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Volati Interim / Quarterly Report 2019
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Interim / Quarterly Report
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Year-end report January–December 2019
"A stable end to a good year"
Mårten Andersson, CEO
This interim report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish original and the translation, the Swedish shall have precedence.
Year-end report January–December 2019
Q4 October–December 2019
- Net sales amounted to SEK 1,801 (1,831) million
- EBITDA increased to SEK 291 (210) million
- EBITA increased by 12 percent to SEK 194 (173) million
- Organic EBITA growth was 3 percent
- Profit after tax increased by 35 percent to SEK 163 (121) million
- Earnings per ordinary share increased by 40 percent to SEK 1.82 (1.30)
Events after the reporting period
- On 21 January, all of the shares in the screws and fastenings supplier Heco Nordiska AB were acquired
- Volati's Board has decided to adopt new financial targets
Period January–December 2019
- Net sales increased by 12 percent to SEK 6,833 (6,084) million
- EBITDA increased to SEK 909 (552) million
- EBITA increased by 18 percent to SEK 513 (433) million
- Organic EBITA growth was 4 percent
- Impairment of intangible assets of SEK 328 million in the Consumer business area
- Profit after tax amounted to SEK -2 (274) million. Adjusted profit after tax, excluding impairment of intangible assets of SEK 324 million after tax, was SEK 322 million
- Earnings per ordinary share amounted to SEK 0.13 (2.58).) Excluding impairment of intangible assets, adjusted earnings per ordinary share amounted to SEK 3.12
- The Board proposes a dividend of SEK 1.10 (1.00) per share
Key figures
The introduction of IFRS 16 Leases on 1 January 2019 affects some of the key figures presented below. As the comparative figures have not been restated, we have added extra columns showing what the figures would have been prior to IFRS 16 to make the information more comparable for the reader. Further information on the definition of alternative performance measures can be found in the note information in the report.
| SEK million | Oct–Dec 2019 |
Oct–Dec 2019*) |
Oct–Dec 2018 |
Full year 2019 |
Full year 2019*) |
Full year 2018 |
|---|---|---|---|---|---|---|
| Net sales | 1,801 | 1,801 | 1,831 | 6,833 | 6,833 | 6,084 |
| EBITDA | 291 | 219 | 210 | 909 | 627 | 552 |
| EBITA | 194 | 185 | 173 | 513 | 490 | 433 |
| Organic EBITA growth, % | 3 | 3 | 2 | 4 | 4 | 0 |
| EBIT | 180 | 171 | 147 | 130 | 108 | 366 |
| Profit after tax | 163 | 164 | 121 | -2 | 14 | 274 |
| Adjusted profit after tax | 163 | 164 | 121 | 322 | 338 | 274 |
| Net debt/Adjusted EBITDA, x | 1.5 | 1.5 | 1.7 | 1.5 | 1.5 | 1.7 |
| Cash conversion, LTM, % | 83 | 83 | 86 | 83 | 83 | 86 |
| Earnings per ordinary share, SEK | 1.82 | 1.82 | 1.30 | 0.13 | 0.32 | 2.58 |
| Adjusted earnings per ordinary share, SEK | 1.82 | 1.82 | 1.30 | 3.12 | 3.32 | 2.58 |
| Equity per ordinary share, SEK | 19.29 | 19.29 | 21.63 | 19.29 | 19.29 | 21.63 |
| Return on adjusted equity, % | 15 | 15 | 13 | 15 | 15 | 13 |
| Ordinary shares outstanding | 79,406,571 | 79,406,571 | 80,406,571 | 79,406,571 | 79,406,571 | 80,406,571 |
| Preference shares outstanding | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 |
*To provide a more comparative picture, the columns show what the figures would have been before the introduction of IFRS 16.
A stable end to a good year
EBITA for the fourth Q4 increased by 12 percent to SEK 194 million and for the full year by 18 percent to SEK 513 million. Organic EBITA growth was 3 percent in the fourth Q4. The good earnings and strong operating cash flow of SEK 439 million in Q4 mean that net debt is low and we therefore continue to have good acquisition capacity.
Good development for Trading continues
The Trading business area showed a strong earnings trend in Q4. This development is particularly pleasing given that the business area was challenged by a weak Swedish krona throughout the year. The business area currently acts as a group of companies which have a clear industrial logic between them and a common platform for logistics, IT and finance. This means, among other things, that we can identify and deliver synergies when making acquisitions in the business area, giving us good opportunities to continue to grow and create value.
Strong quarter for Industry
The Industry business area also delivered a strong result in Q4, with all business units contributing. Looking at the full year, EBITA for the Industry business area is good, but our expectations were at a higher level. Operations in the business area are affected by fluctuations in demand due to project sales and by weather-related fluctuations. These fluctuations in demand have had a negative impact on earnings for the full year. During the year, we successfully implemented major changes in S:t Eriks, leaving us well equipped for growth in the business unit in the coming years.
Akademibokhandeln – good development for stores during the quarter, temporary challenges for e-commerce
The Akademibokhandeln business area has shown very positive development during the year, with growing sales and considerable success in the non-books range. It is therefore particularly disappointing that the Bokus e-commerce store was affected by temporary delivery problems during the important fourth quarter. During the year, the company changed its logistics management with its 3PL supplier to offer customers even faster delivery times. However, the change did not go according to plan for deliveries during the Christmas trading period. In addition to creating problems for customers, sales volumes were negatively affected while costs related to customer service staffing increased. The business area has worked intensively to deal with the delivery problems and we believe that these will gradually subside. The challenges for Bokus meant that both sales and earnings declined during Q4 compared with the same period the previous year, despite an otherwise good performance for Akademibokhandeln. I would particularly highlight good store sales during the quarter – notably during the Christmas trading period.
Earnings improvement for Consumer
The Consumer business area delivered a 30-percent improvement in earnings in Q4. The inspection business
continues to develop well and we are very pleased with the successful work that has been done to adapt the operations to the changed inspection rules.
Many acquisition opportunities
In recent years, Volati has made extensive efforts to engage the business area organisation and business units in the process of identifying and driving forward potential value-creating add-on acquisitions. This has worked well and we have seen results in the form of an increased inflow of acquisition candidates during the year. Four acquisitions were made during 2019 and a further acquisition were made after the end of the period – all of them add-on acquisitions for existing operations. When making add-on acquisitions, Volati is even more of an industrial buyer and sees synergies as a way of creating value in the businesses.
New financial targets
Since Volati's ordinary shares were listed on Nasdaq Stockholm in 2016, the Company's net sales have more than doubled and EBITA has increased by 61 percent. On the basis that Volati has developed as a company in several respects since then, the Board has decided to adopt new financial targets for Volati, to coincide with this year-end report. These are described in detail on page 12.
The new targets do not involve any change of direction for Volati. We will continue to develop the Company at a high rate, with a strong focus on creating long-term value for our shareholders. Volati enters 2020 with a strong financial position. With a net debt of 1.5x EBITDA at the end of the year, we have the financial capacity to continue building Volati in accordance with the Group's strategy.
Mårten Andersson, President and CEO
This is Volati
Volati acquires well-managed companies with strong cash flows at reasonable valuations, and develops them with a focus on long-term value creation. Acquiring companies that have stable and sustainable cash flows from the outset creates a stable base for operations. These cash are then used for further acquisitions. Through active long-term corporate development efforts, Volati creates favourable conditions for organic growth.
Net sales and EBITA trends 2004 – 2019, SEK million
Since 2003, Volati has built an industrial group organised in four business areas: Trading, Consumer, Akademibokhandeln and Industry.
The figures above refer to the twelve-month period between January 2019 and December 2019 and show the business areas' share of EBITA without the effects of IFRS 16, as the business areas are monitored excluding IFRS 16. Acquired operations are included in the relevant business area from the acquisition closing date and are calculated net of central costs. Divested operations are included in the relevant business area up to the divestment date.
Consolidated financial trend
Net sales
The Group's net sales for Q4 2019 amounted to SEK 1,801 (1,831) million, a decline of 2 percent compared with the same period the previous year. The decline is mainly attributable to divested operations and reduced sales in the Akademibokhandeln business area.
Net sales for the full year 2019 amounted to SEK 6,833 (6,084) million, an increase of 12 percent compared with the same period the previous year. The increase is mainly due to acquisitions completed during the previous year.
Earnings
EBITDA for Q4 2019 increased to SEK 291 (210) million, mainly driven by positive earnings growth in the operations, the previous year's acquisitions and an effect of SEK 72 million from the introduction of IFRS 16 Leases. EBITA for Q4 increased by 12 percent to SEK 194 (173) million. Organic EBITA growth for Q4 was 3 percent.
EBITDA for the full year 2019 increased to SEK 909 (552) million, mainly driven by positive earnings growth in the operations, the previous year's acquisitions and an effect of SEK 282 million from the introduction of IFRS 16 Leases. EBITA for the full year amounted to SEK 513 (433) million. Organic EBITA growth during the period was 4 percent.
Profit after tax for Q4 2019 increased to SEK 163 (121) million, with IFRS 16 having a negative effect of SEK 1 million. Tax expenses were positively affected by a one-time effect of SEK 43 million due to a remeasurement of tax losses. Profit after tax attributable to owners of the Parent for Q4 amounted to SEK 160 (74) million. Profit after tax attributable to non-controlling interests was SEK 3 (0) million. Earnings per ordinary share after deduction of preference share dividends amounted to SEK 1.82 (1.30).
Profit after tax for the full year 2019 was SEK -2 (274) million. Adjusted profit after tax, excluding significant impairment, was SEK 322 million. IFRS 16 had a negative effect of SEK 16 million on the full year, and remeasurement of tax losses and deferred tax from prior years had a positive impact of SEK 33 million on earnings. The previous year also had a positive effect of SEK 20 million as a result of a remeasurement due to a tax rate reduction and a remeasurement of acquired tax losses. Profit after tax attributable to owners of the Parent amounted to SEK 74 (272) million in 2019. Profit after tax attributable to owners of the Parent, excluding impairment, was SEK 313 million. Profit after tax attributable to non-controlling interests was SEK -77 (2) million. Earnings per ordinary share after deduction of preference share dividends amounted to SEK 0.13 (2.58) for the full year. Adjusted earnings per ordinary share, excluding significant impairment made during Q3 2019, for the full year was SEK 3.12 (2.58).
Seasonal variations
Volati's operates in several different sectors and markets, all of which contribute to seasonal variations in the Group. The fourth quarter generally has the strongest cash flow and earnings, and the first quarter the weakest. The season pattern is further accentuated by the acquisition of S:t Eriks, which normally reports a negative operating profit during the first quarter due to seasonal effects. Volati's cash flow and earnings are also affected by the conditions in the business areas' respective markets. This means that Volati's operations, sales and earnings development is best monitored on an LTM basis.
Cash flow
Cash flow from operating activities for Q4 2019 amounted to SEK 544 (426) million. The largest difference from the previous year is related to IFRS 16. Cash flow from operating activities for the last twelve months amounted to SEK 759 (448) million. The cash conversion rate for the last twelve months was 83 (86) percent. Investments in non-current assets for Q4 2019 amounted to SEK 39 (34) million and were primarily related to business development investments in the form of newly established inspection stations, IT systems and ongoing investments in machinery and equipment.
