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Solar Interim / Quarterly Report 2018
3414_rns_2018-08-09_d09a50c9-d56a-44f8-82ec-70f6ae47e1d0.pdf
Interim / Quarterly Report
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Solar A/S
Industrivej Vest 43 ■ DK-6600 Vejen ■ Danmark
Tlf. 79 30 00 00 ■ CVR-nr. 15 90 84 16 ■ Web: www.solar.eu
LEI: 21380031XTLI9X5MTY92
Meddelelse nr. 16 2018
- august 2018
Delårsrapport Q2 2018
Vi fastholder vores forventninger for hele året, selvom omsætning og EBITA i Q2 var en anelse under det forventede.
CEO Jens Andersen udtaler:
"Vi forfølger stadig muligheder inden for vores tre strategiske fokusområder og ser en god udvikling. Samtidig har vi igangsat adskillige initiativer for at få den overordnede forretning tilbage på sporet. Derfor forbliver vores forventninger til hele året uændrede, til trods for at vi har oplevet negativ vækst i nogle markeder i andet kvartal, og at resultaterne ligger en anelse under det forventede."
| Udvalgte hovedtal (DKK million)* | Q2 2018 | Q2 2017 | H1 2018 | H1 2017 |
|---|---|---|---|---|
| Omsætning | 2.744 | 2.684 | 5.572 | 5.522 |
| EBITA | 52 | 50 | 118 | 117 |
| Resultat før skat | 6 | 2 | 105 | 147 |
| Pengestrømme fra driftsaktivitet | -39 | -180 | -78 | -266 |
| Udvalgte nøgletal (%) | ||||
| Organisk vækst justeret for antal arbejdsdage | 1,6 | 7,4 | 3,1 | 5,8 |
| EBITA-margin | 1,9 | 1,9 | 2,1 | 2,1 |
| Nettoarbejdskapital, ultimo/omsætning (LTM) | 10,7 | 10,9 | 10,7 | 10,9 |
| Nettoarbejdskapital, gns./omsætning (LTM)** | 10,5 | 9,8 | 10,5 | 9,8 |
| Gearing (NIBD/EBITDA), antal gange | 1,9 | 2,0 | 1,9 | 2,0 |
- Grundet frasalget af vores østrigske og belgiske forretningsaktiviteter, GFI GmbH og Claessen ELGB NV, relaterer tallene for 2017 og 2018 i denne meddelelse sig til vores fortsættende aktiviteter.
** Beregnet som et gennemsnit af de seneste fire kvartalers lagre, debitorer og kreditorer.
Solar A/S
Industrivej Vest 43 ■ DK-6600 Vejen ■ Danmark
Tlf. 79 30 00 00 ■ CVR-nr. 15 90 84 16 ■ Web: www.solar.eu
Omsætning i Q2 2018
- Justeret organisk vækst udgjorde 1,6% mod 7,4% i Q2 2017. Vores relaterede forretning oplevede en vækst på 27,8%, mens kerneforretningen oplevede en vækst på 0,5%.
EBITA i Q2 2018
- Sammenlignet med Q2 2017 udgjorde EBITA fra kerneforretningen uændret DKK 62 mio. Det er en anelse under vores forventninger hovedsagligt på grund af udviklingen i Solar Sverige samt restruktureringsomkostninger i Solar Norge som følge af en mistet kontrakt.
- EBITA for vores relaterede forretning udgjorde DKK -10 mio. mod DKK -12 mio. i Q2 2017. Omsætningen for Scandinavian Technology Institute og Solar Polaris endte lavere end forventet. På grund af de skuffende resultater har vi foretaget omstruktureringer i disse selskaber, hvilket medførte engangsomkostninger i Q2 2018.
Forventninger til 2018
- Vi forventer en omsætning på ca. DKK 11,4 mia. svarende til en organisk vækst på ca. 4%. For kerneforretningen forventer vi en vækst på ca. 3%, hvilket er på niveau med eller under den forventede markedsvækst. Den relaterede forretning forventes at udvise vækst på ca. 25%.
-
Vi fastholder vores forventninger til EBITA på ca. DKK 345 mio. For kerneforretningen øger vi vores forventninger til EBITA fra ca. DKK 365 mio. til ca. DKK 375 mio. For den relaterede forretning sænker vi vores forventninger til EBITA fra ca. DKK -20 mio. til ca. DKK -30 mio.
-
Det forventes at have en negativ indvirkning på kerneforretningen på næsten DKK 100 mio. på omsætningen og ca. DKK 4 mio. på EBITA, hvis de nuværende valutakurser forbliver uændrede.
| EBITA, DKK mio. | Kerne-forretning | Relateret forretning | Solar-koncernen |
|---|---|---|---|
| 2017, faktisk, offentliggjort 12.01.2018 | 309 | -45 | 264 |
| Frasalg af østrigske og belgiske forretninger | 31 | - | 31 |
| 2017, faktisk fortsættende aktiviteter | 340 | -45 | 295 |
| Overhead-omkostninger* | -10 | - | -10 |
| Planlagte forbedringer | 35 | 25 | 60 |
| 2018 guidance offentliggjort 09.02.2018 | 365 | -20 | 345 |
| Effekt af omkostnings-reducerende initiativer | 10 | - | 10 |
| Effekt af mindre omsætning og bruttoavance | - | -10 | -10 |
| 2018 guidance, opdateret | 375 | -30 | 345 |
*De østrigske og belgiske forretninger bar ca. DKK 10 mio. i overhead-omkostninger, som nu vil blive placeret i de fortsættende aktiviteter inden for kerneforretningen.
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Solar A/S
Industrivej Vest 43 ■ DK-6600 Vejen ■ Danmark
Tlf. 79 30 00 00 ■ CVR-nr. 15 90 84 16 ■ Web: www.solar.eu
Audio webcast og telekonference i dag
Præsentationen af Delårsrapport Q2 2018 foregår på engelsk den 9. august 2018 kl. 11.00. Præsentationen bliver transmitteret som en audio webcast og kan følges på www.solar.eu. Deltagelse er mulig via den tilknyttede telekonference.
Indkaldsnumre til telekonferencen:
DK: tlf. +45 354 455 83
UK: tlf. +44 203 194 0544
US: tlf. +1 855 269 2604
Med venlig hilsen
Solar A/S
Jens Andersen
Contacts:
CEO Jens Andersen - tlf. 79 30 02 01
CFO Michael H. Jeppesen - tlf. 79 30 02 62
Director, Stakeholder Relations Charlotte Risskov Kræfting – tlf. 40 34 29 08
Bilag: Delårsrapport Q2 2018, side 1-32.
Fakta om Solar
Solar-koncernen er en førende europæisk sourcing- og servicevirksomhed. Vores kerneforretning centrerer sig om sourcing af produkter, værdiskabende service og optimering af vores kunders forretning.
Som sourcing- og servicevirksomhed fokuserer vi på den enkelte kunde. Vi bestræber os altid på at forstå vores kunders unikke og reelle behov, så vi kan yde en vedkommende, personlig og værdiskabende service og dermed gøre vores kunder til vindere.
Solar-koncernen, der har hovedsæde i Danmark, havde i 2017 en omsætning på over 11 mia. kroner og beskæftiger ca. 3.000 medarbejdere. Solar er noteret på Nasdaq Copenhagen med kortnavn SOLAR B. Flere oplysninger kan findes på: www.solar.eu.
Ansvarsfraskrivelse
Denne meddelelse er offentliggjort dags dato på dansk og engelsk via Nasdaq Copenhagen. I tilfælde af uoverensstemmelse mellem de to versioner er det den danske version, der er gældende.
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Solar A/S
CVR NO.: 15 90 84 16
Quarterly
Report
Q2 2018
solar
stronger together
Soler Quarterly Report Q2 2018
Contents
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Contents
Management's review
03 Financial highlights
04 Business update
05 Financial review
10 Segments
12 Outlook 2018
14 Shareholder information
Financial statements
16 Statement of comprehensive income
17 Balance sheet
18 Cash flow statement
19 Statement of changes in equity
21 Notes
28 Quarterly figures
31 Statement by the Executive Board and the Board of Directors
Solar Quarterly Report Q2 2018
Financial highlights
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MANAGEMENT'S
REVIEW
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FINANCIAL
STATEMENTS
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CONTENTS
Financial highlights
| Consolidated (DKK million) | Q2 | H1 | Year | ||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Revenue | 2,744 | 2,684 | 5,572 | 5,522 | 11,105 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 66 | 63 | 145 | 143 | 347 |
| Earnings before interest, tax and amortisation (EBITA) | 52 | 50 | 118 | 117 | 295 |
| Earnings before interest and tax (EBIT) | 32 | 32 | 78 | 82 | 126 |
| Earnings before tax (EBT) | 6 | 2 | 105 | 147 | 126 |
| Net profit for the period | -7 | -12 | 74 | 111 | 19 |
| Balance sheet total | 4,588 | 4,903 | 4,588 | 4,903 | 4,717 |
| Equity | 1,584 | 1,696 | 1,584 | 1,696 | 1,591 |
| Interest-bearing liabilities, net | 662 | 712 | 662 | 712 | 489 |
| Cash flow from operating activities | -39 | -180 | -78 | -266 | 12 |
| Net investments in property, plant and equipment | -7 | -3 | -23 | -17 | -15 |
Employees
| Number of employees (FTEs), end of the period | 3,001 | 2,882 | 3,001 | 2,882 | 2,959 |
|---|---|---|---|---|---|
| Average number of employees (FTEs), LTM | 2,968 | 2,861 | 2,968 | 2,861 | 2,901 |
| Financial ratios (% unless otherwise stated) | Q2 | H1 | Year | ||
| --- | --- | --- | --- | --- | --- |
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Organic growth adjusted for number of working days | 1.6 | 7.4 | 3.1 | 5.8 | 6.9 |
| Gross profit margin | 20.7 | 20.9 | 20.7 | 21.2 | 21.0 |
| EBITDA margin | 2.4 | 2.3 | 2.6 | 2.6 | 3.1 |
| EBITA margin | 1.9 | 1.9 | 2.1 | 2.1 | 2.7 |
| Net working capital (NWC at end of period)/revenue (LTM) | 10.7 | 10.9 | 10.7 | 10.9 | 9.7 |
| Gearing (net interest-bearing liabilities/EBITDA), no. of times | 1.9 | 2.0 | 1.9 | 2.0 | 1.4 |
| Return on equity (ROE) | -1.1 | 11.0 | -1.1 | 11.0 | 1.2 |
| Equity ratio | 34.5 | 34.6 | 34.5 | 34.6 | 33.7 |
Share ratios (DKK)
| Earnings per share outstanding (EPS) | -0.96 | -1.64 | 10.14 | 15.21 | 2.60 |
|---|---|---|---|---|---|
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 flows and key ratios for the discontinued operations in Claessen ELGB N.V. and GFI GmbH for 2017. In accordance with IFRS, the balance sheet has not been restated.
