Annual Report 2016

2016 annual report Tele Radio Group

Väcker lighthouse Grebbestad, Sweden

2016 Annual Report Tele Radio Group

Tele Radio AB • Datavägen 21 • 436 32 Askim • Sweden Tel +46 31 748 54 60 • Fax +46 31 68 54 64 • www.teleradio.com

2016 annual report

This is a translated copy from the Swedish original.

If any conflict occurs in the translation the Swedish will prevail.

Right Perth, Australia, home of our most recent subsidiary Tele Radio Australia Pty. Ltd.

Tele Radio Group Subsidiaries, partners and authorised dealers Tele Radio office

Tele Radio partners and authorised dealers Tele Radio Headquarters

Tele Radio Norway

Tele Radio Sweden Tele Radio Export

Hydra Remotes Germany Tele Radio Germany Tele Radio America LLC

Tele Radio Balkan

Tele Radio BV Tele Radio SL

Tele Radio Turkey

Tele Radio Amoy Industrial Technology Tele Radio Amoy Tele Radio Asia

Tele Radio LTD

Tele Radio Australia

CORPORATE INFO CEO MESSAGE FINANCIAL

Vision, Concept & Values 6 ISO & Quality 6 Strategic cornerstones 7 Ethical standards 9

Message from the CEO 11

Summary 25 Net-turnover and EBIT 26 EBIT & Financial stability 27 Income statements 28

Balance sheets 31 Cash flow statements 43 Information at a glance 49

AUDITOR'S REPORT

Auditors report 50

Our vision “is to be an international growth company that is respected and well known within application adapted remote control and communication.”

Our business concept ”is to fulfill the customers need of safe, efficient and simple remote control and/or communication with their equipment.

This will be done through a focus on development, production and marketing of application adapted remote control and communication for industrial use.”

Core values • Quality

Quality in our products

Quality in our work • Respect and care

Of colleagues

Of customers • Closeness to customers Culturally Co-development • Adaptiveness

To new technologies

To customer demands • Responsibility

Decision ability

ISO 9001 and ISO 14001 Tele Radio AB is certified according to ISO 9001 quality management system and ISO 14001 environmental management system. This means that you can trust our capacity and knowledge to carry out the work we do, that we continuously work to avoid repeating mistakes, that we use as environmentally friendly components as possible, and use the best means of transport available, both for business travel and for freight transports, for

the sake of the environment. The most important parts of the ISO 9001 certification for management systems are quality, responsibility, resources, product development as well as measurement, analysis and improvement. ISO 14001 demands that we take the responsibility to prevent pollution and that our company management takes full responsibility to improve year by year.

Quality policy We listen to our customers and staff and their opinions is our vantage point when we develop and market products for remote control and communication. We achieve success by: • • •

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Fulfilling agreed upon demands and expectations Each and everyone actively searches out the requirements of the goals of their work Our work and our goals means constant improvement of products and processes

Strategic cornerstones Tele Radio shall be the first choice for customers who put safety first and are searching for customised solutions.

Using technology, the operational set up and the organisation to be the company that fulfils a specific customer demand with the market´s shortest lead time.

Fulfilling and exceeding all demands and standards for each chosen vertical that is targeted by making safety the number one priority.

With local presence and a staff with deep knowledge of Tele Radio products, our customers shall be equally served regardless of their location.

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Credit rating AAA The mother company Tele Radio AB has had the highest credit rating, AAA, since 2002. To get this rating the company must be well established on the market, have a great credit history, satisfactory ownership structure and report key economical figures that are above average for the industry as a whole.

“It is gratifying that we have been given the AAA rating once again, now fourteen years in a row. Despite the situation in the world market, we have been able to successfully develop our company”, says the company Managing director Ola Samelius.

Preserving the tiger The number of tigers in the 1900’s, over 100,000, dropped to 4,000 in the 1970’s. Today, they are a critically endangered species with the total of all the wild populations of the five remaining subspecies (Bengal, Indo-Chinese, Siberian, South China, and Sumatran) is an estimated to be around 3,900 tigers.

It is known that all remaining tigers live in small, isolated populations in widely scattered reserves. The

largest concentration of tigers in one reserve is about 215. At Tele Radio we support the World Wide Fund for Nature (WWF) and its efforts made to conserve the tiger. The population of tigers is slowly recovering through the diligent efforts of the WWF. Tele Radio is proud to be a part of the conservation efforts.

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Ethical standards Tele Radio enforces social and environmental standards Tele Radio believes in protecting the environment and does this by encouraging the reduction, reuse and recycling of waste material or refuse by itself and vendor partners to the greatest extent that is possible and suitable for the stated business.

Tele Radio further encourages its vendor partners to reduce excess packaging using recycled and nontoxic materials whenever possible.

Emissions from any place of business shall be reduced so as to minimise harm to the environment and there shall be a plan in force on how to further reduce the risk of emissions in the future.

Safe workplace environment Tele Radio maintains a safe, clean, healthy and productive environment for its associates and expects the same from its vendor partners. Vendor partners shall furnish employees with safe and healthy working conditions. Factories working with Tele Radio merchandise or

products shall provide adequate medical facilities, fire exits, safety equipment, well lit and comfortable workstations, and clean restrooms.

Tele Radio will not accept business with any vendor partner which provides an unhealthy or hazardous work environment or which utilises mental or physical disciplinary practices.

