Quarterly Report • Oct 22, 2014
Quarterly Report
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| MEUR | Q3 2014 Q3 2013 | Δ% | Q1-Q3 2014 Q1-Q3 2013 | Δ% | ||
|---|---|---|---|---|---|---|
| Net sales 2) | 648.6 | 576.6 | 1) 8 |
1,879.0 | 1,798.0 | 1) 6 |
| Gross earnings | 378.1 | 321.7 | 18 | 1,073.5 | 998.0 | 8 |
| Gross margin, % | 58.3 | 55.8 | 2.5 | 57.1 | 55.5 | 1.6 |
| EBITDA | 181.7 | 153.3 | 19 | 520.3 | 470.7 | 11 |
| EBITDA margin, % | 28.0 | 26.6 | 1.4 | 27.7 | 26.2 | 1.5 |
| Operating earnings (EBIT1) 2) | 140.7 | 118.4 | 19 | 403.7 | 371.0 | 9 |
| Operating margin, % | 21.7 | 20.5 | 1.2 | 21.5 | 20.6 | 0.9 |
| Earnings before taxes excl. | ||||||
| non-recurring items | 132.0 | 109.9 | 20 | 378.7 | 344.4 | 10 |
| Non-recurring items 3) | -18.6 | -14.9 | -25 | -36.0 | -14.9 -142 | |
| Earnings before taxes | 113.4 | 95.0 | 19 | 342.7 | 329.5 | 4 |
| Net earnings | 90.4 | 76.4 | 18 | 273.6 | 266.3 | 3 |
| Net earnings, excl. | ||||||
| non-recurring items | 105.7 | 89.0 | 19 | 303.0 | 278.9 | 9 |
| Earnings per share, EUR | 0.25 | 0.21 | 19 | 0.76 | 0.75 | 1 |
| Earnings per share, excl. | ||||||
| non-recurring items, EUR | 0.29 | 0.25 | 16 | 0.84 | 0.78 | 8 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from deferred revenues (revenue haircut) related to the acquisitions of Vero and Mintec.
3) The non-recurring items relate to Veripos, Mintec, Vero and Other Operations.
"There are many reasons to be excited about Hexagon's third quarter results. For one, we are back to our longterm organic growth trend of 8 per cent - something we haven't experienced for several quarters. We see this as evidence that our strategy to continuously invest in our product portfolio is paying off. The stability and predictability of our business has also improved over the last few years, with recurring revenue on the rise as a per cent of sales. That's because software and services constitute well above 50 per cent of Hexagon's business today - primarily fuelled by strong organic growth in the area and supported by recent acquisitions. These occurrences have led to an EBIT margin of 22 per cent in what normally is a seasonally weak quarter, an improvement of more than 1 percentage point. On a final note, it's also encouraging to see the strong cash flow in the quarter which enables us to continue to pursue attractive acquisition targets."
Ola Rollén, President and CEO, Hexagon AB
Organic growth was 8 per cent in the third quarter while recorded group sales grew by 12 per cent. Net sales amounted to 648.6 MEUR. Operating earnings (EBIT1) grew by 19 per cent to 140.7 MEUR, which corresponds to an operating margin of 21.7 per cent.
Geosystems recorded organic growth of 1 per cent. The division represented 34 per cent of net sales in the third quarter.
Metrology, which represented 33 per cent of net sales, recorded organic growth of 16 per cent.
Technology, which represented 33 per cent of net sales, recorded 7 per cent organic growth. Intergraph PP&M recorded 9 per cent organic growth whilst SG&I recorded slight growth in the quarter.
| Net sales | |
|---|---|
| 2013, MEUR | 566.1* |
| Structure, % | 7 |
| Currency, % | -0 |
| Organic grow th, % | 8 |
| Total, % | 15 |
| 2014, MEUR | 648.6 |
Net sales from acquisitions and divestments during the last twelve months are reported as "Structure" in the table above. Percentages are rounded to the nearest whole per cent. *Group performa numbers post divestment of Other Operations
EMEA saw improved demand in the automotive and manufacturing segments. Growth rates in Americas strengthened sequentially (compared to Q2, 2014) as the North American construction segment recorded strong demand, coupled with increased activity levels in the manufacturing segment. Asia benefited from strong demand in the automotive and electronics segments in China, offsetting a weaker development for surveying in the wider region.
EMEA recorded 7 per cent organic growth in net sales in the third quarter.
Western Europe recorded low single digit growth. Spain and Italy recorded double digit growth rates again, although from depressed post-crisis levels. Customer demand in Western Europe was driven by the automotive and aerospace segments. Growth rates in infrastructure-related activities slowed down, partly due to the strong development seen in Q3 2013.
Russia weakened significantly while Eastern Europe and the Middle East continued to see increased activity levels. Africa recorded strong growth in the quarter, partly due to a large project order.
Americas recorded 11 per cent organic growth in net sales in the third quarter.
In North America demand was driven by the construction, automotive and aerospace segments. Geosystems' sales benefited from strong demand in the construction and residential housing segments. The defence segment also saw increased demand, with the exception of the UAV related business (NovAtel).
South America recorded strong double digit growth in the quarter.
Asia recorded organic growth in net sales of 5 per cent in the third quarter.
Hexagon recorded a strong quarter in China with 12 per cent organic growth with a favourable development in the automotive, electronics, power and energy segments. Surveying, however recorded another weak quarter due to the slowdown in construction activity.
South East Asia recorded solid growth in the quarter, driven by markets such as Indonesia, Singapore and Vietnam.
Growth was held back by Australia, which saw another weak quarter due to continued poor demand in the mining industry.
| Net sales | Earnings | |||||
|---|---|---|---|---|---|---|
| MEUR | Q3 2014 | Q3 2013 Δ % 1) | Q3 2014 | Q3 2013 | Δ % | |
| Hexagon MT | 648.6 | 566.1 | 8 | 145.3 | 122.3 | 19 |
| Other Operations | - | 10.5 | n.a. | - | 0.2 | n.a. |
| Net sales 2) | 648.6 | 576.6 | 8 | |||
| Group cost and eliminations | -4.6 | -4.1 | -12 | |||
| Operating earnings (EBIT1) 2) | 140.7 | 118.4 | 19 | |||
| Operating margin, % | 21.7 | 20.5 | 1.2 | |||
| Interest income and expenses, net | -8.7 | -8.5 | -2 | |||
| Earnings before non-recurring items | 132.0 | 109.9 | 20 | |||
| Non-recurring items | -18.6 | -14.9 | -25 | |||
| Earnings before taxes | 113.4 | 95.0 | 19 | |||
| Taxes | -23.0 | -18.6 | -24 | |||
| Net earnings | 90.4 | 76.4 | 18 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from hdeferred revenues (revenue haircut) related to the acquisitions of Vero and Mintec.
| Movement 1) | Income less cost | Profit impact | |||
|---|---|---|---|---|---|
| CHF | Strengthened | 2% | Negative | Negative | |
| USD | Weakened | -0% | Positive | Negative | |
| CNY | Weakened | -1% | Positive | Negative | |
| EBIT1, MEUR | -3.2 |
1) Compared to Q3 2013.