Solar Quarterly Report Q2 2018
Business update
4
MANAGEMENT'S REVIEW
5
FINANCIAL STATEMENTS
6
CONTENTS
Business update
We remain focused on strategic suppliers, industry and operational excellence
We aim for profitable growth by innovating our business. This is based on our three strategic focus areas.
Strategic suppliers
We continue to pursue growth opportunities within concept sales. Concepts are Solar curated product assortments addressing specific market segment needs. Raising our share of concept sales increases overall profitability and allows us to consolidate our suppliers.
In Q2 we therefore launched a new initiative to further expand and align our approach to concept sales across all our markets. This was kicked off with cross-country initiatives and continues in assigned working groups, each responsible for a specific product category. Their focus is strengthening each concept for both near term sales growth and strategic market positioning in each country as well as concept alignment and supplier consolidation across countries.
Industry focus
We have intensified our focus on Industry and have identified significant market potential. With a Total Cost of Ownership (TCO) mindset, we are continually expanding our position by approaching new and existing customers with cross-national solutions and working with them to deliver tailored solutions for optimising their businesses.
A recent example is our partnership with the world's largest pork exporter and Europe's largest pork processor, Danish Crown. Danish Crown in Denmark is one of Solar's long-standing customers. The new contract, however, ensures that all Danish Crown factories in Denmark, Sweden and Poland will use Solar as their sourcing and services partner.
Danish Crown has an innovative view on TCO and will work with Solar to identify cross-border opportunities and benefits related to tail spend, supplier consolidation and logistics services.
In parallel, we continue to develop the collaboration between Solar and MAG45. MAG45 specialises in integrated supply and has adopted an integral approach to optimising the total cost of ownership of its customers' tail supply chain within sourcing, logistics and processes.
Whenever we meet an industry customer who would be better served by MAG45 than by Solar, we collaborate to ensure a smooth transition and a great customer experience.
Operational excellence
In order to strengthen our position in a competitive market, we are constantly looking for ways to optimise the way we do business.
We have a keen focus on optimising systems and processes that support and facilitate changing business requirements.
Our warehouse management system is the heart of our central warehouses and by digitising the whole supply chain setup, we become more flexible and are much better equipped to further develop our business and meet our customers' future demands.
Over the weekend of 16-17th June, we implemented SAP eWM (extended Warehouse Management) at our central warehouse in Halmstad in Sweden. eWM replaces our current in-house developed warehouse management system, SGS. Overall, the go-live was successful with only minor disruptions experienced in the following weeks. We will continue the implementation at other central warehouses.
Optimisation of processes is also the reason why we are moving parts of Material Planning to our Shared Services Centre in Poland. In Q2, we initiated the transfer of responsibilities from Denmark. We expect Sweden, Norway and the Netherlands to follow shortly. In total, we expect to transfer tasks equivalent to 40 FTEs within Material Planning to Poland.
With the transfer of responsibilities from Material Planning, our Shared Services Centre in Poland is now servicing tasks from Finance, Tax, Risk Management, IT, Master Data and Material Planning across Denmark, Sweden, Norway and the Netherlands.
The benefits we gain from transferring and centralising operations at our Shared Services Centre are:
- Improved ability to handle varying workloads across the Solar business
- Improved process excellence and optimised use of our IT platforms
- More opportunities to train and deploy new skills and to do so faster
- Reduced operating costs
Solar Quarterly Report Q2 2018
Financial review
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Financial review
H1 result for core business was on par with expectations while H1 result for related business disappointed
In H1, Solar's continuing operations generated organic growth of 3.1% adjusted for the number of working days, while EBITA amounted to DKK 118m against DKK 117m in H1 2017.
For core business, revenue and EBITA were on par with our expectations despite a slightly disappointing development in Q2. For related business, total revenue was on par despite a disappointing development in STI while EBITA did not meet our expectations.
Core business showed 2.1% in adjusted organic growth and compared to H1 2017, an unchanged EBITA of DKK 136m. Related business showed strong organic growth of more than 28% when adjusted for number of working days but diluted earnings by delivering EBITA of DKK -18m.
At the end of January 2018, Solar entered into an agreement with Sonepar concerning the divestment of activities in the loss-making subsidiaries, GFI GmbH, Austria, and Claessen ELGB NV, Belgium, cf. company announcements nos. 3, 12 and 14 2018.
Following the divestments, GFI GmbH, Austria, and the activities in Claessen ELGB NV, Belgium, are presented as discontinued operations in line with their treatment in the 2017 Annual Report. Unless otherwise stated, this report recognises Solar's continuing operations only.
Q2 2018
Revenue
In Q2 2018, adjusted organic growth amounted to 1.6%
against 7.4% in Q2 2017. Revenue amounted to unchanged DKK 2.7bn compared to Q2 2017.
Related business saw adjusted organic growth of 27.8%, while adjusted organic growth in core business amounted to 0.5%. Within core business, Solar Danmark and Solar Nederland saw adjusted organic growth of 5.2% and 3.2%, respectively. Solar Sverige saw negative adjusted organic growth of 5.2% despite a healthy market. In our assessment, this is the result of structural changes in the sales organisation at the beginning of Q3 2017. We are currently working to get sales back on track. Solar Norge lost a contract with a purchasing association, which was the main reason for the negative adjusted organic growth of 3.9%.
Revenue is slightly below expectations mainly due to the development in Solar Sverige.
Gross profit margin
Gross profit margin amounted to 20.7%, down from 20.9% in Q2 2017 mainly due to increased freight costs. The dilution of the gross profit margin we saw in Q1 owing to write-down on inventory normalised in Q2 whereas the gross profit margin in MAG45 remained below Q2 2017 level but was above Q1 2018 level.
Core business includes Solar Danmark, Solar Sverige, Solar Norge, Solar Nederland, Solar Polska, and P/F Solar Føroyar.
Related business includes MAG45, Scandinavian Technology Institute and Solar Polaris.
Digital, construction & services includes all associated businesses BIMobject, GenieBelt, Minuba, Viva Labs, Monterra, and HomeBob.
| Q2 | Revenue | EBITA | Invested capital | |||
|---|---|---|---|---|---|---|
| DKK million | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Core business | 2,599 | 2,577 | 62 | 62 | 1,859 | 1,948 |
| Related business | 145 | 107 | -10 | -12 | 113 | 181 |
| Digital, construction & services | - | - | - | - | 277 | 294 |
| Eliminations | - | - | - | - | -277 | -294 |
| Total | 2,744 | 2,684 | 52 | 50 | 1,972 | 2,129 |
| H1 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Core business | 5,276 | 5,302 | 136 | 136 | 1,859 | 1,948 |
| Related business | 296 | 220 | -18 | -19 | 113 | 181 |
| Digital, construction & services | - | - | - | - | 277 | 294 |
| Eliminations | - | - | - | - | -277 | -294 |
| Total | 5,572 | 5,522 | 118 | 117 | 1,972 | 2,129 |
| Q2 | Adj.organic growth | EBITA margin | ROIC | |||
| --- | --- | --- | --- | --- | --- | --- |
| % | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| Core business | 0.5 | 7.4 | 2.4 | 2.4 | 10.9 | 12.4 |
| Related business | 27.8 | 7.9 | -6.9 | -11.2 | N/A | N/A |
| Total | 1.6 | 7.4 | 1.9 | 1.9 | 3.7 | 9.2 |
| H1 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Core business | 2.1 | 5.8 | 2.6 | 2.6 | 10.9 | 12.4 |
| Related business | 28.8 | - | -6.1 | -8.6 | N/A | N/A |
| Total | 3.1 | 5.8 | 2.1 | 2.1 | 3.7 | 9.2 |
Solar Quarterly Report Q2 2018
Financial review
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
EBITA
EBITA increased to DKK 52m against DKK 50m in Q2 2017. As in Q2 2017, EBITA margin amounted to 1.9% of revenue.
Compared to Q2 2017, EBITA from core business amounted to unchanged DKK 62m. This was slightly below expectations mainly due to developments in Solar Sverige and restructuring costs in Solar Norge owing to a lost contract.
EBITA for related business amounted to DKK -10m against DKK -12m in Q2 2017. Revenue for Scandinavian Technology Institute and Solar Polaris came out lower than expected. Due to the disappointing results, restructuring took place at these two companies.
