Momentum : Financial Report 2020

FINANCIAL REPORT 2020 - 9 MONTHS

1 April - 31 December 2020

FINANCIAL YEAR 2020 - 9 MONTHS (1 April-31 December 2020)

• • Revenue for the financial year (9 months) amounted to MSEK 6,846 (4,596), with the change com-pared with the corresponding period in the preceding year attributable to the acquisition of Swedol. Compared with revenue for the corresponding period in the preceding year including Swedol (MSEK 7,412), revenue declined by 8 percent.*

• • EBITA amounted to MSEK 484 (247), corresponding to an EBITA margin of 7.1 percent (5.4). The change compared with the preceding year is primarily attributable to the acquisition of Swedol. Compared with EBITA for the corresponding period in the preceding year including Swedol (MSEK 547), EBITA declined by 12 percent while the EBITA margin amounted to 7.1 percent (7.4).*

• • Operating profit amounted to MSEK 333 (223) and the operating margin to 4.9 percent (4.9). Earnings were affected by provisions for a restructuring reserve totalling MSEK 97 in the financial accounts for the second quarter of 2020. This reserve pertains to restructuring costs in connection with the integration of TOOLS and Swedol.

• • Net profit amounted to MSEK 229 (163) and earnings per share totalled SEK 4.55 (5.75).

• • The return on working capital (EBITA/WC) for the most recent 12-month period (including Swedol) was 24 percent.*

• • Cash flow from operating activities improved to MSEK 1,086 (400).

• • The equity/assets ratio was 39 percent at the end of the financial year.

• • A dividend of SEK 1.50 per share (-) is proposed.

• • During the year, the COVID-19 pandemic negatively impacted revenue due to increased restraint and uncertainty in the market, although with variations between customer segments and countries. The various companies in the Group have adopted continuous measures to adapt their operations based on these conditions.

• • The integration between Swedol and TOOLS commenced according to plan during the year.

THIRD QUARTER (1 October-31 December 2020)

• • Revenue amounted to MSEK 2,529 (1,588).

  Compared with revenue for the corresponding quarter in the preceding year including Swedol (MSEK 2,655), revenue declined by 5 percent.*

• • EBITA amounted to MSEK 201 (92), corresponding to an EBITA margin of 7.9 percent (5.8). Compared with EBITA for the corresponding quarter in the preceding year including Swedol (MSEK

  218), EBITA declined by 8 percent while the EBITA margin amounted to 7.9 percent (8.2).*

• • Net profit amounted to MSEK 134 (56) and earnings per share totalled SEK 2.70 (1.95).

AFTER THE END OF THE FINANCIAL YEAR

• • Within the business area Components & Services, acquisitions of four businesses generating total annual revenue of approximately MSEK 285.

*ACQUISITION OF SWEDOL CLOSED AS OF 1 APRIL 2020

Momentum Group's acquisition of Swedol was completed during spring 2020 and closed on 1 April 2020. Any instances where the comparative figures in this report include Swedol for the period prior to the closing date on 1 April 2020 are specifically noted. The bases for the financial history including Swedol are presented in a separate press release dated 24 June 2020 - Supplementary financial information relating to the 2019/20 financial year for the Momentum Group.

Momentum Group AB (publ)

Mail address: PO Box 5900, SE-102 40 Stockholm, Sweden │ Visit: Östermalmsgatan 87 D, Stockholm │ Tel: [phone] Org No: 559072-1352 Reg office: Stockholm │www.momentum.group

PRESIDENT'S STATEMENT

AN EVENTFUL AND CHALLENGING YEAR

As we at Momentum Group reflect on another financial year (shortened to 9 months ahead of the transition to the calendar year as our financial year) - our fourth as an independent listed company - it was a year filled with both challenges and future opportunities. As was the case for all businesses and societies across the world, the COVID-19 pandemic and its effects dominated our year 2020. From March 2020 onwards, we have worked with intensity and focus to maintain our operations and profitability by delivering on our customer promises in a safe manner and by making continuous adjustments to the Group and all our operations to adapt to the "new normal" through central and local initiatives. Where possible, we transitioned to remote working and to digital meetings, seminars and training courses with customers and suppliers. The general demand situation was characterised by restraint and caution in all of our main markets in the Nordic region, although with certain variations between customer segments and countries, with the most significant impact experienced in Norway. Sales gradually stabilised during the year, and the Group's operations experienced a certain level of recovery during the final quarter. In summary, we thus succeeded in maintaining our profitability and generated significantly higher cash flow from the operations in 2020, leading to a strong financial position for the Group. This provides us with favourable conditions for continued profitable growth, both organically and through acquisitions.

