Earnings Release • Nov 12, 2020
Earnings Release
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NASDAQ Copenhagen A/S Nikolaj Plads 6 DK-1007 Copenhagen K
Announcement no. 46 / 2020 12 November 2020 Company reg. (CVR) no. 15701315
Summary: SP Group generated EBITDA of DKK 258.6 million in the 9M 2020 reporting period, a 9.4% improvement from DKK 236.3 million in 9M 2019. Revenue improved by 7.5% year on year to DKK 1,622.4 million and profit before tax was up 0.3% to DKK 138.7 million. The FY 2020 guidance released in Announcement no. 34/2020 is upgraded and ranges narrowed. We now expect FY 2020 revenue in the DKK 2.1–2.2 billion range and an EBITDA margin of 15.5-16.0%.
The Board of Directors of SP Group A/S has today considered and approved the interim report for 9M 2020.
Highlights of the interim report:
Statement by CEO Frank Gad: "We successfully delivered growth in revenue and EBITDA in the third quarter of 2020 despite the coronavirus pandemic, global turbulence, many market challenges and volatile prices of raw materials. All of our 27 plants are operating and have access to the raw materials they need, and all our sales offices are open for business. We have benefited from our exposure to relatively resilient industries, and we have grown our sales to the healthcare, cleantech, food-related and other demanding industries. We have continued to pursue our dedicated M&A strategy, thereby attracting more customers and new technology, and we are committed to retaining our role as industry consolidators as and when value-creating opportunities arise."
Further information: CEO Frank Gad Tel: +45 70 23 23 79 www.sp-group.dk
| Q3 2020 (unaud.) |
Q3 2019 (unaud.) |
Acc. Q3 2020 (urev.) |
Acc. Q3 2019 (urev.) |
FY 2019 (audited) |
|
|---|---|---|---|---|---|
| DKK '000 (key ratios excepted) Income statement |
|||||
| Revenue | 508,029 | 474,170 | 1,622,416 | 1,509,966 | 2,012,932 |
| Profit before depreciation, amortisation and impairment losses (EBITDA) |
80,569 | 72,942 | 258,561 | 236,293 | 307,510 |
| Depreciation, amortisation and impairment losses | -36,163 | -33,040 | -105,312 | -94,879 | -129,681 |
| Profit before net financials (EBIT) | 44,406 | 39,902 | 153,249 | 141,414 | 177,829 |
| Net financials | -6,840 | -1,705 | -14,509 | -3,113 | -2,436 |
| Profit before tax | 37,566 | 38,197 | 138,740 | 138,301 | 175,393 |
| Profit for the period | 29,088 | 30,646 | 108,393 | 111,406 | 140,269 |
| Earnings per share (DKK) | 9.35 | 9.96 | 12.57 | ||
| Earnings per share, diluted (DKK) | 9.32 | 9.87 | 12.46 | ||
| Balance sheet | |||||
| Non-current assets | 1,282,627 | 1,161,738 | 1,218,274 | ||
| Total assets | 2,145,962 | 1,922,204 | 2,058,615 | ||
| Equity including non-controlling interests | 980,120 | 665,180 | 710,402 | ||
| Investments in property, plant and equipment (excluding acquisitions) |
54,787 | 26,202 | 109,343 | 86,448 | 154,997 |
| Net working capital (NWC) | 427,884 | 430,412 | 491,614 | ||
| Net interest-bearing debt (NIBD) | 629,395 | 801,127 | 875,677 | ||
| NIBD/EBITDA (LTM) | 1.9 | 2.6 | 2.8 | ||
| Cash flows | |||||
| Cash flows from: | |||||
| - operating activities | 69,701 | 29,083 | 253,615 | 126,782 | 158,630 |
| - investing activities | -53,089 | -25,669 | -154,614 | -108,248 | -180,202 |
| - financing activities | -5,444 | -9,328 | -33,372 | -19,111 | 8,836 |
| Change in cash and cash equivalents | 11,168 | -5,914 | 65,629 | -577 | -12,736 |
| Key ratios | |||||
| EBITDA margin (%) | 15.9 | 15.4 | 15.9 | 15.6 | 15.3 |
| EBIT margin (%) | 8.7 | 8.4 | 9.4 | 9.4 | 8.8 |
| Profit before tax as a percentage of revenue | 7.4 | 8.1 | 8.6 | 9.2 | 8.7 |
| Return on invested capital including goodwill (%) | 11.8 | ||||
| Return on invested capital excluding goodwill (%) | 11.8 | ||||
| Return on equity, excluding non-controlling interests | 21.1 | ||||
| Equity ratio, excluding non-controlling interests (%) | 45.6 | 34.5 | 34.4 | ||
| Equity ratio, including non-controlling interests (%) | 45.7 | 34.6 | 34.5 | ||
| Financial gearing | 0.6 | 1.2 | 1.2 | ||
| Cash flow per share, DKK | 21.79 | 11.23 | 14.10 | ||
| Total dividends for the year per share (DKK) Market price, end of period (DKK per share) |
233.00 | 236.00 | 0.00 242.00 |
||
| Net asset value per share, end of period (DKK) | 79.87 | 59.08 | 63.51 | ||
| Market price/net asset value, end of period | 2.92 | 3.99 | 3.81 | ||
| Number of shares, end of period | 12,490,000 | 11,390,000 | 11,390,00 | ||
| of which treasury shares, end of period | 247,849 | 168,959 | 242,594 | ||
| Average no. of employees | 2,189 | 2,085 | 2,114 |
The financial ratios have been calculated in accordance with "Recommendations & Ratios" issued by CFA Society Denmark. The definitions are listed on page 69 of the 2019 Annual Report.
We continued to improve sales to many customers across industries and geographies in the first nine months of 2020. Improvements were the most pronounced in our international markets, as sales outside Denmark grew by 17.2% in the 9M period. Sales to our Danish customers were down by 9.2%.
International sales were up by 17.5% in local currencies.
Performance numbers by customer group relative to the corresponding period of 2019:
| Q3 2020 |
Acc. Q3 2020 |
|
|---|---|---|
| Healthcare | 3.0% | 9.0% |
| Cleantech | 16.0% | 4.1% |
| Food-related | 3.2% | 3.7% |
| Automotive | -23.7% | -24.2% |
| Other demanding industries |
10.6% | 23.3% |
| of which own brands | 17.1% | 11.7% |
Most of the change in revenue for the 9M period was due to higher volume sales. Exchange rate developments reduced revenue by about DKK 2.6 million (SEK and RMB depreciating; USD unchanged against DKK), equal to 0.2% of revenue.
Acquired businesses and operations contributed about DKK 85.4 million of the 9M revenue improvement.
Organic growth in local currencies was about 2.0% in 9M 2020. The rate in the Q3 period was about 5.1%.
Sales to the healthcare industry were up by 9.0% year-on-year to DKK 474.7 million and now account for 29.3% of consolidated revenue.
Sales to the cleantech industry were up by 4.1% to DKK 523.3 million and now make up 32.3% of consolidated revenue.
Sales to food-related industries were up by 3.7% to DKK 212.4 million and now make up 13.1% of consolidated revenue.
Sales to the automotive sector declined 24.2% to DKK 63.8 million to make up 3.9% of revenue.
Sales to other demanding industries were up by 23.3% to DKK 348.2 million and now account for 21.5% of consolidated revenue.
Sales of our own brands were up by 11.7% and now account for 22.6% of consolidated revenue.
SP Medical reported a 6.2% decline in guidewire sales.
Ergomat reported a 35.0% improvement in sales of ergonomic products. Ergomat's Q3 growth rate was 35.7%. The improvements were driven by new innovative solutions and products, improved market opportunities and a larger sales force. The resulting growth contributed to the increase in operating income.
TPI reported a 9.1% decline in sales of farm ventilation components.
MedicoPack reported a 6.3% increase in sales of medical device packaging.
Tinby Skumplast, MM Composite, Dan-Hill-Plast, Ulstrup Plast and Nycopac along with SP Moulding reported combined 8.9% growth in own-brand sales – standard industry components – to a total of DKK 97.4 million.
SP Group continued its intensified marketing efforts towards both existing and potential customers. We won new customers in the first nine months of 2020 and are continuing our proactive approach to developing and marketing a number of new solutions for the healthcare, cleantech and food-related industries, which we believe hold an attractive growth potential for our company.
We are generating higher volume sales to the healthcare industry and have won orders for many new plastics components for regular shipment.
International sales make up 68.7% of revenue (compared with 62.9% in 9M 2019).
SP Group continually seeks to optimise its business under the prevailing market conditions by raising production efficiency, aligning capacity and pursuing tight cost management.
In addition to capacity adjustments, we focus on adjusting our general costs on an ongoing basis. Our goal at SP Group is for all of our production facilities to manufacture and deliver better, cheaper and faster. We continually consider steps to cut consumption of input materials and resources (reducing carbon emissions, etc.) and to reduce the time necessary to commission equipment and switch-over times. We are continuing the current roll-out of our LEAN process, which aims to improve our processes and flows and to enhance the skill sets of our organisation.
Currently, some 72% of our staff are employed outside Denmark.
The Group's headcount grew by 24 in the nine months to 30 September 2020.
The new employees are based in Denmark (34), the USA (15) and Slovakia (7), while there was a net reduction of 32 employees in the rest of the world. The larger headcount in Denmark was due to the acquisition of Dan-Hill-Plast A/S.
