Q2
2017

Munters Group AB (publ)“Continued strong growth“
Second quarter 2017

January - June 2017 The order backlog increased by 21% to SEKm 2,449 (2,025).

 Order intake increased by 18% to SEKm 3,888 (3,305), of
which 11% organically*.

O Order intake increased by 32% to SEKm 2,234 (1,688) of which
25% organically*.

 Net sales increased by 22% to SEKm 3,242 (2,657), of which
15% organically*.

 Net sales increased by 20% to SEKm 1,723 (1,438) of which
12% organically*.

 Operating profit (EBIT) decreased by 2% to SEKm 218 (223).

 Operating profit (EBIT) decreased by 4% to SEKm 143 (150).

 Adjusted EBITA increased by 7% to SEKm 337 (314), corresponding to an adjusted EBITA margin of 10.4% (11.8).

 Adjusted EBITA decreased by 3% to SEKm 190 (194), corresponding to an adjusted EBITA margin of 11.0% (13.5).

 Net income amounted to SEKm -30 (-17).

 Net income amounted to SEKm 11 (11).

 Cash flow from operating activities was SEKm 66 (73).

 Cash flow from operating activities was SEKm 86 (19).

 Earnings per share amounted to SEK -0.52 (-1.12).

 Earnings per share amounted to SEK 0.11 (0.58).
 Munters Group was successfully listed on Nasdaq Stockholm on

May 19, 2017.

 Kristian Sildeby was appointed member of the Board.

FINANCIAL SUMMARY
Q2

Jan-JunLTM

Full year

SEKm

2017

2016

∆%

2017

2016

∆%

Jul-Jun2016

Order backlog

2,449

2,025

21

2,449

2,025

21

2,449

1,741

Order intake

2,234

1,688

32

3,888

3,305

18

6,956

6,373

Net sales

1,723

1,438

20

3,242

2,657

22

6,625

6,040

Operating profit (EBIT)

143

150

-4

218

223

-2

572

577

Adjusted EBITA

190

194

-3

337

314

7

803

781

Adjusted EBITA margin, %

11.0

13.5

10.4

11.8

12.1

12.9

11

11

-30

-17

72

85

0.11

0.58

-0.52

-1.12

2.20

5.08

86

19

66

73

270

277

Net debt

2,775

2,639

2,775

2,639

2,775

2,724

Net debt/adjusted EBITDA

3.1x

3.7x

3.1x

3.7x

3.1x

3.2x

Net income
Earnings per share before and after dilution, SEK
Cash flow from operating activ ities

Some of the above presented numbers are so called alternative performance measures. Definitions are presented on page 24.
* As of Q2 2017 new definition of organic growth where organic growth excludes currency effects. See page 24 for detailed definition.

Q2
2017

Comments from the CEO
CONTINUED STRONG GROWTH DRIVEN BY AIR TREATMENT
AND DATA CENTERS BUT WITH SOME GROWING PAINS
We are pleased that the second quarter of 2017 showed continued strong growth for Munters with anincrease in order intake and net sales of 32% and 20% respectively. The growth was mainly driven
by continued high sales and deliveries to customers in our Data Center and Air Treatment businesses.
The adjusted EBITA for the quarter decreased by 3% to SEKm 190 (194), mainly impacted by low
factory utilization in Data Centers and weak markets in AgHort and Mist Elimination. We are still in
the learning curve in some of our high growth areas including operational challenges caused by project phasing. This is an area where we need to and will improve. We continue to invest in sales and
R&D for future growth.

Strong growth in our key market segments

During the quarter, order intake in business area Air Treatment grew by 12% driven by continued
high demand across all industrial and commercial end-markets. In industrials, solid demand was noted within the lithium-ion battery, pharmaceuticals and other industrial end-markets. In commercial,the supermarkets end-market continued to be strong during the quarter. Air Treatment net sales increased by 14%, with strong deliveries to customers in food, pharmaceutical and electronics. We are
happy to see that the strong performance in Air Treatment continues.
The strong growth in business area Data Centers continued with order intake up 256% in the quarter
which included significant orders from customers in the US and Europe. We continue to perform wellin the digital and co-location market segments based on our innovative technology for significantly
improved energy efficiency. Data Centers net sales grew by 131% with large deliveries to customers
in Americas and Europe. During the quarter, we saw weaker margin performance in the Data Centersbusiness due to low factory utilization in both in the US and Europe coupled with growth investmentsin the business. The negative profit impact of the low utilization during the second quarter is estimated to be SEKm 20-25. We continue to manage the operational challenges around strong growth and the lumpy nature of the Data Centers business.
The business area AgHort showed stable performance during the quarter with order intake and net sales growing 8%, supported by positive currency effects
and the acquisitions of MTech Systems and Edata. As expected, the AgHort business area has experienced lower investment levels mainly in the poultry
and swine sub-segments and we expect this to continue during the remainder of 2017. Margins and adjusted EBITA were slightly lower than the previous
year partly due to higher overhead cost linked to investments in the IoT offering and the growth in China.
Our business area Mist Elimination showed order intake and net sales growth of 8% and 1% respectively, driven by positive impact from the acquisition of
Kevin Enterprises in India and currency effects. The underlying organic growth was negative in the quarter, impacted by lower demand for coal FGD (FlueGas Desulphurization) equipment in the US compared to the strong first half of 2016. Lower margins and adjusted EBITA in the quarter was mainly due tofewer high margin FGD projects in Americas.

Focus on high growth end-markets

Munters´ successful IPO on 19 May was an important milestone for us. It is with great pleasure that we welcome new and old shareholders to take part inthis next step in the journey – to develop Munters in a public environment. The listing will provide us with improved opportunities to continue our progress
and implement our strategy to focus on growing customer segments where climate is mission critical. Long-term, all of Munters’ current end-markets are expected to demonstrate resilient growth, driven by population and GDP growth, the need for increased energy efficiency, increased food and protein consumption, industrialization, urbanization and rising living standards globally. Munters has a strong track record of synergetic acquisitions and will continue topursue M&A opportunities in a disciplined and systematic manner. Acquisitions will be made in selected segments to expand the portfolio of core technologies, customer relationships and/or to grow our presence in emerging markets.
Due to the lumpy nature and phasing of the Data Center business we foresee continued low factory utilization in the third quarter. The earnings in Data Centers in the third quarter are estimated to be at the same level as in the second quarter. The fourth quarter is still expected to be a strong quarter for Munterswith large deliveries of won orders in the US and Europe.

John Peter Leesi, CEO

Munters Group AB, second quarter 2017

2

Q2
2017

Group financial performance
NET SALES AND ORDER INTAKE
Order intake
SEKm

Net sales

Q2∆% Jan-Jun

Current period

2,234Prev ious period

1,688

∆%

Q2

∆% Jan-Jun

3,888

1,723

3,242

3,305

1,438

2,657

∆%

Net sales per quarter and LTM (SEKm)
2,000

Change

546

32

583

18

285

20

585

22

Organic grow th*

420

25

370

11

172

12

390

15

Currency effects

88

5

156

5

73

5

133

5

Structural effects

38

2

57

2

40

3

62

2

7,000
6,000

1,500

5,000
4,000

1,000

3,000
2,000

500

1,000

Order intake for the second quarter increased by 32% to SEKm 2,234 (1,688) of which 25% organically. The
increase was mainly due to a continued strong order intake in Air Treatment and a strong order intake in Data
Centers. Data Centers won two larger orders from two major digital customers in the quarter. Structural effects
were 2% and includes the acquisitions of MTech Systems, Kevin and Edata. Continued strong performance wasreported for all busines areas in China.
Order intake year to date increased by 18% to SEKm 3,888 (3,305) of which 11% organically. The increase wasmainly due to strong order intake in Air Treatment and in Data Centers. Despite the market downturn seen for
AgHort the order intake was on a higher level than in similar market downturns historically, where volumes have
dropped 10-15%. Structural effects were 2% and include the acquisitions of MTech Systems, Kevin and Edata.
Strong performance was reported for all busines areas in China.
Net sales for the second quarter increased by 20% to SEKm 1,723 (1,438) and 12% organically. The increase wasmainly due to revenue growth in Air Treatment and Data Centers. For Air Treatment strong growth was reported
for all the three product segments - Industrial, Commercial and Components. Structural effects in net sales were
3% comprising of the acquisitions of MTech Systems, Kevin and Edata.
Net sales year to date increased by 22% to SEKm 3,242 (2,657) and 15% organically. The increase was mainly
due to revenue growth in Air Treatment and Data Centers. Structural effects in net sales were 2% comprising of
the acquisitions of MTech Systems, Kevin and Edata.

0

0
Q2

Q3

Q4

Q1

Q2

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA per quarter and LTM(SEKm)
300

1,000

250

800

200

600

150
400

100

200

50

0

0

Services net sales year to date increased by 13% to SEKm 326 (287), driven by continued investment in the sales
force and an increasing share of the customer base with service contracts.

Q2

Q3

Q4

Q1

Q2

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

OPERATING PROFIT (EBIT)

Operating profit (EBIT) in the second quarter decreased by 4% to SEKm 143 (150) impacted by depreciations SEKm -16 (-17) and amortizations SEKm -56(-45), whereof SEKm -50 (-41) was related to surplus values. The profit was positively affected by IAC-items amounting to SEKm 9 (0).
Operating profit year to date decreased by 2% to SEKm 218 (223) impacted by depreciations SEKm -37 (-34) and amortizations SEKm -108 (-91), whereof
SEKm -98 (-82) was related to surplus values. The profit was also negatively affected by IAC-items amounting to SEKm 11 (0) as well as advisor costs of
SEKm 8 (0) related to acquisitions.

ADJUSTED EBITA

Adjusted EBITA in the second quarter decreased by 3% to SEKm 190 (194), corresponding to an adjusted EBITA margin of 11% (13).
Business area Air Treatment reported growth in adjusted EBITA but was negatively affected by operational inefficiencies in our Mexican production unit andby less favorable project mix. Data Centers was negatively affected by postponed customer orders where planned capacity building was unused paired with
continued investments in sales and marketing capabilities. For AgHort the adjusted EBITA declined as a result of lower net sales mainly driven by lower
investment levels in line with anticipated industry variations. AgHort margins were also negatively affected by a higher share of sales in Asia, where margins
are lower, and higher overhead costs related to the IoT (Internet of Things) offering. Mist Elimination reported lower adjusted EBITA impacted by lower net
sales from Coal FGD replacement projects in the US.
Adjusted EBITA year to date increased by 7% to SEKm 337 (314), corresponding to an adjusted EBITA margin of 10% (12).

* As of Q2 2017 new definition of organic growth where organic growth excludes currency effects.

Munters Group AB, second quarter 2017

3

Q2
2017

NET FINANCE ITEMS AND PROFIT/RESULT AFTER FINANCIAL ITEMS

Financial income and expenses for the second quarter amounted to SEKm -134 (-110). Due to the re-financing event in May, financing fees capitalized inbalance sheet of SEKm -57 referring to the terminated debt has been expensed to P/L in the quarter. Interest expenses related to the shareholder loans
amounted to SEKm -29 (-50). At the date of the IPO the shareholder loans was terminated and converted into shareholders equity and interest cost is accordingly reduced after that date. The total average weighted interest rate per end of the quarter was 3.07 per cent (6.67).

TAXES

Income taxes for the second quarter amounted to SEKm 2 (-28).
The effective tax rate in the second quarter was 22%. The taxable income in the quarter was negatively impacted by the non-deductible interest costs,
amounting to SEKm -26, relating to the shareholder loans prior to the conversion in May. It was also positively impacted by the non-taxable income of SEKm
53 relating to the preliminary settlement of the HB earn-out (see page 5 for further information in the section about items affecting comparability).

CASH FLOW AND CAPITAL EMPLOYEDCash flow from operating activities amounted to SEKm 86 (19) in the second quarter and was positively affected by a decrease of working capital corresponding to SEKm 23 (-87). Capital expenditures continued on a fairly high level in line with plan and business acquisitions had a negative cash flow effectof SEKm -81 (-2) for the period. Year to date cash flow from operating activities amounted to SEKm 66 (73).
Cash Flow from Financing activities amounted to SEKm 144 (-27) whereof the net effect of the change in loans was SEKm 27. A new share issue has been
made during the period which is further described under Parent Company and Ownership.
Average capital employed during the last twelve months amounted SEKm 6,392 (5,851) and SEKm 6,066 (5,655) during 2016.
Return on capital employed (ROCE) for the last twelve months was 9% (8) and 10% (7) during 2016.
Return on capital employed (ROCE), where EBIT is adjusted for items affecting comparability and capital employed adjusted for goodwill, for the last twelve
months was 28% (24) and 30% (20) during 2016.

SIGNIFICANT EVENTS DURING THE QUARTER
Market listing

Munters Group AB was listed on Nasdaq Stockholm on May 19, 2017. The price per share in the Offering was SEK 55, corresponding to a total value of thenumber of outstanding shares in Munters of SEK 10,098 million.
The Offering consisted of 73,439,120 shares, of which 1,872,728 new shares were issued by the Company. The remaining 71,566,392 existing shares were
offered mainly by the principal shareholders: Nordic Capital Fund VII and Five Arrows. The Offering of new shares provided Munters with gross proceeds of
SEK 103 million.
After full exercise of the Over-Allotment Option, the value of the Offering amounted to approximately SEK 4,524 million corresponding to approximately
44.8% of the total number of outstanding shares in Munters upon completion of the Offering.
Immediately following the completion of the Offering, Munters’ largest shareholders included Nordic Capital Fund VII (50.1% of the total number of shares in
Munters), FAM AB (10.0%), Alecta Pensionsförsäkring (5.0%), AMF Fonder (5.0%), Handelsbanken Fonder (3.0%) and Carve (Brummer) (3.0%)
As a result of the set-off issue and the new cash share issue carried out by Munters Group AB in connection with the recent initial public offering, the number of shares and votes in the company has increased by 166,799,454 since the first day of trading on Nasdaq Stockholm.
As of 30 June 2017, the number of shares and votes in Munters Group AB was a total of 183,597,802 .

Share Capital

In connection with the listing of Munters shares on Nasdaq Stockholm, all preference shares and all common shares of the company were converted into
one class of common shares outstanding. Furthermore, a directed set off issue of new common shares was made to the selling shareholders against set-offof shareholder loans to the company. The extraordinary general meeting held on 7 May 2017 resolved on the following corporate actions to effect the shareconversion and the set off issue.
1.
2.

A conversion of each outstanding preference share (preference shares of class A and class B) and each common share (common shares ofclass A and class B) into one new common share (common shares class B).
A directed set-off issue of new common shares is, with deviation from shareholders´ preferential rights, given to the selling shareholders against
set-off of shareholder loans to the company. The aggregate value of the shareholder loans and accrued interest thereon amounted to SEK 2,553
million and SEK 251 million, respectively, as of 19 May 2017. The set-off issue comprised an issuance of up to 164,926,726 shares.

Incentive program

At the extraordinary general meeting on 7 May 2017, it was resolved to issue warrants as part of an incentive program for certain members of the Groupmanagement (the “participants”). In total, the incentive program comprises 8 individuals and not more than 5,222,000 warrants. The participants may subscribe for warrants at a market value corresponding to in total not more than SEK 17.99 million. The maximum number of warrants that could be subscribedfor by the participants corresponded to approximately 2.77 percent of the Company’s share capital following completion of the offering and assuming full exercise of the warrants.
The warrants will be issued in two separate series. Each participant subscribes for an equal number of warrants of both series. This number of warrants per
participant and series depends on the participant’s position within the Group and the number of shares held by the participant at the time of the commencement of the program. Series 2017/2019 comprises up to 2,611,000 warrants that may be exercised during the following subscription period; 19 May–19 November 2019, with the exception of the thirty-day period preceding (a) the day of the announcement of the company’s interim report for the second quarter

Munters Group AB, second quarter 2017

4

Q2
2017
of 2019, and (b) the day of the announcement of the company’s interim report for the third quarter of 2019. The exercise price for series 2017/2019 corresponds to 121.22 percent of the offer price.
Series 2017/2020 comprises up to 2,611,000 warrants that may be exercised during the following subscription period; 19 May–19 November 2020, with the
exception of the thirty-day period preceding (a) the day of the announcement of the company’s interim report for the second quarter of 2020, and (b) the dayof the announcement of the Company’s interim report for the third quarter of 2020. The exercise price for series 2017/2019 corresponds to 130.91 percent of
the offer price.
The Company has reserved the right to repurchase warrants for example if the participant’s employment with the company is terminated. The company’s total costs for the programs during its term are not expected to exceed SEK 13.30 million (mainly relating to social security contributions for participants in jurisdictions where participation in the incentive programs is taxed as earned income).
More information on the programs is provided on https://www.munters.com/en/corporate-governance/management/share-related-incentive-program/

Changes in Munters Board of Directors

At the Annual General Meeting, held on 28 March 2017, Lena Olving was newly elected as member of the Board. In addition, Kristian Sildeby was elected
as Board member at the extraordinary general meeting held on 7 May 2017. More information about Munters Board of Directors is provided on
https://www.munters.com/en/corporate-governance/board-of-directors/

SEASONAL VARIATIONSThe seasonal profile of net sales differs by business area. In general Q1 is the slowest quarter as the number of projects typically is lower in the period.
Demand for Air Treatment products is seasonally stronger in the summer, due to higher construction activity in general and seasonal increase in humidity
levels, which leads to strong invoicing in Q2 and Q3. Generally, Q3 and Q4 can be impacted by fiscal planning, with customers looking to utilize budgetedfunds and take delivery before year end, which typically leads to a higher net sales level in Q4. The low point in order intake is typically November to February when project activity is lower and customers are in the process of planning for the next fiscal year.
Data Centers’ sales are driven by larger projects where the seasonality is less transparent. Order intake and net sales are likely to fluctuate to a higher degree than in our other business areas quarter by quarter due to lumpiness of larger projects. Due to this we have temporarily provided more guidance for thethird and fourth quarter 2017.
Seasonality in Mist Elimination is mostly driven by seasonal fluctuations of activity in the coal-fired power industry. The pattern is typically similar to Air
Treatment with relatively high net sales in Q4 and limited activity in early Q1.
AgHort’s sales are relatively stable over the year. In general, customer project activity is lower during the winter in Europe and the US, which normally affects the business area’s sales during Q1 and Q4 negatively.

