2 |
| Total liquidity | 30.5 | 31.2 | |
| Total current assets TOTAL ASSETS |
70.9 125.9 |
62.6 110.1 |
|
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Restricted capital | |||
| Share capital Statutory reserve |
24, 25 | 7.1 9.5 |
7.1 9.5 |
| Other reserve | 5.2 | 6.0 | |
| Total restricted capital | 21.8 | 22.6 | |
| Retained result | |||
| Share premium reserve | 35.3 | 35.3 | |
| Result brought forward | -0.1 | 3.2 | |
| Result for the year | 46.4 | 31.4 | |
| Total retained capital | 81.6 | 69.9 | |
| TOTAL SHAREHOLDERS' EQUITY | 103.4 | 92.5 | |
| Long-term liabilities | |||
| Other long-term liabilities | 20 | 0.0 | 0.0 |
| Total long-term liabilities | 0.0 | 0.0 | |
| Current liabilities | |||
| Accounts payable | 23, 26 | 4.9 | 3.2 |
| Inter company payable | 11.6 | 8.4 | |
| Other current liabilities | 21, 23, 26 | 1.2 | 0.8 |
| Accrued expenses and prepaid income | 22 | 4.8 | 5.2 |
| Total current liabilities | 22.4 | 17.6 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 125.9 | 110.1 |
| Share | Results | |||||||
|---|---|---|---|---|---|---|---|---|
| Share | Statutory | Other | Premium | Brought | Results for | Total | ||
| Amounts in SEK million | Note | Capital | Reserve | Reserve | Reserve | Forward | the Year | Equity |
| Opening balance 1 January 2018 | 7.09 | 9.53 | 5.08 | 35.34 | 5.22 | 18.30 | 80.56 | |
| Change in accounting principles | – | – | – | – | 0.07 | – | 0.07 | |
| Revised opening balance 1 January 2018 | 7.09 | 9.53 | 5.08 | 35.34 | 5.29 | 18.30 | 80.63 | |
| Appropriation of last year´s result | – | – | – | – | 18.30 | -18.30 | – | |
| Change other reserve | – | – | 1.70 | – | -1.70 | – | – | |
| Reversal, change other reserve | – | – | -0.79 | – | 0.79 | – | – | |
| Total comprehensive income | – | – | – | – | – | 31.39 | 31.39 | |
| Dividend | – | – | – | – | -19.50 | – | -19.50 | |
| Closing balance 31 December 2018 | 25 | 7.09 | 9.53 | 5.99 | 35.34 | 3.18 | 31.39 | 92.52 |
| Opening balance 1 January 2019 | 7.09 | 9.53 | 5.99 | 35.34 | 3.18 | 31.39 | 92.52 | |
| Appropriation of last year's result | – | – | – | – | 31.39 | -31.39 | – | |
| Change other reserve | – | – | 0.52 | – | -0.52 | – | – | |
| Reversal, change other reserve | – | – | -1.29 | – | 1.29 | – | – | |
| Total comprehensive income | – | – | – | – | – | 46.37 | 46.37 | |
| Dividend | – | – | – | – | -35.45 | – | -35.45 | |
| Closing balance 31 December 2019 | 25 | 7.09 | 9.53 | 5.22 | 35.34 | -0.10 | 46.37 | 103.45 |
SinterCast AB (publ) is the Parent Company of the SinterCast Group with its registered office located in Stockholm, Sweden. SinterCast is the world's leading supplier of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI). The consolidated financial accounts for SinterCast AB (publ) for the financial year ending 31 December 2019 were approved on 18 May 2020 by the Board of Directors and the Managing Director, for publication on 19 May 2020 and will be presented at the Annual General Meeting on 23 June 2020 for approval.
The consolidated financial statements for 2019 have been prepared in accordance with International Financial Reporting Standards (IFRS), as endorsed by the European Union. The consolidated accounts of the Group also comply with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 1 – Supplemental Accounting Rules for Groups. The accounts of the Parent Company comply with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 – Accounting for Legal Entities. The accounting policies used by the Parent Company comply with the policies used by the Group unless otherwise stated. The consolidated financial statements have been prepared under the historical cost convention, unless otherwise stated.
The new IFRS standard IFRS 16 Leases were applied from the financial year beginning 1 January 2019. The new lease standard that replaces IAS 17 Leases and the related interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires assets and liabilities arising from all leases, with some exceptions, to be recognised on the balance sheet. This model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. The portion of the lease payments included in other operating expenses in the consolidated statement of income will be transferred to depreciations and amortisations and the interest portion to financial expenses. The standard affects primarily the accounting for the Group´s operating leases increasing the balance sheet totals and some changes in key figures. The accounting for lessors is in all material aspects unchanged. The parent company use the exception in RFR 2 to not report lease agreements in accordance with IFRS 16. In 2019 and onwards, the same principles that was applied in 2018 will continue to apply.
The implementation of IFRS 16 had a small positive impact on operating profit and a smaller negative impact on profit after financial items. The lease portfolio includes a limited number of contracts, primarily related to operational leases for offices, warehouses, company cars and office equipment. SinterCast has chosen to perform the transition in line with the cumulative catch-up approach and has opted to not restate comparative figures. Right-of-use assets have been determined as an amount equal to the lease liabilities as identified at initial application. A single discount rate has been applied. Lease contracts shorter than 12 months or ending within 12 months at the date of application are considered short-term and hence not recognised as lease liability or right-of-use asset. Low value contracts (with a value below EUR 5,000) are also excluded from being recognised as lease liability or right-of-use asset.
The adjustment to the opening balance 1 January 2019 is shown in the following table:
| (SEK MILLION) | Closing balance 31 Dec 2018 before transition to IFRS 16 Leases |
Reclassifications due to transition to IFRS 16 Leases |
Adjustments due to transition to IFRS 16 Leases |
Adjusted opening balance 1 Jan 2019 |
|---|---|---|---|---|
| Right-of-use assets | – | – | 3.6 | 3.6 |
| Lease liabilities, interest bearing of which is; | – | – | 3.6 | 3.6 |
| – Long term | – | – | 2.7 | 3.6 |
| – Short term | – | – | 0.9 | 0.9 |
It is judged that there are no other IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning 1 January 2019 that had a material impact on the Group.
The preparation of financial statements according to IFRS requires judgement of how to use accounting policies. Further, the management must decide how to apply chosen accounting principles. The principle of capitalisation of Research & Development costs, patent costs and the valuation of deferred taxes on tax losses carried forward are important for SinterCast.
The standard for accounting for deferred tax is IAS 12 "Income Taxes". SinterCast's interpretation of IAS 12 is that recognition of deferred tax assets for the carry forward of unused tax losses may be recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.
SinterCast uses a model to calculate to which extent the carried forward tax losses can be utilised. The calculation is based on the SinterCast business model in the form of its contracts with foundries for the programs that are in current series production or where SinterCast's foundry customers have received definitive orders for future series production. The input for the model is based on the forecast volume, as communicated by the foundry and/or OEM, and is adjusted with a probability factor for each series production program. The programs and probability factors are reviewed regularly. To determine the future taxable profit, the forecast contribution from secured production is reduced by the forecast expenses of the operations. The calculations are based on historical eight-year average currency rates.
The above model is only used to determine the amounts of the tax losses that are probable to be utilised within the forecast horizon, as required by IAS 12, and does not constitute a profit forecast.
Costs that are directly associated with filing a patent controlled by the Group in a new market, and where the patent is expected to generate economic benefits exceeding costs beyond one year, are recognised in the balance sheet. In applying this principle, management considers the probability of future benefits in the specific local market, for each patent.
Development costs that have been directly associated with specific and unique development projects and where management is confident that the resulting products will generate economic benefits exceeding costs beyond one year are recognised as intangible assets and therefore capitalised. In applying this principle, management also considers the ability of market success and the future economic benefits.
The consolidated accounts include the Parent Company and all companies in which the Parent Company directly or indirectly controls more than 50% of the voting rights or by other means has full control. No minority interest currently exists. The consolidated accounts have been prepared in accordance with the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The Group has no additional shareholdings at present other than the subsidiaries.
Costs in SinterCast are presented in the profit and loss statement classified by function. This coincides best with how SinterCast looks upon and controls its business.
SinterCast constitutes one segment and the financial statements are presented accordingly. At present, SinterCast provides only two products, process control systems for the reliable production of Compacted Graphite Iron, and related services for product development, installations, calibration, and technical support; and SinterCast also supplies a suite of tracking technologies, including the SinterCast Ladle Tracker® and SinterCast Cast Tracker®, to improve process control, productivity and traceability in a variety of applications. The company judges that the opportunities and risks with its business are related to the overall CGI market development. The format of the financial statements presented in this Annual Report coincides with the internal reporting structure that management uses to plan, control and follow the company's business activities.
Tangible assets consist of laboratory and production equipment, facility upgrades, computers, installed process control equipment, lease agreements for facilities and vehicles and office furniture's. The tangible assets are stated at historical cost less depreciation. Expenses for improvement of the assets are included in the carrying amount when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Costs for maintenance and repair are expensed. The assets are depreciated systematically over the anticipated useful life using the straight-line method. The rate of depreciation, after evaluation of the useful life for each asset is 3 years (33%) for computers, 3-4 years (24-33%) for laboratory and production equipment, 3–4 years (24–33%) for installed process control equipment, 10 years (10%) for production tooling and 7 years (14%) for facility upgrades and lease agreements.
The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the income statement.
Expenses that are directly associated with filing a patent controlled by the Group in a new market, and where the patent is expected to generate economic benefits exceeding costs beyond one year, are recognised in the balance sheet. The annual patent fees are expensed. Amortisation of capitalised patent expenses is included in the costs for Research & Development.
Development costs that are directly attributable to the design and testing of identifiable and unique new products controlled by the Group are recognised as intangible assets when the following criteria are met:
Directly attributable costs that are capitalised include direct employee costs.
Costs that have been directly associated with the development of specific and unique customer products controlled by the Group and that are expected to generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Capitalised development costs related to specific customer projects are amortised over the estimated useful life of the projects. Amortisation of capitalised development costs are included in the costs for Research & Development.
Capitalised development costs in the Parent Company are reported as restricted equity in other reserves. Depreciation of capitalised development costs recognised in profit for the year is transferred from restricted equity to non-restricted equity to the extent that depreciation relates to these investments.
The rate of depreciation, after evaluation of the useful lives is 12 years (8%) for patents and similar rights and 5–7 years (14– 20%) for capitalised development.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The impairment test is based on future estimated income.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash generating units. Assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Assets not subject to amortisation, which refer to capitalised development yet to be finalised, are tested for impairment on an quarterly basis.
A financial instrument is a real or virtual document such as derivative instruments, commercial papers, fixed income instruments, debt or loan agreements, representing a legal agreement between two or more parties regarding a right to payment of money. A financial asset or liability is recognised when the company is a party to the contractual conditions of the instrument. Acquisitions and sales of financial instruments are accounted for at trade date. An instrument is removed from the balance sheet when cashflow rights from the instrument have expired or been transferred and when the Group has transferred substantially all of the risks and rewards of ownership.
