Enea interim report, July - September 2010

Enea interim report, July - September 2010

Strong cash flow and continued income growth

Over the third quarter of 2010, Enea has continued to improve its
profits. The operating margin for the Group amounted to 12.2 percent,
and operating profit amounted to SEK 20.2 million.  The Software
business unit revenues are stable, with an improvement in operating
margin over the third quarter. The Consulting business unit is
demonstrating slightly lower revenue but with its best margin since the
business unit structure was founded last year. This is due mainly to a
lower cost base within the Nordic organization compared with last year. 

Cash flow from operations was strong, helping to further reinforce
Enea's good financial position.

The outlook for the whole year 2010 remains unchanged. Enea is expected
to demonstrate stable income development, and it is anticipated that it
will see a considerably improved operating profit compared with 2009.

Third quarter

  · Net sales, SEK 166.1 (172.4) million.
  · Revenues for the Software business unit, SEK 84.8 (83.3) million.
  · Revenues for the Consulting business unit, SEK 95.2 (99.8) million.
  · Operating profit, SEK 20.2 (14.9) million. The comparative figures
for the previous year include a restructuring cost of SEK 6.7 million.
  · Net profit after tax, SEK 10.9 (9.5) million.
  · Cash flow from operations, SEK 26.1 (-2.2) million.
  · Earnings per share, SEK 0.63 (0.53).

The first nine months

  · Net sales, SEK 545.0 (582.6) million. The comparative figures for
the previous year are affected by a change in the accounting for
royalties, which had a negative effect of SEK 7 million over the first
quarter.
  · Revenues for the Software business unit, SEK 262.7 (248.7) million.
  · Revenues for the Consulting business unit, SEK 323.0 (374.4)
million.
  · Operating profit, SEK 50.3 (-17.2) million. The comparative figures
for the previous year include a non-recurring writedown of SEK 24.5
million over the first quarter and a restructuring cost of SEK 6.7
million.
  · Net profit after tax, SEK 34.2 (-10.7) million.
  · Cash flow from operations, SEK 96.7 (34.4) million.
  · Earnings per share, SEK 1.95 (-0.60).

Per Åkerberg, President and CEO comments:

“Over the third quarter, Enea has continued to deliver in accordance
with the outlook for the whole year. Profitability has improved
significantly, and Enea is demonstrating its highest operating margin in
more than a decade.

Over the previous year we adapted our operations in a number of ways,
which has resulted in fewer consultants, fewer product developers and a
lower cost base, which have resulted in operations becoming ever more
profitable with stable income levels. Operating profit amounted to SEK
20.2 million, which is equivalent to an operating margin of 12.2
percent. As far as revenues are concerned, we have not reached last
year's revenue levels and are reporting net sales which were 3.7 percent
lower than in the third quarter last year, mainly due to lower net sales
from the Consulting business unit.

Enea has had a good financial position over the last few quarters, and
over the third quarter this has been further reinforced by a strong cash
flow of SEK 26.1 million from operations.

Software

The Software business unit has seen stable revenue development, with
margins continuing to improve over the quarter.  Operating margin
amounted to 16.6 percent..

The cooperation with Freescale Semiconductors is continuing to go well,
albeit slightly more slowly than we had initially planned.  The
partnership with Freescale involves joint development of customers
together with Freescale's global sales force. We are expecting to be
able to present an initial deal based on the partnership before the end
of the year. 

Another important technical field for Enea is Linux. Our customers are
demanding solutions which include both Linux and a real-time operating
system. This was why we deepened our cooperation with NetLogic over the
quarter. This means that we are now able to offer our customers a build
environment for configuring their Linux distribution.

Multicore is another very important technical field for Enea. The
largest deal of the quarter, worth SEK 20 million, shows that we are
continuing to gain the trust of customers in this field. The deal
included Enea's multicore version of the OSE operating system, along
with Enea Hypervisor, a technology which allows a number of operating
systems such as OSE and Linux to be run in parallel on a multicore chip.

Consulting

The Consulting business unit has improved its operating margin compared
with both the second quarter and last year. The operating margin
amounted to 6.4 percent for the third quarter. Most regions have
demonstrated positive development, and income levels have stabilized in
other regions. The recovery is proceeding more slowly in Öresund than in
other regions.

On a final note

In the long term, Enea has good opportunities to continue its positive
development and create long-term value for shareholders through both
organic growth and acquisitions. For 2010, our ambition is to further
underpin our market position and continue to improve our profitability.
The long term operating margin targets of 20 percent for business unit
Software and 10 percent for business unit Consulting are unchanged.”

The full report is published at
www.enea.com/investors (http://www.enea.com/investors)

For more information contact:

Per Åkerberg, President & CEO Enea
Phone: +46 8 507 1 4000
Email: per.akerberg@enea.com (per.akerberg@enea.com)

Lars Kevsjö, CFO
Phone: +46 8 507 1 4000
E-mail: lars.kevsjo@enea.com (lars.kevsjo@enea.com)

Catharina Paulcén, VP Corporate Communications
Phone: +46 709 714133
Email: catharina.paulcen@enea.com (catharina.paulcen@enea.com)