Bravida Holding — Interim / Quarterly Report 2018

Jul 20, 2018

INTERIM REPORT April–June 2018

APRIL–JUNE 2018

• Net sales increased by 11% to SEK 4,790 million (4,325)
• Organic growth was 4% (0)
• The order backlog was 6% higher at SEK 11,139 million (10,493)
• EBITA increased by 10% to SEK 280 million (255)
• The EBITA margin was 5.9% (5.9)
• Adjusted EBITA was SEK 280 million (263)
• The adjusted EBITA margin was 5.9% (6.1)
• Profit after tax was SEK 212 million (186)
• Cash flow from operating activities was SEK 319 million (150)
• Net debt amounted to SEK -1,896 million (-2,343)
• Three acquisitions were completed in the quarter, adding annual sales of approximately SEK 68 million
• Basic earnings per share were SEK 1.05 (0.92) and diluted earnings per share were SEK 1.05 (0.92)

JANUARY–JUNE 2018

• Net sales increased by 11% to SEK 9,347 million (8,440)
• Organic growth was 3% (6)
• EBITA increased by 9% to SEK 506 million (465)
• The EBITA margin was 5.4% (5.5)
• Adjusted EBITA was SEK 506 million (473)
• The adjusted EBITA margin was 5.4% (5.6)
• Profit after tax was SEK 380 million (336)
• Cash flow from operating activities was SEK 377 million (531)
• Six acquisitions were completed in the period, adding annual sales of SEK 300 million
• Basic earnings per share were SEK 1.88 (1.67) and diluted earnings per share were SEK 1.88 (1.67)

FINANCIAL OVERVIEW

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017	Jul 2017- Jun 2018
Net sales	4,790	4,325	9,347	8,440	17,293	18,200
Operating profit/loss (EBIT)	279	253	505	461	1,072	1,116
Operating margin (EBIT), %	5.8	5.8	5.4	5.5	6.2	6.1
EBITA	280	255	506	465	1,078	1,119
EBITA margin, %	5.9	5.9	5.4	5.5	6.2	6.1
Adjusted EBITA	280	263	506	473	1,086	1,119
Adjusted EBITA margin, %	5.9	6.1	5.4	5.6	6.3	6.1
Profit/loss after tax	212	186	380	336	820	863
Cash flow from operating activities	319	150	377	531	1,038	884
Operating cash flow	418	177	547	612	1,171	1,106
Interest coverage ratio	30.0	26.6	31.1	20.3	22.9	27.7
Cash conversion, %	94	104	94	104	106	94
Net debt/adjust. EBITDA, 12 m	1.7	2.2	1.7	2.2	1.7	1.7
Order intake	5,102	4,821	9,977	9,292	17,972	18,656
Order backlog	11,139	10,493	11,139	10,493	10,271	11,139

The leading end-to-end service and installation provider in the Nordics

CONTINUED GOOD PERFORMANCE

SALES GROWTH, BOTH ORGANICALLY AND THROUGH ACQUISITIONS

Bravida continued to grow in the second quarter, with sales rising by 11 percent and organic growth of 4 percent, along with a record-high order backlog. In Norway, we grew by 10 percent in the past quarter, this despite the ongoing implementation of the Bravida Way in Oras which is inhibiting growth as we are prioritising margin over volume. In Sweden, the business is performing well overall with a growth at 4 percent in the quarter and Denmark as well as Finland are reporting significant growth. Our service business is developing well with a growth at 11 percent in the period.

IMPROVEMENT IN EBITA AND OPERATING CASH FLOW

EBITA increased by 10 percent. The EBITA margin in Sweden remained unchanged but improved in Norway. It's pleasing to see the acquired Oras performing in line with our plans and also turning a profit in the second quarter. In Denmark, we achieved a slightly lower margin owing to large projects that are at an early stage of production. In Finland, our new Head of Division initiated a review of the project portfolio, which affected earnings for the quarter.

Operating cash flow was strong in the quarter and cash conversion has improved from 75 percent to 94 percent.

IMPLEMENTATION OF NEW BUSINESS PLAN

During the quarter we continued rolling out the 2018–2020 business plan to all Bravida branches. The business plan is based on a sustained focus on margin and growth, both organically and through acquisitions.

The new business plan emphasises profitability in each branch. Branches with weak or negative profitability must improve and principally focus on achieving a higher margin, while branches with good profitability should aim to grow while maintaining or improving their margin. Growth in service is a priority in order to achieve improved profitability and stability within the business. Our aim is to be the leading service partner for our customers. A raft of initiatives are being undertaken to achieve this long-term objective. The service business generally has a higher margin than the installation business, with regular customers and recurring assignments, which will provide good stability over the next few years.

ACQUISITIONS CONTINUE TO STRENGTHEN BRAVIDA

Bravida's growth and market position within both service and installation is developed through acquisitions. So far this year we have completed eight acquisitions, including two in July. All acquisitions strengthen our local market position and expand our customer offering.

We established an acquisition strategy in 2014, which has so far resulted in over 50 acquisitions and added SEK 5 billion in sales with good profitability. Bravida now has an effective acquisition model that creates shareholder value and enhances our customer offering. I believe we can continue growing through acquisitions in line with our financial targets going forward.

OUTLOOK

The technical service and installation market will remain good in Sweden, Norway and Denmark, and stable in Finland. The order backlog which does not include service assignments, only installation projects, is once again at a record level. The bulk of the order backlog consists of lots of small and medium-sized installation projects, which together with our large service operations, will support growth over the coming quarters.

Mattias Johansson, Stockholm, July 2018

CONSOLIDATED EARNINGS OVERVIEW

NET SALES April–June

Net sales increased by 11 percent to SEK 4,790 million (4,325). Adjusted for currency fluctuations and acquisitions, net sales increased by 4 percent. Currency fluctuations had a positive 2 percent impact on net sales, while acquisitions increased net sales by 5 percent. Net sales increased in all countries. They rose by 4 percent in Sweden, by 10 percent in Norway, by 25 percent in Denmark and by 56 percent in Finland. The high growth in Finland was mainly due to the acquisitions of Adison Oy in January 2018.

Compared with the second quarter of 2017, service business increased by 11 percent and installation by 10 percent. The service business accounted for 45 percent (45) of total net sales.

Order intake amounted to SEK 5,102 million (4,821), an increase of 6 percent. Order intake increased in Norway but decreased in the other countries. The order backlog at 30 June was 6 percent higher than at the same point in the previous year and amounted to SEK 11,139 million (10,493). During the quarter the order backlog rose by SEK 315 million. The increase was attributable to business operations in Norway, Denmark and Sweden. The order backlog only contains installation projects.

January–June

Net sales increased by 11 percent to SEK 9,347 million (8,440). Adjusted for currency fluctuations and acquisitions, the increase was 3 percent. Currency fluctuations had a positive 1 percent impact, while acquisitions increased net sales by 7 percent. Net sales increased in all countries. They rose by 4 percent in Sweden, by 15 percent in Norway, by 23 percent in Denmark and by 42 percent in Finland.

Compared with the same period of 2017, both service and installation business increased by 11 percent. The service business accounted for 46 percent (46) of total net sales. The increase in net sales in the installation business is mainly due to good growth in the order backlog reported since 2016.

The growth in service business is the result of the Group's initiatives to increase service sales.

Order intake, which contains both installation and service, was SEK 9,977 million (9,292), an increase of 7 percent.

EARNINGS

April–June

Operating profit was SEK 279 million (253). EBITA increased by 10 percent to SEK 280 million (255), resulting in an EBITA margin of 5.9 percent (5.9). The cost of Bravida's long-term incentive programmes in the second quarter was SEK 5 million higher than last year, which was largely due to higher employer contributions and the fact that there are now three programmes in place.

