Improvement in earnings from first quarter of 2002

Significantly lower cost base than at this time last year

Very strong earnings performance from Computer Operating Services

Weak profitability for Bank & Finance, further cost saving measures to be implemented

Normal pattern of weak cash flow in the first quarter

No change in market conditions from the previous quarter

 

Operating revenue was NOK 1,058 million in the first quarter of 2003 as compared to NOK 1,125 million in the first quarter of 2002. The reduction reflects the decline in demand experienced by Bank & Finance, Telecommunications and Consultancy Services during the first half of 2002.

 

Operating profit (EBITA) was NOK 33 million higher than in the first quarter of 2002. After adjusting for non-recurring items in the 2002 figures, underlying profit for the first quarter of 2003 was in line with the same period last year. However this should be seen in the light of a drop in turnover between the two periods of NOK 67 million, and the underlying margin has therefore improved. This shows that the extensive cost savings introduced have offset the impact of lower turnover on earnings, while at the same time Computer Operating Services reports a sharp improvement in profit relative to the first quarter of 2002.

 

Reductions in headcount and other cost saving measures helped the group as a whole to report an improvement in underlying operating margin from 3.7% in the first quarter of 2002 to 4.0% in the first quarter of this year despite the marked deterioration in market conditions seen since the start of 2002. The Bank & Finance business area reported weak results for the first quarter, and further measures are to be implemented that will reduce operating costs by NOK 3.5 million per month for the rest of the year with effect from 1 May. These measures do not create any need for non-recurring provisions.

 

The group has reduced its headcount by 468 since the start of 2002. The most recent round of headcount cuts was largely completed over the course of the first quarter of this year.

 

Goodwill depreciation was NOK 4 million lower than in the first quarter of 2002 as a result of the goodwill write-downs carried out in 2002. A goodwill write-down of NOK 4 million was recognised in the first quarter as compared to NOK 3 million in the first quarter of 2002. This related to units in the Bank & Finance business area.

 

Net financial items related to shareholdings improved by NOK 44 million in the first quarter of 2003 as compared to the same period last year, which was burdened by a charge of NOK 45 million in respect of Itworks.

 

Net financial items for the quarter of NOK -17 million include NOK 2 million of net currency losses, representing an increase of NOK 2 million from the same period last year. This principally relates to liabilities denominated in foreign currency.

 

The group reports a pre-tax loss of NOK 16 million for the first quarter of 2003 as compared to a loss of NOK 92 million for the same period last year. The net loss for the quarter of NOK 11 million after tax represents earnings per share of NOK -0.12 as compared to NOK -0.77 for the same quarter last year.

 

 

The group's cash from operations is normally weak in the first quarter because of sizeable advance payments to software suppliers at the start of the year. The first quarter of this year saw cash from operations of NOK -198 million as compared to NOK -235 million for the same quarter last year. However the first quarter of 2002 was adversely affected by particular items amounting to NOK 120 million, so underlying year-on-year cash from operations for the first quarter shows a decline of NOK 83 million. This reflects an increase in prepayments for software licences in the Computer Operating Services business area. In addition most of the NOK 63 million of restructuring costs for which provision was made in the fourth quarter of 2002 were paid out during the first quarter of this year. Cash from operations for the first quarter was equivalent to NOK -2.19 per share as compared to NOK -2.60 per share for the same period last year.

 

Net interest-bearing liabilities totalled NOK 655 million at 31 March 2003, representing an increase of NOK 87 million from the end of the first quarter of 2002 and an increase of NOK 312 million from the start of this year.

 

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1st Quarter Report 2003, inclusive financial tables:

 

1st Quarter Presentation: