Interim Report January-June 2022
INTERIM REPORT JANUARY – JUNE 2022
Reporting period January – June
- Net sales increased 25.8 per cent to SEK 10,530 (8,370) million. Organically, net sales grew by 12.9 per cent.
- EBITA increased 22.0 per cent to SEK 2,237 (1,834) million.
- The EBITA margin was 21.2 (21.9) per cent.
- Profit before tax grew 21.6 per cent to SEK 1,865 (1,534) million.
- Net profit for the period grew 21.5 per cent to SEK 1,399 (1,151) million.
- Earnings per share increased 20.8 per cent till SEK 3.02 (2.50).
- Cash flow from operating activities decreased 19.7 per cent to SEK 947 (1,179) million
- Five new businesses were consolidated during the period with total annual net sales of
about SEK 350 million.
Reporting period April – June
- Net sales increased 22.4 per cent to SEK 5,508 (4,501) million. Organically, net sales grew by 12.3 per cent.
- EBITA increased 19.8 per cent to SEK 1,221 (1,019) million.
- The EBITA margin was 22.2 (22.6) per cent.
- Profit before tax grew 18.6 per cent to SEK 1,027 (866) million.
- Net profit for the period grew 18.6 per cent to SEK 771 (650) million.
- Cash flow from operating activities decreased 27.2 per cent to SEK 625 (858) million.
Summary of financial performance
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Net sales | 10,530 | 8,370 | 25.8% | 5,508 | 4,501 | 22.4% | 19,640 | 12.4% | 17,480 |
| EBITA | 2,237 | 1,834 | 22.0% | 1,221 | 1,019 | 19.8% | 4,112 | 10.9% | 3,709 |
| EBITA margin | 21.2% | 21.9% | -0.7 | 22.2% | 22.6% | -0.4 | 20.9% | -0.3 | 21.2% |
| Profit before tax | 1,865 | 1,534 | 21.6% | 1,027 | 866 | 18.6% | 3,401 | 10.8% | 3,070 |
| Net profit for the period | 1,399 | 1,151 | 21.5% | 771 | 650 | 18.6% | 2,677 | 10.2% | 2,429 |
| Earnings per share | 3.02 | 2.50 | 20.8% | 1.66 | 1.41 | 17.7% | 5.78 | 9.9% | 5.26 |
| Return on capital employed | 22.3% | 22.7% | -0.4 | 22.3% | 22.7% | -0.4 | 22.3% | -0.2 | 22.5% |
| Return on capital employed excl. goodwill | 151% | 159% | -8 | 151% | 159% | -8 | 151% | -11 | 162% |
COMMENTS FROM THE CEO
Net sales increased by 25.8 per cent to SEK 10,530 (8,370) million in the first half of the year, driven by organic growth, acquisitions and positive exchange rate effects. The generally favourable market environment in Demolition & Tools and Systems Solutions was a strong contributing factor to organic growth of 12.9 per cent.
During the first half of the year, EBITA increased by 22.0 per cent to SEK 2,237 (1,834) million. The organic growth and acquisitions contributed to the increased EBITA. The EBITA margin amounted to 21.2 (21.9) per cent and was to some extent negatively affected by the fact that sales and marketing activities returning to pre-pandemic levels as of the third quarter of 2021. The margin was also impacted by certain operations still not having received full cross-compensation for higher costs.
Earnings per share increased by 20.8 per cent to SEK 3.02 (2.50) during the first six months of the year. Cash flow from operating activities amounted to SEK 947 (1,179) million. The lower cash flow is due primarily to increased inventory build-up as the result of high demand for a longer period and disruptions to the global supply chain that led to requirements for greater safety stock.
During the first half of the year, Lifco consolidated five acquisitions – two each in the Dental and Systems Solutions business areas and one in Demolition & Tools. The acquisitions in Dental pertain to Zenith Dental, a niche distributor of dental products in Denmark and Specialist Alarm Services in the UK that develops and manufactures staff attack alarms and nurse call systems for the healthcare sector. Operations in Demolition & Tools have expanded with the Italian company Cormidi, which manufactures mini loaders and mini dumpers. The Construction Materials division in the Systems Solutions business area was strengthened with the Norwegian company Cenec Tavlebygg, which manufactures low-voltage electrical supplies, and the Finnish company BCC Solutions, whose products include optical transceivers and fibre cabling. The acquisitions together will have a positive impact on Lifco’s results and financial position during the year.
One of Lifco’s fundamental principles is to be an owner with a very long-term perspective and we enter all companies with the intention of permanently remaining a principal owner. However, in May this year we decided to make an exception and sold all of our holdings to the management in the Estonian company Hekotek, which mainly sells sawmill equipment to Russia.
Lifco’s financial position remains strong: interest-bearing net debt amounted to 1.3 times EBITDA at 30 June 2022, which is well in line with our target of interest-bearing net debt of a maximum of three times EBITDA. This means that Lifco possesses the financial scope to make additional acquisitions.
Per Waldemarson
President and CEO
GROUP PERFORMANCE IN JANUARY – JUNE
Sales increased 25.8 per cent to SEK 10,530 (8,370) million. Organic growth was 12.9 per cent, acquisitions contributed 9.3 per cent while changes in exchange rates had a positive impact of 4.2 per cent. During the first half of the year, the assets of the Danish company Zenith Dental were consolidated as well as the majority of the Finnish company BCC Solutions, the Norwegian company Cenec Tavlebygg, the Italian company Cormidi and the British company Specialist Alarm Services. The divestment of the Estonian company Hekotek, which mainly sells sawmill equipment to Russia, impacted net sales negatively by 0.6 per cent.
EBITA increased 22.0 per cent to SEK 2,237 (1,834) million. The organic growth and acquisitions contributed to the EBITA increase. The EBITA margin amounted to 21.2 (21.9) per cent and was to some extent negatively affected by sales and marketing activities returning to pre-pandemic levels as of the third quarter of 2021. The margin was also impacted by certain operations still not having received full cross-compensation for higher costs.
Foreign exchange gains added 3.4 per cent to EBITA. During the period, 40 (39) per cent of EBITA was generated in EUR, 25 (25) per cent in SEK, 12 (12) per cent in NOK, 7 (7) per cent in GBP, 6 (5) per cent in DKK, 5 (5) per cent in USD and 5 (7) per cent in other currencies.
Net financial items were SEK -39 (-34) million.
Profit before tax grew by 21.6 per cent to SEK 1,865 (1,534) million and net profit for the period increased by 21.5 per cent to SEK 1,399 (1,151) million.
Average capital employed excluding goodwill increased by SEK 431 million during the first half of
the year, to SEK 2,725 million at 30 June 2022, compared with SEK 2,294 million at 31 December 2021. EBITA in relation to average capital employed excluding goodwill declined during the period to 151 per cent from 162 per cent at year-end.
The Group’s net debt increased by SEK 1,316 million from 31 December 2021 to SEK 8,429 million at 30 June 2022, of which liabilities related to put/call options and additional considerations for acquisitions increased SEK 175 million since year-end to SEK 1,832 million. Interest-bearing net debt increased by SEK 1,110 million since year-end and amounted to SEK 5,713 million at 30 June 2022.
The net debt/equity ratio at 30 June 2022 was 0.7 and was unchanged since year-end. Net debt/EBITDA at 31 December 2021 increased to 1.9 times from 1.7 times. Interest-bearing net debt/EBITDA increased to 1.3 times from 1.1 times at year-end. At period-end, 54 (45) per cent of the Group’s interest-bearing liabilities were denominated in EUR.
Cash flow from operating activities decreased 19.7 per cent to SEK 947 (1,179) million in the first half of the year, and was impacted by higher inventory build-up and increased accounts receivable as a result of the organic growth. Cash flow from investing activities was SEK -1,072 (-1,671) million, which was mainly attributable to acquisitions.
GROUP PERFORMANCE IN THE SECOND QUARTER
Sales increased by 22.4 per cent to SEK 5,508 (4,501) million in the second quarter. Organic growth contributed 12.3 per cent and acquisitions 7.2 per cent, while exchange rate effects had a positive impact of 4.0 per cent. The divestment of the Estonian company Hekotek, which mainly sells sawmill equipment to Russia, impacted net sales negatively by 1.1 per cent.
EBITA increased 19.8 per cent to SEK 1,221 (1,019) million. The organic growth and acquisitions contributed to the EBITA increase. The EBITA margin amounted to 22.2 (22.6) per cent and was to some extent negatively affected by sales and marketing activities returning to pre-pandemic levels as of the third quarter of 2021. The margin was also impacted by certain operations still not having received full cross-compensation for higher costs.
Foreign exchange gains added 3.4 per cent to EBITA. During the second quarter, 38 (37) per cent of EBITA was generated in EUR, 25 (26) per cent in SEK and 12 (13) per cent in NOK, 6 (8) per cent in GBP, 5 (5) per cent in USD, 7 (4) per cent in DKK and 7 (7) per cent in other currencies.
Net financial items were SEK -22 (-20) million.
Profit before tax grew by 18.6 per cent to SEK 1,027 (866) million. Net profit for the period grew 18.6 per cent to SEK 771 (650) million.
Average capital employed excluding goodwill increased by SEK 277 million to SEK 2,725 million at 30 June 2022, compared with SEK 2,448 million at 31 March 2022. EBITA relative to average capital employed excluding goodwill decreased from 160 per cent at 31 March 2022 to 151 percent at 30 June 2022.
From 31 March 2022, the Group’s net debt increased by SEK 719 million to SEK 8,429 million. At the Annual General Meeting on 29 April 2022, the dividend for the 2021 financial year was set at SEK 1.50 per share. The total dividend to shareholders for the 2021 financial year was SEK 681.3 million, and was paid on 6 May 2022.
Cash flow from operating activities decreased 27.2 per cent to SEK 625 (858) million, mainly on the back of higher inventory build-up and increased accounts receivable as a result of the organic growth. Cash flow from investing activities was SEK -498 (-799) million, which was attributable to acquisitions and investments.
FINANCIAL PERFORMANCE – BUSINESS AREAS
Dental
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Net sales | 2,649 | 2,656 | -0.3% | 1,343 | 1,317 | 2.0% | 5,116 | -0.1% | 5,123 |
| EBITA | 521 | 600 | -13.2% | 266 | 297 | -10.4% | 1,001 | -7.3% | 1,080 |
| EBITA margin | 19.7% | 22.6% | -2.9 | 19.8% | 22.6% | -2.8 | 19.6% | -1.5 | 21.1% |
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.
Dental’s sales decreased by 0.3 per cent to SEK 2,649 (2,656) million during the first half of the year. Production of dental prosthetics in China was impacted by the pandemic in the first quarter. Due to these production disruptions, sales were slightly lower than normal in the second quarter as well.
EBITA declined by 13.2 per cent during the period to SEK 521 (600) million and the EBITA margin was 19.7 (22.6) per cent. Profitability was negatively impacted by the production disruptions in China and sales and marketing activities returning to pre-pandemic levels from the third quarter of 2021. The margin was also impacted by certain operations still not having received full cross-compensation for higher costs.
In January 2022, the assets of the Danish company Zenith Dental were consolidated. The company is a niche distributor of dental products in Denmark and generated net sales of around DKK 21 million in 2020. In March 2022, the majority of the shares of the British company Specialist Alarm Services Ltd were consolidated. The company develops and manufactures staff attack alarms and nurse call systems for the healthcare sector. Specialist Alarm Services had a turnover of around GBP 3.9 million in 2021 and has 27 employees.
Demolition & Tools
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Net sales | 2,989 | 2,226 | 34.3% | 1,651 | 1,311 | 25.9% | 5,464 | 16.2% | 4,701 |
| EBITA | 769 | 601 | 28.0% | 450 | 369 | 22.0% | 1,429 | 13.3% | 1,261 |
| EBITA margin | 25.7% | 27.0% | -1.3 | 27.3% | 28.1% | -0.8 | 26.2% | -0.6 | 26.8% |
The Demolition & Tools business area 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 may fluctuate between quarters due to single, major special orders and changes to the product mix.
Sales increased by 34.3 per cent to SEK 2,989 (2,226) million in the first half of the year, driven by organic growth and acquisitions. The market situation during the first half of the year was generally very strong.
EBITA increased by 28.0 per cent to SEK 769 (601) million. The organic growth and acquisitions contributed to the EBITA increase. The EBITA margin amounted to 24.7 (27.0) per cent and was to some extent negatively affected by sales and marketing activities returning to pre-pandemic levels as of the third quarter of 2021. The margin was also impacted by certain operations still not having received full cross-compensation for higher costs. The margin in the year-earlier period was positively affected by profitable special orders.
The majority of shares of the Italian company Cormidi were consolidated as of March 2022, a leading manufacturer of mini dumpers and mini loaders. The company had a turnover of around EUR 13 million in 2020 and has 45 employees.
Systems Solutions
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Net sales | 4,892 | 3,488 | 40.3% | 2,514 | 1,873 | 34.2% | 9,060 | 18.3% | 7,656 |
| EBITA | 1,023 | 695 | 47.2% | 543 | 386 | 40.7% | 1,822 | 22.0% | 1,494 |
| EBITA margin | 20.9% | 19.9% | 1.0 | 21.6% | 20.6% | 1.0 | 20.1% | 0.6 | 19.5% |
Through its operating units, the Systems Solutions business area operates in industries offering systems solutions. Systems Solutions is divided into five divisions: Construction Materials, Contract Manufacturing, Environmental Technology, Service and Distribution, and Forest.
Sales in Systems Solutions increased by 40.3 per cent to SEK 4,892 (3,488) million during the first half of the year, mainly on the back of organic growth in all divisions and acquisitions. The market for Systems Solutions was healthy overall during the first half of the year.
EBITA increased during the period by 47.2 per cent to SEK 1,023 (695) million and the EBITA margin increased by 1.0 percentage point to 20.9 (19.9) per cent. The organic growth and acquisitions contributed to the EBITA increase and margin improvement.
Construction Materials reported a healthy sales trend for the first six months of the year with improved profitability.
Contract Manufacturing reported a healthy sales trend for the six-month period with a slight decline in profitability.
Environmental Technology reported a healthy performance in sales and profitability in the first half of the year.
Service and Distribution reported a healthy sales trend in the six-month period with improved profitability, positively impacted by acquisitions.
Forest reported a healthy sales trend with somewhat weaker profitability compared with the first half of last year. Sales and earnings may vary substantially between the quarters depending on the outcomes in the project-related component of the business. All of the shares in the Estonian company Hekotek, which sells sawmill equipment primarily in Russia, were divested in May 2022. For more information, see the section “Divestment” below.
In the Construction Materials division, the majority of shares of the Norwegian company Cenec Tavlebygg AS, which manufactures low-voltage electrical supplies, were consolidated as of January 2022. The company had net sales of about NOK 17 million in 2020 and has eight employees. In the Construction Materials division, the majority of shares of the Finnish company BCC Solutions, a supplier of optical transceivers, fibre cabling, multiplexers, media converters, test and measurement instruments, for the Finnish fibre installation market, were consolidated as of May 2022. The company had net sales of about EUR 11 million in 2021 and has nine employees.
ACQUISITIONS
Lifco made the following consolidations in the first six months of the year:
| Consolidated from month | Acquisitions | Business area | Net sales | Employees |
| January | Zenith Dental | Dental | DKK 21m1 | - |
| January | Cenec Tavlebygg | Systems Solutions | NOK 17m1 | 8 |
| March | Cormidi | Demolition & Tools | EUR 13m1 | 45 |
| March | Specialist Alarm Services | Dental | GBP 3.9m | 27 |
| May | BCC Solutions | Systems Solutions | EUR 11m | 9 |
| 1 Refers to net sales in 2020. | ||||
Further information on the acquisitions is provided on page 16. 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.