EBITA increased across all countries apart from Finland, which reported a loss. In Norway, the EBITA margin improved, while it was unchanged in Sweden, lower in Denmark and negative in Finland. Group-wide profit was SEK 5 million (1).

Specific costs were SEK – (SEK 8 million). Adjusted EBITA was SEK 280 million (263) and the adjusted EBITA margin was 5.9 percent (6.1).

Net financial items totalled SEK -7 million (-13), with the improvement due to lower debt, lower financing expenses and positive exchange rate effects. Profit after financial items was SEK 273 million (239). Profit after tax was SEK 212 million (186). Basic earnings per share increased by 14 percent to SEK 1.05 (0.92). Diluted earnings per share were SEK 1.05 (0.92).

January–June

Operating profit was SEK 505 million (461). EBITA increased by 9 percent to SEK 506 million (465), resulting in an EBITA margin of 5.4 percent (5.5). EBITA increased across all countries apart from Finland, which reported a loss. The EBITA margin improved in Sweden and Norway, while the margin was slightly lower in Denmark. Group-wide profit was SEK 11 million (15).

Specific costs were SEK – (SEK 8 million). Adjusted EBITA was SEK 506 million (473) and the adjusted EBITA margin was 5.4 (5.6).

Net financial items totalled SEK -16 million (-28), with the improvement due to lower debt, lower financing expenses and positive exchange rate effects. Profit after financial items was

NET SALES (SEK MIL.)

Net sales, rolling 12 months

Order intake, rolling 12 months

SEK 489 million (434). Profit after tax was SEK 380 million (336). Basic earnings per share increased by 13 percent to SEK 1.88 (1.67). Diluted earnings per share were SEK 1.88 (1.67).

DEPRECIATION AND AMORTISATION

Depreciation and amortisation amounted to SEK 8 million (9) for the quarter and SEK 16 million (17) for January to June.

TAX

The tax expense for the quarter was SEK -61 million (-54). Profit before tax was SEK 273 million (239). Effective tax was 22 (22) percent. Tax paid amounted to SEK 95 million (15).

The tax expense for January to June was SEK -109 million (-98). Profit before tax was SEK 489 million (434). The effective tax rate was 22 (22) percent. Tax paid amounted to SEK 161 million (59).

The tax rate in Sweden is 22 percent, in Norway it is 23 percent, in Denmark 22 percent and in Finland 20 percent. The Swedish deferred tax position has been revalued using the decreased corporate tax rates that were decided by the Swedish Government, the impact was marginal.

CASH FLOW

April–June

Cash flow from operating activities was SEK 319 million (150). The improvement in cash flow was, except from the improved operating profit, due to lower working capital, but higher tax payments. Working capital decreased as a result of a rise in current liabilities. The payment of tax increased to SEK -95 million (-15), owing to the settlement of tax liabilities from previous financial years and higher preliminary tax. Cash flow from investing activities was SEK -66 million (-174), of which acquisitions of subsidiaries and businesses totalled SEK -63 million (-172). Cash flow from financing activities relates to dividends, which were SEK -312 million (-252).

12-month cash conversion was 94 percent (104). Cash flow from operating activities in the last 12 months was SEK 884 million (890).

January–June

Cash flow from operating activities was SEK 377 million (531). The decrease in cash flow was due to increased working capital and higher tax payments. Working capital deteriorated owing to a rise in current receivables. The payment of tax increased to SEK -161 million (-59), owing to the settlement of tax liabilities from previous financial years and higher preliminary tax. Cash flow from investing activities was SEK -111 million (-188), while acquisitions of subsidiaries and businesses totalled SEK -104 million (-181). Cash flow from financing activities, which relate to a dividend payment, the net reduction of utilised overdraft facilities and the repayment of borrowings, amounted to SEK -514 million (-252).

ACQUISITIONS

During the quarter, three small acquisitions were completed in Sweden, adding a total of SEK 68 million in annual sales. The acquired companies operate in the electrical, cooling and security segments.

In the first quarter, three acquisitions were completed, one each in Finland, Denmark and Sweden, adding a total of SEK 232 million in annual sales.

FINANCIAL POSITION

Bravida's net debt at 30 June was SEK -1,896 million (-2,343), which corresponds to a capital structure (net debt/adjusted EBITDA) ratio of 1.7 (2.2). Consolidated cash and cash equivalents were SEK 604 million (360) at 30 June. Interest-bearing liabilities amounted to SEK 2,500 million (2,703) at 30 June, SEK 1,000 million (0) of which was commercial paper. Bravida's total credit facilities amounted to SEK 3,500 million (4,023), of which SEK 1,994 million (1,320) was unused at 30 June.

At the end of the period, equity totalled SEK 4,804 million (4,116). The equity/assets ratio was 34.2 percent (32.3).

EMPLOYEES

The average number of employees at 30 June was 10,893 (10,089), an increase of 8 percent.

PARENT COMPANY

Revenues for the second quarter were SEK 43 million (38) and earnings after net financial items were SEK 2 million (-12). Revenues for the January–June period were SEK 85 million (74) and earnings after net financial items were SEK 5 million (-13).

SHAREHOLDER INFORMATION

Bravida Holding AB's ordinary shares are listed on the Nasdaq Stockholm Large Cap list. At 30 June Bravida had 10,134 shareholders, according to Euroclear. At 30 June the largest sharehold-

NET SALES AND GROWTH

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	4,790	4,325	9,347	8,440	17,293
Change	466	525	907	1,213	2,501
Change, %	10.8	13.8	5.2	16.8	16.9
Of which
Organic growth, %	4	0	3	6	6
Acquisitions, %	5	12	7	9	10
Currency effects, %	2	2	1	2	1

ers were Capital Group funds, Swedbank Robur funds, Lannebo funds, Fourth National Pension Insurance Fund (AP4), and Mawer Investment Management funds. Bravida has no shareholders that hold shares exceeding 10 percent of voting rights.

The listed price for Bravida's ordinary shares at 30 June 2018 was SEK 71.15, which equates to a market capitalisation of SEK 14,384 million. Total shareholder return, including dividends, over the past 12 months was 18.1 percent.

Share capital amounts to SEK 4 million divided among 203,316,598 shares, of which 202,166,598 are ordinary shares and 1,150,000 are class C shares. Ordinary shares entitle holders to one vote and a dividend payment, while C shares entitle holders to one-tenth of a vote and no dividend.

In May, the Board took the decision for 600,000 C shares to be converted into ordinary shares for allocation to participants in the long-term incentive programme 2015. Of these, 566,768 shares have been transferred to participants in the incentive programme.

OTHER EVENTS DURING THE PERIOD

There are no other events in the period to report.

FINANCIAL GOALS

• Sales growth: Over 10 percent a year, comprising 5 percent organic growth and 5 to 7 percent through acquisitions
• EBITA margin: Over 7 percent, adjusted for any specific costs and including a dilutive effect from acquisitions
• Cash conversion: Over 100 percent
• Capital structure: In line with 2.5x net debt/adjusted EBITDA
• Dividend policy: A minimum of 50 percent of net earnings while also taking account of other factors such as financial position, cash flow and growth opportunities.

SIGNIFICANT RISKS

Changes in market conditions, financial turmoil and political decisions are the external factors that mainly affect demand for new construction of housing and commercial property, as well as investment from industry and the public sector. Demand for service and maintenance is less sensitive to economic fluctuations. Operating risks are related to day-to-day business operations such as tendering, price risks, capacity utilisation and revenue recognition. Management of these risks is part of Bravida's ongoing business process.

The percentage-of-completion method is applied and is based on the extent of completion of each project and the expected date of completion. A well-developed process for the monitoring of projects is essential in limiting the risk of incorrect revenue recognition. Bravida continually monitors the financial status of each project to ensure that individual project calculations are not exceeded. The Group is also exposed to impairment loss risks in fixed-price contracts and various types of financial risk such as currency, interest rate and credit risk. These material risks and uncertainties apply to both parent company and the consolidated Group.

