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Annual Report 2013


BRA INVEST – BETTER BUSINESS

BrA Invest TABLE OF CONTENTS Introduction 4-5 Company Presentations Management’s Review Income Statement for the Group Balance Sheet for the Group

6-19 20-22 23 24-25

Cash Flow Statement for the Group

26

Income Statement for the Parent Company

27

Balance Sheet for the Parent Company Cash Flow Statement for the Parent Company Additional Disclosures

28-29 30 31-32

Notes 33-40 Signatures 40 Auditor’s Report

41

Presentation of the Board of Directors/Auditor

42

2 – ANNUAL REPORT 2013


”We have three legs (KB, Dogman and Construction/ Property) that generate good return on investment and have strong positions in their respective markets and fields. We believe that this is no coincidence and we are in particular convinced that we can be much better and bigger where we are already good!” ANNUAL REPORT 2013 – 3


BRA INVEST – BETTER BUSINESS

BrA Invest

Return on capital, financial targets and future strategies The history of BrA Invest started in September 2005 with the acquisition of Draken i Reftele (BAB was acquired in 2001, but was not incorporated into BrA until 2008). The average return per year during the period up to and including the 2012 calendar year on the original capital invested has been outstanding at 70%. The return is calculated as an increase in equity adjusted for dividends to the principal owners and minority owners and adjusted for BrA’s acquisitions (buyouts) of minorityheld shares where applicable. The main cause of the high return BrA companies have generated thus far has been that, at the time most of the companies were acquired, the operational situation has been tough, even precarious in some cases, which was reflected in their numbers at these times and when the businesses were turned around into successes, the upside has been even higher with limited capital investments. Dogman and KB are good examples of this. (There are of course also not as good examples such as Living Story and Olofssons Hyvleri…. however, they have a minor effect on the Group from an overall perspective.) If we look at the 2013 calendar year, we can see the following changes in equity: Opening balance: SEK 123.8 million Closing balance: SEK 137.8 million The following adjustment items should also be added:

Dividends to the minority owners of KB: SEK 2.875 million Dogman: SEK 0.250 million BAB: SEK 0.100 million as well as the buyout of a minority interest of 1.25% of the shares of KB Components at a price of SEK 1 million.

We then get a total number for ”the value” the BrA Group companies created in 2013 of SEK 18.2 million and the Group’s return on equity during the year landed at 14.7%. 4 – ANNUAL REPORT 2013

In the future, BrA Invest will probably be unable to generate the historically extremely high return levels we have seen. Instead, we will have to settle with lower percentages (at least the years no assets are sold), but the absolute return in money will of course gradually increase as the Group’s size and earnings grow. We had discussions with our principal bank during the year and decided together on a number of long-term financial targets which will govern and guide how quick future expansion may be in light of the risk level we want to be at and are comfortable with in terms of indebtedness and our long-term equity-asset ratio. The following two financial targets and guiding principles apply from now on:   - The Group’s equity-asset ratio should be no less than 30%   - The Group’s net debt (interest-bearing bank loans minus cash) should not exceed 4 times its EBITDA As of 31 December 2013, we do not meet any of the above targets, but we expect (at the time of this report, March 2014) that we will be able to meet the net debt target no later than at the end of Q1, 2014 and the equity-asset ratio target sometime in 2015. The above decision will have consequences on how we view future opportunities

for acquiring new companies in order to expand in large existing businesses, such as bringing Plastunion into the KB Group or decisions to conduct property construction projects, such as 3Hus’ project to build 32 rental flats in central Åstorp (Resedan area) now under way. The balance sheet increased by SEK 107.6 million during the year (mainly the two transactions mentioned above) and we will only manage to grow the balance sheet in the short term (3-5 years) by SEK 100-150 million per year with the financial targets serving as a framework and with future expected earnings. 3Hus’ acquisition of the Backsippan area in central Åstorp should be seen in this light, where we expect to begin construction of phase 1 sometime in 2016 and phase 2 sometime in 2017. Both phases together involve 60-70 modern rental flats built in 8-9 blocks of flats in a modern park environment. The Group has seen a clear long-term strategy emerge in 2013 on a general scale which is based on the simple principle that we should do more of what we are already good at and stick to that! We have three legs (KB, Dogman and Construction/Property) that generate good return on investment and have strong positions in their respective markets and fields. We believe that this is no coincidence and we are in particular convinced that we can be much better and bigger where we are already good!


BRA INVEST – BETTER BUSINESS

The financial targets applicable from 2014 going forward are the following:   - The BrA Invest Group should generate a return of at least 20% of its reported consolidated equity annually over one economic cycle   - The underlying businesses should get a return of at least 15-20% on their capital employed   - Each should have an annual growth rate higher than the growth of the underlying market Back row from left to right: Kenneth Andersson, Lars Holtskog, Stefan Andersson, Christer Andersson, Alexander Subotin, Åke Waldt, Erling Levin. Front row from left to right: Berne Särbring, Roger Jönsson, Monika Öberg, Anette Sjödahl, Peter Wetterlöv . The consequence of this and our decision to reduce the Group’s financial risk is that future investments will primarily be made in these three legs and, if we to be even more specific about the nearest future, probably in the KB Group, where we have very solid growth, actually better than what we would could have possibly hoped for in the most positive scenarios. The acquisition of Plastunion, which was completed in June 2013, is of course too early to evaluate, but at this point after 8-9 months, this step seems to be good and extremely important strategically. We have now gotten a hold of Småland’s finest and largest injection-moulding business in the Group, which will be a key puzzle piece in the industry’s consolidation in the coming years, with many other players and competitors located geographically around the GGVV area (Gnosjö, Gislaved, Värnamo and Vaggeryd)! For BrA Invest, 2013 has been a year of hard work to raise the profitability of our portfolio companies. After the tough years of 2011 and 2012, where a great deal of restructuring activities were under way, we are now beginning to reap the rewards of that work. We substantially improved our profitability (see above) during the year in spite of the continuing problems in Living Story and Olofssons Hyvleri.

The year’s trend was sluggish initially in the first quarter, but then gradually improved, and several of our companies performed really well at the end of 2013 and much better than in the corresponding periods in 2012. If we take a look at what’s under the surface of our companies and work on return relative to capital employed, then the situation looks approximately as follows: (SEK million)

Capital employed (approx.)

EBIT

Return (%)

Draken

45

0

0

Dogman

80

13

16

210

45

21

Olofssons

KB

35

neg

neg

BAB

10

8

80

3Hus LS

150

10

7

13

neg

neg

If we combine the construction and property businesses, which is reasonable in consideration of their close relationship, we get a picture of three legs that all have a return on capital employed over 10% and that above all have the potential to achieve substantially higher numbers in the future.

Let me conclude by addressing the problem companies, Living Story and Olofssons Hyvleri. It is of course very frustrating, disconcerting and annoying to have to report major losses for these companies three years in a row. The losses also impact the entire Group in a serious manner, since we must cover them with earnings from elsewhere. We will not allow this to continue over time and, in the case of Olofssons Hyvleri, we have announced an evaluation date in the summer of 2015 when we will make a decision about whether to continue the Company as a going concern or dissolve it, and in the case of Living Story, a strategic plan has been developed which is to be assessed as early as the summer of 2014. In conclusion, with that said, a positive outlook emerges where we are expecting a strong profit boost in 2014 for all Group companies and there is only one major restructuring project under way going into the new year, which involves the relocation of production from Årevall to other production units in the KB Group, which results in one-time restructuring costs continuing to decrease in the future.

CEO Stefan Andersson ANNUAL REPORT 2013 – 5


BRA INVEST – BETTER BUSINESS

Fastighets AB 3Hus

New apartments in Åstorp 3Hus is the Group’s property company, with its registered office in Åstorp. Its property portfolio is mainly located in Åstorp and Bjuv. The Company is a wholly-owned subsidiary of BrA Invest. Its business concept is to acquire, manage, improve and develop properties for long-term ownership. With stable and satisfied tenants and short decision-making channels, we manage properties in accordance with the respective companies’ needs and requirements. At the end of 2013, its property portfolio consisted of five commercial properties, two residential properties and four development properties. In 2013, we worked actively to improve/ renovate the property Blåsippan 16 into to make in into an up-to-date clinic. Project design and the start of construction of 32 rental apartments (Resedan district) have begun with move-in planned for June 2014.

CEO Berne Särbring 6 – ANNUAL REPORT 2013

Three new development properties (Backsippan district) were purchased for residential purposes in the summer for future housing construction. As can be seen from the investments we made, we have a cautiously positive view of 2014, with carefully planned property development as the right path to take to ensure the Company’s ongoing growth.

Finances New long-term debt targets have been implemented by the Parent Company together with principal financiers stipulating that: The Group’s equity-asset ratio be no less than 30% of the Group’s net debt and that it not exceed 4 times its EBITDA.

