Interim report for the period January-September 2001

2 Cell Network AB (publ), company registration no. 556216-0357 Cell Network AB (publ), company registration no. 556216-0357 Interim report for the period January-September 2001 Implemented changes improve results in a weak but more stable market Cell Network's operations within business development, systems integration and convergence performed better in the third quarter than both the previous quarter and the third quarter last year. The action programme to restore profitability has pushed up the utilisation rate month by month, so countering the effect of slightly lower prices. Demand has stabilised but at low levels. In view of the situation, Cell Network has decided to embark on further streamlining and efficiency measures. "The result is a cost-efficient and professional Cell Network focused on those operations which have historically proven to be profitable,"" explains CEO Niklas Flyborg. "Cell Network will continue to evolve and develop with the market and new technology but at a more balanced rate than previously. The group's smaller size and sharper focus provide a stable platform for future profitable growth." · Net sales for the third quarter totalled SEK 234 m (321). The number of employees has decreased by around 400 employees to 1 380 during the quarter as a result of disposals and redundancies. · The average utilisation rate for the third quarter was unchanged from the second quarter at 63%. However, the utilisation rate did improve month by month during the third quarter and was 64% in September. General expenses per employee were 5% down on the second quarter. · Gross earnings (EBITA) for the third quarter were better than both the previous quarter and the third quarter last year. Gross earnings before items affecting comparability came to SEK -62 m (-85) in the third quarter. Restructuring costs of SEK -34 m relating to streamlining and rationalisation measures have been charged to the third-quarter accounts. Gross earnings including these restructuring costs totalled SEK -96 m. The rationalisation measures are expected to lead to monthly savings of SEK 5 m. · As announced previously, the Cell Network subsidiary Cell Network Frölunda Intressenter intends to make a cash offer to minority shareholders in Cell Network Frölunda. Cell Network has also taken steps to suspend the compulsory redemption procedure. The provision for compulsory redemption costs in the balance sheet has therefore been reduced from SEK 110 m to SEK 15 m, which is the total expense if all shareholders accept the offer. The change in the provision has not affected the financial result. Market outlook As a result of the downturn in the global economy and the uncertain market outlook, both the private sector and the public sector are reviewing their IT investment plans for this year and next. It is therefore likely that the longer sale cycles will persist and that clients will postpone orders and be more cautious about entering into long-term deals. Market visibility remains limited. However, the development and implementation of new technology will continue to change business and fuel demand for qualified services and projects. Several commentators, including Cell Network's clients, believe that investment in IT will increase in 2002, albeit modestly. The rate of growth will vary from service to service and sector to sector. Cell Network anticipates healthy future demand for business development and systems development services for business-critical solutions, and for systems integration services, for instance in supply chain management and ERP systems. IT investments for cost-cutting purposes may also be given higher priority as clients' market outlook deteriorates. Demand for convergence services will probably rise next year in line with sales of handheld computers, the development of existing GPRS networks and the rollout of third generation mobile telephony. We are noting growing activity when it comes to embedded systems in the automotive industry and other sectors. In addition, Cell Network is seeing healthy growth in the energy sector and the public sector, especially the armed forces, where extensive structural changes and new technology are