TRANSACTIONS WITH RELATED PARTIES

No transactions with related parties outside the Group took place during the period.

EVENTS SINCE THE END OF THE PERIOD

On 2 July 2018, Bravida acquired heating and plumbing company Hermansen A/S in Denmark, with annual sales of DKK 55 million.

On 2 July 2018, Bravida acquired Orkla Elektriker AS in Norway with annual sales of NOK 10 million.

The AGM of 20 April 2018 adopted the Board's proposal for a new long-term incentive programme. Of the 189 employees invited to participate in the incentive programme, 80 percent have accepted.

ADJUSTED EBITA (SEK MIL.) CASH FLOW FROM OPERATING ACTIVITIES (SEK MIL.)

Adjusted EBITA by quarter Cash flow from operating activities by quarter Adjusted EBITA, rolling 12 months Cash flow from operating activities, rolling 12 months

ADJUSTED EBITA MARGIN

Adjusted EBITA margin, rolling 12 months Adjusted EBITA margin

OPERATIONS IN SWEDEN

MARKET

Demand for service and installation remains good. Important drivers include new-builds and the renovation of public-sector buildings and offices, as well as investment in infrastructure. Confidence indicators for the construction industry remain above historical levels. We expect a gradual reduction in demand for technical installations in new-build residentials. This is being replaced, however, by the refurbishment of residentials and increased demand for other types of installation work.

NET SALES AND EARNINGS

April–June

Net sales in Sweden increased by 4 percent to SEK 2,610 million (2,502). The sales growth was due to good growth in service business.

EBITA increased by 4 percent to SEK 169 million (163), resulting in an EBITA margin of 6.5 percent (6.5).

January–June

Net sales increased by 4 percent to SEK 5,144 million (4,948). Growth in net sales was attributable to good growth in service. EBITA increased by 6 percent to SEK 295 million (278), result-

ing in an EBITA margin of 5.7 percent (5.6).

ORDER INTAKE AND ORDER BACKLOG April–June

Order intake was 10 percent lower than for the same period last year, and amounted to SEK 2,726 million (3,027). A number of large installation orders were received in the second quarter of last year, which is the reason for the comparatively lower order intake. Order intake mainly related to small and medium-sized installation projects and service assignments. Order intake for service assignments is recorded at the time of invoicing.

The order backlog at the end of the quarter was 2 percent lower than at the same point last year and amounted to SEK 5,452 million (5,539), while the order backlog rose by SEK 116 million over the quarter.

January–June

Order intake was 6 percent lower than for the same period last year, and amounted to SEK 5,224 million (5,543). A number of large orders were obtained during the period January–June last year. This year, there are mostly small and mid-sized orders that have been obtained.

NET SALES (SEK MIL.)

Net sales rolling 12 months, Sweden

EBITA (SEK MIL.)

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	2,610	2,502	5,144	4,948	9,847
EBITA	169	163	295	278	661
EBITA margin, %	6.5	6.5	5.7	5.6	6.7
Order intake	2,726	3,027	5,224	5,543	10,275
Order backlog	5,452	5,539	5,452	5,539	5,372
Average number of employees	5,621	5,376	5,621	5,376	5,553

A new combined station building and council offices is being constructed in Växjö, southern Sweden. Bravida, which has been involved from the planning stage, has been awarded the contract by Skanska. The new building will be seven storeys high and have an area of 16,400 square metres. Bravida is providing all installations of electrical, heating and plumbing, HVAC, sprinkler and control systems. Växjö's new combined station building and council offices are due for completion by the end of 2020.

OPERATIONS IN NORWAY

MARKET

The service and installation industry in Norway is healthy, although the south-west parts of the market are still weak following the fall in the price of oil and gas. New public investment in and maintenance of road and transport infrastructure and health care are important drivers. There is also good demand for investments relating to the shift towards greener sources of energy such as wind power, solar energy and electric car charging.

NET SALES AND EARNINGS April–June

Net sales increased by 10 percent to SEK 1,136 million (1,033). This growth was due to the acquisition of Oras and a positive currency translation effect of 4 percent. Growth was attributable to both service and installation business.

EBITA increased by 24 percent to SEK 70 million (57), resulting in an EBITA margin of 6.2 percent (5.5). Oras reported a positive EBITA margin for the quarter. The underlying organisation is developing strongly and the EBITA margin excluding Oras was 7.6 percent (6.4).

Oras, which was acquired in May 2017, contained a number of unprofitable projects. The Bravida Way, which is being implemented in Oras, has a strong emphasis on margin taking precedence over volume, leading to these projects gradually being phased out. This has had a negative effect on sales, although profit improved. The phasing-out of unprofitable projects will continue throughout 2018. In line with our new business plan, two unprofitable branches at Oras have been closed, which is having a negative effect on growth.

January–June

Net sales increased by 15 percent to SEK 2,233 million (1,938). This growth was due to the acquisition of Oras in May 2017 and a positive currency translation effect of 1 percent. Growth was attributable to both service and installation business. EBITA increased by 19 percent to SEK 130 million (109), resulting in an EBITA margin of 5.8 percent (5.6).

ORDER INTAKE AND ORDER BACKLOG April–June

Order intake increased by 83 percent to SEK 1,388 million (757). Order intake mainly related to small and medium-sized installation projects and service assignments. During the quarter, Bravida received a large installation project concerning an industrial building for a company in the food industry.

The order backlog at the end of the quarter was 21 percent higher than at the same point last year, at SEK 3,296 million (2,724), while the order backlog rose by SEK 252 million over the quarter.

January–June

Order intake increased by 34 percent to SEK 2,725 million (2,031).

NET SALES (SEK MIL.)

Net sales rolling 12 months, Norway

EBITA (SEK MIL.)

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	1,136	1,033	2,233	1,938	4,185
EBITA	70	57	130	109	254
EBITA margin, %	6.2	5.5	5.8	5.6	6.1
Order intake	1,388	757	2,725	2,031	4,406
Order backlog	3,296	2,724	3,296	2,724	2,804
Average number of employees	2,852	2,409	2,852	2,409	2,718

Some 90 charging points for electric cars are being fitted at Telenor's headquarters in Forneby, Oslo. The solution has been planned and designed by Bravida and the installation is expected to be completed by the end of September. Fortum is supplying the power for the facility and is also the customer for Bravida's services.

OPERATIONS IN DENMARK

MARKET

The service and installation market is healthy. The housing market has improved, which is contributing to increased demand for technical installations in housing new-builds and upgrades. New-builds and the upgrade of public-sector buildings are contributing to a stable market. Demand from the business sector has grown for premises and the installation of new technical solutions for automation and energy optimisation.

NET SALES AND EARNINGS

April–June

Net sales increased by 25 percent to SEK 778 million (621). The increase in net sales was mainly attributable to the installation business, with two large hospital projects currently in production. Currency translation had a positive 7 percent impact on net sales.

EBITA increased by 18 percent to SEK 37 million (31), resulting in an EBITA margin of 4.7 percent (5.0). The lower margin is explained by the large projects which are in an early stage of production.

January–June

Net sales increased by 23 percent to SEK 1,485 million (1,211). The growth in sales was mainly due to increased operations in the installation business. Currency translation had a positive 6 percent impact on net sales.

EBITA increased by 18 percent to SEK 72 million (61), resulting in an EBITA margin of 4.9 percent (5.0).

ORDER INTAKE AND ORDER BACKLOG April–June

Order intake was 3 percent lower than for the same period last year, and amounted to SEK 832 million (854). Order intake mainly related to small and medium-sized installation projects and service assignments.

The order backlog at the end of the quarter was 4 percent higher than at the same point last year and amounted to SEK 1,945 million (1,873), while the order backlog rose by SEK 54 million over the quarter.