In the business area Tools, Consumables, Workwear & Protective Equipment, the integration of

TOOLS and Swedol was in focus during the year, and in accordance with our plans we launched a new shared organisation, started the integration of stores, negotiated joint purchasing agreements and began the introduction of proprietary brands in several parts of the business area. In parallel, this new, strong business area's sales initiatives have resulted in a number of new customer agreements that will contribute positively to future development.

We established a strategic approach focused on acquisition-driven growth in the business area Components & Services and, in early February 2021, had the pleasure of announcing no less than four acquisitions generating total annual revenue of approximately MSEK 285, with favourable profitability. We will continue to evaluate attractive acquisition opportunities with the aim of further strengthening our market positions.

Our Group structure creates opportunities for the future

Much of the uncertainty concerning the effects of the pandemic remain as we head into the coming quarters. We are therefore continuing to focus on what we can affect in our daily operations in order to achieve increased sales and efficiency - with our decentralised earnings responsibility entailing that local measures are taken if and where needed. At the same time, our Group structure with two operationally independent business areas is creating new, interesting opportunities for the future.

In conclusion, I would like to extend my sincere thanks to all of our dedicated employees for your many outstanding contributions during this particularly challenging year - and to our customers and business partners for your continued confidence. We will continue along the path we have established, with a focus on earnings growth in our existing units, reduced funds tied up in working capital and corporate acquisitions in order to increase profitability.

Stockholm, February 2021

Ulf Lilius

President & CEO

MOMENTUM GROUP IN SUMMARY

Revenue, MSEK

Revenue including Swedol 2019/20 1

Operating profit, MSEK of which: Items affecting comparability of which: Amortisation of intangible assets incurred in connection with corporate acquisitions

EBITA, MSEK

EBITA including Swedol 2019/20 1

Profit after financial items, MSEK Net profit (after taxes), MSEK Earnings per share, SEK Operating margin EBITA margin

EBITA margin including Swedol 2019/20 1

Profit margin

Return on equity

Return on working capital (EBITA/WC)

EBITA/WC including Swedol 2019/20 1

Equity per share, SEK

Equity/assets ratio

Number of employees at the end of the period2

REPORTING PERIOD

1) Calculated as though the acquisition of Swedol had closed on 1 April 2019.

REVENUE AND PROFIT

Third quarter (1 October-31 December 2020)

Revenue amounted to MSEK 2,529 (1,588), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding quarter in the preceding year including Swedol (MSEK 2,655), revenue declined by 5 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by 4.4 percent compared with the corresponding quarter in the preceding year. The quarter included one more trading day than the corresponding quarter in the preceding financial year. Operating profit amounted to MSEK 185 (78), with the change compared with the year-earlier period primarily attributable to the acquisition of Swedol. EBITA (operating profit excluding items affecting comparability and amortisation of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 201 (92). Compared with EBITA for the corresponding quarter in the preceding year including Swedol (MSEK 218), EBITA thus declined by 8 percent and the EBITA margin amounted to 7.9 percent (8.2). Exchange-rate translation effects had a net impact of MSEK -1 (0) on operating profit.

Financial year 2020 - 9 months (1 April-31 December 2020)

Revenue amounted to MSEK 6,846 (4,596), with the change compared with the preceding year primarily attributable to the acquisition of Swedol. Compared with revenue for the corresponding period in the preceding year including Swedol (MSEK 7,412), revenue declined by 8 percent. Revenue for comparable units (including Swedol), measured in local currency and adjusted for the number of trading days, decreased by 6.6 percent compared with the corresponding period in the preceding year. Exchange-rate translation effects had an impact of MSEK -196 on revenue for comparable units (including Swedol). The 9 months in the financial year included a total of two more trading days than the corresponding period in the preceding financial year.

