Quarterly Report • Jul 4, 2018
Quarterly Report
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"Continued solid growth in SMB"
Financial key ratios
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| All amounts in SEK million, unless otherwise indicated |
17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Net sales | 2,461.7 | 2,257.4 | 7,776.3 | 7,043.8 | 10,038.7 | 9,306.2 |
| Organic sales growth (%) | 1.6 | 9.2 | 4.1 | 7.5 | 6.1 | 8.6 |
| Gross margin (%) | 16.1 | 15.1 | 15.7 | 15.0 | 15.4 | 14.8 |
| Adjusted EBITA | 107.9 | 94.3 | 381.9 | 334.2 | 473.8 | 426.1 |
| Adjusted EBITA margin (%) | 4.4 | 4.2 | 4.9 | 4.7 | 4.7 | 4.6 |
| EBIT | 97.5 | 72.0 | 336.5 | 275.8 | 410.2 | 349.5 |
| Profit for the period | 66.6 | 47.5 | 234.6 | 190.6 | 283.0 | 239.1 |
| Items affecting comparability* | 0.6 | -4.2 | -2.6 | -6.6 | -3.3 | -7.3 |
| Earnings per share, before dilution, (SEK) | 0.87 | 0.62 | 3.07 | 2.50 | 3.71 | 3.14 |
| Cash flow from operating activities | 221.1 | -22.6 | 688.8 | 227.1 | 675.2 | 213.55 |
| Net debt/adjusted EBITDA (multiple) | - | - | - | - | 2.0 | 2.3 |
| Return on equity (%) | - | - | - | - | 18.1 | 16.1 |
For definitions, refer to page 28.
* Refer to Note 4 Items affecting comparability for more information.
We reported strong sales and a positive margin trend for the third quarter. Net sales rose 9.0 per cent to SEK 2,462 million (2,257), driven by robust growth in the SMB segment (Small and Medium-sized Businesses). Growth in the LCP segment (Large Corporates and Public sector) was hampered by continued low market activity and our selective approach to lower margin volume transactions. The gross margin rose to 16.1 per cent (15.1) and the adjusted EBITA margin increased to 4.4 per cent (4.2). Much of the margin increase was attributable to an improved product mix with a larger share of advanced products and services. Furthermore, a more favourable balance in sales between the SMB and LCP segments had a positive impact.
Despite a strong comparative quarter last year, sales growth for the quarter amounted to 9.0 per cent, of which 1.6 per cent was organic. The SMB segment demonstrated continued strong growth of 17.2 per cent, of which 9.4 per cent was organic. The LCP segment demonstrated more modest growth of 2.7 per cent, of which a negative 5.0 per cent was organic, with the favourable performance in the Large Corporate customer group unable to fully compensate for the continued poor development in the Public Sector customer group. The B2C segment (consumer market) continued its positive trend with solid growth during the financial year's third quarter.
The gross margin increased to 16.1 per cent (15.1) during the quarter while adjusted EBITA rose by SEK 14 million to SEK 108 million. The adjusted EBITA margin improved to 4.4 per cent (4.2). The margin improvement was mainly 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. A continued favourable sales trend for proprietary products, such as cables and adapters, also made a positive contribution.
During the quarter, we further broadened our portfolio of advanced products and services through agreements to acquire Swedish DAV Partner and Finnish ITaito. DAV Partner is specialised in audio/video solutions and conference systems, mainly in the public sector, and complements our previous acquisition of JML System. ITaito has a broad offering in managed services, cloud services, security and data centres, which significantly strengthens our customer offering to small and mediumsized businesses in Finland. We have a clear intention to
continue expanding our portfolio and are continuously seeking suitable acquisition candidates to strengthen our existing operations.
We see great potential in continuously broadening and developing our offering of advanced services and solutions, to strengthen customer loyalty and to improve our margins. It is encouraging to note that in early June we were awarded a contract by Norwegian public service company, NRK, for cloud-based services in the form of back-up and storage. It is a milestone for us to secure a service agreement of this magnitude and with a company that makes substantial demands on smart technological solutions and high security. During the quarter, we also announced that strengthened Group Management with a new head of services and solutions.
We are well positioned in a growing market and are benefiting from trends, such as an accelerating online market and strong growth in mobility, security and cloudbased services. Through our acquisitions, in combination with a higher share of sales of proprietary products and managed services, we will continue to improve profitability and further strengthen customer loyalty through a higher percentage of subscription services.
To summarise, Dustin performed well during the third quarter and our positive view of our future stands firm. The combination of a more advantageous product mix with a larger share of advanced products and services together with a more favourable balance in sales between the SMB and LCP segments resulted in a significant strengthening of margins. We have a solid financial position and are well positioned for continued profitable expansion, both organically and via acquisitions. As the leading IT reseller to the B2B market in the Nordic region, we can further consolidate our position though the continued development of our product and service offering together with proactive sustainability efforts.
Nacka, July 2018
Thomas Ekman President and CEO
Dustin is a leading Nordic IT reseller, with a wide range of hardware, software and related services and solutions. Our centralised warehouse and efficient logistics platform ensure fast and reliable delivery. The addition of high-level IT expertise and competitive prices enables us to meet the needs of primarily small and medium-sized businesses, but also large corporates, the public sector and the B2C market.
Dustin employs a multichannel model where the majority of sales take place online, supplemented by relationshipbased and consultative selling over the telephone or through customer visits. Dustin conducts operations in Sweden, Denmark, Finland and Norway through three business segments: SMB (small and medium-sized businesses), LCP (large corporate and public sector) and B2C (the business-to-consumer market). These segments are in turn supported by several scalable and shared central functions, including the online platform, purchasing, warehousing and logistics, pricing, marketing, IT and HR.
As one of the leading B2B e-retailer in the Nordic region, Dustin is well positioned in the market thanks to its efficient online platform, with more and more sales of both products and core services now taking place online. Our market position is also strengthened by our focus on the more agile and fast-growing customer category of small and medium-sized businesses. We see increasing demand for advanced services as requests for mobility and accessibility grow. By combining products and services into integrated solutions, and by adding advanced services through acquisitions, we are continuously expanding our customer offering. We are able to solve more and more of our customers' IT needs, which is in line with our vision. Our range of packaged services and solutions includes clients, licenses, network, data storage, security, IT operations, mobility and print.
Dustin Group AB is a Swedish public limited company with its head office in Nacka Strand. The share was listed on Nasdaq Stockholm's Mid Cap Index in 2015.
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.
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.
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 in highrisk countries before 2020.
Dustin will reduce the company's climate impact by 40 per cent by 2020, compared with 2014/15.
Responsible use of resources Dustin will have recovered 140,000 sold products by 2020.
Business ethics and anti-corruption 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.
Equality and diversity By 2020, each gender is to make up at least 40 per cent of the entire organisation.
