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Sectra — Interim / Quarterly Report 2011
Sep 6, 2011
2967_10-q_2011-09-06_951fc6ba-642a-45cf-b8ba-bd4fec463a60.pdf
Interim / Quarterly Report
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Sectra's first-quarter interim report:
Sectra completes mammography modality transaction
IT and medical technology company Sectra's profit after net financial items for the company's first quarter, May - July 2011, rose 25.6% to SEK 16.2 million (12.9), corresponding to a profit margin of 9.6% (7.5). The Group reports an operating profit of SEK 6.5 million (9.0) and net sales of SEK 169.3 million (172.8). Order bookings rose 13.8% to SEK 190.8 million (167.7).
The reported outcome pertains to Sectra's remaining operations and does not include Sectra's modality operations in digital mammography that were acquired by Royal Philips Electronics. The agreement was signed in June and the transaction was finalized on August 31. The cash purchase consideration on a debt-free basis was EUR 57.5 million. The agreement includes an additional purchase sum of EUR 12.5 million, which falls due after five years if specially agreed conditions are met.
"The unique low-radiation mammography technology that we have developed and introduced on the market will receive broad international distribution and benefit many women. In addition to the capital gain, the transaction with Philips will contribute favorably to the Group's operating profit this financial year," saysJan-Olof Brüer, President and CEO of Sectra AB.
In the U.S., uncertainty surrounding the current budgetary savings has had a dampening effect on the market. Sectra experiences that the sales process is taking longer than before, which is delaying orders for new projects.
"The economic trend will determine the size of our customers' investments. Budgetary savings are affecting our customers within healthcare as well as authorities and defense. However, Sectra products and services contribute to enhance efficiency and save expenses in customers' operations, which in the long term will imply continued growth in our markets," says Jan-Olof Brüer.
The transaction with Philips will create greater opportunities and increased resources for Sectra to expand its operations.
"A large portion of Sectra's current revenues is generated by existing customers, in the form of additional sales and long-term agreements for products, services, support and upgrades. These customers give us a solid base for continued expansion. Increased sales of systems, products and services, combined with the work we carry out to make the installations and upgrades of our medical systems more efficient, will determine when we achieve our profit target of 15%."
The information in this press release is such that Sectra AB (publ) is obligated to disclose in compliance with the Swedish Securities and Clearing Operations Act. The information was submitted for publication on September 6, 2011 at 08:00 a.m. (CET).
For further information, please contact
Jan-Olof Brüer, President and CEO of Sectra AB, tel: +46 (0)13-23 52 09
About the Sectra Group
Sectra conducts successful development and sales of high technology products in the expansive niche segments of medical systems and Secure Communication Systems. The company was founded in 1978 and grew from research carried out at Linköping University. Sectra has offices in twelve countries and sells its products through partners worldwide. Sales for the 2010/2011 full year amounted to SEK 784 million. Sectra is listed on the NASDAQ OMX Stockholm AB. For more information about Sectra, visit our website at: www.sectra.com.
Sectra AB (publ)
Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 Fax: +46 (0)13 21 21 85 [email protected] www.sectra.se Momsreg.nr SE556064830401
Interim report Sectra AB (publ) for May – July 2011
The reporting in this interim report pertains to remaining operations unless otherwise stated. Discontinued operations pertain to Sectra Mamea AB, which develops, produces and markets the mammography modality, Sectra MicroDose Mammography. Figures for the corresponding period in the preceding year are shown in parentheses.
Remaining operations
- Order bookings rose 13.8% to SEK 190.8 million (167.7).
- Net sales amounted to SEK 169.3 million (172.8), down 2.0% compared with the corresponding year-earlier quarter.
- Operating profit totaled SEK 6.5 million (9.0), corresponding to an operating margin of 3.8% (5.2).
- Profit after net financial items rose 25.6% to SEK 16.2 million (12.9), corresponding to a profit margin of 9.6% (7.5). Currency fluctuations had an impact of SEK 4.4 million (2.0) on the Group's financial items.
- Profit after tax rose 19.0% to SEK 11.9 million (10.0).
- Earnings per share before dilution were SEK 0.32 (0.27).
Discontinued operations
• Loss after tax from discontinued operations totaled SEK 17.0 million (loss: 8.2).
Remaining operations and discontinued operations
- The loss after tax including discontinued operations amounted to SEK 5.1 million (profit: 1.8).
- Loss per share before dilution and including discontinued operations was SEK 0.14 (profit: 0.05).
Events during the first quarter
- Sectra and Royal Philips Electronics signed an agreement entailing that Philips is acquiring Sectra's operations for the development and sale of digital mammography system, Sectra MicroDose Mammography. Accordingly, the business conducted by Sectra's subsidiary, Sectra Mamea AB, is reported as discontinued operations.
- Sectra signed a four-year agreement with the Norwegian healthcare region, Helse Nord. The order value is SEK 57 million.
- Sectra initiated a partnership with McBrothers in Russia. The company will distribute Sectra's medical system in Western Russia.
- The private healthcare provider, Unilabs, in Norway began using Sectra's online service for analyzing bone health in conjunction with mammograms, to simply and cost-efficiently identify women at risk of developing osteoporosis.
Events after the close of the period
• On August 31, Sectra finalized the transaction with Royal Philips Electronics, which thus took over the operation for development and sales of the digital mammography system, Sectra MicroDose Mammography. Excluding a potential additional purchase sum, the transaction is estimated to generate a capital gain of approximately SEK 300 million after tax for Sectra, according to carrying amounts.