In addition to the above, significant movements in the Canadian Dollar had negative impact on net sales and profit in Q3 2014.
EMEA recorded organic growth of 7 per cent in the third quarter, whilst Americas recorded organic growth of 11 per cent. Asia recorded 5 per cent organic growth in the quarter.
Net sales amounted to 648.6 MEUR (576.6) in the third quarter. Using fixed exchange rates and a comparable group structure, net sales increased by 8 per cent.
Operating earnings (EBIT1) increased by 19 per cent to 140.7 MEUR (118.4), which corresponds to an operating margin of 21.7 per cent (20.5). Operating earnings (EBIT1) were negatively affected by exchange rate movements of -3.2 MEUR.
In the third quarter of 2014, Hexagon posted non-recurring items of -18.6 MEUR (-14.9) related to the acquisitions of Vero Software and Mintec (write-down of overlapping technologies and assets between Hexagon and the acquired companies as well as transaction costs). In addition to the nonrecurring items, net sales and EBIT1 have been negatively impacted by -1.8 MEUR by the acquisition of deferred revenues (revenue haircut) in Vero and Mintec.
The financial net amounted to -8.7 MEUR (-8.5) in the third quarter.
Earnings before taxes, excluding nonrecurring items, amounted to 132.0 MEUR (109.9). Earnings before taxes, including these items, amounted to 113.4 MEUR (95.0). Earnings before taxes were negatively affected
by exchange rate movements of -3.2 MEUR. Net earnings, excluding non-recurring items, amounted to 105.7 MEUR (89.0), or 0.29 EUR (0.25) per share. Net earnings, including these items, amounted to 90.4 MEUR (76.4) or 0.25 EUR (0.21) per share.
Hexagon's business Measurement Technologies has consistently improved its profitability. In 2007 and in 2008 the EBIT margin was 20 per cent. In 2009, the margin decreased to approximately 17 per cent due to reduced volumes caused by the global economic downturn. In 2010, the margin was back to 20 per cent and since then, it has continued to expand and reached 22 per cent in 2013. In the third quarter of 2014, the margin was 22.4 per cent (21.6).
| Net sales | ||||||
|---|---|---|---|---|---|---|
| MEUR | Q1-Q3 2014 Q1-Q3 2013 Δ % 1) Q1-Q3 2014 Q1-Q3 2013 | Δ % | ||||
| Hexagon MT | 1,866.0 | 1,749.4 | 6 | 417.1 | 382.5 | 9 |
| Other Operations | 13.0 | 48.6 | n.a. | 0.4 | 1.9 | -79 |
| Net sales 2) | 1,879.0 | 1,798.0 | 6 | |||
| Group cost and eliminations | -13.8 | -13.4 | -3 | |||
| Operating earnings (EBIT1) 2) | 403.7 | 371.0 | 9 | |||
| Operating margin, % | 21.5 | 20.6 | 0.9 | |||
| Interest income and expenses, net | -25.0 | -26.6 | 6 | |||
| Earnings before non-recurring items | 378.7 | 344.4 | 10 | |||
| Non-recurring items | -36.0 | -14.9 | -142 | |||
| Earnings before taxes | 342.7 | 329.5 | 4 | |||
| Taxes | -69.1 | -63.2 | -9 | |||
| Net earnings | 273.6 | 266.3 | 3 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from deferred drevenues (revenue haircut) related to the acquisitions of Vero and Mintec.
| Movement 1) | Income less cost | Profit impact | |||
|---|---|---|---|---|---|
| CHF | Strengthened | 1% | Negative | Negative | |
| USD | Weakened | -3% | Positive | Negative | |
| CNY | Weakened | -3% | Positive | Negative | |
| EBIT1, MEUR | -24.2 |
1) Compared to Q1-Q3 2013.
In addition to the above, significant movements in the Japanese Yen, the Brazilian Real and the Canadian Dollar had a negative impact on net sales and profit during the first nine months of 2014.
Net sales amounted to 1,879.0 MEUR (1,798.0) in the first nine months of the year. Using fixed exchange rates and a comparable group structure, net sales increased by 6 per cent.
Operating earnings (EBIT1) amounted to 403.7 MEUR (371.0), which corresponds to an operating margin of 21.5 per cent (20.6). Operating earnings (EBIT1) were negatively affected by exchange rate movements of -24.2 MEUR.
During the first nine months of the year, Hexagon posted non-recurring items of -36.0 MEUR (-14.9) related to Veripos, Mintec and Vero Software (write-down of overlapping technologies and assets between Hexagon and the acquired companies as well as transaction costs) and the divestment of Other Operations. In addition to the non-recurring items, net sales and EBIT1 have been negatively impacted by -1.8 MEUR by the acquisition of deferred revenues (revenue haircut) in Vero and Mintec.
The financial net amounted to -25.0 MEUR (-26.6) in the first nine months.
Earnings before taxes, excluding nonrecurring items, amounted to 378.7 MEUR (344.4). Earnings before taxes, including these items, amounted to 342.7 MEUR (329.5). Earnings before taxes were negatively affected by exchange rate movements of -24.3 MEUR.
Net earnings, excluding non-recurring items, amounted to 303.0 MEUR (278.9), or 0.84 EUR (0.78) per share. Net earnings, including these items, amounted to 273.6 MEUR (266.3) or 0.76 EUR (0.75) per share.
Evonik, a world leader in specialty chemicals, recently chose Intergraph's command and control solution for networked, physical security at two of its facilities in Germany. The solution joins all physical security, building technology, cameras, communications and alert and notification systems into one unified platform.
Capital employed increased to 5,538.7 MEUR (4,520.4). Return on average capital employed for the last twelve months was 11.5 per cent (11.1). Return on average shareholders' equity for the last twelve months was 12.7 per cent (12.9). The capital turnover rate was 0.5 times (0.5).
Total shareholders' equity increased to 3.278.9 MEUR (2,836.4). The equity ratio was 49 per cent (52). Hexagon's total assets increased to 6,644.1 MEUR (5,447.5).
Following a refinancing during Q3 2014, Hexagon's main sources of financing consist of:
1) A multicurrency revolving credit facility (RCF) established on 25 September 2014. The RCF amounts to 2,000 MEUR with a tenor of 5+1+1 years
2) A Swedish Medium Term Note Programme (MTN) established during Q2 2014. The MTN programme amounts to 10,000 MSEK and facilitates Hexagon to issue medium term notes with tenor ranging from 1-5 years
3) A Swedish Commercial Paper Programme (CP) established during 2012. The CP programme amounts to 8,000 MSEK with tenor up to 12 months
On 30 September 2014, cash and unutilised credit limits totalled 851.6 MEUR (468.5). Hexagon's net debt was 2,065.8 MEUR (1,520.1). The net indebtedness was 0.59 times (0.50). Interest coverage ratio was 13.1 times (12.1).
During the third quarter, cash flow from operations before changes in working capital amounted to 151.2 MEUR (119.7), corresponding to 0.42 EUR (0.34) per share. Cash flow from operations in the third quarter amounted to 139.2 MEUR (148.4), corresponding to 0.39 EUR (0.42) per share.