At 30 September 2020, SP Group had 2,205 employees worldwide.
Volatility in prices of raw materials and frequent coronavirus-related force majeure claims by our suppliers had a negative impact on EBITDA in the 9M 2020 period. We expect to pass on the higher prices of raw materials to our customers at a certain time lag.
All our 27 plants in Europe, North America and Asia are operating and have access to the raw materials they require. All sales offices are open, and just over 95% of our employees are working. Everybody is not back at work yet, because Denmark, Poland, the USA, China and Slovakia have or have had schools and day-care facilities partially closed, which means some employees need to stay home to look after their children.
It goes without saying that all locations have taken a number of initiatives to ensure that people observe social distancing and that strict hygiene procedures are followed at all times.
The longest shutdown so far was in China. As planned, we closed our three factory sites in the last week of January in observance of the Chinese New Year, but the authorities extended the closing period to include the following two weeks as well. Production only restarted in the third week of February and with only half of the staff at work, but our factories in China have been running normally since the end of February. We have had challenges – and still do – particularly delays on shipments coming in and out of China, but our customers are intent on catching up on the production lost during the coronavirus crisis.
We have not had production disrupted in other countries due to the coronavirus.
On the customer side, we are fortunate that SP Group is not particularly exposed to the sectors and industries most severely impacted by the coronavirus crisis.
Our largest sector, cleantech, accounts for one-third of our consolidated sales and so far, it seems relatively unaffected by the coronavirus. Meanwhile, the green transition remains a high priority across the world.
Our second-largest sector, healthcare, also seems to have escaped much of the coronavirus impact. The same applies to the third of our large sectors, food manufacturers and food-related industries, although several of our customers have been forced to shut down their operations by the authorities to avoid a spread of the virus.
Sales to the automotive sector on the other hand have been hard hit, because the coronavirus has forced many factories producing cars and other rolling stock to close.
The picture is quite mixed among Other demanding industries.
Geographically, the impact on our customers varies significantly. Our customers in Italy, France and Spain were closed because the authorities implemented general lockdowns. The same goes for a number of customers in the USA, India and Brazil.
Some parts of our Group saw their activity levels go up because of the coronavirus. Ergomats DuraStripe® products are normally used to support health and safety measures in industry. Now, DuraStripe® is also being used to help people observe social distancing, use the correct personal protective equipment (PPE) and generally to help mitigate the spread of the coronavirus in the public domain.
Another example is the use of PlexxOpido's plexiglass solutions to help shield cashiers from shoppers in supermarkets and other retail outlets.
A third example is online businesses. Due to the rapid growth they are experiencing, they need Ergomat's ergonomic flooring solutions to ensure a strong health and safety environment for their growing staff numbers.
Obviously, SP Group has also been affected by the coronavirus crisis, but we manufacture, sell and deliver our products on a daily basis. Our supply chains are intact. We have not incurred losses on trade receivables on account of the crisis, nor do we expect any.
SP Group has not made use of the Danish relief schemes, as we have not had the need. The extension of deadlines for paying VAT and employee income taxes had a positive effect of approximately DKK 26.5 million on our cash and cash equivalents.
However, it is difficult to provide meaningful guidance in a world where different countries are at different stages in their fight against the coronavirus and where the situation is continuously evolving.
At the end of April 2020, SP Group took out a DKK 50 million loan at market rate with Jyske Bank to fund the acquisition of Dan-Hill-Plast A/S. The loan is scheduled to be repaid over six years.
In addition, SP Group has extended its credit facilities with its primary bankers until spring 2021. The financial covenants are unchanged:
NIBD/EBITDA is expected to be less than 3.0 by 31 December 2020.
On 3 June 2020, SP Group issued 1.1 million new shares in a directed issue without preemption rights.
The shares were sold at market price (DKK 200 per share), giving SP Group gross proceeds of DKK 220 million and DKK 214.5 million net of issuance costs. The shares were oversubscribed.
In June and August of 2020, the Company sold 134,028 treasury shares to cover the cost of warrants exercised under the 2017 warrant programme. The proceeds added DKK 25.4 million in cash to equity.
As announced in Announcement No. 37/2020, SP Group has launched a DKK 40 million share buy-back programme, which is expected to run until 10 April 2021. The purpose of the programme is to hedge existing warrant programmes.
SP Group is committed to continuing its aggressive M&A strategy of making value-generating acquisitions that contribute to increasing the scale and diversification of the Group. The acquisition experience compiled in recent years has enabled us to achieve effective synergies leading to both top and bottom-line growth.
Revenue for the first nine months of 2020 amounted to DKK 1,622.4 million, a 7.5% improvement from DKK 1,510.0 million in the year-earlier period. Acquired businesses and operations accounted for approximately 5.3ppts. Exchange rate developments reduced revenue by about 0.2ppt.