THE GROUP'S ORDER BOOKINGS, SALES AND EARNINGS
First quarter for remaining operations, May – July 2011
The Group's order bookings for the quarter rose 13.8% to SEK 190.8 million (167.7). Order bookings developed favorably in Northern Europe, where the Netherlands and Norway accounted for the largest increase. The Group's order bookings in Southern Europe and the U.S. were weaker than in the corresponding year-earlier quarter.
The Group's net sales for the quarter totaled SEK 169.3 million (172.8). Sectra's operations in Australia reported growth, and sales in Europe were in parity with the corresponding quarter in the preceding year.
Operating profit for the quarter amounted to SEK 6.5 million (9.0), corresponding to an operating margin of 3.8% (5.2). The quarter was charged with expenses for the discontinuation of Sectra Mamea AB.
Profit after net financial items rose 25.6% to SEK 16.2 million (12.9). Currency fluctuations had an impact of SEK 4.4 million (2.0) on the Group's financial items.
Profit after tax rose 19% to SEK 11.9 million (10.0). Earnings per share before dilution were SEK 0.32 (0.27).
Discontinued operations
In June 2011, Sectra and Royal Philips Electronics signed an agreement entailing that Philips would acquire Sectra's operations for the development and sale of the mammography modality Sectra MicroDose Mammography. On August 31, Sectra finalized the transaction with Philips, which thus took over the operation. The operation includes the company Sectra Mamea AB and related activities in Sectra's global sales and service organisation, excluding Australia and Nya Zealand, where Sectra will continue to sell MicroDose Mammography through a separate distribution agreement with Philips. The divested operations have approximately 110 employees. Sectra Mamea AB had sales of SEK 127 million in the 2010/2011 fiscal year, corresponding to 14% of the Sectra Group's sales. The business conducted by Sectra Mamea AB is reported as discontinued operation.
The cash purchase consideration on a debt-free basis amounted to EUR 57.5 million. The agreement includes an additional purchase sum of EUR 12.5 million which falls due after five years if specially agreed conditions are met. Excluding the potential additional purchase sum, the transaction is estimated to generate a capital gain of approximately SEK 300 million after tax for Sectra during the current fiscal year, according to carrying amounts.
Discontinued operations reported a loss after tax of SEK 17.0 million (loss: 8.2) for the quarter. See Note 1 on page 14 for more information about discontinued operations.
Profit including discontinued operations, May – July 2011
The Group's result after tax including discontinued operations amounted to a loss of SEK 5.1 million (profit: 1.8). Loss per share before dilution including discontinued operations amounted to SEK 0.14 (profit: 0.05).
Seasonal variations
Sectra is affected by seasonal variations, which means that most invoicing and earnings are traditionally generated at the end of the fiscal year. The variations in order volumes in terms of individual quarters can be substantial since Sectra has many large customers that sign comprehensive, long-term agreements with the company – for medical IT projects or the development of encryption systems, for example.
Diagram
Bars - per quarter
Line - 12-months rolling
Comments
Since Sectra has chosen not to hedge currency flows, currency fluctuations have a direct impact on order bookings, sales and earnings. During the first quarter of the current fiscal year, the SEK trend had a negative impact on reported order bookings and sales and a positive impact on financial items. In 2010/2011, currency fluctuations had the opposite effect.
SEGMENT REPORTING
Net sales by business segment
| (SEK M) | 3 months | 3 months | 12 months | Full-year |
|---|---|---|---|---|
| May-July | May-July | Aug 2010 | May - Apr | |
| 2011 | 2010 | –July 2011 | 2010/2011 | |
| Medical Systems | 151.6 | 161.2 | 694.2 | 703.7 |
| Secure Communication | ||||
| Systems | 18.6 | 22.4 | 108.0 | 111.8 |
| Other operations 1) | 11.6 | 16.2 | 54.7 | 59.3 |
| Group eliminations | -12.5 | -27.0 | -76.7 | -91.1 |
| Total remaining | 169.3 | 172.8 | 780.2 | 783.7 |
| operations | ||||
| Discontinued | ||||
| operations | 15.0 | 33.8 | 108.4 | 127.2 |
| Total | 184.3 | 206.7 | 888.6 | 910.9 |
| Operating profit/loss per business segment | ||||
|---|---|---|---|---|
| (SEK M) | 3 months | 3 months | 12 months | Full-year |
| May-July | May-July | Aug 2010– | May – Apr | |
| 2011 | 2010 | July 2011 | 2010/2011 | |
| Medical Systems | 3.0 | 7.6 | 63.4 | 68.0 |
| Secure Communication | ||||
| Systems | 0.2 | 3.7 | 13.3 | 16.8 |
| Other operations 1) | -1.9 | -2.6 | -6.9 | -7.6 |
| Group eliminations | 5.1 | 0.3 | 0.1 | -4.7 |
| Total remaining | 6.5 | 9.0 | 70.0 | 72.5 |
| operations | ||||
| Discontinued | ||||
| operations | -18.9 | -8.8 | -74.4 | -64.3 |
| Total | -12.5 | 0.2 | -4.4 | 8.2 |
| Net sales by geographic market (remaining operations) | |||||||
|---|---|---|---|---|---|---|---|
| (SEK M) | 3 months | 3 months | 12 months | Full-year | |||
| May-July | May-July | Aug 2010– | May – Apr | ||||
| 2011 | 2010 | July 2011 | 2010/2011 | ||||
| Sweden | 47.7 | 56.0 | 251.0 | 259.4 | |||
| Rest of Europe | 56.8 | 47.5 | 284.4 | 275.1 | |||
| North America | 44.0 | 54.9 | 204.7 | 215.6 | |||
| Rest of world | 20.8 | 14.4 | 40.1 | 33.6 | |||
| Total | 169.3 | 172.8 | 780.2 | 783.7 |
1) Other operations pertain to Sectra's operations for the financing of customer projects, asset management, the Parent Company's functions for Group finances and stock-exchange, share and investor relations activities.