Dustin performed five 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 91 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 5,023 sold products were recovered during the period. Of these, 4,564 were reused and 459 recycled. At the end of the third quarter, we are ahead of schedule and have recovered a total of 48,185 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 March – May 2018.
Net sales for the quarter increased 9.0 per cent to SEK 2,462 million (2,257). Organic growth amounted to 1.6 per cent (9.2), of which SMB accounted for 9.4 per cent (5.1), LCP negative 5.0 per cent (pos: 14.8) and B2C for 10.9 per cent (neg: 7.8). Acquired growth was 4.7 percentage points (2.4) and exchange-rate differences had a positive impact of 2.7 percentage points (1.9).
During the quarter, gross profit rose SEK 55 million, corresponding to 16.2 per cent, to SEK 396 million (341). The gross margin rose to 16.1 per cent (15.1), mainly attributable to a more advantageous product mix with a higher share of services and solutions, primarily due to earlier acquisitions.
Adjusted EBITA for the quarter increased 14.4 per cent to SEK 108 million (94). The adjusted EBITA margin was 4.4 per cent (4.2). Adjusted EBITA excludes items affecting comparability of SEK 0.6 million (neg: 4.2), which are specified in Note 4 Items affecting comparability. For a comparison of adjusted EBITA and EBIT, see Note 2 Segments.
Operating profit totalled SEK 98 million (72). Operating profit includes items affecting comparability of SEK 0.6 million (neg: 4.2), which for the quarter mainly comprised acquisition and divestment-related expenses of a negative SEK 5.8 million and a positive effect from a change to an acquisition-related liability of SEK 7.3 million. For more information, refer to Note 4 Items affecting comparability.
Financial expenses amounted to SEK 12 million (10), with the costs for the quarter primarily pertaining to costs of SEK 11 million (10) for external financing. Other financial expenses relate primarily to discounting of acquisitionrelated liabilities. Financial income amounted to SEK 0.3 million (0.3).
The tax expense for the quarter was SEK 19 million (14), corresponding to an effective tax rate of 22.3 per cent (23.3).
Profit for the quarter amounted to SEK 67 million (47). Earnings per share amounted to SEK 0.87 (0.62) before dilution and SEK 0.87 (0.62) after dilution.
Cash flow for the quarter was SEK 251 million (neg: 183).
Cash flow from operating activities amounted to SEK 221 million (neg: 23), of which SEK 155 million (neg: 67) was attributable to changes in working capital with the positive effect mainly related to higher accounts payable. Accounts payable increased as a result of higher inventory purchases and were impacted, as in prior periods, by advantageous payment terms. These terms pertain to an agreement with a supplier and apply until further notice. For further information regarding working capital, refer to the Net working capital section.
Cash flow from investing activities amounted to a negative SEK 12 million (neg: 159). Investments in tangible and intangible assets amounted to a negative SEK 12 million (neg: 10), of which a negative SEK 8 million (neg: 5) pertained to IT development.
Cash flow from financing activities amounted to SEK 42 million (neg: 0.5) and mainly comprised cash flow effects from long-term incentive (LTI) programmes.
Dustin has signed an agreement to acquire the Gothenburg-based DAV Partner, which is specialised in audio/video solutions and conference systems, with a focus on the public sector. The acquisition complements JML System, which was acquired in the autumn of 2017. DAV Partner reported sales of approximately SEK 74 million during the 2017 financial year. The company will be consolidated in the fourth quarter and will operate under its own brand until further notice.
Dustin has signed an agreement to acquire ITaito, a Finnish supplier of IT services, focusing on small and mediumsized businesses. ITaito has a broad offering in managed services, cloud services, security and data centres. The company was founded in 2008 and reported sales of approximately EUR 5.7 million during the 2017 financial year. The company has 26 employees with offices in Vantaa outside Helsinki. The company will be consolidated in the fourth quarter and will operate under its own brand until further notice.
Alexandra Drevenlid has joined Dustin's Group Management with responsibility for the Group's range of services and solutions. Alexandra joins us from her role as Chief Digital Officer at Tieto and will take up the new position not later than October 2018.
During the quarter, new shares were issued through the exercise of warrants received under LTI 2015 (refer to the 2016/17 Annual Report, page 40 for more information). In total, the number of shares increased by 822,074, corresponding to an increase in share capital of SEK 4 million, while SEK 39 million was recognised as the share premium reserve. The newly issued shares resulted in dilution of 1.1 per cent. Following the issue during the quarter, no outstanding warrants now remain within LTI 2015.
Net sales for the period rose 10.4 per cent to SEK 7,776 million (7,044). Organic growth amounted to 4.1 per cent (7.5), of which SMB accounted for 9.9 per cent (4.8), LCP for negative 0.6 per cent (pos: 10.5) and B2C for 10.0 per cent (neg: 0.9). Acquired growth was 5.6 percentage points (1.4) and exchange-rate differences had a positive impact of 0.7 percentage points (2.0).
During the period, gross profit rose SEK 164 million, corresponding to 15.6 per cent, to SEK 1,219 million (1,055). The gross margin rose to 15.7 per cent (15.0), mainly attributable to a more advantageous sales mix with a higher share of advanced products, services and solutions, primarily due to earlier acquisitions.
During the period, adjusted EBITA rose 14.3 per cent to SEK 382 million (334). The adjusted EBITA margin was 4.9 per cent (4.7). Adjusted EBITA excludes items affecting comparability of a negative SEK 3 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 337 million (276). Operating profit includes items affecting comparability amounting to a negative SEK 3 million (neg: 7), see Note 4 Items affecting comparability.
Financial expenses amounted to SEK 36 million (32), with the costs for the period primarily pertaining to total costs of SEK 32 million (28) for external financing.
Financial income in the period amounted to SEK 1 million (1).
The tax expense for the period was SEK 67 million (54), corresponding to an effective tax rate of 22.2 per cent, compared with 22.2 per cent in the year-earlier period.
Profit for the period amounted to SEK 235 million (191). Earnings per share amounted to SEK 3.07 (2.50) before dilution and SEK 3.06 (2.50) after dilution.
Cash flow for the period was SEK 352 million (neg: 150). During the period, dividends were paid to shareholders in the amount of negative SEK 213 million (neg: 183).
Cash flow from operating activities amounted to SEK 689 million (227), of which SEK 416 million (neg: 18) 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 468 million (193), with the change primarily attributable to accounts payable. Accounts payable increased as a result of higher inventory purchases and were impacted, as in prior periods, by advantageous payment terms. These terms pertain to an agreement with a supplier and apply until further notice. For further information regarding working capital, refer to the Net working capital section.
Cash flow from investing activities amounted to a negative SEK 388 million (neg: 191), primarily attributable to acquisitions of operations. The purchase consideration paid in the period for Danish company Norriq's business area for hosting and outsourcing IT services amounted to SEK 141 million, for the Norwegian company Core Services AS to SEK 104 million and for JML-System AB to SEK 107 million. Investments in tangible and intangible assets amounted to a negative SEK 30 million (neg: 22), of which a negative SEK 18 million (neg: 14) pertained to IT development.