Amortisation
As part of our focus on digital improvement projects, our investments in software led to increased amortisation. Amortisation totalled DKK 20m against DKK 18m in Q2 2017.
Share of net profit from associates
In Q2 2018, DKK -4m was included as our share of earnings from our digital, construction and services associates.
Impairment on associates
By the end of Q2 2018, the share price of BIMobject AB had decreased and we identified a need for a write-down of DKK 15m.
Financials
Net financials totalled DKK -7m against DKK -30m in Q2 2017 when the DKK -24m fair value adjustment of associated businesses relating to BIMobject is taken into account. Up until the end of May 2017, Solar's equity interest in BIMobject was less than 20% and for that reason the fair value adjustment was recognised in the income statement as financial income.
Earnings before tax
Earnings before tax amounted to DKK 6m against DKK 2m in Q2 2017. However, if adjusted for the impact from associates in terms of share of net profit, impairment and fair value adjustments, earnings before tax amounted to DKK 25m in Q2 2018 against DKK 26m in Q2 2017.
| DKK million | Q2 2018 | Q2 2017 | FY 2017 |
|---|---|---|---|
| Earnings before tax | 6 | 2 | 126 |
| Share of net profit from associates | 4 | 11 | |
| Impact due to market value changes in BIMobject: | |||
| Impairment on associates | 15 | 59 | |
| Fair value adjustment, recognised under financials | 24 | -79 | |
| Earnings before tax, adjusted for associates | 25 | 26 | 117 |
| Impairment loss, other intangible assets | 10 | ||
| Impairment loss, goodwill | 65 | ||
| Impairment loss, customer-related assets | 22 | ||
| Earn-out provision reversed | -15 | ||
| Adjusted earnings before tax | 25 | 26 | 199 |
Net profit
Profit from continuing operations came to DKK -3m against DKK -5m in Q2 2017. Loss from discontinued operations amounted to DKK -4m against DKK -7m in Q2 2017. Net profit for the Solar Group thus totalled DKK -7m in Q2 2018 against DKK -12m in Q2 2017.
Organic growth in % (adjusted for the number of working days)
EBITA margin in %
Solar Quarterly Report Q2 2018
Financial review
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
H1 2018
Revenue
In H1 2018, adjusted organic growth amounted to 3.1% against 5.8% in H1 2017. Revenue amounted to DKK 5.6bn against DKK 5.5bn in H1 2017.
Related business saw adjusted organic growth of more than 28%, while adjusted organic growth in core business amounted to 2.1%. For core business, Solar Danmark saw adjusted organic growth of 4.5% and Solar Nederland saw adjusted organic growth of 7.5% while Solar Sverige and Solar Norge saw negative adjusted organic growth of 2.7% and 3.7%, respectively. As mentioned above, Solar Sverige saw negative revenue impact from structural changes in the sales organisation and Solar Norge's revenue was adversely affected by the loss of a contract with a purchasing association.
Gross profit margin
The gross profit margin amounted to 20.7%, down from 21.2% in H1 2017.
The margin was negatively affected by a change in geographical mix amounting to approx. 0.1 percentage points.
In Q1 2018, core business saw an extraordinary increase in write-down on inventories corresponding to a negative impact on the gross profit margin of approx. 0.3 percentage points. However, write-down normalised in Q2 and the net impact amounted to approx. -0.2 percentage points for H1.
Related business also had a negative impact on margins. MAG45 saw an unexpected decline in margin during the first months of H1 leading to a H1 decline of more than 1 percentage point and corresponding to approx. -0.1 percentage points in margin at group level. MAG45 is currently focusing on regaining the margin. We are seeing gradual progress but are still below the margin level from last year.
EBITA
Compared to H1 2017, EBITA amounted to an unchanged 2.1% of revenue corresponding to DKK 118m in H1 2018 against DKK 117m in H1 2017.
Despite that costs in MAG45 increased by DKK 13m in order to generate growth both organically and through the acquisition of Savone in Italy, the overall costs for the group remained flat taking the exchange rate adjustments into consideration.
We have launched several initiatives in core business to reduce costs. As mentioned in our business update, we are moving Material Planning and Master Data to our Shared Services Centre in Poland as part of our process optimisation. In H1 2018, these initiatives led to one-off costs slightly above the level in H1 2017.
In total we have managed to offset the salary inflation, the growth costs in MAG45 and the increase in one-off costs.
Compared to H1 2017, EBITA from core business amounted to unchanged DKK 136m. Related business diluted EBITA by DKK -18m in H1 2018 against DKK -19m in H1 2017. Results for related business did not meet our expectations.
Amortisation
As part of our focus on digital improvement projects, our investments in software led to increased amortisation. Amortisation totalled DKK 40m against DKK 35m in H1 2017.
Share of net profit from associates
In H1 2018, DKK -5m was included as our share of earnings from our digital, construction and services associates.
Impairment on associates
At year-end 2017, Solar identified the need for write-down of DKK 59m on BIMobject AB based on the share price. By the end of Q1 2018, the BIMobject share price increased and we therefore reversed the write-down of DKK 59m. By the end of Q2 2018, the share price had decreased and the need for write-down of DKK 15m was identified. In H1 2018, reversal of impairment of associates thus amounted to DKK 44m.
EBITA margin LTM, core business
Gearing, no. of times (interest-bearing liabilities, net / EBITDA)
Solar Quarterly Report Q2 2018
Financial review
8
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
13
CONTENTS
Financials
Net financials totalled DKK -12m against DKK 65m in H1 2017 when taking into account the DKK 79m in fair value adjustment of associated businesses relating to BIMobject. Up until the end of May 2017, Solar's equity interest in BIMobject was less than 20% and for that reason the fair value adjustment was recognised in the income statement as financial income.
Earnings before tax
Earnings before tax were down at DKK 105m from DKK 147m in H1 2017. However, if adjusted for the impact from associates in terms of share of net profit, impairment, and fair value adjustment, earnings before tax amounted to DKK 66m in H1 2018 against DKK 68m in H1 2017.
| DKK million | H1 2018 | H1 2017 | FY 2017 |
|---|---|---|---|
| Earnings before tax | 105 | 147 | 126 |
| Share of net profit from associates | 5 | 11 | |
| Impact due to market value changes in BIMobject: | |||
| Impairment on associates | -44 | 59 | |
| Fair value adjustment, recognised under financials | -79 | -79 | |
| Earnings before tax, adjusted for associates | 66 | 68 | 117 |
| Impairment loss, other intangible assets | 10 | ||
| Impairment loss, goodwill | 65 | ||
| Impairment loss, customer-related assets | 22 | ||
| Earn-out provision reversed | -15 | ||
| Adjusted earnings before tax | 66 | 68 | 199 |
Net profit
Profit from continuing operations came to DKK 88m against DKK 128m in H1 2017. Loss from discontinued operations amounted to DKK 14m against DKK 17m in H1 2017. Net profit for the Solar Group thus totalled DKK 74m in H1 2018 against DKK 111m in H1 2017.
Investments in associates
In 2017, we increased our investments in BIMobject and other associates. Thus, at the end of H1 2018, investments in associates came to DKK 243m, of which DKK 229m relates to BIMobject. As at 30 June 2018, Solar's share of the market value of BIMobject amounted to DKK 229m. In 2017, Solar acquired the shares at a price of DKK 171m.
Cash flows
Compared to H1 2017, net working capital calculated as an average of the last four quarters amounted to 10.5% of revenue up from 9.8%. Net working capital at the end of H1 2018 amounted to 10.7% of revenue, down from 10.9% at the end of H1 2017. However, the fact that the last day of Q1 2018 was a non-working day affected net working capital negatively by approx. 0.3 percentage points.
Cash flow from operating activities totalled DKK -78m against DKK -266m in H1 2017. In H1 2018, changes to inventories had a DKK -2m impact on cash flow from operating activities, while changes to receivables had an impact of DKK -68m. The development in receivables was affected by the negative growth in Solar Sverige and Solar Norge. Furthermore, as part of a contract with a major customer, Solar Danmark entered into a factoring agreement which reduced trade receivables by approx. DKK 40m.
Total cash flow from investing activities came to DKK -16m against DKK -281m in H1 2017. The divestment of GFI GmbH, Austria, and the activities in Claessen ELGB NV, Belgium, had a positive impact of DKK 60m. In H1 2017, cash flow from investing activities saw a DKK 209m negative impact from the investment in activities and associated businesses.
Cash flow from financing activities was affected by dividend distributions of DKK 73m against DKK 88m in H1 2017.
Cash flow from discontinued operations amounted to DKK -8m against DKK -27m in H1 2017.
Solar Quarterly Report Q2 2018
Financial review
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Consequently, total cash flow in H1 2018 amounted to DKK -180m against DKK -674m in H1 2017.
Compared to H1 2017, net interest-bearing liabilities decreased by DKK 50m to DKK 662m. Over the past 12 months, we have invested DKK 108m in digital improvements, an additional DKK 13m in subsidiaries and associated businesses, paid dividend of DKK 73m and received DKK 60m from the divestment of our Austrian and Belgian businesses. By the end of H1 2018, gearing had decreased from 2.0 to 1.9 times EBITDA. Our gearing target is 1.5-2.5 times EBITDA.
As at 30 June 2018, Solar had undrawn credit facilities of DKK 328m.
End H1 2018, ROIC was negatively impacted by the impairment loss on related business in Q4 2017 and amounted to 3.7% against 9.2% in H1 2017. ROIC on core business was down from 12.4% to 10.9%, negatively impacted by impairment loss on other intangible assets in Q4 2017.
Invested capital for the Solar Group totalled DKK 1,972m against DKK 2,129m at the end of Q2 2017.
Activities with a Solar equity interest less than 50% and discontinued activities are not included in the ROIC calculation. Invested capital includes operating assets and liabilities only.
Remuneration of Executive Board and management team
In accordance with Solar's remuneration policy and general guidelines for incentive-based remuneration, the Board of Directors granted restricted shares to the Executive Board and management team in February 2018. Overall, the grant of shares is covered by the same terms as the previous grants of share options. A total amount of 3,423 restricted shares was granted amounting to a fair value of DKK 1.3m. The restricted shares vest three years after the time of granting, i.e. this grant of shares vests in 2021.
In February 2018, Solar's Executive Board and management team exercised 19,786 and 17,875 share options from the granting in 2014 and 2015, respectively.
General information on Solar's incentive scheme is available on our website: www.solar.eu/investor/policies/.
Events after the end of the period under review
At 11 July 2018, BIMobject AB announced the implementation of a directed new share issue of approx. SEK 240m to EQT Ventures Fund. The directed share issue has resulted in the dilution of about 13% for
BIMobject's existing shareholders following the issue. Consequently, Solar's equity interest in BIMobject will be reduced from 20.01% to 17.4%. However, as Solar remains a large shareholder in BIMobject and is represented on the Board of Directors, we continue to assess our influence as significant. For that reason, the reduction of our equity interest will not mean any change in our accounting policy for BIMobject.
Key risks
Solar's Annual Report 2017 details the commercial and financial risks associated with our activities. The key risks remain that Solar, like other international companies, is affected by both global trends and local conditions in the markets where we operate.
Solar Quarterly Report Q2 2018
Segments
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Segments
Trends in Installation and Industry
In Q2 2018, organic growth* amounted to 1.6%.
The installation sector
The slowdown we have seen since Q4 2017 in Scandinavia continued in Q2 and we experienced negative growth in Sweden and Norway, see page 5. Growth in Denmark remained flat during the quarter. However, the strong growth in the Netherlands and Poland was sufficient to offset the negative growth in Scandinavia.
In general, the growth we are experiencing primarily relates to large and medium-sized customers. In Sweden, in particular, we lost revenue from small-size customers despite a growing market.
Solar's overall organic growth* for Installation was slightly above 0% for Q2 2018.
The industry sector
In Q2, we saw continued industrial growth in our markets apart from Sweden and Norway, resulting in organic growth* of around 8%. This was especially the case in Denmark and MAG45, where we continue to see double-digit growth.
Sweden and Norway, in particular, saw negative growth in Q2. In Norway, we saw the same pattern as in Q1: the North Sea offshore industry and related industries continue to improve but not sufficiently to offset the decline within Utility.
Compared to Q2 2017, the segment margin was slightly down mainly due to a decline in the gross profit margin largely related to strong growth in Denmark within low margin areas.
Other
Our segment Other covers smaller areas within core business along with the Scandinavian Technology Institute (STI) and Solar Polaris. In Q2, STI and Solar Polaris delivered revenue of DKK 14m, corresponding to approx. 8% of the segment revenue.
| Revenue | Segment profit | Segment margin in % | ||||
|---|---|---|---|---|---|---|
| DKK million | Q2 2018 | Q2 2017 | Q2 2018 | Q2 2017 | Q2 2018 | Q2 2017 |
| Installation | 1,707 | 1,703 | 129 | 130 | 7.6 | 7.6 |
| Industry | 871 | 794 | 127 | 118 | 14.6 | 14.9 |
| Other | 166 | 187 | 23 | 31 | 13.9 | 16.6 |
| Total | 2,744 | 2,684 | 279 | 279 | 10.2 | 10.4 |
| Revenue | Adjusted organic growth in % | |||||
| --- | --- | --- | --- | --- | ||
| DKK million | Q2 2018 | Q2 2017 | Q2 2018 | Q2 2017 | ||
| Denmark | 841 | 787 | 5.1 | 11.4 | ||
| Sweden | 584 | 644 | -5.2 | 9.2 | ||
| Norway | 452 | 462 | -3.8 | 3.1 | ||
| The Netherlands | 668 | 635 | 3.2 | 5.5 | ||
| Other markets | 223 | 179 | 19.6 | 7.4 | ||
| Eliminations | -24 | -23 | ||||
| Total | 2,744 | 2,684 | 1.6 | 7.4 |
- Organic growth adjusted for the number of working days.
Solar Quarterly Report Q2 2018
Segments
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
H1 2018
In H1, we saw flat development in installation overall, with negative growth in mainly Sweden but also in Norway. This was offset by strong growth in the Netherlands and Poland. Development in Denmark remained flat.
Within Industry we saw strong growth in Denmark, the Netherlands and MAG45. We saw a decline in the gross profit margin of 0.7 percentage points mainly due to an unexpected decline in MAG45's gross profit margin in Q1. Despite several margin improving initiatives, it remained below H1 2017 level. This had an impact of approx. 0.2 percentage points for Industry at group level. In addition, there was a diluting effect from growth within low margin areas in Denmark.
Compared to H1 2017, non-allocated costs decreased from 8.2% of revenue to 7.6% in H1 2018 despite the growth costs in MAG45 and the costs of restructuring.
| DKK million | Revenue | Segment profit | Segment margin in % | |||
|---|---|---|---|---|---|---|
| H1 2018 | H1 2017 | H1 2018 | H1 2017 | H1 2018 | H1 2017 | |
| Installation | 3,430 | 3,510 | 280 | 289 | 8.2 | 8.2 |
| Industry | 1,727 | 1,602 | 252 | 242 | 14.6 | 15.1 |
| Other | 415 | 410 | 37 | 64 | 8.9 | 15.6 |
| Total | 5,572 | 5,522 | 569 | 595 | 10.2 | 10.8 |
| DKK million | Revenue | Adjusted organic growth in % | ||||
| --- | --- | --- | --- | --- | ||
| H1 2018 | H1 2017 | H1 2018 | H1 2017 | |||
| Denmark | 1,675 | 1,625 | 4.5 | 10.3 | ||
| Sweden | 1,203 | 1,306 | -2.7 | 6.3 | ||
| Norway | 903 | 989 | -3.8 | 5.9 | ||
| The Netherlands | 1,392 | 1,292 | 7.5 | 2.2 | ||
| Other markets | 445 | 355 | 21.4 | -4.0 | ||
| Eliminations | -46 | -45 | ||||
| Total | 5,572 | 5,522 | 3.1 | 5.8 |
Solar Quarterly Report Q2 2018
Outlook 2018
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Outlook 2018
We reconfirm our guidance
Market outlook for Solar's business areas
Installation
As stated in the 2017 Annual Report, we expect growth in the Installation market in 2018 to match, or slightly exceed, the level for 2017.
New construction and renovation activities in the Danish market are expected to improve compared to 2017, particularly in H2.
In Sweden, we saw an unexpected decline in the number of building permits in late 2017. This trend, however, now seems to have stabilised at the same level as in 2016. We expect the growth we saw in H1 to continue into early H2, whereas there is more uncertainty relating to developments in the latter part of H2. We therefore revise our overall expectations for 2018 with market growth on par with or above 2017.
Despite a weak start in Norway, we continue to expect the installation segment to generate modest growth.
The positive trends in the Dutch market are expected to continue. Consequently, we expect to see continuous but modest improvement compared to 2017.
The improvement that we are seeing in the Polish market is expected to continue for the remaining part of the year and we anticipate substantial growth.
In general, our outlook for 2018 is for moderate, positive market growth.
Industry
As stated in the 2017 Annual Report, our outlook for Industry is for positive growth.
We maintain our outlook for a slightly positive trend in all major markets, including MAG45's global market niche.
Other
We expect growth within the Other segment.
Financial outlook
We expect revenue of approx. DKK 11.4bn corresponding to organic growth of approx. 4%. Within core business we expect growth of approx. 3%, which is on par with or below the expected market growth. Related business is expected to show growth of approx. 25%.
| Guidance 2018, DKK million | Core business | Related business | Solar Group |
|---|---|---|---|
| Revenue | 10,800 | 600 | 11,400 |
| EBITA guidance, published 09.02.2018 | 365 | -20 | 345 |
| Change | 10 | -10 | 0 |
| EBITA guidance, updated | 375 | -30 | 345 |
For 2018, we maintain our EBITA expectations at approx. DKK 345m.
For core business we increase our EBITA expectations from approx. DKK 365m to approx. DKK 375m. Our cost-reducing initiatives are expected to compensate for the negative development in Solar Sverige.
If the current exchange rates remain unchanged this will have a negative impact on core business of close to DKK 100m on revenue and approx. DKK 4m on EBITA.
For related business our expectations in terms of revenue are unchanged as lower revenue expectations in STI and Solar Polaris is expected to be compensated by strong growth in MAG45.
Solar Quarterly Report Q2 2018
Outlook 2018
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
However, our expectations for EBITA have changed from approx. DKK -20m to approx. DKK -30m. Despite the strong growth in MAG45 we continue to see gross profit margin below last year's level and below our initial expectations. Our margin improving initiatives will not be able to compensate for the development in H1. As regards STI and Solar Polaris, we have taken several initiatives to reduce costs in order to compensate for the lack of revenue. We expect, however, the recovery process to take more time. We continue to expect an improvement in H2 compared to last year in all our related businesses.
The table below links the 2017 results to our 2018 guidance. The divestment of the Austrian and Belgian loss-making businesses adds DKK 31m in EBITA to our core business.
