Dimension AB (publ) Interim report for the period January - September 2001

Dimension AB (publ) Interim report for the period January - September 2001 · Net sales declined by 6.5 percent to SEK 898.1 million (960.9). · Operating profit before restructuring expenses amounted to SEK 11.2 million (76.9). · Profit after financial items amounted to SEK 0.7 million (77.8). · The loss per share amounted to SEK -0.03 (2.09). · A weaker market climate resulted in a weak third quarter, with net sales of SEK 207.6 million (291.2) and a loss after financial items of SEK -31.2 million (27.3). An action program has been initiated that will produce overall cost savings of approximately SEK 65 million on an annual basis. Total restructuring expenses of SEK 11.5 million were charged to the third quarter. · Cash flow from operating activities before tax amounted to SEK 16.9 million during the quarter. Highlights during the third quarter: · Continued geographic expansion through an acquisition in Denmark. · Success in the Baltic market with several major transactions. · Dimension ranks first in "Marathon list" of Swedish growth companies. Highlights during the first half-year: · The Dimension share was listed on the Stockholm Exchange's O- list on February 20. · Geographic expansion through the establishment of new operations in Latvia and Lithuania. · Strengthening of offerings through the creation of a new business area for monitoring systems. · Next Nordic signed a three-year agreement as an OEM supplier to Ericsson Radio Systems. · Strengthening of Next Nordic's product offerings in IT security. Following the conclusion of the period: · Cooperation agreement on technology for authentication and access control strengthens security offerings. · Dimension is first in Nordic region to offer fault tolerant Windows server solutions. Market Dimension's clients are primarily in high technology and fast-growing industries such as telecommunications, banking & finance and media. Other important client segments include manufacturing industry and state and municipal governments. The growth in the market for IT infrastructure that distinguished the year's first quarter has leveled off substantially since mid-May. Dimension sees two primary reasons for this development. - The economic slowdown that was reinforced by the terrorist attacks in the U.S. on September 11 has made customers more cautious, and their uncertainty about the future is reflected in postponed investment decisions and revised IT projects. The increased sense of caution has been evident across all segments, with the exception of state and municipal governments, and in Dimension's opinion is an industry-wide phenomenon that is also apparent internationally. - In the Nordic market, the telecom and banking & finance sectors have been distinguished in the last two quarters by structural transformations and consolidations, due to which several of Dimension's customers have taken a cautious approach to IT investments. There is reason to believe that this phase is now nearing its conclusion, which will hopefully lead to a greater willingness to invest. Dimension's intention is to take advantage of the downswing in the market to strengthen its position prior to an eventual recovery. Several significant steps have been taken in this respect. Dimension's competence and offerings have been broadened and strengthened in several areas, at the same time that a number of new companies have been established and acquisitions completed, in line with the strategy to expand geographically in the Nordic and Baltic regions. Sales and profit for the third quarter of 2001 The third quarter is normally a weak quarter, when the vacation period generates lower activity among Dimension's customers. Furthermore, the market downturn Dimension experienced during the second quarter continued into the third quarter, when the events of September 11 in the U.S. were followed by a period of even lower customer activity. As a whole, this led to significantly lower order bookings compared with the third quarter of 2000. Net sales decreased by 28.7 percent to SEK 207.6 million (291.2). The loss after financial items amounted to SEK -31.2 million (27.3), including restructuring expenses of SEK 11.5 million. The operating margin was -15.3 percent (9.3). The lower margin was largely due to the fact that the company planned for higher volumes and therefore had a high level of costs in relation to its sales. The action program that has been implemented will have a full effect beginning in October, with all nonrecurring expenses associated with the program reported in the third quarter. During the quarter Dimension had a positive cash flow from operating activities before tax of SEK 16.9 million. Sales and profit for the report period as a whole For the period January - September as a whole, net sales decreased by 6.5 percent to SEK 898.1 million (960.9). Profit after financial items amounted to SEK 0.7 million (77.8). The operating margin declined to 0.0 percent (8.0). Operating profit before restructuring expenses amounted to SEK 11.2 million (76.9). Operations Until mid-May all operating areas had reported good growth and profit. At that point sales dropped off substantially, primarily in the key telecom and banking & finance segments. Development in the industrial and state & municipal government sectors has remained positive, however. At the same time the service area developed well, with Dimension signing agreements with Flextronics on support for its European data center and with Micronic on the operation and monitoring of its internal IT environment. During the last two quarters there has been a slight shift in customer demand, with greater interest in IT solutions that improve operating efficiency and solutions for IT security, data storage and operations. Important orders were secured during the period from, among others, UPC Sverige, FöreningsSparbanken, Telenor, the Royal Swedish Library, Interactive Gaming Systems, Telia and SEB. During the third quarter a partnership agreement was signed with Skanska, whereby Dimension will become Skanska's main discussion and cooperative partner on IT infrastructure as well as its primary systems supplier. In order to strengthen offerings in systems for monitoring infrastructure solutions, a new business area, System Management, was established during the second quarter. The business area offers consulting services and products that increase the availability of business-critical systems. Dimension cooperates in this area with BMC Software and Twobyfour Software, among others. System Management has secured projects from OM, Telia and Expressen, among others. Action program Profitability is Dimension's highest priority. In order to adapt operations to a weaker market, the company has taken measures that will result in cost savings of approximately SEK 65 million on an annual basis. Staff reductions have led to the elimination of 35 employees, all of whom have left the company. Fewer recruitments and lower expenditures for outside consultants, together with greater cost awareness throughout the organization, are also part of the program. Total restructuring expenses amounted to SEK 11.5 million, which was charged in its entirety against third-quarter profit. International expansion During the report period the Dimension Group continued its geographic expansion and established operations in Lithuania, Latvia, Denmark and Finland. - As an extension of their multi-year cooperation, Dimension and Lithuania-based CompServis established CompServis Open Systems in February. Dimension owns 51 percent of the new company, which initially had six employees and specializes in infrastructure solutions for the banking & finance and telecom sectors. Several important orders were received, including from Lithuania's largest energy company for the delivery and implementation of IT infrastructure valued at slightly over SEK 4 million. - In March Dimension acquired 70 percent of the Latvian company Realogic, which had a turnover in 2000 of approximately SEK 10 million and a profit after financial items of SEK 3 million. The company, which has changed its name to Dimension Latvia, had six employees at the time of acquisition. During the third quarter Dimension Latvia delivered IT infrastructure solutions to one of Latvia's largest banks and one of its leading telecom operators. - In August Dimension further strengthened its Nordic presence by acquiring the Danish IT company Benau Danmark's system integration division. The company is one of Compaq's largest partners in Denmark and focuses on server solutions and data storage as well as related support and consulting services. The acquired operations fit in well with the Dimension Group and are expected to provide important synergies in terms of market coverage, client segments and technical know-how. In 2000 the acquired operations generated a turnover of approximately SEK 150 million and had 34 employees. Since August 24 the acquisition has been consolidated as a wholly owned subsidiary with the name Dimension Danmark AS. The integration process has developed well. - The subsidiary Next Nordic started operations in Denmark and Finland during the first quarter. First place on Marathon list Dimension came in first place on "Marathon list" 2001, a ranking of Swedish growth companies that over the last ten years have achieved the fastest growth while maintaining consistent profitability. During the period 1991-2000 Dimension grew by an average of 69 percent a year. The list is compiled by Ahrens and was published in the Swedish daily Svenska Dagbladet on September 6. Following the conclusion of the report period Dimension is strengthening its offerings in data security through a cooperation agreement with the U.S. company Arcot Systems, a leading supplier of authentication and access control technology. Through the agreement, Dimension can now offer its customers a system with convenient log-ons without the need for smart cards or tokens, combined with extremely high access security. Through a cooperation agreement with the U.S. server technology company Stratus Technologies, Dimension is further broadening its offerings and becoming the first supplier in the Nordic region to offer fault tolerant Windows server solutions. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00060/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00060/bit0001.pdf The full report