Announcement no. 22 -2008
19 August 2008
Profit announcement for the second quarter and first half-year of 2008
In Q2 2008, Netop Solutions invested in a large number of activities intended
to create a platform for increased revenue and significant earnings
improvements going forward.
Business performance
Acquisitions of operations and companies
Netop Solutions has acquired Genevalogic, one of Netop's largest competitors
within Education. Following the integration process, the transaction will make
Netop School the global market leader, providing new opportunities within this
area and securing Netop Solutions an even stronger organisation on the US
market.
Netop Solutions has signed an exclusive distributor agreement with Medianet,
which has developed a leading web connect technology. In connection with the
distributor agreement, Netop Solutions took over all Medianet employees in
Denmark and acquired Medianet's Romanian development company with 23 employees.
Further information on this distributor agreement, for which Netop Solutions
has great expectations, is contained in the company's announcement of 7 July
2008.
Sales
The intensive focus on sales continues, but Netop Solutions still faces a
number of challenges in the UK and in a number of overseas markets.
Netop Solutions continues to focus on signing OEM contracts, including with
competitors whose products are not as technologically advanced as Netop
Solutions' products.
A new management team was set up in Q2 2008.
Development
Netop Solutions has increased its focus on optimising its development process
to accelerate the launch of new versions of existing products and of new
products.
Change of name
Netop Solutions has changed its name from Danware. Netop is the brand under
which the company markets its products, and the change of name is part of a
modernisation of the company's brand, logo and communications.
Efficiency enhancements and cost savings
Netop Solutions kicked off a cost savings programme in Q2 2008, entailing the
termination of a number of employees in connection with the acquisition of
GenevaLogic, but also a major upgrading of Netop Solutions' in-house procedures
with a view to building an efficient, global sales and development
organisation.
In a move to further strengthen its financial resources, Netop Solutions
intends to sell the property north of Copenhagen where its headquarters are
located under a sale and lease back contract. The sale is expected to generate
income of approximately DKK 17m before tax.
Financial performance
EBITDA was a loss of DKK 6.2m in Q2 2008 and a loss of DKK 18.5m for the
first half-year, falling approximately DKK 3m short of expectations, primarily
attributable to the lower-than-expected revenue.
Netop Solutions incurred a net loss of DKK 15.1m in H1 2008 against a DKK
1.1m profit in the year-earlier period.
Q2 revenue was DKK 23.5m against DKK 28.7m in Q2 2007. H1 revenue was DKK
40.0m, down 23% from DKK 52.1m in H1 2007. Relative to H2 2007, revenue was up
by approximately 20% from DKK 33.7m.
EBIT was a loss of DKK 7.6m in Q2 2008, compared with a profit of DKK 2.0m in
the same period of last year. H1 EBIT was a loss of DKK 21.4m against a profit
of DKK 0.2m in H1 2007. The performance was primarily attributable to higher
costs in connection with the establishment of subsidiaries in the UK and
Germany, as these took full effect during the period.
Outlook
Netop Solutions projects full-year revenue of approximately DKK 110m against
the previous guidance of revenue in the DKK 110m-120m range, while retaining
its EBITDA forecast of a loss of approximately DKK 10m, including expected
non-recurring income of DKK 17m before tax from a planned sale of Netop
Solutions' property. Management expects the investments made through
acquisitions and efficiency enhancements to generate substantially higher
revenue and improved profitability in 2009.
Contact
Kurt Bager, CEO, tel. +45 4590 2525, e-mail: kgb@netop.dk.
Claus Finderup Grove, CFO, tel. +45 4590 2525, e-mail: cfg@netop.dk.
Netop Solutions' core business is to develop and market software products based
on the NetOp® core technology - a technology enabling swift, secure and
seamless transfer of screens, sound and data between two or more computers. The
company's two product areas are Desktop Management and Education. The core
product in Desktop Management, NetOp® Remote Control, enables remote control of
one or more distant computers. NetOp® School, the core product in Education, is
a software application for computer-based classroom teaching. All are plug ‘n
play products offering extensive functionality, flexibility and
user-friendliness. Netop Solutions' products are sold in more than 80
countries. In 2007, the company generated revenue of about DKK 85m. Netop
Solutions' shares are listed on the OMX Nordic Exchange Copenhagen and are a
component of the Small Cap+ index. Netop Solutions operates wholly-owned
subsidiaries in the United States, the UK and Germany. For more information, go
to www.netop.com.
Translation In the event of any inconsistency between this document and the
Danish language version, the Danish language version shall be the governing
version.
