Quarterly Report • Oct 22, 2021
Quarterly Report
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Interim report 2021 January - September
This is a translation of the Swedish language original. In the event of any differences between this translation and the Swedish original, the latter shall prevail.
" Our order intake reaches record levels again and despite challenges in component supply, we succeed in keeping deliveries at the same level as during the second quarter of the year.
We continue to see a strong demand in our markets driven by increasing investments in automation, digitalization, energy efficiency and remote monitoring of industrial machinery. Order intake reaches a new record level and amounts to SEK 669 million, corresponding to a growth of 99% compared to the previous year, 80% of this growth is organic. For the first nine months, the corresponding figures are 77% and 66% respectively. As in previous quarters during the year, order intake is boosted by the fact that customers place orders for delivery longer time ahead than usual. This is due to longer lead times related to component shortage. We estimate this temporary positive effect in the order intake to amount to approximately SEK 140 million during the quarter.
The component shortage has also impacted our delivery capacity negatively. Our customers have a good understanding of the current component shortage situation and our assessment is that we do not lose customer orders to any greater extent due to longer delivery times. Despite the challenging situation sourcing components, we achieved net sales of SEK 472 million during the quarter, corresponding to a growth of 37%, of which 18% was organic compared to the previous year. For the first nine months, the corresponding figures are 32% and 22% respectively.
We estimate that the delivery situation has had a negative impact on our sales of approximately SEK 50 million during the quarter as the current component shortage has affected the ability to deliver certain products. The Ewon and Intesis brands in particular experienced delivery disruptions during the quarter.
The effect of the strong order intake and delivery challenges leads to a large build-up of the order book and we now have an order book of approximately SEK 750 million, which is approximately three times higher compared to the corresponding quarter previous year. We assess that the risk of order cancellations is low.
In our most important geographical market, Europe, we once again reached an all-time high order intake. The main driving forces are a continued very strong machine-builder market together with increased demand for remote solutions. The positive development has also continued in Asia, with good development both in China and Japan. Our organic order intake more than doubled, primarily driven by a strong industrial market in China. Also in the US, we have noted new record levels in order intake as the market for industrial automation, and the economy in general, continues to be very strong.
The global component shortage is now also affecting costs, and during the quarter we have seen prices of components multiply for some components, which has a negative effect on our manufacturing costs and leads to temporarily lower gross margin of 61.4%. To compensate for these cost increases, we are now implementing price increase for new orders. We expect to see the full effect of the price adjustments in the middle of next year, which means that the gross margin can be expected to be around current, somewhat lower, levels until mid 2022.
Our operating expenditures are increasing according to plan, in line with higher activities and new investments for growth. The increase in operating expenditures in combination with the temporarily lower gross margin mean that profitability is somewhat lower than the two previous quarters in 2021, even though we reach an operating profit of SEK 101 million, corresponding to 22% operating margin. This is still better than our long-term goal. It is also worth noting that cash flow from operations amounts to a record level of SEK 148 million.
Our latest acquisitions, Procentec and Owasys deliver. Procentec continues on a winning streak and has during the year shown an organic doubled net sales. Owasys' business is developing as planned, although there are some challenges related to component supply.
Since we see it as probable that the existing put/call options will be exercised to increase HMS ownership to one hundred percent in these two companies we will, in accordance with IFRS, not report any minority. Thus, a liability is also reported that corresponds to the expected payment for the remaining shares in the two companies. In total, the assessment of these options affects our net debt of SEK 390 million.
With more and more people fully vaccinated, the world is starting to open up again. Our employees now work from our offices to an increasing extent and we can meet more and more customers in person. Trade shows are also re-starting, albeit on a small scale. We have learned a lot about how we can conduct business more efficiently during the pandemic and we benefit from that. Still, we should not underestimate the importance of real-life meetings when it comes to maintaining relationships and creating new business.
Our sustainability work continues towards our goals for 2025 both when it comes to the environment, our employees, customers and responsible business. As part of the sustainability work, we have also signed the UN Global Compact initiative, which feels like a natural commitment for HMS.
Demand is expected to continue at a high level and most of our customers have strong underlying business. This is expected to continue in the coming quarters. The Group's sales is now highly affected by the availability of components, and we estimate that our delivery capacity will remain at current levels for the remainder of the year and then gradually improve during next year. The situation on the component market is still uncertain and temporary setbacks cannot be ruled out. We have good relations with our customers, who understand the situation that has affected the entire industry and we see the risk of lost business as low.
We continue to work with a focus on long-term growth based on a balanced view of our costs. In the long term, we continue to believe that the market for Industrial ICT (Information & Communication Technology) will be an interesting area, both in terms of organic growth and acquisitions.
Operating margin Q3
Order intake Q3 +99% +37% 22%
Net sales Q3
Order intake increased during the third quarter by 99% to SEK 669 m (336), of which currency translations affected by SEK -16 m (-10). Procentec B.V., acquired in the fourth quarter of 2020 and Owasys S.L., acquired in the third quarter of 2021, have contributed to order intake with SEK 78 m. The organic increase in order intake was 80%.
Net sales increased by 37% to SEK 472 m (345), of which currency translation effects were SEK -7 m (-10). The acquired companies have contributed to net sales by SEK 71 m. The organic increase in net sales were 18%.
Gross profit reached SEK 290 m (213), corresponding to a gross margin of 61.4% (61.9). Operating expenses amounted to SEK 189 m (137), whereof SEK 21 m corresponds to the acquired companies. The organic increase in operating expenses was 25%, corresponding to SEK 33 m.
Operating profit before depreciation/amortization and write-downs amounted to SEK 126 m (102), corresponding to a margin of 26.6% (29.5). Depreciations/amortizations and write-downs amounted to SEK 24 m (25). Operating profit amounted to SEK 101 m (77), corresponding to a margin of 21.5% (22.3). Currency translations affected the Group's operating profit by SEK -2 m (-6). The acquired companies have contributed to the operating profit for the quarter by SEK 18 m, including acquisition costs and amortization of overvalue.
Net financials was SEK 1 m (-4), which gave a profit before tax of SEK 102 m (73).
Profit after tax amounted to SEK 84 m (61) and earnings per share before and after dilution was SEK 1.81 (1.33) and SEK 1.80 (1.32) respectively.
Order intake increased during the first nine months by 77% to SEK 1,839 m (1,039), of which currency translations affected by SEK -90 m (0). Procentec B.V. and Owasys S.L., have contributed to order intake with SEK 201 m. The organic increase in order intake was 66%.
Net sales increased by 32% to SEK 1,401 m (1,061), of which currency translation effects were SEK -69 m (-9). The acquired companies have contributed to net sales by SEK 177 m. The organic increase in net sales was 22%.
Gross profit reached SEK 883 m (659), corresponding to a gross margin of 63.1% (62.1). Operating expenses amounted to SEK 549 m (458), whereof SEK 51 m corresponds to the acquired companies. The organic increase in operating expenses was 12%, corresponding to SEK 57 m.
Operating profit before depreciation/amortization and write-downs amounted to SEK 414 m (302), corresponding to a margin of 29.6% (28.5). Depreciations/amortizations and write-downs amounted to SEK 78 m (90). Operating profit amounted to SEK 336 m (213), corresponding to a margin of 24.0% (20.0). Currency translations affected the Group's operating profit by SEK -27 m (-2). The acquired companies have contributed to the operating profit by SEK 51 m, including acquisition costs and amortization of overvalue.
Net financials was SEK -2 m (-9), which gave a profit before tax of SEK 334 m (204).
Profit after tax amounted to SEK 276 m (163) and earnings per share before and after dilution was SEK 5.75 (3.58) and SEK 5.73 (3.57) respectively.
The graph shows turnover per quarter on the bars referring to the scale on the left axis. The line shows turnover for the latest 12 month period referring to the scale on the axis to the right.
The graph shows operating result EBIT per quarter. The bars refer to the scale on the left axis. The line shows operating result for the last 12 month period referring to the scale on the axis to the right.
| Quarterly data | Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Q4 2019 |
|---|---|---|---|---|---|---|---|---|
| Order intake (SEK m) | 669 | 606 | 565 | 408 | 336 | 302 | 401 | 337 |
| Net sales (SEK m) | 472 | 474 | 455 | 405 | 345 | 355 | 361 | 346 |
| Gross margin (%) | 61.4 | 63.7 | 64.0 | 61.6 | 61.9 | 62.0 | 62.4 | 61.2 |
| EBITDA (SEK m) | 126 | 147 | 141 | 99 | 102 | 111 | 90 | 78 |
| EBITDA (%) | 26.6 | 31.1 | 31.0 | 24.3 | 29.4 | 31.2 | 25.0 | 22.6 |
| EBIT (SEK m) | 101 | 121 | 114 | 75 | 77 | 69 | 67 | 55 |
| EBIT (%) | 21.5 | 25.5 | 25.0 | 18.5 | 22.3 | 19.4 | 18.5 | 15.9 |
| Cash flow from operating activities per share (SEK) | 3.16 | 2.69 | 2.83 | 1.79 | 2.49 | 2.47 | 1.18 | 1.30 |
| Earnings per share before dilution (SEK)¹ | 1.81 | 2.02 | 1.93 | 1.21 | 1.33 | 1.24 | 1.01 | 1.46 |
| Earnings per share after dilution (SEK)¹ | 1.80 | 2.01 | 1.92 | 1.20 | 1.32 | 1.24 | 1.01 | 1.46 |
| Equity per share (SEK) | 25.67 | 27.98 | 27.08 | 25.75 | 24.62 | 23.60 | 22.49 | 21.06 |
¹ Attributed to parent company shareholders.
Cash flow from operating activities before changes in working capital amounted to SEK 127 m (97) for the third quarter of the year. Changes in working capital were SEK 20 m (20), which maily corresponds to decreased account receivables. Cash flow from operating activities was thereby SEK 148 m (116).
Cash flow from investing activities was SEK -56 m (-11), which corresponds to aquisition of subsidiary of SEK -45 m (-). Moreover, investments in intangible and tangible assets claimed SEK -12 m (-11).
Cash flow from financing activities was SEK -81 m (-36) which is mainly explained by a decrease in external loans of SEK -72 m (-28). Amortizations of lease liabilities claimed SEK -9 m (-9). This means that cash flow for the quarter was SEK 10 m (70).
Cash flow from operating activities before changes in working capital amounted to SEK 409 m (278) for the first nine months. Changes in working capital were SEK -4 m (8). Cash flow from operating activities was thereby SEK 405 m (286).
