Interim report for the period 1 January - 30 June 2001
Interim report for the period
1 January - 30 June 2001
Important Events during the Period
· Internet and mobile services were launched during the first
quarter. The sale of mobile services began at the beginning of March and
is based on an agreement with Europolitan.
· A strategic and structural change programme was launched in March
involving, among other things, the division of operations into two
business areas, one of which was into a new direction, the winding up of
the Danish operation and a reduction of 11 in the number of employees in
· Glocalnet's revenue for the first half of 2001 was MSEK 101.4, an
increase of 118% compared to the same period in 2000. Revenue for the
second quarter was MSEK 54.0, an increase of 14% on the previous
· Glocalnet's net earnings for the first half of the year were MSEK -
55.1. The net earnings for the second quarter were MSEK -17.5, an
improvement of MSEK 20.0 compared to the previous quarter.
· The improvement in earnings is a consequence of the structural
change programme and further ongoing cost reductions.
· A new share issue with preferential rights for existing
shareholders was undertaken. This share issue earned the Company MSEK
66.5 after costs.
· The number of registered mobile customers increased significantly,
mainly through cross-selling against the existing customer base, and was
10,600 at the end of the quarter.
During the first quarter Glocalnet launched Internet and mobile
services, and was then able to be the first provider in Sweden with an
integrated range of fixed and mobile telephony as well as Internet
services on a shared invoice and a self-service portal.
During March a strategic and structural change programme was launched,
which is expected to bring the Company to profitability faster.
Operations were divided into two business areas, Glocalnet Service
Operator and Glocalnet Service Provider. In conjunction with this, the
Danish operation was wound up including seven employees, and the number
of employees in Sweden was reduced by 11.
The AGM on 29 March 2001 passed a resolution on two share option
schemes, one of which (involving one million options) was effected after
the end of the period, and an authorisation for the board to issue a
maximum of 40 million shares.
During the second quarter, following the approval of an extraordinary
general meeting held on 2 May 2001, a new share issue of 86,679,850
shares was implemented with preferential rights for existing
shareholders. Approximately 60 percent of the new share issue were
subscribed via subscription rights. The balance of around 40 percent was
subscribed by the main shareholder Catella IT AB in accordance with a
guarantee agreement. The share issue raised MSEK 66.5 after costs.
The division of operations into two business areas was implemented.
During the quarter, Glocalnet Service Provider focused mainly on cross-
selling mobile telephony services to the Company's existing fixed
telephony customer base. This was successful, and the take-up rate of
customers was good. The number of registered mobile customers increased
from around 1,800 at the end of March to 10,600 at the end of June. The
number of customers using Glocalnet's fixed telephony services dropped
somewhat, standing at 88,000 during June. The average income per fixed
telephony customer did, however, rise for the second quarter in
succession, to SEK 187 per month.
The Glocalnet Service Operator business area worked mainly on technical
and organisational preparations for obtaining partners, and held
discussions with potential partners.
Glocalnet's focus on profitability started to bear fruit during this
quarter, and losses were more than halved compared to the first quarter,
mainly due to the strategic and structural change programme.
(Unless otherwise stated, figures below relate to the group. Figures in
brackets represent a comparison with the corresponding period/date in
The accounting principles applied in this interim report are the same as
for the previous financial year, and are contained in the annual
accounts for 2000.
The total operating revenue during the first half of the year amounted
to MSEK 101.4 (46.5). The total operating revenue during the second
quarter amounted to MSEK 54.0, corresponding to an increase of 14
percent compared to the first quarter. This increase was due mainly to
higher average revenue per fixed telephony customer and the mobile
telephony services that were launched at the beginning of March.
The number of customers actively using Glocalnet's fixed telephony
services during June was around 88,000, 3,000 fewer than in March, but
1,500 more than in December 2000. The average revenue per active fixed
telephony customer amounted to SEK 187 per month during the second
quarter, representing an increase of SEK 12 on the previous quarter.
This increase was mainly due to a price rise for calls to mobile phones
and a higher volume per customer for these calls. The Internet service
was used by 2,600 customers during June.
Customer take-up on the mobile side was good during the quarter. On 30
June Glocalnet had 10,600 registered mobile customers, representing an
increase of 8,800 since 31 March. Because of the lead time between
registration of customers and actual use of the service, not all
registered customers were active in June.
Network Expenses and Margins
Network expenses during the first half of the year amounted to MSEK 77.5
(36.1). The gross margin for the first half of the year was 23.5
percent, an increase of 1.2 percentage points compared to the same
period in the previous year. Network expenses during the second quarter
were MSEK 41.2, compared to MSEK 36.4 during the first quarter. This
increase was mainly due to increased sales. The gross margin for the
quarter was 23.7 percent, which was 0.4 percentage points higher than
the previous quarter, largely due to the aforementioned price rise for
calls to mobile phones.
Other Expenses and Earnings
Operating expenses excluding network expenses amounted to MSEK 76.8
(61.8) during the first half of the year. Operating expenses excluding
network expenses were MSEK 29.6 during the second quarter, a reduction
of MSEK 17.6 compared to the previous quarter. Of this, around MSEK 6
can be attributed to the direct effects of the structure programme. A
further MSEK 9.0 relates to the items affecting comparability that
comprised winding up costs as posted during the first quarter. The
winding up work of the restructuring programme is running to plan and
the reserve set aside during the first quarter is expected to match the
Direct sales expenses increased during the second quarter due to the
major take-up on the mobile side, and amounted to MSEK 3.1. Other
external expenses amounted to MSEK 13.4, which was MSEK 6.2 less than
the previous quarter, and included costs of the major customer
acquisition programme on the mobile side. Thanks to cost efficient cross-
selling to the existing customer base, it was possible to keep customer
acquisition costs to a low level. The reduction of other external
expenses was partly due to lower consultancy costs. Personnel expenses
amounted to MSEK 8.2, which was MSEK 3.0 lower than the previous
quarter, and was due to fewer employees during the quarter. The number
of employees at the end of the period was 47 (65). Depreciation of
tangible fixed assets was MSEK 4.9.
The operating earnings for the first six months were MSEK -55.1 (-50.2).
The operating earnings for the second quarter were MSEK -16.8, compared
to MSEK -36.2 for the previous quarter. Net interest for the quarter was
MSEK -0.7, and the earnings after financial items were therefore MSEK -
17.5, representing an improvement of MSEK 20.0 on the previous quarter.
Assets and Liabilities
At the end of the period the balance sheet total was MSEK 177.2 (201.7),
and comprised fixed assets to the value of MSEK 33.9 (30.3), current
receivables to the value of MSEK 61.2 (29.6) and cash to the value of
MSEK 82.0 (141.8). The increase in current receivables related mainly to
accrued income and accounts receivable.
As of 30 June 2001 equity amounted to MSEK 74.2 (130.1), long-term
liabilities to MSEK 35.1 (13.6) and current liabilities to MSEK 67.8
(58.1). The change in equity can be attributed to the Company's earnings
for the last 12 months and the new share issue that took place during
the second quarter. The increase in current liabilities related mainly
to accrued costs and was due to higher network costs as a result of the
increase in sales. The increase in long-term liabilities related to
financing through leasing as well as the arrangement of a loan to the
order of MSEK 20.
During the first half of 2001 total investments amounted to MSEK 5.8
(14.8), of which MSEK 2.3 (7.2) was financed through leasing. During the
second quarter total investments amounted to MSEK 1.0. Investments made
during the period relate mainly to upgrades of the Company's technical
platform for invoicing and customer management.
Cash Flow and Financial Position
The cash flow after financing activities for the first half of the year
was MSEK 4.7 (128.5). Negative cash flow before financing activities
decreased during the second quarter by MSEK 5.3, and amounted to MSEK -
31.2. The new share issue implemented during the second quarter meant
that cash flow after financing activities amounted to MSEK 33.2. As of
30 June 30 2001 Glocalnet's liquid assets amounted to MSEK 82.0.
Change in Equity
Equity has increased from MSEK 62.8 on 31 December 2000 to MSEK 74.2 on
30 June 2001. This change was brought about by the Company's loss during
the period, which amounted to MSEK 55.1, and the new share issue
implemented during the second quarter, which generated MSEK 66.5 after
The Parent Company
The parent company's total revenue during the first half of 2001 was
MSEK 144.9 (31.9), and the earnings after financial items were MSEK -
59.8 (-58.1). Investments in fixed assets during the period amounted to
MSEK 5.8 (14.8).
The Company intends to publish an interim report for the third quarter
on 17 October 2001.
Market and Outlook
There was a clear change in the direction of the profit trend during the
second quarter compared to the previous quarter. We can thus confirm
that many of the efficiency measures are already taking effect. The
Company is also in the final phase of a major project of thoroughly
analysing the Company's fixed telephony production. This is expected to
result in continued, positive trends in the margin for fixed telephony.
However, the project might also result in that major elements of the
fixed assets that relate to the network will not be used for the time
being. At the end of the period, these represented around one third of
the Company's total fixed assets, which amounted to MSEK 33.9.
In order to be able to take in new partners, technical and
organisational preparations have been made in the Service Operator
business area. The business area offers companies the opportunity to
gain further returns from their customer bases and brand names by
launching telecom services without major initial investments. As
previously indicated, the sales process is expected to be relatively
long since the offer is of strategic character and aimed at larger
organizations and companies. No agreements have been signed during the
The efforts put behind mobile telephony have thus far exceeded
expectations. During the second quarter the Company has succeeded in
increasing the customer base from 1,800 to 10,600 customers, at the same
time improving profits. Growth continues to be good, but it is not
possible to provide a forecast, as marketing campaigns are tried out on
a weekly basis against defined targets for customer acquisition costs.
CONSOLIDATED Q 2 - Q 2 - 6 months -2001 6 months -2000
INCOME STATEMENT 2001 2000
Gross Traffic 53,823 28,123 101,510 48,748
Discounts 0 -2,684 -267 -2,736
Net Traffic 53,823 25,439 101,243 46,012
Other Operating 137 72 138 435
Total Operating 53,960 25,511 101,381 46,447
Network Expenses -41,161 -20,630 -77,538 -36,079
Direct Sales -3,100 -3,550 -4,884 -4,620
Other External -13,431 -17,756 -33,081 -34,673
Personnel Expenses -8,202 -8,848 -19,389 -17,199
Depreciation of -4,861 -3,005 -10,399 -5,349
Items Affecting 0 0 -9,046 0
Total Operating -70,755 -53,789 -154,337 -97,920
Operating Earnings -16,795 -28,278 -52,956 -51,473
Interest Income 866 1,782 994 1,922
Interest Expenses -1,615 -641 -3,149 -695
Total Financial -749 1,141 -2,155 1,227
Earnings After -17,544 -27,137 -55,111 -50,246
NET EARNINGS -17,544 -27,137 -55,111 -50,246
DATA PER SHARE
Number of 130,019,775 43,304,120 130,019,775 43,304,120
at End of Period
Weighted Average 66,200,545 43,241,398 54,833,386 39,972,194
Number of Shares
During the Period
Loss Per Share, -0.27 -0.63 -1.01 -1.26
CONSOLIDATED BALANCE SHEET Jun 30 Dec 31 Jun 30
SEK 000 2001 2000 2000
Machinery and Equipment 33,877 44,301 30,260
Total Fixed Assets 33,877 44,301 30,260
Customer Receivables 20,110 6,695 8,100
Other Receivables 3,130 23,059 3,542
Prepaid Expenses and Accrued Income 38,000 23,252 17,983
Total Current Receivables 61,240 53,006 29,624
Cash and Bank Balances 82,037 77,386 141,826
Total Current Assets 143,277 130,392 171,450
TOTAL ASSETS 177,154 174,693 201,710
SHAREHOLDERS' EQUITY AND LIABILITIES
Share Capital 6,501 2,167 2,165
Share Premium Reserve 328,262 266,066 265,574
Accumulated Loss -205,424 -87,407 -87,407
Net Earnings -55,111 -118,017 -50,246
Total Shareholders' Equity 74,228 62,809 130,086
Leasing Commitments 10,101 13,944 8,565
Other Long-Term Liabilities 25,000 15,000 5,000
Total Long-Term Liabilities 35,101 28,944 13,565
Leasing Commitments 8,558 9,049 5,253
Accounts Payable 32,240 36,185 39,247
Other Liabilities 889 19,489 1,531
Accrued Expenses and Deferred Income 26,138 18,217 12,028
Total Current Liabilities 67,825 82,940 58,060
