Interim Report for AU-System AB -Publ- January - June 2000.Business Editors & High Tech Writers STOCKHOLM, Sweden--(BUSINESS WIRE)--Aug. 25, 2000 AU-System (Swedish registration number: 556186-7309) is a leading supplier of consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" and solutions for the development of advanced wireless and Internet technologies, applications and associated services. Following the merger with SandbergTrygg, Sweden's leading business-to-business marketing services agency, the company also offers integrated services In computer networking, IntServ or integrated services is an architecture that specifies the elements to guarantee quality of service (QoS) on networks. IntServ can for example be used to allow video and sound to reach the receiver without interruption. for marketing communications Marketing communications (or marcom) are messages and related media used to communicate with a market. Those who practice advertising, branding, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales . Major clients include Ericsson, Telia, MeritaNordbanken and Singapore Telecom. AU-System was established in 1974 and currently employs more than 800 staff in offices in Sweden, the U.K., the U.S. and in Singapore. AU-System is listed on the O-List of the OM Stockholm Exchange, under the symbol AUS AUS abbr. Army of the United States . For more information, please visit www.ausystem.com. AU-System Reports Strong Growth in Revenue and Profitability. -- The revenue was SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 392.3 million (198.6 m), an increase of 98%. The organic growth was 70%. -- The profit before depreciation and amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) was SEK 26.9 million (-1.2 m). This is equivalent to a margin prior to depreciation and amortisation of 6.9% (-0.6%). The 1999 profit includes SEK 17.2 million regarding costs for Stock Appreciation Rights (SARs) to employees. -- Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) was SEK 15.9 million (-4.3 m). This is equivalent to an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 4.1% (-2.2%). -- Profit after financial items was SEK 11.2 million (6.6 m), an increase of 70%. -- New subsidiaries were established in Singapore, London and San Diego. -- AU-System and IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) closed a strategic service partnership agreement to collaborate on providing mobile e-business solutions to customers of both companies world-wide. Market development The demand for the company's telecom and mobile internet Refers to gaining access to the Internet using a lightweight, handheld device. See Mobile IP, PDA, smartphone and mobile TV. services has been very strong during the first half of 2000. Revenue increased by 98% compared with the same period the preceding year. We expect demand to continue to be strong for the rest of the year. However, it should also be noted that available billable hours Billable Hours is a Canadian comedy series, which airs on Showcase. Set in the fictional Toronto law firm of Fagen & Harrison, the series focuses on three young lawyers struggling to balance their expectations in life with the difficult realities of building a career is one of the most significant variables affecting operating result. This will fluctuate from quarter to quarter as a result of, among other factors, public holidays and staff vacation, this particularly influences the third quarter. By focusing our services on technologies in the early stage of the technology lifecycle Most new technologies follow a similar technology lifecycle describing the technological maturity of a product. This is not similar to a product life cycle, but applies to an entire technology, or a generation of a technology. our market conditions are characterised by strong demand and limited competition both in Sweden and on the international market. AU-System offers services and solutions to three main customer groups: telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment suppliers; network operators and service providers; and large corporate clients. By participating in the development of the technology infrastructure, by offering our services to telecom equipment suppliers, and by leveraging this knowledge in offering services to operators and large corporate clients in building applications and solutions for when the technology reaches a wider acceptance, the company has a strong, highly competitive position. This strategy is known as our catalyst approach. Our knowledge in emerging wireless technologies such as WAP (1) (Wireless Access Point) See access point. (2) (Wireless Application Protocol) A standard for providing cellular phones, pagers and other handheld devices with secure access to e-mail and text-based Web pages. , Bluetooth and UMTS (Universal Mobile Telecommunications System) The GSM implementation of the 3G wireless phone system. Part of IMT-2000, UMTS provides service in the 2 GHz band and offers global roaming and personalized features. gives the company the opportunity to internationalise v. t. 1. Same as internationalize. Verb 1. internationalise - put under international control; "internationalize trade of certain drugs" internationalize the business. To take advantage of this opportunity two international offices have been established during the first half year in London and San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. . Our office in Singapore, which was established in December 1999 and formally opened in March 2000, had 17 employees at the end of the period. Our ambition is to establish two more international offices during the second half-year. To be able to meet the demand from our customers, recruitment of top quality people is very important. The company is attractive as an employer, and during the first half-year we have managed to attract the people needed. To support further expansion and meet our recruitment needs the company has looked outside the hot areas of Stockholm and Lund and established a new office in Ostersund, Sweden. Acquisitions As part of its strategy of pursuing strategic complementary acquisitions, the Company completed the acquisitions of Media Communications Int AB (Medcom) and SandbergTrygg AB during the first half of 2000. Medcom On February 4, 2000, AU-System acquired Medcom, an IT security consultancy firm based in Stockholm. Medcom had 20 employees specialising in providing a full range of IT security solutions, including PKI (Public Key Infrastructure) A framework for creating a secure method for exchanging information based on public key cryptography. The foundation of a PKI is the certificate authority (CA), which issues digital certificates that authenticate the identity of , secure communications and security verification solutions, and was acquired to help the Company strengthen its resources with regard to security technology. Medcom has now been fully integrated as a Business Unit within AU-System. The acquisition of Medcom has been consolidated as of February 1 and goodwill will be depreciated Depreciated may refer to:
SandbergTrygg On March 3, 2000, AU-System acquired SandbergTrygg, one of Sweden's leading business-to-business marketing communications agencies. SandbergTrygg had 89 employees with offices in Stockholm, Gothenburg and Malmo. As part of the consideration paid for SandbergTrygg, the Company issued an aggregate amount of 4,906,950 shares subsequent to the stock split. SandbergTrygg focusses on providing strategic marketing, interactive design and traditional advertising services to large Swedish companies This is a list of Swedish companies: Companies
SKF Svenska Klätterförbundet (Sweden) SKF Smithsonian Kite Festival SKF San Antonio Kelly Field Annex (Lackland AFB, Texas) and ABB n. 1. Among weavers, yarn for the warp. Hence, Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s . SandbergTrygg also provides marketing strategy services to Ericsson and Telia, thus complementing the technology services provided by AU-System to those clients. SandbergTrygg will remain a separate subsidiary and brand within the AU-System group in order to ensure the continuous development of its specialised Adj. 1. specialised - developed or designed for a special activity or function; "a specialized tool" specialized specific - (sometimes followed by `to') applying to or characterized by or distinguishing something particular or special or unique; "rules with marketing competence in a focused environment. SandbergTrygg is included in AU-System's overall business model where the cross-fertilisation between technical expertise and marketing competence adds value for our clients. AU-System also capitalises on cross-selling opportunities resulting from the acquisition by marketing technology solutions to SandbergTrygg's customer base and offering marketing and communications expertise to the company's technology clients. SandbergTrygg already act as marketing and branding advisers to Ericsson and Telia, AU-System's two largest clients. The acquisition of SandbergTrygg has been consolidated as of March 1 and goodwill will be depreciated over 10 years. International Expansion As part of AU-System's strategy to leverage its expertise in wireless technologies in order to expand internationally the Company established its first international office in Singapore in March 2000. At the end of the period the office had 17 employees and the capacity to deliver solutions locally. During the second quarter 2000 the company has also established new offices in London and San Diego. AU-System initially intends to focus its international expansion on offering wireless technology solutions to network operators and service providers. The Company will focus on being present in regions with high wireless penetration. The strategy is to establish hubs based on strong customer demand, supported by AU-System's strategic co-operations with Ericsson and IBM. Revenue and profit AU-System's revenue increased by 98% to SEK 392.3 million (198.6 m) in 2000. The organic growth was 70% during the period. The profit before depreciation and amortisation (EBITDA) was SEK 26.9 million (-1.2 m). The 1999 profit includes SEK 17.2 million regarding costs for Stock Appreciation Rights (SARs) to employees. The profit after financial items was SEK 11.2 million (6.6 m), an increase of 70%. During the reporting period the margin was affected by: -- costs for establishing international offices (Singapore, London and San Diego) -- integration costs related to the acquisition of SandbergTrygg and MedCom, -- high organic growth and introduction costs for new staff, -- costs for internal resources used in the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. process, -- costs for moving to new premises in Lund, Sweden. We consider these costs as ongoing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . As of June 30, 2000 the company has not included any refund money from the Swedish Pension fund SPP (1) (Scalable Parallel Processor) A multiprocessing computer that can be upgraded by adding more CPUs. (2) (Standard Parallel Port) The Centronics parallel port that was used on the first PCs. in the income statement. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. SPP the AU-System Group has SEK 8.3 millions in funds which can be reclaimed re·claim tr.v. re·claimed, re·claim·ing, re·claims 1. To bring into or return to a suitable condition for use, as cultivation or habitation: reclaim marshlands; reclaim strip-mined land. in accordance with SPP regulations. Income tax has been recorded only for the acquired companies. AU-System has not recorded any charge for income tax, reflecting its unutilised tax losses carried forward. Employees AU-System had an average of 643 employees over the period, compared with 353 for the same period the preceding year, an increase of 82%. At the end of the period the number of employees was 782 (369), an increase of 112%. This includes 82 employees taken on in an outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. arrangement with Ericsson, and 109 employees added through the acquisitions of SandbergTrygg and MedCom. Financial position At the end of the period the Company had interest bearing cash assets of SEK 231.7 million (76.7 m) and an interest bearing debt of SEK 145.0 million (90.0 m). Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. totalled SEK 348.9 million (-2.7 m) at the end of June. The increase is due to profits from 1999 and the period under review, and the new issue of shares in connection with AU-System's listing on the OM Stockholm Exchange on June 21, 2000. The receivable from trade debtors was SEK 168.1 million. Less than 3% of this amount was to "start up" companies. The equity/assets ratio was 52.3% ( -1.4%). Investments Investments in the subsidiaries accounted for SEK 191.0 million. SEK 19.0 million was invested in tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. and new premises. The cash-flow effect for the investments over the period was SEK -125.0 million (+39.1 m). Parent Company During the period the group's structure was reorganised Adj. 1. reorganised - organized again; "a reorganized business" reorganized organized - formed into a structured or coherent whole and the operating business of the Swedish subsidiaries was transferred to the Parent Company, AU-System AB, as of January 1, 2000. AU-System AB's revenue for the first six months was SEK 340.5 million (2.1 m). Profit after tax was SEK 10.4 million (-23.8 m). The parent company's interest bearing net cash at the end of June was SEK 109.6 million (-25.3 m). Shareholders equity was SEK 395.5 million (20.3 m). The company received SEK 224.9 million as a result of the IPO as of 21 June 2000. In addition SEK 90.0 million was received as a result of a new issue in connection with the acquisition of SandbergTrygg. The company's net investments for the first six months amounted to SEK 210.5 million. Share data Earnings per share after full tax on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis was SEK 0.11 year to date 2000. At the end of the period, shareholders' equity per share on a fully diluted basis was SEK 3.71. The parent company had 80,803,375 outstanding shares and 5,500,000 new shares under issue as of June 30. On a fully diluted basis, including all outstanding options and reserved shares, the maximum number of shares was 104,527,207 as of that date. Shareholdings As of June 30, 2000 AU-System had 5,857 shareholders and the free float Free float An exchange rate system characterized by the absence of government intervention. Also known as clean float. amounted to 43.6%. The company's largest shareholders are Schroder Ventures (33.0%), Ericsson (11.0%) and IBM (2.6%) on a fully diluted basis. The Annual General Meeting The shareholders Annual General Meeting was held in Stockholm April 14, 2000. It was decided to perform a share split of 1:25 and that the new nominal value Nominal Value The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates. Notes: When referring to fixed-income securities, the nominal value is also the face value. of each share shall be SEK 0.01. A new Board of Directors was elected consisting of Johan Vunderink (Chairman, co-founder of Origin), Bengt Halse (CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Saab), Peter Sandberg (CEO Emerging Technologies), Ulf Jonstromer (CEO BrainHeart Capital), Joran Hoff (General Manager Ericsson Business Innovation), Graham Wrigley (Partner Schroder Ventures) and Tomas Franzen (CEO AU-System). Ulf Mimer (Ericsson Business Innovation) was elected Deputy Director. Important events after the end of the period under review: AU-System has established a Wireless development centre in Umea. AU-System has established an incubator incubator, apparatus for the maintenance of controlled conditions in which eggs can be hatched artificially. Incubator houses with double walls of mud, a fireroom, and several compartments each holding about 6,000 hens' eggs were developed in ancient times; the for technical innovations in mobile internet. Future prospects Our financial ambition is a yearly organic revenue growth of 30 to 40% with a long term EBITDA margin of 15%. We expect the market for our services to continue to be strong. We will continue to focus on deliverance Deliverance See also Freedom. Aphesius epithet of Zeus, meaning ‘releaser.’ [Gk. Myth.: Zimmerman, 292–293] Bolivar, Simón (1783–1830) the great liberator of South America. [Am. Hist. of high quality performance in our customer assignments. Our ambition is to be the number one on quality in the mind of our customers. Our efforts to make AU-System the most attractive employer in the business for highly skilled staff will continue. Our strong growth combined with profitability encourages us to continue to invest in internationalisation (programming) internationalisation - (i18n, globalisation, enabling, software enabling) The process and philosophy of making software portable to other locales. For successful localisation, products must be technically and culturally neutral. and incubation incubation /in·cu·ba·tion/ (in?ku-ba´shun) 1. the provision of proper conditions for growth and development, as for bacterial or tissue cultures. 2. . Telephone conference AU-System will be holding two telephone conference calls on August 25. President and CEO Tomas Franzen and CFO See Chief Financial Officer. Jan Bengtsson will present the company and the interim report and hold a Questions and Answers session. The first call will be at 9 AM CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr (Swedish). Dial-in number: +44 208 515 2308 The second call will be at 10.30 AM CET (9.30 AM GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 ) (English). Dial-in number: +44 208 515 2310 Presentation material can be obtained from www.ausystem.com on August 25. Upcoming financial reports The Interim Report for the period January - September will be presented on November 7, 2000. Stockholm, Sweden August 25, 2000 For the Board of Directors: Tomas Franzen, President and CEO The company's auditors have not reviewed this Interim Report.