Operating cash flow in the third quarter 2014 amounted to 83.0 MEUR (94.3).
For the first nine months, cash flow from operations amounted to 369.5 MEUR (355.2) corresponding to 1.04 EUR (1.01) per share and the operating cash flow amounted to 199.7 MEUR (206.0).
Hexagon's net investments, excluding acquisitions and divestitures, amounted to -56.2 MEUR (-54.1) in the third quarter and -169.8 MEUR (-149.2) in the first nine months. The Q3 2014 investments include -7 MEUR related to the construction of the new Intergraph facility in Huntsville, Alabama, USA.
Depreciation, amortisation and impairment amounted to -56.6 MEUR (-34.9) in the third quarter and -144.1 MEUR (-99.7) during the first nine months. Hexagon recorded impairment charges of -27.5 MEUR (-) in the first nine months related to the acquisitions of Veripos, Mintec and Vero (write-down of overlapping technologies between Hexagon and acquired companies) and the divestment of Other Operations. The charges were recorded as non-recurring items.
The Group's tax expense for the first nine months totalled -69.1 (-63.2).
The reported tax rate was 20.3 per cent (19.6) for the quarter and 20.2 per cent (19.2) for the first nine months. The tax rate, excluding non-recurring items, was 20.0 (19.0) per cent for both the quarter and the first nine months.
The average number of employees during the first nine months was 14,646 (13,948). The number of employees at the end of the quarter was 15,743 (14,291). The increase was primarily driven by acquisitions.
Earnings per share for the third quarter, excluding non-recurring items, amounted to 0.29 EUR (0.25). Earnings per share for the third quarter, including non-recurring items, amounted to 0.25 EUR (0.21). Earnings per share, excluding non-recurring items, for the first nine months amounted to 0.84 EUR (0.78). Earnings per share, including non-recurring items, for the first nine months amounted to 0.76 EUR (0.75).
On 30 September 2014, equity per share was 9.18 EUR (7.98) and the share price was 229.0 SEK (193.80).
Hexagon's share capital amounts to 79,003,194 EUR, represented by 356,039,742 shares, of which 15,750,000 are of series A with 10 votes each and 340,289,742 are of series B with one vote each. Hexagon AB holds no treasury shares.
In accordance with a decision by a Shareholders' General Meeting in December 2011, an incentive programme was introduced, under which a maximum of 13,665,000 warrants can be issued. At full exercise of the warrant programme, the dilutive effect would be 3.7 per cent of the share capital and 2.7 per cent of the number of votes. On 30 September 2014, 3,981,023 warrants were outstanding.
Associated companies affected Hexagon's earnings during the first nine months by -0.1 MEUR (-2.0).
The parent company's earnings after financial items in the first nine months amounted to 184.6 MEUR (262.3). The equity was 1,839.2 MEUR (1,766.1). The solvency ratio of the parent company was 37 per cent (43). Liquid funds including unutilised credit limits were 653.6 MEUR (300.8).
| 648.6 | 566.1 | 1) 8 |
1,866.0 | 1,749.4 | 1) 6 |
|---|---|---|---|---|---|
| 145.3 | 122.3 | 19 | 417.1 | 382.5 | 9 |
| 22.4 | 21.6 | 0.8 | 22.4 | 21.9 | 0.5 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
2) Net sales and EBIT1 in Q3 2014 have been negatively impacted by -1.8 MEUR from accounting effects from deferred drevenues (revenue haircut) related to the acquisitions of Vero and Mintec.
| MEUR | Q3 2014 | Q3 2013 | Δ% | Q1-Q3 2014 Q1-Q3 2013 Δ% | ||
|---|---|---|---|---|---|---|
| Net sales | - | 10.5 | n.a. 1) | 13.0 | 48.6 | n.a. 1) |
| Operating earnings (EBIT1) | - | 0.2 | n.a. | 0.4 | 1.9 | -79 |
| Operating margin,% | n.a. | 1.9 | n.a. | 3.1 | 3.9 -0.8 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
In the third quarter, net sales amounted to 648.6 MEUR (566.1). Using fixed exchange rates and a comparable group structure, net sales increased by 8 per cent.
Operating earnings (EBIT1) amounted to 145.3 MEUR (122.3), which corresponds to an operating margin of 22.4 per cent (21.6).
The number of employees by the end of the quarter was 15,725 (14,041).
On March 17, Hexagon divested SwePart Transmission which finalized the strategy to focus on Measurement Technologies. Hence, no revenue was recorded from Other Operations in Q3 2014.
In Q3 2013, Other Operations had net sales of 10.5 MEUR and operating earnings (EBIT1) amounted to 0.2 MEUR.
| Net sales | Net sales | |||||
|---|---|---|---|---|---|---|
| MEUR | Q3 2014 | Q3 2013 Δ % 1) Q1-Q3 2014 Q1-Q3 2013 Δ % 1) | ||||
| Geosystems | 222.8 | 203.9 | 1 | 660.6 | 625.8 | 5 |
| Metrology | 214.1 | 173.3 | 16 | 589.9 | 535.4 | 10 |
| Technology | 211.7 | 188.9 | 7 | 615.5 | 588.2 | 4 |
| Total Hexagon MT | 648.6 | 566.1 | 8 | 1,866.0 | 1,749.4 | 6 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
NET SALES –
Geosystems recorded 1 per cent organic growth in net sales in the third quarter. Metrology recorded organic sales growth of 16 per cent. Technology recorded 7 per cent organic growth.
Product innovations including new technology, lower manufacturing costs and greater software content have enabled Hexagon to improve the gross margin over time. In the first nine months of 2014, the gross margin was 58 per cent
Zimmer Orthopaedics-Ireland is looking to Hexagon Metrology to meet its goal of scanning and measuring knee replacement joints. With the addition of four coordinate measuring machines, Zimmer is using the DEA Global Advantage 7105 and 575 solutions in its manufacturing and supply of orthopaedic replacement joints.
The Board of Directors and the President and CEO declare that this interim report provides a true and fair overview of the Company´s and the Group´s operations, their financial position and performance, and describes material risks and uncertainties facing the Company and companies within the Group.
Stockholm, Sweden, 22 October 2014 Hexagon AB (publ)
Melker Schörling Chairman of the Board
Ulrika Francke Gun Nilsson Board Member Board Member
Board Member Board Member
Jill Smith Ulrik Svensson
Ola Rollén President and CEO Board Member
Hexagon applies International Financial Reporting Standards (IFRS) as adopted by the European Union. Hexagon's report for the Group is prepared in accordance with IAS 34, "Interim Financial Reporting" and the Annual Accounts Act. Parent company accounts are prepared in accordance with the Annual Accounts Act. Accounting principles and calculation methods are unchanged from those applied in the Annual Report for 2013. New and amended standards applicable from 2014 have not had any significantly impact on the financial statements.