Medical Systems
Focus on medical IT
The transaction with Royal Philips Electronics gives Sectra greater resources and strengthens opportunities for the Medical Systems business area to grow in selected niche markets for medical IT. Sectra invests mainly in providing radiology, mammography, orthopedic and rheumatology clinics with IT systems and services that enhance their efficiency and enable better care. In the niche market of mammography IT systems, Sectra has achieved a leading position and women's healthcare continues to be a key product area for the company.
The market
Sectra's products and services enable care providers to use existing resources more efficiently and to coordinate geographically disperse operations. About 55 million radiology examinations are performed annually in Sectra's systems, which makes Sectra one the five largest suppliers of systems for processing digital x-ray images worldwide.
The market for Medical Systems continues to grow, due to the major need for systems that enhance efficiency for healthcare providers. Sectra's largest markets for Medical Systems are Scandinavia and the U.S. Uncertainty concerning the economic situation and the impact of cost-cutting programs had a dampening effect on growth in the U.S., which also applies to markets in Southern Europe where many countries are facing major socioeconomic problems.
A growing portion of the business area's revenues is generated from commitments to existing customers in the form of additional sales and long-term agreements for products, services, service, support and upgrades. Sectra's strategy is to grow in the locations where the company already has a strong position, such as Northern Europe and North America. Sectra will expand its customer base and continue to support existing customers in their ambition to become more efficient, with product and service offerings that facilitate image interpretation, evaluation of osteoporosis and rheumatism, surgery planning and choice of medication.
Activities to increase profitability
Measures that will help increase the business area's profitability and competitiveness within a couple of years have high priority. Sectra performs a number of activities that are designed to cut costs, increase sales volumes and broaden the product offering to existing customers. These include:
- Streamlining work on installations and upgrades of Sectra's medical IT systems. This is effected by upgrading customers' existing installations of digital imaging systems to the latest generation of Sectra PACS. Such upgrades also lower customers' expenses.
- Investing in higher sales volumes through additional sales to existing customers, sales in more markets and new product and service offerings.
- Investing in medical image services online, a delivery model that is highly scalable and offers major cost and operational benefits to both Sectra and customers.
Sales and earnings for the first quarter, May – July 2011
Medical Systems' net sales for the quarter totaled SEK 151.6 million (161.2). The change is mainly due to currency fluctuations. Operating profit for the quarter amounted to SEK 3.0 million (7.6), corresponding to an operating margin of 2.0% (4.7). The change in earnings was due to lower sales during the quarter. The quarter was charged with expenses for the discontinuation of Sectra Mamea AB.
Secure Communication Systems
The market
Policy-makers, government officials and defense forces in 17 European countries use Sectra's crypto products to protect telephone conversations from eavesdropping. This makes Sectra the leading supplier of eavesdropping-protected products for telephones to European authorities and defense forces.
Sweden and the Netherlands comprise Sectra's largest markets for Secure Communication Systems. Growth in the Secure Communication Systems market is driven by the fact that it is now easier than ever to eavesdrop telephone calls. Increasing numbers of authorities are choosing to protect their telephone conversations. Due to greater collaboration between authorities in European countries, customers need products that support cross-border cooperation. Sectra offers products that are approved by the EU, NATO and several national security agencies.
Sales and earnings for the first quarter, May – July 2011
Net sales totaled SEK 18.6 million (22.4) for the quarter. Operating profit was SEK 0.2 million (3.7), corresponding to an operating margin of 1.1% (16.5). The change in sales and profit were due to additions that were ordered by customers, thus causing delays to deliveries and development projects.
Other operations
Other operations pertain to Sectra's operations for the financing of customer projects, asset management, the Parent Company's functions for Group finances and stock-exchange, share and investor relations activities.
Sales and earnings for the first quarter, May – July 2011
Net sales from Other operations amounted to SEK 11.6 million (16.2) for the quarter. The operating result for the quarter was a loss of SEK 1.9 million (loss: 2.6).
OTHER INFORMATION
Financial position
Sectra has a strong cash balance and balance sheet. The Group's cash flow from operations after changes in working capital amounted to a negative SEK 2.3 million (neg: 2.2) for the period. Total cash flow for the period amounted to a negative SEK 8.8 million (neg: 16.8). After adjustment for exchange-rate differences in cash and cash equivalents, consolidated cash and cash equivalents amounted to SEK 181.8 million (174.6). The comparative quarter includes discontinued operations.
Including discontinued operations, the equity/assets ratio was 64.1% (64.7) at the close of the period and liquidity amounted to a multiple of 2.2 (2.3).
At the close of the period, the Group's interest-bearing liabilities amounted to SEK 23.4 million (17.3) and pertained to convertible debentures.