The consolidated 9M 2020 EBITDA was DKK 258.6 million compared with DKK 236.3 million in 9M 2019. Acquired businesses and operations contributed DKK 13.3 million.
The EBITDA margin was 15.9%, against 15.6% in 9M 2019.
Profit before net financials (EBIT) came to DKK 153.2 million in 9M 2020, against DKK 141.4 million in 9M 2019. The 9M 2020 EBIT margin was unchanged at 9.4%.
Net financials were an expense of DKK 14.5 million in 9M 2020, an DKK 11.4 million greater expense than in 9M 2019 that was due to a decline in positive value adjustments.
Profit before tax amounted to DKK 138.7 million in 9M 2020 as against DKK 138.3 million in 9M 2019.
The tax rate rose to 21.9% from 19.5%.
Total assets amounted to DKK 2,146.0 million at 30 September 2020, compared with DKK 1,922.2 million at 30 September 2019 and DKK 2,058.6 million at 31 December 2019. The equity ratio was 45.7% at 30 September 2020 (as against 34.6% at 30 September 2019 and 34.5% at 31 December 2019).
Total assets grew by approximately DKK 87.3 million during the nine months to 30 September 2020. The amount breaks down as follows: DKK 94.0 million relating to the acquisition of Dan-Hill-Plast, a reduction of gross working capital (DKK 63.3 million), an increase in cash and cash equivalents (DKK 65.6 million), a reduction of intangible assets (DKK 4.1 million), a reduction of property, plant and equipment (DKK 4.9 million) and an increase in financial assets (DKK 0.7 million).
Net interest-bearing debt amounted to DKK 629.4 million at 30 September 2020, against DKK 875.7 million at the beginning of 2020 and DKK 801.1 million at 30 September 2019.
Being focused on working capital, the Group has sold selected trade receivables. Net interest-bearing debt was 1.9 times LTM EBITDA (DKK 329.8 million). NIBD/EBITDA was 2.8 at 31 December 2019. We remain strongly committed to reducing interestbearing debt by increasing cash flows from operating activities.
Equity was reduced in the 9M reporting period due to exchange rate adjustments of foreign subsidiaries (by DKK 30.2 million) and the value adjustment of financial instruments acquired to hedge future cash flows, such instruments consisting mainly of forward contracts (PLN against EUR, by DKK 19.3 million).
Equity was also reduced by the purchase of treasury shares in the reporting period for a net amount of DKK 4.2 million.
Equity saw a positive effect from the issue of 1.1 million new shares which produced net proceeds of DKK 214.5 million.
Equity amounted to DKK 980.1 million at 30 September 2020 against DKK 665.2 million at 30 September 2019 and 710.4 million at 31 December 2019.
Equity increased by DKK 269.7 million in 9M 2020.
Cash flows from operating activities were DKK 253.6 million in 9M 2020, which was DKK 126.8 million more than in the 9M 2019 period.
In the 9M 2020 period, the Group spent DKK 109.8 million on investments, a net amount of DKK 76.5 million on reducing non-current loans, a net amount of DKK 4.2 million on buying treasury shares, DKK -0.8 million on changes in deposits, DKK 44.8 million on a new acquisition, DKK -166.4 million on changes in short-term bank debt, while the issue of new shares produced net proceeds of DKK 214.5 million. The resulting change in cash and cash equivalents was DKK 65.6 million.
Management believes that the company's capital resources remain sound relative to its operations and that is has sufficient cash resources to meet its current and future liabilities. The company has good, long-standing and constructive relationships with its financial business partners and expects to continue those relationships.
The global economy is unlikely to grow in 2020. It remains fragile and subject to political uncertainty and economic volatility. Our neighbouring markets in Europe have grave government budget deficits and high indebtedness. The outbreak of coronavirus in China, which has subsequently spread to the rest of the world, may continue to have considerable adverse effects on the global economy and on our customers and suppliers – and thus on the developments of SP Group.
Brexit is expected to have only a marginally direct impact on SP Group, but it will have an adverse indirect effect on us through a number of our customers.
Trade barriers between the USA and the EU and between the USA and China may have a strong adverse effect on the global economy and, by extension, on developments in SP Group. A higher
level of interest rates would also have an adverse effect on developments in SP Group. A permanently weaker US dollar would have an adverse effect on the developments of SP Group.
We plan to launch a number of new products and solutions for our customers, particularly in the healthcare, cleantech and food-related industries. These new solutions are expected to contribute to growth and earnings.
We intend to maintain a high level of investment for the rest of 2020. We expect the largest single investment to be made in our cleantech operations.
Amortisation and depreciation charges are expected to be higher than in 2019, in part due to the substantial investments made in 2019 and 2020 and a company acquisition.
Financial expenses are expected to be higher than in 2019.
