Report on the 2000 financial year

@@@@@@@@@@@@@@@@@@@@@@@ Report on the 2000 financial year (Gothenburg, 5 February 2001) The Nobel Biocare Group * Sales increased by 21% to SEK 2,109.5 million (1,738.1). * Dental Implant sales increased by 21% to SEK 1,851.0 million (1,528.4). In the fourth quarter of 2000, Dental Implants grew by 29%. ® * Procera sales increased by 23% to SEK 258.5 million (209.7). Sales of ® Procera AllCeram copings grew by 46% in the fourth quarter and 38% for the whole of 2000. * Operating income amounted to SEK 289.6 million (219.1). Operating income excluding goodwill amortization was SEK 348.7 million (274.1). Currency effects were negative, SEK 16 million. * Earnings per share increased by 48% and amounted to SEK 8.39 (5.66). TiUnite , the new titanium implant surface that was launched in the US and Germany during Q4 2000, accounted for 50% of Brånemark System implant sales in December 2000 on these markets. SEK M 2000 1999 Change Net turnover 2 109.5 1 738.1 +21.4% of which Dental Implants 1 851.0 1 528.4 +21.1% of which Procera® 258.5 209.7 +23.3% Operating income before non-recurring 267.3 228.2 +17.1% items Non-recurring items 22.3 -9.1 Operating income 289.6 219.1 +32.2% Income after net financial items 247.8 184.4 +34.4% Earnings per share, SEK 8.39 5.66 +48.2% Earnings per share excluding goodwill amortization and non-recurring items, 9.85 8.24 +19.5% SEK The Nobel Biocare Group Group sales Nobel Biocare sales increased by 21.4% to SEK 2 109.5 million (1 738.1). Dental Implant sales increased by 21.1% compared with 1999 and reached SEK 1 851.0 million (1 528.4). 2000. The sales growth was particularly strong in the fourth quarter 2000. Sales developed very favorably as a result of the recent years' "breakthrough" in product development, that has resulted in several launches of new and innovative products. ® Sales in Procera totaled SEK 258.5 million, an increase of 23.3% compared with 1999. Scanner sales met the target with 280 scanners. The growth rate ® for Procera AllCeram continued to improve and the yearly running rate in December was above 700,000 copings (500,000 in December 1999). The distribution of Gore tissue regeneration products, which started in June 2000, developed satisfactorily. [REMOVED GRAPHICS]Group results Operating income amounted to SEK 289.6 million (219.1), including the calculated present value of future reimbursements from SPP, SEK 22.3 million. The year-on-year currency impact on operating income was a negative SEK 16 million. [REMOVED GRAPHICS]The operating margin was 13.7% (12.6%). The operating margin has been negatively affected by the large negative currency effect. Excluding the currency effects, the operating margin was 15.0% (12.6%). Excluding non-recurring items, the operating margin was 12.7% (13.1%). [REMOVED GRAPHICS]Operating expenses amounted to 53.4% (55.1%) in 2000. Goodwill amortization amounted to SEK 59.1 million (55.0). Depreciation increased by SEK 6.1 million to SEK 62.5 million. Financial income and expenses, net, were negatively influenced by currency and totaled SEK -41.8 million (-34.7). Income after net financial items amounted to SEK 247.8 million (184.4). Investments Capital expenditures, net, totaled SEK 101.1 million (82.5). Personnel The number of employees at the end of December 2000 was 1 196 (1 140), of whom 379 (357) were employed in Sweden. Liquidity and financial position Liquid assets totaled SEK 164.1 million (31/12/1999: SEK 121.8 million). Operating cash flow was SEK 230.6 million (67.0). Operating cash flow before capital expenditures, net, amounted to SEK 331.7 million (149.5). Net debt totaled SEK 381.7 million (437.5). Net debt decreased by SEK 111.2 million in the fourth quarter as a direct consequence of the limited change of operating capital, turning almost all reported earnings before tax into cash. The equity/assets ratio was 64.2% (31/12/1999: 60.5%). Shareholders' equity per share was SEK 60.24 (31/12/1999: SEK 52.52). The number of shares totaled 25,155,086 (31/12/1999: 24,922,934) after the further redemption of warrants issued in connection with the acquisition of Steri-Oss Inc. Swedish Pension Plan SPP surplus funds The group's share of SPP's surplus is SEK 23.5 million. The amount of the payment reimbursed in September 2000, SEK 4.7 million, and the discounted present value of the future payments have been recorded as a non-recurring item, SEK 22.3 million. Synthetic options Operating income in the first quarter of 2000 was charged with SEK 9.8 million for the redemption of synthetic options held by present and former employees of Nobel Biocare. All the options had been redeemed as of 31 March 2000. Dividend The Board of Directors proposes a dividend for 2000 of SEK 2.40 (SEK 2.00) per share, in line with the company's long-term dividend policy. Annual General Meeting The Annual General Meeting will be held on 20 April 2001 at 5 pm, at the Gothia Towers Hotel, Room Ahlstromer 1, Mässans gata 24, Gothenburg, Sweden. Business Area Dental Implants Dental implants are used permanently to replace missing teeth. A screw- shaped element is installed in the jawbone and functions as a replacement