Semcon — Interim / Quarterly Report 2020

Oct 22, 2020

Interim report January-September 2020

IMPROVED OPERATING MARGIN AND STRONG CASH FLOW.

Third quarter

• The operating income amounted to SEK 335 million (410) and the organic growth was -17%
• The operating profit amounted to SEK 28 million (32), yielding an operating margin of 8.5% (7.8)
• The profit after tax amounted to SEK 21 million (24)
• Earnings per share (EPS) after dilution amounted to SEK 1.21 (1.34)

January-September

• The operating income amounted to SEK 1,226 million (1,369) and the organic growth was -9%
• The operating profit before restructuring costs amounted to SEK 118 million (101), yielding an adjusted operating margin of 9.6% (7.4)
• The operating profit after restructuring costs of SEK -37 million (-8) amounted to SEK 81 million (93), yielding an operating margin of 6.6% (6.8)

Semcon Interim report January-September 2020

• The profit after tax amounted to SEK 60 million (68)
• Earnings per share (EPS) after dilution amounted to SEK 3.41 (3.86)
• Net cash excluding lease liabilities amounted to SEK 186 million (72)

Comment from CEO Markus Granlund

Improved operating margin and strong cash flow

Following the implementation of restructuring in the second quarter, we are beginning the autumn with an improved operating margin of 8.5 per cent in the third quarter. The Group's growth within prioritised areas, good demand for aftermarket solutions delivered with high productivity from the Product Information business area and extensive cost savings are the main reasons for the strengthened operating margin. The Product Information business area has almost doubled its operating profit so far this year, reaching an operating margin of 15.3 percent in the quarter. In addition, it is satisfying to report a strong cash flow and robust financial position with net cash amounting to SEK 186 million. This provides us with favourable conditions for both organic and acquisition-driven growth as we move forward. Our ongoing and strategically important industry diversification was accelerated during the quarter through strong demand from both life science and telecom as well as significantly lower revenue primarily from the automotive industry. The share of the Group's total revenue from the automotive industry amounted to 34 per cent in the quarter, the majority of which included digital services, electrification and aftermarket solutions.

Resilience in a less favourable business environment

We have successfully transitioned to remote working while retaining productivity during the present pandemic. This was achieved through close and constructive collaboration with our customers. The breadth of our operations, skills mix, good cost control and industry diversification also helped to increase our resilience in a poorer economic climate. For example, demand for our offering in digital aftermarket solutions remained strong, particularly through long-term managed service

contracts and recurring income, where the proportion for the Product Information business area has now risen to 75 per cent of revenue. We witnessed rising demand for digital training solutions, and our offering has been strengthened with the recent acquisition of Xtractor. Demand from the railway industry and telecom sector was also at positive levels.

Sales growth in life science

The restructuring of the Engineering & Digital Services business area during the second quarter has entailed a more focused offering, one important element of which is to help customers with their digital transformation. We noted growing interest in our services within, for example, electrification and autonomous applications. One good example is the recently initiated project to increase efficiency at the Port of Gävle using autonomous solutions. It is also gratifying that the business area's sales in life science rose 23 per cent compared with the year-earlier period.

Healthy demand for sustainable offerings

In conclusion, I can note that demand for Semcon's offering, which combines physical and digital solutions with a clear link to sustainability in product development, production optimisation and aftermarket solutions, remains healthy despite an uncertain market. Improved profitability together with our robust financial position mean we are optimistic about the future. Our work with industry diversification and growth in prioritised areas is continuing in the Engineering & Digital Services business area and we anticipate that Product Information will continue to report strong earnings at the end of the year.

Göteborg, 22 October 2020 Markus Granlund, President and CEO

Income and result Third quarter

Operating income amounted to SEK 335 million (410) and organic growth was -17 per cent. Due to the COVID-19 pandemic, the Group noted a decline in revenue during the quarter, mainly from automotive and industrial customers while sales to life science and telecom customers demonstrated continued positive growth. The quarter included the same number of working days compared with last year. Operating profit amounted to SEK 28 million (32), yielding an operating margin of 8.5 per cent (7.8). State support received due to COVID-19 reduced costs by SEK 9 million (-). Net financial items amounted to SEK -1 million (-1), yielding profit before tax of SEK 28 million (31). Tax expense for the quarter amounted to SEK -6 million (-7). Profit after tax amounted to SEK 21 million (24) and earnings per share after dilution totalled SEK 1.21 (1.34).