Cash flow from investing activities was SEK -76 m (-36), which corresponds to aquisition of subsidiary of SEK -45 m (-). Moreover, investments in intangible and tangible assets was made by SEK -29 m (-36) and investments in financial assets by SEK -3 m (0).
Cash flow from financing activities was SEK -310 m (-126), which is mainly explained by a decrease in external loans of SEK -175 m (-95) and disbursed dividend of SEK -93 m (-). Moreover, amortizations of lease liabilities claimed SEK -27 m (-26) and re-purchase of own shares was made by SEK -15 m (-6). This means that cash flow for the period was SEK 19 m (124).
Cash and cash equivalents amounted to SEK 103 m (175) and unused credit facilities to SEK 489 m (272). Net debt amounted to SEK 416 m (161), whereof SEK 84 m (97) corresponds to lease liabilities. The net debt also includes a liability corresponding to the discounted expected exercise price for the remaining shares of Procentec B.V. and Owasys S.L, in total SEK 390 m. See more information in Significant events.
Net debt to EBITDA ratio for the last twelve months was 0.81 (0.42). Net debt/Equity ratio was 38% (14) and Equity/Assets ratio was 54% (65).
During the year the financing agreement with the existing bank was extended with similiar terms. The agreement concerns a three-year revolving credit facility of EUR 45 m.
HMS Networks AB (publ) is listed on the Nasdaq OMX Stockholm Mid Cap list, in the Information Technology sector. By the end of the period the total number of shares amounted to 46,818,868 of which 157,571 shares are held by the company.
A list of the company's ownership structure can be found on the company's website (www.hms-networks.com).
The company has four ongoing share savings programs. Based on a decision by the Annual General Meetings, permanent employees are offered to save in HMS shares in an annual share savings program. Between 41% and 52% of the employees opted to participate in the respective program. If certain criterias are met the company is committed to distribute a maximum of two HMS shares for every share saved by the employee, to the participant. As of September 30, 2021, the total number of saved shares amounted to 93,078 (119,639) within ongoing programs.
On December 31, 2020 the share savings program from 2017 was finalized. During the first quarter of 2021, 47,345 shares, of which 17,973 performance shares, were distributed free of charge to the participants. Shares used for the allocation were own shares held by the company.
The parent company's operations are primarily focused on Group wide management and financing. Apart from the Group's CEO, the parent company has no employees. The operating profit for the first nine months amounted to SEK 0 m (0). Dividend from subsidiaries amounted to SEK 423 m (29) and the profit after tax for the first nine months was SEK 423 m (33). Cash and cash equivalents amounted to SEK 2 m (1) and external borrowing does not exist.
No material transactions with related parties have occurred during the period.
There have been no changes in the Group's contingent liabilities, described on page 101 in Note 39 of the Annual Report for 2020.
On July 1, 2021 HMS acquired 60% of the shares in the Spanish company Owasys Advanced Wireless Devices S.L. Owasys is a wireless communication company designing and manufacturing products for utility vehicles and industrial machines. With 20 employees, the company is expected to have net sales of EUR 5.5 m and operating profit before depreciation and amortization of EUR 1.4 m in 2021.
The acquisition generated a SEK 144 m excess value in the Group. The aquired company is consolidated in the HMS Group account as of July 1, 2021. During the third quarter, Owasys had a positive impact on the net sales of the Group of SEK 12 m. The acquisition's contribution to operating profit, including amortization on acquired overvalue and acquisition costs, amounted to SEK -2 m.
HMS has a put/call-option related to the remaining 40% of the shares in Owasys, which is likely to be exercised. As a result of the option, HMS recognize the acquisition of the shares as if the company where wholly owned without minority and a liability corresponding to the discounted expected exercise price for the option. The liability for the remaining shares is valued at SEK 91 m.
According to preliminary acquisition analysis, the purchase price, acquired net assets and goodwill amount to:
| SEK | |
|---|---|
| Purchase sum: | million |
| Cash and cash equivalents | 57 |
| Additional purchase price | 33 |
| Option liability | 91 |
| Total purchase sum | 178 |
| The assets and liabilities recognized in conjun ction with the acquisition are as follows: |
SEK million |
| Intangible fixed assets | 31 |
| Tangible fixed assets | 0 |
| Deferred tax assets | 16 |
| Current assets | 24 |
| Cash and cash equivalents | 9 |
| Deferred tax liabilities | -4 |
| Non-current liabilities | -2 |
| Current liabilities | -16 |
| Total identifiable net assets | 58 |
| Goodwill* | 119 |
| Acquired net assets | 178 |
*Goodwill is attributable to the company's market position within wireless communication and expected synergies with existing operations. No part of the recognized goodwill is expected to be tax deductable.
On October 1, 2020 HMS aquired 70% of the shares in the Dutch company Procentec B.V. HMS has a put/call-option related to the remaining 30% of the shares in Procentec B.V. and during the quarter, managment has updated its assessment that the option is likely to be exercised. This means that HMS has recognized a liability corresponding to the discounted expected exercise price for the option, which amounts to SEK 299 m. As a result of the option, HMS recognize the acquisition of the shares as if the company where wholly owned without minority from the third quarter 2021.
Preliminary acquisition analyses based on as thorough estimates and judgements as possible are conducted at the time of acquisition. However, the analyses may need to be adjusted later on. All acquisition analyses are subject to final adjustments no later than 12 months after the acquisition date.