DIVESTMENT
All of the shares in the Estonian company Hekotek, which sells sawmill equipment primarily in Russia, were divested in May 2022. Hekotek has 130 employees and sales in 2021 were approximately EUR 40 million. The company was consolidated in the Systems Solutions business area, Forest division. The buyers are management of the company, who owned 17.5 per cent of the shares before the transaction. The divestment was not significant for the Group’s or the Forest division’s financial position and did not have a significant impact on Lifco’s earnings or financial position during the year.
OTHER INFORMATION
Employees
The average number of employees was 6,154 (5,784) in the first half of the year. At the end of the period, the number of employees was 6,216 (6,014). About 90 employees joined the company through acquisitions in the six-month period.
Ingvar Ljungqvist, Head of Acquisitions, left Lifco on 7 July 2022 at his own request. There are several other employees in the Lifco Group who work full-time on acquisitions and these individuals will continue to report directly to the CEO.
Events after the end of the reporting period
Lifco announced on 5 May 2022 that the company had signed an agreement to acquire a majority of the shares in the Italian company Trevi Benne S.p.A. The company is a manufacturer of excavator tools and attachments used in demolition, scrap handling, earthmoving and forestry. Trevi Benne reported net sales of about EUR 37 million in 2021 and has 105 employees. The company will be consolidated in the Demolition & Tools business area. Consolidation is expected to take place in the third quarter 2022.
Lifco announced on 13 June 2022 that the company had signed an agreement to acquire a majority of the shares in the Norwegian company Oslo Dental AS. The company sells equipment and services to dentists in Norway. Oslo Dental reported net sales of about NOK 27 million in 2021 and has five employees. The company will be consolidated in the Dental business area in July 2022.
Related party transactions
No significant transactions with related parties took place during the period.
Annual General Meeting 2022
The 2022 Annual General Meeting was held on 29 April in Stockholm. With the support of the temporary law on exemptions to facilitate the conduct of general meetings, shareholders had also been offered the opportunity to exercise their voting rights by post. The main resolutions of the Meeting were as follows: • The dividend for the 2021 financial year was set at SEK 1.50 per share. The record date for the rights to dividends was set at 3 Mat 2022, with a payment date of 6 May 2022. • Carl Bennet, Ulrika Dellby, Annika Espander, Dan Frohm, Erik Gabrielson, Ulf Grunander, Johan Stern, Caroline af Ugglas, Axel Wachtmeister and Per Waldemarson were re-elected members of the Board. Carl Bennet was re-elected Chairman of the Board. • The registered public accounting firm PricewaterhouseCoopers AB was re-elected as the company’s auditors for a one-year term. The new auditor-in-charge is Cecilia Andrén Dorselius. • Fees for the Board and auditors were adopted, as were principles for the work of the Nomination Committee. • The Board’s remuneration report and proposed guidelines on remuneration of senior executives were approved.
Risks and uncertainties
The risk factors which have the biggest impact for Lifco are global macroeconomic factors, 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.
Lifco is monitoring developments in the conflict in Ukraine and currently finds it difficult to assess the effect of sanctions against Russia and the implications that the conflict could have on the economic situation in Europe. Following the divestment of Hekotek in May 2022, sales to Russia in 2021 amounted to SEK 131 million or 0.7 per cent of the Group’s sales; these mainly refer to sales in the Forest division in the Systems Solutions business area. The Group’s sales to Ukraine in 2021 amounted to SEK 0.3 million.
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 2021 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 2021 Annual Report and should be read in conjunction with these.
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 six-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, 15 July 2022
| Carl BennetChairman of the Board | Ulrika DellbyDirector | Dan FrohmDirector |
| Erik Gabrielson Director |
Ulf GrunanderDirector | Annika Espander Director |
| Tobias NordinDirector, employee representative | Johan SternVice Chairman | Caroline af UgglasDirector |
| Axel WachtmeisterDirector | Per WaldemarsonPresident and CEO, Director | Peter WibergDirector,employee representative |
FINANCIAL CALENDAR
The report for the third quarter will be published on 21 October.
The 2022 year-end report and the report for the fourth quarter will be published on 3 February 2023.
FURTHER INFORMATION
Media and investor relations: Åse Lindskog, ir@lifco.se, telephone: +46 730 24 48 72.
ONLINE PRESENTATION
An online presentation with Per Waldemarson, CEO, and Therése Hoffman, CFO, will take place on Friday, 15 July at 9.00 a.m. CEST. The presentation can be listened to online or by calling one of the telephone numbers below. The presentation will be followed by a question-and-answer session.
Link to the presentation: https://tv.streamfabriken.com/lifco-q2-2022
Telephone numbers:
Sweden +46 8 505 163 86
UK +44 2031 98 48 84
US +1 412 317 63 00
The PIN code for all numbers is 6562186#
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 198 operating companies in 31 countries. In 2021, Lifco reported EBITA of SEK 3.7 billion on net sales of SEK 17.5 billion. The EBITA margin was 21.2 per cent. Read more at www.lifco.se.
| This information constitutes information that Lifco AB is required to publish under the EU’sMarket Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication through the aforementioned contact person on 15 July 2022, at 7.30 a.m. CEST. |
CONDENSED CONSOLIDATED INCOME STATEMENT
| SIX MONTHS | SECOND QUARTER | FULL YEAR | |||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | 2021 |
| Net sales | 10,530 | 8,370 | 25.8% | 5,508 | 4,501 | 22.4% | 17,480 |
| Cost of goods sold | -6,206 | -4,814 | 28.9% | -3,223 | -2,587 | 24.6% | -10,150 |
| Gross profit | 4,324 | 3,556 | 21.6% | 2,285 | 1,914 | 19.4% | 7,330 |
| Selling expenses | -1,085 | -845 | 28.4% | -565 | -445 | 27.0% | -1,788 |
| Administrative expenses | -1,254 | -1,058 | 18.5% | -635 | -536 | 18.5% | -2,249 |
| Development costs | -80 | -71 | 12.7% | -41 | -37 | 10.8% | -140 |
| Other income and expenses | -1 | -14 | -92.9% | 5 | -10 | -150% | -12 |
| Operating profit | 1,904 | 1,568 | 21.4% | 1,049 | 886 | 18.4% | 3,141 |
| Net financial items | -39 | -34 | 14.7% | -22 | -20 | 10.0% | -71 |
| Profit before tax | 1,865 | 1,534 | 21.6% | 1,027 | 866 | 18.6% | 3,070 |
| Tax | -466 | -383 | 21.7% | -256 | -216 | 18.5% | -641 |
| Net profit for the period | 1,399 | 1,151 | 21.5% | 771 | 650 | 18.6% | 2,429 |
| Profit attributable to: | |||||||
| Parent Company shareholders | 1,376 | 1,137 | 21.0% | 757 | 644 | 17.5% | 2,390 |
| Non-controlling interests | 23 | 14 | 64.3% | 14 | 6 | 133% | 39 |
| Earnings per share before and after dilution for the period, attributable to Parent Company shareholders | 3.02 | 2.50 | 20.8% | 1.66 | 1.41 | 17.7% | 5.26 |
| EBITA | 2,237 | 1,834 | 22.0% | 1,221 | 1,019 | 19.8% | 3,709 |
| Depreciation of tangible assets | 211 | 190 | 11.1% | 107 | 97 | 10.3% | 393 |
| Amortisation of intangible assets | 10 | 8 | 25.0% | 5 | 5 | - | 20 |
| Amortisation of intangible assets arising from acquisitions | 321 | 243 | 32.1% | 164 | 123 | 33.3% | 526 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| SIX MONTHS | SECOND QUARTER | FULL YEAR2021 | |||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | |
| Net profit for the period | 1,399 | 1,151 | 21.5% | 771 | 650 | 18.6% | 2,429 |
| Other comprehensive income | |||||||
| Items which can later be reclassified to profit or loss: | |||||||
| Hedge of net investment | -29 | -33 | -12.1% | 6 | 20 | -70.0% | -53 |
| Translation differences | 441 | 209 | 111% | 265 | -143 | -285% | 426 |
| Tax related to other comprehensive income | 6 | 7 | -14.3% | -1 | -5 | -80.0% | 12 |
| Total comprehensive income for the period | 1,817 | 1,334 | 36.2% | 1,041 | 522 | 99.4% | 2,814 |
| Comprehensive income attributable to: | |||||||
| Parent Company shareholders | 1,789 | 1,318 | 35.7% | 1,025 | 518 | 97.9% | 2,770 |
| Non-controlling interests | 28 | 16 | 75.0% | 16 | 4 | 300% | 44 |
| 1,817 | 1,334 | 36.2% | 1,041 | 522 | 99.4% | 2,814 | |
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 and Forest.
NET SALES TO EXTERNAL CUSTOMERS
No sales are made between the segments.
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Dental | 2,649 | 2,656 | -0.3% | 1,343 | 1,317 | 2.0% | 5,116 | -0.1% | 5,123 |
| Demolition & Tools | 2,989 | 2,226 | 34.3% | 1,651 | 1,311 | 25.9% | 5,464 | 16.2% | 4,701 |
| Systems Solutions | 4,892 | 3,488 | 40.3% | 2,514 | 1,873 | 34.2% | 9,060 | 18.3% | 7,656 |
| Group | 10,530 | 8,370 | 25.8% | 5,508 | 4,501 | 22.4% | 19,640 | 12.4% | 17,480 |
Net sales by type of income:
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Dental products | 2,649 | 2,656 | -0.3% | 1,343 | 1,317 | 2.0% | 5,116 | -0.1% | 5,123 |
| Machinery and tools | 2,989 | 2,226 | 34.3% | 1,651 | 1,311 | 25.9% | 5,464 | 16.2% | 4,701 |
| Construction Materials | 757 | 603 | 25.5% | 389 | 323 | 20.4% | 1,421 | 12.2% | 1,267 |
| Contract Manufacturing | 953 | 687 | 38.7% | 525 | 369 | 42.3% | 1,792 | 17.4% | 1,526 |
| Environmental Technology | 1,355 | 1,000 | 35.5% | 714 | 546 | 30.8% | 2,430 | 17.1% | 2,075 |
| Service and Distribution | 1,427 | 888 | 60.7% | 720 | 454 | 58.6% | 2,562 | 26.6% | 2,023 |
| Forest | 400 | 310 | 29.0% | 166 | 181 | -8.3% | 855 | 11.8% | 765 |
| Group | 10,530 | 8,370 | 25.8% | 5,508 | 4,501 | 22.4% | 19,640 | 12.4% | 17,480 |
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:
| SIX MONTHS | SECOND QUARTER | Rolling 12 months | FULL YEAR | ||||||
| SEK million | 2022 | 2021 | change | 2022 | 2021 | change | change | 2021 | |
| Dental | 521 | 600 | -13.2% | 266 | 297 | -10.4% | 1,001 | -7.3% | 1,080 |
| Demolition & Tools | 769 | 601 | 28.0% | 450 | 369 | 22.0% | 1,429 | 13.3% | 1,261 |
| Systems Solutions | 1,023 | 695 | 47.2% | 543 | 386 | 40.7% | 1,822 | 22.0% | 1,494 |
| Central Group functions | -76 | -62 | 22.6% | -38 | -33 | 15.2% | -140 | 11.1% | -126 |
| EBITA before acquisition costs |
2,237 | 1,834 | 22.0% | 1,221 | 1,019 | 19.8% | 4,112 | 10.9% | 3,709 |
| Acquisition costs | -12 | -23 | -47.8% | -8 | -10 | -20.0% | -31 | -26.2% | -42 |
| EBITA | 2,225 | 1,811 | 22.9% | 1,213 | 1,009 | 20.2% | 4,081 | 11.3% | 3,667 |
| Amortisation of intangibleassets arising from acquisitions | -321 | -243 | 32.1% | -164 | -123 | 33.3% | -604 | 14.8% | -526 |
| Net financial items | -39 | -34 | 14.7% | -22 | -20 | 10.0% | -76 | 7.0% | -71 |
| Profit before tax | 1,865 | 1,534 | 21.6% | 1,027 | 866 | 18.6% | 3,401 | 10.8% | 3,070 |
CONDENSED CONSOLIDATED BALANCE SHEET
| SEK million | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
| ASSETS | |||
| Intangible assets | 16,624 | 13,513 | 15,497 |
| Tangible assets | 2,101 | 1,774 | 2,052 |
| Financial assets | 357 | 246 | 320 |
| Inventories | 3,542 | 2,424 | 2,821 |
| Accounts receivable - trade | 2,791 | 2,160 | 2,257 |
| Current receivables | 626 | 486 | 420 |
| Cash and cash equivalents | 1,255 | 1,178 | 1,509 |
| TOTAL ASSETS | 27,296 | 21,781 | 24,876 |
| EQUITY AND LIABILITIES | |||
| Equity | 11,678 | 9,350 | 10,756 |
| Non-current interest-bearing liabilities incl. pension provisions | 3,974 | 2,450 | 3,228 |
| Other non-current liabilities and provisions | 3,556 | 2,533 | 3,144 |
| Current interest-bearing liabilities | 3,878 | 3,903 | 3,737 |
| Accounts payable - trade | 1,658 | 1,183 | 1,294 |
| Other current liabilities | 2,552 | 2,362 | 2,717 |
| TOTAL EQUITY AND LIABILITIES | 27,296 | 21,781 | 24,876 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Attributable to Parent Company shareholders |
| SEK million | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
| Opening equity | 10,645 | 8,614 | 8,614 |
| Comprehensive income for the period | 1,789 | 1,318 | 2,770 |
| Change in value, owner transactions | -159 | -123 | -194 |
| Dividend | -681 | -545 | -545 |
| Closing equity | 11,594 | 9,264 | 10,645 |
| Equity attributable to: | |||
| Parent Company shareholders | 11,594 | 9,264 | 10,645 |
| Non-controlling interests | 84 | 86 | 111 |
| 11,678 | 9,350 | 10,756 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
| SIX MONTHS | SECOND QUARTER | FULL YEAR | |||
| SEK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Operating activities | |||||
| Operating profit | 1,904 | 1,568 | 1,049 | 886 | 3,141 |
| Depreciation of right-of-use assets | 98 | 83 | 51 | 43 | 173 |
| Other non-cash items | 444 | 358 | 225 | 182 | 766 |
| Interest and financial items, net | -39 | -34 | -22 | -20 | -71 |
| Tax paid | -477 | -362 | -235 | -188 | -684 |
| Cash flow before changes in working capital | 1,930 | 1,613 | 1,068 | 903 | 3,325 |
| Changes in working capital | |||||
| Inventories | -801 | -343 | -321 | -68 | -627 |
| Current receivables | -601 | -436 | -217 | -98 | -463 |
| Current liabilities | 419 | 345 | 95 | 121 | 703 |
| Cash flow from operating activities | 947 | 1,179 | 625 | 858 | 2,938 |
| Business acquisitions and sales, net | -948 | -1,543 | -443 | -724 | -2,990 |
| Net investment in tangible assets | -112 | -115 | -51 | -67 | -266 |
| Net investment in intangible assets | -12 | -13 | -4 | -8 | -31 |
| Cash flow from investing activities | -1,072 | -1,671 | -498 | -799 | -3,287 |
| Borrowings/repayment of borrowings, net | 576 | 1,082 | 390 | 498 | 1,216 |
| Dividends paid | -681 | -545 | -681 | -545 | -545 |
| Dividends paid to non-controlling interests | -113 | -80 | -104 | -75 | -98 |
| Cash flow from financing activities | -218 | 457 | -395 | -122 | 573 |
| Cash flow for the period | -343 | -35 | -268 | -63 | 224 |
| Cash and cash equivalents at beginning of period | 1,509 | 1,170 | 1,474 | 1,266 | 1,170 |
| Translation differences | 89 | 43 | 49 | -25 | 115 |
| Cash and cash equivalents at end of period | 1,255 | 1,178 | 1,255 | 1,178 | 1,509 |
ACQUISITIONS IN 2022
Five new businesses were consolidated in the first six months of the year. The acquisition pertains to the assets of the Danish company Zenith Dental as well as the majority of the Finnish company BCC Solutions, the Norwegian company Cenec Tavlebygg, the Italian company Cormidi and the British company Specialist Alarm Services.
The purchase price allocation includes all acquisitions consolidated during the first six months of the year.
Acquisition-related expenses of SEK 12 million are included in administrative expenses in the consolidated income statement for the first half of the year. Since the respective consolidation dates, the acquired companies have added SEK 111 million to consolidated net sales and SEK 26 million to EBITA. If the businesses had been consolidated as of 1 January 2022, net sales for the year would have increased by a further SEK 74 million and EBITA would have increased by a further SEK 22 million.
| Acquired net assets | |||
| Net assets, SEK million | Carrying amount | Value adjustment | Fair value |
| Trademarks, customer relationships, licences | - | 529 | 529 |
| Tangible assets | 27 | - | 27 |
| Inventories, accounts receivable and other receivables | 122 | -3 | 119 |
| Accounts payable and other liabilities | -101 | -125 | -226 |
| Cash and cash equivalents | 62 | - | 62 |
| Total net assets | 110 | 401 | 511 |
| Goodwill | - | 404 | 404 |
| Total net assets | 110 | 805 | 915 |
| Effect on cash flow, SEK million | |||
| Consideration | 915 | ||
| Considerations not paid | -240 | ||
| Cash and cash equivalents in acquired companies | -62 | ||
| Consideration paid relating to acquisitions from previous years | 231 | ||
| Total cash flow effect | 844 | ||
FINANCIAL INSTRUMENTS
| SEK million | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
| Financial assets at amortised cost | |||
| Accounts receivable - trade | 2,791 | 2,160 | 2,257 |
| Other non-current financial receivables | 12 | 27 | 13 |
| Cash and cash equivalents | 1,255 | 1,178 | 1,509 |
| Total | 4,058 | 3,365 | 3,779 |
| Liabilities at fair value | |||
| Other liabilities1 | 1,832 | 1,348 | 1,657 |
| Financial liabilities at amortised cost | |||
| Interest-bearing borrowings | 7,791 | 6,308 | 6,908 |
| Accounts payable - trade | 1,658 | 1,183 | 1,294 |
| Total | 11,281 | 8,839 | 9,859 |
1 Other liabilities classified as financial instruments refer to mandatory put/call 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 | 202230 JUNE | 202131 DEC | 202130 JUNE |
| Net sales, SEK million | 19,640 | 17,480 | 15,432 |
| Change in net sales, % | 12.4 | 26.8 | 12.0 |
| EBITA, SEK million | 4,112 | 3,709 | 3,315 |
| EBITA margin, % | 20.9 | 21.2 | 21.5 |
| EBITDA, SEK million | 4,548 | 4,122 | 3,689 |
| EBITDA margin, % | 23.2 | 23.6 | 23.9 |
| Capital employed, SEK million | 18,442 | 16,447 | 14,614 |
| Capital employed excl. goodwill and other intangible assets, SEK million | 2,725 | 2,294 | 2,079 |
| Return on capital employed, % | 22.3 | 22.5 | 22.7 |
| Return on capital employed excl. goodwill, % | 151 | 162 | 159 |
| Return on equity, % | 24.4 | 24.6 | 23.4 |
| Net debt, SEK million | 8,429 | 7,113 | 6,522 |
| Net debt/equity ratio, times | 0.7 | 0.7 | 0.7 |
| Net debt/EBITDA, times | 1.9 | 1.7 | 1.8 |
| Interest-bearing net debt, SEK million | 5,713 | 4,603 | 4,486 |
| Interest-bearing net debt/EBITDA, times | 1.3 | 1.1 | 1.2 |
| Equity/assets ratio, % | 42.8 | 43.2 | 42.9 |
| Number of shares, thousand | 454,216 | 454,216 | 454,216 |
| Average number of employees | 6,154 | 5,995 | 5,784 |
CONDENSED PARENT COMPANY INCOME STATEMENT
| SIX MONTHS | SECOND QUARTER | FULL YEAR | |||
| SEK million | 2022 | 2021 | 2022 | 2021 | 2021 |
| Administrative expenses | -59 | -59 | -24 | -31 | -119 |
| Other operating income1 | - | - | - | - | 170 |
| Operating profit/loss | -59 | -59 | -24 | -31 | 51 |
| Net financial items2 | 501 | 658 | 506 | 680 | 711 |
| Profit after financial items | 442 | 599 | 482 | 649 | 762 |
| Appropriations | - | - | - | - | -54 |
| Tax | 7 | 5 | -1 | -5 | -8 |
| Net profit for the period | 449 | 604 | 481 | 644 | 700 |
1 Invoicing of Group-wide services.
2 Net financial items include SEK 476 (623) million in dividends received during the six-month period.
CONDENSED PARENT COMPANY BALANCE SHEET
| SEK million | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
| ASSETS | |||
| Financial assets | 6,338 | 5,842 | 5,946 |
| Current receivables | 7,942 | 6,940 | 8,333 |
| Cash and cash equivalents | 481 | 345 | 584 |
| TOTAL ASSETS | 14,761 | 13,127 | 14,863 |
| EQUITY AND LIABILITIES | |||
| Equity | 3,654 | 3,790 | 3,886 |
| Untaxed reserves | 122 | 75 | 122 |
| Provisions | - | 15 | 2 |
| Non-current interest-bearing liabilities | 3,111 | 1,785 | 2,363 |
| Current interest-bearing liabilities | 3,642 | 3,689 | 3,522 |
| Current non-interest-bearing liabilities | 4,232 | 3,773 | 4,968 |
| TOTAL EQUITY AND LIABILITIES | 14,761 | 13,127 | 14,863 |
| Pledged assets | - | - | - |
| Contingent liabilities | 202 | 207 | 241 |
DEFINITIONS AND OBJECTIVES
| Return on equity | Net profit for the period divided by average equity. |
| Return on capital employed | EBITA before acquisition costs divided by capital employed. |
| Return on capital employed excluding goodwill and other intangible assets | EBITA before acquisition costs 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 excluding acquisition costs. |
| 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 excluding acquisition costs. |
| EBITDA margin | EBITDA divided by net sales. |
| Net debt/equity ratio | Net debt divided by equity. |
| Net debt | 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 put/call 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 put/call 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 put/call 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 19-20.
EBITA compared with financial statements in accordance with IFRS
| SEK million | SIX MONTHS2022 | SIX MONTHS2021 | FULL YEAR2021 |
| 1,904 | |||
| Operating profit/loss | 1,568 | 3,141 | |
| Amortisation of intangible assets arising from acquisitions | 321 | 243 | 526 |
| EBITA | 2,225 | 1,811 | 3,667 |
| Acquisition costs | 12 | 23 | 42 |
| EBITA before acquisition costs | 2,237 | 1,834 | 3,709 |
EBITDA compared with financial statements in accordance with IFRS
| SEK million | SIX MONTHS2022 | SIX MONTHS2021 | FULL YEAR2021 |
| 1,904 | |||
| Operating profit/loss | 1,568 | 3,141 | |
| Depreciation of tangible assets | 211 | 190 | 393 |
| Amortisation of intangible assets | 10 | 8 | 20 |
| Amortisation of intangible assets arising from acquisitions | 321 | 243 | 526 |
| EBITDA | 2,446 | 2,009 | 4,080 |
| Acquisition costs | 12 | 23 | 42 |
| EBITDA before acquisition costs | 2,458 | 2,032 | 4,122 |
Net debt compared with financial statements in accordance with IFRS
| SEK million | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
| Non-current interest-bearing liabilities including pension provisions | 3,284 | 1,916 | 2,554 |
| Current interest-bearing liabilities | 3,684 | 3,748 | 3,558 |
| Cash and cash equivalents | -1,255 | -1,178 | -1,509 |
| Interest-bearing net debt | 5,713 | 4,486 | 4,603 |
| Put/call options, additional considerations | 1,832 | 1,348 | 1,657 |
| Lease liability | 884 | 688 | 853 |
| Net debt | 8,429 | 6,522 | 7,113 |
Capital employed and capital employed excluding goodwill and other intangible assets compared with financial statements in accordance with IFRS
| SEK million | 30 Jun 2022 | 31 Mar 2022 | 31 Dec 2021 | 30 Sep 2021 |
| Total assets | 27,296 | 26,712 | 24,876 | 23,543 |
| Cash and cash equivalents | -1,255 | -1,474 | -1,509 | -1,450 |
| Interest-bearing pension provisions | -61 | -57 | -57 | -57 |
| Non-interest-bearing liabilities | -5,934 | -6,059 | -5,497 | -5,248 |
| Capital employed | 20,046 | 19,122 | 17,813 | 16,788 |
| Goodwill and other intangible assets | -16,624 | -16,234 | -15,497 | -14,513 |
| Capital employed excluding goodwill and other intangible assets | 3,422 | 2,888 | 2,316 | 2,275 |
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 | Q2 2022 | Q12022 | Q42021 | Q32021 | |
| Capital employed | 18,442 | 20,046 | 19,122 | 17,813 | 16,788 | |
| Capital employed excluding goodwill and other intangible assets | 2,725 | 3,422 | 2,888 | 2,316 | 2,275 | |
| Total | ||||||
| EBITA | 4,112 | 1,221 | 1,016 | 1,013 | 862 | |
| Return on capital employed | 22.3% | |||||
| Return on capital employed excluding goodwill and other intangible assets | 151% |
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