Quarterly Report • May 11, 2007
Quarterly Report
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| in $\epsilon$ thousand | Q1/2007 | O1/2006 | $+/-$ in $%$ |
|
|---|---|---|---|---|
| Turnover | ||||
| Group | 11.5 | 0.1 | Mill.€ | $+$ 4 |
| Vision Systems | 5.2 | 4,7 | Mill.€ | $+$ |
| Vision Components | 6.3 | 5.3 | Mill.€ | $+19$ |
| Orders | ||||
| Incoming Orders | $ $ $ $ $.3$ | 12.3 | Mill.€ | $-8$ |
| Results | ||||
| Gross Margin | 47 | 51 | $\%$ | $-4Pp*$ |
| EBITDA | $\overline{1.5}$ | 2.1 | Mill.€ | $-29$ |
| EBIT | $\Omega$ | 0.9 | Mill.€ | $-100$ |
| EBT | $-0.2$ | 0.8 | Mill.€ | $-125$ |
| Net Results | $-0.1$ | 0.4 | Mill.€ | $-125$ |
| Net Margin | $\overline{\phantom{a}}$ | 4 | $\%$ | $-5Pp*$ |
| Number of Shares | 3.5 | $\overline{3.5}$ | Mill. | |
| Earning per Share | $-0.04$ | 0.11 | € | |
| Cash | ||||
| Cash funds (as of cut-off date) | 2.3 | 2,6 | $Mill \in$ | $-12$ |
| Balance Sheet (as of cut-off date) | ||||
| Equity Capital | 24.8 | 24.9 | Mill.€ | |
| Equity Capital Ratio | 55 | 54 | $Mill \in$ | $-I$ Pp $*$ |
| Staff (as of cut-off date) | ||||
| Number of Staff | 313 | 296 | $+6$ | |
| Shares (as of cut-off date) | ||||
| Share Price (XETRA) | 13.34 | 13,60 | € | $-2$ |
| Market Cap | 47.7 | 47.6 | $Mill.\in$ |
$*$ Pp = Procent point
Turnover continued to grow during the first quarter of 2007, i.e. by 14% on the first three months of the previous year. A decline in demand in the systems business led to an eight-per-cent drop in orders received compared to the year before.
The gross margin for the first quarter was 4 percentage points below the previous year's figure on account of special effects. At the same time, we made investments in further growth, i.e. the development of new products and the expansion of our distributive and marketing activities, which is why we failed to match the profitability level of last year's first quarter. The overall result was not fully balanced.
Incoming orders for the color filter product line have continued to remain below our expectations up until the first few weeks of the second quarter. This is due to the poor earning position of the flat screen producers and the resultant caution over new investments. On account of the substantial volume of the individual orders, we are, as a precaution, reducing the lower limit of our turnover forecast from $\epsilon$ 54 mill. to $\epsilon$ 51 mill. and the upper limit to $\epsilon$ 57 mill. because the capacities may prove a constraint in the fourth quarter if orders should pick up later in the year.
For the rest of the year and especially for the second half we expect gross margins, turnover and the earning position to improve over the first six months.
At $\epsilon$ 11.5 mill. during the first quarter, our turnover was 14% higher than during the same quarter the year before $(E \mid 0.1 \text{ mill.})$ This was mainly due to a substantial increase in turnover in the Vision Components segment (cf. segment-related information). Orders received fell - especially as a result of the described effects from the display inspection product line - on the same period the year before by 8% from $\in$ 12.3 mill. (first quarter 2006) to $\in$ 11.3 mill. (cf. segment-related information).
The result before taxes was $\epsilon$ -0.2 mill. (first quarter 2006: $\epsilon$ +0.8 mill.). A major influence was the drop in the gross margin by 4 percentage points (first quarter 2007: 47%, first quarter 2006: 51%).
The lower gross margin was to a great extent due to a change to the product mix in the systems business, a non-recurrent increase in the cost of production caused by retooling the production equipment to lead-free production in the components business in compliance with a EU directive, and the breaking-in of new production facilities for the subassembly manufacture in our components segment. The latter also entailed a reduced capitalisation quota in research and development. Spending on distribution and marketing increased in efforts to spur growth in particular in the Vision Components segment.