Against discrimination Tele Radio recognises that cultural differences and standards exist and in our various countries; however, Tele Radio believes that the terms and conditions of employment shall be based on an individual’s ability to perform the job, not on the basis of personal characteristics or beliefs. Tele Radio requires itself and vendor partners to uphold the basic principles of human rights and not discriminate against employees, on the basis of race, colour, national origin, gender, religion, disability, sexual orientation or political opinion.

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Child labour not tolerated Tele Radio does not tolerate the use of child labour in the design or manufacture of products it buys or sells. Tele Radio will not accept products from vendor partners that utilise any manner of child labour in the contracting, subcontracting or other relationships for the manufacture of their products of services.

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Message from the CEO 2016 - Focus on investments for the future combined with positive results and growth.

Despite several challenges in an ever increasing wireless world, 2016 shows continued growth for the Tele Radio group, with many positive events during the year. The year was characterised by record level turnover and group profits, largely in part due to organisational expansion, powerful increases in product development and efficiency improvements.

The addition of subsidiaries, markets and new customers further strengthened the growth platform.

Success is measured by employee engagement, climate and product innovation and the ability to change through quick decision pathways.

Turnover and result Many subsidiaries in the group recorded all-timehighs during the year.

The net turnover for the year increased 14% to 228 MSEK (236 MSEK budgeted), compared with 200 MSEK for 2015. EBIT was recorded at 15% (2015: 15%) 34 MSEK, compared with the budgeted 27 MSEK and 31 MSEK for 2015. Solidity amounted to 61% (2015: 59%).

The distribution of existing and new customers was approximately 84/16%.

During the year, approximately 286,000 pieces were sold and distributed (2015: 291,000 pcs).

Left Ola Samelius, CEO for the Tele Radio Group, at the Hannover Industrial fair 2017.

In the top tier Tele Radio once again made Swedish financial magazine “Veckans Affärer” list of top performing 11

companies of 2016, which ranks an elite list of Swedish stock holding companies that demonstrate stable growth across a four year evaluation period. Of the approximately 1,000,000 registered stock holding companies in Sweden, Tele Radio joins just 580 other companies managing to meet the requirements on this “Super company” list.

Tele Radio once again made Swedish financial magazine “Veckans Affärer” list of top performing companies of 2016 Additional subsidiaries In the end of October a deal was struck with Datek Pacific Pty Ltd to acquire all the company shares and thus establish Tele Radio Australia Pty Ltd, located in Perth, Australia.

Tele Radio is the majority owner; previous owners Kjell and Toni Blom, continue owning the other part and will remain active in the company to support the company’s aggressive growth strategy. The additional resources and experience obtained by Tele Radio through this acquisition will drive growth and increase sales in the Australian market.

TRAMOY (Xiamen) Industrial Technology Co., Ltd. has been established in China to increase focus on sales of the company’s products in China. Additional companies are planned for 2017 according to our growth strategy.

Message from the CEO continued Continued focus on research & development Continuous investment in our product portfolio with innovative technical solutions is imperative to ensuring stable growth and good profitability.

This year, product development focused development on more complex products; which as in previous years, are based on adaptable platforms offering high flexibility and customisation options to meet the changing needs of our customers. By doing it this way, we do not negatively affect product certifications or safety classifications.

Development costs are not balanced, and are recorded the same way as in previous years.

Market shares Sales growth has increased the already strong market position and brand of Tele Radio globally.

Increases to our customer base have largely contributed to our success in increasing sales.

Many of these new customers are smaller to midsize with diverse compositions, making us independent of single customer effects to balance

the demand. The same trend has been observed in all subsidiary companies.

We act long term with a customer focus that promotes confidence and security.

We aim to create value through our actions and deliver profitability to our customers through our unique solutions.

In support of this, an additional brand of products with increased technical ability has been launched during the year.

Risk diversification The high volume of globally diverse repeat business gives us the ability to act long term and steadfast to our strategy. It provides the best conditions to minimise the impact of temporary slumps and creates independence from local economy swings or other market uncertainties.

Efficiency increases Continued development a nd implementation of the group joint ERP has occurred throughout the year.

This unites finance, production, stocks, customer and logistics data between the head office, production company and subsidiaries. The benefits we expect 12

include easier financial overview, sales support, prognosis management and improved product flow.

During the year efficiency improvements primarily related to production were performed for additional profitability.

A supply chain strategy was developed in accordance to the company growth plan. As an effect of this, a distribution centre has been created with the goal of optimising product flow and decreasing subsidiary local stock levels.

The distribution centre will initially serve the key account customers of the Swedish, Export, Balkan, Turkish and headquarter offices. Over time, additional subsidiaries will be connected. Through this strategy we expect to retain a better use of the working capital.

Growth plan The aggressive and long-term growth plan developed for 2015-2020 has been the focus of the past year and is still expected to be met. Growth will continue in the same way as previously – through organic growth. Focus remains on profitability, stable cash flow and strengthening of the brand.

To be in a constant growth pattern means continuous adaption in actions and organisation. Our strategic choices, together with the employees’ and company’s ability to develop and adapt, has given a profitable growth through the years regardless of the global economic situation. We plan to continue on this path!

Future and prospect Tele Radio growth is expected to advance according to plan and the latter year’s investments. Our assessment is that the market for industrial remote controls will continue to expand at an ever increasing pace. The financial position is good and based on a sustainable business model that delivers long-term high profitability. This gives us stamina and headroom for future expansion. Our global and diversified presence is a great advantage to help us achieve our goals.

