Bond Investor Presentation - Carnegie income... · Bond Investor Presentation Contemplated Bond Issue of Maximum SEK 500,000,000 August 2014 44 70 102 71 123 152 100 100 100 150 150

Strictly Private and Confidential – Includes inside information and may only be distributed to pre-sounding investors. Unauthorized redistribution is a criminal offence.

Bond Investor Presentation Contemplated Bond Issue of Maximum SEK 500,000,000 August 2014

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Important information 44

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This presentation (the “Presentation") has been produced by Diamorph AB (publ) solely for use in connection with the contemplated offering of bonds by the Company expected to be initiated in August 2014 (the “Bonds”) (the “Bond Issue”), and may not be reproduced or redistributed in whole or in part to any other person. The joint bookrunners for the Bond Issue are Carnegie Investment Bank AB and Pareto Securities AB (the “Joint Bookrunners”). This Presentation is for information purposes only and does not in itself constitute an offer to sell or a solicitation of an offer to buy any of the Bonds. By attending a meeting where this Presentation is presented, or by reading the Presentation slides, you agree to be bound by the following terms, conditions and limitations. References to “Diamorph”, the “Company”, the “Issuer” and the “Group” refer in this presentation to Diamorph AB (publ) and its subsidiaries, unless otherwise indicated by the context.

The information contained in this Presentation has not been independently verified. No representation or warranty (express or implied) is made as to the accuracy or completeness of any information contained herein, and it should not be relied upon as such. The Company does not intend to, and does not assume any obligation to, update this Presentation. Neither the Company, nor the Joint Bookrunners or any of their respective parent companies or subsidiaries nor any such person’s directors, officers, employees, advisors or representatives (collectively the “Representatives”) shall have any liability whatsoever arising directly or indirectly from the use of this Presentation. An investment in the Bonds involves a high level of risk and several factors could cause the actual results or performance of the Company to be different from what may be expressed or implied by statements contained in this Presentation. By attending a meeting where this Presentation is presented, or by reading the Presentation slides, you acknowledge that you will be solely responsible for your own assessment of the Company, the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company, its business, the Bonds and the Company’s other securities. The content of this Presentation is not to be construed as legal, credit, business, investment or tax advice. Each recipient should consult with its own legal, credit, business, investment and tax advisers to receive legal, credit, business, investment and tax advice.

Neither this Presentation nor any copy of it, nor the information contained herein, is being issued, and nor may this Presentation nor any copy of it, nor the information contained herein, be distributed directly or indirectly, to or into Australia, Canada, Japan, the Republic of Cyprus, the United Kingdom or the United States or to any U.S. person (as defined in Rule 902 of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)), or to any other jurisdiction in which such distribution would be unlawful, except as set forth herein and pursuant to appropriate exemptions under the laws of any such jurisdiction. Neither the Company nor the Joint Bookrunners, nor any of their Representatives, have taken any actions to allow the distribution of this Presentation in any jurisdiction where action would be required for such purposes. The distribution of this Presentation and any purchase of or application/subscription for Bonds or other securities of the Company may be restricted by law in certain jurisdictions, and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restrictions. Any failure to comply with such restrictions may constitute a violation of the applicable securities laws of any such jurisdiction. None of the Company or the Joint Bookrunners or any of their Representatives shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with this Presentation. Neither the Company nor the Joint Bookrunners has authorised any offer to the public of securities, or has undertaken or plans to undertake any action to make an offer of securities to the public requiring the publication of an offering prospectus, in any member state of the European Economic Area which has implemented the EU Prospectus Directive 2003/71/EC, as amended (the “Prospectus Directive”).

In the event that this Presentation is distributed in the United Kingdom, it shall be directed only at persons who are either (a) "investment professionals" falling within Article 19(5) of the UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), or (b) high net worth companies, unincorporated associations and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “Relevant Persons”). Any person who is not a Relevant Person should not act or rely on this Presentation or any of its contents. Any investment or investment activity to which this Presentation relates will be available only to Relevant Persons and will be engaged in only with Relevant Persons. This Presentation is not a prospectus for the

purposes of Section 85 of the UK Financial Services and Markets Act 2000, as amended (“FSMA”). Accordingly, this Presentation has not been approved as a prospectus by the UK Financial Conduct Authority (“FCA”) under Section 87A of the FSMA and has not been filed with the FCA pursuant to the UK Prospectus Rules of the FCA, nor has it been approved by any person authorised under FSMA.”

This Presentation does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. In the event that this Presentation is distributed in the United States, it shall be directed only at persons who are “qualified institutional buyers” as defined in Rule 144A promulgated under the Securities Act (“Rule 144A”) (“QIBs”) in reliance upon Rule 144A under the Securities Act. The Bonds have not been and will not be registered under the Securities Act, or with any securities regulatory authority of any state or other jurisdiction in the United States. Accordingly, the Bonds may not be offered, sold (directly or indirectly), delivered or otherwise transferred within or into the United States or to, or for the account or benefit of, US Persons, absent registration or under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Bonds are being offered and sold only (i) outside the United States to persons other than US persons (“non-US purchasers”, which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-US beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act and (ii) in the United States to QIBs in reliance upon Rule 144A under the Securities Act. As used herein, the terms “United States” and “US person” have the meanings as given to them in Rule 902 of Regulation S under the Securities Act. By receiving this Presentation, you warrant and represent that (i) if you are located within the United States and/or a US person or in the United States, you are a QIB, (ii) if you are a non-US person, you are a Qualified Investor (as defined in the Prospectus Directive (with cross-references therein)), or a Relevant Person (as defined above).

This Presentation is dated 25 August 2014. Neither the delivery of this Presentation nor any further discussions of the Company or the Joint Bookrunners with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not undertake any obligation to review or confirm, or to release publicly or otherwise to investors or any other person, any revisions to the information contained in this Presentation to reflect events that occur or circumstances that arise after the date of this Presentation.

The Joint Bookrunners and/or its Representatives may hold shares, options or other securities of the Company and may, as principal or agent, buy or sell such securities. The Joint Bookrunners may have other financial interests in transactions involving these securities.

This Presentation is subject to Swedish law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Swedish courts.

Forward Looking Statements Certain information contained in this Presentation, including any information on the Company’s plans or future financial or operating performance and other statements that express the Company’s management’s expectations or estimates of future performance, constitute forward-looking statements (when used in this document, the words “anticipate”, “believe”, “estimate” and “expect” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements). Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. The Company cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Company to be materially different from the Company’s estimated future results, performance or achievements expressed or implied by those forward-looking statements.


3

Summary of key risk factors 44

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• The Group conducts business in several countries and is therefore exposed to risks associated with international business, such as risks relating to differences between rules in different countries, different legal systems, different accounting standards and tax systems, varying terms of payment between different countries and varying currency rates.

• A change in price of the raw materials necessary for the Group’s production may negatively affect the Company’s business, financial position and result.

• Weak global or economic trends may negatively affect the Company’s business, financial position and result.

• The Company’s ability to market, develop and sell its products may be adversely affected if the Company fails to obtain or enforce relevant patents and other intellectual property rights which may negatively affect the Company’s business, financial position and result.

• The Group’s production activities are mainly conducted in the production facilities in the Czech Republic and the United Kingdom. Any interruptions or disturbances in these facilities may therefore adversely affect the Company’s business, financial position and results.

• A part of the Company’s strategy is to acquire companies and businesses. Any failure to successfully integrate such acquired companies and businesses into the Group may adversely affect the Company’s business, financial position and results.

• Any deficit in Modular Stock Ltd.’s defined contribution retirement plans would have to be recovered by the Group, and any such recovery could have a negative impact on the Company’s business, financial position and results.

• The Group’s business is exposed to environmental, safety and health risks.

• The Company is exposed to certain financial risks, such as currency risks and liquidity risks.

• An investment in the Bonds carries a credit risk relating to the Company’s ability to meet its payment obligations under the Terms and Conditions.

• It cannot be guaranteed that the Bonds will be admitted to trading on a regulated market and even if the Bonds are admitted to trading on a regulated market, there is not always active trading in listed securities.

• The Company is dependent on its subsidiaries, and in the event of liquidation, bankruptcy or similar in any of its subsidiaries, all creditors of such subsidiaries would be entitled to payment in full out of the assets of such subsidiaries before the Company, as a shareholder, would be entitled to any payments.

• The Terms and Conditions include certain provisions pursuant to which the bondholders may resolve on matters, relating to the Bonds, which bind all bondholders. Consequently, resolutions by the majority of the bondholders may impact a specific bondholder’s right in a manner that would be undesirable for such bondholder.

Below is a summary of some risks relating to the Group and to the Bonds. The risks described in this summary are not ranked in order of importance nor are they exhaustive, why risks not discussed herein may also adversely affect the Group, the price of the Bonds and the Company’s ability to service the Bonds. Potential investors should carefully consider the information herein (including the more detailed description of certain risk factors beginning on page 37) and make an independent evaluation before making an investment decision.