Our Group is strongly positioned for the future thanks to tight cost management and swift capacity alignment and by maintaining a strong focus on risk management, cash management and capital management.
Due to geopolitical developments and the spread of the coronavirus and the actions taken by authorities, our levels of activity and cash flows in the coming months are subject to significant uncertainty.
At the present time, we expect to generate FY 2020 revenue in the DKK 2.1–2.2 billion range, an EBITDA margin of 15.5-16.0% and an EBT margin of 8-9%. This upgraded guidance narrows our previous guidance range (of FY 2020 revenue in the DKK 2.0– 2.2 billion range and an EBITDA margin of 15-16%).
The level of uncertainty remains very high, and substantial changes to the assumptions underlying our guidance may still occur.
SP Group A/S acquired Danish company Dan-Hill-Plast A/S effective from 30 April 2020.
Dan-Hill-Plast A/S is an advanced rotation-moulding company with production and assembly facilities in Hornsyld in Central Jutland. Dan-Hill-Plast dates back to 1957. The company has seen strong growth and is currently among Scandinavia's leading rotation-moulding businesses. Exports account for about 40% of its revenue. As a subcontractor to demanding industrial businesses, Dan-Hill-Plast manufactures products for a wide range of industries. The company also develops,
manufactures and sells own-brand products, such as fenders for yachts and boats under the Dan-Fender brand which is sold globally. The company is certified to the ISO 9001 standard. The company's highly skilled management and committed employees will be staying on. The acquisition was announced in Announcement no. 25/2020. The acquisition price is specified in a note on page 13.
Accoat's factory in Brazil was shut down at the beginning of 2020 due to a change in market conditions.
The coronavirus situation has prevented us from winding up the company, because the relevant public offices have been closed.
However, discontinuing operations in Brazil did not affect the profit for the period.
Construction of Gibo's new factory in China has been delayed due to the coronavirus pandemic, causing higher costs because the company continues to manufacture products in Europe and shipping them to China. We expect to start up production in China by the end of 2020.
Gibo plans to add rotation moulding facilities to the new factory in China in 2021. The rotation moulding machines are currently being manufactured in the USA and are expected to arrive in China in the first half of 2021.
Ulstrup Plast has completed expanding its facilities in Slovakia for the benefit of existing and new customers, and the company is now able to continue its positive growth.
The Board of Directors, the Executive Board and the rest of management have today considered and approved the interim report of SP Group A/S for the nine months ended 30 September 2020.
The interim report, which has been neither audited nor reviewed by the company's auditors, was prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU and additional requirements of the Danish Financial Statements Act.
In our opinion, the interim financial statements give a true and fair view of the Group's assets, liabilities and financial position at 30 September 2020 and of the results of the Group's operations and cash flows for the nine months ended 30 September 2020.
Furthermore, in our opinion, the Management commentary gives a true and fair review of the development of the Group's activities and financial affairs, the financial results for the period and the Group's financial position in general as well as a true and fair description of the principal risks and uncertainties which the Group faces.
Søndersø, 12 November 2020
Frank Gad Søren Ulstrup CEO Member of the Executive Board
Lars Ravn Bering /Tilde Kejlhof Member of the Executive Board CFO
Board of Directors
Hans W. Schur Erik P. Holm
Chairman Deputy Chairman
Hans-Henrik Eriksen Bente Overgaard
| Q3 2020 | Q3 2019 | Acc. Q3 2020 |
Acc. Q3 2019 |
FY 2019 | |
|---|---|---|---|---|---|
| DKK '000 | (unaud.) | (unaud.) | (unaud.) | (unaud.) | (audited) |
| Revenue | 508,029 | 474,170 | 1,622,416 | 1,509,966 | 2,012,932 |
| Production costs | -352,353 | -323,817 | -1,115,809 | -1,027,329 | -1,370,187 |
| Contribution margin | 155,676 | 150,353 | 506,607 | 482,637 | 642,745 |
| Profit before depreciation, amortisation and impairment losses (EBITDA) |
80,569 | 72,942 | 258,561 | 236,293 | 307,510 |
| Depreciation, amortisation and impairment losses | -36,163 | -33,040 | -105,312 | -94,879 | -129,681 |
| Profit before net financials (EBIT) | 44,406 | 39,902 | 153,249 | 141,414 | 177,829 |
| Net financials | -6,840 | -1,705 | -14,509 | -3,113 | -2,436 |
| Profit before tax | 37,566 | 38,197 | 138,740 | 138,301 | 175,393 |
| Tax on profit for the period | -8,478 | -7,551 | -30,347 | -26,895 | -35,124 |
| Profit for the period | 29,088 | 30,646 | 108,393 | 111,406 | 140,269 |
| Attributable to: | |||||
| Parent company shareholders | 28,894 | 30,593 | 108,430 | 111,437 | 140,188 |
| Non-controlling shareholders | 104 | 53 | -37 | -31 | 81 |
| Earnings per share (DKK) | 9.35 | 9.96 | 12.57 | ||
| Earnings per share, diluted (DKK) | 9.32 | 9.87 | 12.46 |
| DKK '000 | Q3 2020 (unaud.) |
Q3 2019 (unaud.) |
Acc. Q3 2020 (unaud.) |
Acc. Q3 2019 (unaud.) |
FY 2019 (audited) |
|---|---|---|---|---|---|
| Profit for the period | 29,088 | 30,646 | 108,393 | 111,406 | 140,269 |
| Items that may be reclassified to the income statement: |
|||||
| Exchange rate adjustment relating to foreign companies | -13,308 | -4,498 | -30,202 | -5,511 | 3,546 |
| Net fair value adjustment of financial instruments acquired to hedge future cash flows |
-13,539 | -20,186 | -19,323 | -10,539 | 12,131 |
| Other comprehensive income | -26,847 | -24,684 | -49,525 | -16,050 | 15,677 |
| Comprehensive income | 2,241 | 5,962 | 58,868 | 95,356 | 155,946 |
| Allocation of comprehensive income for the period: |
|||||
| Parent company shareholders | 2,143 | 5,919 | 58,922 | 95,424 | 155,879 |
| Non-controlling shareholders | 98 | 43 | -54 | -68 | 67 |
| Earnings per share (DKK) | 5.08 | 8.52 | 13.98 | ||
| Earnings per share, diluted (DKK) | 5.06 | 8.44 | 13.86 |
| 30.09. 2020 |
30.09. 2019 |
31.12. 2019 |
|
|---|---|---|---|
| DKK '000 | (unaud.) | (unaud.) | (audited) |
| Intangible assets* | 295,368 | 277,494 | 264,007 |
| Property, plant and equipment | 983,527 | 879,877 | 951,355 |
| Financial assets | 1,972 | 1,546 | 1,152 |
| Deferred tax assets | 1,760 | 2,821 | 1,760 |
| Total non-current assets | 1,282,627 | 1,161,738 | 1,218,274 |
| Inventories | 444,563 | 414,642 | 488,843 |
| Receivables* | 304,437 | 284,959 | 302,792 |
| Cash | 114,335 | 60,865 | 48,706 |
| Total current assets | 863,335 | 760,466 | 840,341 |
| Total assets | 2,145,962 | 1,922,204 | 2,058,615 |
| Equity including non-controlling interests | 980,120 | 665,180 | 710,402 |
| Non-current liabilities | 588,913 | 541,065 | 573,462 |
| Current liabilities* | 576,929 | 715,959 | 774,751 |
| Equity and liabilities | 2,145,962 | 1,922,204 | 2,058,615 |
* See notes 3 and 4 to the financial statements on page 16 for changes in goodwill and fair value of derivative financial instruments.
| DKK '000 | Q3 2020 (unaud.) |
Q3 2019 (unaud.) |
Acc. Q3 2020 (unaud.) |
Acc. Q3 2019 (unaud.) |
FY 2019 (audited) |
|---|---|---|---|---|---|
| Profit before net financials (EBIT) | 44,406 | 39,902 | 153,249 | 141,414 | 177,829 |
| Depreciation, amortisation and impairment losses | 36,163 | 33,040 | 105,312 | 94,879 | 129,681 |
| Share-based payment | 162 | 186 | 518 | 515 | 702 |
| Value adjustments, etc. | -12,650 | -5,391 | -25,782 | -5,680 | -1,430 |
| Change in working capital | 16,789 | -26,989 | 48,567 | -53,072 | -83,690 |
| Interest expenses paid | -5,055 | -6,247 | -14,005 | -18,506 | -23,528 |
| Income tax received/paid | -10,114 | -5,418 | -14,244 | -32,768 | -40,934 |
| Cash flows from operating activities | 69,701 | 29,083 | 253,615 | 126,782 | 158,630 |
| Acquisition of subsidiary | 0 | 0 | -44,792 | -26,139 | -17,778 |
| Acquisition of intangible assets | 1,698 | -1,020 | -3,099 | -3,164 | -8,490 |
| Acquisition of property, plant and equipment, net | -54,787 | -24,649 | -106,723 | -78,945 | -153,934 |
