Bufab AB

Quarterly Report • Oct 26, 2016

Interim report January-September 2016

Continued healthy growth and improved operating margin in both segments. Bufab opens subsidiary in Singapore.

Third quarter of 2016

• Net sales rose by 16 percent to SEK 668 million (577). Organic growth was 4 percent
• Order intake was slightly lower than net sales.
• Operating profit rose to SEK 66 million (52) and the operating margin rose to 9.8 percent (9.0)
• Earnings per share rose to SEK 1.22 (0.87)

January-September 2016

• Net sales rose by 16 percent to SEK 2,148 million (1,847). Organic growth was 4 percent
• Order intake was slightly lower than net sales.
• Operating profit rose to SEK 219 million (159) and the operating margin to 10.2 percent (8.6).
• Earnings per share rose to SEK 4.06 (2.78).

	Quarter 3		Δ	Jan-Sep				Δ	Rolling 12 months	Full year
SEK million	2016	2015	%	2016	2015	%	2015/16	2015
Order intake	665	582	14	2,143	1,846	16	2,760	2,463
Net sales	668	577	16	2,148	1,847	16	2,760	2,458
Gross profit	194	159	22	623	510	22	790	677
Gross margin, %	29.0	27.5		29.0	27.6		28.6	27.5
Operating expenses	-128	-107	20	-404	-351	15	-533	-480
Operating profit	66	52	26	219	159	38	257	197
Operating margin, %	9.8	9.0		10.2	8.6		9.3	8.0
Profit after tax	46	33	41	155	106	46	173	125
Earnings per share, SEK	1.22	0.87	41	4.06	2.78	46	4.55	3.27

THE GROUP IN BRIEF (FOR DEFINITIONS, SEE PAGE 19)

QUARTERLY DEVELOPMENT

NET SALES DEVELOPMENT

OPERATING MARGIN

9.8%

CEO'S OVERVIEW

During the third quarter, net sales rose by 16 percent. The acquisitions we have completed over the past two years have had a good development and work well with the other subsidiaries. During the quarter, Bufab also achieved substantial organic growth in both operating segments thanks to an increased market share and slightly stronger underlying demand.

Gross margin for the quarter was significantly stronger year-on-year, primarily due to cost savings in sourcing. The stronger gross margin combined with a good contribution from acquired companies also led to an improved operating margin, despite operating expenses being somewhat high during the quarter.

In segment Sweden, net sales rose by 6 percent, driven primarily by organic growth. The market share is estimated to have increased slightly, which we see as a sign that our long-term and intensive focus on sales in our home market is beginning to pay off. The increase is particularly gratifying against the background of greater uncertainty among telecommunications customers. The gross margin and operating margin both increased.

Segment International performed well. Net sales rose by 21 percent, as a result of acquisitions and an increased market share. Organic growth was 4 percent, which was lower than earlier in the year due to weaker market growth. Despite this slackening, we continue to see growth in most major markets, with the exception of China and Norway.

We have yet to see any negative effects on sales volumes connected to an impending Brexit. A strengthened gross margin during the quarter was offset in part by higher operating expenses, primarily for obsolescence and negative currency effects. We are continuing to strengthen the sales organisation in the segment. For example, Bufab established a subsidiary in Singapore during the quarter, in line with the aim of increasing our presence in Asia. In total, segment International increased its operating profit by 30 percent.

So far this year, Bufab has performed well with both organic and acquired growth, higher margins, improved earnings and a healthy cash flow. Growing uncertainty in the business environment, a slightly weaker order intake, the prevailing exchange rates and a risk of rising commodities prices are challenges that we face towards the end of 2016 and in 2017. Nevertheless, we intend to achieve continued favourable performance by means of increased market share and improved sourcing and logistics efficiency. We also see opportunities to make additional value-creating acquisitions.

Jörgen Rosengren President and CEO

About Bufab

Bufab AB (publ), Corporate Registration Number 556685-6240, is a trading company that offers its customers a full-service solution as Supply Chain Partner for sourcing, quality control and logistics for C-Parts (screws, nuts, etc.). Bufab's Global Parts ProductivityTM customer offering aims to improve productivity in the customers' value chain for C-Parts.

