Frontyard AB (publ) Preliminary 2000 year-end report

Frontyard AB (publ) Preliminary 2000 year-end report Frontyard reports revenue and result above forecast. Strongest quarter ever. Q4, 2000 · Revenue increased to MSEK 45.1 (17.0). · Operating result after depreciation of tangible assets (EBITA) increased to MSEK +1.5 (-12.9). · One-off items burdened the period's results by MSEK -3,5. · Products' share of revenue increased to 80 % (42%) · Export share rose to 54 % (5%) · General IT-consulting activities have been closed down. All costs taken during Q4. Year 2000 · Revenue increased to MSEK 104.1 (62.8). · Operating result after depreciation of tangible assets (EBITA) increased to MSEK -8.6 (-20.2). · One-off items burdened the period's results by MSEK -11.6. · Large on-off amortization of goodwill, which opens up for positive operating result after financial items already during 2001. · Forecast increase in Revenue of more than 50 % for 2001. Positive EBITA and result after financial items are expected. · Frontyard aims to be Europe's leading supplier of Intelligent Internet Services. SUMMARY Year 2000 has been an exciting year for Frontyard, which ended with the strongest quarter ever in the company's history. During 2000 Frontyard has changed its core business and is now focused on products and services for Intelligent Living and Video Communication. The business area Information Systems, which included all general IT- consulting within the company, has been closed down. Furthermore, Frontyard has also made large investments in R&D and is today a product company. One of the company's goals is to increase international sales and at the end of 2000, more than 50 % of the revenue was generated outside of Sweden. In spite of large one-off costs for restructuring, R&D and internationalization, Frontyard has succeeded to increase the operating result compared to 1999. During the fourth quarter the company reported an over-all operating profit. Frontyard's strategy, to focus on a niche with strong growth - Intelligent Internet Services - on an international market has paid off. Frontyard is today a leading supplier of Intelligent Living in Europe and of Video communication in Scandinavia. This strategy has prevented Frontyard from being affected of the weakening market within the IT-sector. The forecast has instead been strengthened due to the fact that it's easier to recruit competent employees. The increasing number of broadband installations, both fixed line and mobile solutions (GPRS/UMTS), will increase the demand for Frontyard's products and services. Video communication will be a very important component in these networks and Frontyard's concept of "Intelligent Living" is one example of content, which will be important within mobile Internet services. Frontyard has now turned losses into profit and has shown that the long- term goal to grow more than 50 % yearly can be achieved. The company's margins are also increasing and margins of 20 % are within reach. The forecast for 2001 is positive and Frontyard expects a strong growth in international sales and further increased result. FINANCIAL DEVELOPMENT The Group's total revenue for the period increased to MSEK 104.1 (62.8). The operating profit after depreciation of tangible assets (EBITA) increased to MSEK -8.6 (-20.2). Due to large one-off amortization of goodwill the result after financial items decreased to MSEK -236.8 (- 21.8). EBITA for the last quarter increased to MSEK 1.5. With adjustments for one- off expenditures, the operating result for the fourth quarter increased to MSEK 5.0 and for the year 2000 to MSEK 3.0. One-off items have burdened the result with MSEK -11,6 for 2000. Due to stronger focus on product development the costs for R&D has increased substantially and amounted to MSEK 11.0 (0). All costs for development has been taken directly in their respective subsidiary and is burdening the result. Including on-off items and the costs for R&D, the operating result increase amounted to MSEK +34.2. The order book increased, and at the close of the period amounted to MSEK 23.8 (7.7). The goodwill amortization for 2000 is MSEK 226.0. The large amount is mainly related to a one-off amortization. After the large one-off amortization the goodwill amount to MSEK 47.0. The solidity is 47,3 % (12,2 %) at the close of the period. Due to rapid growth, cash acquisitions and large one-off items, the company' cash flow has been burdened during the last two quarters. The final liquidity effects for the restructuring will be taken during the first quarter of 2001. One-off costs related to the change of CEO and new organizational structure made that the parent company's costs amounted to more than 10 % of the Group's total revenue during the year 2000. The new board of directors has not signed any contracts with the management in the parent company or subsidiaries that includes severance pay. Similar costs will therefore not arise in the future. The parent company now only holds company-wide functions for management, administration, finance and Investor/Public Relations. The long-term goal is that the parent company's costs should be 2-3 % of the Group's revenue. For 2001 the costs is expected to decrease from 10 % to 4-5 %. During the fourth quarter the costs for the parent company amounted to MSEK 1.8 or 4 % of the revenue. At the close of the period, the number of employees was 101 (62). Summarizing, the company has delivered the previous forecast of MSEK 95 in revenue and a positive operating result during the fourth quarter. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/27/20010227BIT01000/bit0001.doc The full Year- end report http://www.bit.se/bitonline/2001/02/27/20010227BIT01000/bit0001.pdf The full Year- end report