Administration Report

Financial development during the year

Net sales and profit

The AddLife group’s net sales increased by 14 percent (52) and totalled SEK 9,084 million (7,993). Acquired growth was 22 percent (43) and organic growth excluding COVID-19 amounted to 4 percent (3). COVID-19 related sales fell sharply to SEK 760 million (1,976). Exchange rate fluctuations had a positive impact on net sales of 4 percent (-2), corresponding to SEK 352 M (104).

EBITA during the financial year amounted to SEK 1,221 million (1,273) and the EBITA margin was 13.4 percent (15.9). The lower margin is due to the reduced COVID-19 related sales, which could be managed by the existing organization without increased costs. Exchange rate fluctuations had a positive impact on EBITA of 3 percent (-2), corresponding to SEK 42 million (-16). 

Net financial items were SEK -206 M (-69) and profit after financial items amounted to SEK 602 M (927). The increase in negative net financial items is due to increased interest expenses linked to the financing of acquisitions and exchange rate fluctuations. Interest expenses amounted to SEK 112 million (57) and exchange rate losses amounted to SEK 95 million (10). Exchange losses are linked to the conversion of loans and earn-outs in foreign currency. Profit after tax decreased by 33 percent (+39) for the financial year and amounted to SEK 483 million (721) and the effective tax rate amounted to 20 percent (22). Earnings per share before dilution for the financial year amounted to SEK 3.96 (6.03).

Profitability, financial position and cash flow

Return on equity at the end of the financial year was 10 percent (22). Return on capital employed totalled 8 percent (12). The equity ratio at the close of the financial year was 38 percent (40). Equity per share, excluding non-controlling interests, totalled SEK 40.76 (35.14).

Return on working capital (P/WC) totalled 61 percent (95). The long-term P/WC target for the Group and all of its companies is 45 percent. The profitability measure R/RK rewards high operating profit and low tied-up capital, which in combination with the growth target of 15 percent provides the conditions for profitable growth of the companies and the group. The average working capital, which for the calculation of P/WC includes inventories with the addition of the net of accounts receivable and accounts payable, amounted to SEK 2,008 million (1,347) at the end of the financial year.

The group's interest-bearing net debt at the close of the financial year stood at SEK 5,410 million (3,870), including pension liabilities of SEK 60 million (82), as well as lease liabilities of SEK 351 million (339) and earn-outs corresponding to SEK 266 million (349). In connection with the acquisition of MBA in January, the credit facilities were expanded by EUR 98 million. The outstanding bank loans at the end of the financial year amounted to SEK 4,968 million (3,408). Current bank loans amount to SEK 2,432 million (3,147), of which SEK 1,096 million maturing in January 2023 was extended by 12 months. During the year, AddLife also renegotiated credit facilities of EUR 225 million, which now run for three years with an extension option of up to another 24 months. The Group has a good margin in the covenants under bank agreements, which are interest coverage ratio of at least 4.0 times and equity/assets ratio exceeding 25 percent. 

Cash and cash equivalents, consisting of cash and bank balances, together with granted but unutilized credits amounted to SEK 890 million (674) as of December 31, 2022. As of December 31, 2022, the Group's available (including utilized and unutilized) credit facilities amounted to SEK 5,859 million (4,083). The net debt/equity ratio was 1.1, compared with 0.9 at the beginning of the financial year. The intention is to reduce debt through own generated cash flow. 

Cash flow from operating activities reached SEK 909 million (1,010) during the financial year. The change is mainly attributable to lower earnings after financial items. Acquisitions amounted to SEK 818 million (2,843).  Investments in fixed assets during the financial year amounted to SEK 282 million (143). Divestments of non-current assets amounted to SEK 14 M (9). Repurchases of own shares amounted to SEK 60 million (0). Issued and redeemed call options amounted to SEK 33 million (-9). Dividends to parent company shareholders have been paid in the amount of SEK 243 million (183).

Business areas

AddLife's operations during the financial year were organised in two business areas: Labtech and Medtech.

Labtech

Net sales during the financial year amounted to SEK 3,880 million (4,373), a decrease of 11 percent (+22). Organic sales, excluding COVID-19 related sales, increased by 6 percent and acquired growth was 4 percent. COVID-19 related sales decreased by 56 percent and accounted for SEK 760 million (1,719). COVID-19 testing is expected to be carried out in combination with tests for other respiratory diseases in the future, which is why these sales will not be reported separately in the future. Exchange rate fluctuations had a positive impact on net sales of 3 percent.

EBITA decreased by 32 percent (+57) to SEK 667 million (977), corresponding to an EBITA margin of 17.2 percent (22.3).

Labtech had a strong start to the year with a large share of sales related to COVID-19 products. Sales peaked in the first quarter but have since gradually declined as the spread of the virus has declined. Instead, demand has increased in diagnostics, research and drug development. Staff shortages in healthcare have also affected the diagnostics business, driving the need for more efficient processes and increased interest in time-saving technologies and services. 

Medtech

During the financial year, net sales amounted to SEK 5,210 million (3,625), an increase of 44 percent (119). Organic growth, excluding COVID-19 related sales, was 2 percent and acquired growth was 43 percent. COVID-19 related sales amounted to SEK 0 million (257). Exchange rate fluctuations had a positive impact on net sales of 6 percent. 

EBITA increased by 85 percent (58) to SEK 573 million (310), corresponding to an EBITA margin of 11.0 percent (8.6).

Medtech was strongly affected by the pandemic at the beginning of the year, but after the infection rate decreased, activity has increased. Growth in the sector has mainly been driven by the acquisitions made over the past year. Visitor restrictions have been eased, increasing the possibility of customer visits and marketing. Investments in the further development of the digital solutions in home care have continued and are expected to continue in the coming years.