Year-end Report 2001

Year-end Report 2001 · Orders received for the full-year SEK 328.2M (40.2) of which Ishida accounted for SEK 307M · Operating result SEK -85.7M (-318.5) · Renegotiated Telxon agreement cuts debt in half · Net financial income and expenses SEK 41.2M (10.6) as a result of the agreement with Telxon · Liquid funds SEK 72.8M (169.2) · Extensive reconstruction led to increased customer focus and lower costs Significant events after the end of the reporting period · Order from the German company Metro for at least SEK 12,8M · The Board of Directors decision for a share issue to be approved by the extraordinary general meeting on 28 February 2002 _____________________________ Market The markets growth rate during the last 10-year period has been low, but the product attracts an increasing interest. The number of installations in the Japanese market continued to grow and ESL technology is achieving an increased acceptance. The number of installations in the French market also increased. Operations Orders received amounted to SEK 328.2M (40.2) and to SEK 6.6M (6.5) for the fourth quarter. Pricer's Japanese partner, Ishida, accounted for the bulk of orders, SEK 307M, received following a large order for ESL systems which was received in August. These orders will be delivered over five years starting in April 2002. The order is, therefore, larger than the previously stated minimum amount of USD 25M. At the period end, the backlog amounted to SEK 337M (26). The majority of Pricer's orders are made in USD and currency fluctuations affect the value of the backlog in SEK. In November, activities were initiated to restructure the operations and make them more efficient. It is anticipated that most of this work will be implemented during the first quarter of 2002. The sales and marketing operations will be strengthened through supplementing the partner strategy with direct sales in some markets and to large international customers. The revenue base will be widened through a stronger focus on complementary services and products to existing customers. A comprehensive restructuring of the operations is meant to reduce costs from approximately SEK 80M to approximately SEK 40-45M on an annual basis. The measures are expected to make full impact during the second half of 2002. Net sales and results The previous year's figures include the Intactix operation for one quarter, thereafter only Pricer's ESL operation. 2001 Net sales for 2001 amounted to SEK 36.4M (82.8 of which Pricer ESL accounted for 29.9). The deliveries related mainly to Ishida and Pricer's distributor in Germany. The gross profit amounted to SEK 4.6M (45.8 of which Pricer ESL accounted for -0.4). This is an improvement over the previous year, which is mainly due to improved margins. Operating expenses amounted to SEK 90.3M (364,1 of which Pricer ESL accounted for 314.2) and included one-off costs of SEK 17.9M (233.6). The one-off costs relate to the restructuring of the group of companies as well as a severance payment and a bonus made to the company's former president. The operating result improved compared to the previous year and amounted to SEK -85.7M (-318.5 of which Pricer ESL accounted for 314.6). The operating result, excluding one-off costs, improved to SEK -67,8M (84,9). The improvement in net financial income and expenses of SEK 41.2M (10.6) was the result of an agreement with Telxon which generated a financial income of SEK 46.8M. The liability to Telxon of USD 8.4M will be finally settled through a cash payment of USD 4M. Half was paid in December 2001 and half will be paid during April 2002. The net result amounted to SEK -44.5M (307.6 of which Pricer ESL accounted for -305.4). Fourth quarter Net sales amounted to SEK 10.8M (8.6). Gross profit amounted to SEK 1.1M (-0.2) and operating expenses to SEK 27.0M (220.8). Operating expenses included one-off costs of net SEK 7,1M (202.2). The consolidated operating result amounted to SEK -25.9M (221.0) and the net result profit was SEK 22.3M (-215.6). Net sales and operating result in the ESL operations excluding items affecting comparability, SEK M Jan-Dec 2001 Jan-Dec 2000 Oct-Dec 2001 Oct-Dec 2000 Net sales 36.4 29.9 10.8 8.5 Cost of sold -31.8 -30.3 -9.7 -8.7 goods Gross result 4.6 -0.4 1.1 -0.2 Expenses 1) -90.3 -314.2 -27.0 -220.8 Operating -85.7 -314,6 -25.9 -221.0 result Gross margin % 13 % -1 % 10% -2 % 1) Expenses for 2000 include write-down of market rights by SEK 200,2M. Financial position The cash flow from current operations was SEK -71,2M (-93.7) for the full-year and SEK -15.8M (-21,2) for the fourth quarter. Disposable liquid funds, i.e. liquid funds excluding blocked bank deposits and including an unutilised bank overdraft facility, amounted to SEK 51.5M (147.2) at December 31:st 2001. Existing liquid funds are expected to last until the second quarter of 2002. Expenses for the divestment of Intactix were charged to the cash flow of investment operations, but not the result, by SEK 5.7M during 2001. Costs of approximately SEK 9M remain for the phasing out of the Intactix Group. These have been written off. The liquid