triggering a need for Cell Network's expertise. Demand for Cell Consulting's management consulting expertise is also good. Long-term client relations Good long-term client relations have an increasingly important role in a tougher market where more and more of the largest buyers of IT services are choosing to focus on closer relationships with a smaller number of suppliers. Cell Network has an important part to play as a complement to the largest players. Cell Network has built up good longstanding relationships with several of northern Europe's leading companies. We have worked with nine of our ten largest clients for more than five years and have supplied projects and services to more than half of our existing clients for more than three years. Framework agreement clients account for more than 40 per cent of Cell Network's sales and existing clients for around 75 per cent. Cell Network has framework agreements with clients such as Volvo, SAAB, Telia, Ericsson, Europolitan/Vodafone, Statoil, Pharmacia, Siemens, Swedish Post, the Swedish Civil Aviation Administration, the National Swedish Social Insurance Board, the Swedish Defence Materiel Administration, Tele2, SAS, the City of Stockholm and the Swedish Armed Forces. Objectives Cell Network's objective is profitable growth. We aim to match or exceed the average rate of growth in the markets in which we operate. Cell Network's utilisation rate and earnings improved during the third quarter. For 2002, our goal is to grow with the market and generate a gross margin (EBITA margin) of at least 5 per cent. Over a full business cycle, our goal is a gross margin in excess of 10 per cent. Action programme for profitability Cell Network is now taking additional steps in its action programme to restore profitability. Cell Network's core operations will continue to evolve and develop in pace with the market and new technology but at a more balanced rate than previously. The result is a more clearly defined Cell Network with a focused offering, considerably reduced financial commitments and a stronger cash position. We have laid the foundations for a profitable and focused consulting operation in the northern European market, spanning business development and systems integration, convergence and communication. The new Cell Network is smaller but in a far better position to return to the profitability that the company consistently enjoyed until the weak last 18 months. Monthly savings after the planned rationalisation measures that have yet to be implemented are estimated at SEK 5 million. Restructuring costs of SEK 34 m have been charged to the third-quarter accounts to cover staff and rental costs. Cell Network will be moving out of its premises on Regeringsgatan in November. The new offices are located in premises already leased by the group, which is therefore expected to generate annual savings of SEK 8 m. Cell Network has previously announced that the following elements of the action programme are complete: · Streamlining of Nordic operations · Disposal of web-oriented companies Cell Network France and Aperto in Germany · Sale of the Cell Media/Communication business area through the disposal of Journalistgruppen, Propello and Cell Interactive TV · Reduction in central costs The impact of these measures on the group's results was reported in the second-quarter accounts. The effects of the measures taken during the second and third quarters as well as those planned for the fourth quarter that have yet to be implemented are as follows: · The divestment of companies will, among other things, have reduced future commitments in the form of performance-based additional purchase sums of SEK 80 m to a maximum of SEK 365 m. · Through divestment, the expected second-half operating loss of approximately SEK 35 m can be avoided. · Cutbacks mainly in the Nordic region give monthly savings of SEK 11 m. · Group goodwill has been reduced by SEK 548 m. · The provision for compulsory redemption has been reduced by SEK 95 m. · During the action programme in the second and third quarter, the number of employees has been reduced by 500 persons to 1 380. January-September 2001 Sales and earnings Group net sales for the period totalled SEK 1 003 m (1 079). The