As an international group, Hexagon is exposed to a number of business and financial risks. The business risks can be divided into strategic, operational and legal risks. The financial risks are related to such factors as exchange rates, interest rates, liquidity and the ability to raise funds. Risk management in Hexagon aims to identify, control and reduce risks. This work begins with an assessment of the probability of risks occurring and their potential effect on the Group. There has been no change in the risks facing the Group compared to what was reported in the 2013 Annual Report.
No significant related party transactions have been incurred during the first nine months of 2014.
The composition of the Hexagon Nomination Committee for the Annual General Meeting 2015 is: Mikael Ekdahl, Melker Schörling AB (Chairman), Anders Oscarsson, AMF Fonder, Jan Andersson, Swedbank Robur fonder and Bengt Belfrage, Nordea Fonder.
No significant events have occurred during the period between quarter-end and date of issuance of this report.
We have reviewed the condensed interim report for Hexagon AB as at September 30, 2014 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material aspects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, 22 October 2014
Rickard Andersson Authorised Public Accountant
| MEUR | Q3 2014 | Q3 2013 | Q1-Q3 2014 | Q1-Q3 2013 | 2013 |
|---|---|---|---|---|---|
| Net sales | 648.6 | 576.6 | 1,879.0 | 1,798.0 | 2,429.7 |
| Cost of goods sold | -270.5 | -254.9 | -805.5 | -800.0 | -1,081.8 |
| Gross earnings | 378.1 | 321.7 | 1,073.5 | 998.0 | 1,347.9 |
| Sales and administration costs, etc. | -249.7 | -207.3 | -687.2 | -619.9 | -828.4 |
| Earnings from shares in associated companies | -0.1 | -0.3 | -0.1 | -2.0 | -2.0 |
| Capital loss from sale of shares in Group companies | - | -5.2 | -1.5 | -5.2 | -5.2 |
| Amortization of surplus values (in Sales and administration costs, etc.) | -6.2 | -5.4 | -17.0 | -14.8 | -19.5 |
| Operating earnings 1) | 122.1 | 103.5 | 367.7 | 356.1 | 492.8 |
| Interest income and expenses, net | -8.7 | -8.5 | -25.0 | -26.6 | -33.9 |
| Earnings before taxes | 113.4 | 95.0 | 342.7 | 329.5 | 458.9 |
| Taxes | -23.0 | -18.6 | -69.1 | -63.2 | -87.7 |
| Net earnings | 90.4 | 76.4 | 273.6 | 266.3 | 371.2 |
| Attributable to: | |||||
| Parent company shareholders | 89.4 | 75.5 | 270.8 | 263.8 | 367.9 |
| Non-controlling interest | 1.0 | 0.9 | 2.8 | 2.5 | 3.3 |
| 1) of w hich non-recurring items |
-18.6 | -14.9 | -36.0 | -14.9 | -14.9 |
| Earnings include depreciation, amortisation and impairments of | -56.6 | -34.9 | -144.1 | -99.7 | -134.5 |
| - of w hich amortization of surplus values |
-6.2 | -5.4 | -17.0 | -14.8 | -19.5 |
| Basic earnings per share, EUR | 0.25 | 0.21 | 0.76 | 0.75 | 1.04 |
| Earnings per share after dilution, EUR | 0.25 | 0.21 | 0.76 | 0.74 | 1.03 |
| Total shareholder's equity per share, EUR | 9.18 | 7.98 | 9.18 | 7.98 | 8.00 |
| Closing number of shares, thousands | 356,039 | 354,675 | 356,039 | 354,675 | 354,997 |
| Average number of shares, thousands | 355,925 | 353,629 | 355,520 | 353,046 | 353,226 |
| Average number of shares after dilution, thousands | 357,750 | 355,708 | 356,983 | 355,307 | 355,482 |
| MEUR | Q3 2014 | Q3 2013 | Q1-Q3 2014 | Q1-Q3 2013 | 2013 |
|---|---|---|---|---|---|
| Net earnings | 90.4 | 76.4 | 273.6 | 266.3 | 371.2 |
| Other comprehensive income | |||||
| Items that w ill not be reclassified to income statement |
|||||
| Remeasurement of pensions | - | - | - | - | 7.6 |
| Taxes on items that w ill not be reclassified to income statement |
- | - | - | - | -1.5 |
| Total items that w ill not be reclassified to income statement, net of taxes |
- | - | - | - | 6.1 |
| Items that may be reclassified subsequently to income statement | |||||
| Exchange rate differences | 236.5 | -71.1 | 283.2 | -113.8 | -194.4 |
| Effect of hedging of net investments in foreign operations | -23.2 | 6.8 | -26.8 | 3.1 | 8.2 |
| Cash flow hedges, net |
0.0 | 0.2 | 0.0 | 0.2 | - |
| Taxes on items that may be reclassified subsequently to income statement | -3.6 | 6.4 | -3.8 | 4.4 | -29.1 |
| Total items that may be reclassified subsequently to income statement, net of taxes |
209.7 | -57.7 | 252.6 | -106.1 | -215.3 |
| Other comprehensive income, net of taxes | 209.7 | -57.7 | 252.6 | -106.1 | -209.2 |
| Total comprehensive income for the period | 300.1 | 18.7 | 526.2 | 160.2 | 162.0 |
| Attributable to: | |||||
| Parent company shareholders | 298.5 | 18.0 | 522.9 | 157.7 | 158.6 |
| Non-controlling interest | 1.6 | 0.7 | 3.3 | 2.5 | 3.4 |
| MEUR | 30/9 2014 | 30/9 2013 | 31/12 2013 |
|---|---|---|---|
| Intangible fixed assets | 4,884.6 | 3,906.7 | 3,906.6 |
| Tangible fixed assets | 307.7 | 240.9 | 252.6 |
| Financial fixed assets | 18.5 | 17.9 | 56.0 |
| Deferred tax assets | 79.5 | 102.2 | 65.1 |
| Total fixed assets | 5,290.3 | 4,267.7 | 4,280.3 |
| Inventories | 424.6 | 388.3 | 369.6 |
| Accounts receivable | 581.9 | 486.5 | 509.7 |
| Other receivables | 64.9 | 57.3 | 49.2 |
| Prepaid expenses and accrued income | 88.4 | 83.8 | 88.8 |
| Total current receivables | 735.2 | 627.6 | 647.7 |
| Cash and cash equivalents | 194.0 | 163.9 | 176.0 |
| Total current assets | 1,353.8 | 1,179.8 | 1,193.3 |
| Total assets | 6,644.1 | 5,447.5 | 5,473.6 |
| Equity attributable to parent company shareholders | 3,268.8 | 2,830.5 | 2,839.8 |
| Equity attributable to non-controlling interest | 10.1 | 5.9 | 6.5 |
| Total shareholders' equity | 3,278.9 | 2,836.4 | 2,846.3 |
| Interest bearing liabilities | 1,448.0 | 1,324.5 | 918.8 |
| Other liabilities | 3.9 | 8.5 | 8.1 |
| Pension liabilities | 56.2 | 64.1 | 53.2 |
| Deferred tax liabilities | 362.2 | 288.0 | 294.3 |
| Other provisions | 57.9 | 16.4 | 22.1 |
| Total long-term liabilities | 1,928.2 | 1,701.5 | 1,296.5 |
| Interest bearing liabilities | 677.4 | 286.4 | 680.3 |
| Accounts payable | 147.7 | 134.6 | 159.0 |
| Other liabilities | 99.7 | 95.6 | 99.2 |
| Other provisions | 63.3 | 30.1 | 48.5 |
| Accrued expenses and deferred income | 448.9 | 362.9 | 343.8 |
| Total short-term liabilities | 1,437.0 | 909.6 | 1,330.8 |
| Total equity and liabilities | 6,644.1 | 5,447.5 | 5,473.6 |
In Hexagon's balance sheet derivatives and other long-term securities holdings are carried at fair value. Derivatives are measured at fair value based on valuation techniques with observable market data as input (level 2 according to definition in IFRS 7). Other long-term securities holdings amount to insignificant numbers. Other assets and liabilities are carried at accrued cost.