0% 20% 40% 60% 80% 100% 120%
Equity
Equity for the Group amounted to SEK 2,360 (2,567) million at the end of the period. Equity attributable to holders of the Parent's ordinary shares, adjusted for preference share capital, declined from SEK 1,731 million on 31 December 2018 to SEK 1,523 million on 31 December 2019. Impairment of intangible assets had a negative effect of SEK 239 million on equity attributable to holders of the Parent's ordinary shares, while dividends to shareholders and repurchasing of shares and warrants reduced equity by SEK 202 million. Divestment of operations also reduced equity by SEK 97 million. The equity ratio on 31 December 2019 was 38 percent, compared with 46 percent at the end of 2018. The return on adjusted equity, excluding significant impairment, for the last twelve months was 15 (13) percent.
Net debt
The Group had net debt of SEK 1,646 million at the end of the year, compared with SEK 949 million on 31 December 2018. Factors that have increased net debt include the introduction of IFRS 16, share and warrant buy-backs, dividend payments, acquisitions and normal seasonality effects. Net debt excluding IFRS 16 amounted to SEK 907 million on 31 December 2019. The alternative performance measure Net debt/adjusted EBITDA shows the ratio without the effects of IFRS 16. For a definition see note 7 on page 28 of the report.
Total liabilities amounted to SEK 3,795 million at the end of the year, compared with SEK 3,005 million on 31 December 2018. Most of the increase was due to the introduction of IFRS 16. Interestbearing liabilities, including pension obligations and lease liabilities, were SEK 2,094 million at the end of Q4, compared with SEK 1,217 million on 31 December 2018.
Capital structure trend
The Group had net debt, excluding IFRS 16, of SEK 907 million at the end of the quarter, with a net debt/adjusted EBITDA ratio of 1.5 x.
Acquisitions and disposals during and after the period
Net debt, SEK million Net debt/Adjusted EBITDA, x
Acquisitions are a core element of Volati's strategy for creating long-term value growth, and the Company continuously evaluates both complementary acquisitions and acquisitions in new business areas. It is Volati's assessment that there is a lower risk level for add-on acquisitions and acquisitions of business units than for acquisitions in new business areas, as in-depth industrial know-how and a recipient organisation are already in place in the acquiring company and business unit.
As announced in a press release on 8 November 2019, Volati has changed its ownership of me&i, a business unit in the Consumer business area. Volati previously owned 65 percent of the shares in the business unit, but has now converted the ownership into preference shares. The change means that Volati has the possibility to receive up to SEK 83 million in future payments from me&i. Volati no longer consolidates me&i after the change in ownership.
As announced in a press release on 4 December 2019, Volati has acquired all of the shares in Swekip Sweden AB. The acquisition is an add-on acquisition for the Trading business area. Swekip reported sales of SEK 23 million in 2019. Swekip has its head office in Umeå and is an established supplier of wheel loaders to the Swedish market. The acquisition has been financed through Volati's existing credit facilities and the company will be consolidated from January 2020. The acquisition is not expected to have any significant impact on Volati's earnings for 2020.
As announced in a press release on 21 January 2020, Volati has acquired all of the shares in the screws and fastenings supplier Heco Nordiska AB. The acquisition is an add-on acquisition for the Trading business area. Heco reported sales of SEK 183 million in 2019. Heco has its registered office in Hillerstorp and is a long-established partner to professional customers in construction, steel and sheet metal contract work. The company develops and markets a wide range of screws and fastenings from the very latest screw innovations to conventional wood screws. The products are found in the hardware, garden and building materials retail sector. The acquisition has been financed through Volati's existing credit facilities and the company will be consolidated from January 2020. The acquisition is not expected to have any significant impact on Volati's earnings for 2020.
Volati's business areas
Volati's net sales and earnings by business area
The diagrams refer to the twelve-month period 1 January 2019 to 31 December 2019 and show the business areas' share of EBITA without the effects of IFRS 16 as the business areas are monitored excluding IFRS 16. Acquired operations are included in the relevant business area from the acquisition closing date and their proportion is calculated net of central costs. Divested operations are included in the relevant business area up to the divestment date.
Trading
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|
|---|---|---|---|---|
| Net sales, SEK million | 518 | 509 | 2,138 | 2,107 |
| EBITDA, SEK million | 44 | 36 | 192 | 176 |
| EBITA, SEK million | 39 | 32 | 176 | 158 |
| EBITA margin, % | 8 | 6 | 8 | 7 |
| EBIT, SEK million | 36 | 29 | 165 | 147 |
| ROCE excl. goodwill, % | 37 | 37 | 37 | 37 |
The Trading business area's businesses offer products for building and industry, primarily hardware, consumables, material and packaging. Within the business area, there is also a strong offering of products for home and garden, and agriculture and forestry. The products consists of both own brands and distributed brands. Sales are through dealers, retail chains, e-commerce channels and directly to customers. The business area is marked by a clear industrial logic, with the business units' operations gathered within clearly defined market segments. This creates the conditions for synergies – both market and operational. The service company Volati Handel Service offers functions such as logistics, IT systems and finance. It creates efficiency gains through both economies of scale and increased quality.
The business area ended the year strongly with improved profitability. This is despite the year being dominated by challenges in the form of a weak Swedish krona. The business area has been able to meet the challenge well by working on cost and price adjustments. The business area made one add-on acquisition during the quarter and one in January 2020.
Consumer
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|
|---|---|---|---|---|
| Net sales, SEK million | 201 | 222 | 895 | 923 |
| EBITDA, SEK million | 32 | 27 | 139 | 138 |
| EBITA, SEK million | 25 | 19 | 108 | 104 |
| EBITA margin, % | 13 | 8 | 12 | 11 |
| EBIT, SEK million | 22 | 16 | 971) | 93 |
| ROCE excl. goodwill, % | 294 | 233 | 294 | 233 |
1) Excluding impairment of intangible assets in Q3 2019.
The Consumer business area comprises the business units that offer products and services directly to end consumers. Despite the business units operating in two different market niches – vehicle inspection and nutritional supplements – the business area affiliation creates the conditions for clear and strong follow-up and guidance of the operations towards the goal of long-term value creation. The business units also share a number of characteristics that are important to their business. They work on marketing with the help of large customer databases, and on digital tools and e-commerce to create deeper customer relationships and increased customer loyalty. Through experience and knowledge sharing, and the business area's overall improvement programme, the business units can benefit from best practice in these areas.
The business area had a strong fourth quarter with a good improvement in earnings for continuing operations. Within the inspection business, successful efforts have been made to adapt operations to the regulatory changes in the sector. Ownership of me&i was changed during the quarter and Volati no longer consolidates the business unit from November. Me&i is included in the above table up to the date of the change in ownership.
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|
|---|---|---|---|---|
| Net sales, SEK million | 595 | 634 | 1,793 | 1,784 |
| EBITDA, SEK million | 91 | 109 | 99 | 100 |
| EBITA, SEK million | 84 | 101 | 71 | 72 |
| EBITA margin, % | 14 | 16 | 4 | 4 |
| EBIT, SEK million | 78 | 96 | 47 | 48 |
| ROCE excl. goodwill, % | 94 | 92 | 94 | 92 |
Akademibokhandeln
The Akademibokhandeln business area is the leading bookstore chain in Sweden. Under the Akademibokhandeln (nationwide store network and e-commerce), Bokus (e-commerce) and Bokus Play (audio book subscription) brands, the business area operates modern and profitable sales channels for consumers, companies and the public sector. The business is characterised by a high degree of integration of important functions to create efficiency benefits. This means, for example, that book purchasing is negotiated jointly for all brands. All logistics and infrastructure for e-commerce are common to the business area's e-commerce channels.
The business area developed positively in the first nine months of the year and had a strong fourth quarter in its stores. Unfortunately, e-commerce was affected by temporary delivery problems during the important fourth quarter when the company changed the logistics management with its 3PL supplier to offer customers faster delivery times. The business area has worked intensively to deal with the delivery problems that have negatively affected customers and sales volumes and have also led to increased staffing costs. The assessment is that the problems will gradually ease off.
Industry
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|
|---|---|---|---|---|
| Net sales, SEK million | 487 | 467 | 2,008 | 1,271 |
| EBITDA, SEK million | 62 | 46 | 228 | 183 |
| EBITA, SEK million | 46 | 30 | 167 | 144 |
| EBITA margin, % | 9 | 6 | 8 | 11 |
| EBIT, SEK million | 44 | 28 | 159 | 140 |
| ROCE excl. goodwill, % | 28 | 43 | 28 | 43 |
The Industry business area offers products and solutions for companies within four different market niches – grain handling, moisture and water damage restoration, labels for brand manufacturers, and stone and cement products for infrastructure, paving and roofing. The business area affiliation creates the conditions for clear and strong follow-up and guidance of the operations towards the goal of longterm value creation. In the business area, value is created through common programmes for, among other things, sourcing, cost efficiency and pricing. There is strong experience and expertise in product development, production efficiency and international expansion of operations, which creates development opportunities for all business units through knowledge sharing.
The Industry business area had a strong end to the fourth quarter, with all business units contributing. Demand for the business area's products has remained good. The table's figures for the full year were affected by the acquisition of S:t Eriks, which is consolidated from 1 September 2018.
Head Office
Head Office comprises the central costs in the Parent Company Volati AB and associated operations including the acquisition costs arising in the Group. EBITA, net of IFRS 16 effects, was SEK -20 (-20) million for Q4 and SEK -59 (-57) million for the full year.
Other information
Share capital
Volati has two classes of shares, ordinary shares and preference shares, which are listed on Nasdaq Stockholm under the tickers VOLO and VOLO PREF. The number of shareholders at the end of Q4 was 6,746.
On 25 April, Volati repurchased 1 million ordinary shares using the mandate granted by the AGM on 16 May 2018.
The total number of shares outstanding and votes has changed as a result of the redemption of 1,000,000 ordinary shares, owned by the company, which was approved by an Extraordinary General Meeting of Volati on 30 September 2019 and registered with the Swedish Companies Registration Office in October 2019. The number of ordinary shares was 79,406,571 and the number of preference shares was 1,603,774 at the end of 2019. Share capital amounted to SEK 10 million at 31 December 2019.
Nomination Committee
The Nomination Committee for the 2020 Annual General Meeting was appointed during October and the three largest shareholders are represented. The Committee consists of Carin Wahlén (chair) representing Patrik Wahlén, Karl Perlhagen representing himself and Jannis Kitsakis representing Fjärde AP-fonden.
2020 Annual General Meeting
Volati AB's 2020 Annual General Meeting will be held at 17.00 on 6 May 2020 at Hotel Birger Jarl, conference entrance Birger Jarlsgatan 61a, Stockholm. Shareholders who wish to have business dealt with at the AGM must submit a written request to [email protected] or to Volati AB (publ), attn: CFO, Engelbrektsplan 1, SE-114 34 Stockholm, Sweden. To guarantee inclusion in the notice of the Annual General Meeting, the request must have been received by 6 March 2020. Further information on how and when to provide notification of attendance will be published well in advance of the Meeting.
Dividend
In view of Volati's strong financial position and the good cash flows in 2019, the Board proposes a dividend to ordinary shareholders of SEK 1.10 (1.00) per ordinary share, corresponding to a total of SEK 87 million, and a dividend to preference shareholders, in accordance with the Articles of Association, of SEK 40 per preference share, to be paid quarterly, corresponding to a total of SEK 64 million. The ordinary share dividend corresponds to 118 percent of net profit attributable to the Parent Company's shareholders for the 2019 financial year and 28 percent of net profit attributable to the Parent Company's shareholders adjusted for significant non-cash impairment losses.
Related-party transactions
As announced in a press release on 8 November 2019, Volati has changed its ownership of me&i, and the company's former minority shareholder become new majority shareholders.
After the end of the reporting period, the warrants held by a former Volati senior executive were repurchased by Volati on 30 July 2019 at their market value. In August, Volati repurchased shares in subsidiaries and redeemed shareholder loans from key personnel in Volati's business units, which affects non-controlling interests. In October, Volati sold shares in subsidiaries to key personnel in Volati's business units in accordance with the decision of the EGM on 30 September 2019. These transactions reflect a part of Volati's business model, which is to create mutual interest with key individuals within its business units or business areas by way of co-investments.
During Q2, in accordance with a resolution of the 2019 AGM, two percent of the shares in Volati Infrastruktur AB were transferred at market value to the CEO of S:t Eriks AB at a purchase price of SEK 1 million.
No other significant related-party transactions of any other nature have occurred in addition to what is stated in the annual report for 2018. All related-party transactions have been conducted at market conditions.
Events after the end of the reporting period
On 21 January, all of the shares in the screws and fastenings supplier Heco Nordiska AB were acquired. See separate press release.
Volati's Board has adopted new financial targets and an updated dividend policy. The strategic direction stands firm, but with the new targets, the Company wants to consolidate its strong long-term focus on value growth.
Volati's overall objective remains to generate long-term value growth by building an industrial group of profitable companies with solid cash flows and capacity for continuous development.
New financial targets
The Board has established the following long-term financial targets, which should be evaluated as a whole.
- EBITA growth: The target is average annual growth in EBITA per ordinary share of at least 15 percent over a business cycle.
- Return on adjusted equity: The long-term target is a return on adjusted equity1) of 20 percent.
- Capital structure: The target is a net debt/adjusted EBITDA2) ratio of 2 to 3 times as an average over the last four quarters, and not exceeding 3.5 times.
1) See pages 130-131 of the 2018 Annual Report for definitions of alternative performance measures. This is different from how the alternative performance measure is presented in the year-end report. See page 30. 2) See definition under alternative performance measures on page 29.
Updated dividend policy:
Volati will normally distribute 10–30 percent of the Company's net profit attributable to the Parent Company's shareholders. When determining dividends, net debt in relation to the Company's targets is taken into account, together with future acquisition opportunities, scope for development in existing companies and other factors that Volati's Board considers significant. Dividends on preference shares are issued at an annual amount of SEK 40.00 per preference share, in quarterly payments of SEK 10.00, in accordance with the Articles of Association.
Financial calendar
| • | 2019 Annual Report: | Week 13 |
|---|---|---|
| • | Interim Report January–March 2020: | 5 May 2020 |
| • | 2020 Annual General Meeting: | 6 May 2020 |
| • | Interim Report January–June 2020: | 18 August 2020 |
| • | Interim Report January–September 2020: | 5 November 2020 |
Declaration by the Board of Directors
The Board of Directors and the CEO hereby certify that this interim report provides a fair overview of the Parent Company's and the Group's operations, financial position and performance and describes material risks and uncertainties faced by the Parent Company and Group companies.
Volati AB (publ) The Board of Directors and CEO Stockholm, 20 February 2020
Patrik Wahlén Chairman of the Board
Björn Garat Board Member
Anna-Karin Celsing Board Member
Karl Perlhagen Board Member
Christina Tillman Board Member
Magnus Sundström Board Member
Mårten Andersson CEO
Louise Nicolin Board Member
This interim report has not been reviewed by the Company's auditors.
This information is information that Volati AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 07.45 CEST on 20 February 2020.
Conference call
CEO Mårten Andersson and CFO Andreas Stenbäck will present the interim report in a conference call at 15.00 on 20 February. The presentation will be conducted in Swedish. Phone number to access the conference call: +46 8 505 583 51 For a webcast of the conference call, go to www.volati.se.
For more information, please contact:
Mårten Andersson, CEO Volati AB, +46 72 735 42 84, [email protected] Andreas Stenbäck, CFO Volati AB, +46 70 889 09 60, [email protected]
Volati AB (publ)
Corporate reg. no. 556555-4317 Engelbrektsplan 1, SE-114 34 Stockholm Tel: +46 8 21 68 40 www.volati.se
Financial targets up to 2019
Volati's overall objective is to generate long-term value growth by building an industrial group of profitable companies with solid cash flows and capacity for continuous development. Up to 2019, Volati had the following financial targets, which should be evaluated as a whole.
Note that the introduction of IFRS 16 Leases has affected the calculation of the targets (definitions in note 7 in the report).
Earnings growth
Cash conversion
Capital structure
Annual cash conversion of at least 85 percent.
At the end of 2019, net debt/adjusted EBITDA was 1.5x.
Return on adjusted equity
over the last four quarters) of at least 20 percent.
Adjusted EBITA of SEK 700 million by the end of 2019. Average annual organic EBITA growth of 5 percent.
At the end of 2019, adjusted EBITA for the last twelve months was SEK 468 million. Organic EBITA growth varies over the years and amounted to 4 percent during the year.
At the end of 2019, cash conversion for the last twelve months was 83 percent.
Long-term target: Net debt/Adjusted EBITDA ratio (LTM) of less than 3.0x.
Adjusted EBITA, SEK million
2014 2015 2016 2017 2018 2019
2014 2015 2016 2017 2018 2019 Net debt, SEK million Net debt/Adjusted EBITDA, x
Return on adjusted equity
0% 20% 40% 60% 80% 100% 120%
Dividend policy
impairment, was 15 percent.
To distribute a dividend of 10–30 percent of net earnings attributable to the Parent Company's shareholders, after taking into consideration future acquisition potential, development potential in existing companies, the financial position and other material factors.
The Board proposes a dividend of SEK 1.10 per ordinary share for 2019, which corresponds to 118 percent of net profit attributable to the Parent Company's shareholders for the 2019 financial year (and 28 percent adjusted for significant non-cash impairment losses). Dividends on preference shares are issued at an annual amount of SEK 40.00 per preference share, in quarterly payments of SEK 10.00.
Long-term target: Return on adjusted equity (calculated as average equity
At the end of 2019, the return on adjusted equity, excluding significant
Proposed dividend for 2019
1.10
Financial Statements
Consolidated income statement
| SEK million | Oct–Dec 2019 |
Oct–Dec 2019*) |
Oct–Dec 2018 |
Full year 2019 |
Full year 2019*) |
Full year 2018 |
|---|---|---|---|---|---|---|
| Operating income | ||||||
| Net sales | 1,801 | 1,801 | 1,831 | 6,833 | 6,833 | 6,084 |
| Operating expenses | ||||||
| Raw materials and supplies | -955 | -957 | -997 | -3,756 | -3,765 | -3,375 |
| Other external costs | -166 | -236 | -223 | -672 | -945 | -853 |
| Personnel expenses | -405 | -405 | -409 | -1,533 | -1,533 | -1,318 |
| Other operating income | -1 | -1 | 4 | 30 | 30 | 18 |
| Other operating expenses | 3 | 3 | 3 | -5 | -5 | -4 |
| Gain on disposal | 13 | 13 | - | 13 | 13 | - |
| EBITDA | 291 | 219 | 210 | 909 | 627 | 552 |
| Depreciation | -98 | -34 | -36 | -397 | -137 | -119 |
| EBITA | 194 | 185 | 173 | 513 | 490 | 433 |
| Acquisition-related amortisation | -14 | -14 | -13 | -54 | -54 | -49 |
| Impairment of intangible assets | - | - | -14 | -328 | -328 | -18 |
| EBIT | 180 | 171 | 147 | 130 | 108 | 366 |
| Finance income and costs | ||||||
| Finance income | -1 | -1 | 14 | 14 | 14 | 29 |
| Finance costs | -29 | -19 | -20 | -110 | -67 | -80 |
| Profit before tax | 149 | 151 | 141 | 34 | 55 | 316 |
| Tax | 14 | 13 | -19 | -37 | -41 | -42 |
| Net profit | 163 | 164 | 121 | -2 | 14 | 274 |
| Attributable to: | ||||||
| Owners of the Parent | 160 | 161 | 121 | 74 | 90 | 272 |
| Non-controlling interests | 3 | 4 | 0 | -77 | -76 | 2 |
| Earnings per ordinary share, SEK | 1.82 | 1.82 | 1.30 | 0.13 | 0.32 | 2.58 |
| Adjusted earnings per ordinary share, SEK | 1.82 | 1.82 | 1.30 | 3.12 | 3.32 | 2.58 |
| Diluted earnings per ordinary share, SEK | 1.82 | 1.82 | 1.30 | 0.13 | 0.32 | 2.58 |
| No. of ordinary shares | 79,406,571 | 79,406,571 | 80,406,571 | 79,406,571 | 79,406,571 | 80,406,571 |
| Average no. of ordinary shares | 79,406,571 | 79,406,571 | 80,406,571 | 79,721,639 | 79,721,639 | 80,406,571 |
| Average no. of ordinary shares after dilution | 79,406,571 | 79,406,571 | 80,469,822 | 79,721,639 | 79,721,639 | 80,469,822 |
| No. of preference shares | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 |
| Preference share dividend, SEK | 10 | 10 | 10 | 40 | 40 | 40 |
*To provide a more comparative picture, the columns show what the figures would have been before the introduction of IFRS 16.
