Interim report for January - September 2001

HiQ - INTERIM REPORT FOR JANUARY - SEPTEMBER 2001 HiQ is an IT and management consultancy that focuses on high tech solutions in the fields of telecoms, mobility and simulation technology. The company is a leader in these fields and the Nordic region is its domestic market. HiQ employs 450 people at offices in Sweden, Denmark and Finland. HiQ is listed on the Stockholm Exchange. For more information, please visit www.hiq.se Interim report for HiQ International AB (publ.), corporate identity no. 556529-3205, for the period January - September 2001. HiQ - increases net sales by 40 per cent with a margin of 14 per cent · Net sales increase to SEK 378.0 (271.1) million, which is equivalent to an increase of 39.4 per cent compared to the same period last year. · The profit before goodwill (EBITA) increases to SEK 53.8 (46.7) million, which is equivalent to an increase of 15.3 per cent compared to the same period last year. The profit is equivalent to a margin before goodwill depreciation of 14.2 per cent. · The operating profit (EBIT) increases to SEK 45.5 (42.4) million, which is equivalent to an increase of 7.4 per cent compared to the same period last year. The operating margin amounts to 12.0 per cent. · HiQ received a new order in March from the Swedish Defence Material Adminstration (FMV) worth 20 million for the development of training simulators for the JAS 39 Gripen. · HiQ intensifies its collaboration with Ericsson in April within the framework of its preferred supplier agreement for consultancy services. · In August HiQ signs a frame agreement with the Swedish National Post and Telecom Agency (PTS) for all areas of expertise in which the agency requires consultancy help. · HiQ signs a frame agreement with Telia Communications in September. · HiQ signs a frame agreement with Telenordia in September. Market development The general uncertainty about the economic climate continues and has been boosted by the recent events in the United States. In a recession many players choose to postpone investments and place greater emphasis on profitability. During the autumn, this has caused a degree of restraint in the demand for HiQs services. Customers are assessing which project to implement and are more careful in their selection of external suppliers. We are seeing a clear trend in which customers are enlisting the help of fewer consultancy companies with whom to work closely, as well as an increased interest in outsourcing assignments. Consequently, HiQ has intensified its relations with several customers during the year and has signed agreements with Aktiesparinvest, Ericsson, Europolitan, FMV, Hi3G, OM, Orange, the Swedish National Post and Telecom Agency (PTS), Saab Automobile, Telia Communications, Telenordia, Tele2, Utfors, Volvo and 3GIS among others. All of the markets in which HiQ is active are growing. This year we have concentrated on strengthening our skills and position within simulation technology. We have broadened our expertise from a technical and combat technology level to include competencies in simulation on a tactical and operative level, primarily for fighter aircraft. This new expertise supplements our skills in simulation for JAS 39 Gripen and telecommunication. Assignments within medicine and biotechnology have increased during the year. In Denmark and the Öresund region there are a number of players within the field of medicine and telecoms. We believe Denmark and the Öresund region will be interesting growth regions in the future where we will increase our sales efforts. 3G projects have increased during the period and demand is high. Within the motor vehicle industry, a clear trend is continuing towards more IT and communication solutions in the current and next generation of cars. HiQ continues to increase its net sales outside Sweden, which currently accounts for just under a fifth of the net sales (19 per cent). One of HiQ's strategies is to be strong in the Nordic region. The presence of HiQ in several countries allows our international customers to work with HiQ in several geographical areas. In May HiQ was voted the best IT consultancy in a survey carried out by the weekly business magazine Veckans Affärer of 340 decision-makers within Swedish companies. HiQ was assessed on the basis of confidence, customer focus, expertise and results. Invoicing and profit HiQ's net sales increase to SEK 378.0 (271.1) million, which is equivalent to an increase of 39.4 per cent compared to the same period last year. The growth has been exclusively organic. The profit before goodwill (EBITA) increases to SEK 53.8 (46.7) million, which is equivalent to an increase of 15.3 per cent compared to the same period last year, which is equivalent to a margin before goodwill depreciation of 14.2 per cent. The operating profit (EBIT) increases to SEK 45.5 (42.4) million, an increase of 7.4 per cent compared to the same period last year. This is equivalent to an operating margin of 12.0 per cent. The profit before tax (PTP) increases to SEK 47.9 (45.2) million, an increase of 5.9 per cent compared to the previous year. This represents a margin before tax of 12.7 per cent. The Group's net financial income amounted to SEK 2.4 (0.8) million. Converted to a 12-month continuous result, i.e. for the period from 1 October 2000 to 30 September 2001, HiQ 's net sales were SEK 511.8 million. The profit before goodwill (EBITA) amounted to SEK 80.2 million, which is equivalent to a margin before goodwill of 15.7 per cent. Apart from seasonal variations, the changed market situation and investments in broadening of simulation expertise, have affected the results. HiQ's subsidiaries in Norway and Finland, a recent start-up, more than other companies within the group, have been affected by the changed market conditions. The Norwegian subsidiary is also affected by customers who, in the light of the current recession, are unable to pay, which has resulted in a loss on accounts receivable of some SEK 2 million. Accounting principles This interim report has been drawn up in compliance with the Swedish Financial Accounting Standards Council's recommendation no. 20. The accounting principles applied are the same as those applied in the last annual report. Employees The number of employees at the end of the period was 446 (384). During the summer and autumn, HiQ exercised great caution in its recruitment activities of new employees. We are seeing a trend in which fewer employees leave their positions, and our staff turnover continues to be low. Investments The Group's net investments amounted to SEK 7.9 million, of which financial leasing investment amounted to SEK 4.0 million. Financial position HiQ's financial position continues to be strong. At the end of the period, the Group's liquid assets amounted to SEK 107.8 (41.4) million and the interest-bearing net funds amounted to SEK 97.9 (34.2) million. The shareholders' equity amounted to SEK 223.4 million as of 30 September 2001 compared to SEK 176.4 million on 30 September 2000, this is an increase of 27 per cent. At the end of the period the debt-equity ratio was 68.9 (70.6) per cent. The Annual General Meeting held on 26 April voted in favour of a dividend of SEK 0.5 per share, in total SEK 21.7 million, in accordance with HiQ's long-term dividend policy of maintaining a long-term dividend level of about 50 per cent of HiQ's profit after tax. Important events after the end of the period · HiQ signed a frame agreement with Tele2. Outlook Due to the current recession and uncertainty about economic development in the world, it remains difficult to assess the future development of the market. Furthermore, the uncertainty is intensified by an unstable international political climate that could influence economic development. In the prevailing market situation, we have chosen to adjust the pace of recruitment and to further reinforce our sales capacity. HiQ will continue to prioritise profitability before growth. Despite the state of the economy, the fast-pace of technological developments is continuing, and the need for communication between people and businesses is expected to continue to increase. We believe that all market segments in which HiQ is currently active are areas that will continue to require communication-intensive solutions and knowledge of both technology and how technical solutions are transformed into business solutions. We also believe that the need for simulation technology expertise will continue to grow - both for military applications and civilian ones - providing HiQ with a good opportunity to increase the number of assignments in this area. HiQ is and will continue to be a pure consultancy in the fields of IT and management with skilled employees, good customer relations and a strong financial position. We are well equipped to improve our position, continue to develop the company, and to come out of the recession stronger than before. HiQ does not offer any forecasts, but instead has a long-term financial goal of achieving an organic growth of 30 per cent and an operating margin before goodwill of at 15 per cent. Telephone conference HiQ will be holding a telephone conference in English on 23 October at 4 p.m. (3 p.m. GMT). CEO Lars Stugemo and CFO Anna Jennehov will be representing HiQ. Telephone no.: +46 8 600 53 81 Code: 16 42 42 Presentation material will be available from 2.00 p.m. on 23 October on HiQ's English web site: www.hiq.se/english Upcoming financial report: The full-year report will be presented on February the 4th 2002. Stockholm 23 October 2001 The Board of Directors of HiQ International AB This report has not been reviewed by the auditors. For more information, please contact: Lars Stugemo, CEO HiQ International AB, tel.: +46 8 58 90 000 Anna Svensson, CIO HiQ International AB, tel.: +46 704 200 103 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/23/20011023BIT00220/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/23/20011023BIT00220/bit0001.pdf The full report