Q1

2017

Munters first quarter 2017
"Strong net sales and adjusted EBITA growth driven by Data
Centers and Air Treatment"
First quarter 2017

JO

 The order backlog increased by 17% to SEKm 1,998 (1,713).
 Order intake totaled SEKm 1,654 (1,617), an increase of 2%, of w hich 1% organically . Last y ear´s figure for the firstquarter includes a record high Data Center order w orth SEKm 240.
 Net sales increased by 25% to SEKm 1,519 (1,220), of w hich 23% organically .
 Operating profit (EBIT) increased by 1% to SEKm 75 (74).
 Adjusted EBITA increased by 23% to SEKm 147 (119), corresponding to an adjusted EBITA margin of 9.7% (9.8).
 Net income amounted to SEKm -41 (-29).
 Cash flow from operating activ ities w as SEKm -20 (53).
 Acquisition of 60% of the shares in MTech Sy stems w as completed on February 1. The purchase price amounted to
SEKm 222.
 Helen Fasth Gillstedt w as appointed as a member of the Board and as Chairman of the Audit Committee.
 Lena Olv ing w as appointed as a member of the Board.

Events after period end
On April 1, Munters completed the acquisition of Kev in Enterprises Priv ate Limited, a priv ately ow ned company headquartered in Mumbai, India.

FI NANCIAL SUMMARY
Q1

LTM

Full year

SEKm

2017

2016

∆%

Apr-Mar2016

Order backlog

1,998

1,713

17

1,998

1,741

Order intake

1,654

1,617

2

6,410

6,373

Net sales

1,519

1,220

25

6,340

6,040

Operating profit (EBIT)

75

74

1

578

577

Adjusted EBITA

147

119

23

808

781

Adjusted EBITA margin, %

9.7

9.8

12.8

12.9

Net income

-41

-29

73

85

Cash flow from operating activities
External Net debt

-20

53

2,946

2,544

16

204

277

2,946

2,724

Some of the abov e presented numbers are so called alternativ e performance measures.
Definitions are presented on page 23.

1

Q1

2017

Comments from the CEO
NET SALES GROWTH OF 25% I N THE FIRST QUARTER DRI VEN BY
DATA CENTERS AND AI R TREATMENT
The first quarter of 2017 show ed strong grow th for Munters w ith an increase in net sales of 25% and increased adjusted EBITA. The strong net sales grow th in the quarter w as mainly driv en by the continued
strength of our Data Center and Air Treatment businesses in the US and Europe and solid performance inAsia across the business areas. Order intake grow th for the Group w as 2% but the first quarter of 2016 benefitted from a record high Data Center order of SEKm 240. Data Center orders are lumpy in nature and w e
ex pect to see similar characteristics in the current y ear. Nonetheless, the order intake continued to show robust grow th in Data Centers and in Air Treatment order intake grew .

Mu n ters b enefits f rom strong demand in our key market segments

The business area Air Treatment continued its strong grow th trend during the quarter w ith a 23% increase inorder intake w ith robust grow th both in the industrial and commercial end-markets. In industrials, high demand w ithin the lithium-ion battery , pharmaceuticals and other industrial end-markets w ere the main grow thareas during the period. In commercials, the supermarkets end-market had another strong quarter follow ing
the low er demand w itnessed during parts of 2016. Air Treatment net sales grew by 18% in the quarter,
mainly driv en by deliv eries to customers in food, pharmaceutical and electronics.
Order intake in Data Centers decreased by 49% in the quarter, w ith grow th in the quarter impacted by therecord high order of SEKm 240 receiv ed in the first quarter in the prev ious y ear. Data Centers net sales in
the first quarter of 2017 show ed strong dev elopment w ith an increase of 183% driv en by strong demand in
the US and Europe. Munters continue to see high activ ity in the Data Center end-market. Giv en our highly
competitiv e customer offering, based on our innov ativ e technology for significantly improv ed energy efficiency , w e continue to take market shares in our focused end-market.
The business area AgHort show ed solid performance during the quarter w ith continued grow th in order intake and net sales of 10% and 12% respectiv ely , supported by positiv e currency effects and the acquisitionof MTech Sy stems. The AgHort business area has ex perienced low er inv estment lev els mainly in the poultry and sw ine industries but the impact has beenless pronounced than in prev ious dow nturns since w e are more div ersified today w ith additional customers in new geographies and end-markets. Longterm, w e continue to believ e that the underly ing grow th driv ers of more efficient and safe food production as w ell as increasing importance of animal w elfare
w ill remain intact.
Our business area Mist Elimination had a soft start of the y ear w ith a 2% decline in order intake compared to the v ery strong first quarter in 2016, impacted
by anticipated low er v olumes in the pow er end-market in the US, partly offset by continued solid demand in Asia for super clean flue-gas desulfurizationequipment. We believ e that the underly ing demand in the pow er end-market, supported by increasingly stricter env ironmental legislation, remains intact. Asan effect of the low er order intake in the US during the last six months 2016, net sales declined by 14%.
All business areas show ed grow th in China in the quarter and Group order intake grow th in this region ex ceeded 50%. It is also encouraging to see that our
aftermarket Serv ice business continued to perform w ell across all regions, up 17% to SEKm 151 (129) in Q1 2017, as a result of the significant inv estments
w e hav e made into this business during the last three y ears.

Ad ju sted EBITA g rowth from h igher volumes

Adjusted EBITA increased to SEKm 147 (119) in the first quarter corresponding to an adjusted EBITA margin of 10% (10%). The improv ement w as mainly
achiev ed through increased v olumes. During the past y ears, w e have made significant achiev ements in increasing operational ex cellence in our production,
procurement and sales processes. In addition, our long-term inv estments in grow th areas such as Serv ices and Data Centers, hav e y ielded good results.
We hav e continued to inv est in our organization and in our production facilities around the globe to further improv e efficiency .

S t rong platform f or continued g rowthMunters´ v alue proposition is based on our mission to deliv er the perfect climate to customers globally w here the climate is mission critical. Our solutions are
based on our proprietary technologies and application ex pertise built ov er half a century . On the back of long-standing customer relationships, w e w ill continue to ex pand our product offering to become a complete solutions prov ider lev eraging our controls, softw are and serv ice businesses.
During the past y ears, w e hav e transformed our business tow ards high-grow th application areas. All of Munters’ current end-markets are ex pected todemonstrate resilient and positiv e grow th, driv en by population and GDP grow th, the need for increased energy efficiency , increased food and protein consumption, industrialization, urbanization and rising liv ing standards globally .
Munters has a strong track record of sy nergetic acquisitions and w ill continue to pursue M&A opportunities in a disciplined and sy stematic manner. Acquisitions w ill be made in selected segments to ex pand the portfolio of core technologies, customer relationships and/or grow our presence in emerging markets.
The recently completed acquisitions of MTech Sy stems and Kev in Enterprises, the latter after the period end, is in line w ith this strategy and illustrates how
w e continuously w ork to further differentiate our offering to competition and thereby driv e long-term grow th.
John Peter Leesi, CEO

Munters first quarter 2017

2

Q1

2017

Group financial performance
NET SALES AND ORDER I NTAKE
Order intake
SEKm

Q1

Current period

1,654

Previous period

1,617

Net sales∆%

Q1

Net sales per quar ter and LTM (SEKm)
∆%

1,519
1,220

Change

37

2

299

25

Organic growth

18

1

278

23

66

4

61

5

19

1

21

2

Whereof currency effects
Structural effects

2,000

8,000

1,500

6,000

1,000

4,000

500

2,000

0

0
Q1

Q2

Q3

Q4

Q1

Net sales, SEKm
Net sales, LTM, SEKm

Order intake for the first quarter totaled SEKm 1,654 (1,617), an increase of 2% of w hich 1% organically . The
currency effect in the first quarter w as +4%. The increase w as mainly due to strong order intake in Air
Treatment. In the first quarter last y ear, Data Centers receiv ed a record order from a major customer w orth
SEKm 240, corresponding to 26% of Data Centers order intake in 2016. Structural effects w ere 1% including theacquisition of MTech Sy stems, consolidated from February 1, w ithin AgHort. Strong performance w as reported
for all busines areas in China.

Adjusted EBITA per quar ter and LTM(SEKm)
300

800

Net sales increased by 25% to SEKm 1,519 (1,220) and 23% organically , of w hich 5% w as due to currency
effects. The increase w as mainly due to rev enue grow th in Air Treatment and Data Centers. Specifically ,demand w as strong in Data Centers in Europe as w ell as for climate solutions in China. Structural effects in net
sales w ere 2% comprising of the acquisition of MTech Sy stems w ithin AgHort.

200

Serv ices net sales w as SEKm 151, an increase of 17% compared to the same quarter the prev ious y ear, driv en
by continued inv estment in the sales force and an increasing share of the customer base w ith serv ice contracts.

0

ADJUSTED EBI TA

1,000

600

400

100

200
0
Q1

Q2

Q3

Q4

Q1

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Adjusted EBITA increased by 23% to SEKm 147 (119), corresponding to an adjusted EBITA margin of 10% (10).
Strong adjusted EBITA grow th w as reported for Air Treatment and Data Centers in the quarter w hile adjusted EBITA declined for AgHort and Mist
Elimination. Air Treatment benefitted from operational lev erage on the high net sales v olume w hile the business area Data Centers benefitted from high net
sales in Europe. For AgHort the adjusted EBITA declined in Americas as a result of low er net sales mainly driv en by low er investment lev els in line w ith
industry v ariations. AgHort margins w ere also negativ ely affected by a higher share of sales in Asia and costs of SEKm 6 related to the acquisition of MTech
Sy stems.
Mist Elimination reported low er adjusted EBITA impacted by low er net sales in the US.

OPERATING PROFI T (EB IT)
Operating profit (EBIT) increased by 1% to SEKm 75 (74).
Operating profit (EBIT) in the first quarter w as impacted by depreciations SEKm -20 (-17) and amortizations SEKm -53 (-46), w hereof SEKm -48 (-42) w as
related to surplus v alues. The profit w as also negativ ely affected by IAC-items amounting to SEKm -20 (0) as w ell as adv isor costs of SEKm -8 (-2) related
to acquisitions.

NET FI NANCE I TEMS AN D PROFIT/RESULT AFTER FINANCIAL I TEMS
Financial income and ex penses for the first quarter amounted to SEKm -106 (-92). Higher interest ex penses and a negativ e impact of currency fluctuations
w ere the main reasons. Interest ex penses related to the shareholder loans amounted to SEKm -54 (-50).
Profit before tax for the first quarter amounted to SEKm -32 (-19) based on ex isting capital structure.

Munters first quarter 2017

3

Q1

2017

TAXES
Income tax es for the first quarter amounted to SEKm -9 (-10).
The tax able income in the quarter w as negativ ely impacted by the non-deductible interest costs, amounting to SEKm -48, relating to the shareholder loans.
The effectiv e tax rate in the first quarter, after adding back the shareholder loan interest to the profit before tax , w as 58%. The main reasons for the high effectiv e tax rate w ere that Munters Belgium recorded a tax cost of SEKm -2 relating to an adjustment of deferred tax on tax losses for prev ious y ears and thata large portion of the Group’s profits are generated in countries w ith high corporate tax rates (e.g. USA, Italy , Japan).

CASH FLOW
Cash flow from operating activ ities amounted to SEKm -20 (53) in the first quarter and w as negativ ely affected by an increase of w orking capital corresponding to SEKm -114 (-20). Increased inv entories as a result of seasonal effects, strong order intake in China and larger orders to be deliv ered in the second
quarter w ere the main items affecting change in w orking capital. Ex pected high lev el of capital ex penditures had a negativ e effect on the cash flow for theperiod.

SEASONAL VARI ATIONSThe seasonal profile of net sales differs by business area. In general Q1 is the slow est quarter as the number of projects ty pically is low er in the period.
Demand for Air Treatment products is seasonally stronger in the summer, due to higher construction activ ity in general and seasonal increase in humidity
lev els, w hich leads to strong inv oicing in Q2 and Q3. Generally , Q3 and Q4 can be impacted by fiscal planning, w ith customers looking to utilize budgetedfunds and take deliv ery before y ear end, w hich ty pically leads to a higher net sales lev el in Q4. The low point in order intake is ty pically Nov ember to February w hen project activ ity is low er and customers are in the process of planning for the nex t fiscal y ear.
Data Centers sales are driv en by larger projects, w here the seasonality is less transparent. Order intake and net sales are likely to fluctuate to a higher degree than in our other business areas from the quarter to the nex t due to lumpiness of larger projects.
Seasonality in Mist Elimination is mostly driv en by seasonal fluctuations of activ ity in the coal-fired pow er industry . The pattern is ty pically similar to Air
Treatment w ith relativ ely high net sales in Q4 and limited activ ity in early Q1.
AgHort’s sales are relativ ely stable ov er the y ear. In general, customer project activ ity is low er during the w inter in Europe and the US, w hich normally affects the business area’s sales during Q1 negativ ely .

FI NANCIAL POSITION A ND LIQUIDITY

Interest-bearing liabilities in Munters consist of loans from the shareholders and non-current and current bank loans. In total, the interest bearing items
amounted to SEKm 5,844 (5,170) at the end of the quarter, of w hich SEKm 2,689 (2,488) relates to shareholder loans.
Munters main long-term debt facility is a US Dollar denominated senior secured term loan w ith a closing balance of SEKm 2,564 (2,363) at the end of thefirst quarter. The long-term senior debt facility is amortized quarterly according to the stipulated repay ment schedule w ith maturity in 2021.
Furthermore, Munters has committed rev olv ing credit facilities of SEKm 445 (171) secured under the principal credit agreement. The rev olv ing credit facility
is w ithout mandatory repay ment and the final maturity is 2020. In addition, tw o bilateral short term credit facilities amounting to SEKm 353 hav e been madeav ailable during the quarter.
Av ailable unutilized credit facilities as of March 31 amounted to SEKm 171 (269).
The company had cash and cash equiv alents of SEKm 396 (309) as of March 31, 2017.

I TEM S AFFECTING COMPARABILITY
2017
SEKm

2016
Q1

Q4

Q3

Q2

Q1

Full year

27

27

26

53

-7

-7

Other
Exit preparation costs
Divestment Cooler businessBusiness area Air Treatment
Property sale

-7

Business area AgHort
Final Earn out Reventa
Total

-30
20

-3

-30
20

17

The items affecting comparability (IAC) in Q1 mainly comprised of ex ternal costs in relation to Munters and ow ners’ rev iew of strategic alternativ es w hichamounted to SEKm 27. A gain of SEKm 7 from a property sale has been adjusted for in Q1.

Munters first quarter 2017

4

Q1

2017

In 2016, the largest IAC-item refers to ex ternal costs in relation to Munters and ow ners’ rev iew of strategic ex it-alternativ es, w hich amounted to SEKm 53.
Munters also benefitted from tw o positiv e effects during the y ear that hav e been adjusted for. Firstly , the effect from the early settlement of the Rev enta acquisition earn-out of SEKm 30 and, secondly , SEKm 7 related to a prov ision rev ersal for the Cooler div estment that took place in 2015.

PARENT COMPANY

Munters Topholding AB (under name change to Munters Group AB) is the parent company of the Munters Group. The parent company ’s result after financial items for the first quarter w as SEKm -61 (-51). The parent company is a holding company and the main transactions carried out in this legal entity relate
to compensation to the Board members and interest costs on shareholder loans.
Munters Topholding AB does not engage in any business activ ities. The Company only holds shares in subsidiaries, shareholder loans, cash and accounts
pay able. The Parent Company does not engage in sales of goods and serv ices to ex ternal customers. Cash and cash equiv alents at the end of the periodamounted to SEKm 69 (48). The Parent Company has no employ ees.

EVENTS AFTER PERIOD END
Acq u isitions

On April 1, Munters completed the acquisition of Kev in Enterprises Priv ate Limited, a priv ately ow ned company headquartered in Mumbai, India. The
acquisition w as structured as an asset deal, acquiring company being Munters India Humidity Control Priv ate Limited (Munters India). See page 22 foradditional information.

S t rategic alternatives b eing evaluatedMunters and its ow ners are currently inv estigating different strategic alternativ es to support further dev elopment and grow th of the Company , including thepossibility of an initial public offering. No decision has been made and the market w ill be informed if and w hen any such decisions are made.

FI NANCIAL TARGETS AND DIVI DEND POLICYNet sales growthMunters objectiv e is to achiev e an annual organic rev enue grow th of betw een 7-10% per y ear, supplemented by selectiv e acquisitions.

Pro f it ability
Munters’ mid-term target is to hav e an adjusted EBITA margin of 14%.

Cap ital structure

Munters aims to maintain a ratio of net debt to adjusted EBITDA of 1.5x to 2.5x , and may temporarily ex ceed this lev el (e.g., as a result of acquisitions).

Dividend p olicy

Munters aims to pay an annual div idend corresponding to 30-50% of the net profit for the period. The pay -out decision w ill be based on the Company ’s financial position, inv estment needs, acquisitions and liquidity position.

Munters first quarter 2017

5

Q1

2017

Munters business model
Munters is organized in four business areas, w hich are Air Treatment, Data Centers, AgHort and Mist Elimination. From 2017 the Data Center cooling business, prev iously a part of Air Treatment, is reported as a separatebusiness area. Each of these business areas addresses a set of customer industries and applications, w ith anoffering based on Munters’ technologies and serv ices. The application areas w hich Munters target ty pically showa large degree of specialization, w ith substantial commonalities across geographical regions.

Or der intake per business ar ea and LTM(SEKbn)
ME
0.4
6%
AGH
1.7
27%

DC
0.8
12%

AI R T REATMENT
Air Treatment is a global leader in energy efficient air treatment solutions for industrial and commercial applications. Munters’ sy stems prov ide precise humidity and temperature control and are used by clients in mission critical processes, and can hav e a major impact on production safety , product quality , operating efficiency , and financial v iability . Our offering includes ev aporativ e cooling, heating, VOC abatement, and dehumidification
through desiccant rotors, ev aporativ e cooling pads, and poly mer heat ex changers. The underly ing market is estimated to deliv er 8% annual grow th in 2017-2020.

AirT
3.6
55%

Net sales per business ar ea and LTM(SEKbn)ME
0.4
7%

DATA CENTERS

Data Centers is a global leader in climate control sy stems for medium and large scale Data Centers Munters’ solutions are recognized as being robust and durable in demanding conditions and hav e a best-in-class track record of reliability and energy efficiency . Munters is mainly activ e in the fastest grow ing part of the air economizer
data center market (direct and indirect ev aporativ e cooling) w hich is estimated to grow by approx imately 27%
annually in 2017-2020. Our dedicated teams hav e the ability to configure, manufacture, support and deliv er data
center cooling projects across the globe.

AGH
1.7
27%

AirT
3.4
53%
DC
0.8
13%

AGHORT
AgHort dev elops and manufactures energy efficient climate control sy stems for the grow th and dev elopment ofagriculture and greenhouse applications. By prov iding the perfect climate, our solutions enable farms to operate
and produce under optimum conditions. Our innov ativ e product range includes v entilation, cooling, heating andcutting-edge control sy stems. Munters alw ays strives to be the premium partner for our customers and is a global supplier offering a full suite of climate control products for agricultural and greenhouse applications. The underly ing market is estimated to deliv er 6% annual grow th in 2017-2020. Demand is underpinned by global factors
such as population and GDP grow th, and further accelerated by food and industry trends (e.g. increased protein
consumption).

Adjusted EBITA per business ar ea andLTM (SEKbn)
ME
0.1
7%
AGH
0.2
28%

AirT
0.5
56%

M I ST ELIMINATION
Mist Elimination is a globally leading prov ider of mechanical gas and liquid separation. Our mist eliminators are
key components in scrubbers to reduce emissions from pow er plants and ships across the w orld. Our highly efficient mist eliminators also create optimum operating conditions and protect equipment in process industries,
w indmills, gas turbines and ships. Our dedicated team of ex perts helps customers find the perfect solution totheir mist elimination needs. The underly ing market is estimated to deliv er a 6% annual grow th 2017-2020 andw ill benefit from the introduction of the 0.5% sulphur cap in shipping industry w ith effect from 2020.

DC
0.1
9%

FUNCTIONS ACROSS THE BUSINESS AREAS
Munters´ equipment often play s a mission critical role in customers operations. Munters prov ides a range of serv ices for its products, including installation superv ision, commissioning, spare parts sales, repairs and performance optimization. The Serv ice business recorded good grow th in the first quarter, up 17% compared to thefirst quarter of the prev ious y ear. Large inv estments during 2016 in hiring new serv ice sales staff to driv e future
grow th are ex pected to reach full effect during 2017.
Operations continued to generate sav ings w ithin procurement, v ia cost out programs and implementation of leanprinciples across the factories.

OTHER

Other refers to group related functions and costs that are not allocated to the different business areas.

Munters first quarter 2017

6

Q1

2017

Air Treatment
 Strong order intake and net sales in Q1, grow th of 23% and 18% respectiv ely w ith the industrial end-markets
show ing robust grow th Adjusted EBITA margin increased by 2.1 percentage points y ear-on-y ear
 High demand and orders in the lithium-ion battery production, pharmaceutical and other industrial endmarkets as w ell as supermarkets w ere main grow th driv ers of orders in the quarter

FI NANCIAL SUMMARY
Q1

LTM

Full year

2017

2016

∆%

Apr-Mar

2016

1,097

939

17

1,097

978

Order intake

950

775

23

3,560

3,385

Net sales

793

671

18

3,416

3,294

Operating profit (EBIT)

94

59

60

472

437

Adjusted EBITA

90

62

47

477

448

11.4

9.2

14.0

13.6

SEKm

External order backlog

Adjusted EBITA margin, %Ord er intake and n et sales

Order intake in the first quarter 2017 increased by 23%, actual and organic grow th, to SEKm 950 (775). Currency effects had a positiv e impact of 4% on grow th, mainly due to a w eaker SEK v s. USD. Order grow th w as primarily seen in the industrial end-market in the US and Asia, w hile Europe saw demand in line w ith the first quarter 2016. The first quarter of 2017 brought healthy y ear on y ear grow th in the supermarket end-market follow ing
the return to more normalized order lev els in late 2016. High demand for lithium-ion battery production in China
continued to driv e orders in electronics, w hich also generated orders in Europe.
Net sales in the first quarter 2017 increased by 18%, actual and organic, to SEKm 793 (671). Currency effects
had a positiv e impact of 4% on grow th, mainly due to a w eaker SEK v s. USD. Net sales w ere strong in Europe
and Asia, primarily in food, pharmaceutical and electronics. Deliv eries to industrial customers in Americas w ere
dow n but offset by increased demand in the supermarket and other commercial end-markets as w ell as by highcomponents demand from OEMs. Rev enue from Serv ices v aried betw een the regions , w ith softness in industrial
end-markets in Latin America but contributed fav orably to the ov erall increase in net sales in Air Treatment.

Net sales per quar ter and LTM (SEKm)

1,200

4,000

1,000
3,000
800
600

2,000

400
1,000
200
0

Ad ju sted EBITA

0
Q1

Adjusted EBITA in the first quarter 2017 w as SEKm 90 (62), corresponding to an increase of 47% of w hich 5%deriv ed from positiv e currency effects. The increased profit w as mainly achiev ed through operational lev erage on
the high net sales v olume and ov erall positiv e mix effects.
The improv ement w as strongest in Europe, w here the combination of a high net sales v olume, including solid
grow th in Serv ices, and low er ov erhead costs resulted in substantially higher relativ e profitability compared to theprev ious y ear. Asia also show ed improv ement in the earnings margin w hile Americas saw a decline from v ery
healthy lev els in the first quarter 2016 due to mix effects and somew hat low er absorption of ov erhead costs.

Q2

Q3

Q4

Q1

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA per quar ter and LTM(SEKm)
200

600

150
400
100

200
50
0

0
Q1

Q2

Q3

Q4

Q1

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters first quarter 2017

7

Q1

2017

Data Centers Order intake decreased by 49% compared to the first quarter 2016, w hich included a record high order w orth
SEKm 240, corresponding to 26% of full y ear 2016 order intake
 Net sales increased by 183% driv en by strong demand in both the US and Europe Improv ed margins resulting from strong v olume increase and improv ed efficiency

FI NANCIAL SUMMARY
Q1

LTM

Full year∆%

Apr-Mar

2016

SEKm

2017

2016

External order backlog

321

328

-2

321

392

Order intake

165

320

-49

763

919

Net sales253

90 183848

685

Operating profit (EBIT)

32

7 362

79

54

Adjusted EBITA
Adjusted EBITA margin, %

32
12.8

7 349
8.0

81

56

9.5

8.1

Ord er intake and n et sales

Order intake in the first quarter of 2017 decreased by 49%, actual and organic, to SEKm 165 (320). Currency effects had a positiv e impact of 3%, driv en by a w eaker SEK v s. USD. The decrease is related to the record order
receiv ed in the first quarter of 2016 w ith an order v alue of SEKm 240 in Europe and partially offset by a medium
sized order in the US during the first quarter of 2017.
Net sales increased by 183%, actual and organic grow th, in the quarter to SEKm 253 (90). Currency effects had
a positiv e impact of 8% on grow th, mainly due to a w eaker SEK v s. USD. Net sales w ere strong in both the US
and Europe, primarily due to sales to digital customers in both regions. Deliv eries to co-location customers in Europe w ere also strong.

Ad ju sted EBITA

Adjusted EBITA in the first quarter w as SEKm 32 (7) w hich represents an increase of 349%, compared to thecorresponding period in 2016, of w hich 4% w as deriv ed from currency effects. Adjusted EBITA and adjusted
EBITA margin increased by 4.8 percentage points due to higher sales v olumes and improv ed operational efficiency .
The improv ement in adjusted EBITA w as most significant in the US and Europe due to large project deliv eries in
the quarter.

Net sales per quar ter and LTM (SEKm)

400

1,000
800

300

600
200
400
100

200

0

0

Q1

Q2

Q3

Q4

Q1

Net sales, SEKm

Net sales, LTM, SEKm

Adjusted EBITA per quar ter and LTM(SEKm)
60

100
80

40

60

40

20

20
0

0
Q1

Q2

Q3

Q4

Q1

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters first quarter 2017

8

Q1

2017

AgHort Order Intake increased by 10% and net sales by 12%, both supported by positiv e currency effects and theacquisition of MTech Sy stems
 The poultry and sw ine industries are currently in a temporary market slow -dow n in the US and Europe normally seen ev ery 3-4 y ears
 Reduced adjusted EBITA margin mainly due to M&A adv isor related costs, mix effects and lagging of the already implemented price increases

FI NANCIAL SUMMARY
Q1

LTM

Full year

Apr-Mar

2016

SEKm

2017

2016

∆%

External order backlog

454

316

44

454

249

Order intake

469

427

10

1,746

1,704

Net sales

404

360

12

1,748

1,705

Operating profit (EBIT)

25

43

-42

257

276

-39

Adjusted EBITA

28

46

Adjusted EBITA margin, %

7.0

12.9

240

258

13.7

15.1

Ord er intake and n et sales

Order intake during the quarter increased by 10% to SEKm 469 (427) driv en by the acquisition of MTech Sy stems in February 2017, +4%, and positiv e currency effects, +6%. Organic grow th in order intake, ex cluding currency effects, w as flat in the quarter impacted by a low er inv estment lev els primarily seen in the US, w hile bothregions EMEA and Asia show ed grow th in the quarter. The inv estment lev els in AgHort related customer industries hav e historically v aried ov er a 3-4 y ear cy cle. The negativ e grow th impact from low er inv estment lev els in
the fourth quarter of 2016 and first quarter of 2017 has been low er than in prev ious dow nturns in the industry
since Munters currently has a more div ersified business w ith customers in new end-markets and geographies.
Net sales increased by 12% in the quarter to SEKm 404 (360), of w hich 6% w as attributable to the acquisition of
MTech Sy stems in February 2017 and 6% w as attributable to currency effects. Organic grow th in net sales w asflat in the quarter, hampered by negativ e grow th in EMEA, w hile Americas and Asia show ed net sales grow th.
The latter show ed strong grow th compared to last y ear, primarily due to strong performance in China.

Ad ju sted EBITA

Adjusted EBITA in the first quarter 2017 w as SEKm 28 (46). Margins in the Americas w ere impacted by low er inv estment lev els. Margins w ere also affected by a higher share of sales in Asia, w here margins are low er. Other
effects included cost of SEKm 6 for the acquisition of MTech Sy stems and costs relating to the startup of a new
production line in Brazil. Due to phasing, the full effect of already implemented price increases is not y et seen in
profitability .

Net sales per quar ter and LTM (SEKm)

500

2,000

400

1,500

300
1,000
200

500

100

0

0
Q1

Q2

Q3

Q4

Q1

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA per quar ter and LTM(SEKm)
100

300

80

200

60
40

100

20

0

0
Q1

Q2

Q3

Q4

Q1

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters first quarter 2017

9

Q1

2017

Mist Elimination
 Order intake declined by 2% in the quarter impacted by low er anticipated v olumes in the pow er industry in the
US compared to the v ery strong first quarter in 2016, partly offset by solid demand grow th in China related tosuper clean flue-gas desulfurization, FGD, equipment
 Net sales declined by 14% follow ing the low order intake in the US during the second half of 2016
 Low er adjusted EBITA and adjusted EBITA margin in the quarter due to low er v olumes and a comparison to av ery strong quarter in 2016 The acquisition of Kev in Enterprises in India w as completed April 1 2017 further div ersify ing Munters market
ex posure and ex panding the presence in the process industry

FI NANCIAL SUMMARY
Q1

LTM

Full year

SEKm

2017

2016

∆%

Apr-Mar

2016

External order backlog

126

130

-3

126

121

Order intake

101

103

-2

414

416

Net sales

93

108

-14

421

437

Operating profit (EBIT)

6

18

-65

57

69

Adjusted EBITA

6

18

-64

58

69

6.9

16.4

13.8

15.9

Adjusted EBITA margin, %Ord er intake and n et sales

Order intake during the quarter decreased by 2%, actual and organic, to SEKm 101 (103). Currency effects had
a positiv e impact on grow th of 3%, mainly due to w eaker SEK v s. USD. Strong order intake in the pow er endmarket in China w as offset by low order lev els in the US. Order intake in EMEA decreased slightly in the quarter.

Net sales per quar ter and LTM (SEKm)

150

Net sales decreased by 14%, both actual and organic grow th, in the quarter to SEKm 93 (108). Currency effects
had a positiv e impact of 4%. The decrease w as mainly attributable to low er demand from customers in the Pow er industry in the US w here many pow er plants hav e conducted less FGD retrofit projects compared to a v ery
strong first quarter last y ear. Net sales dev elopment in China w as in line w ith last y ear. Net sales in EMEA increased slightly in the quarter.

Ad ju sted EBITA

Adjusted EBITA during the quarter w as SEKm 6 (18), corresponding to a decrease of 64%, despite positiv e currency effects of 8%. Adjusted EBITA margin in the quarter decreased to 7% (16%), mainly due to low er net sales
in the Americas driv en by few er retrofit FGD projects compared to the same period last y ear. Acquisition costs
incurred in the first quarter 2017, related to the acquisition of Kev in Enterprises in India, amounted to SEKm 1.

500

400
100

300
200

50

100
0

0
Q1

Q2

Q3

Q4

Q1

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA per quar ter and LTM(SEKm)
25

80

20

60

15

40
10

20

5
0

0
Q1

Q2

Q3

Q4

Q1

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters first quarter 201710

Consolidated accounts
CONDENSED STATEMENT OF COMPREH ENSIVE I NCOME
Q1
SEKm

LTM

Full year

Apr-Mar

2016

2017

2016

Net sales

1,519

1,220

6,340

6,040

Cost of goods sold

-1,001-791-4,143-3,931Gross profit/loss

518

429

2,197

2,109

0

0

31

31

Selling expenses

-246

-214

-945

-913

Administrative costs

-158

-106

-564

-512

Research and development costs

-38

-35

-141

-138

Other operating expenses

-1

-0

-1

0

Operating profit

75

74

578

577

Financial income and expenses

-106

-92

-438

-424

Profit/Loss after financial items

-32

-19

140

153

Tax

-9

-10

-68

-69

Net income

-41

-29

73

85

-12

-8

194

198

-12

-8

194

198

-

-

-17

-17

-

-

4

4

Other operating income

Other comprehensiv e income
Other comprehensive income to be reclassified to profit or loss insubsequent periods:
Exchange-rate differences on translation of foreign operations
Other comprehensive income not to be reclassified to profit or loss
in subsequent periods:
Actuarial gains and losses on defined-benefit pension obligations,incl. payroll tax
Income tax effect on other comprehensive income not to bereclassified to profit or loss in subsequent periods
Other comprehensiv e income, net after tax

-12

-8

181

185

Comprehensiv e income for the year

-53

-37

254

270

-41

-29

73

85

0

0

0

0

-41

-29

73

85

-53

-37

254

270

0

0

0

0

-181

-149

Income for the year
Attributable to Parent Company shareholders
Attributable to non-controlling interests
Comprehensiv e income for the year
Attributable to Parent Company shareholders
Attributable to non-controlling interests
Earnings per share (before and after dilution), SEK

Munters first quarter 2017

-223

11

Consolidated accounts
CONDENSED STATEMENT OF FI NANCIAL POSITION – ASSETS
SEKm

31/03/2017

31/03/2016

31/12/2016

4,359

3,900

4,227

1,669

1,554

1,550

Buildings and land

148

151

156

Plant and machinery

165

140

172

148

94

133

Construction in progress

94

45

69

Financial assets

26

55

24

ASSETSNON-CURRENT ASSETS
Goodwill
Patents, licenses, brands, and similar rights

Equipment, tools, fixtures and fittings

Deferred tax assets

14,15

9,13

234

211

242

6,843

6,149

6,574

Raw materials and consumables

343

261

321

Products in process

159

112

123

Finished products and goods for resale

254

190

208

Work on contract

20

14

8

Total non-current assets
CURRENT ASSETS

Advances to suppliers

17

6

17

1,070

697

1,094

Prepaid expenses and accrued income

90

69

76

Derivative instruments

6

4

2

Current tax assets

40

13

32

Other receivables

131

93

103

Cash and cash equivalents

396

309

432

Total current assets

2,526

1,768

2,417

TOTAL ASSETS

9,370

7,918

8,991

Accounts receivable

Munters first quarter 201712

Consolidated accounts
CONDENSED STATEMENT OF FI NANCIAL POSITION – EQUITY AND LIABILITIES
SEKm

31/03/2017

31/03/2016

31/12/2016

704

450

756

EQUITY AND LIABILITIESEQUITY
Shareholders equity
Non-controlling interests

10

8

11

Total equity

714

458

767

Shareholder loan

2,689

2,488

2,688

Interest-bearing liabilities

2,495

2,289

2,544

Provisions for pensions and similar commitments

190

201

179

Other provisions

33

31

30

Other liabilities

176

92

15

Deferred tax liabilities

533

510

525

6,116

5,611

5,981

Interest-bearing liabilities

660

393

429

Advances from customers

247

231

315

Accounts payable

567

389

530

Accrued expenses and deferred income

630

466

565

Derivative instruments

3

5

4

Current tax liabilities

50

33

53

Other liabilities

265

232

232

5

4

5

112

95

110

Total current liabilities

2,540

1,848

2,243

TOTAL EQUITY AND LIABILITIES

9,370

7,918

8,991

31/03/2017

31/03/2016

31/12/2016

Opening balance

767

495

495

Total comprehensive income for the period

NON-CURRENT LIABILITIES

Total non-current liabilities
CURRENT LIABILITIESProvisions for pensions and similar commitments
Other provisions

CONDENSED STATEMENT OF CHANGES I N EQUI TY
SEKm

-53

-37

270

Shareholders contribution

-

-

3

Change in non controlling interest

0

0

0

Dividend to non controlling interest

-

-

-

714

458

767

The parent company's shareholders

704

450

756

Holdings with non controlling interests

10

8

11

Closing balance
Total shareholders´equity attributable to:Munters first quarter 201713

Consolidated accounts
CONDENSED CASHFLOW STATEMENT
Q1
SEKm

LTM

Full year

2017

2016

Apr-Mar

2016

75

74

578

577

Depreciation, amortization and impairments

73

63

271

262

Provisions

16

3

-14

-27

Other profit/loss items not affecting liquidity

-2

1

-21

-18

Cash flow before interest and tax

162

140

815

794

Paid financial items

-43

-41

-208

-206

Taxes paid

-25

-25

-130

-130

Cash flow from operating activ ites beforechanges in w orking capital

94

73

477

458

Cash flow from changes in w orking capital

-114

-20

-273

-180

Cash flow from operating activ ities

-20

53

204

277

OPERATING ACTIVITIES
Earnings before interest and tax (EBIT)
Rev ersal of non-cash items;

INVESTING ACTIVITIESBusiness acquisitions

-187

-

-189

-2

Investment in tangible assets

-47

-35

-176

-163

Investment in intangible assets
Cash flow from inv esting activ ities

-9

-2

-27

-20

-242

-37

-391

-186

FINANCING ACTIVITIESNew share issue

-

-

0

0

Changes in loans

222

-54

256

-19

Cash flow from financing activ ities

222

-54

257

-19

Cash flow for the period

-40

-37

69

72

Cash and cash equivalents at period start

432

346

309

346

5

2

17

14

396

309

396

432

Exchange-rate differences in cash and cash equivalents
Cash and cash equiv alents at period end