Consolidated statement of comprehensive income
| SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Net profit | 163 | 121 | -2 | 274 |
| Other comprehensive income | ||||
| Items that may be reclassified subsequently to profit or loss | ||||
| Reversal of translation differences attributable to divested operations | -18 | - | -18 | - |
| Translation differences for the period | -17 | -23 | 11 | 19 |
| Total | -35 | -23 | -8 | 19 |
| Total comprehensive income for the period | 128 | 98 | 10 | 293 |
| Total comprehensive income attributable to: | ||||
| Owners of the Parent | 207 | 98 | 66 | 290 |
| Non-controlling interests | -79 | 0 | -77 | 2 |
Condensed consolidated statement of financial position
| SEK million | 31 Dec 2019 |
31 Dec 2018 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | 2,853 | 3,126 |
| Property, plant and equipment | 336 | 404 |
| Right-of-use assets | 832 | - |
| Financial assets | 7 | 8 |
| Deferred tax assets | 58 | 59 |
| Total non-current assets | 4,086 | 3,597 |
| Current assets | ||
| Inventories | 865 | 895 |
| Trade receivables | 574 | 558 |
| Current tax assets | 8 | 27 |
| Other current receivables | 46 | 67 |
| Derivatives | - | 0 |
| Prepayments and accrued income | 128 | 186 |
| Cash and cash equivalents | 447 | 241 |
| Total current assets | 2,070 | 1,975 |
| Total assets | 6,156 | 5,571 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 10 | 10 |
| Other paid-in capital | 1,995 | 1,995 |
| Other reserves | 44 | 34 |
| Retained earnings, incl. profit for the period | 301 | 520 |
| Equity attributable to owners of the Parent | 2,351 | 2,560 |
| Non-controlling interests | 9 | 7 |
| Total equity | 2,360 | 2,567 |
| Liabilities | ||
| Non-current interest-bearing liabilities | 599 | 974 |
| Non-current lease liabilities | 579 | - |
| Non-current non-interest-bearing liabilities | 56 | 89 |
| Pension obligations | 2 | 2 |
| Warranties and other provisions | 4 | 10 |
| Deferred tax | 290 | 287 |
| Total non-current liabilities | 1,531 | 1,361 |
| Current interest-bearing liabilities | 689 | 241 |
| Current lease liabilities | 225 | - |
| Advances from customers | 62 | 73 |
| Trade payables | 706 | 706 |
| Current tax liabilities | 48 | 61 |
| Derivatives | 0 | 0 |
| Accruals and deferred income | 354 | 379 |
| Other current liabilities | 183 | 184 |
| Total current liabilities | 2,266 | 1,644 |
| Total liabilities | 3,796 | 3,005 |
| Total equity and liabilities | 6,156 | 5,571 |
Condensed consolidated cash flow statement
| SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Operating activities | ||||
| Profit before tax | 149 | 141 | 34 | 316 |
| Adjustment for depreciation/amortisation and impairment | 112 | 63 | 779 | 186 |
| Adjustment for other non-cash items | 8 | -3 | 39 | 18 |
| Interest paid | -22 | -14 | -85 | -39 |
| Interest received | 0 | 0 | 1 | 2 |
| Income tax paid | 24 | 19 | -40 | -53 |
| Cash flow from operating activities | ||||
| before changes in working capital | 271 | 206 | 728 | 430 |
| Cash flow from changes in working capital | ||||
| Change in inventories | 63 | -20 | 27 | -62 |
| Change in operating receivables | 185 | 200 | 30 | 37 |
| Change in operating liabilities | 25 | 40 | -26 | 43 |
| Cash flow from changes in working capital | 274 | 220 | 31 | 18 |
| Cash flow from operating activities | 544 | 426 | 759 | 448 |
| Investing activities | ||||
| Investments in property, plant & equipment and intangible assets | -39 | -34 | -98 | -83 |
| Sale of property, plant & equipment and intangible assets | 1 | 1 | 2 | 2 |
| Acquisition | -57 | -119 | -122 | -545 |
| Divestments of Group companies | -5 | - | -5 | 1 |
| Investments in financial assets | - | -4 | -2 | -4 |
| Divestments of financial assets | 0 | 0 | 0 | 0 |
| Cash flow from investing activities | -100 | -156 | -225 | -629 |
| Financing activities | ||||
| Dividend on preference shares | -16 | -16 | -64 | -64 |
| Dividend on ordinary shares | - | - | -79 | -41 |
| Share buy-back | 0 | - | -45 | - |
| Warrant buyback | - | - | -13 | - |
| Owner transactions | 23 | - | -11 | - |
| Repayment of lease liabilities | -63 | -9 | -241 | -26 |
| Repayment of borrowings | -214 | -50 | -577 | -67 |
| Proceeds from borrowings | 100 | -90 | 700 | 179 |
| Cash flow from financing activities | -170 | -166 | -331 | -18 |
| Cash flow for the period | 274 | 104 | 203 | -199 |
| Cash & cash equivalents at beginning of period | 175 | 141 | 241 | 438 |
| Exchange differences | -2 | -4 | 3 | 2 |
| Cash & cash equivalents at end of period | 447 | 241 | 447 | 241 |
Consolidated statement of changes in equity
| SEK million | Share capital | Other paid-in capital |
Other reserves |
Retained earnings including net profit |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|
| Closing balance, 31 Dec 2018 | 10 | 1,995 | 34 | 520 | 7 | 2,567 |
| Net profit | - | - | - | 74 | -77 | -2 |
| Other comprehensive income | - | - | -8 | - | 0 | -8 |
| Comprehensive income for the period | - | - | -8 | 74 | -77 | -10 |
| Dividend | - | - | - | -144 | - | -144 |
| Share buy-back | - | - | - | -45 | - | -45 |
| Warrant buyback | - | - | - | -13 | - | -13 |
| Shareholder contributions | - | - | - | -8 | 8 | 0 |
| Remeasurement of non-controlling interests | - | - | - | 14 | -7 | 6 |
| Divestment of operations | - | - | - | -79 | 79 | 0 |
| Other owner transactions | - | - | - | 0 | -2 | -1 |
| Closing balance, 31 Dec 2019 | 10 | 1,995 | 26 | 320 | 9 | 2,360 |
| SEK million | Share capital | Other paid-in capital |
Other reserves |
Retained earnings including net profit |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|
| Closing balance, 31 Dec 2017 | 10 | 1,995 | 16 | 331 | 13 | 2,365 |
| IFRS 9 and IFRS 15 transition effect, net of tax |
- | - | - | -3 | 0 | -3 |
| Opening balance, 1 Jan 2018 | 10 | 1,995 | 16 | 328 | 13 | 2,362 |
| Net profit | - | - | - | 272 | 2 | 274 |
| Other comprehensive income | - | - | 18 | - | 0 | 19 |
| Comprehensive income for the period | - | - | 18 | 272 | 2 | 293 |
| Dividend | - | - | - | -105 | 0 | -105 |
| Remeasurement of non-controlling interests | - | - | - | 23 | - | 23 |
| Other owner transactions | - | - | - | 3 | -8 | -5 |
| Closing balance, 31 Dec 2018 | 10 | 1,995 | 34 | 520 | 7 | 2,567 |
Key figures2)
| SEK million | Oct–Dec 2019 |
Oct–Dec 2019*) |
Oct–Dec 2018 |
Full year 2019 |
Full year 2019*) |
Full year 2018 |
|---|---|---|---|---|---|---|
| Net sales, SEK million | 1,801 | 1,801 | 1,831 | 6,833 | 6,833 | 6,084 |
| Net sales growth, % | -2 | -2 | 21 | 12 | 12 | 40 |
| Organic net sales growth, % | -4 | -4 | 0 | -1 | -1 | 1 |
| EBITDA, SEK million | 291 | 219 | 210 | 909 | 627 | 552 |
| Adjusted EBITDA, LTM, SEK million | 604 | 604 | 573 | 604 | 604 | 573 |
| EBITA, SEK million | 194 | 185 | 173 | 513 | 490 | 433 |
| EBITA margin, % | 11 | 10 | 9 | 8 | 7 | 7 |
| EBITA growth, % | 12 | 7 | 22 | 18 | 13 | 15 |
| Adjusted EBITA, LTM, SEK million | 468 | 468 | 436 | 468 | 468 | 436 |
| EBITA excl. central costs and items affecting comparability, SEK million |
194 | 194 | 182 | 523 | 523 | 478 |
| Organic EBITA growth, % | 3 | 3 | 2 | 4 | 4 | 0 |
| EBIT, SEK million3) | 180 | 171 | 147 | 130 | 108 | 366 |
| Profit after tax | 163 | 164 | 121 | -2 | 14 | 274 |
| Adjusted profit after tax | 163 | 164 | 121 | 322 | 338 | 274 |
| Basic earnings per ordinary share, SEK1) | 1.82 | 1.82 | 1.30 | 0.13 | 0.32 | 2.58 |
| Adjusted basic earnings per ordinary share, SEK1) | 1.82 | 1.82 | 1.30 | 3.12 | 3.32 | 2.58 |
| Diluted earnings per ordinary share, SEK1) | 1.82 | 1.82 | 1.30 | 0.13 | 0.32 | 2.58 |
| Equity per ordinary share, SEK | 19.29 | 19.29 | 21.63 | 19.29 | 19.29 | 21.63 |
| Return on equity, % | 0 | 0 | 11 | 0 | 0 | 11 |
| Return on adjusted equity, % | 15 | 15 | 13 | 15 | 15 | 13 |
| Equity ratio, % | 38 | 38 | 46 | 38 | 38 | 46 |
| Cash conversion, LTM, % | 83 | 83 | 86 | 83 | 83 | 86 |
| Operating cash flow, SEK million | 439 | 439 | 383 | 523 | 523 | 475 |
| Net debt/EBITDA, x | 1.5 | 1.5 | 1.7 | 1.5 | 1.5 | 1.7 |
| No. of employees | 2,304 | 2,304 | 2,287 | 2,304 | 2,304 | 2,287 |
| Ordinary shares outstanding | 79,406,571 | 79,406,571 | 80,406,571 | 79,406,571 | 79,406,571 | 80,406,571 |
| Average no. of ordinary shares outstanding | 79,406,571 | 79,406,571 | 80,406,571 | 79,721,639 | 79,721,639 | 80,406,571 |
| Average no. of ordinary shares outstanding after dilution |
79,406,571 | 79,406,571 | 80,469,822 | 79,721,639 | 79,721,639 | 80,469,822 |
| Preference shares outstanding | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 | 1,603,774 |
*To provide a more comparative picture, the columns show what the figures would have been before the introduction of IFRS 16.
1) When calculating earnings per ordinary share, the preference share dividend of SEK 16 million per quarter is deducted for the period.