| Cash flows from investing activities | -53,089 | -25,669 | -154,614 | -108,248 | -180,202 |
| Dividend to non-controlling shareholders | 0 | 0 | 0 | 0 | 0 |
| Dividends paid | 0 | 0 | 0 | -26,892 | -26,994 |
| Deposits, adjustment | -75 | -12 | -820 | 1,455 | 170 |
| Acquisition of treasury shares | -3,067 | -15,944 | -29,590 | -50,392 | -68,516 |
| Sale of treasury shares | 15,081 | 8,372 | 25,385 | 25,490 | 26,886 |
| Capital increase | -324 | 0 | 214,537 | 0 | 0 |
| Sale of warrants | 0 | 0 | 0 | 1,072 | 1,072 |
| Raising of long-term loans | 38 | 0 | 72,401 | 70,000 | 156,693 |
| Instalments on non-current liabilities | -21,191 | -36,080 | -148,889 | -113,122 | -152,540 |
| Bank debt, adjustment | 4,094 | 34,336 | -166,396 | 73,278 | 72,065 |
| Cash flows from financing activities | -5,444 | -9,328 | -33,372 | -19,111 | 8,836 |
| Change in cash and cash equivalents | 11,168 | -5,914 | 65,629 | -577 | -12,736 |
| Cash and cash equivalents at 1 January | 103,167 | 66,779 | 48,706 | 61,442 | 61,442 |
| Cash and cash equivalents at end of period | 114,335 | 60,865 | 114,335 | 60,865 | 48,706 |
| Equity attributable to parent company shareholders |
to non-controlling interests |
Equity attributable | Equity including non-controlling interests |
|||
|---|---|---|---|---|---|---|
| DKK '000 | 2020 (unaud.) |
2019 (unaud.) |
2020 (unaud.) |
2019 (unaud.) |
2020 (unaud.) |
2019 (unaud.) |
| Balance at 1 January | 707,987 | 617,683 | 2,415 | 2,348 | 710,402 | 620,031 |
| Profit for the period | 108,430 | 111,437 | -37 | -31 | 108,393 | 111,406 |
| Other comprehensive income: | ||||||
| Exchange rate adj., foreign subsidiaries | -30,185 | -5,474 | -17 | -37 | -30,202 | -5,511 |
| Value adjustment of derivative financial instruments |
-19,323 | -10,539 | 0 | 0 | -19,323 | -10,539 |
| Total other comprehensive income | -49,508 | -16,013 | -17 | -37 | -49,525 | -16,050 |
| Comprehensive income for the period | 58,922 | 95,424 | -54 | -68 | 58,868 | 95,356 |
| Share-based payment Sale of warrants |
518 0 |
515 1,072 |
0 0 |
0 0 |
518 0 |
515 1,072 |
| Acquisition of treasury shares | -29,590 | -50,392 | 0 | 0 | -29,590 | -50,392 |
| Sale of treasury shares | 25,385 | 25,490 | 0 | 0 | 25,385 | 25,490 |
| Dividends paid | 0 | -26,892 | 0 | 0 | 0 | -26,892 |
| Capital increase | 214,537 | 0 | 0 | 0 | 214,537 | 0 |
| Addition from acquisitions | 0 | 0 | 0 | 0 | 0 | 0 |
| Other adjustments | 0 | 0 | 0 | 0 | 0 | 0 |
| Transactions with shareholders | 210,850 | -50,207 | 0 | 0 | 210,580 | -50,207 |
| Balance at 30 September | 977,759 | 662,900 | 2,361 | 2,280 | 980,120 | 665,180 |
Preliminary fair values of assets and liabilities at the date of acquisition are set out below.
| DKK '000 | |
|---|---|
| Customer files | 12,000 |
| Property, plant and equipment | 36,962 |
| Inventories | 9,443 |
| Order book | 869 |
| Trade receivables | 8,528 |
| Other receivables | 804 |
| Cash and cash equivalents | 3,367 |
| Deferred tax | -5,103 |
| Other provisions | -453 |
| Trade payables | -2,952 |
| Income tax | -1,202 |
| Other payables | -4,177 |
| Acquired net assets | 58,086 |
| Goodwill | 23,639 |
| Total consideration | 81,725 |
| Cash consideration | 48,158 |
| Debt instruments | 14,442 |
| Lease liability | 19,125 |
| Total consideration | 81,725 |
The acquired entity had EBITDA of about DKK 6.2 million in its most recent financial year. After rent on the acquired property and other adjustments are accounted for, EBITDA was approximately DKK 12.5 million.
EBITDA for the first four months of 2020 was approximately DKK 3.4 million.
The consideration amounted to DKK 81,725 thousand, of which DKK 48,158 thousand was paid in cash.
Debt instruments with a total nominal value of DKK 15,000 thousand, which fall due in the period 2021-2022, have been issued. The discounted amount is DKK 14,442 thousand.
Concurrently with the acquisition of the company, an agreement was concluded for the lease and purchase of the production facility where Dan-Hill-Plast operates its business. The property was recognised under property, plant and equipment (lease asset) in the purchase price allocation, and the corresponding lease liability was recognised as part of the consideration.
