Interim Report April - June 2001

Size: px

Start display at page:

Download "Interim Report April - June 2001"

Anna Hubbard
5 years ago
Views:

1 Interim Report April - June 2001

2 January-June Turnover increased by 83 % to MSEK 14,5 (7,9) Cult3D-related sales amounted to MSEK 13,7(6,5) Result before tax amounted to MSEK 38,7 ( 41,3) Liquid funds amounted to MSEK 25,5 (70,6) after the issue of convertible promissory notes corresponding to MSEK 48,4 Solidity at period-end was 18 % (92) Cash flow for the period amounted to MSEK 10,6 (59,4) Powerful efficiency program is implemented in two phases April-June Turnover increased by 81 % to MSEK 7,7 (4,3) Cult3D related turnover amounted to MSEK 7,4 (3,3) Result before tax amounted to MSEK 15,4 ( 24,4) Electrolux, Siemens, General Electric and Procter & Gamble among new customers Phase 2 of efficiency program was initiated New incentive program for employees was introduced Termination of organized share trading through Enskilda Securities as per May 18 Operations Cycore AB is a Swedish company based in Uppsala. The company provides graphical software mainly applicable for the Internet. The company was established in Efficiency program, phase 1 Phase 1 of Cycore s efficiency program was implemented primarily during late Winter and early Spring. Cost savings has been achieved according to the plan, however some items took longer than initially anticipated to phase out. The total expenses, as per the end of Q2, have decreased to the expected level. Efficiency program, phase 2 During the first half of the fiscal year, the revenue has increased each quarter, despite the global decline in the economy. This increase in sales was mainly due to a more focused sales strategy targeting large customers and distribution partners. This sales increase was however not sufficient and the board therefore decided to initiate a new efficiency program in June. Overall, the decision resulted in another reduction in staff level by 12 people, mainly within marketing and administration. Moreover, it was decided to close down the sales office in London, since the British market has not developed as quickly as other markets have. After complete implementation of phase 2 of the efficiency program at the end of Q3, it is estimated that the total number of staff will have been reduced to 54 people. Product Line Cult3D During the first half year the revenue amounted to MSEK 13,7 (6,5). There were 74 (75) fully priced licenses sold and 56 (78) retailer licenses. The average price per fully priced license increased by 54 % versus the corresponding period in the previous year. In addition, the consulting income in terms of modeling and education has more than tripled in comparison with the first half of the year At the end of Q2 the Cult3D plug-in software is estimated to have been distributed to more than 7,2 million users, and around people have downloaded the Cult3D Designer from our website. The software is currently being distributed through several other channels including CDs. The use of Cult3D has gradually changed during the first half of the year More and more corporations are implementing Cult3D as a natural part of the business process in order to improve communication, decrease lead times and expenses, and/or increase revenue. As an example, the North American music retailer HMV reported an increase in sales of 75 % on online music titles represented in Cult3D. Among new customers during the first half of year 2001 were Procter & Gamble, General Electric, Mitsubishi, Sony Electronics and Hewlett-Packard. The distribution structure improved during the period mainly due to co-distribution of Cult3D with Discreet and LeadTek, but also with the help of our 56 new retailers. New partnership agreements were made with a number of corporations. An agreement with the Japanese corporation Sanyo was presented in March. Partner agreements regarding sales and distribution with the Canadian company Homeproject.com, the Danish company ColorCode 3-D and the British company Cubispace. Moreover, an exclusive agreement was made with Disney Interactive Canada with the purpose of joint development of rich media solutions for Disney s online retailers. There were also discussions with several other potential partners during the greater part of Q2 regarding new strategic partnerships in order to further improve the distribution of Cult3D. 2

3 A new product, 3DMeNow with Cult3D Exporter was launched in the beginning of January. A new version of Cult3D, version 5.2 was launched during Q1. On February 23, Cycore started to deliver the earlier announced product ImageModeler for Cult3D, which has been developed in cooperation with the French company RealViz. Product Line PuppetTime In order to further focus both personnel and financial resources towards the product which is expected to be the quickest to reach profitability, Cult3D, it was decided during Q2 to freeze the PuppetTime project. The greater part of the fundamental work regarding PuppetTime is fulfilled. The product is releasable but needs additional development to reach the optimum level of quality. During the Fall, Cycore will evaluate a possible sale of the product line. Other Product Lines In the light of the termination of the AllaDessa project during Q1 and the freeze of PuppetTime during Q2, Cycore presently does not have any new products it plans to introduce. Intensified development within the framework of Cult3D is however planned for the rest of the year. In the short term, Cult3D development is being directed towards Cult3D applications, which can create substantial core process improvements to customers, either by decreased expenses or increased revenue. Employees The number of employees during the first half of year 2001 has been reduced by 46 people to 63 (91) mainly due to the termination of the AllaDessa project, the freeze of the PuppetTime project, along with the relocation of the North American headquarters to Toronto. General meeting decisions At the ordinary general meeting on May 7, 2001, the present board was re-elected and the annual report was adopted. The board of directors and the Chief Executive were discharged from liability. The company gives no dividends for the year The loss for the year is covered by a corresponding transfer from the premium fund. The fulfillment of the general meeting implies that the earlier decided authorization to issue shares, is revoked. At an extra general meeting held in June, it was decided to implement a new option program directed to employees and newly elected board members (see below). Termination of organized share trading Organized trade of the shares in Cycore AB (publ) has been carried on since September 4, The purpose of organizing the trade in the share was to improve the service to the shareholders of Cycore, and to create a larger interest for Cycore publicly and in the capital market. However, the liquidity in the trade has been very low and the pricing volatile. The organized trade has not significantly fulfilled the purpose of increased public interest or interest from the capital market. Therefore, the increased requirements and resources created by the organized trade are no longer considered necessary by the board and management. In the light of this decision, the trade via Enskilda Securities was terminated on May 18, New option program A decision was made during the extraordinary general meeting held on June 25, 2001 to approve the board s suggestion to issue a subordinated loan with detachable warrants in two series of each. The exercise price for shares subject to subscription as per above will be SEK 13 and SEK 25 respectively. Subscription of shares can take place during December 2001 and December 2002 respectively. With deviation from the preemption rights of the shareholders, the right to subscribe for the subordinated loan shall belong to Cycore AB s wholly-owned subsidiary Käsän Electronics Scandinavia AB, with the right and obligation to offer current and future employees in Cycore or its subsidiaries as well as board members in Cycore to acquire the detachable warrants on fair market conditions. If shares are subscribed for due to all issued warrants, the share capital may be increased by a maximum of SEK 140,000, which equals a dilution of approximately 16.9 per cent of the capital. If all issued convertible promissory notes should be converted to new shares, the new warrants equal a dilution of approximately 7.8 per cent of the total share capital if all warrants and promissory notes are exercised. Result and Financial Position January-June Regarding the quarterly figures please see the financial figures at page 6. Turnover Cycore s revenue during the first half year amounted to MSEK 14,5 (7,9) which is an increase compared with the corresponding period year 2000 with 83 % or MSEK 6,6. The sale of Cult3D-licenses amounted to MSEK 9,9 (5,5) or 68 % of the revenue and represented thereby MSEK 4,4 of this increase. The revenue from Cult Effects amounted to MSEK 0,3 (1,4) which corresponds to 2 % of the revenue during the period. The remaining part of the sales, MSEK 4,3 (1,0), refers mainly to modeling and education income. 28 % of the revenue was generated in the North American market, in comparison with 42 % during the first half year