The new and clearer targets will have a long-term effect on the Company’s investment volume, since all forms of property development and in-house property construction projects require an extensive volume of equity. The positive aspect of the new required targets is that the whole Group’s financial strength and stability will be boosted in the long term.


Fastighets AB 3Hus* Key figures 2013 (2012)

Part of the BrA Invest Group since 2008 BrA Invest’s ownership is 100%

Net sales SEK 9.9 million (SEK 9.3 million) EBIT SEK 4.9 million (SEK 3.4 million) Number of employees 2 (2)

*including the other property companies

ANNUAL REPORT 2013 – 7


BRA INVEST – BETTER BUSINESS

BAB Byggtjänst AB

We are growing with our feet on the ground Soon it will be 100 years since building contractor Albin Andersson laid the foundations for the company now called BAB Byggtjänst AB. A number of changes in ownership have occurred during that century and our current company name is based on the initials of one of its past owners, Bertil Andersson. The company has been part of the BrA Invest Group since 2008 BAB Byggtjänst AB is a complete construction company that conducts both construction and building service operations. We operate in western Skåne and southern Halland. BAB today has around 125 employees, with net sales of approximately SEK 260 million. We have our head office in Åstorp and have local offices in Malmö, Landskrona and Båstad. It is important for us to combine our local roots and smallness of scale with the capacity of a large company. In other words, we are careful to retain our smallness of scale, but still don’t shy away from large projects. No job is too small or too big for us and no job is more important than another. Our customers include tenant-owners’ associations, property companies, industrial clients, municipalities and county councils. The idea is for BAB to be your partner for both large and small projects, and to be involved from first idea until final delivery. A lot of work has been put into continuing to develop our building service operations in our entire field of activity in

CEO Peter Wetterlöv 8 – ANNUAL REPORT 2013

2013. We have continued our efforts to achieve stability and clarity throughout our organisation and business. In 2013, we completed a large reconstruction project in Lund where Axfast was the client, and where we rebuilt and adapted the property kv. Färgaren into a gym and office for Fitness 24/7. We completely renovated around 200 flats in Helsingborg, Malmö and Lund, with Rikshem and Akelius as the clients. We also began a housing project in the spring for our affiliate 3Hus in Åstorp. In the autumn, we began construction of a new office for Södra Hallands Kraft and construction of a new central kitchen (Centralkök) for Åstorp Municipality. These projects will be completed in the summer/autumn of 2014. Our building service division has focused its operations in northwestern Skåne on our contract customers, including Kärnfastigheter, Åstorp Municipality, Landskrona City, Båstad Municipality and Riksbyggen. In Malmö, we have focused our operations on flat renovation projects for Akelius.

We will begin a major reconstruction project in the first quarter of 2014 for a tenant-owner association (bostadsrättsförening) in Malmö, which will be completed in the autumn of 2014. The industry has continued to be characterised by a recession and the market has been very cautious with several projects pushed back. In 2014, we will continue our efforts from 2013 to build stability and profitability in all of the Company’s divisions. We will continue to put great emphasis on developing and maintaining our building service operations. As we achieve greater stability in Malmö/Lund, we will actively work to grow organically on this market. Based on the stable foundation of well-functioning building service operations, and the agreements and projects described above, we are confident that 2014 will be a good year for us.


BAB Byggtjänst AB Key figures 2013 (2012)

Part of the BrA Invest Group since 2008 BrA Invest’s ownership is 90%

Net sales SEK 256.8 million (SEK 276.0 million) EBIT SEK 7.3 million (SEK 4.8 million) Number of employees 111 (117)

ANNUAL REPORT 2013 – 9


BRA INVEST – BETTER BUSINESS

AB Dogman

2014 – Dogman’s year! The Dogman Group took several restructuring measures, made several acquisitions, and relocated several warehouses between 2007 and 2012. Heading into 2013, our ambition was, for the first time, to be able to focus our efforts on customer relationship management, building a brand name and growing the company organically. But demand did not accelerate. Instead, our focus has partially shifted gradually to working more intensely on cutting costs and increasing productivity. The results of these efforts will have their full impact in 2014. The Dogman Group has 82 employees in four countries. Its head office is in Åstorp (Sweden) and that is where it has its central functions: marketing, categorisation/purchasing, accounting, logistics/office-based sales, IT and development. We have 20 field sales staff members and our main warehouse is in Åstorp. We have a smaller warehouse for the Norwegian market outside of Oslo. Europe’s weak economic trend has not gone unnoticed in the pet food and pet accessories business. In spite of the trend of us investing more and more in our animals continuing, the deep economic crisis is like a wet blanket over the pet industry. Pet owners are buying fewer toys, are choosing premium food instead of superpremium and are only rewarding dogs with treats on the weekends. This situation has resulted in the competition for the market increasing and that in turn puts higher demands on the efficiency of companies. We established our ”Development” function during the year. We now feel that we have a well-functioning function in place that can push forward our all-important product

CEO Kenneth Andersson 10 – ANNUAL REPORT 2013

development. As customers get more and more selective in their product choices, it gets more important to be innovative and constantly offer customers new interesting products. At the end of 2013, we introduced a new range of natural treats and relaunched our kennel assortment, which gives us a very strong assortment of goods going into 2014. We have taken several reorganisation measures in our product company in Åstorp. The role of the product manager has been combined with the purchasing agent. This change improves monitoring and the efficiency of the flow of goods from supplier to customer. In addition, we combined our office-based sales/customer service with logistics to further strengthen our customer service. Dogman Training Center was established during the year and we held our first customer event. The training centre consists of a large conference and training room as well as a test store. This initiative allows us to offer our staff more training options and give our custom-

ers the opportunity to hold their own conferences or hold product training courses, space management training etc. together with Dogman as our guest. Dogman Training Center is to be a natural meeting place. The number of items in our assortment was reduced by around 1,000 units during the year to total close to 8,500. The targeted efforts to streamline the assortment have met with success. In 2014, these efforts will be amplified to further ensure that we have a good, effective and saleable assortment and stock. 2014 will see greater emphasis on organic growth and process streamlining, as well as focus on cost cuts and productivity increases. We have set clear business targets heading into 2014 which can be easily implemented on the functional level and then on the individual level. This combined with intensified internal provision of information and transparency gradually got everyone to start going in the same direction. The result of this will be an outstanding 2014 – Dogman’s year!


Dogman (Kc)

Key figures 2013 (2012) Part of the BrA Invest Group since 2007 BrA Invest’s ownership is 95%

Net sales SEK 351.8 million (SEK 359.5 million) EBIT SEK 10.7 million (SEK 11.7 million) Number of employees 82 (88)

ANNUAL REPORT 2013 – 11


BRA INVEST – BETTER BUSINESS

Draken i Reftele AB

Optimisation and refinement in tough times! Draken i Reftele is a modern film blowing plastics producer with two main product areas: industrial packaging and technical film. The company has been owned by BrA Invest since 2005 and has continually upgraded both its machinery and its factories Draken’s vision is to be Sweden’s most flexible and effective film conversion company for the production of industrial packaging and technical film in polymer materials. High flexibility is achieved via effective material and product and exchanges and through innovative logistics solutions for customers, primarily in Sweden. In addition to this, Draken is to be a flexible partner that always listens to the individual preferences of customers and delivers customer-specific solutions. Working purposefully and systematically in combination with dedication and knowledge allows us to implement Draken’s business idea. Only world class is good enough! For most of 2013, the plastics industry has been affected by issues involving the economic trend that have impacted the market, demand and pricing for both suppliers and customers. In the period from the first half of Q1 to Q3, the order backlog and sales were insufficient to generate an improvement over the corresponding period in 2012.

CEO Alexander Subotin 12 – ANNUAL REPORT 2013

Draken’s upturn in 2012 was brought down quickly in 2013 by falling prices from competitors, weak demand on high-volume products and structural changes on the retail end. In 2013, we continued our business development efforts to improve efficiency, lower the amount of material scrapped and put greater focus on product quality. Scrapped material is at very low levels and the lack of recycled pellets at certain times has made us unable to be competitive in certain products at certain times. Our work on Draken’s management system has continued and the traditional ISO work now has a more vivid and systematic structure which will give Draken advantages when it is fully implemented and overhauled. In spite of its weak profit performance, Draken chooses to continue investing during a tough year like 2013. A new machine for the conversion division has been ordered and will be delivered and installed in the beginning of 2014. The machine

replaces two existing ones and provides greater production flexibility and cuts personnel costs. In 2013, Draken had a record-breaking year in testing new materials and products that will pay off in the future by increasing business volume. We have increased our volumes in segments with greater added value after having lost volumes in products with low added value. We plan to continue to pursue our strategy of putting greater emphasis on the industrial segment and working more efficiently in the whole process from sale to delivery. We are going into 2014 with a more flexible and quicker organisation, with greater focus on the market end, while retaining focus on production operations with the right staffing and high machinery availability at all times!


Draken i Reftele AB Key figures (2012)

Part of the BrA Invest Group since 2005 BrA Invest’s ownership is 100%

Net sales SEK 84.5 million (SEK 101.2 million) EBIT SEK -0.8 million (SEK 5.8 million) Number of employees 35 (39)

ANNUAL REPORT 2013 – 13


BRA INVEST – BETTER BUSINESS

KB Components AB

Continuing growth KB was founded by Anders Månson in 1947. The bar was set high right from the start. KB’s ambition was to set the plastics industry trend, rather than follow it. The KB Group has four units that manufacture advanced plastics components, while KB System develops proprietary components for flexible power supply. KB Components offers turnkey solutions for the development and production of technically advanced plastic components, and masters most technologies and materials. KB Components is one of the largest players in Scandinavia with state-of-theart production facilities in Anderstorp, Värnamo and Örkelljunga in Sweden, and Kaunas in Lithuania. The facility in Lithuania offers cost-effective production of labour-intensive products, while the facilities in Sweden provide highly-automated production of technically advanced products. KB System manufactures and sells a system for power tracks, bars and outlet panels, based on the Dynamic Workplace Power (DWP) technology. The unique aspect of the system of power tracks is that users themselves can select and mount the outlets where and how they wish on the tracks.

CEO Lars Holtskog 14 – ANNUAL REPORT 2013

The system is very simple to install, use and reuse. The range also includes a complete programme of power poles and panels under the Com.along brand. KB System now offers complete systems for laboratories, hospitals, universities and offices that demand high flexibility and security. Historically, KB has been very successful at adapting to new technologies and major changes in the market. Its previous dependence on the automotive sector has been reduced in the past years and the Company’s sales are now spread out over five different customer segments; light vehicles, heavy vehicles, medical technology, furniture and other industries. The Company’s positive volume performance in 2012 was strengthened in 2013 by the acquisition of Plastunion in

Anderstorp and organic growth with existing customers. We improved our profit by putting a strong emphasis on cutting costs and improving productivity. A decision was made during the year to shut down our operations in Värnamo and concentrate those operations in our other units. Our Kaunas unit has expanded aggressively, which will continue in 2014. We have an optimistic view of the market trend going into 2014. Sales of new products increased, and a well-equipped project portfolio ensures a bright outlook for KB. Current CEO Lars Holtskog will move on to other positions within the Group and he will be replaced in the spring by Robert Ramnér.


KB Components AB (Kc) Key figures 2013 (2012)

Part of the BrA Invest Group since 2009 BrA Invest’s ownership is 72.5%

Net sales SEK 511.8 million (SEK 418.0 million) EBIT SEK 34.8 million (SEK 25.8 million) Number of employees 323 (272)

ANNUAL REPORT 2013 – 15


BRA INVEST – BETTER BUSINESS

Olofssons Hyvleri AB

Continuing tough situation The tough times for the timber processing industry in Sweden continued in 2013 and the whole industry suffered heavy losses. The underlying problems with a strong Swedish krona, overcapacity at the sawmills and weak demand both in Sweden and on key export markets in Western Europe continued during the year, even though a slight improvement could be seen late in the autumn. As the year got off to a start, Olofssons was still in the cutback phase from 2-shifts to day shifts (some termination pay was due in Q1) and we also decided to try to keep prices and margins up, rather than run with larger volumes at increasing losses. This led to a number of days in the first half of 2013 when production was at a standstill, mainly on the large plane. In the second half of the year, days where production was at a standstill were limited to just a few and mainly in December. The stock levels have been cut down during the year by around SEK 5 million and had a total value below SEK 10 million at the end of the year. This work has gone well and we have a healthier stock afterwards, while another effect was that we sold more goods than we produced, which led to a negative effect on the processing revenues of the planes.

CEO Stefan Andersson 16 – ANNUAL REPORT 2013

Our negative net profit for the year is very disconcerting, and even though the loss is around SEK 2 million less than in 2012 and even though we deducted the costs of the dispute we were involved in during the year (which was settled in arbitration in May for SEK 1 million), we’re still in a position where the business’s right to exist in the future must be called into question. We have therefore announced to our employees and others that we will conduct an evaluation in the summer of 2015 as to whether a going concern will be approved or whether dissolution is initiated. Some positive things that have happened during the year on the market end are that several customers have communicated their satisfaction with Olofsson’s quality, delivery service and good assistance from employees and staff. This led to recurring business and a customer base that has been stabilised and has gradually grown.

A strategically important agreement was entered into with a major customer in northern Germany at the end of the year which is equivalent to approximately one month’s production during the first half of 2014 and hopefully will then be extended with an equivalent volume to the second half of 2014. Investments have been substantially limited during the year and essentially only involved necessary replacements of equipment. The Company’s depreciation and amortisation volume is just over SEK 3 million per year and in addition to that, its lease costs, mainly for the large plane, were just over SEK 2.3 million per year which are ongoing until January 2015. We can thus look forward to significant drops in costs as we go into 2015.


Olofssons Hyvleri AB Key figures 2013 (2012)

Part of the BrA Invest Group since 2008 BrA Invest’s ownership is 100%

Net sales SEK 72.1 million (SEK 93.4 million) EBIT SEK -7.2 million (SEK -8.8 million) Number of employees 18 (30)

ANNUAL REPORT 2013 – 17


BRA INVEST – BETTER BUSINESS

Living Story AB

Sales, stock and continuing rationalisation measures Living Story AB is a furnishing wholesaler located close to route E4 in Åstorp just northeast of Helsingborg. Its range of interior fixtures and fittings, furniture and outdoor garden ornaments is designed for both decorative and utility purposes, and is strongly linked to the trends and fashion prevailing on the market. Its customers are mainly interior design stores, garden centres, flower shops and furniture stores. We sell to retailers throughout the Nordic region. The watchword for 2013 was ”Stability”, with the objective of patiently building sound, fundamental stability in the business. The structural work has been completed and we have now established good system support, as well as a good order and storage structure. We have our delivery processes in order as we head into 2014! The financial year began with high expectations and we prepared organisationally for high sales volumes based on the past year’s sales plus some additional sales in the wake of the ”acquisition” of Alma Design. Early in the year, we saw that the sales were not there, so we took major cost-cutting and rationalisation measures immediately. These measures were then a fixture of the business the whole year, but the cost-cutting measures will not have their full effect until 2014.

CEO Christer Andersson 18 – ANNUAL REPORT 2013

In conjunction with the expected increase in sales, a large stock was built up at the beginning of the past year and it is a very heavy burden for us to handle. This overstock has been methodically sold during the year and has just about been cut in half. We opened an outlet store in the autumn that directly targets end customers to manage the items that are the hardest to move. Apart from our own premises, it has been necessary to store stock at external sites in the Åstorp area due to the overstock, which has been very costly. Unfortunately, we will need to continue doing this throughout 2014 before we reach a suitable stock level and logistics management. The necessary decision to essentially discontinue purchasing of new goods has resulted in us not entirely being able to maintain desirable delivery service and not

being able to renew and follow assortment trends either. Our stock situation complicates our sales efforts and vice versa. A negative spiral has occurred and all in all led to a very negative financial end result. This situation combined with the continuing rationalisation measures will be the big challenge to tackle in 2014. There is currently a well-communicated business plan for Living Story that clearly signals that we must turn around the negative economic trend we have had for several years in the 2014 financial year and that drastic measures may be taken if necessary.


Living Story AB

Key figures 2013 (2012) Part of the BrA Invest Group since 2011 BrA Invest’s ownership is 100%

Net sales SEK 25.8 million (SEK 23.6 million) EBIT SEK -11.5 million (SEK -11.6 million) Number of employees 21 (16)

ANNUAL REPORT 2013 – 19


BRA INVEST – BETTER BUSINESS

BrA Invest CKS AB Reg.number: 556753-2501

Management’s Review

The 2013 calendar year was characterised by hard work on improving profitability and cash flow in all of our portfolio companies. The KB Group in particular performed well, but BAB did too. The ”problem companies”, Living Story and Olofssons Hyvleri, continue to be big problems for the Group at the end of 2013, even though we can see some improvements at the end of 2013 and the beginning of 2014. The investments the Group decided to make exceed SEK 100 million for the year by far, with KB’s acquisition of Plastunion and 3Hus’ new construction of 32 flats in central Åstorp constituting the major investments. BrA Invest CKS AB

BAB Byggtjänst AB 90%

Fastighets AB 3Hus 100%

KB Components UAB

KB Components AB 72,50%

KB Components Plastunion AB

Draken i Reftele AB 100%

KB System AB

Dogman AS

Dogman AB 95%

Dogman Aps

Olofssons Hyvleri AB 100%

Living Story AB 100%

Dogman OY

*KB Components Årevall AB has been omitted, because a decision was made to shut it down.

