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Quarterly Report Feb 18, 2021

2998_10-k_2021-02-18_423a4bc7-a375-431c-98df-9960cb64f0f2.pdf

Quarterly Report

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FINANCIAL REPORT 2020 – 9 MONTHS

1 April – 31 December 2020

FINANCIAL YEAR 2020 – 9 MONTHS (1 April-31 December 2020)

  • Revenue for the financial year (9 months) amounted to MSEK 6,846 (4,596), with the change compared with the corresponding period in the preceding year attributable to the acquisition of Swedol. Compared with revenue for the corresponding period in the preceding year including Swedol (MSEK 7,412), revenue declined by 8 percent.*
  • EBITA amounted to MSEK 484 (247), corresponding to an EBITA margin of 7.1 percent (5.4). The change compared with the preceding year is primarily attributable to the acquisition of Swedol. Compared with EBITA for the corresponding period in the preceding year including Swedol (MSEK 547), EBITA declined by 12 percent while the EBITA margin amounted to 7.1 percent (7.4).*
  • Operating profit amounted to MSEK 333 (223) and the operating margin to 4.9 percent (4.9). Earnings were affected by provisions for a restructuring reserve totalling MSEK 97 in the financial accounts for the second quarter of 2020. This reserve pertains to restructuring costs in connection with the integration of TOOLS and Swedol.
  • Net profit amounted to MSEK 229 (163) and earnings per share totalled SEK 4.55 (5.75).
  • The return on working capital (EBITA/WC) for the most recent 12-month period (including Swedol) was 24 percent.*
  • Cash flow from operating activities improved to MSEK 1,086 (400).
  • The equity/assets ratio was 39 percent at the end of the financial year.
  • A dividend of SEK 1.50 per share (–) is proposed.
  • During the year, the COVID-19 pandemic negatively impacted revenue due to increased restraint and uncertainty in the market, although with variations between customer segments and countries. The various companies in the Group have adopted continuous measures to adapt their operations based on these conditions.
  • The integration between Swedol and TOOLS commenced according to plan during the year.

THIRD QUARTER (1 October-31 December 2020)

  • Revenue amounted to MSEK 2,529 (1,588). Compared with revenue for the corresponding quarter in the preceding year including Swedol (MSEK 2,655), revenue declined by 5 percent.*
  • EBITA amounted to MSEK 201 (92), corresponding to an EBITA margin of 7.9 percent (5.8). Compared with EBITA for the corresponding quarter in the preceding year including Swedol (MSEK 218), EBITA declined by 8 percent while the EBITA margin amounted to 7.9 percent (8.2).*
  • Net profit amounted to MSEK 134 (56) and earnings per share totalled SEK 2.70 (1.95).

AFTER THE END OF THE FINANCIAL YEAR

• Within the business area Components & Services, acquisitions of four businesses generating total annual revenue of approximately MSEK 285.

* ACQUISITION OF SWEDOL CLOSED AS OF 1 APRIL 2020

Momentum Group's acquisition of Swedol was completed during spring 2020 and closed on 1 April 2020. Any instances where the comparative figures in this report include Swedol for the period prior to the closing date on 1 April 2020 are specifically noted. The bases for the financial history including Swedol are presented in a separate press release dated 24 June 2020 – Supplementary financial information relating to the 2019/20 financial year for the Momentum Group.

Momentum Group AB (publ)

PRESIDENT'S STATEMENT

AN EVENTFUL AND CHALLENGING YEAR

As we at Momentum Group reflect on another financial year (shortened to 9 months ahead of the transition to the calendar year as our financial year) – our fourth as an independent listed company – it was a year filled with both challenges and future opportunities. As was the case for all businesses and societies across the world, the COVID-19 pandemic and its effects dominated our year 2020. From March 2020 onwards, we have worked with intensity and focus to maintain our operations and profitability by delivering on our customer promises in a safe manner and by making continuous adjustments to the Group and all our operations to adapt to the "new normal" through central and local initiatives. Where possible, we transitioned to remote working and to digital meetings, seminars and training courses with customers and suppliers. The general demand situation was characterised by restraint and caution in all of our main markets in the Nordic region, although with certain variations between customer segments and countries, with the most significant impact experienced in Norway. Sales gradually stabilised during the year, and the Group's operations experienced a certain level of recovery during the final quarter. In summary, we thus succeeded in maintaining our profitability and generated significantly higher cash flow from the operations in 2020, leading to a strong financial position for the Group. This provides us with favourable conditions for continued profitable growth, both organically and through acquisitions.

In the business area Tools, Consumables, Workwear & Protective Equipment, the integration of TOOLS and Swedol was in focus during the year, and in accordance with our plans we launched a new shared organisation, started the integration of stores, negotiated joint purchasing agreements and began the introduction of proprietary brands in several parts of the business area. In parallel, this new, strong business area's sales initiatives have resulted in a number of new customer agreements that will contribute positively to future development.

We established a strategic approach focused on acquisition-driven growth in the business area Components & Services and, in early February 2021, had the pleasure of announcing no less than four acquisitions generating total annual revenue of approximately MSEK 285, with favourable profitability. We will continue to evaluate attractive acquisition opportunities with the aim of further strengthening our market positions.

Our Group structure creates opportunities for the future

Much of the uncertainty concerning the effects of the pandemic remain as we head into the coming quarters. We are therefore continuing to focus on what we can affect in our daily operations in order to achieve increased sales and efficiency – with our decentralised earnings responsibility entailing that local measures are taken if and where needed. At the same time, our Group structure with two operationally independent business areas is creating new, interesting opportunities for the future.

In conclusion, I would like to extend my sincere thanks to all of our dedicated employees for your many outstanding contributions during this particularly challenging year – and to our customers and business partners for your continued confidence. We will continue along the path we have established, with a focus on earnings growth in our existing units, reduced funds tied up in working capital and corporate acquisitions in order to increase profitability.

Stockholm, February 2021

Ulf Lilius President & CEO

MOMENTUM GROUP IN SUMMARY

QUARTER REPORTING PERIOD FULL-YEAR
OCT-DEC OCT-DEC APR-DEC APR-DEC ROLLING
2020 2019 Δ 2020 2019 Δ 12 MON 2019/20 Δ
Revenue, MSEK 2,529 1,588 59% 6,846 4,596 49% 8,385 6,135 37%
Revenue including Swedol 2019/20 1 2,529 2,655 –5% 6,846 7,412 –8% 9,214 9,780 –6%
Operating profit, MSEK 185 78 137% 333 223 49% 413 303 36%
of which: Items affecting comparability 0 –9 –101 –9 –106 –14
of which: Amortisation of intangible assets incurred
in connection with corporate acquisitions –16 –5 –50 –15 –56 –21
EBITA, MSEK 201 92 118% 484 247 96% 575 338 70%
EBITA including Swedol 2019/20 1 201 218 –8% 484 547 –12% 618 681 –9%
Profit after financial items, MSEK 172 72 139% 294 209 41% 368 283 30%
Net profit (after taxes), MSEK 134 56 139% 229 163 40% 283 217 30%
Earnings per share, SEK 2.70 1.95 38% 4.55 5.75 –21% 6.50 7.70 –16%
Operating margin 7.3% 4.9% 4.9% 4.9% 4.9% 4.9%
EBITA margin 7.9% 5.8% 7.1% 5.4% 6.9% 5.5%
EBITA margin including Swedol 2019/20 1 7.9% 8.2% 7.1% 7.4% 6.7% 7.0%
Profit margin 6.8% 4.5% 4.3% 4.5% 4.4% 4.6%
Return on equity 12% 16%
Return on working capital (EBITA/WC) 32% 28%
EBITA/WC including Swedol 2019/20 1 24% 30%
Equity per share, SEK 60.25 56.95 6%
Equity/assets ratio 39% 40% 39% 48%
Number of employees at the end of the period2 2,670 1,675 59% 2,670 1,651 62%

1) Calculated as though the acquisition of Swedol had closed on 1 April 2019.

REVENUE AND PROFIT

Third quarter (1 October-31 December 2020)

Revenue amounted to MSEK 2,529 (1,588), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding quarter in the preceding year including Swedol (MSEK 2,655), revenue declined by 5 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by 4.4 percent compared with the corresponding quarter in the preceding year. The quarter included one more trading day than the corresponding quarter in the preceding financial year.

Operating profit amounted to MSEK 185 (78), with the change compared with the year-earlier period primarily attributable to the acquisition of Swedol. EBITA (operating profit excluding items affecting comparability and amortisation of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 201 (92). Compared with EBITA for the corresponding quarter in the preceding year including Swedol (MSEK 218), EBITA thus declined by 8 percent and the EBITA margin amounted to 7.9 percent (8.2). Exchange-rate translation effects had a net impact of MSEK –1 (0) on operating profit.

Financial year 2020 – 9 months (1 April-31 December 2020)

Revenue amounted to MSEK 6,846 (4,596), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding period in the preceding year including Swedol (MSEK 7,412), revenue declined by 8 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by 6.6 percent compared with the corresponding period in the preceding year. Exchange-rate translation effects had an impact of MSEK –196 on revenue for comparable units (including Swedol). The 9 months in the financial year included a total of two more trading days than the corresponding period in the preceding financial year.

Operating profit amounted to MSEK 333 (223), with the change compared with the year-earlier period primarily attributable to the acquisition of Swedol. EBITA (operating profit excluding items affecting comparability and amortisation of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 484 (247). Compared with EBITA for the corresponding period in the preceding year including Swedol (MSEK 547), EBITA thus declined by 12 percent and the EBITA margin amounted to 7.1 percent (7.4). Operating profit was charged with depreciation and impairment losses of MSEK –42 (–13) on tangible non-current assets and amortisation and impairment losses of MSEK –87 (–26) on intangible non-current assets. Exchange-rate translation effects had a net impact of MSEK –2 (+1) on operating profit.

Profit after financial items totalled MSEK 294 (209) and net profit amounted to MSEK 229 (163), which corresponds to earnings per share of SEK 4.55 (5.75) for the reporting period.

* Since Momentum Group is changing its financial year to the calendar year, the 2020 financial year has been shortened to nine months and covers the 1 April to 31 December 2020 period.

OPERATIONS

From 1 April 2020, the Momentum Group comprises two business areas: Business Area Tools, Consumables, Workwear & Protective Equipment and Business Area Components & Services. Group-wide includes the Group's management, finance function and support functions (including internal communications, investor relations and legal affairs).

MARKET AND IMPACT OF THE COVID-19 PANDEMIC

The shortened 2020 financial year (9 months) was characterised by a significantly restrained and cautious attitude in Momentum Group's main markets, primarily due to the uncertainty concerning the COVID-19 pandemic. Since the stringent measures from both society at large and individual companies started taking effect toward the end of March 2020, all operations in the Group have experienced a negative effect on overall demand. The downturn has been the most tangible among larger customers in the industrial sector, while small and medium-sized customers have demonstrated greater tolerance to the slowdown. At the same time, sales of certain product groups, mainly personal protective equipment, have been more positive, while demand in the automotive and oil & gas sectors has been weaker. Performances have also varied between countries. The overall impact on demand in Sweden has been relatively limited, although with major variations between customer segments. At the same time, the Norwegian and Finnish markets have generally performed more negatively, probably due to the stricter lockdowns in these countries and to weaker demand in the oil & gas sector as well as the shipbuilding industry.

In total, the pandemic is deemed to be the main reason for the Momentum Group's (including Swedol) negative sales performance of approximately 7 percent for the financial year (9 months) compared with the corresponding period in the preceding year. Meanwhile, different government measures, in combination with the Group's own cost-saving measures, have reduced the cost base. Personnel costs during the year decreased by approximately MSEK 150 for comparable units (including Swedol), with government support offsetting the lower volumes primarily during the first and second quarters of the financial year. At the end of the financial year, the Group had no employees left in government supported programmes but continues to regularly implement its own adaptations in the operations to meet fluctuating demand.

While demand gradually recovered somewhat in certain areas of the Group during the course of the financial year, with a comparatively strong close to the year, future sales, particularly to the Group's major, export-oriented customers, will largely be impacted by developments in the global markets. Accordingly, it is not currently possible to predict with any certainty how the pandemic will affect Momentum Group in the coming quarters of 2021, since this depends on the extent and duration of the decline in demand and the effects of the cost-cutting measures taken. Measures taken by the Group during the past months, such as increased vigilance when it comes to changes in customer structure and a heightened focus on liquidity, will continue. However, the current situation has not led to any changes in material bases of judgement compared with those applied in the Annual Report for 2019/20.

Sales performance

REPORTING
QUARTER PERIOD
OCT-DEC 20201 APR-DEC 20201
Change in revenue for:
Comparable units in local currency –4.4% –6.6%
Currency effects –2.3% –2.4%
Number of trading days 1.8% 1.1%
Other units2 0.2% 0.3%
Total change –4.7% –7.6%

1) Swedol is included in "Comparable units" as though the acquisition had closed on 1 April 2019.

2) Other acquisitions in 2019/20 (excluding Swedol, which is thus included in "Comparable units").

BUSINESS AREA TOOLS, CONSUMABLES, WORKWEAR & PROTECTIVE EQUIPMENT

As of 1 April 2020, this business area comprises Swedol and TOOLS with Univern and Grolls, and Gigant, Mercus Yrkeskläder, TriffiQ Företagsprofilering, Reklamproffsen and Company Line, which offer products and services related to tools, consumables, workwear, personal protective equipment, workplace equipment as well as promotional products for the industrial, construction and public sectors in the Nordic region, among others.

Comments from Clein Johansson Ullenvik, Business Area Manager:

2020 was an intense year with a focus on the merger of Swedol and TOOLS. The integration is progressing according to plan and we have completed many important projects over the past nine months. As part of this work, six store integrations between Swedol and TOOLS have been completed, of which four in Sweden and two in Norway, receiving positive feedback from our customers. We also completed the expansion of the logistics centre in Örebro and commenced coordination and optimisation of the product range. At the same time, we prepared for the implementation of our shared IT platform in TOOLS Finland, which will go live in March.

In the third quarter, the sales trend was better than expected given the weak growth during the first and second quarters. We are now actively continuing to reverse the negative trend of declining sales in the business area through measures such as targeted initiatives for major customers in, for example, the industrial sector, where we have noted a more challenging market situation. Apart from managing the challenges related to the ongoing pandemic, we must continue implementing targeted improvement initiatives in order to strengthen our market position.

With the aim of developing our shared platform and culture, we established a new vision and mission for the business area and began developing shared values during the quarter. A leadership training course has also been introduced with the aim of strengthening and developing leadership within the organisation.

We started a fantastic integration journey during the year and accomplished what we set out to achieve together: to create a scalable platform for the future. With a new organisation in place from 1 October and a clear plan for the work ahead, we have gradually created a structure that will enable us to continue to develop the business area toward profitable growth during 2021 and beyond.

Note: The business area is presented below as of 1 April 2020, with comparative figures as though the acquisition of Swedol and other changes in the business area's structure had taken place as of 1 April 2019. For information about the outcome for each business area (operating segment) for the preceding year excluding Swedol, refer to the table in Note 2.

QUARTER REPORTING PERIOD FULL-YEAR
OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
ROLLING
12 MON
2019/20
REVENUE, MSEK
Sweden 1,425 1,368 3,740 3,688 4,893 4,841
Norway 569 666 1,547 1,896 2,153 2,502
Finland 312 326 915 987 1,241 1,313
Other countries 11 10 25 23 31 29
Eliminations –75 –26 –192 –70 –231 –109
Total BA 2,242 2,344 6,035 6,524 8,087 8,576
EBITA, MSEK
Sweden 133 136 290 322 350 382
Norway 23 28 45 69 62 86
Finland 7 13 44 51 59 66
Other countries 1 1 1 1 0 0
Total BA 164 178 380 443 471 534
EBITA MARGIN, %
Sweden 9.3% 9.9% 7.8% 8.7% 7.2% 7.9%
Norway 4.0% 4.2% 2.9% 3.6% 2.9% 3.4%
Finland 2.2% 4.0% 4.8% 5.2% 4.8% 5.0%
Other countries 9.1% 10.0% 4.0% 4.3% 0.0% 0.0%
Total BA 7.3% 7.6% 6.3% 6.8% 5.8% 6.2%
OTHER INFORMATION
Return on working capital (EBITA/WC ), % 25% 26%

Demand in the business area Tools, Consumables, Workwear & Protective Equipment continued to be negatively impacted by the COVID-19 pandemic during the third quarter of the financial year. To a certain extent, this was offset by increased sales in the latter part of the quarter, primarily of workwear for cold and snowy weather. In total, revenue for comparable units in the business area decreased by approximately 4 percent1 during the quarter, although with major variations between countries, with

1 Comparable units (including Swedol), measured in local currency and adjusted for the number of trading days this year compared with the preceding year.

FINANCIAL REPORT 2020 – 9 MONTHS

1 APRIL – 31 DECEMBER 2020

Sweden recording increased sales for comparable units. The earnings performance for the business area was negatively affected by reduced sales, increased purchase prices and negative currency effects. Measures are being taken continuously to increase sales, margins and efficiency.

Revenue for the operations in Sweden increased a total of approximately 2 percent2 during the quarter compared with the preceding year. It was still primarily sales to major industrial companies that were negatively impacted by the prevailing cautious approach, while sales to small and medium-sized customers were stable during the quarter, partly due to extra sales initiatives. The new integrated operations in Swedol-TOOLS also signed a number of new customer agreements that will contribute to future sales growth. The earnings performance was relatively stable during the quarter, and various costsavings measures are continuing. The specialist companies within Workwear & Profile Materials contributed positively to the earnings performance during the quarter.

