Interim report 1 January - 30 June 2000

INTERIM REPORT 1 January - 30 June 2000 Operating income totalled MSEK 104, almost three times as much as for the corresponding period in 1999 Income after financial items totalled MSEK 101 (MSEK 42) Net turnover was MSEK 578, an increase of 21 per cent Order levels increased by 11 percent during the second quarter Earnings per share amounted to SEK 4,82 (SEK 1,92) THE GROUP IN BRIEF 1 Jan-30 June 1 Jan-30 June Change MSEK 2000 1999 2000/1999 Net turnover 578 477 + 21 Operating income 104 36 + 187 Income after financial101 42 + 139 items 1 Earnings per share ,4,82 1,92 + 151 SEK 1 Based on a total of 12,5 million issued shares TRENDS IN OPERATIONS Markets and sales The IRO Group's net turnover for the second quarter was MSEK 290, an increase of 18 per cent over the corresponding period in 1999. Order intake too developed very satisfactorily and totalled MSEK 304, representing an increase of 11 per cent. The strong Swedish krona had a negative effect on accumulated order intake over the first six months of the year, corresponding to 6 per cent. Order levels quarter by quarter MSEK 2000 ±% 1999 ±% 1998 ±% 1997 First quarter 289,7 + 20 242,4 - 12 276,5 + 3 268,3 Second quarter 303,8 + 11 273,6 + 7 255,8 - 15 300,6 Third quarter 226,9 + 12 202,8 - 24 268,1 Fourth quarter 301,3 + 26 239,2 - 5 251,9 Total for 1 044,2 + 7 974,3 - 11 1 088,9 the year Market trends have been stable, with increasing demand for the IRO Group's products on practically all its markets. The Weaving Division's order intake increased by 30 per cent during the first six months of the year, while that of the Knitting Division increased by 11 per cent. Where both Divisions are concerned, growth was at its strongest on Asian markets and particularly that of China. GROUP TOTALS MSEK 1 Jan- 1 Jan- 1 Apr- Total 30 June 30 June 30 June for 2000 1999 2000 1999 Orders received 593 516 304 1 044 Order book 155 131 155 139 Net turnover 578 477 290 992 Operating income 104 36 51 118 1 1 Income after 101 42 50 120 financial items 1 Operating margin, % 18 8 18 12 1 Before restructuring costs of MSEK 12 DEVELOPMENTS IN OPERATIONS Repayment receivable from SPP Insurance Group According to the information now received from SPP Insurance Group, the one-off payment to be made in connection with over-consolidation will be MSEK 16,7. The IRO Group intends to utilize the funds finally allocated before the end of the current year in implementing early retirement schemes for certain employees. The amount to be received has therefore been reported in its entirety positively, as a non-comparable item and negatively, as additional personnel costs incurred. Operating income Operating income continued to be highly satisfactory during the second quarter, and totalled MSEK 51. This, together with operating income for the first quarter of MSEK 53, brings the total for the first six months of the year to MSEK 104, an increase of 187 per cent over the corresponding period in 1999, as the following table illustrates: MSEK 2000 ±% 1999 ±% 1998 ±% 1997 First quarter 53,0 + 155 20,8 - 56 47,4 + 9 43,4 1 Second quarter 51,3 + 202 17,0 - 61 43,3 - 21 54,7 1 Third quarter 27,3 + 9 25,0 - 46 46,6 1 Fourth quarter 52,7 + 443 9,7 - 81 51,0 Total for year 117,8 - 6 125,4 - 36 195,7 1 Before restructuring costs Approx. 60 per cent of the IRO Group's invoiced sales are in euro-related currencies. As a result, the strengthening of the Swedish krona during the year has had a negative effect of MSEK 4 by comparison with the corresponding period in 1999. The improvement in operating income during the first and second quarters of the year and on an accumulated basis is illustrated by the following table: MSEK Q 1 Q 2 Q 1-2 2000/1999 2000/1999 2000/1999 Volume and gross margin 29 26 55 Overheads 2 - 10 - 8 Non-comparable items - 18 18 Depreciation 1 2 3 Total effect on operating income 32 36 68 Income after financial items Payment of dividends to shareholders totalling just over MSEK 41 was the main reason for the increase in net indebtedness, by MSEK 33 to MSEK 168, as at 30 June 2000. As at 30 June 1999, however, net indebtedness was higher than this, and