Investments
Group investments in remaining operations amounted to SEK 5.6 million (14.8) during the quarter. The investments pertained mainly to customer projects in the Group's financing activities and capitalized development. The comparative quarter included discontinued operations.
Investments in Group-financed customer projects during the quarter amounted to SEK 4.9 million (10.2). At the close of the period, the Group's carrying amount for customer projects totaled SEK 48.0 million (62.3).
During the quarter, capitalized work for own use amounted to SEK 0.7 million (3.5). At the end of the period, capitalized development in remaining operations was SEK 56.9 million (63.1).
Including operations being discontinued, capitalized development costs amounted to SEK 175.7 million (183.8) at the end of the period.
Depreciation/amortization during the quarter amounted to SEK 10.2 million (8.0). The increase was due to depreciation of Group-financed customer projects that have been completed and transitioned to the operational phase and capitalized development projects that have been completed and transitioned to the delivery phase.
Employees
The number of full-time employees in Sectra's remaining operations increased by 1 person during the quarter. At the close of the period, the number of full-time employees totaled 500 (505).
The share
Sectra's share capital at the close of the period amounted to SEK 36,842,088. At full conversion and exercise of the implemented incentive programs, the number of shares will increase by a maximum of 701,400, corresponding to 1.9% of the share capital and 1.2% of the voting rights. After dilution, the share capital will amount to SEK 37,543,488.
Incentive programs
During the quarter, the 2008/2011 convertible loan issued to the Group's employees and external Board members matured. There was no conversion to shares and the convertible loan was repaid on the due date of June 15, 2011.
The Annual General Meeting (AGM), which was held during the quarter, resolved on the issue of new convertibles to the Group's employees and external Board members. The convertible loans can be subscribed for during the period September 27 – October 6, 2011. At full exercise, the dilution effect of both convertible programs may not exceed 1% of the share capital on the date of the AGM's resolution. Conditions for issuing convertibles to employees are:
- The conversion price is to correspond to 135% of the average volume-weighted mean of listed prices paid for the company's share on NASDAQ OMX Stockholm on each trading day during the period August 2 – 17, 2011, i.e. SEK 53.70.
- Conversion to Series B shares must be possible during May 25 29, 2015.
Conditions for issuing convertibles to external Board members:
- The conversion price is to correspond to 144% of the average volume-weighted mean of listed prices paid for the company's share on NASDAQ OMX Stockholm for each trading day during the period August 2 – 17, 2011, i.e. SEK 57.30.
- Conversion to Series B shares must be possible during May 23 27, 2016.
The AGM also adopted the Board's motion concerning the issue of not more than 100,000 employee stock options for the Group's employees in the U.S. If these employee stock options are fully exercised, employees will acquire shares in the company corresponding to approximately 0.3% of the share capital and 0.2% of the voting rights.
Authorization
The AGM authorized the Board, for the period until the next AGM, to decide on a rights issue of not more than 3,700,000 Series B shares for consideration in the form of cash payment, offset or contribution in kind and that offset and contribution in kind may deviate from shareholders' preferential rights. If the authorization is fully exercised, the dilution effect will amount to approximately 10% of the share capital and approximately 6% of the voting rights.
Furthermore, the AGM resolved to authorize the Board, on one or more occasions, during the period until the next AGM, to make decisions on acquisition and transfer of treasury Series B shares. A condition for the authorization is that the company's holding of treasury shares at no time exceeds 10% of all shares in the company.
Risks and uncertainties
Through its operations, Sectra is exposed to such business risks as dependence on major customers and partners, the effect of the exchange rate on pricing in the markets in which the Group is active, and property and liability risks. In addition, Sectra is exposed to various types of financial risks such as currency, interest, loan and liquidity risks.
A detailed description of the risks and uncertainties, as well as Sectra's strategies and tactics for minimizing risk exposure and limiting adverse effects, is provided in the Group's Annual Report for the 2010/2011 fiscal year, Note 29, page 48. No significant events have occurred that would alter the conditions reported therein.
Outlook
Sectra has a strong technical platform. The products and system solutions that Sectra develops are aimed at markets with high growth potential. The Company's strong position in the home market provides a solid platform for ongoing international expansion.
PARENT COMPANY
The Parent Company Sectra AB
The Parent Company includes the head office's functions for Group finances, as well as stockexchange, share and investor relations activities.
Net sales in the Parent Company Sectra AB for the quarter amounted to SEK 4.9 million (5.8). Profit after net financial items was SEK 5.4 million (0.3).
The Parent Company's income statement and balance sheet are reported on page 12.
