Interim report January – September 2020
Recovery for Accessibility in the third quarter with organic revenue growth of 6.2%, while the two smaller business units remained negatively affected by Covid-19. A more competitive cost base, mainly driven by the Lift Up Program, led to improved profit year-on-year despite the continuing pandemic.
Third quarter 2020
· Revenue amounted to MEUR 53.2 (59.7).
· Organic growth was -1.2%.
· The gross margin was 42.2% (40.3).
· Adjusted EBITA amounted to MEUR 6.1 (3.9), corresponding to a margin of 11.5% (6.5).
· EBIT was MEUR 4.4 (2.3).
· Net profit (including discontinued operations) amounted to MEUR 2.2 (3.9).
· Earnings per share (including discontinued operations) before and after dilution amounted to EUR 0.04 (0.07).
· Adjusted operating cash flow of MEUR 13.0 (7.3) and leverage improved to 1.3x.
Significant events after the end of the period
· Henrik Teiwik was appointed new CEO and President of Handicare Group AB as of 1 January 2021.
· The Board proposed that dividends for 2019 be reinstated at EUR 0.07 per share.
Covid-19 effects and financial impact
· Covid-19 continues to impact the world negatively. After a weak second quarter, Accessibility recovered when previously locked-down markets opened up again. The two smaller business units, Patient Handling and Vehicle Accessibility, remained negatively affected in the third quarter by measures aimed at mitigating the spread of Covid-19.
· In the quarter, Handicare received government grants totaling MEUR 0.3, relating to personnel. In the period January-September, government grants of MEUR 1.9 have been received.
· Handicare’s financial position and liquidity remain solid.
Notwithstanding that the world economy remains impacted by Covid-19, I am glad to see that the global Accessibility market remains robust, and that Handicare continues to strengthen its position in that market. This is the result of our early initiatives both to improve the delivery of our proposition for our customers, and to improve our efficiency. Through the Lift Up Program, we have successfully established a more competitive cost base, faster than originally planned, and as key stairlift markets started to recover during the third quarter after a period of lockdowns, we are now beginning to see the full effects from the program initiatives. In addition to previously implemented efficiency measures, we have finalized the first phase of the Lift Up Program throughout the organization, optimizing the workforce setup. Our financial position and cash flow have continued to improve during the period, and the leverage ratio was improved to 1.3x. On the back of this development, the Board has proposed to reinstate the payment of dividends for 2019.
Accessibility outperforms previous year’s results despite Covid-19
During the third quarter, we could see a gradual market recovery and return to more normalized demand in several markets, and our stairlift segment managed to outperform last year’s results despite the ongoing pandemic. In line with the trading update published on 13 October, revenues in Handicare’s key focus area, Accessibility, grew organically by 6.2% compared to the same period in 2019. The strong development is mainly attributable to key stairlift markets, including North America and core European markets, opening up again. Simultaneously, we have consolidated the operational setup which together with the completion of the Lift Up Program’s structural cost reductions initiatives has contributed to the overall improvement in profit. We report a strong adjusted EBITA margin for the segment of 18.3% for the quarter.
Review of Patient Handling shows clear results
Revenues for the Patient Handling segment declined during the quarter as the business continues to be affected by local restrictions due to Covid-19, leading to limited access to health care facilities and postponed installations of ceiling lifts. The three-step review initiated as part of the Lift Up Program has, however, showed significant results, and thanks to an effective implementation of streamlining measures in North America and overall simplification of the organisational structure, the adjusted EBITA margin increased to 7.5% in the quarter. The main focus now is to ensure a stable and efficient operational platform, which will enable increased profitability going forward.
The ongoing pandemic continues to bring uncertainty to the global market, and thus short-term demand is difficult to predict. However, revenues during the month of October were in line with the third quarter. We remain confident in now having established a solid platform which, supported by the strong underlying growth trends that characterizes the Accessibility market and our strong financial position, will ensure continued positive development. Subject to the evolvement of Covid-19, we expect further improvements across all segments in the upcoming quarters, and that Handicare will perform on the new, higher level.
Finally, I am pleased to hand over to Henrik Teiwik as new President and CEO of Handicare, assuming the position on 1 January 2021. With his strategic and performance-oriented skillset, Henrik has the leadership skills required to take Handicare on its continued growth journey.
President and CEO
Auditors’ review report
To the Board of Directors of Handicare Group AB (publ), corporate identity number 556982–7115
We have reviewed the condensed interim report for Handicare Group AB (publ) as at 30 September 2020 and for the nine months period then ended. The Board of Directors and the President and CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden.
The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, November 5, 2020
Ernst & Young AB
Authorised Public Accountant
A telephone conference, hosted by Johan Ek, President and CEO, and Pernilla Lindén, CFO, will be held at 09.00 a.m. CET on 5 November 2020. To participate, please register in advance using the following link: http://emea.directeventreg.com/registration/5133785
A presentation will be available at www.handicaregroup.com/investors.
Dates for financial reports and Annual General Meeting:
Year-end report 2020 12 February 2021
Interim report January – March 2021 28 April 2021
The Annual General Meeting for 2020 will be held in Stockholm 6 May 2021
For more information, contact:
Pernilla Lindén, CFO & IR, Tel +46 708 775 832
This information is information that Handicare Group AB (publ) is required to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CET on 5 November 2020.
To the extent this report contains forward-looking statements, these statements are based on the current expectations of Handicare’s Group management. Although management considers the expectations expressed in such forward-looking statements to be reasonable, there is no guarantee that these expectations will prove correct. Accordingly, actual future outcomes may differ significantly from those expressed in the forward-looking statements due to such factors as changed economic, market and competitive conditions, changes in regulatory requirements and other policy measures, and fluctuations in exchange rates.
Handicare offers solutions to increase the independence of disabled or elderly people, and to facilitate for their care providers and family. The offering encompasses a comprehensive range of curved and straight stairlifts, transfer, lifting and repositioning aids and vehicle adaptations. Handicare is a global company with sales in some 40 countries and is one of the market leaders in this field. The head office is in Stockholm, Sweden and manufacturing and assembly is located at four sites distributed across North America, Asia and Europe. In the twelve-month period to September 2020, revenue amounted to MEUR 208 and the adjusted EBITA margin was 6.3%. Employees amounted to approximately 900 and the share is listed on Nasdaq Stockholm. For more information, www.handicaregroup.com.