Annual / Quarterly Financial Statement • Oct 10, 2018
Annual / Quarterly Financial Statement
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Q4
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| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| All amounts in SEK million, unless otherwise indicated | 17/18 | 16/17 | 17/18 | 16/17 |
| Net sales | 2,524.2 | 2,262.4 | 10,300.5 | 9,306.2 |
| Organic sales growth (%) | $-4.7$ | 12.2 | 2.0 | 8.6 |
| Gross margin (%) | 16.5 | 14.3 | 15.9 | 14.8 |
| Adjusted EBITA | 118.8 | 91.9 | 500.6 | 426.1 |
| Adjusted EBITA margin (%) | 4.7 | 4.1 | 4.9 | 4.6 |
| EBIT | 107.3 | 73.7 | 443.8 | 349.5 |
| Profit for the period | 70.5 | 48.4 | 305.1 | 239.1 |
| Items affecting comparability* | 3.6 | $-0.8$ | 1.0 | $-7.3$ |
| Earnings per share, including discontinued operations, before dilution, (SEK) | 0.91 | 0.64 | 3.99 | 3.14 |
| Cash flow from operating activities | 59.1 | $-13.6$ | 747.9 | 213.6 |
| Net debt/adjusted EBITDA (multiple)* | 3.3 | 2.3 | ||
| Return on equity (%) | 18.5 | 16.1 | ||
For definitions, refer to page 27.
*Refer to Note 4 Items affecting comparability for more information
We can summarise an eventful fourth quarter in which we expanded our operations geographically to the Netherlands with the acquisition of Vincere and significantly increased our addressable market. Acquiring DAV Partner and ITaito also further strengthened our position in the Nordic market. We can report a robust improvement in profitability with a higher gross margin and an adjusted EBITA margin of 4.7 per cent (4.1). Net sales rose slightly more than 11 per cent, driven by completed acquisitions and a solid organic growth in the SMB (small and medium-sized businesses) segment.
Net sales for the quarter rose 11.6 per cent to SEK 2,524 million (2,262), corresponding to organic growth of a negative 4.7 per cent. The SMB segment demonstrated sharp growth of 38.9 per cent, of which 8.0 per cent was organic. The LCP (large corporate and public sector) segment reported negative total growth of 5.1 per cent, of which a negative 13.4 per cent was organic, with the strong growth in the Large Corporate customer group unable to fully compensate for the continued weak development in the Public Sector customer group.
Lower growth in the Public Sector customer group was mainly due to the company continuing to refrain from several large-scale procurements with low margins under certain framework agreements and a strong comparative quarter in the preceding year. Deliveries under the framework agreement with the Danish government, municipalities and regions (Staten og Kommunernes Indkøbsservice (SKI)) will commence in the first quarter of 2018/19, which is expected to generate a positive effect on growth moving forward. The B2C (business to consumer) segment continued to report growth for the quarter.
The gross margin increased to 16.5 per cent (14.3) during the quarter while adjusted EBITA rose to SEK 119 million (92), resulting in a margin of 4.7 per cent (4.1). A significant part of the margin improvement was attributable to a more advantageous sales mix with an increased share of advanced products, services and solutions, and a relatively higher share of sales in the SMB segment, mainly due to earlier acquisitions. We continued to see a favourable trend for proprietary products, such as cables and adapters, which also made a positive contribution.
At the start of July, we acquired Dutch company Vincere, a leading player specialised in managed services with focus on cloud and security solutions. The Netherlands is a market that is similar to the Nordic, both in terms of structure and customer needs. As a result of the acquisition, our addressable market will increase from SEK 162 billion to SEK 262 billion. Vincere will help further strengthen our position for sustained strong growth and margin expansion.
We also strengthened our position in the SMB segment in Finland during the quarter with the acquisition of ITaito and in AV equipment with the acquisition of DAV Partner in Sweden.
Following the acquisitions carried out in the fourth quarter, our net debt in relation to adjusted EBITDA was 3.3 (2.3) at the end of the year and currently exceeds our financial target for net debt of a 2.0-3.0 multiple.
We see increased transaction activity and considerable potential in continuously broadening and developing our offering of advanced services and solutions. At the same time, this increases the share of recurring revenues and strengthens both customer loyalty and our margins.
The Board decided in September to propose a rights issue of approximately SEK 700 million to an Extraordinary General Meeting on October 10 in order to increase our financial flexibility so that we can pursue our growth strategy in existing markets in the Nordic region and the Netherlands.
The Board of Directors proposes a total divided of SEK 239 million (213), which is in line with our dividend policy to distribute more than 70 per cent of net profit.
To summarise, Dustin performed well during the 2017/18 financial year and our positive view of our future stands firm. The expansion to the Netherlands through the acquisition of Vincere has increased our addressable market and provides us with a good platform for further growth. The combination of a more advantageous sales mix with a higher value content, through a larger proportion of more advanced products and services, and a more favorable sales balance between the SMB and LCP segments resulted in a significant strengthening of margins during the year. Our financial position remains strong and with the announced rights issue we are well positioned for continued profitable growth, both organically and via acquisitions.
Nacka, October 2018.
Thomas Ekman President and CEO
Dustin is a leading online IT partner in the Nordic region, with a wide range of hardware, software and related services and solutions. Our centralised warehouse along with an efficient logistics and online platform ensure fast and reliable delivery. By adding high-level IT expertise we act as a strategic IT partner primarily for small and medium-sized businesses, but also for large-sized businesses, the public sector and consumers. The acquisition of Vincere Group towards the end of the financial year provides us with a strong position in the Netherlands, primarily in advanced products and services.
Dustin applies a multi-channel business model, where most sales are online, supplemented by relationship and consultative selling over the phone or through customer visits. Dustin conducts operations in Sweden, Denmark, Finland, Norway and the Netherlands through three business segments, SMB (Small and Medium-sized Businesses), LCP (Large Corporate and Public Sector) and B2C (Business to Consumer).
As the leading B2B e-retailer in the Nordic region and through our recently acquired operations in the Netherlands, Dustin has created a strong market position with our efficient online platform, since more and more sales of both products and core services are now taking place online. The operations are supported by scalable and shared central functions, including the online platform, purchasing, warehousing and logistics, pricing, marketing, IT and HR.
We see increasing demand for more advanced and managed services as demand on mobility and accessibility grow. By combining products and services into integrated solutions, and by adding more advanced services through acquisitions, we are continuously expanding our customer offering and our market. We are able to solve more and more of our customers' IT needs, which is in line with our vision.
Responsible business is a prerequisite for a sound and successful company. For us, responsible business encompasses the Group's long-term impact on society and the environment, where our responsibility extends throughout the entire value chain. The size of our operations provides us with a key role and an opportunity to influence both suppliers and customers. We will now focus on making sustainable IT more accessible to our customers.
Dustin Group AB is a Swedish public limited company with its head office in Nacka Strand outside Stockholm. The share was listed on Nasdaq Stockholm's Mid Cap Index in 2015.
* Consolidated as of July 4, 2018.
Distribution refers to sales in the 2017/18 financial year.
To be the customer's first choice and set the standard for efficient and sustainable IT.
To make it possible for our customers to focus on their core business.
Dustin solves your IT challenges.
Responsible business is a prerequisite for a healthy and successful company. By clarifying our view of sustainability and continuing to pursue our overall strategy, Dustin aims to promote responsible business and make sustainable IT more accessible to our customers. We made good progress during the quarter within the scope of Dustin's sustainability agenda.
For us, responsible business encompasses the entire Group's long-term impact on society and the environment, where our responsibility extends throughout the entire value chain. Our vision of efficient and sustainable IT is about how the products are manufactured and transported, how they are used and how they are reused and recycled. This also entails combining products with services and solutions that, in turn, can contribute to a reduced environmental footprint.
Within the scope of our sustainability agenda, Dustin has identified five focus areas where we have intensified our efforts to establish long-term goals connected to our business:
Dustin will have completed 80 factory inspections before 2020.
Dustin will reduce the company's climate impact by 40 per cent by 2020, compared with 2014/15.
Dustin's Board of Directors has established the following financial targets:
Dustin's target is to achieve average annual organic growth of 8 per cent over a business cycle. In addition to this, Dustin intends to expand through acquisitions.
Dustin's target is to increase the adjusted EBITA margin over time, and to achieve an adjusted EBITA margin of 5-6 per cent in the medium term.
Dustin's capital structure should enable a high degree of financial flexibility and provide scope for acquisitions. The company's net debt target is a 2.0-3.0 multiple of adjusted EBITDA for the past 12-month period.
Dustin's dividend payout target is 70 per cent of net profit. However, the company's financial position, cash flow, acquisition opportunities and prospects should be taken into consideration
Dustin will have recovered 140,000 sold products by 2020.
100 per cent of Dustin's business areas will undergo a risk assessment concerning business ethics and anticorruption. 100 per cent of incidents reported will be followed up.
By 2020, each gender is to make up at least 40 per cent of the entire organisation.
Dustin performed four factory inspections in China during the quarter as part of the responsible manufacturing focus area. All of the audits were led by Dustin's Head of Corporate Responsibility together with local experts trained in our Supplier Code of Conduct. The audits identified 93 discrepancies, which were systematically corrected and followed up. Most of the non-conformance was minor, and no "zero tolerance" discrepancies were revealed as part of the audits.
In the responsible use of resources focus area, some 16,103 sold products were recovered during the fourth quarter. Of these, 15,597 were reused and 506 recycled. At the end of the fourth quarter, we are ahead of schedule and have recovered a total of 64,288 products since 2014/15. In recent years, Dustin has supplemented its end-of-life returns service by adding clauses in major agreements that ensure the recovery of a larger share of end-of-life hardware.
Income statement items and cash flows are compared with the year-earlier periods. Balance-sheet items pertain to the position at the end of the period and are compared with the corresponding year-earlier date. The quarter refers to June 2018-August 2018.
Net sales for the quarter increased 11.6 per cent to SEK 2,524 million (2,262). Organic growth amounted to a negative 4.7 per cent (pos: 12.2), of which SMB 8.0 per cent $(11.3)$ , LCP negative 13.4 per cent (pos: 15.5) and B2C 1.1 per cent (neg: 8.1). Acquired growth was 12.6 percentage points (2.7) and exchange-rate differences had a positive impact of 3.7 percentage points (1.0).
During the quarter, gross profit rose SEK 93 million, corresponding to 28.6 per cent, to SEK 417 million (325). The gross margin rose to 16.5 per cent (14.3), mainly attributable to a more advantageous sales mix with a higher share of services and solutions, primarily due to implemented acquisitions.
Adjusted EBITA for the quarter increased 29.3 per cent to SEK 119 million (92). The adjusted EBITA margin was 4.7 per cent (4.1). Adjusted EBITA excludes items affecting comparability of SEK 4 million (neg: 1), which are specified in Note 4 Items affecting comparability. For a comparison of adjusted EBITA and EBIT, see Note 2 Segments.
Operating profit amounted to SEK 107 million (74). Operating profit includes items affecting comparability of SEK 4 million (neg: 1), which for the quarter mainly comprised acquisition and divestment-related expenses of SEK 10 million and a positive effect from a change to an acquisition-related liability of SEK 14 million. For more information, refer to Note 4 Items affecting comparability.
Financial expenses amounted to SEK 25 million (11). A new bank agreement was signed during the quarter and in connection with this borrowing expenses from previous bank agreements for a total of SEK 14 million were expensed. The remaining financial expenses for the quarter referred to standard external financing of SEK 8 million (10). Other financial expenses relate primarily to discounting of acquisition-related liabilities of SEK1 million (0.4). Financial income amounted to SEK 0.2 million $(0.3)$ .
The tax expense for the quarter was SEK 12 million (15), corresponding to an effective tax rate of 15.0 per cent (23.1). The low effective tax rate was mainly attributable to the remeasurement of Swedish deferred taxes due to the
decision of the Parliament on June 13 to lower corporate tax rates. The total tax effect for this change was positive at SEK 4 million. The effect tax for the quarter was also impacted by non-taxable income from the remeasurement of acquisition-related liabilities, recognised under items affecting comparability.
Profit for the quarter amounted to SEK 71 million (48). Earnings per share amounted to SEK 0.91 (0.64) before dilution and SEK 0.91 (0.63) after dilution.
Cash flow for the quarter was a negative SEK 121 million $(neg:24)$ .
Cash flow from operating activities amounted to SEK 59 million (neg: 14). The positive effect in relation to the preceding year was mainly due to higher operating profit for the quarter and a minor negative effect from the change in working capital in relation to the preceding year. The negative change in working capital of SEK 38 million (neg: 92) in the quarter was positively affected primarily by a higher level of accounts payable at the close of the quarter. For further information regarding working capital, refer to the Net working capital section.
Cash flow from investing activities was a negative SEK 739 million (neg: 10) and mainly pertained to acquisitions of operations, including a paid contingent earn-out. The cash-flow effect of the acquisition of operations referred to Vincere Netherlands B.V. SEK 655 million, ITaito Oy SEK 38 million and DAV Partner AB SEK 10 million. The paid earn-out of SEK 14 million pertains to Purity IT AS. Investments in tangible and intangible assets amounted to a negative SEK 22 million (neg: 5), of which a negative SEK 10 million (-) pertained to computer purchases for internal use and a negative SEK 5 (neg: 3) to IT development.
Cash flow from financing activities amounted to SEK 559 million (neg: 0.4) and mainly comprise a new bank agreement of SEK 1,938 million, repayment of previous financing of a negative SEK 1,384 million and borrowing expenses of a negative SEK 6 million (-).
Dustin acquired Vincere Netherlands B.V., a Dutch IT partner with a focus on small and medium-sized companies and organisations. Vincere is specialised in managed services with focus on cloud and security solutions, along with IT solutions with associated value added hardware and consultancy services. The company was founded in 2013 and reported sales of EUR 67.1 million during the 2017 financial year. The company has about 370 employees and operations at eight locations in the
Netherlands. The acquisition increases Dustin's addressable market from SEK 162 billion to SEK 262 billion. The company was consolidated on July 4, 2018.
Dustin won the award decision for a new framework agreement via the Danish government, municipalities and regions (Staten og Kommunernes Indkøbsservice (SKI)). The agreement will come into effect in September 2018 and extends over a two-year period, with the option for an additional two-year extension. The annual value is estimated at approximately DKK 500 million.
During the quarter, Dustin won a procurement of cloudbased services in the form of back-up and storage with Norwegian public service company NRK. The term of the agreement is three years, with the option for an additional total two-year extension and comprises 20 of NRK's data centres in Norway.
In accordance with Dustin's general meeting in December 2017, new members of the Nomination Committee have been appointed based on the ownership structure as of 31 March 2018. For more information about the Annual General Meeting, refer to page 9.
On June 13, the Swedish Parliament passed new tax rules for the corporate sector, including reduced corporate income tax and general interest deduction limitations. During the fourth quarter, Dustin evaluated its deferred tax liability and deferred tax assets based on new tax rates. The revaluation resulted in deferred tax in the balance sheet decreasing by approximately SEK 4 million, which had a corresponding positive effect in the income statement.
During the spring, Dustin negotiated a new bank agreement that came into force during the quarter. The new guaranteed credit volume amounts to approximately SEK 2,000 million with the option of additional lending of SEK 1,000 million. In connection with this, all former external loan agreements were repaid in their entirety. Under the new bank agreement, the company is, as previously, to report all established financial targets to the bank every quarter. When the new agreement came into force, SEK 14 million was expensed, pertaining to remaining borrowing expenses brought forward related to previous financing. The new bank agreement entails generally lower interest expenses.
Net sales for the year increased 10.7 per cent to SEK 10,300 million (9,306). Organic growth amounted to 2.0 per cent (8.6), of which SMB accounted for 9.6 per cent (6.2), LCP
for negative 3.8 per cent (pos: 11.8) and B2C for 7.9 per cent (neg: 2.7). Acquired growth was 7.3 percentage points (1.7) and exchange-rate differences had a positive impact of 1.4 percentage points (1.8).
During the year, gross profit rose SEK 257 million, corresponding to 18.7 per cent, to SEK 1,637 million (1,380). The gross margin rose to 15.9 per cent (14.8), mainly attributable to a more advantageous sales mix with a higher share of advanced products, services and solutions, primarily due to acquisitions.
During the year, adjusted EBITA rose 17.5 per cent to SEK 501 million (426). The adjusted EBITA margin was 4.9 per cent (4.6). Adjusted EBITA excludes items affecting comparability of SEK 1 million (neg: 7), which are specified in Note 4 Items affecting comparability. For a comparison of adjusted EBITA and EBIT, see Note 2 Segments.
Operating profit amounted to SEK 444 million (349). Operating profit includes items affecting comparability of SEK 1 million (neg: 7), which mainly comprised acquisition and divestment-related expenses of SEK 20 million and a positive effect from a change to acquisition-related liabilities of SEK 24 million. See Note 4 Items affecting comparability.
Financial expenses amounted to SEK 60 million (43), with the costs for the year primarily pertaining to borrowing costs of SEK 54 million (38) for external financing. Amortisation and impairment of borrowing expenses gave rise to expenses of SEK 21 million (8), of which SEK 14 million (-) pertains to impairment of borrowing expenses brought forward for raising loans in connection with the new bank agreement during the fourth quarter. Other financial expenses relate primarily to discounting of acquisition-related liabilities of SEK 4 million (0.9). Financial income amounted to SEK 1 million $(1).$
The tax expense for the year was SEK 79 million (69), corresponding to an effective tax rate of 20.7 per cent, compared with 22.4 per cent in the preceding year. The decline is mainly attributable to the remeasurement of deferred tax assets and deferred tax liabilities due to the decision of the Swedish Parliament on 13 June to lower the corporate tax rate. The total effect of the changed tax rate during the year amounted to SEK 4 million.
Net profit for the year amounted to SEK 305 million (239). Earnings per share amounted to SEK 3.99 (3.14) before dilution and SEK 3.97 (3.13) after dilution.
