Good morning to Investors Annual Accounts Press Conference and Report and also our Q4 report. Today, our CEO, Johan Fuschel, will start the presentation followed by our CFO, Helian Anton. This press conference is also a call, so we have participants on the phone. And one can also follow our press conference on the web. So welcome, everyone, and please, Johan.
Thank you, Vivek, and welcome, everybody, to this meeting. Let me start by summarizing 2018. During 2018, the economic activity in the world economy was actually pretty strong. But we know that during the second half of the year, we did see leading indicators turning down, and we also saw in a number of areas that the activity actually also slowed down. This led to a sharp fall in the stock markets around the world during the 4th quarter And basically, most stock markets around the world ended up in negative target for the year, including the Swedish stock market that was down some 4%, 5% in 2018.
I think Investo had a solid performance in this tough market. We basically held our net asset value flat during the year, adjusted for dividends. We had a positive total share return of 4%, which actually was an outperformance compared to the Swedish stock market by 8 percentage points. We invested in 3 listed core investments, and we acquired 2 new subsidiaries in our portfolio. We had a strong profit growth in Patricia Industries, and then Lilleke ended the year with a good organic sales growth.
We had a strong value growth in EKT Investments. And despite the large investments we made, we ended the year with a solid balance sheet with a leverage of only 6%, which is in the lower range of our band of 5% to 10%. So the Board proposes an increase of the dividend with SEK 1 per share or 8% to SEK 13 per share. If I then go through a couple of highlights during the year, I have divided them in 3 buckets: structural actions, investments and agility. If we start with structural actions, during the year, a number of our companies undertook important structural activities.
The split of Atlas Copco and Epiroc became our 12th listed core investments. ABB announced the decision to divest the Power Grids business, and Sobe did 2 acquisitions of products during the year, which is very important for the company, number 1, to diversify its business and also to build a stronger franchise in the U. S. Market. Our U.
S. Subsidiary, Laboree, made a very large acquisition in Coventyx during the year and also restructured the European operations. And finally, we have Alaris, where Alaris divested the care business, which is more or less half of the business. And that, of course, led to a significant strengthening of the balance sheet and reduced financial risk. And now the primary focus, of course, is to turn around the health care operations.
During the year, we also made a number of investments. In the Q1 of 2018, we invested SEK 1,000,000,000 in Ericsson. In the Q4, we invested SEK 500,000,000 in Electrolux, and we also participated in the rights issue of Saab. We believe it's important that Saab get a strong balance sheet. That will improve the likelihood for the company to continue to win important large orders around the world.
And finally, we acquired the 2 new subsidiaries, PIAB in Sweden and Sarnovo in the U. S. And I have to say already now that I'm very pleased to see that both these new companies in our portfolio had a very good performance during its 1st year. Then moving over to Agility. Most of our companies are working very actively with improving the agility, basically handling up- and downswings.
But many companies are also working hard to prepare for potentially tougher times ahead. I don't have a crystal ball, but given where I started this press conference, there is, of course, a possibility that we will enter tougher times. So then it's important that you are ready, you have planned it, and you have the action in place. Basically, be prepared for potentially tougher times. At Investor, we have also prepared.
We have issued a €500,000,000 bond. It's a 12 year bond at very attractive terms, and that, of course, creates a very good liquidity. So we could also be ready to act if opportunities would arise in the year ahead. I mentioned that we continue to have a very strong balance sheet despite investments of about $13,000,000,000 in 2018. I think this is important to highlight.
This is our cash flow generation. We have a strong underlying cash flow generation in investor that allows us to invest, pay dividend and still keep the financials in good shape. So if you look over the last 4 year period, if we start to the right, you see how we have spent the money. You can see over this 4 year period, we have invested SEK 30,000,000,000, dollars 12,000,000,000 has been invested in the listed core investments. We have invested $18,000,000,000 in buying 4 new subsidiaries.
So that's the $30,000,000,000 Then we have also given dividends of more than SEK 30,000,000,000 to our investors. So in total, you can say we have spent SEK 60 plus 1,000,000,000. The good part is that we have also generated SEK 60 plus 1,000,000,000 as you can see to the left. More than half of that is the dividends from the Liste core investment, but you can also see the big chunk that we receive in distributions from our subsidiaries. And of course, Mennleke here is a big part.
