Hexagon Annual Report 2020 1 Hexagon in Brief
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empowering an autonomous future Annual Report 2020 Table of contents 2020 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 34–73. The corporate Letter from the President & CEO 6 governance report examined by the auditors can be found on pages 21–27. Strategy 8 Financial plan 12 Other financial targets 13 empowering an autonomous future Sustainability Report 2020 Board of Directors’ report 14 Corporate governance report 21 Letter from the Chairman of the Board 29 The sustainability report has Board of Directors 30 been reviewed by the auditors for compliance with the Annual Group Management 32 Accounts Act and can be found on: Managing risks 34 hexagon.com Consolidated income statement 42 Consolidated statement of comprehensive income 42 Consolidated balance sheet 43 HxGN LIVE HxGN TV HxGN RADIO HxGN BLOG Consolidated statement of changes in equity 44 Consolidated statement of cash flows 45 Parent company income statement 46 Parent company statement of comprehensive income 46 EXPERIENCE WATCH LISTEN READ Parent company balance sheet 47 hxgnlive.com hxgnspotlight.com Parent company statement of changes in equity 48 FOLLOW US ON SOCIAL MEDIA Parent company statement of cash flows 48 Notes 49 Signing of the annual report 74 hexagon.com Auditor’s report 75 The share 79 Quarterly income statements 82 10-Year Summary 83 Financial definitions 84 Business definitions 85 Currency codes 85 Information for shareholders 85 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 otherwise stated. The Euro is abbreviated EUR, thousands of Euro to KEUR, considers expectations expressed in such future-oriented millions of Euro to MEUR, billions of Euro to bn EUR and million US dollars information as reasonable, no assurance can be given that these to MUSD. Figures in parentheses refer to 2019 unless otherwise stated. expectations will prove correct. Consequently, actual future results Data on markets and peers represent Hexagon’s own assessments unless can differ considerably from those implied in the forward-looking otherwise stated. Assessments are based on most recent available facts statements as a result of factors such as changed conditions in the from published sources. While every care has been taken in the translation economy, market and competition, changes in legal requirements and of this annual report, readers are reminded that the original annual report, other political measures, fluctuations in exchange rates and other signed by the Board of Directors, is in Swedish. factors. 2020 in brief • Operating net sales decreased by -4 per cent to 3,770.5 MEUR (3,907.7). Using fixed exchange rates and a comparable group structure (organic growth), net sales decreased by -4 per cent • Operating earnings (EBIT1) decreased by -2 per cent to 956.2 MEUR (972.5) • Earnings before tax, excluding non-recurring items, amounted to 928.8 MEUR (945.6) • Net earnings, excluding non-recurring items, amounted to 761.6 MEUR (775.4) • Earnings per share, excluding non-recurring items, decreased by -3 per cent to 2.05 EUR (2.11) • Operating cash flow increased by 39 per cent to 920.7 MEUR (663.2) Read about important events on page 15. → Key figures1 2020 2019 % Operating margin Organic growth Operating net sales 3,770.5 3,907.7 -42 Revenue adjustment3 -6.1 - n.a. % % Net sales 3,764.4 3,907.7 -42 25 -4 Operating earnings (EBIT1) 956.2 972.5 -2 Operating margin, % 25.4 24.9 0.5 Net sales, MEUR Operating margin, % Earnings before tax, excl. non-recurring 3,908 3,761 3,7701 items 928.8 945.6 -2 3,4711 Non-recurring items4 -169.2 -80.3 n.a. 3,149 Earnings before tax 759.6 865.3 -12 25.4 Earnings after tax 624.7 708.6 -12 24.7 24.9 24.1 Earnings per share, EUR 1.68 1.92 -13 23.4 Operating cash flow 920.7 663.2 39 Return on equity, % 10.1 12.3 -2.2 Return on capital employed, % 11.1 11.7 -0.6 Share price, SEK 749.80 525.00 43 Net debt 2,375.9 2,115.7 12 2016 2017 2018 2019 2020 Average number of employees 20,343 20,250 0.5 1) Operating net sales. 1) All figures are in MEUR unless otherwise stated. Read about segments financial 2) Adjusted to fixed exchange rates and a comparable group structure, i.e. organic growth. performance on page 15–16. → 3) Reduction of acquired deferred revenue (haircut) related to acquisitions. 4) Non-recurring items 2020 relates to a cost savings programme implemented in Q2 and acquisitions in Q4. Hexagon Annual Report 2020 1 Hexagon in brief Hexagon is a global leader in sensor, software and autonomous solutions. We are putting data to work to boost efficiency, productivity, and quality across industrial, manufacturing, infrastructure, safety, and mobility applications. Our technologies are shaping urban and production ecosystems to become increasingly connected and autonomous – ensuring a scalable, sustainable future. We are stable We are innovative • More than 20,000 employees across • 10–12% of revenues invested in R&D 50 countries • Approx. 5,000 employees in R&D • 3.8 bn EUR in sales • Approx. 4,000 active patents • 25% operating margin • Over 150 acquisitions in 20 years • 60% software and services • 40% recurring revenue We are relevant We are sustainable • We enable customers to measure and • We believe in a world where economic improve efficiency, productivity and quality growth does not come at the expense of • We drive these outcomes for vital the planet and people industries from manufacturing and • Our solutions drive sustainability through construction to public safety, autonomous improved efficiency, productivity, safety mobility and more and less waste • We focus on driving sustainability in the whole value chain Mission Putting data to work to enable autonomous, connected eco- systems that boost efficiency, productivity and quality for our customers. Vision A future where data is fully and autonomously leveraged so that business, industry and humanity sustainably thrive. 2 Hexagon Annual Report 2020 Core values Profit driven Entrepreneurial We value sustainable profitability, We’re confident we have what it takes performance over procedure, setting to achieve our ambitious vision. We take measurable goals and working collectively ownership in dreaming big, trying new things to achieve our financial targets. and pushing for progress. Engaged Professional We seek personal fulfilment by doing We are honest professionals who great work while enjoying what we do. understand the importance of knowing We lead with a sense of urgency, without our business, leading by example and prejudice or politics. demonstrating humility along the way. Innovative Customer focused We invest heavily in innovation to meet We know our customers’ success is our customers’ ever-changing needs, with paramount to our own, and we are laser-like focus on creating sustainable dedicated to driving efficiency, productivity businesses that benefit humanity. and quality for everyone we serve. Hexagon Annual Report 2020 3 Business overview Geospatial Enterprise Solutions Geospatial Enterprise Solutions (GES) includes a world- complemented by software to create 3D maps and leading portfolio of reality-capture sensors – from laser models, which are used for decision-making in a range of scanners, airborne cameras and UAVs (unmanned aerial software applications, covering areas such as surveying, 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 Surveying, 38 Americas, 41 Average no. of employees Infrastructure & construction, 23 EMEA, 40 Natural resources, 14 Asia, 19 Aerospace & defence, 13 Public safety, 8 8,900 Other, 4 Solution examples Laser scanners Surveying Public safety Mobile mapping technologies Mining Precise positioning 4 Hexagon Annual Report 2020 Industrial Enterprise Solutions Industrial Enterprise Solutions (IES) includes a world-leading design), CAM (computer-aided manufacturing) and CAE portfolio of metrology systems incorporating the latest (computer-aided engineering) software. Solutions within sensor technology for fast and accurate measurements. this segment also include software for optimising design, These solutions include technologies such as coordinate improving productivity and creating and leveraging asset measurement machines (CMM) and laser trackers and management information through the lifecycle of industrial scanners for optimising design, processes and throughput plants and process facilities. in manufacturing facilities as well as CAD (computer-aided Customer segment, % Geography, % Sales mix The segment comprises the Software & services following divisions: • Manufacturing Intelligence Recurring revenue • PPM Direct sales Electronics & manufacturing, 31 Asia, 39 Average no. of employees Power & energy, 26 EMEA, 32 Automotive, 17 Americas, 29 Aerospace & defence, 12 Other, 14 11,300 Solution examples CAD/CAM/CAE (computer-aided design/ manufacturing/engineering) software CAD for industrial facilities Optical scanners Industrial metrology software Operations management CMMs (coordinate measuring machines)