January–June

Order intake increased by 24 percent to SEK 1,677 million (1,352).

NET SALES (SEK MIL.)

Net sales by quarter, Denmark Net sales rolling 12 months, Denmark

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	778	621	1,485	1,211	2,547
EBITA	37	31	72	61	131
EBITA margin, %	4.7	5.0	4.9	5.0	5.1
Order intake	832	854	1,677	1,352	2,567
Order backlog	1,945	1,873	1,945	1,873	1,752
Average number of employees	1,798	1,782	1,798	1,782	1,803

Shipping company Fjordline operates on the Denmark-Norway route. The company has had a service agreement with Bravida for the past six years. The agreement includes all ventilation onboard its vessels, including cleaning and the installation of UV lighting. There are usually 4–5 Bravida technicians onboard when service work is carried out. The vessel shown in the image, MS Stavangerfjord, is one of the ferries serviced by Bravida.

OPERATIONS IN FINLAND

MARKET

Bravida believes demand for technical service and installation is stable.

The construction industry has improved over the past few years and building firms are reporting increased sales, which is contributing to stable demand for technical installations. Confidence indicators for the construction industry are above the normal level. The number of granted building permits, however, has decreased recently.

NET SALES AND EARNINGS April–June

Net sales increased by 56 percent to SEK 276 million (177). The acquisition of Adison Oy in January 2018 was the main reason for the strong sales growth. Currency translation had a positive 6 percent impact on net sales.

EBITA was SEK -2 million (3), resulting in an EBITA margin of -0.7 percent (1.7). A review of ongoing projects has resulted in write-downs, which was the reason for the negative earnings performance.

Marko Holopainen became the new Head of Division at the end of March 2018.

January–June

Net sales increased by 42 percent to SEK 511 million (360). EBITA was SEK -2 million (3), resulting in an EBITA margin of -0.4 percent (1.0). Currency translation had a positive 6 percent impact on net sales.

ORDER INTAKE AND ORDER BACKLOG

April–June

Order intake was 13 percent lower than for the same period last year, and amounted to SEK 166 million (191). Order intake related to small and medium-sized installation projects and service assignments.

The order backlog at the end of the quarter was 25 percent higher than at the same point last year and amounted to SEK 446 million (357).

January–June

Order intake was 2 percent lower than for the same period last year, and amounted to SEK 376 million (384).

NET SALES (SEK MIL.)

Net sales by quarter, Finland Net sales 12 months, Finland

EBITA (SEK MIL.)

EBITA by quarter, Finland

EBITA, rolling 12 months, Finland

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	276	177	511	360	745
EBITA	-2	3	-2	3	15
EBITA margin, %	-0.7	1.7	-0.4	1.0	2.0
Order intake	166	191	376	384	755
Order backlog	446	357	446	357	344
Average number of employees	543	451	543	451	496

In Vaasa, Harry Schauman's Foundation is renovating the HS Center, making it a new, more modern shopping centre. The centre will feature a fresh look and new technical solutions. Bravida is providing the installation of all of the building's electrical, heating and plumbing, and HVAC fittings, which is also being renamed Espen in conjunction with the upgrade work. The new shopping centre is due to open in time for Christmas this year.

FINANCIAL REPORTING

CONSOLIDATED INCOME STATEMENT, SUMMARY

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017	Jul 2017- Jun 2018
Net sales	4,790	4,325	9,347	8,440	17,293	18,200
Production costs	-4,131	-3,675	-8,103	-7,234	-14,718	-15,588
Gross profit/loss	659	649	1,244	1,206	2,575	2,613
Selling and administrative expenses	-380	-396	-740	-745	-1,502	-1,497
Operating profit/loss	279	253	505	461	1,072	1,116
Net financial items	-7	-13	-16	-28	-54	-42
Profit/loss before tax	273	239	489	434	1,019	1,074
Tax on profit/loss for the period	-61	-54	-109	-98	-199	-210
Profit/loss for the period	212	186	380	336	820	863
Profit/loss for the period attributable to:
Equity holders of the parent	210	185	378	336	818	860
Non-controlling interests	1	0	1	0	2	3
Profit/loss for the period	212	186	380	336	820	863
Basic earnings per share, SEK	1.05	0.92	1.88	1.67	4.07	4.28
Diluted earnings per share, SEK	1.05	0.92	1.88	1.67	4.06	4.27

STATEMENT OF COMPREHENSIVE INCOME, SUMMARY

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017	Jul 2017- Jun 2018
Profit/loss for the period	212	186	380	336	820	863
Other comprehensive income
Items transferred or that can be transferred to profit or loss
Translation differences for the period from the translation of foreign operations	35	-14	122	-25	-26	121
Items that cannot be transferred to profit or loss
Revaluation of defined-benefit pensions	-74	-36	-74	-36	23	-14
Tax attributable to the revaluation of pensions	16	8	16	8	-5	3
Other comprehensive income for the period	-23	-42	64	-54	-8	110
Comprehensive income for the period	189	143	443	283	812	973
Comprehensive income for the period attributable to:
Equity holders of the parent	188	143	442	282	811	970
Non-controlling interests	1	0	1	0	2	3
Comprehensive income for the period	189	143	443	283	812	973

CONSOLIDATED BALANCE SHEET, SUMMARY

SEK MIL.	30/06/18	30/06/17	31/12/17
Goodwill	8,150	7,780	7,844
Other non-current assets	157	153	154
Total non-current assets	8,307	7,933	7,998
Trade receivables	3,112	2,698	3,030
Income accrued but not invoiced	1,309	1,127	1,004
Other current assets	733	614	489
Cash and cash equivalents	604	360	839
Total current assets	5,758	4,799	5,362
Total assets	14,065	12,732	13,360
Equity attributable to holders of the parent	4,793	4,107	4,652
Equity attributable to non-controlling interests	11	9	10
Total equity	4,804	4,116	4,662
Other non-current liabilities	2,015	3,036	2,056
Total other non-current liabilities	2,015	3,036	2,056
Trade payables	1,863	1,530	1,866
Income invoiced but not accrued	1,734	1,504	1,519
Other current liabilities	3,649	2,546	3,257
Total current liabilities	7,246	5,581	6,642
Total liabilities	9,261	8,617	8,698
Total equity and liabilities	14,065	12,732	13,360
Of which interest-bearing liabilities	2,500	2,703	2,701

STATEMENT OF CHANGES IN EQUITY

SEK MIL.	30/06/18	30/06/17	31/12/17
Consolidated equity
Opening balance	4,662	4,079	4,079
Comprehensive income for the period	443	283	812
Dividend	-312	-252	-252
Cost long-term incentive programme	11	6	23
Closing balance	4,804	4,116	4,662

CONSOLIDATED CASH FLOW STATEMENT, SUMMARY

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Cash flow from operating activities
Profit/loss before tax	273	239	489	434	1,019
Adjustment for non-cash items	3	12	8	17	51
Income taxes paid	-95	-15	-161	-59	-95
Changes in working capital	138	-87	41	140	63
Cash flow from operating activities	319	150	377	531	1,038
Investing activities
Acquisition of subsidiaries and businesses	-63	-172	-104	-181	-215
Other	-3	-2	-7	-7	-16
Cash flow from investing activities	-66	-174	-111	-188	-231
Financing activities
Repayment of loan	–	–	-200	-500	1,700
New loan	–	–	–	500	-1,700
Change in utilisation of overdraft facility	0	0	-1	0	-2
Dividend paid	-312	-252	-312	-252	-252
Cash flow from financing activities	-313	-252	-514	-252	-254
Cash flow for the period	-60	-276	-248	91	553
Cash and cash equivalents at start of year	660	645	839	286	286
Translation difference in cash and cash equivalents	4	-8	12	-17	0
Cash and cash equivalents at end of period	604	360	604	360	839

OPERATING CASH FLOW

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Operating profit/loss	279	253	505	461	1,072
Depreciation and amortisation	8	9	16	17	34
Other adjustments for non-cash items	-5	4	-8	1	17
Capital expenditure	-3	-2	-7	-7	-16
Changes in working capital	138	-87	41	140	63
Operating cash flow	418	177	547	612	1,171

PARENT COMPANY INCOME STATEMENT, SUMMARY

SEK MIL.	Apr-Jun 2018	Apr-Jun 2017	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Net sales	43	38	85	74	151
Selling and administrative expenses	-37	-44	-72	-70	-126
Operating profit/loss	6	-5	12	3	25
Net financial items	-5	-6	-8	-16	-34
Profit/loss after financial items	2	-12	5	-13	-9
Net Group contribution	-1	–	-1	–	644
Transfer to/from untaxed reserves	–	–	–	–	-160
Profit/loss before tax	0	-12	3	-13	475
Tax	0	–	0	–	-105
Profit/loss for the period	1	-12	4	-13	370

PARENT COMPANY BALANCE SHEET, SUMMARY

SEK MIL.	30/06/18	30/06/17	31/12/17
Shares in subsidiaries	7,341	7,341	7,341
Total non-current assets	7,341	7,341	7,341
Receivables from Group companies	1,887	2,495	1,562
Current receivables	185	120	33
Total current receivables	2,072	2,615	1,595
Cash and bank balances	386	272	644
Total current assets	2,458	2,887	2,240
Total assets	9,799	10,228	9,581
Restricted equity	4	4	4
Non-restricted equity	4,603	4,502	4,901
Equity	4,607	4,506	4,905
Untaxed reserves	390	231	390
Liabilities to credit institutions	1,500	2,700	1,700
Provisions	3	–	0
Total non-current liabilities	1,503	2,700	1,700
Short-term loans	1,000	–	1,000
Liabilities to Group companies	2,155	2,624	1,429
Other current liabilities	143	167	157
Total current liabilities	3,298	2,791	2,585
Total equity and liabilities	9,799	10,228	9,581
Of which interest-bearing liabilities	2,500	2,700	2,700

Quarterly data

	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep
INCOME STATEMENT, SEK MIL.	2018	2018	2017	2017	2017	2017	2016	2016
Net sales	4,790	4,557	4,927	3,926	4,325	4,115	4,277	3,289
Production costs	-4,131	-3,972	-4,113	-3,372	-3,675	-3,558	-3,547	-2,822
Gross profit/loss	659	585	815	554	649	557	730	466
Selling and administrative expenses	-380	-360	-426	-332	-396	-348	-377	-277
Operating profit/loss	279	225	389	222	253	209	353	189
Net financial items	-7	-9	-15	-11	-13	-14	-18	-17
Profit/Loss after financial items	273	216	373	211	239	194	335	172
Tax on profit/loss for the period	-61	-48	-53	-48	-54	-44	-80	-39
Profit/loss for the period	212	168	320	164	186	151	255	133

BALANCE SHEET, SEK MIL.	30/06/18	31/03/18	31/12/17	30 /09/17	30 /06/17	31/03/17	31/12/16	30 /09/16
Goodwill	8,150	8,002	7,844	7,796	7,780	7,593	7,599	7,508
Other non-current assets	157	154	154	150	153	145	144	204
Current assets	5,154	4,684	4,523	4,463	4,439	3,890	3,933	3,813
Cash and cash equivalents	604	660	839	388	360	645	286	220
Total assets	14,065	13,500	13,360	12,796	12,732	12,272	11,962	11,745
Equity	4,804	4,921	4,662	4,286	4,116	4,221	4,079	3,619
Non-current borrowings	1,500	1,500	1,700	1,700	2,700	2,700	2,700	2,700
Other non-current liabilities	515	395	356	353	336	258	245	475
Current liabilities	7,246	6,684	6,642	6,458	5,581	5,093	4,938	4,951
Total equity and liabilities	14,065	13,500	13,360	12,796	12,732	12,272	11,962	11,745

CASH FLOW, SEK MIL.	Apr-Jun 2018	Jan-Mar 2018	Oct-Dec 2017	Jul-Sep 2017	Apr-Jun 2017	Jan-Mar 2017	Oct-Dec 2016	Jul-Sep 2016
Cash flow from operating activities	319	58	650	-144	150	381	415	-57
Cash flow from investing activities	-66	-45	-12	-31	-174	-14	-49	-183
Cash flow from financing activities	-313	-201	-201	200	-252	0	-300	200
Cash flow for the period	-60	-188	437	25	-276	367	66	-40

KEY FIGURES	Apr-Jun 2018	Jan-Mar 2018	Oct-Dec 2017	Jul-Sep 2017	Apr-Jun 2017	Jan-Mar 2017	Oct-Dec 2016	Jul-Sep 2016
Operating margin % (EBIT)	5.8	4.9	7.9	5.7	5.8	5.1	8.3	5.8
EBITA margin, %	5.9	5.0	7.9	5.7	5.9	5.1	8.3	5.8
Adjusted EBITA margin, %	5.9	5.0	7.9	5.7	6.1	5.1	8.3	6.1
Return on equity,* %	17.8	17.5	18.3	18.0	17.4	16.9	17.5	13.3
Net debt	1,896	1,841	1,862	2,515	2,343	2,058	2,417	2,783
Net debt/adjust. EBITDA*	1.7	1.6	1.7	2.3	2.2	2.0	2.5	3.0
Cash conversion,* %	94	75	106	88	104	98	61	91
Interest coverage ratio	30.0	32.7	30.0	19.8	26.6	15.9	21.6	12.5
Equity/assets ratio, %	34.2	36.5	34.9	33.5	32.3	34.4	34.1	30.8
Order intake	5,102	4,875	4,620	4,059	4,821	4,471	4,313	3,693
Order backlog	11,139	10,825	10,271	10,635	10,493	9,000	8,644	8,475
Average no. of employees	10,893	10,709	10,643	10,452	10,089	9,835	9,730	9,469
Administration costs as % of sales	7.9	7.9	8.6	8.5	9.2	8.5	8.8	8.4
Working capital as % of sales**	-5.2	-4.7	-5.5	-3.9	-6.2	-6.9	-5.8	-4.9
Basic earnings per share, SEK***	1.05	0.83	1.59	0.81	0.92	0.75	1.26	0.66
Diluted earnings per share, SEK	1.05	0.83	1.58	0.81	0.92	0.75	1.26	0.66
Equity per share, SEK***	23.76	24.41	23.13	21.26	20.42	20.94	20.24	17.96
Cash flow from operating activities per share, SEK***	1.58	0.29	3.23	-0.71	0.74	1.89	2.06	-0.28
Share price at balance sheet date, SEK	71.15	59.70	54.85	59.65	61.55	58.10	55.25	57.00

*Calculated on rolling 12-month earnings **Calculated on rolling 12-month sales ***Calculated on the company's outstanding ordinary shares

Reconciliation of key figures, not defined under IFRS

The company presents certain financial measures in the interim report that are not defined under IFRS. The company believes these measures provide valuable additional information for investors and the company's management as they allow relevant trends to be assessed. Bravida's definitions of these measures may differ from other companies' definitions of the same terms. These financial measures should be regarded as complementary rather than replacing the measures defined under IFRS. Below are definitions of measures not defined under IFRS and not mentioned elsewhere in the interim report. These measures are reconciled in the tables below. Calculations do not always tally because amounts in the table below have been rounded to the nearest million Swedish kronor. For definitions of key figures, see page 20.

