Solar A/S
LEI: 21380031XTLI9X5MTY92
Industrivej Vest 43 ■ DK-6600 Vejen ■ Denmark
Tel. +45 79 30 00 00 ■ CVR no. 15 90 84 16 ■ Web: www.solar.eu
1 of 3
Announcement no. 2 2021
11 February 2021
Annual Report 2020
In 2020, we achieved a strong EBITA, which exceeded
our expectations. At the Annual General Meeting, the
Board of Directors will propose a 2020 dividend
distribution of DKK 28 per share.
CEO Jens Andersen says:
"In 2020, our three-year strategic period came to an end.
During this period, we successfully managed to increase
EBITA by DKK 145m to DKK 455m and exceeded our
target of 4% EBITA margin for our core business.
We conclude the strategic period by proposing dividend
payment of DKK 204m in total.
We are very pleased with the progress and results
delivered in 2020, and with the launch of our new
strategy - CORE+ - that will set new standards for the
period from 2021 to 2023.
Finally, I want to thank our dedicated and skilled
employees. Together, we succeeded in delivering strong
results despite the challenges brought about by COVID-
19.
We have become stronger as a company and as a
group.”
Financial highlights
(DKK million)
Q4
2020
Q4
2019
2020
2019
Revenue
3,057
3,077
11,465
11,679
EBITDA
191
161
637
538
EBITA
145
115
455
360
Earnings before tax
-7
73
300
120
Cash flow from
operating activities
432
305
813
300
Financial ratios (%)
Organic growth adj.
for number of working
days
-2.1
2.6
-2.0
4.9
EBITDA margin
6.2
5.2
5.6
4.6
EBITA margin
4.7
3.7
4.0
3.1
Net working capital,
period-end/revenue
(LTM)
9.7
11.0
9.7
11.0
Gearing (NIBD /
EBITDA), no. of times
0.2
1.7
0.2
1.7
Solar A/S
LEI: 21380031XTLI9X5MTY92
Industrivej Vest 43 ■ DK-6600 Vejen ■ Denmark
Tel. +45 79 30 00 00 ■ CVR no. 15 90 84 16 ■ Web: www.solar.eu
2 of 3
2020 revenue
• Adjusted organic growth amounted to -2.0% (4.9%),
partly due to a declining demand caused by COVID-19
and partly due to our Better Business initiatives.
2020 EBITA
• The results for our core business exceeded our
expectations with EBITA being up by DKK 56m to DKK
456m compared to the original guidance.
• Focus on strategic suppliers and concept sale, project
Better Business and Operational excellence were
stronger than expected. See the follow-up on page 8 in
Annual Report 2020.
Dividend distribution
• At the Annual General Meeting, the Board of Directors
will propose dividend distribution of DKK 28.00 per
share, corresponding to a payout ratio of 92%.
2021 outlook
• We expect revenue of approx. DKK 11,550m equal to
an organic growth of approx. 0%.
• Better Business initiatives are expected to reduce
revenue by DKK 200m. The adjusted organic growth
amounts to approx. 2%.
• We expect an EBITDA of approx. DKK 650m,
corresponding to an EBITA of DKK 465m.
See the remaining assumptions on page 9 in Annual
Report 2020.
Introduction of our new CORE+ strategy
With CORE+ we will be building on the solid foundation
of our core. The new strategy focuses on four areas:
Concepts, Climate & Energy, Industry and Trade. Areas
in which we have a solid track record and see further
opportunities for profitable growth in the years to come.
Our ambitions for the strategic period from 2021 to 2023
can be found on page 17 in Annual Report 2020.
Solar A/S
LEI: 21380031XTLI9X5MTY92
Industrivej Vest 43 ■ DK-6600 Vejen ■ Denmark
Tel. +45 79 30 00 00 ■ CVR no. 15 90 84 16 ■ Web: www.solar.eu
3 of 3
Audio webcast and teleconference today
The presentation of Annual Report 2020 will be made in
English on 11 February 2021 at 11:00 CET. The
presentation will be transmitted as an audio webcast and
will be available at www.solar.eu. Participation will be
possible via teleconference.
Teleconference call-in numbers:
DK: tel. +45 823 331 94
UK: tel. +44 333 300 9264
US: tel. +1 833 526 8384
Contacts
CEO Jens Andersen - tel. +45 79 30 02 01
CFO Michael H. Jeppesen - tel. +45 79 30 02 62
IR Director, Dennis Callesen - tel. +45 29 92 18 11
Enclosure: Annual Report 2020, pages 1-155, including
Q4 2020 quarterly information.
Facts about Solar
Solar is a leading European sourcing and services company mainly within electrical, heating and plumbing, ventilation and climate and energy
solutions. Our core business centres on product sourcing, value-adding services and optimisation of our customers’ businesses.
We facilitate efficiency improvement and provide digital tools that turn our customers into winners. We drive the green transition and provide best
in class solutions to ensure sustainable use of resources.
Solar Group is headquartered in Denmark, generated revenue of approx. DKK 11.5bn in 2020 and has approx. 2,900 employees. Solar is listed on
Nasdaq Copenhagen and operates under the short designation SOLAR B. For more information, please visit www.solar.eu
Disclaimer
This announcement was published in Danish and English today via Nasdaq Copenhagen. In the event of any inconsistency between the two
versions, the Danish version shall prevail
Solar A/S
CVR no. 15 90 84 16
ANNUAL
REPORT
2020
MANAGEMENT REVIEW
3 Solar in brief
4 Letter from the CEO
6 Year at glance
7 Financial highlights 2020
8 Guidance follow-up 2020
9 Guidance 2021
10 Strategy 2021-2023
11 Our business model
12 Core+: stronger execution
of better business
13 Digital Together
14 Green Together
15 Strategic focus areas for
profitable growth
16 Our four strategic focus areas
17 Ambitions for 2023
18 Our strategic focus areas
19 Concepts
21 Climate & Energy
23 Industry
25 Trade
27 Review
28 Five-year summary
29 Financial review
32 Corporate matters
33 Our people
35 Risk management
40 Social responsibility
41 Corporate governance
42 Shareholder information
44 Board of Directors
47 Executive Management
FINANCIAL STATEMENTS
49 Consolidated financial statements
51 Summary for the Solar Group
53 Statement of comprehensive income
54 Balance sheet
55 Cash flow statement
56 Statement of changes in equity
58 Notes
100 Separate financial statements
102 Statement of comprehensive income
103 Balance sheet
104 Cash flow statement
105 Statement of changes in equity
107 Notes
136 Group companies' overview
138 Statements and reports
139 Statement by the Executive Board
and the Board of Directors
140 Independent auditor’s report
144 Q4 2020
We are a leading European sourcing and
services company mainly within electrical,
heating & plumbing, ventilation, and
climate & energy solutions.
A DIGITAL COMPANY
>60%
e-business share
OUR MARKETS
Denmark, Norway,
Sweden, the Netherlands,
Poland & the Faroe Islands
OUR 20212023 STRATEGY IS ENTITLED CORE+
AND HAS FOUR STRATEGIC FOCUS AREAS
TRADE
CLIMATE
& ENERGY
INDUSTRY
CONTENTS
CONCEPTS
ORDERS
Solar Group handles
more than 2.7m digital orders
every year.
10:46
Martin from SIF-Gruppen is permanently based at
the newly opened hotel, VILLA Copenhagen. As
a services engineer, it can be dicult for him to
plan his work schedule. Solar Webshop allows him
to place an order whenever the need arises.
SOLAR
IN BRIEF
3
DELIVERING
ON TARGETS
During the 2018-2020 strategy period, we
increased EBITA by DKK 145m to DKK 455m
and more than reached our target of 4%
EBITA margin for core business. We conclude
the strategic period by proposing a dividend
payment of DKK 204m in total.
LETTER FROM THE CEO
SOLAR IN BRIEFMANAGEMENT’S REVIEW
4Solar – Annual Report 2020
FINANCIAL RESULTS
In 2020, we posted a strong EBITA, which
exceeded our expectations at the beginning of
the year.
For core business, EBITA increased by DKK 77m or
more than 20% in 2020, corresponding to a return
on invested capital (ROIC) aer tax of 15%.
THE 20182020 STRATEGY RESULTED IN
~14% EBITA CAGR
The strategy launched in 2017 marked the begin-
ning of our return to a strong focus on the core
business.
Financially, the target was to reach an EBITA mar-
gin in the core business of a minimum of 4% by
2020, corresponding to a ROIC of 12% aer tax.
Our starting point was to change a product-
focused business into one with a more solution-
focused approach. At the same time, the
intention was to remain an attractive sourcing
and services company for our customers.
By focusing on investments in further digitalisa-
tion, reallocation of cost to growth areas and
maintaining strict management over the cost
base, the aim was to achieve continuous growth
in the EBITA result and to expand the core busi-
ness EBITA margin above the targeted 4%. These
remain the guiding rules for our success.
LAUNCH OF THE 20212023 STRATEGY
CORE+
With the launch of CORE+ we are building on the
journey we began in 2018, with continued focus
on the core business.
The cornerstone of CORE+ is to be the leading
green, digital sourcing and services company
in our industry. We wish to continue to develop
Solar in a profitable way by enabling our key mar-
kets to focus on our four strategic focus areas
and by building on the core capabilities embed-
ded in a strong and agile operating model.
The four strategic areas – Concepts, Climate &
Energy, Industry and Trade – are the key to our
success. The aim is to grow the share of Con-
cepts and Industry sales and introduce Trade and
Climate & Energy to the remaining markets. This
will be supported by maintaining rigorous cost
management.
In the new strategic period, we change the guid-
ance level from EBITA to EBITDA. By doing so, we
are following the trend in other companies. Our
target is to expand the EBITDA margin further
compared to the current level of 5.6%.
EMPLOYEES
Our employees’ well-being is of the utmost im-
portance. The annual employee survey, Navigator,
recorded an all-time high motivation score.
Thanks to Solar’s dedicated and skilled workforce,
we have succeeded in delivering strong results,
even in a market aected by COVID-19.
We have become stronger as a company and as
a group.
CONCLUDING REMARKS
We are very pleased with the progress and results
delivered in 2020, and with the launch of CORE+
we have set new standards for the 2021-2023
period.
With CORE+ Solar will be well positioned to con-
tinue to create value for our customers.
HIGHLIGHTS 2020
EBITA IN DKKM
360 455 26%
EBITA FROM CORE BUSINESS IN DKKM
379 456 20%
EBITA MARGIN FROM CORE BUSINESS
3.4% 4.2% 24%
DIVESTMENT OF OUR SHAREHOLDING IN
BIMOBJECT
DKK 237m
In total cash consideration
COVID19
Limited eect on our business from
COVID-19.
We reached 4.2% partly as a result of
our Better Business project initiatives.
LETTER FROM THE CEO
Jens Andersen
CEO
SOLAR IN BRIEFMANAGEMENT’S REVIEW
5Solar – Annual Report 2020
2
1
EBITA GUIDANCE
The original 2020 guidance was for
revenue of DKK 11.8bn and EBITA of DKK
400m.
In late October, we increased the EBITA
guidance by DKK 35m to DKK 435m,
which included one-o costs of DKK 25m
relating to SAP eWM implementation.
Revenue guidance was adjusted to DKK
11.3bn, a decline of DKK 100m compared
to the previous guidance of DKK 11.4bn.
BIMOBJECT
SOLD
In early October, we divested
our shareholding in BIMobject
for a total cash consideration of
DKK 237m.
The shares were acquired at
DKK 172m in H1 2017. In early 2020, the world was impacted by COVID-19 - as was Solar.
Our agile business model with strong supplier partnerships, a high
and ever-increasing share of e-business and an enhanced group
mindset, enabled us to manage the ensuing challenges. We took
the necessary precautions and introduced a number of initiatives
to limit the risk of infection.
OPERATIONAL EXCELLENCE
As a digital sourcing and services company, our digital transforma-
tion continued throughout 2020. We successfully implemented Au-
toStore, an automated storage and retrieval system, at the central
warehouse in Alkmaar, the Netherlands. We also
implemented SAP eWM at our central ware-
houses in Denmark, Norway and Duiven,
the Netherlands - the fih successful-
ly completed implementation. The
final implementation took place
at Alkmaar, the Netherlands and
was finalised in late January
2021.
REACHING OUR
GOALS
2020 was the final year of the strategy
launched in 2018, and we reached an
EBITA of DKK 455m. The aims were to
work proactively with our customers
to help them increase their eciency
and to meet their requirements. We
succeeded in doing this through an
open-minded partnership with our
customers and the further develop-
ment of our digital services.
We achieved the ambitions set out
at the launch of our strategy and will
introduce new ambitions through the
new CORE+ strategy.
YEAR AT A GLANCE
COVID19
DIGITAL EXCELLENCE
At the Danish Digital Awards, our Solar
Mobile app was rewarded with a GOLD
and SILVER award for Commerce and
Customer Experience respectively.
As our business is centred on digitalisa-
tion with strong customer focus, the
award is testimony to the fact that we are
pursuing the right concepts.
435
DKKm
455
DKKm
SOLAR IN BRIEFMANAGEMENT’S REVIEW
6Solar – Annual Report 2020
MANAGEMENT’S REVIEW
20182017 2019 2020
500
400
300
200
100
20182017 2019 2020
0.0
0.5
1.0
1.5
2.0
20182017 2019 2020
0
5
10
15
20
25
30
10.6
10.8
11.0
11.3
11.5
11.8
20182017 2019 2020
FINANCIAL HIGHLIGHTS 2020
Organic growth of -2.0% was impacted by
product pruning of low-margin business of
approx. DKK 250m and decline in demand caused
by COVID-19.
Within core business, we saw positive growth in
Solar Danmark while other entities saw negative
growth.
Organic growth for related business reached
2.7%.
In 2020, EBITA was up by DKK 95m due to in-
creased gross profit margin and lower cost level.
Non-recurring income of DKK 25m aected
EBITA and was related to extraordinary price
increases, additional discount from suppliers
and settlement with the former shareholder of
MAG45. However, costs related to the imple-
mentation of SAP eWM aected EBITA negative-
ly by DKK 25m.
With EBITA of DKK 456m, core business posted
the best financial results in more than a de-
cade, and EBITA increased in almost all entities.
Related business improved its results by DKK
18m to DKK -1m.
At year-end, gearing was 0.2 times EBITDA.
Calculated as an average, gearing was 1.1
times EBITDA in 2020.
Gearing was impacted by high cash generation
in operating activities and by the divestment
of our shareholding in BIMobject for a total
cash consideration of DKK 237m.
In 2020, we paid dividend of DKK 102m and
invested DKK 83m in digital improvements and
operations optimisation.
Net interest-bearing debt decreased by DKK
793m of which DKK 51m is due to COVID-19 fi-
nancial support packages that will be reversed
in 2021.
.
Our target for payout ratio is at least 35%
of profit aer tax. The Board of Directors
will submit a proposal to the Annual General
Meeting for a dividend payout of DKK 28 per
share, corresponding to a payout ratio of
92%.
In 2018 and 2019, the dividend payment
amounted to DKK 14 per share.
GEARING
times EBITDA
EBITA
DKKm
REVENUE
DKKbn
DIVIDEND PER SHARE
DKK
11.5
455
0.2
28.0
SOLAR IN BRIEFMANAGEMENT’S REVIEW
7Solar – Annual Report 2020
MANAGEMENT’S REVIEW
1) The updated guidance was presented on 21 October, 2020. Prior to October Solar withdraw initial guidance March 27, 2020, as a consequence of COVID-19, and re-introduced a guidance of revenue DKK 11,400m and EBITA of DKK 400m again August 12, 2020.
STRONGER THAN EXPECTED
GROSS PROFIT MARGIN
Focus on strategic suppliers and concept sales
continued to deliver growth opportunities and
we saw revenue and margin from concept sales
picking up in all markets.
Our Better Business project continued to deliver
gross profit margin improvements by focusing on
supplying the right products to the right cus-
tomers and by product pruning. As a derived ef-
fect, revenue was reduced by approx. DKK 250m
compared to the expected approx. DKK 200m.
Extraordinary price increases in combination
with additional discount from suppliers, mainly
in Norway, had a one-o impact of approx. DKK
18m.
COSTS
Other operating income of DKK 8m of which DKK
7m was the outcome of a settlement with the
former shareholder of MAG45.
Operational excellence. Due to COVID-19, we
launched several prudent cost-saving measures
to protect short-term earnings and to deliver
cash generation. The initiatives performed bet-
ter than expected, delivering approx. DKK 40m of
which we estimate DKK 20m to be temporary.
Non-recurring income of around DKK 25m in total
consisted of the above-mentioned extraordinary
price increases of DKK 18m and other operating
income of DKK 7m.
AS EXPECTED
SAP eWM implementation at our central
warehouse in Denmark, Norway, and in Duiven,
the Netherlands, was performed successfully
with hardly any disruptions experienced in
the following weeks. Costs relating to the
implementation amounted to approx. DKK 25m.
WEAKER THAN EXPECTED
Revenue from core business amounted to DKK
10,890m, corresponding to organic growth of
-2%. Our initial guidance for core business was
for revenue of DKK 11.200m including pruning of
DKK 200m. When adjusted for FX impact, revenue
was DKK 200m lower than our initial expectations.
In Industry, in particular, we saw variance within
the sub segments. Our focus on infrastructure
continued to deliver strong growth rates while
Marine & Oshore saw strong headwind with
negative organic growth of more than 20% in Q3.
During Q4, we saw more stable development in
Marine & Oshore.
The results for core business
were above our expectations,
while the results for related
business were on par with the
expectations.
GUIDANCE FOLLOWUP 2020
REVENUE AND ADJ. ORGANIC GROWTH
DKKm
EBITA AND EBITA MARGIN
DKKm
Core business
Related business
Solar Group
Core business
Related business
Solar Group
Guidance Updated
1
Updated
1
Guidance
11,200
600
11,800
10,750
550
11,300
435
0
435
400
0
400
10,890 -2.2 %
575 2.7 %
11,465 -2.0 %
456 4.2 %
-1 -0.2 %
455 4.0 %
Actual Actual
SOLAR IN BRIEFMANAGEMENT’S REVIEW
8Solar – Annual Report 2020
2018
2017
2019
2020
eWM costs
Non-recurr. Income
Cost norm
2020 adj.
improvements
2021 Guidance
25
-25
700
650
600
550
500
450
400
350
300
637
538
379
362
33
650
617
-20
GUIDANCE 2021
For the Solar Group, we expect
revenue of DKK 11,550m equal to
organic growth of 0%. We expect
EBITDA of DKK 650m, corre-
sponding to EBITA of DKK 465m.
Due to the resurgence of the COVID-19
pandemic, our market outlook reflects
increased risk. The guidance is based on several
assumptions.
GENERAL ASSUMPTIONS
Gross profit margin
The guidance for 2021 assumes that the re-
surgence of COVID-19 will not result in new
significant lockdowns in our business segments
or other COVID-19 related knock-on eects.
As stated on pages 11-17, we launch our Core+
strategy, including four strategic focus areas,
which we expect to aect gross profit margin
positively.
In addition, we expect to continue our cost con-
tainment measures. Despite these measures, we
expect costs to partly normalise to pre-COVID-19
levels. The guidance does not include any signifi-
cant restructuring costs.
Loss on trade receivables is assumed to be at
the same level as in 2020. There is, however, a
risk that we will see increased loss on debtors as
government support is reversed.
MARKET OUTLOOK FOR SOLAR’S
SEGMENTS
Overall, we expect the installation and industry
markets to show modest growth rates in 2021.
Installation
We expect the installation market to show
modest growth in 2021 compared to 2020,
positively aected by electrification as one of
the important megatrends.
Industry
The guidance is based on the assumption that
sales to OEM, Marine & Oshore remain at least
at Q4 2020 level. Infrastructure is expected to
continue to deliver strong growth rates.
Trade
We expect growth in Special Sales, which is the
primary activity in the Trade segment.
FINANCIAL OUTLOOK 2021
Revenue guidance
We expect revenue at DKK 11,550m, corre-
sponding to organic growth of approx. 0%.
Our Better Business project is an integral part
of the Core+ strategy and is expected to reduce
revenue by DKK 200m compared to 2020. Adjust-
ed for this, we expect organic growth of approx.
2%.
DKK 600m of the expected revenue can be ac-
counted for by related business.
EBITDA guidance
In 2020, we saw non-recurring income of around
DKK 25m and non-recurring costs of DKK 25m.
In addition, prudent cost-saving initiatives deliv-
ered DKK 40m of which we estimate DKK 20m to
be temporary. In total, the above had a net pos-
itive eect of DKK 20m. We expect the strategic
focus areas to deliver continuous improvement
in earnings, more than osetting the above DKK
20m and delivering an EBITDA of DKK 650m.
Approx. DKK 10m of the expected EBITDA can be
accounted for by related business.
Investments
We have initiated an expansion and upgrade
of our central warehouse in Denmark. We will
add a 10,000 sq.m warehouse. When completed,
this will enable us to close down three external
warehouses, which we are currently operating
in the vicinity of Vejen. In addition, we plan to
invest in AutoStore as we have done in Norway
and the Netherlands.
Aer the completion, we will have more than
25% available capacity for future growth.
The total investment is expected to amount to
approx. DKK 250m and will be finalised in 2022.
The expansion and upgrade will have a minor
negative eect on earnings in 2021 of approx.
DKK 5m.
650
corresponding to EBITA of DKK 465m
EBITDA 2021
DKKm
EBITDA
DKKm
11,550
REVENUE 2021
DKKm
SOLAR IN BRIEFMANAGEMENT’S REVIEW
9Solar – Annual Report 2020
14:06
ØSTRE LANDSRET IN COPENHAGEN IS
BUILDING A NEW COURT.
From the start of the construction phase,
construction plans and buildings are virtualised
using BIM technology. BIM enables the project
manager to visualise the final result at any given
place.
BIM OBJECTS
Solar has digitalised more
than 4,600 of our products
into BIM objects.
STRATEGY
10
We build on long-term
cooperation with stra-
tegic suppliers, and by
consolidating customers’
sourcing needs, we aim
to increase eciency
throughout the supply
chain.
We work closely with
the customers to oer
tailored, value-adding
services that optimise
their business and make
them more productive.
Central and regional
warehousing, common
lean processes,
integrated IT systems
and shared services
across our local
operating companies
support our business.
With an e-business
share above 60%,
we are a true digital
company and use our
platform, including web-
shop, website and digital
marketing, to support a
personalised customer
experience.
SOURCING
EXCELLENCE
SERVICE
EXCELLENCE
OPERATIONAL
EXCELLENCE
DIGITAL
LEADERSHIP
Based on our
understanding of the
customers’ needs
we work with brand
manufacturers while
proactively seeking
alternatives.
The services range from
product engineering,
advisory services and
technical support to
customer logistics and
Fastbox.
We drive continuous im-
provement within a
broad range of disci-
plines, and we eectively
leverage our regional
footprint to reduce costs
and improve eciency.
We assume digital
leadership and drive
business development in
collaboration with digital
partners.
HUMAN RESOURCES
Our 3,000 ‘can-do’
people use market
insight to develop new
business areas and move
our business forward.
INNOVATION CULTURE
Our people have both the
right and the duty to chal-
lenge the customers, suppliers
and each other in pursuit of
innovative solutions.
TECHNOLOGICAL KNOW-HOW
Our people have thorough
knowledge about products and
technologies.
STAKEHOLDER ENGAGEMENT
We engage with a number of
dierent stakeholders to keep
developing our business and
create an understanding of
our productivity agenda.
FINANCIAL CAPITAL
Our financial situation is
sound and our collabora-
tion with the capital mar-
ket helps to ensure the
continuous development
of our business.
CUSTOMER VALUE
Within Installation,
Industry and Trade
we drive customer
productivity by helping
the customers run their
business more e-
ciently.
SHAREHOLDER VALUE
We create value for the
shareholders by con-
stantly optimising our
business to increase the
value of the company.
EMPLOYEE VALUE
We create value for the
employees by giving
them responsibility,
trust, exciting jobs and
career opportunities.
KEY RESOURCES CORE ACTIVITIES VALUE CREATION
We oer a number of
Solar concepts that
meet dierent customer
needs. We have concepts
suitable for both
installation and industry
customers.
Our broad range of ser-
vices is suitable for both
installation and industry
customers.
We strive to keep costs
low to protect the
margins in a market
with increasing price
transparency. We exercise
strict management over
our cost base.
We leverage the digital
transformation of the
construction industry
to develop new
services to drive
productivity and
cost savings in
collaboration with
our customers.
OUR BUSINESS MODEL
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
11Solar – Annual Report 2020
CORE
CORE
+
CORE+: STRONGER EXECUTION
OF BETTER BUSINESS
For the next strategy period, we are building
on the solid foundation of CORE. So we remain
stronger together, while adding further leverage
from two megatrends impacting our business:
DIGITAL and GREEN.
At Solar, we see market opportunities as well as
operational eciencies in digital and green.
And the two oen go hand in hand with customer
productivity, eciency and cost savings, e.g.:
• A new robotics solution based on AutoStore
improves warehouse productivity, saves space,
costs and energy.
• A Smart Supply kanban solution with
digital inventory management and ecient
replenishment boosts customer productivity.
• A green Fastbox service, where customers
place a digital order through our mobile app,
enables us to deliver within the hour by electric
scooters, thus saving customers time.
Everyone wins, including the environment.
THE CORE:
STRONGER TOGETHER
Solar has successfully completed a three-year
strategic drive to improve the profitability of
our core business while investing in the future.
At the core we are a Sourcing & Services
company. We play an assertive role in the value
chain, mindful of our value add. We are a partner
for the customers as well as the strategic
suppliers. This allows us to always source the
right products and deliver on time, every time,
in ways that make the customers more
productive. We call it ‘Stronger Together’.
CORE+: STRONGER EXECUTION
OF BETTER BUSINESS
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
12Solar – Annual Report 2020
Engaging and
productive digital
channels
Challenging
the status quo
Ecient and data driven
business operations
DIGITAL
TOGETHER
1. Ecient and data driven business operations
We operate our business with powerful, easy to
use productivity tools, leveraging data insights
and a high degree of automation.
2. Engaging and productive digital channels
We have a digital first approach and strive to
provide the customers with a personalised and
engaging digital experience, supporting their
productivity through innovative digital services.
3. Challenging the status quo
We are driving our industry forward through
digitalisation. We are setting new standards
in e-business, automation and digital logistics
services by working closely with first mover
customers, suppliers and technology partners.
Our high digital order share
is the perfect enabler of both
automated and data driven
operations and digital services
for our customers.
We are developing our business, delivering
personalised and productive digital customer
experiences. We are automating operations for
eciency and integrate digitally with customers
and strategic suppliers. In addition, we have
a close network of technology partners with
whom we are actively exploring the next wave of
digital solutions. We are not afraid to challenge
the status quo – where it adds more value.
That is what true partners do. We call it ‘Digital
Together’.
DIGITAL TOGETHER
We see a digital transformation happening all across
our industry. App usage, digital integration and virtual
design and construction are all on the rise. And with
COVID-19, even the laggards are logging on. Solar
already leads our peers in the digital area with the
highest digital order share. We are essentially a digital
company, uniquely wired to reap the benefits.
MEGATREND DIGITAL
TRANSFORMATION
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
13Solar – Annual Report 2020
Providing climate &
energy solutions
Contributing to a more
sustainable world
Securing a responsible
business
GREEN
TOGETHER
1. Ensuring a responsible business
Being a responsible business is at the very core
of who we are. Today, this includes proactively
reducing waste and energy consumption across
our processes and operations.
2. Providing climate & energy solutions
As a sourcing and services company we
have a unique opportunity to work together
with customers and suppliers to capture the
growing green potential. This involves exiting
non-sustainable product areas, like oil and gas
boilers, and shiing to green alternatives.
3. Contributing to a more sustainable world
By seeking sustainable solutions, placing
demands on suppliers and supplying to our
customers in more sustainable ways, we
contribute to a more sustainable world.
Global attention on sustainability
presents Solar with both market
opportunities and operational
demands.
Customers and suppliers expect us to run a
responsible business and rely on our expertise
in bringing sustainable products and solutions
to market. Therefore, we are measuring and
monitoring our consumption and, together with
employees and business partners, we constantly
focus on how to reduce our CO
2
emissions. Jointly
we are able to contribute to a more sustainable
world. We call it 'Green Together'.
GREEN TOGETHER
We see a growing demand for green solutions in all
markets. Many are closely linked to the technical
solution areas we already serve and have mastered.
Electrification of society and transportation has the
potential to supercharge Solar’s business – as did the
introduction of light bulbs into homes when Solar was
founded over a century ago.
MEGATREND GREEN
TRANSFORMATION
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
14Solar – Annual Report 2020
1. Concepts
Grow Concept share across all
customer segments
2. Climate & Energy
Focus on Climate & Energy
solutions in all segments
3. Industry
Become the preferred supplier to
four selected Industry segments
4. Trade
Grow Trade with focus on retail,
e-tail and e-trading customers
STRATEGIC FOCUS AREAS
MEGA TRENDS
Digital
Green
CORE
CORE
+
STRATEGIC FOCUS AREAS FOR
PROFITABLE GROWTH
With Core+, we will focus the
Digital and Green trends on
four strategic areas, where we
have a solid track record and
see further opportunities for
profitable growth in the years
to come.
Industry and Trade are distinct segments,
while Concepts and Climate & Energy are
strategic drivers in the Instal lation, Industry
and Trade segments.
Digital and Green investments and initiatives
shape the operating plans for each of the four
strategic focus areas.
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
15Solar – Annual Report 2020
OUR FOUR STRATEGIC FOCUS AREAS
CONCEPTS CLIMATE & ENERGY INDUSTRY TRADE
Our concepts embody our deepest insights into
customer needs within Installation, Industry and
Trade. Every segment in which we want to play a
significant role is supported by a Solar concept.
They power our sourcing as well as the service-led
sales of products from strategic suppliers.
Where Core was about broadening and proving
the concept portfolio, Core+ is about expanding
concept share across all markets with an
emphasis on digital and green, such as digital
concept sales and sustainability documentation.
Solar is already well established in sales of
sustainability solutions, and we aim to grow
substantially in the coming years, especially
within the fields of heat pumps, EV charging,
photovoltaic and energy storage.
Where Core was about product sales and building
expertise in solution selling, Core+ is about
establishing Solar as a value-added reseller and
sourcing partner within selected sustainability
solutions. In parallel, we invest in sustainable
operations, energy eciency, and reducing
packaging and waste.
We have long served selected sub-segments of
Industry with an industry-deep approach. Industry
customers appreciate the breadth and depth
of our product assortment as well as our digital
integrated services, which leads to long-term
contract relationships.
With Core we took the first steps in a regional
sales setup and a value proposition around
total-cost of ownership. With Core+ we will
drive the regional sales approach deeper into
Infrastructure, MRO, OEM and Oshore & Marine,
each with unique value propositions and an
emphasis on digital and green.
A large and growing customer segment, including
DIY stores and e-tailers, no longer source their
materials from installers or from traditional
wholesalers. With our digital business model and
broad and specialised assortments, particularly
within energy eciency and sustainability, we can
attract these customers through a proactive sales
approach.
Where Core was based on a local approach, Core+
will apply best practice across markets, with an
emphasis on outreach sales, as well as digital and
green.
Our target is to increase our share of revenue
in Sweden, Norway and the Netherlands.
Ultimately, targetting a concept share of 25%
of revenue for the core business, up from 21%.
share of revenue CAGR for our strategic period share of core revenue CAGR for our strategic period
With a starting point of DKK 600m for 2020,
we are targetting a CAGR of 5% for
the strategic period.
We aim to increase our Industry share of
revenue, particularly in Sweden and the Nether-
lands, which supports our ambition of an Industry
share of 30% of core revenue, up from 27%.
Our ambition is to introduce Trade
to more of our markets and aim for a
CAGR of 5% over the coming three years with a
starting point of DKK 874m for 2020.
25% 5% 30% 5%
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
16Solar – Annual Report 2020
CORE
+
GROUP: FINANCIAL TARGETS
EBITDA margin above 6%, corresponding
to a ROIC above 17% aer tax
Gearing (NIBD/EBITDA) 1.5-3.0x
GROUP: NON FINANCIAL TARGETS
E-business share of 70%, corresponding to
almost DKK 8bn
Complete the training of 2,000 participants
in renewable solutions at our Solar School
ESG
Increase gender diversity at
management level
All electricity for Solar's own buildings will be
from renewable sources
Install PV equipment at all Solar-owned sites
and EV chargers at all major Solar sites
Further ESG targets will be launched during
2021
CONCEPT
25% share of core revenue
CLIMATE & ENERGY
Revenue CAGR of 5% for the strategic period
INDUSTRY
30% share of core revenue
TRADE
Revenue CAGR of 5% for the strategic period
Our CORE+ strategy derives
from the winning aspiration to
be a leading green and digital
sourcing and services company
in our industry.
We want to develop Solar in
a profitable way by focusing
on key markets, building
around our four strategic focus
areas and deploying the core
capabilities embedded in a
strong and agile operating
model.
AMBITIONS FOR 2023
STRATEGY 20212023
STRATEGYMANAGEMENT’S REVIEW
17Solar – Annual Report 2020
18
DELIVERIES
We deliver more than
115,000 fastboxes
a year.
14:32
A GREENER CHOICE
Solar Fastbox makes our customers more
ecient and flexible in their daily work.
Moreover, by using bicycles and electric vehicles
wherever possible, we underpin our aim to make
Solar Fastbox the more sustainable option.
OUR
STRATEGIC
FOCUS AREAS
1
2
3
6
5
4
7
CONCEPTS
OUR STRATEGIC FOCUS AREAS
Solar Concept is our product portfolio targeted at
customers in the installation and industry segments. We
oer a selected assortment of high-quality products.
Solar Concept embodies five elements - price, quality,
availability, coverage and delivery.
Our seven concepts are
tailored to dierent
customer demands
2020 SHARE OF
CORE REVENUE
21%
Solar Plus oers access to products and
components needed on a day-to-day basis.
When it comes to top tier quality, but at
lower prices, we do not compromise. And
we understand the importance of profes-
sional pride.
Solar Light oers a carefully chosen as-
sortment of products and a group of Solar
Light specialists who are ready to support
you with solutions to projects of any size.
Solar Tools oers high quality products at
competitive prices and makes ordering
tools more accessible.
We have introduced seven dierent concepts:
Solar Plus, Solar Light, Solar Tools, Solar Netto,
Solar Cable, Solar Heat and Solar Project. Each
concept comprises a simple and transparent
product oering together with guidance from
industry specialists.
Solar Netto is our most cost-eective
alternative. This means fixed low prices for
materials that meet standard requirements.
Solar Cable entails collaboration with a
number of suppliers across Europe, which
means we can oer a wide range of cables
to match individual requirements.
Solar Heat comprises a wide assortment
of high-quality products within heating
solutions, which are sold by piece or as full
concepts.
Solar Project covers the full project scope –
from Plus to Heat.
Aesthetics plays a major role at Hotel
Villa in Copenhagen. Lighting is
particularly important for creating a
welcoming atmosphere.
19Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
NEW LIGHTING
IMPROVES SAFETY
When the world’s second largest aluminum producer,
Alcoa, needed a new lighting solution, Solar Light was
the ideal choice. The end result provides better and
safer working conditions for all employees on site.
Obsolete light bulbs and fluorescent tubes were
replaced with a customised LED solution that
created a brighter workplace for almost 200 em-
ployees at Alcoa in Norway. As well as delivering
greater energy eciency, the new lighting system
has also enhanced safety in the production area.
“Our sta used to wear headlights, but aer the
new lighting system was installed, we were able
to do without them. We also used to have a few
vehicle collisions, but the improved vision will
obviously help to prevent more accidents,” says
Ove Martin Kjølleberg from Alcoa.
He also points out two other benefits. Colour
representation has improved, which means that
cables are easier to distinguish. And with the fur-
naces emitting dierent gases, it is now easier to
spot when extra precautions need to be taken.
Electricians at Alcoa used to change light bulbs
every three years, and some of the lighting was
changed even more frequently than that. The
time saved can now be spent more eciently.
Before Aer
“We had constant problems with our lighting
and the cables were too old to provide power.
Our new LED solution means that these issues
are consigned to the past”, explains Ove Martin
Kjølleberg.
Prior to the installation, Solar Light components
were tested in an operational environment and
exposed to the aluminum production tempera-
ture which is 30 degrees higher than the outside
temperature.
As a result of the successful installation, another
Solar Light solution will be installed inside two
hangars at Alcoa’s production site in Norway.
Alcoa
LISTA, NORWAY
Alcoa is the second largest aluminum pro-
ducer in the world, supplying industries
across Europe. The production site is
located in Lista in southern Norway.
OUR STRATEGIC FOCUS AREAS
CASE: CONCEPTS
We had constant
problems with our
lighting and the
cables were too old to
provide power. Our new
LED solution means
that these issues are
consigned to the past.
20Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
CLIMATE & ENERGY
OUR STRATEGIC FOCUS AREAS
Climate & Energy is experiencing increased focus
on, and activity within, climate and energy-ecient
solutions. This stems from a diverse customer base,
including industrial enterprises, public buildings
and private home installations.
The expanding base is the result of ever-in-
creasing energy prices, stricter environmental
requirements and government targets to reduce
CO₂ emissions by 2030.
Solar Climate & Energy provides the right assort-
ment of climate & energy solutions and supports
customers with tailored construction designs, tech-
nical support and future energy consumption calcu-
lations, all of which ensure that customers receive
products with minimum energy consumption.
The EU as well as governments have introduced a
range of targets to reduce CO₂ emissions by 2030.
Solar Climate & Energy will be an active player in
this endavour.
We are experiencing an
increasing demand for
sustainable solutions.
2020 REVENUE
600
DKKm
In 2020, we sold more than 2,700
charging stations - over 60% more
than the year before.
21Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
INSTALLING HEAT
PUMPS REDUCES
CO₂ EMISSIONS
Danish concrete producer Boligbeton’s ambition is to
reduce CO₂ emissions significantly. Therefore, they have
decided to replace all oil and gas heating with greener
alternatives. Alongside Solar, they have found the right
solution, which will ensure sustainable energy, a
comfortable indoor climate and better business.
It takes a lot of water, heat and electricity to pro-
duce concrete panels round-the-clock. Boligbeton
produces concrete panels for all types of con-
structions, and the largescale production means
a high level of CO₂ emissions. The company has
resolved to reduce its emissions and improve the
environmental labelling of its products.
“It is important that we take action both as an
industry and as a company,” says Tom Kristensen,
Boligbeton’s Managing Director.
One initiative is to replace the old heating sys-
tems with new heat pumps.
“For the sake of the environment, it makes sense
to replace oil and gas with greener solutions such
as heat pumps – and there are financial benefits”,
explains Tom Kristensen.
“Compared to the old system, Boligbeton is set
to reduce energy consumption by approximately
70 percent. The heat pumps will also result in
improved circulation and a more comfortable
indoor climate”, says Tom Nielsen, Sales Engineer
at Solar Climate & Energy.
Solar is assisting Boligbeton with project design
and product selection in its green transition.
So far, the company has installed five new heat
pump systems. They are also working on an idea
for a solar cell park that will provide green energy
for lighting and machinery.
CASE: CLIMATE & ENERGY
OUR STRATEGIC FOCUS AREAS
Boligbeton
LØSNING, DENMARK
Boligbeton delivers innovative concrete
solutions to the Danish construction
industry - covering residential, industrial
and oce construction.
Compared to the old
system, Boligbeton is set to
reduce energy consumption
by approximately 70 per
cent. The heat pumps will
also result in improved
circulation and a more
comfortable indoor climate.
22Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
INDUSTRY
OUR STRATEGIC FOCUS AREAS
Industry constitutes a significant part of our
business. The prime focus is on long-term
contracts with industrial customers,
both with a local and cross-border presence.
Our main industrial business focus areas are:
Infrastructure, MRO (Maintenance, Repair & Oper-
ation), OEM (Original Equipment Manufacturer)
and Marine & Oshore.
Our assortment oers everything from lighting
and tools to vital spare parts that safeguard
against production downtime.
One of our key focus areas is to help customers
reduce costs by cutting back on suppliers,
orders and administration – a process known as
Total Cost of Ownership (TCO). This allows the
customers to eliminate heavy and inecient
processes, which results in significant financial
savings.
Having the right stock is important in almost
every industry. Our Smart Supply service, for
instance, oers a transparent stock solution with
greater overview. Moreover, the system ensures
that the right items are available at all times and
helps customers to avoid expensive production
downtime. Increased productivity and eciency
are the result.
Industry is the most
profitable segment in
the majority of our
markets.
2020 SHARE OF
CORE REVENUE
27%
More than 100 industrial customers
are already using our smart supply
kanban storage solution which
reduces their stock by 30%.
23Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
WHEN ONE SUPPLIER
IS ENOUGH
The Danish food manufacturer, Flensted, has optimised
its sourcing setup in partnership with Solar. Making
Total Cost of Ownership (TCO) visible has led to more
transparency and tighter control.
It all began with a phone call
Jes Christensen, Purchasing Manager at Flensted,
was looking for a supplier for a new project. The
technical support department needed to simplify
procurement.
“As an example, we used to buy components from
four dierent suppliers, but I was convinced that
we could optimise that.”
In close collaboration with Flensted, Solar
undertook a transparency analysis of the
purchasing pattern for technical components.
This provided Flensted with the opportunity to
optimise its sourcing and handling setup, such as
consolidating suppliers, improving master data
and standardising products and brands.
“The benefits are clear. We have cut back on
suppliers, orders, deliveries and administration,
which of course means significant financial
savings”, says Jes Christensen.
The next step was to implement a Smart Supply
system to enable the 15 technicians to locate
items and components in stock more easily.
“We had too many items in stock and bought
products whenever we needed them – even
though we probably had them already. We
needed an overview,” the Purchasing Manager
explains.
With a constant backup, the Smart Supply system
ensures that Flensted never runs out of important
products. The system is based on two bins contain-
ing the same items. When the first bin becomes
empty, a new delivery will be on its way. Meanwhile,
the technicians use the second bin.
“We now have transparency, which makes it easi-
er for our employees”, he says.
Minimising downtime
An additional benefit is that the factory has
kept downtime to a minimum. According to the
Purchasing Manager, a breakdown can be very
expensive; machines come to a standstill, goods
for customers may be delayed, and products may
go to waste because of their short shelf-life.
“Availability and a clear stock overview are
essential to run a cost-optimised business with
maximum eciency and minimum cost. Flensted
has a clear future strategy deeply rooted in a TCO
mindset that ensures continued transparency
and a structure for phasing in and phasing out
products. Being in control in this way increases
competitiveness in a competitive market”,
explains Lars Lange, Head of Food and Beverage
at Solar.
CASE: INDUSTRY
OUR STRATEGIC FOCUS AREAS
Flensted, Denmark
Flensted Food Group is a
Danish manufacturer of
convenience food. It was
founded in 1966 and employs
200 people. The group's head
oce and production facilities
are based in Western Jutland.
The benefits are clear. We
have cut back on suppliers,
orders, deliveries and
administration, which of
course means significant
financial savings.
24Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
TRADE
OUR STRATEGIC FOCUS AREAS
Trade focuses on a growing customer group with
dierent buying patterns from the Installation and
Industry customer segments. They are typically
DIY/retailers, webshops or smaller independent
B2B-customers.
The main criteria for these customers are a wide
assortment, a convenient webshop and flexible
logistics solutions – requirements that are com-
bined into a solution that puts them in the best
possible position to leverage their 'go to market'
strategy.
Contracts typically contain agreements on
storage facilitation, inventory management and
logistics solutions for either customer or end-us-
er deliveries.
We can oer all that, which makes us the preferred
partner for a large group of such customers.
Trade is currently
centred in Denmark and
the Netherlands.
2020 SHARE OF
CORE REVENUE
Our long-standing experience and
know-how within logistics and inventory
solutions enable us to serve new
segments.
25Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
8%
Buying behaviour has changed. Many companies
demand one-stop shopping. As a sourcing and services
company, we constantly adopt new ways to make our
customers more ecient - which is why we have a
strategic focus on Trade.
Instead of buying batteries at a hardware store
and light bulbs from a webshop, our customers
use Solar as a one-stop shop to purchase
whatever consumables they need from our wide
assortment.
This makes good business sense for the
customers and for Solar. Customers can cut back
on suppliers, deliveries and administration,
which saves them time and money. We see
this as a self-service concept, where
customers typically do not require
technical support or visits from
our sales team. Instead, they
need a great webshop with a
wide assortment, where they
can quickly find what they
are looking for and have
everything delivered
through our flexible
logistics solutions.
OUR STRATEGIC FOCUS AREAS
WHEN ONLY
ONE SUPPLIER
IS NEEDED
CASE: TRADE
Trade is a business area that will contribute to
our financial growth. The next step is to take best
practice from Denmark and implement it in Swe-
den, Norway, Poland and the Netherlands.
CARSTEN ANTONISEN
Senior Vice President,
Sales
26Solar – Annual Report 2020
MANAGEMENT’S REVIEW OUR STRATEGIC FOCUS AREAS
In general, financial ratios are calculated in accordance with the Danish Finance Society’s “Recommen-
dations & Ratios 2019”.
As at 1 January 2019, Solar implemented IFRS 16, Leases, by applying the modified retrospective ap-
proach. Comparative figures are not restated. This especially aects EBITDA, interest-bearing liabilities,
EBITDA margin, gearing and equity ratio.
In general, restatements have been made of income statements, cash flow and key ratios for discon-
tinued operations regarding STI for 2017 and 2018, and Claessen ELGB N.V. and GFI GmbH for 2016 and
2017. In accordance with IFRS, the balance sheet has not been restated.
Consolidated (DKK million) 2020 2019 2018 2017 2016
Revenue 11,465 11,679 11,098 11,061 10,420
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
637 538 379 362 368
Earnings before interest, tax and amortisation (EBITA) 455 360 327 310 312
Earnings before interest and tax (EBIT) 248 260 224 176 256
Earnings before tax (EBT) 300 120 237 176 223
Net profit for the year 222 64 133 19 125
Balance sheet total 4,607 4,990 4,633 4,717 4,506
Equity 1,696 1,592 1,638 1,591 1,683
Interest-bearing liabilities, net 128 921 461 489 43
Cash flow from operating activities, continuing operations 813 300 224 7 203
Net investments in property, plant and equipment -25 -110 -59 -14 51
Employees
Average number of employees (FTEs), continuing operations 2,935 3,039 2,941 2,870 2,814
Financial ratios (% unless otherwise stated) 2020 2019 2018 2017 2016
Organic growth adjusted for number of working days -2.0 4.9 2.2 7.0 2.3
Gross profit margin 21.0 20.1 20.2 20.7 21.1
EBITDA margin 5.6 4.6 3.4 3.3 3.5
EBITA margin 4.0 3.1 2.9 2.8 3.0
Eective tax rate 26.0 45.2 23.3 17. 0 28.3
Net working capital (year-end NWC)/revenue (LTM) 9.7 11.0 9.8 9.7 8.4
Gearing (net interest-bearing liabilities/EBITDA), no. of times 0.2 1.7 1.2 1.3 0.1
Return on equity (ROE) 13.5 4.0 8.2 1.2 7.1
Return on invested capital (ROIC) 13.8 8.3 8.1 6.3 10.0
Equity ratio 36.8 31.9 35.4 33.7 37.4
Share ratios (DKK unless otherwise stated)
Earnings per share outstanding (EPS) 30.42 8.77 18.22 2.60 16.50
Dividend per share 28.00 14.00 14.00 10.00 12.00
Dividend in % of net profit for the year (payout ratio) 91.9 159.4 76.7 385.6 70.2
FIVEYEAR SUMMARY
28Solar – Annual Report 2020
MANAGEMENT’S REVIEW REVIEW
We succeeded in our journey
towards improved EBITA, which
reached DKK 455m and thereby
exceeded guidance. We delivered
an EBITA increase of more than
25% despite an adjusted organic
revenue growth of -2.0% (4.9%)
partly due to a decline in demand
caused by COVID-19. The EBITA
increase of DKK 95m was driven by
an improved gross profit margin,
eciency gains and cost
containment.
REVENUE
Solar’s overall adjusted organic growth for
Installation amounted to around -3% and for
Industry to around -1%. Solar Danmark
saw positive growth in both Installation and
Industry while other entities saw negative
growth.
With regard to Installation, the Better Business
project focused on supplying the right products
to the right customers. Part of this project
involved product pruning of low-margin business,
which is one of the drivers of negative growth. In
total, this had a negative impact on revenue of
approx. DKK 250m.
With regard to Industry, Infrastructure saw
positive organic growth, while Marine & Oshore
and OEM experienced substantial headwind.
The Trade segment delivered solid positive
organic growth driven by Special Sales.
Adjusted organic growth at group level amounted
to -2.0% (4.9%). Revenue totalled DKK 11.5bn
(DKK 11.7bn).
Core business delivered adjusted organic growth
of -2.2% (5.2%). Solar Danmark saw positive
adjusted organic growth.
GROSS PROFIT MARGIN
Despite lower revenue in 2020, gross profit
increased by DKK 52m. We saw continuous
improvement in the gross profit margin, which
increased to 21.0% (20.1%).
Gross profit margin was positively aected by the
Better Business project initiatives, such as
product pruning, and by the increased sale of
Solar’s concepts.
In addition, extraordinary price increases – mainly
in Solar Norge - led to one-o income of approx.
DKK 18m, corresponding to 0.2% at group level.
OTHER INCOME
Other income amounted to DKK 8m (DKK 9m). Of
this, DKK 7m is the outcome of a settlement with
the former shareholder of MAG45, see Annual
Report 2019 and the note on litigation.
In 2019, the DKK 9m primarily related to the
impact of Solar Polska winning a court case
regarding a VAT refund and to the net impact of
the acquisition of the Swedish business activities.
EXTERNAL OPERATING COSTS AND
STAFF COSTS
Due to COVID-19, we launched several prudent
cost-saving measures to protect short-term
EBITA INCREASED BY
MORE THAN 25% TO DKK 455M
(Figures in brackets are figures from the corresponding period in 2019)
Our comments on core and related business and
disclosures in the note, Segment information, should be
regarded as supplementary information. Information on
the following segments - Installation, Industry and Trade
- is included in the note, Segment information.
RELATED BUSINESS
Revenue from related business amounts to
approx. 5% of our total revenue.
We continue to see a positive eect from the
substantial reorganisation of MAG45 - which
led to an ongoing improvement in profitabili-
ty, with an increase in EBITA of DKK 18m in
2020. Due to the COVID-19 situation, the
strategic review of MAG45 initiated in Q3
2019 is on hold.
Related business showed adjusted organic
growth of 2.7% (-0.3%) while EBITA was up at
DKK -1m (DKK -19m) in 2020.
* Besides MAG45, our related business includes
Solar Polaris.
FINANCIAL REVIEW
29Solar – Annual Report 2020
MANAGEMENT’S REVIEW REVIEW
earnings and to deliver cash generation. We
implemented a freeze on recruitment, reduced
the use of temporary sta and introduced
general cost containment. Some of the cost
savings were temporary savings and, as expected,
costs were gradually normalised in H2 as
COVID-19 restrictions were partly lied.
External operating costs and sta costs were
down by DKK 53m compared to 2019. Of this,
foreign exchange translation adjustments
accounted for DKK 23m, cost savings for DKK
40m, and furlough schemes for DKK 15m. In
addition, the cost of the SAP eWM rollout
amounted to approx. DKK 25m.
LOSS ON TRADE RECEIVABLES
Solar conducts ecient credit management at all
times. In March, we tightened our credit policy
due to the COVID-19 pandemic. Furthermore, we
have taken out insurance to hedge against
potential losses on trade receivables.
Impacts from COVID-19 have increased risks on
trade receivables but loss on trade receivables
remained at a normal level in 2020 amounting to
unchanged 0.2% of revenue.
EBITA
EBITA increased by DKK 95m to DKK 455m,
corresponding to an EBITA margin of 4.0% (3.1%)
of revenue.
Non-recurring income of DKK 25m aected EBITA
and was related to extraordinary price increases,
additional discount from suppliers and settle-
ment with the former shareholder of MAG45.
EBITA from core business was up at DKK 456m
(DKK 379m) corresponding to an EBITA margin of
4.2% (3.4%). The increase was driven by improve-
ments in Solar Danmark, Solar Sverige and Solar
Norge.
As expected, SAP eWM roll-out costs aected
Solar Danmark’s financial performance by DKK
10m. Rollout costs also impacted Solar Norge by
DKK 9m and Solar Nederland by DKK 6m.
Solar Nederland’s performance was also aected
by approx. DKK 6m in restructuring costs and
costs relating to the implementation of Auto-
Store, an automated storage and retrieval system.
The results of the individual countries are
disclosed on page 64.
AMORTISATION AND IMPAIRMENT
Amortisation totalled DKK 207m (DKK 100m).
Review of intangible assets resulted in an
impairment loss of DKK 139m in total. Of this,
DKK 129m related to goodwill obtained when
Solar Sverige acquired Alvesta V.V.S-Material AB in
2007. In addition, a DKK 10m impairment of
soware was made which mainly related to
Axapta soware acquired in 2015 and deployed at
Solar Polska.
In 2019, a review of intangible assets resulted in
an impairment loss of DKK 25m for MAG45. DKK
21m related to soware and DKK 4m related to
customer lists obtained when MAG45 acquired
the industrial business activities in Savone, Italy,
in 2017.
DKK million 2020 2019
Core business, amortisation 67 71
Core business, impairment loss 139 0
Related business, amortisation 1 4
Related business, impairment loss 0 25
Amortisation and impairment of
intangible assets 207 100
SHARE OF NET PROFIT FROM
ASSOCIATES
Our share of earnings from our digital, construc-
tion and services associates amounted to DKK
-12m (DKK -19m) related mainly to BIMobject. In
2019, DKK -15m related to BIMobject and DKK -4m
to HomeBob including write-down of the
HomeBob app.
IMPAIRMENT ON ASSOCIATES
Impairment on associates amounted to DKK 104m
(DKK -86m).
In Q4, we divested our shareholding in BIMobject
for a total cash consideration of SEK 333m (DKK
237m). Profits from the divestment amounted to
DKK 23m based on a book value of DKK 214m as
at 30 September 2020. Furthermore, previously
performed BIMobject write-down of DKK 86m was
reversed.
In addition, we divested 60% of our investment in
Viva Labs. The write-down and loss related to this
divestment amounted to DKK 4m. Other invest-
ments resulted in a loss of DKK 1m.
In 2019, Solar identified a need for write-down of
DKK 86m related to BIMobject.
FINANCIALS
Net financials amounted to DKK -40m (DKK -35m)
negatively aected by DKK 10m due to a partly
redemption of an interest swap. A similar positive
amount is reported under Other comprehensive
income.
Adjusted for this item, net financials totalled DKK
-30m (DKK -35m).
EARNINGS BEFORE TAX
Earnings before tax increased to DKK 300m (DKK
120m). Earnings before tax were aected by
impairment losses etc., see table below. When
adjusted for these items, earnings before tax
were up at DKK 335m (DKK 231m).
DKK million 2020 2019
Earnings before tax 300 120
Impairment on associates -104 86
Earnings before tax, adjusted for
impact from associates 196 206
Impairment loss,
other intangible assets 10 21
Impairment loss, goodwill and
customer lists 129 4
Adjusted earnings before tax 335 231
INCOME TAX
Income tax totalled DKK 78m (DKK 54m) which
corresponds to an eective tax rate of 26.0%
(45.2%). Adjusted for impairment on associates
and non-deductible items, the eective tax rate
was 23.5% (27.8%).
FINANCIAL REVIEW
30Solar – Annual Report 2020
MANAGEMENT’S REVIEW REVIEW
NET PROFIT
Net profit for the Solar Group totalled DKK 222m
(DKK 64m).
CASH FLOWS
Net working capital calculated as an average of
the previous four quarters amounted to 11.5%
(11.9%) of revenue. Net working capital at the
end of 2020 amounted to 9.7% (11.0%).
Cash flow from operating activities totalled DKK
813m (DKK 300m) impacted by inventory changes
of DKK 126m (DKK -92m) and changes to receiv-
ables of DKK 173m (DKK 21m). We succeeded in
reducing our inventory level which was one of
our focus areas in 2020, while receivables were
impacted by negative revenue growth.
Total cash flow from investing activities
amounted to DKK 162m (DKK -194m) where
divestment of BIMobject and Viva Labs impacted
by DKK 237m and DKK 3m respectively. In 2019,
the divestment of STI had a positive impact of
DKK 5m, the acquisition of the Swedish business
activities had a negative impact of DKK 40m,
and further investments in our existing financial
portfolio impacted negatively by DKK 14m.
Purchase of property, plant and equipment
amounted to DKK 33m (DKK 110m) aected in
both 2019 and 2020 mainly by the AutoStore
investments in Solar Norge and Solar Nederland.
Cash flow from financing activities was aected
by dividend distribution of DKK 102m (DKK 102m)
and instalments on lease liabilities of DKK 121m
(DKK 117m). Raising or repayment of non-current
interest-bearing debt amounted to DKK -199m
(DKK -9m). Change in current interest-bearing
debt is presented as part of the financing
activities and amounted to DKK -205m (DKK
118m). Cash flow from financing activities thus
totalled DKK -627m (DKK -110m).
Cash flow from discontinued operations
amounted to DKK 0m (DKK -2m). Consequently,
total cash flow amounted to DKK 348m (DKK
-6m).
Net interest-bearing liabilities amounted to DKK
128m (DKK 921m) positively aected by DKK 51m
due to COVID-19 financial support packages.
Over the past 12 months, we have
• invested DKK 50m in digital improvements;
• invested DKK 33m in optimising our operations
e.g. AutoStore;
• paid dividend of DKK 102m.
As at 31 December 2020, gearing was 0.2 (1.7)
times EBITDA. Calculated as an average, our
gearing was 1.1 (2.0) times EBITDA. Our gearing
target is 1.5-3.0 times EBITDA.
As at 31 December 2020, Solar had undrawn
credit facilities of DKK 474m (DKK 383m).
Invested capital for the Solar Group totalled DKK
1,760m (DKK 2,297m). ROIC amounted to 13.8%
(8.3%). ROIC for core business amounted to
15.1%.
Activities with a Solar equity interest of less than
50% and discontinued activities are not included
in the ROIC calculation. Invested capital only
includes operating assets and liabilities.
REMUNERATION OF EXECUTIVE BOARD
AND MANAGEMENT TEAM
In accordance with Solar’s remuneration policy
and general guidelines for incentive-based
remuneration, the Board of Directors granted
restricted shares to the Executive Board and
management team in February 2020.
Overall, the granting of shares is covered by
the same terms as the previous grants of share
options. 7,664 restricted shares were granted,
amounting to a fair value of DKK 2.4m at the time
of granting. The restricted shares vest three years
aer the time of granting, i.e. this grant of shares
vests in 2023. In February 2020, 28,398 share
options from the grant in 2016 expired. For more
information, please see this report’s note 25 on
share-based payment.
In 2019, new incentive schemes focusing on
increased return on invested capital were
established for both the Executive Board and the
management team.
General information on Solar’s incentive scheme
is available on our website:
FINANCIAL REVIEW
DIVESTMENTS AND ACQUISITIONS
Acquisition of Swedish business activities
On 15 May 2019, Solar acquired selected
parts of Onninen AB’s Swedish business
activities. In 2019, we saw full-year revenue of
approx. DKK 300m. As the acquired activities
are fully integrated into Solar Sverige, we
estimated the 2019 EBITA impact to be
approx. DKK -10m due to integration and
restructuring costs.
Divestment of Norwegian training business
In March 2019, Solar concluded the process,
initiated in December 2018, of a manage-
ment buyout of our Norwegian training
business, Scandinavian Technology Institute
(STI), part of our related business. The
divestment constituted a loss of DKK 17m,
which was recognised in the Solar Group’s
income statement as part of the loss from
discontinued operations in Q4 2018.
WWW.SOLAR.EU/INVESTOR/POLICIES/
31Solar – Annual Report 2020
MANAGEMENT’S REVIEW REVIEW
13:21
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pelia ndicabo. Iqui blamus autae vellupt atese-
quae voloribea dolupta tionsectas am nimin cum
simporest
ORDER LINES
Solar Group has more than
14 million order lines every year
FULL SPEED AHEAD AT NIGHT
Sta at Solar warehouses do their utmost to
ensure that all orders are ready for collection the
next day
22:06
CORPORATE
MATTERS
32
Through our values SmartFun, Glow and Courage,
our many employees have continually developed
the means by which we service the customers.
We have evolved from a pure sales organisation
to a sourcing and services organisation that not
only provides products, but also solutions and
guidance for the end-users. We believe in service
as a way of changing the way we do business – it
makes us stronger together.
DEVELOPING OUR PEOPLE
Creating opportunities and developing employees
has always been among Solar’s main priorities. Our
online learning and development platform, Solar
Compass, encourages and supports employees’
ongoing career development. At Solar, we pro-
mote internal recruitment and thus benefit from
inter-departmental knowledge and the continued
development of the employees.
OUR PEOPLE
People lie at the very heart of our
organisation. Since our foundation in
1919, Solar has been the link between
suppliers and customers, always with
increased eciency and productivity as
the guiding star.
33Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
NOMINATION COMMITTEE
The Board of Directors has established a Nomi-
nation Committee with participation from major
shareholders and one representative from the
Board of Directors. The company wishes to en-
able major shareholders to have an influence over
the composition of the Board of Directors.
It is the committee’s duty to assess the need
for change to the composition of the Board
of Directors, including making sure that the
company’s Board of Directors comprises
individuals with the necessary professional
qualifications, expertise and experience.
The committee ensures that at least half the
members of the Board of Directors are indepen-
dent. Moreover, the committee should, as far as
possible, nominate candidates who will ensure
that the diversity policy adopted by the Board of
Directors will be met over the long term.
In this connection, the committee is responsible
for presenting the Board of Directors with an ac-
tion plan for the future composition of the Board
of Directors, including specific amendments.
However, the Nomination Committee is not a
board committee like other committees estab-
lished by the Board of Directors. The committee
does not prepare decisions that the Board of
Directors is to make. The committee is a supple-
ment to the Board of Directors’ work with the
composition of the board.
OUR PEOPLE
We always hire the most
qualified candidate for
the job, regardless of
political, religious or
personal orientation.
34Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
Own risks and risk
management activities
Test, validate and assess
eciency in risk management
processes and activities
Establish policies and
frameworks, facilitate risk
identification and monitoring
Business Management
& Risk Owners
Internal Audit
First line of defence Third line of defence
Group Risk Management
& Risk Managers
Second line of defence
Board of Directors / Audit Committee
Approve and accept risk policy including
risk appetite and tolerance
Executive Board
Monitor the risk management framework and eectiveness
Solar’s risk management is based
on Enterprise Risk Management
(ERM) and the Board of Direc-
tors’ rules of procedure, which
place the responsibility for risk
management with the Executive
Board.
RISK MANAGEMENT
The Executive Board is responsible for ensuring
that the necessary policies and procedures are
in place, that ecient risk management systems
have been established for all relevant areas and
are improved continuously. The overall purpose of
the risk management initiative is to support the
running of a robust business that is able to react
quickly and flexibly when conditions change.
Solar’s risk management work covers all relevant
Solar companies in Denmark, Norway, Sweden,
the Netherlands, Poland and MAG45. The process
supports national management teams in taking a
structured approach towards risk management,
with risk self-assessments anchored in the annual
cycle. The data is consolidated at group level,
and the findings are presented to the Board of
Directors for approval.
The individual risk owners are responsible for
mitigating risks to a level within Solar’s risk appe-
tite and tolerance. Throughout the year, Solar’s
Group Risk Management and local risk managers
actively monitor the progress of such mitigation
to ensure that risks are at the acceptable level.
THREE LINES OF DEFENCE
Solar’s risk management is organised
according to the three lines of defence
model which demonstrates and structures
roles, responsibilities and accountabilities
for risks, decision-making and control to
achieve eective governance, risk manage-
ment and assurance.
35Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
RISK CATEGORY
Risk seeking
Risk tolerantRisk neutral
RISK APPETITE
RISK TOLERANCE
Moderately
Risk Averse
Risk averse
Governance and
compliance
Strategy
and planning
Operations and
infrastructure
Low
Low-medium
Low-medium
High
High
Low
Low
IMPACT
PROBABILITY
C
A
H
G
B
F
D
E
A
B
C
D
E
F
G
H
RISK MANAGEMENT
RISK DEFINITION
The focus of Solar’s risk management is to iden-
tify and assess operational risks and operational
aspects of strategic risks throughout Solar Group.
Solar defines these risks as events or develop-
ments that could significantly reduce Solar’s
ability to:
1. Meet profit expectations,
2. Execute the strategy, and/or
3. Maintain a licence to operate.
Solar works with the concepts of gross risk (in-
herent risk) and net risk (residual risk).
The gross risk eect is defined as the product
of the impact and the probability of the risk
materialising without any change in current risk
mitigation.
The net risk eect is defined as the risk level
when considering current as well as planned
mitigation activities regarding both impact and
probability.
RISK APPETITE AND TOLERANCE
Solar’s risk appetite and risk tolerance articulate
the extent to which Solar is willing to accept risks
in three overarching categories: Governance and
Compliance, Strategy and Planning, Operations
and Infrastructure.
Accordingly, risk appetite outlines Solar’s
strategic outlook towards risk and defines the
degree to which Solar is risk-seeking or risk-
avoiding, while the risk tolerance, as an indicative
parameter, outlines the level of net risk that Solar
is willing to accept for a given measure of reward.
RISK APPETITE AND TOLERANCE PER RISK CATEGORY
SOLAR RISK MAP 2021
Risk appetite and risk tolerance are set by the
Board of Directors and are reviewed annually.
RISK SELFASSESSMENT
Solar evaluates the eect of a risk based on a
product of the probability of the risk materi-
alising and the gross impact if the risk does
materialise. In detail, the probability of the risk
is defined as the expected frequency with which
the risk may occur, while the impact is divided
into four dimensions:
1. Eect on earnings
2. Reputational damage
3. Compliance (licence to operate)
4. Business activities
RISK HANDLING
The purpose of identifying and then handling risk
is, at all times, to bring it to an acceptable level,
which is in line with risk appetite and tolerance.
Solar works with four dierent risk treatment
strategies when handling risks.
• Avoid – seeks to eliminate uncertainty by
changing circumstances.
• Transfer – seeks to transfer ownership and/or
liability of the risk to a third party.
• Accept – recognises net risks and monitors risk
exposure.
• Mitigate – seeks to minimise risk exposure to
below an acceptable threshold.
To ensure an understanding of risk philosophy
and the treatment preferences, Solar provides
structured criteria concerning risk attitude and a
catalogue of mitigating activities.
Cyberattack
IT interruptions
Market volatility
Warehouse operations
Credit management
Customer migration to new webshop
New entrants in the market
Central warehouse breakdown
Solar’s top risks are mapped out in
terms of probability and impact in
the risk map.
36Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
RISK MANAGEMENT
EXPOSURE TO POTENTIAL TOP RISKS
AND MITIGATION
One of the risks reported last year - change of
warehouse management system (DK, NO, NL) -
is no longer a risk as the SAP eWM system was
successfully implemented in Solar Danmark, Solar
Norge and Solar Nederland.
CYBERATTACK
The risk is unchanged.
Risk of IT breakdown and/or data breach due to
cyberattack.
Business interruptions in the shape of data com-
promise, denial of service, intellectual property
the and regulatory consequences are among
the repercussions of various cyber incidents, ulti-
mately leading to financial losses and an inability
to run daily operations. The probability of the
worst-case scenario is medium, but the potential
impact is assessed as high.
Mitigation eorts concentrate on strengthening
cyber resilience. This includes monitoring the
network for unusual behaviour as well as pro-
viding new security tools or upgrading existing
ones. Ongoing activities related to network safety
aim to minimise the damage from a potential
attack. During 2020, Solar’s “crown jewels” (the
most critical systems) were identified to facilitate
proactive protection by implementing controls
to safeguard them. Additional eorts focus on
the impact analysis of business activities, which
supports developing better business continuity
and disaster recovery planning – these activities
will secure readiness and clarity of priorities with-
in IT and business during a potential interruption.
Group IT continues to communicate appropriate
internal information about IT security to maintain
organisational awareness.
IT INTERRUPTIONS
The risk is unchanged.
Risk of business interruption due to unforeseen
but inherent events aecting IT operations such
as fire, power outage, network or system failure,
and other natural or unintentional man-made
adversities.
Potential IT interruptions may have a significant
impact on earnings and reputation, depending on
the nature and scale of the event. However, the
probability of the worst-case scenario is between
low and medium, but the potential impact is
assessed as between medium and high.
The IT area is continuously monitored and evalu-
ated. Business-critical applications are mirrored
at two central data centres in order to safeguard
IT operations, so that the business can continue
to run if one centre experiences downtime. Mit-
igation eorts planned to reduce the risk of cy-
berattacks – such as increasing network security
and developing better business continuity plans
– will simultaneously reduce the risk of losing the
stability of digital operations.
Risk
Scenario
Impact
Mitigation
37Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
A B
RISK MANAGEMENT
MARKET VOLATILITY
This risk has been added to the list of top group
risks this year.
Risk of adverse market conditions and multiple
unwanted events due to the pandemic.
Rapid changes caused by the pandemic, the
authorities’ interference in the business sector as
well as the dynamics of the regulatory environ-
ment may influence the digital transformation
and challenge the flexibility of our business
model. The probability of the worst-case scenario
is assessed as between low and medium, but its
impact is assessed as high.
In the first two quarters of 2020, Solar Group and
its subsidiaries established a governance model
supplemented by scenario analyses and high-
level recommendations on how to act in certain
circumstances. With the appointed response
teams at corporate, local and business area levels,
Solar adopted a number of preventative activities
focused on the safety of employees, customers
and suppliers. Detailed mitigation plans aligned
with probable scenarios were implemented and
regularly updated. The way Solar handled the
pandemic fallout in Q1 and Q2 2020 by adopting
quickly to market conditions gives confidence
that the company can react quickly and
appropriately if the situation recurs.
WAREHOUSE OPERATIONS
This risk has been added to the list of top group
risks this year.
Risk of business interruption in one or more
central warehouses due to strict safety regula-
tions and/or increased sta absence caused by
COVID-19.
The risk relates to a very dynamic spread of the
pandemic leading to inevitable consequences,
such as strict safety regulations during lockdown
and/or increased sta absence. When absence
in the warehouse grows visibly or when Solar
companies need to reduce sta attendance in
warehouses because of new regulations, it may
have a visible impact on customer deliveries. The
probability as well as the potential impact of the
worst-case scenario is assessed as between low
and medium.
Solar regularly monitors the impact of the pan-
demic on local markets and follows recommenda-
tions of health organisations or local authorities
in order to protect all employees and those of
third parties. An extensive contingency plan for
warehouse sta was created in March and is
regularly upgraded to support the management
of the consequences of the pandemic and to
secure business continuity. It includes i.e. zoning
procedures and equipment, strict hygiene rules,
detailed capacity planning, protection of key
employees as well as guidelines on how to act
if any disease has been detected. The flexible
remediation plan and a wide range of preventa-
tive actions continue to keep the risk within the
appetite for risk.
CREDIT MANAGEMENT
This risk has been added to the list of top group
risks this year.
Risk of negative financial consequences due to
extending credit to customers.
Extending credit to customers is regarded as a
natural and important element in Solar’s business
operations. If a negative market cycle occurs,
then the credit risk will increase - the pandemic
fallout may raise the likelihood of the risk, in par-
ticular when government support packages are
withdrawn. The probability as well as the poten-
tial impact of the worst-case scenario is assessed
as close to medium.
Solar conducts ecient credit management at
all times and monitors the development of credit
risk. In March, the credit policy was tightened
due to the COVID-19 pandemic. Furthermore,
we have taken out insurance to hedge against
potential losses on trade receivables. In addi-
tion, uninsured trade receivables are generally
spread across a large number of small customers.
Impacts from COVID-19 have increased risks on
trade receivables.
Risk
Scenario
Impact
Mitigation
38Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
C
D
E
RISK MANAGEMENT
CUSTOMER MIGRATION
TO NEW WEBSHOP
The risk is reduced.
Risk of customers’ negative experience and
failure to harvest expected benefits from new
e-commerce platform
Failure to transfer customers successfully from
the current platforms (webshop and mobile app)
to the new ones as well as failure to meet cus-
tomers’ expectations concerning the company’s
digital solutions may aect the benefits assumed
by Solar and lead to loss of competitiveness. The
probability as well as the potential impact of the
worst-case scenario is assessed as between low
and medium.
Customers are invited to use the new platform
on a regular basis. Ensuring the right market
research model helps Solar to understand the
needs and behaviour of customers who have mi-
grated to the new platform. Enhanced reporting
is distributed and promoted within the sales and
commercial market organisations as a tool for
analysing trends on a regular basis. Keeping the
old webshop running remains an alternative for
dissatisfied or non-migrated customers.
NEW ENTRANTS IN THE
MARKET
This risk has been added to the list of top group
risks this year.
Risk of new market players entering the market
leading to increased competition and/or price pres-
sure with a negative impact on Solar’s business.
The current commercial risk of strong new
entrants in the market, which may result in
reduced competitiveness, lost revenue and
decreased earnings. However, the probability of
the worst-case scenario is assessed as between low
and medium with a potential impact assessed to
be medium.
A dedicated cross-functional team is in place to
monitor potential new players’ strategies and/or
recent market developments, as well as to under-
stand customers’ present and future buying cri-
teria. Commercial market and sales organisations
monitor this for early indicators. In accordance
with observations and feedback, Solar continues
to invest in digital tools and value adding services,
which adapt to new trends.
CENTRAL WAREHOUSE
BREAKDOWN
The risk is reduced.
Risk of business interruption within central ware-
house due to unforeseen but inherent events
such as fire, power outage, flooding, and other
natural or man-made adversities.
Unwanted events may potentially lead to partial
or complete warehouse breakdown. Materialisa-
tion of this risk can result in financial losses as
well as loss of reputation. Thanks to continuous
progress in removing equipment failure from
significant risk factors, the likelihood of a ware-
house breakdown decreased compared to last
year. The probability of the worst-case scenario is
now assessed as remote, but potential impact is
assessed as between medium and high.
Business contingency plan (BCP) is developed
collaboratively in all central warehouse commu-
nities. It clarifies roles and responsibilities and
describes actions required from sta in case of
possible force majeure events. Additionally, Solar
ensures regular audits of warehouses in order to
verify the level of preventative and detectable
security measures undertaken to protect the
facilities.
Risk
Scenario
Impact
Mitigation
39Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
F
G
H
3) Aer disclosing CO2e, scope 2, Metric tons 4,841 to CDP, additional 350 Metric tons were identified summing up to a total of 5,191 Metric tons in 2019.
40Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
CORPORATE GOVERNANCE
41Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
WWW.SOLAR.EU/INVESTOR/
INVESTOR RELATIONS POLICY
We strive to maintain an open dialogue with
its investors and to provide them with correct
and adequate information for making reasoned
investment decisions concerning Solar's shares.
We ensure all investors are given fair and equal
access to information by publishing relevant
information via Nasdaq Copenhagen.
We participate in conferences, arrange road-
shows and conduct meetings with investors and
financial analysts following the publication of
quarterly and annual reports.
Investor meetings and similar events cannot be
held during our quiet periods, which start on 4
January, 4 April, 4 July and 4 October and end
with the publication of a quarterly or annual
report.
SOLAR’S SHARES
Solar’s share capital is divided into nominal value
DKK 90m A shares and nominal value DKK 646m
B shares.
The A shares are not listed. The B shares are
listed on Nasdaq Copenhagen under the ID code
DK0010274844, are designated SOLAR B, and are
part of the MidCap index and MidCap on Nasdaq
Nordic.
The share capital includes 900,000 A shares and
6,460,000 B shares. Solar’s portfolio of treasury
SHAREHOLDER INFORMATION
shares totals 61,708 B shares or 0.8% of share
capital.
A shares have 10 votes per share amount of DKK
100, while B shares have 1 vote per share amount
of DKK 100.
To be entitled to vote, shares must be registered
in Solar’s register of shareholders no later than
one week before the date of the Annual General
Meeting.
SHAREHOLDERS
As at 31 December 2020, registered share capital
totalled 92.8%, distributed among 4,807 sharehold-
ers. Three shareholders have notified Solar of hold-
ings of 5% or more of the share capital or votes:
ANNUAL GENERAL MEETING
Solar’s Annual General Meeting will be held
on Friday 19 March 2021 at 11.00.
Shareholders can register for the Annual Gener-
al Meeting at the investor portal accessible via
The Board of Directors will submit the fol-
lowing proposals for approval by the Annual
General Meeting:
• Payment of DKK 28.00 in return per share
outstanding of DKK 100.
• Authority to decide to distribute
extraordinary dividends of up to DKK 15.00
per share.
• Authority to acquire treasury shares valued
at up to 10% of share capital.
• Approval of remuneration report 2020
• Approval of the Board of Directors’ remu-
neration of unchanged DKK 200,000 in 2021.
• Approval of Deloitte as new auditors
A presentation of our Board of Directors can
be found on pages 45-46.
Investor Relations is responsible
for communication with the
capital markets. We make
information accessible on our
website and maintain an open
dialogue with investors.
Holdings of 5%
or more of share capital
Share
capital in %
Votes
in %
The Fund of 20th December,
Vejen, Denmark 16.9% 60.0%
RWC Asset Management LLP,
London, England
1
14.7% 7.0%
Nordea Funds Ltd., Helsinki,
Finland 10.4% 5.0%
Investeringsforeningen Nordea
Invest, Copenhagen, Denmark 5.0% 2.4%
1) As of 14 January 2021, RWC Asset Management LLP holds
733,779 shares in Solar or 9.969% of share capital,
corresponding to less than 5% of voting rights.
DISTRIBUTION OF SHARE CAPITAL AND
VOTES AS AT 31 DECEMBER 2020 IN %
42Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
31.12.1901.01.19
MidCap Solar B
80
90
100
110
120
130
140
31.12.2001.01.20
MidCap Solar B
0
20
40
60
80
100
120
140
SHAREHOLDER INFORMATION
DIVIDENDS
Solar’s ambition is to pay an attractive return to
shareholders. At the Annual General Meeting, the
Board of Directors will propose distributing DKK
204m as dividend, corresponding to DKK 28.00
per share outstanding of DKK 100.
TOTAL SHAREHOLDER RETURN
Total shareholder return on the Solar B share
during the holding period from 1 January 2020 to
31 December 2020 was DKK 75 equal to 25% as
DKK 14.00 was paid out in dividend and the share
price increase amounted to DKK 61 in 2020.
SHARE PRICE DEVELOPMENT
On 31 December 2020, the price of Solar’s B share
was DKK 360, up from the 2020 starting price of
DKK 299. This is an increase of approx. 20% in So-
lar’s share price over the year. By way of compari-
son, the MidCap index increased 33% in 2020.
ANALYSTS
The following financial institutions cover
the Solar share:
• Carnegie Bank
• Danske Bank
• Nordea Bank
• SEB
INVESTOR CONTACT
Dennis Callesen
Investor Relations Director
Tel.: +45 29 92 18 11
E-mail: deca@solar.dk
Share price development (index)
FINANCIAL CALENDAR 2021
19 March Annual General Meeting
4 April - 6 May IR quiet period
6 May Quarterly Report Q1 2021
4 July - 12 August IR quiet period
12 August Quarterly Report Q2 2021
4 October - 4 November IR quiet period
4 November Quarterly Report Q3 2021
WINNER OF THE ANNUAL REPORT
AWARD FOR SMALL AND MIDCAP
COMPANIES
The highlights in Solar's annual report are the
good description of the business model and risks,
a good ESG overview and a good description of
accounting policies that fits well with the size
of the company. We are pleased to contribute
to best practice in relation to future annual re-
porting and thus support the Danish accounting
culture.
43Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
BOARD OF DIRECTORS
BOARD OF DIRECTORS' AFFILIATION
WITH SOLAR
Peter Bang, Morten Chrone, Louise Knauer and
Jens Peter To are independent of the company
pursuant to the definition in the recommenda-
tions on corporate governance in Denmark. Jens
Borum has been member of the Board of Direc-
tors for more than 12 years. Jesper Dalsgaard is
aliated with the Fund of 20
th
December, Solar's
majority shareholder.
In 2020, the Board of Directors elected Jens Peter
To, Peter Bang and Louise Knauer as members
of the Audit Committee. Jens Peter To chairs
the Audit Committee. He and Peter Bang have
special accounting qualifications.
The Board of Directors elected Jens Peter
To and Louise Knauer as members of the
Remuneration Committee together with the
Chairman of the Board of Directors Jens Borum.
Jens Borum chairs the Remuneration Committee.
EMPLOYEE REPRESENTATIVES
Under the law, employee representatives have
the same rights, duties and responsibilities as
the other members of the board. Under Danish
law, employees have the right to elect a number
of representatives and alternates, corresponding
to half the representatives elected by the Annual
General Meeting at the time of the announce-
ment of the election of employee representa-
tives.
ELECTION PERIOD
All board members elected at the Annual General
Meeting stand for election each year, whereas
employee representatives are elected by and
among the company’s employees for four-year
terms.
ACTIVITIES
A minimum of six ordinary board meetings as
well as one conference for the Board of Directors
are held each year. In 2020, we had nine board
meetings and one conference for the Board of
Directors.
The Board of Directors and the
Executive Board, which com-
prises the CEO, CCO and CFO,
are jointly responsible for Solar
Group’s overall and strategic
management.
Board member
Board
Meetings
Board
Conference
Audit
Committee
Remuneration
Committee
Jens Borum 8 1 1 1
Jesper Dalsgaard 9 1 - -
Lars Lange Andersen 9 1 - -
Peter Bang 9 1 9 -
Morten Chrone 9 1 - -
Ulrik Damgaard 9 1 - -
Bent Frisk 9 1 - -
Louise Knauer 9 1 8 1
Jens Peter To 8 1 9 1
MEETING ATTENDANCE IN 2020
44Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
Jens Borum Jesper Dalsgaard Jensen Lars Lange Andersen Peter Bang Morten Chrone
Born 1953, joined 1982
Chairman
Born 1968, joined 2017
Vice Chairman
Born 1968, joined 2010
Employee-elected member
Born 1969, joined 2018 Born 1966, joined 2019
• Associate Professor, University of
Copenhagen
• M.Sc. 1980, PhD 1985.
• Has long-standing experience as
chairman.
• Remuneration 2020: DKK 712,500
• Holds 118,520 Solar B shares. Did
not trade Solar shares in 2020.
• Managing Director, Rambøll
Environment & Health, Rambøll
Group A/S.
• M.Sc. in Law and Business Adminis-
tration 1993.
• Member of the board of directors
of the Fund of 20th December and
Mannaz A/S.
• Possesses executive management
experience of companies managed
by funds and companies within
the construction industry, and
has experience within strategy,
business development and mergers
& acquisitions.
• Remuneration 2020: DKK 418,750.
• Holds 1,100 Solar B shares. Ac-
quired 600 Solar shares in 2020.
• Head of F&B Scandinavia.
• Remuneration 2020: DKK 200,000.
• Holds 93 Solar B shares. Did not
trade Solar shares in 2020.
• Executive Director & CFO, VELUX.
• Cand.oecon. 1994 from Aarhus
University, specialising in business
economics and financing.
• Seat on seven internal boards of
the VELUX group. CEO and mem-
ber of the board of O.B. Holding
Aabenraa ApS and member of the
board of directors of BIMobject.
• Experience within construction,
climate/energy, globalisation,
digitalisation, organisational de-
velopment, change management,
communication as well as finance
and performance management.
• Remuneration 2020: DKK 400,000.
• Holds 1,200 Solar B shares. Ac-
quired 800 Solar shares in 2020.
• Group CEO, Unisport Saltex Oy
• MBA 2001 and B.Eng. in Civil and
Constructional Engineering 1994.
• Chairman of the board of Unisport
Scandinavia ApS and CEO of Mads
ApS.
• Has held management positions
within the construction industry/
wholesale business in Denmark and
abroad for the past 25 years and
has significant knowledge of So-
lar’s core business and the markets
we operate in.
• Remuneration 2020: DKK 312,500.
• Holds 712 Solar B shares. Acquired
302 Solar shares in 2020.
BOARD OF DIRECTORS
MEMBERS OF THE BOARD
OF DIRECTORS
45Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
Ulrik Damgaard Bent H. Frisk Louise Knauer Jens Peter To
Born 1973, joined 2014
Employee-elected member
Born 1961, joined 2006
Employee-elected member
Born 1983, joined 2017
Born 1954, joined 2009
• Regional Director.
• Remuneration 2020: DKK 200,000.
• Holds 60 Solar B shares. Did not
trade Solar shares in 2020.
• Central Warehouse Manager.
• Remuneration 2020: DKK 200,000.
• Holds 60 Solar B shares. Did not
trade Solar shares in 2020.
• CED of Lady Invest ApS.
• BSc in business administration and
commercial law, 2006, and MSc in
finance and strategic management,
2008.
• Member of the boards of directors
of REKOM A/S, CC Fly Holding
I ApS, CC Fly Holding II A/S, CC
Globe Holding I ApS, CC Globe
Holding II A/S, Skako A/S and two
subsidiaries hereof.
