Strong cash flow at the end of the year and increased dividend proposed

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| Source: Semcon AB
2013 was characterized by relatively weak demand. We also saw delays in a major
project and were forced to write down another project, which negatively affected
profits. To further focus on growth and increased collaboration we have decided
to introduce a marketoriented organization in the field of engineering services
from 1 January 2014. As a result, restructuring costs negatively impacted Q4 by
SEK 10 million. The reorganization is expected to provide annual savings of SEK
6 million. Cash flow remained strong with a healthy financial position. From the
reported profit for 2013 the Board of Directors proposes an increased share
dividend to SEK 2.50 per share. Customers’ development requirements remain
strong with demand expected to gradually improve. We have a positive attitude
towards development requirements in 2014.
Fourth quarter
• The operating income was SEK 654 million (671)
• The operating profit was SEK 22 million (55) giving an operating margin of
3.3% (8.2)
• The quarter was hit by restructuring costs of SEK 10 million, impairment in a
project of SEK 5 million and by delays in a major project
• The profit after tax was SEK 16 million (47)
• Earnings per share (EPS) after dilution as SEK 0.87 (2.58)

January-December
• The operating income was SEK 2,508 million (2,571)
• The operating profit was SEK 125 million (193) giving an operating margin of
5.0% (7.5)
• The profit after tax was SEK 88 million (141)
• Earnings per share (EPS) after dilution was SEK 4.86 (7.80)
• Cash flow from current activities was SEK 135 million (186)
• The equity/assets ratio was 49% (47)
• Return on equity was 15% (28)
• From the reported profit for 2013, the Board of Directors proposes an
increased share dividend of SEK 2.50 per share (2.00)

Income and results
Fourth quarter
Operating income amounted to SEK 654 million (671) giving organic growth of -2%.
Q4 also saw relatively weak demand from some industrial customers.The operating
profit was SEK 22 million (55) giving an operating margin of 3.3% (8.2). The
quarter has been impacted by restructuring costs of around SEK 10 million,
mainly due to the introduction of the market-oriented organization. The quarter
was also affected by impairment in a major project of SEK 5 million. The
Automotive R&D business area also reported poor results due to the start of a
major project being delayed, from the end of May until December. Net financial
items totalled SEK -2 million (-2) giving a profit before tax of SEK 20 million
(53). Tax costs for the quarter stood at SEK -4 million (-6). The profit after
tax was SEK 16 million (47) and EPS after dilution was SEK 0.87 (2.58).

January-December
The operating income was SEK 2,508 million (2,571) giving organic growth of -1%.
The Informatic business area reported good growth over the year. For other
business areas it is the relatively poor demand from some industrial customers
that has negatively affected sales. The operating profit amounted to SEK 125
million (193) giving an operating margin of 5.0% (7.5). The decline is
attributable to lower revenues, costs arising from staff cuts in Q1 of SEK 6
million, restructuring costs of around SEK 10 million and impairment of a major
project of SEK 5 million in Q4. The Automotive R&D business area also reported
poor results due to the start of a major project being delayed by six months.
Major revenue recognition was reported last year of SEK 5 million in an
Automotive R&D business area project. The business area showed the following
operating margins: Automotive R&D 3.5% (6.6), Design & Development 3.3% (6.7)
and Informatic 11.7% (11.9). Net financial items totalled SEK -7 million (-7)
giving a profit before tax of SEK 118 million (186). Tax costs for the quarter
stood at SEK -30 million (-45). The profit after tax was SEK 88 million (141)
and EPS after dilution was SEK 4.86 (7.80).

Financial position
The operating cash flow from current activities was SEK 135 million (186). The
Group’s cash and bank balances amounted to SEK 153 million (116) with additional
non-utilized credit of SEK 262 million (306) as at 31 December. A new credit
agreement was signed at the start of Q3. The new credit agreement consists of a
three-year revolving credit facility of EUR 22.8 million (32.8), which runs
until July 2016 with an additional, pre-existing, overdraft facility of SEK 150
million (150). Investments in hardware, licences, office supplies and equipment,
amounted to SEK 24 million (22). Shareholders’ equity amounted to SEK 633
million (579) and the equity/assets ratio was 49% (47). A dividend of SEK 36
million (-) was paid to shareholders in Q2. The Group’s net debt fell over the
past year by SEK 68 million, meaning that the Group, at year-end, had net equity
of SEK 7 million (-61) and the debt/equityratio was - times (0.1) with an
interest coverage ratio of 22.0 times (26.8).

Staff and organisation
The headcount on 31 December was 3,001 (3,000). The number of employees active
in service was 2,851 (2,887). In the business areas the headcount is as follows:
Automotive R&D 1,816 (1,772), Design & Development 676 (701) and Informatic 509
(527).

Share dividend
According to Semcon’s financial objectives a share dividend should be paid to
shareholders and be around one third of the profit after tax. From the reported
profit for 2013 the Board of Directors proposes an increased share dividend of
SEK 2.50 per share (2.0). The proposed dividend makes up a total of 51% of the
company’s profit after tax and amounts to SEK 45 million. The record day for the
right to a share dividend is proposed as Friday, 2 May.

Outlook
Customers’ development needs remain strong with demand expected to gradually
improve. Semcon’s development outlook for 2014 is positive.
Semcon is a global company active in the areas of engineering services and
product information. The Group has around 3,000 employees with extensive
experience from many different industries. Semcon develops products, plants and
information solutions along the entire development chain and also provides many
other products and services including quality control, training and methodology
development. Semcon increases customers’ sales and competitive strength by
providing them with innovative and solid engineering solutions. From 2014 the
business will be run in four business areas: Engineering Services Nordic,
Engineering Services Germany, Engineering Services International and Product
Information. The Group had sales of SEK 2.5 billion with activities at more than
45 sites in Sweden, Germany, the UK, Brazil, China, Hungary, India, Spain and
Russia.