Earnings Release • Jul 16, 2020
Earnings Release
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When we summarise the first half of this year. I can conclude that we have delivered two solid quarters despite the turmoil caused by the Covid-19 pandemic. In March, we quickly adapted to the new situation and managed throughout the second quarter to operate our business with many of our employees working remotely. We maintained our efficiency with a clear focus to execute in our client projects, to win new projects and to continue to work closely together with our clients.
In the second quarter, net sales increased 5 per cent, corresponding to SEK 275 million, and organic growth amounted to 1 per cent, adjusted for calendar effects. At the same time, earnings improved and EBITA increased 12 per cent, corresponding to SEK 51 million, adjusted for calendar effects. All in all, this resulted in an EBITA margin of 9.0 per cent (8.1). The positive performance was mainly driven by lower operating expenses, a positive contribution from acquisitions and an increased number of employees. The higher billing ratio also had a positive impact, whereas higher negative project adjustments and restructuring costs had a negative impact on earnings. Cost reductions mainly related to Covid-19 had a positive impact on EBITA of approximately SEK 80 million and restructuring costs had a negative EBITA impact of around SEK 40 million. Our cash flow from operating activities improved SEK 836 million compared to the same quarter last year and we stand financially strong with a net debt/EBITDA ratio of 0.5x (1.2) and SEK 4.7 billion of available liquid assets.
Finland continued to deliver solid EBITA improvement with an EBITA margin above 14 per cent. Sweden and Norway had slightly lower EBITA adjusted for calendar effects at the same time as margins improved. Belgium continued to deliver strong growth and margins. The UK developed well, with MLM and the commencement of previously postponed projects contributing to improved earnings. Calendar adjusted EBITA also improved for the Netherlands and Denmark, whereas Germany continued to have challenges with profitability.
Sweco plans and designs tomorrow's communities and cities. Our work produces sustainable buildings, efficient infrastructure and access to electricity and clean water. With more than 17,500 full-time employees in Europe, we offer our clients the right expertise for every project. We carry out projects in some 70 countries annually throughout the world.
Sweco is Europe's leading engineering and arc This information is information that Sweco is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons, at around 12:00 CET
We have proven our ability to quickly and efficiently adapt to the prevailing market situation. Despite the circumstances, we have been able to work at close to normal capacity. Sweco's projects are highly digitalised, and a large proportion of our projects are also vital to society and as such are given priority. Although we experienced continued stable demand in most segments, the Covid-19 pandemic has affected us. We announced organisational adjustments at the start of the quarter, as we experienced lower demand in the industry and the private building and real estate segments. What we have noted in the second quarter is that these segments are still under pressure. Overall, we have managed to adapt well to the situation, but we stand humble facing the future and expect a continued negative impact on demand in the second half of the year.
At the end of the second quarter, around 130 employees in Sweden had been affected by the organisational adjustments of the approximately 200 announced in April. In addition, 29 employees in Germany, 25 employees in Norway, 10 employees in Finland, 3 employees in Belgium and around 150 employees in the UK were on temporary lay-off. In total, 217 employees were on temporary lay-off at the end of the quarter.
We report a solid second quarter and first half year given the situation, but I want to underline that there is still considerable uncertainty about the development of Covid-19 and how it will affect us. Therefore, our short-term focus is to continue to closely manage the situation and take action as needed. Above all, we must work closely together with our clients, deliver according to plan in our projects and win new assignments. At the same time, we will focus on continuing to execute on our strategy – to pursue profitable growth in our eight core markets and to continue to implement the Sweco model.
Looking further ahead, I feel confident about the future. We have market leading positions in large and fragmented markets, and a strong client offering that is well positioned towards the main trends in society. Our broad geographic footprint and diversified offering within sustainable solutions creates a low risk profile and our strong financial position creates the flexibility needed in uncertain times like these. I am proud to say that we have been able to remain relevant to our clients and to their needs, which is absolutely key for us going forward.
Organic growth amounted to approximately 1 per cent after adjustment for calendar effects. Acquired growth amounted to 5 per cent. Currency effects impacted growth with -1 per cent. In total, net sales increased 5 per cent to SEK 5,489 million (5,214).
Organic growth was mainly driven by an increased number of employees and less absence, whereas higher negative project adjustments and less subconsultant revenue had a negative impact. Organic growth adjusted for calendar effects was particularly strong in Belgium and the Netherlands. Acquired growth was predominantly driven by the acquisitions of MLM in the UK, Imp GmbH in Germany and the design operations of NRC Group in Finland.
EBITA increased to SEK 495 million (422), an improvement of SEK 74 million. The EBITA margin increased to 9.0 per cent (8.1).
EBITA improved approximately 12 per cent or SEK 51 million year-on-year after adjustment for calendar effects. The EBITA improvement was mainly attributable to Finland and the UK, but Denmark, the Netherlands and Belgium also contributed positively. Overall for the Group, lower operating expenses, the contribution from acquisitions and an increased number of employees were the main improvement drivers. The higher billing ratio also contributed positively, whereas higher negative project adjustments and restructuring costs had an adverse impact on earnings. Cost savings mainly related to Covid-19 had a positive impact on EBITA of approximately SEK 80 million and restructuring costs a negative impact of around SEK 40 million.
The quarter had 3 more working hours compared with the same period last year. This had a positive year-onyear impact of approximately SEK 23 million on net sales and EBITA.
The billing ratio increased to 75.5 per cent (74.8).
Total net financial items improved to SEK-14 million (-31) primarily due to foreign exchange revaluation
effects. Improved interest net and lower interest cost of leasing also had a positive impact on the quarter.
Organic growth amounted to approximately 2 per cent after adjustment for calendar effects. Acquired growth amounted to 6 per cent. Currency effects were 0 per cent. In total, net sales increased 8 per cent to SEK 11,170 million (10,315).
Organic growth was mainly driven by an increased number of employees, higher average fees and less absence. Organic growth adjusted for calendar effects was particularly strong in Belgium, Finland and the Netherlands. Acquired growth was predominantly driven by the acquisitions of MLM in the UK, Imp GmbH in Germany and the design operations of NRC Group in Finland.
EBITA increased to SEK 1,125 million (953), an improvement of SEK 172 million. The EBITA margin increased to 10.1 per cent (9.2).
EBITA improved approximately 13 per cent or SEK 122 million vear-on-vear after adjustment for calendar effects. The EBITA improvement was mainly attributable to Finland and the UK, but Sweden, Belgium. Norway and the Netherlands also contributed positively. Overall for the Group, lower operating expenses, higher average fees, contribution from acquisitions and an increased number of employees were the main improvement drivers. Higher negative project adjustments and restructuring costs had an adverse impact on earnings.
The calendar effect of 7 more hours had a positive yearon-year impact of approximately SEK 50 million on net sales and EBITA.
The billing ratio increased to 74.5 per cent (74.4).
Total net financial items improved to SEK-52 million (-58) primarily due to a better interest net and lower interest cost of leasing. Changed exchange rates and revaluation effects had a negative impact.
| Key ratios | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jul 2019-Jun 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|
| Net sales, SEK M | 5,489 | 5,214 | 11,170 | 10,315 | 21,484 | 20,629 |
| Organic growth, % | 2 | $\overline{3}$ | $\overline{3}$ | .5 | ||
| Acquisition-related growth, % | 5 | $\sigma$ | ||||
| Currency, % | -1 | |||||
| Total growth, % | 5 | 8 | 8 | 10 | ||
| Organic growth adj. for calendar, % | 5 | 5 | ||||
| EBITA. SEK M 1) | 495 | 422 | 1.125 | 953 | 2.041 | 1,869 |
| Marain, % | 9.0 | 8.1 | 10.1 | 9.2 | 9.5 | 9.1 |
| Profit after tax, SEK M | 319 | 281 | 762 | 672 | 1.484 | 1,393 |
| Earnings per share, SEK | 2.70 | 2.39 | 6.46 | 5.73 | 12.58 | 11.85 |
| Number of full-time employees | 17,555 | 16,281 | 17,439 | 16,044 | 17,095 | 16,412 |
| Billing ratio, % | 75.5 | 74.8 | 74.5 | 74.4 | 74.3 | 74.3 |
| Normal working hours | 465 | 462 | 965 | 958 | 1,969 | 1,962 |
| Net debt/EBITDA, $x^{2}$ | 0.5 | 1.2 | 1.0 |
1) EBITA is an alternative performance measure (APM) defined as Earnings before Interest, Taxes and Acquisition-related items, under which all leases are treated as operating leases and the total cost of the lease affects EBITA. For further information, see pages 10 and 13.
2) Net debt/EBITDA is an alternative performance measure (APM). Net debt is an alternative performance measure
exclusively of interest-bearing bank debt). Jess cash and cash equivalents and short-term investments. Lease liabilities are excluded from Net debt. EBITDA is an alternative performance measure (APM) defined as Earnings before Interest, Taxes, Depreciation & amortisation and Acquisition-related items, under which all leases are treated as operating before interest. Taxes, Depreciat
Sweco has won the assignment to design a plan for a 112 kilometres railway connection in Tornio, Finland. It includes renewal of the Kemi railway yard. The railway section is part of the Trans-European Transport Core Network (TEN-T). The objective of the railway renewal project is to add capacity and to improve the reliability of railway traffic, preparing for upcoming industrial investments in Northern Finland.
Sweco has signed a four-year framework agreement with the Swedish Transport Administration to handle investigations of noise and sound quality, which will help Sweden take a step closer to achieving its goals and quideline values within the area.
Sweco has won an assignment to provide project management services for the new hospital for the Stavanger region, Norway. The building area is $100,000$ m2 and will provide somatic care, emergency services, radiology, laboratory functions, and administrative services.
Sweco has signed a framework contract with ProRail to replace the train detection system on the entire 40 kilometre long railway, Havenspoorlijn, in the Netherlands. This assignment is the first large-scale application of a new type of axle counters in the Netherlands.
Sweco, as partner in a design team of four, has won the study assignment for the redevelopment of the largest Belgian market square, Grote Markt in Sint-Niklaas, Belgium. Sweco has already redeveloped the Stationsstraat, and renovated the green shopping precinct in Sint-Niklaas.
As part of Sorø Municipality's Vision 2022 and ambitions to attract more inhabitants, the municipality has assigned Sweco to draw up a master plan for the development of the 175,000 m2 area, Pilegårdstrekanten in Dianalund in Denmark. The new district will translate the UN's global goals into architecture and show how sustainable materials and design can create a healthy neighborhood with great diversity and quality of life.
Sweco has received an extended assignment from the European Centre for Disease Prevention and Control (ECDC) in Solna, Sweden to secure reporting from member countries of infection and disease data.
EBITA by quarter and rolling 12 months
including data on Covid-19. Sweco's experts have worked since 2019 with an assignment to visualise, structure and automate the reported data in the ECDC's new system.
Overall, the underlying market for Sweco's services was relatively good in the second quarter, despite the Covid-19 impact. However, there is a clear trend shift compared to recent quarters. Essentially all business areas experienced a good market for Sweco's services in the infrastructure, water, environment and energy segments. Demand for services in the real estate segment and in the industry market weakened overall. The Covid-19 pandemic had an impact primarily on the industry and private building and real estate segments.
The Covid-19 situation creates significant uncertainty regarding future market development. Demand for Sweco's services normally follows the general macroeconomic trend in Sweco's markets, with some time lag. A negative medium-term impact on demand can therefore be expected from the economic effects of Covid-19. However, this impact will most likely be partly mitigated by increased public spending.
On 6 April, Sweco informed about the effects of Covid-19 and mitigating actions. The financial position remained strong and large parts of the project portfolio relatively unaffected. However, the industry and private building and real estate segments, equalling about 25 per cent of total business, had been affected to some extent. Mitigating actions in Sweden, Norway and Belgium were announced.
On 21 April, Sweco's Board of Directors announced an adjustment of the dividend proposal to the AGM, from SEK 6.20 to SEK 3.10 per share, given the general level of uncertainty resulting from Covid-19.
On 30 April, dividends totalling SEK 365 million (644) were distributed to Sweco AB shareholders.
On 1 June. Helene Hasselskog took on the role as Chief HR Officer and joined Sweco's Executive Team.
On 12 June, Sweco Belgium acquired SGI Ingénieurs sa/nv, the Belgian branch of the international SGI Groupe. The company has 39 employees including
agency staff within structural design, building techniques and civil engineering. The acquisition will strengthen Sweco's footprint in Brussels and Wallonia.
EVENTS AFTER THE QUARTER No significant events after the end of the quarter.
CASH FLOW AND FINANCIAL POSITION Group cash flow from operating activities totalled SEK 1,901 million (1,029) for the first half of the year. Net debt decreased significantly to SEK 1,259 million (2,324), primarily as a result of the increased operating cash flow and reduced dividends.
The Net debt/EBITDA ratio was 0.5x (1.2).
Available cash and cash equivalents, including unutilised credit lines, totalled SEK 4,691 million (2,532) at the end of the quarter. In April, a new short-term credit facility of SEK 1.000 million was agreed with one of the existing lenders.
Purchase considerations paid to acquire companies and operations totalled SEK 272 million (421) and had an
impact of SEK-232 million (-326) on the Group's cash and cash equivalents. No divestments were made during the period. Last year, divestments of companies and operations generated purchase considerations of SEK 22 million and had an impact of SEK 18 million on the Group's cash and cash equivalents.
No repurchases of Sweco shares were made during the period. Last year, repurchases of Sweco shares totalled SEK 2 million and had the same effect on the Group's cash and cash equivalents.
Dividends totalling SEK 365 million (644) were distributed to Sweco AB's shareholders during the period.
Investments in equipment totalled SEK 105 million (114) and were primarily attributable to IT investments. Depreciation of equipment amounted to SEK 116 million (114) and amortisation of intangible assets totalled SEK 71 million (62).
Net sales increased to SEK 2,015 million (1,952). Organic growth was 2 per cent adjusted for calendar effects. Organic growth was mainly driven by less absence, an improved billing ratio and higher hourly fees, while higher negative project adjustments impacted negatively. The year-on-year calendar effect of 8 more hours had a positive impact of approximately SEK 26 million on net sales and EBITA.
EBITA increased SEK 21 million to SEK 253 million (233). The EBITA margin increased to 12.6 per cent (11.9). EBITA decreased SEK 5 million, adjusted for calendar effects. EBITA was impacted positively by lower operating expenses, whereas higher negative project adjustments impacted negatively. The improved billing ratio and higher hourly fees also contributed positively. In addition, EBITA was negatively impacted by restructuring costs of approximately SEK 40 million.
The Swedish market remained good during the second quarter but there were variations between the different segments. Demand for infrastructure services remained strong, backed by major public investments. The markets for industrial investments, water and environmental services were also good. The real estate market was divided, with good demand within public buildings, whereas demand related to residential construction remained weak with the exception of larger cities where the situation improved somewhat. The market for power transmission services was strong while demand in energy generation remained challenging.
Durina the second auarter, the overall impact of the Covid-19 pandemic on the business was limited, as ongoing projects continued. However, the cautiousness to start new projects within the private building and real estate market continued in the quarter. The negative effect on projects for the automotive industry remained. At the end of the period, around 130 employees were affected by organisational adjustments due to this impact.
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
|---|---|---|---|---|
| Net sales, SEK M | 2.015 | 1,952 | 3,999 | 3,909 |
| Organic growth, % | ||||
| Acquisition-related growth, % | 0 | -1 | ||
| Currency, % | Ο | |||
| Total arowth, % | ||||
| Organic growth adj. for calendar, % | C | 4 | ||
| EBITA. SEK M | 253 | 233 | 523 | 485 |
| EBITA marain, % | 12.6 | 11.9 | 13.1 | 12.4 |
| Number of full-time employees | 5,934 | 5,927 | 5,922 | 5,882 |
$\mathbf{a}$ and $\mathbf{b}$
Organic growth was 1 per cent, adjusted for calendar effects. Organic growth was mainly driven by an increased number of employees and higher hourly fees, while lower revenue from subconsultants and a lower billing ratio impacted negatively. The year-on-year calendar effect of 8 more hours had a positive impact of approximately SEK 9 million on net sales and EBITA.
EBITA increased 36 per cent to SEK 24 million (18) and the EBITA margin increased to 4.1 per cent (2.7). EBITA decreased SEK 3 million, adjusted for calendar effects. EBITA was impacted positively by higher hourly fees, lower operating expenses and an increased number of employees, whereas higher negative project adjustments and a lower billing ratio had a negative impact.
While the Norwegian economy experienced a lock-down and gradual reopening during the second quarter, the construction market was relatively shielded by the impact from Covid-19 due to the long project timelines. In the short term, commercial buildings projects were the most severely hit. The infrastructure and energy markets were stable, but were not yet showing signs of compensating for the weaker buildings market.
At the end of the quarter, around 25 employees were still temporarily laid off.
| IN DITLI | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
| Net sales, SEK M | 598 | 658 | 1,306 | 1,364 |
| Organic growth, % | 10 | |||
| Acquisition-related growth, % | ||||
| Currency, % | $-12$ | -8 | ||
| Total growth, % | $-9$ | -4 | ||
| Organic growth adj. for calendar, % | 8 | 11 | ||
| EBITA, SEK M | 24 | 18 | 121 | 96 |
| EBITA margin, % | 4.1 | 2.7 | 9.3 | 7.0 |
| Number of full-time employees | 1,664 | 1,563 | 1,647 | 1,552 |
IN DOICE
Net sales increased to SEK 726 million (611). Organic growth was 2 per cent adjusted for calendar effects. Organic growth was mainly driven by an increased number of employees. The year-on-year calendar effect of 6 fewer hours had a negative impact of approximately SEK 7 million on net sales and EBITA. Acquired growth contributed 18 per cent and related to the acquisition of the design operations of NRC Group, which were consolidated into Sweco Finland as of November.
EBITA increased 51 per cent, corresponding to SEK 37 million, adjusted for calendar effects and the EBITA margin reached 14.3 per cent (12.0). The increase in EBITA was mainly attributable to lower operating expenses and an increased number of employees as well as the contribution from the acquired design operations of the NRC Group.
Overall, the Finnish market was quite good during the second quarter, with some differences between segments. Demand within the building and real estate segments was generally good, but noted a decline in residential construction as well as in the renovation, maintenance and improvement market. The market for industrial services was quite stable and the market for infrastructure-related services was good.
During the second quarter, the impact of Covid-19 on the construction segment was limited with only some projects postponed or cancelled. At the end of the quarter, around 10 employees remained on temporary layoff.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
| Net sales, SEK M | 726 | 611 | 1,464 | 1.189 |
| Organic growth, % | ||||
| Acquisition-related growth, % | 18 | 18 | ||
| Currency, % | 0 | |||
| Total growth, % | 19 | 23 | 13 | |
| Organic growth adj. for calendar, % | $\overline{\mathcal{E}}$ | |||
| EBITA, SEK M | 104 | 73 | 204 | 147 |
| EBITA margin, % | 14.3 | 12.0 | 14.0 | 12.4 |
| Number of full-time employees | 2.557 | 2.191 | 2.514 | 2,151 |
Net sales increased to SEK 467 million (442). Organic growth amounted to -1 per cent and was mainly impacted by lower average fees. There was no year-on-year difference in the number of available working hours. Acquired growth contributed 7 per cent and related to the acquisition of KANT Arkitekter.
EBITA increased to SEK 22 million (16). EBITA increased 37 per cent, corresponding to SEK 6 million and the EBITA margin increased to 4.8 per cent (3.6). Improved billing ratio and lower operating expenses more than compensated for lower average fees.
During the second quarter, the market in Denmark was affected by the Covid-19 pandemic with delayed and cancelled projects, but there were still several segments with satisfactory development. Demand in the water and environmental sectors remained stable, driven by climate-related services in the larger cities. The energy market was driven by transmission, gas and wind power, but remained weak. The infrastructure market was fairly stable, however it was still affected by the lack of a new national infrastructure plan and the impact of Covid-19 on private investments. The market for building services as well as the residential, office and retail markets remained weak.
During the second quarter, the Covid-19 situation impacted Sweco Denmark primarily by international projects being delayed or cancelled.
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | ||||
|---|---|---|---|---|---|---|---|---|
| Net sales, SEK M | 467 | 442 | 926 | 897 | ||||
| Organic growth, % | -1 | -8 | -5 | -5 | ||||
| Acquisition-related growth, % | ||||||||
| Currency, % | ||||||||
| Total growth, % | -6 | |||||||
| Organic growth adj. for calendar, % | -1 | -6 | -5 | |||||
| EBITA, SEK M | 22 | 16 | 53 | 52 | ||||
| EBITA margin, % | 4.8 | 3.6 | 5.7 | 5.8 | ||||
| Number of full-time employees | 1,250 | 1,172 | 1.214 | 1.184 |
IN DOICE
Net sales increased to SEK 538 million (519). Organic growth amounted to 4 per cent adjusted for calendar effects and was driven by higher average fees and less absence. The year-on-year calendar effect of 8 fewer hours had a negative impact of approximately SEK 6 million on net sales and EBITA.
EBITA amounted to SEK 35 million (37). EBITA improved SEK 5 million, adjusted for calendar effects. The improvement of EBITA was mainly attributable to higher average fees and lower operating expenses.
In the Netherlands, the engineering market remained relatively stable during the period, as did the demand for Sweco's services within infrastructure, energy, water and public sector buildings.
During the second quarter, Sweco Netherlands was affected by the Covid-19 situation with some delayed and cancelled projects in industry and buildings. However, there is still satisfactory development within large parts of the market.
| IN DRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
| Net sales, SEK M | 538 | 519 | 1.084 | 1.025 |
| Organic growth, % | ||||
| Acquisition-related growth, % | ||||
| Currency, % | ||||
| Total growth, % | ||||
| Organic growth adi, for calendar, % | 4 | |||
| EBITA, SEK M | 35 | 37 | 87 | 80 |
| EBITA margin, % | 6.6 | 7.1 | 8.0 | 7.8 |
| Number of full-time employees | 1,399 | 1,410 | 1,401 | 1,407 |
IN BOICE
Net sales increased to SEK 418 million (352), and organic growth was 7 per cent. Recent acquisitions contributed 12 per cent to growth. Organic growth was primarily driven by an increased number of employees and increased revenue from subconsultants. There was no year-on-year difference in the number of available working hours.
EBITA increased 10 per cent to SEK 45 million (41). The improvement in earnings was mainly attributable to an increased number of employees, while a lower billing ratio and lower average fees impacted negatively.