KB Components started off the year with falling volumes with several of its principal customers, but in particular in heavy vehicles. After that, its market situation improved and was very good at the end of the year. This positive trend continued in the beginning of 2014. KB Component’s Örkelljunga unit has historically been very focused on the Swedish automotive industry. Its strategy of reducing this dependence relative to other customer groups took a major step forward with the acquisition of Plastunion AB in Anderstorp (changing hands in June 2013) which, in the blink of an eye, brought in SEK 170 million in annual sales volume completely spread out across industrial customers in various market segments, with the furniture industry as the single largest. The integration of Plastunion into the Group has gone quickly and well and we have already identified synergies in purchasing, administration and sales/engineering. At the end of the autumn, KB announced the decision to shut down its operations in Värnamo (Årevall) and move the production there primarily to its unit in Kaunas, Lithuania in 2014. 6,000 m² of production space was added to this unit during the year, which is about just as much as is disappearing from the shut-down of the operations in Värnamo (the lease for the building there expires in June 2015). 20 – ANNUAL REPORT 2013

KB has successfully secured new orders and customer tools during the year which, at the fully expected rate of production, will give the Group annual sales in the amount of SEK 60 million. In July 2013, BrA increased its shareholding in KB Components from 71.25% to 72.50% by buying out one of the minority owners who chose to leave the Group. Dogman went into 2013 with hopes and plans for organic growth greater than most of the market managed to achieve. In light of this, we planned to intensify resources in sales and marketing to a certain extent. After the year got under way, the trend got weaker than expected, in particular in Sweden, as a result of the whole market for accessories doing much worse than planned. As this was realised and as all of the rationalisation measures and systematic improvements developed for a long time had their anticipated effect, we were gradually able to rationalise Dogman’s operations, and its total costs heading into 2014 is approximately SEK 5 million lower in comparison to when 2013 got under way. During the year, we invested heavily in marketing via, among other things, a national commercial radio campaign which went on from April to October and incurred costs in the

order of magnitude of SEK 3 million. As we head into 2014, we know that Dogman is a much more efficient company than ever. The problems we have had in Denmark and Finland which caused losses in these countries each year historically are over and we forecast some earnings there in the future. This together with an optimistic outlook for the Norwegian market, where Dogman is very strong, gives us an optimistic view of 2014 and we forecast a strong improvement in profit, with us boosting our operating margin from 3-4% historically to 7-8%! BAB continued its stable performance from 2012 and solidified strong building service and construction operations in western Skåne with is main focus on the Helsingborg region and with ambitions to grow in the interesting Lund-Malmö region. BAB’s operating margin has been stabilised at the 3 percent level and we see opportunities for some improvement going forward as the economic trend slowly improves. The market for construction projects in the order of magnitude of SEK 10-100 million has been under heavy pressure during the year and we have been forced to take new business at historically low margins. We have had few public projects (LOU projects) and there has been a lot of competition in their procurement. Sometimes as many as 10-12


BRA INVEST – BETTER BUSINESS

serious tenders have been submitted and the contract has often gone to someone who accidentally left something out of the cost estimate, which made the margins non-existent. In spite of this, BAB took on several strategically important projects during the year, such as the central kitchen for the schools in Åstorp Municipality, several phases for Axfast (the Ax:son-Johnson Group’s property company in Lund) and a new head office for Södra Hallands kraft in Laholm. The integration of Siffes Bygg and Parat Bygg into BAB has been completed and the whole business now operates under the BAB Byggtjänst brand name. 3Hus has had an active year with the ongoing construction of 32 rental flats in the middle of Åstorp (Resedan area) and a large-scale renovation of the local clinic (Vårdcentralen, which is being completed as of the date of this report, the beginning of March 2014), where damp problems have been discovered and rectified. All of the properties in the portfolio have been fully leased and let under long-term contracts as of 1 April 2014. (Nordvästra Skånes Vatten och Avlopp, NSVA, is moving into Gajaden on 1 April 2014 with a five-year lease) 3Hus’ profitability was boosted during the year, primarily due to Anekdoten being fully leased for the whole year. The business has however been impacted by development costs related to the Resedan project and the costs of providing temporary accommodation for the lessee (the county council, Region Skåne) in temporary housing outside of the clinic while it was being renovated. 3Hus’ profitability will be given a strong boost in the future as a new lease with Region Skåne comes into force on 1 April 2014 and move-in to Resedan commences on 1 June. 2014. 3Hus acquired the Backsippan block in central Åstorp from Brinova effective 1 July 2014 and we are currently planning to develop this area with rental flats, with the first phase expected to begin during the second half of 2015. Draken’s year, which ended on 9 February 2013 according to the Chinese calendar [Draken means dragon in Swedish], became the beginning of a year of disappointment for Draken i Reftele AB. We lost volume and got the timing of raw material purchases ”wrong” the whole year. This in combination with stiffening competi-

tion for the construction film market, which is important to us, led to an erosion of the Company’s margins over the year and a profit of SEK 5 million for the 2012 calendar year was turned into a loss of SEK 1 million for the full year in 2013. We have tried to counter this with rationalisation measures in production and in sales and administration, but have only partially succeeded. We ordered modern welding equipment to replace old equipment (one modern weld replaces three old ones) at a price of approximately SEK 1.5 million in the summer and delivery and installation is taking place as of the date of this report. Draken is thus well-equipped with largely modern machinery and must now focus on bringing in new business, especially from the industrial sector, to quickly regain its historic sound profitability levels. Olofssons Hyvleri went into 2013 with a heavily slimmed-down organisation after a brutal 2012 with plans and hopes to minimise the damage from the historically weak market situation we are in the middle of now. We succeeded in reducing the loss from 2012 by SEK 2 million and ended the year with an SEK 8 million loss, however, with the deduction of an SEK 1 million one-time cost concerning a warranty dispute with a customer that was settled in arbitration, it would have been correspondingly better. The magnitude of the loss is of course unacceptable, but it includes depreciation and amortisation of SEK 3 million, interest of SEK 1 million and lease expenses (expiring after January 2015) of SEK 2.3 million. We forecast that the loss will continue to fall in 2014 in tandem with improved market conditions and efficiency improvements in Olofssons. If the lease expenses are considered ”amortisation”, the Company will make it into the black in 2014 on the EBITDA level. The strategy going forward will thus continue in the vein of limited investments combined with streamlining and rationalisation measures until the company breaks even. Living Story was in the middle of relocating its newly acquired operations in Kumla (Alma Design Group was sold back to its former owners in the end of January since certain terms and conditions in the share transfer agreement signed on 1 November 2012 had not been met) to Åstorp at the beginning of

2013 and hopes were high that this would lead to a strong increase in volumes and the start of a good growth trend for Living Story. In line with this, a number of employees from Alma Design were absorbed, a new sales manager was hired and preparations were made to manage larger volumes, resulting in increased staffing in the storage function in Åstorp. In the beginning of April, we realised that all of our hopes were being shattered and we had to really slam on the brakes to bring down the cost structure. This work has been ongoing all year and hit the business with large costs at the same time as reality caught up with the company since the market was unwilling to pay the list prices for the large volume of goods in stock that had been purchased in line with the plan to significantly increase the sales volume. During the second half of 2013, we continued to make personnel and cost cuts to try to minimise the damage from the previous wrong decisions. In the beginning of 2014, we are still sitting on a far too large stock (stock value approximately SEK 10 million), but we have a substantially slimmed-down organisation. We will continue to deplete the stock for the rest of 2014, but are forecasting a heavy loss for this year too, but not as heavy as the SEK 12 million we had both of the past two calendar years. The BrA Group can look back on a year with substantially greater profitability in comparison to past years in 2013, but still at a level clearly below the targets we set. The KB Group, by virtue of its size and earning capacity, has established itself as the Group’s ”locomotive” and we have very high expectations for this group in the coming years. The Dogman Group is going into 2014 with significantly lower costs and this group will generate significantly higher earnings in the future just by retaining its volumes. The construction and property businesses will probably perform well going forward by virtue of increasing rent revenue from ongoing property projects and by virtue of a construction market that is getting stronger slowly but surely. The above, together with our forecast of lower losses for both Olofsson and Living Story and that we expect Draken to return to normal earning levels, gives us a very optimistic view of 2014 and the future ahead! ANNUAL REPORT 2013 – 21


BRA INVEST – BETTER BUSINESS

Management’s Review continued

Important events in 2013

Proposed distribution of profit

- BrA Invest increased its ownership in KB Components from 71.25% to 72.50% as of 1 July 2013.

