Annual Report • Feb 8, 2012
Annual Report
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| MEUR | Q4 2011 | Q4 2010 ∆% | 2011 | 2010 | ∆% | |
|---|---|---|---|---|---|---|
| Operating net sales | 591.6 | 506.9 | 6 2) | 2,177.6 | 1,487.1 | 12 2) |
| Revenue adjustment 3) | - | -5.8 | n.a. | -8.5 | -5.8 | n.a. |
| Net sales | 591.6 | 501.1 | 6 2) | 2,169.1 | 1,481.3 | 12 2) |
| Operating earnings (EBIT1) | 121.8 | 103.5 | 18 | 439.8 | 272.9 | 61 |
| Operating margin, % | 20.6 | 20.4 | 0.2 | 20.2 | 18.4 | 1.8 |
| Earnings before taxes | ||||||
| excl. non-recurring items | 106.9 | 89.9 | 19 | 380.9 | 247.5 | 54 |
| Non-recurring items | - | -136.6 | n.a. | -8.5 | -136.6 | n.a. |
| Earnings before taxes | 106.9 | -46.7 | n.a. | 372.4 | 110.9 236 | |
| Net earnings | 85.1 | -44.3 | n.a. | 297.4 | 91.7 224 | |
| Earnings per share, EUR | 0.24 | -0.15 | n.a. | 0.84 | 0.30 180 | |
| Earnings per share, excl. | ||||||
| non-recurring items, EUR | 0.24 | 0.24 | 0 | 0.85 | 0.69 | 23 |
1) The dividend for 2010 of 0.15 EUR is equal to 1.40 SEK using average exchange rates for 2010.
2) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
3) Non-recurring reduction of acquired deferred revenue in H1 2011 related to the acquisition of
Intergraph.
COMMENTS FROM OLA ROLLÉN, PRESIDENT AND CEO, HEXAGON AB
" Four years ago we launched an ambitious financial plan, to reach sales of 20 billion SEK with a 20 per cent EBIT margin by 2011 – the 20-20-11 plan. We have met our commitments and close the books on 2011 with a sense of fulfilment. Our new plan is to grow sales to 3.5 billion EUR and to improve our EBIT margin from 20 per cent to 25 per cent before the end of 2015. We are excited about our future. The transition from delivering primarily hardware into selling software centric solutions continues to shape new opportunities. "
Ola Rollén, President and CEO, Hexagon AB
Organic growth in net sales was 6 per cent in the fourth quarter and the operating profit (EBIT1) increased by 18 per cent to 121.8 MEUR.
Geosystems, which represented 33 per cent of Group sales in the fourth quarter, recorded an organic growth of 0 per cent in net sales. Geosystems' growth was adversely affected by the lack of investment in the high-speed rail network in China during the quarter. Excluding this negative effect Geosystems would have reported an organic growth of 4 per cent.
Metrology, which represented 31 per cent of Group sales, displayed 15 per cent organic growth in net sales.
Technology, which includes the acquisition of Intergraph in late 2010, represented 33 per cent of net sales. Intergraph was consolidated as of November 2010 and the organic growth for the period Nov-Dec 2011 was 5 per cent. The Intergraph PP&M division reported strong double digit growth whereas the SG&I division reported slightly negative growth.
Net sales from Intergraph in October and from acquisitions during 2011 are reported as "structure" in the table below.
| Net sales | |
|---|---|
| 2010, MEUR | 501.1 |
| Structure, % | 11 |
| Currency, % | 1 |
| Organic growth, % | 6 |
| Total, % | 18 |
| 2011, MEUR | 591.6 |
All geographic regions display organic growth in net sales. Growth in the quarter primarily comes from the ongoing recovery in the mature markets and from strong demand in the automotive, aerospace, power and energy markets.
The demand for Hexagon's products and services in EMEA continued to improve in the fourth quarter. The organic growth in net sales was 5 per cent in the Group's core business, Measurement Technologies (MT), and 1 per cent in Other Operations.
The major markets in Western Europe experienced increased activity levels in the fourth quarter primarily driven by improved demand for measurement solutions used in automotive, aerospace and manufacturing as well as for equipment used in infrastructure investments. Demand was also driven by customer investments in enterprise engineering, construction and data management software used in power and process industries. Demand in Southern Europe remains weak. Eastern Europe, Russia and the Middle East continue to grow.
Americas recorded 9 per cent organic growth in net sales in the fourth quarter. Apart from defense and security related products, all Hexagon's markets are growing in NAFTA, including automotive, aerospace, and general engineering, as well as infrastructure projects related to the Hexagon Geosystems application area. Canada showed strong growth for Hexagon
Geosystems due to high demand in the natural resources sector.
Activity levels in all of Hexagon's end markets continue to be strong in South America. The newly acquired Brazilian software provider Sisgraph has been successfully integrated and performed well in the quarter. Hexagon anticipates many opportunities related to the exploration and production of Brazil's massive offshore oil reserves and has many interesting business cases and projects involving the 2014 World Cup and the 2016 Olympics.
Asia recorded organic growth in net sales of 6 per cent in the fourth quarter. Excluding sales to customers active within the buildout of the highspeed rail network in China, Asia reported organic growth in net sales of approximately 10 per cent.
All businesses grew in Asia except for Geosystems. The negative growth recorded for Geosystems is due to the lack of activity in the Chinese high-speed rail sector and the slowdown in the construction sector driven by government actions. Hexagon foresees a gradual growth recovery for Geosystems in China as new business initiatives start to contribute during 2012.
Organic growth in China in the quarter, excluding high-speed rail, was 10 per cent. In addition to China, several other markets and industries in the region, such as Korea and Japan, reported growth.
2 HEXAGON YEAR-END REPORT 1 JANUARY – 31 DECEMBER 2011
| Net sales | Earnings | |||||
|---|---|---|---|---|---|---|
| MEUR | Q4 2011 | Q4 2010 | ∆ % 1) | Q4 2011 | Q4 2010 | ∆ % |
| Hexagon MT | 574.6 | 490.1 | 6 | 124.5 | 104.9 | 19 |
| Other Operations | 17.0 | 16.8 | 1 | 0.8 | 0.5 | 60 |
| Operating net sales | 591.6 | 506.9 | 6 | |||
| Group cost and eliminations | - 3.5 | - 1.9 | n.a. | |||
| Operating earnings (EBIT1) | 121.8 | 103.5 | 18 | |||
| Operating margin | 20.6% | 20.4% | 0.2 | |||
| Interest income and expenses, net | - 14.9 | - 13.6 | - 10 | |||
| Earnings before non- recurring items | 106.9 | 89.9 | 19 | |||
| Non- recurring items | - | - 5.8 | n.a. | - | - 136.6 | n.a. |
| Net sales | 591.6 | 501.1 | 6 | |||
| Earnings before taxes | 106.9 | - 46.7 | n.a. | |||
| Tax | - 21.8 | 2 | n.a. | |||
| Net earnings | 85.1 | - 44.3 | n.a. |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
| Movement 1) | Income- cost 2) | Profit impact | |
|---|---|---|---|
| CHF | Strengthened | Negative | Negative |
| USD | Strengthened | Positive | Positive |
| CNY | Strengthened | Positive | Positive |
| EBIT1, MEUR | - 5.3 |
1) Compared to Q4 2010.
2) Net income in currency (positive), net cost (negative).
Operating net sales amounted to 591.6 MEUR (506.9) in the fourth quarter. Using fixed exchange rates and a comparable group structure, net sales increased by 6 per cent.
Operating earnings (EBIT1) increased by 18 per cent to 121.8 MEUR (103.5), which corresponds, to an operating margin of 20.6 per cent (20.4). Operating earnings (EBIT1) were negatively affected by exchange rate movements of -5.3 MEUR.
The financial net amounted to -14.9 MEUR (-13.6) in the fourth quarter. The increase is explained by higher interest rates and a higher net debt, which is a result of the acquisition of Intergraph.
Earnings before taxes amounted to 106.9 MEUR (-46.7). Earnings were negatively affected by exchange rate movements of -5.1 MEUR. Earnings before taxes in Q4 2010 include non-recurring items of -136.6 MEUR primarily related to the acquisition of Intergraph.
Net earnings amounted to 85.1 MEUR (-44.3), or 0.24 EUR (-0.15) per share.
All regions recorded organic growth in net sales in the fourth quarter. The growth rate in Asia was negatively impacted by the halt in development of the high-speed rail network in China.
1) Organic growth in net sales stemming from Intergraph has been included in the graph above per the date of consolidation (November 2010).
Hexagon MT improved its operating margin from 5 per cent in 2001 to 20 per cent in 2008. In 2009, the margin decreased to approximately 17 per cent due to reduced volumes caused by the global economic downturn. In the fourth quarter 2011, the margin improved to 21.7 per cent (21.4).
| Net sales | Earnings | |||||
|---|---|---|---|---|---|---|
| MEUR | 2011 | 2010 ∆ % 1) | 2011 | 2010 ∆ % | ||
| Hexagon MT | 2,112.3 | 1,434.2 | 11 | 450.1 | 281.4 | 60 |
| Other Operations | 65.3 | 52.9 | 17 | 2.1 | -1.2 | n.a. |
| Operating net sales | 2,177.6 | 1,487.1 | 12 | |||
| Group cost and eliminations | -12.4 | -7.3 | 71 | |||
| Operating earnings (EBIT1) | 439.8 | 272.9 | 61 | |||
| Operating margin | 20.2% | 18.4% | 1.8 | |||
| Interest income and expenses, net | -58.9 | -25.4 | 132 | |||
| Earnings before non-recurring items | 380.9 | 247.5 | 54 | |||
| Non-recurring items | -8.5 | -5.8 | -8.5 | -136.6 | n.a. | |
| Net sales | 2,169.1 | 1,481.3 | 12 | |||
| Earnings before taxes | 372.4 | 110.9 | 236 | |||
| Tax | - 75.0 | - 19 | n.a. | |||
| Net earnings | 297.4 | 91.7 | 224 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
| Movement 1) | Income- cost 2) | Profit impact | |
|---|---|---|---|
| CHF | Strengthened | Negative | Negative |
| USD | Weakened | Positive | Negative |
| CNY | Weakened | Positive | Negative |
| EBIT1, MEUR | - 20.8 |
1) Compared to 2010.
2) Net income in currency (positive), net cost (negative).
Operating net sales amounted to 2,177.6 MEUR (1,487.1) in 2011. Using fixed exchange rates and a comparable group structure, net sales increased by 12 per cent.
Operating earnings (EBIT1) increased by 61 per cent to 439.8 MEUR (272.9), which corresponds, to an operating margin of 20.2 per cent (18.4). Operating earnings (EBIT1) were negatively affected by exchange rate movements of -20.8 MEUR.
The financial net amounted to -58.9 MEUR (-25.4) in 2011. The increase is explained by higher interest rates and a higher net debt, which is a result of the acquisition of Intergraph.
Earnings before taxes, excluding nonrecurring items, amounted to 380.9 MEUR (247.5).
Non-recurring items in 2011 amount to -8.5 MEUR and relate to acquired deferred revenue from the Intergraph acquisition. Earnings before taxes in 2010 include non-recurring items of -136.6 MEUR primarily related to the acquisition of Intergraph.
