AI assistant
Hexatronic Group Interim / Quarterly Report 2020
2924_ir_2020-08-14_865e268f-9163-4634-a2fa-eb887644c6c0.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Hexatronic Group AB (publ)
Interim Report January – June 2020
Key ratio
| 2020 | 2019 | 2020 | 2019 | |||
|---|---|---|---|---|---|---|
| Hexatronic Group AB (publ) MSEK |
Q2 | Q2 | Δ % | Jan-Jun | Jan-Jun | Δ % |
| Net sales Delårsrapport 1 januari – 31 mars 2020 |
509.3 | 484.9 | 5% | 946.7 | 906.0 | 4% |
| EBITA | 53.6 | 39.8 | 35% | 75.8 | 61.1 | 24% |
| EBITA margin | 10.5% | 8.2% | 8.0% | 6.7% | ||
| Operating result (EBIT) | 46.6 | 31.1 | 50% | 61.9 | 45.5 | 36% |
| Net earnings | 33.1 | 20.2 | 64% | 42.0 | 25.3 | 66% |
| Earnings per share after dilution, SEK | 0.88 | 0.54 | 63% | 1.12 | 0.68 | 65% |
| Cash flow from operating activities | 12.2 | 5.4 | 126% | 67.9 | 36.2 | 88% |
| Liquid assets | 74.9 | 84.9 | -12% | 74.9 | 84.9 | -12% |
Events during the quarter
- Hexatronic signed a strategic supply agreement with KCOM in the UK worth up to MSEK 40.
- Hexatronic acquired the UK-based fiber optic company Tech Optics Ltd.
- Hexatronic won submarine cable orders totalling MSEK 40.
- Based on the very uncertain situation in the world, the Board decided to withdraw the previously announced dividend proposal.
Events since the end of the period
- Hexatronic acquired the US-based fiber optic training company The Light Brigade Inc.
- Hexatronic estimated the negative sales effect in the second quarter, because of the COVID-19 pandemic, to be approximately MSEK 40-50 but an increased profitability.
COMMENTS FROM THE CEO Strong profitability and strategic acquisitions
Profitability (EBITA) increased during the quarter to 10.5 percent, an increase of 35 percent on the same period last year. This good profitability means that we are clearly approaching our goal of at least 9 percent on a rolling 12-month basis. The operating result and earnings per share also improved considerably at 50 percent and 63 percent respectively compared to the same period last year. The higher profitability is primarily due to a high gross margin and good capacity utilisation in our factories.
During the second quarter and just after its end, we made two minor strategic acquisitions: Tech Optics in the UK and Light Brigade in the USA. The companies are well established on their markets and have a long history, with more than 30 years in fiber optics. Tech Optics consolidates our position in fiber optic solutions for demanding sectors such as defence, oil and gas. The acquisition of Light Brigade, which was completed on 1 August, means that the Group now includes North America's leading training company in fiber optics. The acquisition strengthens our position as a Group that offers complete system solutions and enables us to offer more training in our Fiber to the Home (FTTH) systems.
Growth on our strategic markets remained strong during the second quarter. In Europe, excluding Sweden, we grew organically by 13 percent, primarily driven by strong growth in the UK. We are continuing to grow in North America where organic growth was 9 percent. Altogether the Group's sales grew by 5 percent during the quarter. In the prevailing circumstances with the adverse effects of COVID-19, we are satisfied with the sales growth during the quarter.
We judge that COVID-19 had a negative impact on sales of around 10 percent during the quarter. Most of our companies have been affected to some extent. Our operation in New Zealand essentially closed for a month, resulting in a corresponding loss of sales. Our training companies, which work extensively with practical training, were severely impacted. The new factory in Texas is up and running, although not to the extent we were hoping. This is due to difficulties recruiting enough operators due to the ongoing pandemic.
The effects of COVID-19 have begun gradually decreasing during the quarter. We do, however, anticipate continued negative impact during the third quarter. In what remains a very uncertain situation, we currently believe that the effects will be less in the third quarter than in the second.
The order book has continued to develop positively, and we entered the third quarter with an order book that was 22 percent higher organically than at the same point last year.
Despite the ongoing pandemic, we remain positive in our outlook on the market. We believe that the need for robust networks with high capacity will increase due to the dramatic increase in distance working and the higher demand for online meetings.
Thank you for joining us on this journey.
Henrik Larsson Lyon President and CEO Hexatronic Group AB (publ)
Net sales and earnings
The second quarter (1 april – 30 June 2020)
The Group´s net sales for the second quarter of 2020 increased 5 percent to MSEK 509.3 (484.9), mainly as a result of organic growth. The exchange-rate effects was marginal during the second quarter compared to the same quarter last year.
| Analysis of change in | Q2 | Q2 | ||
|---|---|---|---|---|
| net sales (MSEK) | 2020 | (%) | 2019 | (%) |
| Year-earlier quarter | 484.9 | - | 411.6 | - |
| Organic growth | 24.1 | 5% | 7.4 | 2% |
| Acquisitions and structural changes | 2.3 | 0% | 55.5 | 13% |
| Exchange-rate effects | -2.0 | 0% | 10.4 | 3% |
| Current quarter | 509.3 | 5% | 484.9 | 18% |
The Group's net sales on its strategic growth markets of the UK, Germany and North America continued to grow during the quarter.
| Geographical net sales | Q2 | Allocation | Growth |
|---|---|---|---|
| (MSEK) | 2020 | (%) | (%) |
| Sweden | 154.3 | 30% | 3% |
| Rest of Europe | 168.1 | 33% | 13% |
| North America | 127.5 | 25% | 9% |
| Rest of the world | 59.5 | 12% | -14% |
| Total | 509.3 | 100% | 5% |
EBITA rose 35 percent to MSEK 53.6 (39.8) in the quarter. The EBITA margin amounted to 10.5 percent (8.2).
Net financial items during the quarter amounted to -3.2 MSEK (-3.9), whereof net interest amounted to -2.6 MSEK (-3.2), unrealised foreign exchange differences to -0.3 MSEK (-0.2) and other financial items to -0.4 MSEK (-0.5).
Net earnings for the quarter amounted to MSEK 33.1 (20.2) and earnings per share after dilution, increased by 63 percent and amounted to SEK 0.88 SEK (0.54). tax for the period was MSEK 10.3 (7.0) which means the average effective tax rate for the Group was 23.8 percent (25.9) for the quarter.
The period (1 January – 30 June 2020)
The Group´s net sales for the period January-June 2020 increased 4 percent to MSEK 946.7 (906.0), mainly as a result of organic growth.
| Analysis of change in | Jan-Jun | Jan-Jun | ||
|---|---|---|---|---|
| net sales (MSEK) | 2020 | (%) | 2019 | (%) |
| Year-earlier period | 906.0 | - | 750.8 | - |
| Organic growth | 30.0 | 3% | 10.2 | 1% |
| Acquisitions and structural changes | 2.3 | 0 | 118.6 | 16% |
| Exchange-rate effects | 8.4 | 1% | 26.4 | 4% |
| Current period | 946.7 | 4% | 906.0 | 21% |
The Group's net sales on its strategic growth markets of the UK, Germany and North America continued to grow during the period January-June.
| Geographical net sales | Jan-Jun | Allocation | Growth |
|---|---|---|---|
| (MSEK) | 2020 | (%) | (%) |
| Sweden | 272.6 | 29% | -2% |
| Rest of Europe | 319.2 | 34% | 15% |
| North America | 233.8 | 25% | 13% |
| Rest of the world | 121.0 | 13% | -15% |
| Total | 946.7 | 100% | 4% |
EBITA rose 24 percent to MSEK 75.8 (61.1) during the period. The EBITA margin amounted to 8.0 percent (6.7).
Net financial items during the period amounted to -5.9 MSEK (-8.7), whereof net interest amounted to -5.0 MSEK (-6.3), unrealised foreign exchange differences to -0.1 MSEK (-1.7) and other financial items to -0.7 MSEK (-0.7).
Net earnings during the period amounted to MSEK 42.0 (25.3) and earnings per share after dilution, increased by 65 percent and amounted to SEK 1.12 SEK (0.68). Tax for the period was MSEK 14.0 (11.5) which means the average effective tax rate for the Group was 25.1 percent (31.1) during the period.
Cash flow and investments
Cash flow from operating activities in the quarter amounted to MSEK 12.2 (5.4), including a change in working capital of MSEK -22.1 (-34.8).
Cash flow from operating activities during the period January-June amounted to MSEK 67.9 (36.2), including a change in working capital of MSEK -26.9 (-49.0).
Investments during the period January-June amounted to MSEK 71.2 (29.8). This is mainly related to an investment in a new production facility in the US and payments of additional purchase price related to the acquisitions of Blue Diamond Industries and Opternus.
Net sales (MSEK) and EBITA margin (%) rolling 12 months
Liquidity and financial position
The Group´s net debt
Net debt totalled MSEK 324.0 at the end of the reporting period compared to MSEK 318.9 as per 31 December 2019.
Available funds
Available funds on 30 June 2020, including unutilised overdraft facilities, amounted to MSEK 192.9 (171.8).
Equity
Equity amounted to MSEK 624.6 on 30 June 2020 (574.4), which equated to SEK 16.65 per outstanding share before dilution at the end of the reporting period.
The Group´s financial goals
9 percent EBITA margin
Earnings before amortisation of intangible assets (EBITA) should be at least 9 percent on a rolling 12-month basis. The EBITA margin on a rolling 12-month basis on 30 June 2020 was 8.0 percent (7.0).
20 percent annual growth
The Group shall grow more than its market organically. Annual growth of at least 20 percent.
The growth will be both organic and acquisition driven. Growth during the quarter year was 5 percent. Growth on a rolling 12-month basis was 7 percent (24).
Customers
The Group's customers are mainly wholesalers, telecom operators, network owners, telecom companies, installers, and system houses.
Employees
There were 665 (596) employees in the Group on 30 June 2020. The increase is mainly related to production personnel in Sweden and North America.
Parent Company
The Parent Company's main business consists of performing Group-wide services. Revenue for the period amounted to MSEK 9.2 (9.9) and the result for the quarter was MSEK -25.0 (-29.4).
