Earnings Release • Jul 19, 2018
Earnings Release
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V ä s t e r å s , J u l y 1 9 , 2 0 1 8
| 2018 | 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q1 | Q2 | Q3 | Q4 | Full year | |
| Net turnover, SEK thousands | 1090 122 | 1 2 2 3 5 4 2 | 1001898 | 1077380 | 923 142 | 1017321 | 4019740 |
| Operating profit (EBIT), SEK thousands | 71539 | 57 766 | 86 813 | 74 397 | 63 5 62 | 38 510 | 263 282 |
| Profit after net financial items (EBT), SEK thousands | 68 397 | 55 411 | 92 258 | 70 478 | 61 295 | 31 7 9 7 | 255 828 |
| Operating margin (EBIT %) | 6,6% | 4,7% | 8,7% | 6,9% | 6,9% | 3,8% | 6,5% |
| Profit margin before tax (EBT%) | 6,3% | 4,5% | 9,2% | 6,5% | 6,6% | 3,1% | 6,4% |
| Liquid ratio | 126% | 108% | 142% | 140% | 139% | 125% | 125% |
| Debt/equity ratio | 61% | 54% | 60% | 60% | 62% | 61% | 61% |
| Return on total assets 2) | 8,8% | 7,7% | 13,2% | 12,3% | 12,6% | 10,3% | 10,3% |
| Retum on equity after tax 2) | 11,2% | 10,5% | 18,0% | 16,4% | 16,1% | 13,2% | 13,2% |
| Number of employees in Sweden | 1073 | 1060 | 1021 | 1065 | 1066 | 1043 | 1043 |
| Number of employees outside Sweden | 4615 | 5061 | 4 1 9 8 | 4 3 1 9 | 4414 | 4505 | 4505 |
| Key indicators per share, SEK 1) | |||||||
| Profit for the period | 3,13 | 2,54 | 4,19 | 3,20 | 2.77 | 0,97 | 11,14 |
| Equity | 96,18 | 95,88 | 84,38 | 84,85 | 86,37 | 89,82 | 89,82 |
| Number of shares, thousands | 18 2 94 | 18 2 9 4 | 18 2 94 | 18 2 9 4 | 18 2 94 | 18 2 9 4 | 18 294 |
Aligned with our strategy we have a continued strong growth, which in the second quarter was 13.6 %, of which 2.3 % is organic.
I would have liked to deliver my last report with better profit margin and cashflow. Profit margin was 4.5 % and the cash flow was weak due to the growth and higher inventories. We have initiated action programs to improve also these key figures going forward.
We have two companies in winding down processes, which are estimated to be finished in September, AQ Welded Structures and "AQ Thailand". We have another company with big problems with deliveries and profitability. A number of actions are ongoing with heavy rationalization plus price increases towards the customers, but we have a long way to acceptable delivery precision and profitability. If we exclude these three companies, our margin would be 7 %. Increasing inventory is still a challenge.
Our goal is 8 %, which means that we are below our goal.
In China we have written down a customer debt with SEK 5 million. The case is now handed over for collection. It is unusual for us to have credit losses. We normally have long payment terms, some are paying late, but they pay.
AQ Welded Structures, with production in Ludvika, has shown losses for a long time, also for the first half of this year. The operations is expected to be closed during September. A department in AQ Components Västerås has been established for products with advanced welding. Other products are moved to other AQ units.
AQ started operations in Thailand to follow an important customer. The sales of the customer has decreased. Reduced volumes and continued losses has led to a closing of the operations during September and AQ will supply the customer with production in our Chinese company AQ Components Suzhou.
Our business in telecom in China is decreasing, but we are happy that we are winning new business to e.g. components for automotive safety.
The global demand of gas turbines is still low, which continues to affect our company in Hungary negatively. On the positive side we have started to deliver to smaller gas turbines and doing repair of components for jet engines.
We continue to have problems with profitability in high volumes of sheet metal components to commercial vehicles in Sweden. There is an action program ongoing, but it will take a long time to reach satisfactory delivery precision and profitability.
Our company in Mexico has a new managing director and it opened a new production facility in June. Our business in the medical technology sector is increasing and it is developing very well.
Our business in inductive components in India is expanding heavily and because of this we have chosen to move this business into a separate company for increased focus.
We have also in the second quarter seen efforts from a number of suppliers to increase their prices.
During the first six months we continued to have challenges with increased lead-time of raw material and components, which causes delays of deliveries to our customers. This cost a lot of money in express transports, overtime and extra personnel. However, the biggest cost is that it affects our customers' confidence and it's contrary to our value "We are reliable".
Inventory has continued to grow significantly quicker than the growth of our sales. The work with a specific inventory reduction project has now finished a pilot project in one of our Polish companies. We are now evaluating the results and during August we will make a decision on how to move on. It's important that we achieve a better way of working as well as building increased competence in this area.
Acquisitions are a significant part of AQ's strategy to strengthen the presence and ability in the product areas and geographical areas where we see opportunities for growth and improved profitability. Another central part of the acquisition strategy is to follow our customers to new geographical regions.
On April 3 we acquired Mecanova Oy with a factory in Nivala, Finland and Mecanova Oü with a factory in Pärnu, Estonia. Mecanova has a good reputation among the customers, but has suffered with a weak balance sheet. The balance sheet is now improved, and the confidence of the suppliers is increasing. The operations in Estonia is being integrated with our original company in Estonia. It complements AQ's operations in Pärnu in a very good way. We are also happy to get a company on the growing Finnish market.
The acquisition of the B3CG companies in USA and Canada gives us a strong platform for further expansion in North America. What was extra positive was that the acquisition took place in consultation with one of our largest global customers. The companies have developed according to plan during the quarter.
Our focus is always to adapt to customers' requirements and real demands. It's a strategy we will continue to follow, to be fast movers and adaptable no matter of market conditions. Our organisation is built on entrepreneurship, which is a foundation in our core values.
We are working to wind down two companies and putting extra efforts with one specific company to improve delivery precision and productivity. During the fall we will continue the work to reduce our capital tied up in inventory.
It is important to see all the good things that are being done in other parts of the group in addition to our problem companies. We have after the period invested in a new 3D laser in Lyrestad to increase our competitiveness in e.g. prototype manufacturing. In Bulgaria, Mexico, some Swedish sites and soon in Poland we have built capacity for increased production.
Our guideline is to be a stable, growing and profitable company long term. We have a strong financial position and we have entrepreneurs working in our subsidiaries. We like doing business. We have customer focus. Our employees and leaders are doing a good job and it will also in the future give new business and a stable profit.
AQ is well positioned for new acquisitions from a financial as well as from a management view. With strong relations to world leading customers and engaged employees we shall work hard with continued growth, cash flow and a stable profit level. An important part of this is our core values and our efforts to be a reliable supplier to leading industrial customers.
Claes Mellgren CEO
Net sales for the second quarter was SEK 1 224 million (1 077), an increase of SEK 146 million compared to the same period in the previous year. The increase in turnover can be explained by a generally good state of the market and acquisitions made in the quarter. The total growth in the quarter was 13.6 %, of which organic growth 2.3 %, growth through acquisitions 8.3 % and currency effects of 3.0 %. The currency effect of 3.0 % corresponds to about SEK 32.4 million and is mainly with the currencies EUR, PLN and BGN. The currencies USD, INR and MXN have had a negative currency effect during the quarter.
Operating margin (EBIT) in the first quarter was SEK 58 million (74), a decrease of SEK 16 million. The decrease can mainly be explained by a couple of companies in the business area Sheet Metal Processing, the company in Thailand and a company in China are performing worse than the same period in the previous year. We have continued low profitability in a couple of Swedish factories who are delivering to the automotive industry. During the quarter we have written down SEK 5 million due to uncertain accounts receivables.
Goodwill and other intangible assets have increased during the second quarter with SEK 221 million compared to the second quarter of 2017, an increase due to acquisitions, overvalues, currency translation effects and depreciation of technology and customer relations.
Investments in tangible assets in the quarter in the group were SEK 25 million (33), where the majority were replacement and capacity increasing investments to achieve a more efficient production.