SinterCast classifies its instruments in the following measurement categories:
The classification for interest-bearing assets is based on the nature of the assets' cash flows and business model. Investments in equity instruments shall be measured at fair value in accordance with IFRS 9. SinterCast has chosen to report the changes in value of such instruments in the income statement.
Interest-bearing assets (debt instruments) held for the purpose of collecting contractual cash flows and where these cash flows consist only of principal amounts and interest are valued at amortized cost. The carrying amount of these assets is adjusted with any expected loan losses (see paragraph below). Interest income from these financial assets is reported using the effective interest method and is reported as financial income. The Group's financial assets that are valued at amortized cost consist of long term receivables, trade debtors and cash and cash equivalents.
The Group's financial assets at fair value through profit or loss consist of funds, short term investments and derivative instruments.
Investments in funds and other short-term investments are valued at fair value through the income statement as the Group's business model is to manage the funds based on value development and to continuously realize results by divesting parts of the investments. Equity instruments where the Group has chosen to report these at fair value through the income statement are also included in this category. A gain or loss on a financial asset recognized at fair value through the income statement is recognized net in the income statement in the period in which the gain or loss arises.
Derivative Instruments, included in other debtors or other creditors are always recognized at fair value through the income statement and gain or loss is recognised in the financial net in the income statement in the period in which the gain or loss arises.
The Group's financial liabilities are classified as valued at amortized cost using the effective interest method. Financial liabilities at amortized cost consist of Long term and short term lease liabilities, accounts payable and other liabilities, excluding accruals. Liabilities are initially reported at fair value, net after transaction costs. Liabilities are subsequently reported at amortized cost and any difference between the amount received (net after transaction costs) and the repayment amount is reported in the statement of comprehensive income distributed over the loan period, applying the effective interest method. Liabilities is classified as short-term in the balance sheet if the company does not have an unconditional right to postpone the debt's regulation for at least twelve months after the reporting period. Dividends paid are reported as a liability after the Annual General Meeting has approved the dividend. Accounts payable and other operating liabilities have short expected maturities and are valued without discounting at nominal amounts.
At each reporting date, the Group assesses the future expected loan losses that are linked to assets reported at accrued acquisition value based on forward-looking information. The Group's financial assets for which expected loan losses are expected to consist essentially of accounts receivable and other receivables. The Group applies the simplified approach for credit reservation, that is, the reserve will correspond to the expected loss over the entire life of the accounts receivable.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Swedish Kronor, which is the company's functional and presentation currency.
Transactions in foreign currency have been translated into the functional currency at the transaction date using the exchange rate prevailing at the dates of the transactions. Payment in foreign currency following the transaction, resulting in currency gain or loss, is accounted for in the profit and loss statements. Conversion of monetary liabilities or receivables in foreign currency has been made at the currency rate at the end of the period. Gains or losses from recalculation of receivables or liabilities related to the operation are presented in the profit and loss statements as other income or costs.
Translating the foreign subsidiaries' financial statements into Swedish Kronor has been made according to the following principles:
SinterCast applies the principle that revenue is recognised when control of a good or service transfers to a customer. SinterCast also needs to assess whether the revenue will be recognised over time or at a point in time. The effect of variable considerations and the time value of money on transaction price need to be assessed. In addition, quantitative and qualitative disclosures about the entity's contracts with customers, performance obligations in the contracts and significant judgements may be required.
Remuneration can be paid in the form of payments for the delivery of equipment and spare parts, delivery of consumables, production fees, license fees for leased software and service services. Revenue from contracts made with customers to SinterCast is reported based on when SinterCast's various distinct performance obligations in the contracts are fulfilled. When SinterCast becomes a party to an agreement, it is analysed to determine how many distinct performance obligations it contains. The remuneration received or will be received under the agreement, i.e the transaction price, is allocated to each distinct performance obligation based on the respective obligations' relative share of estimated independent sales prices for the total obligation. Then the allocated amount is recognized as revenue when the obligation is fulfilled. The following describes how each revenue stream is handled in SinterCast accounting.
Remuneration for the sale of systems is based on payment for hardware, software and installation of the system at the customers site. The sale of a system installation, containing an interconnected hardware supply, software delivery and on-site services for commissioning, is considered to be a joint undertaking and is reported when the installation has been accepted by the customer. The reason why these different parts of the agreement are regarded as a performance undertaking is that the total promise to the customer is that it buys a fully installed calibrated machine. Machine and service are thus reported together as a performance commitment and revenue is reported when control over this total distinct commitment is transferred.
The sale of spare parts, consumables and stand-alone system components that are delivered without interconnected services are usually reported in connection with the shipment of the goods and after the above criteria have been established. The transport is normally done in accordance with Incoterm's rules, ex-works (ex-works).
The sale of consumables that are delivered are usually reported in connection with the shipment of the goods and
after the above criteria have been established. The transport is normally done in accordance with Incoterm's rules, ex-works (ex-works).
Revenues from production fees, ie a license fee per tonne of cast goods which, based on the use of SinterCast's intellectual property rights, shall be recognized as revenue when the license is distinct and based on the use of the intellectual property right, ie the revenues relate specifically to the license and not to other obligations. Production fees are recognised on an accrual basis when the customers have reported shipped castings. Production not reported on time is accounted for after made estimates.
Software Licence Fee. Licenses identified as separate performance commitments are of the character "right to use" (right to use). A "right to use" license means the right to use SinterCast´s IP right in its existing condition at the time the license is granted. The right to use licenses is reported at a given time, ie at the time when the customer gets control of the license. Typically, distinct licenses of the kind are "the right to use" because the services that could affect the value and benefit of the license are reported separately as a separate distinct performance commitment. SinterCast defines the licenses as "right to use" and an annual software license fee is charged according to the customer agreement. The license fee is reported in the income statement at the time when the lease term starts and the customer has control over the asset.
Revenue from services refer to service contracts where no assets are created and where the customer consumes the service when it is provided. The commitment is assessed to be met over time. Service revenue are recognised in the accounting period in which the service is performed and to the SinterCast have right to invoice the customer.
Inventories are stated at the lower of cost and net realisable value. Cost consists of purchase price, and other costs directly related to the purchase, and is determined using the first in, first out method (FIFO). Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and, the amount can be reasonably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
All expenses related to the remuneration of the employees have been accounted for in the period the work has been performed. If notice terminating the employment has been served, expenses until termination of the employment are accounted for during the notice period.
If future period contributions are received from the employee, the expense will be recognised as cost in that future accounting period. The pension plan for employees in the UK is based on a 30% contribution of the salary while, for employees in the US, it is based on a 15% contribution of the salary, without any future commitments in either country. All commitments to the employees are in the form of defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The pension plan for employees in Sweden follows the ITPplan insured by Alecta. The Alecta ITP-plan is by definition a multi-employer benefit plan but is constructed such that it is not possible to calculate surplus or deficit on the pension plans that fulfil the requirements in IAS 19 enabling defined benefit accounting, for the respective participating legal entities. The plan is therefore accounted for as a defined contribution plan. Alecta reported a preliminary collective consolidation level at December 31, 2019 of 148 (142) percent. The collective consolidation level is defined as the fair value of Alecta's plan assets in percent of the insured pension commitments calculated according to Alecta's actuarial assumptions, which are not in accordance with IAS 19. Such a surplus can be distributed among the employers or the beneficiaries, but there is no agreement concerning this that enables the company to report a receivable from Alecta. Alecta's pension commitments to SinterCast are insignificant (0.0032%) for Alecta in relation to their total pension commitments. SinterCast represents 0.0025% of the total number of insured individuals at Alecta.
The pension age for the majority of SinterCast employees is expected to be 65-67 years; however, this is regulated by the relevant national laws rather than by the individual employment agreements.
The Group has classified its lease agreements as operational because the Group maintains the ownership and associated risks and returns. At all times, SinterCast retains the ownership of the SinterCast software and systems.
Lease payments under operating leases are recognised in the profit and loss statement on a straight-line basis over the contractual period of the lease. If equipment is sold after the lease period has expired, the revenue from the sale is accounted as revenue.
The Group's capitalised lease agreements consist mainly of offices, warehouses, company cars and office equipment. The average lease period for buildings is approximately five years, and for machinery and equipment approximately three years. The Group recognises a right-of-use (ROU) asset and a lease
liability at the commencement of the lease. Whether a contract contains a lease is determined based on whether SinterCast has the right to control the use of an identified asset for a period of time. At the commencement date, a right-of-use asset as defined by IFRS 16 is measured at cost. The cost of the right-of-use asset shall comprise the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, any initial direct costs incurred by the lessee and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.
The nominal lease liability is initially measured at the present value of the lease payments over the lease term. The lease payments include fixed payments, amounts to be expected to be paid under residual value guarantees, the exercise price of reasonably certain extension options, and payments of penalties for terminating a lease in case this reflects the lease term. The lease payments are discounted at a single discount rate. The lease term is the non-cancellable period of the lease plus period covered by an option to extend or option to terminate if the lessee is reasonably certain to exercise the extension option. Management judgment based on realistic estimates is used when determining the lease term. The right-of-use assets are depreciated and interest on lease liabilities recognised in the statement of income over the lease term. The lease liabilities are subsequently measured at initial recognition less occurring lease payments that are allocated to the principal. Lease payments are presented as repayments of liabilities and related interest expenses. The lease payments are presented in the cash flow from financing activities and the interest related to leases are presented in the cash flow from operating activities. Lease payments related to short-term leases, low-value assets and variable payments are presented in the cash flow from operating activities. The lease and non-lease components are separated. Modifications to lease agreements may result in adjustments to existing right-of-use assets and lease liabilities. A gain or loss arising from a modification and a termination of a lease agreement is recognised in other operating income or other operating expenses in the statement of income. The Group applies the two available exemptions, which relate to either short-term contracts, in which the lease term is less than 12 months, or low-value assets, which are expensed to other operating expenses.
The Group has classified its lease agreements as operational because the lessor maintains the ownership and associated risks and returns for premises and equipment. Expenses for leasing are charged to profit and loss on a straight-line basis over the period of the lease.
Tax on temporary differences is accounted for using the balance sheet liability method. The accounting policy for deferred tax in relation to unused carry-forward tax losses is described under the heading "Critical Accounting Judgements and Estimates" and presented in the Accounting Notes.
Cash and cash equivalents are defined as cash, cash holdings at bank and short-term deposits available with less than three months' notice.
The total amount in tables and statements might not always summarise as there are rounding differences. The aim is to have each line item corresponding to the source and it might therefore be rounding differences in the total.
Amount below SEK 50,000 is presented as "0.0". Where no amount is applicable, the value is presented as "–".