For financial assets and liabilities that are carried at accrued cost, the fair value is deemed to be coincident with the carrying amount except for long-term liabilities to credit institutions. The difference between the fair value and the carrying amount for these long-term liabilities is deemed to be insignificant relative to the total balance sheet since the interest rate duration is short.
| MEUR | Q1-Q3 2014 | Q1-Q3 2013 | 2013 |
|---|---|---|---|
| Opening shareholders' equity | 2,846.3 | 2,749.1 | 2,749.1 |
| Total comprehensive income for the period 1) | 526.2 | 160.2 | 162.0 |
| New share issues, w arrants exercised - net of issuance costs |
16.2 | 19.4 | 23.2 |
| Dividend | -110.1 | -101.6 | -101.9 |
| Sale of repurchased shares | - | 9.2 | 13.8 |
| Effect of acquisitions of subsidiaries | 0.3 | 0.1 | 0.1 |
| Closing shareholders' equity 2) | 3,278.9 | 2,836.4 | 2,846.3 |
| 1) of w hich: Parent company shareholders Non-controlling interest |
522.9 3.3 |
157.7 2.5 |
158.6 3.4 |
| 2) of w hich: Parent company shareholders Non-controlling interest |
3,268.8 10.1 |
2,830.5 5.9 |
2,839.8 6.5 |
| series A | series B | Total | |
|---|---|---|---|
| 2009-12-31 Total issued and outstanding | 11,812,500 | 252,534,653 | 264,347,153 |
| Sale of repurchased shares | - | 20,070 | 20,070 |
| Rights issue | 3,937,500 | 83,845,572 | 87,783,072 |
| 2010-12-31 Total issued and outstanding | 15,750,000 | 336,400,295 | 352,150,295 |
| Rights issue | - | 339,335 | 339,335 |
| 2011-12-31 Total issued and outstanding | 15,750,000 | 336,739,630 | 352,489,630 |
| Sale of repurchased shares | - | 185,207 | 185,207 |
| 2012-12-31 Total issued and outstanding | 15,750,000 | 336,924,837 | 352,674,837 |
| Sale of repurchased shares | - | 967,340 | 967,340 |
| New issue, w arrants exercised |
- | 1,354,800 | 1,354,800 |
| 2013-12-31 Total issued and outstanding | 15,750,000 | 339,246,977 | 354,996,977 |
| New issue, w arrants exercised |
- | 284,910 | 284,910 |
| 2014-03-31 Total issued and outstanding | 15,750,000 | 339,531,887 | 355,281,887 |
| New issue, w arrants exercised |
- | 543,450 | 543,450 |
| 2014-06-30 Total issued and outstanding | 15,750,000 | 340,075,337 | 355,825,337 |
| New issue, w arrants exercised |
- | 214,405 | 214,405 |
| 2014-09-30 Total issued and outstanding 1) | 15,750,000 | 340,289,742 | 356,039,742 |
1) As per 30 September 2014, there were in total 356,039,742 shares in the Company, of which 15,750,000 are of series A with ten votes each and 340,289,742 are of series B with one vote each. Hexagon AB holds no treasury shares.
Warrants exercised until 2014-09-30 have incurred a new share issue in progress as per 2014-09-30 of 422,377 new shares of series B. The new share issue will be finalized in the fourth quarter.
| MEUR | Q3 2014 | Q3 2013 | Q1-Q3 2014 | Q1-Q3 2013 | 2013 |
|---|---|---|---|---|---|
| Cash flow from operations before change in w orking capital |
|||||
| excluding taxes and interest | 176.7 | 146.8 | 514.0 | 461.3 | 628.9 |
| Taxes paid | -19.2 | -20.0 | -63.3 | -51.9 | -62.3 |
| Interest received and paid, net | -6.3 | -7.1 | -19.5 | -22.6 | -28.6 |
| Cash flow from operations before change in w orking capital |
151.2 | 119.7 | 431.2 | 386.8 | 538.0 |
| Cash flow from change in w orking capital |
-12.0 | 28.7 | -61.7 | -31.6 | -31.2 |
| Cash flow from operations |
139.2 | 148.4 | 369.5 | 355.2 | 506.8 |
| Cash flow from ordinary investing activities |
-56.2 | -54.1 | -169.8 | -149.2 | -216.3 |
| Operating cash flow | 83.0 | 94.3 | 199.7 | 206.0 | 290.5 |
| Non-recurring cash flow 1) |
-9.9 | - | -13.6 | - | -4.4 |
| Operating cash flow after non-recurring items |
73.1 | 94.3 | 186.1 | 206.0 | 286.1 |
| Cash flow from other investing activities 2) |
-372.6 | -0.9 | -516.1 | -14.8 | -73.1 |
| Cash flow after other investing activities |
-299.5 | 93.4 | -330.0 | 191.2 | 213.0 |
| Dividends paid | - | -2.8 | -110.1 | -101.6 | -101.9 |
| Sale of repurchased shares | - | 7.6 | - | 9.2 | 13.8 |
| New share issues, w arrants exercised - net of issuance |
|||||
| costs | 5.7 | 2.5 | 16.2 | 19.4 | 23.2 |
| Cash flow from other financing activities |
321.9 | -116.1 | 437.9 | -81.1 | -105.8 |
| Cash flow for the period |
28.1 | -15.4 | 14.0 | 37.1 | 42.3 |
| Cash and cash equivalents, beginning of period | 165.8 | 184.0 | 176.0 | 130.7 | 130.7 |
| Effect of translation differences on cash and cash equivalents | 0.1 | -4.7 | 4.0 | -3.9 | 3.0 |
| Cash flow for the period |
28.1 | -15.4 | 14.0 | 37.1 | 42.3 |
| Cash and cash equivalents, end of period | 194.0 | 163.9 | 194.0 | 163.9 | 176.0 |
1) Non-recurring cash flow in third quarter of 2014 consists of transaction costs of -2.4 MEUR and costs of -7.5 MEUR related to the establishment of a new revolving credit facility. 2) Acquisitions and divestments totalled -371.9 MEUR (-1.0) and other was -0.7 MEUR (0.1) in the third quarter 2014.
