Interim report January - June 2001

Interim report January - June 2001 · Trio's net sales rose 33% to SEK 61.9 million (SEK 46.7 m) · The loss for the first half-year was -SEK 26.1 million (-SEK 70.1 m) · The second quarter saw an excellent inflow of orders, with an increase to SEK 75 million (SEK 15 m) · Q2 net sales climbed 42% to SEK 30.9 million (SEK 21.8 m) · Positive cash flow in Q2 · Strategic orders were signed with Telia and Telenor, amongst others · A partnership agreement with Technology Nexus concerning development enables major business opportunities and cuts costs in the System Products business area · The breakeven forecast for Q3 2001 remains in place Q2 2001 Q2 6 month 6 month SEK million 2000 2001 2000 Inflow of orders 75 15 95 35 Net sales 30.9 21.8 61.9 46.7 Total expenses - 47.1 - 51.3 - 93.6 - 106.1 Loss prior to -10.8 - 25.0 - 26.0 - 54.9 goodwill depreciation Loss for the period -10.9 - 33.0 - 26.1 - 70.1 Cash flow for the 15.0 - 32.1 - 32.9 - 48.7 period The operations Trio is a telecommunications company that develops software and systems solutions with a focus on corporate telephony and value-added call handling. Customers are mobile operators, service providers, companies and organisations. A total of around 2,000 systems have been delivered in the Nordic region. Trio's solutions enable companies to combine their existing telephony investments with 3G mobile telephony and IP telephony, or completely replace their fixed telephony with mobile telephony without affecting service standards. The solutions also enable combining existing telephony and web systems with advanced voice response solutions and contact centres. Trio's solutions enhance the reachability of units and individuals within the company, thus enhancing the company's efficiency. Service levels also improve, which means that the company can boost customer relationships and sharpen its competitive edge. A sharp rise in the inflow of orders Trio's initiative over recent years focusing on the development of systems for the integration of fixed, mobile and IP telephony accounts for the majority of the very strong inflow of orders during Q2 2001. Trio is now entering a phase that will see much larger deals, and it is expected that mobile operators will account for a large proportion of revenues. The Trio group's net sales during Q2 amounted to SEK 30.9 million (SEK 21.8 m), and the inflow of orders amounted to SEK 75.3 million (SEK 14.7 m). At group level, total costs have been cut to SEK 47.1 million (SEK 51.3 m). The savings have mainly been achieved within Trio Information Systems AB, the Swedish operations of System Products. Total costs decreased by 8% in Q2, despite a much higher level in net sales (+44%) and the inflow of orders (+412%). Significant orders during the quarter Last year, all the business areas incurred high development costs, enabling Trio to offer secure, future-proof systems today at the cutting edge of technology. Developmental costs were reduced during the quarter by 29% to SEK 9.8 million (SEK 13.8 m). Agreement with Telia Mobile regarding Trio´s Mobile Office solution. The total order value amounts to SEK 41.7 million excluding training and service. The target group consists of corporate customers that can choose to use mobile telephones alone. They nevertheless enjoy complete switch functionality, access and referral, message handling and a dynamic corporate directory. Trio´s Mobile Office is based on solutions from the Operator Solutions and System Products business areas. The systems are to be installed in Telia Mobile's mobile telephony network in the autumn. Sonera and Telenor already offer Trio's Mobile Office solutions to their respective customers in Finland and Norway. Agreement with Telenor regarding a unique integration solution. The agreement relates to the delivery of Trio PresentOffice to Telenor's new head office at Fornebu. The solution integrates existing telephone switches, mobile telephony and Telenor's IP telephony solution. The system will be used by up to 15,000 employees and 70 attendants within Telenor. The order value is SEK 2.9 million. The solution is the first of its kind in the market and will, for example, enable employees to choose freely between using fixed and mobile telephony while maintaining a very high functionality level. In addition, attendants can manage fixed and mobile telephony from the same ergonomic workstation. Diaries, the web and voice referral are also integrated into the system. Agreement with the National Board of Health and Welfare regarding IP telephony integration. The agreement covers the integration of offices in Stockholm and Gothenburg by means of IP telephony, and has been established in association with Cygate, the systems integrator. The solution enables the use of existing