Cash flow from financing activities amounted to SEK 52 million (neg: 186) and relates primarily to dividends to shareholders of a negative SEK 213 million (neg: 183), newly raised loans of SEK 215 million (-), the cash flow effect from the LTI programme of SEK 55 million (2) and costs for raising loans of a negative SEK 2 million (neg: 3).
Net working capital amounted to a negative SEK 237 million (pos: 35) at the end of the period. The low level of working capital at the end of the period was attributable to higher accounts payable due to more favourable payment terms and higher inventory purchases. The increase in inventories compared with the year-earlier period is due to two large customer deliveries scheduled for shortly after the balance-sheet date and to rising sales volumes.
| SEK million | May 31, 2018 |
May 31, 2017 |
Aug 31, 2017 |
|---|---|---|---|
| Inventories | 393.2 | 297.8 | 261.9 |
| Accounts receivable | 1,090.1 | 1,038.8 | 1,047.1 |
| Tax assets, other current receivables, as well as prepaid expenses and accrued income |
190.0 | 197.5 | 173.7 |
| Accounts payable | -1,436.0 | -1,063.3 | -956.3 |
| Tax liabilities, other current liabilities and accrued expenses and |
|||
| deferred income | -474.2 | -435.7 | -408.2 |
| Net working capital | -236.9 | 35.0 | 118.1 |
At the end of the period, net debt amounted to SEK 968 million (997). In total, cash and cash equivalents amounted to SEK 408 million (91), up SEK 317 million. At the end of the quarter, there was also an unutilised overdraft facility of SEK 270 million (270) and a credit facility of SEK 174 million (400).
Net debt in relation to adjusted EBITDA was 2.0 (2.3), measured over the past 12-month period.
| SEK million | May 31, 2018 |
May 31, 2017 |
Aug 31, 2017 |
|---|---|---|---|
| Non-current liabilities | 1,366.1 | 1,085.5 | 1,068.6 |
| Finance lease liabilities Cash and cash |
9.3 | 2.0 | 1.2 |
| equivalents | -407.9 | -90.8 | -71.5 |
| Net debt | 967.5 | 996.7 | 998.3 |
The average number of full-time employees was 1,044 during the period, compared with 957 in the year-earlier period. The increase is attributable acquisitions.
During the spring, Dustin negotiated a new financing agreement. The new credit volume is SEK 2 billion. The new agreement means the existing loan agreement will be discontinued prematurely and Dustin will therefore expense the remaining borrowing expenses brought forward of approximately SEK 14 million in the fourth quarter. The new bank agreement entails lower interest expenses.
As part of the new financing structure, Dustin resolved during the autumn to initiate a commercial paper program of SEK 750 million to further reduce interest expenses.
Dustin won a procurement of cloud-based services in form of back-up and storage with Norwegian public service company NRK. The agreement expires over three years with the possibility of extension for a further two years and comprises 20 of NRK's data centres in Norway.
On 13 June, 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 will evaluate its deferred tax liability and deferred tax assets based on new tax rates. The estimated effect is that the deferred tax in the balance sheet will decrease by approximately SEK 4.5 million and will have a corresponding positive effect in the income statement.
Dustin has won the award decision for a new framework agreement via the Danish government, municipalities and regions (Staten og Kommunernes Indkøbsservice (SKI)). The annual value is estimated at approximately DKK 500 million. The agreement covers computers and accessories and extends over a two-year period with an option for a two-year extension. The contract period start in September 2018. The tender can be subject to appeal.
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 quarter amounted to SEK 0.3 million (0.3) and profit for the period totalled SEK 216 (loss: 35). 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 78 million (neg: 17). The net currency position is attributable to the external financing. The Group applies hedge accounting, whereby the net currency position is recognized against equity.
Dustin has a structured and Group-wide process to identify, classify, manage and monitor a number of strategic, operative and external risks.
• Strategic risks are normally identified in conjunction with risk discussions connected to a strategic initiative. These risks include acquisition and integration projects and the preparation of profitable and attractive customer offerings.
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 May 31. 2018, the price was SEK 81.50 per share (74.00), representing a total market capitalization of SEK 6 294 million (5 637).
At the end of the quarter, the company had a total of 6,695 shareholders (5,290). The company's three largest shareholders were Axel Johnson AB with 24.7 per cent. Swedbank Robur Fonder with 11.2 per cent and Capital Group with 5.5 percent as of May 31. 2018. Dustin's shareholder register with the largest shareholders is presented on the company's website.
During the period, LTI 2015 were exercised, and the number of shares thus increased from 76.173.115 to 76.226.502. As a result, the share capital increased by SEK 5 million and the share premium reserve by SEK 50 million.
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].
In accordance with the decision at Dustin's general meeting in December 2017 the following members of the Nomination Committee have been appointed based on the ownership structure as of March 31, 2018.
Shareholders who wish to submit proposals to the Nomination Committee can send them by post to: Dustin Group AB (publ), Attn: Sara Edlund, Box 1194, 131 27 Nacka Strand, Sweden or by e-mail to: [email protected].
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.
| Q3 | Q3 | Change | Q1-Q3 | Q1-Q3 | Change | Rolling | Full year | Change | |
|---|---|---|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | % | 17/18 | 16/17 | % | 12 months | 16/17 | % |
| Net sales | 1,051.3 | 897.2 | 17.2 | 3,213.7 | 2,699.7 | 19.0 | 4,044.8 | 3,530.8 | 14.6 |
| Segment results | 118.9 | 92.3 | 28.8 | 376.0 | 286.9 | 31.0 | 466.5 | 377.5 | 23.6 |
| Segment margin (%) | 11.3 | 10.3 | - | 11.7 | 10.6 | - | 11.5 | 10.7 | - |
Net sales rose 17.2 per cent in total during the quarter to SEK 1,051 million (897), with 5.8 percentage points of the increase compared with the year-earlier quarter attributable to acquisitions and divestments. The divestment of IT-Hantverkarna had a negative effect on net sales of approximately SEK 25 million, corresponding to 2.8 percentage points. Organic sales growth was 9.4 per cent (5.1) during the quarter and were mainly attributable to strong sales in the TV & multimedia, infrastructure and mobile phone product categories, predominantly in Sweden and Denmark.