The first quarter's net result was $\epsilon$ -0.1 mill., which translates into a loss per share of $\epsilon$ -0.04 (net result first quarter 2006: € 0.4 mill, profit per share: € 0.11).
The Vision Components segment benefited during the first quarter from the sustained very brisk demand for digital high-performance cameras. Our two newly introduced product lines "scout" and "pioneer" meet with great interest on the market and have already accounted for a sizeable portion of the orders received. Turnover grew in the first quarter by 19% to € 6.3 mill. (first quarter 2006: € 5.3 mill.). Incoming orders even reached a new record high, gaining 32% on the same quarter last year to achieve € 7.5 mill. (first quarter 2006: € 5.7 mill.). Thus, the momentum initiated in 2006 in the components business continues unabated.
The Vision Components segment, in the first quarter of 2007, invested a substantial amount of capital and effort in research and development, the expansion of manufacturing capacities and the extension of distributive activities. Non-recurrent effects associated with the conversion have curtailed the first quarter's gross margin. The expansion of our distributive network at home and abroad, while triggering an increase in fixed costs on the first quarter of 2006, is bound to help spur growth in the quarters to come.
The result of the components segment before interest, taxes and direct investment income ran to $\epsilon$ 0.8 mill. (first quarter 2006: € 1.5 mill.).
The Vision Systems segment (testing systems for industrial mass production), in the first quarter, achieved a turnover of € 5.2 mill., reflecting an 11% increase on the same quarter the year before (first quarter 2006: $\in$ 4.7 mill.).
The past quarter was marred in the systems business by declining investments in the flat screen industry, a trend primarily due to falling average revenues from flat screens and the resultant worsened earning position of our customers. As, however, consumer demand for LCD screens keeps growing unabated - on account of what are by now more reasonable prices - our customers plan to return to increasing investments in new manufacturing equipment during the rest of the year.
Demand for inspection systems for optical storage media has continued to be as weak as before even though we expect momentum later this year from the start of the mass production of the new storage medium Blu-ray Disk.
Inspection systems for the rubber and elastomere industry experienced a gratifying growth. In particular, demand for "vario2", the novel premium product introduced last year, picked up considerably.
What was received with great interest during the first quarter were our new inspection systems for the solar industry. At the leading producers we are meanwhile in the process of testing our automatic inspection systems for the production of wafers and thin-film solar arrays. Our systems provide valuable data about the quality of solar wafers, thus helping to minimise waste in the production process and enabling the efficient use of scarce silicon in the production of solar cells.
At a total amount of $\epsilon$ 3.8 mill., orders received for Vision Systems in the first quarter of 2007 were at a low level. This reflects a decline by -42% on the same quarter last year (first quarter 2006: $\in$ 6.6 mill.), falling short of our expectations. The situation has failed to improve by the start of the second quarter.
Results before interest and taxes were - as in the same quarter last year - negative at $\epsilon$ -0.7 mill. (first quarter 2006: € -0.5 mill.).
Spending on research and development increased in the first quarter of 2007 to $\epsilon$ 2.0 mill. (first quarter 2006: €1.7 mill.). Capitalization for the development of new products accounted for a smaller share in overall expenditure than the year before. Write-offs have increased since the third quarter of 2006 on account of several launches of new products, so that the research and development balance was $\epsilon$ 0.9 mill. higher than during the same period the year before.
At 313, the number of employees was slightly higher - i.e. by 6% - than during the same period the year before (first quarter 2006: 296). The regional distribution of the work force was as follows (last year's figure in brackets):
At € 2.3 mill. the operative cash-flow was roughly equal to the previous year's level (€ 2.2 mill.). Liquid funds on hand decreased during the first quarter of 2007 from $\epsilon$ 3.3 mill. to $\epsilon$ 2.3 mill. due to a reduction in loans from credit institutions by $\epsilon$ 1.0 mill.
The board of directors and the supervisory board, as of 31 March 2007, held the following shares and warrant rights:
| Shares | Options | ||||
|---|---|---|---|---|---|
| 31.03. 2007 |
31.12. 2006 |
31.03. 2007 |
31.12. 2006 |
||
| Supervisory Board | |||||
| N. Basler (Chairman) | 1.8 Mio. | 1.8 Mio. | 106,907 | 106,907 | |
| K. Ellegast (Vice-Chairman) | 3,000 | 3,000 | |||
| E. Kottkamp | |||||
| Vorstand | |||||
| D. Ley (Chairman) | 35,282 | 135,282 | 23,800 | 23,800 | |
| J. P. Jennings | 2,000 | 2,000 | 3,000 | 3,000 | |
| P. Krumhoff | 500 | 500 | 4,557 | 4,557 |
Out of the convertible bond of 31 July 2004, the following employee warrant rights are in circulation as of 31 March 2007:
| 31.03.2007 | |
|---|---|
| Issued | 159.036 |
| In circulated as of $31.12,2006$ | 159.036 |
| Granted | |
| Exercised | |
| Lapsed since 31.12.2006 | |
| In circulated as of $31.03.2007$ | 159.036 |
The Management Board and the Supervisory Board hereby declare that the recommendations of the Government Commission of the Corporate Governance Codex in the version of 12 June 2006 have been complied with in 2006 and since the beginning of 2007 and shall be complied with in future.
Excepted from this are the following recommendations:
The Supervisory Board does not form any committees. Reflecting the size of the company, the Supervisory Board of Basler AG consists of three persons. This composition ensures that efficient work shall be done whilst also complying with the generally accepted minimum requirement for the formation of a board which is set at three persons.
Remuneration of members of the Supervisory Board is set forth in the Articles of Incorporation. Therein special consideration is given to the chair and vice-chair of the Supervisory Board. In the light of the present level of fixed remuneration, the company does not intend to add a variable component to the remuneration of members of the Supervisory Board.
The Declaration of Commitment to the Codex and the Declaration of Compliance is continually updated and may be accessed on the Investor Relations pages of the Basler AG web site at www.baslerweb.com/aktie. If you have any questions regarding the Corporate Governance Codex, please contact the Basler AG Compliance Officer who shall be pleased to assist you: Peter Krumhoff, Tel. + 49 (0) 4102-463 100, [email protected]
On the whole, the course of the first six months will just about reflect our previous assessments and will roughly show a balanced result, with the Vision Components business developing better than forecast while Vision Systems will fall short of expectations.
As the year goes on, the components business will continue to benefit from the generally brisk demand for digital high-performance cameras and the growing specific demand for our products. As for the systems business, we expect the demand for flat screens to recover, which in tandem with initial major sales of our new inspection systems for the solar industry would trigger a return to accustomed turnover levels even though we are unable, at this stage, to make any exact prediction as to the start and scope of revival of the flat screen industry.
As production costs look set to fall, we expect the gross margin to improve later in the year. Vision Components, our growth segment last year, will experience a growth in turnover clearly within the double-digit percentage range also in the current business year, which would enable us to secure and possibly better our market position as the world's no 3 in the area of digital industrial cameras. Given our conservative assessment to the effect that the restraining effects in the systems business might outstrip the upward trend in the components segment, we are reducing, for 2007 as a whole, our forecast of March in that we now expect our turnover to range between € 51 and 57 mill. (2006: € 52.1 mill.), with earnings before taxes totalling between $\in$ 2.0 and 5.0 mill. (2006: $\in$ 4.9 mill.).
