Sectra’s Year-end report 2019/2020: Sectra grows with increased profitability-operating profit for the year increased 25.4%

International medical imaging IT and cybersecurity company Sectra (STO: SECT B) reports the best earnings year in its history, exceeding its three financial goals. Our success and growth are built on high levels of customer satisfaction, long-standing customer relationships, high-quality products and skilled, dedicated employees. These conditions form a stable foundation for our future development and profitability. With a strong financial position, positive cash flow and significant recurring revenue, Sectra is well equipped to manage the great degree of uncertainty resulting from COVID-19. In light of this, it is proposed that the Annual General Meeting (AGM) resolve that SEK 4.50 per share be distributed to the shareholders through a share redemption program.

2019/2020 fiscal year

  • Order bookings amounted to SEK 1,816.0 million (2,132.8). The comparative year included Sectra’s largest order ever-a 13-year agreement with NSW Health in Australia worth SEK 560 million.
  • Net sales rose 17.5% to SEK 1,661.1 million (1,413.5). Adjusted for currency fluctuations, sales increased 14.7%.
  • Operating profit rose 25.4% to SEK 295.3 million (235.5), corresponding to an operating margin of 17.8% (16.7). Adjusted for currency fluctuations, operating profit increased 19.2%.
  • Profit before tax amounted to SEK 303.0 million (248.8).
  • This result includes nonrecurring items (refer to Secure Communications, page 10). These items had a positive net effect of SEK 1.4 million on operating profit.
  • Cash flow after changes in working capital amounted to SEK 296.3 million (252.5).
  • The Board and the President propose that the 2020 Annual General Meeting (AGM) resolve to distribute SEK 4.50 per share to the shareholders through a 2:1 share split in combination with a mandatory redemption process (refer to page 13). No ordinary dividend is proposed.

Fourth quarter, February-April 2020

  • Order bookings amounted to SEK 716.2 million (1,104.9). The comparative quarter included the major order from NSW Health. Of the order bookings during the quarter, 36% were recognized during the fourth quarter and a further estimated 34% to 44% pertains to revenue within 12 months after the end of the quarter.
  • Net sales increased 7.1% to SEK 507.6 million (474.1). Adjusted for currency fluctuations, sales increased 5.0%.
  • Operating profit rose 18.1% to SEK 123.6 million (104.7), corresponding to an operating margin of 24.3% (22.1). Adjusted for currency fluctuations, operating profit increased 12.5%.
  • Profit before tax amounted to SEK 126.7 million (110.9).
  • Cash flow after changes in working capital amounted to SEK 81.0 million (72.1).
  • The outbreak of COVID-19 has not had any significant effect on Sectra’s financial outcome.

Torbjörn Kronander, CEO and President Sectra AB, comments
“When our customers in the healthcare sector become more efficient in their daily work and can thus provide care for more people, or when society’s vulnerability decreases through the use of our data security solutions, then we have also succeeded. It is deeply satisfying that our long-term efforts in creating real value for customers, patients and society at large have enabled us to report the best earnings year in Sectra’s history.”

“Several of our projects are extensive, which leads to broad fluctuations between quarters since a significant portion of earnings is recognized in conjunction with services going online and project deliveries. Accordingly, it is important to look more at trends than at the output for an individual quarter when assessing our development. In the coming fiscal year we expect a weaker first quarter than normal and a sharp focus on deploying our services to customers during the second half of the year, particularly during the spring months. This is due in part to natural seasonal variations, when many customers want to come online before the relatively calm summer period, but also to delays in projects and orders because of COVID-19. Over the long term, our new subscription model for software licenses will enable more balance between quarters, but it is believed this will not have a major effect over the next few years.”

“Our stable development and positive underlying cash flows and profitability give me every reason to remain optimistic. We have a number of exciting projects in the pipeline as well as completely new geographic markets that could eventually become significant. Our possibilities for growth are strong in all operating areas for the foreseeable future, even if COVID-19 will likely mean temporarily dampened demand in certain markets. With our work and investments in the field, and innovation that has the potential to increase customer value, we are creating value for our customers and are thus helping to make society healthier and safer. This customer value is the foundation of our success, and also determines how we successfully create shareholder value and returns for our owners.See the attached year-end report for further CEO comments and information.”

Presentation of the interim report with in-depth information on the new subscription model
Torbjörn Kronander, President and CEO of Sectra AB, and Mats Franzén, CFO of Sectra AB, will present the financial report and answer questions. Fredrik Gustavsson, CTO and Pre-Sales/Product Marketing Manager at Sectra Imaging IT Solutions AB, will present Sectra’s new subscription model for software licenses. The presentation will be held in English. –BioSpace

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