totalled MSEK 208. The net deficit on financial items remained unchanged at MSEK 3, the same level as for the first six months of 1999. MSEK Q 1-2 Q 1-2 Total for 1 2000 1999 1999 Operating income 104 36 118 Net deficit on financial items ( 3) ( 3) ( 8) Exchange rate differences on loans - 9 10 Income after financial items 101 42 120 1 Before restructuring costs INCOME FOR THE PERIOD AND NET EARNINGS PER SHARE The rate of tax applicable for the first six months of the year was 40 per cent, as against 43 per cent for the same period in 1999. Net earnings per share were SEK 4,82 (SEK 1,92). Net earnings per share for the whole of 1999 were SEK 4,95. ONGOING INVESTMENTS During the first six months of the year, net investments in fixed assets exclusive of properties amounted to MSEK 22,6 (MSEK 18). As indicated in the Interim Report for the first three months of the year, the option to purchase the site in Ulricehamn on which the Company's premises stand was exercised in March. The sum invested in this way was a further MSEK 17,4. The transaction will result in an improvement in income after financial items of approx. MSEK 1 per year. LIQUIDITY AND FINANCING Positive cash flow for the first six months of the year 2000 was MSEK 96, as against MSEK 41 for the corresponding period in 1999. Net indebtedness was MSEK 168 (MSEK 208), equivalent to a debt/equity ratio of 0,33 (0,46). As at 30 June 2000 the Group's equity/assets ratio continued high, and was 49,3 per cent as against 46,7 per cent at the same point in 1999. PERSONNEL During the first six months of the year the average number of employees in the Group, expressed in terms of full-year employment, was 926 (901). The increase is accounted for by additional directly-employed personnel taken on as a result of the improvement in order intake. OUTLOOK FOR THE REMAINDER OF 2000 The improvement in demand that has been seen during the last six months of 1999 and the first six months of 2000 is expected to be sustained throughout the remainder of the year. SHARE DATA Shares in IRO AB have been listed on the Stockholm Stock Exchange's O List since 22 June 1995. They are also traded on SEAQ International in London. The Company's share capital is SEK 62 500 000, made up of 12 500 000 fully paid-up shares with a nominal value of SEK 5 each and each carrying one vote. Distribution by shareholding as at 30 June 2000 Shareholdings No of % No of % shares shareholders 1-1000 610 825 4,9 2 187 88,7 1001-5000 427 788 3,4 175 7,1 5001-10000 257 760 2,1 35 1,4 10001-100000 1 387 540 11,1 47 1,9 100001- 9 816 087 78,5 22 0,9 Total 12 500 000 100,0 2 466 100,0 Source: VPC AB as at 30 June 2000 The number of shareholders in the Company as at 30 June 2000 was 2 466, as against 2 747 at 31 December 1999. The proportion of shares held by overseas interests as at 30 June 2000 was 21 per cent as against 20 per cent at 31 December 1999. The proportion of shares held by interests in the USA is approx. 20 per cent. The proportion of shares held by institutions is 54 per cent. Major shareholders as at 30 June 2000 Shareholder No of shares % of voting rights Stena Sessan Rederi AB 3 126 100 25,0 S E B Fonder 1 396 167 11,2 1 Denver Investment Advisers 1 329 070 10,6 FöreningsSparbankens 1 090 400 8,7 värdepappersfonder Arnhold & S Bleichroeder Inc 1 005 000 8,1 AMF/TFA/AFA Insurance Group 400 500 3,2 S E B Pensionsstiftelse 341 000 2,7 Hagströmer & Qviberg Aktiefonder 330 300 2,6 Carlson Investment Management 296 400 2,4 Skandia Insurance Group 256 400 2,0 Stiftelsen för strategisk 249 850 2,0 forskning IRO's Management 183 300 1,5 Total 10 004 487 80,0 Other shareholders 2 495 513 20,0 Total 12 500 000 100,0 1 Previously Bee & Associates Inc Source: VPC AB as at 30 June 2000 and subsequently notified changes PARENT COMPANY The IRO Group's Parent Company is IRO AB (publ), which was established in May 1995, and the shares in which are quoted on the Stockholm Stock Exchange's O List. The Parent Company's loss for the first six months of the year 2000, after financial items, was MSEK 1,9 (MSEK 1,3). Turnover for the period was MSEK 1,2. The Parent Company had three employees, as against an