Cash flow for the year was SEK 231 million (neg: 174). During the year, dividends were paid to shareholders in the amount of negative SEK 213 million (neg: -183).
Cash flow from operating activities amounted to SEK 748 million (214), of which SEK 386 million (neg: 110) was attributable to changes in working capital. The positive change from working capital for the period was largely related to an increase in current liabilities of SEK 451 million (62), with the change primarily attributable to accounts payable. Accounts payable increased due to the temporary extension of credit terms among several suppliers. For further information regarding working capital, refer to the Net working capital section.
Cash flow from investing activities amounted to a negative SEK 1,127 million (neg: 201), primarily due to acquisitions of operations including a paid contingent earn-out. Acquisitions during the period are: Danish company Norriq's business area for hosting and outsourcing IT services SEK 141 million, Norwegian company Core Services AS SEK 104 million, Swedish company JML-System AB SEK 107 million, Finnish company ITaito Oy SEK 38 million, Swedish company DAV Partner AB SEK 10 million and Dutch company Vincere Netherlands B.V. SEK 655 million. Earn-outs paid pertain to Core Services AS SEK 31 million, Purity IT AS SEK 14 million and merged companies IKT Gruppen SEK 7 million and Commsec SEK 1 million. Investments in tangible and intangible assets amounted to a negative SEK 52 million (neg: 27), of which a negative SEK 23 million (neg: 17) pertained to IT development and a negative SEK 10 (-) to purchases for replacing the Group's computers.
Cash flow from financing activities totalled SEK 611 million (neg: 186) and mainly pertained to a new bank agreement of SEK 1,938 million and a repayment on previous loans amounting to negative SEK 1,384 million.
Net working capital amounted to a negative SEK 192 million (pos: 118) at year-end. The low level of working capital at the end of the period was attributable to higher accounts payable due to the temporary extension of credit terms. The effect of the temporary extension of credit terms was slightly higher than in prior periods, mainly due to the higher share or purchases with extended credit terms at the end of the period. The higher level of inventories and accounts receivable compared with the preceding year was mainly due to an increase in the scope of the operations.
| SEK million | Aug 31, 2018 |
Aug 31, 2017 |
|---|---|---|
| Inventories | 395.8 | 261.9 |
| Accounts receivable | 1,272.6 | 1.047.1 |
| Tax assets, other current receivables. as well as prepaid expenses and |
||
| accrued income | 1918 | 173.7 |
| Net working capital | $-192.0$ | 118.1 |
|---|---|---|
| income | $-483.6$ | $-408.2$ |
| Tax liabilities, other current liabilities and accrued expenses and deferred |
||
| Accounts payable | $-1,568.5$ | $-956.3$ |
At the end of the period, net debt amounted to SEK 1,731 million (998). In total, cash and cash equivalents amounted to SEK 278 million (71), up SEK 206 million. At the end of the financial year, there was also an unutilised overdraft facility of SEK 270 million (270). The Dutch subsidiary acquired during the quarter also had a credit facility of a maximum of EUR 5 million, of which EUR 1 million had been utilised at the end of the financial year.
Net debt in relation to adjusted EBITDA was 3.3 (2.3) at the end of the financial year.
| SEK million | Aug 31, 2018 |
Aug 31, 2017 |
|---|---|---|
| Non-current liabilities | 1.984.8 | 1.068.6 |
| Current liabilities to credit institutions | 12.6 | |
| Finance lease liabilities | 10.9 | 1.2 |
| Cash and cash equivalents | $-277.6$ | $-71.5$ |
| Net debt | 1.730.6 | 998.3 |
The average number of full-time employees during the period was 1,152, compared with 977 in the year-earlier period. The increase was primarily attributable to acquisitions.
Dustin announced changes to its organisation to create greater clarity within the segments and further increase the scalability of its support functions. The organisation is also to be adapted to the expansion in the Netherlands. As a result, changes are being made to Dustin's Group Management whereby new roles will be added while other functions will be removed. The changes were implemented as of 1 October 2018.
Dustin Group AB intends to carry out a rights issue to continue the company's acquisition ambitions in its existing markets in the Nordic region and the Netherlands. The Board of Directors of Dustin has resolved to, subject to the approval by an Extraordinary General Meeting, carry out a rights issue of approximately SEK 700 million. The rights issue will provide the company with greater flexibility and the ability to continue to pursue its existing growth strategy in existing markets in the Nordic region and the Netherlands, through acquisitions of companies
with a large share of advanced products, services and recurring revenues.
The company gave notice of an Extraordinary General Meeting with respect to the announced rights issue. This Meeting will take place on 10 October 2018 at 1:00 p.m. at the office of Gernandt & Danielsson Advokatbyrå KB, Hamngatan 2, Stockholm, Sweden.
Dustin Group AB (Corp. Reg. No. 556703-3062), which is domiciled in Nacka, Sweden, only conducts holding operations. Overall external financing is with the Parent Company.
Net sales for the period amounted to SEK 0.4 million (0.4) and profit for the period totalled SEK 366 million (138). The change is the result of the receipt of a dividend of SEK 300 million (10) from Group companies during the period and the fact that the net currency position amounted to a negative SEK 133 million (pos: 2). The net currency position is attributable to the external financing. The Group applies hedge accounting, whereby the net currency position is recognised against equity.
Dustin has a structured and Group-wide process to identify, classify, manage and monitor a number of strategic, operative and external risks.
For a detailed description of the risks that are expected to be particularly significant for the future development of the Group, refer to pages 50-53 of Dustin's 2016/17 Annual Report.
The Parent Company's share has been listed on Nasdaq Stockholm since February 13, 2015, and is included in the Mid Cap index. At August 31, 2018, the price was SEK 90.10 per share (66.75), representing a total market capitalisation of SEK 6,958 million (5,085). At August 31, the company had a total of 6,534 shareholders (5,129). The company's three largest shareholders were Axel Johnson AB with 24.7 per cent, Swedbank Robur Fonder with 11.0 per cent and Capital Group with 5.5 per cent. Dustin's shareholder register with the largest shareholders is presented on the company's website.
LTI 2015 was exercised during the period, and the number of shares thus increased from 76,173,115 to 77,226,502. As a result, the share capital increased by SEK 5 million and the share premium reserve by SEK 50 million.
The board proposes a dividend of in total SEK 239million (213). The dividend per share will depend on the outcome of the proposed rights issue. Based on the current number of outstanding shares, the dividend per share will amount to SEK 3.10 (2.80).
Dustin's Annual General Meeting (AGM) will be held in Stockholm on December 11, 2018. Shareholders who wish to have matters considered should submit a written request to the Board by October 25, 2018 at the latest to ensure that the matter is included in the notice convening the AGM. Requests by mail should be addressed to: Dustin Group AB (publ), Att: Sara Edlund, Box 1194, SE-131 27 Nacka Strand or by e-mail to: [email protected].
The Nomination Committee ahead of the AGM on December 11, 2018 comprises the following members:
9
Dustin's operations are divided into three business segments: SMB (Small and Medium-sized Businesses), LCP (Large Corporate and Public sector) and B2C (Business to Consumer). Within the SMB and LCP segments, customers are served through both the online platform and relationship selling. In the B2C segment, customers are served through the online platform.
| All amounts in SEK million, unless otherwise indicated | Q4 | Q4 | Change | Full-year | Full-year | Change |
|---|---|---|---|---|---|---|
| SMB | 17/18 | 16/17 | $\%$ | 17/18 | 16/17 | % |
| Net sales | 1.154.4 | 831.1 | 38.9 | 4.375.1 | 3.530.8 | 23.9 |
| Segment results | 131.7 | 90.6 | 45.5 | 508.2 | 377.5 | 34.6 |
| Segment margin (%) | 11.4 | 10.9 | 11.6 | 10.7 |
Net sales rose 38.9 per cent in total during the quarter to SEK 1,154 million (832), with 28.3 percentage points of the increase compared with the year-earlier quarter attributable to acquisitions and divestments and 2.6 percentage points to exchange-rate differences. Organic sales amounted to SEK 8.0 per cent (11.3) during the quarter and were mainly attributable to strong sales in the mobile phone, computer and infrastructure product categories, predominantly in Sweden and Denmark. The acquisitions of ITaito, DAV Partner and Vincere during the quarter were fully consolidated with the SMB segment on 1 June, 2 July and 4 July, respectively.
During the quarter, profit for the segment rose 45.5 per cent, corresponding to slightly more than SEK 40 million, to SEK 132 million (91). The improved earnings were the result of higher sales, a better product mix largely due to acquisitions and increased sales of own-branded goods. The segment margin strengthened to 11.4 per cent (10.9).