2 of 22 Bufab was founded in 1977 in Småland and is an international company with operations in 24 countries. The head office is located in Värnamo, Sweden, and Bufab has about 940 employees. Bufab's net sales for the past 12 months amounted to SEK 2.8 billion and the operating margin was 9 percent. The Bufab share is listed on Nasdaq Stockholm, under the ticker "BUFAB". Please visit www.bufab.com for more information.

The Group in brief

THIRD QUARTER

Order intake amounted to SEK 665 million (582) and was slightly lower than net sales.

Net sales rose by 16 percent to SEK 668 million (577). The Group's organic growth was +4 percent, comprising +4 percent for segment International and +4 percent for segment Sweden.

The underlying demand is considered slightly improved and the market share as slightly higher than in the year-earlier period.

Gross margin strengthened during the quarter, year-on-year, due to a consistent effort to improve sourcing procedures, and to higher gross margins in the acquired companies. Compared with the preceding quarter, the gross margin was slightly lower, a normal effect in the third quarter.

Operating profit rose to SEK 66 million (52), equal to an operating margin of 9.8 percent (9.0). The operating margin increased as a result of a higher gross margin, but was negatively affected by somewhat high operating expenses during the quarter in segment International.

Exchange-rate fluctuations impacted operating profit negatively by SEK 4 million, volumes positively by SEK 7 million, price/cost mix and other factors by SEK 0 million and acquisitions positively by SEK 11 million.

JANUARY-SEPTEMBER

Order intake was SEK 2,143 million (1,846), which was slightly lower than net sales.

Net sales rose by 16 percent to SEK 2,148 million (1,847). The Group's organic growth was +4 percent, +6 percent for segment International and +1 percent for segment Sweden.

Underlying demand is considered unchanged, and the market share as slightly higher than in the yearearlier period.

Gross margin strengthened during the period, primarily due to savings in sourcing but also to higher gross margins in the acquired companies.

Operating profit rose to SEK 219 million (159), equal to an operating margin of 10.2 percent (8.6).

Exchange-rate fluctuations had a negative impact of SEK 9 million on operating profit, volume had a positive impact of SEK 17 million, price/cost mix and other factors a positive impact of SEK 12 million and acquisitions a positive impact of SEK 40 million.

FINANCIAL ITEMS AND TAX

The Group's net financial items were an expense of SEK 5 million (expense: 6) for the third quarter. During the quarter, exchange-rate differences had a positive impact of SEK 2 million (0) on net financial items. During the nine-month period, net financial items amounted to an expense of SEK 13 (expense: 17) and exchange-rate differences had a positive effect of SEK 6 million (neg: 1).

The Group's profit after financial items was SEK 61 million (46) for the third quarter and SEK 206 (142) for the nine-month period.

The third-quarter tax expense was SEK 15 million (expense: 12), implying an effective tax rate of 24 percent (25). The tax expense for the nine-month period was SEK 51 million (expense: 35), implying an effective tax rate of 25 percent (25).

CASH FLOW, WORKING CAPITAL AND FINANCIAL POSITION

		Quarter 3	Jan-Sep
SEK million	2016	2015	2016	2015
Operating profit	66	52	219	159
Depreciation/amortisation and impairment	11	9	32	26
Other non-cash items	0	0	0	-1
Changes in working capital	6	18	4	-24
Cash flow from operations	83	79	255	160
Investments excluding acquisitions	-6	-9	-16	-18
Operating cash flow	77	70	239	142

Operating cash flow amounted to SEK 77 million (70) for the period. The year-on-year increase resulted from improved operating profit but with a reduction in working capital being lower year-onyear. The lower reduction in working capital this year is due to a higher growth rate compared to previous year. Operating cash flow for the ninemonth period was SEK 239 million (142).

Average working capital in relation to net sales during the past 12 months was 36.6 percent (36.0). A reduction in tied-up inventory and an increase in payables had a positive impact on this key figure, while the higher capital tied-up in the acquisition of Apex Stainless Holdings had a negative impact. Excluding this acquisition, average working capital

in relation to net sales during the past 12 months would have amounted to 34.1 percent (36.0).

Holdings and Magnetfabriken. On 30 September 2016, the debt/equity ratio was 61 percent (51).

On 30 September 2016, the Group's net debt totalled SEK 791 million (612).