Acquisition costs amount to DKK 0.75 million in a preliminary estimate, which amount has been recognised in 2020.
In a preliminary estimate, goodwill has been made up at DKK 23,639 thousand after recognition at fair value of identifiable assets, liabilities and contingent liabilities. Goodwill represents the expected value of synergies and know-how resulting from the combination with SP Group. Goodwill is not amortised for tax purposes.
No warrants were issued in 2020.
A total of 134,028 warrants were exercised in June and August 2020.
SP Group currently has incentive programmes consisting of 11,535 warrants (2016 programme) that are exercisable as from 2019, 208,200 warrants (2017 programme) that are exercisable as from 2020, 207,500 warrants (2018 programme) that are exercisable as from 2021, and 240,000 warrants (2019 programme) that are exercisable as from 2022.
If a participant resigns from the group company in which he or she is employed, the number of warrants will be reduced on a pro rata basis so as to reflect that the participant was only associated with the Group for a part of the term of the programme. This does not apply if a participant has bought and paid for his or her warrants.
The interim report for the nine months to 30 September 2020 is presented in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and Danish disclosure requirements for listed companies. Other than as set out below, the accounting policies are consistent with those applied in Annual Report 2019, in which the accounting policies are set out in their entirety in note 1 to the financial statements.
Effective from 1 January 2020, SP Group A/S has implemented the following new or amended standards and interpretations:
SP Group A/S has implemented the standards and interpretations taking effect in the EU for 2020. None of these have affected recognition and measurement in 2020 nor are they expected to affect SP Group A/S.
In preparing the interim financial statements, Management makes accounting judgments and estimates that affect the use of accounting policies and recognised assets, liabilities, income and expenses. Actual results may differ from these judgments.
The most significant estimates made by Management when applying the accounting policies and the most significant judgment uncertainty related to preparing these interim financial statements are the same as those used to prepare the consolidated and the parent company financial statements for 2019. Reference is made to the information provided on estimates and judgments in note 2 to the consolidated and the parent company financial statements for 2019.
Management has not identified evidence of impairment of the carrying amount of intangible assets including goodwill at 30 September 2020.
| 30.09. 2020 |
30.09. 2019 |
31.12. 2019 |
|
|---|---|---|---|
| DKK '000 | (unaud.) | (unaud.) | (audited) |
| Cost at 1 January | 200,853 | 196,071 | 196,071 |
| Foreign exchange adjustment | -717 | 693 | 333 |
| Addition from acquisitions | 23,639 | 12,171 | 4,449 |
| Additions | 0 | 0 | 0 |
| Cost at 30 September | 223,775 | 208,935 | 200,853 |
| Depreciation and impairment at 1 January | 1,861 | 1,861 | 1,861 |
| Impairment | 0 | 0 | 0 |
| Foreign exchange adjustment | 0 | 0 | 0 |
| Cost at 30 September | 1,861 | 1,861 | 1,861 |
| Carrying amount at 30 September | 221,914 | 207,074 | 198,992 |
Listed below are relevant disclosure requirements relevant for the Group's forward exchange contracts.
Derivative financial instruments are measured in accordance with a recognised valuation method, under which all material data are based on observable market data, i.e. level 2
| 30.09. 2020 |
30.09. 2019 |
31.12. 2019 |
||||
|---|---|---|---|---|---|---|
| DKK '000 | (unaud.) | (unaud.) | (audited) | |||
| Financial assets | Fair value | Carrying amount |
Fair value | Carrying amount |
Fair value | Carrying amount |
| Derivative financial instruments to hedge future cash flows |
4,565 | 4,565 | 770 | 770 | 27,777 | 27,777 |
With a view to hedging the currency risk on the future sale of goods in EUR from the Polish entities, derivative financial instruments have been entered into, in accordance with the Group's currency policy, hedging part of the currency risk related to such sales for a period of up to four years.
This interim report contains forward-looking statements reflecting Management's current perception of future trends and financial performance. Statements relating to 2020 and the following years are inherently subject to uncertainty and SP Group's actual results may thus differ from expectations. Factors that may cause actual results to differ from expectations include, but are not limited to, changes in SP Group's activities, raw materials prices, foreign exchange rates, pandemics and economic conditions. This interim report does not constitute an invitation to buy or sell shares in SP Group A/S.
SP Group manufactures moulded plastic and composite components and applies plastic coatings on plastic and metal surfaces.
SP Group is a leading supplier of plastic manufactured products for the manufacturing industries and has increasing sales and growing production from own factories in Denmark, China, the USA, Latvia, Slovakia, Sweden, Finland and Poland. SP Group also has sales and service subsidiaries in Sweden, Norway, the Netherlands and Canada. SP Group is listed on NASDAQ OMX Copenhagen and had some 2,200 employees and about 2,200 registered shareholders at 30 September 2020.
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