Earnings before taxes, including nonrecurring items, amounted to 372.4 MEUR (110.9). Earnings were negatively affected by exchange rate movements of -20.0 MEUR.
Net earnings, excluding non-recurring items, amounted to 302.7 MEUR (210.0), or 0.85 EUR (0.69) per share. Net earnings, including these items, amounted to 297.4 MEUR (91.7) or 0.84 EUR (0.30) per share.
Hexagon continually monitors a large number of companies to identify acquisitions that can strengthen Hexagon's product and technology portfolio and/or improve the distribution network. Each acquisition target is financially, technologically and commercially evaluated on a regular basis. A candidate's potential place in Hexagon is primarily determined on the basis of synergy opportunities and implementation strategies.
In 2011 Hexagon acquired four companies:
The companies will as of their consolidation dates immediately contribute to Hexagon's earnings.
On January 19, 2012 Hexagon entered into an agreement to acquire all outstanding shares of MicroSurvey Software Inc – a leading Canadian based developer of surveying and mapping software for the land surveying, construction, and forensic markets (Geosystems technology add-on). Consolidated as of January, 2012.
Geocisa, a Spanish engineering company performing monitoring tasks around the world, has recently been commissioned to undertake the tunnel construction area monitoring for the 11.9 km twin tunnel Crossrail project in London. Crossrail is Europe's largest civil engineering construction project. Geocisa selected products and monitoring software from Hexagon Geosystems for this prestigious undertaking.
Capital employed, defined as total assets less non-interest bearing liabilities, increased to 4,429.0 MEUR (4,208.8). Return on average capital employed, excluding non-recurring items, for the last twelve months was 10.5 per cent (10.2). Return on average shareholders' equity for the last twelve months was 13.1 per cent (6.0). The capital turnover rate was 0.7 times (1.1).
Total shareholders' equity increased to 2,525.8 MEUR (2,172.3). The equity ratio was 47 per cent (43). Hexagon's total assets increased to 5,343.7 MEUR (5,006.6). The increase in equity and assets is due to the acquisition of Intergraph in 2010 and the rights issue conducted around year-end 2010.
Hexagon's primary sources of financing are a 900 MUSD and a 1,000 MEUR Term and Revolving Credit Facilities Agreement that expires in July 2015. Hexagon also has a Bridge Term Loan of 375 MUSD that matures in July 2012 and which is intended to be refinanced with a bond issue. In the fourth quarter of 2009 Hexagon issued a 2 000 MSEK five year bond which is also part of the Groups financing.
On 31 December 2011, cash and unutilised credit limits totalled 360.1 MEUR (508.0). Hexagon's net debt was 1,786.8 MEUR. The net indebtedness was 0.66 times (0.82). Interest coverage ratio was 7.0 times (3.6).
During the fourth quarter, cash flow from operations before changes in working capital increased to 114.5 MEUR (99.6),
corresponding to 0.32 EUR (0.32) per share. Cash flow from operations in the fourth quarter increased to 113.3 MEUR (80.9), corresponding to 0.32 EUR (0.26) per share. The operating cash flow in the fourth quarter 2011 including non-recurring items amounted to 70.6 MEUR (13.8).
For the full year, cash flow from operations amounted to 369.0 MEUR (260.4), corresponding to 1.05 EUR (0.86) per share and the operating cash flow including non-recurring items amounted to 217.1 MEUR (125.4).
Hexagon's net investments, excluding acquisitions and divestitures, amounted to -42.7 MEUR (-25.0) in the fourth quarter and -135.9 MEUR (-87.2) in 2011. The increased investment level in 2011 is primarily due to the acquisition of Intergraph and increased investments into R&D.
Depreciation, amortisation and impairment amounted to -26.7 MEUR (-86.2) in the fourth quarter and -102.6 MEUR (-152.5) in 2011 of which impairment amounted to – MEUR (-62.9).
The Group's tax expense for 2011 totalled -75.0 MEUR (-19.2), corresponding to an effective tax rate of 20 per cent (17). The increase in the effective tax rate is due to increased operations in the US following the acquisition of Intergraph in 2010.
The average number of employees in Hexagon during 2011 was 12,475 (8,179). The number of employees at the end of the year was 13,060 (11,992). The increase is mainly explained by the acquisition of Intergraph.
Earnings per share for the fourth quarter amounted to 0.24 EUR (-0.15). Earnings per share for 2011 amounted to 0.84 EUR (0.30).
On 31 December 2011, equity per share was 7.15 EUR (6.15) and the share price was 103 SEK (144).
Hexagon's Extraordinary General Meeting in December 2011 resolved on the implementation of an incentive programme through a directed issue of 13 655 000 warrants. At full exercise of the warrant programme, the dilutive effect would be 3.7 per cent of the share capital and 2.7 per cent of the number of votes.
Through the rights issue conducted around year-end 2010, the number of shares increased by 88 122 407, of which 3 937 500 shares of series A and 84 184 907 shares of series B. Total number of shares after the rights issue amounts to 353 642 177 of which 15 750 000 shares of series A and 337 892 177 shares of series B.
Associated companies affected Hexagon's earnings during 2011 by 0.0 MEUR (0.1).
