Interim report from Sectra AB for the period May - October 2001

Interim Report from Sectra AB (publ), for the period May - October 2001 The period in brief (May-October 2000 in parentheses) * Sales increased by 35 % to SEK 144.2 million (106.6). * Profit before tax rose to SEK 15.9 million (9.9), up 61 %. * Earnings per share equaled SEK 0.34 (0.22). * Order bookings amounted to SEK 171.5 million (195.1). The second quarter in brief (August-October 2000 in parentheses) * Sales increased by 62 % to SEK 93.9 million (58.1). * Profit before tax rose to SEK 13.8 million (5.5), up 151%. * Earnings per share equaled SEK 0.30 (0.12). * Order bookings amounted to SEK 77.7 million (109.9) Significant events during the second quarter * Sectra was contracted for digitizing the radiology operations at the Diakonhjemmet Hospital in Oslo and Ängelholm Hospital in Sweden. * Sectra's digital radiology system received top overall rating in an American customer survey. This highly favorable survey result is important for Sectra in its continuing sales. * The first pilot study in clinical environment of Sectra's digital mammography system, Sectra MicroDose Mammographytm, has been initiated at St. Göran Hospital in Stockholm, Sweden. * In cooperation with the Örebro Innovation Center and a group of Swedish radiologists, Sectra formed a teleradiology company, Paxlink AB. The business concept is to receive and read X-ray images from Swedish and Norwegian hospitals where it is hard to manage to read all incoming X-rays due to a shortage of radiologists. * Sectra signed an agreement with its Norwegian partner Kongsberg Defence Communications AS to supply 1,000 Tiger telephones with accessories. This is the largest order received by the company to date for the NATO version of Sectra Tiger®. Significant events after the end of the quarter * Sectra is cooperating with SIX, the leading supplier of financial information in the Nordic region, in the launch of a new mobile financial service based on Sectra's CitySurfer. The new service provide real-time updates of share prices and financial news to financial and stock market participants. Market The market for medical systems is in a strong growth phase and an increasing number of hospitals are choosing to enhance the efficiency of their radiology operations by installing digital systems. The countries that have advanced furthest in the transition to digital radiology systems are Norway, Sweden, the US and Germany. Sectra currently has it's largest share of installations in Scandinavia and the US (via partners), and a project to also cultivate the market in the rest of Western Europe is now under way. Sectra's sales success continued during the quarter, both in Sweden and internationally. New agreements were signed for the digitization of radiology operations at Ängelholms Hospital in Sweden and the Diakonhjemmet Hospital in Oslo, among other institutions. Increased demand was noted in the US, partly as a result of an American customer survey that assigned the highest ranking to Sectra's digital imaging system, which is sold by Philips Medical Systems under its own brand on the North American market. The survey evaluated systems from eight leading suppliers in the US. It is a significant factor for Sectra's sales that the company has, on several occasions, achieved top ranking in international evaluations of systems from leading suppliers. Sectra has formed a teleradiology company, Paxlink AB, in cooperation with Orebro Innovation Center and a group of Swedish radiologists. The business concept is to receive and read X-rays from Swedish and Norwegian hospitals where it is hard to manage to read all incoming X-rays due to a shortage of radiologists. Sectra is a part owner of the new company, whose services increase the benefits customers obtain from digital radiology systems. During the quarter, the first pilot study of Sectra's new digital mammography system, Sectra MicroDose MammographyTM, has been initiated at the St. Göran Hospital in Stockholm. Preliminary tests indicate that Sectra MicroDose MammographyTM deliver high quality images with a five- fold reduction of the radiation dose. The radiation dose is an important consideration for mammography screening. Research institutes in the US will also participate in the early clinical analyses of Sectra's system. Sectra plans to deliver the first series-produced units to mammography departments in Europe during 2002. The market for secure communications systems is characterized by the discernible trend in the defense sector, both in Sweden and international markets, towards increased investment in IT-systems, in parallel with a decline in more traditional defense investments. There is considerable demand for eavesdrop-secure systems and an increased number of inquiries were noted during the quarter as a result of the changed world situation. Sectra signed an agreement with its Norwegian partner Kongsberg Defence Communications AS during the quarter to supply 1,000 Tiger telephones for the NATO market. This is Sectra's largest order to date for the NATO version of Tiger®. The market for wireless information systems is in an early growth phase. Increased mobility among people is driving developments in mobile information services. However, a restrained investment climate was noted during the quarter in those segments that are affected by the economic downturn. As part of Sectra's new development project in the area of aviation communications, the first functional tests in a real airport environment were conducted, with highly satisfactory results. Commercialization of the system may be delayed, however, due to the current trend in the air travel market. Sales and earnings The Group's net sales for the reporting period increased by 35 % to SEK 144.2 M (106.6), of which SEK 93.9 M (58.1) relate to the second quarter. Profit before tax rose to SEK 15.9 M (9.9), which indicates that profit for the second quarter amounted to SEK 13.8 M (5.5). Order bookings during the second quarter amounted to SEK 77.7 M (109.9), bringing total order bookings for the first six months of the fiscal year to SEK 171.5 M (195.1). The reduction in order bookings is believed to be mainly attributable to the postponement of order confirmations due to the temporary uncertainty, and is not regarded as a sign of that the demand is falling off. The chart shows sales during the first six months of the fiscal year, distributed by business area. [REMOVED GRAPHICS] Financial position Sectra's equity ratio at October 31, 2001 was 64.3 % (61.7) and liquidity was a multiple of 3.0 (3.0). Interest-bearing liabilities amounted to SEK 37.3 M (9.9), of which SEK 33.7 M (33.0) pertained to convertible debentures. Investments Investments in the Group during the period amounted to SEK 2.0 M (5.9) and pertained mainly to computer equipment and fixtures and fittings. Personnel The number of employees increased by 23 persons during the second quarter, bringing the total number of employees at October 31, 2001 to 218. Convertible debentures and personnel options In accordance with the decision at Sectra's Annual General Meeting in June, employees of the Sectra Group were offered to subscribe for convertible debentures during the second quarter. Approximately 34 % of the employees signed for convertible debentures in a total nominal amount of SEK 18.1 M. At full conversion, the number of series B shares in Sectra increases to 308,200, corresponding to 0.9 % of the share capital and 0.6 % of the votes. The term of the convertible debentures is from November 1, 2001 to July 1, 2004 and the conversion price is SEK 57.70. The Annual General Meeting in June 2001 also approved the Board's proposal to issue an additional maximum of 80,000 personnel options for the Group's employees in the US. If these personnel options are fully exercised, employees in the Group will acquire shares in the company corresponding to 0.3 % of the share capital and 0.1 % of the votes. Share data Sectra's share capital at October 31, 2001 was SEK 32,760,945 (32,760,945), distributed among 32,760,945 shares. Assuming full conver sion and exercise of issued convertible debentures and personnel options, the number of shares increases to 33,493,645. Outlook Sectra has a strong technology platform that has brought the company major successes in international evaluations involving comparison with its competitors. The products and system solutions developed by Sectra are aimed at markets with a high growth potential. The company's strong position in its domestic market constitutes an excellent platform for continued international expansion. The Board's assessment that Sectra will continue to expand with favorable profitability remains valid. Accounting principles This report was prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20. The accounting principles presented in the 2000/2001 Annual Report are unchanged. Future financial reports Interim report, nine months ended January 31, 2002: March 5, 2002 Preliminary year-end report 2001/02: May 22, 2002 For additional information please contact: Jan-Olof Brüer, President and CEO Phone: +46 13 23 52 09 E-mail: job@sectra.se ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/12/05/20011205BIT00120/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/12/05/20011205BIT00120/bit0002.pdf The full report