Ownership structure
The company's share is listed in the Mid cap segment on Nasdaq Stockholm. At the end of the period the share capital amounted to MSEK 1.9.
| Number of | Number | Percentage | Percentage | |
|---|---|---|---|---|
| Class of shares | shares | of votes | of capital | of votes |
| Ordinary share, 1 vote per share | 37,508,930 | 37,508,930 | 99.0% | 99.9% |
| Class C share, 1/10 vote per share | 360,000 | 36,000 | 1.0% | 0.1% |
| Total number of shares before repurchases | 37,868,930 | 37,544,930 | 100% | 100% |
| Repurchased class C shares | -360,000 | 1.0% | 0.1% | |
| Total number of shares after repurchases | 37,508,930 |
Employee stock option programmes active at the time of this report's publication are:
| Corresponding | Proportion | ||||
|---|---|---|---|---|---|
| Outstanding warrant | Number of | number | of total | Exercise | |
| programme | warrants | of shares | shares | price | Expiration period |
| Warrant programme 2018/2021 | 578,000 | 578,000 | 1.5% | 82.20 | 15 May - 15 Jun 2021 |
| Warrant programme 2019/2022 | 357,500 | 357,500 | 0.9% | 66.73 | 15 May - 15 Jun 2022 |
| Warrant programme 2020/2023 | 290,000 | 290,000 | 0.8% | 63.00 | 15 May - 15 Jun 2023 |
| Total | 1 225,500 | 1 225,500 |
In addition to above warrant programmes, a decision was made in 2019 to introduce a long-term, performance-based incentive plan (LTIP 2019) for 11 senior executives in the Group who are resident in Sweden. At the time of this report, the participants have invested in a total of 48,640 savings shares.
Under the LTIP, for each acquired Hexatronic share (savings share), participants can receive 4–6 shares in Hexatronic (performance shares) free of charge, assuming achievement of certain performance targets. To qualify for performance shares, participants must acquire and retain a number of Hexatronic shares for the
whole of the three-year vesting period and must, with some exceptions, remain in employment during the same period. In addition to the above conditions, performance shares also require certain performance targets to be met, linked to the development of the per-share earnings, the Group's growth and the growth in EBITA during the vesting period.
The targets relate to the 2019, 2020 and 2021 financial years. Hexatronic has judged that all the above conditions are non-market related conditions under IFRS 2.
The company's market value at the end of the period was MSEK 1,980. The number of shareholders at period end, 8,750, is based on data from Euroclear.
The shareholder structure of Hexatronic Group AB (publ) on 30 June 2020 is shown in the table below.
| Shareholder | No. of ordinary shares | Votes % |
|---|---|---|
| Accendo Capital | 3,756,012 | 10.0% |
| Handelsbanken Funds | 3,673,630 | 9.8% |
| Jonas Nordlund, privately and corporately | 3,003,000 | 8.0% |
| Länsförsäkringar Funds | 1,956,827 | 5.2% |
| Martin Åberg and Erik Selin via Chirp AB | 1,785,872 | 4.8% |
| AMF Insurance & Funds | 1,321,279 | 3.5% |
| Swedbank Robur, West Fund | 1,309,572 | 3.5% |
| Fondita Nordic Micro Cap |
1,158,795 | 3.1% |
| Avanza Pension - Insurance Company |
951,476 | 2.5% |
| Consensus Asset Management | 877,143 | 2.3% |
| Other shareholders | 17,715,324 | 47.2% |
| Total outstanding shares | 37,508,930 | 100.0% |
Sustainability
Together with our employees, customers, and suppliers, Hexatronic wants to contribute to a more sustainable society. The Hexatronic Group focuses on the following nine sustainability areas: high business ethics, sustainable supply chain, stable profitability, low climate impact, environmentally sound products, high resource efficiency, diversity and gender equality, good working environment, health and safety and social involvement.
In 2019, Hexatronic Group was ranked among the top 5 percent of the stock exchange's most sustainable companies linked to anti-corruption and the top 25 percent linked to Agenda 2030. In 2019, we became a supporting member of the Swedish Anti-Corruption Institute and a member of the Global Compact.
In 2020, special focus will be on developing and improving the Group in the areas of low climate impact, sustainable supply chain and diversity and gender equality. In addition, a sustainability roadmap 2030 will be drawn up.
For more information about what Hexatronic has done and what is planned within the Group's sustainability work, please see Hexatronic' s Annual Report 2019 on pages 24-37 and the website https://hexatronicgroup.com/en/sustainability/.
The market
The general transition to a more digital, sustainable society is continuing at an increasing rate, and this change is extensively dependent on a fast, reliable infrastructure for digital communication. There are many factors driving this transition and the increased need for connection, from altered behaviours such as increased work from home, online shopping, digital banking services, online gaming, HD TV, streaming services and VR/MR, to a higher degree of connectivity in industry and driverless vehicles. The common denominator for it all is reliable internet connection with increasing demands on short response times.
The world's fiber network consists of powerful international transport networks that link together national and regional networks, backbone networks, and finally access networks (FTTH, fiber-to-the-home) which reach out to individual households. Millions of homes around the world need to be connected to highperformance communication networks, which means that the international market for FTTH is continuing to develop positively. Market Panorama, an annual report by FTTH Council Europe conducted, shows that growth in subscribers between September 2018 and September 2019 was 5 percent in the Nordic countries, 40 percent in the UK and 42 percent in Germany. The 2017-2018 growth was 42 percent in New Zealand and 21 percent in North America.
Various reports and national forecasts indicate continued strong demand for FTTH on Hexatronic' s strategic growth markets (the UK, North America and Germany) up to 2025–2030, and probably beyond as well.
Other disclosures
Nature of operations
Hexatronic Group AB (publ) is an engineering group specialising in fibre communications. The Group delivers products and solutions for optical fibre networks and supplies a complete range of passive infrastructure for telecom companies, including related training.
The Group develops, designs, manufactures, and sells its own products and system solutions in combination with products from leading partners around the world. The Group conducts its own business through established companies in Sweden, Norway, the UK, Germany, China, USA, and New Zealand.
All amounts are in thousands of Swedish kronor (SEK thousand) unless otherwise stated. The figures in parentheses refer to the previous year.
Transactions with related parties
The Group rents premises from Fastighets AB Balder, in which the Group's board member Erik Selin has a significant influence. The rental contract has been entered under normal commercial conditions. The rent for the premises amounts to approximately MSEK 4.7 annually.
Significant risks and uncertainties
Like all business activities, Hexatronic' s operation is associated with risks of various kinds. Continually identifying and assessing risks is a natural and integral part of the operation, enabling risks to be controlled, limited and managed proactively.
The Group's ability to map and prevent risks minimises the likelihood of unpredictable events having an adverse impact on the business. The aim of risk management is not necessarily to eliminate the risk, but rather to safeguard set business goals with a balanced risk portfolio. Mapping, planning and management of identifiable risks supports the management in making strategic decisions. Risk assessment also aims to increase the entire organisation's risk awareness.
Several risk areas have been identified in Hexatronic' s risk management process. Hexatronic has divided identified risks into operational and environmental risks, market risks and financial risks.
A more detailed description of the Group's risks and risk management is provided in the Hexatronic Group Annual Report for 2019 on page 44-47.
Accounting policies
The consolidated financial statements for Hexatronic Group ("Hexatronic") have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, RFR 1 Supplementary Accounting Rules for Groups and the Swedish Annual Accounts Act. This interim report has been prepared in accordance with IAS 34 Interim Reporting, the Swedish Annual Accounts Act and RFR 1 Supplementary Accounting Rules for Groups.
The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The application of RFR 2 means that in its interim report for the legal entity, the Parent Company applies all IFRS and statements adopted by the EU as far as possible within the framework of the Swedish Annual Accounts Act and the Swedish Insurance Act and regarding the relationship between accounting and taxation.
For full accounting policies, see the Annual Report for 2019.
Review
This interim report has not been reviewed by the company's auditor.
Other information
Publication
This information comprises disclosures that Hexatronic Group AB (publ) must publish according to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, under responsibility of the contact persons named below, on 14 August 2020 at 07:00 CET.
Financial calendar
Interim Report July-September 2020: 5 November 2020 Year-End Report 2020: 24 February 2021 Interim Report January-March 2021: 29 April 2021
Annual General Meeting
The AGM will be held on 6 May 2021.
Please direct any questions to:
- Henrik Larsson Lyon, President and CEO, + 46 (0)70-650 34 00
- Lennart Sparud, CFO, + 46 (0)70-558 66 04
The Board of Directors and President hereby confirm that this interim report provides a true and fair overview of the business, financial position and results of the Parent Company and the Group and describes significant risks and uncertainty factors with which the Parent Company and the companies forming the Group are faced.
Gothenburg, 14 August 2020
Anders Persson Erik Selin Chairman Board member
Jaakko Kivinen Malin Frenning Board member Board member
Helena Holmgren Frida Westerberg Board member Board member
Henrik Larsson Lyon President and CEO
Consolidated income statement
| (SEK thousand) | 2020 | 2019 | 2020 | 2019 | 2019 |
|---|---|---|---|---|---|
| Q2 | Q2 | Jan-June | Jan-June | Full year | |
| Revenue | |||||
| Net sales | 509,336 | 484,875 | 946,667 | 905,962 | 1,842,266 |
| Other operating income | 4,526 | 1,039 | 6,476 | 2,262 | 14,043 |
| 513,862 | 485,914 | 953,143 | 908,224 | 1,856,310 | |
| Operating expenses | |||||
| Raw materials and goods for resale | -279,748 | -266,769 | -522,888 | -500,372 | -1,022,632 |
| Other external costs | -61,581 | -68,039 | -121,441 | -126,374 | -266,716 |
| Personnel costs | -102,621 | -94,300 | -201,449 | -187,469 | -368,880 |
| Other operating expenses | 0 | -695 | 0 | -695 | -1,294 |
| Depreciation of tangible assets | -16,358 | -16,278 | -31,600 | -32,240 | -60,876 |
| Earnings before amortisation of intangible assets (EBITA) | 53,553 | 39,834 | 75,765 | 61,075 | 135,911 |
| Amortisation of intangible assets | -6,926 | -8,735 | -13,864 | -15,572 | -29,501 |
| Operating result (EBIT) | 46,627 | 31,099 | 61,901 | 45,503 | 106,410 |
| Result from financial items | |||||
| Financial income | 0 | 41 | 106 | 82 | 285 |
| Financial expenses | -3,198 | -3,924 | -5,981 | -8,784 | -15,664 |
| Result after financial items | 43,429 | 27,216 | 56,025 | 36,800 | 91,031 |
| Income taxes | -10,320 | -7,048 | -13,922 | -11,451 | -23,965 |
| Net result for the period | 33,109 | 20,168 | 41,986 | 25,349 | 67,066 |
| Attributable to: | |||||
| Parent Company shareholders | 33,109 | 20,168 | 41,986 | 25,349 | 67,066 |
| Earnings per share | |||||
| Earnings per share before dilution (SEK) | 0.88 | 0.54 | 1.12 | 0.68 | 1.81 |
| Earnings per share after dilution (SEK) | 0.88 | 0.54 | 1.12 | 0.68 | 1.80 |
| Consolidated statement of comprehensive income | 2020 | 2019 | 2020 | 2019 | 2019 |
| Q2 | Q2 | Jan-June | Jan-June | Full year | |
| Result for the period | 33,109 | 20,168 | 41,553 | 25,349 | 67,066 |
| Items which can later be recovered in the income statement | |||||
| Translation differences | -46,228 | -3,386 | -10,903 | 13,074 | 12,025 |
| Other comprehensive income for the period | -46,228 | -3,386 | -10,903 | 13,074 | 12,025 |
| Comprehensive income for the period | -13,118 | 16,782 | 31,083 | 38,423 | 79,091 |
| Attributable to: | |||||
| Parent Company shareholders | -13,118 | 16,782 | 31,083 | 38,423 | 79,091 |
Consolidated balance sheet
| (SEK thousand) | |||
|---|---|---|---|
| Assets | 30/6/2020 | 30/6/2019 | 31/12/2019 |
| Non-current assets | |||
| Intangible assets | 423,469 | 446,308 | 434,253 |
| Tangible assets | 391,397 | 319,172 | 352,562 |
| Financial assets | 1,572 | 1,714 | 1,729 |
| Total non-current assets | 816,438 | 767,194 | 788,544 |
| Current assets | |||
| Inventories | 360,733 | 375,247 | 339,346 |
| Accounts receivable | 328,426 | 292,749 | 242,413 |
| Other receivables | 3,185 | 2,750 | 3,232 |
| Prepaid expenses and accrued income | 29,900 | 24,680 | 20,559 |
| Liquid assets | 74,904 | 84,878 | 103,762 |
| Total current assets | 797,147 | 780,305 | 709,312 |
| TOTAL ASSETS | 1,613,585 | 1,547,499 | 1,497,856 |
| Equity | 624,569 | 531,921 | 574,400 |
| Non-current liabilities | |||
| Liabilities to credit institutions | 306,465 | 326,858 | 320,430 |
| Deferred tax | 56,573 | 60,939 | 58,497 |
| Non-current lease liabilities | 129,982 | 135,461 | 123,415 |
| Total non-current liabilities | 493,019 | 523,257 | 502,342 |
| Current liabilities | |||
| Liabilities to credit institutions | 57,000 | 56,907 | 57,000 |
| Current lease liabilities | 35,282 | 30,778 | 34,349 |
| Overdraft facilities | 35,415 | 72,217 | 45,258 |
| Accounts payable | 211,749 | 193,407 | 162,584 |
| Provisions | 3,000 | 3,000 | 3,000 |
| Current tax liabilities | 19,557 | 1,248 | 2,811 |
| Other liabilities | 53,982 | 66,246 | 48,346 |
| Accrued expenses and deferred income | 80,013 | 68,518 | 67,765 |
| Total current liabilities | 495,997 | 492,321 | 421,114 |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 1,613,585 | 1,547,499 | 1,497,856 |
Consolidated statement of changes in equity
| (SEK thousand) | Share capital | Other capital contributions |
Reserves | Result brought forward, including result for the period |
Total equity |
|---|---|---|---|---|---|
| Balance brought forward as of 1 January 2019 | 1,826 | 205,787 | 5,905 | 280,897 | 494,415 |
| Result for the period | 0 | 0 | 0 | 67,066 | 67,066 |
| Other comprehensive income | 0 | 0 | 12,025 | 0 | 12,025 |
| Total comprehensive income | 0 | 0 | 12,025 | 67,066 | 79,091 |
| New shares related to employee stock option programme Employee stock option programme |
34 0 |
12,795 2,186 |
0 0 |
0 0 |
12,828 2,186 |
| Share-based remuneration | 18 | 0 | 0 | 736 | 754 |
| Dividend paid | 0 | 0 | 0 | -14,874 | -14,874 |
| Total transactions with shareholders, reported | |||||
| directly in equity | 52 | 14,981 | 0 | -14,138 | 894 |
| Balance carried forward as of 31 December 2019 | 1,877 | 220,768 | 17,930 | 333,825 | 574,400 |
| Balance brought forward as of 1 January 2020 | 1,877 | 220,768 | 17,930 | 333,825 | 574,400 |
| Result for the period | 0 | 0 | 0 | 41,986 | 41,986 |
| Other comprehensive income | 0 | 0 | -10,903 | 0 | -10,903 |
| Total comprehensive income | 0 | 0 | -10,903 | 41,986 | 31,083 |
| New shares related to employee stock option programme |
15 | 15,854 | 0 | 0 | 15,869 |
| Employee stock option programme | 0 | 1,365 | 0 | 720 | 2,085 |
| New share issue related to business acquisitions | 1 | 1,132 | 0 | 0 | 1,133 |
| Total transactions with shareholders, reported directly in equity |
16 | 18,350 | 0 | 720 | 19,087 |
| Balance carried forward as of 30 June 2020 | 1,893 | 239,118 | 7,027 | 376,531 | 624,569 |
Consolidated statement of cash flows
| (SEK thousand) | 2020 | 2019 | 2020 | 2019 | 2019 |
|---|---|---|---|---|---|
| Q2 | Q2 | Jan-June | Jan-June | Full year | |