When there are obligations to acquire the remaining shares of a company, these are recognized as if they were wholly owned without a minority. Instead, a financial liability is recognized in the consolidated balance sheet, corresponding to the discounted expected exercise price for these options. The non-controlling interest attributable to the option is thus also eliminated. The difference between the liability for the option and the non-controlling interest to which the option is related is recognized directly against the majority's equity. The expected purchase price for the remaining ownership interest is recognized as a financial liability in accordance with IAS 32/IFRS 9. Any future changes in value are recognized in the consolidated income statement.
There are no events that are to be considered significant after the end of the period until the signing of this interim report.
Demand is expected to continue at a high level and most of our customers have strong underlying business. This is expected to continue in the coming quarters. The global shortage of semiconductor components is still affecting the Group, which has resulted in increased component prices and longer delivery times for several products. There may be shifts in deliveries between quarters, but the Group does not assess that it will have any noticeable impact on lost business.
The HMS Group's long-term growth is supported by a continued inflow of Design-Wins, a broader product offering especially within the Industrial ICT, supplementary technology platforms from earlier acquisitions, and expansion of the HMS sales channels according to the existing strategy.
The HMS Group is exposed to business and financial risks through its operations. These risks have been described at length in the Company's Annual Report 2020. In addition, no significant risks are considered to have arisen.
In accordance with principles adopted at a prior HMS' Annual General Meeting, the following persons have been assigned to be a part of the Nomination Committee: Johan Menckel, Investment AB Latour, representing 26% of the shares, Staffan Dahlström representing 13% of the shares, Patrik Jönsson, SEB Fonder representing 9% of the shares, Tomas Risbecker, AMF Fonder representing 7% of the shares, and Charlotte Brogren, Chairman of the Board. The Nomination Committee has appointed Johan Menckel as its Chairman.
Shareholders who wish to present proposals to HMS' Nomination Committee may do so by e-mail to: [email protected] or in writing to: HMS Networks AB, Att: Nomination Committee, Box 4126, SE 300 04 Halmstad, Sweden no later than January 10, 2022.
HMS Group's consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS), adopted by the EU. The Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The parent company applies Swedish Financial Reporting Board's recommendation, RFR 2 Accounting for Legal Entities, and the Swedish Annual Accounts Act.
The accounting principles applied conform to those described in the 2020 Annual Report (except the following description of cash flow hedging and supplements regarding financial instruments).
The Group hedges part of the forecasted inflow in foreign currency and reports the realized cash flow hedges (currency futures) as net sales in the income statement. In 2020, these were reported separately as net sales (inflow), cost of goods sold (outflow) and selling expenses (outflow) in the income statement.
HMS acquisitions include deferred consideration and option liabilities, which constitute financial instruments that are reported at fair value through the income statement. Presented fair values for these items have been calculated by management based on a discounted cash flow model and are presented within level 3 in the value hierarchy. No transfers between levels have occurred during the period. Level 3 in the fair value hierarchy are instruments where significant input data is not based on observable market information. Regarding other financial instruments reported at amortized cost the carrying amount is deemed to constitute a reasonable approximation of fair value.
Other new or revised IFRS standards or other IFRIC-interpretations that came into effect after January 1, 2021 have not had any significant impact on the Group's financial reports as of September 30, 2021.
HMS applies the European Securities and Market Authority's (ESMA) guidelines on alternative key indicators (measures that are not defined in accordance with IFRS).
GROWTH STRATEGY – HMS' growth strategies includes a combination of organic growth and acquisitions. Expansion in existing markets is done through a continuously improved and expanded product offering, often including new technology. This is combined with a high level of service and active investments in new sales channels globally. New markets are addressed with innovative and targeted solutions.
DEVELOPMENT STRATEGY – HMS' core competence is the broad and deep knowledge of industrial communication and IIoT, Industrial Internet of Things. A clear platform strategy ensures that all development centers within HMS are using core HMS technology.
PRODUCT STRATEGY – HMS offers solutions for industrial ICT (Information and Communication Technology) under the trademarks Anybus®, Ewon®, Ixxat® and Intesis®.
HMS also offers products and services for diagnostics, monitoring and troubleshooting of industrial networks via Procentec, software solutions for intuitive visualization of data from industrial applications through WEBfactory, as well as solutions for wireless communication in mobile industrial applications through Owasys.
PRODUCTION STRATEGY – Flexible low volume production in own factories in Halmstad, Nivelles and Igualada is combined with high volume production in Europe and Asia in close collaboration with carefully selected subcontractors.
MARKETING STRATEGY – HMS' markets its solutions to several customer segment in the industrial value chain. Device manufacturers and machine builders are offered solutions that are tightly integrated into the customer's application. System integrators and end users are offered flexible infrastructure products that solve all kinds of communication problems in industrial systems and IIoT applications. HMS' most important market is factory automation, but other important markets are energy and infrastructure, transport and logistics, and building automation.
SALES STRATEGY – HMS combines direct sales from own sales offices with sales through distribution. HMS has sales offices in key markets in 16 countries, complemented by a network of distributors and solution partners in more than 50 countries.
HMS has developed its business models by packaging technology into targeted solutions for each targeted customer group. With device manufacturers and machine builders, HMS signs long-term framework agreements, so-called Design-Wins. This model is characterized by a relatively long sales cycle and design phase during which HMS' solutions are specified into the customer's application, after which long-term revenues are secured. The close collaboration gives HMS clear insight into the customer's future needs.
