Solar — Interim / Quarterly Report 2016

Feb 10, 2017

Solar A/S
CVR NO.: 15 90 84 16

Q4 2016

Quarterly information

The quarterly information has neither been audited nor reviewed

solar
stronger together

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Solar A/S Quarterly information Q4 2016

Quarterly figures

Consolidated

Income statement (DKK million)	Q1		Q2		Q3		Q4
	2016	2015	2016	2015	2016	2015	2016	2015
Revenue	2,656	2,645	2,811	2,674	2,595	2,449	3,010	2,819
Earnings before interest, tax, depreciation and amortisation (EBITDA)	67	77	72	64	74	104	117	117
Earnings before interest, tax and amortisation (EBITA)	52	60	57	48	67	89	102	99
Earnings before interest and tax (EBIT)	39	48	43	37	53	77	87	87
Financials, net	-11	-8	-6	-7	-9	-12	-8	-21
Earnings before tax (EBT)	28	40	37	30	44	65	79	66
Net profit for the period	21	62	27	23	29	48	48	34

Balance sheet (DKK million)

Non-current assets	1,324	1,322	1,316	1,310	1,399	1,281	1,397	1,250
Current assets	3,285	3,365	3,221	3,358	3,172	3,201	3,109	3,421
Balance sheet total	4,609	4,687	4,537	4,668	4,571	4,482	4,506	4,671
Equity	1,813	1,754	1,740	1,798	1,631	1,812	1,683	1,831
Non-current liabilities	394	649	387	644	407	623	375	592
Current liabilities	2,402	2,284	2,410	2,226	2,533	2,047	2,448	2,248
Interest-bearing liabilities, net	156	240	231	221	476	294	43	-184
Invested capital	1,984	2,101	1,986	2,133	2,122	2,219	1,744	1,662
Net working capital, end of period	1,232	1,308	1,196	1,307	1,323	1,403	998	989
Net working capital, average	1,233	1,362	1,205	1,302	1,185	1,282	1,187	1,252

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Solar A/S Quarterly information Q4 2016

Quarterly figures

Consolidated - continued

Cash flow (DKK million)	Q1		Q2		Q3		Q4
	2016	2015	2016	2015	2016	2015	2016	2015
Cash flow from operating activities, continuing operations	-251	-183	40	58	-7	-68	437	524
Cash flow from investing activities, continuing operations	-33	22	-28	-10	-83	-17	-3	-19
Cash flow from financing activities, continuing operations	-80	-14	-137	-69	-159	-12	-12	-30
Net investments in intangible assets	-12	-6	-19	-10	-22	-10	-35	-10
Net investments in property, plant and equipment	32	-4	-9	-5	-4	-7	37	-9
Acquisition and disposal of subsidiaries, net	-53	32	0	5	-44	0	0	0

Financial ratios (% unless otherwise stated)

Revenue growth	0.4	2.3	5.1	8.0	6.0	1.3	6.8	1.6
Organic growth	-0.3	4.6	3.8	9.4	3.0	3.8	4.4	3.2
Organic growth adjusted for number of working days	1.2	5.8	-1.8	10.1	3.1	3.8	4.3	1.5
Gross profit margin	21.0	21.2	20.5	20.5	20.8	20.8	21.1	20.5
EBITDA margin	2.5	2.9	2.6	2.4	2.9	4.2	3.9	4.2
EBITA margin	2.0	2.3	2.0	1.8	2.6	3.6	3.4	3.5
EBIT margin	1.5	1.8	1.5	1.4	2.0	3.1	2.9	3.1
Net working capital (end of period NWC)/revenue (LTM)	11.6	12.7	11.1	12.4	12.2	13.3	9.0	9.3
Net working capital (average NWC)/revenue (LTM)	11.6	12.4	11.2	12.0	10.9	12.2	10.7	11.8
Gearing (interest-bearing liabilities, net/EBITDA), no. of times	0.4	1.0	0.6	0.8	1.4	1.0	0.1	-0.5
Return on equity (ROE)	6.9	-9.2	7.3	-5.8	6.6	-5.0	7.5	9.2
Return on invested capital (ROIC)	8.2	-3.3	8.4	0.5	7.5	2.0	7.5	8.5
Adjusted enterprise value/earnings before interest, tax and amortisation (EV/EBITA)	9.3	19.4	8.6	16.2	11.8	17.8	9.4	10.6
Equity ratio	39.3	37.4	38.4	38.5	35.7	40.4	37.4	39.2

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Solar A/S Quarterly information Q4 2016

