A WORD FROM THE CEO

2018 has been a challenging year for PanLink with sales declining close to 25 percent. The main driver for the significant decrease in sales is that one of our largest customers, due to a merger with another company, decided to insource the lion’s share of their production. At the same time, we have continued our investments in Italy and the rail segment. We have seen a considerable sales increase in this segment during the year, but also very high costs primarily during the first half of the year. The decreased sales and the costs connected to establishing PanLink in the rail segment are the main drivers for the loss made in 2018. By the end of 2018, we made some decisions to streamline our operations and put focus on our core areas. We expect these changes to come into full effect during the first half of 2019 and reducing cost significantly compared to 2018.

When I joined PanLink in November, I was first of all impressed by the set-up and efficiency of our operations in Poland, which is the heart of our business. Despite
the challenges during the year, our Polish operation has continued to develop with
a strong performance in efficiency, quality and deliveries. With this base line, the actions taken to reduce cost and the several new customers and projects on the
way in, I look positively on 2019. With focus on growing our business and developing customer relationships further, we will be back on growth and positive margin during the second half of the year. One clear indication that the work done during 2018 is starting to pay off is the letter of intent we signed with a major European rail company during the end of the year, giving significant volumes for the coming two years.

/Lars-Gunnar Nilsson, CEO.

IMPORTANT EVENTS IN 2018

FAIRFORD´S VIEW

The investment in PanLink was initially motivated by the identified need by many small to medium companies to find a production partner in order to manage production during all stages of the product lifecycle from trial runs, ramp up on to high volume manufacturing. The specific need of this customer segment is still valid and we believe it to be a long-term characteristic in the geographies in which PanLink operates. Managed carefully with costs and competence built in the correct locations we think PanLink will continue to be a competitive player in the long run and we are keen to support and realise the company’s full potential.

Lars-Gunnar Nilsson, CEO

Andreas Karlsson, CFO