The business model towards system integrators is more traditional with a short sales cycle and manufacturing against customer orders or short-term forecasts. This sale is often handled by local distributors who are supported by HMS' sales and marketing organization.
Halmstad October 22, 2021
Staffan Dahlström Chief Executive Officer
Further information can be obtained by: Staffan Dahlström, CEO, +46 (0)35 17 2901 Joakim Nideborn, CFO, +46 (0)35 710 6983
This information is such that HMS Networks AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 14.00 CET on October 22, 2021.
We have reviewed the condensed interim financial information (interim report) of HMS Networks AB (publ) as of September 30, 2021 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information 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 Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Halmstad October 22, 2021 Öhrlings PricewaterhouseCoopers AB
Johan Palmgren Authorized Public Accountant
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Net sales | 472 | 345 | 1,401 | 1,061 | 1,806 | 1,467 |
| Cost of goods and services sold | -182 | -131 | -518 | -402 | -673 | -558 |
| GROSS PROFIT | 290 | 213 | 883 | 659 | 1,133 | 909 |
| Selling expenses | -92 | -70 | -255 | -225 | -342 | -312 |
| Administrative expenses | -41 | -27 | -121 | -86 | -158 | -123 |
| Research and development expenses | -55 | -40 | -171 | -131 | -220 | -180 |
| Other operating income¹ | - | - | 1 | 12 | 1 | 12 |
| Other operating expenses² | -1 | 0 | -2 | -16 | -3 | -18 |
| OPERATING PROFIT | 101 | 77 | 336 | 213 | 411 | 288 |
| Financial income and expenses | 1 | -4 | -2 | -9 | -7 | -14 |
| Profit before tax | 102 | 73 | 334 | 204 | 404 | 274 |
| Tax | -18 | -11 | -59 | -41 | -71 | -54 |
| PROFIT FOR THE PERIOD | 84 | 61 | 276 | 163 | 333 | 220 |
| Attributed to: | ||||||
| Parent company shareholders | 84 | 62 | 268 | 167 | 325 | 223 |
| Non-controlling interests | - | -1 | 8 | -4 | 9 | -3 |
| Earnings per share regarding profit attributed to parent company shareholders: |
||||||
| Before dilution (SEK) | 1.81 | 1.33 | 5.75 | 3.58 | 6.96 | 4.79 |
| After dilution (SEK) | 1.80 | 1.32 | 5.73 | 3.57 | 6.93 | 4.77 |
1 Of other operating income for 2020, SEK 10 m corresponds to reversal of additional purchase price related to WEBfactory GmbH.
2 Of other operating expenses for 2020, SEK -14 m corresponds to impairment of goodwill attributable to WEBfactory GmbH.
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Profit for the period | 84 | 61 | 276 | 163 | 333 | 220 |
| Other comprehensive income: | ||||||
| Items that may be reclassified subsequently to income statement |
||||||
| Cash flow hedges | -9 | 0 | -23 | 2 | -7 | 18 |
| Hedging of net investments | -1 | 0 | -3 | -2 | 10 | 12 |
| Translation differences | 7 | 5 | 16 | 10 | -31 | -37 |
| Income tax relating to components of other comprehensive income |
2 | 0 | 5 | 0 | -1 | -6 |
| Other comprehensive income for the period, net of tax | 0 | 4 | -5 | 11 | -28 | -13 |