The following amounts are at the disposal of the Annual General Meeting (in SEK):

- KB Components acquired 100% of the shares in Plastunion AB (1 June 2013)

Retained earnings

34,362,112

Net profit for the year

11,907,902

- A decision was made to move KB Components’ operations in Värnamo (Årevall) to the KB Group’s other production units

Total

46,270,014

The Board of Directors proposes the following distribution of profit:

- 3Hus began construction of 32 rental flats in central Åstorp (Resedan area)

To be carried forward

- 3Hus acquired the Backsippan block in central Åstorp for future development of housing

46,270,014

Total

46,270,014

For more information about the results of operations and financial position of the company, please see the Income Statements and Balance Sheets of both the Group and the Parent Company, with the Additional Disclosures and Notes. All amounts are stated in SEK thousands.

- Extensive renovation of the local clinic (Vårdcentralen) was begun during the year and was completed at the end of March 2014

The Group’s results of operations and financial position Ksek

2013

Net sales Profit after financial items

2011

2010

2009

2008

1,278,531 1,260,159 1,111,851

2012

918,699

837,073

538,507

27,071

16,593

12,440

82,330

42,722

17,562

Total assets

718,831

611,251

637,692

459,287

451,419

256,614

Equity including minority interests

137,802

123,802

116,600

148,744

80,877

31,712

19,2%

20,3%

18,3%

32,4%

17,9%

12,4%

2,1%

1,3%

1,1%

9,0%

5,1%

3,3%

Equity-asset ratio including minority interests Profit margin Interest cover ratio Return on equity

4,0

2,7

2,8

21,8

12,9

4,6

10,9%

5,1%

5,3%

85,6%

92,7%

51,7%

Msek 1200

100,0%

2013

90,0%

2012

1000

80,0%

2011

70,0%

2010

60,0%

2009

50,0%

2008

800 600

40,0% 400

30,0% 20,0%

200

10,0% 0

Net sales Nettoomsättning

22 – ANNUAL REPORT 2013

Resultatet efter finansiella poster items Profit after financial

Total assets Balansomslutning

Equity including minority interests Eget kapital inkl minoritetsintressen

0,0%

Equity-asset ratio including Soliditet inkl. minoritetsintressen minority interests


BRA INVEST – BETTER BUSINESS

Income Statement for the Group Ksek

Note

2013

2012

2

Operating income: Net sales

1,278,531

1,260,159

Change in inventories

2,540

-1,395

Own work capitalised

27,359

11,885

Other operating income

3,654

3,155

1,312,084

1,273,804

Raw materials and consumables

-540,354

-538,428

Goods for resale

-276,988

-280,231

4,5

-141,934

-133,081

3

-284,940

-266,140

-32,023

-30,343

Operating expenses:

Other external expenses Personnel expenses Depreciation of property, plant and equipment, and amortisation of intangible assets Other operating expenses

Operating profit

-331

-338

-1,276,570

-1,248,561

35,514

25,243

723

837

-9,166

-9,487

27,071

16,593

Profit from financial investments: Interest income Interest expenses

Profit after financial items

Tax on profit for the year Minority interest in profit for the year

NET PROFIT FOR THE YEAR

7

-8,070

-5,934

-7,552

-5,704

11,449

4,955

ANNUAL REPORT 2013 – 23


BRA INVEST – BETTER BUSINESS

Balance Sheet for the Group SEK 1,000 as at 31 December

Note

2013

2012

230

400

Non-current assets Intangible assets

8

Trademarks Goodwill

Property, plant and equipment

46,226

42,134

46,456

42,534

150,361

134,054

9

Land and buildings Plant and machinery

64,070

51,536

Equipment, tools and fixtures & fittings

25,876

29,452

Work in progress and prepayments for property, plant and equipment

30,671

4,151

270,978

219,193

24

24

Financial assets Other non-current securities holdings Deferred tax assets

14

Other non-current receivables

Total non-current assets

0

2,417

1,766

1,687

1,790

4,128

319,224

265,855

72,947

53,521

99

1,935

91,407

92,294

0

1,027

3,840

17

168,293

148,794

198,553

162,738

Current assets Inventories, etc. Raw materials and consumables Goods in progress Finished goods and goods for resale Work in progress Prepayments to suppliers

Current receivables Trade receivables Tax assets Other receivables Income recognised, but not invoiced

11

Prepaid expenses and accrued income

12

0

626

5,764

2,523

13,596

14,764

9,259

11,175

227,172

191,826

4,142

4,776

Total current assets

399,607

345,396

TOTAL ASSETS

718,831

611,251

Cash and bank balances

24 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Balance Sheet for the Group SEK 1,000 as at 31 December

Note

2013

2012

EQUITY AND LIABILITIES

Equity

13

Share capital

100

100

Restricted equity

15,041

6,567

Unrestricted equity

83,889

88,247

Net profit for the year

11,449

4,955

110,479

99,869

27,323

23,933

6,095

0

Total equity

Minority interests

Provisions Deferred tax liabilities

14

Other provisions

15

Total provisions

2,418

2,163

8,513

2,163

Non-current liabilities Overdraft facility

16

92,093

82,554

Building credit facility

16

27,000

7,000

Invoice credit facility

16

21,606

26,406

Other debt to credit institutions

17

149,300

151,465

Other liabilities Total non-current liabilities

293

0

290,292

267,425

16,125

14,999

Current liabilities Debt to credit institutions Prepayments from customers Income invoiced, but not recognised

11

Trade payables Current tax liabilities

3,008

1,329

10,792

4,936

158,155

124,116

4,810

0

32,371

21,853

56,963

50,628

Total current liabilities

282,224

217,861

TOTAL EQUITY AND LIABILITIES

718,831

611,251

501,984

451,422

None

None

Other liabilities Accrued expenses and prepaid income

12

MEMORANDUM ITEMS

Pledged assets

Contingent liabilities

18

ANNUAL REPORT 2013 – 25


BRA INVEST – BETTER BUSINESS

Cash Flow Statement for the Group SEK 1,000 as at 31 December

2013

2012

Operating activities Profit after financial items

27,071

16,593

Adjustments for non-cash items

32,113

28,268

Tax for the year Cash flow from operating activities before changes in working capital

-5,724

-5,262

53,460

39,599

Decrease/increase in inventories

4,594

-1,806

Decrease/increase in operating receivables

-6,583

14,852

Decrease/increase in operating liabilities

26,730

-37,197

Cash flow from operating activities

78,201

15,448

Investing activities Acquisition of subsidiaries Net investment in intangible assets Net investment in property, plant and equipment Change in non-current receivables Cash flow from investing activities

-43,600

-323

528

2,379

-54,084

-31,189

-79

-36

-97,235

-29,169

Financing activities Net change in loans

22,447

6,159

Minority

-3,208

-3,259

Translation difference in equity

-839

-145

18,400

2,755

-634

-10,966

Cash and cash equivalents at beginning of year

4,776

15,742

Cash and cash equivalents at end of year

4,142

4,776

Cash flow from financing activities

CASH FLOW FOR THE YEAR

Unutilised overdraft facilities according to Note 16

35,534

25,939

Available cash and cash equivalents at end of year

39,676

30,715

26 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Income Statement for the Parent Company SEK 1,000 as at 31 December

Note

2013

2012

4,920

4,165

Operating income: Net sales Other operating income

3

0

4,923

4,165

Operating expenses: Other external expenses

4

-2,947

-3,091

Personnel expenses

3

-3,567

-4,417

Depreciation of property, plant and equipment

Operating profit

-16

-13

-6,530

-7,521

1

-1,607

-3 356

6

16,270

22,546

1,848

1,689

Profit from financial investments: Profit from investments in Group companies Interest income, the Group Other interest income Interest expenses, the Group Other interest expenses Profit after financial items Tax on profit for the year NET PROFIT FOR THE YEAR

7

0

78

-1,019

-1,243

-977

-821

14,515

18,893

-2,607

-4,359

11,908

14,534

ANNUAL REPORT 2013 – 27


BRA INVEST – BETTER BUSINESS

Balance Sheet for the Parent Company SEK 1,000 as at 31 December

Note

2013

2012

ASSETS Non-current assets Property, plant and equipment Equipment, tools and fixtures & fittings

9

14

17

14

17

68,388

Financial assets Investments in Group companies

10

69,488

Deferred tax assets

14

4,726

2,409

74,214

70,797

74,228

70,814

41,100

58,412

0

130

Total non-current assets Current assets Current receivables Receivables from group companies Other receivables Prepaid expenses and accrued income

Total current assets TOTAL ASSETS

28 – ANNUAL REPORT 2013

12

242

99

41,342

58,641

41,342

58,641

115,570

129,455


BRA INVEST – BETTER BUSINESS

Balance Sheet for the Parent Company SEK 1,000 as at 31 December

Note

2013

2012

EQUITY AND LIABILITIES

Equity

13

Restricted equity Share capital - 1,000 shares

100

100

Total restricted equity

100

100

Unrestricted equity Retained earnings

34,362

37,285

Net profit for the year

11,908

14,534

Total unrestricted equity

46,270

51,819

Total equity

46,370

51,919

25,989

33,448

25,989

33,448

726

360

35,128

33,180

Non-current liabilities Overdraft facility

16

Total non-current liabilities

Current liabilities Trade payables Liabilities to group companies Current tax liabilities Other liabilities Accrued expenses and prepaid income