Net debt increased, mainly due to loans taken in conjunction with the acquisition of Apex Stainless

Segment Sweden

Third quarter

Order intake amounted to SEK 215 million (208) and was below net sales.

Net sales rose by 6 percent to SEK 219 million (206). Organic growth was +4 percent. Underlying demand during the period is estimated to be slightly improved. As in previous quarters, growth was burdened by customers´ relocation of production from Sweden to other countries, primarily Eastern Europe, corresponding to around 1 percent of the segment's sales. Segment International benefits from these production relocations. The market share in Sweden is otherwise estimated to be unchanged or slightly better.

Gross margin rose to 30.1 percent (29.2), with the improvement due to cost savings in sourcing.

Operating profit was SEK 28 million (24), equal to a higher operating margin of 12.6 percent (11.8). Exchange-rate fluctuations affected operating profit negatively by SEK 2 million, volumes positively by SEK 3 million, price/cost mix and other factors positively by SEK 2 million and the Magnetfabriken acquisition positively by SEK 1 million.

January-September

Order intake was SEK 724 million (708) and was lower than net sales.

Net sales increased to SEK 735 million (719). Organic growth was +1 percent. Growth in the period was burdened by slightly more than 1 percentage point by customers´ relocation of production to primarily Eastern Europe. Underlying demand during the period is estimated to be unchanged and the market share unchanged or slightly improved.

Gross margin rose to 30.0 percent (28.9), with the improvement due to cost savings in sourcing.

Operating profit was SEK 99 million (89), equal to an operating margin of 13.5 percent (12.3). Exchange-rate fluctuations had a negative impact of SEK 5 million on operating profit, volumes a positive impact of SEK 1 million, price/cost mix and other factors a positive impact of SEK 12 million, and the acquisition of Magnetfabriken a positive impact of SEK 2 million.

	Quarter 3		Δ Jan-Sep				Rolling 12 months	Full year
SEK million	2016	2015	%	2016	2015	%	2015/16	2015
Order intake*	215	208	3	724	708	2	948	932
Net sales*	219	206	6	735	719	2	953	937
Gross profit	66	60	10	221	208	6	282	269
Gross margin, %	30.1	29.2		30.0	28.9		29.6	28.7
Operating expenses	-38	-36	7	-121	-119	2	-163	-161
Operating profit/loss	28	24	14	99	89	12	118	108
Operating margin, %	12.6	11.8		13.5	12.3		12.4	11.5

*Pertains to net sales and order intake from external customers

Segment International

Third quarter

Order intake was SEK 450 million (374) and was in line with net sales.

Net sales rose by 21 percent to SEK 449 million (371). Organic growth was +4 percent, due to higher market shares in most markets. Customers´ production relocations from Sweden to mostly Eastern Europe also had a positive impact of nearly 1 percentage point on the segment's sales. Underlying demand is deemed to be unchanged year-on-year.

Gross margin rose to 29.3 percent (27.5). Just over half of the improvement is attributable to cost savings in sourcing and almost half to the acquired company's higher gross margin.

Operating profit rose to SEK 41 million (32), equal to an operating margin of 9.1 percent (8.5). The operating margin during the quarter was burdened by high costs for revaluation items, primarily for obsolescence and currency. Exchange-rate fluctuations had a negative impact of SEK 2 million on operating profit, volumes a positive impact of SEK 4 million, price/cost mix and other factors a negative impact of SEK 3 million and acquisitions a positive impact of SEK 10 million.

January-September

Order intake was SEK 1,419 million (1,137) and slightly exceeded net sales.

Net sales rose by 25 percent to SEK 1,414 million (1,128). Organic growth was 6 percent, due primarily to higher market shares.

Gross margin rose to 29.2 percent (27.6). The acquired companies have a higher gross margin, which accounted for almost half of the increase. The remaining improvement is due to cost savings in sourcing.

Operating profit rose to SEK 138 million (89), equal to an operating margin of 9.7 percent (7.9). Exchange-rate fluctuations had a negative impact of SEK 6 million on operating profit, volumes a positive impact of SEK 16 million, price/cost mix and other factors a positive impact of SEK 3 million, and acquisitions a positive impact of SEK 36 million.