Quarterly figures

Consolidated - continued

Share ratios (DKK unless otherwise stated)	Q1		Q2		Q3		Q4
	2016	2015	2015	2016	2016	2015	2016	2015
Earnings per share outstanding (EPS)	2.71	7.89	3.51	2.93	3.84	6.11	6.58	4.33
Intrinsic value per share outstanding	233.91	223.28	225.93	229.03	216.10	230.81	230.60	234.43
Share price	329	318	307	363	374	409	362	432
Share price/intrinsic value	1.41	1.43	1.36	1.59	1.73	1.77	1.57	1.84

Employees

Average number of employees (FTEs), continuing operations	2,968	2,892	3,024	2,886	3,051	2,840	3,083	2,864

Definitions

Organic growth	Revenue growth adjusted for enterprises acquired and sold off and any exchange rate changes. No adjustments have been made for number of working days.
Net working capital	Inventories and trade receivables less trade payables.
ROIC	Return on invested capital calculated on the basis of operating profit or loss less tax calculated using the effective tax rate.

Overall, financial ratios are calculated in accordance with the Danish Finance Society's "Recommendations & Financial Ratios 2015".

In general, restatements have been made of income statements, cash flow and key ratios for the discontinued operations in Solar Deutschland GmbH for 2014. In accordance with IFRS, the balance sheet has not been restated. The key ratio interest-bearing liabilities, net, has been adjusted for interest-bearing receivables relating to the divestment of Aurora Group Danmark A/S, up until the settlement in Q1 2015. No adjustments have been made for acquired enterprises.

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Solar A/S Quarterly information Q4 2016

Statement of comprehensive income

Income statement

DKK million	Q4
	2016	2015
Revenue	3,010	2,819
Cost of sales	-2,376	-2,240
Gross profit	634	579
Other operating income and costs	0	0
External operating costs	-121	-99
Staff costs	-390	-362
Loss on trade receivables	-6	-1
Earnings before interest, tax, depreciation and amortisation (EBITDA)	117	117
Depreciation and write-down on property, plant and equipment	-15	-18
Earnings before interest, tax and amortisation (EBITA)	102	99
Amortisation of intangible assets	-15	-12
Earnings before interest and tax (EBIT)	87	87
Financial income	6	4
Financial costs	-14	-25
Earnings before tax (EBT)	79	66
Income tax	-31	-29
Profit or loss of continuing operations	48	37
Profit or loss of discontinued operations	0	-3
Net profit for the period	48	34
Earnings in DKK per share outstanding (EPS)	6.58	4.33
Diluted earnings in DKK per share outstanding (EPS-D)	6.57	4.32
Earnings in DKK per share outstanding (EPS) of continuing operations	6.58	4.72
Diluted earnings in DKK per share outstanding (EPS-D) of continuing operations	6.57	4.70

Other comprehensive income

DKK million	Q4
	2016	2015
Net profit for the period	48	34
Other income and costs recognised:
Items that cannot be reclassified for the income statement
Actuarial gains / losses on defined benefit plans	-9	-13
Tax on actuarial gains / losses on defined benefit plans	2	0
Items that can be reclassified for the income statement
Foreign currency translation adjustments of foreign subsidiaries	-4	5
Value adjustments of hedging instruments before tax	19	16
Tax on value adjustments of hedging instruments	-4	-4
Other income and costs recognised after tax	4	4
Total comprehensive income for the period	52	38

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Solar A/S

Quarterly information Q4 2016

Balance sheet

Consolidated

	31.12
DKK million	2016	2015
ASSETS
Intangible assets	475	333
Property, plant and equipment	865	882
Deferred tax asset	10	28
Other non-current assets	47	7
Non-current assets	1,397	1,250
Inventories	1,321	1,302
Trade receivables	1,404	1,295
Income tax receivable	5	4
Other receivables	10	10
Prepayments	26	23
Cash at bank and in hand	343	699
Assets held for sale	0	88
Current assets	3,109	3,421
Total assets	4,506	4,671
	31.12
---	---	---
DKK million	2016	2015
EQUITY AND LIABILITIES
Share capital	792	792
Reserves	-135	-143
Retained earnings	938	1.104
Proposed dividends for the year	88	78
Equity	1,683	1,831
Interest-bearing liabilities	194	430
Provision for pension obligations	18	15
Provision for deferred tax	122	128
Other provisions	41	19
Non-current liabilities	375	592
Interest-bearing liabilities	192	60
Trade payables	1,727	1,608
Income tax payable	16	11
Other payables	495	516
Other provisions	18	28
Liabilities held for sale	0	25
Current liabilities	2,448	2,248
Liabilities	2,823	2,840
Total equity and liabilities	4,506	4,671

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Solar A/S Quarterly information Q4 2016