Interest bearing liabilities of the group are SEK 461 million (222) and cash and cash equivalents amount to SEK 140 million (103), which means that the group has a net debt of SEK 321 million. In the same period last year, the group had net debt of SEK 119 million.
Cash flow from operating activities was SEK 35 million (79). The positive cash flow from operating activities is lower than the same period in the previous year. Activities to reduce working capital, mainly to reduce inventories have continued during the quarter but has not given the desired results yet.
Cash flow from investing activities was SEK -142 million (-30), which relates to acquisitions and investments in fixed assets.
Cash flow from financing activities was SEK 90 million (-69) which relates to new bank loan, decreased usage of overdraft facility and dividends to shareholders.
Equity at the end of the period was SEK 1 754 million (1 552) for the group.
Net sales for the first six months was SEK 2 314 million (2 079), an increase of SEK 235 million compared to the same period previous year. Increase in net sales can be explained by acquisitions, good market conditions and gained market shares. In the first six months the total growth was 11.3 %, of which organic growth 4.4 %, growth through acquisitions 4.3 % and a currency effect of 2.5 %. The currency effect of 2.5 % corresponds to about SEK 53.6 million and is mainly with the currencies EUR, PLN and BGN. During the first six months INR, USD and MXN have had a negative currency effect.
Operating margin (EBIT) in the first six months was SEK 129 million (161), a decrease of SEK 32 million. The decrease can mainly be explained by a couple of companies in business area Sheet Metal Processing, the company in Thailand and a company in China doing worse than the same period in the previous year. We have continued low profitability in a couple of Swedish factories delivering to the automotive industry.
Goodwill and immaterial assets have increased with SEK 220 million compared to the same period in 2017. The net change is due to acquisitions, overvalues, currency translation effects and depreciation of technology and customer relations.
The investments of the group in tangible fixed assets in the first six months were SEK 42 million (53), the major part being replacement and capacity increasing investments to gain a more efficient production.
Interest bearing debts of the group are SEK 461 million (222) and cash and cash equivalents amount to SEK 140 million (103), which means that the group has a net debt of SEK 321 million. In the same period last year, the group had a net debt of SEK 119 million.
Cash flow from operating activities were SEK 70 million (94). During the first six months inventory, accounts receivables, accounts payable and other debts have increased. Activities to release working capital have continued during the period, but have not given the desired results yet.
Cash flow from investing activities was SEK -160 million (-50), which relates to acquisitions and investments in fixed assets.
Cash flow from financing activities was SEK 79 million (-101) which relates to new bank loan, reduction of operating credit and payment of dividends.
Equity at the end of the period was SEK 1 754 million (1 552) for the group.
In order to give the give the respective operations full customer focus and an enhanced P&L responsibility, a new company, AQ Special Sheet Metal AB, has acquired the operations in Lyrestad and Pålsboda from AQ Segerström & Svensson AB.
On February 22, 2018, company management of AQ Welded Structures AB called for negotiations with the unions for a restructuring of the company, which has 51 employees.
The Board of Directors of AQ Group has appointed Anders S Carlsson as new President and CEO. Anders will assume the position September 1, 2018, replacing one of AQ's founders, Claes Mellgren. Claes Mellgren is a member of the board.
AQ Group AB signed on April 3, 2018 an agreement to acquire 100% of the shares of Mecanova Oy in Nivala, Finland with the subsidiary Mecanova Oü in Pärnu, Estonia. The purchase price for the shares was EUR 1.1 million. The takeover took place the same day. Mecanova is a supplier of sheet metal and copper components for demanding industrial customers. The company has net sales of about EUR 17 million and employs about 160 people. The purpose of the acquisition is to extend AQ's customer base, get a presence in Finland and to broaden our offering in sheet metal processing and copper component manufacturing and to obtain synergies with our current factory in Pärnu.
AQ Manufacturing Co., Ltd is started on May 2, 2018 a process to close down the manufacturing site in Samutprakarn, Thailand. The company had 43 employees in Thailand and its turnover was less than one percent of AQ Group's turnover. The background to the closure is that the company has generated losses since the inception in 2015 and that the main customers have had declining sales. The business volumes from customers mainly operating in extremely competitive telecom and consumer electronics market showed negative trends and the company didn't see a profitable future. The manufacturing is being transferred to AQ Components in China.
AQ Group AB signed on May 8, 2018 an agreement to acquire 100% of the shares of B3CG Interconnect Inc. (http://www.b3cg.com/en/home/) and its affiliate B3CG Interconnect USA Inc. The purchase price consists of CAD 13.6 million plus an earnout over two years with a maximum of CAD 6 million. The closing took place the same day.
B3CG is a leading supplier of complex electrical harnesses, high voltage cables, and electromechanical assemblies for various industries. The two companies have a total net sales of about Can\$ 35 million with a profit margin in line with AQ. They employ about 300 people in their operations in Saint Eustache, Quebec, Canada and in Plattsburgh, New York, U.S.A. B3CG has a long history with experienced management and the company fits well in AQ and our business area Wiring Systems
There have been no significant events after the end of the period.
The goal of the group is continued profitable growth. The Board of directors are not giving any forecast for turnover or profit. Statements in this report can be perceived as forward looking and the real outcome can be significantly different.
The board of directors of AQ Group has set goals for the group. The goals mean that the group is managed towards good profit, high quality and delivery precision with strong growth and a healthy financial risk level. The dividend policy is to have dividends corresponding to about 25 % of profit after tax over a business cycle. However, the Group's financial consolidation must always be considered.
| Goal | Jan-June 2018 | |
|---|---|---|
| Product quality | 100 % | 99.6 % |
| Delivery precision | 98 % | 88.4 % |
| Equity ratio | >40 % | 54 % |
| Profit margin before tax, (EBT %) | 8 % | 4.5 % |
The parent company has a related party relationship with its subsidiaries. There are some sales activities concerning goods between the operating group companies. The parent company is charging a management fee to the subsidiaries. All invoicing is according to market level prices and results in claims and debts between the companies which are settled regularly. There are some long-term loans between the parent company and a few subsidiaries. These loans are given with market level interest rates. Most companies in the group are part of cash pool in the parent company. The companies are charged/given interest rates at market level.
During 2018, AQ Group AB has paid SEK 50.3 million in dividends to its shareholders. There have been no other transactions between AQ and closely related parties which significantly affected the position or result of the company. There are no loans to members of the board of directors nor to anyone in leading positions.
At the annual general meeting on April 26, 2018 it was decided that a yearly fee of SEK 160 000 shall be paid to the members of the board of directors and a fee of SEK 400 000 to the chairman of the board. For the chairman of the Audit Committee, the remuneration shall be SEK 70,000 and to the other members of the Audit Committee, SEK 40,000. For the chairman of the Remuneration Committee, the remuneration shall be SEK 50,000 and to the other members of the Remuneration Committee, SEK 30,000. There are no other remunerations to the board of directors. There is no remuneration paid after a board assignment is completed.
People in management positions are paid a fixed salary and a variable element calculated in % of the group's profit maximized to one-year salary. There are no other benefits in addition to pension benefits for work performed via the employment contract. In individual cases and where there is special justification, the Board shall have the option of deviating from the above guidelines.
AQ is a global company with operations in fifteen countries. Within the group there are a number of risks and uncertainties of both operational and financial characteristics, which were described in the annual report of 2017. No additional significant risks have been identified since the annual report of 2017 was published. In addition to the commented factors the real outcome can be affected by for example political events, business cycle effects, currency and interest rates, competing products and their pricing, product development, commercial and technical difficulties, delivery problems and large credit losses at our customers.
The risks that are most evident in a shorter perspective are risks related to currency and prices.
Transactions and assets and liabilities in foreign currency are managed centrally within AQ in order to create balance in the respective currency thereby achieving highest possible levelling effect within the group in order to minimize currency differences.
AQ is not buying any direct raw material, but only intermediate goods for further production such as sheet metal of steel and aluminium, cables, insulated wire etc. The risk is minimized through customer agreements with price clauses.