Board of Directors
Dietwor ky On Harrys
as of 31.03.2007 according to IFRS*
| in $\epsilon$ thousand, result per share in $\epsilon$ | $01.01 -$ 31.03.2007 |
$01.01 -$ 31.03.2006 |
|---|---|---|
| Sales | 11,542 | 10,075 |
| Cost of Sales | $-6, 139$ | $-4,887$ |
| Gross profit | 5,403 | 5,188 |
| Sales and marketing expenses | $-2,457$ | $-2,037$ |
| General and administrative expenses | $-1,906$ | $-2,282$ |
| Research and development expenses | ||
| Costs | $-2,041$ | $-1,711$ |
| Capitalization of intangible assets | 1,766 | 1,996 |
| Deduction for depreciation on capitalized intangible assets |
$-1,242$ | $-935$ |
| Research and Development expenses balanced | $-1,517$ | $-650$ |
| Other income | 437 | 699 |
| Operating results | $-40$ | 918 |
| Interest results | $-126$ | $-118$ |
| Result before income taxes | $-166$ | 800 |
| Income taxes | 37 | $-401$ |
| Group net result for period | $-129$ | 399 |
| Number of shares | 3,500,000 | 3,500,000 |
| Result per share | $-0.04$ | 0.11 |
| Number of shares (diluted) | 3,714,285 | 3,714,285 |
| Dilution effect out of corporate bond | 9 | 9 |
| Fully diluted result per share | $-0.03$ | 0.11 |
| in $\epsilon$ thousand | $01.01 -$ 31.03.2007 |
$01.01 -$ 31.03.2006 |
|---|---|---|
| Group net profit | $-129$ | 398 |
| Deprecation of fixed assets | 1,578 | 1,195 |
| Payments for interests | 92 | 54 |
| Increase/decrease in provisions | $-391$ | $-86$ |
| Changes in deferred taxes | $-61$ | 329 |
| Invalid payment changes in shareholder's equity | 8 | -3 |
| Result from disposal of equipment | $\overline{2}$ | $\overline{1}$ |
| Inventories | $-1,167$ | $-1,083$ |
| Trade accounts receivable | 1,240 | 1,831 |
| Other assets, which are not assigned to investing or financing activities |
$-501$ | $-112$ |
| Advanced payments received | 357 | 252 |
| Accounts payable | 1,151 | $-149$ |
| Notes payable to shareholders | $\Omega$ | $\Omega$ |
| Other liabilities, which are not assigned to investing | ||
| or financing activities | 104 | -447 |
| Cash Flow from operating activities | 2,293 | 2,180 |
| Revenue from disposal of equipment | $-$ | 6 |
| Purchase of equipment | $-2,160$ | $-2,300$ |
| Cash Flow from investing activities | $-2,161$ | $-2,294$ |
| Free Cash Flow | 132 | -114 |
| Increase in cash received by bank loan | $-1,000$ | $-600$ |
| Payments of interests | $-92$ | -54 |
| Cash Flow from financing activities | $-1,092$ | $-654$ |
| Net change in cash | $-960$ | $-768$ |
| Cash at beginning of period | 3,268 | 3,326 |
| Cash at end of period | 2,308 | 2,558 |
| Changes in cash and cash equivalents at end of period | ||
| Paid out for interests | 2,308 | 2,558 |
| Paid out for taxes | $\Omega$ | $\Omega$ |
as of $31.03.2007$ according to IFRS*
| Assets in $f$ thousand | 31.03.2007 | 31.03.2006 |
|---|---|---|
| Long-term assets | ||
| Fixed assets | ||
| Tangible assets | 2,556 | 2,585 |
| Other intangible assets | 1,404 | 1,318 |
| Capitalization of development | 13,008 | 12,487 |
| Total fixed assets | 16,968 | 16,390 |
| Deferred tax assets | 9,408 | 8,703 |
| Total long-term assets | 26,376 | 25,093 |
| Current assets | ||
| Cash and cash equivalents | 2,308 | 3,268 |
| Short-term accounts | ||
| Trade accounts receivable | 5,462 | 5,326 |
| Percentage of Completion receivables | 2,779 | 4,155 |
| Total current receivables | 8,241 | 9,481 |
| Inventories | ||
| Finished goods and commodities | 1,506 | 1,364 |
| Work in process and semi-finished goods | 1,380 | 1,030 |
| Raw materials and supplies | 4.810 | 4,140 |
| Merchandise | 234 | 229 |