| Operating result | 46,627 | 31,099 | 61,901 | 45,503 | 106,410 |
| Items not affecting cash flow | 1,801 | 23,173 | 38,999 | 58,597 | 97,206 |
| Interest received | -12 | 41 | 106 | 82 | 285 |
| Interest paid | -5,736 | -3,609 | -6,677 | -6,850 | -16,090 |
| Income tax paid | -8,341 | -10,536 | 459 | -12,065 | -27,679 |
| Cash flow from operating activities before changes in working capital |
34,338 | 40,167 | 94,787 | 85,266 | 160,132 |
| Increase (-)/decrease (+) in inventories | -23,285 | 4,424 | -19,499 | -40,966 | -5,065 |
| Increase (-)/decrease (+) in accounts receivable | -35,765 | -13,821 | -85,872 | -30,975 | 19,361 |
| Increase (-)/decrease (+) in operating receivables | 5,285 | 4,597 | -8,727 | 298 | 3,938 |
| Increase (+)/decrease (-) in accounts payable | 12,663 | -28,015 | 48,220 | 19,635 | -11,188 |
| Increase (+)/decrease (-) in operating liabilities | 18,986 | -1,941 | 39,010 | 2,984 | 6,736 |
| Cash flow from changes in working capital | -22,116 | -34,755 | -26,867 | -49,024 | 13,782 |
| Cash flow from operating activities | 12,222 | 5,412 | 67,920 | 36,242 | 173,915 |
| Investing activities | |||||
| Acquisition of tangible and intangible assets | -4,727 | -14,747 | -46,386 | -29,089 | -81,781 |
| Acquisition of subsidiaries after deduction of acquired liquid assets | -14,634 | 0 | -24,999 | 0 | -13,809 |
| Change in financial assets | 83 | -110 | 157 | -700 | -714 |
| Cash flow from investing activities | -19,278 | -14,857 | -71,228 | -29,788 | -96,304 |
| Financing activities | |||||
| Borrowings | 0 | 0 | 0 | 0 | 20,000 |
| Amortisation of loans | 0 | -27,611 | -14,250 | -27,611 | -56,971 |
| Amortisation of lease liabilities | -9,217 | -8,779 | -18,585 | -17,488 | -35,657 |
| Changes in overdraft facilities | -8,798 | 72,217 | -9,843 | 42,354 | 15,395 |
| New share issues for the period | 278 | 278 | 16,147 | 13,106 | 13,106 |
| Dividends paid | 0 | -14,874 | 0 | -14,874 | -14,874 |
| Cash flow from financing activities | -17,736 | 21,231 | -26,531 | -4,512 | -59,000 |
| Cash flow for the period | -24,792 | 11,786 | -29,838 | 1,942 | 18,610 |
| Liquid assets at the start of the period | 97,004 | 73,282 | 103,762 | 84,621 | 84,621 |
| Exchange rate difference in liquid assets | 2,692 | -190 | 980 | -1,685 | 531 |
| Liquid assets at the end of the period | 74,904 | 84,878 | 74,904 | 84,878 | 103,762 |
Key metric for the group
| 2020 | 2019 | 2020 | 2019 | 2019 | |
|---|---|---|---|---|---|
| Q2 | Q2 | Jan-June | Jan-June | Full year | |
| Growth in net sales | 5% | 18% | 4% | 21% | 15% |
| EBITA margin | 10.5% | 8.2% | 8.0% | 6.7% | 7.4% |
| EBITA margin, 12 months rolling | 8.0% | 7.0% | 8.0% | 7.0% | 7.4% |
| Operating margin | 9.2% | 6.4% | 6.5% | 5.0% | 5.8% |
| Earnings per share before dilution (SEK) | 0.88 | 0.54 | 1.12 | 0.68 | 1.81 |
| Earnings per share after dilution (SEK) | 0.88 | 0.54 | 1.12 | 0.68 | 1.80 |
| Net sales per employee (SEK thousand) | 791 | 815 | 1,522 | 1,565 | 3,133 |
| Result per employee (SEK thousand) | 51 | 34 | 68 | 44 | 114 |
| Quick asset ratio | 88% | 82% | 88% | 82% | 88% |
| Average number of employees | 644 | 595 | 622 | 579 | 588 |
| Number of shares at period end before dilution | 37,508,930 | 37,183,825 | 37,508,930 | 37,183,825 | 37,183,825 |
| Average number of shares before dilution | 37,508,930 | 37,183,825 | 37,400,562 | 37,071,825 | 37,127,825 |
| Average number of shares after dilution | 37,508,930 | 37,193,920 | 37,404,764 | 37,157,620 | 37,217,336 |
For definition of key metrics, see the section Definition alternative key metrics.
The key metrics presented are deemed essential to describing the Group's development as they both constitute the Group's financial objectives (growth in net sales and EBITA margin) and are the key metrics by which the Group is governed. Several key metrics are considered relevant to investors, such as earnings per share and the number of shares. Other key metrics are presented in order to provide different perspectives on how the Group is developing and are therefore deemed to be of benefit to the reader.
Parent Company income statement
| (SEK thousand) | 2020 | 2019 |
|---|---|---|
| Jan-June | Jan-June | |
| Revenue | ||
| Net sales | 9,221 | 9,889 |
| 9,221 | 9,889 | |
| Operating expenses | ||
| Other external costs | -18,450 | -21,807 |
| Personnel costs | -13,375 | -13,289 |
| Depreciation of tangible assets | -113 | -107 |
| Operating result (EBITA) | -22,717 | -25,315 |
| Result from financial items | ||
| Interest income | 2,124 | 589 |
| Interest expenses | -4,375 | -4,711 |
| Result after financial items | -24,968 | -29,436 |
| Appropriations | 0 | 0 |
| Result before tax | -24,968 | -29,436 |
| Tax on profit for the period | 4 | 0 |
| Net result for the period | -24,964 | -29,436 |
Total comprehensive income is the same as net result for the period in the parent company since there is nothing accounted for as other comprehensive income.