The scalable and sustainable business model is strong and is accepted throughout the group. We have a business culture that lets us continuously develop which has been our recipe for success for a long time.

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It has a momentum that drives the internal principles and development of the company along the set course, more so than we had ever imagined. A clear responsibility for the business creates confidence.

To another successful year I, and the company management, would like to thank all employees, customers and colleagues!

Ola Samelius Managing Director and CEO

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Environmental efforts Living up to ISO 14001 means continuous efforts At Tele Radio we try to minimise the impact we have on the environment; and in the areas where we do have an impact, continuously improve. Managing our carbon footprint to be as small as possible is a key performance indicator for this.

A major change towards this end, is the creation of our new distribution center.

By being able to better coordinate shipments and consolidate other component movements, we have been able to reduce our CO2 footprint by 2% compared to 2015. As we continue to improve our systems and procedures we expect this trend to keep up for 2017.

In R&D, we have set a goal to make our products meet the standards of REACH and RoHS. REACH is a regulation of the European Union, adopted to improve the protection of human health and the environment from the risks that can be posed by chemicals, while enhancing the competitiveness of the EU chemicals industry.

The Restriction of Hazardous Substances Directive 2002/95/EC, RoHs for short, describes the restriction of the use of certain hazardous substances in electrical and electronic equipment.

At Tele Radio, Eva Klavmark and Jan Aga work diligently to make sure we follow the process and to coordinate and cooperate with the auditors.

Left Jan Aga and Eva Klavmark with the company Environmental policy.

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286 000 Products sold during 2016

15%

13,8%

EBIT margin during 2016

11,4%

Sales growth during 2016

Average yearly turnover growth the last five years

Top 3 performers - Turnover 2016 vs. 2015

Left Crane operator at construction site using a Tiger TG-T9-1 to help level suspended loads.

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2

3

Tele Radio Sweden

Tele Radio Norway

Tele Radio Asia

Administration report

T

ele Radio i Lysekil AB engages in developing, manufacturing and marketing in the area of remote control and communications for industrial use. The company is headquartered in Gothenburg, Västra Götalands län, Sweden. The corporate group of Tele Radio is represented by subsidiaries in the following countries: Norway, USA, The Netherlands, Germany, UK, Hong Kong, Sweden, China, Turkey, Spain, Croatia and Australia. 2016 was marked by continued strong performance of the company with increased sales and profits and aggressive investments in both products and organization and in subsidiary companies. During the year, the subsidiaries Tele Radio Australia Pty Ltd. and TRAMOY (Xiamen) Industrial Technology Co., Ltd. was established.

Another brand of products with a higher technology level has been launched during the year.

Operational risks The Group was exposed to various risks, including operational as well as financial risks.Risk management in Tele Radio Lysekil AB aims to identify, control and to minimize the risks within the company. The operational risks are mainly related to customers, suppliers, competitors and employees.

Employees The company is dependent on a skilled workforce.

By being an employer that provides the opportunity

for interesting work, flexible working hours, health promotion, performance appraisal, etc. the company’s succeed to attract, develop, and retain their staff. The company has a high level of technical competence of personnel who is continuously growing, which is a competitive advantage towards customers. They are not dependent on individuals' skills but has a broad range of skills within the organization.

Production and distribution During the year the group business system was implemented to link the parent company with the production company and subsidiaries for efficient accounting, sales support, forecasting within the supply chain. Production and distribution efficiency continued during the year providing additional profitability effects. A central Group distribution unit was created to optimise product flow and reduce the local inventory stock level for subsidiaries, improving utilisation of working capital.

Financial Risks The company is not exposed to any essential risks that demand action to be taken. The most essential risk for the company is the currency exchange rate risk in trade receivables and payables. Some of the risks are attributable to interest on the checking account. The company holds no derivative instruments for hedging flows. The company 18

operates globally, making it less sensitive to local conditions. Risks in accounts receivable are managed by well-established procedures and historical losses have been low.

Research and development Aggressive development is an essential part of the Tele Radio strategy to strengthen its existing operations for long-term survival.

Constant technology and market evolution requires adaption to meet changing customer needs. The ability to anticipate and deliver according to these needs through new and innovative products is seen as a significant competitive advantage. Tele Radio has, in a patient and future-oriented way, continued to invest heavily in product development. This has yielded increased market share from an expanded product range which is positively received by the market. Costs have affected net income.

Environmental impact The group does not conduct any operations that requires environmental permits. The impact on the environment in terms of emissions, waste and energy use is considered relatively small as only one of the group companies engages in manufacturing; all other subsidiaries, including the parent company, are considered to be sales offices.

Future Tele Radio has a growth-oriented strategy. During 2016, the total market for our customer segment continued to show a positive trend. The sales in the 19

subsidiaries has continued to increase. The positive trend in orders suggest a continuous increase of turnover and net profit during 2017. The company works actively to increase the market share. We have achieved a number of new and exciting projects within segments in which we have never worked before. This has been made possible thanks to the parent company’s recently released products, which are gradually being introduced to the market by our subsidiaries and retailers. In 2017, we plan more aggressive efforts to further develop the product mix, the organization and its subsidiaries. This and other preparations will provide continued expansion with increased profitability and cash flow; Tele Radio looks confidently forward to 2107 and the following years.