for the natural dental root. The products are offered to dentists for the treatment of all types of missing teeth and are used at around 50,000 clinics in some 50 countries. Nobel Biocare markets dental implants under two brands, Brånemark System® and Steri-Oss®, with a global market share of some 40%. So far,1.4 million patients have been treated. Dental Implant sales The positive global sales trend for dental implants continued. Sales within the business area increased by 21.1% and totaled SEK 1 851.0 million (1 528.4). Excluding distributor sales of Gore products, sales increased by 18.8%. Currency-adjusted sales growth for the business area were 16% in an improving and accelerating trend, above the estimated market growth of 10-12%. The sales growth reached a record high level of 30% in the fourth quarter. Currency adjusted, sales in Europe (excl. the Nordic countries) increased by 19% and were especially strong in Germany, France, Spain and Italy. Sales in the Nordic region increased by 5%. Sweden recovered nicely and experienced stronger growth than the other Nordic countries. In North America, sales increased by 14% which is above market growth. The Asian region grew by 9%. Due to a change of distributors for the Steri-Oss brand in Southeast Asia, the sales growth was moderate in 2000. A positive trend was reported in Japan. Growth was strong in Latin America and increased by 76%. [REMOVED GRAPHICS]With the subsidiary in Brazil and the two newly opened branch offices in Argentina and Chile, Nobel Biocare is now well positioned for future growth in Latin America. Dental Implants experienced a strong sales upturn during the fall of 2000. The success of Replace Select, which was launched late in 1999, accelerated throughout 2000 and is the fastest growing brand on the dental implant market. The position for Brånemark System has radically been strengthened by the introduction of -TiUnite surface to shorten healing time - Stargrip, the effective delivery system and - Streamline with the Multi- unit abutment. Sales accelerated strongly during the second half of 2000 for Brånemark System, which accounts for approximately two-thirds of Nobel Biocare's dental implant sales. TiUnite - a new fixture surface launch TiUnite is a new, unique implant with designed surface properties. TiUnite was successfully launched on Brånemark System implants in the fourth quarter of 2000 in the US and Germany. The response has been very positive and constitutes an important vehicle for competitor conversion. TiUnite accounted Business Area Dental Implants for 50% of Brånemark System implant sales in the US and Germany in December 2000. TiUnite will be rolled out on the remaining markets in January/ February 2001 along with capacity build-up. TheTiUnite titanium surface is an innovation that features an enlarged surface area, which enhances the bone healing process and increases the initial stability. The TiUnite surface will also be launched on Replace implants during the first half of 2001. ® Brånemark System Novum - new fixed teeth in one day ® The launch of Brånemark System Novum, another pioneering product launch, started in November 2000. With this treatment, the patient is offered a permanent tooth reconstruction in one day. The new treatment concept has attracted a great deal of attention and was covered by full-page articles in newspapers like The Times, the Daily Telegraph and the Herald Tribune and has also been shown on several TV channels in the UK and Denmark. Distribution of Gore tissue regeneration products Sales of Gore tissue regeneration products amounted to SEK 35.7 million (June-December 2000). The transfer has been smooth and the Gore distribution business is now well integrated in Nobel Biocare's dental implant business. Shop-on-line Nobel Biocare will start an e-trade pilot test with a new shop-on-line offer to customers in the US and Sweden in February, 2001. This is an extension of the previous version and covers the total dental implant assortment. ® Business Area Procera ® Procera is a CAD-CAM-based process for the industrial production of the inner core, the coping, of dental crowns made of ceramic material or ® titanium. A Procera AllCeram crown has superior strength and esthetic properties, as well as a significantly lower material cost, compared with conventional dental crowns. So far, more than 600,000 patients have been ® treated with Procera . The product system is marketed to dental ® laboratories, which invest in computer-aided equipment from Procera . A ® production file is sent by modem to a Procera production unit, where the coping is produced industrially and then shipped to the dental laboratory. After applying the porcelain, the dental laboratory delivers the crown to the dentist. Procera Sales ® Sales in Procera totaled SEK 258.5 million (209.7) and increased by 23.3% ® compared with 1999. Procera AllCeram sales grew by 42%. Operating income ® continued to improve faster than sales. [REMOVED GRAPHICS]Procera has further strengthened its position in the single-crown segment and is gaining market share on all its markets. The compe-titive situation within the CAD/CAM segment did not change in 2000, further strengthening the ® first mover advantage for Procera . ® The isolated volume growth for Procera AllCeram in the fourth quarter 2000 was 46%, with the US, accounting for 70% of the total volume, growing by more ® than 50%. The volume increase for Procera AllCeram was 38% compared with 1999. Prices remained stable. The yearly running rate of copings in December 2000 was well above 700,000 copings compared to 500,000 in December 1999. Sales of scanners were strong during the fourth quarter, reaching a total volume of 280 scanners for the whole of 2000, which is slightly above 1999 ® volume. Procera was successfully introduced in Brazil and Japan in 2000. In all, more than 1 050 scanners have now been installed in some 30 countries. Eleven new countries were added in 2000. New customers are an important volume driver for coping growth. Close to 40% of the total volume growth comes from customers who started working with Procera in 2000. ® Procera AllCeram Laminates for esthetic dentistry were launched in ® September 2000, thereby extending the customer proposition to Procera ® Network laboratories and increasing the attractiveness of Procera . The production cost per coping continues to decrease as a result of increased volumes and the introduction of new production technology. The improvements are being achieved at both the US and the Swedish production units. In 2001, the Procera product line will be extended to include two new ® ceramic copings - Procera AllZirkon, made of zirconia that is the ® strongest ceramic material in the market, and Procera AllCeram esthetic, a thin coping for esthetically challenging single-crown restorations. Consolidated Income Statement SEK M Full year Full year 2000 % 1999 % Net turnover 2 109.5 100.0 1 738.1 100.0 Cost of goods sold -639.0 -30.3% -472.1-27.2% Gross income 1 470.5 69.7% 1 266.0 72.8% R&D, sales and administration expenses -1 200.8 -56.9% -1 040.1-59.8% Other operating income and operating -2.4 0.1% 2.3 0.1% expenses - net Non-recurring items 22.3 1.0% -9.1 0.5% Operating income 289.6 13.7% 219.1 12.6% Financial income and expenses - net -41.8 2.0% -34.7 -2.0% Income after financial income and 247.8 11.7% 184.4 10.6% expenses Taxes -36.7 -1.7% -43.2 -2.5% Income after taxes 211.1 10.0% 141.2 8.1% Consolidated Balance Sheet SEK M 31/12/00 31/12/99 Assets Intangible fixed assets 1 055.3 1 056.4 Tangible fixed assets 212.8 171.9 Financial fixed assets 54.7 35.6 Total fixed assets 1 322.8 1 263.9 Inventories 296.8 255.8 Current receivables 576.9 521.9 Financial current assets 164.1 121.8 Total current assets 1 037.8 899.5 TOTAL ASSETS 2 360.6 2 163.4 Equity 1 515.3 1 309.0 Allocations 17.1 32.7 Long-term liabilities 504.7 455.8 Current liabilities 323.5 365.9 TOTAL EQUITY AND LIABILITIES 2 360.6 2 163.4 Cash Flow SEK M Full year Full year 2000 1999 Funds provided internally 296.7 199.9 Change in operating capital etc. -47.0 -192.2 Net investments -94.3 -85.0 Change in interest-bearing liabilities -63.0 114.5 Dividends -50.1 -42.3 Net cash flow 42.3 -5.1 The Nobel Biocare Group - Quarterly Review SEK M 4/20003/2000 2/2000 1/20004/1999 3/1999 Net sales 634.8 475.6 521.0 478.1 495.9 382.1 Operating expenses -495.4-423.3 -445.4 -418.6-401.2 -335.9 Operating income excluding 139.4 52.3 75.6 59.5 94.7 46.2 non-recurring items and amortization of goodwill Amortization of goodwill -15.7 -14.9 -14.7 -14.2 -13.9 -14.9 Operating income excl. non- 123.7 37.4 60.9 45.3 80.8 31.3 recurring items Non-recurring items - - 22.3 - -9.1 - Operating income 123.7 37.4 83.2 45.3 71.7 31.3 Summary of Operations SEK M Full year Full year 2000 1999 Net sales 2 109.5 1 738.1 Operating income 289.6 219.1 Operating margin excluding goodwill amortization 16.5% 15.8% Operating margin 13.7% 12.6% Income after financial income and expenses 247.8 184.4 Return on average capital employed 14.7% 12.4% Return on average equity 15.2% 11.3% Equity/assets ratio 64.2% 60.5% Earnings per share excl. goodwill amortization, 10.74 7.87 SEK Earnings per share, SEK 8.39 5.66 Balance sheet total 2 360.6 2 163.4 Equity 1 515.3 1 309.0 Net investment 101.1 82.5 Equity per share, SEK 60.24 52.52 Number of shares 25 155 086 24 922 934 Number of employees 1 196 1 140 Key figures, excluding non-recurring items Operating income 267.3 228.2 Operating margin excluding goodwill amortization 15.5% 16.3% Operating margin 12.7% 13.1% Income after financial income and expenses 225.5 193.5 Return on average capital employed 13.6% 12.9% Return on average equity 13.6% 12.1% Earnings per share excl. goodwill amortization, 9.85 8.24 SEK Earnings per share, SEK 7.50 6.03 Gothenburg, 5 February 2001 NOBEL BIOCARE AB (publ.) Board of Directors Further information is available from: Jack Forsgren, President & CEO, telephone +46 31 81 88 58, and Mikael Kromli, CFO, telephone +46 31 81 89 80. Publishing dates for financial information in 2001 Annual Report 2000 (Swedish)April 2 Interim Report 1 April 20 Interim Report 2 August 14 Interim Report 3 October 23 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/05/20010205BIT00350/bit0001.doc http://www.bit.se/bitonline/2001/02/05/20010205BIT00350/bit0002.pdf