12

Total current liabilities

TOTAL EQUITY AND LIABILITIES

92

46

6,258

9,143

1,007

1,359

43,211

44,088

115,570

129,455

MEMORANDUM ITEMS

Pledged assets

18

69,488

68,388

Contingent liabilities

18

189,604

164,054

ANNUAL REPORT 2013 – 29


BRA INVEST – BETTER BUSINESS

Cash Flow Statement for the Parent Company SEK 1,000

2013

2012

14,515

18,893

16

8,660

0

0

Operating activities Profit after financial items Adjustments for non-cash items Tax for the year Cash flow from operating activities before changes in working capital

14,531

27,553

Decrease/increase in operating receivables

17,299

-33,423

Decrease/increase in operating liabilities

-877

1,702

30,953

-4,168

-23,481

-24,443

-13

0

-23,494

-24,443

Net change in loans

-7,459

28,611

Cash flow from financing activities

-7,459

28,611

0

0

Cash flow from operating activities

Investing activities Investments in subsidiaries Net investment in property, plant and equipment Cash flow from investing activities

Financing activities

CASH FLOW FOR THE YEAR Cash and cash equivalents at beginning of year

0

0

Cash and cash equivalents at end of year

0

0

Unutilised overdraft facilities according to Note 16

16,011

8,552

Available cash and cash equivalents at end of year

16,011

8,552

30 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Additional Disclosures Accounting policies

Recognition of income tax

The accounting policies applied comply with the Swedish Annual Accounts Act and the general recommendations of the Swedish Accounting Standards Board. In the absence of general recommendations from the Accounting Standards Board, guidance has been obtained in the recommendations of the Swedish Financing Accounting Standards Council and, where appropriate, from the statements of the Swedish Institute of Authorised Public Accountants (FAR SRS). In such case, this is stated as a separate disclosure below.

Recognised income tax includes current tax, adjustments concerning current tax in previous years, and changes in deferred tax. All current tax payable/ receivable is valued at nominal amounts and in accordance with the tax rules and tax rates adopted or that have been announced and are very likely to be adopted.

The accounting policies applied are unchanged from previous years.

For items that are recognised in the Income Statement, the related tax effects are also recognised in the Income Statement. Tax is recognised directly to equity if the tax is attributable to items that are recognised directly to equity.

General

Deferred tax is calculated according to the balance sheet liability method on all significant temporary differences between the carrying amounts and taxable values of assets and liabilities. The temporary differences arise mainly via untaxed reserves.

The Group’s financial statements include subsidiaries in which the Parent Company directly or indirectly holds more than 50% of the votes or otherwise has a controlling influence.

Deferred tax assets concerning loss carry-forwards or future tax deductions are recognised only to the extent that it is probable that the deductions can be settled against future taxable profit.

Companies that are acquired or divested during the current year are recognised in the Group’s financial statements for the part of the year that the company was held by the Group.

No deferred tax is recognised on temporary differences in properties as these are expected to be divested in a way that does not trigger taxation.

Group financial statements

The Group’s financial statements are presented on the basis of the acquisition method. This entails that the assets and liabilities of acquired subsidiaries are recognised at market value according to a completed acquisition analysis. If the acquisition value of shares in subsidiaries exceeds the estimated market value of the company’s net assets according to the acquisition analysis, the difference is recognised as goodwill. Amortisation of goodwill is based on the calculated economic useful life. Translation of foreign subsidiaries The current exchange rate method is applied to the translation of the total assets of foreign subsidiaries. This entails that the assets and liabilities of foreign subsidiaries are recognised at the exchange rates on the balance sheet date. Items included in equity are recognised at the exchange rates prevailing on the respective acquisition dates. All items of the Income Statement are translated at the average exchange rates for the year. Translation differences are carried directly to Group equity. Minority interests The minority share of the Group’s net profit is recognised in the Income Statement for the Group. The minority share of subsidiaries’ equity is recognised in a separate item of the Group’s Balance Sheet.

Income recognition

Due to the relationship between recognition and taxation, the deferred tax liability on untaxed reserves is recognised in the parent company as part of the untaxed reserves.

Inventories Inventories are measured at the lower of cost and net realisable value. Deductions are made for obsolescence.

Receivables Receivables are recognised at the amount that is estimated to be paid, based on an individual assessment.

Receivables and liabilities in foreign currencies Receivables and liabilities denominated in foreign currencies are stated at the exchange rates on the balance sheet. If hedging transactions are used, such as forward foreign exchange contracts, the forward exchange rate is used.

Provisions and liabilities Liabilities are recognised at cost subject to the customary reservations for accrued costs. Provisions are made for known or probable risks based on individual assessment.

General Income is recognised to the extent that the economic benefits are likely to accrue to the company, and the income can be calculated on a reliable basis. Recognition of construction contracts and similar commissions The company reports performed contracts – at fixed price and current account – in accordance with the general principle of the Swedish Accounting Standards Board in BFNAR 2003:3. The principle is called successive profit settlement and entails that income and expenses are recognised in the Income Statement as a ratio of the degree of completion of the contract. The degree of completion is determined on the basis of the actual project costs as a ratio of the calculated project costs of the entire contract. Recognised income comprises the degree of completion as a ratio of the total income calculated for the entire contract.

Intangible assets and property, plant and equipment Intangible assets and property, plant and equipment are recognised at cost less accumulated depreciation or amortisation and any impairment. Cost includes the acquisition price and the costs that are directly attributable to the asset for its installation and preparation for use in accordance with the purpose of its acquisition. The gain or loss on the divestment or disposal of an asset is the difference between the sales price and the carrying amount of the asset, after deduction of direct sales costs. The incurred gain or loss is recognised as operating profit. Depreciation and amortisation are based on original cost less the calculated residual value equivalent to zero. Depreciation takes place on a straight-line basis over the estimated useful life of the asset: Capitalised development expenses

A precondition for successive profit settlement is that the outcome can be calculated on a reliable basis. For commissions for which the outcome cannot be calculated reliably, income equivalent to the actual costs is recognised. Expected losses are carried as costs as soon as they are known.

Trademarks

Construction contracts are recognised in the Balance Sheet project by project either as Recognised, but not invoiced income under current assets, or as Invoiced, but not recognised income under current liabilities. Projects with higher recognised income than invoiced are recognised as assets, while projects invoiced for more than recognised income are recognised as liabilities.

Sites

Recognition of properties

3 years 5 years

Goodwill

5-20 years

Buildings

33-100 years 20 years

Plant and machinery

5-10 years

Equipment, tools and fixtures & fittings

4-10 years

The term of amortisation of Group goodwill concerning acquired companies is 5-20 years as these acquisitions are assessed to

Properties are recognised at cost less accumulated depreciation. The Group’s properties are recognised in the Balance Sheet as non-current assets. For reconstruction projects, the part of the investment that can be classed as maintenance is carried as a cost.

ANNUAL REPORT 2013 – 31


BRA INVEST – BETTER BUSINESS

Financial income and expenses Financial income and expenses consist of interest income on bank deposits, receivables and interest-bearing securities, interest expenses, distributed income, and realised gains and losses on financial investments. Interest income and interest expenses include accrued amounts.

Financial risk management Interest rate risk Existing interest-bearing debt carries variable interest rates. Currency risk The business is in principle exposed to certain transaction risks. The company does not normally use forward contracts or similar financial instruments. Credit risk The business involves a large number of customers with varying credit ratings. The company suffers very few customer losses, among other things due to credit rating checks and credit limits. The credit risk is estimated to be limited. Liquidity risk In recent years, the Company has reported large positive cash flows from the company’s operations. Completed investments have been financed with loans and the Company’s own funds. Continuing sound profitability means that the liquidity risk is deemed to be low.

Definition of key ratios Profit margin Profit after financial items as a percentage of net sales. Interest cover ratio Profit after financial items plus interest expenses divided by interest expenses. Return on equity Net profit as a percentage of average equity. Net equity-asset ratio Adjusted equity as a ratio of total assets Equity-asset ratio including minority interests Group equity + minority interests as a percentage of total assets.

32 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Notes Note 1 Purchases and sales between Group companies The Parent Company’s sales are all internal within the Group. The Parent Company’s purchases from companies in the Group are SEK 418 thousand (SEK 558 thousand).

