No. 16 2018 Quarterly Report Q2 2018

LEI: 21380031XTLI9X5MTY92

We reconfirm our expectations for the full year even though Q2 revenue and EBITA were slightly below expectations.

CEO Jens Andersen says:

"We still pursue opportunities within our three strategic focus areas and see good progress. At the same time, we have taken several initiatives to get the overall business back on track. Therefore, our full-year expectations are unchanged despite the fact that we experienced negative growth in some markets in the second quarter, and the results were slightly below our expectations."

Financial highlights (DKK million)*	Q2 2018	Q2 2017	H1 2018	H1 2017
Revenue	2,744	2,684	5,572	5,522
EBITA	52	50	118	117
Earnings before tax	6	2	105	147
Cash flow from operating activities	-39	-180	-78	-266
Financial ratios (%)
Organic growth adj. for number of working days	1.6	7.4	3.1	5.8
EBITA margin	1.9	1.9	2.1	2.1
Net working capital, period-end/revenue (LTM)	10.7	10.9	10.7	10.9
Net working capital, average/revenue (LTM)**	10.5	9.8	10.5	9.8
Gearing (NIBD/EBITDA), no. of times	1.9	2.0	1.9	2.0

* Due to the divestments of our Austrian and Belgian business activities, GFI GmbH and Claessen ELGB NV, 2017 and 2018 figures in this announcement relate to our continuing operations.
** Calculated as an average of the past four quarters' inventories, trade receivables and trade payables.

Q2 2018 Revenue

Adjusted organic growth amounted to 1.6% against 7.4% in Q2 2017. Related business saw growth of 27.8%, while growth in core business amounted to 0.5%.

Q2 2018 EBITA

Compared to Q2 2017, EBITA from core business amounted to an unchanged DKK 62m. This was slightly below expectations mainly due to developments in Solar Sverige and restructuring costs in Solar Norge owing to a lost contract.
EBITA for related business amounted to DKK -10m against DKK -12m in Q2 2017. Revenue for Scandinavian Technology Institute and Solar Polaris came out lower than expected. Due to the disappointing results, restructuring took place at these companies leading to one-off costs in Q2 2018.

2018 outlook

We expect revenue of approx. DKK 11.4bn corresponding to organic growth of approx. 4%. Within core business we expect growth of approx. 3%, which is on par with or below the expected market growth. Related business is expected to show growth of approx. 25%.
We maintain our EBITA expectations at approx. DKK 345m. For core business we increase our EBITA expectations from approx. DKK 365m to approx. DKK 375m. For related business we lower our EBITA expectations from approx. DKK -20m to approx. DKK -30m.
If the current exchange rates remain unchanged this will have a negative impact on core business of close to DKK 100m on revenue and approx. DKK 4m on EBITA.

EBITA, DKK million	Core business	Related business	Solar Group
2017, actual, published 12.01.2018	309	-45	264
Divestment of Austrian and Belgian businesses	31	-	31
2017, actual continuing operations	340	-45	295
Overhead costs*	-10	-	-10
Planned improvements	35	25	60
2018 guidance published 09.02.2018	365	-20	345
Impact from cost-reducing initiatives	10	-	10
Impact from lower revenue and gross profit	-	-10	-10
2018 guidance, updated	375	-30	345

*The Austrian and Belgian businesses carried approx. DKK 10m in overhead
costs, which will now be placed in the continuing operations within core business.

Audio webcast and teleconference today
The presentation of Quarterly Report Q2 2018 will be conducted in English on 9 August 2018 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 a teleconference.

Teleconference call-in numbers:

DK: tel. +45 354 455 83
UK: tel. +44 203 194 0544
US: tel. +1 855 269 2604

Yours faithfully,
Solar A/S

Jens Andersen

Contacts:
CEO Jens Andersen - tel. +45 79 30 02 01

CFO Michael H. Jeppesen - tel. +45 79 30 02 62

Director, Stakeholder Relations Charlotte Risskov Kræfting -
tel. +45 40 34 29 08

Enclosure: Quarterly Report Q2 2018, pages 1-32.

Facts about Solar
Solar Group is a leading sourcing and services company. Our core business centres on product sourcing, value-adding services and optimisation of our customers' businesses.

Being a sourcing and services company, we focus on each individual customer. We always strive to understand our customers' unique and genuine needs in order to provide relevant, personal and value-adding services, turning our customers into winners.

Solar Group is headquartered in Denmark, generated revenue of more than DKK 11bn in 2017 and has approx. 3,000 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.