UPPSALA, Sweden, April 29, 2002 (PRIMEZONE) -- Nocom AB (publ):
- Result improvement during the quarter compared to previous year. Loss after financial items totaled SEK -17.9 (-33.3) million. - Continued market hesitation resulted in lower sales. - Good opportunities for continued result improvement during the year.
First Quarter 2002
The first quarter of the year was characterized by a continued weak IT market trend. For Nocom, the market situation has entailed reduced sales. Despite this, the Company reports a clear result improvement, with the operating profit/loss before tax improving by slightly more than 45 percent compared to the same period last year. The result improvement is primarily due to the streamlining of operations that was carried out in the fall of 2001 - with increased focus on core operations, cost saving measures, and divestments. Nocom now has an organization that is well suited to its operations, in terms of both size and expertise.
The goal to achieve profitability during the first quarter was not, however, fulfilled.
Focus and Operations
We begin 2002 with a clear focus on the integration of IT solutions. This is a natural continuation and strengthening of the focus we have had since our beginnings in 1985 - to help our customers make their information accessible. For most companies, IT is a strategic resource that is intended to support the business concept and goals. A company's IT investments are increasingly concentrated on those areas that create clear competitive advantages. Information solutions and system integration are such areas. Over the years, Nocom has conducted operations as both a systems integrator and a value-adding software distributor. These operations are now separate and carried out in distinct business units.
The first business unit, Nocom, is divided as follows:
Integration products:
- an offering of leading standard software, combined with services such as professional services, maintenance, and training.
Integration solutions:
- an offering of complete solutions, based on leading integration products and services and complemented with leading edge expertise in the areas of consulting and hosting.
The other business unit, Nocom Partner Network AB, is a value-added distributor, active in the Scandinavian market. In order to further clarify this division, during the second quarter we will begin handling software distribution under our own brand and change the name.
Several Key Deals during the Period
Customer Description Value
Ikea IT Host computer access SEK 2.7
million
Bank/insurance Host computer access SEK 4.5
million
Stockholm County Council SEK 20.0 million (over two
Hosting years)
Two major contracts were carried out during the quarter in the area of host computer access, one with a major client in the banking/insurance sector, one with Ikea IT. Both deals are extensions of many years of collaboration.
A strategically important contract was signed with Stockholm County Council (Stockholms Lans Landsting, SLL) after a public bid process. The contract runs for two years and comprises both hosting and support for SLL's website and Internet portal Vardguiden (The Healthcare Guide) in Nocom's hosting center, the e-channel center. We see a great deal of potential in this collaboration with SLL, and good opportunities for future contracts, with both SLL and other authorities and organizations with similar needs within advanced hosting services. The associated company Mobile Relations delivered a number of noted SMS solutions, including solutions for Connex and Vasaloppet.
Sales
Sales have been affected by a generally depressed market. Sales for the first quarter totaled SEK 40.7 (72.3) million. This decrease is due in part to divested operation segments, SEK 18.1 million, and in part to lower sales in other operations, SEK 13.5 million.
Net sales, per business unit:
Jan-Mar Jan-Mar Entire year
Net sales, SEK millions 2002 2001 2001
Nocom 29.6 45.5 180.5
Nocom Partner Network 11.1 9.8 43.9
- 18.1 61.3
Divested business segments
Less intragroup sales - -1.1 -5.3
Group 40.7 72.3 280.4
Nocom
Nocom sales during the quarter were lower than expected and totaled SEK 29.6 million.
Integration products
This business area shows growth regarding software for host computer access, with WRQ and Netmanage as suppliers. Support and maintenance agreements comprise a major percentage of this business area and show a continued, stable stock of about 2,200 service agreements in Scandinavia. This strong customer base provides this business area with continued growth potential.
Integration solutions
This business area has been burdened by the prevailing market conditions, with low demand for consulting services and declining hourly rates as a consequence. During the fall, Nocom initiated collaboration with the American TIBCO, the market-leading supplier of advanced business integration software. This type of more advanced integration solution has already led to increased demand for our consulting services.
Consulting operations for content management continue to work at high capacity and our specialists have a leading market position in Scandinavia.
A certain stabilization has been seen in the area of hosting, which is a result of a partially scaled-down market. The number of competitors has decreased and prices have stabilized, even if at a lower level. Revenue development for our hosting operations is deemed to be good for the remainder of 2002.
Nocom Partner Network
Nocom Partner Network's product portfolio has been supplemented during the quarter with products from Macromedia and Sybari. Nocom Partner Network reports an increase in sales during the first quarter compared to the previous year. Potential for further growth is judged to be good. The market is still weak, however, which is evident in both the limited amount of activity in the retail stage and the lower prices and lower margins in the distribution stage. The Norwegian and Finnish markets are showing more positive development.
Net Loss
The Group's loss after financial items for the first quarter of 2002 totaled SEK 17.9 (33.3) million, an improvement of SEK 15.4 million. The loss before depreciation for the period totaled SEK 9.8 (18.2) million. Despite a wary market and a reduction in sales, excluding divested business segments, of SEK 13.5 million, equivalent to 25 percent, the loss before depreciation has been reduced by SEK 8.4 million, almost 45 percent. This is a result of the streamlining and cost-saving measures implemented during the fall of 2001. Operating costs have been considerably reduced, which in turn creates opportunities for result improvement.
In addition, successive improvement of the operating loss and operating margin is expected during the year, the speed and scope of which is dependent upon market developments.
