10/08/2005
- Operating income excluding one-off items MSEK 33.8 (24.4 during the same period in 2004).
- Continued expansion with the area of Information Logistics, with acquisitions in Denmark and Finland.
- Net sales MSEK 1 670 (1 555).
- Net income after tax MSEK 16.1 (7.5).
- Earnings per share SEK 0.75 (0.35).
Sales and Income
Stralfors’ net sales during the second quarter of 2005 amounted to MSEK 854 (763). During the same period, operating income amounted to MSEK 8.3 (0.2). For the first half year, net sales are reported of MSEK 1 670 (1 555) and an operating income of MSEK 30.8 (22.5).
Acquired activities since the turn of the year 2004/2005, i.e., printing and enveloping operations within CSC Print Center in Denmark, Data Com Finland Oy and 50% of Stralfors’ Information Logistics A/S in Denmark, have given Stralfors sales of MSEK 103 during the first half year.
Costs referring to restructuring of the half-owned operation Lasermax Roll Systems have been charged to second quarter earnings, and thus to the result for the first half year, by MSEK 2.9.
Expansion within Information Logistics
At the turn of the year 2004/2005, the printing and enveloping operation in CSC Print Center, Denmark, was acquired, with about 80 employees and annual sales of about MSEK 150. On 1 April 2005, all shares in the Finnish company, Data Com Finland Oy were acquired. The company, which has sales of about MSEK 45 per year, and about 40 employees has its operations centrally located in Helsinki. On 2 May, the remaining 50% of the shares in the Danish company, Strålfors Information Logistics A/S were acquired, up until then the company had been half-owned, which brings to Stralfors annual sales of about MSEK 75.
Outlook for the Remainder of the Year
The forecast given in the 2004 Annual Report remains. The improvement in earnings that commenced during 2004 is expected to continue during 2005. Acquisitions and new customer contracts, together with the retrenchment programme, are contributing to this.
Graphic Solutions
The division includes business areas Graphics and Labels. Business Area Graphics reported a better result during both the first and second quarters than during the equivalent periods of last year. During the past year, the Business Area has strengthened its market positions. A contraction of the total market volume within the traditional product range has been compensated through a combination of successful product and concept developments, and cost adjustments. Investment in products and services for gaming and the pharmaceuticals industry continues. For example, delivery of track programmes for the Swedish trotting tracks has commenced in accordance with the new agreement with the Central Federation of Swedish Trotting Associations (Svenska Travsportens Centralförbund, STC)
During the second quarter of 2005, Business Area Labels reported a better result than during the equivalent period of last year, which has broken the previous negative earnings trend. The improvement in earnings is due to lower costs. Manufacture has been further specialised within the various production units, and an extensive retrenchment programme has entailed reductions of personnel in units in Sweden and Switzerland of a total of about 50 persons.
Information Logistics
As described above, several acquisitions were made during the last half-year (printing and enveloping operation in CSC Print Center, Denmark, the Finnish company Data Com Finland Oy, and 50% of the shares in the previously half-owned Danish company, Strålfors Information Logistics A/S). The second quarter has been characterised by intensive work both with integration of the new units and with operational start-up of new, bigger assignments from companies including Nordea and TeleNor. Measures that have had a negative affect on second quarter earnings will give a positive earnings effect as from the third quarter.
The division’s sales during the first half of the year amounted to MSEK 503, an increase of MSEK 137 compared with the equivalent period last year (367). Of the increase, MSEK 103 originates from acquisitions and the remaining MSEK 34 from organic growth. Operating income during the first half of the year amounted to MSEK 23.3 (16.1).
During this year, Stralfors has progressively taken over all printing and enveloping for Nordea in the Nordic Area, in accordance with the agreement signed at the end of the previous year. In connection with the assignment, Stralfors is taking on 30 employees from Nordea.
Thanks to completed acquisitions in combination with organic growth, the Division’s annual sales are expected to exceed SEK 1 billion during the present year.
SPI, System- and Product-related Information Transfer
The division consists of Business Area Supplies, the 50-percent-owned operation Lasermax Roll Systems, Stralfors TradeCom Solutions and other operations.
The market for Business Area Supplies is characterised by continued over-establishment and severe competition. During the first half of the year, both sales and earnings were lower than during the equivalent period of last year.
Since the fourth quarter of 2004, the former Business Area Lasermax has been included, in a joint venture, co-owned with Böwe Systec, Germany. This joint venture also includes Roll Systems, USA. Because the amalgamated 50-percent-owned operation, both as regards sales and earnings, is roughly double the size of Stralfors’ previously wholly-owned Lasermax operation, the structural change only has a marginal effect on Stralfors’ financial figures. For the second quarter of this year, a clearly improved result is reported than during the equivalent period of last year due to higher sales. This constitutes a recovery compared with the weak outcome of the first quarter of the year. An advantageous order situation, together with ongoing structural measures, are expected to contribute a continued positive earnings trend.
Joint Resources
The joint Group resources have charged operating income of the first half year with MSEK 19.7 (20.9). The figure for last year included exchange gains of MSEK 1.9, which can be compared with exchange losses of MSEK 1.9 during the first half of this year. Other central costs have thus declined by MSEK 5, compared with the same period last year. Exchange losses of this year are a result of derivatives, primarily futures contracts, being allocated over a different period as from 2005, through introduction of AIS 39, than was the case with previous accounting principles.