• Possesses experience as CEO and
member of executive committees
with developing strategies and
companies both nationally and
internationally. Expertise within
technologically-driven innovation,
digitalization, data/AI/ML and
cyber security.
• Remuneration 2020: DKK 393,750.
• Holds 381 Solar B shares. Did not
trade Solar shares in 2020.
• CED of Selskabet af 11. december
2008 ApS and one subsidiary hereof.
• Graduate Diploma in Business
Administration (Financial and
Management Accounting) 1983, the
Executive Program, University of
Michigan Business School.
• Chairman of the boards of directors
of Mipsalus Holding ApS and one
subsidiary hereof and of Fonden af
4. December 2001.
• Vice chairman of the board of direc-
tors of M. Goldschmidt Holding A/S.
• Member of the boards of directors
of Bitten og Mads Clausens Fond,
the unit trusts Danske Invest,
Danske Invest Select, Profil Invest,
Danske Invest Index and the capital
units Danske Invest Institutional and
AP Invest, Civilingeniør N.T. Rasmus-
sens Fond, Enid Ingemanns Fond,
Fondet for Dansk Norsk Samarbej-
de, three subsidiaries of
M. Goldschmidt Holding A/S,
Dansk Vækstkapital II, Dagrofa ApS
and Mahia 17 ApS, and Selskabet af
11. December 2008 ApS.
• Member of the investment com-
mittee of GRO Capital I.
• Possesses experience of capital
market transactions, financial
matters, investments, organisation,
general management and stock
exchange matters.
• Remuneration 2020: DKK 500,000.
• Holds 1,250 Solar B shares. Did not
trade Solar shares in 2020.
BOARD OF DIRECTORS
MEMBERS OF THE BOARD
OF DIRECTORS
46Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
EXECUTIVE MANAGEMENT
EXECUTIVE BOARD AND
SOLAR GROUP MANAGEMENT
Jens E. Andersen Hugo Dorph Michael H. Jeppesen
Born 1968
CEO and MD Denmark
Born 1965
CCO
Born 1966
CFO
• Chairman of the boards of directors of
8 Solar Group subsidiaries.
• Member of the boards of directors of
VELTEK, Associated Danish Ports A/S
and HF Christiansen Holding A/S and
two subsidiaries hereof.
• Holds 5,520 Solar B shares of which
1,040 were purchased in 2020.
• Holds 2,709 share options and 5,076
restricted share units. 2,666 restricted
share units were granted in 2020. 2,912
share options expired in 2020.
• Remuneration: DKK 9.3m.
• Member of the boards of directors of 5
Solar Group subsidiaries.
• Chairman of the board of directors of
Flexya A/S, Flexya Innovations A/S and
HomeBob A/S.
• Member of the boards of directors of
LetsBuild Denmark ApS.
• Holds no Solar shares.
• Holds 2,703 share options and 2,738
restricted share units. 1,341 restricted
share units were granted in 2020. 2,928
share options expired in 2020.
• Remuneration: DKK 5.3m.
• Member of the boards of directors of all
Solar Group subsidiaries.
• Member of the boards of directors of
Aktieselskabet Sønder Omme Plantage.
• Holds 1,894 Solar B shares.
• Holds 2,186 share options and 2,496
restricted share units. 1,331 restricted
share units were granted in 2020. 2,432
share options expired in 2020.
• Remuneration: DKK 4.9m.
SOLAR GROUP MANAGEMENT
Solar Group Management comprises the Executive
Board, our senior vice presidents and the MDs of the
Solar Group subsidiaries.
Jan Willy Fjellvær
Born 1961
Senior Vice President & MD Norway
Lars Goth
Born 1961
Senior Vice President, Group Operations
Anders Koppel
Born 1969
Senior Vice President & MD Sweden
Peter Pedersen
Born 1970
Senior Vice President, Commercial Market
Michiel Rohrman
Born 1967
Senior Vice President & MD the Netherlands
Frank Simonsen
Born 1978
Senior Vice President, Finance
Ole Sørensen
Born 1971
Senior Vice President, Industry Sales
Dariusz Targosz
Born 1969
Senior Vice President & MD Poland
Bauke Zeinstra
Born 1966
Senior Vice President & MD MAG45
47Solar – Annual Report 2020
MANAGEMENT’S REVIEW CORPORATE MATTERS
00:19
EFFICIENT LOGISTICS
As time is of the essence, we use night deliveries.
Our customers can place their orders until 6pm
and receive their materials before starting work
the next day.
SHIPMENTS
Solar’s drop shipments totalled
2.5 million in 2020
FINANCIAL
STATEMENTS
CONTENTS
NOTES TO THE FINANCIAL STATEMENTS
Basis for preparation
1 General accounting policies 58
2 Significant accounting estimates
and assessments 61
3 Financial risks 61
Notes to the income statement
4 Segment information 62
5 Sta costs 65
6 Loss on trade receivables 66
7 Depreciation, write-down, amortisation
and impairment 66
8 Income tax 67
9 Net profit for the year 70
Invested capital
10 Intangible assets 71
11 Property, plant and equipment 75
12 Leases 77
13 Associates 80
14 Inventories 82
15 Trade receivables 83
16 Other provisions 84
17 Other payables 85
18 Acquisitions of subsidiaries and activities 86
19 Assets and liabilities held for sale 88
Capital structure and financing costs
20 Share capital 89
21 Earnings per share in DKK per share
outstanding for the year 90
22 Interest-bearing liabilities and
maturity statement 91
23 Financial income 95
24 Financial expenses 95
Other notes
25 Share-based payment 96
26 Contingent liabilities
and other financial liabilities 98
27 Related parties 98
28 Auditors’ fees 99
29 New financial reporting standards 99
Summary for the Solar Group 51
Statement of comprehensive income 53
Balance sheet 54
Cash flow statement 55
Statement of changes in equity 56
Notes 58
51Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Cash flow (DKK million) 2020 2019 2018 2017 2016
Cash flow from operating activities,
continuing operations
813 300 224 7 203
Cash flow from investing activities,
continuing operations
162 -194 -112 -342 -152
Cash flow from financing activities,
continuing operations
-627 -110 -108 99 -388
Net investments in intangible assets -50 -35 -88 -106 -88
Net investments in property, plant and equipment -25 -110 -59 -14 51
Acquisition and divestment of subsidiaries
and operations, net
0 -35 50 -16 -97
Financial ratios (% unless otherwise stated)
Revenue growth -1.8 5.2 0.3 6.4 5.2
Organic growth -1.2 4.8 1.8 6.4 3.2
Organic growth adjusted for number of working days -2.0 4.9 2.2 7.0 2.3
Gross profit margin 21.0 20.1 20.2 20.7 21.1
EBITDA margin 5.6 4.6 3.4 3.3 3.5
EBITA margin 4.0 3.1 2.9 2.8 3.0
EBIT margin 2.2 2.2 2.0 1.6 2.5
Eective tax rate 26.0 45.2 23.3 17.0 28.3
Net working capital (year-end NWC)/revenue (LTM) 9.7 11.0 9.8 9.7 8.4
Net working capital (average NWC)/revenue (LTM) 11.5 11.9 10.6 10.2 10.1
Gearing (net interest-bearing liabilities/EBITDA),
no. of times
0.2 1.7 1.2 1.3 0.1
Return on equity (ROE) 13.5 4.0 8.2 1.2 7.1
Return on invested capital (ROIC) 13.8 8.3 8.1 6.3 10.0
Adjusted enterprise value/earnings before interest, tax and
amortisation (EV/EBITA)
5.8 7.9 6.8 10.4 8.8
Equity ratio 36.8 31.9 35.4 33.7 37.4
Income statement (DKK million) 2020 2019 2018 2017 2016
Revenue 11,465 11,679 11,098 11,061 10,420
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
637 538 379 362 368
Earnings before interest, tax and amortisation (EBITA) 455 360 327 310 312
Earnings before interest and tax (EBIT) 248 260 224 176 256
Financials, net -40 -35 -35 70 -33
Earnings before tax (EBT) 300 120 237 176 223
Net profit for the year 222 64 133 19 125
Balance sheet (DKK million)
Non-current assets 1,339 1,756 1,516 1,522 1,397
Current assets 3,268 3,234 3,117 3,195 3,109
Balance sheet total 4,607 4,990 4,633 4,717 4,506
Equity 1,696 1,592 1,638 1,591 1,683
Non-current liabilities 498 503 543 557 375
Current liabilities 2,413 2,895 2,452 2,569 2,448
Interest-bearing liabilities, net 128 921 461 489 43
Invested capital 1,760 2,297 1,797 1,790 1,744
Net working capital, year-end 1,10 9 1,280 1,090 1,081 998
Net working capital, average 1,322 1,386 1,182 1,133 1,187
SUMMARY FOR THE SOLAR GROUP
2016-2020
52Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
In general, financial ratios are calculated in accordance with the Danish Finance Society’s
“Recommendations & Financial Ratios 2019”. As at 1 January 2019, Solar implemented IFRS 16, Leases, by
applying the modified retrospective approach. Comparative figures are not restated. This especially aects
EBITDA, interest-bearing liabilities, EBITDA margin, gearing and equity ratio.
In general, restatements have been made of income statements, cash flow and key ratios for the
discontinued operations regarding STI for 2017 and 2018, and Claessen ELGB N.V. and GFI GmbH for 2016
and 2017. In accordance with IFRS, the balance sheet has not been restated.
SUMMARY FOR THE SOLAR GROUP
Share ratios (DKK unless otherwise stated) 2020 2019 2018 2017 2016
Earnings per share outstanding (EPS) 30.42 8.77 18.22 2.60 16.50
Intrinsic value per share outstanding 232.38 218.13 224.44 218.00 230.60
Cash flow from operating activities per share outstanding
111.40 41.11 30.67 0.96 26.77
Share price 353.70 297.31 284.12 414.52 361.80
Share price/intrinsic value 1.52 1.36 1.27 1.90 1.57
Dividends per share 28.00 14.00 14.00 10.00 12.00
Dividend in % of net profit for the year (payout ratio) 91.9 159.4 76.7 385.6 70.2
Price Earnings (P/E) 11.6 33.9 15.6 159.2 21.9
Employees
Average number of employees (FTEs), continuing operations 2,935 3,039 2,941 2,870 2,814
Definitions
Organic growth Revenue growth adjusted for enterprises acquired and divested and any exchange rate
changes. No adjustments have been made for number of working days.
Net working capital Inventories and trade receivables less trade payables.
ROIC Return on invested capital calculated on the basis of operating profit exclusive
impairment on goodwill less tax calculated using the eective tax rate.
2016-2020 – continued
53Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Income statement
Note DKK million 2020 2019
4 Revenue 11,465 11,679
Cost of sales -9,060 -9,326
Gross profit 2,405 2,353
Other operating income and costs 8 9
28 External operating costs -288 -329
5 Sta costs -1,465 -1,477
6 Loss on trade receivables -23 -18
Earnings before interest, tax, depreciation and amortisation (EBITDA) 637 538
7 Depreciation and write-down on property, plant and equipment -182 -178
Earnings before interest, tax and amortisation (EBITA) 455 360
7 Amortisation and impairment of intangible assets -207 -100
Earnings before interest and tax (EBIT) 248 260
13 Share of net profit from associates -12 -19
13 Impairment and gain from divestment of associates 104 -86
23 Financial income 24 18
24 Financial expenses -64 -53
Earnings before tax (EBT) 300 120
8 Income tax -78 -54
Profit of continuing operations 222 66
19 Loss of discontinued operations 0 -2
9 Net profit for the year 222 64
21 Earnings in DKK per share outstanding (EPS) for the year 30.42 8.77
21 Diluted earnings in DKK per share outstanding (EPS-D) for the year 30.38 8.77
21 Earnings in DKK per share outstanding (EPS) of continuing operations for the year
21
Diluted earnings in DKK per share outstanding (EPS-D) of continuing operations for
the year
Please see note 19 on discontinued operations for earnings per share outstanding (EPS) from discontinued
operations.
STATEMENT OF COMPREHENSIVE INCOME
Other comprehensive income
DKK million 2020 2019
Net profit for the year 222 64
Other income and costs recognised:
Items that can be reclassified for the income statement
Foreign currency translation adjustments of foreign subsidiaries
-22 0
Fair value adjustments of hedging instruments before tax 7 -10
Tax on fair value adjustments of hedging instruments
-1 2
Other income and costs recognised aer tax
-16 -8
Total comprehensive income for the year
54Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
BALANCE SHEET
Notes DKK million 2020 2019
Assets
10 Intangible assets 157 315
11 Property, plant and equipment 818 865
12 Right-of-use assets 288 341
8 Deferred tax assets 3 10
13 Investments in associates 2 146
Other non-current assets 71 79
Non-current assets 1,339 1,756
14 Inventories 1,531 1,666
15 Trade receivables 1,271 1,428
Income tax receivable 13 14
Other receivables 8 8
Prepayments 41 62
Cash at bank and in hand 404 56
Current assets 3,268 3,234
Total assets 4,607 4,990
Notes DKK million 2020 2019
Equity and liabilities
20 Share capital 736 736
Reserves -195 -179
Retained earnings 951 933
Proposed dividends for the financial year 204 102
Equity 1,696 1,592
22 Interest-bearing liabilities 199 156
12, 22 Lease liabilities 189 231
8 Provision for deferred tax 98 103
16 Other provisions 12 13
Non-current liabilities 498 503
22 Interest-bearing liabilities 41 477
22 Lease liabilities 103 113
Trade payables 1,693 1,814
Income tax payable 21 10
17 Other payables 544 464
Prepayments 2 4
16 Other provisions 9 13
Current liabilities 2,413 2,895
Liabilities 2,911 3,398
Total equity and liabilities 4,607 4,990
as at 31 December
55Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Notes DKK million 2020 2019
Net profit or loss of continuing operations for the year 222 66
Write-down negative goodwill 0 -18
7 Depreciation, write-down and amortisation 389 278
Impairment and gain from divestment of associates -104 86
Changes to provisions and other adjustments -3 -6
Share of net profit from associates 12 19
23,24 Financials, net 40 35
Income tax 78 54
23 Financial income, received 7 8
24 Financial expenses, settled -47 -41
Income tax, settled -65 -62
Cash flow before working capital changes 529 419
Working capital changes
Inventory changes 126 -92
Receivables changes 173 21
Non-interest-bearing liabilities changes -15 -48
Cash flow from operating activities, continuing operations 813 300
Cash flow from operating activities, discontinued operations 0 -2
Cash flow from operating activities 813 298
CASH FLOW STATEMENT
Notes DKK million 2020 2019
Investing activities
10 Purchase of intangible assets -50 -35
Purchase of property, plant and equipment -33 -110
Disposal of property, plant and equipment 8 0
18 Acquisition of subsidaries and activities 0 -40
Acquisition of associates -2 0
Divestment of subsidiaries and activities 0 5
Divestment of associates
1
Other financial investments -1 -14
Cash flow from investing activities, continuing operations 162 -194
Cash flow from investing activities, discontinued operations 0 0
Cash flow from investing activities 162 -194
Financing activities
Repayment of non-current interest-bearing debt -252 -9
Raising of non-current interest-bearing liabilities 53 0
Change in current interest-bearing debt -205 118
12 Instalment on lease liabilities -121 -117
Dividends distributed -102 -102
Cash flow from financing activities, continuing operations -627 -110
Cash flow from financing activities, discontinued operations 0 0
Cash flow from financing activities -627 -110
Total cash flow 348 -6
Cash at bank and in hand at the beginning of the year 56 65
19 Assumed on disposal of subsidaries 0 -3
Foreign currency translation adjustments 0 0
Cash at bank and in hand at the end of the year 404 56
Cash at bank and in hand at the end of the year
Cash at bank and in hand 404 56
Cash at bank and in hand at the end of the year 404 56
1) DKK 237 m relates to the divestment of our shareholding in BIMobject.
56Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
DKK million
Share
capital
Reserves
for hedging
transactions
1
Reserves for
foreign
currency
translation
adjustments
1
Retained
earnings
Proposed
dividends Total
2020
Equity as at 1 January 736 -66 -113 933 102 1,592
Foreign currency translation adjustments of foreign subsidiaries -22 -22
Fair value adjustments of hedging instruments before tax 7 7
Tax on fair value adjustments -1 -1
Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 6 -22 0 0 -16
Net profit for the year 18 204 222
Comprehensive income 0 6 -22 18 204 206
Distribution of dividends (DKK 14,00 per share) -102 -102
Reduction in share capital 0
Transactions with the owners 0 0 0 0 -102 -102
Equity as at 31 December 736 -60 -135 951 204 1,696
1) Reserves for hedging transactions and reserves for foreign currency translation adjustments are recognised in the balance sheet as a total amount under reserves.
STATEMENT OF CHANGES IN EQUITY
57Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
STATEMENT OF CHANGES IN EQUITY
DKK million
Share
capital
Reserves
for hedging
transactions
1
Reserves for
foreign
currency
translation
adjustments
1
Retained
earnings
Proposed
dividends Total
2019
Equity as at 1 January 775 -58 -113 932 102 1,638
Foreign currency translation adjustments of foreign subsidiaries 0
Fair value adjustments of hedging instruments before tax -10 -10
Tax on fair value adjustments 2 2
Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 -8 0 0 0 -8
Net profit for the year -38 102 64
Comprehensive income 0 -8 0 -38 102 56
Distribution of dividends (DKK 14,00 per share) -102 -102
Reduction in share capital -39 39 0
Transactions with the owners -39 0 0 39 -102 -102
Equity as at 31 December 736 -66 -113 933 102 1,592
1) Reserves for hedging transactions and reserves for foreign currency translation adjustments are recognised in the balance sheet as a total amount under reserves.
– continued
58Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
1
General accounting policies
The consolidated financial statements of Solar A/S for 2020 are presented in accordance with the International
Financial Reporting Standards (IFRSs) as approved by the EU and additional Danish disclosure requirements
for annual reports of listed companies cf. Nasdaq Copenhagen’s disclosure requirements for annual reports of
listed companies and the IFRS executive order issued in accordance with the Danish Financial Statements Act.
The consolidated financial statements have been prepared using the historical cost formula with the exception
of derivative financial instruments and investments in equity instruments, which are measured at fair value, as
well as non-current assets and groups of assets held for sale, which are measured at the lowest value of the
book value before changes in classification or fair value less sales costs.
The accounting policies described below have been applied consistently in the financial year and to the compar-
ative figures except otherwise stated.
Implementation of new financial reporting standards
No additional standards have been implemented in 2020. We have implemented new amendments and interpre-
tations on existing IFRS standards, including Amendment to IFRS 16 Leases: COVID 19-Related Rent Concessions.
These changes have only insignificant impact on Solar.
Presentation currency
The annual report is presented in Danish kroner rounded o to the nearest 1,000,000 Danish kroner. Danish
kroner is the parent company’s functional currency.
Translation of foreign currency items
A functional currency has been set for each reporting group entity. The functional currencies are the currencies
used in the primary economic environments in which each individual reporting entity operates. Transactions in
other currencies than the functional currency are considered transactions in foreign currencies.
Transactions in foreign currency are translated at first recognition to the functional currency at the exchange
rate prevailing at the date of the transaction. Dierences between the exchange rate prevailing on the date of
the transaction and the exchange rate on the payment date are recognised in the income statement as items
under financial income and expenses.
All monetary items in foreign currencies that have not been settled on the balance sheet date are translated
into the functional currencies using the exchange rates on the balance sheet date. Any dierence between
the exchange rate prevailing on the date of the transaction and the balance sheet date exchange rate are rec-
ognised in the income statement as items under financial income and expenses.
When recognising entities with dierent functional currencies than Danish kroner in the consolidated financial
statements, the income statements are translated at the exchange rate prevailing on the date of the trans-
action and balance sheet items are translated at the balance sheet date exchange rates. The average rate of
exchange for the individual months is used as exchange rate prevailing on the date of the transaction when this
does not result in a considerably dierent presentation. Exchange rate dierences, from translation of these en-
tities’ equity at the beginning of the year at the balance sheet date exchange rates and in connection with the
translation of income statements from the exchange rate prevailing at the date of transaction to the balance
sheet date exchange rates, are recognised directly in other comprehensive income as a separate reserve for
foreign currency translation adjustments.
When translating investments in associates with a functional currency other than Danish kroner in the consol-
idated financial statement, the group’s share of comprehensive income is translated at the average exchange
rates and the share of equity, including goodwill, is translated at the exchange rate on the balance sheet date.
The exchange rate dierence resulting from the translation of the share of foreign associates’ equity at the be-
ginning of the year at the exchange rate on the balance sheet date and the translation of the share of compre-
hensive income from the average exchange rates to the exchange rate prevailing on the balance sheet date is
recognised in other comprehensive income and presented in a separate reserve for foreign currency translation
adjustments under equity. The cumulative currency translation adjustment is recycled to the income statement
upon disposal of the investment.
Consolidated financial statements
The consolidated financial statements include the financial statements of the parent company Solar A/S and
subsidiaries in which Solar A/S has power over the investee, exposure to variable returns and the ability to use
its power over the investee to aect the returns.
The consolidated financial statements have been prepared as an aggregation of the parent company and the
individual subsidiaries’ financial statements and in accordance with the group’s accounting policies. Intercom-
pany revenue, other intercompany operating items, intercompany balances, profit and loss from transactions
between the consolidated entities as well as internal equity investments are eliminated.
59Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
General accounting policies – continued
Entities over which the group has significant influence but not control over operational and financial decisions
are classified as associates. Significant influence typically exists when the group directly or indirectly holds
more than 20% of voting rights, but less than 50%. However, for each investment an individual assessment
on the classification will be performed. The assessment will be based on our part of the voting rights and our
representation on Board of Directors. If such an assessment concludes that we have insignificant influence then
the investment is classified as other non-current assets.
The group’s share of the associates’ earnings aer tax and the elimination of the proportional share of internal
profit/loss is recognised in the income statement. The group’s share of the associates’ other comprehensive
income is recognised in other comprehensive income.
When obtaining significant influence over an entity in which the group has previously held an interest account-
ed for as a financial asset, the fair value as of the date when the group obtained significant influence is deemed
as cost under the equity method.
Statement of comprehensive income
Solar A/S presents the statement of comprehensive income in two statements. An income statement and a
statement of comprehensive income that show the year’s results and income that forms part of other compre-
hensive income. Other comprehensive income includes exchange rate adjustments, actuarial gains and losses,
adjustments of investments in associates and hedging transactions.
Presentation of discontinued operations
Discontinued operations consists of geographical areas where activities and cash flow can be clearly separated
in an operational and accounting sense from the other parts of the entity and when the entity has either been
divested or separated as held for sale.
Earnings aer tax of discontinued operations as well as write-down to fair value less costs to sell and gains/loss-
es from any sale are presented in a separate line in the income statement with adjustment of the comparative
figures. Notes include information on revenue, costs, value adjustments, financials and tax for any discontinued
operations. Assets and related liabilities of discontinued operations are presented separately in the balance
sheet without adjustments to comparative figures.
Cash flow statement
The cash flow statement shows cash flow distributed on operating, investing and financing activities for the
year, changes in cash and cash equivalents, and cash at bank and in hand at the beginning and end of the year.
The eect of cash flow on the acquisition and divestment of entities is shown separately under cash flow from
investing activities. Cash flow from acquired entities is recognised in the cash flow statement from the date
of acquisition and cash flow from divested entities is recognised until the time of divestment. Cash flow from
discontinued operations is presented separately under operating, investing and financing activities.
Cash flow from operating activities is determined using the indirect method as earnings before tax adjusted
for non-cash operating items, changes in working capital, interest received and paid, and income tax paid. Cash
flow from investing activities includes payments in connection with the acquisition and sale of intangibles,
property, plant and equipment and investments, and acquisition and divestment of entities. Cash flow from
financing activities includes acquisition and sale of treasury shares, dividends distribution, incurrence or repay-
ment of non-current and current interest-bearing liabilities and instalment on lease liabilities. Cash at bank and
in hand includes cash holdings and deposits with banks.
Financial ratios
Earnings per share (EPS) and diluted earnings per share (EPS-D) are determined in accordance with IAS 33.
In general, financial ratios are calculated in accordance with the “Recommendations and Ratios 2019” of the
Danish Finance Society.
1
60Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
1
General accounting policies – continued
Description of accounting policies in notes
Descriptions of accounting policies in the notes form part of the overall description of accounting policies.
These descriptions are found in the following notes:
Note 4 Segment information
Note 8 Income tax
Note 9 Net profit for the year
Note 10 Intangible assets
Note 11 Property, plant and equipment
Note 12 Leases
Note 13 Associates
Note 14 Inventories
Note 15 Trade receivables
Note 16 Other provisions
Note 18 Acquisitions of subsidiaries
Note 19 Assets and liabilities held for sale
Note 20 Share capital
Note 22 Interest-bearing liabilities and maturity statement
Note 25 Share-based payment
61Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Significant accounting estimates and assessments
When preparing the annual report in accordance with generally applicable principles, management make
estimates and assumptions that aect the reported assets and liabilities. Management base their estimates on
historic experience and expectations for future events. Therefore, actual results may dier from these estimates.
The following estimates and accompanying assessments are deemed material for the preparation of the finan-
cial statements:
• Impairment test of goodwill
• Impairment test of soware
• Inventory write-down
• Write-down for meeting of loss on doubtful receivables
• Deferred tax assets
These estimates and assessments are described in the following notes:
Note 8 Income tax
Note 10 Intangible assets
Note 14 Inventories
Note 15 Trade receivables
2
Financial risks
Results and equity are aected by a range of financial risks. All financial transactions are based on commercial
activities, and no speculative transactions are made. Financial instruments are solely used for hedging of finan-
cial risks.
The financial risks are described in the following notes:
Note 15 Trade receivables
Note 22 Interest-bearing liabilities and maturity statement
For description of Solar’s other business related risks and our approach to risk management, see the manage-
ment’s review on pages 35-37.
3
62Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
4
Segment information
Solar’s business segments are Installation, Industry and Trade and are based on the customers’ aliation
with the segments. Installation covers installation of electrical, and heating and plumbing products,
while Industry covers industry, oshore and marine, and utility and infrastructure. Trade covers special sales and
other small areas. The three main segments have been identified without aggregation of operating segments.
Segment income and costs include any items that are directly attributable to the individual segment and
any items that can be reliably allocated to the individual segment. Non-allocated costs refer to income
and costs related to joint group functions. Assets and liabilities are not included in segment reporting.
DKK million Installation Industry Trade Total
2020
Revenue 7,0 45 3,546 874 11,465
Cost of sales -5,645 -2,716 -699 -9,060
Gross profit 1,400 830 175 2,405
Direct costs -234 -99 -22 -355
Earnings before indirect costs 1,166 731 153 2,050
Indirect costs -542 -170 -50 -762
Segment profit 624 561 103 1,288
Non-allocated costs -651
Earnings before interest, tax, depreciation and amortisation (EBITDA) 637
Depreciation and amortisation -389
Earnings before interest and tax (EBIT) 248
Financials, net incl. share of net profit from associates and impairment
on associates
52
Earnings before tax (EBT) 300
No single customer makes up more than 10% of the total revenue.
Accounting policies
The reporting on business segments follows the structure
of Solar’s internal management reporting to chief operating
decision makers, the group Executive Board. The group
Executive Board uses business segmentation when
allocating resources and following up on results.
Furthermore, Solar presents the geographical distribution
of revenue and non-current assets divided on Denmark,
Sweden, Norway, the Netherlands and Other markets. The
geographical distribution is based on the business units
operating in these geographical areas.
Related business includes MAG45 and Solar Polaris. MAG45
is included in the operating segment Industry, while Solar
Polaris is included in the operating segment Trade.
Revenue
Revenue includes goods for resale recognised in the income
statement if the transfer of control to the customer
according to the agreed delivery terms takes place before
the end of the year and if revenue can be determined
reliably. Revenue is measured exclusive VAT and duties
charged on behalf of a third party. All types of discounts
allowed are recognised in revenue.
Cost of sales
Cost of sales includes the year’s purchases and change in
inventory of goods for resale. This includes shrinkage and
any write-down resulting from obsolescence.
63Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
4
Segment information – continued
DKK million Installation Industry Trade Total
2019
Revenue 7,234 3,628 817 11,679
Cost of sales -5,896 -2,800 -630 -9,326
Gross profit 1,338 828 187 2,353
Direct costs -254 -108 -20 -382
Earnings before indirect costs 1,084 720 167 1,971
Indirect costs -562 -167 -45 -774
Segment profit 522 553 122 1,197
Non-allocated costs -659
Earnings before interest, tax, depreciation and amortisation (EBITDA) 538
Depreciation and amortisation -278
Earnings before interest and tax (EBIT) 260
Financials, net, including share of net profit from associates and
impairment on associates
-140
Earnings before tax (EBT) 120
64Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
DKK million Revenue
Adjusted
organic
growth EBITA EBITA margin
Non-current
assets
2020
Denmark 3,642 3.2 251 6.9 1,757
Sweden 2,455 -8.7 53 2.2 198
Norway 1,807 -1.9 95 5.3 171
The Netherlands 2,893 -2.4 47 1.6 350
Poland 359 -12.0 5 1.4 27
Other markets 41 21.3 5 12.2 5
Eliminations -307 - 0 0.0 -1,220
Core business 10,890 -2.2 456 4.2 1,288
Several markets (MAG45) 560 3.1 0 0.0 51
Other markets 15 -10.9 -1 -6.7 0
Related business 575 2.7 -1 -0.2 51
Solar Group 11,465 -2.0 455 4.0 1,339
DKK million Revenue
Adjusted
organic
growth EBITA EBITA margin
Non-current
assets
2019
Denmark 3,490 3.4 227 6.5 2,053
Sweden 2,515 1.5 26 1.0 346
Norway 1,941 10.1 53 2.7 198
The Netherlands 2,965 7.6 65 2.2 360
Poland 393 1.8 6 1.5 33
Other markets 33 22.4 2 6.1 5
Eliminations -221 - 0 0.0 -1,315
Core business 11,116 5.2 379 3.4 1,680
Several markets (MAG45) 544 1.1 -18 -3.3 75
Other markets 19 -31.1 -1 -5.3 1
Related business 563 -0.3 -19 -3.4 76
Solar Group 11,679 4.9 360 3.1 1,756
4
Segment information – continued
Geographical information
Solar A/S primarily operates on the Danish, Swedish, Norwegian and Dutch markets. In the below table, Other
markets covers the remaining markets, which can be seen in the companies overview available on page 137. The
below allocation has been made based on the products’ place of sale.
65Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
5
Sta costs
Terms of notice for members of the Executive Board is 12 months. When stepping down, the CEO is entitled to
6 months’ remuneration.
DKK million 2020 2019
Salaries and wages etc.
1
1,216 1,226
Pensions, defined contribution 99 94
Costs related to social security 148 156
Share-based payment 2 1
Total 1,465 1,477
Average number of employees (FTEs) 2,935 3,039
Number of employees at year-end (FTEs) 2,864 3,041
Remuneration of Board of Directors
Remuneration of Board of Directors 3 3
Remuneration of Executive Board
Remuneration and bonus 18 16
Share-based payment
2
1 1
Total 19 17
1) In 2020, Solar received DKK 15m from furlough schemes due to COVID-19 which is included in salaries and
wages
2) See note 25 share-based payment
66Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
DKK million 2020 2019
Recognised losses 22 17
Received on trade receivables previously written o -4 -2
18 15
Change in write-down for bad and doubtful debts 5 3
Total 23 18
Relevant accounting policies are described in note 15, trade receivables.
DKK million 2020 2019
Buildings 24 27
Plant, operating equipment, tools and equipment 34 29
Leasehold improvements 4 2
Tenancy, lease 85 83
Cars, lease 26 28
IT equipment, lease 6 6
Technical equipment, lease 2 2
Other lease 1 1
Total depreciation and write-down on property, plant and equipment 182 178
Customer-related assets 1 2
Soware 67 73
Impairment on intangible assets 139 25
Total amortisation and impairment of intangible assets 207 100
Relevant accounting policies are described in note 10, intangible assets, and note 11, property, plant and
equipment, and note 12, Leases.
6 7
Loss on trade receivables Depreciation, write-down, amortisation and impairment
67Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
8
Income tax
Accounting policies
Tax for the year is recognised with the share attributable to
results for the year in the income statement and with the
share attributable to other recognised income and costs in
the statement of comprehensive income. Tax consists of
current tax and changes to deferred tax.
DKK million 2020 2019
Current tax 78 62
Deferred tax 3 -8
Tax on profit for the year 81 54
Tax on taxable profit previous year 1 0
Adjustment of deferred tax for previous years -4 0
Total 78 54
Statement of eective tax rate:
Danish income tax rate 22.0% 22.0%
Tax base change for non-capitalised loss in subsidiaries 1.8% 1.8%
Change to tax rates in Sweden 0.0% -0.6%
Impairment on / gain from sale of / reversal of impairment on associates -7.7% 15.7%
Non-taxable/deductible items in parent company 0.8% 4.5%
Non-taxable/deductible items and diering tax rates compared to Danish tax rate in foreign subsidiaries 10.2% 1.7%
Tax for previous years -1.1% 0.1%
Eective tax rate 26.0% 45.2%
68Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
DKK million 2020 2019
Provision for deferred tax
1/1 93 103
Foreign currency translation adjustments 1 0
Acquired or divested enterprises 0 0
Recognised in other comprehensive income 1 -2
Ordinary tax recognised in income statement -1 -8
Other items 1 0
Total 31/12 95 93
Specified as follows:
Deferred tax liabilities 98 103
Deferred tax assets -3 -10
Total deferred tax, net 95 93
Further specified as follows:
Expected use within 1 year -9 -10
Expected use aer 1 year 104 103
Total, net 95 93
Not recognised in balance sheet:
Deferred tax assets 58 42
Deferred tax assets not recognised in the balance sheet are the part of tax losses where it is not considered suciently certain that
the tax losses can be realised within a short time frame based on the same assumptions as described in note 10, intangible assets.
Non-recognised tax assets can in all material respects be attributed to tax losses in the Netherlands, where the non-recognised tax
assets may be exercised until 2029 (2028).
8
Income tax – continued
Accounting estimates and assesments
Deferred tax assets
Deferred tax assets are not recognised if it is not deemed
suciently safe that these can reduce future taxable
income. In this connection, management assess expected
future taxable income.
Accounting policies
Current tax liabilities and current tax receivables are
recognised in the balance sheet as calculated tax on the
year’s taxable income, adjusted for tax on previous year’s
taxable income and for tax paid on account.
Deferred tax is measured in accordance with the balance
sheet liability method of all temporary dierentials
between accounting and tax-related amounts and
provisions. Deferred tax is recognised at the local tax rate
that any temporary dierentials are expected to be realised
at based on the adopted or expected adopted tax
legislation on the balance sheet date.
Deferred tax assets, including the tax value of tax loss
allowed for carryforward, are measured at the value at
which the asset is expected to be realised, either by
elimination in tax of future earnings or by osetting against
deferred tax liabilities.
Deferred tax assets are assessed annually and only
recognised to the extent that it is probable that they will be
utilised.
Deferred tax is also recognised for the covering of the
retaxation of losses in former foreign subsidiaries partici-
pating in joint taxation assessed as becoming current.
69Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
8
Income tax – continued
DKK million 1/1
Foreign
currency
translation
adjustments
Change in
tax rate
Other
adjustments 2020 2019
Specification by balance sheet items
Property, plant and equipment 44 0 0 -4 40 44
Inventories -3 0 0 0 -3 -3
Provisions for loss on receivables -4 0 0 0 -4 -4
Pension obligations -1 0 0 0 -1 -1
Other items
1
57 1 0 5 63 57
Total, net 93 1 0 1 95 93
1) Other items particularly cover intangible assets and loss balances in jointly taxed entities.
70Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
9
Net profit for the year
DKK million 2020 2019
Proposed distribution of net profit for the year:
Proposed dividends, parent 204 102
Retained earnings 18 -38
Net profit for the year 222 64
Dividends in DKK per share of DKK 100
1
28.00 14.00
1) Calculations are based on proposed dividends.
Accounting policies
Dividends
Proposed dividends are recognised as a liability at the time
of adoption of the general meeting.
71Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
10
Intangible assets
Accounting policies
Customer-related intangible assets
Customer-related intangible assets acquired in connection
with business combinations are measured at cost less
accumulated amortisation and impairment loss.
Customer-related intangible assets are amortised using the
straight-line principle over the expected useful life. Typically,
the amortisation period is 5-7 years.
Goodwill
Goodwill is initially recognised in the balance sheet as the
positive balance between the acquisition consideration of an
enterprise on one side and the fair value of the assets,
liabilities and contingent liabilities acquired on the other
side. In cases of measurement uncertainty, the goodwill
amount can be adjusted until 12 months aer the date of the
acquisition. Goodwill is not amortised but an impairment
test is done annually. The first impairment test is done by the
end of the year of acquisition. Subsequently, goodwill is
measured at this value less accumulated impairment losses.
On acquisition, goodwill is assigned to the cashgenerating
units that form the basis of the impairment test
subsequently. The determination of cashgenerating units
follows the managerial structure and management control.
Soware
Soware is measured at cost less accumulated amortisation
and writedown. Cost includes both direct internal and
external costs. Soware is amortised using the straight-line
principle over 4-8 years. The basis of amortisation is reduced
by any write-down.
DKK million Goodwill
Customer-
related
assets Soware Total
2020
Cost 1/1 269 277 642 1,188
Foreign currency translation adjustment 0 1 -1 0
Additions during the year 0 0 50 50
Disposals during the year
1
-269 0 -1 -270
Cost 31/12 0 278 690 968
Amortisation 1/1 140 272 461 873
Foreign currency translation adjustment 0 1 0 1
Amortisation during the year 0 1 67 68
Impairments during the year 129 0 10 139
Amortisation of abandoned assets -269 0 -1 -270
Amortisation and impairment 31/12 0 274 537 811
Carrying amount 31/12 0 4 153 157
Remaining amortisation period in number of years - 1-5 1-8 -
1) Due to impairment of goodwill, see pages 73-74.
72Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
10
Intangible assets – continued
Accounting policies
Impairment of intangible assets
Goodwill is tested yearly for impairment and at first
before the end of the year of acquisition.
The carrying amount of goodwill is tested for impairment
together with the other non-current assets of the
cash-generating unit to which goodwill is allocated, and is
written down to the recoverable amount via the income
statement, provided that the carrying amount is larger.
Generally, the recoverable amount is determined as the
present value of the expected future net cash flow from
the company or activity (cash-generating unit) that the
goodwill is aliated to. Write-down of goodwill is
recognised in the income statement as part of amortisation
of intangible assets.
The carrying amount of intangible assets is assessed
annually to determine whether there is any indication of
impairment.
When such an indication is present, the asset’s recoverable
amount is calculated, which is the highest of the asset’s fair
value less expected costs of disposal or value in use. Value
in use is calculated as the present value of expected cash
flow from the smallest cash flow-generating unit to which
the asset belongs.
Impairment loss is recognised when the carrying amount of
an asset exceeds the asset’s recoverable amount.
Impairment loss is recognised in the income statement.
Impairment loss relating to goodwill is not reversed.
Impairment on other intangible assets are reversed to
the extent that changes have been made to the
assumptions and estimates that led to the write-down.
DKK million Goodwill
Customer-
related
assets Soware Total
2019
Cost 1/1 270 570 608 1,448
Foreign currency translation adjustment -1 -2 -1 -4
Additions during the year 0 0 35 35
Disposals during the year 0 -291 0 -291
Cost 31/12 269 277 642 1,188
Amortisation 1/1 140 559 367 1,066
Foreign currency translation adjustment 0 -2 0 -2
Amortisation during the year 0 2 73 75
Impairments during the year 0 4 21 25
Amortisation of abandoned assets 0 -291 0 -291
Amortisation and impairment 31/12 140 272 461 873
Carrying amount 31/12 129 5 181 315
Remaining amortisation period in number of years - 1-6 1-8 -
73Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
10
Intangible assets – continued
Goodwill, customer-related assets and other intangible assets
(Comparative figures for 2019 in brackets)
Management has completed the impairment test of the carrying amount of goodwill and soware. The im-
pairment test was based on our new Core+ strategy, estimates and expectations as well as other assumptions
approved by the Executive Board and the Board of Directors with the necessary adjustments under IAS 36.
When performing an impairment test of cash-generating units, the recoverable amount (value in use), determined
as the discounted value of the expected future cash flow, is compared to the carrying amounts of the individual
cash-generating units. Non-allocated costs are proportionately distributed between the individual segments and
thus aect the individual impairment tests by the estimated total costs.
Overall, the impairment tests made are based on the new strategy for 2021-2023 approved by the Executive Board
and the Board of Directors in December 2020. A budget period of 5 years (6 years) has been applied to ensure
that the entire impact from strategic initiatives is included. This reduces the dependency of the terminal value
and thereby also the volatility. Budgets and expectations for the budget for the next 5 years (6 years) are based on
Solar’s current, ongoing and contract investments, in which risks of the material parameters have been assessed
and recognised in the future expected cash flow. In general, expected growth for core business is based on a
conservative outlook for market growth in the coming years.
Management’s final assessment of the impairment tests made is based on an assessment of probable changes to
the basic assumptions and that these will result in that the carrying amount of goodwill is exceeding the recover-
able amount.
Accounting estimates and assessments
Impairment test for goodwill
In connection with the annual impairment test of goodwill,
or when there is an indication of impairment, an estimate is
made of how the parts of the business (cash-generating
units), that goodwill is linked to, will be able to generate
sucient positive cash flow in future to support the value
of goodwill and other net assets in the relevant part of the
business.
Due to the nature of the business, estimates must be made
of expected cash flow for many years ahead which,
naturally, results in a certain level of uncertainty. This
uncertainty is reflected in the discount rate determined.
The impairment test and the very sensitive related aspects
are described in more detail in the comments section.
Soware
Soware is evaluated annually for indicators of a need for
impairment. If a need to perform impairment is identified,
an impairment test for the soware is performed.
The impairment test is made on the basis of dierent
factors, including the soware’s future application, the
present value of the expected cost saving as well as interest
and risks.
74Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Intangible assets – continued
Alvesta V.V.S.-Material AB
The carrying amount of the group’s goodwill arises from the acquisition of the Swedish enterprise Alvesta
V.V.S.-Material AB (wholesale of heating & plumbing materials).
The impairment test as of 31 December 2020 shows that the carrying amount of goodwill exceeds its recover-
able amount with the full carrying amount, DKK 129m, and consequently, goodwill has been written down to
DKK 0m.
The recoverable amount has been determined at a maximum of DKK 280m, whereas the carrying amount includ-
ing goodwill amounts to DKK 415m.
The impairment test is based on the Swedish part of the installation segment. The installation segment compris-
es two divisions: the electrical division and the heating & plumbing division. The electrical division is delivering
the majority of both revenue and earnings.
Compared to the assumptions used in 2019, the actual segment growth and result for 2020 were substantially
below the assumptions used.
10
Value in use is based on the Swedish part of the installation segment and on the following main assumptions:
• The growth rate for 2021 is 2% (6%)
• Growth rate for 2022-2025 is 3.0-3.4% (2.5%)
• Gross margin increase of approx. 1% (0%) over the budget period
• Expected growth rate in the terminal period: 2% (2%)
The discount rate (WACC) used to calculate the recoverable amount is 9.5% (8.5%) in order to compensate for
the risk. Historically it has proven very dicult to prepare accurate long-term estimates in Solar Sverige. There-
fore, a 20% estimated discount has been applied to the estimated cash flow.
75Solar – Annual Report 2020
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11
Property, plant and equipment
Accounting policies
Property, plant and equipment
Land and buildings as well as other plant, operating
equipment, and tools and equipment are measured at cost
less accumulated depreciation and write-down.
Cost includes the purchase price and costs directly
attributable to the acquisition until the time when the asset
is ready for use. Cost of a combined asset is disaggregated
into separate components which are depreciated separately
if the useful lives of the individual components dier.
Subsequent expenditure, for example in connection with
the replacement of components of property, plant or
equipment, is recognised in the carrying amount of the
relevant asset when it is probable that the incurrence will
result in future economic benefits for the group.
The replaced components cease to be recognised in the
balance sheet and the carrying amount is transferred to the
income statement. All other general repair and maintenance
costs are recognised in the income statement when these
are incurred.
Property, plant and equipment are depreciated on a straight-
line basis over their estimated useful lives which are:
• Buildings 40 years
• Technical installations 20 years
• Plant, operating equipment, and tools and equipment 2-5
years
There are a few dierences from the mentioned
depreciation periods in which useful life is estimated as
shorter. Leasehold improvements are depreciated over the
lease term, however, maximum 5 years.
Land is not depreciated.
DKK million
Land and
buildings
Plant,
operating
equipment,
tools and
equipment
Leasehold
improvements
Assets
under
construction Total
2020
Cost 1/1 1,16 4 558 74 48 1,844
Foreign currency translation adjustments -10 -4 -1 0 -15
Additions during the year 1 67 5 13 86
Disposals during the year 0 -16 -2 -53 -71
Cost 31/12 1,155 605 76 8 1,844
Write-down and depreciation 1/1 454 470 55 0 979
Foreign currency translation adjustments -3 -1 -1 0 -5
Write-down and depreciation during the year 24 34 4 0 62
Write-down and depreciation of abandoned assets 0 -8 -2 0 -10
Write-down and depreciation 31/12 475 495 56 0 1,026
Carrying amount 31/12 680 110 20 8 818
76Solar – Annual Report 2020
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11
Property, plant and equipment – continued
Accounting policies – continued
The basis of depreciation is determined in consideration of
the asset’s residual value and reduced by any impairment.
Residual value is determined at the time of acquisition and
reassessed annually. If residual value exceeds the asset’s
carrying amount, depreciation will cease.
By changing the depreciation period or residual value, the
eect of future depreciation is recognised as a change to
accounting estimates.
Impairment of property, plant and equipment
The carrying amount of property, plant and equipment is
assessed annually to determine whether there is any
indication of impairment.
When such an indication is present, the asset’s recoverable
amount is calculated, which is the highest of the asset’s fair
value less expected costs of disposal or value in use. Value
in use is calculated as the present value of expected cash
flow from the smallest cash flow-generating unit to which
the asset belongs.
Impairment loss is recognised when the carrying amount of
an asset exceeds the asset’s recoverable amount.
Impairment loss is recognised in the income statement.
Write-down on property, plant and equipment is reversed to
the extent that changes have been made to the
assumptions and estimates that led to the write-down.
DKK million
Land and
buildings
Plant,
operating
equipment,
tools and
equipment
Leasehold
improvements
Assets
under
construction Total
2019
Cost 1/1 1,156 519 68 31 1,774
Foreign currency translation adjustments 1 -1 0 0 0
Additions during the year 7 76 10 56 149
Disposals during the year 0 -36 -4 -39 -79
Cost 31/12 1,164 558 74 48 1,844
Write-down and depreciation 1/1 427 478 57 0 962
Foreign currency translation adjustments 0 -1 0 0 -1
Write-down and depreciation during the year 27 29 2 0 58
Write-down and depreciation of abandoned assets 0 -36 -4 0 -40
Write-down and depreciation 31/12 454 470 55 0 979
Carrying amount 31/12 710 88 19 48 865
77Solar – Annual Report 2020
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12
Leases
Right-of-use assets
DKK million Tenancy Cars IT equipment
Technical
equipment
Other
equipment Total
2020
Cost 1/1 353 76 16 8 2 455
Foreign currency translation adjustments -1 0 0 0 0 -1
Additions during the year 163 23 14 2 0 202
Disposals during the year
1
-171 -13 -9 -1 0 -194
Cost 31/12 344 86 21 9 2 462
Write-down and depreciation 1/1 81 24 6 2 1 114
Foreign currency translation adjustments 0 0 0 0 0 0
Write-down and depreciation during
the year
85 26 6 2 1 120
Write-down and depreciation of
abandoned assets
-42 -11 -7 0 0 -60
Write-down and depreciation 31/12 124 39 5 4 2 174
Carrying amount 31/12 220 47 16 5 0 288
1) Disposals relate to expiration and renewal of contracts.
Accounting policies
Right-of-use assets
Right-of-use assets are lease assets arising from a lease
agreement. Lease assets are initially measured at cost
consisting of the amount of the initial measurement of the
lease liability with addition of lease payments made to the
lessor at or before the commencement date less any lease
incentives received. Five dierent types of leases have been
identified:
• Tenancy
• Cars
• IT equipment
• Technical equipment
• Other equipment
The lease assets are depreciated on a straight-line basis
over the lease term. The carrying amount of the right-of-
use asset can be adjusted due to modifications to the lease
agreement or in special cases reassessment of the lease
term.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as
an expense in the income statement. Short-term leases are
leases with a term of 12 months or less. Low-value assets
comprise IT-equipment and small items of oce furniture
of a value below DKK 37,000.
78Solar – Annual Report 2020
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12
Leases – continued
Right-of-use assets
DKK million Tenancy Cars IT equipment
Technical
equipment
Other
equipment Total
2019
Cost 1/1 221 46 16 5 1 289
Foreign currency translation adjustments 0 0 0 0 0 0
Additions during the year 142 43 0 3 1 189
Disposals during the year -10 -13 0 0 0 -23
Cost 31/12 353 76 16 8 2 455
Write-down and depreciation 1/1 0 0 0 0 0 0
Foreign currency translation adjustments 1 0 0 0 0 1
Write-down and depreciation during
the year
83 28 6 2 1 120
Write-down and depreciation of
abandoned assets
-3 -4 0 0 0 -7
Write-down and depreciation 31/12 81 24 6 2 1 114
Carrying amount 31/12 272 52 10 6 1 341
79Solar – Annual Report 2020
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12
Leases – continued
Long-term lease liabilities
DKK million 2020 2019
Maturity > 1 year < 5 years, undiscounted 166 178
Maturity > 5 years, undiscounted 29 64
Long-term lease liabilities 31/12, undiscounted 195 242
Discounting on lease liabilities > 1 year < 5 years -5 -7
Discounting on lease liabilities > 5 years -1 -4
Long-term lease liabilities 31/12 189 231
Amounts recognized in the income statement
Depreciation of right-of-use assets 120 120
Interest expense on lease liabilities
5 5
Expense relating to short-term leases 0 1
Expense relating to leases of low-value items 1 1
Expense relating to variable lease payments not included in the measurement of lease liabilities 10 11
Total 136 138
Cash outflows for leases
Instalment on lease liabilities -121 -117
Interest payments -5 -5
Total cash outflows for leases -126 -122
Future cash outflows not recognised as lease liabilities in the balance sheet amount to DKK 0m (DKK 14m) regarding signed but not
yet started lease contracts on rent of premises. Extension options regarding lease contracts on rent of premises, which are not
recognised in the balance sheet amount to DKK 24m (DKK 14m).
Accounting policies
Lease liabilities
Lease liabilities arise from a lease agreement. Lease
liabilities are initially measured at the present value of the
lease payments during the non-cancellable lease period
with addition of periods covered by an option to extend the
lease if exercise of the option is considered reasonably
certain on inception of the lease.
At initial recognition, each contract is assessed individually
to assess the likelihood of exercising a potential extension
option in the contract. The option to extend the contract
period will be included in measuring the lease liability if it is
reasonably certain that Solar will exercise the option.
When calculating the net present value, a discount rate
corresponding to Solar’s incremental borrowing rate has
been used. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities on January 1
2020 are between 1.3% (0.6%) and 4.0% (3.66%) depending
among other things on the term and the currency in which
the contracts are denominated.
The lease liability will be remeasured when changes occur
due to modifications to the contract (extension,
termination etc.), indexation or in special cases
reassessment of the lease term.
80Solar – Annual Report 2020
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13
Associates
1
Accounting policies
Investment in associates
Investments in associates are accounted for by using
the equity method of accounting, by which the investments
are measured at the proportional share of
the entities’ equity determined according to the group’s
accounting policies reduced by the proportional share of
unrealised gains on transaction between the group and the
associates and increased by goodwill determined as of the
date when the investment became an associate.
Investments in associates are tested for impairment
when there is an indication of impairment.
Associates with a negative equity are accounted for at
DKK 0. If the group has a legal or actual obligation to
cover the negative balance of the associate, this obligation
is recognised under liabilities.
Investments in associates, DKK million 2020 2019
Cost 1/1 273 273
Foreign currency translation adjustment 0 0
Additions during the year 2 0
Transferred to other investments -3 0
Disposals during the year -256 0
Cost 31/12 16 273
Adjustments 1/1 -127 -22
Foreign currency translation adjustment
0 0
Profit from associates
-12 -19
Impairment/reversal of impairment
2
81 -86
Transferred to other investments
2 0
Disposals during the year
42 0
Value adjustment 31/12 -14 -127
Carrying amount 31/12 2 146
Impairment and realised gain from sale of associates, DKK million 2020 2019
Impairment/reversal of impairment
81 -86
Realised gain from sale of associates
23 0
Impairment on associates, total 104 -86
1) Associates include the following investments:
• BIMobject where Solar owns 0% compared to 17.2% last year. In 2020, Solar divested its shareholding in BIMobject with a gain of DKK 23m
• Monterra where Solar owns 30.0%
• HomeBob where Solar owns 44.5%
• Zolw where Solar owns 24.4%
• The investment in VivaLabs was transferred to Other investments due to Solar’s ownership was reduced aer divestment of shares. Solar owns 7.89%
compared to 20.0% last year.
2) Impairment/reversal of impairment primarily relates to fair value adjustments based on the share price of BIMobject shares which are traded on the
First North Exchange. All shares were divested in 2020 cf. announcement no. 16 of 8th October 2020.
81Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
13
Associates – continued
Below is a specification on Solar’s ownership in BIMobject AB, which is 0% (17,20%) as all shares were divested in 2020 cf.
announcement no. 16 of 8th October 2020. Key figures according to 9 months’ interim financial statement of 30 September 2020
(30 September 2019) for BIMobject AB.
DKK million 2020 2019
BIMobject AB
Current assets
- 159
Non-current assets - 36
Current and non-current liabilities - 57
Revenue - 74
Net loss for the period - -61
Other comprehensive income - -2
Total comprehensive income for the period - -63
Equity - 138
Solar’s share of net profit from associates regarding the 12 months’ period 1 October 2019 - 30 September 2020
(1 October 2018 - 30 September 2019) as to reporting from BIMobject AB -12 -15
DKK million 2020 2019
Investments in associates
Solar A/S ownershare of equity in BIMobject AB - 24
Goodwill - 115
Booked value, investment BIMobject AB
139
Other associates - 7
Total - 146
Fair value according to First North Exchange (level 1)
31/12, investment BIMobject AB
- 139
82Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
14
Inventories
Accounting policies
Inventories are measured at cost according to the FIFO
method or at net realisable value, if this is lower.
Cost of inventories includes purchase price with
addition of delivery costs.
The net realisable value of inventories is determined as
selling price less costs incurred to make the sale and is
determined in consideration of marketability, obsole-
scence and development of expected selling price.
DKK million 2020 2019
End products 1,531 1,666
Recognised write-down -2 6
The main reasons for the recognised write-downs are sales and scrapping of previously written-down products.
Accounting estimates and assesments
Write-down of inventories
Write-down of inventories is made due to the obsole-
scence of products.
Management specifically assess inventories, including the
products’ turnover rate, current economic trends and
product development when deciding whether the
write-down is sucient.
83Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
15
Trade receivables
Accounting policies
Trade receivables are measured at fair value at acquisition and at amortised cost subsequently. Based
on an individual assessment of the loss risk, write-down to amortised cost less expected credit losses is
made, if this is lower.
Accounting estimates and assesments
Write-down for meeting of loss on doubtful trade receivables
The IFRS 9 simplified approach is applied to measure expected credit losses, which uses a lifetime
expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the day past invoicing.
As the vast majority of our companies generally takes out insurance to hedge against loss to the extent
possible, the write-down based on age distribution amounts to less than 0.5% (0.3%) of gross trade
receivables. Individual assessment of write-down is performed by management specifically analysing
trade receivables, including the customers’ credit rating and current economic trends to ensure that
write-down is sucient. Write-down based on individual assessment amounts to 1.8% (1.4%) of gross
trade receivables. As the total write-down on trade receivables amounts to less than 3% (2%) of gross
trade receivables, no maturity statement of the write-down is included. However, the majority of the
provision relates to receivables overdue by more than 31 (31) days.
Financial risks
Credit risk
Solar is subject to credit risks in respect of trade receivables and cash at bank. No credit risk is deemed to
exist in respect of cash as the counterparts are banks with good credit ratings. Solar A/S’ main banker is
Nordea Bank Danmark A/S.
As a result of customer diversification, trade receivables are distributed so that there is no significant
concentration of risk. Credit granting to customers is regarded as a natural and important element in
Solar’s business operations. Solar conducts ecient credit management at all times. The vast majority of
our companies generally takes out insurance to hedge against loss to the extent possible. As a result, 70%
of trade receivables is covered by insurance against 76% at year-end 2019.
Loss due to credit granting is considered a normal business risk and, therefore, will occur.
DKK million 2020 2019
Maturity statement, trade receivables
Not due 1,215 1,133
Past due for 1-30 day(s) 66 244
Past due for 31-90 days 6 55
Past due for 91+ days 13 20
1,300 1,452
Write-down -29 -24
Total 1,271 1,428
Write-down based on:
Age distribution 6 4
Individual assessment 23 20
Total 29 24
Write-down 1/1 24 21
Foreign currency translation adjustment 0 0
Write-down for the year 11 9
Losses realised during the year -4 -4
Reversed for the year -2 -2
Write-down 31/12 29 24
84Solar – Annual Report 2020
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16
Other provisions
Accounting policies
Provisions are measured in accordance with management’s
best estimate of the amount required to settle a liability.
Restructuring expenses are recognised as liabilities
when a detailed ocial plan for the restructuring has
been published to the parties aected by the plan on
the balance sheet date at the latest.
DKK million 2020 2019
Non-current
Other provisions 12 13
Total 31/12 12 13
Specification, non-current
1/1 13 19
Reversed during the year
-2 -9
Provisions of the year
1 3
Total 31/12 12 13
Current
Other provisions 9 13
Total 31/12 9 13
Specification, current
1/1 13 2
Reversed during the year -13 -2
Provisions of the year 9 13
Total 31/12 9 13
85Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
17
Other payables
DKK million 2020 2019
Sta costs 232 215
Taxes and charges 164 111
Interest rate swaps 77 84
Other payables and amounts payable 71 54
Total 544 464
Relevant accounting policies for derivative financial instruments are described in note 22 on interest-bearing liabilities and maturity
statement.
86Solar – Annual Report 2020
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18
Acquisitions of subsidiaries and activities
2019
On 15 May 2019, Solar A/S acquired selected parts of Onninen AB’s Swedish business activities from the Finnish Kesko Corporation.
Solar acquired the heating, plumbing and air conditioning business segment, which serves mostly small and medium-sized contractors
in Sweden.
The acquisition price for net assets is DKK 45m. The assets mainly consist of inventories and employee-related liabilities.
The acquisition is financed via withdrawals from the Solar Group’s cash resources.
Transaction costs related to the acquisition totalled DKK 2m.
Negative goodwill has been identified with DKK 18m and is attributable to asssumed restructuring costs related to sta and rent.
The amount is recognised in the income statement under other income minus the assumed restructuring costs of DKK 16m, leading
to a net profit of DKK 2m.
The acquired business activities had an estimated eect on our 2019 revenue of approx. DKK 175m and a negative EBITA impact of
estimated DKK -10m including the above mentioned.
The 2019 full year eect is estimated to approx. DKK 300m on revenue and approx. -10m on EBITA.
As the acquired activities are fully integrated, the estimated full year eect is subject to significant uncertainty.
Accounting policies
Newly acquired or newly founded subsidiaries are
recognised in the consolidated financial statements from
the date of acquisition.
For acquisitions of subsidiaries, cost is stated as the
fair value of the assets transferred, obligations undertaken
and shares issued. Cost includes the fair value of any earn
outs. Acquisition-related costs are recognised in the period
in which they are incurred. Identifiable assets, liabilities and
contingent liabilities (net assets) relating to the enterprise
acquired are recognised at fair value at the date of
acquisition calculated in accordance with group accounting
policies. Intangible assets are recognised if they are
separately recognisable or originate in a contractual right.
Deferred tax related to all temporary dierentials except
taxable temporary dierentials on goodwill is recognised.
For business combinations, positive balances (goodwill)
between the acquisition consideration of the enterprise on
one side and the fair value of the assets, liabilities and
contingent liabilities acquired on the other side, are
recognised as goodwill under intangible assets. In cases of
measurement uncertainty, goodwill can be adjusted until 12
months aer the acquisition. Goodwill is not amortised but
an impairment test is done annually. The first impairment
test is done by the end of the year of acquisition. On
acquisition, goodwill is assigned to the cashgenerating
units that form the basis of the impairment test
subsequently.
Comparative figures are not restated for newly acquired
enterprises.
87Solar – Annual Report 2020
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18
Acquisitions of subsidiaries and activities – continued
Fair value at the date of acquisition: (DKK million) 2020 2019
Property, plant and equipment - 1
Inventories - 55
Prepayments - 3
Other payables - -6
Other provisions - -6
Net assets acquired - 47
Negative goodwill - -18
Final acquisition price - 29
Cash paid at closing - 40
Withheld acquisition price - 4
Acquisition price - 44
Adjustment acquisition price
1
- -15
Net purchase price - 29
1) At closing, inventory was lower than estimated which triggered a similar adjustment of the acquisition price.
88Solar – Annual Report 2020
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19
Assets and liabilities held for sale
Discontinued operations
On 20 December 2018, Solar A/S has initiated the process of a management buyout of our Norwegian training business Scandinavian
Technology Institute (STI), a part of our related business. Expected accounting loss of DKK 17m has been included in the financial
statement for 2018. The transaction was completed on 25 March 2019.
The discontinued operations impacted the income statement as follows:
DKK million 2020 2019
Revenue - 12
Cost of sales - -1
Gross profit - 11
Costs - -13
Earnings before interest and tax (EBIT) - -2
Financials - 0
Earnings before tax (EBT) - -2
Tax on net loss for the period - 0
Net loss for the period - -2
Write-down to fair value less cost to sell - 0
Net loss of discontinued operations - -2
Earnings from discontinued operations in DKK per share outstanding (EPS) - -0.27
Diluted earnings from discontinued operations in DKK per share outstanding (EPS-D) - -0.27
Deferred tax assets not recognised in the balance sheet of Claessen ELGB NV (activity divested in 2018) and Solar Deutschland GmbH
(activity divested in 2015) amounted to DKK 113m (DKK 109m) at the end of the period.
Accounting policies
Assets held for sale are saleable assets with expected sale
within 1 year. Write-down to a reduced fair value less sales
costs is made.
89Solar – Annual Report 2020
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20
Share capital
DKK million 2020 2019
Share capital 1/1 736 775
Reduction of share capital 0 -39
Share capital 31/12 736 736
Share capital is fully paid in and divided into the following classes:
A shares, 40 shares at DKK 10,000 0 0
A shares, 2,240 shares at DKK 40,000 90 90
A shares total 90 90
B shares 6,460,000 (6,460,000) at DKK 100 646 646
Total 736 736
In 2019, the share capital was reduced by 385,625 B shares.
Number of shares
Nominal value
(DKK million)
2020 2019 2020 2019
A shares outstanding 31/12
1
900,000 900,000 90 90
B shares outstanding
Outstanding 1/1 6,398,292 6,398,292 640 640
Purchase of treasury shares 0 0 0 0
B shares outstanding 31/12 6,398,292 6,398,292 640 640
Total shares outstanding 31/12 7,298,292 7,298,292 730 730
1) A shares have been included in the calculation in units of DKK 100.
Accounting policies
Treasury shares
Acquisition and disposal sums related to treasury shares are
recognised directly in transactions with the owners.
90Solar – Annual Report 2020
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20
Share capital – continued
Treasury shares (B shares)
Number of shares
Nominal value
(DKK million)
Cost
(DKK million)
Percentage
of share capital
2020 2019 2020 2019 2020 2019 2020 2019
Holding 1/1 61,708 447,333 6 45 24 176 0.8% 5.8%
Cancellation 0 -385,625 0 -39 0 -152 0.0% -5.0%
Holding 31/12 61,708 61,708 6 6 24 24 0.8% 0.8%
Solar A/S's annual general meeting passed a resolution on 15 March 2019 to reduce the company's B share capital
by nominally DKK 38,562,500 by cancelling treasury B shares. This corresponds to a reduction of the B share
capital of 385,625 B shares of DKK 100.
All treasury shares are held by the parent company.
21
Earnings per share in DKK per share outstanding for the year
DKK million 2020 2019
Net profit for the year in DKK million 222 64
Average number of shares 7,360,000 7,48 5,724
Average number of treasury shares -61,708 -187,4 32
Average number of shares outstanding 7,298,292 7,298,292
Dilution eect of share options and restricted shares 9,091 22
Diluted number of shares outstanding 7,307,38 3 7,298,314
Earnings per share in DKK per share outstanding for the year 30.42 8.77
Diluted earnings per share in DKK per share outstanding for the year 30.38 8.77
Earnings per share from continuing operations in DKK per share outstanding for the year 30.42 9.04
Diluted earnings per share from continuing activities in DKK per share outstanding for the year 30.38 9.04
A shares have been included in the calculation in units of DKK 100.
91Solar – Annual Report 2020
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Interest-bearing liabilities and maturity statement
DKK million Interest rate 2020 2019
Debt to mortgage credit institutions Fixed
1
155 165
Debt to credit institutions Fixed 0 135
Debt to credit institutions Floating 53 107
Lease liabilities Calculated 292 344
Bank loans and overdras Floating 31 226
Interest-bearing liabilities 531 977
Trade payables 1,693 1,814
Other payables 576 491
Financial liabilities 2,800 3,282
Cash at bank and in hand 404 56
Trade receivables 1,271 1,428
Other receivables 62 84
Financial assets 1,737 1,568
Total, net 1,063 1,714
1) Interest swaps have been used to hedge floating-rate loans, converting these loans to fixed-rate loans.
2020 2019
Debt to mortgage and credit institutions and lease liabilities 1/1 752 418
Raising of debt to mortgage and credit instututions 53 0
Lease liability recognised as at 1 January 2019 on implementation of IFRS 16 - 289
Lease liability raised during the year 68 173
Repayment of debt to mortgage and credit institutions -252 -9
Instalment on lease liabilities -121 -117
Foreign currency translation adjustment 0 -2
Debt to mortgage and credit institutions and lease liabilities 31/12 500 752
Accounting policies
Financial liabilities
Debt to credit institutions is recognised initially at the
proceeds received net of transaction costs incurred.
In subsequent periods, the financial liabilities are measured
at amortised cost using the eective interest method,
meaning that the dierence between the proceeds and the
nominal value is recognised in the income statement under
financials for the term of the loan.
Financial risks
Interest rate risk
Solar monitors and adjusts interest-bearing liabilities on
an ongoing basis. Loans are only raised in the currencies
of the countries where Solar operates. Of total interest-
bearing liabilities, Solar endeavours to ensure that a
maximum of half is based on variable payment of interest
fixed in accordance with current money market rates. The
remaining interest-bearing liabilities are fixed-rate. Solar
Group has no significant non-current interest-bearing
assets.
As a result of Solar’s policies, a certain interest rate risk
exists.
Reconciliation of development in interest-bearing debt to mortgage
and credit institutions and lease liabilities to financing activities in the cash flow statement:
92Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
22
Interest-bearing liabilities and maturity statement – continued
DKK million 2020 2019
Maturity < 1 year
Debt to mortgage credit institutions 9 9
Debt to credit institutions 0 242
Lease liabilities 103 113
Bank loans and overdras 32 226
Current interest-bearing liabilities 144 590
Other financial liabilities 2,269 2,305
Financial liabilities 2,413 2,895
Financial assets 1,737 1,568
Total, net 676 1,327
Maturity 1-5 year(s)
Debt to mortgage credit institutions 36 36
Debt to credit institutions 53 0
Lease liabilities 161 171
Total 250 207
Maturity > 5 years
Debt to mortgage credit institutions 110 120
Lease liabilities 28 60
Total 138 180
Total non-current liabilities 388 387
Maturity, until year 2037 2037
The carrying amount of financial liabilities corresponds to fair value.
Financial risks – continued
Currency risk
Solar is exposed to currency risks in the form of translation
risks since a substantial proportion of revenue derives from
foreign subsidiaries which apply other currencies than
Danish kroner. The currencies used are euro, Danish kroner,
Swedish kroner, Norwegian kroner and, to a lesser extent,
Polish zloty, Swiss Franc, US dollar and British pound.
The individual subsidiaries are not significantly aected by
exchange rate fluctuations since revenue and costs in
subsidiaries are mainly in the same currencies. Solar has a
number of investments in foreign subsidiaries, where the
translation of equity into Danish kroner depends on
exchange rates. Investments in subsidiaries are not hedged
as such investments are regarded as long-term and because
hedging is seen as unlikely to create any long-term value.
Liquidity risks
Solar has an objective of substantial self-financing to
minimise dependence on lenders and thus gain greater
freedom of action. Financing is primarily controlled
centrally based on the individual subsidiary’s operating and
investment cash requirements. Solar ensures that there are
always sucient and flexible cash reserves and
diversification of maturities of both non-current and
current credit facilities.
Eect on recognition of subsidiaries
of any change in foreign exchange rates of 10%
Profit of the year Equity
DKK million 2020 2019 2020 2019
NOK 8.2 4.0 39.4 35.7
SEK -7.0 3.7 29.3 38.0
PLN 1.3 0.8 6.7 6.4
Total 2.4 8.5 75.4 80.1
93Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
22
Interest-bearing liabilities and maturity statement – continued
DKK million 2020 2019
Interest-bearing liabilities and maturity statement for expected interest expense for the period
< 1 year 12 15
1-5 year(s) 32 36
> 5 years 37 46
Total 81 97
Outstanding interest swaps made for hedging floating-rate loans
Principal amount 164 192
Interest rate in % for outstanding interest swaps 5.2 5.2
Fair value recognised as other payables under current liabilities -77 -84
Maturity for interest swaps follows the maturity for debt to mortgage credit institutions as stated on previous page.
Amounts recognised in other comprehensive income
Adjustment to fair value for the year -10 -18
Realised during the year, recognised as financial income/expenses 17 8
Total 7 -10
Eect of a 1% interest rate increase
Eect on equity 15 22
Of this, earnings impact is 0 -3
Undrawn credit facilities 31/12 474 383
Accounting policies
Derivatives
Derivatives are only used to hedge financial risks in the form of
interest rate and currency risks.
Derivatives are initially recognised at cost and at fair value
subsequently. Both realised and unrealised gains and losses are
recognised in the income statement unless the derivatives are
part of hedging of future transactions. Value adjustments of
derivatives for hedging of future transactions are recognised
directly in other comprehensive income.
As hedged transactions are realised, gains or losses are recog-
nised in the hedging instrument from other comprehensive
income in the same item as the hedged items. Any non-eective
part of the financial instrument in question is recognised in the
income statement.
Derivatives are recognised under other receivables or other
payables.
Fair value measurement
The group uses the fair value concept for recognition of certain
financial instruments and in connection with some disclosure
requirements. Fair value is defined as the price that can be secured
when selling an asset or that must be paid to transfer a liability in
a standard transaction between market participants (exit price).
Fair value is a marked-based and not enterprise-specific valuation.
The enterprise uses the assumptions that market participants
would use when pricing an asset or liability based on existing
market conditions, including assumptions relating to risks.
As far as possible, fair value measurement is based on market
value in active markets (level 1) or alternatively on values derived
from observable market information (level 2).
If such observable information is not available or cannot be used
without significant modifications, recognised valuation methods
and fair estimates are used as the basis of fair values (level 3).
94Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Interest-bearing liabilities and maturity statement – continued
Distribution on currencies
Current liabilities Non-current liabilities
DKK million 2020 2019 2020 2019
EUR 9 33 146 156
DKK 0 333 53 0
NOK 0 0 0 0
PLN 0 4 0 0
SEK 32 107 0 0
Total 41 477 199 156
Interest rate in % 1.1-5.2 1.1-5.2 1.1-5.2 1.1-5.2
Fair value of Solar’s respective interest-bearing liabilities is seen as fair value measurement at level 2. Mortgage loans are
valued based on underlying securities, while bank debt is calculated based on models for discounting to net present value.
Non-observable market data is primarily made up of credit risks, which are seen as insignificant in Solar’s case.
The fair value of Solar’s derived financial instruments (interest rate instruments) is fixed as fair value measurement at level 2,
since fair value can be determined directly based on the actual forward rates and instalments on the balance sheet date.
Outstanding interest rate swaps for hedging of floating-rate loans expire over the period until 2037 (2037).
The group’s enterprises have raised loans in their respective functional currencies, while the parent company has also raised
loans in euro.
22
95Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
23 24
Financial income Financial expenses
DKK million 2020 2019
Interest income 7 8
Foreign exchange gains 17 10
Total 24 18
Financial income, received 7 8
DKK million 2020 2019
Interest expenses 28 32
Foreign exchange losses 17 12
Interest on lease liabilities 5 5
Other financial expenses 14 4
Total 64 53
Financial expenses, settled 47 41
96Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
25
Share-based payment
Share option plans
DKK million
Executive
Board Others Total
No. of share options at year-end 2020
Outstanding at the beginning of 2020 15,870 36,933 52,803
Expired -8,272 -20,126 -28,398
Outstanding at year-end 2020 7,598 16,807 24,405
No. of share options at year-end 2019
Outstanding at the beginning of 2019 27,26 4 46,036 73,300
Expired -11,394 -9,103 -20,497
Outstanding at year-end 2019 15,870 36,933 52,803
DKK million 2020 2019
Market value estimated using the Black-Scholes model, recognised under other liabilities 0 0
Conditions applying to the statement of market value using the Black-Scholes model:
Expected volatility 37% 26%
Expected dividends in proportion to market value 4% 5%
Risk-free interest rate 0% 0%
Accounting policies
Share options and restricted share units are measured at
fair value at the grant date and are recognised in the
income statement under sta costs over the period when
the final right to the options and/or the restricted share
units is vested. The set-o to this is recognised under other
payables, as the employees have the right to choose cash
settlement. This liability is regularly adjusted to fair value
and fair value adjustments are recognised in financials.
The fair value of the granted share options is estimated
using the Black-Scholes model. Allowance is made for the
conditions and terms related to the granted share options
when performing the calculation.
The fair value of the granted restricted share units is
estimated using the market price at closing date.
97Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Share-based payment – continued
Specification of share option plans
Year of granting
No. of shares 2018 2017 2016
Executive Board
Granted 0 9,261 7,297
Transferred on change to the Executive Board 0 -1,663 975
Expired 0 0 -8,272
Total 0 7,598 0
Others
Granted 2,322 14,457 21,101
Transferred on change to the Executive Board 0 1,663 -975
Forfeited on resignation of management employees 0 -1,635 0
Expired 0 0 -20,126
Total 2,322 14,485 0
Exercise price
1
391.80 373.84 335.21
Exercise period
10 banking days following the publication
of the annual report in 2021/2022 2020/2021 2019/2020
1) Exercise price was adjusted by DKK -7.39 in 2018 as dividends distributed in 2018 exceeded years’ results.
Restricted share units
No. of restricted share units at year-end 2020
Executive
Board Others Total
Outstanding at the beginning of 2020 4,972 5,739 10,711
Granted in 2020 4,904 2,760 7,66 4
Adjustment due to dividend distribution 434 376 810
Outstanding at year-end 2020 10,310 8,875 19,185
No. of restricted share units at year-end 2019
Outstanding at the beginning of 2019 2,057 1,097 3,154
Granted in 2019 2,690 4,380 7,070
Adjustment due to dividend distribution 225 262 487
Outstanding at year-end 2019 4,972 5,739 10,711
Year of granting
Specification of restricted share units, no. of shares 2020 2019 2018
Executive Board
Granted 4,904 2,690 2,006
Adjustment due to dividend distribution 216 256 238
Total 5,120 2,946 2,244
Others
Granted 2,760 4,380 1,333
Forefeited on resignation of management employees 0 0 -269
Exercised 0 0 0
Adjustment due to dividend distribution 121 415 135
Total 2,881 4,795 1,199
Price at time of granting 319.39 297.70 399.19
Vesting year 2023 2022 2021
25
Restricted share units
In accordance with Solar’s remuneration policy and general guidelines for incentive-based remuneration, the Board
of Directors decided to grant restricted shares to the Executive Board and management team in 2020 and 2019.
Overall, the grant of shares is covered by the same terms as the previous grants of share options.
Restricted shares are granted for no consideration and provide the holder with a right and an obligation to receive B
shares at a nominal value of DKK 100. The price at the time of granting is fixed at DKK 319.39 (297.7) based on the
average price on Nasdaq Copenhagen the first 10 business days aer publication of Annual Report 2019 (2018). The
restricted shares vest three years aer the time of granting, meaning that this grant of shares vests in 2023 (2022).
At this point, the holder may exercise the restricted share granting.
The number of granted shares was adjusted by +810 (+487) shares in 2020 (2019) due to dividend distribution.
General information on Solar’s incentive scheme is available on our website: https://www.solar.eu/investor/policies.
98Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
26
Contingent liabilities and other financial liabilities
DKK million 2020 2019
Collateral
Assets have been pledged as collateral for bank arrangements at a carrying amount of:
Land and buildings 402 471
Current assets 0 78
Total 402 549
In 2013, Solar Nederland B.V. closed its defined benefit pension plan and transferred all risks that in 2013 amounted
to DKK 373m to an insurance company. In 2016, Conelgro B.V. closed its defined benefit pension plan and
transferred all risks that in 2016 amounted to DKK 250m to an insurance company.
Solar is liable for payment of the benefit vs. the participants and has consequently a credit risk vs. the insurance
company. Based on the insurance company’s current rating, this risk is determined to be limited.
27
Related parties
Group and parent Solar A/S are subject to control by the Fund of 20th December (registered as a
commercial foundation in Denmark), which owns 16,9% of the shares and holds 60,0 % of the voting
rights. The remaining shares are owned by a widely combined group of shareholders.
Other related parties include the company’s Board of Directors and Executive Board. There
have been no transactions in the financial year with members of the Board of Directors and
Executive Board other than those which appear from note 5 and note 25.
Solar invoices the Fund of 20th December for the performance of administrative services at DKK
20,000. Balances with the Fund of 20th December total 0 on balance sheet date.
99Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
28
Auditors’ fees
DKK million 2020 2019
PricewaterhouseCoopers
Statutory audit 3 3
Other assurance engagements 0 0
Tax consulting 0 0
Other services
1
1 1
Total 4 4
Other auditors
Statutory audit 1 1
Other services 0 0
Total 1 1
1) Other services mainly consists of IT-related services.
29
New financial reporting standards
IASB has issued the following new or amended standards which are not yet eective and which are relevant
for Solar:
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or
Noncurrent, eective 1 January 2023.
• Amendment to IAS 37, Provisions, contingent liabilities and contingent assets: Onerous contracts,
Cost of fulfilling a contract, eective 1 January 2022.
• Annual improvements 2018-2020 comprising minor amendments to existing standards, eective 1 January
2022.
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2,
eective 1 January 2021.
The amendments are eective for accounting periods beginning on or aer 1 January 2021.
They are not expected to have significant impact on Solar’s accounting policies.
101Solar – Annual Report 2020
FINANCIAL STATEMENTS
NOTES TO THE SEPARATE FINANCIAL
STATEMENTS
Basis for preparation
1 General accounting policies 107
2 Significant accounting estimates
and assessments 107
Notes to the income statement
3 Sta costs 108
4 Loss on trade receivables 109
5 Depreciation, write-down and amortisation 109
6 Income tax 110
7 Net profit for the year 113
Invested capital
8 Intangible assets 114
9 Property, plant and equipment 116
10 Leases 118
11 Investments measured at equity value
and other non-current assets 121
12 Inventories 123
13 Trade receivables 124
14 Other provisions 125
15 Other payables 126
Capital structure and financing costs
16 Share capital 127
17 Interest-bearing liabilities and
maturity statement 129
18 Financial income 133
19 Financial expenses 133
Other notes
20 Contingent liabilities and other
financial liabilities 134
21 Related parties 135
22 Auditors’ fees 135
CONTENTS
Statement of comprehensive income 102
Balance sheet 103
Cash flow statement 104
Statement of changes in equity 105
Notes 107
102Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
STATEMENT OF COMPREHENSIVE INCOME
Income statement
Note DKK million 2020 2019
Revenue 3,642 3,489
Cost of sales -2,785 -2,679
Gross profit 857 810
Other operating income and costs 37 35
21 External operating costs -31 -29
3 Sta costs -527 -504
4 Loss on trade receivables -8 -5
Earnings before interest, tax, depreciation and amortisation (EBITDA) 328 307
5 Depreciation and write-down on property, plant and equipment -46 -45
Earnings before interest, tax and amortisation (EBITA) 282 262
5 Amortisation and impairment of intangible assets -75 -69
Earnings before interest and tax (EBIT) 207 193
Profit from subsidiaries -12 33
Write-down of subsidiaries held for sale 0 0
Share of net profit from associates -12 -19
Impairment and gain from divestment of associates 104 -86
18 Financial income 16 13
19 Financial expenses -41 -30
Earnings before tax (EBT) 262 104
6 Income tax -40 -40
7 Net profit for the year 222 64
Other comprehensive income
DKK million 2020 2019
Net profit for the year 222 64
Other income and costs recognised:
Items that can be reclassified for the income statement
Foreign currency translation adjustments of foreign subsidiaries
-22 0
Fair value adjustments of hedging instruments before tax, parent company 7 -10
Tax on fair value adjustments of hedging instruments, parent company
-1 2
Other income and costs recognised aer tax
-16 -8
Total comprehensive income for the year
206 56
103Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
BALANCE SHEET
Notes DKK million 2020 2019
Assets
8 Intangible assets 154 181
9 Property, plant and equipment 242 253
10 Right-of-use assets 72 74
11 Investments measured at equity value 1,219 1,457
11 Other non-current assets 69 78
Non-current assets 1,756 2,043
12 Inventories 533 506
13 Trade receivables 345 373
Receivables from subsidiaries 386 379
Income tax receivable 3 3
Other receivables 3 4
Prepayments 16 27
Cash at bank and in hand 323 0
Current assets 1,609 1,292
Total assets 3,365 3,335
Notes DKK million 2020 2019
Equity and liabilities
16 Share capital 736 736
Reserves -80 -51
Retained earnings 836 805
Proposed dividends for the financial year 204 102
Equity 1,696 1,592
17 Interest-bearing liabilities 199 156
10 Lease liabilities 51 51
6 Provision for deferred tax 72 79
14 Other provisions 1 2
Non-current liabilities 323 288
17 Interest-bearing liabilities 41 342
10 Lease liabilities 22 23
Trade payables 738 699
Amounts owed to subsidiaries 282 157
15 Other payables 261 233
Prepayments 1 1
14 Other provisions 1 0
Current liabilities 1,346 1,455
Liabilities 1,669 1,743
Total equity and liabilities 3,365 3,335
as at 31 December
104Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
CASH FLOW STATEMENT
Notes DKK million 2020 2019
Net profit for the year 222 64
5 Depreciation, write-down and amortisation 121 114
Impairment and gain from divestment of associates -104 86
Changes to provisions and other adjustments 1 -2
Profit from subsidiaries 12 -33
Share of net profit from associates 12 19
17, 18 Financials, net 25 17
Income tax 40 40
17 Financial income, received 9 10
18 Financial expenses, settled -35 -26
Income tax, settled -49 -46
Cash flow before working capital changes 254 243
Working capital changes
Inventory changes -27 26
Receivables changes 48 18
Non-interest-bearing liabilities changes 73 -91
Cash flow from operating activities 348 196
Investing activities
8 Purchase of intangible assets -47 -30
Purchase of property, plant and equipment -9 -24
Purchase/capital increase subsidiaries 0 -15
Divestment of subsidiary 0 5
Divestment of associates
1
240 0
Other financial investments -1 -14
Cash flow from investing activities 183 -78
1) DKK 237m relates to the divestment of our shareholding in BIMobject.
Notes DKK million 2020 2019
Financing activities
Repayment of non-current interest-bearing debt -145 -9
Raising of non-current interest-bearing liabilities 53 0
Change in current interest-bearing liabilities -167 127
Instalment on lease liabilities -26 -27
Changes to loans to subsidaries 119 -132
Dividends from subsidiaries 60 25
Dividends distributed -102 -102
Cash flow from financing activities, continuing operations -208 -118
Total cash flow 323 0
Cash at bank and in hand at the beginning of the year 0 0
Cash at bank and in hand at the end of the year 323 0
Cash at bank and in hand at the end of the year
Cash at bank and in hand 323 0
Cash at bank and in hand at the end of the year 323 0
105Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
DKK million
Share
capital
Reserves
for hedging
transactions
1
Reserves for
foreign
currency
translation
adjustments
1
Reserves for
development
costs
1
Retained
earnings
Proposed
dividends Total
2020
Equity as at 1 January 736 -66 -113 128 805 102 1,592
Foreign currency translation adjustments of foreign subsidiaries -22 -22
Fair value adjustments of hedging instruments before tax 7 7
Tax on fair value adjustments -1 -1
Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 6 -22 0 0 0 -16
Net profit for the year -13 31 204 222
Comprehensive income 0 6 -22 -13 31 204 206
Distribution of dividends (DKK 14.00 per share) -102 -102
Transactions with the owners 0 0 0 0 0 -102 -102
Equity as at 31 December 736 -60 -135 115 836 204 1,696
1) Reserves for hedging transactions, reserves for foreign currency translation adjustments and reserves for development costs are recognised in the balance sheet as a total amount under reserves.
