January-March 1999

Interim report January-March 1999 *Total group sales were SEK 158.4 (101.9) m, up 55% on the corresponding period last year. *Group operating profit before goodwill amortisation was SEK 4.3 (4.0) m, an increase of approximately 8%. *The consultancy operations invoiced SEK 39.4 (25.7) m, rising 53%. Profit before goodwill amortisation was SEK 6.1 m for the consultancy operations. *System Sales invoiced SEK 113.1 (76.2) m, an increase of 48%; profit before goodwill amortisation was SEK 1.5 m. *Information Highway is continuing to consolidate its leading position on the market for electronic channels. Information Highway creates integrated business solutions for electronic channels. Electronic channels is the term Information Highway uses to describe the services, products and solutions that can be offered to clients in order to create new business solutions with the help of the latest technology. January-March 1999 The restructuring that was initiated towards the end of 1998 had the intended effect on Consultancy and Systems Sales' earnings for the period. Group operating profit before goodwill amortisation was SEK 4.3 (4.0) m, an increase of approximately 8% on the corresponding period last year. The consultancy operations enjoyed extremely high capacity utilisation during the period. For Systems Sales, both sales and orders received rose sharply compared to the corresponding period in 1998. Extensive efforts were made during the period to formulate Information Highway's future strategy. In summary, this implies the utilisation of the secure Internet platform that has been established, primarily on the consultancy side, to develop Information Highway's systems integration expertise for solutions for the electronic market. This encompasses initiatives focused on areas such as Internet applications within the sphere of new mobile technology such as WAP (wireless application protocol) and digital TV. Information Highway's operations are founded on business know-how, creativity and extensive technical expertise. In March, the company implemented an options incentive scheme aimed at all group employees. The purpose of the scheme is to raise employee motivation and enhance Information Highway's team spirit. The options incentive scheme was very well received and was oversubscribed by more than 100%. Market Information Highway is active in that market segment the company terms electronic channels, the most expansive Internet sphere encompassing those services, products and solutions clients can be offered in order to create new business solutions with the help of leading-edge technology. The market for rationalising external and internal business processes with the help of new electronic channels is considerably more extensive than the traditional Internet market. Information Highway already utilises applications that include digital TV and GSM. Information Highway is highly competitive compared to the market's other Internet-oriented services providers. Its combination of extensive business expertise and the ability / know-how to implement technically sophisticated solutions is Information Highway's primary distinguishing feature. Demand for the group's consultants is currently extremely robust, evidence that Information Highway harbours extensive expertise in the Internet sphere and that clients have considerable confidence in the company. In the Systems area, there is some uncertainty relating to whether customer orders will decline during the fourth quarter of 1999 as a result of the new millennium. Many hardware suppliers reported contracting markets at the beginning of the year and have warned of a waning PC market in 1999. Information Highway has not experienced any such decline primarily because the company is not active in the PC segment. Systems sales have been concentrated on technically sophisticated server solutions focused on the Internet. Outlook Growth is expected to remain brisk in 1999. Even if System Sales' profit gains were pronounced, some work remains to be done before satisfactory earnings will be achieved- the rationalisation initiatives are set to continue during the year. The consultancy operations will sustain their brisk rate of recruitment. Information Highway intends to retain its position as the leading systems - integrator on the market for electronic channels. Sales Sales for the period amounted to SEK 158.4 (101.9) m, up 55% on the first quarter of 1998. SALES 1999 1998 1998 1 (SEK m) Jan- Jan- full Mar Mar year Group 158. 101. 455. 4 9 2 Consultan 39.4 cy 25.7 125. 6 Systems 113. Sales 1 76.2 345. 8 Group- 5.9 - 4.9 wide 1 Group sales have been subject to the elimination of internal sales of SEK 21.1 m. Profit Group profit before goodwill amortisation was SEK 4.3 (4.0) m, an increase of approximately 8% on the corresponding period of last year. Goodwill amortisation amounted to SEK 2.9 (1.9) m. Profit net of financial items was SEK 1.1 (2.2) m. PROFIT BEFORE GOODWILL 1999 1 AMORTISATION (SEK m) Jan- Mar Group 4.3 Consultancy 6.1 Systems Sales 1.5 Group-wide -3.3 1 As the consequence of re-organisation, there are no relevant comparable figures for the respective business areas for the corresponding period of the previous year. Profit- Consultancy The consultancy operations' profit before goodwill amortisation amounted to SEK 6.1 m. The consultancy operations enjoyed extremely high capacity utilisation during the period and are maintaining their brisk recruitment. Profit- Systems Sales Systems Sales' profit before goodwill amortisation was SEK 1.5 m. The restructuring initiatives that began towards the end of 1998 have had the intended effect on profit for the period. The work is set to continue during the year; further measures will be required in order to attain satisfactory earnings. Profit- Group-wide / parent company The parent company's profit before goodwill amortisation was SEK -3.3 m. The figure was burdened with provisions for restructuring costs worth SEK 2.0 m. Financing Liquid funds were SEK 20.2 m at the end of the period, against SEK 35.4 m at the end of 1998. The group equity ratio was 38.1% as of 31 March 1999, against 36.2% at year-end. Key figures Earnings per share were SEK 0.17 as of 31 March 1999, compared to SEK 0.48 at the corresponding point in the previous year. Shareholders' equity was SEK 26.32 (42.59) per share at the end of the period. Operating margin before goodwill amortisation was 2.7% (3.9) for the period. Return on capital employed was 1.3% (6.8) for the quarter; return on equity was 0.7% (4.7). Number of employees The number of employees was 247 at the end of the period, against 240 at the corresponding point last year. The consultancy operations employ 167 persons while 68 work in System Sales. At the end of the first quarter, the corresponding numbers were 162 and 64 respectively. The higher number of employees in Systems Sales is attributable to a structural change implying that all administrative personnel linked to the business area have been included in the total figure. Number of shares and share price On 16 March 1999, the Annual General Meeting authorised the Board to effect targeted new issues totalling a maximum of 200,000 shares to be used as part payment for acquisitions of strategically important companies in the period until the next AGM is held. Total number of shares outstanding as of 31 March 1998 3,411, 750 Authorisation by the AGM for 200,00 further acquisitions 0 Convertible programme, 1997 170,00 0 Options programme, 1998 170,00 0 Options programme, 1999 170,00 0 According to the terms of the 1999 options incentive scheme, employees can subscribe for one new share per option at SEK 106 during the period 1 October 2001-15 February 2002. The price of the options was set at SEK 6.85; a further 170,000 shares will be issued upon full utilisation of the offer. During the period, the share price fluctuated between a low of SEK 58 in January and a peak of SEK 80 in March. Forthcoming reports The second-quarter report will be published on 16 August 1999 The third-quarter report will be published on 25 October 1999 The 1999 financial statement will be published on 26 January 2000 Sundbyberg, Sweden, 27 April 1999 Göran Wågström President and CEO Website: www.infohwy.se e-mail: info@infohwy.se Please direct any questions arising from this report to our CEO, Göran Wågström, or CFO Katarina Nyberg, tel. + 46 (0)8 635 1500. This report has not been examined by the group's auditors. Income Statement January - March 1999 1999 1998 1998 (SEK M) Jan- Jan- Full Mar Mar year Net sales 158.4 101.9 455.2 Operating costs - -97.9 - 154.1 466.5 Operating profit before items affecting comparability 4.3 4.0 -11.3 Items affecting comparability - - -39.8 Operating profit before 4.3 4.0 -51.1 goodwill amortisation Goodwill amortisation -2.9 -1.9 -10.5 Goodwill write-down - - -5.0 Operating profit after goodwill 1.4 2.1 -66.6 amortisation Net financial position -0.3 0.1 -0.4 Profit net of financial items 1.1 2.2 -67.0 Tax -0.5 -0.6 14.0 Net profit for the year 0.6 1.6 -53.0 Balance sheet 1999 1998 1998 (SEK M) 31 31 31 Mar Mar Dec Intangible fixed assets 35.6 44.9 38.3 Tangible fixed assets 37.3 17.1 24.7 Inventories 17.8 35.5 28.2 Customer receivables 97.0 79.3 90.6 Liquid funds 20.2 38.4 35.4 Other current assets 27.7 28.3 29.7 Total current assets 162. 181. 183. 7 5 9 Total assets 235. 243. 246. 6 5 9 Shareholders' equity 89.8 145. 89.3 3 Non-interest bearing long- 0.3 3.7 0.7 term liabilities Interest-bearing long-term 46.3 17.8 41.9 liabilities Total long-term liabilities 46.6 21.5 42.6 Accounts payable 64.5 43.9 73.6 Other liabilities 34.7 32.8 41.4 Total current liabilities 99.2 76.7 115. 0 Total liabilities and 235. 243. 246. shareholders' equity 6 5 9 Key figures x 1999 1998 1998 (SEK 31 31 31 M) Mar Mar Dec Data per share, SEK Earnings per share 0.17 0.48 neg . Shareholders' equity 26.3 42.5 26. per share 2 9 2 Ratios, % Operating margin before goodwill 2.7 3.9 neg amortisation . Operating margin after goodwill 0.9 2.0 neg amortisation . Return on capital employed 1.3 6.8 neg . Return on equity 0.7 4.7 neg . Equity ratio 38. 59. 36. 1 7 2 1 Statement of Changes in Financial Position 1999 1998 (SEK 31 31 M) Mar Dec Ongoing operations Operating profit 1. - 4 66. 6 Adjustment for items not 5. 23. included in cash flow 2 9 Cash flow from ongoing operations before change in working capital 6. - 6 42. 7 Change in working capital I nventories 10. - 4 3.8 Current receivables - - 3.9 11. 1 Current liabilities - 31. 15. 4 4 Cash flow from change in - 16. working capital 8.9 5 Cash flow from ongoing - - operations 2.3 26. 2 Investment activity Acquisitions of fixed 17. 42. assets 3 7 Cash flow from 17. 42. investment activity 3 7 Financing activity New issue - 16. 8 Dividends - - 1.6 Change in borrowing 4.4 24. 7 Cash flow from 4.4 39. financing activities 9 Liquid funds, opening 35. 64. balance 4 4 Change in liquid funds - - 15. 29. 2 0 Liquid funds, closing 20. 35. balance 2 4 1 No comparable figures are available as of 31 March 1998 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/27/19990616BIT00560/bit0001.doc http://www.bit.se/bitonline/1999/04/27/19990616BIT00560/bit0002.pdf