Frontec Yearend 2001

Year-end report The Extraordinary General Meeting on June 25, 2001 decided to extend the fiscal year to comprise the period July 1, 2000 - December 31, 2001 and that the fiscal year thereafter would be the calendar year. This report covers the quarter October 1, 2001 - December 31, 2001, the twelve-month period January 1, 2001- December 31, 2001 and the fiscal year July 1, 2000 - December 31, 2001. · The Group's net sales for the quarter amounted to SEK 238 million (274, for comparable units 1) 253). · The Group's operating loss after goodwill amortization for the quarter amounted to SEK -82 million (-36, for comparable units -34). · An action program affecting 114 employees was implemented during quarter. As a result the Group´s operating loss after goodwill amortization for the quarter includes restructuring expenses of SEK 45 million. · The Group's loss after net financial items for the quarter was SEK -80 million (-31, for comparable units -29). · Frontec eBusiness' net sales for the quarter amounted to SEK 135 million (161), with an operating loss after goodwill amortization of SEK -45 million (2). The result includes restructuring expenses of SEK 26 million. · BlueLabs' net sales for the quarter amounted to SEK 80 million (76), with an operating profit after goodwill amortization of SEK -9 million (6). The result includes restructuring expenses of SEK 13 million. · Venture Zone's net sales for the quarter amounted to SEK 31 million (63, for comparable units 35), with an operating loss after goodwill amortization of SEK -6 million (-4, for comparable units -2). The result includes restructuring expenses of SEK 3 million. · The Group in brief Frontec's restructuring process and focus on its core businesses, eBusiness and BlueLabs, has continued. The previously announced action program has been implemented and 114 employees will gradually leave the company. Due to market weakness, net sales for comparable units declined by six percent during the quarter. Profitability was negatively affected by the expenses for the action program, but was also due to the market situation. 1) The figures for comparable units have been adjusted for the divestments of FRT and FSO (Venture Zone). Economic conditions are still uncertain, which is negatively affecting demand. Several clients have postponed major projects. As a result, there is overcapacity in the market, which has kept price pressure on traditional development projects. Demand for expert competence is still good, however, with only a marginal change in the price picture. The Group's liquid assets, including short-term investments, amounted to SEK 113 million (41) at the end of the period. In summary, it was a quarter of continued restructuring and adjustment to the current market situation. Sales and results The quarter October-December 2001 The Group's net sales for the quarter amounted to SEK 238 million (274, for comparable units 1) 253). The operating loss after goodwill amortization for the quarter amounted to SEK -82 million (-36, for comparable units -34). The operating loss includes restructuring expenses of SEK 45 million. The loss after net financial items was SEK - 80 million (-31, for comparable units -29). The twelve-month period January-December 2001 The Group's net sales for the twelve-month period amounted to SEK 928 million (1,013, for comparable units 913). The operating loss after goodwill amortization was SEK -105 million (-85, for comparable units - 113). The operating loss includes restructuring expenses of SEK 46 million. The loss after net financial items was SEK -108 million (-136, for comparable units -124). The fiscal year July 2000-December 2001 The Group's net sales for the extended fiscal year amounted to SEK 1,409 million. The operating loss after goodwill amortization was SEK -158 million and the loss after net financial items was SEK -221 million. The Group: [REMOVED GRAPHICS] (Operating profit/loss after goodwill amortization adjusted for restructuring expenses and SPP refund) 1) The figures for comparable units have been adjusted for the divestments of FRT and FSO (Venture Zone). Employees The number of employees as of December 31, 2001 was 961 (1,090), of whom 45 (53) were outside Sweden. During the fourth quarter an action program was approved that will result in 114 employees gradually leaving the company. Liquid assets As of December 31, 2001 the Group's liquid assets, including short-term investments, amounted to SEK 113 million (41). Liquidity has been positively affected by structural sales and negatively by the repayment of subordinated loans. Investments The Group's net investments in tangible assets amounted to SEK 27 million during the period July 1, 2000 - December 31, 2001. Frontec share As of December 31, 2001 Frontec has 31,405,110 shares, of which 2,640,000 are Class A shares, 28,764,760 Class B shares and 350 Class C shares. During the period July 1, 2000 - December 31, 2001 a total of 508,836 Class C shares were converted to 4,582,391 Class B shares in accordance with the conversion rules from 1998. Frontec had 19,461 shareholders at year-end 2001. Approximately 15 percent of the shares are owned by foreign investors and slightly over 85 percent of all shareholders own fewer than 1000 shares. Frontec eBusiness Frontec eBusiness offers competence and tools for strategic development and implementation of eBusiness solutions. The market consists of large Swedish companies and organizations primarily in industry and the public sector. On December 31, 2001 eBusiness had 511 employees. Market development Economic conditions are creating great uncertainty and several clients are slowing or postponing major projects. This is causing price pressure on traditional development projects. Demand for expert competence is still good, with only a marginal change in the price picture. Moreover, we expect demand in integration services, an important area for us, to increase. Frontec's good historical client relations are important now that many companies are choosing to work with fewer suppliers. During the fourth quarter Frontec signed framework agreements with the National Corporation of Swedish Pharmacies, the Board of Agriculture, Skanova, the National Social Insurance Board, the Patent and Registration Office, the National Board of Student Aid and the National Government Employee Pensions Board, as well as a renewed agreement with Telia. Sales and results Frontec eBusiness' net sales amounted to SEK 135 million (161) for the quarter and SEK 547 million (590) for the twelve-month period. The operating loss after goodwill amortization was SEK -45 million (2) for the quarter and SEK -57 million (-4) for the twelve-month period. The result includes restructuring expenses of SEK 26 million. The increased loss compared with the previous year is primarily due to the costs of the action program as well as price pressure and a lower workload caused by market overcapacity. eBusiness: (Operating profit/loss after goodwill amortization adjusted for restructuring expenses and SPP refund) BlueLabs BlueLabs is a high-technology consulting firm specializing in the development, testing and integration of technically advanced systems. The market consists of clients in telecommunications and other industries. On December 31, 2001 BlueLabs had 317 employees. Market development Due to the uncertainty caused by the economic slowdown, the market in certain regions further declined during the quarter. There is still a strong focus on profitability and many clients are therefore delaying new projects. In the Medical Technology and Automotive segments, as well as the Mobility business area, BlueLabs continued to report good growth during the quarter. Sales and results BlueLabs' net sales amounted to SEK 80 million (76) for the quarter and SEK 294 million (300) for the twelve-month period. A reclassification in the fourth quarter affected sales positively by SEK 8 million. The operating loss after goodwill amortization for the quarter was SEK -9 million (6). For the twelve-month period BlueLabs reported a corresponding profit of SEK 7 million (8). The result includes restructuring expenses of SEK 13 million. The fourth-quarter loss was primarily due to the costs of the action program. Price pressure in portions of the company's market and a lower workload also negatively affected results. BlueLabs: (Operating profit/loss after goodwill amortization adjusted for restructuring expenses and SPP refund) Venture Zone Venture Zone primarily comprises operations that are seeking a new structure in or outside the Group. At the end of the period the division included the FMS companies, netSolution, EdiCom and MultiDesign. On December 31, 2001 Venture Zone had 121 employees. The FMS companies and EdiCom were sold following the conclusion of the period. The divested companies together had 79 employees and a turnover of approximately SEK 80 million in 2001. Following the FMS sale, Frontec has operations only in Sweden. Sales and results Venture Zone's net sales amounted to SEK 31 million (63, for comparable units 1) 35) for the quarter and SEK 128 million (241, for comparable units 27) for the twelve-month period. The operating loss after goodwill amortization was SEK -6 million (-4, for comparable units -2) for the quarter and SEK -16 million (-45, for comparable units -33) for the twelve-month period. The result includes restructuring expenses of SEK 3 million. Other Parent Company The Parent Company's net sales amounted to SEK 5 million (10) for the quarter, SEK 23 million (35) for the twelve-month period and SEK 39 million for the fiscal year. The operating loss after goodwill amortization was SEK -12 million (-28) for the quarter, SEK -35 million (-73) for the twelve-month period and SEK -78 million for the fiscal year. Restructuring expenses are included in the amount of SEK 4 million. The Parent Company's net investments for the fiscal year amounted to SEK -93 million and include a net change of SEK -95 million in financial assets, which relates to divestments, write-downs and further investments in subsidiaries. The Parent Company's liquid assets amounted to SEK 24 million at the end of the fiscal year. 1) The figures for comparable units have been adjusted for the divestments of FRT and FSO (Venture Zone). During the fourth quarter the Parent Company purchased the shares in Viewlocity from the Dutch subsidiary, which thereafter entered into liquidation. The Parent Company has written down the shareholding and its receivables from the subsidiary by an additional SEK 78 million. Total write-downs amount to SEK 684 million during the fiscal year. The consolidated income and balance sheet have not been affected by this. The Parent Company's equity amounts to SEK 218 million as of December 31, 2001. Highlights following the conclusion of the period · Sale of the software companies Frontec Edicom AB, Frontec Maintenance Systems AB, Frontec Denmark A/S, Frontec Maintenance Systems Norge A/S, Frontec Deutschland GmbH, API PRO Nederland BV and Frontec Belgium NV. Together, these companies have around 60 employees and a turnover of approximately SEK 60 million in 2001. · Sale of Frontec (UK) Limited (remaining part of Frontec Maintenance Systems). The company has around 20 employees and a turnover of approximately SEK 20 million in 2001. · An organizational change was implemented effective February 1, whereby the operations of Frontec AB and Frontec eBusiness were merged. In connection with the change, CEO Per Tjernberg also assumed the role of Chief Operating Officer for eBusiness. · Björn Sandberg, CFO and Vice President, is leaving the Group on April 15 to persue other endeavors. Kristina Willgård, currently Group Controller at Frontec, will take over as acting CFO. · Information Annual General Meeting May 15, 2002 Wednesday, May 15 at 3:00 p.m. (CET) SAS Headquarters in Frösundavik Frösundaviks Allé 1 Solna The Annual Report will be published in mid-April and sent to shareholders upon request. Interim report January-March 2002 May 15, 2002 Interim report April-June 2002 August 21, 2002 Interim report July-September 2002 November 20, 2002 Solna, February 20, 2002 Frontec AB (publ) The Board of Directors For further information, please contact: Per Tjernberg, President and CEO telephone +46 8 587 97 505 Madelene Sandgren, Director of Communications telephone +46 8 587 97 524 Invitation to analyst meeting: Frontec cordially invites analysts and the media to meet with CEO Per Tjernberg and CFO Björn Sandberg at 8:00 a.m. Swedish time on Friday, February 22 at Operaterassen. Register at hearings@financialhearings.com or www.financialhearings.com Frontec AB (Publ), Reg. no. 556272-5092 Box 713 SE-169 27 Solna , Sweden Telephone +46 8 587 97 400 www.frontec.se [REMOVED GRAPHICS] ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/02/21/20020221BIT00560/bit0001.doc The Full Year-End Report http://www.waymaker.net/bitonline/2002/02/21/20020221BIT00560/bit0001.pdf The Full Year-End Report