IP networks for both data and traditional switch-based telephony. The integration will also enable attendants to serve both offices from one and the same workstation. All National Board of Health and Welfare regional offices will be gradually integrated. The solution is based on Cisco's IP telephony platform. Partnership agreement with Technology Nexus concerning development Trio signed a partnership and outsourcing agreement with Technology Nexus concerning the development of Trio PresentOffice. The agreement involves the transfer of employees of Trio Business Technology (a Trio subsidiary) to Technology Nexus. However, they will mainly continue to work for Trio during the three-year term of the agreement. So far, Trio has received a cash payment in the amount of SEK 21 million. As a part of the deal, Trio undertakes to purchase services from Technology Nexus for a total of SEK 60 million over a three-year period. The background is that larger deals relating to e.g. Trio's Mobile Office are based on a high degree of customer-financed development and adaptation. The collaboration will enable Trio to broaden its expertise quickly and offer the services of more development professionals in the context of projects conducted in close collaboration with customers. The agreement also cuts the development costs considerably in the System Products business area. The estimation that costs within System Products will be reduced by just over SEK 15 million in 2001 remains in place. Savings generated by the current restructuring programme in the business area are also included in the assessment. The agreement does not affect Trio's two other business areas. Staff The group employed 121 (188) people at the end of the quarter. Investments Investments in equipment and computers amounted to SEK 0,4 million (SEK 1.3) in Q2 Financial status and liquidity At the end of the period, the equity/assets ratio was 55% (86%) and liquid assets amounted to SEK 98.7 million (SEK 26.1 m). Outlook for 2001 In 2000, there was a sharp drop in demand in the Nordic region, mainly within the System Products business area. In the first half of 2001, demand has risen, however. The main reason for the much higher inflow of orders in Q2, however, is that as of this year, Trio can offer two qualified solutions for the integration of fixed, mobile and IP telephony. The first is Trio's Mobile Office, now being offered by the Nordic region's three leading mobile operators. The second is based on Trio PresentOffice, and is integrated with existing company switches. Telenor is the first customer and the installation is presented above. Trio estimates that license revenues (and thus business volumes) in both the Nordic region and internationally will rise, in spite of a dip in the business cycle in 2001. The reason is that the integration solutions offered by Trio are powerful rationalisation tools that enhance internal efficiency and improve customer service. However, a higher proportion of major orders will involve greater quarterly fluctuations in terms of signed orders, net sales, costs and financial result. It is expected that the majority of the increased revenues in 2001 will come from the Operator Solutions business area. It is expected that System Products will enjoy a higher level of net sales and that its financial result will improve significantly. It is expected that Customized Systems' financial result will improve during the second half of the year. At group level, the company's assessment set forth in the preliminary year-end accounts for the 2000 entire year remains in place. Organic growth of at least 50% is expected as well as an operating profit prior to goodwill depreciation by Q3 2001 at the latest. Upcoming financial information The nine-month interim report will be published on 25 October. Stockholm 26 July 2001 Trio AB (publ) The Board of Directors For more information, please contact Sverker Hannervall, CEO, tel.: +46 8 457 30 00, or Ion Bogdaneris, Chairman of the Board, tel.: +47 23 11 70 00 This report has not been subject to a special review by the company's auditors. The Trio Group is a group of companies with 120 employees in Sweden, Finland, Norway and Denmark. Trio develops and markets systems for mobile and fixed telephony that are designed to enhance the information flow of organisations, increase the accessibility of employees and raise the service level. The systems include call and message handling, call charging, and fax solutions for networks, as well as voice response and call centre systems. Trio's shares are listed on the O-list of the Stockholm Stock Exchange. www.trio.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/26/20010726BIT00020/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/07/26/20010726BIT00020/bit0001.pdf The full report