Slide 1: Q4 2017
Q4 2017 MÅRTEN ANDERSSON, CEO MATTIAS BJÖRK, CFO 22 FEBRUARY, 2018
Slide 2: Financial development in Q4 2017
FINANCIAL DEVELOPMENT IN Q4 2017. Net sales EBITA SEK 1,517m SEK 142m (780) (73) Operating cash flow Q4 SEK 364m (139) 2
Slide 3: Financial development full year 2017
FINANCIAL DEVELOPMENT FULL YEAR 2017. Net sales EBITA SEK 4,356m SEK 377m (3,206 FY2016) (318 FY2016) Operating Organic cash flow EBITA FULL YEAR 2017 SEK growth 513m -18% (344 FY2016) 3
Slide 4: Total EBITA growth of 18 percent but disappointing organic EBITA growth
TOTAL EBITA GROWTH OF 18 PERCENT BUT DISAPPOINTING ORGANIC EBITA GROWTH. • In 2017, a number of our companies did not deliver in line with expectations, with clear impact on the Group’s organic earnings growth, which was negative 18% on full-year NET SALES AND • Despite this, for the full year we ca
Slide 5: The underlying reasons for weak performances differ
THE UNDERLYING REASONS FOR WEAK PERFORMANCES DIFFER. INDUSTRY – CORROVENTA INDUSTRY - TORNUM • No major floods in the year, earnings were • Tornum reported healthy sales significantly down on 2016 • Weak project profitability due to a larger • Corroventa stands strong and continues to share of sales
Slide 6: Decisions closer to operations in strengthened business area organisation
DECISIONS CLOSER TO OPERATIONS IN STRENGHTHENED BUSINESS AREA ORGANISATION. Acquisitions In charge of platform acquisitions Trading Consumer Akademibokhandeln Industry Håkan Karlström Johan Ekström Maria Hamrefors Nicklas Margård Add-on acquisitions, business development and operations follow-up 6
Slide 7: Growth in Trading – weak development in Industry and Consumer
GROWTH IN TRADING – WEAK DEVELOPMENT IN INDUSTRY AND CONSUMER. TRADING CONSUMER INDUSTRY AKADEMIBOKHANDELN1 +21.7% -1.4% +0.0% +20.5% 627 627 Net sales growth 372 453 Q4 2017 244 241 197 163 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 Q4 2016 Q4 2017 +15.7% -22.6% -49.0% 1 -6.7% EBITA growth Q4
Slide 8: Strong cash flow and low net debt
STRONG CASH FLOW AND LOW NET DEBT. CASH CONVERSION SALES AND EBITA NET DEBT/(CASH) % SEKm SEKm 2.79 112% 5 647 2.39 2.27 94% 90% 89% 4 356 762 756 619 62% 3 206 483 1.20 2 188 1 509 1 656 (265) 326 318 377 405 215 227 (0.63) 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 13 14 15 16 17 d ne 20 20
Slide 9: A robust business model
A ROBUST BUSINESS MODEL. …is used for Strong operating acquisitions of …at reasonable ...and with a long- cash flow from additional valuation term approach to the business companies with multiples... value creation units… strong cash flows... ACQUIRED EBITA OPERATING CASH FLOW ACQUISITION MULTIPLES
Slide 10: Rather turn down a good deal than risk making a bad one
”Rather turn down a good deal than risk making a bad one.” PATRIK WAHLÉN 10
Slide 11: Three acquisitions in 2017 – adding SEK 139m in EBITA
THREE ACQUISITIONS IN 2017 – ADDING SEK 139 M IN EBITA. ANNOUNCEMENT DATE 24 May 2017 5 Jul 2017 27 Oct 2017 CLOSING DATE 3 Jul 2017 5 Jul 2017 10 Nov 2017 TYPE OF • Add-on acquisition to • Business area • Business unit ACQUISITION existing business unit • The only successful omni-channel player • W
Slide 12: Well-positioned for additional acquisitions in a challenging environment
WELL-POSITIONED FOR ADDITIONAL ACQUISITIONS IN A CHALLENGING ENVIRONMENT. Well-defined acquisition model and process Evaluated ~130 companies during 2017 Strong position on the acquisition market 17 20 Good financial capacity for continued 16 20 acquisitions 15 20 Low debt, unutilized credit facilit
Slide 13: Long-term development supports financial targets
LONG-TERM DEVELOPMENT SUPPORTS FINANCIAL TARGETS. METRIC TARGET PERFORMANCE >2.7x 377 SEK 700m Reach an adjusted EBITA of SEK 700m 8% 137 EBITA growth at end of 2019 – annual organic EBITA (by 2019) Average organic EBITA growth of 5% on average growth 2013 – 2017 2013 2017 94% 112% 90% 89% Cash 62%
Slide 14: Well-positioned for delivering long-term value
WELL-POSITIONED FOR DELIVERING LONG-TERM VALUE. Reinforced business area organisation • Enables efficient management of our operations and provides management resources to achieve the strategic plans and value creation in the business units Low net debt and high acquisition capacity • Good position
Slide 15: A growing Swedish industrial group
A growing Swedish industrial group
Slide 16: Appendix
APPENDIX. 16
Slide 17: Accounting policies – IFRS 15 and IFRS 9
ACCOUNTING POLICIES – IFRS 15 AND IFRS 9. IFRS 15 Revenue from Contracts with Customers • The new standard entails that revenue is to be recognised when the customer obtains control of the sold goods or services and has the opportunity to use or obtain the benefits from the goods or service. • Volat
Slide 18: Accounting policies – IFRS 16 Leases
ACCOUNTING POLICIES – IFRS 16 LEASES. • From 2019, IFRS 16 — Leases requires all assets and liabilities attributable to leasing agreements, with a few exceptions, to be recognised in the balance sheet. • The standard is applicable for financial years commencing on 1 January 2019 or later and Volati
Slide 19: Business area Trading – operational synergies through shared service centre
BUSINESS AREA TRADING – OPERATIONAL SYNERGIES THROUGH SHARED SERVICE CENTRE. An operational business area • Operating16 companies in 6 countries • Organised in 7 business units Integrated business model Island • Focused on four market segments: – Construction consumables and hardware (primarily B2B)
Slide 20: Business area Consumer – attractive niches
BUSINESS AREA CONSUMER – ATTRACTIVE NICHES. A strategic business area • Operating 9 companies in 5 countries • Organised in 3 business units Strong local entrepreneurship • Business units focused on B2C niches • Strong local entrepreneurship combined with collaboration in selected areas such as data
Slide 21: Business area Akademibokhandeln – Sweden's leading book retailer
BUSINESS AREA AKADEMIBOKHANDELN – SWEDEN’S LEADING BOOK RETAILER. Overview • Operating 2 companies in Sweden • Organised in 1 business unit Sweden’s leading book retailer • The only successful omni-channel player – # 1 in physical bookstores – # 2 online retailer – 37% total market share • Sales fro
Slide 22: Business area Industry – successful expansion
BUSINESS AREA INDUSTRY – SUCCESSFUL EXPANSION. A strategic business area • Operating 21 companies in 14 countries • Organised in 3 business units Thailand Strong local entrepreneurship • Business units focused on B2B niches • Strong local entrepreneurship combined with collaboration in selected area
Slide 23: Income statement
INCOME STATEMENT. SEKm 2014 2015 2016 2017 Net sales 1,656 2,188 3,207 4,356 Raw materials and supplies -547 -933 -1,526 -2 228 Other external costs -347 -413 -516 -684 Personnel costs -513 -582 -771 -983 Other income 3 18 4 7 Other operating costs -2 -3 -12 -9 EBITDA 249 275 385 459 Depreciation -3
Slide 24: Balance sheet
BALANCE SHEET. SEKm 31 Dec 2014 31 Dec 2015 31 Dec 2016 31 Dec 2017 Intangible fixed assets 1,160 1,689 1,840 2,934 Tangible fixed assets 138 180 191 241 Financial fixed assets 8 13 8 10 Other non-current marketable securities 4 7 - - Deferred tax assets 21 33 42 59 Total non-current assets 1,332 1,
Slide 25: Cash flow statement
CASH FLOW STATEMENT. SEKm 2014 2015 2016 2017 Profit before tax 61 161 254 305 Adjustment for non-cash items 172 96 122 146 Interest paid -58 -45 -39 -21 Interest received 3 1 0 1 Cash taxes -18 -19 -41 -62 Cash flow before changes in working capital 160 196 295 369 Change in inventories -11 18 -29
Slide 26: Net debt and working capital
NET DEBT AND WORKING CAPITAL. SEKm 31 Dec 2014 31 Dec 2015 31 Dec 2016 31 Dec 2017 Net debt Cash and cash equivalents -156 -200 -371 -438 Unrealised derivate instruments assets 0 0 0 0 Pension liabilities 2 2 2 2 Non-current interest-bearing liabilities 1,055 908 54 984 Current interest-bearing liab
Slide 27: Definitions of key metrics
DEFINITIONS OF KEY METRICS. Metric Explanation Adjusted Explanation Business area return on capital employed (BA BA EBITA in relation to BA capital employed - - ROCE) Cash conversion excluding capex related to Besikta IT Cash conversion Operating cash flow in relation to EBITDA Adj. cash conversion