Interim report January – March 2019

  • Net sales increased by 25.5 per cent to SEK 3,357 (2,674) million. Organically, net sales grew by 12.0 per cent
  • EBITA* increased by 40.4 per cent to SEK 587 (418) million
  • The EBITA margin* increased to 17.5 (15.6) per cent
  • Earnings before tax grew by 24.9 per cent to SEK 432 (346) million
  • Net profit for the period grew by 25.9 per cent to SEK 326 (259) million
  • Earnings per share increased by 24.5% till SEK 3.51 (2.82)
  • Cash flow from operating activities increased by 355 per cent to SEK 141 (31) million
  • Deputy CEO Per Waldemarson was appointed President and CEO on February 8
  • Two businesses were acquired during the period with combined annual sales of
    about SEK 500 million

Summary of financial performance 

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Net sales 3,357 2,674 25.5% 12,639 5.7% 11,956
EBITA* 587 418 40.4% 2,337 7.8% 2,168
EBITA margin* 17.5% 15.6% 1.9 18.5% 0.4 18.1%
Profit before tax 432 346 24.9% 1,944 4.6% 1,858
Net profit for the period 326 259 25.9% 1,487 4.7% 1,420
Earnings per share 3.51 2.82 24.5% 15.98 4.5% 15.29
Return on capital employed 21.5% 18.9% 2.6 21.5% 0.5 21.0%
Return on capital employed excl. goodwill 152% 147% 5 152% -13 165%

   * Before acquisition costs and non-recurring items.

COMMENTS FROM THE CEO 

After having served in senior positions at Lifco for 13 years, I took over as CEO of the company in February. My task is to work together with all our employees in the Group to continue to consistently carry out our strategy, focusing on results, simplicity and decentralisation.

Lifco’s overall target is to increase earnings every year though both organic growth and acquisitions. Net sales for the first quarter increased by 25.5 per cent to SEK 3,357 (2,674) million, driven by organic growth, acquisitions and foreign exchange gains. The generally favourable economy was a strong contributing factor to organic growth. It should also be pointed out that comparative figures were affected by negative organic growth in the first quarter of 2018.

EBITA* increased by 40.4 per cent to SEK 587 (418) million during the quarter and the EBITA margin* improved by 1.9 percentage points to 17.5 (15.6) per cent. The improvement in profitability was mainly due to organic growth and acquisitions. The comparison is also impacted by Easter falling in April this year and the Demolition & Tools business area reporting a negative profitability trend in the first quarter of last year. Earnings per share increased by 24.5% till SEK 3.51 (2.82) in the first quarter of 2019.

All three business areas reported robust sales and earnings growth, and performance was stable in all divisions. The market generally remained positive for the three business areas during the quarter.

Cash flow increased by 355 per cent to SEK 141 (31) million. Although cash flow improved compared with the year-earlier quarter, we can note that the generally favourable market situation resulted in higher accounts receivable and inventory build-up in many of our businesses.

During the period, Lifco strengthened Demolition & Tools with the addition of two new businesses with combined annual sales of around SEK 500 million. The companies consolidated were Swedish company Indexator Rotator Systems, a world-leading manufacturer of rotators, and the majority of Italian company Hammer, a provider of hydraulic hammers and other demolition tools for excavators. The acquisitions jointly had a positive impact on Lifco’s results and financial position during the quarter.

We purchased the majority of UK company UK POS after the end of the quarter. The company is a leading supplier of exhibition and visual display solutions sold directly to end customers in various industries in the UK. The company will be consolidated in the Systems Solutions business area, division Service and Distribution (previously Interiors for Service Vehicles).

Lifco has a solid financial position and interest-bearing net debt amounted to 1.5 times EBITDA*, which is in line with our target of interest-bearing net debt of a maximum of three times EBITDA*. This means that Lifco has significant financial scope to make additional acquisitions, while we retain focus on increasing earnings in our existing operations.

Per Waldemarson

President and CEO

GROUP PERFORMANCE IN JANUARY – MARCH  

Sales increased by 25.5 per cent to SEK 3,357 (2,674) million, driven by organic growth, acquisitions and foreign exchange gains. Organic growth was 12.0 per cent, acquisitions contributed 8.7 per cent while changes in exchange rates had a positive impact of 4.8 per cent. Swedish company Indexator Rotator Systems and the majority of Italian company Hammer were consolidated during the quarter.

EBITA* increased by 40.4 per cent to SEK 587 (418) million and the EBITA margin* improved by 1.9 percentage points to 17.5 (15.6) per cent. EBITA* improved on the back of organic growth, acquisitions and foreign exchange gains. Foreign exchange gains accounted for 5.1% of the increase in EBITA*. During the year 36 (37) per cent of EBITA* was generated in EUR, 27 (28) per cent in SEK and 16 (14) per cent in NOK, 8 (7) per cent in DKK, 6 (6) per cent in USD, 2 (2) per cent in GBP and 5 (6) per cent in other currencies.

Net financial items were SEK -13 (-13) million.

Profit before tax grew by 24.9 per cent to SEK 432 (346) million and net profit for the period increased by 25.9 per cent to SEK 326 (259) million. Non-recurring items amounted to SEK 56 (0) million for the quarter related to costs associated with change in management.

Average capital employed excluding goodwill increased by SEK 228 million during the quarter, to SEK 1,540 million at 31 March 2019, compared with SEK 1,312 million at 31 December 2018. EBITA* relative to average capital employed excluding goodwill was at 165 per cent at year-end and declined to 152 per cent during the quarter.

The Group’s net debt increased by SEK 1,275 million from 31 December 2018 to SEK 4,960 million at 31 March 2019 of which liabilities related to call/put options and additional considerations for acquisitions totalled SEK 709 (281) million. As of 1 January 2019, net debt is impacted by the lease lability which is a consequence of the implementation of IFRS 16. The lease liability was SEK 447 (-) million at the end of the period.

The net debt/equity ratio at 31 March 2019 was 0.7 (0.7) and net debt/EBITDA* was 2.0 (2.1) times. At period-end, 34 (32) per cent of the Group’s interest-bearing liabilities were denominated in EUR.

Cash flow from operating activities increased by 355 per cent to SEK 141 (31) million during the quarter, mainly due to improved earnings. Cash flow from investing activities was SEK -580 (-107) million, which was mainly attributable to acquisitions.

  

FINANCIAL PERFORMANCE – BUSINESS AREAS 

Dental 

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Net sales 1,127 1,010 11.6% 4,302 2.8% 4,185
EBITA* 232 191 21.5% 843 5.1% 802
EBITA margin* 20.6% 18.9% 1.7 19.6% 0.4 19.2%

The companies in Lifco’s Dental business area are leading suppliers of consumables, equipment and technical service to dentists across Europe, and the business area also has operations in the US. Lifco sells dental technology to dentists in the Nordic countries and Germany, and develops and sells medical record systems in Denmark, Sweden and Germany. The business area also includes a number of manufacturers which produce fitting products for dentures, disinfectants, saliva ejectors, bite registration and dental impression materials, bonding agents and other consumables that are sold to dentists through distributors around the world. In the last few years, Dental has, through acquisitions and organic growth, increased the performance within manufacturing, dental technology and software faster than within distribution, resulting in a positive impact of the margin development within the business area.

Net sales in Dental increased by 11.6 per cent to SEK 1,127 (1,010) during the first quarter, positively impacted by the late Easter and acquisitions. The late Easter meant that March had more working days than in 2018. This means that Dental will experience a corresponding negative seasonal effect in the second quarter of 2019.

EBITA* increased by 21.5 per cent to SEK 232 (191) million in the period and the EBITA margin* improved by 1.7 percentage points to 20.6 (18.9) per cent, partly as a result of the positive effect of Easter falling in April.

The dental market remains generally stable. The results of individual companies in Lifco’s Dental business may in any individual quarter be influenced by significant fluctuations in exchange rates, calendar effects (such as Easter), gained or lost contracts in procurements of consumables by public-sector or major private-sector customers and fluctuations in the delivery of equipment. Both sales and earnings for the quarter were impacted by Easter falling in April.

Demolition & Tools 

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Net sales 832 597 39.4% 3,055 8.3% 2,820
EBITA* 172 117 47.0% 779 7.6% 724
EBITA margin* 20.7% 19.6% 1.1 25.5% -0.2 25.7%

Demolition & Tools develops, manufactures and sells equipment for the construction and demolition industries. The Group is the world’s leading supplier of demolition robots and crane attachments. The Group is also one of the leading global suppliers of excavator attachments. The business area’s EBITA margin might fluctuate between quarters due to single, major special orders and changes to the product mix.