Raw material price risk refers to the change in the price of material and its impact on earnings. The company's purchase of materials to different processes is significant. There is a risk of sharp price increases for raw materials where the Company is not able to compensate price increases, which may affect the Company's earnings negatively.
The group's credit risks are mainly connected to receivables from customers.
The parent company is indirectly affected by the same risks and uncertainties.
| Interim report Q3, 2018 | October 25, 2018, at 08:00 |
|---|---|
| Interim report Q4, 2018 | February 21, 2019, at 08:00 |
The information of this interim report shall be made public according to the Securities Market Act of Sweden. AQ Group AB (publ) is listed on Nasdaq Stockholm's main market.
The information was made public on July 19, 2018 at 08:00.
This report has not been reviewed by the company's financial auditors.
Further information can be given by AQ Group AB: CEO and IR, Claes Mellgren, telephone +46 70-592 83 38, [email protected] , CFO, Mia Tomczak, telephone +46 70-833 00 80, [email protected]
Financial reports and press releases are published in Swedish and English. If there are discrepancies between the two, the Swedish version shall prevail. They are available at www.aqg.se.
The Board and the Chief Executive Officer certifies that the interim report gives a true and fair overview of the Group's and the parent company's operations, financial position and results and describes material risks and uncertainties facing the parent company and the companies that form part of the Group.
Västerås, July 19, 2018
Claes Mellgren, CEO and board member
Patrik Nolåker P-O Andersson Ulf Gundemark Chairman of the Board Board member Board member
Board member Board member Board member
Gunilla Spongh Lars Wrebo Annika Johansson-Rosengren
| Rolling 12 months | ||||||
|---|---|---|---|---|---|---|
| Jul 2017 | ||||||
| SEK thousands | Apr-Jun 2018 | Apr-Jun 2017 | Jan-Jun 2018 | Jan-Jun 2017 | - Jun 2018 Full year 2017 | |
| Net sales | 1 223 542 | 1 077 380 | 2 313 665 | 2 079 278 | 4 254 128 | 4 019 740 |
| Other operating income | 19 732 | 16 681 | 37 228 | 27 363 | 58 236 | 48 371 |
| 1 243 275 | 1 094 061 | 2 350 893 | 2 106 641 | 4 312 364 | 4 068 111 | |
| Change in inventory and work in progress | 24 663 | 14 223 | 34 944 | 24 401 | 74 041 | 63 498 |
| Raw material and consumables | -627 262 | -555 360 | -1 189 376 | -1 061 909 | -2 165 714 | -2 038 247 |
| Goods for resale | -34 398 | -32 612 | -53 236 | -41 803 | -106 337 | -94 905 |
| Other external expenses | -164 454 | -132 833 | -302 790 | -256 332 | -575 524 | -529 066 |
| Personnel costs | -340 380 | -283 234 | -633 269 | -548 101 | -1 160 219 | -1 075 051 |
| Depreciation and amortisation | -26 927 | -23 656 | -50 735 | -46 519 | -101 715 | -97 499 |
| Other operating expenses | -16 751 | -6 192 | -27 126 | -15 167 | -45 518 | -33 559 |
| -1 185 509 | -1 019 664 | -2 221 588 | -1 945 431 | -4 080 987 | -3 804 829 | |
| Operating profit | 57 766 | 74 397 | 129 305 | 161 210 | 231 377 | 263 282 |
| Net financial income/expense | -2 355 | -3 919 | -5 497 | 1 526 | -14 477 | -7 454 |
| Profit before tax | 55 411 | 70 478 | 123 808 | 162 736 | 216 900 | 255 828 |
| Taxes | -8 400 | -11 641 | -19 210 | -26 974 | -43 390 | -51 154 |
| Profit for the period | 47 010 | 58 837 | 104 598 | 135 762 | 173 510 | 204 674 |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO: | ||||||
| Parent company shareholders | 46 538 | 58 601 | 103 827 | 135 334 | 172 265 | 203 773 |
| Non-controlling interests | 472 | 236 | 771 | 427 | 1 244 | 901 |
| 47 010 | 58 837 | 104 598 | 135 762 | 173 510 | 204 674 | |
| Earnings per share 1) | 2,54 | 3,20 | 5,68 | 7,40 | 9,42 | 11,14 |
1) There were no transactions during the year that might result in dilution effects.
| Rolling 12 months Jul 2017 |
||||||
|---|---|---|---|---|---|---|
| SEK thousands | Apr-Jun 2018 | Apr-Jun 2017 | Jan-Jun 2018 | Jan-Jun 2017 | - Jun 2018 Full year 2017 | |
| PROFIT FOR THE PERIOD | 47 010 | 58 837 | 104 598 | 135 762 | 173 510 | 204 674 |
| OTHER COMPREHENSIVE INCOME Items that cannot be transferred to the profit for the period |
||||||
| Revaluation of defined benefit pension plans Items transferred or that can be transferred to the profit for the period |
-159 | -159 | ||||
| Translation difference transferred to the profit | ||||||
| Translation difference for foreign operations | -2 304 | 44 | 56 351 | 3 610 | 78 533 | 25 793 |
| Other comprehensive income for the period after tax | -2 304 | 44 | 56 351 | 3 610 | 78 374 | 25 633 |
| Comprehensive income for the period | 44 707 | 58 880 | 160 948 | 139 372 | 251 884 | 230 307 |
| COMPREHENSIVE INCOME FOR THE PERIOD | ||||||
| ATTRIBUTABLE TO: | ||||||
| Parent company shareholders | 44 174 | 58 605 | 159 938 | 138 910 | 250 332 | 229 306 |
| Non-controlling interests | 532 | 275 | 1 010 | 462 | 1 551 | 1 001 |
| 44 707 | 58 880 | 160 948 | 139 372 | 251 883 | 230 307 |
| SEK thousands | 30/06/2018 | 30/06/2017 | 31/12/2017 |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 274 838 | 150 121 | 150 030 |
| Other intangible assets | 176 801 | 81 037 | 76 710 |
| Tangible assets | 562 402 | 508 083 | 519 512 |
| Financial assets | 2 232 | 2 024 | 1 977 |
| Deferred tax assets | 22 367 | 12 530 | 10 861 |
| TOTAL NON-CURRENT ASSETS | 1 038 640 | 753 794 | 759 089 |
| Inventories | 831 442 | 624 954 | 732 343 |
| Trade and other receivables | 1 103 424 | 947 782 | 900 387 |
| Other current receivables | 149 262 | 161 748 | 143 575 |
| Cash and cash equivalents | 139 988 | 103 003 | 142 049 |
| TOTAL CURRENT ASSETS | 2 224 116 | 1 837 487 | 1 918 354 |
| TOTAL ASSETS | 3 262 755 | 2 591 281 | 2 677 444 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company shareholders | 1 749 321 | 1 549 057 | 1 639 452 |
| Non-controlling interests | 4 751 | 3 201 | 3 742 |
| TOTAL EQUITY | 1 754 072 | 1 552 257 | 1 643 193 |
| Non-current liabilities to credit institutions | 46 478 | 91 653 | 12 757 |
| Non-current non-interest-bearing liabilities | 173 484 | 82 788 | 74 642 |
| Total non-current liabilities | 219 962 | 174 441 | 87 399 |
| Interest-bearing current liabilities | 414 606 | 130 614 | 253 264 |
| Trade and other payables | 519 585 | 414 437 | 418 050 |
| Other current liabilities | 354 530 | 319 532 | 275 537 |
| Total current liabilities | 1 288 721 | 864 583 | 946 851 |
| TOTAL LIABILITIES | 1 508 683 | 1 039 024 | 1 034 250 |
| TOTAL EQUITY AND LIABILITIES | 3 262 755 | 2 591 281 | 2 677 444 |
| Equity attributable to parent company shareholders | |||||||
|---|---|---|---|---|---|---|---|
| Share capital | Other | Translation | Retained | Subtotal Non-controlling | Total equity | ||
| contributed | reserve | earnings incl. | interests | ||||
| SEK thousands | capital | profit | |||||
| Equity, 01/01/2017 | 36 588 | 84 194 | 72 236 | 1 267 437 | 1 460 455 | 2 739 | 1 463 195 |
| Profit for the period | 135 334 | 135 334 | 427 | 135 762 | |||
| Translation differences in foreign operations | 3 576 | 3 576 | 34 | 3 610 | |||
| Other comprehensive income | 3 576 | 3 576 | 34 | 3 610 | |||
| Comprehensive income for the period | 3 576 | 135 334 | 138 910 | 462 | 139 372 | ||
| Changes in non-controlling interests | |||||||
| Issue | |||||||
| Dividends paid | -50 309 | -50 309 | - | -50 309 | |||
| Transactions with shareholders | - | - | -50 309 | -50 309 | -50 309 | ||
| Equity, 30/06/2017 | 36 588 | 84 194 | 75 812 | 1 352 462 | 1 549 056 | 3 201 | 1 552 257 |
| Equity, 01/01/2018 | 36 588 | 84 194 | 97 927 | 1 420 746 | 1 639 452 | 3 742 | 1 643 193 |
| Profit for the period | 103 827 | 103 827 | 771 | 104 598 | |||
| Translation differences in foreign operations | 56 111 | 56 111 | 239 | 56 351 | |||
| Other comprehensive income | 56 111 | 56 111 | 239 | 56 351 | |||
| Comprehensive income for the period | 56 111 | 103 827 | 159 938 | 1 010 | 160 948 | ||
| Acquisition of companies, revaluation tax effect | 240 | 240 | 240 | ||||
| Dividends paid | -50 309 | -50 309 | -50 309 | ||||
| Transactions with shareholders | -50 068 | -50 068 | -50 068 | ||||
| Equity, 30/06/2018 | 36 588 | 84 194 | 154 039 | 1 474 504 | 1 749 321 | 4 751 | 1 754 072 |
All shares, 18 294 058 pcs, are A-shares with equal voting rights and equal rights to the results.
| SEK thousands | 1 Apr - 30 Jun, 2018 | 1 Apr - 30 Jun, 2017 | 1 Jan - 30 Jun, 2018 | 1 Jan - 30 Jun, 2017 | Full year 2017 |
|---|---|---|---|---|---|
| Profit before tax | 55 411 | 70 478 | 123 808 | 162 736 | 255 828 |
| Adjustment for non cash generating items | 27 045 | 25 363 | 53 069 | 44 776 | 98 888 |
| Income tax paid | -15 214 | 2 295 | -30 558 | -23 540 | -39 476 |
| Cash flow from operating activities before change in | |||||
| working capital | 67 242 | 98 135 | 146 319 | 183 972 | 315 239 |
| Increase (-)/decrease (+) in inventories | -12 987 | -7 264 | -42 375 | -40 121 | -140 311 |
| Increase (-)/decrease (+) in trade receivables | -7 716 | -25 312 | -104 928 | -138 718 | -83 489 |
| Increase (-)/decrease (+) in other receivables | 50 987 | 12 568 | 39 580 | 6 050 | 3 396 |
| Increase (+)/decrease (-) in trade payables | -26 535 | 12 436 | 18 878 | 61 827 | 61 191 |
| Increase (+)/decrease (-) in other liabilities | -35 543 | -11 943 | 12 552 | 20 678 | -8 804 |
| Change in working capital | -31 793 | -19 514 | -76 294 | -90 283 | -168 017 |
| Cashflow from operating activities | 35 448 | 78 621 | 70 025 | 93 688 | 147 223 |
| Aquisitions of shares in subsidiaries | -121 265 | 0 | -123 320 | 0 | -7 000 |
| Divestment of shares in subsidiaries | 1 310 | 0 | 1 310 | 0 | 0 |
| Acquisition of intangible non-current assets | -241 | -463 | -444 | -1 258 | -1 685 |
| Acquisition of tangible non-current assets*) | -24 972 | -32 939 | -41 914 | -52 831 | -104 002 |
| Sale of tangible non-current assets | 3 457 | 3 508 | 4 037 | 3 585 | 5 282 |
| Purchase/Sales of short-term investment in securities | 110 | 205 | 204 | 204 | |
| Cashflow from investing activities | -141 601 | -29 689 | -160 332 | -50 299 | -107 200 |
| New borrowings, credit institutions*) | 170 000 | 0 | 170 000 | 100 | 114 983 |
| Amortisation of loans | -2 576 | -14 103 | -3 230 | -24 795 | -161 433 |
| Amortisation of loans (leasing) | -4 119 | -1 082 | -4 602 | -2 032 | -4 444 |
| Change in bank overdraft facilities | -23 259 | -3 319 | -32 253 | -23 828 | 43 058 |
| Dividends to the parent company shareholders | -50 309 | -50 309 | -50 309 | -50 309 | -50 309 |
| Other changes in financial activities | -135 | 73 | -135 | 104 | 173 |
| Casflow from financing activities | 89 602 | -68 740 | 79 473 | -100 761 | -57 972 |
| Change in cash and cash equivalents for the period | -16 551 | -19 808 | -10 834 | -57 372 | -17 949 |
| Cash and cash equivalents at the beginning of the year | 155 152 | 125 316 | 142 049 | 162 812 | 162 812 |
| Exchange rate difference in cash and cash equivalents | 1 387 | -2 505 | 8 773 | -2 437 | -2 814 |
| Cash and cash equivalents at the end of the period | 139 988 | 103 003 | 139 988 | 103 003 | 142 049 |
*) In previous periods financial leasing has been presented with gross numbers in the cash flow, as new loans and acquisitions of tangible assets As of the third quarter in 2017 financial leasing is presented with net numbers, as the transaction doesn't have any impact on the cash flow. Earlier periods have been adjusted.
The parent company, AQ Group AB, focuses primarily on managing and developing the Group. As in previous years, the parent company's turnover consists almost exclusively of the sale of administrative services to subsidiaries. There are no purchases of any substance from subsidiaries.
| Rolling 12 months | ||||||
|---|---|---|---|---|---|---|
| Jul 2017 | ||||||
| SEK thousands | Apr-Jun 2018 | Apr-Jun 2017 | Jan-Jun 2018 | Jan-Jun 2017 | -Jun 2018 Full year 2017 | |
| Net sales | 13 802 | 12 427 | 24 553 | 24 770 | 50 022 | 50 240 |
| Other operating income | 1 026 | 998 | 1 891 | 1 323 | 3 175 | 2 607 |
| 14 828 | 13 425 | 26 444 | 26 092 | 53 197 | 52 846 | |
| Other external expenses | -5 636 | -4 511 | -9 684 | -8 063 | -18 518 | -16 898 |
| Personnel costs | -4 038 | -5 507 | -8 920 | -10 398 | -16 673 | -18 152 |
| Depreciation and amortisation | -80 | -74 | -160 | -153 | -300 | -293 |
| Other operating expenses | -63 | -42 | -98 | -109 | -302 | -314 |
| -9 817 | -10 135 | -18 861 | -18 724 | -35 793 | -35 656 | |
| Operating profit | 5 011 | 3 290 | 7 583 | 7 369 | 17 404 | 17 190 |
| Net financial items | 209 085 | 40 848 | 206 931 | 84 285 | 204 403 | 81 756 |
| Earnings after net financial items | 214 096 | 44 139 | 214 515 | 91 654 | 221 807 | 98 946 |
| Appropriations | 34 193 | 34 193 | ||||
| Profit before tax | 214 096 | 44 139 | 214 515 | 91 654 | 256 001 | 133 140 |
| Taxes | -715 | -587 | -823 | -2 765 | -17 952 | -19 894 |
| Profit for the period | 213 381 | 43 551 | 213 692 | 88 889 | 238 049 | 113 246 |
Net sales for the second quarter was SEK 13.8 million (12.4), somewhat higher than the same period in the previous year, because of higher invoicing of management fees (group commons costs). Other external expenses were SEK 5.6 million (4.5).
