Interim Report January - June 2000

Interim Report January - June 2000 * Sales increased 8 percent to SEK 4,443 m. (4,131). * Operating income, both before and after items affecting comparability, improved significantly in the secon quarter, compared with last year. * Income before tax rose to SEK 111 m. (36). Operating income totaled SEK 85 m. (27). * A bonus on pension funds totaling SEK 55 m. to be repaid by the SPP pension company (Sweden), was recorded as income in the second quarter and booked as an item affecting comparability. * Scribona is capturing market shares in a weak computer products market. Scribona is benefiting from a very strong increase in sales of portable computers. * An exclusive agreement was signed with Bredbandsbolaget, a Swedish broadband services company, covering distribution rights for IT products in Sweden. Scribona has started to make the first deliveries in connection with the agreement. * Operating income before items affecting comparability, and income before tax, are both expected to be higher for the full year 2000. Market Demand varied between Scribona´s market areas. Demand declined in the largest market area, desktop PCs, but increased for portable PCs and copiers. However, stronger market demand was noted during the latter part of the period for the PC product area as a whole. Demand is anticipated to improve further during the rest of the year. Based on preliminary statistics, the PC market in the Nordic region declined 8 percent in the first quarter, measured in the number of delivered units and compared with the corresponding period of 1999. The market decreased less in the second quarter, about 2 percent, although with large variations between Nordic markets. The pattern noted in the first quarter continued, with demand decreasing for desktop models, and with accelerated growth for portable PCs in the first half with almost 50 percent. The decline in the total number of delivered PCs was sharpest in Norway and in Sweden, where deliveries decreased approximately 10 percent. The Finnish market developed the best, showing growth of approximately 5 percent. The market for document management products stabilized after last year's decline. The total number of copier deliveries increased between 5 and 15 percent in all Nordic markets during the first half of 2000. Sales and earnings Sales of the Scribona Group totaled SEK 4,443 m. (4,131), an increase of 8 percent. Based on comparable units, the increase was 10 percent. Growth occurred primarily within the Brand Alliance business area, where sales were up 25%, of which most of the increase was attributable to sales of portable Toshiba PCs. Scribona increased its share of the computer products market during the first half of the year. Income totaling SEK 55 m. has been reported among items affecting comparability and represents the discounted present value of a bonus on pension funds repaid to Scribona by the SPP pension company in Sweden. This corresponds to SEK 1.15 per share after full tax. Operating income was SEK 85 m. (27). Operating income generated by distribution units of the Scribona Solutions and Scribona Distribution business areas was lower than last year, while Scribona Brand Alliance's income improved considerably. Net financial income totaled SEK 26 m. (9) and included a capital gain of SEK 33 m. on the sale of shares in the Norwegian companies Super Office and Office Systems in February. Income before tax was SEK 111 m. (36). Developments by business areas Scribona Solutions The business area's operations were clearly impacted by the low level of investment in IT infrastructure equipment during the first half of the year. A slight improvement in market demand was noted at the end of the period. Sales totaled SEK 583 m. (608) in the first six months of 2000. The business area reported an operating loss of SEK 4 m. (16). The Finnish company reported the largest loss. Due to the business area's weak development, an internal action program was launched that aims to improve profitability during the second half of the year. Changes were also made to the business area's management. In addition, Scribona shares the general opinion of the industry that the market for business support systems will improve during the second half of the year. This improvement will basically have a positive impact on Scribona Solutions' sales, but it will particularly favor Scribona's collaboration with Intentia, a leading provider of enterprise and e- business solutions. Scribona Distribution The business area's sales were negatively affected by the soft market for PC products. Sales totaled SEK 2,816 m. (2,660), an increase