Micronic Group 1998 Year-end release

Micronic Group 1998 Year-end release st st For period January 1 - December 31 1998 *Net sales increased by 4 per cent to MSEK 268 (259). 13 systems were delivered in 1998, the same number as in 1997. *Profit after financial items declined by MSEK 14 to MSEK 43 (57). *Earnings per share after full tax declined to SEK 2.13 (3.18). *At the close the company's order book amounted to MSEK 117 (219), all of which is expected to be invoiced during 1999. *The number of employees increased by 36 to 151 at the end of the year. *The planned flotation of the company may take place when the market situation has improved. *A fully subscribed rights issue generated proceeds of MSEK 76 before issue costs. Important events in 1998 Micronic's Asian markets retained their dominant position in 1998, and accounted for approximately 89 per cent of total sales. However, the economic crisis in Asia had an adverse effect on the order intake, which was 46 per cent down on 1997. Even though customers in the countries of most importance to Micronic, namely Korea, Japan and Taiwan, postponed their investment decisions, Micronic retained its market position, despite the lower order intake. In 1998, Micronic delivered 13 systems, which is the same as in 1997, and st orders were received for 6 more. By December 31 , a total of 46 Micronic systems had been installed around the world. During the year a preliminary study was made into a new photomasking technique, as a result of which a development agreement was signed with an international research institute. A rights issue involving the issue of 2,000,083 shares was carried out via D. Carnegie & Co AB, as a result of which the company received proceeds of st MSEK 76 before issue costs. On December 31 the company had some 185 shareholders. Micronic's distributor in Japan, Hakuto Co, acquired a 5 per cent holding in the company. The company extended its premises by adding 4 new clean rooms to enable it to cope with its growing need of space for development of semiconductor writers, and training and demonstration activities. There are now 10 clean rooms for the production and development of Micronic's products. The organisation was expanded by 36, mainly in the technical departments. st By December 31 , the number of personnel amounted to 151. The service organisation was further enlarged in Japan, Taiwan and the USA. The number of employees in these countries was more than doubled - by 7 to 12. Customer service is now developing into an important part of our business also in terms of turnover. On a global basis, the number of per- manent service contracts increased from 7 to 15, and these accounted for 7 per cent of the company's turnover in 1998. Markets The financial turmoil in Asia continued through-out 1998, resulting in serious delays to the order intake and sales. Now, however, there is much to indicate that this market region is back on a favourable long-term development track. In the closing months of 1998, 2 new orders were booked. The economic situation in Asia caused orders to be postponed in all market segments. Micronic is currently the dominating supplier of shadow mask writers. Shadow masks are used in the cathode ray tubes of TV sets and computer screens. In 1998, Micronic delivered 2 systems and upgraded 5 previously installed systems. The market for shadow mask writers is more or less saturated, but the demand for colour screens for PCs is expected to grow and early models are replaced by new ones of higher quality and with a larger sized screen. This can lead to sustained demand for shadow mask writers. Flat-screen displays are used in laptop computers, mobile phones, video cameras and information screens. The dominant technique for laptop com- puters is the TFT-LCD display. Micronic shares the market for laser writers for this segment with a small number of European and Asian companies. Micronic is the leading manufacturer of laser writers for full- size photomasks. In 1998, Micronic delivered 4 systems for the production of TFT masks and colour filters. In September, a new size of laser writer was installed for the production of plasma displays (PDPs). The machine writes the world's largest masks for the manufacture of "TVs on the wall", with a 70" picture diagonal. Micronic's sales of laser writers for the production of photomasks for flat screen displays are now just as important as sales of laser writers for the manufacture of photomasks for the production of shadow masks. In the spring of 1998, Micronic delivered the first 3 systems based on the new platform for the semiconductor reticles. The systems more than satisfy the performance goals. Semiconductor components constitute the cornerstone of all modern electronics and can be found in everything from mobile phones to cars and computers. The semiconductor market is of interest to Micronic, by virtue of its size and long-term growth potential, which is forecast to be very strong. There is intense competition on this tech- nically advanced market. The market for the laser writers that produce the photomasks used in packaging of semiconductor circuits is Micronic's smallest segment. The company delivered 3 systems during the year. Packaging includes techniques for bonding the semiconductor components to the circuit board, and a variety of types of semiconductor carrier. Competition within the packaging segment is intense and it is currently a low-price, low- specification segment. Orders and sales Net sales amounted to MSEK 268 (259), an increase of 4 per cent. In 1998, new orders were booked for 6 (17) systems. The dominant markets are Japan, South East Asia and the USA. Important orders were received from all markets. The year closed with 2 orders having a combined value of MSEK 64. Sales are for the most part in US dollars. Micronic endeavours to limit the effects of currency fluctuations by regularly hedging its currency flows. The strength of the US dollar boosted sales and earnings for the period by 6 per cent. The closing order book, which was worth MSEK 117 (219), included 3 systems. The translation into SEK is based on the closing exchange rate of 8.04 SEK/USD. Operating costs During the year the company concentrated on developing its sales, service and R & D. Development efforts were focused on a new platform within the semiconductor segment and a computer system for the handling of complex pattern geometries. The focus of our customer support and service was sharpened, to improve service to our current and prospective customers. At an international level, the company's organisation was enlarged in Japan, Taiwan and the USA. Operating costs, excluding depreciation and items disturbing comparability, amounted to MSEK 225 (214), an increase of 5 per cent. This is related to the above-mentioned development programmes. Results The operating profit after financial items amounted to MSEK 42.8 (56.5). The operating margin was 16 per cent. Cost of items of MSEK 19 disturbing comparability were charged against the result for 1997. Profit after full tax declined by 22 per cent. Earnings per share In 1998 the company carried out a 6 for 1 rights issue of 2,000,083 shares. The number of shares in issue, including options (720,000), amounts to 14,720,583 after full dilution. Each share has a par value of SEK 1. Earnings per share after full tax and full dilution amounted to SEK 2.13 (3.18). Capital expenditure Net capital expenditure during the period amounted to MSEK 16 (36), of which MSEK 11 relates to expansion of the company's premises to increase development and production capacity. Liquidity and financial position The company's financial position is good. Closing liquid funds amounted to MSEK 150 (52). The company's net liquid funds amounted to MSEK 101 and the equity ratio was 66 per cent (49). Future outlook Strong growth is forecast for what are expected to be Micronic's main markets (flat panel displays and semiconductors). The company has decided to intensify its research and development programmes even if the order intake remains weak during the coming year, which could adversely affect the operating result. The role of Micronic's enlarged service organisation is to improve service and customer support and to serve as a base for continued expansion. Micronic's order intake, sales and profits vary, mainly due to fluctuations in the underlying demand for consumer electronics products, and technical developments in the electronics industry. The financial turmoil in Asia caused some delay in orders and consequently in invoicing. The future level of sales will also depend on developments in Asia. The planned flotation of the company may take place when the market situation has improved. Annual General Meeting The Annual General Meeting will be held at 5.00 pm on May 6, 1999 at the Täby Park Hotel in Täby, Stockholm. Financial information Annual report 1998April 1999 Interim report January-June 1999 August 1999 th Täby, March 16 1999 Micronic Laser Systems AB (publ.) Staffan Junel, President and CEO For further information contact: Staffan Junel, president. Telephone: +46-8-638 52 00. e-mail: staffan.junel@micronic.se PROFIT AND LOSS ACCOUNTS MSEK GROUP PARENT COMPANY 1998 1997 1998 1997 Net sales 268.4 258.9 263.0 257.0 Change in work in progress and 5.7 30.6 5.6 30.6 finished goods inventory Other operating income 1.5 3.7 0.9 3.7 Operating costs, -231.7 -236.8 - -236.3 including depreciation 229.7 Operating profit 43.9 56.4 39.8 55.0 Profit/loss from -1.1 0.1 -1.0 0.1 financial investments Profit after financial items 42.8 56.5 38.8 55.1 Appropriations - - -7.8 -13.4 Tax -11.5 -16.4 -8.8 -12.2 Net profit for the year 31.3 40.1 22.2 29.5 BALANCE SHEETS MSEK ASSETS Fixed assets 60.3 51.1 67.0 51.6 Current assets Inventories 60.2 49.2 56.0 49.2 Current receivables 24.6 27.5 22.4 27.7 Liquid funds 149.6 52.3 145.9 50.0 Total current assets 234.4 129.0 224.3 126.9 Total assets 294.7 180.1 291.3 178.5 EQUITY AND LIABILITIES Equity Restricted equity 113.3 33.9 90.4 13.7 Non-restricted equity 80.1 54.9 75.5 54.0 Total equity 193.4 88.8 165.9 67.7 Untaxed reserves - - 35.9 28.1 Provisions 10.4 7.9 0.0 0.0 Long-term interest-bearing 47.7 24.5 47.7 24.5 liabilities Other liabilities 43.2 58.9 41.8 58.2 Total liabilities 101.3 91.3 89.5 82.7 Total equity and liabilities 294.7 180.1 291.3 178.5 KEY FIGURES Operating margin 16% 22% 15% 21% Liquid ratio * 59% 44% 58% 44% Net liquid funds, MSEK** 100.7 27.5 97.0 25.2 Equity ratio 66% 49% 66% 49% Equity, MSEK*** 193 89 192 88 No. of shares, x 1,000**** 14,721 12,601 14,72 12,601 1 Equity/share, SEK***** 13.14 7.05 13.03 6.98 Earnings/share, SEK ****** 2.13 31.8 1.51 2.34 Average no. of employees 140 103 128 99 Capital expenditure - Property 9.6 10.0 9.6 10.0 - Machinery and equipment 6.6 12.2 6.6 12.2 * ) Sum of current receivables and liquid funds as % of balance sheet total. **) Liquid funds less interest-bearing liabilities. ***) Equity including 72% of untaxed reserves. ****) Including options granted to employees and key partners, of which 19,000 have not been allotted. *****) All outstanding options have been taken into account in the calculation. ******) Earnings per share: based on the result after full tax. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/05/20000706BIT00560/bit0001.doc http://www.bit.se/bitonline/1999/04/05/20000706BIT00560/bit0002.pdf