But we have also gotten good distribution from 3, Braunability, Permobil during this period. And finally, we have received a net contribution from EKT over this period. So you can say despite investments of SEK 30,000,000,000, our net debt at investor has been more or less unchanged over this period. And since the asset value has gone up, you can see that the leverage has actually gone down from 7% to 6% over this period. So with that summary of 2018 and our cash flow profile, let me then yes, or before that, I should say that when I talked about the dividends of SEK 30 plus 1,000,000,000 over this period, we should, of course, remember that we have continuously increased the dividend over this period of time.
And the gray bar to the right here is the proposal from the Board of SEK 13 per share. So with that, I will then jump into the 4th quarter results. As I mentioned initially, the 4th quarter was characterized by big fall in the stock market. The stock market in Sweden was down more than 14%. Our adjusted net asset value was down 12%, and our total share of the return was down 8%.
If we look on the mix between the different parts of investor, you can see that we fell, which is not good, but we outperformed the market. You can see that our listed portfolio developed more and less in line with the market. But you can see that the unlisted part performed better. Patricia Industries was only down 3%, and that is a net effect of increased profits but multiple contraction among the peer multiples that we use. So profits had a very good development, but multiples came down.
And then we have EQT that was actually up 14% in the quarter. But here, we have some internal transactions related to EKT AB, and I will come back to that later, that has boosted this figure by about 10 percentage points. So you can say that the underlying performance of EKK in the quarter was plus 4%, but that is still a strong performance, especially considering that the stock market was down 14% in the quarter. So let me then go into the companies and start with Mennlikh. It was good to see that we had an organic sales growth of 6% in constant currency in Mennelikke in the quarter.
Wunker actually grew 8% in the quarter. Surgical grew 4%. We had a good growth, I would say, in all major geographies. If I should give a little bit more color, you can say that emerging markets that I talked about before, China, Middle East, Brazil and those kind of markets, were growing about 14% in the quarter. But we also see a very good growth in the U.
S. In this quarter. And then finally, Europe actually also showed a quite solid performance. Europe was good. The weakest there in Europe remains U.
K, but we had a solid growth also in Europe in the quarter. Profitability was down somewhat compared to last year, but that is mainly related to that we are putting a lot of efforts behind sales and marketing now to push these new products out to the market. And then we also had some negative currency effects in this particular quarter. Due to the strong performance in this company, the company was once again able to distribute €100,000,000 to Patricia. And in the quarter, they also did a smaller acquisition, but an important one.
They make a key component to our wound care dressings. And this will not only give the technology, but it will also strengthen the R and D capability in the company. Then moving over to Permobil. The organic sales grew minus 2% in the quarter. Basically, you can say that the electric power wheelchairs were down in the quarter, but we saw a very good growth in manual and also a good growth in seating and positioning.
In the last quarterly report, I said to you that in Permobil, the cost level is too high and that the priority has been to really get the cost level in good shape. And I have to say that management has done an excellent job in focusing on this. Even though sales was more or less flat, as you see, actually, the profit grew by 30 percent year over year, and we saw a significant margin expansion. And if you look into the details of that, we can see that we see cost improvements both on a COGS level and on an OpEx level. And due to the strong profitability and cash flow in this company, also Perma Bill were able to distribute SEK 600,000,000 in the quarter.
Moving over to our new kids on the block, Tejad. Good development, organic sales growth of 5%. Europe was the key driver here. Actually, America was down, and that is mainly due to a weak automotive segment in the U. S.
Market. The profit margin increased quite a lot. It was driven by operating leverage. If you compare with last year, I think our margin this quarter was 30%, and it was 22% last year. We had a good margin development underlying, but last year was also affected by adjustments related to certain areas.
So the real shift one should, of course, take, but the profit level in itself was very strong, and the underlying profit grew quite a lot. And there is a process here to find new CEO, so Sander Schlinkris will leave in the Q2. Then moving over to La Biree. I have to say it's great to see that the company continued to deliver now. We saw an organic sales growth of 6%.
You see most of our companies are delivering very solid organic growth, 6% organic growth. And you can see on the profitability that we're now back to a good profitability after the restructuring and after the integration of this company, Covientix. So the profit margin in the quarter was something like 26%, 27 percent. Zalnova, our 2nd new company in the portfolio, also grew organically by 5% in the quarter. In this quarter, the growth was mainly driven by the Acute Care segment, while emergency preparedness was more or less flat.
