Annual Report 2019 Empower an Autonomous Future Table of Contents
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Annual Report 2019 Empower an autonomous future Table of contents 2019 in brief 1 About this report Hexagon in brief 2 The audited annual accounts and consolidated accounts Business overview 4 can be found on pages 14–20 and 32–72. The corporate gov- Letter from the President & CEO 6 ernance report examined by the auditors can be found on pages 21–25. Strategy 8 Financial plan 12 Other financial targets 13 Sustainability Report 2019 Board of Directors’ Report 14 Empower an autonomous future Corporate Governance Report 21 Letter from the Chairman of the Board 27 The sustainability report has been Board of Directors 28 reviewed by the auditors for compli- ance with the Annual Accounts Act Group Management 30 and can be found on: Managing risks 32 investors.hexagon.com Consolidated Income Statement 40 Consolidated Statement of Comprehensive Income 40 Consolidated Balance Sheet 41 HxGN LIVE HxGN TV HxGN RADIO HxGN BLOG Consolidated Statement of Changes in Equity 42 Consolidated Statement of Cash Flows 43 Parent Company Income Statement 44 Parent Company Statement of Comprehensive Income 44 EXPERIENCE WATCH LISTEN READ Parent Company Balance Sheet 45 hxgnlive.com hxgnspotlight.com Parent Company Statement of Changes in Equity 46 FOLLOW US ON SOCIAL MEDIA Parent Company Statement of Cash Flows 46 Notes 47 Signing of the annual report 72 hexagon.com Auditor’s report 73 The share 77 Quarterly Income Statements 80 10-Year Summary 81 Financial definitions 82 Business definitions 83 Currency codes 83 Information for shareholders 84 Hexagon AB is a Swedish public limited liability company with corporate This report contains forward-looking statements based on Hexagon registration number 556190-4771. All values are expressed in Euros unless management’s current expectations. Although management consid- otherwise stated. The Euro is abbreviated EUR, thousands of Euro to KEUR, ers expectations expressed in such future-oriented information as millions of Euro to MEUR, billions of Euro to bn EUR and million US dollars reasonable, no assurance can be given that these expectations will to MUSD. Figures in parentheses refer to 2018 unless otherwise stated. prove correct. Consequently, actual future results can differ con- Data on markets and peers represent Hexagon’s own assessments unless siderably from those implied in the forward-looking statements as a otherwise stated. Assessments are based on most recent available facts result of factors such as changed conditions in the economy, market from published sources. While every care has been taken in the translation and competition, changes in legal requirements and other political of this annual report, readers are reminded that the original annual report, measures, fluctuations in exchange rates and other factors. signed by the Board of Directors, is in Swedish. 2019 in brief • Net sales increased by 4 per cent to 3,907.7 MEUR (3,760.7). Using fixed exchange rates and a comparable group structure (organic growth), net sales decreased -1 per cent • Operating earnings (EBIT1) increased by 5 per cent to 972.5 MEUR (929.0) • Earnings before tax, excluding non-recurring items, amounted to 945.6 MEUR (906.2) • Net earnings, excluding non-recurring items, amounted to 775.4 MEUR (743.1) • Earnings per share, excluding non-recurring items, increased by 3 per cent to 2.11 EUR (2.04) • Operating cash flow increased by 18 per cent to 663.2 MEUR (562.8) Read about important events on page 15. → Key figures1 2019 20184 % Operating margin Organic growth Net sales 3,907.7 3,760.7 -12 Operating earnings (EBIT1) 972.5 929.0 5 % % Operating margin, % 24.9 24.7 0,2 25 -1 Earnings before tax, excl. non-recurring items 945.6 906.2 4 Net sales, MEUR Operating margin, % 3 Non-recurring items -80.3 -3.9 n.a. 3,908 3,761 Earnings before tax 865.3 902.3 -4 3,4711 Earnings after tax 708.6 738,1 -4 3,044 3,149 Earnings per share, EUR 1.92 2.02 -5 Operating cash flow 663.2 562.8 18 24.7 24.9 24.1 23.4 Return on equity, % 12.3 15.0 -2,7 22.8 Return on capital employed, % 11.7 12.6 -0,9 Share price, SEK 525.00 408.00 29 Net debt 2,115.7 2,069.3 2 Average number of employees 20,250 19,249 5 2015 2016 2017 2018 2019 1) All figures are in MEUR unless otherwise stated. 1) Operating net sales. 2) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth. 3) Non-recurring items 2019 relates to the launch of a restructuring programme in Q2 and acquisitions in Q1 and Q4. Read about segments financial 4) Numbers for 2018 has not been restated according to IFRS16. performance on page 16–17. → Hexagon Annual Report 2019 1 Outlined Outlined Hexagon in brief LIVE TV RADIO NEWS LOCAL OutlinedHexagon is a global leader in sensor, software and autonomous technologies. Hexagon is putting data to work to boost efficiency, productivity, and quality across industrial, manufacturing, infrastructure, safety, and mobility applications. Its technologies are shaping urban and production ecosystems to become increasingly connected and autonomous – ensuring a scalable, sustainable future. MISSION VISION Our focus is data Our commitment is innovation • Leverage beyond data creation • Transformation focus, with 10–12% of net • From automation to autonomy sales invested in R&D • 3,800+ employees in R&D • 3,700+ active patents CUSTOMER FOCUSED ENGAGED PROFESSIONAL PROFIT DRIVEN ENTREPRENEURIAL INNOVATIVE Our strength is proven Our value is vital • More than 20,000 employees • Solutions deliver productivity and quality across 50 countries • Broad range of industries served • 3.9 bn EUR in sales • Unmatched scope of technologies in the • 25% operating margin portfolio 2 Hexagon Annual Report 2019 LIVE TV RADIO NEWS LOCAL LIVE TV RADIO NEWS LOCAL LIVE TV RADIO NEWS LOCAL MISSION VISION PuttingLIVE data to work toTV enable autonomous,RADIO NEWSA future whereLOCAL data is fully leveraged so that MISSION MISSIONVISION VISION connected ecosystems that boost efficiency, both humanity and sustainability thrive. productivity and quality for our customers. LIVELIVE TV TV RADIORADIO NEWSNEWS LOCALLOCAL MISSION VISION MISSION VISION CUSTOMER FOCUSED CUSTOMERENGAGED FOCUSED PROFESSIONALENGAGED COREPROFITPROFESSIONAL DRIVENVALUES ENTREPRENEURIALPROFIT DRIVEN INNOVATIVEENTREPRENEURIAL INNOVATIVE Profit driven Innovative We value performance over procedure, We understand the importance of innova- setting measurable goals and working tion in meeting the ever-changing needs of MISSION VISION MISSION VISION collaboratively to achieve the results our customers and that opportunities must we seek.CUSTOMER FOCUSED ENGAGED PROFESSIONAL be nurturedPROFIT DRIVEN and developedENTREPRENEURIAL quickly. INNOVATIVE CUSTOMER FOCUSED ENGAGED PROFESSIONAL PROFIT DRIVEN ENTREPRENEURIAL INNOVATIVE Customer focused Professional We know our customers’ success is par- We are honest professionals who under- amount to our own and is based on our stand the importance of knowing our busi- ability to talk openly and set clear targets ness, exceeding expectations and avoiding CUSTOMERCUSTOMER FOCUSED FOCUSED ENGAGEDENGAGED to meetPROFESSIONAL theirPROFESSIONAL needs. PROFITPROFIT DRIVEN DRIVEN ENTREPRENEURIALENTREPRENEURIAL politicsINNOVATIVEINNOVATIVE along the way. Engaged Entrepreneurial Our spirited energy and engagement are We are not afraid to try new things and evident in our commitment to our work, leverage our decentralised structure to passion for what we do and the speed by make speedy decisions, take calculated which we achieve it. risks and find new opportunities. Hexagon Annual Report 2019 3 Business overview Geospatial Enterprise Solutions Geospatial Enterprise Solutions (GES) includes a complemented by software for the creation of 3D maps world-leading portfolio of reality-capture sensors – from and models which are used for decision-making in a range laser scanners, airborne cameras and UAVs (unmanned of software applications, covering areas such as surveying, aerial vehicles) to monitoring equipment, mobile mapping construction, public safety and agriculture. technologies and precise positioning. The sensors are Customer segment, % Geography, % Sales mix The segment comprises the Software & services following divisions: • Geosystems Recurring revenue • Safety & Infrastructure Direct sales • Autonomy & Positioning Emerging markets Surveying, 40 EMEA, 42 Infrastructure & construction, 27 Americas,40 Natural resources, 11 Asia, 18 Average no. of employees Aerospace & defence, 10 Public safety, 8 Other, 4 8,900 Solution examples Laser scanners Airborne cameras Public safety Mobile mapping technologies Precise positioning Precise positioning 4 Hexagon Annual Report 2019 Industrial Enterprise Solutions Industrial Enterprise Solutions (IES) includes a world-leading (computer-aided design), CAM (computer-aided manufac- portfolio of metrology systems that incorporate the latest turing) and CAE (computer-aided engineering). Solutions in sensor technology for fast and accurate measurements. within this segment optimise design and processes, improve These solutions include technologies such as coordinate productivity in process facilities and create and leverage measurement machines (CMM) and laser trackers and scan- asset management information critical to the planning, con- ners – which optimise design, processes and throughput in struction and operation of plants and process facilities. manufacturing facilities. It also includes software for CAD Customer segment, % Geography, % Sales mix The segment comprises the Software & services following divisions: