Interim Report January 1st - June 30th, 2001

Interim Report January 1st - June 30th, 2001 Second quarter 2001 · Earnings after financial items, adjusted for surplus funds from SPP, increased by 27 % to 71MSEK. · Order intake increased by 17 %. · Net sales increased by 26 %. · The Acquisition of Brown & Sharpe proceeds according to plan. The First six months 2001 · Earnings after financial items, adjusted for surplus funds from SPP, increased by 23 % to 127 MSEK. · Order intake increased by 5 %. · Net sales increased by 10 %. · For further information, please call: Ola Rollén, CEO, Hexagon AB, tel. no +46 (0) 8 - 601 26 20 Håkan Halén, CFO, Hexagon AB, tel. no +46 (0) 8 - 601 26 20 Subscription to Hexagons financial information is available as e-mail at www.hexagon.se. Hexagon AB (publ), registration number Tel +46 (0) 8 - 601 26 20 556190-4771 Box 1112 Fax +46 (0) 8 - 601 26 21 S - 131 26 Nacka Strand, Sweden www.hexagon.se E-mail postmaster@hexagon.se Hexagon is a multinational engineering group with the long-term ambition of positioning itself as number one or number two within its strategic sectors. The operation is divided into four business areas. The group's targets are to increase earnings per share after tax by at least 15 per cent p.a., and achieve a return on capital employed of more than 15 per cent over the business cycle. Second quarter 2001 Earnings after financial items amounted 71 MSEK (122). Adjusted for surplus funds from SPP, earnings increased by 27 % to 71 MSEK (56). Net sales rose by 26 % and amounted to 1 628 MSEK (1 289). The order intake increased by 17 % and amounted to 1 578 MSEK (1 343). As Hexagon, during the last 12 months, has drastically changed its group structure, the figures are not totally comparable between years. In this interim report the comparability is affected by the disposal of AKA, Fagerberg and Norfoods, and the acquisitions of the Berendsen´s hydraulics operations in the Nordic countries as well as Brown & Sharpe´s global metrology operation. Quarterly figures 2000 2001 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Order intake 1 292 1 343 1 184 1 395 1 177 1 578 Net sales 1 210 1 289 1 184 1 416 1 125 1 628 Earnings after 47 122 61 -7 56 71 financial items Operating margin* 4,4 % 5,0 % 3,6 % 4,1 % 4,2 % 5,1 % *= Adjusted for capital gains an non-recurring items First half-year 2001 - Earnings, invoiced sales and order intake Earnings after financial items amounted to 127 MSEK (169). A capital gain of 20 MSEK is included in the earnings for 2001 derived from the sale of AKA and Fagerberg. Year 2000 included surplus funds from SPP of 66 MSEK. Adjusted for the SPP funds the group earnings increased by 23 % to 127 MSEK (103). The operating margin, excluding non-recurring items, was 5,4 % (4,8). Net sales increased by 10 % and amounted to 2 753 MSEK (2 499). The order intake increased by 5 % from 2 635 MSEK to 2 755 MSEK. Profitability The Return on shareholder's equity was 9,8 % (8,3 excluding SPP-funds/ 14,0 including SPP-funds) and the return on capital employed was 11,2 % (9,9/15,0). Group financial position In connection with the acquisition of Brown & Sharpe the group has been refinanced through a five-year 255 MUSD loan agreement. The new loan agreement, signed on June 13th, which replaces previous facilities, gives the group a financial base for future expansion of the it's businesses. The shareholder's equity amounted to 1 713 MSEK (1 648). The equity ratio decreased primarily because of the acquisition of Brown & Sharpe to 27,6 % (44,3) and is thereby within the frames set by Hexagon. Cash including non-utilised credit limits amounted to 1 058 MSEK (973). The net debt amounted to 2 296 MSEK (938) and the net indebtedness to 1,34 times (0,57). The increase is principally explained by the acquisition of Brown & Sharpe. Interest coverage ratio amounted to 4,0 times (7,9). Investments Investments in fixed assets, excluding acquisitions, amounted to 93 MSEK (87) and sales of fixed assets has been recorded by 4 MSEK (6). Depreciation amounted to 95 MSEK (99). Acquisitions and divestitures The Acquisition of Brown & Sharpe is consolidated as of May 1st, 2001. The cost for the acquisition, including expenses, amounted to 1,7 GSEK and resulted in a, primarily tax deductible, goodwill of 0,7 GSEK. Brown & Sharpe had a turnover of approx. 285 MUSD in the year 2000. In addition to the acquisition of Brown & Sharpe, the following acquisitions and divestitures have been performed during the year. - AKA Industriprodukter and Gustaf Fagerberg have been divested with effect as from January 1st, 2001. The companies had an annual turnover of approx. 950 MSEK. - Johnson Metal Bearing Components has been divested with effect as from January 1st, 2001. The company had an annual turnover of approx. 150 MSEK. - The Transmission business in Denmark has been sold with closing on September 1st, 2001. The operation has an annual turnover of approx. 28 MDKK. - The Assets related to the agency of Brown & Sharpe and Renishaw have been acquired from Mikromess AB with closing on September 1st, 2001. The operation has an annual turnover of approx. 30 MSEK. Cash flow The Cash flow from operations before changes in working capital was 161 MSEK (168 excluding SPP-funds/234 including SPP-funds), which corresponds to 10,88 SEK per share (11,36/15,84). The operative cash flow amounted to -44 MSEK (-30/36). Group Tax rate Hexagons´ tax rate deviates from the Swedish rate of 28 % as a considerable part of the business is located abroad, and a part of the depreciation of goodwill is non-deductible. Workforce The Average number of employees during the first half-year was 4 370. For the calendar year 2000 the numbers was 4 078. Because of the acquisition of Brown & Sharpe and the sale of AKA and Fagerberg the number of employees has increased by 1 378 and was at the end of the period 5 983. Business areas Hexagon Automation The Business area is focused on hydraulics, gear- and electric motors, pneumatics, transmissions and automatic controls. The customers are found within a great variety of industries, for example, the wind power industry, offshore, pulp and paper industry, process industry, engineering and vehicle industry as well as flow equipment. Net sales within the business area amounted to 1 081 MSEK (448). Order intake increased