Personnel costs were SEK 4.0 million (5.5). Operating profit (EBIT) was SEK 5.0 million (3.3). Net financial items were SEK 209.1 million (40.8) and consisted partly of tax free dividends from subsidiaries of SEK 211.0 million (42.2).
Tax costs of SEK 0.7 million (0.6) are marginally lower than the same period in the previous year.
Net sales for the first six months was SEK 24.5 million (24.8), similar to the same period in the previous year. Other external expenses were SEK 9.7 million (8.1).
Personnel costs were SEK 8.9 million (10.4). Operating profit (EBIT) was SEK 214.5 million (91.6). Net financial items were SEK 206.9 million (84.3) and consisted partly of tax free dividends from subsidiaries of SEK 211.0 million (80.0).
Tax costs of SEK 0.8 (2.8) million are lower than the same period in the previous year.
| SEK thousands | 30/06/2018 | 30/06/2017 | 31/12/2017 |
|---|---|---|---|
| ASSETS | |||
| Tangible assets | 1 089 | 1 068 | 922 |
| Financial fixed assets | 879 715 | 704 185 | 661 743 |
| Deferred tax assets | - | 581 | - |
| TOTAL NON-CURRENT ASSETS | 880 804 | 705 833 | 662 666 |
| Other current receivables | 389 247 | 225 432 | 316 805 |
| Cash and cash equivalents | - | - | - |
| TOTAL CURRENT ASSETS | 389 247 | 225 432 | 316 805 |
| TOTAL ASSETS | 1 270 051 | 931 265 | 979 472 |
| EQUITY AND LIABILITIES | |||
| Restricted equity | 37 745 | 37 745 | 37 745 |
| Non-restricted equity | 497 115 | 309 375 | 333 732 |
| Total equity | 534 860 | 347 120 | 371 476 |
| Untaxed reserves | 60 407 | 44 100 | 60 407 |
| Other provisions | 52 669 | 7 708 | - |
| Interest-bearing non-current liabilities | 546 | 75 472 | 144 |
| Deferred tax liabilities | 14 | - | 12 |
| Total non-current liabilities | 53 229 | 83 180 | 156 |
| Interest-bearing current liabilities | 607 802 | 442 870 | 515 998 |
| Trade and other payables | 3 313 | 1 709 | 2 994 |
| Other current liabilities | 10 441 | 12 287 | 28 441 |
| Total current liabilities | 621 556 | 456 866 | 547 433 |
| TOTAL LIABILITIES | 674 785 | 540 046 | 547 589 |
| TOTAL EQUITY AND LIABILITIES | 1 270 051 | 931 265 | 979 472 |
The increase in financial fixed assets compared to the same period in the previous year is due to the acquisitions of Teknoprodukter, Mecanova and B3CG and a reduction of shares in subsidiaries because of the merger of AQ Industrial System AB and AQ Group AB and to devaluation of shares in the subsidiaries in Mexico and India in December 2017.
Other current receivables are mainly with group companies of SEK 383 million (212).
The change in non-restricted equity compared to second quarter last year is due to retained earnings including profit for the year is higher than the same period last year.
Interest-bearing current liabilities have increased compared to the same period in the previous year due to acquisitions and consists of short-term bank loans of SEK 285 million, usage of bank overdraft of SEK 100 million and debts to subsidiaries in the cash pool of SEK 222 million.
The summary interim report has been prepared in accordance IAS 34, Interim Financial Reporting, and applicable parts of the Swedish Annual Accounts Act. Information according to IAS 34.16A are presented in the financial reports and their notes as well as in other parts of the interim report. The interim report for the parent company has been prepared in accordance with Swedish Annual Accounts Act, chapter 9 Interim report. For the group and the parent company the accounting and valuation principles applied are the same as used in the latest annual report.
The total sum in tables and calculations do not always sum up of the parts due to rounding differences. The objective is that every interim row shall conform with the original source resulting in rounding differences.
As of July 3, 2016, ESMAs (European Securities And Markets Authority) "Guidelines – Alternative performance measures" are applied. In accordance with these guidelines information about financial numbers have been added that are not defined by IFRS.
During 2018 the group has started to apply IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.
The transition to IFRS 9 and IFRS 15 has not had any major effect for the group or the parent company. IFRS 15 has added additional information which is shown together with business segments in note 2.
IFRS 9 includes rules for classification and valuation of financial assets and liabilities, impairment of financial instruments and hedge accounting. The standard introduces among other things an impairment model based on expected credit losses instead of actual credit losses.
IFRS 15 builds on the principle that revenue is recognized when the customer gets control of the sold goods or service and replaces the earlier principle when revenue is recognized when risks and benefits have transferred to the buyer. IFRS 15 is also clearer in identifying the performance obligations in customer contracts.
IFRS 16 Leases will replace IAS 17 Leases on January 1, 2019. With IFRS 16, all leases will be accounted for in the group's balance sheet except for leases of lesser value and contracts with a lease period of less than 12 months. IFRS 16 is estimated to influence the group's balance sheet total with maximum 10%.
The Group operates in two business segments: Component, which produces transformers, wiring systems, mechanical components, punched sheet metal and injection-moulded thermoplastics and System, which produces systems, power and automation solutions and assembles complete machines in close collaboration with the customers.
For the segment Component, the total net sales for the second quarter was SEK 1085 million (935), of which SEK 982 million (848) is external sales. The increase of the external sales of totally SEK 133 million is due to high demands from our customers and our acquisitions.
For the segment System, the total net sales for the second quarter was SEK 294 million (272), of which SEK 242 million (229) is external sales. The increase of the external sales of SEK 13 million is due to increased demands from our customers.
Operating profit (EBIT) in the second quarter was SEK 44 million (65) for Component, which was SEK 21 million lower than the same period last year. The reason for the lower profit in Component is mainly due to our companies in China, Hungary and Thailand are showing a lower operating profit than the same period last year. In addition, we have a Swedish company with big problems with deliveries and profitability. Operating profit (EBIT) for System was SEK 10 million (8), which was SEK 2 million better than the same period last year.
In the column" Unallocated and eliminations" there are items which have not been allocated to the two segments, mainly real estate companies, parent company and group eliminations.
The turnover divided among geographical market in the second quarter: Sweden 42% (50), other European countries 46% (39) and other countries 12% (11).
| Unallocated and | ||||
|---|---|---|---|---|
| Q2 2018, SEK thousands | Component | System | eliminations | Group |
| Net sales, external | 981 605 | 241 937 | 1 223 542 | |
| Net sales, internal | 103 022 | 51 901 | -154 922 | |
| Total net turnover | 1 084 627 | 293 838 | -154 922 | 1 223 542 |
| Material costs, excl. purchases own segment | -565 683 | -214 265 | 142 951 | -636 997 |
| Depreciation | -25 593 | -1 254 | -80 | -26 927 |
| Other operating expenses/income | -449 315 | -68 676 | 16 139 | -501 852 |
| Operating profit | 44 036 | 9 643 | 4 087 | 57 766 |
| Net financial items | -2 355 | -2 355 | ||
| Profit before tax | 44 036 | 9 643 | 1 732 | 55 411 |
| Other comprehensive income plus tax | -10 704 | -10 704 | ||
| Comprehensive income for the period | 44 036 | 9 643 | -8 972 | 44 707 |
| Q2 2017 | ||||
| Net sales, external | 848 381 | 228 999 | 1 077 380 | |
| Net sales, internal | 86 760 | 43 287 | -130 046 | |
| Total net turnover | 935 140 | 272 286 | -130 046 | 1 077 380 |
| Material costs, excl. purchases own segment | -478 825 | -215 311 | 120 386 | -573 749 |
| Depreciation | -21 833 | -1 749 | -74 | -23 656 |
| Other operating expenses/income | -369 226 | -47 282 | 10 931 | -405 578 |
| Operating profit | 65 257 | 7 944 | 1 196 | 74 397 |
| Net financial items | -3 919 | -3 919 | ||
| Profit before tax | 65 257 | 7 944 | -2 723 | 70 478 |
| Other comprehensive income plus tax | -11 597 | -11 597 | ||
| Comprehensive income for the period | 65 257 | 7 944 | -14 320 | 58 880 |
| Unallocated and | ||||
|---|---|---|---|---|
| Q2 2018, SEK thousands | Component | System | eliminations | Group |
| Sweden | 392 476 | 176 394 | 13 802 | 582 672 |
| Other European countries | 569 743 | 70 040 | 639 783 | |
| Other countries | 122 407 | 47 404 | 169 812 | |
| Net sales | 1 084 627 | 293 838 | 13 802 | 1 392 267 |
| Internal sales, eliminations | -168 725 | -168 725 | ||
| Total net turover | 1 084 627 | 293 838 | -154 922 | 1 223 542 |
| Unallocated and | ||||
|---|---|---|---|---|
| Q2 2017 | Component | System | eliminations | Group |
| Sweden | 410 020 | 183 990 | 12 427 | 606 437 |
| Other European countries | 437 523 | 44 842 | 482 365 | |
| Other countries | 87 597 | 43 454 | 131 052 | |
| Net sales | 935 140 | 272 286 | 12 427 | 1 219 853 |
| Internal sales, eliminations | -142 474 | -142 474 | ||
| Total net turover | 935 140 | 272 286 | -130 046 | 1 077 380 |
Geographical markets are based on where AQ Group's subsidiaries has it registered office.
For the segment Component, the total net sales for the first six months was SEK 2 018 million (1 810), of which SEK 1 824 million (1 648) is external sales. The increase of the external sales of totally SEK 176 million is due to high demands from our customers and our acquisitions.
For the segment System, the total net sales for the first six months was SEK 589 million (517), of which SEK 490 million (432) is external sales. The increase of the external sales of SEK 58 million is due to increased demands from our customers.
Operating profit (EBIT) in the first six months was SEK 103 million (127) for Component, which was SEK 23 million lower than the same period last year. The reason for the lower profit in Component is mainly due to our companies in China, Hungary and Thailand are showing a lower operating profit than the same period last year. In addition, we have a Swedish company with big problems with deliveries and profitability. Operating profit (EBIT) for System was SEK 23 million (30), which was SEK 7 million lower than the same period last year due to projects with lower profitability than last year.
In the column" Unallocated and eliminations" there are items which have not been allocated to the two segments, mainly real estate companies, parent company and group eliminations.
The turnover divided among geographical market in the first six months: Sweden 44% (49), other European countries 45% (41) and other countries 11% (10).
| Unallocated and | ||||
|---|---|---|---|---|
| YTD 2018, SEK thousands | Component | System | eliminations | Group |
| Net sales, external | 1 823 956 | 489 709 | 2 313 665 | |
| Net sales, internal | 194 531 | 98 882 | -293 413 | |
| Total net turnover | 2 018 487 | 588 591 | -293 413 | 2 313 665 |
| Material costs, excl. purchases own segment | -1 042 252 | -438 071 | 272 655 | -1 207 668 |
| Depreciation | -48 411 | -2 165 | -160 | -50 735 |
| Other operating expenses/income | -824 811 | -125 641 | 24 495 | -925 957 |
| Operating profit | 103 014 | 22 713 | 3 578 | 129 305 |
| Net financial items | -5 497 | -5 497 | ||
| Profit before tax | 103 014 | 22 713 | -1 919 | 123 808 |
| Other comprehensive income plus tax | 37 140 | 37 140 | ||
| Comprehensive income for the period | 103 014 | 22 713 | 35 221 | 160 948 |
| YTD 2017 | ||||
| Net sales, external | 1 647 729 | 431 548 | 2 079 278 | |
| Net sales, internal | 161 876 | 85 899 | -247 775 | |
| Total net turnover | 1 809 605 | 517 447 | -247 775 | 2 079 278 |
| Material costs, excl. purchases own segment | -929 574 | -381 915 | 232 177 | -1 079 312 |
| Depreciation | -43 208 | -3 159 | -153 | -46 519 |
| Other operating expenses/income | -710 294 | -102 036 | 20 094 | -792 236 |
| Operating profit | 126 529 | 30 338 | 4 343 | 161 210 |
| Net financial items | 1 526 | 1 526 | ||
| Profit before tax | 126 529 | 30 338 | 5 869 | 162 736 |
| Other comprehensive income plus tax | -23 364 | -23 364 | ||
| Comprehensive income for the period | 126 529 | 30 338 | -17 495 | 139 372 |
| Unallocated and | |||||||
|---|---|---|---|---|---|---|---|
| YTD 2018, SEK thousands | Component | System | eliminations | Group | |||
| Sweden | 766 660 | 380 600 | 24 553 | 1 171 813 | |||
| Other European countries | 1 051 041 | 128 937 | 1 179 978 | ||||
| Other countries | 200 785 | 79 054 | 279 839 | ||||
| Net sales | 2 018 487 | 588 591 | 24 553 | 2 631 631 | |||
| Internal sales, eliminations | -317 966 | -317 966 | |||||
| Total net turover | 2 018 487 | 588 591 | -293 413 | 2 313 665 |
| Unallocated and | ||||||||
|---|---|---|---|---|---|---|---|---|
| YTD 2017 | Component | System | eliminations | Group | ||||
| Sweden | 770 081 | 368 944 | 24 770 | 1 163 795 | ||||
| Other European countries | 872 419 | 82 023 | 954 442 | |||||
| Other countries | 167 106 | 66 480 | 233 586 | |||||
| Net sales | 1 809 605 | 517 447 | 24 770 | 2 351 822 | ||||
| Internal sales, eliminations | -272 545 | -272 545 | ||||||
| Total net turover | 1 809 605 | 517 447 | -247 775 | 2 079 278 |
Geographical markets are based on where AQ Group's subsidiaries has it registered office.
Number of employees (full time yearly equivalents) in the Group per country:
| Jan-Jun 2018 | Jan-Jun 2017 | Jan-Dec 2017 | |
|---|---|---|---|
| Bulgaria | 1 200 | 1 051 | 1 146 |
| Poland | 1 105 | 954 | 1 010 |
| Sweden | 1 060 | 1 065 | 1 043 |
| Lithuania | 718 | 680 | 688 |
| China | 450 | 484 | 472 |
| Estonia | 408 | 369 | 385 |
| Hungary | 378 | 444 | 430 |
| Mexico | 165 | 145 | 162 |
| Finland | 140 | 0 | 0 |
| India | 126 | 131 | 123 |
| Canada | 160 | 0 | 0 |
| Thailand | 44 | 22 | 34 |
| USA | 115 | 0 | 0 |
| Serbia | 32 | 27 | 36 |
| Italy | 20 | 12 | 19 |
| 6 121 | 5 384 | 5 548 |
AQ's strategy is to grow in both segments. During the period January to June a minor and two larger acquisition and no divestments were made.
Acquisitions during the first half year 2018:
| Date | Acquisition | Net sales, SEK million Number of employees | ||||
|---|---|---|---|---|---|---|
| March 1, 2018 Teknoprodukter Finmekanik Vännäs AB | 3.1 | 3 Sweden | ||||
| April 3, 2018 | Mecanova OY | 138.4 | 120 Finland | |||
| Mecanova OÜ | 34.6 | 45 Estonia | ||||
| May 8, 2018 | B3CG Interconnect Inc. | 158.4 | 180 Canada | |||
| B3CG Interconnect USA Inc. | 81.6 | 120 USA |
* Net sales and number of employees at the time of acquisition
On March 1, 2018 AQ M-Tech acquired 100% of the shares in the private company Teknoprodukter Finmekanik i Vännäs AB. The purchase was divided into SEK 2.6 million in cash and a deferred payment of SEK 0.6 million to be paid when machines and knowledge has been transferred to AQ M-Tech AB.
The company has established a preliminary acquisition analysis, which shows consolidated overvalues of about SEK 1.9 million divided in customer relations SEK 1.3 million, technology SEK 0.5 million, goodwill SEK 0.5 million and a deferred tax debt of SEK 0.4 million. The depreciation rate is estimated to 5 years for the customer relations and 5 years for the technology. The estimated goodwill value of SEK 0.5 million includes synergy effects in the form of more efficient production processes and the technical competence of personnel. No part of the goodwill is expected to be tax deductible. There were no acquisition related expenses in conjunction with the acquisition. Operating receivables are taken at their gross value, which correspond to real value. The acquisition was financed without bank loans.
During the period March to June the acquired company contributed with SEK 871 thousand to the group's turnover and SEK 50 thousand to the profit after tax. If the acquisition had been made on January 1, 2018, i.e. included January and February, management is estimating that the group's sales would have been SEK 430 thousand higher and the profit would have been SEK 78 thousand higher for the first six months of 2018.
On April 3, 2018 AQ Group acquired 100 % of the shares in the private company Mecanova Oy in Nivala, Finland with its subsidiary Mecanova Oü in Pärnu, Estonia. The purchase price was EUR 1.1 million in cash. In conjunction with the purchase it was agreed that AQ Group shall pay additionally EUR 0.5 million and make a shareholder's contribution of EUR 2.1 million.
The company has established a preliminary acquisition analysis, which shows consolidated overvalues of about EUR 6.9 million divided in customer relations EUR 0.9 million, technology EUR 2.3 million, goodwill EUR 4.3 million and a deferred tax debt of EUR 0.6 million. The depreciation rate is estimated to 10 years for the customer relations and 10 years for the technology. The estimated goodwill value of EUR 4.3 million includes synergy effects in the form of more efficient production processes and the technical competence of personnel. No part of the goodwill is expected to be tax deductible. There were SEK 1.2 million of acquisition related expenses in conjunction with the acquisition. Operating receivables are taken at their gross value, which correspond to real value. The acquisition was financed without new bank loans.
During the period April to June the acquired companies contributed with SEK 53 million to the group's turnover and SEK 3.6 million to the profit after tax. If the acquisition had been made on January 1, 2018, i.e. included the first quarter, management is estimating that the group's sales would have been SEK 55 million higher and the profit would have been SEK 3.5 million higher for the first six months of 2018.
AQ Group AB signed on May 8, 2018 an agreement to acquire 100% of the shares in B3CG Interconnect Inc. and its subsidiary B3CG Interconnect USA Inc. The purchase price was CAD 13.6 million plus an earnout over two years of maximum CAD 6 million.
The company has established a preliminary acquisition analysis, which shows consolidated overvalues of about CAD 17.3 million divided in customer relations CAD 4.7 million, technology CAD 5.7 million, goodwill CAD 9.7 million and a deferred tax debt of CAD 2.8 million. The depreciation rate is estimated to 10 years for the customer relations and 10 years for the technology. The estimated goodwill value of CAD 9.7 million includes synergy effects in the form of more efficient production processes and the technical competence of personnel. No part of the goodwill is expected to be tax deductible. There were SEK 0.9 million of acquisition related expenses in conjunction with the acquisition. Operating receivables are taken at their gross value, which correspond to real value. The acquisition was financed with a new bank loan.
During the period May to June the acquired companies contributed with SEK 35 million to the group's turnover and SEK 1.8 million to the profit after tax. If the acquisition had been made on January 1, 2018, i.e. included the first quarter and the month of April, management is estimating that the group's sales would have been SEK 70 million higher and the profit would have been SEK 7 million higher for the first six months of 2018.
| (SEK thousands) | ||||
|---|---|---|---|---|
| Teknoprod. | Mecanova OY and B3CG Interc. Inc and | |||
| Finmek. Vännäs AB | Mecanova OÜ B3CG Interc. USA Inc. | Group | ||
| Intagible assets | - | 2 421 | 9 140 | 11 561 |
| Tangible assets | 362 | 24 123 | 8 513 | 32 998 |
| Financial assets | - | 5 462 | - | 5 462 |
| Inventories | 149 | 18 433 | 19 059 | 37 641 |
| Tax receivables | 43 | - | - | 43 |
| Operating receivables | 547 | 9 755 | 44 751 | 55 053 |
| Tax liability | - | - | -1 302 | -1 302 |
| Operating liabilities | -351 | -52 562 | -31 106 | -84 019 |
| Liquid funds | 544 | 134 | 1 052 | 1 730 |
| Provisions | - | - | -1 684 | -1 684 |
| Net loans | - | -40 540 | -32 647 | -73 187 |
| Acquired net assets | 1 294 | -32 775 | 15 776 | -15 705 |
| Customer relations | 1 313 | 6 703 | 49 624 | 57 640 |
| Technologies | 511 | 28 665 | 19 721 | 48 897 |
| Deferred tax on surplus values | -401 | -7 076 | -18 723 | -26 200 |
| Goodwill | 483 | 42 827 | 68 549 | 111 859 |
| Purchase price shares | 3 200 | 38 344 | 134 947 | 176 491 |
| Debt additional purchase price | -600 | -12 992 | -41 310 | -54 902 |
| Cash flow effect | ||||
| Cash paid | 2 600 | 25 352 | 93 637 | 121 589 |
| Total consideration paid | 2 600 | 25 352 | 93 637 | 121 589 |
| Liquid funds in acquired company | 544 | 134 | 1 052 | 1 730 |
| Total cash flow effect | 3 144 | 25 487 | 94 689 | 123 320 |
Financial instruments that are shown in the balance sheet include on the assets side mainly cash or cash equivalents, receivables from customers and other receivables. On the liabilities side they consist mainly of payables to suppliers, other payable and credit debts.
Fair value is not separately shown as it is our assessment that the values shown are an acceptable estimation of the real value because of the short terms. Fair value of assets is established from market prices. Fair value is based on the listing at brokers. Similar contracts are being traded on an active market and the prices are reflecting actual transactions of comparable instruments.
The Group is only in exceptional cases using derivatives to reduce currency risks and it has not had any derivatives during the year.
Information about events after the end of the reporting period are presented on page 6.
