Strong cash flow at the end of the year and increased

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.