Financial Report 1 April, 2001- 31 March, 2002
5/14/2002 9:43 AM EST
Addtech Group
Financial report for the period April 1, 2001 - March 31, 2002
Net revenues amounted to MSEK 2 360 (2 502).
Operating income not including items affecting comparability
amounted to MSEK 85 (201).
Operating income was charged with costs for structural measures on a
current basis during the year, resulting in cost savings of about
MSEK 40 on an annual basis.
The market situation for businesses aimed at the telecom and
electronics sectors was weak during the year.
Cash flow from current operations, excluding taxes paid attributable
to last year's result, amounted to MSEK 91 (173).
The equity ratio increased to 41 percent despite repurchase of
shares equivalent to just short of 5 percent of total capital.
A cash dividend of SEK 1.20 is proposed.
3 months to 12 months to
March March 31, March March
31, 2002 2001 31, 2002 31, 2001
Net revenues 567 718 2 360 2 502
Operating income* 12 52 85 201
- in percent of net 2.2 7.3 3.6 8.0
revenues
Income after financial 10 48 80 194
items*
- in percent of net 1.9 6.7 3.4 7.8
revenues
Earnings per share, 0.22 1.23 1.91 5.02
SEK*
* Not including items affecting comparability
NET REVENUES AND INCOME
Financial year April 1, 2001 - March 31, 2002
Revenues of the Addtech Group during the financial year amounted to
MSEK 2 360 (2 502). MSEK 273 hereof was additional business volume
generated by newly acquired units. Currency effects affected
revenues by MSEK 84 in a positive direction.
The year was marked by a pronounced slowdown for the Group's telecom
and electronics-related businesses, especially for investment type
products. The drop in demand was seen early during the year and no
discernible improvement has occurred.
In spite of the overall economic slowdown, most units - with the
exception of those related to telecom - were able to maintain sales
at a satisfactory level. Units focused on niche production of
transmission products and machine parts had a positive development
during the year and good capacity utilization. Sales of components
and sub-systems from the Group's sharply niched units to the
machinery and vehicle industries were also stable.
In order to counter a weaker business climate, a forceful action
program was launched. On an annual basis this program is expected to
reduce costs by about MSEK 40. Action taken involved some 100
employees, equivalent to a reduction of close to 10 percent from the
level at the end of June when the action program was initiated.
Operating income was affected on a current basis by costs for
personnel reductions and other structural measures.
Operating income, not including items affecting comparability,
amounted to MSEK 85 (201) and income after financial items was MSEK
80 (194). Added to this result are income affecting comparability of
MSEK 4, as a result of sales of real estate, and costs affecting
comparability of MSEK 3, attributable to listing Addtech on the O-
list of the Stockholm Stock Exchange. For the preceding year there
was income affecting comparability of MSEK 13 as a consequence of
repaid SPP funds.
Income after taxes amounted to MSEK 53 (149), or SEK 1.92 per share
(5.36). The effective tax rate was 32 percent (28).
Fourth quarter 2001/02 (January - March)
Net revenues during the fourth quarter amounted to MSEK 567 (718).
Revenues added by newly acquired units were MSEK 18.
The market situation for units doing business with the telecom and
electronics industries continued to be weak and no improvement
compared to what was reported in the previous quarterly report has
been registered. Demand for machinery and equipment of a capital
investment type was extremely weak.
For the other areas of operation the market situation was at the
same level as in prior periods of the financial year. In
Transmission Systems, however, some weakness was noted in sales of
components.
Operating income amounted to MSEK 12 (52). The lower result is
explained by a negative result in Production Systems, but the other
two business areas also registered lower results than for the
corresponding period one year ago. Income was burdened by shutdown
and restructuring costs of MSEK 12 during the quarter.
Income after financial items amounted to MSEK 10 (48). The period's
net of financial items was MSEK -2 (-4).
BUSINESS AREAS
Production Systems
provides systems solutions primarily for production processes in the
electronics, engineering and automotive industries.
3 months 12 months
to to
March Marc Marc Mar
31, h h ch
2002 31, 31, 31,
2001 2002 200
1
Net 118 227 570 805
revenues
Operating -9 18 -16 60
income
- in
percent -7.5 8.4 -2.8 7.5
of net
revenues
Net revenues declined by 29 percent to MSEK 570 (805). Revenue added
by newly acquired units amounted to MSEK 31. Operating income
amounted to MSEK -16 (60).
The sharp economic downturn in the telecom industry caused sales to
drop significantly during the financial year. The uncertainty with
respect to investment decisions brought on by structural changes in
telecom and the industry's overall low propensity to invest were
also negatives.
