STOCKHOLM, Sweden, Feb. 20, 2002 (PRIMEZONE) -- Studsvik AB (publ):
-- Net sales for the Group increased by 7.8 per cent to SEK 882.7
million (818.8).
-- The result before tax amounted to SEK -132.4 million (43.4).
-- SEK -76.8 million (96.9) in non-recurring items were charged to
the result.
-- The result per share after tax amounted to SEK -17.86 (-0.05)
-- At December 31, 2001, the equity per share amounted to SEK
-- In March 2001, SEK 320.5 million in capital was injected into
Studsvik through a directed new share issue in combination with
an unconditional shareholder's contribution.
-- On May 4, 2001, the Studsvik share was listed on
Stockholmborsen's (Stockholm stock-exchange) O list.
-- Hans-Bertil Hakansson took over as President and Chief Executive
Officer of Studsvik on December 1, 2001.
Facts about Studsvik
Studsvik is a high-tech company with a leading position in nuclear tech nology. Studsvik develops and markets products and services which contribute to solving customers' environmental, safety and quality problems through the application of primarily nuclear technology as well as other industrial processes. Studsvik's business is international and customers mainly comprise nuclear power plants and nuclear fuel producers as well as industrial companies and organizations in the health care sector. Studsvik comprises four strategic business units (SBU) - Nuclear Technology, Waste & Decommissioning, Industrial Services and Nuclear Medicine. Since May, 2001, the Studsvik share has been listed on Stockholmborsen's O list.
Net Sales
In 2001, net sales amounted to SEK 882.7 million (818.8). The increase is primarily attributable to the Group's radioactive waste management business in the USA.
Net sales in the fourth quarter amounted to SEK 226.3 million (200.8).
Exports increased and amounted to 65 (57) per cent of net sales. A breakdown of net sales per geographical market is provided below.
Oct- Oct- Full Full
Amounts in SEK Dec Dec year year
million 2001 2000 2001 2000
Sweden 76.7 87.0 306.9 350.1
Europe, excluding 85.6 70.6 310.7 275.1
Sweden
North America 57.8 38.6 196.8 134.2
Asia 3.4 3.9 63.2 54.2
Other markets 2.8 0.7 5.1 5.2
Total 226.3 200.8 882.7 818.8
Result
The operating result for 2001 amounted to SEK -125.7 million (56.5) which corresponds to the forecast stated in the report for the third quarter. The negative result is largely due to the Erwin business and the production loss as a result of the terrorist attacks on September 11. A significant contributing factor is also the guarantee measures taken for Japanese fuel testing projects. In addition, a total of SEK - 76.8 million (96.9) in non-recurring items was charged to profit. This includes the cost of restructuring and rationalization measures to improve operational efficiency (-37.5), costs for the arbitration process in the USA (-30.0), costs for the initial public offering (-4.5) and other items (-4.8). SEK -62.1 million (-33.9) in non-recurring items have been charged to administrative expenses. The result is analyzed below.
Oct- Oct- Full Full
Amounts in SEK Dec Dec Year Year
million 2001 2000 2001 2000
Operating result -32.8 -31.5 -125.7 56.5
Non-recurring items 14.7 7.8 76.8 -96.9
Adjusted operating -18.1 -23.7 -48.9 -40.4
profit
Amortization of 2.3 2.8 10.0 9.9
goodwill
Adjusted result
before amortization -15.8 -20.9 -38.9 -30.5
of goodwill
Business
General
The fourth quarter was largely characterized by the terrorist attacks in the USA. Shipments to and from Studsvik's waste management facility in Erwin were severely limited and only returned to the normal level at the end of the quarter. The events also affected other business activities in the US nuclear power industry through the introduction of temporary budget restrictions.
The arbitration process between Studsvik, Inc. and Metric Duke concerning the construction of the waste management facility in Erwin continued during the fourth quarter and entered a negotiation phase as planned before the arbitration board after balance-sheet date on January 8, 2002.
A package, dispatched from Studsvik on December 27, 2001, containing the iridium-192 isotope showed increased radiation levels when it was received by a customer in the USA. The investigation of the transport package showed deficiencies in Studsvik's handling of the radioactive material, since the inner containers during the shipment from Studsvik were not correctly sealed. As a result of the incident, Studsvik has continued to review its work procedures and quality system in connection with the shipment and handling of radioactive substances. This work will continue in close co-operation with the regulatory authorities. A provision of SEK 6.0 million has been made, primarily to cover investigation costs and the handling of the damaged package.
Hans-Bertil Hakansson took over as President and Chief Executive Officer of Studsvik on December 1, 2001.
Nuclear Technology
During the year, the SBU's net sales decreased by about 3 per cent to SEK 310.2 million (319.3). During the fourth quarter, net sales amounted to SEK 66.5 million (75.6). The operating result for 2001 amounted to SEK -30.2 million (9.9) and, for the fourth quarter, to SEK -10.9 million (5.4), of which SEK -24.6 million (0) and SEK -5.2 million (0) in non-recurring items for extensive restructuring measures in the SBU. The measures aim at achieving a sustainable profitability improvement of at least SEK 15 million per year.
During autumn 2000, it was found that the project results in two multi- year fuel testing projects for Japanese customers were not in phase with the agreed testing program. Extra efforts have, since then, been channeled into guaranteeing quality and delivering test results within the appointed time. The resources used have entailed extra costs and reduced the SBU's capacity to start new projects. A significant part of the SBU's deterioration in results is directly attributable to this.
The business within environmental and safety technology (Studsvik EcoSafe) and in-core fuel management codes (Studsvik Scandpower group) have continued to develop in a positive direction. However, the Studsvik Scandpower group noted a reduction in sales during the fourth quarter compared with the previous year.
Waste & Decommissioning
During the year, the SBU increased its net sales by about 30 per cent to SEK 206.5 million (159.5). Net sales during the fourth quarter amounted to SEK 58.4 million (47.1). Operating profit for 2001 amounted to SEK - 57.0 million (-50.3) and for the fourth quarter to SEK -15.2 million (- 23.5). The operating profit for 2001 includes SEK -75.2 million from the business in Erwin, USA.
USD rates during 2001 have had a negative effect on operating result amounting to SEK 8.6 million. Non-recurring items for an arbitration process with the supplier of the Erwin facility, amounting to SEK -30.0 million (-19.5), have been charged to the operating result for 2001. SEK -10.6 million (-8.6) of this amount was charged to the operating result during the fourth quarter.
Improvements and changes implemented in the Erwin facility during the spring meant that the facility reached the capacity that it was designed for. Capacity utilization was about 80 per cent during July and August. However, operations were limited after transport restrictions were introduced following the terrorist attacks of September 11. Nevertheless, in December, production returned to the previous level, amounting to just over 4,100 cubic feet, which is the highest production figure so far for a single month.
Negotiations continue concerning Studsvik's participation in a number of projects which may open up the market for federal waste for Studsvik's THOR process. Studsvik signed its first contract, worth SEK 6 million, on this market during October. The purpose of the project is to demonstrate the capacity of the THOR process to treat the nuclear waste for which the US Department of Energy (DOE) is responsible. The project is expected to be completed during the first quarter 2002.
The business in Studsvik RadWaste AB is continuing to develop positively. During the year, just over 1,000 tonnes were treated in the melting facility and about 310 tonnes in the incineration facility.
Industrial Services
During the year, net sales for the SBU improved by about 5 per cent to SEK 396.1 million (376.1). Net sales during the fourth quarter amounted to SEK 102.7 million (83.9). The operating profit for 2001 amounted to SEK 13.4 million (20.3) and, for the fourth quarter, to SEK -3.5 million (-2.5).
The profit in the German business has improved compared with 2000. In June 2001, the business in Baumann Nuklear Service GmbH was acquired with 45 employees in Germany. Baumann conducts business in connection with the nuclear power industry focusing on the areas of dismantling, decontamination and waste management. The SBU's operations in Bitterfeld in eastern Germany have been closed down.
The refueling and maintenance outages at both German and Swedish nuclear power plants were shorter in 2001, compared with 2000.
Nuclear Medicine
During 2001, the SBU's net sales amounted to SEK 15.9 million (16.0). Net sales during the fourth quarter amounted to SEK 5.3 million (4.2). The operating profit for 2001 amounted to SEK 1.1 million (1.5) and, for the fourth quarter, to SEK 1.7 million (0.3).
The SBU is still being developed and BNCT activities are currently under going clinical trials for approval of the treatment method by the Swedish Medical Products Agency. In 2001, 20 patients were treated, of which 7 were treated during the fourth quarter. Treatment is continuously being conducted.
Studsvik has conducted work to develop production resources for new radioisotopes, including sulfur-35 and phosphorus-32. Production, which should have started during 2001, is delayed and is expected to start during the first half of 2002.
Investments
During 2001, the Group's investments amounted to SEK 74.2 million (219.5) and, during the fourth quarter, to SEK 23.6 million (14.4). The Group's investments for the year included SEK 7.3 million (18.0) in business acquisitions, SEK 11.7 million (125.0) in the Erwin facility, SEK 12.4 million (17.1) in the BNCT facility and SEK 18.1 million (18.9) in fuel elements for the R2 reactor.
Financial Position and Liquidity
Liquid assets amounted to SEK 258.0 million (31.8), which corresponds to 29 per cent of net sales. SEK 190 million of liquid assets were pledged as security for loans in USD. After balance-sheet date, MUSD 10.5 million in principal on the loans was repaid from the pledged liquid assets. The remaining pledged assets, corresponding to about SEK 84 million will then be released.
Equity amounted to SEK 551.6 million (358.0) and the equity-assets ratio to 42 (31) per cent.
Interest-bearing liabilities amounted to SEK 330.5 million (342.5). Borrowing is entirely in foreign currency and concerns the investment in the USA as well as the acquisition of SINA Industrieservice.
Cash Flow
For 2001, the cash flow from operating activities after investments amounted to SEK -113.3 million (-131.7).
Personnel
In 2001, the average number of employees amounted to 1,134 (1,204).
The decrease can be mainly explained by the fact that fewer temporary employees were hired due to the shorter refueling and maintenance outages.
Parent Company
During 2001, net sales for the parent company amounted to SEK 16.0 million (17.5) and during the fourth quarter to SEK 3.4 million (4.1). The operating result amounted to SEK -51.2 (-69.9) and SEK -5.5 million (-39.8) respectively. The result for 2001 includes SEK -16.9 million (- 14.4) in non-recurring items, of which, SEK 5.8 million (-14.4) was for the fourth quarter. The items include the cost of restructuring and rationalization measures, SEK -18.9 million (0), the cost of the initial public offering, SEK -4.5 million (-14.4) and other costs, SEK 6.5 million (0).
In March 2001, SEK 320.5 million in capital was injected into the company through a directed new share issue in combination with an unconditional shareholder's contribution.
The Studsvik Share
The Studsvik share was listed on the Stockholmsborsen O list on May 4, 2001. At year-end, the number of shareholders amounted to 6,866. The share of foreign owners is 49 per cent. Institutional ownership of Studsvik is estimated at about 80 per cent. About 95 per cent of the number of shareholders owned less than 501 shares each. In 2001, the maximum price paid for the share was SEK 50 and the lowest, SEK 28.20.
Future Outlook
The deregulation of the international electricity market continues to put pressure on the cost efficiency of the nuclear power plants and is driving growth in the market for fuel testing, in-core fuel management codes and consulting. Studsvik is well-positioned to take advantage of this opportunity in terms of its expertise and resources.
The market for radioactive waste management is increasing. Substantial growth can also be expected in the market for federal waste in USA (the DOE market). The THOR process and the Erwin facility are unique and give Studsvik a strong position on the DOE market. Operations at the Erwin facility are currently stable and the market is expected to grow gradually.
The demand for radioisotopes for medical applications is increasing and the BNCT method could mean a breakthrough in the treatment of fast- growing cancer.
The negative impact on profit resulting from the guarantee measures for Japanese fuel testing projects is rapidly declining and the restructuring measures initiated in 2001 are expected to have an impact in 2002.
In the light of the above, profit for the Group is expected to show a substantial improvement in 2002.
Dividend, General Meeting of Shareholders and Annual Report
The Board proposes to the General Meeting of Shareholders that no dividend should be paid for financial year 2001. The General Meeting of Shareholders will be held on April 22, 2002 at 4 p.m. at Salen Konferens & Matsalar, Norrlandsgatan 15, Stockholm, Sweden. The annual report will be distributed during week 11, 2002.
Changed Accounting Policies
From 2001, the company has applied the eight new recommendations that apply from this year, including the Swedish Financial Accounting Standards Council's recommendation no. 20, Interim Reports. The application of the Swedish Financial Accounting Standards Council's recommendation no. 10, Work on Contract and Similar Work, means that income, costs and profit are reported in accordance with the percentage of completion method. Comparative figures for the previous year have been re-stated as a result of the application of this recommendation. The effect on results from the change in accounting policy has been directly transferred to non-restricted equity. In other respects, the application of the new recommendations has no material effect on the reported financial performance and position. However, on a number of points, the new recommendations entail greater requirements on supplementary disclosures.
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www.waymaker.net/bitonline/2002/02/20/20020220BIT00200/bit0001.doc The full Year-End Report www.waymaker.net/bitonline/2002/02/20/20020220BIT00200/bit0001.pdf The full Year-End Report