The parent company's earnings after financial items in 2011 amounted to 295.1 MEUR (-213.1). The equity was 1,473.3 MEUR (1,253.9). The solvency ratio of the parent company was 37 per cent (33). Liquid funds including unutilised credit limits were 206.4 MEUR (352.2).
| MEUR | Q4 2011 | Q4 2010 | ∆% | 2011 | 2010 | ∆% | |||
|---|---|---|---|---|---|---|---|---|---|
| Net sales | 574.6 | 490.1 | 6 1) | 2,112.3 | 1,434.2 | 11 1) | |||
| Operating earnings (EBIT1) | 124.5 | 104.9 | 19 | 450.1 | 281.4 | 60 | |||
| Operating margin,% | 21.7 | 21.4 | 0.3 | 21.3 | 19.6 | 1.7 | |||
| 1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth. |
| MEUR | Q4 2011 | Q4 2010 | ∆% | 2011 | 2010 | ∆% |
|---|---|---|---|---|---|---|
| Net sales | 17.0 | 16.8 | 1 1) | 65.3 | 52.9 | 17 1) |
| Operating earnings (EBIT1) | 0.8 | 0.5 | n.a. | 2.1 | - 1.2 | n.a. |
| Operating margin,% | 4.7 | 3.0 | 1.7 | 3.2 | - 2.3 | 5.5 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
| Net sales | Net sales | |||||
|---|---|---|---|---|---|---|
| MEUR | Q4 2011 | Q4 2010 | ∆ % 1) | 2011 | 2010 | ∆ % 1) |
| Geosystems | 196.1 | 200.0 | 0 | 757.0 | 749.9 | 2 |
| Metrology | 183.5 | 158.2 | 15 | 633.5 | 508.9 | 26 |
| Technology | 195.0 | 131.9 | 5 | 721.8 | 175.4 | n.a. |
| Total Hexagon MT | 574.6 | 490.1 | 6 | 2,112.3 | 1,434.2 | 11 |
1) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth.
Geosystems reported 0 per cent organic growth in net sales in the fourth quarter. The strong recovery in Metrology continued in the fourth quarter and the application area displayed organic sales growth of 15 per cent compared to the corresponding period in 2010.
In the fourth quarter, operating net sales amounted to 574.6 MEUR (490.1). Using fixed exchange rates and a comparable group structure, net sales increased by 6 per cent.
Operating earnings (EBIT1) amounted to 124.5 MEUR (104.9), which corresponds to an operating margin of 21.7 per cent (21.4). The number of employees by the end of the quarter was 12,728 (11,659).
In the fourth quarter, net sales amounted to 17.0 MEUR (16.8). Using fixed exchange rates and a comparable group structure, net sales increased by 1 per cent.
Operating earnings (EBIT1) amounted to 0.8 MEUR (0.5), which corresponds to an operating margin of 4.7 per cent (3.0).
The number of employees by the end of the quarter was 320 (321).
Product innovations including new technology, lower manufacturing costs and an increase in software content have enabled Hexagon to improve the gross margin from 35 per cent in 2002 to 51 per cent in 2008. In 2009 the gross margin decreased to 49 per cent. In 2011, it improved to 54 per cent.
Located in a small town just south of Rome, Italy, ESRIN is the headquarters for the European Space Agency's Earth Observation activities. ESRIN relies on software from Intergraph SG&I to streamline data access and data ordering workflows for the European Maritime Safety Agency (EMSA) and European Union Satellite Center (EUSC).
The Board of Directors and the President and CEO declare that this year-end report provides a true and fair overview of the company´s and the Group´s operations, their financial position and performance, and describes material risks and uncertainties facing the company and companies within the Group.
Stockholm, Sweden, 7 February 2012 Hexagon AB (publ)
Melker Schörling Chairman of the Board
Mario Fontana Ulrika Francke Board Member Board Member
Ulf Henriksson Gun Nilsson Board Member Board Member
Ulrik Svensson Ola Rollén
Board Member President and CEO Board Member
This Year-End Report has not been reviewed by the company's auditors.
Hexagon applies International Financial Reporting Standards (IFRS) as adopted by the European Union. Hexagon's report for the Group is prepared in accordance with IAS 34, "Interim Financial Reporting" and the Annual Accounts Act. Parent company accounts are prepared in accordance with the Annual Accounts Act. Accounting principles and calculation methods are unchanged from those applied in the Annual Report for 2010 with the following exception: As of January 1, 2011 Hexagon has changed the presentation currency in the consolidated financial statements from Swedish kronor (SEK) to Euro (EUR) and also changed the functional currency of the parent company to EUR. The change of currency from SEK to EUR is expected to decrease the currency exposure in both the profit and loss statement as well as in comprehensive income. It will also allow the Hexagon Group to better match debt to the net assets.
As an international group, Hexagon is exposed to a number of business and financial risks. The business risks can be divided into strategic, operational and legal risks. The financial risks are related to such factors as exchange rates, interest rates, liquidity and the giving of credit. Risk management in Hexagon aims to identify, control and reduce risks. This work begins with an assessment of the probability of risks occurring and their potential effect on the Group. There has been no change in the risk picture in comparison with what was reported in the 2010 Annual Report.
No significant related party transactions have been incurred in 2011.
The AGM will be held on 9 May 2012, at 17:00 CET in Stockholm (Oscarsteatern, Kungsgatan 63). The Annual Report for 2011 will be distributed during the week starting 16 April. To participate at the AGM shareholders must be registered in the share register maintained by Euroclear on 3 May. Notification of attendance should be made to Hexagon's head office no later than 12:00 CET on 4 May. To participate in the AGM, shareholders with nominee-registered holdings should temporarily reregister their shares in their own names through the agency of their nominees so that they are recorded in the share register in good time before 4 May.
The Hexagon Board of Directors proposes a dividend of 0.17 EUR per share (0.15).
| MEUR | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 591.6 | 501.1 | 2,169.1 | 1,481.3 |
| Cost of goods sold | -281.2 | -247.6 | -1,025.6 | -728.6 |
| Gross earnings | 310.4 | 253.5 | 1,143.5 | 752.7 |
| Sales and administration costs, etc. | -188.5 | -271.2 | -712.2 | -601.1 |
| Earnings from shares in associated companies | -0.1 | 0.0 | 0.0 | 0.1 |
| Operating earnings 1) | 121.8 | -17.7 | 431.3 | 151.7 |
| Interest income and expenses, net 2) | -14.9 | -29.0 | -58.9 | -40.8 |
| Earnings before taxes | 106.9 | -46.7 | 372.4 | 110.9 |
| Taxes | -21.8 | 2.4 | -75.0 | -19.2 |
| Net earnings | 85.1 | -44.3 | 297.4 | 91.7 |
| Attributable to: | ||||
| Parent company shareholders | 84.4 | -45.0 | 295.2 | 89.9 |
| Non-controlling interest | 0.7 | 0.7 | 2.2 | 1.8 |
| 1) of w hich non-recurring items | - | -121.2 | -8.5 | -121.2 |
| 2) of w hich non-recurring items | - | -15.4 | - | -15.4 |
| Earnings include depreciation, amortisation and impairments of | -26.7 | -86.2 | -102.6 | -152.5 |
| Basic earnings per share, EUR | 0.24 | -0.15 | 0.84 | 0.30 |
| Earnings per share after dilution, EUR | 0.24 | -0.15 | 0.84 | 0.30 |
| Total shareholder's equity per share, EUR | 7.15 | 6.15 | 7.15 | 6.15 |
| Closing number of shares, thousands | 352,490 | 352,150 | 352,490 | 352,150 |
| Average number of shares, thousands | 352,490 | 309,845 | 352,484 | 303,655 |
| Average number of shares after dilution, thousands | 352,490 | 309,845 | 352,546 | 303,677 |
| MEUR | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net earnings | 85.1 | -44.3 | 297.4 | 91.7 |
| Other comprehensive income: | ||||
| Exchange rate differences | 88.2 | 89.7 | 77.1 | 208.0 |
| Effect of hedging of net investments in foreign operations Cash flow hedges, net |
30.3 -2.8 |
-10.3 -0.3 |
38.9 -0.8 |
-27.9 0.2 |
| Tax attributable to Other comprehensive income | -7.2 | 2.8 | -10.0 | 7.3 |
| Other comprehensive income, net of tax | 108.5 | 81.9 | 105.2 | 187.6 |
| Total comprehensive income for the period | 193.6 | 37.6 | 402.6 | 279.3 |
| Attributable to: | ||||
| Parent company shareholders | 192.6 | 36.8 | 399.9 | 276.8 |
| Non-controlling interest | 1.0 | 0.8 | 2.7 | 2.5 |
8 HEXAGON YEAR-END REPORT 1 JANUARY – 31 DECEMBER 2011
| MEUR | 31/12 2011 | 31/12 2010 |
|---|---|---|
| Intangible fixed assets | 3,872.3 | 3,595.4 |
| Tangible fixed assets | 229.3 | 274.1 |
| Financial fixed assets | 28.6 | 20.3 |
| Deferred tax assets | 88.5 | 64.4 |
| Total fixed assets | 4,218.7 | 3,954.2 |
| Inventories | 358.9 | 319.2 |
| Accounts receivable | 509.8 | 451.2 |
| Other receivables | 83.6 | 63.4 |
| Prepaid expenses and accrued income | 56.3 | 58.2 |
| Total current receivables | 649.7 | 572.8 |
| Cash and cash equivalents | 116.4 | 160.4 |
| Total current assets | 1,125.1 | 1,052.4 |
| Total assets | 5,343.7 | 5,006.6 |
| Equity attributable to parent company shareholders | 2,518.7 | 2,166.1 |
| Equity attributable to non-controlling interest | 7.1 | 6.2 |
| Total shareholders' equity | 2,525.8 | 2,172.3 |
| Interest bearing liabilities | 1,407.5 | 1,810.0 |
| Other liabilities | 29.9 | 24.0 |
| Pension liabilities | 38.6 | 34.2 |
| Deferred tax liabilities | 245.7 | 210.1 |
| Other provisions | 81.3 | 46.8 |
| Total long-term liabilities | 1,803.0 | 2,125.1 |
| Interest bearing liabilities | 456.9 | 154.4 |
| Accounts payable | 144.8 | 152.1 |
| Other liabilities | 79.0 | 55.7 |
| Other provisions | 8.2 | 30.1 |
| Accrued expenses and deferred income | 326.0 | 316.9 |
| Total short-term liabilities | 1,014.9 | 709.2 |
| Total equity and liabilities | 5,343.7 | 5,006.6 |
| MEUR | 2011 | 2010 |
|---|---|---|
| Opening shareholders' equity | 2,172.3 | 1,217.7 |
| Total comprehensive income for the period 1) | 402.6 | 279.3 |
| Rights issue, net of issuance cost | 2.8 | 710.1 |
| Dividend | -57.3 | -34.5 |
| Repurchase of stock options | -2.8 | - |
| Sale of stock options | 8.2 | - |
| Effect of acquisitions and divestments in subsidiaries | - | -0.3 |
| Closing shareholders' equity 2) | 2,525.8 | 2,172.3 |
| 1) of w hich: Parent company shareholders | 399.9 | 276.8 |
| Non-controlling interest | 2.7 | 2.5 |
| 2) of w hich: Parent company shareholders | 2,518.7 | 2,166.1 |
| Non-controlling interest | 7.1 | 6.2 |
| series A | series B | Total | |
|---|---|---|---|
| 2008-12-31 Total issued | 11,812,500 | 253,707,270 | 265,519,770 |
| Repurchase | - | -1,311,442 | -1,311,442 |
| 2008-12-31 Total issued and outstanding | 11,812,500 | 252,395,828 | 264,208,328 |
| Sale of repurchased shares | - | 138,825 | 138,825 |
| 2009-12-31 Total issued and outstanding | 11,812,500 | 252,534,653 | 264,347,153 |
| Sale of repurchased shares | - | 20,070 | 20,070 |
| Rights issue | 3,937,500 | 83,845,572 | 87,783,072 |
| 2010-12-31 Total issued and outstanding | 15,750,000 | 336,400,295 | 352,150,295 |
| Rights issue | - | 339,335 | 339,335 |
| 2011-12-31 Total issued and outstanding 1) | 15,750,000 | 336,739,630 | 352,489,630 |
1) In January 2011, the issuance of shares subscribed for with subsidiary preferential rights resulted in an increase of in total 339 335 shares of series B. As per 31 December 2011, there were in total 353 642 177 shares in the company, of which 15 750 000 are of series A with ten votes each and 337 892 177 are of series B with one vote each. Hexagon AB Treasury shares amounted to 1 152 547 shares of series B.