And it's good to see also that the private label, Curaplex, continued to show good growth. BraunAbility did not have good growth. It had a very strong growth, as you can see. It had a 17% organic growth. The profitability was somewhat lower than last year, and that is mainly due to the fact that we are investing heavily in improving the supply chain system.
Due to the strong cash flow generation over the last year in BraunAbility, they were now able to give the first distribution to Patricia that amounted to about SEK 1,200,000,000. And then we come to Alaris. And here, you can see that the lines are pointing in the wrong direction. And here, I think I need to do a couple of explanation. First of all, I'm very pleased to say that we now, in January, have closed the sale of Alaris Care.
That means that we now have a strong balance sheet in Alaris and, of course, significantly have reduced the financial risk. If you look on the figures, I think it's important to highlight that there are 2 major things affecting the figures. 1 is restructuring costs related to the divestiture of Alaris Care. And the second one is that the company has made significant provisions for unprofitable contracts following a thorough review that has been done. If we start by adjusting for the restructuring costs that are related to the sale of Care, which I think is fair because that is really a structural activity.
The EBITDA would have been positive by CHF 2,000,000, but you can see that the operating profit after depreciation would still be in negative territory. However, this result has been significantly affected by this provision for unprofitable contracts. As you know, we are not adjusting for that because it's not good to enter unprofitable contracts. But for your information, if we would adjust, which we don't, for these provisions for unprofitable contracts, the profit level would have been more or less in line with last year. 3, Scandinavia.
Subscription base grew by 37,000 during the quarter. The figures were, of course, affected by the VAT ruling, but the underlying service revenue was more or less flat, And the underlying profitability, as you can see on the dotted line, was also more or less flat in the quarter. And then we come to EQT. As I mentioned, Equity was up 14%, but excluding these transactions related to Equity AB, the performance was plus 4%. And these are transactions that have been done to simplify the ownership structure as part of the ongoing review of the divestiture and the balance sheet.
From an investor point of view, we have participated. We have, for example, gotten a distribution, and we have participated in certain emissions. Based on this transaction, we now report a value that is different compared to previously. The total value of our equity investment, including our LP share, is now SEK 21,000,000,000. And you can see on the graph, which is over the last 5 year period, that in 2018, the cash flow from IKT was actually lower than the normalized level.
But on the other hand, you can see a strong return on within EKK or plus 25% in constant currency. Adjusting for this onetime effect, the return would have been 14% to 15% in the year, which, of course, is very strong in this given the stock market development in the year. So let me then summarize and look forward. I think in these times, when there is a lot of uncertainty, and I will not mention it because everybody talks about it, but uncertainty and the rapid changes we see around the world, it is, of course, extremely important that you have a very clear direction where you're going and that you have clear plans to act and also, of course, the organization in place to do it. At Investo, our purpose is very clear, and that is to create value for people and society by building strong and sustainable businesses.
This is our genes. We always work as an engaged owner with the ambition to make the companies best in class. That is outperforming competition. And we always work to do what is best for each individual company. This is us.
And as you have seen many times before, we have clear operating priorities, and we will stick to these operating priorities, and that is to grow net asset value by, number 1, being an engaged owner and number 2, making good investments secondly, operate efficiently, keep track on our costs and thirdly, pay a steadily rising dividend. If we succeed with that, we believe that we will continue to generate a good return to our shareholders. And if we look on the track record over the last 5, 10 or 20 years, You can see on the blue bar, which is investors' return, that we have exceeded both our return requirement of 8 percent to 9% and also exceeded the stock market, which is the yellow bar, during all these periods. And we will work hard to try to continue to deliver in line with this. This morning, we also issued this press release, where we are offering the sharepersons in our listed core investments to invest with their own money at market terms in long term options, options with 5 year durations and a strike price of 110%.
The reason why we do this, first of all, the shareperson is very important for us. In a simple way, the shareperson has 2 key roles. Number 1 is to lead the Board. And the second, of course, is to be a very strong sounding Board to the CEO in the company. So we believe in this.
We believe in skin in the game. We believe in long term commitment, and that is what this is all about. So with that, I hand over to Helena Saxon.
Thank you,
Johan. Let me go through then the financial highlights the quarter. So our adjusted net asset value amounted to SEK 372,000,000,000 at the end of the quarter. This is a decrease of 12%, and we all know why Johan already discussed the tough equity markets in Q4. Looking at our listed core investments, which landed at SEK 275,000,000,000 at the end of the quarter, The total contribution was actually minus SEK 47,000,000,000 due to this weakness in the stock market.