FINANCIAL POSITION AND LIQUIDITY

In connection with the listing at the stock exchange, Munters entered into a new unsecured loan facility agreement. New lenders are a group of six Scandinavian banks. The facilities contain of a Term Loan of USDm 250 and a Revolving Credit Facility of EURm 185. The facilities have no mandatory amortization requirement. The final maturity date is in May 2022. The loan agreement contains one financial covenant which stipulates a limit on the consolidated net
debt in relation to Adjusted EBITDA.
Interest-bearing liabilities amounted to SEKm 3,075 (5,225) at the end of the quarter.
Available unutilized credit facilities as of June 30 amounted to SEKm 626 (314).
The company had cash and cash equivalents of SEKm 494 (265) as of June 30, 2017.

ITEMS AFFECTING COMPARABILITY
2017
SEKm

2016

Q2

Q1

Jan-Jun

Q4

Q3

Q2

Q1 Full year

Ex it preparation costs

44

27

70

27

26

-

-

53

Div estment Cooler business

-

-

-

-

-7

-

-

-7

Other

Business area Air Treatment
Property sale

0

-7

-7

-

-

-

-

-

-53

-

-53

-

-

-

-

-

Final Earn out Rev enta

-

-

-

-30

-

-

-

-30

Total

-9

20

11

-3

20

-

-

17

Final Earn out HB Group
Business area AgHort

Munters Group AB, second quarter 2017

5

Q2
2017
The items affecting comparability (IAC) in Q2 mainly comprised of exit preparation costs amounting to SEKm 44. Preliminary settlement of the HB Groupacquisition earn-out resulted in a gain of SEKm 53.
In 2016, the largest IAC item refers to external costs in relation to Munters and owners’ review of strategic exit-alternatives, which amounted to SEKm 53.
Munters also benefitted from two positive effects during the year that have been adjusted for. Firstly, the effect from the early settlement of the Reventa acquisition earn-out of SEKm 30 and, secondly, SEKm 7 related to a provision reversal for the Cooler divestment that took place in 2015. There were no IAC
items during the first 6-months of 2016 affecting comparability with Q2 2017 and year to date 2017.
The numbers in the table above shows the adjustments made to EBITA.

PARENT COMPANY AND OWNERSHIP

Munters Group AB does not engage in any business activities. The Company only holds shares in subsidiaries, cash and accounts payable. The Parent
Company does not engage in sales of goods and services to external customers. Cash and cash equivalents at the end of the period amounted to SEKm
175 (46). The Parent Company has no employees.
On May 19th the shares in Munters Group AB were listed on Nasdaq Stockholm. The Offering consisted of 73,439,120 shares, of which 1,872,728 newshares were issued by the Company. The remaining 71,566,392 existing shares were offered mainly by the principal shareholders: Nordic Capital Fund VII
and Five Arrows (the “Principal Owners”). The Offering of new shares provides Munters with gross proceeds of approximately SEK 103 million.
Nordic Capital remained as of June 30, the biggest shareholder (50.1%) followed by FAM (10.0%), AMF (5.3%), Alecta (5.0%), Handelsbanken Fonder(3.9%), Carve (3.0%) and Five Arrows (1.7%).

ACQUISITIONSOn April 1, Munters completed the acquisition of Kevin Enterprises Private Limited, a privately owned company headquartered in Mumbai, India. The
acquisition was structured as an asset deal, acquiring company being Munters India Humidity Control Private Limited (Munters India). See page 22 foradditional information.
On May 30, Munters announced the acquisition of Brazilian-based Edata specializing in key software for food processing plants, primarily for poultry
production. Edata provides software to keep track of production within food processing plants and is a long-term partner to MTech Systems, the leading
supplier of software solutions to the live production industry which was acquired by Munters on 1 February 2017. Edata delivers form-fit solutions for
tracking finished products, measuring quality and yield, and for controlling waste in the food production process. Edata’s software will be fully incorporated
into MTech’s suite enabling Munters to integrate data from farms, hatcheries, feed mills in the food producers' production system. Edata had a turnover ofapproximately SEKm 15 in 2016 and has 34 employees.
Acquisition costs was SEKm 1 related to the acquisition of Kevin Enteprises in Mist Elimination.

FINANCIAL TARGETS AND DIVIDEND POLICYNet sales growthMunters objective is to achieve an annual organic revenue growth of between 7-10% per year, supplemented by selective acquisitions.

Profitability

Munters’ mid-term target is to have an adjusted EBITA margin of 14%.

Capital structure

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

Dividend policy

Munters aims to pay an annual dividend corresponding to 30-50% of the net income for the period. The pay-out decision will be based on the Company’s financial position, investment needs, acquisitions and liquidity position.

Munters Group AB, second quarter 2017

6

Q2
2017

Munters business areas
Munters is organized in four business areas, which are Air Treatment, Data Centers, AgHort and Mist Elimination. From 2017 the Data Center cooling business, previously a part of Air Treatment, is reported as a separatebusiness area. Each of these business areas addresses a set of customer industries and applications, with anoffering based on Munters’ technologies and services. The application areas which Munters targets typicallyshow a large degree of specialization, with substantial commonalities across geographical regions.

Order intake per business area and LTM(SEKbn)

AGH
1.8
25%

AIR TREATMENT

Air Treatment is a global leader in energy efficient air treatment solutions for industrial and commercial applications. Munters’ systems provide precise humidity and temperature control and are used by clients in mission critical processes, and can have a major impact on production safety, product quality, operating efficiency, and financial viability. Our offering includes evaporative cooling, heating, VOC abatement, and dehumidification
through desiccant rotors, evaporative cooling pads, and polymer heat exchangers. The underlying market is estimated to deliver 8% annual growth in 2017-2020.

DATA CENTERS

Data Centers is a global leader in climate control systems for medium and large scale Data Centers. Munters’
solutions are recognized as being robust and durable in demanding conditions and have a best-in-class trackrecord of reliability and energy efficiency. Munters is mainly active in the fastest growing part of the air economizer data center market (direct and indirect evaporative cooling) which is estimated to grow by approximately
27% annually in 2017-2020. Our dedicated teams have the ability to configure, manufacture, support and deliver
data center cooling projects across the globe.

AirT
3.7
52%
DC
1.2
17%

Net sales per business area and LTM(SEKbn)

ME
0.4
6%
AGH
1.8
27%

AGHORT

AgHort develops and manufactures energy efficient climate control systems for the growth and development ofagriculture and greenhouse applications. By providing the perfect climate, our solutions enable farms to operate
and produce under optimum conditions. Our innovative product range includes ventilation, cooling, heating andcutting-edge control systems. Munters always 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 underlying market is estimated to deliver 6% annual growth in 2017-2020. Demand is underpinned by global factors
such as population and GDP growth, and further accelerated by food and industry trends (e.g. productivity andsafety issues).

ME
0.4
6%

AirT
3.5
53%
DC
1.0
14%

Adjusted EBITA per business area andLTM (SEKm)MIST ELIMINATION

Mist Elimination is a globally leading provider of mechanical gas and liquid separation. Our mist eliminators are
key components in scrubbers to reduce emissions from power plants and ships across the world. Our highly efficient mist eliminators also create optimum operating conditions and protect equipment in process industries,
windmills, gas turbines and ships. Our dedicated team of experts helps customers find the perfect solution totheir mist elimination needs. The underlying market is estimated to deliver a 6% annual growth 2017-2020 andwill benefit from the introduction of the 0.5% sulphur cap in shipping industry with effect from 2020.

FUNCTIONS ACROSS THE BUSINESS AREAS

ME
49
6%
AGH
230
27%
DC
80
10%

AirT
484
57%

Munters´ equipment often plays a mission critical role in customers operations. Munters provides a range of services for its products, including installation supervision, commissioning, spare parts sales, repairs and performance optimization. The Service business recorded good growth in the second quarter, up 13% compared toprevious year. Large investments during 2016 in hiring new service sales staff to drive future growth are expected to reach full effect during 2017.
Operations continued to generate savings within procurement, via 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. The former business area HumiCool is included in this segment in 2015 with immaterial amounts.

Munters Group AB, second quarter 2017

7

Q2
2017

Air Treatment
 Strong order intake and net sales in Q2 with growth of 12% and 14% respectively with key segments Industrial, Commercial and Components all showing robust growth.
 High demand and orders in the lithium-ion battery production, food and pharmaceutical end-markets as wellas supermarkets were main growth drivers of orders in the quarter.
 Adjusted EBITA margin decreased by 1.0 percentage point in the quarter mainly due to production inefficiencies in Mexico and less favorable project mix compared to the previous year.