		Quarter 3		Jan-Sep		Δ	Rolling 12 months	Full year
SEK million	2016	2015	%	2016	2015	%	2015/16	2015
Order intake*	450	374	20	1,419	1,137	24	1,810	1,531
Net sales*	449	371	21	1,414	1,128	25	1,807	1,521
Gross profit	131	102	29	413	311	33	521	419
Gross margin, %	29.3	27.5		29.2	27.6		28.8	27.5
Operating expenses	-90	-70	28	-276	-222	24	-354	-300
Operating profit/loss	41	32	30	138	89	54	167	119
Operating margin, %	9.1	8.5		9.7	7.9		9.3	7.8

*Pertains to net sales and order intake from external customers

Consolidated Income Statement

	Quarter 3		Jan-Sep
SEK million	2016	2015	2016	2015
Net sales	668	577	2,148	1,847
Cost of goods sold	-474	-418	-1,525	-1,337
Gross profit	194	159	623	510
Distribution costs	-96	-80	-294	-253
Administrative expenses	-32	-29	-112	-99
Other operating income	7	11	22	28
Other operating expenses	-7	-9	-20	-27
Operating profit	66	52	219	159
Profit/loss from financial items
Interest income and similar income items	2	1	6	1
Interest expenses and similar expenses	-7	-7	-19	-18
Profit after financial items	61	46	206	142
Tax on net profit for the period	-15	-12	-51	-35
Profit after tax	46	33	155	106

Statement of Comprehensive Income

		Quarter 3	Jan-Sep
SEK million	2016	2015	2016	2015
Profit after tax	46	33	155	106
Other comprehensive income
Items that cannot be reclassified to profit or loss	-	-	-	-
Items that may be reclassified subsequently to profit or loss
Translation differences / Currency hedging net after tax	17	2	22	-6
Other comprehensive income after tax	17	2	22	-6
Total comprehensive income	63	35	177	100
Total comprehensive income attributable to:
Parent Company shareholders	63	35	177	100

Earnings per share

		Quarter 3		Jan-Sep
SEK	2016	2015	2016	2015
Earnings per share	1.22	0.87	4.06	2.78
Weighted number of shares outstanding, thousands	38,110.5	38,110.5	38,110.5	38,110.5
Diluted earnings per share, SEK	1.22	0.87	4.06	2.78
Weighted number of shares outstanding after dilution, thousands	38,110.5	38,110.5	38,110.5	38,110.5

Consolidated Balance Sheet

SEK million	30 Sep 16	30 Sep 15	31 Dec 15
ASSETS
Non-current assets
Intangible assets	985	820	955
Property, plant and equipment	126	134	138
Financial assets	27	29	26
Total non-current assets	1,138	983	1,119
Current assets
Inventories	863	717	856
Current receivables	629	556	571
Cash and cash equivalents	128	103	107
Total current assets	1,620	1,376	1,534
Total assets	2,758	2,359	2,653
EQUITY AND LIABILITIES
Equity	1,295	1,189	1,183
Non-current liabilities
Non-current liabilities, interest-bearing	793	589	840
Non-current liabilities, non-interest bearing	76	54	72
Total non-current liabilities	869	643	912
Current liabilities
Current liabilities, interest-bearing	126	126	151
Current liabilities, non-interest-bearing	468	401	407
Total current liabilities	594	527	558
Total equity and liabilities	2,758	2,359	2,653

Consolidated Statement of Changes in Equity

SEK million	30 Sep 16	30 Sep 15
Equity at beginning of year	1,183	1,147
Comprehensive income
Profit after tax	155	105
Other comprehensive income
Items that will not be reclassified in profit or loss	-	-
Items that may be reclassified in profit or loss
Translation differences / Currency hedging net after tax	22	-6
Total comprehensive income	177	99
Transactions with shareholders
Dividend to shareholders	-65	-57
Total shareholder transactions	-65	-57
Equity at end of period	1,295	1,189

