Interim report for the period January - March 2002

Interim report for the period January - March 2002 Financial summary · Net sales amounted to SEK 310.5 million (397.8). · The loss after financial items was SEK -39.9 million (28.2). · The operating margin amounted to -11.9 percent (7.6). · The loss per share amounted to SEK -1.01 (0.73). · Positive cash flow of SEK 47.6 million (-23.7) from operating activities before tax. · Financial position remains strong. At the end of the period the Group's liquid assets amounted to SEK 122.6 million (153.6), and the equity/assets ratio was 58.8 percent (42.3). · A selective action program is implemented in part to strengthen operations that are developing well and in part to reduce costs by an additional SEK 20 million on an annual basis. · Unless a significant improvement in market conditions takes place, profit for the full year will not be better than the previous year. Dimension's previous prediction of improved profit was based on expectations of a more substantial market recovery than was evident during the first quarter. · Due to continued uncertainty in the market, the Board of Directors has decided to withdraw the proposal to the Annual General Meeting of an incentive program. Highlights during the report period · The acquisition of Kipling was finalized and the company was consolidated in the Dimension Group on February 19. The integration process has developed well. · Several strategically important transactions in data storage, operations and infrastructure for distribution of mobile services. · A major agreement was signed with a leading telecom operator in the Baltic market on IT infrastructure for mobile services. · The interim report is also available online at www.dimension.se Telephone conference tomorrow, Friday, April 19 at 10:00 a.m. (CET) at +44 (0)20 8241 0004. The conference will be held in Swedish. Sven Uthorn, Managing Director of Dimension AB, comments on the first quarter of 2002 "The market is currently distinguished by obvious imbalances, with certain areas developing strongly, while others lag behind. A more general market recovery will apparently have to wait, however. To meet the major changes in the IT market, we initiated an extensive effort during the third quarter to adapt the Dimension Group. An important part of the change is to increase the service content in our offering, speed up the international expansion and develop our operations in areas that are experiencing growth, such as IT security and systems management. Furthermore, a new operating area, Dimension Telecom, has been formed to concentrate and strengthen our solution offering for mobile operators. This area was further strengthened through the acquisition of Kipling, which was finalized in February of this year. Our new investments and acquisitions developed positively during quarter, and we were able to strengthen our positions. The Group's profit trend is unsatisfactory, however, due in part to continued slow growth in the Infrastructure integration area in Stockholm and in part to lower gross margins in the Value-adding distribution area, where sales volume had priority over the margin level during the quarter. The Group's cash flow developed positively during the period, and by adapting the size of our inventory we reduced tied-up capital, while at the same time increasing prospects for a future rebound in gross margins. Developments following the conclusion of the report period somewhat support this strategy. The current market situation, together with the unsatisfactory profit trend during the quarter, makes it necessary to further intensify the efforts to adapt the organization and reallocate resources. Pending clearer evidence of a market recovery, a decision has been made to implement a selective action program in part to strengthen operations that are developing well and in part to further reduce costs." Market Dimension's customers are primarily in high technology industries such as telecommunications, banking & finance and media. Other key customer segments include manufacturing industry and the public sector. The IT infrastructure market as a whole continued to develop weakly during the first quarter. The market is distinguished by imbalances, however. In market sectors such as server and storage consolidation, security and systems management, growth is good, while other areas are trailing. Customers remain cautious in their attitude toward IT investments. For Dimension, this has meant, among other things, that the product content in the infrastructure solutions it supplies has decreased in relative terms. One reason is that customers to a greater extent are reusing their existing equipment instead of investing in new products. At the same time, consulting services have become a more important part of IT infrastructure projects, which underscores the strategic correctness of Dimension's decision to strengthen its service offering. Sales and profit for the first quarter of 2002 Net sales during the quarter amounted to SEK 310.5 million (397.8). Given the seasonal variations in the Group's operations, due to which the first quarter is usually the weakest of the year, the reported volume would seem to indicate a slight recovery in the market. The loss after financial items amounted to SEK -39.9 million (28.2). The result was affected negatively by continued difficulties for certain units in the Infrastructure integration operation area, primarily in Stockholm, and by lower gross margins in the Value-adding distribution operating area, where sales volumes have been given priority over maintaining margins, in part in order to adapt the size of the inventory. The operating margin was -11.9 percent (7.6). Action program Profitability remains Dimension's highest priority. The result trend for the first quarter and continued uncertain market conditions led the company's management to decide following the conclusion of the report period on further structural measures and savings. The aim has been to design a selective action program that supports the profitability objective, while at the same time creating opportunities to strengthen areas that are developing positively. The program includes staff reductions of approximately 30 positions, primarily in units in Stockholm, and is expected to lead to cost savings of approximately SEK 20 million a year, with a full impact in the third quarter. Restructuring expenses attributable to the action program are estimated at SEK 8 million, which will be charged against the second quarter. The personnel cutbacks were done in part to adapt to lower business volume in certain units and in part to improve efficiency in Group-wide functions. Through the program, resources will be reallocated to areas that are developing well, such as IT security, the Manufacturing industry and Public sector customer segments, and the Baltic market. The program also includes measures to further concentrate and coordinate the Group's telecom operations in the Telecom integration operating area. Operations Dimension's intention is to take advantage of the slump in the market to strengthen its position prior to an eventual upturn. During the second half of 2001 significant effort was made to adapt and strengthen operations, and a number of important steps were taken. The service offering was expanded and significantly strengthened, at the same time that a number of new companies were established and others acquired, in line with the strategy to expand geographically in the Nordic region and the Baltic states. Efforts to develop the new operations and integrate those that have been acquired progressed according to expectations during the quarter. The decision to implement the action program means that this work will now be further intensified. During the quarter several important projects were received in data storage and server solutions, as well as in operations and infrastructure for mobile Internet services. Among other things, Dimension signed an agreement with AstraZeneca on data storage equipment. Other key orders were secured during the period with Telia Mobile (infrastructure for mobile portals), Europolitan Vodafone (infrastructure for a new web platform) and Trebruk (operation of the group's entire IT infrastructure). International operations as a whole have developed according to expectations. Among other things, one of the Group's Baltic subsidiaries received an order in February from one of the leading telecom operators in the region to supply IT infrastructure for the distribution of mobile services. [REMOVED GRAPHICS] Since the beginning of the year, the Dimension Group's operations have been divided into three areas based on business model, offering and customer focus. In the Infrastructure integration operating area, the Group works with the design, integration and commissioning of advanced server, data storage and security solutions. An important part of the customer offering consists of services, such as analysis, project management, support, operations and maintenance. The Group's growing operations in security solutions and consulting services continued to develop positively during the quarter. However, the operating area has been affected negatively by continued difficulties for certain units, primarily in Stockholm. Sales in the operating area amounted to SEK 178.6 million during the quarter. The Telecom integration operating area comprises the Group's cutting- edge competence and offering in infrastructure solutions for telecom operators' service networks. The acquisition of the telecom consulting firm Kipling was finalized during the quarter and as of February 19 the company is consolidated in the Dimension Group. The integration process has progressed well and the new operations are developing according to expectations. The operating area's sales amounted to SEK 41.0 million during the quarter. The Value-adding distribution operating area specializes in supplying IT resellers and integrators with hardware, software, peripherals, services and training. Sales in the operating area amounted to SEK 90.9 million during the quarter. A continued weak IT market has affected the operating area negatively, primarily with regard to hardware. Gross margins declined during the quarter, as sales volumes were given priority over maintaining margins. On the other hand, sales in IT security and software developed strongly. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/18/20020418BIT01660/wkr0001.doc The Full Report http://www.waymaker.net/bitonline/2002/04/18/20020418BIT01660/wkr0002.pdf The Full Report