Interim report third quarter, July-September 2001

INTERIM REPORT THIRD QUARTER, July-September 2001 Uncertainty on the market affects ProAct Summary of the period Revenue for the third quarter totalled SEK 155.6 million (127.4), an increase of 22 per cent. In the third quarter, operating profits for the group before the amortization of goodwill (EBITA) totalled SEK -7.8 million (-1.8). Net revenue for the first three quarters amounted to SEK 553.0 million (413.5), an increase of 34 per cent, with EBITA excluding capital gains totalled SEK 0.6 million (1.7). Improved EBITA result on rolling 12 months, 2.4 per cent (1.6%), despite the current economic situation. Continued good development in service income improves position in spite of reticence with regard to system investments. The average number of employees during this interim period was 262 (197). During the quarter, 11 people have joined the staff. Since the beginning of the year, the number of employees increased by 61 to 280. For the remainder of the year, ProAct will operate a very restrained recruiting policy. Important events during the period July-September Restraint in IT investments and extended sales cycles are having a negative effect on both ProAct and the IT market in general. Continued concentration in the fields of networks and security in West and South Sweden, with ProAct NetWorking AB opening an office in Gothenburg. Restructuring of the activities of ProAct Media Technology. One-off write-downs to the value of SEK 5-7 million are expected to be carried out in the fourth quarter. ProAct is a specialist and independent integrator with know-how, methods and products in the field of data warehousing and infrastructure for securing mission-critical information. The company, which is active in Denmark, Finland, Norway, Switzerland and Sweden, focuses on large and medium-sized companies and organisations in need of secure and efficient handling of mission-critical information. Business is conducted in Copenhagen, Aarhus, Helsinki, Uleåborg, Oslo, Bergen, Stavanger, Trondheim, Stockholm, Gothenburg, Linköping, Sundsvall, Lund, Karlskrona and Zurich with a staff more than 280, most of whom are technically oriented. What sets ProAct apart is the technical expertise and competence of its personnel. ProAct IT Group AB is listed on the O-list of the OM Stockholm Stock Exchange, Attract 40. The Market and ProAct's role ProAct is a specialist and independent integrator with know-how, methods and products in the field of infrastructure for securing mission- critical information. The company, which employs around 280 people, conducts business in Denmark, Finland, Norway, Switzerland and Sweden. ProAct primarily works for large and medium-sized businesses and organisations. Factors such as the expansion of the Internet and increased business activity on the Net make increasing demands for security, access to data, short response times, and high accessibility - 24 hours a day, all year round. ProAct's skills and system solutions are much in demand by customers in all sectors. Secure infrastructure consists of elements such as data warehousing, security, networks and associated functions for increased performance and accessibility - irrespective of the type of server and applications used. Infrastructure is built up from three perspectives: Volume - infrastructure must be able to cope with increasing volumes of information without these disrupting operation or creating unexpected extension problems. Value - infrastructure must be built up on the basis of the value that the information and accessibility to it has for the company Cost - the company must be able to manage the infrastructure in such a way as to ensure that the operating costs do not rise when the volume of information and the utilisation of the system increase. Under the current market conditions, where customers are increasingly obliged to focus on their operating costs, this aspect will become even more important, and investments in the field of back-up and storage consolidation will provide rapid payback. The market for secure infrastructure is continuing to grow more rapidly than the IT market in general. Based on new analyses of certain sub- markets, ProAct evaluates that the market will grow by 15-20 per cent for the time being. Third quarter 2001 Revenue during the third quarter amounted to SEK 155.6 million (127.4), an increase of 22 per cent compared to the same quarter of the previous financial year. Of this growth, 12 per cent is organic. Of the total revenue for the period, service income amounted to SEK 59.7 million (33.6), an increase of SEK 26.1 million compared to the third quarter of the previous financial year. Services accounted for 38 per cent (26%) of the net revenue generated during the third quarter. In the third quarter, operating profits for the group before the amortization of goodwill (EBITA) totalled SEK -7.8 million (-1.8). Net operating profits totalled SEK -11.6 million (-4.4). During the third quarter, ProAct's activities have encountered a market showing longer sales cycles and a degree of restraint as regards IT investments. This has had a negative effect on ProAct. However, even under these conditions, ProAct's sales of services have continued to develop positively. Some sluggishness has been observed, primarily in the area of new system projects, with system sales during the third quarter failing to reach the expected levels. This applies to parts of the Swedish and Finnish markets. In spite of the poor market conditions, system sales during the third quarter still reached the same level as last year. Measures have been adopted to deal with the lower level of sales. These include redistribution of sales resources between different customer segments. The activities implemented earlier this year to increase efficiency have already had some effect. For the remainder of the year, ProAct will operate a very restrained recruiting policy. In addition, the company is conducting a survey of all costs, and as a part of this work, the ProAct Media Technology office in Stockholm has been closed, with the staff being relocated to the Sollentuna office. During the third quarter, ProAct has continued to concentrate on the areas of networks and security in West and South Sweden, with ProAct NetWorking AB opening an office in Gothenburg. The following major deals were concluded during the period covered by this report: Bluewin - backup/restore solution for Swiss Internet portal. Ericsson Software Technology AB - data storage and infrastructure solution based on Network Attached Storage (NAS) for the expansion of ClearCase, the company's development environment. Föreningssparbanken - strategic agreement for support and operational assistance with regard to the customer's Internet environment. Siemens - infrastructure for SAP solution and hosting services concerning data storage for large companies in Finland. SP2, the largest pre-press company in Denmark - data storage solution (Storage Area Network, SAN) for storing and administrating large image databases paves the way for ASP and e-commerce within the graphics sector. Norska Statnett - delivery of a combined backup/restore and storage system. Norska Statoil - continued extension of a previously supplied NAS solution. WM-Data Scania AB - replacement of the entire existing backup/restore platform in all the company's IT environments. This constitutes a part of the company's future SAN solution. ProAct is supplying project management, installation and delivery of hardware and software, and is also responsible for ongoing service and support. Future information dates Year-end report 2001 15 February 2002 Sollentuna, 25 October 2001 ProAct IT Group AB (publ) Per-Arne Lundberg President and CEO For additional information, please contact: Per-Arne Lundberg, President Tel. +45 8 410 666 00 E-mail: itgroup@proact.se www.proact.se ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/25/20011025BIT00500/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/10/25/20011025BIT00500/bit0002.pdf The full report