Solar A/S disposed of its subsidiary Aurora Group Danmark A/S as of 24 April 2013. Thus, 2012 and 2013 figures in this announcement relate to the continuing operations only.
Solar Group revenue and EBITA for 2013 exceeded most recently announced expectations slightly but the group’s earnings were still unsatisfactory. In 2013, Solar generated positive cash flow from operating activities while also reducing debt. We expect this trend to continue in 2014. On this basis, the Board of Directors will propose payout of dividends for 2013 of DKK 12.00 per share at the upcoming annual general meeting.
Group CEO Flemming H. Tomdrup says: ”2013 was a challenging year characterised by negative growth, and market trends made for harsh conditions. We focused on cost efficiency to strengthen our earnings, and we will continue to do so in the years ahead. We are glad to have dedicated employees who have shown great willingness to change. At the same time, it is important that we generated strong cash flows and reduced our interest-bearing debt considerably.”
| Selected key figures (€ million) | Q4 2013 | Q4 2012 | 2013 | 2012 |
| Revenue | 403.8 | 436.7 | 1,531.5 | 1,638.9 |
| EBITA | 13.8 | 11.5 | 21.7 | 35.3 |
| Earnings before tax | 9.8 | 7.9 | 5.5 | 21.0 |
| Cash flow from operating activities | 39.7 | 46.3 | 35.1 | 57.4 |
| Selected financial ratios (%) | ||||
| Organic growth | -5.3 | -3.2 | -5.9 | -0.1 |
| EBITA margin | 3.4 | 2.6 | 1.4 | 2.2 |
| Net working capital/past 12 months’ revenue* | 13.5 | 13.7 | 13.5 | 13.7 |
* Calculated as an average of the last four quarters’ inventories, trade receivables and trade payables.
Revenue 2013:
- Revenue for the group exceeded our most recent announcements.
- Negative market trends have impacted Solar’s revenue growth. Q4 organic growth was -5.3% and ended up at -4.9% when adjusted for number of working days.
EBITA 2013:
- EBITA exceeded our most recent announcements but the group’s 2013 earnings were still unsatisfactory.
- In Q4 2013, write-down was made on property in Solar Deutschland which impacted the group’s EBITA negatively by € 2.8m.
- 2013 EBITA from continuing activities was also impacted by an accounting gain from the divestment of Aurora Group of € 1.5m, restructuring costs of € 5.6m and by Solar 8000 costs of € 3.6m.
Net working capital:
- Stated as an average of four quarters, net working capital was 13.5% of revenue, meeting Solar’s target of average net working capital of less than 14% of revenue. Net working capital was 11.5% of revenue at year-end.
- Efforts to reduce net working capital will continue. Stated as an average of four quarters, our target for 2014 is to get net working capital down to 13% of revenue. Moreover, we expect net working capital of 11% of revenue at year-end 2014.
Dividend distribution:
- Solar generated positive cash flow from operating activities in 2013 and managed to reduce debt. We expect this trend to continue in 2014. On this basis, the Board of Directors will propose payout of dividends for 2013 of DKK 12.00, equalling € 1.61, per share at the upcoming annual general meeting.
Expectations for 2014:
- For 2014, we expect revenue of € 1,465-1,510m and EBITA of € 25-32m.
- Expectations for 2014 EBITA include restructuring costs and Solar 8000 implementation costs, totalling some € 3m. Adjusted for these, normalised EBITA is expected at € 28-35m.
- The lower expectation levels equal negative growth of approximately 2.5%, while the upper levels equal positive growth of approximately 0.5%.
- Compared to 2013, exchange rate fluctuations will have a negative impact on EBITA of more than € 1m.
- We will implement restructuring measures in several group enterprises as a result of our expectations for continued low market growth and a wish to increase efficiency.
Long-term financial targets:
- Our long-term target is still to reach an operating result equalling an EBITA margin of 5-6%, which is 1-2% higher than the average realised in 2001-2010. This higher level presupposes organic growth of minimum 4%.
Short-term financial targets:
- One prerequisite for reaching the targets for 2015 for EBITA margin and ROIC was average growth exceeding 3% in this period and that the Dutch market settled in 2013.
- None of these prerequisites were met, and we are now annulling the short-term financial targets for EBITA margin, net working capital and ROIC.
- We will maintain our targets for equity ratio of 35-40%, gearing of 1.5-2.5 times EBITDA and pay-out ratio of 35-45%.
Q4 presentation - webcast and teleconference today The presentation of Annual Report 2013 will be transmitted online in English from NASDAQ OMX Copenhagen today at 11.00 CET, and the webcast will be accessible via www.solar.eu. It will be possible to make comments and ask questions via teleconference. Please use these numbers to participate:
Callers from Denmark: tel. +45 32 72 80 18 Callers from Great Britain: tel. +44 145 255 5131 Callers from the USA: tel. +1 866 682 8490 International callers: tel. +44 (0) 145 255 5131
Yours faithfully Solar A/S
Flemming H. Tomdrup
Appendix: Annual Report pages 1-96
Solar facts Solar A/S was established in 1919 and listed on the Copenhagen Stock Exchange in 1953. Solar is one of Northern Europe’s leading technical wholesalers within electrical, heating, plumbing and ventilation products. The group, based in Kolding, Denmark, has subsidiaries in Denmark incl. the Faroes, Sweden, Norway, the Netherlands, Belgium, Germany, Poland and Austria. In 2013, Solar Group revenue totalled € 1,531.5m, equating DKK 11.4bn. The group has some 3,300 employees.
For more information, please visit www.solar.eu.
Disclaimer This announcement was published in Danish and English today via NASDAQ OMX Copenhagen. In case of discrepancy between the two languages, the Danish version shall prevail.
