Quarterly Report January - June 2000

Quarterly Report January - June 2000 Operations during the period Revenues for the first half-year amounted to SEK 22.4 million, the highest figure for a half-year yet - an increase of 30% compared with the previous year (SEK 17.2 million). During the first half-year of the millennium, very few procurements were made of the type of system that ConNova sells. Operations have focused on customer projects in progress, starting to establish operations within the Internet, mobile and utility market as well as consolidating and enhancing the efficiency of delivery resources. In May, Quiero TV in Spain commenced digital TV operations using BizManager. There are therefore two BizManagers in operation. With over 200 simultaneous users, Quiero TV is ConNova's largest installation yet. A long-term agreement regarding future deliveries and support was met with Quiero TV in June. Judging by our experiences of the period under review, large, long-term systems projects generate more upgrade related revenues than previously planned. This is positive for ConNova's long-term revenues base. On an ongoing basis, ConNova is recruiting people to raise sales and delivery capacity, and is implementing efficiency-enhancing measures, which are expected to generate higher revenues and profitability in the long term. It takes time, however, before new staff members are trained within the field of ConNova's products and methods, and before they become profitably productive. For the period expenses amounted to SEK 45.0 million (SEK 30.6 m). Of these expenses, SEK 3.2 million is attributable to the initiative focusing on new market segments. All internal product development, a total of SEK 8.7 million, has been charged directly to the profit/loss. During the period, activities have been conducted to identify potential partners that could raise ConNova's growth rate further. At the close of the period the backlog of orders amounted to SEK 18.8 million (SEK 31.6 m). Orders received during the period amounted to SEK 16.7 million (SEK 17.1 m). Internet and utility market initiatives Our focus on new markets has continued. All contacts with potential customers confirm that our BizManager product supports the business model in which various content services are delivered to large customer groups via, e.g. the Internet, mobile networks, utility networks, etc., which is now starting to be used in an increasing number of industries. This provides BizManager with certain unique advantages for new economy operators. A sales organisation in Stockholm has been established, and a small prospective customer base has been cultivated. The new market segment initiative is expected to generate revenues from systems sales as of 2001. During the period under review, ConNova TVX, ConNova's customer service company, signed its first agreement relating to customer services for Internet distributed services. The agreement, which concerned a pilot project, was the first to relate to a non-TV segment project. Result and liquidity Turnover for the first half year of 2000 amounted to SEK 22.4 million, a rise of 30% compared with the first half year of 1999 (SEK 17.2 m). Profit/loss amounted to - SEK 21.9 million (- SEK 13.4 million). Expenses for the first half-year amounted to SEK 45.0 million (SEK 30.6 m), SEK 8.7 million of which related to internal product development (SEK 10.9 million), and SEK 1.2 million to goodwill depreciation (SEK 1.2 m). The increased expenses are mainly attributable to a rise in staff number and expenses related to recruitment and introduction, coupled with an unusually high level of the use of consultants as a result of the delivery projects underway. New delivery projects will subsequently be simpler to deliver in line with the fact that the functionality of the main product, BizManager, is being broadened and delivery efficiency improved. Profitability per project is increasing successively. ConNova continues to charge all product development expenses to the profit/loss as and when they arise. Liquidity, which is healthy, has developed according to the plan established for the year. Cash flow from financing operations relates to a non-recurring loan repayment. The organisation The organisation grows and develops continually in order to manage larger sales volumes. A Total Quality Management programme has been launched during the spring as part of the company's growth and development. At the close of the period, the company had 70 employees, which is comparable with 57 at the same time the previous year. The number of ConNova employees including consultants amounts to 88, compared with 69 for the previous year. The rest of the year Both the market and the prospective client base are developing as expected. Increasing resource requirements are, however, leading to higher expenses than originally planned. This, coupled with our focus on new markets, means that profit/loss is expected to be on a par with that of last year. Income Statement Group Parent company Income Statement Jan-JuneJan-JuneJan-Dec Jan-June Jan-June SEK 000´s 2000 1999 1999 2000 1999 Operating income 22 431 17 223 34 657 1 487 889 Other external expenses -22 927 -14 884 -33 209 -3 716 -2 974 Personnel cost -20 352 -14 036 -26 939 -3 057 -3 206 Depreciation of tangible -1 769 -1 705 -3 388 -141 -239 and intangible fixed assets Operating expenses -45 048 -30 625 -63 536 -6 914 -6 419 Loss before financial items -22 617 -13 402 -28 879 -5 427 -5 530 Net financial items 739 -46 -436 868 64 Loss before appropriations -21 878 -13 448 -29 315 -4 559 -5 466 Balance Sheet Balance Sheet Group June 30 December 31 SEK 000s 2000 1999 Goodwill 17 737 18 997 Intangible assets 71 276 Tangible assets 994 1 333 Total fixed assets 18 802 20 606 Current receivables 17 688 16 486 Liquid assets 67 232 110 872 Total current assets 84 920 127 358 Total assets 103 722 147 964 Shareholders equity 88 520 7 754 Interest bearing liabilities 0 16 890 Non interest bearing liabilities 15 202 123 320 Total liabilities and Shareholders equity 103 722 147 964 Cash Flow Analysis Group Jan - June Jan - June 2000 1999 Cash flow from current operations before change in working capital -20159 -11743 Change in working capital -5582 -5368 Cash flow from current operations -25741 -17111 Cash flow from investment operations 36 -277 Cash flow from financing operations -17935 12320 Cash flow for the period -43640 -5068 Liquid assets at the beginning of the period 110872 9183 Liquid assets at the end of the period 67232 4115 The Quarterly report has not been reviewed by the company´s auditors ConNova specialises in developing and supplying business support systems for multimedia operators handling pay TV, the Internet, broadband and telecoms services. The company has 15 years' experience of the industry. ConNova's services range from consulting services to the development of software adapted to meet the market's latest needs. Within the framework of ConNova TVX AB, ConNova also runs customer services on an assignment basis for European pay TV operators. ConNova's current customers are to be found in the fields of cable TV, DTT (Digital Terrestrial Television), multimedia and telecommunications. At the international billing systems trade fair held in London in May 1999, ConNova's customer management system BizManager was awarded two honourable mentions, one for "Overall Best Contribution to Billing" and the other for "Most Innovative Billing Product". The ConNova Group AB (publ) has been listed on the OM Stockholm Stock Exchange's O list since 1997. Addresses and company details ConNova Group Tel: +46 141 237 600 Box 231 Fax: +46 141 564 24 Platensgatan 1 e-mail: info@connova.se SE-591 23 Motala Web site: www.connova.se Sweden Swedish corporate identity number: 556423-7716 Additional information For more information, please contact: Björn Persson, MD Roger Persson, CFO, Tel: +46 141 237 601 Tel: +46 141 237 653 e-mail: bp@connova.se e-mail: rope@connova.se ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/07/28/20000728BIT00150/bit0001.doc http://www.bit.se/bitonline/2000/07/28/20000728BIT00150/bit0002.pdf