GOTHENBURG, Sweden, Aug. 20, 2004 (PRIMEZONE) -- Sigma:
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Sigma increases its full-year forecast
* Sales during the period amounted to SEK 391.9 M (385.4)
* Earnings (EBITA) for the first half of the year were SEK 17.3 M (loss: 2.2), corresponding to a margin of 4.4% (neg: 0.6).
* The loss after financial items amounted to SEK 0.8 M (loss: 22.5) and after tax, to SEK 8.9 M (loss: 21.9 Goodwill amortization is included in the amount with SEK 15.7 M. Earnings per share are a loss of SEK 0.13 (loss: 0.77). Excluding goodwill amortization, the corresponding figure is income of SEK 0.25 per share (loss: 0.24).
* Cash flow from operations amounted to SEK 22.4 M (8.6).
* Sigma is again beginning to expand through the strategic acquisition of RKS and organic growth.
* Increased forecast for 2004: Earnings (EBITA) to exceed SEK 40 M
Comment on trends during the first half of 2004:
Development was favourable for Sigma, with earnings increases and organic growth. This applies particularly to the IT Solutions business area, which reported an EBITA margin in excess of 5%, compared with losses in prior years. The consolidated earnings (EBITA) for the first half amounted to SEK 17.3 M (neg 2.0). Earnings were charged with a capital loss of SEK 1.9 M and operating losses in discontinued and divested companies totalling SEK 7.5 M. There were no further expenses attributable to these operations. Cash flow was positive with SEK 22.4 M (8.6). Sigma is again expanding after three years of efficiency enhancement measures. During the second quarter growth was 4%, of which organic growth account for slightly more than 3%. The number of consultants rose by some 20 during the quarter. The Sigma Kommun & Landsting subsidiary was sold on June 30. The income statement for the first half of the year was included in operations as was the capital loss of SEK 1.9 M that arose from the transaction. Moreover, the Swiss subsidiary, Sigma iFace AG, was liquidated.
Trends by Employees at
business area Earnings Margin closing date
Sales EBITA **) EBITA % ***)
Business
Solutions 140.0 (157.6) 5.7 (3.4) 4.1 (2.2) 192 (271)
IT Solutions 180.0 (163.7) 10.0 (-2.1) 5.5 (-1.3) 503 (337)
Information
Solutions 76.1 (67.4) 11.6 (5.4) 15.3 (8.1) 158 (144)
Other
activities *) 9.3 (11.8) -10.0 (-8.9) 5 (8)
Eliminations -13.5 (-15.1)
TOTAL 391.9 (385.4) 17.3 (-2.2) 4.4 (-0.6) 858 (760)
*) Pertains to divested and terminated operations, including
parent company expenses of SEK 6.6 M (4.4). The capital loss of SEK 1.9
M that arose on the sale of companies is included in this earnings
figure
.**) Earnings/EBITA refers to earnings before goodwill amortization
and items affecting comparability. Amortization of
intangible assets is included in EBITA.
***) The number of employees increased by 231 through the acquisition
of RKS and 7 by IPM and decreased by 58 through the sale of
Sigma Kommun & Landsting.
Business Solutions
The Business Systems sector reports a stable development. During the second quarter, the Company acquired an operation focusing on the Movex business system, which has performed well since the acquisition. A small operation was transferred internally to the IT Solutions business area from Business Systems. The Strategy & Communications sector developed according to plan in both Sweden and Denmark, generating a stable margin. Minor new hiring's were carried out within the sector. Operational systems for municipal and county government were sold on June 30, as announced in an earlier press release. The operations are characteristically cyclical over the calendar year and report a loss during the first half of the year, which is normal for this type of business. The purpose of the sale was among others to streamline the group toward consulting operations.
IT Solutions
The business area continued to report a margin above 5%, compared with the negative margin in prior years, despite unprofitable operations reporting a loss of SEK 3.6 M, which were phased out. Adjusted for these, the margin for the business area would have been 7.9%. The order situation in late summer and into the autumn is highly favourable and strong earnings are expected to continue. Recruitment is taking place in this area in several communities. Growth takes place primarily via the larger of Sigma's customers, with which the Group has signed framework agreements. This often occurs through various undertakings involving total functions in the customer companies, a segment that has grown sharply over the past few years.