reduction of 7% relates partly to the disposal of some of the company's operations and partly to worsening market conditions. Sales generated by international operations fell by 4% to SEK 352 m (365). Divided by industry sector, sales were distributed as follows: Telecom 20%, Public 14%, Financial Services 9%, Automotive 9% and Retail/Consumer Brands 8%. This distribution is roughly the same as the last quarter. Earnings before goodwill amortisation charges and items affecting comparability amounted to SEK -163 m (-136). This decrease is attributable to worsening market conditions both in Sweden and internationally. Items affecting comparability comprise restructuring costs of SEK 100 m. These costs are a direct result of redundancies, restructuring measures and other steps taken to restore profitability and streamline the group. Earnings after restructuring costs and before goodwill amortisation charges (EBITA) amounted to SEK -263 m (-248). On 11 July 2001 the 51% stake in Aperto was sold to Germany's DeltaVest. The sale generated a capital loss of SEK 150 m. As part of the deal a capital injection of SEK 14 m was paid to Aperto and an accrued liability of SEK 19 m to the previous owners was paid in July. This means that there are no longer any outstanding commitments to Aperto, the previous owners or DeltaVest. The Cell Media/Communication business area was sold through the disposal of subsidiary Cell Interactive TV to SPARKidea Consulting in London on 6 July and the sale of subsidiaries Journalistgruppen and Propello to Bure Equity on 13 July. These transactions will increase the group's cash reserves by SEK 46 m while generating a capital loss of around SEK 32 m. On 27 July, the company sold its shares in Cell Network France to the former management, triggering a capital loss of SEK 85 m. There are no longer any outstanding commitments to either the buyers or previous owners. Allowances had been made in the second-quarter accounts for the capital losses resulting from the above disposals in the form of a SEK 261 m write-down of goodwill. Capital losses from the sale and write-down of fixed assets amount to SEK --321 m. Of this, SEK --268 m is attributable to the disposal of subsidiaries, SEK --38 m refers to the write-down of shares in companies part-owned by Cell Innovation and SEK --15 m relates to write-downs in conjunction with the action programme. Earnings after financial items amounted to SEK -842 m (-322). Significant events after the period-end On 9 October, it was announced that Cell Network''s subsidiary, Cell Network Frölunda Intressenter, would be making a cash offer of SEK 20 per share to minority shareholders in Cell Network Frölunda, i.e. those shareholders who did not accept the public offer made during the merger between Mandator and Cell Network. On the same date, Cell Network withdrew its request for the compulsory redemption of shares and transferred all its shares in Cell Network Frölunda to the newly formed subsidiary, Cell Network Frölunda Holding. The legal position is uncertain in terms of whether the action taken will lead to the cancellation of the compulsory redemption procedure. It is not possible at this point in time to say when a final settlement will be made. Cell Network is of the opinion that the conditions for compulsory redemption of the shares no longer apply. Given that Cell Network will incur costs of SEK 15 m if all of the minority shareholders accept the cash offer, the provision in the balance sheet has been reduced from SEK 110 m to SEK 15 m based on the assessment that the compulsory redemption procedure will be suspended. An offer is expected to be announced at the beginning of November 2001. Goodwill In line with previous period-ends, a valuation has been made of the group''s goodwill. This has been valued by calculating the present value of expected cash flows from acquired companies in accordance with the recommendations set out by the Swedish Financial Accounting Standards Council. The review at the end of the second quarter revealed that reported goodwill, related primarily to international operations, was not justifiable and so it was written down by SEK 191 m. No further adjustment was made in the third quarter. Personnel At the end of the third quarter, the number of employees stood at 1 380, a reduction of 389 compared to the previous quarter. 