During the quarter, profit for the segment rose 28.8 per cent, corresponding to SEK 27 million, to SEK 119 million (92). 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 was 11.3 per cent (10.3). Our investments in advanced products and services continued and, for example, the customer base for SaaS configurations via the cloud platform increased to 1,270 active customers (903), corresponding to 48,021 users (24,141) at the end of the third quarter.
| Q3 | Q3 | Change | Q1-Q3 | Q1-Q3 | Change | Rolling | Full-year | Change | |
|---|---|---|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | % | 17/18 | 16/17 | % 12 months | 16/17 | % | |
| Net sales | 1,261.5 | 1,228.0 | 2.7 | 4,060.6 | 3,888.5 | 4.4 | 5,356.7 | 5,184.6 | 3.3 |
| Segment results | 74.3 | 83.9 | -11.5 | 257.2 | 278.9 | -7.8 | 333.8 | 355.4 | -6.1 |
| Segment margin. % | 5.9 | 6.8 | - | 6.3 | 7.2 | - | 6.2 | 6.9 | - |
Net sales for the quarter rose 2.7 per cent to SEK 1,262 million (1,228). Organic growth was negative at 5.0 per cent (pos: 14.8) and was partially attributable to a very strong trend in the year-earlier quarter and the decision to refrain from a greater share of procurements with low margins under certain framework agreements for the public sector, mainly in Finland and Denmark. The quarter was characterised by a robust performance in the Large Corporate customer group in all markets.
Profit for the segment was SEK 74 million (84), which was a decline compared with the corresponding period in the preceding year. The segment margin was 5.9 per cent (6.8), with the decrease mainly attributable to a higher share of recently signed contracts with a lower average margin.
Acquisitions carried out earlier had a neutral effect on the segment margin during the quarter.
| Q3 | Q3 | Change | Q1-Q3 | Q1-Q3 | Change | Rolling | Full-year | Change | |
|---|---|---|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | % | 17/18 | 16/17 | % | 12 months | 16/17 | % |
| Net sales | 148.9 | 132.0 | 12.8 | 502.0 | 455.6 | 10.2 | 637.2 | 590.8 | 7.9 |
| Segment results | 7.9 | 4.9 | 60.7 | 23.9 | 16.4 | 45.5 | 32.0 | 24.6 | 30.4 |
| Segment margin. % | 5.3 | 3.7 | - | 4.8 | 3.6 | - | 5.0 | 4.2 | - |
Net sales for the quarter increased 12.8 per cent to SEK 149 million (132). Organic growth was 10.9 per cent (neg: 8.0). The quarter was positively impacted by increased sales in Denmark, Norway and Finland, primarily in the consumer electronics and mobile phones product categories.
The segment results for the quarter increased to SEK 8 million (5) and the segment margin rose to 5.3 per cent (3.7).
| Q3 | Q3 | Change | Q1-Q3 | Q1-Q3 | Change | Rolling | Full-year | Change | |
|---|---|---|---|---|---|---|---|---|---|
| SEK Million | 17/18 | 16/17 | % | 17/18 | 16/17 | % | 12 months | 16/17 | % |
| Costs for central functions | -93.2 | -86.8 | 7.4 | -275.2 | -248.0 | 11.0 | -358.5 | -331.3 | 8.2 |
| Costs in relation to net sales (%) | -3.8 | -3.8 | - | -3.5 | -3.5 | - | -3.6 | -3.6 | - |
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 third quarter for central functions amounted to 3.8 per cent (3.8) of sales.
Costs for central functions amounted to SEK 93 million (87), 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 21, and to Segment information by quarter on page 27.
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, July 4, 2018
Thomas Ekman. CEO In accordance with authorization by the Board of Directors
We have reviewed the condensed interim report for Dustin Group AB as at May 31, 2018 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 International 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 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 respects, 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, July 4, 2018
Ernst & Young AB
Jennifer Rock-Baley, Authorised Public Accountant
| Note 17/18 16/17 17/18 16/17 12 months SEK million |
16/17 |
|---|---|
| Net sales 2 2,461.7 2,257.4 7,776.3 7,043.8 10,038.7 |
9,306.2 |
| Cost of goods and services sold -2,065.7 -1,916.7 -6,556.9 -5,988.9 -8,494.7 |
-7,926.7 |
| Gross profit 395.9 340.7 1,219.4 1,054.9 1,544.0 |
1,379.5 |
| Selling and administrative expenses -296.6 -262.8 -871.8 -768.6 -1,119.5 |
-1,016.3 |
| Items affecting comparability 4 0.6 -4.2 -2.6 -6.6 -3.3 |
-7.3 |
| Other operating income 2.4 1.1 5.1 4.6 6.4 |
5.9 |
| Other operating expenses -4.9 -2.8 -13.5 -8.5 -17.3 |
-12.3 |
| EBIT 2 97.5 72.0 336.5 275.8 410.2 |
349.5 |
| Financial income and other similar income-statement | |
| items 0.3 0.3 0.8 0.9 1.1 |
1.2 |
| Financial expenses and other similar income-statement | |
| items -12.0 -10.4 -35.8 -31.6 -46.8 |
-42.6 |
| Profit after financial items 85.8 61.9 301.6 245.1 364.6 |
308.1 |
| Tax -19.1 -14.4 -67.0 -54.5 -81.5 |
-69.0 |
| Profit for the period 66.6 47.5 234.6 190.6 283.0 |
239.1 |
| Other comprehensive income (all items will be transferred to the income statement) |
|
| Translation differences 20.9 -0.4 64.1 16.5 44.3 |
-3.2 |
| Change in hedging reserves -34.5 1.8 -74.9 -10.5 -53.8 |
10.6 |
| Tax attributable to change in hedging reserves 7.6 -0.4 16.5 2.3 11.8 |
-2.3 |
| Other comprehensive income -6.0 1.0 5.6 8.4 2.3 |
5.1 |
| Comprehensive income, in its entirety attributably to 60.6 48.4 240.2 199.0 285.4 |
244.1 |
| Parent Company shareholders | |
| Earnings per share before dilution (SEK) 0.87 0.62 3.07 2.50 3.71 |
3.14 |
| Earnings for per share after dilution (SEK) 0.87 0.62 3.06 2.50 3.69 |
3.13 |
| SEK million | Note | May 31. 2018 |
May 31. 2017 |
Aug 31. 2017 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Goodwill | 2,622.4 | 2,119.3 | 2,105.8 | |
| Other intangible assets attributable to acquisitions | 381.8 | 369.6 | 357.9 | |
| Other intangible assets | 5 | 114.5 | 118.0 | 115.1 |
| Tangible assets | 5 | 34.6 | 26.5 | 24.6 |
| Divestment-related receivables | 8 | 1.6 | - | - |
| Deferred tax assets | 3.5 | 8.9 | 8.4 | |
| Other non-current assets | 4.8 | 3.0 | 2.9 | |
| Total non-current assets | 3,163.2 | 2,645.2 | 2,614.7 | |
| Current assets | ||||
| Inventories | 393.2 | 297.8 | 261.9 | |
| Accounts receivable | 1,090.1 | 1,038.8 | 1,047.1 | |
| Tax assets | 7.5 | 5.6 | 7.6 | |
| Other receivables | 3.6 | 4.8 | 7.7 | |
| Prepaid expenses and accrued income | 178.9 | 187.1 | 158.5 | |
| Divestment-related receivables | 8 | 5.0 | - | - |
| Cash and cash equivalents | 407.9 | 90.8 | 71.5 | |
| Total current assets | 2,086.2 | 1,624.8 | 1,554.1 | |
| TOTAL ASSETS | 5,249.4 | 4,270.0 | 4,168.8 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Equity attributable to Parent Company shareholders | 1,566.6 | 1,440.0 | 1,485.1 | |
| Total equity | 1,566.6 | 1,440.0 | 1,485.1 | |
| Non-current liabilities | ||||
| Deferred tax and other long-term provisions | 137.5 | 126.2 | 133.3 | |
| Liabilities to credit institutions | 1,366.1 | 1,085.5 | 1,068.6 | |
| Acquisition-related liabilities | 8 | 162.2 | 78.5 | 78.3 |
| Derivative instruments | 8 | 6.0 | - | 6.5 |
| Total non-current liabilities | 1,671.8 | 1,290.2 | 1,286.6 | |
| Current liabilities | ||||
| Accounts payable | 1,436.0 | 1,063.3 | 956.3 | |
| Tax liabilities | 34.5 | 54.6 | 59.3 | |
| Derivative instruments | 8 | 0.0 | 7.2 | 0.1 |
| Other current liabilities | 133.1 | 109.7 | 115.1 | |
| Acquisition-related liabilities | 8 | 91.4 | 31.6 | 31.3 |
| Accrued expenses and deferred income | 315.9 | 273.5 | 235.0 | |
| Total current liabilities | 2,010.9 | 1,539.9 | 1,397.1 | |
| TOTAL EQUITY AND LIABILITIES | 5,249.4 | 4,270.0 | 4,168.8 |
| May 31, | May 31, | Aug 31, | |
|---|---|---|---|
| SEK million | 2018 | 2017 | 2017 |
| Opening balance, September 1 | 1,485.1 | 1,422.2 | 1,422.2 |
| Profit for the period | 234.6 | 190.6 | 239.1 |
| Other comprehensive income | |||
| Translation differences | 64.1 | 16.5 | -3.2 |
| Cash-flow hedging | -74.9 | -10.5 | 10.6 |
| Tax attributable to cash-flow hedges | 16.5 | 2.3 | -2.3 |
| Total other comprehensive income | 5.6 | 8.4 | 5.1 |
| Total comprehensive income | 240.2 | 199.0 | 244.1 |
| Dividends | -213.3 | -182.8 | -182.8 |
| Holdings of own warrants | -5.9 | - | - |
| New share issue | 55.4 | - | - |
| Subscription with the support of warrants | 5.1 | 1.6 | 1.6 |
| Total transactions with shareholders | -158.7 | -181.2 | -181.2 |
| Closing equity as per the balance-sheet date, attributable to Parent Company shareholders in its entirety |
1,566.6 | 1,440.0 | 1,485.1 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Full-year | ||
|---|---|---|---|---|---|---|
| SEK million | Note | 17/18 | 16/17 | 17/18 | 16/17 | 16/17 |
| Operating activities | ||||||
| Profit before financial items | 97.5 | 72.0 | 336.5 | 275.8 | 349.5 | |
| Adjustment for non-cash items | 8.0 | -1.7 | 40.3 | 39.5 | 58.1 | |
| Interest received | 0.3 | 0.3 | 0.8 | 0.9 | 1.2 | |
| Interest paid | -8.8 | -8.0 | -26.1 | -25.6 | -27.4 | |
| Income tax paid | -30.6 | -18.6 | -86.0 | -45.9 | -57.9 | |
| Cash flow from operating activities before | 66.4 | 44.0 | 265.6 | 244.7 | 323.4 | |
| changes in working capital | ||||||
| Decrease (+)/increase (-) in inventories | -78.0 | 7.5 | -119.5 | -62.8 | -28.5 | |
| Decrease (+)/increase (-) in receivables | 66.8 | 84.1 | 74.5 | -148.3 | -143.8 | |
| Decrease (-)/increase (+) in current liabilities | 166.0 | -158.2 | 468.2 | 193.5 | 62.5 | |
| Cash flow from changes in working capital | 154.7 | -66.6 | 423.3 | -17.6 | -109.9 | |
| Cash flow from operating activities | 221.1 | -22.6 | 688.8 | 227.1 | 213.6 | |
| Investing activities | ||||||
| Acquisition of intangible assets | 5 | -8.9 | -6.0 | -20.0 | -14.5 | -18.1 |
| Acquisition of tangible assets | 5 | -3.2 | -3.9 | -9.9 | -7.3 | -9.2 |
| Acquisition of operations | 3 | - | -122.9 | -320 | -142.7 | -147.2 |
| Divestment of operations | - | - | 1.5 | - | - | |
| Contingent consideration paid | - | -26.6 | -39.9 | -26.6 | -26.6 | |
| Cash flow from investing activities | -12.1 | -159.4 | -388.3 | -191.2 | -201.0 | |
| Financing activities | ||||||
| Cash flow from LTI program | 43.2 | - | 54.6 | 1.6 | 1.6 | |
| Dividend | - | - | -213.3 | -182.8 | -182.8 | |
| New loans raised | - | - | 215.2 | - | - | |
| Paid bank arrangement fees | - | - | -1.9 | -3.3 | -3.3 | |
| Change in financial leasing liability | -1.2 | -0.5 | -2.9 | -1.2 | -1.6 | |
| Cash flow from financing activities | 42.0 | -0.5 | 51.7 | -185.7 | -186.1 | |
| Cash flow for the period | 251.0 | -182.5 | 352.2 | -149.8 | -173.6 | |
| Cash and cash equivalents at beginning of period | 159.5 | 274,0 | 71.5 | 242.9 | 242.9 | |
| Cash flow for the period | 251.0 | -182.5 | 352.2 | -149.8 | -173.6 | |
| Exchange-rate differences in cash and cash | -2.5 | -0.7 | -15.8 | -2.3 | 2.2 | |
| equivalents | ||||||
| Cash and cash equivalents at the end of the period | 408.0 | 90,8 | 407.9 | 90.8 | 71.5 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Net sales | 0.1 | 0.1 | 0.3 | 0.3 | 0.4 | 0.4 |
| Selling and administrative expenses | -2.2 | -2.4 | -9.7 | -8.8 | -11.2 | -10.4 |
| Other operating expenses | 0.0 | 0.0 | -0.1 | 0.0 | -0.1 | 0.0 |
| EBIT | -2.1 | -2.3 | -9.4 | -8.5 | -10.9 | -10.0 |
| Financial income and other similar income-statement items | 4.2 | 2.5 | 312.4 | 17.5 | 314.9 | 20.0 |
| Financial expenses and other similar income-statement items | -39.7 | -9.0 | -110.4 | -54.3 | -102.1 | -45.9 |
| Profit/Loss after financial items | -37.6 | -8.7 | 192.6 | -45.3 | 202.0 | -35.9 |
| Appropriations | - | - | 0.0 | - | 212.4 | 212.4 |
| Tax | 8.3 | 1.9 | 23.6 | 10.0 | -25.2 | -38.8 |
| Profit/Loss for the period | -29.4 | -6.8 | 216.2 | -35.3 | 389.2 | 137.6 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Profit/Loss for the period | -29.4 | -6.8 | 216.2 | -35.3 | 389.2 | 137.6 |
| Other comprehensive income | - | - | - | - | - | - |
| Comprehensive income for the period | -29.4 | -6.8 | 216.2 | -35.3 | 389.2 | 137.6 |
| SEK million | May 31, 2018 |
May 31, 2017 |
Aug 31, 2017 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Participations in Group companies | 1,211.6 | 1,211.6 | 1,211.6 |
| Total non-current assets | 1,211.6 | 1,211.6 | 1,211.6 |
| Current assets | |||
| Receivables from Group companies | 602.8 | 379.9 | 619.9 |
| Tax assets | 26.3 | 1.2 | 0.6 |
| Prepaid expenses and accrued income | 1.7 | 6.3 | 6.3 |
| Other receivables | 0.1 | 0.2 | 0.2 |
| Cash and bank balances | 355.8 | 22.3 | 42.9 |
| Total current assets | 986.7 | 409.9 | 669.8 |
| TOTAL ASSETS | 2,198.2 | 1,621.5 | 1,881.4 |
| EQUITY AND LIABILITIES | |||
| Restricted equity | |||
| Share capital | 386.1 | 380.9 | 380.9 |
| Total restricted equity | 386.1 | 380.9 | 380.9 |
| Non-restricted equity | |||
| Share premium reserve | 438.3 | 388.1 | 388.1 |
| Retained earnings | -322.0 | -251.5 | -251.5 |
| Profit/Loss for the period | 216.2 | -35.3 | 137.6 |
| Total non-restricted equity | 332.5 | 101.4 | 274.3 |
| Total equity | 718.6 | 482.3 | 655.2 |
| Untaxed reserves | 109.4 | 50.6 | 109.4 |
| Non-current liabilities | |||
| Non-current liabilities to credit institutions | 1,366.1 | 1,085.5 | 1,068.6 |
| Total non-current liabilities | 1,366.1 | 1,085.5 | 1,068.6 |
| Current liabilities | |||
| Accounts payable | 0.0 | 1.2 | 0.2 |
| Tax liabilities | - | - | 45.1 |
| Other current liabilities | 0.3 | - | 0.3 |
| Accrued expenses and deferred income | 3.8 | 1.9 | 2.6 |
| Total current liabilities | 4.1 | 3.2 | 48.2 |
| TOTAL EQUITY AND LIABILITIES | 2,198.2 | 1,621.5 | 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 during last quarter.
The Parent Company applies the Swedish Annual Accounts Act, and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.
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.
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 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 not impact the recognition of financial instruments, but will primarily affect disclosures and categorization. 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 is to be applied from January 1, 2018, which for Dustin means the financial year beginning September 1, 2018. During the preceding financial year, Dustin began working to identify the effects of the standard with respect to revenue recognition and disclosure requirements. This process included a review of existing customer contracts, the categorization of revenue and the establishment of procedures for ensuring compliance with the standard. While Dustin has not yet completed its analysis of the impact of the new regulations on the Group's financial statements, the majority of Dustin's current revenue comprises product sales for which current revenue recognition under IAS 18 Revenue corresponds in all material respects to IFRS 15 Revenue from Contracts with Customers. A project to comprehensively identify all of the effects for the Group is under way, but a preliminary assessment has shown that the effects will not be material from a financial perspective.
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 recognized 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 recognized 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.
This report has been prepared in SEK million, unless otherwise stated. Rounding-off differences may occur in this report.
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| All amounts in SEK million. unless otherwise indicated | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Net sales | ||||||
| LCP | 1,261.5 | 1,228.1 | 4,060.6 | 3,888.5 | 5,356.7 | 5,184.6 |
| SMB | 1,051.3 | 897.3 | 3,213.7 | 2,699.7 | 4,044.8 | 3,530.8 |
| B2C | 148.9 | 132.0 | 502.0 | 455.6 | 637.2 | 590.8 |
| Total | 2,461.7 | 2,257.4 | 7,776.3 | 7,043.8 | 10,038.7 | 9,306.2 |
| Segment results | ||||||
| LCP | 74.3 | 83.9 | 257.2 | 278.9 | 333.8 | 355.4 |
| SMB | 118.9 | 92.3 | 376.0 | 286.9 | 466.5 | 377.5 |
| B2C | 7.9 | 4.9 | 23.9 | 16.4 | 32.0 | 24.6 |
| Total | 201.1 | 181.1 | 657.1 | 582.2 | 832.3 | 757.4 |
| Central functions | -93.2 | -86.8 | -275.2 | -248.0 | -358.5 | -331.3 |
| Adjusted EBITA | 107.9 | 94.3 | 381.9 | 334.2 | 473.8 | 426.1 |
| Segment margin | ||||||
| LCP, segment margin (%) | 5.9 | 6.8 | 6.3 | 7.2 | 6.2 | 6.9 |
| SMB, segment margin (%) | 11.3 | 10.3 | 11.7 | 10.6 | 11.5 | 10.7 |
| B2C, segment margin (%) | 5.3 | 3.7 | 4.8 | 3.6 | 5.0 | 4.2 |
| Costs for central functions, excluding items affecting | ||||||
| comparability in relation to net sales (%) | -3.8 | -3.8 | -3.5 | -3.5 | -3.6 | -3.6 |
| Reconciliation with profit after financial items | ||||||
| Items affecting comparability | 0.6 | -4.2 | -2.6 | -6.6 | -3.3 | -7.3 |
| Amortization and impairment of intangible assets | -11.0 | -18.1 | -42.8 | -51.9 | -60.2 | -69.3 |
| EBIT, Group | 97.5 | 72.0 | 336.5 | 275.8 | 410.3 | 349.5 |
| Financial income and other similar income-statement | ||||||
| items | 0.3 | 0.3 | 0.8 | 0.9 | 1.1 | 1.2 |
| Financial expenses and other similar income-statement | -12.0 | -10.4 | -35.8 | -31.6 | -46.8 | -42.6 |
| items | ||||||
| Profit after financial items, Group | 85.8 | 61.9 | 301.6 | 245.0 | 364.6 | 308.1 |
During the period, Dustin completed five acquisitions, were as three was finalised in the first quarter of the fiscal year. In September, the Denmark-based Norriq'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 audio/video solutions for meeting rooms and conferences.
