HMS Networks: Year-end report 2016, January - December

Yearly

• Net sales for the full year increased with 36 % reaching SEK 952 m (702), corresponding to a 34 % increase in local currencies
• Operating profit reached SEK 149 m (102), equal to a 16 % (14) operating margin
• Order intake for the year increased to 966 m (682) corresponding to a 42 % increase in local currencies
• Cash flow from ongoing operations reached SEK 155 m (90)
• Net result after tax amounted to SEK 100 m (60) and result per share amounted to SEK 8.59 (5.33)
• The Board of Directors propose a dividend to the amount of SEK 4.00 (2.50)

Fourth quarter

• Net sales for the fourth quarter reached SEK 265 m (175) corresponding to a 42 % increase
• Operating result reached SEK 40 m (14) corresponding to an 15 % (8) operating margin
• Order intake during the fourth quarter was SEK 267 m (157)

Comment from the CEO

The strong development reported for the third quarter has continued. We close the year with a new record quarter ending the year with SEK 952 m in net sales corresponding to a 36 % growth compared to last year. During the fourth quarter we had a good 12 % organic growth, positive contributions from the acquisitions made, a tail wind from a weakening Swedish currency and despite numerous market activities we have managed to increase our operating result with 174 % compared to the same period the previous year.

Geographically Central Europe with Germany at the forefront showed a continuing stable growth rate and the American market is beginning to show good growth again. The growth on the Japanese market weakened during the latter part of the year and the Nordic market did not manage to grow further compared to the strong development during the previous year.

The name of the acquired Belgium company eWON SA was changed into HMS Industrial Networks SA and the name eWON is now the brand name of our products in the area of Remote Solutions. The HMS product group Netbiter is now included as a product group under the eWON brand name. Together these products will represent a very competitive product offer and strengthen our position as the leading supplier of solutions for remote control and remote management for industrial applications.

The product areas Anybus, eWON and IXXAT are growing in line with or above expectations.

The acquired company Intesis offering communication solutions in the area of building automation developed according to the plan established for the year.

Our products sold under the "design win" business model shows a continuing good growth in number of new design wins during 2016. In total we achieved 203 (195) new design wins during the year ending up with total number of active design wins to 1 508 (1 381) corresponding to a 9 % increase compared to the previous year. Of these design wins 1 137 (1 023) are in production and 371 (358) are expected to go into production during the following years. The fact that we have a new record in number of design wins proves that the HMS product offer is attractive and confirms the good conditions for future growth.