340 of these employees related to operations that have been sold. Financial position Cash flow from operating activities during the first nine months amounted to SEK -155 m, which is SEK 126 m better than last year. Cash flow during the third quarter amounted to SEK -84 m, compared to SEK - 149 m during the third quarter last year. The holiday period means that the third quarter is seasonally the weakest period during the financial year. Cash flow from investing activities amounted to SEK -185 m (-139), of which SEK 23 m related to investments in tangible fixed assets, SEK - -49 m related to additional purchase sums paid while SEK 98 m to the financing of Cell Consulting AG. Cash flow from financing activities amounted to SEK 206 m (19), of which SEK 256 m is attributable to the new share issue and SEK -58 m to loan repayments. Shareholders' equity at the period-end was SEK 491 m compared to SEK 923 m at the end of 2000, giving an equity/assets ratio of 50%, against 43% in the second quarter. Provisions amounted to SEK 150 m, with SEK 49 m relating to estimated additional purchase sums for previous acquisitions. This is a decrease of SEK 58 m compared to the previous quarter. This reduction is partly due to the fact that certain commitments were removed with the sale of subsidiaries Aperto, Journalistgruppen and Cell Network France, and partly to the revaluation of future additional purchase sums. Provisions also include SEK 15 m for the compulsory redemption of shares in Cell Network Frölunda, a reduction of SEK 95 m from the second quarter. The change is due to a reappraisal of the cost of the transaction. At the end of the third quarter, liquid funds totalled SEK 150 m. In addition to this there were unused credit facilities of SEK 73 m. The Board of Cell Network assesses that the group''s liquidity reserve in combination with planned measures will cover the liquidity requirement for at least 12 months ahead. New issue At the Extraordinary General Meeting of 10 May 2001, it was resolved to carry out a new share issue with preferential rights for existing shareholders. The purpose of this share issue was to strengthen the group's financial position, provide scope for expanding the management consulting operations in Germany, and to prepare for non-operational financial commitments in the form of additional purchase sums for acquisitions as well as the compulsory purchase of shares in the event of any drop in demand. The issue, which was taken up at 100%, generated SEK 256 m after the deduction of issue expenses of SEK 15 m. Each existing share entitled the holder to subscribe for a newly issued share at an issue price of SEK 3. Investments Total gross investments in tangible fixed assets during the accounting period stood at SEK 23 m (41). Investments in company acquisitions and other intangible fixed assets, including additional purchase sums as yet unpaid, totalled SEK 0 m (638). Investments in financial fixed assets amounted in total to SEK 98 m (72) and relate to the funding of Cell Consulting AG. Third quarter 2001 Group net sales during the third quarter amounted to SEK 234 m (321), a decrease of 27%, or 19% adjusted to take account of operations sold. Sales generated by international operations fell by 31% to SEK 83 m (121), or 27% adjusted to take account of operations sold. This fall was due to the weaker market trend. During the period, the group's capacity utilisation rate was 63%, which was on a par with the previous quarter. Capacity utilisation gradually improved during the third quarter and stood at 64% in September. The weak market during the second and third quarters has led to slightly lower price levels. Earnings before goodwill amortisation charges and restructuring costs stood at SEK -62 m (-85), which is an improvement of SEK 23 m on the same period last year and SEK 14 m on the second quarter, despite the holiday period. This improvement has been attributed to the impact of the action programme that got under way during the second quarter. The result is charged with SEK 34 m in restructuring costs pertaining to planned action programme measures that are yet to be implemented. The measures are expected to result in monthly savings of around SEK 5 m. After items affecting comparability, earnings before goodwill amortisation charges (EBITA) stood at SEK -96 m (-94). Business area developments Cell IT/Internet During the third quarter, net sales in the Cell IT/Internet business area amounted to SEK 203 m (299), a fall of 32%. The operating loss stood at SEK -40 m (-54), which was SEK 14 m better than last year and SEK 5 m better than the second quarter. The number of employees fell from 1 299 at the end of the second quarter to 1 114, largely on account of the disposal of various units. Cell Network continues to enjoy the confidence of its clients and entered into new framework agreements with Swedish Post during the third quarter. Its involvement in the public sector market is substantial and includes agreements with the Swedish Defence Materiel Administration and the Norwegian Armed Forces. Following the implementation of the action programme, Norwegian operations are once again showing profitability, partly thanks to major contracts with Statens Innkrevingssentral and Statoil. Cell Telecom During the third quarter, net sales in the Cell Telecom business area amounted to SEK 41 m (46), a fall of 11%. The operating loss stood at SEK -2 m (4). The number of employees fell from 186 in the second quarter to 171. The telecom sector has yet to recover from the slowdown in the second quarter. Cell Telecom is countering the drop in demand from the telecom industry with new contracts with operators and end-users. Cell Telecom has entered into a framework agreement with Europolitan/Vodafone and now has framework agreements with the three largest mobile telephony operators in Sweden. Cell Telecom also won new convergence projects during the quarter for end-users in the energy and defence industries, and has extended its relationship with ICA Bank. Cell Telecom is expected to post profits for the full year 2001. Cell Media/Communication This business area was sold in July 2001. Cell ITS Net sales generated by Cell ITS during the third quarter totalled SEK 15 m (9), while the operating loss stood at SEK -4 m (-16). The number of employees totalled 73, compared to 75 in the second quarter. Cell ITS entered into important agreements with the Swedish Defence Materiel Administration and the Swedish Civil Aviation Administration during the quarter. Demand for management and decision training using simulators is probably set to rise in the aviation and defence sectors in response to growing concern about security around the world. Accounting policies This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's Recommendation No. 20, "Interim reporting". From 2001 a number of new recommendations from the Swedish Financial Accounting Standards Council came into force. Recommendation No. 9, "Income taxes", has affected both the income statement and the balance sheet. Comparative figures for previous periods have been restated in accordance with Recommendation No. 5, "Changes in accounting policies". Furthermore, the implementation of Recommendation No. 18, "Earnings per share", has led to the restatement of comparative figures for previous periods. In all other cases, unchanged accounting policies have been applied. Future financial reports -- 2001 The year-end report for 2001 will be published on 15 February 2002. Stockholm, 25 October 2001 Cell Network AB (publ) Niklas Flyborg, President and CEO This report has not been the subject of a review by the company's auditors. Questions regarding this report should be addressed to: Niklas Flyborg, President and CEO, Tel: +46 8 52 20 40 02 Gunilla Rudebjer, CFO, Tel: +46 8 52 20 41 18, +46 709 84 38 36 Robert Karlsson, Director of Corporate Communications, Tel: +46 8 52 20 40 50, +46 709 56 51 41, robert.karlsson@cellnetwork.com Net sales and EBITA per business area, SEK m Qtr3 Qtr3 Jan-Sep Jan-Sep Jan-Dec 2001 2000 2001 2000 2000 Net sales: Cell IT/Internet 202.9 299.2 807.4 1 229.2 880.6 Cell Telecom 41.3 158.2 185.4 46.3 129.8 Cell Media - 23.7 81.5 154.5 103.8 Cell ITS 14.8 8.8 56.2 72.8 58.9 Parent company operations 9.4 12.7 34.5 58.8 42.7 Elimination internal sales -34.1 -70.0 -134.4 - -201.5 136.7 Total net