Shareholders The company is a fully owned subsidiary of Tele Radio International Holding AB, corporate identity number 559001-1697.

For more information, please visit the company group’s webpage: www.teleradio.com

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Toni Blom, part owner and Key Account Manager, Tele Radio Australia Pty Ltd Besides being the part owner of Tele Radio Australia, Toni Blom demonstrates that she knows full well how to run a company and manage the challenges that comes with it. She describes herself as the “whip and chain” for the newest subsidiary in the group.

“Running an office full of men with different skills and focusing on how to structure the work around how people work, is part of what I do” Toni says.

She makes sure that they follow the complicated rules and regulations that control the Australian industrial market. In addition to keeping her staff in line, she handles the company’s accounts and helps customers with technical issues; something that isn’t always easy to do, considering the industry is not used to dealing with a woman when it comes to technical affairs.

“Many customers have a bit of a challenge to grasp the fact that a woman knows how a remote control system works, but the long-time clients have come to accept that I know what I am talking about” Toni says.

“Fast and efficient quality services” is a motto of Tele Radio Australia. While the competition may have no qualms in letting customers wait weeks for a product replacement; the ambition for Tele Radio Australia is to have a three day turnaround and if possible, even faster.

“When a big client has downtime, that can cost them $50 000 a day in lost business. We won’t keep them waiting.” Toni's next focus is to expand the sales force enabling Tele Radio Australia to grow larger and stronger.

“We will be a force to be reckoned with.”

Left Toni Blom, part owner and Key Account Manager for Tele Radio Australia.

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As time goes by ...

T

ele Radio i Lysekil AB has come a long way since 1955.

competitors on the market that could be potential buyers, but finally Inge’s son-in-law, Bertil Görling, bought the company based on evaluation by a professional corporate finance bank and the auditors.

Bertil took over the operation and started bringing the company into an expansion phase. The company was moved to Gothenburg in order to get closer to its customers. But with expansion comes growing pains and for a few years the numbers were not looking as good as they previously had. It wasn’t until 1992, that things really started to turn around with the birth of the ”460-system”, Tele Radio’s first in-house developed product line. Things started rolling very fast after this milestone with customers in Europe placing increasing sales demand on the company. The first subsidiary was formed in 1995, Tele Radio AS in Norway, coinciding with the companies 40th anniversary.

In 1997 Tele Radio had its own booth at the important ”Hannover fair” in Germany, another milestone.

In 1999 the second subsidiary, Tele Radio LLC, was formed to serve the American market. By 2000 the third subsidiary, Tele Radio BV in

Company history

Left Opening day at the new Distribution Center. A centralised hub for stock and shipment serving Europe.

One could argue that the first trembling steps to becoming one of the world’s largest remote control companies was taken in 1955 in Lysekil, Sweden.

Inge Dahlgren then only 17 years old constructed a bicycle mounted radio powered by a wheel mounted generator.

The company was later registered since Inge was determined to do something ”on his own”. The company’s first ventures were in radio, walkie-talkies, TV and stereo equipment.

In the early years, the company remained in the radio & television segment, building a reputation; but it wasn’t until 1969 that the first remote control system moved through the doors of Tele Radio in the form of a modified system from an American company. And in 1971 the focus had shifted from the home electronics segment into garage door openers and other remote control products. The business continued in this way up until 1988 when Inge’s health began to decline and he slowly realised that he would have to sell the business.

By then there were a few other

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Holland was established and in this fashion it has continued, with a new subsidiary started almost every year since 1999. Now Tele Radio has its own production and logistics center in Asia servicing subsidiaries, thirteen authorised dealers and partners in every continent of the world.

This was only made possible by having very dedicated staff with a mission to create great products and a willingness to listen to the customer in order to tailor our products to their very specific needs.

This is our mission, to continue to grow by providing great products for small and large companies all over the world.

Through hard work and dedication we are convinced that the future will hold even greater rewards for the Tele Radio Group.

And the rest as they say, is history.

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Unless otherwise stated, all amounts are reported in SEK. The notes section is not included in this version; for a full version with notes, please see the unabridged version submitted to Swedish Companies Registration Office.

Comparative figures covering several years Summary of the company’s financial development

2016

2015

2014

2013

2012

225 503

198 420

174 456

153 821

139 088

Group Net sales, TSEK Profit/loss after financial items, TSEK

33 374

30 113

30 727

23 197

16 274

Equity/assets ratio, %

67

58

57

49

34

Return on equity, %

34

38

49

49

18

113 416

105 590

97 797

83 720

75 214

13 641

15 441

17 371

4 222

3 464

Equity/assets ratio, %

49

47

38

41

31

Return on equity, %

22

33

54

13

14

Parent company Net sales, TSEK Profit/loss after financial items TSEK

Definitions of key ratios used are provided in Note 1, see original financial report.

Proposed appropriation of profits The following profits are at the disposal of the Annual General Meeting: Profit brought forward

46 717 773

Net profit/loss for the year

12 626 341 59 344 114

The Board proposes that the profits are appropriated so that amount to be carried forward

59 344 144

Left Hydra casing being milled to fulfill a customer's specification.

59 344 144

25

Net turn-over / EBIT margin

0 20

20

20

20

20

20

20

20

20

20

20 26

16

0 15

5

14

50 000 000

13

10

12

100 000 000

11

15

10

150 000 000

09

20

08

200 000 000

07

%

06

Sek. 250 000 000

-5

Continued high business result with growth strategy Yet again the Tele Radio group shows high profit results during 2016, despite the burden of substantial depreciations and ongoing costs for the group, proving the viability of our growth strategy.