Investments in advanced products and services continued and, for example, the customer base for SaaS configurations via the cloud platform increased to 1,227 active customers (980), corresponding to 53,988 users (30,150) at the end of the fourth quarter).
| All amounts in SEK million, unless otherwise indicated | Q4 | Q4 | Change | Full-year | Full-vear | Change |
|---|---|---|---|---|---|---|
| LCP | 17/18 | 16/17 | % | 17/18 | 16/17 | % |
| Net sales | 1,230.1 | 1.296.1 | $-5.1$ | 5.284.1 | 5.184.6 | 1.9 |
| Segment results | 74.1 | 76.5 | $-3.2$ | 330.5 | 355.4 | $-7.0$ |
| Segment margin (%) | 6.0 | 5.9 | - | 6.3 | 6.9 |
Net sales for the quarter declined 5.1 per cent to SEK 1,230 million (1,296), positively impacted by acquisitions corresponding to 3.8 percentage points and exchange-rate differences to 4.5 percentage points. Organic growth was a negative 13.4 per cent (pos: 15.5) and attributable in its entirety to the performance of the Public Sector customer group. The decline was partially due to Dustin's decision to refrain from a greater share of procurements with low margins under certain framework agreements, mainly in Finland, Denmark and Norway, and partially due to a very strong trend in the year-earlier quarter. The Large Corporate customer group, with a sales share of 34 per cent in this segment, performed strongly in all markets and reported total growth of slightly more than 26 per cent in the quarter.
Profit for the segment was SEK 74 million (76), which was a decline compared with the corresponding period in the
preceding year. The segment margin improved slightly to 6.0 per cent (5.9), mainly as a result of a more favourable sales balance between the large corporate and public sector customer groups.
| All amounts in SEK million, unless otherwise indicated | Q4 | Q4 | Change | Full-year | Full-year | Change |
|---|---|---|---|---|---|---|
| B 2 C | 17/18 | 16/17 | % | 17/18 | 16/17 | % |
| Net sales | 139.6 | 135.2 | 3.3 | 641.2 | 590.8 | 8.5 |
| Segment results | 7.2 | 8.1 | $-10.3$ | 31.5 | 24.6 | 28.3 |
| Segment margin (%) | 5.2 | 6.0 | $\qquad \qquad \blacksquare$ | 4.9 | 4.2 |
Net sales for the quarter increased 3.3 per cent to SEK 140 million (135). Organic growth was 1.1 per cent (neg: 8.1). The quarter was positively impacted by healthy sales growth in Denmark and Norway, particularly in the product categories of mobile phones and infrastructure.
Profit for the segment for the quarter was in line with the preceding year at SEK 7 million (8), while the segment margin fell slightly to 5.2 per cent (6.0).
| All amounts in SEK million, unless otherwise indicated | Q4 | Q4 | Change | Full-year | Full-vear | Change |
|---|---|---|---|---|---|---|
| Central functions | 17/18 | 16/17 | % | 17/18 | 16/17 | % |
| Costs for central functions | $-94.3$ | $-833$ | 13.2 1 | $-369.5$ | $-3313$ | 11.5 |
| Costs for central functions, excluding items affecting comparability in relation to net sales (%) |
$-37$ | $-3.7$ | $\overline{\phantom{a}}$ | $-3.6$ | $-36$ |
Dustin's central functions hold the key to efficient delivery of the Group's offerings in all markets, the generation of economies of scale and the simplification of the integration of acquired operations. Costs in the fourth quarter for central functions amounted to 3.7 per cent (3.7) of sales. Costs for central functions amounted to SEK 94
million (83), with the increase attributable to continued investments in the product
and service offering and the integration of acquired businesses.
For additional financial data on the segments, refer to Note 2 Segments on page 20, and to Segment information by quarter on page 26.
The undersigned certify that this interim report gives a true and fair presentation of the Parent Company's and the Group's operations, financial position and profits and describes the material risks and uncertainties facing the Parent Company and the companies in the Group.
Nacka, October 10, 2018
Thomas Ekman, President and CEO in accordance with authorisation by the Board of Directors
This report has not been reviewed by the company's auditors.
| Q4 | Q4 | Full-year | Full-year | ||
|---|---|---|---|---|---|
| SEK million | Note | 17/18 | 16/17 | 17/18 | 16/17 |
| Continuing operations: | |||||
| Net sales | $\overline{2}$ | 2,524.2 | 2,262.4 | 10,300.5 | 9.306.2 |
| Cost of goods and services sold | $-2,106.7$ | $-1,937.8$ | $-8,663.7$ | $-7,926.7$ | |
| Gross profit | 417.4 | 324.6 | 1,636.8 | 1,379.5 | |
| Selling and administrative expenses | $-311.5$ | $-247.7$ | $-1,183.3$ | $-1,016.3$ | |
| Items affecting comparability | $\overline{4}$ | 3.6 | $-0.8$ | 1.0 | $-7.3$ |
| Other operating income | 1.7 | 1.3 | 6.8 | 5.9 | |
| Other operating expenses | $-4.0$ | $-3.8$ | $-17.5$ | $-12.3$ | |
| EBIT | $\overline{2}$ | 107.3 | 73.7 | 443.8 | 349.5 |
| Financial income and other similar income-statement items | 0.2 | 0.3 | 1.1 | 1.2 | |
| Financial expenses and other similar income-statement items | $-24.5$ | $-10.9$ | $-60.3$ | $-42.6$ | |
| Profit after financial items | 83.0 | 63.0 | 384.6 | 308.1 | |
| Tax attributable to continuing operations | $-12.5$ | $-14.6$ | $-79.4$ | $-69.0$ | |
| Comprehensive income for the period is attributable in its | 70.5 | 48.4 | 305.1 | 239.1 | |
| entirety to Parent Company shareholders | |||||
| Other comprehensive income (all items that will be transferred to the income statement) |
|||||
| Translation differences | 51.2 | $-19.8$ | 115.3 | $-3.2$ | |
| Change in hedging reserves | $-53.6$ | 21.1 | $-128.5$ | 10.6 | |
| Tax attributable to change in hedging reserves | 11.7 | $-4.6$ | 28.2 | $-2.3$ | |
| Other comprehensive income | 9.4 | $-3.3$ | 15.0 | 5.1 | |
| Comprehensive income for the period is attributable in its entirety to Parent Company shareholders |
79.9 | 45.1 | 320.1 | 244.1 | |
| Earnings for continuing operations per share (SEK) | 0.91 | 0.64 | 3.99 | 3.14 | |
| Earnings for continuing operations per share after dilution (SEK) | 0.91 | 0.63 | 3.97 | 3.13 |
| Note | Aug 31, 2018 | Aug 31, 2017 |
|---|---|---|
| SEK million ASSETS |
||
| Non-current assets | ||
| Goodwill | 3,221.7 | 2,105.8 |
| Other intangible assets attributable to acquisitions | 572.0 | 357.9 |
| Other intangible assets 5 |
127.0 | 115.1 |
| Derivative instruments | 2.0 | |
| Tangible assets 5 |
91.7 | 24.6 |
| Divestment-related receivables 8 |
1.6 | |
| Deferred tax assets | 2.1 | 8.4 |
| Other non-current assets | 16.2 | 2.9 |
| Total non-current assets | 4,034.1 | 2,614.7 |
| Current assets | ||
| Inventories | 395.8 | 261.9 |
| Accounts receivable | 1,272.6 | 1,047.1 |
| Derivative instruments | 0.2 | |
| Tax assets | 9.0 | 7.6 |
| Other receivables | 14.4 | 7.7 |
| Prepaid expenses and accrued income | 168.3 | 158.5 |
| Divestment-related receivables 8 |
5.0 | |
| Cash and cash equivalents | 277.6 | 71.5 |
| Total current assets | 2,143.0 | 1,554.1 |
| TOTAL ASSETS | 6,177.1 | 4,168.8 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Equity attributable to Parent Company shareholders | 1,646.6 | 1,485.1 |
| Total equity | 1,646.6 | 1,485.1 |
| Non-current liabilities | ||
| Deferred tax and other long-term provisions | 186.5 | 133.3 |
| Liabilities to credit institutions | 1,984.8 | 1,068.6 |
| Acquisition-related liabilities 8 |
202.5 | 78.3 |
| 8 Derivative instruments |
7.3 | 6.5 |
| Total non-current liabilities | 2,381.1 | 1,286.6 |
| Current liabilities | ||
| Liabilities to credit institutions | 12.6 | |
| Accounts payable | 1,568.5 | 956.3 |
| Tax liabilities | 20.0 | 59.3 |
| Derivative instruments 8 |
0.1 | 0.1 |
| Other current liabilities | 162.7 | 115.1 |
| Acquisition-related liabilities 8 |
73.9 | 31.3 |
| Accrued expenses and deferred income | 311.8 | 235.0 |
| Total current liabilities | 2,149.5 | 1,397.1 |
| TOTAL EQUITY AND LIABILITIES | 6,177.1 | 4,168.8 |
| SEK million | Aug 31, 2018 | Aug 31, 2017 |
|---|---|---|
| Opening balance, September 1 | 1,485.1 | 1,422.2 |
| Profit for the period | 305.1 | 239.1 |
| Other comprehensive income | ||
| Translation differences | 115.3 | $-3.2$ |
| Change in hedging reserves | $-128.5$ | 10.6 |
| Tax attributable to change in hedging reserves | 28.2 | $-2.3$ |
| Total other comprehensive income | 15.0 | 5.1 |
| Total comprehensive income | 320.1 | 244.1 |
| Dividends | $-213.3$ | $-182.8$ |
| Holdings of own warrants | $-5.9$ | |
