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ContextVision AB Interim / Quarterly Report 2010
9979_rns_2010-04-21_0a41c051-5069-4678-aed5-fcffb60399c2.pdf
Interim / Quarterly Report
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CONTEXTVISION
IMAGE IS EVERYTHING
ContextVision AB
First quarter 2010
COV reports Q1
Q1 HIGHLIGHTS:
- 3 new OEM customers signed up
- Presentations and publication of Thomas Jefferson University Hospital’s evaluation of GOPiCE US, a leading 3D volumetric image processing product, at AIUM in San Diego
- Quarterly sales of 11.4 MSEK
- Q1 operating margin of -3.7%
- Positive operating cash flow of 5.3 MSEK (0.9)
FINANCIAL DATA
First quarter 2010
- Sales of 11.4 MSEK (12.3)
- Operating result of -0.4 MSEK (0.03) and result before tax of -0.4 MSEK (0.4)
- Earnings per share of -0.06 (0.03) SEK
- Loan of 2 MSEK to SharpView
ContextVision is the software imaging partner to the most recognized medical equipment manufacturers worldwide, enabling them to rapidly deliver leading products to market and provide next-generation upgrades while focusing on their customers. Context Vision's world leading imaging software offers the greatest image clarity and quality available, enabling unprecedented diagnostic confidence. The company has offices worldwide with management in Stockholm, Sweden and listed on the Oslo Stock Exchange, Norway (ticker: COV)
ContextVision AB, First quarter 2010 financial results
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CONTEXTVISION
IMAGE IS EVERYTHING
Management Comment
Jan-Erik Hedborg, the company's CEO commented: as stated in our Q4 2009 report, we expect, and are increasingly confident about, a recovery of sales growth during the second half of this year. First quarter sales were in line with our expectations. Revenues from Asian markets remain strong and are expected to grow whilst America is still weak in terms of revenues. Sales of GOPView®iRVPlus remained strong during the quarter.
As reported during the second half of 2009, we decided to lower our underlying operating costs in 2010. The measures have been implemented successfully and we are pleased to see results already in this quarter. Costs related to the ongoing M&A process were 0.8 MSEK and the result from associated companies (SharpView) was -0.3 MSEK.
We secured three new OEM customers during the quarter, one ultrasound manufacturer in Eastern Europe and two X-ray manufacturers in China, which are expected to fuel sales growth this year.
Our efforts in Eastern Europe also remain strong. We have now established various contacts and are in active discussions with the majority of the medical imaging manufacturers in the region. We expect these efforts to translate into additional customer agreements and sales this year.
Thomas Jefferson University Hospital’s evaluation of GOPiCE US was presented and published at the AIUM congress in San Diego. The conclusion of the evaluation was very positive and is of great importance for our future. The evaluation shows that volumetric/3D real time image enhancement for ultrasound with GOPiCE US has significant advantages compared to 2D filtering.
The discussions with leading OEMs regarding GOPICE US are ongoing. The evaluation of the product at reference hospitals is proceeding well with GOPICE US being integrated in standard high-end ultrasound systems.
Clinical evaluation of GOPiCE MR, our next volumetric/3D image enhancement product, by Mannudeep Kalra, MD, as principal investigator, at CMIV (Centre for Medical Imaging and Visualisation) in Linköping started during this quarter and is proceeding well. We expect the results to be available in May. The purpose of the evaluation
is to validate our product and make sure that it has the quality and clinical usefulness that is required by our demanding customers.
The favourable development of the x-ray market is driven by the availability of cheaper flat panel detectors (which is the single most expensive part in digital x-ray equipment). In addition, emerging markets are experiencing strong demand due to continued economic growth which allows for increased spending in the public healthcare sector. There are a number of new entrants coming to the market seeing the opportunity to gain market share and benefit from the market growth by offering x-ray systems at lower prices than the industry leaders. These manufacturers represent an opportunity for ContextVision as they tend to be in need of imaging enhancement software.
Our Chairman, Mr. Knut Brundtland, has been appointed as a partner and CEO for ABG Sundal & Collier, a leading Nordic investment bank. Due to regulatory obligations related to his new position, Mr. Brundtland has to disengage from all board assignments and will therefore cease to be part of ContextVision’s Board following the Annual Shareholder Meeting in June. Mr. Brundtland joined the board in 2002 and took the Chairman position in 2004. During his tenure as a board member he has consistently driven ContextVision to become more market oriented and he initiated the spin-off of SharpView as an end-user based business. Also, Mr. Brundtland supported the increased branding and company profiling activities which have strengthened our position in the medical imaging market. I thank Knut for having been an excellent coach in supporting and advising in business matters and wish him all the best in the future.
The board intends to propose a new chairman for election at the Annual General Meeting in June.
The process to evaluate a merger or other strategic opportunities, managed by Nomura Code Securities, a leading European Healthcare Investment Bank, is progressing. We will make a further announcement as soon as possible.
ContextVision AB, First quarter 2010 financial results
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CONTEXTVISION
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Net sales and operating profit
First quarter 2010
Net sales
- Quarter one sales for ContextVision were 11.4 MSEK, compared to 12.3 MSEK prior year.
Operating profit and margin
- The operating profit was -0.4 MSEK (0.03) with an operating margin of -3.7% (0.3%).
- 0.8 MSEK of the external costs during the current quarter are connected to the ongoing M&A process.
- A result of -265 TSEK is reported from associated companies. The result is based on Sharp View’s result from Q4 2009, reduced by the calculated effect of the cost reduction programme announced by SharpView.
Cash-flow and financing
- Cash flow from operations represented an increase of 5.3 MSEK (0.9). A large customer payment was received in the beginning of 2010 when receivables of 5 MSEK were paid in to the company.
- Cash amounted to 15.3 MSEK (17.1) at period end.
- During the quarter, a loan of 2 MSEK was paid to SharpView. The loan is expected to be converted into shares during 2010, under the condition that the AGM of SharpView will support such a share issue.
- Equity at period end amounted to 39.9 (39.6) MSEK giving an equity ratio of 81% (78%).
Employees
- At period end the company had 34 (37) employees of which 15 are dedicated to research and development. Three are located in the United States of America and one in China.
ContextVision group
- The group consists of ContextVision AB (publ), company registration number 556377-8900 as the parent company, and ContextVision Inc Corp registration number 36-4333625 State of Illinois, USA, as the wholly owned subsidiary.
ContextVision AB, First quarter 2010 financial results
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CONTEXTVISION
IMAGE IS EVERYTHING
Business operations
- Sales by region for the quarter are as follows (MSEK): Asia 4.7, Europe 4.1 and USA 2.6.
- Sales by product for the quarter are as follows (MSEK): Ultrasound 6.1, X-Ray 2.1 Magnetic Resonance 1.3 and Other 1.9 (other consists of GOPView iRV, GOPView CT and GOPView MAMMO).
- The company participated successfully in ECR, the European Radiology Congress in Vienna during March. ContextVision has participated in this event every year since 2004, and the company is well recognised among customers and the market in general.
- A clinical evaluation of GOPICE MR (3D volumetric image enhancement) is run at CMIV at Linköping by Dr Mannudeep Kalra from Massachusetts General Hospital.
Growth strategy
- The company's most recent products, GOPView iRV and GOPiCE US, are cornerstones in the company's growth plan targeting sales with new customers including tier 1 OEMs
- GOPView US (2D ultrasound) is expected to remain the highest revenue generating product and we are expecting to release a new release with improved performance in 2011
- Sales in x-ray are expected to grow in the coming years and we are targeting a new release with improved performance and extended applications possibly beyond image enhancement
Risks & uncertainties
- Consolidation of the medical business occurs on a regular basis with the general purpose of enhancing technical competence and gaining market shares, at the same time as competition decreases. Besides consolidations, new players enter the market and challenge the established actors. The trends above represent both threats and opportunities for ContextVision.
The quarter report provides a fair and true overview of the company's and the Group's activities, position and results, and describes the risks and uncertainties of significance faced by ContextVision and by the companies in the Group.
The Board of Directors of ContextVision AB
Stockholm 2010-04-20
This report has not been reviewed by the company's auditors.
ContextVision AB, First quarter 2010 financial results
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CONTEXTVISION
IMAGE IS EVERYTHING
Presentation and reporting dates
This quarterly report will be published on the company’s website on the 21st of April. There will be no webcast or presentation in connection with the Q1 report.
The annual report for 2009 will be published on the company’s website, at the same time as the Q1 report.
A printed version of the annual report, together with the invitation to the annual general meeting, will be mailed to the shareholders at the end of April.
Please visit our website for further information, www.contextvision.com, or use [email protected] to send a question directly to management.
Reporting dates
Q1 result 2010 April 21, 2010
Q2 result 2010 August 19, 2010
Q3 result 2010 October 21, 2010
Q4 2010 and annual result 2010 February 17, 2011
For more information please contact:
Jan Erik Hedborg, CEO Phone +46 (0)8 750 35 59
ContextVision fast facts
- ContextVision is a spin-off from the Image Processing Laboratory at Linköping University, Sweden. The corporate identity was established in 1983 with the first OEM agreement in radiology in 1987. ContextVision is traded on the Oslo Stock Exchange since 1997.
- ContextVision enhances significant information in digital images using proprietary GOP technology. The company offers:
- More than 25 years successful experience in OEM business
- Unprecedented image enhancement for x-ray, MRI, CT, and ultrasound images
- Long standing corporate commitment to R&D that ensures timely and rewarding upgrade paths
- Strong customer relationships to ensure their success
- Expert training in image processing for our customers
- Compatibility across any image format and all major computer platforms
- ContextVision’s technology enables the company’s customers to provide superior digital imaging solutions for hospitals and clinicians. Such solutions promise more rapid and accurate diagnoses, reduced operator eye fatigue, and ultimately, a greater return-on-investment for medical imaging users.
ContextVision AB, First quarter 2010 financial results Page 5 of 9
CONTEXTVISION
IMAGE IS EVERYTHING
Income Statement (SEK 1000)
| Q1 2010 | Q1 2009 | Rolling 12 months | 2009 | |
|---|---|---|---|---|
| Net sales | 11 400 | 12 279 | 53 852 | 54 731 |
| Total revenues | 11 400 | 12 279 | 53 852 | 54 731 |
| Goods for resale | -259 | -97 | -1 651 | -1 489 |
| Other external costs | -4 036 | -3 855 | -18 131 | -17 950 |
| Personnel costs | -6 566 | -7 651 | -28 797 | -29 882 |
| Depreciation assets | -691 | -647 | -2 849 | -2 805 |
| Result from associated company | -265 | - | -265 | - |
| Write-down of intangible assets | - | - | -1 933 | -1 933 |
| Operating results | -417 | 29 | 227 | 673 |
| Interest income | 59 | 330 | 70 | 341 |
| Interest costs and similar profit / loss items | -7 | -1 | -26 | -20 |
| Write-down of assets held for sale | - | - | -8 973 | -8 973 |
| Results after financial items | -365 | 358 | -8 702 | -7 979 |
| Tax | -76 | -158 | -191 | -273 |
| Net results | -441 | 200 | -8 893 | -8 252 |
| Earnings per share after tax, SEK | -0,06 | 0,03 | -1,14 | -1,05 |
Consolidated Statement of comprehensive income (SEK 1000)
| Q1 2010 | Q1 2009 | 2009 | |
|---|---|---|---|
| Effect of currency hedging | -233 | -128 | 2 119 |
| Fair value adjustment of assets available for sale | -2 823 | -4 368 | |
| Fair value adjustment for assets available for sale transferred to the income statement during the period | - | 8 973 | |
| Translation difference | -69 | 84 | -90 |
| Total other comprehensive income | -302 | -2 867 | 6 634 |
| Net result for the period | -441 | 200 | -8 252 |
| Total comprehensive income for the period | -743 | -2 667 | -1 618 |
Financial Highlights
| Q1 2010 | Q1 2009 | Rolling 12 months | 2009 | |
|---|---|---|---|---|
| Earnings per share after tax, SEK | -0,03 | 0,03 | -1,14 | -1,05 |
| Operating margin (per cent) | -3,7 | 0,2 | 0,5 | 1,2 |
| Solidity (per cent) | 81,4 | 77,9 | 81,4 | 81,7 |
ContextVision AB, First quarter 2010 financial results
CONTEXTVISION
IMAGE IS EVERYTHING
Consolidated Balance Sheet (SEK 1000)
| Q1 2010 | Q1 2009 | 2009 | |
|---|---|---|---|
| Intangible fixed assets | 11 440 | 12 454 | 11 247 |
| Tangible assets | 1 421 | 1 506 | 1 438 |
| Participation in associated companies | 1 161 | - | 1 426 |
| Long-term receivables from associated companies | 4 000 | - | 2 000 |
| Other financial assets | 50 | 3 021 | 50 |
| Inventories | 165 | 671 | 404 |
| Current receivables | 15 496 | 16 097 | 23 185 |
| Cash and bank | 15 337 | 17 126 | 10 067 |
| Total assets | 49 070 | 50 875 | 49 817 |
| Equity | 39 935 | 39 629 | 40 678 |
| Provisions | 1 004 | 287 | 1 088 |
| Current liabilities | 8 131 | 10 959 | 8 051 |
| Total equity and liabilities | 49 070 | 50 875 | 49 817 |
Change in equity (SEK 1000)
| Q1 2010 | Q1 2009 | 2009 | |
|---|---|---|---|
| Opening balance | 40 678 | 49 535 | 49 535 |
| Total comprehensive income for the period | -743 | -2 667 | -1 618 |
| Repurchase of own shares | - | -7 239 | -7 239 |
| Closing balance | 39 935 | 39 629 | 40 678 |
ContextVision AB, First quarter 2010 financial results
CONTEXTVISION
IMAGE IS EVERYTHING
Consolidated Statement of Cash Flows (SEK 1000)
| Q1 2010 | Q1 2009 | 12 months 2009 | |
|---|---|---|---|
| Result after financial items | -365 | 358 | -7 979 |
| Depreciation and write-down of assets | 693 | 648 | 13 713 |
| Urealised gain/loss on current investments | -233 | - | -280 |
| Changes in provisions | -84 | 1 017 | 875 |
| Result from participation in associated company | 265 | - | - |
| Income tax paid | -428 | -6 352 | -8 411 |
| Cash flow from operating activities before change in working capital | -152 | -4 329 | -2 081 |
| Change in working capital | |||
| Increase(-)/decrease(+) inventories | 239 | -242 | 25 |
| Increase(-)/decrease(+) current receivables | 8 007 | 1 635 | -3 332 |
| Increase(+)/decrease(-) liabilities | 46 | -2 379 | -2 169 |
| Cash flow from operating activities | 8 139 | -5 315 | -7 557 |
| Investing activities | |||
| Investments in intangible assets | -746 | -1 657 | -4 268 |
| Investments in tangible assets | -123 | -67 | -273 |
| Investments in financial assets | -2 000 | - | -1 614 |
| Short-term investments | - | 15 202 | 15 202 |
| Cash flow from investing activities | -2 869 | 13 478 | 9 047 |
| Financing activities | |||
| Repurchase of own stock | - | -7 239 | -7 239 |
| Cash flow from financing activities | - | -7 239 | -7 239 |
| Cash flow for the period | 5 270 | 925 | -5 749 |
| Change of liquid assets | |||
| Liquid assets at beginning of period | 10 067 | 16 201 | 16 202 |
| Liquid assets at period end | 15 337 | 17 126 | 10 067 |
Basis of preparation
The interim condensed consolidated financial statements for the 1:st quarter ended March 31st 2010 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as of 31 December 2009.
ContextVision AB, First quarter 2010 financial results
CONTEXTVISION
IMAGE IS EVERYTHING
GLOSSARY
CT (COMPUTED TOMOGRAPHY)
A diagnostic device through which a two-dimensional cross-sectional image of the studied tissue is obtained using X-rays.
DR (DIRECT RADIOGRAPHY)
A detector that converts X-ray photons into digital signals, replacing the need for X-ray films.
FLUOROSCOPY
An X-ray imaging technique that produces real-time images of a patient's internal structures on a TV monitor. Fluoroscopy allows the study of dynamic processes within the body and can be used for guidance in interventional procedures.
GOP® (GENERAL OPERATOR PROCESSOR)
A term for ContextVision's methodology in detecting structures in an image and relating them to their wider context in order to increase visualization accuracy.
GOPVIEW®
The family name for ContextVision's product lines of OEM-embedded software.
HCU (HAND CARRIED ULTRASOUND)
A portable, battery-powered ultrasound machine no larger than a briefcase.
IMAGE ANALYSIS
Processing a digital image in order to describe/classify its contents or to extract quantitative measurements.
IMAGE PROCESSING
A generic term used to describe the computation of digital images, typically to enhance or analyze them.
IMAGE ENHANCEMENT
To improve the visual quality of a digital image by increasing the visibility of relevant structures, as in edge/contrast enhancement and the suppression of noise or artifacts.
MAMMOGRAPHY
An X-ray method used to examine the human breast.
MODALITY
A device that generates internal images of the body, such as X-ray, ultrasound, magnetic resonance imaging, and computed tomography.
MRI (MAGNETIC RESONANCE IMAGING)
A non-invasive procedure, generated by variations in strong magnetic fields, that produces a two-dimensional view of an internal organ or structure, especially the brain and spinal cord.
OEM
The acronym for Original Equipment Manufacturer.
US (ULTRASOUND)
A procedure in which high-energy sound waves are bounced off internal tissues or organs to create echoes. The echo patterns are displayed on the screen of an ultrasound machine, forming a picture of body tissues called a sonogram.
X-RAY
A diagnostic device in which radiation is used to create images for examination of soft and hard tissue, such as muscle and bone.
ContextVision AB, First quarter 2010 financial results
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