Interim report, january - june 2001

Studsvik AB - Interim Report, January - June 2001 * Studsvik was listed on Stockholmsbörsen's (Stockholm stock exchange) O list on May 4. * In March 2001, SEK 320.5 million was injected into Studsvik through a directed share issue in combination with an unconditional shareholders' contribution. * The result after net financial items for the second quarter was SEK -28.0 million (84.9) and, for the period of January-June, SEK -64.1 million (103.0). Non-recurring items have had a material impact on the result for the second quarter. * Technical adjustments continued to be made to the Erwin facility and a considerable improvement in production was thereby achieved. * An agreement was signed to acquire a decommissioning business in Germany. This will have a positive impact on margins already this year. * A rationalization program has been launched and is expected to result in sustainable savings on the order of SEK >15 million per year, starting in 2002. * During the second quarter, 6 patients were treated at Studsvik's BNCT facility where brain tumors are treated by neutron irradiation. Business During the second quarter, the nuclear power industry started their annual refuelling and maintenance outages. However, in both Sweden and Germany, the outages started later, compared with the previous year. This is expected to have a positive impact on the third quarter. Orders received by the Group amounted to SEK 257 million during the second quarter, which is an increase of 32 %, compared with the first quarter and 55 % , compared with the second quarter of 2000. An extensive rationalization and change program has been launched. The exact cost of the program cannot yet be determined and has therefore not yet been reported as an expense. However, the cost is estimated at about SEK 20 million. The measures are expected to result in sustainable savings on the order of SEK >15 million, as of 2002. The program will involve downsizing and negotiations have started with the trade unions. The arbitration process, where Studsvik is suing Metric Duke, the supplier of the waste management facility in Erwin, USA for damages, is expected to be resolved at the end of the year. Non-recurring costs amounting to a total of SEK 21.1 million have been charged to the result for the quarter. The amount includes expenses for the arbitration process in the USA (11.1), consultants' expenses for the restructuring program (4.5), the winding up of the business in Studsvik Instrumentteknik AB (0.2) and the expenses for Studsvik's listing on Stockholmsbörsen (5.3). In June, an agreement was signed to acquire the business in Baumann Nuklear Service GmbH in Germany and ownership was transferred to Studsvik on July 1. The acquisition will improve net sales for the Group in the second half of the year by about SEK 25 million and will enhance the Group's financial performance already this year. The performance of Studsvik's four SBUs during the second quarter of 2001 is described below. Nuclear Technology Work on quality assurance for the fuel testing project for Japanese customers is progressing as planned. The production capacity for silicon doping (semi-conductors) was fully utilized. Capacity utilization in the consulting business within reactor technology, environmental technology and other nuclear technology (EcoSafe) has been high with a sizeable and even order inflow. The SBU's operating profit before amortization of goodwill amounted to SEK 2.4 million (3.8) for the second quarter and to SEK -4.3 million (11.6) for the period of January-June. Waste & Decommissioning The business in Studsvik RadWaste AB developed well during the quarter. Sales for the period of January-June were 6 % higher than the previous year and the operating result improved by just over SEK 6 million. Production figures have improved at the facility for the destruction of ion-exchange resins in Erwin, USA. The trend continued after the balance sheet date. In July, production figures reached 4,160 ft3, the highest figure for any single month. The average price has increased and, during the second quarter, was USD 351, a 29 % increase compared with the same period the previous year. Adjusted for legal and expert advisory expenses relating to the arbitration process, the cash flow from operating activities was largely at break-even level during the second quarter. The operating result before amortization of goodwill for the SBU for the second quarter was SEK -19.1 million (-9.0) and for the period of January-June, SEK -32.2 million (-7.3). Industrial Services The SBU is maintaining its strong position on the nuclear power market in Sweden. In Germany, the SBU has consolidated its market position through the launch of BoleroTM, a robot used for mechanical decontamination of concrete structures. The operating result of the SBU before amortization of goodwill amounted to SEK 6.6 million (13.1) for the second quarter and, for the period of January-June, SEK 8.6 million (14.3). Nuclear Medicine At the BNCT facility at Studsvik, where brain tumors are treated by neutron irradiation, 6 patients were treated during the second quarter of the year. At the beginning of next year, at the earliest, can a conclusion, on the basis of scientific evidence, be presented about the medical effects of the treatment. Nevertheless, so far, it can be said that the treatment is contributing to an increased quality of life for the patients. The SBU's operating result before amortization of goodwill amounted to SEK -0.4 million (0.2) for the second quarter and to SEK -0.3 million (0.5) for the period of January-June. Net Sales Net sales for the Group for the second quarter amounted to SEK 211.6 million (224.8) and for the period of January-June, SEK 408.5 million (407.8). Result The result for the Group is analyzed below. April- April- Jan-June Jan-June June June 2001 2000 2001 2000 Operating result -27.0 87.9 -59.0 106.6 Non-recurring items 21.1 -93.0 31.6 -110.7 Adjusted operating result -5.9 -5.1 -27.4 -4.1 Amortization of goodwill 2.5 2.5 5.0 4.6 Adjusted result before -3.4 -2.6 -22.4 0.5 amortization of goodwill Non-recurring items for the period of January-June include the following SEK 15.9 million (4.9) in expenses for the arbitration process in the USA, SEK 4.5 million in consultants' expenses for the rationalization program in Sweden, SEK 5.9 million in winding-up expenses for Studsvik Instrumentteknik AB, SEK 5.3 million in expenses relating to the initial public offering and an SEK 0 million (115.6) refund from the SPP pension insurance company. The Erwin facility started production on April 1, 2000 and therefore only the second quarter is included in the 6-month interim result for 2000. Financial Position and Liquidity At June 30, liquid assets amounted to SEK 305.6 million (70.3) and the equity-assets ratio was 45.9 (32.3) %. Interest-bearing liabilities amounted to SEK 340.2 million (257.4). At the end of the period, Group equity amounted to SEK 632.9 million (413.0). During the second quarter, investments in tangible fixed assets amounted to SEK 13.3 million (223.3) and during the first half of the year to SEK 30.6 million (266.0). Fuel for the R2 reactor is included with SEK 0.3 million (23.5) and SEK 6.3 million (28.2), respectively. Cash Flow For the period of January-June, cash flow from operating activities after investment was SEK -62.7 million (-124.7). Personnel The average number of employees during the first half of the year amounted to 1,174 (1,218). Parent Company In the second quarter, net sales for the parent company amounted to SEK 4.0 million (4.4) and during the first half of the year, to SEK 8.7 million (9.4). Result after financial items amounted to SEK -8.5 million (6.8) and SEK 6.2 million (4.8). At June 30, liquid assets amounted to SEK 287.3 million (0.0). Investments during the second quarter amounted to SEK 0.2 million (0.3). Ownership Structure On June 29, 2001, the number of shareholders was 7,215. The shareholdings of the ten largest shareholders corresponded to just over 60 % of the shares. The shares were held by Swedish natural persons just over 17 %, Swedish legal entities 26 %, and foreign legal entities 57 %. Outlook for 2001 Financial performance for the whole of 2001 will be strongly affected by the development of the Erwin business. The prices are showing a tendency to increase and the production figures for the facility are improving. The quantity of waste that is allowed to be deposited at the Barnwell waste disposal facility in South Carolina, is being reduced from 160,000 ft3 per year to 80,000 ft3 for the 12-month period starting on July 1, 2001. This can be expected to have a positive impact on prices. Studsvik is now in the process of decisive discussions regarding its participation in three different projects where THORTM, the process applied at the Erwin facility, is a vital component. The purpose of the projects is to demonstrate the suitability of the THOR process for the processing of the nuclear waste in the USA for which the US Department of Energy (DOE) is responsible. Studsvik RadWaste AB has had a good inflow of orders. The positive development of the company is expected to continue during the second half of the year. The BNCT business has largely progressed as planned. Providing that the experience of the treatment continues to be positive, the number of patients will increase successively during the year. In 2002, the BNCT business is expected to enter a more commercial phase with an increase in the number of Swedish and foreign patients. The financial performance of the Group for the second half of the year is expected to be better than that for the first half of the year, especially since the Erwin facility is now operating continuously. The development of Studsvik RadWaste AB's business and the fact that Industrial Services is now further consolidating its favorable market position in Germany are also positive. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/17/20010817BIT00580/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/17/20010817BIT00580/bit0001.pdf The full report