Getinge revises year-end accounts for fiscal years 2007 and 2008 and comments on earnings outlook for 2009
Getinge, 24 March 2009
Changes in Getinge’s year-end accounts for 2007 and 2008
Following publication of its Year-end Report for 2008, Getinge uncovered irregularities in the accounting for Huntleigh’s French subsidiary HNE Medical SAS, which is part of the Extended Care business area. The company was included in the acquisition of Huntleigh Technology PLC, which has been part of the Getinge Group since the beginning of 2007. Getinge, in cooperation with its auditors PWC (PricewaterhouseCoopers), was able to establish that the irregularities have been in progress since 2000, but that these probably did not involve the removal of assets or money from the company.
The scope of the irregularities has meant that HNE Medical’s total earnings for the period 2000 through 2008 were overstated in an amount of approximately SEK 215 million, of which net profit for 2007 and 2008 was overstated by SEK 27 million and SEK 29 million, respectively. Due to the circumstances described, Getinge intends to revise its earnings for 2007 and 2008 by the amounts mentioned. The remaining amount of approximately SEK 159 million will result in an adjustment of the goodwill item that arose from the acquisition of Huntleigh Technology PLC.
Getinge has suspended the personnel in the French company who are suspected of involvement in the situation that has arisen and has reported the matter to the French police authority. In addition, Getinge is investigating the possibility of taking legal action and making compensation claims against the parties involved in facilitating the irregularities in the French company or obstructing their discovery at an earlier stage.
Updated earnings outlook for 2009
Due to the changes in demand that have been observed in recent months, a comprehensive analysis of the Group’s operations was conducted to assess the probable earnings outcome for the current year. Following the review of operations, Getinge assesses that the Group’s profit before tax, excluding integration expenses relating to the Datascope acquisition, will increase by approximately 25%. This result is based on the prevailing currency-exchange situation and an evaluation that the organic invoicing growth for the year will amount to between 2 and 3%. The result forecast includes a currency gain of SEK 228 million arising from the currency hedge made in conjunction with the new share issue to finance the acquisition of Datascope. Restructuring and integration expenses for Datascope have not been determined at the time of writing.
Regarding demand and the volume trend for the current year, Getinge expects sales of medical technical capital goods in the US to decline to varying degrees depending on product category. The largest decline is expected to be for patient handling systems and ventilators. For infection control equipment and operating room equipment, the decline is expected to be limited, while the volume trend for consumables is expected to remain intact. In markets outside the US, the volume trend is expected to be affected considerably less in the prevailing business climate, except for some markets in Western Europe and markets in Eastern Europe and Russia.
Getinge continues to constantly evaluate demand and take action to adapt costs relating to sales and production.
In conjunction with its most recent Year-end Report, Getinge made the assessment that organic invoicing growth for 2009 would be somewhat lower than the outcome for 2008, and that the Group’s EBITA margin, excluding restructuring expenses, would amount to between 18 and 19% for the current year.
For the first quarter of the current year, profit before tax, excluding the currency gain of SEK 228 million described above, is expected to be less than profit for the first quarter of 2008, as a result of lower invoicing growth.
A teleconference with Johan Malmquist, CEO, and Ulf Grunander, CFO, will be held on 24 March 2009 at 10:00 a.m. (Swedish time).
Telephone number for participation in the conference:
Sweden: + 46 (0)8 506 269 04
UK: + 44 (0)207 108 6205
9:45 a.m. Call conference number
10:00 a.m. Presentation and questions