ContextVision AB First quarter result 2008 Period January March Sales of 16.6 (10.8) MSEK 54% sales growth Operating profit was 5.0 (-0.1*) MSEK and profit before tax was 6.1 (0.8*) MSEK Earnings per share was 0,54 (0.07*) SEK Significant events during the quarter 88% of the sales increase boosted operating profit Intensive preparation of two major product launches for 3D and fluoroscopy image enhancement * Q1 2007 data excluding SharpView related cost of 1,7 MSEK and reversal of bonus provision of 5,9 MSEK ContextVision is the software imaging partner to the most recognized medical imaging manufacturers worldwide, enabling them to rapidly deliver leading products to market and provide next-generation upgrades while focusing on their customers. Context Vision s world leading imaging software offers the greatest image clarity and quality available, enabling unprecedented diagnostic confidence. The company has worldwide offices with corporate sales & marketing in Stockholm, Sweden and listed on the Oslo Stock Exchange, Norway (ticker: COV) ContextVision AB, First quarter 2008 financial results Page 1 of 7
Management Comment Jan-Erik Hedborg, the company s CEO commented: Sales for the first quarter are in line with our expectations, being well aware of the seasonality that our business is beset with, where the beginning of a year typically is rather slow. Compared to 2007 sales increased with 54% to 16,6 MSEK generating an operating profit of 5 MSEK, a 30% margin. An entire 88% of the sales increase boosted our profit (comparing with underlying zero operating profit Q1 2007), again showing the evident scalability of our business model. Our Q1 result is also a reflection of the fact that our business now resides on a broader customer base, generating revenues that even in a season wise weaker quarter are quite enough to deliver a stable profit and respectable margins. That being said, as for all exporting companies the recent US dollar depreciation has had a notable negative impact on our financial result. Wherefore it is justified to say that the underlying performance of the business actually is even better than our financial statements indicate. Currently I think it is safe to say that the entire company is with passion and devotion engaged in the process of developing our new products for 3-D and fluoroscopy image enhancement, which will play a significant role delivering our future growth. 3-D image enhancement is applicable on all our current product lines but initial focus will be on ultrasound, where we have an extensive customer base. Customer contacts are so far very positive which reassures me that the market is ready for this next generation of image enhancement. The launch of 3D GOPView US is planned to take place in August in Chicago. With fluoroscopy we are entering an entirely new segment within X-ray with strong potential. Individual competence of our co-workers is a key asset for the company, not only for research & development but also for sales and marketing. Therefore it is very comforting that we have engaged a very experienced person from the American med-tech industry to head and secure a successful launch of our fluoroscopy image enhancement product, called GOPView ira, scheduled for release in November in Chicago. During the quarter we again participated in the biggest trade show in Europe, ECR in Vienna. We have for quite many years frequently visited all the big trade shows around the world. At those events it is quite evident that we now are a truly recognized member of the medical imaging community, considered as a potential partner even by the world s largest OEM s. To simplify the history of ContextVision it basically consists of two success stories, first image enhancement for Magnetic Resonance in 1987 and secondly for Ultrasound in 2004. In light of that I am very pleased that we are now in the midst of releasing two new products almost simultaneously, where each on its own has the potential of acquiring the label success story. * * * With a very broad customer base and a strong existing product portfolio combined with two new major product launches later this year, I feel comfortable repeating our long term goal of going for doubling the year 2007 revenue by 2010. ContextVision AB, First quarter 2008 financial results Page 2 of 7