average of one person. As at 30 June 2000, its liquid assets totalled SEK 142 000 (SEK 135 000). No investments were made during the period. FINANCIAL REPORTING 2000 IRO will publish the following further financial information for the year 2000: The report for the first three quarters of 2000 will be published on Tuesday 24 October The preliminary report on 2000 operations will be published on 22 February 2001 The Annual Report for 2000 will be published at the end of March 2001 KEY RATIOS (Definitions in accordance with 1999 Annual Report) 1 Jan-30 June 1 Jan-30 June Total for 2000 1999 1999 Operating margin, % 18,0 7,6 10,7 Net profit margin, % 10,4 5,0 6,2 Interest cover, times 17,6 7,9 10,5 Return on 25,7 12,0 14,2 capital employed, % Return on equity, % 23,6 12,3 13,1 Earnings per 1 share, SEK 4,82 1,92 4,95 Debt/equity ratio, times 0,33 0,5 0,28 Equity/assets ratio, % 49,3 46,7 49,2 Equity per 1 share, SEK 39,94 35,63 38,49 1 Based on a total of 12,5 million issued shares Ulricehamn, 9 August 2000 Stig-Arne Blom President This interim report is based on the consolidated accounts as at 30 June 2000, and has not been the subject of a separate examination by the Company's auditors. IRO AB IRO is an international group engaged in the development and manufacture of yarn feeders for textile machinery. Its principal customers are manufacturers of weaving and knitting machines. IRO is the world's leading manufacturer of yarn feeders, with a share of more than 60 per cent of the global market. Production takes place at locations in Sweden, Germany, Italy, China and Taiwan. Markets outside Sweden account for some 97 per cent of sales. IRO AB (publ), Box 54, SE-523 22 Ulricehamn, Sweden Tel: +46 321 297 00. Fax: +46 321 298 00. e-mail: info@iro.se Internet: www.iroab.com Summary of Profit and Loss Accounts MSEK 1Jan- 1Jan- Total 30June 30June for 1999 2000 1999 Operating revenues Net turnover 578 477 992 Variations in stocks 9 - 4 Capitalized work - - 2 on own account Total operating revenues 587 477 998 Operating expenses Raw materials and (202) (162) (350) consumables Other external charges (80) (73) (148) Personnel costs (184) (169) (312) Non-comparable items 17 (1) (12) Operating income 138 72 176 before depreciation Depreciation of tangible and Intangible fixed assets (34) (36) (70) Operating income 104 36 106 Financial items Interest receivable 3 1 2 and similar income Interest payable (6) (4) (10) and similar charges Exchange rate - 9 10 differences on loans Income after 101 42 108 financial items Minority interests (1) - (1) Tax (40) (18) (45) Net profit for the period 60 24 62 Summary of Balance Sheets MSEK 30 June 2000 30 June 1999 31 Dec 1999 ASSETS Goodwill 170 184 177 Other intangible fixed 23 26 25 assets Tangible fixed assets 243 236 231 Total fixed assets 436 446 433 Stocks 210 194 179 Customer receivables 246 229 229 Other short-term 46 51 41 receivables Cash in hand and at 86 45 107 the bank Total current assets 588 519 556 TOTAL ASSETS 1 024 965 989 EQUITY AND LIABILITIES Equity 499 445 481 Minority interests 6 5 5 Long-term loans 251 240 240 Other long-term 55 56 51 liabilities and reserves Total long-term 306 296 291 liabilities Short-term loans 3 13 3 Other short-term 210 206 209 liabilities Total short-term 213 219 212 liabilities TOTAL EQUITY AND 1 024 965 989 LIABILITIES Summary of Cash Flow Analyses MSEK 1 Jan-30 June1 Jan-30 JuneTotal for 1999 2000 1999 Income before tax but after minority 100 42 107 interests Reversal of 34 36 70 depreciation Reversal of - - 5 gains on disposals of fixed assets Reversal of - (2) (5) provisions Reversal of 3 3 6 interest on financing Tax paid (41) (38) (62) Cash flow before changes in working 96 41 121 capital Total changes (48) (33) (19) in working capital Net investments including Differences on (37) (13) (39) translation Net financing (33) (31) (34) Changes in cash (22) (36) 29 flow Balances as at 107 82 82 1 January Differences on 1 (1) (4) translation Balances as at 86 45 107 end of period ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/09/20000809BIT00360/bit0001.doc http://www.bit.se/bitonline/2000/08/09/20000809BIT00360/bit0002.pdf

Subscribe