Revenue for the operations in Norway decreased by approximately 6 percent2 during the quarter. The pandemic continued to have a negative impact on overall demand, not least within the oil & gas sector, which had a negative impact on sales to both retail and direct sales customers during the quarter. This decrease in sales was reflected in earnings for the Norwegian operations, as was the negative impact of the exchange rate for the Norwegian krona. Price increases have been implemented and cost-saving measures continue, including measures taken within the logistics functions.

Revenue for the operations in Finland decreased by approximately 3 percent2 during the quarter. Demand was negatively impacted by the decline in demand in the relatively export-dependent Finnish industrial sector, including the pulp & paper and shipbuilding industries. The operations are continuously implementing customised cost-saving measures with the aim of reversing the negative earnings trend.

BUSINESS AREA COMPONENTS & SERVICES

This business area comprises Momentum Industrial, Öbergs in Karlstad, ETAB Industriautomation, Rörick Elektriska Verkstad, Carl A Nilssons Elektriska Reparationsverkstad and JNF Køge, which offer spare parts, services and repairs to customers in the industrial sector in the Nordic region.

Comments from Ulf Lilius, Business Area Manager:

The operations in the business area performed well during the third and final quarter of the financial year despite the turbulent operating environment, and we are continuing along the established path with a focus on earnings growth in combination with reduced funds tied up in working capital. Demand from industrial customers remained restrained, but gradually recovered during the quarter and the adopted measures contributed to a continued stable earnings performance, favourable profitability and strong cash flows.

With the new Group structure in place, the business area Components & Services also has favourable opportunities for acquisition-driven growth while maintaining profitability in our various areas. It was therefore highly gratifying to announce four new acquisitions in early February 2021. The aim of these acquisitions is to strengthen our market-leading position as a supplier of industrial components and industrial service for Nordic industry, and the four acquired operations (Öbergs in Karlstad, Mekano and Mekano in Sävedalen as well as three electromechanical workshops acquired from Assemblin El) are all contributing to the continued development of the business area. The acquisitions add a total of approximately MSEK 285 in annual revenue to the business area. We are also continuing to evaluate attractive acquisition opportunities that would further strengthen our market position and profitability. Refer to page 7 for more information about the completed acquisitions.

QUARTER REPORTING PERIOD FULL-YEAR
OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
ROLLING
12 MON
2019/20
REVENUE, MSEK
Total BA 296 323 837 928 1,163 1,254
EBITA, MSEK
Total BA 40 39 111 109 156 154
EBITA MARGIN, %
Total BA 13.5% 12.1% 13.3% 11.7% 13.4% 12.3%
OTHER INFORMATION
Return on working capital (EBITA/WC ), % 63% 59%

Sales in the business area Components & Services continued to be negatively impacted by the COVID-19 pandemic during the third quarter of the financial year. The quarter was characterised by a general sense of restraint and major industrial customers continuing to implement cost-cutting measures in their operations, although demand gradually improved during the period. Revenue for comparable units in the business area decreased by approximately 10 percent2 during the quarter.

2 Comparable units (including Swedol), measured in local currency and adjusted for the number of trading days this year compared with the preceding year.

For Momentum Industrial, demand improved in the mining sector and the pulp & paper industry during the quarter, while sales to the automotive industry in particular remained restrained. For many industrial customers, maintenance work continues to contribute to favourable business opportunities. The previously implemented measures to increase cost efficiency contributed to a stable earnings performance during the quarter, despite the downturn in sales.

Rörick Elektriska Verkstad, which specialises in service and repairs, and ETAB Industriautomation, which specialises in pneumatics and hydraulics, displayed a stable performance during the quarter and contributed positively to the business area's earnings performance. Rörick's acquisition of SKF's spindle service operations in Sweden closed in mid-November 2020, contributing approximately MSEK 10 in annual revenue.

Group-wide3 and eliminations

EBITA for "Group-wide and eliminations" amounted to MSEK –7 (–5) for the 9 months in the financial year and items affecting comparability to MSEK –2 (–9). Items affecting comparability pertain to costs for advisors and other costs arising from the acquisition of Swedol. Accordingly, an operating loss of MSEK –9 (–14) was reported.

The Parent Company's revenue for the financial year amounted to MSEK 22 (22) and profit after financial items totalled MSEK –13 (7). The results include no Group contributions (–).

EMPLOYEES

At the end of the financial year, the number of employees in the Group amounted to 2,670, compared with 1,651 at the beginning of the year. In conjunction with the acquisition of Swedol on 1 April 2020, 1,046 employees joined the Group.

CORPORATE ACQUISITIONS

Momentum Group conducted two corporate acquisitions with closing during the 2020 financial year.

Acquisition of Swedol.

Momentum Group's public offer to shareholders in Swedol AB (publ) in November 2019 was completed in spring 2020 and closing took place on 1 April 2020. The combination of TOOLS and Swedol creates an attractive business partner for Nordic customers in the areas of tools, workwear, personal protective equipment and consumables. The acquisition creates the prerequisites for increased efficiency and economies of scale, which will also be of benefit to the customers of both companies and lead to increased competition within the sector. Together, both businesses will benefit from common product ranges, procurement channels, more efficient logistics and Swedol's proprietary product brands as well as the development of an even better service offering and new digital solutions. This will lead to a solid platform for continued expansion. Hence, the coordination between Swedol's and TOOLS' operations will create value for customers, suppliers, employees and owners.

Acquisition of SKF's spindle service operations in Sweden.

At the end of September 2020, the subsidiary Rörick Elektriska Verkstad AB signed an agreement to acquire SKF's spindle service operations in Sweden in order to further strengthen the market position in service and maintenance for Swedish industry. At the time of acquisition, the acquired operations generated annual revenue of approximately MSEK 10 with favourable profitability. The acquisition was carried out as a conveyance of assets and liabilities and closing took place in mid-November 2020.

Refer to Note 4 for the final acquisition analysis of the acquisition of Swedol

AFTER THE END OF THE FINANCIAL YEAR

Acquisition of electromechanical workshops from Assemblin.

With the aim of further strengthening the Group's market position in service and maintenance for Swedish industry, an agreement was signed to acquire three electromechanical service workshops from Assemblin El AB in early February 2021. The acquired workshops, which have their origin in NEA workshops (Närkes Elektriska), generate annual revenue of approximately MSEK 90 with favourable profitability and have about 45 employees. The acquisition will be conducted as a conveyance of assets and liabilities with closing scheduled to take place in early April 2021.

Acquisition of Mekano – further strengthening our position in industrial services in Sweden.

Momentum Group also signed an agreement in early February 2021 to acquire 70 percent of the shares of Mekano AB and 100 percent of the shares of Mekano i Sävedalen AB, further strengthening the Group's market position in service and maintenance for Swedish industry. Mekano is one of Sweden's leading suppliers of products and services for the industrial services market, and the two Mekano

3 The comparative year for "Group-wide" has been restated to reflect the transfer of the Group's logistics function in Sweden to the business area Tools, Consumables, Workwear & Protective Equipment for accounting purposes.

companies generate combined annual revenue of approximately MSEK 145 with favourable profitability and have about 85 employees. Closing is scheduled to take place in February 2021.

Acquisition of Öbergs in Karlstad.

In early February 2021, Momentum Group acquired 100 percent of the shares in Öbergs i Karlstad AB ("Öbergs"). The acquisition of Öbergs, a market-leading specialist company in pneumatics in Sweden, further strengthens the Group's position as a leading supplier of industrial components and related services to Swedish industry. Öbergs generates annual revenue of approximately MSEK 50 with favourable profitability and has 12 employees. Closing took place in conjunction with the acquisition.

Refer to the summary of acquisitions completed since the 2015/16 financial year on page 14.

PROFITABILITY, CASH FLOW AND FINANCIAL POSITION

The Group's profitability, measured as the return on equity, amounted to 12 percent (17) and the return on working capital (EBITA/WC) to 32 percent (27) for the most recent 12-month period. The return on capital employed for the corresponding period was 10 percent (15).

Cash flow from operating activities before changes in working capital for the 9 months in the financial year totalled MSEK 763 (365). During the period, inventories decreased by MSEK 167 and operating receivables by MSEK 113. Operating liabilities rose by MSEK 43. Accordingly, cash flow from operating activities for the period amounted to MSEK 1,086 (400).

Cash flow for the financial year was also impacted in a net amount of MSEK –149 (–14) pertaining to investments in and divestments of non-current assets, and a net amount of MSEK –1,748 (–58) pertaining to acquisitions of subsidiaries and other business units and sale of financial non-current assets. Investments in non-current assets mainly pertained to the expansion and efficiency enhancements carried out at the Group's warehouse and logistics facility in Örebro, which was part of the acquisition of Swedol.