The Austrian and Belgian businesses carried approx. DKK 10m in overhead costs, which will now be assigned to the continuing operations within the core business.
| EBITA, DKK million | Core business | Related business | Solar Group |
|---|---|---|---|
| 2017, actual, published 12.01.2018 | 309 | -45 | 264 |
| Divestment of Austrian & Belgian businesses | 31 | - | 31 |
| 2017, actual, continuing operations | 340 | -45 | 295 |
| Overhead costs | -10 | - | -10 |
| Planned improvements | 35 | 25 | 60 |
| 2018 guidance, published 09.02.2018 | 365 | -20 | 345 |
| Impact from cost-reducing initiatives | 10 | - | 10 |
| Impact from lower revenue and gross profit | - | -10 | -10 |
| 2018 guidance, updated | 375 | -30 | 345 |
Solar Quarterly Report Q2 2018
Shareholder information
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Shareholder information
Share and webcast information
Solar's shares
Solar's share capital is divided into nominal value DKK 90 million A shares and nominal value DKK 685 million B shares.
The A shares are not listed. The B shares are listed on Nasdaq Copenhagen under the ID code DK0010274844, with the short designation SOLAR B, and form part of the MidCap index and MidCap on Nasdaq Nordic.
The share capital includes 900,000 A shares and 6,845,625 B shares. Solar's portfolio of treasury shares totalled 447,333 B shares or 5.8% of share capital as at 30 June 2018.
A shares have 10 votes per share amount of DKK 100, while B shares have 1 vote per share amount of DKK 100.
Audio webcast
The presentation of the Quarterly Report Q2 2018 will be conducted in English on 9 August 2018 at 11:00 CET. The presentation will be transmitted as an audio webcast and will be available at www.solar.eu.
IR quiet periods
We have changed the timing for our IR quiet periods. These periods now start on the 4th of every month following a closed quarter and end with the publication of the next quarterly report. At year-end, the IR quiet period still starts on the 10th of the next month following the closed year and ends with the publication of the annual report.
Solar's market value
Solar holds a 20.01% equity interest in BIMobject AB, which is a listed company on First North. In June 2018, BIMobject announced that the company has decided to begin the process of listing the company's shares at Nasdaq Stockholm with an ambition of being listed within 16-20 months.
This is an illustration of the impact of BIMobject's market value on Solar's market value.
Distribution of share capital and votes as at 30 June 2018 in %
| Holdings of 5% or more of share capital | Share capital | Votes |
|---|---|---|
| The Fund of 20th December, Vejen, Denmark | 16.0% | 58.1% |
| RWC Asset Management LLP, London, England | 11.9% | 5.8% |
| Chr. Augustinus Fabrikker A/S, Copenhagen, Denmark | 10.6% | 5.2% |
| Nordea Funds Oy, Danish Branch, Copenhagen, Denmark¹ | 10.2% | <5% |
| Solar A/S, Vejen, Denmark | 5.8% | 2.8% |
¹ Cf. company announcement no. 15 2018, dated 9 July 2018, which is the latest public information.
Financial calendar 2018
| 4 October – 1 November | IR quiet period |
|---|---|
| 1 November | Quarterly Report Q3 2018 |
Soler Quarterly Report Q2 2018
Consolidated financial statements
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Consolidated financial statements
Solar Quarterly Report Q2 2018
Statement of comprehensive income
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MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
17
CONTENTS
Statement of comprehensive income
Income statement
| DKK million | Q2 | H1 | Year | ||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Revenue | 2,744 | 2,684 | 5,572 | 5,522 | 11,105 |
| Cost of sales | -2,176 | -2,123 | -4,418 | -4,353 | -8,776 |
| Gross profit | 568 | 561 | 1,154 | 1,169 | 2,329 |
| External operating costs | -117 | -120 | -252 | -263 | -482 |
| Staff costs | -381 | -375 | -751 | -756 | -1,484 |
| Loss on trade receivables | -4 | -3 | -6 | -7 | -16 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 66 | 63 | 145 | 143 | 347 |
| Write-down and depreciation on property, plant and equipment | -14 | -13 | -27 | -26 | -52 |
| Earnings before interest, tax and amortisation (EBITA) | 52 | 50 | 118 | 117 | 295 |
| Amortisation of intangible assets | -20 | -18 | -40 | -35 | -169 |
| Earnings before interest and tax (EBIT) | 32 | 32 | 78 | 82 | 126 |
| Share of net profit from associates | -4 | 0 | -5 | 0 | -11 |
| Impairment on associates | -15 | 0 | 44 | 0 | -59 |
| Financial income | 6 | -20 | 11 | 86 | 110 |
| Financial costs | -13 | -10 | -23 | -21 | -40 |
| Earnings before tax (EBT) | 6 | 2 | 105 | 147 | 126 |
| Income tax | -9 | -7 | -17 | -19 | -25 |
| Net profit from continuing operations | -3 | -5 | 88 | 128 | 101 |
| Profit from discontinued operations | -4 | -7 | -14 | -17 | -82 |
| Net profit for the period | -7 | -12 | 74 | 111 | 19 |
| Earnings in DKK per share outstanding (EPS) | -0.96 | -1.64 | 10.14 | 15.21 | 2.60 |
| Diluted earnings in DKK per share outstanding (EPS-D) | -0.96 | -1.64 | 10.12 | 15.19 | 2.60 |
| Earnings in DKK per share outstanding (EPS) of continuing operations | -0.41 | -0.69 | 12.06 | 17.54 | 13.84 |
| Diluted earnings in DKK per share outstanding (EPS-D) of continuing operations | -0.41 | -0.68 | 12.04 | 17.52 | 13.82 |
Other comprehensive income
| DKK million | Q2 | H1 | Year | ||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Net profit for the period | -7 | -12 | 74 | 111 | 19 |
| Other income and costs recognised: | |||||
| Items that can be reclassified for the income statement | |||||
| Foreign currency translation adjustments of foreign subsidiaries | -3 | -19 | -10 | -20 | -35 |
| Value adjustments of hedging instruments before tax | -1 | 5 | 2 | 13 | 16 |
| Tax on value adjustments of hedging instruments | 1 | -1 | 0 | -3 | -4 |
| Other income and costs recognised after tax | -3 | -15 | -8 | -10 | -23 |
| Total comprehensive income for the period | -10 | -27 | 66 | 101 | -4 |
Solar Quarterly Report Q2 2018
Balance sheet
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MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
18
CONTENTS
Balance sheet
as at 30 June
| Consolidated (DKK million) | 30.06 | 31.12 | |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| ASSETS | |||
| Intangible assets | 431 | 500 | 427 |
| Property, plant and equipment | 808 | 849 | 814 |
| Deferred tax assets | 16 | 10 | 18 |
| Investments in associates | 243 | 265 | 203 |
| Other non-current assets | 63 | 57 | 60 |
| Non-current assets | 1,561 | 1,681 | 1,522 |
| Inventories | 1,426 | 1,430 | 1,437 |
| Trade receivables | 1,512 | 1,691 | 1,492 |
| Income tax receivable | 1 | 13 | 5 |
| Receivables from construction contracts | 1 | 1 | 1 |
| Other receivables | 8 | 13 | 13 |
| Prepayments | 52 | 55 | 45 |
| Cash at bank and in hand | 27 | 19 | 77 |
| Assets held for sale | 0 | 0 | 125 |
| Current assets | 3,027 | 3,222 | 3,195 |
| Total assets | 4,588 | 4,903 | 4,717 |
| DKK million | 30.06 | 31.12 | |
| --- | --- | --- | --- |
| 2018 | 2017 | 2017 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 775 | 775 | 775 |
| Reserves | -166 | -145 | -158 |
| Retained earnings | 975 | 1,066 | 901 |
| Proposed dividend for the year | 0 | 0 | 73 |
| Equity | 1,584 | 1,696 | 1,591 |
| Interest-bearing liabilities | 412 | 183 | 423 |
| Provision for pension obligations | 3 | 15 | 3 |
| Provision for deferred tax | 101 | 126 | 107 |
| Other provisions | 24 | 42 | 24 |
| Non-current liabilities | 540 | 366 | 557 |
| Interest-bearing liabilities | 277 | 548 | 143 |
| Trade payables | 1,742 | 1,812 | 1,848 |
| Income tax payable | 5 | 12 | 19 |
| Payables from construction contracts | 1 | 2 | 1 |
| Other payables | 429 | 452 | 482 |
| Prepayments | 3 | 1 | 1 |
| Other provisions | 7 | 14 | 7 |
| Liabilities held for sale | 0 | 0 | 68 |
| Current liabilities | 2,464 | 2,841 | 2,569 |
| Liabilities | 3,004 | 3,207 | 3,126 |
| Total equity and liabilities | 4,588 | 4,903 | 4,717 |
Solar Quarterly Report Q2 2018
Cash flow statement
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MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
19
CONTENTS
Cash flow statement
| DKK million | Q2 | H1 | Year | ||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Net profit from continuing operations for the period | -3 | -5 | 88 | 128 | 101 |
| Depreciation, write-down and amortisation | 34 | 31 | 67 | 61 | 221 |
| Impairment on associates | 15 | 0 | -44 | 0 | 59 |
| Changes to provisions and other adjustments | 3 | -1 | 3 | -5 | -9 |
| Share of net profit from associates | 4 | 0 | 5 | 0 | 11 |
| Financials, net | 8 | 30 | 13 | -65 | -70 |
| Income tax | 9 | 7 | 17 | 18 | 25 |
| Financial income, received | 2 | 1 | 4 | 3 | 6 |
| Financial expenses, settled | -9 | -7 | -15 | -15 | -28 |