4 Result Cycore s result before net interest expenses amounted to MSEK -37,8 (-40,3) during the period. The operating result has been burdened by development costs, goodwill amortization and restructuring costs in USA and in Sweden. Cash flow The cash flow from the current operation amounted to MSEK -37,2 (-28,0) and the investments of the consolidated group amounted to MSEK 0,5 (5,3). The cash flow from the financial operation amounted to MSEK 48,3 (92,6), mainly due to the issue of convertible promissory notes. Thus, the cash flow of the period amounted to MSEK 10,6 (59,4), which contributed to the liquid funds at half year end amounted to MSEK 25,5 (70,6). There was an unused credit line of MSEK 1,2. Solidity The solidity at the end of the period was 18 % (92). This change is mainly an impact of the convertible promissory notes described below, which increase the balance sheet total by MSEK 48,4. Financing During the period, Cycore has been supplied with MSEK 48,4 by the issue of convertible promissory notes, which was decided at the extra-ordinary general meeting on February 15, At full conversion, the share capital of the above can be increased by a maximum of SEK 970,000. The period of conversion is October 1 to November 30, Both the company shareholders, as well as option holders, had the right to apply for the promissory notes. The date for repayment of the loan is December 31, D modelers will receive all Cult3D software when purchasing Maya version 4. Read more about this important alliance on the following address: Cycore launched in August 2001 the new version Cult3D 5.3, with a number of new features. Read more on: Outlook A report on web3d from the American industry analyst Jon Peddie Associates was published in July. One of the conclusions was that the web3d market has a very large potential; the number of web sites containing 3D content is anticipated to increase from approximately as per today, to approximately 1 million year Read more on: The management agrees to Jon Peddie Associates judgment on the long-term market potential, even if the outlook for the nearest quarters seems insecure. Cycore has so far increased its revenue four quarters in a row, despite the global decline in economy. However, the decline does not seem to have been reached bottom yet, and the decision processes at potential customers are slower and slower. This might result in that the increase level in sales might slow down. Next Report Opportunity Interim report for the period July to September 2001 will be published on November 15, Investments The investments of the consolidated group in tangible capital assets during the quarter amounted to MSEK 0,8 (2,1). No intangible investments have been made during the first half of year 2001 (MSEK 0,0 Jan-Jun 2000). Continuous costs for development are entered in the books directly via the income statement. Financial investments were negative, MSEK -0,3 (3,2) due to repayment of long-term liabilities. The acquisition of the Norwegian company Systems In Motion (SIM) is subject to new negotiations since Norwegian tax authorities did not approve the original agreement. Events After the End of the Period - Cycore has started co-distribution of Cult3D together with on of the most popular 3D CAD tools, Maya from Alias Wavefront. From July and onwards Uppsala August 27, 2001 Bengt Starke Chief Executive Officer Cycore AB (publ) This interim report has not been subject to review from the auditors of the company. On this interim report the same accounting principles and valuation principles has been applied, as on the latest annual report. The company s accounting and valuation principles are according to the recommendation of the Swedish Redovisningsrådet (Financial Accounting Standards Council). For more information, please contact: CEO Bengt Starke +46 (0)

5 SUMMARY OF CONSOLIDATED INCOME STATEMENT AND BALANCE SHEET CONSOLIDATED INCOME STATEMENT (TSEK) Net sales Operating expenses Operating result Net interest income/expenses -988 * Result before taxes during the period Acquired result Result of the period * Including capital acquisition expenses and exchange variances CONSOLIDATED BALANCE SHEET (TSEK) ASSETS Intangible fixed assets Tangible fixed assets Financial fixed assets Current receivables Cash and bank balances Total assets EQUITY AND LIABILITIES Total equity Long-term liabilities Current liabilities Total equity and liabilities CHANGE IN TOTAL EQUITY (TSEK) At beginning of period New share issue Translation differences during the period Net loss for the period At end of period OTHER Solidity 17,9% 92,4% 79,2% No of shares at the end of the period Weighted average number of shares Equity capital per share 1,91 kr 14,06 kr 7,36 kr Earnings per share -5,66 kr -6,78 kr -18,39 kr

6 CASHFLOW ANALYSIS OF GROUP (TSEK) Cashflow from operations Cashflow from investment activities Cashflow from financing activities Cashflow of the period Liquid funds at the beginning of the period Exchange rate difference in liquid funds Liquid funds at the end of the period QUARTERLY FINANCIAL INFORMATION OF THE GROUP Q3* Q4 Q1 Q2 Q3 Q4 Q1 Q INCOME STATEMENT (TSEK) Net sales Operating expenses Operating result Net interest income/expense Result before taxes during the period Acquired result Result of the period BALANCE SHEET (TSEK) Balance sheet total Cash and bank balances Total equity OTHER No of employees at the end of the period No of sold fully priced licenses No of sold retailer licenses *proforma (group accounts were not draw up for the quarter) 6

CYCORE AB (publ) INTERIM REPORT January 1 - September 30,

CYCORE AB (publ) INTERIM REPORT January 1 - September 30, 2000 www.cycore.com Turnover increased by 207% to MSEK 11.3 (3.7) Result before taxes amounted to MSEK 59.7 (-28.0) Liquid funds amounted to MSEK