At the end of the financial year, the Group's financial net loan liability amounted to MSEK 2,331, compared with MSEK 708 at the beginning of the financial year. The change is primarily related to the acquisition of Swedol regarding the payment of a cash settlement, refinancing of interest-bearing financial liabilities and additional lease liabilities. At the end of the year, the Group's operational net loan liability amounted to MSEK 1,293 (166). Cash and cash equivalents, including unutilised granted credit facilities, totalled MSEK 1,425. The equity/assets ratio at the end of the financial year was 39 percent.

Equity per share, both before and after dilution, totalled SEK 60.25 at the end of the financial year, compared with SEK 56.95 at the beginning of the year.

The Group's normalised tax rate, with its current geographic mix, is approximately 22 percent.

SHARE STRUCTURE AND REPURCHASE OF OWN SHARES

At the end of the financial year, the share capital totalled MSEK 102. The distribution by class of share on 31 December 2020 was as follows:

CLASS OF SHARE AS OF 31 DECEMBER 2020
Class A shares 1,062,436
Class B shares 49,843,753
Total number of shares before repurchasing 50,906,189
Less : Repurchased Class B shares –500,000
Total number of shares after repurchasing 50,406,189

As of 31 March 2020, Momentum Group's holding of Class B treasury shares totalled 500,000. There were no changes to the holding of treasury shares during the financial year. Accordingly, the number of Class B shares held in treasury as of 31 December 2020 amounted to 500,000, corresponding to 1.0 percent of the total number of shares and 0.8 percent of the total number of votes.

The shares held in treasury cover the Company's obligations in the call option programmes issued to senior management in December 2017 and September 2018, respectively. The redemption price for the 250,000 call options issued in connection with the 2017 share-based incentive programme is SEK 119.30 per share4 . Each call option in this programme entitles the holder to acquire one repurchased Class B share during the redemption periods of 18-25 February and 12-25 May 2021, respectively. The redemption price for the 250,000 call options issued in connection with the 2018 share-based incentive programme is SEK 137.30 per share. Each call option in this programme entitles the holder to acquire one repurchased Class B share during the redemption periods of 14-28 February and 16-30 May 2022, respectively.

4 The original redemption price per call option for the 2017 share-based incentive programme of SEK 121.60 has been recalculated by Nordea Bank in accordance with the terms of the incentive programme due to paid and adopted dividends between 2018 and 2021.

The share price on 31 December 2020 was SEK 142.00 and the call options outstanding on the shares repurchased by the Company resulted in a dilution effect of approximately 0.02 percent for the third quarter of 2020. The issued call options did not entail any dilution effect for the financial year. Refer also to page 14.

There have been no changes in the holding of treasury shares after the end of the financial year.

TRANSACTIONS WITH RELATED PARTIES

No transactions having a material impact on the Group's position or earnings occurred between Momentum Group and its related parties during the financial year.

RISKS AND UNCERTAINTIES

Momentum Group's earnings, financial position and strategic position are impacted by a number of internal factors that are within the control of Momentum Group as well as a number of external factors where the Group's ability to influence the course of events is limited. The most important external risk factors for Momentum Group are the economic and market situation as well as the development in the number of employees in the industrial and construction sectors combined with structural changes and the competitive situation. The risks and uncertainties impacting the Group are the same as in earlier periods, although uncertainty over future developments in the market and demand is deemed to have increased on account of the ongoing COVID-19 pandemic. The impact of the pandemic on the Group's operations, the measures adopted in 2020 (including, for example, increased vigilance when it comes to changes in customer structure and a heightened focus on liquidity) and the current assessment of the impact during the coming quarters of 2021 are presented on page 4. For more detailed information about the Group's other risks and uncertainties, refer to page 42 of Momentum Group's Annual Report for 2019/20. The Parent Company is impacted indirectly by the above risks and uncertainties through its function in the Group.

MOTIONS TO THE ANNUAL GENERAL MEETING ON 11 MAY 2021

Momentum Group AB's Annual General Meeting will be held in Stockholm, Sweden on 11 May 2021.

Proposed dividend

The Board of Directors of Momentum Group AB proposes a dividend of SEK 1.50 per share, corresponding to a pay-out ratio of 33 percent of the earnings per share for the financial year. Taking into account the Class B shares repurchased by the Company, the proposed dividend corresponds to a total of approximately MSEK 76. The proposed dividend is in line with the Company's dividend policy, which states that 30–50 percent of earnings per share are to be distributed over a business cycle.

Authorisation for repurchase of own shares

The Board has decided to propose that the Annual General Meeting resolve to renew the authorisation to repurchase own shares. In brief, this motion entails that the Annual General Meeting would authorise the Board, during the period until the next Annual General Meeting, to repurchase a maximum number of own shares through Nasdaq Stockholm so that the Company's holding of treasury shares would at no time exceed 10 percent of the total number of shares in the Company. This authorisation would enable the Board to use repurchased shares to pay for acquisitions or to sell the shares in a manner other than through Nasdaq Stockholm in order to finance acquisitions and to fulfil the Company's obligations in connection with its share-based incentive programmes for senior management in the Momentum Group.

Authorisation for new share issues

The Board has also decided to propose that the Annual General Meeting resolve on a renewed authorisation for new share issues of up to 10 percent of the number of shares as a means of payment for acquisitions. In brief, this motion entails that the Annual General Meeting would authorise the Board, on one or more occasions during the period until the next Annual General Meeting, to decide to increase the Company's share capital through a new issue of shares up to a maximum of 10 percent of the number of shares. The new issue of shares may be performed with or without deviation from the shareholders' preferential rights and with or without provisions regarding non-cash issues or right of offset. The purpose of the authorisation and the grounds for the deviation from the shareholders' preferential rights are to improve the Company's opportunities to conduct or finance corporate acquisitions.

Election Committee

At the 2020 Annual General Meeting, an Election Committee was appointed comprising Peter Hofvenstam (nominated by Nordstjernan) as Chairman, Stefan Hedelius (nominated by Tom Hedelius), Marianne Flink (nominated by Swedbank Robur Fonder) and Lilian Fossum Biner (nominated by Handelsbanken Fonder). The task of the Election Committee ahead of the 2021 Annual General Meeting is to submit motions

concerning the Chairman of the Board and other Board members, directors' fees, the auditors, auditors' fees and the Chairman of the Meeting.

EVENTS AFTER THE END OF THE FINANCIAL YEAR

Four acquisitions strengthen Momentum Group's future market position.

In early February, Momentum Group signed agreements for the acquisition of Mekano, Öbergs in Karlstad and three electromechanical workshops from Assemblin El. Read more about the acquisitions on page 7.

No other significant events affecting the Group have occurred since the end of the financial year.

Stockholm, 18 February 2021

Ulf Lilius President & CEO

This report has not been subject to special review by the Company's auditors.

Contact information

Ulf Lilius, President & CEO, Tel: +46 10 454 54 70 Mats Karlqvist, Head of Investor Relations, Tel: +46 70 660 31 32

Dates for forthcoming financial information

Presentation of Financial Report 2020 (9 months) – Conference call today, Thursday, 18 February 2021 at 11:00 a.m. CET. Refer to www.momentum.group for information about telephone numbers and the link to the webcast.

Annual Report for the 2020 financial year (9 months) will be published at the end of April 2021 and will be available on the Company's website on the same date.

Interim Report (3 months) – 1 January-31 March 2021 will be published on 29 April 2021.

Momentum Group AB's 2021 Annual General Meeting will be held in Stockholm, Sweden on 11 May 2021.

Visit www.momentum.group to subscribe for reports and press releases.

The information in this report is such that Momentum Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 8:00 a.m. CET on 18 February 2021.