| Total comprehensive income for the period | 84 | 66 | 271 | 173 | 305 | 207 |
| Attributed to: | ||||||
| Parent company shareholders | 84 | 66 | 264 | 178 | 296 | 210 |
| Non-controlling interests | - | -1 | 8 | -4 | 9 | -3 |
| SEK millions | Sep 30 2021 | Sep 30 2020 | Dec 31 2020 |
|---|---|---|---|
| ASSETS | |||
| Goodwill | 1,032 | 869 | 902 |
| Other intangible assets | 286 | 282 | 278 |
| Property, plant and equipment | 44 | 40 | 42 |
| Right-of-use assets | 86 | 98 | 102 |
| Deferred tax assets | 18 | 4 | 4 |
| Other long-term receivables | 14 | 9 | 11 |
| Total fixed assets | 1,480 | 1,302 | 1,339 |
| Inventories | 182 | 136 | 158 |
| Accounts receivable - trade | 206 | 145 | 175 |
| Other current receivables | 59 | 69 | 73 |
| Cash and cash equivalents | 103 | 175 | 82 |
| Total current assets | 550 | 525 | 487 |
| TOTAL ASSETS | 2,030 | 1,827 | 1,826 |
| EQUITY AND LIABILITIES | |||
| Equity attributed to parent company shareholders | 1,092 | 1,175 | 1,204 |
| Non-controlling interests | - | 8 | 17 |
| Total Equity | 1,092 | 1,183 | 1,220 |
| Liabilities | |||
| Interest-bearing liabilities | 11 | 238 | 177 |
| Non interest-bearing liabilities¹ | 417 | - | - |
| Lease liabilities | 53 | 66 | 68 |
| Deferred income tax liabilities | 76 | 77 | 80 |
| Total non-current liabilities | 556 | 381 | 326 |
| Interest-bearing liabilities | 1 | 2 | 1 |
| Non interest-bearing liabilities | 6 | - | - |
| Lease liabilities | 31 | 31 | 34 |
| Accounts payable - trade | 116 | 77 | 91 |
| Other current liabilities | 227 | 154 | 154 |
| Total current liabilities | 382 | 263 | 280 |
| TOTAL EQUITY AND LIABILITIES | 2,030 | 1,827 | 1,826 |
1 SEK 390 m corresponds to the expected purchase price for the remaining shares in Procentec B.V. and Owasys S.L.
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities before changes in working capital |
127 | 97 | 409 | 278 | 488 | 357 |
| Cash flow from changes in working capital | 20 | 20 | -4 | 8 | 1 | 13 |
| Cash flow from operating activities | 148 | 116 | 405 | 286 | 488 | 370 |
| Cash flow from investing activities¹ | -56 | -11 | -76 | -36 | -127 | -88 |
| Cash flow from financing activities | -81 | -36 | -310 | -126 | -431 | -247 |
| Cash flow for the period | 10 | 70 | 19 | 124 | -70 | 36 |
| Cash and cash equivalents at beginning of the period | 90 | 105 | 82 | 51 | 175 | 51 |
| Translation differences in cash and cash equivalents | 2 | 1 | 3 | 0 | -3 | -5 |
| Cash and cash equivalents at end of period | 103 | 175 | 103 | 175 | 103 | 82 |
| Interest-bearing and Non-interest-bearing liabilities2 | 519 | 336 | 519 | 336 | 519 | 279 |
| Net debt | 416 | 161 | 416 | 161 | 416 | 198 |
1The acquisition of Procentec's impact on the Group's cash and cash equivalents, after deduction of Procentec's cash and cash equivalents, was SEK -27 m in Q4 2020.
The acquisition of the remaining 25.1% of WEBfactory had an impact on the Group's cash and cash equivalents by SEK -13 m in Q4 2020. The acquisition of Owasys' impact on the Group's cash and cash equivalents, after deduction of Owasys' cash and cash equivalents, was SEK -45 m in Q3 2021.
2Non-interest-bearing liabilities refers to additional purchase price and option liabilities related to Procentec and Owasys from Q3 2021.
| Change in Group Equity, SEK millions | Sep 30 2021 | Sep 30 2020 | Dec 31 2020 |
|---|---|---|---|
| Opening balance at January 1 | 1,204 | 998 | 998 |
| Total comprehensive income for the period | 263 | 178 | 210 |
| Share-related payment | 8 | 5 | 6 |
| Repurchase of own shares | -15 | -6 | -6 |
| Dividend | -93 | - | - |
| Transactions with non-controlling interests¹ | -274 | - | -6 |
| Closing balance attributed to parent company shareholders |
1,092 | 1,175 | 1,204 |
| Opening non-controlling interest at January 1 | 17 | 12 | 12 |
| Total comprehensive income for the period | 8 | -4 | -3 |
| Non-controlling interest arising from acquisition of subsidiaries |
- | - | 16 |
| Transactions with non-controlling interests¹ | -25 | - | -8 |
| Closing non-controlling interests | - | 8 | 17 |
| Closing balance | 1,092 | 1,183 | 1,220 |
¹HMS holds a put/call-option related to the remaining ownership interests in Procentec B.V. and Owasys S.L. respectively, which is not held by the majority owner. The design of these options is such that it is considered likely that the option will be exercised. As a result, the acquisitions are reported at 100% and no holding of non-controlling interests are reported in the Group's equity. Previous non-controlling interest in Procentec B.V. has been adjusted in connection with this judgement and instead fair value of the option is recognized as a financial liability. The difference between the option's estimated fair value and the reported minority interest is recognized against the majority's equity.
| Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|
|---|---|---|---|---|---|---|
| Net increase in net sales (%) | 37.0 | -8.4 | 32.0 | -9.5 | 28.3 | -3.4 |
| Gross margin (%) | 61.4 | 61.9 | 63.1 | 62.1 | 62.7 | 62.0 |