FINANCIAL SUMMARY
Q2

Jan-JunLTM

Full year

SEKm

2017

2016

∆%

2017

2016

∆% Jul-Jun

2016

Ex ternal order backlog

1,171

1,067

10

1,171

1,067

10

1,171

959

Order intake

1,037

923

12

1,987

1,698

17

3,674

3,385

Net sales

931

820

14

1,724

1,491

16

3,527

3,294

Operating profit (EBIT)

173

114

52

267

173

55

531

437

Adjusted EBITA

123

117

5

213

178

20

484

448

Adjusted EBITA margin, %

13.2

14.2

12.4

11.9

13.7

13.6

Order intake and net sales

Order intake increased by 12 % during the quarter to SEKm 1,037 (923) of which 8% organically. Currency effects had a positive impact of 4%. In Industrial, order growth was primarily seen in food and pharmaceutical, in
the US and Europe. The electronics industry remains the main driver of growth in Asia, particularly in China
where lithium-ion battery demand remained strong. Growth in the supermarket end-market continued on a strong
path through the second quarter.

Net sales per quarter and LTM (SEKm)
1,200

Net sales increased by 14% during the quarter to SEKm 931 (820) of which 9% organically. Currency effects had
a positive impact of 4%. The increase in net sales resulted from growth in deliveries to industrial and commercial
end-markets as well as in components sales to OEMs. In the Americas, a significant delivery to the transportation industry was a major contributor to the revenue growth.

1,000

Order intake year to date increased by 17% to SEKm 1,987 (1,698) of which 13% organically. Currency effects
had a positive impact of 4%. Order growth was primarily seen in the pharmaceutical, electronics and other industrial applications in the US and in Asia, where the demand from lithium-ion battery producers remained high.
Growth in the supermarket end-market continued bringing the year to date order intake to a higher level than prior year.

200

Net sales year to date increased by 16% to SEKm 1,724 (1,491) of which 12% organically. Currency effects had
a positive impact of 4%. The increase in net sales was primarily driven by high volume deliveries to industrial
customers in the electronics and transportation field as well as high demand from OEMs for components. The increased net sales to supermarkets in the second quarter also added significant growth year to date.

Adjusted EBITA

4,000
3,000

800
600

2,000

400

1,000

0

0
Q2

Q3

Q4

Q1

Q2

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA per quarter and LTM(SEKm)
600

200

Adjusted EBITA in the second quarter increased by 5% to SEKm 123 (117), of which 3% derived from positive
currency translation effects. The EBITA margin decreased from 14.2% to 13.2% due to operational inefficiencies
in Americas, primarily in Munters’ Mexican operations and by an unfavorable project mix.

150

Adjusted EBITA year to date remained solid totaling SEKm 213 (178), corresponding to an increase of 20% of
which 4% derived from positive currency translation effects. The EBITA margin for the period remained unchanged at 12% as significant improvements in Europe offset the decline caused by the operational inefficiencies in Americas.

50

500
400

100

300
200
100

0

0
Q2

Q3

Q4

Q1

Q2

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters Group AB, second quarter 2017

8

Q2
2017

Data Centers Order intake increased by 256% compared to the second quarter prior year, primarily due to a SEKm 275 order won in the US and a SEKm 232 order won in Europe.
 Net sales increased by 131% driven by large deliveries for digital customers in the US and a large co-location
customer in Europe.
 Weaker performance on margins and adjusted EBITA due to low factory utilization in both the US and Europe
and continued investments in the business.

FINANCIAL SUMMARY
Q2

Jan-JunLTM

Full year

SEKm

2017

2016

∆%

2017

2016

∆% Jul-Jun

2016

Ex ternal order backlog

643

455

41

643

455

41

643

412

Order intake

558

157

256

723

477

52

1,164

919

Net sales

200

86

131

453

176

157

962

685

Operating profit (EBIT)

-14

-13

-12

18

-6

77

54

Adjusted EBITA

-13

-12

-9

19

-5

80

56

Adjusted EBITA margin, %

-6.6

-14.1

4.2

-2.8

8.3

8.1

Order intake and net sales

Order intake in the second quarter increased by 256% to SEKm 558 (157) of which 249% organically. Currency
effects had a positive impact of 7%. The increase was related primarily to a large order received from a digital
customer in the US for SEKm 275 and a large digital customer in Europe for SEKm 232.
Net sales in the second quarter increased by 131% to SEKm 200 (86) of which 125% was organic growth. Currency effects had a positive impact of 6%. Net sales were strong in the US due to sales to digital customers. Deliveries to co-location customers in Europe were also strong.

Net sales per quarter and LTM (SEKm)
400

1,200
1,000

300

Order intake year to date increased by 52% to SEKm 723 (477) of which 47% organically. Currency effects had
a positive impact of 5%. The increase was related primarily to large orders received from a digital customers in
the US and Europe.

200

Net sales year to date increased by 157% to SEKm 453 (176) of which 151% was organic growth. Currency effects had a positive impact of 7%. The increase is related primarily to increased sales to large digital customers
in the US and Europe as well as a co-location customer in Europe.

0

800
600
400

100

200
0
Q2

Adjusted EBITA year to date was SEKm 19 (-5). The improved adjusted EBITA was due primarily to more consistent projects in both the US and Europe. The increase was partially offset by low project margin performancein the second quarter. Due to the lumpy nature and phasing of the Data Center business Munters foresee continued low factory utilization in the third quarter. The earnings in Data Centers in the third quarter are estimatedto be at the same level as in the second quarter. The fourth quarter is still expected to be a strong quarter for
Munters with large deliveries of won orders in the US and Europe.

Q4

Q1

Q2

Net sales, SEKm

Adjusted EBITA
Adjusted EBITA in the second quarter was SEKm -13 (-12). Additional production facilities have been dedicatedto Data Center production during 2017 and despite increased deliveries during the quarter, these additional facilities in both the US and Europe were underutilized, partly due to postponement of a significant production order. The profit impact of the low utilization during the second quarter is estimated to be SEKm 20-25.

Q3

Net sales, LTM, SEKm

Adjusted EBITA per quarter and LTM(SEKm)
100

60

80

40

60

20

40
20

0
Q2

Q3

Q4

Q1

Q2

-20

0
-20

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters Group AB, second quarter 2017

9

Q2
2017

AgHort Order intake and net sales both increased by 8% supported by positive currency effects and the acquisitionsof MTech Systems and Edata.
 Demand was impacted by lower investment levels in the industry, which mainly had an effect on the Layer
sub-segment. In the quarter there was a strong demand in the Swine end-market in China while the Broiler
sub-segment showed moderate growth in US and Europe.
 Adjusted EBITA margins were lower than in the second quarter prior year driven by higher overhead cost due
to investments in the IoT-offering and growth in China.

FINANCIAL SUMMARY
Q2

Jan-JunLTM

Full year

SEKm

2017

2016

∆%

2017

2016

∆% Jul-Jun

2016

Ex ternal order backlog

490

375

31

490

375

31

490

249

Order intake

561

520

8

1,031

947

9

1,787

1,704

Net sales

502

463

8

905

824

10

1,787

1,705

Operating profit (EBIT)

75

85

-11

100

128

-22

248

276

Adjusted EBITA

78

88

-11

107

134

-21

230

258

15.6

18.9

11.8

16.3

12.9

15.1

Adjusted EBITA margin, %Order intake and net sales

Order intake in the second quarter was SEKm 561 (520), an increase of 8% of which -3% organically. The
increase was due to 5% in positive structural effect from MTech and Edata and a positive currency effect of
6%.The organic order intake decrease was mainly due to lower demand in the US and the fact that the very highdemand from the Layer sub-segment in the first half of 2016 has not continued this year. However, in Asia theperformance was very strong with high order intake in several geographical markets during the quarter.
Net sales in the quarter increased by 8% to SEKm 502 (463) with negative organic growth of 5% and positive
currency effects of 6%. Structural effects in net sales were 7% comprising of the acquisitions of MTech andEdata. The Edata acquisition was closed in May with limited impact on net sales in the quarter.
Order intake year to date increased by 9% compared to the same period last year with a negative organic growthof 2%. Strong growth in Asia was noted while order intake in EMEA and Americas (excl. acquisitions) decreased.
Net sales year to date increased by 10% compared to the first six months prior year with a negative organic
growth of 3%.

Net sales per quarter and LTM (SEKm)

600

2,000

500

1,500

400
300

1,000

200

500

100
0

0
Q2

In the second quarter last year releases of warranty and bad debt accruals improved the result with SEKm 7.
Adjusted EBITA year to date was SEKm 107 (134). In addition to the cost increases seen in the second quarter,
the result in the first quarter included cost of SEKm 6 for the acquisition of MTech Systems and costs relating to
the startup of a new production line in Brazil.

Q4

Q1

Q2

Net sales, SEKm

Adjusted EBITA

Adjusted EBITA in the second quarter was SEKm 78 (88) which represents a decrease of 11%, of which 7% derived from positive currency effects. The decrease was partly due to higher overhead cost due to investments in
the IoT offering and growth in China. The adjusted EBITA was also impacted by increased cost for raw material
and a larger share of sales in Asia where margins are lower.

Q3

Net sales, LTM, SEKm

Adjusted EBITA per quarter and LTM(SEKm)
100

300

80

250
200

60

150
40

100

20

50

0

0
Q2

Q3

Q4

Q1

Q2

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters Group AB, second quarter 2017

10

Q2
2017

Mist Elimination
 Order intake increased by 8% driven by structural effects.
 Net sales increased by 1% with structural impacts of +6%. Growth was impacted by continued weak demand
for replacement projects in Coal FGD (Flue Gas Desulphurization) compared to prior year.
 Lower adjusted EBITA and adjusted EBITA margin in the quarter due to fewer high margin FGD projects inmainly Americas.

FINANCIAL SUMMARY
Q2

LTM

Full year

2016∆% Jul-Jun

2016

Jan-Jun

SEKm

2017

2016

∆%

2017

Ex ternal order backlog

145

129

13

145

129

13

145

121

Order intake

111

103

8

212

206

3

422

416

Net sales

107

106

1

200

215

-7

422

437

Operating profit (EBIT)

8

17

-55

14

35

-60

48

69

Adjusted EBITA

8

18

-52

15

35

-58

49

69

7.9

16.4

7.4

16.4

11.6

15.9

Adjusted EBITA margin, %Order intake and net sales

Order intake in the second quarter increased by 8% to SEKm 111 (103), including a currency impact of +5% andstructural effects of +12% related to the acquisition of Kevin Enterprises in India. The organic growth was -9%. A
declining order intake in EMEA and Americas was partly offset by growth in China. However, an increased
activity was seen within the Marine EGC where smaller orders were won from large customers in the quarter.
Net sales in the second quarter increased by 1% to 107 (106) including a currency impact of +5% and structuraleffects of +6% related to the acquisition of Kevin Enterprises. The organic growth was -10%. EMEA net sales
grew as a result of currency effects whereas Americas declined due to continued weak demand for replacement
projects in Coal FGD, especially compared to last year. Asian volumes were up, with a slight growth in China
coupled with structural positive impacts from the acquisition of Kevin Enterprises.
Order intake year to date was SEKm 212 (206) corresponding to a growth of 3% of which organic growth was-7%. In regions EMEA and Americas the order intake declined while the order intake in Asia increased, mainly as
an effect of the Kevin Enterprises acquisition.
Net sales year to date declined by 7% to SEKm 200 (215) of which organic growth was -14%. In regions EMEA
and Americas the order intake declined while the order intake in Asia increased, mainly as an effect of the Kevin
Enterprises acquisition.

Net sales per quarter and LTM (SEKm)
140

500

120

400

100
80

300

60

200

40
100

20
0

0
Q2

Q3

Q4

Q1

Q2

Net sales, SEKm
Net sales, LTM, SEKm

Adjusted EBITA

Adjusted EBITA in the second quarter was SEKm 8 (18), where currency had an impact of +5%. The declining
earnings were mainly attributable to a volume mix change where a lower share of net sales were coming fromthe highly profitable Coal FGD replacement projects in US and a relatively higher share from the lower margin
businesses in EMEA and Asia. Costs for final closure of the Kevin Enterprises acquisition amounted to SEKm 1
during the quarter.
During the first half year adjusted EBITA was SEKm 15 (35). The decline was mainly caused by the lower
volumes of high-margin FGD replacement projects in US.

Adjusted EBITA per quarter and LTM(SEKm)
25

80
70

20

60
50

15

40
10

30
20

5

10

0

0
Q2

Q3

Q4

Q1

Q2

Adjusted EBITA, SEKm
Adjusted EBITA, LTM, SEKm

Munters Group AB, second quarter 2017

11

Q2
2017

Consolidated accounts
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q2

Jan-JunLTM

Full year

SEKm

2017

2016

2017

2016

Jul-Jun

2016

Net sales

1,723

1,438

3,242

2,657

6,625

6,040

Cost of goods sold

-1,157-922-2,158-1,713-4,377-3,931Gross profit/loss

566

516

1,084

945

2,248

2,109

Other operating income

53

1

53

1

84

31

Selling ex penses

-248

-220

-495

-434

-974

-913

Administrativ e costs

-175

-113

-333

-219

-626

-512

Research and dev elopment costs

-43

-37

-81

-72

-146

-138

Other operating ex penses

-10

3

-10

3

-13

0

Operating profit

143

150

218

223

572

577

Financial income and ex penses

-134

-110

-241

-202

-463

-424

Profit/Loss after financial items

9

40

-23

21

109

153

Tax

2

-28

-7

-39

-37

-69

Net income

11

11

-30

-17

72

85

Other comprehensive income
Other comprehensive income to be reclassified to profit or loss
in subsequent periods:
Ex change-rate differences on translation of foreign operations

-63

85

-75

77

46

198

-63

85

-75

77

46

198

-

-

-

-

-17

-17

reclassified to profit or loss in subsequent periods

-

-

-

-

4

4

Other comprehensive income, net after tax

-63

85

-75

77

33

185

Comprehensive income for the year

-52

96

-105

60

105

270

Attributable to Parent Company shareholders

11

10

-29

-19

75

85

Attributable to non-controlling interests

0

2

-2

1

-3

0

-52

95

-104

58

108

270

Attributable to non-controlling interests

0

2

-2

1

-3

0

Earnings per share before dilution, SEK

0.11

0.58

-0.52

-1.12

2.20

5.08

Earnings per share after dilution, SEK

0.11

0.58

-0.52

-1.12

2.20

5.08

Other comprehensive income not to be reclassified to profit orActuarial gains and losses on defined-benefit pension obligations,incl. pay roll tax
Income tax effect on other comprehensiv e income not to be

Income for the year

Comprehensive income for the year
Attributable to Parent Company shareholders

Munters Group AB, second quarter 2017

12

Q2
2017

Consolidated accounts
CONDENSED STATEMENT OF FINANCIAL POSITION – ASSETS
SEKm

2017/06/30

2016/06/30

2016/12/31

ASSETSNON-CURRENT ASSETS
Goodw ill

4,268

4,023

4,227

Patents, licenses, brands, and similar rights

1,568

1,558

1,550

Buildings and land

174

153

156

Plant and machinery

159

140

172

Equipment, tools, fix tures and fittings

146

103

133

Construction in progress

111

66

69

Financial assets

26

60

24

Deferred tax assets

252

207

242

6,702

6,310

6,574

Raw materials and consumables

364

276

321

Products in process

151

126

123

Finished products and goods for resale

268

237

208

Work on contract

20

13

8

Adv ances to suppliers

14

10

17

Accounts receiv able

1,068

797

1,094

Prepaid ex penses and accrued income

83

71

76

Deriv ativ e instruments

6

6

2

Total non-current assets
CURRENT ASSETS

Current tax assets

46

20

32

Other receiv ables

129

100

103

Cash and cash equiv alents

494

265

432

Total current assets

2,643

1,920

2,417

TOTAL ASSETS

9,344

8,230

8,991

Munters Group AB, second quarter 2017

13

Q2
2017

Consolidated accounts
CONDENSED STATEMENT OF FINANCIAL POSITION – EQUITY AND LIABILITIES
SEKm

2017/06/30

2016/06/30

2016/12/31

3,591

543

756

EQUITY AND LIABILITIESEQUITY
Shareholders equity
Non-controlling interests
Total equity

12

10

11

3,604

553

767

-

2,488

2,688

2,398

2,376

2,544

192

203

179

NON-CURRENT LIABILITIESShareholder loan
Interest-bearing liabilities
Prov isions for pensions and similar commitments
Other prov isions

29

27

30

Other liabilities

153

81

15

Deferred tax liabilities

502

512

525

3,273

5,687

5,981

Interest-bearing liabilities

677

361

429

Adv ances from customers

280

217

315

Total non-current liabilities
CURRENT LIABILITIES

Accounts pay able

608

455

530

Accrued ex penses and deferred income

538

593

565

Deriv ativ e instruments

4

6

4

Current tax liabilities

59

39

53

Other liabilities

185

222

232

Prov isions for pensions and similar commitments

5

4

5

111

93

110

Total current liabilities

2,467

1,990

2,243

TOTAL EQUITY AND LIABILITIES

9,344

8,230

8,991

2017/06/30

2016/06/30

2016/12/31

Opening balance

767

495

495

Total comprehensiv e income for the period

-105

59

270

Shareholders contribution

Other prov isions

CONDENSED STATEMENT OF CHANGES IN EQUITY
SEKm

2,803

-

3

Warrants

18--

New share issue

100

-

-

Change in non controlling interest

3

-2

0

Put/call option related to non controlling interests

18

-

-

3,604

553

767

The parent company 's shareholders

3,591

543

756

Holdings w ith non controlling interests

12

10

11

Closing balance
Total shareholders´equity attributable to:Munters Group AB, second quarter 2017

14

Q2
2017

Consolidated accounts
CONDENSED CASHFLOW STATEMENT
Q2
SEKm

Jan-JunLTM

Full year

2017

2016

2017

2016

Jul-Jun2016

577

OPERATING ACTIVITIES
Earnings before interest and tax (EBIT)

143

150

218

223

572

Reversal of non-cash items;

-

-

-

-

-

-

Depreciation, amortization and impairments

72

62

145

125

282

262

Prov isions

-0

-4

16

-1

-10

-27

Other profit/loss items not affecting liquidity

-51

-4

-52

-4

-67

-18

Cash flow before interest and tax

164

203

326

343

776

794

Paid financial items

-72

-60

-115

-101

-220

-206

Tax es paid

-29

-36

-54

-62

-123

-130

changes in working capital

63

107

157

180

433

458

Cash flow from changes in working capital

23

-87

-91

-107

-163

-180

Cash flow from operating activities

86

19

66

73

270

277

-2

Cash flow from operating activites before

INVESTING ACTIVITIESBusiness acquisitions

-81

-2

-268

-2

-268

Sale of tangible fix ed assets

1

-

1

-

1

-

Inv estment in tangible assets

-32

-37

-80

-72

-171

-163

Inv estment in intangible assets
Cash flow from investing activities

-7

-3

-16

-5

-31

-20

-120

-42

-362

-79

-469

-186

100

-

100

-

100

0

FINANCING ACTIVITIESNew share issue
Warrants

18

-

18

-

18

-

Changes in loans

27

-27

249

-81

311

-19

Cash flow from financing activities

144

-27

366

-81

428

-19

Cash flow for the period

110

-50

70

-88

230

72

Cash and cash equiv alents at period start

396

309

432

346

265

346

Ex change-rate differences in cash and cash equiv alents

-12

5

-8

6

-0

14

Cash and cash equivalents at period end

494

265

494

265

494

432

Munters Group AB, second quarter 2017

15

Q2
2017

Parent company
CONDENSED INCOME STATEMENT
Q2
SEKm

LTM

Jan-JunFull year

2017

2016

2017

2016

Jul-Jun

2016

Net sales

-

-

-

-

-

-

Gross profit/loss

-

-

-

-

-

-

Administrativ e costs

-45

-1

-53

-2

-55

-5

Profit/Loss before interest and tax (EBIT)

-45

-1

-53

-2

-55

-5

Financial income and ex penses

-29

-50

-83

-99

-186

-202

Profit/Loss after financial items

-74

-51

-136

-101

-241

-207

-

-

-

-

27

27

-74

-51

-136

-101

-214

-180

7

-

7

-

7

-

-68

-51

-129

-101

-207

-180

Group contributions
Profit/Loss before tax
Tax
Net income

CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Q2
SEKm
Profit/Loss for the y ear

LTM

Jan-JunFull year

2017

2016

2017

2016

Jul-Jun

2016

-68

-51

-129

-101

-207

-180

Other comprehensiv e income, net after tax

-

-

-

-

-

-

Comprehensive income for the year

-68

-51

-129

-101

-207

-180

Munters Group AB, second quarter 2017

16

Q2
2017

Parent company
CONDENSED BALANCE SHEET – ASSETS
SEKm

2017/06/30

2016/06/30

2016/12/31

4,086

4,086

4,086

7

-

-

4,093

4,086

4,086

ASSETSNON-CURRENT ASSETS
Participations in subsidiaries
Other financial assets
Total non-current assets
CURRENT ASSETS
Other current receiv ables

10

-

-

Receiv ables from subsidiaries

-

-

27

Cash and cash equiv alents

175

46

44

Total current assets

185

46

71

4,278

4,132

4,157

2017/06/30

2016/06/30

2016/12/31

TOTAL ASSETSCONDENSED BALANCE SHEET – EQUITY AND LIABILITIESSEKmEQUITY AND LIABILITIESEQUITY
Share capital

6

0

0

Share premium reserv e

1,177

1,177

1,177

Profit brought forw ard

3,173

437

437

Income for the y ear

-129

-101

-180

Total equity

4,227

1,513

1,434

Shareholder loan

-

2,488

2,688

Total non-current liabilities

-

2,488

2,688

NON-CURRENT LIABILITIESCURRENT LIABILITIES
Accounts pay able

37

-

-

Accrued ex penses and deferred income

3

131

35

Other liabilities

11

1

-

Total current liabilities

51

131

35

4,278

4,132

4,157

TOTAL EQUITY AND LIABILITIES

Munters Group AB, second quarter 2017

17

Q2
2017

Quarterly overview Group and Segments
Group
2017
SEKm

2016

2015

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Order backlog

2,449

1,998

2,449

1,741

2,040

2,025

1,713

1,741

1,348

1,623

Order intake

2,234

1,654

3,888

1,491

1,577

1,688

1,617

6,373

1,286

1,439

Net sales

1,723

1,519

3,242

1,823

1,560

1,438

1,220

6,040

1,575

1,424

Operating profit (EBIT)

143

75

218

228

126

150

74

577

107

144

Financial income and ex penses

-134

-106

-241

-116

-106

-110

-92

-424

-99

-96

Transactions betw een segments

Tax

2

-9

-7

-8

-22

-28

-10

-69

23

-39

Net income

11

-41

-30

105

-2

11

-29

85

31

9

Amortization (incl. surplus v alues)

56

53

108

49

47

45

46

187

49

42

Items affecting comparability (IAC)

-9

20

11

-3

20

-

-

17

-15

2

Adjusted EBITA

190

147

337

274

193

194

119

781

140

188

Adjusted EBITA margin, %

11.0

9.7

10.4

15.0

12.3

13.5

9.8

12.9

8.9

13.2

Air Treatment
2017
SEKm

2016

2015

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Ex ternal order backlog

1,171

1,097

1,171

959

1,076

1,067

939

959

841

1,000

Order intake

1,037

950

1,987

840

848

923

775

3,385

828

740

927

787

1,713

959

842

818

670

3,288

971

870

5

6

11

2

0

2

1

6

17

18

173

94

267

162

102

114

59

437

141

133

3

3

6

3

3

3

3

11

5

3

Ex ternal net sales
Transactions betw een segments
Operating profit (EBIT)
Amortization (incl. surplus v alues)
Items affecting comparability (IAC)

-53

-7

-60

-

-

-

-

-

-

-

Adjusted EBITA

123

90

213

166

105

117

62

448

146

136

Adjusted EBITA margin, %

13.2

11.4

12.4

17.2

12.4

14.2

9.2

13.6

14.8

15.3

Data Centers
2017

2016

2015

SEKm

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Ex ternal order backlog

643

321

643

412

558

455

328

412

112

205

Order intake

558

165

723

187

255

157

320

919

27

185

Ex ternal net sales

192

249

441

352

156

57

90

655

115

105

8

4

12

0

0

29

0

30

0

0

-14

11

Transactions betw een segments
Operating profit (EBIT)

-14

32

18

51

9

-13

7

54

Amortization (incl. surplus v alues)

1

1

1

0

0

0

0

1

-

-

Items affecting comparability (IAC)

-

-

-

-

-

-

-

-

-

-

Adjusted EBITA

-13

32

19

51

9

-12

7

56

-14

11

Adjusted EBITA margin, %

-6.6

12.8

4.3

14.6

5.8

-14.1

8.0

8.5

-12.1

10.0

Munters Group AB, second quarter 2017

18

Q2
2017

Quarterly overview Group and Segments
AgHort
2017

2016

2015

SEKm

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Ex ternal order backlog

490

454

490

249

267

375

316

249

260

264

Order intake

561

469

1,031

382

374

520

427

1,704

360

405

Ex ternal net sales

500

391

891

399

459

457

355

1,669

379

333

Transactions betw een segments

1

13

14

11

12

7

5

36

12

8

Operating profit (EBIT)

75

25

100

66

81

85

43

276

35

49

Amortization (incl. surplus v alues)

3

3

6

3

3

3

3

12

3

0

Items affecting comparability (IAC)

-

-

-

-30

-

-

-

-30

-

-

Adjusted EBITA

78

28

107

39

85

88

46

258

38

49

15.6

7.0

12.0

9.5

18.0

18.9

12.9

15.4

9.7

14.4

Adjusted EBITA margin, %Mist Elimination
2017

2016

2015

SEKm

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Ex ternal order backlog

145

126

145

121

140

129

130

121

135

147

Order intake

111

101

212

95

115

103

103

416

93

126

Ex ternal net sales

104

92

196

113

103

106

106

428

102

99

Transactions betw een segments

3

1

4

3

3

0

3

9

2

2

Operating profit (EBIT)

8

6

14

21

12

17

18

69

12

16

Amortization (incl. surplus v alues)

1

0

1

0

0

0

0

1

0

0

Items affecting comparability (IAC)

-

-

-

-

-

-

-

-

1

1

Adjusted EBITA
Adjusted EBITA margin, %

8

6

15

22

13

18

18

69

13

17

7.9

6.9

7.6

18.6

11.8

16.4

16.4

16.2

13.0

16.6

Other and eliminations
2017

2016

2015

SEKm

Q2

Q1

Jan-June

Q4

Q3

Q2

Q1

Full year

Q4

Q3

Order intake

-34

-31

-65

-13

-15

-14

-8

-50

-21

-18

-

-

-

-

-

-

-

-

8

15

Transactions betw een segments

-17

-24

-41

-17

-15

-39

-9

-80

-31

-29

Operating profit (EBIT)