2) All performance measures, apart from net sales and earnings per share, are non-IFRS performance measures – see also the alternative performance measures section below.
| Quarterly overview | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK million | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 |
| Operating income | ||||||||||
| Net sales | 1,801 | 1,711 | 1,776 | 1,544 | 1,831 | 1,470 | 1,428 | 1,355 | 1,517 | 1,224 |
| Operating expenses | ||||||||||
| Raw materials and supplies | -955 | -965 | -981 | -856 | -997 | -830 | -784 | -764 | -824 | -651 |
| Other external costs | -166 | -157 | -164 | -185 | -223 | -202 | -216 | -212 | -214 | -203 |
| Personnel expenses | -405 | -347 | -406 | -376 | -409 | -292 | -312 | -304 | -314 | -253 |
| Other operating income | -1 | 15 | 4 | 11 | 4 | 6 | 1 | 7 | 3 | 3 |
| Other operating expenses | 3 | -4 | -1 | -3 | 3 | 0 | -2 | -5 | -2 | -2 |
| Capital gain on sale of Group | ||||||||||
| company | 13 | - | - | - | - | - | - | - | - | - |
| EBITDA | 291 | 253 | 229 | 136 | 210 | 152 | 114 | 77 | 166 | 119 |
| Depreciation | -98 | -101 | -100 | -98 | -36 | -29 | -28 | -26 | -24 | -23 |
| EBITA | 194 | 153 | 129 | 37 | 173 | 123 | 86 | 51 | 142 | 96 |
| Acquisition-related amortisation | -14 | -14 | -14 | -13 | -13 | -13 | -12 | -12 | -13 | -9 |
| Impairment of intangible assets | - | -328 | - | - | -14 | - | -4 | - | - | - |
| EBIT | -180 | -189 | 115 | 24 | 147 | 110 | 70 | 39 | 129 | 87 |
| Finance income and costs | ||||||||||
| Finance income | -1 | 7 | 4 | 5 | 14 | 3 | 10 | 3 | 2 | 1 |
| Finance costs | -29 | -24 | -28 | -29 | -20 | -17 | -24 | -18 | -20 | -16 |
| Profit before tax | 149 | -206 | 91 | 0 | 141 | 96 | 55 | 24 | 110 | 72 |
| Tax | 14 | -19 | -30 | -1 | -19 | -22 | 5 | -6 | -18 | -19 |
| Net profit | 163 | -225 | 60 | -1 | 121 | 74 | 61 | 18 | 93 | 53 |
| Attributable to: | ||||||||||
| Owners of the Parent | 160 | -206 | 58 | -1 | 121 | 74 | 60 | 18 | 92 | 52 |
| Non-controlling interests | 3 | -19 | 3 | 0 | 0 | 1 | 1 | 0 | 0 | 1 |
| Net sales, SEK million | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | Q3 2017 |
| Trading Industry |
518 | 535 | 589 | 496 | 509 | 524 | 607 | 468 | 453 | 394 |
| 487 | 536 | 612 | 373 | 467 634 |
334 | 257 | 213 | 197 | 205 | |
| 398 | 315 | |||||||||
| Akademibokhandeln | 595 | 416 | 328 | 453 | 436 | 627 | 402 | |||
| Consumer | 201 | 224 | 248 | 222 | 222 | 214 | 249 | 238 | 241 | 222 |
| Internal eliminations | 0 | 0 | 0 | 0 | -1 | 0 | 0 | 0 | 0 | 0 |
| Total net sales | 1,801 | 1,711 | 1,776 | 1,544 | 1,831 | 1,470 | 1,428 | 1,355 | 1,517 | 1,224 |
| EBITDA, SEK million | ||||||||||
| Trading | 44 | 53 | 63 | 33 | 36 | 59 | 58 | 23 | 29 | 45 |
| Industry | 62 | 64 | 75 | 27 | 46 | 53 | 45 | 38 | 19 | 37 |
| Akademibokhandeln | 91 | 23 | -19 | 5 | 109 | 19 | -27 | -1 | 94 | 22 |
| Consumer | 32 | 41 | 54 | 12 | 27 | 35 | 50 | 26 | 43 | 33 |
| Items affecting comparability | 11 | 13 | -1 | 5 | 12 | - | - | 0 | -7 | 1 |
| Central costs | -20 | -11 | -14 | -13 | -20 | -14 | -12 | -10 | -13 | -19 |
| Total excl. IFRS 16 | 219 | 182 | 157 | 69 | ||||||
| IFRS 16 effect | 72 | 71 | 72 | 67 | ||||||
| Total EBITDA | 291 | 253 | 229 | 136 | 210 | 152 | 114 | 77 | 166 | 119 |
| EBITA, SEK million | ||||||||||
| Trading | 39 | 50 | 59 | 28 | 32 | 54 | 53 | 19 | 26 | 42 |
| Industry | 46 | 49 | 60 | 13 | 30 | 44 | 38 | 32 | 13 | 31 |
| Akademibokhandeln | 84 | 15 | -26 | -2 | 101 | 12 | -34 | -7 | 88 | 17 |
| Consumer | 25 | 33 | 46 | 4 | 19 | 27 | 41 | 17 | 35 | 25 |
| Items affecting comparability | 11 | 13 | -1 | 5 | 12 | - | - | - | -7 | 1 |
| Central costs | -20 | -11 | -15 | -14 | -20 | -14 | -12 | -10 | -13 | -19 |
| Total excl. IFRS 16 | 185 | 148 | 122 | 35 | ||||||
| IFRS 16 effect | 9 | 4 | 7 | 3 |
Notes to consolidated financial statements
Note 1 Accounting policies
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting policies are consistent with those applied by the Group in the 2018 annual report. The Parent Company's interim report has been prepared in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. Some figures in this report have been rounded, which means that certain tables do not always add up exactly. This applies where figures are stated in thousands, millions or billions. Pages 1-13 of this report are an integral part of the interim report.
New accounting policies for 2019
IFRS 16 Leases is effective from 1 January 2019 and requires assets and liabilities attributable to leases, with some exceptions, to be recognised in the balance sheet. Implementation of the new lease standard has resulted in the majority of the Group's leases being reported in the balance sheet, as a distinction between operating and finance leases is no longer made. IFRS 16 provides a choice of introduction method: the full retrospective approach, whereby all leases are remeasured from their inception date, or the modified retrospective approach, whereby historical obligations are not remeasured from their inception date but are assumed to have been entered into on 1 January 2019. Volati has chosen the modified retrospective approach, mainly applying the practical expedients concerning short-term leases and low-value leases, see also note 2.
New balance sheet presentation
With effect from 1 January 2019, the Group has moved the previous finance leases from the 'property, plant and equipment' line to the 'right-of-use assets' line so that they are classified in the same place as operating leases under IFRS 16.
Key assumptions
Key assumptions about the future are described in note 25 of the 2018 annual report. The introduction of IFRS 16 means that important new assumptions involving judgements have arisen. Within the Volati Group, the assessment of the extension options regarding right-of-use assets has been taken into account if exercise of such options is reasonably certain. Use of the discount rate on leases also represents judgement in terms of what asset it refers to, the financial risk and length in years for the underlying market interest rate. An incorrect assessment of the above factors can result in right-of-use assets and lease liabilities being over- or undervalued.
Note 2 Transition to IFRS 16
To calculate the effect of IFRS 16, the length of the right of use has been based on the remaining lease terms, although extension options have been taken into account if exercise of such an option is reasonably certain. In addition, the calculation has been based on the leases that existed at the end of the 2018 financial year. For all contracts where the interest rate implicit in the lease could not be determined from the obligation, the discount rate used to measure of the obligation has been adjusted according to the type of leased asset it refers to, the geographical location of the asset and the estimated financial risk associated with the lessee. The discount rate used for obligations varies between 2 and 20 percent depending on these different assumptions.
The effects on assets, liabilities and equity that arose on transition on 1 January 2019 are shown below
| balance sheet items Reclassification due Restatement SEK million 31 Dec 2018 to IFRS 16 IFRS 16 1 Jan 2019 ASSETS Non-current assets Intangible assets 3,126 Property, plant and equipment 404 -76 Right-of-use assets - 76 901 Financial assets 8 Deferred tax assets 59 Total non-current assets 3,597 901 Current assets Inventories 895 Trade receivables 558 Tax assets 27 Other current receivables 67 Derivatives 0 Prepayments and accrued income 186 -59 Cash and cash equivalents 241 Total current assets 1,975 -59 |
Restated |
|---|---|
| 3,126 | |
| 328 | |
| 977 | |
| 8 | |
| 59 | |
| 4,498 | |
| 895 | |
| 558 | |
| 27 | |
| 67 | |
| 0 | |
| 127 | |
| 241 | |
| 1,916 | |
| Total assets 5,571 842 |
6,413 |
| EQUITY AND LIABILITIES | |
| Equity | |
| Share capital 10 |
10 |
| Other paid-in capital 1,995 |
1,995 |
| Other reserves 34 |
34 |
| Retained earnings, incl. profit for the period 520 |
520 |
| Equity attributable to owners of the Parent 2,560 |
2,560 |
| Non-controlling interests 7 |
7 |
| Total equity 2,567 |
2,567 |
| Liabilities | |
| Non-current interest-bearing liabilities 974 -49 |
925 |
| Non-current lease liabilities - 49 648 |
697 |
| Non-current non-interest-bearing liabilities 89 |
89 |
| Pension obligations 2 |
2 |
| Warranties and other provisions 10 |
10 |
| Deferred tax 287 |
287 |
| Total non-current liabilities 1,361 648 |
2,008 |
| Current interest-bearing liabilities 241 -26 |
215 |
| Current lease liabilities - 26 208 |
235 |
| Advances from customers 73 |
73 |
| Trade payables 706 |
706 |
| Tax liabilities 61 |
61 |
| Derivatives 0 |
0 |
| Accruals and deferred income 379 -14 |
364 |
| Other current liabilities 184 |
184 |
| Total current liabilities 1,644 194 |
1,838 |
| Total liabilities 3,005 842 |
3,846 |
| Total equity and liabilities 5,571 842 |
6,413 |
The introduction of IFRS 16 has had a positive effect of SEK 72 million on EBITDA for Q4 2019 and a positive effect of SEK 9 million on EBITA. IFRS 16 has also resulted in depreciation for the period increasing by SEK 63 million and interest expenses by SEK 10 million. Profit after tax for Q4 was negatively affected by SEK 1 million and by SEK 16 million for the full year 2019.
Interest-bearing liabilities have increased by SEK 739 million at 31 December 2019 as a result of the transition to IFRS 16. Cash flow from operating activities has been positively affected by SEK 62 million during Q4, while cash flow from financing activities has been negatively affected by the corresponding amount. Volati AB's financial commitments under bank loan agreements are based on the accounting policies that existed at the inception of the loans, which is why the associated covenants are not affected by the introduction of IFRS 16. Net debt/adjusted EBITDA at 31 December 2019 was 1.5x.
Note 3 Risks and uncertainties
It is the assessment that the Group's material risks and uncertainties are unchanged from those described in detail in the 2018 Annual Report.
Note 4 Segment reporting
At the end of Q4, Volati consisted of four business areas: Trading, Industry, Akademibokhandeln and Consumer.
| Net sales, SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Trading | 518 | 509 | 2,138 | 2,107 |
| Industry | 487 | 467 | 2,008 | 1,271 |
| Akademibokhandeln | 595 | 634 | 1,793 | 1,784 |
| Consumer | 201 | 222 | 895 | 923 |
| Internal eliminations | 0 | -1 | -2 | -1 |
| Total net sales | 1,801 | 1,831 | 6,833 | 6,084 |
Sales between segments are not disclosed as they are immaterial.
| EBITDA, SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Trading | 44 | 36 | 192 | 176 |
| Industry | 62 | 46 | 228 | 183 |
| Akademibokhandeln | 91 | 109 | 99 | 100 |
| Consumer | 32 | 27 | 139 | 138 |
| Items affecting comparability | 11 | 12 | 27 | 12 |
| Central costs | -20 | -20 | -59 | -56 |
| Total EBITDA excl. IFRS 16 | 219 | 210 | 627 | 552 |
| IFRS 16 effect | 72 | - | 282 | - |
| Total EBITDA | 291 | 210 | 909 | 552 |
| Oct–Dec | Oct–Dec | Full year | Full year | |
|---|---|---|---|---|
| EBITA, SEK million | 2019 | 2018 | 2019 | 2018 |
| Trading | 39 | 32 | 176 | 158 |
| Industry | 46 | 30 | 167 | 144 |
| Akademibokhandeln | 84 | 101 | 71 | 72 |
| Consumer | 25 | 19 | 108 | 104 |
| Items affecting comparability | 11 | 12 | 27 | 12 |
| Central costs | -20 | -20 | -59 | -57 |
| Total EBITA excl. IFRS 16 | 185 | 173 | 490 | 433 |
| IFRS 16 effect | 9 | - | 22 | - |
| Total EBITA | 194 | 173 | 513 | 433 |
| Acquisition-related amortisation | -14 | -13 | -54 | -49 |
| Impairment of intangible assets | - | -14 | -328 | -18 |
| Net financial items | -31 | -6 | -96 | -50 |
| Profit before tax | 149 | 141 | 34 | 316 |
| EBIT, SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Trading | 36 | 29 | 165 | 147 |
| Industry | 44 | 28 | 159 | 140 |
| Akademibokhandeln | 78 | 96 | 47 | 48 |
| Consumer | 22 | 16 | 97 | 93 |
| Impairment of intangible assets | 0 | -14 | -328 | -18 |
| Items affecting comparability | -2 | 12 | 27 | 12 |
| Central costs | -20 | -20 | -60 | -57 |
| Total EBIT excl. IFRS 16 | 171 | 147 | 108 | 366 |
| IFRS 16 effect | 9 | 0 | 22 | 0 |
| Total EBIT | 180 | 147 | 130 | 366 |
Note 5 Acquisitions and divestments of companies and operations
Acquisition
After the end of the quarter, on 21 January 2020, an agreement was signed to acquire all of the shares in Heco Nordiska AB. Heco reported sales of SEK 183 million in 2019 and is not expected to have any significant impact on Volati's earnings for 2020. The acquisition was completed and consolidated with effect from January 2020. The acquisition analysis will be presented in the interim report for the first quarter of 2020.
On 4 December 2019, Volati acquired all of the shares in Swekip Sweden AB. Swekip reported sales of about SEK 23 million in 2019 and is not expected to have any significant impact on Volati's earnings for 2020. The acquisition was completed and consolidated with effect from January 2020. The acquisition analysis will be presented in the interim report for the first quarter of 2020.
On 13 September 2019, Volati acquired all of the shares in Väggmaterial i Sverige AB. The company develops and markets a wide range of innovative products including corner protection, putty and glass-fibre fabric. The acquisition is an add-on acquisition for the Trading business area. The acquisition was completed and consolidated with effect from October 2019.
Two deferred purchase considerations were settled during Q2: SEK 1 million related to the acquisition of S:t Eriks and SEK 5 million related to Vinninga Cementvarufabrik (an acquisition S:t Eriks made prior to its own acquisition by Volati).
Volati acquired all shares in Stenentreprenader i Hessleholm AB and Mundus Maskin AB on 11 April 2019. The acquisitions are add-on acquisitions for Volati's Industry business area and the S:t Eriks and Tornum business units. The acquisitions are consolidated with effect from April. The table below shows the impact of the acquisitions of Stenentreprenader, Mundus and Väggmaterial on the Volati Group's balance sheet.
| Impact of acquisitions on balance sheet (SEK million) | 31 Dec 2019 |
|---|---|
| Intangible assets | 30 |
| Property, plant and equipment | 6 |
| Financial receivables | 5 |
| Deferred tax assets | 0 |
| Inventories | 12 |
| Trade receivables | 24 |
| Other receivables | 10 |
| Cash and cash equivalents | 39 |
| Deferred tax liabilities | -8 |
| Non-current interest-bearing liabilities | -3 |
| Current interest-bearing liabilities | -2 |
| Current liabilities | -28 |
| 86 | |
| Goodwill | 74 |
| Purchase price for shares | 160 |
| Purchase price for shares | -160 |
| Consideration settled against existing receivable | 5 |
| Cash & cash equivalents in the acquired company at the acquisition date | 39 |
| Impact on the Group's cash & cash equivalents on acquisition date | -116 |
| Net sales | EBITDA | EBITA | EBIT | |||||
|---|---|---|---|---|---|---|---|---|
| Impact of acquisitions on balance sheet (SEK million) |
Oct–Dec | Full year 2019 |
Oct–Dec | Full year 2019 |
Oct–Dec | Full year 2019 |
Oct–Dec | Full year 2019 |
| Trading | 16 | 16 | 1 | 1 | 1 | 1 | 1 | 1 |
| Industry | 27 | 83 | 3 | 11 | 3 | 10 | 2 | 9 |
| Volati Group | 44 | 100 | 4 | 12 | 4 | 11 | 3 | 10 |
| EBITDA excl. IFRS 16 EBITA excl. IFRS 16 |
EBIT excl. IFRS 16 | |||||||
| Impact of acquisitions on balance sheet (SEK million) |
Oct–Dec | Full year 2019 |
Oct–Dec | Full year 2019 |
Oct–Dec | Full year 2019 |
||
| Trading | 1 | 1 | 1 | 1 | 1 | 1 | ||
| Industry | 3 | 10 | 3 | 10 | 2 | 9 | ||
| Volati Group | 4 | 12 | 4 | 11 | 3 | 10 |
Transaction costs of SEK 1 million for the acquisitions have been charged to the Group's earnings. If the acquisitions had been consolidated with effect from 1 January 2019, their contribution to the Group's income statement, excluding transaction costs, for the period January-December 2019 would have been as follows: sales SEK 178 million, EBITDA SEK 18 million, EBITA SEK 16 million and operating profit SEK 13 million. Goodwill of SEK 74 million arising from the transactions is supported by several factors, largely attributable to the acquired companies' synergies, employees and market shares.
Divestment
On 7 November, Volati entered into an agreement to convert its ownership of me&i into preference shares without voting rights. The effect of the conversion means that Volati loses control of me&i and has deconsolidated me&i from the agreement date. Me&i was part of the Consumer business area prior to the divestment. The earnings effect of the ownership change was SEK 12 million, including transaction costs of SEK 1 million, and is reported in EBITDA under Gain on disposal. Volati has the possibility to receive up to SEK 83 million in future payments from me&i (including receivables of SEK 10 million from me&i). The change in ownership had a negative impact of SEK 5 million on the Group's cash and cash equivalents.
During the period 1 January to 7 November, me&i's contribution to the consolidated income statement was as follows: sales of SEK 120 million, EBITDA of SEK 18 million (of which SEK 12 million as an earnings effect of the ownership change), EBITA of SEK 16 million (of which SEK 12 million as an earnings effect of the ownership change), EBIT of SEK -212 million (of which SEK 12 million as an earnings effect of the ownership change and SEK -228 million in impairment of intangible assets) and profit after tax of SEK - 209 million (of which SEK 12 million as an earnings effect of the ownership change and SEK -224 million in impairment of intangible assets including tax effect).
For the 2018 financial year, me&i contributed sales of SEK 147 million, EBITDA of SEK 11 million, EBITA of SEK 11 million, EBIT of SEK 6 million and profit after tax of SEK 5 million. During the period 1 January to 7 November, me&i contributed SEK -2 million to the Group's cash flow from operating activities. For the 2018 financial year, me&i contributed SEK 15 million to the Group's cash flow from operating activities. On the divestment date, me&i's net assets amounted to SEK -22 million, while its net assets on 31 December 2018 were SEK 168 million.
Parent Company shareholders' share of Earnings per share attributable to divested operations for the period 1 January to 7 November 2019 was SEK -1.64 (0.06) and for Q4 SEK 0.16 (0.03). Parent Company shareholders' share of Adjusted earnings per share attributable to divested operations for the period 1 January to 7 November 2019 was SEK 0.19 (0.06) and for Q4 SEK 0.16 (0.03).
In 2018, four percent of the shares in Volati 1 Holding AB were transferred to the CEO of Ettikettoprintcom AB at a purchase price of SEK 1 million. The transaction had a positive effect of SEK 1 million on cash and cash equivalents and a negative effect of SEK 1 million on other current liabilities.
Note 6 Financial Instruments
Financial instruments: carrying amounts and fair values by measurement category
| 31 Dec 2019 | 31 Dec 2018 | |||||
|---|---|---|---|---|---|---|
| IFRS 9 category1) |
Carrying amount |
Fair value | IFRS 9 category1) |
Carrying amount |
Fair value | |
| Financial assets | ||||||
| Other shares and interests | 2 | 4 | 4 | 2 | 5 | 5 |
| Other non-current financial assets | 1.2 | 2 | 2 | 1.2 | 2 | 2 |
| Derivatives held for trading | 2 | 0 | 0 | 2 | 0 | 0 |
| Trade receivables | 1 | 574 | 574 | 1 | 558 | 558 |
| Cash and cash equivalents | 1 | 447 | 447 | 1 | 241 | 241 |
| Financial liabilities | ||||||
| Bonds | 4 | 600 | 613 | 4 | 893 | 911 |
| Loans from credit institutions | 4 | 601 | 601 | 4 | 102 | 102 |
| Derivatives held for trading | 5 | 0 | 0 | 5 | 0 | 0 |
| Trade payables | 4 | 706 | 706 | 4 | 706 | 706 |
| Additional consideration | 5 | 6 | 6 | 5 | 29 | 29 |
| Put options | 6 | 56 | 56 | 6 | 71 | 71 |
| Other current liabilities | 4 | 32 | 32 | 4 | 32 | 32 |
1) applicable IFRS 9 categories
1= Financial assets at amortised cost
2=Financial assets at fair value through profit or loss
3= Financial assets at fair value through OCI
4= Financial liabilities at amortised cost
5= Financial liabilities at fair value through profit or loss
6= Financial liabilities at fair value through equity
For a description of what is included in the various items and the measurement method, see note 21 of the 2018 annual report.
Financial instruments measured at fair value
| 31 Dec 2019 | 31 Dec 2018 | |||||||
|---|---|---|---|---|---|---|---|---|
| Carrying amounts |
Quoted prices Level 1 |
Observ able inputs Level 2 |
Unobserv able inputs Level 3 |
Carrying amounts |
Quoted prices Level 1 |
Observ able inputs Level 2 |
Unobserv able inputs Level 3 |
|
| Financial assets | ||||||||
| Other shares and interests | 4 | - | - | 4 | 5 | - | - | 5 |
| Derivatives | - | - | - | - | 0 | 0 | - | - |
| Financial liabilities | ||||||||
| Derivatives | 0 | 0 | - | - | 0 | 0 | - | - |
| Put options | 56 | - | - | 56 | 71 | - | - | 71 |
| Additional consideration 1) | 6 | - | - | 6 | 29 | - | - | 29 |
1) Additional consideration is often contingent on the financial performance of the acquired business over a specific period and is measured on the basis of management's best estimate. Discounting to present value is applied for large amounts or long durations.
Note 7 Alternative performance measures
The financial reports published by Volati include the APMs, which supplement the metrics defined or specified in the applicable rules for financial reporting, such as revenue, profit or loss and earnings per share. APMs are specified when they, in their context, provide clearer or more in-depth data than those metrics defined in the applicable rules for financial reporting. The basis for APMs is that they are used by management to assess financial performance and can thus be considered to give analysts and other stakeholders valuable information.
Volati regularly uses APMs as a complement to the key metrics that comprise generally accepted accounting policies. The APMs derive from Volati's consolidated accounts and do not comprise measures of financial performance or liquidity in accordance with IFRS and, accordingly, should not be considered as alternatives to net income, operating profit or other key metrics that are derived pursuant to IFRS or as an alternative to cash flow as a measure of consolidated liquidity. As a result of the new standard IFRS 16 Leases that came into effect on 1 January 2019, Volati has changed the definition of some of the alternative key ratios compared with previous years and also in the 2018 annual report, see the definition below.
Alternative performance measures
The following table sets out definitions for Volati's key figures. The calculation of APMs is presented separately below.
| Non-IFRS APMs and key metrics | Description | Reason for use |
|---|---|---|
| Organic net sales growth*) | Calculated as net sales for the period, adjusted for total acquired and divested net sales and currency effects, compared with net sales for the same period the previous year, as if the relevant business unit had been owned for the same length of time in the comparative period as the length of time it has been legally consolidated in the current period. |
This metric is used by management to monitor the underlying, non-acquired and non-currency-affected, net sales growth in existing operations. |
| Adjusted net sales | Calculated as net sales for the last 12 months at the reporting date for the companies included in the Group at the reporting date, as if they had been owned for the last 12 months. |
Together with adjusted EBITA, adjusted net sales and adjusted EBITDA provide management and investors with a view of the size of the operations included in the Group at the reporting date. |
| EBITDA | Earnings before interest, taxes, depreciation and amortisation. |
EBITDA is used together with EBITA to clarify earnings before the effects of depreciation and amortisation, and earnings before amortisation of acquisition-related intangible assets, in order to provide a view of the profit generated by operating activities. |
| Adjusted EBITDA*) | Calculated as EBITDA, excl. IFRS 16 adjustments, for the last 12 months for the companies included in the Group at the reporting date, as if they had been owned for the last 12 months, and adjusted for transaction-related costs, restructuring costs, remeasurement of additional consideration, capital gains/losses on the sale of operations and other income and expenses considered to be non-recurring. |
Together with adjusted net sales and adjusted EBITA, adjusted EBITDA provides management and investors with a view of the size of the operations included in the Group at the reporting date, as it does not include items not directly attributable to day to-day operations. |
| EBITA | Earnings before interest, taxes and amortisation. | Together with EBITDA, EBITA provides a view of the profit generated by operating activities. |
| Adjusted EBITA*) | Calculated as adjusted EBITDA, excl. IFRS 16 adjustments, less acquisition-related amortisation for the last 12 months at the reporting date for the companies included in the Group at the reporting date, as if they had been owned for the last 12 months. |
Together with adjusted net sales and adjusted EBITDA, adjusted EBITA provides management and investors with a view of the size of the operations included in the Group at the reporting date. |
| EBITA excl. items affecting comparability*) |
Calculated as EBITA, excl. IFRS 16, adjusted for remeasurement of additional consideration, capital gains/losses on the sale of operations and properties, and other income considered to be non-recurring. |
Used by management to monitor the underlying earnings growth for the Group. |
| EBITA excl. central costs and items affecting comparability*) |
Calculated as EBITA, excl. IFRS 16, adjusted for central costs, remeasurement of additional consideration, capital gains/losses on the sale of operations and properties, and other income and expenses considered to be non recurring. |
Used by management to monitor the underlying earnings growth for the operations in the Group. |
| Adjusted profit after tax1) | Profit after tax, excluding significant impairment | Used by management to monitor the underlying earnings growth for the operations in the Group. |
| Organic EBITA growth*) | Calculated as EBITA, excl. IFRS 16, excluding central costs and items affecting comparability for the period, adjusted for total acquired and divested EBITA and currency effects, compared with EBITA excluding central costs and items affecting comparability for the same period the previous year, as if the relevant business unit had been owned for the same length of time in the comparative period as the length of time it has been legally consolidated in the current period. |
Used by management to monitor the underlying earnings growth for existing operations. |
| Adjusted earnings per ordinary share1) Profit attributable to holders of the Parent's ordinary shares, excluding significant impairment, divided by the number of shares outstanding |
Used to illustrate the underlying earnings per share in the Group. |
*) Updated compared with the 2018 annual report, mainly regarding the exclusion of IFRS 16 effects.
1) New or updated APM since 2018 annual report, which excludes significant impairment.
| Non-IFRS APMs and key metrics | Description | |||
|---|---|---|---|---|
| Return on equity*) | Net profit (including share attributable to non-controlling interests) divided by average equity (including share attributable to non-controlling interests). |
Shows the return generated on the total capital invested in the Company by shareholders. |
||
| Return on adjusted equity1)2) | Net profit excluding significant impairment (including share attributable to non-controlling interests) less preference share dividend divided by average equity for the last four quarters (including share attributable to non-controlling interests) less preference share capital. |
Shows the underlying return generated on ordinary share capital invested in the Company by owners of ordinary shares. |
||
| Return on capital employed (ROCE excl. GW) *) |
EBITA, excl. IFRS 16, excluding items affecting comparability for the last 12 months divided by average capital employed, excl. IFRS 16, for the last 12 months. |
Shows the return on capital employed generated by each business area and the Group without taking into consideration acquisition-related intangible assets with indefinite useful lives. |
||
| Return on capital employed including goodwill (ROCE incl. GW) |
EBITA, excl. IFRS 16, excluding items affecting comparability for the last 12 months divided by average capital employed, excl. IFRS 16, including goodwill and other intangible assets with indefinite useful lives for the last 12 months. |
Shows the return on capital employed generated by each business area and the Group. |
||
| Equity ratio | Equity (including share attributable to non-controlling interests) as a percentage of total assets. |
The metric can be used to assess financial risk. |
||
| Cash conversion*) | Calculated as operating cash flow for the last twelve months divided by EBITDA excl. IFRS 16. |
Cash conversion is used by management to monitor how efficiently the Company is managing working capital and ongoing investments. |
||
| Operating cash flow*) | Calculated as EBITDA, excl. IFRS 16, less the difference between investments in/divestments of property, plant & equipment and intangible assets, after adjustment for cash flow from changes in working capital, excl. IFRS 16. |
Operating cash flow is used by management to monitor cash flow generated by operating activities. |
||
| Net debt/Adjusted EBITDA*) | Net debt, excl. IFRS 16 adjustments, at the end of the period in relation to adjusted EBITDA for the period. |
The metric can be used to assess financial risk. |
*) Updated compared with the 2018 annual report, mainly regarding the exclusion of IFRS 16 effects.
1) New or updated APM since 2018 annual report, which excludes significant impairment.
2) The return on adjusted equity in 2019 was exclusive of significant impairment. With the adoption of the new financial targets in February 2020, the
definition now reverts to what it was in the 2018 Annual Report.
Calculations of alternative performance measures are presented separately below.
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|
|---|---|---|---|---|
| Calculation of organic net sales growth | ||||
| Net sales | 1,801 | 1,831 | 6,833 | 6,084 |
| Acquired/divested net sales | -33 | -302 | -788 | -1,636 |
| Currency effects | -9 | -18 | -22 | -41 |
| Comparative figure for previous year | 1,760 | 1510 | 6,023 | 4,407 |
| Organic net sales growth, % | -4 | 0 | -1 | 1 |
| EBITA excl. central costs and items affecting comparability | ||||
| EBITA | 194 | 173 | 513 | 433 |
| Reversal of IFRS 16 effect | -9 | - | -22 | - |
| Adjustment for items affecting comparability | -11 | -12 | -27 | -12 |
| EBITA excl. items affecting comparability | 174 | 162 | 463 | 421 |
| Adjustment for central costs | 20 | 20 | 59 | 57 |
| EBITA excl. central costs and items affecting comparability | 194 | 182 | 523 | 478 |
| Adjusted net sales | ||||
| Net sales, LTM | 6,833 | 6084 | 6,833 | 6,084 |
| Acquired companies | 79 | 690 | 79 | 690 |
| Divested operations | -120 | -120 | -120 | 0 |
| Adjusted net sales | 6,792 | 6,773 | 6,792 | 6,773 |
| Adjusted EBITA and EBITDA | ||||
| EBITDA, LTM | 291 | 210 | 909 | 552 |
| Reversal of IFRS 16 effect | -72 | - | -282 | - |
| Acquired companies | - | 6 | 30 | |
| Divested companies | -1 | - | -5 | - |
| Impairment, associates | - | - | 1 | - |
| Capital gain/loss on disposal | -13 | - | -13 | - |
| Transaction costs | 1 | 1 | 3 | 3 |
| One-time payments | 2 | 2 | 1 | 2 |
| Additional consideration remeasurement | - | -14 | -17 | -14 |
| Adjusted EBITDA | 209 | 199 | 604 | 573 |
| Depreciation | -98 | -36 | -397 | -119 |
| Reversal of IFRS 16 depreciation | 63 | - | 260 | - |
| Depreciation, acquired companies | - | - | 0 | -18 |
| Depreciation, divested operations | 0 | - | 1 | - |
| Adjusted EBITA | 175 | 163 | 468 | 436 |
| Calculation of organic EBITA growth | ||||
| EBITA | 194 | 173 | 513 | 433 |
| Reversal of IFRS 16 effect | -9 | - | -22 | - |
| Adjustment for items affecting comparability | -11 | -12 | -27 | -12 |
| Adjustment for central costs | 20 | 20 | 59 | 57 |
| EBITA excl. central costs and items affecting comparability | 194 | 182 | 523 | 478 |
| Total acquired/divested EBITA | -7 | -17 | -26 | -34 |
| Currency effects | 0 | 0 | 0 | -1 |
| Comparative figure for previous year | 188 | 165 | 496 | 443 |
| Organic EBITA growth, % | 3 | 2 | 4 | 0 |
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
excl. IFRS 16 Oct–Dec 2019 |
excl. IFRS 16 Full year 2019 |
|
|---|---|---|---|---|---|---|
| Adjusted profit after tax | ||||||
| Profit after tax | 163 | 121 | -2 | 274 | 164 | 14 |
| Adjustment for significant impairment | - | - | 324 | - | 324 | |
| Adjusted profit after tax | 163 | 121 | 322 | 274 | 164 | 338 |
| excl. | ||||||
|---|---|---|---|---|---|---|
| Oct–Dec | Oct–Dec | Full year | Full year | excl. IFRS 16 |
IFRS 16 Full year |
|
| 2019 | 2018 | 2019 | 2018 | Oct–Dec 2019 | 2019 | |
| Basic earnings per ordinary share | ||||||
| Net profit attributable to owners of the Parent | 160 | 121 | 74 | 272 | 161 | 90 |
| Deduction for preference share dividend | 16 | 16 | 64 | 64 | 16 | 64 |
| Net profit attributable to owners of the Parent, adjusted for preference share dividend |
144 | 105 | 10 | 208 | 145 | 26 |
| Average no. of ordinary shares | 79,406,571 | 80,406,571 | 79,721,639 | 80,406,571 | 79,406 571 | 79,721,639 |
| Earnings per ordinary share, SEK | 1.82 | 1.30 | 0.13 | 2.58 | 1.82 | 0.32 |
| Adjusted basic earnings per ordinary share, SEK |
||||||
| Net profit attributable to owners of the Parent | 160 | 121 | 74 | 272 | 161 | 90 |
| Adjustment for significant impairment | ||||||
| Parent Company's share | - | - | 239 | - | - | 239 |
| Deduction for preference share dividend | 16 | 16 | 64 | 64 | 16 | 64 |
| Net profit attributable to owners of the Parent, | ||||||
| adjusted for preference share dividend | 144 | 105 | 249 | 208 | 145 | 264 |
| Average no. of ordinary shares | 79,406,571 | 80,406,571 | 79,721,639 | 80,406,571 | 79,406,571 | 79,721 639 |
| Earnings per ordinary share, SEK | 1.82 | 1.30 | 3.12 | 2.58 | 1.82 | 3.32 |
| Diluted earnings per ordinary share | ||||||
| Net profit attributable to owners of the Parent, adjusted for preference share dividend |
144 | 105 | 10 | 208 | 145 | 26 |
| Average no. of ordinary shares after dilution | 79,406,571 | 80,469,822 | 79,721,639 | 80,469,822 | 79,406,571 | 79,721,639 |
| Diluted earnings per ordinary share, SEK | 1.82 | 1.30 | 0.13 | 2.58 | 1.82 | 0.32 |
| Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|||
| Equity per ordinary share | ||||||
| Equity at end of period including non-controlling interests | 2,360 | 2,567 | 2,360 | 2,567 | ||
| Preference share capital | 828 | 828 | 828 | 828 | ||
| Equity at end of period including non-controlling interests, adjusted for preference share capital |
1,532 | 1,739 | 1,532 | 1,739 | ||
| No. of ordinary shares outstanding at end of period | 79,406,571 | 80,406,571 | 79,406,571 | 80,406,571 | ||
| Equity per ordinary share, SEK | 19.29 | 21.63 | 19.29 | 21.63 | ||
| Calculation of return on equity | ||||||
| (A) Net profit, LTM, including non-controlling interests | -2 | 274 | -2 | 274 | ||
| Reversal of impairment | 324 | - | 324 | - | ||
| Adjustment for preference share dividends, including dividends accrued but not yet paid |
-64 | -64 | -64 | -64 | ||
| (B) Net profit, adjusted | 258 | 210 | 258 | 210 | ||
| (C) Average total equity | 2,411 | 2,473 | 2,411 | 2,473 | ||
| (D) Average adjusted equity | 1,745 | 1,645 | 1,745 | 1,645 | ||
| (A/C) Return on total equity, % | 0 | 11 | 0 | 11 | ||
| (B/D) Return on adjusted equity, % | 15 | 13 | 15 | 13 | ||
| Calculation of equity ratio | ||||||
| Equity including non-controlling interests | 2,360 | 2,567 | 2,360 | 2,567 | ||
| Total assets | 6,156 | 5,571 | 6,156 | 5,571 | ||
| Equity ratio, % | 38 | 46 | 38 | 46 |
| Calculation of operating cash flow and cash conversion, % | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| (A) EBITDA excl. IFRS 16 effect | 219 | 210 | 627 | 552 |
| (B) adjustment for non-cash items | -15 | -14 | -35 | -14 |
| Change in working capital | 274 | 220 | 31 | 18 |
| Reversal of IFRS 16 effect on working capital | -1 | - | -3 | - |
| Net investments in property, plant & equipment and intangible assets |
-38 | -33 | -96 | -81 |
| (C) Operating cash flow | 439 | 383 | 523 | 475 |
| (C/A) Cash conversion, % | 200 | 183 | 83 | 86 |
| Calculation of Net debt/Adjusted EBITDA, x | ||||
| Net debt | ||||
| Cash and cash equivalents | -447 | -241 | -447 | -241 |
| Unrealised derivative contract assets | - | 0 | - | 0 |
| Pension obligations | 2 | 2 | 2 | 2 |
| Non-current interest-bearing liabilities | 642 | 974 | 642 | 974 |
| Current interest-bearing liabilities | 711 | 241 | 711 | 241 |
| Unrealised derivative contract liabilities | 0 | 0 | 0 | 0 |
| Accrued interest expenses | - | 7 | - | 7 |
| Pension assets | -2 | -2 | -2 | -2 |
| Adjustment for nominal value of bond liability | 4 | -6 | 4 | -6 |
| Adjustment for shareholder loans | -2 | -25 | -2 | -25 |
| Net debt | 907 | 949 | 907 | 949 |
| Adjusted EBITDA | 604 | 573 | 604 | 573 |
| Net debt/Adjusted EBITDA, x | 1.5 | 1.7 | 1.5 | 1.7 |
| Akademibokh | ||||||
|---|---|---|---|---|---|---|
| ROCE %, at 31 December 2019 | Trading | Industry | andeln | Consumer | Central costs | Volati Group |
| 1) EBITA, LTM | 176 | 167 | 71 | 108 | -59 | 463 |
| Capital employed at 31 December 2019 | ||||||
| Intangible assets | 977 | 538 | 836 | 501 | 2,853 | |
| Adjustment for goodwill, patent/technology, brands |
-973 | -520 | -774 | -451 | -2,717 | |
| Property, plant and equipment | 31 | 223 | 30 | 37 | 336 | |
| Financial right-of-use assets | 23 | 39 | 2 | 1 | 66 | |
| Inventories | 342 | 318 | 198 | 8 | 865 | |
| Trade receivables | 296 | 217 | 28 | 33 | 574 | |
| Other current receivables | 1 | 21 | 21 | 1 | 46 | |
| Prepayments and accrued income excl. IFRS 16 | 42 | 74 | 48 | 22 | 190 | |
| Adjustment for non-working-capital-related current receivables |
-2 | |||||
| Advances from customers | -2 | -49 | -1 | -10 | -62 | |
| Trade payables | -186 | -211 | -254 | -51 | -706 | |
| Accruals and deferred income | -79 | -116 | -100 | -49 | -354 | |
| Other current liabilities | -34 | -27 | -58 | -23 | -183 | |
| Adjustment for non-working-capital-related current liabilities |
12 | |||||
| Adjusted for preference share dividend | 32 | |||||
| Capital employed at 31 December 2019 | 438 | 508 | -23 | 20 | 951 | |
| Adjustment for average capital employed, LTM | 33 | 80 | 98 | 17 | 0 | 220 |
| 2) Average capital employed, LTM | 471 | 588 | 75 | 37 | 1,172 | |
| ROCE excl. GW 1)/2), % | 37 | 28 | 94 | 294 | 40 | |
| 3) Average capital employed, LTM, incl. goodwill and other intangible assets with indefinite useful lives |
1,332 | 1,037 | 726 | 703 | 3,801 | |
| ROCE incl. goodwill 1)/3), % | 13 | 16 | 10 | 15 | 12 |
| ROCE %, at 31 December 2018 | Trading | Industry | Akademi bokhandeln |
Consumer | Central costs | Volati Group |
|---|---|---|---|---|---|---|
| 1) EBITA excl. IFRS 16 effect R12 | 158 | 144 | 72 | 104 | -57 | 421 |
| Capital employed at 31 December 2018 | ||||||
| Intangible assets | 936 | 772 | 859 | 844 | 3,126 | |
| Adjustment for goodwill, patent/technology, brands |
-932 | -753 | -794 | -779 | -2,972 | |
| Property, plant and equipment | 54 | 263 | 40 | 31 | 404 | |
| Inventories | 346 | 324 | 196 | 29 | 895 | |
| Trade receivables | 292 | 201 | 30 | 36 | 558 | |
| Other current receivables | 10 | 26 | 28 | 2 | 67 | |
| Prepayments and accrued income | 38 | 74 | 50 | 23 | 186 | |
| Adjustment for non-working-capital-related current receivables |
0 | |||||
| Advances from customers | -2 | -60 | 0 | -11 | -73 | |
| Trade payables | -220 | -169 | -260 | -54 | -706 | |
| Accruals and deferred income | -83 | -136 | -94 | -54 | -379 | |
| Other current liabilities | -32 | -28 | -52 | -27 | -184 | |
| Adjustment for non-working-capital-related current liabilities |
18 | |||||
| Adjusted for preference share dividend | 32 | |||||
| Capital employed at 31 December 2018 | 407 | 513 | 3 | 40 | 972 | |
| Adjustment for average capital employed, LTM | 25 | -177 | 75 | 5 | -72 | |
| 2) Average capital employed, LTM | 432 | 336 | 78 | 45 | 900 | |
| ROCE excl. GW 1)/2), % | 37 | 43 | 92 | 233 | 47 | |
| 3) Average capital employed, LTM, incl. goodwill and other intangible assets with indefinite useful lives |
1,284 | 669 | 728 | 817 | 3,493 | |
| ROCE incl. goodwill 1)/3), % | 12 | 21 | 10 | 13 | 12 |
Parent Company Volati AB (publ)
The Parent Company Volati AB acts as a holding company and the members of Volati's management are employed within the Parent Company. The figures below for 2019 are shown including IFRS 16 effects.
Parent Company condensed income statement
| SEK million | Oct–Dec 2019 |
Oct–Dec 2018 |
Full year 2019 |
Full year 2018 |
|---|---|---|---|---|
| Net sales | 11 | 5 | 24 | 14 |
| Operating expenses | -14 | -13 | -59 | -48 |
| Operating profit1) | -3 | -7 | -35 | -34 |
| Profit/loss from financial investments | -62 | 38 | 501 | 632 |
| Profit after financial items | -66 | 30 | 465 | 598 |
| Appropriations | 39 | -101 | 39 | -101 |
| Tax for the period | 13 | 16 | 0 | 0 |
| Net profit | -14 | -54 | 504 | 497 |
| Comprehensive income for the period | -14 | -54 | 504 | 497 |
1) Operating profit includes bank charges.
Parent Company condensed statement of financial position
| SEK million | 31 Dec 2019 |
31 Dec 2018 |
|---|---|---|
| Non-current assets | 2,029 | 1,594 |
| Current assets | 5,807 | 4,072 |
| Total assets | 7,836 | 5,666 |
| Equity | 3,547 | 3,244 |
| Untaxed reserves | 48 | 54 |
| Pension obligations | 1 | 1 |
| Non-current liabilities | 618 | 740 |
| Current liabilities | 3,622 | 1,628 |
| Total equity and liabilities | 7,836 | 5,666 |