ALL AMOUNTS IN SEK MILLION UNLESS OTHERWISE STATED
Equipment includes sold and leased Systems, Mini-Systems and Spare Parts. Series Production includes Consumables, Production Fees and Software Licence Fees. Engineering Service includes performed Engineering Services, Demonstrations and sales of Test Pieces. Group sales represent delivery to foreign subsidiaries of Equipment and Engineering Service. Group purchases represent mainly services provided by the subsidiaries.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Equipment | 11.9 | 4.6 | 8.8 | 4.5 |
| Series Production | 102.3 | 81.3 | 99.0 | 76.9 |
| Engineering Service | 2.3 | 1.8 | 1.9 | 1.7 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 |
| Group Sales | – | – | 5.5 | 4.0 |
| Total | 116.5 | 87.7 | 115.2 | 87.1 |
| Group sales of total sales for the Parent Company | 5% | 5% |
|---|---|---|
| Group purchases of costs of goods sold for the Parent Company | 54% | 58% |
| GROUP | ||
|---|---|---|
| Revenue Breakdown per Country | 2019 | 2018 |
| Brazil | 50.9 | 33.4 |
| Mexico | 38.2 | 23.0 |
| Sweden | 6.0 | 7.4 |
| Korea | 5.3 | 5.6 |
| Germany | 5.3 | 3.2 |
| USA | 3.8 | 4.2 |
| China | 3.7 | 8.6 |
| Other | 3.3 | 2.3 |
| Total | 116.5 | 87.7 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Costs for Personnel and Administration | 7.6 | 7.5 | 7.6 | 7.5 |
| Depreciation and Write Down | 1.5 | 1.7 | 1.5 | 1.7 |
| Material in R&D | 1.2 | 1.0 | 1.2 | 1.0 |
| Capitalised Development | -0.4 | -1.6 | -0.4 | -1.6 |
| Other | 2.1 | 1.7 | 2.1 | 1.7 |
| Total | 12.0 | 10.3 | 12.0 | 10.3 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Personnel expenses | 36.3 | 31.7 | 20.5 | 17.8 |
| Material in cost of goods sold and in R&D | 16.8 | 12.2 | 36.2 | 28.8 |
| Consultants; sales, marketing and administration | 7.0 | 3.4 | 6.5 | 2.9 |
| Travel, commission, exhibition and other sales costs | 6.9 | 3.5 | 4.8 | 2.1 |
| Depreciation and write down* | 3.2 | 2.2 | 2.0 | 2.2 |
| Office and related costs | 3.2 | 2.4 | 2.6 | 1.8 |
| Operational foreign exchange difference | 0.7 | 0.4 | 1.2 | 1.8 |
| Other | 4.0 | 4.0 | 3.8 | 3.9 |
| Total | 78.1 | 59.8 | 77.6 | 60.5 |
*Of which SEK 1.2 million relates to Right-of-Use Assets
| GROUP | PARENT COMPANY | ||
|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 |
| 0.3 | 0.2 | 0.3 | 0.2 |
| 0.2 | 0.1 | 0.2 | 0.1 |
| 0.1 | 0.2 | 0.1 | 0.2 |
| – | – | – | – |
| 0.1 | 0.1 | – | – |
| 0.0 | 0.0 | – | – |
| 0.0 | 0.0 | – | – |
| 0.7 | 0.6 | 0.6 | 0.5 |
*The total fee to PwC is SEK 0.6 million. In addition to audit services, PwC provided certain audit-related services. The audit-related services include quarterly review.
The Annual General Meeting 2019 decided upon a remuneration policy in respect of the Managing Director and other members of the Group Management as follows: The Board of Directors proposes that the Annual General Meeting decides upon a remuneration policy in respect of the Managing Director and other members of the Group Management as follows. The remuneration shall consist of a balanced combination of fixed remuneration, variable remuneration, pension and other benefits. The total remuneration shall be in accordance with market practice and shall be based on performance. The fixed remuneration shall be individually determined and shall be based on each individual's responsibility, role, competence and position. Variable remuneration shall be based on predetermined targets on the Group level and the individual level, considering the effect on the long term result. In extraordinary situations a special compensation may be paid out to attract and retain key competence. Variable remuneration and special compensation may not exceed an amount corresponding to 75 percent of the fixed annual salary.
Pension benefits are in the form of defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the entity does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Variable remuneration and special compensation in extraordinary situations shall not constitute a basis for pension as far as this does not conflict with applicable collective agreement or applicable law. Upon termination by the company, the notice period for the Managing Director is nine months, and six months for the other members of the Group Management. Upon termination of the Managing Director by the company the Managing Director is entitled to a severance payment corresponding to nine months compensation. Deduction shall not be made for remuneration paid by another employer. No severance payments have been agreed with the other members of the Group Management.
The Board of Directors and, on behalf of the Board of Directors, the Compensation Committee, shall be entitled to deviate from the guidelines if there are specific reasons in an individual case.
ALL AMOUNTS IN SEK THOUSANDS
| 2019 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|
| Salaries and | Social security | Pension | Salaries and | Social security | Pension | |||
| GROUP | remuneration | costs | costs | remuneration | costs | costs | ||
| China | 1,550 | 181 | – | 1,376 | 172 | – | ||
| Korea | 1,963 | – | 184 | 1,778 | – | 152 | ||
| Sweden | 14,108 | 4,678 | 2,522 | 12,718 | 4,034 | 2,178 | ||
| United Kingdom | 4,750 | 632 | 905 | 4,033 | 526 | 800 | ||
| USA | 4,800 | 213 | 529 | 4,277 | 210 | 478 | ||
| Total | 27,171 | 5,704 | 4,141 | 24,182 | 4,942 | 3,608 | ||
| PARENT COMPANY | ||||||||
| Sweden* | 14,108 | 4,678 | 2,522 | 12,718 | 4,034 | 2,178 | ||
| Total | 14,108 | 4,678 | 2,522 | 12,718 | 4,034 | 2,178 |
* Contributions to the Alecta ITP-2 pension plan amounted to SEK 0.7 million (0.7). The expected contribution for 2020 is approximately SEK 0.7 million.
The remuneration to the Managing Director amounted to SEK 4.8 million (4.0). The remuneration is allocated according to the compensation committee´s resolution and includes variable remuneration of SEK 0.6 million (0.4), taxable benefits in the form of insurance premiums paid for life, long term disability and medical, and school fees amounting to SEK 0.9 million (0.8). Pension contributions (30% of salary), amounted to SEK 0.9 million (0.8), which are based on contributions made without any further commitments. The social costs for the Managing Director amounted to SEK 0.6 million (0.5). The remuneration to the other two (two) members of the Group Management, presented on page 17, amounted to SEK 2.7 million (2.5), including variable remuneration amounting to SEK 0.34 million (SEK 0.13 million). In addition, pension contributions amounting to SEK 0.9 million (0.7) were paid, including additional voluntary contributions. The social costs amounted to SEK 1.0 million (0.9). The pension plan follows the Swedish ITP-Plan, according to collective agreement.
For all other employees, the remuneration package included a variable element during 2019. The variable part constituted a minor part of the total remuneration package. The variable remuneration for 2019 has been accounted for on an accrual basis. During 2019, no share based related benefits existed in SinterCast.
The Annual General Meeting on 23 May 2019 (AGM 2018) decided upon a total Board remuneration, for the period until the next AGM, of SEK 1,110,000 (SEK 960,000). It was further decided that the remuneration shall be divided between the Chairman, SEK 390,000 (SEK 320,000) and the ordinary Board Members, SEK 180,000 (SEK 160,000) each, with no Board remuneration for the Managing Director. The AGM decided that the Board should consist of six (six) ordinary Board Members.
The Board remuneration during 2019 has been in accordance with the AGM decision, in total SEK 1.11 million (0.96). The remuneration to the new Chairman, Jan Åke Jonsson, amounted to SEK 0.39 million (-) and the remuneration to the ordinary Board Members Robert Dover, Caroline Sundewall Jun Arimoto and Lars Hellberg amounted to SEK 0.18 million (0.16) each. No Board fees were allocated to the Managing Director. No bonus schemes, incentive programmes, pension commitments, or pension liabilities exist for the Board Members, with the exception of the Managing Director. The Review Group was disbanded on 23 May 2019.
ALL AMOUNTS IN SEK THOUSANDS
| 20191 | 2018 2 | 20191 | 2018 2 | |
|---|---|---|---|---|
| Board Remuneration | Review Group | |||
| Jan Åke Jonsson | 390 | – | – | – |
| Hans-Erik Andersson | – | 320 | – | – |
| Robert Dover | 180 | 160 | – | – |
| Caroline Sundewall | 180 | 160 | – | 20 |
| Jun Arimoto | 180 | 160 | – | – |
| Lars Hellberg | 180 | 160 | – | 20 |
| Steve Dawson | – | – | – | – |
| Total | 1,110 | 960 | – | 40 |
For the period 23 May 2019–23 June 2020
For the period 24 May 2018–23 May 2019
ALL AMOUNTS IN SEK THOUSANDS
| 2019 | |||||
|---|---|---|---|---|---|
| Board and Group | Other | Board and Group | Other | ||
| GROUP | Management | Employees | Management | Employees | |
| China | – | 1,550 | – | 1,376 | |
| Korea | – | 1,963 | – | 1,778 | |
| Sweden | 3,772 | 10,336 | 3,522 | 9,196 | |
| United Kingdom | 4,750 | – | 4,033 | – | |
| USA | – | 4,800 | – | 4,277 | |
| Total | 8.522 | 18,649 | 7,555 | 16,627 | |
| PARENT COMPANY | |||||
| Sweden | 3,772 | 10,336 | 3,522 | 9,196 | |
| Total | 3,772 | 10,336 | 3,522 | 9,196 |
No substantial transactions took place between SinterCast and the Board or management during 2019.
| 2019 | 2018 | |||||
|---|---|---|---|---|---|---|
| GROUP | Total | Female | Female % | Total | Female | Female % |
| Board Members | 13 | 2 | 15 | 13 | 2 | 15 |
| CEO and Group Management | 3 | 0 | 0 | 3 | 0 | 0 |
| PARENT COMPANY | ||||||
| Board Members | 6 | 1 | 17 | 6 | 1 | 17 |
| CEO and Group Management | 3 | 0 | 0 | 3 | 0 | 0 |
| 2019 | 2018 | ||||
|---|---|---|---|---|---|
| GROUP | Total | Male | Total | Male | |
| China | 1 | 1 | 1 | 1 | |
| Korea | 1 | 1 | 1 | 1 | |
| Sweden | 17 | 13 | 16 | 12 | |
| United Kingdom | 1 | 1 | 1 | 1 | |
| USA | 2 | 2 | 2 | 2 | |
| Total | 22 | 18 | 21 | 17 | |
| PARENT COMPANY | |||||
| Sweden | 17 | 13 | 16 | 12 | |
| Total | 17 | 13 | 16 | 12 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| SinterCast as Lessor | 2019 | 2018 | 2019 | 2018 |
| Income from leased equipment | 0.1 | 0.1 | 0.1 | 0.1 |
| Contracted future income | 0.5 | 0.5 | 0.5 | 0.5 |
| Receivables within 1 year | 0.1 | 0.1 | 0.1 | 0.1 |
| Receivables within 2–5 years | 0.4 | 0.4 | 0.4 | 0.4 |
| Receivables beyond 5 years | 0.0 | 0.0 | 0.0 | 0.0 |
Leased equipment refers to Agreements with SKF.