Risks relating to the Bonds Risks associated with the Company, the industry and the market


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Table of contents 44

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Summary of the Bond Issue

Introduction to Diamorph

Products and market overview

Business overview

Risk factors

Transaction and financial information

Appendix


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Summary of terms

Use of proceeds Refinance outstanding bond and the deferred payment from the acquisition of Tenmat

Tenor 5 years

Coupon Fixed: [6.50-7.00]% p.a., semi-annual interest payments

Issuer Diamorph AB (publ)

Volume Maximum SEK 500,000,000

Status Senior secured

Change of control Investor put at 101% if any person other than Latour or Serendipity acquires/controls more than 50% of the shares/voting rights

Financial covenants

Incurrence test (additional debt must be pari passu or subordinated to, and have maturity after, the bond):

Net Interest Bearing Debt / EBITDA < 4.00x year 1-2, < 3.75x year 3, < 3.50x year 4 and < 3.00x year 5

Interest Coverage Ratio > 3.00x year 1-3 and > 3.50x year 4-5

Negative pledge, with carve-out for a general basket of additional debt up to EUR 5,000,000

Distributions to shareholders

Up to 50% of previous year’s net profit, from the earlier of (i) 24 months after the issue date or (ii) the occurrence of a listing of the shares in the Issuer and a full utilization of the equity claw back, provided that the distribution test (below) is fulfilled:

Net Interest Bearing Debt / EBITDA < 3.00x

Interest Coverage Ratio > 3.50x

Jurisdiction Swedish law

Agent Nordic Trustee & Agency AB

Listing NASDAQ OMX Stockholm not later than 60 days after issue date

Call Option (American)

Make whole during first 36 months 103.00% after 36 months, 102.50% after 42 months, 102.00% after 48 months and 101.00% after 54 months

Voluntary partial repayment

During first 3 years, up to 10% of nominal amount p.a. @ 102.00%

Nominal amount SEK 1,000,000

Subsequent issues Up to SEK 300,000,000 (an aggregate of SEK 800,000,000), subject to incurrence test

Equity claw back Up to 30% of nominal amount @ lower of 103.00% or call option amount, provided that no less than 70% of nominal amount remains outstanding

Security Pledges over (i) the Issuer’s holding of its shares in Diamorph Bearings AB (80%) and all shares in Diamorph UK Ltd and Modular Stock Ltd, (ii) a SEK 500,000,000 intra-group loan and (iii) the escrow account on which the cash net proceeds will be held until the early redemption date

Joint bookrunners Carnegie Investment Bank AB and Pareto Securities AB

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Interest rate increase Coupon increase by 75 bps, if Latour’s or Serendipity’s shareholding declines to <50% of their respective current shareholding (except if pursuant to listing of shares or if Latour’s holding of shares and voting rights in the Issuer amounts to at least 20%)

Exchange offer Bonds may be paid for in kind by delivery of the Issuer’s outstanding bonds. Roll-over bonds will receive interest up until the early redemption date


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Transaction structure 44

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80%

Diamorph AB (publ) (Sweden)

100%

Diamorph Bearings AB (SWE)

Intra-group loan

= No share pledge

SEK 500m New bond

= Intra-group loan pledge

SEK 425m Outstanding bond

SEK 77m Transaction triggered payments

Early redemption fee, deferred

payment, transaction costs

Shareholders: >200 including Latour (21.1%) and Serendipity (23.1%)

• The Bonds will be issued by Diamorph AB (publ), the ultimate parent company of the Diamorph Group with the main purpose of refinancing the outstanding bond (SEK 425m senior secured bond and early redemption fee of SEK 32m) and pay off the outstanding deferred payment (GBP 3m/SEK 35m), from the 2012 acquisition of Tenmat, accelerated by the refinancing

• The Bonds will be secured by pledges over:

i. The Company’s holding of the shares in Diamorph Bearings AB (80%) and all shares in Diamorph UK Ltd and Modular Stock Ltd

ii. A SEK 500,000,000 intra-group loan iii. The escrow account (net cash proceeds until the early redemption date)

• The Tenmat Group companies, wholly owned subsidiaries of the pledged company Modular Stock Ltd, represents Diamorph’s primary operating business and account for most of Diamorph’s revenues and EBITDA

• Please see page 30 for additional information on the transaction structure

• Bonds may be paid for in kind by delivery of outstanding bonds issued by the Issuer and roll-over investors will not lose potential interest on outstanding bonds up until the early redemption date. Roll-over investors will receive, in cash, on or about the early redemption date:

i. Accrued but unpaid interest on the roll-over bonds up until the early redemption date

ii. The premium of the call option amount to be paid by the Company for early redemption of the outstanding bonds

• Previous vendors and current bondholders, among others Tony Moore, on aggregate holding bonds of SEK 30m intend to subscribe for full roll over of current holding

– Such subscriptions will in terms of allocation be considered on equal terms as other investors’ subscriptions

= Share pledge

SEK 2m Cash

Note: Diamorph UK will use the proceeds from the SEK 500m intra-group loan provided in connection with the Bond Issue to settle the deferred payment of GBP 3m and to repay an outstanding SEK 425m intra-group loan from the Company, thus enabling the Company to refinance the outstanding bond and pay transaction costs.

Diamorph UK and Modular Stock Ltd (UK)


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Investment highlights 44

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Leading niche market positions with high

barriers to entry

• Supplier of components for especially demanding industrial applications within niche industries

• Exposed to several niche markets with an aggregate value of SEK ~3bn, out of which Diamorph holds 10-15% market share

• High barriers to entry, due to the advanced nature of the technology and long term relationships with customers

Unique and diversified product

portfolio

• Five individually significant and distinct business segments, none accounting for more than 30% of sales, making the Company well diversified and with low industry-specific exposure

• Diversified products and several single-source customers result in high stickiness to Diamorph

• No dependency on any single customer – the Company’s largest customer represents 4% of total revenue

• High geographical diversification – customers in all continents and across 60 countries

High margin business with high debt service

capabilities

• Several years of stable sales around SEK 350m and a high EBITDA margin of +30% - LTM EBITDA of SEK 114m

• Adjusted for FX-effects, sales for main subsidiary Tenmat shows a CAGR of ~4.1% since 2005 only accounting for organic growth and 6.7% with acquisitions included

• Limited need for capex – annual average of SEK 6m since 2012 – and low net working capital swings

• Strong track record of solid cash generation of SEK ~90m before financing per year caters for high debt service capacity

Strong and committed owners

• Founding owner Serendipity Ixora holds 23.1% of the shares in Diamorph

• Second main shareholder Investment AB Latour, with a net asset value of SEK ~28bn, holds 21.1% of the shares in Diamorph

• Committed owners – Latour invested in Diamorph in mid 2012 and almost doubled its ownership in December 2012

Diamorph is a leading provider of advanced materials and benefits from strong customer relationships


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Presenting today 44

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Mark Hutchison CFO Manchester, UK Diamorph since 2014 Mark has a degree in Natural Sciences from Cambridge University. He trained with KPMG and is a qualified chartered accountant in the UK. He has held senior finance leadership positions within Spectris plc, a UK listed engineering company, most recently as divisional CFO for one of the group’s businesses in Switzerland

Fredrik Svedberg CEO Stockholm, Sweden Diamorph since 2009, CEO since 2010 Fredrik has degrees in Engineering from Lund Technical University and Finance from Lund School of Economics. He joined Diamorph in 2009 and assumed the position of CEO in 2010. He is also board member in the subsidiaries of Diamorph


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Business overview

Risk factors


Appendix


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Goals and outcome after 2012 acquisition Introduction to Diamorph

Business maintained, operational integration, growth

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2. Integrate

• Group financial consolidation moved to UK

• Teams working jointly on material development and sales

1. Maintain

• Organisation intact

• Sales intact

3. Grow

• Growing cross-sales

• Stronger development pipe

• Joint focus on Diamorph products

• New production line installed in Trafford Park


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• Diamorph supplies advanced material solutions for especially demanding industrial applications

• Diamorph has a global customer base with customers in 60 countries and nearly 300 people employed in operations in Sweden, the Czech Republic and UK

• The Company engages in development, manufacturing and sales of industrial products

• Diamorph’s business model is to identify deep niches and supply differentiated products to solve demanding industrial challenges

Diamorph in brief Introduction to Diamorph

History of Diamorph

Diamorph supplies advanced materials solutions for especially demanding industrial applications with the vision of becoming one of the

world leaders in differentiated high performance composites and engineering materials

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• The company originates from businesses started 100 years ago

• It has been profitable with a focus on cash flow since the start

• Over the years, the group has introduced various industry standard products such as Feroform rotor blades and Firefly downlight covers

• Over the past ten years, growth in sales and increased EBITDA-margins have been observed

2012

Management buyout of Tenmat lead by

Tony Moore

1997

TENMAT is formed

1986 2006

Tenmat acquired Railko Ltd

Diamorph acquires HOB CerTec

Diamorph acquires Tenmat

Diamorph is founded

2003 2011

Tenmat consolidated all production into

Trafford Park

2008 1914

Business description


• Cash: SEK 166m

• Sales: SEK 351m

• EBITDA: SEK 114m (33%)

• Cash conversion: >90%

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Key figures Introduction to Diamorph

Diversified customer base and resilient cash flow

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Sales and EBITDA-margin development* Diversified portfolio of customers and sales

Distribution in 60 countries globally Key financial figures**

Largest customer: 4%

Others 77%

* Figures presented in SEK using fixed FX-rate (average for last twelve months). Pro forma data up to 2012 ** Q2/LTM 2014 figures

Europe 55%

USA 24%

Rest of world 21%

0%

5%

10%

15%

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35%

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2005 2006 2007 2008 2009 2010 2011 2012 2013 LTMJun-14

EBITD

A (%

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sal

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SEK

m)

Sales EBITDA %


• The Diamorph sales team continuously identifies new opportunities and needs in the market

• The technical team assesses these opportunities and needs and translates them into products

• Before entry, the Company ensures that the market is capable of generating sustainable high returns

• Diamorph chooses market niches where its products are differentiated

– The company strives to avoid head-to-head competition

– Markets are usually small on a global basis

– An indication that the selected market niche is differentiated is that high margins are achieved

• Long sales cycles for new products

– Critical products require rigorous evaluation by the customer before approval

• Diamorph will only enter a market if the niche is deep enough, i.e. entry barriers must be high and possible to uphold over time

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Diamorph’s competitive strategy Introduction to Diamorph

Diamorph’s source of competitive advantage is differentiation in deep niches

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Market needs and opportunities Material design

Differentiation Deep niche

Market needs and opportunities, material design Illustration of Diamorph’s strategy

Differentiation, deep niche


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Business overview

Risk factors


Appendix


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Overview of product categories Products and market overview

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Business segment breakdown of sales (2013)

Diversified revenues in terms of product portfolio, where no individual product category accounts for more than 30%

Geographical breakdown of sales (2013)

Europe 55%

USA 24%

Rest of world 21%

SEK 334m

Wear parts & bearings

• Aerospace • Railway • Hydropower • Marine

Ceramic rollers

• Ceramic tile manufacturing

• Façades

Other high

temperature materials

• Aluminium processing • Hot gas filtration • Glass manufacturing • Analytical equipment

Rotary vanes

• Oil lubricated compressors and vacuum pumps

Passive fire protection

• Cavity barriers • Downlight covers • Mechanical service

penetrations

Wear parts & bearings High temperature materials


45%

High temperature

materials 55% SEK 334m


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• The Company produces wear parts and bearings with low friction and long lifespan

• This product category contains composites and ceramic products for applications within a variety of industries including space rockets, railways, submarines, hydro power and tankers

– Wear parts are used in industries to protect machines, tools and other equipment from premature failure due to wear

– Bearings are used in many types of applications in order to reduce friction and wear as well as to increase efficiency

• Market drivers: Marine and rail industries are important markets for the segment, which follows the general economy

• Examples of customers include blue chips such as Airbus and BAE Systems as well as General Electric Company

Wear parts & bearings 1 (2) Products and market overview


Critical components for marine, aerospace and railway

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Wear parts & bearings share of sales (2013)


45%

High temperature



• Rotary vanes is an application where the Company is a world leading producer

• The Company develops and manufactures rotary vanes made of composite materials which are ideal for oil lubricated vane vacuum pumps

– The pumps are used on pumper trucks, in milking and most recently for hydraulic fracking

• Consistent quality and reliable performance have lead to a dominating market position

• Market drivers: The hydraulic fracking industry in North America is predicted to drive further growth

• Examples of customers include National Vacuum, Ro-Flo Compressors and Fruitland Manufacturing

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Wear parts & bearings 2 (2) Products and market overview

Rotary vanes

Industry standard for oil lubricated vanes pumps

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Wear parts & bearings share of sales (2013)


45%

High temperature



• Passive fire protection contains products for downlight covers, cavity barriers, ventilation and cable penetrations to prevent the spread of fire in buildings

– The material expands when exposed to extreme heat, can seals cavities and thereby contain fire

• The products, which all are rigorously tested and certified, include:

– Downlight covers, cable ports, ventilated fire barriers, loft covers and pipe wraps

• Market drivers: Construction industry, stricter legislations for fire protection, environmental aspects such as more timber frame constructions and higher demand for energy saving solutions

• Examples of customers include Astroflame Fireseal and Sheffield Insulations

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High temperature materials 1 (3) Products and market overview


One of the most certified intumescent passive fire protection material in the world

High temperature materials share of sales (2013)

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45%

High temperature



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• Diamorph produces the world's longest ceramic rollers for use in production of ceramic tiles and flat-screen monitors

– Other applications for the rollers include façade materials for buildings and heated conveying of various products

• Diamorph’s rollers are capable of higher loads when compared to competitors’ and can be made in lengths up to 6 meters

– Longer rollers enable a higher tile production capacity

• Market drivers: The European construction industry drives the demand for ceramic tiles which affects the consumption of rollers

• Examples of customers include Saudi Ceramics, SICC and Kalesseramik


Ceramic rollers

Ceramic rollers with reliable and consistent quality

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45%

High temperature



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• Diamorph manufactures a range of products designed to perform at high temperatures

• The high temperature materials are used to produce:

– Covered float glass lehr rollers for glass manufacturing

– Ceramic brake discs for sports cars

– Gas filtration products for waste plants

– Insulation sheets for high voltage applications

– Molten metal processing refractories

• Market drivers: Stricter environmental legislations

• Examples of customers include Saint-Gobain and Pilkington


Other high temperature materials

A variety of products to serve demanding niches in the high temperature materials market

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45%

High temperature



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• Diamorph is active in the market for advanced materials

• The Company manufactures critical components developed for demanding industrial applications

– The components increase lifespan, performance and/or reliability in the customers’ applications

• As customers demand high quality and complete solutions, a supplier is required to have technological breadth and depth, in order to meet the demand and successfully solve the customers’ problems

• To meet different customers' varying material needs, Diamorph works with many different materials, such as ceramics, fiber reinforced polymers and metals

• The advanced materials market is mainly driven by technological advancement

Market and customers Products and market overview

Markets support further growth

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Addressable market overview*

Diamorph’s market share

Differentiation strategy and growth logic

Wear parts & bearings (SEK 1bn) High temperature materials (SEK 2bn)

* Company estimations

15% 10%

Wear parts & bearings Rotary vanes

• Focus on lubrication-free or water lubricated bearings

• Growth by new products and market share

• Focus on a special type of pump

• Growth if market grows


• Focus on intumescent materials

• Growth with new products, increasing market share and growing market

Ceramic rollers

• Focus on product development leadership

• Growth through new applications and market share

Other high temp materials

• Focus on non-scratch lehr rollers, large filters and high-end brake discs

• Growth by new products

Overview Breakdown of customers in 2013

A: 4%

B: 4%

C: 3%

D: 2%

E: 2%

F: 2%

G: 2%

H: 2%

I: 2%

J: 2%

Others: 77%


• Diamorph’s strategy is to focus on product niches with a favorable competitive landscape, e.g. where Diamorph can become one of the market leaders through innovation, differentiation and long term relationships with customers

• In its chosen niches, Diamorph’s products very often constitute a critical part of and yet a small cost in a larger complex system

• The strategy creates high barriers to entry

– Patents, undisclosed know-how and processes take many years to discover and develop

– Rigorous verifications are required, making it difficult for customers to switch supplier

• Competition varies depending on niche and geographical market

• Competitors and Diamorph's position in different niches are listed below

22

Competitors and positioning Products and market overview

Overview

Strong and defendable market positions

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Overview of competitors and positioning*

Niche Competitors Diamorph’s competitive advantage Position

Wear parts & bearings • Components for railway rolling stock • Support pads for bitumen tankers

Faigle Kunststoff Thordon Bearings

Longer lifespan, low noise and low stick-slip Longer lifespan, temperature resistance, low stick-slip

# 1 in India # 2 in the world

Rotary vanes Isoma Longer lifespans and better performance # 1 in the world

Passive Fire Protection • Light covers

Promat

More certifications than the competition

# 1 in USA, # 1 in UK

Ceramic rollers Keratech 0 technical claims (2013) # 2 in Europe

High-temperature materials • Covers for float glass lehr rollers

Nichias Corporation

Track-record (>10 years life) yields high barriers to entry

# 1 in the world

* Company estimations


23


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Business overview

Risk factors


Appendix


24

• The sales organization consists of 31 engineers in UK, USA, Czech Republic, Italy, France and Sweden

– The in-house organization is complemented by distributors and agents

• The customers are located in 60 countries across all continents

• Diamorph is close to the market in each of its niches, being in direct contact with customers, following up leads and relaying needs and order specifications to the development team

– The Company’s sales efforts resulted in the 2013 Queen's Award for Enterprise in the International Trade category

• Marketing and sales processes and approaches vary widely from one niche to another, driven by each market’s particular characteristics

– Rotor blade customers tend to be retained once established

– Fire protection sales are partly to end users requiring emphasis on customer service

– Stern tube bearing customers need to be sought constantly as the market tends to be project based

Sales organisation Business overview

Description Overview of sales organization

44

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World wide sales reach

Net sales by geography in 2013

Location of sales offices

Europe 55%

USA 24%

Rest of world 21%

SEK 334m

1. Global customer base

2. Technical sales by engineers

3. Sales approaches vary between niches


25

Development organisation Business overview

Description Development pipe

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Continuous development of value-adding, differentiated materials and products

Location of R&D facilities

Overview of R&D setup

Product Development Verification Sales

A

B

C

D

E

F

G Wear parts & bearings

High temperature materials

• The development organization consists of 18 scientists and technicians with support from production for prototype experiments and pilot-scale production

• Development expenses amounted to 5% of sales in 2013

• The development organization is adapted to be capable of continuously developing new products and improve existing ones

– The Company’s R&D work resulted in the 2012 Queen's Award for Enterprise in the Innovation Category

• Diamorph’s intellectual property is protected through a combination of patents and undisclosed technical know-how

• Diamorph’s development facilities are located in Sweden, UK and Czech Republic.

• A common part of the development is testing and verification at customer sites and in the field

• The development pipeline consists of a number of products in various degrees of completion, evenly distributed over both business segments

1. Development close to market

2. Pipe spread over several business areas

3. Verification and tests at customers’ facilities common


26

Production organisation Business overview

Description Overview of facilities

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Consistent quality and high reliability from procedurally driven production

Facility Size Main products No. of production lines

UK 25,000 sqm Wear parts and bearings, rotary vanes, passive fire protection, high temperature materials

4

Czech Republic

3,500 sqm Ceramic rollers 1

Sweden 200 sqm Wear resistant materials R&D facility

Breakdown of suppliers in 2013

A:18%

B: 8%

C: 7%

D: 6%

E: 6%

F: 5%

G: 4%

H: 3%

I: 3%

J: 2%

Other: 37%

1. Procedurally driven

2. Consistent quality paramount

3. Production certified for space industry

• Through the UK and Czech entities, Diamorph operates two efficient production facilities

• Manufacturing of Diamorph’s products is procedurally driven and handled in-house

– Having the production in-house is important since it involves undisclosed know-how

• Methods used to manufacture Diamorph’s products include pre-pregs, hot-pressing, vacuum forming and sintering

• The UK production facility is the largest with 4 production lines and 25,000 sqm

• The Czech production facility consists of 3,500 sqm

• The R&D facility in Sweden is capable of pilot production of materials and products for developmental, test and verification purposes

• Additional production capacity can be added within current facilities


Serendipity Ixora in brief

• An investment company with a long-term owner perspective whose business focus is to identify, invest in and develop growth companies with products and services with global market potential

– The company has a diversified portfolio of innovative growth companies

– The portfolio currently consists of ten companies

• The net asset value amounted to SEK 683m as at 30 June 2014

27

Ownership structure Business overview

Strong and committed main owners

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Investment AB Latour in brief

Overview of ownership*

• An investment company with a long-term perspective whose business concept is to invest in stable and profitable companies that have their own strong products or brands and a good internationalization potential

– The wholly-owned industrial and trading operations consist of some 70 companies organised into five business areas: Hultafors Group, Latour Industries, Nord-Lock, Specma Group and Swegon

– The investment portfolio comprises of nine well consolidated companies where Latour is the main, or one of the largest, shareholder(s)

• The company is listed on NASDAQ OMX Stockholm with a market capitalization of SEK 28bn

Serendipity Ixora: 23.1%

Latour: 21.1%

First Kraft AB: 4.3%

Anthony Moore: 4.0%

Tindaf AB: 3.4%

Mikaros AB: 3.4%

Zhou Jun: 3.1%

Mikael Lönn: 2.8%

Other: 34.6%

* Ownership as at 30 June 2014

Serendipity’s and Latour’s ownership development

24.1 % 23.3 % 23.3 % 23.3 % 23.2 % 23.4 %

23.1 % 23.1 %

13.4 %

21.2 % 21.2 % 21.2 % 21.2 % 21.1 % 21.1 % 21.1 %

10%

12%

14%

16%

18%

20%

22%

24%

26%

Serendipity Latour


28

Management team and board of directors Business overview

Management team Board of directors

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Experienced leadership

Fredrik Svedberg CEO, Diamorph Group

Fredrik has degrees in Engineering from Lund Technical University and Finance from Lund School of Economics. He joined Diamorph in 2009 and assumed the position of CEO in 2010. He is also board member in the subsidiaries of Diamorph

Mark Hutchison CFO, Diamorph Group

Mark has a degree in Natural Sciences from Cambridge University. He is trained with KPMG and a qualified chartered accountant in the UK. Held senior finance leadership positions within Spectris plc, a UK listed engineering company, most recently as divisional CFO for one of the group’s businesses in Switzerland

Heinz Pöhlmann CEO, Diamorph HOB CerTec

Heinz has a commercial and technical engineering background and has worked for more than 15 years as manager at Hoechst CeramTec Germany. He spent 5 years at Hoechst in Japan, building up a whole new ceramic department

Tony Moore CEO, Tenmat

Tony is a chemistry graduate from Manchester University. He pioneered the creation of Tenmat from joint ventures of units from another business, and has been leading the Tenmat team from 1986

Ashkan Pouya Chairman

Ashkan has a background in Business Administration, studying at Uppsala University, Queen’s University and the WHU-Otto Besheim School of Management in Germany. He has experience from research-based companies and was previously Director of Innovation at Lund University

Saeid Esmaeilzadeh

Saeid is Adjunct Professor of Materials Chemistry at Stockholm University. He has received numerous awards and honours for his research and his work as an entrepreneur

Anders Mörck Anders holds a Masters degree in Economics and Business Administration from the Växjö University. He is currently CFO of Investment AB Latour, Chairman of the Board in Specma AB, and board member in Swegon AB, Hultafors Group AB, Nord-Lock International AB and Latour Industries AB

Tony Moore Tony is a chemistry graduate from Manchester University. He pioneered the creation of Tenmat from joint ventures of units from another business, and has been leading the Tenmat team from 1986

Anders G. Carlberg

Anders holds a Masters degree in Economics and Business Administration from Lund University. Presently, he is Chairman and Board member of several companies including Herenco, Axel Johnson Inc., SSAB, Beijer-Alma, Investment AB Latour and more. Anders will resign as a board member during the autumn due to lack of time since he has become the Chairman of Gränges which aims to go public. The board therefore intends to convene an EGM in due course in order to elect a new board member.


29


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Business overview

Risk factors


Appendix



Transaction structure 44

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Transaction and legal* structure

Sources and uses

Sources and uses of funds (SEKm) Sources and uses of current cash (SEKm)

Bond Issue 500

Early redemption of outstanding bond 425

Cash position as at 30 June 166

Deferred payment 57

Existing cash 2 Early redemption fee 32

Interest outstanding bond 25

Deferred payment 35 Bond refinancing 2

Transaction costs 10 Surplus cash 82

502 502 166 166

* For a complete overview of the legal structure, see Appendix – Legal structure; ** Based on GBP/SEK 11.463 Note: Diamorph UK will use the proceeds from the SEK 500m intra-group loan provided in connection with the Bond Issue to settle the deferred payment of GBP 3m and to repay an outstanding SEK 425m intra-group loan from the Company, thus enabling the Company to refinance the outstanding bond and pay transaction costs.

• The Bonds will be issued by Diamorph AB (publ), the ultimate parent company of the Diamorph Group, with the main purpose of refinancing the outstanding bond (SEK 425m senior secured bond and early redemption fee of SEK 32m) and pay off the outstanding deferred payment (GBP 3m/SEK 35m**) from the acquisition of Tenmat, accelerated by the refinancing

• Current available cash, SEK 166m, will be partly applied for interest on outstanding bond, SEK 25m, and for a scheduled deferred payment (GBP 5m/SEK 57m**) from the acquisition of Tenmat. A further SEK 2m will be used to refinance the outstanding bond

• The post Bond Issue pro forma cash balance will be solid with SEK 82m in cash

– Provides a solid cash position for Diamorph going forward and sufficient head-room for expected GBP 2.5m (net of tax) one-time bonus payment to staff of Modular Stock Ltd by the end of 2014

• The Bonds will be secured by pledges over: i. The Company’s holding of the shares in Diamorph Bearings AB (80%) and all shares in

Diamorph UK Ltd and Modular Stock Ltd

ii. The SEK 500,000,000 intra-group loan

iii. The escrow account (net cash proceeds until the early redemption date)

• The Tenmat Group companies, wholly owned subsidiaries of the pledged company Modular Stock Ltd, represent Diamorph’s primary operating business and account for most of Diamorph’s revenues and EBITDA

• Bonds may be paid for in kind by delivery of outstanding bonds issued by the Issuer and roll-over investors will not lose potential interest on outstanding bonds up until the early redemption date. Roll-over investors will receive, in cash, on or about the early redemption date:

i. Accrued but unpaid interest on the roll-over bonds up until the early redemption date ii. The premium of the call option amount to be paid by the Company for early

redemption of the outstanding bonds

• Previous vendors and current bondholders, among others Tony Moore, on aggregate holding bonds of SEK 30m intend to subscribe for full roll over of current holding

– Such subscriptions will in terms of allocation be considered on equal terms as other investors’ subscriptions

80%


100%

Diamorph Bearings AB (SWE)

Intra-group loan

= No share pledge

SEK 500m New bond

= Intra-group loan pledge

SEK 425m Outstanding bond

SEK 77m Transaction

triggered payments

= Share pledge

Diamorph UK and Modular Stock

Ltd (UK)

30

SEK 2m Cash


448

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

0

100

200

300

400

500

2012Pro forma

2013Actual

Q2 2014LTM

Pro formaLTM

Ne

t sa

les

(SEK

m)

Net IB debt (lhs) Non-interest bearing deferred payments

Net IB/EBITDA (rhs) EBITDA ICR (cash interest) (rhs)

31

Historical and illustrative pro forma financials in brief Transaction and financial information

Net debt development (2012-Q2 2014)

44

70

102

71

123

152

100

100

100

150

150

150

107

109

185

230

230

230

POST REFINANCING PRO FORMA PRINCIPLES

• The balance sheet pro forma post refinancing as at 30 June 2014 is based on the consolidated balance sheet as at 30 June 2014, with the following adjustments:

– Interest bearing debt has been increased by SEK 76m, reflecting the net impact of replacing the outstanding bonds of SEK 425m with the new bonds of SEK 500m and the net change to the value of transaction fees carried in the balance sheet (SEK 1m)

– Equity is reduced by SEK 47m being payment of the early redemption fee of SEK 32m, write-off of the unamortized arrangement fees from the outstanding bonds (SEK 11m), and discount effect of accelerated deferred payment liability (SEK 4m)

– Other liabilities are reduced by the deferred payments (scheduled GBP 5m and accelerated GBP 3m) representing SEK 88m in total, and accrued bond interest of SEK 25m

– Cash is reduced by the remaining difference between cash inflows and outflows above

• The pro forma income statement is based on rolling 12 months for the period 1 July 2013 - 30 June 2014 and the following pro forma adjustments have been made:

– Financial income is reduced by 1% of the reduced cash amount

– Financial expenses have been reduced based on the difference of the current annual interest rate on the outstanding bonds of SEK 425m and 6.75% (mid-range) annual interest rate on the new bond loan of SEK 500m (SEK 17m), and lowered arrangement fee amortisation (SEK 2m)

Income statements 2012 2013 Q2 2014 Pro forma Pro forma

SEKm Pro forma Actual LTM adjustments LTM

Net sales 351 334 351 351

Operating expenses -230 -226 -237 -237

EBITDA 121 108 114 114

Items affecting comparability -12 -1 -1 -1

Depreciation and amortization -9 -9 -9 -9

EBIT 100 98 104 101

Financial income 1 1 1 -1 0

Financial expenses -57 -57 -57 19 -38

Exceptional financial items -3 -5 -20 -20

Profit before tax 41 37 28 18 46

Balance sheets Pro forma Pro forma

SEKm 31-Dec-12 31-Dec-13 30-Jun-14 adjustments 30-Jun-14

Intangible assets 657 663 703 703

Tangible and financial assets 73 87 93 93

Inventories 30 28 31 31

Trade receivables 56 55 65 65

Other assets 6 9 8 8

Cash and cash equivalents 96 141 166 -84 82

Sum assets 918 983 1,066 -84 982

Equity 234 312 385 -47 338

Deferred tax 44 34 37 37

Interest bearing debt (IB) 460 459 454 76 530

Accounts payable 18 19 25 25

Other liabilities 162 159 165 -113 52

Sum equity and debt 918 983 1,066 -84 982

Key metrics 2012 2013 Q2 2014 Pro forma

Pro forma Actual LTM LTM

EBITDA-margin 34% 32% 33% 33%

Equity ratio 25% 32% 36% 34%

Gross IB debt/EBITDA 3.8x 4.3x 4.0x 4.6x

Net IB debt/EBITDA 3.0x 2.9x 2.5x 3.9x

EBITDA ICR (cash interest) 2.3x 2.0x 2.2x 3.2x

FFO/Net IB debt 16% 14% 17% 15%

460

397 376

Note: 2012 and 2013 figures are retrieved from the annual report for 2013. 2012 figures are pro forma. Q2 LTM figures are retrieved from the Q2 2014 report. 2012 and 2013 balance sheet presentation of net interest bearing debt has been adjusted to remove the accrued interest. Exceptional financial items have been presented separately to better illustrate the underlying financing charges. They mainly comprise currency gains and losses on third party and intercompany financing balances, unwinding of discount charges on non-interest bearing liabilities, and revaluation gains on assets available for sale.


32

Net sales and EBITDA development Transaction and financial information

Net sales and EBITDA development (2011-Q2 2014 LTM) Comments

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• Net sales decreased slightly over the period, as the 2011 result benefitted from very strong sales in certain markets. Much of the fluctuation in pro forma/reported sales in the intervening period can be attributed to currency fluctuations

• Throughout this period*, Diamorph has generated a high and stable EBITDA margin of above 30%, with a slight EBITDA reduction being driven by a combination of the strong 2011 sales result and costs related to integration and consolidation of the Group

• Tenmat makes up the largest amount of net sales within the business. Allowing for the Railko acquisition in 2006 (and subsequent marine division divestment) this business has grown consistently (4.1% compound annual organic growth or 6.7% including Railko acquisition) and has demonstrated good resilience during the economic downturn (2008-2010)

Tenmat – Net sales development in fixed currency (2005-2013) Certec – Net sales development in fixed currency (2005-2013)

Note: 2011 and 2012 figures are pro forma and retrieved from the annual report of 2012 and 2013 respectively. 2013 and Q2 2014 LTM figures are retrieved from the annual report of 2013 and Q2 2014 report respectively Note: Tenmat and CerTec figures are management accounts and fixed 2013 FX rates of 10.188 SEK/GBP and 0.333 SEK/CZK are used throughout the period 2005-2013 for each company * 2011 and 2012 results on pro forma basis

361 351 334

351

0%

10%

20%

30%

40%

0

100

200

300

400

2011Pro forma

2012Pro forma

2013Actual

Q2 2014LTM

EBITD

A (%

)

Ne

t sa

les

(SEK

m)

Net sales EBITDA %

154

211 244 235

197 227

287 282 275

0%

10%

20%

30%

40%

50%

0

100

200

300

400

2005 2006 2007 2008 2009 2010 2011 2012 2013

EBIT (%

)

Net

Sal

es (

SEK

m)

Sales EBIT %

64 62 65 71 67 52 60 51 58

0%

10%

20%

30%

40%

50%

0

100

200

300

2005 2006 2007 2008 2009 2010 2011 2012 2013

EBIT (%

)

Net

Sal

es (

SEK

m)

Sales EBIT %

Railko +41

Railko +25

Railko marine -26


33

Operating costs structure Transaction and financial information

Breakdown of operating costs (2013) Comments

Fixed vs. variable costs (2013) Comments

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• Operating costs below gross margin represent only 26 percent of net sales and of these, selling expenses make up the largest part

• R&D expenses relate primarily to new product development in Sweden as well as development of both existing and new product families in the UK and Czech Republic

• Administrative expenses include management, financial administration, IT, professional services, property depreciation, insurance and company incentives

• The majority of the Company’s total costs are variable, meaning that there is a strong natural mechanism to offset the effect of any temporary sales reduction on profitability

• Variable costs are mainly comprised of materials, direct labour, energy, consumables, packaging and transport costs

• Fixed costs primarily relate to indirect manufacturing overhead, such as depreciation of production related assets, production management and maintenance, as well as sales, administration and R&D

86.9 (26.0% of net sales)

Variable costs 53%

Fixed costs 47%

37.7

33.6

13.6 2.0

0%

20%

40%

60%

80%

100%

2013

Op

erat

ing

cost

s (S

EKm

)

Selling Administrative Research and development Net other operating costs

Note: Breakdown of operating costs are retrieved from the annual report of 2013 and fixed vs. variable costs split is retrieved from management accounts


34

Capex, NWC and operating cash flow Transaction and financial information

Capital expenditures (2012-Q2 2014 LTM) Operating cash flow (2012-Q2 2014 LTM)

NWC (2012-Q2 2014 LTM) Comments

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150

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107

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230

• Historically low capital expenditures, Q2 2014 LTM spend includes SEK 1m investment in a machine for an upcoming production line

• Historical capex has stayed at around 2 percent of net sales and the core business capex should continue at this level

• As a share of net sales, net working capital (NWC) amounted to 18.5 percent in Q2 2014, the increase compared to Dec 2013 being mainly driven by currency effects

• Positive NWC position provides cash generative cushion in the event of a decline in sales

• Steady funds from operation (FFO) of around SEK 50m with limited capex provides a deleveraging profile for Diamorph

5 6

8

0%

1%

2%

3%

4%

5%

0

2

4

6

8

10

2012 2013 Q2 2014LTM

% o

f net sales C

apex

(SE

Km

)

Capital expenditures % of net sales

Machine for upcoming production line,

SEK 1m

Note: The capital expenditure and NWC figures for 2013 and LTM Q2 2014 are retrieved from the annual report of 2013 and Q2 2014 report respectively and figures for 2012 are pro forma management accounts

Note: 2012, 2013 and LTM figures are retrieved from recent annual and quarterly reports. Pro forma calculations for 2012 have not been made by the company for cash flow and balance sheet items, i.e. paid interest, paid tax, NWC and capex * Paid net interest 2012 equals paid net interest as reported in the annual report of 2013 ** Paid tax 2012 equals pro forma tax expense as reported in the annual report of 2013 *** Change in NWC 2012 assumes no NWC change

SEK million 2012 2013 LTM Q2 2014

EBITDA 120.5 107.6 114.4

Paid net interest* -52.8 -52.8 -52.6

Paid tax** -10.6 -9.5 -11.8

FFO 57.1 45.3 50.0

Change in NWC*** 9.3 -2.4

CFO 57.1 54.6 47.6

Capital expenditures -5.3 -6.1 -7.8

FOCF 51.8 48.5 39.8

-20%

-10%

0%

10%

20%

30%

-80

-40

0

40

80

120

2012 2013 Q2 2014LTM

% o

f net sales N

WC

(SE

Km

)

Inventories Accounts receivable Other receivablesAccounts payable Other liabilities Net working capital% of net sales


35

Seasonality Transaction and financial information

Quarterly net sales development (Q3 2011-Q2 2014)

Quarterly WC development (Q3 2012-Q2 2014) Comments

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• Diamorph exhibits moderate seasonality in sales due to the nature of its business

• Accounts receivable is the single largest WC item for Diamorph followed by inventories and accounts payable

• Development of net working capital is a stable movement over time, even when net sales fluctuate

