Interim report January - March 1999

Interim report January - March 1999 @ Operating revenue rose by 29 percent to SEK 252 million (195). @ Operating profit before goodwill amortization rose by 37 percent to SEK 27.1 million (19.8). @ Profit per share increased to SEK 0.37 (0.21). @ In April an agreement was signed to acquire 30 percent of the shares of Argus Media, Germany, effective January 1, 2000, after which Sifo Group's interest in the company will amount to 80 percent. @ Profit for the full-year is expected to be better than the previous year. @ Group structure Sifo Group is active in media and market monitoring, surveys and consulting services. Sifo Group, which was previously part of the Scribona Group, has been quoted on the Stockholm Stock Exchange's O-list since September 10, 1998. Sifo Group has three divisions: Observer Media Intelligence, which works with media and market monitoring; Sifo Research & Consulting, which works with surveys and related consulting services; and SMG Consulting (50-percent owned), which is active in management and strategic consulting. Sifo Group operates in the Nordic countries, the Baltic region and Germany. Market Demand was generally good in all operating areas. Media content was favorable in most markets in which we are active, due in part to a high level of business activity, which affected Observer Media Intelligence's positively. Demand for editorial and analytical services remained high. The market for Sifo Research & Consulting's operations was good in both Sweden and Norway. Revenue Operating revenue rose by 29 percent to SEK 252 million (195). The increase is essentially due to organic growth and was 26 percent for comparable units. For Observer Media Intelligence, operating revenue amounted to SEK 147 million (115), representing growth of 28 percent. The growth rate was approximately 10 percent in Norway, over 20 percent in Sweden and Denmark, and over 30 percent in Finland and Germany. Editorial and analytical services continued to develop faster than basic services and accounted for 24 percent (18) of the division's revenue. Sifo Research & Consulting's operating revenue amounted to SEK 102 million (76). The growth for comparable units was 25 percent. In Sweden, growth was 12 percent and in Norway essentially higher. The Internet operations of Sifo Interactive Media reported higher operating revenue of SEK 2.1 million (0.6). SMG Consulting's operating revenue amounted to SEK 10 million (9), an increase of 13 percent. Profit Sifo Group's operating profit before goodwill amortization amounted to SEK 27.1 million (19.8), an increase of 37 percent. The higher profit in large part is attributable to organic growth. The operating margin improved to 10.8 percent (10.2). For Observer Media Intelligence, operating profit rose to SEK 27.6 million (22.1), an increase of 25 percent mainly attributable to organic growth. Swedish, Finnish and German operations developed especially well. The operating margin amounted to 18.7 percent (19.2). The somewhat lower margin is primarily due to the fact that the internal IT consulting operations were moved to the Group level. The merger between Observer Sverige and Imedia has been successful resulting in improved margins. In Norway costs are being expensed for a major development project under way to facilitate scanning of all newspapers and periodicals as well as searches for relevant information with the help of an advanced search system. The system is expected to be in production in the fall. Operating profit for Sifo Research & Consulting amounted to SEK 0.1 million (-2.7). The division's Norwegian and Swedish operations both noted improvements. The improved divisional result stems mainly from the business areas MIA (Management of Intangible Assets), Media as well as the consulting operations in Norway. The Internet operations of Sifo Interactive Media reported a loss of SEK -3.6 million (-0.7), according to plan. The increased deficit is due to the present launch of RelevantKnowledge. The project is expected to continue in year 2000. Direct profit comparisons in the division between years may be somewhat misleading due to, among other things, the degree of completion of major projects in each year. SMG Consulting's operating profit amounted to SEK 0.8 million (0.9). The Swedish operations developed positively, while in Finland the year started weakly due to project delays, among other things. The Group's net financial income and expenses amounted to SEK -1.5 million (- 2.1). The improvement is due to cash generated in operations. Profit per share after full tax amounted to SEK 0.37 (0.21) after full dilution. Financial position Acquisitions during the period amounted to SEK 4.0 million (31.4). The net debt/equity ratio declined to 17 percent (85). Goodwill in the balance sheet amounted to SEK 214.2 million (216.4). Shareholders' equity amounted to SEK 202.3 million (147.3) at the end of the period, corresponding to SEK 5.91 (4.30) per share. The equity/assets ratio improved to 36 percent (29). Acquisitions In February Sifo Group acquired Pressfax Oy, presently BIT Finland, with a turnover of SEK 2.5 million, as a first step in BIT's (Börslistans Informationstjänst) internationalization. BIT is part of Observer Media Intelligence. In April an agreement was signed to acquire an additional 30 percent of the shares of Argus Media, Germany, effective January 1, 2000, after which Sifo Group's interest will amount to 80 percent. The intent is to merge Argus Media and Observer RTV Medienauswertungen in early 2000 and thereby take full advantage of potential economies of scale. Sifo Group will own 86 percent of the combined operations. Millennium shift The project to secure the proper functioning of the IT systems in Sifo Group started in 1998. During the spring the remaining critical systems will be tested and guaranteed to be year 2000 compliant. The implementation plan is expected to be completed well before year-end. Outlook for the full-year We expect a continued strong growth during the remainder of 1999 although not on the same high level as for the first quarter. The conflict in the Balkans presently fills up a good part of the available media space leading to lower volumes for Observer Media Intelligence. Profit for the full-year is expected to be better than the previous year. This report has not been reviewed by the company's auditors. Sifo Group AB (publ) Board of Directors For further information, please contact: Robert Lundberg, President and CEO, phone +46-8-625 15 43, e-mail robert.lundberg@sifogroup.se Jan-Erik Jansson, Chief Financial Officer, phone +46-8-625 15 42, e-mail jan-erik.jansson@sifogroup.se This press release can also be accessed online at http://www.sifogroup.com SIFO GROUP - INTERIM REPORT JANUARY - MARCH 1999 Consolidated income statement 1999 19981998/9 1998 9 Amounts in SEK million Jan- Jan- Apr- Jan- Mar Mar Mar Dec 1 Operating revenue 251.6 194.8 951.2 894.4 Operating expenses -217.0-169.7-817.6-770.3 Depreciation, goodwill -3.5 -3.1 -14.0 -13.6 Depreciation, other -7.5 -5.3 -24.1 -21.9 Noncomparable items 0.0 0.0 -5.3 -5.3 Operating profit 23.6 16.7 90.2 83.3 Net financial income and -1.5 -2.1 -9.0 -9.6 expenses Profit before tax 22.1 14.6 81.2 73.7 Tax -8.2 -6.1 -25.8 -23.7 Minority interest -1.1 -1.2 -3.4 -3.5 Net profit for the period 12.8 7.3 52.0 46.5 1 Refers to the sum of net sales and the change in work in progress. Consolidated balance sheet 1999 1998 1998 Amounts in SEK million Mar 31Mar 31 Dec 31 Goodwill 214.2 216.4 219.2 Other fixed assets 90.4 80.7 91.4 Current receivables 200.3 176.5 210.6 Financial assets 79.1 62.3 72.6 Total assets 584.0 535.9 593.8 Shareholders' equity 202.3 147.3 194.1 Minority shares 6.1 6.3 8.8 Provisions 12.8 10.5 21.8 Current liabilities 248.0 179.1 251.7 Financial liabilities 114.8 192.7 117.4 Total equity and liabilities 584.0 535.9 593.8 Operating capital 244.1 284.0 247.7 Operating capital excl. 29.9 67.6 28.5 goodwill Interest-bearing net 35.7 130.4 44.8 indebtedness SIFO GROUP - INTERIM REPORT JANUARY - MARCH 1999 Operating revenue 1999 19981998/9 1998 9 Amounts in SEK million Jan- Jan- Apr- Jan- Mar Mar Mar Dec Observer Media Intelligence 147.4 115.4 525.1 493.1 2 Sifo Research & Consulting 102.4 76.3 412.8 386.7 SMG Consulting 10.4 9.2 44.2 43.0 Divisions 260.2 200.9 982.1 922.8 Group items -8.6 -6,1 -30.9 -28.4 Total 251.6 194.8 951.2 894.4 2 Of which Sifo Interactive 2.1 0.6 5.7 4.2 Media Operating profit before goodwill amortizations and noncomparable items 1999 19981998/9 1998 Amounts in SEK million Jan- Jan- 9 Jan- Mar Mar Apr- Dec Mar Observer Media Intelligence 27.6 22.1 94.5 89.0 3 Sifo Research & Consulting 0.1 -2.7 16.6 13.8 SMG Consulting 0.8 0.9 5.3 5.4 Divisions 28.5 20.3 116.4 108.2 Group items -1.4 -0.5 -6.9 -6.0 Total 27.1 19.8 109.5 102.2 3 Of which Sifo Interactive -3.6 -0.7 -9.8 -6.9 Media SIFO GROUP - INTERIM REPORT JANUARY - MARCH 1999 Cash flow analysis 1999 1998 1998 Amounts in SEK million Jan- Jan- Jan- Mar Mar Dec Cash flow from operations 12.3 -1.3 141.6 Cash flow from investment -11.9 -40.0 -75.2 activities Cash flow from financing 5.7 24.4 -58.7 Cash flow 6.1 -16.9 7.7 Key ratios 1999 19981998/9 1998 9 Jan- Jan- Apr- Jan- Mar Mar Mar Dec Operating margin 10.8% 10.2% 11.5% 11.4% Return on equity 26% 28% ROE, excluding noncomparable 28% 30% items Equity/assets ratio 36% 29% 36% 34% Net debt/equity ratio 17% 85% 17% 22% Interest coverage, multiple 12.9 6.7 9.2 7.9 Cash flow from operating 15.2 2.9 67.3 55.1 activities, SEK million Acquisition values of acquired 4.0 31.4 7.3 34.7 operations, SEK million Other investments, gross, SEK 8.6 12.7 35.8 40.0 million Profit per share after full tax: Before dilution, SEK 0.37 0.21 1.52 1.36 Excl. noncomparable items, SEK 0.37 0.21 1.63 1.47 After full dilution, SEK 0.37 0.21 1.50 1.34 Excl. noncomparable items, SEK 0.37 0.21 1.61 1.45 Equity per share, SEK 5.91 4.30 5.91 5.67 Number of shares, thousands 34,24034,24034,24034,240 Number of employees at end of 1,132 1,016 1,132 1,089 period ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/26/19990426BIT00430/bit0001.doc The full report http://www.bit.se/bitonline/1999/04/26/19990426BIT00430/bit0002.pdf The full report