of 6 percent. Based on comparable units, sales were 9 percent higher. Sales of Scribona Distribution units in Sweden decreased 3 percent, although sales in the second quarter reached the same level as in the corresponding quarter last year. Other markets showed growth, with the largest increase being noted in Finland. The cooperation with Alfaskop was started in May, and despite the weak market demand, it contributed to the favorable development of Swedish units in the second quarter, resulting in larger market shares. The business area reported an operating loss of SEK 6 m. (3). However, the result for the second quarter was better than in the corresponding quarter of 1999. The Finnish company improved its operating results, compared with the same period last year. The Swedish company reported the largest loss as a consequence of the very weak market for PCs in the beginning of the year. Scribona Brand Alliance Scribona Brand Alliance's agency business developed very strongly during the first half of the year, notably sales of Toshiba's portable PCs within the Toshiba Digital Media division. The market for portables is currently developing very favorably and Toshiba's competitive range is behind the very good trend of sales. Sales of the two document handling systems divisions, Toshiba Document Solutions and Carl Lamm, also developed well. Sales of the business area totaled SEK 1,431 m. (1,146), representing growth of 25 percent. Toshiba Digital Media achieved the largest increase in sales. Operating income was SEK 56 m. (27). All three divisions of the business area achieved higher income. Cash flow and financial position Cash flow of the Scribona Group was SEK -333 m. (-377) in the first half of 2000. Important reasons for the negative cash flow were a substantial decrease in trade accounts payable and the acquisitions made during the period. The Group's net investments totaled SEK 88 m. (40). Net financial capital was SEK -444 m. (-376) at the end of the second quarter. In May, a cash dividend of SEK 1.50 per share (5.00), or a total of SEK 51 m. (171), was paid to shareholders. Key ratios Earnings per share were SEK 2.22 (0.79) in the first half of 2000. Earnings per share during the past 12-month period, excluding items affecting comparability, were SEK 2.16 (2.13 for the full year 1999). Equity per share was SEK 21.64 (20.74) at the close of the period. Return on equity was 12.3 percent during the past 12-month period (5.3 percent for the full year 1999). Excluding items affecting comparability, return on equity was 10.2 percent (9.7 percent for the full year 1999). Return on capital employed was 12.7 percent during the past 12-month period (6.5 percent for the full year 1999). Excluding items affecting comparability, return on capital employed was 9.9 percent (10.2 percent for the full year 1999). The equity/assets ratio was 27.2 percent (29.8 percent) at June 30, 2000. Personnel Scribona had 1,372 employees (1,396) at June 30, 2000. The Group's leadership structure was changed in June with a view to strengthening Scribona's management. Among other improvements, this change has created the conditions for achieving synergies and developing business between the divisions. In connection with the change, Anders Bley was appointed Executive Vice President of the Parent Company Scribona AB. Outlook for the rest of the year Operating income before items affecting comparability and income before tax are both expected to be higher for the full year. Upcoming dates for financial reports Interim Report, nine months ended September 30, 2000 October 27, 2000 Report on 2000 operations (January-December 2000) February 9, 2001 This report has not been examined by the Company's auditors Lennart Svantesson President and CEO Facts about the Scribona Group Scribona is the leading distributor and reseller of information technology products in the Nordic region and offers customers cutting-edge knowledge about products, the industry's most advanced e-commerce system, optimum product availability and a broad program of complementary services. Scribona's operations are organized into three business areas: * Scribona Solutions - valued-added distribution of products and equipment for IT infrastructure. * Scribona Distribution - effective volume distribution of IT products. * Scribona Brand Alliance - operating as the exclusive agent for leading brands. For further information contact: Lennart Svantesson, President and CEO, phone +46 8 734 35 76. Lennart Bernard, Chief Financial Officer, phone +46 8 734 36 91. SCRIBONA - INTERIM REPORT AS OF JUNE 30, 2000 Summary Consolidated Income Statement 2000 1999 2000 1999 1999/2 