Year-end Report 2007 Nocom AB (publ)
• Net sales in continuing operations reached SEK 531.8 million (489.5) for the full year and SEK 154.2 million (144.5) for the fourth quarter
• Profit before amortization of intangible assets (EBITA) in continuing operations was SEK 54.9 million (63.6) for the full year and SEK 10.3 million (21.6) for the fourth quarter
• Profit after tax in continuing operations amounted to SEK 69.2 million (62.0) for the full year and SEK 36.9 million (34.6) for the fourth quarter
• Earnings per share in continuing operations were SEK 0.60 (0.60) for the full year and SEK 0.32 (0.32) for the fourth quarter
• The Board proposes a regular dividend of SEK 0.20 (0.20) per share
• The Board proposes to the AGM on May 6, 2008, that the company’s business focus and profile be changed to the acquisition, active ownership and divestment of IT companies. Stefan Skarin has been appointed as President and CEO to lead this change and the new Group, while Stefan Ström will be Chief Operating Officer (COO).
Comments from the CEO - 2007, a year of streamlining and investments:
Much of our energy in 2007 was devoted to the Group’s long-term strategic focus. We have increased the value of and sold off unprofitable subsidiaries in the distribution business area to instead concentrate on the subsidiaries we believe to have the greatest potential for growth and profitability. Nocom has been loyal to the IT sector since the start, but has shed its involvement in the less profitable distribution operations over the past few years. Nocom is no longer a distributor – Nocom’s ambition today is to create autonomous and profitable subsidiaries.
Net sales in continuing operations rose by close to 9 percent to approximately SEK 532 million for the full year and around SEK 154 million for the fourth quarter. Last autumn’s divestitures of the distribution companies Nocom Security and Network Innovation were the final step in Nocom’s streamlining during 2007. Today the Group consists of five companies – IAR Systems, Northern, Deltaco, Nocom Software and Nocom Drift.
In 2007, ambitious investments were made in sales and marketing resources in IAR Systems and Northern, and in building a range of own-branded products in Deltaco.
IAR Systems is continuing to reap success in the ARM segment, the leading microprocessor architecture in 32-bit technology, and recorded its highest quarterly sales ever in this area.
Northern took several offensive steps during the year, including its largest product launch of all time, an acquisition in France and the opening of offices in England and Germany.
Deltaco’s efforts to develop and market a range of products under its own brand have proceeded according to plan. At year-end there were some 700 proprietary products on the market, in retailer-specific packages, and their share of total sales has grown steadily throughout the year. In spite of this resource-intensive venture, which has led to increased capital tied up in inventory and development costs, Deltaco is showing stable and healthy profitability.
The Group’s financial position remains strong and has provided scope for a sizeable share buyback in the fourth quarter. In 2007 Nocom repurchased a total of 4.8 million shares. The equity/assets ratio strengthened during the year and was 83 percent at December 31, 2007.
We have now laid a foundation for Nocom’s next important step, a point we have reached through the past few years’ strategic realignment, through acquisitions and divestitures, and through active development of our acquired companies.
Stockholm, Thursday, February 14, 2008
President and CEO, Nocom AB (publ)
Group - Stable operations and solid finances:
Net sales in continuing operations rose by close to 9 percent to 531.8 million (489.5) for the full year and SEK 154.2 million (144.5) for the fourth quarter. Nocom Security, which accounted for the bulk of sales in the Distribution business area, and Network Innovation were both sold in September.
These divestitures represented the final step in the realignment of distribution operations, and have reduced the business area’s share of total Group sales to around 10 percent. The process of change has been underway throughout the entire year, with a resulting impact on both sales and earnings. The sold companies have shown a negative earnings trend in 2007 compared to earlier years
After three quarters of stable earnings growth, profit for the fourth quarter was down somewhat. This also meant that profit for the full year was lower than in 2006. In continuing operations, profit after amortization of intangible assets was SEK 54.9 million (63.6) for the full year and SEK 10.3 million (21.6) for the fourth quarter. Operating margin was 9.5 percent (12.2) for the full year and 5.9 percent (14.5) for the fourth quarter. Profitability remains good in the subsidiaries IAR Systems and Deltaco, while fourth quarter earnings in Northern were negatively affected by weak sales. The remaining distribution operations in Nocom Software and Nocom Drift also performed well and the streamlining process has given the business area stronger profitability and an operating margin of 19 percent.
Profit for 2006 was positively affected by one-time items of SEK 3 million – a SEK 2 million gain on the first quarter sale of the stockholding in ContactorArete and additional purchase consideration of SEK 1 million for the sale of Arete and Arete Datastöd in the second quarter of 2006.
Cash flow from operating activities was SEK 37.1 million (56.7) for the full year and SEK 9.0 million (14.4) for the fourth quarter. In the fourth quarter Nocom repurchased 3,842,000 treasury shares for a combined price of SEK 18.0 million. Total share buy-backs during the thus amounted to 4,795,000 B class B shares for a combined price of SEK 23.8 million.
Together with the year’s stockholder dividends for a total of SEK 35.1 million, these items were charged to cash flow and net cash in a total amount of SEK 59 million. Receivables from the sold subsidiaries were settled in the fourth quarter, strengthening net cash by approximately SEK 18.5 million. Net cash at December 31, 2007, was SEK 20.4 million (83.6).
The equity/assets ratio improved further during the period and amounted to 83 percent (73) at December 31, 2007.