Teleca AB-publ, Year-End Report, January-December, 2001-Pro forma; Merger Between Teleca and AU-Sustem - Process Going According to Plan (with link)

Telecas Margin-EBITA-, excl. Demerger Expenses, Increased in Q4 to 15.1%-14.8%

MALMO, SWEDEN


MALMO, Sweden, Feb. 21, 2002 (PRIMEZONE) -- Teleca AB:


 -- Sales advanced 35% to SEK 1,188 M during 2001.
 
 -- Operating profit before goodwill amortization (EBITA), excl 
    demerger expenses, increased 48% to SEK 181.3 M (122.8 M). Profit
    after tax increased 172% to 162.9 M (60.0 M).
 
 -- The margin (EBITA) in 2001, excl demerger expenses, rose from
    13,2% to 15,3%.
 
 -- Earnings per share, excl demerger expenses, was SEK 4.79 (1.67)
    and excluding goodwill amortization SEK 5.95 (2.41).
 
 -- Proposed dividend SEK 0.70 per share (1.10).
 
 -- Forecast for 2002: Significantly increased earnings (EBITA) 
    compared with the pro forma figures for Teleca and AU-System.

The focus in this report is on Teleca's Pro Forma figures, which is representative for the Teleca Group as per December 2001 and excludes Epsilon and Sigma. The consolidated report, which includes Epsilon until May and Sigma until September, is presented at the end of this report.

In an appendix the pro forma figures for the merger between Teleca and AU-System are shown.

Operations

In the beginning of February 2002, Teleca acquired 99.1% of the shares in AU-System AB (publ) and has subsequently applied for the compulsory redemption of the outstanding shares. The merger of Teleca and AU-System creates one of Europe's leading consulting companies, with a focus on new technology and R&D and a strong position in the Nordic countries, Great Britain and France. The combined Group has some 2,200 employees in 13 countries, of whom approximately 25% are based outside Sweden, with revenue outside Sweden of approximately 32%.

The Group's customers are leading technology companies, service operators and world-class IT users that need to develop new technologies or enhance existing solutions in the following markets:


 -- Telecoms: handsets, switches, base-stations, call handling, OSS, 
    data services, etc.
 -- Consumer Electronics: PC peripherals, PDAs, cameras,
    set-top-boxes, hi-fi equipment, etc.
 -- Automotive: driver info, security and safety, engine management, 
    telematics, traffic handling, etc.
 -- Medical: pharmaceutical production control, laboratory 
    instrumentation, treatment electronics, etc.
 -- Industrial: SCADA, robotics, materials handling, device control, 
    simulation, validation, etc.
 -- Finance: online banking, financial messaging, mobile banking 
    solutions, etc.
 -- Government: business critical Content Management Systems.

Customers rely on the engineering skills of the Group across the range from small devices such as mobile phones and smart-card readers to large- scale operations like financial networks, passenger information systems and production plant control.

Examples of customers of the Group are; ABB, AMS, Ericsson, Motorola, Nokia, One2One, Orange, Saab, Sagem, Siemens, Sony Ericsson, Telia, Vattenfall and Volvo.

Based on combined pro forma figures for Teleca and AU-System, the distribution of revenue by segment during 2001 was as follows: telecoms and consumer electronics, 59%; automotive, 8%; medical, 5%; industrial, 17%; finance, 2%; government, 4% and SandbergTrygg, 5%.

The merger process is going according to plan. The assessment of the industrial logic and the potential of profit increases are the same today as were described in the prospectus for the merger.

As part of the merger the ownership structure has been strengthened. Shareholders, including the two main owners Bure Equity AB and Dan Olofsson, have proposed a new joint board of directors consisting of Konstantin Caliacmanis, Bengt Halse, Goran Larsson, Gunder Lilius, Dan Olofsson (Chairman), Peter Sandberg and Johan Vunderink for an extra shareholders meeting on the February 28. The first meeting of the new board will be held on the March 1. The management and the Merger Group are now working to prepare decision material for the board on key issues like structure, organisation, how to leverage on AU-Systems components, cost and revenue synergies etc. More detailed information will be presented after the board meeting.

Market Outlook

Throughout 2001 Teleca worked hard to reduce unnecessary overhead and increase sales activity and effectiveness. This resulted in good margins on very difficult market conditions. Significant progress was made but there is still much work to do.

During the fourth quarter Teleca's markets have broadly continued in a similar way to the third reinforcing our view that the downturn has plateaued. The most stable markets in the fourth quarter were Telecom terminals, Industrial Automation, Automotive and Medtech. Telecas focus during the autumn has been on margins and not on growth due to the market conditions, over 15% EBITA-margin is the result of this. Growth will start again when the market has stabilized for a couple of months.

Competition has been high as everyone chases fewer opportunities and nervousness in investments continues to propagate volatility. A number of customers delayed decisions in November and December on a number of new and existing projects. This volatility has reduced with many contracts signed during February especially with Telecom operators. This may indicate an upward trend, although it is probably too early to draw any real conclusions.

Across Europe we have seen a similar picture with the exception of France, which has had a tougher situation, particularly in Telecoms where all the major equipment manufacturers have made significant cuts.

The trend for customers to consolidate suppliers continues, which is positive for established partners with strong relationships. Outsourcing opportunities of R&D are also increasing as companies focus on profit and core business.

The merger with AU-System creates one of Europe's leading consulting firms focused on new technology and R&D. With some 2,200 highly skilled employees, a large portfolio of leading international blue-chip clients and a good geographic spread, the group is well equipped to play a key role in the European consolidation of the sector. This, combined with a market that seems to have plateaued and where we see some positive signs, makes us believe in gradual improvements during 2002.

Accounting Principles

This year-end report has been created in accordance with the Swedish Financial Accounting Standards Council recommendations and declarations. The same accounting principles and calculation methods have been used in the most recent Annual Report, with the exception of recommendation RR9 by the Swedish Financial Accounting Standard Council regarding taxes, which the Group now applies.

Dividend

Teleca's dividend policy states that the Company's ambition is to pay an annual dividend corresponding to 30% of profit after tax. This year, the Board has also had to take into account the distribution of Sigma and Epsilon during the preceding year and the impact this has had on the company, the tax income that was reported during 2001, as a result of the spin-off of the shares in Sigma, and the recently concluded new issue of shares to AU-Systems' shareholders, which significantly increased the total number of shares in Teleca AB.

The Board proposes that a dividend of SEK 0.70 (1.10) per share be paid for the 2001 financial year, which is the same total amount as last year.

Annual General Meeting

The Annual General Meeting will be held in Malmo Borshus, Skeppsbron 2, Malmo, Sweden on May 6, 2002 at 17.00 hours. Notice of the Meeting will be made through press advertisements and via the Company's Annual Report, which is expected to be distributed to shareholders in mid-April 2002. Thereafter, the Annual Report will be available on the Company website, at www.teleca.com or can be ordered from Teleca's head office.

Forthcoming report dates


 Three-month interim report (Q1) 2002:   May 6, 2002
 Six-month interim report (Q2) 2002:     August 29, 2002
 Nine-month interim report (Q3) 2002:    November 7, 2002
 Year-end report (Q4) 2002:              February 20, 2003

The interim report may be ordered from the Company or downloaded from Teleca's website: www.teleca.com

This information was brought to you by Waymaker http://www.waymaker.net

The following files are available for download:


 www.waymaker.net/bitonline/2002/02/21/20020221BIT00020/bit0003.doc
 The Full Year-End Report
 
 www.waymaker.net/bitonline/2002/02/21/20020221BIT00020/bit0003.pdf
 The Full Year-End Report


            

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