| SinterCast as Lessee | 2019 | 2018 | 2019 | 2018 |
|---|---|---|---|---|
| Cost from leased premises and equipment | – | 1.4 | 0.9 | 0.8 |
| Contracted future commitments | – | 6.7 | 3.5 | 4.0 |
| Payable within 1 year | – | 1.3 | 0.9 | 0.8 |
| Payable within 2–5 years | – | 5.4 | 3.5 | 3.2 |
| Payable beyond 5 years | – | 0.0 | 0.0 | 0.0 |
Leasing fees for operational leasing charged to the operating result refer primarily to leased premises used for production, inventory, development, and office space.
| Lease Liability | 2019 | 2018 | |
|---|---|---|---|
| Liabilities for lease contracts as of December 31, 2018 | 6.7 | – | |
| Discounted using the group´s incremental borrowing rate of 7.8 % | -3.0 | – | |
| Less short term and low-value leases recognised on a straight line basis | -0.1 | – | |
| Lease liability recognised as of January 1, 2019 | 3.6 | – | |
| Amounts recognised in statement of income | 2019 | 2018 | |
| Expenses related to short term leases and leases of low value (included in administration) |
0.0 | – | |
| Depreciation and impairment of right-of-use assets | 1.2 | – | |
| Interest expense (included in financial expense) | 0.2 | – | |
| Interest income (included in financial income) | 0.0 | – | |
| Amounts recognised in statement of income | 2019 | 2018 | |
| Amortisation of lease liabilities (included in finance activities) | -1.0 | – |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Other Income | ||||
| Exchange gains from operations | 2.1 | 2.4 | 2.3 | 2.6 |
| Total | 2.1 | 2.4 | 2.3 | 2.6 |
| Other Costs | ||||
| Exchange loss from operations | -2.8 | -2.8 | -3.5 | -3.7 |
| Total | -2.8 | -2.8 | -3.5 | -3.7 |
| Total other operating income and costs | -0.7 | -0.4 | -1.2 | -1.1 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Interest | 2019 | 2018 | 2019 | 2018 |
| Interest income | 0.1 | 0.1 | 0.1 | 0.1 |
| Interest cost | -0.4 | -0.1 | -0.1 | -0.1 |
| Total | -0.3 | 0.0 | 0.0 | 0.0 |
| Revaluation differences of forward exchange contracts and investments | ||||
| Exchange gain, forward contracts | 0.1 | 0.0 | 0.1 | 0.0 |
| Exchange loss, forward contracts | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 0.1 | 0.0 | 0.1 | 0.0 |
| Total financial income and expenses | -0.2 | 0.0 | 0.1 | 0.0 |
| GROUP | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| Income tax | 2019 | 2018 | 2019 | 2018 | ||
| Income tax for the year | -0.2 | 0.0 | -0.2 | 0.0 | ||
| Change in deferred tax asset | 8.5 | 3.3 | 8.5 | 3.3 | ||
| Income tax in the income statement | 8.3 | 3.3 | 8.3 | 3.3 | ||
| GROUP | PARENT COMPANY | |||||
| Deferred tax asset | 2019 | 2018 | 2019 | 2018 | ||
| Deferred tax asset brought forward | 35.6 | 32.3 | 35.6 | 32.3 |
Capitalised carry forward tax losses during the year 8.5 5.5 8.5 5.5 Change in Swedish income tax rate 0.0 -2.2 0.0 -2.2
| Accumulated value carried forward | 44.1 | 35.6 | 44.1 | 35.6 |
|---|---|---|---|---|
| Deferred tax asset relates to carry forward tax losses in Sweden, only. No tax effects on items included in other comprehensive income. |
Historical eight-year average currency rates have been used when calculating the value of the deferred tax asset on the balance sheet date.
Based on the filed tax returns for the financial year 2018, with addition of the calculated taxable result of the financial year 2019.
| Country | Valid until | 2019 | 2018 | Tax Rates |
|---|---|---|---|---|
| Sweden | indefinitely | 352.9 | 390.9 | 21.4% |
| United Kingdom | indefinitely | 33.1 | 31.7 | 20% |
| USA* | 20 years from the year of filing | 26.1 | 24.4 | 15-35% |
| Total** | 412.1 | 447.0 | 21.4% |
*Of which USD 2.4 million is due within 5 years, USD 0.4 million within 10 years.
**SEK 213.1 million (SEK 171.6 million) of the Group's total carried-forward tax losses have been used as the basis of the deferred tax asset calculation SEK 199.0 million (SEK 275.4 million) of the Group's carried forward tax losses have not yet been used.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| Tax expenses based on actual tax rate | 2019 | 2018 | 2019 | 2018 |
| Result before tax | 39.9 | 29.4 | 38.1 | 28.1 |
| Tax calculated based on Swedish tax rate | -8.5 | -6.5 | -8.2 | -6.2 |
| Tax effect on non tax deductible expenses | 0.0 | 0.0 | 0.0 | 0.0 |
| Tax effect on foreign tax | 0.0 | 0.0 | 0.0 | 0.0 |
| Tax effect on utilised carried forward tax losses | 8.5 | 6.5 | 8.2 | 6.2 |
| Tax effect on capitalised tax losses | 8.3 | 3.3 | 8.3 | 3.3 |
| Tax on the result for the period as per the income statements | 8.3 | 3.3 | 8.3 | 3.3 |
The income tax rate valid for the Group was 21.4% (22%). The income tax rate valid for Sweden was 21.4% (22%). The income tax rate valid for UK was 20% (20%). The income tax rate valid for US was 21% (21%).
| Patent | Capitalised Development | Total | |||||
|---|---|---|---|---|---|---|---|
| GROUP | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Acquisition value brought forward | 15.8 | 16.3 | 9.0 | 7.4 | 24.8 | 23.7 | |
| Acquisitions during the year | |||||||
| Research & development | 0.1 | 0.1 | 0.5 | 1.6 | 0.6 | 1.7 | |
| Disposals | -10.9 | -0.6 | -0.7 | 0.0 | -11.6 | -0.6 | |
| Accumulated acquisition carried forward | 5.0 | 15.8 | 8.8 | 9.0 | 13.8 | 24.8 | |
| Depreciation brought forward | -14.6 | -14.5 | -2.6 | -1.5 | -17.2 | -16.0 | |
| Depreciation for the year | |||||||
| Research & development | -0.2 | -0.2 | -1.3 | -1.1 | -1.5 | -1.3 | |
| Disposals | 10.9 | 0.1 | 0.7 | 0.0 | 11.6 | 0.1 | |
| Accumulated depreciation carried forward | -3.9 | -14.6 | -3.2 | -2.6 | -7.1 | -17.2 | |
| Book value carried forward | 1.1 | 1.2 | 5.6 | 6.4 | 6.7 | 7.6 | |
| Patent | Capitalised Development | Total | |||||
| PARENT COMPANY | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Acquisition value brought forward | 15.8 | 16.3 | 9.0 | 7.4 | 24.8 | 23.7 | |
| Acquisitions during the year | |||||||
| Research & development | 0.1 | 0.1 | 0.5 | 1.6 | 0.6 | 1.7 | |
| Disposals | -10.9 | -0.6 | -0.7 | 0.0 | -11.6 | -0.6 | |
| Accumulated acquisition carried forward | 5.0 | 15.8 | 8.8 | 9.0 | 13.8 | 24.8 | |
| Depreciation brought forward | -14.6 | -14.5 | -2.6 | -1.5 | -17.2 | -16.0 | |
| Depreciation for the year | |||||||
| Research & development | -0.2 | -0.2 | -1.3 | -1.1 | -1.5 | -1.3 | |
| Disposals | 10.9 | 0.1 | 0.7 | 0.0 | 11.6 | 0.1 | |
| Accumulated depreciation carried forward | -3.9 | -14.6 | -3.2 | -2.6 | -7.1 | -17.2 | |
| Book value carried forward | 1.1 | 1.2 | 5.6 | 6.4 | 6.7 | 7.6 |
* All intangible assets are related to Sweden.
| Laboratory & Production Equipment, | ||||||
|---|---|---|---|---|---|---|
| Facility Upgrades & Computers | Process Control Equipment | Total | ||||
| GROUP | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Acquisition value brought forward | 5.3 | 4.4 | 2.1 | 5.3 | 7.4 | 9.7 |
| Acquisitions during the year | ||||||
| Administration | 0.3 | 0.9 | – | – | 0.3 | 0.9 |
| Sales and marketing | – | – | – | – | – | – |
| Disposals | ||||||
| Sales and marketing | – | – | 0.0 | -3.2 | 0.0 | -3.2 |
| Administration | -0.1 | 0.0 | – | – | -0.1 | 0.0 |
| Accumulated acquisition carried forward | 5.5 | 5.3 | 2.1 | 2.1 | 7.6 | 7.4 |
| Depreciation brought forward | -3.2 | -2.7 | -2.1 | -5.3 | -5.3 | -8.0 |
| Depreciation for the year | ||||||
| Sales and marketing | – | – | – | – | – | – |
| Administration | -0.6 | -0.5 | – | – | -0.6 | -0.5 |
| Disposals | ||||||
| Sales and marketing | – | – | 0.0 | 3.2 | 0.0 | 3.2 |
| Administration | 0.1 | 0.0 | – | – | 0.1 | 0.0 |
| Accumulated depreciation carried forward | -3.7 | -3.2 | -2.1 | -2.1 | -5.8 | -5.3 |
| Book value carried forward | 1.8 | 2.1 | 0.0 | 0.0 | 1.8 | 2.1 |
| Company Cars and Office | |||||||
|---|---|---|---|---|---|---|---|
| Offices and Warehouses | Equipments | Total | |||||
| GROUP | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |
| Acquisition value brought forward | 2.9 | – | 0.7 | – | 3.6 | – | |
| Acquisitions during the year | |||||||
| Administration | 0.1 | – | 0.2 | – | 0.3 | – | |
| Sales and marketing | – | – | – | – | – | – | |
| Disposals | |||||||
| Sales and marketing | – | – | – | – | 0.0 | – | |
| Administration | – | – | – | – | 0.0 | – | |
| Accumulated acquisition carried forward | 3.0 | – | 0.9 | – | 3.9 | – | |
| Depreciation brought forward | – | – | – | – | 0.0 | – | |
| Depreciation for the year | |||||||
| Sales and marketing | – | – | – | – | – | – | |
| Administration | -1.0 | – | -0.2 | – | -1.2 | – | |
| Disposals | |||||||
| Sales and marketing | – | – | – | – | 0.0 | – | |
| Administration | – | – | – | – | 0.0 | – | |
| Accumulated depreciation carried forward | -1.0 | – | -0.2 | – | -1.2 | – | |
| Book value carried forward | 2.0 | – | 0.7 | – | 2.7 | – | |
| Laboratory & Production Equipment, Facility Upgrades & Computers |
Process Control Equipment | Total | ||||
|---|---|---|---|---|---|---|
| PARENT COMPANY | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Acquisition value brought forward | 5.8 | 5.0 | 1.7 | 1.7 | 7.5 | 6.7 |
| Acquisition during the year | ||||||
| Administration | 0.3 | 0.9 | – | – | 0.3 | 0.9 |
| Sales and marketing | – | – | – | – | – | – |
| Disposals | ||||||
| Sales and marketing | – | – | – | – | – | – |
| Administration | -0.1 | -0.1 | – | – | -0.1 | -0.1 |
| Accumulated acquisition carried forward | 6.0 | 5.8 | 1.7 | 1.7 | 7.7 | 7.5 |
| Depreciation brought forward | -3.8 | -3.3 | -1.7 | -1.7 | -5.5 | -5.0 |
| Depreciation for the year | ||||||
| Sales and marketing | – | – | – | – | – | – |
| Administration | -0.5 | -0.5 | – | – | -0.5 | -0.5 |
| Disposals | ||||||
| Sales and marketing | – | – | – | – | – | – |
| Administration | 0.1 | 0.0 | – | – | 0.1 | 0.0 |
| Accumulated depreciation carried forward | -4.2 | -3.8 | -1.7 | -1.7 | -5.9 | -5.5 |
| Book value carried forward | 1.8 | 2.0 | 0.0 | 0.0 | 1.8 | 2.0 |
*All fixed assets in the Parent Company relates to Sweden.
| GROUP | ||
|---|---|---|
| 2019 | 2018 | |
| Accounts receivable not due | 17.4 | 17.7 |
| Accounts receivable overdue 0–30 days | 6.2 | 2.3 |
| Accounts receivable overdue 31–90 days | 1.4 | 2.5 |
| Accounts receivable overdue 91–180 days | 0.3 | 0.0 |
| Accounts receivable overdue >180 days | 3.8 | 0.4 |
| Accounts receivables, gross* | 29.1 | 22.9 |
| Provision for bad debts | -1.2 | 0.0 |
| Accounts receivables net | 27.9 | 22.9 |
Accounts receivable net, including a provision for bad debts amounting to SEK 1.21 (0.05) million. The carrying amount of accounts receivable represents the fair value. *Of which SEK 27.9 million refers to IFRS 9 category 1 and SEK 1.2 million refers to category 3
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Deposits* | 0.4 | 0.4 | 0.1 | 0.1 |
| Deferred Tax Asset | 44.1 | 35.6 | 44.1 | 35.6 |
| Accrued Interest from Subsidiary | – | – | 0.3 | 0.3 |
| Total | 44.5 | 36.0 | 44.5 | 36.0 |
*Mainly office rental deposits.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Work in progress | 2.4 | 2.0 | 2.4 | 2.0 |
| Finished products | 6.0 | 4.5 | 5.9 | 4.5 |
| Total | 8.4 | 6.5 | 8.3 | 6.5 |
| GROUP | PARENT COMPANY | |||
| 2019 | 2018 | 2019 | 2018 | |
| The amount of inventories recognised as an expense during the period | 15.6 | 11.2 | 15.5 | 11.0 |
| Total | 15.6 | 11.2 | 15.5 | 11.0 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| VAT and tax receivables | 1.1 | 0.4 | 1.2 | 0.5 |
| Other current receivables | 0.2 | 0.1 | 0.1 | 0.0 |
| Total | 1.3 | 0.5 | 1.3 | 0.5 |
* The fair value of forward foreign exchange contracts is determined by using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. The fair value of derivative instruments is established by using valuation techniques. For this purpose, observable market information is used.
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Prepaid rents | 0.1 | 0.1 | 0.0 | 0.1 |
| Prepaid insurance | 0.6 | 0.7 | 0.5 | 0.5 |
| Accrued income from Production Fee | 0.0 | 0.0 | 0.0 | 0.0 |
| Others | 0.6 | 1.0 | 0.6 | 1.0 |
| Total | 1.3 | 1.8 | 1.1 | 1.6 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Opening balance | 0.0 | 0.0 | – | – |
| Adjustment IFRS 9 | 2.7 | 0.0 | – | – |
| Additional loans | 0.1 | 0.0 | – | – |
| Reclassification to short term lease liability | -0.9 | 0.0 | – | – |
| Total | 1.9 | 0.0 | 0.0 | 0.0 |
| GROUP | PARENT COMPANY | |||
|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | |
| Withholding tax and national insurance contributions for employees | 1.4 | 1.0 | 1.2 | 0.8 |
| Fair value on currency forward foreign exchange contracts* | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 1.4 | 1.0 | 1.2 | 0.8 |
* The fair value of forward foreign exchange contracts is determined by using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. The fair value of derivative instruments is established by using valuation techniques. For this purpose, observable market information is used.
| GROUP | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| 2019 | 2018 | 2019 | 2018 | ||
| Accrued personnel expenses | 4.4 | 3.9 | 2.9 | 2.6 | |
| Accrued adminstrative costs | 0.4 | 0.3 | 0.3 | 0.2 | |
| Deferred income | 1.3 | 1.5 | 1.1 | 1.5 | |
| Provisions for cost of goods sold | - | 0.3 | – | 0.3 | |
| Short term lease liability | 0.9 | – | – | – | |
| Others | 0.5 | 0.6 | 0.5 | 0.6 | |
| Total | 7.5 | 6.6 | 4.8 | 5.2 |
| Financial assets at fair value through profit and loss |
Financial assets at amortised cost |
Financial liabilities at amortised cost |
Total | |||||
|---|---|---|---|---|---|---|---|---|
| 31 December 2019 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Other long term receivables | – | – | 0.4 | 0.4 | – | – | 0.4 | 0.4 |
| Trade debtors | – | – | 27.9 | 22.9 | – | – | 27.9 | 22.9 |
| Other debtors | – | – | 1.3 | 0.5 | – | – | 1.3 | 0.5 |
| Cash and cash equivalents | 4.9 | 10.0 | 28.0 | 22.8 | – | – | 32.9 | 32.8 |
| Accounts payable | – | – | – | – | -5.1 | -3.4 | -5.1 | -3.4 |
| Lease liabilities, short | – | – | – | – | -0.9 | – | -0.9 | – |
| Lease liabilities, long | – | – | – | – | -1.9 | – | -1.9 | – |
| Other current liabilities | – | – | – | – | -1.4 | -1.0 | -1.4 | -1.0 |
| Total | 4.9 | 10.0 | 57.6 | 46.6 | -9.3 | -4.4 | 53.2 | 52.2 |
The Group holds short-term investments that are included in cash and bank balances which are valued at level 1 (quoted prices in an active market). The short-term investments in the form of municipality bonds are managed as a group of financial assets and are reported at fair value through profit and loss.
| ALL AMOUNTS IN SEK | 2019 | 2018 |
|---|---|---|
| Acquisition value brought forward | 66,268,332 | 66,268,332 |
| Acquisition during the year | ||
| New share issue | 0 | 0 |
| Accumulated acquisition value carried forward | 66,268,332 | 66,268,332 |
| Impairment brought forward | -64,352,300 | -64,352,300 |
| Impairment for the year | ||
| Write-off of shares in subsidiaries | 0 | 0 |
| Accumulated impairment carried forward | -64,352,300 | -64,352,300 |
| Book value carried forward | 1,916,032 | 1,916,032 |
| Corporate | Votes and Percentage | Book Value | Book Value | ||
|---|---|---|---|---|---|
| List of subsidiaries to SinterCast AB (publ) | Identification Number | of Equity, % | 2019 | 2018 | |
| SinterCast Trading (Beijing) Co., Ltd. | Beijing, China | 911101055976721753 | 100 | 1,848,047 | 1,848,047 |
| SinterCast Korea Co., Ltd | JeonJu-City, South Korea | 418-81-40366 | 100 | 67,981 | 67,981 |
| SinterCast Ltd. | London, UK | 2021239 | 100 | 1 | 1 |
| SinterCast, Inc. | Chicago, USA | 187363 | 100 | 1 | 1 |
| SinterCast SA de CV | Saltillo, Mexico | SIN960415AY5 | 100 | 1 | 1 |
| SinterCast Servicios SA de CV | Saltillo, Mexico | SSE960408EX1 | 100 | 1 | 1 |
| Total | 1,916,032 | 1,916,032 |
| Number of Shares | |||||
|---|---|---|---|---|---|
| A* | B** | Total | Par Value (SEK) | Share Capital (SEK) | |
| Share capital as of 1 January 1993 | 101,200 | 2,660 | 103,860 | 0.50 | 51,930 |
| March 1993: Share issue I | 161,200 | 2,660 | 163,860 | 0.50 | 81,930 |
| April 1993: Split 10:1 | 1,612,000 | 26,600 | 1,638,600 | 0.05 | 81,930 |
| April–May 1993: Share issue II | 2,084,600 | 26,600 | 2,111,200 | 0.05 | 105,560 |
| April–May 1993: Share issue III | 2,311,350 | 26,600 | 2,337,950 | 0.05 | 116,898 |
| December 1993: Bonus issue | 2,311,350 | 26,600 | 2,337,950 | 1.00 | 2,337,950 |
| January 1994: Directed share issue | 2,811,350 | 26,600 | 2,837,950 | 1.00 | 2,837,950 |
| October 1994: Directed share issue | 2,811,350 | 626,600 | 3,437,950 | 1.00 | 3,437,950 |
| October 1995: Directed share issue | 3,435,350 | 626,600 | 4,061,950 | 1.00 | 4,061,950 |
| December 1995: Subscription via warrants | 3,435,350 | 628,600 | 4,063,950 | 1.00 | 4,063,950 |
| June 1996: Subscription via warrants | 3,435,350 | 655,600 | 4,090,950 | 1.00 | 4,090,950 |
| February 2002: Directed share issue | 4,235,350 | 655,600 | 4,890,950 | 1.00 | 4,890,950 |
| Number of Outstanding Shares | |||||
| June 2002: Change share structure* (B shares converted to A) | 4,890,950 | 1.00 | 4,890,950 | ||
| September 2002: Subscription via warrants | 4,900,062 | 1.00 | 4,900,062 | ||
| November 2003: Subscription via warrants | 5,364,200 | 1.00 | 5,364,200 | ||
| December 2003: Subscription via warrants | 5,389,200 | 1.00 | 5,389,200 | ||
| December 2004: Subscription via warrants | 5,552,900 | 1.00 | 5,552,900 |
September 2009: Directed share issue 6,478,383 1.00 6,478,383 October 2010: Subscription via warrants 6,930,653 1.00 6,930,653
December 2010: Subscription via warrants 6,975,653 1.00 6,975,653 December 2013: Subscription via warrants 7,090,133 1.00 7,090,133
* One vote per share
**One tenth vote per share
All business and share-ownership involves some measure of risk. The risk factors reported herein are not ranked in order of priority or significance, and do not claim to be comprehensive. Shareholders should make their own assessment of each risk factor and its significance for the future development of the company. The risk exposure for SinterCast can be broadly divided into strategic risks, operational risks and financial risks.