This document is in all respects a translation of the Swedish original Financial Report. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

Momentum Group AB (publ) Mail address: PO Box 5900, SE-102 40 Stockholm, Sweden Visit: Östermalmsgatan 87 D, Stockholm Tel: +46 10 454 54 70 Org No: 559072-1352 Reg office: Stockholm www.momentum.group

GROUP SUMMARY

INCOME STATEMENT

QUARTER REPORTING PERIOD FULL-YEAR
MSEK OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
2019/20
Revenue 2,529 1,588 6,846 4,596 6,135
Other operating income 4 1 15 3 4
Total operating income 2,533 1,589 6,861 4,599 6,139
Cost of goods sold –1,519 –1,001 –4,177 –2,895 –3,864
Personnel costs –465 –310 –1,271 –893 –1,189
Depreciation, amortisation, impairment losses and
reversal of impairment losses
Other operating expenses –139
–225
–65
–135
–459
–621
–198
–390
–264
–519
Total operating expenses –2,348 –1,511 –6,528 –4,376 –5,836
Operating profit 185 78 333 223 303
Financial income 0 0 3 0 1
Financial expenses –13 –6 –42 –14 –21
Net financial items –13 –6 –39 –14 –20
Profit after financial items 172 72 294 209 283
Taxes –38 –16 –65 –46 –66
Net profit 134 56 229 163 217
Of which, attributable to:
Parent Company shareholders
Non-controlling interest
135
–1
55
1
228
1
160
3
214
3
Earnings per share, SEK
– before dilution
– after dilution
2.70
2.70
1.95
1.95
4.55
4.55
5.75
5.75
7.70
7.70

STATEMENT OF COMPREHENSIVE INCOME

QUARTER REPORTING PERIOD FULL-YEAR
MSEK OCT-DEC OCT-DEC APR-DEC APR-DEC 2019/20
Net profit 2020
134
2019
56
2020
229
2019
163
217
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
Components that will not be reclassified to net profit
Remeasurement of defined-benefit
pension plans 2 2 –2 –3 –3
Tax attributable to components that will
not be reclassified –1 0 0 1 1
1 2 –2 –2 –2
Components that will be reclassified to net profit
Translation differences –23 –16 –37 –5 –27
Fair value changes for the year in
cash-flow hedges –9 –1 –27 –1 2
Tax attributable to components that will
be reclassified 2 0 6 0 0
–30 –17 –58 –6 –25
Other comprehensive income for the period –29 –15 –60 –8 –27
Total comprehensive income for the period 105 41 169 155 190
Of which, attributable to:
Parent Company shareholders 106 40 168 152 187
Non-controlling interest –1 1 1 3 3

BALANCE SHEET

MSEK 31 DEC 2020 31 DEC 2019 31 MAR 2020
ASSETS
Non-current assets
Intangible non-current assets 2,784 663 660
Tangible non-current assets 506 62 61
Right-of-use assets 952 531 491
Financial investments 1 2 2
Deferred tax assets 70 22 18
Total non-current assets 4,313 1,280 1,232
Current assets
Inventories 1,761 1,036 985
Accounts receivable 1,141 907 964
Current receivables - non-cash issue 1,487
Other current receivables 222 132 115
Cash and cash equivalents 375 37 1,157
Total current assets 3,499 2,112 4,708
TOTAL ASSETS 7,812 3,392 5,940
EQUITY AND LIABILITIES
Equity
Equity attributable to Parent Company shareholders
Non-controlling interest
3,037
14
1,345
18
2,869
19
Total equity 3,051 1,363 2,888
Non-current liabilities
Non-current interest-bearing liabilities 1,544 105 1,125
Non-current lease liabilities 641 347 305
Provisions for pensions 34 31 31
Other non-current liabilities and provisions 378 66 61
Total non-current liabilities 2,597 549 1,522
Current liabilities
Current interest-bearing liabilities 124 130 198
Current lease liabilities 363 206 206
Accounts payable 1,022 770 764
Other current liabilities 655 374 362
Total current liabilities 2,164 1,480 1,530
TOTAL LIABILITIES 4,761 2,029 3,052
TOTAL EQUITY AND LIABILITIES 7,812 3,392 5,940
Financial net loan liability 2,331 782 708
Operational net loan liability 1,293 198 166

STATEMENT OF CHANGES IN EQUITY

Equity attributable to Parent Company shareholders Non
MSEK Share
capital
Reserves Retained earnings,
including net profit
Total controlling
interest
Total
equity
Closing equity, 31 March 2019 57 10 1,236 1,303 14 1,317
Change in accounting policy1 –8 –8 –8
Net profit 160 160 3 163
Other comprehensive income –6 –2 –8 –8
Dividend –89 –89 –89
Acquisitions of partly owned subsidiaries 8 8
Changes in share of partly owned subsidiaries 5 5 –5 0
Dividends paid in partly owned subsidiaries –2 –2
Option liability, acquisitions2 –16 –16 –16
Change in value of option liability3 –2 –2 –2
Closing equity, 31 December 2019 57 4 1,284 1,345 18 1,363
Net profit 54 54 0 54
Other comprehensive income –19 0 –19 –19
Non-cash issue4 45 1,442 1,487 1,487
Acquisitions of partly owned subsidiaries 1 1
Option liability, acquisitions2 –1 –1 –1
Change in value of option liability3 3 3 3
Closing equity, 31 March 2020 102 –15 2,782 2,869 19 2,888
Net profit 228 228 1 229
Other comprehensive income –58 –2 –60 –60
Non-cash issue5 0 0 0 0
Changes in share of partly owned subsidiaries 1 1 –8 –7
Contributions in partly owned subsidiaries 2 2
Change in value of option liability3 –1 –1 –1
Closing equity, 31 December 2020 102 –73 3,008 3,037 14 3,051

1) Transition to IFRS 16. Refer to accounting policies in Momentum Group's Annual Report for 2019/20.

2) Refers to the value of call/put options in relation to non-controlling interests in the acquired subsidiaries ETAB Industriautomation AB and Company Line Förvaltning AB, which entail that: a) Momentum Group is entitled to purchase the remaining shares from the shareholders (call option), and b) the shareholders are entitled to sell their shares to Momentum Group (put option). The call options expire during the 2021/22 financial year and can thereafter be extended for a period of one year at a time. The put options can be exercised until the 2020/21 financial year. The price of the options is dependent on certain results being achieved in the respective company.

3) Pertains to a change in the value of the call/put options in relation to non-controlling interests carried out in conjunction with the acquisitions of partly owned subsidiaries.

4) A new issue of a total of 22,633,876 Class B shares pertaining to the public offer to shareholders in Swedol AB (publ). Capital contributed in kind consisting of the shares in Swedol was conveyed to the Group on 1 April 2020 and recognised on 31 March 2020 as a current receivable pertaining to the non-cash issue.

5) A new issue of a total of 6,897 Class B shares pertaining to the public offer to shareholders in Swedol AB (publ).

CASH-FLOW STATEMENT

QUARTER REPORTING PERIOD FULL-YEAR
MSEK OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
2019/20
Operating activities
Operating activities before changes in
working capital 304 121 763 365 487
Changes in working capital 185 77 323 35 18
Cash flow from operating activities 489 198 1,086 400 505
Investing activities
Acquisition of intangible & tangible non
current assets
–48 –4 –149 –14 –18
Sale of intangible & tangible non
current assets 0 0 0 0 0
Acquisition of subsidiaries & other
business units
–4 –1,749 –58 –66
Sale of financial non-current assets 0 1
Cash flow from investing activities –52 –4 –1,897 –72 –84
Cash flow before financing 437 194 –811 328 421
Financing activities
Financing activities –149 –184 31 –299 729
Cash flow for the period 288 10 –780 29 1,150
Cash and cash equivalents at the beginning
of the period 88 27 1,157 8 8
Exchange-rate differences in cash and 0 –2 0 –1
cash equivalents –1
Cash and cash equivalents at the end
of the period
375 37 375 37 1,157

KEY PER-SHARE DATA

QUARTER
REPORTING PERIOD
FULL-YEAR
SEK OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
2019/20
Earnings before dilution 2.70 1.95 4.55 5.75 7.70
Earnings after dilution 2.70 1.95 4.55 5.75 7.70
Equity, at the end of the period
Equity after dilution, at the end of the
60.25 48.45 56.95
period 60.25 48.45 56.95
NUMBER OF SHARES OUTSTANDING IN THOUSANDS
Number of shares outstanding before
dilution
Weighted number of shares outstanding
50,406 27,765 50,406 27,765 50,399
before dilution
Weighted number of shares outstanding
50,406 27,765 50,406 27,765 27,765
after dilution 50,426 27,765 50,406 27,765 27,765

Weighted number of shares and dilution

Average number of shares outstanding before or after dilution. Shares held by Momentum Group at any given time are not included in the number of shares outstanding. Dilution effects arise due to any call options issued by the Company that can be settled using shares in share-based incentive programmes. In such cases, the call options have a dilution effect when the average share price during the period is higher than the redemption price of the call options.

Momentum Group held 500,000 Class B shares as of 31 December 2020 and has issued 500,000 call options for repurchased shares. For the third quarter of 2020, the average share price exceeded the redemption price of SEK 119.30 per call option in the 2017 sharebased incentive programme*, which entailed a dilution effect of approximately 0.02 percent as of 31 December 2020. For the 2018 share-based incentive programme (with a redemption price of SEK 137.30 per call option) and for the entire financial year, the issued call options did not entail any dilution effect. The share price on 31 December 2020 was SEK 142.00. Refer also to page 8.

* The original redemption price per call option for the 2017 share-based incentive programme of SEK 121.60 has been recalculated by Nordea Bank in accordance with the terms of the incentive programme due to paid and adopted dividends between 2018 and 2021.

