Results for 2007
Based on the insecurity that currently exists in the market, the Supervisory
Board of Solar has decided to exceptionally release results for 2007 earlier
than planned.
In 2007, the Solar Group realised a new record as regards revenue as well as
earnings. Revenue increased with € 292.7m to € 1,367.2m, corresponding to
organic growth of more than 15%. The new business areas made a positive
contribution to the growth. Thereby, revenue exceeded the expectations for the
year of € 1,360m. Earnings before tax increased from € 62.0m to € 65.6m but did
not quite meet the most recently announced expectation of € 69m.
In Q4, earnings were negatively affected by increasing freight costs combined
with increased price competition especially within HWS. Earnings of Aurora
Group disappointed in Q4 as a consequence of the continued expending of
significant costs for build-up of new chain customers. At the same time, the
year ended with revenue in December for most companies somewhat below
expectations.
See financial highlights for 2007 in the enclosed file.
The focused effort to reduce the group's total funds tied up has resulted in an
improvement of cash flow from operating activities from € 24.5m in 2006 to €
54.6m in 2007.
At the annual general meeting, the Supervisory Board will propose a dividend of
DKK 19.00 per share outstanding, corresponding to € 2.55 per share and a
distribution percentage of 37.
The stated numbers are given with reservations for the final completion of
audit.
New expectations for 2008
Labour shortage in a number of countries is expected to limit the growth.
Housing construction development is expected to have a negative effect on
market growth in several countries, while the activity level within industrial
and office building construction as well as the public sector is expected to
continue at a relatively high level if financing for these projects can
continually be found. The growth within industry is also expected to continue
at a relatively high level.
A somewhat larger insecurity is, however, attached with the development at the
beginning of 2008 than what has been the case in the last couple of years. The
mentioned market expectations combined with the strong market position of the
group and the focused effort concerning business development provide the Solar
group with good possibilities for a continuation of the relatively high revenue
growth also in 2008 in spite of an expected decreasing growth rate. To ensure a
continued growth, geographical expansion will also take place in 2008 through
establishment of a number of new foreign branches just as an ongoing search for
possible acquisitions is performed.
Compared to most recently announced expectations, the new expectation for the
results for 2008 is negatively affected by substantial additional investments
in IT among other things, including a new telephone system that will strengthen
our customer service and additional costs for geographical expansion, which has
a negative operational effect of more than € 2m. Increased freight costs
combined with increased price competition is expected to have a negative impact
on earnings for 2008 compared to most recent expectations.
For 2008, revenue is continuously expected to be € 1,500m, but the expectation
for earnings before tax is reduced from € 78m to € 71m corresponding to EBITA
of € 86m.
The Annual Report 2007 will be announced on 11 March 2008.
Sincerely yours,
SOLAR A/S
Jens Borum
Chairman of the Supervisory Board