to 1 101 MSEK (1 038). Operating earnings rose and amounted to 42 MSEK (17). The Improvement in the earnings is principally explained by the hydraulics operation that was acquired from Berendsen, but also by a positive development within most of the other subsidiaries. Hexagon Engineering The Business area is focused at selling advanced components and systems to customers within the vehicle-and engineering industry. Net sales within the business area amounted to 1 143 MSEK (1 121) and the order intake was 1 121 MSEK (1 076). Operating earnings fell to 76 MSEK (80). The lower earnings attributable to the weakening of the business climate which currently affects the business area's customers, pressure from the customers in prices, and increased raw material prices, which not yet has been possible to compensates for. Hexagon Wireless The Business area manufactures antennas for mobile phones and develops antenna solutions within wireless short wave communication (so called Bluetooth). Net sales within the business area fell to 48 MSEK (106) and the order intake was 40 MSEK (111). Operating earnings deteriorated to -24 MSEK (- 2). The fall in net sales as well as earnings is principally explained by Moteco´s principal customer's high stock levels of components for existing telephones, and that the introduction of new articles planned for 2001, has been delayed. During the first half-year Moteco has received several new orders from Asian manufacturers of mobile phones. Deliveries start to these new customers successively during the remaining part of the year. The relocation of the production from Sweden to Kina and Malaysia is completed and the effect is visible already in the result for the second quarter. After having achieved the same net sales level of 24 MSEK in both quarters of 2001, the loss within Moteco decreased from -10 MSEK in the first quarter to -2 MSEK for the second quarter. The Investment in gigaAnt AB, geared to antenna solutions for Bluetooth, is proceeding according to plan and charges the result of the business area by -12 MSEK (-5). GigaAnt´s loss rate expected be significantly lower during the second half of 2001. The Invoiced Sales amounted to 2 MSEK (0). Hexagon Metrology The Business area includes the new acquisition of Brown & Sharpe, that is world leader in metrology. It produces coordinate measurement machines (CMM: s) and hand tools at 7 plants all over the world. Extensive aftermarket services are fulfilled by 20 regional so called Precision Centres with responsibility for upgrade of machines and software, education, contracted maintenance and other services. The largest customers are found in the Automotive-, Aerospace-, electronics- , medicine- and engineering industries. The Business area recorded net sales of 493 MSEK (-) during the period (two months). The order intake was 493 MSEK (-). Operating earnings amounted to 43 MSEK (-). The order intake and net sales have been affected by the economic down turn in North America. Europe has begun to notice a weakening business climate, whilst Asia grows considerably. During the quarter the profitable aftermarket has grown both in Europe and the USA, and as a consequence, the result for the period was satisfactory. Affiliated companies The Affiliated Company VBG AB contributes to Hexagons earnings in accordance with the equity method with 3 MSEK (15). During the second quarter Hexagon consolidated a loss of -2 MSEK. VBG has during the year been negatively affected by the worsening trade conditions within the heavy vehicle industry. Share data The Total number of shares outstanding was 14 793 182, which is unchanged compared with last year. Earnings per share after tax were 5,61 SEK (4,53 excluding SPP-funds/7,77 including SPP-funds). Equity per share was 115,80 SEK (108,16/111,40) and the share price was 148 SEK (123). Parent company The parent company's earnings after financial items were 64 MSEK (-9). The main reason for the increase in earnings is capital gains as well as dividends from affiliated companies. The equity ratio in the parent company was 34 % (47). The shareholder's equity including the capital proportion of untaxed reserves amounted to 1 379 MSEK (1 147). Liquid assets, including unutilised credit limits amounted to 701 MSEK (786). The corresponding figure at December 31st, 2000 was 923 MSEK. Accounting principles This interim report has been prepared in compliance with the Swedish Financial Accounting Standards Council's recommendation RR20. Subscription warrants During 2000 Hexagon introduced a warrants programme. The motivation was to facilitate for key personnel in the Group to become shareholders in the company. There are in total 700 000 warrants whereof 532 000 have been subscribed. Each warrant entitles the holder to subscribe to one new share of class B during the period from June 1st, 2002 to and including May 31st, 2005 for 201 SEK. The warrant rights are transferred at market value. The dilution effect on full utilisation corresponds to approx. 4,7 per cent of the share capital and 3,1 per cent of the votes. A calculation of any dilutions effect in key numbers hasn't been done as the effect is judged to be marginal. Forecast for fiscal 2001 As commented in the annual report for 2000, as well as in the report for the first quarter of 2001, Hexagon is adversely affected by the economic down turn. Our previous view that the economy would gain speed at the end of 2001 seems today unlikely. We therefore believe that Hexagon will post a result at the same level as in 2000. Annual General Meeting At this year's Annual General Meeting the dividend was set at 5 SEK per share. The Annual General Meeting further approved the sale of the Norwegian company Johnson Metal Bearing Components A/S to its managing director. Financial information On the Group's web site, www.hexagon.se, all external information is published as soon as it has become public. The following reporting events apply for 2001: - Interim report quarter 3; 30th October 2001 Nacka Strand, 6th of August, 2001 HEXAGON AB (publ) Ola Rollén C.E.O and President This interim report has not been audited by the Company's auditors. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/06/20010806BIT00490/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/06/20010806BIT00490/bit0001.pdf The full report