Consolidated income statements
| 3 months 3 months 12 months Full-year SEK thousands May 2011 May 2010 Aug 2010 – May - Apr - July 2011 - July 2010 July 2011 2010/2011 Net sales 169,320 172,828 780,183 783,691 Capitalized work for own use 710 3,520 5,788 8,598 Goods for resale -30,906 -19,915 -125,067 -114,077 Personnel costs -91,357 -102,114 -392,149 -402,906 Other external costs -31,101 -37,321 -155,255 -161,474 Depreciation/amortization -10,209 -7,955 -43,542 -41,288 Operating profit 6,457 9,043 69,958 72,544 Net financial items 9,754 3,850 3,533 -2,371 Profit after net financial items 16,211 12,893 73,491 70,173 Taxes -4,270 -2,910 -23,234 -21,874 Earnings for the period from 11,941 9,983 50,257 48,299 remaining operations Loss from discontinued operations -17,040 -8,201 -66,755 -57,916 Earnings for the period -5,099 1,782 -16,498 -9,617 |
|---|
| Earnings for the period attributable |
| to: |
| Parent Company owners -5,099 1,782 -16,498 -9,617 Minority interest 0 0 0 0 |
| Earnings per share remaining |
| operations |
| Before dilution, SEK 0.32 0.27 1.36 1.31 |
| After dilution, SEK 0.32 0.27 1.34 1.29 |
| Earnings per share including |
| operations held for sale |
| Before dilution, SEK -0.14 0.05 -0.45 -0.26 |
| After dilution, SEK -0.14 0.05 -0.44 -0.26 |
| No. of shares Before dilution 36,842,088 36,842,088 36,842,088 36,842,088 |
| After dilution 1) 37,543,488 37,400,488 37,633,488 37,633,488 |
| Average, before dilution 36,842,088 36,842,088 36,842,088 36,842,088 |
| Average, after dilution 1) 37,587,155 37,647,488 37,536,405 37,536,405 |
1) Dilution is based on the convertible debentures programs issued in 2009/2010 (368,400) and 2010/2011 (133,000) and on employee stock options issued in 2009/2010 (100,000) and 2010/2011 (100,000).
Consolidated Statement of Comprehensive Income
| 3 months | 3 months | 12 months | Full-year | |
|---|---|---|---|---|
| SEK thousands | May 2011 | May 2010 | Aug 2010 – | May - Apr |
| - July 2011 | - July 2010 | July 2011 | 2010/2011 | |
| Earnings for the period | -5,099 | 1,782 | -16,498 | -9,617 |
| Other comprehensive income Change in translation differences from translating foreign subsidiaries |
7,857 | -1,005 | -16,972 | -25,834 |
| Total other comprehensive income | 7,857 | -1,005 | -16,972 | -25,834 |
| for the period | ||||
| Total comprehensive income for the period |
2,758 | 777 | -33,470 | -35,451 |
Consolidated Balance Sheets
| Assets | 2011 | 2010 | 2011 |
|---|---|---|---|
| Intangible assets | 67,768 | 206,898 | 195,073 |
| Tangible assets | 57,254 | 77,602 | 60,175 |
| Financial assets | 4,998 | 5,231 | 4,335 |
| Deferred tas assets | 1,739 | - | 1,739 |
| Total fixed assets | 131,759 | 289,731 | 261,322 |
| Other current assets | 421,390 | 469,541 | 461,061 |
| Cash and cash equivalents | 181,832 | 174,564 | 211,341 |
| Total current assets | 603,222 | 644,105 | 672,402 |
| Total assets held for sale | 159,475 | - | - |
| Total assets | 894,456 | 933,836 | 933,724 |
| Equity and liabilities | |||
| Equity (including total comprehensive income for the period) | 572,911 | 604,066 | 569,537 |
| Provisions | 578 | 6,587 | 5,627 |
| Deferred tax liabilities | 16,572 | 15,909 | 15,328 |
| Long-term liabilities | 6,091 | 17,315 | 23,406 |
| Current liabilities | 269,215 | 289,959 | 319,826 |
| Liabilities attributable to assets held for sale | 29,089 | - | - |
| Total equity and liabilities | 894,456 | 933,836 | 933,724 |
No changes have occurred in pledged assets and contingent liabilities since the 2010/2011 Annual Report.
Consolidated Statement of Changes in Equity
| SEK thousands | 3 months | 3 months | Full-year |
|---|---|---|---|
| May 2011 | May 2010 | May - Apr | |
| - July 2011 | - July 2010 | 2010/2011 | |
| Equity at start of period | 569,537 | 602,568 | 602,568 |
| Comprehensive income for the period | 2,758 | 777 | -35,451 |
| Share-related payments | 616 | 721 | 2,420 |
| Equity at the end of the period | 572,911 | 604,066 | 569,537 |
Consolidated Cash-flow Statements
| 3 months | 3 months | Full-year | |
|---|---|---|---|
| SEK thousands | May 2011 | May 2010 | May - Apr |
| - July 2011 | - July 2010 | 2010/2011 | |
| Cash flow from operations before changes in working capital | 12,803 | 10,399 | 25,623 |
| Cash flow from operations after changes in working capital | -2,343 | -2,235 | 44,852 |
| Investing activities | -5,554 | -14,760 | -20,547 |
| Financing activities | -946 | 206 | -16,898 |
| Cash flow for the period | -8,843 | -16,789 | 7,407 |
| Cash flow from operations being discontinued: | |||
| Current operations | -15,597 | - | - |
| Investing activities | -2,557 | - | - |
| Financing activities | - | - | - |
| Cash flow for the period from operations being discontinued | -18,154 | - | - |
| Total cash flow for the period | -26,997 | -16,789 | 7,407 |
| Change in cash and cash equivalents | |||
| Cash and cash equivalents, opening balance | 211,341 | 193,024 | 193,024 |
| Exchange-rate difference in cash and cash equivalents | -2,512 | -1,671 | 10,910 |
| Cash and cash equivalents, closing balance | 181,832 | 174,564 | 211,341 |
| Unutilized credit facilities | 15,000 | 15,000 | 15,000 |
Key Figures
| 3 months | 3 months | 12 months | Full-year | |
|---|---|---|---|---|
| July 31, | July 31, | July 31, | Apr 30, | |
| 2011 | 2010 | 2011 | 2011 | |
| Order bookings, SEK M | 190.8 | 167.7 | 654.1 | 631.0 |
| Operating margin, % | 3.8 | 5.2 | 9.0 | 9.3 |
| Profit margin, % | 9.6 | 7.5 | 9.4 | 9.0 |
| Average number of employees | 492 | 502 | 486 | 496 |
| Cash flow per share, SEK | 0.35 | 0.43 | 2.16 | 2.24 |
| Cash flow per share after full dilution, SEK | 0.34 | 0.42 | 2.12 | 2.19 |
| Value added, SEK M | 97.8 | 111.2 | 462.1 | 475.5 |
| P/E ratio, multiple | - | - | 31.6 | 26.0 |
| Share price at end of period, SEK | 43.0 | 33.3 | 43.0 | 34.0 |
| Including discontinued operations: | ||||
| Return on equity, % | -0.9 | 0.3 | -2.8 | -1.6 |
| Return on capital employed, % | -1.1 | 0.3 | -2.7 | -1.1 |
| Return on total capital, % | -0.7 | 0.2 | -1.7 | -0.7 |
| Equity/assets ratio, % | 64.1 | 64.7 | 64.1 | 61.0 |
| Liquidity, multiple | 2.2 | 2.3 | 2.2 | 2.1 |
| Cash flow per share, SEK | -0.13 | 0.28 | 0.29 | 0.70 |
| Cash flow per share after full dilution, SEK | -0.12 | 0.28 | 0.28 | 0.68 |
| Equity per share, SEK | 15.55 | 16.40 | 15.55 | 15.46 |
| Equity per share after full dilution, SEK | 15.26 | 16.15 | 15.26 | 15.13 |
Quarterly consolidated income statements and key figures
| 2011/2012 | 2010/2011 | 2009/2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK M | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Net sales | 169.3 | 197.3 | 200.7 | 212.9 | 172.8 | 223.1 | 178.3 | 177.8 | 174.7 |
| Capitalized work for own use | 0.7 | 0.4 | 2.2 | 2.4 | 3.5 | 1.0 | 3.4 | 6.0 | 4.7 |
| Operating expenses | -153.4 | -163.5 | -176.0 | -179.6 | -159.3 | -177.8 | -156.1 | -146.5 | -147.8 |
| Depreciation/amortization | -10.2 | -11.7 | -10.9 | -10.7 | -8.0 | -6.9 | -7.8 | -6.3 | -4.1 |
| Operating profit | 6.5 | 22.5 | 16.0 | 25.0 | 9.0 | 39.4 | 17.8 | 31.0 | 27.5 |
| Net financial items | 9.8 | -1.1 | -1.0 | -4.1 | 3.9 | -1.2 | 7.0 | -3.8 | -4.6 |
| Earnings after net | 16.2 | 21.4 | 15.0 | 20.9 | 12.9 | 38.2 | 24.8 | 27.2 | 22.9 |
| financial items | |||||||||
| Tax on earnings for the | |||||||||
| period | -4.3 | -21.2 | 2.5 | -0.3 | -2.9 | -29.0 | -0.9 | 1.7 | -0.9 |
| Earnings for the period | 11.9 | 0.2 | 17.5 | 20.6 | 10.0 | 9.2 | 23.9 | 28.9 | 22.0 |
| from remaining | |||||||||
| operations | |||||||||
| Loss from discontinued | |||||||||
| operations | -17.0 | 0.5 | -27.4 | -20.5 | -8.2 | 1.1 | -22.2 | -26.2 | -19.4 |
| Earnings for the period | -5.1 | -1.9 | -9.7 | 0.2 | 1.8 | 10.3 | 1.7 | 2.7 | 2.6 |
| Operating margin, % | 3.8 | 11.6 | 8.0 | 11.7 | 5.2 | 17.6 | 10.0 | 17.4 | 15.8 |
| Cash flow per share, SEK | 0.35 | -0.11 | 0.13 | 0.16 | 0.28 | 0.49 | 0.37 | 0.10 | 0.06 |
| Cash flow per share after | |||||||||
| full dilution, SEK | 0.34 | 0.10 | 0.13 | 0.16 | 0.28 | 0.48 | 0.37 | 0.10 | 0.06 |
| Earnings per share, SEK | 0.32 | 0.00 | 0.48 | 0.56 | 0.27 | 0.25 | 0.65 | 0.78 | 0.60 |
| Including discontinued | |||||||||
| operations: | |||||||||
| Return on equity, % | -0.9 | -0.3 | -1.6 | 0.0 | 0.3 | 1.7 | 0.3 | 0.1 | 0.4 |
| Return on capital | -1.1 | 0.3 | -2.0 | 0.1 | 0.3 | 2.6 | 0.5 | 0.2 | 1.6 |
| employed, % | |||||||||
| Equity/assets ratio, % | 64.1 | 61.0 | 63.5 | 63.6 | 64.7 | 62.2 | 62.6 | 65.6 | 65.1 |
| Cash flow per share, SEK | -0.13 | -0.11 | 0.13 | 0.16 | 0.28 | 0.49 | 0.37 | 0.10 | 0.06 |
| Equity per share, SEK | 15.55 | 15.46 | 15.78 | 16.16 | 16.40 | 16.36 | 16.24 | 16.09 | 16.20 |
Five-year summary
| 2010/2011 | 2009/2010 | 2008/2009 | 2007/2008 | 2006/2007 | |
|---|---|---|---|---|---|
| Remaining operations 1) | |||||
| Order bookings, SEK M | 631.0 | 766.7 | 1,080.6 | 947.6 | 636.5 |
| Net sales, SEK M | 783.7 | 753.9 | 777.0 | 688.0 | 607.7 |
