Interim Statement for Össur hf. 2000
Profit before Depreciation up by 55%<br>
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The consolidated accounts of Össur hf. for the first 6 months of the year have been prepared for release. The consolidated accounts include the operating results of Flex-Foot Inc. over the last three months. The financial indicators from the accounts will also be published on the Össur hf. website at www.össur.is at 5 p.m. on Wednesday, 26 July. The accounts of the company will be published in their entirety with notes on the company website on Thursday, 27 July, at 10.30 a.m. <br>
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Open Teleconference with Management<br>
Tomorrow, Thursday 27 July at 11:00 investors and other parties interested in the operations of the company will have an opportunity to participate in an open teleconference. At the conference, Mr. Jón Sigurðsson, CEO, and Mr. Árni Alvar Arason, CFO, will discuss the conclusions of the interim statement.<br>
To participate in the teleconference, dial 595-2030. The meeting can also be observed on the Össur hf. website at www.ossur.is.<br>
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Key Figures<br>
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The Össur hf. Group <br>
Profit and Loss Account <br>
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6 months 2000 6 months 1999 Change<br>
Operating income 1,322 728 82%<br>
Operating expenses: 1,146 607 88%<br>
Operating profit 175 122 41%<br>
Operating profit before depreciation (EBIDTA) 209 135 55%<br>
Financial income and expenses 11 -4 <br>
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Profits before income tax and net worth tax 186 118 58%<br>
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Income tax and net worth tax -49 -38 29%<br>
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Other income and expenses -3,690 0 <br>
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Net earnings (loss) over the year -3,553 77 <br>
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Balance Sheet 6 months 2000 31.12.1999 Change<br>
Fixed assets 2,381 1,289 85%<br>
Current assets 1,234 475 160%<br>
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Equity: 1,618 1,387 17%<br>
Long-term liabilities 1,150 162 610%<br>
Current liabilities 847 214 295%<br>
Equity and liabilities 3.615 1,763 105%<br>
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The first half of the year 2000 was an eventful period in the operations of Össur hf., as attested by the accounts of the company for the period. Össur acquired the US company Flex-Foot, which became a part of the Össur group as of 1 April The operating income of the company amounted to ISK 1,322 million over the first half of the year, as compared to ISK 728 million in the first half of 1999, which represents an increase of 82%. Operating expenses, excluding depreciation, amounted to ISK 1,112 million, and earnings before depreciation (EBIDTA) amounted to ISK 209 million, as compared to ISK 135 million for 1999. This represents an increase of 55% between years, which is in line with the projections of the IPO prospectus of the company of last April.<br>
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R&D costs amounted to ISK 101 million, which represents an increase of 120% between years; this cost, as before, has been charged to the accounts in full. Other operating expenses amounted to ISK 371 million, including, among other things, all sales and marketing costs as well as the cost of closing and moving the US sales office of Össur hf. from Baltimore to California. The proportion of materials cost in the operating income has changed from 31 December 1999, increasing by 2.2 percentage points. This increase is largely a result of the increased proportion of purchased goods with the entry of Flex-Foot into the Össur Group.<br>
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The operating profit of the company before taxes amounted to ISK 186 million, which represents a 58% increase from the preceding year. Financial items are positive by ISK 11 million, but it should be noted that interest costs and exchange rate differences resulting from a bridging loan for the acquisition of Flex-Foot are entered as costs relating to the acquisition of Flex-Foot.<br>
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Income before extraordinary items net of taxes amounted to ISK 137 million, as compared to ISK 78 million in 1999, which represents an increase of 75% from the preceding year. <br>
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Total assets after extraordinary items are negative (loss) by ISK 3,552 million. Also, account has been taken of depreciation by ISK 3,725 million of goodwill relating to the acquisition of Flex-Foot. <br>
Fixed assets increased by ISK 1,093 million over the period, and amounted to ISK 2,381 million. Current assets increased by ISK 759 million, and amounted to ISK 1,234 million at the end of the period. <br>
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The nominal value of shareholders equity was increased through the issue of new share capital in the amount of ISK 65.3 million, nominal value, and issued and paid-in share capital amounts to ISK 277 million at nominal value. Equity amounted to ISK 1,618 million as at 30 June 2000.<br>
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Long term liabilities increased by ISK 1,073 million during the period, and total assets now amount to ISK 3,615 million as at 30 June 2000, which represents an increase of ISK 1,852 million from 31 December 1999.<br>
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Working capital amounted to ISK 241 million as at 30 June, which represents an increase of ISK 144 million from the preceding year. Net cash from operating activities amounted to ISK 12 million, as compared to ISK 98 million in the preceding year. Increase in cash in the first 6 months of the year amounted to ISK 94 million.<br>
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Key Figures<br>
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Financial Indicators 6 months 2000<br>
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Employees 269<br>
Current ratio 1,5<br>
Equity ratio 44,8%<br>
Working capital 242<br>
Net cash from operating activities: 12<br>
No. of shares (million) 277,2<br>
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The current ratio of the company is 1.5, which represents a reduction in the groups equity ratio from 78.6% on 31 December 1999 to 44.8% as a result of depreciation in goodwill. <br>
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The Effect of the Acquisition by Össur hf. of Flex-Foot on the Consolidated Accounts of the Company,<br>
Since the merger of Össur hf. and Flex-Foot, the senior management of the companies has sought means of achieving synergy effects, which have only been marginally felt so far. It was clear from the start that as the development of the marketing system of Flex-Foot in the United States was considerably more advanced, this marketing system would become the mainstay in the two companies marketing efforts. At the end of June, the Össur US sales agency in Maryland was closed and moved to Flex-Foot in California. Nine people were employed at the Maryland office, but three key employees moved to Flex-Foot. In order to expedite the changes, a great deal of time has been spent on training the sales and marketing staff of Flex-Foot in the use and sale of Össur hf. products. The companys sales staff began presenting and selling Össur products to customers about mid-May. <br>
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The prospectus issued in April 2000 assumes depreciation in goodwill of ISK 3,150 million, but this projection has been increased by ISK 575 million from the previous estimate. This increase is explained partly by consultancy costs relating to the acquisition and partly by exchange rate difference. The largest part, i.e. about ISK 221 million, is a result of the capitalisation of an Earn-Out payment, which in all probability will be payable in the next three years, assuming that certain conditions are met in the operation of Flex-Foot. It was regarded as appropriate to enter this amount in the accounts now for reasons of prudence, and in order to show the highest possible acquisition price of the Company. <br>
The exchange rate trends of the Icelandic króna were unfavourable for the company, as the income of the company was entered in the accounts when the króna was strong, but the effects of the weakening of the króna toward the end of the period is fully reflected in the companys balance sheet. <br>
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Prospects in the Operation of the Company<br>
In the prospectus issued in April 2000, the operating profit before depreciation was projected at ISK 69 million for the year. It should be noted that the impact of the merger with Flex-Foot Inc. will be more fully felt in the second half of the year, by which time the operation of Flex-Foot will have formed a part of the group for six months; the management of Össur hf. sees no reason to change its estimate. <br>
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