Interim report from Sectra AB for the period May - October 2001
12/5/2001 3:28 AM EST
Interim Report from Sectra AB (publ),
for the period May - October 2001
The period in brief (May-October 2000 in
parentheses)
* Sales increased by 35 % to SEK 144.2 million (106.6).
* Profit before tax rose to SEK 15.9 million (9.9), up 61 %.
* Earnings per share equaled SEK 0.34 (0.22).
* Order bookings amounted to SEK 171.5 million (195.1).
The second quarter in brief (August-October 2000 in
parentheses)
* Sales increased by 62 % to SEK 93.9 million (58.1).
* Profit before tax rose to SEK 13.8 million (5.5), up 151%.
* Earnings per share equaled SEK 0.30 (0.12).
* Order bookings amounted to SEK 77.7 million (109.9)
Significant events during the second quarter
* Sectra was contracted for digitizing the radiology operations at
the Diakonhjemmet Hospital in Oslo and Ängelholm Hospital in Sweden.
* Sectra's digital radiology system received top overall rating in an
American customer survey. This highly favorable survey result is
important for Sectra in its continuing sales.
* The first pilot study in clinical environment of Sectra's digital
mammography system, Sectra MicroDose Mammographytm, has been initiated
at St. Göran Hospital in Stockholm, Sweden.
* In cooperation with the Örebro Innovation Center and a group of
Swedish radiologists, Sectra formed a teleradiology company, Paxlink AB.
The business concept is to receive and read X-ray images from Swedish
and Norwegian hospitals where it is hard to manage to read all incoming
X-rays due to a shortage of radiologists.
* Sectra signed an agreement with its Norwegian partner Kongsberg
Defence Communications AS to supply 1,000 Tiger telephones with
accessories. This is the largest order received by the company to date
for the NATO version of Sectra Tiger®.
Significant events after the end of the quarter
* Sectra is cooperating with SIX, the leading supplier of financial
information in the Nordic region, in the launch of a new mobile
financial service based on Sectra's CitySurfer. The new service provide
real-time updates of share prices and financial news to financial and
stock market participants.
Market
The market for medical systems is in a strong growth phase and an
increasing number of hospitals are choosing to enhance the efficiency of
their radiology operations by installing digital systems. The countries
that have advanced furthest in the transition to digital radiology
systems are Norway, Sweden, the US and Germany. Sectra currently has
it's largest share of installations in Scandinavia and the US (via
partners), and a project to also cultivate the market in the rest of
Western Europe is now under way.
Sectra's sales success continued during the quarter, both in Sweden and
internationally. New agreements were signed for the digitization of
radiology operations at Ängelholms Hospital in Sweden and the
Diakonhjemmet Hospital in Oslo, among other institutions. Increased
demand was noted in the US, partly as a result of an American customer
survey that assigned the highest ranking to Sectra's digital imaging
system, which is sold by Philips Medical Systems under its own brand on
the North American market. The survey evaluated systems from eight
leading suppliers in the US. It is a significant factor for Sectra's
sales that the company has, on several occasions, achieved top ranking
in international
evaluations of systems from leading suppliers. Sectra has formed a
teleradiology company, Paxlink AB, in cooperation with Orebro Innovation
Center and a group of Swedish radiologists. The business concept is to
receive and read X-rays
from Swedish and Norwegian hospitals where it is hard to manage to read
all incoming X-rays due to a shortage of radiologists. Sectra is a part
owner of the new company, whose services increase the benefits customers
obtain from digital radiology systems.
During the quarter, the first pilot study of Sectra's new digital
mammography system, Sectra MicroDose MammographyTM, has been initiated
at the St. Göran Hospital in Stockholm. Preliminary tests indicate that
Sectra MicroDose MammographyTM deliver high quality images with a five-
fold reduction of the radiation dose. The radiation dose is an important
consideration for mammography screening. Research institutes in the US
will also participate in the early clinical analyses of Sectra's system.
Sectra plans to deliver the first series-produced units to mammography
departments in Europe during 2002.