Apart from customary Group Management functions, Group resources are for such things as development, e-commerce, IT, environment, quality, safety and security, foreign exchange management and the Group’s operating property. In previous accounting, Group-strategic goodwill was also included in the central resources. This Group-strategic goodwill referred to the acquisition in 2000 of the French operation. In connection with conversion of the consolidated accounts to IFRS, recalculation of the acquisition has been carried out, and the intangible assets that arose with the acquisition, together with depreciation of them, are now reported, as mentioned above, in the Graphic Solutions Division.
Group Earnings
During the first half of the year, operating income, MSEK 30.8 (22.5), has been charged with financial items of MSEK 4.0 (4.3). The financial items include foreign exchange gains of MSEK 1.6 (-0.1).
Pre-tax earnings were MSEK 26.8 (18.2) and tax amounted to MSEK 10.7 (10.7). Earnings for the period of MSEK 16.1 (7.5) equal earnings per share of SEK 0.75 (0.35).
Changes in the income statement during the first year of 2005 compared with the same period of last year are shown in the table below.
Investments, cash flow, liquidity and financing
The consolidated balance sheet has been adjusted during the first half of the year in accordance with the table below.
Investments (excluding company acquisitions) during the first half of the year amounted to MSEK 66.8, i.e., an increase of MSEK 28 compared with the same period last year (38.7). The increase in investment derives from Business Areas Labels and Information Logistics, and from rebuilding and additional building in Ljungby.
Acquisition of the printing and enveloping operations in CSC Print Center, Denmark did not include accounts receivable and accounts payable. These balance sheet items have thus been established after acquisition by Stralfors, and are reported in the table above as ”other changes”.
The increase in shareholders’ equity in connection with acquisitions refers to adjustment of the market value of assets in Strålfors Information Logistics A/S in connection with the consolidation of the 50-percent acquisition. The increase in financial liabilities is primarily due to acquisitions.
During the first half year, liquid funds declined by MSEK 27, and at the end of the interim period, amounted to MSEK 108. Over and above this amount, at the end of the period, there were unutilised credit facilities of
MSEK 631.
No change in contingent liabilities and contingent assets has occurred during the quarter.
Reporting in accordance with IFRS
Stralfors’ consolidated accounting has been converted to IFRS (International Financial Reporting Standards) as from 2005. The comparison figures for the equivalent period last year have also been converted in this report, and therefore do not conform with the reported figures in last year’s quarterly reports. The changes are given at the end of the report under the heading, Accounting Principles.
General Audit
This report has not been examined by the Company’s auditors.
Financial information from Stralfors
Questions concerning the contents of this report may be addressed to:
Per Samuelson, President and CEO, telephone +46 (0)372 854 40, or Kjell Åke Jönsson, Vice President, telephone +46 (0)372 852 34.
The next report, the interim report for the third quarter of 2005, will be published on 26 October. Other report dates that have been fixed are 9 February 2006 (Closing Statement for 2005) and 26 April 2006 (Interim Report for the first quarter of 2006). The Annual General Meeting for next year will be held on 26 April in Ljungby.
Accounting Principles
This interim report has been prepared in accordance with IAS 34 Interim Reporting, which in essence conforms to recommendation RR 31 of the Swedish Financial Accounting Standards Council, Interim Reporting for Groups.
All listed companies within the EU shall have converted their Group reporting to IFRS (International Financial Reporting Standards) as from 2005. The changes that affect Stralfors’ accounting most in the transition to accounting in accordance with IFRS have been described under ”New Accounting Principles 2004 and 2005” in the 2004 Annual Report. This also includes a description of the changes in the transition to IFRS in the 2004 net result and in shareholders’ equity at the commencement and close of 2004 respectively. As mentioned in the introduction, the comparison figures reported in this interim report for the equivalent period last year have been converted and therefore do not conform to the figures reported in last year’s interim reports. The changes are given in the tables below.
Intangible assets attributable to the acquisition of the operation in France, and depreciations of them, have previously been reported as central items. After conversion of accounting to IFRS, these assets are reported, together with the depreciations, in the Graphic Solutions Division. All intangible assets attributable to company acquisitions are now reported in the business areas covered by the acquisition.
Change in profit/loss for the period of MSEK –0.8 is due to recalculation of acquisitions.
Changes in shareholders’ equity per 30-06-2004 of MSEK –24.8, are due partly to recalculation of company acquisitions to the extent of MSEK –26.9, and partly to the minority component being reported as shareholders’ equity MSEK +2.1. In accordance with the rules for transition to IFRS, the new principles for financial instruments are only applied in those parts of the accounts that refer to 2005.
Changes in the cash flow analysis consist of reclassification within the cash flow from current operations and are due to recalculation of acquisitions.
The comparison figures in the other tables in this interim report, with the exception of the summary covering several years, have also been recalculated as a result of the changes in the income statement and balance sheet. In the summary covering several years, only figures referring to 2004 have been recalculated.
Addresses and Corporate Identity Number
Stralfors AB (publ). Corporate Identity Number: 556062-0618.
Postal address: SE-341 84 Ljungby. Visiting address: Helsingborgsvägen 20, Ljungby. Tel: +46(0)372-850 00.
Web address: www.stralfors.se
Ljungby, 10 August 2005
The Board of Directors
About Stralfors
Stralfors is an IT-focused Business-to-Business company with print heritage, and providing total solutions within the field of information transfer. Stralfors develops, produces and delivers systems, services and products for the efficient communication of information crucial to operating a business. The Group has net sales of SEK 3.1 billion and operates in 12 countries with a total of 1900 employees. Stralfors "B" shares have been quoted on the Stockholm Stock Exchange since 1984.