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Commissioned research Healthcare | Sweden 2 October 2017

Marketing material commissioned by ADDvise 1

ADDvise An acquisition story unfolding

Gaining from demographic tailwinds An investment in ADDvise offers exposure to defensive assets in a market favoured by demographic factors, such as a growing and ageing population in the Nordics, which is likely to drive further increases in healthcare expenditure. Based on the strong fundamentals, we see opportunities for many life science companies to capture organic growth in the coming years, including ADDvise, which has direct exposure to the market dynamics through its two business units, Lab and Healthcare.

Leveraging on a scalable business model Acquisitions are an integral part of ADDvise’s business model and the company has, in the past few years, proven its ability to rapidly grow sales by acquiring and integrating targets within its niche markets. Its decentralised business model is highly scalable, as implied by the ambitious financial targets: the company aims for annual sales growth in excess of 20%. We model a front-end loaded sales CAGR of 14.8% between 2016 and 2024E, lifting sales from SEK 192m to SEK 588m during our forecast period.

Profitability on the rise Increased scale also allows higher profitability, partly due to synergies, but also because of lower financial costs. ADDvise has successfully improved its profitability and the new financial targets point to further potential ahead. Our research implies the EBITDA margin (adj.) could expand from 4.7% in 2016 (adjusted for acquisition-related items) to 10.0% in 2024E.

Valuation Based on our fundamental DCF approach, with variations in sales growth, EBIT margin and WACC assumptions, we derive an equity value per share of SEK 1.5 to SEK 4.7. This implies a 2019E EV/EBITDA of 6.7-10.7x and a 2019E P/E of 5.7-17.9x.

Key data

Absolute and relative performance

Source: FactSet

Valuation approach

Source: Nordea Markets

Source: Company data and Nordea Markets

Key data Country Sweden Bloomberg ADDVB SS Reuters ADDVB.ST Share price 2.12 Free float n.a. Market cap (m) SEK 89 Website www.addvisegroup.com Next report date 31 October 2017

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-1M -6M -12M YTD Absolute 18% 14% 12% 11% Relative 13% 10% 3% 2%

SEK 4.7

SEK 1.5

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DCF

Summary table - key figuresSEKm 2012 2013 2014 2015 2016 2017E 2018E 2019ENet sales 100 120 138 147 195 258 331 377- growth 20% 15% 6% 33% 32% 28% 14%EBIT (adj.) -2 4 4 -4 5 15 22 27- margin -1.8% 3.6% 3.2% -2.7% 2.8% 5.9% 6.7% 7.1%EPS -0.52 -0.44 -0.41 -0.73 0.01 0.03 0.16 0.26- growth -15% -8% 79% neg. n.m. 498% 66%DPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00P/E n.m. n.m. n.m. n.m. n.m. 80.0 13.4 8.1EV/EBIT n.m. 76.9 51.0 406.4 n.m. 15.3 11.2 9.6EV/Sales 0.4 0.8 1.0 0.9 0.9 0.9 0.8 0.7RoE -38.1% -41.7% -36.1% -116.0% 1.2% 2.2% 11.2% 16.1%Div. yield 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%FCF yield -56.6% -63.2% -97.2% -27.2% -101.6% -51.9% -16.5% -9.4%ND/EBITDA 11.6 14.9 19.3 19.2 5.8 7.1 5.5 4.8

ADDvise 2 October 2017


Table of contents ADDvise .......................................................................................................................................... 1

Table of contents ............................................................................................................................ 2

Factors to consider when investing in ADDvise ............................................................................... 3

Valuation ......................................................................................................................................... 7

Company overview ....................................................................................................................... 12

Acquisition model .......................................................................................................................... 18

Market ........................................................................................................................................... 25

Business unit – Lab ....................................................................................................................... 27

Business unit – Healthcare ........................................................................................................... 34

Historical financials ....................................................................................................................... 42

Estimates ...................................................................................................................................... 46

Detailed estimates ........................................................................................................................ 50

Risk factors ................................................................................................................................... 51

Reported numbers and forecasts .................................................................................................. 53

Disclaimer ..................................................................................................................................... 56

Conflict of interest ......................................................................................................................... 56

Issuer review ................................................................................................................................. 56



Factors to consider when investing in ADDvise An investment in ADDvise gives exposure to defensive assets in the Life Science segment, a market that is favoured by demographic factors such as an ageing and growing population. To further leverage on the structural growth prospects, ADDvise has an ambitious agenda to increase sales through its acquisition-driven business model. Since the strategy was initiated in 2010, the company has had a sales CAGR of above 30%. Increased scale also allows ADDvise to improve its margins by capitalising on synergies, due to the scalability of the decentralised business model and reduced financing costs, which will gradually contribute positively to the bottom line.

We have identified a number of key themes describing the investment case in ADDvise

We consider the following factors to be key when evaluating an investment in ADDvise:

• Defensive assets favoured by changing demographics, such as a growing and ageing population in the Nordics, leading to solid organic growth prospects for decades to come.

• Acquisitions are an integral part of the business model and will also be the key to reaching the company’s growth targets. ADDvise has a well-specified M&A model, which allows smooth integration and gradual synergy extraction.

• Newly adopted long-term financial targets show the company’s high ambition for annual revenue growth to exceed 20%. Acquisitions will underpin this growth story and we estimate a sales CAGR of 14.8% between 2016 and 2024E, with quite front-end loaded contributions from acquisitions.

• Profitability is, according to our forecasts, expected to increase, partly via synergies but also through lower financial costs for the group. The new financial targets also open the door for potential dividends over time.

Key risk factors:

• ADDvise is dependent on its ability to attract, keep and motivate key personnel, especially its top management.

• The company’s clear M&A agenda could bring the risk of overpaying or incurring high costs related to integrating new acquisitions.

• Related to its growth strategy, the company’s financial position and future funding needs are key to reaching its ambitious targets.

• ADDvise is, to some extent, reliant on general market conditions in the Nordics, and Sweden in particular (constituting 69% of sales in H1 2017).

Structural growth in the underlying market

Global medtech market estimated to grow at 5% a year until 2020

Structural factors support long-term growth The key structural growth driver of ADDvise’s operations is favourable demographics, as this affects demand for both of the company’s business units: Lab and Healthcare. SCB forecasts that the number of individuals above 65 years of age in Sweden will grow by 50% and reach three million in the next 30‐40 years. In the next few years alone, Sweden will see large cohorts of baby boomers turning 80.

In a global setting, ADDvise states that the medtech market is estimated to grow at an annual rate of 5% until 2020. In addition, an increasing amount of research activities is being migrated to labs, meaning that new facilities need to be constructed and that existing facilities need to be modernised, supporting demand in the Lab business unit. We assume an organic growth contribution of 2% annually, based on historical numbers and the focus on rather mature businesses.



Source: SCB and Nordea Markets Source: SCB and Nordea Markets

Source: SCB and Nordea Markets

Acquisitions will continue to be the key driver of future growth

The new growth strategy has yielded a sales CAGR of above 30% between 2011 to 2016

A well-specified model to integrate companies and gradually recover synergies

Scale advantages from a decentralised business model ADDvise has been on a transformative journey, with rapidly increasing sales since its acquisition strategy was introduced in 2010. Helped by the well-specified business model, the company aims to continue to grow, and further acquisitions will be integral in the future, as the company pursues its newly adopted financial targets.

ADDvise targets life science companies with revenue of SEK 30-100m within its niche markets, Lab and Healthcare. Its targets are mature companies with strong cash flows and mainly B2B sales. While Sweden is ADDvise’s primary market, the search for acquisitions is on a global scale, as evidenced by the acquisition of US company Surgical Tables Inc in 2014. ADDvise is continuously working with an extensive list of potential additions to the group and sources its targets primarily through dealers and advisors. Historically, it has executed one to two transactions per year and the company has, on the back of these acquisitions, seen a sales CAGR of 31.2% between 2011 and 2016. Multiples paid have varied depending on the target company, but have on average been about 4x EV/EBITDA.

ADDvise’s acquisition model includes a methodical integration process to allow gradual synergy recognition. As the company operates in a decentralised fashion, this allows a high degree of operational control for the subsidiaries, enabling them to benefit from ADDvise’s scale while focusing on their core skills within their niche markets. It also frees up time and allows senior management to focus on identifying and completing new deals.

Source: Company data and Nordea Markets Source: Company data and Nordea Markets

Sweden demographics Number of elderly (> 65 years)

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Historical acquisitions and sales Sales development and CAGR

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Ambitious target of 20% annual sales growth

Ambitious financial targets ADDvise adopted long-term financial targets for the first time in September 2017. We believe these targets further demonstrate the company’s strong ambition to grow its top line with increasing profitability. These targets include an ambitious revenue goal of annual growth exceeding 20%. Considering that organic growth has been in the low single digits historically, acquisitions are likely to remain at the top of management’s agenda and represent the bulk of the targeted sales increase.

We model a sales CAGR of 14.8%, 2 pp out of which is organic growth, for the period between 2016 and 2024E, as ADDvise continues to deliver on its strategy and pursues acquisitions to complement its offering and expand its geographical reach.


EBITDA margin has improved ..but the company sees additional upside

Profitability on the rise ADDvise’s EBITDA margin development has followed a positive trend, going from 0.1% in 2011 to 4.7% in 2016 (adjusted for acquisition-related costs), helped by its new growth strategy. The increasing profitability is mainly the result of the scalable business model and synergies realised from its earlier acquisitions. Its long-term financial target of a 10% EBITDA margin also indicates that the company sees further margin upside ahead.

Another advantage from scaling up the business is on the funding side. On 15 September 2017, ADDvise announced that it would refinance its SEK 87m bond and in the process lower its interest rate from 10% to 7.25%. The new five-year bond will be issued at a nominal amount of SEK 100m, including a potential tap-on of up to SEK 240m to finance potential acquisitions. The company estimates that this refinancing will save SEK 2.4m annually in interest costs, which will trickle down to the bottom line. This might also allow for potential dividends in the future and the company has indicated an ambition to return up to 25% of the pre-tax profit to its shareholders in the future.

If the company is able to deliver on its growth ambitions, we see further potential for it to reduce financial costs thanks to scale benefits and lowered leverage. One example could be access to other financing sources, such as bank lending. After year three, ADDvise is able to redeem its new bond without paying any penalty costs. In our model, we assume interest costs will come down to 5% from 2021E. This is based on expectations of increased profitability, lower leverage and access to other financing sources, including bank loans.

ADDvise estimated sales ADDvise estimated sales split

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Our DCF valuation indicates a fair value range of SEK 1.5-4.7 per share

Valuation Based on the assumption that the company can deliver in line with our expectations, we estimate a fair value range of SEK 1.5-4.7 per share based on variations in sales growth, EBIT margins and weighted average cost of capital (WACC). We derive our fair value from our fundamental DCF framework.

A full description of the risk factors we find most relevant for ADDvise is provided on pages 51-52

Risk factors ADDvise relies on a number of key employees, especially its CEO and large shareholder Rikard Akhtarzand, and losing their knowledge could affect operations.

As ADDvise has a clear M&A agenda, the company’s future sales and profit growth is thus dependent on management’s ability to source and complete new deals. Other potential risks related to acquisitions are those of overpaying and of integrating new acquisition targets.

Related to its acquisition-driven growth strategy is the company’s financial position and future funding needs. ADDvise has a growth-oriented business model that is dependent on securing sufficient funding. Failure to do so might affect its plans for future growth. The company is currently refinancing its outstanding bond of SEK 87m (10% yield) with a bond of SEK 100m (7.25% yield).

Recent acquisitions have largely been financed by the proceeds from the first bond issuance, but also by a number of equity issues, which potentially dilute the holdings of existing shareholders. To be able to deliver on its growth targets, the company might need additional funding, and failure to secure such financing might affect the operations.

Finally, ADDvise is somewhat dependent on general market conditions in the Nordics, particularly in Sweden (69% of total sales in H1 2017). And as such, an economic downturn in the region might affect investments by its customers, implying lower sales for ADDvise. We provide a full description of the main risk factors we find relevant for ADDvise on pages 51-52.

ADDvise estimated EBITDA ADDvise estimated EBITDA margin

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Valuation Primarily using a fundamental DCF valuation and assuming a WACC of 8.0-10.0%, we derive an equity value range of SEK 1.5-4.7 per share. This implies 2019E EV/EBITDA of 6.7-10.7x and 2019E P/E of 5.7-17.9x. Note that our valuation is based on a long-term analysis and is not linked to a near-term assessment of the performance of the company. Based on the current share price and our estimates, ADDvise trades at 2019E EV/EBITDA of 7.5x and 2019E P/E of 8.0x.

Our valuation approach is primarily based on a DCF framework

We derive an equity value of SEK 1.5 to SEK 4.7 per share for ADDvise

One of the most common ways to value the attractiveness of an investment opportunity is the discounted cash flow (DCF) method. A DCF model discounts all available cash flows for equity, bond and non‐equity holders at the weighted average cost of capital (WACC). In other words, WACC represents a blended cost of capital for all invested capital in the company. In fundamental terms, a DCF framework is built on three parts:

• Discounting the company’s free cash flow at WACC.

• Identifying the value of debt and other non‐equity claims on the enterprise value.

• Deducting all claims to determine the value of the common equity. The fair value per share is then simply calculated by dividing the equity value by the number of outstanding shares.

A DCF valuation is commonly considered among academics and practitioners to be the best way to capture the underlying fundamental drivers of a company such as cost of capital, growth rates, reinvestment rates etc. If applied correctly, it represents the best way to approximate the true intrinsic value of a company. The main appeal of a DCF framework compared with other valuation methodologies is that it also focuses on streams of cash rather than accounting earnings. Its main disadvantage is its relative sensitivity to changes in input values.

We rely primarily on our fundamental DCF framework to derive an equity valuation range of SEK 1.5-4.7 per share, which implies a 2019E EV/EBITDA valuation of 6.7-10.7x. Our valuation does incorporate assumptions of future acquisitions. We also provide a relative valuation approach, but note that none of ADDvise’s competitors is among these peers, so this should be treated more as a sanity check. ADDvise is also considerably smaller than the companies used in our peer valuation.


DCF valuation interval

SEK 4.7 SEK 1.5

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DCF



Our DCF valuation range is based on variations in sales, EBIT margin and WACC assumptions

Fundamental valuation In the following table we set out the general assumptions that we use to calculate our DCF value. Based on the assumption that ADDvise can deliver broadly in line with our forecasts, with variations in sales growth, EBIT margin and WACC assumptions, we arrive at a fair equity value range of SEK 1.5-4.7 per share. In the terminal period, we model WACC equal to ROIC and 2.5% growth.



We apply a WACC range of 8.0-10.0%

WACC We apply a range of cost capital (WACC) of 8.0-10.0% as the input for our DCF valuation. The assumptions behind our WACC are outlined in the following table.


DCF sensitivity In the table below, we provide a sensitivity analysis of the DCF valuation, with varying EBIT margins and sales growth rates.

Our DCF value with varying EBIT margins and sales growth rates


DCF valuationDCF value Value Per shareNPV FCFF 166-294 3.9-6.8(Net debt) -105 -2.5Time value 5-13 0.1-0.3DCF Value 66-202 1.5-4.7

Averages & assumptionsAverages and assumptions 17-24 25-27 28-32 33-37 38-42 43-47 Sust.Sales growth, CAGR 12.5% 6.0% 4.0% 4.0% 3.0% 2.5%EBIT-margin, ex. associaties 7.4% 7.4% 6.7% 6.2% 5.0% 1.7%Capex/depreciation, x 1.0 1.0 1.0 1.0 1.0 1.0Capex/sales 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%NWC/sales 11.7% 11.7% 11.7% 11.7% 11.7% 11.7%FCFF, CAGR -192.2% 4.3% 3.2% 2.2% -1.0% -21.7% 2.5%

WACC assumptionsWACC componentsRisk-free interest rate 1.5%Market risk premium 5.5%Forward looking equity beta 1.5-2.0Cost of equity 9.5%-12.2%Cost of debt 6.0%Tax-rate used in WACC 22.0%Equity weight 70%WACC 8.0%-10.0%

Sales growth vs EBIT margin

-1.0pp -0.5pp +0.5pp +1.0pp+0.5pp 3.1 3.2 3.4 3.7 3.9

EBIT margin +0.3pp 2.8 3.0 3.2 3.4 3.6change 2.5 2.7 2.9 3.0 3.2

-0.3pp 2.3 2.4 2.6 2.7 2.9-0.5pp 2.0 2.1 2.3 2.4 2.6

Sales growth change



Below we also illustrate how the equity value varies with changes in WACC and sales growth.

Our DCF value with different WACC and sales growth assumptions


In addition, we provide a sensitivity table illustrating how the equity value varies with changes in EBIT margin assumptions and WACC.

Our DCF value with different WACC and EBIT margin assumptions


We rely on EV/EBIT and P/E multiples for our relative valuation

Valuation multiples We contend that a relative valuation based on EV/EBIT and P/E provides the best benchmark for valuing ADDvise for the following reasons:

• EV/EBIT is neutral to a companyʹs financial gearing. It captures the operationsʹ capital intensity to the extent that depreciation levels approximately correspond to sustainable capex levels.

• P/E is often used to compare companies and to consider the differences in tax rates and financing costs. However, it is biased towards lower multiples for companies with high financial gearing. We believe that certain adjustments should be applied when using P/E in order to appropriately value the company.

We complement our analysis with a relative valuation as a sanity check

Peer group valuation We find the DCF method to be the most flexible and accurate to value most companies. However, a stringent relative valuation comparing multiples to a carefully selected peer group could provide a useful check for the DCF forecast. There are three main considerations we find necessary for an accurate relative valuation approach:

• Finding the right multiple. We prefer enterprise value based multiples such as EV/EBIT or EV/EBITA for comparing different companies. P/E is also a commonly used multiple but should be used with caution as it does not differentiate between companies with different capital structures.

• Consistency in calculations and adjustments of multiples.

• Finding the right peer group. Companies selected for the peer group should have similar growth outlooks and return on capital. The most common starting point is to use industry peers.

We use a broad European universe for our relative valuation

It is difficult to find perfect peers for ADDvise, as it operates in a niche market as a supplier to healthcare and research facilities. To complicate matters further, ADDvise’s aggressive M&A-driven growth strategy is pursued by only a few other similar peers.

To avoid company specifics distorting the picture, we use a broad and blended universe of companies with similar financial profiles and growth outlooks to ADDvise, ie

WACC vs sales growth

8.0% 8.5% 9.0% 9.5% 10.0%+1.0pp 4.5 3.8 3.2 2.7 2.3

Sales gr. +0.5pp 4.2 3.6 3.0 2.6 2.1change 4.0 3.4 2.9 2.4 2.0

-0.5pp 3.8 3.2 2.7 2.3 1.9-1.0pp 3.5 3.0 2.5 2.1 1.7

WACC

WACC vs EBIT margin

8.0% 8.5% 9.0% 9.5% 10.0%+0.5pp 4.7 4.0 3.4 2.9 2.4

EBIT margin +0.3pp 4.4 3.7 3.2 2.7 2.2change 4.0 3.4 2.9 2.4 2.0

-0.3pp 3.6 3.1 2.6 2.1 1.7-0.5pp 3.2 2.7 2.3 1.9 1.5

WACC



medtech companies or peers with explicit acquisition agenda (Indutrade, Addtech and Volati). In total we include ten listed peer companies (see the end of this section).

We would like to highlight that ADDvise is significantly smaller than its peers, with a market cap of just 1% of the peer group average. This could warrant a valuation discount to the peer group, as smaller companies usually experience lower liquidity and operate in more narrow markets, which make them more exposed to exogenous factors.

Based on our estimates for 2018E, ADDvise trades at discounts to the peer group average of 27% on P/E and 25% on EV/EBIT. Our forecasts suggest that ADDvise should grow faster than its peer group both in terms of sales and EBIT. Of the peer group companies, we find Addlife to be most comparable based on its M&A-driven business model and life science focus.

Source: Nordea Markets and Thomson Reuters

Source: Nordea Markets and Thomson Reuters

Peer group valuation (calendarised) Price MCAP Perf.(Local) (EUR) 12m 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E

CompaniesHealthcareAddlife 164.5 405 21% n.a. 16.2 15.3 n.a. 23.3 n.a. n.a. 22.2 20.6 n.a. 4.2% 4.6%Bastie Le Confort Medical 37.8 277 70% 9.9 8.4 7.1 24.1 20.4 n.a. 31.9 27.9 23.6 2.6% 3.3% 5.4%Getinge 152.7 4,051 -6% 10.8 10.1 8.8 18.9 16.0 13.2 15.9 15.6 13.5 4.9% 6.1% 8.0%LivaNova plc 70.1 2,858 17% 13.9 12.8 12.1 15.7 15.1 13.9 23.4 21.6 19.9 1.9% 3.6% 4.7%MedCap 37.5 52 -3% 12.6 14.9 8.8 16.3 15.3 n.a. 72.5 123.5 16.1 9.2% 5.6% 7.7%

Average Healthcare 1,529 20% 11.8 12.5 10.4 18.8 18.0 13.5 35.9 42.1 18.7 4.6% 4.6% 6.1%

Trading companiesAddtech 163.5 1,109 25% 16.2 14.2 12.9 20.5 17.6 n.a. 25.0 20.6 18.7 1.3% 3.7% 5.3%Indutrade 214.9 2,708 19% 17.5 15.0 13.7 22.4 18.7 17.5 24.7 19.0 17.3 2.4% 3.4% 4.8%Lagercrantz 80.8 558 -2% 12.0 11.0 10.0 14.9 13.8 n.a. 21.0 19.0 17.0 1.3% 2.8% 4.9%Lifco 265.6 2,350 16% 17.8 15.2 14.2 20.9 18.2 16.9 24.3 20.3 18.9 3.7% 3.5% 5.5%Volati 62.5 629 -6% 15.6 11.5 10.2 19.9 15.1 13.3 23.3 19.5 17.9 2.0% 1.0% 6.2%

Average Trading companies 1,471 10% 15.8 13.4 12.2 19.7 16.7 15.9 23.7 19.7 18.0 2.1% 2.9% 5.3%

Average (all companies) 1,500 15.1% 14.0 12.9 11.3 19.3 17.3 14.9 29.1 30.9 18.3 3.3% 3.7% 5.7%

Median 869 16.2% 13.9 13.5 11.2 19.9 16.8 13.9 24.3 20.4 18.3 2.4% 3.5% 5.3%Min 52 -5.7% 9.9 8.4 7.1 14.9 13.8 13.2 15.9 15.6 13.5 1.3% 1.0% 4.6%Max 4,051 69.8% 17.8 16.2 15.3 24.1 23.3 17.5 72.5 123.5 23.6 9.2% 6.1% 8.0%

ADDvise (Nordea) 2.1 9 -1% 10 12 9 33 15 11 n.m. 80 13 n.m. -52% -17%

EV/EBITDA EV/EBIT P/E FCF yield

Peer group comparison (calendarised)

2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018ECompaniesHealthcareAddlife n.a. n.a. 5.5% n.a. 7.4% 7.6% n.a. n.a. 7.6% n.a. n.a. 7.6%Bastie Le Confort Medical 11.5% 16.5% 13.1% 7.6% 7.7% 8.1% 9.4% 19.3% 18.6% 13.0% 15.5% 17.8%Getinge -0.9% 1.6% 1.3% 10.4% 12.1% 14.5% -7.0% 18.1% 21.6% 3.4% 1.6% 15.7%LivaNova plc 2.3% 1.2% 0.9% 18.0% 18.6% 19.9% 34.1% 4.5% 8.1% 36.6% 8.3% 8.4%MedCap -0.8% 1.1% -5.4% 4.4% 4.6% 5.8% 46.7% 6.9% 21.0% 13.0% n.m. n.m.

Average Healthcare 3% 5% 3% 10% 10% 11% 21% 12% 15% 17% 8% 12%

Trading companiesAddtech 0.9% 9.3% 6.3% 8.1% 8.6% 8.9% 15.2% 16.2% 9.8% 23.8% 21.0% 9.6%Indutrade 9.3% 14.3% 6.9% 10.3% 10.7% 10.7% 7.6% 19.5% 6.9% 12.6% 30.1% 9.8%Lagercrantz 2.6% 5.0% 6.7% 11.2% 11.5% 12.2% 12.9% 8.3% 12.5% 12.9% 10.7% 11.6%Lifco 14.9% 9.8% 5.7% 14.0% 14.6% 15.0% 16.0% 14.4% 8.3% 20.7% 19.9% 7.4%Volati n.a. 32.8% 26.1% 9.2% 9.1% 8.2% n/a 32.3% 13.3% n.a. 19.4% 9.0%

Average Trading companies 6.9% 14.2% 10.3% 10.5% 10.9% 11.0% 12.9% 18.2% 10.1% 17.5% 20.2% 9.5%

Average (all companies) 5.0% 10.2% 6.7% 10.3% 10.5% 11.1% 16.9% 15.5% 12.8% 17.0% 15.8% 10.8%

Median 2.5% 9.3% 6.0% 10.3% 9.9% 9.8% 14.1% 16.2% 11.1% 13.0% 17.4% 9.6%Min -0.9% 1.1% -5.4% 4.4% 4.6% 5.8% -7.0% 4.5% 6.9% 3.4% 1.6% 7.4%Max 14.9% 32.8% 26.1% 18.0% 18.6% 19.9% 46.7% 32.3% 21.6% 36.6% 30.1% 17.8%

ADDvise (Nordea) 33% 32% 28% 2.8% 5.9% 6.7% n.m. 7% 46% n.m. n.m. 66%

EBIT growth Adj. EPS growthSales growth EBIT margin



Description of peer companies Addlife is a Swedish medtech trading company providing consumables, components and systems from leading suppliers to customers primarily within the healthcare, laboratory research, academia, food and pharmaceutical industries.

Addtech is a Swedish technology trading group. The business comprises about 120 independent companies selling high-tech products and solutions to customers mainly in the manufacturing and infrastructure sectors in around 20 countries. It operates through the following segments: components, energy, industrial process, and power solutions.

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Company overview ADDvise provides equipment and services to healthcare and research institutions. The company operates through two business units: Lab and Healthcare. Sales are global, but Sweden is the company’s primary market. Overall, ADDvise’s underlying markets are characterised by stable growth due to favourable demographics, such as an ageing and growing population. The business model is acquisition-heavy and the company aims to expand by adding even more companies to broaden the product portfolio, drive growth and expand its geographical scope.

A leading Swedish equipment supplier to healthcare and research facilities

ADDvise is a leading Swedish supplier of medical equipment and services to healthcare and research institutions. The consolidated group consists of ten subsidiaries, divided into two business units: Lab and Healthcare. Sales are global, but Sweden is the primary market, constituting 69% of sales in H1 2017, followed by Europe (15%) and North America (15%). Products are sold to both private companies and the public sector, where demand is expected to remain stable due to favourable demographics.

Source: Company data

Acquisitions are an integral part of the business model

Following a strategic shift initiated in 2010, acquisitions have become an integral part of the business and ADDvise targets add-on acquisitions that will broaden its product portfolio and/or geographical scope. On average since 2010, the company has made about 1-1.5 acquisitions per year. Potential synergies can be derived through access to ADDvise’s distribution network, facilitating the ability to take on major projects. In addition, potential cost synergies can be recovered through gradual integration into ADDvise’s organisational model.

In the last 12 months, reported sales reached SEK 226m, with Lab and Healthcare representing 67% and 33% of sales, respectively. The company is listed on Nasdaq First North Stockholm.

Examples of ADDvise's products




Founded in 1989 and taking off a few years later, it was first listed in 1998 New ownership in 2008 and initiation of new growth strategy in 2010

Company history ADDvise was founded in 1989 by a number of specialists in lab furnishings, clean rooms and safety ventilation. Operations started on a small scale, but in the mid-1990s, sales picked up with large laboratory orders from Astra. In 1998, ADDvise took its first step into the public market when it was listed on Nya Marknaden (today, Nasdaq OMX First North). In the following years, the company received a number of benchmark orders from major pharmaceutical companies and research labs in the Nordic region.