The market was good within most segments during the second quarter and both the private and the public sector building markets remained stable. The residential market was stable as was the office market. The public infrastructure markets remained strong. Belgium is in the middle of a complete energy transition with a focus on decarbonisation in the transportation, building and industry sectors as well as transforming energy production. The electrification in industry and the public domain increased. The pharma industry was running at full speed, while the more traditional industry markets were still impacted by Covid-19.
At the end of June, only 3 employees were still temporarily laid off.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
| Net sales, SEK M | 418 | 352 | 849 | 686 |
| Organic growth, % | 24 | 11 | 16 | |
| Acquisition-related growth, % | 12 | 3 | 12 | |
| Currency, % | 0 | |||
| Total growth, % | 19 | 30 | 24 | 22 |
| Organic growth adj. for calendar, % | 24 | 10 | 16 | |
| EBITA, SEK M | 45 | 41 | 95 | 79 |
| EBITA marain, % | 10.8 | 11.7 | 11.2 | 11.6 |
| Number of full-time employees | 1,054 | 831 | 1,039 | 832 |
$\cdots$ contra
Net sales increased 5 per cent to SEK 305 million (291). Organic growth was -10 per cent and the decline was mainly driven by site closures and project delays related to Covid-19 measures. The acquisition of MLM contributed acquired growth of 15 per cent. There was no year-on-year difference in the number of available working hours.
EBITA improved SEK 17 million and the EBITA margin increased to 6.8 per cent (1.4). The earnings improvement was attributable to the contribution from MLM and to lower operating expenses as well as an improvement in the billing ratio, primarily in projects within transport infrastructure.
The UK market weakened overall in the second quarter as a result of the lockdown in the country due to Covid-19. The buildings structures and services market as well as the building compliance market declined as a result of Covid-19, particularly due to the suspension of projects and the closure of some construction sites. The energy, environment and water markets were to some extent also impacted by site closures. The transportation infrastructure market experienced a lower impact from Covid-19 given the committed public sector spend within the strategic highways sector.
During the second quarter, the Covid-19 situation caused delaved and cancelled projects primarily within the Buildings and MLM divisions, which both rely on private sector work. During June, sites have begun to recommence work with a slow but steady increase in enguiries from clients. At the end of June 2020, approximately 150 employees remain on temporary furlough and around 40 employees were on reduced working hours.
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
|---|---|---|---|---|
| Net sales, SEK M | 305 | 291 | 687 | 505 |
| Organic growth, % | $-10$ | -9 | $-7$ | |
| Acquisition-related growth, % | 15 | 35 | 36 | 18 |
| Currency, % | -1 | |||
| Total growth, % | 29 | 36 | 15 | |
| Organic growth adi, for calendar, % | $-10$ | -8 | $-2$ | |
| EBITA, SEK M | 21 | 4 | 60 | 12 |
| EBITA margin, % | 6.8 | 1.4 | 8.8 | 23 |
| Number of full-time employees | 1,246 | 1,148 | 1,245 | 1,000 |
Net sales increased 15 per cent to SEK 504 million (438). Organic growth was around 0 per cent and was primarily impacted by lower average fees. Acquired growth amounted to 15 per cent and related to the acquisition of Imp GmbH which was consolidated into Sweco Germany & Central Europe as of July 2019. There was no year-on-year difference in the number of available working hours.
EBITA decreased approximately SEK 10 million and the change was mainly driven by weaker performance in the existing German business, whereas the acquisition of Imp GmbH and Central Europe contributed positively.
Overall, the German market remained stable in the second quarter despite Covid-19 and no major construction sites had to be closed due to the crisis. However, private investors continued to slow down or stop projects and tenders in the real estate market. On the other hand, the German publicly funded sector remained good and energy transition projects have continued as planned.
At the end of the quarter, 29 employees were temporarily laid-off.
| IN BRIEF | ||||
|---|---|---|---|---|
| Net sales and profit | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 |
| Net sales, SEK M | 504 | 438 | 1,002 | 835 |
| Organic growth, % | Ω | 10 | ||
| Acquisition-related growth, % | 15 | 16 | ||
| Currency, % | $-1$ | |||
| Total growth, % | 15 | 13 | 20 | 13 |
| Organic growth adj. for calendar, % | 11 | |||
| EBITA SEK M | 18 | 17 | 30 | |
| EBITA margin, % | 1.7 | 4.1 | 1.7 | 3.5 |
| Number of full-time employees | 2,405 | 1,961 | 2,411 | 1,963 |
PARENT COMPANY, JANUARY-JUNE 2020
Parent Company net sales totalled SEK 438 million (382) and were attributable to intra-group services. Profit after net financial items totalled SEK 287 million (224). Investments in equipment totalled SEK 24 million (17). Cash and cash equivalents at the end of the period totalled SEK 1.447 million (139).
Sweco complies with the International Financial Reporting Standards (IFRS) and interpretive statements from the International Financial Reporting Interpretations Committee (IFRIC), as adopted by the EU. This interim report was prepared in accordance with IAS 34. Interim Reporting: the Swedish Annual Accounts Act: and the Swedish Financial Reporting Board's RFR 2, Reporting for Legal Entities. The Group applies the same accounting and valuation principles as those described in Note 1 in the Annual Report for 2019.
In this interim report, amounts in brackets refer to the corresponding period of the previous year. Because table items are individually rounded off, table figures do not always tally. The interim report comprises pages 1-19; the interim financial information presented on pages 1-19 is therefore part of this financial report.
Sweco follows the guidelines from ESMA (European Securities and Markets Authority) regarding APMs (Alternative Performance Measures). In brief, these are measures of historical or ongoing operating results and financial performance that are not specified or defined in IFRS. The presentation of non-IFRS financial measures is limited as an analytical tool and should not be used as a substitute for key ratios pursuant to IFRS. Sweco believes that the APMs will enhance investors' evaluation of our ongoing operating results, aid in forecasting future periods and facilitate meaningful comparison of results between periods. The non-IFRS financial measures presented in this report may differ from similarly titled measures used by other companies. A complete list of all Sweco's definitions can be found on our website: https://www.sweco.se/en/IR/financialdata/definitions/
The adoption of IFRS 16 had a significant impact on the presentation of financial statements. Sweco has chosen to maintain its key financial metrics close to previous definitions, producing minor differences to previously presented values. The objective is to facilitate comparability with previous periods and provide transparency regarding Sweco's operational performance and the Group's financial strength, apart from the accounting effects of IFRS 16.
Sweco's key financial metrics, defined as Alternative Performance Measures (APMs) in accordance with IFRS, are EBITA and Net debt/EBITDA.
EBITA is the Group's key metric for operational performance at Group and BA level. Sweco's EBITA measure is defined as Earnings Before Interest, Taxes and Acquisition-related items. All leases are treated as operating leases and the total cost of the lease affects EBITA. Operating lease treatment follows IAS 17 (the standard for leases applicable through 31 December $2018$ ).
Net debt/EBITDA is Sweco's key metric for financial strength. The definition remains essentially in line with the covenants defined in Sweco's bank financing agreements. Net debt is defined as financial debt (comprised almost exclusively of interest-bearing bank debt) less cash and cash equivalents and short-term investments. Lease liabilities are excluded from Net debt. As with the calculation of EBITA, when calculating EBITDA all leases are assumed to comprise operating leases pursuant to IAS 17.
The reconciliation of Sweco's key financial metrics, described above, and IFRS measures is presented on page 13. Organic growth calculation is presented on page 18.
The Sweco share is listed on Nasdaq Stockholm. The share price of the Sweco Class B share was SEK 418.40 at the end of the period, representing a 48 per cent increase during the quarter. Nasdaq Stockholm OMXSPI increased 16 per cent over the same period.
The total number of shares at the end of the period was 121.083.819: 10.385.713 Class A shares and 110.698.106 Class B shares. The total number of shares outstanding was 118,399,321: 10,385,713 Class A shares and 108,013,608 Class B shares.
Significant risks and uncertainties affecting the Sweco Group and the Parent Company include business risks associated with the general economic trend and investment level in various markets, the capacity to attract and retain skilled personnel and the effects of political decisions. The Group is also exposed to various types of financial risk, such as foreign currency, interest rate and credit risk. The risks to which Sweco is exposed are detailed in Sweco's 2019 Annual Report (page 100, Risks and Risk Management). No significant risks are deemed to have arisen since then apart from the Covid-19 pandemic.
The risks and uncertainties related to the Covid-19 pandemic are briefly described on page 89 and page 100 in the 2019 Annual Report. There is still significant uncertainty as to the extent of the Covid-19 impact on Sweco, the form this impact may take and the time horizon during which any impact may be felt.
Year 2020 The number of normal working hours in 2020, based on
the 12-month sales-weighted business mix as of September 2019, is broken down as follows:
| 2020 | 2019 | ||
|---|---|---|---|
| Quarter 1: | 500 | 496 | +4 |
| Quarter 2: | 465 | 462 | $+3$ |
| Quarter 3: | 518 | 519 | -1 |
| Quarter 4: | 491 | 485 | +6 |
| Total: | 1.974 | 1.962 | $+12$ |
Acquisition-related intangible assets and expensed costs for future services will be amortised pursuant to the following schedule, based on acquisitions to date:
| 2020 Estimate | SEK-134 million |
|---|---|
| 2021 Estimate | SEK-116 million |
| 2022 Estimate | SEK-73 million |
| 2023 Estimate | SEK-39 million |
FORTHCOMING FINANCIAL INFORMATION Interim report January-September 4 November 2020 Year-end report 2020 11 February 2021
FOR FURTHER INFORMATION, PLEASE CONTACT: Åsa Bergman, President and CEO [email protected]
Phone +46 70 306 46 21 [email protected]
Phone +46 73 258 93 33 [email protected]
Gjörwellsgatan 22, Box 34044, 100 26 Stockholm, Phone: +46 8 695 60 00 Email: [email protected] www.swecogroup.com
This report has not been audited nor subject to a review by the company's auditor.
The Board of Directors and the President give their assurance that this interim report gives a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and Group companies are exposed.
Stockholm, 16 July 2020
Johan Nordström Board Chairman Gunnel Duveblad Board member
Johan Hjertonsson Board member
Christine Wolff Board member
Elaine Grunewald Board member
Alf Göransson Board member
Maria Ekh Employee representative
Anna Leonsson Employee representative
Görgen Edenhagen Employee representative
Åsa Bergman President & CEO Board member
| Jul 2019- | ||||||
|---|---|---|---|---|---|---|
| Key ratios 1) | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jun 2020 | Full-year 2019 |
| Profitability | ||||||
| EBITA margin, % | 9.0 | 8.1 | 10.1 | 9.2 | 9.5 | 9.1 |
| Operating margin (EBIT), % | 8.0 | 7.6 | 9.4 | 9.1 | 9.4 | 9.2 |
| Profit margin, % | 7.7 | 7.0 | 9.0 | 8.5 | 8.9 | 8.6 |
| Revenue growth 2) | ||||||
| Organic growth, % | $\mathbf{2}$ | 3 | $\overline{3}$ | $\overline{4}$ | 5 | |
| Acquisition-related growth, % | 5 | $\overline{c}$ | 6 | $\mathbf{2}$ | 3 | |
| Currency, % | $-1$ | $\mathbf{1}$ | 0 | $\overline{c}$ | $\overline{c}$ | |
| Total growth, % | 5 | 6 | 8 | 8 | 10 | |
| Debt | ||||||
| Net debt, SEK M | 1,259 | 2,324 | 2,114 | |||
| Interest-bearing debt, SEK M | 3,146 | 2,760 | 2,774 | |||
| Financial strength | ||||||
| Net debt/Equity, % | 16.8 | 36.2 | 29.5 | |||
| Net debt/EBITDA, x | 0.5 | 1.2 | 1.0 | |||
| Equity/Assets ratio, % | 36.7 | 34.9 | 37.1 | |||
| Available cash and cash equivalents, | 4.691 | 2.532 | 2,699 | |||
| SEKM | ||||||
| -of which unutilised credit, SEK M | 2,803 | 2.096 | 2,039 | |||
| Return | ||||||
| Return on equity, % | 21.3 | 21.1 | 20.9 | |||
| Return on capital employed, % | 15.5 | 14.2 | 15.3 | |||
| Share data | ||||||
| Earnings per share, SEK | 2.70 | 2.39 | 6.46 | 5.73 | 12.58 | 11.85 |
| Diluted earnings per share, SEK | 2.64 | 2.32 | 6.30 | 5.55 | 12.26 | 11.52 |
| Equity per share, SEK3) | 63.28 | 54.40 | 60.73 | |||
| Diluted equity per share, SEK3) | 61.94 | 52.98 | 59.14 | |||
| Number of outstanding shares at | 118,399,321 | 117,798,459 | 117,798,459 | |||
| reporting date | ||||||
| Number of repurchased Class B | 2,684,498 | 3,285,360 | 3,285,360 | |||
| shares |
1) Key ratio definitions are available on Sweco's website.
2) See page 18 for details on Sweco's calculation of revenue growth.
3) Refers to portion attributable to Parent Company shareholders.
| Reconciliation of EBIT and the APMs | Jul 2019- | |||||
|---|---|---|---|---|---|---|
| EBITA and EBITDA, SEK M | Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jun 2020 | Full-year 2019 |
| Operating profit (EBIT) | 439 | 398 | 1,054 | 935 | 2,011 | 1,892 |
| Acquisition-related items | 74 | 43 | 110 | 56 | 112 | 58 |
| Lease expenses $^{1)}$ | $-192$ | $-182$ | $-387$ | -356 | $-767$ | $-736$ |
| Depreciation and impairments, right- | ||||||
| of-use assets | 174 | 163 | 348 | 318 | 685 | 656 |
| EBITA 2 | 495 | 422 | 1,125 | 953 | 2,041 | 1,869 |
| Amortisation/depreciation and impairment, tangible and intangible |
||||||
| fixed assets | 71 | 72 | 142 | 141 | 292 | 291 |
| EBITDA 3 | 566 | 494 | 1,267 | 1.094 | 2.334 | 2.160 |
1) Lease expenses pertain to adjustments made in order to treat all leases as operating leases.