Munters first quarter 201714

Parent company
I NCOME STATEMENT
Q1
SEKm

LTM

Full year

2017

2016

Apr-Mar

2016

-

-

-

-

Administrative costs

-7

-1

-11

-5

Profit/Loss before interest and tax (EBIT)

-7

-1

-11

-5

Financial income and expenses

-54

-50

-207

-202

Profit/Loss after financial items

-61

-51

-217

-207

Group contributions

-

-

27

27

Profit/Loss before tax

-61

-51

-190

-180

-

-

-

-

-61

-51

-190

-180

Net sales
Gross profit/loss

Tax
Net income

STATEMENT OF COMPREHENSIVE I NCOME
Q1

LTM

Full year

SEKm

2017

2016

Apr-Mar2016

Profit/Loss for the year

-61

-51

-190

-180

-

-

-

-

-61

-51

-190

-180

Other comprehensive income, net after tax
Comprehensiv e income for the year

Munters first quarter 201715

Parent company
BALANCE SHEET – ASSETS
SEKm

31/03/2017

31/03/2016

31/12/2016

Participations in subsidiaries

4,086

4,086

4,086

Total non-current assets

4,086

4,086

4,086

Receivables from subsidiaries

-

-

27

Cash and cash equivalents

69

48

44

Total current assets

69

48

71

4,155

4,134

4,157

31/03/2017

31/03/2016

31/12/2016

ASSETSNON-CURRENT ASSETSCURRENT ASSETSTOTAL ASSETSBALANCE SHEET – EQUITY AND LI ABILITIESSEKmEQUITY AND LIABILITIESEQUITY
Share capital

0

0

0

Share premium reserve

1,177

1,177

1,177

Profit brought forward

257

437

437

Income for the year

-61

-51

-180

1,373

1,563

1,434

Shareholder loan

2,689

2,488

2,688

Total non-current liabilities

2,689

2,488

2,688

Accrued expenses and deferred income

87

81

35

Other liabilities

6

1

-

Total current liabilities

93

82

35

4,155

4,134

4,157

Total equity
NON-CURRENT LIABILITIESCURRENT LIABILITIESTOTAL EQUITY AND LIABILITIES

Munters first quarter 201716

Quarterly overview Group and Business areas
Gro u p
Q1

LTM

Full year

SEKm

2017

2016

Apr-Mar2016

Order backlog

1,998

1,713

1,998

1,741

Order intake

1,654

1,617

6,410

6,373

Net sales

1,519

1,220

6,340

6,040

75

74

578

577

-106

-92

-438

-424

Tax

-9

-10

-68

-69

Net income

-41

-29

73

85

Amortization (incl. surplus values)

53

46

193

187

IAC

20

-

37

17

Adjusted EBITA

147

119

808

781

Adjusted EBITA margin, %

10

10

13

13

Operating profit (EBIT)
Financial income and expenses

Air Treat ment
Q1

LTM

Full year

SEKm

2017

2016

Apr-Mar

2016

External order backlog

1,097

939

1,097

978

Order intake

950

775

3,560

3,385

External net sales

787

670

3,405

3,288

Transactions between segments

6

1

11

6

Operating profit (EBIT)

94

59

472

437

Amortization (incl. surplus values)

3

3

12

11

Adjusted EBITA

90

62

477

448

Adjusted EBITA margin, %

11

9

14

14

Dat a Centers
Q1

LTM

Full year

2017

2016

Apr-Mar

2016

External order backlog

321

328

321

392

Order intake

165

320

763

919

External net sales

249

90

814

655

Transactions between segments

4

0

34

30

Operating profit (EBIT)

32

7

79

54

Amortization (incl. surplus values)

1

0

2

1

Adjusted EBITA

32

7

81

56

Adjusted EBITA margin, %

13

8

10

8

SEKm

Munters first quarter 201717

Quarterly overview Group and Business areas
Ag Ho rtQ1

LTM

Full year

Apr-Mar

2016

2017

2016

External order backlog

454

316

454

249

Order intake

469

427

1,746

1,704

External net sales

391

355

1,706

1,669

Transactions between segments

13

5

43

36

Operating profit (EBIT)

25

43

257

276

SEKm

Amortization (incl. surplus values)

3

3

13

12

Adjusted EBITA

28

46

240

258

Adjusted EBITA margin, %

7

13

14

15

Mist Elimination
Q1

LTM

Full year

2017

2016

Apr-Mar

2016

External order backlog

126

130

126

121

Order intake

101

103

414

416

External net sales

92

106

415

428

Transactions between segments

1

3

7

9

Operating profit (EBIT)

6

18

57

69

Amortization (incl. surplus values)

0

0

1

1

Adjusted EBITA

6

18

58

69

Adjusted EBITA margin, %

7

16

14

16

SEKm

Ot h er and eliminations
Q1

LTM

Full year

2017

2016

Apr-Mar2016

Order intake

-31

-8

-73

-50

Transactions between segments

-24

-9

-95

-80

Operating profit (EBIT)

-82

-53

-288

-258

Amortization (incl. surplus values)

46

40

167

161

Adjusted EBITA

-10

-13

-47

-51

SEKm

External order backlog

Munters first quarter 201718

NotesACCOUNTING POLICIESThis report has been prepared in accordance w ith IAS 34, “Interim Financial Reporting”. The accounting policies conform to International Financial
Reporting Standards (IFRS), as w ell as w ith the EU approv ed interpretations of the relev ant standards, the International Financial Reporting Interpretations
Committee (IFRIC) and Chapter 9 of the Sw edish Annual Accounts Act. The report has been draw n up using the same accounting policies and methods ofcalculation as those in the Annual Report (Note 1), ex cept for a change in segments w here, as of January 1, 2017, the Data Centers, prev iously part of the
Air Treatment segment, is presented as s separate segment. The historical numbers hav e been recalculated to reflect this change. Segment information canbe found on pages 7 through 10 and the segment disclosures are presented on page 17-18.. New or rev ised IFRS standards that came into force in 2017
did not hav e any material impact on the Group. IFRS also comprises International Accounting Standards (IAS) and interpretations of the standards, called
IFRIC and SIC, respectiv ely . Besides IFRS and the Annual Accounts Act, recommendation RFR1 of the Sw edish Financial Reporting Board –Supplementary Accounting Rules for Groups – is also applied.
The parent company has implemented the Sw edish Financial Reporting Board’s Recommendation RFR 2, w hich means that the parent in the legal entity
shall apply all EU approv ed IFRS and related statements as far as this is possible, w hile continuing to apply the Sw edish Annual Accounts Act and thePension Obligations Vesting Act and pay ing due regard to the relationship betw een accounting and tax ation. The consolidated accounts w ere prepared inaccordance w ith International Financial Reporting Standards (IFRS) as adopted by the EU and according to the Annual Accounts Act.
The consolidated accounts encompass the Parent Company and its subsidiaries. The financial statements for the Parent Company and its subsidiaries
included in the consolidated accounts refer to the same period and hav e been prepared in accordance w ith the accounting policies that apply to the Group.
All intra-Group transactions, rev enues, costs, gains, or losses that arise in transactions betw een companies included in the consolidated accounts hav ebeen w holly eliminated.
IFRS 15, Rev enue from contracts w ith customers (effectiv e from 2018).
The Company is ev aluating the impact of the standard and has not quantified the effects of IFRS 15. Based on a preliminary analy sis of a number ofcontracts related to customers of the Air Treatment business area, the Company does not currently believ e that the standard w ill hav e a significant effect on
the Company ’s financial statements. This ev aluation w ill continue throughout 2017.
IFRS 16 Lease (effectiv e from 2019).
Munters has begun to analy ze the effects IFRS 16 w ill hav e on the Company ’s financial statements. In brief, the initial analy sis show s that Munters as an
operational lessee w ill be affected by the implementation of IFRS 16. Monetary calculations of the effect of IFRS 16 and choice of transition approach hav e
not y et been carried out. Based on the Company ’s preliminary rev iew of its leases (primarily lease agreements in respect of premises), including notice
periods and rental amounts, the Company currently believ es that IFRS 16 w ill hav e an effect on its consolidated accounts and financial key performanceindicators, primarily ratios based on gross assets and gross liabilities.