| EBITDA (SEK m) | 126 | 102 | 414 | 302 | 513 | 401 |
| EBITDA (%) | 26.6 | 29.4 | 29.6 | 28.5 | 28.4 | 27.4 |
| EBIT excl acquisition-related costs (SEK m) | 106 | 82 | 352 | 230 | 433 | 311 |
| EBIT excl acquisition-related costs (%) | 22.5 | 23.8 | 25.1 | 21.6 | 24.0 | 21.2 |
| EBIT (SEK m) | 101 | 77 | 336 | 213 | 411 | 288 |
| EBIT (%) | 21.5 | 22.3 | 24.0 | 20.0 | 22.8 | 19.6 |
| Return on capital employed (%) | - | - | - | - | 27.4 | 19.3 |
| Return on Shareholder's equity (%) | - | - | - | - | 26.6 | 19.9 |
| Working capital in relation to sales (%) | - | - | - | - | 7.4 | 10.5 |
| Capital turnover rate | - | - | - | - | 0.96 | 0.81 |
| Net debt/equity ratio | 0.38 | 0.14 | 0.38 | 0.14 | 0.38 | 0.16 |
| Equity/assets ratio (%) | 53.8 | 64.8 | 53.8 | 64.8 | 53.8 | 66.8 |
| Investments in tangible fixed assets (SEK m) | 6 | 2 | 11 | 5 | 12 | 6 |
| Investments in right-of-use assets (SEK m) | 1 | 2 | 7 | 6 | 24 | 24 |
| Investments in intangible fixed assets (SEK m) | 5 | 9 | 18 | 32 | 28 | 41 |
| Depreciation of tangible fixed assets (SEK m) | -3 | -3 | -10 | -9 | -13 | -13 |
| Depreciation of right-of-use assets (SEK m) | -8 | -8 | -25 | -25 | -34 | -34 |
| Amortization of intangible fixed assets (SEK m) | -13 | -12 | -35 | -36 | -46 | -48 |
| of which amortization of overvalues acquired | -5 | -5 | -15 | -14 | -19 | -18 |
| of which amortization of capitalized development costs | -7 | -7 | -20 | -23 | -27 | -29 |
| Impairment of intangible fixed assets (SEK m) | - | -1 | -9 | -19 | -9 | -19 |
| Number of employees (average) | 698 | 590 | 631 | 609 | 670 | 614 |
| Net sales per employees (SEK m) | 0.7 | 0.6 | 2.2 | 1.7 | 2.7 | 2.4 |
| Equity per share (SEK) | 25.67 | 24.62 | 26.38 | 23.55 | 26.17 | 24.07 |
| Cash flow from operations per share (SEK) | 3.16 | 2.49 | 8.68 | 6.14 | 10.46 | 7.93 |
| Total number of share average (thousands) | 46,819 | 46,819 | 46,819 | 46,819 | 46,819 | 46,819 |
| Holding of own shares average (thousands) | 158 | 155 | 157 | 167 | 157 | 165 |
| Total outstanding shares average (thousands) | 46,661 | 46,664 | 46,662 | 46,652 | 46,662 | 46,654 |
| Division of net sales per brand SEK millions |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Q4 2019 |
|---|---|---|---|---|---|---|---|---|
| Anybus | 220 | 231 | 214 | 191 | 184 | 212 | 211 | 184 |
| Ixxat | 53 | 41 | 47 | 42 | 43 | 40 | 43 | 42 |
| Ewon | 73 | 97 | 93 | 84 | 74 | 67 | 76 | 75 |
| Intesis | 34 | 34 | 31 | 33 | 33 | 27 | 21 | 34 |
| Other¹ | 92 | 71 | 69 | 55 | 11 | 9 | 10 | 11 |
| Total | 472 | 474 | 455 | 405 | 345 | 355 | 361 | 346 |
All brands are based on a common technology platform and are marketed and sold in common sales channels. Therefore, no complete segment follow-up is reported. 1Net sales in "Other" includes Procentec from Q4 2020 and Owasys from Q3 2021.
| Net sales per region SEK millions |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Q4 2019 |
|---|---|---|---|---|---|---|---|---|
| EMEA | 296 | 285 | 280 | 250 | 208 | 198 | 214 | 218 |
| Americas | 96 | 107 | 96 | 82 | 80 | 84 | 87 | 76 |
| Asia | 80 | 82 | 79 | 73 | 57 | 73 | 60 | 52 |
| Total | 472 | 474 | 455 | 405 | 345 | 355 | 361 | 346 |
| Income statement SEK millions |
Q3 2021 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Q4 2019 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 472 | 474 | 455 | 405 | 345 | 355 | 361 | 346 |
| Gross profit | 290 | 302 | 291 | 250 | 213 | 220 | 225 | 212 |
| Gross margin (%) | 61.4 | 63.7 | 64.0 | 61.6 | 61.9 | 62.0 | 62.4 | 61.2 |
| Operating profit | 101 | 121 | 114 | 75 | 77 | 69 | 67 | 55 |
| Operating margin (%) | 21.5 | 25.5 | 25.0 | 18.5 | 22.3 | 19.4 | 18.5 | 15.9 |
| Profit before tax | 102 | 117 | 115 | 70 | 73 | 69 | 63 | 47 |
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Net sales | 4 | 4 | 11 | 13 | 14 | 16 |
| Gross profit | 4 | 4 | 11 | 13 | 14 | 16 |
| Administrative expenses | -4 | -4 | -11 | -13 | -15 | -16 |
| Operating profit | 0 | 0 | 0 | 0 | 0 | 0 |
| Profit from participations in subsidiaries | - | - | 423 | 29 | 423 | 29 |
| Interest income/ expenses and similar items | - | 0 | 0 | 4 | 0 | 4 |
| Profit before tax | 0 | 0 | 423 | 33 | 423 | 33 |
| Tax | - | - | 0 | 0 | -1 | -1 |
| Profit for the period | 0 | 0 | 423 | 33 | 422 | 32 |
| SEK millions | Sep 30 2021 | Sep 30 2020 | Dec 31 2020 |
|---|---|---|---|
| ASSETS | |||
| Financial assets | 337 | 337 | 337 |
| Total financial assets | 337 | 337 | 337 |
| Receivables from Group companies | 306 | - | - |
| Other receivables | 0 | 1 | 1 |
| Cash and cash equivalents | 2 | 1 | 2 |
| Total current assets | 308 | 2 | 3 |
| TOTAL ASSETS | 645 | 339 | 340 |
| EQUITY AND LIABILITIES | |||
| Equity | 639 | 326 | 325 |
| Current liabilities | |||
| Accounts payable - trade | - | 1 | 1 |
| Liabilities to Group companies | - | 6 | 6 |
| Other current liabilities | 7 | 6 | 8 |
| Total current liabilities | 7 | 13 | 15 |
| TOTAL EQUITY AND LIABILITIES | 645 | 339 | 340 |
The average number of registered shares less repurchased own shares that are held as treasury shares.