sales 234.3 320.7 1 003.3 1 1 499.2 079.2 EBITA: Cell IT/Internet -39,6 -53.7 -92,5 -86.6 -69.3 Cell Telecom -2.2 4.3 3.9 16.7 11.6 Cell Media - -4.1 -11.1 -7.4 4.1 Cell ITS -4.4 -15.8 -11.9 -50.9 -35.1 Parent company operations -15.9 -15.7 -51.7 -61.2 -47.7 EBITA, operations -62,1 -85.0 -163,3 -189.4 -136.4 Refund from SPP - - - 36.0 35.3 Transaction costs - - - - -103.4 105.3 Merger costs - -9.0 - -54.9 -41.7 Profit on disposal of operations - - - 30.5 - Restructuring costs -34.1 - -99.7 -13.1 - Total items affecting comparability -34.1 -9.0 -99.7 -104.9 -111.8 EBITA, group -96,2 -94.0 -263,0 - -294.3 248.1 Net sales and EBITA per geographical area, SEK m Qtr3 Qtr3 Jan- Jan- Jan- 2001 2000 Sep Sep Dec 2001 2000 2000 Net sales: Sweden 176.5 257.3 750.9 1 807.9 133.7 International 82.6 120.6 352.3 365.4 508.2 Parent company 9.4 12.7 34.5 42.7 58.8 operations Elimination internal -34.1 -70.0 - - - sales 134.4 136.7 201.5 Total net sales 234.3 320.7 1 1 1 003.3 079.2 499.2 EBITA: Sweden -33.2 -55.4 -56.7 -74.7 - 118.0 International -13.0 -13.9 -54.9 -14.0 -10.2 Parent company -15.9 -15.7 -51.7 -47.7 -61.2 operations EBITA, operations -62.1 -85.0 - - - 163.3 136.4 189.4 Consolidated income statement, in summary, SEK m Qtr3 Qtr3 Jan- Jan- Jan- 2001 2000 Sep Sep Dec 2001 2000 2000 Net sales 234.3 320.7 1 1 1 003.3 079.2 499.2 Cost of operations - - -1 -1 -1 291.9 403.6 148.2 199.5 659.6 Items affecting -34.1 -9.0 -99.7 - - comparability 111.8 104.9 Depreciation of fixed -4.6 -2.1 -18.4 -16.1 -29.0 assets Gross earnings (EBITA) -96.2 -94.0 - - - 263.0 248.1 294.3 Amortisation of -12.9 -32.0 -72.1 -77.9 -99.5 intangible fixed assets Write-down of intangible - - - - - fixed assets 191.1 171.3 Income from shares in 0.0 -0.1 0.0 0.4 0.8 associated companies Operating loss - - - - - 109.1 126.1 526.3 325.6 564.3 Capital gains on the sale of subsidiaries and write- -23.7 - - - -40.0 down of financial fixed 321.4 assets Income from financial -1.8 -1.3 5.8 4.0 7.9 investments Loss after financial - - - - - items 134.6 127.4 841.8 321.6 596.4 Tax -3.9 -10.1 -4.4 0,8 5.1 Minority shares 0.1 0.1 7.2 0.6 5.3 Net loss for the period - - - - - 138.4 137.4 839.0 320.2 586.0 Share data Jan- Jan- Jan- Sep Sep Dec 2001 2000 2000 No of shares on 181 75 82 closing day, in 046 115 524 thousands Before Average no of shares, 118 74 75 dilution in thousands 119 494 562 EBITA per share, SEK -2.23 -3.33 -3.89 Earnings per share, -7.17 -4.40 -7.76 SEK Shareholders' equity 2.71 12.80 11.18 per share, SEK After full Average no of shares, 118 74 75 dilution in thousands 119 494 562 EBITA per share, SEK -2.23 -3.33 -3.89 Earnings per share, -7.17 -4.40 -7.76 SEK Shareholders' equity 2.71 12.80 11.18 per share, SEK The share data has been calculated in accordance with the Swedish Financial Accounting Standards Council's Recommendation No 18 "Earnings per share". Consolidated balance sheet, in summary, SEK m 30-09- 30-09- 31-12- 2001 2000 2000 Assets Intangible fixed assets 260.7 1 880.4 242.9 Tangible fixed assets 54.3 80.9 67.9 Financial fixed assets 139.1 133.5 115.3 Accounts receivable 165.3 234.9 302.2 Other current assets 212.3 217.6 180.7 Liquid funds 150.0 219.4 274.1 Total assets 981.7 1 2 820.7 129.2 Shareholders' equity and liabilities Shareholders' equity 491.4 961.3 923.3 Minority interests - 13.5 2.3 Provisions 149.9 782.1 436.1 Note 1 Interest-bearing liabilities 12.9 64.5 71.5 Other liabilities 327.5 307.8 387.5 Total shareholders' equity and 981.7 1 liabilities 2 820.7 129.2 Change in equity, SEK m Share Curre Restr Resul Net Total capit nt icted t profi al new reser broug t/ share ves ht loss issue forwa for rd the year Opening balance, 01-01- 78.4 48.0 983.2 52.1 35.7 1 2000 197.4 Adjusted accounting 7.1 6.8 13.9 policies Adjusted opening 78.4 48.0 983.2 59.2 42.5 1 balance, 01-01-2000 211.3 Appropriation of 42.5 -42.5 profit Share issue -- 71.8 29.0 -39.3 61.5 contribution in kind Premium, subscription 16.1 16.1 options Translation 8.3 8.3 differences Dividends -15.7 -15.7 Net profit/loss for - - the year 320.2 320.2 Closing balance, 30-09-150.2 77.0 960.0 94.3 - 961.3 2000 320.2 Opening balance, 01-01-165.0 2.1 1 69.1 - 923.3 2001 273.1 586.0 Appropriation of - 586.0 profit 586.0 Change in provision 95.0 95.0 for compulsory redemptions Share issue 181.1 75.2 256.3 Share issue -- 22.0 -2.1 46.1 66.0 contribution in kind Premium, subscription -0.5 -0.5 options Translation -9.7 -9.7 differences Net profit/loss for - the year -839. 