Inission : Interim report July-September 2023

INTERIM REPORT

JULY-SEPTEMBER 2023

Financial summary

515	Net sales	44	Operating profit	1078	(Number of)
Q3 2023 (MSEK)	EBIT Q3 2023 (MSEK)	Employees

Net sales	QUARTERLY OVERVIEW NET SALES & EBITA RESULT* (MSEK)	EBITA result*

660												46
660												44
630												42
600												40
570												38
540												36
510												34
480												32
450												30
420												28
390												26
360												24
330												22
300												20
270												18
240												16
210												14
180												12
150												10
120												8
90												6
60												4
30												2
0												0
Q3 20	Q4 20	Q1 21	Q2 21	Q3 21	Q4 21	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
(K3 reporting)						(IFRS reporting)

	JULY 1 - SEPTEMBER 30, 2023
	Net sales (MSEK)	515	(438)
	EBITA* result (MSEK)	45.2	(27.3)
	Operating profit EBIT (MSEK)	44.3	(26.5)
	Cash flow from operating activities (MSEK)	7.8	(137.6)
	Equity ratio (%)	36%	(29%)
	Earnings per share before dilution (SEK)	1.38	(0.89)
	Earnings per share after dilution (SEK)	1.38	(0.89)

JANUARY 1 - SEPTEMBER 30, 2023
Net sales (MSEK)	1 642	(1 332)
EBITA* result (MSEK)	131.2	(63.2)
Operating profit EBIT (MSEK)	128.7	(60.8)
Cash flow from operating activities (MSEK)	68.9	(81.0)
Equity ratio (%)	36%	(29%)
Earnings per share before dilution (SEK)	4.04	(2.34)
Earnings per share after dilution (SEK)	4.03	(2.33)

* EBITA - operating profit adjusted for amortization of intangible assets arising from acquisitions

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CEO review

Profitable growth

Inission continues its trend of profitable growth. Net sales amounted to MSEK 515 (438) with an EBITA margin of 8.8% (6.2%). We are now seeing significantly improved efficiency in our factories, mainly due to improved material supply and that our new empolyees are getting better trained. Due to reduced operating liabilities, the cash flow from operating activities remains at MSEK 7.8 (137.6).

In the comparison quarter, there is a Covid-related tax and VAT deferral of MSEK 119.

The majority of Inission's factories continues to run with high load. Capacity has increased due to growing staffing levels and improved efficiency, and is now in line with demand. Our investments in new machinery and equipment also increase our capacity, efficiency and enhance quality. We also invest in the skills of our employees through the Inission Academy.

Inission

Inission makes a good quarter in terms of net sales and profit, with MSEK 376 (314) in net sales and an EBITA of MSEK 37 (19). The margin exceeds our communicated target for the business area in 2023 but is in line with our mid-term target. Demand from our customers remains strong. The fact that some customers reduce their inventories and thus reduce orders is more than compensated by an increase in others. In total, the order backlog slightly decreased as customers could reduce the time horizon when placing orders, due to shorter lead times for components. However, the order level for the next three months is at record levels. We predict a slower growth rate going forward. Inventories increased marginally and are expected to decrease due to the enhanced capacity and the improved component situation. Our collaboration with Part Development to develop our processes and working methods is proceeding according to plan.

Enedo

Enedo delivered a good quarter in terms of both sales and earnings. Net sales amounted to MSEK 138 (124), a growth of 12% compared to the previous year. EBITA improved to MSEK 8 (0), which gives a margin of 5.8% (0%). A higher production rate and cost control and pricing drove the positive margin development. Continued operational development of the Tunis factory supported the stable performance in the quarter. The order backlog remains at a good level, while the order intake during the quarter was weaker for 2024 deliveries. Research and development for customer-specific solutions continued at a high pace during the third quarter.

Acquisition activities

During the period, we have been involved in a few processes but decided not to proceed. This is mainly because we do not meet sellers' expectations on valuation. We are systematically looking for acquisitions also outside the Nordics, mainly in Northern Germany and Benelux. Our ambition is to grow by around 5% annually through acquisitions. When Enedo has moved further on its transformation journey, we will also start looking for acquisitions in power electronics.

