ELEKTA AB: Interim Report for the Six-Month Period May 1 Through October 31, 2002.Business Editors STOCKHOLM, Sweden--(BUSINESS WIRE)--Dec. 11, 2002 ELEKTA AB (STHLM STHLM Stockholm : EKTA.B):
-- Operating profit improved sharply, by SEK 67 M, to SEK 147 M
and the operating margin rose to 11 (6) percent.
-- The cash flow after investments was positive, amounting to SEK
148 M (4).
-- Order bookings increased to SEK 1,466 M (1,344). During the
second quarter order bookings increased 20 percent to SEK 769
M (641).
-- Net sales increased by 10 percent, to SEK 1,359 M (1,232).
Despite a generally weak economy, the trend in the international healthcare market is positive. Demand for Elekta's products and treatment methods for cancer and neurological disorders This is a list of major and frequently observed neurological disorders (e.g. Alzheimer's disease), symptoms (e.g.back pain), signs (e.g. aphasia) and syndromes (e.g. Aicardi syndrome). continues to be good. As a result of an increasingly older population and improved diagnostic methods, the number of detected cancer cases is rising. The development of treatment methods for cancer is focusing increasingly on high-precision radiation treatment. Elekta is currently the second-largest supplier in the world, and the largest in Europe, of methods for radiation treatment of cancer. Elekta is also a leading supplier of high-precision radiation treatment of cancer using Intensity Modulated mod·u·late v. mod·u·lat·ed, mod·u·lat·ing, mod·u·lates v.tr. 1. To adjust or adapt to a certain proportion; regulate or temper. 2. Radiation Treatment (IMRT IMRT Intensity-modulated radiation therapy Radiation oncology A format for delivering high-dose RT to regions–eg, nasopharynx, that are surrounded by radiation-sensitive areas; in IMRT, a broad radiation field is divided into hundreds of small pencil beams, ). IMRT makes it possible to adapt the radiation dose more precisely to the tumor's three-dimensional shape and specific radiation sensitivity, without damage to healthy tissue, thereby improving the patient's treatment result and quality of life. The market has rapidly accepted IMRT as a clinically and financially efficient method of improved cancer care. The need for non-invasive radiation surgery is growing. Today, approximately 235 of each million persons suffer from the type of brain disease that is suitable for radiation surgery using Leksell Gamma Knife Gamma Knife A trademark for a radiologic nonsurgical device used in stereotactic radiosurgery. Gamma knife A surgical tool that focuses beams of radiation at the head, which converge in the brain to form a lesion. (R). The areas of illness in which radiosurgery radiosurgery /ra·dio·sur·gery/ (-ser´jer-e) surgery in which tissue destruction is performed by means of ionizing radiation rather than by surgical incision. is rising sharply are certain tumors in the brain and functional disorders functional disorder n. A physical disorder in which the symptoms have no known or detectable organic basis but are believed to be the result of psychological factors such as emotional conflicts or stress. Also called functional disease. . Radiation treatment using Leksell Gamma Knife is characterized by the high quality of care provided and its cost-efficiency, as well as being very gentle on the patient. Order bookings and order backlog Order bookings increased by 9 percent, to SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1,466 M (1,344). Exchange-rate movements affected order bookings negatively by circa 6 percent. Orders for neurological products declined by 11 percent, to SEK 432 M (486), and orders for oncology products rose by 21 percent, to SEK 1,034 M (858). Order bookings during the second quarter of the fiscal year increased by 20 percent, to SEK 769 M (641). Calculated on a rolling 12-month basis, order bookings rose 11 percent, to SEK 3,049 M. Order bookings exceeded net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight . The Group's order backlog was affected though by the weakening of the US dollar. As of October 31, 2002 the order backlog amounted to SEK 2,276 M, compared with SEK 2,317 M at April 30, 2002. Investments in cancer care in Europe Order bookings in Region Europe, including the Middle East and Africa, increased 16 percent, to SEK 649 M (559). Orders for oncology products were 26 percent higher, while the trend for neurosurgery neurosurgery /neu·ro·sur·gery/ (noor´o-sur?jer-e) surgery of the nervous system. neu·ro·sur·ger·y n. Surgery on any part of the nervous system. products was weak. Substantial investments in the development of cancer care are being made in the Netherlands. Elekta has received an order amounting to SEK 160 M from a large hospital in the Netherlands for eight linear accelerators linear accelerator: see particle accelerator. linear accelerator or linac Type of particle accelerator that imparts a series of relatively small increases in energy to subatomic particles as they pass through a sequence of for radiation treatment of cancer. The equipment features IMRT, which facilitates intensity modulated radiotherapy with high precision. Strong growth for oncology products in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Orders booked in North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. increased by 8 percent, to SEK 517 M (480). Orders for oncology products rose by 53 percent. Order bookings for neurosurgery products were stable but lower compared with the strong six months in the preceding fiscal year. Elekta has launched a new business concept with deliveries of prefabricated pre·fab·ri·cate tr.v. pre·fab·ri·cat·ed, pre·fab·ri·cat·ing, pre·fab·ri·cates 1. To manufacture (a building or section of a building, for example) in advance, especially in standard sections that can be easily shipped and treatment rooms for Leksell Gamma Knife(R). The radiation-safe treatment room is a turnkey delivery. This total solution makes it possible for the customer to be more cost-efficient and to begin treatment of patients sooner. Seasonally weak order bookings in Japan The market was characterized by the continuing weak trend of the economy in Japan, but certain improvement is expected towards the end of the fiscal year. Order bookings in Japan amounted to SEK 112 M (114). Investment decisions in the healthcare field in Japan are generally made during the later part of Elekta's fiscal year. Asia Order bookings in Asia amounted to SEK 188 M (191). In particular there was a strong