Parent Company balance sheet
| (SEK thousand) | 30/6/2020 | 30/6/2019 | 31/12/2019 |
|---|---|---|---|
| Assets | |||
| Intangible assets | 1,550 | 0 | 388 |
| Tangible assets | 385 | 440 | 333 |
| Financial assets | 637,828 | 625,177 | 631,753 |
| Total non-current assets | 639,763 | 625,617 | 632,473 |
| Current receivables | |||
| Receivables from Group companies | 245,088 | 158,722 | 257,463 |
| Other receivables | 3,480 | 2,714 | 2,262 |
| Prepaid expenses and accrued income | 3,784 | 4,728 | 4,118 |
| Total current receivables | 252,351 | 166,164 | 263,843 |
| Cash and bank balances | 0 | 0 | 0 |
| Total current assets | 252,351 | 166,164 | 263,843 |
| TOTAL ASSETS | 892,114 | 791,781 | 896,316 |
| Equity | 203,669 | 171,034 | 210,390 |
| Untaxed reserves | 16,950 | 12,350 | 16,950 |
| Non-current liabilities | |||
| Liabilities to credit institutions | 306,465 | 316,967 | 320,430 |
| Deferred tax | 0 | 0 | 4 |
| Total non-current liabilities | 306,465 | 316,967 | 320,434 |
| Current liabilities | |||
| Liabilities to credit institutions | 57,000 | 55,221 | 57,000 |
| Overdraft facilities | 35,415 | 72,217 | 45,258 |
| Accounts payable | 4,440 | 5,314 | 8,465 |
| Liabilities to Group companies | 254,213 | 114,470 | 200,084 |
| Current tax liabilities | 0 | 197 | 3,462 |
| Other liabilities | 7,810 | 36,981 | 29,270 |
| Accrued expenses and deferred income | 6,152 | 7,031 | 5,002 |
| Total current liabilities | 365,030 | 291,430 | 348,541 |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 892,114 | 791,781 | 896,316 |
Notes
Note 1 Revenue
| January to June 2020 | |||||
|---|---|---|---|---|---|
| Rest of the | |||||
| Geographical markets | Sweden | Rest of Europe | North America | world | Total |
| Revenue from external customers | 272,594 | 319,214 | 233,830 | 121,029 | 946,667 |
| Category | |||||
| Goods | 261,575 | 294,259 | 233,830 | 121,029 | 910,693 |
| Services | 11,019 | 24,955 | 0 | 0 | 35,974 |
| Total | 272,594 | 319,214 | 233,830 | 121,029 | 946,667 |
| Time for revenue recognition | |||||
| At a given time | 272,594 | 319,214 | 233,830 | 121,029 | 946,667 |
| Over time | 0 | 0 | 0 | 0 | 0 |
| Total | 272,594 | 319,214 | 233,830 | 121,029 | 946,667 |
| January to June 2019 | |||||
|---|---|---|---|---|---|
| Rest of the | |||||
| Geographical markets | Sweden | Rest of Europe | North America | world | Total |
| Revenue from external customers | 277,827 | 278,662 | 207,440 | 142,033 | 905,962 |
| Category | |||||
| Goods | 259,209 | 245,628 | 207,440 | 142,033 | 854,310 |
| Services | 18,618 | 33,034 | 0 | 0 | 51,652 |
| Total | 277,827 | 278,662 | 207,440 | 142,033 | 905,962 |
| Time for revenue recognition | |||||
| At a given time | 277,827 | 278,662 | 207,440 | 142,033 | 905,962 |
| Over time | 0 | 0 | 0 | 0 | 0 |
| Total | 277,827 | 278,662 | 207,440 | 142,033 | 905,962 |
Note 2 Pledged assets
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Pledged assets | 30/6/2020 | 30/6/2019 | 31/12/2019 | 30/6/2020 | 30/6/2019 |
| Assets pledged for liabilities to credit institutions | |||||
| Chattel mortgages | 157,350 | 157,350 | 157,350 | 100 | 100 |
| Shares in subsidiaries | 312,074 | 307,869 | 269,517 | 83,132 | 82,504 |
| Total | 469,424 | 465,219 | 426,867 | 83,232 | 82,604 |
Note 3 Business acquisitions
Tech Optics Ltd. ("Tech Optics")
On 1 June 2020, the Group acquired 100% of the share capital in Tech Optics for MGBP 0.374.
The preliminary table below summarises the purchase price paid for Tech Optics and the fair value of acquired assets and assumed liabilities recognised on the acquisition date.
| Purchase price as of 1 June 2020 | |
|---|---|
| Liquid assets | 4,655 |
| Total purchase price | 4,655 |
| Recognised amounts for identifiable acquired assets and taken-over liabilities | |
| Liquid assets | 1,043 |
| Tangible assets | 0,277 |
| Accounts receivable | 0,141 |
| Inventories | 1,888 |
| Other receivables | 0,567 |
| Accounts payable | -0,945 |
| Other payables | -0,435 |
| Total identifiable net assets | 2,536 |
| Goodwill | 2,119 |
Acquisition-related costs of SEK 350 thousand are included in other external costs in the consolidated statement of comprehensive income for the 2020 financial year. Total cash flow, excluding acquisition related costs, attributable to the business acquisition amounted to SEK -3,612 thousand. Goodwill is attributable to the added earning capacity the company is expected to bring.
The fair value of accounts receivable totals SEK 141 thousand. No accounts receivable is deemed to be doubtful.
Tech Optics net sales have been included in the consolidated income statement since 1 June 2020 and amount to SEK 2,320 thousand. Tech Optics also generated a net profit of SEK 477 thousand in the same period on group level.
Had Tech Optics been consolidated from 1 January 2020, the consolidated income statement for the period 1 January 2020 to 30 June 2020 would have shown increased net sales amounting to SEK 7,242 thousand and a net profit of SEK 34 thousand.
Reconciliation between IFRS and key metrics used
In this interim report, Hexatronic presents certain financial parameters that are not defined in IFRS, known as alternative key metrics. The Group believes that these parameters provide valuable supplementary information for investors, as they facilitate an evaluation of the company's results and position. Since not all companies calculate financial parameters in the same way, these metrics are not always comparable with those used by other companies. Investors should see the financial parameters as a complement to, rather than a replacement for, financial reporting in accordance with IFRS.
| Organic growth, SEK thousand, % | Q2 2020 | Jan-Jun 2020 | |
|---|---|---|---|
| Net sales 2020 | 509,336 | 946,667 | |
| Exchange-rate effects | 1,951 | -8,429 | |
| Acquisition driven | -2,320 | -2,320 | |
| Comparable net sales | 508,967 | 935,918 | |
| Net sales 2019 | 484,875 | 905,962 | |
| Net sales increase cleared of exchange-rate effects | 26,412 | 32,276 | |
| % | 5% | 4% | |
| Organic growth | 24,092 | 29,956 | |
| % | 5% | 3% | |
| Annual growth, rolling 12 months, % | 12 months | ||
| Net sales January-June 2020 | 946,667 | ||
| Net sales July-December 2019 | 936,304 | ||
| Net sales rolling 12 months | 1,882,971 | ||
| Net sales January-June 2019 | 905,962 | ||
| Net sales July-December 2018 | 846,947 | ||
| Net sales rolling 12 months | 1,752,909 | ||
| Annual growth, rolling 12 months | 7% | ||
| Quick asset ratio, % | 30/6/2020 | 30/6/2019 | 31/12/2019 |
| Current assets | 761,182 | 780,305 | 709,312 |
| Inventories | -360,733 | -375,247 | -339,346 |
| Current assets-inventories | 400,449 | 405,058 | 369,965 |
| Current liabilities | 457,464 | 492,321 | 421,114 |
| Quick asset ratio | 88% | 82% | 88% |
| Core working capital, SEK thousand | 30/6/2020 | 30/6/2019 | 31/12/2019 |
| Inventories | 360,733 | 375,247 | 339,346 |
| Accounts receivable | 328,426 | 292,749 | 242,413 |
| Accounts payable | -211,749 | -193,407 | -162,584 |
| Core working capital | 477,410 | 474,589 | 419,176 |
Definition alternative key metrics
EBITA
Earnings before amortisation of intangible assets.
EBITA margin
Earnings before amortisation of intangible assets as a percentage of net sales.
EBIT (operating result)
Earnings before interest and taxes.
Operating margin
Earnings before interest and taxes as a percentage of net sales.
Number of shares
Number of outstanding shares at the end of the period.
Organic growth
Changes in net sales excluding exchange-rate effects and acquisitions compared with the same period last year.
Annual growth
Average annual growth is calculated as the Group´s total net sales during the period compared to the same period the year before.
Quick asset ratio
Quick asset ratio is calculated as current assets minus inventories divided by current liabilities.
Core working capital
Core working capital is defined as inventories plus accounts receivable minus accounts payable.
Average number of outstanding shares
Weighted average of the number of outstanding shares during the period.
Average number of outstanding shares after dilution
Number of outstanding shares at the end of the period plus the number of shares that would be added if all dilutive potential shares were converted.
Earnings per share before dilution
Earnings as a percentage of average number of outstanding shares before dilution.
Earnings per share after dilution
Earnings as a percentage of average number of outstanding shares after dilution.
Equity per share
Equity divided by the number of shares at the end of the period.
Number of employees
Number of employees at the end of the period.
This is Hexatronic
Hexatronic Group AB (publ) is a group that develops, markets and delivers products, components and system solutions with the main focus on the fiber optic market. Hexatronic offers a wide range of innovative system and product solutions mainly for passive fiber optic infrastructure with global trademarks like Ribbonet®, Micronet™, Drytech™, Lightmate®, FibreHub™, Matrix, Viper, Stringray, Raptor, InOne and Wistom®. The Group has its headquarters in Gothenburg, Sweden and has sales offices and/or subsidiaries in Sweden, Norway, Finland, United Kingdom, Germany, China, New Zealand and the US. The Group is listed on Nasdaq Stockholm under the ticker HTRO. For more information, visit www.hexatronicgroup.com.
Hexatronic Group AB (publ) Org nr 556168-6360
Hexatronic Group AB (publ) Sofierogatan 3a, 412 51 Göteborg, Sverige www.hexatronicgroup.com