January-September

Operating income amounted to SEK 1,226 million (1,369) and organic growth was -9 per cent. The period included the same number of working days compared with last year. Operating profit before restructuring costs amounted to SEK 118 million (101), yielding an adjusted operating margin of 9.6 per cent (7.4). A number of measures have been taken to limit the effects of a drop in revenue, which include short-time working, further efficiency enhancements and a reduction in the number of staff by approximately 170. Restructuring costs for this were

charged to earnings for the second quarter in the amount of SEK -37 million (-8). The operating profit after restructuring costs amounted to SEK 81 million (93), yielding an operating margin of 6.6% (6.8). State support received due to COVID-19 reduced costs by SEK 35 million (-). Net financial items amounted to SEK -4 million (-5), yielding profit before tax of SEK 78 million (88). Tax expense for the period amounted to SEK -18 million (-20). Profit after tax amounted to SEK 60 million (68) and earnings per share after dilution totalled SEK 3.41 (3.86).

Financial position

Operating cash flow from current activities was SEK 213 million (126). A decrease in tiedup working capital of SEK 117 million (28) helped to strengthen cash flow. Investments in hardware, licenses, office supplies and equipment amounted to SEK 5 million (6). The Group's cash and cash equivalents, after the acquisition of Xtractor, amounted to SEK 186 million (72). In addition, the Group had non-utilised credit of SEK 250 million (251) as of 30 September. Shareholders' equity amounted to SEK 662 million (583) and the equity/assets ratio was 59 per cent (55). The Group's net cash excluding lease liabilities amounted to SEK 186 million (72).

Parent company

Operating income for the parent company amounted to SEK 29 million (32) and pertains to compensation for intra-Group services. The profit before tax totalled SEK 40 million (27).

Rolling 12 months, per quarter

Semcon Interim report January-September 2020 3

Employees

The number of employees on September 30 was 2,016 (2,235) and the number of employees in active service was 1,949 (2,166). In the respective business areas the head count is as follows: Engineering & Digital Services 1,253 (1,498) and Product Information 763 (737).

Important events during the period

• The Engineering & Digital Services business area entered into a partnership with Imagimob. The company develops software for Edge AI, which means that even more and smaller products can be both connected and intelligent. • In March, the Product Information business area acquired Xtractor, with operations in Stockholm. The company has approximately 40 employees with revenues of about SEK 50 million. The acquisition will strengthen Semcon's position within digital training.

• Through the Engineering & Digital Services business area, Semcon has acted as technology partner to Jotun with the revolutionary proactive cleaning solution for large vessels – Jotun Hull Skating Solutions. The solution is contributing to healthier oceans and cost savings for Jotun's customers.

• Semcon has developed an AI-powered intelligent assistant for professional use, which can help companies to structure security classified data and present required information in a way tailored to their end users.

• The Engineering & Digital Services business area worked together with Getinge to develop a new digital platform to make it easier to identify where the risk of infections during surgery is greatest. Semcon is contributing to the project excellence in embedded, sensing systems and UX.

• Semcon became development partner to Kongsberg Beam Technology, which is using new technology to develop a world-unique proton treatment – with minimal side effects for multiple types of cancer. Semcon is responsible for technical and digital development in the project.

• The Product Information business area has, through Xtractor, secured a contract from Stockholms Tekniska Institut to deliver and maintain a modern and flexible learning environment using the Totara Learn platform. • The Engineering & Digital Services business area has deepened its collaboration with the fuel cell manufacturer PowerCell. Both through a new framework agreement and by developing a new robotic cell with the use of vision technology, which will streamline the production of fuel cells for the vehicles of the future. • Through the Product Information business area, Semcon has been trusted by Lynk & Co to develop all digital technical training for the European workshop network in its preparation for the European launch of the 01 car model. • Semcon has signed a product development agreement with the Norwegian technology company ELOP. The collaboration will result in a concrete scanner for critical infrastructure that will be ready for commercial sales later this year.

Change in operating income
	Jan-Sept	Jan-Dec
	2020	2019
Acquisition and divestment	2.1%	-0.2%
Currency effects	-3.5%	0.6%
Organic growth	-9.1%	0.5%
Total	-10.5%	0.9%

No. of working days in Sweden
2018	2019	2020	2021
63	63	63	62
59	58	58	59
65	66	66	66
62	62	63	64
249	249	250	251

The change in one working day represents around SEK 7 million in income and impacts operating profit by about SEK 6 million.

Ownership structure

As of September 30, JCE Group owned 25.8% (25.8) of Semcon's shares, Nordea Investment Funds 11.3% (9.8), BNY Mellon 4.8% (4.8), Northern Trust Company RE 4.5% (0.8) and Avanza Pension 3.6% (3.8). Foreign ownership was 41.9% (37.7) and the number of shareholders was 5,077 (5,249) The number of ordinary shares at the end of the period was 18,112,534 (18,112,534), all with the quotient value of SEK 1 and equal voting rights. Semcon owned 754,416 (754,416) of the company's share on September 30. Semcon is listed on Nasdaq Stockholm, small cap under the SEMC ticker. For more information about Semcon's ownership structure and share price movements visit www.semcon.com.

Risk and instability factors

The Group and parent company's significant risks and instability factors include business risks in the form of high exposure towards a single industry or customer. An economic downturn or disruptions to financial markets can have a negative effect on the Group's services. In general terms acquisitions and divestments incur increased risks. This also includes financial risks mainly concerning currency risks. Semcon's Annual Report 2019, pages 42-43 and 61-63, include a detailed description of the Group and parent company's risk exposure and risk management. The global outbreak of COVID-19 in 2020 has resulted in greater uncertainty in terms of the above risks and uncertainties.

Accounting principles

Semcon follows the IFRS standards adopted by the EU and its interpretations of these (IFRIC). This interim report has been drawn up in accordance with IAS 34. The new standards that came into force as of 1 January 2020 have had no material effect on the Group's accounts during the year. As a consequence of the COVID-19 pandemic, Semcon received state support in 2020, mainly in the form of short-time working. Support received is allocated and recognised for the period when the short-time working took place. The support is recognised in profit or loss as a reduction in the staff costs item. In general, the same accounting policies and methods of calculation have been used in this interim report as in the latest Annual Report.

Acquisitions and divestments

In March, the Product Information business area acquired Xtractor. The acquisition is expected to have a positive impact on both the business area's operating margin and Semcon's earnings per share in 2020. Xtractor has operations in Stockholm and approximately 40 employees with revenues of about SEK 50 million. For further information about the acquisition, see Note 2. No other acquisitions or divestments took place during the period.

Events after the end of the period

No significant events occurred after the end of the period.

		Jan-Sept
Key figures	2020	2019	2019
Growth in sales (%)	-10.5	1.2	0.9
Organic growth in sales (%)	-9.1	0.6	0.5
Operating margin before depreciation (%)	9.8	9.7	10.5
Operating margin (%)	6.6	6.8	7.6
Profit margin (%)	6.3	6.4	7.3
Return on shareholders' equity (%)*	15.5	17.9	18.1
Return on capital employed (%)*	16.3	20.0	19.4
Equity/assets ratio (%)	59.3	54.6	55.2
Number of employees at the end of the period	2.016	2.235	2.262

* Rolling 12 months.

		Jan-Sept	Jan-Dec
Key figures for the Semcon share	2020	2019	2019
Earnings per share before dilution (SEK)	3.45	3.91	6.11
Earnings per share after dilution (SEK)	3.41	3.86	6.04
Shareholders' equity before dilution (SEK)	38.11	33.62	35.72
Shareholders' equity after dilution (SEK)	36.53	32.22	34.24
Share price/Shareholders' equity (times)	1.76	1.72	2.02
Cash flow from current activities (SEK)	11.78	6.96	7.22
Share price at the end of the period (SEK)	64.20	55.50	69.20
Market cap at the end of the period (mSEK)	1 163	1,005	1,253
Number of shares at the end of the period with
the quotient value of SEK 1 (000)	18,113	18,113	18,113
Number of own shares at the end of the period (000)	754	754	754
Average number of shares (000)	18,113	18,113	18,113

BUSINESS AREAS

Engineering & Digital Services

The business area's income amounted to SEK 801 million (976) and organic growth was -13.7 per cent. Due to the COVID-19 pandemic, growth was negatively impacted by lower revenue, mainly to automotive and industrial customers, while sales to life science customers demonstrated continued positive growth. Operating profit amounted to SEK 25 million (69), yielding an operating margin of 3.2 per cent (7.1). Restructuring costs were charged to earnings for the

second quarter in the amount of SEK -35 million (-7). State support received, mainly pertaining to short-time working, reduced costs by SEK 22 million (-), of which SEK 6 million (-) during the third quarter. The business area remains cautiously optimistic about developments as we move forward and that employees encompassed by a short-time working scheme at the end of the period will gradually return to full working hours over the coming quarters.