PARENT COMPANY IN SUMMARY

INCOME STATEMENT

QUARTER
REPORTING PERIOD
FULL-YEAR
MSEK OCT-DEC
2020
OCT-DEC
2019
APR-DEC
2020
APR-DEC
2019
2019/20
Revenue 7 8 22 22 29
Other operating income 0 0 2 2 2
Total operating income 7 8 24 24 31
Operating expenses –10 –10 –33 –32 –41
Operating profit/loss –3 –2 –9 –8 –10
Financial income and expenses –2 5 –4 15 16
Profit/loss after financial items –5 3 –13 7 6
Appropriations –3
Profit/loss before taxes –5 3 –13 7 3
Taxes 1 –1 3 –2 –1
Net profit/loss –4 2 –10 5 2

There are no items in the Parent Company recognised as other comprehensive income. Accordingly, total comprehensive income corresponds to net profit for the period.

BALANCE SHEET

MSEK 31 DEC 2020 31 DEC 2019 31 MAR 2020
ASSETS
Intangible non-current assets 0 0 0
Tangible non-current assets 0 0 0
Financial non-current assets 3,907 846 829
Current receivables 176 226 1,644
Cash and cash equivalents 357 1,153
TOTAL ASSETS 4,440 1,072 3,626
EQUITY, PROVISIONS AND LIABILITIES
Restricted equity 102 57 102
Non-restricted equity 1,955 526 1,965
Total equity 2,057 583 2,067
Untaxed reserves 63
Provisions
Non-current liabilities 1,544 105 1,125
Current liabilities 839 321 434
TOTAL EQUITY, PROVISIONS AND LIABILITIES 4,440 1,072 3,626

The change in financial non-current assets during the first quarter primarily pertained to the acquisition of Swedol in the amount of MSEK 2,738 and an increase in long-term receivables from Group companies in the amount of MSEK 456, mainly related to the refinancing of interest-bearing liabilities in Swedol, which were replaced by new credit facilities in Momentum Group AB. During the second quarter, Swedol AB was conveyed at the carrying amount to Alligo Holding AB, which is the parent company of the sub-group Business Area Tools, Consumables, Workwear & Protective Equipment. In conjunction with the transaction, Alligo Holding AB received shareholder contributions and raised internal financing, and the transaction did consequently not entail any changes to the financial non-current assets reported by the parent company.

The change in current receivables and cash and cash equivalents is primarily attributable to the recognition of the non-cash issue on 31 March 2020 as a current receivable and to the payment of the cash portion of the acquisition of Swedol.

NOTES

NOTE 1 ACCOUNTING POLICIES

The Financial Report for the Group was prepared in accordance with IFRS and by applying IAS 34 Interim Financial Reporting, the Swedish Annual Accounts Act and the Swedish Securities Market Act. In addition to the financial statements and associated notes, disclosures in accordance with IAS 34.16A are also presented in other sections of the report. The Financial Report for the Parent Company was prepared in accordance with the Swedish Annual Accounts Act and the Swedish Securities Market Act, which conforms to the provisions detailed in RFR 2 Accounting for Legal Entities. The same accounting policies and bases of judgement as in Momentum Group's Annual Report for 2019/20 have been applied.

During the financial year, the Group received government grants for part-time working. The grants received are deemed to meet the definition of government grants under IAS 20. The grants are recognised in the income statement as a reduction of personnel costs. The grants are systematically recognised in the income statement over the same periods of time as the costs that the grants are intended to compensate for and when the Group is

NOTE 2 OPERATING SEGMENTS AND DISCLOSURES ON INCOME

The Group's operating segments comprise the business areas Tools, Consumables, Workwear & Protective Equipment and Components & Services. The operating segments are consolidations of the operational organisation, as used by Group management and the Board of Directors to monitor operations. Group management, comprising the CEO and CFO, are the Group's chief operating decision makers.

During the financial year, Tools, Consumables, Workwear & Protective Equipment comprised Swedol and TOOLS with Univern and Grolls, and Gigant, Mercus Yrkeskläder, TriffiQ Företagsprofilering, Reklamproffsen Skandinavien and Company Line, which offer products and services related to tools, consumables, workwear, personal protective equipment, workplace equipment as well as promotional products for the industrial, construction and public sectors and private market in the Nordic region, among others.

deemed to meet the conditions and fulfil the obligations pertaining to the grants.

As of 1 April 2020, the Group has a new business area structure (operating segments). The change primarily impacted the Group's logistics function in Sweden, which is consolidated as part of the business area Tools, Consumables, Workwear & Protective Equipment as of 1 April 2020, after previously being part of Group-wide. Establishing the new Group structure during the second quarter of 2020 also entailed certain small changes in how the Group's operating segments are consolidated, primarily regarding a subsidiary in Denmark, which now belongs to the business area Components & Services. The comparative year and the first quarter of 2020 have been restated accordingly.

IASB has issued additions to standards that will take effect for the Group on or after 1 April 2020. These additions are deemed not to be material for the consolidated financial statement.

During the financial year, Components & Services comprised Momentum Industrial, ETAB Industriautomation, Rörick Elektriska Verkstad, Carl A Nilssons Elektriska Reparationsverkstad and JNF Køge, which offer spare parts, service and repairs for customers in the industrial sector in the Nordic region.

Group-wide includes the Group's management, finance function and support functions. The support functions include internal communications, investor relations and legal affairs.

Financial items and taxes are not distributed by operating segment but recognised in their entirety in Group-wide.

Intra-Group pricing between the operating segments occurs on market terms. The accounting policies are the same as those applied in the consolidated financial statements. The revenue presented below for the geographic markets is based on the domicile of the customers (compared with the information presented by geographic market for Tools, Consumables, Workwear & Protective Equipment on page 5, which is based on the geographic domicile of each legal entity).

APR-DEC 2020 (9 MON)
MSEK Tools, Consumables, Workwear
& Protective Equipment
Components &
Services
Group-wide Eliminations Group total
From external customers by geographic area
Sweden 3,488 774 4,262
Norway 1,534 15 1,549
Finland 873 1 874
Other countries 122 39 161
From other segments 18 8 22 –48
Revenue 6,035 837 22 –48 6,846
EBITA 380 111 –7 0 484
Items affecting comparability –99 –2 –101
Amortisation of intangible assets incurred in
connection with corporate acquisitions
–47 –3 –50
Operating profit 234 108 –9 0 333
APR-DEC 2019 (9 MON)
MSEK Tools, Consumables, Workwear
& Protective Equipment
Components &
Services
Group-wide Eliminations Group total
From external customers by geographic area
Sweden 1,439 847 2,286
Norway 1,423 18 1,441
Finland 747 1 748
Other countries 80 41 121
From other segments 19 21 22 –62
Revenue 3,708 928 22 –62 4,596
EBITA 143 109 –7 2 247
Items affecting comparability –9 –9
Amortisation of intangible assets incurred in
connection with corporate acquisitions –12 –3 –15
Operating profit 131 106 –16 2 223

Revenue by operating segment and quarter

2020* 2019/20
MSEK Q3 Q2 Q1 Q4 Q3 Q2 Q1
Tools, Consumables, Workwear
& Protective Equipment
2,242 1,781 2,012 1,223 1,277 1,152 1,279
Components & Services 296 256 285 326 323 295 310
Group-wide 8 7 7 7 8 7 7
Eliminations –17 –15 –16 –17 –20 –22 –20
Momentum Group 2,529 2,029 2,288 1,539 1,588 1,432 1,576

EBITA by operating segment and quarter

2020* 2019/20
MSEK Q3 Q2 Q1 Q4 Q3 Q2 Q1
Tools, Consumables, Workwear
& Protective Equipment
164 94 122 48 52 46 45
Components & Services 40 37 34 45 39 37 33
Group-wide –3 –3 –1 –2 –1 –3 –3
Eliminations 0 0 0 0 2 0 0
Momentum Group 201 128 155 91 92 80 75

* Since Momentum Group is changing its financial year to the calendar year, the current 2020 financial year has been shortened to nine months and covers the 1 April to 31 December 2020 period.

NOTE 3 FINANCIAL INSTRUMENTS

Momentum Group measures financial instruments at fair value or amortised cost in the balance sheet depending on their classification. In addition to items in the financial net debt, financial instruments also include accounts receivable and accounts payable. The fair value of all of the Group's financial assets is deemed to be a reasonable approximation of their carrying amount. Liabilities measured at fair value comprise hedging instruments for which the fair value is based on observable market data and are therefore included in level 2 according to IFRS 13 and contingent purchase considerations that are measured using discounted cash flow and are thus included in level 3.