Note 2 Net sales per segment Group

2013

2012

Manufacture of plastic components

511,777

418,002

Pet item business

351,399

359,540

Construction business

228,849

260,454

Production of plastic products

84,145

100,929

Planing

72,085

93,413

Decoration product business

25,772

23,564

Property management Total

4,504

4,257

1,278,531

1,260,159

Note 3 Personnel 2013 Average number of employees

2012

Number

of whom women

Number

of whom women

4

25%

5

20%

Subsidiaries

592

36%

560

33%

Group total

596

36%

565

33%

Parent company

Gender distribution of company management Board of Directors

3

0%

2

0%

CEO and other company management, Parent Company

1

100%

3

33%

CEO and other company management, subsidiaries

11

18%

11

18%

Other employees Board of Directors and CEO

Other employees

Salaries and other remuneration

Board of Directors and CEO

Parent company

1,203

673

1,503

1,155

Subsidiaries

6,953

193,309

6,807

179,417

Group total

8,156

193,982

8,310

180,572

Invoiced directors’ fees are

Pension costs Parent company

0

610

Board of Directors and CEO

Other employees Board of Directors and CEO

Other employees

272

139

203

185

Subsidiaries

1,090

13,056

1,327

12,308

Group total

1,362

13,195

1,530

12,493

Other social security expenses Parent company

All

All

699

959

Subsidiaries

60,437

55,620

Group total

61,136

56,579

There are no outstanding pension obligations to the management of the Parent Company or the Group.

ANNUAL REPORT 2013 – 33


BRA INVEST – BETTER BUSINESS

Note 4 Audit fees 2013

2012

Audit services

Other services

Audit services

Other services

Mazars SET Revisionsbyrå AB

779

222

703

610

Other auditors

160

38

127

49

Group total

939

260

830

659

Audit services are the auditors’ statutory audit. Audit fees concerning audit by Mazars SET Revisionsbyrå AB are charged to the Parent Company BrA Invest CKS AB in their entirety as from and including 2012.

Note 5 Lease fees Group

Lease fees total

Parent company

2013

2012

2013

2012

7,790

9,837

0

0

Note 6 Profit from financial investments Parent company Profit from investments in Group companies

2013

2012

Anticipated dividend

2,700

12,775

Group contributions

13,570

18,418

0

-8,647

16,270

22,546

Impairment Total

Note 7 Tax on the profit for the year Group 2013 Tax effect, Group contributions

Parent company 2012

2013

2012 -6,343

0

0

-4,924

-5,723

-5,262

0

0

-1

0

0

0

Deferred tax

-2,346

-672

2,317

1,984

Total

-8,070

-5,934

-2,607

-4,359

Current tax, tax for the year Current tax, tax in previous years

34 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Note 8 Intangible assets Group 2013

2012

Opening cost

486

486

Sales/disposals

-160

0

Capitalised costs

Closing cost

326

486

Opening amortisation

-486

-486

Sales/disposals

160

0

-326

-486

0

0

Closing amortisation Carrying amount

Trademarks Opening cost

5,231

5,231

Closing cost

5,231

5,231

Opening amortisation

-4,831

-4,662

Amortisation for the year

-170

-169

-5,001

-4,831

230

400

Opening cost

62,355

65,557

Acquisition of subsidiaries

Closing amortisation Carrying amount

Goodwill

11,463

0

Purchases

0

-2,210

Sales/disposals

0

-1,153

Translation difference

-1,043

161

Closing cost

72,775

62,355

Opening amortisation

-20,221

-14,822

-6,843

-6,492

0

1,153

Translation difference

515

-60

Closing amortisation

-26,549

-20,221

Carrying amount

46,226

42,134

Amortisation for the year Sales/disposals

ANNUAL REPORT 2013 – 35


BRA INVEST – BETTER BUSINESS

Note 9 Property, plant and equipment Group

Parent company

2013

2012

150,210

120,468

2013

2012

38

Land and buildings Opening cost Acquisition of subsidiaries Purchases Reclassifications Sales/disposals

25,223

0

7,376

22,012

0

7,730

-221

0

182,588

150,210

Opening depreciation

-16,156

-13,691

Acquisition of subsidiaries

-13,274

0

Closing cost

Sales/disposals Depreciation for the year Closing depreciation Carrying amount

67

0

-2,864

-2,465

-32,227

-16,156

150,361

134,054

222,981

223,688

Plant and machinery Opening cost Acquisition of subsidiaries

69,209

0

Purchases

12,388

5,564

Sales/disposals

-3,145

-6,364

Reclassifications

9,703

93

362

0

Translation difference Closing cost

311,498

222,981

Opening depreciation

-171,445

-166,521

Acquisition of subsidiaries

-58,675

0

Sales/disposals

2,885

5,987

Reclassifications

-6,910

0

-13,258

-10,911

Translation difference

-25

0

Closing depreciation

-247,428

-171,445

64,070

51,536

162,236

152,444

38

7,831

13,308

13

0

-743

-4,087

0

0

299

-295

0

0

-9,525

866

0

0

Depreciation for the year

Carrying amount

Equipment, tools and fixtures & fittings Opening cost Purchases Sales/disposals Translation difference Reclassifications Closing cost

160,098

162,236

51

38

Opening depreciation

-132,784

-125,319

-21

-9

Sales/disposals Amortisation for the year Translation difference Reclassifications Closing depreciation

743

3,319

0

0

-8,889

-10,311

-16

-12

-202

181

0

0

6,910

-654

0

0 -21

-134,222

-132,784

-37

Opening impairment

0

-36

0

0

Sales/disposals

0

36

0

0

Closing impairment

0

0

0

0

25,876

29,452

14

17

Carrying amount

36 – ANNUAL REPORT 2013


BRA INVEST – BETTER BUSINESS

Note 10 Investments in Group companies Parent company

Opening cost Acquisitions

2013

2012

81,248

80,925

1,100

323

Closing cost

82,348

81,248

Opening impairment

-12,860

-4,213

Impairment for the year

0

-8,647

Closing impairment

-12,860

-12,860

Carrying amount

69,488

68,388

Information concerning subsidiaries Company name and registered office

Reg. no.

Capital/ Votes

Number of shares

Carrying amount

1,143

Direct ownership BAB Byggtjänst AB, Åstorp

556608-9669

90%

1,350

Fastighets AB 3Hus, Åstorp

556739-8010

100%

1,000

100

Draken i Reftele AB, Gislaved

556476-2093

100%

4,000

9,833 24,750

Dogman AB, Åstorp

556493-9519

95%

28,500

Olofssons Hyvleri AB, Vrigstad

556386-4668

100%

10,000

1,350

KB Components AB, Örkelljunga

556081-6653

72,5%

406,000

16,885

Living Story AB, Åstorp

556304-6803

100%

11,000

7,077

Fastighets AB Västra vägen, Åstorp

556825-8650

100%

500

2,050

Fastighets AB Vårdsippan, Åstorp

556825-8635

100%

500

4,050

Fastighets AB Backsippan 14-16, Åstorp

556932-5441

100%

50

50

Fastighets AB Resedan, Åstorp

556926-5621

100%

50

50

Gajadfastigheten i Åstorp AB, Åstorp

556826-1944

100%

500

50

Mässhallen i Åstorp AB, Åstorp

556838-8622

100%

500

50

Fastighets AB Bjuvstorp 6:42, Åstorp

556825-9070

100%

500

2,050

Total

69,488

Information concerning subsidiaries Company name and registered office

Reg. no.

Capital/ Votes

Number of shares

986 467 025

95%

100

29 41 44 91

95%

125,000

2366900-6

95%

100

556306-9581

72,5%

1,000

Indirect ownership Dogman AS, Hagan, Norge Dogman Aps, Bröndby, Danmark Dogman OY, Åbo, Finland KB System AB, Örkelljunga

300 066 964

72,5%

10

KB Components Årevall AB, Värnamo

KB Components UAB, Kaunas, Litauen

556498-0885

72,5%

5,000

KB Components Plastunion AB, Anderstorp

556181-5209

72,5%

30,000

ANNUAL REPORT 2013 – 37


BRA INVEST – BETTER BUSINESS

Note 11 Construction work in progress Group 2013

2012

Income recognised, but not invoiced Recognised income for construction work in progress

120,343

77,855

Invoiced for construction work in progress

-106,747

-63,091

13,596

14,764

Recognised income for construction work in progress

-53,414

-36,232

Invoiced for construction work in progress

64,206

41,168

Total

10,792

4,936

2,804

9,828

Total

Income invoiced, but not recognised

Net construction work in progress

Note 12 Accrued items Group 2013

Parent company 2012

2013

2012

99

Prepaid expenses and accrued income Prepaid expenses

6,982

9,274

242

Accrued income

2,277

1,901

0

0

Total

9,259

11,175

242

99

Accrued personnel expenses

48,618

40,071

318

659

Accrued bonus to customers

3,190

3,123

0

0

Other accrued expenses

4,073

6,352

689

700

Prepaid income

1,082

1,082

0

0

56,963

50,628

1,007

1,359

Share capital

Restricted equity

Unrestricted equity

100

6,567

93,202

-3

-836

Accrued expenses and prepaid income

Total

Note 13 Equity Group Opening balance Translation difference Adjustments between restricted and unrestricted equity