Consolidated Cash Flow Statement

	Quarter 3		Jan-Sep
SEK million	2016	2015	2016	2015
Operating activities
Profit before financial items	66	52	219	159
Depreciation/amortisation and impairment	11	9	32	26
Interest and other finance income	0	0	0	0
Interest and other finance expenses	-7	-7	-19	-18
Other non-cash items	0	0	0	-1
Income tax paid	-11	-11	-42	-31
Cash flow from operating activities before changes in working capital	59	43	190	135
Changes in working capital
Increase (-)/decrease (+) in inventories	-23	-15	3	13
Increase (-)/decrease (+) in operating receivables	68	55	-52	-44
Increase (+)/decrease (-) in operating liabilities	-39	-22	53	7
Cash flow from operating activities	65	61	194	111
Investing activities
Acquisition of property, plant and equipment	-6	-6	-15	-15
Company acquisition *	-5	-	-28	-86
Acquisition of intangible assets	0	-3	-1	-3
Cash flow from investing activities	-11	-9	-44	-104
Financing activities
Dividend paid	-	-	-65	-57
Increase (+)/decrease (-) in borrowings	-48	-37	-66	26
Cash flow from financing activities	-48	-37	-131	-31
Cash flow for the period	6	15	19	-24
Cash and cash equivalents at beginning of period	121	86	107	128
Translation differences	1	2	2	-1
Cash and cash equivalents at end of period	128	103	128	103

*See page 16 for more information.

The Group's Segment Reporting

		2015				2016
Sweden	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Net sales	251	262	206	218	244	272	219
Gross profit	73	75	60	62	72	82	66
Gross margin, %	28.9	28.5	29.2	28.3	29.6	30.3	30.1
Operating expenses	-43	-40	-36	-43	-40	-42	-38
Operating profit	30	35	24	19	32	40	28
Operating margin, %	11.9	13.2	11.8	8.7	13.2	14.6	12.6

		2015 2016
International	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Net sales	358	399	371	393	474	491	449
Gross profit	100	109	102	108	138	144	131
Gross margin, %	28.0	27.4	27.5	27.5	29.1	29.4	29.3
Operating expenses	-73	-78	-70	-78	-91	-94	-90
Operating profit	27	31	32	30	47	50	41
Operating margin, %	7.4	7.8	8.5	7.6	9.8	10.2	9.1

			2015		2016
Other*	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Net sales	-	-	-	-	-	-	-
Gross profit	-3	-3	-3	-3	-4	-4	-3
Operating expenses	-5	-5	-1	-8	-4	-4	0
Operating profit/loss	-8	-8	-4	-11	-8	-8	-3
Operating margin, %	-	-	-	-	-	-	-

*Other includes unallocated costs

of a Group-wide nature

			2015				2016
Group	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Net sales	609	661	577	612	718	762	668
Gross profit	170	181	159	167	206	223	194
Gross margin, %	28.0	27.4	27.5	27.4	28.6	29.3	29.0
Operating expenses	-121	-123	-107	-129	-135	-141	-128
Operating profit	49	58	52	38	71	82	66
Operating margin, %	8.0	8.8	9.0	6.2	9.9	10.8	9.8

Consolidated Key Figures

	Quarter 3		Δ	Jan-Sep		Δ
	2016	2015	%	2016	2015	%
Order intake, SEK million	665	582	14	2,143	1,846	16
Net sales, SEK million	668	577	16	2,148	1,847	16
Gross profit, SEK million	194	159	22	623	510	22
EBITDA, SEK million	77	61	26	251	185	36
Operating profit, SEK million	66	52	26	219	159	38
Profit after tax, SEK million	46	33	41	155	106	46
Gross margin, %	29.0	27.5		29.0	27.6
Operating margin, %	9.8	9.0		10.2	8.6
Net margin, %	7.0	5.7		7.2	5.7
Net debt, SEK million	791	612	29
Debt / equity ratio,%	61	51
Net debt / EBITDA*, multiple	2.7	2.7
Working capital, SEK million	1,024	873	17
Average working capital, SEK million	1,029	867	19
Average working capital in relation to net sales, %	36.6	36.0
Equity / assets ratio, %	47	50
Operating cash flow, SEK million	77	70		239	142
Earnings per share, SEK	1.22	0.87	40	4.06	2.78

*Paid purchase prices have been charged in full to net debt while EBITDA has only been credited from the acquisition date. For definitions, see page 19.

