Interim Report January - June 2001

Interim ReportJanuary - June 2001 ConNova Group AB (publ) Operations during the period A certain recovery in the market could be noticed as early as in Q1 this year, and the positive trend continued during Q2. The inflow of orders rose 26% to SEK 21.0 million compared with the same period the previous year (SEK 16.7 million). The order book total at the end of the period was SEK 21.2 million, an increase of 13% compared with the previous year (SEK 18.8 million). The figure had more than doubled compared with the level at the beginning of the year. The increase in the inflow of orders has not had an impact in terms of revenues during the period. This is due to a small opening order book total, the fact that there has not yet been enough time for orders received towards the end of the period to generate revenues, and that orders received are spanning periods of several years to a greater extent than previously. Long-term contracts with pricing models based on current payments provide ConNova with higher revenues and a more stable flow of revenues, but reduce the short- term revenues effect. Revenues during the first half-year amounted to SEK 8.9 million compared with the corresponding period the previous year (SEK 22.4 million). During the period, the prospective customer base has continued to develop favourably, although manifest caution can still be noticed in the decision-making processes of customers. We expect the market to continue to recover. Over the period, the operations have focused on cultivating and bolstering the prospective customer base. The results of this process include an order for BizManager from the Chinese Channel in London as well as new assignments for ConNova TVX. ConNova has also delivered supplementary projects to existing customers, and has completed the latest version of BizManager, which is now a complete basic product that can be delivered alongside partners with relatively small work input from ConNova. During the period under review, expenses amounted to SEK 31.4 million (SEK 45.0 million). All internal product development expenses (totalling SEK 7.2 million) have been charged directly to the profit/loss. During the period, a partner agreement for sales and delivery has been signed with Cap Gemini, which has also trained a special BizManager team during the spring. Previous collaborative projects with Soluziona and Sema Group have been further developed, and a number of tenders and sub- projects have been delivered alongside partners. Because of the development within partner relations, ConNova's need for in-house distribution and product development resources has been reduced. Developments within ConNova TVX The subsidiary, ConNova TVX AB, which manages customer service on an assignment basis, has demonstrated a positive trend during the period. A previous collaboration with NSAB has been extended, leading to a distribution assignment for another TV channel, ORT. ConNova TVX's main competitor, which has been competing with low prices for several years, recently announced that it is winding up its operations in the autumn. ConNova TVX is currently involved in discussions relating to more potential assignments for TV channels that will lack a distributor due to the competitor's closure. There will be no established competitor to ConNova TVX for the service they require as of the autumn. We expect that pricing for our services can develop healthily following several years of tough pricing pressure. Profit/loss and liquidity Net sales for the first half of 2001 amounted to SEK 8.9 million (SEK 22.4 million). The profit/loss amounted to -SEK 22.3 million (-SEK 21.9 million). Expenses for the first half totalled SEK 31.4 million (SEK 45.0 million), of which SEK 7.2 million related to internal product development (SEK 8.7 million). The reduced expenses are mainly a result of the staff reduction process initiated towards the end of 2000. ConNova continues to charge all product development costs to the financial result as they arise. The liquidity trend has not been as good as planned, but is satisfactory. The volume of expenses will reduce considerably now that the basic development process for BizManager is complete, and the broadly extended collaboration with partners reduces the need for in-house resources for distribution and further software development. General accounting principles The report is prepared in accordance with Recommendation No. 20, Interim report, of the Financial Accounting Standard Council. The company applies the accounting principles and calculation methods used in the latest annual report Organisation At the end of the period, the number of employees amounted to 52, which can be compared with 70 at the same time last year. Because BizManager is now complete as a standardised basic product, and collaborative relationships have been established with several partners within sales, delivery and development, ConNova's need for in-house distribution and product development staff has continued to decrease. This has brought about the introduction of a further staff reduction process following the end of the period. During Q2, the company's Managing Director, Christian Ekström, left the company and has been replaced by Claes Rossby. The remainder of the year The market for customer management systems for media operators is gradually recovering following a severe dip over last year. The prospective customer base is developing as expected. The inflow of orders during Q2 has, compared with the first quarter, tripled and the order book total has more than doubled. The cost saving process recently introduced will cut the current fixed cost level more than 50% once adjustment costs have been booked in Q3. The management therefore expects a sharp improvement in the financial result and cash flow. It is expected that the effects will bear a clear impact during Q4. Motala 27 July 2001 The Board of Directors ConNova Group AB (publ) ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/27/20010727BIT00110/bit0001.doc Full Report http://www.waymaker.net/bitonline/2001/07/27/20010727BIT00110/bit0002.pdf Full Report