RECONCILIATION OF KEY FIGURES, NOT DEFINED UNDER IFRS	Apr-Jun 2018	Jan-Mar 2018	Oct-Dec 2017	Jul-Sep 2017	Apr-Jun 2017	Jan-Mar 2017	Oct-Dec 2016	Jul-Sep 2016
Net debt
Interest-bearing liabilities	2,500	2,500	2,701	2,903	2,703	2,703	2,703	3,003
Cash and cash equivalents	-604	-660	-839	-388	-360	-645	-286	-220
Total net debt	1,896	1,841	1,862	2,515	2,343	2,058	2,417	2,783
EBITA/Adjusted EBITA Operating profit/loss (EBIT)	279	225	389	222	253	209	353	189
Depreciation, amortisation and impairment losses	1	1	1	1	2	2	1	1
EBITA	280	226	390	223	255	211	354	190
Adjustment relating to specific cost*	–	–	–	–	8	–	0	11
Adjusted EBITA	280	226	390	223	263	211	354	201
EBITDA /Adjusted EBITDA
Operating profit/loss (EBIT)	279	225	389	222	253	209	353	189
Depreciation, amortisation and impairment losses	8	8	9	8	9	8	7	6
EBITDA	287	233	397	231	262	217	360	196
Adjustment relating to specific costs* Adjusted EBITDA	– 287	– 233	– 397	– 231	8 270	– 217	0 360	11 207
Working capital
Current assets	5,758	5,344	5,362	4,851	4,799	4,534	4,219	4,033
Cash and cash equivalents	-604	-660	-839	-388	-360	-645	-286	-220
Current liabilities	-7,246	-6,684	-6,642	-6,458	-5,581	-5,093	-4,938	-4,951
Current loans	1,000	1,000	1,001	1,203	3	3	3	303
Provisions	153	162	172	137	143	137	143	130
Total working capital	-939	-837	-946	-655	-996	-1,064	-859	-705
Interest coverage ratio
Profit/loss before tax	273	216	373	211	239	194	335	172
Interest expense	9	7	13	11	9	13	16	15
Total	282	223	386	223	249	207	351	187
Interest expense	9	7	13	11	9	13	16	15
Interest coverage ratio	30.0	32.7	30.0	19.8	26.6	15.9	21.6	12.5
Cash conversion
Operating profit/loss before depreciation, amortisation and
impairment losses, past 12 months	1,148	1,123	1,107	1,070	1,035	1,006	970	891
Non-cash provisions in working capital, last 12 months	-44	-21	-14	22	55	28	16	54
Change in working capital, last 12 months	-35	-260	63	-148	-18	-54	-387	-122
Investments in machinery and equipment, last 12 months	-17	-20	-21	-28	-27	-22	-21	-32
Total	1,052	822	1,135	916	1,045	958	578	791
Operating profit/loss, last 12 months	1,116	1,089	1,072	1,037	1,004	978	944	866
Cash conversion, last 12 months, %	94	75	106	88	104	98	61	91

*See note 6

NOTES

NOTE 1. ACCOUNTING POLICIES

This interim report for the group has been prepared in accordance with IAS 34 Interim Reporting and appropriate sections of Chapter 9, Interim Reporting, of the Swedish Annual Accounts Act. The parts of the interim report that relate to the parent company have been prepared in accordance with Chapter 9, Interim Reporting, of the Swedish Annual Accounts Act.

Since 1 January 2018, Bravida has applied IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

For Bravida, the introduction of IFRS 9 will mean that credit losses will be recognised earlier than under IAS 39. The Group has historically had very low recorded bad debts and this is not expected to change going forward, so the impact of the impairment model on expected credit losses is immaterial. As the effects are immaterial, the transfer to the opening balance for 2018 is not affected.

IFRS 15 is replacing existing standards for revenue recognition. Initial assessment of the IFRS 15 criteria for recognition over time or at a particular date indicate that in most of these cases the goods are deemed to be controlled by the customer as they are installed, whereupon they will also be recognised over time rather than at the date when installation is completed. This implies no difference in revenue recognition compared with the current situation. The effects of this new accounting standard are immaterial for the Group. So the transition to IFRS 15 does not affect the opening balance for 2018.

IFRS 15 contains increased disclosure requirements on revenue. Information about the distribution of revenues is provided in Note 2 of the interim report.

The IASB has issued a new standard that comes into effect from 1 January 2019, IFRS 16 Leases.

IFRS 16 replaces the existing standard for the accounting of leases. The standard will be applied by Bravida from 1 January 2019. The new standard will have a not insignificant impact on Bravida's financial statements. Work is currently ongoing to calculate the effect on amounts from IFRS 16. Please refer to the 2017 annual accounts for a more detailed description of the implications of IFRS 16 and to Note 28 on operating leases for indications of the scope of existing leases.

As the effects of IFRS 9 and IFRS 15 are insignificant, the report has essentially been prepared in accordance with the same accounting policies and calculation methods as the 2017 annual accounts.

Amounts in the Group's financial reporting are in Swedish kronor (SEK MIL.) unless stated otherwise. Rounding differences may occur.

NOTE 2. SEGMENT REPORTING AND DISTRIBUTION OF NET SALES

Geographic markets constitute Bravida's operating segments. The Group's geographic markets comprise the countries; Sweden, Norway, Denmark and Finland.

NET SALES BY COUNTRY

SEK MIL.	Apr-Jun 2018	Break down	Apr-Jun 2017	Break down	Jan-Jun 2018	Break down	Jan-Jun 2017	Break down	Jan-Dec 2017	Break down
Sweden	2,610	54%	2,502	58%	5,144	55%	4,948	59%	9,847	57%
Norway	1,136	24%	1,033	24%	2,233	24%	1,938	23%	4,185	24%
Denmark	778	16%	621	14%	1,485	16%	1,211	14%	2,547	15%
Finland	276	6%	177	4%	511	5%	360	4%	745	4%
Group-wide and eliminations	-10		-8		-25		-18		-31
Total	4,790		4,325		9,347		8,440		17,293

EBITA, EBITA MARGIN AND PROFIT/LOSS BEFORE TAX

SEK MIL.	Apr-Jun 2018	EBITA Margin	Apr-Jun 2017	EBITA Margin	Jan-Jun 2018	EBITA Margin	Jan-Jun 2017	EBITA Margin	Jan-Dec 2017	EBITA Margin
Sweden	169	6.5%	163	6.5%	295	5.7%	278	5.6%	661	6.7%
Norway	70	6.2%	57	5.5%	130	5.8%	109	5.6%	254	6.1%
Denmark	37	4.7%	31	5.0%	72	4.9%	61	5.0%	131	5.1%
Finland	-2	-0.7%	3	1.7%	-2	-0.4%	3	1.0%	15	2.0%
Group and eliminations	5		1		11		15		18
Total	280	5.9%	255	5.9%	506	5.4%	465	5.5%	1,078	6.2%
Adjustments (specific costs)*	–		8		–		8		8
Adjusted operating profit/loss	280	5.9%	263	6.1%	506	5.4%	473	5.6%	1,086	6.3%
Amortisation of intangible assets	-1		-2		-2		-4		-6
Net financial items	-7		-13		-16		-28		-54
Profit/loss before tax	273		239		489		434		1,019

*Specific costs have only had an effect on Group-wide operations, not the other segments

DISTRIBUTION OF NET SALES		Apr-Jun 2018			Apr-Jun 2017
NET SALES PER CATEGORY	Service	Installation	Total	Service	Installation	Total
Sweden	1,268	1,342	2,610	1,144	1,357	2,502
Norway	558	578	1,136	499	534	1,033
Denmark	302	476	778	274	348	621
Finland	44	232	276	37	140	177
Eliminations	-1	-9	-10	-1	-8	-8
The Group	2,171	2,619	4,790	1,953	2,371	4,325