		July-Sept	Jan-Sept		Jan-Dec	Share of Semcon's total income Jan–Sept, 2020
	2020	2019	2020	2019	2019
Operating income, mSEK	207.1	287.4	801.1	976.3	1,326.5
Operating profit, mSEK	10.0	22.6	25.3	69.2	107.3	65%
Operating margin, %	4.8	7.9	3.2	7.1	8.1	(71)
No. of employees	1,253	1,498	1,253	1,498	1,528

About Engineering & Digital Services

The business area's almost 1,300 employees provide services in areas such as digitization, product development, plant engineering and production development services. The offer is aimed at requirement and concept studies, design, calculations, construction, embedded systems, testing, simulation, quality control, project management, production and process development and expertise in lean production and service development. Engineering & Digital Services has offices in Sweden, Norway, the UK, India and Brazil. Business activities mainly focus on the automotive, industry, energy and life science sectors. Customers include ABB, AB Volvo, Alstom, AstraZeneca, Autoliv, Bombardier, CEVT, Geely, Fortum, Getinge, Husqvarna, MAN, Metso, Powercell, Rolls-Royce Marine, Saab, Scania, Siemens, Swedish Transport Administration (Trafikverket), Vattenfall and Volvo Cars.

Product Information

The business area's income amounted to SEK 427 million (395) and organic growth was 2.4 per cent. Growth was favourable in Sweden and the UK, but slowed slightly during the second and third quarters as revenue, particularly from automotive customers, decreased due to the COVID-19 pandemic. The partnership with AGCO (one of the world's largest manufacturers of agricultural equipment) has progressed well and has, for example, contributed to the improved income in the UK and other markets. Operating profit amounted to SEK 66 million (35), yielding an operating margin of 15.5 per cent (9.0). Productivity in a number of major projects was at a high level, which had a positive impact on profitability. The acquisition of Xtractor and lower costs also contributed to the improvement in earnings. Earnings for the second quarter were charged with restructuring costs in the amount of SEK -2 million (-). State support received reduced costs by SEK 11 million, of which SEK 3 million during the third quarter. Part of the business area's strategy is focused on a high proportion of Managed Service contracts and a high level of resource efficiency through deliveries involving networking teams from several countries.

						Share of Semcon's total income
	July-Sept		Jan-Sept		Jan-Dec	Jan–Sept, 2020
	2020	2019	2020	2019	2019
Operating income, mSEK	127.2	124.1	427.2	394.6	535.8
Operating profit, mSEK	19.5	13.4	66.3	35.5	50.4	35%
Operating margin, %	15.3	10.8	15.5	9.0	9.4	(29)
No. of employees	763	737	763	737	734

About Product Information

The business area's almost 800 employees provide complete product information solutions with the primary focus on customers' aftermarket business. The business area's offering supports products and systems throughout the product life cycle: from sales and marketing to installation, maintenance, diagnostics, repairs, as well as training service staff. The business area has offices in Sweden, the UK, Hungary, Germany and China. Customers are mainly in the engineering, automotive, telecom and IT, energy sectors and med-tech. These include ABB, AGCO, Baxter, Bombardier, Lynk & Co, ESAB, Jaguar Land Rover, Saab, Siemens, London Electric Vehicle Company, Logisnext and Volvo Cars.