2) EBITA is an alternative performance measure (APM) defined as Earnings before Interest, Taxes and Acquisition-related i
| Net debt, SEK M 1) | 30 Jun 2020 | 30 Jun 2019 | 31 Dec 2019 |
|---|---|---|---|
| Non-current interest-bearing debt | 3.097 | 2.636 | 1.665 |
| Current interest-bearing debt | 49 | 124 | 1.109 |
| Cash and cash equivalents incl. short-term investments | $-1.887$ | $-436$ | $-660$ |
| NET DEBT | 1,259 | 2.324 | 2,114 |
$^{\text{1)}}$ Net debt is an alternative performance measure (APM) defined as financial debt (comprised almost exclusively of interest-bearing bank debt) less cash and cash equivalents and short-term investments. Lease liabil
| Income Statement SEKM |
Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jul 2019- Jun 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|
| Net sales | 5,489 | 5,214 | 11,170 | 10.315 | 21,484 | 20,629 |
| Other income | 1 | 5 | 6 | 16 | 17 | |
| Other external expenses | $-1.041$ | $-1,084$ | $-2.160$ | $-2.112$ | $-4,421$ | $-4,373$ |
| Personnel expenses Amortisation/depreciation and impairment, tangible and in- tangible fixed assets 1) |
$-3,691$ $-71$ |
$-3,458$ $-72$ |
$-7,362$ $-142$ |
$-6,760$ $-141$ |
$-13,979$ $-292$ |
$-13,377$ $-291$ |
| Depreciation and impairment, right-of-use assets |
$-174$ | $-163$ | $-348$ | $-318$ | $-685$ | $-656$ |
| Acquisition-related items 2) | $-74$ | $-43$ | $-110$ | $-56$ | $-112$ | $-58$ |
| Operating profit (EBIT) | 439 | 398 | 1,054 | 935 | 2,011 | 1,892 |
| Net financial items 3) | $-10$ | $-12$ | $-21$ | $-24$ | $-42$ | $-46$ |
| Interest cost of leasing 4) | $-14$ | $-16$ | $-29$ | $-32$ | $-62$ | $-65$ |
| Other financial items 5) | 10 | $-2$ | $-3$ | $-2$ | $-4$ | $-4$ |
| Total net financial items | $-14$ | $-31$ | $-52$ | $-58$ | $-108$ | $-115$ |
| Profit before tax | 425 | 367 | 1,002 | 877 | 1.903 | 1,777 |
| Income tax | $-106$ | $-86$ | $-240$ | $-205$ | $-419$ | $-384$ |
| PROFIT FOR THE PERIOD | 319 | 281 | 762 | 672 | 1,484 | 1,393 |
| Attributable to: | ||||||
| Parent Company shareholders | 319 | 281 | 762 | 672 | 1,483 | 1.393 |
| Non-controlling interests Earnings per share attributable to Parent Company shareholders, SEK |
0 2.70 |
0 2.39 |
0 6.46 |
0 5.73 |
0 12.58 |
0 11.85 |
| Average number of shares Dividend per share, SEK |
118,212,021 | 117,576,994 | 118,018,228 | 117,343,075 | 117,908,343 | 117,570,767 3.10 |
$\footnotesize$ $\footnotesize$ $\footnotesize$ ) Includes tangible assets and intangible assets that are not acquisition-related.
$\footnotesize$
$\footnotesize$ Acquisition-related items consist of amortisation and impairment of goodwill and acquisition-related
4) Interest cost of leasing comprises the interest cost of leasing pursuant to IFRS 16.
5) Other financial items: Result and distributions from participation in associated companies and other securities, result from sale of participations in associated companies and other securities, foreign exchange gains and losses on financial assets and liabilities, and other interest income and interest expenses.
| Consolidated income state- ment and other comprehensive income, SEK M |
Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jul 2019- Jun 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|
| Profit for the period | 319 | 281 | 762 | 672 | 1,484 | 1,393 |
| Items that will not be reversed in the income statement |
||||||
| Revaluation of defined benefit pensions, net after tax 1,2) |
$-22$ | $-22$ | $-65$ | $-42$ | ||
| Items that may subsequently be reversed in the income statement |
||||||
| Translation differences, net after tax |
$-193$ | 20 | $-131$ | 162 | $-128$ | 165 |
| COMPREHENSIVE INCOME FOR THE PERIOD |
104 | 301 | 609 | 834 | 1,291 | 1,516 |
| Attributable to: | ||||||
| Parent Company shareholders | 104 | 301 | 609 | 834 | 1,291 | 1,516 |
| Non-controlling interests | 0 | 0 | 0 | 0 | 1 | |
| $^{1)}$ Tax on revaluation of defined benefit pensions |
$\overline{7}$ | 7 | 22 | 15 |
$2)$ Revalued annually. Reviewed quarterly in the event of material changes to actuarial assumptions.
| Cash flow statement SEKM |
Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jul 2019- Jun 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|
| Profit before tax | 425 | 367 | 1,002 | 877 | 1,903 | 1,777 |
| Amortisation/depreciation and impairment |
267 | 261 | 536 | 498 | 1.086 | 1,048 |
| Other non-cash items | 102 | 92 | 109 | 118 | 122 | 131 |
| Cash flow from operating activities before changes in working capital, tax paid, interest paid and received |
794 | 719 | 1,647 | 1,492 | 3,111 | 2,955 |
| Interest cost leasing | $-14$ | $-16$ | $-29$ | $-32$ | $-62$ | $-65$ |
| Net interest paid | $-8$ | $-8$ | $-14$ | $-18$ | $-29$ | $-33$ |
| Tax paid | $-117$ | $-156$ | $-224$ | $-274$ | $-367$ | $-418$ |
| Changes in working capital | 779 | 59 | 520 | $-140$ | 519 | $-141$ |
| Cash flow from operating activities | 1,434 | 599 | 1,901 | 1,029 | 3,171 | 2,299 |
| Acquisition and divestment of sub- sidiaries and operations |
32 | $-294$ | $-232$ | $-308$ | $-693$ | $-769$ |
| Purchase and disposal of intangible and tangible assets |
$-75$ | $-67$ | $-130$ | $-133$ | $-210$ | $-212$ |
| Other investing activities | 0 | $-1$ | $\overline{\phantom{0}}$ | $\mathbf{1}$ | $-3$ | $-4$ |
| Cash flow from investing activities | $-43$ | $-363$ | $-361$ | $-440$ | $-905$ | $-985$ |
| Borrowings and repayment of bor- rowings |
$-9$ | 504 | 381 | 52 | 216 | $-112$ |
| Principal elements of lease pay- ments |
$-175$ | $-159$ | $-349$ | $-312$ | $-681$ | $-645$ |
| Dividends paid | $-365$ | $-645$ | $-365$ | $-645$ | $-365$ | $-645$ |
| Repurchase of treasury shares | 0 | $-2$ | $-2$ | |||
| Cash flow from financing activities | $-550$ | $-299$ | $-334$ | $-907$ | $-830$ | $-1.404$ |
| CASH FLOW FOR THE PERIOD | 841 | $-63$ | 1,206 | $-318$ | 1,435 | $-90$ |
| Balance sheet SEKM |
30 Jun 2020 | 30 Jun 2019 | 31 Dec 2019 |
|---|---|---|---|
| Goodwill | 7.571 | 7.112 | 7.471 |
| Other intangible assets | 353 | 337 | 339 |
| Property, plant and equipment | 558 | 621 | 580 |
| Right-of-use assets | 2,860 | 2,940 | 3,043 |
| Financial assets | 404 | 485 | 389 |
| Current assets excl. cash and cash equivalents | 6,812 | 6,459 | 6,821 |
| Cash and cash equivalents incl. short-term investments | 1,887 | 436 | 660 |
| TOTAL ASSETS | 20,446 | 18,391 | 19,303 |
| Equity attributable to Parent Company shareholders | 7,492 | 6,409 | 7,154 |
| Non-controlling interests | 10 | 10 | 10 |
| Total equity | 7,502 | 6,418 | 7,164 |
| Non-current leasing liabilities | 2,309 | 2,470 | 2,522 |
| Non-current interest-bearing debt | 3,097 | 2,636 | 1,665 |
| Other non-current liabilities | 915 | 955 | 877 |
| Current leasing liabilities | 698 | 648 | 688 |
| Current interest-bearing debt | 49 | 124 | 1,109 |
| Other current liabilities | 5,875 | 5,140 | 5,279 |
| TOTAL EQUITY AND LIABILITIES | 20,446 | 18,391 | 19,303 |
| Pledged assets | 20 | ||
| Contingent liabilities | 953 | 799 | 1,010 |
| Changes in equity | Jan-Jun 2020 | Jan-Jun 2019 | ||||
|---|---|---|---|---|---|---|
| SEKM | Equity attributa- ble to Parent Company shareholders |
Non- controlling interests |
Total equity | Equity attributa- ble to Parent Company shareholders |
Non- controlling interests |
Total equity |
| Equity, opening balance | 7,154 | 10 | 7,164 | 6,158 | 10 | 6,168 |
| Comprehensive income for the period |
609 | $\Omega$ | 609 | 834 | 0 | 834 |
| Transfer to shareholders | $-365$ | $-365$ | $-644$ | 0 | $-645$ | |
| Buy-back of treasury shares | $\overline{\phantom{a}}$ | - | $-2$ | - | $-2$ | |
| Share-based incentive schemes | 93 | $\overline{\phantom{0}}$ | 93 | 61 | 61 | |
| Share savings schemes | 3 | - | C | ົ | ||
| EQUITY, CLOSING BALANCE | 7.492 | 10 | 7,502 | 6.409 | 10 | 6,418 |
The following acquisitions of companies and operations were carried out during the period.