Quarterly gross margin development (Q4 2012-Q2 2014)

Note: Figures are retrieved from quarterly reports and in addition, the 2011 and 2012 figures are pro forma

0%

10%

20%

30%

40%

50%

60%

70%

80%

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Gro

ss m

argi

n (

%)

GM%

-40

-20

0

20

40

60

80

100

120

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

NW

C (

SEK

m)

Accounts receivable Accounts payable Inventories Core working capital

0

20

40

60

80

100

120

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Net

sal

es (

SEK

m)

Net sales


36


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Business overview

Risk factors


Appendix


37

Risk factors

Risk factors 44

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Investing in the Bonds involves inherent risks. The financial performance of the Company and the risks associated with its business are important when making a decision on whether to invest in the Bonds. A number of risk factors and uncertainties may adversely affect the Company. If any of these risks or uncertainties actually occurs, the business, operating results and financial position of the Company could be materially and adversely affected, which ultimately could affect the Company’s ability to make payments of interest and repayments of principal under the final terms and conditions for the Bonds (the “Terms and Conditions”). In this section, a number of risk factors are illustrated, namely general risks pertaining to the Company’s business operations and material risks relating to the Bonds as financial instruments. The risks presented in this Presentation are not exhaustive and other risks not discussed herein may also adversely affect the Company, the price of the Bonds and the Company’s ability to service its debt obligations. Further, the risk factors herein are not ranked in order of importance. Potential investors should carefully consider the information contained in this Presentation and make an independent evaluation before making an investment decision.

Risks associated with the Company, the industry and the market

Impact on the economy

The Group operates in a large number of countries and its operations are therefore dependent on global economic developments as well as conditions that are unique to such countries and/or regions. As in virtually all businesses, general market conditions affect the inclination and the capability of existing and potential customers to invest in advanced materials. Weak global or regional economic trends may result in the Group growing and developing at a lower rate than expected and this could have a negative effect on the Company’s business, financial position and results.

Raw material price

The prices of raw materials essential to the Group’s production are linked to the availability of those raw materials. Therefore, Diamorph is exposed to risks when relevant underlying raw material prices change, which could have a negative effect on the Company’s business financial position and results.

Production trend

Diamorph’s future growth partly depends on its ability to develop new products and render these products successful as well as on its ability to improve existing products, in order to meet customer requirements and to avoid losing market share to competitors. Future growth is also dependent on the Company’s ability to develop new products within existing and new market segments. Research and development efforts of new products are costly and always entail a risk of unsuccessful commercialisation, which could have a negative effect on the Company’s business, financial position and results.

Production

The Group’s production activities are mainly conducted in the production facilities in the Czech Republic and the United Kingdom and consist of chain processes where an interruption or a disturbance - such as a breakdown, a labour dispute or a natural disaster - at any stage may have a major impact on the Group’s ability to fulfil its obligations to its customers. Any such interruptions or disturbances may therefore adversely affect the Company’s business, financial position and results.

Customers, suppliers and partners

The Group’s customer, supplier and partner relations constitute an operational risk. Diamorph’s business activities are conducted in several different countries with customers in multiple customer sectors, including industrial enterprises, construction and transportation industries. A weak development in any of these customer sectors could lead to a reduced demand for the Company’s products, which could have a negative impact on the Company’s business, financial position and results.

The Group’s products consist of materials from several different suppliers. To be in a position to manufacture, sell and deliver products, the Group is dependent upon deliveries from third parties in accordance with agreements relating to, inter alia, quantity, quality and delivery time. Erroneous or default deliveries by suppliers may in turn cause delay or default in the Group’s deliveries to its customers, which could have a negative impact on the Company’s business, financial position and results.

The Company has entered into, and may in the future enter into, strategic co-operation agreements regarding, inter alia, the development and commercialisation of its products. The Company and its partners may from time to time have different opinions on how a co-operation shall be managed or how rights and duties should be allocated. A disagreement or dispute including one or several partners may have a negative effect on the Company’s business, financial position and results.

Pension matters

Through its acquisition of Modular Stock Ltd. in July 2012, the Group has defined contribution retirement plans as well as defined benefit retirement plans. A characteristic of defined benefit retirement plans is that they specify the amount of the retirement benefit that the employee obtains after retirement. A defined benefit retirement plan is financed by contributions assessed by an actuary to be sufficient to fund the expected pension payments. At the triennial valuation of the retirement plans in August 2013, a deficit of £794,000 was discovered. The deficit will be repaid under a four year repayment plan with annual repayments of £230,000. The first repayment will be made on 1 March 2015.

The incurred deficit and any deficit that could arise in the contributions provided for the expected future pension payments would need to be funded by Modular Stock Ltd, which could have a negative impact on the Company’s business, financial position and results.

Competition

The Company operates on a competitive market. The Company’s future possibilities to compete are, among other things, dependent upon the Company’s ability to anticipate future market changes and trends, and to rapidly react on existing and future market needs, which may result in increased costs or require price reductions or changes of the Company’s business model. Further, the Group operates on a market where several competitors may have greater financial resources than the Group. Increased competition from existing and new market participants as well as deteriorated competition possibilities could have a material negative impact on the Group’s operations, earnings and financial position.

Acquisitions and integration

A part of the Company’s strategy is to acquire companies and businesses and to integrate such acquired companies and business into the Group. The Company may have significant acquisition, administration and restructuring costs with regard to both historical and future acquisitions. Post-acquisition, if the Company does not manage to successfully integrate acquired companies and businesses, these companies and businesses do not perform as expected or expected synergies are not obtained, this may adversely affect the Company’s business, financial position and results.

Diamorph Bearings share redemption

According to a participation agreement entered into by certain Group companies and a minority shareholder of Diamorph Bearings, the minority shareholder has a right to request that Diamorph Bearings redeems the minority shareholder’s holding of shares, in part or in full. Such redemption shall be made at a price which depends on the EBIT of Diamorph Bearings and its subsidiaries during approximately 2012–2016. If the market value of the shares is lower than the redemption price at the time of redemption, it could have a negative impact on the Company’s business, financial position and results.

Different legal systems and legal proceedings

Since the Group’s business activities are conducted in several different countries and cover a number of different customer sectors, the Group is exposed to a variety of different laws, regulations (including anti-trust), rules, agreements and guidelines (including environmental and health and safety). Any changes thereof may have a significant adverse effect on the Company’s business activities.

Further, Diamorph and its subsidiaries have entered into a number of agreements with customers, suppliers, distributors and other third parties domiciled different countries and the agreements are governed by the laws of various jurisdictions. Although formal agreements have been entered into, there is a risk that the Company or its subsidiaries will not be able to enforce all of their rights under these agreements. If Diamorph or its subsidiaries are unable to enforce their rights under the agreements, this could adversely affect the Company’s business, financial position and results.

Changed accounting rules

The Company’s business is affected by the accounting rules that, from time to time, are applied in the countries where the Group conducts its business, including for example IFRS and other international accounting rules. This means that the Group’s accounting, financial reporting and internal control, may in the future be affected by and may have to be adapted to changed accounting rules or a changed application of such accounting rules. This might entail uncertainty regarding the Group’s accounting, financial reporting and internal control and might also affect the Company’s accounted earnings, balance sheet and equity, which could have a material negative effect on the Group’s operations, earnings and financial position.

Warranties and reputational damage

The Company’s operations include product development, manufacturing, marketing and sales. Since the Company manufactures products with advanced features such as extreme hardness and toughness and good thermal properties, matters of quality are particularly important. A defect in any part of the production process could lead to quality issues or involve other risks with regard to, inter alia, product safety. Unforeseen issues of product quality may harm the Company’s reputation and brand, result in costs in relation to warranty claims and have a negative impact on the Company’s business, financial position and results.

Insurance

The Group keeps the business insured through different insurance policies such as property and professional liability insurances. The Company is of the opinion that the Group’s insurance protection is sufficient to cover risks normally associated with its business operations. However, the Company cannot guarantee that the Group’s current insurance protection can be maintained with acceptable terms or at all or that future demands will be fully covered by the Group’s insurance protection, which may have a negative impact on the Company’s business, financial position and results.


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Intellectual property rights

The Company seeks to protect the Group’s innovations to safeguard the returns on the resources that Diamorph assigns to research and development. Patents are a part of the Group’s property rights and the Group therefore submits patent applications whenever the Company considers appropriate. Thus, patent infringement is a risk to which the Group is exposed. There is no guarantee that the Group will be able to protect its patents, trademarks and other intellectual property rights or that submitted applications for registration will be granted.

Further, the sectors that the Group operates in are subject to rapid technical developments. Accordingly, there is a risk that new innovations and products are developed by competitors or others which circumvent or replace the Group’s intellectual property rights. In addition, the Company is partly dependent on know-how that cannot be protected by intellectual property law. It is possible that competitors will develop similar know-how or that the Company is not able to protect its know-how in a desired manner. The Company believes that the Group does not currently infringe third party intellectual property rights. However, as with most companies of this nature, the Company cannot guarantee that the Group cannot be considered to infringe the intellectual property rights of others. Infringement disputes can, like disputes in general, be costly and time consuming and may therefore adversely affect the Company’s business, financial position and results.

Disputes

Diamorph may become involved in disputes with or claims from third parties, such as customers, suppliers and other business partners. Such disputes could be time consuming and costly and there is a risk that the outcome will be unsuccessful for Diamorph. Furthermore, the costs associated to such disputes or claims cannot always be foreseen. Disputes could, therefore, have a material negative impact on the Company’s operations, earnings and financial position.

