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 1920.

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%

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 implying that the company has a long-term view on its holdings, a focus on profitability and a strongly decentralised organisation. The Group has three business areas: Dental, Demolition & Tools and Systems Solutions. At the end of 2021 the Lifco Group consisted of 198 operating companies in 31 countries. In 2021 Lifco reported an EBITA margin of 21.2 per cent on net sales of SEK 17.5 billion.

 

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LIFCO AB
Verkmästaregatan 1
745 85 Enköping, Sweden
ir@lifco.se
+46 72 717 59 33
Org.nr: 556465-3185

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