| Operating profit | 72.5 | 115.7 | 120.4 | 150.6 | 138.9 |
| Earnings after net financial items, SEK M | 70.2 | 113.0 | 200.0 | 183.2 | 165.1 |
| Earnings after tax from remaining | 48.3 | 84.0 | 143.9 | 125.7 | 116.2 |
| operations, SEK M | |||||
| Operating margin, % | 9.3 | 15.3 | 15.5 | 21.9 | 22.9 |
| Profit margin, % | 9.0 | 15.0 | 25.7 | 26.6 | 27.2 |
| Earnings per share before dilution, SEK | 1.31 | 2.28 | 3.90 | 3.41 | 3.15 |
| Earnings per share after dilution, SEK | 1.29 | 2.24 | 3.84 | 3.34 | 3.11 |
| Dividend per share, SEK | 0.00 | 0.00 | 0.00 | 0.50 | 0.50 |
| Share price at year end, SEK | 34.0 | 37.3 | 38.8 | 58.5 | 76.0 |
| P/E ratio, multiple | 26.0 | 16.4 | 9.9 | 17.2 | 24.1 |
| Including discontinued operations: | |||||
| Earnings for the period including | -9.6 | 17.2 | 50.5 | 50.5 | 47.2 |
| discontinued operations, MSEK | |||||
| Return on equity, % | -1.6 | 2.9 | 8.7 | 9.3 | 9.4 |
| Return on capital employed, % | -1.1 | 3.9 | 11.6 | 13.8 | 13.0 |
| Return on total capital, % | -0.7 | 2.5 | 7.4 | 8.9 | 8.6 |
| Equity per share before dilution, SEK | 15.46 | 16.36 | 16.26 | 15.22 | 14.12 |
| Equity per share after dilution, SEK | 15.13 | 16.11 | 16.06 | 14.93 | 13.84 |
| Equity/assets ratio, % | 61.0 | 62.2 | 59.4 | 56.9 | 60.8 |
1) In remaining operations, revenues and expenses attributable to the Sectra Mamea AB subsidiary are excluded for 2010/2011.
Parent Company Income Statements
| 3 months | 3 months | 12 months | Full-year | |
|---|---|---|---|---|
| SEK thousands | May 2011 | May 2010 | Aug 2010 | May - Apr |
| - July 2011 | - July 2010 | - July 2011 | 2010/2011 | |
| Net sales | 4,870 | 5,785 | 17,739 | 18,654 |
| Personnel costs | -2,514 | -1,778 | -9,766 | -9,030 |
| Operating expenses | -4,528 | -7,302 | -15,990 | -18,764 |
| Depreciation/amortization | -54 | -60 | -225 | -231 |
| Operating loss | -2,226 | -3,355 | -8,242 | -9,371 |
| Net financial items | 7,670 | 3,618 | 81,174 | 77,122 |
| Profit after net financial items | 5,444 | 263 | 72,932 | 67,751 |
| Appropriations | 0 | 0 | 1,874 | 1,874 |
| Profit before tax | 5,444 | 263 | 74,806 | 69,625 |
| Tax on earnings for the period | -1,431 | -70 | -20,228 | -18,867 |
| Earnings for the period | 4,013 | 193 | 54,578 | 50,758 |
Parent Company Statement of Comprehensive Income
| 3 months | 3 months | 12 months | Full-year | |
|---|---|---|---|---|
| SEK thousands | May 2011 | May 2010 | Aug 2010 | May - Apr |
| - July 2011 | - July 2010 | - July 2011 | 2010/2011 | |
| Earnings for the period | 4,013 | 193 | 54,577 | 50,758 |
| Other comprehensive income Fund for fair value |
7,678 | -1,130 | -28,720 | -22,189 |
| Total other comprehensive income for the period |
7,678 | -1,130 | -28,720 | -22,189 |
| Total comprehensive income for the period |
11,691 | -937 | 25,857 | 28,569 |
Parent Company Balance Sheets
| SEK thousands | July 31, | July 31, | Apr 30, |
|---|---|---|---|
| 2011 | 2010 | 2011 | |
| Assets | |||
| Tangible assets | 503 | 728 | 558 |
| Financial assets | 160,089 | 167,050 | 160,987 |
| Total fixed assets | 160,592 | 167,778 | 161,545 |
| Other current assets | 282,829 | 324,081 | 290,972 |
| Cash and cash equivalents | 836,477 | 721,544 | 815,410 |
| Total current assets | 1,119,306 | 1,045,625 | 1,106,382 |
| Total assets | 1,279,898 | 1,213,403 | 1,267,927 |
| Equity and liabilities | |||
| Equity (including earnings for the period) | 470,115 | 486,662 | 458,424 |
| Deferred tax liabilities | 95,962 | 97,836 | 95,962 |
| Long-term liabilities | 6,091 | 17,315 | 23,406 |
| Current liabilities | 707,730 | 611,590 | 690,135 |
| Total equity and liabilities | 1,279,898 | 1,213,403 | 1,267,927 |
Pledged assets and contingent liabilities
| SEK thousands | July 31, | July 31, | Apr 30, |
|---|---|---|---|
| 2011 | 2010 | 2011 | |
| Pledged, assets | 11,000 | 11,000 | 11,000 |
| Total pledged assets | 11,000 | 11,000 | 11,000 |
| Guarantees on behalf of group companies | 334,315 | 394,494 | 332,944 |
| Total contingent liabilities | 334,315 | 394,494 | 332,944 |
Note 1 Discontinued operations
In June 2011, Sectra and Royal Philips Electronics signed an agreement entailing that Philips would acquire Sectra's operations for the development and sales of digital mammography system Sectra MicroDose Mammography. This entails that the business conducted in Sectra's subsidiary, Sectra Mamea AB, is reported as discontinued operations. Philips acquired the operation on August 31, when the transaction was closed.