Consolidated FINANCIAL, SUMMARY

Income statements

		July-Sept		Jan-Sept		Jan-Dec
mSEK	Note	2020	2019	2020	2019	2019
Operating income	1	334.5	410.2	1,226.2	1.369.4	1.858.2
Purchase of goods and services		-55.8	-70.9	-199.9	-245.3	-336.6
Other external operating expenses		-24.5	-26.0	-71.4	-74.1	-99.7
Staff costs		-213.0	-268.1	-834.8	-917.0	-1.227.3
Operating profit before depreciation		41.2	45.2	120.1	133.0	194.6
Depreciation of tangible fixed assets		-2.2	-2.2	-6.9	-6.8	-9.2
Depreciation of right-of-use assets		-9.8	-10.4	-29.4	-31.1	-40.5
Depreciation of other intangible assets		-0.8	-0.8	-2.4	-2.3	-3.1
Operating profit		28.4	31.8	81.4	92.8	141.8
Net financial items		-0.8	-1.3	-3.6	-4.5	-6.8
Profit before tax		27.6	30.5	77.8	88.3	135.0
Tax		-6.4	-7.0	-17.9	-20.3	-28.7
Profit after tax		21.2	23.5	59.9	68.0	106.3
Profit attributable to:
Parent company's shareholders		21.2	23.5	59.9	68.0	106.3
Earnings per share before dilution (SEK)		1.22	1.35	3.45	3.91	6.11
Earnings per share after dilution (SEK)		1.21	1.34	3.41	3.86	6.04
No. of working days in period		66	66	187	187	249

Statement of comprehensive income

	July-Sept	Jan-Sept		Jan-Dec
mSEK		2019	2020	2019	2019
Profit after tax	21.2	23.5	59.9	68.0	106.3
Items that can be reclassified as profit or loss
Translation differences for the period	-2.6	0.1	-19.2	4.5	2.4
Total	-2.6	0.1	-19.2	4.5	2.4
Total other comprehensive income	18.6	23.6	40.7	72.5	108.7
Total comprehensive income for the period	18.6	23.6	40.7	72.5	108.7

Balance sheets

		Sept 30	Dec 31
mSEK	2020	2019	2019
Assets
Intangible assets, goodwill	369.3	318.3	317.1
Right-of-use assets	120.5	130.8	148.6
Other intangible assets	8.5	10.2	10.2
Tangible fixed assets	25.4	29.9	30.1
Financial assets	2.8	6.3	5.6
Accounts receivable	198.1	257.0	372.7
Accrued non-invoiced income	167.2	212.5	145.5
Other current assets	38.2	31.5	30.3
Cash and cash equivalents	186.0	71.6	63.0
Total assets	1,116.0	1,068.1	1,123.1
Shareholders' equity and liabilities
Shareholders' equity	661.6	583.5	620.1
Non-current lease liabilities	86.7	93.5	109.1
Deferred tax liabilities	59.8	55.6	48.2
Accounts payable	35.6	47.3	55.7
Current lease liabilities	32.3	34.1	36.8
Non-accrued invoiced income	12.8	11.2	16.5
Other non interest-bearing current liabilities	227.2	242.9	236.7
Total shareholders' equity and liabilities	1,116.0	1,068.1	1,123.1

Change in shareholders' equity

		Sept 30
mSEK	2020	2019	2019
Shareholders' equity at the start of the year	620.1	566.9	566.9
Total comprehensive income	40.7	72.5	108.7
Acquisition of own shares	-	-4.7	-4.7
Share-based remuneration	0.8	1.1	1.5
Shareholder dividend	-	-52.3	-52.3
Shareholders' equity at the end of the year	661.6	583.5	620.1

Capital employed

		Sept 30	Dec 31
mSEK	2020	2019	2019
Total assets	1,116.0	1,068.1	1,123.1
Deferred tax liabilities	-59.8	-55.6	-48.2
Accounts payable	-35.6	-47.3	-55.7
Other non interest-bearing liabilities	-240.0	-254.1	-253.2
Total capital employed	780.6	711.1	766.0
Average capital employed	763.0	654.1	699.1

Cash flow statements

			July-Sept		Jan-Sept
mSEK	Note	2020	2019	2020	2019	2019
Cash flow from current activities
before change in working capital		39.4	32.3	96.6	97.7	162.9
Change in working capital		5.7	26.1	116.7	28.4	-32.1
Cash flow from current activities		45.1	58.4	213.3	126.1	130.8
Investments		-1.2	-1.7	-4.9	-5.9	-9.6
Acquisition of subsidiaries	2	-5.0	-	-48.1	-	-
Sales of fixed assets		0.2	-	0.3	-	0.1
Cash flow from investment activities		-6.0	-1.7	-52.7	-5.9	-9.5
Repayment of lease liabilities		-9.7	-11.1	-28.1	-33.5	-44.0
Acquisition of own shares		-	-3.6	-	-4.7	-4.7
Shareholder dividend		-	-	-	-52.3	-52.3
Cash flow from financing activities		-9.7	-14.7	-28.1	-90.5	-101.0
Cash flow for the period		29.4	42.0	132.5	29.7	20.3
Cash and cash equivalents at the start of the period		157.6	31.3	63.0	43.5	43.5
Translation differences		-1.0	-1.7	-9.5	-1.6	-0.8
Cash and cash equivalents at the end of the period		186.0	71.6	186.0	71.6	63.0