Environment, safety and health

The Company believes that its business is operated in accordance with applicable environmental regulations and laws and rules regarding health and safety. The Group’s business is, to some extent, subject to national environmental permits. The Group’s ownership and operation of industrial premises imposes risks, such as the risk of being obliged to examine and decontaminate such premises in the event of pollution. Changes of law and stricter government regulation of environmental and health and safety matters or a development towards a stricter application of laws and rules by public authorities may require additional investments and lead to increased costs and commitments upon those operations subject to such laws and rules. Liability as a result of personal injury, property damage or environmental damage may have a negative impact on the Company’s business, financial position and results.

Permits and certificates

The Group’s production and exports, to some extent, depend on the granting of permits by the relevant public authorities. Diamorph believes that it holds all such relevant permits. However, there is no guarantee that the Group in the future will maintain and/or be granted the required permits, which may adversely affect the Company’s business, financial position and results.

Liquidity risks

Liquidity risk is the risk that the Company cannot meet its payment obligations at the maturity date without the cost for obtaining cash or cash equivalents increasing significantly. As of 30 June 2014, the Group’s available liquidity amounted to SEK 166.0 million. If the Company’s liquidity sources prove not to be sufficient, it could have a material negative impact on the Company’s business, financial position and results.

Tax

The Group operates in several countries and the Group’s operations are affected by the tax law, treaties and regulations in force from time to time in the relevant countries. These rules include corporate tax, value added tax, rules regarding tax-free disposals of shares, other governmental or municipal taxes, and interest deductions and subsidies. Diamorph’s and its subsidiaries’ tax situation is also affected by if transactions between companies within the Group are considered to be priced on market terms. Although the Group’s business is conducted in accordance with the Company’s interpretation of applicable tax laws and regulations, and in accordance with advice from tax advisors, it cannot be excluded that the Company’s interpretation is incorrect, or that such regulations change, possibly with retroactive effect. Further, future changes in applicable laws and regulations may affect the conditions of the businesses of the Group. There are significant differences in the political parties view on the size and occurrence of taxes and subsidies. It cannot be excluded that tax rates are changed in the future or that other changes of regulations occur which could affect the Group’s tax position. It may in this respect be noted that an Official Report of the Swedish Government (SOU 2014:40) published on 12 June 2014 proposed that new rules shall be implemented in Sweden regarding, inter alia, limitations on deductions of interest costs and other financial costs, which hence could limit the Company’s possibility to obtain deductions in this respect. If any of the above described risks would materialize, it could have a material negative impact on the Company’s business, financial position and results.

Currency risks

The Company is exposed to currency risks. The Company’s accounting currency is SEK, but sales are in, inter alia, EUR, USD and GBP. Further, the Group has operations in the Czech Republic and in the United Kingdom. Unfavourable currency exchange rate fluctuations may therefore have an adverse effect on the Company’s business, financial position and results.

Customer credit risks

The Group applies market standard payment terms to its customers. If a customer cannot pay a debt on time or at all that the Group has invoiced or intends to invoice it may have a negative impact on the Company’s business, financial position and results.

Goodwill

A substantial share of the Company’s intangible fixed assets consists of goodwill. Goodwill is tested at least annually to identify any necessary impairment requirements. In the event that future impairment tests in respect of decreases in the value of goodwill should lead to impairment, this may have a negative impact on the Company’s financial position and earnings.

Risks relating to the Bonds

Credit risks

An investment in the Bonds carries a credit risk relating to the Company and the Group. The investor’s ability to receive payment under the Terms and Conditions is therefore dependent upon the Company’s ability to meet its payment obligations, which in turn is largely dependent upon the performance of the Group’s operations and its financial position. The Group’s financial position is affected by several factors, a number of which have been discussed above.

An increased credit risk may cause the market to charge the Bonds a higher risk premium, which would affect the Bonds’ value negatively.

Interest rate risks

The value of the Bonds is dependent on a number of factors. One factor of importance is the general market rate of interest. An increased market rate of interest could decrease the value of the Bonds. As the market rate of interest is largely dependent on the Swedish and international economic development, this is a risk factor which the Group cannot control.

Refinancing risk

The Group may be required to refinance certain or all of its outstanding debt, including the Bonds. The Group’s ability to successfully refinance its debt obligations is dependent upon the conditions of the capital markets and the Group’s financial position at such time. Even if the markets and the Company’s financial position are favourable, the Group’s access to financing sources may not be available on acceptable terms, or at all. The Group’s inability to refinance its debt obligations on acceptable terms, or at all, could have a material adverse effect on the Group’s business, financial position and results of operations and on the bondholders’ recovery under the Bonds.

Liquidity risks

The Company has undertaken to list the Bonds on the corporate bond list of NASDAQ OMX Stockholm or, if such admission to trading is not possible to obtain or maintain, admitted to trading on another regulated market, within 60 calendar days after the issue date of the Bonds. It is further, the Company’s intention to complete such listing within 30 days after the issue date of the Bonds. However, it cannot be guaranteed that the Bonds will be admitted to trading. Further, even if securities, including the Bonds, are admitted to trading on a regulated market, there is not always active trading in the securities, so there are no guarantees that there will be a liquid market for trading in the Bonds or that this market will be maintained even if the Bonds are listed. This may result in that the bondholders cannot sell their Bonds when desired or at a price level which allows for a profit comparable to similar investments with an active and functioning secondary market. Lack of liquidity in the market may have a negative impact on the market value of the Bonds. Furthermore, the nominal value of the Bonds may not be indicative compared to the market price of the Bonds if they are admitted for trading on NASDAQ OMX Stockholm or another regulated market.

It should also be noted that during a given time period it may be difficult or impossible to sell the Bonds (at all or at reasonable terms) due to, for example, severe price fluctuations, close down of the relevant market or trade restrictions imposed on the market.

The Bonds may not be a suitable investment for all investors

Each potential investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should

• have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained in this Presentation or any applicable supplement;

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the impact other Bonds will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds;

• thoroughly understand the Terms and Conditions; and

• be able to evaluate (either alone or with the help of a financial advisor) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

The market price of the Bonds may be volatile

The market price of the Bonds could be subject to significant fluctuations in response to actual or anticipated variations in the Group’s operating results and those of its competitors, adverse business developments, changes to the regulatory environment in which the Group operates, changes in financial estimates by securities analysts and the actual or expected sale of a large number of Bonds, as well as other factors, some of which have been discussed above. In addition, in recent years the global financial markets have experienced significant price and volume fluctuations, which, if repeated in the future, could adversely affect the market price of the Bonds without regard to the Group’s operating results, financial position or prospects.


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Security arrangements

As continuing security for the due and punctual fulfilment of the Issuer’s obligations under the Bonds, the relevant group companies shall pledge: (i) all their shares in Diamorph Bearings AB, all shares in Diamorph UK Ltd and all shares in Modular Stock Ltd, (ii) all present and future money claims under a SEK 500,000,000 intra-group loan agreement and (iii) an escrow account and all funds standing to the credit of such account from time to time (Bond proceeds).

There can be no guarantee that the pledged assets will be sufficient for the bondholders should the pledges be realised. Save for the security created under the abovementioned pledges, the Bonds represent unsecured obligations of the Issuer. This means that in the event of bankruptcy, reorganisation or winding-up of the Issuer, the holders of the Bonds normally receive payment after any priority creditors have been paid in full.

Each investor should be aware that there is a risk that an investor in the Bonds may lose all or part of their investment if the Issuer or the Group is declared bankrupt, carries out a reorganisation or is wound-up.

Dependence on subsidiaries

A significant part of the Group’s assets and revenues relate to the Company’s subsidiaries. Accordingly, the Company is dependent upon receipt of sufficient income related to the operation of and the ownership in such entities to enable it to make payments under the Bonds. The Company’s subsidiaries are legally separate and distinct from the Company and have no obligation to pay amounts due with respect to the Company’s obligations and commitments, including the Bonds, or to make funds available for such payments. The ability of the Company’s subsidiaries to make such payments to the Company is subject to, among other things, the availability of funds. Should the Company not receive sufficient income from its subsidiaries, the investor’s ability to receive payment under the Terms and Conditions may be adversely affected.

Insolvency of subsidiaries

In the event of insolvency, liquidation or a similar event relating to one of the Company’s subsidiaries, all creditors of such company would be entitled to payment in full out of the assets of such company before the Company, as a shareholder, would be entitled to any payments. Thus, the Bonds are structurally subordinated to the liabilities of the subsidiaries. There can be no assurance that the Company and its assets would be protected from any actions by the creditors of a subsidiary, whether under bankruptcy law, by contract or otherwise. In addition, defaults by, or the insolvency of, certain subsidiaries of the Company could result in the obligation of the Company to make payments under parent company financial or performance guarantees in respect of such subsidiaries’ obligations or the occurrence of cross defaults on certain borrowings of the Group.

Risks related to early redemption and put options

As described in the Term Sheet, and as will be stipulated in the Terms and Conditions, the Company has reserved the possibility to redeem and / or partly repay all outstanding Bonds before the final redemption date. If the Bonds are redeemed or partly repaid before the final redemption date, the bondholders have the right to receive an early redemption amount which exceeds the nominal amount. However, there is a risk that the market value of the Bonds is higher than the early redemption amount and that it may not be possible for bondholders to reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and may only be able to do so at a significantly lower rate.