| Company or operations | Included from | Business area | Acquired share, $%^{1}$ |
Annual net sales in MSEK 2) |
Number of employees (individuals) |
|---|---|---|---|---|---|
| Talboom Group | January | Sweco Belgium | 100 | 133 | 69 |
| Morgenroth & Landwehr, asset deal | February | Sweco Germany & CE | 8 | Ō | |
| Temco, asset deal | March | Sweco Belgium | 37 | 31 | |
| KANT Arkitekter A/S | March | Sweco Denmark | 100 | 136 | 81 |
| Automation unit of Eurocon, asset deal | March | Sweco Sweden | ÷ | ||
| SGI Ingénieurs SA/NV | June | Sweco Belgium | 100 | 58 | 31 |
| TOTAL | 378 | 223 |
1) No acquired share reported for asset deals.
2) Estimated annual Net Sales
The purchase considerations of the acquisitions carried out in the period totalled SEK 272 million and had a negative impact on cash and cash equivalents of SEK 232 million. The acquisitions impacted the consolidated balance sheet as detailed in the table below.
The acquisition analyses regarding Talboom, Morgenroth & Landwehr, KANT Arkitekter, Temco, Automation unit of Eurocon and SGI Ingénieurs are preliminary. During the period, the acquired companies contributed SEK 116 million in net sales. SEK 5 million in EBITA and SEK-3 million in operating profit (EBIT). If the companies had been owned as of 1 January 2020 they would have contributed approximately SEK 174 million in net sales, about SEK 12 million in EBITA and about SEK 3 million in operating profit (EBIT). The transaction costs for the acquisitions during this period and the previous period totalled SEK 4 million.
| Acquisitions, SEK M | |
|---|---|
| Intangible assets | 275 |
| Property, plant and equipment | 3 |
| Financial assets | 6 |
| Current assets | 163 |
| Non-current liabilities | -1 |
| Deferred tax | $-29$ |
| Other current liabilities | $-144$ |
| Total purchase consideration | 272 |
| Payment and repayment of deferred purchase price | $-22$ |
| Cash and cash equivalents in acquired companies | $-18$ |
| DECREASE IN GROUP CASH AND CASH EQUIVALENTS | 232 |
| Acquisition-related items SEK M |
Apr-Jun 2020 | Apr-Jun 2019 | Jan-Jun 2020 | Jan-Jun 2019 | Jul 2019- Jun 2020 |
Full-year 2019 |
|---|---|---|---|---|---|---|
| Amortisation of acquisition-related intangible assets |
$-22$ | $-25$ | -46 | -39 | $-108$ | $-101$ |
| Revaluation of additional purchase price | $-39$ | $-39$ | Ω | $-41$ | ÷ | |
| Profit/loss on divestment of buildings and land |
$\Omega$ | Ω | 19 | 20 | ||
| Profit/loss on divestment of companies and operations |
$-9$ | $-9$ | 71 | 62 | ||
| Expensed cost for future service | $-13$ | -8 | $-25$ | $-8$ | -54 | -37 |
| ACQUISITION-RELATED ITEMS | $-74$ | $-43$ | $-110$ | -56 | $-112$ | $-58$ |
The Group's financial instruments measured at fair value totalled SEK 10 million (11). The derivative instruments are forward currency contracts, the fair value of which is determined based on listed prices for forward currency contracts on the balance sheet date (Level 2). The fair value of unlisted financial assets is determined through market valuation techniques (observable market inputs) such as recent transactions, listed prices of similar instruments and discounted cash flows. In the event no reliable inputs are available for determining fair value, financial assets are reported at acquisition value (Level 3). There were no transfers between levels during the period.
In the table below, 2018 segment information has been restated to reflect the adjusted business area structure applicable from 1 January 2019.
| Quarterly summary restated for ad- justed business area structure 1) |
2020 Q2 | 2020 01 | 2019 04 | 2019 03 | 2019 02 | 2019 01 | 2018 04 | 2018 03 | 2018 02 |
|---|---|---|---|---|---|---|---|---|---|
| Net sales, SEK M | |||||||||
| Sweco Sweden | 2,015 | 1,985 | 2,054 | 1,519 | 1.952 | 1,958 | 2,003 | 1,427 | 1,926 |
| Sweco Norway | 598 | 708 | 692 | 550 | 658 | 706 | 661 | 516 | 639 |
| Sweco Finland | 726 | 738 | 663 | 536 | 611 | 579 | 556 | 465 | 549 |
| Sweco Denmark | 467 | 458 | 477 | 410 | 442 | 455 | 460 | 403 | 469 |
| Sweco Netherlands | 538 | 547 | 542 | 488 | 519 | 506 | 520 | 447 | 492 |
| Sweco Belgium | 418 | 431 | 381 | 326 | 352 | 335 | 323 | 240 | 271 |
| Sweco UK | 305 | 382 | 348 | 317 | 291 | 214 | 207 | 212 | 225 |
| Sweco Germany & Central Europe | 504 | 497 | 605 | 502 | 438 | 397 | 436 | 397 | 387 |
| Group-wide, Eliminations, etc. | $-81$ | $-65$ | $-71$ | $-26$ | $-49$ | -47 | -55 | $-29$ | -41 |
| TOTAL GROUP | 5,489 | 5,680 | 5,692 | 4,623 | 5,214 | 5,101 | 5,112 | 4,078 | 4,916 |
| EBITA, SEK M 2) | |||||||||
| Sweco Sweden | 253 | 269 | 271 | 102 | 233 | 252 | 284 | 83 | 234 |
| Sweco Norway | 24 | 97 | 65 | 55 | 18 | 78 | 60 | 41 | 49 |
| Sweco Finland | 104 | 101 | 64 | 76 | 73 | 74 | 53 | 46 | 63 |
| Sweco Denmark | 22 | 30 | 41 | 44 | 16 | 36 | 17 | 27 | 41 |
| Sweco Netherlands | 35 | 51 | 39 | 24 | 37 | 43 | 31 | 13 | 34 |
| Sweco Belgium | 45 | 50 | 41 | 38 | 41 | 38 | 37 | 12 | 24 |
| Sweco UK | 21 | 40 | 24 | 15 | 4 | 8 | -6 | 6 | 6 |
| Sweco Germany & Central Europe | 8 | 9 | 21 | 26 | 18 | 11 | 27 | 24 | 25 |
| Group-wide, Eliminations, etc. 3) | $-18$ | $-17$ | $-34$ | 3 | $-18$ | -9 | -8 | 11 | $-11$ |
| EBITA | 495 | 630 | 532 | 384 | 422 | 531 | 494 | 263 | 464 |
| EBITA margin, $\frac{96}{2}$ | |||||||||
| 12.6 | 13.6 | 13.2 | 6.7 | 11.9 | 12.9 | 14.2 | 5.8 | 12.1 | |
| Sweco Sweden | 4.1 | 13.7 | 9.4 | 10.0 | 2.7 | 11.0 | 9.0 | 8.0 | 7.7 |
| Sweco Norway | 14.3 | 13.7 | 9.6 | 14.2 | 12.0 | 12.8 | 9.5 | 9.9 | 11.5 |
| Sweco Finland | 4.8 | 6.7 | 8.6 | 10.7 | 3.6 | 8.0 | 3.7 | 6.7 | 8.8 |
| Sweco Denmark | 6.6 | 9.4 | 7.2 | 5.0 | 7.1 | 8.6 | 5.9 | 2.8 | 6.8 |
| Sweco Netherlands | 10.8 | 11.5 | 10.7 | 11.6 | 11.7 | 11.4 | 11.5 | 5.1 | 8.8 |
| Sweco Belgium | 6.8 | 10.4 | 7.0 | 4.8 | 1.4 | 3.7 | $-3.0$ | 2.8 | 2.7 |
| Sweco UK | 1.7 | 1.8 | 3.5 | 5.2 | 2.9 | ||||
| Sweco Germany & Central Europe | 9.0 | 11.1 | 9.4 | 8.3 | 4.1 8.1 |
6.3 9.7 |
6.1 6.5 |
6.4 9.4 |
|
| EBITA margin | 10.4 | ||||||||
| Billing ratio, % | 75.5 | 73.6 | 74.6 | 73.6 | 74.8 | 74.1 | 74.5 | 73.7 | 75.2 |
| Number of normal working hours | 465 | 500 | 485 | 519 | 462 | 496 | 489 | 511 | 474 |
| Number of full-time employees | 17,555 | 17,330 | 17,084 | 16,463 | 16,281 | 15,823 | 15,665 | 15,197 | 15,387 |
1) Sweco is not applying IFRS 16 at the business area level. In the table above, business area EBITA values for 2018 therefore remain unchanged from previous values.