| MEUR | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Cash flow from operations before change in w orking capital | ||||
| excluding taxes and interest | 148.5 | 149.4 | 523.9 | 370.0 |
| Tax paid | -20.3 | -7.4 | -71.1 | -22.1 |
| Interest received and paid, net | -13.7 | -42.4 | -55.6 | -53.8 |
| Cash flow from operations before change in w orking capital | 114.5 | 99.6 | 397.2 | 294.1 |
| Cash flow from change in w orking capital | -1.2 | -18.7 | -28.2 | -33.7 |
| Cash flow from operations | 113.3 | 80.9 | 369.0 | 260.4 |
| Cash flow from ordinary investing activities | -42.7 | -25.0 | -135.9 | -87.2 |
| Operating cash flow | 70.6 | 55.9 | 233.1 | 173.2 |
| Non-recurring cash flow | - | -42.1 | -16.0 | -47.8 |
| Operating cash flow after non-recurring items | 70.6 | 13.8 | 217.1 | 125.4 |
| Cash flow from other investing activities 1) | -9.3 | -1,581.4 | -99.2 | -1,598.2 |
| Cash flow after other investing activities | 61.3 | -1,567.6 | 117.9 | -1,472.8 |
| Dividends paid | - | - | -57.3 | -34.5 |
| Rights issue net of expenses | - | 718.5 | -5.7 | 718.5 |
| Repurchase of stock options | - | - | -2.8 | - |
| Cash flow from other financing activities | -85.1 | 910.8 | -97.8 | 861.8 |
| Cash flow for the period | -23.8 | 61.7 | -45.7 | 73.0 |
| Cash and cash equivalents, beginning of period | 136.5 | 96.4 | 160.4 | 77.4 |
| Effect of translation differences on cash and cash equivalents | 3.7 | 2.3 | 1.7 | 10.0 |
| Cash flow for the period | -23.8 | 61.7 | -45.7 | 73.0 |
| Cash and cash equivalents, end of period | 116.4 | 160.4 | 116.4 | 160.4 |
1)Acquisitions -83.0 MEUR (-1,591.4) and other -16.2 MEUR (-6.8) in 2011.
| Q4 2011 | Q4 2010 | 2011 | 2010 | |
|---|---|---|---|---|
| Operating margin, % | 20.6 | 20.4 | 20.2 | 18.4 |
| Profit margin before taxes, % | 18.1 | -10.0 | 17.2 | 7.5 |
| Return on shareholders' equity 12 month average, % | 13.1 | 6.0 | 13.1 | 6.0 |
| Return on capital employed, % | 10.5 | 10.2 | 10.5 | 10.2 |
| Equity ratio, % | 47.3 | 43.4 | 47.3 | 43.4 |
| Net indebtedness | 0.66 | 0.82 | 0.66 | 0.82 |
| Interest coverage ratio | 7.6 | -0.7 | 7.0 | 3.6 |
| Average number of shares, thousands | 352,490 | 309,845 | 352,484 | 303,655 |
| Basic earnings per share excl. non-recurring items, EUR | 0.24 | 0.24 | 0.85 | 0.69 |
| Basic earnings per share, EUR | 0.24 | -0.15 | 0.84 | 0.30 |
| Cash flow per share, EUR | 0.32 | 0.26 | 1.05 | 0.86 |
| Cash flow per share before change in w orking cap, EUR | 0.32 | 0.32 | 1.13 | 0.97 |
| Share price, SEK | 103 | 144 | 103 | 144 |
| Share price translated to EUR | 11.6 | 16.1 | 11.6 | 16.1 |
In connection with the acquisition of Intergraph, a business unit in Geosystems (ERDAS) has been transferred to Intergraph (Technology) and a business unit in Intergraph (Z/I) has been transferred to Geosystems. Historic numbers have not been restated.