1999 000 SEK m. Jan- Jan- April- April- July- Jan- June June June June June Dec Total Income 4,443 4,131 2,240 2,012 8,590 8,278 Operating expenses Goods for resale - - -1,918 -1,721 -7,378 - 3,812 3,534 7,100 Other external -237 -213 -117 -100 -428 -404 costs Staff costs -314 -311 -156 -161 -599 -596 Depreciation, -17 -9 -10 -4 -26 -18 goodwill Depreciation, -25 -23 -12 -12 -49 -47 inventories Other operating -8 -6 -4 -1 -15 -13 expenses Items affecting comparability Gain/loss on the - -3 - -2 -31 -34 sale of operations Swedish Pension 55 55 - 55 - Fund, surplus Costs for implementation IT- systems, utilization of - -5 - -5 3 -2 reserves etc. Income before net 85 27 78 6 122 64 financial items Net financial items 26 9 -5 6 29 12 Income before tax 111 36 73 12 151 76 Tax -35 -9 -22 -3 -62 -36 Income after tax 76 27 51 9 89 40 Summary Consolidated Balance Sheet 2000 2000 1999 1999 1999 SEK m. June March Dec Sept June Intangible fixed assets 200 138 147 72 76 Tangible fixed assets 132 133 139 174 175 Other fixed assets 34 33 33 34 36 Inventories 730 771 658 618 711 Current operating 1,529 1,513 1,606 1,408 1,375 receivables Financial assets 101 65 220 125 12 Total assets 2,726 2,653 2,803 2,431 2,385 Shareholders´ equity 741 741 721 697 710 Provisions 43 55 68 39 47 Long-term operating 6 7 7 8 9 liabilities Current operating 1,391 1,634 1,676 1,319 1,231 liabilities Financial liabilities 545 216 331 368 388 Total liabilities and 2,726 2,653 2,803 2,431 2,385 Shareholders´ equity Capital employed 1,185 892 832 940 1,086 Net financial capital -444 -151 -111 -243 -376 SCRIBONA - INTERIM REPORT AS OF JUNE 30, 2000 Sales by Business Area 2000 1999 2000 1999 1999/2 1999 000 SEK m. Jan- Jan- April- April- July- Jan- June June June June June Dec Solutions 583 608 288 294 1,123 1,148 Distribution 2,816 2,660 1,431 1,307 5,464 5,308 Brand Alliance 1,431 1,146 703 547 2,752 2,467 Total business areas 4,830 4,414 2,422 2,148 9,339 8,923 Intra-group -387 -283 -182 -136 -749 -645 Total 4,443 4,131 2,240 2,012 8,590 8,278 Results Before Items Affecting Comparability 2000 1999 2000 1999 1999/2 1999 000 SEK m. Jan- Jan- April- April- July- Jan- June June June June June Dec Solutions -4 16 -1 10 5 25 Distribution -6 3 2 -1 -9 0 Brand Alliance 56 27 27 10 121 92 Total business areas 46 46 28 19 117 117 Joint Group -16 -11 -5 -6 -22 -17 Total 30 35 23 13 95 100 Key Figures 2000 1999 2000 1999 1999/2 1999 000 Jan- Jan- April- April- July- Jan- June June June June June Dec Operating margin before items affecting comparability 0.7% 0.8% 1.0% 0.6% 1.1% 1.2% Earnings per share 2.22 0.79 1.49 0.26 2.60 1.17 - excluding items 1.05 1.02 0.32 0.47 2.16 2.13 affecting comparability Shareholders´ equity 21.64 20.74 21.64 21.06 per share Equity/assets ratio 27.2% 29.8% 27.2% 25.7% Return on capital 12.7% 6.5% employed before tax - excluding items 9.9% 10.2% affecting comparability Return on shareholders´ 12.3% 5.3% equity after tax - excluding items 10.2% 9.7% affecting comparability Capital turnover rate 8.9 8.5 Capital employed, 962 978 average Shareholders´ equity, 725 750 average Number of employees 1,372 1,396 1,372 1,386 Number of shares, 34,24 34,24 34,240 34,24 thousand 0 0 0 SCRIBONA - INTERIM REPORT AS OF JUNE 30, 2000 Cash Flow Statement 2000 1999 2000 1999 1999/2 1999 000 SEK m. Jan- Jan- April- April- July- Jan- June June June June June Dec ONGOING OPERATIONS Income after financial 111 36 73 12 151 76 items Adjustments for items not included in cash flow Depreciation 42 32 22 16 75 65 Other -1 0 0 0 -4 -3 152 68 95 28 222 138 Tax paid -17 -15 -9 -5 -31 -29 Cash flow from ongoing operations before changes in working 135 53 86 23 191 109 capital Cash flow from changes in working capital Changes in -73 257 40 204 -12 318 inventories Changes in 99 334 -7 108 -145 90 receivables Changes in -355 -810 -277 -337 99 -356 liabilities Cash flow from ongoing -194 -166 -158 -2 133 161 operations INVESTMENT ACTIVITIES Acquisitions of -71 0 -71 0 -163 -92 subsidiaries/operations Sale of 2 0 0 0 2 0 subsidiaries/operations Acquisition of tangible -19 -41 -13 -25 -41 -63 fixed assets Sale of fixed assets 0 1 0 1 52 53 Cash flow from investment -88 -40 -84 -24 -150 -102 activities FINANCING ACTIVITIES Dividend paid -51 -171 -51 -171 -51 -171 Cash flow from financing -51 -171 -51 -171 -51 -171 activities Cash flow from the period -333 -377 -293 -197 -68 -112 Net financial capital, -111 1 -151 -179 -376 1 opening balance Net financial capital, -444 -376 -444 -376 -444 -111 closing balance ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/07/17/20000717BIT00410/bit0001.doc http://www.bit.se/bitonline/2000/07/17/20000717BIT00410/bit0002.pdf