Change in net cash

	July-Sept		Jan-Sept	Jan-Dec
mSEK	2020	2019	2020	2019	2019
Opening balance	157.6	31.3	63.0	43.5	43.5
Cash flow from current activities	45.1	58.4	213.3	126.1	130.8
Net investments	-1.0	-1.7	-4.6	-5.9	-9.5
Acquisitions of subsidiaries	-5.0	-	-48.1	-	-
Shareholder dividend	-	-	-	-52.3	-52.3
Repayment of lease liabilities	-9.7	-11.1	-28.1	-33.5	-44.0
Acquisition of own shares	-	-3.6	-	-4.7	-4.7
Translation differences	-1.0	-1.7	-9.5	-1.6	-0.8
Closing balance	186.0	71.6	186.0	71.6	63.0

Quarterly information by Business Area

	2018				2019				2020
	Q1	Q2	Q3	Q4	2018	Q1	Q2	Q3	Q4	2019	Q1	Q2	Q3
Operating income (mSEK)
Engineering & Digital
Services	359.6	362.7	293.1	355.6	1,371.0	348.8	340.1	287.4	350.2	1,326.5	337.3	256.7	207.1
Product Information	109.0	116.7	112.5	135.9	474.1	134.5	136.0	124.1	141.2	535.8	155.2	144.8	127.2
Group items/
eliminations	-0.2	-0.2	-0.7	-1.8	-2.9	-0.1	-0.1	-1.3	-2.6	-4.1	-1.2	-1.1	0.2
Total	468.4	479.2	404.9	489.7	1,842.2	483.2	476.0	410.2	488.8	1,858.2	491.3	400.4	334.5
Operating profit (mSEK)
Engineering & Digital
Services	36.8	25.5	10.0	31.6	103.9	34.1	12.5	22.6	38.1	107.3	31.0	-15.7	10.0
Product Information	6.7	1.1	9.7	15.5	33.0	13.0	9.1	13.4	14.9	50.4	24.6	22.2	19.5
Group items/
eliminations	-3.5	-5.9	-1.8	-6.1	-17.3	-3.2	-4.5	-4.2	-4.0	-15.9	-5.4	-3.7	-1.1
Total	40.0	20.7	17.9	41.0	119.6	43.9	17.1	31.8	49.0	141.8	50.2	2.8	28.4
Operating margin (%)
Engineering & Digital
Services	10.2	7.0	3.4	8.9	7.6	9.8	3.7	7.9	10.9	8.1	9.2	-6.1	4.8
Product Information	6.1	0.9	8.6	11.4	7.0	9.7	6.7	10.8	10.6	9.4	15.9	15.3	15.3
Total	8.5	4.3	4.4	8.4	6.5	9.1	3.6	7.8	10.0	7.6	10.2	0.7	8.5
Number of employees
Engineering & Digital
Services	1,405	1,458	1,427	1,414	1,414	1,421	1,440	1,498	1,528	1,528	1,489	1,296	1,253
Product Information	637	668	695	705	705	722	728	737	734	734	778	764	763
Total	2,042	2,126	2,122	2,119	2,119	2,143	2,168	2,235	2,262	2,262	2,267	2,060	2,016
Number of working days	63	59	65	62	249	63	58	66	62	249	63	58	66

Definitions

Capital employed

The balance sheet total minus non interest-bearing provisions and liabilities.

Cash flow per share

Cash flow from current activities divided by the weighted average number of outstanding shares adjusted for the dilution effect on potential shares.

Earnings per share (EPS) before dilution

Profit/loss after tax attributable to the parent company's owners divided by the average number of outstanding ordinary shares excluding shares held as own shares by the parent company.

Earnings per share (EPS) after dilution

Profit/loss after tax attributable to the parent company's owners divided by the average number of outstanding shares adjusted for the dilution effect of potential shares.

Equity/assets ratio

Shareholders' equity as a percentage of the balance sheet total.

Net cash/net debt

Cash and cash equivalents and interestbearing receivables with deductions for interest-bearing provisions and liabilities, excluding lease liabilities.

Organic growth

Year-on-year increase in income adjusted for currency effects, acquisitions and divestments.

Operating margin

Operating profit as a percentage of operating income.

Operating margin before depreciation Operating profit before depreciation as a percentage of operating income.

Profit margin

Profit before tax as a percentage of operating income.

Return on shareholders' equity

Profit for the period after tax divided by the average shareholders' equity.

Return on capital employed

Profit before tax plus financial costs divided by the average capital employed.

Shareholders' equity per share before dilution

Shareholders' equity divided by the number of shares at end of the period excluding shares held as own shares by the parent company.

Shareholders' equity per share after dilution

Shareholders' equity divided by the number of shares at end of the period adjusted for the dilution effect on potential shares.

Parent company FINANCIAL, SUMMARY

Income statements

	July-Sept		Jan-Sept		Jan-Dec
mSEK	2020	2019	2020	2019	2019
Operating income	9.0	10.3	28.9	32.0	43.1
Other external operating expenses	-2.3	-2.5	-8.5	-8.8	-11.7
Staff costs	-6.1	-9.6	-22.7	-27.8	-36.3
Operating loss	0.6	-1.8	-2.3	-4.6	-4.9
Net financial items*	0.7	0.5	41.9	31.9	31.4
Profit after net financial items	1.3	-1.3	39.6	27.3	26.5
Appropriations**	-	-	-	-	52.3
Profit before tax	1.3	-1.3	39.6	27.3	78.8
Tax	-0.3	0.3	0.5	0.4	-11.8
Profit for the period	1.0	-1.0	40.1	27.7	67.0
* of which translation differences	0.3	0.1	-1.4	1.7	1.0
of which dividend	-	-	42.0	29.0	29.0
** of which group contribution received	-	-	-	-	70.4

Statements of comprehensive income

	July-Sept		Jan-Sept		Jan-Dec
mSEK	2020	2019	2020	2019	2019
Profit for the period	1.0	-1.0	40.1	27.7	67.0
Other comprehensive income	-	-	-	-	-
Total comprehensive income for the period	1.0	-1.0	40.1	27.7	67.0

Balance sheets

	30 Sept		Dec 31
mSEK	2020	2019	2019
Assets
Financial fixed assets	235.5	234.7	234.1
Current assets	185.1	140.6	222.5
Cash and cash equivalents	143.1	29.7	24.6
Total assets	563.7	405.0	481.2
Shareholders' equity and liabilities
Shareholders' equity	390.7	311.3	350.6
Untaxed reserves	56.6	38.5	56.6
Non interest-bearing current liabilitities	116.4	55.2	74.0
Total shareholders' equity and liabilities	563.7	405.0	481.2

Note 1 DISTRIBUTION OF REVENUE

mSEK	Engineering & Digital Product Information Services			Group
July-Sept	2020	2019	2020	2019	2020	2019
Distribution per country
Sweden	154.0	202.2	74.5	71.7	228.5	273.9
Norway	25.8	31.0	0.1	-	25.9	31.0
UK	5.6	9.5	15.7	16.8	21.3	26.3
Brazil	15.8	32.6	-	-	15.8	32.6
Germany	0.7	0.3	13.4	15.9	14.1	16.2
Other	5.2	11.8	23.5	19.7	28.7	31.5
Eliminations	-	-	-	-	0.2	-1.3
Total	207.1	287.4	127.2	124.1	334.5	410.2
Distribution per industry
Automotive	80.2	129.1	32.0	40.2	112.2	169.3
Industry	58.6	87.8	43.1	45.3	101.7	133.1
Life Science	36.5	29.6	2.9	2.8	39.4	32.4
Telecom	1.4	1.1	34.9	30.3	36.3	31.4
Energy	21.9	24.4	3.0	3.7	24.9	28.1
Other	8.5	15.4	11.3	1.8	19.8	17.2
Eliminations	-	-	-	-	0.2	-1.3
Total	207.1	287.4	127.2	124.1	334.5	410.2