The cash purchase consideration on a debt-free basis amounted to EUR 57.5 million. The agreement includes an additional purchase sum of EUR 12.5 million which falls due after five years if specially agreed conditions are met. Excluding the potential additional purchase sum, the transaction is estimated to generate a capital gain of approximately SEK 300 million after tax for Sectra during the current fiscal year, according to carrying amounts.
Revenues and profit
During the first quarter, Sectra Mamea AB's revenues amounted to SEK 15.0 million (33.8). The operating result was a loss of SEK 18.9 million (loss: 8.9). The operation was substantially impacted by the transfer to Philips. Ongoing transactions were disposed of in order to facilitate and simplify the transition, which involved postponing business events until after the Philips' acquisition had been finalized.
Profit from discontinued operations
| 3 months | 3 months | 12 months | Full-year | |
|---|---|---|---|---|
| SEK thousands | May - July | May - July | Aug 2010- | May - Apr |
| 2011 | 2010 | July 2011 | 2010/2011 | |
| Net sales | 15,026 | 33,838 | 108,384 | 127,196 |
| Capitalized work for own use | 2,238 | 839 | 13,151 | 11,752 |
| Goods for resale | -10,527 | -17,972 | -75,548 | -82,993 |
| Personnel costs | -15,523 | -11,730 | -58,827 | -55,033 |
| Other external expenses | -10,136 | -7,732 | -45,619 | -43,216 |
| Depreciation/amortization of fixed assets | 0 | -6,115 | -15,896 | -22,011 |
| Operating profit | -18,922 | -8,872 | -74,355 | -64,305 |
| Net financial items | -4,198 | -2,152 | -15,979 | -13,933 |
| Profit before tax | -23,120 | -11,024 | -90,334 | -78,238 |
| Taxes | 6,080 | 2,823 | 23,579 | 20,322 |
| Earnings for the period | -17,040 | -8,201 | -66,755 | -57,916 |
Definition of key figures
| Adjusted equity | Reported shareholders' equity increased by 73.7% of untaxed reserves. |
|---|---|
| Capital employed | Total assets reduced by non interest-bearing liabilities. |
| Cash flow per share | Cash flow divided by the number of shares at the end of the period. |
| Earnings per share | Profit/loss after tax divided by the average number of shares. |
| Equity/assets ratio | Equity as a percentage of total assets. |
| Equity per share | Equity divided by the number of shares at the end of the period. |
| Liquidity | Current assets divided by current liabilities. |
| P/E ratio | Share price at the end of the period in relation to the 12-month period's earnings per share. |
| Profit margin | Profit after net financial items as a percentage of net sales. |
| Return on equity | Profit after tax as a percentage of average adjusted equity. |
| Return on capital employed (ROCE) | Profit before tax plus financial expenses as a percentage of average capital employed. |
| Return on total capital | Profit after net financial items plus financial expenses as a percentage of average total assets. |
| Value added | Operating profit plus labor costs. |
Accounting policies
This interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, the Annual Accounts Act and the Swedish Securities Markets Act. The consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS) and statements from the International Financial Reporting Interpretations Committee (IFRIC) that have been approved by the EU Commission for application within the EU. The accounting policies and calculation methods are unchanged compared with those applied in the 2010/2011 Annual Report with the exception that IFRS 5, Non-current assets held for sale and discontinued operations has now been applied. New policies and amendments that have come into effect as of the 2011/2012 fiscal have had no impact on the financial statements.
Financial calendar
| Six-month report | December 6, 2011 |
|---|---|
| Nine-month report | March 6, 2012 |
| Year-end report | May 22, 2012 |
For further information, please contact:
CEO Jan-Olof Brüer Telephone +46 13 - 23 52 09
The Board of Directors and the President of Sectra AB (publ) hereby assure that the interim report for the period May - July 2011 provides a true and fair view of the Parent Company's and Group's operations, financial position and earnings and describes the significant risks and uncertainties facing the Parent Company and other companies in the Group.
This interim report has not been reviewed by the company's auditors.
Linköping September 6, 2011 Board of Directors Sectra AB (publ)
The information in this report is such that Sectra AB (publ) is obligated to disclose in compliance with the Securities and Clearing Operations Act and/or the Financial Instruments Trading Act. This information was released to the media for public disclosure on September 6, 2011 at 8:00 a.m. (CET).
Sectra AB (publ) Teknikringen 20 SE 583 30 Linköping Tel: +46 (0)13 23 52 00 Fax: +46 (0)13 21 21 85 [email protected] www.sectra.se Momsreg.nr SE556064830401