Net sales and operating profit January March Net sales Total sales for ContextVision were 16.6 (10.8) MSEK. This represents a sales growth of 54% compared with the corresponding quarter 2007. In fact this is the best quarter one sales in the history of the Company. Sales are in line with our expectations however with a somewhat weaker performance in Europe and stronger in Asia. The business is generally beset with seasonality where the beginning of a year is slower than the end. 100% of the Company s sales are denominated either in USD (approx. 40%) or Euro (approx. 60%). Hence, currency movement s impacts reported sales. During 2007 the depreciation in USD was more or less compensated by a stronger Euro, however in this quarter we have a clear negative currency effect due to the weak USD. Had currency rates been the same as quarter one 2007 current quarter sales would be approximately 0.6 MSEK higher. Other income 2007 contained a government contribution of 0.4 MSEK with no equivalent income 2008. Operating profit and margin The operating profit was 5.0 (4.1) MSEK producing an operating margin of 30%. The same quarter previous year contains SharpView related cost of 1.7 MSEK and reversal of a bonus provision of 5.9 MSEK, hence comparable operating profit and margin was -0.1 MSEK. The USD currency depreciation also had a significant negative impact on the result, where accounts receivables denominated in USD has been written down generating a loss of some 0.8 MSEK. The operating profit again constitutes an excellent example of the strong leverage in the business model, where a sales increase of 5.8 MSEK increased the underlying operating profit with 5.1 MSEK. This means that as much as 88% of the actual sales increase directly impacted the operating result. Without the negative impact of the USD depreciation, profit would actually have increased more than sales. The reason for this strong leverage is that the image enhancement software sold is virtually not associated with any variable cost, wherefore a change in sales to a very large extent affects the profit. ContextVision AB, First quarter 2008 financial results Page 3 of 7
Cash-flow and financing Disregarding tax payments related to prior year, cash-flow from operations for the quarter is solid of some 4 MSEK. ContextVision has provided the former subsidiary SharpView with a bridge finance of 5 MSEK that will be converted into shares in SharpView. Liquid funds in ContextVision including current investments amounted to 37.9 (43.6) MSEK. Equity at period end amounted to 58.7 (55.2) MSEK giving a solidity of 76% (84%). Employees At period end the Company had 29 (32) employees whereof 12 are dedicated to research and development. Two are located in the United States of America and one in China. Out of the 32 employees in 2007, four belonged to the SharpView business still incorporated in ContextVision. Business operations For the first three months of 2008 the company s sales are distributed by region and product as follows. Sales by region: Europe 24% (41%), USA 43% (35%) and Asia 34% (23%). Sales by product group: Ultrasound 83% (63%), X-ray 11% (22%) Magnetic Resonance Imaging 6% (13%) and Other 1% (2%). The data above is very much a consequence of the great strength and market response of the ultrasound product that is generating very significant revenue for the Company. Market development and outlook Onwards the Company holds great expectations for the two new products in 3D and Fluoroscopy image enhancement, both products are scheduled for release the second half of the year. GOPView US still remains the growth engine where sales rely on a large number of customers. Transactions with related parties Disbursement of a convertible loan occurred with 5 MSEK in January 2008 to the former subsidiary SharpView. This is reflected as a financial asset in the financial statement. ContextVision AB, First quarter 2008 financial results Page 4 of 7
Risks & uncertainties Consolidation of the medical business occur on a regular basis with the general purpose of enhancing technical competence and gaining market shares, at the same time as competition decreases. Besides consolidations, new players enter the market and challenge the established actors. The trends above represent both threats and opportunities for ContextVision. The quarter report provides a fair and true overview of the company s and the Group s activities, position and results, and describes the risks and uncertainties of significance faced by ContexVision and by the companies in the Group. The Board of Directors of ContextVision AB Stockholm 2008-10-24 This report has not been reviewed by the company s auditors. Analyst presentation and reporting dates At April 24 th there will be a presentation of the last quarter by the CEO and Chairman of the board. Presentation is held at Felix Konferansesenter (Bryggetorget 3, Oslo) at 15.00 hrs. If you cannot physically attend the presentation it will also be available as webcast, please follow link at 15.00 hrs: http://www.cik.no/contextvision/080424/080424_contextvision.php Please visit our website for further information, www.contextvision.com, or use shareholderinfo@contextvision.se to send a direct question to management. Reporting dates Q2 result 2008 August 20, 2008 Q3 result 2008 October 23, 2008 Q4 2008 and Annual result 2008 February 19, 2009 For more information please contact: Jan Erik Hedborg, CEO Phone +46 (0)8 750 35 59 Henrik Bergentoft, CFO Phone +46 (0)8 750 35 52 ContextVision AB, First quarter 2008 financial results Page 5 of 7
Income Statement (SEK 1000) Q1 2008 Q1 2007 Rolling 12- months 2007 Net sales 16 643 10 300 75 384 69 041 Other income - 519 1 014 1 533 Operating income 16 643 10 819 76 398 70 574 Goods for resale -368-195 -2 067-1 894 Other external costs -4 605-4 519-17 008-16 922 Personnel costs -6 072-1 490-27 213-22 631 Depreciation assets -550-531 -2 416-2 397 Operating results 5 048 4 084 27 694 26 730 Interest income 1 107 969 2 502 2 364 Interest costs and similar profit / loss items -88-49 -135-96 Results after financial items 6 067 5 004 30 061 28 998 Tax -1 695-1 499-9 124-8 928 Net results 4 372 3 505 20 937 20 070 Of which attributable to: Equity holders of the Parent Company 4 372 3 586 21 097 20 311 Minority - -81-160 -241 Earnings per share after tax, SEK 0,54 0,42 2,54 2,42 Balance Sheet (SEK 1000) Q1 2008 2007 Q1 2007 Intangible fixed assets 8 350 7 285 7 045 Tangible assets 1 561 1 561 1 137 Financial assets 5 050 50 50 Inventories 661 709 727 Current receivables 23 748 16 779 13 551 Current investments 28 623 27 606 30 138 Cash and bank 9 228 16 535 13 451 Total assets 77 221 70 525 66 099 Equity 58 693 54 358 55 187 Minority interest in subsidiary - - 1 001 Provisions 1 829 1 829 1 380 Current liabilities 16 699 14 338 8 531 Total equity and liabilities 77 221 70 525 66 099 Change in equity (SEK 1000) 2008 2007 Opening balance 54 358 51 668 Repurchase of own shares - -10 743 Dividend of SharpView shares - -6 832 Translation difference -37-46 Net result 4 372 20 311 Closing balance 58 693 54 358 Financial Highlights Q1 2008 Q1 2007 Rolling 12- months 2007 Earnings per share after tax, SEK 0,54 0,42 2,54 2,42 Operating margin (per cent) 30,3 37,7 36,2 37,9 Solidity (per cent) 76,0 83,5 76,0 77,1 ContextVision AB, First quarter 2008 financial results Page 6 of 7
Consolidated Statement of Cash Flows (SEK 1000) Q1 2008 Q1 2007 Operating activities Result after financial items 6 067 5 004 Depreciation of assets 550 531 Unrealised gain/loss on current investments -779-532 Changes in provisions - -5 943 Income tax paid -4 821-191 Cash flow from operating 1 017-1 131 activities before change in working capital Change in working capital Increase(-)/decrease(+) inventories 48-128 Increase(-)/decrease(+) current receivables 3 471 2 168 Increase(+)/decrease(-) liabilities -5 228 1 883 Cash flow from operating activities -692 2 792 Investing activities Investments in group companies Investments in intangible assets -1 487-780 Investments in tangible assets -128-265 Cash flow from investing activities -1 615-1 045 Financing activities Convertible loan to SharpView -5 000 - Cash flow from financing activities -5 000 0 Cash flow for the period -7 307 1 747 Change of liquid assets Liquid assets at beginning of period 16 535 11 704 Liquid assets at period end 9 228 13 451 Basis of preparation The interim condensed consolidated financial statements for the three months ended March 31 st 2008 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements as of 31 December 2007. ContextVision AB, First quarter 2008 financial results Page 7 of 7