Year-end financial report January - December 2000

YEAR-END FINANCIAL REPORT JANUARY - DECEMBER 2000 Continuation of strong growth at AudioDev Proforma 1) 2000 1999 Chang e Jan- Jan-Dec Dec Net turnover, SEK mill. 237.1 166.3 +42.6 % Operating profit, SEK 60.0 44.6 +34.5 mill. % - as % of net turnover 25.3 26.8 - Pre-tax profit, SEK m 60.3 - - - as % of net turnover 25.4 - - Profit for the period, SEK 46.0 - - mill 1) Profit and loss statement has been calculated according to the prospectus. Figures in parentheses refer to the period January-December, 1999. * Net turnover increased by 43 percent to SEK 237.1 (166.3) million. * Operating profit increased by 34.5 percent to SEK 60.0 (44.6 proforma) million. * The USA subsidiary expanded in November through the acquisition of the distribution company DataCD, consolidating its position in the USA market. * Sales in the USA more than doubled during the year, to SEK 65.3 (25.3) million. This increase is considered to be in excess of the overall expansion of the market. * AudioDev's sales in the DVD segment amounted to SEK 104.0 (16.6) million. DVD sales thus increased to 44 (10) percent of total sales. Growth in the DVD sector remains very strong. * AudioDevs marketsegment increased with the introduction of Base- products for production-oriented testing. Operations To AudioDev, 2000 was the company's most successful and eventful year since it was established in 1987. Both turnover and profit rose to record levels, and on 21 September, the company's shares were launched on the "O" list of the Stockholm Stock Exchange. Our judgement is that our position in the market was strengthened during the year, and that our market share overall increased. Net turnover increased by 43 percent to SEK 237.1 (166.3) million and the profit for the full year increased to SEK 60.0 (44.6) million. Compared to 1999, invoicing remained relatively consistent through every quarter, mainly because the sales of CD-R testers declined, owing to temporary overcapacity among manufacturers of CD-R discs. Demand for DVD testers grew sharply, which, combined with increased sales of CD testers, compensated for the loss in CD-R. It should be mentioned that profit has developed strongly, despite the adverse influence of forward contracts in USD. Market and products DVD is expanding very strongly, especially in the USA, but also in Europe and Asia. AudioDev's sales in the DVD segment amounted to SEK 104.0 (16.6) million. DVD sales thus increased to 44 (10) percent of total sales. CD maintained its relative share of sales, 32 (30) percent, with sales to a value of SEK 76.0 (49.0) million, indicating that growth remains satisfactory also in this product sector. The temporary overcapacity in production of CD-R discs led to pressure on prices and lower margins to manufacturers. The consequence was that investments in equipment for CD-R production also declined. AudioDev's sales in the CD-R segment totalled SEK 56.9 (99.6) million, representing a decline in the share of total sales to 24 (60) percent. Because we are the only company to develop testers for all optical formats in all geographical markets, we have over the past five years been able to report annual growth of 45 percent. AudioDev's strategy, based on a broad product offering and global coverage, has proved particularly successful in a market that is characterized by rapid, but irregular growth. The market in test equipment does not show a gently rising curve, but instead is characterized by stepped changes in demand. This pattern of strong demand alternating with periods of relative calm is repeated irrespective of optical format or market. In November, the USA subsidiary, AudioDev USA Inc., expanded through the acquisition of the distribution company DataCD, formerly distributor for the competitor DaTARIUS. This has strengthened the organization ahead of the anticipated expansion in DVD in the USA. The development will create the scope for more aggressive activities in the market, together with increased service and support. From having offered testers primarily for reference-measurement of optical media, the product offering was expanded in the year 2000 to include production-oriented test-equipment suited for high-volume manufacturing at established manufacturing facilities. AudioDev's market-segment thereby expanded further. The first product to be launched for this purpose was the CD Base. During 2001, additional Base-testers will be introduced. During the year, the first tester in the market for recordable DVD media was introduced, DVD-R/-RW Pro. Thanks to the flexibility of the SA300 system platform, a tester for recordable DVD formats could be developed quickly to verify the quality of these formats at an early stage. Orders received, order book and net turnover Orders received during the year totalled SEK 187.7 million and the order book at the end of the period amounted to SEK 44.8 million. During the fourth quarter, a decline in market investments was noticed. Net turnover increased by 43 percent to SEK 237.1 (166.3) million. Sales in the USA continue to rise. Invoiced sales in the USA totalled SEK 65.3 (25.3) million during the year. The increase is considered to be in excess of the overall market expansion. Sales in the Asian market accounted for 45 (65) percent of net turnover, while the European market, including OEM sales, represented 22 (14) percent and the North American market 31 (19) percent. Other markets accounted for 2 (2) percent of net turnover. Operating profit and margin Operating profit increased to SEK 60.0 (44.6 proforma) million. Operating profit has been calculated in accordance with the