TRANSACTIONS WI TH RELATED PARTIES
Munters Topholding AB has a loan from shareholders raised in 2010 w hich are subordinated to the other loans. At March 31, 2017, the loan amounted to
SEKm 2,689 (2,488) plus accrued interest amounting to SEKm 86 and carries an 8.0 percent rate of interest. Interest accumulates and is scheduled to be
repaid at the latest w hen the loan matures on May 5, 2022. For the first quarter 2017 the Group ex pensed interest on loans from shareholders amounting to
SEKm -54 (-50). For further information of transactions betw een Munters and related parties, see the Annual Report 2016.

EM PLOYEESThe number of permanent employ ees at March 31th 2017 w as 3,203 (2,742), an increase of 17%. The increase in the number of employ ees w as mainly attributable to the acquisition of MTech Sy stems as w ell as to the ex pansion of serv ice and production staff to address the increase in v olumes that occurred
and the focus on the serv ice business.

ENVI RONMENTAL I MPACT AND ENVI RONMENTAL PO LICY
Munters’ operations affect the ex ternal env ironment through air and w ater emissions, the handling of chemicals and w aste, transport of input goods andfinished products to and from Munters’ factories. Munters is committed to constant v igilance regarding the env ironmental impact of its operations. Munters iscommitted to comply ing w ith all law s and to continuously promoting improv ements in all EHS aspects, w herev er Munters conducts business. Munters iscommitted to env ironmentally friendly and compliant operations. Munters constantly seeks opportunities to reduce risk and to create a safer, healthier, more
div erse and more env ironmentally friendly w orkplace for our employ ees, customers, communities, and the ov erall env ironment. We achiev e this throughstrong leadership, teamw ork and our constant quest for improv ement in all that w e do. Munters’ manufacturing facilities all ov er the w orld are committed tow orking w ith a w ritten Env ironmental, Health, & Safety Management Program. The Safety Management Program establishes procedures to ensurecompliance and to activ ely prev ent injuries, v arious incidents, and env ironmental pollution.

RI SKS AND UNCERTAINTI ES
Munters is a company w ith geographically w idespread operations and many small organisational entities. The Group depends to s ome ex tent on key
customers and key personnel. Some of Munters’ sales consist of components, products and facilities used in complex customer processes. Quality andcontract obligations could result in claims for damages. Future alternativ e technologies could constitute a risk. Companies c urrently activ e in air treatment
could become established in Munters’ niches, w hich w ould mean increased competition. Demand for the Company ’s products is affected by the general
economic trends. Financial risks mainly consist of currency , interest and financing risks. The continued dev elopment of the global economy (including

Munters first quarter 201719

interest rate and currency risk) is an uncertainty factor for profitability . A more detailed description of the Group’s financial risks and how they are monitored
and managed is disclosed in Note 3 in the Annual Report of 2016. Central guidelines gov ern the use of insurance, including cov erage for general liability
and product liability , property , business interruption, transportation, crimes against property , the liability of Board members and the CEO and employ ment
practices liabilities. Sev eral of insurance policies are managed Group-w ide.

EARNI NGS PER SHARE

Net profit per ordinary share in the first quarter 2017 amounted to SEK -181 (-149). Income attributable to Parent Company ’s ordinary shareholders, after
consideration to preferential shares’ annual right to div idend, amounted to SEKm -97 (-80) for the first quarter. The av erage number of outstanding ordinary
shares in the full y ear and the first quarter w as 536,981.

FAI R VALUE OF FI NANC IAL I NSTRUMENTS
The Group’s deriv ativ es, recognized at fair v alue in the statement of financial position, are measured according to IFRS 13 and lev el 2 in the fair v alue hierarchy . The deriv ativ es amount to SEKm 6 (4) in financial assets and to SEKm 3 (5) in financial liabilities.
The Group’s contingent earn-outs and put/call acquisition options, recognized at fair v alue in the statement of financial position, are measured according to
IFRS 13 and lev el 3 in the fair v alue hierarchy . The contingent consideration related to the acquisition of HB group in 2015 is v alued based on the EBITDA
during the period July 1, 2015 to July 1, 2017. The range, depending on w hat EBITDA lev el is achiev ed, is betw een zero up to a max imum of EURm 10. In
the table below the changes in the contingent consideration liability during 2017 are ex plained. The largest change are related to the acquisition of MTech
Sy stems, see further description on page 21.

SEKm

31/03/2017 31/03/2016 31/12/2016

Contingent price considerations and put/call options
Opening balance

51

78

Estimated liabilities at acquisition

162

-

-

Payments---9

Changes recognized in other operating income

-

-

-30

Discounting

1

2

7

Exchange-rate differences for the year

-1

0

5

213

80

51

Closing balance78

Munters deems that the interest rate on interest-bearing liabilities is in line w ith market terms at March 31, 2017, and the fair v alue at the end of the reporting
period therefore in all material aspects corresponds to the carry ing amount.

Munters first quarter 201720

ACQUI SITIONS
MTech Systems

On February 1, 2017, Munters completed the acquisition of 60% of the shares in the US based softw are company MTech Sy stems.
The company w ill operate w ithin the business area AgHort. The purchase price amounted to SEKm 222, corresponding to a debt-free enterprise v alue for100% of the company of SEKm 370. Munters also has an option to acquire the remaining 40% of the shares that are held by senior ex ecutiv es of MTech
Sy stems, w hich also hav e an option to sell, starting in December 2020. The purchase consideration on ex ercising the option w ill be based on the financial
result for the 12 months prior to the date of ex ercising the option. As a consequence of the option Munters recognize non-controlling participations initiallyand allocate such part of income. The Group also recognizes a liability corresponding to the discounted ex pected redemption price for the options w hereupon non-controlling participations attributable to the options are eliminated.
The difference betw een liabilities for the options and the non-controlling participations to w hich the options refer is recognized directly in equity and disclosed separately from other changes in equity .
The acquisition of MTech Sy stems w as financed by raising bank loans. In 2016 MTech Sy stems had rev enues amounting to approx imately SEKm 140.
Acquisition costs during 2016 - 2017 incurred amounts to SEKm 10.
Information about acquired net assets and goodwill
follows (SEKm)

According to preliminarypurchase price allocation

Cash purchase consideration paid

222

Total purchase consideration

222

Fair value of non-controlling interests

162

Fair value of acquired net assets-244

Goodwill

140

Acquired net assets at time of acquisition

Fair values according topreliminary purchase priceallocation

AssetsProperty, plant and equipment
Customer relationships
Technology
Brands
Accounts receivable
Other current assets
Cash and cash equivalents

13
29
122
19
51
39
35

Total assets

307

Liabilities
Non-current interest-bearing liabilities
Current interest-bearing liabilities
Accounts payable
Accrued expenses and deferred income
Deferred tax liabilities
Other current liabilities

0
0
1
20
29
12

Total liabilities

63

Net identifiable assets and liabilities

244

Cash purchase consideration paid
Cash and cash equivalents in acquired company

222
-35

Change in the Group's cash and cash equivalents on
acquisition

187

The fair v alue of acquired net assets w as increased by SEKm 160. Of this amount SEK 29 million relates to customer relationships, SEKm 122 to technology , SEKm 19 to brands, SEKm 19 to accrued income, and SEKm 29 to deferred tax liabilities. The fair v alue of the acquired accounts receiv able at the dateof acquisition, SEKm 51 corresponds to the amount ex pected to be paid. Receiv ables hav e a nominal v alue of SEKm 51.
The goodw ill arising from the acquisition, SEKm 140, is primarily attributable to future sy nergies ex pected through combining MTech Sy stems ex pertise in
adv anced data analy sis w ith data from Munters controllers, creating a complete ov erv iew of the supply chain for poultry and sw ine producers. Ov erall thisw ill significantly ex pand Munters offering to our customers in business area AgHort.

Munters first quarter 201721

Kevin Enterprises

On April 1, Munters completed the acquisition of Kev in Enterprises Priv ate Limited, a priv ately ow ned company headquartered in Mumbai, India. The acquisition w as structured as an asset deal, acquiring company being Munters India Humidity Control Priv ate Limited, Munters India. The acquired business w ill
as of April 2017 be reported as a separate reporting unit w ithin Munters India, and w ill be consolidated into Business Area M ist Elimination. The preliminarypurchased consideration, after preliminary net w orking capital and net debt adjustments, amounted to SEKm 76. Preliminary fair v alue of transferred net
w orking capital and net fix ed assets amounted to SEKm 18 and 35 respectiv ely . Value of intangible assets, including goodw ill, w as estimated at approx imately SEKm 23. Work w ill be carried out w ith respect to further specify ing and allocating v alue to specific intangible assets. Net debt items w ere estimatedat approx imately SEKm 0.2. In 2016, Kev in Enterprises generated rev enues of approx imately SEKm 65.
Acquisition costs incurred amounts to SEKm 5.

Information about acquired net assets and goodwill
follows (SEKm)

According to preliminarypurchase price allocation

Cash purchase consideration paid

76

Working capital

18

Fixed assets

35

Net Debt

0

Intangible assets, including goodwill

23

Munters first quarter 201722

Alternative performance measures
In this interim report, there are references to a number of performance measures. Some of the measures are defined in IFRS, others are alternativ e performance measures and are not disclosed in accordance w ith applicable financial reporting framew orks or other legislations. The performance measures areused by the Group to assist both inv estors and management in analy zing Munters’ business. Below are the performance measures found in this interim report described, defined and the reason for use disclosed.

Org anic growth

The change in net sales compared to the prev ious period, ex cluding contributions to net sales from businesses that w ere acquired and/or div ested during
the current period and/or any comparison period. The measure is used by Munters to monitor net sales grow th driv en by changes in v olume, currencies,
price and sales betw een different periods.

Ord er backlog

Receiv ed and confirmed sales orders not y et deliv ered and accounted for as net sales. Order Backlog is a useful measure to indicate the efficiency of the
conv ersion of receiv ed and confirmed sales orders into net sales in future periods, and is used by Munters to monitor busines s performance and customer
demand, and adjust operations.

Ord er intake

Receiv ed and confirmed sales orders during the reporting period. The order intake is an indicator of future rev enues and, consequently , an important KPI for
the management of Munters’ business.

L TM

LTM (last tw elv e months) after any key indicator means that the KPI corresponds to an accumulation of prev ious tw elv e month reported numbers . The
measure is used to highlight trends in different KPIs, w hich is v aluable in order to gain a deeper understanding of the dev elopment of the business.

Op erating profit ( EBIT)

Earnings before interest and tax . Munters believ es that EBIT show s the profit generated by the operating activ ities.

Ad ju sted EBITA

Operating profit, adjusted for amortizations and items affecting comparability . The measurement is a key component in order to ev aluate the underly ing
business of Munters and is regularly monitored and analy zed by the Group.

I t ems affecting comparability (“IAC”)
Items affecting comparability relates to income statement items that hav e an impact on operating profit and are important for understanding the underly ing
dev elopment of operations.

Ad ju sted EBITA margin

Adjusted EBITA as a percentage of net sales. Munters believ es that Adjusted EBITA Margin is a useful measure for show ing the Company ’s profit
generated by the operating activ ities

Ext ernal Net d ebt

Net debt calculated as ex ternal interest bearing debt (ex cluding shareholder loans) and pension liabilities, deducted by cash and cash equiv alents. This is ameasure of the ability to repay the debt if it w as all due.

C ash and cash equivalents

Cash and bank balances plus inv estments in securities and the like w ith maturity periods not ex ceeding three months . This is a measure that highlights theshort-term liquidity .

Munters first quarter 201723

Stockholm, 21 April 2017

John Peter Leesi, President and CEO
This report has been subject to rev iew by the company ’s auditors.

FOR FURTHER I NFORMATION, PLEASE CONTACT:John Peter Leesi, President and CEO
Tel +46 (0)8 626 63 01

Munters Topholding AB

Jonas Ågrup, CFO

Corporate identity number

Tel +46 (0)8 626 63 01

556819-2321

John Womack, IR
Tel + 46 (0)70 678 24 99
About Munters Group
Munters is a global leader in energy efficient air treatment and climate solutions. Using innov ativ e technologies, Munters creates the perfect climate for customers in a w ide range of industries, the largest being the food, pharmaceutical and data center sectors. Munters has been defining the future of air treatment since 1955. Today , around 3,500 employ ees (including temps.) carry out manufacturing and sales in more than 30 countries. Munters reports annual
net sales abov e SEK 6 billion and is ow ned to a majority by Nordic Capital Fund VII. For more information, please v isit w w w.munters.com.
Ev ery care has been taken in the translation of this interim report. In the ev ent of discrepancies, the Sw edish original w ill supersede the English translation.

"Strong net sales and adjusted EBITA growth driven by
Data Centers and Air Treatment"

Munters first quarter 201724

THI S IS A TRANSLATION FROM THE SWEDISH ORIGINAL

Report on review of interim financial information
Munters Topholding AB, corporate identity number 556819-2321

I n troduction

We hav e rev iew ed the condensed interim consolidated financial information for Munters Topholding AB as at March 31, 2017 and for the three months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance
w ith IAS 34 and the Sw edish Annual Accounts Act. Our responsibility is to ex press a conclusion on this interim report based on our rev iew .

S co pe of review

We conducted our rev iew in accordance w ith the International Standard on Rev iew Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A rev iew consists of making inquiries, primarily of persons responsible for financial and accounting matters,
and apply ing analy tical and other rev iew procedures. A rev iew is substantially less in scope than an audit conducted in accordance w ith International Standards on Auditing and other generally accepted auditing standards in Sw eden. The procedures performed in a rev iew do not enable us to obtain assurance
that w e w ould become aw are of all significant matters that might be identified in an audit. Accordingly , w e do not ex press an audit opinion.

Co n clusion

Based on our rev iew , nothing has come to our attention that causes us to believ e that the condensed interim consolidated financial information is not prepared, in all material respects, in accordance w ith IAS 34 and the Sw edish Annual Accounts Act regarding the Group, and in accordance w ith the Sw edish
Annual Accounts Act regarding the Parent Company .
Stockholm, April 21, 2017
Ernst & Young AB

Erik Sandström
Authorized Public Accountant

Munters first quarter 201725