The Board of Directors monitors the business development and the associated risks during the Board Meetings. The Board of Directors has established policies to provide a framework for how the various risks that SinterCast can encounter shall be managed and to define the risk exposure with which the business may be operated. The objective of the Board's policies is to maintain a low risk profile regarding financial and legal matters. External monitoring is conducted by auditors and advisors. Internal monitoring takes place in accordance with the operating principles approved by the Board of Directors. Appropriate insurance has been taken against risks associated with assets and interruption of operations and to minimise indemnity risks. Operating procedures have also been implemented to reduce the risk of IT interruptions and recovery procedures have been established. SinterCast is currently not involved in any legal disputes.
Uncertainty factors for SinterCast include the timing of OEM decisions for new CGI engines and other components, adherence to start-of-production dates and ramp projections, the global economy for new vehicle sales, technology trends and emissions legislation, and the individual sales success of vehicles equipped with SinterCast-CGI components.
Prior to the onset of the COVID-19 virus, most forecasters were predicting nearterm stabilisation or softening of the global passenger vehicle, commercial vehicle and industrial power markets. The outlook for Europe generally indicated stable near-term sales for passenger vehicles and moderate growth for commercial vehicles. In China, the outlook for commercial vehicles – the main opportunity for SinterCast in China – indicated moderate growth, with the market opportunity for SinterCast depending primarily on the enforcement of emissions legislation and acceptance of the SinterCast business model. In North America, currently the largest end-user market for SinterCast, commercial vehicle sales were forecast to soften while passenger vehicle sales were forecast to remain near historical high levels, with the growth of larger crossovers, SUVs and pick ups benefitting SinterCast. Although the top three best-selling vehicles in America have recently committed to diesel engine options, the long-term outlook for diesel passenger vehicles remains uncertain. Prior to the onset of the COVID-19 virus, the main market risk for SinterCast and its end-user industries related to the impact of political uncertainty, the renegotiation of international tariffs and free-trade agreements on vehicle sales, and the demand for goods transportation. However, the COVID-19 virus has quickly evolved to dominate the near-term risk outlook for the global automotive and foundry industries, and the overall global economy. Most industry forecasts suggest that it is prudent to anticipate a weak second quarter with the start of recovery in the second half of year, although it is not yet possible to predict the recovery ramp or the influence on the SinterCast market development. While the series production may be temporarily influenced by the COVID-19 virus, SinterCast remains confident in the long-term growth of CGI.
Series production is diversified between diesel and petrol engines for passenger vehicles, commercial vehicle engine components, and other applications such as exhaust components, bedplates and industrial power components. This diversification, combined with the delivery of SinterCast-CGI castings to more than 30 different end-users in five continents, helps to mitigate the risk of cyclical demand in any one sector or for any one customer. SinterCast also endeavours to offset the risk in its current customer activities by developing new products and applications. The SinterCast Tracking Technologies provide the opportunity for supplemental revenue beyond the core CGI business.
The business development of SinterCast is strongly linked to the internal combustion engine, particularly the diesel engine. Recent events in the global passenger vehicle market have increased the scrutiny on diesel engines and some governments are revisiting emissions legislation. While SinterCast believes that the diesel engine can meet stringent NOx legislation and that it remains an important part of the solution for fleet fuel economy and CO2 reduction, revised legislation can present a hindrance to the market development for diesel passenger vehicles. For long-haul commercial vehicles, diesel engines are expected to remain the dominant powertrain technology throughout the SinterCast planning horizon. Within the passenger vehicle market, sales of new powertrain technologies, such as vehicle electrification (hybrid and plug-in vehicles), alternative fuels and fuel cells will grow, however, many automotive industry forecasts agree that the internal combustion engine will remain the dominant powertrain technology well beyond the SinterCast planning horizon. In perspective, plug-in electric passenger vehicles accounted for approximately 3% of new passenger vehicle sales in Europe; 2% in the US, and 5.5% in China in 2019. While considerable attention is given to "electrification", most industry analysts agree that the majority of electrified vehicles for the next 20 years will be hybrids, combining both electric drive and an internal combustion engine. The continued need for efficient internal combustion engines provides an opportunity for SinterCast and SinterCast must promote CGI alternatives for these applications. The internal combustion engine, both diesel and petrol, will continue to make efficiency improvements to defend its position as the most cost-efficient and convenient powertrain option. These gains will include downsizing, increased thermal and mechanical loading, and increased specific performance with current product development focussing on more than 200 horsepower per litre. These developments can benefit from stronger material such as CGI.
The Board of Directors has established a Code of Conduct to guide the way that the company is represented. The guidelines provided in the Code of Conduct are established to reinforce the recognition, respect and leadership position that SinterCast enjoys in industry and in society. SinterCast is committed to high and consistent standards of integrity and ethics. The Board and the management are committed to leading by example and to ensuring that the Code of Conduct is honoured by all employees.
In recent years, SinterCast has actively worked to expand its customer base in order to reduce its dependence on individual foundry customers. As of 15 March 2020, SinterCast has 57 installations in 14 countries and 11 different languages. In 2019, the three largest customers represented SEK 48.5 million (SEK 33.2 million), SEK 34.7 million (SEK 22.1 million) and SEK 5.3 million (SEK 6.7 million) of the company's sales while the five largest customers accounted for approximately SEK 95.9 million (SEK 70.4 million) of sales. As a result, the loss of a single foundry customer, capacity constraints at any such customer, or stoppages in the production of any high-volume engine programme could – at least in the short term – have a significant negative impact on the company's revenue and result.
For the foreseeable future, SinterCast will be dependent on the expertise and creativity of a core group of key personnel. These people have the knowledge, experience and contacts that develop and support the underlying technology and that maintain the customer support and sales activities. The departure of one or more of these individuals could have a negative effect on the company's business. The Board of Directors has implemented short-term and long-term incentive programmes to manage this risk and to motivate, retain and reward employees. The recent recruitment of technical staff has also helped to distribute the core know-how and broaden the competence within the company. SinterCast strives to provide a challenging and rewarding work environment.
The company has implemented a strategy to protect its technology through patents or other intellectual property rights to preserve its leading position within liquid metal process control. The company applies for patents in selected countries that are relevant to the foundry and/or automotive industries, while retaining some core technology as knowhow. However, there is no guarantee that the company will continue to be granted patents in the relevant geographic markets, or will be able to defend the patents that have been granted. There is also a risk that new technologies may be developed which circumvent the company's patents. During the recent years, as the SinterCast technology has evolved, the company allowed selected patents to lapse, as it was judged that continued payment of the national phase annuities for these patents would not provide a return on the investment.
The risk for claims refers to the costs that SinterCast could incur to replace or rectify non-conforming or defective products or systems and the possible costs for customer-levied penalties. SinterCast endeavours to resolve any claim quickly and efficiently to ensure customer satisfaction and loyalty, even if such resolutions result in short term costs. During 2019, the Group's cost for claims amounted to less than one percent of turnover. SinterCast strives to minimise its risks for claims by means of comprehensive testing during the development phase, through quality control, proactive customer support and adequate insurance.
The Board of Directors has established the SinterCast finance policy to provide a framework for how different types of financial risks shall be managed and to define the risk exposure with which the business may be operated. The objective of this policy is to maintain a low risk profile. In general, risks and principles are applicable for both the Parent Company and the Group. Please see page 37 "Financial Instruments" for more detailed information regarding the SinterCast classification of financial instruments.
Liquidity risk is the risk that the Group's short term cash and cash equivalents requirements may not be met. Planning of the Group's future requirements for liquid funds is facilitated by continuously updating the Group's requirements for liquidity over a 12-month period. The Board must be promptly notified of any sudden or expected decline in the Group liquidity. The risk is limited by holding sufficient cash and cash equivalents and if necessary, securing granted but unused credit facilities that can be utilised without conditions, for at least a 12-month period. The liquidity risk is considered as low. The Group's liquidity on 31 December 2019 amounted to SEK 32.9 million (SEK 32.8 million).
| Liquidity | Group | Parent Company | ||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in SEK million | 2019 | 2018 | 2019 | 2018 | ||||
| Bonds, fixed income instruments | 4.9 | 10.0 | 4.9 | 10.0 | ||||
| Cash at bank | 28.0 | 22.8 | 25.6 | 21.2 | ||||
| Total | 32.9 | 32.8 | 30.5 | 31.2 | ||||
| Maturity Structure | 2019 | 2018 | ||||||
| Group (Parent Company) | Total | <30 days | Total | <30 days | ||||
| Total cash & equivalents | 32.9 (30.5) 32.9 (30.5) 32.8 (31.2) 32.8 (31.2) | |||||||
| Receivables | 27.9 (26.7) | 6.2 (6.0) 22.9 (21.7) | 2.2 (1.8) | |||||
| Income from leases | 0.5 (0.5) | 0.0 (0.0) | 0.1 (0.1) | 0.0 (0.0) | ||||
| Total | 61.3 (57.7) 39.1 (36.5) 55.8 (53.0) 35.0 (33.0) | |||||||
| Total payable, ex salaries | 5.5 (5.3) | 5.4 (5.2) | 3.9 (3.7) | 3.8 (3.6) | ||||
| Expenses from leases | 1.4 (3.5) | 0.1 (0.6) | 1.4 (0.8) | 0.1 (0.1) | ||||
| Total | 6.9 (8.8) | 5.5 (5.8) | 5.3 (4.5) | 3.9 (3.7) |
Refinancing risk is the risk that the Group will be unable to raise new loans or to refinance existing loans, when falling due. Planning of the Group's future finance requirements is facilitated by continuously updating the Group's finance forecasts over a five year period, and reviewing existing loans, if any. Currently, the SinterCast Group has no external loans. Only the Board can approve new loans.
Credit risk is the risk that any counterparty may not be able to fulfil its commitments and, as a consequence, the Group suffers a loss. Prior to entering a business relationship with a new customer, professional credit information about the customer is obtained and reviewed. Before offering credit, financing guarantee products that provide cover against payment risks are evaluated and the credit terms and terms of payments are determined accordingly. This is also valid regarding deposits. Credit risk in excess of SEK 5 million must be approved by the Board. Credit risk is handled by the Group's finance function. Credits are systematically monitored and followedup. The majority of the Group's customers are large, well-known companies and organisations. The credit risk is distributed among the majority of the customers. Historical and present bad debt losses are insignificant. SinterCast operates with credit insurance for most contracts. Provision for bad debts has been made amounting to SEK 1.2 million.