The decline in results compared to the year before was due to lower
sales in combination with an organization that was dimensioned for a
higher business volume. In addition hereto, certain project-related
business aimed at environmental solutions had a negative impact on
earnings.
Adjustments to cope with a lower volume of business continued during
the last quarter of the financial year. A balance has had to be
struck between on the one hand a short-term need to cut back to
remedy an unsatisfactory earnings situation and a longer term need
to keep talent for a rebound in the basically interesting telecom
market.
The action program includes a reduction in the number of employees
by about 30 percent. Income was burdened during the fourth quarter
by shutdown and restructuring costs in the amount of MSEK 7.
Transmission Systems
markets transmission components, machine parts, hydraulic systems
and automation systems for the manufacturing industry and after-
market. In-house manufacturing is conducted primarily in the case of
chains, gaskets and machine parts.
3 months 12
to months
to
Mar Mar Mar Mar
ch ch ch ch
31, 31, 31, 31,
200 200 200 200
2 1 2 1
Net 212 232 869 729
revenues
Operating 7 13 40 53
profit
- in
percent of 3.2 5.4 4.5 7.3
net
revenues
Net revenues increased by 19 percent to MSEK 869 (729). Revenue
added by newly acquired units amounted to MSEK 153. Operating income
amounted to MSEK 40 (53).
The business area's combination of sales of components to producing
customers and their aftermarket provided for an overall stable
market situation during the year.
Niche production of transmission products and machine parts grew
during the year and capacity utilization was good. Several new
contracts were won in these areas.
The volume increase added by the acquisition of the FB Group had
only a marginal impact on income for the year.
The lower operating income is explained largely by a negative result
in a manufacturing unit with elements of contract production. Cost
reductions implemented led to a situation where further negative
impact was limited during the last quarter.
Demand was stable for the producing units during the fourth quarter,
while component sales were slightly lower. Income was burdened
during the fourth quarter by certain shutdown and restructuring
costs in the amount of MSEK 4.
Component Systems
develops and markets niche electromechanical and electronic
component solutions for the manufacturing industry and the after-
market.
3 months 12
to months
to
Mar Mar Mar Mar
ch ch ch ch
31, 31, 31, 31,
200 200 200 200
2 1 2 1
Net 237 260 923 971
revenues
Operating 13 22 61 91
income
- in
percent of 5.4 8.3 6.6 9.4
net
revenues
Net revenues increased by five percent to MSEK 923 (971). Revenue
added by newly acquired units amounted to MSEK 89. Operating income
amounted to MSEK 61 (91).
The market situation was affected primarily by the weak trend in the
telecom industry and to some degree also by weakness in the overall
economy, with lower demand for components and systems as a result.
Sales of components and sub-systems for machinery and special
vehicles were stable.
The market situation was unchanged during the fourth quarter
compared to earlier periods during the year.
PROFITABILITY
The return on capital employed was 15 percent during the financial
year (38) and return on equity was 12 percent (36).
FINANCIAL POSITION CASH FLOW
The equity ratio stood at 41 percent at the end of the financial
year (34). Shareholders' equity per share amounted to SEK 15.70
(14.90).
The Group's financial indebtedness amounted to MSEK 74 at year-end.
This is an increase by MSEK 58 since the beginning of the year.
Cash flow from current operations amounted to MSEK 41. Excluding
taxes paid of MSEK 50 attributable to last year's result, cash flow
from current operations amounted to MSEK 91 (173). Investments in
fixed assets amounted to MSEK 21. Disposals amounted to MSEK 25.
Financing operations were affected by repurchase of own shares in an
amount of MSEK 46.
Summary statement of cash flow
Jan.- Full year
Mar.,
2002
2001/ 2000/ 2001
MSEK 2002
Income after 13 80 207
financial items
Adjustment for
items not included 10 41 30
in cash flow
Taxes paid -48 -87 -7
Change in working -8 7 -7
capital
Cash flow from -33 41 223
current operations
Net investments in 13 4 -25
fixed assets
Corporate -10 -13 -195
acquisitions and
disposals
Repurchase of own 0 -46 -
shares
Other financing -24 -44 -*
operations
Cash flow for the -54 -58 3
period
Liquid funds at 149 151 -*
beginning of period
Exchange rate -3 -1 -*
difference in
liquid funds
Liquid funds at end 92 92 151
of period
*The Addtech Group was capitalized March 31, 2001. Certain data has
therefore been omitted.
**Last year's items affecting comparability, primarily relating to
SPP funds, are reported among Adjustments for items not included in
cash flow.