We can also attribute this accomplishment to our presence in the global marketplace for sustained profitable growth.

We are confident we will continue to prosper through tactics in global risk diversification and expanded product range.

EBIT

Sek.

Financial solidity

%

250 000 000

80 70

200 000 000

60 50

150 000 000

40 100 000 000

30 20

50 000 000 0

10 2012

2013

2014

2015

0

2016

27

2012

2013

2014

2015

2016

Group

Income Statements Net sales

Note 3

Net sales Group Other operating income

Parent Company

2016

2015

2016

2015

225 502 658

198 420 228

1 090 540

463 685

-

-

112 325 286

105 126 678

2 508 492

1 904 680

-

-

228 011 150

200 324 908

113 415 826

105 590 363

-

-

-56 102 801

-49 508 993

-52 546 515

-41 162 655

-1 071 916

-6 687 241

4,5

-59 870 139

-54 752 261

-31 360 689

-30 220 764

6

Operating expenses Goods for resale Group Goods for resale Other external expenses Personnel costs

-76 567 273

-68 738 547

-25 112 347

-23 233 016

Depreciation of tangible and intangible assets

-3 006 233

-2 776 379

-1 018 860

-657 716

Other operating expenses

-2 260 935

-2 323 512

-1 874 621

-1 964 248

-194 251 095

-169 753 354

33 760 055

30 571 554

-3 125 408

-6 681 615

-

-

17 723 045

23 235 683

Operating profit/loss

-116 541 234 -112 271 978

Profit/loss from financial items Income from participations in Group companies

7,8

Other interest income and similar profit/loss items

9

64 370

36 974

40 481

56 931

Interest expenses and similar profit/loss items

10

-450 669

-495 794

-996 829

-1 169 737

-386 299

-458 820

16 766 697

22 122 877

33 373 756

30 112 734

13 641 289

15 441 262

Total income from financial items Profit/loss after financial items

Right Tele Radio exhibiting at the Hannover Industrial Automation fair.

28

29

30

Group

Income Statements

Note

Parent Company

2016

2015

2016

2015 -

Appropriations

11

-

-

-620 018

Tax on profit for the year

12

-6 239 164

-5 774 503

-394 930

-

-1 332 945

591 542

-

384 348

25 801 647

24 929 773

12 626 341

15 825 610

24 346 734

21 497 191

-

-

1 454 913

3 432 582

-

-

2016-12-31

2015-12-31

2016-12-31

2015-12-31

Deferred tax Net profit/loss for the year Attributable to: Parent Company shareholder Minority interest

Balance sheets

Note

Assets

Fixed assets Intangible fixed assets Brand

13

3 051 138

39 560

26 639

39 560

Goodwill

14

6 027 379

7 190 875

-

-

9 078 517

7 230 435

26 639

39 560

15

6 754 231

3 872 077

4 395 385

2 576 238

Participations in Group companies

16

-

-

39 150 213

33 179 240

Deferred tax

17

4 010 444

4 779 140

-

384 348

Other non-current receivables

18

333 684

240 726

-

-

4 344 128

5 019 866

39 150 213

33 563 588

20 176 876

16 122 378

43 572 237

36 179 386

Tangible fixed assets Equipment, tools, fixtures and fittings Financial fixed assets

Left Hydra joystick controller

Total fixed assets

31

Group

Balance sheets Current assets

Note

Parent Company

2016-12-31

2015-12-31

2016-12-31

2015-12-31

Inventories, etc.

Finished products and goods for resale

698 182

35 089 365

34 679 401

31 880 931

Raw materials and consumables

38 142 903

11 377 491

-

-

Total

38 841 085

46 466 856

34 679 401

31 880 931

25 317 704

17 472 515

58 251

16 678

Current receivables Accounts receivable - trade Receivables from Group companies

-

-

22 684 872

23 785 291

Current tax assets

2 668 897

2 453 092

1 652 978

1 663 560

Advance payments to suppliers

1 886 790

-

-

-

18 972 750

8 038 424

15 260 135

7 423 464

1 957 227

2 081 583

540 699

616 847

Total

50 803 368

30 045 614

40 196 935

33 505 840

Cash and bank balances

36 659 053

30 431 162

7 558 490

1 753 267

Total current assets

126 303 506

106 943 632

82 434 826

67 140 038

Total assets

146 480 382

123 066 010

126 007 063

103 319 424

Share capital

1 300 000

1 300 000

1 300 000

1 300 000

Statutory reserve

3 803 777

2 585 629

260 000

260 000

Total

5 103 777

3 885 629

1 560 000

1 560 000

Other current receivables Prepaid expenses and accrued income

19

Equity and liabilities Equity Restricted equity

32

Right Crane operator using a Tiger transmitter in cockpit to control a load balancer holding the concrete wall.

33

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Kjell Blom, General Manager, Tele Radio Australia Pty Ltd Kjell's history with Tele Radio started almost 20 years ago when he was still with the competitor Datek.

“At that point in time we weren't really competitors but had more synergetic effects on each other” says Kjell.

Tele Radio brought customers to Datek and vice versa. There had always been occasional contact but around December in 2016, an opportunity presented itself and Kjell and wife Toni decided to join the Tele Radio family.