In the third quarter, agreements were signed for two acquisitions: DAV Partner AB, which is a company specialised in audio/video solutions, with focus on the public sector, and ITaito Oy, a Finnish supplier of IT services, focusing on small and medium-sized businesses. Both acquisitions, which were conducted during the third quarter, are expected to be closed during the fourth quarter.
| Million SEK | Q1-Q3 |
|---|---|
| Fair value of acquired assets and liabilities | 17/18 |
| Intangible assets (excl. goodwill) | 47.2 |
| Tangible assets | 8.4 |
| Financial assets | 0.1 |
| Inventories | 7.0 |
| Accounts receivables and other current assets | 92.4 |
| Cash and cash equivalents | 35.7 |
| Other current liabilities | 85.5 |
| Total identifiable assets | 105.4 |
| Consolidated goodwill | 432.3 |
| Purchase consideration including estimated contingent earn-out | 537.7 |
| Less: | |
| Cash and cash equivalents | 35.7 |
| Non-regulated earn-out | 32.4 |
| Estimated contingent earn-out | 149.5 |
| Net cash outflow | 320.0 |
The maximum performance-based earn-out liability for acquisitions in the quarter totals SEK 184 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.
Costs attributable to acquisitions during the financial year amounted to SEK 10 million (11) and mainly pertained to remuneration to consultants and attorneys for financial and legal advisory services in conjunction with acquisitions and divestments. The change in value of the acquisition
related liability is related to the previous acquisition of IDENET AB, and an impairment of earn-out liability related to IKT. The gain attributable to the divestment of operations relates to the sale of IT-Hantverkarna Sverige AB, which was carried out in December 2017.
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Acquisition and divestment-related expenses | -5.8 | -8.4 | -10.2 | -10.8 | -10.9 | -11.6 |
| Recruitment costs, senior executives | - | - | -2.9 | - | -2.9 | - |
| Change in value of acquisition-related liabilities | 7.3 | 22.3 | 10.1 | 22.3 | 10.1 | 22.3 |
| Gain attributable to divestment of operations | -0.9 | - | 0.4 | - | 0.4 | - |
| Provision for repayment requirement | - | -18.0 | - | -18.0 | 0.0 | -18.0 |
| Total | 0.6 | -4.2 | -2.6 | -6.6 | -3.3 | -7.3 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| SEK million | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Capitalized expenditure for IT development (integrated IT platform and other long term strategic IT-systems) |
7.9 | 5.3 | 17.8 | 13.8 | 20.9 | 16.9 |
| Other investments in tangible and intangible assets | 4.1 | 4.6 | 12.1 | 8.0 | 14.4 | 10.3 |
| Investments in financial lease assets | 0.1 | - | 4.0 | - | 4.0 | - |
| Total | 12.1 | 9.9 | 33.9 | 21.8 | 39.3 | 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-related attests 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 of investments in 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 May 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. Acquisition-related assets pertain to contingent earn-outs for the divestment of IT Hantverkarna i Sverige 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 acquisition 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), Norwegian company Core Services (SEK 73 million) and the Swedish acquisition of JML-System (SEK 34 million).
| Change in acquisition-related liabilities measured at fair value based on inputs that are not based on observative market date (Level 3) |
May 31, 2018 |
May 31, 2017 |
Aug 31. 2017 |
|---|---|---|---|
| Opening balance | 109.6 | 52.6 | 52.6 |
| Remeasurements recognized in profit and loss: Unrealized remeasurements of contingent earn-out recognized under items affecting comparability |
-10.1 | -22.3 | -22.3 |
| Discount of contingent earn-out recognized under Financial expenses and other similar income-statement items |
3.1 | 0.5 | 0.9 |
| Remeasurements recognized under other comprehensive income: Unrealized exchange-rate differences recognized under Translation differences |
8.9 | -2.1 | -3.1 |
| Changes recognized via the balance sheet: | |||
| Payments attributable to previous acquisitions | -39.9 | -26.6 | -26.6 |
| Acquisitions | 182.0 | 108.0 | 108.0 |
| Closing balance | 253.6 | 110.1 | 109.6 |
| Change in acquisition-related receivables measured at fair value based on inputs that are not based on observative market date (Level 3) |
May 31, 2018 |
May 31, 2017 |
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 | - | - |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full-year | |
|---|---|---|---|---|---|---|
| All amounts in SEK million. unless otherwise indicated | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Income statement | ||||||
| Organic sales growth (%) | 1.6 | 9.2 | 4.1 | 7.5 | 6.1 | 8.6 |
| Gross margin (%) | 16.1 | 15.1 | 15.7 | 15.0 | 15.4 | 14.8 |
| EBIT | 97.5 | 72.0 | 336.5 | 275.8 | 410.2 | 349.5 |
| Adjusted EBITDA | 112.3 | 97.7 | 393.9 | 342.7 | 489.5 | 438.4 |
| Adjusted EBITA | 107.9 | 94.3 | 381.9 | 334.2 | 473.8 | 426.1 |
| Adjusted EBITA margin (%) | 4.4 | 4.2 | 4.9 | 4.7 | 4.7 | 4.6 |
| Return on equity (%) | - | - | - | - | 18.1 | 16.1 |
| Balance sheet | ||||||
| Net working capital | -236.9 | 35.0 | -236.9 | 35.0 | -236.9 | 118.1 |
| Capital employed | -77.9 | 191.3 | -77.9 | 191.3 | -77.9 | 269.1 |
| Net debt | 967.5 | 996.7 | 967.5 | 996.7 | 967.5 | 998.3 |
| Net debt/adjusted EBITDA (multiple) | - | - | - | - | 2.0 | 2.3 |
| Maintenance investments | -12.1 | -9.9 | -29.8 | -13.3 | -43.8 | -27.3 |
| Equity/assets ratio (%) | - | - | - | - | 29.8 | 35.6 |
| Cash flow | ||||||
| Operating cash flow | 255.0 | 21.2 | 787.3 | 311.9 | 776.7 | 301.2 |
| Cash flow from operating activities | 221.1 | -22.6 | 688.8 | 227.1 | 675.2 | 213.6 |
| Data per share | ||||||
| Earnings per share before dilution (SEK) | 0.87 | 0.62 | 3.07 | 2.50 | 3.71 | 3.14 |
| Earnings per share after dilution (SEK) | 0.87 | 0.62 | 3.06 | 2.50 | 3.69 | 3.13 |
| Equity per share before dilution (SEK) | 20.29 | 18.90 | 20.29 | 18.90 | 20.29 | 19.50 |
| Cash flow from operating activities per share before dilution (SEK) |
2.89 | -0.30 | 9.03 | 2.98 | 8.85 | 2.80 |
| Cash flow from operating activities per share after dilution (SEK) |
2.88 | -0.30 | 8.98 | 2.98 | 8.82 | 2.80 |
| Average number of shares | 76,569,451 | 76,173,115 | 76,319,388 | 76,173,115 | 76,282,519 | 76,173,115 |
| Average number of shares after dilution | 76,852,529 | 76,389,010 | 76,672,180 | 76,328,838 | 76,595,221 | 76,338,787 |
| Number of shares issued at end of period | 77,226,502 | 76,173,115 | 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 complementary information from which all performance measures can be derived. The sources of Net working capital and Net debt are described on pages 8.