Funds not needed in the operation shall be invested in order to minimise risks and optimise returns. Bond investments shall be made in bond funds such that all funds shall be Standard & Poors BBB or above, with a maximum of 50% of the funds allocated to the BBB class. The Group shall not invest in securities or funds which are exposed to long term interest rate risks.
| Credit Risk | Group | Parent Company | |||
|---|---|---|---|---|---|
| Amounts in SEK million | 2019 | 2018 | 2019 | 2018 | |
| Receivables, not due | 17.4 | 17.7 | 16.5 | 17.2 | |
| Due <30 days | 6.2 | 2.3 | 6.0 | 1.8 | |
| Due > 30 days | 4.3 | 2.9 | 4.2 | 2.7 | |
| Provision for bad debts | 1.2 | 0.0 | 1.2 | 0.0 | |
| Total trade receivables | 29.1 | 22.9 | 27.9 | 21.7 |
Interest rate risk is the risk that variations in interest rates will have a negative impact on the Group results. The aim is to minimise the interest rate risk by investing the Group's liquid funds in a well-balanced portfolio. Interest rate risk exists in short term investments, bank deposits, lease liabilities and outstanding loans due to variability of interest rates. An interest rate change of one percentage point up or down corresponds to an interest risk of approximately SEK 0.3 million for SinterCast's short term investments and bank deposits.
Currency risk is the risk that the value of future flows, loans, and equity may change as a result of foreign exchange rate fluctuations. This risk can be further subdivided as follows:
Transaction exposure is the risk that the value in Swedish krona of actual and estimated net inflows in foreign currencies varies with the exchange rate. The net inflow of exposed currencies shall be budgeted for the next 12 months and presented to the Group's banks and other financial advisors for guidance on future hedging. The hedging for the following year will thereafter be decided by the Board.
The Group´s net inflow of foreign currency primarily consists of USD and EUR while its expenses are primarily in SEK. The increased expenses outside Sweden have increased the natural hedge of the USD and EUR inflow. The net surplus of foreign currency primarily consists of USD and EUR which are exchanged to SEK and GBP. During 2019, foreign currencies exchanged to SEK amounted to approximately USD 6.7 million (USD 3.9 million) and EUR 2.7 million (EUR 1.3 million). Foreign currencies exchanged to GBP amounted to approximately USD 1.0 million (USD 0.5 million) and EUR 0.0 million (EUR 0.3 million). During 2019, the average USD/SEK exchange rate increased by 8.9%, from 8.69 to 9.46. The EUR/SEK exchange rate increased by 3.2% from 10.26 to 10.59. The exchange rate movement in these currencies in 2019 effected the net currency flow by approximately SEK 0.7 million (SEK 0.6 million). The exchange rate movements in GBP compared to USD and EUR affected the 2019 net currency flow by approximately SEK 0.0 million. An exchange rate increase of 10 percent in the main net currency flows versus SEK, has an effect of approximately USD 0.7 million (USD/SEK) and EUR 0.3 million (EUR/SEK) on the future net currency flows. All presented figures above are before consideration of hedges made in accordance with the Finance Policy. It is estimated that the combined currency movement, phasing on conversions made and other currency effects on the Income Statement during 2019, amounts to approximately SEK -0.7 million.
In accordance with the Group's Finance Policy, part of the expected and budgeted flow of USD and EUR was hedged for the following 12 month period. Outstanding currency forward exchange contracts on the balance sheet date were:
| Amounts in million | 2019 | 2018 | |||
|---|---|---|---|---|---|
| Total | <6 month | Total | <6 month | ||
| USD | 0.6 | 0.6 | 1.2 | 1.0 | |
| EUR | 1.0 | 1.0 | 1.2 | 1.0 |
Translation exposure is the risk of holding net assets in a foreign subsidiary (i.e. subsidiaries with a base currency other than SEK). Currently, the net assets in foreign subsidiaries are not hedged. This is reviewed on a yearly basis, in conjunction with the Finance Policy review and approval. Any changes to the hedge decision must be approved by the Board. The value of the Group's net assets, meaning the difference between capital employed and net debt, amounted to SEK 8.4 million, (SEK 6.6 million) and was distributed among the following currencies:
| Amounts in SEK million | 2019 | 2018 |
|---|---|---|
| USD | 4.7 | 3.9 |
| GBP | 2.1 | 1.5 |
| KRW | 0.9 | 0.7 |
| RMB | 0.5 | 0.3 |
| MEX | 0.2 | 0.2 |
If the currency moves 10% towards SEK, the following translation effect will arise, and will affect the result before tax correspondingly.
Translation Risk (Amounts in SEK million)
USD (0.5), RMB (0.2), GBP (0.1), KRW (0.1), MEX (0.0)
Loan exposure is the risk of holding loans denominated in a foreign currency, which are not used to hedge the transaction or equity position. The matching principle is applied to funds borrowed externally. Accordingly, if possible, money is raised, or hedged, in the currency in which it is intended to invest the funds. Internal loans are denominated in the currency of the lender. External foreign currency loans must be approved by the Board.
Capital Risk is the risk that the Group's capital structure is not efficient or that there are risks to cease the Group's operation.
The Group's objective in respect of the capital structure is to optimise the capital structure in order to secure that SinterCast is able to continue to conduct its operations so that it can generate a return for shareholders and value for other stakeholders and in order to maintain an optimal capital structure so that the cost of capital can be reduced.
To manage the capital structure, the Group must seek approval from the shareholders to issue new shares, buy-back shares or distribute dividends. The capital structure is regularly monitored and the Board is updated of the current capital structure and provided with proposals to be decided upon. The Group equity on 31 December 2019 amounted to SEK 111.7 million (SEK 99.2 million). The equity of SinterCast AB amounted to SEK 103.5 million (SEK 92.5 million). The foreign subsidiaries have been financed by internal loans and equity.
Since the beginning of 2020, the onset of the COVID-19 pandemic has resulted in rapidly changing market conditions and increased uncertainty. This has impacted the global foundry and automotive industries. It is not yet possible to quantify the full impact of the virus or the evolution of the recovery ramp. The following press releases have been issued:
There have been no other significant events since the balance sheet date of 31 December 2019 that could materially change these financial statements.
The balance sheets and the income statements shall be presented for approval at the Annual General Meeting of shareholders on 23 June 2020.
The following earnings in the Parent Company are at the disposal of the Annual General Meeting.
| Total non-restricted equity of the Parent Company | 81,601,992 |
|---|---|
| Result for the year | 46,366,879 |
| Result brought forward | -101,497 |
| Share premium reserve | 35,336,610 |
| (Amounts in SEK) |
The Board of Directors proposes to the AGM that earnings be distributed as follows.
| Total | 81,601,992 |
|---|---|
| To be retained by the Parent Company | 81,601,992 |
| (Amounts in SEK) |
The European Securities and Markets Authority (ESMA) has issued guidelines regarding alternate key ratios for listed companies. Alternative ratios relate to financial key figures and share data used by management to control and evaluate the Group's business, other than those defined in the applicable financial reporting framework (IFRS). These ratios are also considered to be of interest to external investors and analysts who monitor the company. The key ratios are calculated according to the following definitions using the figures presented in the financial statements. According to management judgement, reconciliation of the key ratios has not been presented because the calculations are based on non-adjusted figures.
Solidity % Average number of shares adjusted for dilution Shareholders' equity expressed as percentage of total assets end of period Weighted average of the number of shares for the period Equity per share adjusted for dilution Shareholders' equity divided by the average number of shares Earnings per share Capital employed Result for the period divided by the average number of shares Total assets less non-interest bearing liabilities Earnings per share, diluted Return on shareholders' equity % Result for the period divided by the average number of shares Result for the period as a percentage of average shareholders' equity adjusted for dilution Quarterly values are not annualised Dividend per share Return on capital employed % Dividend divided by the number of shares Result for the period as a percentage of average capital employed Cashflow from operations per share
Quarterly values are not annualised Cashflow from operations divided by the number of shares
Result for the period as a percentage of total average assets. Latest paid price for the SinterCast share at Nasdaq Stockholm Quarterly values are not annualised stock exchange
Operating result as percentage of revenue Weighted average of the number of shares outstanding for the period
Return on total assets % Share price at the end of the period
52
Accounting Notes
Notes
The Board of Directors and the Managing Director declare that the consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and give a fair view of the Group's financial position and results of operations. The financial statements of the Parent Company have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view of the Parent Company's financial position and results of the operations. The Directors' Report of the Group and the Parent Company provides a fair review of the development of the Group's and the Parent Company's operations, financial position and results of the operations, and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.
Stockholm 18 May 2020
Jan Åke Jonsson Chairman of the Board
Robert Dover Member of the Board
Caroline Sundewall Member of the Board
Jun Arimoto Member of the Board
Lars Hellberg Member of the Board
Steve Dawson Member of the Board & Managing Director
Our audit report was submitted on 18 May 2020 Öhrlings PricewaterhouseCoopers AB
Tobias Stråhle Authorised Public Accountant
To the general meeting of the shareholders of SinterCast AB (publ), corporate identity number 556233-6494
We have audited the annual accounts and consolidated accounts of SinterCast AB (publ) for the year 2019 except for the corporate governance statement on pages 23-28. The annual accounts and consolidated accounts of the company are included on pages 19-53 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 and the group as of 31 December 2019 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 2019 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. Our opinions do not cover the corporate governance statement on pages 23-28. 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 opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company's audit committee in accordance with the Audit Regulation (537/2014) Article 11.
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 accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
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.
The transaction flow, as well as the processes that the company applies to ensure financial reporting, is limited in scope. The financial reporting is supervised by a small group of people within the company's finance department, management and board. For efficiency reasons audit evidence was mainly obtained by testing details, on sample basis, of individual transactions in the accounting records.
Our audit of the consolidated financial statements has included all the material units in the Group. Continuous meetings with the management and the audit committee was held where we reported our findings.
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 consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole. 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.
Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of 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.
The consolidated and the parent company's balance sheet include deferred taxes amounting to SEK 44 (36) million. This corresponds to SEK 213 (172) million of the accumulated tax losses carry forward in Sweden. Details of the total tax losses are disclosed in note 12 in the financial statements.
Under IFRS tax losses should be recognized as deferred tax assets to the extent it is likely that these can be offset against future taxable income over the foreseeable future.
The company management assesses that the utilization of tax losses carried forward are limited to future earnings from secured CGI programs. The future taxable income which can be offset against tax losses carry forward is calculated, based on a mathematical model. The utilization rate is re-assessed on quarterly basis and reviewed by the board. As described in the accounting principles (pages 35-40), "critical accounting estimates and judgements" (page 36) and internal control section in the financial statements (page 28), The company management asses that the deferred tax asset is a significant area of judgment for the financial statements.
For the above reasons, valuation of tax losses carry forwards is considered a key audit matter.
Our review has not resulted in any adjustments and we have not reported any significant findings to the Audit Committee.
This document also contains other information than the annual accounts and consolidated accounts and is found on pages [1-18 and 57-60]. 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.
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 intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.
The Audit Committee 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: www.revisorsinspektionen.se/ revisornsansvar. 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 Director's and the Managing Director of SinterCast AB (publ) for the year 2019 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 Director's 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' 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 fulfill 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:
• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
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/revisornsansvar. This description is part of the auditor's report.
The Board of Directors is responsible for that the corporate governance statement on pages 23-28 has been prepared in accordance with the Annual Accounts Act.
Our examination of the corporate governance statement is conducted in accordance with FAR's auditing standard RevU 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 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act.
Öhrlings PricewaterhouseCoopers AB, Torsgatan 21 Stockholm, was appointed auditor of SinterCast AB (publ) by the general meeting of the shareholders on the May 23, 2019 and has been the company's auditor since the April 26, 1993. Tobias Stråhle has been main responsible auditor of SinterCast AB (publ) since November 14, 2013
Stockholm 18 May 2020 Öhrlings PricewaterhouseCoopers AB
Tobias Stråhle Authorized public accountant
| Amounts in SEK million | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|
| Profit and Loss accounts | |||||
| Revenue | 116.5 | 87.7 | 65.6 | 75.4 | 72.4 |
| Operating result | 40.1 | 29.4 | 17.7 | 26.4 | 20.3 |
| Financial net | -0.2 | 0.0 | 0.0 | -0.6 | 4.1 |
| Tax | 8.3 | 3.3 | 0.9 | 1.0 | 0.8 |
| Result for the year for Parent Company shareholders | 48.2 | 32.7 | 18.6 | 26.8 | 25.2 |
| Cashflow analysis | |||||
| Cashflow from operations before change in working capital | 43.0 | 31.6 | 18.9 | 26.9 | 21.3 |
| Change in working capital | -5.2 | -6.8 | -2.0 | -1.5 | -0.9 |
| Cashflow from operations | 37.8 | 24.8 | 16.9 | 25.4 | 20.4 |
| Cashflow from investments | -1.2 | -2.6 | -3.7 | -3.3 | -1.7 |
| Cashflow from financial operations | -36.5 | -19.5 | -28.4 | -24.8 | -15.6 |
| Exchange rate differences in cash and cash equivalents | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Change in cash position | 0.1 | 2.7 | -15.2 | -2.7 | 3.1 |
| Balance sheet | |||||
| Assets | |||||
| Fixed assets | 55.8 | 45.7 | 42.1 | 38.8 | 35.6 |
| Other current assets | 38.9 | 31.7 | 22.5 | 23.4 | 22.8 |
| Cash and bank deposits | 32.9 | 32.8 | 30.1 | 45.3 | 48.0 |
| Total assets | 127.6 | 110.2 | 94.7 | 107.5 | 106.4 |
| Total shareholders' equity | 111.7 | 99.2 | 85.8 | 95.8 | 93.2 |
| Long-term liabilities | 1.9 | 0.0 | 0.0 | 0.0 | 0.0 |
| Current liabilities | 14.0 | 11.0 | 8.9 | 11.7 | 13.2 |
| Total shareholders' equity and liabilities | 127.6 | 110.2 | 94.7 | 107.5 | 106.4 |
| Key ratios | |||||
| Operating margin, % | 34.4 | 33.5 | 27.0 | 35.0 | 28.0 |
| Solidity, % | 89.7 | 90.0 | 90.6 | 89.1 | 87.6 |
| Capital employed | 113.6 | 99.2 | 85.8 | 95.8 | 93.2 |
| Return on shareholders' equity, % | 45.7 | 35.4 | 20.5 | 28.4 | 27.8 |
| Return on capital employed, % | 45.7 | 35.4 | 20.5 | 28.4 | 27.8 |
| Return on total assets, % | 40.5 | 31.9 | 18.4 | 25.1 | 24.8 |
| Earnings per share, SEK | 6.8 | 4.6 | 2.6 | 3.8 | 3.6 |
| Dividend per share, SEK | 5.0 | 2.8 | 4.0 | 3.5 | 2.2 |
| Cashflow from operations/share, SEK | 5.3 | 3.5 | 2.4 | 3.6 | 2.9 |
| Employees | |||||
| Number of employees at the end of the period | 23 | 21 | 21 | 21 | 20 |
| Average number of employees | 22 | 21 | 21 | 20 | 19 |
Definition of key ratios can be found in Note 29.
The SinterCast share has been listed and quoted on the Small Cap segment of the Nasdaq Stockholm stock exchange, since 26 April 1993.
ABG Sundal Collier is the appointed liquidity provider for the SinterCast share in order to improve the volume and thereby the liquidity, and to decrease the difference between quoted prices. ABG Sundal Collier undertakes to continuously, for its own account, and during the opening hours of the Nasdaq, quote prices for the SinterCast share in accordance with the at all times prevailing minimum requirements for liquidity providers set out by Nasdaq Stockholm. The Liquidity Provider guarantees that; prices shall be quoted at least 85% of the continuous trading during normal trading conditions; to quote at least SEK 30,000 in trading volume on bid and ask side and to provide a maximum spread of four percent (4%) calculated from the bid price.
The SinterCast share capital on 31 December 2019 was SEK 7,090,133 (SEK 7,090,133 at 31 December 2018) at par value of SEK 1 per share.
SinterCast had 4,019 (2,783) shareholders on 31 December 2019. The ten largest, of which five were nominee shareholders, controlled 53.0% (53.8%) of the capital and votes.
As of 31 December 2019, the SinterCast Board, management and employees controlled 1.1% (1.1%).
| No. of Share | No. of Shares | % of Total Share | ||
|---|---|---|---|---|
| holders | 31 December 2019 | Capital and Votes | ||
| Försäkringsbolaget, Avanza Pension* | 830,049 | 11.71% | ||
| Nordnet Pensionsförsäkring AB* | 714,268 | 10.07% | ||
| UBS Switzerland AG, W8IMY* | 629,455 | 8.88% | ||
| Ahlström, Lars incl. affiliates | 481,875 | 6.80% | ||
| Coeli Wealth Management AB* | 269,492 | 3.80% | ||
| HSBC Bank PLC, W8IMY* | 259,665 | 3.66% | ||
| Stenbeck, Ulf incl. affiliates | 253,000 | 3.57% | ||
| Brandels, Olle | 176,424 | 2.49% | ||
| Gustafsson, Torbjörn | 85,081 | 1.20% | ||
| Karlberg, Martin | 60,500 | 0.85% | ||
| Subtotal | 10 | 3,759,809 | 53.03% | |
| Other shareholders approx. | 4,009 | 3,330,324 | ||
| Total | 4,019 | 7,090,133 | 100.00% | |
| Total foreign shareholders | 177 | 1,229,826 | 17.35% | |
| Total Swedish shareholders | 3,842 | 5,860,307 | 82.65% |
*Nominee shareholder
| No. of shares | No. of Shareholders | Holding % | No. of Shares | Votes % |
|---|---|---|---|---|
| 1 - 500 | 3,168 | 5.36% | 380,201 | 5.36% |
| 501 - 1,000 | 340 | 3.80% | 269,137 | 3.80% |
| 1,001 - 5,000 | 361 | 11.31% | 802,076 | 11.31% |
| 5,001 - 10,000 | 66 | 6.70% | 475,232 | 6.70% |
| 10,001 - 15,000 | 32 | 5.50% | 389,902 | 5.50% |
| 15,001 - 20,000 | 18 | 4.20% | 298,054 | 4.20% |
| 20,001 - | 34 | 63.12% | 4,475,641 | 63.12% |
| Total | 4,019 | 100.00% | 7,090,133 | 100.00% |
| Amounts in SEK | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|
| Number of shares at the end of the period | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 |
| Average number of shares during the period | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 |
| Average number of shares during the period adjusted for outstanding warrants1 | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 | 7,090,133 |
| Earnings per share | 6.8 | 4.6 | 2.6 | 3.8 | 3.6 |
| Earnings per share diluted | 6.8 | 4.6 | 2.6 | 3.8 | 3.6 |
| Equity per share | 15.8 | 14.0 | 12.1 | 13.5 | 13.1 |
| Equity per share adjusted for outstanding warrants | 15.8 | 14.0 | 12.1 | 13.5 | 13.1 |
| Dividends per share | 5.0 | 2.8 | 4.0 | 3.5 | 2.2 |
| Share price at the end of the period | 195.0 | 80.8 | 65.0 | 81.8 | 88.3 |
| Highest share price during the period | 195.5 | 94.6 | 83.8 | 91.8 | 102.5 |
| Lowest share price during the period | 78.0 | 63.8 | 64.5 | 77.5 | 76.2 |
| Number of shareholders | 4,019 | 2,783 | 2,909 | 3,172 | 3,408 |
| Non-Swedish shareholdings, % of share capital | 17 | 19 | 19 | 17 | 18 |
| Swedish shareholdings, % of share capital | 83 | 81 | 81 | 83 | 82 |
| Market value, SEK million | 1,382.6 | 572.9 | 460.9 | 580.0 | 626.1 |
1 Calculated as per the recommendations of IAS 33
For definitions see Note 29
The Annual General Meeting 2020 will be held at 15:00 on 23 June 2020 at The Royal Swedish Academy of Engineering Sciences (IVA), Grev Turegatan 16, Stockholm.
The financial report April–June 2020 will be published on 19 August 2020.
The financial report July–September 2020 will be published on 28 October 2020.
The financial report October–December and Full Year Results 2020 will be published on 10 February 2021.
The financial report January–March 2021 will be published on 21 April 2021.
SinterCast AB (publ) Technical Centre Kungsgatan 2 SE-641 30 Katrineholm Sweden Tel: +46 150 794 40
SinterCast Ltd Kingswick House Kingswick Drive Sunninghill, Berkshire SL5 7BH United Kingdom Tel: +46 150 794 40
SinterCast Inc 1755 Park Street, Suite 200 Naperville, IL 60563 USA Tel: +1 630 778 3466
SinterCast Korea Co., Ltd Rosavall City No. 310 HyoJa-Ro 194 WanSan-Gu JeonJu-City, 54969 South Korea Tel: +82 63 277 1764
SinterCast Trading (Beijing) Co., Ltd Room 007, 8/F, Block B Gateway, No. 18 Xiaguangli North Road East Third Ring Chaoyang District Beijing, China, 100027 Tel: +86 10 5923 1163
The Annual Report 2019 is distributed in PDF-format and is available on the SinterCast website. The Annual Report 2019 will not be distributed as a printed document. This Annual Report is available in Swedish and English. The English version is an unofficial translation of the Swedish original. Financial reports and the Annual Report can be obtained by contacting SinterCast AB (publ), or at the SinterCast website:
SinterCast ® AB (publ) Kungsgatan 2, 641 30 Katrineholm, Sweden tel: +46 150 794 40 e-mail: [email protected]
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