A major transition was initiated in 2008 with a new main owner, which resulted in a number of management and board changes, and a new growth strategy was implemented in 2010. The main implication from the new strategy was to emphasise acquisitions as a path to growth and the first acquisition was finalised during the autumn of 2010. It was also the start of a broader product offering, as the company previously was more of a niche player. Since 2010, ADDvise has completed seven acquisitions, with an eighth, AB Germa, currently pending. In September 2017, the company introduced its first long-term financial targets.


Long-term financial targets presented in September 2017

Financial targets In September 2017, ADDvise introduced long-term financial targets for the first time. Its strategy is still the same, but the targets provide more details and explicit numbers on its ambition to maintain high revenue growth based on a combination of acquisitions and organic initiatives. In combination with the 20% revenue growth target, the company introduced a profitability target of a 10% EBITDA margin and it aims to keep leverage below 3x net debt/EBITDA. In addition, the company targets paying out 25% of the pre-tax profit in dividends to its shareholders.

Organisational structure as of June 2017

Lab Healthcare

Pendingacquisition

Key events for ADDviseKey years1989 Founded by a number of specialistsMid 90's First major orders from Astra laboratories 1998 Listed on 'Nya Marknaden"2008 New principal owner2010 New growth strategy through M&A Acquisition of KEBO Inredningar Sverige AB2012 Acquisition of Sunnex Tillquist AB Acquisition of IM-Medico Svenska AB2013 Acquisition of Sonesta2014 Acquisition of Surgical Tables Inc2016 Acquisition of LabRum AB2017 Acquisition of Hettich Labinstrument AB Pending acquisition of AB Germa Introduce long term financial targets



ADDvise’s long-term financial targets as of 11 September 2017:

• Revenue growth: Annual revenue growth to exceed 20% including acquisitions

• Profitability: EBITDA margin target of 10%

• Capital structure: Net interest-bearing debt/EBITDA below 3.0x

• Dividend: 25% of the previous year’s pre-tax profit, excluding revaluation of pending earn-outs, to be paid as shareholder dividends.

Operates with two business units: Lab and Healthcare

Business units ADDvise has arranged its operations into two business units: Lab and Healthcare. This helps to support the clear M&A agenda. Each subsidiary is then linked to a particular business unit based on its products and customers. This also allows for synergy extraction through shared sales and distribution networks. The business model is decentralised and each subsidiary has its own management to keep the entrepreneurial spirit but still utilises the synergy potential of being part of a larger group and collaborating with other subsidiaries.



Business unit Lab supplies equipment to both public and private research centres

Lab ADDvise’s Lab business unit is a leading Nordic supplier of lab furnishing and equipment to research centres in both the private and public sphere, including hospitals, pharmaceutical companies and industrial companies. The company designs, produces, and sells lab furnishings, safety ventilation, scales and other lab equipment such as clean rooms and climate chambers.

In the LTM period ending in June 2017, Lab reported net sales of SEK 151.7m, representing 67.2% of group sales. In terms of profitability, Lab reported EBITDA of SEK 6.5m, implying an EBITDA margin of 4.3%.

Sales split by business unit, LTM as of Q2 2017 EBITDA split by business unit, LTM as of Q2-17

Lab67%

Healthcare33%

Lab39%

Healthcare61%

Sales, rolling LTM as of Q2 2017 Adj. EBITDA and margin, rolling LTM as of Q2 2017

147 151168

179195

212226

0

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250

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

SEK

m

4.4

-1.0 -1.6

2.9

9.3

13.7

16.0

-3%

0%

3%

6%

9%

-6

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6

12

18

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

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Healthcare sells devices and consumables, mostly to the public sector

Healthcare The Healthcare business unit produces and sells various types of medical devices and consumables to the healthcare industry. Consumable products are mainly sold to the public sector, while equipment such as urology and gynaecology chairs and surgical tables are mainly sold in North America, where healthcare is, to a large extent, privatised.

In the LTM period ending in June 2017, Healthcare reported net sales of SEK 74.0m, representing 32.8% of group sales. In terms of profitability, Healthcare reported EBITDA of SEK 10.3m, implying an EBITDA margin of 13.9%.


Management and board with relevant capabilities for an acquisition-based operating model

Executive management and Board of Directors ADDvise has a lean management team headed by CEO Rikard Akhtarzand, who has been with the company since 2010. He has long experience both at an executive level and as a board member and has formerly been the CEO of listed company Formpipe. Mr Akhtarzand is also one of the largest shareholders of the company, owning 2.56 million shares in total. The Chairman of the Board is Staffan Torstensson, a partner in Corporate Finance at Evli Bank. Our overall impression is that ADDvise possesses the relevant capabilities to drive growth through acquisitions.

Lab sales, rolling LTM as of Q2 2017 Lab EBITDA and margin, rolling LTM as of Q2 2017

7485

101110

124

138

152

60

80

100

120

140

160

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

SEK

m

Sales

-2.0-3.3

-2.4

-0.9

1.5

4.1

6.5

-4%

-2%

0%

2%

4%

6%

8%

-4

-2

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2

4

6

8

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

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m

EBITDA EBITDA margin

Healthcare sales, rolling LTM as of Q2 2017 Healthcare EBITDA and margin, rolling LTM as of Q2 2017

73

6667

69

71

73 74

60

64

68

72

76

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

SEK

m

Sales

4.5

0.0

4.1

10.711.8

10.3

0%

5%

10%

15%

20%

0

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20

Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17

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m






Executive management

Rikard Akhtarzand Anna Hasselgren Erland Pontusson

Position Position Position

CEO CFO COO

Other appointments Other appointments Other appointmentsCEO & Board member of Kivsvalk AB

Previous background Previous background Previous backgroundLong-term experience in operating both listed and unlisted companies at board and executive management level. Past experience as CEO at FormPipe Software AB

Head of business control at Tradedoubler Former CEO of Absorbest, Abilia and LIC Orthopedics as well Nordic manager and CEO at VWR and sales manager at Fujitsu Sweden

No. of shares No. of shares No. of shares2 455 131 shares, 1 687 482 A-shares & 767 649 B-shares, private and through companies

0 58 840 shares, 29 420 A-shares & 29 420 B-shares

Board of Directors

Meg Tivéus Fredrik Celsing Rikard Akhtarzand Staffan Torstensson

Position Position Position Position

Board member Board member CEO & Board member Chairman of the Board

Other appointments Other appointments Other appointments Other appointmentsBoard member of Swedish Match, Endomines, Blomsterfonden & Gotlandsbåten. Chairman of Arkitektkopia, Solhagagruppen, Bjorn Axén, Close, Readly & Svenskt Kulturarv

CEO in Kamic Group & Amplex CEO & Board member of Kivsvalk AB

Board member of Formpipe Software & Tuida Holding, also business partner at Evli Bank in the corporate finance sector

Previous background Previous background Previous background Previous backgroundLong-term experience of senior management and board positions in both the private and public sectors in Sweden and internationally

Long-term experience in operating both listed and unlisted companies at board and executive management level

Long-term experience in operating both listed and unlisted companies at board and executive management level. Past experience as CEO at FormPipe Software AB

Multi-year experience from public and private investment banking transactions

No. of shares No. of shares No. of shares No. of shares16 400 0 2 455 131 shares, 1 687 482 A-

shares & 767 649 B-shares, private and through companies

200 000 shares, 100 000 A-shares & 100 000 B-shares, 34 000 options through company



CEO is among the largest shareholders in terms of both capital and voting power

Shareholders ADDvise has both A- and B-shares outstanding, with each B-share representing 1/10 of the voting power of an A-share. The main motivation behind the existence of the dual share classes is to allow for issuance of B-shares to fund acquisitions, while maintaining a stable ownership structure in terms of voting power. Per Åhlgren, Chairman of Black Earth Farming, is the largest shareholder in terms of value, with shares representing 30% of the capital and 12% of the votes. CEO Rikard Akhtarzand is among the largest shareholders in terms of both capital and voting power.

Source: Company data and Holdings (Swedish ownership database)

Shareholder structure as of September 21, 2017Shareholder Votes CapitalRikard Akhtarzand 15.8% 5.7%Magnus Vahlquist 15.2% 8.1%Caracal AB 10.5% 5.0%Per Åhlgren 11.6% 30.0%Ingvar Jensen 3.8% 4.2%Cajory AB 2.5% 1.2%PGN Invest AB 2.8% 1.3%JP-RV Invest AB 2.8% 1.3%Vallpax AB 1.8% 0.5%Mangold Fondkomission AB 1.8% 3.8%Others 31.3% 39.0%Totalt 100.0% 100.0%



Acquisition model ADDvise has a well-specified acquisition model to enable it to grow and capture synergies. In line with its new financial targets, the strategy is to maintain a high pace of future acquisitions and add assets that can broaden the company’s operations. Focus is solely on Life Science companies with sales of about SEK 30-100m, where competition and paid multiples are usually lower. The company currently sees a number of potential acquisition opportunities within its specified range. New strategy in 2010 to boost growth through M&A

In general, the company has acquired complementary businesses

Further acquisitions needed to deliver on the company’s growth target

Acquisition-driven growth story As a consequence of the strategic shift in its business model – initiated in 2010 following the changes of ownership and management that took place in 2008 – there have been multiple acquisitions. Since 2010, ADDvise has acquired seven companies with an eighth target, Germa, pending closure of the deal. This means that the company has on average added 1-1.5 acquisitions per year and considering its growth targets and single-digit organic growth, we expect this rate of M&A activity to increase.

In general, the acquired companies have either been competitors or companies with a product and service offering that has complemented that of ADDvise. The targets have also strengthened or expanded ADDvise’s geographical reach. The motivation given for each acquisition has often been the expected synergies, both industrial and financial.

We expect ADDvise to continue to operate a clear acquisition-driven growth strategy with the goal of growing both horizontally and vertically to enable a wider offering of products and services in both of its business units. It will continue to capitalise on synergies between ADDvise and the acquired companies and thus increase the level of profitability.


Growth strategy

Wider offering of products and services

Product development Distribution SalesProduction

SYNERGIES Overhead Admin, Finance & IT Marketing Logistics Sales, Service & Support

Product area 1

Product area 2

Product area 3

Product area 4

Product area 5

Product area 6

Product area 7

Further acquisitions



Deal flow is largely generated through intermediaries

Acquisition criteria ADDvise evaluates about 100 companies per year and has a shortlist of about ten potential targets. Deal flow is generally generated through intermediaries. The company’s criteria for potential acquisitions are as follow:

Type of company

• Providers of medical and laboratory equipment and related services with opportunities for synergies with ADDvise

• Mature companies with stable businesses that have strong cash flows, B2B sales and that experience relatively low levels of operational risk

Type of deal

• A typical deal is a privately held company

• ADDvise has historically wanted to acquire a majority share

Region

• Focus primarily on the Nordics and the US, but also elsewhere globally

• Strong local presence with potential to expand outside its home market

Size

• Targets companies with annual turnover of SEK 30-100m, and around SEK 20m at a minimum

Structured investment process to identify potential targets

Efficient internal structure allows a smooth integration process

Investment and integration process The investment process begins with strategic planning, which includes identifying the potential acquisitions. Here ADDvise makes use of its industrial network and intermediaries. This helps the company connect with potential sellers and for a percentage fee on the transaction value, ADDvise thus outsources the finding of its acquisition targets, enabling it to focus on the integration of its previous acquisitions and negotiating new deals. Each investment is then subject to a comprehensive due diligence process.

The payment structure for acquisitions that ADDvise mainly adopts consists of a mix of cash, shares and earn-outs. This payment model has a dual purpose in that it aims to both create incentives for the seller to maximise the ongoing development of the sold company, even after the sale, and meet the price expectations of the seller.

After a deal has been signed and a target has been acquired, the investment process moves into the integration process. ADDvise has an effective internal structure to enable a smooth and easy integration process of the acquired companies. The integration process is done in a methodical manner in order to optimise the acquired companies and realise the potential synergies.




Becoming a part of ADDvise translates into numerous benefits for the acquired companies

ADDvise value proposition to the acquired company For the acquired company there are numerous advantages of being part of ADDvise. The company’s products can be sold through ADDvise’s distribution channels and as ADDvise is a trusted partner in larger transactions, this enables deals of a greater scope. ADDvise’s goal is to maintain the entrepreneurial spirit of the acquired company and to emphasise that goal, in 2016 it started operating a more decentralised organisation to enable the business units to exert more independent control but still offer the option to utilise the advantages of a bigger group. ADDvise’s goal is also to help the acquired company improve operationally from its current level, in order to reach its full potential.

Acquisition multiples During the past few years, ADDvise has completed multiple acquisitions, with the transactions varying in size and being executed at different multiples. According to the company, valuations for these types of smaller companies have not varied significantly in the past. Hence, we expect future acquisitions to be finalised at around the historical multiple levels. See the list below for the completed and pending transactions since 2010.


Acquisitions have had an average EBITDA margin of 5.6% and three-year sales CAGR of 8.3%

Historical financials of acquired companies The completed acquisitions, excluding Sonesta where no EBITDA was reported, have had an average EBITDA margin of 5.6% in the last full financial year before they were acquired. The average sales CAGR for the completed acquisitions, excluding Sonesta and Surgical Tables Inc, was 8.3% in the three last full financial years before the companies were acquired.

M&A process

1. Strategic planning- Identify interesting targets- Analyse targets- Internal preparation

4. Growth- Add on acquisition- Organic growth

3. Integration process- Integrate- Optimise - Realise synergies- Streamline

2. Acquisition process - Negotiation and agreement - Realise acquisition

Transactions since 2010Company Year MultipleKEBO Inredningar 2010 EV/S 0.3x & EV/EBITDA 3.9x plus potential earn-outsSunnex Tillquist 2012 EV/S 0.2x & EV/EBITDA 12.2xIM-Medico 2012 EV/S 0.3x & EV/EBITDA 3.8x plus potential earn-outsSonesta 2013 EV/S 1.1x & EV/Gross Profit 3.3xSurgical Tables Inc 2014 EV/S 0.6x & EV/EBITDA 10.5xLabRum 2016 EV/S 0.5x & EV/EBITDA 4.7x plus potential earn-outsHettich Labinstrument 2016 EV/S 0.3x & EV/EBITDA 3.6x plus potential earn-outsGerma Pending EV/S 0.5x & EV/EBITDA 4.1x



Seven companies acquired in 2010-17, eighth addition pending


The acquisition of KEBO Inredningar in 2010 constituted the first step in the company’s new growth strategy

KEBO Inredningar KEBO Inredningar was consolidated in 2010 and constituted the first step in ADDvise’s new growth strategy, adopted earlier that year. KEBO Inredningar sells and manufactures lab furnishings and protective ventilation.

In 2009, KEBO Inredningar had sales of SEK 21.5m and EBITDA of SEK 1.8m, implying an EBITDA margin of 8.4%. For the period between 2006 and 2009, the company had a sales CAGR of 11.8%.


Sunnex Tillquist was consolidated in 2012 and added to the Lab business

Sunnex Tillquist Sunnex Tillquist was consolidated in 2012 and is part of the Lab business unit under the name ADDvise Tillquist. It is active within manufacturing, sales and service on medtech products, lab equipment and scales to customer within healthcare and research as well as industry and retail.

In 2011/12, Sunnex Tillquist had sales of SEK 39.6m and EBITDA of 0.4m, implying an EBITDA margin of 1.1%. For the period between 2008/09 and 2011/12, the company had a sales CAGR of -5.3%.


Acquired companies since 2010Company Acquired Consolidated SegmentKEBO Inredningar 2010 01/10/2010 LabSunnex Tillquist 2011 16/01/2012 LabIM-Medico 2012 01/06/2012 HealthcareSonesta 2013 02/09/2013 HealthcareSurgical Tables Inc 2014 04/11/2014 HealthcareLabRum 2016 01/03/2016 LabHettich Labinstrument 2017 31/01/2017 Lab

Germa Pending Pending Healthcare

KEBO Inredningar sales KEBO Inredningar EBITDA

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5

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25

2005 2006 2007 2008 2009

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Sales

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2005 2006 2007 2008 2009

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Sunnex Tillquist sales Sunnex Tillquist EBITDA

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2008/2009 2009/2010 2010/2011 2011/2012

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-8%

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Acquisition of IM-Medico broadened the product offering within Healthcare

IM-Medico IM-Medico was acquired in 2012 and is part of the Healthcare business unit. It complemented ADDvise’s offering of consumables and medtech products to acute and prehospital care with products within diagnostics, such as EKG. The business has a large portion of recurring revenues and a low correlation with the general business cycle, meaning that there is low operational risk.

In 2011/12, IM-Medico had sales of SEK 28.9m and EBITDA of SEK 2.4m, implying an EBITDA margin of 8.3%. For the period between 2008/09 and 2011/12, the company had a sales CAGR of 8.4%.

Source: Company data and Nordea Markets Source: Company data and Nordea Markets Sonesta was previously part of the listed company Stille

Surgical Tables sells surgical tables and strengthened ADDvise’s presence in the US

LabRum was acquired in 2016 and added about SEK 72.5m in sales

Sonesta Sonesta was acquired in 2013 and is part of the Healthcare business unit. It was previously part of Stille AB and manufactures and sells equipment for patient positioning, primarily within urology and gynaecology. Through the acquisition, ADDvise was able to expand its product portfolio within medical equipment and expand from being a Nordic player to having sales in more than 60 countries.

During 2012, Sonesta had sales of SEK 19.4m and a gross profit of SEK 6.3m. During the first four months of 2013, the company had revenue of SEK 5.3m and a gross profit of SEK 2.3m.

Surgical Tables Inc Surgical Tables Inc was acquired in 2014 and is part of the Healthcare business unit. The company sells and manufactures surgical tables for medical care. It strengthened ADDvise’s presence in the important US market and it is headquartered in Massachusetts, where the manufacturing is also located.

During 2013, Surgical Tables had sales of SEK 20.1m and EBITDA of SEK 1.1m, implying an EBITDA margin of 5.5%. During the first eight months of 2014, the company had revenue of SEK 13.5m and EBITDA of SEK 2.2m, implying an EBITDA margin of 16.3%.

LabRum LabRum was acquired in 2016 and is part of Lab business unit. It is one of Sweden’s oldest companies within the sale of laboratory equipment, laboratory furnishing and protective ventilation. Its customers are found in both the private and public sectors in the Nordic region.

In 2014/15, LabRum had sales of SEK 72.5m and EBITDA of SEK 7.4m, implying an EBITDA margin of 10.2%. Note that the numbers in the graph only refer to the Swedish operations.

IM-Medico sales IM-Medico EBITDA

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16%

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2008/2009 2009/2010 2010/2011 2011/2012SE

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Hettich was acquired this year to strengthen the offering within Lab

Hettich Labinstrument Hettich Labinstrument was acquired in 2017 and is part of the Lab business unit. It is one of Sweden’s leading companies within instruments, consumables and services for healthcare and research facilities. The acquisition complements ADDvise’s product offering and strengthens its Nordic presence and is expected to contribute both industrial and financial synergies.

In 2016, Hettich Labinstrument had sales of SEK 47.8m and EBITDA of SEK 3.6m (adjusted for FX), implying an EBITDA margin of 7.5%. For the period between 2013 and 2016, the company had a sales CAGR of 11.7%.


Germa is a pending acquisition that is subject to due diligence

Germa Germa is a pending acquisition and will, after closure of the deal, be added to the Healthcare business unit. ADDvise signed a letter of intent for the acquisition on 18 July and is currently undertaking a due diligence process.

Germa manufactures and sells hospital equipment such as positioning vacuum pillows, transfer mattresses, child safety solutions, and rehab products, as well as safety products for the armed forces. The company is located in Kristianstad, Sweden.

In 2016, Germa had sales of SEK 30.1m and EBITDA of SEK 3.4m, implying an EBITDA margin of 11.4%. For the period between 2013 and 2016, the company had a sales CAGR of 3.1%.

LabRum sales LabRum EBITDA

0%

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2012/2013 2013/2014 2014/2015

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2012/2013 2013/2014 2014/2015

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Hettich Labinstrument sales Hettich Labinstrument EBITDA

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Germa sales Germa EBITDA

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Market We expect ADDvise to benefit from structural growth in its underlying market, aided by favourable factors such as a growing population and an increasing proportion of elderly people. The company estimates that the global medtech market will grow by 5% annually up to 2020, and demand in its home market Sweden is also expected to be healthy, supported by baby boomers turning 80 in the coming years. The impact of demographical shifts has translated into steady growth in health expenditure over the past 20 years and we expect the trend to continue, which underpins good prospects for ADDvise to capture organic growth.

ADDvise estimates that global medtech demand will grow at 5% annually until 2020

Ageing baby boomers boost healthcare demand

Baby boomers turning into health demand boosters ADDvise states that the global medtech market is estimated to grow at an annual rate of 5% until 2020. In addition, a company-specific growth driver is that an increasing share of research is taking place in labs, which will increase the demand for construction of more facilities as well as the modernisation of existing infrastructure.

Although the Swedish population is already among the oldest in Europe, the large cohort of baby boomers born in the 1940s will start to turn 80 in the next few years. This translates into increased demand for healthcare products and services over the coming years.


Demographic factors support long-term growth for ADDvise’s business units

Demographic shifts support long-term growth The general market trend is favourable for ADDvise in the long term, driven by demographic factors such as a growing population and an increased proportion of elderly people. In the next 30-40 years, the number of elderly people (defined as older than 65) is expected to grow by almost 50% and reach close to three million people in 2050, according to SCB. In relative terms, elderly people will account for almost 23% of the total population, up from 13% today. Ageing populations increase the demand for both of ADDvise’s business units, ie Lab and Healthcare, and could thus be supportive for the company’s organic growth prospects for the foreseeable future.

Number of births in Sweden

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

1920 1930 1940 1950 1960 1970 1980Number of births in Sweden

Current age: 80 years



Source: SCB and Nordea Markets Source: SCB and Nordea Markets


Health expenditure relative to GDP is growing steadily on a global basis

Trend of increasing healthcare costs is global As populations grow older, the cost of caring for them is also growing. In Sweden, health expenditure relative to GDP has increased by 4 pp in the past 20 years, from about 8% to 12% today. The same trend can also be seen in the EU as a whole, although the increase in Sweden – ADDvise’s most important market – has been larger in the past five years. This is also true for the US, which ADDvise is exposed to through its Sonesta and Surgical Table subsidiaries. The US is seeing a markedly higher share of GDP devoted to health expenditure and the gap to the EU has been persistent in the past 20 years.

Source: World Bank and Nordea Markets

Source: World Bank and Nordea Markets Source: World Bank and Nordea Markets

Sweden demographics Number of elderly (> 65 years)

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1970 1980 1990 2000 2010 2020 2030 2040 2050

in m

illio

ns

<65 years >65 years Population

0

0.5

1

1.5

2

2.5

3

3.5

1970 1980 1990 2000 2010 2020 2030 2040 2050

in m

illio

ns

>65 years

Sweden life expectancy1980 1990 2000 2010 2020 2030 2040 2050

Men 73 75 77 80 81 83 84 86Women 79 80 82 83 85 86 87 88Average 76 78 80 82 83 84 86 87

Health expenditure as % of GDP

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Business unit – Lab The Lab business unit provides a wide range of laboratory products to customers in both the private and public sector. The product portfolio ranges from laboratory furnishings, equipment and apparatus and, through its subsidiary ADDvise Tillquist, ADDvise can also offer servicing of laboratory equipment and scales. The business unit is split between four brands and three subsidiaries: Hettich Labinstrument, LabRum and ADDvise Tillquist. The operational setup allows ADDvise to provide full-scale solutions to all types of research facilities.

The Lab business unit provides laboratory-related products and services and can provide full-scale solutions to all types of research facilities

The Lab business unit provides laboratory furnishings, safety ventilation, climate rooms, clean rooms and laboratory equipment and apparatus to customers active within both the private and public sectors. ADDvise also offers laboratory furnishings specially adapted to schools, environments that typically require solutions fulfilling the same high safety standards as required in industrial laboratories and that can also handle the hardware and narrow budget requirements typically associated with schools. Lab accounted for 67% of ADDvise’s LTM sales as of Q2 2017 and 39% of the EBITDA during the same period.


The business area is split between four different brands and three subsidiaries: Hettich Labinstrument AB, LabRum AB and ADDvise TQ AB. The operational setup within Lab allows ADDvise to provide full-scale solutions to all types of research facilities.


Sales split, LTM as of Q2 2017 EBITDA split, LTM as of Q2 2017

Lab67%

Lab39%

Lab business unit

Lab

Hettich Labinstrument LabRum

KEBO Inredningar

LabRum Klimat Oy

LabRum AS

ADDvise Tillquist



Hettich Labinstrument was acquired in 2017 and supplies a wide range of medical devices and instruments from well-known brands

Hettich Labinstrument Hettich Labinstrument AB was acquired by ADDvise in January 2017. It is a leading distributor of instruments, consumables and services for healthcare and research facilities in Sweden. In 2016, Hettich reported sales of SEK 47.8m and an EBITDA of SEK 3.6m (adjusted for FX), corresponding to an EBITDA margin of 7.5%. Through Hettich, ADDvise is able to supply a wide range of medical instruments and devices from well-known brands such as Hettich, Memmert, Greiner Bio-One, Deltalab, NTE-SENER and Kern. Hettich’s product offering includes microbiology automation, centrifuges, incubators, climate chambers, vacuum ovens, water and oil baths, as well as balances.


Source: Hettich Labinstrument

AUTOPLAK (microbiology automation) Many hospitals and laboratories are still faced with the challenge of performing many highly repetitive processes manually, which increases the risk of errors. Through automation, staff are not only freed up from performing repetitive tasks but the variability of clinical practice and risk of errors are also reduced. Through AUTOPLAK, an automatic sample inoculation and streaking system for Petri dishes in microbiology laboratories, the labs are able to increase productivity and quality as well as lower costs.

Distributes a wide offering of centrifuges from Hettich Zentrifugen

Centrifuges Hettich distributes a wide range of centrifuges manufactured by Hettich Zentrifugen, targeting both general practices and more advanced laboratories. The product offering stretches from smaller compact centrifuges for a low number of samples up to larger, floor-standing and cooled centrifuges for blood bags and larger sample volumes.

Source: Hettich Labinstrument

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Examples of centrifuges



Incubators and climate chambers manufactured by Memmert and Hettich Incubators

Incubators/Climate chambers Hettich’s offering within incubators and climate chambers includes products manufactured by Memmert and Hettich Incubators. The HETTcube product range includes incubators in a variety of different sizes, all of which meet rigorous quality standards and provide optimal growth conditions for the cultures via homogenous temperature distribution, while also optimising usable volume and minimise the environmental footprint. The Memmert climate chambers combine high-precision temperature control with a nearly maintenance-free service life and best-in-class energy efficiency.

Source for all pictures on this page: Hettich Labinstrument

Vacuum/Universal ovens The Memmert heating and drying ovens are available in a variety of different sizes, ranging from 32 litres to 1,060 litres in chamber volume and may be used for precise drying, heating, ageing, burn-in and hardening in research, science, industry and quality assurance. Each appliance complies with strict requirements in terms of temperature homogeneity, behaviour during stabilisation period and temperature control.

Water/oil baths Memmert’s water and oil baths, distributed by Hettich, combine high-grade anti-corrosion stainless steel with advanced electronics to provide functional security, convenience and ease of use. The water baths are offered in two different performance classes: basic and excellent. Whilst the basic water bath covers basic needs in terms of precision, safety and comfort, the excellent product type is well-suited for professional applications in quality management and for technical guidelines.

Balances Hettich also distributes a wide selection of balances, manufactured by Kern. The product offering includes both pocket balances and highly advanced precision balances used in laboratories, industry and within the food sector. Whilst pocket balances are suitable for situations requiring high precision combined with mobility, the Kern precision balances are optimal in settings with highly accurate demand requirements, such as in recipe function and percentage determination.

LabRum added to ADDvise’s broad competence within laboratory furnishings and equipment

LabRum AB LabRum AB was acquired by ADDvise in February 2016 and added to the company’s already broad competence within laboratory furnishings, safety ventilation and laboratory equipment. The acquisition of LabRum AB also included the subsidiaries LabRum AS (100%), LabRum Klimat Oy (80%) and Kinda Fastighets AB (20%). In conjunction with the acquisition of LabRum in 2016, both ADDvise’s original Lab operations and its subsidiary KEBO Inredningar were integrated into LabRum. The separate brands remain but now act as product lines within LabRum.

LabRum AB is one of Swedenʹs leading laboratory equipment manufacturers, laboratory equipment and protective ventilation suppliers. LabRum’s special expertise within the

Examples of incubators/climate chambers



laboratory fitting and equipment area extends over 40 years, making LabRum one of the oldest complete suppliers of interior design, laboratory equipment and protection ventilation in the Swedish market.

During fiscal-year 2014/15, LabRum reported sales of SEK 72.5m and generated an EBITDA of SEK 7.4m, corresponding to an EBITDA margin of 10.2%. LabRum’s customers include both private and public clients, including the highly reputable Karolinska Institute, the Swedish Police Authority and several universities. Note that the graphs below only refer to the Swedish operations.


Laboratory furnishings are offered in four styles in order to meet different customer needs

Laboratory furnishings LabRumʹs laboratory fittings are strongly associated with a high degree of functionality, quality and design. In order to meet different customer needs, LabRum offers four different styles, including the Hanson Design, Nordic Design, Oxford Design and the Classic Design.

As laboratory fittings are exposed to great stress over their lifetime, often including high temperatures and corrosive substances, this puts great demand on the properties of the material, while the fittings should also be ergonomically correct and enable efficiency and safety. By choosing, for example, LabRum’s Nordic Design or Oxford design, the customer gets a traditional interior design with simple and flexible wall modules that are easy to move or adjust if necessary. With the Hanson Design, customers are able to free up additional space as the design is free from table legs/tripod legs and potentially disturbing steel details and with a stability and strength that are better and more flexible than the traditional laboratory furnishing. LabRum also offers solutions specifically adapted to school environments via the Oxford design where LabRum has taken its well-proven concept and applied it to the typical school environment.

Source: LabRum

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Examples of laboratory furnishings



LabRum can provide customised solutions to most types of working environments with a wide range of accessory options

Safety ventilation Within protective and safety ventilation, LabRum offers a variety of products, including fume cupboards, fume hoods, ventilated benches, ventilated storage cabinets, laminar flow cabinets, local extraction devices and ventilated sinks. In a working environment exposed to contaminated or potentially hazardous air, adequate ventilation is of utmost importance in order to ensure the safety of both staff and in some cases even the product. LabRum is able to provide customised solutions to most types of working environments and can offer a wide range of accessory options as a complement to its standard offering. The products can also be adapted for heavy-duty use.

Source: LabRum

LabRum also distributes a wide range of laboratory equipment

Laboratory equipment In addition to LabRum’s broad product offering within laboratory furnishings and protective ventilation, the company also distributes a wide range of laboratory equipment including low-temp freezers, incubators, climate cabinets, heating cabinets and ovens.

Source: LabRum

KEBO Inredningar was acquired in 2010 and offers tailor-made laboratory furnishings and protective ventilation

KEBO Inredningar AB KEBO Inredningar AB was acquired by ADDvise in 2010, and formed the foundation of ADDvise’s new strategy of becoming a leading supplier of complete solutions to hospitals and research facilities, which was embraced by the board in January 2010. In 2009, KEBO Inredningar had sales of SEK 21.5m and EBITDA of SEK 1.8m, implying an EBITDA margin of 8.4%. In 2016, it was integrated into LabRum but the brand remains a separate product line.

The KEBO Inredningar product line offers tailor-made laboratory furnishings and protective ventilation to all types of workplaces and is, thanks to its long and broad industry experience, able to assist customers in all aspects from the planning stage to completed installation. KEBO Inredningar’s aim is to always customise the product to each customer’s individual demands in order to increase safety, functionality and to achieve greater convenience. KEBO Inredningar’s customers include AstraZeneca, Biovitrum and GE Healthcare. KEBO Inredningar products are manufactured at its own production unit in Hässleholm in southern Sweden, which is also responsible for further product development. Thanks to its own production unit, KEBO Inredningar is able to maintain close control over product quality and product delivery.

Examples of safety ventilation products

Examples of laboratory equipment




KEBO Inredningar products can all be custom-fitted with shelves and locks

Laboratory furnishings KEBO Inredningar’s main product line is KEBO 100. In the standard setting, the laboratory furnishings are delivered with a white laminate decor but it is possible to get the decor with many others colours and patterns. The product offering stretches from laboratory tables and laboratory sinks to cabinets, all of which can be custom-fitted with shelves and locks.

Source: KEBO Inredningar

KEBO’s offering within safety ventilation has been developed and tested in cooperation with qualified experts

Safety ventilation KEBO’s offering within safety ventilation includes fume hoods, ventilated benches, ventilated storage cabinets, local extraction devices and LAF benches. KEBO’s products within safety ventilation effectively take care of and remove airborne contaminants generated during processes by collecting the pollutants at the source so that as little as possible spreads to other areas. Each of KEBO’s products has been developed and tested in co-operation with qualified experts, is based on long tradition, and is continuously adapted to todayʹs requirements and technique.

Source: KEBO Inredningar

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Examples of laboratory furnishings

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ADDvise Tillquist was acquired in 2012 and offers service of laboratory equipment and scales

ADDvise Tillquist AB ADDvise offers the servicing of laboratory equipment through its subsidiary ADDvise Tillquist (formerly Sunnex Tillquist), which was acquired in 2012. In 2011/12, ADDvise Tillquist had sales of SEK 39.6m and EBITDA of 0.4m, implying an EBITDA margin of 1.1%. ADDvise Tillquist possesses broad competence and long experience in the service and calibration of both scales and laboratory equipment, which are integral in assuring product reliability and creating a safe laboratory environment. ADDvise Tillquist offers servicing throughout Sweden, and thanks to its nationwide service organisation, the customer is able to receive fast and well-qualified service covering both scales and other laboratory equipment. ADDvise Tillquist has been SWEDAC-accredited for scale calibration since 1986.


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Business unit – Healthcare ADDvise’s Healthcare business unit manufactures and provides a wide range of products to customers mainly in the hospital setting. Its product portfolio ranges from consumable materials for healthcare to high-tech instruments for the intensive care unit, such as defibrillators and advanced urological and gynaecological chairs. The business model encompasses both own products and third-party products and is split into a product operation and a trading operation, where ADDvise acts as a distributor of well-known brands. The business unit is currently split between three brands and product areas: IM-Medico, Sonesta and Surgical Tables.

The Healthcare business unit manufactures and provides a wide product range, mainly for hospital settings

The subsidiaries in the Healthcare business unit manufacture and provide a wide range of products to customers mainly in the hospital setting. The product portfolios differ between the subsidiaries but the combined portfolio ranges from consumables for healthcare to high-tech instruments for intensive care units. The business model encompasses both own and third-party products and is split into a product operation and a trading operation, where ADDvise acts as a distributor of well-known brands. The Healthcare business unit accounted for 33% of ADDvise’s LTM sales as of Q2 2017 and 61% of EBITDA during the same period.


The business unit is currently split between three brands and product areas – IM-Medico, Sonesta and Surgical Tables – and will see the addition of Germa when the acquisition process is completed.


IM-Medico, acquired in 2012, is a market leading trading company that is able to meet the entire

IM-Medico IM-Medico is mainly a trading company and was acquired by ADDvise in 2012. It is the market leader when it comes to the sale of bags and carrying systems used in Swedish ambulance healthcare and is a well-known supplier of equipment and consumable materials used in hospital bedside treatment and care. The company’s most successful product is an intra-osseous needle that enables the infusion of medication directly into the bone marrow of severely ill patients, for which IM-Medico acts as the Swedish agent

Sales split, LTM as of Q2 2017 EBITDA split, LTM as of Q2 2017

Healthcare33%

Healthcare61%

Healthcare business unit

Pendingacquisition



healthcare chain’s needs

and facilitates training. Thanks to its wide product offering and strong position in Sweden, IM-Medico is able to meet the entire healthcare chain, which allows cross selling and cost synergies. In 2011, IM-Medico had sales of about SEK 27.4m and EBITDA of SEK 2.4m, implying an EBITDA margin of 8.8%.


Emergency healthcare IM-Medico’s emergency healthcare offers a comprehensive assortment of products targeting the medical emergency equipment and emergency supplies market. It provides a large selection of equipment and supplies specialised for Emergency Medical Services, include diagnostic kits, disposables and patient care products.

Product sub-segments NIO intraosseous device This device is needed in emergency situations when vascular access for fluid is required. The NIO is an automatic intraosseous device packaged for safe and easy vascular access. The product requires no drills, batteries or extra parts.

Immobilisation products Most EMS systems employ a full range of options for positioning patients for care and transport. The use of various other extremity splints and flexible spine packaging devices is common. Patients who require no splinting can be cared for in a seated position of comfort on a stretcher and belted for safe transport to a hospital. IM-Medico’s offering include vacuum splints, vacuum mattresses, Combi-Carrier, Baxstrap and neck collars.

Source for all pictures on this page: IM-Medico Emergency and oxygen bags

IM-Medico offers EMS bags of different varieties and usage. The product range offers options from multi-functional to single-functioned, such as oxygen, gear bags, etc used in acute and less acute situations.

IM-Medico sales IM-Medico EBITDA

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Examples of immobilisation products



IM-Medico’s sells emergency CPAP devices from Pulmodyne

Emergency CPAP Products IM-Medico also sells Pulmodyne’s product family of disposable and portable emergency CPAP (continuous positive airway pressure) devices. They provide a consistent flow throughout inhalation and exhalation, and offer attachments and features that allow the utilisation of different combinations of FiO2 (fraction of inspired oxygen) and PEEP (positive end-expiratory pressure) to meet patient needs. Note that IM-Medico also provides traditional CPAP products that are described more in detail under OP/AN/IVA.

Other emergency care This product area includes other products such as CPR manikins, endoscopy masks and VBM Pocket Introducer (an aid for the difficult airway to facilitate insertion of an endotracheal tube under direct oral laryngoscopy).

IM-Medico has a wide product offering of single and multiple use products designed for surgery anaesthesia and intensive care

Stapling is often much more efficient than manual suturing

OP/AN/IVA (surgery, anaesthesia and intensive care) IM-Medico provides a wide range of single and multiple use products designed for surgery, anaesthesia and intensive care. These areas are central in today’s hospital care with intensive care usually only offered to those whose condition is potentially reversible and who have a good chance of surviving with intensive care support, while anaesthesia enables the painless performance of medical procedures that would cause severe or intolerable pain to an unanaesthetised patient. IM-Medico’s portfolio includes products such as tourniquets, CPAP, oxygen therapy, ventilator and anaesthesia masks, surgical instruments and suction units.

Stapling Surgical staples are specialised staples used in surgery. Stapling is often much more efficient than manual suturing and also more accurate. Main areas of usage include bowel and lung surgery, because staple lines are more consistent and therefore less likely to leak blood, air or bowel contents. An alternative to stapling is dermal adhesives.

• Endoscopic linear cutter stapler with universal handle

• Skin stapler and skin stapler remover

• Circular stapler with dual safety

• Reloadable linear cutter stapler

• Haemorrhoidal circular stapler with dual safety and transparent cartridge

Source: IM-Medico

CPAP products are typically used for people with breathing problems

CPAP (continuous positive airway pressure) CPAP is a form of positive airway pressure ventilator that applies mild air pressure on a continuous basis to keep the airways continuously open in people who are unable to breathe spontaneously on their own. CPAP devices apply continuous positive airway pressure throughout the breathing cycle. CPAP is typically used for people who have breathing problems (including sleep apnea) or to treat pre-term infants whose lungs have not yet fully developed.

• CPAP masks

• CPAP sets

• CPAP accessories

Example of stapling



Source: IM-Medico (all pictures below)

Tourniquet products A tourniquet is a device that can control circulation to an extremity for a period of time. It works by applying pressure circumferentially upon the skin and underlying tissues of a limb causing the vessels to be temporarily occluded. The technology is used in applications such as cannulation or to stem the flow of traumatic bleeding and/or in military medics.

• Tourniquet units

• Tourniquet cuffs

• Consumables

Suction units for patients IM-Medico provides both standard and compact suction units. LSU is standard size and LCSU 4 from Laerdal is a compact suction unit designed for portability and with an intended use for first responders. While LSU and LCSU 4 are electrical, IM-Medical also provides manual suction devices from Laerdal. The suction units are mainly used for the removal of blood, regurgitation and secretion from a patient’s airway to allow for uninterrupted ventilation.

Hyfrecation A hyfrecator is a device for electrosurgery used to destroy tissue directly, and to stop bleeding during minor surgery. IM-Medico offers machines with the name Hyfrecator produced by ConMed Corporation. Hyfrecator has become a genericised trademark to refer to any dedicated non-ground-return electrosurgical apparatus, and a number of manufacturers now produce such machines under other brand names.

• Hyfrecator units (made by ConMed)

• Accessories (for all units on the market)

Surgical instruments IM-Medico provides a wide range of surgical instruments, both high- and low-end. The surgical instruments come from Reda in Germany and Glorious Enterprises/M.A Arain & Brothers, in Pakistan. From what we understand, IM-Medico’s sales of surgical instruments are quite limited.

Laparoscopic surgery Within laparoscopic surgery (keyhole surgery) IM-Medico sells Conmed’s Universal Plus Suction Irrigation System as well as single or multi use consumables for use in combination with the suction/irrigation sets.

Airway management products of a wide variety for both healthcare and first aid use

Airway Management IM-Medico provides airway management products for both healthcare and first aid use. The products provided include:

• Endoscopy masks (that allow a safe combination of ventilation and bronchoscopy simultaneously)

• Jet-ventilation catheters (offer quick and efficient oxygenation of a patient, for use in emergency rooms, crash carts, ambulances and operating rooms)

• Endotracheal tube guides

• Quicktrach (percutaneous cricothyrotomy)

• Manual ventilators (multi use and single use)

• CPR masks and pocket masks

https://en.wikipedia.org/wiki/Vascular_occlusion

https://en.wikipedia.org/wiki/Cannulation

https://en.wikipedia.org/wiki/Bleeding



Source: IM-Medico

Oxygen therapy Products offered within oxygen therapy (medical treatment use of oxygen) include cannulas and tubing sets.

Anaesthesia masks IM-Medico provides anaesthesia masks both for single and multi-use. The masks are offered in various models and sizes. Currently, IM-Medico provides anaesthesia masks from Laerdal, VBM and Foremaount.

Various accessories for surgery, anaesthesia and intensive care Other products provided within this area include single use surgery accessories products from Purple Surgical, cuff manometers, laryngoscopes from Kawe, tubings, tubing holders etc.

In its Diagnostics segment, IM-Medico offers a wide range of diagnostic products, such as defibrillators, scales and oximeters

Diagnostics Under the Diagnostics segment, IM-Medico provides a wide range of diagnostic products including sphygmomanometers, stethoscopes, defibrillators, scales, body composition monitors and oximeters. The products are intended for use both in hospitals and pre-hospital; suppliers include Tanita, Philips, Solaris and MDF.

Body composition monitors IM-Medico provides scales and body composition monitors for both healthcare use and research. IM-Medico offers monitors from Tanita that brings fast, accurate body composition results using the latest advanced bioelectrical impedance analysis (BIA) technology. The monitor shows an indication of inner health and, when monitored over time, can show the impact of any fitness regime or weight loss programme.

Scales • Personal scales

• Medical chair scales

• Paediatric baby scales

First aid defibrillators from Philips come pre-installed in a carrying case

First aid defibrillators The AEDs (automated external defibrillators) from Philips come pre-installed in a carrying case with battery and pads. Models provided are HeartStart HS1 and HeartStart FR3.

Pulse oximeters Pulse oximetry is used to measure a personʹs oxygen saturation.

• Fingertrip Pulse Oximeter

• Pulse CO-Oximeters handheld

Source: IM-Medico

Stethoscopes IM-Medico provides stethoscopes suitable for doctors, nurses and students. The product range includes both standard stethoscopes but also dedicated stethoscopes for cardiology lung diagnostics.

Blood pressure monitoring IM-Medico offers blood pressure devices from Omron. These devices mainly help to monitor hypertension, which is the main risk factor for stroke or irregular heartbeats. Devices offered are designed for use in hospitals and community care and are available as automatic and manual devices.



IM-Medico’s wound dressings and bandages are used both professionally and as first aid

Basic wound dressings and bandages IM-Medico’s products within wound dressings are suitable for both hospital and pre-hospital use. The products are used professionally in hospitals and emergency care but also as first aid in non-professional settings. The dressings cover various areas such as burns, fixation, tubular and cast bandages.

Tubular bandages provide tissue support; Tubigrip is manufactured by Mölnlycke

Bandages and first aid IM-Medico provides Snøgg’s Soft NEXT absorbent plaster as well as the Uni NEXT bandage.

Burn care Within burn care, IM-Medico offers Burnshield (from Snøgg), a sterile product made of hydrogel that is designed for emergency care of burns and scalding. IM-Medico also offers Burnshield hydrogel, a sterile gel that absorbs and dissipates heat, minimises burn damage, cools and provides pain relief.

Tubular bandages Tubular bandages are designed to provide tissue support in treating strains, sprains, soft tissue injuries, general oedema, post-burn scarring and other injuries. Tubigrip, which IM-Medico offers, is manufactured by Mölnlycke. Tubigrip is made from cotton with covered elastic threads laced into the fabric to form free-moving spirals and is available in different sizes and colours.

Other bandages These include bandages used after amputation surgery as well as collarbone bandages.

Sonesta was acquired in 2013 and is mainly active within the urodynamic, urology and gynaecology fields

Sonesta Sonesta was acquired from Stille in 2013. Sonesta manufactures and sells procedure and examination tables and chairs used mainly by specialists in the urodynamic, urology and gynaecology fields. In addition to the tables and chairs, Sonesta also has a broad range of accessories to make the tables and chairs that can be customised after requirements. Manufacturing is located in Sweden. During 2012, before its acquisition, Sonesta had sales of SEK 19.4m and a gross profit of SEK 6.3m. During the first four months of 2013, the company had revenue of SEK 5.3m and a gross profit of SEK 2.3m.

In 2016, the Next Generation Sonesta chairs were launched. The 6202 and the 6303 models have been upgraded and are now called S2 and S3. These chairs are versatile and offer an infinite variety of patient positioning. There are currently more than 9,000 Sonesta tables and chairs sold.

Source: Sonesta

Sonesta S2 The S2 chair is part of the Next Generation Sonesta line. It is easily accessible for the elderly and handicapped, has two motors to adjust height and back, and comes with the option to add a large range of accessories. Weight capacity is 170kg.

Source: Sonesta

Sonesta S3 The Sonesta S3 chair is also part of the Next Generation Sonesta line but has an additional motor compared to S2. Thanks to three motors it offers power adjustment of seat, back and lift. The Sonesta S3 has a weight capacity of up to 210kg.

Source: Sonesta

Sonesta 6210 The Sonesta 6210 is a video fluoroscopy table designed for imaging and translucency for procedures and examinations where a C-arm is used. It has eight positioning functions that are controlled with three motors. It has a weight capacity of up to 250kg.

http://www.im-medico.se/forband/tubulara-forband/fixationsforband-addfast/

http://www.im-medico.se/forband/tubulara-forband/



Surgical Tables, acquired in 2014, manufactures patient tables

Surgical Tables Surgical Tables, which was acquired in 2014, is a manufacturer of patient tables for the use in combination with C-Arm technology bases in Massachusetts, US. Its X-ray imaging tables can be equipped with five-way adjustable controls, including height, lateral tilt, trendelenburg, longitudinal travel and lateral travel. The precision controls allow exact patient control with millimetre precision.

During 2013, Surgical Tables had sales of SEK 20.1m and EBITDA of SEK 1.1m, implying an EBITDA margin of 5.5%. During the first eight months of 2014, the company had revenue of SEK 13.5m and EBITDA of SEK 2.2m, implying an EBITDA margin of 16.3%.

Bariatric surgery x-ray tables Surgical Tables’ bariatric table is designed to support the latest advancements in surgical procedures and imaging techniques alongside a 450kg patient weight capacity. The table can support up to five movements, depending upon the model purchased.

EconoMAX surgical tables The EconoMAX series of imaging tables uses a cantilevered (diving board) style design without the bellows. The “H” style base offers maximum C-Arm clearance along the entire cantilevered length. The EconoMAX tables can be ordered in five different models (EconoMAX 1-5) with different degrees of freedom when it comes to movement, where EconoMAX 1 only has height adjustments and EconoMAX comes with adjustments up/down, lateral tilt, trendelenburg, longitudinal travel, and lateral travel. Designed for a 220kg patient weight capacity.

MAX surgical tables The MAX series surgical tables are designed to suit pain management, spinal injections or spine surgery, GI, and various orthopaedic procedures. MAX also comes in five versions (MAX 1-5) where the ability to move the table is the main difference between the models. The table can be controlled by option foot controls. Designed for a 220kg patient weight capacity.

Streamline imaging tables The Streamline imaging table series is designed for high patient throughput for surgery centres, pain management, and other multidisciplinary medical facilities. Streamline series X-ray imaging tables are priced in the value segment of the market.

URO-MAX urological tables The URO-MAX C-arm imaging table offers a solution for real-time urological X-ray procedures. The table has cantilevered, carbon fibre, radiolucent top areas. The URO-Max offers several movement options and accessories, and thanks to a carbon fibre leg extension accessory, it can turn the table into a procedure table for pain management and other C-arm guided procedures.

Source: Surgical Tables (all pictures above)

V-MAX surgical tables Surgical Table Inc.’s V-MAX series of vascular X-ray imaging tables offers all main basic features, including height, four-way float and trendelenburg adjustments. V-MAX is targeting the value segment.

Custom surgical tables At the production site in Middleton, MA, Surgical Tables has the ability to custom-build tables for specific projects and procedures. Most of the standard tables can be customised to be longer, shorter, lower or higher but other specifications can also be altered.



Pending acquisition Germa sells healthcare related products

Germa In July 2017, ADDvise signed a letter of intent to acquire Germa AB. Germa produces and sells healthcare related products such as vacuum mattresses, rehabilitation products and safety products for the military. The company is structured into the following product areas: Emergency, Hospital, Dental, Rehabilitation, Flight suits and Special productions.

In 2016, Germa had sales of SEK 30.1m and EBITDA of SEK 3.4m, implying an EBITDA margin of 11.4%. For the period between 2013 and 2016, the company had a sales CAGR of 3.1%.


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Historical financials ADDvise increased its sales at a 31.2% CAGR between 2011 and 2016, with an adj. EBITDA CAGR of 105% during the same period. The main sales growth contribution derives from acquisitions, which have been an integral part of the business model since the new strategy was introduced in 2010. These acquisitions have also boosted EBITDA, but have also added to net debt, as M&A activity has largely been financed via debt, including a sizeable bond issue.

ADDvise has seen rapid sales growth through its M&A strategy

Adjusted EBITDA grew at a CAGR of 105% between 2011 and 2016

Group financials ADDvise has seen a period of rapid sales growth in the past few years, as it has made multiple acquisitions, a consequence of the strategic shift in its business model in 2010. In the period between 2011 and 2016, the company increased its revenue at a 31.2% CAGR. The vast majority of the growth experienced during the period derived from completed acquisitions.

The acquired companies have boosted EBITDA and between 2011 and 2016, adjusting EBITDA for acquisition related items, it grew at a 105% CAGR, albeit from a low starting point. This has translated into the adjusted EBITDA margin expanding from 0.5% in 2011 to 4.7% in 2016, implying sales leverage through economies of scale in operations due to higher purchase volumes and reduced administration costs relative to sales, for example.



ADDvise reported sales ADDvise estimated sales growth split

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2011 2012 2013 2014 2015 2016

SEK

m

-10%

0%

10%

20%

30%

40%

2013 2014 2015 2016Organic Acquistions FX Group

ADDvise adjusted EBITDA ADDvise adjusted EBITDA margin

0%

2%

4%

6%

2011 2012 2013 2014 2015 2016Adjusted EBITDA margin

0

3

6

9

12

2011 2012 2013 2014 2015 2016

SEK

m

Adjusted EBITDA



Average sales per employee has increased since 2014

ADDvise’s employee base has increased over the years as the company has grown through acquisitions. In absolute terms, the number of employees has grown by 23% annually since 2011, which is below the sales growth trend during the same period. Average sales per employee exhibited a rather flat trend until 2016, when the acquisition of LabRum caused sales per employee to spike to SEK 3.3m from the SEK 2.2-2.4m seen in earlier years.


Raw material costs have grown in line with sales

Group cost structure Raw material costs relative to sales have stayed rather flat throughout the period, hovering around the 60% level. In absolute terms, raw material costs have grown at an annual pace of 30% for the past six years, which is slightly below the sales CAGR of 31% during the same period.


Other external costs saw a trend reversal in 2016

Other external costs, which include acquisition-related costs, grew at a CAGR of 34% in 2011-16, and in terms of sales, external costs rose from 11% in 2011 to 19% in 2015. However, 2016 saw a reversal of that trend, as other external costs relative to sales fell back to 12% last year.


Average number of employees Average sales per employee

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80

2011 2012 2013 2014 2015 20160

1

2

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4

2011 2012 2013 2014 2015 2016

SEK

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Raw material costs Raw material costs relative to sales

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2011 2012 2013 2014 2015 2016

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2011 2012 2013 2014 2015 2016

Other external costs Other external costs relative to sales

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30

2011 2012 2013 2014 2015 2016

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5%

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2011 2012 2013 2014 2015 2016



Personnel costs have stayed flattish relative to sales

Personnel costs have increased every year since 2011 at a CAGR of 33%, outpacing the sales CAGR over the same period by 2 pp. Relative to sales, the personnel costs have fluctuated around the 26% average in the last five years.


Acquisition strategy has increased net debt

Net debt has risen substantially since 2011 from about zero to above SEK 100m, as the company has completed a number of acquisitions. Due to the increase in debt and net profit losses between 2012 and 2015, the equity ratio has declined. The uptick in 2016 is due to a number of rights issues, primarily related to financing the acquisitions of LabRum and Hettich Labinstrument.


Working capital and capex have seen spikes in recent years

Working capital and capex Working capital requirements have fluctuated in the range of -5% to 5% relative to sales historically. The spike in 2014 stemmed from a one-off effect of SEK 32m in other current assets, while the second spike in 2016 was due to the company changing its practice on accounts receivable from factoring to invoice discounting; ie using accounts receivables as collateral for loans. ADDvise’s capex requirements are relatively low and have gradually moved back towards the historical 2% level after a spike in 2014, when capex to sales went above 7% due to the purchase of intangibles.


Personnel costs Personnel costs relative to sales

0

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2011 2012 2013 2014 2015 2016

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15%

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30%

2011 2012 2013 2014 2015 2016

Net debt Equity ratio

0%

10%

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30%

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50%

2011 2012 2013 2014 2015 2016-30

0

30

60

90

120

2011 2012 2013 2014 2015 2016

SEK

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Working capital need Capex profile

0%

3%

6%

9%

12%

0

3

6

9

12

2011 2012 2013 2014 2015 2016

SEK

m

Capex Capex to sales

-10%

0%

10%

20%

30%

40%

-12

0

12

24

36

48

2011 2012 2013 2014 2015 2016

SEK

m

Net working capital Net working capital to sales



Lab sales jumped in 2016 with the LabRum acquisition

Profitability has been volatile with a weak 2015

Financials per business unit Lab Sales in the Lab business unit grew steadily at a CAGR of 19% between 2013 and 2016. Growth in the unit was supported by the acquisitions of Sunnex Tillquist (2012) and LabRum (2016).

The EBITDA margin in Lab has been volatile for the past four years. After a solid 2014 in EBITDA terms, 2015 saw profitability hit a trough with a margin drop of 7.6 pp. The margin recovered in 2016 to 1.2% and the trend for 2017 has been positive during H1 when the LTM margin came in at 4.3%. The EBITDA CAGR between 2013 and 2016 was 29%, far exceeding the sales growth for the unit during the same period.


Healthcare sales to be boosted by pending AB Germa acquisition

EBITDA CAGR of 59% between 2013 and 2016

Healthcare Healthcare’s sales increased at a CAGR of 15% between 2013 and 2016. Growth was supported by the acquisitions of Sonesta (2013), Surgical Tables Inc (2014) and will be boosted by the pending acquisition of AB Germa, which saw revenue of SEK 30.1m in 2016.

Profitability in Healthcare has outpaced that of the Lab unit and the EBITDA margin has consistently been higher in Healthcare. The EBITDA CAGR during 2013-16 hit 59%, considerably outgrowing sales in the unit. The margin trend has consequently been positive in the past few years and in 2016 the EBITDA margin reached 15%.


Lab sales Lab EBITDA

-3%

0%

3%

6%

9%

-3

0

3

6

9

2013 2014 2015 2016 LTM July2017

SEK

m


0

40

80

120

160

2013 2014 2015 2016 LTM July2017

SEK

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Sales

Healthcare sales Healthcare EBITDA

0%

4%

8%

12%

16%

0

3

6

9

12

2013 2014 2015 2016 LTM July2017

SEK

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2013 2014 2015 2016 LTM July2017

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Sales



Estimates Our research implies that ADDvise could deliver a revenue CAGR of 14.8% for the period 2016 to 2024E, aided by favourable demographics and acquisitions. On a business unit level, we model a gradual sales mix shift in favour of Healthcare. On account of sales leverage through synergies, we expect an EBITDA CAGR of 26.0% for our forecast period. We see potential for the company to reach its long-term profitability target over time, implying an EBITDA margin of 10.0%.

Main growth contribution derives from M&A

Our research implies improving profitability

We expect ADDvise to near its margin target over time

We estimate that ADDvise could deliver a revenue CAGR of 14.8% for 2016-24E, aided by acquisitions. This implies group sales of SEK 588m in 2024E. In terms of sales composition, we model an annual organic growth contribution of 2% throughout our forecast period, while the remaining growth derives from M&A. The organic growth assumption is based on historical numbers and ADDvise’s focus on rather mature businesses with a low degree of operational risk. We assume that ADDvise will add about 1-1.5x acquisitions per year with sales of SEK 30-100m, which is in line with historical numbers. The estimated acquisitions are split evenly between Lab and Healthcare.

We estimate that the revenue CAGR of 14.8% could result in an EBITDA CAGR of 26.0% during our forecast period, helped by synergy extraction in the acquired companies. We assume average EBITDA margins for the acquired companies in Lab and Healthcare of 6.5% and 8%, respectively, which are below the group average. According to our forecasts, we expect ADDvise to be able to acquire companies at an EV/EBITDA multiple of about 4x, based on the historical multiples for its previous acquisitions.

For 2024, we estimate EBITDA of SEK 59m, implying an EBITDA margin of 10.0%, versus an adjusted EBITDA margin of 4.7% in 2016. This is fully in line with ADDvise’s long-term financial target. The margin boost can be explained by synergy extraction both in terms of revenue, by enabling the potential to take on larger orders, and costs, ie supply chain improvements and reduced overhead costs.


Source: Company data and Nordea Markets Source: Company data and Nordea

ADDvise estimated sales ADDvise estimated sales split

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2016 2017E2018E2019E2020E2021E2022E2023E2024E

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Sales

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2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

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Sales Acquisitions

ADDvise estimated EBITDA ADDvise estimated EBITDA margin

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Capex levels to match amortisation and depreciation

Depreciation and amortisation relative to sales averaged 2.0% between 2011 and 2016, peaking at 3.0% in 2012. During our forecast period, we expect depreciation and amortisation relative to sales to be around 2.0%, which is in line with capex. We estimate SG&A to come down slightly, due to scalability in the business model and potential to take out overhead costs in the acquired companies.



We model a gradual sales mix shift in favour of Healthcare

Financial forecasts per business unit The Lab business unit is ADDvise’s largest sales constituent today but has been struggling with its profitability. We model a gradual shift in the sales mix in favour of Healthcare, driven by acquisitions, and expect its share of revenue to increase from about 32% in 2017E, to 43% in 2024E.


Amortisation and depreciation relative to sales Raw material costs relative to sales

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024EAmortization Depreciation

58%

59%

60%

61%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Other external costs relative to sales Personnel costs relative to sales

0%

3%

6%

9%

12%

15%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E20%

21%

22%

23%

24%

25%

26%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Estimated sales by business unit 2017E Estimated sales by business unit 2024E

Lab68%

Healthcare32%

Lab57%

Healthcare43%



Acquisitions are the main growth driver for Lab

Lab We estimate that Lab could reach revenue of SEK 176m in 2017E, aided by the acquisition of Hettich Labinstrument, representing y/y growth of 42%. Within our forecast period (2017E-24E), we expect a revenue CAGR of 9.8%, yielding an EBITDA CAGR of 13.8%. Acquisitions will be the main growth driver, while favourable demographics and potential to expand geographically with its customers outside the Nordic region could aid long-term growth prospects.

An increasing share of research is also being conducted in laboratories, which fosters the need for new facilities and refurbishments. Furthermore, we see some room for margin improvements through centralisation of group functions and streamlining, once the most recent acquisitions are fully integrated.


Pending acquisition of Germa could be a near-term growth driver

Healthcare We estimate that Healthcare could reach revenue of SEK 82m in 2017E, aided by the pending acquisition of AB Germa, representing y/y growth of 15%. Within our forecast period (2017E-24E), we expect a revenue CAGR of 17.3%, giving an EBITDA CAGR of 19.7%.

As in the Lab unit, acquisitions will be the primary growth driver, both on a product level and through geographical expansion, while favourable demographics could aid long-term growth expectations. We also see scope for reduced overhead costs, supply chain improvements and continued internationalisation by increasing sales outside the Nordics, where growth has been solid.


Lab estimated sales Lab estimated EBITDA margin

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2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

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2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Healthcare estimated sales Healthcare estimated EBITDA margin

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2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

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16%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E



Lower leverage supported by improving cash flows

New bond will reduce interest costs

Balance sheet ADDvise’s leverage is currently elevated at net debt/EBITDA of 5.8x in 2016, but we expect it to decrease in the coming years. Based on improving cash flows, we expect that net debt/EBITDA will gradually decrease despite further acquisitions. According to our forecasts, ADDvise will reach its financial target for the capital structure, ie net debt/EBITDA below 3x, in 2023E.

In terms of financial costs, the company announced on 15 September that it will issue a new secured bond maturing in 2022. The new SEK 100m bond will carry annual interest of 7.25%, paid on a quarterly basis. It will replace the current SEK 87m bond, which carries 10% interest, lowering the annual interest paid by the company by SEK 2.4m, starting in 2018.

If the company is able to deliver on its growth ambitions, we see further potential for it to reduce financial costs thanks to scale benefits and lowered leverage. One example could be access to other financing sources, such as bank lending. After year three, ADDvise can redeem its new bond without paying any penalty costs. In our model, we assume that interest costs come down to 5% from 2021E.


We expect a meaningful improvement in operational cash flows

Cash flow We expect a meaningful improvement in FCF before acquisitions in 2017E, to SEK -6m from SEK -37m in 2016. The main driver will be working capital, as 2016 was impacted by a switch from factoring to invoice discounting, ie using accounts receivable as collateral for loans.

In terms of capex, we estimate a small increase relative to sales owing to slightly low investment levels in 2016.


Estimated net debt to EBITDA Estimated net working capital relative to sales

11.7% 11.7% 11.7% 11.7% 11.7% 11.7% 11.7% 11.7% 11.7%

0%

3%

6%

9%

12%

15%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

5.8x

7.1x

5.5x4.8x

4.3x3.8x

3.3x2.9x 2.6x

0.0x

2.0x

4.0x

6.0x

8.0x

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Estimated FCF before acquisitions and divestments Estimated capex relative to sales

1.9%

2.0% 2.0% 2.0%2.0% 2.0% 2.0% 2.0% 2.0%

1.6%

1.8%

2.0%

2.2%

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

-37.0

-6.4-1.9

5.7 8.915.5 18.6 21.8 24.6

-60

-40

-20

0

20

40

2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

SEK

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FCF before A&D



Detailed estimates



ADDvise - Detailed estimatesSEKm 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024ESales 138 147 195 258 331 377 422 465 507 547 588 growth (%) 15.0% 6.2% 33.2% 32.1% 28.3% 14.0% 12.0% 10.0% 9.0% 8.0% 7.5%

organic (%) 1.1% -7.6% 5.1% 1.9% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%acquired (%) 13.3% 12.3% 25.8% 30.1% 26.3% 12.0% 10.0% 8.0% 7.0% 6.0% 5.5%FX (%) 0.6% 1.4% 2.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Adj. EBITDA 7 0 9 20 29 34 40 44 49 54 59margin (%) 5.0% 0.1% 4.7% 7.8% 8.7% 9.1% 9.4% 9.5% 9.7% 9.9% 10.0%

Adj. net income -3 -15 -9 1 7 11 14 20 24 27 30Adj. EPS -0.26 -1.01 -0.30 0.03 0.16 0.26 0.33 0.47 0.55 0.62 0.69

SalesLab 74 74 124 176 204 228 252 273 295 316 338Healthcare 64 73 71 82 127 149 171 191 211 231 250

Sales growthLab 0% 68% 42% 16% 12% 10% 9% 8% 7% 7%Healthcare 13% -2% 15% 55% 18% 15% 12% 11% 9% 9%

Adj. EBITDALab 4 -2 1 12 16 19 22 24 26 28 30Healthcare 7 5 11 8 13 15 18 21 23 26 28

Adj. EBITDA margin (%)Lab 5% -3% 1% 7% 8% 8% 9% 9% 9% 9% 9%Healthcare 11% 6% 15% 10% 10% 10% 10% 11% 11% 11% 11%

ADDvise - P&L quarterly and annual estimatesSEKm Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017E Q4 2017E 2017E 2018E 2019ESales 46 54 42 53 62 68 55 73 258 331 377

Lab 29 36 25 34 44 50 37 46 176 204 228 Healthcare 16 18 17 20 18 19 18 27 82 127 149

growth (%) 11.4% 44.9% 33.1% 45.9% 35.5% 26.1% 29.8% 37.0% 32.1% 28.3% 14.0%Adj. EBITDA 0 3 2 3 4 6 4 6 20 29 34 margin (%) 0.1% 6.2% 5.8% 6.4% 7.2% 8.3% 7.9% 8.3% 7.8% 8.7% 9.1%Adj. EBIT -1 2 2 2 3 5 3 5 15 22 27 margin (%) -1.8% 4.3% 3.6% 4.5% 5.5% 6.7% 5.9% 6.3% 5.9% 6.7% 7.1%Net financials -3 -3 -3 -3 -4 -3 -3 -3 -14 -13 -12EBT -6 6 0 0 -1 1 0 1 1 9 14Taxes 0 -1 0 0 0 0 0 0 0 -2 -3Net income -6 5 1 0 -1 1 0 1 1 7 11



Risk factors Below, we list the main risk factors we find relevant for ADDvise. The purpose of this is not to provide a comprehensive picture of all of the risks that the company may be subject to, but instead to highlight those that we find most relevant. The main risks we identify relate to the financial position, operating model and dependency on key employees.

ADDvise might need additional funds to finance its growth agenda

Inherent risks in the acquisition processes

Few competitors currently have the same full service offering

Exposed to industry dynamics but limited customer specific risks

Limited currency exposure

Financial position and capital needs ADDvise has a growth-oriented business model that is dependent on securing sufficient funding. At present, the company has an outstanding bond with a face value of SEK 87m, after a tap-on of SEK 9.1m on 1 September 2017. In addition, the company raised SEK 7.9m in a targeted issue of new shares at the same time. Historically, ADDvise has made use of a variety of sources to fund acquisitions, including debt, new shares and earn-outs.

On 15 September 2017, the company announced that it intends to refinance the SEK 87m bond with a new secured bond of SEK 100m, which could potentially be expanded to a maximum of SEK 240m in case of acquisitions. The new bond matures in October 2022, has a nominal rate of 7.25% and uses shares in Hettich Labinstrument and Surgical Tables Inc as collateral.

Acquisition strategy Since ADDvise’s growth strategy is largely dependent on a steady flow of new companies, there are risks related to the acquisition process. One key risk is that ADDvise could potentially overpay for companies in relation to their future financial performance. To reduce this risk, ADDvise makes use of an extensive due diligence process. Another key risk related to acquisitions is the integration risk. Since it is difficult to determine this risk before the integration process is initiated, ADDvise’s strategy is to gradually integrate its subsidiaries, which could be a mitigating factor.

Competition The market of supplying medical equipment and related services is a competitive niche with many competitors. However, ADDvise states that overall there are few competitors in its key markets that have full service offerings. However, competition can be quite intense for particular products. There is also a risk that new companies enter the market or that existing players develop new products that raise their competitive edge. Both of these scenarios could affect ADDvise’s sales. To maintain its competitive edge, ADDvise might also need to make additional investments or lower its prices.

Customer concentration ADDvise’s customers are to a large extent in the healthcare segment, which is generally a stable market but the company could be exposed to industry fluctuations in the event of a downturn. Some of ADDvise’s customers are large public and private companies, but no single customer constitutes more than 15% of the total revenue.

Currency fluctuations ADDvise is affected by currency risks, but as the company has both assets and liabilities in different currencies the exposure is rather balanced. In its 2016 annual report, the company states that a 5% change in its underlying currencies versus the SEK would affect the pre-tax profit by SEK 0.042m. The company has a policy of avoiding currency risk by hedging currency exposure or using currency clauses in its customer contracts. Its main exposures in terms of sales and cost are in SEK, NOK, USD and EUR.



Products needs to fulfil certain quality requirements

CEO is also a board member and among the largest shareholders

Sweden represent-ed 66% of group revenue in 2016

Attracting and retaining key personnel is integral for ADDvise’s future success

Suppliers ADDvise uses a number of different suppliers for its products and services. Significant disturbances, quality issues or other adverse events with a major supplier can result in additional costs, and a change of supplier could lead to disturbances in the supply chain. The manufacturing of certain medtech products also needs to fulfil certain quality standards and other regulatory requirements.

Concentration of ownership and conflict of interest Rikard Akhtarzand, who is the CEO, is also on the board of directors and is one of the main shareholders of ADDvise. As of 30 June 2017, he held shares representing about 16% of the voting power. As such, there could potentially be a governance issue putting the CEO’s interests ahead of those of minority shareholders.

General economy and specifically Sweden’s economy ADDvise is to some extent exposed to the general economy and that of Sweden in particular, which constituted 66% of group sales in 2016. In case of an economic downturn in the region, this could potentially lead to delayed investments from its customers, affecting ADDvise’s sales.

Hiring and maintaining key employees ADDvise’s future success is dependent on its ability to keep, motivate and attract key personnel. This includes senior management and in particular Rikard Akhtarzand, who is the CEO, a member of the board and one of the largest owners. Loss of key individuals could impact operations and the growth strategy outlined by senior management and the main owners. As the company grows, it may also need to add new capabilities and attract future employees with certain qualities and characteristics.



Reported numbers and forecasts



Income statementSEKm 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022ENet revenue 50 100 120 138 147 195 258 331 377 422 465 507 Revenue growth 99.5% 19.6% 15.0% 6.2% 33.2% 32.1% 28.3% 14.0% 12.0% 10.0% 9.0% EBITDA 0 1 3 5 4 18 20 29 34 40 44 49 Depreciation and impairments PPE 0 -0 -1 -1 -1 -1 -1 -2 -2 -2 -2 -3 EBITA 0 1 3 5 4 17 19 27 32 37 42 47 Amortisation and impairments -1 -2 -1 -2 -3 -3 -4 -5 -6 -6 -7 -8 EBIT -1 -2 1 3 0 14 15 22 27 31 35 39 of which associates 0 0 0 0 0 0 0 0 0 0 0 0 Associates excl. from EBIT 0 0 0 0 0 0 0 0 0 0 0 0 Net financials -0 -2 -6 -7 -11 -13 -14 -13 -12 -13 -9 -9 Pre-Tax Profit -1 -4 -4 -5 -11 1 1 9 14 18 26 30 Reported taxes 1 -0 0 -0 -0 -1 -0 -2 -3 -4 -6 -7 Net profit from cont. operations -0 -4 -4 -5 -11 0 1 7 11 14 20 24 Discontinued operations 0 0 0 0 0 0 0 0 0 0 0 0 Minority interest 0 0 0 0 0 0 0 0 0 0 0 0 Net profit to equity -0 -4 -4 -5 -11 0 1 7 11 14 20 24EPS -0.08 -0.52 -0.44 -0.41 -0.73 0.01 0.03 0.16 0.26 0.33 0.47 0.55 DPS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.18 of which ordinary 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.18 of which extraordinary 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Profit margin in percent EBITDA 0.5% 1.2% 2.6% 3.8% 3.0% 9.2% 7.8% 8.7% 9.1% 9.4% 9.5% 9.7% EBITA 0.8% 0.7% 2.1% 3.3% 2.4% 8.7% 7.3% 8.2% 8.6% 8.8% 9.0% 9.2% EBIT -1.1% -1.8% 1.0% 2.0% 0.2% 7.3% 5.9% 6.7% 7.1% 7.4% 7.5% 7.7%

Adjusted earnings EBITDA (adj.) 0 1 6 7 0 9 20 29 34 40 44 49 EBITA (adj.) 0 1 6 6 -1 8 19 27 32 37 42 47 EBIT (adj.) -1 -2 4 4 -4 5 15 22 27 31 35 39 EPS (adj.) -0.08 -0.52 -0.14 -0.26 -1.01 -0.30 0.03 0.16 0.26 0.33 0.47 0.55

Adjusted profit margins in percent EBITDA (adj.) 0.5% 1.2% 5.1% 5.0% 0.1% 4.7% 7.8% 8.7% 9.1% 9.4% 9.5% 9.7% EBITA (adj.) 0.8% 0.7% 4.6% 4.5% -0.5% 4.2% 7.3% 8.2% 8.6% 8.8% 9.0% 9.2% EBIT (adj.) -1.1% -1.8% 3.6% 3.2% -2.7% 2.8% 5.9% 6.7% 7.1% 7.4% 7.5% 7.7%

Performance metrics CAGR last 5 years Net revenue n.a. n.a. n.a. n.a. 30.6% 18.1% 21.1% 24.4% 26.7% 21.3% 15.9% 11.2% EBITDA n.a. n.a. n.a. n.a. 104.0% 96.3% 59.8% 53.5% 67.2% 21.6% 22.0% 14.3% EBIT n.a. n.a. n.a. n.a. n.a. n.a. 87.1% 69.4% 205.8% 21.6% 23.1% 15.2% EPS n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 134.0% 105.7% 36.4% DPS n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Average EBIT margin n.a. n.a. -0.4% 0.4% 0.3% 2.4% 3.9% 5.1% 6.0% 6.9% 7.0% 7.3% Average EBITDA margin n.a. n.a. 1.7% 2.4% 2.5% 4.6% 5.9% 7.2% 8.1% 8.9% 9.0% 9.3%

Valuation ratios - adjusted earningsSEKm 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E P/E (adj.) n.m. n.m. n.m. n.m. n.m. n.m. 80.0 13.4 8.1 6.4 4.5 3.9 EV/EBITDA (adj.) 37.5 31.5 15.7 20.0 n.m. 19.1 11.7 8.6 7.5 6.6 5.8 5.1 EV/EBITA (adj.) 25.1 53.4 17.2 21.9 n.m. 21.4 12.4 9.2 7.9 7.0 6.2 5.4 EV/EBIT (adj.) n.m. n.m. 22.4 31.5 n.m. 32.5 15.3 11.2 9.6 8.4 7.4 6.4

Valuation ratios/reported earnings P/E n.m. n.m. n.m. n.m. n.m. 171.6 80.0 13.4 8.1 6.4 4.5 3.9 EV/Sales 0.2 0.4 0.8 1.0 0.9 0.9 0.9 0.8 0.7 0.6 0.6 0.5 EV/EBITDA 37.5 31.5 31.2 26.5 28.3 9.8 11.7 8.6 7.5 6.6 5.8 5.1 EV/EBITA 25.1 53.4 37.8 29.9 34.9 10.3 12.4 9.2 7.9 7.0 6.2 5.4 EV/EBIT n.m. n.m. 76.9 51.0 406.4 12.4 15.3 11.2 9.6 8.4 7.4 6.4 Dividend yield (ord.) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.3% FCF yield 0.9% -56.6% -63.2% -97.2% -27.2% -102% -51.9% -16.5% -9.4% -5.1% 3.6% 7.6% Payout ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%




Balance sheetSEKm 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E Intangible assets 8 28 51 73 78 122 160 173 187 201 213 225 of which R&D 0 0 0 0 0 0 0 0 0 0 0 0 of which other intangibles 1 2 25 30 34 36 36 36 36 36 36 37 of which goodwill 7 26 26 43 43 86 123 137 151 165 177 188 Tangible assets 2 2 6 8 7 7 10 10 10 10 10 10 Shares associates 0 0 0 0 0 0 0 0 0 0 0 0 Interest bearing assets 0 0 0 0 0 0 0 0 0 0 0 0 Deferred tax assets 0 0 0 0 0 0 0 0 0 0 0 0 Other non-int. bearing assets 0 0 0 0 0 0 0 0 0 0 0 0 Other non-current assets 0 0 0 1 1 0 0 0 0 0 0 0 Total non-current assets 10 30 57 82 86 129 170 183 198 211 223 235 Inventory 3 10 11 15 15 20 27 34 39 44 48 53 Accounts receivable 6 11 12 23 8 39 51 66 75 84 93 101 Other current assets 3 8 6 40 14 12 15 20 22 25 27 30 Cash and bank 3 9 3 7 5 25 8 9 13 20 22 17 Total current assets 14 38 33 85 43 96 102 129 149 173 191 201 Assets held for sale 0 0 0 0 0 0 0 0 0 0 0 0Total assets 24 68 89 167 129 224 272 312 347 384 414 436

Shareholders equity 9 10 11 15 4 46 58 65 76 90 111 134 of which preferred stock 0 0 0 0 0 0 0 0 0 0 0 0 of which Equity of hyb. debt 0 0 0 0 0 0 0 0 0 0 0 0 Minority interest 0 0 0 0 0 0 0 0 0 0 0 0 Total Equity 9 10 11 15 4 46 58 65 76 90 111 134 Deferred tax 0 0 0 0 0 0 0 0 0 0 0 0 Long term int. bearing debt 1 23 39 72 84 94 151 167 179 191 190 178 Pension provisions 0 0 0 0 0 0 0 0 0 0 0 0 Other long-term provisions 0 0 0 0 0 0 0 0 0 0 0 0 Other long-term liabilities 0 0 0 0 0 0 0 0 0 0 0 0 Convertible debt 0 0 0 0 0 0 0 0 0 0 0 0 Shareholder debt 0 0 0 0 0 0 0 0 0 0 0 0 Hybrid debt 0 0 0 0 0 0 0 0 0 0 0 0 Total non-curr. liabilities 1 23 41 80 84 94 151 167 179 191 190 178 Short-term provisions 0 0 0 0 0 0 0 0 0 0 0 0 Accounts payable 6 14 15 19 19 22 29 38 43 48 53 57 Other current liabilities 8 20 13 17 16 26 34 43 49 55 61 66 Short term interest bearing debt 0 0 9 35 5 36 0 0 0 0 0 0 Total current liabilities 14 35 37 72 40 84 63 81 92 103 114 124 Liab.for assets held for sale 0 0 0 0 0 0 0 0 0 0 0 0Total liabilities and equity 23 68 90 167 129 224 272 312 347 384 414 436

Balance sheet and debt metrics Net debt -2 14 46 100 85 105 142 157 166 171 167 160 Working capital -2 -6 2 41 3 23 30 39 44 50 55 60 Invested capital 8 24 59 123 89 152 200 222 242 261 278 295 Capital employed 10 33 52 95 89 141 209 231 255 281 300 312 ROE -6.0% -38.1% -41.7% -36.1% -116% 1.2% 2.2% 11.2% 16.1% 17.2% 20.4% 19.3% ROIC -3.1% -13.8% 0.1% 1.1% -2.3% 8.9% 6.8% 8.2% 9.0% 9.6% 10.2% 10.7% ROCE -5.7% -5.3% 2.4% 2.9% 0.3% 10.1% 7.3% 9.6% 10.5% 11.1% 11.7% 12.6%

Net debt/EBITDA -7.9 11.6 14.9 19.3 19.2 5.8 7.1 5.5 4.8 4.3 3.8 3.3Interest coverage -2.1 -0.9 0.2 0.4 0.1 1.1 1.1 n.m. n.m. n.m. n.m. n.m.Equity ratio 39.5% 14.2% 12.8% 8.9% 3.3% 20.4% 21.2% 20.7% 21.9% 23.5% 26.7% 30.8%Net gearing -21.8% 146.2% 399% 674.1% n.m. 229.1% 245.9% 243.3% 218.4% 188.9% 151.1% 119.3%




Cash flow statementSEKm 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E 2022EEBITDA (adj.) for associates 0 1 3 5 4 18 20 29 34 40 44 49 Paid taxes 0 0 0 0 0 -2 0 -2 -3 -4 -6 -7 Net financials 0 -2 -6 -7 -11 -11 -14 -13 -12 -13 -9 -9 Change in Provisions 0 0 0 0 0 0 0 0 0 0 0 0 Change in other LT non-IB 0 0 2 6 -7 0 0 0 0 0 0 0 Cash flow to/from associates 0 0 0 0 0 0 0 0 0 0 0 0 Dividends paid to minorities 0 0 0 0 0 0 0 0 0 0 0 0 Other adj. to reconcile to cash flow 1 0 -2 -6 0 -14 0 0 0 0 0 0Funds from operations (FFO) 0 -1 -3 -2 -14 -9 6 13 19 23 30 34 Change in NWC 1 8 -3 -7 10 -25 -7 -9 -5 -5 -5 -5Cash flow from op. (CFO) 1 7 -6 -9 -4 -33 -1 5 13 17 25 29 Capital Expenditure -1 -2 -2 -10 -7 -4 -5 -7 -8 -9 -9 -10Free Cash Flow before A&D 0 5 -8 -19 -10 -37 -6 -2 6 9 15 19 Proceeds from sale of assets 0 0 0 -18 0 0 0 0 0 0 0 0 Acquisitions 0 -19 -23 0 0 -35 -41 -13 -14 -14 -12 -12 Free cash flow 0 -14 -32 -36 -11 -71 -47 -15 -9 -5 3 7

Dividends paid 0 0 0 0 0 0 0 0 0 0 0 0 Equity issues / buybacks 5 4 6 8 0 41 11 0 0 0 0 0 Net change in debt -3 16 14 63 -18 40 20 16 12 12 -1 -12 Other financing adjustments 0 0 6 1 0 0 0 0 0 0 0 0 Other non-cash adjustments 1 0 -1 -32 26 11 0 0 0 0 0 0 Change in cash 3 7 -7 4 -2 20 -17 1 3 7 2 -5

Cash flow metrics Capex/D&A 111% 72% 136% 405% 164% 95% 110% 102% 102% 101% 100% 101% Capex/Sales 1.8% 2.1% 2.1% 7.3% 4.6% 1.9% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Key information Share price year end (current) 3 3 5 3 3 2 2 2 2 2 2 2 Market cap 12 24 50 37 40 70 91 91 91 91 91 91 Enterprise value 10 38 96 138 125 176 234 249 257 262 259 252 Diluted no. of shares, year-end (m) 4.5 7.7 10.6 11.9 15.2 37.0 43.0 43.0 43.0 43.0 43.0 43.0



Disclaimer Nordea Markets is the commercial name for Nordea’s international capital markets operation.

The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision.

The document has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination.

Nordea Bank AB (publ), Company registration number/VAT number 516406-0120/SE663000019501. The board is domiciled in Stockholm, Sweden.

Conflict of interest Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content.

It is important to note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Issuer review This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report.

Completion date: 02 October 2017, 06:15 CET

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