Net sales increased by 39.4 per cent to SEK 832 (597) million in the quarter, driven by acquisitions, organic growth and foreign exchange gains. The market situation was generally good. Among the larger markets, the US saw the fastest growth. EBITA* increased by 47.0 per cent during the period to SEK 172 (117) million and the EBITA margin* was 20.7 (19.6) per cent. The comparison is impacted by the negative effect on profitability for Demolition & Tools in the first quarter of 2018 from provisions for doubtful debts, changes to the product mix and a weaker USD.

Swedish company Indexator Rotator Systems, which produces and manufactures rotators, mainly for the forest industry, was consolidated in January 2019. The company had net sales of around SEK 300 million in 2018 and has about 140 employees. The majority of Italian company Hammer SRL, which is a provider of hydraulic hammers and other demolition tools for excavators, was consolidated in February 2019. The company generated sales of about EUR 20 million in 2018 and has about 100 employees.

Systems Solutions 

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Net sales 1,398 1,067 31.0% 5,282 6.7% 4,951
EBITA* 209 138 51.4% 827 9.4% 756
EBITA margin* 14.9% 12.9% 2.0 15.7% 0.4 15.3%

Through its operating units, Systems Solutions operates in industries offering systems solutions. Systems Solutions is divided into five divisions: Construction Materials, Contract Manufacturing, Environmental Technology, Service and Distribution (formerly Interiors for Service Vehicles) and Forest.

Net sales in Systems Solutions increased by 31.0 per cent to SEK 1,398 (1,067) million during the quarter, mainly on the back of organic growth in all divisions. The late Easter has a slightly positive effect on organic growth.

EBITA* increased by 51.4 per cent to SEK 209 (138) million in the first three months of the year, with improved earnings across all divisions. The EBITA margin* expanded by 2.0 percentage points to 14.9 (12.9) per cent.

ACQUISITIONS  

Lifco made the following acquisitions in the period:

Consolidated  from month  Acquisition  Business area  Net sales   Employees 
January Indexator Rotator Systems Demolition & Tools SEK 300m 140
February Hammer Demolition & Tools EUR 20m 100

Further information on the acquisitions is provided on page 15. The figures for net sales and number of employees refer to estimated annual net sales and the number of employees at the acquisition date.

Taken together, the acquisitions will have a positive impact on Lifco’s results and financial position in the current year.

OTHER FINANCIAL INFORMATION 

Employees 

The average number of employees was 5,137 (4,714) in the first quarter. At the end of the period, the number of employees was 5,219 (4,736). Acquisitions added 240 employees.

Events after the end of the reporting period 

After the end of the period, the acquisition of the majority of UK company UK POS was consolidated in the Systems Solutions business area, Service and Distribution division (formerly Interiors for Service Vehicles). The company is a leading supplier of exhibition and visual display solutions sold directly to end customers in various industries in the UK.  UK POS had net sales of around GBP 12 million in 2018 and has just over 60 employees.

Related party transactions 

No significant transactions with related parties took place during the period.

Risks and uncertainties  

The risk factors which have the biggest impact for Lifco are the competitive situation, structural changes in the market and general level of economic activity. Lifco is also exposed to financial risks, including currency risks, interest rate risks, credit and counterparty risks.

The Parent Company is affected by the above risks and uncertainties in its capacity as owner of the subsidiary companies. For further information on Lifco’s risks and risk management, see the 2018 Annual Report.

Accounting policies 

The Group’s interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. In respect of the Parent Company, the report has been prepared in accordance with the Annual Accounts Act and Recommendation RFR 2 Financial Reporting for Legal Entities of the Swedish Financial Reporting Board. The accounting policies have been applied in accordance with those which are presented in the 2018 Annual Report and should be read in conjunction with these.

The Group applies IFRS 16 from 1 January 2019, and the implementation of the standard implies that nearly all leases are recognised in the balance sheet of the lessee, as there is no longer any distinction made between operating and finance leases. According to IFRS 16, a tangible asset (the right to use a leased asset) and a financial liability (non-current and current) regarding the obligation to pay lease payments is to be recognised in the balance sheet. In the consolidated income statement, depreciation and interest expense are recognised instead of operating leases, which were recognised in their entirety within operating profit. IFRS 16 will impact the cash flow insofar that leasing payments impact the cash flow from operating activities (e.g. interest and low-value and short-term leases) and cash flow from financing activities (repayment of the lease liability). The Group applies the modified retrospective approach, which entails that right-of-use assets are measured at an amount corresponding to the lease liability on 1 January 2019 (adjusted for prepaid and accrued lease payments). Accordingly, the transition to IFRS 16 does not have any impact the Group’s equity. Since the modified retrospective approach has been applied, comparative figures for 2018 have not been recalculated. The Group has chosen to apply the exception and thus not to recognise short-term leases and low-value leases as a part of the right-of-use asset and the lease liability in the balance sheet. Payments attributable to these leases has instead been recognised as a cost straight line over the term of the lease. The remaining lease commitments essentially comprise premises such as office, warehouse and factory premises.

Reconciliation of obligations for operating leases and recognised lease liability (SEK million)
Obligations for operating leases 31 December 2018 600
Discounting effect -69
Less: short-term leases and low-value leases that are expensed straight-line -67
Less: corrections/reclassifications -19
Translation differences -5
Lease liability recognised 1 January 2019 440

The weighted average marginal interest rate which has been used to calculate the discounting effect is 2.09%. The transition to IFRS 16 has had a positive effect on the Group’s operating profit of SEK 2 million, EBITDA* SEK 36 million and EBITA* SEK 2 million on 31 March 2019. The financial net is impacted by SEK -2 million.  The reported lease liability is SEK 447 million on 31 March 2019.

This report has not been examined by the company’s auditors.

DECLARATION OF THE BOARD OF DIRECTORS 

The Board of Directors and Chief Executive Officer warrant and declare that this three-month report gives a true and fair view of the Parent Company’s and Group’s operations, financial positions and results, and that it describes significant risks and uncertainties faced by the Parent Company and the companies included in the Group.

Enköping, 26 April 2019

Carl BennetChairman of the Board Gabriel DanielssonDirector Ulrika DellbyDirector
Erik Gabrielson
Director
Ulf GrunanderDirector Anna HallbergDirector
Annika Espander Jansson Director Anders LorentzsonDirector, employee representative Johan SternVice Chairman

Axel WachtmeisterDirector
Per WaldemarsonPresident and CEO Peter WibergDirector,employee representative

FINANCIAL CALENDAR 

The report for the second quarter will be published on 18 July

The report for the third quarter will be published on 23 October

The 2019 year-end report will be published on 31 January 2020

ANNUAL GENERAL MEETING 2019 

The Annual General Meeting of Lifco AB will be held on Friday 26 April 2019, at 2 p.m. CEST, at Bonnierhuset, Torsgatan 21, Stockholm.

FURTHER INFORMATION 

Media and investor relations: Åse Lindskog, ir@lifco.se, telephone: +46 730 24 48 72.

TELECONFERENCE 

Media and analysts are welcome to call in to a teleconference, where CEO Per Waldemarson and CFO Therése Hoffman will present the interim report. After the presentation, there will be an opportunity to ask questions.

Time: Friday, 26 April at 12.00 p.m. CEST

Link to the presentation: https://tv.streamfabriken.com/lifco-q1-2019

Telephone numbers:

Sweden +46 8 5055 83 59

UK +44 3333 00 90 34

US +1 8338 23 05 90

LIFCO IN BRIEF 

Lifco offers a safe haven for small and medium-sized businesses. Lifco’s business concept is to acquire and develop market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. Lifco is guided by a clear philosophy centred on long-term growth, a focus on profitability and a strongly decentralised organisation. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. At year-end, the Lifco Group consisted of 146 operating companies in 29 countries. In 2018, Lifco reported EBITA of SEK 2,168 million on net sales of SEK 12.0 billion. The EBITA margin was 18.1 per cent. Read more at www.lifco.se.

This information constitutes information that Lifco AB is required to publish under the EU’s Market Abuse Regulation. The information was submitted for publication through the aforementioned contact person on 26 April 2019, at 11.00 a.m. CEST.

CONDENSED CONSOLIDATED INCOME STATEMENT 

FIRST QUARTER  FULL YEAR 
SEK million  2019  2018  change  2018 
Net sales 3,357 2,674 25.5% 11,956
Cost of goods sold -1,981 -1,550 27.8% -6,838
Gross profit  1,376  1,124  22.4%  5,118 
Selling expenses -377 -310 21.6% -1,315
Administrative expenses -506 -409 23.7% -1,735
Development costs -40 -37 8.1% -144
Other income and expenses -8 -9 -11.1% -22
Operating profit  445  359  24.0%  1,902 
Net financial items -13 -13 - -44
Profit before tax  432  346  24.9%  1,858 
Tax -106 -87 21.8% -438
Net profit for the period  326  259  25.9%  1,420 
Profit attributable to: 
Parent Company shareholders 319 256 24.6% 1,389
Non-controlling interests 7 3 133% 31
Earnings per share before and after dilution for the period, attributable to Parent Company shareholders 3.51 2.82 24.5% 15.29
EBITA*  587 418 40.4% 2,168
Depreciation of tangible assets 73 30 143% 127
Amortisation of intangible assets 3 3 - 12
Amortisation of intangible assets arising from acquisitions 74 57 29.8% 253

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 

FIRST QUARTER  FULL YEAR 
SEK million  2019  2018  change  2018 
Net profit for the period 326 259 25.9% 1,420
Other comprehensive income 
Items which can later be reclassified to profit or loss: Hedge of net investment  -7 20 -135%  13
Translation differences 159 197 -19.3% 155
Tax related to other comprehensive income 2 -4 -150% -3
Total comprehensive income for the period  480  472  1.7%  1,585 
Comprehensive income attributable to: 
Parent Company shareholders 471 467 0.9% 1,552
Non-controlling interests 9 5 80% 33
480  472  1.7%  1,585 

SEGMENT OVERVIEW 

Lifco’s operations are monitored and evaluated by the CEO and resources are allocated based on information from the three operating segments Dental, Demolition & Tools and Systems Solutions. The defined quantitative limits have been exceeded only by Dental and Demolition & Tools. One further operating segment, Systems Solutions, is presented. This operating segment consists of a merger of those divisions which have similar economic characteristics and which do not individually meet the defined quantitative limits. These divisions are Construction Materials, Contract Manufacturing, Environmental Technology, Service and Distribution (formerly Interiors for Service Vehicles) and Forest.

NET SALES TO EXTERNAL CUSTOMERS 

No sales are made between the segments.

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Dental 1,127 1,010 11.6% 4,302 2.8% 4,185
Demolition & Tools 832 597 39.4% 3,055 8.3% 2,820
Systems Solutions 1,398 1,067 31.0% 5,282 6.7% 4,951
Group  3,357  2,674  25.5%  12,639  5.7%  11,956 

Net sales by type of income:

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Dental products 1,127 1,010 11.6% 4,302 2.8% 4,185
Machinery and Tools 832 597 39.4% 3,055 8.3% 2,820
Construction Materials 297 244 21.7% 1,155 4.8% 1,102
Contract Manufacturing 238 208 14.4% 981 3.2% 951
Environmental Technology 387 315 22.9% 1,535 4.9% 1,463
Service and Distribution 203 136 49.3% 727 10.2% 660
Forest 273 164 66.5% 884 14.1% 775
Group  3,357  2,674  25.5%  12,639  5.7%  11,956 

EBITA  

A breakdown of results by segment is made up to and including EBITA. EBITA is reconciled to profit before tax in accordance with the following table:

FIRST QUARTER Rolling 12 months  FULL YEAR 
SEK million  2019 2018 change  change  2018
Dental 232 191 21.5% 843 5.1% 802
Demolition & Tools 172 117 47.0% 779 7.6% 724
Systems Solutions 209 138 51.4% 827 9.4% 756
Central Group functions -26 -28 -7.1% -112 -1.8% -114
EBITA before acquisition
costs and non-recurring items
 
587  418  40.4%  2,337  7.8%  2,168 
Acquisition costs* -12 -2 500% -23 76.9% -13
Non-recurring items -56 - - -56 - -
EBITA  519  416  24.8%  2,258  4.8%  2,155 
Amortisation of intangibleassets arising from acquisitions -74 -57 29.8%  -270 6.7%  -253 
Net financial items  -13 -13 - -44 -  -44
Profit before tax  432  346  24.9%  1,944  4.6%  1,858 

* Of which, change in call/put options and additional considerations for the current year, SEK -8 (-) million.

CONDENSED CONSOLIDATED BALANCE SHEET 

SEK million  31 Mar 2019  31 Mar 2018  31 Dec 2018 
ASSETS 
Intangible assets 9,886 8,606 9,133
Tangible assets 1,246 576 611
Financial assets 181 151 153
Inventories 1,980 1,555 1,710
Accounts receivable 1,751 1,497 1,550
Current receivables 401 274 261
Cash and cash equivalents 348 250 405
TOTAL ASSETS  15,793  12,909  13,823 
EQUITY AND LIABILITIES 
Equity   7,219 6,011 6,748
Non-current interest-bearing liabilities incl. pension provisions 2,314 1,055 1,813
Other non-current liabilities and provisions 1,591 1,072 1,307
Current interest-bearing liabilities 2,285 2,891 1,762
Accounts payable 827 673 632
Other current liabilities 1,557 1,207 1,561
TOTAL EQUITY AND LIABILITIES  15,793  12,909  13,823 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

Attributable to Parent Company shareholders 


SEK million  31 Mar 2019  31 Mar 2018  31 Dec 2018 
Opening equity  6,685 5,496 5,496
Comprehensive income for the period 471 467 1,552
Dividend - - -363
Closing equity  7,156  5,963  6,685 
Equity attributable to: 
Parent Company shareholders 7,156 5,963 6,685
Non-controlling interests 63 48 63
7,219  6,011  6,748 

CONDENSED CONSOLIDATED CASH FLOW STATEMENT 

FIRST QUARTER  FULL YEAR 
SEK million  2019  2018  2018 
Operating activities 
Operating profit 445 359 1,902
Non-cash items 158 90 391
Interest and financial items, net -13 -13 -44
Tax paid -159 -151 -472
Cash flow before changes in working capital 431 285 1,777
Changes in working capital 
Inventories -183 -155 -260
Current receivables -138 -198 -214
Current liabilities 31 99 230
Cash flow from operating activities  141  31  1,533 
Business acquisitions and sales, net -515 -66 -500
Net investment in tangible assets -63 -39 -150
Net investment in intangible assets -2 -2 -19
Cash flow from investing activities  -580  -107  -669 
Borrowings/repayment of borrowings, net 360 1 -416
Dividends paid -9 -7 -383
Cash flow from financing activities  351  -6  -799 
Cash flow for the period  -88  -82  65 
Cash and cash equivalents at beginning of period 405 305 305
Translation differences 31 27 35
Cash and cash equivalents at end of period  348  250  405 


ACQUISITIONS IN 2019 

Two businesses were consolidated in the first three months of the year. These acquisitions referred to all of the shares in Indexator Rotator Systems and the majority of the shares in Hammer.

The purchase price allocation includes all acquisitions made during the first three months of the year.

Acquisition-related expenses of SEK 4 million are included in administrative expenses in the consolidated income statement for the first three months of the year. If consolidation had taken place on 1 January 2019, the Group’s net sales would have been positively impacted by about SEK 9 million and the effect on earnings would have been slightly negative.

Acquired net assets 
Net assets, SEK million  Carrying amount  Value adjustment  Fair value 
Trademarks, customer relationships, licences 9 363 372
Tangible assets 153 - 153
Inventories, accounts receivable and other receivables 266 -27 239
Accounts payable and other liabilities -270 -83 -353
Cash and cash equivalents 46 - 46
Net assets  204  253  457 
Goodwill - 278 278
Total net assets  204  531  735 
Effect on cash flow, SEK million 
Consideration 735
Consideration not paid   -174 
Cash and cash equivalents in acquired companies                                       -46
Total cash flow effect                                                  515 

FINANCIAL INSTRUMENTS 

SEK million  31 Mar 2019  31 Mar 2018 
Financial assets measured at amortised cost* 
Accounts receivable  1,751 1,497
Other non-current financial receivables  22 6
Cash and cash equivalents  348 250
Total  2,121  1,753 
Liabilities at fair value through profit or loss 
Other liabilities**  709 281
Financial liabilities at amortised cost 
Interest-bearing borrowings  4,565 3,913
Accounts payable 827 673
Total  6,101  4,867 

*All financial assets on 31 March 2018 were classified in the category “Loans and receivables.”

**Other liabilities classified as financial instruments refer to mandatory call/put options related to non-controlling interests and additional considerations.

The carrying amount is the same as the fair value. Financial instruments at fair value are classified into different levels depending on how fair value is determined. All financial instruments at fair value in the Lifco Group have been classified as level 3, i.e. non-observable inputs. The fair value of short-term borrowings is equal to the carrying amount, as the discount effect is insignificant.

KEY PERFORMANCE INDICATORS 

ROLLING TWELVE MONTHS TO  2019 31 MAR  2018 31 DEC  2018 31 MAR 
Net sales, SEK million 12,639 11,956 10,281
Change in net sales, % 5.7 19.2 2.5
EBITA*, SEK million 2,337 2,168 1,765
EBITA margin*, % 18.5 18.1 17.2
EBITDA*, SEK million 2,519 2,307 1,892
EBITA margin*, % 19.9 19.3 18.4
Capital employed, SEK million 10,861 10,314 9,341
Capital employed excl. goodwill and other intangible assets, SEK million 1,540 1,312 1,199
Return on capital employed, % 21.5 21.0 18.9
Return on capital employed excl. goodwill, % 152 165 147
Return on equity, % 22.5 22.5 20.7
Net debt, SEK million 4,960 3,685 3,977
Net debt/equity ratio 0.7 0.5 0.7
Net debt/EBITDA* 2.0 1.6 2.1
Interest-bearing net debt, SEK million 3,804 3,170 3,696
Interest-bearing net debt/EBITDA* 1.5 1.4 2.0
Equity/assets ratio, % 45.7 48.8 46.6
Number of shares, thousand 90,843 90,843 90,843
Average number of employees 5,137 4,860 4,714

