Enea Interim Report January - March 2010

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Enea Improves Earnings

Over the first quarter of 2010, Enea has improved its results compared with the corresponding period in the previous year, when Enea made a loss. The operating margin for the Group amounted to 6.3 percent, and profit before tax amounted to SEK 11.9 million.

Net sales have fallen by 10 percent as a result of a reduction in delivery capacity within the Consulting business unit. The Software business unit has demonstrated positive development over the quarter, with greatly improved profitability. The outlook for the whole year 2010 remains unchanged. The company is expected to demonstrate stable income development and a considerably improved operating profit compared with 2009.

First quarter

• Net sales SEK 186.3 (207.3) million. The comparative figures for the previous year are affected by a change in the accounting principles for royalties, which had a negative effect of SEK 7 million over the first quarter.
• Revenues for the Software business unit SEK 86.8 (80.5) million.
• Revenues for the Consulting business unit SEK 112.8 (145.3) million.
• Operating profit SEK 11.8 (-36.7) million. The comparative figures for the previous year include a non-recurring writedown of SEK 24.5 million.
• Net profit after tax SEK 8.7 (-25.2) million.
• Cash flow from operations SEK 4.1 (21.5) million.
• Earnings per share SEK 0.50 (-1.40).

Per Åkerberg, President and CEO comments:

"2010 began with Enea seeing a considerable improvement in earning capacity which is also reflected in our figures. Over the previous year we adapted our operations in a number of ways, which has resulted in fewer consultants, fewer product developers and a lower cost base. Despite this, we have succeeded in keeping revenues for our Software business unit at a stable level, and we can see that demand on consultancy services is gradually returning. Our adaptations are reflected directly in the operating profit, where we have turned a loss in the first quarter last year to a profit of SEK 11.8 million for the first quarter this year.

The biggest deal of the first quarter came from Japan. The customer will be using Enea's multicore version of the Enea OSE operating system, along with related products and services, in order to develop parts of the distribution network for HDTV. This is a good example of a deal in which we can use our knowledge of telecom to create new business opportunities.

Over the last few quarters, Enea has created a strong financial position which will now benefit its shareholders in that the Annual General Meeting decided to issue a dividend of SEK 1.50 per share.

Software

The Software business unit developed positively over the quarter.  Its profitability continued at a good level, and the operating margin amounted to 11.0 percent. This is in line with the long-term margin target of 20 percent for the business unit, given the seasonal variations in the business area, with a first quarter which is normally weaker than other quarters.  Both the new sale of licenses and royalties demonstrated stable development over the quarter, which is pleasing given the declines in royalties that we have seen previously. 

As far as products are concerned, we have launched a number of new multicore products where we offer extended support for various processors. One of the new products with major long-term potential is Enea Hypervisor, which enables customers to combine several operating systems on the same processor. Multicore is the major technology shift in real-time operating systems and is expected to be an important growth area in years to come. Enea is well positioned to play an active part in this development and take new market shares.

Consulting

Revenues for the Consulting business unit fell over the first quarter, which was expected given the reduction in delivery capacity which took place in the previous year. The operating margin was 2.1 percent compared with the long-term target of 10 percent. Demand seems to be gradually on the increase again, and Enea has a good combination of expertise in the areas in demand. However, the Öresund region in Sweden is an exception as recovery is slower than in other regions.

On a final note

In the long term, Enea has good opportunities to continue its positive development and create long-term value for shareholders through both organic growth and acquisitions. Multicore market potential continues to look promising, and we have launched a lot of important new products in the first quarter. For 2010, our ambition is to strengthen our market position even further."

The full interim report is available on Enea's website www.enea.com

For more information

Per Åkerberg, President & CEO
Phone: 46 8 50 71 40 00
Email: per.akerberg@enea.com

Lars Kevsjö, CFO
Phone: 46 8 50 71 40 00
Email: lars.kevsjö@enea.com

Catharina Paulcén, VP Corporate Communications
Phone: 46 8 50 71 40 00
Email: catharina.paulcen@enea.com

About Enea
Enea is a global software and services company focused on solutions for communication-driven products. With 40 years of experience Enea is a world leader in the development of software platforms with extreme demands on high-availability and performance. Enea's expertise in real-time operating systems and high availability middleware shortens development cycles, brings down product costs and increases system reliability. Enea's vertical solutions cover telecom handsets and infrastructure, medtech, automotive and mil/aero. Enea has offices in Europe, North America and Asia. Enea is listed on Nasdaq OMX Nordic Exchange Stockholm AB. For more information please visit enea.com or contact us at info@enea.com.

Enea®, Enea OSE®, Netbricks®, Polyhedra® and Zealcore® are registered trademarks of Enea AB and its subsidiaries. Enea OSE®ck, Enea OSE® Epsilon, Enea® Element, Enea® Optima, Enea® Optima Log Analyzer, Enea® Black Box Recorder, Enea® LINX, Enea® Accelerator, Polyhedra® Flashlite, Enea® dSPEED Platform, Enea® System Manager, Accelerating Network Convergence(TM), Device Software Optimized(TM) and Embedded for Leaders(TM) are unregistered trademarks of Enea AB or its subsidiaries. Any other company, product or service names mentioned above are the registered or unregistered trademarks of their respective owner. © Enea AB 2010.

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