CORPORATE ACQUISITIONS
Addtech acquired two companies during the financial year with
aggregate sales of MSEK 40. In addition, an agreement was concluded
to acquire an additional company, possession to be taken in May
2002.
EMPLOYEES
At the end of the financial year the number of employees was 1 100,
which can be compared with 1 162 at the beginning of the year. The
number of employees increased by 10 during the year due to
acquisitions. The average number of employees was 1 155 (940).
DISTRIBUTION OF SHARES
The share capital amounted to MSEK 55.7 at the end of the period.
The distribution among classes of shares was as follows:
Classes of share Shares
outstanding
Class A shares 1 113
478
Class B shares 26
750
754
Total number of shares 27
outstanding before 864
repurchases 232
Shares repurchased 1 331
400
Total number of shares 26
outstanding after 532
repurchases 832
REPURCHASE OF OWN SHARES
An extra General meeting of shareholders in Addtech AB held December
17, 2001 resolved a mandate for the Board of Directors to repurchase
own shares equivalent to a maximum of 10 percent of all outstanding
shares. The purpose of the buyback is to give the Board of Directors
increased freedom of action in its work with the Company's capital
structure and to fulfill the Company's obligation under the
incentive program decided by the Board of Directors. The mandate to
the Board of Directors also includes an opportunity to sell
repurchased shares in connection with corporate acquisitions.
At the end of December Addtech repurchased 1 331 400 of its own
class B shares, which is also the Company's total number of shares
held in treasury. These shares are equivalent to 4.8 percent of all
shares issued and 3.5 percent of the votes. The shares were
repurchased at an average price of SEK 34.84. With this purchase,
Addtech has fulfilled the Company's obligation under the option
program for members of senior management resolved by the extra
general meeting of shareholders held December 17, 2001.
The Board of Directors has decided to propose to the regularly
scheduled Annual General Meeting a renewed mandate for repurchase of
own shares. The proposal includes a mandate for the Board of
Directors - to remain in effect until the next following regularly
scheduled Annual general Meeting - to acquire shares up to 10
percent of all outstanding shares in the Company. Purchases shall be
made over the Stockholm Stock Exchange. The mandate is also proposed
to include an opportunity to use repurchased shares for payment in
connection with acquisitions or to sell repurchased shares in ways
other than over the Stockholm Stock Exchange as a way of refinancing
acquisitions.
INCENTIVE PROGRAM
In December 2001 the Board of Directors awarded 700 000 so-called
personnel options to 56 members of senior management in the Group.
To make this possible, the extra general meeting of shareholders
held December 17, 2001, resolved that the Company will convey up to
700 000 class B shares in the company in connection with any
redemption of these personnel options. The redemption price has been
set at SEK 44.80, equivalent to 110 percent of the average price of
the Addtech share during the period December 3 - 7, 2001. These
shares have been repurchased at an average price of SEK 34.84. If
the personnel options are exercised, the number of shares
outstanding will increase by 2.6 percent (1.9 percent of the votes).
FUTURE PROSPECTS
The weaker economy and the extensive restructuring in the telecom
industry have had a negative effect on the Company's operations.
In order to meet the effects of the weaker business climate, a
program to increase efficiency has been implemented, whereby the
cost level has been lowered by MSEK 40 on an annual basis. The costs
for this program has been charged on last year's result. Additional
measures are being taken in a few additional areas of operation, but
most of the Group's operations have been adapted to the current
demand situation.
Addtech's long-term growth and profitability goals remain unchanged.
With a cost level adapted to a weak economy and a strong financial
position, Addtech has excellent opportunities for positive earnings
performance, in existing operations as well as through acquisitions.
ACCOUNTING PRINCIPLES
This financial report has been compiled in accordance with
recommendation RR20 Interim reporting of the Swedish Financial
Accounting Standards Council. Recommendation RR9 Income taxes of the
Swedish Financial Accounting Standards Council has been applied
starting this year. In all other respects the same accounting
principles and computation methods as presented in Addtech's listing
prospectus have been used.
PARENT COMPANY
The Parent Company's net revenues amounted to MSEK 27 (-) and income
after financial items was MSEK 321 (-). This result includes items
affecting comparability in the amount of MSEK-3 and dividends and
group contributions from subsidiaries in an amount of MSEK 320 (-).
DIVIDEND
The Board of Directors proposes a dividend of SEK 1.20 per share.
The total dividend payment amounts to MSEK 32. The Group's dividend
policy states that 30 to 50 percent of the Group's average income
after taxes should be paid as dividends to the shareholders.