According to the Term Sheet, and as will be stipulated in the Terms and Conditions, the Bonds are subject to prepayment at the option of each bondholder (put options) upon a Change of Control Event (as defined in the Term Sheet). There is, however, a risk that the Company will not have sufficient funds at the time of such prepayment to make the required prepayment of the Bonds.

No action against the Company and bondholders’ representation

In accordance with the Term Sheet, and as will be stipulated in the Terms and Conditions, the agent will represent all bondholders in all matters relating to the Bonds and the bondholders are prevented from taking actions on their own against the Company. Consequently, individual bondholders do not have the right to take legal actions to declare any default by claiming any payment from or enforcing any security granted by the Company or any of its subsidiaries and may therefore lack effective remedies unless and until a requisite majority of the bondholders agree to take such action. However, the possibility that a bondholder, in certain situations, could bring its own action against the Company (in breach of the Terms and Conditions) cannot be ruled out, which could negatively impact an acceleration of the Bonds or other action against the Company. To enable the agent to represent bondholders in court, the bondholders may have to submit a written power of attorney for legal proceedings. The failure of all bondholders to submit such a power of attorney could negatively affect the legal proceedings.

Under the Term Sheet, and as will be stipulated in the Terms and Conditions, the agent will in some cases have the right to make decisions and take measures that bind all bondholders. Consequently, the actions of the agent in such matters could impact a bondholder’s rights under the Terms and Conditions in a manner that would be undesirable for some of the bondholders.

Bondholders’ meetings

The Terms and Conditions will include certain provisions regarding bondholders’ meetings and written procedures. Such meetings and procedures may be held / executed in order to resolve on matters relating to the bondholders’ interests. The Terms and Conditions will allow for stated majorities to bind all bondholders, including bondholders who have not taken part in the meeting / procedure and those who have voted differently to the required majority at a duly convened and conducted bondholders’ meeting or written procedure. Consequently, the actions of the majority in such matters could impact a bondholder’s rights in a manner that would be undesirable for some of the bondholders.

Restrictions on the transferability of the Bonds

The Bonds have not been and will not be registered under the Securities Act, or any U.S. state securities laws. Subject to certain exemptions, a bondholder may not offer or sell the Bonds in the United States. The Company has not undertaken to register the Bonds under the Securities Act or any U.S. state securities laws or to effect any exchange offer for the Bonds in the future. Furthermore, the Company has not registered the Bonds under any other country’s securities laws. Each potential investor should read the information under the heading “Important information”, in the Terms and Conditions and in the prospectus which shall be prepared in connection with the contemplated listing of the Bonds for further information about the transfer restrictions that apply to the Bonds. It is each bondholder’s obligation to ensure that its offers and sales of Bonds comply with all applicable securities laws.

Risks relating to the clearing and settlement in Euroclear’s book-entry system

The Bonds will be affiliated to Euroclear’s account-based system, and no physical notes will be issued. Clearing and settlement relating to the Bonds will be carried out within Euroclear’s book-entry system as well as payment of interest and repayment of the principal. Investors are therefore dependent upon the functionality of Euroclear’s account-based system.

Amended or new legislation

This Presentation is, and the Terms and Conditions will be, based on Swedish law in force at the date hereof and the issue date of the Bonds, respectively. No assurance can be given on the impact of any possible future legislative measures or changes or modifications to administrative practices. Amended or new legislation and administrative practices may adversely affect the investor’s ability to receive payment under the Terms and Conditions.

Conflict of interests

The Joint Bookrunners have had and may also in the future have relations with the Group other than those arising from its role in the issue of the Bonds. The Joint Bookrunners may, for example, provide services related to financing other than through the issue of the Bonds, such as investment banking services for, or other commercial dealings with, the Group. Consequently, it cannot be guaranteed that conflicts of interest will not arise in the future.


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Business overview

Risk factors


Appendix


41

Appendix

Legal structure 44

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Tenmat Limited (UK)

Golden Heights Limited (Dorrmant)

(UK)

Tenmat Holdings

(USA)

Tenmat Overseas (UK)

Tenmat (Germany)

Tenmat (France)

Tenmat (USA)

Railko Limited

(UK)

Tenmat (Italy)

Diamorph Ceramics (Dormant) (Sweden)

Diamorph Bearings (Sweden)

100% 80%

100%


Diamorph CerTec (Czech Republic)

Aurum Insular (Switzerland)

KHP Marketing (Switzerland)

100%

100%

Diamorph Services (Dormant) (Sweden)

100%

Diamorph UK (UK)

100%

Modular Stock Limited

(UK)

Representative office


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Appendix

Historical income statements and balance sheets 44

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SEK million 2012 2013 H1 2014

Net sales 162.3 333.8 188.7

Cost of sales -80.7 -148.1 -84.8

Gross profit 81.6 185.7 103.9

Gross margin (%) 50.3% 55.6% 55.1%

Selling expenses -11.1 -37.7 -20.4

Administrative expenses -34.7 -33.6 -11.8

Research and development -1.7 -13.6 -6.1

Other operating income 2.4 1.5 -

Other operating expenses -2.5 -3.5 -

Total operating expenses -47.6 -86.9 -38.3

Adj. EBIT 34.0 98.8 65.6

Adj, EBIT margin (%) 20.9% 29.6% 34.8%

Nonrecurring items -11.9 -0.9 -

EBIT 22.1 97.9 65.6

EBIT margin (%) 13.6% 29.3% 34.8%

Financial income 0.8 0.5 0.2

Financial expenses -30.7 -56.8 -28.1

Exceptional financial items -1.0 -4.4 -18.6

Financial net -30.9 -60.7 -46.5

Pre-tax profit -8.8 37.2 19.1

Pre-tax profit margin (%) -5.4% 11.1% 10.1%

Income tax -6.5 -7.0 -7.9

Exceptional tax items - 2.9 -3.6

Total income tax -6.5 -4.1 -11.5

Net profit -15.3 33.1 7.6

Profit margin (%) -9.4% 9.9% 4.0%

Historical income statements Historical balance sheets

Note: Figures for 2012 and 2013 are retrieved from the annual report of 2013 and figures for Q2 2014 are retrieved from the Q2 2014 report. Also note that 2012 numbers are actual (not pro forma). 2012 and 2013 figures are adjusted to separately show exceptional financing and tax items.

SEK million 2012 2013 H1 2014

ASSETS

Fixed assets

Intangible assets 657.3 662.7 703.1

Tangible assets 65.8 61.4 67.0

Financial assets 7.5 26.0 25.5

Total fixed assets 730.6 750.1 795.6

Current assets

Inventories 29.5 27.5 31.0

Accounts receivable 56.3 55.3 65.4

Other receivables 6.3 5.6 4.6

Restricted cash - 3.1 3.1

Cash and cash equivalents 95.5 141.4 166.0

Total current assets 187.6 232.9 270.1

Total assets 918.2 983.0 1,065.7

EQUITY & LIABILITIES

Equity

Total equity 233.5 311.8 384.8

Long-term liabilities

Interest-bearing debt 452.9 451.6 447.2

Deferred tax liabilities 44.4 34.2 36.9

Other liabilities 94.4 27.2 30.7

Total long-term liabilities 591.7 513.0 514.8

Current liabilities

Current interest-bearing debt 7.2 7.0 7.1

Accrued interest 24.9 24.9 24.9

Accounts payable 17.9 19.0 24.8

Other liabilities 43.0 107.3 109.3

Total current liabilities 93.0 158.2 166.1

Total equity & liabilities 918.2 983.0 1,065.7


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Cash flow from operating activities

EBIT 22.1 97.9 65.6

Depreciation and amortization 6.5 8.8 4.5

Non-cash items 2.5 2.2 -

Interest received 1.0 0.5 0.2

Interest paid -3.3 -53.3 -26.3

Income tax paid -2.8 -9.5 -8.1

Cash flow from operating activities before changes in working capital

26.0 46.6 35.9

Change in working capital -10.3 9.3 -5.9

Cash flow from operating activities 15.7 55.9 30.0

Cash flow from investing activities

Acquisition of subsidiaries, net of cash acquired -468.1 -25.2 -

Investments in intangible fixed assets 0.0 0.0 -

Investments in tangible fixed assets -0.5 -6.1 -4.3

Acquisition/disposal of other financial fixed assets -1.1 10.5 -

Cash flow from investing activities -469.7 -20.8 -4.3

Cash flow from financing activities

Proceeds from share issue(s) 122.8 17.3 -

Proceeds from borrowings 374.8 0.0 -

Repayment of borrowings -11.5 -7.5 -7.1

Acquisition of non-controlling interests -8.1 0.0 -

Cash flow from financing activities 478.0 9.8 -7.1

Cash flow for the period 24.0 44.9 18.6

Cash at beginning of the period 72.6 95.5 141.4

Foreign currency impact on cash -1.1 1.0 6.0

Cash at the end of the period 95.5 141.4 166.0

Note: Figures for 2012 and 2013 are retrieved from the annual report of 2013 and figures for Q2 2014 are retrieved from the Q2 2014 report. Also note that 2012 numbers are actual (not pro forma)

Historical cash flow statement

Documents

Bond Investor Presentation - Carnegie income... · Bond Investor Presentation Contemplated Bond Issue of Maximum SEK 500,000,000 August 2014 44 70 102 71 123 152 100 100 100 150 150