Sdiptech AB (publ) publishes interim report for the first quarter (January – March) 2019

Press release
3 May 2019, 08:00

Sdiptech AB (publ) publishes interim report for the first quarter (January – March) 2019
The report will be available on the company's website: www.sdiptech.com

Strong profit growth and a good market situation

• Net sales increased by 24.9 percent to SEK 422.2 million (338.1).
   
• Operating profit EBITA* increased by 51.0 percent to SEK 51.8 million (34.3), corresponding to an EBITA* margin of 12.3%. Acquired units with higher profit margin and margin increases, especially within Water & Energy, has contributed to the development of the profit.
   
• Profit after acquisitions costs and financial items amounted to SEK 26.5 million (23.2).
   
• Earnings after tax amounted to SEK 20.2 million (17.2), of which SEK 19.3 million (16.6) was attributable to the Parent Company’s shareholders.
   
• Earnings after tax for the Group, including discontinued operations, amounted to SEK 20.2 million (91.9), of which SEK 19.3 million (48.1) was attributable to the Parent Company’s shareholders.
   
• Earnings per ordinary share, less minority interests and dividends on preference shares, amounted to SEK 0.52 (0.43).
   
• Earnings per ordinary share for the Group, including discontinued operations, less minority interests and dividends in preference shares amounted to SEK 0.52 (1.47).
   
• Cashflow from current remaining operations amounted to SEK 57.6 million (6.4), corresponding to a cash flow generation of 110.8% (25.9). The improvement was mainly due to higher profit and changes in the working capital.
   
• During the period, Sdiptech AB completed two acquisitions: On 24 January 2019, Sdiptech acquired all of the shares in RedSpeed International Limited and on 18 February, Sdiptech acquired all of the shares in Water Treatment Products Limited and Water Treatment Products Holding Limited.
   
• On 18 February 2019, Sdiptech divested its shares in AVA Monitoring AB back to the original owners.
   
• At the end of March 2019, Sdiptech signed an agreement with Nordea on bank financing totalling SEK 800 million. The bank financing consists of a so-called revolving credit facility (RCF) of SEK 800 million and an agreement on a so-called cash pool for efficient cash management within the Group and its companies. These key agreements replace the current spread of credit agreements totalling approximately SEK 480 million (per 31 December 2018).

COMMENTS BY THE CEO:

DEAR SHAREHOLDER,

I can sum up a good start to 2019. Net sales increased by 25 percent during the quarter and EBITA* increased by 51 percent. Cash flow generation improved to 111 percent (26) during the quarter after a decrease in both inventories and operating receivables. The market situation was generally good within the business areas, leading to attractive organic growth in most businesses.

THE FIRST QUARTER 
The organic growth in the Water & Energy and Special Infrastructure Solutions business areas totaled +11 percent during the quarter, while Water & Energy strengthened its margins in a satisfactory manner. Property Technical Services decreased organically by -9% due partly to a deliberate shift towards more profitable customer segments in elevators, and partly to a market correction in the housing sector that is impacting our shell completion operations.

In the Water & Energy and Special Infrastructure Solutions business areas, the market situation is good thanks to a long-term willingness among both public and private customers to invest in the expansion of capacity and better solutions. We experienced particularly strong demand within water treatment, power distribution, electrical automation and refrigeration. A gradual introduction of more stringent environmental regulations, an increasing degree of process automation and general undercapacity in systems is driving the willingness to invest.

In the Property Technical Services business area, our elevator operations are continuing to develop positively with improved profitability and increased profits during the quarter. After a period strongly characterized by new construction of housing, during which our customers prioritized new construction over renovations, demand for renovations has returned to a good level. On the other hand, we saw a trend reversal in shell completion, which is also part of the business area. After a period of very high activity in new housing construction, demand is now showing a correction. In addition, unusually large projects during the prior year period contributed to a negative development this year. However, new incoming orders are now being directed towards commercial and public properties, where demand has been stable for many years.

ACQUISITIONS
In the first quarter, two acquisitions of well-managed product companies were completed in the UK.

RedSpeed International Ltd, which is part of the Special Infrastructure Solutions business area, manufactures digital cameras for speed monitoring and traffic safety enforcement. RedSpeed is mainly focused on the UK market where the company has a strong market share. Through the acquisition, we are taking a step into the market for traffic monitoring solutions, which are becoming increasingly common and are in line with the increasing automation of traffic flows. 

Water Treatment Products, which is part of the Water & Energy business area, is a leading company within preparation and manufacture of chemical products for water treatment and is primarily focused on the domestic UK market. The water treatment market is showing steady growth and we expect that this will continue as water shortages are becoming an ever-increasing problem in society.

OUTLOOK
During the quarter, we signed an agreement with Nordea regarding bank financing of SEK 800 million, which will strengthen Sdiptech’s flexibility when it comes to continued acquisitions and growth.

Our business model is working well and during the first quarter EBITA* increased by 51 percent after positive contributions from acquisitions and strengthened margins in Water & Energy. For Sdiptech, the market correction in the housing sector in Stockholm is primarily restricted to shell completion; however, the market situation for the Group is otherwise good. Our view on future periods remains unchanged with good opportunities for continued profit growth. 
By way of conclusion, I want to convey a big thank you to all of our dedicated employees for a good start to 2019. I also want to welcome to Sdiptech the new shareholders that have joined us and our new employees in the UK.

Jakob Holm
President and CEO

For additional information, please contact:

Jakob Holm, CEO, +46 761 61 21 91, jakob.holm@sdiptech.com

Bengt Lejdström, CFO, +46 702 74 22 00, bengt.lejdstrom@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 Stockholm is Erik Penser Bank, +468-463 83 00, certifiedadviser@penser.se. Further information is available on the company's website: www.sdiptech.com 

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 1,500 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 3 May 2019 at 08:00 CEST.

Attachment

• Sdiptech interim report Q1 2019