03/05/2005
- Continued expansion within the area of information logistics, with acquisitions in Denmark and Finland
- Net sales: MSEK 816 (792)
- Operating profit: MSEK 22.5 (22.4)
- Operating cash flow: MSEK –7.0 (23.5)
- Net income after tax: MSEK 13.8 (11.6)
- Earnings per share: SEK 0.64 (0.54)
Sales and Result
Stralfors' net sales during the first quarter of 2005 amounted to MSEK 816 (792). The printing and enveloping operations in Denmark, acquired from CSC at the turn of the year 2004/2005, had sales of about MSEK 40 during the first quarter.
Operating profit amounted to MSEK 22.5 (22.4). The Information Logistics Division reports a marked improvement in its result. Graphics also reports an improved result, while Labels and the SPI Division show less favourable results than during the equivalent period of the previous year.
Expansion within Information Logistics
The Information Logistics Division is in an expansive period, and Stralfors’ position as leading actor in the Nordic Area within the sector has been further strengthened. Growth is being made both through acquisitions and organically.
At the turn of the year 2004/2005 the printing and enveloping operations in CSC Print Center, Denmark were acquired, there are about 80 employees and an annual turnover of about MSEK 150.
During the past year, several large assignments have been obtained, for example, printing and enveloping assignments for Telenor and Nordea, personalised ID cards for the Swedish National Social Insurance Board (Riksförsäkringsverket) and its Norwegian equivalent, and petrol cards for euroShell Cards in Europe.
After the expiration of this interim report two further acquisitions have been made. On 1 April, all shares in the Finnish company, Data Com Finland Oy, were acquired. The company, which has sales of about MSEK 45, and 40 employees, has its operations centrally located in Helsinki.
On 2 May, the remaining 50% of the shares were acquired in the Danish company, Stralfors Information Logistics A/S, which was previously 50%-owned. This acquisition will give Stralfors annual sales of about MSEK 75, i.e. half of the total turnover of MSEK 150.
Retrenchment
The retrenchment programme initiated in September 2004 achieved its required effect during the first quarter of this year and is expected to achieve further effect during the rest of the year.
Prospects for the Remainder of the Year
The assessment made in the 2004 Annual Report remains: the improvement in earnings which occurred during 2004 is expected to continue progressively during 2005. Acquisitions and new customer contracts, together with the retrenchment programme, contribute to this.
The Division comprises the Business Areas Graphics and Labels. The positive development of results for Business Area Graphics has continued during the first quarter of 2005. During the previous year, the Business Area strengthened its market positions. The market-influenced decline in volumes within the traditional product range has been compensated through a combination of successful product and concept development, and adaptation of costs.
During the first quarter of 2005, Business Area Labels reported lower sales and results than during the equivalent period of the previous year. Profitability is under pressure for most label manufacturers in the market. Stralfors’ Business Area Labels is countering this situation with rationalisation measures. Manufacture has been restructured, while the various production units and an extensive retrenchment programme have involved reductions in personnel in the units in Sweden and Switzerland to the extent of 50 persons.
The Division consists of Business Area Supplies, the 50%-owned business Lasermax Roll Systems, the Stralfors TradeCom Solutions company and other businesses.
The market for Business Area Supplies is characterised by over establishment and tough competition. Both sales and results during the first quarter are somewhat lower than during the equivalent period of the previous year.
The former Business Area Lasermax is, as from the fourth quarter of 2004, part of a joint venture, co-owned with Böwe Systec, Germany. Roll Systems, USA is also part of this joint venture. Because the amalgamated 50%-owned business, both as regards sales and results, is roughly double the size of Stralfors’ former wholly-owned Lasermax operation, the structural change only has a marginal effect on Stralfors’ financial figures. For the first quarter of this year, a lower result is reported than during the equivalent period of the previous year, primarily due to the lower USD rate. An advantageous order situation is expected to produce a positive earnings trend during the remainder of the year.
Joint Resources
The Group-owned resources have been charged to the operating result to the extent of MSEK 8.2 (8.0). In the figures for the previous year, exchange-rate profit is included to the extent of MSEK 3.2, which can be compared with MSEK 0.3 during the first quarter of this year. Other central costs have thus reduced by almost MSEK 3 compared with the previous year.
Apart from customary Group management functions, the joint resources consist of Group resources for such things as development, e-commerce, IT, environment, quality, security, foreign exchange management, and the company’s real property. According to the previous reporting, Group-strategic goodwill was also included in the central resources. This Group-strategic goodwill was related to the acquisition of the French operation in the year 2000. In connection with conversion of the Group Accounts to IFRS, recalculation has been undertaken of the acquisition, and the intangible assets that the acquisition produced, together with depreciation of these, are now, as mentioned above, reported in the Graphic Solutions Division.
Group Earnings
Operating income for the first quarter of MSEK 22.5 (22.4), has been charged with financial items of MSEK 1.3 (2.4). The financial items include a foreign exchange profit of MSEK 1.3 (-0.0).
Pre-tax earnings were MSEK 21.2 (20.0) and the tax amounts to MSEK 7.4 (8.3). Profit for the period of MSEK 13.8 (11.6) equals earnings per share of SEK 0.64 (0.54).
Investments, Cash Flow, Liquidity and Financing
During the first quarter, the Group total assets increased by MSEK 60 to MSEK 2 039. The increase was due to changed currency exchange rates, increase in liquid funds and building up of accounts receivable in the business acquired in Denmark at the turn of the year 2004/05 (the acquisition was made excluding outstanding accounts receivable and accounts payable).
During the first quarter, investments amounted to MSEK 39 and depreciation for the period was MSEK 40. Operating cash flow during the period was MSEK –7.0.
Liquid funds have increased by MSEK 27, and at the end of the interim period amounted to MSEK 185. Over and above this amount, at the end of the period, there were unused credit facilities of MSEK 715.
During the quarter there has been no change in contingent liabilities and possible assets.
Reporting in Accordance with IFRS
Stralfors’ Group Accounts have been converted to IFRS (International Financial Reporting Standards) as from 2005. The comparison figures for the equivalent period of the previous year have been also been converted in this Report, and therefore do not conform to the reported figures in the Interim Reports of last year. An account of the changes is given at the end of the Report under the heading Accounting Principles.
Financial Information from Stralfors
Questions about the content of this Report may be addressed to:
Per Samuelson, President and CEO, telephone +46 (0)372 854 40, or to Kjell Åke Jönsson, Vice President, telephone
+46 (0)372 852 34.
The next report, the Interim Report for the second quarter of 2005, will be published on 10 August. Other reporting dates will be 27 October (third quarter) and 9 February 2006 (Closing Statement for 2005).
Accounting Principles
This Interim Report has been prepared in accordance with IAS 34 Interim Reporting, which, in essence, conforms to the Swedish Financial Accounting Standards Council’s (Redovisningsrådets) recommendation RR 31, Interim Reporting for Groups.
All listed companies within the EU shall have completely converted their group reporting to IFRS (International Financial Reporting Standards) as from 2005. The changes that affect Stralfors’ reporting most in the transition to reporting in accordance with IFRS have been described under ”New Accounting Principles, 2004 and 2005” in the 2004 Annual Report. In that report are also given the changes in the transition to IFRS in the 2004 net result and in shareholders’ equity at the beginning and end of 2004 respectively. As mentioned earlier, the comparison figures presented in this Interim Report for the equivalent period last year, have been converted, and therefore do not conform to the reported figures in last year’s Interim Report. The changes are presented in the tables below.
Intangible assets attributable to the acquisition of the business in France, and depreciation of them, have been earlier reported as central items. After the conversion of reporting to IFRS, these assets will be reported together with the depreciations in the Graphic Solutions Division. The change means that the operating results for the first quarters, both of 2004 and 2005, are reduced by MSEK 2.8 compared with the previous reporting principles. Operating capital has increased by an average of MSEK 73 and MSEK 62 during the first quarters of 2004 and 2005 respectively. Total intangible assets attributable to the company acquisitions are now thus reported in the business areas covered by the acquisition.
Addresses and Corporate Identity Number
Strålfors 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, 3 May 2005
The Board of Directors
Business Concept and Corporate Description
Stralfors is an IT-focused Business-to-Business company with a print heritage 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 1900 employees. Stralfors “B” shares have been quoted on the Stockholm Stock Exchange since 1984.