| MEUR | Q4 2011 | Q3 2011 | Q2 2011 | Q1 2011 | 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | 2010 |
|---|---|---|---|---|---|---|---|---|---|---|
| Hexagon MT | 574.6 | 507.9 | 526.7 | 503.1 | 2,112.3 | 490.1 | 326.0 | 336.8 | 281.2 | 1,434.2 |
| - Of w hich Geosystems | 196.1 | 179.2 | 196.6 | 185.1 | 757.0 | 2) 200.0 |
182.9 | 198.0 | 169.0 | 749.9 |
| Metrology | 183.5 | 157.5 | 155.6 | 136.9 | 633.5 | 158.2 | 128.9 | 123.8 | 98.0 | 508.9 |
| Technology | 195.0 | 171.2 | 174.5 1) | 181.1 1) | 721.8 | 131.9 2) | 14.3 | 15.0 | 14.2 | 175.4 |
| Other operations | 17.0 | 13.3 | 16.8 | 18.2 | 65.3 | 16.8 | 11.0 | 13.9 | 11.2 | 52.9 |
| Group | 591.6 | 521.2 | 543.5 | 521.3 | 2,177.6 | 506.9 | 337.0 | 350.8 | 292.4 | 1,487.1 |
| MEUR | Q4 2011 | Q3 2011 | Q2 2011 | Q1 2011 | 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | 2010 |
|---|---|---|---|---|---|---|---|---|---|---|
| Hexagon MT | 124.5 | 101.5 | 117.2 | 106.9 | 450.1 | 104.9 | 60.7 | 65.4 | 50.4 | 281.4 |
| Other operations | 0.8 | 0.0 | 0.4 | 0.9 | 2.1 | 0.5 | -0.8 | -0.2 | -0.7 | -1.2 |
| Group costs | -3.5 | -2.6 | -3.3 | -3.0 | -12.4 | -1.9 | -1.9 | -1.9 | -1.6 | -7.3 |
| Group | 121.8 | 98.9 | 114.3 | 104.8 | 439.8 | 103.5 | 58.0 | 63.3 | 48.1 | 272.9 |
| Margin,% | 20.6 | 19.0 | 21.0 | 20.1 | 20.2 | 20.7 | 17.2 | 18.0 | 16.5 | 18.4 |
| MEUR | Q4 2011 | Q3 2011 | Q2 2011 | Q1 2011 | 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | 2010 |
|---|---|---|---|---|---|---|---|---|---|---|
| EMEA | 258.5 | 223.2 | 242.6 | 231.3 | 955.6 | 237.3 | 150.1 | 165.4 | 141.1 | 693.9 |
| Americas | 190.7 | 163.6 | 158.4 | 153.7 | 666.4 | 146.5 | 81.6 | 83.7 | 68.4 | 380.2 |
| Asia | 142.4 | 134.4 | 142.5 | 136.3 | 555.6 | 123.1 | 105.3 | 101.7 | 82.9 | 413.0 |
| Group | 591.6 | 521.2 | 543.5 1) | 521.3 1) | 2,177.6 | 506.9 | 337.0 | 350.8 | 292.4 | 1,487.1 |
1) Excluding non-recurring effect from revaluation of acquired deferred revenue of -4.4 MEUR in Q1 2011 and -4.1 MEUR in Q2 2011.
2) In a comparable group structure, taking into account the move of the business units ERDAS and Z/I, the revenue number for Geosystems in Q4 2010 would have been 192.5 MEUR and for Technology the number would have been 139.4.
| 2011 | 2010 | |||
|---|---|---|---|---|
| MEUR | Acquisitions | Divestments | Acquisitions | Divestments |
| Intangible fixed assets | 138.5 | - | 1,736.4 | - |
| Other fixed assets | -49.1 | - | 119.3 | - |
| Total fixed assets | 89.4 | - | 1,855.7 | - |
| Total current assets | 11.0 | - | 261.5 | - |
| Total assets | 100.4 | - | 2,117.2 | - |
| Total long-term liabilities, etc | -51.6 | - | 281.8 | - |
| Total short-term liabilities | 65.4 | - | 164.5 | - |
| Total liabilities | 13.8 | - | 446.3 | - |
| Total net assets | 86.6 | - | 1,670.9 | - |
| Total acquisition cost/divestment income | -110.5 | - | -1,696.6 | - |
| Adjustment for non-paid part of acquisition cost/ | ||||
| divestment income incl. payment of items from prior years | 23.9 | - | 25.7 | - |
| Adjustment for cash and bank balances in aquired entities | 3.6 | - | 79.5 | - |
| Cash flow from acquisitions | -83.0 | - | -1,591.4 | - |
The purchase price allocation regarding the acquisition of Intergraph has now been finalised. The following changes have been made in relation to the preliminary allocation as reported in the Annual Report 2010:
| MEUR | |
|---|---|
| Intangible fixed assets | 30.9 |
|---|---|
| Other fixed assets | -49.5 |
| Total fixed assets | -18.6 |
| Total assets | -18.6 |
| Long-term liabilities | -16.0 |
| Current liabilities | -2.6 |
| Total liabilities | -18.6 |
The most important adjustment to the purchase price allocation relates to a fair value adjustment of land and buildings by -49.8 MEUR. Other insignificant adjustments were also made. The adjustments have not had any significant impact on 2011 earnings.
Hexagon has acquired the following companies or businesses during 2011: Sisgraph Ltda, Brazil, Denali, USA, Seven Ocean, China and Augusta Systems, USA of which only the acquisition of Sisgraph was significant. Total acquisition cost for these companies was 110.5 MEUR.
Sisgraph is a software and services provider which provides consulting, implementation and training services for all Intergraph products in Latin America. Excluding inter-company sales, Sisgraph's turnover in 2010 amounted to approximately 11 MEUR. The company has shown solid growth and strong profitability over the last years.
The provisional fair value of the identifiable assets and liabilities of Sisgraph as at the date of acquisition was:
| MEUR | |
|---|---|
| Intangible fixed assets | 22.5 |
| Other fixed assets | 0.2 |
| Total fixed assets | 22.7 |
| Total current assets | 8.2 |
| Total assets | 30.9 |
| Long-term liabilities | 2.6 |
| Current liabilities | 31.8 |
| Total liabilities | 34.4 |
| Total identifiable net assets at fair value | -3.5 |
| Goodw ill | 70.8 |
| Purchase consideration transferred | 67.3 |
Goodwill relates to primarily increased future total sales to South America for Intergraph, in excess of what Sisgraph presently adds, related to the offshore oil exploration and production market segment and interesting opportunities in the security and infrastructure market segments.