Total assets less non-interest-bearing current liabilities, provisions, and total deferred tax liabilities.
CAPITAL TURNOVER Net sales in relation to average balance sheet total.
CASH FLOW FROM OPERATING ACTIVITIES PER SHARE Cash flow from operating activities in relation to the average number of outstanding shares.
Share of the profit after tax attributable to the parent company shareholders in relation to the average number of outstanding shares.
Share of the profit after tax attributable to the parent company shareholders in relation to the average number of outstanding shares plus an adjustment for the average number of shares that are added when converting the outstanding number of convertibles and options.
Operating income according to income statement.
Operating income excluding amortization and impairment of acquired overvalues and goodwill as well as acquisition-related transaction costs.
Operating profit excluding depreciation, amortization and impairment of tangible and intangible assets.
Average equity attributable to the parent company's shareholders divided by the number of outstanding shares at the end of the period.
Shareholders' equity in relation to total assets.
Long-term and short-term financial receivables plus cash and cash equivalents.
Long-and short-term interest-bearing financial liabilities, additional purchase price and option liability, reduced with financial interestbearing assets and cash and cash equivalents.
The number of registered shares, less repurchased own shares that are held as treasury shares.
Operating profit in relation to net sales.
Change in order intake, net sales and operating expenses excluding increase attributable to acquisitions, converted to the previous year's exchange rates and calculated as a percentage of the previous year's figures. Amounts from acquired companies are included in the calculation of organic change from the first turn of the month, which falls 12 months after the acquisition date.
Profit after financial income in relation to the average capital employed.
Share of the profit after tax attributable to the parent company shareholders in relation to the average of Shareholder's equity.
Current assets less cash and cash equivalents and current liabilities calculated on average values.
HMS presents certain financial measures in the interim report that has not been defined in accordance with IFRS. The company considers that these measures provide valuable additional information for investors and the company's management, as they enable the evaluation of relevant trends and the company's performance.
As not all companies calculate financial measures in the same way, these are not always comparable with the measures used by other companies. These financial measures should therefore not be viewed as substitutes for IFRS-defined measures, unless otherwise stated.
EBITDA is a measure of the underlying operational activities and an indicator of cash flow.
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Operating profit | 101 | 77 | 336 | 213 | 411 | 288 |
| Depreciation of tangible fixed assets (incl right-of-use assets) |
12 | 11 | 35 | 34 | 47 | 46 |
| Amortization of intangible fixed assets | 13 | 12 | 35 | 36 | 46 | 48 |
| Impairment of intangible fixed assets | - | 1 | 9 | 19 | 9 | 19 |
| EBITDA | 126 | 102 | 414 | 303 | 513 | 401 |
| Net sales | 472 | 345 | 1,401 | 1,061 | 1,806 | 1,467 |
| EBITDA (%) | 26.6 | 29.5 | 29.6 | 28.5 | 28.4 | 27.4 |
EBIT before amortization and impairment of acquired overvalues and goodwill and transaction costs is a value that the company uses to describe how the operating activities develop and perform without the impact of acquisition-related costs.
| SEK millions | Q3 2021 |
Q3 2020 |
Q1-Q3 2021 |
Q1-Q3 2020 |
R12 2021 |
Q1-Q4 2020 |
|---|---|---|---|---|---|---|
| Operating profit | 101 | 77 | 336 | 213 | 411 | 288 |
| Amortization of acquired overvalues | 5 | 5 | 15 | 14 | 19 | 19 |
| Impairment of acquired goodwill | - | - | - | 14 | - | 14 |
| Reversal of additional consideration | - | - | - | -10 | - | -10 |
| Acquisition-related transaction costs | 0 | - | 1 | - | 3 | 1 |
| EBIT excl acquisition-related costs | 106 | 82 | 352 | 230 | 433 | 311 |
| Net sales | 472 | 345 | 1,401 | 1,061 | 1,806 | 1,467 |
| EBIT excl acquisition-related costs (%) | 22.5 | 23.8 | 25.1 | 21.6 | 24.0 | 21.2 |
HMS Networks AB (publ) is a market-leading provider of solutions in industrial information and communication technology (Industrial ICT). HMS develops and manufactures products under the Anybus®, Ixxat®, Ewon® and Intesis® brands. Development takes place at the headquarter in Halmstad and also in Ravensburg, Nivelles, Igualada, Wetzlar, Buchen, Delft and Bilbao. Local sales and support are handled by branch offices in Germany, USA, Japan, China, Singapore, Italy, France, Spain, the Netherlands, India, UK, Sweden, South Korea and UAE, as well as through a worldwide network of distributors and partners. HMS employs over 700 people and reported sales of SEK 1,467 million in 2020. HMS is listed on the NASDAQ OMX in Stockholm, category Mid Cap, Information Technology.
To become the World's greatest industrial ICT company. (ICT = Information & Communication Technology)
We enable valuable data and insights from industrial equipment allowing our customers to increase productivity and sustainability.
HMS Networks AB (publ) Org.Nr. 556661-8954 Box 4126 | 300 04 Halmstad | Sweden Tel: +46 35 17 29 00 [email protected] www.hms-networks.com/ir
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