| Income tax, settled | -9 | -9 | -30 | -28 | -49 |
| Cash flow before working capital changes | 54 | 47 | 108 | 97 | 267 |
| Working capital changes | |||||
| Inventory changes | -10 | -46 | -2 | -128 | -226 |
| Receivables changes | 72 | -12 | -68 | -307 | -226 |
| Non-interest-bearing liabilities changes | -155 | -169 | -116 | 72 | 197 |
| Cash flow from operating activities, continuing operations | -39 | -180 | -78 | -266 | 12 |
| Cash flow from operating activities, discontinued operations | -13 | -17 | -8 | -27 | -13 |
| Cash flow from operating activities | -52 | -197 | -86 | -293 | -1 |
| Investing activities | |||||
| Purchase of intangible assets | -28 | -27 | -53 | -55 | -110 |
| Purchase of property, plant and equipment | -7 | -4 | -23 | -18 | -37 |
| Disposal of property, plant and equipment | 0 | 1 | 0 | 1 | 22 |
| Acquisition of subsidiaries and activities | 0 | 0 | 0 | -10 | -16 |
| Acquisition of associates | 0 | -10 | 0 | -10 | -16 |
| Divestment of subsidiaries and activities | 60 | 0 | 60 | 0 | 0 |
| Other financial investments¹ | 0 | -10 | 0 | -189 | -190 |
| Cash flow from investing activities, continuing operations | 25 | -50 | -16 | -281 | -347 |
| Cash flow from investing activities, discontinued operations | 0 | 0 | 0 | 0 | 0 |
| Cash flow from investing activities | 25 | -50 | -16 | -281 | -347 |
| DKK million | Q2 | H1 | Year | ||
| --- | --- | --- | --- | --- | --- |
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Financing activities | |||||
| Repayment of non-current interest-bearing debt | -3 | -7 | -5 | -12 | -69 |
| Raising of non-current interest-bearing liabilities | 0 | 0 | 0 | 0 | 135 |
| Dividends distributed | 0 | 0 | -73 | -88 | -88 |
| Cash flow from financing activities, continuing operations | -3 | -7 | -78 | -100 | -22 |
| Cash flow from financing activities, discontinued operations | 0 | 0 | 0 | 0 | 0 |
| Cash flow from financing activities | -3 | -7 | -78 | -100 | -22 |
| Total cash flow | -30 | -254 | -180 | -674 | -370 |
| Cash at bank and in hand at the beginning of the period | -216 | -99 | -66 | 222 | 321 |
| Assumed on divestment of subsidiaries | -5 | 0 | -5 | 0 | 0 |
| Foreign currency translation adjustments | 1 | -10 | 1 | -10 | -17 |
| Cash at bank and in hand at the end of the period | -250 | -363 | -250 | -462 | -66 |
| Cash at bank and in hand at the end of the period | |||||
| Cash at bank and in hand | 27 | 19 | 27 | 74 | 77 |
| Current interest-bearing liabilities² | -277 | -382 | -277 | -536 | -143 |
| Cash at bank and in hand at the end of the period | -250 | -363 | -250 | -462 | -66 |
- Investment in B/Mobject in 2017 amounts to DKK 171m.
- Amount for Q1-Q3 2017 does not include the short-term part of long-term liabilities that fell due in 2017.
Solar Quarterly Report Q2 2018
Statement of changes in equity
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
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CONTENTS
Statement of changes in equity
| DKK million | Share capital | Reserves for hedging transactions | Reserves for foreign currency translation adjustments | Retained earnings | Proposed dividends | Total |
|---|---|---|---|---|---|---|
| 2018 | ||||||
| Equity as at 1 January | 775 | -61 | -97 | 901 | 73 | 1,591 |
| Foreign currency translation adjustments of foreign subsidiaries | -10 | -10 | ||||
| Fair value adjustments of hedging instruments before tax | 2 | 2 | ||||
| Tax on value adjustments | 0 | 0 | ||||
| Net income recognised in equity via other comprehensive income in the statement of comprehensive income | 0 | 2 | -10 | 0 | 0 | -8 |
| Net profit for the period | 74 | 74 | ||||
| Comprehensive income | 0 | 2 | -10 | 74 | 0 | 66 |
| Distribution of dividends (DKK 10.00 per share) | -73 | -73 | ||||
| Transactions with the owners | 0 | 0 | 0 | 0 | -73 | -73 |
| Equity as at 30 June | 775 | -59 | -107 | 975 | 0 | 1,584 |
Solar Quarterly Report Q2 2018
Statement of changes in equity
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
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CONTENTS
Statement of changes in equity
- continued
| DKK million | Share capital | Reserves for hedging transactions | Reserves for foreign currency translation adjustments | Retained earnings | Proposed dividends | Total |
|---|---|---|---|---|---|---|
| 2017 | ||||||
| Equity as at 1 January | 792 | -73 | -62 | 938 | 88 | 1,683 |
| Foreign currency translation adjustments of foreign subsidiaries | -20 | -20 | ||||
| Fair value adjustments of hedging instruments before tax | 13 | 13 | ||||
| Tax on value adjustments | -3 | -3 | ||||
| Net income recognised in equity via other comprehensive income in the statement of comprehensive income | 0 | 10 | -20 | 0 | 0 | -10 |
| Net profit for the period | 111 | 111 | ||||
| Comprehensive income | 0 | 10 | -20 | 111 | 0 | 101 |
| Distribution of dividends (DKK 12.00 per share) | -88 | -88 | ||||
| Deduction in share capital | -17 | 17 | 0 | |||
| Transactions with the owners | -17 | 0 | 0 | 17 | -88 | -88 |
| Equity as at 30 June | 775 | -63 | -82 | 1.066 | 0 | 1,696 |
Solar Quarterly Report Q2 2018
Notes
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MANAGEMENT'S REVIEW
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FINANCIAL STATEMENTS
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CONTENTS
Notes
Segment information
Solar's business segments are Installation, Industry and Other 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. Other 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 | Other | Total |
|---|---|---|---|---|
| Q2 2018 | ||||
| Revenue | 1,707 | 871 | 166 | 2,744 |
| Cost of sales | -1,381 | -673 | -122 | -2,176 |
| Gross profit | 326 | 198 | 44 | 568 |
| Direct costs | -63 | -26 | -8 | -97 |
| Earnings before indirect costs | 263 | 172 | 36 | 471 |
| Indirect costs | -134 | -45 | -13 | -192 |
| Segment profit | 129 | 127 | 23 | 279 |
| Non-allocated costs | -213 | |||
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 66 | |||
| Depreciation and amortisation | -34 | |||
| Earnings before interest and tax (EBIT) | 32 | |||
| Financials, net | -26 | |||
| Earnings before tax (EBT) | 6 | |||
| DKK million | Installation | Industry | Other | Total |
| --- | --- | --- | --- | --- |
| Q2 2017 | ||||
| Revenue | 1,703 | 794 | 187 | 2,684 |
| Cost of sales | -1,375 | -609 | -139 | -2,123 |
| Gross profit | 328 | 185 | 48 | 561 |
| Direct costs | -64 | -25 | -5 | -94 |
| Earnings before indirect costs | 264 | 160 | 43 | 467 |
| Indirect costs | -134 | -42 | -12 | -188 |
| Segment profit | 130 | 118 | 31 | 279 |
| Non-allocated costs | -216 | |||
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 63 | |||
| Depreciation and amortisation | -31 | |||
| Earnings before interest and tax (EBIT) | 32 | |||
| Financials, net | -30 | |||
| Earnings before tax (EBT) | 2 |
Solar Quarterly Report Q2 2018
Notes
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MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
33
CONTENTS
Notes
Segment information - continued
| DKK million | Installation | Industry | Other | Total |
|---|---|---|---|---|
| H1 2018 | ||||
| Revenue | 3,430 | 1,727 | 415 | 5,572 |
| Cost of sales | -2,752 | -1,331 | -335 | -4,418 |
| Gross profit | 678 | 396 | 80 | 1,154 |
| Direct costs | -129 | -53 | -16 | -198 |
| Earnings before indirect costs | 549 | 343 | 64 | 956 |
| Indirect costs | -269 | -91 | -27 | -387 |
| Segment profit | 280 | 252 | 37 | 569 |
| Non-allocated costs | -424 | |||
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 145 | |||
| Depreciation and amortisation | -67 | |||
| Earnings before interest and tax (EBIT) | 78 | |||
| Financials, net | 27 | |||
| Earnings before tax (EBT) | 105 | |||
| DKK million | Installation | Industry | Other | Total |
| --- | --- | --- | --- | --- |
| H1 2017 | ||||
| Revenue | 3,510 | 1,602 | 410 | 5,522 |
| Cost of sales | -2,823 | -1,224 | -306 | -4,353 |
| Gross profit | 687 | 378 | 104 | 1,169 |
| Direct costs | -129 | -49 | -14 | -192 |
| Earnings before indirect costs | 558 | 329 | 90 | 977 |
| Indirect costs | -269 | -87 | -26 | -382 |
| Segment profit | 289 | 242 | 64 | 595 |
| Non-allocated costs | -452 | |||
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 143 | |||
| Depreciation and amortisation | -61 | |||
| Earnings before interest and tax (EBIT) | 82 | |||
| Financials, net | 65 | |||
| Earnings before tax (EBT) | 147 |
Solar Quarterly Report Q2 2018
Notes
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Notes
Segment information - continued
Core business includes Solar Danmark, Solar Sverige, Solar Norge, Solar Nederland, Solar Polska, and P/F Solar Føroyar.
Related business includes MAG45, Scandinavian Technology Institute and Solar Polaris.