20 EBITA is an alternative performance measure (APM) defined as Earnings before Interest, Taxes and Acquisition-related items, under which all leases are treated as
operating leases and the total cost of the lease affects
| January-June | Net sales. SEK M | EBITA, SEK M 2) | EBITA margin, $\frac{96}{2}$ | Number of full-time employees |
||||
|---|---|---|---|---|---|---|---|---|
| Business Area 1) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 |
| Sweco Sweden | 3.999 | 3.909 | 523 | 485 | 13.1 | 12.4 | 5.922 | 5.882 |
| Sweco Norway | 1,306 | 1,364 | 121 | 96 | 9.3 | 7.0 | 1,647 | 1,552 |
| Sweco Finland | 1.464 | 1.189 | 204 | 147 | 14.0 | 12.4 | 2.514 | 2.151 |
| Sweco Denmark | 926 | 897 | 53 | 52 | 5.7 | 5.8 | 1,214 | 1.184 |
| Sweco Netherlands | 1,084 | 1,025 | 87 | 80 | 8.0 | 7.8 | 1,401 | 1,407 |
| Sweco Belgium | 849 | 686 | 95 | 79 | 11.2 | 11.6 | 1,039 | 832 |
| Sweco UK | 687 | 505 | 60 | 12 | 8.8 | 2.3 | 1,245 | 1,000 |
| Sweco Germany & Central Europe | 1,002 | 835 | 17 | 30 | 1.7 | 3.5 | 2,411 | 1.963 |
| Group-wide, Eliminations, etc. 3) | $-147$ | -96 | $-35$ | $-27$ | $\overline{\phantom{a}}$ | $\overline{\phantom{0}}$ | 45 | 73 |
| TOTAL GROUP | 11.170 | 10,315 | 1,125 | 953 | 10.1 | 9.2 | 17,439 | 16,044 |
1) Sweco is not applying IFRS 16 at the business area level.
2) EBITA is an alternative performance measure (APM) defined as Earnings before Interest, Taxes and Acquisition-related items, under which all leases are treated as operating leases and the total cost of the lease affects EBITA.
3) Group-wide, Eliminations, etc. includes Group functions and the Dutch real estate operations.
The table below shows the calculation of organic growth excluding calendar effect $-$ i.e., net sales growth adjusted for the impact of acquisitions and divestments as well as the effect of foreign currency fluctuations a
| Net sales growth | 2020 Apr-Jun |
2019 Apr-Jun |
Growth, % Apr-Jun 2020 |
2020 Jan-Jun |
2019 Jan-Jun |
Growth, % Jan-Jun 2020 |
|---|---|---|---|---|---|---|
| Reported net sales | 5.489 | 5.214 | 11.170 | 10.315 | ||
| Adjustment for currency effects | $-77$ | $-1$ | -48 | |||
| Net sales, currency-adjusted | 5.489 | 5.137 | 11.170 | 10.266 | ||
| Adjustment for acquisitions/divestments | $-289$ | -31 | -667 | -65 | ||
| Comparable net sales, currency-adjusted | 5,201 | 5.106 | 10.503 | 10.201 | ||
| Adjustment of calendar effect | $-23$ | $-50$ | ||||
| Comparable net sales, adjusted for currency and calendar effects |
5.178 | 5,106 | 10.452 | 10.201 |
| Net sales growth | 2019 Apr-Jun |
2018 Apr-Jun |
Growth, % Apr-Jun 2019 |
2019 Jan-Jun |
2018 Jan-Jun |
Growth, % Jan-Jun 2019 |
|---|---|---|---|---|---|---|
| Reported net sales | 5.214 | 4.916 | 10.315 | 9.544 | ||
| Adjustment for currency effects | 74 | 192 | ||||
| Net sales, currency-adjusted | 5.214 | 4,990 | 10.315 | 9.736 | ||
| Adjustment for acquisitions/divestments | $-97$ | -4 | $-101$ | 69 | ||
| Comparable net sales, currency-adjusted | 5.116 | 4.986 | 10.214 | 9.805 | ||
| Adjustment of calendar effect | 97 | $-2$ | 44 | |||
| Comparable net sales, adjusted for currency and calendar effects |
5.213 | 4,986 | 10.258 | 9.805 |
| Parent Company income statement, SEK M | Jan-Jun 2020 | Jan-Jun 2019 | Full-year 2019 |
|---|---|---|---|
| Net sales | 438 | 382 | 771 |
| Operating expenses | $-463$ | $-402$ | $-818$ |
| Operating loss | $-26$ | $-19$ | $-48$ |
| Net financial items | 313 | 244 | 791 |
| Profit/loss after net financial items | 287 | 224 | 743 |
| Appropriations | $\qquad \qquad$ | $-120$ | |
| Profit/loss before tax | 287 | 224 | 623 |
| Tax | $-77$ | ||
| PROFIT/LOSS AFTER TAX | 287 | 224 | 546 |
| Parent Company balance sheet, SEK M | 30 Jun 2020 | 31 Dec 2019 |
|---|---|---|
| Intangible assets | 31 | 26 |
| Property, plant and equipment | 68 | 59 |
| Financial assets | 6.530 | 6.537 |
| Current assets | 3.938 | 3.371 |
| TOTAL ASSETS | 10,567 | 9,994 |
| Equity | 4,502 | 4.480 |
| Untaxed reserves | 474 | 474 |
| Non-current liabilities | 2,921 | 1,569 |
| Current liabilities | 2.669 | 3.471 |
| TOTAL EQUITY AND LIABILITIES | 10,567 | 9.994 |
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