		Jan-Jun 2018			Jan-Jun 2017
	Service	Installation	Total	Service	Installation	Total
Sweden	2,503	2,641	5,144	2,263	2,685	4,948
Norway	1,104	1,128	2,233	970	969	1,938
Denmark	593	892	1,485	553	658	1,211
Finland	83	428	511	71	290	360
Eliminations	-9	-17	-25	-1	-17	-18
The Group	4,274	5,073	9,347	3,855	4,584	8,440

AVERAGE NUMBER OF EMPLOYEES	Jan-Jun 2018	Jan-Jun 2017	Jan-Dec 2017
Sweden	5,621	5,376	5,553
Norway	2,852	2,409	2,718
Denmark	1,798	1,782	1,803
Finland	543	451	496
Group functions	79	72	73
Total	10,893	10,089	10,643

Bravida made the following acquisitions during the period January to June:

Acquired unit	Country	Type	Month of acquisition	Percentage of votes	No. of employees	Estimated annual sales in SEK MIL.
Electrical business, Viborg	Denmark	Company	January	100%	30	26
Electrical business, Enköping	Sweden	Company	January	100%	10	16
Electrical, heating & plumbing, and HVAC business, Helsinki region	Finland	Company	January	100%	70	190
Cooling business, Stockholm	Sweden	Company	April	100%	12	30
Electrical business, Sala	Sweden	Company	May	100%	18	20
Fire and safety business, Västerås	Sweden	Company	May	100%	14	18

Effects of acquisitions in 2018

Bravida normally uses an acquisition structure with a fixed purchase price and conditional purchase price. The conditional purchase price is initially valued at the likely final amount, which for the year's acquisitions is SEK 45 million. The conditional purchase price are due for payment within three years.

The acquisition analyses of acquired companies in 2018 are preliminary.

Assets and liabilities included in acquisition	Fair value recognised in the Group, SEK MIL.
Intangible assets	0
Property, plant and equipment	2
Trade receivables*	23
Income accrued but not invoiced	3
Other current assets	20
Cash and cash equivalents	39
Long-term liabilities	-3
Trade payables	-11
Income invoiced but not accrued	-4
Other current liabilities	-32
Sum net identifiable assets and liabilities	37
Consolidated goodwill	132
Aquisition price	170
Cash and cash equivalents (acquired)	39
Net effect on cash and cash equivalents	131
Purchase price paid in cash	116
Consideration recognised as a liability**	54
Aquisition price	170

*No significant write-downs of trade receivables exist **Of total debited purchase price, SEK 45 million consists of conditional purchase price

Acquisitions after the end of the reporting period

Bravida has made two acquisitions since the end of the reporting period. In July, Norge Orkla Elektriker AS was acquired, with 8 employees and sales of around SEK 11 million. In addition, in Denmark heating and plumbing company P. Hermansen A/S was acquired, with 28 employees and sales of around SEK 70 million.

NOTE 4. SEASONAL VARIATIONS

Bravida's business is affected by seasonal variations in the construction industry and employees' annual holiday. Bravida usually has a lower level of activity in the third quarter as it is the main holiday period. The fourth quarter normally has higher earnings which is explained by many projects being completed during this period.

NOTE 5. FINANCIAL INSTRUMENTS, FAIR VALUE

The fair value of the Group's non-current assets and liabilities is not materially different from carrying amounts. No other items than the above mentioned conditional purchase prices, in Note 3, are reported at fair value in the balance sheet.

NOTE 6. SPECIFIC COSTS

In the second quarter of 2017 these related to acquisition costs for Oras. In the third quarter of 2016, these related mainly to costs for the final settlement of a dispute.

The Board of Directors and Chief Executive Officer warrant that the report gives a true and fair overview of the operations, financial position and results of the Group and parent company, and describes significant risks and uncertainties faced by the parent company and the companies included in the Group.

Stockholm, 20 July 2018 Bravida Holding AB

Fredrik Arp Chairman

Jan Johansson Director

Mikael Norman Director

Marie Nygren Director

Staffan Påhlsson Director

Cecilia Daun Wennborg Director

Mattias Johansson CEO and Group President

Jan Ericson Employee representative

Geir Gjestad Employee representative

Anders Mårtensson Employee representative

Örnulf Thorsen Employee representative

INFORMATION

This interim report has not been reviewed by Bravida's auditors. This information is information that Bravida Holding AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out below, at 07:30 CET on 20 July 2018.

This report contains information and opinions on future prospects for Bravida's business activities. The information is based on Group management's current expectations and estimates. Actual future outcomes may vary considerably from the forward-looking statements in this report, partly because of changes in economic, market and competitive conditions.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Mattias Johansson, CEO & Group President E-mail: mattias.p.johansson@bravida.se Telephone: +46 8 695 20 00

Nils-Johan Andersson, CFO E-mail: nils-johan.andersson@bravida.se Telephone: +46 70 668 50 75

FINANCIAL REPORTING DATES

Interim report July-September 2018	6 November 2018
Interim report October-December 2018	15 February 2019

FINANCIAL DEFINITIONS

NUMBER OF EMPLOYEES

Calculated as the average number of employees during the year, taking account of the percentage of full-time employment.

RETURN ON EQUITY

12-month rolling net profit/loss as a percentage of average equity.

EBITA*

Operating profit excluding depreciation, amortisation and impairment of noncurrent intangible assets. EBITA is the key figure and performance measure that is used for operational internal monitoring. EBITA provides an overall view of profit generated by operating activities.

EBITA MARGIN*

EBITA as a percentage of net sales.

EBITDA*

Earnings before interest, taxes, depreciation, and amortisation. EBITDA is a measure that the Group regards as relevant for investors who want to understand earnings generation before investments in non-current assets.

EFFECTIVE TAX RATES

Recognised tax expense as a percentage of profit/loss before tax.

EQUITY PER SHARE, SEK

Equity attributable to equity holders of the parent company divided by the number of ordinary shares outstanding at period end.

NET FINANCIAL ITEMS

Total exchange differences on borrowing and cash and cash equivalents in foreign currency, other financial revenue and other finance costs.

ADJUSTED EBITA*

EBITA adjusted for specific costs Adjusted EBITA improves the ability to make comparisons over time by excluding items that are irregular in frequency or size.

ADJUSTED EBITA MARGIN*

EBITA excluding specific costs as a percentage of net sales. The adjusted EBITA margin excludes the effect of specific costs, which improves the ability to make comparisons over time by excluding items that are irregular in frequency or size.

ADJUSTED EBITDA*

Earnings before interest, taxes, depreciation, and amortisation, adjusted for specific costs. Improves the ability to make comparisons over time by excluding items that are irregular in frequency or size.

CAPITAL STRUCTURE

Average net debt divided by EBITDA excluding specific costs, based on a rolling 12-month calculation.

CASH FLOW FROM OPERATING ACTIVITIES PER SHARE

Cash flow from operating activities for the period, divided by the number of shares at period end.

CASH CONVERSION*

12-month EBITDA +/- change in working capital and investment in machinery and equipment in relation to 12-month EBIT (operating profit/loss). This key figure measures the percentage of profit that is converted into cash flow. The purpose is to analyse what percentage of earnings can be converted into cash and cash equivalents and, in the longer term, the opportunity for investments, acquisitions and dividends, with the exception of interest-related cash flows.

NET SALES

Net sales are recognised in accordance with the principle of percentage-ofcompletion method. These revenues are recognised in proportion to the degree of completion of projects.

NET DEBT/EBITDA ADJUSTED FOR SPECIFIC COSTS

Average net debt divided by EBITDA excluding specific costs, based on a rolling 12-month calculation.

NET DEBT*

Interest-bearing liabilities, excluding pension liabilities, less cash and cash equivalents. This key figure is a measure to show the Group's total interest-bearing debt.

ORGANIC GROWTH

The change in sales adjusted for currency effects, as well as acquisitions and disposals compared with the same period last year.