accounting policies stated in the prospectus drawn up in connection with the company's stock market flotation. The operating margin for the period was 25.3 (26.8) percent. Investments Investments in tangible fixed assets totalled SEK 5.4 (5.9) million during 2000. The relatively low level of investment may be explained partly by the fact that AudioDev, on an ongoing basis, charges to expenses PC costs relating to the group's product development. Financial position and liquidity Liquid assets, including short-term investments, amounted to SEK 148.5 (22.3) million on 31 December, and the group's equity ratio was 80.9 (36.9) percent. At the close of the period, the group's equity totalled SEK 245.1 (40.6) million. Undistributed liquid assets including short-term investments and unutilized credit commitments amounted to SEK 172.5 (46.3) million. The group's short-term investments, totalling SEK 125.0 (-) million, have been placed in an interest fund based on treasury bills. The market value of the fund on the balance sheet date was in excess of the nominal value of SEK 1.3 million, which is not included in operating profit. The group's interest-bearing liabilities amounted to SEK 0 (19.4) million. Cashflow The substantial increase in turnover led to a rise in the capital tied up in accounts receivable and stock during the period. Investments were made in stocks of components to guarantee capacity. This caused a negative cashflow from operating activities, in the amount of SEK -7.7 (29.0) million during the period. Personnel In the course of 2000, the average number of employees increased by 29 to 90. At present, the Development Department is the most rapidly expanding department. At year-end, the personnel of this department had doubled to 32. The increase in personnel is a consequence of the increase in volume, as well as preparations ahead of an expected continuation of this expansion and increased sales. Impact of currency The group's invoiced sales are made mainly in USD. Hedging is obtained for a major net exposure in USD, via forward contracts corresponding to 50 percent of the estimated net flow for the 12 months ahead. The strong rise in the US dollar during the year therefore only had a marginally favourable effect on profits. On 31 December, 2000, future flows totalling USD 15 million were hedged at an average exchange rate of USD 1 = SEK 9.68. Parent company Net turnover for the parent company totalled SEK 218.6 (153.9) million and an operating profit of SEK 53.8 (37.5) million was reported. The parent company invested SEK 4.8 (3.5) million in tangible fixed assets in 2000. Undistributed liquid assets, including short-term investments and unutilized credit commitments totalled SEK 169.6 (42.7) million. New share issue In July, options entitling the holders to subscribe for 170,000 new class "B" shares, corresponding to 3,400,000 shares after the 20-for-one split, were exercised. The share capital thus increased by SEK 1.7 million, to SEK 6.7 million. A total of around SEK 24.6 million was generated for AudioDev. AudioDev AB was introduced to the "O" List of the OM Stockholm Stock Exchange on 21 September. The share issue was oversubscribed 16 times and the subscription price was set at SEK 63. In conjunction with the Stock Exchange listing, a new share issue totalling 2,700,000 class "B" shares each with a nominal value of SEK 0.50, was carried out. This led to an increase of SEK 1.3 million in the company's share capital, to SEK 8.0 million. The share issue brought an inflow of capital amounting to SEK 170.1 million into the company. The cost of the share issue, SEK 11.6 million, was charged against the proceeds of the new issue. Outlook According to a report from the independent analysis company Understanding & Solutions, the market in DVD media will grow by an annual average of 40 percent, and CD-R media by an annual average of 25 percent, during the forecast period, which extends to the end of 2004. Against this background, AudioDev considers the outlook for long-term growth in the market for test equipment to be very good. The weakness in orders received during the fourth quarter 2000 continued in the early part of 2001. As a result, the profit for the first half-year will be weak. On the other hand, an improvement in the market is expected and strong order bookings are anticipated for the second half-year. Annual General Meeting The company's annual general meeting will be held on Tuesday 8 May at 4.30 p.m. Location is Bagersalen, S:t Gertrud Kongresser, Bagersgatan 1, Malmö. Dividend The Board of Directors will recommend to the meeting that a dividend of SEK 0.20 should be paid for 2000, which equals a total dividend of SEK 3.2 million . Financial calendar The company's annual report will be distributed to shareholders during week 16, and will be available at AudioDev's headquarters at Kabingatan 9, Malmö. 8 May - Interim Report, January-March 2001 21 August - Interim Report, January-June 2001 31 October - Interim Report, January-September 2001 February 2002 - Year-end financial report Malmö, 28 February, 2001 AudioDev AB (Publ) Jan Barchan Managing Director and Group CEO For further information, please contact: Jan Barchan, Chief Executive Officer Tel: +46-40 690 49 49 Mobile: +46-708 287187 e-mail: jan.barchan@audiodev.com Björn Pysander, Chief Financial Officer Tel: +46-40 690 49 42 Mobile: +46-708 466447 e-mail: bjorn.pysander@audiodev.com ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/03/01/20010301BIT00010/bit0002.doc http://www.bit.se/bitonline/2001/03/01/20010301BIT00010/bit0002.pdf http://www.bit.se/bitonline/2001/03/01/20010301BIT00010/bit0002.xls Appendix