The future

The order backlog remain good. The component situation is becoming a non-issue, although lead times for some components are still long. Material sell-through has returned to normal levels, which slightly improves the profit margin but reduces the organic growth. Inflation has come down in most markets but is still too high. Whether interest rates have leveled off or will increase somewhat further remains to be seen. Our mix of customers and new contracts coming in makes us feel very confident going forward. The megatrends driving growth in our industry remain strong. Inission, with its positioning, proximity, flexibility, and performance, is well-equipped for the future.

Fredrik Berghel, Chief Executive Officer of Inission AB.

Karlstad, Sweden November 9, 2023

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Business areas

INISSION - CONTRACT MANUFACTURING OF ELECTRONICS AND MECHANICS

Inission is a manufacturing partner with services and products that cover the entire product lifecycle, from development and design to industrialization, volume production, and aftermarket. Inission has production units in Stockholm, Västerås, Borås, Munkfors, Malmö, Trondheim (Norway), Lohja (Finland), Lagedi and Tallinn (Estonia), with a total of 708 employees.

Key-figures		Q1-Q3 2023	Q1-Q3 2022	R12	Full year 2022	Full year 2021
Net sales	(TSEK)	1 234 117	989 275	1 674 095	1 429 253	1 003 200
Growth	(%)	24.7%	38.2%	31.1%	42.5%	-5.3%
of which acquired	(%)	0.0%	7.4%	1.4%	9.6%	0,0%
EBITA	(TSEK)	105 508	59 107	131 480	85 079	52 736
EBITA	(%)	8.5%	6.0%	7.9%	6.0%	5.3%
Assets	(TSEK)	1 365 421	1 033 951	1 365 421	1 315 332	855 967
Liabilities	(TSEK)	826 265	630 366	826 265	879 531	548 539

Net sales amounted to MSEK 1 234.1 compared to MSEK 989.3 the previous year. Of the increase in sales of MSEK 245, 0% relates to acquisitions, which means that organic growth amounted to 24.7%. The EBITA result for the period was MSEK 105.5 compared to MSEK 59.1 the previous year, corresponding to an EBITA margin of 8.5% compared to 6.0% the year before. The EBITA margin over the last 12-month period thus amounts to 7.9%.

ENEDO - POWER ELECTRONICS AND SYSTEMS

Enedo is a product company that develops, manufactures, and sells high-quality electronic power supplies and system solutions. Enedo has operations in Finland, Italy, the US, and Tunisia, with a total of 370 employees.

Key-figures		Q1-Q3 2023	Q1-Q3 2022	R12	Full year 2022	Full year 2021
Net sales	(TSEK)	407 505	342 572	559 134	493 210	369 700
Growth	(%)	19.0%	23.4%	25.7%	33.4%	-5.5%
of which acquired	(%)	0.0%	0,0%	0.0%	0,0%	0.0%
EBITA	(TSEK)	25 706	-4 064	27 640	5 542	-64 704
EBITA	(%)	6.3%	-1.2%	4.9%	1.1%	-17.5%
Assets	(TSEK)	307 327	311 590	307 327	282 050	376 597
Liabilities	(TSEK)	241 053	310 007	241 053	293 536	286 071

Net sales amounted to MSEK 407.5 compared to MSEK 342.6 in the corresponding period of the previous year.

Of the increase in sales of MSEK 64.9, 0% relates to acquisitions, which means that organic growth amounted to 19.0%. The EBITA result for the period was MSEK 25.7 compared to MSEK -4.1 the previous year, corresponding to an EBITA margin of 6.3% compared to -1.2% the year before. The EBITA margin over the last 12-month period thus amounts to 4.9%. The average SEK/EUR exchange rate used in 2023 is 11.4758 and the closing date rate is 11.4923. In 2022, the corresponding rates were 10.5287 and 10.9177, respectively.

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Significant events

PERIOD JULY-SEPTEMBER 2023

On July 6, Inission announced that John Granlund has been appointed as the new CFO of the Company as of September 12. John has extensive experience in economics, a Bachelor of Business Administration from the University of Skövde, an Executive MBA from the University of Goth- enburg, and comes most recently from the role of CFO at SEGULA Technologies in Gothenburg.

On August 1, Inission announced that Olle Hulteberg leaves his operational role as Inission's Marketing Direc- tor, but continues his involvement in Inission as Chairman of the Board and one of the majority owners. As Olle's replacement, Fredric Grahn takes over as the new Marketing Director for Inission AB. Fredric has been part of Inission since 2015 and have had several different sales leadership roles within the Company.