| Q3 2014 | Q3 2013 | Q1-Q3 2014 | Q1-Q3 2013 | 2013 | |
|---|---|---|---|---|---|
| Operating margin, % | 21.7 | 20.5 | 21.5 | 20.6 | 20.9 |
| Profit margin before taxes, % | 17.5 | 16.5 | 18.2 | 18.3 | 18.9 |
| Return on shareholders' equity, 12 month average, % | 12.7 | 12.9 | 12.7 | 12.9 | 13.0 |
| Return on capital employed ,12 month average, % | 11.5 | 11.1 | 11.5 | 11.1 | 11.2 |
| Equity ratio, % | 49.4 | 52.1 | 49.4 | 52.1 | 52.0 |
| Net indebtedness | 0.59 | 0.50 | 0.59 | 0.50 | 0.49 |
| Interest coverage ratio | 12.5 | 11.0 | 13.1 | 12.1 | 12.7 |
| Average number of shares, thousands | 355,925 | 353,629 | 355,520 | 353,046 | 353,226 |
| Basic earnings per share excl. non-recurring items, EUR | 0.29 | 0.25 | 0.84 | 0.78 | 1.08 |
| Basic earnings per share, EUR | 0.25 | 0.21 | 0.76 | 0.75 | 1.04 |
| Cash flow per share, EUR |
0.39 | 0.42 | 1.04 | 1.01 | 1.43 |
| Cash flow per share before change in w orking cap, EUR |
0.42 | 0.34 | 1.21 | 1.10 | 1.52 |
| Share price, SEK | 229.00 | 193.80 | 229.00 | 193.80 | 203.30 |
| Share price, translated to EUR | 25.04 | 22.39 | 25.04 | 22.39 | 22.95 |
| MEUR | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | 2013 |
|---|---|---|---|---|---|---|---|---|
| Hexagon MT - Of w hich |
648.6 | 635.6 | 581.8 | 619.5 | 566.1 | 614.2 | 569.1 | 2,368.9 |
| Geosystems | 222.8 | 229.6 | 208.2 | 224.8 | 203.9 | 226.7 | 195.2 | 850.6 |
| Metrology | 214.1 | 196.4 | 179.4 | 200.4 | 173.3 | 186.3 | 175.8 | 735.8 |
| Technology | 211.7 | 209.6 | 194.2 | 194.3 | 188.9 | 201.2 | 198.1 | 782.5 |
| Other Operations | - | - | 13.0 | 12.2 | 10.5 | 20.9 | 17.2 | 60.8 |
| Group | 648.6 | 635.6 | 594.8 | 631.7 | 576.6 | 635.1 | 586.3 | 2,429.7 |
| MEUR | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | 2013 |
|---|---|---|---|---|---|---|---|---|
| Hexagon MT | 145.3 | 144.2 | 127.6 | 141.3 | 122.3 | 135.2 | 125.0 | 523.8 |
| Other Operations | - | - | 0.4 | -0.1 | 0.2 | 1.1 | 0.6 | 1.8 |
| Group costs | -4.6 | -4.6 | -4.6 | -4.5 | -4.1 | -4.7 | -4.6 | -17.9 |
| Group | 140.7 | 139.6 | 123.4 | 136.7 | 118.4 | 131.6 | 121.0 | 507.7 |
| Margin, % | 21.7 | 22.0 | 20.7 | 21.6 | 20.5 | 20.7 | 20.6 | 20.9 |
| MEUR | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | 2013 |
|---|---|---|---|---|---|---|---|---|
| EMEA | 248.2 | 259.4 | 245.3 | 267.7 | 230.4 | 261.9 | 249.6 | 1,009.6 |
| Americas | 228.3 | 203.8 | 186.1 | 206.7 | 187.9 | 201.7 | 183.5 | 779.8 |
| Asia | 172.1 | 172.3 | 163.4 | 157.3 | 158.3 | 171.5 | 153.2 | 640.3 |
| Group | 648.6 | 635.6 | 594.8 | 631.7 | 576.6 | 635.1 | 586.3 | 2,429.7 |
| Average | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | 2013 |
|---|---|---|---|---|---|---|---|---|
| SEK/EUR | 0.1086 | 0.1105 | 0.1129 | 0.1128 | 0.1152 | 0.1167 | 0.1177 | 0.1156 |
| USD/EUR | 0.7544 | 0.7291 | 0.7299 | 0.7348 | 0.7550 | 0.7657 | 0.7571 | 0.7531 |
| CNY/EUR | 0.1224 | 0.1170 | 0.1196 | 0.1206 | 0.1233 | 0.1244 | 0.1217 | 0.1225 |
| CHF/EUR | 0.8254 | 0.8202 | 0.8173 | 0.8135 | 0.8100 | 0.8120 | 0.8139 | 0.8123 |
| Closing | Q3 2014 | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | 2013 |
| SEK/EUR | 0.1093 | 0.1090 | 0.1118 | 0.1129 | 0.1155 | 0.1139 | 0.1197 | 0.1129 |
| USD/EUR | 0.7947 | 0.7322 | 0.7253 | 0.7251 | 0.7405 | 0.7645 | 0.7809 | 0.7251 |
| CNY/EUR | 0.1294 | 0.1180 | 0.1166 | 0.1198 | 0.1210 | 0.1246 | 0.1256 | 0.1198 |
| Acquisitions | ||||||
|---|---|---|---|---|---|---|
| MEUR | Veripos | Mintec | Vero | Other | Q1-Q3 2014 | Q1-Q3 2013 |
| Fair value of acquired assets and assumed liabilities | ||||||
| Intangible fixed assets | 23.3 | 33.2 | 83.8 | 17.7 | 158.0 | 3.1 |
| Other fixed assets | 10.0 | 0.5 | 4.1 | 11.9 | 26.5 | 1.9 |
| Total fixed assets | 33.3 | 33.7 | 87.9 | 29.6 | 184.5 | 5.0 |
| Total current assets | 25.3 | 2.5 | 54.1 | 19.4 | 101.3 | 15.6 |
| Total assets | 58.6 | 36.2 | 142.0 | 49.0 | 285.8 | 20.6 |
| Total long-term liabilities | 5.6 | - | 65.4 | 9.4 | 80.4 | 0.1 |
| Total current liabilities | 9.0 | 9.8 | 35.2 | 10.9 | 64.9 | 9.6 |
| Total liabilities | 14.6 | 9.8 | 100.6 | 20.3 | 145.3 | 9.7 |
| Fair value of acquired assets and assumed liabilities, net | 44.0 | 26.4 | 41.4 | 28.7 | 140.5 | 10.9 |
| Long-term securities holdings | -42.9 | - | - | - | -42.9 | - |
| Shares in associated companies | - | - | - | -3.1 | -3.1 | -5.4 |
| Non-controlling interest in equity | - | - | -0.3 | - | -0.3 | -0.1 |
| Goodw ill |
103.0 | 99.0 | 268.2 | 84.1 | 554.3 | 25.1 |
| Total purchase consideration transferred | 104.1 | 125.4 | 309.3 | 109.7 | 648.5 | 30.5 |
| Less cash and cash equivalents in acquired companies | -50.2 | -4.1 | ||||
| Adjustment for non-paid consideration and considerations paid for | ||||||
| prior years' acquisitions | -69.7 | -9.5 | ||||
| Cash flow from acquisition of companies/businesses |
528.6 | 16.9 | ||||
During the first nine months of 2014, Hexagon acquired the following companies:
GT Strudl, a US software development company
Aibotix, a German manufacturer of advanced drones
Veripos, a UK based provider of positioning services
SAFEmine, a Swiss based provider of mining safety products
Geodata, a French provider of network RTK correction services
North West Geomatics, a Canadian provider of aerial mapping
Arvus, a Brazil provider of precision agriculture solutions
iLab, a Brazil provider of precision agriculture solutions
Mintec, a US provider of mine planning software
Vero Software, a UK provider of Computer-Aided Manufacturing (CAM) software
The acquisitions included in the column "Other" are individually assessed as immaterial from a group perspective why only aggregated information are presented. The analysis of the acquired net assets is preliminary and the fair value might be subject to change. Further information related to the acquisitions of Veripos, Mintec and Vero Software is presented in the acqusition analysis on page 14-15.
As of March 12th 2014 Hexagon became the owner of 100 per cent of the shares in Veripos, a company headquartered in Aberdeen, Scotland employing approximately 130 people in 8 countries. Veripos operates, maintains and controls its own network of over 80 GNSS reference stations to determine, calculate and deliver a GNSS correction signal, through a satellite delivery method. Veripos' main market segment is the offshore energy market, with most of the company revenues generated in the oil & gas exploration and positioning segments.
Hexagon has a large customer base and an extensive offering in the surveying and agriculture markets through its brands Leica Geosystems and NovAtel. In those markets satellite correction services are becoming an essential part to be able to offer customers. It is therefore a good strategic fit between Hexagon and Veripos where Hexagon will provide, state of the art, positioning technology to Veripos as well as future growth via Hexagon's onshore markets. Veripos has, in turn, built up a strong position in the offshore market and has infrastructure that Hexagon can leverage on immediately after the acquisition rather than building such infrastructure in-house.
The goodwill of 103.0 MEUR comprises the value of expected synergies arising from the acquisition and the assembled workforce, which is not separately recognised. Synergies have primarily been identified to arise by i) combining Hexagon and Veripos technologies, ii) selling Veripos correction services in Hexagons markets, iii) rationalisation of overlapping resources at Hexagon and Veripos. Goodwill is allocated entirely to the Measurement Technologies operating segment. None of the goodwill recognised is expected to be deductible for income tax purposes.
Of the 23.3 MEUR of acquired intangible assets, 8.8 MEUR was assigned to trademarks that are not subject to amortisation. The remaining 14.5 MEUR was assigned to capitalised development expenses, patents and other assets with useful lives of 7-15 years. The intangible assets have been valued using a discounted cash flow method.
From the date of acquisition, Veripos has contributed 24.4 MEUR of net sales in 2014. If the acquisition had taken place at the beginning of the year, the contribution to net sales would have been 27.3 MEUR.
The analysis of the acquired net assets is preliminary and the fair values might be subject to changes.
As of July 3 th 2014 Hexagon became the owner of virtually all assets and liabilities in Mintec, a company headquartered in Tucson, AZ, United States employing approximately 230 people in 8 countries. Mintec is the developer of the MineSight software, used for resource modelling, optimisation, planning and scheduling in the mining industry. Mintec's software is used to design mines, make commercial decisions on where to mine and make decisions based on new information once material is extracted and assayed.
Hexagon has a large customer base and an extensive offering in the mining industry through its brands Leica Geosystems, Devex and SAFEmine. Mining is becoming a more precise practice, and accurate mine planning and scheduling is deemed to be at the forefront of this change. It is therefore a strategic fit between Hexagon's present activity in the operations domain, and Mintec's activities within the planning and scheduling phase. The integration of these capabilities will enable Hexagon to close the loop and control data flow from design and mine planning through extraction and back into life-of-mine planning, providing a comprehensive flow of data across all mining operations.
The goodwill of 99.0 MEUR comprises the value of expected synergies arising from the acquisition and the assembled workforce, which is not separately recognised. Synergies have primarily been identified to arise by i) combining Hexagon and Mintec technologies, ii) selling Hexagon products to Mintec's customer base, iii) removal of overlapping resources at Hexagon and Mintec. Goodwill is allocated entirely to the Measurement Technologies operating segment.
Of the 33.2 MEUR of acquired intangible assets 10.3 MEUR was assigned to trademarks that are not subject to amortisation. The remaining 22.9 MEUR was assigned to capitalised development expenses, patents and other assets with useful lives of 10-20 years. The intangible assets have been valued using a discounted cash flow method.
From the date of acquisition, Mintec has contributed 9.4 MEUR of net sales in 2014. If the acquisition had taken place at the beginning of the year, the contribution to net sales in 2014 would have been 24.6 MEUR.
The analysis of the acquired net assets is preliminary and the fair values might be subject to changes.
As of August 7 th 2014 Hexagon became the owner of 100 per cent of the shares in Vero Software, a company headquartered in Cheltenham, UK employing approximately 580 people in 12 countries. Vero Software is a developer of Computer-Aided Manufacturing (CAM) software, which aids the design and manufacturing process with solutions for programming and controlling machine tools, addressing the rising challenge of achieving manufacturing efficiencies with high-quality output. Brands in Vero Software's portfolio include Alphacam, Cabinet Vision, Edgecam, Radan, SURFCAM, VISI, and WorkNC.
Hexagon has a large customer base and an extensive offering in the manufacturing industry through its Metrology business, which helps customer to assess quality in the post-production stage within the manufacturing lifecycle. Vero Software will bring Hexagon into the pre-production stage of the manufacturing process, where Vero's software is used to program and control machine tools. The combination of these technologies will strengthen Hexagon's software offering, and provide the means to close the gap between metrology and production planning by making quality data fully actionable.
The goodwill of 268.2 MEUR comprises the value of expected synergies arising from the acquisition and the assembled workforce, which is not separately recognised. Synergies have primarily been identified to arise by i) combining Hexagon and Vero technologies, ii) using Hexagon's global footprint to extend the reach of Vero Software's organisation, iii) removal of overlapping resources at Hexagon and Vero. Goodwill is allocated entirely to the Measurement Technologies operating segment. None of the goodwill recognised is expected to be deductible for income tax purposes. Of the 83.8 MEUR of acquired intangible assets 40.9 MEUR was assigned to trademarks that are not subject to amortisation. The remaining 42.9 MEUR was assigned to capitalised development expenses, patents and other assets with useful lives of 12-15 years. The intangible assets have been valued using a discounted cash flow method.
From the date of acquisition, Vero has contributed 14.1 MEUR of net sales in 2014. If the acquisition had taken place at the beginning of the year, the contribution to net sales would have been 63.3 MEUR.