STATEMENT OF CHANGES IN EQUITY
106Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
STATEMENT OF CHANGES IN EQUITY
– continued
DKK million
Share
capital
Reserves
for hedging
transactions
1
Reserves for
foreign
currency
translation
adjustments
1
Reserves for
development
costs
1
Retained
earnings
Proposed
dividends Total
2019
Equity as at 1 January 775 -58 -113 141 791 102 1,638
Foreign currency translation adjustments of foreign subsidiaries 0
Fair value adjustments of hedging instruments before tax -10 -10
Tax on fair value adjustments 2 2
Net income recognised in equity via other comprehensive income in the statement of comprehensive income 0 -8 0 0 0 0 -8
Net profit for the year -13 -25 102 64
Comprehensive income 0 -8 0 -13 -25 102 56
Distribution of dividends (DKK 14.00 per share) -102 -102
Reduction in share capital -39 39 0
Transactions with the owners -39 0 0 0 39 -102 -102
Equity as at 31 December 736 -66 -113 128 805 102 1,592
1) Reserves for hedging transactions, reserves for foreign currency translation adjustments and reserves for development costs are recognised in the balance sheet as a total amount under reserves.
107Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
1 2
General accounting policies
A general description of accounting policies can be found in the consolidated financial statements
on pages 58-60, note 1, Accounting policies.
Descriptions of accounting policies in notes
Descriptions of accounting policies in the notes form part of the overall description of accounting
policies. Parent-specific descriptions are found in the following notes:
Note 6 Income tax
Note 7 Net profit for the year
Note 8 Intangible assets
Note 9 Property, plant and equipment
Note 10 Leases
Note 11 Investments measured at equity value and other non-current assets
Note 12 Inventories
Note 13 Trade receivables
Note 14 Other provisions
Note 16 Share capital
Note 17 Interest-bearing liabilities
Note 20 Contingent liabilities and other financial liabilities
Significant accounting estimates and assessments
When preparing the annual report in accordance with generally applicable principles, management make
estimates and assumptions that aect the reported assets and liabilities. Management base their estimates on
historic experience and expectations for future events. Therefore, actual results may dier from these estimates.
The following estimates and accompanying assessments are deemed material for the preparation of the finan-
cial statements:
• Impairment test for goodwill and equity investments
• Impairment test of soware
• Inventory write-down
• Write-down for meeting of loss on doubtful receivables
These estimates and assessments are described in the following notes:
Note 8 Intangible assets
Note 12 Inventories
Note 13 Trade receivables
108Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
3
Sta costs
Terms of notice for members of the Executive Board is 12 months. When stepping down, the CEO is
entitled to 6 months’ remuneration.
DKK million 2020 2019
Salaries and wages etc.
1
480 462
Pensions, defined contribution 34 30
Costs related to social security 11 11
Share-based payment 2 1
Total 527 504
Average number of employees (FTEs) 760 765
Number of employees at year-end (FTEs) 766 775
Remuneration of Board of Directors
Remuneration of Board of Directors 3 3
Remuneration of Executive Board
Remuneration and bonus 18 16
Share-based payment 1 1
Total 19 17
1) In 2020, Solar received DKK 5m from furlough schemes due to COVID-19 which is included in salaries and wages.
109Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
4 5
Loss on trade receivables Depreciation, write-down and amortisation
DKK million 2020 2019
Recognised losses 5 5
Received on trade receivables previously written o 0 0
5 5
Change in write-down for bad and doubtful debts 3 0
Total 8 5
Relevant accounting policies are described in note 13, trade receivables.
DKK million 2020 2019
Buildings 11 10
Plant, operating equipment, tools and equipment 8 8
Leasehold improvements 1 0
Tenancy, lease 11 11
Cars, lease 9 10
IT equipment, lease 6 6
Total depreciation and write-down on property, plant and equipment 46 45
Customer-related assets 1 1
Soware 64 68
Impairment of intangible assets 10 0
Total amortisation and impairment of intangible assets 75 69
Relevant accounting policies are described in note 8, intangible assets, and note 9, property, plant and equipment
and note 10, leases.
110Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
6
Income tax
Accounting policies
Tax for the year is recognised with the share attributable to
results for the year in the income statement and with the
share attributable to other recognised income and costs in
the statement of comprehensive income. Tax consists of
current tax and changes to deferred tax.
DKK million 2020 2019
Current tax 49 47
Deferred tax -9 -7
Tax on profit or loss for the year 40 40
Tax on taxable profit previous year 0 0
Total 40 40
Statement of eective tax rate:
Danish income tax rate 22.0% 22.0%
Profit from subsidiaries 1.2% -6.9%
Impairment on / gain from sale of / reversal of impairment on associates -8.9% 18.1%
Non-taxable/deductible items in parent 1.0% 5.1%
Tax regarding prevoius year 0.0% 0.2%
Eective tax rate 15.3% 38.5%
111Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
6
Income tax – continued
Accounting policies
Current tax liabilities and current tax receivables are
recognised in the balance sheet as calculated tax on the
year’s taxable income, adjusted for tax on previous year’s
taxable income and for tax paid on account.
Deferred tax is measured in accordance with the balance
sheet liability method of all temporary dierentials
between accounting and tax-related amounts and
provisions. Deferred tax is recognised at the local tax rate
that any temporary dierentials are expected to be realised
at based on the adopted or expected adopted tax
legislation on the balance sheet date.
Deferred tax assets, including the tax value of tax loss
allowed for carryforward, are measured at the value at
which the asset is expected to be realised, either by
elimination in tax of future earnings or by osetting against
deferred tax liabilities.
Deferred tax assets are assessed annually and only
recognised to the extent that it is probable that they
will be utilised.
Deferred tax is also recognised for the covering of
retaxation of losses in former foreign subsidiaries
participating in joint taxation assessed as becoming
current.
DKK million 2020 2019
1/1 79 88
Recognised in other comprehensive income 1 -2
Ordinary tax recognised in income statement -9 -7
Other items 1 -
Total 31/12 72 79
Specified as follows:
Deferred tax 72 79
Deferred tax assets 0 0
Total deferred tax, net 72 79
Further specified as follows:
Expected use within 1 year 0 0
Expected use aer 1 year 72 79
Total, net 72 79
112Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
6
Income tax – continued
Specification by balance sheet items
DKK million 1/1
Other
adjustments 2020 2019
Property, plant and equipment 20 0 20 20
Inventories 0 0 0 0
Provisions for loss on receivables 0 0 0 0
Other items
1
59 -7 52 59
Total, net 79 -7 72 79
1) Other items cover intangible assets, loss balances in jointly taxed entities.
113Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
7
Net profit for the year
Accounting policies
Dividends
Proposed dividends are recognised as a liability at the
time of adoption of the general meeting.
DKK million 2020 2019
Proposed distribution of net profit for the year:
Proposed dividends, parent 204 102
Reserves for development costs -13 -13
Retained earnings 31 -25
Net profit for the year 222 64
Dividends in DKK per share of DKK 100
1
28.00 14.00
1) Calculations are based on proposed dividends.
114Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
8
Intangible assets
Accounting policies
Customer-related intangible assets
Customer-related intangible assets acquired in connection
with business combinations are measured at cost less
accumulated amortisation and impairment loss.
Customer-related intangible assets are amortised using
the straight-line principle over the expected useful life.
Typically, the amortisation period is 5-7 years.
Goodwill
Goodwill is initially recognised in the balance sheet as
the positive balance between the acquisition consideration
of an enterprise on one side and the fair value of the assets,
liabilities and contingent liabilities acquired on the other
side. In cases of measurement uncertainty, the goodwill
amount can be adjusted until 12 months aer the date of
the acquisition. Goodwill is not amortised but an
impairment test is done annually. The first impairment test
is done by the end of the year of acquisition. Subsequently,
goodwill is measured at this value less accumulated
impairment losses. On acquisition, goodwill is assigned to
the cashgenerating units that form the basis of the
impairment test subsequently. The determination of
cashgenerating units follows the managerial structure and
management control.
Soware
Soware is measured at cost less accumulated amortisation
and write-down. Cost includes both direct internal and
external costs. Soware is amortised using the straight-line
principle over 4-8 years. The basis of amortisation is
reduced by any write-down.
DKK million Goodwill
Customer-
related assets Soware Total
2020
Cost 1/1 9 46 606 661
Additions during the year 0 0 48 48
Disposals during the year -9 0 -1 -10
Cost 31/12 0 46 653 699
Amortisation and impairment 1/1 9 42 429 480
Amortisation during the year 0 1 64 65
Impairment during the year 0 0 10 10
Amortisation of abandoned assets -9 0 -1 -10
Amortisation and impairment 31/12 0 43 502 545
Carrying amount 31/12 0 3 151 154
Remaining amortisation period in number of years - 5 1-8 -
8
115Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Accounting policies – continued
Impairment of intangible assets
The carrying amount of intangible assets is assessed
annually to determine whether there is any indication of
impairment.
When such an indication is present, the asset’s recoverable
amount is calculated, which is the highest of the asset’s fair
value less expected costs of disposal or value in use. Value
in use is calculated as the present value of expected cash
flow from the smallest cash flow-generating unit to which
the asset belongs.
Impairment loss is recognised when the carrying amount of
an asset exceeds the asset’s recoverable amount.
Impairment loss is recognised in the income statement.
Impairment loss on intangible assets is reversed if changes
have been made to the assumptions and estimates that led
to the impairment loss.
8
Intangible assets – continued
Accounting estimates and assesments
Soware
Soware is evaluated annually for indicators of a need for
impairment. If a need to perform impairment is identified,
an impairment test is performed for the soware.
The impairment test is made on the basis of dierent
factors, including the soware’s future application, the
present value of the expected cost saving as well as interest
and risks.
DKK million Goodwill
Customer-
related assets Soware Total
2019
Cost 1/1 9 46 576 631
Additions during the year 0 0 30 30
Acquired during the year 0 0 0 0
Disposals during the year 0 0 0 0
Cost 31/12 9 46 606 661
Amortisation and impairment 1/1 9 41 361 411
Amortisation during the year 0 1 68 69
Impairment during the year 0 0 0 0
Amortisation of abandoned assets 0 0 0 0
Amortisation and impairment 31/12 9 42 429 480
Carrying amount 31/12 0 4 177 181
Remaining amortisation period in number of years - 6 1-8 -
116Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
9
Property, plant and equipment
Accounting policies
Property, plant and equipment
Land and buildings as well as other plant, operating
equipment, and tools and equipment are measured at cost
less accumulated depreciation and write-down.
Cost includes the purchase price and costs directly
attributable to the acquisition until the time when the asset
is ready for use. Cost of a combined asset is disaggregated
into separate components which are depreciated separately
if the useful lives of the individual components dier.
Subsequent expenditure, for example in connection with
the replacement of components of property, plant or
equipment, is recognised in the carrying amount of the
relevant asset when it is probable that the incurrence will
result in future economic benefits for the group. The
replaced components cease to be recognised in the balance
sheet and the carrying amount is transferred to the income
statement. All other general repair and maintenance costs
are recognised in the income statement when these are
incurred.
Property, plant and equipment are depreciated on a
straight-line basis over their estimated useful lives which
are:
• Buildings 40 years
• Technical installations 20 years
• Plant, operating equipment, and tools and equipment
2-5 years.
There are a few dierences from the mentioned
depreciation periods in which useful life is estimated as
shorter. Leasehold improvements are depreciated over the
lease term, however, maximum 5 years.
Land is not depreciated.
DKK million
Land and
buildings
Plant,
operating
equipment,
tools and
equipment
Leasehold
improvements Total
2020
Cost 1/1 409 245 12 666
Additions during the year 1 13 0 14
Disposals during the year 0 -9 -2 -11
Cost 31/12 410 249 10 669
Write-down and depreciation 1/1 183 224 6 413
Write-down and depreciation during the year 11 8 1 20
Write-down and depreciation of abandoned assets 0 -4 -2 -6
Write-down and depreciation 31/12 194 228 5 427
Carrying amount 31/12 216 21 5 242
117Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
9
Property, plant and equipment – continued
Accounting policies – continued
The basis of depreciation is determined in consideration of
the asset’s residual value and reduced by any impairment.
Residual value is determined at the time of acquisition and
reassessed annually. If residual value exceeds the asset’s
carrying amount, depreciation will cease.
By changing the depreciation period or residual value,
the eect of future depreciation is recognised as a
change to accounting estimates.
Impairment of property, plant and equipment
The carrying amount of property, plant and equipment
is assessed annually to determine whether there is any
indication of impairment.
When such an indication is present, the asset’s recoverable
amount is calculated, which is the highest of the asset’s fair
value less expected costs of disposal or value in use. Value
in use is calculated as the present value of expected cash
flow from the smallest cash flow-generating unit to which
the asset belongs.
Impairment loss is recognised when the carrying amount of
an asset exceeds the asset’s recoverable amount.
Impairment loss is recognised in the income statement.
Write-down on property, plant and equipment is reversed to
the extent that changes have been made to the
assumptions and estimates that led to the write-down.
DKK million
Land and
buildings
Plant,
operating
equipment,
tools and
equipment
Leasehold
improvements Total
2019
Cost 1/1 404 256 7 667
Additions during the year 5 13 6 24
Disposals during the year 0 -24 -1 -25
Cost 31/12 409 245 12 666
Write-down and depreciation 1/1 173 240 7 420
Write-down and depreciation during the year 10 8 0 18
Write-down and depreciation of abandoned assets 0 -24 -1 -25
Write-down and depreciation 31/12 183 224 6 413
Carrying amount 31/12 226 21 6 253
118Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
10
Leases
Right-of-use assets
DKK million Tenancy Cars
IT
equipment Total
2020
Cost 1/1 59 25 16 100
Additions during the year 5 7 14 26
Disposals during the year
1
0 -4 -9 -13
Cost 31/12 64 28 21 113
Write-down and depreciation 1/1 11 9 6 26
Write-down and depreciation during the year 11 9 6 26
Write-down and depreciation of abandoned assets 0 -4 -7 -11
Write-down and depreciation 31/12 22 14 5 41
Carrying amount 31/12 42 14 16 72
1) Disposals relate to expiration and renewal of contracts.
Accounting policies
Right-of-use assets
Right-of-use assets are lease assets arising from a lease
agreement. Lease assets are initially measured at cost
consisting of the amount of the initial measurement of the
lease liability with addition of lease payments made to the
lessor at or before the commencement date less any lease
incentives received. Three dierent types of leases have
been identified:
• Tenancy
• Cars
• IT equipment
The lease assets are depreciated on a straight-line basis
over the lease term. The carrying amount of the right-of-
use asset can be adjusted due to modifications to the lease
agreement or in special cases reassessment of the lease
term.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as
an expense in the income statement. Short-term leases are
leases with a term of 12 months or less. Low-value assets
comprise IT-equipment and small items of oce furniture
of a value below DKK 37,000.
119Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
10
Leases – continued
Right-of-use assets
DKK million Tenancy Cars
IT
equipment Total
2019
Cost 1/1 30 15 16 61
Additions during the year 29 11 0 40
Disposals during the year 0 -1 0 -1
Cost 31/12 59 25 16 100
Write-down and depreciation 1/1 0 0 0 0
Write-down and depreciation during the year 11 10 6 27
Write-down and depreciation of abandoned assets 0 -1 0 -1
Write-down and depreciation 31/12 11 9 6 26
Carrying amount 31/12 48 16 10 74
120Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Leases – continued
Long-term lease liabilities
DKK Million 2020 2019
Maturity > 1 year < 5 years, undiscounted 40 35
Maturity > 5 years, undiscounted 13 18
Long-term lease liabilities 31/12, undiscounted 53 53
Discounting on lease liabilities > 1 year < 5 years -1 -1
Discounting on lease liabilities > 5 years -1 -1
Long-term lease liabilities 31/12 51 51
Amounts recognized in the Profit & Loss statement
Depreciation of right-of-use assets 26 27
Interest expense on lease liabilities 1 1
Expense relating to short-term leases 0 0
Expense relating to leases of low-value items 0 0
Expense relating to variable lease payments not included in the measurement of lease liabilities 2 2
Total 29 30
Cash outflows for leases
Instalment on lease liabilities -26 -27
Interest payments -1 -1
Total cash outflows for leases -27 -28
10
Accounting policies
Lease liabilities
Lease liabilities arise from a lease agreement. Lease
liabilities are initially measured at the present value of the
lease payments during the non-cancellable lease period
with addition of periods covered by an option to extend the
lease if exercise of the option is considered reasonably
certain on inception of the lease.
At initial recognition, each contract is assessed individually
to assess the likelihood of exercising a potential extension
option in the contract. The option to extend the contract
period will be included in measuring the lease liability if it is
reasonably certain that Solar will exercise the option.
When calculating the net present value, a discount rate
corresponding to Solar’s incremental borrowing rate has
been used. The weighted average lessee’s incremental
borrowing rate applied to the lease liabilities on January 1
2020 are between 1.3% (0.6%) and 4.0% ( 3.66%) depending
among other things on the term and the currency in which
the contracts are denominated.
The lease liability will be remeasured when changes occur
due to modifications to the contract (extension,
termination etc.), indexation or in special cases
reassessment of the lease term.
121Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Investments measured at equity value an other non-current assets
DKK million
Equity
investments
Investments
in associates
Other
investments
Other
receivables Total
2020
Cost 1/1 2,624 273 53 49 2,999
Foreign currency translation adjustments 0 0 -1 0 -1
Additions during the year 0 0 0 1 1
Fair value adjustment recognised under financial income 0 0 0 0 0
Transferred from associates to other investments 0 -3 3 0 0
Disposals during the year 0 -256 0 -30 -286
Cost 31/12 2,624 14 55 20 2,713
Value adjustment 1/1 -1,313 -127 -2 -22 -1,464
Foreign currency translation adjustments -22 0 0 0 -22
Dividends from subsidiaries -60 0 0 0 -60
Profit from subsidiaries -12 -12 0 0 -24
Fair value adjustment recognised under impairment
on associates 0 81 0 0 81
Fair value adjustment recognised under financial
expenses 0 0 0 -2 -2
Transferred from associates to other investments 0 2 -2 0 0
Other adjustments 2 42 0 22 66
Value adjustment 31/12 -1,405 -14 -4 -2 -1,425
Carrying amount 31/12 1,219 0 51 18 1,288
11
Accounting policies
Under the equity method of accounting, the investments
are initially recognised at cost and adjusted thereaer to
recognise the parent company’s share of the post-
acquisition profits or losses of the subsdiary in profit or loss
statement, and the parent company’s share of movements
in other comprehensive income of the investee in other
comprehensive income.
Dividends received or receivable from subsidiaries are
recognised as a reduction in the carrying amount of the
investment.
Unrealised gains on transactions between the parent
company and its subsidiaries are eliminated to the extent of
the parent company’s interest in these entities. Unrealised
losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of equity accounted investees have
been changed where necessary to ensure consistency with
the policies adopted by the parent company.
The carrying amount of equity-accounted investments is
tested for impairment.
Other investments are measured at fair value.
122Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Investments measured at equity value and other non-current assets – continued
11
DKK million
Equity
investments
Investments
in associates
Other
investments
Other
receivables Total
2019
Cost 1/1 2,609 273 48 36 2,966
Additions during the year 15 0 5 9 29
Transferred from investments held for sale 0 0 0 4 4
Disposals during the year 0 0 0 0 0
Cost 31/12 2,624 273 53 49 2,999
Value adjustment 1/1 -1,321 -22 -2 -22 -1,367
Dividends from subsidiaries -25 0 0 0 -25
Profit from subsidiaries 33 -19 0 0 14
Fair value adjustment recognised under impairment
on associates 0 -86 0 0 -86
Other adjustments 0 0 0 0 0
Value adjustment 31/12 -1,313 -127 -2 -22 -1,464
Carrying amount 31/12 1,311 146 51 27 1,535
123Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
12
Inventories
Accounting policies
Inventories are measured at cost according to the FIFO
method or at net realisable value, if this is lower.
Cost of inventories includes purchase price with addition
of delivery costs.
The net realisable value of inventories is determined as
selling price less costs incurred to make the sale and is
determined in consideration of marketability,
obsolescence and development of expected selling
price.
DKK million 2020 2019
End products 533 506
Recognised write-down 3 -1
The main reasons for the recognised write-downs is an increase in write-down articles.
Accounting estimates and assesments
Write-down of inventories
Write-down of inventories is made due to the
obsolescence of products.
Management specifically assess inventories, including
the products’ turnover rate, current economic trends
and product development when deciding whether the
write-down is sucient.
124Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Accounting policies
Trade receivables are measured at fair value at acquisition
and at amortised cost subsequently. Based on an individual
assessment of the loss risk, write-down to amortised cost
less expected credit losses is made, if this is lower.
Accounting estimates and assesments
Write-down for meeting of loss on doubtful trade
receivables
The IFRS 9 simplified approach is applied to measure
expected credit losses, which uses a lifetime expected loss
allowance for all trade receivables.
To measure the expected credit losses, trade receivables
have been grouped based on shared credit risk
characteristics and the day past invoicing.
As the vast majority of our companies generally takes out
insurance to hedge against loss to the extent possible, the
write-down based on age distribution amounts to less than
0.3% (0.8%) of gross trade receivables.
Individual assessment of write-down is performed by
management specifically analysing trade receivables,
including the customers’ credit rating and current
economic trends to ensure that write-down is sucient.
Write-down based on individual assessment amounts to
1.7% (0.3%) of gross trade receivables. As the total
write-down on trade receivables amounts to 2% (1%) of
gross trade receivables, no maturity statement of the write-
down is included. However, the majority of the provision
relates to receivables overdue by more than 31 days (31
days).
13
Trade receivables
DKK million 2020 2019
Maturity statement, trade receivables
Not due 344 320
Past due for 1-30 day(s) 4 39
Past due for 31-90 days 3 15
Past due for 91+ days 1 3
352 377
Write-down -7 -4
Total 345 373
Write-down based on:
Age distribution 1 3
Individual assessment 6 1
Total 7 4
Write-down 1/1 4 4
Write-down for the year 5 1
Losses realised during the year 0 0
Reversed for the year -2 -1
Write-down 31/12 7 4
We refer to the consolidated accounts, note 15, trade receivables, for information on credit risk.
125Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
14
Other provisions
Accounting policies
Provisions are measured in accordance with management’s
best estimate of the amount required to settle a liability.
Restructuring expenses are recognised as liabilities when a
detailed ocial plan for the restructuring has been
published to the parties aected by the plan on the balance
sheet date at the latest.
DKK million 2020 2019
Non-current
Others 1 2
Total 31/12 1 2
Specification, non-current
1/1 2 2
Reversed during the year
-1 0
Provisions of the year
0 0
Total 31/12 1 2
Current
Restructuring costs 1 0
Total 31/12 1 0
Specification, current
1/1 0 0
Reversed during the year 0 0
Provisions of the year 1 0
Total 31/12 1 0
126Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
15
Other payables
DKK million 2020 2019
Sta costs 105 115
Taxes and charges 48 14
Hedging instruments 77 84
Other payables and amounts payable 31 20
Total 261 233
Accounting policies for hedging instruments are described in note 17 on interest-bearing liabilities and maturity statement.
127Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
16
Share capital
DKK million 2020 2019
Share capital 1/1 736 775
Reduction in share capital 0 -39
Share capital 31/12 736 736
Share capital is fully paid in and divided into the following classes:
A shares, 40 shares at DKK 10,000 0 0
A shares, 2,240 shares at DKK 40,000 90 90
A shares total 90 90
B shares 6,460,000 at DKK 100 646 646
Total 736 736
In 2019 the share capital was reduced by 385,625 B shares.
Number of shares Nominal value
2020 2019 2020 2019
A shares outstanding 31/12
1
900,000 900,000 90 90
B shares outstanding
Outstanding 1/1 6,398,292 6,398,292 640 640
Purchase of treasury shares 0 0 0 0
B shares outstanding 31/12 6,398,292 6,398,292 640 640
Total shares outstanding 31/12 7,298,292 7,298,292 730 730
1) A shares have been included in the calculation in units of DKK 100.
Accounting policies
Treasury shares
Acquisition and disposal sums related to treasury shares are
recognised directly in transactions with the owners.
128Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
16
Share capital – continued
Treasury shares (B shares)
Number of shares Nominal value (DKK million) Cost (DKK million) Percentage of share capital
2020 2019 2020 2019 2020 2019 2020 2019
Holding 1/1 61,708 447,333 6 45 24 176 0.8% 5.8%
Cancellation 0 -385,625 0 -39 0 -152 0.0% -5.0%
Holding 31/12 61,708 61,708 6 6 24 24 0.8% 0.8%
Solar A/S’s annual general meeting passed a resolution on 15 March 2019 to reduce the company’s B share capital by nominally DKK
38,562,500 by cancelling treasury B shares. This corresponds to a reduction of the B share capital of 385,625 B shares of DKK 100.
All treasury shares are held by the parent company.
129Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
17
Interest-bearing liabilities and maturity statement
DKK million Interest rate 2020 2019
Debt to mortgage credit institutions
1
Fixed 155 165
Debt to credit institutions Floating/Fixed
1
53 135
Lease liabilities Calculated 73 74
Bank loans and overdras Floating 31 198
Interest-bearing liabilities 312 572
Trade payables 738 699
Other payables 545 391
Financial liabilities 1,595 1,662
Cash at bank and in hand 323 0
Trade receivables 345 373
Other receivables 408 413
Financial assets 1,076 786
Total, net 519 876
1) Interest swaps have been used to hedge floating-rate loans, converting these loans to fixed-rate loans.
Reconciliation of development in interest-bearing debt to mortgage
and credit institutions to finanacing acitivites in the cash flow statement:
DKK million 2020 2019
Debt to mortgage and credit institutions and lease liabilities 1/1 374 309
Raising of non-current interest-bearing liabilities 53 0
Lease liability recognised as at 1 January 2019 on implementation of IFRS 16 - 61
Lease liability raised during the year 25 40
Repayment of debt to mortgage and credit institutions -145 -9
Instalment on lease liabilities -26 -27
Debt to mortgage and credit institutions and lease liabilities 31/12 281 374
Accounting policies
Financial liabilities
Debt to credit institutions is recognised initially at the
proceeds received net of transaction costs incurred.
In subsequent periods, the financial liabilities are measured
at amortised cost using the eective interest method,
meaning that the dierence between the proceeds and the
nominal value is recognised in the income statement under
financials for the term of the loan.
130Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
17
Interest-bearing liabilities and maturity statement – continued
DKK million 2020 2019
Current interest-bearing liabilities
Maturity < 1 year
Debt to mortgage credit institutions 9 9
Debt to credit institutions 0 135
Lease liabilities 22 23
Bank loans and overdras 31 198
Current interest-bearing liabilities 62 365
Other financial liabilities 1,283 1,090
Financial liabilities 1,345 1,455
Financial assets 1,076 786
Total, net 269 669
Maturity 1-5 year(s)
Debt to mortgage credit institutions 36 36
Debt to credit institutions 53 0
Lease liabilities 39 34
Total 128 70
Maturity > 5 years
Debt to mortgage credit institutions 110 120
Lease liabilities 12 17
Total 122 137
Total non-current liabilities 250 207
Maturity, until year 2037 2037
The carrying amount of financial liabilities corresponds to fair value.
131Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
17
Interest-bearing liabilities and maturity statement – continued
DKK million 2020 2019
Interest-bearing liabilities and maturity statement for expected interest expense for the period
< 1 year 9 11
1-5 year(s) 29 31
> 5 years 36 42
Total 74 84
Outstanding interest swaps made for hedging floating-rate loans
Principal amount 164 192
Interest rate in % for outstanding swaps 5.2 5.2
Fair value -77 -84
Maturity for interest swaps follows the maturity for debt to mortgage credit institutions as stated on previous page.
Amounts recognised in other comprehensive income
Adjustment to fair value for the year -10 -18
Realised during the year, recognised as financial income/expenses 17 8
Total 7 -10
Eect of a 1% interest rate increase
Eect on equity 15 23
Of this, earnings impact is 0 -2
Undrawn credit facilities 31/12 380 309
Accounting policies
Derivatives
Derivatives are only used to hedge financial risks in the form of
interest rate and currency risks.
