Nexus Interim Report Jan - Sep 2002

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Interim Report January - September 2002 The Period In Brief * Net sales decreased by 7.9 % to SEK 332.2 million (360.6) * The result before depreciation totalled ./. SEK 30.8 million (34.5) * The result after financial items totalled ./. SEK 317.8 million (15.1), of which items affecting comparability totalled ./. SEK 278.2 million, of which ./.SEK 263.2 million were attributable to the write- down of goodwill and ./. 24 million restructuring costs * The order book at the end of the period totalled SEK 599.4 million (425.5) * Orders received during the period totalled SEK 479.5 million (390.7), primarily continued high order levels within the PKI and Secured Messaging segments * Liquidity, unaccounted credit, totalled SEK 14.7 million (32.7) at the end of the period * The Company is restructuring into three business areas and is reserving restructuring costs of SEK 15 million * E-Tech Group and Blueice Research AB have been acquired * A number of extensive agreements with customers within the Company's core expertise areas have been signed The CEO' s Comments on Developments During the Period The Company's development during the first nine months has not been satisfactory. Sales have been somewhat lower than for the same period last year while the earnings trend has been considerably poorer. During the second quarter of the year, a certain stabilisation was noted after a very unsatisfactory first quarter. The level of orders received was high and the cost-savings program was implemented. During the third quarter, normally the weakest, the level of orders received continued to be high while a few market-related events had a considerable negative effect on the result for the quarter and for the period as a whole. This concerns in part a number of comprehensive serial deliveries being postponed until the fourth quarter - and even 2003 - and in part consulting operations being negatively affected by generally low demand and the termination of several customer projects that were underway. On the positive side, the level of orders received and growth within two of the Company's core areas, PKI and PKI-related projects (Public Key Infrastructure or certificate solutions) and Security, continued to develop well. The order book at the end of the period amounted to about SEK 600 million, the highest recorded value in the Company's history. Despite the postponement of a number of serial delivery deals, the Company noted the beginning of increased activity within this area, which ought to benefit development in the immediate future. Overseas operations continued to develop positively and are profitable. The Company assesses that price levels have stabilised, even if at a lower level. During recent months, the Company carried out a review of its strategy and organisation within the framework of a project called Focus. The conclusions of the project included a more pronounced focus of the Company's activities within Secured IT Solutions with the aim of yet further strengthening expertise and our ability to deliver within the field. Activities outside the core areas will be wound down. In conjunction with this, the Company will be reorganised into three business areas. The costs for this restructuring are estimated at SEK 15.0 million, which will be charged in their entirety during the third quarter. The new organisation will result in greater efficiency, which together with the already implemented cost reductions will considerably strengthen the Company for the year 2003. As a step in this overhaul and adaptation of operations, the Board has also decided to write off a considerable sum of the Company's acquired goodwill. The result for the third quarter will therefore be charged with a goodwill write-down of SEK 263.2 million. Market Developments The market as a whole has experienced negative growth. Within the Company's core areas, however, development has been positive, even if the number of major implementation projects is still too low. The Company has, however, noted an increased level of activity within preliminary studies and planning. A number of major initiatives, such as Bankernas ID-tjänst (BIDT, The Banks' ID Services) and Statskontoret (The Swedish Agency for Public Management), are expected to enter the negotiation phase in the near future. Another trend that was discerned during the third quarter is that to an increasing extent customers want to order project and product deliveries now, but with delivery in 2003. Restructuring Operations Parallel to the overhaul of the costs structure that was carried out in recent months, the Company has also reviewed its strategy and structure, in a project called Focus. The conclusions of the project included a more pronounced focus in operations within Secured IT Solutions. Today, the Company has a leading position within this area and wants to concentrate its efforts on retaining and developing this position in close collaboration with both customers and partners. The Company will concentrate its activities on PKI projects and products, Security Consultants, and Product Sourcing operations and the associated product development and serial deliveries. Activities outside this market focus, where the Company is often also a more marginal supplier, will be wound down. The Company is organising operations into three business areas, wherein expertise, offering, and ability to deliver will be strengthened. These business areas are as follows: · Nexus Secured Business Solutions - gathers all operations within PKI projects and products, including Nexus International, which encompasses the Company's overseas operations. · Nexus Security Consultants - consolidates all operations within the Security field, encompassing operational analysis and administrative and technical Information Security. · Nexus Product Sourcing - where all activities concerning product development within Secured Products and serial deliveries will be concentrated. · Relevant issues and customer relations within the three respective business areas will be co-ordinated via Key Account Management and the management group. The Company's management group is comprised of: Mikael Jacobsson, CEO Henrik Halvorsen, Deputy CEO Gustaf Malmros, Deputy CEO and Head of Nexus Secured Business Solutions Peter Galli, Head of Nexus Security Consultants Ola Kjellstrand, Head of Nexus Product Sourcing Lars Hedberg, CFO The reorganisation will entail further improvements in efficiency and additional cost savings. The costs for this restructuring are estimated to be about SEK 15.0 million, which will be charged in their entirety during the third quarter as a restructuring reserve. As of the third quarter 2002, financial reporting will be carried our at business area level. ------------------------------------------------------------ This information was brought to you by Waymaker The following files are available for download: The full report The full report