MSEK 31 DEC 2020 31 DEC 2019 31 MAR 2020
Financial assets measured at fair value
Financial investments 1 1 1
Derivative hedging instruments 0 0 4
Financial assets measured at amortised cost
Long-term receivables 0 1 1
Accounts receivable 1,141 907 964
Cash and cash equivalents 375 37 1,157
Total financial assets 1,517 946 2,127
Financial liabilities measured at fair value
Derivative hedging instruments 14 0 0
Conditional purchase considerations 5 5
Financial liabilities measured at amortised cost
Option liability 17 38 35
Interest-bearing liabilities 2,672 788 1,834
Accounts payable 1,022 770 764
Total financial liabilities 3,725 1,601 2,638

NOTE 4 ACQUISITIONS

Acquisition of Swedol, which closed on 1 April 2020

On 11 November 2019, Momentum Group announced a recommended public offer to the shareholders of Swedol AB (publ). On 23 March 2020, the Board of Directors of Momentum Group resolved to complete the offer following scrutiny for compatibility with competition law by the national competition authorities in Sweden, Norway and Finland and the offer being accepted by shareholders representing approximately 98 percent of the shares in Swedol. Closing on the shares in Swedol took place on 1 April 2020. The last day for trading in Swedol's Class B shares on Nasdaq Stockholm was 20 April 2020 and Momentum Group has called for a compulsory redemption of the remaining shares outstanding in Swedol. The arbitration board in the dispute resolution proceeding granted preferential rights to the outstanding shares in early July 2020, after which Momentum Group now holds 100 percent of the shares and votes in Swedol.

The total purchase consideration for the acquisition amounted to MSEK 2,724 (excluding acquisition costs), of which the non-cash issue's share was MSEK 1,487 and the remaining share was a cash settlement. The fair value of the 22,640,773 Class B shares in Momentum Group issued as part of the purchase consideration is based on the listed share price for Momentum Group's Class B shares on 1 April 2020 of SEK 65.70 per share. Acquisition costs totalling MSEK 14 were recognised as other operating expenses for the 2019/20 financial year and MSEK 2 for the 2020 financial year from 1 April to 31 December 2020.

In accordance with the final acquisition analysis presented below, MSEK 1,066 of the purchase consideration was allocated to goodwill, MSEK 630 to brands and MSEK 460 to customer relations. The allocation to brands and customer relations was based on the discounted value of future cash flows attributable to each class of assets, where an assessment was conducted that included margin, tied-up capital and turnover rate of the customer base. The value of goodwill was based on the expectation that the Momentum Group's position in the markets in question will strengthen and the other synergies in areas such as purchasing, store coordination and logistics that the Group expects to realise through the acquisition.

If the acquisition had been completed on 1 April 2019, a preliminary consolidated income statement at 31 March 2020 for the Momentum Group, including Swedol, would have shown total revenue of MSEK 9,780 and net profit after tax of MSEK 425 for the 2019/20 financial year. These amounts have been calculated based on the Swedol Group's earnings, adjusted for additional depreciation and amortisation that would have arisen if the adjustment to fair value for tangible and intangible non-current assets had been applied from 1 April 2019, together with attributable tax effects. There are no material differences in accounting policies between Momentum Group and the acquired business since Swedol applied IFRS in its historical financial statements.

During the 2020 financial year from 1 April to 31 December 2020, the acquisition of Swedol contributed MSEK 2,789 to the Group's revenue and MSEK 284 to the Group's EBITA.

According to the final acquisition analysis, the assets and liabilities included in the acquisition of Swedol AB amounted to the following:

FAIR VALUE RECOGNISED
IN THE GROUP
MSEK
ACQUIRED ASSETS
Brands 630
Customer relations 460
Other intangible non-current assets 52
Buildings and land 168
Other tangible non-current assets 195
Right-of-use assets 622
Deferred tax assets 9
Inventories 1,023
Other receivables 432
Cash and cash equivalents 25
Total assets 3,616
ACQUIRED PROVISIONS AND LIABILITIES
Interest-bearing liabilities - credit institutions 527
Interest-bearing liabilities - leases 621
Deferred tax liability 329
Other current liabilities 481
Total provisions and liabilities 1,958
NET OF IDENTIFIED ASSETS AND LIABILITIES 1,658
Goodwill 1,066
Non-controlling interests 0
PURCHASE CONSIDERATION 2,724
Less: New share issue –1,487
Additional: Net debt in Swedol 503
EFFECT ON THE GROUP'S CASH AND CASH EQUIVALENTS 1,740

The effect of the businesses acquired during the financial year on the Group's cash and cash equivalents and the additional purchase considerations settled amounted to MSEK 1,749 in total, of which MSEK 1,740 pertained to the acquisition of Swedol. Other effects on the Group's cash and cash equivalents totalling MSEK 9 pertained to the acquisition of SKF's spindle service operations in Sweden, for which closing took place in November 2020, and paid additional purchase considerations pertaining to the acquisition of Lindström Group's PPE business, for which closing took place in April 2019. The payment of the additional purchase consideration corresponded entirely with the amount of the liability, which is why the settlement during the financial year did not have any impact on earnings.

Corporate acquisitions carried out since the 2015/16 financial year:

TIME NO. OF
ACQUISITION (possession taken) REVENUE1 EMPLOYEES1 BUSINESS AREA
AB Carl A. Nilssons El. Rep.verkstad, SE September 2015 MSEK 20 13 Components & Services
Tønsberg Maskinforretning AS, NO April 2016 MNOK 20 10 Tools & Consumables
Astrup Industrivarer AS, NO November 2016 MNOK 240 50 Tools & Consumables
Arboga Machine Tool AB, SE March 2017 MSEK 10 5 Components & Services
TriffiQ Företagsprofilering AB2
, SE
September 2017 MSEK 70 18 Tools & Consumables
AB Knut Sehlins Industrivaruhus, SE October 2017 MSEK 40 14 Tools & Consumables
Elka Produkter AB2
, SE
October 2017 3
10 Tools & Consumables
Reklamproffsen Skandinavien AB2
, SE
March 2018 MSEK 35 12 Tools & Consumables
Profilmakarna i Södertälje AB, SE April 2018 MSEK 25 8 Tools & Consumables
MRO business from Brammer4
, SE
May 2018 MSEK 140 33 Components & Services
MFG Components Oy4
, FI
October 2018 MEUR 1 3 Tools & Consumables
TOOLS Løvold AS, NO January 2019 MNOK 95 28 Tools & Consumables
PPE business from Lindström Group4
, FI
April 2019 MEUR 6 5 Tools & Consumables
ETAB Industriautomation AB2
, SE
June 2019 MSEK 45 9 Components & Services
Company Line Förvaltning AB2
, SE
June 2019 MSEK 75 25 Tools & Consumables
AMJ Papper AB, SE March 2020 MSEK 15 6 Tools & Consumables
Swedol AB5
, SE / NO / FI
April 2020 MSEK 3,650 1,046 Tools & Consumables
SKF's spindle service operations4
, SE
November 2020 MSEK 10 5 Components & Services
After the end of the financial year
Mekano AB2
& Mekano i Sävedalen AB, SE
February 2021 MSEK 145 85 Components & Services
Öbergs i Karlstad AB, SE February 2021 MSEK 50 12 Components & Services
Service workshops from Assemblin El4
, SE
April 2021 MSEK 90 45 Components & Services

1) Refers to information for the full year on the date of acquisition.

2) Momentum Group initially acquired 70 percent of the shares in each company. Momentum Group now owns 100 percent of the shares in TriffiQ Företagsprofilering AB and Reklamproffsen Skandinavien AB.

3) The current operations of Elka Produkter AB were established in autumn 2017. Accordingly, there is no full-year information available regarding comparable revenue.

4) The acquisition was carried out as a conveyance of assets and liabilities.

5) After the completion of the public offer to the shareholders in Swedol AB, Momentum Group's holding amounted to approximately 99 percent of the shares. Compulsory redemption of the remaining shares in Swedol has been called for, and preferential rights to the shares was granted by the arbitration board in the dispute resolution proceeding in early July 2020. Momentum Group subsequently holds 100 percent of the shares and votes in Swedol.

PERFORMANCE MEASURES – DEFINITIONS & CALCULATIONS

Momentum Group uses certain financial performance measures in its analysis of the operations and their performance that are not defined in accordance with IFRS. Momentum Group believes that these alternative performance measures provide valuable information for the company's Board of Directors, owners and investors, since they enable a more accurate assessment of current trends and the company's performance when combined with other performance measures calculated in accordance with IFRS. Since not all listed companies calculate these financial performance measures in the same way, there is no guarantee that the information is comparable with other companies' performance measures of the same name. Hence, these financial performance measures must not be viewed as a replacement for those measures calculated in accordance with IFRS. Insofar as the performance measures are used and commented on by business area (operating segment), the derivation of the performance measures is also presented at this level.

