SOLNA, Sweden, Nov. 25, 2002 (PRIMEZONE) -- Frontec (Other OTC:FRNRF):
- The Group's net sales amounted to SEK 91 million (173)(1) for the third quarter.
- The Group's operating loss, EBIT, was SEK -4 million (-18)(1) for the third quarter.
- The Group's profit was SEK 54 million (-27)(1) for the period January-September.
- The sale of BlueLabs was completed with a reported gain of SEK 98 million. BlueLabs had 259 employees and sales of SEK 294 million in 2001.
- The operations of Frontec netSolution were divested during the quarter. In 2001, netSolution had 21 employees and sales of SEK 33 million.
- Following the conclusion of the quarter, Frontec acquired portions of the operations of Meridium Sverige AB, a consulting firm specializing in Microsoft .NET technology.
(1) Frontec's pro forma results after structural changes are shown on page 2.
The Group in summary
(Amounts in SEK million) 3 3 9 9 12
months months months months months
Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec
2002 2001 2002 2001 2001
Net sales 91 173 430 690 932
Operating profit/loss, EBIT -4 -18 -43 -23 -105
Profit/loss after net 96 -15 53 -27 -108
financial items
Operating margin, % -4 -10 -10 -3 -11
Return on capital employed, % 57 neg. 28 neg. neg.
Return on equity, % 58 neg. 29 neg. neg.
Equity/assets ratio, % 66 46 66 46 34
Profit/loss per
share(2), SEK 2.79 -0.53 1.56 -0.97 -3.41
Average number of employees 623 995 717 1,030 1,021
No. of employees at end of 473 970 473 970 961
period
(2) The dilution effect is not taken into account in negative results
Continued focus on integration
Following the recent structural changes, Frontec consists solely of its eBusiness operations. The sale of BlueLabs to Flextronics was finalized in July and in August the operations of Frontec netSolution were sold to TietoEnator. As a result, two of Frontec's business areas, BlueLabs and Venture Zone, have been eliminated and are no longer separately reported. The divestments have significantly strengthened Frontec's financial position. Following BlueLabs' sale, the Group's remaining goodwill amounts to only SEK 180,000.
The purchase price for BlueLabs is based partly on the balance sheet as of July 31, 2002, although a final determination has not been made. Flextronics has issued a claim for SEK 34 million in respect of future provisions for ITP pensions (supplementary pensions for salaried employees). Frontec has reported pension provisions in accordance with current accounting principles and therefore is of the opinion that the claim is unfounded. Furthermore, a settlement of customary guarantees has not yet been determined. The purchase price is estimated at slightly over SEK 180 million, the capital gain at SEK 100 million and the liquidity effect at SEK 175 million.
In July, 98 employees subscribed for a convertible debenture loan of SEK 7,398,000. The conversion price has been set at SEK 5.80, with the conversion in 2006. After conversion to shares, the share capital will be diluted by a maximum of 3.7%.
For further information, please contact:
Per Tjernberg, President and CEO telephone +46 8 587 97 505
Kristina Willgard, CFO telephone +46 8 587 97 401
Frontec AB (Publ), Reg. no. 556272-5092 Box 713 SE-169 27 Solna, Sweden Telephone +46 8 587 97 400 www.frontec.se
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