And the TSR was minus 15% compared to the stock market's minus 14%. And of course, some of our heavy industrial companies were affected by the worry about the economic outlook, about China, and we can see in the graph that they were hit especially hard. But across the board, our listed portfolio was weakened in the quarter. Looking at the value of Patricia Industries, we can see a much smaller value reduction from SEK 119,000,000,000 to SEK 115,000,000,000. And we can see that 3 companies contributed positively, while the others were negative.
But we should remember that profit and cash flow generation was strong in the quarter but mitigated by peer multiple contraction. And again, that is the effect of what happened in the stock market. We can also see in this graph the striped gray bars at the bottom of the company bars, the distribution that was very strong in the quarter, dollars 2,800,000,000 was distributed from Permobil, BraunAbility and Mannliche. And as Johan already mentioned, this is the first distribution from vulnerability. And in this graph, this cash, of course, lands in the cash pool at the right here.
So looking at what were the major drivers of value in the Patricia portfolio, we can see that Laboree had very strong profit development, and that increased the market value by SEK 1,000,000,000 Permobil was up only EUR 100,000,000 but also distributed EUR 600,000,000. And for 3, we can see a negative EUR 1,200,000,000. This is both lower multiples in the telecom operator segment but also the negative impact from the Swedish VAT ruling that Johan already mentioned. Vulnerability was down SEK 1,500,000,000 due to lower multiples, but this is also an effect of the distribution of SEK 1,200,000,000. Mannlicher was down SEK 4 point 5,000,000,000 driven by lower multiples and also a distribution of SEK 1,000,000,000 in the quarter.
Financial Investments is a portfolio within Patricia Industries. It's DKK 7,300,000,000. And here, the realization of the portfolio continues. And 2 companies were fully exited in the quarter, I will end with our financial position as of the last of December 2018 is still solid. Our leverage of 6% is now in the target range of 5% to 10%, which we have communicated.
Our net debt landed at $21,000,000,000 We still have more than $11,000,000,000 of cash, and our average maturity of the debt profile has been extended by the bond that Johan mentioned and is now more than 10 years. This is my final slide, and we will end again with our purpose statements.
Thank you, Johan and Helena. And let's move over to a Q and A session. And we will start with questions here from the room. And we have a microphone. And please also give present yourself so the ones on the call knows who you are.
Absolutely. Joakim Gennal from DNB Markets. So on your comments regarding an economic slowdown, is there anything in particular with regards to your portfolio that you want to highlight in terms of sectors especially?
I think what we see is that especially China, you can say that we see a weakening in certain parts of Asia. In China, you see weakening. And the other key area, I would say, is for sure the automotive segment, and that goes for sure also in China. Other than that, it, of course, depends on what sectors you look into. But I would say those 2 are 2 clear ones.
Secondly then, I mean, obviously, with regards to the dividend rates you see in investor today, you have a resilient dividend platform. But how do you think about your portfolio companies now? Should they be more careful with their balance sheets to have a, so to say, financial muscle to act upon if times get rough? How do you could you elaborate on what you feel there?
Unfortunately, I cannot since we are heading into the quarterly reports going forward. So I cannot do that.
A question on 3 Scandinavia. It is now one and a half years since you started providing your preliminary market value, so to say. We have seen the valuation or in terms of the multiple you applied to through Scandinavia come down about 2 thirds? So this is perhaps a question for Helena. How are you thinking there?
As we have communicated before, the valuation process is fairly mechanical. We have an external part helping us providing market multiples that are set were set at the beginning of the period, and we haven't changed the way we look at these multiples. It's the same peer group and the same indices that we use. So it's the development of the market actually.
Finally then on 3 Scandinavia as well. They lost out on the 1st spectrum auction here in Sweden. So how do you view the competitive landscape from 3 Scandinavia's point of view following that?
I think this is a sector where there is always a very tough competition. I think Swiss Scandinavia has advantage of being a focused company, being nimble and can act quickly and being focused, but it's always a tough competition. And so that kind of business is a battle everyday. Thank you.
Thank you for taking my questions. A question regarding Mannliche. Could you give any more information behind the improvements in Malenek? And can we extrapolate this development? Or should we see this possibly affected by one offs?
And also if you could comment if you are taking market share or if the market is growing as a whole?
On the latter one, I can say no because I haven't seen the figures for the others yet, but it will for sure be interesting to see when they report the quarterly results. You know we don't give forecasts, but what I can say is that our direction is very clear. If you have a company that is as profitable and generates so much cash as Malvika, the biggest driver of value is growth. And of course, we have a high focus on organic growth. So that will continue.
And the priorities I mentioned before, the priorities is to really make sure that we launch the products that we are now launching in the market, work behind that to bring forward new innovative products. We have a pipe coming up after that. And thirdly, of course, to make sure we continue to grow in what I call the emerging markets. So I will say those are the top priorities, and I hope that we will continue to deliver a good solid organic growth in the years ahead. But of course, I don't know how the market will develop, and that is why I never give a forecast.
And can you give a number on how big emerging market is of total share now? It
is still not huge. But if you look on the double digit growth that it has, it has a material impact on the growth of the company.
Thank you. And also a question regarding IKT. Your value grew from EUR 227,000,000 in Q3 to EUR 1,700,000,000 And I understand that you get a dividend to avoid a dilution in your ownership. But could you give any more comment behind this transaction, where the money comes from or yes?
As you say, I mean, first of all, it is a number of internal transactions. And we have received a distribution, and we have participated in some emissions in the company. And based on that, we report this value. It's not more complicated than that basically.
Okay. So you have participated in the emissions?
Yes.
Okay. Thank you.
Liz Niliadis, Bank of America. Thank you for taking questions. Perhaps if I could start on your outlook for perhaps new investments. Are you still looking to cash hoard given where we are in the market? Or given where multiples are today, perhaps invest in something new?
Thank you for the question. I think we have, as I mentioned before, we issued a bond, a 12 year bond, to make sure we have liquidity, and we still have a strong balance sheet. So we are ready to act if opportunities arise. We have a clear strategy where we prioritize. But to be honest, when you enter a year, and that was the same last year, opportunities arise or they don't arise.
If we talk about the investments we did, for example, Ericsson in the beginning of last year and Electrolux at the end of the last year, of course, that will depend on when we see opportunities, we are ready, and we are ready to act. So we know where we want to invest, and then we will do it when we see good value. On the unlisted side, of course, it's different. On the unlisted side, the opportunities comes when somebody wants to sell. And last year, we got 2 opportunities with Kia Bensa Nova, and we thought those were great opportunities, and we invested.
So I actually cannot give you an answer. We are ready. If the opportunities arise, we are ready to act. But we will also, of course, make sure we have a strong balance sheet and liquidity. So it's always a balance for us to make sure that we are doing the right things with the ultimate target just to make sure we try to create value.
And is there any particular sector that you might be looking at or listed or non listed?
No. We will invest where we find the best opportunities. Okay. But we will continue we will, of course, continue to invest in the sectors that we understand and know. So we stick to what we know.
And another question on the distributions you're receiving. So BraunAbility received something for the first time. Is that something that we can expect going forward? And then secondly, on Monlika, if we assume higher growth, which obviously you said you won't comment on, could we see an uplift in the distribution there?
When it comes to the distributions, the reason why I think we have the best way, instead of me talking and guessing, I think the best way I can say, look in our track record. And the reason why I say that I actually cannot answer your question is that if the companies will find great add on acquisitions that create a lot of value, that will for sure be a preferred road forward. But on the other hand, if they do not find big acquisitions and they continue to generate so strong cash, we are fortunate to have a portfolio that generates a lot of cash, then of course, we don't want our company to become banks. So then they should distribute it. And actually, we have the same reasoning in some in our listed portfolio.
We have a number of companies that over the years have made redemptions, basically extra distributions when the balance sheet have become too strong. So that is our philosophy.
Okay. Thank
you. Thomas
Gaff, Handelsbanken. Could you just comment a bit on Alaris here? You said it's reduced risk now with the divestment, but what's the plan to turn it around? Or just any comment.
I think you answered it yourself. The focus now, this divestiture of Alaris Care is done. The balance sheet is in good shape, and now the focus is to basically turn around health care. And there is a lot of activities going on within the company. Okay.
Thanks.
Any more questions here in the room? No? Then let's see if we have any questions from the participants on the call.
Okay. There appear to be no audio questions. Okay.
Thank you. And then finally, Magnus, do we have any on the web? No. No more questions. Then I would like to say thank you for joining us this morning.
And Johan will be here to answer any questions from the media for individual interviews. Thank you so much.