Digital, construction & services includes all associated businesses BIMobject, GenieBelt, Minuba, Viva Labs, Monterra, and HomeBob.
| DKK million (unless otherwise stated) | Core business | Related business | Digital, Construction & Services | Eliminations | Total |
|---|---|---|---|---|---|
| Q2 2018 | |||||
| Revenue | 2,599 | 145 | - | - | 2,744 |
| Gross profit | 528 | 40 | - | - | 568 |
| EBITA | 62 | -10 | - | - | 52 |
| Invested capital | 1,859 | 113 | 277 | -277 | 1,972 |
| Adj. organic growth in % | 0.5 | 27.8 | - | - | 1.6 |
| Gross profit margin | 20.3 | 27.6 | - | - | 20.7 |
| EBITA margin | 2.4 | -6.9 | - | - | 1.9 |
| ROIC in % | 10.9 | N/A | - | - | 3.7 |
Q2 2017
| Revenue | 2,577 | 107 | - | - | 2,684 |
|---|---|---|---|---|---|
| Gross profit | 529 | 32 | - | - | 561 |
| EBITA | 62 | -12 | - | - | 50 |
| Invested capital | 1,948 | 181 | 294 | -294 | 2,129 |
| Adj. organic growth in % | 7.4 | 7.9 | - | - | 7.4 |
| Gross profit margin | 20.5 | 29.9 | - | - | 20.9 |
| EBITA margin | 2.4 | -11.2 | - | - | 1.9 |
| ROIC in % | 12.4 | N/A | - | - | 9.2 |
| DKK million (unless otherwise stated) | Core business | Related business | Digital, Construction & Services | Eliminations | Total |
| --- | --- | --- | --- | --- | --- |
| H1 2018 | |||||
| Revenue | 5,276 | 296 | - | - | 5,572 |
| Gross profit | 1,073 | 81 | - | - | 1,154 |
| EBITA | 136 | -18 | - | - | 118 |
| Invested capital | 1,859 | 113 | 277 | -277 | 1,972 |
| Adj. organic growth in % | 2.1 | 28.8 | - | - | 3.1 |
| Gross profit margin | 20.3 | 27.4 | - | - | 20.7 |
| EBITA margin | 2.6 | -6.1 | - | - | 2.1 |
| ROIC in % | 10.9 | N/A | - | - | 3.7 |
H1 2017
| Revenue | 5,302 | 220 | - | - | 5,522 |
|---|---|---|---|---|---|
| Gross profit | 1,103 | 66 | - | - | 1,169 |
| EBITA | 136 | -19 | - | - | 117 |
| Invested capital | 1,948 | 181 | 294 | -294 | 2,129 |
| Adj. organic growth in % | 5.8 | - | - | - | 5.8 |
| Gross profit margin | 20.8 | 30.0 | - | - | 21.2 |
| EBITA margin | 2.6 | -8.6 | - | - | 2.1 |
| ROIC in % | 12.4 | N/A | - | - | 9.2 |
Solar Quarterly Report Q2 2018
Notes
24
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
35
CONTENTS
Notes
Segment information - continued
Geographical information
Solar A/S primarily operates on the Danish, Swedish, Norwegian and Dutch markets. In the below table, Other markets covers the remaining markets, which can be seen in the group structure available on page 18 of Annual Report 2017 or on www.solar.eu. The below allocation has been made based on the products' place of sale.
| DKK million | Q2 | H1 | |||
|---|---|---|---|---|---|
| Revenue | Adjusted organic growth | Revenue | Adjusted organic growth | Non-current assets | |
| 2018 | |||||
| Denmark | 841 | 5.1 | 1,675 | 4.5 | 1,878 |
| Sweden | 584 | -5.2 | 1,203 | -2.7 | 241 |
| Norway | 452 | -3.8 | 903 | -3.8 | 157 |
| The Netherlands | 668 | 3.2 | 1,392 | 7.5 | 292 |
| Other markets | 223 | 19.6 | 445 | 21.4 | 69 |
| Eliminations | -24 | - | -46 | - | -1,076 |
| Total | 2,744 | 1.6 | 5,572 | 3.1 | 1,561 |
2017
| Denmark | 787 | 11.4 | 1,625 | 10.3 | 2,163 |
|---|---|---|---|---|---|
| Sweden | 644 | 9.2 | 1,306 | 6.3 | 283 |
| Norway | 462 | 3.1 | 989 | 5.9 | 194 |
| The Netherlands | 635 | 5.5 | 1,292 | 2.2 | 280 |
| Other markets | 179 | 7.4 | 355 | -4.0 | 105 |
| Eliminations | -23 | - | -45 | - | -1,344 |
| Total | 2,684 | 7.4 | 5,522 | 5.8 | 1,681 |
Solar Quarterly Report Q2 2018
Notes
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
2018
CONTENTS
Notes
Discontinued operation
As of 5 April 2018, Solar A/S finalised the divestment of all shares in GFI GmbH, and of 1 May the assets in Claessen ELGB N.V. to Sonepar Group with an accounting loss of DKK 47m.
The discontinued operation impacted the income statement as follows:
| DKK million | Q2 | H1 | Year | ||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | |
| Revenue | 16 | 177 | 157 | 335 | 664 |
| Cost of sales | -13 | -151 | -130 | -285 | -566 |
| Gross profit | 3 | 26 | 27 | 50 | 98 |
| Costs | -6 | -32 | -39 | -67 | -129 |
| Earnings before interest and tax (EBIT) | -3 | -6 | -12 | -17 | -31 |
| Financials | 0 | -1 | -1 | -1 | -2 |
| Earnings before tax (EBT) | -3 | -7 | -13 | -18 | -33 |
| Tax on net profit or loss for the period | -1 | 0 | -1 | 1 | -2 |
| Net profit or loss for the period | -4 | -7 | -14 | -17 | -35 |
| Write-down to fair value less costs to sell | 0 | 0 | 0 | 0 | -47 |
| Net profit or loss for discontinued operations | -4 | -7 | -14 | -17 | -82 |
| Earnings from discontinued operations in DKK per share outstanding (EPS) | -0.55 | -0.96 | -1.92 | -2.33 | -11.24 |
| --- | --- | --- | --- | --- | --- |
| Diluted earnings from discontinued operations in DKK per share outstanding (EPS-D) | -0.55 | -0.96 | -1.92 | -2.33 | -11.24 |
Solar Quarterly Report Q2 2018
Notes
26
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FINANCIAL STATEMENTS
35
CONTENTS
Notes
Grant of restricted shares
In accordance with Solar's remuneration policy and general guidelines for incentive-based remuneration, the Board of Directors decided to grant restricted shares to the Executive Board and management team in 2018. Overall, the grant of shares is covered by the same terms as the previous grants of share options.
Restricted shares are granted for no consideration and provide the holder with a right and an obligation to receive 8 shares at a nominal value of DKK 100. The price at the time of granting is fixed at DKK 399.19 based on the average price on Nasdaq Copenhagen the first 10 business days after publication of Annual Report 2017. A total amount of 3,423 restricted shares was granted amounting to a fair value of DKK 1.3m.
The restricted shares vest three years after the time of granting, meaning that this grant of shares vests in 2021. At this point, the holder may exercise the restricted share granting.
General information on Solar's incentive scheme is available on our website: https://www.solar.eu/investor/policies.
Share option plans
In February 2018, 19,786 share options from the 2014 granting and 17,875 share options from the 2015 granting were, respectively, exercised. In addition, Solar granted 2,322 additional share options to a senior management employee. So on 23 February 2018, outstanding share options totalled 74,935.
Description and specification of Solar's share option plans are found in Annual Report 2017 and at our website: https://www.solar.eu/investor/policies.
Contingent liabilities
Litigation
In July 2018, Solar received a writ of summons from the main former shareholder of MAG45 B.V. (the company that Solar acquired in February 2016) claiming payment of the maximum amount of the earn-out agreed in the share purchase agreement with the sellers totalling DKK 120m. Prior to the initiation of the proceedings Solar notified the sellers that it had a claim under the same earn-out provisions as well as a warranty claim jointly totalling DKK 26m. It is our assessment that the claim against Solar has no merit and has only been put forward as a reaction to Solar's claim. Solar will pursue its claims at the court of Amsterdam, the same court that will rule on the claim instituted against Solar.
The claim from the main former owner of MAG45 B.V. is not expected to have any effect on Solar's financial position or future earnings.
Solar Quarterly Report Q2 2018
Notes
27
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
32
CONTENTS
Notes
Accounting policies
The quarterly report for Solar A/S has been prepared in accordance with IAS 34 “Presentation of interim reports” as approved by the EU and additional Danish disclosure requirements for quarterly reports of listed companies.
Apart from the effect of new IAS/IFRS standards implemented during the period and the additional accounting policies mentioned below, the accounting policies remain unchanged from the Annual Report 2017, which contains a full description of these on pages 53-55 as well as of relevant, supplementary notes.
Key items in the accounts are based on annual contracts etc. A prudent assessment of the current year's activities was undertaken during the preparation of this quarterly report.
In the quarterly report, income tax has been calculated on the basis of pre-tax profits at the expected average tax rate. No calculations of taxable income for the period have been made.
New accounting standards implemented during the period
On 1 January 2018 Solar implemented IFRS 9 on financial instruments and IFRS 15 on revenue from contracts with customers. Also, we have implemented new interpretations on existing standards. These changes have no impact on Solar. As a consequence of the IFRS implementations the following accounting policies have been updated:
Revenue
Revenue includes goods for resale recognised in the income statement if the passing of the risk to the customer takes place before the end of the year and if revenue can be determined reliably. Revenue is measured exclusive VAT and duties charged on behalf of a third party. All types of discounts allowed are recognised in revenue. Revenue from delivery of services, which are consumed by the customer simultaneously with delivery such as training is recognised along with delivery.
Trade receivables
Trade receivables are measured at fair value at acquisition and at amortised cost subsequently. A write down for expected credit losses over the life of the receivables is made, based on a combination of a portfolio assessment and an individual assessment taking into account payment defaults etc. When assessing the write down, security provided and other credit enhancements are taken into account.
New accounting standards to be implemented in coming accounting periods
For information on new accounting standards, reference is made to note 28 on page 96 in the Annual Report 2017. No new or amended standards have been issued in 2018 other than those stated in the annual report.
On audit
This quarterly report has not been audited or reviewed.
Solar Quarterly Report Q2 2018
Quarterly figures
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MANAGEMENT'S
REVIEW
^{}[]
FINANCIAL
STATEMENTS
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CONTENTS
Quarterly figures
| Income statement (DKK million) | Q1 | Q2 | Q3 | Q4 | ||||
|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | 2016 | 2017 | 2016 | |
| Revenue | 2,828 | 2,838 | 2,744 | 2,684 | 2,604 | 2,427 | 2,979 | 2,851 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 79 | 80 | 66 | 63 | 106 | 77 | 98 | 139 |
| Earnings before interest, tax and amortisation (EBITA) | 66 | 67 | 52 | 50 | 93 | 64 | 85 | 125 |
| Earnings before interest and tax (EBIT) | 46 | 50 | 32 | 32 | 74 | 49 | -30 | 110 |
| Financials, net | -5 | 95 | -7 | -30 | -4 | -7 | 9 | -8 |
| Earnings before tax (EBT) | 99 | 145 | 6 | 2 | 69 | 42 | -90 | 102 |
| Net profit or loss for the quarter | 81 | 123 | -7 | -12 | 42 | 29 | -134 | 48 |
Balance sheet (DKK million)
| Non-current assets | 1,580 | 1,698 | 1,561 | 1,681 | 1,675 | 1,399 | 1,522 | 1,397 |
|---|---|---|---|---|---|---|---|---|
| Current assets | 3,254 | 3,217 | 3,027 | 3,222 | 3,339 | 3,172 | 3,195 | 3,109 |
| Balance sheet total | 4,834 | 4,915 | 4,588 | 4,903 | 5,014 | 4,571 | 4,717 | 4,506 |
| Equity | 1,594 | 1,723 | 1,584 | 1,696 | 1,745 | 1,631 | 1,591 | 1,683 |
| Non-current liabilities | 546 | 371 | 540 | 366 | 362 | 407 | 557 | 375 |
| Current liabilities | 2,694 | 2,821 | 2,464 | 2,841 | 2,907 | 2,533 | 2,569 | 2,448 |
| Interest-bearing liabilities, net | 632 | 458 | 662 | 712 | 728 | 476 | 489 | 43 |
| Invested capital | 1,895 | 1,899 | 1,972 | 2,129 | 2,190 | 2,122 | 1,790 | 1,744 |
| Net working capital, end of period | 1,145 | 1,132 | 1,196 | 1,309 | 1,398 | 1,323 | 1,081 | 998 |
| Net working capital, average | 1,168 | 1,162 | 1,173 | 1,191 | 1,209 | 1,185 | 1,133 | 1,187 |
Solar Quarterly Report Q2 2018
Quarterly figures
29
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FINANCIAL STATEMENTS
30
CONTENTS
Quarterly figures
- continued
| Cash flows (DKK million) | Q1 | Q2 | Q3 | Q4 | ||||
|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | 2016 | 2017 | 2016 | |
| Cash flow from operating activities | -39 | -86 | -39 | -180 | -4 | 2 | 282 | 415 |
| Cash flow from investing activities | -41 | -231 | 25 | -50 | -25 | -89 | -41 | -4 |
| Cash flow from financing activities | -75 | -93 | -3 | -7 | -6 | -159 | 84 | -12 |
| Net investments in intangible assets | -25 | -28 | -28 | -27 | -27 | -22 | -28 | -36 |
| Net investments in property, plant and equipment | -16 | -14 | -7 | -3 | 7 | -11 | -5 | 37 |
| Acquisition and disposal of subsidiaries, net | 0 | -10 | 0 | 0 | 0 | -44 | -6 | 0 |
Financial ratios (% unless otherwise stated)
| Revenue growth | -0.4 | 13.5 | 2.2 | 1.6 | 7.3 | 6.4 | 4.5 | 8.1 |
|---|---|---|---|---|---|---|---|---|
| Organic growth | 1.3 | 11.0 | 3.6 | 2.1 | 7.3 | 3.3 | 5.3 | 5.5 |
| Organic growth adjusted for number of working days | 4.4 | 4.5 | 1.6 | 7.4 | 8.8 | 3.6 | 7.0 | 5.4 |
| Gross profit margin | 20.7 | 21.4 | 20.7 | 20.9 | 20.9 | 21.0 | 20.6 | 21.4 |
| EBITDA margin | 2.8 | 2.8 | 2.4 | 2.3 | 4.1 | 3.2 | 3.3 | 4.9 |
| EBITA margin | 2.3 | 2.4 | 1.9 | 1.9 | 3.6 | 2.6 | 2.9 | 4.4 |
| EBIT margin | 1.6 | 1.8 | 1.2 | 1.2 | 2.8 | 2.0 | -1.0 | 3.9 |
| Net working capital (NWC end of period)/revenue (LTM) | 10.3 | 9.3 | 10.7 | 10.9 | 11.6 | 11.6 | 9.7 | 8.4 |
| Net working capital (NWC average)/revenue (LTM) | 10.5 | 9.6 | 10.5 | 9.8 | 9.8 | 10.3 | 10.2 | 10.1 |
| Gearing (interest-bearing liabilities, net/EBITDA), no. of times | 1.8 | 1.2 | 1.9 | 2.0 | 1.9 | 1.3 | 1.4 | 0.1 |
| Return on equity (ROE) | -1.4 | 13.3 | -1.1 | 11.0 | 11.7 | 6.6 | 1.1 | 7.5 |
| Return on invested capital (ROIC) | 3.9 | 10.1 | 3.7 | 9.2 | 10.1 | 9.1 | 3.8 | 10.0 |
| Adjusted enterprise value/earnings before interest, tax and amortisation (EV/EBITA) | 10.9 | 9.1 | 11.0 | 10.2 | 9.5 | 11.4 | 11.0 | 8.8 |
| Equity ratio | 33.0 | 35.1 | 34.5 | 34.6 | 34.8 | 35.7 | 33.7 | 37.4 |
Solar Quarterly Report Q2 2018
Quarterly figures
30
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
3P
CONTENTS
Quarterly figures
- continued
| Share ratios (DKK) | Q1 | Q2 | Q3 | Q4 | ||||
|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2017 | 2016 | 2017 | 2016 | |
| Earnings in DKK per share outstanding (EPS) | 11.10 | 16.85 | -0.96 | -1.64 | 5.75 | 3.84 | -18.36 | 6.58 |
| Intrinsic value in DKK per share outstanding | 218.41 | 236.08 | 217.04 | 232.38 | 239.10 | 216.10 | 218.00 | 230.60 |
| Share price in DKK | 398.53 | 382.88 | 398.72 | 376.73 | 381.25 | 373.66 | 414.52 | 361.80 |
| Share price/intrinsic value | 1.82 | 1.62 | 1.84 | 1.62 | 1.59 | 1.73 | 1.90 | 1.57 |
Employees
| Number of employees (FTEs), end of the period | 2,994 | 2,864 | 3,001 | 2,882 | 2,920 | 2,863 | 2,959 | 2,834 |
|---|---|---|---|---|---|---|---|---|
| Average number of employees (FTEs), LTM | 2,939 | 2,843 | 2,968 | 2,861 | 2,875 | 2,783 | 2,901 | 2,814 |
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. |
| Activities where our equity interest is <50% are not included in the ROIC calculation. The invested capital only includes operating assets and liabilities. |
Overall, financial ratios are calculated in accordance with the Danish Finance Society's "Recommendations & Financial Ratios 2015".
Solar Quarterly Report Q2 2018
Statement by the Executive Board and the Board of Directors
MANAGEMENT'S REVIEW
FINANCIAL STATEMENTS
CONTENTS
Statement by the Executive Board and the Board of Directors
Today, the group's Board of Directors and Executive Board have discussed and approved the Q2 2018 quarterly report of Solar A/S.
The quarterly report, which has not been audited or reviewed by the company's auditor, is presented in accordance with IAS 34 "Interim Financial Reporting" as approved by the EU and additional Danish disclosure requirements for quarterly reports of listed companies.
In our opinion, the quarterly report gives a fair presentation of the group's assets, equity and liabilities and financial position as at 30 June 2018 as well as of the results of the group's activities and cash flow for Q2 2018.
Further, in our opinion, the management's review gives a true and fair statement of the development of the group's activities and financial situation, net profit or loss for the period and of the group's overall financial position and describes the most significant risks and uncertainties that the group faces.
Vejen, 9 August 2018
EXECUTIVE BOARD
Jens E. Andersen
CEO
Hugo Dorph
CCO
Michael H. Jeppesen
CFO
BOARD OF DIRECTORS
Jens Borum
Chairman
Ulf Gundemark
Vice chairman
Lars Lange Andersen
Peter Bang
Jesper Dalsgaard
Ulrik Damgaard
Bent H. Frisk
Louise Knauer
Jens Peter Toft
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
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