Press release
29 April 2021, 08:00
Sdiptech AB (publ) publishes interim report for the first quarter (January - March) 2021
The report is available on the company's website: www.sdiptech.se
SEVERAL IMPORTANT TRANSACTIONS AND CONTINUED STRONG PROFIT GROWTH
FIRST QUARTER 2021
- Operating profit EBITA* increased by 64.0% to SEK 116.1 million (70.8), corresponding to an EBITA*-marginal of 17.6% (14.6). Organic EBITA*- growth for the Group was 15.9%, excluding currency effects.
- Net sales increased by 35.9% to SEK 658.3 million (484.4). In total for the Group, organic sales growth was 3.9%, excluding currency effects.
- Profit after acquisition costs before financial items (EBIT) increased by 31.7% and amounted to SEK 90.7 million (68.8). Acquisition costs for the period were particularly high due to strategic divestments and a larger acquisition in the UK and stamp duty in connection therewith, which is a one-time cost.
- Earnings after tax for the Group amounted to SEK 64.2 million (52.0), of which SEK 62.7 million (52.0) was attributable to the Parent Company’s shareholders.
- Cash flow from current operations amounted to SEK 39.4 million (58.3), corresponding to a cash conversion of 48% (72). Due to high profits in 2020, more tax was paid than normal during the period. In addition, some additional inventory build-up was carried out preventively.
- Earnings per ordinary share (average number), less minority interests and dividends on preference shares amounted to SEK 1.74 (1.60). After dilution, earnings per shares amounted to SEK 1.72 Kr (1.59).
- On February 19, Sdiptech acquired all shares in Rolec Services Ltd and One Stop Europe Ltd (Rolec).
- On February 19, all shares in Tello Service Partner were divested and the agreement was signed to divest the Swedish elevator business. All the units belonged to the Property Technical Services segment.
- On March 9, Sdiptech carried out a directed share issue that contributed approximately SEK 473 million to equity before issue costs. The purpose of the issue was to strengthen the Group's financial flexibility for further acquisitions and to expand the ownership base.
- Due to the prevailing circumstances and with the aim of reducing the risk of spreading infection, Sdiptech's Annual General Meeting 2021 is held without any physical meeting and it is therefore not possible for the owners to attend in person or through proxy. Instead, the owners can submit their votes to the meeting in advance by so-called postal vote. For further information, see published notice.
COMMENTS BY THE CEO
SEVERAL IMPORTANT TRANSACTIONS AND CONTINUED STRONG PROFIT GROWTH
Sdiptech’s overriding goal is to increase the Group’s profit through organic growth and acquisitions. EBITA* rose by a total of 64.0 percent, of which 52.4 percent from acquisitions, 15.9 percent organically and -4.3 percent from currency. At the same time, several important transactions were made that further shape us towards high quality and consolidate our position as a Group with leading and sustainable offerings.
THE FIRST QUARTER
During the first quarter, the majority of our business units were able to deliver with full capacity and strong demand, equivalent to sales growth of 35.9 percent, of which 3.9 percent was organic excluding currency effects.
Meanwhile, there are many uncertainties and risks to monitor, both regarding the ongoing pandemic, as well as strains in supply chains. We are continually working on reviewing these risks and establish plans to ensure business continuity. For instance, we have worked with preventive stockbuilding of critical components and materials, which is expected to continue in the coming quarters. This has had an effect on our otherwise strong cash generation, which during the quarter amounted to 48 (72) percent.
We can confirm that our business model is well suited for navigating uncertain periods. Thanks to a good distribution of customers, several of our business units have flexibility in being able to shift focus among different customer segments depending on where demand is strongest. This way, we have been able to maintain planned production volumes and implement price increases, which resulted in strong EBITA* growth of 15.9 percent organically excluding currency effects. This has also contributed to a continued strengthening of margins and together with contributions from acquisitions, the Group’s EBITA* margin increased to 17.6 (14.6) percent.
During the quarter, our business activity at Group level was particularly high with several complex transactions comprising a total of six companies; one large acquisition and divestment of five business units. Non-recurring costs for UK tax on acquisitions and advisor fees impacted our earnings per share in the quarter negatively, which amounted to SEK 1.74 (1.60). With that said, we believe that these transactions are value-creating. They further shape the group towards high quality and strengthen our position as a group with leading and sustainable offerings.
ACQUISITIONS
The acquisition made during the quarter was Rolec Services Ltd and One Stop Europe Ltd (together Rolec), which is specialised in the development and manufacture of a wide range of charging equipment and systems for electric vehicles. An acquisition that further strengthens our focus on sustainability, efficiency and safety. The market for charging stations for electric vehicles in the UK is expected to enjoy significant growth, driven by several different factors. Among other things, the UK government decided in November 2020 that no new petrol or diesel cars are to be sold after 2030 and no hybrid cars after 2035.
The completed divestments were the four companies in the Swedish elevator business, and the roof renovation company Tello Site Services AB. The divestments are in line with our ambition to concentrate our growth in the Water & Energy and Special Infrastructure Solutions business areas. After a couple of years of work with profitability measures, the elevator business shows stable and good earnings, and the timing was thus right to transfer the companies to new suitable owners. The planning took place in consultation with the founders and management of the businesses, which was very important to us as divestments are not part of our business model.
In connection with these transactions, we increased the Group’s guidance from approximately 17 to 19–20 percent in EBITA* margin for the full year 2021.
Between December 2020 and February 2021, we acquired companies equivalent to approximately SEK 130 million in EBITA, which is far more than our annual growth target of SEK 90 million. To ensure continued flexibility in our acquisition work, we carried out a directed share issue in our B share in March, which provided about SEK 470 million in additional growth capital.
OUTLOOK
We continue as before to be extremely selective in our choice of companies to acquire, and quality before quantity is our model. We are thorough in our analysis and disciplined in our pricing – although the market is currently very hot after a long period of time with low interest rates and extensive governance support.
The underlying demand from our customers is strong and we are with confidence looking forward to societies gradually being able to open up.
In conclusion, I want to express a big thank you to all of our dedicated employees for your commitment and strong efforts. During a period that is still very special, we have collectively been able to deliver a strong first quarter. I also want to take this opportunity to welcome the new shareholders that have joined Sdiptech.
Jakob Holm
President and CEO
For additional information, please contact:
Bengt Lejdström, CFO, +46 702 74 22 00, bengt.lejdstrom@sdiptech.com
My Lundberg, Sustainability & IR Manager, +46 703 61 18 10, my.lundberg@sdiptech.com
Sdiptech's common share of series B share is traded under the short name SDIP B with ISIN code SE0003756758.
Sdiptech AB's preferred shares are traded under the short name SDIP PREF with ISIN code SE0006758348.
Sdiptech AB's Certified Adviser at Nasdaq First North Premier Growth Market is Erik Penser Bank, +468-463 83 00, certifiedadviser@penser.se. Further information is available on the company's website: www.sdiptech.se
Sdiptech AB is a technology group with a primary focus on infrastructure segments critical to well-functioning societies and to welfare, e.g. water & sanitation, power & energy, transportation, energy efficiency and air climate. As part of our offering in urban areas, we also provide niched technical services for buildings and real-estate such as renovation of elevators and roofs. The company has approximately SEK 2,000 million in sales and is based in Stockholm.
Sdiptech AB (publ) is required to disclose this information pursuant to EU Market Use Regulation 596/2014. The company is based in Stockholm. The information was provided by the above contact person for publication 29 April 2021 at 08:00 CEST.
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