The analysis of the acquired net assets is preliminary and the fair values might be subject to changes.
| Divestments | ||
|---|---|---|
| MEUR | Q1-Q3 2014 | Q1-Q3 2013 |
| Carrying value of divested assets and liabilities, net | ||
| Intangible fixed assets | 0.0 | - |
| Other fixed assets | 7.8 | - |
| Total fixed assets | 7.8 | - |
| Total current assets | 22.4 | 13.8 |
| Total assets | 30.2 | 13.8 |
| Total long-term liabilities | 1.3 | - |
| Total current liabilities | 22.3 | 8.4 |
| Total liabilities | 23.6 | 8.4 |
| Carrying value of divested assets and liabilities, net | 6.6 | - |
| Capital gain (+) / loss (-) | -1.5 | -5.2 |
| Total purchase consideration transferred | 5.1 | 0.2 |
| Plus repayment of intercompany loan | 14.0 | - |
| Cash flow from divestment of companies/businesses |
19.1 | 0.2 |
In March 2014, Hexagon divested SwePart Transmission AB that was reported within the business area Other Operations. In July 2013, Hexagon divested EBP i Olofström AB. Following these divestments, Hexagon will record no further activity within the Other Operations business area.
| MEUR | Q3 2014 | Q3 2013 | Q1-Q3 2014 | Q1-Q3 2013 | 2013 |
|---|---|---|---|---|---|
| Net sales | 2.8 | 2.8 | 11.6 | 8.4 | 11.2 |
| Administration cost | -2.6 | -3.3 | -11.4 | -11.2 | -17.1 |
| Operating earnings | 0.2 | -0.5 | 0.2 | -2.8 | -5.9 |
| Earnings from shares in Group companies | 0.0 | 50.4 | 146.5 | 236.8 | 235.0 |
| Interest income and expenses, net | 26.9 | -10.0 | 37.9 | 28.3 | 33.3 |
| Earnings before taxes | 27.1 | 39.9 | 184.6 | 262.3 | 262.4 |
| Taxes | -5.9 | 2.3 | -8.4 | -5.7 | -30.2 |
| Net earnings | 21.2 | 42.2 | 176.2 | 256.6 | 232.2 |
| MEUR | 30/9 2014 | 30/9 2013 | 31/12 2013 |
|---|---|---|---|
| Total fixed assets | 4,616.9 | 3,914.4 | 3,946.1 |
| Total current receivables | 308.2 | 164.9 | 158.8 |
| Cash and cash equivalents | 12.7 | 13.7 | 16.3 |
| Total current assets | 320.9 | 178.6 | 175.1 |
| Total assets | 4,937.8 | 4,093.0 | 4,121.2 |
| Total shareholders' equity | 1,839.2 | 1,766.1 | 1,757.1 |
| Total long-term liabilities | 1,452.5 | 1,323.5 | 914.0 |
| Total short-term liabilities | 1,646.1 | 1,003.4 | 1,450.1 |
| Total equity and liabilities | 4,937.8 | 4,093.0 | 4,121.2 |
| Amortization of surplus values | When a company is acquired, the purchase consideration is allocated to the identified assets and liabilities of the company. Intangible assets are most often allocated the substantial part of the purchase consideration. The amortization of surplus values is defined as the difference between the amortization of such identified intangible assets and what the amortization would have been in the acquired company had the acquisition not taken place at all. |
|---|---|
| Capital employed | Total assets less non-interest bearing liabilities |
| Capital turnover rate | Net sales divided by average capital employed |
| Cash flow | Cash flow from operations, after change in working capital, excluding non-recurring items |
| Cash flow per share | Cash flow from operations, after change in working capital, excluding non-recurring items divided by average number of shares |
| Earnings per share | Net earnings excluding non-controlling interest divided by average number of shares |
| Equity ratio | Shareholders' equity including non-controlling interests as a percentage of total assets |
| Interest cover ratio | Earnings after financial items plus financial expenses divided by financial expenses |
| Investments | Purchases less sales of tangible and intangible fixed assets, excluding those included in acquisitions and divestitures of subsidiaries |
| Net indebtedness | Interest-bearing liabilities less interest-bearing current receivables and liquid assets divided by shareholders' equity excluding non-controlling interests |
| Non-recurring items | Income and expenses that are not expected to appear on a regular basis |
| Operating earnings (EBIT1) | Operating earnings excluding capital gains on shares in group companies and other non-recurring items |
| Operating earnings EBITDA | Operating earnings excluding non-recurring items and amortisation and depreciation of fixed assets |
| Operating margin | Operating earnings (EBIT1) as a percentage of net sales |
| Profit margin before taxes | Earnings after financial items as a percentage of net sales |
| Return on capital employed (12 month average) |
Twelve months to end of period earnings after financial items, excluding non-recurring items, plus financial expenses as a percentage of twelve months to end of period average capital employed |
| Return on equity (12 month average) | Twelve months to end of period net earnings excluding non-controlling interests as a percentage of twelve months to end of period average shareholders' equity excluding non-controlling interests last twelve months. |
| Shareholders' equity per share | Shareholders' equity excluding non-controlling interests divided by the number of shares at year-end |
| Share price | Last settled transaction on Nasdaq Stockholm on the last business day for the period |
| Americas | North, South and Central America |
|---|---|
| Asia | Asia, Australia and New Zealand |
| EMEA | Europe, Middle East and Africa |
| MT | The core segment, Measurement Technologies |
Hexagon is a leading global provider of information technologies that drive dynamic decision making across industrial and geospatial applications. Hexagon's solutions integrate sensors, software, domain knowledge and customer workflows into intelligent information ecosystems that deliver actionable information, automate business processes and improve productivity. They are used in a broad range of vital industries. Hexagon (Nasdaq Stockholm: HEXA B) has more than 15,000 employees in over 40 countries and net sales of approximately 2,500 MEUR. Learn more at hexagon.com.
Hexagon gives financial information at the following occasions:
Year-end report 2014 6 February 2015 Interim report Q1 2015 6 May 2015 Interim report Q2 2015 7 August 2015 Interim report Q3 2015 27 October 2015
Financial information is available in Swedish and English at the Hexagon website and can be ordered via phone +46 8 601 26 20 or e-mail [email protected]
The interim report for the third quarter 2014 will be presented on 22 October at 16:00 CET at a telephone conference. Please view instructions at Hexagon's website on how to participate.
Carl Gustafsson, Investor Relations Manager, Hexagon AB, +46 8 601 26 27, [email protected]
This interim report is a type of information that Hexagon AB (publ) is obliged to disclose in accordance with the Swedish Securities Market Act and /or the Financial Instruments Trading Act. The information was submitted for publication on 22 October 2014 at 14:00 CET.
This communication may contain forward-looking statements. When used in this communication, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the measurement field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Hexagon's management as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by Hexagon's management and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Hexagon disclaims any intention or obligation to update these forwardlooking statements.
Hexagon AB [publ] P.O. Box 3692 SE- 103 59 Stockholm Fax: +46 8 601 26 21 Phone: +46 8 601 26 20 Registration number: 556190-4771 Registred Office: Stockholm Sweden www.hexagon.com
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