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | YTD | Q1 | Q2 | Q3 | Q4 | Full year | |
| Operating margin, (EBIT %) | ||||||||
| Operating profit | 71 539 | 57 766 | 129 305 | 86 813 | 74 397 | 63 562 | 38 510 | 263 282 |
| Net revenue | 1 090 122 | 1 223 542 | 2 313 665 | 1 001 898 | 1 077 380 | 923 142 | 1 017 321 | 4 019 740 |
| Operating margin | 6,6% | 4,7% | 5,6% | 8,7% | 6,9% | 6,9% | 3,8% | 6,5% |
| Profit margin before tax, (EBT %) | ||||||||
| Profit before tax | 68 397 | 55 411 | 123 808 | 92 258 | 70 478 | 61 295 | 31 797 | 255 828 |
| Net revenue | 1 090 122 | 1 223 542 | 2 313 665 | 1 001 898 | 1 077 380 | 923 142 | 1 017 321 | 4 019 740 |
| Profit margin before tax | 6,3% | 4,5% | 5,4% | 9,2% | 6,5% | 6,6% | 3,1% | 6,4% |
| Liquid ratio, % | ||||||||
| Trade receivables | 1 024 591 | 1 103 424 | 1 103 424 | 922 728 | 947 782 | 889 208 | 900 387 | 900 387 |
| Other current receivables | 161 071 | 149 262 | 149 262 | 184 722 | 161 748 | 155 202 | 143 575 | 143 575 |
| Cash and cash equivalents | 155 151 | 139 988 | 139 988 | 125 316 | 103 003 | 105 741 | 142 049 | 142 049 |
| Current liabilities | 1 059 940 | 1 288 721 | 1 288 721 | 865 301 | 864 583 | 828 792 | 946 851 | 946 851 |
| Liquid ratio | 126% | 108% | 108% | 142% | 140% | 139% | 125% | 125% |
| Debt/equity ratio, % | ||||||||
| Total equity | 1 759 434 | 1 754 072 | 1 754 072 | 1 543 686 | 1 552 257 | 1 580 103 | 1 643 193 | 1 643 193 |
| Total assets | 2 904 192 | 3 262 755 | 3 262 755 | 2 593 111 | 2 591 281 | 2 567 768 | 2 677 444 | 2 677 444 |
| Debt/equity ratio | 61% | 54% | 54% | 60% | 60% | 62% | 61% | 61% |
| Return on total assets, % | ||||||||
| Profit before tax, rolling 12 months | 231 967 | 216 900 | 216 900 | 295 648 | 275 368 | 283 613 | 255 828 | 255 828 |
| Financial expenses, rolling 12 months | -11 222 | -9 766 | -9 766 | -12 669 | -15 652 | -12 671 | -10 741 | -10 741 |
| Total equity and liabilities, opening balance for 12 months Total equity and liabilities, closing balance |
2 593 111 2 904 192 |
2 591 281 3 262 755 |
2 591 281 3 262 755 |
2 066 851 2 593 111 |
2 149 012 2 591 281 |
2 130 582 2 567 768 |
2 449 796 2 677 444 |
2 449 796 2 677 444 |
| Total equity and liabilities, average | 2 748 651 | 2 927 018 | 2 927 018 | 2 329 981 | 2 370 147 | 2 349 175 | 2 563 620 | 2 563 620 |
| Return on total assets | 8,8% | 7,7% | 7,7% | 13,2% | 12,3% | 12,6% | 10,3% | 10,3% |
| Return on equity after tax, % | ||||||||
| Profit for the period after tax, rolling 12 months | 185 336 | 173 510 | 173 510 | 250 191 | 233 463 | 237 884 | 204 674 | 204 674 |
| Total equity, opening for 12 months | 1 543 686 | 1 552 257 | 1 552 257 | 1 241 016 | 1 290 577 | 1 366 832 | 1 463 195 | 1 463 195 |
| Total equity, closing | 1 759 434 | 1 754 072 | 1 754 072 | 1 543 686 | 1 552 257 | 1 580 103 | 1 643 193 | 1 643 193 |
| Total equity, average | 1 651 560 | 1 653 165 | 1 653 165 | 1 392 351 | 1 421 417 | 1 473 468 | 1 553 194 | 1 553 194 |
| Return on equity after tax | 11,2% | 10,5% | 10,5% | 18,0% | 16,4% | 16,1% | 13,2% | 13,2% |
| Net cash / Net debt | ||||||||
| Cash and cash equivalents | 155 151 | 139 988 | 139 988 | 125 316 | 103 003 | 105 741 | 142 049 | 142 049 |
| Non-current interest bearing liabilities | 9 817 | 46 478 | 46 478 | 100 757 | 91 653 | 84 587 | 12 757 | 12 757 |
| Current interest bearing liabilities | 248 309 | 414 606 | 414 606 | 139 998 | 130 614 | 112 052 | 253 264 | 253 264 |
| Total interest bearing liabilities | 258 126 | 461 084 | 461 084 | 240 755 | 222 267 | 196 639 | 266 021 | 266 021 |
| Net cash / Net debt | -102 975 | -321 096 | -321 096 | -115 439 | -119 264 | -90 898 | -123 972 | -123 972 |
| Growth, % | ||||||||
| Organic growth | ||||||||
| Net revenue | 1 090 122 | 1 223 542 | 2 313 665 | 1 001 898 | 1 077 380 | 923 142 | 1 017 321 | 4 019 740 |
| - Effect of changes in exchange rates | 21 159 | 32 485 | 53 644 | 8 945 | 22 944 | -1 319 | -1 262 | 29 308 |
| - Net revenue for last year | 1 001 898 | 1 077 380 | 2 079 278 | 801 834 | 859 584 | 723 223 | 904 575 | 3 289 215 |
| - Net revenue for acquired companies | 92 | 89 105 | 89 197 | 121 766 | 108 181 | 95 109 | 0 | 325 055 |
| = Organic growth | 66 973 | 24 574 | 91 546 | 69 353 | 86 671 | 106 130 | 114 008 | 376 162 |
| Organic growth divided by last year net revenue, % | 6,7% | 2,3% | 4,4% | 8,6% | 10,1% | 14,7% | 12,6% | 11,4% |
| Growth through acquisitions | ||||||||
| Net revenue for acquired companies divided by last year net | ||||||||
| revenue, % | 0,0% | 8,3% | 4,3% | 15,2% | 12,6% | 13,1% | 0,0% | 9,9% |
Calculated as operating profit divided by net sales.
This key figure shows the achieved profitability in the operative business of the company. Operating margin is a useful measure to follow up profitability and efficiency of the business before deduction of tied up capital. The figure is used internally for controlling and managing the business as well as a benchmark towards other companies in the industry.
Calculated as profit before tax divided by net sales.
This key figure shows the profitability of the business before tax. Profit margin before tax is a useful measure to follow up profitability and efficiency including tied up capital. The figure is used internally for controlling and managing the business as well as a benchmark towards other companies in the industry.
Calculated as current assets (excl. inventory) divided by current liabilities.
This key figure reflects the company's short-term solvency as it sets the company's current assets (except inventory) in relation to the short-term liabilities. If the liquid ratio exceeds 100%, it means that the assets exceed the liabilities in question.
Calculated as adjusted equity divided by balance sheet total.
This key figure reflects the company's financial position and its long term solvency. To have a good equity ratio and thus a strong financial position is important for being able to manage business cycles with varying sales. To have a strong financial position is also important for managing growth.
Calculated as profit/loss after financial items divided by the average balance sheet total. This key figure also shows the achieved profitability in the operative business. This number complements the operating margin as it includes tied up capital. It means that the number gives information on the return the business is given in relation to the capital tied in it. (Financial investments and cash and cash equivalents are also considered and the profit they give in the form of financial income.)
Calculated as profit/loss after tax divided by average equity including minority interest. This is a key figure showing the return of the capital that the owners have invested in the company (including retained earnings) after other stakeholders have received their dividends. This key figure shows how profitable the company is for its owners. This return also has significance for the company's opportunities to grow in a financial balance.
Calculated as the profit before tax and financial items.
Operating profit shows the result generated by the operative business and is used together with operating margin and return on total assets for evaluating and managing the operative business.
Calculated as the profit before tax.
The key figure shows the result generated by the operative business and financial income taking into account payments to creditors for the capital they are contributing to finance the business. The figure shows remaining profit to the owners taking into account that part of it will be deducted for tax payments.
Calculated as the difference between interest bearing debts and cash and cash equivalents. This key figure is reflecting how much interest-bearing debts the company has taking into account in cash and cash equivalents. The figure gives a good picture of the debt situation. Net cash means that cash and cash equivalents exceeds interest bearing debts. Net debt means that interest bearing debts exceed cash and cash equivalents.
The company is using two key figures to describe growth; 1) organic growth and 2) growth through acquisitions.
Organic growth is calculated as the difference between the net sales of the current period and the net sales of the previous period, excluding currency effect and net sales of acquired units. Organic growth in % is calculated as the organic growth divided by the net sales in the same period in the previous year.
Growth through acquisitions is calculated as net sales of acquired companies divided by the net sales in the same period in the previous year.
Growth is an important component in the company's strategy as growth is required to be a leading actor in the markets where the company is operating. Growth is partly through acquisition and partly organic. It's important to follow up and to present the different ways of achieving growth as it is two different ways to grow. Acquisitions are done when opportunities are given to expand the business in a certain geographic market or in a certain product area (in line with the company's strategic plan). Organic growth often has the character of a continued expansion within the existing operations.
Dividend per share is decided at the Annual General Meeting where the annual report is approved for the fiscal year. Number of shares are the thousands of shares issued at the set date for payment of dividends.
AQ is a leading supplier to demanding industrial customers and is listed on Nasdaq Stockholm's main market.
The Group consists mainly of operating companies each of which develop their special skills and in cooperation with other companies, striving to provide cost effective solutions in close cooperation with the customer.
The Group headquarter is in Västerås, Sweden. AQ has, on December 31, 2017, in total about 5,500 employees in Sweden, Bulgaria, China, Estonia, Hungary, India, Italy, Lithuania, Mexico, Poland, Serbia and Thailand.
In 2017 AQ had net sales of SEK 4.0 billion and the group has since its start in 1994 shown profit every quarter.
AQ has the highest credit rating AAA according to Bisnode.
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