funds, approximately SEK 25M, which in accordance with the agreement with Intactix have been deposited in a blocked account in a bank as security for potential agreement undertakings, are expected to be at Pricer's disposal in April 2002. The tax authority in Sweden has announced a changed assessment relating to VAT on issue costs, SEK 3.4M, which were declared in 1999 in accordance with the opinion of the National Tax Board applicable at that time. Pricer has appealed against the decision and has not entered the amount as a liability. Should the decision of the highest court be the same as that of the tax authority, Pricer will report the amount of SEK 3.7M directly against equity. Capital expenditure During the year, total capital expenditure amounted to SEK 1.1M (2.3) and related mainly to computers and office equipment. All product development was written off. Personnel During 2001, the average number of employees amounted to 44 (89, of whom 45 work at Pricer ESL) whereas the number at 31 December 2001 amounted to 43 (46). Parent company During 2001, the parent company's net sales amounted to SEK 35.9M (29.7) and the result before appropriations was SEK -62.4M (-225.7). Capital expenditure amounted to SEK 1.1M (2.2). The parent company's liquid funds amounted to SEK 43.3M (128.7) at 31 December 2001. Accounting principles This year-end report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20 Interim Reports. From 2001, the following recommendations from the Swedish Financial Accounting Standards Council have been applied: RR9 income taxes, RR11 revenues, RR12 tangible fixed assets, RR13 associated companies and RR18 result per share. The application of these recommendations has not had any significant impact on the company's results and position. From 1 January 2001, the parent company's receivable from its subsidiary, Pricer Inc., is regarded as a permanent part of the financing and the translation difference is, therefore, reported directly against equity in the consolidated accounts. For 2001, this translation difference, which previously had an effect on the result, amounts to SEK 11.0M (8.3). Otherwise, the same accounting principles have been applied as in the latest Annual Report. Significant events after the end of the reporting period During February Pricer has received an order of at least SEK 12,8M from the German retail chain Metro, Pricer's largest customer. The new order is meant for a new Metro store concept in Germany. Deliveries will start in May 2002 and will continue until the first quarter of 2003. After the end of the reporting period, the Board of Directors decided for a new share issue with a preferential right for the company's shareholders to the approval of the extraordinary general meeting, which will be held on 28 February 2002. If the issue is subscribed in full, Pricer will raise SEK 109,7M, before issue- and guarantee costs 60 per cent of the new issue has been guaranteed. For further information, please refer to a separate press release. Forecast As the turnover increases, the action programme is aimed at achieving a more rapid improvement in the operating result by significantly reducing the fixed costs. It is difficult to assess the continued market trend. This assessment is unchanged from the Interim Report in September 2001. The annual report is expected to be published March 8:th 2002 and will be available for the public. The Board of Directors is of the opinion that the payment from the planned new share issue, if subscribed in full, will meet Pricer's capital requirement until the operations generate a positive cash flow. This is expected to be achieved during the first half of 2004. Annual general meeting and dividend An extraordinary general meeting will be held in Uppsala on 28 February 2002 at 4 pm. The date of the 2001 annual general meeting has been advanced and will be held on 25 April in Uppsala. The Board of Directors proposes that no dividend will be paid. The annual report is expected to be published on March 8:th 2002, and will be available for the public at the company on Axel Johanssons gata 4-6(Kristallen) in Uppsala. Next reporting date The Interim Report for January-March 2002 will be published on 25 April 2002. Uppsala, 7 February 2002 Pricer AB (publ) Board of Directors This Report is based on the accounts audited accounts. For further information, please contact: Jan Forssjö, President of Pricer AB: +46 18-18 81 00 Pricer AB (publ) was founded in Uppsala in 1991 and has built a leading position in the world market as a supplier of electronic display and information systems to the retail industry. Pricer offers electronic information systems intended to improve significantly customer benefit and improve retail profitability. Through Pricer's co-operation with highly competent partners, customers are offered a totally integrated solution together with the products, applications and services offered by our partners. The Pricer share is quoted on the O-list of OM Stockholm Exchange. For further information, please visit Pricer's website www.pricer.se. 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