| Total inventories | 7,930 | 6,763 |
| Other accounts and financial assets | 1,333 | 830 |
| Total current assets | 19,812 | 20,342 |
| Total assets | 46,188 | 45,435 |
| Liabilities in $\epsilon$ thousand | 31.03.2007 | 31.03.2006 |
|---|---|---|
| Shareholder's equity | ||
| Subscribed capital | 3,500 | 3,500 |
| Capital reserve | 1.268 | 1.268 |
| Equation of currency exchange | 129 | $ $ 4 |
| Accumulated earnings | 19,937 | 20,066 |
| Total shareholder's equity | 24,834 | 24,948 |
| Liabilities | ||
| Long-term liabilities | ||
| Silent partnership | 1,023 | 1,023 |
| Long-term loans | 515 | 511 |
| Long-term liabilities to shareholders | 8 | $\Omega$ |
| Deferred tax liabilities | 8,297 | 7,655 |
| Total long-term liabilities | 9,843 | 9,189 |
| Short-term liabilities | ||
| Convertible bond | 2,727 | 2,727 |
| Short-term liabilities to banks | 3,000 | 4,000 |
| Notes payable to shareholder's equity | 178 | 170 |
| Advanced payments received | 493 | 135 |
| Trade liabilities | 2,909 | 1,758 |
| Other liabilities | 663 | 577 |
| Tax provisions | 152 | 5 |
| Other provisions | 1,389 | 1,780 |
| Total short-term liabilities | 11,511 | 11,298 |
| Total | 21,354 | 20,487 |
| Total liabilities | 46,188 | 45,435 |
First Quarter 2007
| Vision Systems | Vision Components | Reconciliation | Group | |||||
|---|---|---|---|---|---|---|---|---|
| in $\epsilon$ thousand | O 1 2007 |
O 1 2006 |
O 1 2007 |
Q 1 2006 |
O 1 2007 |
O 1 2006 |
O 1 2007 |
O 1 2006 |
| Segment revenues | 5,221 | 4.737 | 6.321 | 5.338 | Ω | 0 | 11.542 | 10.075 |
| Segment results (EBIT) | $-738$ | $-457$ | 800 | 1.466 | $-103$ | $-92$ | $-41$ | 917 |
| Segment assets | 5.679 | 6.019 | 4.903 | 10.165 | 2.558 | 2.867 | 33.140 | 29,051 |
| Segment liabilities | 574 | 813 | 0 | .299 | 2,826 | 1.880 | 3,639 | |
| Segment investments | 944 | .212 | .063 | 885 | 153 | 203 | 2,160 | 2,300 |
| Segment depreciations | 921 | 610 | 476 | 391 | 181 | 194 | 1,578 | 1.195 |
* unaudited
First Quarter 2007
| in $\epsilon$ thousand | Europe | Reconciliation | Group | |||
|---|---|---|---|---|---|---|
| O1/ 2007 |
01/ 2006 |
OI/ 2007 |
01/ 2006 |
OI/ 2007 |
O 1 2006 |
|
| Segment revenues | 1.542 | 10.075 | l I.542 | 10,075 | ||
| Segment assets | 30.582 | 26.184 | 2.558 | 2.867 | 33.140 | 29,051 |
| Segment investments | 2.007 | 2.097 | 53 | 203 | 2.160 | 2.300 |
* unaudited
Equity as of 31.03.2007 according to IFRS*
| in $\epsilon$ thousand | Nominal capital |
Capital reserve |
Equation of currency exchange |
Accumulated earnings |
Total |
|---|---|---|---|---|---|
| Shareholder's equity as of 01.01.2006 | 3.500 | 1.268 | 97 | 17.106 | 21,971 |
| Difference from currency conversion | $-3$ | -3 | |||
| Group net profit for year | 398 | 398 | |||
| Shareholder's equity as of 31.03.2006 | 3.500 | 1.268 | 94 | 17,504 | 22,366 |
| Difference from currency conversion | 20 | 20 | |||
| Group net profit for year | 2,562 | 2,562 | |||
| Shareholder's equity as of 31.12.2006 | 3.500 | 1.268 | l 14 | 20.066 | 24,948 |
| Difference from currency conversion | 5 | 15 | |||
| Group net profit for year | $-129$ | $-129$ | |||
| Shareholder's equity as of 31.03.2007 | 3.500 | 1.268 | 129 | 19.937 | 24,834 |
Headquartered in Ahrensburg, Basler AG is one of the leading companies in Vision Technology, the technology on which artificial visions systems are based. The field of Vision Technology embraces both computer-enabled Vision Systems which use optical information to make automatic decisions, and cameras (Vision Components) which are built into Vision Systems.