CONDENSED PARENT COMPANY INCOME STATEMENT 

FIRST QUARTER  FULL YEAR 
SEK million  2019 2018 2018
Administrative expenses -85 -33 -136
Other operating income* - - 48
Operating profit  -85  -33  -88 
Net financial items** 34 44 602
Profit/loss after financial items  -51  11  514 
Appropriations - - 56
Tax  16 6 -5
Net profit for the period   -35  17  565 

* Invoicing of Group-wide services.

** Net financial items include SEK 26 (39) million in dividends received during the three-month period.

CONDENSED PARENT COMPANY BALANCE SHEET 

SEK million  31 Mar 2019  31 Mar 2018 
ASSETS 
Tangible assets  0 0
Financial assets  2,591 4,335
Current receivables 6,258 3,817
Cash and cash equivalents  38 29
TOTAL ASSETS  8,887  8,181 
EQUITY AND LIABILITIES 
Equity   2,876 2,759
Untaxed reserves 70 70
Provisions - 1
Non-current interest-bearing liabilities 1,775 1,022
Current interest-bearing liabilities 2,214 2,872
Current non-interest-bearing liabilities 1,952 1,457
TOTAL EQUITY AND LIABILITIES  8,887  8,181 
Pledged assets - -
Contingent liabilities 101 135

DEFINITIONS AND OBJECTIVE 

Return on equity Net profit for the period divided by average equity.
Return on capital employed EBITA before acquisition costs and non-recurring items divided by capital employed.
Return on capital employed excluding goodwill and other intangible assets EBITA before acquisition costs and non-recurring items divided by capital employed excluding goodwill and other intangible assets.
EBITA EBITA is a measure which Lifco considers relevant for investors who wish to understand the earnings generated after investments in tangible and intangible assets requiring reinvestment but before investments in intangible assets attributable to acquisitions. Lifco defines earnings before interest, tax and amortisation (EBITA) as operating profit before amortisation and impairment of intangible assets arising from acquisitions. In its financial reports, Lifco excludes acquisition costs and non-recurring items. This is indicated by an asterisk.
EBITA margin EBITA divided by net sales.
EBITDA EBITDA is a measure which Lifco considers relevant for investors who wish to understand the earnings generated before investments in non-current assets. Lifco defines earnings before interest, tax, depreciation and amortisation (EBITDA) as operating profit before depreciation, amortisation and impairment of tangible and intangible assets. In its financial reports, Lifco excludes acquisition costs and non-recurring items. This is indicated by an asterisk.
EBITDA margin EBITDA divided by net sales.
Net debt/equity ratio Net debt divided by equity.
Net debt[1] Lifco uses the alternative KPI net debt. Lifco considers that this is a useful additional KPI which allows users of the financial reports to assess the Group’s ability to pay dividends, make strategic investments and meet its financial obligations. Lifco defines the KPI as follows: current and non-current liabilities to credit institutions, bonds, interest-bearing pension provisions, liabilities related to call/put options and additional considerations relating to acquisitions as well as lease liabilities less cash and cash equivalents.
Earnings per share Profit after tax attributable to Parent Company shareholders, divided by the average number of shares outstanding.
Interest-bearing net debt Lifco uses the alternative KPI interest-bearing net debt. Lifco considers that this is a useful additional KPI which allows users of the financial reports to assess the Group’s ability to pay dividends, make strategic investments and meet its financial obligations. Lifco defines the KPI as follows: current and non-current liabilities to credit institutions, bonds as well as interest-bearing pension provisions less cash and cash equivalents.
Equity/assets ratio Equity divided by total assets (balance sheet total).
Capital employed Capital employed is a measure which Lifco uses for calculating the return on capital employed and for measuring how efficient the Group is. Lifco considers that capital employed is useful in helping users of the financial reports to understand how the Group finances itself. Lifco defines capital employed as total assets less cash and cash equivalents, interest-bearing pension provisions and non-interest-bearing liabilities with the exception of liabilities related to call/put options and additional considerations relating to acquisitions, calculated as the average of the last four quarters.
Capital employed excluding goodwill and other intangible assets Capital employed excluding goodwill and other intangible assets is a measure which Lifco uses for calculating the return on capital employed and for measuring how efficient the Group is. Lifco considers that capital employed excluding goodwill and other intangible assets is useful in helping users of the financial reports to understand the impact of goodwill and other intangible assets on that capital which requires a return. Lifco defines capital employed excluding goodwill and other intangible assets as total assets less cash and cash equivalents, interest-bearing pension provisions, non-interest-bearing liabilities with the exception of liabilities related to call/put options and additional considerations relating to acquisitions, goodwill and other intangible assets, calculated as the average of the last four quarters.