Operating profit and profit after financial items, per business unit:
Jan-Mar Jan-Mar Entire
Operating profit and profit after financial 2002 2001 year
items respectively 2001
Nocom -8.4 -17.2 -43.2
Nocom Partner Network -0.7 -0.3 -6.9
Profit/loss from participations in -0.7 -0.8 -2.9
associated companies
Divested business segments - 0.1 -22.8
Profit/loss before depreciation -9.8 -18.2 -75.8
Depreciation of tangible assets -5.1 -4.9 -23.8
Amortization of intangible assets -2.6 -1.5 -7.2
Write-downs of intangible assets - - -24.4
Profit/loss from financial investments -0.4 -6.7 -5.4
Divested business segments - -2.0 -51.3
Profit/loss after financial items -17.9 -33.3 -187.9
Investments and Financing
At the beginning of 2002, with our current plans, investment needs are assessed to be small. Investments of SEK 0.3 (42.0) million were made during the first quarter. Investments in tangible fixed assets for the quarter totaled SEK 0.3 (9.0) million
During the first six months of 2001, Nocom invested substantial amounts in the establishment of its hosting facilities Nocom e-channel center, the development of Tradevision's software (now divested), and the acquisition of stock in AeroHosting AB.
Interest-bearing liabilities as of March 31, 2002 totaled SEK 10.9 (14.3) million, all of which concern financial leasing. Solidity at the end of the period was 53 (69) percent. No changes have been seen in pledged assets and contingent liabilities during the period.
The Company sees no financing being necessary to current plans.
Cash Flows and Liquid Assets
During the beginning of the quarter, Nocom exhibited a positive cash flow as a result of reduced tied capital. For the full quarter, however, the cash flow from current operations was negative and amounted to SEK - 8.6 (-3.6) million. Cash flow during the period has been affected positively by improvements in operating capital by SEK 0.8 (19.7) million.
The cash flow from investment activities, which primarily concerns financial leasing, totaled SEK -1.8 (-30.6) million. At the end of the period, available liquid assets totaled SEK 52.5 (105.9) million, including unutilized bank advances of SEK 18.5 million.
Personnel
The number of Group employees at the end of the period was 140 (239), distributed between Nocom, 123, and Nocom Partner Network, 17. The reduction is a result of the divestments and streamlining implemented during the fall of 2001.
The Future
The need to integrate different IT systems is on the rise, at the same time as the demand for selective, interactive, and personalized information becomes greater, regardless of whether the recipient is a customer, an employee, or a partner. We are convinced that more and more companies will invest in information and business integration during the year, both in order to create new income and to reduce costs. After the streamlining and focusing implemented during the fall of 2001, Nocom has a strong market position and good conditions for continued improvement. We do, however, anticipate a continuing recession in the market situation during quarters two and three, with structural changes within the industry as a result.
Nocom's Long-term Financial Goals
Operating Margin
Profitability is the overall, governing goal. Expressed as operating profit, the goal is a minimum of ten percent. The operating margin for the year's first quarter was negative. This goal is anticipated to be reached in 2003 at the earliest.
Cash Flow
The Group's goal with regard to cash flow from current operations is that it shall equal a minimum of eight percent of sales. Cash flow during the first quarter of 2002 was negative. This goal is anticipated to be reached in 2003 at the earliest.
Solidity The Group's solidity goal is set at 40 percent, but should not drop below 30 percent during recessions. Solidity as of March 31, 2002 was 53 percent.
Long-term financial goals Q1
1999 2000 2001 2002 Mal
Operating margin, % 0 -30 -65 -44 10
Cash flow, % -6 -20 -15 -21 8
Solidity, % 36 68 51 53 30-40
Parent Company The Parent Company's sales for the period totaled SEK 9.7 (11.6) million. The loss after financial items was SEK 21.0 (20.0) million. Investments in tangible fixed assets totaled SEK 0.2 (3.0) million. As of March 31, 2002, available liquid assets, including unutilized bank advances, totaled SEK 42.2 (69.2) million. The number of employees within the Parent Company at the end of the period was 51 (65).
Nocom Stock
Nocom's Series B stock is quoted on the Stockholm Stock Exchange O-list. During the first quarter of the year, the stock unit price varied from a low of SEK 2.58 to a high of SEK 3.60. The stock price as of March 31, 2002 was SEK 2.85. Nocom's market value, as of March 31, 2002, was SEK 81 million.
Accounting Principles
This interim report was prepared in accordance with FASC's recommendation RR 20 regarding interim reports and the accounting principles are unchanged in comparison with the previous year. Nocom does not report the value of deficit deductions as assets on the balance sheet. As of March 31, 2002, accumulated deficit deductions totaled approximately SEK 175 million.
Audit
This interim report has not been subject to auditing by the Company's accountants.
Uppsala, Sweden, Monday, April 29, 2002
Stefan Skarin CEO Nocom AB
This report is available in Swedish and English. The English version is virtually the same as the Swedish report. If deviations between the Swedish and the English version occur, the Swedish version should apply.
Dates for Financial Reports
August 27, 2002 Interim Report Jan-Jun 2002 November 5, 2002 Interim Report Jan-Sep 2002 For further information, please contact Stefan Skarin CEO telephone +46 708 65 10 05 Stefan Strom CFO telephone +46 708 65 10 68
Nocom AB (publ) Corporate ID-no. 556400-7200
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