8,477

Net profit for the year

-8,477 11,449

Closing balance

100

15,041

95,338

Parent company

Share capital

Restricted equity

Unrestricted equity

Opening balance

100

Group contributions Tax effect of Group contributions

4,924

Net profit for the year Closing balance

38 – ANNUAL REPORT 2013

51,819 -22,381

11,908 100

46,270


BRA INVEST – BETTER BUSINESS

Note 14 Deferred tax assets/liabilities The temporary differences have resulted in deferred tax assets and liabilities concerning the following:

Group

Untaxed reserves Non-current assets

Parent company

2013

2012

2013

2012

-12,871

-3,927

0

0

-644

-481

0

0

Other assets

415

381

0

0

Provisions

594

528

0

0

6,411

5,916

4,726

2,409

Loss of which blocked for taxation in 2015 Total

327

327

184

184

-6,095

2,417

4,726

2,409

Note 15 Other provisions Group 2013

2012

Pensions

2,418

2,163

Total

2,418

2,163

Note 16 Credit limits Group

Parent company

2013

2012

2013

2012

127,627

108,493

42,000

42,000

35,534

25,939

16,011

8,552

27,000

7,000

0

0

30,000

30,000

0

0

Overdraft facility Limit granted Unutilised credit facility Building credit facility Limit granted Invoice credit facility Limit granted

Note 17 Non-current liabilities Group

Loans falling due within 2-5 years Loans falling due after 5 years

2013

2012

39,424

39,086

110,169

112,379

ANNUAL REPORT 2013 – 39


BRA INVEST – BETTER BUSINESS

Note 18 Memorandum items Group

Parent company

2013

2012

2013

2012

Business mortgages

156,000

138,400

0

0

Property mortgages

157,750

137,250

0

0

Shares in subsidiaries

136,288

129,113

69,488

68,388

31,021

35,086

0

0

1,674

1,554

0

0

19,251

10,019

0

0

501,984

451,422

69,488

68,388

Surety for subsidiaries

0

0

189,604

164,054

Total contingent liabilities

0

0

189,604

164,054

Pledged assets

Mortgaged trade receivables Capital insurance Other pledged assets Total pledges

Contingent liabilities

Åstorp 28 March 2014

Stefan Andersson

Kenneth Andersson

Christer Andersson

CEO

Chairman

Board Member

My audit report was submitted on 28 March 2014

Bo Matson Authorised Public Accountant

40 – ANNUAL REPORT 2013


Revisionsberättelse To the Annual General Meeting of BrA Invest CKS AB, Reg. no. 556753-2501 Report on the Annual Report and Consolidated Financial Statements I have audited the Annual Report and Consolidated Financial Statements of BrA Invest CKS AB for the year 2013. The company’s Annual Report and Consolidated Financial Statements are presented on pages 20-40 of the printed edition of this document. The responsibility of the Board of Directors and CEO for the Annual Report and Consolidated Financial Statements The Board of Directors and the CEO are responsible for the presentation of an Annual Report that presents a true and fair view in accordance with the Swedish Annual Accounts Act, as well as Consolidated Financial Statements that present a true and fair view in accordance with the Swedish Annual Accounts Act, and for the internal controls deemed necessary by the Board of Directors and the CEO in order to present an Annual Report and Consolidated Financial Statements that are free of material misstatement, whether due to inaccuracies or errors. Responsibility of the auditor It is my responsibility to state an opinion concerning the Annual Report and the Consolidated Financial Statements on the basis of my audit. I conducted my audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. These standards require that I comply with ethical business requirements and plan and perform the audit to obtain reasonable assurance that the Annual Report and the Consolidated Financial Statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and other disclosures in the Annual Report and the Consolidated Financial Statements. The auditor selects which measures to perform, among other things by assessing the risks of material misstatement in the Annual Report and the Consolidated Financial Statements, whether due to inaccuracies or errors. In this risk assessment, the auditor considers the elements of the internal control that are relevant to how the company presents the Annual Report and the Consolidated Financial Statements in order to present a true and fair view, for the purpose of performing the assessments that are appropriate in the circumstances, but not to state an opinion on the effectiveness of the company’s internal control. An audit also includes an assessment of the appropriateness of the accounting policies applied and the reasonableness of the estimates made by the Board of Directors and the CEO in the Annual Report, as well as evaluating the overall presentation of the Annual Report and the Consolidated Financial Statements.

elements of the Annual Report and the Consolidated Financial Statements. I therefore recommend the Income Statements and Balance Sheets of the Parent Company and the Group for adoption by the Annual General Meeting. Report on other statutory requirements and other provisions In addition to my audit of the Annual Report and the Consolidated Financial Statements, I have also audited the proposal for allocation of the company’s profit or loss, as well as the management of BrA Invest CKS AB for the year 2013 by the Board of Directors and CEO. The responsibility of the Board of Directors and the CEO The Board of Directors is responsible for the proposal for allocation of the company’s profit or loss, and the Board of Directors and CEO are responsible for the management of the company in accordance with the Swedish Companies Act. Responsibility of the auditor On the basis of my audit, it is my responsibility to state an opinion with reasonable certainty concerning the proposal for allocation of the company’s profit or loss and on the management of the company. I conducted my audit in accordance with generally accepted auditing standards in Sweden. As the basis for my opinion on the Board of Directors’ proposal for allocation of the company’s profit or loss, I have examined whether the proposal is in accordance with the Swedish Companies Act. As the basis for my opinion concerning discharge from liability, in addition to my audit of the Annual Report and the Consolidated Financial Statements, I have examined significant decisions, measures and circumstances of the company in order to assess whether any member of the Board of Directors or the CEO has any indemnification liability to the company. I have also examined whether any member of the Board of Directors or the CEO has otherwise infringed the Swedish Companies Act, Annual Accounts Act, or the company’s Articles of Association. I consider the audit evidence I have obtained to be sufficient and appropriate as the basis for my opinion. Opinion I recommend that the Annual General Meeting adopt the distribution of the profit in accordance with the proposal in the Management’s Review and discharge the members of the Board of Directors and the CEO from liability for the financial year.

I consider the audit evidence I have obtained to be sufficient and appropriate as the basis for my opinion. Opinions I believe that the Annual Report and the Consolidated Financial Statements are presented in accordance with the Annual Accounts Act and in all material respects present a true and fair view of the financial position of the Parent Company and the Group as of 31 December 2013 and of their financial performance and cash flows for the year in accordance with the Annual Accounts Act. The Management’s Review is in harmony with the other

Helsingborg 28 March 2014

Bo Matson Authorised Public Accountant

ANNUAL REPORT 2013 – 41


BRA INVEST – BETTER BUSINESS

Board of Directors and auditors

Stefan Andersson, born 1964

Auditor

Member of the Board of Directors and CEO since 2008

Bo Matson, born 1952

Education and professional experience: MSc (Eng), Mechanical Engineering, Master of Business Administration, CEO and President of BrA Invest since 2008, CEO of Gunnebo Troax AB and member of Gunnebo’s Executive Management Board, 2002-2008, Division Manager, Atlas Copco Secoroc, 2000-2002, Division Manager, Trelleborg Protective Products, 1996-2000, other management positions in ABB Stal, 1988-1996 in such locations as Finspång, North Brunswick, NJ, USA and Nuremberg, Germany.

Authorised Public Accountant, Mazars SET Revisionsbyrå AB

Current Board positions: Chairman of the Boards of all subsidiaries of BrA Invest. Member of the Board of Directors of the Chamber of Commerce and Industry of Southern Sweden.

Kenneth Andersson, born 1966 Chairman Has experience in the construction, property and retail industry. Worked at external companies between 1986 and 2001, and in an executive position since 1997. He has served as a CEO in the BrA Group’s companies since 2001.

Christer Andersson, born 1968 Board Member Has a background in the construction and property industry. He has held executive positions since 1989 at external companies and within the BrA Group since 2001.

42 – ANNUAL REPORT 2013

Other audit responsibilities: Among others Marco Group, Stenbocken, Ulf Malmgren Gruppen, Godbiten.

Alternate auditor

Rose-Marie Östberg, born 1963 Authorised Public Accountant, Mazars SET Revisionsbyrå AB Other audit responsibilities: Among others Öresundskraft, Helsingborgshem, HSB Nordvästra Skåne, Mäster Grön


”For BrA Invest, 2013 has been a year of hard work to raise the profitability of our portfolio companies. We are now beginning to reap the rewards of that work. In conclusion, with that said, a positive outlook emerges where we are expecting a strong profit boost in 2014 for all Group companies.” Stefan Andersson, CEO BrA Invest CKS AB

ANNUAL REPORT 2013 – 43


T H O R N R E K L A M BY R Å

BrA Invest – Box 163 – SE-265 22 Åstorp – Tel +46 (0)42-509 60 – Fax +46 (0)42-599 20 – Company reg. no.: 556753-2501 – www.brainvest.se


Arsredovisning 2013 en