RECONCILIATION OF ALTERNATIVE KEY PERFORMANCE INDICATORS 

The interim report presents alternative key performance indicators for assessing the Group’s performance. The primary alternative KPIs presented in this interim report are EBITA, EBITDA, net debt and capital employed. Definitions of the alternative KPIs are presented on pages 18-19.

EBITA compared with financial statements in accordance with IFRS

SEK million  THREE MONTHS2019 THREE MONTHS2018 FULL YEAR2018
Operating profit  445 359 1,902
Amortisation of intangible assets arising from acquisitions 74 57 253
EBITA  519  416  2,155 
Acquisition costs and non-recurring items 68 2 13
EBITA before acquisition costs and non-recurring items.  587                   418            2,168 

EBITDA compared with financial statements in accordance with IFRS

SEK million  THREE MONTHS2019 THREE MONTHS2018 FULL YEAR2018
Operating profit  445 359 1,902
Depreciation of tangible assets 73 30 127
Amortisation of intangible assets 3 3 12
Amortisation of intangible assets arising from acquisitions 74 57 253
EBITDA  595  449  2,294 
Acquisition costs and non-recurring items 68 2 13
EBITDA before acquisition costs and non-recurring items.  663  451  2,307 

Net debt compared with financial statements in accordance with IFRS[2]

SEK million  31 Mar 2019 31 Mar 2018 31 Dec 2018
Non-current interest-bearing liabilities including pension provisions 1,887 1,055 1,813
Current interest-bearing liabilities 2,265 2,891 1,762
Cash and cash equivalents -348 -250 -405
Interest-bearing net debt  3,804  3,696  3,170 
Call/put options, additional considerations 709 281 515
Lease liability 447 - -
Net debt  4,960  3,977  3,685 

Capital employed and capital employed excluding goodwill and other intangible assets compared with financial statements in accordance with IFRS

SEK million 31 Mar 2019 31 Dec 2018 30 Sep 2018 30 Jun 2018
Total assets  15,793  13,823  14,109  13,567 
Cash and cash equivalents -348 -405 -374 -301
Interest-bearing pension provisions -34 -37 -37 -36
Non-interest-bearing liabilities -3,266 -2,985 -3,125 -2,899
Capital employed  12,145  10,396  10,573  10,331 
Goodwill and other intangible assets -9,886 -9,133 -9,322 -8,946
Capital employed excluding goodwill and other intangible assets  2,259  1,263  1,251  1,385 

Capital employed and capital employed excluding goodwill and other intangible assets calculated as the average of the last four quarters compared with financial statements in accordance with IFRS

SEK million Average Q1 2019 Q42018 Q3 2018 Q22018
Capital employed 10,861 12,145 10,396 10,573 10,331
Capital employed excluding goodwill and other intangible assets 1,540  2,259 1,263 1,251 1,385
Total
EBITA* 2,337  587 670 520 560
Return on capital employed  21.5% 
Return on capital employed excluding goodwill and other intangible assets  152% 

 


[1] New definition as of 1 January 2019.

[2] The key performance indicator was restated in accordance with the adjusted definition of net debt on page 18.

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About Us

Lifco offers a safe haven for small and medium-sized businesses. Lifco’s business concept is to acquire and develop market-leading niche businesses with the potential to deliver sustainable earnings growth and robust cash flows. Lifco is guided by a clear philosophy implying that the company has a long-term view on its holdings, a focus on profitability and a strongly decentralised organisation. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. At the end of 2017 the Lifco Group consisted of 146 operating companies in 29 countries. In 2018, Lifco reported EBITA of SEK 2,168 million on net sales of SEK 12.0 billion. The EBITA margin was 18.1 per cent. For more information, visit www.lifco.se.