Information Solutions
The operations are expanding and 15 people were recruited since year- end. The EBITA margin has practically doubled compared with the preceding year, to 15%. The operations are characterized by long-term assignments, often involving total functional sourcing, which lend stability to the operations. Market trend The market situation has stabilized over the past year. After the major cut-backs in the industry, demand increased and the supply--demand relationship has stabilized. It is primarily large industrial groups that are expanding their IT projects. This has not had any significant impact on prices to date, but increases are expected. Several framework agreements are renegotiated annually, which has a dampening effect on the pace of change. In that the assignments are becoming larger and longer-term, capacity utilization has been positively impacted and there are fewer periods of non-utilization between assignments. The character of assignments, which during a period were focused on projects that enhance the efficiency of the customer's internal processes and which capitalized on investments already made, has changed. Now demand related to earnings-driving IT projects in the form of new development of services and products is again increasing. Sales and earnings January--June and financial position Sales amounted to SEK 391.9 M (385.4). Sales were higher this year despite the fact that operations that have been phased out had invoicing of SEK 18.5 M in the preceding year and the new acquisitions have not begun to impact sales to any appreciable degree. The average number of employees was approximately 100 fewer in 2004 and invoicing per employee was SEK 39,000 higher, corresponding to approximately 9%, than for the corresponding period in the preceding year, adjusted for the invoicing generated by sub consultants which also increased. During the first half of the year, earnings before goodwill amortization (EBITA) amounted to SEK 17.3 M (loss: 2.2), corresponding to a margin of 4.4% (neg: 0.6). Three Sigma operations have ceased -- for example, through divestment. Combined, these operations generated operating losses of SEK 7.5 M. Included in the year's EBITA is the capital loss of SEK 1.9 M resulting from the sale of companies. Accordingly, the remaining operations generated EBITA of SEK 26.7 M during the first half of the year. Earnings (EBITA) for the second quarter amounted to SEK 5.8 M, including the capital loss that arose of SEK 1.9 M. Earnings (EBITA) in the first quarter was SEK 11.5 M. There were three less working days in the second quarter, which affected earnings adversely by SEK 7.5 M. Profit before financial items amounted to SEK 1.6 M (loss: 17.2) including the cost of amortization of goodwill, which was SEK 15.7 M (15.0), which did not affect cash flow. Net financial items improved over the preceding year due to a lower net debt and lower interest rates. The interest-bearing net debt was SEK 50.1 M (125.3), and at year-end, SEK 95.3 M. Liquidity amounted to SEK 27.5 M (10.3) at the end of the first half of the year. The equity/assets ratio amounted on June 30 to 41.4% (33.4). Net debt/equity ratio was 21.4% (79.6). Forecast 2004 The stable trend and the divestment of loss-generating operations combined with the growth that has occurred through the acquisition of RKS, the trend of earnings has been favourable. Sigma is revising its forecast: Sigma's previous forecast: Earnings (EBITA) exceeding SEK 30 M New forecast: Earnings (EBITA) exceeding SEK 40 M. Acquisition of RKS Sigma acquired on June 30, the majority of shares in RKS through the public offering it presented in May. The balance sheet for RKS has been consolidated in the present report, while the income statements will be consolidated in Sigma's reporting as of July 1. RKS has been delisted from Stockholmsborsen (the Stockholm Exchange) and has therefore not produced any interim report for the first half of the year. Instead, a separate section on RKS's performance in the first half of the year has been included in the full interim report for Sigma. Forthcoming report dates - Nine-month interim report (Q3) 2004 October 27, 2004 - Year-end report, 12 months (Q4) 2004 February 11, 2005 Gothenburg August20, 2004 SigmaAB(publ) (Corporate reg. No. 556347-5440) Board of Directors
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