mSEK		Engineering & Digital Product Information Services			Group
Jan-Sept	2020	2019	2020	2019	2020	2019
Distribution per country
Sweden	605.9	738.0	255.9	235.5	861.8	973.5
Norway	87.2	93.4	0.2	0.2	87.4	93.6
UK	28.2	31.6	56.3	54.7	84.5	86.3
Brazil	59.4	86.9	-	-	59.4	86.9
Germany	1.8	1.4	45.3	47.5	47.1	48.9
Other	18.6	25.0	69.5	56.7	88.1	81.7
Eliminations	-	-	-	-	-2.1	-1.5
Total	801.1	976.3	427.2	394.6	1,226.2	1,369.4
Distribution per industry
Automotive	318.5	427.9	120.3	129.4	438.8	557.3
Industry	246.7	302.2	147.5	146.0	394.2	448.2
Life Science	115.3	99.3	9.0	9.6	124.3	108.9
Telecom	8.0	9.2	105.2	93.4	113.2	102.6
Energy	77.4	91.8	11.3	12.3	88.7	104.1
Other	35.2	45.9	33.9	3.9	69.1	49.8
Eliminations	-	-	-	-	-2.1	-1.5
Total	801.1	976.3	427.2	394.6	1,226.2	1,369.4

Note 2 ACQUISITIONS

In March, Semcon acquired 100 per cent of the shares in Xtractor Interactive AB, with its registered office in Stockholm, Sweden. Xtractor provides complete digital training solutions to companies within several different industries. The company has approximately 40 employees, with competencies within e-learning and development of LMS (Learning Management System) and LXP (Learning eXperience Platform). The acquisition of Xtractor further strengthens Semcon's position, enabling it to become one of the largest service providers in Sweden within digital training.

Operating income for the January–September 2020 period amounted to SEK 39.0 million and operating profit to SEK 4.5 million. Operating income for the holding period amounted to SEK 28.8 million and operating profit to SEK 2.8 million. External acquisition-related costs are recognised in operating profit and total SEK 0.2 million. Based on preliminary acquisition analyses, the acquisition has impacted the consolidated balance sheet and cash and cash equivalents according to the table below.

Acquired net assets on the date of acquisition

mSEK

Current assets	28.1
Current liabilities	-24.3
Net assets and liabilities	3.8
Intangible assets, goodwill	51.8
Total purchase price	55.6
Less: liquid assets in acquired companies	-7.5
Impact on consolidated cash and cash equivalents	48.1

The analysis of the acquisition of Xtractor found that the purchase price was larger than the carrying amount of net assets, and therefore gave rise to goodwill. In the acquisition of a consultancy firm, the main item acquired consists of human capital in the form of employee expertise, which is why the acquired companies' intangible assets have been assigned to goodwill.

REVIEW REPORT

Semcon AB (publ) corporate identity number 556539-9549

Introduction

We have reviewed the condensed interim report for Semcon AB (publ) as at September 30, 2019 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on

Auditing and other generally accepted auditing standards in Sweden.

The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

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

Gothenburg, October 22 2020 Ernst & Young AB

Andreas Mast Authorised Public Accountant

SEMCON'S MISSION

To turn technology into excellent user experiences.

FINANCIAL CALENDAR

Year-end report 2020 Interim report January-March 2021 Annual General Meeting Interim report January-June 2021 Interim report January-September 2021 Year-end report 2021

CONTACT INFORMATION

Contact persons

Markus Granlund, CEO Semcon AB, +46 31-721 03 06 Björn Strömberg, CFO Semcon AB, +46 31-721 03 06 10 February, 2021, at 08.00 29 April 2021, at 08.00 29 April, 2021 16 July 2021, at 08.00 27 Oktober 2021, at 08.00 9 February 2022, at 08.00

Contact information

Semcon AB (publ) 417 80 Göteborg, Sweden Visiting address: Lindholmsallén 2 417 80 Göteborg, Sweden Phone: +46 31-721 00 00 www.semcon.com

Göteborg 22 October, 2020 Semcon AB (publ) Co.reg.no 556539-9549 Markus Granlund, President and CEO

This report has been reviewed by the company's auditors.

This information is such information as Semcon 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 person set out above, at 08.00 a.m. CET on 22 October 2020.

Semcon is an international technology company that develops products based on human needs and behaviours. We strengthen our customers' competitiveness by always starting from the end user, because the person who knows most about the user's needs creates the best products and the clearest benefits to humans. Semcon collaborates mainly with companies in the automotive, industry, energy, life science and telecom sectors. With more than 2,000 specialised employees, Semcon has the ability to take care of the entire product development cycle, from strategy and technology development to design and product information. Semcon was founded in Sweden in 1980 and has offices in over 30 locations in eight different countries. In 2019, the Group reported annual sales of SEK 1.9 billion. Read more on semcon.com.