On August 10, Inission announced that Enedo's CEO, Mikael Fryklund, had been promoted to a new position as COO of Inission AB. The new CEO of Enedo is Kalle Huittinen, former Regional Division Manager at ABB Large Motors & Generators Europe.

On August 28, the tenth edition of the Inission innovation award opened. The purpose of the competition is to help entrepreneurs realize their innova- tions. The prize is MSEK 1 in development and manufacturing services from Inission. The final, coordinated with Ny Teknik's 33-listan, will be held on December 6 at the Clarion Hotel in Stockholm.

On September 26, Inission informed about the new collaboration with South Pole. South Pole will train and guide us in developing and establishing working methods and processes to meet the new CSRD directive on corporate sustainability reporting. Based on the new directive, they will carry out quality- assured and complete GHG calculations within scope 1, 2 and 3.

On September 28, Inission announced that Mathias Larsson has been appointed as the new CEO of Inission Munkfors. Mathias has a Master of Science in Mechanical Engineering and was most recently CEO at Anva Polytech AB. Mathias has many years of experience from leading positions in various industries such as EMS, aerospace and elastomers.

AFTER THE END OF THE PERIOD

On November 2, Inission announced that the Company's operations in Malmö are expanding their production section by approximately 50%. This is to become more competitive and increase the capacity. The project is expected to be completed in the second quarter of next year.

For more information: www.inission.com

On September 28, Inission announced that Mathias Larsson has been appointed as the new CEO of Inission Munkfors.

New collaboration with South Pole. From left Mikael Grafström, South Pole, Stefan Larsson, Inission and Marie Gustafsson, South Pole.

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Comments

INCOME STATEMENT Q3 2023 (TSEK)

Group: Net sales in the quarter amounted to 514 546 (438 008), an increase of 76 538 during the quarter (17.5%). The currency impact on net sales for the period amounts to -537. The high order intake and thus high net sales provide an organic growth of 17.4 excluding currency impact. The change in inventories of work in progress and finished goods amounts to -11 122

(37 358), a decrease of 48 480. Other operating income amounts to 17 (6 702).

The cost of raw materials and consum- ables, together with the change in inventories during the quarter, amounts to 307 570 (275 070), an increase of 11.8%. The materials ratio, including material sales, considering the change in inventories, lands at a slightly lower level compared to the previous year of 59.8% (62.8%). Other external costs for the period amount to 43 913 (32 715), an increase of 34%. Personnel costs amount to 106 477 (80 810), an increase of 32%, mainly linked to higher volume and material supply issues, and thus load balancing. Other operating expenses amount to -6 343 (8 940). Depreciation of fixed assets amounts to 18 598

(20 627).

Overall, this gives an operating profit for the Group of 44 348 (26 548) and a profit after financial items of 33 164 (20 503). Other comprehensive income for the period amounts to -5 547 (741), which gives a total comprehensive

income of 22 334 (18 561). Of the total comprehensive income, 25 810 (228) is attributable to Parent Company owners and 174 (513) to non-controlling interests.

Parent Company: To mitigate the currency impact, Inission AB buys US dollar futures continuously. The Company hedges up to 60% of the Group's future net outflow. In the event of hedging, the hedging instruments are remeasured, and in case of changing exchange rates, at the rate prevailing on the balance sheet date. The value of these futures at the end of the quarter amounted to MSEK 1.7, as opposed to the previous quarter's value of MSEK

1.1. This means that the profit for the period was positively impacted by MSEK 0.5.

BALANCE SHEET SEPTEMBER 30, 2023 (TSEK)

Goodwill amounts to 184 039 (175 015) and the increase relates to changing exchange rates. Other intangible assets amount to 102 726 (101 301) and licenses amount to 2 448 (3 324). The total value of tangible fixed assets has decreased to 85 499 (86 164) related to investments in production equipment less depreciation and changing exchange rates.

Right-of-use assets amount to 246 224 (157 686) and refer to lease agreements, newly signed rental agreements, and changed exchange rates. Financial

assets amount to 3 356 (3 395). Inventories amount to 672 029 (656 667), an increase of 2% compared to the same period last year, and are related to the increasing order intake. Trade receivables have increased to 293 891 (235 528) which means an increase of 25% entirely related to increased deliveries to customers. Total assets thus increased to 1 672 748 (1 511 160), an increase of 11%.