-99

-82

-181

-73

-78

-54

-53

-258

-68

-65

Amortization (incl. surplus v alues)

48

46

94

42

40

39

40

161

41

38

Items affecting comparability (IAC)

44

27

70

27

20

-

-

47

-17

2

Adjusted EBITA

-7

-10

-17

-4

-18

-15

-13

-51

-43

-25

Ex ternal net sales

Munters Group AB, second quarter 2017

19

Q2
2017

Notes
ACCOUNTING POLICIESThis report has been prepared in accordance with IAS 34, “Interim Financial Reporting”. The accounting policies conform to International Financial
Reporting Standards (IFRS), as well as with the EU approved interpretations of the relevant standards, the International Financial Reporting Interpretations
Committee (IFRIC) and Chapter 9 of the Swedish Annual Accounts Act. The report has been drawn up using the same accounting policies and methods ofcalculation as those in the Annual Report (Note 1), except for a change in segments where, as of January 1, 2017, the Data Centers, previously part of the
Air Treatment segment, is presented as s separate segment. The historical numbers have 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 revised IFRS standards that came into force in 2017 did
not have any material impact on the Group. IFRS also comprises International Accounting Standards (IAS) and interpretations of the standards, called
IFRIC and SIC, respectively. Besides IFRS and the Annual Accounts Act, recommendation RFR1 of the Swedish Financial Reporting Board –Supplementary Accounting Rules for Groups – is also applied.
The parent company has implemented the Swedish Financial Reporting Board’s Recommendation RFR 2, which means that the parent in the legal entity
shall apply all EU approved IFRS and related statements as far as this is possible, while continuing to apply the Swedish Annual Accounts Act and thePension Obligations Vesting Act and paying due regard to the relationship between accounting and taxation.The consolidated accounts were prepared inaccordance with 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 have been prepared in accordance with the accounting policies that apply to the Group.
All intra-Group transactions, revenues, costs, gains, or losses that arise in transactions between companies included in the consolidated accounts havebeen wholly eliminated.

IFRS 15, Revenue from contracts with customers (effective from 2018).

The Company is evaluating the impact of the standard and has not quantified the effects of IFRS 15. Based on a preliminary analysis of a number ofcontracts related to customers of the Air Treatment business area, the Company does not currently believe that the standard will have a significant effect on
the Company’s financial statements. This evaluation will continue throughout 2017.

IFRS 16 Lease (effective from 2019).

Munters has begun to analyze the effects IFRS 16 will have on the Company’s financial statements. In brief, the initial analysis shows that Munters as an
operational lessee will be affected by the implementation of IFRS 16. Monetary calculations of the effect of IFRS 16 and choice of transition approach have
not yet been carried out. Based on the Company’s preliminary review of its leases (primarily lease agreements in respect of premises), including notice
periods and rental amounts, the Company currently believes that IFRS 16 will have an effect on its consolidated accounts and financial key performanceindicators, primarily ratios based on gross assets and gross liabilities.

TRANSACTIONS WITH RELATED PARTIES

Munters loan from shareholders was raised in 2010. At the date of the IPO the Shareholder loan was terminated and converted into shareholders equity. For
the second quarter 2017 the Group expensed interest on loans from shareholders amounting to SEKm -29 (-50). At the Extraordinary General Meeting on 7
May 2017, it was resolved to issue warrants as part of an incentive program for certain members of the Group management. In total, the incentive program
comprises 8 individuals and not more than 5,222,000 warrants. The Participants may subscribe for warrants at a market value corresponding to in total not
more than SEK 17.99 million. The maximum number of warrants that may be subscribed for by the Participants corresponds to approximately 2.77 percentof the Company’s share capital following completion of the Offering and assuming full exercise of the warrants. For more information about the incentive
programs, see page 4 in this report. For further information of transactions between Munters and related parties, see the Annual Report 2016.

EMPLOYEESThe number of permanent employees at June 30th 2017 was 3,431 (2,772), an increase of 24%. The increase in the number of employees was mainly attributable to the acquisition of MTech Systems and Kevin Enterprises as well as to the expansion of service and production staff to address the increase involumes that occurred and the focus on the service business.

ENVIRONMENTAL IMPACT AND ENVIRONMENTAL POLICY

Munters’ operations affect the external environment through air and water emissions, the handling of chemicals and waste, transport of input goods andfinished products to and from Munters’ factories. Munters is committed to constant vigilance regarding the environmental impact of its operations. Munters iscommitted to complying with all laws and to continuously promoting improvements in all Environement, Health & Safety (“EHS”) aspects, wherever Muntersconducts business. Munters constantly seeks opportunities to reduce risk and to create a safer, healthier, more diverse and more environmentally friendly
workplace for our employees, customers, communities, and the overall environment. We achieve this through strong leadership, teamwork and our constantquest for improvement in all that we do. Munters’ manufacturing facilities all over the world are committed to working with a written EHS Management
Program. The EHS Program establishes procedures to ensure regulatory compliance, to actively prevent injuries, and to reduce the impact that ourbusiness has on the environment.

RISKS AND UNCERTAINTIES

Munters is a company with geographically widespread operations and many small organisational entities. The Group depends to some extent 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 alternative technologies could constitute a risk. Companies currently active in air treatment
could become established in Munters’ niches, which would mean increased competition. Demand for the Company’s products is affected by the general

Munters Group AB, second quarter 2017

20

Q2
2017
economic trends. Financial risks mainly consist of currency, interest and financing risks. The continued development of the global economy (includinginterest 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 govern the use of insurance, including coverage for general liability
and product liability, property, business interruption, transportation, crimes against property, the liability of Board members and the CEO and employment
practices liabilities. Several of insurance policies are managed Group-wide.

EARNINGS PER SHARE

Net profit per ordinary share in the second quarter 2017 amounted to SEK 0.11 (0.58). Income attributable to Parent Company’s ordinary shareholders
amounted to SEKm 11 (10) for the second quarter. The average number of outstanding ordinary shares in the second quarter was 92,784,766 before dilution and 93,010,632 after dilution. The two major factors behind the decrease in earnings per share compared to the same quarter previous year were thetransformation of shareholder loans to equity and the share issue on May 19th. Net income was also negatively affected by previously capitalized financing
fees amounting to SEKm -57 taken as cost in the second quarter.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group’s derivatives, recognized at fair value in the statement of financial position, are measured according to IFRS 13 and level 2 in the fair value hierarchy. The derivatives amount to SEKm 6 (4) in financial assets and to SEKm 3 (5) in financial liabilities.
Per end of the quarter the Term loan was fully drawn with USDm 250 and EURm 100 of the total Revolver facility were drawn in EUR, USD and SEK. Alongwith the main loan facility an amount of SEKm 20 in local debt is outstanding in Brazil, China and Czech Republic.
The Group’s contingent earn-outs and put/call acquisition options, recognized at fair value in the statement of financial position, are measured according to
IFRS 13 and level 3 in the fair value hierarchy. In the table below the changes in the contingent consideration liability during 2017 are explained. The largest
changes are related to the acquisition of MTech Systems, see further description on page 21.

SEKm

2017/06/30

2016/06/30

2016/12/31

Opening balance

51

78

78

Estimated liabilities at acquisition

162

Contingent price considerations and put/call options

Pay ments

-

-

-

-9

Changes recognized in other operating income

-53

-

-30

Discounting

-15

2

7

Ex change-rate differences for the y ear

-7

5

5

Closing balance

138

85

51

Munters deems that the interest rate on interest-bearing liabilities is in line with market terms at June 30, 2017, and the fair value at the end of the reporting
period therefore in all material aspects corresponds to the carrying amount.

Munters Group AB, second quarter 2017

21

Q2
2017

ACQUISITIONS
MTech Systems

On February 1, 2017, Munters completed the acquisition of 60% of the shares in the US based software company MTech Systems.
The company will operate within the business area AgHort. The purchase price amounted to SEKm 222, corresponding to a debt-free enterprise value 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 executives of MTech
Systems, which also have an option to sell, starting in December 2020. The purchase consideration on exercising the option will be based on the financial
result for the 12 months prior to the date of exercising 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 expected redemption price for the options whereupon non-controlling participations attributable to the options are eliminated. This is the final purchase price allocation. Compared with the preliminary purchase price allocation technology has decreased with SEKm 25 and goodwill has increased with the same amount.
The difference between liabilities for the options and the non-controlling participations to which the options refer is recognized directly in equity and disclosed separately from other changes in equity.
The acquisition of MTech Systems was financed by raising bank loans. In 2016 MTech Systems had revenues amounting to approximately SEKm 140.
Acquisition costs during 2016 - 2017 incurred amounts to SEKm 10.
Information about acquired net assets and goodwill
follows (SEKm)
Cash purchase consideration paid

According to final purchase priceallocation
222

Total purchase consideration

222

Fair value of non-controlling interests

162

Fair value of acquired net assets-219

Goodwill

165

Acquired net assets at time of acquisition

Fair values according topreliminary purchase priceallocation

AssetsProperty, plant and equipment

13

Customer relationships
Technology

29
97

Brands
Accounts receivable

19
51

Other current assets

39

Cash and cash equivalents

35

Total assets

282

Liabilities
Non-current interest-bearing liabilities

0

Current interest-bearing liabilities
Accounts payable01

Accrued expenses and deferred income
Deferred tax liabilities

20
29

Other current liabilities

12

Total liabilities

63

Net identifiable assets and liabilities

219

Cash purchase consideration paid

222

Cash and cash equivalents in acquired company-35

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

187

The fair value of acquired net assets was increased by SEKm 141. Of this amount SEK 29 million relates to customer relationships, SEKm 97 to technology,
SEKm 19 to brands, and SEKm 29 to deferred tax liabilities. The fair value of the acquired accounts receivable at the date of acquisition, SEKm 51 corresponds to the amount expected to be paid. Receivables have a nominal value of SEKm 51.

Munters Group AB, second quarter 2017

22

Q2
2017
The goodwill arising from the acquisition, SEKm 165, is primarily attributable to future synergies expected through combining MTech Systems expertise inadvanced data analysis with data from Munters controllers, creating a complete overview of the supply chain for poultry and swine producers. Overall thiswill significantly expand Munters offering to our customers in business area AgHort.

Kevin Enterprises

On April 1, Munters completed the acquisition of Kevin Enterprises Private Limited, a privately owned company headquartered in Mumbai, India. The acquisition was structured as an asset deal, acquiring company being Munters India Humidity Control Private Limited, Munters India. The acquired business will
as of April 2017 be reported as a separate reporting unit within Munters India, and will be consolidated into Business Area Mist Elimination. The preliminarypurchased consideration, after preliminary net working capital and net debt adjustments, amounted to SEKm 76. Preliminary fair value of transferred net
working capital and net fixed assets amounted to SEKm 18 and 35 respectively. Value of intangible assets, including goodwill, was estimated at approximately SEKm 23. Work will be carried out with respect to further specifying and allocating value to specific intangible assets. Net debt items were estimatedat approximately SEKm 0.2. In 2016, Kevin Enterprises generated revenues of approximately SEKm 65.
Acquisition costs incurred amounts to SEKm 6.
Information about acquired net assets and goodwill follows(SEK million)
Cash purchase consideration paid

According to preliminarypurchase price allocation76

Total purchase consideration

76

Fair value of acquired net assets

61

Goodwill

15

Acquired net assets at time of acquisition

Fair value according topreliminary purchase priceallocation

AssetsProperty, plant & equipment
Technology

Inventories
Accounts receivable
Other current assets

35
6
1
1
11
10
0

Total assets

64

Order backlog
Favourable contract to use Brand name

Liabilities
Accounts payable
Accrued expenses and deferred income
Other current liabilities

(3)
(0)
(0)

Total liabilities(3)

Net identified assets and liabilities

61

Cash purchase consideration paid

76

Change in Group's cash and cash equivalent on acquisition

76

Edata
On May 30 2017, Munters Group acquired Brazilian-based Edata specializing in key software for food processing plants, primarily for poultry production.
Edata provides software to keep track of production within food processing plants and is a long-term partner to MTech Systems, the leading supplier ofsoftware solutions to the live production industry which was acquired by Munters on 1 February 2017. Edata delivers form-fit solutions for tracking finishedproducts, measuring quality and yield, and for controlling waste in the food production process. Edata’s software will be fully incorporated into MTech’s suiteenabling Munters to integrate data from farms, hatcheries, feed mills in the food producers' production system. Edata had a turnover of approximately 15
MSEK in 2016 and have 34 employees.

Munters Group AB, second quarter 2017

23

Q2
2017

Alternative performance measures
In this interim report, there are references to a number of performance measures. Some of the measures are defined in IFRS while others are alternative
performance measures and are not disclosed in accordance with applicable financial reporting frameworks or other legislations. The performance measures
are used by the Group to assist both investors and management in analyzing Munters’ business. Below are the performance measures found in this interim
report described, defined and the reason for use disclosed.
O

Adjusted EBITA

Operating profit, adjusted for amortizations and items affecting comparability.
Munters believes that using adjusted EBITDA is helpful in analyzing our performance because it removes the impact of items from our operating results
that, in our opinion, do not reflect our core operating performance.

Operating profit (EBIT)

Earnings before interest and tax. Munters believes that EBIT shows the
profit generated by the operating activities.

Order backlog

Adjusted EBITA as a percentage of net sales. Munters believes that Adjusted
EBITA Margin is a useful measure for showing the Company’s profit
generated by the operating activities.

Received and confirmed sales orders not yet delivered and accounted foras net sales. Order Backlog is a useful measure to indicate the efficiencyof the conversion of received and confirmed sales orders into net sales infuture periods, and is used by Munters to monitor business performanceand customer demand, and adjust operations.

Capital employed

Order intake

Cash and cash equivalents

Organic growth

Adjusted EBITA margin

Capital employed is calculated as the balance sheet’s total assets, excludinginterest-bearing assets and deferred tax assets, less total liabilities, excludinginterest-bearing liabilities, pension liabilities and deferred tax liabilities.
Cash and bank balances plus investments in securities and the like with maturity periods not exceeding three months. This is a measure that highlights
the short-term liquidity.

Items affecting comparability (“IAC”)

Items affecting comparability relates to income statement items that have an
impact on operating profit and are important for understanding the underlying
development of operations.

Received and confirmed sales orders during the reporting period. The order intake is an indicator of future revenues and, consequently, an important KPI for the management of Munters’ business.
Change in order intake and net sales compared to the previous period, excluding currency translation effects and contributions to order intake andnet sales from businesses that were acquired and/or divested during thecurrent period and/or any comparison period. The measure is used by
Munters to monitor order intake and net sales growth driven by changes involume and price between different periods.

Return on capital employed (ROCE)

LTM

Operating profit (EBIT), divided by the average capital employed. The average capital employed for each year consists of an average of the closing
capital employed in the last 13 months.

Net debt

Munters believes that the presentation of ROCE provides useful information to investors because ROCE can be used to determine whether
capital invested in Munters yields competitive returns. The usefulness of
ROCE is inherently limited by the fact that it is a ratio and thus does notprovide information as to the absolute amount of Munters income, debt orequity. It also excludes certain items from the calculation and other companies may use a similar measure but calculate it differently.

LTM (last twelve months) after any key indicator means that the KPI corresponds to an accumulation of previous twelve month reported numbers. The
measure is used to highlight trends in different KPIs, which is valuable in order to gain a deeper understanding of the development of the business.
Net debt calculated as interest bearing debt and pension liabilities, deductedby cash and cash equivalents. This is a measure of the ability to repay thedebt if it was all due.

Munters Group AB, second quarter 2017

24

Q2
2017
The Board of Directors and the President and CEO certify that the Interim Report gives a true and fair overview of the Parent Company’s and Group’s operations, their financial position and results of operations, and describes the significant risks and uncertainties facing the Parent Company and other companies in the Group.
Stockholm, 15 August 2017

Christopher Curtis
Chairman of the Board

John Peter Leesi
President and CEO

Helen Fasth Gillstedt
Board Member

Per Hallius
Board Member

Joakim Karlsson
Board Member

Andreas Näsvik
Board Member

Lena Olving
Board Member

Kristian Sildeby
Board Member

Joachim Zetterlund
Board Member

Robin Heden
Board Member,
employee representative

Pia Nordquist
Board Member,
employee representative

Simon Henriksson
Deputy Board Member,
employee representative

Robert Wahlgren
Deputy Board Member,
employee representative

This report has not been subject to review by the company’s auditors.

Munters Group AB, second quarter 2017

25

Q2
2017

INFORMATION AND REPORTING DATES 2017/2018

This information is information that Munters Group AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets
Act. The information was submitted for publication, through the agency of the contact person set out below, at 08.00 CET on 15 August 2017.
Contact persons:John Peter Leesi, President and CEO, Phone +46 (0)8 626 63 60
Jonas Ågrup, CFO, Phone +46 (0)8 626 63 60
John Womack, IR, Phone + 46 (0)70 678 24 99
Additional information may be obtained from Munters Investor Relations at phone +46 8 626 63 01 or by e-mailing info@munters.com.
The report will be presented at a webcast/teleconference on 15 August 2017 at 10:00 CET via http://www.financialhearings.com/event/10287
Munters Group AB, Corp. Reg. No. 556819-2321
Financial calendar 2017/2018:
9 November, Interim report, third quarter 201716 February, Interim report, fourth quarter and year-end 201726 April, Interim report, first quarter 2018

About Munters Group
Munters is a global leader in energy efficient air treatment and climate solutions. Using innovative technologies, Munters creates the perfect climate for customers in a wide 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 employees (including temps.) carry out manufacturing and sales in more than 30 countries. Munters reports annual
net sales above SEK 6 billion. For more information, please visit www.munters.com.
Every care has been taken in the translation of this interim report. In the event of discrepancies, the Swedish original will supersede the English translation.

Munters Group AB, second quarter 201726