STOCKHOLM, Sweden, Aug. 15, 2002 (PRIMEZONE) -- HiQ is an IT and management consultancy that focuses on high-tech solutions in the fields of telecoms, datacoms and simulation technology. The company is a leader in these fields and the Nordic region is its domestic market. HiQ employs 470 people at offices in Sweden, Norway, Denmark and Finland. HiQ is listed on Stockholmsborsen (the Stockholm exchange). For more information, please visit www.hiq.se
Interim report for HiQ International AB (publ), corporate identity no. 556529-3205.
HiQ - sales of SEK 212.4 million and EBITA of SEK 8.5 million
- Net sales of SEK 212.4 (278.0) million.
- Profit before goodwill (EBITA) is SEK 8.5 (44.8) million,
equivalent to a margin pre-goodwill of 4.0%.
- Positive cash flow from operations.
- In March HiQ won an order from the Swedish Defence Material
Administration (FMV) worth SEK 24 million to develop training
simulators for the JAS 39 Gripen and in June an order worth
SEK 40 million.
- Framework agreement signed with the government agency Vagverket
Produktion.
- Framework agreement with Saab Automobile renewed.
- Acquisition of profitable Finnish IT consultancy, Softplan, with 50
employees in Helsinki.
- New framework agreement signed with Nokia Mobile Phones in Denmark.
- New framework agreement as preferred supplier within research and
development, IS/IT and technical documentation signed with Ericsson.
Market development
The market remains tough, and the propensity to invest is low. However, the situation varies between different regions and market sectors. In general, customers are giving priority to quick cost savings, profitability and efficiency.
The major players are choosing to work with a smaller number of external suppliers and HiQ continues to be among them, which is a strength. We have increased the number of larger projects compared with the same period last year and are still receiving more inquiries about outsourcing assignments.
Technical developments are resulting in products and systems becoming more complex, with the consequence of increasing demand for simulation, testing and verification. We have seen an increase in the share of assignments in these areas.
Regions
There are major differences between the markets in the different regions where HiQ International is active. Demand remains good in Finland, Denmark and southern Sweden. The high concentration of consultants price pressure is particularly evident in Stockholm and Gothenburg.
In April HiQ acquired the Finnish IT consultancy Softplan. HiQ Softplan is a profitable and well-reputed subsidiary with customers primarily within telecoms, entertainment & gaming and the public sector. The acquisition was consolidated in April and means that HiQ is now making a profit in the Finnish market. In conjunction with the acquisition of Softplan our smaller Finnish company, HiQ East Oy, was wound up.
The Oresund area is an interesting growth region and a number of players in medicine, industry and telecoms are established there. HiQ has established a subsidiary in Lund, on the Swedish side of the region, to complement our Danish business. A managing director of the Lund subsidiary was appointed in June.
Business in Arboga continues to be stable, and our position as a supplier of training simulators to the defence industry was further strengthened by a new order in June from the Swedish Defence Material Administration (FMV) worth SEK 40 million.
Telecoms
The combination of an economic downturn and insecurity concerning the ongoing technology shift is still resulting in a low propensity to invest among both suppliers and operators.
In the Nordic region the development of both systems and products as well as the expansion of infrastructure for 3G networks continues. The number of HiQ's 3G assignments has increased compared to the same period last year, involving work on roll-outs, development of support systems and terminals as well as testing of service platforms.
During the period HiQ received a new large order from a telecoms supplier for testing and verification. The assignment involves testing mobile platforms and terminals for 3G with products such as servers, networks, gateways, palmtops, etc. with the aim to get different products to work with each other.
Defence
In March HiQ received a new order from the Swedish Defence Material Administration (FMV) worth SEK 24 million for JAS 39 Gripen training simulators and in June a further order worth SEK 40 million. HiQ holds a very strong position as a supplier of consulting services in simulation technology to the defence industry, and we believe that there is a good possibility that we will receive additional orders during the year.
Public sector
Despite fierce competition, our share of qualified IT consultancy assignments in the public sector has substantially increased compared to the same period last year. During the period HiQ has worked with customers including the Swedish Labour Market Board, Emergency Center of Helsinki, Finland Post, the Swedish National Post and Telecom Agency, the Swedish National Police Board, the Swedish National Tax Board and the Swedish National Insurance Board.
Finance & insurance
The number of assignments within finance & insurance increased during the period. In January HiQ received an order worth SEK 30 million from a new customer in the insurance sector. We see this as a breakthrough in a sector with good prospects of further assignments.
Automotive
We are seeing increased use of technical specialists among our customers in the automotive sector. IT in vehicles provides a competitive advantage, and our assessment is that the IT content of vehicles will increase in the future. In the automotive industry HiQ is active in both project management and the development of integrated systems. HiQ signed agreements with Saab Automobile and Volvo during the period.
Entertainment & gaming
HiQ is continuing to increase sales within entertainment & gaming by working with customers such as Svenska Spel (Swedish National Lottery) and Veikkaus (Finnish National Lottery). Through its customer Veikkaus, HiQ Softplan has received a new assignment for a European lottery and has started phase two of the development of platforms for Internet gaming.
International assignments
HiQ has ongoing international assignments in a number of countries, with over a third of sales coming from outside Sweden. Since a number of HiQ's customers are focusing on the Nordic market, we are forging ahead in accordance with our strategy of being a strong consultancy in the Nordic region.
Invoicing and profit
HiQ's net sales amounted to SEK 212.4 (278.0) million.
Profit before goodwill (EBITA) was SEK 8.5 (44.8) million which is equivalent to a margin before goodwill depreciation of 4.0 per cent. The operating profit (EBIT) was SEK 0.5 (39.1) million, equivalent to an operating margin of 0.2 per cent.
Our Finnish business has been focused on the newly acquired Softplan, as a result of which HiQ East Oy - which had five employees - was wound up as of 30 June. The costs of winding up HiQ East Oy amount to approx. SEK 2 million and are reported as an item affecting comparability.
The Group's net financial income for the period was SEK 1.2 (1.0) million. Pre-tax profit (PTP) was SEK -0.2 (40.1) million.
Accounting principles
This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation no. 20. The accounting principles are the same as those applied in the preparation of the last annual report.
Employees
At the end of the period the number of employees was 472 (445), of which approx. 50 were employed within HiQ Softplan.
Investments
The Group's net investments during the period totalled SEK 98.4 (6.0) million, of which investments in financial leasing amounted to SEK 1.6 (2.3) million, the acquisition of Softplan amounted to SEK 87.4 million, and investments in real estate associated with the acquisition amounted to SEK 8.4 million.
Financial position
HiQ's financial position continues to be strong with a positive cash flow from operations.
At the end of the period the Group's liquid assets totalled SEK 49.8 million, compared to SEK 133.6 million as of 31 December 2001, a decrease of SEK 83.8 million. Dividends, supplementary tax payments and the acquisition of Softplan have reduced funds by approx. SEK 90 million during the period.
Interest-bearing net funds amounted to SEK 40.6 (89.1) million. Shareholders' equity as of 30 June 2002 amounted to SEK 263.3 million, compared to SEK 218.3 million as of 30 June 2001. The equity/assets ratio at the end of the period was 70.5 (65.4) per cent.
Recalculated as a continuous twelve-month profit, i.e. for the period 01.07.01-30.06.02, HiQ's net sales were SEK 426.5 million. Profit before goodwill was SEK 29.9 million, which is equivalent to a margin before goodwill of 7.0 per cent.
Outlook
The market situation remains tough and difficult to assess, with regional differences. We expect HiQ's market to become easier to assess by the end of the year.
In the current market situation we are continuing to adapt the business and are prioritising profitability. Both fixed and variable costs are constantly under review, and the rate of recruitment is being adjusted in accordance with regional differences.
Since a number of HiQ's customers are focusing on the Nordic market, we are forging ahead in accordance with our strategy of being a strong consultancy in the Nordic region. Developing HiQ as a Nordic company and strengthening our position in the countries where we are already active are seen as being of the utmost importance.
Due to our strategic acquisition in Finland, we are very optimistic about future development in the Finnish market.
HiQ's focus on the Oresund region continues, and we intend to develop the business in southern Sweden.
Based on HiQ's position as a high-tech supplier of systems to the defence industry in both Sweden and Norway, we believe that our potential for securing further assignments is good.
HiQ is and will continue to be a pure consultancy in the fields of IT and management with skilled employees, good customer relations and a strong financial position. We are well equipped to take a greater share of the markets, to continue to develop our company, and to emerge from the recession stronger than before.
HiQ does not present any forecasts. Our long-term financial goals of 30 per cent growth and an operating margin before goodwill of 15 per cent remain.
The parent company
HiQ International AB's profit after tax was SEK 2.3 (-0.3) million. As of 30 June 2002 the company's interest-bearing net funds amounted to SEK 4.7 (75.0) million, shareholders' equity to SEK 229.1 (173.1) million and the equity/assets ratio to 78.9 (84.5) per cent. The company's net investments for the period totalled SEK 128.1 (2.1) million.
Next financial report
The interim report for January - September will be presented on 23 October 2002.
Stockholm, 15 August 2002 The Board of Directors of HiQ International AB
This report has not been subject to an auditor's review.
For further information, please contact: Lars Stugemo, CEO HiQ International AB, tel. +46 (0)8 588 90 000
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