Announcement No. 5-2010
16 March 2010
To NASDAQ OMX Copenhagen
Netop Solutions A/S releasing Annual Report 2009
Summary: The year 2009 was a difficult and challenging period for Netop
Solutions dominated by the global economic crisis. Management adjusted
operations during the year to reflect the changed market conditions. Revenue
was DKK 85.3m, while EBITDA was a loss of DKK 34.5m. Management considers the
financial results to be unsatisfactory. An extensive number of operational and
costreducing initiatives were implemented during 2009, and the company's
operations are improving strongly. Netop Solutions achieved break even in the
fourth quarter and management believes that the objective of profitable
operations is achievable in 2010.
(This announcement should be read in conjunction with the enclosed 2009 Annual
Report for Netop Solutions. The Annual Report is also available from Netop
Solutions' web site, www.netop.com.)
Highlights of the 2009 financial year
•The year 2009 was a difficult and challenging period for Netop Solutions
dominated by the global economic crisis. Management adjusted operations during
the year to reflect the changed market conditions.
•Revenue totalled DKK 85.3m in 2009, down 7% from DKK 91.5m in 2008. The 2009
revenue fell short of our original guidance, due to the general economic
downturn that prevailed in all of the company's markets during the year.
•EBITDA was a loss of DKK 34.5m in 2009, a fall of about 2% from the EBITDA
loss of DKK 33.9m in 2008.
•EBIT was a loss of DKK 67.4m in 2009 against a DKK 45.1m loss in 2008. Netop
Solutions made a DKK 20.8m writedown on the product M-Net, which was acquired
at a price of DKK 25.0m in 2006.
•We continued the efforts to optimise costs and enhance cash flows in 2009. The
company's total operating costs were DKK 119m, against DKK 125m in 2008. The
actual cost reduction was greater than the DKK 6m indicated, as costs relating
to the acquisition of GenevaLogic in mid-2008 were only included for six months
of 2008 but for 12 months of 2009.
•Netop Solutions consolidated its development resources during the first half
of 2009, merging and relocating a total of seven locations to two, one in
Romania and one in the Philippines. Through the consolidation, the company has
achieved much greater flexibility and scalability in its development processes,
as well as significant cost savings.
•The partnership agreement between Netop Solutions and Medianet was terminated
with effect from the end of 2009, and the companies withdrew from all
agreements existing between them. At the same time, Netop Solutions launched
its proprietary communication solution, Netop Live Guide, which facilitates
personal communication via Internet sites with chat, audio and video. Going
forward, Live Guide will make up the core of the Communication business area.
Highlights for the fourth quarter of 2009
•Revenue for Q4 2009 was DKK 21.2m, a fall of 22% from DKK 27.1m in Q4 2008
resulting from the difficult market conditions prevailing in 2009.
•EBITDA for Q4 was a DKK 0.6m profit against a loss of DKK 1.4m in Q4 2008.
Events after the balance sheet date
After the expiry of the 2009 financial year, Netop Solutions announced the sale
of the rights to Netop Mobile Embedded. We will continue to sell the product as
a global, non-exclusive distributor and will retain the exist-ing customer
portfolio. The selling price was agreed at DKK 5.0m. DKK 2.0m of the amount was
paid in cash when the contract was signed, while the remaining amount will be
paid over a five-year period through a dis-count arrangement to Netop Solutions
as provided in a distributor agreement. The agreement was concluded with effect
from 1 February 2010.
Outlook for 2010
Netop Solutions' primary goal for 2010 is to generate profitable operations and
positive cash flows while re-maining focused on building a platform from which
Netop Solutions can generate satisfactory growth going forward. Management
expects that the company's core markets will continue to feel the effects of
the eco-nomic crisis well into 2010, but that the markets have generally
stabilised at the current level. In other words, we do not expect to see any
improvements in our market segments until in the second half of 2010, although
we anticipate that a lot of businesses will have a substantial pent-up demand
and that could eventually have a positive effect on the market.
Backed by an extensive number of operational and cost-reducing initiatives
implemented during 2009, management believes that the objective of profitable
operations is achievable in 2010.
Netop Solutions' cash resources came under pressure during 2009 and the Board
of Directors and the Man-agement Board are monitoring the situation very
closely. Management believes that based on the company's budget for 2010 and
the cost-cutting initiatives implemented in the fourth quarter of 2009, Netop
Solutions will have adequate cash resources for the company's day-to-day
operations in 2010. However, capital resources are at a level that could come
to jeopardise the company's plans, but Netop Solutions' main shareholder,
Consolidated Holdings Group, has stated that it is willing to assist in the
procurement if additional to the Company, should become necessary in 2010.
Given the difficult market conditions that we expect will continue to prevail
during most of 2010, Netop Solutions is expected to generate revenue of DKK
80-90 million in 2010. Against that background and in light of the substantial
cost-cutting initiatives that have been implemented but will not feed through
fully until early in the second quarter of 2010, Netop Solutions' cost base for
2010 is expected to be 30-35% lower than the total costs incurred in 2009. As a
result, we expect EBITDA for the 2010 financial year in the region of DKK 0-5m.
Contact
CEO Kurt Bager CFO Claus Finderup Grove
Phone: 45 90 25 25 Phone: 45 90 25 25
E-mail:kgb@netop.com E-mail: cfg@netop.com
Netop Solutions A/S
Netop develops and sells software solutions enabling swift, stable and secure
transfer of video, screen images, sound and data over the Internet. The company
has three core business areas: Administration, Education and Communication.
Netop's unique and cost-saving Administration solutions makes work easier for
IT professionals through remote control and IT asset management. Netop's
market-leading Education solutions for classroom management and corporate
e-learning help students and teachers achieve optimum results through virtual
teaching. Netop's Communication solutions allow customers, business partners
and colleagues to meet easily and safely in virtual space through chat, video
or voice over the Internet. Netop has 142 employees and subsidiaries in the
USA, the UK, Romania and Switzerland. The com-pany sells its solutions to
public and private sector customers in more than 80 countries. Netop Solutions
A/S is listed on NASDAQ OMX Copenhagen. Netop generated revenue of DKK 85.3m in
2009. 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.