The market for secure communications systems is characterized by the
discernible trend in the defense sector, both in Sweden and
international markets, towards increased investment in IT-systems, in
parallel with a decline in more traditional defense investments. There
is considerable demand for eavesdrop-secure systems and an increased
number of inquiries were noted during the quarter as a result of the
changed world situation. Sectra signed an agreement with its Norwegian
partner Kongsberg Defence Communications AS during
the quarter to supply 1,000 Tiger telephones for the NATO market. This
is Sectra's largest order to date for the NATO version of Tiger®.
The market for wireless information systems is in an early growth phase.
Increased mobility among people is driving developments in mobile
information services. However, a restrained investment climate was noted
during the quarter in those segments that are affected by the economic
downturn.
As part of Sectra's new development project in the area of aviation
communications, the first functional tests in a real airport environment
were conducted, with highly satisfactory results. Commercialization of
the system may be delayed, however, due to the current trend in the air
travel market.
Sales and earnings
The Group's net sales for the reporting period increased by 35 % to SEK
144.2 M (106.6), of which SEK 93.9 M (58.1) relate to the second
quarter. Profit before tax rose to SEK 15.9 M (9.9), which indicates
that profit for the second quarter amounted to SEK 13.8 M (5.5). Order
bookings during the second quarter amounted to SEK 77.7 M (109.9),
bringing total order bookings for the first six months of the fiscal
year to SEK 171.5 M (195.1). The reduction in order bookings is believed
to be mainly attributable to the postponement of order confirmations due
to the temporary uncertainty, and is not regarded as a sign of that the
demand is falling off.
The chart shows sales during the first six months of the fiscal year,
distributed by business area.
[REMOVED GRAPHICS]
Financial position
Sectra's equity ratio at October 31, 2001 was 64.3 % (61.7) and
liquidity was a multiple of 3.0 (3.0). Interest-bearing liabilities
amounted to SEK 37.3 M (9.9), of which SEK 33.7 M (33.0) pertained to
convertible debentures.
Investments
Investments in the Group during the period amounted to SEK 2.0 M (5.9)
and pertained mainly to computer equipment and fixtures and fittings.
Personnel
The number of employees increased by 23 persons during the second
quarter, bringing the total number of employees at October 31, 2001 to
218.
Convertible debentures
and personnel options
In accordance with the decision at Sectra's Annual General Meeting in
June, employees of the Sectra Group were offered to subscribe for
convertible debentures during the second quarter. Approximately 34 % of
the employees signed for convertible debentures in a total nominal
amount of SEK 18.1 M. At full conversion, the number of series B shares
in Sectra increases to 308,200, corresponding to 0.9 % of the share
capital and 0.6 % of the votes. The term of the convertible debentures
is from November 1, 2001 to July 1, 2004 and the conversion price is SEK
57.70.
The Annual General Meeting in June 2001 also approved the Board's
proposal to issue an additional maximum of 80,000 personnel options for
the Group's employees in the US. If these personnel options are fully
exercised, employees in the Group will acquire shares in the company
corresponding to 0.3 % of the share capital and 0.1 % of the votes.
Share data
Sectra's share capital at October 31, 2001 was SEK 32,760,945
(32,760,945), distributed among 32,760,945 shares. Assuming full conver
sion and exercise of issued convertible debentures and personnel
options, the number of shares increases to 33,493,645.
Outlook
Sectra has a strong technology platform that has brought the company
major successes in
international evaluations involving comparison with its competitors. The
products and system solutions developed by Sectra are aimed at markets
with a high growth potential. The company's strong position in its
domestic market constitutes an excellent platform for continued
international expansion. The Board's assessment that Sectra will
continue to expand with favorable profitability remains valid.
Accounting principles
This report was prepared in accordance with the Swedish Financial
Accounting Standards Council's recommendation RR20. The accounting
principles presented in the 2000/2001 Annual Report are unchanged.
Future financial reports
Interim report, nine months ended January 31, 2002:
March 5, 2002
Preliminary year-end report 2001/02:
May 22, 2002
For additional information please contact:
Jan-Olof Brüer, President and CEO
Phone: +46 13 23 52 09
E-mail: