Interim Report 2, January - June 2002

Interim Report 2, January - June 2002 14 August 2002 Nobel Biocare Holding AG Group - Total sales increased by 11% (11% currency adjusted) to SEK 1 457.8 million. In Q2 2002, sales increased by 7% (11% currency adjusted) to SEK 728.9 million. Sales performance in Q2 was not impacted by any price changes. - Japan continued to experience positive sales trends. Notable improvements were recorded in the second quarter in Germany, Belgium and the Netherlands. - Operating income before non-recurring items increased by 39% to SEK 293.1 million, and Operating income by 13% to SEK 239.7 million. In Q2 2002, Operating income before non-recurring items increased by 31% to SEK 149.5 million. - The profitability improvement program increased the EBITA margin for Dental Implants from 25.5% in the first quarter to 27.3% in the second quarter bringing the margin for the first half of 2002 to 26.4%. The EBIT margin before non-recurring items for the Group increased to 20.1%. - Cash flow from current operations increased by 67% to SEK 348.6 million reducing the net debt to SEK 13.1 million per 30 June 2002. - Earnings per share increased by 17% to SEK 5.71, equivalent to CHF 0.92. - A new Swiss holding structure was established following the successful share exchange offer. The shares of the new Swiss parent company Nobel Biocare Holding AG were listed on the SWX Swiss Exchange and the Stockholm Stock Exchange on 24 June 2002. Nobel Biocare AB's shares were delisted from the Stockholm Stock Exchange on 18 July 2002, when approximately 99% of the shares had been exchanged. SEK M Jan-June Jan-June Change 2002 2001 Net sales 1 457.8 1 309.2 +11.4% of which Dental Implants 1 272.9 1 146.8 +11.0% of which Procera® 184.9 162.4 +13.9% Operating income before non-recurring 293.1 211.4 +38.6% items Operating income (EBIT) 239.7 211.4 +13.3% Net income 143.5 123.5 +16.2% Cash flow from current operations 348.6 208.8 +67.0% Earnings per share, SEK 5.71* 4.87** +17.2% Earnings per share, CHF 0.92* Number of shares 25 133 25 341 290* 224** Number of shares after full dilution 26 357 26 617 318 605 Market value 30 June 14 643 9 300 *) Average number of Nobel Biocare Holding AG/Nobel Biocare AB shares. **) Average number of Nobel Biocare AB shares. The Nobel Biocare Holding AG Group Sales Group Total sales increased by 11.4% to SEK 1 457.8 million (11.1% currency adjusted). In the second quarter sales increased by 7.4% to SEK 728.9 million (10.5% currency adjusted). Sales performance in the second quarter was not impacted by any price changes. Dental Implants Sales increased by 11.0 % to SEK 1 272.9 million, (10.7% currency adjusted). In the second quarter 2002, sales increased by 6.9% to SEK 635.2 million (10.1% currency adjusted). Dental Implants Regional Sales, January-June SEK M 2002 2001 Growth in SEK (in local currency) Europe 558.0 495.9 12.5% / (11.1%) North America 476.8 426.4 11.8% / (10.3%) Asia 139.2 116.0 20.0% / (21.5%) Rest of the World/Gore 98.9 108.5 -8.8% / (-0,8%) Total 1 272.9 1 146.8 11.0% / (10.7%) Dental Implant Regional Sales, April-June SEK M 2002 2001 Growth in SEK (in local currency) Europe 280.0 246.7 13.5% / (13.0%) North America 237.2 222.0 6.8% / (11.0%) Asia 69.0 65.0 6.2% / (9.7%) Rest of the 49.0 60.4 -18.9% / (-8.9%) World/Gore Total 635.2 594.1 6.9% / (10.1%) Currency adjusted sales growth on the main markets, Europe and North America, increased in the second quarter compared to the first quarter of 2002. The new sales strategy to target new customers with Replace Select resulted in significant growth for the brand and more than 1 000 new customers were recruited in the second quarter 2002. The Replace Select system is growing faster than the market due to its user-friendly and versatile approach, which attracts the growing General Practitioner segment of the market. The success of Nobel Biocare's innovative new TiUnite implant surface continued. TiUnite represents 65% and 51% of Brånemark System and Replace implant sales, respectively. The clinical performance of the TiUnite surface has been shown to produce significant improvements in both implant survival and immediate function. Clinical studies of TiUnite performance for immediate function will be published in September 2002. In June, Nobel Biocare was the first company to receive a general FDA approval for immediate loading with the Replace HA coated implants. Sales of Gore membranes are included in the Dental Implant business. The contribution from Gore membrane sales has been soft in the first half of 2002. The new bio-resorbable Gore membrane Resolut Adapt, which was launched in Q2 2002, was well received by the market and is expected to drive growth of this business. Procera Sales increased by 13.9 % to SEK 184.9 million, (12.7% currency adjusted). In the second quarter 2002, sales increased by 10.8% to SEK 93.7 million (13.2% currency adjusted). [REMOVED GRAPHICS] Sales of Procera AllCeram and Procera Scanner showed steady growth trends. Scanner sales improved in the second quarter compared with the first quarter of 2002. Sales of personalized prosthetics for dental implants are growing as the Procera Abutment made of ceramic is gradually being launched. In the second quarter, the new 3D CAD design program was implemented world wide. Operating results Group Operating income before goodwill amortization (EBITA) and non-recurring items increased by 41.4% to SEK 343.1 million (242.6). Operating income before non-recurring items increased by 38.6% to SEK 293.1 million (211.4). Operating income (EBIT) increased by 13.4% to SEK 239.7 million (211.4). The operating margin (EBIT) increased to 16.4% (16.1%) and 20.1% (16.1%) before non-recurring items. Operating expenses amounted to 49.6% (50.5%) of sales in the first half of 2002. Goodwill amortization increased to SEK 50.1 million (31.2) mainly as a result of the Procera Sandvik AB acquisition in December 2001. Depreciation amounted to SEK 48.8 million (40.0). The profitability improvement program, which was announced in October 2001 with the aim of improving the earnings level is developing above plan resulting in an EBITA margin for Dental Implants of 26.4% and an EBIT-margin before non-recurring items for the Group of 20.1%. Operating Results, January-June 2002 % of 2001 % of SEK M sales sales Operating income before goodwill amortization (EBITA) and non- recurring items Dental Implants 336.4 26.4 239.2 20.9 Procera 6.7 3.6 3.4 2.1 Total 343.1 23.5 242.6 18.5 Operating income (EBIT) before non- recurring items Dental Implants 300.0 23.6 208.0 18.1 Procera -6.9 -3.7 3.4 2.1 Total 293.1 20.1 211.4 16.1 Operating Results, April-June 2002 % of 2001 % of SEK M sales sales Operating income before goodwill amortization (EBITA) and non- recurring items Dental Implants 173.6 27.3 129.7 21.9 Procera 0.4 0.4 0.4 0.4 Total 174.0 23.9 130.1 19.2 Operating income (EBIT) before non- recurring items Dental Implants 156.0 24.6 114.0 19.2 Procera -6.5 -6.9 0.4 0.4 Total 149.5 20.5 114.4 16.9 Non-recurring items of SEK -53.4 million, representing the majority of the consulting costs in relation to the establishment of the new Swiss holding structure, were recorded in the second quarter of 2002. Dental Implants Operating income before goodwill amortization (EBITA) and non-recurring items increased by 40.6% to SEK 336.4 million (239.2). Operating income (EBIT) before non-recurring items increased by 44.2% to SEK 300.0 million (208.0). The EBITA margin before non-recurring items improved to 26.4% (20.9%) as a result of the ongoing profitability improvement program with approximately 1.5% being allocated to purchasing and production efficiencies, 1% to sales efficiencies, and 2.5% to lower operating expenses. Procera Operating income before goodwill amortization (EBITA) amounted to SEK 6.7 million (3.4). After goodwill amortization, operating income (EBIT) amounted to SEK -6.9 million (3.4). The EBITA margin increased to 3.6% (2.1%). The integration of Procera in the Nobel Biocare organization was successfully completed in the first half of 2002. A common market and sales organization for Dental Implants and Procera has been established on all markets as well as at Nobel Biocare headquarters. Investments Capital expenditures on fixed assets totaled SEK 48.3 million (55.8), whereof SEK 30.9 million relates to investments in the production facilities. Liquidity and financial position Mainly as a result of decreased working capital, cash flow from current operations increased by 67% to SEK 348.6 million reducing the net debt from SEK 272.0 million to SEK 13.1 million in the first half of 2002. Liquid assets totaled SEK 271.4 million (31/12/2001: SEK 233.8 million). Shareholders' equity per average share decreased to SEK 68.00* (31/12/2001: SEK 76.33**), due to paid dividend and negative translation adjustments mainly as a consequence of the weakened USD. Parent company Since 21 June 2002, Nobel Biocare Holding AG, has been the parent company of the Nobel Biocare Group. The parent company income statement includes consulting costs in relation to the establishment of the new Swiss holding structure. The balance sheet includes the participation in Nobel Biocare AB as the main asset and the corresponding equity. After the successful share exchange offer, the number of shares in Nobel Biocare Holding AG on 30/6/2002 totaled 24,005,242 (31/12/2001 for Nobel Biocare AB: 25,354,900). Following the redemption of all the outstanding warrants and options, the total number of shares will be 26 357 605. A new Swiss holding structure The initiative by the Nobel Biocare AB's Board of Directors to establish a new Swiss holding structure was made in order to support the company's continued efforts to increase profitability, sustain long-term market leadership and create value for the shareholders. The establishment of the new Swiss holding structure was executed through a public share exchange offer to all the shareholders of Nobel Biocare AB involving a 1:1 exchange of shares in Nobel Biocare AB for shares in the new Swiss parent company, Nobel Biocare Holding AG. Following the successful completion of the exchange offer, with approximately 99% acceptance on 9 July 2002, Nobel Biocare AB is now a subsidiary of Nobel Biocare Holding AG. The shares of the new Swiss parent company were listed at the SWX Swiss Exchange in Zurich and at Stockholmsbörsen (the Stockholm Stock Exchange) on 24 June 2002. The change in the legal structure does not change the operations of Nobel Biocare. All current operational headquarter functions, including the research department, will remain in Gothenburg, Sweden. The production centers in Sweden and the United States will not be affected by the new holding structure. As a consequence of the new Swiss holding structure, Nobel Biocare reports its financial statements with footnote reconciliation between Swedish GAAP and IAS from Q2 2002. For the full year 2002, the financial statements for the Nobel Biocare Holding AG Group will be reported under IAS. Status report on disputes As there are no material developments in the disputes earlier reported, nor any new disputes, Nobel Biocare has not changed its assessment of the potential outcome of the ongoing disputes. Outlook for current year The outlook for the rest of 2002 should be viewed in relation to the company strategy established in October 2001. The priorities and objectives for 2002 can be summarized as follows: Increasing the EBITA margin for Dental Implants from 21% (2001) to >24% by the end of 2002 and the EBIT margin for the Group from 16% (2001) to >20% in 2002. Implementation of a new sales strategy targeting a new market segment, i.e. General Practitioners. Preparation and launch of a new, integrated global market concept named Crown & Bridge & Implant, to drive long-term sales growth, which will be launched in Q4 2002 with the aim of transforming Nobel Biocare into a world leading company for Innovative Esthetic Dental Solutions. The full impact of the strategic repositioning and integration of Procera within the Nobel Biocare organization. 14 August, 2002 NOBEL BIOCARE HOLDING AG Heliane Canepa President & CEO Futher information is available from: Harrieth Sundaeus, Chief Financial Officer, tel. +46 31 81 88 48 Gunilla Ekholtz, Investor Relations Officer, tel. +46 31 81 88 36 The Interim Report 3 will be published 23 October 2002. Nobel Biocare is an innovative, medical devices company, whose core business comprises dental implants and dental prosthetics. The company is the world leader in dental implants with its product systems Brånemark System® and Replace(TM). The company's other product line, Procera®, is a unique, IT-based process for the industrial production of dental prosthetics. The system has been launched in more than 35 countries. Nobel Biocare has around 1 300 employees and in 2001 sales totaled SEK 2 663 million. The company's headquarters are located in Gothenburg, Sweden, while production takes place in Sweden and the US. Nobel Biocare has its own sales organizations in 27 countries. www.nobelbiocare.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/14/20020814BIT00190/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/08/14/20020814BIT00190/wkr0002.pdf The Full Report