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full year | |
|---|---|---|---|---|---|---|
| 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 | |
| Organic growth | ||||||
| Sales growth (%) | 9.0 | 13.5 | 10.4 | 10.9 | 11.6 | 12.1 |
| Acquired growth (%) | -4.7 | -2.4 | -5.6 | -1.4 | -4.8 | -1.7 |
| Currency effects in sales growth (%) | -2.7 | -1.9 | -0.7 | -2.0 | -0.8 | -1.8 |
| Organic sales growth (%) | 1.6 | 9.2 | 4.1 | 7.5 | 6.1 | 8.6 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full year | |
| SMB | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Organic growth | ||||||
| Sales growth (%) | 17.2 | 12.5 | 19.1 | 9.8 | 19.2 | 11.9 |
| Acquired growth (%) | -5.8 | -6.0 | -8.7 | -3.5 | -7.8 | -4.4 |
| Currency effects in sales growth (%) | -2.0 | -1.4 | -0.5 | -1.5 | -0.6 | -1.3 |
| Organic sales growth (%) | 9.4 | 5.1 | 9.9 | 4.8 | 10.8 | 6.2 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full year | |
| LCP | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Organic growth | ||||||
| Sales growth (%) | 2.7 | 17.1 | 4.4 | 13.1 | 7.1 | 14.0 |
| Acquired growth (%) | -4.4 | 0.0 | -4.1 | -0.2 | -3.3 | -0.1 |
| Currency effects in sales growth (%) | -3.4 | -2.3 | -0.9 | -2.5 | -0.9 | -2.1 |
| Organic sales growth (%) | -5.0 | 14.8 | -0.6 | 10.5 | 2.9 | 11.8 |
| Q3 | Q3 | Q1-Q3 | Q1-Q3 | Rolling | Full year | |
| B2C | 17/18 | 16/17 | 17/18 | 16/17 | 12 months | 16/17 |
| Organic growth | ||||||
| Sales growth (%) | 12.8 | -6.3 | 10.2 | 0.8 | 6.0 | -1.2 |
| Acquired growth (%) | - | - | - | - | - | - |
| Currency effects in sales growth (%) | -1.9 | -1.5 | -0.2 | -1.7 | -0.4 | -1.5 |
| Organic sales growth (%) | 10.9 | -7.8 | 10.0 | -0.9 | 5.6 | -2.7 |
| All amounts in SEK million, unless | Kv 3 | Kv 2 | Kv 1 | Kv 4 | Kv 3 | Kv 2 | Kv 1 | Kv 4 | Kv 3 | Kv 2 |
|---|---|---|---|---|---|---|---|---|---|---|
| otherwise indicated | 17/18 | 17/18 | 17/18 | 16/17 | 16/17 | 16/17 | 16/17 | 15/16 | 15/16 | 15/16 |
| Net sales | 2,461.7 | 2,722.9 | 2,591.8 | 2,262.4 | 2,257.4 | 2,502.9 | 2,283.6 | 1,951.8 | 1,988.9 | 2,236.6 |
| Organic sales growth (%) | 1.6 | 1.7 | 8.8 | 12.2 | 9.2 | 8.7 | 4.4 | 10.2 | 3.6 | 2.4 |
| Gross margin (%) | 16.1 | 15.4 | 15.6 | 14.3 | 15.1 | 14.9 | 14.9 | 15.3 | 15.4 | 14.7 |
| Adjusted EBITA | 107.9 | 143.1 | 130.9 | 91.9 | 94.3 | 124.1 | 115.8 | 80.7 | 91.4 | 112.7 |
| Adjusted EBITA margin (%) | 4.4 | 5.3 | 5.1 | 4.1 | 4.2 | 5.0 | 5.1 | 4.1 | 4.6 | 5.0 |
| Net sales per segment | ||||||||||
| LCP* | 1,261.5 | 1,444.1 | 1,348.4 | 1,296.1 | 1,228.0 | 1,440.7 | 1,219.8 | - | - | - |
| SMB* | 1,051.3 | 1109.6 | 1059.8 | 831.1 | 897.2 | 909.2 | 893.2 | - | - | - |
| B2B | 2,312.7 | 2,553.7 | 2,408.2 | 2,127.2 | 2,125.3 | 2,349.9 | 2,113.0 | 1,806.2 | 1,847.6 | 2,069.4 |
| B2C | 148.9 | 169.2 | 183.5 | 135.2 | 132.0 | 153.0 | 170.6 | 145.6 | 141.3 | 167.2 |
| Segment results | ||||||||||
| LCP* | 74.3 | 93.4 | 88.8 | 76.5 | 83.9 | 106.1 | 88.9 | - | - | - |
| SMB* | 118.9 | 135.7 | 121.8 | 90.6 | 92.3 | 97.0 | 97.6 | - | - | - |
| B2B | 193.2 | 229.1 | 210.6 | 167.1 | 176.2 | 203.1 | 186.5 | 150.3 | 155.6 | 183.2 |
| B2C | 7.9 | 8.4 | 7.9 | 8.1 | 4.9 | 5.9 | 5.5 | 5.6 | 6.7 | 6.0 |
| Segment margin (%) | ||||||||||
| LCP* | 5.9 | 6.5 | 6.6 | 5.9 | 6.8 | 7.4 | 7.3 | - | - | - |
| SMB* | 11.3 | 12.2 | 11.5 | 10.9 | 10.3 | 10.7 | 10.9 | - | - | - |
| B2B | 8.4 | 9.0 | 8.7 | 7.9 | 8.3 | 8.6 | 8.8 | 8.3 | 8.4 | 8.9 |
| B2C | 5.3 | 5.0 | 4.3 | 6.0 | 3.7 | 3.9 | 3.3 | 3.8 | 4.7 | 3.6 |
| Central functions | ||||||||||
| Central functions | -93.2 | -94.4 | -87.5 | -83.3 | -86.8 | -84.9 | -76.2 | -75.2 | -70.9 | -76.5 |
| Percentage of net sales | -3.8 | -3.5 | -3.4 | -3.7 | -3.8 | -3.4 | -3.3 | -3.9 | -3.6 | -3.4 |
* 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 |
|---|---|
| B2B | Pertains to all sales to companies and organizations. |
| B2C | 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. |
Year-end report. September 1, 2017–August 31. 2018
Annual Report for the period September 1, 2017–August 31. 2018
Annual General Meeting in Stockholm
Johan Karlsson, CFO [email protected] 0708-67 79 97
Fredrik Sätterström, Head of Investor Relations [email protected] 0705-10 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 July 4, 2018.
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