| New share issue | 55.4 | |
| Subscription with the support of warrants | 5.1 | 1.6 |
| Total transactions with shareholders | ||
| $-158.7$ | $-181.2$ | |
| Closing equity as per the balance-sheet date, attributable to | ||
| Parent Company shareholders in its entirety | 1,646.6 | 1,485.1 |
| Q4 | Q4 | Full-year | Full-year | ||
|---|---|---|---|---|---|
| SEK million | Note | 17/18 | 16/17 | 17/18 | 16/17 |
| Operating activities | |||||
| Profit before financial items including operating profit from | |||||
| discontinued operations | 107.3 | 73.7 | 443.8 | 349.5 | |
| Adjustment for non-cash items | 11.4 | 18.5 | 51.7 | 58.1 | |
| Interest received | 0.2 | 0.3 | 1.1 | 1.2 | |
| Interest paid | $-8.4$ | $-1.8$ | $-34.6$ | $-27.4$ | |
| Income tax paid | $-13.8$ | $-12.0$ | $-99.8$ | $-57.9$ | |
| Cash flow from operating activities before changes in working capital | 96.7 | 78.7 | 362.3 | 323.4 | |
| Decrease $(+)/$ increase $(-)$ in inventories | 32.4 | 34.3 | $-87.1$ | $-28.5$ | |
| Decrease (+)/increase (-) in receivables | $-52.8$ | 4.5 | 21.8 | $-143.8$ | |
| Decrease (-)/increase (+) in current liabilities | $-17.2$ | $-131.0$ | 451.0 | 62.5 | |
| Cash flow from changes in working capital | $-37.6$ | $-92.3$ | 385.7 | $-109.9$ | |
| Cash flow from operating activities | 59.1 | $-13.6$ | 747.9 | 213.6 | |
| Investing activities | |||||
| Acquisition of intangible assets | 5 | $-7.2$ | $-3.6$ | $-27.2$ | $-18.1$ |
| Acquisition of tangible assets | 5 | $-15.1$ | $-1.9$ | $-24.9$ | $-9.2$ |
| Acquisition of operations | 3 | $-703.0$ | -4.4 | $-1,023$ | $-147.2$ |
| Divestment of operations | 1.5 | 0.0 | |||
| Contingent consideration paid | $-13.8$ | L, | $-53.7$ | $-26.6$ | |
| Cash flow from investing activities | $-739.1$ | -9.9 | $-1,127.4$ | $-201.0$ | |
| Financing activities | |||||
| Cash flow from LTI program | 54.6 | 1.6 | |||
| Dividend | ÷, | $-213.3$ | $-182.8$ | ||
| New loans raised | 1,949.8 | $\overline{a}$ | 2,165.0 | ||
| Repayment of loans | $-1,383.6$ | ÷, | $-1,383.6$ | ||
| Paid bank arrangement fees | $-6.5$ | $-8.4$ | $-3.3$ | ||
| Change in financial leasing liability | $-0.7$ | $-0.4$ | $-3.6$ | $-1.6$ | |
| Cash flow from financing activities | 559.1 | $-0.4$ | 610.8 | $-186.1$ | |
| Cash flow for the period | $-120.9$ | $-23.8$ | 231.3 | $-173.6$ | |
| Cash and cash equivalents at beginning of period | 408.0 | 90.8 | 71.5 | 242.9 | |
| Cash flow for the period | $-120.9$ | $-23.8$ | 231.3 | $-173.6$ | |
| Exchange-rate differences in cash and cash equivalents | -9.4 | 4.5 | $-25.1$ | 2.2 | |
| Cash and cash equivalents at the close of the period | 277.6 | 71.5 | 277.6 | 71.5 |
| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 |
| Net sales | 0.1 | 0.1 | 0.4 | 0.4 |
| Selling and administrative expenses | $-2.1$ | $-1.5$ | $-11.8$ | $-10.4$ |
| Other operating expenses | 0.0 | 0.0 | $-0.1$ | 0.0 |
| EBIT | $-2.0$ | $-1.5$ | $-11.5$ | $-10.0$ |
| Financial income and other similar income-statement items | 1.7 | 2.5 | 314.2 | 20.0 |
| Financial expenses and other similar income-statement items | $-77.2$ | 8.3 | $-187.6$ | $-45.9$ |
| Profit/Loss after financial items | $-77.5$ | 9.4 | 115.1 | $-35.9$ |
| Appropriations | 269.4 | 212.4 | 269.4 | 212.4 |
| Tax | $-42.3$ | $-48.9$ | $-18.7$ | $-38.8$ |
| Profit/Loss for the period | 149.6 | 172.9 | 365.9 | 137.6 |
| Q4 | Q4 | Full-vear | Full-year | |
|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 |
| Profit/Loss for the period | 149.6 | 172.9 | 365.9 | 137.6 |
| Other comprehensive income | . | ۰ | ||
| Comprehensive income for the period | 149.6 | 172.9 | 365.9 | 137.6 |
| SEK million | Aug 31, 2018 | Aug 31, 2017 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Participations in Group companies | 1,211.6 | 1,211.6 |
| Total non-current assets | 1,211.6 | 1,211.6 |
| Current assets | ||
| Receivables from Group companies | 1,245.6 | 619.9 |
| Tax assets | 0.6 | |
| Prepaid expenses and accrued income Other receivables |
0.8 297.7 |
6.3 0.2 |
| Cash and bank balances | 247.0 | 42.9 |
| Total current assets | 1,791.1 3,002.7 |
669.8 |
| TOTAL ASSETS | 1,881.4 | |
| EQUITY AND LIABILITIES | ||
| Restricted equity | ||
| Share capital | 386.1 | 380.9 |
| Total restricted equity | 386.1 | 380.9 |
| Non-restricted equity | ||
| Share premium reserve | 438.3 | 388.1 |
| Retained earnings | $-322.0$ | $-251.5$ |
| Profit/Loss for the year | 365.9 | 137.6 |
| Total non-restricted equity | 482.1 | 274.3 |
| Total equity | 868.2 | 655.2 |
| Untaxed reserves | 137.7 | 109.4 |
| Non-current liabilities | ||
| Non-current liabilities to credit institutions | 1,984.8 | 1,068.6 |
| Total non-current liabilities | 1,984.8 | 1,068.6 |
| Current liabilities | ||
| Accounts payable | 0.0 | 0.2 |
| Tax liabilities | 6.6 | 45.1 |
| Other current liabilities | 0.4 | 0.3 |
| Accrued expenses and deferred income | $5.0$ | 2.6 |
| Total current liabilities | 12.0 | 48.2 |
| TOTAL EQUITY AND LIABILITIES | 3,002.7 | 1,881.4 |
This report has been prepared by applying IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting policies are consistent with those presented in the Group's Annual Report for the 2016/17 financial year, except for the information provided about segment reporting on page 73 in the Annual Report's description of significant accounting policies. New segment reporting was presented in the first quarter entailing that B2B is divided into two segments: SMB and LCP.
The Parent Company applies the Swedish Annual Accounts Act, and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.
This report has been prepared in SEK million, unless otherwise stated. Rounding-off differences may occur in this report.
None of the amendments and interpretations in existing standards that have been applied from the financial year beginning September 1, 2017 had any material impact on the financial statements for the Group or the Parent Company or alternative performance measures.
A number of new standards, amendments and interpretations of standards are effective for financial years beginning after January 1, 2018. These have not been applied in the preparation of this report. The following amendments are expected to impact Dustin's future financial statements:
The standard replaces IAS 39 Financial Instruments: Recognition and Measurement. It contains rules for classification and measurement of financial assets and liabilities, impairment of financial instruments and hedge accounting. The assessment is that this standard will impact disclosures and categorisation in Dustin's financial statements. The standard is effective for financial years beginning on or after January 1, 2018, which for Dustin means the financial year beginning September 1, 2018.
The standard deals with the recognition of revenue from contracts with customers and the sale of certain nonfinancial assets. The new standard replaces IAS 11 Construction Contracts and IAS 18 Revenue and related interpretations. The standard became effective for financial years beginning on or after January 1, 2018, which for Dustin means the financial year beginning September 1, 2018. In addition to what is described below, the standard entails more informative disclosures in the company's external reporting.
Sales of products comprise the largest share of the Group's total income. Income is to be recognised at the point in time that control of the product is passed to the buyer, instead of the current policy whereby income is recognised when the material risks and benefits are transferred to the buyer. Dustin believes that the company's current income recognition is essentially consistent with the new standard.
Dustin is the reseller of licences and does not sell its own licences to customers. When another party is involved in providing goods or services to a customer, IFRS 15 requires that Dustin is to determine whether its promise is a performance obligation to provide the specified goods and services itself (meaning that the company is the principal) or is to ensure that the other party provides these goods or services (meaning that the company is the agent). Depending on the type of software licence sold, Dustin has identified customer contracts in which Dustin is both the principal and the agent. Dustin believes that the company's current income recognition is essentially consistent with the new standard.
To recognise income for various bundled services, an assessment is made of whether the service and hardware is to be deemed a component and recognised over time or whether the service and the hardware are to be separated with income from hardware recognised on delivery and the service over time. An analysis of current income recognition revealed that no material changes exist.
This standard, which encompasses the recognition of lease agreements, comes into effect on January 1, 2019, which for Dustin means the financial year beginning September 1, 2019. The financial statements will be affected by this standard, partly as a result of the current value of the future leasing payments being recognised as an asset and interest-bearing liability in the balance sheet, and by the fact that the current lease expenses in the income statement will be replaced by the recognition of depreciation and an interest expense in net financial items. The contracts that will be recognised in Dustin's balance sheet relate mainly to buildings (offices and warehouses), transportation (vehicles and forklifts) and other equipment (e.g. IT and machinery). A project to evaluate the effects is in progress and Dustin has not yet completed its quantification of the impact of the new standard on the consolidated financial statements.
| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| All amounts in SEK million, unless otherwise indicated | 17/18 | 16/17 | 17/18 | 16/17 |
| Net sales | ||||
| LCP | 1,230.1 | 1,296.1 | 5,284.1 | 5,184.6 |
| SMB | 1,154.4 | 831.1 | 4,375.1 | 3,530.8 |
| B 2 C | 139.6 | 135.2 | 641.2 | 590.8 |
| Total | 2,524.2 | 2,262.4 | 10,300.5 | 9,306.2 |
| Segment results | ||||
| LCP | 74.1 | 76.5 | 330.5 | 355.4 |
| SMB | 131.7 | 90.6 | 508.2 | 377.5 |
| B 2 C | 7.2 | 8.1 | 31.5 | 24.6 |
| Total | 213.1 | 175.1 | 870.2 | 757.4 |
| Central functions | $-94.3$ | $-83.3$ | $-369.5$ | $-331.3$ |
| Adjusted EBITA | 118.8 | 91.9 | 500.6 | 426.1 |
| Segment margin | ||||
| LCP, segment margin (%) | 6.0 | 5.9 | 6.3 | 6.9 |
| SMB, segment margin (%) | 11.4 | 10.9 | 11.6 | 10.7 |
| B2C, segment margin (%) | 5.2 | 6.0 | 4.9 | 4.2 |
| Costs for central functions, excluding items affecting comparability in | $-3.7$ | $-3.7$ | $-3.6$ | $-3.6$ |
| relation to net sales (%) | ||||
| Reconciliation with profit after financial items | ||||
| Items affecting comparability | 3.6 | $-0.8$ | 1.0 | $-7.3$ |
| Amortisation and impairment of intangible assets | $-15.1$ | $-17.4$ | $-57.8$ | $-69.3$ |
| EBIT, Group | 107.3 | 73.7 | 443.8 | 349.5 |
| Financial income and other similar income-statement items | 0.2 | 0.3 | 1.1 | 1.2 |
| Financial expenses and other similar income-statement items | $-24.5$ | $-10.9$ | $-60.3$ | $-42.6$ |
| Profit after financial items, Group | 83.0 | 63.0 | 384.6 | 308.1 |
During the period, Dustin completed six acquisitions, three of which were finalised in the first quarter of the financial year. In September, the Denmark-based Norrig's business area for hosting and outsourcing IT services was acquired on the basis of an asset transfer. In October, Dustin acquired all of the shares outstanding in the Norwegian company Core Services AS, which is one of the leading players in the new generation of data centre solutions, known as software defined data centres. In November, Dustin acquired all of the shares in the Swedish company JML-System AB, which offers installation and service of AV equipment for meeting rooms and conferences.
In the third quarter, agreements were signed for two acquisitions and closed during the fourth quarter. In June, ITaito Oy, a Finnish supplier of IT services, focusing on small and medium-sized businesses, was acquired. In July, DAV Partner AB, a company specialised in audio/video solutions, with focus on the public sector, was acquired. In the fourth quarter, Vincere Netherlands B.V., was also acquired, a Dutch company focusing on cloud solutions, safety and IT solutions with associated hardware and consultancy services. Acquisition-related liabilities for Core Services AS were corrected in the amount of SEK12 million during the quarter.
| DAV | Vincere | Core | ||||
|---|---|---|---|---|---|---|
| $Q1-Q3$ | Partner | Netherlands | Services | Q1-Q4 | ||
| Fair value of acquired assets and liabilities | 17/18 | ITaito Oy | AB | B.V | AS | 17/18 |
| Intangible assets (excl. goodwill) | 47.2 | 5.8 | 0.0 | 203.0 | $\overline{\phantom{a}}$ | 256.0 |
| Tangible assets | 8.4 | 5.3 | 0.1 | 42.8 | $\overline{\phantom{a}}$ | 56.6 |
| Financial assets | 0.1 | $\sim$ | 0.1 | |||
| Inventories | 7.0 | 0.5 | 7.2 | 25.5 | $\overline{\phantom{a}}$ | 40.2 |
| Accounts receivables and other current assets | 92.4 | 6.7 | 23.0 | 83.8 | $\overline{\phantom{a}}$ | 206.0 |
| Cash and cash equivalents | 35.7 | 8.8 | 4.9 | $\sim$ | 49.4 | |
| Other current liabilities | 85.5 | 10.2 | 23.3 | 170.2 | $\sim$ | 289.2 |
| Total identifiable net assets | 105.4 | 16.9 | 11.9 | 184.9 | $\overline{\phantom{0}}$ | 319.1 |
| Consolidated goodwill | 432.3 | 55.3 | 3.3 | 469.7 | 11.7 | 972.4 |
| Purchase consideration including estimated contingent earn-out |
537.7 | 72.2 | 15.3 | 654.6 | 11.7 | 1,291.4 |
| Less: | ||||||
| Cash and cash equivalents | 35.7 | 8.8 | 4.9 | 49.4 | ||
| Estimated contingent earn-out | 182.0 | 25.4 | 11.7 | 219.1 | ||
| Net cash out flow | 320.0 | 38.0 | 10.4 | 654.6 | 0.0 | 1,023.0 |
The maximum performance-based earn-out liability for acquisitions in the period totals SEK 239 million. These acquisitions are strategically important in terms of complementing Dustin's service offering with respect to advanced products and services. The total acquisition costs are presented in Note 4 Items affecting
comparability. Acquired goodwill comprises new distribution channels, new sales channels for advanced products and services, and employee expertise. The fair value of the acquired receivables is expected to be fully regulated. The contracted gross amounts essentially correspond to the fair values of the receivables.
Items affecting comparability for the full-year amounted to SEK 1 million (neg: 7) and mainly comprised acquisition costs of SEK 20 million (12) for acquisitions implemented during the year and positive effects from the impairment of performance-based earn-outs of SEK 24 million (22). Costs for acquisitions and divestments primarily pertained to remuneration to consultants and attorneys for financial and legal advisory services in conjunction with acquisitions and divestments.
The change in value of acquisition-related liabilities for the period is related to the previous acquisition of IDENET AB and impairment of liabilities for the earn-out attributable to the now merged company IKT AS and Core Services AS. The gain attributable to the divestment of operations relates to the sale of IT-Hantverkarna Sverige AB.
| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 |
| Acquisition and divestment-related expenses | $-10.0$ | $-0.8$ | $-20.2$ | $-11.6$ |
| Recruitment costs, senior executives | $\overline{\phantom{a}}$ | $-2.9$ | ||
| Change in value of acquisition-related liabilities | 13.6 | $\overline{\phantom{a}}$ | 23.7 | 22.3 |
| Gain attributable to divestment of operations | . | 0.4 | ||
| Provision for repayment requirement | - | 0.0 | $-18.0$ | |
| Total | 3.6 | $-0.8$ | 1.0 | $-7.3$ |
| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 |
| Capitalised expenditure for IT development (integrated IT-platform and other long term strategic IT-systems) |
5.1 | 3.1 | 22.9 | 16.9 |
| Other investments in tangible and intangible assets | 17.1 | 2.3 | 29.2 | 10.3 |
| Investments in financial lease assets | 0.0 | $\overline{\phantom{a}}$ | 4.0 | |
| Total | 22.3 | 5.5 | 56.1 | 27.3 |
Dustin is impacted by seasonal variations. Each quarter is comparable between years. Sales volumes are normally higher in November and December, and lower during the summer months when sales and marketing activities are less intense. Similar seasonal variations occur in all geographical markets.
There were no significant related-party transactions during the current period or comparative period.
Financial instruments measured at fair value consist of derivative instruments and acquisition and divestmentrelated assets and liabilities. As regards other financial items, these essentially match fair value and book value.
Derivative instruments measured at fair value consist of interest-rate derivatives and currency futures. Derivative instruments have been structured as hedges for variable interest on external bank loans. Currency futures pertain to hedging for USD purchases from China and hedging investment of foreign subsidiaries. The Group applies hedge accounting for derivatives and currency futures, and the fair value measurement is Level 2, according to the definition in IFRS 13. The valuation level is unchanged compared with August 31, 2017.
At August 31, 2018, the fair value of liabilities for derivative instruments was SEK 6 million (7).
Acquisition-related liabilities pertain to contingent earnouts. Measurement is carried out on a continuous basis at fair value and the liability is settled as required via profit or loss. If a change in value occurs prior to the preparation of the purchase price allocation and is not the result of events following the acquisition date, measurement is carried out via the balance sheet. Divestment-related receivables pertain to contingent earn-outs for the divestment of IT-Hantverkarna i Sweden AB. The fair value is calculated as defined for Level 3 in IFRS 13, meaning according to inputs that are not based on observable market data. The calculation of the contingent earn-out liability is based on the parameters of each agreement. These parameters are usually linked to the outcome of performance measures taken for up to three years from the date of acquisition. Changes to the balance sheet item are shown in the table below. Acquisitions during the period refer to the Danish company Norriq's business area for hosting and outsourcing IT services (SEK 75 million), the Norwegian company Core Services (SEK 73 million), the Swedish acquisition of JML-System (SEK 34 million), the Finnish acquisition of ITaito (SEK 26 million) and the acquisition of the Dutch company Vincere Netherlands B.V. (SEK 7 million).
| Change in acquisition-related liabilities measured at fair value based on inputs that are not based on observative market date (Level 3) |
Aug 31, 2018 | Aug 31, 2017 |
|---|---|---|
| Opening balance | 109.6 | 52.6 |
| Remeasurements recognised in profit or loss: | ||
| Unrealised remeasurement of contingent earn-out recognised under items affecting comparability | $-23.7$ | $-22.3$ |
| Discount of contingent earn-out recognised under Financial expenses and other similar income- statement items |
4.3 | 0.9 |
| Remeasurements recognised under other comprehensive income: | ||
| Unrealised exchange-rate differences recognised under Translation differences | 12.2 | $-3.1$ |
| Changes recognised via the balance sheet: | ||
| Payments attributable to previous acquisitions | $-53.7$ | $-26.6$ |
| Acquisitions | 227.7 | 108.0 |
| Closing balance | 276.3 | 109.6 |
| Change in acquisition-related liabilities measured at fair value based on inputs that are not based on observative market date (Level 3) |
Aug 31, 2018 | Aug 31. 2017 |
|---|---|---|
| Opening balance | ||
| Remeasurements recognized in profit or loss: | ||
| Estimated purchase consideration, divestment of subsidiary, long and short term | 6.6 | |
| Closing balance | 6.6 |
| Q4 | Q4 | Full-year | Full-year | |
|---|---|---|---|---|
| All amounts in SEK million, unless otherwise indicated | 17/18 | 16/17 | 17/18 | 16/17 |
| Income statement | ||||
| Organic sales growth (%) | $-4.7$ | 12.2 | 2.0 | 8.6 |
| Gross margin (%) | 16.5 | 14.3 | 15.9 | 14.8 |
| EBIT | 107.3 | 73.7 | 443.8 | 349.5 |
| Adjusted EBITDA | 127.3 | 95.6 | 521.2 | 438.4 |
| Adjusted EBITA | 118.8 | 91.9 | 500.6 | 426.1 |
| Adjusted EBITA margin (%) | 4.7 | 4.1 | 4.9 | 4.6 |
| Return on equity (%) | 18.5 | 16.1 | ||
| Balance sheet | ||||
| Net working capital | $-192.0$ | 118.1 | $-192.0$ | 118.1 |
| Capital employed | 48.5 | 269.1 | 48.5 | 269.1 |
| Net debt | 1,730.6 | 998.3 | 1,730.6 | 998.3 |
| Net debt/adjusted EBITDA (multiple) | $\bar{ }$ | 3.3 | 2.3 | |
| Maintenance investments | $-22.2$ | $-5.5$ | $-52.1$ | $-27.3$ |
| Equity/assets ratio (%) | 26.7 | 35.6 | ||
| Cash flow | ||||
| Operating cash flow | 67.5 | $-2.1$ | 854.8 | 301.2 |
| Cash flow from operating activities | 59.1 | $-13.6$ | 747.9 | 213.6 |
| Data per share | ||||
| Earnings per share, including discontinued operations before dilution | ||||
| (SEK) | 0.91 | 0.64 | 3.99 | 3.14 |
| Earnings per share, including discontinued operations after dilution (SEK) |
0.91 | 0.63 | 3.97 | 3.13 |
| Equity per share (SEK) | 21.32 | 19.50 | 21.32 | 19.50 |
| Cash flow from operating activities per share before dilution (SEK) | 0.77 | $-0.18$ | 9.77 | 2.80 |
| Cash flow from operating activities per share after dilution (SEK) | 0.76 | $-0.18$ | 9.72 | 2.80 |
| Average number of shares | 77,226,502 | 76,173,115 | 76,548,031 | 76,173,115 |
| Average number of shares after dilution | 77,532,207 | 76,366,919 | 76,918,811 | 76,338,787 |
| Number of shares issued at end of period | 77,226,502 | 76,173,115 | 77,226,502 | 76,173,115 |
Dustin applies financial measures that are not defined under IFRS. Dustin believes that these financial measures provide the reader of the report with valuable information, and constitute a complement when assessing Dustin's performance. The performance measures that Dustin has chosen to present are relevant in relation to its operations and the Company's financial targets for growth, margins and capital structure and in terms of Dustin's dividend policy. The alternative performance measures are not
always comparable with those applied by other companies since these companies may have used different calculation methods. Definitions on page 27 present how Dustin defines its performance measures and the purpose of each performance measure. The data presented below is supplementary information from which all performance measures can be derived. The sources of Net working capital and Net debt are described on page 8.
| Q4 17/18 |
Q4 16/17 |
Full-year 17/18 |
Full-year 16/17 |
|
|---|---|---|---|---|
| All amounts in SEK million, unless otherwise indicated Organic growth |
||||
| Sales growth (%) | 15.9 | 11.0 | 12.1 | 4.6 |
| Acquired growth (%) | $-2.7$ | $-1.1$ | $-1.7$ | $-1.2$ |
| Currency effects in sales growth (%) | $-1.0$ | 0.3 | $-1.8$ | 1.0 |
| Organic sales growth (%) | 12.2 | 10.2 | 8.6 | 4.4 |
| Q4 | Q4 | Full-year | Full-year | |
| SMB | 17/18 | 16/17 | 17/18 | 16/17 |
| Organic growth | ||||
| Sales growth (%) | 38.9 | 19.6 | 23.9 | 11.9 |
| Acquired growth (%) | $-28.3$ | $-7.6$ | $-13.3$ | $-4.4$ |
| Currency effects in sales growth (%) | $-2.6$ | $-0.7$ | $-1.0$ | $-1.3$ |
| Organic sales growth (%) | 8.0 | 11.3 | 9.6 | 6.2 |
| Q4 | Q4 | Full-year | Full-year | |
| LCP | 17/18 | 16/17 | 17/18 | 16/17 |
| Organic growth | ||||
| Sales growth (%) | $-5.1$ | 16.7 | 1.9 | 14.0 |
| Acquired growth (%) | $-3.8$ | 0.0 | $-4.0$ | $-0.1$ |
| Currency effects in sales growth (%) | $-4.5$ | $-1.2$ | $-1.7$ | $-2.1$ |
| Organic sales growth (%) | $-13.4$ | 15.5 | $-3.8$ | 11.8 |
| Q4 | Q4 | Full-year | Full-year | |
| B 2 C | 17/18 | 16/17 | 17/18 | 16/17 |
| Organic growth | ||||
| Sales growth (%) | 3.6 | $-7.4$ | 8.6 | $-1.2$ |
| Acquired growth (%) | ||||
| Currency effects in sales growth (%) | $-2.5$ | $-0.7$ | $-0.7$ | $-1.5$ |
| Organic sales growth (%) | 1.1 | $-8.1$ | 7.9 | $-2.7$ |
| Q4 | Q4 | Full-year | Full-year | |
| EBITA | 17/18 | 16/17 | 17/18 | 16/17 |
| Operating profit | 107.3 | 73.7 | 443.8 | 349.5 |
| Depreciation and impairment of intangible assets | 15.1 | 17.4 | 57.8 | 69.3 |
| Items affecting comparability | $-3.6$ | 0.8 | $-1.0$ | 7.3 |
| EBITA | 118.8 | 91.9 | 500.6 | 426.1 |
| Q4 | Q4 | Full-year | Full-year | |
| EBITDA | 17/18 | 16/17 | 17/18 | 16/17 |
| Operating profit | 107.3 | 73.7 | 443.8 | 349.5 |
| Depreciation and impairment of tangible assets | 8.5 | 3.8 | 20.5 | 12.3 |
| Amortisation and impairment of intangible assets | 15.1 | 17.4 | 57.8 | 69.3 |
| Items affecting comparability | $-3.6$ | 0.8 | $-1.0$ | 7.3 |
| EBITDA | 127.3 | 95.6 | 521.2 | 438.4 |
| All amounts in SEK million, unless | Q4 | Q3 | Q 2 | Q1 | Q4 | Q3 | Q 2 | Q1 | Q4 |
|---|---|---|---|---|---|---|---|---|---|
| otherwise indicated | 17/18 | 17/18 | 17/18 | 17/18 | 16/17 | 16/17 | 16/17 | 16/17 | 15/16 |
| Net sales | 2,524.2 | 2,461.7 | 2,722.9 | 2,591.8 | 2,262.4 | 2,257.4 | 2,502.9 | 2,283.6 | 1,951.8 |
| Organic sales growth (%) | $-4.7$ | 1.6 | 1.7 | 8.8 | 12.2 | 9.2 | 8.7 | 4.4 | 10.2 |
| Gross margin (%) | 16.5 | 16.1 | 15.4 | 15.6 | 14.3 | 15.1 | 14.9 | 14.9 | 15.3 |
| Adjusted EBITA | 118.8 | 107.9 | 143.1 | 130.9 | 91.9 | 94.3 | 124.1 | 115.8 | 80.7 |
| Adjusted EBITA margin (%) | 4.7 | 4.4 | 5.3 | 5.1 | 4.1 | 4.2 | 5.0 | 5.1 | 4.1 |
| Net sales per segment | |||||||||
| LCP* | 1,230.1 | 1,261.5 | 1,444.1 | 1,348.4 | 1,296.1 | 1,228.0 | 1,440.7 | 1,219.8 | |
| SMB* | 1,154.4 | 1,051.3 | 1,109.6 | 1,059.8 | 831.1 | 897.2 | 909.2 | 893.2 | |
| B 2 B | 2,384.5 | 2,312.7 | 2,553.7 | 2,408.2 | 2,127.2 | 2,125.3 | 2.349.9 | 2,113.0 | 1,806.2 |
| B 2 C | 139.6 | 148.9 | 169.2 | 183.5 | 135.2 | 132.0 | 153.0 | 170.6 | 145.6 |
| Segment results | |||||||||
| LCP* | 74.1 | 74.3 | 93.4 | 88.8 | 76.5 | 83.9 | 106.1 | 88.9 | |
| SMB* | 131.7 | 118.9 | 135.7 | 121.8 | 90.6 | 92.3 | 97.0 | 97.6 | |
| B 2 B | 205.8 | 193.2 | 229.1 | 210.6 | 167.1 | 176.2 | 203.1 | 186.5 | 150.3 |
| B 2C | 7.2 | 7.9 | 8.4 | 7.9 | 8.1 | 4.9 | 5.9 | 5.5 | 5.6 |
| Segment margin (%) | |||||||||
| LCP* | 6.0 | 5.9 | 6.5 | 6.6 | 5.9 | 6.8 | 7.4 | 7.3 | |
| SMB * | 11.4 | 11.3 | 12.2 | 11.5 | 10.9 | 10.3 | 10.7 | 10.9 | |
| B 2 B | 8.6 | 8.4 | 9.0 | 8.7 | 7.9 | 8.3 | 8.6 | 8.8 | 8.3 |
| B 2 C | 5.2 | 5.3 | 5.0 | 4.3 | 6.0 | 3.7 | 3.9 | 3.3 | 3.8 |
| Central functions | |||||||||
| Central functions | $-94.3$ | $-93.2$ | $-94.4$ | $-87.5$ | $-83.3$ | $-86.8$ | $-84.9$ | $-76.2$ | $-75.2$ |
| Percentage of net sales | $-3.7$ | $-3.8$ | $-3.5$ | $-3.4$ | $-3.7$ | $-3.8$ | $-3.4$ | $-3.3$ | $-3.9$ |
* Comparative figures for the 2015/16 quarters have not been restated
| IFRS measures: | Definition/Calculation |
|---|---|
| Earnings per share | Net profit/loss in SEK in relation to average number of shares, according to IAS 33. |
| Alternative performance | ||
|---|---|---|
| measures: | Definition/Calculation | Purpose |
| Acquired growth | Net sales for the relevant period attributable to acquired and divested companies in relation to net sales for the comparable period. |
Acquired growth is eliminated in the calculation of organic growth. |
| Adjusted EBITA | EBIT according to the income statement before items affecting comparability and amortisation and impairment of intangible assets. |
Dustin believes that this performance measure shows the underlying earnings capacity and facilitates comparisons between quarters. |
| Adjusted EBITA margin | Adjusted EBITA in relation to net sales. | This performance measure is used to measure the profitability level of the operations. |
| Adjusted EBITDA | EBIT according to the income statement before items affecting comparability and amortisation/depreciation and impairment of intangible and tangible assets. |
Dustin believes that this performance measure shows the underlying earnings capacity and facilitates comparisons between quarters. |
| Capital employed | Working capital plus total assets, excluding goodwill and other intangible assets attributable to acquisitions, and interest- bearing receivables pertaining to finance leasing, at the end of the period. |
Capital employed measures utilization of capital and efficiency. |
| Cash flow from operating activities |
Cash flow from operating activities, after changes in working capital. |
Used to show the amount of cash flow generated from operating activities. |
| Cash flow from operating activities per share |
Cash flow from operating activities as a percentage of the average number of shares outstanding. |
Used to show the amount of cash flow generated from operating activities per share. |
| Currency effects | The difference between net sales in SEK for the comparative period and net sales in local currencies for the comparative period converted to SEK using the average exchange rate for the relevant period. |
Currency effects are eliminated in the calculation of organic growth. |
| EBIT | EBIT is a measurement of the company's earnings before income tax and financial items. |
This measure shows Dustin's profitability from operations. |
| Equity per share | Equity at the end of the period in relation to the number of shares at the end of the period. |
Shows Dustin's equity per share. |
| Equity/assets ratio | Equity at the end of the period in relation to total assets at the end of the period. |
Dustin believes that this measure provides an accurate view of the company's long-term solvency. |
|---|---|---|
| Gross margin | Gross profit in relation to net sales. | Used to measure product and service profitability. |
| Items affecting comparability |
Items affecting comparability relate to material income and expense items recognized separately due to the significance of their nature and amounts. |
Dustin believes that separate recognition of items affecting comparability increases comparability of EBIT over time. |
| Maintenance investments | Investments required to maintain current operations excluding financial leasing. |
Used to calculate operating cash flow. |
| Net debt | Current and non-current interest-bearing liabilities, excluding acquisition-related liabilities and shareholder loans, less cash and cash equivalents and receivables from finance leasing, at the end of the period. |
This performance measure shows Dustin's total liabilities adjusted for cash and cash equivalents. |
| Net debt/EBITDA | Net debt in relation to EBITDA. | This performance measure shows the company's ability to pay its debt. |
| Net working capital | Total current assets less cash and cash equivalents, current financial lease assets and current non-interest-bearing liabilities, at the end of the period. |
This performance measure shows Dustin's efficiency and capital tied up. |
| Operating cash flow | Adjusted EBITDA less maintenance investments plus cash flow from changes in working capital. |
Used to show the amount of cash flow generated from operating activities and available for payments in connection with dividends, interest and tax. |
| Organic growth | Growth in net sales for the relevant period adjusted for acquired and divested growth and currency effects. |
Provides a measure of the growth achieved by Dustin in its own right. |
| Return on equity | Net profit for the year in relation to equity at the end of the period. |
Dustin believes that this performance measure shows how profitable the company is for its shareholders. |
| Sales growth | Net sales for the relevant period in relation to net sales for the comparable period. |
Used to show the development of net sales. |
| Segment results | The segment's operating profit excluding amortization/depreciation and items affecting comparability. |
Dustin believes that this performance measure shows the earnings capacity of the segment. |
| Word/Term | Definition/Calculation |
|---|---|
| B 2 B | Pertains to all sales to companies and organizations. |
| B 2 C | Pertains to all sales to consumers. |
| Central functions | Includes all non-allocated central expenses, including amortization and depreciation, and excluding items affecting comparability. |
| Clients | Umbrella term for the product categories computers, mobile phones and tablets. |
| LCP | Pertains to all sales to large corporate and public sector. As a general rule, this segment is defined as companies and organizations with more than 500 employees or public sector operations. |
| LTI | Long-term incentive program that includes Group management and other key employees within Dustin. |
| SaaS | Software as a service (SaaS) is a type of cloud service that provides software over the Internet. |
| SMB | Pertains to all sales to small and medium-sized businesses. |
October 10, 2018
Extraordinary General Meeting in Stockholm
November 15, 2018 Annual Report for the period September 1, 2017-August 31, 2018
December 11, 2018 Annual General Meeting in Stockholm
January 9, 2019 Interim report for the first quarter September 1, 2018 - November 30, 2018
April 10, 2019 Interim report for the second quarter December 1, 2018 - February 28, 2019
July 3, 2019 Interim report for the third quarter March 1, 2019 - May 31, 2019
October 9, 2019 Year-end report September 1, 2018 - August 31, 2019
November 14, 2019 2018/19 Annual Report
December 11, 2019 2018/19 Annual General Meeting
Dustin Group AB Johan Karlsson, CFO [email protected] $+46708-67799$
Fredrik Sätterström. Head of Investor Relations [email protected] +46 705-10 10 22
This information is information that Dustin Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication at 8:00 a.m. CET on October 10, 2018.
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