The company, which was founded by Norbert Basler in 1988, currently employs more than 300 staff and has a total of 7 sites in the USA, Europe and Asia, making it an international enterprise. The stock corporation has two divisions reflecting the current structure of our product's applications. The Vision Systems division develops and sells turn-key quality control solutions in four sectors: flat panel industry, optical media industry, rubber- and elastomer-industry as well as photovoltaics industry. The second division is Vision Components. This division develops and sells standard components that can be used in numerous industrial sectors largely independently of concrete applications. The core component of the division's portfolio is digital cameras used in industrial applications.
On the back of a combined system and component business at Basler, we intend to grow into one of the biggest vision technology companies worldwide. To achieve this aim, we plan to increase sales by an average 20% per year on a profitable basis involving a two-digit pre-tax margin. The two main factors leading to success on this growth path are our multi-sector strategy and sustainable investment in research and technology. Our multi-sector strategy makes us less sensitive to fluctuations in individual markets and puts us in a better position to offset demand cycles. Due to our consistently high investment in research & development, we are meanwhile generating more than half of our sales with products that are less than two years old. This high level of investment gives us advantages over our competitors and guarantees profitability.
| Financial dates | |
|---|---|
| 21 May 2007 | Shareholders' meeting in Hamburg |
| 08 Aug. 2007 | Publication of the results for the second quarter of 2007 |
| 12 to 14 Nov. 2007 | Publication of the results for the third quarter of 2007 Presentation at the equity forum in Frankfurt |
| Tradeshows and Conferences | |
| Vision Systems | |
| 15 to 17 May 2007 | MEDIA-TECH Expo - Long Beach, USA |
| 03 to 07 Sept. 2007 | EU PVSEC - Milan, Italy |
| 16 to 18 Oct. 2007 | Rubber Expo 2007 - Cleveland, USA |
| Vision Components | |
| 11 to 13 June 2007 | Vision Show China - Beijing, China |
| 12 to 14 June 2007 | Robotics & Vision Show - Chicago, USA |
| 17 to 20 June 2007 | Semicon West - San Francisco, USA |
| 25 to 27 Sept. 2007 | Vision Show France - Paris, France |
| 06 to 08 Nov. 2007 | Vision Show - Stuttgart, Germany |
| 05 to 07 Dec. 2007 | ITE - Yokohama, Japan |
An der Strusbek 60 - 62 D-22926 Ahrensburg/Germany Tel.: +49 4102 463-0 Fax: +49 4102 463-109
740 Springdale Drive Exton, Pa 19341, USA Tel.: +1 610 280-0171 Fax: +1 610 280-7608 [email protected] www.baslerweb.com
25 International Business Park # 02 - 06 German Center Singapore 609916 Tel.: + 65 6425 0472 Fax: $+ 6564250473$ [email protected]
3F, No.87-6, Guangming 6th Rd. Jhubei City, Hsinchu County 302, Taiwan/R.O.C. Tel.: +886 3 5583955 Fax: +886 3 5583956 [email protected]
Representative Office Room #12H, No. 288, Cao Xi Bei Road, Xu Hui District Shanghai, 200030 China Tel.: + 86 21 64 31 11 88 Fax: + 86 21 64 31 11 88 [email protected]
Representative Office Fon +82 41 578 27 17
8th Floor, Hanna Plaza, 720 Booldang-Dong, Cheonan City, ChoongchungNam-Do, Korea [email protected]
Representative Office #603-24-8 Ymashitacho Naka-ku, Yokohama, Kangawa 231-0023 Japan Tel.: + 81 45 227 6210 $Fax: + 81452276220$ [email protected]
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