Derivatives are initially recognised at cost and at fair value
subsequently. Both realised and unrealised gains and losses are
recognised in the income statement unless the derivatives are
part of hedging of future transactions. Value adjustments of
derivatives for hedging of future transactions are recognised
directly in other comprehensive income. As hedged transactions
are realised, gains or losses are recognised in the hedging
instrument from other comprehensive income in the same item
as the hedged items. Any non-eective part of the financial
instrument in question is recognised in the income statement.
Derivatives are recognised under other receivables or other
payables.
Fair value measurement
The group uses the fair value concept for recognition of certain
financial instruments and in connection with some disclosure
requirements. Fair value is defined as the price that can be
secured when selling an asset or that must be paid to transfer a
liability in a standard transaction between market participants
(exit price).
Fair value is a market-based and not enterprise-specific
valuation. The enterprise uses the assumptions that market
participants would use when pricing an asset or liability based
on existing market conditions, including assumptions relating to
risks.
As far as possible, fair value measurement is based on market
value in active markets (level 1) or alternatively on values
derived from observable market information (level 2).
If such observable information is not available or cannot be used
without significant modifications, recognised valuation methods
and fair estimates are used as the basis of fair values (level 3).
132Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
17
Interest-bearing liabilities and maturity statement – continued
Distribution on currencies
Current liabilities Non-current liabilities
DKK million 2020 2019 2020 2019
EUR 9 18 146 156
DKK 0 324 53 0
SEK 32 0 0 0
Total 41 342 199 156
Interest rate in % 1.1-5.2 1.1-5.2 1.1-5.2 1.1- 5.2
Fair value of Solar’s respective interest-bearing liabilities is seen as fair value measurement at level 2. Mortgage loans are
valued based on underlying securities, while bank debt is calculated based on models for discounting to net present value.
Non-observable market data is primarily made up of credit risks, which are seen as insignificant in Solar’s case.
The fair value of Solar’s derived financial instruments (interest rate instruments) is fixed as fair value measurement at level 2,
since fair value can be determined directly based on the actual forward rates and instalments on the balance sheet date.
Outstanding interest rate swaps for hedging of floating-rate loans expire over the period until 2037 (2037).
The parent company has raised loans in Danish kroner and euro. We refer to the consolidated accounts, note 22, interest-
bearing liabilities and maturity statement, for more information on liquidity risk, interest rate and currency risk
management.
133Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
18 19
Financial income Financial expenses
DKK million 2020 2019
Interest revenue 4 5
Foreign exchange gains 7 3
Other financial income
1
5 5
Total 16 13
Financial income, received 9 10
DKK million 2020 2019
Interest expenses 20 23
Foreign exchange losses 6 4
Interest on lease liabilities 1 1
Other financial expenses 14 2
Total 41 30
Financial expenses, settled 35 26
134Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
20
Contingent liabilities and other financial liabilities
DKK million 2020 2019
Collateral
Assets have been pledged as collateral for bank arrangements at a carrying amount of:
Land and buildings 218 227
Current assets 0 0
Total 218 227
Mortgaging and guarantees
As security of subsidiaires’ bank arrangements, guarantees have been issued for:
Total 95 333
As security of subsidiaires’ liabilities, guarantees have been issued for:
Total 433 482
135Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
21
Related parties
Group and parent Solar A/S are subject to control by the Fund of 20th December (registered as a
commercial foundation in Denmark), which owns 16.9% of the shares and holds 60% of the voting rights.
The remaining shares are owned by a widely combined group of shareholders.
Other related parties include the company’s Board of Directors and Executive Board. There have been no
transactions in the financial year with members of the Board of Directors and Executive Board other than
those which appear from note 3.
The parent company has had the following significant transactions with related parties:
DKK million 2020 2019
Sale of services to subsidiaries 148 157
Sale of goods to subsidiaries 99 83
Interest income from subsidiaries 5 5
Interest expense from subsidiaries 1 1
On the balance sheet date, the usual product balances derived from these transactions exist. These appear
from the parent company’s balance sheet.
Solar also invoices the Fund of 20th December for the performance of administrative services at DKK
20,000. Balances with the Fund of 20th December total 0 on balance sheet date.
22
Auditors’ fees
DKK million 2020 2019
PricewaterhouseCoopers
Statutory audit 1 1
Other services
1
1 1
Total 2 2
Other auditors
Other services 0 0
Total 0 0
1) Other services mainly consists of IT-related services (IT-related services and services related to business
combinations).
137Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Group companies overview
Companies fully owned by Solar A/S Companies fully owned by Solar A/S – continued
Name Reg. no. Currency Share capital Country
Solar A/S 15908416 DKK 736,000,000 DK
Solar Sverige AB 5562410406 SEK 100,000,000 SE
Solar Norge AS 980672891 NOK 70,000,000 NO
Solar Nederland B.V. 09013687 € 67,000,500 NL
Eltechna B.V. KvK 23066336 € 18,151 NL
MAG45 Holding B.V. 17213145 € 28,544 NL
MAG45 B.V. 17168649 € 18,000 NL
MAG45 Sp.z.oo 277409 PLN 50,000 PL
MAG45 GmbH 18354 € 25,000 DE
MAG45 Ltd 311859 € 152 IE
MAG45 (UK) Ltd 4092664 £ 301 UK
MAG45 S.a.r.l. CHE-265,557,14 8 CHF 20,000 CH
MAG45 INC 123858292 $ 1,500 USA
MAG45 S.R.O 27697690 CZK 200,000 CZ
MAG45 Iss Co. Ltd 91320594693364287L $ 80,000 CN
MAG45 Ltd 39740334 $ 1 HK
MAG45 Pte Ltd. 201709959H SG$ 100,000 SG
MAG45 K 01-09-300892 HUF 3,000,000 HU
MAG45 Srl 10053890967 € 20,000 IT
Solar Polska Sp.z.oo 0000003924 PLN 65,050,000 PL
Claessen Holding N.V 04 37.191.965 € 65,094 BE
Claessen ELGB NV 0436.564.831 € 5 ,697,10 0 BE
Name Reg. no. Currency Share capital Country
P/F Solar Føroyar P/F 10 4 DKK 12,000,000 FO
SD of 16 March GmbH HRB 516 NM € 51,400,000 DE
SD of 17 March Gesellscha für
Vermögensverwaltung mbH
HRB 16642 KI € 25,000 DE
SD of 16 March Gesellscha für
Vermögensverwaltung mbH
HRB 16638 KI € 2,556,500 DE
SD of 16 March
Immobilienverwaltung GmbH
HRB 16616 KI € 25,000 DE
Solar Invest A/S 73316111 DKK 500,000 DK
Solar Polaris A/S 38378171 DKK 5,000,000 DK
Name, equity interest Reg. no. Currency Share capital Country
LetsBuild Holding SA, 8.07% 0656.613.388 EUR 20,769,243 BE
Viva Labs AS, 7.89% 898 444 392 NOK 105,534 NO
Minuba ApS, 19.98% 33259336 DKK 100,542 DK
Zolw AS, 24.40% 925 003 328 NOK 41,280 NO
HomeBob A/S, 44.46% 38832840 DKK 4,512,636 DK
Monterra AB, 30.00% 559103-4847 SEK 50,000 SE
Companies, where Solar’s equity interest is less than 50%
139Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS
STATEMENTS AND REPORTS
Q4 2020
STATEMENT BY THE EXECUTIVE BOARD
AND THE BOARD OF DIRECTORS
Vejen, 11 February 2021
EXECUTIVE BOARD
Jens E. Andersen Hugo Dorph Michael H. Jeppesen
CEO CCO CFO
BOARD OF DIRECTORS
Jens Borum Jesper Dalsgaard Lars Lange Andersen
Chairman Vice-chairman
Peter Bang Morten Chrone Ulrik Damgaard
Bent H. Frisk Louise Knauer Jens Peter To
140Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS
STATEMENTS AND REPORTS
Q4 2020
INDEPENDENT AUDITORS’ REPORT
Report on the audit of the Financial Statements
Our opinion
Basis for opinion
141Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS
STATEMENTS AND REPORTS
Q4 2020
Key Audit Matters
Statement on Management’s Review
Management’s responsibilities for the Financial Statements
142Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS
STATEMENTS AND REPORTS
Q4 2020
Auditor’s responsibilities for the audit of the Financial Statements
Report on compliance with the ESEF Regulation
143Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS
STATEMENTS AND REPORTS
Q4 2020
Trekantområdet, 11 February 2021
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no. 3377 1231
Lars Almskou Ohmeyer Henrik Fortho Lind
State Authorised Public Accountant State Authorised Public Accountant
mne24817 mne34169
144Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020FINANCIAL STATEMENTS
Solar – Annual Report 2020 144
Q4 2020
Quarterly information
The quarterly information has neither
been audited nor reviewed
145Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
QUARTERLY FIGURES
Consolidated
Q1 Q2 Q3 Q4
Income statement (DKK million) 2020 2019 2020 2019 2020 2019 2020 2019
Revenue
3,045 2,957 2,745 2,868 2,618 2,777 3,057 3,077
Earnings before interest, tax, depreciation and amortisation (EBITDA)
142 121 127 104 177 152 191 161
Earnings before interest, tax and amortisation (EBITA)
97 80 81 60 132 105 145 115
Earnings before interest and tax (EBIT)
82 62 65 41 115 82 -14 75
Financials, net
-8 -7 -6 -9 -10 -9 -16 -10
Earnings before tax (EBT)
45 -7 153 56 109 -2 -7 73
Net profit or loss for the quarter
30 -20 141 48 83 -22 -32 58
Balance sheet (DKK million)
Non-current assets
1,636 1,739 1,735 1,792 1,695 1,691 1,339 1,756
Current assets
3,349 3,425 3,267 3,451 3,227 3,460 3,268 3,234
Balance sheet total
4,985 5,164 5,002 5,243 4,922 5,151 4,607 4,990
Equity
1,441 1,515 1,614 1,552 1,688 1,512 1,696 1,592
Non-current liabilities
455 713 457 713 497 707 498 503
Current liabilities
3,089 2,936 2,931 2,978 2,737 2,932 2,413 2,895
Interest-bearing liabilities, net
1,077 1,032 845 1,182 726 1,089 128 921
Invested capital
2,332 2,302 2,178 2,461 2,132 2,395 1,760 2,297
Net working capital, end of period
1,432 1,331 1,383 1,466 1,363 1,467 1,109 1,280
Net working capital, average
1,411 1,230 1,391 1,299 1,365 1,339 1,322 1,386
146Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
QUARTERLY FIGURES
Consolidated – continued
Q1 Q2 Q3 Q4
Cash flows (DKK million) 2020 2019 2020 2019 2020 2019 2020 2019
Cash flow from operating activities, continuing operations
-43 -132 282 -17 142 144 432 305
Cash flow from investing activities, continuing operations
-25 -28 -18 -78 -8 -40 213 -48
Cash flow from financing activities, continuing operations
84 160 -198 82 -116 -88 -397 -264
Net investments in intangible assets
-12 -10 -12 -8 -12 -8 -14 -9
Net investments in property, plant and equipment
-13 -21 -4 -25 1 -25 -9 -39
Acquisition and disposal of subsidiaries, net
0 5 0 -40 0 0 0 0
Financial ratios (% unless otherwise stated)
Revenue growth
3.0 5.0 -4.3 4.9 -5.7 9.4 -0.6 2.3
Organic growth
2.6 6.0 -1.7 4.2 -4.8 7.9 0.0 1.6
Organic growth adjusted for number of working days
1.4 5.8 -1.6 5.6 -4.8 6.3 -2.1 2.6
Gross profit margin
20.5 20.1 20.5 20.2 21.5 19.7 21.5 20.5
EBITDA margin
4.7 4.1 4.6 3.6 6.8 5.5 6.2 5.2
EBITA margin
3.2 2.7 3.0 2.1 5.0 3.8 4.7 3.7
EBIT margin
2.7 2.1 2.4 1.4 4.4 3.0 -0.5 2.4
Net working capital (NWC end of period)/revenue (LTM)
12.2 11.8 11.9 12.9 11.9 12.6 9.7 11.0
Net working capital (NWC average)/revenue (LTM)
12.0 10.9 11.9 11.4 11.9 11.5 11.5 11.9
Gearing (interest-bearing liabilities,net/EBITDA), no. of times
1.9 2.5 1.5 2.6 1.2 2.2 0.2 1.7
Return on equity (ROE)
7.5 2.0 13.6 5.7 18.9 1.0 13.1 4.1
Return on invested capital (ROIC)
9.0 8.1 10.2 7.9 11.7 8.3 13.8 8.3
Adjusted enterprise value/earnings before interest, tax and amortisation (EV/EBITA)
6.3 8.5 6.0 8.9 6.2 8.1 5.8 7.9
Equity ratio
28.9 29.3 32.3 29.6 34.3 29.4 36.8 31.9
147Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
QUARTERLY FIGURES
Consolidated – continued
Q1 Q2 Q3 Q4
Share ratios (DKK unless otherwise stated) 2020 2019 2020 2019 2020 2019 2020 2019
Earnings per share outstanding (EPS)
4.11 -2.74 19.32 6.82 11.37 -3.18 -4.38 7.95
Intrinsic value per share outstanding
197.44 20 7.5 8 221.15 224.52 231.29 218.73 232.38 218.13
Share price
204.50 286.68 255.05 312.60 301.43 289.41 353.70 297.31
Share price/intrinsic value
1.04 1.38 1.15 1.39 1.30 1.32 1.52 1.36
Employees
Average number of employees (FTE’s) continuing operations
3,057
2,951
3,024
2,984
2,979 3,018 2,935
3,039
Definitions
Organic growth Revenue growth adjusted for enterprises acquired and divested and any exchange rate changes. No adjustments have been made for number of working days.
Net working capital Inventories and trade receivables less trade payables.
ROIC Return on invested capital calculated on the basis of operating profit exclusive impairment on goodwill less tax calculated using the eective tax rate.
In general, financial ratios are calculated in accordance with the Danish Finance Society’s “Recommendations & Financial Ratios 2019”.
148Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
Q4 EBITA exceeded our expec-
tations. We delivered an EBITA
increase of more than 25% despite
an adjusted organic revenue
growth of -2.1% (2.6%). The EBITA
increase of DKK 30m was driven by
an improved gross profit margin,
eciency gains and cost contain-
ment.
Q4 2020
REVENUE
Solar’s overall adjusted organic growth for
Installation amounted to around -4%. The Better
Business project focuses on supplying the right
products to the right customers. Part of this
project involves product pruning of low-margin
business, which is one of the drivers of negative
growth.
Solar Danmark and Solar Norge also saw positive
growth in the industry segment, while the other
entities saw negative growth. Overall, organic
growth within the Industry segment amounted to
around 3%.
The trade segment delivered negative organic
growth in Q4.
In Q4, adjusted organic growth at group level
amounted to -2.1% (2.6%). Revenue was un-
changed at DKK 3.1bn.
Core business delivered adjusted organic growth
of -2.7% (3.3%). Solar Danmark and Solar Norge
saw positive adjusted organic growth.
GROSS PROFIT
Revenue was almost unchanged in Q4 while gross
profit increased by DKK 25m. We saw continuous
improvement in the gross profit margin, which
increased to 21.5% (20.5%).
The gross profit margin was positively aected
by the Better Business project initiatives, such
as product pruning, and by the increased sale of
Solar’s concepts.
In addition, extraordinary price increases – mainly
in Solar Norge - led to one-o income of approx.
DKK 8m, corresponding to 0.3% on group level.
EXTERNAL OPERATING COSTS AND STAFF
COSTS
As expected, costs in general were gradually nor-
malised during Q4 as COVID-19 restrictions were
partly lied.
External operating costs and sta costs were
down by DKK 14m compared to last year. Of
this, foreign exchange translation adjustments
accounted for DKK 1m, cost savings for DKK 15m
and furlough for DKK 2m. In addition, SAP eWM
rollout costs amounted to approx. DKK 4m.
Financial review
Q4 EBITA INCREASED BY
MORE THAN 25% TO DKK 145M
(Figures in brackets are figures from the corresponding period in 2019)
LOSS ON TRADE RECEIVABLES
Solar conducts ecient credit management at all
times. In March, we tightened our credit policy
due to the COVID-19 pandemic. Furthermore, we
have taken out insurance to hedge against poten-
tial losses on trade receivables.
However, impacts from COVID-19 have increased
risks on trade receivables. Thus, provisions for
loss on trade receivables increased slightly to
0.3% (0.0%) in Q4.
EBITA
EBITA increased to DKK 145m (DKK 115m) and
exceeded our expectations.
The EBITA margin increased to 4.7% (3.7%). We
succeeded in increasing EBITA by DKK 30m due
to an improved gross profit margin, eciency
gains and cost containment despite a revenue
decrease of DKK 20m.
EBITA from core business was up at DKK 144m
(DKK 121m) corresponding to an EBITA margin of
5.0% (4.1%).
As expected, Solar Nederland’s financial perfor-
mance was negatively aected by roll-out costs
for SAP eWM of approx. DKK 4m.
149Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
The results from the individual countries are
given on page 154.
AMORTISATION AND IMPAIRMENT
Amortisation totalled DKK 159m (DKK 40m).
Review of intangible assets resulted in an im-
pairment loss of DKK 139m in total. Of this, DKK
129m related to goodwill obtained when Solar
Sverige acquired Alvesta V.V.S-Material AB in 2007.
In addition is a DKK 10m soware impairment
which mainly relates to Axapta soware acquired
in 2015 and deployed in Solar Polska.
In Q4 2019, a review of goodwill, customer lists
and other intangible assets resulted in an impair-
ment loss in MAG45 regarding soware of DKK
21m.
IMPAIRMENT ON ASSOCIATES
Impairment on associates amounted to DKK 24m
(DKK 12m).
This mainly relates to the divestment of our
shareholding in BIMobject for a total cash con-
sideration of SEK 333m (DKK 237m). Profits from
the divestment amounted to DKK 23m based on a
book value of DKK 214m as at 30 September 2020.
In Q4 2019, write-down of DKK 12m relating to
BIMobject was reversed.
EARNINGS BEFORE TAX
Earnings before tax amounted to DKK -7m (DKK
73m) and when adjusted, earnings before tax
were up at DKK 108m (DKK 82m), as illustrated in
the following table.
DKK million Q4 2020 Q4 2019
Earnings before tax -7 73
Impairment on associates -24 -12
Earnings before tax, adjusted for
impact from associates -31 61
Impairment loss,
other intangible assets 10 21
Impairment loss, goodwill and
customer lists 129 0
Adjusted earnings before tax 108 82
NET PROFIT
Profit from continuing operations came to DKK
-32m (DKK 58m).
CASH FLOWS
Net working capital calculated as an average of
the previous four quarters amounted to 11.5%
(11.9%) of revenue. Net working capital at the
end of 2020 amounted to 9.7% (11.0%).
Cash flow from operating activities totalled DKK
432m (DKK 305m). Changes in inventories and
changes in receivables had a DKK 35m (DKK -33m)
and a DKK 235m (DKK 269m) impact on cash flow
respectively, while changes in non-interest-bear-
ing liabilities had an impact of DKK 26m (DKK
-34m).
Total cash flow from investing activities amount-
ed to DKK 213m (DKK -48m) mainly impacted by
the divestment of our shareholding in BIMobject
for DKK 237m.
Cash flow from financing activities amounted to
DKK -397m (DKK -264m), mainly due to repayment
of non-current interest-bearing debt and change
in current interest-bearing liabilities.
Consequently, total cash flow amounted to DKK
248m (DKK -7m).
Net interest-bearing liabilities amounted to DKK
128m (DKK 921m).
As at 31 December 2020, gearing was 0.2 (1.7)
times EBITDA. Calculated as an average, our
gearing was 1.1 (2.0) times EBITDA. Our gearing
target is 1.5-3.0 times EBITDA.
As at 31 December 2019, Solar had undrawn cred-
it facilities of DKK 474m (DKK 383m).
Invested capital for the Solar Group totalled DKK
1,760m (DKK 2,297). ROIC amounted to 13.8%
(8.3%). ROIC for core business amounted to
15.1%.
Activities with a Solar equity interest of less than
50% and discontinued activities are not included
in the ROIC calculation. Invested capital only
includes operating assets and liabilities.
FINANCIAL REVIEW
150Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
STATEMENT OF COMPREHENSIVE INCOME
Income statement
Q4
DKK million 2020 2019
Revenue 3,057 3,077
Cost of sales -2,400 -2,445
Gross profit 657 632
Other operating income and costs -2 0
External operating costs -75 -80
Sta costs -381 -390
Loss on trade receivables -8 -1
Earnings before interest, tax, depreciation and amortisation (EBITDA) 191 161
Depreciation and write-down on property, plant and equipment -46 -46
Earnings before interest, tax and amortisation (EBITA) 145 115
Amortisation and impairment of intangible assets -159 -40
Earnings before interest and tax (EBIT) -14 75
Share of net profit from associates -1 -4
Impairment and gain from divestment of associates 24 12
Financial income 5 5
Financial expenses -21 -15
Earnings before tax (EBT) -7 73
Income tax -25 -15
Profit of continuing operations -32 58
Profit of discontinued operations 0 0
Net profit for the period -32 58
Earnings in DKK per share outstanding (EPS) -4.38 7.95
Diluted earnings in DKK per share outstanding (EPS-D) -4.38 7.95
Earnings in DKK per share outstanding (EPS) from continuing operations -4.38 7.95
Diluted earnings in DKK per share outstanding (EPS-D) from continuing operations -4.38 7.95
Other comprehensive income
Q4
DKK million 2020 2019
Net profit for the period -32 58
Other income and costs recognised:
Items that can be reclassified for the income statement
Foreign currency translation adjustment of foreign subsidiaries
30 14
Fair value adjustment of hedging instruments before tax 12 11
Tax on fair value adjustments of hedging instruments
-2 -3
Other income and costs recognised aer tax 40 22
Total comprehensive income for the period
8 80
151Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
BALANCE SHEET
31.12
DKK million 2020 2019
ASSETS
Intangible assets 157 315
Property, plant and equipment 818 865
Right-of-use assets 288 341
Deferred tax assets 3 10
Investments in associates 2 146
Other non-current assets 71 79
Non-current assets 1,339 1,756
Inventories 1,531 1,666
Trade receivables 1,271 1,428
Income tax receivable 13 14
Other receivables 8 8
Prepayments 41 62
Cash at bank and in hand 404 56
Current assets 3,268 3,234
Total assets 4,607 4,990
31.12
DKK million 2020 2019
EQUITY AND LIABILITIES
Share capital 736 736
Reserves -195 -179
Retained earnings 951 933
Proposed dividend for the financial year 204 102
Equity 1,696 1,592
Interest-bearing liabilities 199 156
Lease liabilities 189 231
Provision for deferred tax 98 103
Other provisions 12 13
Non-current liabilities 498 503
Interest-bearing liabilities 41 477
Lease liabilities 103 113
Trade payables 1,693 1,814
Income tax payable 21 10
Other payables 544 464
Prepayments 2 4
Other provisions 9 13
Current liabilities 2,413 2,895
Liabilities 2,911 3,398
Total equity and liabilities 4,607 4,990
Consolidated
152Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
CASH FLOW STATEMENT
Q4
DKK million 2020 2019
Net profit for the period from continuing operations -32 58
Depreciation, write-down and amortisation 205 86
Impairment and gain from divestment of associates -24 -12
Changes to provisions and other adjustments 9 -16
Share of net profit from associates 1 4
Financials, net 16 10
Income tax 25 15
Financial income, received 2 2
Financial expenses, settled -17 -13
Income tax, settled -49 -31
Cash flow before working capital changes 136 103
Working capital changes
Inventory changes 35 -33
Receivables changes 235 269
Non-interest-bearing liabilities changes 26 -34
Cash flow from operating activities, continuing operations 432 305
Cash flow from operating activities, discontinued operations 0 0
Cash flow from operating activities 432 305
Investing activities
Purchase of intangible assets -14 -9
Purchase of property, plant and equipment -9 -39
Disposal of property, plant and equipment 0 0
Acquisition of subsidaries and activities 0 0
Divestment of associates 237 0
Other financial investments -1 0
Cash flow from investing activities, continuing operations 213 -48
Cash flow from investing activities, discontinued operations 0 0
Cash flow from investing activities 213 -48
Q4
DKK million 2020 2019
Financing activities
Repayment of non-current, interest-bearing debt -245 -2
Raising non-current interest-bearing liabilities 0 0
Change in current interest-bearing debt -121 -232
Instalment on lease liabilities -31 -30
Cash flow from financing activities, continuing operations -397 -264
Cash flow from financing activities, discontinued operations 0 0
Cash flow from financing activities -397 -264
Total cash flow 248 -7
Cash at bank and in hand at the beginning of period 155 61
Assumed on acquisition of subsidaries 0 0
Foreign currency translation adjustments 1 2
Cash at bank and in hand at the end of period 404 56
Cash at bank and in hand 404 56
Cash at bank and in hand at the end of period 404 56
Consolidated
153Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
SEGMENT INFORMATION
Solar’s business segments are Installation, Industry and Other and are based on the customers’ aliation with
the segments. Installation covers installation of electrical, and heating and plumbing products, while Industry
covers industry, oshore and marine, and utility and infrastructure. Other covers special sales and other small
areas. The three main segments have been identified without aggregation of operating segments. Segment
income and costs include any items that are directly attributable to the individual segment and any items that
can be reliably allocated to the individual segment. Non-allocated costs refer to income and costs related to
joint group functions. Assets and liabilities are not included in segment reporting.
DKK million Installation Industry Trade Total
Q4 2020
Revenue 1,894 937 226 3,057
Cost of sales -1,509 -714 -177 -2,400
Gross profit 385 223 49 657
Direct costs -58 -26 -5 -89
Earnings before indirect costs 327 197 44 568
Indirect costs -145 -45 -14 -204
Segment profit 182 152 30 364
Non-allocated costs -173
Earnings before interest, tax,
depreciation and amortisation (EBITDA) 191
Depreciation and amortisation -205
Earnings before interst and tax (EBIT) -14
Financials, net including share of net profit from associates
and impairment on associates
7
Earnings before tax (EBT) -7
DKK million Installation Industry Trade Total
Q4 2019
Revenue 1,931 895 251 3,077
Cost of sales -1,566 -686 -193 -2,445
Gross profit 365 209 58 632
Direct costs -67 -29 -5 -101
Earnings before indirect costs 298 180 53 531
Indirect costs -145 -42 -12 -199
Segment profit 153 138 41 332
Non-allocated costs -171
Earnings before interest, tax,
depreciation and amortisation (EBITDA) 161
Depreciation and amortisation -86
Earnings before interst and tax (EBIT) 75
Financials, net including share of net profit from associates
and impairment on associates
-2
Earnings before tax (EBT) 73
154Solar – Annual Report 2020
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS GROUP COMPANIES OVERVIEWSEPARATE FINANCIAL STATEMENTS STATEMENTS AND REPORTS Q4 2020
SEGMENT INFORMATION
Geographical information
Solar A/S primarily operates on the Danish, Swedish, Norwegian and Dutch markets. In the below table, Other
markets covers the remaining markets, which can be seen in the companies overview available on page 137.
The below allocation has been made based on the products’ place of sale. Geographical information as well as
information on core business and related related business should be regarded as supplementary information.
Q4
DKK million Revenue
Adjusted organic
growth EBITA
EBITA
margin
Non-current
assets
2020
Denmark 959 4.6 62 6.5 1,757
Sweden 669 -8.9 24 3.6 198
Norway 483 4.5 37 7.7 171
The Netherlands 763 -8.8 16 2.1 350
Poland 96 -12.8 3 3.1 27
Other markets 13 18.8 2 15.4 5
Eliminations -77 - 0 0.0 -1,220
Core business 2,906 -2.7 144 5.0 1,288
Several markets
(MAG45) 148 13.6 1 0.7 51
Other markets 3 -38.3 0 0.0 0
Related business 151 11.7 1 0.7 51
Solar Group 3,057 -2.1 145 4.7 1,339
Q4
DKK million Revenue
Adjusted organic
growth EBITA
EBITA
margin
Non-current
assets
2019
Denmark 902 0.9 67 7. 4 2,053
Sweden 680 -0.8 13 1.9 346
Norway 481 2.3 16 3.3 198
The Netherlands 824 10.5 22 2.7 360
Poland 107 -1.6 2 1.9 33
Other markets 10 45.9 1 10.0 5
Eliminations -60 - 0 0.0 -1,315
Core business 2,944 3.3 121 4.1 1,680
Several markets
(MAG45) 128 -7.7 -6 -4.7 75
Other markets 5 -49.7 0 0.0 1
Related business 133 -10.4 -6 -4.5 76
Solar Group 3,077 2.6 115 3.7 1,756
– continued
