• Appeals Board sends decision back for reassessment
• Started in Nov-14, initial decision received in May-17
• DKK 4-20m fine looking less likely

Background
On 20 November 2014, the Danish Competition and Consumer Authority (DCCA) launched an investigation into several waterproofing manufacturers’ involvement in a Danish trade organisation, and especially the industry trade council TOR. On 31 May 2017, the DCCA decided that NWG, Icopal and Danske Tagpapfabrikanters Brancheforening were in breach of the Danish Competition Act by influencing the council, favouring its own products. A potential fine was estimated to be DKK 4-20m (this was also the estimate at the time of the IPO), while two civil law claims totalling DKK 136m were filed on the grounds of losses of potential future revenue.

Appeals Board sends DCAA decision back for reassessment
Today, the Danish Appeals Board referred the matter back to the DCCA due to “insufficient grounds and flawed legal reasoning”. Given that TOR was dismantled following the initial investigation and that it has taken almost 4 years to reach a conclusion, we see this as positive news, making the likelihood of a potential fine (0.2-1.2 SEK/share) less likely. Regarding the civil law claims, we have always seen these as exaggerated and highly unlikely, which we continue to believe following today’s decision.

TOR was positive for quality within the industry
Following this decision, and what we believe is a low likelihood of any potential civil cases, this should be one less cloud in the sky for NWG. Furthermore, TOR was positive about the level of standards required within the Danish waterproofing industry, which could result in TOR returning to action once again. Nordic Waterproofing is currently trading at 9x adj. EV/EBITA’19e and an 8% FCF yield.