OPERATING CASH FLOW

Operating profit/loss adjusted for noncash items, investments in machinery and equipment and changes in working capital.

ORDER INTAKE

The value of new projects and contracts received, and changes in existing projects and contracts over the period in question. Includes both installation and service business.

ORDER BACKLOG

The value of remaining, not yet accrued project revenues from orders on hand at the end of the period. Order backlog does not include service operations, only installation projects.

DILUTED EARNINGS PER SHARE

Profit/loss for the period attributable to owners of the parent company divided by the average number of outstanding ordinary shares after dilution.

BASIC EARNINGS PER SHARE

Profit/loss for the period attributable to owners of the parent company divided by the average number of outstanding ordinary shares.

INTEREST COVERAGE RATIO

Profit/loss after financial items plus interest expense, divided by interest expense. This key figure is a measure of how much earnings may fall by without interest payments being jeopardised or how much interest on borrowing may increase without operating profit turning negative.

WORKING CAPITAL

Total current assets, excluding cash and cash equivalents, minus current liabilities excluding current provisions and borrowing. This measure shows how much working capital is tied up in the business and may be set in relation to sales to understand how efficiently tied-up working capital is being used.

OPERATING MARGIN

Operating profit/loss as a percentage of net sales.

OPERATING PROFIT/EBIT

Earnings before financial items and taxes.

EQUITY/ASSETS RATIO

Equity including non-controlling interests as a percentage of total assets.

SPECIFIC COSTS

Transactions and items that are irregular in occurrence and size and consequently have an impact on earnings and key figures.

*See page 15 for reconciliation of 'alternative performance measures' used by Bravida. As of 1 January 2018, Bravida has opted to report and monitor EBITA and EBITA margin, as well as adjusted EBITA and adjusted EBITA margin. It has done so to reflect internal monitoring. These key figures consequently replace operating margin, and adjusted operating profit and adjusted operating margin.

OPERATIONAL DEFINITIONS

INSTALLATION/CONTRACTING

The installation and refurbishment of technical systems in properties, facilities and infrastructure.

SERVICE

Operation and maintenance, as well as minor refurbishment of installations in buildings and facilities.

ELECTRICAL

Power supply, lighting, heating, automatic control and surveillance systems. Telecom and other lowvoltage installations. Fire and intruder alarm products and systems, access control systems, CCTV and integrated security systems.

HVAC (HEATING, VENTILATION AND AIR CONDITIONING)

Comfort ventilation and comfort cooling through air treatment, air conditioning and climate control. Commercial cooling in freezer and cold rooms. Process ventilation control systems. Energy audits and energy efficiency through heat recovery ventilation, heat pumps, etc.

HEATING AND PLUMBING

Water, waste water, heating, sanitation, cooling and sprinkler systems. District heating and cooling. Industrial piping with expertise in all types of pipe welding. Energy saving through integrated energy systems.

OTHER AREAS

Principally relates to other areas of technology such as security, cooling, sprinklers, technical service management and power.

THIS IS BRAVIDA

Leader in service and installation

Bravida brings buildings to life – 24 hours a day, 365 days a year. We work primarily with electricity, heating & plumbing, and HVAC, and we offer services in security, sprinklers, cooling, power, lifts, project management and technical service management. After every service or installation assignment we want properties and systems to work a little better and be more energy-efficient and for those people that live or work there to feel safe and healthy. In other words, we bring buildings to life.

Our mission

We offer technical end-to-end solutions over the life of a property, from consulting and design to installation and service.

We are a large company with a local presence across the Nordics. We meet customers locally and take long-term responsibility for our work.

Our employees are our most important resource. With shared values, working methods and tools, together we create a sustainable and profitable business for us and our customers.

Our vision

Bravida is the best in the Nordics at providing sustainable service and installation of the functions that bring buildings to life. We are the first choice for customers and the most attractive employer in the industry.

Targets

We manage our business according to a number of key goals that reflect our aims regarding growth, stability and leadership in the sector.

THE BRAVIDA WAY

Our corporate culture and way of working make us unique in the market

ENTREPRENEURSHIP

Our approach is based on an important principle: each local branch is responsible for its own earnings. Branch managers are responsible for creating, together with their employees, a successful business with stable profitability, growth and good local market relations. It's the combined commitment of the branches and employees that drive Bravida forward.

FOLLOW-UP AND SUPPORT

Together, the branches create economies of scale, supported by Bravida's shared tools and working methods. Employees are responsible for continually making use of these. Regular follow-ups together help us create the stable profitability that is distinctive for our organisation. The business is supported by central Group departments.

CONTINUOUS IMPROVEMENT

We have established shared best-practice working methods. We aim to constantly improve and simplify the way we operate. Our working model, which is designed to create constant improvement, helps local branches continually share experiences and learn from each other.

BRAVIDA INTERIM REPORT APRIL – JUNE 2018 21

BRAVIDA'S STRATEGIES

PROFITABLE GROWTH

Bravida's objective is to be the largest or second-largest player in all the locations where we choose to operate. We aim to grow both organically and via acquisitions in our various key geographical markets. To ensure long-term stable growth, we are increasing our focus on service and proactive sales.

ORGANIC GROWTH

Focus on growth in service and proactive sales

Focus on end-to-end solutions and packaged solutions

Greater cooperation between branches

FINANCIAL STABILITY

Maintaining good financial stability is essential to Bravida. Margin always takes precedence over volume in our operations, cost-effectiveness is a cornerstone of our business and we continually endeavour to maintain stable cash flow.

STABLE CASH FLOW

Focus on cash flow

Long-term efforts to maintain strong cash flow and a healthy capital structure.

Continual monitoring Continual monitoring of cash flow at all levels of the company.

GROWTH THROUGH ACQUISITIONS

We acquire companies that help us become the local market leader in priority growth regions

Acquisitions should contribute at least one of the following:

• Strengthening our local offering
• Complementing our technical offering
• Providing geographical expansion
• Boosting expertise and improving offerings, for example in resourceefficient solutions

GOOD PROFITABILITY

Margin over volume

Growth, but not at any price. We only take on assignments with a healthy margin and calculable risks.

Focus on cost-effectiveness

• Minimise fixed costs. We adapt production capacity and administrative expenses according to sales volumes.
• Coordination of purchasing generates economies of scale and costeffectiveness.

Continual financial monitoring

Continual financial monitoring at all levels of the company.

SUSTAINABLE COMPANY

Bravida aims to operate a responsible business and manage its own and others' resources efficiently. We take focused measures to achieve clear results in our sustainability work.

SUSTAINABLE USE OF RESOURCES

Efficient production

Greater efficiency in our own operations and resource usage.

Energy efficiency in our customers properties

Cooperation with customers to reduce energy and resource consumption in their properties and facilities.

Sustainable products

Sustainability impact assessment of installation products.

GOOD HEALTH AND SAFETY

Active health and safety work Employee safety, and physical and mental health.

Focus on leadership

GOOD BUSINESS ETHICS

Internal culture Active measures to maintain a healthy corporate culture with good values.

Suppliers

Continual sustainability assessment of suppliers.

WE BRING BUILDINGS TO LIFE

HEADQUARTERS

Bravida Holding AB 126 81 Stockholm Sweden Street address: Mikrofonvägen 28 Telephone: +46 8 695 20 00 www.bravida.se

NORWAY

Bravida Norge AS Postboks 313 Økern 0511 Oslo Norway Street address: Østre Aker vei 90 Telephone: +47 2404 80 00 www.bravida.no

DENMARK

Bravida Danmark A/S Park Allé 373 2605 Brøndby Denmark Telephone: +45 4322 1100 www.bravida.dk

FINLAND

Bravida Finland Oy Ajomiehentie 1 00390 Helsinki Finland Telephone: +358 10 238 8000 www.bravida.fi