Total equity amounts to 605 430

(435 750), of which non-controlling interests amount to 1 727 (50 143). This gives an equity ratio of 36% (29%). Non-current liabilities have increased to 323 130 (240 533). This means that non-current liabilities have increased by 34%. The increase is mainly related to increased lease liabilities according to IFRS 16 measurement.

Inission has requested tax and VAT deferrals for the Swedish companies under special rules related to the pandemic amounting to 118 834, which are recognized as a current liability. Current liabilities amount to 744 188 (834 878) adjusted for tax and VAT deferrals of 625 354 (716 044), corresponding to a decrease of 13% adjusted for the tax/ VAT deferrals. The change is mainly referring to a reduction in the use of invoice discounting credit and lower trade payables.

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Net debt

FINANCIAL POSITION (TSEK)	SEP 30, 2023		SEP 30, 2022		DEC 31, 2022
Cash at the end of the period	45 586		61 251		14 603
Used overdraft facility	-33 461		-13 210		-32 408
Non-current liabilities, interest-bearing	-80 689		-73 621		-194 778
Non-current liabilities, leasing	-206 079		-124 690		-187 611
Current liabilities, interest-bearing	-170 011		-215 798		-95 648
Current liabilities, leasing	-35 966		-28 297		-31 925
Invoice discounting credit	-56 953		-82 738		-69 484
Net cash (+) / Net debt (-)	-537 573		-477 104		-597 251
Net cash (+) / Net debt (-) excl. leasing	-277 840		-324 116		-377 715
Unused overdraft facility	84 227		86 790		67 592
Total overdraft facility	100 000		100 000		100 000
Equity	605 430		435 750		424 315
Balance sheet total	1 672 748		1 511 160		1 579 789
Equity ratio (%)	36%		29%		27%

Parent Company information

The Parent Company, Inission AB, is entirely focused on the management and development of the Group. The Parent Company's net sales consist almost exclusively of the sale of management services to its subsidiaries. There are no significant purchases from any of these.

Transactions with related parties The debt to two majority shareholders was amortized during the third quar- ter, and after that, the debt amounts to MSEK 0. The loans were linked to the acquisition of Enedo shares. Interest expense referring to shareholder loans amounted to MSEK 0.2 in the quarter. The loans had an interest rate of 7.0%.

Presentation of the Interim Report The Consolidated Accounts of Inission AB have been prepared according to the Swedish Annual Accounts Act, RFR

1 Supplementary Accounting Rules for Groups, and International Financial Reporting Standards (IFRS) and interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC) as adopted by the EU. This Interim Report has been prepared under IAS 34 Interim Financial Reporting and the Annual Accounts Act. The Parent Company applies RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act.

Important estimates and assessments for accounting purposes

In preparing the Interim Report, the Company has reviewed and assessed the risks and uncertainties described in

the Annual Report for 2022 and determined that there have been no material changes. For information on the risks and uncertainties affecting the Group, please refer to the Annual Report for 2022.

Dividend

Inission's dividend policy is, if liquidity permits, to distribute 30 percent of the Group's profit after tax.

Calendar

• Year-endReport for Q4 2023 will be released on February 28, 2024
• Interim Report for Q1 2024 will be released on May 8, 2024
• Interim Report for Q2 2024 will be released on August 27, 2024
• Interim Report for Q3 2024 will be released on November 8, 2024

The Board of Directors of Inission AB submits this Interim Report 2023-11-09. This report has not been reviewed by the Company's auditor. The

report has been prepared in a Swedish original and an English translation. In the event of any discrepancies between the two, the Swedish

version is to apply. Rounding-off differences may occur.

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Financial statements

Consolidated statement of comprehensive income in summary (TSEK)

			Note	Jul-Sep 2023	Jul-Sep 2022	Jan-Sep 2023	Jan-Sep 2022	Jan-Dec 2022
	Net sales
	1	514 546	438 008	1 641 622	1 332 103	1 921 173
	Change in inventories of work in progress and		-11 122	37 358	22 771	64 631	68 857
	finished goods incl. capitalized work for own
	account
	Other operating income		17	6 702	5 671	15 545	21 252
Operating income		503 441	482 068	1 670 064	1 412 279	2 011 282
	Raw materials and consumables		-296 448	-312 428	-1 004 495	-869 015	-1 254 829
	Other external costs		-43 913	-32 715	-118 073	-113 473	-162 876
	Personnel costs		-106 477	-80 810	-329 656	-276 494	-380 638
	Depreciation and amortization of intangible assets	-18 598	-20 627	-60 991	-61 405	-82 351
	and tangible fixed assets
	Other operating expenses		6 343	-8 940	-28 185	-31 087	-43 126
Total operating expenses		-459 093	-455 521	-1 541 400	-1 351 474	-1 923 820
Operating profit		44 348	26 548	128 664	60 805	87 462
	Financial income		-176	1 460	505	2 785	4 318
	Financial costs		-11 008	-7 505	-30 542	-19 197	-28 488
Financial items - net		-11 184	-6 045	-30 038	-16 412	-24 170
Income before tax		33 164	20 503	98 626	44 393	63 292
	Income tax		-5 283	-2 683	-16 373	-10 125	-13 712
Profit for the period		27 881	17 820	82 253	34 268	49 580
Profit for the period attributable to:
	Parent Company owners		27 707	17 199	81 793	41 155	56 154
	Non-controlling interest		174	621	460	-6 887	-6 574

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cont'd. Consolidated statement of comprehensive income in summary (TSEK)

Note

Jul-Sep 2023

Jul-Sep 2022 Jan-Sep 2023 Jan-Sep 2022 Jan-Dec 2022

Other comprehensive income:
Items that may be reclassified to profit or loss:
	Translation differences for the year	-5 547	741	4 386	9 906	14 814
Items not to be reclassified to profit or loss:
	Remeasurement of the net defined benefit liability	0	0	0	0	858
	Income tax relating to the above item	0	0	0	0	0
Other comprehensive income for the year	-5 547	741	4 386	9 906	15 672
	Parent Company owners	25 810	228	81 793	6 030	12 157
	Non-controlling interest	174	513	460	3 876	3 515
Total other comprehensive income for the year	25 984	741	82 253	9 906	15 672
Total comprehensive income for the year	22 334	18 561	86 639	44 174	65 252
Total comprehensive income for the year related to:
	Parent Company owners	49 352	17 428	86 179	47 186	68 311
	Non-controlling interest	314	1 133	460	-3 011	-3 059
Total	49 666	18 561	86 639	44 174	65 252
Earnings per share, based on the profit attributable
to Parent Company shareholders for the period:
	Earnings per share before dilution	1.38	0.89	4.04	1.81	2.57
	Earnings per share after dilution	1.38	0.89	4.03	1.80	2.57
	Weighted average no. of shares before dilution	20 137 000	19 924 817	20 358 285	18 984 698	19 372 842
	Weighted average no. of shares after dilution	20 214 521	19 972 457	20 426 989	19 000 578	19 396 662
	Number of shares at the end of the period	22 135 502	19 924 817	22 135 502	19 924 817	20 263 042

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Consolidated balance sheet in summary (TSEK)

	ASSETS	Note	2023-09-30	2022-09-30	2022-12-31
	Fixed assets
		Intangible assets
					Goodwill		184 039	175 015	178 532
					Other intangible assets		102 726	101 301	101 583
					Licenses, etc.		2 448	3 324	4 250
		Total intangible assets		289 213	279 640	284 365
		Tangible fixed assets
					Machinery and other technical equipment		70 006	79 386	79 839
					Equipment, tools, fixtures, and fittings		5 584	4 808	4 566
					Improvement costs to third-party property		9 909	1 970	2 552
		Total tangible fixed assets		85 499	86 164	86 957
			Right-of-use assets		246 224	157 686	224 532
		Financial fixed assets
				Other non-current securities	2	355	313	1 090
				Other non-current receivables	2	3 001	3 083	3 105
		Total financial fixed assets		3 356	3 395	4 195
			Deferred tax assets		19 522	18 567	18 732
	Total fixed assets		643 814	545 452	618 782
	Current assets
			Inventories		672 029	656 667	642 235
			Trade receivables		293 891	235 528	288 295
			Derivative instruments		1 663	1 067	0
			Current tax receivables		0	2	0
			Other receivables		5 187	4 374	4 341
			Prepayments and accrued income		10 578	6 820	11 533
			Cash and cash equivalents		45 586	61 251	14 603
	Total current assets		1 028 934	965 708	961 007
	TOTAL ASSETS		1 672 748	1 511 160	1 579 789
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