| MEUR | Q4 2011 | Q4 2010 | 2011 | 2010 |
|---|---|---|---|---|
| Net sales | 3.1 | 2.0 | 8.6 | 7.6 |
| Administration cost | -4.4 | -37.7 | -13.1 | -43.9 |
| Operating earnings | -1.3 | -35.7 | -4.5 | -36.3 |
| Earnings from shares in Group companies | 5.3 | 0.0 | 149.0 | 98.8 |
| Interest income and expenses, net | 133.0 | -255.0 | 150.6 | -275.6 |
| Earnings after financial items | 137.0 | -290.7 | 295.1 | -213.1 |
| Tax | -16.7 | -2.3 | -20.3 | 3.2 |
| Net earnings | 120.3 | -293.0 | 274.8 | -209.9 |
| MEUR | 31/12 2011 | 31/12 2010 |
|---|---|---|
| Subscribed but not paid capital | - | 2.8 |
| Total fixed assets | 3,772.5 | 3,627.8 |
| Total current receivables | 207.5 | 107.5 |
| Cash and cash equivalents | 0.2 | 38.9 |
| Total current assets | 207.7 | 146.4 |
| Total assets | 3,980.2 | 3,777.0 |
| Total shareholders' equity | 1,473.3 | 1,253.9 |
| Total long-term liabilities | 1,371.0 | 1,768.0 |
| Total short-term liabilities | 1,135.9 | 755.1 |
| Total equity and liabilities | 3,980.2 | 3,777.0 |
| Capital employed | Total assets less non-interest bearing liabilities |
|---|---|
| Capital turnover rate | Net sales divided by average capital employed |
| Cash flow | Cash flow from operations, after change in working capital, excluding non-recurring items |
| Cash flow per share | Cash flow from operations, after change in working capital, excluding non-recurring items divided by average number of shares |
| Earnings per share | Net earnings excluding non-controlling interest divided by average number of shares |
| Equity ratio | Shareholders' equity including non-controlling interests as a percentage of total assets |
| Interest cover ratio | Earnings after financial items plus financial expenses divided by financial expenses |
| Investments | Purchases less sales of tangible and intangible fixed assets, excluding those included in acquisitions and divestitures of subsidiaries |
| Net indebtedness | Interest-bearing liabilities less interest-bearing current receivables and liquid assets divided by shareholders' equity excluding non-controlling interests |
| Non-recurring items | Income and expenses that are not expected to appear on a regular basis |
| Operating earnings (EBIT1) | Operating earnings excluding capital gains on shares in group companies and other non-recurring items |
| Operating margin | Operating earnings (EBIT1) as a percentage of operating net sales |
| Operating net sales | Net sales adjusted by the difference between fair value and book-value of deferred revenue regarding acquired businesses |
| Profit margin before tax | Earnings after financial items as a percentage of net sales |
| Return on capital employed | Twelve months to end of period earnings after financial items, excluding non-recurring items, plus financial expenses as a percentage of twelve months to end of period average capital employed |
| Return on equity (12 month average) | Twelve months to end of period net earnings excluding non-controlling interests as a percentage of twelve months to end of period average shareholders' equity excluding non-controlling interests last twelve months. |
| Shareholders' equity per share | Shareholders' equity excluding non-controlling interests divided by the number of shares at year-end |
| Share price | Last settled transaction on NASDAQ OMX Nordic Exchange on the last business day for the period |
| BUSINESS DEFINITIONS | |
| Americas | North, South and Central America |
| Asia | Asia, Australia and New Zealand |
| EMEA | Europe, Middle East and Africa |
| MT | Hexagon's core business, Measurement Technologies |
Hexagon is a leading global provider of design, measurement and visualisation technologies. Our customers can design, measure and position objects, and process and present data, to stay one step ahead of a changing world. Hexagon's solutions increase productivity, enhance quality and allow for faster, better operational decisions, saving time, money and resources. Hexagon has over 13 000 employees in more than 40 countries and net sales of about 2 200 MEUR. Our products are used in a broad range of industries including surveying, power and energy, aerospace and defence, safety and security, construction and manufacturing Learn more at www.hexagon.com.
Hexagon gives financial information at the following occasions:
| Interim Report Q1 2012 | 9 May 2012 |
|---|---|
| Interim Report Q2 2012 | 9 August 2012 |
| Interim Report Q3 2012 | 26 October 2012 |
| Year-End Report 2012 | February 2013 |
Financial information is available in Swedish and English at the Hexagon website and can be ordered via phone +46 8 601 26 20 or e-mail [email protected]
The year-end report 2011 will be presented 8 February at 11:00 CET at a telephone conference. Please view instructions at Hexagon's website on how to participate.
Mattias Stenberg, VP Strategy and Communications, Hexagon AB +46 8 601 26 27, [email protected]
This year-end report is a type of information that Hexagon AB (publ) is obliged to disclose in accordance with the Swedish Securities Market Act and /or the Financial Instruments Trading Act. The information was submitted for publication on 8 February 2012 at 08:00 CET.
This communication may contain forward-looking statements. When used in this communication, words such as "anticipate", "believe", "estimate", "expect", "intend", "plan" and "project" are intended to identify forward-looking statements. They may involve risks and uncertainties, including technological advances in the measurement field, product demand and market acceptance, the effect of economic conditions, the impact of competitive products and pricing, foreign currency exchange rates and other risks. These forward-looking statements reflect the views of Hexagon's management as of the date made with respect to future events and are subject to risks and uncertainties. All of these forward-looking statements are based on estimates and assumptions made by Hexagon's management and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results or experience could differ materially from the forward-looking statements. Hexagon disclaims any intention or obligation to update these forwardlooking statements.
Hexagon AB [publ] P.O. Box 3692 SE- 103 59 Stockholm Fax: +46 8 601 26 21 Phone: +46 8 601 26 20 Registration number: 556190-4771 Registred Office: Stockholm, Sweden www.hexagon.com
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