TOTAL SHAREHOLDERS' EQUITY AND 177,154 174,693 201,710
CONSOLIDATED CASH FLOW STATEMENT Q 2 - Q 2 - 6 6
SEK 000 2001 2000 months months
- 2001 -
Payments from Customers 35,170 15,972 73,218 34,965
Payments to Suppliers and -64,635 -30,227 - -64,802
Cash Flow From Operations Before -29,465 -14,255 -62,100 -29,837
Interest and Income Tax Paid
Interest Received 866 1,782 994 1,922
Interest Paid -1,615 -641 -3,149 -695
Cash Flow From Operations -30,214 -13,114 -64,255 -28,610
Acquisitions of Tangible Fixed -1,023 -3,949 -3,558 -7,553
Cash Flow From Investment -1,023 -3,949 -3,558 -7,553
New Issue 66,530 0 66,530 161,459
New Debt 0 0 10,000 5,000
Amortization of Debt -2,064 -1,069 -4,066 -1,785
Cash Flow From Financing 64,466 -1,069 72,464 164,674
CASH FLOW FOR THE PERIOD 33,229 -18,133 4,651 128,512
Cash at Beginning of Period 48,808 159,959 77,386 13,314
CASH AT END OF PERIOD 82,037 141,826 82,037 141,826
CONSOLIDATED KEY RATIOS
Millions of SEK (Unless stated
Income statements Q 2 - Q 2 - 6 6
2001 2000 months months
- 2001 -
Total Operating Revenue 54.0 25.5 101.4 46.4
Network Expenses -41.2 -20.6 -77.5 -36.1
Gross Profit1) 12.8 4.9 23.8 10.4
Adjusted Operating Expenses2) -24.7 -30.2 -57.4 -56.5
Depreciation -4.9 -3.0 -10.4 -5.3
Operating Earnings Before Items -16.8 -28.3 -43.9 -51.5
Operating Earnings -16.8 -28.3 -53.0 -51.5
Financial Items -0.7 1.1 -2.1 1.2
Net Earnings -17.5 -27.1 -55.1 -50.2
Balance Sheets Jun 30 Dec 31 Jun 30
2001 2000 2000
Fixed Assets 33.9 44.3 30.3
Current Assets 61.2 53.0 29.6
Cash and Bank Balances 82.0 77.4 141.8
Total Assets 177.2 174.7 201.7
Shareholders' Equity 74.2 62.8 130.1
Long-Term Liabilities 35.1 28.9 13.6
Current Liabilities 67.8 82.9 58.1
Total Shareholders' Equity and 177.2 174.7 201.7
Cash Flow Statements Q 2 - Q2 - 6 6
2001 2000 months months
Cash Flow from Operations -30.2 -13.1 -64.3 -28.6
Cash Flow from Investment Activities -1.0 -3.9 -3.6 -7.6
Cash Flow from Financing Activities 64.5 -1.1 72.5 164.7
Cash Flow for the Period 33.2 -18.1 4.7 128.5
Traffic Margin3), % 24 19 23 22
Gross Margin4), % 24 19 24 22
Gross Margin Before Discounts5), % 24 27 24 27
Operating Capital at End of Period6) 35.8 7.1 35.8 7.1
Equity to Assets ratio at End of 42 64 42 64
Debt to Equity ratio at End of 0.59 0.14 0.59 0.14
1) Total Operating Revenue less Network Expenses.
2) Operating Expenses excluding Network Expenses,
Depreciation and Items Affecting Comparability.
3) Difference between Net Traffic Revenue and
Network Expenses divided by Net Traffic Revenue.
4) Gross Profit divided by Total Operating Revenue.
5) Sum of Gross Profit and Discounts divided by sum
of Total Operating Revenue and Discounts.
6) Sum of Shareholders' Equity and Interest bearing
debt, less Cash and Bank Balances.
7) Shareholders' Equity divided by Total Assets.
8) Interest bearing debt divided by Shareholders'
Stockholm, Sweden, July 17, 2001
Chief Executive Officer
Glocalnet develops and markets telecom services - for fixed and mobile
telephony plus the Internet - to private individuals. Glocalnet is
Sweden's only provider capable of offering these services with an
integrated bill, customer service function and self-service www portal.
Activities are pursued through two business areas: Glocalnet Service
Provider, Sweden's third-largest private fixed telephony operator,
offers Glocalnet-branded telecom services direct to consumers, and
Glocalnet Service Operator, which offers turn-key telecom operation
solutions to other corporations - virtual operators - who want to launch
proprietary branded integrated telecom offerings. Glocalnet is
headquartered in Stockholm, Sweden; its stock is quoted on the Stockholm
Stock Exchange O-list.
For more information, please contact:
Västmannagatan 44 A
SE-113 86 Stockholm
Tel: +46 (0)8 566 34100
Fax: +46 (0)8 566 34141