Summary Consolidated Income Statement
April- April- Jan- Jan- Full
June June June June Year
2000 1999 2000 1999 1999
Revenue 221.7 106.1 392.3 198.6 402.3
Operating expenses(a) -209.1 -114.4 -365.3 -199.9 -385.0
Depreciation of tangible -2.2 -1.3 -4.5 -2.9 -6.0
fixed assets
Depreciation of intangible -4.9 -0.2 -6.5 -0.2 -0.4
fixed assets (amortisation
of goodwill)
Operating profit 5.6 -9.8 15.9 -4.3 10.8
Profit from participation 0.0 0.0 0.0 11.7 11.7
in group companies
Net financial items -1.9 -0.5 -4.7 -0.8 -2.8
Profit after financial 3.7 -10.3 11.2 6.6 19.7
items
Income tax -1.7 0.0 -1.7 0.0 0.0
Net income 2.0 -10.3 9.6 6.6 19.7
(a) April - June 1999 includes costs for stock appreciation rights
(SARs) of SEK 17.2 million to employees
Summary Consolidated Balance Sheet
June June Dec
2000 1999 1999
Fixed assets
Intangible fixed assets 184.0 3.3 3.1
Tangible fixed assets 28.1 6.3 13.5
Financial fixed assets 3.2 2.9 3.0
TOTAL FIXED ASSETS 215.3 12.5 19.6
Current assets
Trade debtors 168.1 73.7 122.7
Other receivables 52.0 25.7 11.6
TOTAL CURRENT ASSETS 220.1 99.4 134.3
Cash and similar assets 231.7 76.7 50.8
TOTAL ASSETS 667.1 188.6 204.7
Total equity 348.9 -2.7 13.7
Total provisions 1.3 0.0 0.0
Total long term liabilities 105.0 50.0 50.0
Total short term liabilities 211.9 141.3 141.0
TOTAL EQUITY, PROVISIONS AND 667.1 188.6 204.7
LIABILITIES
Consolidated Cash Flow Statement
Jan- Jan- Full
June June Year
2000 1999 1999
Cash flow from the current operations 22.3 9.7 15.3
before changes in working capital
Change in working capital -15.4 -2.9 -55.8
Cash flow from the current operations 6.9 6.8 -40.5
Cash flow from investing activities -121.7 39.1 28.5
Cash flow from financing activities 295.7 -8.3 23.7
Current year cash flow 180.9 37.6 11.7
Opening balance of liquid funds 50.8 39.1 39.1
Closing balance of liquid funds 231.7 76.7 50.8
Key Ratios
Jan- Jan- Full
June June Year
2000 1999 1999
Revenue, profit and cash flow, MSEK
Revenue 392.3 198.6 402.3
Operating profit before depreciation 26.9 -1.2 17.3
and amortisation(EBITDA)
Operating profit before amortisation of 22.4 -4.1 11.3
goodwill (EBITA)
Operating profit (EBIT) 15.9 -4.3 10.8
Operating profit (EBIT) excluding costs 15.9 12.9 28.0
for SARs
Financial net excluding gain from sold -4.7 -0.8 -2.8
subsidiaries
Profit after financial items 11.2 6.6 19.7
Cash flow 180.9 37.6 11.7
Cash flow per share, SEK 2.1 0.4 0.1
Cash flow per share fully diluted, SEK 1.9 0.4 0.1
Financial position, MSEK
Equity 348.9 -2.7 13.7
Equity per share, SEK 4.04 -0.03 0.16
Equity per share, fully diluted, SEK 3.71 -0.03 0.15
Total assets 667.1 188.5 204.7
Equity/assets ratio 52.3% -1.4% 6.7%
Key Ratios
Jan- Jan- Full
June June Year
2000 1999 1999
Profitability
Operating margin before depreciation and 6.9% -0.6% 4.3%
amortisation (EBITDA)
Operating margin before amortisation of 5.7% 2.1% 2.8%
goodwill (EBITA)
Operating margin (EBIT) 4.1% -2.2% 2.7%
Operating margin (EBIT) excluding costs 4.1% 6.5% 7.0%
for SARs
Return on equity 5.3% 22.3% -5.0%
Return on capital employed 5.6% 11.9% 31.4%
Interest-coverage ratio 3.0 5.5 6.0
Net earnings per share, full tax, before 0.111 0.088 0.263
dilution SEK
Net earnings per share, full tax, fully 0.102 0.088 0.212
diluted, SEK
Employees
Average number of employees 643 353 387
Number of employees at end of period 782 369 443
Revenue per employee, kSEK 610 563 1039
EBITA per employee, kSEK 35 -12 29
Data per share
Share price at end of period 50 - -
Number of shares at end
of period 86,303,375 75,000,000 75,000,000
Number of shares fully diluted
at end of period 99,519,634 75,000,000 92,966,750
Average number of shares 80,651,688 75,000,000 75,000,000
Weighted average number of
shares fully diluted 94,151,247 75,000,000 92,966,750
This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/25/20000825BIT00150/bit0001.doc http://www.bit.se/bitonline/2000/08/25/20000825BIT00150/bit0002.pdf |
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