Cash flow statement

Consolidated

DKK million	Q4
	2016	2015
Net profit or loss of continuing operations for the period	48	37
Write-down, depreciation and amortisation	30	30
Changes to provisions and other adjustments	1	-27
Financials, net	8	21
Income tax	31	29
Financial income, received	2	0
Financial expenses, settled	-8	-12
Income tax, settled	-25	-23
Cash flow before working capital changes	87	55
Working capital changes
Inventory changes	30	-7
Receivables changes	236	229
Non-interest-bearing liabilities changes	84	247
Cash flow from operating activities, continuing operations	437	524
Cash flow from operating activities, discontinued operations	0	-3
Cash flow from operating activities	437	521
Investing activities
Purchase of intangible assets	-35	-10
Purchase of property, plant and equipment	-21	-11
Disposal of property, plant and equipment	58	2
Other financial investments	-5	0
Cash flow from investing activities, continuing operations	-3	-19
Cash flow from investing activities, discontinued operations	0	0
Cash flow from investing activities	-3	-19
DKK million	Q4
---	---	---
	2016	2015
Financing activities
Repayment of non-current interest-bearing debt	-12	-11
Treasury share purchases and sales	0	-19
Cash flow from financing activities, continuing operations	-12	-30
Cash flow from financing activities, discontinued operations	0	0
Cash flow from financing activities	-12	-30
Total cash flow	422	472
Cash at bank and in hand at the beginning of the period	-100	167
Foreign currency translation adjustments	-1	0
Cash at bank and in hand at the end of the period	321	639
Cash at bank and in hand at the end of the period
Cash at bank and in hand	343	699
Current interest-bearing liabilities¹	-22	-60
Cash at bank and in hand at the end of the period	321	639

¹ Not including the short-term part of long-term liabilities that falls due in March 2017.

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Solar A/S Quarterly information Q4 2016

Segment information

Solar's business segments are Installation, Industry and Others and are based on the customers' affiliation with the segments. Installation covers installation of electrical, and heating and plumbing products, while Industry covers industry, offshore and marine, and utility and infrastructure. Others covers other small areas. The three main segments have been identified without aggregation of operating segments. Segment income and costs include any items that are directly attributable to the individual segment and any items that can be reliably allocated to the individual segment. Non-allocated costs refer to income and costs related to joint group functions. Assets and liabilities are not included in segment reporting.

DKK million	Installation	Industry	Others	Total
Q4 2016
Revenue	1,995	805	210	3,010
Cost of sales	-1,614	-618	-144	-2,376
Gross profit	381	187	66	634
Direct costs	-79	-26	-6	-111
Earnings before indirect costs	302	161	60	523
Indirect costs	-150	-45	-11	-206
Segment profit	152	116	49	317
Non-allocated costs				-200
Earnings before interest, tax, depreciation and amortisation (EBITDA)				117
Depreciation and amortisation				-30
Earnings before interest and tax (EBIT)				87
Financials, net				-8
Earnings before tax (EBT)				79
DKK million	Installation	Industry	Others	Total
---	---	---	---	---
Q4 2015
Revenue	1,969	664	186	2,819
Cost of sales	-1,562	-508	-170	-2,240
Gross profit	407	156	16	579
Direct costs	-77	-23	-3	-103
Earnings before indirect costs	330	133	13	476
Indirect costs	-143	-37	-13	-193
Segment profit or loss	187	96	0	283
Non-allocated costs				-166
Earnings before interest, tax, depreciation and amortisation (EBITDA)				117
Depreciation and amortisation				-30
Earnings before interest and tax (EBIT)				87
Financials, net				-21
Earnings before tax (EBT)				66

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Solar A/S Quarterly information Q4 2016

Segment information

Continued

Geographical information

Solar A/S primarily operates on the Danish, Swedish, Norwegian and Benelux markets. In the below table, Other markets covers the remaining markets, which can be seen in the group structure available on page 21 of Annual Report 2016 or on www.solar.eu. The below allocation has been made based on the products' place of sale.

DKK million	Revenue	Q4
		Adjusted organic growth	Non-current assets
2016
Denmark	822	10.6	1,811
Sweden	677	1.9	281
Norway	532	9.3	208
Benelux	718	0.8	287
Other markets	281	-6.4	104
Eliminations	-20	-	-1,294
I alt	3,010	4.3	1,397

2015

Denmark¹	732	-0.2	1,657
Sweden	687	11.1	283
Norway	468	-4.5	138
Benelux	725	-4.0	321
Other markets	228	18.5	43
Eliminations¹	-21	-	-1,192
I alt	2,819	1.5	1,250

1 Denmark's figures include non-current assets determined for Solar A/S, the parent company. In 2016, the parent company switched accounting policies from cost method to equity value method. As a result, non-current assets for 2015 were restated from DKK 1,746m to DKK 1,657m, changing the eliminations figures from DKK -1,281m to DKK -1,192m.

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Solar A/S
Industrivej Vest 43
DK-6600 Vejen
Tel. +45 79 30 00 00
CVR no. 15908416

www.solar.eu
http://www.linkedin.com/company/solar-as

solar
stronger together