Operating profit amounted to MSEK 333 (223), with the change compared with the year-earlier period primarily attributable to the acquisition of Swedol. EBITA (operating profit excluding items affecting comparability and amortisation of intangible assets incurred in connection with corporate acquisitions) amounted to MSEK 484 (247). Compared with EBITA for the corresponding period in the preceding year including Swedol (MSEK 547), EBITA thus declined by 12 percent and the EBITA margin amounted to 7.1 percent (7.4). Operating profit was charged with depreciation and impairment losses of MSEK -42 (-13) on tangible non-current assets and amortisation and impairment losses of MSEK -87 (-26) on intangible non-current assets. Exchange-rate translation effects had a net impact of MSEK -2 (+1) on operating profit.

Profit after financial items totalled MSEK 294 (209) and net profit amounted to MSEK 229 (163), which corresponds to earnings per share of SEK 4.55 (5.75) for the reporting period.

* Since Momentum Group is changing its financial year to the calendar year, the 2020 financial year has been shortened to nine months and covers the 1 April to 31 December 2020 period.

OPERATIONS

From 1 April 2020, the Momentum Group comprises two business areas: Business Area Tools, Consum-ables, Workwear & Protective Equipment and Business Area Components & Services. Group-wide includes the Group's management, finance function and support functions (including internal communications, investor relations and legal affairs).

MARKET AND IMPACT OF THE COVID-19 PANDEMIC

The shortened 2020 financial year (9 months) was characterised by a significantly restrained and cautious attitude in Momentum Group's main markets, primarily due to the uncertainty concerning the COVID-19 pandemic. Since the stringent measures from both society at large and individual companies started taking effect toward the end of March 2020, all operations in the Group have experienced a negative effect on overall demand. The downturn has been the most tangible among larger customers in the industrial sector, while small and medium-sized customers have demonstrated greater tolerance to the slowdown. At the same time, sales of certain product groups, mainly personal protective equipment, have been more positive, while demand in the automotive and oil & gas sectors has been weaker. Performances have also varied between countries. The overall impact on demand in Sweden has been relatively limited, although with major variations between customer segments. At the same time, the Norwegian and Finnish markets have generally performed more negatively, probably due to the stricter lockdowns in these countries and to weaker demand in the oil & gas sector as well as the shipbuilding industry.

In total, the pandemic is deemed to be the main reason for the Momentum Group's (including Swedol) negative sales performance of approximately 7 percent for the financial year (9 months) compared with the corresponding period in the preceding year. Meanwhile, different government measures, in combina- tion with the Group's own cost-saving measures, have reduced the cost base. Personnel costs during the year decreased by approximately MSEK 150 for comparable units (including Swedol), with government support offsetting the lower volumes primarily during the first and second quarters of the financial year. At the end of the financial year, the Group had no employees left in government supported programmes but continues to regularly implement its own adaptations in the operations to meet fluctuating demand. While demand gradually recovered somewhat in certain areas of the Group during the course of the financial year, with a comparatively strong close to the year, future sales, particularly to the Group's major, export-oriented customers, will largely be impacted by developments in the global markets. Accordingly, it is not currently possible to predict with any certainty how the pandemic will affect Momentum Group in the coming quarters of 2021, since this depends on the extent and duration of the decline in demand and the effects of the cost-cutting measures taken. Measures taken by the Group during the past months, such as increased vigilance when it comes to changes in customer structure and a heightened focus on liquidity, will continue. However, the current situation has not led to any changes in material bases of judgement compared with those applied in the Annual Report for 2019/20.

Sales performance

REPORTING

QUARTER	PERIOD
OCT-DEC 20201	APR-DEC 20201
Change in revenue for: Comparable units in local currency Currency effects Number of trading days Other units2	-4.4% -2.3% 1.8% 0.2%	-6.6% -2.4% 1.1% 0.3%
Total change	-4.7%	-7.6%

• 1) Swedol is included in "Comparable units" as though the acquisition had closed on 1 April 2019.

• 2) Other acquisitions in 2019/20 (excluding Swedol, which is thus included in "Comparable units").