increase in orders for neurosurgery products, in which orders during the first six months have already exceeded order bookings for the entire preceding fiscal year. In addition to orders for Leksell Gamma Knife units, contracts were signed for delivery of linear accelerators for radiotherapy of cancer in both China and Taiwan. Net sales Consolidated net sales increased by 10 percent, to SEK 1,359 M (1,232). Exchange-rate movements had a negative impact of 7 percent on net sales. Net sales of neurosurgery products rose by 1 percent, to SEK 392 M (389), with an increase of 15 percent, to SEK 967 M (843) for oncology products. Net sales of after-market products and services increased by 18 percent, to SEK 413 M (351), and accounted for 30 (28) percent of the Group total. Net sales during the second quarter amounted to SEK 697 M (688). Calculated on a rolling 12-month basis, net sales increased by 14 percent, to SEK 2,865 M. Result Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. improved by SEK 67 M, to SEK 147 M (80). The improvement was attributable primarily to improved productivity and increased volume in the oncology sector. Exchange-rate movements affected operating profit favorably by approximately SEK 2 M. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 11 percent (6). Calculated on a rolling 12-month basis, the operating margin was 10 percent. Investments in research and development increased by 28 percent, to SEK 82 M (64), equal to 6 (5) percent of net sales. In accordance with Recommendation RR15 of the Swedish Financial Accounting Standards Council, SEK 21 M has been capitalized for certain specific projects while the remainder has been expensed. See Accounting principles on page 10. Net financial expense amounted to SEK 1 M (income 6), including net interest income of SEK 1 M (interest expense: 3). Earnings from participations in associated companies amounted to SEK 5 M (6), and foreign exchange differences totaled a negative SEK 7 M (positive: 3). Profit after net financial items improved by 70 percent to SEK 146 M (86). Profit after taxes increased to SEK 98 M (59). Earnings per share during the first half of the fiscal year increased by 57 percent and amounted to SEK 3.07 (1.95) before dilution, and to SEK 3.00 (1.93) after dilution. The return on equity amounted to 14 (12) percent and the return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). was 23 (18) percent. Investments and depreciation Investments in intangible and tangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → amounted to SEK 39 M (12). Amortization/depreciation of intangible and tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. amounted to SEK 31 M (30). During the second quarter of the fiscal year Elekta increased its share holding in Shanghai Elekta from 60 to 80 percent of the capital. Liquidity and financial position Cash flow before investments was strong and amounted to SEK 162 M (12). Cash flow after investments and divestments amounted to SEK 148 M (4). Liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. as of October 31, 2002 amounted to SEK 671 M, compared with SEK 536 M on April 30, 2002. SEK 78 M of Elekta's bank balances was pledged, primarily in the form of guarantees for customer advances received. Interest-bearing liabilities amounted to SEK 29 M compared with SEK 35 M on April 30, 2002. The equity/assets ratio was 53 percent. During the first half of the fiscal year 202,775 new Series B shares were subscribed through the exercise of warrants allotted al·lot tr.v. al·lot·ted, al·lot·ting, al·lots 1. To parcel out; distribute or apportion: allotting land to homesteaders; allot blame. 2. within the framework of Elekta's established stock options program. As of November 25, the total number of Elekta shares was 32,115.142. Patent dispute In the ongoing patent dispute in the U.S., Elekta has appealed the ruling in the lower court and provided a surety bond surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. of USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 25 million, corresponding to the damage ruling in the first instance court. The plaintiff has not presented any objections to the amount of the bond, but the judge has not finally specified the amount. The opinion today is that the probability that the judge will change the amount is small. Elekta estimates that the appeal process will take two to three years. Employees The average number of employees in the Group was 991 (883). The number of employees at the end of the period was 1,004 compared with 989 as of April 30, 2002. Parent Company Parent Company operations comprise Group management, joint Group functions and financial management. The Parent Company incurred a loss for the period of SEK 16 M (loss 21), after net financial items. The average number of employees was 15 (13). Future prospects Elekta estimates that even with today's currency situation, net sales for 2002/03 fiscal year will be somewhat higher compared with last fiscal year. It is estimated that the operating margin will be at the same level as in the first six months. Financial information The interim report for the first nine months of the 2002/03 fiscal year will be released on March 11, 2003. Stockholm December 11, 2002 ELEKTA AB (publ) Laurent Leksell President Accounting principles Application of RR15, the Swedish Financial Accounting Standards Council's new recommenda-tion regarding intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. resulted in a change of accounting principles for Elekta, which has previously expensed all research and development expenditures. Elekta's application of the new rules mean that very high demands are placed before any expenditures for development shall be reported as an asset. For example, the technical functionality of a new product must be proven before expenditures for this development are reported as an asset. The transition rules for this recommendation mean that no retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a adjustment is made. Otherwise, the accounting principles applied are the same as those used in Elekta's most recent year-end report. This interim report was prepared in accordance with Recommendation RR20 on Interim Reports, issued by the Swedish Financial Accounting Standards Council. The Company's auditors have not reviewed this interim report. Please contact Taylor Rafferty at (212) 889-4350 for graphical and tabular information. |
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