Year-end report 2015

The year ended with a weak last quarter, with business area Product Information
reporting a drop in sales due to less business in the UK and China. Meanwhile,
as we announced previously, there were restructuring costs in Engineering
Services Germany of SEK 26 million. 2015 was a year of challenges for Semcon.
The measures taken had a major negative impact on results, but are necessary for
Semcon to remain competitive over the long term. The restructuring work carried
out at Engineering Services Germany, to adapt the organisation to the current
market situation, meant major costs, amounting to SEK 46 million over the year.
The realignment to a more sales-oriented organisation will probably take more
time before realizing the full effect. We signed several partnership agreements
with global customers in 2015 and increased our ownership in the Norwegian
company Devotek. Our largest business area, Engineering Services Nordic, begin
to see the effect of working with value-based total solutions.
I look with confidence to 2016 as we have efficient process, excellent employees
and very high customer satisfaction. We should be able to deliver the same top
quality and technical ability, but with improved profitability.
Fourth quarter
• The operating income was SEK 637 million (731) and organic growth was -12%
• The operating loss was SEK 9 million (+27), giving an operating margin of
-1.5% (3.6)
• The loss after tax was SEK 8 million (+22)
• Earnings per share (EPS) after dilution was SEK -0.46 (1.23)

January-December
• The operating income was SEK 2,557 million (2,726) and organic growth was -7%
• The operating profit was SEK 10 million (102), giving an operating margin of
0.4% (3.8)
• The profit after tax was SEK 3 million (75)
• Earnings per share (EPS) after dilution was SEK 0.20 (4.16)
• The equity/assets ratio was 45% (48)
• Return on shareholder’s’ equity was 1% (12)
• The Board of Directors proposes a share dividend of SEK 1.25 per share (2.50)

Income and result
Fourth quarter
The operating income amounted to SEK 637 (731) million. Adjusted for currency
effects, acquisitions and divestments, income fell by 12%. All business areas,
except Engineering Services Nordic, reported a drop in income. The operating
loss was SEK 9 million (+27), giving an operating margin of -1.5% (3.6). The
operating loss also includes restructuring costs from the Engineering Services
Germany business area of SEK -26 million (-4), for measures associated with a
new business structure and fewer administrative staff. The Product Information
business area’s result were negatively affected by an organic drop in sales of
25% over the quarter, due to fewer deliveries to Jaguar Land Rover and by sales
to one of the larger customers in China ended in Q3. Kongsberg Devotek AS, which
was consolidated from November has affected the operating profit with SEK -6
million. Net financial items amounted to SEK -1 million (-1), giving a loss
before tax of SEK 11 million (+26). The tax income for the quarter amounted to
SEK 2 million (-3). The loss after tax amounted to SEK 8 million (+22) and EPS
after dilution of SEK -0.46 (1.23).

January-December
The operating income amounted to SEK 2,577 million (2,726). Adjusted for
currency effects, acquisitions and divestments, income fell by 7%. The
Engineering Services Germany business area, adjusted for currency effects,
reported a drop in income of 13%, due to the transition underway in the German
market. The Group’s operating profit amounted to SEK 10 million (102), giving an
operating margin of 0.4% (3.8). The Engineering Services Germany business area
reported significantly weaker results due to the drop in sales and restructuring
costs of SEK 46 million (6). The Product Information business area’s results
were negatively affected by fewer deliveries in Q4 to Jaguar Land Rover and by
sales to one of the larger customers in China ended in Q3. This has negatively
affected results through the writing down of accounts receivable and extra
operational costs. Sales have also been weak towards the Norwegian oil and gas
industry, which has also contributed towards the weaker results. Net financial
items amounted to SEK -4 million (-5), giving a profit before tax of SEK 5
million (97). The tax expense for the year amounted to SEK 2 million (22). The
profit after tax amounted to SEK 3 million (75) and EPS after dilution amounted
to SEK 0.20 (4.16).

Financial position
The operating cash flow from current activities was SEK 27 million (82).
Investments in hardware, licenses, office supplies and equipment amounted to SEK
33 million (28). The Group’s liquid assets amounted to SEK 126 million (152)
with additional non-utilized credit of SEK 226 million (273) as at 31 December.
The Group’s credit agreements were extended at the start of Q4 and will run
until October 2018. Shareholders’ equity amounted to SEK 604 million (662) and
the equity/assets ratio was 45% (48). During Q2 a dividend worth SEK 45 million
(45) was paid to shareholders. In addition, share buy backs were carried out to
acquire 100,000 Semcon shares for SEK 6 million. The Group’s net debt amounts to
SEK 78 million (14). Excluding pension commitments, net debt amounted to SEK 10
million (net cash 55). The debt/equity ratio was 0.1 times (0.0) with an
interest coverage ratio of 2.4 times (24.8).

Share dividend
According to Semcon’s financial objectives a dividend long-term should be paid
to shareholders and be at least one third of the profit after tax. The Board of
Directors proposes a share dividend of SEK 1.25 per share (2.50). Dividend
amounts to SEK 22.6 million (45.3). The record day for the right to a share
dividend is proposed as Monday, 2 May.

Staff
The headcount on 31 December was 2,936 (2,990). The number of employees in
active service was 2,796 (2,891).Downsizing of business activities over the past
year, mainly in Engineering Services Germany, which have resulted in a fall in
the number of employees. In the respective business areas the headcount is as
follows: Engineering Services Nordic 1,098 (1,038), Engineering Services Germany
957 (1,044), Engineering Services International 352 (359) and Product
Information 529 (549).
For more information, please contact:
Markus Granlund, CEO Semcon AB +46 31-721 03 06
Björn Strömberg, CFO Semcon AB +46 31-721 03 06
Per Nilsson, Communications Director Semcon AB +46 73-973 72 00
Semcon is an international technology company in the engineering services and
product information sectors. We have around 3,000 employees with extensive
experience from many different industries. We develop technology, products,
plant and information solutions along the entire development chain and also
provide many services and products in areas such as quality control, training
and methodology development. We contribute to our customers’ competitive
strength by providing innovative solutions, design and solid engineering
expertise. The business activities are run via four business areas: Engineering
Services Nordic, Engineering Services Germany, Engineering Services
International and Product Information. Work processes and solutions are adapted
to customer requirements, from taking part in the customer’s teams to in-house
development projects. The Group had annual sales of SEK 2.6 billion with
activities at more than 40 sites in Sweden, Germany, the UK, Brazil, China,
Hungary, India, Spain and Norway. Some of Semcon’s biggest customers include:
ABB, AB Volvo, Audi, BMW, CEVT, Jaguar Land Rover, Scania, Volvo Cars and VW.
Read more at semcon.com.