12 MONTHS ENDING
31 DEC 20201 31 MAR 2020 31 MAR 2019 31 MAR 2018
IFRS PERFORMANCE MEASURES
Net profit, MSEK 283 217 231 182
Earnings per share, SEK 6.50 7.70 8.20 6.45
ALTERNATIVE PERFORMANCE MEASURES
Performance measures related to the income statement
Revenue, MSEK 8,385 6,135 6,024 5,616
Operating profit, MSEK 413 303 302 240
of which: Items affecting comparability –106 – 14 –12
of which: Amortisation of intangible assets incurred
in connection with corporate acquisitions –56 – 21 –16 –10
EBITA, MSEK 575 338 318 262
of which: Depreciation and amortisaton of tangible
assets 2
and other intangible non-current
–86 –31 –31 –27
Profit after financial items, MSEK 368 283 296 235
Operating margin, % 4.9% 4.9% 5.0% 4.3%
EBITA margin, % 6.9% 5.5% 5.3% 4.7%
Profit margin, % 4.4% 4.6% 4.9% 4.2%
Performance measures related to profitability
Return on working capital (EBITA/WC), % 32% 28% 27% 25%
Return on capital employed, % 10% 14% 19% 17%
Return on equity, % 12% 16% 19% 17%
Performance measures related to financial position
Financial net loan liability (closing balance), MSEK 2,331 708 293 322
Operational net loan liability (closing balance), MSEK 1,293 166 266 295
Equity (closing balance)3
, MSEK
3,037 2,869 1,303 1,155
Equity/assets ratio, % 39% 48% 45% 42%
Other performance measures
Number of employees at the end of the period 2,670 1,651 1,684 1,647
Share price at the end of the period, SEK 142.00 67.50 93.40 100.00

1) These performance measures include the acquisition of Swedol as of 1 April 2020. Refer to the summary on page 2 for performance measures calculated as though the acquisition of Swedol had closed on 1 April 2019.

2) Total depreciation/amortisation of tangible and intangible non-current assets, excluding amortisation of intangible assets arising in connection with corporate acquisitions and IFRS 16 effects.

3) Refers to equity attributable to Parent Company shareholders.

DEFINITIONS OF PERFORMANCE MEASURES

Revenue

Own invoicing, commission-based revenue from commission sales and side revenue.

Used to present the Group's sales to external customers. Revenue from both external and internal customers is recognised per business area (operating segment).

Operating profit

Profit before financial items and tax.

Used to present the Group's earnings before interest and tax.

Items affecting comparability

Items affecting comparability include revenue and expenses that do not arise regularly in the operating activities.

EBITA

Operating profit adjusted for items affecting comparability and before any impairment of goodwill and amortisation and impairment of other intangible assets arising in connection with corporate acquisitions and equivalent transactions. Used to present the Group's earnings generated from operating activities.

Operating margin, %

Operating profit relative to revenue.

Used to measure the Group's earnings generated before interest and tax and provides an understanding of the earnings performance over time. Specifies the percentage of revenue remaining to cover interest payments and tax and to provide profit after the Group's expenses have been paid.

EBITA margin, %

EBITA as a percentage of revenue.

Used to measure the Group's earnings generated from operating activities and provides an understanding of the earnings performance over time. The EBITA margin based on revenue from both external and internal customers is presented per business area (operating segment).

Profit margin, %

Profit after financial items as a percentage of revenue.

Used to assess the Group's earnings generated before tax and presents the share of revenue that the Group may retain in earnings before tax.

Return on working capital (EBITA/WC), %

EBITA for the most recent 12-month period divided by average working capital measured as total working capital (accounts receivable and inventories less accounts payable) at the end of each month for the most recent 12-month period and the opening balance at the start of the period divided by 13.

The Group's internal profitability target, which encourages high EBITA and low tied-up capital. Used to analyse profitability in the Group and its various operations.

Return on capital employed, %

Operating profit plus financial income for the most recent 12-month period divided by average capital employed measured as the balance-sheet total less non-interest-bearing liabilities and provisions at the end of the most recent four quarters and the opening balance at the start of the period divided by five.

Presented to show the Group's return on its externally financed capital and equity, meaning independent of its financing.

Return on equity, %

Net profit for the most recent 12-month period divided by average equity measured as total equity attributable to Parent Company shareholders at the end of the most recent four quarters and the opening balance at the start of the period divided by five.

Used to measure the return generated on the capital invested by the shareholders.

Financial net loan liability (closing balance)

Financial net loan liability measured as non-current interest-bearing liabilities and current interest-bearing liabilities, less cash and cash equivalents at the end of the period.

Used to monitor the debt trend and analyse the Group's total indebtedness including lease liabilities.

Operational net loan liability (closing balance)

Operational net loan liability measured as non-current interest-bearing liabilities and current interest-bearing liabilities, excluding lease liabilities and net provisions for pensions, less cash and cash equivalents at the end of the period.

Used to monitor the debt trend and analyse the Group's total indebtedness excluding lease liabilities and net provisions for pensions.

Equity/assets ratio, %

Equity attributable to Parent Company shareholders as a percentage of the balance-sheet total at the end of the period.

Used to analyse the financial risk in the Group and show how much of the Group's assets are financed by equity.

Earnings per share, SEK

Net profit attributable to the Parent Company shareholders divided by the weighted number of shares. IFRS performance measure.

Change in revenue for comparable units

Comparable units refer to sales in local currency from units that were part of the Group during the current period and the entire corresponding period in the preceding year. Trading days refer to sales in local currency depending on the difference in the number of trading days compared with the comparative period. Other units refer to the acquisition or divestment of units during the corresponding period. Note: Any instances where comparable units include Swedol for periods prior to the closing date of 1 April 2020 are specifically noted.

Used to analyse the underlying sales growth driven by changes in volume, the product and service offering, and the price for similar products and services across different periods. Refer to the reconciliation table on page 4.

DERIVATION OF ALTERNATIVE PERFORMANCE MEASURES

DERIVATION OF ALTERNATIVE PERFORMANCE MEASURES
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
EBITA
Operating profit 413 303 302 240
Items affecting comparability
Restructuring expenses 97
Acquisition related expenses 7 14
Integration expenses for the acquisition of Swedol 2
Split and listing expenses 12
Amortisation of intangible assets incurred in connection with corporate
acquisitions 56 21 16 10
EBITA 575 338 318 262

FINANCIAL REPORT 2020 – 9 MONTHS

1 APRIL – 31 DECEMBER 2020

1 APRIL – 31 DECEMBER 2020
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
WORKING CAPITAL
Average operating assets
Average inventories 1,602 1,021 975 884
Average accounts receivable 1,076 966 956 895
Total average operating assets 2,678 1,987 1,931 1,779
Average operating liabilities
Average accounts payable –886 –759 –736 –732
Total average operating liabilities –886 –759 –736 –732
Average working capital 1,792 1,228 1,195 1,047
EBITA 575 338 318 262
Return on working capital (EBITA/WC), % 32% 28% 27% 25%
Return on working capital (EBITA/WC), % 32% 28% 27% 25%
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
CAPITAL EMPLOYED
Average balance-sheet total 5,952 3,318 2,813 2,619
Average non-interest-bearing liabilities and provisions
Average non-interest-bearing non-current liabilities –244 –72 –74 –57
Average non-interest-bearing current liabilities –1,407 –1,147 –1,150 –1,149
Total average non-interest-bearing liabilities and provisions –1,651 –1,219 –1,224 –1,206
Average capital employed 4,301 2,099 1,589 1,413
Operating profit 413 303 302 240
Financial income 4 1 1 2
Total operating profit + financial income 417 304 303 242
Return on capital employed, % 10% 14% 19% 17%
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
RETURN ON EQUITY
Average equity* 2,326 1,333 1,220 1,070
Net profit* 282 214 229 181
Return on equity, % 12% 16% 19% 17%
* Refers to equity and earnings attributable to Parent Company shareholders.
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
FINANCIAL NET LOAN LIABILITY (CLOSING BALANCE)
Non-current interest-bearing liabilities 2,219 1,461 164 130
Current interest-bearing liabilities 487 404 137 202
Cash and cash equivalents –375 –1,157 –8 –10
Financial net loan liability (closing balance) 2,331 708 293 322
Financial net loan liability (closing balance) 2,331 708 293 322
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
OPERATIONAL NET LOAN LIABILITY (CLOSING BALANCE)
Financial net loan liability 2,331 708 293 322
Financial lease liabilities –1,004 –511
Net provisions for pensions –34 –31 –27 –27
Operational net loan liability (closing balance) 1,293 166 266 295
12 MONTHS ENDING
M
SEK
31 DEC 2020 31 MAR 2020 31 MAR 2019 31 MAR 2018
EQUITY/ASSETS RATIO
Balance-sheet total (closing balance) 7,812 5,940 2,914 2,734
Equity (closing balance)* 3,037 2,869 1,303 1,155
Equity/assets ratio, % 39% 48% 45% 42%

* Refers to equity attributable to Parent Company shareholders.

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