839.0 0 Closing balance, 30-09-368.1 - 1 - - 2001 488.9 526.6 839.0 491.4 Consolidated cash flow statement, in summary, SEK m Jan- Jan- Jan- Sep Sep Dec 2001 2000 2000 Cash flow before changes - - - in working capital 170.1 208.1 306.1 Change in working capital 15.2 -73.1 4.5 Cash flow from operating - - - activities 154.9 281.2 301.6 Acquisition of -50.3 -13.1 -79.9 subsidiaries Disposal of subsidiaries -13.8 0.5 31.5 Investments in financial -98.2 -71.9 -81.8 fixed assets Cash flow from other -22.8 -54.3 -51.0 investments Cash flow from investing - - - activities 185.1 138.7 181.2 Cash flow from financing 206.5 18.5 135.3 activities Change in liquid funds - - - 133.5 401.4 347.5 Liquid funds, opening 274.1 620.6 620.6 balance Exchange rate differences 9.3 0.2 1.0 in liquid funds Liquid funds, closing 150.0 219.4 274.1 balance Key ratios Qtr3 Qtr3 Jan- Jan- Jan- 2001 2000 Sep Sep Dec 2001 2000 2000 EBITDA, SEK -91.6 -91.9 - - - m 244.7 232.0 265.3 EBITDA, % -39.1 -28.7 -24.4 -21.5 -17.7 EBITA, SEK m -96.2 -94.0 - - - 263.0 248.1 294.3 EBITA, % -41.1 -29.3 -26.2 -23.0 -19.6 Pre-tax -57.4 -39.7 -83.9 -29.8 -39.8 margin, % Equity/asset 50.1 45.1 50.8 s ratio, % Net sales per 583 569 796 employee, SEK 000s Net sales per 755 711 995 consultant, SEK 000s Utilisation rate, % 64 64 Debt/equity ratio, % 2.6 6.7 7.7 Return on - -29.5 -54.9 shareholders' equity, 118.6 % Return on shareholders' equity - -19.2 -45.1 excl items affecting 104.5 comparability, % Return on capital - -52.5 employed, % 111.8 -27.5 Note 1 Provisions, SEK m 2001- 2000- 2000- 09-30 09-30 12-31 Provisions for tax 10.5 9.6 13.1 Pension provisions 0.8 - 0.3 Provisions for guarantee commitments - 1.4 0.5 Compulsory redemption of shares in 15.0 110.0 110.0 Cell Network Frölunda AB Additional purchase sums due within a 33.1 487.4 131.4 year of the balance-sheet date Additional purchase sums due over a 15.7 173.7 176.2 year after the balance-sheet date Reserve for restructuring 74.8 - 4.6 Total provisions 149.9 782.1 436.1 The provision for compulsory redemptions relates to the estimated settlement for the remaining 3.3% of shares in Cell Network Frölunda AB. The figure is based on full acceptance of the new cash offer of SEK 20 per share. Cell Network's acquisition model means that, on the one hand, the group pays a fixed purchase sum and, on the other, an additional purchase sum, which is payable subject to certain set targets being met within two to three years of the acquisition. The estimated future additional purchase sum is entered in the books as a provision. Every time the books are balanced, the future purchase sum is reassessed, with any revaluation thus affecting provisions and goodwill. Provisions for additional purchase sums due within a year of the balance-sheet date (SEK 33 m in total) are to be settled in cash. In the case of provisions relating to additional purchase sums that are due more than one year after the balance-sheet date (SEK 16 m in total), SEK 3 m are to be settled in cash, while the balance can be settled either in cash or through the issue of new shares, in accordance with Cell Network's choice. Compared to previous quarters, provisions for additional purchase payments have decreased by SEK 58 m, where SEK 10 m of this figure relates to commitments that have ceased through the disposal of Cell Network France, SEK 19 m to the July payment that was part of the Aperto disposal and the remaining SEK 29 m to a new estimate of future additional purchase sums due. Pledged assets and contingent liabilities Assets pledged as security for bank guarantees and credit facilities totalled SEK 91 m of which SEK 73 m relates to charges on company assets, SEK 14 m to blocked bank funds and SEK 4 m to other collateral. Unused credit facilities amounted to SEK 73 m. Assets pledged stood at SEK 49 m as at 31-12-2000. Contingent liabilities (guarantees) stood at SEK 20 m, compared with SEK 29 m as at 31-12-2000. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/25/20011025BIT01130/bit0003.pdf