“Sometimes it is better to be a part of something larger than take every battle by yourself” says Kjell referring to the stability that comes with being part of the group.

“You have more room to manoeuvre financially and you can take bigger risks, and reap bigger rewards, without the worries of a smaller company structure. It is also more clear for the customers in Australia that we are here to stay. It presents stability to the customer.”

And while facing competition from the usual companies, HBC, Autec, Ikusi and others, Kjell is confident that we can take market shares from them based on some of the core strengths that Tele Radio brings. The fact that we are fast footed and carry local stocks in Australia makes all the difference.

“We can have a customized product delivered at the clients desk within 14 days. There is no one else who can provide that.”

Kjell is confident that if we can continue to promote these qualities we will have no problem to grow and exceed expectations.

Left Kjell Blom, General Manager at Tele Radio Australia.

35

36

Group

Balance sheets

Note

Parent Company

2016-12-31

2015-12-31

2016-12-31

2015-12-31

62 963 666

36 628 558

46 717 773

30 892 162

Non-restricted equity Retained earnings Net profit/loss for the year Equity attributable to parent company shareholders Minority interest Total equity

24 346 734

24 929 773

12 626 341

15 825 610

87 310 400

61 558 331

59 344 114

46 717 772

92 414 177

65 443 960

60 904 114

48 277 772

6 279 372

6 323 623

-

-

98 693 549

71 767 583

60 904 114

48 277 772

-

-

Untaxed reserves Accumulated depreciation

11

Total untaxed reserves

620 018

-

620 018

-

Provisions Deferred taxes

361 976

-

-

-

Other provisions

278 910

1076 569

-

-

Total provisions

640 886

1 076 569

0

0

9 299 083

13 999 083

9 299 083

13 999 083

9 299 083

13 999 083

9 299 083

13 999 083

Non-current liabilities Other liabilities to credit institutions

20

Total non-current liabilities

Left Tow truck from Foima,Spain outfitted with a Panther remote control system from Tele Radio.

37

Group

Balance sheets

Parent Company

Note

2016-12-31

2015-12-31

2016-12-31

2015-12-31

20,21

4 622 231

7 998 968

4 622 231

7 998 968

20

4 760 697

4 750 000

4 750 000

4 750 000

12 992 532

7 121 926

6 686 131

2 097 598

-

-

33 704 003

20 569 106

Current tax liabilities

4 077 587

1 905 973

-

-

Other current liabilities

4 990 603

9 411 715

1 711 238

1 892 520

6 403 214

5 034 193

3 710 245

3 734 377

37 846 864

36 222 775

55 183 848

41 042 569

146 480 382

123 066 010

126 007 063

103 319 424

Current liabilities Bank overdraft facilities Liabilities to credit institutions Accounts payable - trade Liabilities to Group companies

Accrued expenses and deferred income

22

Total current liabilities Total equity and liabilities

195 Employees

Country with largest staff increase over the last year.

Countries with the most employees: 42

28

76

120%

38

Change in equity Group Equity 2013-12-31

Share capital Restricted reserves

Distributable reserves and net profit for the year

Total

Minority interest

Total equity

1 300 000

3 307 243

37 573 160

42 180 403

5 471 970

47 652 373

Appropriation of profits based on the resolution of the general meeting of shareholders

-

-

-15 000 000

-15 000 000

-2 653 340

-17 653 340

Translation differences

-

-

7 685 592

7 685 592

-339 941

7 345 651

Year displacement restricted reserves

-

-839 391

839 391

-

-

-

Net profit/loss for the year

-

-

20 671 663

20 671 663

4 609 541

25 281 204

1 300 000

2 467 852

51 769 806

55 537658

7 088 230

62 625 888

Acqusition of existing subsidiary

-

-

-9 087 944

-9 087 944

-3 207 089

-12 295 033

Translation differences

-

-

-2 502 945

-2 502 945

-990 100

-3 493 045

Year displacement restricted reserves

-

117 777

-117 777

-

-

-

Net profit/loss for the year

-

-

21 497 191

21 497 191

3 432 582

24 929 773

1 300 000

2 585 629

61 558 331

65 443 960

6 323 623

71 767 583

Acqusition of existing subsidiary

-

-

-

-

-2 506 281

-2 506 281

Translation differences

-

-

2 623 483

2 623 483

1 007 117

3 630 600

Year displacement restricted reserves

-

1 218 148

-1 218 148

-

-

-

Net profit/loss for the year

-

-

24 346 734

24 346 734

1 454 913

25 801 647

1 300 000

3 803 777

87 310 400

92 414 177

6 279 372

98 693 549

Equity 2014-12-31

Equity 2015-12-31

Equity 2016-12-31

39

40

Vlaming Group North of Amsterdam in Zwaagdijk, the Netherlands, the company Vlaming Group has its operations. Vlaming Group sells agricultural solutions for farming and industrial equipment. In their wide range of products you will find tractors and tractor equipment, freight trailers, internal transport systems, drainage equipment, harvesting machines, seeding and planting equipment. The strength of Vlaming is that they have a wide diversity of products and are willing to customise what they sell, much like Tele Radio.

For one of their customers who specialises in cabbage harvesting, they mounted a Panther system on a Massey Fergusson tractor trailer with a custom cabbage conveyor belt attached. What is unique about this application is that the Panther system is wired to the propulsion system of the tractor, allowing use of the transmitter to not only operate the conveyor belt but also control the tractor. The people working in the field can control the speed of the tractor, adjust the steering, stop and so on. This effectively allows the driver to also work in the field, which increases efficiency by performing two tasks simultaneously.

Left Harvesting a cauliflower field with remote control from Tele Radio.

41

Parent Company Equity 2013-12-31

Share capital Restricted reserves

Total

Minority interest

Total equity

1 300 000

260 000

24 660 193

4 915 172

31 135 365

Group contribution received

-

-

-

-

-

Tax effect of Group contribution

-

-

-

-

-

Appropriation of profits based on the resolution of the general meeting of shareholders

-

-

4 915 172

-4 915 172

-

Dividends

-

-

-15 000 000

-

-15 000 000

Net profit/loss for the year

-

-

-

16 316 798

16 316 798

1 300 000

260 000

14 575 365

16 316 798

32 452 163

Appropriation of profits based on the resolution of the general meeting of shareholders

-

-

16 316 798

-16 316 798

-

Dividends

-

-

-

-

-

Net profit/loss for the year

-

-

-

15 825 610

15 825 610

1 300 000

260 000

30 892 163

15 825 610

48 277 773

Appropriation of profits based on the resolution of the general meeting of shareholders

-

-

15 825 610

-15 825 610

-

Dividends

-

-

-

-

-

Net profit/loss for the year

-

-

-

12 626 341

12 626 341

1 300 000

260 000

46 717 773

12 626 341

60 904 114

Equity 2014-12-31

Equity 2015-12-31

Equity 2016-12-31

The share capital consists of 1300 A-shares with a quota value of 500 SEK and 1300-B-shares with a quota value of 500 sek.

42

Group

Cash flow statements

Note

Parent Company

2016

2015

2016

2015

33 760 055

30 571 554

-3 125 408

-6 681 615

3 006 233

2 776 379

1 018 860

657 716

64 370

36 974

40 481

56 931

-

-

11 663 045

16 935 682

-450 669

-495 794

-996 829

-1 169 737

-6 239 164

-5 774 503

-394 930

-

30 140 825

27 114 610

8 205 219

9 798 977

Operating activities Operating profit/loss before financial items Adjustments for non-cash items, etc.

13, 14, 15

Interest received Dividends received

7

Interest paid Paid / refunded income taxes

Change in inventories

7 625 771

-3 872 221

-2 798 470

-215 764

-7 845 189

6 541 211

-41 573

2 609 713

-12 912 565

-8 776 907

-6 649 522

-1 957 144

Change in accounts payable

5 870 606

-2 196 357

4 588 533

-1 957 145

Change in current payables

-880 477

3 009 586

12 929 483

-4 312 734

21 998 971

21 819 922

16 233 670

3 965 903

13,14

-3 024 499

-

-

-

Investments in tangible fixed assets

15

-4 428 649

-2 390 036

-2 825 085

-1 661 590

Sold tangible fixed assets

15

55 010

Acquisition of subsidiaries

16

-

-8 047 932

-5 970 973

-8 047 932

Change in accounts receivable trades Change in current receivables

Cash flow from operating activates before working capital changes Investing activities Investments in intangible and tangible fixed assets

43

44

Croatia Cruising - Princeza Diana The 40 meter long cruise ship Princeza Diana is great example of the diversity in Tele Radio clients. Despite being a relatively small ship as far as cruise ships go, it is a beautiful vessel that offers many amenities for its passengers. The Princeza Diana has three lighting control areas. The first is in a room in the stern, the second is housed near the bar in the restaurant and the third is in the wheelhouse. These different light stations control the various lights such as community area lights, the ships name spotlights, reflectors, restaurant lights and auxiliary lights for stairs.

A common problem for ships like this, is that there is no centralised lighting control. When the crew wants to turn on or adjust lighting, they must move all over the vessel, potentially in and by guest quarters which can cause unnecessary disturbance.

The family owning this cruise company decided to install a Panther system with the help of Tele Radio Balkan. With three different receivers and three different transmitters, the crew can remotely and discreetly operate the ships lighting without having to leave their posts.

Croatia Cruising was so happy with the solution that they will move forward with yet another ship that is currently being built. This ship will, aside from lighting control, also offer remote control maneuvering capabilities of the ship itself. The captain can stand on the mooring point and position the ship with complete freedom of movement. Fitting of the remote controls for the new ship was done in April.

Left The Princeza Diana

45

Group

Cash flow statements

Note

Parent Company

2016

2015

2016

2015

Change in deffered tax

17

768 696

-

384 348

-

Change in other long-term receivables

18

-92 958

6 436 583

-

6 436 583

-6 722 400

-4 001 385

-8 411 710

-3 272 939

Cash flow from investing activities Financial activities Change in committed credit line

20

-3 376 737

-1 936 704

-3 376 737

-1 936 704

Amortisation/borrowing

20

-4 760 697

-4 750 000

-4 700 000

-4 750 000

Group contribution received

8

-

-

6 060 000

5 400 000

-976 418

-1 881 092

-

-

-9 113 852

-8 567 796

-2 016 737

-1 286 704

6 162 719

9 250 741

5 805 223

-593 740

Exchange rate difference in cash and cash equivalents

65 172

-1 240 154

-

-

Cash and cash equivalents at beginning of the year

30 431 162

22 420 575

1 753 267

2 347 007

Cash and cash equivalents at the end of the year

36 659 053

30 431 162

7 558 490

1 753 267

Dividend non-controlling interests Cash flow from financing activities Cash flow for the year

Right Staff in training for Microsoft AX, the new group ERP. 46

47

48

Information at a glance Group sales, by geography

Europe, exluding Nordic countries Nordic countries North America

44%

Asia and other countries

Gender distribution Male

Group companies

% 15

29% Left Toronto Electric, a customer in Canada, using Tele Radio equipment for their overhead cranes.

11%

226 Msek

Female

49

Auditor’s report To the annual meeting of the shareholders of Tele Radio i Lysekil AB, corporate identity number 556344-0196.

and cash flow for the year then ended in accordance with the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.

I therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group.

Report on the annual accounts and consolidated accounts

Opinions

Mattias Celind Authorised Public Accountant at PwC

I have audited the annual accounts and consolidated accounts of Tele Radio I Lysekil AB for the year. The annual accounts and consolidated accounts of the company are included on pages 18-46 in this document.

In my opinion, the annual accounts and consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of parent company and the group as of 31 December 2016 and their financial performance

Basis for Opinions

I conducted my audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. My responsibilities under those standards are further described in the Auditor’s Responsibilities section. I am independent of the parent company and the group in accordance with professional

50

ethics for accountants in Sweden and have otherwise fulfilled my ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinions.

Other Information than the annual accounts and consolidated accounts

The Board of Directors and the Managing Director are responsible for the other information. The other information comprises pages 6-17 (but does not include the annual accounts, consolidated accounts and my auditor’s report thereon).

My opinion on the annual accounts and consolidated accounts does not cover this other information and I do not express

any form of assurance conclusion regarding this other information.

In connection with my audit of the annual accounts and consolidated accounts, my responsibility is to read the information identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure I also take into account my knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated.

If I, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to

51

going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the company, to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibility

My objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists.

Misstatements can arise from

Auditor’s report continued fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts.

A s part of an audit in accordance with ISAs, I exercise professional judgment and maintain professional scepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinions.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of the company’s internal control relevant to my audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director.

• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. I also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast

52

significant doubt on the company’s and the group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify my opinion about the annual accounts and consolidated accounts. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern.

• Ev a l u a t e t h e o v e r a l l presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated accounts. I am responsible for the direction, supervision and performance of the group audit.

I remain solely responsible for my opinions.

I must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. I must also inform of significant audit findings during my audit, including any significant deficiencies in internal control that I identified.

Report on other legal and regulatory requirements

Opinions

In addition to my audit of the annual accounts and consolidated accounts, I have also audited the administration of the Board of Directors and the Managing

Director of Tele Radio I Lysekil AB for the year 2016 and the proposed appropriations of the company’s profit or loss.

I recommend to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

I conducted the audit in accordance with generally accepted auditing standards in Sweden.

My responsibilities under those standards are further described in the Auditor’s Responsibilities section. I am independent of the parent company and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled my ethical responsibilities in accordance with these requirements.

53

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinions.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group’s type of operations, size and risks place on the size of the parent company's and the group’s equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company’s orga niz ation a nd t he administration of the company’s affairs. This includes among other things continuous assessment of

Auditor’s report continued the company’s and the group’s financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor’s responsibility

My objective concerning the audit of the administration, and thereby my opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

• Has undertaken any action or been guilty of any omission which can give rise to liability to the company, or • In any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

My objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby my opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act.

54

As part of an audit in accordance with generally accepted auditing standards in Sweden, I exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the company’s profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on my professional judgment with starting point in risk and materiality. This means that I focus the examination on such actions, areas and relationships that are material for the operations and where deviations and violations would have particular importance for the company’s situation. I examine and test decisions undertaken, support for decisions, actions taken and other circumstances that are relevant to my opinion concerning discharge from liability. As a basis for my opinion on the Board of Directors’

proposed appropriations of the company’s profit or loss I examined the Board of Directors’ reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act. Uddevalla May 4th 2017

Mattias Celind Authorised Public Accountant

55

Management group

The management group is the executive management team at Tele Radio acting for the parent company through short and long term planning and decisions with continuous improvement.

Arne Hagen Market Manager

Halldรณr Halldรณrsson Purchasing Manager

Jan Carlbrand Controller

Lars Elvind Sales Manager

Jesper Ribbe R & D Manager

Ola Samelius Managing Director & CEO

Board of Directors

Stefan Sedersten Member

Thord Gรถrling Member Henrik Johansson Member

Ola Samelius Managing Director & CEO

Bertil Gรถrling Chairman

The work of the board The board of directors mission is to manage the company’s affairs by the will of the owners.

The board continuously assess the company’s group financial situation.

The board is composed of individuals with diverse backgrounds offering broad industr y knowledge and competency.

At every board meeting a review of the operations, group result, financial standing, as well as the rest of the year is made.

The board then makes overall decisions in areas such as the company’s strategy, marketing and sales, finance, budget and long term planning.

During the year the board held four recorded sessions.

Notes

2016 annual report Tele Radio Group

Väcker lighthouse Grebbestad, Sweden

2016 Annual Report Tele Radio Group

Tele Radio AB • Datavägen 21 • 436 32 Askim • Sweden Tel +46 31 748 54 60 • Fax +46 31 68 54 64 • www.teleradio.com