Parent Company Income Statement

	Quarter 3			Jan-Sep
SEK million	2016	2015	2016	2015
Administrative expenses	-2	-2	-9	-8
Other operating income	1	0	4	3
Operating loss	-1	-2	-5	-5
Loss from financial items
Interest expenses and similar expenses	0	0	0	0
Profit after financial items	-1	-2	-5	-5
Appropriations	-	-	-	-
Tax on net profit/loss for the period	0	0	1	1
Loss after tax	-1	-2	-4	-4
Other comprehensive income	-	-	-	-
Total comprehensive income	-1	-2	-4	-4

Parent Company Balance Sheet

SEK million	30 Sep 16	30 Sep 15	31 Dec 15
ASSETS
Non-current assets
Financial assets
Participations in Group companies	845	845	845
Total non-current assets	845	845	845
Current assets
Receivables from Group companies	95	98	178
Other current receivables	21	16	11
Cash and cash equivalents	0	0	0
Total current assets	116	114	189
Total assets	961	959	1,034
EQUITY AND LIABILITIES
Equity	858	876	928
Untaxed reserves	100	80	100
Non-current interest-bearing liabilities
Other non-current liabilities	-	-	-
Total non-current liabilities	0	0	0
Current non-interest-bearing liabilities
Liabilities to Group companies	-	-	-
Other current liabilities	3	3	6
Total current liabilities	3	3	6
Total equity and liabilities	961	959	1,034

Other information

ACCOUNTING POLICIES

This interim report has been prepared pursuant to IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The Parent Company's financial statements were prepared in accordance with the Swedish Annual Accounts Act, Chapter 9 and the Swedish Financial Reporting Board's recommendation RFR 2.

The accounting policies applied correspond to the accounting policies and measurement principles presented in the 2015 Annual Report. The 2015 Annual Report is available at www.bufab.com

RISKS AND RISK MANAGEMENT

Exposure to risk is a natural part of business activity, as reflected in Bufab's approach to risk management. The aim is to identify and prevent risks and to limit any loss or damage from these risks. The main risks to which the Group is exposed relate to the impact of the economy on demand. For further information, see Note 3 of the 2015 Annual Report.

SEASONAL VARIATIONS

Bufab has no material seasonal variation, but sales throughout the year vary depending on the number of customer production days in each quarter.

RELATED-PARTY TRANSACTIONS

There were no related-party transactions during the period.

EMPLOYEES

The number of full-time employees in the Group on 30 September 2016 was 946 (827), 116 of whom stem from the acquisition of Apex Stainless Holdings Ltd and Magnetfabriken AB.

ACQUISITIONS

The following acquisitions were made during 2015- 2016.

	Date	Net sales*	Employees
Flos BV	26 Feb 2015	160	52
Apex Stainless Holdings Ltd	26 Nov 2015	300	110
Magnetfabriken AB	2 Mar 2016	20	6

*Estimated annual net sales at the time of acquisition

On 3 March 2016, Bufab AB (publ) acquired 100 percent of the shares in Magnetfabriken AB. Magnetfabriken AB was founded in 1992 and has since developed into one of the leading suppliers of magnets and magnet systems in the Nordic region. The purchase consideration was SEK 36 million, of which SEK 27 million has been paid unconditionally and the remaining SEK 9 million is subject to conditions. Of the conditional portion of SEK 9 million, SEK 5 million was paid in the third quarter. The conditional portion of SEK 9 million comprises about 57 percent of the maximum payment outcome. About half is dependent on the acquired company's earnings trend through April 2016 and approximately half to future earnings thereafter.

The acquisition has added SEK 15 million to the Group's accumulated net sales since the transfer. The net impact on accumulated operating profit was SEK 3 million and the effect on profit after tax was SEK 2 million. Transaction costs for the acquisition amounted to SEK 0 million. The acquisition would have positively impacted the Group's net sales by an estimated SEK 17 million, operating profit by about SEK 3 million and profit after tax for the period by about SEK 2 million had it been implemented on 1 January 2016. The amounts of the assets and liabilities included in the acquisitions according to the preliminary acquisition analysis were as follows:

Magnetfabriken AB	Carrying amount on acquisition date	Adjustment to fair value	Fair value
Intangible assets		8	8
Other non-current assets	0		0
Inventories	3		3
Other current assets	2		2
Cash and cash equivalents	4		4
Deferred tax liabilities		-2	-2
Other liabilities	-2		-2
Acquired net assets	7	6	13
Goodwill			23
Purchase consideration*			36
Less: cash and cash equivalents in acquired operations			-4
Less: purchase consideration yet to be paid			-4
Effect on the Group's cash and cash equivalents			28

* The consideration is stated excluding acquisition expenses

Goodwill arising in connection with the acquisition is attributable to the knowledge accrued in the acquired company, to the established and consolidated market positions and to the anticipated profitability related to it.

CONTINGENT LIABILITIES

No significant changes to contingent liabilities occurred during the interim period.

ORGANISATION

In the third quarter, Bufab started a subsidiary in Singapore with the aim of increasing the company's presence in Southeast Asia.

2017 ANNUAL GENERAL MEETING

The Annual General Meeting of Bufab AB (publ) will be held in Värnamo, on 4 May 2017 at 2:00 p.m.

NOMINATION COMMITTEE

In accordance with a resolution at Bufab's Annual General Meeting, the members of the Nomination Committee ahead of the 2017 Annual General Meeting are to be appointed from the four largest shareholders of the company in terms of votes, who have expressed a wish to participate in the work of the Nomination Committee when asked. In addition, the Nomination Committee shall include the Chairman of Bufab. The Nomination Committee has been appointed by Liljedahl Group, Carnegie fonder, Didner & Gerge fonder and Lannebo fonder. Each of these has appointed a representative (see below) to comprise Bufab's Nomination Committee along with the Chairman of the Board. The members of the Nomination Committee are Bengt Liljedahl (Liljedahl Group), Viktor Henriksson (Carnegie fonder), Adam Gerge (Didner & Gerge

fonder), Johan Ståhl (Lannebo fonder) and Sven-Olof Kulldorff, Chairman of Bufab AB (publ). The Nomination Committee will prepare proposals for the 2017 Annual General Meeting, including the Chairman of the Meeting, Board members, Chairman of the Board, remuneration of the Board, auditors, auditors' fees and any changes in the instruction to the Nomination Committee. Shareholders wishing to submit proposals to the Nomination Committee should do so by e-mail to valberedning@bufab.com.

FINANCIAL REPORTING DATES

Year-end report 2016 21 February 2017 Interim report for the first quarter of 2017 27 April 2017 Interim report for the second quarter of 2017 19 July 2017 Interim report for the third quarter of 2017 26 October 2017 Year-end report 2017 9 February 2018

Värnamo, 26 October 2016

Jörgen Rosengren President and CEO

Auditors' report of the review of the financial information in summary (interim report)

Introduction

We have conducted a review of the financial information in summary (interim report) for Bufab AB (publ) (556685- 6240) as of 30 September 2016 and the nine-month period that ended on that date. The Board of Directors and the President are responsible for preparing and presenting this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review.

Focus and scope of the review

We have conducted our review in accordance with the Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA). The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Opinion

Based on our review, nothing has come to our attention that causes us to believe that, in all material respects, the accompanying interim report has not been prepared for the Group in accordance with IAS 34 and the Annual Accounts Act and for the Parent Company in accordance with the Annual Accounts Act.

Gothenburg, 26 October 2016

Öhrlings PricewaterhouseCoopers AB

Fredrik Göransson Authorised Public Accountant

Definitions of key figures

Gross margin, %

Gross profit as a percentage of net sales for the period

EBITDA

Operating profit before depreciation, amortisation and impairment

Operating margin, %

Operating profit as a percentage of net sales for the period

Net debt

Interest-bearing liabilities less interest-bearing assets, calculated at the end of the period

Debt / equity ratio, %

Net debt divided by equity, calculated at the end of the period

Net debt / EBITDA, multiple

Net debt at the end of the period divided by EBITDA in the last twelve months

Operating expenses

Total distribution costs, administrative expenses, other operating income and other operating expenses

Working capital

Total current assets less cash and cash equivalents less current non-interest-bearing liabilities, calculated at the end of the period

Average working capital

Average working capital calculated as the average of the past four quarters

Average working capital in relation to net sales, %

Average working capital as a percentage of net sales in the last twelve months

Equity / assets ratio, %

Equity as a percentage of total assets, calculated at the end of the period

Operating cash flow

Operating profit adjusted for depreciation/amortisation, impairment and other non-cash items less changes in working capital and investments

Earnings per share

Profit after tax divided by the average number of common shares

Alternative performance measures

Bufab uses certain performance measures not defined in the rules for financial reporting adopted by Bufab. The purpose of these performance measures is to provide a better understanding of the performance of the operations. It should be pointed out that these alternative performance measures, as they are defined, are not fully comparable with other companies' performance measures with the same name.

Organic growth

Because Bufab has operations in many countries with different currencies, it is essential to provide an understanding of the company's performance without current effects when translating foreign subsidiaries. In addition, Bufab has an important strategic objective in carrying out value-generating acquisitions. For these reasons, growth is recognised also excluding currency effects when translating foreign subsidiaries and excluding acquired operations within the term Organic growth. This performance measure is expressed in percentage points of last year's net sales.

	Quarter 3				Jan-Sep
2016	Group	Sweden	International	Group	Sweden	International
Organic growth	4	4	4	4	1	6
Currency translation effects	0	0	0	-1	0	-2
Acquisitions	12	2	17	13	1	21
Recognised growth	16	6	21	16	2	25

		Quarter 3			Jan-Sep
2015	Group	Sweden	International	Group	Sweden	International
Organic growth	0	-6	4	3	-4	9
Currency translation effects	1	0	2	3	0	4
Acquisitions	7	0	11	5	0	10
Recognised growth	8	-6	17	11	-4	23

Operating cash flow

In order to improve its total cash flow, Bufab continuously measures the cash flow generated by operations in all its companies. This is expressed as Operating cash flow and defined below.

	Quarter 3		Jan-Sep
	2016	2015	2016	2015
EBITDA	77	61	251	185
Other non-cash items	0	0	0	-1
Changes in inventory	-23	-15	3	13
Changes in operating receivables	68	55	-52	-44
Changes in operating liabilities	-39	-22	53	7
Cash flow from operations	83	79	255	160
Investments excluding acquisitions	-6	-9	-16	-18
Operating cash flow	77	70	239	142

EBITDA

EBITDA is an expression of operating profit before depreciation, amortisation and impairment. The key figure is defined below.

	Quarter 3		Jan-Sep
	2016	2015	2016	2015
Operating profit/loss	66	52	219	159
Depreciation/amortisation and impairment	11	9	32	26
EBITDA	77	61	251	185

Working capital

Because Bufab is a trading company, working capital represents a large share of the balance sheet's value. In order to optimise the company's cash generation, management focuses on the local company's development, and thereby the entire Group's development, of working capital as it is defined below.

	30 Sep	30 Sep
	2016	2015
Current assets	1,620	1,376
Less: cash and cash equivalents	-128	-103
Less: current non-interest-bearing liabilities	-468	-401
Working capital on balance-sheet date	1,024	872

Net debt

Net debt is an expression of how large the financial borrowing is in the company in absolute figures after deductions for cash and cash equivalents. The key figure is defined below.

	30 Sep	30 Sep
	2016	2015
Non-current interest-bearing liabilities	793	589
Current interest-bearing liabilities	126	126
Less: cash and cash equivalents	-128	-103
Net debt on balance-sheet date	791	612

CONFERENCE CALL

A conference call will be held on 26 October 2016 at 10:00 a.m. CET. Jörgen Rosengren, President and CEO, and Thomas Ekström, CFO, will present the results. The conference call will be held in English.

To participate in the conference, use any of the following dial-in numbers: +44 (0) 1452 555566, UK: 08444933800, Sweden: 0850336434, or the US: 16315107498. Conference code: 81029778.

Please dial in 5–10 minutes ahead in order to complete the short registration process.

CONTACT

Jörgen Rosengren CEO +46 370 69 69 01 jorgen.rosengren@bufab.com

Thomas Ekström CFO and IR Director +46 370 69 94 01 thomas.ekstrom@bufab.com

This information is such that Bufab AB (publ) is obliged to disclose in accordance with the EU's Market Abuse Regulation. The information was submitted for publication by the aforementioned contacts on 26 October 2016 at 8.00 a.m. CET

Bufab AB (publ) Box 2266 SE-331 02 Värnamo, Corp. Reg. No. 556685-6240 Tel: +46 370 69 69 10 Fax +46 370 69 69 10 www.bufab.coms